IM Bank eyes organic growth as half-year profit hits Sh11.7b

I&M Group is banking on organic growth as it seeks to cement its footprint in the region. The group, which has operations in Mauritius, Uganda, Rwanda, Tanzania and Kenya, targets to have other subsidiaries outside of Kenya contribute 50 per cent to its balance sheet.

In the latest financial results for the first half of the year, these businesses contributed 24 per cent to the group’s profit before tax (PBT), a slight drop from 26 per cent in 2024.

The results show that I&M Group’s profit before tax in the six months to June 30 grew by 34 per cent to Sh11.7 billion.

Customers’ deposits improved by two per cent to Sh429.4 billion while assets went up four per cent to Sh588.9 billion.

Gross non-performing loans (NPL) ratio dropped to 11.8 per cent, an improvement from 12.3 per cent in the same period last year.

This is below the industry NPL ratio of 17.1 per cent. As a result, net NPLs declined from Sh14.7 billion to Sh10.9 billion.

The results show Tanzania’s subsidiary contributed five per cent to the group’s profit before tax numbers, Rwanda 15 per cent, Uganda two per cent and Mauritius four per cent.

Group Chief Executive Kihara Maina said even as the bank seeks to grow its subsidiaries, it will not be at the expense of the Kenyan unit.

“We certainly would like to see at least 50 per cent contribution coming in from outside Kenya, but that is not at the expense of Kenya,” he said. “We expect Kenya will continue growing at a pace. What we want to see is our subsidiaries also growing strongly.”

Maina said, looking at the bank’s market share in subsidiaries such as Tanzania and Uganda, which is just under two per cent, there are significant opportunities to grow those businesses. “There is a lot of ground to make up,” he said. “We have significantly large opportunities in Uganda and Tanzania. As we continue building our business there, we expect that contribution to rise.”

He said the bank aspires to be Eastern Africa’s leading financial partner for growth, adding that just like other banks in Kenya have spread their wings regionally, I&M is also looking into a similar strategy.

“That remains something that we keep watching. In the meantime, organic growth is what is going to really do it for us,” said Maina.

Across the subsidiaries, the group h851,0 customers, which it targets to grow to a million by 2026.

I&M Group Chief Financial Officer David Ngata said the drop in subsidiary contribution from 26 to 24 per cent shows how competitive the businesses are within the group.

However, a keen eye is on Uganda, whose profit before tax is two per cent of the group’s profit before tax, yet it contributes seven per cent to the total asset base.

This is when compared to Rwanda, which contributes 14 per cent to the group’s assets and 15 per cent to profit before tax.

“Kenya’s subsidiary profit is giving 31 per cent. In as much as Kenya is pacing that fast, we are seeing other subsidiaries pushing back to defend their share of contribution across the group’s profitability,” said Ngata.

Kenyan unit’s profit before tax grew 31 per cent to Sh8.2 billion as customers’ deposits went up 0.4 per cent to Sh314.8 billion. Net loans and advances dropped to Sh211.2 billion in the period from Sh216.7 billion.

I&M Bank Kenya Chief Executive Gul Khan noted the 25 per cent increase in customer base to 562,000 even as digital transactions hit 12.9 million in the period. The growth in digital transactions is linked to the group spending 10 per cent of its investment on technology.

“What is pleasing is that our customer experience has held up very well. Our net promoter score is at 81 per cent for the first half of the year. This is more pleasing given the massive increase in our digital transactions on our platform,” he said.