Bank of Kigali (BK) has been ranked by London based Financial Times (FT) Magazine, once again, as Rwanda’s bank of the year in terms of financial performance and business growth.

According to FT, BK scooped this year’s Rwanda accolade—which is based on good financial performance, business growth and customer care service— because of the Bank’s sound approach to lending and efficient policies.

While several top lenders in the country hiked their lending rates, making it expensive to borrow, BK decided not to raise, its lending rates albeit the liquidity crisis experienced throughout last year. This helped the bank retain its customer base and attract new clients.

Surprisingly, the decision by banks to increase lending rates and imposing stringent requirements came amid strong policy measures by the Government and the National Bank of Rwanda (BNR) that aimed at encouraging these loan shy banks.  These policies included; injecting liquidity into the banking system, lowering the key repo rates—at which banks borrow from the central bank and also helping local banks to secure lines of credit from foreign financial institutions.  

Instead, lenders chose to increase the cost of funds even when the economy was experiencing low inflationary pressures.

With sound lending approach and good management practices, BK’s non performing loans fell from 15.4 percent of the total loan book in 2008 to 8 percent in 2009. And, its profits accounted for 70 percent of the overall banking sector profit in Rwanda.

If other banks had pursued a similar approach they, too, could have enjoyed a healthy growth and the economy would have recovered faster. 

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