Assessment on Loan and Advances in bank of Abyssinia

Abstract

This research aimed at finding out why the performance of loan and advance of the bank of Abyssinia stands below from other peers Ethiopian Private Banks, as a case study, in addition to this, the research tried to investigate major challenges encountered at the approval process. This research is conducted with sample of 128 employees, customers and 110 financial statements includes data from 2012 to 2016. This thesis also strives to analyze the level of correlation between selected total assets and deposits factors on the banks loan and advances in BoA; the study found lending practices, lack of focused loan monitoring and follow-up, estimation of collaterals terms and conditions system suspense, and weak customer and bank relationship as the major factors that contribute to loan default. Thus, it is suggested that banks should put in place a vibrant credit process under the NBE standard that ensures proper customer selection, satisfaction, robust credit analysis, proactive monitoring, ethical standards, and prudent application of polices that govern bank loans. The findings highlight in case of the NBE standard result shows properly implemented, and there is some management problems on the process, whereas, there is significant relationship between loan and advances and total assets and deposit of the bank, there is a positive relationship between the variables