Non performing loan above BNR limit

The ratio of non-performing loans (NPL) to the total loan portfolio of banks in Rwanda has risen to 13.1 percent from 12.6 percent in 2008, above the Central Bank’s requirement of less than 10 percent. The National Bank of Rwanda (NBR) data shows that by the end of December 2009 commercial banks’ consolidated net NPL ratio, which reflects loans in default or close to being default, was 11.3 percent.
Ben Kalkman, CEO of Banque Populaire du Rwanda says that NPL portfolio will improve (file photo).
Ben Kalkman, CEO of Banque Populaire du Rwanda says that NPL portfolio will improve (file photo).

The ratio of non-performing loans (NPL) to the total loan portfolio of banks in Rwanda has risen to 13.1 percent from 12.6 percent in 2008, above the Central Bank’s requirement of less than 10 percent.

The National Bank of Rwanda (NBR) data shows that by the end of December 2009 commercial banks’ consolidated net NPL ratio, which reflects loans in default or close to being default, was 11.3 percent.

The deterioration is attributed to losses registered by some commercial banks following the decline in their assets quality in 2009 because of the contractions in the construction and commerce sectors.

“It is a collective problem within the banking sector. Last year credit disbursement went up,” said Ben Kalkman, Chief Executive Officer (CEO) of Banque Populaire du Rwanda.
The 2009 half year report on banks showed that major banks posted huge losses and also tightened lending standards.

However, Central Bank says that commercial banks have maintained and exceeded the Based minimum capital requirement of 8 percent and BNR requirements of 10 percent.

Francois Kanimba, the NBR Governor said this week that the newly licensed Credit Reference Bureau Africa which will compile and disseminate credit information on borrowers within the banking sector will reward and promote good credit track record.

He said banks have been exposed to high risk of lending to bad debtors due to lack of enough information about particular clients.

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