Housing Finance Group reports a 9 month pre tax loss of Ksh. 325 Million
The Housing Finance Group yesterday reported a pre-tax loss of Ksh. 325 Million for the period ending 30th September 2018. This is as compared to Ksh. 231 Million profit for a similar period last year.
The drop in profitability was explained to be as a result of slow down in the real estate credit growth and a tough operating environment that resulted in an increase in the non-performing loans.
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In this period customer deposits increased by 3% to Ksh. 34.6 Billion. Loans and advances declined by 11% to Ksh. 45.4 Billion. This led to a decline in the net interest income to Ksh. 1.7 Billion. This was attributed lower loan interest and investment income in the period. Non interest income also decreased by 7% due to lower property sales and credit fees from loans during the period.
Total non performing loans increased during the period to stand at Ksh. 8.9 Billion up from Ksh. 8.1 Billion. This was due to unfavorable macroeconomic factors that affected the financial and real estate sectors. Adoption of the International Financial Reporting Standards (IFRS 9) also meant that the group had to make a higher loan loss provision.
The Group Managing Director, Sam Waweru had this to say about the results, “Whereas the performance is attributable to several macro-economic factors that have adversely affected business, we have a revamped strategy that aims to diversify and turnaround the business. Previously, our strategy was anchored on real estate and property finance business; however, our future strategy includes diversification that includes investment in digital and full service banking capacity in order to grow revenue streams as we reduce reliance on a monolithic business.”