Category Archives: HFCK

Last October Weekend

Kenya not safe
Another travel advisory against Kenya has been issued by the US state department warning on the potential for violence in association with Kenya’s upcoming constitutional referendum on November 21. Note that the number of visitors from the US to Kenya was up by 45% in the first half of the year.

Local online classifieds
In the tradition of craiglist, city search, city guide, and E-Bay’s Kijiji comes Nairobist – short for {Nairobi’s list} a free service that connects the local community in Nairobi and also home of NairobiWiki. Postings can include CVs, for sale, gigs/events, housing, jobs, personals and services. (Was tipped to it by a service offering sponsorship for free GMAT/GRE exams

Another cool site on tourism mainly at the Kenya coast.

Kenyan hip hop documentary
“Hip Hop Colony” is a documentary detailing the art form of hip hop in Kenya. View the trailer online.

Britain divests
British investment giant CDC has offered a block of 6,245,482 shares of Housing Finance Company of Kenya (HFCK) for sale at Kshs.11.00 per share. According to the Daily Nation this follows regulatory pressure from local banking authorities.

graduate opportunity
Barclays Leadership Programme is seeking talented, ambitious, individuals to apply for its two years session beginning in January 2006. Applicants should be self-driven motivated individuals who can demonstrate initiative, and innovation, and who have attained 1st class or upper 2nd honours from recognized universities in various degrees – preferably business/finance related studies (also additional post graduate degrees are an advantage).

Apply online for this graduate opportunity (you’ll need pen, paper, ID/passport number as an online assessment is included in the application) by November 4th. Results of assessment will eb e-mailed within 2 days, while only sucessful applicants will be contacted after November 18.

Give your thumbs a rest
Safaricom’s 50% daytime discount on SMS comes to an end this weekend. After Monday, all local SMS will revert back to Kshs. 5 per message.

Sports Weekend
Local horse racing, and numerous golf tournaments.

Saturday 29 October
2:30 PM SS3 Tottenham vs. Arsenal & SS6 Wigan Athletic vs. Fulham
5:00 PM SS3 Chelsea vs. Blackburn & SS6 Liverpool vs. West Ham
7:15 PM SS3 Boro vs. Man Utd
9:00 PM SS7 La Liga:: Real Betis vs. Real Madrid

Sunday 30 October
7:00 PM SS3 FA Premiership:: West Brom vs. Newcastle
11 PM SS3 La Liga:: Barcelona vs. Sociedad

Tuesday 01 November
10:15 PM UEFA: Liverpool vs. Anderlecht & Inter vs. Porto & PSV Eindhoven vs. Milan,

Wednesday 02 November
10:15 PM UEFA:: Arsenal vs. Sparta & Benfica vs. Villarreal & Lille vs. Man Utd,

Next weekend:
Saturday: Rugby returns with Wales vs. NZ, Argentina vs. SA, and France vs. Australia
Sunday 06 November Man Utd vs. Chelsea

Midweek Mix

Health care package for low income Kenyans
AAR, Kenya’s largest HMO has linked with K-Rep Bank to offer in a pilot project to provide health care to low-income groups.

Media blamed for undermining bank merger
HFCK say that leakage of documents portrayed them as using underhand methods to secure a deal with DBK

Two perspectives on life in Nairobi
Eastleigh Estate in Nairobi is like Mogadishu because of wealthy Somali residents while Asians profess that they are ”Kenya Damu”

End of the Yellow Jackets
The Nairobi City Council is progressing towards a system that will privatise the management of parking spaces (on and off the street) in Nairobi

Ship refuses to sail away
Assurances to the Treasury by the Chief of General Staff, General Joe Kibwana, about a 4.1 billion Kenya Shilling (US$53.5 million) deal to buy a new patrol boat for the Navy have turned out to be misplaced, according to documents seen by Africa Confidential.

HFCK Boss Out

Peter Lewis Jones is out as Managing Director of Housing Finance Company of Kenya.

Earlier this month, the Nation reported that CBK wantd him out because HFCK was for violating Prudential regulation no. 10 which deals with provision for bad and doubtful loans and advances. HFCK has been making too little provisions as defined by CBK.

In their auditor’s letter at the end of 2003, KPMG made a point about future operations at HFCK noting that “a significant portion of their mortgage portfolio is non-performing, and low interest rates in the country have also lowered interest margins at HFCK. Also further growth is constrained by existing capital under the Bank Act and CBK act. The current licence does not allow for diversification, and the banks ability to make profits depends on recovery of non-performing assets.”

The bank was supposed to make efforts to comply with PR10 and consult with shareholders by December 2004. – and these efforts have not borne much fruit, which is why CBK has forced the MD out.

In 2004, net interest income fell to 900 milliom, down from 1.6 billion in 2003 (and 2.0 b in 2002). HFCK ended the year with a pre-tax profit of 98 m (down from 112m in 03). HFCK has a bad debt portfolio of 4 b, but they also have 5 b as realizable value of securities (i.e. if they re-possess and sell houses of people who have defaulted)

Mortgage 2005

The 2005 Homes Expo was held at Sarit Centre over the weekend. Various financial institutions were represented at the fair all offering various mortgage products. While HFCK and Savings & Loan (KCB) have been in the mortgage business for years, low interest rates beginning in 2003 caused Barclays, Standard Chartered and other banks to enter this market.
Others mortgage players not represented at the fair include: Credit Unions, East Africa Building Society (about to merge with Akiba Bank), Commercial Bank of Africa, I&M Bank and NIC Bank.

