Professional Documents
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Disclaimer
This 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 counterparties and developments in the markets in which they operate, (6) management changes and changes to the Banks 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 forwardlooking statements whether as a result of new information, future events, or otherwise.
Presentation Team
Lado Gurgenidze Chairman of the Board Email: lgurgenidze@bk.rw Mobile: +995 599 477 272 lado.gurgenidze.2008
Lawson Naibo Chief Operating Officer Email: lnaibo@bk.rw Mobile: +250 78 830 2076
John Bugunya Chief Finance Officer Email: jbugunya@bk.rw Mobile: +250 78 830 6100
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 Information
4
CO U N T RY OV E RV I E W I N FO R M AT I O N
26,338 sq km 10.7 million Kinyarwanda, French, English Kigali Rwandan Franc (RWF) B/Stable (Fitch Ratings) B/B (Standard & Poors)
Macro Economic Indicators
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
Nominal GDP (2011) Nominal GDP Per Capita (2011) Real GDP Growth Rate 2011 Real GDP Growth Rate 2012E Inflation Rate (Feb 2012) Private Sector Credit Growth (2011) External Debt to GDP (2010) Currency Depreciation (2011) FDI as % of GDP (2011E)
US$ 6.4 billion US$595 8.6% 7.6% 7.9% 28.4% 14.9% 1.6% 1.9%
6
Source: IMF, CIA World Factbook, Ministry of Finance and Economic Planning, National Institute of Statistics Rwanda, National Bank of Rwanda,
Population
Healthy GDP growth with moderating inflation US$ Bn 7 6 5 4 3 2 1 0 2006 2007 2008 2009 2010 2011
Inflation (%) Source: National Institute of Statistics Rwanda
7
0-19
15.4% 18.0% 16.0% 14.0% 8.8% 9.1% 10.3% 12.0% 8.3% 7.5% 10.0% 8.0% 6.0% 2.3% 4.0%
30.0%
20.0%
10.0%
0.0%
10.0%
Male %
20.0%
30.0%
Female %
54% of the population is under 19 years. 83% of the population is under 40 years. 3% of the population over 65 years.
3.1
3.7
4.7
5.2
5.6
6.4
6.6 2012E
2.0% 0.0%
Macroeconomic Indicators
GDP Breakdown by Economic Activity
Finance, insurance, 2.8% Transport, storage, communication, 7.5% Education, 5.5% Manufacturing, 6.6% Transport, storage, communication, 7.5% Real estate, business services, 8.0% Mining and quarrying, 1.3%
Trade Structure Rwandas exports are dominated by coffee, tea and minerals(tin, coltan and wolfram). The country remains a net importer. Major imports include
Agriculture, 31.9%
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
Construction, 8.3%
13%
2007
2011
B A N K I N G S EC TO R OV E RV I E W
Economy is still cash based with bank accounts being used mostly for cash deposits and withdrawals
534
Kenya*
66%
Kenya
Approximately 20% of the population is banked 90% of banked adults have a product with UBPR or credit unions
Tanzania*
50%
Tanzania
274
Prudential Regulations
10%
Reserve Requirement
(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
Restricted to exporters
10
Interest Rate Analysis 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Dec Jan Feb Mar Apr May Jun 2010 Jul Aug Sep Oct Nov Dec
1,000 900 800 700 600 500 400 300 200 100 0
CAGR -19.7%
728.5 468.7 360.8 516.2 579.5
888.4
2006
2007
2008
2009
2010
2011
Branch Coverage 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.
