I&M Bank profit up 31pc to Sh3.3bn in first quarter

I&M Group has posted a 30.9 percent jump in net profit to Sh3.32 billion in the first quarter of trading ended March 2024 on increased interest income.

The jump in net earnings was from Sh2.54 billion posted in a similar three-month period of last year as net interest income, mainly from lending, grew 37.7 percent to Sh8.39 billion.

The rise in net interest income made up for a 9.4 percent fall in non-interest income to Sh3.16 billion for the lender that mid-February last year waived transactional fees for customers moving money from the bank to mobile money platforms like M-Pesa.

The lender last month explained that the waiver has seen it double the pace of growth in personal accounts, enabling it to expand other business lines, including loan disbursements.

Net loans and advances to customers closed March 2024 at Sh291.48 billion, marking a 13 percent growth from Sh257.7 billion in a similar period last year.

I&M’s operating expenses rose 10 percent to Sh6.64 billion in the period under review even as it cut provisioning for loan defaults to Sh1.54 billion from Sh1.64 billion.

The rise in operating expenses was driven by a 24.2 percent rise in staff costs to Sh1.96 billion, reflecting the expanded staff size and salary increment. The lender mid-January this year opened eight new branches in Kenya and plans to add 12 before the end of the year.

Other operating expenses went up by 15 percent to Sh2.2 billion, contributing to the overall rise in the operating costs for the Nairobi Securities Exchange-listed lender.

The lender follows other tier I lenders including KCB Group, Equity Group, Cooperative Bank of Kenya, NCBA Group and Stanbic Bank which have all posted a growth in net profit in the quarter under review. KCB leads the pack, with net earnings having grown 69 percent to Sh16.06 billion.

I&M will this Friday, March 24, pay a dividend of Sh2.55 per share amounting to Sh4.22 billion on the performance for the year ended December 2023 in which net profit rose 12.7 percent to Sh12.62 billion.

The payout, to be given to shareholders who were on the company’s register at the close of business on April 18, will mark the third straight year of increased distribution to shareholders. The distribution equals what the lender paid in 2019.

I&M founder Suresh Shah, who is also the chairperson, will receive Sh445.2 million for his 10.6 percent stake in the lender while his two sons—Sachit Shah and Sarit Shah—will each receive Sh96.6 million for their stake of 2.3 percent each.

The group is planning to double its physical branches in Kenya to 100 by the end of 2026 in the race to increase its share of retail banking business in the country.