, NAIROBI, Kenya, May 30 – HF Group has posted a 73 percent drop its first-quarter profit before tax, to hit Sh129 million during the quarter to March 31, 2017, down from Sh470 million over a similar period in 2016.
The Group has attributed the performance to the interest rate capping law that resulted in significant drop in interest-related income and an increase in interest related expenses.
Net interest income declined by 20 percent from Sh1 billion in a similar period last year, to Sh798 million.
Loans and advances to customers increased by 2 percent to Sh54.6 billion, from Sh53.4 billion.
Non-performing loans increased during the period to Sh7.78 billion from Sh4.5 billion in 2016 due to stalled property transactions at the lands office and unfavorable macro-economic conditions.
Total operating expenses increased by 9 percent on the back of increased provisions for the non-performing loans.
The Group’s liquidity was however maintained above the statutory minimum, despite the challenges experienced during the quarter. The liquidity position is expected to further improve on the back of debt facilities of approximately Sh4 billion expected by the third quarter.
The performance is however expected to pick up during the second quarter, with the Group Managing Director attributing the expected outcomes to the expected completion of Komorock Heights and Richland projects.
He also explained that normalisation of the property conveyance process at the Ministry of Lands Registries will benefit the Group by releasing funds tied in incomplete transactions as well as improve asset quality as financed projects are closed.
“We expect the transactions at the lands office to normalise during the second half of the year, which will enable us to close the projects we financed which, though completed the conveyance process has been delayed for a very long time,” Ireri said.