Housing Finance Managing Director Frank Ireri attributes the drop to high cost of credit for many customers.
He said the scramble for players to keep pace with credit growth in a high cost of funding environment led to an increase in interest rates for borrowers in the market.
“The results for the third quarter are on the whole pleasing given the continued difficult trading environment. The period was quite difficult for our customers who were exposed to the rising cost of credit,” said Ireri.
Gross Non Performing Loans (NPL) as a result of rising interest rates increased to Sh1.97 billion during the period compared to Sh1.57 in September 2012, representing a 26 percent increase.
The rise in NPLs is attributable to the increase in the interest rates in the market as a result of the tight monetary policy in the market.
Loans and advances increased to Sh28.8 billion up from Sh22.9 billion representing a 26 percent growth. Total interest income increased by 52 percent to Sh3.71 billion up from Sh2.44 billion realised the previous year.
Total operating expenses however declined marginally by four percent to Sh999 million from Sh1.03 billion.
The firm’s total interest expenses increased by 123 percent to Sh2.35 billion up from Sh1.05 billion during a similar period in 2011. Customer deposits increased by 29 percent to Sh24.01 billion from Sh18.65 billion during a similar period in 2011.
Following the success of the Bond Issue of Sh5.2 billion against a target of Sh2.9 billion, Housing Finance plans to re-introduce part fixed mortgages as it moves to grow its mortgage business.
The mortgage financier is targeting the lower and middle income segments of the market where there is an acute housing shortage.
“Going forward, we intend to focus on our two key growth pillars which are funding and supply of houses. On the funding side we will continue to explore a mix of affordable funding options and for on the supply side, we will ensure that there are houses in the market which the Kenyan populace can afford,” Ireri said.