Bank of Kigali Investor Presentation Full Year 2011
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Transcript of Bank of Kigali Investor Presentation Full Year 2011
BANK OF KIGALI
INVESTOR PRESENTATION
20112011
Year End 2011
DisclaimerThis presentation contains statements that constitute “forward-looking statements”, including, but not
limited to, statements relating to the implementation of strategic initiatives and other statements
relating to our business development and financial performance.
While these forward-looking statements represent our judgments and future expectations concerning
the development of our business, a number of risks, uncertainties and other factors could cause actual
developments and results to differ materially from our expectations.
These factors include, but are not limited to, (1) general market, macroeconomic, governmental
policies, legislative and regulatory trends, (2) movements in local and international currency exchange
rates, interest rates and securities markets, (3) competitive pressures, (4) technological
developments, (5) changes in the financial position or credit worthiness of our customers, obligors and
2
developments, (5) changes in the financial position or credit worthiness of our customers, obligors and
counterparties and developments in the markets in which they operate, (6) management changes and
changes to the Bank’s structure and (7) other key factors that we have indicated could adversely affect
our business and financial performance, which are contained elsewhere in this presentation and in our
past and future filings and reports, including those filed with the National Bank of Rwanda and the
Rwanda Stock Exchange.
We are under no obligation (and expressly disclaim any such obligations to) update or alter our forward-
looking statements whether as a result of new information, future events, or otherwise.
Presentation Team
J a m e s G a t e r aC h i e f E x e c u t i v e O f f i c e rE m a i l : j g a t e r a @ b k . r wT e l : + 2 5 0 2 5 2 5 9 3 1 2 1
L a d o G u r g e n i d z eC h a i r m a n o f t h e B o a r dE m a i l : l g u r g e n i d z e @ b k . r wM o b i l e : + 9 9 5 5 9 9 4 7 7 2 7 2
l a d o . g u r g e n i d z e . 2 0 0 8
3
L a w s o n N a i b oC h i e f O p e r a t i n g O f f i c e rE m a i l : l n a i b o @ b k . r wM o b i l e : + 2 5 0 7 8 8 3 0 2 0 7 6
J o h n B u g u n y aC h i e f F i n a n c e O f f i c e rE m a i l : j b u g u n y a @ b k . r wM o b i l e : + 2 5 0 7 8 8 3 0 6 1 0 0
Agenda
1. Country Overview Information
2. Banking Sector Overview
3. Bank Overview
4. Corporate governance
5. Business Overview
6. Review of Financial Performance 2011
7. Strategic Outlook
8. Contact Information4
COUNTRY OVERVIEW INFORMATION
5
Rwanda – Country Profile
Nominal GDP (2011) US$ 6.4 billion
Nominal GDP Per Capita (2011) US$595
Rwanda has been recognized by the World Bank as the second most
active reformer globally 2005-2011
Since 2005, Rwanda has implemented over 22 business regulation
reforms in the areas measured by the World Bank Doing Business
Index
Today, entrepreneurs can register a new business in 24 hours as well
as online
Area 26,338 sq km
Population (2010) 10.7 million
Official Languages Kinyarwanda, French, English
Capital Kigali
Currency Rwandan Franc (RWF)
Credit Rating B/Stable (Fitch Ratings)
B/B (Standard & Poors)
Business Environment
Macro Economic Indicators
National Facts
6
Nominal GDP Per Capita (2011) US$595
Real GDP Growth Rate 2011 8.6%
Real GDP Growth Rate 2012E 7.6%
Inflation Rate (Feb 2012) 7.9%
Private Sector Credit Growth (2011) 28.4%
External Debt to GDP (2010) 14.9%
Currency Depreciation (2011) 1.6%
FDI as % of GDP (2011E) 1.9%Source: IMF, CIA World Factbook, Ministry of Finance and Economic Planning, National Institute of Statistics Rwanda, National Bank of Rwanda,
GDP per Capita continues to grow Population Pyramid for Rwanda, 2011
Sound Macro Fundamentals
20-39
40-59
60 and above
9.2 9.6 9.8 10.1 10.4 10.7
333391
479 519 540
595
0
100
200
300
400
500
600
700
0
2
4
6
8
10
12
2006 2007 2008 2009 2010 2011
US $Mln
Population Nominal GDP Per Capita
3.1 3.7 4.7 5.2 5.6 6.4 6.6
8.8% 9.1%
15.4%
10.3%
2.3%
8.3%7.5%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
0
1
2
3
4
5
6
7
2006 2007 2008 2009 2010 2011 2012E
US$ Bn
Nominal GDP (US$ Bn) Inflation (%)
Healthy GDP growth with moderating inflation
7Source: National Institute of Statistics RwandaSource: Ministry of Finance and Economic Planning, IMF
54% of the population is under 19 years.
