I&M Holdings Records a 6% Decline in Profits before Tax

I&M Holdings Limited (IMHL) has recorded a 6 percent decline its Profit Before Tax for the year ended 31 December 2017 closing in at 9.9 billion shillings down from 10.6 billion shillings in the previous year.

The decline was attributed to the economic headwinds experienced last year in Kenya and the unintended consequences of interest rate capping.

The Group’s loan book expanded by 14 percent to close at 153 billion shillings up from 135 billion shillings reported the previous year.

Deposits closed at 169 billion shillings up from 147 billion shillings recorded the previous year, representing a 16 percent growth.

Overall, IMHL, which operates in four countries – Kenya, Tanzania, Rwanda and Mauritius through its subsidiaries, affiliates and joint venture investments in each of these countries, maintained a growth trajectory in its total assets, rising 14 percent to 240 billion shillings up from 211 billion shillings reported the previous year.

IMHL Chairman, Daniel Ndonye said that they believe the spirit of the IFRS 9 standard that has come at an appropriate time that dove-tails with their heightened desire to ensure utmost prudence and appropriate pricing of risk.

“At an operating income level, we have managed to maintain performance at the same level as the prior year. In addition, we have set aside 4.1 billion shillings from our profit by way of provisions to deal with certain sectors in our book that have demonstrated signs of stress in late 2017”.

Ndonye said the prolonged electoral process in Kenya, had largely constrained economic growth, with the manufacturing sector especially taking a hit. “In our 44 years of existence, our performance has always closely mirrored that of the Kenyan economy; the country suffers, we suffer, and as it prospers, we prosper.”

I&M Bank Kenya CEO, Kihara Maina said that the Bank’s customers who include local manufacturers, real estate developers, building and construction, and suppliers to the retail sector, had suffered heavily due to unforeseen political, regulatory and market challenges.

“As a responsible banking sector player and conscious of the prevailing challenges, we are committed to supporting our customers navigate through the hard times by providing a much-needed shoulder to lean on,” Kihara said.

While acknowledging the adverse impact of interest rate capping on overall credit expansion the CEO noted that “where the risk-reward tradeoff has met both our expectations, i.e. the customer and the bank, our commitment to lend has remained undiminished.”

IMHL attributed the increase in its operating expenses by 6 percent to the recent acquisition and integration of the former Giro Bank into its system.

The acquisition coupled with the ongoing corporate strategy implementation including a strategic expansion of delivery channels and continued focus on investment in people and systems had served to expand the operating expense base with investment returns on the same expected to accrue in the medium term, he noted.