Some general facts
– For comparison purposes, I used a typical 6 million shilling ($75,000) property such as a 3 bedroom flat in Kilimani or a 4 bedroom maisonette in South C
– The longer the mortgage period, the higher the interest rate
– While most loans are variable rates, recently some banks have introduced fixed-rate mortgages
– Banks finance less (i.e. higher down payment) if you don’t live in the property
– Banks finance less for properties out of major towns (or not at all)

Barclays
Barclays will finance up to 85%, loan repayable over 15 years at a variable rate of 12.5%. You can use the facility to build new home, transfer your current mortgage, or borrow against your property (an equity release) to meet other financial obligations.

To buy your 6 million home, your down payment is 900,000 ($11,250) and Barclays will finance 5.1 million ($63,750). Annual repayments on the 5.1 million will range from 445,000 ($5,600) in year 1 and reduce to 62,000 ($775) in year 15.

Housing Finance Company of Kenya (HFCK)
Has a 3-plan mortgage scheme;
(1) Startup Plan mortgage: 10 to 15 year mortgage designed for 1st time borrowers
(2) House Plan mortgage: 5 to 10 year mortgage – for those who want to repay mortgage faster e.g. are closer to retirement
(3) Ace Plan mortgage: less than 5 years for those who have higher disposable incomes or are making investments

You can use HFCK loans for owner-occupied (you live there), investment residential (you don’t live there) equity release, construction loans & residential plots (maximum of 2 years for development to begin) purposes. Generally they finance up to 80% if you live there, 70% if you don’t.
– Interest rate is what gets some HFCK borrower into trouble. Their current base rate is 13.75 p.a. and in the StartUp Plan (for the 6 million shilling house) you pay Base +4% p.a. If you prove to be a good with your repayments, you get a discount of 1% p.a., but if you fall behind on repayments, you arrears attract an interest rate of base +5%.
– Closing costs are at least 5% of market value (including 4% stamp duty, 1% commitment fee, and other fees)
– Your 6 million house for 1st time borrowers falls into the Start up mortgage and after a down payment of 1.2 million ($15,000), HFCK will finance 4.8 million ($60,000)

KCB through their subsidiary “Savings & Loan Kenya Ltd.”
– Loans are charged 12.5% for up to 15 years for residential house or flats, and 12% for estate development.
– They finance up to 80% of property in Nairobi, Mombasa, Kisumu, Nakuru and Thika and only 70% if it is a property you’re not living in or are located in another town (i.e. you increase your down payment from 20% to 30%)
– Their loans are available to any borrower with repayment ability, but for salaried people the loan maximum is such that repayments must not exceed more than 2/3 of your net monthly salary
– Typical fees include: appraisal fee (1%), ledger fees 350 shillings/month, legal fees, stamp duty (4%), registration fee (0.2%)
– Typical repayment: To buy your 6 million shilling house, your down payment is 1.2 million ($15,000) and KCB will finance the remaining 80% (4.8 million $60,000). Repayment in year 1 will be about 450,000 (5,625) in year 1, and reduce to 70,000 ($875) in year 15

Standard Chartered
With Stanchart, you can build new home, transfer your current mortgage or borrow against your property (an equity release) to meet other financial obligations and the Bank says that loans are approved within 48 hours.
– This is at a fixed interest rate for up to 10 years is 14.5%, up to 15 years is 15.5%, and they finance up to 85% of property financed i.e. you put 15% down payment
– To buy your 6 million home, down payment is 900,000 ($11,250) and Stanchart will finance 5.1 million ($63,750) – and over the 15 years, repayments on the 5.1 million loan will be 72,000 per month.
– They also have a variable rate mortgage, which will result in monthly repayments of about 68,000 per month over 15 years to but your 6 million shilling home.

Corporate Brief’s

Barclays
The whole saga of the Matiba schools vs. Barclays is spinning out of control. Current MP’s and former MP’s have stepped up and urged the government to tame rogue foreign banks that are destroying Kenya entrepreneurs. Meanwhile, over the weekend, threats were made to Barclays and staff working for the receiver manager of the schools. Hopefully these are just prank calls.

HFCK
Al is well or not well with Housing Finance’s proposed merger with Development bank (DBK) .It appears that, not only is DBK management opposed to the deal, but also Central Bank of Kenya which now also wants to remove the managers of HFCK

Central Bank
Meanwhile deputy governor Sambili’s term is coming to an end. The office comes with security of tenure.

Econet
According to Ministry of Information PS, James Rege, Econet will not be allowed to operate in Kenya because it has only paid $15 million of the $27 million license fee. This was on KTN, but after attending a few functions and seeing some wild news coverage, I’d like to see the actual remarks, and the context in which he made them.

Telkom
Telkom will lay off 12,000 of its 18,000 workers. This will save 400 million shillings a month – Telkom earns 1.2 billion shillings a month, but half of that goes to salaries (according to media reports on Monday). The company has about 250,000 lines, and according to PS Rege, a Senegalese telephone operator serves the same number of lines with just 2,000 employees.