Shelter Afrique blames a freeze on lending in 2016 for poor performance.
Pan-African mortgage financier Shelter Afrique loss extended by 18.5 percent to $9.23 million (Sh940.8 million) for the financial year ended December 2018, condemning it to the fourth straight year in loss.
The management blamed the poor performance on the continued self-imposed lending moratorium that was started at the end of 2016 as the then senior officials fought off mismanagement allegations.
“The non-resumption of underwriting new business impacted the financial performance for 2018, and consequently, the revenue streams continued to decrease year-on-year basis was driven by the sustained decline of the existing loan book,” says the company in its latest annual report.
The last time the lender posted a profit was in 2014, coming in at $0.45 million or Sh45 million, before a streak of losses set in.
Failure to underwrite any new business saw interest and fee and other incomes dip by 29 per cent and 24 per cent to $17.6 million (Sh1.79 billion) and $1.8 million (Sh183 million) respectively.
Its loan book fell by a third during the period.
Previously reassessed viable loan commitments were also scaled down from $20 million to $10 million, out of which $6.9 million was disbursed in 2018. The scale-down signals even lower interest income in the absence of new loan commitments.
The firm now wants to end the lending restriction and grow its loan book under the 2019 to 2023 revised strategy.
“The key to restoring the company’s financial sustainability is to resume immediate underwriting of new business and focus on solely fulfilling its mandate of financing affordable housing for Africa,” says the lender.
Gross income dipped to a seven-year low of Sh967.5 million. Operating expenses rose 2.4 percent to Sh906 million putting pressure on operating income.
The firm disclosed that the rise in operating expenses was due to extraordinary items relating to Sh100 million spent on staff redundancies and Sh91 million incurred on business restructuring.
“The organisation restructuring also involved staff redundancies. The number of staff was reduced by 25 percent,” says the firm.
In August last year, Shelter Afrique announced that it was going to lay off 13 employees in a bid to cut costs.
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