HF Group issues profit warning on declining interest income

Housing Finance Group Plc on Friday issued profit warning that their earnings will be lower for FY 2018 compared to FY2017 after posting a 9-month loss.
It cited tough operating circumstances that led to a decline in interest income after the Central Bank Rate (CBR) was revised from 9.50% to 9.00% in July.
“Further, the trading environment continued to be unfavourable, leading to a slowdown in the real estate sector credit growth. The tough operating circumstances have led to an increase in the non-performing loans position, which has also adversely affected the business performance,” said Sam Waweru, the Acting Group Managing Director.
The also said the redundancy exercise which they took during the year increased the staff cost due to the ‘one-off payout exercise’.

In its unaudited financial statements and other disclosures, the bank reported a pretax loss of Ksh 325.65 million for the nine months to end-September, compared with Ksh231.87 million profit in its previous financial year.
Its net non-performing loans rose to Ksh 5.15 billion from Ksh 5.12 billion, while net interest income fell to Ksh1.8 billion from Ksh 2.18 billion.
Its liquidity ratio fell to 22.89% from 26.03%. The statutory minimum was reported at 20%.
The group says it is focusing on strategic initiatives whose success will drive profitability in future. “Continued focus investment in digital channels to enhance accessibility, focus on customer service and experience excellence, deepening of the full-service banking value proposition, aggressive collections on the non-performing loans and scaling up on the provision of affordable and decent housing.”