UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS JUNE 2017 I&M HOLDINGS LIMITED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE PERIOD ENDED 30 JUNE 2017 COMPANY GROUP UNAUDITED AUDITED UNAUDITED UNAUDITED AUDITED UNAUDITED 30-Jun 31-Dec 30-Jun 30-Jun 31-Dec 30-Jun 2017 2016 2016 2017 2016 2016 KShs '000' KShs '000' KShs '000' KShs '000' KShs '000' KShs '000'

Interest income 35,302 16,940 14,357 11,090,527 24,451,398 11,826,385 Interest expense - - - (4,229,236) (8,929,722) (4,647,603) Net interest income 35,302 16,940 14,357 6,861,291 15,521,676 7,178,782

Fee and commission income - - - 1,432,338 2,734,967 1,265,353 Fee and commission expense - - - (62,328) (182,817) (90,935) Net fee and commission income - - - 1,370,010 2,552,150 1,174,418

Revenue 35,302 16,940 14,357 8,231,301 18,073,826 8,353,200 Other operating income 4,123,534 1,495,904 1,495,739 1,334,903 2,238,169 1,233,454 Operating income 4,158,836 1,512,844 1,510,096 9,566,204 20,311,995 9,586,654

Staff costs - - - (1,910,311) (3,595,375) (1,714,748) Premises and equipment costs - - - (327,269) (571,381) (300,234) General administrative expenses (12,747) (32,790) (11,958) (1,382,466) (2,540,065) (1,029,245) Depreciation and amortisation (47) (94) (43) (261,863) (488,975) (237,451) Operating expenses (12,794) (32,884) (12,001) (3,881,909) (7,195,796) (3,281,678)

Operating profit before impairment Losses and taxation 4,146,042 1,479,960 1,498,095 5,684,295 13,116,199 6,304,976 Net impairment losses on loans and - - - (965,564) (2,956,979) (719,743) advances 4,146,042 1,479,960 1,498,095 4,718,731 10,159,220 5,585,233 Share of profit of Joint Venture - - - 245,462 443,968 240,061 Profit before income tax 4,146,042 1,479,960 1,498,095 4,964,193 10,603,188 5,825,294 Income tax expense (10,163) (3,453) (4,307) (1,534,107) (2,843,026) (1,648,487) Profit for the period 4,135,879 1,476,507 1,493,788 3,430,086 7,760,162 4,176,807 Other comprehensive income - - - 543,701 189,258 110,263 Total comprehensive income for the period 4,135,879 1,476,507 1,493,788 3,973,787 7,949,420 4,287,070 Profit attributable to: Equity holders of the company 4,135,879 1,476,507 1,493,788 3,250,269 7,283,625 3,905,429 Non controlling interest - - - 179,817 476,537 271,378 4,135,879 1,476,507 1,493,788 3,430,086 7,760,162 4,176,807

Total comprehensive income attributable to: Equity holders of the company 4,135,879 1,476,507 1,493,788 3,887,824 7,473,712 4,134,696 Non controlling interest - - - 85,963 475,708 152,374 4,135,879 1,476,507 1,493,788 3,973,787 7,949,420 4,287,070

