By Godfrey Ntagungira
Central bank of Rwanda governor, John Rwangombwa says Rwanda’s financial service sector is stable despite the slowdown -affirming that Rwanda’s inflation pressures are expected to slow down.
According to the quarterly Financial Stability Committee (FSC) and Monetary Policy Committee (MPC) report released on March 29 noted that the financial sector remains stable and sound.
According Central Bank the sector also remains profitable, adequately liquid and solvent. The central bank estimates that assets of the financial sector continued to grow as it has seen banking sector assets increase by 11.5 percent (year –on-year) to Frw 24 trillion.
In the same period, assets of the microfinance sector increased by 6.6 percent representing Frw 223 billion while assets of the insurance and pension sectors increased by 13.7 percent to Frw 347 billion and by 12.1 percent to 610 billion respectively.
It also observed that the financial sector is sufficiently solvent. As at the end December 2016, Central Bank statistics indicate the capital adequacy ratio of banks and microfinance sectors stood at 21.8 percent and 35.2 percent respectively above the BNR regulatory minimum of 15 percent.
According to the report solvency positions of private insurers continued to improve following the recapitalization of previously undercapitalized companies. After reviewing the economic and financial developments and the outcomes of the previous monetary policy decisions and the outlook for 2017Q2, the MPC decided to maintain the current policy stance.
Overall, the total banking sector net profit (before tax) increased from 57 billion in 2015 to 60 billion in 2016. In the same period. The microfinance sector profits increased from Frw 6.8 billion to Frw 9.9 billion boosted by reduced operational costs and increased fee and commission income.
Profits of the insurance sector increased from Frw 21.9 billion in December 2015 to 24.6 billion in December 2016.
Rwangombwa, noted that BNR will continue to engage financial institutions to improve financial efficiency in order to improve financial sector profitability.
The Rwandan economy grew by 5.9 percent in 2016 and is expected to continue performing well in 2017Q1 as the real composite index of economic activities grew by 5.8 percent during the first two months of 2017 and total turnovers grew by 15.9 percent during the same period.