The Contribution of Loan Risk Management on the Profitability of Commercial Banks. A Case Study of Bank of Kigali Headquarters, Dan Nuwayo, Liliane Uwimbabazi,

Abstract

The purpose of this paper was to analyze the contribution of loan risk management on the profitability of Bank of Kigali. The research used descriptive and correlational research designs.

The population of this research was composed by 57 respondents. Purposive and universal sampling techniques were used. In order to collect data, questionnaire and interview guide were applied. Data were analyzed by using the Statistical Package for Social Sciences (SPSS) and statistical method was employed. Findings showed that the net profit ratio was 34.94% in 2011 while in 2012 it was 34.02%, in 2013, it increased up to 41.90% while in 2014 the net profit was reduced at 36.17%.  The significant Spearman correlation coefficient value Rs = 0.708 confirms that there appears to be a strong positive correlation between the two variables (Loan Risk Management and Profitability of BK). However, we need to perform a significance test to decide whether based upon this sample there is a greater contribution of loan risk management on the profitability of BK