I&M GROUP STRONG GROWTH

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 I&M Group has sustained its growth momentum into the first half of 2022 after reporting a 16% growth in profit after tax to Kshs.  4.9 billion compared to Kshs.  4.2 billion in the same period in 2021. During the period under review, the group’s balance sheet and income improved while strong liquidity and a solid capital base were maintained. Its total assets grew by 15% to Kshs.  440 billion, up from Kshs. 382 billion in June 2021.

By the same token, the loan portfolio increased by 13% to Kshs.  231 billion, while investments in government securities were up by 17%. Additionally, the net non-performing loans stood at 2.3%, decreasing by 31% year on year on the back of increases in the loan book and recoveries. Finally,  the  customer deposits closed at Kshs. 313 billion, a 13% increase year on year.

Income statement

Net interest income for the period under review recorded a growth of 19%, closing at Kshs. 10.5 billion, an increase from Kshs. 8.9 billion in June 2021, reflecting improved earnings on loans and advances as well as government securities.

The strong growth in non-interest income was driven by a 44% increase in fees and commissions and a jump in foreign exchange trading income from Kshs.  770 million in the half year results of 2021 to Kshs.  1.9 billion.  Loan loss provisions increased by 24% compared to the previous year as the group remained prudent on credit risk provisioning.

Commenting on the results, Mr. Daniel Ndonye, Chairman, I&M Group, noted: “This performance reflects positive underlying trends across the entire business resulting from gains made in implementing our iMara 2.0 strategy.”  He added:  “Our key focus going forward is to accelerate the digital transformation journey through rolling out more innovative solutions and embedding digital channels to ensure that we deliver the value add financial solutions for our customers.” During the period under review, I&M Group significantly increased its digital services, with 85% of its customers now initiating transactions through digital channels.

Market driven solutions

The Group including its Eastern Africa subsidiaries, rolled out new digital solutions aligned to its business growth strategy. In Kenya, I&M Bank launched its unsecured automated lending solution targeting small businesses and retail clients through its state of the art mobile and internet banking platform – I&M On-The-Go (OTG).  This solution enables a customer to conveniently apply for a loan from an amount of Kshs. 50,000 up to a maximum of Kshs. 3 million for a period of four years. In Tanzania, the partnership launch with Airtel of its mobile lending solution, Kamalisha, is showing good early uptake.

The Kenyan subsidiary has continued to invest in financial support programmes geared towards financing  micro, small and medium  enterprises (MSMEs) through partnering with IFC and FMO to provide access to financing for working capital, expansion, and to weather the effects of Covid-19. The move is part of the group’s strategy to diversify its revenue streams for business growth through deeper penetration in the MSME space.

Also, I&M Bank, Kenya launched an enhanced set of financial solutions tailor-made to support its   strategy of growing its retail and MSME segments. These include simplified transactional accounts such as the pay-go and club accounts, targeting young professionals and high net-worth Individuals, as well as   the business premier account and business account, catering for the corporate and business clients. Also the offerings come with a set of world-class debit cards extended in partnership with Mastercard.

In Rwanda, I&M Bank via its partnership with SPENN launched a loan product for micro borrowers, allowing its clients to borrow up to Rwf 500,000, (Kshs. 58,000), supporting deeper financial inclusion among Rwandese. To support its regional customers, the group launched a single transactional account and real-time payments platform known as I&M brisk, which allows its customers to access real-time withdrawals, deposits and funds transfers at any branch in Kenya, Rwanda and Tanzania.

Regional performance

The group’s flagship subsidiary, I&M Bank, Kenya recorded a profit after tax of Kshs. 3.8 billion, compared to Kshs. 3 billion in June 2021 reflecting a 27% year on year growth. The performance was driven by growth in net interest income and non-funded income by 11% and 20% respectively and a reduction in loan loss provisions. Total assets grew by 13% to close at Kshs. 319 billion driven by a 12% growth in the loan book. 

I&M Bank Rwanda reported a 29% increase in profit after tax for the half year to June 2022. The bank’s strong performance was driven by increased economic activity, with loans and deposits growing by 21% and 27% respectively, which in turn led to strong growth in net interest income and net fee income. The Rwandan subsidiary continues its focus on enhancing digital services adoption – 75% of its customers now initiate transactions through digital channels.

In Tanzania, I&M recorded a marginal drop in profit after tax to Tshs.  2.4 billion, (Kshs.  117 million)  compared to Tshs. 2.5 billion  (Kshs. 116.9 million)  in June 2021, reflecting an increase of 14% in operating expenses due to investment in technology and additional impairment provisions of Tshs. 1.4 billion (Kshs.  70 million). The balance sheet grew by 9% to close at Tshs. 613 billion (Kshs. 31 billion).

I&M Bank Uganda reported its first year-on-year results as a member of the group, posting a profit after tax of Ugx. 776 million (Kshs.  25 million). This reflects an increase in operating income to Ugx 26 billion, (Kshs.  831 million), reduced loan loss provisions and increased recoveries. The balance sheet reported a 4% year on year growth to close at Ugx 809 billion, (Kshs. 25 billion). I&M Group completed the acquisition of a 90 percent stake in Uganda’s Orient Bank Limited on 30 April 2021.

The Group’s joint venture, Bank One in Mauritius recorded a profit after tax of Mur 160 million (Kshs.  411 million) for the 6 months to June 2022 compared to Mur 198 million (Kshs.  536 million) for the same period last year. The half year results for 2021 included one off exceptional gains of Mur 78 million (Kshs.  29 million) on sale of financial assets. Recently,  the  bank was ranked as the fifth most valuable bank brand and seventh most valuable brand in Kenya by the international branding agency, Brand Finance, in its Kenya report, 2022.

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