Integrated property and financial services provider, HF Group has boosted the capital base of its banking subsidiary HFC by Ksh3.7 billion to Ksh7.9 billion as it gears for its next phase of growth.
HF Group injected the funds from the recent rights issue which raised Kshs 3.5 billion and from the current year profits. The increase in capital means that the banks capability of lending and deposit taking also increases. The Group has posted an after tax profit of Ksh777.4 million up from Ksh709 million in the third quarter of 2015, representing a 10% growth.
Loans and advances to customers increased to Ksh51.7billion up from Ksh43.2 billion posted during a similar period in 2014. Customer deposits increased to Ksh37.5 billion up form Ksh33.1 billion.
HF Group Managing Director Frank Ireri said the full service banking subsidiary plans to increase its customer base and support delivery of a broader range of products and services. “Investments to support the banking strategy are expected to contribute positively to the profit trajectory of the Group in the next financial year. HFC will roll out a campaign to increase its deposit base in the next financial year,” said Ireri.
Total non-interest income however dropped to Ksh401.8 million down from Ksh692.2 million. The drop was as a result of a one off gain made from disposal of an equity investment in 2014. Additionally, in prior year there were sales of housing units by its development arm, HFDI but none in the current year.
“However, there are several housing projects which are expected to be completed by year end which will boost this income stream,” said Ireri.The projects expected to contribute to the income stream include Komarock 5B and K Mall.
The Group has increased its retained earnings to Ksh3.9 billion up from Ksh2.5 billion. Gross non-performing loans decreased to Ksh4 billion down from Ksh4.3 billion. HF Group is currently testing a new core banking system that is expected to improve efficiencies and deliver new product offerings to customers.
“The core banking system will enable the bank roll out future technology driven products, provide comprehensive business functionality and enhance customer experience,” said Mr Ireri.
In July, HF Group established HFC Limited to carry on the business of mortgage finance as well as banking services under the Banking Act. HFC is targeting to grow its branch network to a maximum of 40 branches by 2018 in major cities, focusing on emerging property hotspots and near its developments.
The firm’s banking strategy currently entails opening branches in areas where the group is financing a major commercial or residential development. HFC is targeting to be a Top 10 commercial bank by 2020. To create the next wave of growth, HFCplans to focus on its core mortgage lending and banking efforts on the under-penetrated, upper-middle income and affluent market segments.
The company also plans to continue growing its full service retail banking offering, rapidly scale up HFDI to feed mortgage opportunities to HFC, make home ownership possible for the lower- and mid-middle income segments in urban areas by creating a low-cost housing mortgage market and develop a corporate banking niche in commercial mortgages and loans, project finance, asset finance and employee loan schemes.
HF Group’s property development subsidiary, HFDI has commenced development of phase one of Komarock Heights consisting of 480 apartments. HFDI will in the fourth quarter of the year also embark on the construction of four housing projects in Nairobi that will consist of a total of 1,664 apartments and will commence a site and service scheme of l,030 plots. “These projects are further expected to contribute to the growth of HF Group in the medium term,” said Mr Ireri.
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