Bank of Kigali Group (Plc) – Rwanda’s largest financial institution in terms of assets, has set another target to hit at least $2billion in total assets in the next six years – a goal that will be largely influenced by a growth in the current bank’s clientele base.
According to Bank of Kigali Group Chief Executive Officer Dr. Diane Karusisi, this target can be reached by looking at the company’s compound growth rate year-on-year.
“We have a little above $1billion in assets today. If we go by the growth rate we have seen in the past between 15% and 25% growth year-on-year, we are hoping that in five to six years we will boast $2billion in assets all out,” Karusisi said.
The BK Group CEO, accompanied by Heads of the group’s subsidiaries, made the revelation on Friday, August 30, during a press briefing to announce its Quarter 2 (Q2) and Half Year (1H) year-on-year (y-o-y) results in 2019.
Nathalie Mpaka – BK Group Chief finance Officer said that the target will be reached with the help of aggressive approach to profitability, but specifically growth from the retail banking and Small and Medium Enterprises (SMEs) which is expected to double the current size.
The bank’s reviewed financial results indicate a Net Income of Rwf14.6 billion ($ 16.1 million) – representing an increase of 8.5% y-o-y; with Return On Average Assets (ROAA) and Return on Average Equity (OAE) reaching 3.3% and 14.6% respectively for the period ended 30 June 2019.
The Bank’s total assets registered 22.1% increase year-on-year Rwf893.2 billion ($ 987.9 million) in the same period, while its net loans and advances increased by 35.1% year-on-year to Rwf650.2 billion ($ 719.1 million).
Announcing the results, as Dr Karusisi said that the bank’s client balances and deposits increased by 16.8% year-on-year to Rwf551.7 billion ($ 610.2 million) as at 30 June 2019.
The bank’s shareholder’s equity also increased by 57.0% year-on-year to Rwf204.0 billion ($225.6 million) as at 30 June 2019.
In November last year, the bank Rwanda’s biggest Financial Institution by assets, made history as the first Rwandan company to cross-list on International Stock Market. On Friday, the bank was officially welcomed to Nairobi stock market after years of listing on the Rwanda Stock Exchange.
BK is currently looking at a customer base of 1 million by 2021 from the current 350,000 clients on its book.
“If we have one million more customers it means we are going to triple the number of customers in three years, if we triple the number of customers it means we are going to have more revenues, more deposits, increase the loan book and retail banking,” Mpaka said.
“We are still doing more traditional banking although there are products on internet banking but we think the targeted assets of $2billion will be reached by retail banking and SME growth that will almost double, Mpaka explained.
As of 30 June 2019, the Bank served over 315,700 retail customers and over 23,800 corporate clients; and expanded the Agency Banking Network to 1,416 agents and processed over 1.2 million transactions worth Rwf83.7 billion.
To further tap on the retail business opportunity, BK Group has this year introduced the rural farmer’s quick financial access service – ‘Ikofi’ financial product which since its launch on May 2019, has reached a record 160,000 users in less than three months, according to BK CEO Dr Karusisi.
BK Profit Machinery
BK General banking services together with other BK subsidiaries (BK Capital, BK General Insurance, BK TechHouse enjoyed a flourishing performance with a net profit of Rwf14.6billion (8.5% growth) year-on-year in this half period with surprising profits from the new BK insurance despite a major loss in the insurance sector.
The BK Insurance registered a profit of Rwf974million in the first quarter of this year compared to Rwf357 million registered in the same period last year; representing 172.5% growth in profitability year-on-year as the whole sector made an underwriting loss of Rwf0.9bn, as seen in the Central Bank’s Financial stability report.
The BK Insurance also had gross premium increased from Rwf1.9 billion in 1H 2018 to Rwf2.4 billion in 1H 2019 – reflecting a growth of 28.2%; while its underwriting profit grew from Rwf278 million to Rwf988 million year-on-year, representing a 255% growth.
Commenting on the performance, Alex Bahizi, the CEO of BK Insurance said: “It is because we entered this sector with a difference. To give good and better services which others are not doing. For example, we can repay insurance in less than 30 minutes depending on the information provided.”
The recently established BK Capital also announced that its working on a new capital market product that will demystify and encourage more common citizens to buy shares on the secondary market.
With only seven years on the stock market, BK Capital assets grew by 20% compared to previous quarter reaching about Rwf3 billion as at June 2019 mainly from growth in private pension fund management and its total revenues in the quarter two 2019 increased by 175% from previous quarter, mainly driven by commissions from advisory services, fund management activities as well as interest income from investment.
The performance of the bond market has been active vis a vis same period last year with volumes of 6,009 million traded valued at Rwf6.1 million.
“We are setting up a product that will enable us to invest on behalf of citizens because we know many are shy to invest in capital market products. So we will demystify this fear,” said Carine Umutoni, the Managing Director of BK Capital.