Business / Companies
Zimbabwean banks tighten lending terms
27 Apr 2015 at 07:58hrs | Views
The impact of the current liquidity crunch may become more pronounced as it emerged banks have tightened their lending conditions by targeting high net worth clients to avoid contracting bad loans.
Industry sources said that while banks were actively lending to various sectors of the economy, they were now more selective and cautious in their lending, preferring mostly high net or credit worth clients.
This comes as banks prepare to participate in the interbank market, which resumed following a $200 million support facility from Africa Export Import Bank. Interbank lending was suspended in 2009.
"We are lending, all banks are lending, but what is happening now is that banks are now seeking high credit worth and net worth clients. Bank non-performing loans to total gross loans are the value of non-performing loans divided by the total value of the loan portfolio (including nonperforming loans before deduction of specific loan-loss provisions)," said one bank official.
The loan amount recorded as a NPL should be the gross value of the loan as recorded on the balance sheet, not just the amount that is overdue.
Industry sources said that while banks were actively lending to various sectors of the economy, they were now more selective and cautious in their lending, preferring mostly high net or credit worth clients.
This comes as banks prepare to participate in the interbank market, which resumed following a $200 million support facility from Africa Export Import Bank. Interbank lending was suspended in 2009.
"We are lending, all banks are lending, but what is happening now is that banks are now seeking high credit worth and net worth clients. Bank non-performing loans to total gross loans are the value of non-performing loans divided by the total value of the loan portfolio (including nonperforming loans before deduction of specific loan-loss provisions)," said one bank official.
The loan amount recorded as a NPL should be the gross value of the loan as recorded on the balance sheet, not just the amount that is overdue.
Source - The Herald
