With profit growth slackening, Housing Finance has embarked on its Vision 2020 strategic plan and has brought on board multinational management consulting firm, McKinsey, to guide its growth plans.
The Group posted an after tax profit of Kshs 221.5 million, up a measly 0.1% from Ksh221.1 million posted in 2014. The net non-performing loan stood at Ksh2.8 billion up from Ksh2.5 billion in 2014.
Managing Director Frank Ireri said the firm, which is celebrating its 50th anniversary, needs to accelerate growth to remain relevant in the competitive financial services industry. “McKinsey has been hired to support Housing Finance’s next phase of growth details of which will be communicated later in the year,” said Mr. Ireri.
Housing Finance recently raised Ksh3.5 billion through a rights issue, funds which will be used to fund growth and expansion plans. About 90% of the money raised will be geared to bolstering the bank’s lending capacity.
Housing Finance banking loans accounted for 44% of all disbursements in the first quarter of 2015, signifying the firm’s reducing reliance on the traditional mortgage business.
In the year to March, Housing Finance disbursed Ksh2 billion worth of banking related loans against Ksh2.5 billion worth of loans for mortgages and construction. Mr Ireri said it expects its banking business to record further growth during the year.
“Housing Finance banking strategy entails opening branches in areas where the group is financing a major commercial or residential development. The banking strategy is also expected to focus on growing its retail customer base as a source of affordable funds,” said Mr Ireri.
The firm is planning to establish at least 30 branches by the end of 2016, up from the current 18 branches. Its key banking products include overdrafts, short-term loans, insurance premium financing and asset finance. The firm plans to roll out leasing services during the course of the year.
During the first quarter, loans and advances to customers increased to Ksh47.6 billion up from Ksh37.2 billion in 2014. Customers’ deposits increased to Ksh33 billion up from Ksh28.5 billion. Income from loans and advances grew to Ksh1.6 billion from Ksh1.2 billion.