By The KFJ & RG Partners
Key Takeaways
- Rwanda’s banking sector delivered a strong Q3 2025, with assets up 16%, loans rising 23%, and deposits increasing by 15%. These results indicate a clear strengthening of credit appetite supported by abundant liquidity across the system.
- League 1 banks maintained overall dominance, though momentum varied significantly. BPR posted headline asset growth of 54%, partly influenced by portfolio normalization and aggressive credit expansion, while BK and Equity recorded more moderate but stable performance.
- Earnings remained concentrated among top-tier banks, with I&M and BPR showing the strongest profit growth. League 2 banks exhibited greater variability, with NCBA outperforming and GT Bank notably lagging.
- Capital, liquidity, and prudential ratios stayed well above regulatory thresholds. However, efficiency gaps widened between League 1 and League 2, highlighting scale-driven performance divergence.
- Heading into Q4, high liquidity buffers and renewed lending momentum position the sector for further expansion, though cost discipline, asset quality, and fee-income resilience will determine relative outperformance.
Sector Momentum Strengthens as Lending and Profitability Accelerate
Rwanda’s banking sector posted a robust Q3 2025, with growth accelerating across both the balance sheet and income statement. Total assets increased by 16%, supported by a 23% rise in loans—one of the clearest indications of returning credit appetite following several cautious quarters. Investment portfolios expanded 10%, while deposits grew 15%, reinforcing continued customer confidence and strong funding mobilisation. Strengthening profitability underpinned higher capital formation, resulting in an 18% increase in total equity.
On the income side, the sector sustained solid performance. Interest income rose 16%, driven by both loan growth and stable asset yields, contributing to a 13% uplift in operating income. Staff costs increased 26%, reflecting continued investment in critical talent and wage adjustments for inflation. Despite these pressures, overall operating expenses rose by only 8%, signalling disciplined management of other cost lines. Combined revenue momentum and cost control translated into strong earnings, with profit before tax up 27% and profit after tax up 25%.
Balance Sheet Dynamics Across League 1 and League 2 Banks
League segmentation remains a powerful analytical lens, reflecting differences in scale, operating leverage, and risk-carrying capacity.
League 1 banks—those with assets above RWF 1 trillion—anchored sector performance but displayed notably different growth trajectories. BPR recorded a 54% increase in assets, driven by aggressive loan growth, deposit mobilisation, and continued balance sheet normalization after prior restructuring. I&M Bank delivered balanced, consistent expansion across major lines. Bank of Kigali posted more moderate growth, with assets up 8%, marked by a strategic pivot from investments toward lending. Equity Bank expanded its loan book by 25% despite relatively flat deposit mobilisation, underscoring selective credit deployment.
Among League 2 banks, performance dispersion was wider. GT Bank reported the strongest headline growth at 21%, supported by increases in both lending and deposits. Ecobank and Access Bank displayed steady expansion, while NCBA grew moderately amid a contraction in deposits. Bank of Africa delivered the softest performance, posting declines in both lending and investment balances.
These patterns highlight a sector where scale confers stability, yet some of the most dynamic shifts in credit growth are emerging from mid-sized institutions seeking to reposition in a competitive environment.
How League 1 and League 2 Banks Converted Growth Into Earnings
Income-statement results reveal how balance sheet momentum translated into earnings across the two leagues.
In League 1, interest income increased across all banks. I&M led with a 30% uplift, reflecting strong loan growth and improved yield profiles. BPR posted a 24% rise, supported by expanding customer activity. Equity grew interest income by 23%, though overall momentum was tempered by a 6% decline in non-funded income. BK recorded a more modest 11% increase, influenced by the scale of its balance sheet and an 11% contraction in non-funded income.
These trends filtered directly into profitability. I&M posted one of the strongest earnings performances in the sector, with profit before tax rising 46% due to revenue growth and improved credit costs. BPR delivered a 39% increase in PBT, driven largely by an 89% reduction in impairments—an improvement more reflective of credit-cycle normalization than purely operational gains. BK and Equity posted PBT growth of 25% and 20% respectively, reinforcing their resilience.
