THE IMPACT OF NON-PERFORMING LOAN MANAGEMENT ON FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN RWANDA. CASE OF BANK OF KIGALI PLC/ HEAD OFFICE PERIOD: 2019 TO 2022

Abstract

Non-performing loans are a significant concern for banks, as they pose risks to their profitability and stability. Effective management of NPLs is crucial for maintaining a healthy financial position and sustainable growth. This study aims to assess the relationship between non-performing loan management and financial performance of Bank of Kigali .His main objectif is to assess the impact of nonperforming loan on performance of BK PLC. The specific objectives are to examine the effectiveness of non-performing loan management applied by BK and also to analyse the relationship between Bank non performing loan and financial performance of BK from the year 2019 up to 2022 The analysis considers various factors related to NPLs management and their influence on financial performance measures such as profitability, liquidity, and solvency. Data has been analysed quantitatively using SPSS computer software called Statistical Package for Social Scientist and qualitatively. Data were obtained from secondary data which were the published financial statement and financial report of BK from 2019 up to 2022 .The data analysis was done through correlations. The findings revealed that loan management has an inverse effect on the financial performance. It was founds also that BK has high profit because of it bank size. It is recommended that banks should regulate their loans facilities to customers and ensure they decrease the non performing loan as it has been found for the year 2022 to increase the quality of the bank’s profitability to ensure the effectiveness of non performing loan management. The study confirms that there is a significant contribution of the Non- performing loan management on the financial performance of BK PLC.