Banks in Rwanda have received a total of Rwf2,085billion of cash deposits in the past one year between September 2018 and September 2019, the Central Bank said in its Quarterly Financial Stability Statement on Friday.
Last year at the end of September 2018, the banks only received Rwf1876billion of cash deposits.
The statement released after Financial Stability committee (FSC) convened on Tuesday, noted that Rwanda’s financial Sector is adequately capitalized and has been responsible for the lubrication of a solid economic performance.
The statement also reports that the Banking sector assets increased by 13% during from Rwf2,906billion in September 2018 to currently 3,283billion by September 2019. Experts say during this period, growth was most visible in the net loans that increased from Rwf1,651billion to Rwf1,962billion in the same period.
Other details indicate a sharp adjustment in microfinance assets which increased by 15% from Rwf272billion to Rwf313billion between September 2018 to September 2019.
The insurance assets captured show a rise from Rwf437billion to Rwf494billion in value representing a 13% increased between the same period. Pension funds also experienced an upward trend from Rwf781billion to Rwf918billion.
Banks made sizeable profits for example the statement shows an improvement from Rwf37Billion net profit in September 2018 to Rwf51Billion in September 2019. It was the same trend for microfinance sector net profits rising from Rwf5.8 to Rwf9.9Billion of net profit during the same period.
However, the FSC committee identified credit risk as main risk facing the lending institutions. Credit risk is manifested through high loan concentration to some sectors, especially mortgage and hotels.
The central Bank says it will continue to regularly monitor the performance, classification and provisioning of mortgage loan facilities in banks, ensure compliance with Single Obligor Limits (SOL) as well as Loan-to-Value (LTV) limits.
Meanwhile, regarding high level of written off loans, the Central Bank promises to continue liaising with key stakeholders to deal with issues regarding collateral realisation process.
Operational efficiency was also identified as another challenge across the financial sector which the central bank wants financial institutions to rationalise costs and increase revenue.