HF Group loan approval process is foolproof

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HF Group top managers fiddling with loans?

HF Group chairman, Steve Mainda has assured borrowers that its loan approval process is foolproof and dismissed allegations that its top executives awarded loans under unclear circumstances.
Responding to claims that HF group managing director Frank Ireri overruled his employees and approved loan applications earlier declined, the chair said HFC Limited, as a regulated entity, has very clear credit policies and an approval matrix approved by the board, which has always been followed to the letter.
Mr Mainda said the approval matrix sets certain limits that apply to the management lending committee, the Group managing director, the board credit committee and the full board.
“Upon review of the cases specifically mentioned, we state that the board is fully satisfied that the approval matrix was and continues to be strictly adhered to,” said Mainda.
The lender reiterates that the Group has a well-documented policy on insider lending that see all required disclosures, both at the board level and to regulators done in all the matters highlighted.
“For avoidance of doubt, all the lending mentioned in the Sunday Standard newspaper was at arm’s length, fully secured and with a clear business case,” Mr Mainda said.
“It is therefore not true, as alleged in the article or at all, that HFC intentionally misreported the non-performing loans position during the Rights Issue and state that this is actuated by malice and intended to serve other collateral purposes,” he said.
HF Group, said its subsidiary, HFC has a focused strategy on ensuring sound asset quality, with the necessary disclosures on asset quality made to the relevant stakeholders from time to time.

Moreover, the management lending committee of Company meets every two weeks to approve new credits and also to review the asset book and exit non performing clients through recovery avenues open to the Lender.

The Group has confirmed that the consulting firm McKinsey was contracted by the board to assist in crafting the HF Group’s five year strategy.

The Group, through its banking subsidiary HFC has also embarked on a branch expansion plan in areas with high potential and with clientele who fit into their long-term strategic plan in support of HFC commercial banking strategy. The new branches opened during the period are Komarock, Machakos, River Road, Hurlingham, Nanyuki and Ongata Rongai, which bring the total number of operational branches to 24.

The consultant submitted a comprehensive report on the entire business of the company, including asset quality and the company continues to implement the strategy, crafted with the input of the consultants.

“In view of the fact that the allegations referred to and widely publicized are malicious and false, intended only to injure the reputation of the Institution, we are consulting our lawyers and reserve the right to take legal action against all concerned for recovery of aggravated damages, both as a corporate and the senior executives in their individual capacity,” the Group chairman said.

The firm has remained robust despite the rising negative macroeconomic drivers in the real estate sector that have shaken the operations of many financial service providers.

HF Development and Investments HFDI, the Group’s real estate developer, is this year on course to complete mega projects initiated by the firm. Phase 1 of the 1,272 Komarock Heights units, comprising of 480 houses will be completed in March this year. The project was commissioned by President Uhuru Kenyatta in August 2015. Already the property development arm has presold 15% of the 480-units. Phase 1 of the Sh7.5 billion project comprises of a mix of two and three bed-roomed units totaling 480 apartments targeting the largely inclusive middle-income population.

Under the Group’s five-year strategy, HFDI will deliver at least 10,000 housing units by 2020 annually.