Housing Finance Drops Most in a Month on Earnings: Nairobi Mover
Housing Finance Ltd., Kenya’s only publicly traded mortgage lender, dropped the most in a month after saying pretax profit slid 7 percent last year.
The shares fell 3 percent to 19.40 shillings by the 3 p.m. close in Nairobi, the biggest decline since Jan. 21, according to data compiled by Bloomberg. About 229,300 shares changed hands, or 173 percent of the three-month daily average.
Pretax profit retreated to 907.6 million shillings ($10.4 million) from 975.8 million shillings a year earlier as interest expenses doubled to 3.12 billion shillings, the company said yesterday. Net interest income, the money lenders earn from interest charges on loans, increased to 1.95 billion shillings from 1.9 billion shillings.
“As expected the high interest rate regime in first-half 2012 would eat into their net interest income as interest expenses grew,” Ted Macharia, a research analyst at Nairobi- based AIB Capital Ltd., said today in an e-mailed note to clients. “This growth coupled with an increase in operation expenses would eat into their profit before tax even after interest income grew.”
The Central Bank of Kenya’s Monetary Policy Committee left the benchmark rate unchanged at 18 percent during all five of its meetings in the first half of 2012. The committee has since cut the rate four times to 9.5 percent.
Profit after tax grew 19 percent to 743.3 million shillings after Housing Finance sought deferral of tax following the revival of Kenya Building Society. The unit was dormant for 13 years. The effective tax rate fell by half to 18 percent, Managing Director Frank Ireri told reporters in Nairobi today.
“The deferred tax was the shocker that boosted profit after tax,” Macharia said in an interview today.
To contact the reporter on this story: Eric Ombok in Nairobi at email@example.com
To contact the editor responsible for this story: Shaji Mathew at firstname.lastname@example.org