AnnualReport

2014

AFRICAN BANKER
AWARDS 2014
2014
RWANDA RWANDA RWANDA

Annual Report
1
 BK Awards In pursuit of excellence

Bank of the Year Award

Best Bank in East Africa Award

Best Bank in Rwanda

FiReAward
Fire Award Euromoney Award
Best African Listing Award

In Rwanda we transform lives,

to the world we make Rwanda proud
Rwanda is on her way to becoming one of the top brands in Africa. The spirit of Agaciro and hard work
is propelling our country forward. With a Bank whose goal is to transform the lives of Rwandans,
the future can only be bright.

Our commitment to this course has been recognised both at home and around the world.

We are honoured to be Rwanda’s leading bank.

AFRICANBANKER
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For more information call 4455 or visit your Branch Manager Annual Report
 OUR VISION OUR MISSION O U R VA L U E S

Bank of Kigali aspires to Our mission is to be the • Customer focus

be the leading provider leader in creating value
• Integrity
of the most innovative for our stakeholders
financial solutions in by providing the best • Quality
the region. financial services • Excellence
to businesses and
individual customers,
through motivated and
professional staff.

2014
Annual Report
1
 Ta b l e o f C o n t e n t s
Ta b l e o f C o n t e n t s

Pages

Financial Review

Financial Highlights 3
Key Performance Ratios 5
Value Added Statement 6
Chairman’s Report 8
Chief Executive Officer’s Report 9

Sustainability Report

Sustainability Report 2014 13

Corporate Governance Report

Corporate Governance Report 21

Board of Directors Profiles 26
Management Profiles 30

Financial Report

Directors and Statutory Information 36

Report of the Directors 37
Statement of Directors Responsibilities 38
Report of the Independent Auditor 39-40
Consolidated Statement of Comprehensive Income 41
Consolidated Statement of Financial Position 42
Consolidated Statement of Changes in Equity 43
Consolidated Statement of Cash Flows 44
Notes to the Consolidated Financial Statements 45-95

Notice of Annual General Meeting 96

Proxy Form 97

2 2014
Annual Report
 Financial Highlights

Total Assets Gross Loans

FRw bn FRw bn

C AG R 2 5 . 0 % C AG R 2 3 . 8 %

Financial Highlights
2014 482.6 2014 247.4

2013 422.4 2013 211.9

2012 322.8 2012 194.0

2011 287.9 2011 130.7

2010 197.7 2010 105.5

Customer Deposits Shareholders Equity

FRw bn FRw bn

C AG R 2 4 . 4 % C AG R 2 9 . 4 %
2014 324.6 2014 89.5

2013 280.5 2013 70.8

2012 211.9 2012 63.1

2011 181.0 2011 61.6

2010 135.7 2010 31.9

2014
Annual Report
3
 Financial Highlights

Net Interest Income Net Non-Interest Income

FRw bn FRw bn

C AG R 3 5 . 3 % C AG R 1 8 . 8 %
Financial Highlights

2014 39.3 2014 18.9

2013 35.2 2013 18.6

2012 23.7 2012 14.5

2011 16.6 2011 12.9

2010 11.7 2010 9.5

Operating Income Net Profit

FRw bn FRw bn

C AG R 2 8 . 7 % C AG R 3 1 . 1 %
2014 58.2 2014 18.3

2013 53.8 2013 14.8

2012 38.3 2012 11.8

2011 29.5 2011 8.7

2010 21.2 2010 6.2

4 2014
Annual Report
 Key Performance Ratios

  2014 2013 2012 2011 2010

Profitability
Return on Average Assets 4.0% 4.0% 3.9% 3.6% 3.5%
Return on Average Equity 22.9% 22.2% 18.9% 18.6% 24.5%
Net Interest Margin 9.9% 11.1% 9.6% 8.4% 8.3%
Loan Yield 20.5% 20.5% 17.0% 16.9% 15.8%
Interest Expense/Interest Income 24.4% 22.2% 26.0% 26.8% 25.6%
Cost of Funds 3.4% 3.3% 3.4% 3.1% 2.8%
           
Efficiency
Cost/Income Ratio 47.9% 48.4% 52.8% 48.4% 47.5%
Costs/Average Assets 6.2% 7.0% 6.6% 5.9% 5.8%
Personnel Costs/Total Recurring Operating Costs 51.8% 45.0% 47.4% 51.8% 52.3%
Personnel Costs/Average Total Assets, Annualised 3.2% 3.1% 3.1% 2.9% 3.0%
Personnel Costs/Total Operating Income 24.8% 21.8% 25.0% 25.1% 25.0%
Net Income/Total Operating Income 31.5% 27.6% 30.7% 29.5% 29.2%
Total Operating Income/Average Assets 12.9% 14.4% 12.6% 12.1% 12.1%
           
Liquidity
Net Loans/Total Assets 48.4% 47.1% 57.3% 42.8% 51.3%
Liquid Assets / Total Assets 45.7% 46.0% 31.9% 45.1% 37.0%

Key Performance Ratios

Liquid Assets / Total Deposits 64.9% 65.2% 44.7% 64.9% 47.3%
Liquid Assets / Total Liabilities 56.1% 55.2% 39.6% 57.4% 44.1%
Total Deposits / Total Assets 70.4% 70.5% 71.3% 69.5% 78.2%
Total Deposits / Total Liabilities 86.5% 84.7% 88.7% 88.4% 93.2%
Interbank Borrowings / Total Deposits 4.5% 5.8% 8.0% 9.5% 12.2%
Gross Loans/Total Assets 51.1% 50.2% 60.1% 45.4% 53.4%
Gross Loans / Total Deposits 72.6% 71.1% 84.2% 65.3% 68.3%
Interest Earning Assets/Total Assets 87.7% 88.4% 80.5% 82.0% 81.6%
Leverage (Total Liabilities/Equity), Times 4.4 5.0 4.1 3.7 5.2
           
Asset Quality
NPLs / Gross Loans 6.6% 6.9% 6.5% 8.3% 8.5%
NPL Coverage Ratio 81.8% 87.4% 70.3% 69.1% 45.8%
Loan Loss reserve / Gross Loans 5.4% 6.1% 4.6% 5.8% 3.9%
Average Loan Loss reserve / Average Gross Loans 5.7% 5.4% 5.1% 4.9% 4.3%
Large Exposures / Gross Loans 18.0% 5.4% 6.5% 8.8% 14.3%
Cost of Risk, Annualised 3.3% 4.4% 2.2% 3.8% 2.0%
           
Capital Adequacy
Core Capital / Risk Weighted Assets 25.8% 23.0% 22.4% 28.1% 18.7%
Total Qualifying Capital / Risk Weighted Assets 26.3% 23.7% 23.2% 29.1% 20.1%
Off Balance Sheet Items / Total Qualifying Capital 428.4% 542.5% 524.3% 363.1% 351.2%
Large Exposures / Core Capital 53.5% 17.9% 22.6% 21.3% 61.1%
NPLs less Provisions / Core Capital 3.5% 2.9% 6.8% 6.2% 19.7%
           
Market Sensitivity
Forex Exposure / Core Capital (20.4%) (9.1%) (41.2%) 11.7% 11.5%
Forex Loans / Forex Deposits 8.4% 0.7% 1.0% 0.8% 1.0%
Forex Assets / Forex Liabilities 87.5% 93.8% 61.0% 105.3% 106.7%
Forex Loans / Gross Loans 3.3% 0.3% 0.3% 0.3% 0.4%
Forex Deposits/Total Deposits 39.9% 44.8% 25.3% 23.8% 27.4%
           
Selected Operating Data
Full Time Employees 1,019 980 877 602 454
Assets per FTE (FRw in billion) 0.5 0.4 0.4 0.5 0.4
Number of Active Branches 70 65 59 44 33
Number of Mobibank 9 5 5 - -
Number of ATMS 76 65 55 26 26
Number of POS Terminals 656 568 405 202 97
Number of Retail current accounts 266,239 231,409 191,632 124,248 50,073
Number of BK Yacu Agent 861 569 30 - -
Number of mVisa wallet 54,544 10,528 - - -

2014
Annual Report
5
 Va l u e a d d e d s t a t e m e n t

For the Year ended 31 December 2014

2014 % 2013 %
Value Added Statement
Interest, commissions and other revenues 70,835,144 63,769,148  
Interest paid to depositors and costs of services (20,237,271) (17,737,510)  
Net impairement loss on Financial assets (7,542,957) (8,993,999)  
Value added 43,054,916 37,037,639  
 
Distribution of Value Added  
To Employees        
Salaries, wages and other benefits 10,917,797 25% 8,986,092 24%
   
To Government        
Corporation Tax 4,441,880 10% 3,926,001 11%
VAT 727,212 2% 721,802 2%
Withholding Tax 1,432,757 3% 1,196,456 3%
District Taxes 44,972 0% 16,270 0%
PAYE Tax 3,509,940 8% 2,721,146 7%
  10,156,760 24% 8,581,675 23%

To Shareholders        
Dividends paid to shareholders 10,990,095 26% 7,415,118 20%
   
To Expansion and Growth        
Retained Income 7,326,730 17% 7,415,118 20%
Depreciation and amortisation 3,663,534 9% 4,639,637 13%
  10,990,264 26% 12,054,755 33%
   
Wealth distributed 43,054,916 100% 37,037,639 100%
Value added statement

2014 2013
% FRw‘ 000 FRw ‘ 000 %

25% 10,917,797 To Employees 8,986,092 24%

24% 10,156,760 To Government 8,581,675 23%

26% 10,990,095 To Shareholders 7,415,118 20%

26% 10,990,264 To Expansion and Growth 12,054,755 33%

6 2014
Annual Report
 Our Customer Service Promise
We endeavour to meet and exceed our customers’ expectations through;

Developing technology-based delivery channels

Creating an extensive branch network to make our services more accessible

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Annual Report
7
 C h a i r m a n ’s R e p o r t

Dear fellow shareholders,

B
ank of Kigali has done it again. We closed the year 2014 on a high note, with
Net Income of FRw 18.3 billion, a 23.5% increase from the previous year. Our
Total Assets grew by 14.3% y-o-y, and our Shareholders’ Equity grew by 26.5%
y-o-y. Our high profitability remained intact, with ROAA and ROAE of 4.0% and 22.9%,
respectively.

I am pleased to report that this performance enabled the bank to increase its dividend
payout ratio from 50% to 60% (of Net Income). This means that approximately FRw 11
Lado Gurgenidze, billion will be paid out in dividends this year, which translates into an annual dividend
Chairman of the Board
of about FRw 16.33 (approximately US$ 0.02) per share. As the bank’s capital adequacy
ratios remain well above the target set by the board, I would personally expect the bank

“
to be able to maintain this high dividend payout ratio in the medium term.

Our presence in Rwanda continues to grow, as we expand our branch network in

We look forward different areas of the country. The bank now boasts of 70 branches, which are supported
by a growing network of agents and mobile vans. Our large and growing network allows
us to reach a wider majority of Rwandans and helps us stay true to our promise of

to greater success contributing to financial inclusion in Rwanda. We must not rest on our laurels though. If,
a few short years ago, the ability to create a bank account with a debit card and mobile

in 2015 “ banking interface was considered the pinnacle of financial inclusion, the evolving needs
of our clients dictate that we need to get better at retail credit scoring and underwriting,
thus acquiring the confidence and proficiency needed to make properly priced retail
credit available to a greater share of the Rwandan population.

We understand that, in order to transform the lives of the people, we must go further
than providing financial services; we must invest in the communities that we operate
in. In line with our policy, last year the bank invested 1% of its Net Operating Income in
CSR programs.

Even with the increased competition in the market, Bank of Kigali still holds the largest
market share of approximately 30% across the key balance sheet metrics. We have our
dedicated staff, loyal customers and supportive stakeholders to thank for this.
Chairman s’Report

As we look to the future, we intend to optimise operational efficiency by investing in

world-class technologies, innovative products and modern delivery channels.

We look forward to greater success in 2015, keeping in mind that our success is
measured, first and foremost, by the shareholder value we build, but also by the success
of our community and the people we serve. Here is to another great year.

Lado Gurgenidze
Chairman

8 2014
Annual Report
 C h i e f E x e c u t i v e O f f i c e r ’s R e p o r t

“
In 2015 we continue:

The Good to Great transformational journey

“
Introduction Operating environment

Bank of Kigali has committed to GDP in 2014 was 7% higher in real terms
financially transform lives; especially lives than the previous year and it is estimated
of those that we serve, first on the list to average at about 6.5% in the year 2015.
being our customers. Ours is a promise of The services sector contributed 47% of
delivering service that goes beyond the the GDP with the financial services sector
customers’ expectations. The promise is specifically contributing 3% to the total GDP.
actualized through continued expansion Other sectors like agriculture contributed D r. J a m e s G a t e r a ,
Chief Executive Officer
of the banking infrastructure, developing 34%; the industry sector contributed 14%
innovative products and training our staff and construction contributed 7%.
to anticipate and deliver the customers’ On average, headline inflation decelerated
Financial performance in 2014
needs. from 4.0% in Jan 2014 to 2.1% in Dec 2014.
In 2014, inflationary pressures from many The Bank’s net profit increased by 23.5% to
The Bank’s sustained strong performance
components reduced, the main drivers FRw 18.3 billion up from FRw 14.8 billion
has elevated the BK brand to be one of
of this being food, housing, transport, realized in 2013. The performance, as in
the super brands in the Rwandan market.
education, restaurants and hotels. other years, accounts for over 50% of the
This has been achieved as a result of
total commercial banking sector profits.
delivering above average performance Imported inflation was moderate owing to The increase in profitability was mainly
to our stakeholders who include the low global inflation and falling international driven by a 11.5% growth in net interest
customers, our shareholders, staff and commodities prices. income amounting to FRw 39.3 billion.
the community.
Money market interest rates remained Non-Interest income grew by 2%, a slower
The Bank’s profit after tax increased to low and stable in 2014. The key repo rate growth due to lower foreign currency gains
FRw 18.3 billion from FRw 14.8 billion and T-bills rate as at December 2014 were fees and commissions. Our cost to income
in 2013, reflecting a Return on Average 6.5% and 4.9% respectively, while the ratio was 47.9% in 2014, improving in spite
Equity of 22.9%. The Bank’s total assets interbank rate dropped slightly to 4.7%. of the growth of the Bank, from 48.4% in
also rose to FRw 482.6 billion from FRw Commercial banks’ deposit interest rates 2013.
422.4 billion, representing a growth of stabilized around 7.8% in the last quarter
14.3% year on year. The growth was as of 2014 whereas the lending interest Financial position in 2014
a result of the continued investment in rates remained stable around 17.7%. The The Bank was able to sustain the growth in
distribution channels, strong liquidity currency depreciation against the dollar the balance sheet by 14.3% to FRw 482.6
position and diversified sources of stood at 3.6% in 2014 compared to 6.1% in billion. The loan book grew to FRw 233.4
funding. 2013. billion from FRw 199.0 billion, a growth
rate of 17.3% year on year. Deposits on
The banking sector in general did well last
Strong market share growth the other hand were FRw 324.6 billion
year. As at the end of the year, total CAR
up from FRw 280.5 billion in 2013. Our
Despite the entry of Pan African and stood at 24.2% compared to 23.1% of 2013,
liquid assets in the form of placements
regional banks into the banking sector, our well above the regulatory minimum of
with correspondent banks increased
market position continues to grow stronger. 15%. The sector’s liquidity position stood
significantly to FRw 63.2 billion, growing by
Our market share of total assets was 33.7 %, at 51.7% compared to 49.5% in 2013. The
268% from the previous year.
loans and advances 30.7 % while deposits industry balance sheet measured by total
were 31.0%. The Bank has over the years assets grew by 19.3% from FRw 1,510.7 We remain the best capitalized bank in the
CEO s’Report

managed to successfully defend as well as billion in December 2013 to FRw 1,800 market compared to the aggregated capital
gain additional market share. billion in December 2014. of the five banks that follow.

2014
Annual Report
9
 C h i e f E x e c u t i v e O f f i c e r ’s R e p o r t

Customer Focus Deploying technology driven alternative delivery channels

The Bank’s sustained growth and competitive advantage is anchored The mobile branches dubbed MobiBanks have been deployed in
on the loyalty and the confidence that our customers have in the each of the provinces in Rwanda. This service enables customers
Bank. This loyalty has seen the Bank grow at a compounded annual to open accounts as well as withdraw and deposit funds to their
growth rate of over 20% in the last five years in all of the major accounts. The mobile vans also support our Agency Banking
metrics including total assets, loans and advances and customer through liquidity management. As at the end of the year, 5,345
deposits. Year after year, the Bank implemented strategies designed current accounts had been opened and FRw 35.8 billion of deposits
to meet and exceed the customers’ expectations. collected through the MobiBanks.

These strategies include expansion of the banking infrastructure Agency banking has a very significant opportunity in expanding
where the existing branch network grew by 5; ATM network which access to financial services in the country. The service has also
grew by 10 and increasing the deployment of Point of Sale terminals been very successful in deposit mobilization with the capability of
(PoS), which accept all major international cards, from 568 in 2013 handling the high footfall and transaction volumes. By the end of the
to 656 in 2014. Our mobile vans offer full banking services to areas year, we had partnerships with 861 agents across all administrative
where the Bank does not have a presence and help with liquidity centres in Rwanda. The service is provided through the BK YACU
management to the increasing number of Agency Banking agents. platform which is used by the Bank’s agents to connect customers
to their accounts in our core banking system on a real time basis.
The Bank has developed innovative technology-driven products to
ensure that customers have access to their accounts 24/7 through The agents perform cash in and cash out transactions. The channel
our mobile banking and internet banking channels. also allows users to send money to any mobile subscriber in the
country regardless of whether or not the recipient holds a bank
We have continued to upskill our staff through in-house class and on
account.
the job training to ensure that they are well equipped to serve our
customers to the required nationally-promulgated customer service As at December 2014, over 822,000 transactions had been
standards. conducted through the Agency Banking network, with net deposits
mobilized amounting to over FRw 101.6 billion.
Our strong balance sheet ensures that the Bank is able to respond to
our customers’ financing needs in project finance while continually We have continued to grow our card acquiring and issuing business.
expanding our infrastructure. Our Point of Sale terminals and ATMs accept all major international
cards including MasterCard, Visa, American Express, Diners Club and
During the year, our dedication to promoting financial inclusion in
Union Pay (CUP). We currently issue VISA debit and credit cards to
Rwanda through innovative financial solutions was recognized by
our customers and will soon begin issuing Master Card in order to
Euromoney which awarded the Bank with the Euromoney Award for
offer our customers a range of international cards.
Excellence as the Best Bank in Rwanda for the 2nd year running. Also
the Bank was awarded the Best Bank in East Africa by the African
Participation in the capital markets financial services
Banker Magazine. In addition we were, for the fifth time, recognized
as the Bank of the Year in Rwanda by The Banker magazine and as the BK Securities Limited, the Bank’s wholly owned subsidiary, offers
Best Bank in Rwanda by Emeafinance for the sixth consecutive time. brokerage financial services in capital markets. The company in its
In addition, the Bank received the 2014 USD STP Excellence Award, 2nd year of operations has gained a market share of over 12%. During
awarded annually by Deutsche Bank, for the exception quality of the year, the company acted as the lead sponsoring broker for the
payment messages. This achievement puts the Bank in the top tier highly subscribed IFC Umuganda bond.
of institutions Deutsche Bank works with globally and highlights
the Bank’s exceptional quality in processing USD denominated Risk Management and Compliance

payments as well as a high rate of STP transactions overall. We recognize that sustainable performance can only be achieved
through disciplined risk management. It is part of our corporate
Diverse customer segment and business lines culture that every employee at every level of the organization is
We serve customers in broadly two main segments which include accountable for risk management. This approach has enabled the
business and retail. In terms of loans and advances the business Bank to weather the challenges of the changing global, regional and
segment represented 76% while the retail segment was 24% of domestic macroeconomic environment. Credit risk is inherently the
the total loans and advances in 2014. For deposits, the business single most important risk facing banks. We continue to manage
segment was 71% while the retail segment was 29% of the total credit risk and make provision for any specific risk proactively. Our
deposits of the Bank. non-performing loans risk coverage was 81.8% compared to the
CEO s’Report

market average of 56.8%. The market has continued to benefit

from the reforms that have been made both in the regulatory
framework as well as the land registry. These reforms have led to

10 2014
Annual Report
 C h i e f E x e c u t i v e O f f i c e r ’s R e p o r t

the fast tracking of provision of title deeds and foreclosures, with our staff in addition to upgrading our processes to gain efficiencies
the electronic registration of collateral now possible. In addition, the in cost management.
Credit Reference Bureau is increasingly becoming an important tool
in credit risk management. Funding our growth strategies

The Bank has signed and continues to drawdown long term lines of
Human capital development initiatives
credit from International Development Finance Institutions in order
Our commitment to developing our people and creating the best to better manage the risks arising from maturity mismatch.
working environment for our staff is very important to the Bank.
We continue to attract and retain the best talent in the market and Strategic partnership for growth
we are an employer of choice to the young people graduating from The East African financial markets continue to dominate the news
the various universities. We currently have a staff compliment of with the successes of TELCO-led mobile banking financial services.
1,019 staff and are committed to creating a working environment In this arena, the Bank is partnering with the TELCO mobile money
that develops and equips staff with the skills and capabilities to platforms to offer our customers the added flexibility that these
effectively serve our customers. platforms offer. We also plan to partner with the TELCOs to offer
Our Early Career Programme focuses on bringing new graduates small savers and borrowers the intermediation interplay.
into the Bank and developing them through regular class and on
the job training. The programme equips the graduates with the right Harnessing our sustainable future growth

functional and leadership capabilities that are essential in the early The banking sector has grown increasingly competitive following the
years of their careers. entry of strong Pan African and regional banks. Nonetheless, there
are also immense opportunities for upscaling banking services with
In the implementation of the talent management policy, the Bank is
the significant under banked population. Given our strength and the
currently sponsoring a number of staff for the Banking professional
opportunities in the market, our focus is therefore in developing
course. In time we hope to equip majority of the staff with the
our banking infrastructure, innovative products and strategic
necessary skills to develop the leadership potential of self-motivated
partnerships in order to serve more customers.
top performers in the Bank.
We are dedicated to delivering above-average market returns for
Credit rating of the Bank our shareholders and remain focused on executing our business
The Bank is the only credit rated company in Rwanda with a short model that does not sacrifice profitability for growth. We believe
term rating of A1+ and a long term rating of AA-, with a stable that this model will continue creating value for our customers and
outlook, from Global Credit Rating of South Africa. ultimately to our shareholders and other stakeholders.

Acknowledgement
Future aspirations for 2015
On Behalf of the management team and staff, I wish to appreciate
our customers for their loyalty and confidence in the Bank that
In 2015 we continue:

“ “ has enabled us to sustain our strong market leadership position.

The Good to Great
I would also like to acknowledge our Board members for their
transformational journey
continued direction and support to management.

I thank the staff for their commitment and dedication that

continues to shape the Bank into a formidable player in the
financial services sector.
The Bank has already taken significant steps in channel expansion
and roll out of self-service products such as mobile-based banking
products; card-based products as well as Agency Banking. We will
continue to grow our branch network with more branches expected
to be opened in 2015. We will continue to deploy our top of the
range deposit-taking ATMs both in the branches and in high footfall
Dr. James Gatera,
locations with the aim of bringing convenient and flexible service
Chief Executive Officer
to our customers. Our Agency banking has registered significant
CEO s’Report

growth in all classes of agents.

The Bank will continue to strive towards providing superior customer

service and will invest in continuous training and development of

2014
Annual Report
11
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12 more information, call 4455 or visit your Branch Manager Annual Report
 Sustainability Report 2014

Sustainability Review
Ou r St rateg y
Bank of Kigali aspires to be the leading provider of the most
innovative financial solutions in the region. We are a customer-
focused bank. Understanding the needs of our customers and
finding innovative ways to meet those needs is our priority. As a
result, our customers have been loyal to us which has enabled
us to maintain our leadership position of 33.7% market share by
total assets as at 31st December 2014.

