At I&M Group, Growth Strategy Fails To Accelerate Profit

I&M Group profit after tax for the three months to March 31, this year, remained flat at Ksh2.7 billion, compared to same period in 2022, weighed down by increased expenses and other provisions.

Profitability remained unchanged despite the 29% growth in total operating income at Ksh9.6 billion, up from Ksh7.4 billion last year. I&M Group PLC recorded a 29% growth in total operating income at Ksh9.6 billion for the first quarter of 2023 up from the Ksh7.4 billion reported during the same period in 2022.

“This first quarter posed its own challenges amidst rising inflation and the high cost of doing business,” said Mr Sarit Raja Shah, Group Executive Director, I&M Group. “We look forward to a continued positive trajectory in the coming quarters.”

Mr Sarit Raja Shah, Group Executive Director, I&M Group PLC, said the Tier 1 bank continues to successfully execute its iMara 2.0 strategy, which is now in its third and final year, focusing on business growth, operational efficiencies, customer centricity and digital transformation.

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 Balance sheet highlights

• The Group’s balance sheet grew steadily with total assets increasing by KES 41.4 billion to KES 472.6 billion.
• The loan portfolio grew by 18% to KES 257.7 billion partly attributed to the extension of retail lending through the Bank’s digital platforms.
• The net non-performing loans stood at KES 10 billion, a reflection of the challenging macro-economic environment.
• Customer deposits closed at KES 324.7 billion, a 5% increase year on year, largely attributed to growth in CASA (Current Accounts and Savings Accounts).

 Income statement 

• While the operating income recorded a strong growth of 29%, profitability was flat due to the growth in both expenses and provisions.
• Growth in total operating income was driven by 17% and 59% growth in Net interest income and non-interest income respectively for the period under review on account of growth in fees, commissions, foreign exchange income as well as interest from the loan portfolio and earnings from government securities.
• The Group’s operating expenses exclusive of loan loss provisions stood at KES 4.4 billion, an increase of 30% year on year on account of continued investment in technology and people across each of the jurisdictions. The cost to income ratio increased marginally from 45% to 46%.

I&M Bank Kenya

I&M Bank Kenya posted a 16% increase in profit before tax for the period under review, driven by a 28% growth in the operating income. I&M Bank Kenya CEO, Mr Gul Khan, said during the first quarter the bank enhanced its retail business. “We take pride in our customer-centricity evidenced by our Net Promoter Score closing at 54% against the banking sector average of 38% in Kenya and plan to roll out several new branches over the next couple of years as we seek to enhance our distribution and visibility,” said Mr Khan.

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As part of iMara strategy, the bank has seen a significant growth in the adoption of its digital services, with 93% of customers initiating their transactions through digital channels. In a move to support millions of mobile money users in Kenya, the Bank recently waived bank to mobile wallet charges.

Regional growth

The Group’s regional subsidiaries continued to show steady growth, contributing 17% to the Group’s overall profitability. For the period ending 31^st March 2023, 77% of I&M customers across the region were digitally active. Non-branch transactions also increased to 76%.

I&M Rwanda reported an 18% increase in profit before tax for the period review. The Bank’s strong performance was driven by increased economic activity in the region, with loans and deposits growing by 11% and 8% respectively, which led to growth in net interest income and non-funded income.

In Tanzania, I&M recorded a profit before tax of Ksh22 million on the back of strong growth in total assets of 22%, with loans and deposits growing by 19% and 26% respectively.

I&M Uganda posted strong growth in operating income of 31%. Total assets reported a 22% year on year growth to close at KES 30.2 billion, with growth in the loan and deposit book at 21% and 17% respectively.

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The Group’s Joint Venture investment in Mauritius, Bank One, recorded a growth of 59% in profit before tax 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 executing the final year of its iMara 2.0 strategy which has been focused on enhancing its corporate strength while scaling up diversification into retail. I&M Group Regional CEO, Mr. Kihara Maina, is positive about the 2023 projection on the back of a robust adoption of the iMara 2.0 strategy.

“Coming into 2023, we have seen good momentum from a great performance in 2022,” Mr Maina said. “As we roll out the final year of our iMara 2.0 strategy, we remain confident in the progress we have made and look forward to taking the lessons into our next strategy in further steering I&M Group as Eastern Africa’s leading financial partner for growth.”