HF Group (previously known as Housing Finance) has recorded a 74 per cent dip in profit for the half year ended June on the back of reduced interest income blamed on rate caps.
The lender’s net earnings in the period stood at Sh159 million compared to Sh612.5 million a year earlier.
HF’s interest income declined 18.1 per cent to Sh3.6 billion as the impact of narrowed lending margins was exacerbated by a 1.3 per cent shrinkage of the loan book to Sh52.7 billion.
“The drop in our performance is as a result of the prevailing impact of the interest rate capping law,” said HF chief executive Frank Ireri in a statement.
He added that results also show the impact of “the unfavourable macroeconomic environment that resulted in a significant drop in interest related income and an increase in interest related expenses”.
HF’s interest expenses decreased 12 per cent to Sh2.1 billion, partly reflecting a six per cent decline in customer deposits to Sh37.3 billion.
Operating expenses, including loan loss provisions, rose 8.6 per cent to Sh1.7 billion.
The company’s stock of bad debt surged 47.5 per cent to Sh7.9 billion.
