The I&M Bank Rwanda Board has recommended a dividend payment of Rwf5.91 per share for the year ending December 2018, which is a 14 per cent increase from the previous year.

In 2017, shareholders received Rwf5.1 for each share held.

In its financial brief issued early this week, the board proposed a Rwf2.9 billion dividend payout, which is 40 per cent of the bank’s total net profit. The bank posted Rwf7.5 billion in net profit.

The total dividend payout stands at Rwf14.78, from Rwf12.92 in 2017.

“We recorded growth in earnings by managing our operating costs better and sustaining our focus on investments,” said chief executive Robin Bairstow.

With improved earnings, I&M now plans to increase funding to micro and small enterprises.

The bank’s deposits grew by 32.3 per cent, attributed to the 15,000 new customers that the it registered in 2018. Interest income rose by 26 per cent to Rwf30.9 billion, driven by the loan book portfolio and investments made in the money market through government securities and interbank placements, which grew by 15 per cent and 42 per cent respectively.

The bank’s non-performing loans (NPL) ratio stood at 2.53 per cent (Rwf5.2 billion), way below the industry average of 6.4 per cent, but which was an increase from 2.49 per cent (Rwf4.4 billion) the previous year.

The bank attributed the low rate to the improved credit risk assessment which has helped boost its recovery efforts and measured growth of unsecured personal loans.

The low NPL ratio was also boosted by the bank’s decision to stay away from the debt-ridden real estate sector which has failed to attract many buyers.

In 2017, the hospitality industry, which received the bulk of credit, put pressure on the banking sector’s margins.

Over the next five years, the bank will focus on SMEs, in line with customers’ propositions.

“We have been focusing on medium enterprises but we believe that through the revamp and understanding the risks, we could go for micro and small enterprise, as we strategically shun the real estate sector,” said I&M Bank executive director, Faustin Byishimo. “We plan to revamp our products offerings by examining our pricing and coverage, with the aim of tapping into new segments.”

According to the National Bank of Rwanda, in the year to June 2018, credit expansion slowed down as banks took a cautious lending stance amid high NPLs. Across the region, banks increased their appetite to invest in government securities, which are perceived to be less risky.

The situation was compounded by the continuation of interest rate cap on bank loans.

“The saturation of highly financed sectors such as construction led to a decline in demand for credit and ultimately a slowdown in credit growth. Generally, in most EAC countries credit growth has slowed down over the past three years,” the Central Bank Annual Financial Stability report reads.