Britam Holdings has reversed a previous impairment or loss recorded on its investment in its banking associate HF Group to the tune of Sh2.09 billion, citing improved financial performance of the lender.
The write back marks a turnaround in the valuation of its stake in the mortgage financier, coming after several write-downs due to previous poor financial performance, falling share price and breaches in capital and liquidity ratios.
Britam discloses in the latest annual report that it implemented the write back in the financial year ended December 2024, contributing to the rise in the value of its 48.17 percent stake in HF to Sh4.09 billion compared with the prior year’s Sh645.46 million.
“The group assessed the impairment of the associate as per IAS (International Accounting Standard) 36 and an impairment reversal of previous impairment provisions was recognized amounting Sh2,098,554,000. This was evidenced by continued profitability of the associate, successful rights issue and reduced weighted cost of capital,” said Britam.
Last year’s impairment reversal on HF investment is the first since Sh172.06 million in 2021 when the lender started recovering after the Covid-19 pandemic disruptions.
In 2020, Britam had booked an impairment loss of Sh602.73 million in HF, coming after another impairment of Sh1.57 billion in 2018.
HF has been on a recovery path, with the net profit for the first three months ended March 2025 rising 2.2 times to Sh327.93 million on the back of increased interest and non-interest income.
Last year, HF rights issue was oversubscribed by 38.3 percent, with shareholders giving it Sh5.99 billion in the cash call whose proceeds went into boosting its capital.
HF has posted growth in net profit for the last three years, hitting Sh524.68 million in 2024 from Sh388.15 million a year earlier. Britam's share from last year’s HF pre-tax profit was Sh244 million from Sh187 million in the prior year.
The lender had posted Sh126.22 million net profit in 2017 before sinking into back-to-back losses from 2018 to 2021, including the record net loss of Sh1.71 billion in 2020.
The four-year streak of losses saw the lender’s share at the Nairobi Securities Exchange fall, even as its capital and liquidity ratios dropped below the Central Bank of Kenya’s prescribed minimum.
However, this was corrected last year through the rights issue that triggered share price appreciation.
The rights issue and the resultant appreciation in the share price by about 31 percent saw HF added to the Morgan Stanley Capital International (MSCI) Frontier Markets Small Cap Index in February this year. The index serves as a key performance indicator for investors tracking emerging markets.
HF joined BAT Kenya, Kenya Electricity Generating Company, Kenya Re and DTB Group who were already on the MSCI Frontier Markets Small Cap Index.
