I&M Group PLC recorded a 29% growth in total operating income at KES 9.6 billion for the first quarter (Q1) of 2023 up from the KES 7.4 billion reported during the same period in 2022.
The Tier 1 Bank 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
During the period under review, the Group’s balance sheet and income metrics improved on the backdrop of strong liquidity and a solid capital base.
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 highlights
- While the operating income recorded a strong growth of 29%, the Group’s 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%.
Commenting on the results, Mr. Sarit Raja Shah, Group Executive Director, I&M Group PLC, noted:
“This first quarter posed its own challenges amidst rising inflation and the high cost of doing business. Our continued investments in the group-wide iMara 2.0 strategy that focuses on customer centricity and digital transformation as well as the on-going strategic partnerships, have continued to give value to our customers and stakeholders. We look forward to a continued positive trajectory in the coming quarters,” said Mr. Shah.
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.
Commenting on I&M Bank Kenya’s performance, I&M Bank’s CEO Mr. Gul Khan said:
“During the first quarter we enhanced our retail proposition by launching “Ni Sare Kabisa” and “The Largest Unsecured Personal Loan of up to KES 10 million” campaigns as a testament to our continued commitment to solving customer problems. 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.
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 amidst the tough economic environment.
I&M was recently recognized as a leading financial institution in Kenya when it was awarded the ‘Excellence in Mobile Banking’ award at the Finnovex Awards in May 2023 in addition to 4 awards at the Think Business Banking 2023 Awards.
The Group’s regional subsidiaries continued to show steady growth, contributing 17% to the Group’s overall profitability.
For the period ending 31st March 2023, 77% of I&M Group 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 under 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 KES 22 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.
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 through an enhanced customer value proposition and building requisite capabilities.
Speaking on the Group’s Q1 2023 performance, the Group’s Regional CEO, Mr. Kihara Maina was positive about the 2023 projection on the back of a robust Group adoption of the iMara 2.0 strategy.
“Coming into 2023, we have seen good momentum from a great performance in 2022. 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. We will continue to focus on our key areas of emphasis which include enhancing digital capabilities as well as building customer-focused products and services,” said Mr. Maina.