BK projects rise in earnings

BK Group is projecting a net profit of between Rwf26 billion and Rwf28 billion this year. The projections follow a 17.8 per cent growth in net income to Rwf13.4 billion in the first half of 2018. The group, which has subsidiaries in banking, technology and insurance, registered growth in most of its operations with biggest returns in the banking arm. The lenders loan book grew by 6.8 per cent year on year to Rwf481.2 billion. Its insurance subsidiary posted a net premium income of Rwf1.1 billion. BK TecHouse increased its reach through two products to over 1.3 million users. The growth secures dividends of Rwf14.8 billion for shareholders which will be approved during the annual general meeting next year. A comparison between the bank’s financials and the Rwandan financial sector’s performance shows that the lender maintain dominance over the local sector. The banking sector jointly registered a net earning of Rwf23 billion, meaning that Bank of Kigali alone takes more than half the profit. The sector has 16 players. According to statistics from the Central Bank, the local banking sector saw a drop of new loans approved in the first half of the year from Rwf416.7 billion to Rwf402.7 billion in the first half of 2018. The Central Bank Governor, John Rwangombwa, explained the drop as a result of a decrease in demand of loans as well as tighter credit conditions implemented by banks in a bid to cut down non-performing loans. The financial players rejected about 14.7 per cent of loan applications in pursuit of better quality loans. Désiré Rumanyika, the Chief Operating Officer of Bank of Kigali, said that the largest rejection by them was to the retail sector. The results and projections by the bank come at a time when the biggest drivers of credit to the private sector, commercial real estate and hospitality, are showing signs of saturation and fatigue and are no longer as attractive. Bank of Kigali Chief Executive Officer, Dr Diane Karusisi, said that they aim to grow their portfolio in other sectors, such as manufacturing and residential mortgages. Karusisi says the bank will embark on de-risking sectors that have for long not been attractive to local lending. The mining and agriculture sectors, despite showing potential for growth, have not been attractive enough for local lenders as they have lacked adequate data and business models. The Government’s move to pilot crop and livestock insurance beginning with the coming season, Karusisi said, is likely to improve attractiveness of the sector. editorial@newtimes.co.rw

News

BK projects rise in earnings