I&M Bank FY’2016 Results: Profit after Tax grew by 10.3% to Ksh.6.5 billion

I&M Bank released FY’2016 results

I&M Bank posted a 10.3 percent growth in Profit after Tax to Ksh.6.5 billion from Ksh.6 billion in FY’2015. This was driven by a 20.6 percent growth in operating revenue to Ksh.17.6 billion from Ksh.14.6 billion in FY’2015, despite a higher growth in operating expenses that grew by 48.3 percent to Ksh.8.6 billion from Ksh.5.8 billion in FY’2015.

Note that, these are the results for the bank, the results for the holding company, which is the listed entity, is to be released at a later date.

Key points to note include:

  • Operating revenue increased by 20.6 percent to Ksh.17.6 billion from Ksh.14.6 billion in FY’2015. This was driven by Net Interest Income which grew by 23.1 percent to Ksh.13.6 billion from Ksh.11 billion in FY’2015, following a 10.7 percent growth in Interest Income to Ksh.21.8 billion from Ksh.19.7 billion in FY’2015 outpacing a 5 percent decline in Interest Expense to Ksh.8.2 billion from Ksh.8.6 billion in FY’2015.
  • The Net Interest Margin improved to 10.9 percent from 9.4 percent in FY’2015.
  • Non-Funded Income increased by 12.8 percent to Ksh.4 billion from Ksh.3.6 billion in FY’2015, owing to an increase in other fees and commissions that rose by 27.5 percent to Ksh.1.5 billion from Ksh.1.2 billion. This takes the revenue mix to 67:33, Funded: Non-Funded from 71:29 in FY’2015.
  • Operating expenses grew by 48.3 percent to Ksh.8.6 billion from Ksh.5.8 billion in FY’2015. This was due to a 314.9 percent growth in Loan Loss Provisions (LLP) to Ksh.2.9 billion from Ksh.0.7 billion in FY’2015 as a result of the NPLs ratio increasing to 6.8 percent from 4.4 percent in FY’2015. Staff costs also rose by 4.8 percent to Ksh.2.5 billion from Ksh.2.4 billion in FY’2015.
  • The Cost to Income ratio (CIR) increased to 48.6 percent from 39.9 percent in FY’2015. Without LLP, the CIR declined to 32.2 percent from 35.2 percent in FY’2015.
  • Total Assets increased by 10.5 percent to Ksh.182.1 billion from Ksh.164.8 billion driven by an increase in net loans by 5 percent to Ksh.120.7 billion from Ksh.114.9 billion in FY’2015.
  • Total Liabilities increased by 8.7 percent to Ksh.150.1 billion from Ksh.138.0 billion, as deposits rose by 10.9 percent to Ksh.129.6 billion from Ksh.116.8 billion in FY’2015. The faster growth in deposits than loans led to the loan deposit ratio declining to 93.1 percent from 98.4 percent in FY’2015.
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Going forward, we expect growth to be driven by:

  1. High operating efficiency
  2. Full adoption of internet banking to enhance loans disbursement and deposit mobilization, which will further drive up efficiency.

However, a major challenge they face is stiff competition for clients from larger existing Tier 1 banks in the SME and retail sectors.

Mr. Felix
A Math Nerd and a Computer Geek. Currently a Windows 10 Insider. Interested in AI, big data and AR/VR. Takes a keen interest in developments in the tech, business and social media spheres.

Mr. Felix

A Math Nerd and a Computer Geek. Currently a Windows 10 Insider. Interested in AI, big data and AR/VR. Takes a keen interest in developments in the tech, business and social media spheres.

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