Shelter Afrique loss hits Sh13bn on bad loans

Femi Adewole Shelter Afrique boss. PHOTO | DIANA NGILA
Femi Adewole, Shelter Afrique acting managing director. PHOTO | DIANA NGILA 

Shelter Afrique’s net loss for the year to December grew by 156 per cent to Sh12.7 billion following a near-doubling of provisions for bad loans, confirming findings of a damning forensic audit done on the mortgage lender.

The pan-African housing financier has disclosed that it closed the period under review with impairment costs for non-performing loan of Sh1.85 billion, a steep increase from the previous year’s Sh962.5 million.

Shelter Afrique’s loan book grew 3.2 per cent to close the year at Sh29.2 billion.

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 company decided to take a critical look into its loan book and specifically the doubtful debts account,” Shelter Afrique’s chief finance officer Ray Davies said in an interview.

“We also reviewed our provisioning policy to make it stricter. The effect of these interventions is that there was a huge increase in our provisioning for the year. We even went back as far as 2015 in some cases and restated the accounts,” he added.

The report, adopted by the housing 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.

Mr Waweru alleged that creative accounting helped Shelter Afrique post a net profit of Sh218.7 million in 2015 and record bad loans provisions as Sh234.5 million.

Shelter Afrique’s restated accounts now show that it actually made a net loss of Sh509.2 million during this period while loan impairments have been revised upwards to Sh962.5 million.

The mortgage financier, which is owned by 44 African countries (including Kenya) together with the AfDB and African Reinsurance, closed the year under review with total assets of Sh34.6 billion, representing a marginal increase from 2015.

Total liabilities grew by Sh1.4 million to Sh25 billion with the big chunk of this being lines of credit which now stand at Sh19.5 billion.

The increased provisioning wiped also away a 12.8 per cent increase in net interest income to Sh1.41 billion.