CREDIT MANAGEMENT PRACTICE OF UNITED BANK S.CO

Abstract

Bank promote economic growth by offering credit to borrowers, which is essential for the economic development of the country, this study intends to assess credit management practice of United Bank S.co based on four basic dimensions namely credit follow up and monitoring system after it has been advanced, Bank’s Non-performing Loans (NPLs) and its workout strategy so far, causes for increment of Bank’s loan provision for anticipated loan loss, and sectoral distribution of bank’s loan portfolio. For the purpose of the study descriptive survey design method was applied. Sources of both primary and secondary data were used. Questionnaire was used as a main instrument to collect primary data while secondary data were collected from Bank’s audited annual reports, NBE directives, and bulletin of the bank, furthermore the researches employed Proportionate Stratified Sampling (PSS) approach to select the number of respondents from each section, to analyzing the collected data descriptive statistical tools were used. Data was analyzed using SPSS 21 version and results are described based on statistical mean and standard deviation values. The study found that the bank has insufficient credit monitoring and administration practice, lack of confirming the end use of loan, insufficient rapid remedial on NPL, low quality of lending practice and week control over the credit causes high provision, uneven distribution of bank’s loan portfolio to different economic sector. Finally, based on the findings possible recommendations are given. These include both branches and credit portfolio department of the bank should build strong and efficient credit management practice, the bank should check and confirm the end use of funds to reduce risk of default, the bank should have diversified loan portfolio composition in all aspects to manage the credit risk.