I&M Bank Rwanda is a subsidiary of I&M Holdings (headquartered in Kenya) which has a 55 percent stake in the company through BCR Investment Company (BCRICL).
The Government of Rwanda holds 19.8 percent – being offered to public through IPO. The bank is the third largest bank in Rwanda by assets (RwF 206.45Bn).
The Rwandan banking landscape:
This landscape is concentrated; top four large banks control more than 60% of total assets, net loans and customer deposits.
Currently, large exposures to gross loans ratio is 30.8 percent. Lending is mainly to mortgages, trade and hotels sectors which account for 67.4 percent of total loans. Private sector credit growth remains high (4-year avg. of 25 percent) though the banking sector remains a relatively small part of the economy – loans to GDP is at 22 percent compared to Kenya’s 33 percent. Banks, however face competition on the retail end from SACCOs which have about 33 percent of adults using their services mainly due to ease of accessibility.
Key Banking Sector highlights:
(1.) NIM pressure mainly from corporate clientele bargaining power, 2016 Avg. 9.1%. (2.) Continued cut in NPL ratio (7.5% in 2016 vs. 11.3% in 2011) aided by continued regulatory reform. (3.) CTI has remained sticky above 50% mark on continued expansion strategies over the last decade (4.) Reducing influence of non-funded income. NIR to total income down to 27.8% in 2016 vs. 37.4% in 2012 on increased lending activity.
I&M Bank Rwanda positives:
(1.) Strong balance sheet growth; loan and deposit 4 year historical CAGR of 14.1% & 9.3% vs. industry’s 8.6% and 6.4% respectively (2017-2020 expected CAGR 8.8% and 9.8%). (2.) Low NPL ratio – 4 year Avg. 4.8% vs. industry’s 6.7% (Forecast Avg. 3.4%) (3.) Strong Non-funded income base – 4 year Avg. 42% vs. industry’s 30.8%. (Forecast Avg. 34%)
I&M Bank Rwanda Key Negatives:
(1.) Bank is facing NIM pressure, 2016 NIM at 8.4% vs. industry’s 9.1% (forecast avg. 8.2%). (2.) Above sector CTI 2016 58.1% vs. industry’s 50% (forecast Avg. 58.7%)