The firm expects earnings for the period to December 2016 to drop by more than 25 per cent attributed to impairment costs for non-performing loans.
The pan-African housing financier posted a net profit of $3.1 million in 2015, compared to $0.45 million a year earlier.
Ratings agency Moody’s in November downgraded Shelter Afrique’s long-term issuer rating from Ba1 to Ba3
Mortgage lender Shelter Afrique has issued a profit warning attributed to increased provisions for bad loans.
This comes after a forensic audit confirmed allegations of creative accounting and subprime lending at the financier.
Shelter Afrique, which has listed a Sh5 billion bond on the Nairobi bourse, says it expects earnings for the period to December 2016 to drop by more than 25 per cent attributed to impairment costs for non-performing loans.
“The main reason for the lower earnings in the restated 2015 results and 2016 is a sharp increase in the level of impairment charges to provide for expected losses from the portfolio,” Shelter Afrique said in a trading update.
The pan-African housing financier posted a net profit of $3.1 million in 2015, compared to $0.45 million a year earlier.
Deloitte was last year invited to conduct an in-depth review of Shelter Afrique’s books after the lender’s former head of finance Godfrey Waweru blew the whistle on alleged book-cooking at the lender.
The Deloitte report, adopted by the financier’s board in February, raised the flag on inadequate loan loss provisions, queries on loan swaps for non-performing loans, and discrepancies on Shelter Afrique’s loans software platform.
Ratings agency Moody’s in November downgraded Shelter Afrique’s long-term issuer rating from Ba1 to Ba3, and placed it on review for further downgrade.
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