Mortgage uptake boosts HF bottom line

October 31, 2011
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Housing Finance MD Frank Ireri/ File
NAIROBI, Kenya, Oct 31- Housing Finance wrote more mortgages in the nine months ended September 30, 2011 which enabled it to post a 62.9 percent rise in net profit to Sh407.5 million.

During the period under review, loans and advances increased from Sh18.4 billion to Sh22.9 billion while the total interest income grew by 37.8 percent to Sh2.4 billion.

“The firm posted an after tax profit of Sh407.5 million up from Sh250.1 million posted during a similar period in 2010. The firm’s pre-tax profit soared to Sh581.9 million up from Sh352.6 million,” Housing Finance Managing Director Frank Ireri said of their third quarter performance.

And as the demand for housing continues to rise, Ireri said they expect the firm to sustain growth in the last quarter of the year.

Kenya’s mortgage market is largely underdeveloped with Housing Finance being the premier mortgage lender in the country and this has in turn affected the number of working professionals taking up mortgages.

A new survey released in February this year indicated that (mortgage) loan accounts stood at a meagre 15,049, a situation that was blamed on among other factors an over 60 percent increase in property prices as well as high mortgage interest rate.

The mortgage lender, he added was positioning itself to take advantage of and cater to this demand particularly in the middle-income and lower-middle class segments of the society.

“There is still a strong demand for properties especially in the middle to middle lower segment which are our main focus. We are in the process of launching our property development arm to tap opportunities in this segment,” the MD disclosed.

Last year, the firm diversified into commercial property financing in a bid to grow its revenues by setting up a unit which finances a wide range of property types including office space, retail shopping centres, industrial usage, hospitality and educational use.

At the same time, Ireri once again reiterated their desire to explore longer term financing options so as to cushion the business from fluctuations in interest rates.

The firm has been pushing for the introduction of 25- year housing bonds targeting institutional investors such as pension funds and Real Estate Investment Trusts (REITS) to address the funding challenges facing the housing sector.

The Capital Markets Authority (CMA) has however responded to this call and is currently developing a policy that will pave way for the introduction of Real Estate Investment products in the capital markets.

Last week, CMA kicked off engagement sessions with key stakeholders to seek their input on the draft 2009 Capital Markets (Real Estate Investment Trust) Regulations and ensure that the law will meet the diverse market needs.

“Given the critical importance of implementing an effective capital markets real estate funding structure to the attainment of the objectives of the Vision 2030, the Authority is targeting to finalise the framework by December 2011 to ensure the incentives granted under the Finance Bill 2011 are fully realised,” stressed CMA boss Stella Kilonzo.

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