I&M Group has increased dividends for the third straight year to Sh2.55 per share amounting to Sh4.22 billion after net profit for the financial year ended December 2023 grew 12.7 percent to Sh12.62 billion.

The proposed dividend per share is a rise from Sh2.25 per share or a total of Sh3.72 billion paid a year earlier. The latest payout equals the per-share distribution that was made by I&M in 2019.

However, the Sh4.22 billion distribution is double that of 2019 considering there has been a rise in issued shares.

I&M directors said the dividend will be paid on or around May 24, to shareholders on the company’s register at the close of business on April 18.

The lender joins Stanbic Holdings and Standard Chartered Bank of Kenya in increasing dividend payout to shareholders on the back of increased profits.

The review period saw I&M’s net interest income rise 24.8 percent to Sh28.6 billion as the loan book grew to Sh311.3 billion from Sh238.59 billion.

Non-interest income was up 10.4 percent to Sh14.05 billion, adding to the growth in operating income.

Operating expenses, however, grew by 27.5 percent to Sh27.2 billion from Sh21.3 billion, mainly on the back of increased provisioning for loan defaults and a surge in staff costs.

Loan loss provisioning rose by 31 percent to Sh6.87 billion to reflect economic difficulties that were facing borrowers as interest rates rose while the rise in staff costs by 15.5 percent to Sh7.48 billion was fuelled by the hiring of new workers as it opened new branches.

“The increase that we see in the non-performing loan really is the reflection of the difficult macroeconomic environment that we have seen particularly here in Kenya,” said Kihara Maina, I&M Group regional CEO.

“We have seen policy responses in central banks in many of our operating environments by increasing rates to deal with inflation and currency movements. We see this start to plateau and we expect to see interest rates start to come down,” said Mr Maina.

Mr Maina said the group closed 2023 with 2,814 employees compared with 2,143, translating to an additional 671 workers, contributing to the rise in staff costs.

Subsidiary performance

I&M Bank Kenya contributed 76 percent or Sh11.76 billion of the group’s Sh15.48 billion pre-tax profit. This was a slight drop from Sh12 billion in the preceding year. I&M Bank Kenya CEO Gul Khan attributed this to the rise in provisioning for loan defaults.

Pre-tax earnings from the Tanzania unit improved to a pre-tax profit of Sh0.3 billion from a Sh0.7 billion loss while that of Rwanda rose to Sh1.9 billion from Sh1.5 billion.

The Uganda unit saw a drop to Sh0.4 billion from Sh0.7 billion as the operations in Mauritius posted a pretax profit of Sh2.6 billion from Sh1.4 billion.

The review period marked the end of I&M’s iMara 2.0 strategy that had run since 2021, helping the group position itself as a diversified banking group.

The group has now embarked on a new strategy, iMara 3.0, which will run until 2026. Some of the targets during this period include growing retail and small and medium-sized enterprises business segments.