Credit Administration and Financial Performance of Commercial Banks in Kampala City Authority, Uganda (Dfcu and Finance Trust)

ABSTRACT The study was can-ied under the topic Credit Administration and Financial Performance of commercial Bank in Kampala City Authm-ity- Uganda. The objectives of the study were to level of credit administration, establish the level of financial performance of Commercial Banks and the relationship between credit administration and financial performance of commercial Banks. The data was collected generated from questimmaires and interview guide and analyzed using SPSS and pearson product moment correlation coefficient to make conclusions. The study indicate that it takes more than a week to access credit from a Bank, interest rates charged between 15- 20%. Borrowers are classified according to risk factors in terms of ability to pay; banks require sufficient collateral from small borrowers. Credit appraisal reports are always prepared and reviewed by management before credits are given out. The bank emphases close monitoring on small credits as compared to big loans. The findings also indicate the banks had improved its overall profitability in the past 5 years, there has been continuous improvement in tenus of accessibility by banks to customers, improved motivation of employees, improved marketing. The banks also offer loans like mortgage, salary loans, and home improvement among others. The findings indicate the there was a strong relationship between credit administration and financial performance of commercial banks for instance there is a high loan default in a bank, such a bank will have increased bad loans and thus reducing on the profitability of the bank. The study recommended that banks should revise mechanisms and see how to reduce on the tumaround time to enable those clients acquire loans fast. Banks should introduce new technologies in order curb the ever increasing fraud in the industry, the banks should increase on marketing of the bank products to the customers.