- The firm's gross earnings grew to Sh39 million during the quarter against a pre-tax loss of Sh178 million in 2021
- Non-Performing Loans were reduced by Sh2.1 billion year on year, a 20 per cent reduction.
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HF Group swung to profitability in the first three months of 2022, ending close to a five-year loss run on lower loss provision.
The listed mortgage firm reported a net profit of Sh34 million in the period under review which is still far less compared to a Sh191 million loss same period last year.
The firm's gross earnings grew to Sh39 million during the quarter against a pre-tax loss of Sh178 million during a similar period in 2021.
HF Group chief executive officer Robert Kibaara said 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.
“Despite the complex impact of the Covid 19 pandemic, our strategy is paying off and our performance is now moving on the right trajectory,'' Kibaara said.
He added that diversification into full banking has led to significant revenue growth, and an increase in inexpensive current and savings account deposits, hence a significant reduction in the 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”, Kibaara said.
All the Group’s operating subsidiaries (HFC, HFDI and HFBI) registered a profit.
The banking subsidiary, HFC, posted a reduction in its non-performing loan book by Sh2.1billion Year-on-Year from Sh10.5 billion to Sh8.4 billion, resulting in a reduction in loan provisions which has improved profitability.
The firm's property development subsidiary has managed to complete the sale of its largest project, Komarock Heights apartments in Komarock estate (480 units), and also commenced its titling process which once completed will catalyse the collection of receivables and closure of the project.
The group recorded a 10 percent growth in net interest income to reach Sh520.1 million while its non-funded income rose 87 per cent to 252.7 million.
Its total operating income grew 27 per cent to Sh772.8 million thanks to the new business segments of SME, Personal Banking, Diaspora, and Institutional Banking which contributed positively to the Group's profits.
Non-Performing Loans were reduced by Sh2.1 billion year on year, a 20 per cent reduction.
Operating expenses were reduced by seven per cent to Sh733.8 million while loan loss provisions were reduced by 24per cent to Sh56.4 million.
The business continues to aggressively accelerate the sale of its property projects, having sold over 1100 houses over the last two 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, mobilisation of
“Our strategy must remain adaptive, particularly in relation to the needs of our customer base, product and service offering, and capacity to manage future disruption risks,'' Kibaara said.