BK registers Rwf 20.8bn profit after tax in 2016

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Dr Karusisi addresses the media on Tuesday. / Sam Ngendahimana

Bank of Kigali registered a profit after tax of Rwf 20.8 billion in 2016 compared to Rwf 20.5 billion in the previous year.

The bank’s profit before tax grew significantly by about Rwf 4.3billion to stand at Rwf 30billion.

In 2016 Rwanda Revenue Authority demanded more from the financial institution in corporation tax as the 5 year incentive after its Initial Public offer had lapsed.

This saw the bank pay about Rwf 9 billion in taxes due to the increase in corporation tax from 20 per cent to 30 per cent.

“With that the tax almost doubled from about 5 billion to 9 billion as the 5 year incentive extended after the IPO came to an end and we are back to the normal corporation tax rate,” Nathalie Mpaka, the Chief Finance Officer said yesterday.

The bank will during the next annual general meeting in May propose a dividend payout of 40 per cent profit to shareholders.

Speaking at a press conference, the bank’s chief executive officer Dr. Diane Karusisi said that the 40 per cent payout is an attempt to balance between funds for re-investment and value to shareholders.

“As a bank that wants sustainable growth, we do not want to distribute all the dividends in cash, we want to re-invest a portion of the profit we made to continue to grow our business. It happens in all business, when you make money you do not spend it all. That is why we will be proposing a 40 per cent dividend payout, which is subject to shareholders’ approval,” she said.

The bank’s assets in 2016 rose to Rwf 638.3billion up from 561.2 billion in 2015 while the net loans grew to Rwf 385.8 billion up from Rwf 313.9 billion in the same year.

Despite the increase in cost of operation in 2016 to about 36.5 billion, the CEO allayed fears that they would be looking to reduce on staff as has been seen in the region.

“For us we are still in a growing environment with further room to grow. We do not see ourselves reducing our staff because of the potential growth. As any organisation we are looking at how we can gain more efficiency on how we operate through digitisation but unlikely to come through cutting down on staff,” Dr. Karusisi said.

Among the avenues of growth for banks in the country is to go beyond the formally unbanked population which currently stands at about 26 per cent going by numbers presented last year by Access to Finance.

Banks have been criticized for lacking innovation to tap into the opportunity of the unbanked which could see them increase their revenues significantly.

But Karusisi said they have been doing internal reviews on how they can play a role in increasing the banked population.

Among the ways they hope to do this is by increasing services that can be offered by their banking agents beyond cashing in and cashing out.

“We were put on the spot as a bank that has been in operation for about 50 years. Between 2012 and 2016 when the survey was done, the number of banked people has not grown but in that same period, we grew our branch network to close to 75 branches,” she said.

Going forward, the bank is optimistic on continued growth trickling from the 2017 national economic outlook.

Meanwhile, the bank’s loan book features corporates, small and medium enterprise as well as retail.

Corporate loans make about 80 per cent of the loan portfolio while 20 cent is in retail loan products.

Eventually they are aiming at adjusting the ratio to 60:40 for corporate and retail loans.

“For 2017, we are generally very positive. 2016 was a year when major iconic projects that we were supporting as a bank such as the convention centre, Marriot hotel were opened and began operations. We are hoping that these businesses will generate income,” she said.

The bank’s positive outlook is also partly due to the made in Rwanda campaign which they expect will bring entrepreneurs through their doors seeking finance to produce Rwandan products.

Mpaka said that their major threats in 2016 were increased competition from new players entering the sector but they were confident on improved performance in 2017.

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