Our motto is “financially transforming lives”. To make this a

reality, and to allow us provide the most innovative financial
solutions in the region, we believe that the first step is getting
closer to Rwandans. As such, we have in place a banking
infrastructure expansion strategy which has seen us grow Our Premier Banking lounge

from only 18 branches in 2009 to 70 branches as at the end

of December 2014. This number will increase by an additional We would like to create ubiquitous bank across Rwanda with
five branches every year for the next five years. To support the business lines that cut across all segments as well as innovative
branch network, we have increased our ATMs to 76 from 65 in products, particularly self-service products, for our clients.
2013 and only 6 in 2009. Our Point of Sale terminals (POS) have We will strengthen our strategic partnerships and alliances
increased to 656 from 568 in 2013 and 52 in 2009. Our mobile especially with the TELCOs, to give top service to our customers.
vans and agency banking platform under the brand name BK
YACU, which we introduced in 2013, has grown by 51% and 44%
respectively as at end 2014. We have revamped our internet
O ur C usto m ers
banking system making it easier to use, more convenient and Transforming the lives of Rwandans requires a bank to have a
accessible to our customers. strong balance sheet to meet customers’ needs. We are the
best capitalized bank on the market and the only bank that
can singlehandedly finance projects that would otherwise take
a syndicate of six local banks to finance. The trust and loyalty
our customers have placed in us has seen us grow to FRw 18.3
billion in 2014 from FRw 14.8 billion in 2013, representing a
23.5% increase in net profit, accounting for over 50% of the total
commercial banking sector profits for the second year running.

We offer a wide spectrum of commercial banking services

to Corporate, SME and Retail clients. Our loan portfolio and
segmentation is informed by our clients’ needs. We offer
mortgage loans, vehicle loans, agriculture loans and consumer
loans such as school fees, medical, pension holiday or wedding
loans to our retail segment; stock loans, overdraft facilities and
business loans to our corporate and SME clients. Our gross loans
have grown by 16% from FRw 211.9 billion in 2013 to FRw 246.7
Customers lining up to use our MobiBank
billion in 2014, with approximately 75.9% in corporate and
In terms of product offering, we have continued to grow our 24.1% in retail and our total customers deposits has grown from
card business giving our clients both Visa and Mastercard FRw 280.5 billion in 2013 to FRw 324.6 billion with corporate
usage options. Our mobile banking platform ensures that our deposits at 71.1% and retail 28.9% of our customer deposits.
customers can now buy services such as electricity, airtime
In 2013, the Bank opened a fully owned subsidiary brokerage
and TV subscription from the comfort of their home. We are
company called BK Securities. The company offers stock
constantly looking for creative ways of expanding our loan
broking services and other capital market financial services.
portfolio to meet the needs of our retail, corporate and SME
BK Securities intends to grow their product offering to include:
clientele. Bank of Kigali also offers Premier Banking services to
wealth management, fund management, transaction and
its high net-worth customers.
corporate finance advisory.

2014
Annual Report
13
 Sustainability Report 2014
Sustainability Review

Ou r E mpl oyees our clients’ needs and how best to meet them. At the end of
the retreat, all managers are clear on how their department’s
Bank of Kigali is the employer of choice in Rwanda, thus allowing
targets contribute to the overall performance of the bank. This
us to attract and retain the best talent in the market. We offer
is trickled down to all staff through individual Key Performance
a conducive working environment for our staff and provide
Indicators which is attached to our competitive bonus scheme.
competitive remuneration packages which include benefits such
as favourable interest rates and a much-admired bonus scheme.
Our expansion strategy has seen us increase our staff numbers
from 303 in 2009 to over 1000 in 2014. We have employed a
number of fresh graduates developing them through regular
class and on-the-job training with the aim of equipping them
with the right functional and leadership capabilities that are
essential in the early years of their careers.

Management team in a brainstorming session at a

retreat in Gisenyi

Staff in a training session at the BK training Centre The retreat is a time to strategise and get a fresh outlook
for the year ahead. It is also a time to bond and have fun.

We have trained a number of our staff in professional banking

and leadership courses. The implementation of our talent
management and succession planning policy has seen top
performers rise to management positions. As such, our staff is
well equipped to serve the needs of our clients.

Our management team is also top-notch, employing the best

talent from Rwanda and within the region. Of the 103 managers
on the team, 50% of the Executive team and approximately 40%
of managers are women.

We empower our staff by ensuring that they form part of

the decision making process in implementation our strategy.
We acknowledge that our staff have different skills and The CEO (far left) joins the team in a
competencies and are at different levels of their careers. At the bonding and fun exercise.

start of each year, our Executive and Management team hold

a retreat where the team discusses the targets for the year
and share ideas on how best to meet these targets. We discuss

14 2014
Annual Report
 Sustainability Report 2014

Sustainability Review
Ou r Resp on s i b i l i t y to t h e In addition, we encourage academic excellence within the
student community by partnering with different colleges such as
Co mm u n i t y College of Business Education (CBE), the College of Science and
Corporate Social Responsibility (CSR) is embedded in our Technology and other institutions of higher learning to award
corporate culture. Our commitment to financially transforming their best performing students with different prizes. We also
the lives of Rwandans extends to giving back to the community offer internship opportunities to the best performing students
through the Bank’s strong CSR strategy. First, we have who, depending on their performance at the Bank, have an
incorporated CSR policies and environment friendly practices as opportunity to join the Bank as staff employees. Furthermore,
part of the Banks culture. Secondly, we put in place a strong CSR we have established branches at College of Business Economics
strategy in 2009 that we have since successfully implemented and College of Science and Technology.
based on four pillars: improving access to education, promoting
To promote self-employment and boost confidence in the youth,
community health, environmental sustainability and poverty
we, for three consecutive years, have been the main sponsor
eradication. In addition, we have set aside 1% of our annual net
for Young Entrepreneurs Debate Championship organized by
operating income to support our CSR activities.
Rwanda Inspiration Back Up Ltd, whose aim is to bring schools
The Bank has a CSR Committee whose primary role is to and universities from all over the country to debate and share
implement the Banks CSR strategy. The Committee composed ideas on self employment.
of six members, sit at least once a month to evaluate project
proposals brought to the Bank and how these projects enhance
the Banks CSR Strategy. Through the CSR Committee, we ensure
that we finance projects which have minimal adverse impacts
on the environment and that those with potentially major
adverse environmental and social impact are accompanied by
adequate mitigation measures.

Pillar 1 Improving access to education Students participating in a debate

We believe that for Rwanda to achieve sustainable growth and

Pillar 2 Promoting Community Health
development, human capital development is a prerequisite. As
such, we have for five years running in partnership with Imbuto
In recognition of the increasing incidence of breast cancer
foundation, provided scholarships to 200 secondary school
in Rwanda and the urgent need to develop awareness of the
students from financially disadvantaged backgrounds who
disease, we were one of the main sponsors of the Ulinzi Walk
would otherwise not have afforded an education. We intend to
and fundraising dinner which aim to create public awareness
continue supporting this project in 2015
about breast cancer, emphasizing that early detection is the
best protection. The initiative also encourages solidarity in
facing cancer; further demonstrating public ownership of the
cancer burden in order to stimulate intervention of the needed
changes.

Bank of Kigali staff participate in Ulinzi walk to promote

Students at an event sponsored by BK and Imbuto foundation
Breast Cancer Awareness

2014
Annual Report
15
 Sustainability Report 2014
Sustainability Review

We not only sponsor a range of health activities, but also We continued to support Operation smile in its efforts to train
demonstrate our commitment through participation of our cleft teams in Rwanda that will eventually be able to take over
staff. In November 2014, we hosted a health wellness fair for our the care of all new cleft patients in Rwanda. With this goal in
staff which included breast cancer testing and awareness, vision mind, Operations Smile continued its training of the five medical
screening, blood pressure, diabetes, breast cancer awareness professionals from Ruhengeri Hospital who received training on
and testing among others. We engaged BCIEA (Breast Cancer surgical techniques, administration of anaesthesia, and speech
Initiative East Africa) in an awareness campaign again breast therapy. Operation Smile will continue to work extensively with
cancer. The team explained to our staff the risk factors, signs this group over the next several years to develop their skills.
and symptoms of breast cancer, debunked myths, stigma and During the mission, the Operation Smile team worked with
misinformation that surround breast cancer and strategies to local hospital staff to provide hands-on transfer of skills, with a
reduce breast cancer. Our staff were offered free breast cancer specific emphasis on scrub technicians.
examination by trained nurses from Rwanda Association of
Midwives.

BK staff listen to qualified professionals on breast

cancer awareness and prevention
Specialists perform a lifesaving operation

In 2013, the Bank signed a 3 year MOU with Operation Smile, a

Non-profit Organization that provides free cleft palate surgery
to children around the world. This organisation operates all
over the world and started its operations in Rwanda in 2010.
Since then, Operation Smile has conducted six medical missions
and seven surgical rotations in Rwanda, providing medical
evaluations for more than 2,400 patients and free life-changing
surgeries for 1,326 Rwandan children and adults. Operation
Smile has also arranged medical trainings for hospital staff and
medical students, including Basic Life Support (BLS). To date,
these medical programs have benefited more than 300 health
care professionals in Rwanda.

In 2014, on its 6th Mission to Rwanda which took place at

Ruhengeri Hospital in Musanze, a team of 49 dedicated
volunteers travelled from 11 different countries, including
Canada, Denmark, Egypt, Ghana, Ireland, Italy, Kenya, Rwanda,
Sweden, United Kingdom, and the United States. The team
included Plastic Surgeons, Anaesthesiologists, Paediatricians,
Bank of Kigali Staff receive a certificate in honour of the
Nurses, Speech Pathologists, Child Specialists, and Dentists Bank’s contribution to Operation Smile
among others. Together, the team provided medical evaluations
to 216 patients and performed surgery on 95 patients, with a
total of 133 procedures.

16 2014
Annual Report
 Sustainability Report 2014

C S R s ’ Re pReview
ort
During the year, we sponsored the Special Olympics sports There are a number of people who have intellectual disabilities

Sustainability
competition, specially designed for people with intellectual in Rwanda, as is the case in all parts of the world. We need
disability. We believe that with sports activities such as these, to recognise them as part of the Rwandan society, give them
the Special Olympians develop mental, physical, and social skills support and equal opportunities and recognise their talents and
leading to more independent living. More so, Special Olympian their potential.
families get to recognize that their children with intellectual
disability are worthy human beings with a lot to offer.

Intellectually disabled persons given an opportunity to

Some of the participants receiving awards showcase their talents through sports

Pillar 3 Environmental sustainability

of all projects before financing

them and that compliance to
these procedures and guidelines
are adhered to.

Saving Trees by introducing

paperless means of
communication in business

In 2010, we introduced electronic-

based bank statements and use
of electronic channels such as
mobile and internet banking
for the customers to access
their accounts without printing
statements. These initiatives
are designed to save paper
which ensures that Rwanda’s
environment is kept clean and
reduces the cutting down of
trees. We will continuously invest
in promoting paperless business
We are mindful of our environmental obligations both internally and externally and as such, have operations and communication.
strategically integrated environmental and social considerations into our business operations.
We ensure that there are guidelines and procedures in place to assess the environmental impact

2014
Annual Report
17
 Sustainability Report 2014
Sustainability Review

Mountain Gorilla Conservation A newly born mountain gorilla at the national park

Bank of Kigali believes in environmental

conservation. Since 2003, we
have partnered with the Rwanda
Development Board to support the
annual gorilla naming ceremony
Kwita Izina in an effort to participate
in mountain gorilla conservation. In
2014, 18 baby mountain gorillas were
named at the Volcanoes National Park.
Rwanda’s mountain gorillas contribute
almost 90 percent of revenues accrued
from national parks in tourism receipts.
They are also a key driver of rural
economic and social empowerment,
especially in the communities
surrounding the national parks.

Pillar 4 Poverty Eradication

We believe that access to finance is the surest way to economic

empowerment and eradicating poverty. In the spirit of the
aforementioned, we opened a total of 70 branches as at end
2014; expanded the agency banking network and thus ensuring
that Rwandans can access financial services from as close as
their neighbourhood shops that act as agents of the Bank. We
have also increased our mobile Banking vans from five in 2013
to nine in 2014.

Bank of Kigali is the only Bank in Rwanda that offers this service.
Through MobiBank vans, the Bank has penetrated further in
the villages to ensure that even where there is no branch or
The CEO of Bank of Kigali with one of the cows donated
BK agent, Rwandans can still access Bank of Kigali’s financial to genocide survivors in Kiramuruzi district

services.

Poverty Eradication through the BK CSR

Strategy

In April 2014, the Bank’s staff visited Genocide Survivors of

Kiramuruzi and Kiziguro Sectors, in the Eastern Province where
they donated 20 Friesian cows and built 20 kraals. The primary
beneficiaries of these cows were genocide survivors of these
sectors, who were most in need.

The Governor of the Eastern Province and the CEO of Bank of Kigali
share a light moment with the Mayor of Kiziguro District and the COO
of Bank of Kigali

18 2014
Annual Report
 Sustainability Report 2014

Sustainability Review
We recognise that in Rwanda, as is the case in most of the other Employee-led Participation in community
African countries, the elderly are looked after by their children. work, Umuganda
However, following the 1994 genocide, there are a number
In the spirit of the national practice of Umuganda, our staff
of elderly genocide survivors who lost all their children in the
participate in community work on a monthly basis. Given our
genocide and as such do not have families to look after them.
extensive branch network, our community participation is
spread nationwide. On a quarterly basis, our employees come
together to participate in umuganda in a specific community or
sector. Some of the major umuganda activities in 2014 included
ground levelling in Rugarama Cell, Nyamirambo sector, in Kigali
District, Gashora Sector, Bugesera District and of Kiramuruzi
Sector, Gatsibo District in the Eastern Province.

One of the houses constructed by AVEGA-AGOHOZO

with the sponsorship of BK

We sponsored AVEGA-AGAHOZO whose mission in 2014 was

to provide assisted living facilities or nursing homes for these
elderly persons. In these homes, they would get special, round
the clock nursing care. These homes not only provide shelter
and nursing facilities for the elderly, but also resolve the issue
Governor of the Eastern Province (centre) together with the
of loneliness at old age. As a start, AVEGA built two homes; one Chief Executive Officer (far right) and the COO (centre left) at an
umuganda session in Kiramuruzi Sector, Gatsibo District
in Rwamagana district in the Eastern Province and the other in
Kamonyi district in the Southern Province. They aim to build a
house in every district.

Conclusion
We have an important role to play, as a good corporate citizen, to fight social inequality by improving our society’s
education, health, environment sustainability and alleviating poverty. In 2015, we will continue to implement our
robust CSR strategy and support most of the already existing partnerships as we look to newer venues of uplifting and
transforming society.

2014
Annual Report
19
Sustainability Report 2014

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2014
Annual Report
 Corporate Governance Report

Bank of Kigali continues to align its business ethics to the best in the Bank. He is also responsible for ensuring that the interests
corporate governance practices. We believe that good corporate of the Bank’s shareholders are safeguarded and that there is
governance is the cornerstone of the Bank’s success. Through effective communication with them.
the Board, the Bank has put in place systems to ensure that
The Board has delegated the authority for day-to-day
the highest standards of corporate governance are maintained
management of the Bank to the Chief Executive Officer of the
at all levels and ensure compliance with the National Bank of
Bank. The Chief Executive Officer has overall responsibility for
Rwanda’s Regulations on Corporate Governance, Rwanda’s Law
the performance of the business and provides leadership to
Relating to Companies, the Law Relating to Banking together

Corporate Governance Report

facilitate successful planning and execution of the objectives
with the National Bank’s Guidelines as well as the Capital
and strategies agreed by the Board.
Markets Authority laws and regulations.
For the successful management of the Board and their
Board of Directors functions, the Board is guided by a Board Charter which sets out
The Board of Directors is responsible for the overall leadership their powers, roles and responsibilities. The Board meets on
of the Bank through oversight and guidance on key strategic a quarterly basis or more frequently as the business demands.
and risk issues. It plays a pivotal role in setting up the system of In addition to the quarterly meetings, the Board has appointed
corporate governance within the Bank to ensure safeguard of five subcommittees to assist in achieving its mandate as per the
policies and procedures, ensuring that Management conducts BNR requirements.
its business operations with integrity and in accordance with
Composition of the Board of Directors and its Committees
best corporate governance practices. It ensures that in carrying
out its duties, Management complies with relevant laws and Directors are appointed by the Shareholders at the Annual
regulation and risk management while balancing the interests General Meeting (AGM) and approved by the National Bank of
of the various stakeholders. Rwanda as a regulatory requirement.

The Board of Directors is chaired by an independent non- The Board comprises of two non-resident independent non-
executive Chairman and is composed of eight non-executive executive directors with extensive expertise in international
members who have a wide range of skills, experience and banking practices as well as six resident non-executive directors
independent judgment. Their skills, competencies and including a financial consultant, two practicing lawyers, and
academic qualifications can be found on page 26 to 28 of this other private sector and government representatives with
Annual Report. The Chairman, who has overall responsibility for extensive business acumen. The wide array of skills, knowledge
the Board, ensures overall leadership and long term success of and experiences is a major contribution to the proper
the Bank. His role is distinct from the Chief Executive Officer. functioning of the Board and its committees and enriches the
A cordial relationship exists between the Chairman and the decision-making processes.
Chief Executive Officer based on mutual understanding of their
respective roles. The Chairman ensures that the Board focuses Board Meetings
on the right matters reserved for the Board by approving all The Board of Directors meets at least once every quarter and
Board Agendas in collaboration with the Chief Executive Officer has a formal schedule of matters reserved for it. Board members
and the Company Secretary. The Chairman, with the support are provided with detailed board materials well in advance to
of the Company Secretary also ensures that Board members facilitate the meetings. In line with the Bank’s environmental
receive timely and relevant information for the board meetings friendly strategy, board materials are circulated to board
and that the members are kept informed of key developments members’ ipads through a boardbook software.

The following is the list of Board Members who served in 2014 and their board attendance.
Structure Category Board Audit Risk Credit ALCO HR
Lado Gurgenidze Chairman 4/4
Daniel Ufitikirezi* Vice Chairman 3/4 3/4 7/11 3/4
Reuben Karemera* Non Executive Member 3/4 2/4 8/11 2/3
Apollo M. Nkunda Non Executive Member 4/4 4/4 3/3
Marc Holtzman Non Executive Member 3/4 2/3
Lillian Igihozo Non Executive Member 4/4 3/4 3/3
Alphonsine Niyigena Non Executive Member 4/4 4/4 11/11 4/4
Julien Kavaruganda Non Executive Member 4/4 4/4 4/4
* Mr. Reuben Karemera and Dr. Daniel Ufitikirezi were appointed to the board on 14th April and 5th May 2014 respectively after the first board meeting had taken place.

2014
Annual Report
21
 Corporate Governance Report

Board Committees Risk Management Committee

To ensure efficiency within the governance structure and to The mandate of the Risk Management Committee is to ensure
assist carry out its independent oversight function, the Board that the Bank’s enterprise risk management policies and
has delegated certain responsibilities to Board Committees. In procedures are updated to ensure that the risks are properly
line with the BNR guidelines06/2008 on Corporate Governance, tackled, effectively controlled and managed. This Committee
the Board has five Board Committees, each with terms of comprises of three independent non executive board members
reference to support the Board in performing its functions. and meets on quarterly basis or more frequently as its business
Corporate Governance Report

These guidelines have been adopted and form part of the Board demands. The Committee is chaired by Daniel Ufitikirezi. Other
Charter of the Bank. In line with best practice, the Chairman of members include: Julien Kavaruganda and Lillian Igihozo.
the Board does not sit on any of the committees. The Board is
kept up to date on the deliberations and recommendations of Assets-Liability Management Committee
the Committees through reports from each of the Committee The committee is responsible for monitoring and managing the
Chair at Board meetings. All Directors have access to the services Bank’s balance sheet to ensure that various business risks such
of the Company Secretary in relation to discharging their duties as liquidity, capital, market and currency risks are monitored
as a director, or as a member of any Board Committee. and mitigated in compliance with the Bank’s policies and
Central Bank guidelines. The Board Asset-Liability Management
Audit Committee Committee, Chaired by Alphonsine Niyigena comprises of
This is the principal Board Committee charged with overseeing three independent non-executive directors: Julien Kavaruganda
the Bank’s financial reporting policies and disclosures to ensure and Daniel Ufitikirezi, who meet on a quarterly basis or more
that they are produced in accordance with International frequently as its business demands.
Financial Reporting Standards and meet the all the necessary
regulatory requirements. The Audit Committee is responsible Nominations and Remuneration Committee
for ensuring that the Bank’s internal controls and procedures The Committee is responsible for the appointment of and
are adequate and adhered to, making recommendations where remuneration of Management and also ensuring that the Bank’s
necessary. It is also charged with the appointment and review human resources are able to support the development and
of the work of the external auditors. The Committee comprises implementation of the Bank’s strategy. This entails reviewing
of three independent non executive board members who meet the Human Resources policies and procedures, organizational
on a quarterly basis or more frequently as its business demands. structure, senior management composition as well as
The Committee is chaired by Ms. Alphonsine Niyigena, a remuneration.
financial consultant. Other members Include: Lillian Igihozo and
Apollo M. Nkunda. The Nominations and Remunerations Committee, chaired
by Apollo M. Nkunda is composed of four independent non-
Credit Committee executive directors including Lillian Igihozo, Marc Holtzman
and Reuben Karemera who meet once every quarter or more
The Committee oversees the Bank’s loan portfolio credit
frequently as its business demands.
risk management. It is charged with reviewing credit facility
applications that are beyond the discretionary limits of the
Board Evaluation
Management Credit Committee. The Committee also oversees
the Bank’s lending policies and procedures to ensure that there The Board established a system of self-evaluation of its own
is adequate risk management in addition to monitoring the loan performance and the performance of its committees and
portfolio to maintain high asset quality. individual directors. The results of the evaluation are submitted
to the Central Bank before the first Board meeting of the
The committee comprises of three independent non-executive following year as per the National Bank Regulations.
directors who meet monthly or more frequently as its business
demands. The Committee is chaired by Reuben Karemera.
Other Committee Members include: Alphonsine Niyigena and
Daniel Ufitikirezi.

22 2014
Annual Report
 Corporate Governance Report

Management Committees Shareholding Structure

The Bank also has various Management Committees in place to The Bank’s shares are listed on the Rwanda Stock Exchange. The
assist in the day to day implementation of the bank’s strategy. table below shows the Bank’s shareholding as at 31st December
These include: 2014.
• Executive Management Committee
Investor Categorization Total number %
• Credit Committee of shares

Corporate Governance Report

• Treasury /Assets-Liability Committee Government of Rwanda 198,534,600 29.6%
Rwanda Social Security Board 168,454,000 25.1%
• Human Resources Committee
International Institutional Investors 110,337,200 16.4%
• Recovery Committee
Retail Investors 81,613,600 12.2%
• Corporate Social Responsibility Local Institutional Investors 59,095,400 8.8%
• Product Development Committee Regional Institutional Investors 41,898,000 6.2%
• Branch and Agency Expansion Committee Employees and Directors 10,749,900 1.6%

• Marketing and Communication Committee Other State Owned Entities 687,900 0.1%
Total 671,370,600 100.0%
• Procurement Committee

2014
Annual Report
23
 BANK OF KIGALI
Corporate Governance Report

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OurBoard

2014
Annual Report
25
 Board of Directors Profiles

Lado Gurgenidze, Chairman of the Board

Lado Gurgenidze is a career banker who, after a decade spent at

several investment banks in Warsaw, Moscow and London, returned
to his native Georgia in 2004 and spearheaded, as Executive Chairman
and Chief Executive Officer, a turnaround of Bank of Georgia (LSE:
BGEO). During Lado’s three-year tenure, the bank’s total assets and
net income grew 855% and 1,775%, respectively, achieving ROAE of
16.2% and ROAA of 3.6% in 2007. As its market share grew from 18%
to 34%, Bank of Georgia became the leading universal bank in Georgia
and the region, with market capitalisation exceeding US$900 million at
the time of Lado’s departure (up from less than US$30 million at the
time of his arrival; share price grew by 1,461%). Bank of Georgia was
the first-ever issuer from the Caucasus and second FSU bank to list its
GDRs on the London Stock Exchange (November 2006, US$130 mln). In
February 2007, Bank of Georgia became the first-ever Georgian entity
to issue Eurobonds (US$200 mln 5 yr).
Board of Directors

In 2007-2008, Lado served as Prime Minister of Georgia, leading

the Georgian economy through the final stage of free-market
reforms, including tax cuts, financial services sector reform as well
as privatisation and liberalisation policies. In April 2008, Lado led the
effort to issue Georgia’s debut sovereign US$500 mln 5yr Eurobond.
In the aftermath of the August 2008 conflict with Russia, Lado was
instrumental in stabilising the Georgian economy and its financial sector, as well as securing a US$750 million IMF stand-by arrangement and
a US$ 4.5 billion multi-donor aid package. Some of the largest-ever Georgian privatisation transactions, including the sale of Poti Port and
Tbilisi Water Company, were executed under Lado’s leadership.