In League 2, outcomes diverged sharply. NCBA outperformed peers, converting modest revenue growth into an 86% increase in profit before tax, supported by a substantial drop in impairment charges. Ecobank recorded strong interest income growth (24%) and a 57% rise in FX income, but a 512% surge in impairments dampened bottom-line progress. Bank of Africa achieved a 16% rise in PBT despite a 3% decline in interest income, demonstrating strong cost control. Access Bank saw PBT fall 3% due to softer revenues and rising expenses. GT Bank faced the most challenging quarter, with interest income down 5%, NFI down 34%, and PBT down 20% amid sharply higher credit costs.
Taken together, the earnings profile reaffirms a widening performance gap between the two leagues—one driven by scale, cost efficiency, and risk management maturity.
Risk, Resilience, and Performance: What the Ratios Reveal
Capital Adequacy: Strong Buffers with Diverging Risk Strategies
Capital ratios remained comfortably above regulatory minima. League 1 showed strong buffers—BK (19.7%), BPR (18.9%), and Equity (16.6%). I&M stood at 15.96%, still well within prudential thresholds.
League 2 displayed greater variance. Ecobank’s Tier 1 ratio of 24.9% and GT Bank’s 36.4% reflect conservative balance sheet strategies and low risk-weighted asset intensity rather than excess profitability. Other banks maintained moderate but stable capital levels.
Asset Quality: Diverging Risk Appetite
League 1 banks maintained comparatively low NPL ratios—below 3% for most—while BK and Equity exhibited higher restructured loan balances, signalling active management of legacy exposures.
League 2 banks showed wider differences, with Ecobank exhibiting exceptionally low NPLs (0.49%), while Access and NCBA hovered near pressure points at 4% and 3.89%.
Liquidity & Funding: Deep Buffers, Differentiated Utilisation
Liquidity coverage ratios were exceptionally strong across the sector. BK (302%), Equity (310%), and I&M (446%) indicated deep buffers, while BPR’s 160% reflected tighter but still compliant management.
League 2 banks showed even wider liquidity ranges. The exceptionally high ratios at Ecobank, NCBA, and GT Bank illustrate conservative positioning or slower loan deployment rather than inherent funding constraints.
Efficiency & Cost Structure: A Growing Challenge
Efficiency gaps widened. League 1 maintained stronger cost-to-income ratios—generally in the 36–45% range—reflecting scale advantages. League 2 faced higher ratios, with several above 50% and GT Bank at 90%, driven by limited revenue scale relative to fixed costs.
Returns & Profitability: Scale Still Matters
ROE and ROA results reaffirmed scale-driven advantages. Equity (19.6%), BK (19%), I&M (16%), and BPR (15%) all posted robust returns. NCBA led League 2 at 18%, while others hovered around the mid-teens, except GT Bank, whose small balance sheet and cost structure constrained ROE to 5.48%.
Balance Sheet Structure: Lending Appetite Widens the Gap
Loan-to-deposit ratios further illustrate strategic differentiation. League 1 banks showed strong intermediation activity—BK (86%), Equity (78%), BPR (76%). I&M’s 55% ratio signals capacity for additional credit deployment.
League 2 strategies varied markedly, with NCBA at 71%, Access at 29%, BOA at 48%, and GT Bank at 26%. This divergence reinforces the emerging segmentation between high-growth lenders and conservative models.
Positioning for a Strong Finish to Q4
Q3 2025 confirms a sector that is resilient, liquid, and increasingly differentiated. Lending momentum has reaccelerated, liquidity buffers remain deep, and profitability is robust at the top end of the market. However, performance is no longer uniform.
As banks head into Q4, the most competitively positioned institutions will be those that:
- Deploy liquidity more aggressively but prudently,
- Strengthen non-funded income streams,
- Manage credit risk proactively, and
- Enhance cost efficiency amid rising staff expenditure.
With liquidity deepening and credit appetite returning, Rwanda’s banking sector enters the final quarter of the year from a position of strength, though with widening divergence between leaders and laggards.
