THE EFFECT OF LOAN PORTFOLIO MANAGEMENT ON FINANCIAL PERFORMANCE OF BANKING INSTITUTIONS IN RWANDA. Case study of BPR ATRASMALA HEADQUARTER, Period: 2020-2023

Abstract

The study investigates the effect of loan portfolio management on the financial performance of financial institutions in Rwanda, focusing specifically on BPR Atrasmala Headquarters 6 during the period from 2020 to 2023. The research aims to analyze how various aspects of loan portfolios, including diversification, risk assessment, and interest rates, influence key performance indicators such as return on assets (ROA), return on equity (ROE), and net profit margins. Given the dynamic economic environment in Rwanda, characterized by rapid growth and increasing competition among financial institutions, effective loan portfolio management is crucial for sustaining profitability and ensuring long-term viability.The methodology employed includes quantitative analysis through financial data collected from BPR Atrasmala’s annual reports and qualitative insights gathered from interviews with key management personnel. This dual approach allows for a comprehensive understanding of how strategic decisions regarding loan portfolios impact overall financial health. Preliminary findings suggest that a well-managed loan portfolio significantly enhances financial performance by optimizing asset utilization and minimizing default risks.Furthermore, the study highlights challenges faced by BPR Atrasmala in maintaining an optimal loan portfolio amidst economic fluctuations and regulatory changes. It also discusses best practices in loan portfolio management that could be adopted to improve financial outcomes. The implications of this research are significant for policymakers and stakeholders within the Rwandan banking sector, providing insights into effective strategies for enhancing institutional performance through improved loan portfolio practices.This research contributes to the existing literature on financial performance in emerging markets and offers practical recommendations for enhancing the operational efficiency of financial institutions in Rwanda.