Mortgage lender HF Group #ticker:HFCK has issued a profit warning for the year ended December, blaming the weaker earnings forecast on slow property transactions and the capping of interest rates.
The company’s net profit had already dropped 81 per cent to Sh159.7 million in the nine months ended September, a move that is expected to pull down the full-year earnings beyond the 25 per cent threshold which triggers an earnings alert.
Performance in the nine-month period was largely driven by defaults which contributed to reduced interest income.
“HF Group Plc projects that the net earnings for the year ended 31st December 2017 will be potentially 25 per cent lower than that reported for the year ended 31st December 2016,” the company said in a statement Thursday.
The mortgage financier reported a net profit of Sh905.8 million in the previous year.
HF says slow processing of transactions at the land ministry has resulted in slow liquidation of some of its project loans.
The company joins a growing list of firms that have issued profit warnings including Bamburi Cement #ticker:BAMB, setting up investors for potential dividend cuts.