83% of the population is under 40 years.
3% of the population over 65 years.
30.0% 20.0% 10.0% 0.0% 10.0% 20.0% 30.0%
0-19
Female % Male %
GDP Breakdown by Economic Activity
Macroeconomic Indicators
Rwanda’s exports are dominated by coffee, tea and
minerals(tin, coltan and wolfram).
The country remains a net importer. Major imports include
intermediary goods especially construction materials,
consumer goods, energy and lubricants and capital goods.
Informal cross-border trade is a significant component of
Rwandan external trade (approx. 18% of total exports). More
than 78% of these exports are destined to DRC.
Official reserves were estimated at 7.7 months of goods
Agriculture,
31.9%
Wholesale and
Real
estate, business
Transport,
storage,
communication,
7.5%
Manufacturing,
6.6%
Education,
5.5%
Transport,
storage,
communication,
7.5%
Finance,
insurance,
2.8%
Mining and
quarrying, 1.3%
Trade Structure
12%11% 10%
14% 15%
11%
14% 15%13%
0%
5%
10%
15%
20%
2003 2004 2005 2006 2007 2008 2009 2010 2011
Current Account as a % of GDPTrade Deficit as a % of GDP
8
Source: NBR Monetary Policy Statement
Source: Ministry of Finance and Economic Planning, IMF
Official reserves were estimated at 7.7 months of goods
imports for Dec 2011
4%
9%
12% 13%
17%
0%
5%
10%
15%
20%
2007 2008 2009 2010 2011
Current Account Deficit as a % of GDPSource: National Institute of Statistics Rwanda
Source: National Institute of Statistics Rwanda
Wholesale and
retail
trade, 12.9%
Construction,
8.3%
estate, business
services, 8.0%
BANKING SECTOR OVERVIEW
9
2011 Banking Assets/GDP Large Unbanked Population
Economy is still cash based with bank accounts being used
mostly for cash deposits and withdrawals
Approximately 20% of the population is banked
90% of banked adults have a product with UBPR or credit
unions
2010 Banking Assets Per Capita 5
Significant Banking Sector Potential
534
274
165
Kenya
Tanzania
Uganda
(US$)
Source: Finscope Rwanda 2008
Prudential Regulations
CAR (Tier One) 10%
33%
50%
66%
Uganda*
Tanzania*
Kenya*
(1) Source: Central Bank of Kenya and Economic Survey 2011
(2) Source: IMF and Tanzania Banking Survey 2011 (Serengeti Advisers)
(3) Source: IMF and Bank of Uganda Joint Annual Supervision & Financial Stability Report December 2010
(4) Source: NISR, National Bank of Rwanda Monetary Policy review
(5) Source: population stats by IMF
*2010 figures are used for Kenya Tanzania and Uganda
10
165
124
Uganda
Rwanda
Total CAR 15%
Liquidity Ratio 20%
Reserve Requirement 5% of total deposits
Lending in foreign currency Restricted to exporters
23%
33%
Rwanda
Uganda*
Banking Sector Overview
Rwanda Banking System Growth (Total Assets)
Branch Coverage Recent Regulatory Reforms to improve Access to Credit
360.8468.7
516.2579.5
728.5
888.4
0
100
200300
400
500
600700
800
900
1,000
2006 2007 2008 2009 2010 2011
CAGR -19.7%
Rwf bn
Source: NBR Monetary Policy & Financial Stability Report 2011
Interest Rate Analysis
0.0%2.0%4.0%6.0%8.0%
10.0%12.0%14.0%16.0%18.0%
Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2010 2011
Key Repo Rate T-Bills Rate Deposit Rate Lending Rate
Source: National Bank of Rwanda, Bank of Kigali Data
Branch Coverage Recent Regulatory Reforms to improve Access to Credit
Enactment of Law on Mortgages, requiring the registration of mortgages
and enabling lenders to foreclose on defaulters
Establishment of Commercial Courts dealing solely with commercial
disputes
Reorganization of the Land Centre which has computerized records and
operations in addition to timely issuance of property titles
Reorganization of the Office of the Registrar General to enhance and fast
track registration of mortgages and foreclosures
Establishment of Credit Reference Bureau to enhance information sharing
among banks and other financial institutions in order to assist with credit
risk assessment
11
The total number of branches and outlet networks in the banking
industry as at FY 2011 was 683 with Bank of Kigali having 44
branches and outlets.
