HFCB Group Plc, formerly known as HF Group Plc, has posted its strongest first-quarter performance in the company’s history, with net profit after tax rising 45% to KSh 475.5 million for the three months ended March 31, 2026.
The lender’s profit before tax climbed 80.5% to a record KSh 607.4 million, surpassing its previous first-quarter high of KSh 470 million recorded in 2016.
Growth was largely driven by stronger interest earnings. Net interest income rose 27.9% to an all-time first-quarter high of KSh 1.27 billion as total interest income increased 14.3% to KSh 2.05 billion, while funding costs declined by 2.5% to KSh 785.2 million.
Total operating income grew 29.7% to KSh 1.83 billion, with operating expenses increasing at a slower pace of 13.8%, supporting the group’s improved profitability.
The balance sheet also expanded significantly during the quarter. Total assets crossed the KSh 90 billion mark for the first time, reaching KSh 90.5 billion, while customer deposits increased by 30.7% to KSh 65.5 billion.
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Asset quality showed signs of improvement, with gross non-performing loans falling 8.4% to KSh 11 billion. The decline marks the first notable reduction after more than seven years during which bad loans consistently remained above the KSh 10 billion threshold.
Recovery After Years of Decline
The latest results cap a lengthy turnaround journey for the lender. Following its pre-tax profit peak in the first quarter of 2016, earnings steadily deteriorated over the next five years, culminating in a pre-tax loss of KSh 178 million in Q1 2021. The downturn was driven by the effects of interest rate caps, weakening mortgage assets, and declining capital levels.
Core capital shrank from KSh 8.6 billion in 2017 to KSh 2 billion by the first quarter of 2024, placing the institution under significant pressure.
A rights issue conducted in 2024, which attracted subscriptions exceeding the target by 38.3%, strengthened the lender’s capital position and paved the way for its transition to Tier II status and subsequent rebranding to HFCB Group.
The group’s asset mix has also shifted considerably. Net loans have fallen from KSh 54.6 billion in 2017 to KSh 41.8 billion, while investments in government securities have expanded from KSh 4.2 billion to KSh 30 billion, accounting for roughly one-third of total assets.
Looking ahead, management has projected a full-year 2026 pre-tax profit of KSh 2.49 billion, representing expected growth of 54%. The banking subsidiary is expected to contribute KSh 1.75 billion, while the property division targets KSh 598 million. The first-quarter pre-tax profit of KSh 607.4 million has already achieved nearly a quarter of the annual target.
