I&M Bank’s profits rise by 15 percent as the lender intensifies regional expansion

• With operations in Kenya, Rwanda, Tanzania, Uganda and Mauritius, I&M Bank has attributed 15 per cent profit growth to an increase in its operating income.

• Its loan portfolio grew by 30 per cent to $2.4 billion, partly attributed to the extension of retail lending through digital platforms.

• Customer deposits closed at $3.2 billion, a 33% increase year-on-year, attributed mainly to growth in current and savings accounts.

Nairobi Securities Exchange-listed lender I&M Group PLC has recorded a profit after tax of $101.5 million for the year ended December 31, 2023, up from $88.5 million, as it continued with its regional expansion.

The financial services provider, which operates in Kenya, Rwanda, Tanzania, Uganda, and Mauritius, has attributed the 15 per cent growth in its profits to an increase in its operating income.

In the context of the Group’s strategic focus, the management said that 2023 performance is a clear affirmation that its iMara2.0 strategy, which ended in 2023 after three years, has delivered remarkable year-on-year results.

The focus on delivering the iMara2.0 strategy over the past three years has seen a return on equity grow from 10 per cent in 2020 to 15 per cent in 2023.

During the period, operating income grew by 20 per cent from $274.8 million in the previous year to $328.2 million, with 20 per cent of this revenue coming from new strategic initiatives.

The Group’s balance sheet and income metrics improved, with the liquidity and capital ratios remaining strong, with total assets increasing by $1.08 billion to $4.4 billion.

The loan portfolio grew by 30 per cent to $2.4 billion, partly attributed to the extension of retail lending through the bank’s digital platforms with a net non-performing loan ratio at five per cent as of  December 2023.

Customer deposits closed at $3.2 billion, recording a 33 per cent increase year-on-year, primarily attributed to current and savings accounts growth.

Growth in operating income was driven by a 25 per cent increase in net interest income on the back of rising interest rates and a 10 per cent growth in non-interest income for the period under review.

Non-interest income growth is attributed to growth in income from banking transactions and foreign exchange trading.

The Group’s operating expenses, exclusive of loan loss provisions, rose by 26 per cent year-on-year to close at $152.7 million because of branch expansion, inflationary pressures and increased investment in staff and technology, management notes.

Group’s share of profit from its joint venture in Mauritius, Bank One Limited, recorded a year-on-year growth of 82 per cent to close at $9.2 million.

Commenting on the results, I&M Group PLC, Regional CEO Kihara Maina, said: “Building upon the success of our recently concluded iMara 2.0 strategy, we have witnessed remarkable achievements in both profitability and growth in our various business units.”

“As we venture into the next chapter with our iMara 3.0 strategy, our primary aim is to sustain the growth through continued focus on enhancing our digital solutions platforms and building an ecosystem to support our customers’ businesses as we seek to become Eastern Africa’s Leading Financial Partner for Growth,” Maina added.

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I&M Bank Kenya

I&M Bank Kenya posted an operating income growth of 14 per cent year-on-year, a seven per cent increase in operating profit and a one per cent drop in profit before tax due to higher loan loss provisions.

In the prior year, the successful implementation of the bank’s iMara strategy resulted in significant growth in new customers, deposits, primarily current and savings accounts, and customer loans.

According to management, through relevant product innovation and brand building, brand awareness grew from five per cent to 20 per cent. As part of the strategy, the bank has also seen significant growth in adopting its digital services, with 93 per cent of customers being digitally active.

I&M Bank Kenya CEO Gul Khan said: “Throughout the year, our primary focus was on delivering new and relevant financial solutions designed to solve problems for Kenyans, which resulted in a 27 per cent increase in our total customers and over 100 per cent increase in digital transactions.”

According to Khan, the bank saw significant growth driven by innovative solutions such as the ongoing “Ni Sare Kabisa” free transfers to M-Pesa and Airtel Money from Bank accounts and the largest unsecured personal loan of up to Ksh10 million (Sh76,335).

“Our commitment to customer-centricity remains firm, as evidenced by our countrywide branch expansion, which has seen us open eight branches, with plans to open 12 more, to be closer to our customers. Furthermore, we will continue to launch new and relevant solutions for our customers as we celebrate 50 years of I&M Bank in Kenya,” Khan said.

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Regional growth

The Group’s regional subsidiaries continued to show steady growth, contributing 24 per cent to the Group’s overall profitability. For the period ending December 2023, 78 per cent of I&M Group customers across the region were digitally active, with non-branch transactions increasing to 81 per cent.

I&M Bank in Rwanda reported a 24 per cent increase in profit before tax for the period under review. The Bank’s strong performance was driven by increased economic activity in the region, with loans and deposits growing by 48 per cent and 39 per cent, respectively, which led to growth in net interest income and non-funded income.

In Tanzania, the bank recorded a profit before tax of USD2.4 million, up from a loss of USD5.3 million in 2022,  on the back of strong growth in total assets of 47 per cent, with loans and deposits growing by 45 per cent and 55 per cent, respectively.

I&M Bank Uganda posted strong growth in operating income of 41 per cent. Total assets reported a 44 per cent year-on-year growth to close at USD290.1 million,  with growth in the loans and deposits book at 53 per cent and 38 per cent, respectively.

The Group’s joint venture investment in Mauritius, Bank One, recorded a growth of 80 per cent in profit before tax year on year, driven by the loan portfolio growth and higher non-interest income.

Read also: Banking in Africa- A case of resilience

50 years of I&M Bank

I&M Bank celebrates its golden jubilee this year, marking 50 glorious years since its incorporation in 1974.

The entrepreneurial spark of the Founder and Chairman Emeritus, SBR Shah, MBS ignited a vision of greatness that has seen I&M Bank grow from a community-based lending outfit to a regional financial services Group with a presence in five countries.

I&M Group has been on a transformation journey since the beginning of 2016, deepening its presence in the Eastern African market while also penetrating key growth segments; iMara 2.0 set the foundation towards being a diversified banking group.

Non-financials

The Group continues to build a relevant brand, as evidenced by an enhanced net promoter score of 71 per cent in 2023 compared to 34 per cent in 2020. Customer numbers went up to 560,000 from 250,000 during the same period.

Digitally active customers increased to 78 per cent in 2023, with 81 per cent of the total transactions done through digital channels. The number of transactions increased to 29 million in 2023 from 6.2 million in 2020,  with a value of $9.2 billion.

The Group’s employee engagement increased to 78 per cent from 75 per cent in 2020.

I&M Group has a long-standing presence in the Kenyan market, including banking, insurance, and real estate.

The Group offers a full range of banking and financial services covering corporate and institutional banking, personal and business banking, bancassurance, wealth management, and advisory services with a presence spanning five countries.

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