HF Group finally records profit after five years of losses

HF Group’s managing director Robert Kibaara. FILE PHOTO | NMG

Mortgage lender HF Group has reported its first profit since 2018, intensifying the turnaround that started with the appointment of Robert Kibaara as CEO.

Net profit rose to Sh265.5 million last year compared to a loss of Sh682.75 million in 2021 as it races to break its dividend drought.

The earnings were driven by increased non-interest income and a drop in operating expenses.

The firm reported a 28.5 percent growth in operating income to Sh3.04 billion from Sh2.36 billion.

Read: HF Group marks turnaround with Sh266 million profit

This was on the back of a 63.5 percent jump in non-interest income from fees and commission and foreign exchange trading to Sh879.69 million.

Interest from loans grew by 8.8 percent to Sh4.27 billion from Sh3.92 billion, with the lender’s loan book expanding by 4.6 percent to Sh36.29 billion from Sh34.69 billion in the period.

Mr Kibaara has attributed the growth to strong performance by its remodelled banking subsidiary, HFC, to make it into a full-service bank, whose net profit grew more than five-fold to Sh178.2 million, rising from a loss of Sh381.3 million in 2021.

“Our performance reflects the relentless focus we have put on our business transformation strategy. Our diversification to full-service banking has seen the group maintain a flat interest expense line while growing customer deposits and significantly increasing our funded and non–funded income,” said Mr Kibaara.

He took the helm of the bank in December 2018 from Frank Ireri in a transition that came as the firm announced a Sh332 million quarter three losses.

HF’s expenses declined by 14.3 percent to Sh2.84 billion on reducing costs, despite increased staff costs.

The Nairobi Securities Exchange-listed firm has been posting net losses since 2018, marking the first reversal to net profit in the first quarter of 2022.

Profitability was recorded across all subsidiaries, with the property development unit’s revenue growing by Sh321 million, supported by growth in project management fees and commissions.

The group’s bancassurance subsidiary (HFBI) posted a 12 percent growth in profit before tax to reach Sh47.5 million.

Mr Kibaara has expressed confidence in sustained profit-making across all business units driven by revenue diversification and the deepening of its full-service banking.

Read: HF Group reports first Q1 net profit in four years

“As we embark on 2023, we have an optimistic outlook on our performance. Revenue diversification is expected to accelerate as the group continues to roll out SME and personal banking offerings and project management initiatives, and this is expected to continue facilitating access to cheaper funding for the franchise,” he added.

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