Commercial banks are concerned with another wave of Covid-19 infections that have disrupted economic activities that were beginning to pick up after the government lifted restrictions last year.

However, recent restrictions to contain spread of Omicron has sent alarm bells to banks that were betting on bullish sectors like mining, traditional exports to shore up their earnings Although a number of banks reported profits in quarter three of 2021, the sector was strongly hit by the pandemic, with some lenders even expecting a higher non-performing loans (NPL) ratio and provisions in the fourth quarter results.

“2021 was a very challenging year due to Covid-19 disruptions, many of our customers across different sectors were affected, it came with huge health concerns for our customers and staff, for us it was even more difficult because our customers and staff lost loved ones to the virus,” said Hannington Namara, the CEO of Equity Bank Rwanda.

He said the investment side of the bank also suffered as customers held back due to the pandemic, hence not nailing down any big investment like in the previous years, but the bank is ready to expand its loan book in 2022 and lend to sectors it had never ventured into before.

“The reality of the new omicron variant is not as bad as the previous ones like Delta, the acceptability of the fact that we shall be with this virus for long will open up some businesses.”

“Our outlook for 2022 is both defensive and offensive, we are looking forward to seeing how we can continue accommodating the customers we have, but also the see what opportunities the economy is putting forward.”

“We have the liquidity so we shall expand our loan book this year and look into financing sectors like mining, agriculture, and traditional exports which are performing well during this time,” said Mr Namara.

Major impairments in 2021 were recorded in transport and logistics, tourism and hospitality, real estate, agriculture sectors, with many customers still having a long way to recover even after getting moratoriums.

"The only upside was for those clients whose businesses I would say were favored by the pandemic, like pharmaceutical dealers, telecoms and those making products used in fighting the virus” said Mr Namara.

Banks have customers struggling to pay their loans in all sectors across all loan products, from those with salary loans that lost jobs, those whose businesses came to a standstill, to customers who got moratoriums that have also expired but can’t still resume payment.

“I don’t have the numbers now but I am sure our NPL’s and number of provisions have gone up, they are higher than those in 2020, it will be clear once the results are out”

Despite the difficult year, local banks posted profits with Bank of Kigali (BK) registered a 33 percent growth in net profit for the nine months to September.

I&M Bank reported profits before tax of Rwf8.3 billion for the first nine months of 2021, up from Rwf 5.8 billion.

Diane Karusisi, the CEO of BK, however, noted that that is still too early to know 2022 fortunes.