Timeline of Foreign Investment
2004 2006 2007 2008 2009 2010 2011
80% stake
in BCR 40% stake in Cogebanque
12
Source: NBR Supervision Department, BK Audited Full Year 2011 Results
30%
stake in
BPR
Banking Sector Overview Cont’d
Case study: Rwanda– six out of nine banks in Rwanda are owned by regional and Pan African bank and have
lost market share to locally-run banks
Market Share By Total Assets In 2008 Market Share By Total Assets In 2011
Top three “local”
banks, 52.3%
Six foreign-controlled
banks, 47.7%
Top three “local”
banks, 51.7%
Five foreign-
controlled
banks, 48.3%
March 2012Page 13
Source: the National Bank of Rwanda, company estimates
www.libertycapital.ge
BANK OF KIGALI
UBPR
BANK OF KIGALI
BPR
Competitive Landscape
Market Share Dynamics as at 31 December 2011
Source: NBR Supervision Department, BK Audited Full Year 2011 Results
Banking Sector Growth Vs Bank of Kigali Growth
45.6%
21.4%
33.4%
93.2%
23.0%29.9%
23.8%
52.4%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Total Assets
Growth
Net Loan Book
Growth
Client Deposits
Growth
Shareholders'
Equity
Bank of Kigali Growth in 2011 The Rwandan Banking Sector Growth in 2011
26.4% 26.8%25.7%
26.7%27.4%
31.5%
25.9%
32.2%32.3%
29.4%28.1%
42.2%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Assets Net Loans Client Deposits Shareholders' Equity
2009 2010 2011
14
Concentration of Banking Sector AssetsPerformance Indicators YE 2011
Source: NBR Supervision Department, BK Audited Full Year 2011 Results
7.0%
2.2%
10.6%8.3%
3.6%
18.6%
0.0%
5.0%
10.0%
15.0%
20.0%
NPLs/Gross Loans Return on Average Assets
Return on Average Equity
Asset Quality Profitability ratios
Banking Sector BK
31 December 2011 31 December 2010
Top 5
Banks,
78.7%
Others,
21.3%
Top 5
Banks,
78.4%
Others
, 21.5%
Source: NBR Supervision Department, BK Audited Full Year 2011 Results
Bank of Kigali is the Market LeaderRank Total Assets Loans Deposits Equity
32.3%
BANK OF KIGALI
BPR
17.6%
ECOBANK
10.4%
BCR
10.5%
7.9%
1
2
3
4
5
29.4%
BANK OF KIGALI
28.1%
BANK OF KIGALI
42.2%
BANK OF KIGALI
BPR
23.5%
BPR
18.9%
BPR
14.9%
BCR
8.5%
ECOBANK
10.0%
ECOBANK
11.0%
9.0%
COGEBANQUE
9.3%
BCR
11.0%
7.9% 6.8%
KCB
7.1%
Source: National Bank of Rwanda as at 31 December 2011
COGEBANQUE
7.9%
FINA BANK
6.6%
KCB
7.1%
ACCESS BANK
6.3%
5
6
7
8
BCR
9.0%
ACCESS BANK
2.9%
KCB
8.4%
ACCESS BANK
7.5%
COGEBANQUE
7.9%
FINA BANK
7.3%
KCB
7.7%
ECOBANK
6.8%
COGEBANQUE
6.6%
FINA BANK
4.8%
ACCESS BANK
4.5%
FINA BANK
7.5%
9
EQUITY BANKEQUITY BANK EQUITY BANK
EQUITY BANK
4.6%
1.3% 0.1% 0.7%
15
BANK OVERVIEW
16
Background and History
A+ credit rating by
GCR (Global Credit
Rating)
20112006
Established in 1967
as J.V with Belgolaise
S.A
1967
Current
management team
assembled
2007 2009
Supervisory Board
enhanced &
internationalised
2010
US$62.5 mln
Initial Public
Offering of 45%
of its shares and
listing on RSE
2007 2010
17
2011
Government of
Rwanda acquired
50% stake from
Belgolaise becoming
100% shareholder
20061967 2007
New strategy
focusing on the
universal banking
business model and
profitable growth
adopted
2009 2010
EIB loan signed:
‒ EUR 5 MM
‒ 7 years
AFD loan signed:‒ US$ 20 MM
‒ 10 years
AfDB loan signed:
-US$12 MM
-10 years
2007 2010
Key Facts
A Snapshot of Bank of Kigali
The leading bank in Rwanda (32.3% market share by total assets as of
December 31, 2011), offering a wide spectrum of commercial banking
services to corporate, SME and retail customers
As of 31 December 2011 the Bank had:
Over 13,000 corporate accounts
Over 73,000 retail current accounts
44 branches (29 of these outside of Kigali)
26 ATMs
602 employees
19,321 debit cards in issue
Western Union Agent for International Transfers
One of two Banks in Rwanda that offer International VISA cards.Branch Network Evolution
Source: Bank of Kigali Audited Financials 2007-2011
US$ MM 2007 2008 2009 2010 2011
CAGR
2007-
2011*
Total Assets 225.1 216.1 265.9 332.5 476.3 24.1%
Net Loans 89.4 129.0 135.0 170.6 203.7 26.1%
Client Deposits 187.2 167.9 191.7 228.2 299.5 15.5%
Shareholders' Equity 23.5 28.4 32.5 53.6 101.9 48.1%
Net Income 7.8 10.3 9.3 10.4 14.4 19.5%
Growth figures are calculated on RwF Values
MARKET SHARE
Total Assets 29.0% 23.4% 26.3% 27.4% 32.4%
Net Loans 25.3% 24.4% 26.8% 31.5% 29.4%
Client Deposits 30.6% 24.6% 25.8% 25.9% 28.0%
Shareholders' Equity 28.3% 22.3% 26.8% 32.2% 40.8%
One of two Banks in Rwanda that offer International VISA cards.
