ASSESSMENT OF CREDIT RISK MANAGEMENT PRACTICES IN NIB INTERNATIONAL BANK (CASE STUDY IN WOLKITE TOWEN BRANCHES

Abstract

The objective of this study is to examine the practice of credit risk management at NIB international bank. To address this objective, the study targeted 15 professional workers who currently work at three NIB bank branches in Wolkite town. The primary data were collected through questionnaires. The collected data were analyzed using the descriptive analysis method. The findings showed that there is a well-designed credit risk strategy and policy that indicate and recognizes areas of credit engagement and the risks inherent in these engagements. The findings also indicated that respondent employees believed there is a good level of credit appraisal and granting process at the bank that check borrower’s history, financial condition, and collateral requirements before granting the loan. Furthermore, the study showed that NIB Bank has an appropriate internal risk scoring system, good risk control and monitoring system, employs risk based scientific pricing and has an independent risk management function. But results also indicated there is a room for improvement about credit portfolio concentration limits and offering customer’s sufficient training on loan usage. In line with the findings of the study, it was suggested to the bank enhance its credit portfolio concentration limit and improve training to customer on loan usage