Latest data on loan performance indicates that the banking and microfinance sectors remain broadly healthy, with most borrowers servicing their loans on time.

According to the Monetary Policy and Financial Stability Statement released last week, real estate leads among key sectors with the lowest non-performing loan (NPL) ratio at just 1.3%, signalling strong repayment performance.

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Construction and trade also show solid results, with NPL ratios of 1.6% and 1.9% respectively, reflecting robust repayment behaviour.

Manufacturing records a slightly higher NPL ratio of 4.6%, while transportation and storage stand at 2.9%, both still within acceptable levels.

Personal loans, however, carry the highest NPL ratio at 4.8% among the top financed sectors.

Thierry Kalisa, Chief Economist at the National Bank of Rwanda, said the real estate sector’s performance remains well below the 5% benchmark, indicating no immediate concerns.

"As the sector continues to grow and attract investors, we will maintain close monitoring. However, current performance remains strong, with non-performing loans well below our benchmark,” he said.

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Kalisa noted that real estate is closely linked to the construction sector, a key driver of economic growth over the past five years.

Data from the National Institute of Statistics of Rwanda shows that GDP grew by 9.4% in 2025, while construction expanded by 10.9%.

"This highlights the sector’s importance to the economy. Construction, particularly during the building phase, is one of the largest sources of employment, driven by both public and private infrastructure projects,” he added.

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Private developments, including headquarters for financial institutions, international organisations, and commercial properties, are also contributing significantly.

"We are seeing growth in apartment complexes and housing developments. Once completed, these properties are rented out, supporting real estate activity and contributing to GDP,” he explained.

NPL ratio drops to 2.5%

The overall NPL ratio, a key measure of loan repayment capacity declined to 2.5% in December 2025, down from 3.1% in December 2024. The total stock of non-performing loans also fell to Rwf169 billion from Rwf176 billion.

This improvement reflects stronger credit risk management, increased loan recoveries, and write-offs.

However, loans classified as "watch” (30 to 90 days overdue) rose to 7.4% from 4.5% a year earlier, with manufacturing accounting for 34% of this category.

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Meanwhile, newly authorised bank loans grew by 24.9% in 2025, up from 15.0% in 2024, supported by favourable macroeconomic conditions and improved asset quality.

By maturity, short-term loans dominated at 50.7% of total authorised credit, followed by long-term loans at 34.8% and medium-term loans at 14.5%.

The dominance of short-term lending reflects strong demand for working capital, particularly in wholesale and retail trade, motor vehicle and motorcycle repair, and manufacturing.

Overall, the banking sector remained resilient, underpinned by strong asset quality, solid capital buffers, and adequate liquidity.

Why real estate loans perform best

Real estate continues to post the strongest repayment performance, supported by several structural factors.

Steady demand for housing, office space, and commercial properties provides developers with reliable income streams to service loans.

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The sector’s close link to construction, one of the fastest-growing sectors, also supports repayment, as completed projects generate revenue.

In addition, both domestic and international investment in real estate strengthens developers’ financial positions.

Most importantly, real estate loans are typically secured by property. In case of default, banks can recover funds through asset sales, reducing risk and supporting overall repayment discipline.