The dip in 2017 was largely on account of Sh957.75 million decline in net interest income to Sh2.98 billion as total operating costs rose nearly a fifth to Sh3.99 billion.
The predominantly mortgage financier has been struggling to grow its loan book amid increased provisions against bad debt since 2015 when profit rose 22.72 per cent to Sh1.2 billion.
Housing Finance (HF) Group, has reported a Sh126.22 million after-tax profit for the year ended December, representing an 86.07 per cent slide from the previous Sh905.83 million. The 2016 profit was a 24.32 per cent drop for the listed firm.
The dip in 2017 was largely on account of Sh957.75 million decline in net interest income to Sh2.98 billion as total operating costs rose nearly a fifth to Sh3.99 billion.
The predominantly mortgage financier has been struggling to grow its loan book amid increased provisions against bad debt since 2015 when profit rose 22.72 per cent to Sh1.2 billion.
Loans to customers have not recovered from September 2016 legal caps on interest rates, falling to Sh49.64 billion in December 2017 from Sh52.77 billion six months earlier and Sh54.46 billion in December 2016.
The slowdown in real estate sector also helped pile up gross bad debt for the lender to Sh8.21 billion last December from Sh7.91 billion in June and Sh6.19 billion in December, 2016.
The bank has proposed a final dividend of Sh0.35 per share, 30 per cent lower than Sh0.50 a year earlier for approval by shareholders at an annual general meeting in May.
The investors have been offered a bonus share for every 10 held to cover for reduced dividend, subject to their approval and that of the the regulator, the Capital Markets Authority.
HF is the only one of the 11 banks on the Nairobi bourse whose share price is yet to recover from the interest cap shock 19 months ago.
The shares traded at Sh11.65 per unit on Thursday, 22.07 per cent weaker than the Sh14.95 price lows after the rate cap law was enforced.
It plans to go big into SMEs and personal lending through digital channels to reverse a sharp fall in profitability.
Heavy investment
The lender says increased banking services to small and medium-sized enterprises amid heavy investment in digital banking will yield returns in 18 to 24 months.
“The pressure caused by the operating environment provided an opportunity to bolster fundamental business initiatives that are key to our operating efficiencies and sustainable growth,” group managing director Frank Ireri said in a statement.
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