Listed banks in Rwanda have reported strong growth in profits in the first half of the year despite a tough business environment, thanks to interest income and commissions.
The banks — KCB, I&M, Equity and Bank of Kigali – reported a combined net profit of Rwf21 billion ($24 million) against the industry total of Rwf22.9 billion ($26 million) in the half-year ending June 30.
In the same period last year, the banks made Rwf17.3 billion ($19.7 million) against the industry’s Rwf22 billion ($25 million), according to consolidated data from the National Bank of Rwanda. There are 16 banks in Rwanda.
The listed lenders have managed to remain profitable in a competitive market by automating their operations, which has helped them cut operational costs.
They have invested heavily in automating their services and product delivery through mass rollout of automated teller machines, agency banking and e-banking. Currently, only six banks use agency banking. As a result, the number of branches decreased from 553 in June 2017 to 522 during the same period this year.
Bank of Kigali, the biggest player by market share and profits generated Rwf13.4 billion ($15.4 million) during the reporting period; from Rwf16.7 billion ($18.9 million) in the first half of the year ending June 2017.
According to a financial statement published by the Bank of Kigali at the end of last month, net interest income increased by 16.1 per cent year-on-year to Rwf35.3 billion ($40 million).
Net non-interest income amounted to Rwf14.8 billion ($16.8 million), an increase of 7 per cent. Total operating income reached Rwf50.1 billion, a growth of 13.3 per cent.
“BK Group Plc continues to demonstrate strong performance, reporting a net income growth of 17.8 per cent year-on-year enabled by solid growth on all our business lines as well as effective cost management,” said Diane Karusisi, chief executive of the bank The bank, however, reported a marginal growth on its assets of 1.7 per cent, reaching Rwf731.8 billion ($842.6 million), resulting from a mounting stock of bad loans as some of the businesses the bank financed are struggling.
According to Nathali Mpaka, chief finance officer, Bank of Kigali, tier-two and tier-three hotels it has financed are struggling to service loans, largely due to growing competition.
As a result, Bank of Kigali reported Rwf34 billion ($38.6 million) in non-performing loans (NPLs) in the first six months of this year, pushing the ratio to 5.5 per cent, which is above the […]