bank of kigali annual report 2011

7/28/2019 Bank of Kigali Annual Report 2011

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Annual Report

2011


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Best Bank in Rwanda 2009,2010,2011

Bank of Kigali

Com

panyoftheyear201

1

BankoftheYear200

9,2010,2011


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Bank of Kigali aspires to be the leading provider of the

most innovave nancial soluons in the region.

Our mission is to be the leader in creang value for our

stakeholders by providing the best nancial services to

businesses and individual customers, through movated

and professional sta.

Customer focus

Integrity

Quality

Excellence

OUR VISION

OUR MISSION

OUR VALUES


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Pages

Business Review

Financial Highlights 3

Key Performance Raos 5

Valu Addd Statmnt 6

Chairmans Rport 7

Chif execuve Ocers Report 9

Corporat Social Rsponsibility Rport 14

Corporate Governance

Corporate Governance Report 18

Bank of Kigali Board Prole 23

Execuve Management Prole 25

Financial Statements

Bank Informaon 31

Rport of th Dirctors 32

Statement of Directors Responsibilies 33

Rport of th Indpndnt Auditors 34

Financial Statmnts:

Statement of Financial Posion 36

Incom Statmnt 37

Statement of Comprehensive Income 38

Statmnt of Changs in equity 39

Nots to th Financial Statmnts 41

Notice of Annual General Meeting 90

Proxy Form 92

Table of Contents


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Financial Highlights

2007 2008 2009 2010 2011

350300

250

200

150

100

50

0

121.5 120.8151.9

197.7

287.9

Total Assets

CAGR - 24.1%

2007 2008 2009 2010 2011

70

60

50

40

30

20

10

0

Rwf bn

12.8 15.918.5

31.9

61.6CAGR - 48.1%

Shareholders Equity

10

9

8

7

6

5

4

3

2

1

0

2007 2008 2009 2010 2011

Prot Aer Tax

CAGR - 19.5%

4.3

5.75.3

6.2

8.7

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Rwf bn

Rwf bn


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2007 2008 2009 2010 2011

140

120

100

80

60

40

20

0

Corporat Rtail

CAGR - 23.3% 130.7

105.5

80.978.8

56.6

45.965.2 66.5

84.8 89.510.8

13.6 14.4

20.741.2

Gross LoansRwf bn

200

180

160

140

120

100

80

60

40

20

0

Rwf bn

101.9 93.8109.5

135.7

181.0

78.0 69.681.6

99.3

126.8

23.9 24.227.8

36.4

54.2

2007 2008 2009 2010 2011

Corporat Rtail

CAGR - 15.5%

Customers Deposits

2007 2008 2009 2010 2011

250

200

150

100

50

0

ATMs Numbr of Branchs POS

6 6 611 1440 52 33 44

97

202

18 26 260

Delivery Channel Evoluon

Financial Highlights

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Key Performance Raos

2011 2010

Protability

Return on Average Assets 3.6% 3.5%

Return on Average Equity 18.6% 24.5%

Net Interest Margin 8.4% 8.3%Loan Yild 16.9% 15.8%

Intrst expns/Intrst Incom 26.8% 25.6%

Cost of Funds 3.1% 2.8%

Eciency

Cost/Income Rao 48.4% 47.5%

Costs/Average Assets 5.9% 5.8%

Personnel Costs/Total Recurring Operang Costs 51.8% 52.3%

Personnel Costs/Average Total Assets 2.9% 3.0%

Personnel Costs/Total Operang Income 25.1% 25.0%

Net Income/Total Operang Income 29.5% 29.2%

Liquidity

Nt Loans/Total Assts 42.8% 51.3%

Liquid Assts / Total Dposits 60.8% 43.9%

Intrbank Borrowings / Total Dposits 9.5% 12.2%

Short-trm Liquidity Gap 43.0% 11.9%

Gross Loans / Total Dposits 65.3% 68.3%

Asset Quality

NPLs / Gross Loans 8.3% 8.5%

NPL Coverage Rat 85.1% 45.8%Larg exposurs / Gross Loans 8.8% 14.3%

Cost of Risk 3.8% 2.0%

Leverage (Total Liabilies/Equity), Times 3.7 5.2

Capital Adequacy

Cor Capital / Risk Wightd Assts 28.1% 18.7%

Total Qualifying Capital / Risk Wightd Assts 29.1% 20.1%

O Balance Sheet Items / Total Qualifying Capital 363.1% 351.2%

Larg exposurs / Cor Capital 21.3% 61.1%

NPLs less Provisions / Core Capital 3.0% 19.7%

Market Sensivity

Forx exposur / Cor Capital 11.7% 11.5%

Forx Loans / Forx Dposits 0.8% 1.0%

Forex Assets / Forex Liabilies 105.3% 106.7%

Selected Operang Data

Full Tim employs 602 454

Assets per FTE (RwF billion) 0.5 0.4

Number of Acve Branches 44 33

Number of ATMS 26 26

Number of POS Terminals 202 97

Numbr of Rtail Accounts 73,716 39,741

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Corporate Tax

Value Added Tax

Withholding Tax

District Tax

Sta PAYE

1,965,143 2,502,810

2011

Rwf 000

577,985 493,075

833,221 552,740

54,8099,583

1,868,603 1,155,568

2010

Rwf 000

TAXES PAID

Value added statement

Value Added Statement in Rwf 000 2011 % 2010 %

Interest, commissions and other revenues 35,530,550 25,329,695

Interest paid to depositors and costs of other services (13,907,872) (9,016,781)

Wealth created 21,622,678 16,312,914

Distribuon of wealth

Employees

Salaries, wages and other benets 5,201,832 24% 3,882,773 24%

Government 5,299,760 25% 4,713,776 29%

Shareholders

Dividends paid to shareholders - -

Retenons to support future business growth 11,121,086 51% 7,716,365 47%

Rtaind surplus 8,688,765 6,178,582

Depreciaon and amorsaon 2,432,321 1,537,782

Wealth distributed 21,622,678 16,312,914

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Chairmans Report

Lado GurgenidzeChairman of the Board

Dear fellow Shareholders of

Bank of Kigali,

This years performance was exceponally

good. Your bank managd to grow its Nt

Income by 40.6% (compared to the growth

by 30.6% in 2010). This accelerang growth

was achieved despite the challenging

global environment in the second half of

2011, and our management and sta are

to be congratulated for this achievement.

Despite the rapid growth, we managed to

maintain cost discipline, with Cost-Income

Rao of 48.4%, largely unchanged from

2010, and kept our protability intact,

achieving ROAA of 3.6% in 2011, a slight

improvement on 2010.

Perhaps the best news is that we have much

to look forward to, as our future growth and

development appears well funded. In 2011,

w managd to procur two long-trm

credit lines from Internaonal Financial

Instuons, pulling ahead of the compeon

in this respect and, on 1 September 2011,

your Bank was oated on the Rwanda

Stock exchang. With th capital raisd in

the IPO, your Banks equity stood at the

year-end 2011 at RwF 61.6 bn (US$ 101.9

mln), accounng for approximately 40.8%

of the banking sector equity. In 2011, we

also achieved market share gains by Total

Assets (32.4%, up from 27.4% in 2010) and

Customer Deposits (28%, up from 25.9% in

2010).

Despite the high level of transaconalacvity in 2011, your management team did

not let itself be distracted from execung

our strategy of building a leading universal

bank with ubiquitous rtail prsnc in

Rwanda. Our branch, ATM and POS terminal

footprint has been expanded, and a lot of

eort was directed at modernizing our retail

oering and electronic banking channels.

Product innovaon connued as well, as the

foundaon was laid for the private banking

and micro lnding lins of businss.

Looking ahead, rest assured that the Board

and managmnt of your bank will rmain

focused on delivering protable growth as

we complete the modernizaon of your

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Chairmans Report

bank. I am xcitd that w nhancd our

middle management layer by recruing

several high-calibre professionals locally

and regionally, who have joined the ranks

of our talented sta. Now that we are a

publicly tradd company with a 45% fr

oat, it is incumbent upon us to further raise

our game in terms of strategy execuon

and shareholder communicaons. Finally,

I encourage you to vote for the dividend

payout policy recommended by the Board,

which amounts to paying out 50% of our

Net Income in 2011, 2012 and 2013 as

dividends your bank can aord it, without

any adverse impact on its growth prospects.

I look forward to wlcoming you at our

upcoming Annual Gnral Meeng ofShareholders and to reporng on our

connued progress in next years annual

rport.

Lado Gurgenidze

Chairman

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Chief Execuve Ocers Report

James GateraChief Execuve Ocer

Introducon

Iam pleased to announce the Banks connued

strong and sustained growth in our nancial

prformanc and balanc sht in 2011. Th

Bank increased its prot aer tax by 40.6% to

Rwf 8.7 billion and grw total assts by 45.6%

to Rwf 287.9 billion. Th growth was as a rsult

of connued branch expansion and investments

in alternave delivery channels, strong liquidity

posion, funding sources and increased focus on

rtail banking.

Sustained strong market posioning

Bank of Kigali has connued to dominate the

Rwandan banking sctor. With total assts of

Rwf 287.9 billion, the Bank accounts for 32.4%

of th total banking assts. W also maintain th

leading posion in the market for total customerdeposits, total performance, and total net loans.

