NAIROBI - Mortgage-focused lender HF Group Plc warned on Friday its 2018 net earnings would be 25 percent lower than the previous year, after posting a nine-month loss.
Declining interest income after a cut in the central bank rate led to lower lending rates, and higher non-performing loans weigh on its performance, the bank said in a statement.
The central bank cut its key lending rate to 9.00 percent in July from 9.50 percent, and has left it unchanged since then.
Kenya has had a cap on commercial lending rates — in place since late 2016 and set at 4 percentage points above the central bank rate.
“Further, the trading environment continued to be unfavourable, leading to a slowdown in the real estate sector credit growth,” the bank said.
READ MORE
Trapped in the crossfire, Kenyan workers plead for evacuation
The economic truths State will not admit amid inflation storm
Gachagua to Ruto: I am out of the way, now deliver to Kenyans
“The tough operating circumstances have led to an increase in the non-performing loans position, which has also adversely affected the business performance.”
The bank reported a pretax loss of 325.65 million shillings ($3.18 million) for the nine months to end-September, compared with a 231.87 million shilling profit a year earlier.
Net non-performing loans rose to 5.15 billion shillings from 5.12 billion shillings, while net interest income fell to 1.8 billion shillings from 2.18 billion shillings.
HF Group said a redundancy exercise it undertook during the period also increased its staff costs due to one-off payments to those laid off.
The bank said its liquidity ratio fell to 22.89 percent from 26.03 percent, against a statutory minimum of 20 percent.