Source: National Bank of Rwanda, Bank of Kigali Data
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
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2004
2006
2007
2008
2009
2010
2011
12
BANK OF KIGALI
BANK OF KIGALI
BPR
UBPR
Page 13
www.libertycapital.ge
March 2012
Competitive Landscape
Market Share Dynamics as at 31 December 2011
45% 40% 35% 30% 25% 20% 15% 10% 5% 0%
2009
32.3% 27.4% 26.4%
2010
2011
28.1% 25.9% 25.7%
93.2%
26.7%
52.4%
Assets
Net Loans
Client Deposits
Shareholders' Equity
Shareholders' Equity
Performance Indicators YE 2011 20.0% 15.0% 10.0% 5.0% 0.0% NPLs/Gross Loans Return on Average Return on Average Assets Equity Profitability ratios BK 7.0% 8.3% 2.2% 3.6% 10.6% 18.6%
Others, 21.3%
14
32.3%
BANK OF KIGALI
29.4%
BANK OF KIGALI
28.1%
BANK OF KIGALI
42.2%
2
BPR
17.6%
BPR
23.5%
BPR
18.9%
BPR
14.9%
3
ECOBANK
10.5%
ECOBANK
10.0%
ECOBANK
11.0%
BCR
8.5%
4
BCR
10.4%
COGEBANQUE
9.3%
BCR
11.0%
KCB
7.1%
5
COGEBANQUE
7.9%
BCR
9.0%
COGEBANQUE
7.9%
ECOBANK
6.8%
6
ACCESS BANK
7.1%
KCB
8.4%
KCB
7.7%
COGEBANQUE
6.6%
7
FINA BANK
6.6%
FINA BANK
7.5%
ACCESS BANK
7.5%
FINA BANK
4.8%
8
KCB
6.3%
ACCESS BANK
2.9%
FINA BANK
7.3%
EQUITY BANK
4.6%
9
EQUITY BANK
1.3%
EQUITY BANK
0.1%
EQUITY BANK
0.7%
ACCESS BANK
4.5%
15
B A N K OV E RV I E W
16
1967
2006
2007 2007
2009
2010 2010
2011
Government of Rwanda acquired 50% stake from Belgolaise becoming 100% shareholder
New strategy focusing on the universal banking business model and profitable growth adopted
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US$ MM 2007 2008 2009 Total Assets 225.1 216.1 265.9 Net Loans 89.4 129.0 135.0 Client Deposits 187.2 167.9 191.7 Shareholders' Equity 23.5 28.4 32.5 Net Income 7.8 10.3 9.3 Growth figures are calculated on RwF Values MARKET SHARE Total Assets 29.0% 23.4% 26.3% Net Loans 25.3% 24.4% 26.8% Client Deposits 30.6% 24.6% 25.8% Shareholders' Equity 28.3% 22.3% 26.8%
Source: Bank of Kigali Audited Financials 2007-2011
303 18
2009
33
2010
44
2011
Number of Branches
Number of Employees
ATMs
POS
6 0 27
0
40 30 6 2008
52 41 2009
2007
2010
CO R P O R AT E G OV E R N A N C E
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S h a re h o l d i n g S t r u c t u re
Shareholding Structure Other State Owned Entities, 0.1% Government of Rwanda, 29.8% Employees and Directors, 1.1% International Institutional Investors, 18.4%
Report date Current price, RwF Market Cap, US$ mln Free float Free float in US$ mln Average daily traded volume in US$ mln Common shares outstanding, mln shares 12-month high 12-month low P/E YE 2011 P/BV YE 2011 Ticker Code
11-May-12 125 137 45% 67 0.12 667.3 200 118 8.0 1.13 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
Closing Price
Initial Price
10-Nov-
15-Nov-
20-Nov-
25-Nov-
30-Nov-
10-Dec-
15-Dec-
20-Dec-
25-Dec-
30-Dec-
13-Feb-
18-Feb-
23-Feb-
28-Feb-
14-Mar-
19-Mar-
24-Mar-
29-Mar-
100
1-Sep-11 6-Sep-11
13-Apr-12
18-Apr-12
23-Apr-12
28-Apr-12
3-Feb-12
8-Feb-12
3-Apr-12
8-Apr-12
3-May-12
11-Oct-11
16-Oct-11
21-Oct-11
26-Oct-11
31-Oct-11
14-Jan-12
19-Jan-12
24-Jan-12
29-Jan-12
20
8-May-12
1-Oct-11
6-Oct-11
5-Nov-11
5-Dec-11
4-Jan-12
9-Jan-12
4-Mar-12
9-Mar-12
C o r p o ra te G o ve r n a n c e
The Board of Directors is composed of seven independent non-executive directors (including two nonresident 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 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 Banks business performance. This enables the Directors to make informed decisions on governance, strategic, financials and operational issues
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B U S I N E S S OV E RV I E W
22
CAGR 23.3%
105.5 78.8 56.6
10.8 65.2 66.9 13.6
31 December 2011