On average, the break-even period for new branches is less than 24 months
18
Growth in ATMs, POS Terminals and # of retail accou nts
11 14 18 33 44
267 295 303453
602
0
200
400
600
800
0
20
40
60
2007 2008 2009 2010 2011
Number of Branches Number of Employees
6 6 6 26 26040 52
97
202
27 30 41 65
139
0
200
400
2007 2008 2009 2010 2011
ATMs POS Retail Accounts Number ('000')
CORPORATE GOVERNANCE
19
Sharehold ing Structure
Report date 11-May-12
Current price, RwF 125
Market Cap, US$ mln 137
Free float 45%
Free float in US$ mln 67
Average daily traded volume in US$ mln 0.12
Common shares outstanding, mln shares 667.3
12-month high 200
12-month low 118
P/E YE 2011 8.0
P/BV YE 2011 1.13
Ticker Code BOK
Shareholding Structure
Employees and
Directors, 1.1%
Government of
Rwanda, 29.8%
Other State Owned
Entities,
0.1%
International
Institutional
Investors,
18.4%
Local Institutional
Investors, 2.8%
Retail Investors,
15.4%
Rwanda Social
Security Board, 27.6%
20
Ticker Code BOK
Rwf/USD Exchange Rate (e-o-p) of 607.552 as at 25 April 2012
*Capital gains on the RSE transactions are exempted from Capital Gains
Tax
Share Price Performance since start of trading
100
125
150
175
200
1-S
ep
-11
6-S
ep
-11
11
-Se
p-…
16
-Se
p-…
21
-Se
p-…
26
-Se
p-…
1-O
ct-1
1
6-O
ct-1
1
11
-Oct
-11
16
-Oct
-11
21
-Oct
-11
26
-Oct
-11
31
-Oct
-11
5-N
ov-
11
10
-No
v-…
15
-No
v-…
20
-No
v-…
25
-No
v-…
30
-No
v-…
5-D
ec-
11
10
-De
c-…
15
-De
c-…
20
-De
c-…
25
-De
c-…
30
-De
c-…
4-J
an
-12
9-J
an
-12
14
-Ja
n-1
2
19
-Ja
n-1
2
24
-Ja
n-1
2
29
-Ja
n-1
2
3-F
eb
-12
8-F
eb
-12
13
-Fe
b-…
18
-Fe
b-…
23
-Fe
b-…
28
-Fe
b-…
4-M
ar-
12
9-M
ar-
12
14
-Ma
r-…
19
-Ma
r-…
24
-Ma
r-…
29
-Ma
r-…
3-A
pr-
12
8-A
pr-
12
13
-Ap
r-1
2
18
-Ap
r-1
2
23
-Ap
r-1
2
28
-Ap
r-1
2
3-M
ay-
12
8-M
ay-
12
PriceClosing Price Volume Weighted Average Price Initial Price
Investors, 2.8%15.4%
Regional Institutional
Investors, 4.8%
Corporate Governance
The Board of Directors is composed of seven independent non-executive directors (including two non-
resident directors with extensive expertise in international banking practices)
The Board of Directors is approved by the Central Bank and meet on a quarterly basis or more frequently
as the business demands
The Board retains full responsibility for the direction and control of the Bank as spelled out in the
Memorandum and Articles of Association, the Board Charter and the corporate governance guidelinesMemorandum and Articles of Association, the Board Charter and the corporate governance guidelines
The Board sub-committees have clear TORs which underscore the scope and context of their
performance as approved by the Board & corporate governance regulation
The Board receives detailed financial information and regular presentations from the management on the
Bank’s business performance. This enables the Directors to make informed decisions on
governance, strategic, financials and operational issues21
BUSINESS OVERVIEW
22
68.5%
31.5%
Corporate Loans Retail Loans
80.3%
19.7%
Corporate Loans Retail Loans
Gross Loan Portfolio Loan Book Segmentation
Overview of the Loan Book
Rwf Bn
Corporate Loan Book, 31st December 2011
Source: Bank of Kigali
45.9 65.2 66.9
84.8 89.5 10.8
13.6 14.0
20.7
41.2
0
20
40
60
80
100
120
140
2007 2008 2009 2010 2011
Corporate Retail
56.6
78.880.9
105.5
130.7CAGR 23.3% 31 December 2011 31 December 2010
Top 10
Corporate
Loan,
25.5%
Other
Corporate
Loan,
74.5%
Top 10 Corporate Loan Other Corporate Loan
Corporate Loan Book, 31st December 2011
Source: Bank of Kigali Corporate Loans: RWF 89.5 Bn
Over 1
Billion,
36.0%
500M-1
Billion,
11.8%
100M-500
Million,
34.2%
50M-
100Million
, 8.2%
0-50
million,
9.8%
Manufactu
ring
10%
Constructio
n
29%Commerce,
restaurants
& hotels
45%
Transport
&
Communic
ation
7%
Others
9%
Customer Deposits Growth
Customer Deposit Base
Source: Bank of Kigali
78.0 69.6 81.6
99.3
126.8
