I&M parent firm invests Sh396m in Mauritian unit

I&M Holdings invested an additional Sh396.7 million in its Mauritian subsidiary Bank One in the year ended December to boost its capital position.

The move came as Bank One sought to strengthen its capacity to handle existing and potential defaults in the course of the Covid-19 pandemic that has hurt bank earnings in most parts of the world.

The Nairobi Securities Exchange-listed firm owns 50 percent of the Mauritian lender, with the other half held by the island nation’s conglomerate CIEL Limited.

“At the half year, our shareholders showed their commitment to Bank One with R300 million (Sh793.5 million) Tier 1 capital injection, which was further bolstered by a R600 million (Sh1.5 billion) subordinated bond issue, that was very well received by the market,” the subsidiary says in its latest annual report.

“The bank now has historically high levels of capital. As a result, the Bank’s CARE rating was confirmed at A+ Stable in June 2020.”

I&M’s stake in the Mauritian bank remained unchanged since each shareholder provided its proportionate share of capital.

Bank One raised its provisions significantly in the year ended December, dragging it into a loss that weighed down I&M’s consolidated earnings.

The Kenyan banking multinational reported a net loss of Sh687 million from its ownership in Bank One in the review period, reversing a net profit of Sh898.9 million recorded in the prior year.

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

I&M subsequently cut its proposed dividend to Sh2.25 per share from the previous year’s payout of Sh2.55 per share. The lender also proposed a bonus issue of one share for every one held, a move that will double the volume of its outstanding stock to 1.6 billion units.