Buildings are built to last, but it is their nature of permanence and rigidity that curses them to age into old monuments admired for their beauty.
This is even when they lack utility in the burst of the new architecture.
And for decades, Housing Finance Group (HF) has been the bastion of home-ownership in the country, as old as the Kenyan republic - having been founded in 1965.
The mortgage lender has gifted more than 18,000 Kenyans with the keys to their first homes.
And even as KCB Bank grew to surpass the lender, HF shrugged off the newer player since there was enough room for growth.
HF Group rode on a wave of a boom in the housing market that saw the mortgage lender pick up new development projects across the country.
The speed of financing developers to put up houses was dizzying such that last year, the lender was channelling money to more than 62 housing projects.
By the end of the year, it had a total of 1,000 projects jutting out of the ground in defiance.
Then the music stopped.
Market studies that were cheering on the sludge of concrete suddenly started indicating signs of oversupply.
The developers soon found themselves without buyers, the auctioneers’ hammers banged louder than masons who still put up houses, oblivious of the turn in the tide.
“When the industry was booming, developers were taking margins of up to 50 per cent, now even getting 30 per cent is very difficult,” HF Group Chief Executive Robert Kibaara said.
Like many other players, the 54-year-old lender had been operating with the belief that there was endless and limitless demand.
Now, there were no buyers and in 2017, matters came to a head when the mortgage lender’s profits plummeted 86 per cent from Sh905 million to Sh126 million.
During this period, non-performing loans surged from Sh6 billion to Sh8 billion within a year, which the bank blamed on a bad mix of post-electoral environment and effects of the rate capping law.
But last year, things did not improve as defaults continued to rise to Sh13.3 billion of gross bad loans.
This was even after the lender slammed the brakes on new lending - shrinking its loan books from Sh49 billion to Sh43 billion.
For the first time in a decade, HF had sunk into the red, posting a net loss of Sh598 million. The erstwhile chief executive Frank Ireri, who had been at the helm of the mortgage firm for 13 years had called it quits towards the end of his term.
The bank needed a serious turnaround strategy if it was to survive and reconnect with the market realities. It needed new blood that could take up such a daunting task.
At this time, NIC Bank where Kibaara was a director and Commercial Bank of Africa (CBA) was on course for a merger, and with a combined workforce of 2,360, talent and egos from two of Kenya’s most efficiently run lenders would inevitably clash.
And the writing was on the wall that NIC Bank Group Managing Director John Gachora was set to head the merged entity, while his counterpart Isaac Awuondo, who has led CBA as the group managing director, would take up the role of chairman for the Kenyan banking business.
Mr Awuondo would also continue to provide the day-to-day leadership of the digital business with the intention of creating a distinct separate board, a curious and confusing structure.
Then the NIC Bank director for retail banking, Kibaara would not wait for the uncertainties. He chose to take up the almost impossible task of rebuilding HF.
And he did not come to renovate but to re-build, tear down the pillars that could no longer hold the mortgage lender and draw up new architectural plans whose reality is about to be tested.
“If this bank is going to be the HF 2.0 we envision - a high performing organisation, then we need to have the right people in the right places,” Kibaara reckoned in an interview with the Financial Standard.
The exit of Ireri was quickly followed by managing director Samuel Waweru and Chairman Steve Mainda who retired from the company.
Chief Digital Officer Nancy Matimu left for MasterCard as Vice President, Head of Market Development in Sub-Saharan Africa, while Head of SME Banking George Njuguna also exited.
Mr Kibaara tapped his former colleague Joseph Mwanguo from NIC Uganda to come and head the Treasury Department.
He brought in Rose Muturi as the chief digital officer for the new wing dubbed HF Whizz. Ms Muturi was formerly chief executive at Tala, where she had built a leading mobile-based lending platform, stealing banks’ dinner.
To streamline credit with the high rate of default, Kibaara tapped senior credit risk manager at Standard Bank Mr Peter Mugeni to come in as the director of credit.
“My leadership style is putting the right people in the right places. Also, we needed a cultural transformation because we were not as agile and fast, a situation that is common in State-type institutions. We have to change or we die,” he said.
And when Kibaara arrived at HF, he examined internal processes, speed, and agility and found that it took two to three weeks to process an application. He has since cut them to five days and targets to further reduce it to a day.
Net promoter score of service that was at +4 in January is now at +34 and customers are beginning to notice. RTGS transfers are now being cleared on the same day while opening an account is instant and can be done over the phone.
“If you go to Galitos for a pizza they’ll get you in 10 minutes, but go to these other hotels and you ask for the same, they do it in two hours just getting everything together. That is what we call process re-engineering,” he explained.
He said he started a process to restructure the workforce from back-office roles into an army of 80 salespeople to lead the frontline charge.
While the new HF Group boss had the power to change his internal dynamics, a market depressed with low demand, crippled by defaulting borrowers remains a big challenge.
But the main in the hot seat also wants to change the perception of the developers they fund, who still think of making up to 50 per cent margin.
“I told my people we needed to help developers sell houses and the first thing was to tell them to cut prices by 30 per cent,” he said. “The developers were living in denial expecting huge margins. We told them this was the only way to recover their money or lose capital.”
According to the records, the lender has sold 300 units so far this year - more houses than it had been able to sell in the last two years, netting Sh2 billion.
And Mr Kibaara is confident they can sell 700 units as the bank heads to the Westin August to woo Kenyans in the diaspora with tailored solutions targeting those who send money home with an eye on owning property.
Projects in the upmarket addresses ranging from Sh7 million to Sh10 million have flooded the market, yet there are few buyers. But the HF boss says their houses are in the range of Sh1 million to Sh5 million.
They plan to capitalise on the State-led initiative to provide affordable housing so as to increase demand for their homes.
“We will pledge part of the mortgage portfolio to the Kenya Mortgage Refinancing Corporation in exchange for cash to lend to home buyers at a low fixed rate,” he said.
Mr Kibaara promises to use the lessons learned at NIC Bank’s transformation - from an asset finance bank into a major player in retail and corporate banking and convert HF into a full-service bank.
“We will selectively go into SME banking with a focus on health, education, agriculture value addition, and trade as well as diaspora banking,” he said.
Digital business is also a focal point for growth. Mr Kibaara said HF Whizz led by the former Tala talent had managed to grow, dispensing 100 to 1500 loans and opening as many as 2,000 accounts a day.
But even as he seeks to diversify the business, increase deposits and rationalise costs to deliver numbers by the end of the year, he still faces monumental challenges.
The lender has a Sh2.9 billion seven-year bond that will mature in October this year, which will suck liquidity that was to be deployed to his ambitious projects.
The last time it had to settle a huge loan, HF took another Sh4.5 billion that helped in clearing its Sh7 billion bond.
The bond was redeemed using Sh2 billion from the loan and Sh5 billion internally generated cash.
Mr Kibaara is, however, optimistic of meeting payments in time, having prepared by packing liquidity in short-term government paper, which stood at Sh2.6 billion at the end of 2018.
The money from the sales of the new houses has also been set aside for footing the debt. “I cannot wait to settle the bond because once we pay, we will have savings,” he said.
The mortgage bank plans to take tier II capital, which it believes will be costly to fund the new dream of helping Kenyans own a home.
Mr Kibaara also wants to unlock HF’s land along Thika Road and at Komarock to drive the “new age BuruBuru” just as the lender did in the 1980s.
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