Companies

HF slides into Sh97m net loss as bad loans pile up

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HF Group offices on Kenyatta Avenue. FILE PHOTO | NMG

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Summary

  • HF Group has posted a Sh97 million net loss for the six months to June from a profit of Sh6.8 million in a similar period last year.

Housing Finance Group #ticker:HFCK has slipped into loss-making territory by posting Sh97 million net loss for the six months to June from a profit of Sh6.8 million in a similar period last year.

The mortgage financier which recently made headlines for slashing house prices and auctioning distressed customer properties due to bad loans has seen an increase in non-performing loans from Sh8.8 billion to Sh12.9 billion in the period.

The firm however said that during the period, the Group’s property development subsidiary, HFDI, managed to offset outstanding debt worth Sh1.5 billion.

“There was a reduction in NPLs between December and June driven by aggressive collection strategies including the property sales campaign dubbed “Shika Nyumba na HF Reloaded,” HF Group CEO Robert Kibaara said in a statement.

“The campaign has also accelerated property sales on a mix of HF-owned and financed developments with 335 units sold to date. This is more than double the sales recorded over a similar period last year,” he said.

HF lending slowed down from Sh47 billion last year to Sh40 billion as the firm repositions its books. This saw a decline on interest from loans from Sh3 billion to Sh2.4 billion, while higher allocation to securities saw the lender increase interest income from lending to the government from Sh145 million to Sh195 million.

Decline in customer deposits from Sh36.2 billion to Sh33.8 billion saw the lender save on interest expenses that reduced by 9 percent to Sh1.6 billion from Sh1.8 billion during a similar period in 2018.

“Interest expense declined on the back of an aggressive retail banking strategy that has seen the business lower the cost of funding,” the lender said.

HF is expected to pay off a Sh3 billion corporate bond by October with the lender saying it has stocked up enough cash to retire the facility.

“The business is on track to redeem in full the Sh3 billion Corporate Bond in October 2019. This is the second tranche of the Sh10 billion Bond issued in October 2010. The business will finance the bond repayment from internal cash flows generated from operations,” Mr Kibaara said.