I&M Group ratings affirmed by Fitch with stable outlook in Kenya

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I&M Group Fitch ratings Kenya

Highlights

I&M Group Plc and I&M Bank LIMITED have their Long-Term Issuer Default Ratings affirmed at 'B-' by Fitch with stable outlooks, aligned with Kenya's rating.
I&M Bank's sovereign exposure remains high, with Kenyan government fixed-income securities comprising 260% of Fitch Core Capital at mid-2026, but non-performing loan ratio improves to 8.4%.
Fitch forecasts Kenya's GDP growth at 4.9% in 2026 and 5.1% in 2027, and projects I&M Group's Fitch Core Capital ratio to rise to 20.3% at mid-2026.

Rating drivers and financial profile

As reported by Fitch Ratings, I&M Group Plc and its core banking subsidiary I&M Bank LIMITED have their Long-Term Issuer Default Ratings affirmed at 'B-', with Viability Ratings of 'b-' reflecting their standalone credit strength and concentration in Kenya. The stable outlooks mirror the outlook on Kenya's own long-term rating, while the group's national long-term ratings remain at 'A+(ken)'.

Fitch says the group's and bank's ratings are constrained by high sovereign exposure relative to capital and by a weaker domestic franchise, profitability and funding structure than other Fitch-rated Kenyan banks. I&M Group is a non-operating bank holding company, and its rating is equalised with the group assessment because of the absence of double leverage and the high fungibility of capital and liquidity.

I&M Bank accounts for 74% of group assets at the end of the first half of 2026, leading Fitch to equalise its viability rating with the group profile. The agency also notes that the bank is a Tier 1 lender in Kenya, holding a 5.6% share of domestic banking sector assets at the end of 2025.

Kenya exposure and outlook implications

Fitch forecasts Kenya's real GDP growth to rise to 4.9% in 2026 and 5.1% in 2027, from 4.6% in 2025. Inflation reaches 6.8% in September 2026 because of spillovers from the Iran conflict, but Fitch expects it to remain within the Central Bank of Kenya's target range.

I&M Bank's holdings of Kenyan government fixed-income securities remain high at about 260% of Fitch Core Capital at the end of the first half of 2026, mainly in treasury bonds. At the same time, the group's regulatory non-performing loan ratio improves to 8.4% from 9.6% at the end of 2025, while total loan loss allowance coverage of impaired loans stands at 75%.

Fitch expects the non-performing loan ratio to improve modestly in the near term, supported by write-offs, recoveries and loan growth. The group's Fitch Core Capital ratio rises to 20.3% at the end of the first half of 2026 from 19.4% at end-2025, while funding remains dominated by customer deposits, including a high 48% share of price-sensitive term deposits, and liquidity stays healthy in both local and foreign currencies.

A downgrade of the long-term ratings would follow a weaker viability assessment, with a sovereign downgrade also capable of pressuring the ratings. Any upgrade would require an improvement in Kenya's sovereign rating alongside stable financial metrics at the group and bank.

In our earlier article on sovereign borrowing risks amid geopolitical tensions and high funding costs, we explained how persistent shocks and elevated fiscal spending can erode fiscal headroom and increase refinancing strain for governments. We also noted that emerging and frontier markets are particularly exposed because debt-service burdens tend to be high relative to narrower revenue bases, while higher energy and food prices can keep inflation elevated and weigh on sovereign credit profiles.

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