Bank of Kigali (BK) has said that its recent earning of long-term credit rating A+ and short-term credit rating A1 will facilitate it to access long and short term funds from local, regional and international market.
“If this is achieved it means that BK would in turn be able to provide more credit, especially to Small and Medium Enterprises (SMEs) and mortgage businesses who are currently starved of long-term financing,” the Bank’s Managing Director, James Gatera said.
The rating by South Africa’s Global Credit rating agency reflects the Bank’s strong capital position, its systemic importance, strong asset quality and financial performance.
“The credit rating is an important milestone as it provides investors the necessary confidence of their investment and will enable us to cheaply diversify our funding base and further enhances our capital
position,” Gatera said in a press statement released this week.
The Bank, which is the largest in the country by the assets, becomes the first Rwandan bank to be rated by a credit rating agency.
In a parallel interview with Business Times Gatera said, the credit rating, which was announced in October this year, acts as a benchmark which can be used by investors to assess the repayment of their investment.
The credit rating provides BK with the possibility of attracting funds at a relatively lower interest rate, he said.
The Bank has already secured a 7 year credit line of €5 million from the European Investment Bank to support the SME lending.
“Negotiations are at an advanced stage to secure significant credit facilities from two international development financial institutions,” Gatera said.
BK’s loan book registered a modest increase of 21 percent from Rwf77 billion in December 2009 to Rwf92 billion in September this year.
“Locally the bank will develop long term products, such bonds, to attract funds into the Bank and help mobilise local savings and investments. These funds will assist the Bank top sustain its market share lending positioning especially in the mortgage and SME sectors.” Gatera said.