News
Sunday, October 05, 2014
Rwanda Central Bank ready against shocks
KIGALI, Rwanda - The Governor of the Central Bank of Rwanda (BNR) John Rwangombwa (below), said the financial sector was well capitalized and can stand any shocks that may crop up.
The Governor was presenting the third quarterly 2014 Monetary Policy and Financial Stability statement in Kigali last week.
“The bank has maintained a stable and sound financial sector and this can be seen by looking at the numbers used to assess the performance of the sector which include the capital, liquidity levels and the quality of the assets of the different institutions,” Rwangombwa said.
Rwangombwa said banks, microfinance and insurers were all well capitalized.
Bank Capital Adequacy Ratios were now standing at 23.6% against the prudential requirement of 15%, microfinance at 33.9% against the prudential requirement of 15% and that of insurers at 243% compared to the 100% required by the end of June.
He said looking at the assets of the institutions depending mainly on the Non Performing Loan ratio (NPL) that are monitored on a daily basis, banks’ NPL ratio slightly reduced from the 7.2% registered in mid-2013 to 6.9% in December 2013 standing at 6.6% end June 2014.
“This shows an improvement in the quality of the portfolio of banks despite the fact that we have not reached the below 5% we need,” he said.
Rwangombwa said in the microfinance sector there is a slight worsening from 6.8% registered in December 2013 to 7.6% end June 2014, and this is why the BNR will continue to monitor this sector.
The three sectors (banks, microfinance, and insurance), have remained profitable.
The banking sector’s Return on Assets (ROA) standing at 2.1% by end June 2014, as compared to the 1.5% registered in December 2013. The Return on Equity (ROE) stood at 12.2% by end June 2014 compared to 7.4% registered in December.
Microfinance sector’s ROA stood at 3.9% ROE standing at 11.9% by end June 2014, whereas the insurance sector’s ROA stood at 6% and the ROE at 8% by end June 2014.
“This is not only linked to the improvement in the quality of the assets of these institutions, but also on the performance of their lending activities,” he said.
By Agnes Bateta, Sunday, October 05th, 2014