Beata Habyarimana, the chief executive officer of BK Group Plc has expressed optimism in the company’s business outlook in 2024, despite a downgrade in its growth projection in the year.

"We expect all our subsidiaries across the group, specifically BK General Insurance and BK Capital to continue to perform better,” she told The New Times in an exclusive interview.

BK Group recorded a 25 per cent year-on-year increase in net profit, reaching Rwf74.8 billion in 2023. The group saw its profit before tax cross the Rwf100 billion mark, growing at 23.8 per cent.

However, the group is projecting a slow growth in profit before tax at 23 per cent in 2024, a downgrade that the chief executive said is based on "the expected impact of the prevailing market interest rates as they affect deposit mobilization, loans and stocks.”

"Interest rates are influenced by the depreciation against the USD, and the expected inflationary pressures are all influenced by the global and macroeconomic turbulences,” she noted.

However, Habyarimana was confident in the overall direction of the economic growth, saying that this will make it possible for the group performance to remain resilient in 2024.

The group’s 2023 performance was mainly from the bank subsidiary, driven by interest and non-interest income.

"We are happy that BK General Insurance and BK Capital are coming out bigger. What started as 96 per cent share for the bank is now going down to 93-94 per cent, with the other subsidiaries increasingly contributing to the overall growth,” she said.

Bank of Kigali’s net earnings improved by 22.9 per cent to Rwf73.7 attributed mainly to a rise in interest income stemming from the loan book growth, as well as an improved loan yield.

Non-interest income – revenue generated from sources other than the traditional interest earned on bank loans – stood out in the company’s performance, growing at 34 per cent to Rwf59 billion in 2023.

"It was an intentional move to not depend only on interest income. The rise in non-interest income was basically because the bank is widening the services that we provide,” the chief executive said.

She indicated that there are a lot of emerging avenues from which the bank can derive non-interest income. This could be fees charged from the use of mobile phone services when transacting, internet banking, or even trade services such as letters of credit.

"There are people who want letters of credit. Those are the moves we have been seeing. With global supply chain disruptions, BK stands even stronger in a position where we can respond to the needs of our clients through these facilities,” she said.

BK’s non-performing loans (NPLs) ratio increased by 1.9 percentage points to 4.5 per cent, signifying a somewhat high risk of loan defaults. Loan loss provisions – funds set aside to cover potential loan losses – increased by Rwf9.1 billion to Rwf22.2 billion in the same period.

"We are still under the norm. We know the projects that have been affected and some of them are especially in the energy sector. We are working with partners to see how to stabilize it (NPLs ratio),” the CEO said.

Bank of Kigali Plc has been increasing its financing position to key economic sectors mainly to agriculture, a sector that banks have ignored for a long time due to its risky nature.

"We have seen increased government investment in agriculture and we have aligned our key objectives to these priorities,” Habyarimana said, highlighting that the bank now finances agriculture mechanization projects, digitalization of agriculture sector, and has committed to provide increased insurance services to the sector.

Insurance, investment advisory

Although much of the growth is attributable to the bank performance, there has been some good growth in the insurance, investment advisory, and technology businesses.

BK General Insurance’s profit grew 9 per cent to Rwf3.1 billion while gross premium increased by 33 per cent year-on-year to Rwf14.6 billion in 2023.

The insurance business closed 2023 with a well-capitalized position. Its total assets increased by 26 per cent year-on-year to Rwf29.7 billion in 2023.

In the same period, BK Capital’s assets under management grew 29 per cent to Rwf42.8 billion in 2023, largely driven by the Aguka Unit Trust Fund which increased by Rwf3.6 billion.

On the other hand, BK TecHouse saw its annual sales revenue grow by 22 per cent Rwf1.45 billion.

"The plan is to increase the contribution of other subsidiaries,” Habyarimana said.