Interest Rate Risk Exposure And Financial Performance Of Commercial Banks In Ugnada

Samuel Odeke, James Odongo


The Ugandan banks still faced with challenges of non-performing assets based on in-accurate information on clients, wrong clients and weak controls within the financial system. Consequently, evidence of weak financial performance of many banks was seen in large provisions for bad loans being made, and subsequent write offs of delinquent loans when they went bad, thus affecting bank efficiency. A cross sectional survey and descriptive research design was used, a sample size of 9 commercial banks was analyzed and interpreted using financial ratios of DuPont analysis of commercial banks. Findings show that a combined variation of maturity gaps, basis risk and assets and liabilities margins for all the commercial banks accounted for up to 14.9% variation in their banks performance. The variation explained 20.19% of the performance of the commercial banks, would predict maturity gaps, basis risk, and assets and liabilities margins. The overall analysis of interest rate risk exposure and bank performance showed generally a positive relationship except basis risk

Keywords: Interest rate risk exposure, financial performance, commercial banks.

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