Mortgage financier HF Group has reported a 24.3 per cent drop in net profit in the year ended December 2016, hurt by reduced property sales.
The company’s net earnings stood at Sh905.8 million in the period compared to Sh1.1 billion a year earlier.
This came as “other income”, largely property sales, dropped 43.9 per cent to Sh430.4 million.
Chief executive Frank Ireri said the company’s property development unit HFDI has Sh1 billion worth of transactions tied up at the lands ministry where operations have slowed down.
The company also blamed slow property transactions on the 51.1 per cent jump in gross non-performing loans to Sh6.1 billion, leading to 38.7 per cent rise in loss provisions to Sh699.1 million.
“The stalemate and reforms at the lands office has … caused massive delay in matters related to change of user process, subdivisions and amalgamations,” Mr Ireri said in a statement.
“This has affected closure of our projects, with some such as Komarock 5A, completed in 2013 yet to be fully closed.”
HF declared a dividend of Sh0.5 per share, down from previous year’s Sh1.3 per share. The conservative payout comes ahead of the maturity of its Sh7 billion corporate bond on October 2.
The firm’s loan book expanded 2.7 per cent to Sh54.4 billion, helping to raise total interest income 6.2 per cent to Sh8.6 billion.
Interest expenses increased 4.1 per cent to Sh4.6 billion despite customer deposits declining 8.5 per cent to Sh38 billion, indicating higher rates offered to depositors.