I&M Group PLC delivers consistent growth in its 2021 full year financials

I&M Group PLC has delivered consistent growth in its 2021 financial results having reported a 3% growth in Profit after tax to Kes 8.6 billion compared to Kes 8.4 billion in the same period in 2020.

The performance was driven mainly by growth in customer deposits and loans as well as continued investment in the digital banking infrastructure. This has positioned the Group to achieve its steady growth trajectory. 

Of note is that the Group has withstood the challenging operating environment and has continued to provide enhanced shareholder value as well as consistently paying dividends to shareholders amidst the two-year COVID -19 pandemic period. For FY 2021, the Board has recommended a dividend payout of 29% up from 22% in the previous year.  

The Group’s flagship subsidiary I&M Bank Limited, Kenya took a more cautious approach during the period under review and has worked to support its clients as well as setting aside higher loan loss provisions than its industry peers. This was necessitated to cushion the Bank from the continuing impact of the pandemic and the heightened geopolitical risks. 

The Group’s Net Non-Performing Loans, however, reduced by 22% during the period under review. This is better than the industry average and can be attributed to a significantly expanded loan book, which grew by 12%, and positive recovery efforts across multiple operations.

Commenting on the results, Mr. Daniel Ndonye, Chairman, I&M Group PLC, noted, “2021, being the second year of the pandemic, was not devoid of challenges. The Group made key investments during the period under review to help us position ourselves better for future growth through enhanced resilience initiatives and optimisation of our operations.”

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“Specifically, we accelerated our digital transformation activities across the Group in a bid to deliver value to our customers through the provision of innovative financial solutions.” Mr. Ndonye noted.  

In Kenya, I&M Bank Limited launched the new digital banking platform, I&M On The Go, through a partnership with Backbase which is a world-leading digital banking platform provider. Additionally, the Bank rolled out its Wealth Management and Advisory Services towards delivering holistic financial solutions to its customers.

The Group’s non-Kenyan banking subsidiaries performed well under difficult operating environments and contribute 13% of the overall profit before tax (versus 5% in 2020). Further, during the period under review, the Group completed its acquisition of Orient Bank in Uganda, thereby completing the expansion of its footprint in the East African region. The rebranded I&M Bank (Uganda) Limited contributed 5% of the Group’s total asset base as at 31st December 2021.  

The Rwandan and Tanzanian subsidiaries made significant investments in their digital solutions during the year, launching digital lending and WhatsApp banking platforms – WhatsApp banking was a first in those markets. The Mauritian joint venture, Bank One, was able to deliver a much-improved performance of 181% growth in profit after tax during the period under review, as compared to a similar period in 2020.

Key Financial Performance

During the period under review, the Group’s balance sheet and income metrics improved on the backdrop of a solid capital base and strong liquidity.

Balance sheet highlights

  • The Group’s total asset base rose to Kshs 415.2 billion, reflecting a 16% year on year growth due to increases in the loan book and investments in government securities.
  • The Group’s loan portfolio grew by 12% to Kshs 210.6 billion as at 31st December 2021, up from Kshs 187.4 billion for the same period the previous year.
  • Customer deposits of the Group closed at Kshs 296.7 billion, or a 13% increase year on year.
  • The Group’s Net Non-Performing loans stood at Kshs 6.1 billion reflecting a 22% reduction year on year, largely due to recoveries and upgrades from Non-performing loans during the year.
  • Shareholder’s Equity for the Group grew to Kshs 69.6 billion from Kshs 64.2 billion, during the period under review. 
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Income statement highlights

  • The Group achieved a profit after tax of Kshs 8.6 billion which was a 3% increase year on year, supported by increased net interest income and share of joint venture profit.
  • Net interest income for the Group recorded a growth of 34% to close at Kshs 20.9 billion, an increase from Kshs 15.6 billion in December 2020 on account of improved earnings from government securities and a reduction in interest expense.
  • The Group’s total non-funded income recorded a marginal rise of 1% to close at Kshs 8.7 billion which was up from Kshs 8.6 billion year on year.
  • The Group’s operating expenses before loan loss provisions stood at Kshs 13.5 billion, an increase of 34% year on year on account of increased investment in digitisation. 
  • The Group’s loan impairment charges for the period stood at Kshs 4.2 billion which was an increase of 70% year on year, to cater for portfolios affected by COVID-19. 

Outlook for 2022

The Group’s Executive Director, Mr. Sarit Raja Shah remained optimistic for the Bank’s performance in 2022, amidst the impact of geo-political tensions in Russia and Ukraine and the upcoming general elections.  “We have good momentum coming into 2022 and are confident that we can continue to execute on our iMara2.0 strategy. Our focus is now to build on our solid foundation through building resilience against emerging operational, credit and cyber risks, and enhancing our liquidity and capital position. We will continue to diversify our revenues through expanding our customer segment penetration, credit offerings and other advisory and wealth management solutions. We remain committed to ensuring that we offer consistent value and growth for our clients.” he reiterated. 

Odipo Riaga
Managing Editor at KachTech Media
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