BK Group posted strong half year results for 2021 despite operating under what it called “very challenging” times due to the Covid-19 pandemic but still managed to achieve a significant growth in income and assets.
The Group on Wednesday, September 1, announced its half year results, with the Chief Executive Officer (CEO), Dr. Diane Karusisi, stating that the financial institution defied two lockdowns and other restrictions that constrained economic activity, to post strong results.
“Our net income has grown by 41.5 percent, which is very commendable. Our assets have grown significantly by 20.4 percent. This is mainly driven by net loans increasing by almost 16 percent,”
“We also have seen very good growth in our deposits, by 14.2 percent and this is something we are very happy to see. We’ve seen very good business activity in the first half, also improved trade flows and this is why we are posting significant results,” Dr. Karusisi told Journalists at a press conference to announce the results.
She pointed out that BK has kept a very prudent stance with regards to impairments by keeping a very high cost at above 4 percent due to the fact that the Covid-19 pandemic is yet to relent.
However, Dr. Karusisi said that they are banking on hope that with the ongoing mass vaccination campaign, at least 50 percent of the urban adult population in the country will have been vaccinated, which could lead to the year ending on a high.
“Looking at the progress in the past weeks, we hope that we will reach more than 50 percent by the end of the year,” Karusisi said, emphasizing that the bank will only be able to gradually release the provisions after seeing an improved vaccination rate.
Nathalie Mpaka, BK’s Chief Operating Officer, said the bank managed to post a strong balance sheet growth and increase profitability at the same time regardless of the challenges.
“Our profit after tax increased by 41.5 percent year-on-year and quarter-on-quarter increased by 4.2 percent,”
“We are very pleased by the results, mostly driven by the expansion of our loan book, large corporate facility mostly, followed by a small increase in SME and retail segment,” Mpaka said, adding that on the liability side, the bank is seeing very good growth in customer deposits.
She said deposits increased by 14.2 percent year-on-year and they expect this to continue in the second half, while shareholder equity increased by 17.2percent, to Rwf271bn, which is net of 50 percent dividend provision for the current year shareholders approved in the previous Annual General Meeting (AGM).
BK Group Plc reported a net Income of Rwf11.6 billion, reflecting an increase of 17.7percent year-on-year, with Return on Average Assets (ROAA) and Return on Average Equity (ROAE) reaching 3.4percent and 17.2percent respectively for the period ended June 30th, 2021.
The bank’s total Assets increased by 20.4percent year-on-year, to Rwf1,1405.5bn at the half year while net loans and advances increased by 15.9percent compared to last year, to Rwf916.0 bn.
BK’s client Balances and deposits increased by 14.2percent, to Rwf 857.1 bn while shareholders’ equity increased by 17.2percent y-o-y to Rwf271.1 bn at the end of the first half of 2021.
Total interest income rose by 28.2percent, year-on-year, to Rwf85.9 billion supported by higher income from loans and advances, which grew by 17.5percent y-o-y to Rwf1.0 trillion.
BK’s total interest expenses increased by 22.5percent to Rwf18.6 billion in line with a 14.2percent growth y-o-y in customer deposits to Rwf857.1 billion
The bank’s overall net interest income growth was at 29.9percent to Rwf 67.2 billion; with net Interest margin increasing to 11.1percent from 10.7percent in the 2020 financial year.
Bank of Kigali registered a year-on-year increase of non-interest income of Rwf16.2 billion, representing 26.4percent, driven mostly by increased trade volume and economic activities.
The bank’s total operating income rose by 29.2percent to Rwf83.4 billion, while the total operating expenses rose by 18.9percent y-o-y to Rwf 27.4 billion.
The bank said its cost to income ratio is in line with year-end 2020 at 32.8percent and that loan loss provisions rose to Rwf22.2 billion, reflecting a year-on-year increase of 21.5percent.
Though the bank’s asset quality is generally improving, However, Non-performing Loans were at 6.6 per cent, which is above industry average of 5.9 per cent.
The bank said the percentage of COVID-19 related loans on moratorium reduced to 4.1percent of the gross loans from 47percent restructured facilities.
“As at June 30th, 2021, BK Group Plc is adequately capitalized with Total Capital to Risk Weighted Assets at 22.0percent. The Group’s Total Assets stood at Rwf 1,405.5 billion; up 20.4 percent y-o-y,”
“Net Loans/Total Assets ratio stood at 65.2percent. Total dividend payable balance stood at Rwf 24.7 billion, which include Rwf 13 billion payable dividend for 2019 and a 50 percent pay-out ratio for the current year’s profit. Shareholders’ Equity increased to Rwf 271.1 billion, up 17.2percent y-o-y,” BK’s financial statement reads.
At the end of June, BK had served over 356,900 retail customers and over 26,000 corporate clients. The bank had 68 branches, 96 ATMs, 2,895 points of sale and expanded its agency banking network to 2,692 agents around the country who processed over 2.8 million transactions worth Rwf 289.9 million.
Retail clients’ balances and deposits reached Rwf242.2bn by the half year while corporate banking clients’ balances and deposits accounted for Rwf478.5 bn. BK’s mobile service ‘BK Quick’ has registered 111,350 subscribers who transacted Rwf4bn.
BK’s IKOFI wallet registered over 1,800 agro-dealers and agents as well as over 262,700 registered farmers.
The groups insurance subsidiary, BK General Insurance registered a profit of Rwf1.19 bn compared to a profit of Rwf1.39 bn registered in the first half of 2020.