31 December 2010
80.9
20.7 14.0 84.8
41.2 31.5%
19.7%
50M100Million , 8.2%
Constructio n 29%
181.0
54.2 29.9% 36.4 99.3 126.8 70.1% 26.8% 73.2%
93.8
24.2 69.6
109.5
27.8 81.6
2007
Source: Bank of Kigali
2008
2009 Retail
2010
Corporate
Other, 86%
Other 77.6%
Notes: * depositors with total balances above 5% of shareholders equity of BoK Source: Bank of Kigali
24
Corporate Banking
Description 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 <1yr) Overdrafts
Tolirwa
Key Segments
Corporate Loans: RWF 89.5 Bn 4.1% 10% 11% Corporate Deposits: Rwf 126.8
24.6%
71.4% 79%
Corporate
SMEs
NBAs
Corporate
SMEs
NBAs
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
Number of Corporate Accounts 12,000 10,000 8,000 6,000 4,000 2,000 2007 2008 Loans Accounts 2009 2010 Deposits Accounts 2011 1,619 1,823 1,567 4,813 5,236 4,968 5,873 4,234 2,757 9,921
Merez Petroleum
25
26
Retail Banking
Description The Banks 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+ 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) Our Products 100,000 80,000 60,000 40,000 20,000 Source: Bank of Kigali
Key Segments Retail Loans: RWF 41.2 Bn 5.1% Retail Deposits: RWF 54.2 Bn
12.6%
1.5%
40.1%
44.3%
85.8%
10.5%
Overdrafts Other
RB Savings Deposits
76,810 61,919 49,712 18,419 8,199 2007 20,579 9,145 2008 Loans 29,081 11,524 15,131
2010
2011
Branches
150 100 50 0 2011 2012P 2013P 2014P 2015P 2016P 44 56 77 89 101
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
65
ATMs
115 125 145
165
Agents will be able to perform cash in and cash out transactions, account opening and micro loan applications and disbursement. Introduce 20 BK owned agent kiosks in high traffic areas
2013P
2014P
2015P
2016P
POS
3,400 2,650 1,850
4,100
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 opportunities
28
2011
2012P
2013P
2014P
2015P
2016P
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) Launch of three new card products VISA Prepaid VISA Classic (Credit Card) VISA Gold (Credit Card) Launch of E-commerce
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 competitiveness
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REVIEW OF FINANCIAL P E R FO R M A N C E 2 0 1 1
Rwf bn
350.0 300.0 250.0 197.7 200.0 151.9 150.0 100.0 50.0 0.0 2007 2008 2009 2010 2011 121.5 120.8
CAGR - 24.1%
CAGR- 20.1%
165.8 133.3 108.7 104.9
226.3
2008
2010
2011
Shareholders Equity Rwf bn Rwf bn 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 2007 2008 2009 2010 2011 12.8 15.9 18.5 40.0 20.0 0.0 2007 2008 31.9 140.0
CAGR- 26.1%
101.4 72.1 48.7 77.1
123.1
CAGR - 48.1%
61.6
2009
2010
2011
Asset Quality
NPLs Coverage Rwf Bn 12.0 10.0 8.0 6.0 4.0 2.0 0.0 7.5 2007 9.2 2008 5.8 2009 8.1 2010 10.1 2011 72.6% 55.3% NPLs 57.1% Coverage ratio 69.1% 45.8% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 2007 2008 2009 2010 2011
Notes: * LLP charge / Average gross loans for period
Loan Book Quality (NPLs %) 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 2007 2008 2009 2010 2011
Source: Bank of Kigali Audited IFRS Statements 2007-2010, Bank of Kigali Unaudited IFRS Statements 2011
NPLs by segment
31 December 2011 31 December 2010
Collateral Structure
Cash Cover 7% Guaran tees 9%
19.4% 15.4%
Retail , 16%
Retail , 25%
8.3%
8.5%
8.3%
Corpo rate, 75% Corpo rate, 84%
33
Funding
Funding Structure, %
31 December 2011 31 December 2010
Liquidity Ratios
Ratios
Net Loans/Customer Deposits Net Loans /Total Assets
2007
47.8%
2008
76.8%
2009
70.4%
2010
74.7%
2011
68.0%
5.7%
16.1%
40.1% 35.9%
59.7% 34.7%
50.8% 42.1%
51.3% 43.9%
42.8% 60.8%
68.6%
Liquidity Ratio
CAR, %
30.0% 25.0%
Highlights 29.1%
Deposits are the primary source of funding with share of deposits exceeding 60% as at December 2011.
