I&M Group has raised its dividend per share by 17.6 percent to Sh3 after posting a 21.9 percent growth in net profit for the year ended December 2024.
The lender's profit after tax for the period hit Sh15.3 billion, up from Sh12.6 billion in 2023, helping it to declare a final dividend of Sh1.70 per share after paying an interim dividend of Sh1.30 in January.
I&M's total dividend for the 12 months will be Sh5 billion, up from Sh4.2 billion a year earlier, or a dividend of Sh2.55 per share, representing a payout ratio of 32.6 percent, above the bank’s payout guidance of 30 percent.
“We have had a target ratio of 30 percent but ultimately, the payouts we give in any given year are usually driven by the capital needs that we have for future growth. Balancing that altogether, we are happy to push our payout ratio this year,” said I&M Group Plc chief executive officer Kihara Maina.
The final dividend will be payable on or before May 22, 2025, to registered shareholders as of April 18.
I&M’s profit growth of 21.9 percent was largely driven by higher revenues from lending as net interest income rose by 31.1 percent to Sh37.5 billion from Sh28.6 billion previously.
The rise in interest income was achieved against the backdrop of high borrowing costs, which improved the banks' lending margins even as they increased the industry’s funding expenses.
“Asset liability management is a strength we have really been working on especially when you have a high interest environment which puts pressure on both sides of the value chain. Margin management is something every bank must focus on,” added Mr Maina.
The higher net interest income for the bank helped offset a 2.9 percent dip in non-interest funded income, which fell to Sh13.6 billion from Sh14 billion on lower foreign exchange trading income during the year.
I&M’s balance sheet was, meanwhile, largely unchanged as the strengthening of the Kenyan shilling impacted the size of net loans and advances to customers alongside client deposits.
The net loans and advances to customers, for instance, fell by 7.9 percent to Sh287 billion from Sh311.3 billion a year before.
Customer deposits marked a marginal drop to Sh412.1 billion from Sh416.6 billion.
I&M kept cost growth below income, with its non-interest related expenses climbing by a lower 14.7 percent to Sh31.3 billion from Sh27.2 billion previously.
The higher expenses were partly attributable to increased loan-loss provisions, which hit Sh7.8 billion from Sh6.8 billion the previous year.
The increased cover for expected credit losses was nevertheless against a negligible change in the group’s gross non-performing loans, which closed the year at Sh35.5 billion from Sh35.3 billion in 2023.
