摘要：The concept of the credit risk management has gained momentum in recent years with financial institutions developing techniques aiming at minimizing credit risk and regulatory bodies coming up with policies ensuring banks adequately manage their risks. This study was carried out to quantitatively determine how risk management affects the banks profitability. PCB, RBKO, NLB, TEB were selected as the sample banks for this study. The methodology involved extracting time series data from the annual reports of the banks to calculate the return on equity which was used as a measure of profitability and also to calculate the nonperforming loan ratio which was used as a credit risk management measure along with the risk asset ratio. Return on equity was expressed as a function of the risk asset ratio and non-performing loan ratio and substituted into a multivariate regression model. The data was run using SPSS software. To further examine the relation a simple linear regression was carried out along with a trend analysis. The output showed a substantial relation between the variables and reflected that a higher risk asset ratio would result in a marginal decline in profitability while higher nonperforming loans had a positive and more substantial effect. Further analysis showed a predominantly negative effect, highlighting the possible inadequacy of the multivariate model.