Basic and diluted earnings Per share - (KShs) 10.00 3.57 3.61 7.86 17.62 9.45 Dividends Per share - (KShs) - Final - 3.50 - - 3.50 - I&M HOLDINGS LIMITED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2017 COMPANY GROUP UNAUDITED AUDITED UNAUDITED UNAUDITED AUDITED UNAUDITED 30-Jun 31-Dec 30-Jun 30-Jun 31-Dec 30-Jun 2017 2016 2016 2017 2016 2016 KShs '000' KShs '000' KShs '000' KShs '000' KShs '000' KShs '000' ASSETS Cash and balances with central - - - 10,270,907 11,083,876 9,839,216 Items in the course of collection - - - 1,426,928 487,791 1,183,886 Placements with financial institutions - - - 6,657,470 6,948,707 8,144,979 Loans and advances to customers - - - 144,546,775 134,675,332 132,463,686 Investment securities 190,392 111,896 - 50,371,550 45,834,460 48,605,745 Investment in Joint Venture 1,679,971 1,679,971 1,679,971 3,884,730 3,508,182 3,309,148 Investment in subsidiaries 24,770,462 19,675,872 19,609,785 - - - Property and equipment 58 105 199 4,905,986 3,906,899 2,915,365 Intangible assets - Goodwill - - - 3,781,971 1,207,048 1,174,601 Intangible assets - Software - - - 240,363 233,405 260,560 Prepaid operating lease rentals - - - 262,253 253,864 281,751 Tax recoverable - 3,954 4,493 621,433 12,541 20,769 Deferred tax asset - - - 568,588 421,121 512,325 Due from group companies 131,614 71,375 157,891 - - - Other assets 7,180 29,456 151,583 1,684,801 1,969,167 1,625,873 TOTAL ASSETS 26,779,677 21,572,629 21,603,922 229,223,755 210,542,393 210,337,904

LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities Deposits from banks - - - 5,900,602 7,795,856 9,649,335 Items in course of collection - - - 7,517 - Deposits from customers - - - 161,526,916 146,514,406 146,416,925 Deferred tax liability - - - 223,424 - 64,042 Tax payable 5,400 - - 226,302 139,813 247,737 Due to group companies 10,929 11,337 16,671 - - - Other liabilities 120,580 66,677 75,355 4,754,611 3,272,187 3,475,307 Long term borrowings - - - 7,860,588 8,759,516 9,537,646 Subordinated debt - - - 4,363,693 4,546,681 4,415,620 136,909 78,014 92,026 184,856,136 171,035,976 173,806,612 Shareholders’ equity Share capital 413,405 392,362 392,362 413,405 392,362 392,362 Share premium 19,784,926 17,331,510 17,331,510 19,784,926 17,331,510 17,331,510 Retained earnings 6,444,437 3,770,743 3,788,024 20,069,782 18,217,056 15,448,231 Revaluation reserve - - - 723,004 718,074 446,744 Available-for-sale reserve - - - (70,236) (353,536) (121,302) Translation reserve - - - (159,393) (287,996) (216,737) Statutory credit risk reserve - - - 1,215,100 1,059,022 968,479 Defined benefit reserve - - - (46,744) (46,744) (39,725) Equity attributable to owners of the company 26,642,768 21,494,615 21,511,896 41,929,844 37,029,748 34,209,562 Non-controlling interest - - - 2,437,775 2,476,669 2,321,730

TOTAL SHAREHOLDERS’ EQUITY 26,642,768 21,494,615 21,511,896 44,367,619 39,506,417 36,531,292

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 26,779,677 21,572,629 21,603,922 229,223,755 210,542,393 210,337,904 I&M HOLDINGS LIMITED UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT JUNE 2017

Share Share Revaluation Available for sale Statutory Loans Retirement Total Retained Translation Non controlling 6 months period to 30 June 2017 capital premium reserve Reserve reserve reserve reserve earnings reserve Total interest Total Kshs '000' Kshs '000' Kshs '000' Kshs '000' Kshs '000' Kshs '000' Kshs '000' Kshs '000' Kshs '000' Kshs '000' Kshs '000' Kshs '000'

