ABSTRACT

This research work is designed to look into credit risk management as an important tool for survival of banks in Nigeria. The distress syndrome which has crippled most of the Nigeria banks call for effective management of credit unit for survival and growth banks. It critically reviews how prudently Commercial banks managed their credit portfolios that lead them to scale through in the recent Sanusi bank screening test. lndeed, the core business of banks is not as bankers might think, taking deposits and booking loans. Successful bank lending is based not on the booking of loans but on minimizing the risk in collecting them. Thus, the true core business or banking can be described as the profitable management of risk.The survival of banks and their ability to compete depend primarily on their ability to manage credit risk. Historically, banking crises occurred when a group of banks create loans of very poor quality. It is true that bank may occasionally get into trouble because of insufficient liquidity, unexpected interest rate movements, policy induced shocks etc. However, in most cases when banks fail, they do so because of the poor quality of their loan portfolio. However, the recent CBN governor's action against the 8 erring banks has called for strictly adherence to responsible credit risk management by banks and made them to obey doctrines of sound credit risk management system as well as application of ethical credit extension, monitoring and recovery tools. The methodology adopted for the study was the use of secondary data was first bank annual reports and CBN monetary and prudential guidelines. The data were analyzed using multiple regressions. The major findings of this research reviews that poor credit risk management lead to problem in recovering banks loans, wrong allocation of credits, banks failures as well as unemployment. The recommendation made is that, banks should improve more and invest in their credit risk management. They should comply with proper credit risk management guidelines; because it will go a long way in reducing banks failures as well as improvement in their customer's patronage and confidences which will turn lead to increase in profitability and economy development and growth.