Housing Finance Group records 74pc drop in HY profit

Housing Finance Group has posted half year after tax profit of Sh159 million for the period ending June 30, 2017 representing 74 per cent decline compared to a similar period in 2016.

“The drop in our performance is as a result of the prevailing impact of the interest rate capping law and the unfavourable macroeconomic environment that resulted in a significant drop in interest related income and an increase in interest related expenses,” said HF Group Managing Director Frank Ireri.

Total interest income declined by 18.2 per cent over the period under review to Sh3.68 billion down from Sh4.5 billion recorded in 2016.

Net interest income also declined by 25 per cent from Sh 2.1 billion in a similar period in 2016 to Sh1.6 billion.

Total operating expenses increased by 8.6 per cent on the back of increased provisions for the non-performing loans. Non-performing loans increased during the period to Sh7.9 billion from Sh 5.4 billion in 2016 due to stalled property transactions at the lands office and unfavourable macroeconomic conditions.

The Group’s liquidity position improved to 26.4 percent  in 2017 up from 21.77 percent  in a similar period in 2016.

“The liquidity improvement is as a result of deliberate build-up of cash reserves in readying the business to redeem the Kes 7b bond in October 2017. The cash mainly came from aggressive collections and debt. The business is well positioned to pay the bond holders in October 2017,” said Mr. Ireri.