New licence enables the lender to hold cash and other property on behalf of pension schemes, fund managers, stockbrokers and others for a fee.
HFC said it will offer core custody services, cash management services, escrow custody services, trustee services, and bond trading.
HF Group has suffered a drop in profitability in the last two years.
HFC, the banking arm of the struggling HF Group #ticker:HFCK, has gotten the go-ahead from sector regulators to venture into custodial services, the company said on Tuesday.
The new licence enables the lender to hold cash and other property on behalf of pension schemes, fund managers, stockbrokers, investment banks, corporates and high-net worth individuals for a fee.
HFC said it will offer core custody services, cash management services, escrow custody services, trustee services and bond trading.
One-stop shop
The approvals from the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA) enables HFC to be a one-stop shop for banking services, giving it a level-playing field with other commercial lenders.
“We also expect to significantly improve our financial position in the medium term by locking in non-funded income revenue streams as well as boosting foreign exchange flows for the business,” managing director Sam Waweru said in a statement Tuesday.
HFC joins other banks in the space which has witnessed considerable growth over the last decade, thanks to increased investment flows into stock market and government securities largely by domestic institutional investors and foreigners.
“The value of assets under custody have appreciated over time because of a conducive interest rate environment and increased investor confidence,” Mr Waweru said.
“The Capital Markets Authority has also been committed to driving this growth through active engagement with industry stakeholders, including custodians, when introducing new products that are in line with global standards.”
Earnings drop
HF Group, whose shares are publicly traded on the Nairobi bourse, has suffered a drop in profitability in the last two years.
Net earnings fell to Sh126.22 million in 2017 from Sh905.83 million in 2016 and Sh1.20 billion in 2015, its financial statements shows.
