Hannington Awori, chairman of both Nation Media Group and Standard Chartered Bank on the same day (May 26th)
He has attained age 70, mandatory age for retirement at Stanchart; he was re-elected and will remain as Chairman for one more year, while he and the Board groom a successor (a move Barclays Kenya also made last year).
Category Archives: Stanchart
In banking this week
Citibank (31.5 billion assets) Roars Back
After a lacklustre 2004, Citibank Kenya has already surpassed its 2004 profit in the first three months of 2005. Deposits increased by 23%, from 19.5 billion shillings to 24b, and the bank’s net interest income and total operating income of 263m and 501m respectively, between January and March 2005. As a result, Citibank earned 308m before tax, and 185m after-tax, compared to 124m for the entire 2004 year.
Diop: Kibaki tenant
As has been already pointed out, it is a conflict of interest for the World Bank Country Director (or the World Bank itself) to be a tenant of the President of Kenya. In Equatorial Guinea, where President Obiang has been accused of fleecing the country, one favoured channel of corruption was that oil companies would always rent buildings and properties from Obiang and his family (even a 12-year-old kid) at exorbitant rates.
Know your credit history
In a Kenya Gazette notice this week, the Banking Act has been amended so that a bank customer is now entitled to know any information a credit bureau holds on him, by requesting this in writing. This will enable the customer to correct information, file a complaint with the Bank and encourage the bank to investigate the dispute for correction. (Applies to all banks and financial institutions)
Executive changes
Mukhisa Kituyi has appointed James Ochami as the new managing director of Industrial Development Bank Ltd. He also appointed Evans Kisina as a director.
Stanchart to target mid-sized businesses
Standard Chartered Bank has launched a Small and Medium Enterprises (SME) division. The SME product will offer a combination of overdrafts, letters of credit, bonds and guarantees, credit bill negotiation, invoice discounting among other benefits. The bank has also introduced trade and working capital, finance products, auto loans, commercial and residential mortgage facilities to cater for different customer needs.
New robbery technique
Bank robbers are now posing as customers in banking halls as they scope out people making huge withdrawals. They then rob them far away from the Bank, often posing as police officers.
Union wrong-footed on Labour Day
The Bank union which earlier forbade its members from participating in a performance appraisal system at Kenya Commercial Bank are now crying foul – and now opposing payment of bonuses to management and other members of staff who were evaluated and found to be high-performers in the process.
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.
Profit drop at Standard Chartered
In 2004, Standard Chartered posted a 1.8 billion shilling profit, down 33% from 2.8 billion in 2003. Much was blamed on the low interest rates and during year, the bank transferred much of its lending away from the government and toward the public. Loans to the public increased from 19 to 27 billion shillings, while government securities held by Stanchart fell from 32 to 24 billion. Commission and fee income reduced by 166 million, while other income also dropped by 700 million. Unlike Barclays, which reduced its staff costs by 40%, Stanchart staff costs increased by 8% to 1.6 billion.
The Bank closed the year with deposits of 57 billion, and even though earnings and dividends have reduced from 2003, shareholders will still be happy with a 6.50 per share dividend (on earnings of 6.74 per share) as their share prices have almost dipped to their 12 month low of 130 shillings.
Away from politics, talking points for Monday
If you’re still earning less than 2% on your savings accounts or fixed deposit accounts (rates dipped in 2003, and early 2004), you should ask your bank or branch manager to raise it or you’ll take a walk. With treasury bill rates at 8%, and banks lending at around 17%, you should be able to earn at least 5%. Standard Chartered, in the Friday newspapers proclaimed, “You deserve a raise” as they trumpeted rates of up to 5.5% for 12 months and 7.2% for 24 months. Other banks are expected to follow suit, but more quietly.
Since Equity Building Society got their license and converted into a bank, they have now walked away from their offer to buy out Daima Bank (in statutory management). They had earlier offered to buy Daima for 220 million (and also assume Daima’s 800 million debts). Still, according to the Sunday Standard, a deal to revive Daima should be completed in February 2005 with another investor.
Prime Bank has signed on to sponsor the main series of golf events in Kenya known as the “festival of golf.” This year the festival will comprise 18 tournaments around the country, with the finals to be on September 3 at Leisure Lodge Mombasa (a sister company of Prime Bank).