Bank of Kigali delivers strong growth in H1’22

Bank of Kigali Group PLC has delivered outstanding performance in the first half of 2022, with a 24.5% increase in net income to reach 28.3 billion Rwandan Francs compared to the same period last year. The bank has shown significant improvement across key growth metrics, showcasing resilience and profitability amidst challenging macroeconomic conditions. CNBC Africa’s insightful conversation with Nathalie Mpaka, Chief Finance Officer at Bank of Kigali PLC, shed light on the bank’s robust performance and strategic outlook. According to Mpaka, the bank witnessed remarkable growth in subsidiary revenues, fees, and commissions, particularly driven by the Bank of Kigali and BK Genoa Insurance, the second-largest subsidiary. Net premiums increased, while claims decreased, indicating a positive trajectory in non-funded income. The bank is on track to achieve around 30% growth in non-funded income for the year, aligning with its strategic targets. Despite facing challenges such as higher costs of funds impacting the funded income, Mpaka remains optimistic that these factors will stabilize in the second half of the year. All four subsidiaries of the Bank of Kigali Group are profitable and experiencing robust growth, with BK TecHouse and BK Capital also contributing significantly alongside Bank of Kigali and BK Genoa Insurance. BK TecHouse is at the forefront of technological advancements, providing solutions for education institutions and other sectors, showing a year-on-year growth range of 30% to 50%. The bank continues to witness growth in loan demand across various sectors such as trade, manufacturing, and export, reflecting a post-COVID recovery trend and increased competition in the market. Despite inflationary pressures and rising costs, Bank of Kigali has managed to achieve strong customer deposit growth of close to 20%. The bank remains cautious about the potential impact of inflation on customer defaults and asset quality in the future. Notably, the bank's non-performing loans ratio declined to 5.1%, showcasing prudent risk management practices and better asset quality compared to industry peers. Operating costs saw a 32.9% increase, primarily attributed to investments in the new co-banking system and digitization strategy. The bank's focus on enhancing digital offerings has resulted in operational efficiencies and improved customer service. While the recent increase in the central bank's repurchase rate may necessitate a revision in lending rates, Bank of Kigali aims to balance profitability with customer affordability during these challenging times. Looking ahead, the bank reassures its commitment to supporting clients through effective credit appraisal, collateral management, and exploring affordable funding sources to mitigate cost pressures. The bank remains agile in responding to market dynamics, focusing on expanding non-banking services, adding new products to its portfolio, and enhancing its ESG initiatives. The strategic vision includes a stronger focus on life insurance, digital services, sustainable practices, and community impact. As shareholders anticipate dividend payouts, Bank of Kigali plans to maintain its 50% payout ratio for 2022, reflecting confidence in its strong capital base and growth prospects. The introduction of interim dividends before year-end aims to enhance shareholder value and provide regular returns to investors. With a solid financial performance and a clear strategic direction, Bank of Kigali is poised for continued success in the second half of 2022 and beyond.