Bank of Kigali (BK) has said it is set to upgrade its banking software to improve technology based service delivery in a bid to cut operating costs and consolidate its position in Rwanda’s banking industry as the largest bank by market share.

Management says that the move, which is expected to commence in the last quarter of this year, will provide real time processing of transactions through the introduction of new products like internet banking, card services and telephone banking.

"One of the strategies is to use technology as a way of lowering the cost of delivering service to our customers.

It is also convenient for accessing and making transactions at the comfort of their homes or offices at any time of the day,” James Gatera, the Managing Director of BK said in an interview.

He emphasised that the bank recognises that it has to be innovative in order to maintain its strong market leadership in the financial industry.

According to the bank’s financial statements revised by Ernst & Young, in the first half of 2009 its net income reduced to Rwf2.9 billion form Rwf3.3 billion in the same period last year as net interest income increased by 8.5 percent to Rwf4.4 billion from Rwf4.1 billion in the period under review.

Gatera said that the current trends in the financial services industry are dictating a decrease in margin between interest income on lending and interest cost on deposits.

He said as a result the only option for banks to survive will be through increasing customer loyalty and managing costs more effectively.

The bank’s interest expenses rose significantly by 50.2 percent up from Rwf925 million in the first half of 2008 to Rwf1.3 billion in the first six months of 2009.

"Currently we have the lowest cost of income ratio in the market. We intend to maintain this position through continuous use of ICT,” he said.

Gatera also mentioned that the bank has been able to hold its ground in spite of the global economic downturn and local liquidity crunch.

"The bank has been able to whither the storm with the support from its customers who have continued to maintain their deposits to repay their loans,” he said, revealing that BK’s ratio of non-performing loans has been decreasing over the years.

The financial statements also portray that loan loss provisions in the period under review increased two folds to Rwf650 million from Rwf303 million.

This has thus brought down the bank’s ratio of non-performing loans to 11 percent in the first half of 2009 from 23 percent by end 2006.

Customer deposits including wholesale deposits increased by 10 percent to Rwf110 million as of June 30, 2009 from Rwf98.2 million in June 2008 as total assets increased to Rwf71.6 billion from Rwf70.2 million.

"To reciprocate the support from our customers we have not increased our lending rates or tariffs and have continued to give loans to our customers normally.

We have also maintained competitive deposit rates and have been continuously improving our customer service,” Gatera said.

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