banking:Commercial bank profits surge in Quarter 2

The general performance of local commercial banks surged in quarter two of the year with banks registering a robust 220 per cent increase in net profits compared to the same period last year.Statistics from the central bank indicate that total loans issued by banks from January to end of June this year increased from Rwf331.3b to Rwf391.6b, showing quick recovery in the banking sector after the credit crunch that hit the world between 2008 and 2009.

The general performance of local commercial banks surged in quarter two of the year with banks registering a robust 220 per cent increase in net profits compared to the same period last year. 

Statistics from the central bank indicate that total loans issued by banks from January to end of June this year increased from Rwf331.3b to Rwf391.6b, showing quick recovery in the banking sector after the credit crunch that hit the world between 2008 and 2009.

Central bank statistics indicate that the combined deposits increased from Rwf462.7b in the first six months of 2010 to Rwf596.8b the same period this year.

“The sector registered a better performance. The key drivers to this performance is attributed to better management practices exercised by banks, which include cleaning up bad books (NPL), improved corporate governance practices and improved supervisory practices, in terms of improved and new regulations, among others,” Central bank said in a report sent to Business Times.

Figures further indicated that total assets by all bank also increased from Rwf627.1b to Rwf808b.

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.

Return on Equity (RoE) increased to 16.7 percent this year from 10.3 percent last year while Return on Assets (RoA) increased 2.2 percent in 2011 from 1.3 percent.

“Provision of None Performing Loans (NPL) declined to 49.7 percent this year from 56.8 percent in 2010 while NPLs on Gross loans also dipped to 9.6 percent from 12.2 percent from January to June last year,” the report further indicated.

Bank also posted a consolidated net profit in quarter one, with profits rising from a loss of Rwf283.1m to Rwf4.59b in the first quarter of this year.

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