HF Group has recorded a Ksh332 million net loss in nine months for the period ending September as compared to a Ksh159.7 million profit in 2017.
The management attributes the slump to reduced lending and loan defaults.
The stock of gross non-performing loans went up by 10.3 per cent to Ksh8.9 billion from Ksh8.1 billion in 2017 while loan uptake went down by 11.2 per cent to Ksh45.4 billion.
The total interest income declined by 14.1 per cent to Ksh4.6 billion. Customer deposits for the period recorded an increase of 3 per cent to Ksh34.6 billion up from Ksh33.6 billion in 2017.
The lender’s interest expenses declined 11.7 per cent to Ksh2.8 billion while customer deposits rose by three per cent to Ksh34.6 billion.
“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 turn around the business,” said HF acting CEO Sam Waweru.
In a turnaround strategy, the lender aims at shying away from engaging in real estate business where it has been a big financier.
“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,” Said Mr Waweru.
Waweru says that the Group has also stepped up efforts to address non – performing loans.
“We are addressing NPLs by employing new and aggressive strategies to ensure that the recovery process has greater success and is less painful to the parties involved. These strategies have seen us collect Ksh817million from bad and doubtful debts within the last 9 months”
In July 2018, the banking arm of the group HFC Ltd launched a strategic focus on digital banking via a financial services platform dubbed HF Whizz, which the group says it is performing well.
In August, the lender announced a plan to lay off nine per cent of its employees in line with its recently launched digital banking strategy.
The Group’s Managing Director Frank Ireri noted that the restructuring would result in merger, redundancy and creation of new roles.
“By rationalizing roles, we are providing the appropriate gearing towards future growth and addressing current issues such as operating costs for the business which have remained high and hindered our ability to operate profitably,” Ireri said.
Under the new organizational structure, roles such as the finance role will be merged with those of strategy, sustainability and business performance.
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