The task of the thesis is to design a model to find the optimal solution for allocating funds for the various types of loans offered by Nkoranman Rural Bank, Sunyani, in order to maximize the net returns. The aims and the objectives of the project are to model the Loan Portfolio of Nkoranman Rural Bank, Sunyani using Linear Programming and solve the Linear Programming Model to maximize profit. A linear programming Model was formulated using the data collected from Nkoranman Rural Bank, Sunyani and Karmarkar’s algorithm, an interior point method is used to solve it. The results show that Nkoranman Rural Bank Limited, Sunyani, will realize an optimal annual profit of GHc 117,123.51 on its loan portfolio if the management of the bank adopts the Model and implement it accordingly. This amount represents 35.5 % of the total fund to be disbursed by the bank for the year 2015, as against the 28.2 % profit made in 2014.

1.0. Introduction
This chapter discusses the general overview of the study including the background of the study, the statement of the problem and the objectives of the study. The chapter also looks at the summarized version of the methodology, significance of the study and the organization of the thesis.

1.1.0    Background of the study
Banks are licensed and regulated financial institutions that invest money received from customers, pay it out on request, give loans at an interest rate and exchange currency. According to the International Monetary Fund’s Gobat (2012), banks are institutions that match up savers and borrowers to help ensure that the economies function smoothly. Banks are intermediaries between depositors (who lend money to bank) and borrowers (to whom the bank lends money). The amount banks pay for deposits and the income they receive on their loans are both called interest.

For most banks across the globe, lending is a primary source of revenue or income among their core functions. Lending therefore has become the principal business activity for most banks in Ghana. In spite of the high interest rate charged on loans, borrowers still patronize various types of loans for various reasons and intentions.

The Loan Portfolio is a very important financial portfolio and as such, its effective management is fundamental to the safety and sustainability of banks. Most loan managers concentrate their effort on how to effectively approve loans and carefully monitor loan performance. It is therefore vital and prudent for financial establishments like banks to maximize the return on their Loan Portfolio.

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Item Type: Ghanaian Topic  |  Size: 81 pages  |  Chapters: 1-5
Format: MS Word  |  Delivery: Within 30Mins.


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