Property sales lift Housing Finance earnings by 13pc

Housing Finance net profit rose 13 per cent in the first quarter to Sh221.1 million from Sh195.6 million over the corresponding period last year helped by property sales.

The mortgage firm booked a gain of Sh106 million from sale of more than 100 houses in Nairobi’s Komarock Estate, growing its non-interest income twofold to Sh217.8 million.

“We sold properties in our Komarock Phase 5 project and that raised our other income,” said Frank Ireri, HF’s chief executive.

The firm’s mainstay lending business recorded a 5.7 per cent growth in interest income to Sh1.4 billion despite its loan book expanding from Sh35.2 billion in December to Sh37.2 billion in March.

HF’s expenses grew by double digits in the first quarter, with the property sales helping to offset lower margins in the core lending business.

Its interest expenses jumped 13.2 per cent to Sh784.5 million as customer deposits grew to Sh28.5 billion in March from Sh26.5 billion in December 2013 and Sh24.5 billion in March 2013.

HF’s operating expenses, including staff costs and loan loss provisions, increased 19.3 per cent to Sh553.9 million in the review period.

The company’s share price has gained 40 per cent over the past six months to trade at Sh37.

The firm developed 162 units of four-bedroomed maisonettes in Nairobi’s Komarock Estate through its subsidiary Kenya Building Society.

READ: Housing Finance revives construction arm with Komarock estate plan

HF recently moved to expand its capital base by creating new shares, a move seen as paving the way for raising of capital in the future through a rights issue.

The mortgage firm is seeking approval to increase its authorised number of shares from 236 million shares to 500 million during an annual general meeting set to be held on Friday.

Out of the 236 million authorised shares, 231 million have been issued leaving a balance of five million.

By creating additional shares, the bank would get headroom for floating a rights issue if it needs cash or give a paper dividend if the intention is to conserve cash. It could also close an acquisition through a share swap.

A number of Nairobi Securities Exchange-listed firms including KCB and Co-operative Bank have increased their authorised share capital before making rights or bonus issue.

HF has in recent years relied heavily on debt to fund its lending business, with its borrowings standing at Sh15.4 billion in March.