Rwanda Commercial Bank (BCR) has reported a rise in its profit for the period ending September 2010, supported by operating costs control and non-interest sources of funds. BCR’s audited financial statements show that, in the period between January and September 2010, pre tax profits climbed to Rwf2.5 billion compared to Rwf6.1 million that was registered during the same period last year.

In an interview with Business Times, on Monday, Sanjeev Anand BCR’s Managing Director attributed the achievement largely to the good control on expenses and foreign exchange trading gains.

"In today’s competitive environment, you have to be cost competitive to, not only to survive and pick up, but also to increase market share.

Today, my ability to give concessions or pricing reductions to customers is higher because we have slimmed down our own expense base,” Anand said.

Audited financial statements of the bank by Ernst & Young indicate that the bank has a net income of Rwf1.7 billion during the period under review compared to Rwf43.3million recorded last year during the same period.

"We did very well on our foreign currency, fees and commissions improved. We were having high cost funds but we have now replaced them with low cost funds,” added the MD.

Due to the bank’s aggressive cost control policy, the bank recently rendered approximately 20 of their staff redundant.

"Their positions becoming redundant, one of the things we are doing is that we are introducing more technology, improving the efficiency of our processes; for instance, swift messages used to be sent manuallybut it is now automated,” Anand explained.

As a result of conservative cost control, the bank’s operating costs dropped from Rwf6.9 billion to approximately Rwf6 billion.

However, the bank’s balance sheet reflects increased risk aversion with a shift from advances and loans to customers to central bank balances and other instruments including treasury bills and bonds.

Loans and advances to customers reduced from Rwf33.5 billion to Rwf28.5 billion during the period under review while transactions with the central bank, banks and other financial institutions increased to Rwf37.6 billion from Rwf32.3 billion.

"It has proved to be a bit of a challenge to expand (loan book). I have enough liquidity, but we have not managed to identify a substantial number of creditable applications,” Anand said explaining the contraction in the bank’s loan book.

He added: "It is not that we are not giving out loans but (we) want to give out more loans which are credit worthy.”

The Banker also pointed out that economic activity was slow during the first half of this year though it has since picked up.

"We have also been focusing on internal issues, we had enough problems internally; we also had to fix the non-performing loans, and had big recoveries to do…,” he said.

Last year, BCR managed to collect at least Rwf2.5 billion in recovery after overhauling its recovery department. Anand said the bank is targeting to expand its loan book next year with specific focus on Small and Medium Enterprises (SMEs) and retail segment for products like mortgages.

"We have learnt the hard way of lending to SMEs; we can now segregate between good SMEs and bad SMEs.” Anand said, pointing out that the bank has now developed a skills development product for SMEs to equip them with accounting and financial literacy skills.

BCR is largely owned by Actis, a private equity investor in emerging markets with head offices in London, while the Government of Rwanda is a minority shareholder with a 20 percent shareholding.

Ends