Abstract:
The title of this work is “The effect of loan management to the Performance of Financial Institutions in Rwanda 2020-2022”. The first objective of the study was to assess the effectiveness of loan management in Bank of Kigali where the researcher indicated loan policies in bank of Kigali, evolution of loans and deposits, default rate, Performing and non-performing. About the second objective of demonstrating the relationship between loan management and performance of Bank of Kigali, the data revealed that during the study period, the interest on loans had a considerable beneficial impact on the increase in operating income at Bank of Kigali, the findings indicated that there is a significant positive impact of loans interest on the increase of operating income in Bank of Kigali during the period of the study. The findings from the table 6 indicated that loan policies are well used for effective loan management in bank of Kigali. The table 7 indicates that loans and advances have been increase as time went, the table 9 indicates that Asset quality ratio in 2020 was 6.7%, 5.3% in 2021 and 6.5 in 2022.These ratios were not good during 2020 (6.7%), 2021 (5.3%) and 2022 (6.5%) because they were greater than 5%. Again, the findings from table 10 indicated that the amount of performing loans is good in Bank of Kigali during the period of the study. These are very good indicators of effective loans management in Bank of Kigali. In 2020 net interest income contributed 78.2 % percent on the total operating income, in 2021 net interest income contributed 75.6% percent on the total operating income and in 2022 net interest income contributed 72.0% percent on the total operating income. As matter of the fact, it is very true to confirm that there is a significant positive impact of loans interest on the increase of operating income in Bank of Kigali from 2020 to 2022. For this reason, the hypothesis which states Loan management is strongly linked to the success of the Bank of Kigali was accepted true.