Th Bank accounts for 29.4% of total nt loans in

th markt. Th growth in loans was supportd

by strong dposit markt shar of 28.0%. W

managd to stay at th top bcaus of our

customers condence and undivided focus on

thir nds.

Review of nancial performance

In 2011, our prot aer tax increased by 40.6% toRwf 8.7 billion. This was mainly du to th growth

in our Total Operang Income which was Rwf

29.5 billion, up 39.3% from 2010. The growth in

operang income was driven by a 36.2% growth

in Nt Intrst Incom which rachd Rwf 16.6

billion. Non-intrst Incom also prformd

wll growing by 43.5% to rach Rwf 12.9 billion

driven by the FX trading which achieved a 45.7%

growth rat to rach Rwf 7.6 billion. Fs and

commission also grew by an impressive 43.2%

and amountd to Rwf 4.3 billion.

Our Total Operang Expenses grew by 41.3 %

and rachd Rwf 14.3 billion. This incras has

put pressure on our Cost/income rao which

moved from 47.5% to 48.4% in 2011.

Net Provision for non performing loans increased

by 91.2% to Rwf 4.5 billion.

Review of nancial posion

Our Balance sheet saw a considerable growth

of 45.6% in 2011 raching Rwf 287.9 billion.

Th growth in total assts was supportd by

th incrasd lnding which saw our nt loans

incras by 21.4% to RwF 123.1 billion.

The growth in our loan book was driven by retail

consumr lnding which now accounts for 31.5%

of gross loans up from 19.6% as at Dcmbr

2010. The increase in the rao of retail loansemphasizes our commitment to growing our

retail book as compeon for Corporate, SMEs

and Non Business acvies increases. The

growth in our corporat loan book was 5% as

w undrtook to rduc th xposurs of som

of our large borrowers in order to eecvely

manage concentraon risk.

On the liability side, the growth in customer

dposits was 33.4% raching Rwf 181.0 billion.

This growth was driven by gains from our branch

expansion strategy. Overall, the connued loyaltyand condence of our customers enabled us to

consolidate our posion as the market leader in

lnding and dposits in th banking sctor.

The capital raised in the IPO shored up the Banks

capital, increasing Shareholders Equity by 93.2%

to Rwf 61.6 billion from Rwf 31.9 billion in 2010.

The Bank remains the best capitalized in the

markt. Th cor capital to total risk wightd

assts incrasd from 18.7% to 28.1%. Th total

capital to total risk weighted assets rao rose

from 20.1% to 29.1%.

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Our strong balance sheet and capital base have

laid the foundaon for us to take advantage of

market opportunies and derive good value for

our exisng and potenal investors.

Risk Management and Compliance

During the year under review, the Bank saw

an improvement in asset quality. NPLs as a

prcntag of Gross Loans stood at 8.3%.

This was due to improved credit risk management

as a result of the Banks revised Credit Policies

and Know Your Customer (KYC) Policies. The

Bank also began to benet from our credit risk

managmnt approach which was r-nginrd

in 2010 to focus on le and case management.

There was an overall improvement in the credit

risk environment as the sector began to reap

dividends from reforms in the Mortgage Law

and Land Registry to fast track provision of tle

deeds and foreclosures. In addion, the Credit

Rfrnc Burau is incrasingly bcoming an

important tool in assisng us to assess credit

risk. Going forward w xpct it will bcom a

more eecve tool as it signs up all micro nance

instuons, ulity companies, SACCOs and

insuranc companis.

Th Bank also undrtook to mor prudnt

provisioning to increase our coverage rao. In

2011, we made IFRS provisions of Rwf 8.3 billion,

to bring the coverage rao to 85.1% compared to

45.8% in 2010.

As part of our strategic plan, the Bank connues

to invest in acvies that increase educaon and

awarnss in risk managmnt and complianc

among our sta in order to enhance the risk

management culture to the level of regional and

internaonal banks.

Human capital development iniaves

Our employees are our greatest asset and

the biggest drivers of the Banks sustaind

performance. We currently boast a sta

complement of 602 and are commied to

creang a working environment that develops

and equips all sta with the skills and capabilies

to serve our customers eecvely.

The Bank connues to invest in enhancingtheir skills parcularly in retail banking as we

pursue our strategic objecve to serve over

500,000 clients in the coming years. Through

our partnership with John Scholl, a renowned

internaonal customer service guru, we

embarked on the second module of service

quality training and had 300 sta trained in swi

service delivery and showing leadership at work.

A total of 80 sta was trained in technical areas

of front oce and back oce funcons. The

Bank also embarked on improving the so skills

of its sta parcularly in communicaon and had

85 sta trained in negoaons, public speaking

and eecve communicaons.

Our product and service innovaons

During the year, we focused on increasing our

product and service oering in both corporate

and rtail banking in ordr to mt th changing

needs of our customers. Our biggest achievement

was the launch of our mobile banking service

which gives customers the ability to check their

balances and order cheque books, in addion to

purchasing prepaid electricity, prepaid TV and

intra-bank money transfer in addion to giving

customers with account informaon and daily

xchang rats.

In the card business, the Bank started issuing

internaonally accepted VISA Electron Debit

cards in addion to the local branded cards from

R-SWITCH and th prpaid ZIPP Card which is

targeed at the lower income earners.

Investment in technology driven alternave

delivery channels

In 2011, we connued to invest in technological

developments to meet our customer demands

and invested in making our ATMs and Points of

Sales (POSs) interoperable with both local debit

cards and internaonal cards.

Our ATMs and Points of Sales (POSs) are able to

accpt not only R-Switch cards and VISA Cards

but Diners Club and China Union Pay (CUP) cards

as well. Going forward, progress is underway to

ensure that they also start accepng American

exprss as wll. Th incrasd introprability of

our channels will encourage addional tourism

spnd in th country.

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Future aspiraons for 2012

Our theme for 2012 will be to connue to

This will be realized through connuedinnovaons in self services products such asmobile banking based products, card basedproducts and agncy banking.

The Bank will connue to grow its branchntwork and 12 branchs ar xpctd to b

opened in 2012. In addion, we expect to seeour footprint xtnd across our bordrs through

representave oces in selected neighbouringcountris.

We will connue to expand our self-servicechannls spcially through mobil phons

which have proven to be an eecve deliverychannl bcaus of thir ubiquity.

On the card business front, the Bank will beginto issue the VISA Classic, VISA Gold and VISAprepaid cards and launch e-commerce services.Ths cards will nabl our customrs to

make purchases internaonally and online. Inaddion, we will grow our PoS and ATM network

to support th growth in th card businss and

we expect to deploy 60 more ATMs with added

funconalies to reduce fooall in the branches.

The Bank will also focus on developing its newbusiness segments parcularly micro lending aswe strive to improve access to nance for thesgmnts at th lowr nd of th pyramid. Th

service was launched in 2011 and was pioneeredwith 3 products aimed at women, youth andsenior cizens.

For our High Net Worth and VIP clientele, theBank has launchd its Prmir Banking branch

at th ultra-modrn Kigali City Towr. BK Prmir

is the ulmate convenience service centre forths clints.

The Bank will connue to strive to deliversuperior customer service and will invest heavilyin training and development of our sta andprocesses to ensure that we are cost eecve.

In 2012, we will launch a 24 hour call centreto improve customer feedback processes andcustomer relaonship management.

Funding our growth strategies

As is th cas with all banks across Rwanda and

th rgion th Banks long trm loan assts ar

mainly funded by mobilized short term deposits.

This rsults in incrasd maturity mismatchand intrst rat risk for th banks. In ordr

to diversify our source of funding, the Banktook to rais capital in th capital markts and

successfully raised Rwf 20.7 billion in its IPOin 2011. The addional capital will be used forchannel expansion, increased lending and torduc our asst/liability mismatch.

In addion to the long term credit line from theEuropean Investment Bank worth 5 million, ofwhich we are nearing complete drawdown, the

Bank also signed two addional long term creditlines. The credit lines worth $12 million and $20 million are from the African DevelopmentBank and the French Development Agency andwill further improve the Banks liquidity anddiversify our source of funds. These credit linesar xpctd to b drawn down in 2012.

Bringnancialservices

closertothepeople

Conclusion and acknowledgement

We ancipate that the market place will becomeincreasingly compeve in the coming years.

We shall connue to engage in acvies that

improve eciency of our business and maintainour customer service promise to meet andexceed our customer expectaons.

We aim to connue to deliver shareholder valuefor our new and exisng shareholders and growour prots and assets base. Our shareholdersconnue to support our business growthstrategies and have decided to retain 50% of theprots in the Bank as we strive to bring nancialtransformaon in Rwanda.

Spcial thanks also go to our loyal customrswho connued to entrust us with their businessduring the year. We recognize that you are the

reason we are in business, and we value your self-assurance in Bank of Kigali and its Management.

I would also lik to thank th Board of Dirctorsfor their guidance and direcon and for workingvery closely with Management in order to realizethe opportunies abound and to grow ourbusiness as we take humble investment stepstowards aainment of the countrys Vision 2020.

I am also grateful to all sta, without them thisimpressive performance and assets growthwould not have been possible. Their hard work,dedicaon and loyalty are invaluable in ourpursuit of excellence in Rwandas nancial sector

and I am condent we will all strive to deliver inth sam spirit in 2012 and byond.


