Credit risk management practices of Amantin and Kasei Community Bank Limited

Abstract

The study set out to examine the credit risk management practices of the Amantin and Kasei Community Bank Limited. A mix of qualitative and quantitative research approaches was adopted in a cross-sectional research design. The General Manager, as well as the 15 loan officers for all the loan schemes, the Internal Auditors, Head of Operations and Accounts Department staff were purposively sampled for the study because of their direct involvement in credit management. Primary data on the effectiveness of recovery of defaulted loans and the management challenges of credit risks were also collected from the sampled employees. Secondary data on the non-performing loans ratios from 2009 to 2014 were accessed for the analysis on the trends in credit risk exposure. Questionnaires were used to collect data from the loan officers for quantitative analysis. Interview guides were used to collect data from the General Manager, and the Internal Auditors for qualitative analysis. The quantitative data were analysed using correlation matrices, percentages and frequencies. The qualitative data was discussed and quotes were made to support salient issues. The first conclusion drawn by the study is that, the bank performed comparatively well with the general credit default rates in the Ghanaian banking industry from 2009 to 2014 accounting years. However, the rate of default was fast increasing and that raises concerns for the bank’s operations. The study also concludes that the credit management practices are in line with general banking practices. The study recommended investing further in training of loan officers in loan recovery practices and investing into data management technology for managing client information