Listed mortgage lender Housing Finance (HF) has been upgraded back to a mid-tier bank after growing its market share following a capital injection by shareholders last year.
The Central Bank of Kenya disclosed that HF controlled one percent of the Kenyan banking market, which is the mark used to identify medium-sized banks.
HF’s upgrade saw the number of banks classified as mid-sized rise to nine. HF had long been ranked as a mid-sized lender but was downgraded in 2020 after years of loss-making that ate into its core capital.
Mid-sized banks are those that control one to five percent market share and also include Prime Bank, Bank of Baroda, Citibank, Family Bank, National Bank of Kenya, Bank of India, Ecobank, and SBM Bank.
HF raised Sh5.99 billion last year through a rights issue that was oversubscribed by 38.3 percent as it moved to improve its capital position so as to push for more business.
HF has posted growth in net profit for the last three years, hitting Sh524.6 million in 2024 from Sh388.15 million a year earlier. The lender had posted Sh126.22 million net profit in 2017 before sinking into back-to-back losses from 2018 to 2021, including the record net loss of Sh1.71 billion in 2020.
The four-year streak of losses saw the lender downgraded to a small tier as its capital and liquidity ratios dropped below the regulatory minimum.
The bank’s turnaround has also seen it attract a new crop of investors with government bigwigs drawn to its counter at the Nairobi Securities Exchange.
Some of the new investors in the bank include the family of former Kenya Revenue Authority chair Anthony Mwaura, who bought a 12.7 percent stake, and Leader of the Government Majority in the National Assembly, Kimani Ichung’wah.
Regulatory disclosures show that the Member of Parliament for Kikuyu constituency acquired 18,642,043 shares in HF valued at Sh138.3 million, giving him a one percent stake in the integrated financial solutions provider company.
Among the top-tier banks, Co-operative Bank overtook NCBA Bank to become the third-largest bank in the country with a 9.6 percent market share. Standard Chartered Bank Kenya slid two ranks to position eight, being overtaken by Stanbic Bank and I&M Bank.
In the small tier category, Sidian Bank was the fastest growing with its market share, 0.7 percent, ranking it second among the small peer group, up from position seven in 2023.
Sidian Bank got new shareholders last year who have also been injecting new capital in the lender to drive growth with ambitions of being a mid-tier bank by 2028.
Sidian’s shareholders have injected Sh3 billion in the lender in the last 18 months, which has allowed it to book more business.
