Bank of Kigali (BK) Group Plc will go ahead and pay dividends to shareholders upon approval by the Central Bank, after it posted a profit of Rwf37.3bn for the year 2019.
The bank will pay dividends when the National Bank of Rwanda (BNR) approves the proposal despite anticipated losses for the financial year 2020, resulting from the New Coronavirus outbreak.
This was revealed during the virtual Annual General Meeting for shareholders and investors held on Wednesday during which the bank announced performance figures for the 2019 financial year which saw the banks profit grow by 36.3 percent.
During the AGM which was chaired by the group’s Board Chairman Marc Holtzman, Bank of KigaliCEO Dr Diane Karusisi said the year 2019 saw the biggest bank in Rwanda register a remarkable performance in line with the impressive economic performance in Rwanda.
“The Group increased profit after tax by 36.3% to RWF 37.3 billion while the balance sheet hit RWF 1.0 trillion, representing 16.1% increase from 2018,”
“We improved on efficiency as shown by our cost-to-income ratio that reduced to 42.2% from 48.1% last year and delivered an increase in return on average equity (ROAE) of 18% from 17.2% in 2018,” Karusisi told the AGM.
Dr. Karurusi said that the growth of Bank of Kigali Plc, the commercial banking subsidiary of the group, mainly resulted from the aggressive strategy to mobilize customer deposits and to continue diversifying the loan book into growing sectors of the economy such as manufacturing, energy, and transport.
Bank of Kigali Plc remains the leading commercial bank in Rwanda with more than 50% market share in profitability terms. Karusisi said that other arms of the group continue to record impressive growth too.
“Other subsidiaries also continue to show a steady and sustained growth with BK General Insurance increasing its profitability by 43%, while BK Capital grew its assets under management by 500%,”
“BK TecHouse has kept momentum in creating digital consumers for the Group, through the development of AgriTech and EduTech solutions that are being scaled country-wide,” Karusis told the shareholders and investors.
Dr. Karusisi said that the Bank has intensified efforts towards the digital banking agenda with the group’s digital factory, BK TechHouse, leading the digital innovations, automating internal processes, designing and developing new delivery channels with an improved customer experience.
She revealed that BK selected cloud native Temenos T24 to power its digital transformation strategy and help the bank to reduce its deployment costs and drive simplicity and efficiency in its operations.
“The world is experiencing unprecedented challenges from COVID-19 pandemic that has profoundly impacted lives, productivity and economies globally– and brought so much uncertainty,”
“Rwanda has not been spared and since the earliest days of this crisis, the Government has taken decisive, coordinated action to stop the spread of the virus. At the Bank, our efforts have focused on ensuring the health and safety of our employees, especially those who work on the frontline,” Dr Karusisi said, highlighting some of the initiatives BK has come up with to support economic resilience and recovery.
“We remain committed to playing our role and supporting recovery of economic activities across our footprint. Although 2020 is expected to be a challenging year, we are committed to providing the best services and being true to our motto: “financially transforming lives”” she told the AGM.
The bank passed a resolution to pay shareholders Rwf14.4 dividend per share for the year 2019 after the AGM voted in favour of the payout but the decision is pending BNR’s approval.
Responding to questions from shareholders, Karusisi said the bank will pay out the dividends despite a difficult outlook for the year 2020. – Please consider above detail on payment of dividend.
“We have reviewed our focus for 2020 and also 2021. There will be a major economic slowdown following the impressive economic performance of 2019. We believe that our book will be affected and will take heavy impairment for expected losses on our credit facilities,”
“But all in all, we believe that the bank will remain profitable, albeit with reduced profitability compared to 2019 and the historical profitability the bank has seen over the years but we are confident that the bank will remain profitable,”
BK CEO said the bank entered the crisis with a strong capital position and will go on to pay out the dividends even as major financial institutions are bracing for tough times ahead.
“We believe we shall be in position to distribute dividends. We hope at the AGM 2020 next year the board will present a motion to shareholders to approve the distribution of dividends,” she added. – Please consider above detail on payment of dividend.
The AGM approved a dividend re-investment of Rwf255 at 2 percent discounted share price. Dr Karusisi also said that the bank has put in place measures to support struggling businesses, including differing payments on long term loans and providing a grace period.
She said the measures along with the ones put in place by the government will go a long way in support businesses to remain afloat. Rwanda has put in place a $200M stimulus fund to support business hit by COVID-19. The fund will be channelled through banks.
The annual report was approved by the AGM, which also approved Regis Rugemanshuro, the Director General of Rwanda Social Security Board (RSSB) to join the group’s board.
The group’s chairman Holtzman commended the bank’s management for ensuring that the bank remains profitable and is now focused to support Rwanda’s economy to recover and remain on track. He said BK will continue to support government efforts to overcome the impact of COVID-19.
“The Government of Rwanda has shown effective leadership in its containment measures, support to vulnerable people and to the economy,”
“The period ahead is likely to be challenging for our customers with the macroeconomic downturn, our robust position has however seen us offer various level of support to the affected customers and will continue to walk with them through this difficult phase,” Mr Holtzman said.
He added that Bank of Kigali as a strong financial services group, will emerge from the pandemic well placed to continue to serve its customers and other stakeholders.
He also thanked the shareholders and investors for adjusting quickly to technology to participate in the AGM digitally.