HF maintains growth path

October 30, 2008

, 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.

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