I & M Holdings released their 3Q22 earnings results where PAT and EPS were above our expectations by edging up 25.00% y/y and 25.23% respectively to KES 6.18Bn and KES 4.12 driven by a 15.56% increase in net interest income and a 43.00% growth in non-interest income. Trailing ROaE improved 22bps to 13.91% while NIMs remained adequate at 6.46%.
- Loan book grew 11.38% y/y to KES 231.24Bn faster than the 6.71% growth in customer deposits y/y to KES 308.05Bn, taking the Loan to Deposit ratio 315bps higher to 75.07%. Allocation to government securities fell 3.38% to KES 98.83Bn in Q3'22 largely driven by fair value loss through FVCOI as a percentage of government securities rising to 6.01% from 0.49% in Q3'21.
- Digital transactions boosts efficiency: The Cost to income less provisioning improved 285bps in Q3'22 to 45.25% from 48.10% in Q3'21 mainly driven by digital transactions. CTI improvement was also driven by a faster-operating income growth (+23.97% y/y) compared to an 10.22% y/y increase in staff costs to 4.76Bn.
- Asset quality still a concern: Gross NPLs increased 4.22% y/y to KES 23.68Bn lower than loan book growth leading to the NPL ratio declining 65bps to 9.51% below the latest industry average of 14.20%. NPL coverage further improved to 75.41% from 70.59% in Q3'21.
