Limited deposits and savings are partly to blame for high interest charges to customers seeking loans from local financiers, BK Group Chief Executive Officer, Diane Karusisi has said.
Karusisi was speaking to The Saturday Times on Friday in Kigali as the bank concluded its Customer Service Week.
Karusisi said that low savings lead local banks to borrow from international financiers often requiring them to pay back at high interest rates which is often transferred to clients.
“If we have access to funds that are long-term, if people save their money for long with the bank, then we can also lend it out at low interest rate,” she said.
“The challenge is that our access to long-term funds is very limited, we also borrow from other financial institutions at a rate of 11 and 12 per cent for one year, which we have to pay back,” she observed.
Likening bank’s buying and lending transaction to a business, she said “if you by at expensive price, of course you are going to sell at a high price.”
“That’s why we need to have long-term funding. When someone makes deposits for 10 years we can lend that money on affordable process.” she said.
BK’s interest rates, she explained, are at about 16.5 per cent for businesses that are considered low risk and up to 18.5 per cent for businesses with significantly high risks such as agriculture which relies on weather patterns.
The rates also depend on the average performance with the steady enterprises standing a high chance of acquiring a cheaper loan.
Geoffrey Kayigi, a Bank of Kigali customer, said that the bank has been performing well in regards to serving its customers and delivering a variety of services and developing technological innovations for diversification of services.
However, he voiced concern that high interest rates continue to be a major hurdle facing people seeking loans in all banks countrywide calling for mechanisms to reverse the trend.
“The private sector has always requested that the interest rates be reduced to improve operating conditions for borrowers but their calls remain unanswered,” he told The Saturday Times pointing out that affordable loans are important in the growth of any business.
In reference to the Customer Service Week, Rose Ngabire, Head of Customer Experience Management at Bank of Kigali, told this paper that the lender is committed to continue improving customer service.
“We look at customer service week in two ways: as a time to appreciate our customers as well as an opportunity to get feedback on our products and services,” she explained.
You are most welcome in all of our BK branches. pic.twitter.com/tuK55upjJx— BK Group PLC (@BankofKigali) October 5, 2018
“There are many alternatives for customers to use during transactions, including mobile loans and savings solutions to improve their convenience,” she added.
The group saw its net income grow by 17.8 per cent in net income to Rwf13.4 billion in the first half of 2018.
As of June this year, the bank had served 268,000 retail customers and over 24,000 corporate clients.
The growth raked in Rwf14.8 billion in dividends for shareholders which will be approved during annual general meeting next year.