Lado put Georgia on the global institutional investor map, leading the first-ever international equity and debt capital markets issues by
Bank of Georgia and the Georgian government as well as the country’s first few domestic share placements. He is responsible for bringing
in approximately US$1 billion of portfolio investments and close to US$500 million of FDI. Lado is the only person to have been awarded
both St George’s Victory Order (in 2008) and the Presidential Order of Excellence (in 2010) – the two highest civilian honours in Georgia.
Since he stepped down as Prime Minister, Lado has been a frequent public speaker on issues of economic liberty and free-market reforms in
developing countries.

Since September 2009, Lado has been spearheading the turnaround of Liberty Bank as its Executive Chairman and (until July 2013) Chief
Executive Officer. During October 2009-December 2014, Liberty Bank’s total assets grew 411% (vs. 136% for the banking sector) to US$847
million, and its market share by total assets grew from 3.5% to 7.8%. Net loans grew 693% (vs. 144% for the banking sector), client balances
& deposits grew 702% (vs. 199% for the banking sector) to US$743 mln and the bank’s revenue tripled over the same period. Liberty Bank is
currently the third largest bank in Georgia, has been profitable since 2010 and serves 1.5 million clients through 629 branches and distribution
outlets and 386 ATMs.

Since October 2009, Lado has been serving as Chairman of the Board of Bank of Kigali, the largest bank in Rwanda, and has led the bank’s
modernisation, with the cumulative asset growth of 232% and net loans growth of 236% and a successful US$62.5 million IPO in September
2011 (awarded the Best African IPO award by Africa investor magazine in September 2012). As at 31 December 2014, Bank of Kigali held
market shares of 33.8%, 30.5% and 30.9% by total assets, net loans and client balances & deposits, respectively. 2014 ROAA reached 4.0%
and annualised ROAE 22.9%.

Lado owns 80% of Liberty Securities, a Georgian broker-dealer and asset manager, and, in addition, is the controlling shareholder of Georgia’s
first startup incubator, Smartex (www.smartex.ge), which owns controlling stakes in the country’s largest digital wallet and other electronic
payments businesses, leading online lending and ecommerce players and VoIP provider. In addition, Lado has made early stage angel
investments in several high-profile fintech startups in Europe and the United States, including Coinbase, TransferWise and Saving Global.

In January 2014, Lado joined the Board of Directors of Bayport Management Limited, a consumer lender in Sub-Saharan Africa and Latin
America.

Prior to taking the helm at Bank of Georgia, Lado served as Head of Europe at Putnam Lovell (now part of Jefferies & Company, Inc.) and
as Head of Technology Corporate Finance and Head of M&A, Emerging Europe at ABN Amro, advising clients such as SWIFT, Reuters (now

26 2014
Annual Report
 Board of Directors Profiles

Thomson Reuters), Wirtualna Polska (now part of Orange Polska), Marconi, Andrew Corporation, Merloni (renamed Indesit Company), News
Corp, Global One (now part of France Telecom), Golden Telecom (now part of Vimpelcom), UPC (now part of Liberty Global) and Philips.

Lado is married with four sons and a daughter and is a Georgian and British citizen. Lado received his MBA from Goizueta Business School
of Emory University in 1993 (and is the recipient of the 2010 Emory University Sheth Distinguished International Alumni Award and of a
2015 Goizueta Business School Distinguished Achievement Award and was named in 2011 as one of 175 Emory History Makers), following
undergraduate studies at Middlebury College and Tbilisi State University. Lado served as non-executive director at JSC Partnership Fund
(2011-2014), the sovereign wealth fund of Georgia, GeoProMining (2011-2012), a gold, copper and antimony producer with principal assets
in Armenia and Russia, and the Georgian Stock Exchange (2005-2007). In 2009-2010, Lado co-chaired the Emory Center For Alternative
Investments, and in 2012-2013 served as Co-Chairman of the International School of Economics at Tbilisi State University. In 2006, Lado
hosted the licensed Georgian version of The Apprentice TV show, and in 2011 he co-hosted a business reality TV show together with the
mayor of Tbilisi and heads of the two other large banks. In 2010, Lado served as a judge on the Investment Banking Awards panel of The
Banker magazine.

Dr. Daniel Ufitikirezi, Director (Appointed 14 th April 2014)

Dr. Daniel Ufitikirezi is the Director General of Rwanda Social Security Board (RSSB), the country’s biggest
financial institution. He has extensive experience in Investment Management and Finance both in the
Public and Private Sectors. Prior to this position, he served as the Deputy Director General in charge
of Funds Management. He has also held Senior Management positions in the Public Sector including

Board of Directors
Head of Department of Assets and Investment Management Department (Privatization Program and
Management of Government Assets) with the Rwanda Development Board (RDB) and Horizon Group of
companies. Dr Daniel Ufitikirezi also lectures management subjects in Rwandan universities.

Daniel holds a first class degree in Business Management from Bangalore University-India, a Master’s in
Business Administration from Bharathiar University-India and a PhD from Golden State University, India.

Apollo M. Nkunda, Director

Mr. Nkunda is a practicing Lawyer and a Partner with Trust Law Chambers, a Rwandan leading law firm.
He has over fifteen years’ experience in legal practice from both the Public and Private sector. Apollo
specialises in Banking and Finance Law, Labour Law and Government procurement. Prior to joining
Private practice in 2004, he was Head of Legal Services at the National Tender Board, now the Rwanda
Procurement Authority and also served as a State Attorney representing Government in Commercial
litigation. Apollo holds a Master’s degree in Business and Trade Law from Erasmus University Rotterdam,
The Netherlands, and a Bachelors of Law from the National University of Rwanda. He is a member of
the Rwanda Bar Association, the East African Law Society, Chartered Institute of Arbitrators, UK and
an Associate Member of the Chartered Institute of Purchasing and Supply. He serves on the Boards of
Listed and unlisted regional companies.

Alphonsine Niyigena, Director

Alphonsine is a business woman with investments in education and real estate in Rwanda. She has
extensive experience and exposure in trade, entrepreneurship and investment from having been
actively involved in regional and international business fora. She served for two consecutive mandates
as the Vice Chairperson of the Rwanda Private Sector Federation and as the Vice Chairperson of East
African Business Council, umbrella organizations representing the business community in Rwanda and
in the East African Countries. Alphonsine has conducted national and international consultancies as
an independent consultant in the areas of Finance, Economic Planning and Audit. Prior to joining the
private sector, Alphonsine served in the Office of Auditor General for 5 years as Senior Auditor and
team leader and conducted several audit missions in the Government institutions including Ministries,
Government agencies, bilateral and multilateral projects, local governments and Rwandan embassies.
She is currently the Chairperson of Medical Military Insurance Company (MMI); and a Board member
of various institutions including New Forests Company (NFCR), Rwanda Institute of Administration and
Management (RIAM) and Impact Policy Analysis and Research Institute (IPAR).

Alphonsine holds a Master’s Degree in Business Administration where she majored in Finance from
Maastricht University, Netherlands; a Bachelor’s Degree in Economic Studies and an associated degree
in taxation.

2014
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27
 Board of Directors Profiles

Julien Kavaruganda, Director

Julien is a practicing lawyer and Managing Partner of K-Solutions & Partners; one of the leading
law firms in Rwanda. He has vast experience in Banking and Finance law as well as Commercial and
Corporate law. Prior to that, he worked as a corporate lawyer at the Brussels Bar Association. He
serves as a Director on the Board of the Rwanda Bar Association, Kigali International Arbitration
Centre and New Bugarama Mining Company Ltd. Julien was called to the Brussels Bar in 2004 and is a
member of the Rwanda Bar Association as well as the East African Law Society. He holds a Bachelor’s
and a Master’s degree in Law from the Université Catholique de Louvain in Belgium.

Marc Holtzman, Director

Marc Holtzman is Chairman of Kazkommertsbank (LSE: KKB:LI), Kazakhstan’s largest private bank with
a total market share of 24%. Previously, Marc was Chairman of Meridian Capital HK, a Hong Kong
based private equity firm with investments in natural resources, real estate, food, agriculture and
transportation. Prior to joining Meridian, Marc served as Vice Chairman of Barclays Capital and as Vice
Board of Directors

Chairman of ABN Amro Bank. Marc also served in the Cabinet of Governor Bill Owens as Colorado’s
first Secretary of Technology and was President of the University of Denver. Previously, as co-founder
and President of MeesPierson EurAmerica (a firm which was acquired by ABN Amro) and as Senior
Adviser to Salomon Brothers, he lived and worked in Eastern Europe and Russia from September 1989
until October 1998. Marc also currently serves as a Member of the Board of Directors of FTI Consulting
(NYSE) and as a Member of the Board of Directors of TeleTech (NASDAQ: TTEC), the world’s leading
provider of analytics-driven technology-enabled services.

Liliane Igihozo Uwera, Director

Lilliane is a Partner at FreddyN Consulting, an international consulting company active in Strategic,

Financial and Operational Advisory Services. Prior to that, she was the Vice Rector in charge of
Administration and Finance at the School of Finance and Banking (SFB). She also worked as the Chief
Executive Officer of the Rwanda Investment Group (RIG ltd.), one of the largest private venture capital
firms in Rwanda.
Liliane has project management experience in private and public sectors and in various industries
such as railways/high speed train engineering, construction projects, energy, cement manufacturing,
education and retail.
She holds a Master’s degree in Financial Risk Management and a Bachelor’s in Business Administration
from the Catholic University of Louvain, Belgium. She is a Certified International Professional Associate
in Project Management of the International Project Management Institute (PMI).

Re u b e n Ka re me ra , Director (Appointed 14 th April 2014)

Reuben is the Deputy Accountant General in charge of Treasury Management in the Ministry of Finance
and Economic Planning, Rwanda. He is a Qualified Accountant with a background in Economics. He has
vast experience in the area of taxation especially the International Aspect of Taxation, gained both from
formal training and 11 years of working with Rwanda Revenue Authority, where he occupied various
positions in the Customs Services Department, the Commissioner General’s Office and finally serving
as the Chief Finance Officer.

Reuben is a full member of the Association of Certified Chartered Accountants. He holds a Master’s
Degree in International Taxation from The University of Sydney - Australia, a Bachelor’s Degree in
Economics from Makerere University - Uganda and a Diploma in Trade Policy from The University of
Nairobi.

28 2014
Annual Report
 Management Team

2014
2013
Annual
29
27
Annual Report
Report
 Management Profiles

Dr. James Gatera, Managing Director and Chief Executive Officer

Dr. James Gatera has been the Managing Director and Chief
Executive Officer of Bank of Kigali since 2007. Under his stewardship,
the Bank has had sustained profitability and market leadership
with approximately 35% market share across all key balance sheet
metrics. The Bank also increased its branch network from 10 to 70
branches as at the end of 2014. In addition, James has spearheaded
an aggressive strategy to ensure that all Rwandans have access to
financial services through expansion of alternative channels such as
mobile banking vans dubbed mobivans, agency banking, internet
banking, full service ATMs and Points of Sale terminals.

During his tenure, the Bank became the second domestic company
to be listed on the Rwanda Stock Exchange in 2011 and received the
Best African Listing by Africa Investor (AI). The Bank has received
international recognition for its performance; for six years running
as the Best Bank in Rwanda from Emeafinance and as the Bank of
the Year from The Banker for five years. The Bank has a short term
credit rating of A1+ and a long term rating of AA-, with a stable
outlook, from Global Credit Rating (GCR) of South Africa.

Prior to becoming the Managing Director and Chief Executive

Officer, James was the Deputy Managing Director in Bank of Kigali
from 2005-2007. He played a key role in leading the Bank when
Belgolaise SA sold its 50% stake to the Government of Rwanda.

He currently serves as a Non-Executive Director on various boards, including East African Business Council (EABC), Magasins Generaux du
Rwanda S.A. (MAGERWA), Rwanda National Resources Authority and National Land Commission. As a Board member of the East African
Management Team Profile

Business Council, Dr. Gatera is at the centre of promoting East African integration and the elimination of non-tariff barriers in the East
African Community.

James holds a Bachelor of Arts degree majoring in Psychology from Simon Fraser University, Canada; a Bachelor of Commerce degree from
the National University of Lesotho and an Honorary Doctorate Degree from the Commonwealth University of Belize. He is also a fellow
of the Commonwealth Academy of Leadership and Management (FCALM) and was awarded the East African Business Leader of the Year
Award 2013 by Africa Business Awards (AABLAs).

Lawson Naibo, Chief Operating Officer

Lawson is the Chief Operating Officer. He has been with the Bank since 2009. He has wide experience
in Strategic Management processes, Financial Accounting Advisory, Corporate Governance, Risk
Management and Compliance Advisory gained from over 15 years post qualification experience
previously in CFC Bank Group and KPMG East Africa. Immediately prior to joining the Bank, Lawson
was an Associate Director specialising in Transaction Services at KPMG East Africa.

Lawson is a qualified Business Strategy and Financial Services Advisor and holds MBA in Strategic
Management from the University of Nairobi (UoN) and BSc in Financial Services from the Manchester
Institute of Science and Technology (UMIST) London. He is also a qualified Accountant and Chartered
Banker and Certified Trainer in Corporate Governance.

30 2014
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 Management Profiles

Flora Nsinga, Chief Shared Services Officer

Flora is the Chief Shared Services Officer of Bank of Kigali and has been with the Bank since 2008. Prior
to this, she was Head of Human Resources and Administration. Flora joined the Bank with about ten
years’ experience from the telecommunication industry. She has been responsible for the growth in
branch network and the staff of the Bank since then. She was instrumental in leading the Bank through
various organisational reforms in 2009. She oversaw the Bank’s strategic human resource restructuring,
transforming it from a product-driven to a customer-focused structure. Flora holds a Bachelor’s degree
in Business Administration with specialisation in Human Resources from Kigali Institute of Science,
Technology and Management (KIST). She also holds a Master’s in Management, majoring in Leadership
and Human Resources from Cambridge College Boston, Massachusetts – USA.

N a t h a l i e M p a k a , Ag. Chief Financial Officer (since December 2014)

Nathalie is the Acting Chief Finance Officer. She joined the Bank’s Management Team in 2011 as the
Financial Reporting and Investor Relations Manager. She has vast experience in financial planning,
analysis and reporting as well as systems implementation. She is dynamic and passionate about
Financial Excellence and Value Creation.

Nathalie is ACCA qualified finance professional and also a member of the Institute of Certified Public
Accountants in Rwanda (ICPAR) where she is currently serving as a Governing Council Member. She
holds a first class Bachelor’s degree in Accounting & Finance from the University of Birmingham in the
UK.

Management Team Profile

D r. S h i v o n B y a m u k a m a , C o m p a n y S e c r e t a r y

Dr. Shivon Byamukama is the Company Secretary and Head of Corporate Affairs at Bank of Kigali. She
is in charge of Legal Contracting, providing legal advisory services and implementing good Corporate
Governance practices for the Bank. Shivon also oversees the Bank’s, Investor Relations & Shareholder
matters, Public Communications and is at the helm of implementing the Bank’s Corporate Social
Responsibility strategy.

Prior to joining Bank of Kigali, she was the Company Secretary and Chief Legal Officer for RwandAir,
Rwanda’s national carrier. Shivon was an instrumental member of the team that transformed the
airline which began operating its own aircrafts in 2009. She played a central role in the negotiations
of all major aircraft transactions for the company including; the acquisition contracts of the aircrafts,
aircraft financing and insurance arrangements, aircraft maintenance and technical support contracts,
corporation agreements with other airlines, and Bi-lateral agreements.

Shivon also serves as a Director on the Board of Rwanda Development Board.

Shivon holds a PhD in Law from Glasgow Caledonian University-UK a Bachelor of Laws Degree from
Makerere University-Uganda, and a Diploma in Legal Practice from the Law Development Centre,
Kampala, Uganda.

2014
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31
 Management Profiles

P a t r i c k M a s u m b u k o , Chief Representative Officer - Nairobi

Patrick is currently the Chief Representative Officer at the Nairobi Office. He was previously head of
Corporate Banking Department in Bank of Kigali before moving to the office in Nairobi. Patrick joined
the Bank with over ten years experience from the Banking and private sector. He also held various
positions in Non Governmental Organizations.

Patrick is responsible for managing the Bank’s representative office in Nairobi, creating the contact
centre for our existing and potential clients in Kenya.

Patrick holds a Bachelor of Commerce degree from Kigali Institute of Science Technology and
Management and a Diploma in Business Studies from National College of Business Studies Nakawa.

E n o c k K . L u y e n z i , Head of Human Resources & Administration

Enock is the Head of Human Resources and Administration. His areas of responsibility include Human
Resource Strategy, administration and logistics management. He is also in charge of all administrative
matters of the Bank including the procurement function. Enock has wide experience in strategy
implementation processes and has been at the helm of implementing the Bank’s expansion strategy
since 2009. He also developed the overall HR Strategies and Performance Management System that
deliver employee productivity in support of the Bank’s business objectives.

He has worked with senior management to implement HR and Administration Policies and objectives,
especially in attracting, retaining, motivating, developing key talents and cost effective strategy. Prior
to that, he served as the General Services Manager at the Bank. He joined the Bank with over seven
years’ experience in supply chain management, logistics and administration at various senior and
responsible levels in the public sector.

Enock is a Chartered Human Resources Analyst (CHRA). He holds a Bachelors’ Degree in Management
Management Team Profile

from the National University of Rwanda and has done various executive trainings on Strategy Execution
with Maps and Balance Scorecard Master Class by Dr. Robert Kaplan, Harvard Business School.

C a r i n e U m u t o n i , Head of Treasur y& Trade Finance

Carine Umutoni is the Head of Treasury and Trade Finance at Bank of Kigali. She has 12 years of
banking experience in Treasury, Trade Finance and Institutional Banking. She is responsible for the
liquidity management, foreign exchange operations, assets and liabilities management as well as the
trade finance operations of the bank.

Carine holds a Bachelor degree in Banking and Finance from Damelin Institute of South Africa and a
MBA- Economic Policy and Corporate Strategy from Maastricht School of Management.

A d o l p h e N g u n g a , Head of Retail Banking

Adolphe is the Head of Retail Banking and has been with the Bank for over 10 years. Adolphe held
various responsibilities in the Bank including heading Corporate Banking Departments and Branch
Management. Prior to joining the Bank, he served in the banking industry in Burundi. Adolphe holds a
Bachelor’s degree in Economics from the University of Bujumbura in Burundi.

32 2014
Annual Report
 Management Profiles

Dr. Emmanuel T. Gatabazi, Head of Corporate Banking 

Dr. Emmanuel is the Head of Corporate Banking Department. He joined the Bank in August 2014
having served in the Public Sector for over 17 years in different capacities. Prior to joining Bank of
Kigali, Dr Emmanuel was the Vice Rector in charge of Administration and Finance at the Kigali Institute
of Science and Technology (KIST). He also worked as the Accountant General at the Ministry of Finance
where he was instrumental in introducing a number of Public Finance Management (PFM) Reforms
and oversaw the preparation of the first Government PFM Reforms Strategy.

Dr. Emmanuel holds Bachelor of Commerce degree (B Com) from the University of Dar-es-salaam, an
MBA in Finance from PSG College of Technology- India and a PhD from the University of Fort Hare,
South Africa.

A l l a n M w a n g i , Head of Retail Credit Risk

Allan is the Head of Retail Credit Risk, having joined the bank in February 2012. He brings to the Bank
vast experience in business planning, financial management, accounting, risk management and audit
with over 17 years in the financial services industry gained from working in Equity Bank, ABN Amro
Bank, Deloitte and Touche, and Lonrho Africa Plc.

He holds an MBA (Finance) from University of Nairobi and a Bachelor of Commerce (Accounting)
degree from Kenyatta University.  He is a Certified Public Accountant and alumni of the Advanced
Management Programme (AMP) of the IEESE Business School, Spain and Strathmore Business School,
Kenya. He is a member of the Institute of Certified Public Accountants of Kenya (ICPAK).

Management Team Profile

Moffat Mwangi, Head of Consumer Banking and Product Development

Moffat is the Head of Consumer Banking and Product Development and has been with the Bank
since early 2012. He has an extensive exposure in the financial services sector with a broad range of
skills and knowledge gained from his experience in Operations, Retail Banking, Credit Card Business,
Business Banking and Corporate Banking in Barclays Bank in Kenya.

He holds a BSc in financial services from the University of Manchester Institute of Science and
Technology (UMIST), MBA degree from Middlesex University Business School, London and is a
Chartered Associate of the Institute of Financial Services (CAIFS). He is a member of the Chartered
Institute of Marketing (MCIM) and a Chartered Marketer.

I n n o c e n t M u s o m i n a r i , Head of Credit Departm ent

Innocent is the Head of Credit, and has worked with the Bank since 2004. He has wide experience
in credit analysis and management gained from having worked with the Rwandan Banking sector
for over 15 years. Prior to joining the Bank, Innocent served in the Commercial Bank of Rwanda now
I&M Bank for 5 years as Corporate Credit Analyst Advisor. He has been pivotal in managing the Bank’s
credit risk and this has led to improvements in asset quality. Innocent holds a Bachelor’s degree in
Economics from the National University of Rwanda.

2014
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33
 Management Profiles

Celestin Zimulinda, Head of Information and Communications Technology

Celestin is the Head of the IT department at Bank of Kigali and is responsible for the bank’s daily IT
needs. He joined the Bank in November, 2014. Prior to joining the Bank, he worked as Project Manager
with Ericsson, Rwanda where he was in charge of network rollout activities. He also worked with Cisco
Systems East Africa as a Project Manager in charge of Cisco businesses in Rwanda and Tanzania.

He previously worked as a Senior ICT Officer with the Ministry of Infrastructure in Rwanda and
following that, as the Assistant Head of ICT Centre. He also worked as an Assistant Lecturer at Kigali
Institute of Science and Technology.

Celestin holds a Bachelor of Science Degree in Computer Engineering and Information Technology
from Kigali Institute of Science and Technology, Rwanda and a Master’s Degree in IT and Management
from Illinois Institute of Technology, United States. He has undergone numerous Telecommunications
and IT technical trainings offered by Ericsson, Intel Corp, QUALCOMM, and USTTI. He is a former
recipient of the Fulbright Junior Scholarship through the United States Department of State.

Gerard Nyangezi, FCCA, H e a d o f I n t e r n a l A u d i t & C o n t r o l

Gerard is the Head of the Internal Audit and Control Department. He joined the Bank in 2009
and has over 10 years’ experience in Audit and Finance, especially from the financial sector and
telecommunication industry.

Gerard holds a Bachelor of Commerce-Finance degree from Makerere University, Uganda; a Bachelor
of Science in Accounting from Walter Sisulu University, South Africa and is also a Certified Chartered
Accountant. Gerard is a Fellow of the Institute of Certified Chartered Accountants of United Kingdom,
(FCCA) and is also a member of the Institute of Certified Public Accountants, Rwanda (ICPAR).

Yves Gatsimbanyi, Head of Risk & Compliance

Yves has been the Head of Risk and Compliance since early 2010 with vast experience in the banking
Management Team Profile

sector. Yves served as a bank examiner at the National Bank of Rwanda for ten years. Prior to joining
the Bank, he was the Head of Compliance and Internal Control at I&M Bank-Rwanda.

He holds an MBA in finance and accounting from Mount Kenya University and a Bachelor’s degree
in Economics from the National University of Rwanda. He also has a diploma in Risk management in
Finance and Banking.

A l e x N . B a h i z i , Head of Legal Services & Collections

Alex is the Head of Legal Services & Collections Department and has been with the Bank since 2010.
He is in charge of Legal Services including advisory services, negotiations, mediation, litigation and
designing and executing the Bank’s strategy for debt collections.

Trained in both Civil Law and Common Law Legal Families, Alex commands authority in major areas
of laws affecting the industry among them, Corporate & Commercial transactions, Banking Law, civil
proceedings, Land and Real estate transactions, Comparative Company Law, shareholder rights,
Alternative Dispute Resolution approaches, Contractual obligations, Secured transactions, Creditor’s
protection, debt enforcement mechanisms and Litigation services management.

Prior to joining the Bank, Alex was a State Attorney in the National Social Security Fund. He was also
a key member of the reform team in charge of modernizing the Social Security industry. As a practicing Lawyer, he was a member of the
Kigali Bar Association and a Member of the East African Law Society.

Alex holds a Bachelor’s of Laws (LLB) from the National University of Rwanda (NUR), a Master’s of Laws (LLM) majoring in International
Commercial Law from The Robert Gordon University - United Kingdom. He holds a Certificate of Arbitration from the London Chartered
Institute of Arbitration (CIARB) and has completed an MBA – Strategic Management at Mount Kenya University.

