The contribution of bank loans to profitability of commercial banks in Uganda: acase study of KCB Uganda

Abstract

This study explored the level of profitability of loans in KCB Uganda. The study used both quantitative and qualitative approaches with a sample size of 10 participants (including 3 credit officers and 7 loan officers of KCB). The study’s main results show that loan profitability at KCB is low due to various challenges, especially the existence of bad or non-performing loans. Other challenges included inefficient data management, insufficient risk management tools, cumbersome reporting, regulatory changes, fraud & identity theft among others. The study suggested strategies that can be used to mitigate these challenges and they include Loan Risk Analysis Strategies, Enforcement strategy in KCB, Default strategy in KCB, well-developed internal control tools, and training analysts among others. The study recommends a need for more loan regulation policies, and further training of employees for better loan management, hence increasing profitability.