Impacts of non-performing loans on a bank performance; case of Banc ABC

Author

Momati, Munyaradzi

Title

Impacts of non-performing loans on a bank performance; case of Banc ABC

Abstract

This study aimed to examine the impacts of non-performing loan affecting bank performance. The study was limited to Banc ABC headquarters where the sample of 50 people were drawn from targeted population of 70 people. Purposive and simple random sampling techniques were used in data collections. The (SPSS) Version 21 software was used on data analysis. The research findings reveal that loan portfolio management affect the rates of NPL differently in business units within the overall credit department. Lack of proper internal credit risk assessment contributes highly to the high levels of NPL. Based on these findings, enhanced regulatory oversight, collaborative NPL resolution strategies, and strengthened credit risk management practices. The research concludes that the research findings have shed light on the significant implications that high levels of NPLs can have on various aspects of a bank's operations, financial health, and overall performance. This negatively affects the bank's profitability and capital adequacy, as resources are diverted to cover potential losses, limiting the bank's ability to generate sustainable earnings and support future growth and also NPLs have a detrimental impact on a bank's credit risk profile. This study contributes to a deeper understanding of the complex relationship between NPLs and bank performance, providing valuable insights for policymakers, regulators, and banking institutions seeking to mitigate the risks associated with NPLs and foster a more resilient financial system.

Date

May 2024

Publisher

BUSE

Keywords

Bank perfomance

Banc ABC

Non-performing loans

Supervisor

N/A