23.9 24.2 27.8
36.4
54.2
-
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
180.0
200.0
2007 2008 2009 2010 2011
RwF Bn
Corporate Retail
CAGR= 15.5%181.0
101.9 93.8 109.5
135.7
Customer Deposit Segmentation
70.1%
29.9%
Corporate Deposits Retail Deposits
31 December 2011 31 December 2010
73.2%
26.8%
Corporate Deposits Retail Deposits
Structure of Deposits, 31st December 2011 Customer Deposits Concentration
24Corporate: RWF 126.8 Bn Retail: RWF 54.2 Bn
Notes: * depositors with total balances above 5% of shareholders’ equity of BoK
Source: Bank of Kigali
Large depositors*
22.4%
Other77.6%
31 December 2011 31 December 2010CB Term
Deposits,
27.1%
CB Collate
ral Deposit
s, 3.7%
CB Deman
d Deposit
s, 69.2%
RB Term
Deposits,
12.6%
RB Savings Deposit
s, 1.5%
RB Deman
d Deposit
s, 85.8%
Large Depositors*, 14%
Other,86%
Corporate Deposits: Rwf 126.8
Description Key Segments
Clients include corporate, SMEs and NBAs*
Interest rates were in the 15.0%-17.25% range as of
December 2011
Key products:
CAPEX loans: long-term loans for investment or
expansion of the business
Commercial mortgage loans: typical customer
participation at 30% of property value, typical
tenor of up to 10 years
Working capital loans: financing business needs
to an agreed limit for a short period (usually
Corporate Banking
Corporate Loans: RWF 89.5 Bn
71.4%
24.6%
4.1%
Corporate SMEs NBAs
79%
11%
10%
Corporate SMEs NBAs
Number of Corporate Accounts
to an agreed limit for a short period (usually
<1yr)
Overdrafts
Strategy
Introduce new services, integrate client coverage
Grow and consolidate market share
Leverage superior lending capacity
Focus on payroll services
*NBAs (Non Business Associations) includes Non-Profit
Organizations, Charities, Religious institutions, Educational
Institutions, Cooperatives,etc
25
1,619 1,823 1,567 2,757
4,234 4,813 5,236 4,968
5,873
9,921
-
2,000
4,000
6,000
8,000
10,000
12,000
2007 2008 2009 2010 2011
Loans Accounts Deposits Accounts
Merez
Petroleum
Tolirwa
Corporate SMEs NBAs Corporate SMEs NBAs
Executing the Retail Strategy
26
Description Key Segments
Retail Banking
The Bank’s retail business is primarily focused on mortgages and
consumer loans with notable share of overdrafts
Key products:
Mortgage loan: up to 10 years with typical customer participation
at 30% of property value
Consumer loan: up to 12x monthly salary and 48 months
Overdraft: up to 50% of monthly salary (normally repaid in 30
days)
Other products include credit cards and asset leasing
Strategy:
Build a ubiquitous branch footprint throughout the country
Build sufficient channel capacity to be able to service 500,000+
Retail Loans: RWF 41.2 Bn
44.3%
10.5%
40.1%
5.1%
Retail Deposits: RWF 54.2 Bn
12.6% 1.5%
85.8%
Number of Retail Accounts
27
Source: Bank of Kigali
Build sufficient channel capacity to be able to service 500,000+
clients by 2015
Build out the retail product lineup to achieve relevance to the
daily lives of the banked population
Expand credit card/debit card offering to other providers
(MasterCard, Amex etc)
8,199 9,145 11,524 15,131
61,919
18,419 20,579 29,081
49,712
76,810
-
20,000
40,000
60,000
80,000
100,000
2007 2008 2009 2010 2011
Loans Deposits Accounts
Our Products
Consumer loans Overdrafts
Mortgages Other
RB Term Deposits RB Savings Deposits
RB Demand Deposits
Ubiquitous footprint
Agency Banking
Growing our Distribution Network
44 56 65
7789
101
0
50
100
150
2011 2012P 2013P 2014P 2015P 2016P
Branches
86 115 125
145 165
150
200ATMs
Increasing functionalities of our delivery channels
2012 Targets
Cash out and Cash in at Point of sale merchants
Deposit taking ATMs
Card less Transactions at ATMs through our mobile banking and mobile wallet
Recruitment of 400 existing businesses as agents in
underway
Agents will be able to perform cash in and cash out
transactions, account opening and micro loan
applications and disbursement.
