ASSESSMENT OF CREDIT RISK MANAGEMENT POLICIES AND PRACTICES IN NIB INTERNATIONAL BANK S.CO

Abstract

Credit risk refers to the probability of loss due to a borrower’s failure to make payments on any type of debt. Credit risk management, meanwhile, is the practice of mitigating those losses by understanding the adequacy of both a bank’s capital and loan loss reserves at any given time a process that has long been a challenge for financial institutions. The focus of this research is to assess credit risk management policies and practices of NIB international Bank S.co. The study used a mix of quantitative and qualitative research method to collect and analyze data relevant for the study. Questionnaire and in-depth interview were used to gather pertinent data for the study. Considering the number of targeted population which is only 102 and to increase the accuracy of the study’s result, population censes method or the whole population is considered for this study and data is collected from 102 staffs of the Bank out of which 96 are found to be good for analysis. In-depth interview was conducted with Directors, division managers and with two special Branch managers. Descriptive statistics such as averages, percentages, frequencies and tables are used to analyze and present the data. The study found that factors such as poor credit policy, weak credit analysis, poor credit monitoring, inadequate risk management, lack of management information system in placed to insure that exposures approaching risk limits are brought to the attention of senior management have put a boundless influence towards the attainment of successful credit risk management in NIB Bank. Based on the findings, the paper recommends the Bank’s credit policies should be designed and implemented with consideration for internal and external factors such as the bank’s market position, particularly establish targets for portfolio mix and exposure limits to single counterparties, groups of connected counterparties, industries or economic sectors, geographic regions and specific products as doing this in credit policies and procedures enable the bank to maintain sound credit granting standards; monitor and control credit risk; properly evaluate new business opportunities; and identify and administer problem credits.