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Corporate Social Responsibility Report

13

Bank of Kigali Branch footprint

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Corporat Social Rsponsibility has assumda great importance in the corporate world,

including th banking sctor. Bank of Kigali

connues its visible trend of promong socially

responsible policies and environment friendly

budgeng, lending and investment pracces. The

Bank has acvely invested and highlighted the

importanc of CSR and has put in plac a suitabl

and appropriate plan of acon towards helping

th caus of sustainabl social and conomic

development. Recognizing the importance ofCSR, the Board approved a policy to devote 1% of

the annual net operang income to CSR acvies.

The Banks CSR principles and acvies are

built on the foundaon of four pillars, which

include promoon of educaon especially the

needy members of the society, health acvies,

sustainable environment protecon, and poverty

alleviaon. The pillars are designed to recognizethat th small stps w tak today contribut to

a biggr chang for a brightr tomorrow of our

community.

Pillar 1: Improving access to educaon

Bank of Kigali acknowldgs its rol in nurturing

human capital, parcularly in educaon which is

a crical success factor for Rwandas long term

development.

The Bank, through its partnership with the

Imbuto Foundaon, provides scholarships to

200 studnts from ndy backgrounds. Th

Bank also supports of th School of Financ and

Banking (SFB) and its various iniaves including

sponsoring prizes awarded to their best students

in ordr to ncourag acadmic xcllnc within

th studnt community.

Corporat Social Rsponsibility Rport

The Head of Corporate Banking presents a cheque to the Rector of the School of Finance

and Banking in support of the Best students at the school.

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Th Bank also pldgd support to th Capital

Markets University Challenge. The UniversityChallenge was organized by the Capital MarketsAuthority to incras awarnss of Rwandas

capital markets through a compeve essay

wring compeon and television quiz showamong 10 parcipang terary instuonsnaonwide.

Pillar 2: Promong Community Health

Th Bank acknowldgs th nd for a halthy

society in order for Rwanda to achieve its Vision2020. In 2011, the Bank maintained its Rwf100 million commitment to Friends of Africa,a campaign focusing on incrasing rturns

on investment in the ght against HIV/AIDS,Tubrculosis and Malaria.

During the year, in recognion of the increasingincidence of cancer in our society, the Banksupported the Ulinzi Walk, whose aim wasincreasing awareness of breast and cervicalcancer by raising funds to support educaon,screening, and treatment of these cancersand to support outrach programs for familis

impactd by this disas.

Pillar 3: Promong Environmental sustainability

In 2011, the Bank began to implement itsEnvironmental and Social Policy which was

approved in late 2010. The main objecve ofthis policy is to ensure that the Bank nancesprojects which have minimal adverse impactson the environment while ensuring that thosehaving potenally major adverse environmentaland social impact ar accompanid by adquat

migaon measures.

In line with the general objecve, the Bankspecically endeavours to ensure that:

Thr ar guidlins and procdurs in plac

to assess the environmental impact of allprojects before commitments and;

Complianc to ths procdurs and

guidlins ar adhrd to.

In addion, the Bank in its ordinary courseof businss is consciously mindful of its

environmental obligaons both internally andexternally and has invested in the followinginiaves during the year:

Saving Trees by introducing paperless means of

communicaon in business

Since the end of 2010, the Bank has introduced

lctronic basd bank statmnts and us oflctronic channls such as mobil and intrnt

banking for th customrs to accss thir

accounts without prinng statements. These


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iniaves are designed to save paper whichhelps maintain Rwandas clean environment.These iniaves also extend to the awarenesscampaigns to sensize to our customersand sta on the need for environmental

sustainability. The Bank will connuously investin promong paperless business operaons andcommunicaon.

Mountain Gorilla conservaon

Th Bank maintaind its partnrship with th

Rwanda Development Board in supporng theannual gorilla naming, Kwita Izina ceremony.Rwandas mountain gorillas contribut almost

90% of revenues accrued from naonal parks intourism receipts, and are a key driver of rural

conomic and social mpowrmnt spcially inthe communies surrounding the naonal park.

Employee-led Parcipaon in community

work, Umuganda

In the spirit of the naonal pracce of Umu-ganda, our sta parcipate in community workon a monthly basis. Given our extensive branchnetwork, our community parcipaon is spread

naonwide. Moreover on a quarterly basis, ouremployees engage in a specialized Umuganda indierent communies.

In 2011, our sta parcipated in the followingacvies as part of its community work:

Planng of trees to enhance aorestaonand re-forestaon;

Creang terraces to eliminate soil erosion inmountainous agricultural arable land and;

General cleaning of the city.

Pillar 4: Eliminaon of poverty

The Banks approach to reducing poverty istwo prongd: We connue to improve accessto banking services for the underserved ruralpopulaon as well as support naonal pro-poorprogrammes both nancially and acvely.

Improving access to banking services to the

underserved rural populaon

As part of our branch expansion strategy, Bankof Kigali is dtrmind to opn branchs in rural

aras in ordr to act as a catalyst for conomic

development in those areas. In 2011, we opened

7 branchs in rural aras.

Th Bank furthr introducd Community

Oriented products targeng mainly the unbankedand underserved. The three products are part ofth Banks strategy to extend nancing to threepopulaon groups women, youth and seniorrered cizens which have historically beenunderserved. Moreover, the products combine asavings and loans products in recognion of theneed to improve savings culture in Rwanda aswell as limited access to nance.


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Promong decent housing:An-Nyakatsicampaign

In the year under review, the Bank connued its dedicaon to promote decent housing. In this regard,we connued to parcipate in the naonal An-Nyakatsi campaign at provincial level. In addion oursta parcipated in building and creang decent housing for a genocide survivor in Gasabo district.

Bank of KigaliBank of KigaliYourTrustedPartnerinWealthCreaon

In 2012, the Bank will connue to implement a robust CSR strategy. The Bank aims to form more

strategic alliances with established organizaons whose work is focused in any areas encompassed

by our CSR strategy. We intend to increase the number of employee-led CSR iniaves to promote

the Rwandan culture of community-led development. We will also connue to promote integraon

of CSR principles in the Banks day-to-day operaons.

Conclusion

In order to improve the livelihoods of rural families, the Bank connued its support for the naonalGirinka programm also known as One cow per poor family. The programme is aimed at improvinglivelihoods through the reducon of malnutrion as well as increasing household incomes by providingfamilies with an addional source of income.

Girinka programme

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Bank of Kigali is commied to upholding

high standards of Corporate Governancein compliance with the Naonal Bank of

Rwandas regulaons on Corporate Governance,

Rwandas Law relang to companies, the Banking

Law as well as the Capital Markets Authority.

Shareholders Responsibilies

In accordance with the Law relang to companies,

Shareholders have the primary role to appoint

th Board of Dirctors and th extrnal Auditors.This rol is xtndd to holding th Board

accountable and responsible for ecient and

eecve governance. The responsibility of the

Sharholdrs is xrcisd through th Annual

and Extraordinary General Meengs.

Shareholding Structure

In 2011, the Banks shareholding structure

changed signicantly. In an Extraordinary General

Meeng held on 4 May 2011, the shareholders

resolved to split the shares 1:11,000. It was

further resolved to issue an addional 25% new

shars. This brought th total numbr of issud

shares to 667,337,000 shares.

Following the change in shareholding structure,

the shareholders resolved to sell 45% of the

Banks shares to the public through an Inial

Public Oer. The shares sold comprised of 25%

new shares issued as well as 20% divesture by

the Government of Rwanda. On 1 September

2011, the Bank became the second domesc

company to b listd on th Rwanda Stock

exchang.

The table below shows the Banks Shareholding as at 31 December 2011.

Shareholder Number of Shares

Percentage of Issued

Shares

Government of Rwanda 198,534,600 29.75%

Rwanda Social Security Board (RSSB) 181,328,800 27.17%

Blackeney Management 48,772,300 7.31%

Other State Owned Enes 687,900 0.10%

Local Instuonal Investors 16,511,700 2.47%

Regional Instuonal Investors 30,030,400 4.50%

Internaonal Instuonal Investors 71,349,500 10.69%

employs & Dirctors 7,200,000 1.08%

Retail Investors 112,921,800 16.92%

Total 667,337,000 100.00%

Corporate Governance Report

CorporateGovernance


21/9619

Boards responsibilies

The Board of Directors is responsible for providingleadership through oversight and guidance on keystrategic, risk management and internal control

issues. The Board also ensures that Managementconducts its business and operaons withintgrity and in accordanc with bst corporatgovernance pracces based on transparency,accountability and rsponsibility. It also nsurscompliance with relevant laws and regulaonsand risk managmnt as th Bank balancs thinterests of the various stakeholders. In order to

achieve this, the Board has established a BoardCharter to guide its funcons. The Board meetson a quartrly basis or mor frquntly as thbusinss dmands. Th Board has also appointdfour sub-commiees to assist in achieving its

mandat.

The Board also conducts a self evaluaon exercisein compliance with the highest internaonalstandards which is submied to the CentralBank. In 2011, the Board held six meengs. Thetable below indicates the directors aendanceof board and board commiee meengs.