19.9%
20.0%
20.1%
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
14.0%
15.0% 10.0% 5.0% 0.0%
14.9%
2007
2008
2009
2010
2011
+36%
16.6
14.0 12.0
+43%
12.9
12.2
9.0
2010
2011
2010
2011
2010 2011
Net Income
+40%
8.7
6.2
2010
2011
2010
2011
CAGR- 27.5%
3.0%
6.7%
Total Operating Costs 16.0 14.2 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 2007 2008 2009 2010 2011 4.4 17.1% 5.7 7.1
CAGR- 34.1%
10.0 33.1% 49.8% 34.5% 50.2%
15.3%
Personnel expenses Depreciation and amortization Other operating expenses
36
Profitability
Net Interest Margin, % 10.0% 9.5% 9.5% 9.0% 9.0% 8.5% 8.0% 7.5% 2007 2008 2009 RoAE, % 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 37.5% 39.4% 30.7% 24.5% 18.6%
SA average: 14.4% Nigeria average: 10.4% Nigeria average: 6.8% SA average: 6.8%
Cost / Income, %
Nigeria average: 67.3% SA average: 59.1%
47.5%
48.4%
2010
2011
2007
2008
2009 RoAA, %
2010
2011
5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0%
SA average: 1.1%
3.6%
2007
2008
2009
2010
2011
Source: Bank of Kigali Audited IFRS Statements 2007-2010, Bank of Kigali audited IFRS Statements 2011, African Alliance Research 2012
2007
2008
2009
2010
2011
37
ST R AT EG I C O U T LO O K
Strategic Outlook
Objectives Strategies
Build a ubiquitous branch footprint throughout the country Build sufficient channel capacity
Action
Expand the branch network to 60+ branches by YE 2013 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, cobranded cards, utilities, etc) 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
Outcomes
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 Maximize the product-to-client ratio Grow with clients Valuable source of retail clients through payroll programs Growth of loan book and F&C income
Increase the loan to deposit ratio to 60% Increase retail loans penetration
Consolidate the leading position in corporate banking Increase the maturing profile of liabilities Create a universal banking platform
Integrated client coverage Leverage the superior lending capacity Cross-selling opportunities Documentary opps & trade finance, FX, other solutions Rep offices in EAC from 2012 Leverage the superior access to wholesale funding to complement the deposit funding base
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
Reduce maturity gap Enable further expansion of long-term lending Further diversification of revenue streams
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
Gross Loans/Total Assets 70% 60% 60% 30% 50% 40% 30% 20% 45%
46%
distribution channel
44
Contact Information
For information please contact: Lado Gurgenidze Chairman of the Board Email: lgurgenidze@bk.rw Mobile: +995 599 477 272 Lawson Naibo Chief Operating Officer Email: lnaibo@bk.rw Mobile: +250 78 830 2076 Shivon Byamukama Company Secretary Email: sbyamukama@bk.rw Mobile: +250 78 838 4547 James Gatera Chief Executive Officer Email: jgatera@bk.rw Mobile: +250 78 814 3000 John Bugunya Chief Finance Officer Email: jbugunya@bk.rw Mobile: +250 78 830 6100 Linda Rusagara Investor Relations Officer Email: lrusagara@bk.rw Mobile: +250 784 300 334
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
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