Banking is a business practice, or profession almost as old as the veryrnexistence of man. It has sprouted from the very primitive stone agernbanking, through the Victorian age to the technology driven Google- agernbanking, encompassing automotive teller machines (ATMs), credit andrndebit card, correspondent and internet banking ( Wikipedia, 2008).rnWhile financial institutions have found difficulties over the years for arnmultitude of reasons, the major cause of serious banking problemsrncontinues to be directly related to lax credit standards for borrowers andrncounterparts, poor portfolio risk management, or a lack of attention tornchangesrninrneconomicrnorrnotherrncircumstancesrnthatrncanrnleadrntorndeterioration in the credit standing of bank's counter parties. Now a daysrncredit risk is becoming a vicinity of concern not only to bank's but to allrnin the business world because the risk of a trading partner not fulfillingrnhis obligations in full on due date can seriously Jeopardize the affairs ofrnthe other partner. The goal of Credit Risk Management is to maximizernbanks risk- adjusted rate of return by maintaining credit risk exposurernwithin acceptable parameters. Banks need to manage the credit riskrninherent in the entire portfolio as well as the risk in individual credits or transactions. Banks should also consider the relationships betweenrncredit risk and other risks. Effective management of credit risk is arncritical component of a comprehensive approach to risk management andrnessential to the long-term success of any banking organization (Baslerncommittee on banking supervision, 2004)rnThe axle of this study is to have a clearer picture of how CommercialrnBank of Ethiopia, Construction & Business Bank, Dashen Bank S.C.,rnAwash International Bank S.C., United Bank S.C. and NIB InternationalrnBank S.C manage their credit risks. In this light the study in its firstrnchapter gives background to the study and the second part is a detailedrnliterature review on the origin of banking, credit risk managementrnprinciples, tools, techniques and assessment models. Data analysis andrninterpretation of results are dealt in chapter three. Finally based onrnthese, conclusions and recommendations were drawn on the last chapterrnof the paper