HF Group’s first-quarter profit before tax increased to KSh470.5 million during the quarter to March 31, 2016 a 47% increase compared to KSh320.4million over a corresponding period in 2015. The firm attributes the growth to rise in interest income from its banking subsidiary HFC and income from housing projects by HFDI.
During the quarter, the Group’s profit after tax and exceptional items rose 50 per cent to KSh327.4 million from KSh221.5 million in the first quarter of 2015. The growth was attributed to increase in net interest income that increased from KSh782.5 million in 2015 to KSh1 billion in the three months to 31 March 2016.
“From our set of first quarter results, it is evident that we have gathered momentum since our restructuring exercise in August last year,” said Frank Ireri, HF Group Managing Director.
The company’s loan book grew by 12% to KSh53.4 billion from KSh47.7 billion in a similar period in 2015.
Customer deposits on the other hand increased by 24 per cent to KSh41.1 billion from KSh34.3 billion in 2015 on account of increased customer numbers.
The Group also increased its holding of government securities from KSh255 million to KSh4.2 billion both to take advantage of the improved yields on Government paper as well as building a sinking fund towards liquidation of the first tranche of its Corporate Bond expected in October 2017.
The Group Non-performing loans increased during the period to KSh4.5 billion from KSh3.8 billion in 2015 on account of delayed liquidation of some project loans whose conveyance process is in progress and expected to be paid off during the year. The Group MD explained that this was expected to reduce gross NPL level to 7%. The quality of Core Residential Mortgage business remained stable.
Total operating expenses increased from KSh671 million to KSh773 million on account of increased amortization cost due to commissioning of the new Core Banking System and other business software in the current year.
From the above the company achieved annualised Earnings per Share of KSh3.75, a 50 per cent increase compared to KSh2.54 reported over a similar quarter last year
During the quarter, HF Group launched a new Core Banking System that will enhance customer service and experience.
“This system will enable us to truly personalise our offering because we get a full view of our customers and their individual transactions, trends and needs. We now have a much stronger capacity to track our own performance against our customers’ expectations and to ensure we keep our promises,” said Ireri.
Among the services that are now available following the rollout of the new system include mobile banking through a new Mobile App, salary advances and instant alerts on transactions. Internet Banking is scheduled to be rolled out within the year.
The Group, through its banking subsidiary HFC has also embarked on a branch expansion plan in support of its commercial banking strategy. The new branches that are set to commence operations within the second quarter of the year are Komarock (opened on 18th April 2016), Machakos, River Road, Hurlingham and Ongata Rongai. ‘’These areas have high potential and the clientele fits into our long-term strategic plan,’’ Mr Ireri said.
These and other branches that are planned for opening in the course of this year will bring to 30 HFC’s branches by end of this year. HFC is also in plans to start offering its services through agency banking. It expects to start contracting agents in the fourth quarter of this year.