34 2014
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2014
Annual Report
35
 BANK OF KIGALI LIMITED
DIRECTORS AND STATUTORY INFORMATION
FOR THE YEAR ENDED 31 DECEMBER 2014

The directors that served during the period and to the date of this report are shown below:

Directors
Mr. Lado Gurgenidze - Chairman
Mrs. Angelique Kantengwa - Resigned on 22 February 2014
Mr. Marc Holtzman
Mr. Apollo Nkunda
Mrs. Alphonsine Niyigena
Mr. Caleb Rwamuganza - Resigned on 28 March 2014
Mr. Julien Kavaruganda
Mrs. Liliane Igihozo
Mr. Reuben Karemera - Appointed on 14 April 2014
Dr. Daniel Ufitikirezi - Appointed on 5 May 2014

Secretary
Dr. Shivon Byamukama
Avenue de la Paix
P.O. Box 175
Kigali-Rwanda

Auditors
KPMG Rwanda Limited
Certified Public Accountants
Grand Pension Plaza
Boulevard de la Revolution
P.O. Box 6755
Kigali-Rwanda

Registered Office & Principal Place of Business

Bank of Kigali Building
Avenue de la Paix
P.O. Box 175
Kigali-Rwanda
Financial Report

Advocates
Mr. Emmanuel Rukangira
P.O. Box 3270
Kigali-Rwanda

Mr. Athanase Rutabingwa

P.O. Box 6886
Kigali-Rwanda

36 2014
Annual Report
 BANK OF KIGALI LIMITED
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 31 DECEMBER 2014

The directors have the pleasure of submitting their report together with the audited consolidated financial statements for the
year ended 31 December 2014 which disclose the state of affairs of the Bank. The Bank was incorporated on 22nd December
1966 and issued with a Banking license to operate in Rwanda by the National Bank of Rwanda on 11th February 1967. Operations
commenced on 27th February 1967.

1. Principal activities

The principal activity of Bank of Kigali Limited is provision of retail and corporate banking services.

2. Results

The results for the year are set out in the consolidated financial statements on pages 41 to 95.

3 Dividends

(a) During the Board of Directors Meeting held on 5th December 2014, the Directors proposed a dividend pay-out of 60%
of the Bank’s audited IFRS-based net income in respect of the year 2014.

(b) The total proposed dividend for the year is therefore FRw 10,993,914,600 (2013 – FRw 7,415,117,500) for ordinary
shareholders.

4. Reserves

The reserves of the bank are set out in note 29.

5. Directors

The Directors who served during the year and up to the date of this report are set out on page 36.

6. Auditors

The auditors, KPMG Rwanda limited, were appointed in 2012 and will be rotating out of office in accordance with
regulation n°04/2009 on accreditation and other requirements for external auditors of banks, insurers and insurance
brokers.

7. Approval of the financial statements

The consolidated financial statements were approved by the Directors on........... March 2015.

BY ORDER OF THE BOARD

Financial Report

........................................
Dr. Shivon Byamukama
Company Secretary

Date: ……………………………

2014
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37
 BANK OF KIGALI LIMITED
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
FOR THE YEAR ENDED 31 DECEMBER 2014

The Bank’s Directors are responsible for the preparation and fair presentation of the consolidated financial statements,
comprising the consolidated statement of financial position at 31 December 2014, the consolidated statement of
comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year
then ended, and the notes to the consolidated financial statements, which include a summary of significant accounting policies
and other explanatory notes, in accordance with International Financial Reporting Standards and the Law No: 07/2009 of
27/04/2009 relating to Companies as amended and regulations governing Banks in Rwanda and for such internal control
as the Directors determine is necessary to enable the preparation of consolidated financial statements that are free from
material misstatement whether due to fraud or error.

The Directors’ responsibility includes: designing, implementing and maintaining internal control relevant to the preparation
and fair presentation of these consolidated financial statements that are free from material misstatement, whether due to
fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable
in the circumstances. They are also responsible for safe guarding the assets of the company.

The Directors accept responsibility for the consolidated financial statements set out on pages 41 to 95, which have been
prepared using appropriate accounting policies supported by reasonable and prudent judgements and estimates, in
conformity with International Financial Reporting Standards and the requirements of the Law No: 07/2009 of 27/04/2009
relating to Companies as amended and regulations governing Banks in Rwanda. The Directors are of the opinion that the
consolidated financial statements give a true and fair view of the state of the financial affairs and the profit and cash flow for
the year ended 31 December 2014.

The Directors have made an assessment of the Bank’s ability to continue as a going concern and have no reason to believe the
business will not be a going concern for at least the next twelve months from the date of this statement.

The Auditor is responsible for reporting on whether the annual consolidated financial statements are fairly presented in
accordance with the International Financial Reporting Standards and the Law No: 07/2009 of 27/04/2009 relating to
Companies as amended and regulations governing Banks in Rwanda.

The consolidated financial statements which appear on pages 41 to 95 were approved by the Board of Directors on ………
March 2015 and signed on its behalf by:

_____________________________ ________________________
Financial Report

Director Director

_____________________________
Dr. Shivon Byamukama
Company Secretary

Date: _________________________

38 2014
Annual Report
 REPORT OF THE INDEPENDENT AUDITOR
TO THE MEMBERS OF BANK OF KIGALI LIMITED

Report on the Financial Statements

We have audited the consolidated financial statements of Bank of Kigali Limited which comprise the consolidated statements of
financial position as at 31 December 2014, the consolidated statements of comprehensive income, changes in equity and cash
flows for the year then ended, and a summary of significant accounting policies and other explanatory information as set out on
pages 41 to 95.

Directors’ responsibility for the Consolidated Financial Statements

As stated on page 37, the Bank’s Directors are responsible for the preparation and fair presentation of these consolidated
financial statements in accordance with International Financial Reporting Standards and in the manner required by the Law
No: 07/2009 of 27/04/2009 as amended, and the regulations governing banks in Rwanda, and for such internal control as the
Directors determine is necessary to enable the preparation of consolidated financial statements that are free from material
misstatements, whether due to fraud or error.

Auditors’ responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our
audit in accordance with International Standards on Auditing. Those standards require that we comply with relevant ethical
requirements and plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are
free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material
misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we
consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in
order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of
the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion

In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of Bank of
Kigali as at 31 December 2014, and the Bank’s consolidated financial performance and consolidated cash flows for the year then
Financial Report
ended in accordance with International Financial Reporting Standards, the requirements of the Law No. 07/2009 of 27/04/2009
relating to Companies, as amended and the regulations governing banks in Rwanda.

2014
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39
 REPORT OF THE INDEPENDENT AUDITOR
TO THE MEMBERS OF BANK OF KIGALI LIMITED

Report on other legal requirements

As required by the provisions of Article 247 of Law No. 07/2009 of 27/04/2009 relating to companies in Rwanda as amended, we
report to you, based on our audit, that:

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary
for the purpose of our audit;

(ii) In our opinion, proper books of account have been kept by the company, so far as appears from our examination;

(iii) The consolidated statement of comprehensive income and consolidated statement of financial position are in
agreement with the books of account;

(iv) We have no relationship, interest or debt with Bank of Kigali Limited. As indicated in our report on the financial
statements, we comply with ethical requirements. These are the International Federation of Accountants’ Code of
Ethics for Professional Accountants, which includes comprehensive independence and other requirements.

(v) We have reported internal control matters together with our recommendations to management in a separate
management letter.

Stephen Ineget
KPMG Rwanda Limited
Certified Public Accountants
P. O. Box 6755
Kigali
Rwanda

Date: …………………………………..
Financial Report

40 2014
Annual Report
 BANK OF KIGALI LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2014

2014 2013
Note FRw’000 FRw’000

Interest income 7 51,909,827 45,210,752

Interest expense 8 (12,654,600) (10,015,908)
Net interest income 39,255,227 35,194,844

Net Fees and commission income 9 10,899,154 10,801,253

Foreign exchange related income 10 7,724,325 7,476,135
Other operating income 11 301,838 281,008

Operating income before impairment losses 58,180,544 53,753,240

Net impairment on loans and advances 12 (7,542,957) (8,993,999)

Net operating income 50,637,587 44,759,241

Personnel costs 13(a) (14,427,737) (11,707,238)

Depreciation and amortisation 13(b) (3,663,534) (4,639,637)
Administration and General expenses 13(c) (9,787,611) (9,656,130)
Total operating expenses (27,878,882) (26,003,005)

Profit before income tax 22,758,705 18,756,236

Income tax expense 14(a) (4,441,880) (3,926,001)

Net profit for the year 18,316,825 14,830,235

Other comprehensive income net of taxes: - -

Total comprehensive income for the year 18,316,825 14,830,235

Financial Report

Basic earnings per share in FRw 15 27.34 22.20

Diluted earnings per share in FRw 15 27.22 22.13
Dividend per share (FRw) - proposed 15 16.33 11.10

The notes set out on pages 45 to 95 form an integral part of these financial statements.

2014
Annual Report
41
 BANK OF KIGALI LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2014

2014 2013
Note FRw’000 FRw’000
Assets
Cash in hand 16 (a) 12,020,669 11,110,210
Balances with the National Bank of Rwanda 16 (b) 46,938,373 24,855,050
Due from banks 17 102,988,217 107,377,523
Held to maturity investments 18(a) 58,596,907 50,820,690
Loans and advances to customers 19(a) 233,439,509 199,025,241
Equity Investments 18(b) 221,425 218,455
Other assets 20 7,665,385 7,695,005
Property and equipment 21 20,503,423 21,018,894
Intangible assets 22 234,056 239,005

Total Assets 482,607,964 422,360,073

Liabilities
Due to banks 23 15,214,461 17,345,024
Deposits and balances from customers 24 324,601,160 280,489,463
Tax Payable 14(b) 692,518 1,828,573
Deferred tax liability 25 1,431,391 1,620,650
Dividends Payable 26 5,469 7,416,579
Other liabilities 27 11,185,264 8,705,581
Long-term finance 28 39,929,967 34,190,519

Total Liabilities 393,060,230 351,596,389

Capital and Reserves

Share Capital (page 43) 29(a) 6,713,706 6,684,500
Share Premium (page 43) 29(b) 18,572,040 18,236,171
Revaluation Reserves (page 43) 29(c) 6,537,638 6,946,241
Other Reserves (page 43) 29(d) 37,364,514 29,949,395
Retained earnings (page 43) 29(e) 20,359,836 8,947,377

Total Equity 89,547,734 70,763,684

Financial Report

Total Liabilities and Equity 482,607,964 422,360,073

The financial statements were approved by the Board of Directors on ….....…March 2015 and were signed on its behalf by:

Director: ___________________________ Director: ___________________________

Date: ___________________________ Date: ___________________________

The notes set out on pages 45 to 95 form an integral part of these financial statements.

42 2014
Annual Report
 Issued Share Revaluation Retained Statutory Legal Special Other Total
capital Premium Earnings Credit risk Reserves Reserves Reserves
FRw’000 FRw’000 FRw’000 FRw’000 FRw’000 FRw’000 FRw’000 FRw’000 FRw’000
2013

Annual Report
2014
As at 1 January 2013 6,673,370 18,108,176 7,354,844 6,893,076 19,100 3,853,186 3,938,420 16,267,121 63,107,293
Appropriation of profit - 2012 - - - (5,890,668) - 589,067 589,067 4,712,534 -
Increase in Share Capital 11,130 127,995 - - - - - - 139,125
Statutory credit risk reserve - - 19,100 (19,100) - - - -
Total Comprehensive Income - - - 14,830,235 - - - - 14,830,235
Dividend accrued – 2013 - - - (7,415,118) - - - - (7,415,118)
Transfer of Excess depreciation - - (408,603) 510,752 - - - - 102,149
As at 31 December 2013 6,684,500 18,236,171 6,946,241 8,947,377 - 4,442,253 4,527,487 20,979,655 70,763,684

2014
As at 1 January 2014 6,684,500 18,236,171 6,946,241 8,947,377 - 4,442,253 4,527,487 20,979,655 70,763,684
Appropriation of profit - 2013 - - - (7,415,118) - 741,512 741,512 5,932,095 -
Increase in Share Capital 29,206 335,869 - - - - - - 365,075
Total Comprehensive Income - - - 18,316,825 - - - - 18,316,825
Transfer of Excess depreciation - - (408,603) 510,752 - - - - 102,149
As at 31 December 2014 6,713,706 18,572,040 6,537,638 20,359,836 - 5,183,765 5,268,999 26,911,750 89,547,734

The notes set out on pages 45 to 95 form an integral part of these financial statements
BANK OF KIGALI LIMITED

FOR THE YEAR ENDED 31 DECEMBER 2014

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

43
Financial Report
 BANK OF KIGALI LIMITED
CONSOLIDATED STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 31 DECEMBER 2014

2014 2013
Note FRw’000 FRw’000
Cash flows from operating activities
Profit before tax 22,758,705 18,756,236
Adjusted for:
Depreciation of property and equipment 13(b) 3,469,943 4,303,044
Amortization of intangible assets 13(b) 193,591 336,593
Gains on disposal of fixed Assets 11 (84,496) (24,753)
Loss on revaluation of long-term finance 28 400,937 392,446
Dividend income 11 (54,254) -
Cash flows before changes in working capital 26,684,426 23,763,566

Changes in Working capital

Increase in Loans and Advances 19(a) (34,414,268) (13,958,489)
Decrease in other assets 20 29,620 4,929,704
Increase in clients balances and deposits 24 44,111,697 68,624,395
Increase/ (Decrease) in other liabilities 27 2,479,683 (6,370,132)
Income tax paid 14(b) (5,665,044) (2,862,521)

Net cash generated from operating activities 33,226,114 74,126,523

Investing Activities
Purchase of intangible assets 22 (188,642) (237,478)
Purchase of property and equipment 21 (3,049,369) (3,874,221)
Proceeds from sale of fixed assets 179,393 205,000
Increase in held to maturity investments 18(a) (7,776,217) (37,701,365)
Purchase of equity Investment shares 18(b) (2,970) -
Dividends received 11 54,254 -

Net cash flows from investing activities (10,783,551) (41,608,064)

Financing Activities
Dividends paid 26 (7,411,110) (5,892,885)
Drawdown of long term finance 28 9,261,851 29,154,396
Financial Report

Repayment of long-term finance 28 (3,923,340) (1,301,301)

Increase in share capital 29(a) 29,206 11,130
Increase in share premium 29(b) 335,869 127,995

Net cash flows from financing activities (1,707,524) 22,099,335

Net increase/(Decrease) in cash and cash equivalent 20,735,039 54,617,794

Cash and cash equivalents at 1 January 125,997,759 71,379,965
Cash and cash equivalent at 31 December 16(c) 146,732,798 125,997,759

The notes set out on pages 45 to 95 form an integral part of these financial statements.

44 2014
Annual Report
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014

1. Corporate Information
Bank of Kigali Limited is a financial institution licensed under Law No. 08/99 relating to Regulations Governing Banks and
Other Financial Institutions, provides corporate and retail banking services.

The Bank is incorporated in Rwanda and is publicly traded on the Rwanda Stock Exchange. The address of its registered
office is as follows:

Bank of Kigali Building

Avenue de la Paix
P.O. Box 175
Kigali-Rwanda

2. Basis of Preparation
(a) Basis of accounting
These consolidated financial statements have been prepared in accordance with IFRS. They were authorised for issue
by the Bank’s board of directors on ………..March 2015. All values are rounded to the nearest thousand (FRw’000)
except when otherwise indicated.

The bank presents its consolidated statement of financial position broadly in order of liquidity. An analysis regarding
recovery or settlement within 12 months after the statement of financial position date (current) and more than 12
months after the statement of financial position date (non- current) is presented in note 31.

(b) Basis of consolidation

i) Subsidiaries
Subsidiaries’ are investees controlled by the Bank. The Bank ‘controls’ an investee if it is exposed to, or has rights
to, variable returns from its involvement with the investee and has the ability to affect those returns through
its power over the investee. The Bank wholly controls BK Securities and The Nairobi Representative Office as
disclosed in Note 34 of these financial statements. The Bank reassesses whether it has control if there are
changes to one or more of the elements of control. This includes circumstances in which protective rights held
(e.g. those resulting from a lending relationship) become substantive and lead to the Bank having power over
an investee. The financial statements of subsidiaries are included in the consolidated financial statements from
the date on which control commences until the date when control ceases.

ii) Transactions eliminated on consolidation Financial Report

Intra-group balances and transactions, and any unrealised income and expenses (except for foreign currency
transaction gains or losses) arising from intra-group transactions, are eliminated in preparing the consolidated
financial statements. Unrealised losses are eliminated in the same way as unrealised gains, but only to the
extent that there is no evidence of impairment.

The subsidiaries indicated on note 34 to these financial statements have been consolidated in these financial
statements.

(c) Going concern

The Bank’s management has made an assessment of the Bank’s ability to continue as a going concern and is satisfied
that the Bank has the resources to continue in business for the foreseeable future. Furthermore, the management is
not aware of any material uncertainties that may cast significant doubt upon the Bank’s ability to continue as a going
concern. Therefore, the consolidated financial statements have been prepared on the going concern basis.

2014
Annual Report
45
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

2. Basis of Preparation (Continued)

(d) Use of estimates and judgments
The preparation of consolidated financial statements in conformity with IFRSs requires management to make
judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of
assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the reporting period.

The estimates and assumptions are based on the Directors’ best knowledge of current events, actions, historical
experience and various other factors that are believed to be reasonable under the circumstances, the results of
which form the basis of making the judgments about the carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are
recognised in the period which the estimate is revised if the revision affects only that period or in the period of the
revision and future periods if the revision affects both current and future periods. In particular, information about
significant areas of estimation and critical judgments in applying accounting policies that have the most significant
effect on the amounts recognised in the financial statements are described in Note 5.

3. Significant Accounting Policies

The principal accounting policies adopted in the preparation of these consolidated financial statements have been applied
consistently and to all periods presented in these consolidated financial statements.

(a) Recognition of income and expense

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Bank and the
revenue can be reliably measured. The following specific criteria must be met before revenue is recognised:

(i) Interest
Interest income and expense are recognised in profit or loss using the effective interest method. The effective
interest rate is the rate that exactly discounts the estimated future cash payments and receipts through the
expected life of the financial asset or financial liability (or, where appropriate, a shorter period) to the carrying
amount of the financial asset or financial liability.

When calculating the effective interest rate, the Group estimates future cash flows considering all contractual
terms of the financial instrument, but not future credit losses.

The calculation of the effective interest rate includes transaction costs and fees and points paid or received that
Financial Report

are an integral part of the effective interest rate. Transaction costs include incremental costs that are directly
attributable to the acquisition or issue of a financial asset or financial liability.

- Interest income and expense presented in the statement of profit or loss and OCI include:

- interest on financial assets and financial liabilities measured at amortised cost calculated on an effective
interest basis;

- interest on available-for-sale investment securities calculated on an effective interest basis; and the effective
portion of fair value changes in qualifying hedging derivatives designated in cash flow hedges of variability
in interest cash flows, in the same period as the hedged cash flows affect interest income/expense
Interest income is recognised in the statement of comprehensive income for all interest bearing instruments on
an accrual basis taking into account the effective yield on the asset.

46 2014
Annual Report
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

3. Significant Accounting Policies (continued)

(a) Recognition of income and expense (continued)
(ii) Fees and commission
Fees and commission income and expense that are integral to the effective interest rate on a financial asset or
financial liability are included in the measurement of the effective interest rate

Other fees and commission income – including account servicing fees, investment management fees, sales
commission, placement fees and syndication fees – are recognised as the related services are performed. If a loan
commitment is not expected to result in the draw-down of a loan, then the related loan commitment fees are
recognised on a straight-line basis over the commitment period.

Other fees and commission expense relate mainly to transaction and service fees, which are expensed as the
services are received.

(iii) Dividend income

Dividend income is recognised when the right to receive income is established. Usually, this is the ex-dividend
date for quoted equity securities. Dividends are presented in net trading income, net income from other
financial instruments at fair value through profit or loss or other revenue based on the underlying classification
of the equity investment.

(iv) Net trading income

Net trading income’ comprises gains less losses related to trading assets and liabilities, and includes all realised
and unrealised fair value changes, interest, dividends and foreign exchange differences.

(b) Property and equipment

Property and equipment are stated at cost or valuation, less accumulated depreciation and accumulated impairment
losses. Costs include expenditure that is directly attributable to the acquisition of the asset. Purchased software that
is integral to the functionality of the related equipment is capitalised as part of that equipment.

Property and equipment is de-recognised upon disposal or when no future economic benefits are expected to arise
from the continued use of the asset. Gains and losses arising on disposal of an item of property and equipment are
determined by comparing the net proceeds from disposal with the carrying amount of the item and are recognised
net within ‘other operating income’ in profit or loss.

Depreciation is recognised in profit or loss on a straight line basis at annual rates estimated to write off the carrying
values of the assets over the estimated useful lives of each part of property and equipment. The annual depreciation Financial Report
rates in use are:

Buildings 5%
Motor vehicles 25%
Furniture, Fittings& Equipment 25%
Computers & IT equipment 50%

Freehold land is not depreciated as it is deemed to have an indefinite life.

Property and equipment are periodically reviewed for impairment. If any such indication exists and where the
carrying values exceed the estimated recoverable amount, the assets are written down to their recoverable amount.

2014
Annual Report
47
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

3. Significant Accounting Policies (continued)

(b) Property and equipment (continued)
The recoverable amount is the greater of net selling price and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset. Impairment losses are recognised in the
statement of comprehensive income.

The asset’s residual values, useful lives and methods of depreciation are reviewed, and adjusted if appropriate, at
each financial year end.

Changes in the expected useful life are accounted for by changing the amortisation period or method, as appropriate,
and treated as changes in accounting estimates.

Property and equipment is de-recognised upon disposal or when no future economic benefits are expected to
arise from the continued use of the asset. Any gain or loss arising on de-recognition of the asset (calculated as the
difference between the net disposal proceeds and the carrying amount of the item) is included in the statement of
comprehensive income in the period the item is de-recognised.

The costs of replacing part of an item of property and equipment is recognised in the carrying amount of the item
if it is probable that future economic benefits embodied within the part will flow to the bank and its costs can be
measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of
property and equipment are recognised in profit or loss as incurred.

c) Provisions
Provisions are recognised when the Bank has a present legal or constructive obligation as a result of past events,
for which it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. Provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where
appropriate, the risks specific to that liability. The expense relating to any provision is presented in the statement of
comprehensive income net of any disbursement.

d) Financial instruments
(i) Recognition
The Bank’s consolidated financial position, initially recognises cash, amounts due from/ due to Bank companies,
loans and advances, deposits, debt securities and subordinated liabilities on the date they are originated. All
other financial assets and liabilities (including assets and liabilities designated at fair value through profit or
Financial Report

loss) are initially recognised on the trade date at which the Bank becomes a party to the contractual provisions
of the instrument.

A financial asset or financial liability is initially measured at fair value plus (for an item not subsequently measured
at fair value through profit or loss) transaction costs that are directly attributable to its acquisition or issue.

(ii) De-recognition
The Bank derecognises a financial asset when the contractual rights to the cash flows from the asset expire,
or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which
substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in
transferred financial assets that is created or retained by the bank is recognised as a separate asset or liability.

48 2014
Annual Report
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

3. Significant Accounting Policies (continued)

d) Financial instruments (Continued)
(ii) De-recognition (Continued)
The bank enters into transactions whereby it transfers assets recognised on its statement of financial position,
but retains either all risks or rewards of the transferred assets or a portion of them. If all or substantially all risks
and rewards are retained, then the transferred assets are not derecognised from the statement of financial
position. Transfers of assets with retention of all or substantially all risks and rewards include, for example,
securities lending and repurchase transactions. If, as a result of a transfer, a financial asset is derecognised in its
entirety but the transfer results in the Bank obtaining a new financial asset or assuming a new financial liability,
the Bank recognises the new financial asset or financial liability at fair value.

Where a financial asset is derecognised in its entirety, the difference between the carrying amount and the sum of
the consideration received together with any gain or loss previously recognised in other comprehensive income,
are recognised in profit or loss. The Bank derecognises a financial liability when its contractual obligations are
discharged or cancelled or expire.

(iii) Classification
The Bank classifies its financial assets in the following categories: financial assets at fair value through profit or
loss; loans and receivables; held-to-maturity investments; and available-for-sale financial assets. Management
determines the classification of its investments at initial recognition.

• Financial assets at fair value through profit or loss

This category has two sub-categories: financial assets held for trading, and those designated at fair value
through profit or loss at inception. A financial asset is classified in this category if acquired principally for the
purpose of selling in the short term or if so designated by management.

