HF losses down by 75pc on increase in non-interest income

Housing Finance Group #ticker:HFCK has reduced its losses by 74.5 percent to Sh81.4 million in the first nine months of trading, supported by near doubling of non-interest income and muted operating expenses.

The reduction, from the preceding similar period’s loss of Sh325.6 million, was despite net interest income falling marginally by Sh78 million to stand at Sh1.72 billion.

The flat interest income, which majorly comes from loans and advances to customers, coincided with the period the loan book shrank by Sh6.2 billion or 13.7 percent to Sh39.2 billion in the wake of piling bad loans.

Gross non-performing loans (NPLs) jumped from Sh8.94 billion to Sh12.65 billion, showing higher defaulting. This saw the lender increase loan loss provisioning by 64 percent to Sh587 million. However, the bottom-line was helped by a rise in non-interest income by 78.8 percent to Sh1.07 billion from Sh598 million. This was hugely driven by fees and commissions on loans and advances as well as a rise in foreign income trading gain.

Operating expenses rose from Sh2.72 billion to Sh2.87 billion driven by the higher loan loss provisioning. The bank’s staff costs, however, dropped by 17 percent to Sh771.9 million reflecting the gains of reducing its headcount.