I&M Group PLC increased its operating income by 23% to KES 19.1 billion in the first half of 2023, up from KES 15.6 billion in the same period in 2022. The operating income was boosted by growth in both corporate and retail segments (29% and 28% year on year growth) as it saw its diversification strategy yield fruit.
The Tier 1 Bank recorded strong operating revenues across its markets, with regional businesses contributing 27% to its revenue.
The Group continues to successfully execute its iMara 2.0 strategy, which is now in its 3rd and final year, focusing on business growth, operational efficiencies, customer centricity and digital transformation.
Key Financial Performance Highlights
Balance sheet highlights
The Group’s balance sheet grew steadily, with total assets crossing the KES 500 Billion mark increasing by 17% over the same period in 2022.
The loan portfolio grew by 17% to reach KES 270 billion partly attributable to retail lending through the Group’s digital platforms despite the challenging macro-economic conditions across most of its markets.
Customer deposits closed at KES 357 billion, a 14% increase year on year, during the period as the Group continued focusing on product innovation and digitization.
The Net Non-Performing Loans stood at KES 10 billion, a reflection of the challenging macro-economic environment.
Income statement highlights
The Group’s operating income recorded a strong growth of 23%. The overall profit declined marginally by 2% to KES 7.0 billion because of increase in loan loss provisions, as the Group maintained prudence.
Growth in operating income was driven by a growth of 16% in Net Interest Income and 37% in Non-Interest Income for the period under review.
The Group’s operating expenses, exclusive of loan loss provisions, stood at KES 9.3 billion, an increase of 28% year on year driven by continued investment in technology and people across all jurisdictions.
Commenting on the results, Mr. Sarit Raja-Shah, Group Executive Director, I&M Group PLC, noted: “The Group has ensured adequate funding and sufficient capital buffers to uphold the present growth momentum as we continue to meaningfully impact customers. The rise in the Non-Performing loan book and provisions reflects our cautious approach to portfolio management amid a challenging business environment. As we move ahead, the Group’s emphasis remains on expanding our portfolio and enabling our customers to achieve their business goals.
I&M Bank Kenya
I&M Bank Kenya posted an operating income growth of 20% year on year, 17% increase in operating profit and a 6% decline in profit before tax, due to higher loan loss provisions.
The successful implementation of the iMara 2.0 strategy resulted in growth in deposits, primarily Current and Savings Accounts , Customer assets and New-to-Bank relationships. Additionally, through relevant product innovation and marketing, the Bank has registered significant growth in brand awareness from 5% to 20% during the first half of the year.
As part of the strategy, the Bank has also seen a significant growth in the adoption of its digital services, with 93.5% of customers initiating their transactions through digital channels leading to the Bank being recognized by Finnovex East Africa for Excellence in Mobile Banking at the prestigious awards.
Commenting on I&M Bank Kenya’s performance, I&M Bank’s CEO Mr. Gul Khan said:
“In the first half of the year, our focus centered on providing relevant financial solutions designed for Kenyans. This included waiving of Bank to mobile wallet charges with the Ni Sare Kabisa campaign to cushion Kenyans against the high cost of living, the Unsecured Personal Loan of up to Kes 10 Million, Digital Unsecured Lending for personal customers and small businesses and Stock Financing. We take pride in our customer-centricity and plan to roll out several new branches over the next couple of months as we seek to move our financial services closer to our customers ,” said Mr. Khan.
Regional growth
Regional subsidiaries of the Group continued to grow steadily, with operating income contribution increasing to 27% from 25% in 2022. For the period ending 30th June 2023, 78.4% of I&M Group customers across the region were digitally active.
I&M Rwanda reported a 15% increase in operating income 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 9% and 11% respectively, which led to growth in net interest income and non-funded income.
In Tanzania, I&M recorded a 56% increase in operating income to close at KES 1.4 billion and 108% increase in operating profit on the back of strong growth in total assets of 24%. Asset growth was supported by loans growth of 19% while deposits increased by 22%.
I&M Uganda posted strong growth in operating income of 42% and an operating profit of 117%, as it continues integrating into the Group. Total assets reported a 28% year on year growth to close at KES 33 billion, with growth in the loan and deposit book at 42% and 13% respectively.
The Group’s Joint Venture investment in Mauritius, Bank One, recorded a growth of 51% in operating income year on year, driven by the growth of the loan portfolio as well as higher Non-Interest Income.
Group Strategy & Outlook for 2023
I&M Group is in the final year of its iMara 2.0 strategy, which has been focused on enhancing its corporate strength while scaling up diversification into retail through an enhanced customer value proposition and building requisite capabilities.
Speaking on the Group’s half year 2023 performance, the Group’s Regional CEO, Mr. Kihara Maina was positive about the Group’s forecast for the second half of 2023 on the back of a robust Group adoption of the iMara 2.0 strategy.
“As we complete the final year of our iMara 2.0 strategy, we remain confident in the progress we have made in further steering I&M Group as Eastern Africa’s leading financial partner for growth. We shall continue to invest in rolling out solutions that meet our customer needs. In line with this, plans are ongoing to roll out an end-to-end Trade Finance platform and a Bancassurance system,” said Mr. Maina.
I&M Bank Group recently joined the United Nations Global Compact (UNGC) reaffirming its dedication to its sustainability initiatives. This significant step aligns with the Group’s iMara 2.0 strategy to embrace sustainability and the UN Sustainable Development Goals (SDGs), thereby aiming to establish a resilient business across its subsidiaries.
I&M Group has undertaken various initiatives to reduce its carbon footprint, ensuring that sustainability remains at the core of its operations. The Group places particular emphasis on environmental responsibility, taking a proactive approach in identifying opportunities to achieve net-zero impact. This includes a focus on digital banking, transitioning to green energy, green financing products, and adopting green buildings. Notably, the recently inaugurated green headquarters in Rwanda serves as the lender’s second green building after 1 Park Avenue in Nairobi.