I&M Bank Rwanda declares $3.1m dividend

An I&M Bank branch in Kigali. FILE PHOTO | CYRIL NDEGEYA 

In Summary

• Earnings per share increased from Rwf11.61 ($0.013) to Rwf12.92 ($0.015), leaving investors with a large stake in the bank and enjoying growth in the value of their wealth at the Rwandan bourse.
• In 2017, banks saw pressure on their margins come from the hospitality sector which received biggest pile of credit but still faces cash flows challenges.

By KABONA ESIARA
More by this Author

The I&M Bank Rwanda board has proposed a Rwf5.16 ($0.006) per share dividend payout to shareholders after posting strong earnings in the year ending December 2017.

The I&M Bank Rwanda board proposed a $3.08 million dividend payout — 40 per cent of the net profit.

Earnings per share increased from Rwf11.61 ($0.013) to Rwf12.92 ($0.015), leaving investors with a large stake in the bank and enjoying growth in the value of their wealth at the Rwandan bourse.

I&M Holdings, a listed company on the Nairobi Securities Exchange, which holds 79.22 per cent stake in I&M Bank Rwanda, could pocket $2.4 million. Listed shares will earn $604,855, employees will earn $30,520 and individual investors will earn $5,241.

The bank grew its deposits by 32.3 per cent after registering 13,000 new customers. It also reported growth in interest incomes, which increased by 20 per cent to Rwf24.5 billion ($28.9 million).

It kept its non-performing loans (NPL) ratio at 2.49 per cent, way below the industry average of 7.6 per cent, through improved credit risk assessment, a more effective recoveries strategy and measured growth of unsecured personal loans.

In 2017, banks saw pressure on their margins come from the hospitality sector which received biggest pile of credit but still faces cash flows challenges.

“The hospitality industry has a lot of loans which reduces the banking sector’s ability to lend and mobilise cheap deposits,” said Maurice Toroitich managing director Bank Populaire du Rwanda.

Last year, Rwandan banks pumped Rwf70 billion ($82 million) into hotel construction, furnishings, fixtures and equipment. However, $9.5 million of the debt is reported as non-performing loans, which have to be provisioned for, reducing earnings and bank capital levels.

“If the hospitality sector does well, they repay loans, and if not, means defaults,” said Mr Toroitich who doubles as Rwanda Bankers’ Association president.

Central bank data shows that banking profits dropped to Rwf56.1 billion ($63.6 million) in 2017 from Rwf56.7 billion ($66.6 million) between January and December 2016.

This is the sharpest in Rwanda’s banking industry in three straight years from the Rwf57.2 billion ($67 million) in 2015.

Hoteliers say they have many rooms but are low on bookings and occupancy.

Data from Rwanda Development Board shows that the room numbers rose from 8,161 in 2015, to 9,900 in 2016 and 10,488 in 2017 while the number of beds increased to 15,670.

Tourist arrivals recorded by National Bank of Rwanda averaged 5,400.