Investments held for trading are those which were either acquired for generating a profit from short-term
fluctuations in price or dealer’s margin, or are securities included in a portfolio in which a pattern of short-
term profit-taking exists. Investments held for trading are subsequently re-measured at fair value based
on quoted bid prices or dealer price quotations, without any deduction for transaction costs. All related
realized and unrealized gains and losses are included in profit or loss. Interest earned whilst holding held for
trading investments is reported as interest income.

Foreign exchange forward and spot contracts are classified as held for trading. They are marked to market
and are carried at their fair value. Fair values are obtained from discounted cash flow models which are used
in the determination of the foreign exchange forward and spot contract rates. Gains and losses on foreign Financial Report
exchange forward and spot contracts are included in foreign exchange income as they arise.

• Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. They arise when the Bank provides money directly to a debtor with no intention
of trading the receivable. Loans and advances are initially measured at fair value plus incremental direct
transaction costs, and subsequently measured at their amortized cost using the effective interest method.

• Held to maturity
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and
fixed maturities that the Bank’s management has the positive intention and ability to hold to maturity. A sale
or reclassification of more than an insignificant amount of held to maturity investments would result in the
reclassification of the entire category as available for sale. Held to maturity investments includes treasury
bills and bonds. They are subsequently measured at amortized cost.

2014
Annual Report
49
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

3. Significant Accounting Policies (continued)

d) Financial instruments (Continued)
(iii) Classification (Continued)
• Available for sale
Available for sale financial investments are those non derivative financial assets that are designated as
available for sale or are not classified as any other category of financial assets. Available for sale financial
assets are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial
recognition, they are measured at fair value and changes therein are recognized in other comprehensive
income and presented in the available for sale fair value reserve in equity. When an investment is
derecognized, the gain or loss accumulated in equity is re-classified to profit or loss.

(iv) Offsetting of financial assets and liabilities

Financial assets and liabilities are offset and the net amount reported on the statement of financial position
when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on
a net basis, or to realise the asset and settle the liability simultaneously.

Income and expenses are presented on a net basis only when permitted under IFRSs, or for gains and losses
arising from a Bank of similar transactions such as in the Bank’s trading activity.

(v) Fair value of financial instruments

Fair value is the amount for which an asset could be exchanged or liability settled between knowledgeable
willing parties in an arm’s length transaction on the measurement date.

The determination of fair values of financial assets and financial liabilities is based on quoted market prices or
dealer price quotations for financial instruments traded in active markets. For all other financial instruments fair
value is determined by using valuation techniques. Valuation techniques include net present value techniques,
the discounted cash flow method, comparison to similar instruments for which market observable prices exist,
and valuation models.

The bank uses widely recognised valuation models for determining the fair value of common and simpler
financial instruments like options, interest rate and currency swaps. For these financial instruments, inputs into
models are market observable.

For more complex instruments, the bank uses proprietary models, which are usually developed from recognised
valuation models. Some or all of the inputs into these models may not be market observable, and are derived
from market prices or rates or are estimated based on assumptions.
Financial Report

When entering into a transaction, the financial instrument is recognised initially at the transaction price, which
is the best indicator of fair value, although the value obtained from the valuation model may differ from the
transaction price.

This initial difference, usually an increase, in fair value indicated by valuation techniques is recognised in profit
or loss depending on the individual facts and circumstances of each transaction and not later than when the
market data becomes observable.

The value produced by a model or other valuation techniques is adjusted to allow for a number of factors as
appropriate, because valuation techniques cannot appropriately reflect all factors.

Market participants take into account pricing when entering into a transaction. Valuation adjustments are
recorded to allow for model risks, bid-ask spreads, liquidity risks, as well as other factors. Management believes
that these valuation adjustments are necessary and appropriate to fairly state financial instruments carried at
fair value on the statement of financial position.

50 2014
Annual Report
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

3. Significant Accounting Policies (continued)

d) Financial instruments (Continued)
(vi) Identification and measurement of impairment of financial assets

At each reporting date the bank assesses whether there is objective evidence that financial assets carried at
amortised cost are impaired. A financial asset or a Bank of financial assets is impaired when objective evidence
demonstrates that a loss event has occurred after the initial recognition of the asset(s), and that the loss event
has an impact on the future cash flows of the asset(s) that can be estimated reliably.

Objective evidence that financial assets are impaired can include significant financial difficulty of the borrower
or issuer, default or delinquency by a borrower, restructuring of a loan or advance by the bank on terms
that the bank would not otherwise consider, indications that a borrower or issuer will enter bankruptcy, the
disappearance of an active market for a security, or other observable data relating to a Bank of assets such
as adverse changes in the payment status of borrowers or issuers in the Bank, or economic conditions that
correlate with defaults in the bank.

The bank considers evidence of impairment for loans and advances and investment securities measured at
amortised costs at both a specific asset and collective level. All individually significant loans and advances
and investment securities measured at amortised cost are assessed for specific impairment. All individually
significant loans and advances and investment securities measured at amortised cost found not to be specifically
impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Loans
and advances and investment securities measured at amortised cost, that are not individually significant
are collectively assessed for impairment by ranking together loans and advances and investment securities
measured at amortised cost with similar risk characteristics.

In assessing collective impairment the bank uses statistical modelling of historical trends of the probability
of default, timing of recoveries and the amount of loss incurred, adjusted for management’s judgement as to
whether current economic and credit conditions are such that the actual losses are likely to be greater or less
than suggested by historical modelling.

Default rates, loss rates and the expected timing of future recoveries are regularly benchmarked against actual
outcomes to ensure that they remain appropriate.

Impairment losses on assets carried at amortised cost are measured as the difference between the carrying
amount of the financial asset and the present value of estimated future cash flows discounted at the asset’s
original effective interest rate. Impairment losses are recognised in profit or loss and reflected in an allowance
account against loans and advances. Interest on impaired assets continues to be recognised through the
unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease, the Financial Report
decrease in impairment loss is reversed through profit or loss.

The bank writes off loans and advances and investment securities when they are determined to be uncollectible.

In assessing collective impairment the bank uses statistical modelling of historical trends of the probability
of default, timing of recoveries and the amount of loss incurred, adjusted for management’s judgement as to
whether current economic and credit conditions are such that the actual losses are likely to be greater or less
than suggested by historical modelling.

Impairment losses on available-for-sale investment securities are recognised by transferring the cumulative loss
that has been recognised in other comprehensive income to profit or loss as a reclassification adjustment.
The cumulative loss that is reclassified from other comprehensive income to profit or loss is the difference
between the acquisition cost, net of any principal repayment and amortisation, and the current fair value, less
any impairment loss previously recognised in profit or loss. Changes in impairment provisions attributable to
time value are reflected as a component of interest income.

2014
Annual Report
51
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

3. Significant Accounting Policies (continued)

d) Financial instruments (Continued)
(vi) Identification and measurement of impairment of financial assets (Continued)

If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and the
increase can be objectively related to an event occurring after the impairment loss was recognised in profit or
loss, then the impairment loss is reversed, with the amount of the reversal recognised in profit or loss. However,
any subsequent recovery in the fair value of an impaired available-for-sale equity security is recognised in other
comprehensive income. The bank writes off certain loans and advances and investment securities when they
are determined to be uncollectible.

e) Cash and cash equivalents

Cash and cash equivalents comprise balances with less than three months maturity from the date of acquisition,
including: notes and coins on hand, unrestricted balances deposited with the National Bank of Rwanda and highly
liquid assets, subject to insignificant risk of changes in their fair value.

Cash and cash equivalents are carried at amortised cost in the statement of financial position.

f) Foreign exchange forward and spot contracts

Foreign exchange forward and spot contracts are classified as held for trading. They are marked to market and
are carried at their fair value. Fair values are obtained from discounted cash flow models which are used in the
determination of the foreign exchange forward and spot contract rates. Gains and losses on foreign exchange forward
and spot contracts are included in foreign exchange income as they arise.

g) Income tax expense

Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except
to the extent that it relates to items recognised directly in equity or other comprehensive income, in which case it is
recognised in equity or in other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income for the year using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised on all temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes, except differences relating to the initial
recognition of assets or liabilities in a transaction that is not a business combination and which affects neither
accounting nor taxable profit.
Financial Report

Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they
reverse, based on the laws that have been enacted or substantively enacted by the reporting date. A deferred tax
asset is recognised only to the extent that it is probable that future taxable profits will be available against which the
asset can be utilised.

Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable
that the related tax benefit will be realised.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities against
current tax assets and they relate to income taxes levied by the same tax authority on the same taxable entity or on
different tax entities, but they intend to settle current tax assets and liabilities on a net basis or their tax assets and
liabilities will be realised simultaneously.

52 2014
Annual Report
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

3. Significant Accounting Policies (continued)

h) Leasing
The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement
and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset
or assets and the arrangement conveys a right to use the asset.

Leases, where a significant portion of the risks and rewards of ownership are retained by the lessor, are classified as
operating leases. Payments made under operating leases are charged to the profit and loss account on a straight-line
basis over the period of the lease.

Leases where substantially all the risks and rewards of ownership of an asset are transferred to the Lessee are classified
as finance leases. Upon recognition, the leased asset is measured at the lower of its fair value and the present value
of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the
accounting policy applicable to that asset as follows:

• Operating lease
The total payments made under operating leases are charged to profit or loss on a straight-line basis over
the period of the lease. When an operating lease is terminated before the lease period has expired, any
payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which
termination takes place.

• Finance lease
When assets are held subject to a finance lease, the present value of the lease payments is recognised as a
receivable. The difference between the gross receivable and the present value of the receivable is recognised
as unearned finance income. Lease income is recognised over the term of the lease using the net investment
method, which reflects a constant periodic rate of return.

i) Financial guarantees
In the ordinary course of business, the Bank gives financial guarantees, consisting of letters of credit, guarantees
and acceptances. Financial guarantees are initially recognised in the financial statements (within other liabilities) at
fair value, being the premium received. Subsequent to initial recognition, the bank’s liability under each guarantee
is measured at the higher of the amount initially recognised less, when appropriate, cumulative amortisation
recognised in the income statement, and the best estimate of expenditure required to settle any financial obligation
arising as a result of the guarantee.

Any increase in the liability relating to financial guarantees is recorded in the statement of comprehensive income in Financial Report
allowance for impairment losses The premium received is recognised in the statement of comprehensive income in
‘Net fees and commission income’ on a straight line basis over the life of the guarantee.

j) Fiduciary assets
The bank provides trust and other fiduciary services such as nominee or agent that result in the holding or investing
of assets on behalf of its clients. Assets held in a fiduciary capacity and income arising from related undertakings to
return such assets to customers are not reported in the financial statements, as they are not the assets of the bank.

k) Intangible assets
The Bank’s intangible assets include the value of computer software.

An intangible asset is recognised only when its cost can be measured reliably and it is probable that the expected
future economic benefits that are attributable to it will flow to the Bank.

2014
Annual Report
53
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

3. Significant Accounting Policies (continued)

k) Intangible assets (Continued)
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets is their
fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any
accumulated amortisation and any accumulated impairment losses.

The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives
are amortised over the useful economic life. The amortisation period and the amortisation method for an intangible
asset with a finite useful life are reviewed at least at each financial year-end.

Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in
the asset are accounted for by changing the amortisation period or method, as appropriate, and treated as changes
in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement
of comprehensive income in the expense category consistent with the function of the intangible asset.

Amortisation is calculated using the straight-line method to write down the cost of intangible assets to their residual
values over their estimated useful lives as follows:

Computer software 2 years

There are no intangible assets with indefinite useful lives.

l) Dividends on ordinary shares

Dividends on ordinary shares are recognised as a liability and deducted from equity when they are approved by
the Bank’s shareholders. Interim dividends are deducted from equity when they are declared and no longer at the
discretion of the Bank.

Dividends for the year that are approved after the statement of financial position date are disclosed as an event after
the statement of financial position date.

m) Employee benefits
• Retirement benefit costs
The company contributes to a statutory defined contribution pension scheme, the Rwanda Social Security Board
(RSSB). Contributions are determined by local statute and are currently limited to 5% of the employees’ gross
salary. The company’s CSR contributions are charged to the statement of comprehensive income in the period
to which they relate.

• Short-term benefits
Financial Report

Short term benefits consist of salaries, bonuses and any non-monetary benefits such as medical aid contributions
and transport allowance. Short-term employee benefit obligations are measured on an undiscounted basis and
are expensed as the related service is provided.

A provision is recognised for the amount expected to be paid under short-term cash bonus if the Bank has a
present obligation to pay this amount as a result of past service provided by the employee and the obligation
can be estimated reliably.

n) Segment reporting
An operating segment is a component of the bank that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relate to transactions with any of the bank’s
other components, whose operating results are reviewed regularly by the Bank’s Management Committee (being
the chief operating decision maker) to make decisions about resources allocated to each segment and assess its
performance, and for which discrete financial information is available.

54 2014
Annual Report
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

3. Significant Accounting Policies (continued)

n) Segment reporting (Continued)
The Bank’s segmentation reporting is based on the following operating segments: Retail banking, corporate banking,
and central treasury functions

o) Contingent liabilities
Letters of credit, acceptances, guarantees and performance bonds are disclosed as contingent liabilities. Estimates
of the outcome and the financial effect of contingent liabilities is made by management based on the information
available up to the date that the financial statements are approved for issue by the directors.

p) Earnings per share

Basic and diluted earnings per share (EPS) data for ordinary shares are presented in the financial statements. Basic
EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Bank by the weighted
average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit
or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for
the effects of all dilutive potential ordinary shares, if any.

q) Related parties
In the normal course of business, the Bank has entered into transactions with related parties. The related party
transactions are at arm’s length.

r) New standards and interpretations not yet adopted

(i) New standards, amendments and interpretations effective and adopted during the year
New standard or amendments Effective for annual
periods beginning on
or after
Amendments to IAS 32 - Offsetting Financial Assets and Financial Liabilities (2011) 1 January 2014
Investment Entities- Amendments to IFRS 10, IFRS 12, and IAS 27 (2012) 1 January 2014
Amendments to IAS 36 - Recoverable Amount Disclosures for Non-Financial Assets (2013) 1 January 2014
Novation of Derivatives and Continuation of Hedge Accounting (Amendments to IAS 39) 1 January 2014
IFRIC 21 Levies (2013) 1 January 2014

• Amendments to IAS 32: Offsetting Financial Assets and Financial Liabilities (effective for annual periods
beginning on or after 1 January 2014). Financial Report
The amendments to IAS 32 clarify the offsetting criteria in IAS 32 by explaining when an entity currently
has a legally enforceable right to set-off and when gross settlement is equivalent to net settlement. The
adoption of the amendments did not have a significant impact on the financial statements of the Bank.

• Amendments to IFRS 10, IFRS 12 and IAS 27: Investment entities (effective for annual periods beginning on
or after 1 January 2014)
The amendments clarify that a qualifying investment entity is required to account for investments in
controlled entities, as well as investments in associates and joint ventures, at fair value through profit or
loss; the only exception would be subsidiaries that are considered an extension of the investment entity’s
investment activities. The consolidation exemption is mandatory and not optional. The adoption of the
amendments did not have a significant impact on the financial statements of the Bank.

2014
Annual Report
55
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

3. Significant Accounting Policies (continued)

r) New standards and interpretations not yet adopted (Continued)
(i) New standards, amendments and interpretations effective and adopted during the year (Continued)

• Amendments to IAS 36: Recoverable Amount Disclosures for Non-Financial Assets (effective for annual
periods beginning on or after 1 January 2014)
The amendments reverse the unintended requirement in IFRS 13 Fair Value Measurement to disclose
the recoverable amount of every cash-generating unit to which significant goodwill or indefinite-lived
intangible assets have been allocated. Under the amendments, the recoverable amount is required
to be disclosed only when an impairment loss has been recognised or reversed. The adoption of the
amendments did not have a significant impact on the financial statements of the Bank.

• Amendments to IAS 39: Novation of Derivatives and Continuation of Hedge Accounting (effective for
annual periods beginning on or after 1 January 2014)
The amendments permit the continuation of hedge accounting in a situation where a counterparty to
a derivative designated as a hedging instrument is replaced by a new central counterparty (known as
‘novation of derivatives’), as a consequence of laws or regulations, if specific conditions are met. The
adoption of the amendments did not have a significant impact on the financial statements of the Bank.

• IFRIC 21: Levies (effective for annual periods beginning on or after 1 January 2014).
IFRIC 21 defines a levy as an outflow from an entity imposed by a government in accordance with
legislation. It confirms that an entity recognises a liability for a levy when – and only when – the triggering
event specified in the legislation occurs. The adoption of the amendments did not have a significant
impact on the financial statements of the Bank.

(ii) New and amended standards and interpretations in issue but not yet effective for the year/period ended 31
December 2014.

New standard or amendments Effective for annual

periods beginning on
or after
Defined Benefit Plans: Employee Contributions (Amendments to IAS 19) 1 July 2014
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture 1 January 2016
(Amendments to IFRS 10 and IAS 28)
Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11) 1 January 2016
Amendments to IAS 41 - Bearer Plants (Amendments to IAS 16 and IAS 41) 1 January 2016
Amendments to IAS 16 and IAS 38 – Clarification of Acceptable Methods of 1 January 2016
Financial Report

Depreciations and Amortisation

Equity Method in Separate Financial Statements (Amendments to IAS 27) 1 January 2016
IFRS 14 Regulatory Deferral Accounts 1 January 2016
Investment Entities: Applying the Consolidation Exception (Amendments to IFRS 10, 1 January 2016
IFRS 12 and IAS 28)
Disclosure Initiative (Amendments to IAS 1) 1 January 2016
IFRS 15 Revenue from Contracts with Customers 1 January 2017
IFRS 9 Financial Instruments (2014) 1 January 2018

All Standards and Interpretations will be adopted at their effective date (except for those Standards and
Interpretations that are not applicable to the entity).

56 2014
Annual Report
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

3. Significant Accounting Policies (continued)

r) New standards and interpretations not yet adopted (Continued)
(ii) New and amended standards and interpretations in issue but not yet effective for the year/period ended 31
December 2014 (Continued)

• Defined benefit plans – Employee contributions (Amendments to IAS 19)

The amendments introduce relief that will reduce the complexity and burden of accounting for certain
contributions from employees or third parties. Such contributions are eligible for practical expedient if
they are:
 set out in the formal terms of the plan;
 linked to service; and
 independent of the number of years of service.

When contributions are eligible for the practical expedient, a company is permitted (but not required) to
recognise them as a reduction of the service cost in the period in which the related service is rendered.

The amendments apply retrospectively for annual periods beginning on or after 1 July 2014 with early
adoption permitted.

The adoption of these changes will not affect the amounts and disclosures of the Bank’s defined benefits
obligations.

• Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS
10 and IAS 28)
The amendments require the full gain to be recognised when assets transferred between an investor
and its associate or joint venture meet the definition of a ‘business’ under IFRS 3 Business Combinations.
Where the assets transferred do not meet the definition of a business, a partial gain to the extent of
unrelated investors’ interests in the associate or joint venture is recognised. The definition of a business is
key to determining the extent of the gain to be recognised

The amendments will be effective from annual periods commencing on or after 1 January 2016. 

The adoption of these changes will not affect the amounts and disclosures of the Bank’s transactions with
associates or joint ventures.

• Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11)

The amendments require business combination accounting to be applied to acquisitions of interests in a
Financial Report
joint operation that constitutes a business.

Business combination accounting also applies to the acquisition of additional interests in a joint operation
while the joint operator retains joint control. The additional interest acquired will be measured at fair
value. The previously held interest in the joint operation will not be re-measured.

The amendments apply prospectively for annual periods beginning on or after 1 January 2016 and early
adoption is permitted.

The adoption of these changes would not affect the amounts and disclosures of the Bank’s interests in
joint operations.

2014
Annual Report
57
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

3. Significant Accounting Policies (continued)

r) New standards and interpretations not yet adopted (Continued)
(ii) New and amended standards and interpretations in issue but not yet effective for the year/period ended 31
December 2014 (Continued)

• Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38)
The amendments to IAS 16 Property, Plant and Equipment explicitly state that revenue-based methods of
depreciation cannot be used for property, plant and equipment. The amendments to IAS 38 Intangible Assets
introduce a rebuttable presumption that the use of revenue-based amortisation methods for intangible
assets is inappropriate. The presumption can be overcome only when revenue and the consumption of the
economic benefits of the intangible asset are ‘highly correlated’, or when the intangible asset is expressed
as a measure of revenue.

The amendments apply prospectively for annual periods beginning on or after 1 January 2016 and early
adoption is permitted.

The adoption of these changes will not affect the amounts and disclosures of the Bank’s property, plant
and equipment and intangible assets.

• Equity Method in Separate Financial Statements (Amendments to IAS 27)

The amendments allow the use of the equity method in separate financial statements, and apply to the
accounting not only for associates and joint ventures but also for subsidiaries

The amendments apply retrospectively for annual periods beginning on or after 1 January 2016 with early
adoption permitted.

The adoption of these changes will not affect the amounts and disclosures of the Bank’s interests in other
entities.

• IFRS 14 Regulatory Deferral Accounts

IFRS 14 provides guidance on accounting for regulatory deferral account balances by first-time adopters of
IFRS. To apply this standard, the entity has to be rate-regulated i.e. the establishment of prices that can be
charged to its customers for goods and services is subject to oversight and/or approval by an authorised
body.

The standard is effective for financial reporting years beginning on or after 1 January 2016 with early
adoption is permitted.
Financial Report

The adoption of this standard is not expected to have an impact the financial statements of the Bank given
that it is not a first time adopter of IFRS.

• Investment Entities: Applying the Consolidation Exception (Amendments to IFRS 10, IFRS 12 and IAS 28)
The amendment to IFRS 10 Consolidated Financial Statements clarifies which subsidiaries of an investment
entity are consolidated instead of being measured at fair value through profit and loss. The amendment
also modifies the condition in the general consolidation exemption that requires an entity’s parent or
ultimate parent to prepare consolidated financial statements. The amendment clarifies that this condition
is also met where the ultimate parent or any intermediary parent of a parent entity measures subsidiaries
at fair value through profit or loss in accordance with IFRS 10 and not only where the ultimate parent or
intermediate parent consolidates its subsidiaries.

58 2014
Annual Report
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

3. Significant Accounting Policies (continued)

r) New standards and interpretations not yet adopted (Continued)
(ii) New and amended standards and interpretations in issue but not yet effective for the year/period ended 31
December 2014 (Continued)

The amendment to IFRS 12 Disclosure of Interests in Other Entities requires an entity that prepares financial
statements in which all its subsidiaries are measured at fair value through profit or loss in accordance with
IFRS 10 to make disclosures required by IFRS 12 relating to investment entities.

The amendment to IAS 28 Investments in Associates and Joint Ventures modifies the conditions where
an entity need not apply the equity method to its investments in associates or joint ventures to align
these to the amended IFRS 10 conditions for not presenting consolidated financial statements. The
amendments introduce relief when applying the equity method which permits a non-investment entity
investor in an associate or joint venture that is an investment entity to retain the fair value through profit
or loss measurement applied by the associate or joint venture to its subsidiaries. The amendments apply
retrospectively for annual periods beginning on or after 1 January 2016, with early application permitted.
The adoption of these changes will not affect the amounts and disclosures of the Bank’s interests in other
entities.

• Disclosure Initiative (Amendments to IAS 1)

The amendments provide additional guidance on the application of materiality and aggregation when
preparing financial statements. The amendments apply for annual periods beginning on or after 1 January
2016 and an early application is permitted. The adoption of these changes will not affect the amounts and
disclosures of the Bank’s interests in other entities.

• IFRS 15 Revenue from Contracts with Customers

This standard replaces IAS 11 Construction Contracts, IAS 18 Revenue, IFRIC 13 Customer Loyalty
Programmes, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18 Transfer of Assets from
Customers and SIC-31 Revenue – Barter of Transactions Involving Advertising Services.

The standard contains a single model that applies to contracts with customers and two approaches to
recognising revenue: at a point in time or over time. The standard specifies how and when an IFRS reporter
will recognise revenue as well as requiring such entities to provide users of financial statements with more
informative, relevant disclosures.

The standard provides a single, principles based five-step model to be applied to all contracts with
customers in recognising revenue being: Identify the contract(s) with a customer; Identify the Financial Report
performance obligations in the contract; Determine the transaction price; Allocate the transaction price
to the performance obligations in the contract; and recognise revenue when (or as) the entity satisfies a
performance obligation. IFRS 15 is effective for annual reporting periods beginning on or after 1 January
2017, with early adoption is permitted.

The Bank is assessing the potential impact on its financial statements resulting from the application of
IFRS 15.

