Abstract:
The purpose of the study is to analyze the contribution of loan management on financial performance of Bank of Kigali Plc. The specific objective of the study is to assess the effectiveness of loan management of BANK OF KIGALI PLC and to analyze how loan management contributes to the financial performance of BANK OF KIGALI PLC. The data was collected by using documentation technique and data was analyzed through analytical, historical, synthetic methods. The findings show that the researchers have found that from 2018-2022 BK Ltd has increased its credits where from 2018-2019 the credit offered by BANK OF KIGALI PLC was 19% in 2019, 26% in 2020, 16% in 2021 and 15% in 2022. This increase of loan granted by BK ltd resulted from strong management of loan. At the end of 2021 shows how the credit amount progressed from 2018 to 202 the amount has raised step by step at the beginning, The loans offered by BANK OF KIGALI PLC to SMEs were 51,908,675 in 2018, 127,118,705 in 2019, 128,593,947 in 2020, 131,345,473 in 2021 and in 2022, loans granted to SMEs was 137,272,914. Under the Innovation Pillar, the Bank unveiled „Urumuri Initiative‟ which was an annual youth led enterprise challenge where young people with innovative solution based project ideas with great commercial potential to support sustainable national economic growth will compete for interest-free financing to invest in their projects. The Bank made available Rwf 60million worth of interest free financing. According to National Bank of Rwanda (NBR) standard on loan providing, NBR requires all commercial banks operate in Rwanda, for total amount deposit for 100% must be used as follows: 5% reserve requirements, 15% money base and where 80% must be delivered as loan and commercial banks not go beyond on that standard of 80%. The performing loans to total loan of BK that the ratio was good during our period of study 2018 to 2022, the normal ratio of NBR required to banks should be under 95% in 2018, in 2019 the ratio was 94% and 92% in 2020 also increased up to 95% in 2021 and 97.4% in 2022. Trend of net result of BANK OF KIGALI PLC of the research period where from 2018-2019 the net income increased up to 36% and from 2019-2020 the net income increased up to 3% and 2020-2021 net income was 35% and in 2022 the increment of net income was 3%. The net income shows how BK minimizes the expenses. Because the net results of the company necessity of the level of cost includes. But all income from to the how the customers appreciate the services delivered by using and this is due to favorable Loan management.