Structure Category Number of BoardMeengs

Audit & Riskcommiee

Credit

Commiee

ALCO

Commiee

Nominaons &

Remuneraon

Commiee

Number of Meengs held 6 4 11 4 2

Lado Gurgenidze Non-execuve 6

Sudadi S.Kayitana Non-execuve 6 4 9

Caleb Rwamuganza Non-execuve 6 10 4

Apollo M. Nkunda Non-execuve 5 3 2

Marc Holtzman Non-execuve 4

Dava Mukeshimana Non-execuve 6 3 4

Alphonsin Niyigna Non-execuve 6 3 10

Perrine Mukankusi Non-execuve 5 3 2

Directors aendance in Board and Board Commiee meengs


During the year, eight independent non-execuve directors served on the Board. Mrs. Perrine

Mukankusi resigned from the Board on 15 October, 2011.

Composion of the Board of Directors

Dirctors ar appointd by th Sharholdrs onrecommendaon from the Minister of Financeand economic Planning. In accordanc with thBanks Memorandum and Arcles of Associaon,the appointments are raed at the next AnnualGeneral Meeng (AGM). The Directors are alsoapproved by the Naonal Bank of Rwanda as argulatory rquirmnt.

Th Board compriss two non rsidnt dirctorswith extensive experse in internaonal bankingpracces as well as six resident directorsincluding a professional accountant, a praccinglawyer, and other private sector and governmentrepresentaves with extensive businessacumen. The wide array of skills, knowledge andexperiences is a major contribuon to the properfunconing of the board and its commiees andnrichs th dcision-making procsss.

Board Commiees

In lin with th BNR guidlins 06/2008 onCorporate Governance, the Board has four Board

Commiees, each with terms of reference, tosupport th Board in performing its funcons.

Credit Commiee

The commiee comprises of three independentnon-execuve directors who meet monthlyor mor frquntly as its businss dmands.It oversees the banks loan porolio creditrisk management. The commiee is charged

with reviewing credit facility applicaons thatare beyond the discreonary limits of themanagement credit commiee. The commieealso oversees the Banks lending policies andprocdurs to nsur that thr is adquat riskmanagement in addion to monitoring the loanporolio to maintain high asset quality.

Audit Commiee

This is the principal Board Commiee thatcomprises of four independent non execuveboard mmbrs and mts on quartrly basisor mor frquntly as its businss dmands.The Audit Commiee is responsible for ensuring

CorporateGovernance


22/9620

that th Banks intrnal controls and procdurs

are adequate and adhered to, makingrecommendaons where necessary. It is alsocharged with the appointment and review of thework of th xtrnal auditors. This also xtnds

to overseeing the Banks nancial reporngpolicis and disclosurs to nsur that thy

are produced in accordance with InternaonalFinancial Reporng Standards and meet the allth ncssary rgulatory rquirmnts.

Risk Commiee

This Commiee comprises of four independentnon execuve board members and meetson quartrly basis or mor frquntly as its

businss dmands. Th mandat of th Riskmanagement Commiee is to ensure that theBanks risk managmnt policis and procdurs

ar updatd to nsur that th risks ar proprly

tackled, eecvely controlled and managed.

Assets-Liability Management Commiee

The Board Asset-Liability ManagementCommiee comprises of three independent non-execuve directors and meets on quarterly basis

or mor frquntly as its businss dmands.It is rsponsibl for monitoring and managing

the Banks balance sheet to ensure that variousbusiness risks such as liquidity, capital, marketand currency risks are monitored and migates incomplianc with th Banks policis and Cntral

Bank guidlins.

Nominaons and Remuneraon Commiee

The Nominaons and Remuneraons Commiee

is composd of thr indpndnt non-execuve directors and meets once a yearor mor frquntly as its businss dmands.

It is rsponsibl for th appointmnt of and

remuneraon of the Board Members and alsonsuring that th Banks human rsourcs ar abl

to support the development and implementaonof the Banks strategy. This entails reviewingthe Human Resources policies and procedures,organizaonal structure, senior managementcomposion as well as remuneraon.

Management commiees

The Bank also has various ManagementCommiees in place to assist in the day to dayimplementaon of the banks strategy. These

includ:

Execuve Management Commiee

Credit Commiee

Assets-Liability Commiee

Human Resources Commiee

Procurement Commiee

Disclosures

RelatedPartyTransacons

During the nancial year 2011 there were nomaterially signicant transacons enteredinto between the Company and its promoters,dirctors or th managmnt or othr rlatd

pares that may have potenal conict with theintrsts of th Company at larg.

An Employee Share Ownership Plan (ESOP) wasintroduced during the Inial Public Oer and7,200,000 shares were allocated to the Directors

and employs.

Statutory Compliance, Penales and

Strictures

Th Company has complid with th

requirements of the Naonal Bank of Rwandaand the Law relang to Companies on all maersrlatd to th banking and company businss.

In 2011, the Bank also began to comply with therequirements of the Capital Markets Authority

and the Rwanda Stock Exchange. No penales orrestricons have been imposed on the Companyby these authories.


CorporateGovernance


23/96

Our Team


24/96


25/9623

Lado Gurgenidze, Chairman

Lado Gurgenidze is a career banker who aer a decade spent at severalinvestment banks in Eastern Europe and London returned to his nave

Georgia in 2004 and spearheaded, as Execuve Chairman and CEO, aturnaround of Bank of Georgia (LSE: BGEO). During Lados three-year

tenure, the banks total assets and net income grew 760% and 1,563%,respecvely. As its market share grew from 18% to 34%, Bank of Georgia

became the leading universal bank in Georgia and the region withmarket capitalizaon exceeding US$900 million at the me of Ladosdeparture (up from US$30 million at the me of his arrival).

In 2007-2008, Lado served as Prime Minister of Georgia, leading theGeorgian economy through the nal stage of free-market reforms,

including tax cuts, nancial services sector reform as well as aggressiveprivasaon and liberalisaon policies.

Since he stepped down as Prime Minister, Lado has been a frequent

public spakr on issus of conomic librty and fr-markt rformsin developing countries and co-chairs the Emory Center for Alternave

Investments. In October 2009, he was invited to join, as Chairman, the

Board of Bank of Kigali, the largest bank in Rwanda.

In September 2009, Lado established, together with Dinu Patriciu,Liberty Investments, an investment company focusing on nancial services instuons in froner markets with low corrupon,low taxes and open economies. In the same month, Liberty Investments announced the acquision of a controlling equity

interest in Liberty Bank, which has the largest client base in Georgia, serving some 1.4 million clients and a branch network

of 274 branchs.

He is a Georgian and Brish cizen and received his MBA from Goizueta Business School of Emory University in 1993, followingundergraduate studies at Middlebury College and Tbilisi State University.

Sudadi S. Kayitana, Director

Sudadi Kayitana is a pracsing Accountant with wide experience in Finance and Audit. He has

served in the Public and Private sector, and internaonal community organisaons includingUNDP.

Sudadi also serves as a director on the Regulatory Board of Rwanda Ulity Regulatory Agency(RURA) and RwandaAir. He is a member of the Governing Council of the Instute of CeredPublic Accountants of Rwanda (ICPAR).

He is a founding member of the Instute of Cered Public Accountants of Rwanda (ICPAR),He is an aliate of the Associaon of Cered Chartered Accountants (ACCA) UK. He is also

qualied professional of supply chain management and is a member of Instute of Purchasingand supply (MCIPS). He also holds an Associate degree in Accounng from the Naonal

University of Rwanda.

Bank of Kigali Board prole

Caleb Rwamuganza, Director

Caleb Rwamuganza is the Deputy Accountant General, Treasury Management at Ministry ofFinance and Economic Planning. He has extensive experience in the area of Accounng and

Finance and has served in the Ministry of Finance and Economic Planning since 2005 in variouscapacies including Technical Assistant to the Secretary to the Treasury. Prior to that, Caleb wasChief Accountant in the Oce of the President.

Caleb acts as lead Negoator on Government loans and manages the execuon of public debtobligaons and implementaon of debt related policy maers. Caleb also serves as a Director

on the Boards of RwandaAir and the Naonal Post Oce of Rwanda.

He holds a Master of Arts degree in Management and Finance from Southampton Solent

Southampton University (UK) and Bachelor of Business Administraon in Accounng fromNkumba University, Uganda.

CorporateGovernance


26/9624

Alphonsine Niyigena, Director

Alphonsine is Vice Chairperson of the Rwanda Private Sector Federaon, Chairperson of theUnion Investments Corporaon (UIC), and Vice Chairperson of Liberal Professionals Chamber,

one of the nine chambers of the Rwanda Private Sector Federaon.

She also serves as the Board Chairperson of Military Medical Insurance, Board Member ofMotor Guarantee Fund and Rwanda Instute of Administraon and Management (RIAM).

Alphonsine is the Managing Director of Worldwide Iniaves SARL; a regional consulngrm registered in Rwanda and has conducted naonal and internaonal consultancies as an

independent consultant in the areas of Finance, Economic Planning, and Audit. Prior to joiningthe private sector, Alphonsine served in the Oce of Auditor General for 5 years as Senior

Auditor and tam ladr.

Alphonsine holds a Masters Degree in Business Administraon-Finance from MaastrichtUniversity, Netherlands.

