HF Group offices on Kenyatta Avenue, Nairobi. FILE PHOTO | NMG Housing Finance (HF) #ticker:HFCK and Stanbic Bank #ticker:SBIC collectively recovered Sh1.03 billion customers’ assets last year over unpaid loans, underlining increased debt distress as borrowers struggle with repayment.
The big chunk came from HF, which has disclosed that it acquired property worth Sh717.1 million. In the same year, it also started exiting the home construction business.
HF managing director Robert Kibaara Tuesday said most of the repossessions related to the houses in which the bank entered into private treaty agreements with its customers.
“We have taken an approach of agreeing with customers to transfer the facility to us at an agreed price for us to sell given the distressed property market. Some of the houses have now been sold,” said Mr Kibaara in an interview.
Under private treaty, customers transfer their properties — such as houses — to banks at an agreed price in exchange for loan cancellation. The bank then proceeds to dispose the asset.
Stanbic, which is also strong on vehicle and asset financing (VAF) said in its latest annual report that it repossessed assets valued Sh312.3 million. This is 18.2 percent lower than the Sh381.88 million property it seized a year earlier.
The bank said that it seized saloon cars, prime movers and trailers, which it had financed under VAF.
Also seized were residential and commercial property financed under mortgage and personal loans.
Thousands of borrowers are struggling to hold onto their prime assets as they fall behind on their bank loans repayments with Kenya’s economy slowing down.
Auctioneers have in recent months reported an increase in auctions on the back of rising defaults.
Auctions and repossessions are likely to increase in coming months due to the effects of Covid-19, which has led to layoffs, pay cuts and employees being send on unpaid leaves.“It is the Group’s policy to dispose of foreclosed properties on the open market, at fair market value.“The proceeds are used to reduce or repay the outstanding claim. In general, the Group does not occupy foreclosed properties for business use,” said Stanbic.The value of repossessed residential properties dropped from Sh86.97 million in 2018 to Sh50.18 million while that of other class of assets also reduced from Sh294.9 million to Sh262.12 million.The repossessions came in the year Stanbic posted a 1.6 percent growth in net profit to Sh6.38 billion.During the year, mortgage lending grew 22 percent to Sh25.58 billion, accounting for 15.3 percent […]