Local banks are in good shape and capable of withstanding external shocks, central bank financial health checks indicate, pointing to a surge in the lenders’ assets that are way above the regulator’s threshold.Quarterly preliminary figures from the central bank indicate that consolidated assets of banks increased by 2.9 per cent to Rwf1.2 trillion in the first quarter of this year on the back of improved supervision. Central bank targets a growth of 7.7 per cent for the banking industry by the end of this year."We are very much encouraged despite what is happening elsewhere, our numbers look good, we are improving, laws, regulations and the prudential standards in place are paying off,” said central bank Governor,  Amb.Claver Gatete. According to statistics, banks’ deposits grew by 6 per cent to Rwf755.9 billion in March, reflecting the lenders’ increased ability to tap into people’s saving.Banks’ combined half year net profits rose to Rwf20.8 billion as of June this year.Through regular meetings with stakeholders in the financial industry, the central bank says it manages to get relevant information when assessing the health of the industry.Besides, the central bank carries out regular auditing of the operations of the lenders and advises on which areas to focus on in terms of rolling out financial products as well as risk management. "We always aspire to have the best of the best in terms of standards and regulatory framework,” said Gatete.Banks’ capital adequacy ratio—the measure of the bank’s capital, which is essential in protecting depositors as well as promoting stability and efficiency— increased to 29 per cent from 25 per cent, which is higher than the central bank’s benchmark of 15 per cent.Their Non Performing Loans (NPL) dropped to 6 per cent in the first quarter of 2012 from 8 per cent last year and 10.8 per cent in 2010.Meanwhile consolidated assets for microfinance institutions including Savings and Credit Cooperatives (Sacco) reached Rwf81.9 billion, up from Rwf77 billion as of December last year.Government is banking on SACCOs to achieve its target of having more than 80 per cent of the population getting access to financial institutions by the year 2017. "We are seeing light at the end of a tunnel because what was more significant is that banks are growing with less risk because solvency ratio is a buffer,” he said.However, NPL in microfinance and Umurenge Sacco are still high having dropped by just 1 percentage point from 12 per cent. Last week, BNR established an internal committee to regulate and analyse external risks within the sector and advise accordingly."As we get more banks that are regional and international in nature, we know that whatever happens will affect Rwanda, so we need to know the kind of risks that we can anticipate,” Gatete emphasised.