HF borrows Sh800m from NIC, Co-op banks
The Nairobi Securities Exchange-listed mortgage home loans lender will repay the debt at close to the maximum interest rate allowed by law, an indication of its keen interest to get the cash from its rivals.
“During the year, HFC Limited received… two short term notes from NIC Bank Limited Sh500 million and Co-operative Bank of Kenya Limited Sh300 million at a rate of 14 and 13 per cent respectively for one year,” HF says in the report.
The obligations had grown to Sh517.3 million on the NIC loan and Sh309.6 million (Co-op Bank) as of December 2017.
HF had a Sh7 billion corporate bond repayment in October last year. The lender recorded a drop in customer deposits in the period.
The interest rates on the two loans are more than double the average of 6.3 per cent that banks charged each other last year on the shorter-term inter-bank lending market, according to Central Bank of Kenya data.
HF also received $22 million (Sh2.2 billion) from the European Investment Bank at an interest rate of 4.3 per cent for seven years and $15 million (Sh1.5 billion) from Ghana International Bank at a rate of three months London Inter-bank Offered Rate (Libor), a global benchmark, plus a five per cent premium for two years.
Redemption of the bond saw HF’s overall debt fall by Sh3.6 billion to Sh16 billion.
The company saw a reduction in deposits last year to Sh36.7 billion from Sh38.7 billion in 2016.
“Additionally, small and medium banks continue to suffer the impact of the ‘flight of deposits’ stemming from eroded public confidence following the collapse of three banks in 2016, whose fate is yet to be fully resolved thus tying up investor and depositor funds,” HF says in the report.