26
86
0
50
100
2011 2012P 2013P 2014P 2015P 2016P
202
1,000
1,850
2,650
3,400
4,100
0
1000
2000
3000
4000
5000
2011 2012P 2013P 2014P 2015P 2016P
POS
applications and disbursement.
Introduce 20 BK owned agent kiosks in high traffic
areas
Partnership with Telecos for our clients to transact
at their agents
Other Initiatives
Launch of mobile vans. So far 5 mobile vans have been ordered for 2012
Become super agents for mobile telecos to attract their customers to BK
and increase cross selling opportunities28
Growing our Card Business Increasing our Mobile product offering
Expanding our self service products
2011 Achievements
Issuing of approximately 40,000 VISA
Electron cards
Interoperability of our ATMs with VISA
Electron and local proprietary Cards
2012 Targets
AMEX acquiring. (CUP and Diners Club
acquiring have already been completed)
1. Enhancing our mobile banking service
In 2011, the Bank upgraded its SMS banking service to a
mobile banking service allowing customers to perform
the following transactions:
Purchasing prepaid TV, airtime and electricity
Check Balances and Bank information
Order cheque books
2. Launching our mobile payment platform
Attractive Products
acquiring have already been completed)
Launch of three new card products
VISA Prepaid
VISA Classic (Credit Card)
VISA Gold (Credit Card)
Launch of E-commerce
This platform will enable our clients to make purchases
at selected merchants using their mobile phones
Expected Launch Date: June 2012
3. Launch of mobile wallet
Issuing of a mobile wallet that is either linked to a
current account or not linked to a current account
Wallet will enable our customers to store cash and
transact at our ATMs and agents
29
Refreshing Product and Service Line UpNew Business Lines
Grow Retail Product Offering
1. Teleco mobile money agency
Super agent for the two telcos and expect to sign with 3rd operator after they
launch
All the 46 branches will be agent for the telco mobile money
Virtual money customers can deposit, withdraw and transfer at any of the BK
branches countrywide
2. Establishing BK Securities subsidiary
BK custody has over 60% of the local investors
The securities brokerage services will offer our investors seamless services
Grow Retail Product Offering
1. Loan Products
Top Up Mortgages
Leisure loans to tap the growing middle class
Payroll Loans: Leveraging our corporate clients’ payrolls
2. Remittances
Grow our Western Union market share from 36% to 40%
Increase functionality of Western Union to enable direct transfers to current
accounts and mobile wallets
Harmonize BK tariff structure with the region to increase competitiveness30
REVIEW OF F INANCIAL PERFORMANCE 2011
Balance Sheet HighlightsTotal Assets Total Liabilities
121.5 120.8
151.9
197.7
287.9
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
2007 2008 2009 2010 2011
CAGR - 24.1%
Rwf bn
108.7 104.9133.3
165.8
226.3
0.0
50.0
100.0
150.0
200.0
250.0
2007 2008 2009 2010 2011
Rwf bn
CAGR- 20.1%
48.7
72.177.1
101.4
123.1
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
2007 2008 2009 2010 2011
Rwf bn
CAGR- 26.1%
Shareholders’ Equity Net Loans
12.8 15.9 18.5
31.9
61.6
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
2007 2008 2009 2010 2011
Rwf bn
CAGR - 48.1%
2007 2008 2009 2010 2011
Cost of Risk*, %
Asset Quality
Notes: * LLP charge / Average gross loans for period
NPLs Coverage
1.1%
0.4%
1.9%
2.5%
3.8%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
2007 2008 2009 2010 2011
7.5 9.2 5.8 8.1 10.1
72.6%
55.3%57.1%
45.8%
69.1%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
0.0
2.0
4.0
6.0
8.0
10.0
12.0
2007 2008 2009 2010 2011
Rwf BnNPLs Coverage ratio
Collateral Structure
33Source: Bank of Kigali Audited IFRS Statements 2007-2010, Bank of Kigali Unaudited IFRS Statements 2011
Loan Book Quality (NPLs %)
Cash Cover
7%
Guarantees9%
Real Estate52%
Unregistered12%
Unsecured20%
19.4%
15.4%
8.3% 8.5% 8.3%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
2007 2008 2009 2010 2011
NPLs by segment
Corporate, 75%
Retail, 25%
31 December 2011 31 December 2010
Corporate, 84%
Retail, 16%
62.9%
6.6%
21.4%
9.1%
DepositsDue to BanksShareholders Equity
68.6%9.6%
16.1%
5.7%
Deposits Due to Banks
Shareholders Equity Other
Funding Structure, % Liquidity Ratios
CAR, % Highlights
Funding
31 December 2011 31 December 2010 Ratios 2007 2008 2009 2010 2011
Net Loans/Customer
Deposits
47.8% 76.8% 70.4% 74.7% 68.0%
Net Loans /Total
Assets
40.1% 59.7% 50.8% 51.3% 42.8%
Liquidity Ratio 35.9% 34.7% 42.1% 43.9% 60.8%
CAR, % Highlights
Deposits are the primary source of funding with share of deposits
exceeding 60% as at December 2011.