2014
Annual Report
59
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

3. Significant Accounting Policies (continued)

r) New standards and interpretations not yet adopted (Continued)
(ii) New and amended standards and interpretations in issue but not yet effective for the year/period ended 31
December 2014 (Continued)

• IFRS 9: Financial Instruments (2014)

On 24 July 2014 the IASB issued the final IFRS 9 Financial Instruments Standard, which replaces earlier
versions of IFRS 9 and completes the IASB’s project to replace IAS 39 Financial Instruments: Recognition
and Measurement.

This standard introduces changes in the measurement bases of the financial assets to amortised cost,
fair value through other comprehensive income or fair value through profit or loss. Even though these
measurement categories are similar to IAS 39, the criteria for classification into these categories are
significantly different. In addition, the IFRS 9 impairment model has been changed from an “incurred loss”
model from IAS 39 to an “expected credit loss” model.

The standard is effective for annual periods beginning on or after 1 January 2018 with retrospective
application, early adoption is permitted.

The adoption of this standard is expected to have a significant impact the financial statements of the Bank.
The significant impact would be based on the “expected credit loss” model which means the bank will
have to assess the potential credit risk at the initiation of the loan.

4. Financial Risk Management

The Bank’s activities expose it to a variety of financial risks, including credit risk, liquidity risk, market risks and operational
risks. The Bank’s overall risk management programme focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on the Bank’s financial performance.

The Board of Directors has overall responsibility for the establishment and oversight of the Bank’s risk management
framework. The Board of Directors of the Bank has established the Credit, Audit, Risk, Human Resources and Asset and
Liability committees, which are responsible for developing and monitoring the Bank’s risk management policies in their
specified areas. All Board committees have both executive and non-executive members and report regularly to the Board
of Directors on their activities.

The Bank’s risk management policies are established to identify and analyse the risks faced by the Bank, to set appropriate
risk limits and controls and to monitor risks and adherence to limits.

Risk management policies and systems are reviewed regularly to reflect changes in market conditions, products and
Financial Report

services offered. The Bank, through its training and management standards and procedures, aims to develop a disciplined
and constructive control environment in which all employees understand their roles and obligations.

The Bank’s risk management policies are established to identify and analyse the risks faced by the Bank, to set appropriate
risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed
regularly to reflect changes in market conditions, products and services offered. The Bank, through its training and
management standards and procedures, aims to develop a disciplined and constructive control environment in which all
employees understand their roles and obligations.

The Audit Committee is responsible for monitoring compliance with the Bank’s risk management policies and procedures
and for reviewing the adequacy of the risk management framework in relation to the risks faced by the Bank. The
Audit Committee is assisted in these functions by Internal Audit department. Internal Audit personnel undertake both
regular and ad-hoc reviews of risk management controls and procedures, the results of which are reported to the Audit
Committee.

60 2014
Annual Report
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

4. Financial Risk Management (continued)

(a) Credit risk
Credit risk is the risk of financial loss to the Bank if a customer or counterparty to a financial instrument fails to meet
its contractual obligations and arises principally from the Bank’s loans and advances to customers, placement and
balances with other counterparties and investment securities. It arises from lending and other activities undertaken
by the Bank. For risk management reporting purposes, the Bank considers and consolidates all elements of credit
risk exposure.

(i) Management of credit risk

The Board of Directors has delegated responsibility for the management of credit risk to its Credit Committee. A
separate credit department, reporting to the Credit Committee, is responsible for oversight of the Bank’s credit
risk, including:

• Formulating credit policies in consultation with business units, covering collateral requirements, credit
assessment, risk grading and reporting, documentary and legal procedures, and compliance with
regulatory and statutory requirements;

• Establishing the authorisation structure for the approval and renewal of credit facilities. Authorisation
limits are allocated to business unit credit managers. Larger facilities require approval by the Board of
Directors;

• Reviewing and assessing credit risk. The credit department assesses all credit exposures in excess
of designated limits, prior to facilities being committed to customers by the business unit concerned.
Renewals and reviews of facilities are subject to the same review process; Limiting concentrations of
exposure to counterparties, geographies and industries (for loans and advances), and by issuer, credit
rating band, market liquidity and country (for investment securities);

• Developing and maintaining the Bank’s risk grading in order to categorise exposures according to the
degree of risk of financial loss faced and to focus management on the attendant risks. The risk grading
system is used in determining where impairment provisions may be required against specific credit
exposures. The current risk grading framework consists of five grades reflecting varying degrees of risk of
default and the availability of collateral or other credit risk mitigation;

• Reviewing compliance of business units with agreed exposure limits, including those for selected industries
and product types. Regular reports are provided to the Credit Committee on the credit quality of local
portfolios and appropriate corrective action is taken;

• Providing advice, guidance and specialist skills to business units to promote best practice throughout the Financial Report
Bank in the management of credit risk;

• Each business unit is required to implement the Bank’s credit policies and procedures. Each business
unit has a credit manager who reports on all credit related matters to local management and the Credit
Committee. Each business unit is responsible for the quality and performance of its credit portfolio and for
monitoring and controlling all credit risks in its portfolios, including those subject to central approval; and

• Regular audits of business units and the bank’s credit processes are undertaken by Internal Audit
Department.

2014
Annual Report
61
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

4. Financial Risk Management (continued)

(a) Credit risk (Continued)

(ii) Credit risk measurement

The Bank assesses the probability of default of customer or counterparty using internal rating scale tailored
to the various categories of counter party. The rating scale has been developed internally and combines data
analysis with credit officer judgment and is validated, where appropriate, by comparison with externally available
information. Customers of the Bank are segmented into five rating classes.

The Bank’s rating scale, which is shown below, reflects the range of default probabilities defined for each rating
class. This means that, in principle, exposures migrate between classes as the assessment of their probability of
default changes. The rating scale is kept under review and upgraded as necessary. The Bank regularly validates
the performance of the rating and their predictive power with regard to default events.

The Bank’s internal ratings scale is as follows:

Grade 1: Normal risk (between 0-30 days)
Grade 2: Watch risk (between 31-90 days)
Grade 3: Sub-standard risk (between 91-180 days)
Grade 4: Doubtful risk (between 181-360 days)
Grade 5: Loss (over 360 days)

(iii) Impairment and provisioning policies

The Bank establishes an allowance for impairment losses that represents its estimate of incurred losses in its
loans and advances portfolio. The main components of this allowance are a specific loss component that relates
to individually significant exposures. The second component is in respect of losses that have been incurred but
have not been identified in relation to the loans and advances portfolio that is not specifically impaired.

The impairment provision recognised in the statement of financial position at year-end is derived from each of
the five internal rating grades. However, the impairment provision is composed largely of the bottom two grades.

The Bank’s exposure to credit risk is analysed as follows:

2014 2013
FRw’000 FRw’000
Individually impaired
Grade 3: Substandard risk 5,881,416 3,770,485
Grade 4: Doubtful risk 6,214,378 4,440,377
Grade 5: Loss risk 4,102,557 6,481,694
Financial Report

Gross amount 16,198,351 14,692,556

Allowance for impairment

Specific provision for impairment (11,569,935) (9,967,748)

Net Carrying amount 4,628,416 4,724,808

Non–performing loans
Non-performing loans and advances on which interest income has been suspended amount to FRw 16,168
million (2013: 14,693 million) for the Bank, with total impairment allowance of FRw 13,258 million (2013: FRw
12,835 million). Interest on these accounts is fully provided for in loans loss provision as these advances are
classified as non-performing at the period end date. Discounted value of securities held in respect to those loans
and advances are valued at FRw 9,324 million (2013: FRw 6,129 million) and are considered adequate.

62 2014
Annual Report
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

4. Financial Risk Management (continued)

(a) Credit risk (Continued)

(iii) Impairment and provisioning policies (Continued)

Past due but not impaired loans and advances

Past due but not impaired loans and advances are those for which contractual interest or principal payments are
past due, but the Bank believes that impairment is not appropriate on the basis of stage of collection of amounts
owed to the Bank. As at 31 December, the ageing analysis of past due but not impaired loans and advances was
as follows:

2014 2013
FRw’000 FRw’000
Grade 1: Normal risk 194,968,496 134,461,313
Grade 2: Watch risk 35,530,769 62,706,848
Allowance for collective assessment (1,688,172) (2,867,728)
Net Carrying amount 228,811,093 194,300,433

Loans and advances graded 2, 3, 4 and 5 in the Bank’s internal credit risk grading system include items that are
individually impaired. These are advances for which the Bank determines that it is probable that it will be unable
to collect all principal and interest due according to the contractual terms of the loan agreements.

Loans and advances graded 1 are not individually impaired. Allowances for impairment losses for these loans
and advances are assessed collectively using the Bank’s historical credit loss ratio.

The Bank also complies with the Central Bank’s prudential guidelines on collective and specific impairment losses.
Additional provisions for loan losses required to comply with the requirements of Central Bank’s prudential
guidelines are transferred to regulatory reserve.

The internal rating scale assists management to determine whether objective evidence of impairment exists,
based on the following criteria set out by the Bank:

• Delinquency in contractual payments of principal or interest;

• Cash flow difficulties experienced by the borrower;
• Breach of loan covenants or conditions;
• Initiation of Bank bankruptcy proceedings;
• Deterioration of the borrower’s competitive position;
Financial Report
• Deterioration in the value of collateral.

The Bank’s policy requires the review of individual financial assets regularly when individual circumstances
require. Impairment allowances on individually assessed accounts are determined by an evaluation of the
impairment at reporting date on a case-by-case basis, and are applied to all individually significant accounts.
The assessment normally encompasses collateral held (including re-confirmation of its enforceability) and the
anticipated receipts for that individual account.

2014
Annual Report
63
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

4. Financial Risk Management (continued)

(a) Credit risk (Continued)

(iii) Impairment and provisioning policies (Continued)

Other exposures to credit risk are as summarized below:

2014 2013
FRw’000 FRw’000
Balances with the National Bank of Rwanda 46,938,373 24,855,050
Due from banks 102,988,217 107,377,523
Held to maturity investments 58,596,907 50,820,690
Equity investments 221,425 218,455
Other assets 7,665,385 7,695,005
Net Carrying amount 216,410,307 190,966,723

(iv) Credit –related commitment risk

The Bank makes available to its customers guarantees which may require the Bank to make payments on their
behalf and enters into commitments to extend lines to secure their liquidity needs. The Bank enters into various
irrevocable commitments and contingent liabilities. These consist of financial guarantees, letters of credit and
other undrawn commitments to lend.

Letters of credit and guarantees (including standby letters of credit) commit the Bank to make payments on
behalf of customers in the event of a specific act, generally related to the import or export of goods. Such
commitments expose the Bank to similar risks to loans and are mitigated by the same control processes and
policies.

Even though these obligations may not be recognised on the statement of financial position, they do contain
credit risk and are therefore part of the overall risk of the Bank. Letters of credit and guarantees (including
standby letters of credit) commit the Bank to make payments on behalf of customers in the event of a specific
act, generally related to the import or export of goods. Guarantees and standby letters of credits carry similar
credit risk to loans.

The table below shows the bank’s maximum credit risk exposure for commitments and guarantees. The
maximum exposure to credit risk relating to a financial guarantee is the maximum amount the bank could have
to pay if the guarantee is called upon. The maximum exposure to credit risk relating to a loan commitment is the
full amount of the commitment.
Financial Report

2014 2013
FRw’000 FRw’000
Guarantees
Acceptances and letter of credit issued 13,563,264 49,594,239
Guarantees commitments issued 67,489,885 27,698,321
- -
81,053,149 77,292,560

64 2014
Annual Report
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

4. Financial Risk Management (continued)

(a) Credit risk (Continued)

(v) Concentration of credit risk

The Bank’s financial instruments do not represent a concentration of credit risk because the Bank deals with a
variety of customers and its loans and advances are structured and spread among a number of customers. The
Bank monitors concentrations of credit risk by sector. An analysis of concentrations of credit risk at the reporting
date is shown below:

2014 2013
FRw’000 %age FRw’000 %age
Large Corporate Clients 134,412,278 54% 88,184,482 42%
Small and Medium Enterprises 46,960,333 19% 53,770,343 25%
Non-Profit Entities 6,348,545 3% 4,429,132 2%
Retail Banking 59,715,792 24% 65,476,760 31%
247,436,948 100% 211,860,717 100%

(vi) Fair value of collateral held

The Bank holds collateral against loans and advances to customers in the form of cash, residential, commercial
and industrial property; fixed assets such as plant and machinery; marketable securities; bank guarantees and
letters of credit.

The Bank also enters into collateralised reverse purchase agreements. Risk mitigation policies control the
approval of collateral types. Collateral is valued in accordance with the Bank’s risk mitigation policy, which
prescribes the frequency of valuation for different collateral types. The valuation frequency is driven by the level
of price volatility of each type of collateral. Collateral held against impaired loans is maintained at fair value. The
valuation of collateral is monitored regularly and is back tested at least annually.

Collateral generally is not held over loans and advances to banks, except when securities are held as part of
reverse purchase and securities borrowing activity. Collateral usually is not held against investment securities,
and no such collateral was held as at 31 December 2013 and 2014. An estimate of fair values of collaterals held
against loans and advances to customers at the end of the year was as follows:

2014 2013
FRw’000 FRw’000 Financial Report
Against Impaired loans 9,323,504 6,129,065
Against past due but not impaired loans 211,078,087 202,648,186
220,401,591 208,777,251

2014
Annual Report
65
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

4. Financial Risk Management (continued)

(a) Credit risk (Continued)

(vi) Fair value of collateral held (Continued)

Collateral held other credit enhancements and their financial effect

The Bank holds collateral against loans and advances to customers in the form of mortgage interests over
property, other registered securities over assets, and guarantees. Estimates of fair value are based on the value
of collateral assessed at the time of borrowing, and generally are not updated except when a loan is individually
assessed as impaired. Collateral generally is not held over loans and advances to banks, except when securities
are held as part of reverse purchase and securities borrowing activity. Collateral is usually not held against
investment securities, and no such collateral was held at 31 December 2014 or 2013.

The table below sets out the principal types of collateral held against different types of financial assets.

Type of credit exposure Percentage of exposure that is  Principal type of security held
subject to collateral requirements
 
2014 2013
Loans and advances to Customers      
Retail Loans & Advances
Overdrafts 0 0 Un-secured
Personal Loans 0 0 Un-secured
Vehicles loans 70 70 Vehicle
Mortgage Loans 70 70 Property
Credit Cards 0 0 Un-secured

Property, Plant and Equipment,

Corporate Loans 100 100
Insurance, guarantees
       
Loan and advances to Banks      
Repos 100 100 Marketable Securities
Other loans and advances to banks 0 0 Un- Secured

(b) Liquidity risk

Liquidity risk is the risk that the Bank will encounter difficulty in meeting obligations from its financial liabilities. The
Bank’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to
meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or
risking damage to the Bank’s reputation.

The Bank’s treasury maintains a portfolio of short-term liquid assets, largely made up of short-term liquid investment
Financial Report

securities, loans and advances to banks and other inter-bank facilities, to ensure that sufficient liquidity is maintained
within the Bank as a whole. The daily liquidity position is monitored and regular liquidity stress testing is conducted
under a variety of scenarios covering both normal and more severe market conditions.

The key measure used by the Bank for managing liquidity risk is the ratio of net liquid assets to deposits from
customers.

Details of the reported Bank’s ratio of net liquid assets to deposits from customers at the reporting date and during
the reporting year were as follows:
2014 2013
At close of the year 64.9% 65.2%
Average for the year 67.8% 53.5%
Maximum for the year 70.3% 65.2%
Minimum for the year 64.9% 44.8%

66 2014
Annual Report
 4. Financial Risk Management (continued)
(b) Liquidity risk

The table below summarizes the Bank’s liquidity risk as at 31 December 2014 and 31 December 2013, categorized into relevant maturity rankings based on the earlier of the
remaining contractual maturities or re-pricing dates.

Annual Report
2014
Up to 1 month 1 - 3 months 3 – 12 months 1 - 5 years Over 5 years Total
FRw’000 FRw’000 FRw’000 FRw’000 FRw’000 FRw’000
Assets  
Cash in hand 12,020,669 - - - - 12,020,669
Balances with the National Bank of Rwanda 46,938,373 - - - - 46,938,373
Due from banks 102,988,217 - - - - 102,988,217
Held to maturity investments 8,976,834 26,851,823 22,768,250 - - 58,596,907
Loans and advances to customers 31,880,289 19,819,438 20,530,590 65,571,333 95,637,859 233,439,509
Equity investments - - - - 221,425 221,425
Other assets 5,746,766 1,037,987 868,100 12,532 - 7,665,385
Property and equipment - - - - 20,503,423 20,503,423
Intangible assets - - - 234,056 - 234,056
Total Assets 208,551,148 47,709,248 44,166,940 65,817,921 116,362,707 482,607,964

Liabilities and Equity  

Due to banks 10,472,516 1,742,099 2,835,500 164,346 - 15,214,461
Other customer deposits 240,190,387 8,762,179 75,633,022 15,572 - 324,601,160
Deferred Tax - - 102,151 510,754 818,486 1,431,391
Dividends payable - - 5,469 - - 5,469
Other liabilities 6,882,271 4,051,994 250,999 - - 11,185,264
Long-term Finance 514,547 381,146 6,006,297 29,671,168 3,356,809 39,929,967
BANK OF KIGALI LIMITED

Tax payable - 692,518 - - - 692,518

Shareholders’ funds - - - - 89,547,734 89,547,734
At 31 December 2014 258,059,721 15,629,936 84,833,438 30,361,840 93,723,029 482,607,964
FOR THE YEAR ENDED 31 DECEMBER 2014

Liquidity Gap 2014 (49,508,573) 32,079,312 (40,666,498) 35,456,081 22,639,678 -

67
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Financial Report
 Financial Report

68
4. Financial Risk Management (continued)
(b) Liquidity risk (Continued)

Up to 1 month 1 - 3 months 3 – 12 months 1 - 5 years Over 5 years Total

Assets FRw’000 FRw’000 FRw’000 FRw’000 FRw’000 FRw’000
BANK OF KIGALI LIMITED

Cash in hand 11,110,210 - - - - 11,110,210

Balances with the National Bank of Rwanda 24,855,050 - - - - 24,855,050
Due from banks 90,195,479 17,182,044 - - - 107,377,523
FOR THE YEAR ENDED 31 DECEMBER 2014

Held to maturity investments 15,068,391 27,060,959 8,691,340 - - 50,820,690

Loans and advances to customers 45,418,046 9,026,682 33,655,483 76,726,627 34,198,403 199,025,241
Equity investments - - - - 218,455 218,455
Other assets 7,695,005 - - - - 7,695,005
Property and equipment - - - - 21,018,894 21,018,894
Intangible assets - - - - 239,005 239,005
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Total Assets 194,342,181 53,269,685 42,346,823 76,726,627 55,674,757 422,360,073

   
Liabilities And Equity  
Due to banks 5,532,246 21,500 11,595,500 195,778 - 17,345,024
Other customer deposits 221,332,253 3,293,539 55,699,161 164,510 - 280,489,463
Deterred Tax - - 102,151 510,753 1,007,747 1,620,650
Dividends payable - - 7,416,579 - - 7,416,579
Other liabilities 8,705,581 - - - - 8,705,581
Long-term Finance - 251,331 3,099,507 26,076,882 4,762,798 34,190,519
Tax payable - 1,828,573 - - - 1,828,573
Shareholders’ funds - - - - 70,763,684 70,763,684
At 31 December 2013 235,570,080 5,394,943 77,912,898 26,947,923 76,534,229 422,360,073
Liquidity Gap 2013 (41,227,899) 47,874,742 (35,566,075) 49,778,704 (20,859,472) -

Annual Report
2014
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

4. Financial Risk Management (continued)

(c) Market Risk

(i) Currency risk

The Bank takes on exposure to effects of fluctuations in the prevailing foreign currency exchange rates on its
financial position and cash flows. The Board sets limits on the level of exposure by currency and in total for
both overnight and intra-day positions which are monitored daily and hedging strategies used to ensure that
positions are maintained within the established limits.

Transactions in foreign currency are recorded at the rate in effect at the date of the transaction. The Bank
translates monetary assets and liabilities denominated in foreign currencies at the rate of exchange in effect at
the reporting date. The Bank records all gains or losses on changes in currency exchange rates in profit or loss.

The table below summarises the foreign currency exposure as at 31 December 2014 and 31 December 2013:

2014 2013
FRw’000 FRw’000

Assets in foreign currencies 118,568,075 125,031,246

Liabilities in foreign currencies (135,467,989) (130,836,020)
Net foreign currency exposure at the end of the year (16,899,914) (5,804,774)

The following table demonstrates the sensitivity to a reasonably possible change in the below mentioned
exchange rates of major transaction currencies, with all other variables held constant, of the Bank’s profit before
tax (due to changes in the fair value of monetary assets and liabilities).

Currency Increase/decrease in Effect on profit before tax

exchange rate 2014 2013
FRw’000 FRw’000

USD +/-1% (375,858) (48,031

GBP +/-1% (95,392) 29,623
EUR +/-1% (30,048 (42,640)

Financial Report

2014
Annual Report
69
 Financial Report

70
4. Financial Risk Management (continued)
(c) Market Risk (Continued)

(i) Currency risk (Continued)

The various foreign currencies to which the Bank is exposed to are summarised below. All figures are in thousands of Rwandan francs (FRw’000) as at 31 December 2014:
BANK OF KIGALI LIMITED

USD Euro GBP Other Foreign currencies Total

Cash, deposits and advances to banks 80,289,710 9,982,369 11,169,877 8,297,155 109,739,111
FOR THE YEAR ENDED 31 DECEMBER 2014

Loans and advances to customers 8,064,455 30,775 2,450 484 8,098,164

Other assets, property and investments 671,442 53,410 5,874 74 730,800
At 31 December 2014 89,025,607 10,066,554 11,178,201 8,297,713 118,568,075

Liabilities and Equity

Deposits from banks 331,510 15,262 - - 346,772
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Deposits from customers 87,731,503 7,043,485 1,639,011 155,834 96,569,833

Other liabilities 376,564 3,015 22 - 379,601
Long-Term Finance 38,171,783 - - - 38,171,783
At 31 December 2014 126,611,360 7,061,762 1,639,033 155,834 135,467,989
Net currency exposure (37,585,753) 3,004,792 9,539,168 8,141,879 (16,899,914)

Annual Report
2014
 4. Financial Risk Management (continued)
(c) Market Risk (Continued)

Annual Report
(i) Currency risk (Continued)

2014
The various foreign currencies to which the Bank is exposed to are summarised below. All figures are in thousands of Rwandan francs (FRw’000) as at 31 December 2013:

USD Euro GBP Other Foreign currencies Total

Cash, deposits and advances to banks 110,920,511 5,752,931 4,764,888 477,493 121,915,823
Loans and advances to customers 699,110 14,960 2,133 459 716,662
Other assets, property and intangibles 2,398,761 - - - 2,398,761
At 31 December 2013 114,018,382 5,767,891 4,767,021 477,952 125,031,246

Liabilities and Equity

Deposits from banks 1,328,746 78,186 65,482 - 1,472,414
Deposits from customers 85,430,047 9,953,754 1,739,209 177,866 97,300,876
Other liabilities 395,024 - - - 395,024
Long-term Finance 31,667,706 - - - 31,667,706
At 31 December 2013 118,821,523 10,031,940 1,804,691 177,866 130,836,020
Net currency exposure (4,803,141) (4,264,049) 2,962,330 300,086 (5,804,774)
BANK OF KIGALI LIMITED

FOR THE YEAR ENDED 31 DECEMBER 2014

71
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Financial Report
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

4. Financial Risk Management (continued)

(c) Market Risk (Continued)

(ii) Interest rate risk

Interest rate is the risk that the future cash flows of financial instruments will fluctuate because of changes in
the market interest rates. Interest margin may increase as a result of such changes but may reduce losses in
the event that unexpected movement arises. The Bank closely monitors interest rate movements and seeks to
limit its exposure by managing the interest rate and maturity structure of assets and liabilities carried on the
statement of financial position.

Sensitivity analysis interest rate risk

Except for some borrowings that are tagged to LIBOR, all financial instruments entered into by the bank are at
fixed rates and therefore not prone to interest rate fluctuations. The impact of fluctuations in the LIBOR (London
Interbank Rate) is not expected to have a significant effect on the results of the bank.

