HF Group reports 134% H1 net profit surge to KSh 624 M, fueled by government lending, income diversification, and strengthened capital structure.

Lending to Government Propels HF Group to 134% Profit Growth

Nairobi, Kenya — August 26, 2025 — Kenyan mortgage financier HF Group has reported a 134 percent surge in half-year net profit, largely driven by higher returns from government securities amid a sluggish private credit market.

Strong Profit Growth on Safer Assets

The lender’s net earnings rose to KSh325.1 million ($2.5 million) for the six months ended June 2025, up from KSh138.8 million ($1.1 million) in the same period last year. This performance was underpinned by a 40 percent jump in interest income, with a substantial share derived from investments in Treasury bills and bonds.

“Government paper continues to provide a stable and attractive return profile at a time when private sector lending carries elevated risks,” HF Group CEO Robert Kibaara said in a statement.

Shift Away from Mortgages

Once a dominant player in Kenya’s residential mortgage market, HF Group has in recent years scaled back risky property lending. Instead, it has redirected funds toward safer government securities, aligning with a broader industry trend as commercial banks seek predictable yields.

The Group’s loan book shrank modestly, highlighting challenges in Kenya’s real estate sector, which continues to face high default rates and sluggish demand for new housing loans.

Market Context

The strategy reflects wider shifts in Kenya’s financial sector, where institutions are capitalizing on elevated yields on government debt, a result of persistent budget deficits and heavy domestic borrowing by the Treasury.

According to the Central Bank of Kenya (CBK), yields on 91-day Treasury bills have averaged above 15 percent this year — levels unseen in over a decade — making them especially attractive to lenders.

Looking Ahead

Analysts note that while HF Group’s repositioning strengthens short-term profitability, overreliance on government securities could limit future growth if yields decline.

“The real test will be whether HF can balance this conservative strategy with renewed innovation in housing finance — an area where it once set the pace,” said George Bodo, an independent financial analyst in Nairobi.

Conclusion

HF Group’s strong half-year results underscore the growing role of government debt as a safe haven for Kenyan lenders, even as it raises questions about the long-term trajectory of the country’s mortgage sector.