Capital preservation and loanloss impairment provisions will remain top on the agenda of local banks to stay afloat.

Unlike other banks in the region that largely depend on fees and commissions, loans form the core business of Rwandan banks.

Inability for their clients to service loans as a result of Covid-19 outbreak had is expected to expose many to losses.

“The first thing to recognise is that the impact of Covid-19 is still with us and will be here longer, what we are doing as BPR-Atlas mara currently is to raise the level of loan loss impairment provisions to ensure that future losses are taken care of in our cash flows” said Maurice Toroitich, chief executive of BPR Atlas Mara.

Although he recognises that this will affect their profitability, he says the bank is approaching the coming year with “flexibility and agility” because the impact of the pandemic is still unfolding.

“Preservation of capital is key for us, when things are hard you need to preserve capital so you minimise cash flow problems” he said.

As Covid-19 ravaged businesses across sectors, bringing many of the banking sector customers to their knees that resulted in reduced appetite for loans.

Bank of Kigali (BK), the market leader for instance, has a significant number of logistics companies as its customers, and when Intra-regional trade dropped by 40 percent, the lender took a hit.

“At the height of the crisis we had more than 40 percent of our loan book restructured, that is 40 per cent of our clients not paying back.

“But the big question was if these businesses will be able to survive, that’s how we came to take huge loan provisions in terms of credit losses, this affected our performance” said Diane Karusisi, BK chief executive.

She said the turbulence the year faced affected loan disbursement “yet lending is our biggest business, deposits were also drying up because people were consuming their savings”.

At the height of the Covid-19 disruption of businesses, the central bank asked lenders to facilitate loan restructuring to their customers.

Banks were also the conduits through which government channelled the economic recovery fund, intended to accelerate recovery of the most distressed businesses across different sectors.