HF Group released their Q1’2016 earnings recording an impressive core EPS growth of 47.6% y/y growth to Kshs. 3.8 per share from Kshs. 2.5 per share in Q1’2015, driven by 30.8% growth in operating revenue, outpacing operating expenses growth of 15.2%. This is according to a report by Cytonn Invest.
According to the report, operating revenue grew by 30.8% to Kshs 1.2 bn in Q1’2016, compared to Kshs 0.95 bn in 2015 driven by a 28.0% increase in net interest income to Kshs. 1.0 bn from Kshs. 0.8 bn in Q1’2015 and a 43.5% increase in non-interest income,
Non-interest income grew by 43.5% to Kshs. 241.8 mn, from Kshs 168.5 mn in Q1’2015, supported by other income growth which grew by 136.5%, comprising of property sales from the completed K-Mall, 500 units in Komarock 5B, Kahawa Downs and Precious Heights Phase 1. The current revenue mix stands at 81%:19% funded to non-funded income, respectively,
Operating expenses increased by 15.2% to Kshs. 0.8 bn from Kshs7 bn in Q1’2015, driven by (i) a reduction in the loan loss provision by 5.4% to Kshs 136.9 mn from Kshs. 144.7 mn in Q1’2015, and (ii) a reduction in staff costs by 3.6% to Kshs 248.8 mn from Kshs. 258.2 mn in Q1’2015. The slower expense growth resulted to a reduction in the cost to income ratio to 62.2% from 70.6% in Q1’2015, higher than the industry average, which is at 59.4%
PAT growth came in at 47.8% y/y, to Kshs. 0.3 bn from Kshs. 0.2 bn compared to our projection of an 18.4% increase
Housing Finance Group posted impressive results and is in tandem with its 2016 strategic agenda having launched a new core banking system that will enhance customer service in the banking arm and broke ground for the construction of 1,500 residential units in the Komarock Heights and Richland projects. However, in our view the group has to embrace alternative deposit mobilization avenues such as agency banking and mobile banking to drive growth.
Article by Juma Fred.