Kenyan mortgage lender Housing Finance posted a 65 percent rise in its nine-month pretax profit on Monday and said it was seeking to float a 25-year housing bond to help address funding bottlenecks arising from interest rates.
Pretax earnings for the second-largest mortgage lender in Kenya rose to 582 million shillings ($5.8 million) from 325 million shillings in the same period last year. The mortgage book grew by 24 percent to 22.8 billion shillings.
Frank Ireri, Housing Finance’s managing director, said he expected profit growth to be sustained into the fourth quarter, helped by strong demand for housing in the middle and lower end of the market.
“There is still a strong demand for properties especially in the middle to middle lower segment which are our main focus,” Ireri said.
Concerned with the huge fluctuations in short-term funding instruments, Ireri said he was considering floating a 25-year housing bond targeting pension funds and real estate investment trusts.
“Access to long-term financing will insulate the housing finance system from market fluctuations associated with short-term funds,” Ireri said in a statement.
The mortgage lender raised 7 billion shillings through a 7-year bond issue in October last year. The bond had a fixed rate set at 8.5 percent and a variable rate pegged at 3 percent above the 182-day Treasury bill rate.
Net interest income rose 34 percent to 1.39 billion shillings, despite customer deposits dipping 14 percent to 532 million shillings.
The mortgage lender said in September that shilling depreciation was slowing the flow of real estate developments and could hurt the industry as construction material costs rise.