Loan Portfolio Management and Performance of Financial Institutions in Rwanda

Lending is the principal business activity for most commercial banks. The loan portfolio is typically the largest asset and the predominate source of revenue. The main purpose of the study was to examine the relationship loan portfolio management and performance of financial institutions in Rwanda. The study was anchored on Modern Portfolio Theory and Customer-Supplier Relationship Theory. The study used descriptive design in providing an indepth study and analysis. The findings indicated that portfolio planning is a key indicator in enhancing performance of financial institutions. As evidenced from the findings, the study concluded that there is a strong positive relationship between portfolio planning and clients screening on the performance of financial institutions. The study recommends that clients need to be trained on how financial institutions work; there is still a need in establish proper methods in approaching clients by increasing agents and number of branches as some financial institutions are located away from rural areas and are only accessible in urban centers. There is still a need in sensitizing citizens on how loans work, and expose them to the most factors that could lead to loss in case someone asked for a loan. There is still a need in collaborating between different financial institutions to avoid confusion regarding financial policies in Rwanda.