House Building Finance Company Limited (HBFCL), which was heading towards a bankruptcy till the end of 2008, has turned to a profit giving company in last three years through a reform introduced by the new management. HBFCL, the country’s leading housing finance institution which has been steadily reducing its losses over the past three years besides improving its financial position will show more profits during the financial year 2011 as compared to the profit of Rs 113 million achieved in 2010.
This was said by Azhar A Jaffri, Chief Executive Officer of HBFC, in an exclusive interview with Profit. He informed that though the financial report of the year 2011 was yet to be compiled by the company the profit during the fiscal year ended June 2011 was expected to cross the profit of 2010. In financial year 2007 and 2008, HBFC reported a loss of Rs 959 million and Rs 414 million respectively. In 2009 and under the new management, the loss was further reduced to Rs.109 million, followed by a profit of Rs.113 million in 2010. HBFCL has however announced an after-tax profit of Rs95.0 million for the first half of 2011.
The improvement made during the last couple of years the outcome of a comprehensive transformation strategy that the company has been enacting for making the institution an efficient, customer-focused and profitable entity.Talking about the reforms brought since 2009 in the company, he said that the transformation and change of management, which introduced major reforms, was the basic reasons of improvements in every section of the organisation including Legal, Human Resources, Finance, Credit and Recoveries, Business Development, Customer Services, Strategy, Marketing, Corporate Affairs and Risk Management etc.
To minimise the financial burden over the company, the new management has introduced a “Voluntary Separation Scheme (VSS)” to its employees purely on their own will, under which hundreds of staff have obtained package reducing the number of staff from 1400 to 800. He said CBA Central Bargaining Agent also supported the entire process and a number of union members including chairman and general secretary also availed VSS offer. He said the key component of VSS strategy is to turn HBFCL into customer-focused and profitable entity.
The CEO said that the company being the prime housing finance institution of the country, was providing affordable housing solutions to low and middle income groups of population by encouraging new constructions in small & medium housing (SMH) sector. The company was also supporting small builders besides introducing bulk housing finance. In reply to query, Jaffri said that the recovery of the company has however been affected badly by the current rate of inflation and the devastation of flood in the country last year. HBFC was facing Rs 300 to 400 million short falls in recovery.
To question he said HBFC has now started constructing building on its own lands both in Islamabad and Lahore which would increase the asset and income of the company. To another question he said, HBFC encouraged such builders who built houses for low income group. Being a housing financing institution, HBFC has made efforts to promote low income groups besides promotion for supply of the low cost housing. In reply to query that whether only builder and middle class were being facilitated by the company, he said, the average loan was ranges between Rs 0.5 million to Rs 0.8 million proving that the lower lass people. Talking about new projects, he said, the company was also considering to finance the projects of building government offices as the issues was initially discussed with Federal Minister of Housing and Works Faisal Salih Hayat.
Besides, a proposal has also forwarded to HBFC to finance a low cost housing project at Sehwan Sharif to be introduced by Sindh government, he said. He also informed that the company had made Rs 100 million contribution in Prime Minister’s Flood Relief Fund in 2010. It has also pledged to contribute Rs 25 million to send required food and medicines to the flood affectees.