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Housing Finance Puts Bond Issue On Hold As Half-Year Profit Grows By 19 Percent

July 18, 2014

James Waithaka



Mortgage lender Housing Finance has put on hold plans to raise debt through a bond "in the short term", it announced yesterday, saying interest rates are still high.

The lender, which grew its half-year net profit by nearly a fifth for the period ended June 30, has the Capital Markets Authority's approval to float a Sh20 billion bond by 2016.

HF said Kenya's first sovereign bond, which raised $2 billion (Sh175.5 billion) last month and was oversubscribed four-fold, has not dampened interest rates yet.

"... the firm does not plan to market its Sh20 billion bond issue in the short term as the debt market is still expensive. Despite the successful Eurobond, the 90-day Treasury bill is trading at a high of 11 per cent," managing director Frank Ireri said in a statement.

The NSE-listed lender will instead set up a non-trading holding company that will "launch new lines of businesses" to cut reliance on interest income. It will rebrand before year-end.

HF's recently revived house building subsidiary and a new venture into bancassurance steered its after-tax profit for the six months to Sh474.44 million from Sh397.12 million in a comparable period last year, a 19.5 per cent growth.

Kenya Building Society and Housing Finance Insurance Agency pushed the group's total non-interest income up by nearly two and a half times to Sh504.3 million from Sh148.41 million. This includes Sh17.09 million earned from forex trading from zero in the first half of 2013.

The mid-tier lender now looks headed to cross the billion-shilling mark in full year net profit for the first time despite net interest income dipping by 2.9 per cent to Sh1.34 billion in the half-year period from Sh1.38 billion a year ago.

HF, which controlled a market share of 1.46 per cent in banking sector as at December 31, saw its earnings from government securities dip by 49.3 per cent to Sh17.58 million in the period from Sh34.70 million.

The firm's loan book grew to Sh38.81 billion in the period compared to Sh32.48 billion in a similar period in 2013. However, gross non-performing loans jumped by 31.6 per cent to Sh3.87 billion from Sh2.94 billion, for which it blamed the "ongoing reforms at the lands office".


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Source: AllAfrica


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