I&M bank has received a Ksh.4 billion ($40 billion) loan from Dutch Development Bank FMO that will be used to boost loaning to small and medium sized enterprises in the country.
In a statement announcing the inking of the deal which has a five year tenor, Linda Broekhuizen Chief Information Officer (CIO) of FMO expressed her confidence in the accord.
“I&M Bank Kenya really fits our strict selection criteria. The bank has good performance, a strong reputation and has been successful in SME lending,” said Broekhuizen.
“By supporting the expansion of its operations, FMO can help give the local economy an extra boost.”
The bank which has been a client of FMO since 2010 has a long and successful track record of SME finance in the region. Its record made it possible for its affiliate I&M Bank Tanzania to receive loans from the lender as well. The bank has a loan portfolio of roughly Ksh. 121.1 billion ($1.2bn). Thirty percent of this makes up loans to SME-customers.
According to a local daily, other Kenyan lenders such as Co-op Bank, KCB and Equity have in the past taken loans from global lenders such as International Finance Corporation (IFC) since the banks offer auspicious loan return rates.
The rise in international borrowing has also been attributed to the collapse of former Chase Bank and Imperial Bank which owes investors Ksh. 10 billion, discounting interest, in arrears.
SMEs have had trouble acquiring loans from lenders with most banking facilities appending loans to the businesses due to perceived higher risks of default as a result of the Central Bank of Kenya increasing loan interest rates from 4 per cent to 9 per cent.
I&M Bank Kenya is fully owned by I&M Holdings (IMHL), a listed non-operating entity. The main sectors in the portfolio of I&M Bank Kenya are manufacturing, trade, real estate and building and construction.