Apollo M. Nkunda, Director

Apollo Nkunda is a pracsing Lawyer, and a Partner with Trust Law Chambers. He has over tenyears experience in legal pracce from both the Public and Private sector. Apollo specialises

in Banking and Finance Law, Labour Law and Government procurement. Prior to joining thePrivate sector, he was Head of Legal Services at the Naonal Tender Board, now the Rwanda

Procurmnt Authority.

Apollo holds a Masters degree in Business and Trade Law from Erasmus University Roerdam,

the Netherlands, and a Bachelors of Law from the Naonal University of Rwanda.

He is a member of the Rwanda Bar Associaon, the East African Law Society, an AssociateMember of the Chartered Instute of Purchasing and Supply, a founding member of the

Centre for Arbitraon and honorary counsel to the Kigali Golf Club.

Marc Holtzman, Director

Marc Holtzman is Vice Chairman of Barclays Capital. Prior to joining Barclays Capital in

August 2008, Marc served as Vice Chairman of ABN Amro Bank. Previously, as co-founderand President of MeesPierson EurAmerica (a rm 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 unl October 1998.

Drawing on his early experience in helping develop Central Asias nance sector, Marc was

recently appointed by Kazakhstans Prime Minister to serve on the Board of Trustees of TheAlmaty Regional Financial Centre. In addion, he serves as Chairman of Meridian Capital, and

Non-execuve Chairman of Indus, a leading Indian oil and Gas Company listed on LondonsAIM market.

Marc is widely recognized as a leading authority on economic and polical developments inemerging markets. He also served as President of The University of Denver with approximately10,000 students and as Colorados rst Secretary of Technology. He draws on almost three

decades of polical and public service in The United States. He holds a Bachelor of Arts Degreein Economics from Lehigh University.

Dava Mukeshimana, Director

Dava is the Execuve Secretary for Duterimbere Asbl, a Women Entrepreneurial Associaon

and a micro nance instuon in Rwanda. Dava has vast experience with programmemanagement and nancing of NGOs, especially gender related programmes.

She has managed instuonal nances including resource mobilizaon and has managedhuman resources at operaon and strategic levels.

Dava holds a Bachelors degree in Economics, with a major in Money and Banking from Kigali

Independent University and an MSc in Project Management from Bujumbura University.

Bank of Kigali Board prole

CorporateGovernance


27/9625

James Gatera, Chief Execuve Ocer

James Gatera has been the Managing Director and Chief Execuve Ocerof Bank of Kigali since 2007. Under his stewardship, Bank of Kigali has had

sustained periods of protability and market leadership across all key balance

sht mtrics.

As a rm believer in increasing access to the unbanked in Rwanda, James is at thehelm of execung the Banks strategy to making banking services available and

within the reach of the majority of Rwandans. He has spearheaded the Banksaggressive branch expansion strategy as well as the Banks connual roll-out ofinnovave products to reach the unbanked populaon. In 2011, James led the

Bank through a successful Inial Public Oering to raise capital for the Banksexpansion strategy and Bank of Kigali became the second domesc company to

list on th Rwanda Stock exchang.

During his tenure, the Bank has been internaonally recognized for its

performance as the Best Bank in Rwanda by emeanance and has been awarded

th Bank of th Yar for Rwanda sinc 2009 by th Financial Tims of London.The Bank has also been rated A+/A1 by the Global Credit Rang Agency of South

Africa. In 2011, the Bank was further awarded the Company of the Year Award

by the Kenya Instute of Management.

Over the years, James has accumulated vast experience in Corporate Governance and currently serves as a non-execuveChairman, and Director on various Boards including Commonwealth Business Council (CBC).

James is oen a key speaker in many internaonal and African business forums including the CBC and the East African

Community.

Previously, 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.

James holds a Bachelor of Arts degree majoring in Psychology from Simon Fraser University, Canada and Bachelor of Commerce

from Naonal University of Lesotho.

Lawson Naibo, Chief Operang Ocer

Lawson is the Chief Operang Ocer. He has been with the Bank since 2009. He has wide

experience in Strategic Management processes, Financial Accounng Advisory, Corporate

Governance, Risk Management and Compliance Advisory gained from over 15 years post

qualicaon experience previously in CFC Bank Group. Prior to joining the Bank, Lawson was

an Associate Director specialising in Transacon Services at KPMG East Africa.

Lawson is a qualied Business Strategy and Financial Services Advisor and holds an MBA in

Strategic Management and a Bsc in Financial Services. He is also a Qualied Accountant and

Chartered Banker and a Cered Trainer in Corporate Governance.

Flora Nsinga, Chief Shared Services Ocer

Flora is the Chief Shared Services Ocer. Prior to this, she was the Head of Human Resources

and Administraon Department and has been with the Bank since 2008. Flora joined with aboutten years experience from the telecommunicaons industry.

Flora has been responsible for the growth in branch network and sta since 2008 and she wasa focal point in managing the consultants charged with organisaonal reforms in 2009. She is

also rsponsibl for th growth of th branch infrastructur which has sn th Banks branch

network grow from 14 in 2008 to 44 in 2011. She has overseen the Banks strategic humanresources restructuring from a product driven structure to a customer focused structure. In

addion, she has overseen the supply and demand side of the banks human capital with sta

complmnt of 284 in 2008 and 602 in 2011.

Flora holds a Bachelors degree in Business Administraon with specialisaon in Human

Resources from Kigali Instute of Science, Technology and Management (KIST).

Execuve Management Prole

CorporateGovernance


28/9626

John K. Bugunya, FCCA, Chief Finance Ocer

John is the Chief Finance Ocer. He has been with the Bank since 2009 and he brings in a wealthof experience from nancial advisory and assurance services gained from over 6 years post

qualicaon experience with Ernst & Young and Deloie. Prior to joining the Bank, John workedas an Audit Manager at Deloie in the United Kingdom specialising in nancial services.

John is responsible for overseeing the development and implementaon of the strategic and

statutory nancial reporng informaon systems. He is also responsible for the management

of funding rquirmnts.

John holds a Bachelors degree in Business Administraon from Makerere University-Uganda,MBA-Accounng & Finance from Oxford Brookes University, UK and is a Fellow of the Associaon

of Cered Chartered Accountants UK (ACCA).

Patrick Masumbuko, Head of Corporate BankingPatrick is th Head of Corporate Banking Department. Prior to holding this posion he was

the Corporate Banking Manager. Patrick joined the Bank in 2011 with seven years experiencefrom the Banking sector and private sector. He also held various posions in Non Governmental

Organizaons.

Patrick holds a Bachelor of Commerce degree from Kigali Instute of Science Technology

and Management and Diploma in Business Studies from Naonal College of Business Studies

Nakawa.

Enock K. Luyenzi, Head of Human Resources & Administraon

Enock is the Head of Human resources and Administraon. Prior to that, he served as the

General Services Manager at the Bank since 2009. He joined the Bank with over seven years

experience in supply chain management, logiscs and administraon from the public sector.

Enock has been responsible for eciently managing and overseeing the procurement processof the Bank as well as execung the bank expansion strategy since 2009.

Enock holds a Bachelor s Degree in Management from the Naonal University of Rwanda.

Shivon Byamukama, Company Secretary & Head of Corporate Aairs

Shivon is the Company Secretary/ Head of Corporate Aairs Department. She joined the Bankfrom RwandAir where she served as the Company Secretary and Chief Legal Ocer since 2009.During her me at RwandAir, she was instrumental in the negoaons for the acquision oftheir new aircras and their nancing agreements.

She joins the Bank with a wealth of experience in contract negoaons. Shivon has also

worked with the Internaonal Criminal Court at the Hague and taught at Glasgow Caledonian

University.

She holds a PhD in Law from Glasgow Caledonian University, a Diploma in Legal Pracce from

the Law Development Centre (LDC) Kampala Uganda and a Bachelor of Laws from MakerereUniversity, Uganda.


CorporateGovernance


29/962727

Bank of KigaliBank of Kigali

Adolphe Ngunga, Head of Retail Branch Network

Adolphe is the Head of Retail Branch Network, and has been in the Bank for over 10 years.

Adolphe has held various posions in the Bank including Branch Management, CorporateBanking and Head of Retail Banking. He has been instrumental in driving growth of the Banks

rtail customr sgmnt across our xpanding branch ntwork.

Adolphe holds a Bachelor s degree in Economics from the University of Bujumbura in Burundi.

Allan Mwangi, Head of Retail Credit Risk

Allan is the newly appointed Head of Retail Credit Risk. Prior to joining Bank of Kigali, Allan was

a Director at Dhamana Africa; a consultancy rm engaged in providing nancial consultancy andbusiness advisory services.

He brings to the Bank vast experience in business planning, nancial management, accounng,risk management and audit with over 16 years in the nancial services industry gained from

working in Equity Bank, Deloie and Touche, Lonrho Africa Plc and ABN Amro Bank.

He holds an MBA (Finance) from University of Nairobi and a Bachelor of Commerce (Accounng)

degree from Kenyaa University. He is Cered Public Accountant and alumni of the AdvancedManagement Programme (AMP) of the IEESE Business School, Spain and Strathmore Business

School, Kenya. He is a member of the Instute of Cered Public Accountants of Kenya (ICPAK).

Innocent Musominari, Head of Credit Department

Innocnt is th Had of Crdit and has workd with th Bank sinc 2004. H has wid xprinc

in crdit analysis and managmnt gaind from working within th Rwandan Banking sctor for

14 years. He has been pivotal in managing the Banks credit risk and this has led to improvements

in asst quality.