The following is an analysis of the Group’s sensitivity to an increase or decrease in market interest rates, assuming
no asymmetrical movement in yield curves and a constant financial position:

 Balance as at 31 December 2014 Weighted interest rate +/- 100bp

  FRw’000 FRw’000
Effect on Interest income
Balances with the National Bank of Rwanda 8.5% 15,000,000 150,000
Balances and placements with other Banks 0.9% 102,987,376 1,029,874
Treasury bills and bonds 5.9% 58,596,907 585,969
Loans and advances - Net 20.1% 233,219,355 2,332,193
Total Assets/Increase 409,803,638 4,098,036

Effect on Interest expense

Balances and placements due to Banks 10.5% 9,687,737 96,877
Customer deposits 12.9% 88,433,788 884,338
Long-Term Finance 6.5% 39,929,967 399,300
Total Liabilities/Increase   138,051,492 1,380,515

Effect on Profits   271,752,146 2,717,521

Financial Report

(d) Operational risk

Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Bank’s
processes, personnel, technology and infrastructure and from external factors other than credit, market and liquidity
risks such as those arising from legal and regulatory requirements and generally accepted standards of corporate
behaviour. Operational risks arise from all of the Bank’s operations and are faced by all business units.

The Bank’s objective is to manage operational risk so as to balance the avoidance of financial losses and damage
to the Bank’s reputation with overall cost effectiveness and to avoid control procedures that restrict initiative and
creativity.

72 2014
Annual Report
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

4. Financial Risk Management (continued)

(d) Operational risk (Continued)

The primary responsibility for the development and implementation of controls to address operational risk is assigned
to senior management within each business unit. This responsibility is supported by the development of overall Bank
standards for the management of operational risk in the following areas:

• Requirements for appropriate segregation of duties, including the independent authorisation of

transactions.

• Requirements for the reconciliation and monitoring of transactions.

• Compliance with regulatory and other legal requirements.

• Documentation of controls and procedures.

• Requirements for the yearly assessment of operational risks faced and the adequacy of controls and
procedures to address the risks identified.

• Requirements for the reporting of operational losses and proposed remedial action.

• Development of contingency plans.

• Training and professional development.

• Ethical and business standards.

• Risk mitigation, including insurance where this is effective.

Compliance with Bank’s standards is supported by a programme of regular reviews undertaken by both the Internal
Audit and Risk and Compliance department. The results of internal audit reviews are discussed with the management
of the business unit to which they relate, with summaries submitted to the Audit Committee and senior management
of the Bank.

(e) Capital management

The primary objective of the Bank’s capital management is to ensure that the Bank complies with capital requirements
and maintains healthy capital ratios in order to support its business and to maximise shareholders’ value.

The Bank maintains an actively managed capital base to cover risks inherent in the business. The adequacy of the
Bank’s capital is monitored using, among other measures, the rules and ratios established by the National Bank of
Rwanda. The National Bank of Rwanda sets and monitors capital requirements for the banking industry as a whole. Financial Report
In implementing current capital requirements, the National Bank of Rwanda requires the Bank to maintain a
prescribed ratio of total capital to total risk-weighted assets.

The Bank’s regulatory capital is analysed into two tiers:

• Core Capital (Tier 1) capital, which includes ordinary share capital, share premium, retained earnings, after
deductions for investments in financial institutions, and other regulatory adjustments relating to items that are
included in equity but are treated differently for capital adequacy purposes; and

• Supplementary Capital (Tier 2) includes the regulatory reserve.

2014
Annual Report
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 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

4. Financial Risk Management (continued)

(e) Capital management (Continued)

Various limits are applied to elements of the capital base.

The Bank’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence
and to sustain future development of the business. The impact of the level of capital on shareholders’ return is
also recognised and the Bank recognises the need to maintain a balance between the higher returns that might be
possible with greater gearing and the advantages and security afforded by a sound capital position.

The Bank’s regulatory capital position at 31 December was as follows:

2014 2013
FRw’000 FRw’000
Core Capital (Tier 1):
Ordinary share capital 6,713,706 6,684,500
Retained earnings and reserves 57,724,350 38,896,772
Share premium 18,572,040 18,236,171
Total 83,010,096 63,817,443

Supplementary Capital (Tier 2): 1,634,410 1,736,560

Total qualifying capital 84,644,506 65,554,003

Risk %
BNR Repo 20% 3,000,000 640,000
Due From Banks 20% 20,597,643 21,475,505
Loans & Advances (Net excl. Residential mortgage) 100% 198,605,312 153,151,988
Loans & Advances (Net Residential mortgage) 50% 17,417,099 22,936,626
Equity Investments 100% 221,425 218,455
Fixed Assets & other assets 100% 28,402,864 28,952,904
Financing commitments given to customers 100% 53,598,425 49,501,869
Financial Report

Total Risk weighted assets 321,842,768 276,877,347

Regulatory reserve 15% 15%

Capital ratios:
Total qualifying capital expressed as a
26.3% 23.7%
percentage of total risk-weighted assets
Total tier 1 capital expressed as a
25.8% 23.0%
percentage of total risk-weighted assets

74 2014
Annual Report
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

5. Use of Estimates and Judgments

In determining the carrying amounts of certain assets and liabilities, the Bank makes assumptions of the effects of
uncertain future events on those assets and liabilities at the reporting date. The Bank’s estimates and assumptions are
based on historical experience and expectation of future events and are reviewed periodically. This disclosure excludes
uncertainty over future events and judgments in respect of measuring financial instruments. Further information about
key assumptions concerning the future, and other key sources of estimation uncertainty are set out in the notes.

(a) Impairment losses on loans and advances

The Bank’s loan loss provisions are established to recognize incurred impairment losses either on loans or within a
portfolio of loans and receivable.

The Bank reviews its loans and advances at each reporting date to assess whether an allowance for impairment should
be recognised in profit or loss. In particular, judgment by the directors is required in the estimation of the amount
and timing of future cash flows when determining the level of allowance required. Such estimates are based on the
assumptions about a number of factors and actual results may differ, resulting in future changes in the allowance.

In addition to specific allowances against individual significant loans and advances, the Bank makes a collective
impairment allowance against exposures which, although not specifically identified as requiring a specific allowance,
have a greater risk of default than when originally granted. This takes into consideration such factors as any
deterioration in industry, technological obsolescence, as well as identified structural weaknesses or deterioration in
cash flows and past loss experience and defaults based on portfolio trends.

(b) Fair value of financial instruments

The fair values of financial assets and financial liabilities that are traded in active markets are based on quoted market
prices or dealer price quotations. For all other financial instruments, the Bank determines fair values using other
valuation techniques.

For financial instruments that trade infrequently and have little price transparency, fair value is less objective, and
requires varying degrees of judgement depending on liquidity, concentration, uncertainty of market factors, pricing
assumptions and other risks affecting the specific instrument.

• Valuation models

The Bank measures fair values using the following fair value hierarchy, which reflects the significance of the
inputs used in making the measurements.

 Level 1: inputs that are quoted market prices (unadjusted) in active markets for identical instruments for Financial Report
example quoted equity securities. These items are exchange traded positions.

 Level 2: inputs other than quoted prices included within Level 1 that are observable either directly (i.e.
as prices) or indirectly (i.e. derived from prices). This category includes instruments valued using: quoted
market prices in active markets for similar instruments; quoted prices for identical or similar instruments in
markets that are considered less than active; or other valuation techniques in which all significant inputs are
directly or indirectly observable from market data.

 Level 3: inputs that are unobservable. This category includes all instruments for which the valuation
technique includes inputs not based on observable data and the unobservable inputs have a significant
effect on the instrument’s valuation. This category includes instruments that are valued based on quoted
prices for similar instruments for which significant unobservable adjustments or assumptions are required
to reflect differences between the instruments.

2014
Annual Report
75
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

5. Use of Estimates and Judgments (continued)

Valuation techniques include net present value and discounted cash flow models, comparison with similar instruments
for which market observable prices exist. Assumptions and inputs used in valuation techniques include risk-free and
benchmark interest rates, credit spreads and other premia used in estimating discount rates, bond and equity prices,
foreign currency exchange rates, equity and equity index prices and expected price volatilities and correlations.

The objective of valuation techniques is to arrive at a fair value measurement that reflects the price that would be received
to sell the asset or paid to transfer the liability in an orderly transaction between market participants at the measurement
date.

The Bank uses widely recognised valuation models for determining the fair value of common and more simple financial
instruments, such as interest rate and currency swaps that use only observable market data and require little management
judgement and estimation. Observable prices or model inputs are usually available in the market for listed debt and equity
securities, exchange-traded derivatives and simple over-the-counter derivatives such as interest rate swaps. Availability
of observable market prices and model inputs reduces the need for management judgement and estimation and also
reduces the uncertainty associated with determining fair values. Availability of observable market prices and inputs varies
depending on the products and markets and is prone to changes based on specific events and general conditions in the
financial markets.

• Valuation framework
The Bank has an established control framework with respect to the measurement of fair values. This framework
includes a Product Control function, which is independent of front office management and reports to the Chief
Financial Officer, and which has overall responsibility for independently verifying the results of trading and investment
operations and all significant fair value measurements. Specific controls include:

 Verification of observable pricing;

 Re-performance of model valuations;

 Review and approval process for new models and changes to models involving both Product Control and the
Bank’s Market Risk;

 Quarterly calibration and back-testing of models against observed market transactions;

 Analysis and investigation of significant daily valuation movements; and

 Review of significant unobservable inputs, valuation adjustments and significant changes to the fair value
measurement of Level 3 instruments compared with the previous month, by a committee of senior Product
Control and the Bank’s Market Risk personnel.

 When third party information, such as broker quotes or pricing services, is used to measure fair value, Product
Financial Report

Control assesses and documents the evidence obtained from the third parties to support the conclusion that such
valuations meet the requirements of IFRS. This includes:

 Verifying that the broker or pricing service is approved by the Bank for use in pricing the relevant type of financial
instrument;

 Understanding how the fair value has been arrived at and the extent to which it represents actual market
transactions;

 When prices for similar instruments are used to measure fair value, how these prices have been adjusted to
reflect the characteristics of the instrument subject to measurement; and

 If a number of quotes for the same financial instrument have been obtained, then how fair value has been
determined using those quotes.

Significant valuation issues are reported to the Bank’s management committee.

76 2014
Annual Report
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

5. Use of Estimates and Judgments (continued)

The following table sets out the fair values of financial instruments not measured at fair value as at 31st December 2014
and analyses them by the level in the fair value hierarchy into which each fair value measurement is categorized.

Total carrying
Level 1 Level 2 Level 3 Total fair value
amount
FRw’000 FRw’000 FRw’000 FRw’000 FRw’000

Cash on hand - 12,020,669 - 12,020,669 12,020,669

Balances with the National Bank of
- 46,938,373 - 46,938,373 46,938,373
Rwanda
Due from banks - 102,988,217 - 102,988,217 102,988,217

Held to maturity investments - 58,596,907 - 58,596,907 58,596,907

Loans and advances to customers - - 233,439,509 233,439,509 233,439,509

Equity Investments - - 221,425 221,425 221,425

Other assets - - 7,665,385 7,665,385 7,665,385

- 220,544,166 241,326,319 461,870,485 461,870,485

Where available, the fair value of loans and advances is based on observable market transactions. Where observable
market transactions are not available, fair value is estimated using valuation models, such as discounted cash flow
techniques. Input into the valuation techniques includes expected lifetime credit losses, interest rates, prepayment rates
and primary origination or secondary market spreads. For collateral-dependent impaired loans, the fair value is measured
based on the value of the underlying collateral. Input into the models may include data from third party brokers based
on Over the Counter (OTC) trading activity, and information obtained from other market participants, which includes
observed primary and secondary transactions.

The fair value of deposits from banks and customers is estimated using discounted cash flow techniques, applying the
rates that are offered for deposits of similar maturities and terms. The fair value of deposits payable on demand is the
amount payable at the reporting date. Management estimates that the amortised cost equates to the fair value.

(c) Deferred tax assets

Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will
be available against which the losses can be utilised. Significant directors’ judgment is required to determine the Financial Report
amount of deferred tax asset that can be recognised, based upon the likely timing and level of future taxable profits
together with future tax planning strategies.

(d) Property and equipment

Property and equipment is depreciated over its useful life taking into account residual values, where appropriate. The
actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors.
In reassessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes
are taken into account. Residual value assessments consider issues such as future market conditions, the remaining
life of the asset and projected disposal values. The rates used are set out on accounting policy 3(g) (ii).

2014
Annual Report
77
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

6. Segment Reporting

The Bank’s main business comprises of the following reportable segments:

Retail banking – incorporating banking services such as customer current accounts, savings and fixed deposits to
individuals. Retail lending are mainly consumer loans and mortgages based lending. Mortgages – incorporating the
provision of mortgage finance.

Corporate banking – incorporating banking services such as current accounts, fixed deposits, overdrafts, loans and other
credit facilities both in local and foreign currencies.

Central Treasury - Funding and centralised risk management activities through borrowings, issues of debt securities and
investing in liquid assets such as short-term placements and corporate and government debt securities

The table below shows analysis of the breakdown for segmental assets, liabilities, income and expenses.

Statement of Comprehensive Income

Corporate Retail Central Total
Banking Banking Treasury
FRw’000 FRw’000 FRw’000 FRw’000
For the year ended 31 December 2014
Interest income 33,882,960 12,897,735 5,129,132 51,909,827
Interest expense (2,553,495) (560,495) (9,560,610) (12,654,600)
Net interest income 31,329,465 12,337,240 (4,411,478) 39,255,227

Net Non-interest Income 7,521,050 2,362,892 9,041,375 18,925,317

Net Loan loss impairment (4,659,674) (2,883,284) - (7,542,957)
Total operating expenses (18,197,307) (6,926,904) (2,754,670) (27,878,882)

Profit before taxation 15,993,534 4,889,943 1,875,227 22,758,705

Taxation (3,121,503) (954,384) (365,993) (4,441,880)

Profit after taxation 12,872,031 3,935,560 1,509,234 18,316,825

For the year ended 31 December 2013

Interest income 28,849,909 12,734,910 3,625,933 45,210,752
Financial Report

Interest expense (2,101,608) (226,775) (7,687,525) (10,015,908)

Net interest income 26,748,301 12,508,135 (4,061,592) 35,194,844

Net Non-interest Income 6,513,988 2,875,401 9,169,008 18,558,396

Net Loan loss impairment (3,532,034) (5,461,965) - (8,993,999)
Total operating expenses (16,593,052) (7,342,495) (2,085,459) (26,003,005)

Profit/(Loss) before taxation 13,137,203 2,597,076 3,021,957 18,756,236

Taxation (2,749,841) (543,613) (632,547) (3,926,001)

Profit/(Loss) after taxation 10,387,362 2,053,463 2,389,410 14,830,235

78 2014
Annual Report
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

6. Segment Reporting (continued)

Statement of Financial Position

Corporate Retail Central Total
Banking Banking Treasury

FRw’000 FRw’000 FRw’000 FRw’000

As at 31 December 2014

Gross Loans & advances to customers 187,721,156 58,976,460 - 246,697,616

Cash in hand - - 12,020,669 12,020,669
Balances with the Central Bank - - 46,938,373 46,938,373
Due from banks - - 102,988,217 102,988,217
Held to maturity investments - - 58,596,907 58,596,907

Total Deposits 185,869,809 73,352,999 80,592,813 339,815,621

Number of customers 24,165 288,022 28 312,215

Current Accounts 32,551 266,239 177 298,967

As at 31 December 2013

Gross Loans & advances to customers 146,383,957 65,476,760 - 211,861,167

Cash in hand - - 11,110,210 11,110,210
Balances with the Central Bank - - 24,855,050 24,855,050
Due from banks - - 107,377,523 107,377,523
Held to maturity investments - - 50,820,690 50,820,690

Total Deposits 168,354,345 68,185,263 61,294,879 297,834,487

Number of customers 20,485 239,510 19 260,014

Current Accounts 27,712 231,409 142 259,263

The other assets and liabilities have not been allocated to the reportable segments as they are deemed to contribute
to the overall performance of the Bank rather than a particular segment. The Bank’s geographical coverage is within all
Financial Report
provinces of Rwanda.

2014
Annual Report
79
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

7. Interest Income

2014 2013
FRw’000 FRw’000
Interest on overdrawn accounts 10,016,733 9,882,349
Interest on treasury loans 4,765,373 4,235,125
Interest on equipment loans 4,871,114 3,838,218
Interest on consumer loans 7,049,062 6,465,347
Interest on mortgage loans 15,545,839 12,259,456
Other interest on loans to clients 4,687,629 4,904,323
Interest on deposits with banks 980,580 262,585
Interest received from reverse purchase agreements 771,890 1,423,824
Interest on assets held to maturity 3,221,607 1,939,525
51,909,827 45,210,752

Included within various line items under interest income for the year ended 31 December 2014 is a total of FRw 3.4 billion
(2013: FRw 3.6 billion) relating to impaired loans and advances.

8. Interest Expense

2014 2013
FRw’000 FRw’000
Interest on borrowings and transactions with other banks 2,475,389 1,621,764
Interest on current accounts and saving accounts 981,936 1,089,855
Interest on fixed deposits 9,197,275 7,304,289
12,654,600 10,015,908

9. Net Fees and Commission Income

2014 2013
FRw’000 FRw’000
Fees and commission income
Commissions on operations of accounts 2,358,216 2,639,702
Commissions on payment facilities 2,718,969 3,198,971
Commissions on loan services 2,812,701 2,168,032
Commissions received from financing commitments 498,853 595,613
Commissions received from guarantees commitments 989,272 1,078,380
Income from transactions with other banks 321,348 309,383
Financial Report

Other fees from services 1,387,494 1,206,525

11,086,853 11,196,606
Fees and commission expense
Commissions on credit services (86,304) (320,524)
Commissions on payment facilities (101,395) (74,829)
(187,699) (395,353)
Net Fees and Commission 10,899,154 10,801,253

10. Foreign Exchange related income

2014 2013
FRw’000 FRw’000
Net gains on foreign currency transactions 7,724,325 7,476,135

80 2014
Annual Report
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

11. Other Operating Income

2014 2013
FRw’000 FRw’000
Rental income 154,064 256,149
Dividend received from investment 54,254 -
Gain on asset disposal 84,496 24,753
Other income from banking activities 9,024 106
301,838 281,008

12. Net Impairment Losses on Financial Assets

2014 2013
FRw’000 FRw’000
Additional specific provisions (Note 19(b)) 10,499,492 9,097,104
Decrease of Collective provisions (Note 19(c)) (1,179,556) 1,491,909
Recoveries of previously written off loans (1,776,979) (1,595,014)
7,542,957 8,993,999

13. Other Operating Expenses

(a) Personnel expenses

2014 2013
FRw’000 FRw’000
Salaries and wages 13,139,596 10,768,740
Medical expenses 401,361 267,395
Pension scheme contributions 612,140 501,736
Other benefits 274,640 169,367
14,427,737 11,707,238

(b) Depreciation and amortisation

2014 2013
FRw’000 FRw’000
Depreciation of property and equipment (Note 21) 3,469,943 4,303,044
Amortisation of intangible assets (Note 22) 193,591 336,593
3,663,534 4,639,637

(c) Administration and general expenses

2014 2013
FRw’000 FRw’000 Financial Report
Directors’ Remuneration 357,209 400,945
Audit Fees 38,263 50,485
Rent, repairs and Maintenance 1,126,239 989,909
Utilities 424,148 413,575
Postage, Photocopying and printing 1,019,184 976,003
Travel and Accommodation Expenses 387,965 365,550
Security and cash in transit costs 1,318,946 1,075,778
Insurance 104,423 94,716
Marketing and Publicity 583,618 468,987
Legal and Consultancy Fees 405,289 362,978
Unclaimed VAT on expenditure 727,212 721,802
Telephone and Internet costs 774,395 737,361
Credit and Visa card Costs 1,256,392 1,179,237
Other general expenses 1,264,328 1,818,804
9,787,611 9,656,130

2014
Annual Report
81
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

14. Income Tax

The components of income tax expense for the year ended 31 December 2014 and 2013 are:

a) Income tax expense

2014 2013
FRw’000 FRw’000
Current tax 4,528,989 4,370,349
Deferred tax credit (87,109) (444,348)
Net tax charge 4,441,880 3,926,001

The income tax charge on the Bank’s profit differs from the theoretical amount that would arise using the basic tax
rates as follows:
Effective 2014 Effective 2013
rate FRw’000  rate FRw’000
 Income Tax charge  
Current tax 4,528,989 4,370,349
Deferred tax charge/ (credit) (87,109) (444,348)
Net tax charge 19.5% 4,441,880 20.9% 3,926,001
   
Accounting profit before tax 22,758,705 18,756,236
   
Tax calculated at tax rate of 20% 20.0% 4,551,741 20.0% 3,751,247
Tax effects on non-taxable/non-deductible items 1.4% 317,546 5.1% 948,053
Tax discount - staff & other adj. (1.5%) (340,298) (1.8%) (328,951)
  19.9% 4,528,989 23.3% 4,370,349

(b) Tax Payable

2014 2013
FRw’000 FRw’000
At 1 January 1,828,573 320,745
Tax paid during the year (5,665,044) (2,862,521)
Tax charge for the year 4,528,989 4,370,349
At 31 December 692,518 1,828,573

15. Earnings per Share

2014 2013
Financial Report

FRw’000 FRw’000
Profit for the year attributable to equity shareholders – FRw’000 18,316,825 14,830,235
Weighted average number of shares 669,910,300 667,893,500
Effect of dilution:
Share option ( Employee share Ownership Plan) 2,992,026 2,319,009
Weighted average number of ordinary shares adjusted for the effect of dilution 672,902,326 670,212,509
Earnings per share:
Basic earnings per share - FRw 27.34 22.20
Diluted earnings per share - FRw 27.22 22.13
Dividend per share – proposed FRw 16.33 11.06

Basic earnings per share is calculated on the profit attributable to ordinary shareholders of FRw 18,316 million (2013:
FRw 14,830 million) and on the weighted average number of ordinary shares outstanding during the year of 671,370,600
(2013: 668,450,000 shares).

82 2014
Annual Report
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

15. Earnings per Share (Continued)

The Bank has potential dilutive shares equal to 7,200,000 offer shares under the Employee Share Ownership Plan (“ESOP”)
that may be subscribed for by the directors and eligible employees from 1st September 2012 and no later than 31st August
2017. The warrant entitle the holder one newly issued share of the bank for the cash consideration equal to offer price
(FRw 125) and payable in full at the time of purchase.

At the period end date 4,033,600 shares had been exercised under this ESOP scheme.

16. Analysis of Cash and Cash Equivalents

Cash and cash equivalents included in the statement of cash flow comprise the following statement of financial position
accounts:

(a) Cash in hand

2014 2013
FRw’000 FRw’000
Cash in foreign currency 5,191,160 5,088,980
Cash in local currency 6,829,509 6,021,230
12,020,669 11,110,210

(b) Balances with National Bank of Rwanda

2014 2013
FRw’000 FRw’000
Restricted balances (Cash Reserve Ratio) 16,990,781 14,664,989
Unrestricted balances 29,947,592 10,190,061
46,938,373 24,855,050

The Cash Reserve Ratio is non-interest earning and is based on the value of deposits as adjusted per the National
Bank of Rwanda requirements. At 31 December 2014, the Cash Reserve Ratio requirement was 5% (2013 - 5%) of all
deposits amounting to FRw 339.8 billion (2013: FRw 297.8 billion). Mandatory cash reserve ratio is not available for
use in the Bank’s day-to-day operations.

The unrestricted balances include BNR reverse purchase agreement (REPO) amounting to FRw 29.9billion (2013:
10.0billion).
Financial Report
(c) Analysis of Cash and Cash equivalent

Cash and cash equivalents included in the statement of cash flows comprise the following statement of financial
position accounts:

2014 2013
FRw’000 FRw’000
Cash in hand 12,020,669 11,110,210
Balances with the National Bank of Rwanda 46,938,373 24,855,050
Due from banks 102,988,217 107,377,523
Due to Banks (15,214,461) (17,345,024)
146,732,798 125,997,759

2014
Annual Report
83
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

17. Due from Banks

2014 2013
FRw’000 FRw’000
Placements with local banks 3,527 2,520,684
Placements with foreign banks 63,221,501 17,182,044
Current accounts with foreign banks 39,763,189 87,674,795
102,988,217 107,377,523

The credit ratings of the financial institutions where the bank’s placements are held are shown below. Where individual
bank ratings were not available, the parent bank’s rating or country ratings have been adopted, in order of preference.

2014 2013
FRw’000 FRw’000
A 195,333 -
A+ 77,698,783 80,111,147
AA - 45,648
B 3,090,880 2,771,823
B+ 22,003,221 24,448,905
102,988,217 107,377,523

The weighted average effective interest rate on placements and balances with other banks at 31 December 2014 was
0.4% (2013: 0.5%)

18. Investments

a) Held to Maturity Investments

2014 2013
FRw’000 FRw’000
Treasury bills 58,596,907 50,820,690

Maturing between 3-12 months 58,596,907 42,129,350

Maturing between 1-5 years - 8,691,340
58,596,907 50,820,690

Treasury bills are debt securities issued by the Government of the Republic of Rwanda. The bills are categorised as
Financial Report

amounts held to maturity and are carried at amortised cost.

