CREDIT RISK MANAGEMENT AND FINANCIAL PERFORMANCE OF BRAC MICROFINANCE KIBULI, MAKINDYE DIVISION KAMPALA UGANDA

ABSTRACT The study concerning the findings on the effect of credit risk management on the financial performance of Brac Microfinance. The study objectives were to investigate the relationship credit risk ident~fIcation on the financial performance, to establish the relationship between credit risk monitoring and assess the relationship credit risk analysis on the financial performance of equity bank Uganda. The study was conducted from 30 respondents who were the employees ofBrac Microfinance. The data was collected using closed ended questionnaires were data, the research was entirely a descriptive research design based on quantitative research. The studyfindings reveal that credit risk management had a significant contribution to financial peiformance. The study conclude that credit risk ident~flcation was low though with a sign~flcant effect on financial performance, the study conclude that risk identUication need enhancement through improving forecasting improvements. The study on the second objective the study conclude that the credit risk analysis contribute significantly to financial performance of the banks, the study conclude that risk analysis has to be improved in the mechanisms to enhance financial performance and operations. On the third objective the study conclude that credit risk monitoring can generate financial performance of the bank, whereas the financial performance ofthe bank seemed relevant and significant, credit risk management is low that call for an enhancement ofthe staffand the instruments used in improving credit risk management to generate financial performance. The study recommends that bank’s top management and board ofdirectors must base their investment decisions primarily on risk management. They must use detailed information on integrated risk management at their company and weigh these risks against those of new investments. There is need for improving the financial performance of the commercial bank in the extent that customer base can be improved There is needfor strong cost reduction by management through credit risk analysis so as to save on the finances lost through operations that are not effectively guided in work to improve financial soundness of the commercial bank.