Investrust strengthens credit underwriting processes

INVESTRUST Bank says to cope with the expected increase of loan defaults in the second half of the year due to high interest rates, it has strengthened its credit underwriting processes to ensure maintenance of a quality loan book.
The bank says it has also intensified staff training to maintain a quality loan book.
According to Investrust Bank results for the six months ended June 30, 2016, risk acceptance policies are also constantly reviewed in line with changing risk trends and recoveries efforts on all past due loans have been enhanced through a dedicated recoveries team.
“Specialised recovery firms are being appointed to ensure focused recovery efforts. Where necessary, legal action has been instituted,” the report reads.
However, the bank says despite operating in an environment charaterised by tight Kwacha liquidity, high funding costs and high interest rates, the bank has focused on expenditure control and sourcing cheaper deposits.
It says focus for the second quarter continues to be on aggressive deposit mobilisation as well as to diversify the deposit base by reducing reliance on expensive term deposits.
In the second half, Investrust will restructure the bank’s branches from being processing centres to a more sales- oriented model that will continue as a key driver for growth.
The bank also says it intends to allocate more resources on client portfolio growth through aggressive sales of retail and corporate liability products.
“The bank anticipates growing its business in the near future through consolidation of its operations and increasing the client base and product offerings and uptake,” the report reads.
Meanwhile, during the first half of the year, the bank raised K40 million via a Rights offer to boost its regulatory capital.
On March 30, 2016 at the annual general meeting, the shareholders approved an issuance of Non-Voting Preference shares which meet the criteria of Tier 1 capital which is used to describe the capital adequacy of a bank.
The bank says regulatory approvals are all in motion to ensure that the issuance of shares is concluded before the close of the second half of the year.
It says the issuance of shares will result in the bank’s regulatory capital exceeding the minimum prescribed capital as required by the Bank of Zambia.

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