Kenya’s HF Group Plc has expressed optimism of returning to profitability by the end of this financial year after registering significant performance improvement, cutting its losses by more than half a billion shillings.
The mortgage lender recorded a half-year pre-tax loss of Ksh94.314 million, compared to a loss of Ksh642.74 million for the year ended 31 December 2018.
The Group’s total interest expenses reduced by 9.80 per cent to Ksh1.67 billion from Ksh85 billion during a similar period in 2018, on the back of an aggressive retail banking strategy that has seen the business lower the cost of funding.
During the period, the Group’s property development subsidiary, HFDI, managed to offset outstanding debt worth Kes. 1.5 billion.
Non-funded income grew by 56 per cent to Ksh914 million up from Ksh586 million during a similar period in 2018, on account of gains made on sale of assets.
Managing Non-Performing Loans
The net Non-Performing Loan book shrunk by 13.14 per cent to Ksh7.58 billion from Ksh8.73 billion as at 31 December 2018.
The reduction was driven by aggressive collection strategies including the property sales campaign dubbed “Shika Nyumba na HF Reloaded.” The campaign has also accelerated property sales on a mix of HF owned and financed developments with 335 units sold to date. This is more than double the sales recorded over a similar period last year.
Building a Diaspora Banking Capability
The Group has embarked on a strategy to expand its offering to Kenyans in the diaspora, having recently completed roadshows in the United States of America that saw engagement with hundreds of Kenyans in need of a trusted financial partner for investment and banking needs back home.
‘’The Kenyan diaspora is a demographic segment that has consistently shown a relentless appetite for convenience, which is why our forays into that market seeks to offer products that are aligned with their financial needs,’’ said Group CEO Robert Kibaara.
Introduction of WhatsApp Banking Platform
HF has launched the HF WhatsApp banking platform to offer customized banking services to its customers, effectively becoming the first bank in the region to go live with the product. This platform allows customers to interact with the bank and enjoy full banking services, including virtual account opening, funds transfer, payments, loans, forex rates and real time customer service.
“This new channel is part of our digital banking strategy and is reflective of our commitment to provide innovative financial solutions that enhance customer experience through ease of access, convenience, safety and simplicity,” said Mr. Kibaara.
Repayment of Ksh3 billion Corporate Bond
The business is on track to redeem in full the Ksh3 billion corporate bond in October 2019. This is the second tranche of the Ksh10 billion bond issued in October 2010.
The business will finance the bond repayment from internal cash flows generated from operations.
Business Outlook in Kenya
“Our business transformation strategy is paying off and given the trend in performance, we project a turnaround to profitability by end of 2019,” said the Group CEO.
HF is a multi-dimensional financial services provider with capability in digital banking, retail banking, SME and institutional banking, banc assurance, property development and finance.