HF Group Plc’s first-quarter results for 2025 reinforce a narrative that has been building for some time—this is a financial institution that has not only survived the turbulence of shifting from a mortgage-focused lender but is now thriving as a diversified financial services player. The Group posted a profit before tax of Kes. 337 million, marking an impressive 112% year-on-year growth from Kes.159 million in Q1 2024. That level of expansion is not accidental—it’s evidence of a carefully orchestrated strategy that is now paying.
Breaking Down the Numbers
A 33% increase in total income to Kes. 1.41 billion underscores how well HF Group has repositioned itself in the market. The standout figure in this performance is net interest income, which surged by 46%. Traditionally, HF has relied heavily on mortgage lending, but this number suggests that its broader lending portfolio is gaining traction. The contribution of non-funded income to 30% of total revenues is particularly noteworthy—this reflects a well-balanced business model that doesn’t depend solely on loan interest to drive profitability.
Deposits grew by 16% to Kes. 51 billion, reflecting renewed confidence from investors following the oversubscribed rights issue, which came in 38% above expectations. Such market confidence is a telling sign that investors believe in HF’s ability to sustain growth. The Group’s balance sheet expansion of 18% to Kes. 73.4 billion demonstrates increased financial muscle, allowing it to fund more lending activity while maintaining a solid liquidity position of 45.1%, well above the statutory minimum.
Costs vs. Investments: A Strategic Trade-off
There’s no ignoring the 19.1% increase in operating expenses, which totaled Kes. 1.08 billion. At first glance, this might raise concerns, but the context matters—HF has been deliberately investing in talent acquisition and digital infrastructure. Any institution undergoing transformation must contend with short-term cost escalations, and the question always is: will these expenditures translate into long-term efficiency and revenue growth? The answer, in HF’s case, appears to be yes.
Read: HF Group Posts Solid Growth as Q1 Pre-tax Profit Soar 112%
Another promising indicator is the decline in provisions for expected credit losses by 8%. This suggests that HF’s risk management framework is improving, with better loan performance and more effective recoveries. Given the broader economic conditions, maintaining a handle on non-performing loans is critical, and HF appears to be making significant strides in this area.
HF Group CEO’s Perspective: A Confident Outlook
Robert Kibaara, HF Group’s CEO, has consistently spoken about the transformation of the bank. His confidence in the institution’s ability to evolve into a broader financial services provider seems justified given the latest results. His comments underscore that the bank is focused on business banking, diversified financial solutions, and a strong regional presence, rather than clinging to the past mortgage-driven model.
“We continue to realize the impact of our transformation journey. Our business model has evolved significantly, enabling us to deliver sustainable growth and value to our shareholders,” Kibaara stated during the Q1 2025 results announcement.
Importantly, HF’s core capital-to-risk-weighted assets ratio stands at 21.3%, more than double the regulatory minimum. This is a key confidence booster, signaling strong fundamentals that will allow the Group to keep growing without putting undue strain on its financial position.
Final Thoughts: The HF Group Story is Far from Over
Today’s HF Group is fundamentally different from what it was five years ago. No longer just a mortgage lender, it is establishing itself as a broad-based financial institution, with strong earnings growth, prudent risk management, and a forward-looking strategy. The Group has managed to balance revenue expansion with cost control, a rare feat in an industry where transformation often comes at the expense of profitability.
For investors, the next big question is whether HF can sustain this momentum and further scale its diversified financial services offering. If the bank continues to execute on its transformation strategy, it could emerge as a dominant player in the financial services space, not just in Kenya, but regionally.
