IM and HFCB join banking rivals in posting higher half-year earnings

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Listed lenders I&M Group PLC and HFCB Group PLC posted higher half-year earnings on Thursday, joining rivals in delivering results that have provided a rare bright spot against the backdrop of a tight domestic economy.

I&M Group net profit after tax grew by 20.4 per cent to hit Sh9.30 billion for the six months that ended on June 30, up from Sh7.73 billion in the same period last year.

The growth in earnings was driven by a 23 per cent surge in total operating income to Sh33.7 billion, supported by a 22.5 per cent rise in net interest income.

The lender's net interest income climbed to Sh25.04 billion, a 22.5 per cent increase supported by a 15 per cent expansion in its loan book to hit Sh334 billion, according to the company's financial statements.

The Group's total assets further grew by 27 per cent to Sh746 billion, while customer deposits increased by 18 per cent to reach Sh505 billion. Asset quality improved with gross non-performing loans (NPL) declining by 12 per cent to Sh30.1 billion, while the net NPL ratio improved to 2.3 per cent from 4.1 per cent a year earlier.

"The strong growth in operating income, combined with the increasing contribution from our regional subsidiaries, reflects a disciplined execution of our diversification strategy," said I&M Group Regional CEO Kihara Maina in a statement.

The regional diversification strategy proved successful, with subsidiaries outside Kenya accounting for 33 per cent of group profit before tax, up from 25 per cent in the prior year.

I&M Bank Rwanda led the regional charge with a 53 per cent increase in profit before tax to Sh2.4 billion, while I&M Bank Uganda recorded a 225 per cent surge in profitability.

I&M Group also raised its provisioning levels, increasing loan-loss provisions by 38 per cent to Sh5.6 billion, amid ongoing geopolitical uncertainty and prevailing domestic economic conditions.

Meanwhile, HFCB Group net profit after tax jumped by 60 per cent to Sh998.3 million for the first half of 2026, up from Sh624.3 million in the same period last year, reflecting strong growth in earnings.

The surge in HFCB’s bottom-line earnings was driven by a 32 per cent increase in total operating income to Sh3.8 billion, supported by a 29 per cent rise in net interest income and a 37 per cent jump in non-funded income to Sh1.16 billion.

The lender also improved its cost-to-income ratio to 51.0 per cent from 52.1 per cent, further boosting profitability.

HFCB's balance sheet expanded 22 per cent to Sh94 billion, with customer deposits climbing 31 per cent to Sh69 billion.

The group reduced its cost of deposits by 68 basis points, pointing to an improved funding mix and greater balance sheet efficiency.

A significant milestone for HFCB was surpassing Sh10 billion in core capital, meeting revised regulatory capital thresholds four years ahead of the 2029 deadline. The group maintained a strong liquidity ratio of 54.4 per cent, more than double the regulatory minimum of 20 per cent.

Following the release of HFCB's financial results, the Nairobi Securities Exchange halted trading in the company's shares for the day, citing the release of results during trading hours contrary to Capital Markets regulations.

The bourse stated that the halt was implemented in accordance with Rule 9.4.2(c) of the NSE Trading Rules for Equity Securities and with the approval of the Capital Markets Authority (CMA). The NSE explained that the measure was "intended to facilitate orderly dissemination and assimilation of the information by the market."

The results from I&M and HFCB follow strong earnings from other listed lenders cementing a trend of record earnings across the sector.

The banking sector has maintained strong earnings growth despite the easing interest-rate environment, with listed lenders riding on cost cutting to drive profitability.

However, analysts remain cautious about the sector's outlook. The NPL ratio, while improving at some institutions, remains elevated across the sector, and asset growth that outruns credit quality improvement could reintroduce provisioning pressures in the coming quarters, bankers say.