Rwanda and Kenya are leading the region with banking sectors generating returns on assets (ROA) exceeding 20 percent, reinforcing their appeal as investment destinations.

Central Bank of Rwanda Governor John Rwangombwa revealed this during the Monetary Policy and Financial Stability Statement (MPFSS) presentation.

He reported that net profits in Rwanda’s banking sector surged by 36.7 percent to Rwf132.5 billion in the first half of 2024, highlighting the sector’s resilience and growth.

Rwangombwa noted that these returns position Rwanda’s banking industry as a competitive player in the region.

“This is a good indication that our banking industry is attractive to investments,” Rwangombwa states.

“It is good business but it is also contributing to the general performance of the economy.”

In May 2023, Kenyan banks with subsidiaries in Rwanda reported the highest profits among regional counterparts, benefiting from Rwanda’s fast-growing economy despite global challenges like the impact of Russia’s invasion of Ukraine.

Data from the Central Bank of Kenya indicated that regional bank subsidiaries’ profits before tax surged by 88.65 percent, reaching Sh32.51 billion ($237.29 million) in 2022, up from Sh17.23 billion ($125.76 million) in 2021. Notably, 31.26 percent of these earnings originated from Rwandan operations.

Kenyan banks have established a strong presence in Rwanda, operating 133 branches: KCB (84), Equity (16), NCBA Group (5), I&M Holdings (14), and Guaranty Trust Bank (14).

Rwanda’s banking sector showed significant growth in the first half of 2024, with a return on assets (ROA) of 4.9 percent and a return on equity (ROE) of 21.8 percent. The total assets of the Rwandan banking industry now amount to Rwf7.8 trillion, with banks accounting for 67.5 percent of the country’s financial sector assets.

Equity Bank Rwanda Managing Director Namara Hannington highlighted the agricultural sector as a key area for collaboration between banks and insurance companies, emphasizing its potential to boost economic activity and create business opportunities.

Additionally, lending to the manufacturing industry has increased, with new loans totaling Rwf47.3 billion in the first half of 2024, representing 9% of all new authorized loans.

However, this growth has been accompanied by a rise in non-performing loans, particularly among newer firms and those involved in the Manufacture and Build to Recover program, according to Bank of Kigali CEO Diane Karusisi.

Despite these challenges, the banking sector remains optimistic, with growth opportunities in agriculture and manufacturing expected to drive further economic development.