The performance of commercial banks in the country improved significantly with credit to the economy growing by 10 percent in the first quarter of 2011 compared to the same period last year.
Statistics from the central bank indicate that total loans issued by banks from January to March this year increased to Rwf404.33 billion from Rwf367.04 billion, which is a sign of a steady recovery in the country’s credit market.
According to the central bank, consolidated net profit for the banks for the period rose to Rwf4.59 billion from a net loss of Rwf283.02 million in the same period last year, representing a 1724 percent increase.
The central bank said the performance is a result of a strong asset growth and competition in the mobilisation of deposits after banks strengthening their activities.
“This improvement is due the positive net profit registered by commercial banks (some banks registered losses) following the efforts made in assets quality management and resources mobilisation,” the central bank told Business Times in a statement.
Total assets of all banks increased by 26 percent from Rwf594.6 billion to Rwf751.1 billion as deposits increased by 22 percent from Rwf441.1 billion in to Rwf540.2 billion, the Bank said.
The central bank also said that it improved the regulatory framework, further boosting the general performance of the financial sector.
In what reflects how banks are efficiently using their assets to generate income, the central bank said that the combined Return on Assets (ROT) was 2.5 percent compared to -0.4 percent in 2010.
The Return on Equity (ROE) also increased to 17.2 percent from 1.4 percent.
“In order to strengthen and improve the functioning of the banking system, the prudential regulations to implement the banking law have been updated,” the statement reads in part.
KCB Bank Rwanda’s, Managing Director, Maurice Toroitich, attributed the growth to improved value addition to banking services, which may be a result of heightened competition within the banking industry.
“Banks have also expanded a wide range of products and better services that attract more customers which has increased revenues,” Toroitich explained.
The Managing Director of Rwanda Commercial Bank (BCR), Sanjeev Anand, said that from 2009 to 2010 banks spent a lot of effort on building the infrastructure as well as scaling down the size of bad loans on their balance sheets.
“Banks have now come-out in booking new business and their None Performing Loans (NPL) has improved and now having new book loans,” Anand said.
The heavy investment in technology has helped banks to attract more clients and be able to give them a range of interesting and competitive products, he said.
The Marketing Manager of Bank of Kigali, Januario Mucyo, said that banks increased delivery channels through opening up of more branches, which increased customer attraction and retention.