Loan Portfolio Management and Financial Performance of Financial Institutions in Rwanda: A Case of Access Bank
Umutesi Shamsi & Kato Mahazi
University of Kigali
ORCID: https://orcid.org/0009-0005-7531-7314
Email: shamsiumutesi@gmail.com
Abstract: Despite significant progress in financial inclusion, with access to formal financial services rising, Rwandan microfinance institutions encounter critical loan-related challenges. The general objective of this study was to examine the effect of loan portfolio management on financial performance of financial institutions, specifically focusing on Access Bank Rwanda. Data collection involved questionnaires and documentary techniques using reports and records from Access Bank. Data analysis was conducted using SPSS (Statistical Package for Social Sciences) version 25, analyzing descriptive statistics frequency, percentage, mean, and standard deviation. The unstandardized coefficient for loan origination is 0.294, the significance level for this coefficient (Sig. = 0.001) demonstrates a statistically significant relationship, highlighting the effect of loan origination on financial performance. For credit risk management, the unstandardized coefficient is 0.334, the significance of this coefficient (Sig. = 0.000) indicates a statistically significant positive relationship with financial performance. The unstandardized coefficient for loan collection and recovery is 0.220, the significance value of 0.002 indicates a statistically significant relationship, pointing to the effect of loan collection and recovery on financial performance. Research concluded that Access Bank Rwanda could shorten processing times and raise loan quality by improving its loan origination procedures and introducing more effective review and approval systems. Furthermore, the bank should engage in modern credit risk management measures, such as using data analytics to better analyze and mitigate possible hazards, which will ensure long-term financial stability.
