Housing Finance Group has received a Ksh 1 billion Capital Injection from its majority shareholder Britam Holdings to back its diversification, moving towards a full-service offering.
Housing Finance CEO says the company will commit a majority of the fresh funds to extend credit to retail and SME players, terming the investment as a vote of confidence.
“The investment comes on the back of a turnaround strategy that is poised to see the business transform into a full-service bank. This is a major vote of confidence informed by the results already being witnessed through our business transformation initiatives.” said CEO Robert Kibaara.
Housing Finance Group will also use the funds to finance affordable housing finance projects. A company statement shows that the company is financing buyers of the Park road affordable housing projects, including real estate developer Tecnofin, currently developing 1,562 units.
“The group has signed agreements with the National Government to finance buyers of Park Road affordable housing projects and private sector developers, including real estate developer Tecnofin Limited, which is developing 1,562 affordable housing units in Pangani,” reads the company’s statement.
Housing Finance’s Turnaround Strategy
The capital boost comes at a time when the company is moving away from real estate as a core income stream, given the sectors’ performance which has left the company exposed to high defaults and Non-performing loans. The group reported NPL of Ksh 11.2 billion in 2020 Q3, which had improved from Ksh 12.6 billion in 2019 Q3 unaudited results.
Nevertheless, the bank is now moving towards new channels of growth in retail and SME lending, and strengthening its focus in personal, diaspora and institutional banking.
In an interview with The Standard, CEO Robert Kibaara said the company is not going to fully exit the property development market. Isntead, it will not involve itself directly in new projects.
A major component of its turnaround strategy involves cost rationalisation, recapturing mortgage leadership and building direct sales.
In November, Housing Finance gave a profit warning projecting that its results for the year ending December 2020 could be lower than those of 2019, following a net loss of Ksh 730.1 million in 2020 Q3.