Innocent holds a Bachelor s degree in Economics from the Naonal University of Rwanda.


CorporateGovernance

Moat Mwangi, Head of Consumer Banking and Product Development

Moat is the newly appointed Head of Consumer Banking and Product Development. Priorto joining Bank of Kigali, Moat was a Senior Manager Risk Control Unit Corporate Credit at

Barclays Bank Knya.

Moat has been in the banking sector for 25 years and brings to the Bank a spectrum of skillsand knowledge gained from his experience in Operaons, Retail Banking, Card Business and

Businss Banking in Barclays Bank in Knya.

He holds a BSc in Financial Services from the University of Manchester Instute Of Science and

Technology (UMIST), MBA degree from Middlesex University Business School London and is anAssociate of the Chartered Instute of Bankers (ACIB).


30/9628

Alex Ngabonziza, Head of Informaon and Communicaons Technology

Alex is the Head of Informaon and Communicaon Technology and has been with the Bank since2009, having joined with over 14 years of experience in the industry. He has been instrumental

in developing the Banks IT capabilies through the computerizaon and networking of thebranches and other distribuon channels to support the growth of the Banks distribuon

ntwork.

Prior to joining the Bank, Alex was Head of Applicaons Division in Rwanda Revenue Authority.He has also worked as an IT consultant for the Department for Internaonal Development and

Head Developer and Database Administrator at Alpha-So, a soware development rm.

Alx holds a Bachlors dgr in Tchnical elctromchanical enginring and Bachlors

degree in Informaon Technology, from the Naonal University of Rwanda.

Yves Gatsimbanyi, Head of Risk & Compliance

Yves has been the Head of Risk and Compliance since early 2010. Yves joined the Bank havingserved as a Bank Examiner at the Naonal Bank of Rwanda for 10 years. Previously he has also

held posions in Internal Control and Compliance within the Banking sector in Rwanda.

He holds a Bachelors degree in Economics from the Naonal University of Rwanda and aDiploma in Risk Management.

Gerald Nyangezi, Head of Internal Audit

Gerard heads the Internal Audit and Control Department. He joined the Bank in 2009 andhas over 10 years experience in Audit and Finance especially from the nancial sector and

telecommunicaon industry.Gerard holds a Bachelor of Commerce, Finance from Makerere University, Uganda, andBachelors of Accounng degree from Transkei University, Republic of South Africa. He is a

Qualied Accountant and a member of the Associaon of Cered Chartered Accountants ofUnited Kingdom (ACCA) as well as a member of Instute of Cered Public Accountants Rwanda

(ICPAR).


CorporateGovernance


31/96

Financial Rports


32/9630

BANK OF KIGALI LTD

ANNUAL REPORT AND FINANCIAL STATEMENTS

31 DECEMBER 2011


33/9631

Principal Place of Business

Bank of Kigali LtdAvenue de la Paix

P.O. Box 175

Kigali - Rwanda

Registered Oce

Bank of Kigali Ltd

Avenue de la Paix

P.O. Box 175

Kigali - Rwanda

Lawyers

Mr. Emmanuel Rukangira

P.O Box 3270

Kigali Rwanda

Mr. Athanase Rutabingwa

P.O. Box 6886

Kigali - Rwanda

BankersNaonal Bank of Rwanda

P.O Box 531

Kigali-Rwanda

Company Secretary

Shivon Byamukama

Bank of Kigali Building

Avenue de la Paix

P.O. Box 175

Kigali - Rwanda

Bank Auditors

Ernst & Young (Rwanda) SARL

Cered Public Accountants

Bank of Kigali Building

Avenue de la Paix

P.O. Box 3638

Kigali - Rwanda

Bank of KigaliBank of KigaliBANK OF KIGALI LTD

BANK INFORMATION

FinancialSta

tements


34/9632

The Directors have the pleasure in subming their report together with, the audited nancial statements

for the year ended 31 December 2011 which discloses the state of aairs of the Bank.

1. Principal Acvity

The Bank is a commercial bank that oers corporate and retail banking services and is licensed

under the Laws and Regulaons governing Banks in Rwanda.

2. Results

Th rsults for th yar ar st out on pag 37.

3. Dividend

The directors recommend a dividend payment of Rwf 6.5 per share (Rwf 4,344 million) for theapproval of shareholders at the Annual General Meeng. (2010: Nil)

4. Reserves

The reserves of the Bank are set out on page 64, note 17.

5. Directors

The directors who served during the year and to the date of this report were:-

Mr. Lado Gurgenidze - Chairman

Mr. Marc Holtzman

Mr. Caleb Rwamuganza

Mrs. Perrine Mukankusi - Resigned 15 October 2011

Mr. Apollo Nkunda

Mrs. Alphonsine Niyigena

Mrs. Dave Mukeshimana

Mr. Sudadi Kayitana

6. Auditors

Ernst & Young (Rwanda) SARL were appointed auditors of the Bank in 2008 and have rotated out

in compliance with Naonal Bank of Rwanda Regulaons.

By Order of the Board

Company Scrtary

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

BANK OF KIGALI LTD

REPORT OF THE DIRECTORS

YEAR ENDED 31 DECEMBER 2011

FinancialSta

tements


35/9633

The Law No: 07/2009 of 27/04/2009 relang to Companies requires the directors to prepare nancial

statements for each nancial year, which give a true and fair view of the state of aairs of the Bank asat the end of the nancial year and of its operang results for that year. It also requires the directors

to ensure the Bank keeps proper accounng records which disclose, with reasonable accuracy the

nancial posion of the Bank. They are also responsible for safeguarding the assets of the Bank.

The directors accept responsibility for the annual nancial statements, which have been prepared using

appropriate accounng policies supported by reasonable and prudent judgments and esmates in

conformity with Internaonal Financial Reporng Standards and the requirements of Law No: 07/2009

of 27/04/2009 relang to Companies. The directors are of the opinion that the nancial statements

give a true and fair view of the state of the nancial aairs of the Bank and of its operang results.

The directors further accept responsibility for the maintenance of accounng records which may be

relied upon in the preparaon of nancial statements, as well as adequate systems of internal nancialcontrol.

Nothing has come to the aenon of the directors to indicate that the Bank will not remain a going

concern for at least the next twelve months from the date of this statement.

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

Dirctor

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

Dirctor

Dat


STATEMENT OF DIRECTORS RESPONSIBILITIES

FOR THE YEAR ENDED 31 DECEMBER 2011

FinancialSta

tements


36/9634

Report on the Financial Statements

We have audited the accompanying nancial statements of Bank of Kigali Ltd as set out on pages 36 to88, which comprise the statement of nancial posion as at 31 December 2011, the income statement,

statement of comprehensive income, statement of changes in equity and statement of cash ows for

the year then ended and, a summary of signicant accounng policies and other explanatory notes.

Directors Responsibility for the Financial Statements

The directors are responsible for the preparaon and fair presentaon of the nancial statements in

accordance with Internaonal Financial Reporng Standards and in the manner required by Law No:

07/2009 of 27/04/2009 relang to Companies and Laws and Regulaons governing Banks in Rwanda,

and for such internal control as the directors determines necessary to enable the preparaon of

nancial statements that are free of material misstatement, whether due to fraud or error.

Auditors Responsibility

Our responsibility is to express an opinion on these nancial statements based on our audit. We

conducted our audit in accordance with Internaonal Standards on Auding. Those standards require

that w comply with thical rquirmnts and plan and prform th audit to obtain rasonabl

assurance about whether the nancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures

in the nancial statements. The procedures selected depend on the auditors judgment, including the

assessment of the risks of material misstatement of the nancial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Banks

preparaon and fair presentaon of the nancial statements in order to design audit procedures

that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

eecveness of the Banks internal control. An audit also includes evaluang the appropriateness of

accounng policies used and the reasonableness of accounng esmates made by the directors, as

well as evaluang the overall presentaon of the nancial statements.

We believe that the audit evidence we have obtained is sucient and appropriate to provide a basis

for our audit opinion.

Opinion

In our opinion, the nancial statements present fairly in all material respects, the nancial posion of

the Bank as at 31 December 2011, and of its nancial performance and its cash ows for the year then

ended in accordance with Internaonal Financial Reporng Standards and in the manner required by

Law No: 07/2009 of 27/04/2009 relang to Companies and Laws and Regulaons governing banks in

Rwanda.

REPORT OF THE INDEPENDENT AUDITORS

TO THE MEMBERS OF

BANK OF KIGALI LTD

FinancialSta

tements


37/9635

Report on other Legal and Regulatory Requirements

The Law No: 07/2009 of 27/04/2009 relang to Companies which was promulgated on 27 April 2009requires that in carrying out our audit, we consider and report to you on the following maers. We conrm

that:

i) We have no relaonship, interests and debts in the Bank;

ii) We have obtained all the informaon and explanaons which to the best of our knowledge

and belief were necessary for the purpose of our audit;

iii) In our opinion, proper books of account have been kept by the Bank, so far as appears from our

examinaon of those books;

iv) We have communicated to you through the management leer, internal control weaknesses

idened in the course of our audit including our recommendaons with regard to those

maers.

