I&M Bank has announced 1H13 results, posting a 35.1% y/y rise in PAT to KES 2.4bn driven by higher net interest income and growth in non-interest income. Net interest income rose 56.5% y/y to 4.1bn driven by a 17.1% y/y decline in interest expenses to KES 2.7bn. The decline in interest expenses was on the back of lower customer deposit expenses (-21.8.% y/y to KES 2.4bn), enabled by the lower interest rates in 2013 compared to in 2012. Customer deposit expenses declined despite a rise in total customer deposits held (+34.0% y/y to KES 96.9bn). Notably, total interest income rose 16.0% y/y to KES 6.8bn driven by higher interest income from loans and advances (+14.6% y/y to KES 5.5bn) and Government securities (+50.0% y/y to KES 1.2bn). The increased loan interest income was enabled by an expansion in the loan book (+41.8% y/y to KES 84.0bn), that offset lower average lending rates during the period. Non-interest income grew 38.8% y/y to KES 1.8bn driven by higher income from fees and commissions (+48.8% y/y to KES 638.7m) and foreign exchange trading income (+80.1% y/y to KES 687.0m). Operating expenses rose 75.0% y/y to KES 2.4bn, faster than operating income (+50.7% y/y to KES 5.9bn), leading to a 550bps increase in the cost to income ratio to 38.3%. (Courtesy of Kestrel Research)