Femi Adewole, Shelter Afrique acting managing director. PHOTO | DIANA NGILA
Shelter Afrique’s net loss for the year
to December grew by 156 per cent to Sh12.7 billion following a
near-doubling of provisions for bad loans, confirming findings of a
damning forensic audit done on the mortgage lender.
The
pan-African housing financier has disclosed that it closed the period
under review with impairment costs for non-performing loan of Sh1.85
billion, a steep increase from the previous year’s Sh962.5 million.
Shelter Afrique’s loan book grew 3.2 per cent to close the year at Sh29.2 billion.
Deloitte
was last year invited to conduct an in-depth review of Shelter
Afrique’s books after the lender’s former head of finance Godfrey Waweru
blew the whistle on alleged book-cooking at the lender.
“The
company decided to take a critical look into its loan book and
specifically the doubtful debts account,” Shelter Afrique’s chief
finance officer Ray Davies said in an interview.
“We
also reviewed our provisioning policy to make it stricter. The effect of
these interventions is that there was a huge increase in our
provisioning for the year. We even went back as far as 2015 in some
cases and restated the accounts,” he added.
ALSO READ: GCR cuts Shelter Afrique rating
The
report, adopted by the housing financier’s board in February, raised
the flag on inadequate loan loss provisions, queries on loan swaps for
non-performing loans, and discrepancies on Shelter Afrique’s loans
software platform.
Mr Waweru alleged that creative
accounting helped Shelter Afrique post a net profit of Sh218.7 million
in 2015 and record bad loans provisions as Sh234.5 million.
Shelter
Afrique’s restated accounts now show that it actually made a net loss
of Sh509.2 million during this period while loan impairments have been
revised upwards to Sh962.5 million.
The mortgage
financier, which is owned by 44 African countries (including Kenya)
together with the AfDB and African Reinsurance, closed the year under
review with total assets of Sh34.6 billion, representing a marginal
increase from 2015.
Total liabilities grew by Sh1.4
million to Sh25 billion with the big chunk of this being lines of credit
which now stand at Sh19.5 billion.
The increased provisioning wiped also away a 12.8 per cent increase in net interest income to Sh1.41 billion.
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