ALLAN GICHUHI

FOR ERNST & YOUNG RWANDA SARL

KIGALI

..2012

Bank of KigaliBank of KigaliREPORT OF THE INDEPENDENT AUDITORS (Connued)

TO THE MEMBERS OF

BANK OF KIGALI LTD

FinancialSta

tements


38/9636

Note 2011 2010

Assets Rwf000 Rwf000

Cash in hand 3 8,123,088 6,881,845

Cash balances with the Naonal Bank of Rwanda 4 61,621,376 22,562,505

Du from banks 5 51,994,652 38,452,178

Loans and advances to customers 6 123,130,687 101,402,657

Financial investments held-to-maturity 7 8,190,524 5,224,395

Financial investments available-for-sale 8 218,455 268,375

Other assets 9 14,920,439 4,390,670

Intangibl assts 10 146,350 180,604

Proprty and quipmnt 11 19,554,303 18,313,417

Total Assts 287,899,874 197,676,646

Liabilies and Equity

Customr dposits 12 181,019,654 135,677,746

Du to banks 13 19,090,060 18,920,636

Tax payabl 26(a) 137,024 496,816

Other payables 14 18,725,051 6,841,124

Long trm dbt 15 4,998,112 -

Dfrrd tax 26(b) 2,345,641 3,870,437

Total Liabilies 226,315,542 165,806,759

equityShar capital 16 6,673,370 5,005,000

Revaluaon 17 (a) 7,763,446 7,150,542

Reserves 17 (b) 37,947,998 13,535,763

Rtaind arnings 17 (c) 9,199,518 6,178,582

Total equity 61,584,332 31,869,887

Total Liabilies And Equity 287,899,874 197,676,646

These nancial statements were approved by the Board of Directors on .. 2012 and signedon its bhalf by:-

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

Dirctor

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

Dirctor

BANK OF KIGALI LTD

STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2011

FinancialSta

tements


39/9637

Note 2011 2010

Rwf000 Rwf000

Intrst and similar incom 18 22,671,124 16,368,740

Intrst and similar xpns 19 (6,075,680) (4,182,666)

Nt intrst incom 16,595,444 12,186,074

F and commission incom 20 4,326,856 3,022,031

Forign xchang gains 21 7,643,851 5,247,543

Other income 22 888,719 691,381

Total operang income 29,454,870 21,147,029

Impairment loss on loans and advances 6(e) (4,544,321) (2,376,281)

Impairment loss on available-for-sale investments 8(b) (49,920) (46,733)

Net operang income 24,860,629 18,724,015

Prsonnl xpnss 23 (7,070,435) (5,038,341)

Amorsaon 10 (146,348) (180,602)

Depreciaon 11 (2,285,972) (1,357,181)

Operang expenses 24 (4,703,966) (3,466,499)

Total operang expenses (14,206,721) (10,042,623)

Prot before tax 10,653,908 8,681,392

Incom tax xpns 26(a) (1,965,143) (2,502,810)

Prot for the year 8,688,765 6,178,582

earnings pr shar:

Basic and dilutd arnings pr shar 27 15.62 12.34


INCOME STATEMENT


FinancialSta

tements


40/9638

Note 2011 2010

Rwf000 Rwf000

Prot for the year 8,688,765 6,178,582

Other comprehensive income net of taxes:

Revaluaon net of deferred tax - 7,150,542

Eect of change in tax rate on revaluaon 17 (a) 1,021,506 -

Other comprehensive income net of taxes 1,021,506 7,150,542

Total comprehensive income net of taxes 9,710,271 13,329,124

BANK OF KIGALI LTD

STATEMENT OF COMPREHENSIVE INCOME


FinancialSta

tements


41/9639

ShareCapital

Share

Premium

Retained

Earn

ings

Revaluaon

Reserve

Legal

reserves

Special

Reserves

OtherReserves

Total

Rwf000

Rwf000

Rwf000

Rwf000

Rwf000

Rwf000

Rwf000

Rwf000

At1January2010

5,005,000

-

2,643

,481

-2,272,254

2,357,488

6,262,540

18,540,763

Divid

endsdeclared

-

-

-

-

-

-

-

-

Appr

opriaonofRetainedProt

17(c)

-

-(2,643,481)

-

528,636

528,636

1,586,209

-

TotalComprehensiveIncome:

O

thercomprehensiveincome

-

-

-

7,150,542

-

-

-

7,150,542

P

rotfortheyear

-

-

6,178

,582

-

-

-

-

6,178,582

At31

Dcmbr2010

5,005,000

-

6,178

,582

7,150,542

2,800,890

2,886,124

7,848,749

31,869,887

At1January2011

5,005,000

-

6,178

,582

7,150,542

2,800,890

2,886,124

7,848,749

31,869,887

Divid

endsdeclared

-

-

-

-

-

-

-

-

Nw

sharIssu

16

1,668,370

18,233,653

-

-

-

-

-

19,902,023

Appr

opriaonofRetainedProt

17(c)

-

-(6,178,582)

-

617,858

617,858

4,942,866

-

DfrrdTax

-

-

-

102,151

-

-

-

102,151

Total

ComprehensiveIncome:

Ot

hercomprehensiveincome

-

-

-

-

-

-

-

E

ectofchangeintaxrate

1,021,506

1,021,506

Transferofexcessdepreciaon

-

-

510

,753

(510,753)

-

Protfortheyear

-

-

8,688

,765

-

-

-

-

8,688,765

At31

Dcmbr2011

6,673,370

18,233,653

9,199

,518

7,763,446

3,418,748

3,503,982

12,791,615

61,584,332


STATEMENT OF CHANGES IN EQUITY


FinancialSta

tements


42/9640

Note 2011 2010

Rwf000 Rwf000

Operang Acvies

Prot before taxaon 10,653,908 8,681,392

Adjustment for:

Depreciaon 2,285,972 1,357,181

Amorsaon of intangible assets 146,348 180,602

Dividends received (33,180) (10,477)

Impairment on available-for-sale investments 49,920 46,733

Cash ows generated from operang acvies before

changs in working capital 13,102,968 10,255,431Loans and advances to customers (21,728,030) (24,306,791)

Other assets (10,529,769) (1,112,872)

Customr dposits 45,341,908 26,194,942

Other payables 11,822,067 2,452,533

Cash ows generated from operaons 38,009,144 13,483,243

Incom taxs paid 26(a) (2,714,134) (2,911,451)

Net cash ows from operang acvies 35,295,010 10,571,792

Invesng Acvies

Purchase of held to maturity investments (2,916,209) 7,088,511

Dividends received 33,180 10,477

Purchas of proprty and quipmnt (3,526,858) (3,080,383)

Purchas of intangibl assts (112,094) (344,313)

Net cash ows used in invesng acvies (6,521,981) 3,674,292

Financing Acvies

Dividends paid - (2,643,482)

Nw shars issud 19,902,023 -

Nw loans raisd 4,998,112 -

Net cash ows used in nancing acvies 24,900,135 (2,643,482)

Net increase in cash and cash equivalents 53,673,164 11,602,602

Cash and cash equivalents at 01 January 48,975,892 37,373,290

Cash and cash equivalents at 31 December 28 102,649,056 48,975,892

BANK OF KIGALI LTD

NOTES TO THE FINANCIAL STATEMENTS


FinancialSta

tements


43/9641

1. Corporate Informaon

Bank of Kigali Limited is a nancial instuon licensed to provide corporate and retail banking services tocorporate, small and medium size enterprises and retail customers in various parts of Rwanda.

Th Bank is a limitd liability company incorporatd and domicild in Rwanda.

The nancial statements for the year ended 31 December 2011 were authorised for issue in accordance with aresoluon of the directors on 29 March 2012.

2. Accounng Policies

2.1 Basis of preparaon

The nancial statements have been prepared on a historical cost basis, except for certain nancial instrumentsthat have been measured at fair value. The nancial statements are presented in Rwandan Francs (Rwf) whichis the funconal and reporng currency and all values are rounded to the nearest thousand (Rwf000) except

whn othrwis indicatd.Statementofcompliance

The nancial statements of the Bank have been prepared in accordance with Internaonal Financial ReporngStandards (IFRS) as issued by the Internaonal Accounng Standards Board (IASB) except where otherwisenoted in the accounng policies.

Presentaonofnancialstatements

Th Bank presents its statement of nancial posion broadly in order of liquidity. An analysis regarding recoveryor selement within 12 months aer the statement of nancial posion date (current) and more than 12months aer the statement of nancial posion date (non- current) is presented in note 30.

