HF Group’s return to Tier 2 status in 2025 is the result of more than a decade of restructuring and recapitalization which has seen the listed lender post KSh 624 million in H1 2025 profits.
- •Housing Finance Company of Kenya was created in 1965 to promote home ownership and became the country’s leading mortgage lender.
- •It listed on the Nairobi bourse in 1992 and thrived during property booms, but its reliance on mortgages became a weakness.
- •By 2020, HF was posting losses of KSh 1.7 billion and its market share had slipped below 1 percent, reclassifying it as Tier 3.
The reasons for this turn in fortunes was multifold. The interest rate cap and a housing slowdown had driven non-performing loans from KSh 8.billion in 2017 to nearly KSh 13 billion by early 2018. To adapt, the board restructured in 2015, creating HF Group as a holding company with HFC Bank as its licensed subsidiary, creating a corporate structure that allowed for diversification while retaining its core business.
In 2019, the company hired Robert Kibaara, a banker who had spent years in C-suites at NIC Bank, National Bank, Standard Chartered, and Barclays, as its new CEO.
Kibaara set out scaling back balance-sheet property development, diversifying income, and doubling down on digital banking.
Capital reset and ownership
Early investors in Housing Finance included the Commonwealth Development Corporation (UK) and the Kenyan government, which at one time held up to 60% and 50% ownership respectively. In recent years, HF Group has restructured its core ownership to raise capital.
A 2015 rights issue raised KSh 3.5 billion, with Britam becoming the largest shareholder. Proceeds funded loan growth, the property arm’s housing projects, and capital buffers. Around the same period, the lender issued a KSh 7 billion bond in 2010 and a KSh 3 billion bond in 2012, both oversubscribed, which supported mortgage expansion. The bonds were retired in 2019 as HF exited the debt market.
In 2024, a second rights issue raised KSh 6.4 billion and was oversubscribed by 38%. Equity nearly doubled to KSh 16.8 billion, lifting core capital above the CBK’s Tier 2 threshold. The funds allowed write-downs of bad loans and technology upgrades.
Britam backed the recapitalization, while Equity Bank had exited in 2014 after selling its 24% stake to Britam.
Strategic pivots
HF Development & Investment (HFDI), the property arm, was scaled back after unsold units strained liquidity. Projects such as Komarock and Richland Pointe had boosted earnings earlier but later tied up capital.
HF now partners with developers like Mi Vida Homes and uses Kenya Mortgage Refinance Company funding for affordable housing loans. This capital-light approach has allowed HF Group to still profit from Kenya’s housing demand without overburdening its balance sheet.
Custody and bancassurance business has also expanded HF’s non-interest income, while HF Foundation has focused on training artisans to support housing projects. From a mortgage financier, the mix today is more diversified and less capital intensive.
Its H1 2025 results show the lender now has headroom to lend, with loans-to-deposits at 74% and equity-to-assets at 21.8%. Priorities include expanding SME and retail lending, growing fee businesses, and controlling costs. The main risks are expense growth and dependence on interest income, which still provides more than two-thirds of revenue.
