Housing Finance records 74% jump in profit as it announces progress in securing long term funding

February 22, 2012 … Housing Finance has defied an economic downturn to post an impressive 74 percent jump in profits for the full-year 2011 of Kshs 975.8 million compared to Kshs 561 million the previous year.

The firm’s Profit after tax grew by 64 percent to Kshs 622.2 million up from Kshs 379.5 million in 2010. The directors have recommended a final dividend of 0.70 in addition to the interim dividend of 0.50 resulting in a dividend yield for 2011 of 9.7%.

Managing Director, Housing Finance, Mr. Frank Ireri, attributed the shining performance to prudent cost management and brand positioning, both which helped cushion the firm from the current economic shocks.

The MD said the firm is making good progress in securing long term stable funds to sustain the growth momentum in 2012 and beyond. “We are optimistic that we can maintain the growth curve in the current financial year on the back of Long term financing which will shield the company from current market fluctuations in the money market,” said Mr. Ireri.

Housing Finance also plans to roll out current accounts to its customers in the first quarter of 2012. This will result in reduction in funding costs and at the same time increase the level of deposits available for mortgage lending.

The MD said the move to adjust its lending rate by only 2 percent to 16.5 percent for its existing customers has helped keep a clean mortgage book. Housing Finance Net Non-Performing Loans book is at an all time low of 3.8 percent.

The firm however identified the high fuel and food prices; interest rates increases, forex rate decline, heated political climate following ICC confirmations and heavy government borrowing as some of the factors that impacted on performance in 2011.  The National Elections, inflation, Europe crises and the war in Somalia are key factors expected to shape performance in 2012.

Despite the increase in interest rates that pushed many investors to invest in government securities which offer higher returns, the firm managed to increase its customer deposits by 17 percent to Kshs 18.6 billion from Kshs 15.9 billion in 2010.

The growth in deposits is largely attributed to an aggressive consumer campaign last year for its Cross Over saving account which offers attractive interest rates.

Housing Finance has unveiled its 2012 – 2016 strategic plan which identifies agency banking, and Bancassurance as new growth areas. Under the strategic plan, the firm is also seeking to tap regional opportunities.

In December, Housing Finance established its first Sales and Service Centre in Kitengela with plans underway to establish similar centres in Nairobi’s Metropolis and in the counties. The firm plans to establish 100 Sales and Service Centres across the country in the next five years to tap growth in the property sector. The Sales and service centres will tap the huge business potential in terms of deposits and mortgage sales.

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