- Liquidity position improves by 26% on the back of aggressive collections
- Group is optimistic about second half of financial year as faster property conveyance is poised to unlock pipeline of projects
- Group is well prepared to payback bond holders in October 2017
Nairobi, August 16th 2017 – HF Group posted half year after tax profit of Kes 159 million for the period ending June 30, 2017, representing a 74% decline compared to a similar period in 2016.
Total Interest income declined by 18.2% over the period under review to Kes 3.68 billion down from Kes 4.497 billion recorded in 2016. Correspondingly, net interest income also declined by 25% from Kes 2.086 billion in a similar period in 2016 to Kes 1.559 billion.
Total operating expenses increased by 8.6% on the back of increased provisions for the non-performing loans. Non-performing loans increased during the period to Kes 7.914 billion from Kes 5.363 billion in 2016 due to stalled property transactions at the lands office and unfavourable macro-economic conditions.
“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.
Customer deposits declined by 6% to Kes 37.357 billion down from Kes 39.752 billion recorded in 2016. Loans and advances to customers also decreased by 1.3% from Kes 53.46 billion in 2016 to Kes 52.76 billion in 2017.
The Group’s liquidity position improved to 26.4% in 2017 up from 21.77 % 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.
Positive outlook for second half
The business is however optimistic that the Group’s performance for the second half of the year will be positive as the property conveyance processing at the Ministry of Lands Registries is expected to normalize. The long delays previously experienced have started to decline.
The Group has embarked on initiatives to improve customer service, which will ensure that customers enjoy enhanced accessibility and experience when transacting.
The Group through its banking subsidiary has introduced a 24-hour call centre and continues the roll out of internet banking and mobile app solutions commenced in the second quarter of the year.