Most of the banks in the country posted better performance in the first half of this year compared to the same period last year, going by their recently published balance sheets.

The sector, made up of 10 commercial banks, four microfinance banks, one development bank and one cooperative bank, is one of the country’s economic drivers with a special task of increasing lending to the private sector under the Second Economic Development and Poverty Reduction Strategy.

The central bank’s August monetary policy and financial stability statement indicates that the industry’s balance sheet measured by total assets grew by 17 per cent, from Rwf1.5 trillion end December last year to Rwf 1.8 trillion by end June this year.

The growth is mainly attributed to loans granted to the private sector which increased by 7.2 per cent from Rwf843.9 billion end December 2013 to Rwf904.5 billion end June 2014.

On the liability side, deposits grew by 20.6 per cent from Rwf1 trillion end December 2013 to Rwf1.2 trillion end June this year.

On the whole, the sector recorded a total profit of Rwf17.4 billion for the first half of 2014, representing a 24.3 per cent increase compared to Rwf14 billion recorded in the same period last year.

Some of the banks that contributed to the performance include Kenyan bank subsidiaries, Equity Bank Rwanda, which recovered from a Rwf806.3 million loss in the last half year to post a Rwf194.4 million net profit in the last half year, and KCB Bank Rwanda, which saw its after tax profits go up from Rwf199.9 million in the first half of last year to Rwf323 million end June this year.

Bank of Kigali posted a 35 per cent increase in half year net profit, from Rwf7.3 billion at the end ​of ​June last year to Rwf9.8 billion June the year.

However, much as the central bank lowered the Key Repo Rate from 7.5 to seven per cent at the start of the second half last year to encourage the banks to lend, some of them ended up posting lower revenues while others posted losses during this year.

To start with, Development Bank of Rwanda (BRD) posted a 50 per cent after tax profit decline this year, from Rwf2.5 billion end June last year to Rwf1.1 billion end June this year. Ecobank posted a Rwf628.6 million profit slump, from Rwf941.5 million last year to Rwf 312.9 million this year.

I&M Bank Rwanda posted a Rwf308.4 million drop in net profit in the first half of this year, from Rwf2.5 billion last year to Rwf2.2 billion this year, according to a statement from the lender.

Sanjeev Anand, chairman of the Rwanda Bankers Association and managing director of I&M Bank Rwanda, attributed the decline in profits for the banks as a result of the lower volumes they made this year on exchange gains compared to last year.

"We recorded a decline in profits this year for only one reason; our exchange earnings were lower this year compared to last year in volumes and margins,” he said.

I&M Bank’s half year exchange earnings went down from Rwf3 billion last year to Rwf1.9 billion this year, while Ecobank recorded a similar drop in exchange earnings.

BRD made a Rwf378.1 million loss on foreign exchange in the first half of the year from a gain of Rwf 159.2 million last year.

Anand said almost all banks in the industry had exchange gains go down by almost 50 per cent compared to last year but they had made up for the losses by increasing revenues in other areas and reducing costs.

"I made up for the decline by increasing in my revenue streams and reducing on the costs so that profits weren’t affected that much,” he spoke of his bank, I&M.

Access Bank Rwanda managing director Jean Claude Karayenzi said they registered a decline in the income margins as the Rwandan franc declined against the dollar.

"Maybe the margin was eight or nine per cent last year, now it is two to three per cent and that has affected the exchange incomes,” he explained.

Karayenzi said the fact that Rwanda is currently importing much more than its exports can cover contributed to the franc depreciation against the dollar.

The Rwandan franc declined by 1.9 per cent against the dollar in  the first half of the year even as it appreciated against other major international and regional currencies.

The central bank quoted the dollar trading against the franc at Rwf676/689 a dollar on the last day of June this year from Rwf638/647 a dollar on the same date last year.

According to officials, the regulator intends to release over $300 million to the market in order to reinforce the franc.

Karayenzi said any intervention would count for the market and that he doesn’t foresee the franc depreciating further to an extent that would affect overall economic growth.

"I think the dollar will close the year at around Rwf700 or Rwf705. It will come to stabilise as indicated by the slight depreciation in the first half of the year.”

Karayenzi said this year is a better year for the banking sector compared to 2013, noting that the banks’ current lending rates were better than last year’s and that more projects in the mining and construction sectors were being financed.