NAIROBI, October 30 – Mortgage lender Housing Finance has posted a 36 percent jump in third quarter profit, recording Sh128.6 million pre-tax, up from Sh94.7 million during a similar period last year.
The firm’s Managing Director Frank Ireri said the growth was on the back of an increase in disbursements of loans, increased customer deposits coupled with prudent management of its non-Performing loans portfolio.
“We attribute the good results to our on-going strategy that revolves around having the right products for each market segment, becoming a major player in the supply of property, bolstering the capital base and achieving operational excellence,” said Mr Ireri in a statement.
The profit after tax increased to Sh89. 7 million, up from Sh66.3 million posted in the period ending September 30 last year. Net interest income also increased to Sh571 million from Sh517 million.
Customer deposits increased to Sh9.2 billion from Sh8.3 billion during a similar period last year, while loans and advances increased to Sh774.8 million up form Sh637 million.
The company’s Non Performing Loans (NPL) book continued to improve with its ratio to total loan book coming down to 12 percent from a high of 18 percent at the beginning of the year. Mr Ireri attributed the improved NPL book to introduction of a more robust loan approval process and effective recovery and collection procedures undertaken by the Company.
“Housing Finance has increased its lending capacity by an additional Sh30 billion which should greatly bolster its loan book and hence improve its bottom line as a result of higher interest income. The firm projects that its loan book will grow by at least 40 percent this financial year,” said Mr Ireri.
He said following the successful Rights Issue that raised Sh2.3 billion, the mortgage firm is now able to increase its deposit base by an additional Sh25 billion which will significantly increase its lending capability. “The additional deposit taking and the resultant enhanced lending capacity will significantly boost Housing Finance’s capacity to participate in the property development sector in Kenya,” said Mr Ireri.
Housing Finance is reviewing various large scale housing projects that have capital investment requirements of up to Sh1.5 billion so as to meet its charter for affordable housing of 30,000 units annually.
Mr Ireri said plans of revamping its subsidiary, Kenya Building Society, are at an advanced stage and that Housing Finance will work with its partners to undertake large scale housing projects. “We shall seek to enhance partnerships with developers, professional firms, land owners and investors for large scale housing estate delopments,” he said that the investment rationale for this asset class will largely be driven by volume-driven profitability.
Housing Finance is projecting demand and development of Housing to grow at a steady rate despite the current crunch in the market.
Mr Ireri said that despite the momentary slowdown witnessed over the past few months, the property development sector will witness a high growth trajectory in the long term as the sector is capital intensive which leaves little room for few speculators seeking quick returns.