30 April 2009

Rwanda: Bank of Kigali Going Strong, Despite Global Financial Crisis

Until 2007 the bank was a joint venture between the government and Belgolaise S.A., the latter holding 50% of the shares. However in 2007 the government acquired this stake to fully own the company.

The Bank currently has 13 agencies making it the largest bank in terms of branch network. Two more branches will be opened in Kayonza and Kabuga before the end of June 2009, and three more by the end of the year. Yet the Kigali head office and agencies remain the heart of the company, with over 70% of its business activities.

The chief operations officer of Bank of Kigali, Lawson Naibo, says that over the years, the bank has become the banker of choice for individual and corporate customers.

"This dates back to the period after the genocide, when BK was the only bank that managed to repay customers deposits," Naibo says. He adds that during this challenging period of global economic crisis and credit crunch, the bank has refrained from increasing it loan interest rate or denying credit to customers in spite of deposit mobilization challenges facing the banking sector.

Naibo explains that BK's product range includes traditional financial products, current and fixed deposit accounts, working capital overdrafts, equipment loans, mortgage and construction facilities and other loan products.

Technology plays an important part in the bank's activities, its flagship in this respect being its internet banking service, B-Web. "Customers can access their bank accounts and make transfers, print bank statements, order check books or give instructions to the bank in one of the most secure banking services from the comfort of their home or office," says Naibo.

Through more than 20 ATMs run by Simtel, Lawson says customers have access to cash 24 hours a day. Western Union Money transfer services, Visa and Master Cards, credit cards and local Visa Electron debit cards are also part of BK's drive to make it easier for customers to access and manage their money.

As the banking sector becomes more competitive, the bank is continuously looking to innovate its systems and products, Naibo remarks, for instance by targeting Rwandans in the Diaspora. Another unique product is education saving, which he says has become very popular for customers, especially those between 30 and 40 years.

Strong performance

It seems like the efforts are paying off. In 2008, BK returned a profit after tax of Frw 5.6 billion compared to Frw 4.2 billion in 2007, which according to Lawson Naibo makes it the most profitable bank in Rwanda.

"The strong performance was as a result of higher interest income, as opposed to previous years," Naibo says. "There has been an increase in loans to customers by 48% and recovery from previously non-performing assets helped boost the income."

Shareholders equity increased by 24% in 2008. However the banks assets did not change a lot. Naibo says that the bank's total assets remained stable between 2007 and 2008, and the cumulative annual growth rate over the 5 years still shows a 94% growth.

Loans and advances to customer also have grown by 48% between 2007 and 2008, with a cumulative annual growth rate was 170% over the last 5 years.

Naibo says the BK continues to forge strategic alliances with various service providers and Government agencies. For instance, the bank now serves as a collection agent for Rwanda Revenue Authority, and customers and non-customers can pay their taxes through at the Bank's counters, thereby avoiding long queues at RRA offices, or even from their home or office by using the internet banking facilities.

Lawson says the strong growth and development of market positioning has been made possible by the high corporate governance principles observed by all the stakeholders. "Although the bank is 100% owned by the Government, the shareholder does not interfere with its management. This is left to the Board of Directors, whose members have diverse qualifications and experience," Naibo remarks.

As a result, BK has won several international awards, such as the 2008 International Star for Quality for customer service and quality, and the Quality Summit Award In 2007. The recognitions were given by the Business Initiatives Directions, a Geneva-based international quality programs organization.

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