At 1 January 2017 392,362 17,331,510 718,074 (353,536) 1,059,022 (46,744) 1,012,278 18,217,056 (287,996) 37,029,748 2,476,669 39,506,417 Net profit after tax ------3,250,269 - 3,250,269 179,817 3,430,086 Other comprehensive income - - 4,930 283,300 156,078 - 156,078 64,644 128,603 637,555 (93,854) 543,701 Total comprehensive income for the period - - 4,930 283,300 156,078 - 156,078 3,314,913 128,603 3,887,824 85,963 3,973,787 Statutory loan loss reserve ------Transactions with owners: - - Issue of additional shares 21,043 2,526,251 ------2,547,294 - 2,547,294 Dividends Paid ------(1,462,187) - (1,462,187) (124,857) (1,587,044) Stamp duty expense (Giro acquisition and One) (72,835) ------(72,835) - (72,835) Total transactions with owners for the period 21,043 2,453,416 - - - - - (1,462,187) - 1,012,272 (124,857) 887,415 - - - Balance as at 30 June 2017 413,405 19,784,926 723,004 (70,236) 1,215,100 (46,744) 1,168,356 20,069,782 (159,393) 41,929,844 2,437,775 44,367,619

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Share Share Revaluation Available for sale Statutory Loans Retirement Total Retained Translation Non controlling For the year ended 31 December 2016 capital premium reserve Reserve reserve reserve reserve earnings reserve Total interest Total Kshs '000' Kshs '000' Kshs '000' Kshs '000' Kshs '000' Kshs '000' Kshs '000' Kshs '000' Kshs '000' Kshs '000' Kshs '000' Kshs '000'

At 1 January 2016 392,362 17,331,510 446,744 (502,206) 912,617 (39,725) 872,892 12,971,933 (65,102) 31,448,133 2,273,166 33,721,299 Net profit after tax ------7,283,625 - 7,283,625 476,537 7,760,162 Other comprehensive income - - 271,330 148,670 146,405 (7,019) 139,386 (146,405) (222,894) 190,087 (829) 189,258 Total comprehensive income for the period - - 271,330 148,670 146,405 (7,019) 139,386 7,137,220 (222,894) 7,473,712 475,708 7,949,420 Statutory credit risk ------Transactions with owners: Other transactions ------(518,828) - (518,828) (147,668) (666,496) Dividends Paid ------(1,373,269) - (1,373,269) (124,537) (1,497,806) Total transactions with owners for the year ------(1,892,097) - (1,892,097) (272,205) (2,164,302) - Balance as at 31 December 2016 392,362 17,331,510 718,074 (353,536) 1,059,022 (46,744) 1,012,278 18,217,056 (287,996) 37,029,748 2,476,669 39,506,417

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Share Share Revaluation Available for sale Statutory Loans Retirement Total Retained Translation Non controlling 6 months period to 30 June 2016 capital premium reserve Reserve reserve reserve reserve earnings reserve Total interest Total Kshs '000' Kshs '000' Kshs '000' Kshs '000' Kshs '000' Kshs '000' Kshs '000' Kshs '000' Kshs '000' Kshs '000' Kshs '000' Kshs '000'

At 1 January 2016 392,362 17,331,510 446,744 (502,206) 912,617 (39,725) 872,892 12,971,933 (65,102) 31,448,133 2,273,166 33,721,299

Total comprehensive income for the period Net profit after tax ------3,905,427 - 3,905,427 271,380 4,176,807 Other comprehensive income - - - 380,904 - - - - (151,635) 229,269 (119,006) 110,263 Total comprehensive income for the period - - - 380,904 - - - 3,905,427 (151,635) 4,134,696 152,374 4,287,070 Statutory loan loss reserve - - - - 55,862 - 55,862 (55,862) - - - - Transactions with owners: - - Dividends Paid ------(1,373,267) - (1,373,267) (103,810) (1,477,077) - - - Balance as at 30 June 2016 392,362 17,331,510 446,744 (121,302) 968,479 (39,725) 928,754 15,448,231 (216,737) 34,209,562 2,321,730 36,531,292 ------I&M HOLDINGS LIMITED CONSOLIDATED STATEMENT OF CASH FLOWS UNAUDITED AUDITED UNAUDITED FOR THE PERIOD ENDED 30 JUNE 2017 30-Jun 31-Dec 30-Jun 2017 2016 2016 KShs '000' KShs '000' KShs '000' Net cash used in operating activities 6,005,106 10,610,555 9,618,390

