Abstract:
The topic under this study is made of “study is to establish the effect of loan portfolio management on the performance of commercial banks in Rwanda. with the following objectives; to examine the effectiveness of loan portfolio management at BANK OF KIGALI PLC. to analyze the contribution of loan portfolio management to the performance of BANK OF KIGALI PLC. The target population of this study was all employees in credit management and disbursement department where all were found to 54. The results presented in the table 4.4 mentioned that the majority of respondents representing 72.7% of the total respondents strongly agreed 21.3% agreed that the Bank of Kigali applies risk diversification in terms of portfolio management, 85.2% of the total respondents strongly agreed 14.8% agreed that The bank use bank management systematic and unsystematic risk in term of portfolio management, and 77.2% of the total respondents strongly agreed 12.8% agreed that Cost of loan portfolio diversification is determined in case of loan portfolio management within The bank next 72.7% of the total respondents strongly agreed 21.3% agreed that The allocation of the bank risk management deeply relies on the diversification of loan risk to decrease the NPL amount The table 4.14 shows the Return on Assets ratio during the covered period. From 2019 up to 2022.The ratio of Return on Assets are 3.66%; 2.95%; 2.95% and 3.22% respectively. This means that, in 2019 for 100 RWF of invested they got 3.66 RWF; in 2020 for 100 RWF of invested they got 2.95RWF; in 2021 it got 2.95RWF and in 2022 got 3.22 Rwfs. The table 4.15 shows that from 2019 up to 2022, the ratios of Return on Equity are as follow: 16.90%, 14.86%; 18.16% and 18.72% respectively. This means that, in 2019; for the 100Rwf investors have invested in bank, they generated in 16.90Rwf of benefit, in 2020 for the 100Rwf investors have invested in bank, they generated in 14.86Rwfof benefit, and in 2021 for the 100Rwf investors have invested in bank, they generated in 18.16Rwf of benefit and in 2022 for100Rwf investors have invested in bank, they generated in 18.72 Rwf of benefit. It is from these we verify and rejected the first hypothesis stipulating that There is no relationship between loan portfolio management and financial performance at BANK OF KIGALI Main Branch And the second one which said that: There is relationship between loan portfolio management and financial performance at BANK OF KIGALI Main Branch has been verify.
