In the same fiscal year, loan approvals surged by 33%, amounting to Frw 2,162.9 billion.

The BNR’s report, presented to both chambers of Parliament on November 18, 2024, highlighted notable changes in the banking sector.

Deposit interest rates in commercial banks rose to an average of 10%, driven by long-term savings, while loan interest rates declined by 15.97%, spurred by the growth of short-term loans.

The increase in the NPL ratio, from 3.6% to 5%, was largely attributed to repayment challenges faced by some large companies. Nevertheless, the banking sector demonstrated resilience, with net profits rising by 36.7% to Frw 132.5 billion in the first half of 2024.

BNR Governor John Rwangombwa explained that the 5% NPL ratio does not threaten the profitability of banks.

He remarked, “Even with this 5%, there are amounts already written off as unrecoverable, which are closely monitored over time.”

Rwangombwa also emphasized that BNR maintains strict oversight to ensure banks can issue loans prudently or recover collateral when necessary.

Despite a strong financial position, the sector faces structural challenges. In 2024, 67% of total deposits were demand deposits, which can be withdrawn at any time, while only 33% were time deposits with maturities of less than a year. This limits banks’ capacity to issue long-term loans.

As of June 2024, the Net Stable Funding Ratio (NSFR) stood at 135.6%, well above the regulatory minimum of 100%. This indicates a robust liquidity position, bolstered by a 23.1% increase in customer deposits, which accounted for 78.5% of total bank liabilities.

Rwandan banks have maintained profitability despite increase in non-performing loans to Frw 267 billion.