Cash flows from investing activities Purchase of property and equipment (826,040) (851,008) (157,496) Purchase of intangible assets (73,400) (87,984) (66,888) Purchase of property and equipment directly expensed - (2,737) - Acquisition of Burbidge Capital net of cash and cash equivalent - (54,856) - Additional investment in I&M Bank (T) Limited - (819,907) - Proceeds from disposal of property and equipment - 8,163 1,690 Acquisition of Giro Limited net of cash and cash equivalent 536,362 - -

Net cash used in investing activities (363,078) (1,808,329) (222,694)

Cash flows from financing activities

Net inflows/(outflows) from term subordinated debt (182,988) 51,597 (79,464) Dividend paid to shareholders of the company (1,462,187) (1,373,269) (1,373,267) Dividend paid to non-controlling interests (160,671) (124,537) (103,809) Dividends received from Joint Venture 38,081 - - Rights issue - I&M Bank (T) Limited - 132,578 - Rights issue - I&M Burbidge Capital - 2,100 -

Net cash generated from financing activities (1,767,765) (1,311,531) (1,556,540)

Net increase in cash and cash equivalents 3,874,263 7,490,695 7,839,156 Cash and cash equivalents at beginning of period 11,868,769 4,378,074 4,378,074

Cash and cash equivalents at end of period 15,743,032 11,868,769 12,217,230 I&M HOLDINGS LIMITED NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1 REPORTING ENTITY

I&M Holdings Limited (the “Company ”), a non-operating holding company licensed by the of under the Kenyan Banking Act (Chapter 488) and its subsidiaries (together, the “Group”) provide banking, Bancassurance and Real Estate services. I&M Holdings Limited is incorporated in Kenya under the Companies Act as a public limited liability company and is domiciled in Kenya. The Bank’s shares are listed on the Securities Exchange (NSE). I&M Holdings Limited and its subsidiaries operate in Kenya, Tanzania, Rwanda, Uganda and Mauritius. The address of its registered office is as follows:

I&M Bank House 2nd Ngong Avenue P O Box 30238 00100 Nairobi GPO

The Company owns the following entities directly:

(i) I&M Bank Limited – 100% shareholding; (ii) Giro Limited – 100% shareholding (iii) I&M Bank (Rwanda) Limited – effective interest of 54.99% in I&M Bank (Rwanda) Limited through a 68.742% holding in BCR Investment Company Limited (Mauritius) which owns 80% shareholding in I&M Bank (Rwanda) Limited. (iv) I&M Capital Limited - 100% shareholding (v) Bank One Limited - 50% interest in Bank One Limited, a joint venture in a bank licensed in Mauritius; and (vi) I&M Realty Limited (incorporated on 30 October 2014) – 100% shareholding; (vii) I&M Burbidge Capital Limited, Kenya and Burbidge Capital (U) Limited , Uganda – 65% shareholding

It also owns the following entities through I&M Bank Limited:

(i) 70.38% shareholding in I&M Bank (T) Limited; and (ii) 100% shareholding in I&M Insurance Agency Limited (incorporated on 23 July 2014).

2 BASIS OF PREPARATION The principal accounting policies adopted in these consolidated interim financial statements are consistent with those used in the Audited Annual Financial Statements for the year ended 31 December 2016. These semi annually financial statements should be read together with the 2016 Audited Annual Financial Statements.

3 ACQUSITION OF GIRO COMMERCIAL BANK LTD (GCBL) a On 13 February 2017, I&M Holdings Limited completed the acquisition of all the issued share capital of Giro Commercial Bank Limited [GCBL] having met all conditions precedent to completion of the transaction. As a result and in settlement of part of the purchase consideration, 21,043,330 (twenty one million forty three thousand three hundred and thirty) new ordinary shares of Kshs 1.00 each in the capital of the Company were issued. Subsequently, the whole of the banking business of GCBL and all associated assets and the liabilities of GCBL was transferred into that of I&M Bank LIMITED.

