FINA BANK Rwanda has reported a drop in net profits in the first six months of 2010 attributing it to heavy investments in human resource and infrastructure.
The bank’s financial results indicate that net profits dropped by 51.5 percent to Rwf 116.1 million in 2010 from Rwf 240 million the same time last year.
In an exclusive interview with the Business Times, the bank’s Managing Director, Steve Caley said that in 2009, the bank made one substantial bad debt recovery, registering an increase in net profits.
“However, in 2010, the bank become reliable for compression tax, making 2009 the last year of enjoying a tax free investment incentive,” Caley said.
He also added the charge led to the slide in net profits during in the first half financial results.
Caley also attributed down fall performance to high costs incurred during recruitment process to meet the bank’s branch expansion programme and also the substantial increased cost of funds reflecting high interest rate being paid to depositors.
Like other commercial banks, this year, the bank has invested in branch network expansion.
we had five branches, this remained the case until the end of 2008; in 2009 and 2010, we have opened up four new branches and we are set to open up three more by the end of this year to make it 12,” Caley said.
He also added that the bank plans to open-up four to six other branches in 2011.
The National Bank of Rwanda (BNR) requires all commercial banks to reduce NPLs below 7 percent by the end of the year; however the MD raised concerns about the bank not meeting the challenge.
“It will remain in the double figures and its being caused by a mix of fewer recoveries than easier anticipated,”
FINA BANK inherited a bad Non- Performing Loan record of 85 percent from the former privately-owned commercial bank known as BACAR in 2004.
The bank was targeting Rwf1 billion net profits at the end of the year, but the MD said that the 1st half figures don’t support the target but he however said that the returns in July and August are showing progress and he believes they will be close to that figure by the end of the year.
He also said that though competition within the banking sector in the country remains strong, Fina Bank feels well placed to retaining their market share.