Housing Finance’s first quarter profit grows by 13 per cent

Frank Ireri, Housing Finance managing director attributes growth in profit to diversification in the group’s investment portfolio. [PHOTO: FILE]

By JAMES ANYANZWA

NAIROBI, KENYA: Housing Finance (HF) registered a 13 per cent growth in its pre-tax profit for the three-month period ending March 31.

Additional revenues from the firm’s diversified investment basket that includes forex trading boosted the growth.

The mortgage lender’s profit before tax (PBT) grew to Sh315.97 million, up from Sh279.9 million recorded in a similar period last year.

Forex trading whose operations were launched in June last year yielded Sh13.68 million.

Managing Director Frank Ireri said the Group would bolster its diversification process by tapping into the more vibrant retail sector.

 “Our main focus now is to grow new deposits in current and saving accounts, which will reduce our cost of funds and also improve our bottom line,” he said.

In a statement Tuesday, Ireri said the firm is leveraging on its new ‘Makao’ construction solution to drive retail deposits.

“Makao is a seamless end-to-end building solution involving consortia of building professionals and Housing Finance,” he said.

According to the group’s unaudited financial statement released Tuesday, its non-performing loan portfolio increased to Sh3.58 billion, up from Sh2.68 billion registered in 2013. The bank’s loss provision increased to Sh835.90 million, up from Sh335.48 million recorded in a similar period in 2013.

BAD LOANS

Despite an increase in the non-performing loan book, Ireri said the firm does not expect a loss as the loans are fully secured.

He expects the mortgage business to record robust growth once the issue between the Lands ministry and National Land Commission (NLC) is resolved.

Sales and registration of properties have in the last few months slowed down due to the unclear jurisdiction between the Ministry of Lands and the NLC. The Group plans to partner with County Development Corporations; deliver property and land rates solutions and provide financing of utilities such as water.

The group is also seeking property opportunities in the oil, gas and mining sector.

According to the unaudited results, interest income rose by six per cent to Sh1.43 billion, up from Sh1.35 billion. Similarly, interest income on loans and advances grew by six per cent to Sh1.28 billion, from Sh1.21 billion recorded the previous year.

Interest on customer deposits grew by 16 per cent to Sh465 million, up from Sh400.57 million recorded in the previous year.

Net loans and advances to customers grew by 18 per cent to Sh37.24 billion, up from Sh31.69 billion, while customer deposits increased 16 per cent to Sh28.52 billion, up from Sh24.55 billion recorded in a similar period last year.

Borrowed funds rose 26 per cent to Sh15.47 billion from Sh12.23 billion. HF has also embraced the concept of joint ventures to raise its involvement in the supply of affordable housing units.