ROLE OF LOANS MANAGEMENT TO THE PERFORMANCE OF FINANCIAL INSTITUTIONS IN RWANDA.CASE STUDY:EQUITY BANK RWANDA(2020-2023).

Abstract

The main objective of this study is to assess the contribution of loan management to the financial institution in Rwanda. The specific objectives of the study were To analyze the effectiveness of loan management in Equity Bank Rwanda. To determine the contribution of loan management to the performance of Equity Bank Rwanda. We have investigated using documentary techniques. From the table, interest expenses to interest income ratio of Equity Bank Rwanda were ; The table 4.8 indicates that the net profit made by Equity Bank Rwanda in in 2020 was 10,287,415,000 , in 2021 was 12,379,241,000Rwf , 2022 was 33,275,770,000Rwf and in 2023 was 36,405,577 rwf .It was indicated that the net profit of Equity Bank Rwanda was increased in all four years of the study. The table 4.9 shows the evolution of interest and commission Equity Bank Rwanda collected on credits offered from 2020 up 2023. About the results above, from 2020 up to 2021 were increased by 85.9 % and from 2021 up to 2022 there were the increase of interest and commission collected on credit 218.5 and from 2022 up to 2023. there were the increase of interest and commission collected on credit 8.7. The increase of interest income mean that the bank get income from the credits extended. The table above indicates that the equity of Equity Bank Rwanda are increasing as in 2020 amount of equity in 2023 funds of shareholders were 52,857,944,000 Rwf in 2020 equity were 65,176,206,000Rwf in 2021; 110,586,897,000Frw in 2022, and in 2023 funds of shareholders were 136,404,958,000 Rwf The equity of Equity Bank Rwanda comes from the social capital, reserves, net income and subvention of partners. The profitability of Equity Bank Rwanda, in terms of return on equity was 2020 it increased to 19.4% caused by the increase of equity shareholders , in 2021 was also increased to 43.1% , the ROE was 30% in 2022 and in 2023 was increased to 26.6 % as resulting an increase of the net income Thetable showsthechangesbetweendepositsandloanswithintheEquityBankRwandaduring the period of our study. The results show that the bank granted credits of, 87.9 , 73.4 , 122.9 and 328.05% respectively from 2020 to 2023. The instruction of central bank (BNR) requires 80% of total deposits. As shown in the table in 2021 Equity Bank Rwanda respects the BNR’s regulation except in 2020,2022 and 2023 where the ratio was , 87.9 ,122.9 and 328.05 here the branch manager said that the bank has exceeded the ratio standard as required by BNR because Equity Bank Rwanda has used even its reserves to offer loans to customers so the excess of exceeded which resulted in the use of reserves in the delivery of loans.