An investigation of credit management practices in corporate banking: A case study of Union Bank Nigeria, Lagos
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Background of the Study
Effective credit management is essential for mitigating risk and ensuring profitability in corporate banking. Union Bank Nigeria in Lagos has developed a suite of credit management practices that aim to balance risk and reward in its lending operations. These practices encompass rigorous credit evaluation procedures, continuous monitoring of borrower performance, and proactive risk mitigation measures such as collateral management and loan restructuring (Adenuga, 2023). By leveraging advanced data analytics and automated monitoring systems, the bank is able to make informed credit decisions that align with both regulatory requirements and market conditions. This systematic approach to credit management not only helps reduce the incidence of non-performing loans but also contributes to higher recovery rates and improved overall portfolio quality (Oluwaseun, 2024).
Union Bank’s credit management framework integrates both quantitative risk assessment models and qualitative evaluations, enabling a comprehensive review of borrower creditworthiness. Regular training and updates to credit policies further ensure that the bank’s practices remain current and effective in a rapidly evolving financial landscape (Chukwu, 2025). However, challenges such as data integration issues, regulatory compliance pressures, and fluctuating economic conditions continue to impact the efficiency of these practices. This study investigates the credit management strategies employed by Union Bank, assessing their effectiveness and identifying areas for enhancement to support sustainable corporate banking operations.
Statement of the Problem
Despite robust credit management practices, Union Bank Nigeria experiences challenges that hinder optimal risk mitigation in its corporate banking division. One critical issue is the difficulty in integrating advanced credit assessment tools with legacy systems, which can lead to data discrepancies and delayed decision-making (Adenuga, 2023). Moreover, the complexity of regulatory requirements and economic volatility often results in inconsistent application of credit policies, thereby increasing the risk of default. The bank also faces challenges related to insufficient training of credit officers on new technologies and methodologies, which hampers the accuracy of risk assessments (Oluwaseun, 2024). These factors contribute to a higher incidence of non-performing loans and reduce overall portfolio quality. In addition, external factors such as market fluctuations and changing borrower profiles further complicate credit management practices, necessitating continual adjustments to the risk management framework (Chukwu, 2025). This study aims to identify these challenges and propose strategies to enhance credit management practices, ultimately reducing credit risk and improving corporate banking performance.
Objectives of the Study
- To evaluate the current credit management practices at Union Bank.
- To identify key challenges affecting credit risk assessment and monitoring.
- To recommend strategies to enhance credit management efficiency in corporate banking.
Research Questions
- What credit management practices are employed by Union Bank in its corporate banking operations?
- What challenges hinder effective credit risk assessment?
- What improvements can be made to enhance credit management practices?
Research Hypotheses
- H₁: Advanced credit management practices significantly reduce non-performing loans.
- H₂: Integration issues between new technologies and legacy systems negatively affect risk assessment accuracy.
- H₃: Continuous training and policy updates improve credit management outcomes.
Scope and Limitations of the Study
The study is limited to Union Bank’s corporate banking division in Lagos, examining credit management practices over recent fiscal periods. Limitations include restricted access to internal credit data and the influence of external economic conditions.
Definitions of Terms
- Credit Management Practices: Procedures and strategies used to assess, monitor, and mitigate credit risk.
- Corporate Banking: Financial services provided to large business entities.
- Non-performing Loans: Loans that are in default or close to being in default.
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