Housing Finance Group has today announced a pre-tax profit of Kshs. 311 Million for the year ending 31stDecember 2017. The Financial services Group said that the 77% decline in profitability reflects the unfavourable economic and fiscal environment on the back of protracted electioneering during the period under review.
Based on the market outlook, the Group has reviewed its business strategy and shifted its focus to growth through leveraging digital channels, an initiative which is poised to attract return on investment in the next 18 – 24 months. It has also up-scaled full service banking proposition targeting SMEs and retail customers and refocused on service delivery and customer experience, which has seen the introduction of a 24-hour call centre and enhanced operational efficiencies. The Group has also shifted its focus to a new property development-operating model to reduce reliance on bank debt for project finance and end buyer mortgage finance in line with the apathy created by interest rate capping.
Commenting on the results, the Group’s Managing Director, Frank Ireri said; “The pressure occasioned by the operating environment provided an opportunity to bolster fundamental business initiatives that are key to our operating efficiencies and sustainable growth.”
Total operating income declined by 7.8% for the period under review, to KShs 4.32 billion down from KShs 4.69 billion recorded in 2016. Total operating expenses increased by 19% on the back of increased operating costs occasioned by investment in alternative channels.
Gross Non-performing loans increased during the period to KShs 8.2 billion from KShs 6.2 billion in 2016 due to slowdown in the property market and overall unfavourable macro-economic conditions. The Group’s Total Assets declined by 6% to KShs 67.5 billion, down from KShs 71.9 billion during a similar period in 2016.
Other significant developments
The Group was able to attract financing of approximately Kshs. 5 billion from European Investment Bank and Ghana International Bank. In addition, on 2 October 2017, the Group through its banking subsidiary, HFC successfully paid the first tranche of the KShs 10 billion corporate bond issued in 2010 amounting to KShs 7 billion.
The Group’s focus is on enhancing working capital access to SME customers, improving non-interest income and enhancing accessibility and convenience for its customers through investment in alternative channels including MasterCard, internet banking and a mobile banking application.
During the period, the Group’s property development subsidiary, HFDI, launched Clay City a joint venture project comprising of 1,520 units and a commercial Center, whose construction will be done in four phases. HFDI has fully operationalized K-Mall and also commenced on the handing over of the Komarock Heights phase one, consisting of 480 apartments.
Regarding the Government’s big four agenda, the Group’s CEO posited; “The pillar on affordable housing is noble and fits hand-in-glove with our initiatives under the aegis of HFDI. The public private partnerships around land swaps and tax incentives hold the potential to motivate, catalyze development in the sector and increase GDP contribution.”
The Board of Directors recommend to the shareholders at the forthcoming Annual General Meeting, the payment of a final dividend for the year of Ksh 0.35 for every ordinary Share of Ksh. 5.00.
The board also recommends the issuance of bonus share of one (1) of such new fully paid ordinary share for every ten (10) of existing ordinary share of par value Kshs.5.00.