Non Performing loans in Commercial Banks: A case of CBZ Bank Limited In Zimbabwe

Abstract

The purpose of the study was to find out the causes of non-performing loans in Zimbabwe. Loans form a greater portion of the total assets in banks. These assets generate huge interest income for banks which to a large extent determines the financial performance of banks. However, some of these loans usually fall into non-performing status and adversely affect the performance of banks. In view of the critical role banks play in an economy, it is essential to identify problems that affect the performance of these institutions. This is because non-performing loans can affect the ability of banks to play their role in the development of the economy. A case study research design of CBZ Bank Limited was employed. Interviews and questionnaires were used to collect data for the study. The paper revealed that external factors are more prevalent in causing non performing loans in CBZ Bank Limited. The major factors causing non performing loans were natural disasters, government policy and the integrity of the borrower.