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

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


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

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summary

  • The IFC said the loan will have a maturity of up to seven years, with a five-year grace period to comply with the level 2 capital requirements of the Central Bank of Kenya.
  • I&M should lend to groups of clients who meet the definitions set by the international financier.
  • IFC defines SMEs using various measures, including companies with between 10 and 300 employees or annual sales of 10 million shillings to 1.5 billion shillings.

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.

Nairobi Stock Exchange-listed subsidiary of I&M Holdings is the latest local bank to raise billions of shillings from international financiers to fund expansion and overcome increased economic risks from the Covid-19 pandemic .

“The project consists of a $ 50 million (Sh5.4 billion) Level 2 subordinated loan to I&M Bank Limited, the largest subsidiary of I&M Holdings Plc,” IFC says in its investment information.

“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 lending operations to small businesses. and medium-sized enterprises. “

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

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

IFC defines SMEs using various measures, including companies with between 10 and 300 employees or annual sales of 10 million shillings to 1.5 billion shillings. 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% stake in Uganda Orient Bank Limited under 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 year ended in December to strengthen its capital position.

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

This contributed to the drop in its consolidated net profit to 8.4 billion shillings from 10.7 billion shillings.

I&M then 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 proposed a free issue of one share for each share held, a move that will double the volume of its outstanding shares to 1.6 billion units.


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