LOAN MANAGEMENT AND FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN RWANDA A CASE OF: BANK OF KIGALI (2019-2022)

Abstract

This dissertation explores loan management and financial performance of commercial banks in Rwanda, focusing on the Bank of Kigali from 2019 to 2022. The study's objectives were to measure the relationship between loan management and financial performance, to evaluate the effectiveness of nonperforming loan management on enhancing the financial stability and to examine the effects of loan recovery, deposit utilization, and lending strategies on the financial results of Bank of Kigali. Using financial data from 2019 to 2022, a quantitative research design was adopted, utilizing secondary data from the Bank of Kigali. Statistical techniques were employed using SPSS software. The findings show strong positive correlation of .978 and a significance of 0.022 between loan management practices and financial performance, which leads to the confirmation of the alternative hypothesis. The study recommends that the Bank of Kigali improve loan management strategies to reduce nonperforming loans (NPLs) and continuously monitor and evaluate loan recovery processes for maximum efficiency. Additionally, implementing advanced loan management technologies could further enhance financial performance. This study contributes to the existing body of knowledge by empirically demonstrating the impact of loan management on the financial performance of commercial banks in Rwanda. It offers practical insights for bank management and policymakers on the importance of effective loan management practices for ensuring financial stability and profitability.