b The details of the fair value of the assets and liabilities acquired and goodwill arising are as follows:

Kshs '000 Total assets 16,886,278 Total liabilites (14,243,361) Statutory reservers (123,250) Net assets acquired 2,519,667 Goodwill 2,574,923 Total purchase consideration 5,094,590

Total purchase consideration settled: By issue of shares 2,547,295 In cash 2,547,295 5,094,590

Acquisition of Giro [Commercial Bank] Limited net of cash and cash equivalents c Kshs '000 Net assets acquired 2,519,667 Less Cash and cash equivalents in subsidiary acquired (3,134,668) (615,001) Add Goodwill 2,574,923 Less non-cash consideration [ Issue of shares] (2,547,295) Net Cash flow on acquisition (536,363)

4 DIVIDEND PER SHARE At the Annual General Meeting held on 25 May 2017, a final dividend in respect of the year ended 31 December 2016 of Shs 3.50 per share [2015 - 3.50] amounting to a total of Shs 1,446,918,791 was approved by the shareholders and paid. 4 SEGMENT REPORTING The group operations are within five geographical segments: Kenya, Tanzania, Rwanda, Uganda and Mauritius. The table below contains segmental information provided to the Group Executive Committee.

30-June-2017 Kenya Tanzania Rwanda Uganda Mauritius Total UNAUDITED KShs `000 KShs `000 KShs `000 KShs `000 KShs `000 KShs `000

Statement of Profit or Loss Disclosures Operating income 7,576,309 669,029 1,320,439 428 - 9,566,204

Profit before tax 4,026,660 127,601 565,492 (1,021) - 4,718,731

Share of profit of Joint Venture - - - - 245,462 245,462

Profit after tax 2,760,333 66,571 358,741 (1,021) 245,462 3,430,086

Financial Position Disclosures

Loans and advances to customers 114,994,774 14,249,262 15,302,739 - - 144,546,775

Investment in Joint Venture - - - - 3,884,730 3,884,730

Customer deposits 126,752,433 13,885,413 20,889,070 - - 161,526,916

Total Assets 178,024,567 20,059,332 27,724,883 5,649 3,409,324 229,223,755

31-December-2016 Kenya Tanzania Rwanda Uganda Mauritius Total AUDITED KShs `000 KShs `000 KShs `000 KShs `000 KShs `000 KShs `000

Statement of Profit or Loss Disclosures Operating income 16,165,790 1,329,784 2,813,548 2,873 - 20,311,995

Profit before tax 8,673,139 383,541 1,106,570 (4,030) - 10,159,220

Share of profit of Joint Venture - - - - 443,968 443,968

Profit after tax 6,298,054 258,172 763,094 (3,126) 443,968 7,760,162

Financial Position Disclosures

Loans and advances to customers 106,585,738 14,111,125 13,978,469 - - 134,675,332

Investment in Joint Venture - - - - 3,508,182 3,508,182

Customer deposits 116,166,305 13,466,636 16,881,465 - - 146,514,406

Total Assets 161,622,900 19,911,983 25,979,415 5,808 3,022,287 210,542,393

30-June-2016 Kenya Tanzania Rwanda Uganda Mauritius Total UNAUDITED Shs `000 Shs `000 Shs `000 KShs `000 Shs `000 Shs `000

Statement of Profit or Loss Disclosures Operating income 7,597,757 612,474 1,376,423 - - 9,586,654

Profit before tax 4,743,664 295,629 545,940 - - 5,585,233

Share of profit of Joint Venture 240,061 240,061

Profit after tax 3,334,084 248,755 353,907 - 240,061 4,176,807

Financial Position Disclosures

Loans and advances to customers 104,475,131 13,273,430 14,715,125 - - 132,463,686

Investment in Joint Venture 3,309,148 3,309,148

Customer deposits 114,958,342 13,978,333 17,480,250 - - 146,416,925

Total Assets 165,677,988 18,562,391 24,468,348 - 1,629,177 210,337,904