I&M Bank’s Rwanda unit has recently been hit by a major setback, experiencing a significant financial loss of $10.3 million. The astonishing sum was drained through a series of fraudulent customer withdrawals that occurred over a period of less than three months, leaving the bank reeling from the impact. In response to this distressing incident, the bank has launched a thorough investigation in an urgent bid to recover the substantial amount.
To comprehend the gravity of this loss, it is important to note that it surpasses the entire net profit of $7.6 million generated by I&M Group in the Rwandan market during the previous financial year, which concluded in December 2022. These illicit withdrawals took place between November 1 of the preceding year and January 17, catching the bank off guard and highlighting the need for enhanced security measures.
In a bold and commendable move, I&M Group opted for complete transparency by disclosing this unsettling revelation in its annual report. This timely disclosure was made following the closure of the financial year, ensuring that shareholders were provided with essential information well in advance of the highly anticipated general meeting.
According to the comprehensive annual report, “Following the conclusion of the financial year, the management of I&M Bank (Rwanda) PLC unearthed a series of incidents involving fraudulent withdrawals from customer wallets, amounting to an astounding $10.3 million between November 1 and January 17, 2023. While some funds have already been successfully recovered, ongoing investigations continue to shed light on this distressing matter.”
In such challenging circumstances, banks can find solace in the fact that they typically have insurance coverage for cash at hand, cash at the bank, and cash in transit. This offers a glimmer of hope for I&M Bank, as a portion of the colossal losses may be mitigated by the involvement of underwriters, thereby alleviating the burden to some extent.
I&M Bank made its strategic entry into the Rwandan market back in 2012 through the acquisition of a majority shareholding in Banque Commerciale du Rwanda. Currently, the bank maintains a controlling stake of 54.47 percent through BCR Investment Company, with an impressive valuation of $15.4 million as of December.
With a widespread network serving over 65,000 customers through approximately 18 branches, 33 ATMs, and a dedicated team of more than 400 employees, I&M Rwanda has emerged as the most lucrative venture for I&M Bank outside of its home territory in Kenya.
In the preceding fiscal year, I&M Rwanda witnessed substantial growth, recording a net profit of $7.6 million from a remarkable turnover of $73 million. In comparison, the bank’s operations in Mauritius and Uganda achieved noteworthy net profits of $4.7 million and $2.1 million, respectively.
However, the same period witnessed the Tanzanian unit struggling with adversity, incurring a net loss of $3.7 million. On the flip side, I&M Kenya defied the odds by catapulting its net earnings from $54 million to an impressive $74.6 million. This commendable performance resulted in an astounding 37.7 percent growth in the group’s overall profitability, reaching a remarkable $82 million.
As I&M Bank navigates the aftermath of this significant loss, the ongoing investigations offer a glimmer of hope. The banking industry must remain ever-vigilant and resolute in its efforts to combat fraudulent activities, ensuring the continued financial well-being and security of institutions and their valued customers.
