<a href="https://www.hfgroup.co.ke/">HF Group Plc</a> recently saw its banking subsidiary elevated to Tier II status, marking a pivotal milestone in its transformation journey, underpinned by a significantly strengthened capital base. As of H1 2025, the bank’s liquidity ratio stood at an impressive 51.4%—more than double the statutory minimum of 20.0% and a sharp improvement from 27.9% in H1 2024. Core capital closed the period at KES 8.9 billion, placing the bank firmly on track to meet the Central Bank of Kenya’s KES 10 billion core capital requirement by 2028. Equally notable is the core capital to total risk-weighted assets ratio of 21.3%, which is twice the statutory minimum of 10.5%. This robust capital position, combined with the Tier II upgrade, sends a strong signal to the market: HF Group is not only stable but also positioned for sustainable expansion. The move opens the door for deeper market penetration and broader revenue diversification across the country. The <a href="https://tradingroom.co.ke/hf-group-doubles-profit-to-kes-703m-in-hy2025/">Group’s H1 2025 results</a> reinforce this narrative. Both deposits and assets posted double-digit growth—17% and 21% respectively—lifting total assets beyond KES 77 billion. Deposits surpassed KES 53 billion, while the loan book reached KES 40 billion, translating to a healthy loan-to-deposit ratio of 75.5%. This balance sheet strength translated into earnings resilience, with loan interest income of KES 2.3 billion comfortably outpacing deposit interest expenses of KES 1.4 billion, yielding a positive spread of KES 0.9 billion. HF Group's Net profit surged by over 135% to KES 0.6 billion, driven by: <ul> <li><em>A modest but positive uptick in loan interest income (+KES 10M YoY).</em></li> <li><em>A sharp 87% rise in interest income from government securities to KES 1.3B.</em></li> <li><em>Total interest income growth of 19.6% to KES 3.6B.</em></li> <li><em>A 6.7% decline in total interest expenses to KES 1.6B, enhancing net interest margins.</em></li> <li><em>Non-interest income growth of 17.9% to KES 844M.</em></li> <li><em>Operating income growth of 41% to KES 2.9B, outpacing operating expense growth of 23.7% to KES 2.2B.</em></li> </ul> This combination of revenue expansion, cost discipline, and balance sheet optimization underscores management’s ability to execute on its transformation strategy. [caption id="attachment_18125" align="alignnone" width="640"]<img class="size-medium wp-image-18125" src="https://tradingroom.co.ke/wp-content/uploads/2025/09/Screenshot-2025-09-02-at-08.12.16-640x389.png" alt="HF Group Plc" width="640" height="389" /> HF Group Profit After Tax in 1H25 [Chart by Tradingroom][/caption] <h5><strong>Annual Investor Returns on HF Group Cross 100% </strong></h5> On the Nairobi Securities Exchange, HF Group’s equity performance has mirrored its operational turnaround. The stock has appreciated 110% year-to-date and 144% over the past 12 months to KES 9.48, ranking as the 10th most traded counter over the last quarter. The doubling of the share price since June 2024 reflects investor confidence in the Group’s strategic direction, bolstered by the oversubscribed 2024 rights issue. The 2024 capital raise on the <a href="https://tradingroom.co.ke/hf-group-rights-issue-why-you-should-invest/">oversubscribed Rights Issue</a> at 138.32% with applications totaling KES 6.4 billion against a KES 4.6 billion target was one of the most successful on the NSE in the past decade. The proceeds have been instrumental in funding expansion and fortifying the capital base ahead of regulatory thresholds. From our analyst’s perspective, HF Group’s trajectory suggests a well-calibrated growth plan: capital strength is being translated into market share gains, earnings momentum, and shareholder value creation. Suppose management sustains this balance between prudent risk management and strategic expansion. In that case, HF is well-positioned to consolidate its Tier II status and emerge as a more competitive force in Kenya’s banking sector.
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