Shelter Afrique has rebounded from a Sh1.5 billion ($11.7 million) loss to post a profit of Sh128 million ($994,049) – the second positive net earnings in over seven years – following a rise in revenues and a drop in non-performing loans (NPLs).
The pan-African housing financier last made a profit in 2021, when it posted Sh233 million ($1.8 million) net earnings, after making losses for six consecutive years since 2015, amid falling revenue as its loan book thinned and non-performing loans soared.
In the financial year ending December 2023, the financier, which recently rebranded into a development bank, recorded a surge in revenue as its NPLs dropped by about 2.5 percent amid increased recovery efforts.
“Mortgage borrowers have faced increased repayment burdens, resulting in a slowdown in housing activity and declining home prices globally,” said Shelter Afrique’s board of directors chairperson Chii Akporji.
“Despite challenges, Shelter Afrique has made significant strides. The transformational initiatives undertaken by Management have led to improved financial performance, with a break-even financial position achieved in 2023.”
Based on the continental lender’s financial results published this week, its 2023 total income rose 94 percent to Sh2.2 billion ($16.9 million) from the Sh1.1 billion ($8.7 million) they recorded in 2o22.
Its net earnings from interest on loans more than doubled to Sh2 billion ($15.2 million), up from Sh954.6 million ($7.4 million) in 2022, largely driven by a surge in its recovery of loans, as its own interest expense registered a marginal rise.
Last year, the lender recovered a total of Sh1.8 billion ($13.7 million) in bad loans, both from cash collections and asset takeovers, bringing down its NPLs to gross loans ratio to 51 percent, from 53.5 percent in 2022.
However, it also wrote off Sh2.5 billion ($19.1 million) in bad loans in 2023 alone, highlighting the magnitude of the lender’s struggle with non-performing loans, which currently constitute over half of its loan book.
The lender says the high rate of NPL ratio is because “the rate of closing new transactions is still slower compared to the repayments of the performing book,” despite increasing efforts to expand its loan book.
Its loan book last year decreased by 11 percent to Sh17.8 billion ($138 million) from Sh20 billion ($155 million) in 2022.