The Bank has also signed two long-term credit lines with the European
Investment Bank and the French Development Agency worth € 5
million for 7 years and $20 million for 10 years respectively.
In 2011, a third credit line was signed with the African Development
Bank worth $12 million for 10 years.
The Bank had drawn down EUR 2.6m & USD 5.0m on the EIB & AFD
loans respectively by December 2011
34
Source: Bank of Kigali audited IFRS Statements
14.0% 14.9%
19.9% 20.1%
29.1%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
2007 2008 2009 2010 2011
2011 Performance Highlights
Net Interest Income Net Non-Interest Income Total Operating Income
12.2
16.6
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
2010 2011
RwF bn
+36%
9.0
12.9
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
2010 2011
RwF bn
+43%
21.2
29.5
-
5.0
10.0
15.0
20.0
25.0
30.0
35.0
2010 2011
RwF bn
+39%
Total Recurring Operating Costs Profit Before Provisions Net Income
10.1
14.3
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
2010 2011
RwF bn
+42%
11.1
15.2
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
2010 2011
RwF bn
+37%
6.2
8.7
-
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
2010 2011
RwF bn
+40%
56.3%
14.7%
26.0%
3.0%
Net interest income
Fees & Commisions
FX gains
Other non- interest income
Total Operating Income Composition of Total Operating Income
Income Statement Highlights
11.1
14.316.0
21.1
29.5
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
2007 2008 2009 2010 2011
CAGR- 27.5%
31 December 2011 31 December 2010
55.1%
13.3%
24.8%
6.7%
Net interest income
Fees & Commisions
FX gains
Other non- interest income
50.2%
15.3%
34.5%
Personnel expenses
Depreciation and amortization
Other operating expenses
Total Operating Costs Composition of Total Operating Expenses
36
31 December 201031 December 2011
49.8%
17.1%
33.1%
Personnel expenses
Depreciation and amortization
Other operating expenses
4.4
5.77.1
10.0
14.2
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
2007 2008 2009 2010 2011
CAGR- 34.1%
39.5% 39.8%44.1%
47.5% 48.4%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
2007 2008 2009 2010 2011
9.5%
9.0%
8.2% 8.3%8.4%
7.5%
8.0%
8.5%
9.0%
9.5%
10.0%
2007 2008 2009 2010 2011
Net Interest Margin, % Cost / Income, %
Profitability
Nigeria average: 6.8%
SA average: 6.8%
Nigeria average: 67.3%
SA average: 59.1%
4.1%4.7%
3.9%3.5% 3.6%
0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%5.0%
2007 2008 2009 2010 2011
Nigeria average: 1.5%
SA average: 1.1%37.5% 39.4%
30.7%
24.5%
18.6%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
2007 2008 2009 2010 2011
2007 2008 2009 2010 2011
RoAE, % RoAA, %
37
Source: Bank of Kigali Audited IFRS Statements 2007-2010, Bank of Kigali audited IFRS Statements 2011, African Alliance Research 2012
Nigeria average: 10.4%
SA average: 14.4%
STRATEGIC OUTLOOK
Strategic OutlookObjectives Strategies Action Outcomes
Customer Growth in
terms of current
accounts
Benefit from first-mover advantage
outside the capital city, making it more
difficult for the competitors to follow suit
Reach out to the unbanked (but
bankable) population
Become the bank of choice and
convenience for the middle class and
youth entering the employment sector
Create capacity to service 500,000+
clients
Increase the number of ATMs, POS terminals and cards outstanding
Build a modern and scalable mobile banking and Internet banking
platforms
Alternative client acquisition & service channels (retail chains, co-
branded cards, utilities, etc)
Expand the branch network to 60+ branches by YE 2013
“Grow with clients”
Valuable source of retail clients through
payroll programs
Growth of loan book and F&C income
Maximize the product-to-client ratio
Expand retail product offering
Build sufficient channel capacity
Build a ubiquitous branch footprint
throughout the country
Flexible, offset, variable-rate, etc mortgages
Full range of consumer loan products
Revolving credit cards
Payroll & pension-backed loans & overdrafts
Microfinance
Modern, multi-currency current accounts with debit cards
Ubiquity of ATMs and POS terminals in urban centers and reasonable
proximity elsewhere
Payment & e-wallet solutions
Full range of deposit products
Integrated client coverageIncrease the loan to deposit ratio to
Diversification of funding base
Return on Average Equity
> 20%
