I&M Bank to raise Rwf10 billion by rights issue

I&M Bank head office. The bank’s net interest revenue recorded an 8 per cent increase to Rwf22 billion in 2019 from Rwf20.2 billion in the previous year. / Sam Ngendahimana.

I&M Bank Rwanda PLC will in the course of the year be seeking to raise Rwf10bn by rights issue in a bid to capitalize operations of the bank. The rights issue will see existing shareholders of the bank  existing shareholders offered an opportunity to buy more shares in proportion to their holding of ‘old shares’.

This was agreed upon by the bank’s shareholders during their Annual General Meeting on Monday June 22 which was held virtually.

 

The AGM approved a recommendation by the Board to issue further capital to meet the growing level of operations as well as maintain key ratios specified by the financial sector regulator.

 

This will see the financial institution which is a listed company raise Rwf 10B by issuing shares to holders of ordinary shares of the Company in such proportion to the existing shares held by them at the close of business on such date to be fixed by the Directors and at such price as shall be determined by the Directors.

 

While it is not exactly when the rights issue will take place, William Irwin the Board Chairperson said that they were likely to do it before the end of the year.

Anita Umulisa, the Bank’s Chief Financial Officer said that among the reasons necessitating  raising further capital  was to support continued business expansion. In recent months, the bank’s business lines have been expanding steadily with its loan book expanding by 17 per cent to Rwf201 billion in the first quarter of 2020.

Umulisa said that additional capital would support plans for expansion and maximization of digital platforms which is an emerging trend in the local financial scene.

The capital is also expected to give the bank liquidity to service the market as the economy recovers from the Covid-19 pandemic.

Consequently, the meeting also approved a recommendation by the board to increase the current Bank’s authorized share capital from Rwf6bn comprising of 600,000,000 ordinary shares of Rwf10 each up to Rwf25bn comprising 2,500,000,000 ordinary shares of Rwf10 each.

 A final dividend disbursing Rwf1.515bn was approved at Rwf3 per share for the financial year ended December 31, 2019. The dividend payout is however unlikely to be paid out this year as per the directives by the Central Bank.

Commenting on the impact of Covid19 to the Non-performing Loans, Faustin Byishimo Executive Director at the bank said that it was still too early to be certain. He said that more accurate projections will be possible towards the end of the year but noted that they had modelled scenarios of various possibilities including double the NPL.

Later in the year, William Irwin the Board Chairperson said that they are likely to look into their branch network and its fate as increasingly, more transactions are being conducted digitally and remotely.

I&M Bank Rwanda’s net interest revenue recorded an 8 percent increase to Rwf22 billion in 2019 from Rwf20.2 billion in the previous year.

However, I&M Bank’s bottom line decreased to Rwf6.1 billion in 2019, down from Rwf7.5 billion realised a year before.

This was attributed to initiatives taken by the Bank to strengthen its human capital and uplift its technological readiness.  

This included the depreciation costs on the investment in Finacle – the core banking system – and an exceptional one-off expense relating to a voluntary severance scheme when 29 staff retired.

Robin Bairstow the Managing Director of the bank said that at the moment their key focus was their customers and would be involved in the disbursement of the Economic Recovery Fund.

I&M Bank has had multiple interventions to its clients in response to the pandemic including relief on loan repayment burden as the lender has reduced its base lending rate from 16.5 per cent to 16 per cent in April this year.

By reducing the base rate, the bank consequently reduced its revenue to support their customers amid the pandemic.

The bank also extended a grace period of up to 3 months for principal and/or interest payments in support of those businesses or retail clients’ who are being financially affected by the pandemic.

This was with understanding that a majority of their clients’ cash flows have been interrupted by the pandemic and could have liquidity challenges in the short term.

cmwai@newtimesrwanda.com

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