More Housing Finance mortgage borrowers default

NAIROBI, KENYA: The number of people unable to service their mortgage loans with Housing Finance, the country’s leading mortgage lender, increased in the third quarter of this year.

According to the firm’s financial results released last week, net non-performing loans increased to Sh3.39 billion up from Sh2.43 billion.

The company attributed increase in default to the “tough economic and operating environment persisting within the economy driven by constitutional challenges around title management in the country”.

But overall, the firm’s after-tax profit increased to Sh719.78 million up from Sh676.17 million, representing six per cent growth.

During that period, net loans and advances to customers increased by 29 per cent to Sh43.27 billion up from Sh33.47 billion. Customer deposits increased to Sh33.14 billion up from Sh25.92 billion in 2013.

Interest income from loans and advances increased by 13 per cent to Sh4.14 billion up from Sh3.66 billion during a similar period in 2013. This growth propelled total interest income to Sh4.57 billion up from 4.10 billion in 2013.

Efforts to stimulate more volume and value through enhanced business mix saw non-interest income increase to Sh692.28 million up from Sh233.31 million.

Housing Finance Managing Director Frank Ireri said the banking strategy is beginning to take shape as the firm shifts focus to provision of a complete suite of retail and corporate banking products and services to its customers.

 Banking strategy

“The banking strategy is beginning to take shape both in terms of deposit mobilisation, income diversification and asset diversification,” said Ireri.

Asset finance, trade finance and corporate banking have been the main new banking solutions. Loan disbursements in the third quarter exceeded 2013 by Sh1.5 billion and were 55 per cent better than the third quarter of 2013.

Ireri said the firm will be seeking additional funding in the first quarter of 2015 to bolster its capital strength and support its growth strategy.

“Plans are underway subject to regulatory and shareholder approval to undertake a rights issue in the first quarter of next year,” said Ireri.

 Assets

HF’s borrowed funds portfolio increased to Sh16.70 billion up from SH14.81 billion as a result of additional funding from Norfund and Ghana International Bank.

Group total assets increased to Sh56.88 billion up from Sh47.03 billion and total liabilities increased to Sh50.76 billion up from Sh41.5 billion.

Housing Finance plans to tap into the Real Estate Investment Trusts (Reits) market for long-term funding through both development and income Reits.

In July, the firm received a licence to operate as a Reit trustee from the Capital Markets Authority. HF is awaiting approval for a Reits manager for its subsidiary, the Kenya Building Society.

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