Rwanda banks re­port mixed re­sults in 2018

Bank of Kigali, I&M Bank, Eq­uity, Bank Pop­u­laire and KCB in the lead

The East African - - BUSINESS - By Kabona Isiara

We are get­ting our fun­da­men­tals right, from rev­enues and non-per­form­ing loans.” Mau­rice Toroitich, manag­ing di­rec­tor, Bank Pop­u­laire du Rwanda

Com­mer­cial banks in Rwanda re­ported mixed re­sults in the nine months to Septem­ber, with Ecobank Rwanda join­ing the group of nine banks that re­turned a profit, to­gether rep­re­sent­ing a 21.8 per cent growth from $36 mil­lion to $43.8 mil­lion, while new en­trants strug­gled.

Ecobank Rwanda, which re­ported a loss of Rwf1.9 bil­lion ($2 mil­lion) in the nine months to Septem­ber 2017, posted a Rwf1 bil­lion ($1 mil­lion) net profit in the same pe­riod this year.

Those that did not fare well — Com­mer­cial Bank of Africa (CBA), three mi­cro­fi­nance banks and the De­vel­op­ment Bank of Rwanda — re­ported a com­bined Rwf8.3 bil­lion ($9.3 bil­lion) in net losses.

Bank of Kigali, I&M Bank Rwanda, Eq­uity Bank Rwanda, Bank Pop­u­laire du Rwanda and KCB Rwanda led the group of banks that posted prof­its.

Ac­cord­ing to the re­sults, al­most half of the com­mer­cial banks’ prof­its were gen­er­ated by Bank of Kigali, which is rid­ing on its large cap­i­tal base to fi­nance cor­po­rate clients, its coun­try­wide pres­ence to serve the re­tail seg­ment and its tech­nol­ogy-driven bank­ing plat­form to beat com­pe­ti­tion.

Bank of Kigali re­ported a net profit of Rwf19.7 bil­lion ($22 mil­lion) in the first nine months, which is an 11.1 per cent in­crease from the Rwf17.6 bil­lion ($19.7 mil­lion) re­ported dur­ing the same pe­riod last year. The bank’s credit book grew by 10.6 per cent in the nine months to Septem­ber, com­pared with the same pe­riod last year, from Rwf471 bil­lion ($528 mil­lion) to Rwf500.7 bil­lion ($561 mil­lion).

Bank Pop­u­laire du Rwanda posted a net profit of Rwf2.15 bil­lion ($2.4 mil­lion) in the nine months to Septem­ber com­pared with Rwf134.6 mil­lion ($151,349) re­ported same pe­riod last year.

“We are com­ing from a very poor per­for­mance his­tory. We are get­ting our fun­da­men­tals right from rev­enues, non-per­form­ing loans and costs,” said Mau­rice Toroitich, manag­ing di­rec­tor Bank Pop­u­laire du Rwanda.

I&M Bank Rwanda re­ported Rwf4.9 mil­lion ($5.5 mil­lion) net profit, com­pared with Rwf4.8 bil­lion ($5.3 mil­lion) last year while Eq­uity Bank made a net profit of Rwf4.5 ($5 mil­lion) com­pared with $2.8 mil­lion re­ported in the same pe­riod last year.

I&M Bank Rwanda and Eq­uity Bank Rwanda also kept the non-per­form­ing loans in check while grow­ing their loan books. For ex­am­ple, I&M Bank Rwanda non-per­form­ing loan ra­tio av­er­aged 2.9 per cent in the nine months to Septem­ber, which gave it lee­way to lend more and in­vest in in money mar­kets, thereby im­prov­ing its net in­ter­est and sim­i­lar in­come which ex­panded by 24 per cent.

KCB Rwanda prof­its grew from Rwf2.2 bil­lion (2.4 mil­lion) nine months to Septem­ber 2017 to Rwf2.6 bil­lion ($2.9 mil­lion) dur­ing the pe­riod un­der re­view.

