Credit Risk Management Practices on Loan Portfolio of Barclays Bank of Kenya
Since banks core business is lending, they are viewed as business with huge risk appetite with lending activities being one of the key sources of credit risk. Among the risks that banks face, credit risk is of great concern to most bank authorities and banking regulators since it easily and most likely prompts bank failure. Credit risks faced by commercial banks are not only a threat to its financial performance but also to the financial market.The main aim of the current research study was to evaluate the extent to which credit risk management policies influenced the loan book in terms of quality at Barclays bank of Kenya.The researcher adopted the case study research design as it places more emphasis on full contextual analysis of fewer events or conditions and the interventions. The study used primary data that was obtained with the help of personal interview steered by the use of interview guide. Once the data was collected, content analysis was used to conduct an analysis on a text, after the text was coded, into manageable concepts which were quantified and tarried using the basis method of content analysis, the conceptual analysis.From the findings, it is clear that loan portfolio at Barclays Bank of Kenya was influenced by credit risk management policies. The conclusion was that lenders need to levy their customer’s reasonable interest rates. In this regard, loan portfolio performance tends to get better thus enhanced lender returns. Subsequently, reduced interest rates attract new customers thereby improving income levels to the bank. This research explained fifty seven percent variance of NPA’s in banks. Further research needs to be done to include the additional determinants hence reveal the remaining NPA variance.
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