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CREDIT MANAGEMENT AND FINANCIAL PERFORMANCE OF MICROFINANCE INSTITUTIONS IN UGANDA: A CASE STUDY OF THE MICROFINANCE SUPPORT CENTRE, MBALE BRANCH

ABSTRACT

This study investigates the relationship between credit management and financial performance among microfinance institutions (MFIs) in Uganda, using the Microfinance Support Centre (MSC), Mbale Branch, as a case study. The research was guided by three main objectives: first, to examine the effect of client appraisal techniques on the financial performance of MSC Ltd.; second, to assess the effect of credit risk control tools on its financial performance; and third, to evaluate the effect of collection policies on its financial performance.

The study population comprised 60 respondents from various departments, including Finance (2), Human Resource Administration (5), Loans Officers (15), Information Communication Technology (2), Marketing and Corporate Affairs (13), Legal Officers (10), Customers (10), and Internal Audit (5).

Data will be collected using questionnaires and interviews. A structured questionnaire will be administered to members and staff of MSC to gather information on credit management and financial performance. Additionally, face-to-face interviews will be conducted with MSC staff to collect in-depth qualitative data on the same subject. The researcher will arrange meetings with respondents from the specified categories to conduct these interviews.

CHAPTER ONE: GENERAL INTRODUCTION

1.0 Introduction

This chapter presents the background information on the research topic, the statement of the problem, study objectives, research questions, scope of the study, significance of the study, conceptual framework, and definitions of key terms.

1.1 Background of the Study

Globally, the modern concept of “microfinancing” emerged in the 1970s with organizations such as the Grameen Bank of Bangladesh, founded by microfinance pioneer Muhammad Yunus. These institutions shaped the modern microfinance industry, which initially focused narrowly on providing microloans to poor entrepreneurs and small businesses lacking access to traditional banking services. Two primary delivery mechanisms were used: relationship-based banking for individual entrepreneurs and small businesses, and group-based models where several entrepreneurs applied for loans and other services collectively. Over time, microfinance has evolved into a broader movement aiming for a world where everyone—particularly the poor and socially marginalized—has access to a wide range of affordable, high-quality financial products and services, including credit, savings, insurance, payment services, and fund transfers. According to Horne and Wachowicz (1998), many microfinance proponents believe such access helps lift people out of poverty, a view shared by participants in the Microcredit Summit Campaign (1998). For some, microfinance promotes economic development, employment, and growth by supporting micro-entrepreneurs and small businesses; for others, it helps the poor manage their finances more effectively, seize economic opportunities, and mitigate risks.

Currently, microfinance involves supplying loans (credit), savings, and other basic financial services to the poor. These services typically involve small amounts of money—small loans, small savings, etc. However, for most MFIs, credit is one of the key services offered because it influences demand for their products. Myers and Berkley (2003) defined credit as a process where possession of goods or services is granted without immediate payment, based on a contractual agreement for later payment.

The concept of credit dates back to the 1540s, derived from the Middle French word credit (15th century) meaning “belief, faith,” from Italian credito, and from Latin creditum—”a loan, thing entrusted to another,” neuter past participle of credere (“to trust, entrust, believe”). The commercial sense—”confidence in the ability and intention of a purchaser or borrower to make payment at some future time”—appeared in English in the 1570s (with creditor appearing in the mid-15th century), leading to the phrase “sum placed at a person’s disposal by a bank, etc.”

Therefore, the greatest risk in microfinance is lending money and not recovering it. Credit risk is particularly concerning for MFIs because lending is often unsecured; traditional collateral is not commonly used to secure microloans (Churchill & Coster, 2001). Their clients are typically individuals who cannot obtain credit from banks or other financial institutions due to an inability to provide guarantees or security. Many MFIs are reluctant to serve these populations due to high default risk for interest payments and, in some cases, the principal amount itself. Consequently, these institutions must design sound credit management systems. Credit management is the process of granting credit, defining its terms, and recovering it when due. It is a function within a bank or company that controls credit policies to improve revenues and reduce financial risks, involving the identification of existing and potential risks inherent in lending activities. For effective credit management, MFIs should implement variables such as client appraisal techniques, credit terms, collection policies, and credit risk control tools. Sound credit management is a prerequisite for MFI stability and sustained profitability, while deteriorating credit quality is the most frequent cause of poor financial performance. According to Gitman (1997), the probability of bad debts increases as credit standards are relaxed. Firms must therefore ensure efficient and effective receivables management. Delays in collecting cash from debtors cause serious financial problems, increase bad debts, and affect customer relations. Late payments erode profitability, and non-payment results in a total loss. On this basis, it is sound business practice to place credit management at the “front end” by managing it strategically.

