Many clients who got moratoriums from banks last year had resumed their loan servicing, but the current lockdowns could puncture their recovery.
For example, 80 percent of BPR Atlas Mara's customers who were given moratoriums have started paying, but the prevailing circumstances are putting all businesses on shaky grounds.
Most of the banks are decrying lack of business due to the lockdowns put in place to save lives.
"Today is tough, customers cannot do business and this means businesses are unable to pay their facilities, I cannot, therefore, talk about profitability at the end of the year," said Hannington Namara, the managing director of Equity Bank Rwanda. "We have been doing loan loss provisions every month from last year, which we saw was the prudent thing to do, the lockdowns have had a big impact on the economy and our business."
He said that "the key pain point is lack of business, but not all is gone, there some businesses that controlled the risks." the bank will focus on relationship management and continue to work with its customers on a case-by-case basis to try and whether the storms to minimise impact by the end of the year.
Mr Namara, however, thinks the banking sector will still remain profitable this year, as "different banks depend on different lines of revenue, those that are not reliant on loans will be profitable, and those that rely on loans will suffer."
The bad loans registered in the commercial real estate and hotel sectors have for example put non-performing loan pressure on the market leader -Bank of Kigali, keeping its cost of risk higher than other lenders at 4.7 percent.
Many commercial real estate properties service loans using money collected from rent, so if lockdowns continue to weaken these businesses ' ability to pay loans may worsen an already bad situation. Bank of Kigali has downgraded most of the hotels under its loan portfolio, which might extend to its customers in other lines of business.
Although BK's loan-loss provisions decreased by 11.3 per cent year on year to Rwf11.7 billion ($11.8 million), the lender's non-performing loans grew to Rwf90.5 billion ($91.4 million) by March 2021, from Rwf69.7 billion ($69.6 million) in December 2020, according to the bank'sQ1 results. The bank's loans under Covid-19 related moratoriums also reduced to 12 per cent of the gross loans from 43 per cent restructured facilities.
"At BPR we are looking at stability, risk management is key for us as the year comes to an end, in operations, loans, this is the time to conserve value, we shall also continue supporting our customers who are trying to stay afloat" said Maurice Toroitich, the CEO of BPR Atlas Mara.
With lending being their core business, Rwandan banks are still giving loans albeit after serious assessment of the business health long term and ability to pay back.
Despite the tough times, all the top banks in the market have seen their loan books grow.
"Majority of the businesses we gave moratoriums have started paying their loans, 80 per cent have so far resumed, 20 per cent are struggling, others have even come back for more, although most of them are not trading at the same level they did before the pandemic," said Mr Toroitich.
He said the current pandemic will definitely have a serious effect on loan repayment across different businesses, and that if the lockdown goes beyond the 10 days the effect will even be worse.
This, and in commercial real estate, which grew from 7.5 per cent to 16.7 per cent.