Bank of Kigali Headquarters
Bank of Kigali, a subsidiary of BK Group Plc, has reported a Rwf74.8bn profit and a year-on-year growth of 25 percent for the financial year 2023, to remain Rwanda’s leading financial entity by assets and liquidity.
Announcing the 2022 Full Year Financial Results on Thursday, Beata Habyarimana, BK Group Chief Executive Officer, said that the steely performance was mainly buoyed by return on equity and assets in 2023, amidst more recovery and growth.
“We are pleased to announce that we had a good performance for 2023, recording a profit of 74.8 billion Rwandan Francs, which is approximately $59 million, which also translated to a 25 percent growth, year on year,” Habyarimana said during a virtual press conference to announce the results.
“The robust performances of our subsidiaries throughout 2023 further solidify our standing as a premier financial services provider. We take immense pride in these achievements, which underscore our unwavering focus on delivering superior value to our stakeholders. We are resolute in our dedication to enriching shareholder value and bolstering investor trust,” Habyarimana said.
Habyarimana said that all companies owned by BK Group Plc recorded a good performance in growth in terms of revenues and expansion, citing BK Capital, which has been taking the lead and advising on the issuance of BRD’s Sustainability-Linked Bond -the first of its kind.
The brokerage firm, which was added to the group portfolio in 2012, has been able to advise a significant number of transactions in regard to the bond which was issued in November last year, positioning itself to be a major player in the financial brokerage industry.
BG Group Plc CEO Beata Habyarimana speaks during a virtual press conference to announce the results on Thursday.
BK General Insurance, the insurance company registered a growth of 33 percent, with a profit of Rwf 3.1 billion in 2023 compared to Rwf2.8 billion in 2022, representing a 9 percent of growth in profitability year-on-year, while financial products engineered by BK Techouse, the group’s innovation hub, have been growing tremendously.
Habyarimana cited an example of Urubuto, a payment gateway, mostly by schools, whose transation volumes have grown by 166 percent, to cap a great year for the group which remains Rwanda’s most profitable entity.
A stellar performance
According to the audited results, BK Group Plc registered a Return on Average Assets (ROAA) of 3.8 percent and a Return of Average Equity (ROAE) of 21.8 percent, for the period ended December 31st, 2023.
The group’s Total Assets increased by 14.5 percent year-on-year to Rwf2.12 billion (US$ 1.75 million) as of the end of last year, while Net Loans and Advances increased by 9.7 percent, compared to the previous year, to Rwf1.25 billion, equivalent to $ 1.024 million at the end of last year.
BK’s client balances and deposits increased by 28.0 percent to Rwf1.37 billion while Shareholders’ Equity increased by 14.8 percent compared to 2022, reaching Rwf366.4 billion ($ 301.4 million) at the end of the 2023 fiscal year.
The group’s total interest income rose by 20.0 percent year on year, to Rwf165.4 billion while the net loan book grew by 9.7 percent, to Rwf1.25 billion.
Bank of Kigali’s total interest expenses increased by 3.6 percent to Rwf51.5 billion, while customer deposits grew by 28.0 percent to Rwf1.34 billion. The Group reported a net interest margin of 10.0 percent for 2023 while non-interest income totalled Rwf59.0 billion; an increase of 34.8 percent.
The bank’s total operating income increased by 23.6 percent to Rwf224.4 billion, while total operating expenses rose by 15.8 percent to Rwf96 billion. Loan loss provision stood at Rwf22.2 billion at the end of 2023, increasing from Rwf13.1 billion in 2022.
BK Group registered a stellar performance in 2023.
According to the results presented on Thursday by Anita D. Umuhire, BK’s Chief Finance Officer, Non-Performing Loans (NPL) ratio and cost of risk stood at 4.5 percent and 1.5 percent respectively, while cost to income ratio stood at 42.8 percent for the past fiscal year.
“The good performance was largely supported by the net income 15.7 percent year-on-year and this was stemming from two main factors the first one being the loan book growth of 9.7% and an improved loan yield which increased by 60 basis points,”
“This was also driven by commendable growth in the retail loan book that grew by 68 billion,” Umuhire said, adding that the good performance was further supported by a reduction in the cost of funds -a deliberate action by the bank to move towards other effective and less costly ways of financing clients.
Umuhire said the effect of a better loan yield and the reduced cost of funds resulted in a double net interest margin of 10 percent.
BK also registered formidable growth of its non- funded income, with a consolidated growth of 34.8 percent year-on-year, contributing 26.3 percent of the total operating income, up from 24.1 percent the previous year.
The bank earned Rwf13.9 billion through forex transactions, which is the biggest contributor to the non-funded income but FX earnings dropped by 7 percent compared to 2022, due to challenging market conditions.
Bank of Kigali CEO Dr. Diane Karusisi.
The year 2023 also saw Bank of Kigali grow its other non-funded income lines such as non-lending fees, which contributed Rwf5 billion in earnings in 2023, mainly resulting from an increase in digital channel usage uptake as well as higher transfer and remittance volumes.
The 2023 financial year left BK Group Plc adequately capitalized with Total Capital to Risk Weighted Assets at 21.7 percent. The Group’s Total Assets stood at Rwf2.1 trillion, reflecting an increase 14.5 percent y-o-y, backed by strong liquidity from customer deposits growth.
Net Loans/Total Assets ratio stood 58.7 percent down from 61.2 percent in the same period last year. Shareholders’ Equity increased to Rwf366.4 billion, up 14.8 percent compared to the previous year.
The bank’s Liquid Assets divided by Total Deposits increased to 51.4 percent at the end of last year, from 47.3% in December 2022.
Significant milestone
Reacting to the financial performance, Dr. Diane Karusisi, CEO Bank of Kigali said that it is the first time the bank is recording a profit before tax above the mark of Rwf100 billion, accruing a net profit of Rwf109 billion.
Karurisi said the growth which was driven by an increase in the bank’s non-interest income, which grew by 34.8 percent, is ‘very healthy’ and a significant milestone for the financial institution which has been looking to diversify its source of income, moving away from interest, which remains the biggest source of income.
Habyarimana said the growth and expansion continues to make the bank Rwanda’s biggest financial entity.
She pointed out that the bank is also looking to continue minimising operating costs and expenses, having invested heavily in new and efficient banking systems over the past year as well as improving capacity of staff in the past year.
Karusisi said the bank is already registering a decline in operating costs, compared to the income, where in 2023 they saw operating expenses increase by 15.8 percent, against the total operating income increasing by 23.6 percent.
“This is also very healthy and shows that we are really leveraging our assets to provide income returns to our shareholders. On the balance sheet side, you will see that assets have grown by 14.8 percent, driven obviously by loans to customers,”
“But also, on the balance sheets we’ve seen our shareholders Equity growing by a 14.6 percent to Rwf365 billion,” CEO Karusisi said.
BK Group Chairman Jean Philippe Prosper, said the results reflect the bank’s steadfast dedication to operational excellence and prudent financial management.
“We are pleased with the synergistic outcomes achieved among our subsidiaries and eagerly anticipate a more prosperous year ahead,” Prosper said in a statement.
At the end of last year, Bank of Kigali had served 515,896 retail customers and 594 corporate clients while the bank was also to expand its agency banking network to 4,470 agents who processed over 7.2 million transactions worth Rwf1.8 trillion.
Retail clients’ balances and deposits reached Rwf310.5 billion while corporate banking clients’ balances and deposits were at Rwf1 trillion at the end of last year. The bank also had 67 branches, 103 ATMs and 2,490 POS terminals by the end of the financial year.
