HF Group has officially been reclassified as a mid-tier bank following a fresh capital injection that strengthens its balance sheet and ends years of vulnerability on prudential ratios.
The Central Bank of Kenya confirmed that the lender’s core capital has risen above the Ksh5 billion threshold that defines mid-tier institutions, marking a significant turnaround for a bank that has struggled with thin liquidity and rising defaults in its mortgage loan book.
The upgrade follows a Ksh1.2 billion capital boost from its principal shareholder, Britam Holdings, and a rights issue that saw new institutional investors come on board.
These funds have been used to clean up the lender’s books, increase its capital adequacy ratio to above the regulatory minimum of 14.5 per cent, and position the bank for profitable growth.
HF’s elevation gives it access to cheaper wholesale funding lines and improves its credibility with both retail and corporate customers. Group CEO Robert Kibaara said the strategic focus will now shift towards SME and personal banking to diversify away from the cyclical real-estate sector that previously left the bank exposed to downturns in the property market.
Analysts say the upgrade paves the way for HF to expand its branch network, bid more competitively for government and parastatal deposits and deepen its presence in trade finance and transactional banking.
Market watchers note that the shift comes amid intensifying consolidation in Kenya’s banking sector, with weaker tier-three lenders either seeking mergers, capital injections or risking collapse as competition stiffens.
The Central Bank’s approval is seen as a vote of confidence, signalling that HF’s turnaround strategy is bearing fruit after years of losses and asset-quality concerns. Kibaara said the bank will now aggressively court small businesses and salaried customers with new digital products, affordable loans and attractive deposit offerings.
The upgrade cements HF’s place among Kenya’s stronger lenders and gives it much-needed momentum in an increasingly crowded mid-tier segment.
Written By Ian Maleve
