Attn: News/Business Editor27th March 2017
For Immediate Use
HF Group registers pre-tax profits of KShs. 1.4 billion
NAIROBI... Integrated financial services provider HF Group registered a pre-tax profit of KShs. 1.4 billion in the year ending 31st December 2016. This was despite a drop in property sales and a difficult operating environment.
Net interest income grew to KShs.3.9 billion during the twelve months compared to KShs.3.6 billion over the same period in 2015.
Non-interest income dropped 35 percent to KShs. 755.5 million from KShs. 1.17 billion the previous year. The drop was attributed to the effects of lower property sales, reduced lending
and a drop in forex trading income.
The company’s loans and advances to customers increased to KShs. 54.5 billion up from KShs. 53 billion over the same period last year.
Insider lending to directors, shareholders and associates went down by 20% from KShs. 735 million to KShs. 582 million as at the end of 2016.
Customer deposits dropped to KShs.38.8 billion during the period under review compared to KShs.41.9 billion in 2015. This was attributed to adverse market conditions that saw a number of wholesale depositors transfer their deposits to tier 1 Banks and Government securities.
The Group attracted (Read Borrowed) KShs. 2.74 billion from two financiers during the period for onward
lending to small and medium enterprises.
The total borrowed funds grew to KShs. 19.7 billion as at the end of 2016 from KShs.18.5 billion in the previous year.
Ireri said the Group’s banking subsidiary, HFC, continued with its strategic transformation programme that saw it open 7 additional branches in 2016 and also roll out a modern core banking. The Group expects to optimize these investments in the coming years.
“Following the successful expansion and ICT modernization programme, HFC will now leverage on technology to roll out additional retail and corporate banking products, focus on alternative channels, better efficiencies and customer service to lead to growth of non-interest income as well as cost management” said Ireri.
In the year under focus, HFC, the banking subsidiary of the Group, grew its Trade Finance related business 390 percent from KShs. 256 million to over KShs. 1 billion.
The bank is preparing to liquidate the 1st tranche of the bond issued in 2010 and has invested KShs. 4.1 billion in government securities.
The balance will be raised through debt refinancing 
and enhanced collections.
The MD added that the capital ratios remain robust and HFC is adequately capitalised at KShs. 8 billion giving it enough room to support growth.
Non-performing loans increased to KShs. 6.2 billion from KShs. 4 billion in 2015. The growth was attributed to adverse macro-economic conditions that saw incidences of default increase in the market as well as intermittent stoppage of operations at the land registries that resulted in delay of closure procedures of project finance facilities.
The Group’s development subsidiary, HFDI, has also been impacted by the delays at the lands office, with property sales proceeds of over KShs. 1 billion yet to be unlocked.
“The stalemate and reforms at the lands office has dragged on for more than 3 years and this has caused massive delay in matters related to change of user process, subdivisions and amalgamations. This has affected closure of our projects, with some such as Komarock 5A,
completed in 2013 yet to be fully closed,” said Ireri.
We expect to property related business to pick up in the second half of the year when transactions at the lands office are expected to normalise.
The Group has invested KShs. 3.2 billion in its fully owned and joint venture housing projects.
These projects include Clay City comprising of 560 units, Richland a 248 – unit project, Kahawa Downs and Theta Grove.
The total operating expenses increased by just 7% over the period to KShs. 3.3billion from
KShs.s.3.1billion in 2016 indicating good cost management.
Earnings per share dropped to KShs. 2.59 during the period compared to KShs. 3.43 in 2015 on account of lower profit. The Group proposes to pay a first and final dividend of KShs. 0.50 per share.
-Ends-
About The HF Group
HF Group is an integrated financial and property services provider with interest in real estate development, property finance, banking and assurance
HF Group is the non- operating holding company for; HFC which primarily focuses on Banking and Property finance, HFDI deals in real estate development; HFIA serves as an insurance agency and HF Foundation the Corporate Responsibility Investment arm. HFC Limited was licensed by the Central Bank of Kenya on August 2015 to carry on the business of property finance as well as banking services under the Banking Act.
HF Group’s mission is to remain the leading integrated solutions enabler for the property industry. Its business is anchored on multiplatform solutions across the property value-chain as suppliers and financiers that offer unique solutions to all while being environmentally
responsible.
-- ENDS --