Effect of financial reporting on financial decision making of commercial banks. Case Study: Bank of Kigali Plc (2019-2022)

Abstract

The purpose of the study is to assess the effect of financial reporting on decision taken by commercial bank in Rwanda where the specific objectives of the study are to analyze the effectiveness of financial reporting applied by BANK OF KIGALI PLC and to investigate the contribution of financial reporting on decision making of BANK OF KIGALI PLC. The data was collected by using documentary techniques where the data were analyzed by using analytical, historical ans statistical methods. The results of the findings shows that the interest income of Bank of Kigali Plc was 116,517,161 in 2019, 141,558,224 in 2020, 176,572,535 in 2021 and 187,448,813 in 2022. Which corresponded with Interest expense which is equal (21,743,716) in 2019 up to (49,673,037) in 2022. From 2019-2022 shows some significant trend on the side of the assets for example Cash, deposits and Balances due from financial institutions which increased to 132% from 2020 compared to the basic year and become 190% in 2021 and increased to 229 in 2022 compared to the basic year and loan and advance to customers which increased 126% in 2020, 146% in 2021 up to 168% from 2022 of base year‟s figure which is good in BK business the more you gets client to lend money some time they grow their businesses and after they start the saving if credit risks were studied with much care. And total assets were 128% up to 182% from 2019-2022 compared to the basic year and this also shows the growth on the part of Assets. The decision made after analyzing the financial reporting are Investing decision making, Equity Investments, Working capital decision making and Dividend decision making and Recruitment decision making of BANK OF KIGALI PLC. During the research period from 2019-2022, ROE ratio are the following: 17%, 15%, 18% and 19% respectively. 100 FRW invested by shareholders generated 17 Frw in 2019, 15 Frw in 2020, 18 Frw in 2021 and 19 Frw respectively. The researchers recommended BANK OF KIGALI PLC did not fully comply with the requirements of BNR; therefore, the employees of BANK OF KIGALI PLC are advised to read all the requirements of BNR carefully and put in place a good strategy to respect those financial requirements.