2.2 Changes in accounng policy and disclosures

Newandamendedstandardsandinterpretaons

The accounng policies adopted are consistent with those of the previous nancial year, except for thefollowing new and amended IFRS and IFRIC interpretaons eecve as of 1 January 2011:

The accounng policies adopted are consistent with those of the previous nancial year, except for thefollowing new and amended IFRS and IFRIC interpretaons eecve as of 1 January 2011:

IFRS 1 Limited Exempon from Comparave IFRS 7 Disclosures for First-me Adopters (Amendment) 1July 2010

IAS 24 Related Party Disclosures (amendment) eecve 1 January 2011IAS 32 Financial Instruments: Presentaon (amendment) eecve 1 February 2010IFRIC 14 Prepayments of a Minimum Funding Requirement (amendment) eecve 1 January 2011Improvements to IFRSs (May 2010) ) IFRIC 19 Exnguishing Financial Liabilies with Equity Instruments 1

July 2010

The adopon of the standards or interpretaons is described below:

IFRS 1 Limited Exempon from Comparave IFRS7 Disclosures for First-me Adopters(Amendment):-Theamendment to IFRS 1 is eecve for annual periods beginning on or aer 1 July 2010. The amendment allowsrst-me adopters to ulise the transional provisions of IFRS 7 Financial Instruments: Disclosures as theyrelate to the March 2009 amendments to the standard. These provisions give relief from providing comparaveinformaon in the disclosures required by the amendments in the rst year of applicaon. To achieve this, thetransional provisions in IFRS 7 were also amended. This is not applicable to the Bank as it is not a rst-meadoptr.

IAS 24 Related Party Transacons (Amendment):-The IASB issued an amendment to IAS 24 that claries thedenions of a related party. The new denions emphasise a symmetrical view of related party relaonshipsand claries the circumstances in which persons and key management personnel aect related partyrelaonships of an enty. In addion, the amendment introduces an exempon from the general related partydisclosure requirements for transacons with government and enes that are controlled, jointly controlledor signicantly inuenced by the same government as the reporng enty. The adopon of the amendmentdid not have any impact on the nancial posion or performance of the enty.


NOTES TO THE FINANCIAL STATEMENTS (connued)


FinancialSta

tements


44/9642

2. Accounng Policies (Connued)

2.2. Changes in accounng policy and disclosures (connued)

IAS 32 Financial Instruments: Presentaon (Amendment):-The IASB issued an amendment that alters thedenion of a nancial liability in IAS 32 to enable enes to classify rights issues and certain opons orwarrants as equity instruments. The amendment is applicable if therights are given pro rata to all of the

exisng owners of the same class of an entys non-derivave equityinstruments, to acquire a xed number ofthe entys own equity instruments for a xed amount in any currency. This amendment had no impact on theBank as no such transacons were entered into.

IFRIC 19 Exnguishing Financial Liabilies with Equity Instruments:-IFRIC 19 is eecve for annual periods

beginning on or aer 1 July 2010. The interpretaon claries the accounng by an enty when the termsof a nancial liability are renegoated and result in the enty issuing equity instruments to a creditor of theenty to exnguish all or part of the nancial liability (debt for equity swap). The interpretaon claries that

equity instruments issued to a creditor to exnguish a nancial liability qualify as consideraon paid. Theequity instruments issued are measured at their fair value. In case that this cannot be reliably measured,the instruments are measured at the fair value of the liability exnguished. Any gain or loss is recognisedimmediately in income statement. The adopon of this interpretaon had no eect on the nancial posionor performance of the Bank as no such transacons were entered into.

IFRIC 14 Prepayments of a minimum funding requirement (Amendment):-The amendment to IFRIC 14is eecve for annual periods beginning on or aer 1 January 2011 with retrospecve applicaon. The

amendment corrects an unintended consequence of IFRIC 14, IAS 19 The limit on a dened benet asset,minimum funding requirements and their interacon. Without the amendments, enes are not permiedto recognise as an asset some voluntary prepayments for minimum funding contribuons. The amendmentprovides guidance on assessing the recoverable amount of a net pension asset. The amendment permits anenty to treat the prepayment of a minimum funding requirement as an asset. The amendment had no impact

on the nancial statements of the Bank, as no dened benet plans are used by the Bank.ImprovementstoIFRSs

In May 2010, the IASB issued its third omnibus of amendments to its standards, primarily with a view toremoving inconsistencies and clarifying wording. There are separate transional provisions for each standard.The following amendments have no impact on the nancial posion or performance of the enty.

IFRS 1 First-me Adopon of Internaonal Financial Reporng Standards (eecve from 1 January 2011)

Accounng policy changes in the year of adopon - The amendment claries that, if a rst-me adopter

changes its accounng policies or its use of the exempons in IFRS 1 aer it has published an interimnancial report in accordance with IAS 34 Interim Financial Reporng, it has to explain those changesand update the reconciliaons between previous GAAP and IFRS. This amendment had no impact onthe Bank, as the Bank already reports in terms of IFRS.

Revaluaon basis as deemed cost - The amendment allows rst-me adopters to use an event-drivenfair value as deemed cost, even if the event occurs aer the date of transion, but before the rst IFRSnancial statements are issued. When such re-measurement occurs aer the date of transion to IFRS,but during the period covered by its rst IFRS nancial statements the adjustment is recognised directly

in retained earnings (or if appropriate, another category of equity). This amendment had no impact onthe Bank, as the Bank already reports in terms of IFRS.

Use of deemed cost for operaons subject to rate regulaon - The amendment expands the scope ofdeemed cost for property, plant and equipment or intangible assets to include items used subject torate regulated acvies The exempon will be applied on an item-by-item basis. All such assets will alsoneed to be tested for impairment at the date of transion. The amendment allows enes with rate-regulate acvies to use the carrying amount of their property, plant and equipment and intangiblebalances from their previous GAAP as its deemed cost upon transion to IFRS. These balances may

include amounts that would not be permied for capitalisaon under IAS 16 Property, Plant andEquipment, IAS 23 Borrowing Costs and IAS 38 Intangible Assets. This amendment had no impact onthe Bank, as the Bank already reports in terms of IFRS.

BANK OF KIGALI LTD



FinancialSta

tements


45/9643



IFRS 3 Business Combinaons: The measurement opons available for non-controlling interest (NCI) wereamended. Only components of NCI that constute a present ownership interest that entles their holderto a proporonate share of the entys net assets in the event of liquidaon should be measured at eitherfair value or at the present ownership instruments proporonate share of the acquirees idenable netassets. All other components are to be measured at their acquision date fair value.The amendments toIFRS 3 are eecve for annual periods beginning on or aer 1 July 2011. The amendment had no impact

on the nancial statements of the Bank.

IFRS 7 Financial Instrumnts Disclosurs: Th amndmnt was intndd to simplify th disclosurs

provided by reducing the volume of disclosures around collateral held and improving disclosures byrequiring qualitave informaon to put the quantave informaon in context. The Group reects the

revised disclosure requirements in the notes.

IAS 1 Presentaon of Financial Statements: The amendment claries that an enty may present an analysis

of each component of other comprehensive income maybe either in the statement of changes in equity orin the notes to the nancial statements.

Other amendments resulng from Improvements to IFRSs to the following standards did not have any impacton the accounng policies, nancial posion or performance of the enty

IFRS 3 Business Combinaons (Conngent consideraon arising from business combinaon prior to

adopon of IFRS 3 (as revised in 2008))

IFRS 3 Business Combinaons (Un-replaced and voluntarily replaced share-based payment awards)

IAS 27 Consolidatd and Sparat Financial Statmnts

IAS 34 Intrim Financial Statmnts

IFRIC 13 Customer Loyalty Programmes (determining the fair value of award credits)

Standardsissuedbutnotyeteecve

Standards issued but not yet eecve up to the date of issuance of the entys nancial statements are listedbelow. This lisng of standards and interpretaons issued are those that the enty reasonably expects tohavean impact on disclosures, nancial posion or performance when applied at a future date. The enty intendsto adopt these standards when they become eecve.

IAS 1 Financial Statement Presentaon Presentaon of Items of Other Comprehensive Income

The amendments to IAS 1 change the grouping of items presented in OCI. Items that could be reclassied

(orrecycled) to prot or loss at a future point in me (for example, upon derecognion or selement) wouldbepresented separately from items that will never be reclassied. The amendment aects presentaon onlyandhas there no impact on the entys nancial posion or performance. The amendment becomes eecveforannual periods beginning on or aer 1 July 2012.

IAS 19 Employee benets (Revised): - The amendments are eecve for annual periods beginning on or aer

1 January 2013. There are changes to post employee benets in that pension surpluses and decits are tobe recognised in full (no more deferral mechanisms) and all actuarial gains and losses recognised in othercomprehensive income as they occur with no recycling to the income statement. Past service costs as a resultof plan amendments are to be recognized immediately. Short and long-term benets will now be disnguishedbased on the expected ming of selement, rather than employee entlement. Although the Bank will not beimpacted by amendments relang to dened benet plans, the impacts on the denions of short-term andlong-term employee benets are sll being assessed.




FinancialSta

tements


46/9644



Standardsissuedbutnotyeteecve(connued)

IFRS 7 Financial Instruments: Disclosures Enhanced Derecognion Disclosure Requirements

The amendment requires addional disclosure about nancial assets that have been transferred but notderecognised to enable the user of the entys nancial statements to understand the relaonship with thoseassets that have not been derecognised and their associated liabilies. In addion, the amendment requiresdisclosures about connuing involvement in derecognised assets to enable the user to evaluate the nature of,and risks associated with, the entys connuing involvement in those derecognised assets. The amendment

becomes eecve for annual periods beginning on or aer 1 July 2011. The amendment has no impact on theentys nancial posion or performance.

IFRS 9 Financial Instruments: Classicaon and MeasurementIFRS 9 as issued reects the rst phase of the IASBs work on the replacement of IAS 39 and applies toclassicaon and measurement of nancial assets and nancial liabilies as dened in IAS 39. The standar

bank of kigali annual report 2011

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