Continuous improvement of risk management policies &
procedures
Disciplined capital management, medium term target CAR of
15%-17% and ROE of 20%+, implying ROA in the 3.5% range
No profitability sacrifices for the sake of market
share gains
Sensible dividend policy as the growth curve
flattens out over time
Maintain profitable growth
Asset Growth of 30%
Integrated client coverage
Leverage the superior lending capacity
Cross-selling opportunities
Documentary opps & trade finance, FX, other solutions
Rep offices in EAC from 2012
Private Banking, Securities, Insurance
Leverage the superior access to wholesale funding to
complement the deposit funding base Reduce maturity gap
Enable further expansion of long-term
lending
Increase the maturing profile of
liabilities
Create a universal banking platform
Consolidate the leading position in
corporate banking
Further diversification of revenue streams
Increase retail loans penetration
Increase the loan to deposit ratio to
60% Diversification of funding base
Expand the share of higher-margin lending
Maximize the cross-sell opportunities
Grow the share of retail in the loan book up to
30%-40% in the medium term
Management Targets 2012
Other Management targetsTotal Assets Growth Gross Loans/Total Assets
Launch representative offices within the EAC region
Launch agency banking
Launch Premier Banking - targeting 500 clients by YE
2013
46%
30%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2011 2012P
45%
60%
0%
10%
20%
30%
40%
50%
60%
70%
2011 2012P
Branch expansionReturn on Average Equity Revamp the existing digital wallet/mobile banking
distribution channel
19%
20%
18%
18%
19%
19%
20%
20%
21%
2011 2012P
44
56
0
10
20
30
40
50
60
2011 2012P 40
Sound Macro
Fundamentals
Politically stable country with sound governance
Very attractive demographic profile: population of 10.8million with 83% below the age of 40
Robust economic growth of 4.1%-11.2% between 2006-2010 and 8.8% expected for 2011
Moderate inflation: Maintained single digit inflation at 8.3% in 2011 vis-à-vis East African Community Partners
Very friendly business environment, recognized as the 2nd most reformer globally 2005-2011 in World Bank Doing Business Report
Significant headroom for growth given low banking penetration
Total assets/GDP of 23%
Large unbanked population of approximately 80%
Well regulated banking sector: fairly conservative regulator relative to regulators in the East Africa region
Market leadership by
Total assets (RWF 287,900 million as of 31 Dec 2011) – 32.4% market share
Net Loans (RWF 123,131 million as of 31 Dec 2011) – 29.4% market share
Significant
Banking Sector
Potential
Market Leadership
Key Investment Highlights
41
Deposits (RWF 181,020 million as of 31 Dec 2011) – 28.0% market share
Shareholders’ equity (RWF 61,584 million as of 31 Dec 2011) – 40.8% market share
Relatively high capital adequacy ratios ranging from 14.0% - 28.1% between 2007 and 2011
Manageable level of non-performing loans – 8.3% of gross loans in December 2011, down from 19.4% in 2007
Loans to deposit ratio range of 54.8% - 72.7% between 2007 and December 2011.
Conservative
Business Model
Experienced
Management
Team
Management team with combined banking sector experience of 79 years
Complemented by an experienced and diversified Board of Directors
Track record of producing stellar results
Profitable GrowthRobust asset growth at a CAGR of 24.4% to RWF 287,900 million (2007-2011)
ROAA ranging from 3.0% - 4.1% between 2006 and 2011
For information please contact:
Lado Gurgenidze
Chairman of the Board
Email: [email protected]
Mobile: +995 599 477 272
James Gatera
Chief Executive Officer
Email: [email protected]
Mobile: +250 78 814 3000
Lawson Naibo
Chief Operating Officer
Email: [email protected]
Mobile: +250 78 830 2076
Contact Information
John Bugunya
Chief Finance Officer
Email: [email protected]
Mobile: +250 78 830 6100
42
Linda Rusagara
Investor Relations Officer
Email: [email protected]
Mobile: +250 784 300 334
Mobile: +250 78 830 2076
Visit our website, www.bk.rw, or follow us on Scribd to access our Investor Presentations, Press
Releases and Annual Reports.
Telephone number: +250 252 593100. Address: Plot 6112, Avenue de la Paix, Kigali Rwanda
Mobile: +250 78 830 6100
Shivon Byamukama
Company Secretary
Email: [email protected]
Mobile: +250 78 838 4547