Despite the pandemic, BK Group Plc in 2020 recorded an after-tax profit of Rwf38.4 billion which was a 3 per cent growth compared to the previous year. BK Group Board Chair Marc Holtzman spoke to The New Times’ Collins Mwai on how the financial institution managed to maintain profitability across all subsidiaries, projections for 2021, expectations from the government among others. Excerpts: What are your thoughts on BK Group’s performance especially amid the pandemic? After a challenging year, I am proud of my colleagues and the work that the BK Group team has done to provide extra-ordinary results in the history of the bank. We made about $37M last year from about $34M, the year prior. With the pandemic, most of us had feared that we would suffer let alone the opportunity to break even. As it turns out, our digitalization, our efforts to modernize and improve the experience for our customer proved so positive that we were able to even increase our market position. During the pandemic, we learnt a lot about some of our weaker points that we need to improve. For the most part we went from strength to strength, we could work remotely, we showed that we were really making a difference in our customers’ lives. How do you think you fared with regard to supporting your clientele? Where clients needed a little more support during trying and difficult times, we look at ourselves as a partner who is side by side with them. We extended grace periods and showed leniency where we needed to. At the same time, we did not sacrifice the financial discipline required to run a bank. The pandemic will also see your shareholders forego 2020 dividends and wait a while before they can receive 2019 dividends, how are they reacting to this? As far as the dividend is concerned, our shareholders look for two things; Capital growth and dividends. Most shareholders were more interested in capital growth, we do not do it only for the dividends. Having said that, the dividend is important for some of our smaller local and retail shareholders. That requires us to be mindful of the dividend. The central bank allowed us to declare the dividend for 2019 but not pay it out yet, we have accounted for it and it’s a liability on our books. I am certain that we will pay it. Out of prudence and caution, it was not something that I necessarily agreed with but the central bank put the brakes on 2020 dividends, it was met with mixed reactions from our investors. Long term, investors want to know about predictability, in the case of BK Group, we more than met the test and rose to the occasion. It really did not affect our ability to pay, we have full ability to meet that dividend. I believe we will resume to a full healthy dividend in 2021 and I also believe that we will soon be able to give guidance to investors that they might soon be able to expect a more significant dividend for the 2021 year. All factors constant, what are your thoughts on the outlook of the local market? The group’s performance will be dictated by several things, it will be dictated by the bottom line net income, by how the market sees our growth potential as well as how investors perceive Rwanda as an investment destination. Under the leadership of President Kagame, this is the most attractive investment market in Africa, it is one of the few markets where you have full transparency, elimination of corruption and tremendous growth prospects. When it comes to the evolution of capital markets for a long time, BK and Bralirwa sat as the two market leaders, but now with the inclusion of MTN Rwanda, we have the triple pillar, the largest bank, largest telco and largest brewery. This is a staple that every foreign investor looks to measure the growth of the country. It will make Rwanda a true international destination for inbound capital markets investment. It will impact the performance of our share price as investors see a menu of opportunities in the companies ready for investments. How is this likely to translate to your performance? Our growth is very strong, we can see it in the activity of the bank even in the first quarter of the year. As management we are incredibly optimistic about the future, we are aggressively re-investing in digital transformation, equipment. For instance we have new ATMs which will not only dispense cash but also take deposits, we are planning on rolling out video banking to some of the most remote and rural areas so that our customers in those areas will have the same benefit and access as those in Kigali. Across the network, we have exciting plans. The local financial sector has been criticized for lacking relevance to a majority of the local market. Does BK group have plans to turn this around? A market like Rwanda has several advantages, because we are a lean mean market, we are small but forceful. If you look at banks in the United States and Europe, many of them are likely to become victims of their own success. Their legacy platforms will handcuff them and they will not be able to leapfrog like we have been able to do in Rwanda as a consequence, we have been able to go through many generations of technology. We are leapfrogging in a way that will allow the deployment of the latest greatest and most productive technology. That is what we are seeing, experiencing. We have a digital factory that looks to take best practices from elsewhere and shape them to our needs and preferences in Rwanda. In the second half of the year, we are going to roll out a whole suite of products which are going to be extremely transformational. Telcos and fintechs have been projected to disrupt financial services which is a key driver for the Group’s returns, how are you bracing for this? Our competition today is not just other banks, at the end of the day, we are emerging as the only large whole grown bank. Why is that important? As vice chairman of Barclays, I recall that if the country manager wanted to make a decision, they had to get approval from head office. Here, we are the head office, we are closer to the customers than any foreign bank can be. Our challenge is to be as good if not better in deployment of technology as well as recognize that our competitors are not only the banks but also teclos and other payment services providers. We have to keep being ahead of the game and disrupt before we are disrupted. What are your expectations from the government to enable you to grow further? We do a lot of business with the local government. Having said that, we want the government to continue to more or less get out of the way. We want the government to lead efforts in protecting customers, regulatory guidelines but at the same time there is a recognition that the government has to live up to the President’s vision to unshackle human capital and entrepreneurship. What are key sectors that you are watching closely that you think will grow in the coming days? To me, the most underserved sector in banking and finance is agriculture, as recently as two years ago, it was about 30 per cent of the economy but only represented only 6 per cent of bank lending. Through our Ikofi product and the work of Dr. Diane Karusisi and her team, we have significantly closed that gap and increased lending to agriculture. Beyond agriculture, metals and mining are going to be increasingly attractive growth sectors. The service sector will be another winning sector of the economy. It is best served by the work of the Kigali International Financial Centre which I believe will create important preconditions of growth locally.