In Uganda, the institutionalization of microfinance progressed slowly. Traditionally, Uganda’s private sector has struggled with infrastructural failings, including a weak commercial justice system, corruption, inadequate tax and regulatory management, and lack of financial services (Audit Report, 2002; Wong, 1999). During the 1990s, bank closures and inflexible banking practices by the Uganda Commercial Bank excluded small businesses and low-income households from financial services (Carlton et al., 2016). Furthermore, traditional banks of that era damaged Uganda’s social capital and credit culture by mishandling credit schemes, profoundly undermining public trust in traditional financial institutions (Carlton et al., 2001). However, more traditional forms of informal financial activities have existed for decades (Carlton et al., 2001). The first government-introduced MFIs were FINCA and Uganda’s Women Finance Trust (UWFT) in the 1990s. Due to government failures in effective poverty reduction and development policies at the time, there was heavy reliance on NGOs, community-based organizations, and local “Resistance Councils.”

Following the introduction of these MFIs, results indicate that while microfinance is important for society, challenges remain, including inadequate donor funding, insufficient government support, improper regulations, inefficiency in credit management tools and techniques, and a lack of standardized reporting and performance monitoring systems for MFIs. Although the Ugandan government introduced the Microfinance Support Centre to address these challenges, most efforts have focused on poverty alleviation, with less emphasis placed on credit management. According to MSC’s financial reports from 2016–2018, of the 80 billion Ugandan shillings disbursed in loans, only 40 billion was recovered on time, and 20 billion was defaulted. This highlights a significant challenge in credit management among MFIs, underscoring the need for further research.

1.2 Problem Statement

Sound credit management is a prerequisite for an MFI’s stability and continued profitability, while deteriorating credit quality is the most frequent cause of poor financial performance. According to Gitman (1997), the probability of bad debts increases as credit standards are relaxed. Firms must therefore ensure efficient and effective receivables management. Delays in collecting cash from debtors lead to serious financial problems, increased bad debts, and damaged customer relations. Late payments erode profitability, and non-payment results in total loss. Therefore, strategically positioning credit management at the “front end” is simply good business. MSC has established credit management mechanisms aimed at ensuring proper management of all loans disbursed to clients and improving financial performance. These include sound policies for fund disbursement, well-trained credit officers, and risk assessment officers (MSC Annual Report, 2016). Despite these efforts, MSC’s financial position has continued to deteriorate due to a high default rate. According to MSC’s financial reports from 2016–2018, of the 80 billion shillings disbursed, only 40 billion was recovered on time, and 20 billion defaulted. As with any financial institution, the biggest risk in microfinance is lending money and not getting it back. Credit risk is especially concerning for MFIs because most microlending is unsecured (Craig Churchill & Dan Coster, 2001). Their clients are those who cannot obtain credit from banks due to an inability to provide guarantees or security. This forms the background against which the researcher will examine the effect of credit management on financial performance, with a specific focus on the Microfinance Support Centre, Mbale Branch.

1.3 Research Objectives

1.3.1 General Objective
To examine the effect of credit management on the financial performance of microfinance institutions in Uganda.

1.3.2 Specific Objectives
i. To examine the effect of client appraisal techniques on the financial performance of Microfinance Support Centre Ltd., Mbale Branch.
ii. To examine the effect of credit risk control tools on the financial performance of Microfinance Support Centre Ltd., Mbale Branch.
iii. To examine the effect of collection policies on the financial performance of Microfinance Support Centre Ltd., Mbale Branch.

1.4 Research Questions
i. What is the effect of client appraisal techniques on the financial performance of the Microfinance Support Centre, Mbale Branch?
ii. What is the effect of credit risk control tools on the financial performance of the Microfinance Support Centre, Mbale Branch?
iii. How effective are the collection policies on the financial performance of the Microfinance Support Centre, Mbale Branch?

1.5 Research Hypotheses
i. There is a strong, positive, and significant effect of client appraisal techniques on financial performance.
ii. There is a positive and significant relationship between credit risk control tools and financial performance.
iii. There is a positive and significant effect of collection policies on financial performance.

1.6 Scope of the Study

1.6.1 Content Scope
The study will focus on credit management as the independent variable, with dimensions including client appraisal techniques, credit risk control tools, and collection policies. The dependent variable is financial performance, measured by profitability, cash flow, and liquidity position.

1.6.2 Time Scope
The study will consider information covering ten years. This period is chosen because the Microfinance Support Centre expanded into several areas of Uganda during this time, and ten years is sufficient to predict an organization’s future trajectory.

