I&M Group PLC delivers strong growth with a 16% increase in Profit after Tax as it continues investment in its digital and regional growth strategy:
I&M Group PLC has sustained its growth momentum into the first half of 2022, with the Group reporting a 16% growth in profit after tax to Kes 4.9 billion compared to Kes 4.2 billion in the same period in 2021.
Key Financial Performance
During the period under review, the Group’s balance sheet and income improved while strong liquidity and a solid capital base were maintained.
Balance sheet highlights
The Group’s total assets grew by 15% to Kes 440 billion, up from Kes 382 billion in June 2021.
The loan portfolio increased by 13% to Kes 231 billion, while investments in government securities were up by 17%.
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.
Customer deposits closed at Kes. 313 billion, a 13% increase year on year.
Income statement highlights
Net interest income for the period under review recorded a growth of 19%, closing at Kes. 10.5 billion, an increase from Kes. 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 Kes 770 million in HY 2021 to Kes 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 PLC, noted:
“This performance reflects positive underlying trends across the entire business resulting from gains made in implementing our iMara 2.0 strategy.” Ndonye 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 Kes 50,000 up to a maximum of Kes 3 million for a period of 4 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 small businesses (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 the Bank’s strategy of growing its Retail and MSME segments. These include simplified transactional accounts such as the Pay-Go and Club Accounts, targeting the Young Professionals and High Networth Individuals, and 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, (Kes 58000), supporting deeper financial inclusion among Rwandans.
To support its Regional customers, the Group launched a single transactional account and real-time payments platform known as I&M BRISK, which allows I&M Bank customers to access real-time withdrawals, deposits and funds transfers at any I&M Bank branch in Kenya, Rwanda, and Tanzania using their existing account.
The Group’s Flagship subsidiary, I&M Bank, Kenya recorded a profit after tax of Ksh. 3.8 billion, compared to Ksh. 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 Ksh. 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 Tsh 2.4 billion, (Kes 117 Million) compared to Tsh. 2.5 billion (Kes 116.9 million) in June 2021, reflecting an increase of 14% in operating expenses due to investment in technology and additional impairment provisions of Tsh 1.4 billion (Kes 70 million). The balance sheet grew by 9% to close at Tsh. 613 billion. (Kes 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 (Kes 25 million). This reflects an increase in operating income to Ugx 26 billion, (Kes 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, (Kes 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 (Kes 411 million) for the 6 months to June 2022 compared to Mur 198 million (Kes 536 million) for the same period last year. The half year results for 2021 included one off exceptional gains of Mur 78 million (Kes 29 million) on sale of financial assets.
Outlook to December 2022
Amidst the recent general election in Kenya as well as the ongoing geo-political tensions in Russia and Ukraine, the Group’s Executive Director, Mr. Sarit Raja Shah remains positive about the Group’s performance in the second half of 2022.
Recently I&M 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.
“While the outlook for the global economy in 2022 is uncertain, we are encouraged by the strong and resilient base we have built in the past few years, which should support the Group to mitigate risks arising from credit, cybersecurity, or generally weak economic conditions,” said Mr. Shah.
He concluded: “The Group continues to seek strategic partnerships to deliver efficiency and profitability across the region.”