HF Group Rebounds to Profitability in 2022

HF Group has posted a net profit of Sh256.7 million for the full year ended December 31, 2022, a major bounce back in earnings from a loss of Sh682.7 million posted in 2021.

The Group’s banking subsidiary, HFC, improved its performance, resulting in a rise in profit after tax of 147% to Sh178.2 million from a loss of Sh381.3 million in 2021.

While interest expenses rose marginally by 1%, or Sh15 million, net interest income increased by Sh347 million to Sh2.16 billion.

Interest-earning investments increased by Sh3.6 billion, and their average yield increased from 9.6 percent in December 2021 to 10% this year.

Deposits grew by Sh1.5 billion during the period that was characterized by the steep rise in interest rates.

“Our performance reflects the relentless focus we have put on our business transformation strategy. Our diversification to full service banking has seen the Group maintain a flat interest expense line while growing customer deposits and significantly increasing our funded and non – funded income,” said HF Group CEO, Robert Kibaara.

The Group’s overall expenditures decreased by Sh472 million (14% year over year) despite a staff cost increase of 13% to support new business divisions, demonstrating the success of a cost optimization program.

“We continue to invest in people and technology, speeding our capacity building and digital transformation in order to enhance customer experience,” he said.

Foreign exchange income rose by 182 percent underscoring the bank’s new focus on the SME market as the benefits of full-service banking continue to stream in.

All of the Group’s subsidiaries saw revenue increases, with the property development subsidiary’s revenue increasing by Sh321 million thanks to increases in project management fees and commissions.

The bancassurance subsidiary of the Group, HFBI, reported a 12% increase in profit before tax to hit Sh47.5 million.

As a result of revenue diversification and the expansion of its full-service banking, the Group CEO has exuded confidence in sustained profitability across every business unit.

“As we embark on 2023, we have an optimistic outlook on our performance. Revenue diversification is expected to accelerate as the Group continues to roll out SME and Personal Banking offerings and project management initiatives, and this is expected to continue facilitating access to cheaper funding for the franchise,” Kibaara said.