The effects of Covid-19 on loan portfolio management, a case of Stanbic bank Uganda

Abstract

The study examined the effect of COVID-19 on loan portfolio management at Stanbic Bank branches. It was guided by three research objectives which were to; to assess the loan portfolio management practices that are used in the COVID-19 pandemic at Stanbic bank Uganda, to identify the challenges that have affected loan portfolio management at Stanbic bank Uganda and to examine the strategies designed to improve loan portfolio management in the COVID-19 pandemic at Stanbic bank Uganda. The study adopted a descriptive design, in a cross-sectional manner and used quantitative approaches. The study population included employees of Stanbic Bank branches and specifically included Credit Officers, Client Relationship Managers, Credit Evaluation Managers and Branch managers. Data was collected using questionnaire, data collected was analyzed using SPSS to obtain frequencies, percentages, means and factor analysis. It was found out that Loan restructure practices were the major loan portfolio practices used by Stanbic Bank Uganda in the COVID-19 pandemic with 47.16% variance followed by loan terms and conditions with 25.27% and clients could access loans on phone and through internet banking in COVID 19-pandemic. Loan repayment were the major challenges that affected loan portfolio management at Stanbic bank Uganda due to COVID-19 with 42.59% variance followed by loan term challenges with 16.547% and loan repayment capacity challenge with 10.208. %. Improving on loan operations is a major strategy that can be used to improve loan portfolio management at Stanbic bank Uganda with 40.94 % variance followed by improving on loan information provided to clients with 20.249 %. It was therefore concluded that Stanbic bank devised means of keeping their loan portfolio healthy and adopted loan portfolio management practices that were friendly to the customers during the pandemic. Some of the major challenges faced during the pandemic included business disruptions that have led to poor payment of loans by clients. The bank requires solid strategies to manage its loan portfolio during the pandemic. It was therefore recommended that there is need to relax on some of the conditions like collateral requirements for a loan, the bank should put in place stronger assessment processes through its loans department that will help identify those clients who are genuinely vulnerable in the pandemic and the bank should strengthen its online and mobile banking platforms that can help to do loan transactions as well as loan servicing remotely.