The lender, how­ever, recorded an in­crease in non-per­form­ing loans, from from Rwf3.5 bil­lion ($3.9 mil­lion) to Rwf7 bil­lion ($7.8 mil­lion in the nine-month pe­ri­ofd.

Ac­count­ing stan­dard

While KCB’S bad loans ra­tio in­creased to 5.7 per cent from 3.1 per cent, the bot­tom line gained be­cause there was less im­pair­ment com­pared with last year.

Co­ge­bank’s prof­its fell from Rwf3.9 bil­lion ($4.3 mil­lion) in the nine months to Septem­ber last year to Rwf2.7 bil­lion ($3 bil­lion) in the first nine months of this year.

The bank’s earn­ings took a hit af­ter it spent Rwf2.9 bil­lion ($3.2 mil­lion) im­ple­ment­ing IFRS 9, the global ac­count­ing stan­dard that re­quires lenders to pro­vide for both good and bad loans.

Other banks that re­ported a growth in prof­its were Guar­an­tee Trust Bank and Ac­cess Bank.

CBA, which started trad­ing as a com­mer­cial bank last year af­ter ac­quir­ing Crane Bank, re­ported a Rwf2 bil­lion ($2.2 mil­lion) loss in the nine months to Septem­ber com­pared with a loss of Rwf845,155 ($948,764), dur­ing the same pe­riod in 2017, even as its loan book ex­panded to Rwf4.6 ($5 mil­lion) from Rwf3 bil­lion ($3.3 mil­lion) last year.

“There were ma­te­rial changes as a re­sult of this trans­ac­tion re­sult­ing in ad­di­tional cap­i­tal, prop­erty and equip­ment ex­penses,” says a note by chief ex­ec­u­tive of­fi­cer Lina Hi­giro.

De­vel­op­ment Bank Of Rwanda (BRD) re­ported a Rwf4.9 bil­lion ($5.5 mil­lion) loss, from the Rw234 mil­lion ($262,512) loss it recorded dur­ing the same pe­riod last year.

In or­der to re­duce its ex­po­sure, the bank says it plans to with­draw from 10 of the 30 compa- nies in Rwanda in which it has share­hold­ing.

BRD’S pub­lished re­sults for the nine months to Septem­ber show its earn­ings from fees and com­mis­sions plunged while the net in­ter­est in­come re­mained rel­a­tively strong.

How­ever, BRD’S non-per­form­ing loans re­mained dou­ble-digit, reach­ing 18.93 per cent which is more than the cen­tral bank’s 5 per cent bench­mark, which re­duces the banks’ ca­pac­ity to lend as it has to pro­vi­sion for the loans. BRD re­ported Rwf39 bil­lion ($44 mil­lion) non-per­form­ing loans dur­ing the pe­riod, which means share­hold­ers.

The re­sults also show that mi­cro­fi­nance in­sti­tu­tions are also strug­gling, weighed down by losses and non-per­form­ing loans. Un­guka Bank, AB Bank and Ur­wego Bank re­ported a com­bined Rwf1.3 bil­lion ($1.4) loss, largely due to scaled down lend­ing to mi­cro bor­row­ers af­ter their rev­enues took a hit in year in 2016 and 2017 due to bad weather, which de­stroyed crops and slowed eco­nomic growth.

The Ur­wego Bank’s in­ter­est in­come dipped 9 per cent; fees and com­mis­sions fell by 10 per cent and credit to the pri­vate sec­tor dropped 27 per cent — busi­ness streams which are cru­cial for lenders to post a profit.

While its in­come im­proved in the first nine months to 2018, Ur­wego re­ported a Rwf675 mil­lion ($757,548) loss, from the Rwf980 mil­lion ($1 mil­lion) it recorded in the same pe­riod last year.

Pic­ture: File

Bank of Kigali. The lender re­ported a net profit of $22 mil­lion in the first nine months of the year.

Newspapers in English

Newspapers from Kenya

© PressReader. All rights reserved.