HF Group reports first Q1 net profit in four years


HFC Group CEO Robert Kibaara speaks at a past event. PHOTO | SALATON NJAU | NMG

HF Group has posted a net profit in the three months to March period for the first time in four years on the back of growth in operating income and low loan provisioning. 

The firm posted a net profit of Sh34.2 million in the first quarter of the year, a reversal from a Sh191.8 million net loss in the same period last year.

The performance in the first quarter could point to a net profit in the full-year period for the tier 2 bank that has been posting net losses since 2018.

The last time the Nairobi Securities Exchange-listed firm reported a net profit in the first quarter was in 2018 when it posted Sh37.06 million.  

The turnaround follows a 26.8 percent growth in operating income to Sh772.8 million driven by fees and commissions on loans, advances and transactions.  

Non-interest income grew by 87.2 percent to Sh252.7 million. Loan provisions for the group dropped by 24 percent to Sh56.4 million.

HF Group chief executive Robert Kibaara attributed the performance to a business transformation strategy that has seen the lender focus on growing its SME and retail banking and robust cost and non-performing loans management measures. 

“Diversification into full banking has led to significant revenue growth, increase in inexpensive current and savings accounts (CASA) deposits, hence a significant reduction in the cost of funds. The bank has also benefited from growth in non-funded income emanating from diversified channels, growth in customer numbers and digital transactions,” said Mr Kibaara.

HF Group, through its property development arm, HFDI, has suffered in the past from a slowdown in the real estate market and more recently the economic fallout from the Covid-19 pandemic, which has seen the loss-making firm cut its financing for a mortgage.

The firm in 2021 turned to property auctions and negotiated sales with borrowers to bring down its non-performing loans (NPLs) that have weighed down on its performance.

The Group states that all its operating subsidiaries have turned to profitability over the period including the banking arm (HFC),  HFDI and insurance agency.

The Group has completed the sale of its largest project, Komarock Heights apartments in Komarock estate with 480 units, and also commenced its titling process which once completed is expected to raise revenues as collected receivables and closure of the project.

The business has accelerated the sale of its property projects, having sold over 1100 houses over the last two years.