Rwanda’s Biggest Lender to Start Investment Bank, Insurer

KIGALI (Capital Markets in Africa) – Rwanda’s biggest lender is expanding into investment banking to win more business customers as competition for consumers intensifies.

BK Group Plc’s Bank of Kigali will start its investment-banking unit in March, Chief Executive Officer Diane Karusisi said in an interview in the Rwandan capital. The lender also plans to start an insurance unit as it seeks to diversify earnings, she said.

Rivalry in retail banking among the nation’s 11 commercial lenders is heating up as the government targets a 90 percent financial-inclusion rateby 2020. About 26 percent of Rwanda’s estimated 6 million adults are banked, according to a 2016 survey by FinScope, although adding other types of formal and informal financial-services products, such as micro-loans, increases this ratio to 89 percent.

The Bank of Kigali wants to maintain its leading market share by “trying to look at not only salaried clients but also business people,” Karusisi said. The World Bank estimates the economy will probably expand 7.8 percent this year from 7.5 percent in 2018.

It is also changing tact on expanding regionally to rather focus on getting clients to use more of its products, while digitizing its businesses over the next five years. Bank of Kigali has no plans of acquiring any local bank and its focused on growing existing operations, Karusisi added.

‘One Brand’
“The strategy of the board now is to expand within country but also diversify into insurance,” she said. “What we are doing is to be able to provide all the financial services under one brand as opposed to expand in the region and beyond.”

The lender is forecasting a slowdown in net-income growth this year to 15 percent from an estimated 20 percent in 2018, the CEO said. Bank of Kigali probably reached its target for net income of 28 billion francs ($32 million) last year, Karusisi said, citing unaudited statements.

Sitting on additional capital raised from a cross-listing of its shares on the Nairobi exchange is weighing on the returns the company would typically make from investments. It will probably return to 20 percent earnings growth from 2020, the CEO added.

“We have a positive outlook, healthy pipeline and we have enough capital to deploy,” she said. “We expect 2019 and the next two to three years are going to be positive.”

Source: Bloomberg Business News