Bank of Kigali registered a half year profit after tax of Rwf11.4 billion compared to Rwf10.9 billion in the same period last year.

The bank’s profit before tax stood at Rwf16.7 compared to Rwf15.8 billion in the same period last year.

The half year performance has boosted the firm’s confidence in going past last year’s after net income of about Rwf20.8 billion.

Banking sector enthusiasts project that the lender could register an after tax profit of between Rwf22 billion and Rwf24 billion at the end of the year, given the bank’s performance in the first half of the year and market performance.

Presenting the half-year statistics, Vincent Gatete, the bank’s chief commercial officer, said that in pursuit of growth, they had so far served over 258,000 retail customers and over 26,000 corporate clients.

Total bank assets as of June 30 this year were at Rwf719.3 billion which is a 16.2 per cent growth compared to the same period last year.

According to the performance statement, net loans and advances grew to about Rwf450.5 billion while clients’ balances and deposits stood at Rwf483.8 billion.

The process of growth also saw the bank’s operating cost rise by about 16 per cent to Rwf21.2 billion.

BK chief executive Diane Karusisi said they are upbeat about the performance and expect to go beyond last year’s profit.

"We expect to do well this year and go beyond last year’s profit,” she said.

‘Risk-based pricing’

Dr Karusisi said the bank has been able to grow their loan book by introducing models such as risk-based pricing whereby the interest is determined by the level of risk of a project.

This, she said, has seen the bank foster relationships with clients, consequently growing their loan book.

"In risk-based pricing, if a customer walks into the bank and has a good project, he scores high and gets a lower interest rate. We have been implementing this and its fostering our relationship and it has helped us grow our loan book. This has contributed to increased assets,” she said.

Commenting on the impact of the revision of the key repo rate by the central bank to banks, Karusisi said that though it has not had much impact in increasing demand, the move by the regulator can be credited for increasing bank assets.

The National Bank of Rwanda (BNR) last year signaled commercial banks to consider increasing loans issuance by revising downwards the key repo rate from 6.5 per cent to 6.25 per cent.

The key repo is the rate at which the central bank lends money to commercial banks. The rate had remained unchanged at 6.5 per cent since mid-2014.

The regulator in June again revised the repo rate downwards to 6.0 to further influence loan issuance.

"In general, what we see is that the repo rate does not have much impact in the demand for loans. Demand comes from investors and entrepreneurs when they have good projects. However, when you look at the total banking industry, there has been growth of total assets showing that the revision of the repo rate has had a positive impact in increasing assets,” Karusisi said.

The bank has also been able to increase lending by introducing new features to their loan products such as unsecure loans whereby clients with reliable salaries and good track record with the lender can borrow without security.

According to Gatete, clients can now borrow up to Rwf10 million without security as long as they have a good record and a reliable income.

The feature began in the second half of this year.

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