I&M Bank Kenya contracts IFC 5.4 billion shillings loan to boost lending



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I&M Bank Kenya contracts IFC 5.4 billion shillings loan to boost lending


I&M Bank branch in Nyeri. PHOTO FILE | NMG

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Summary

  • IFC said the loan will have a maturity of up to seven years, with a five-year grace period to comply with the Central Bank of Kenya’s level 2 capital requirements.
  • I&M should lend to groups of clients who meet the definitions defined by the international financier.
  • IFC defines SMEs using various measures, including companies with between 10 and 300 employees or annual sales of Sh10 million to Sh1.5 billion.

I&M Bank Kenya #ticker: I&M will receive a long-term loan of $ 50 million (5.4 billion shillings) from the International Finance Corporation to increase its capital and expand its lending to small and medium enterprises.

The Nairobi Stock Exchange-listed subsidiary of I&M Holdings is the latest among local banks to raise billions of shillings from international financiers to finance their expansion and overcome the increased economic risks brought on by the Covid-19 pandemic.

“The project consists of a $ 50 million (Sh 5.4 billion) Tier 2 qualifying subordinated loan to I&M Bank Limited, the largest subsidiary of I&M Holdings Plc,” IFC said in its investment statements. .

“The proposed investment will provide I&M with a subordinated loan which will qualify as Tier 2 capital under Kenyan laws and regulations, enhancing the bank’s capitalization and to be used to finance its small lending operations. and medium-sized enterprises. “

IFC said the loan will have a maturity of up to seven years, with a five-year grace period to comply with the Central Bank of Kenya’s level 2 capital requirements.

I&M should lend to groups of clients who meet the definitions defined by the international financier.

IFC defines SMEs using various measures, including companies with between 10 and 300 employees or annual sales of Sh10 million to Sh1.5 billion. The loan amount per borrower generally ranges from 1 million shillings to 200 million shillings.

The loan comes at a time when I&M’s parent company has stepped up its investments in the regional market.

I&M Holdings recently completed the acquisition of a 90 percent stake in Ugandan company Orient Bank Limited in a deal in which it spent 3.6 billion shillings.

It also invested an additional 396.7 million shillings in its Mauritius subsidiary Bank One during the fiscal year ended in December to strengthen its capital position.

The Kenyan multinational banking corporation reported a net loss of 687 million shillings from its stake in Bank One during the reporting period, reversing a net profit of 898.9 million shillings recorded the previous year.

This contributed to its consolidated net profit falling to Sh8.4 billion from Sh10.7 billion.

I&M subsequently reduced its proposed dividend to 2.25 shillings per share from the payment of 2.55 shillings per share the previous year. The lender has also offered a free issue of one share for each share held, a move that will double the volume of its outstanding stock to 1.6 billion units.


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