I&M Group HY24 earnings, after ranking top in consumer sentiment

I was a little late to the party as the IMH ticker rallied 66% in a single trading session. It was quite a head scratcher for us, the earnings were out but the frenzy just didn't make any sense. Our chairman thought there might be something we missed in the results but, apart from the near 20% growth in profits and a significant increase in number of customer accounts[FY '23], there wasn't that much to warrant the 66% jump. This was a dilemma for any investor who owned IMH, should you buy more or cash in on your stake? We held our position, which in hindsight seems to have been the right decision, it was however a tough one in the heat of the moment.

I had to thoroughly go through I&M Group's financials, just to make sure there's nothing I missed, the fomo¹ was at its peak.
They announced amazing results for HY '24, the obvious highlights of the results being the 17.4% increase in profit YOY and their perception performance. The 17% growth was driven by growth in a few key areas: their customer centricity was crucial in the 17.5% growth in customer deposits hitting KES 419.4B - amazing numbers that bear testament to their commitment of having the customer at the center of all they do. Net interest income increased by 35%, with the current operating environment the cost of funds was also pretty high; increasing by 61% to KES 14.6B. Loans and advances increased by 5.3% to KES 284.2B, growth that's sustainable.

It wasn't all smooth sailing, however, income from trading foreign exchange took a 37.7% hit - as the shilling has stabilised against other major currencies, non-funded income from this business activity has dropped drastically. Operating expenses were up 13.9% and just like NCBA, staffing costs took the spotlight - increasing by 20% YOY. The increase in staffing costs was expected since the bank is expanding, with plans to open 20 new branches in 2024. Fitch downgraded the firm due to its exposure to the national government’s debt, with a quarter of its total assets held in government securities. In Fitch's opinion selling off a portion of these holdings would help reduce the firm’s risk as a hedge against a possible default by the debtor.

Conclusion

The group's performance was good, they've got great momentum and the potential to end the year on a good note. Unfortunately no interim dividend will be payed out, we'll definitely be looking forward to a fat dividend cheque from the firm at the end of FY '24. The bank has a lot of growth potential and their customer centricity, which was recently recognised when they were ranked first on the Kenya Banking Consumer Sentiment index not too long ago, has lifted them to great heights. They've got a great brand, built on unconventional ideas like the free bank-to-mobile transfers. Their steady YOY growth is sustainable in the long-term and investors are happy with the results, unless you bought in at KES 34 on Thursday.

Recommended reads

5% YOY growth for NCBA as they entice customers with no monthly fees ,
Co-op Bank HY 24 earnings, good enough to cover rating downgrade? ,
KCB Group posts 86% YOY growth in profits - a firm firing on all cylinders

Resources

I&M Group HY '24 Financial results , Investor relations , Fitch downgrade action commentary

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Footnotes

1. Fomo - fear of missing out ↩