HF Group has swung to profitability, posting a pre-tax profit of Ksh. 39 million in quarter 1, 2022 against a pre – tax loss of Ksh. 178 million during a similar period in 2021.
These results come on the back of the business transformation strategy which has seen the listed lender enhance its focus on growing its SME and retail banking proposition, robust cost and non-performing loans management measures.
“Despite the complex impact of the Covid 19 pandemic, our strategy is paying off and our performance is now moving in the right trajectory.
Diversification into full banking has led to significant revenue growth, increase in inexpensive Current and Savings Accounts (CASA) deposits, hence significant reduction in cost of funds.
The bank has also benefited from growth in Non-funded income emanating from diversified channels, growth in customer numbers and digital transactions”, said HF Group Chief Executive Officer, Robert Kibaara.
The period saw all the Group’s operating subsidiaries (HFC, HFDI and HFBI) registering a profit. The banking subsidiary, HFC, posted a reduction in its non- performing loan book by Ksh 2.1 billion Year-on-Year from Ksh. 10.5 billion to Ksh. 8.4 billion, resulting in a reduction in loan provisions which has improved profitability.
- 10% growth in net interest income to reach 520.1 million
- 87% growth in non-funded income to 252.7 million
- 27% growth in Total Operating Income to 772.8 milion
- The new business segments of SME, Personal Banking, Diaspora and Institutional Banking are profitable and contributing positively to the Group.
- HFDI, the property development arm of the Group returned to profitability.
- Non-Performing Loans reduced by 2.1 Billion year on year, a 20% reduction.
- Operating expenses reduced by 7% to 733.8 million
- Loan loss provisions reduced by 24% to 56.4 million
- The Group swung into profit, from a loss of 178m to 39m profit, an increase of 122%
The Group, through its property development subsidiary has managed to complete the sale of its largest project, Komarock Heights apartments in Komarock estate (480 units) and also commenced on its titling process which once completed will catalyze the collection of receivables and closure of the project. The business continues to aggressively accelerate sale of its property projects, having sold over 1100 houses over the last 2 years.
The lender is looking to sustain its growth momentum by accelerating the growth of its new engines of growth (SME and Retail Banking), aggressive NPL collections, mobilization of inexpensive CASA deposits to power growth on the lending side, and accelerate non-funded income.
“Our strategy must remain adaptive particularly in relation to the needs of our customer base, our product and service offering and our capacity to manage future disruption risks. These ongoing adaptions will be key in cementing our value proposition to our customers and shareholders,” Group CEO Robert Kibaara added.
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