NAIROBI, KENYA, MAR 27 — I&M Holdings Limited (IMHL) profit after tax for the year ended December 31, 2017 declined six per cent (6%) to Ksh9.9 billion from Ksh10.6 billion the previous year, the lender has announced.
The group has attributed the drop to “economic headwinds” experienced last year in Kenya, which include the prolonged general elections and interest rate capping law.
While commenting on the results released on Tuesday, IMHL Chairman Daniel Ndonye said:
“We believe the spirit of the IFRS 9 standard, coming on the back of adverse impact of the interest capping has come at an appropriate time that dove-tails with our heightened desire to ensure outmost prudence and appropriate pricing of risk”.
“At an operating income level, we have managed to maintain performance at the same level as prior year. In addition, we have set aside Ksh 4.1 billion from our profit by way of provisions to deal with certain sectors in our book that have demonstrated signs of stress in late 2017,” he added.
Buoyed by a commitment to continue supporting its customers using robust credit scoring tools, the group posted a 13 per cent growth on its loans and advances to customers to close at Ksh153 billion up from Ksh135 billion reported the previous years.
On the other hand, it displayed a steady capacity to mobilise customer deposits managing to close at Ksh169 billion up from Ksh147 billion recorded the previous year, representing a 15 per cent growth.
Operating expense however increase six per cent, attributed to the recent acquisition and integration of the former Giro Bank into its system.
Ndonye said the implementation of the International Financial Reporting Standard (IFRS) 9 will be good for the industry in the long run, a tacit acknowledgment on the impact of the standard on it financials.
Meanwhile, I&M Bank Kenya CEO Kihara Maina has said the Bank’s customers who include local manufacturers in the plastic carry bags space, real estate developers, building and construction, and suppliers to the retail sector, had suffered heavily due to unforeseen political, regulatory and market challenges.
While acknowledging the adverse impact of interest rate capping on overall credit expansion the CEO said: “where the risk reward tradeoff has met both our expectations, that is the customer and the bank, our commitment to lend has remained undiminished.”
“As a responsible banking sector player and conscious of the prevailing challenges, we are committed to support our customers navigate through the hard times by providing a much needed shoulder to lean on,” he added.
Overall, IMHL, which operates in four countries – Kenya, Tanzania, Rwanda and Mauritius through its subsidiaries, affiliates and joint venture investments in each of these countries, maintained a growth trajectory in its total assets, rising 14 per cent to Ksh240 billion up from Ksh 211 Billion reported the previous year.
IMHL Director, Sarit Raja-Shah noted that the group’s subsidiaries in Tanzania, Rwanda and Mauritius had helped to enhance shareholder value.
“The contribution of our subsidiaries vindicates our regional expansion strategies, regional business now contributes over 20 per cent of overall profit before tax. We shall continue to take advantage of such opportunities as and when they arise,” he said.
The group has stepped up the pursuit of a prudence based operating strategy to ensure business sustainability, the lender said.