Regional lender I&M Group has reported a 22.35 percent rise in net profit for the first half of 2026, reaching KES10.17 billion attributable to robust lending income and a sharp improvement in asset quality across its subsidiaries.

During the half, the bank’s profit before tax for the group increased by 15 percent to KES13.13 billion, even as the bank adopted a more prudent stance on provisioning, which rose 38 percent to KES 5.6 billion.

Net interest income, the difference between earnings from loans and payments on deposits, expanded by 22.5 percent to KES25.04 billion, supported by a 15 percent increase in the gross loan book to KES333.8 billion. 

The group’s balance sheet swelled to KES746.3 billion, reflecting a sustained appetite for credit in the region.

Non-interest income, which comprise of fees, commissions and foreign exchange trading, also delivered a strong performance, rising by 24.5 percent to KES 8.66 billion. 

Group’s cost-to-income ratio remained steady at 44 percent, despite a 24 percent rise in operating expenses linked to branch expansion, brand investment and staff upskilling.

A standout feature of the half-year results was the marked improvement in asset quality. Gross non-performing loans (NPLs) fell by 12.4 percent to KES30.11 billion, down from KES34.37 billion a year earlier.

At the same time, the net NPL exposure dropped to KES7.58 billion, representing a net NPL ratio of just 2.3 percent, compared to 5.2 percent in the first half of 2025.

The improvement in the loan book’s health provided some relief as the bank grew its lending portfolio, reducing pressure from credit-loss provisions despite the higher provisioning charge.

Subsidiaries Outperform

I&M Group’s regional push is bearing fruit, with subsidiaries outside Kenya contributing 33 percent of profit before tax, an increase of eight percentage points from the prior year.

Rwanda was a standout performer, contributing 20 percent of group gross earnings compared to 14 percent in the first half of 2025, driven by a 44 percent surge in total assets and a 62 percent increase in government securities investments.

Uganda, where profit before tax jumped by a massive 225 percent year-on-year, saw its contribution rise from 2 percent to 6 percent as the cost-to-income ratio there improved dramatically from 96 percent to 73 percent.

Tanzania, where I&M Group recently increased its stake to 95.5 percent following the exit of minority shareholders PROPARCO and Microfinance East Africa Ltd, contributed 5 percent of the gross profit. The group’s confidence in the Tanzanian market remains high, with the banking sector there offering significant room for growth in under-served segments.

Outlook

I&M Group shares rose approximately 6 percent to KES 79 at the Nairobi Securities Exchange on Thursday following the earnings release, extending a rally that has seen the stock climb 61 percent over the first seven months of the year.

The group’s return on equity strengthened to 17 percent, while its total capital to risk-weighted assets ratio improved to 21.8 percent, significantly above the statutory minimum of 14.5 percent. With liquidity comfortably above regulatory thresholds at 64.9 percent, the bank is well-positioned to navigate the region’s cautiously positive macroeconomic outlook, which is underpinned by East Africa’s forecast GDP growth of 5.8-5.9 percent for 2026.

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