| Abstract: | Investment, trade, and other commercial operations depend heavily on credit. Poor credit management practices affect the banking industry's bottom line, making credit management and maintenance a prevalent issue. The study's goal is to evaluate Awash Bank's methods for managing credit risk. Descriptive research design and a mixed research approach were used to carry out the study in order to meet this purpose. Using a basic random sampling technique, 125 employees are proportionally chosen as the sample from the 182 target population. 12 boards of directors, 14 members of executive management, 33 members of senior management, 112 departments responsible for credit and risk management, and 12 regional office directors make up the sample. Using structured and semi-structured questionnaires, primary data were gathered from bank workers. To aid in the analysis of the data, descriptive statistics including frequency, percentage, mean score, standard deviation, and graphs were used together with SPSS Version 20.0. The results of this study show that the environment for credit risk management, the credit-granting process, the credit-administration process, and the controls methods used by AB are all good. On the other hand, the discovery demonstrates the bank's lack of adequate financial research, due diligence, and leveraged loan agreements, as well as its failure to test and validate new leading retirees. Additionally, the senior management of the bank uses their subjective judgment. This analysis revealed that Awash Bank's credit risk management practices were good when compared to the NBE norms and Basel Committee credit risk management principles. According to the study's findings, Awash Bank should test and validate new leading retirees in accordance with NBE guidelines and Basel Committee credit risk management principles. The bank should also promote female employees during the hiring process and in the work place. Bank senior management must free themselves from subjective judgment during the loan preparation and processing by creating the pertinent criteria that are utilized to create common judgment. The study recommended that the Bank exercise due caution while handling certain leveraged credit. |