The change in the carrying amount of government and other securities held for trading is as shown below:
2014 2013
Treasury Treasury Treasury Treasury
Total Total
Bills Bonds Bills Bonds
FRw’000 FRw’000 FRw’000 FRw’000 FRw’000 FRw’000
1 January 50,820,690 - 50,820,690 12,084,228 1,035,096 13,119,324
Additions 286,171,894 1,660,208 287,832,102 256,932,372 - 256,932,372
Maturities (280,054,658) (1,227) (280,055,885) (218,195,910) (1,035,096) (219,231,006)
31 December 56,937,926 1,658,981 58,596,907 50,820,690 - 50,820,690

The weighted average effective interest rate on government securities held to maturity at 31 December 2014 was
5.9% (2013: 6.1%).

84 2014
Annual Report
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

18. Investments (Continued)

b) Equity Investments

2014 2013
FRw’000 FRw’000
Development Bank of Rwanda (BRD) 96,975 96,975
Magerwa 5,000 5,000
Investments in SWIFT 2,970 -
R-Switch (SIMTEL) 116,480 116,480
221,425 218,455

The equity investment in unquoted entities is recorded at costs less impairment since there is no active market
for these investments. In the absence of the most reliable basis of determining fair value, cost less impairment is
deemed the most reasonable basis of measurement.

19. Loans and Advances

(a) Net loans and advances

2014 2013
FRw’000 FRw’000
Corporate 134,412,278 88,184,482
Small and Medium Enterprises 46,960,333 53,770,343
Non-Profit Entities 6,348,545 4,429,132
Retail Banking 59,715,792 65,476,760
Total Gross Loans 247,436,948 211,860,717
Allowance for Impairment - Specific assessment (11,569,935) (9,967,748)
Allowance for Impairment - Collective assessment (1,688,172) (2,867,728)
Discount on staff loans (739,332) -
Net Carrying Amount 233,439,509 199,025,241

(b) Specific provisions for impairment

2014 2013
FRw’000 FRw’000
At 1 January 9,967,748 5,479,956 Financial Report
Provisions made during the year 10,499,493 11,152,467
Loans written off during the year (8,897,306) (6,664,675)
As at 31 December 11,569,935 9,967,748

(c) Collective provisions for impairment

2014 2013
FRw’000 FRw’000
At 1 January 2,867,728 1,375,819
Provisions/ (Reversals) made during the year (1,179,556) 1,491,909
As at 31 December 1,688,172 2,867,728

2014
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85
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

19. Loans and Advances (Continued)

(d) Maturity analysis of gross loans and advances to customers

2014 2013
FRw’000 FRw’000
Maturing within 1 month 31,880,289 45,418,047
Maturing after 1 month, but before 3 months 19,819,438 9,026,682
Maturing after 3 months, but within 1 year 20,530,590 33,655,483
Maturing after 1 year, but within 5 years 78,829,439 89,562,102
Maturing after 5 years 95,637,860 34,198,403
246,697,616 211,860,717

(e) Sectoral analysis of Gross Loans and advances to customers

2014 2013
FRw’000 FRw’000
Private sector and individuals 246,643,295 210,704,898
Government and parastatals 54,321 1,155,819
246,697,616 211,860,717

The weighted average effective interest rate on gross loans and advances as at 31 December 2014 was 20.5% (31
December 2013–20.5%).As at 31 December, the ageing analysis of past due but not impaired loans and advances is
as follows:
2014 2013
FRw’000 FRw’000
Less than 60 days 18,568,312 54,194,023
Between 61 – 90 days 16,962,457 8,512,825
35,530,769 62,706,848

20. Other Assets

2014 2013
FRw’000 FRw’000
Prepayments and other receivables 2,311,757 1,208,932
Clearing accounts 5,353,628 6,486,073
7,665,385 7,695,005
Financial Report

Clearing accounts are temporally and transitory accounts pending compensation house clearing including cheques
in transit to other banks.

Other receivables are current and non-interest bearing and are generally between 30 to 90 days terms.

86 2014
Annual Report
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

21. Property and Equipment

Land and Computer and Motor Furniture and Work in

Buildings IT Equipment vehicles Fittings Progress Total
FRw’000 FRw’000 FRw’000 FRw’000 FRw’000 FRw’000
2014
Cost
At 1 January 2014 21,744,982 4,603,143 707,517 9,204,953 - 36,260,595
Additions 1,062,918 440,267 102,889 1,443,295 - 3,049,369
Disposal (95,000) - - - - (95,000)
At 31 December 2014 22,712,900 5,043,410 810,406 10,648,248 - 39,214,964

Depreciation
At 1 January 2014 4,712,467 3,980,947 598,164 5,950,123 - 15,241,701
Charge for the year 1,092,548 509,029 87,422 1,780,944 - 3,469,943
Disposal (103) - - - (103)
At 31 December 2014 5,804,912 4,489,976 685,586 7,731,067 - 18,711,541

Net Book Value 16,907,988 553,454 124,820 2,917,181 - 20,503,423

2013
Cost
At 1 January 2013 20,409,607 3,742,859 615,712 7,604,759 218,437 32,591,374
Additions 1,540,375 860,284 91,805 1,381,757 - 3,874,221
Reclassification - - - 218,437 (218,437) -
Disposal (205,000) - - - - (205,000)
At 31 December 2013 21,744,982 4,603,143 707,517 9,204,953 - 36,260,595

Depreciation
At 1 January 2013 3,644,221 2,883,784 419,899 4,015,506 - 10,963,410
Charge for the year 1,073,944 1,097,163 178,265 1,953,672 - 4,303,044
Reclassification 19,055 - - (19,055) - -
Disposal (24,753) - - - (24,753)
At 31 December 2013 4,712,467 3,980,947 598,164 5,950,123 - 15,241,701 Financial Report

Net Book Value 17,032,515 622,196 109,353 3,254,830 - 21,018,894

2014
Annual Report
87
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

22. Intangible Assets

2014 2013
FRw’000 FRw’000
Cost
At 1 January 1,232,318 994,840
Additions 188,642 237,478
At 31 December 1,420,960 1,232,318

Amortisation
At 1 January 993,313 656,720
Amortisation 193,591 336,593
At 31 December 1,186,904 993,313

Net book value 234,056 239,005

The intangible asset relates to the Bank’s core banking platform, Delta and computer software in use.

23. Due to Banks

2014 2013
FRw’000 FRw’000
Current accounts 6,313,823 5,708,024
Term Treasury borrowings 8,900,638 11,637,000
15,214,461 17,345,024
Maturing as follows:
Payable within 1 month 10,472,516 5,532,246
Payable after 1 month 4,741,945 11,812,778
15,214,461 17,345,024

The weighted average effective interest rate on deposits and balances from other banks as at 31 December 2014 was
9.1% (2013: 10.6%)

24. Deposits and balances from customers

2014 2013
FRw’000 FRw’000
Financial Report

Current accounts 227,750,108 204,953,080

Fixed deposit accounts 84,246,898 64,779,760
Savings accounts 4,086,890 2,249,528
Collateral and other deposits 3,992,523 3,972,395
Interest Payable 4,524,741 4,534,700
324,601,160 280,489,463

The weighted average effective interest rate on interest bearing customer deposits as at 31 December 2014 was 1.6%
(2013: 3.5%)

88 2014
Annual Report
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

25. Deferred Tax

The following table shows deferred tax recognized in the statement of financial position and changes recorded in the
income tax expense:

Deferred tax Income Statement of Deferred tax

 
liability 2014 statement financial position liability 2013
FRw’000 FRw’000 FRw’000 FRw’000
Revaluation of assets-Property 1,634,409 -  (102,150) 1,736,559
Capital Allowance 761,781 (18,097) - 779,878
Other temporally differences (964,799) (69,012) - (895,787)
  1,431,391 (87,109) (102,150) 1,620,650

26. Dividends Payable

2014 2013
FRw’000 FRw’000
At 1 January 7,416,579 5,894,345
Dividends paid during the year (7,411,110) (5,892,885)
Dividends accrued - 7,415,119
At 31 December 5,469 7,416,579

During the Board of Directors Meeting held on 5th December 2014, the Directors proposed a dividend pay-out of 60% of
the Bank’s audited IFRS-based net income in respect of the year 2014.

27. Other Liabilities

2014 2013
FRw’000 FRw’000
Clearing accounts 4,622,257 3,001,043
Other payables 315,219 157,483
Accrued General expenses 6,247,788 5,547,055
11,185,264 8,705,581

28. Long Term Finance

Additional
2014 Repayment Revaluation Drawdown Interest 2013
FRw’000 FRw’000 FRw’000 FRw’000 FRw’000 FRw’000
EIB Loan (9.5% - 11.4%) 1,758,184 427,952 (336,677) - 237,537 2,522,813
AFD Loan (Libor +3.74% pa) 11,148,524 1,708,093 290,067 - 688,644 12,566,550
AFDB Loan (Libor +4.15% pa) 7,203,662 1,025,006 90,994 4,116,378 490,259 4,021,296
EADB – (Libor +6.65 pa) 6,860,630 - 39,617 5,145,473 160,838 1,675,540
Financial Report
PTA Loan (8% pa) 6,098,338 762,289 158,467 - 562,424 6,702,160
OFID Loan (Libor +4.0% pa) 6,860,629 - 158,469 - 276,669 6,702,160
Total 39,929,967 3,923,340 400,937 9,261,851 2,416,371 34,190,519

The Bank has a 7 year arrangement with European Investment Bank (EIB) for a credit of EUR 5,000,000 to be on-lent to
final beneficiaries for the financing up to 50% of the total cost of eligible projects in local currency. The drawdown as at
31 December 2014 was EUR 3.8 million (2013: EUR 3.8m), and no further drawdown is expected.

In 2011, the Bank signed a two ten year credit lines with Agence Francaise de Development (AFD) and the African
Development Bank (AFDB) for USD 20 million and 12 million respectively. As 31 December 2014, both the AFD & AFDB
credit lines were fully drawn down.

In 2013, the Bank signed three 5 year term credit lines of USD 10m each with the East African Development Bank (EADB),
Eastern and Southern African Trade and Development bank (PTA) and OPEC Fund for International Development (OFID)
respectively. As at year end 2014, the Bank had fully drawn down on the EADB, PTA and OFID credit lines.

2014
Annual Report
89
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

29. Capital & Reserves

(a) Share Capital

2014 2013
Shares FRw’000 Shares FRw’000
Authorised Share capital of FRw 10 each 702,460,000 7,024,600 702,460,000 7,024,600
Issued and fully paid up
At 1 January 668,450,000 6,684,500 667,337,000 6,673,370
New issued 2,920,600 29,206 1,113,000 11,130
At 31 December 671,370,600 6,713,706 668,450,000 6,684,500

(b) Share Premium

These reserves arose when the shares of the Bank were issued at a price higher than the nominal (par) value. These
will be applied towards capital in future

2014 2013
FRw’000 FRw’000
At 1 January 18,236,171 18,108,176
New issued at premium @ FRw 115 each 335,869 127,995
At 31 December 18,572,040 18,236,171

(c) Revaluation Reserve

2014 2013
FRw’000 FRw’000
Buildings 6,946,241 7,354,844
Transfer of excess depreciation (510,753) (510,753)
Deferred tax on transfer 102,150 102,150
6,537,638 6,946,241

Revaluation reserves arose from the periodic revaluation of freehold land and buildings. The carrying amount of
these assets is adjusted to the revaluations. Revaluation surpluses are not distributable.

(d) Other Reserves

2014 2013
Financial Report

FRw’000 FRw’000
Legal reserves 5,183,765 4,442,253
Special reserves 5,268,999 4,527,487
Other reserves 26,911,750 20,979,655
37,364,514 29,949,395

The Bank transfers 20% of its profit after tax to reserves (10% legal reserves and 10% special reserves). These reserves
are not mandatory and neither are they distributable. Other reserves represent the amount transferred from retained
earnings to reserves that may be decided by the General Assembly.

90 2014
Annual Report
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

29. Capital & Reserves (Continued)

(e) Retained Earnings

2014 2013
FRw’000 FRw’000
Opening balance 8,947,377 6,893,076
Appropriation of prior year profit ( 7,415,118) ( 5,890,668)
Profit for the current year 18,316,825 14,830,235
Dividends accrued - (7,415,118)
Excess loan loss provision - 19,100
Deferred tax 510,752 510,752
20,359,836 8,947,377

30. Classification of Financial Assets and Financial Liabilities

The following table provides a reconciliation of the line items in the statement of financial position and categories of
financial instruments:

Loans and Other Held to Available for Total carrying

31 December 2014 receivables amortized cost Maturity Sale amount
  FRw‘000 FRw‘000 FRw‘000 FRw‘000 FRw‘000
Assets
Cash and balances with central bank - 58,959,042 - - 58,959,042
Balances due from other Banks - 102,988,217 - - 102,988,217
Government securities - - 58,596,907 - 58,596,907
Loans and advances to customers 233,439,509 - - - 233,439,509
Equity Investments - - - 221,425 221,425
Other assets (uncleared effects) - 7,665,385 - - 7,665,385

Total Financial Assets 233,439,509 169,612,644 58,596,907 221,425 461,870,485

Liabilities
Balances due to other Banks - 15,214,461 - - 15,214,461
Customer deposits - 324,601,160 - - 324,601,160
Other liabilities - 11,185,264 - - 11,185,264
Long Term Borrowing - 39,929,967 - - 39,929,967

Total Financial Liabilities - 390,930,852 - - 390,930,852

31 December 2013
 
Assets Financial Report
Cash and balances with central bank - 35,965,260 - - 35,965,260
Balances due from other Banks - 107,377,523 - - 107,377,523
Government securities - - 50,820,690 - 50,820,690
Loans and advances to customers 199,025,241 - - - 199,025,241
Equity Investments - - - 218,455 218,455
Other assets (uncleared effects) - 7,695,003 - - 7,695,003

Total Financial Assets 199,025,241 151,037,786 50,820,690 218,455 401,102,172

Liabilities -
Balances due to other Banks - 17,345,024 - - 17,345,024
Customer deposits - 280,489,463 - - 280,489,463
Other liabilities - 8,705,581 - - 8,705,581
Long Term Borrowing - 34,190,519 - - 34,190,519

Total Financial Liabilities - 340,730,587 - - 340,730,587

2014
Annual Report
91
BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

31. Maturity Analysis of Assets and Liabilities

The table below shows an analysis of assets analysed according to when they are expected to be recovered or settled

Less than Over

At 31 December 2014 12 months 12 months Total

FRw’000 FRw’000 FRw’000

Assets
Cash in hand 12,020,669 - 12,020,669
Balances with the National Bank of Rwanda 46,938,373 - 46,938,373
Balances held with other Financial Institutions 102,988,217 - 102,988,217
Held to maturity investments 58,596,907 - 58,596,907
Loans and advances to customers 72,230,317 161,209,192 233,439,509
Other assets 7,652,853 12,532 7,665,385
Equity investments - 221,425 221,425
Intangible assets - 234,056 234,056
Property and equipment - 20,503,423 20,503,423
Total Assets 300,427,336 182,180,628 482,607,964

The table below shows an analysis of liabilities analysed according to when they are expected to be recovered or settled

Less than Over

At 31 December 2014 12 months 12 months Total
FRw’000 FRw’000 FRw’000
Liabilities
Balances from other Financial Institutions 15,050,115 164,346 15,214,461
Customer deposits 324,585,588 15,572 324,601,160
Tax Liability 692,518 - 692,518
Deferred tax liability 102,150 1,329,241 1,413,391
Dividends payables 5,469 - 5,469
Other liabilities 11,185,264 - 11,185,264
Long-term Finance 3,350,838 36,579,129 39,929,967
Shareholders’ funds 10,990,094 78,557,640 89,547,734
Total Liabilities and Equity 365,962,036 116,645,928 482,607,964

92 2014
Annual Report
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

31. Maturity Analysis of Assets and Liabilities (Continued)

At 31 December 2013 Less than Over

12 months 12 months Total
FRw’000 FRw’000 FRw’000
Assets
Cash in hand 11,110,210 - 11,110,210
Balances with the National Bank of Rwanda 24,855,050 - 24,855,050
Balances and placements with other Financial Institutions 107,377,523 - 107,377,523
Held to maturity investments 50,820,690 - 50,820,690
Loans and advances to customers 88,100,212 110,925,029 199,025,241
Other assets 7,695,005 - 7,695,005
Equity investments - 218,455 218,455
Intangible assets - 239,005 239,005
Property and equipment - 21,018,894 21,018,894
Total Assets 289,958,690 132,401,383 422,360,073

Liabilities
Balances from other Financial Institutions 17,149,246 195,778 17,345,024
Customer deposits 280,324,953 164,510 280,489,463
Tax Liability 1,828,573 - 1,828,573
Deferred tax liability 102,150 1,518,500 1,620,650
Dividends payables 7,416,579 - 7,416,579
Other liabilities 8,705,580 - 8,705,580
Long-term Finance 3,350,839 30,839,680 34,190,519
Shareholders’ funds - 70,763,685 70,763,685
Total Liabilities and Equity 318,877,920 103,482,153 422,360,073

32. Contingent Liabilities, Commitments and Leasing Arrangements

Legal Claims
Litigation is a common occurrence in the Banking industry due to the nature of the business undertaken. The Bank has
formal controls and policies for managing legal claims. Once professional advice has been obtained and the amount of
loss reasonably estimated, the Bank makes adjustments to account for any adverse effects which the claims may have on
its financial standing.

At year end, the Bank is party to various legal proceedings from default customers for a total amount of FRw 31.0 Million
(2013: FRw 142.8 Million). Having regarded the legal advice received, the management is of the opinion that these legal
proceedings will not give rise to liabilities, and accordingly no provision for any claims has been made in these financial
statements.

2014
Annual Report
93
BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

33. Related Parties Disclosures

2014 2013
FRw’000 FRw’000
Compensation of key management personnel of the Bank
Short term employee benefits 797,963 633,176
Post-employment pension (defined contribution) 56,661 34,067
Terminal benefits 18,730 -
873,354 667,243
Directors emolument 357,209 400,945

The non-executive directors do not receive pension entitlements from the Bank

Transaction with key management personnel of the Bank

The Bank enters into transactions, arrangements and agreements involving directors, senior management and their
related party concerns in the ordinary course of business at commercial interest and commission rates.

The following table provides the total amount of transactions, which have been entered into with related parties for the
relevant financial year

2014 2013
FRw’000 FRw’000
Maximum Maximum
Balance as at Income/ Balance as at Income/
balance balance
31 December Expense 31 December Expense
during during
Residential mortgages 139,854 131,958 12,981 195,673 190,664 10,343
Credit cards and other loans 90,235 90,325 10,560 65,039 36,130 1,509
Deposits 138,895 104,561 16 191,566 56,257 23

Transaction with other related parties

In addition to transactions with key management, the Bank enters into transactions with entities with significant influence
over the Bank. The following table shows the outstanding deposits balance and the corresponding interest during the
year

Entities with significant influence over the Bank:

Maximum balances
Interest Income Interest Expense Balance as at year end
during the year
FRw ‘000 FRw ‘000 FRw ‘000 FRw ‘000
2014 38 5,301,459 51,072,731 57,505,625
2013 600 3,896,937 40,002,126 42,581,037

The above mentioned outstanding balances arose from the ordinary course of business. The interests charged to and by
related parties are at normal commercial rates. Outstanding balances at the year-end are unsecured. There have been no
guarantees provided or received for any related party receivables or payables. For the year ended 31 December 2014, the
Bank has not made any provision for doubtful debts relating to amounts owed by related parties (2013: Nil).

The Bank offers loans to its employees at 7.5% and 16.0% (2013: 7.5% and 16.0%). The Bank closely monitors the loans
to ensure they are performing. As at the end of year there were no non performing staff loans.

94 2014
Annual Report
 BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

34. Subsidiaries

Representative Office - Nairobi

The Bank opened a representative office in Nairobi, Kenya on 19th February 2013 that is wholly owned subsidiary of
Bank of Kigali Limited. The representative office acts as a liaison between the bank and its clientele in Kenya seeking
to strengthen the Bank’s relationship with existing clients operating in Nairobi as well establish a relationship with
prospective clients. The office however does not directly offer deposit taking or lending facilities.

BK Securities Limited
The Bank opened a wholly owned subsidiary, BK Securities Ltd on the 28th January 2013. Its principal place of office is in
the Bank of Kigali office premises. BK Securities offers the Bank’s customers seamless service consistent with the Bank’s
customer service. The investing public has an opportunity to buy and sell shares or bonds under the umbrella BK brands.
The firm offers brokerage services for all equities listed on the Rwanda Stock Exchange including Bank of Kigali shares. The
value of the investment at cost less impairment is FRw 100,000,000.

35. Comparatives

Where necessary; comparative figures have been adjusted to conform to changes in presentation in the current year.

36. Post Period End Events

Except as disclosed in the notes to the financial statements, there are no events after the reporting date that require
disclosure in or adjustments to the financial statements as at the date of this report,

2014
Annual Report
95
 Notice of Annual General Meeting

Notice is hereby given that the Annual General Meeting (AGM) of Bank of Kigali Limited will be held on Thursday 28th May 2015, at
The Serena Hotel, Kigali Rwanda at 2.30 p.m. to transact the following Business:

1. To determine whether quorum is present;

2. The Company Secretary to read the notice convening the meeting;

3. To receive, consider and if thought fit, adopt the Annual Report and Audited Financial Statements for the year ended 31st
December 2014 together with the Chairman’s, Directors’ and Auditor’s reports thereon;

4. Approve a dividend of FRw 10,993,914,600 (2013- 50% pay out- FRw 7,415,117,500) which represents 60% pay-out on
the Banks audited IFRS-based net income in respect of the year 2014;

5. Election of Directors;

6. To approve the remuneration of the directors;

7. Appointment of Auditor and fixing of the Auditor’s remuneration;

8. Any other business of which notice will have been duly received.

...............................................

By order of the Board

Dr. Byamukama Shivon
Company Secretary
Plot 6112, Avenue de la Paix
Kigali, Rwanda

Proxy

A member entitled to attend and vote at the meeting and who is unable to attend is entitled to appoint a proxy to attend and vote
on his or her behalf. A proxy need not be a member of the Company.

To be valid, a proxy form attached at the end of this Annual Report must be duly completed by the member and lodged with the
Company Secretary at the Bank of Kigali Head Office, Plot 6112, Avenue de la Paix, Kigali, Rwanda not later than 10.00 a.m. on the
26th May 2015, failing which it will be invalid. In the case of a corporate body the proxy must be under its common seal.

Closure of Register

Dividend for the year ended 31 December 2014 of FRw 10,993,914,600 will be paid to shareholders on the register of members
of the Company at the close of business on Friday 12th June 2015. The dividend will be paid on or about Monday 29th June 2015.

96 2014
Annual Report
Bank of Kigali Proxy Form

I/We ___________________________________________________________________ CSD A/C No__________________

of (address) ____________________________________________________________ being a member(s) of Bank of Kigali Limited,

hereby appoint: ___________________________________________________________________________________________

of (address) ____________________________________ or, failing him, the duly appointed Chairman of the meeting to be my/our
proxy, to vote on my/ our behalf at the Annual General Meeting of the Company to be held on Thursday 28th May 2015 at 2.30 p.m,
or at any adjournment thereof.

As witness to my/our hands this ___________________________ day of ________________________ 2015

Signature(s) ________________________________________

Notes:

1. In case of corporate shareholders and individual shareholders who would like to be represented at the AGM, please tear
this page carefully and complete as appropriate.

2. This proxy form is to be delivered to the Company Secretary at Bank of Kigali Head Office Plot 6112, Avenue de la Paix,
Kigali, Rwanda not later than 10.00 a.m. on the 26th day of May 2015, failing which it will be invalid.

3. A proxy form must be in writing and in the case of an individual shall be signed by the shareholder or by his attorney, and
in the case of a corporation the proxy must be either under its common seal or signed by its attorney or by an officer of
the corporation.

P l e a s e a d m i t __________________________________________ Number of ordinary shares held:

______________________ to the Annual General Meeting of Bank of

Kigali Limited which will be held at the Serena Hotel, Kigali, Rwanda on Name of Shareholder:

the 28th day of May 2015 at 2.30 p.m.

Address of Shareholder:
This admission card must be produced by the shareholder or his proxy
CDS Account Number:
in order to obtain entrance to the Annual General Meeting.

Dr Shivon Byamukama
Company Secretary

2014
Annual Report
97
BANK OF KIGALI LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2014

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2014
Annual Report