1.6.3 Geographical Scope
The study will be conducted at the Microfinance Support Centre, Mbale Branch, located in eastern Uganda, Mbale Municipality, at Plot 2, Bumasifwa Lane, along Pallisa Road. Mbale Municipality is bordered by Sironko District to the north, Bududa District to the northeast, Manafwa District to the southeast, Tororo District to the south, Butaleja District to the southwest, and Budaka District to the west. Pallisa and Kumi districts lie to the northwest. Mbale District was chosen because it hosts one of the largest microfinance support centres in the country.

1.7 Significance of the Study
The results of this study will be valuable to researchers and scholars, forming a basis for further research. Scholars can use this study as a foundation for discussions on credit management and financial performance of MFIs. It will provide empirical studies for use in their work and will contribute to the body of knowledge in finance by bridging gaps in credit management research generally.

This study will contribute to both knowledge building and practical improvement in credit management and financial performance. Theoretically, it proposes a comprehensive framework for studying changes in credit management and financial performance. It is also expected to aid policymakers in their efforts to revitalize the sector.

The findings will be highly relevant to the organizations under study and other financial institutions. Non-financial business firms, whether manufacturing or service-oriented, will also benefit, as the results will enable users—especially Finance Trust Bank, Mbale—to appraise their credit policies and critically review their operations for a more results-oriented approach to credit facilities.

1.8 Justification of the Study
Numerous studies on credit management have been conducted globally and in Uganda, but only a few are directly relevant to this research, notably those by Robert (2011) and Lydia (2012).

Robert (2011) studied credit management and profitability of commercial banks using FINCA Uganda, focusing on the role of credit management in profitability. The objectives were to examine credit policy and profitability at FINCA Uganda, assess the causes of low profitability, and establish the relationship between credit management policy and profitability. However, Robert focused only on commercial bank profitability, leaving out other MFIs, which prompted further research on the role of credit management.

Lydia (2012) studied credit control and loan performance in financial institutions, using Centenary Bank, Mbale as a case study. The objectives were to assess the level of usage of credit control systems at Centenary Bank, establish the effects of these systems on deposit rates, and recommend further research on credit risk management and management efficiency in financial institutions. Although Lydia conducted a thorough study based on her objectives (usage of credit control systems and their effect on loan default), she did not examine the challenges of credit management systems. Therefore, further study is needed on the challenges faced in using credit management and the role of credit management systems in financial performance.

1.9 Definition of Key Terms

Financial Performance: According to Business Dictionary, financial performance involves measuring the results of a firm’s policies and operations in monetary terms, reflected in return on investment, return on assets, and value added. Stoner (2003) defines it as the ability to operate efficiently, profitably, survive, grow, and respond to environmental opportunities and threats. Sollenberg and Anderson (1995) assert that performance is measured by how efficiently an enterprise uses resources to achieve its objectives. Hitt et al. (1996) believe that many firms’ low performance results from poorly performing assets.

Client Appraisal: The first step in limiting credit risk involves screening clients to ensure they have the willingness and ability to repay a loan. MSC uses the 5Cs model of credit (character, capacity, collateral, capital, conditions) to evaluate potential borrowers (Abedi, 2000).

Credit Management: One of the most important activities in any company, credit management is the process ensuring that customers pay for products delivered or services rendered. Myers and Brealey (2003) describe it as methods and strategies adopted by a firm to maintain optimal credit levels and effective management. It is an aspect of financial management involving credit analysis, rating, classification, and reporting. Nelson (2002) views credit management as simply the means by which an entity manages its credit sales. It is a prerequisite for any entity dealing with credit transactions, as zero credit or default risk is impossible. The higher the amount and age of accounts receivable, the higher the finance costs to maintain them. If receivables are uncollectible when urgent cash needs arise, a firm may resort to borrowing, with the opportunity cost being the interest expense paid.

Credit Risk Control Tools: Key credit controls include loan product design, credit committees, and delinquency management (Churchill & Coster, 2001).

Collection Policies: Organizations should implement various policies to ensure effective credit management. A collection policy is necessary because not all customers pay bills on time; some are slow payers while others are non-payers. Collection efforts should aim to accelerate collections from slow payers and reduce bad debt losses (Kariuki, 2010).

1.10 Conceptual Framework

Source: Developed by the researcher, guided by Jabareen, Y. (2009)

The conceptual framework presents the independent variable (credit management), intervening variables (organizational policies and values), and dependent variable (financial performance). Credit management involves using credit terms, collection policies, credit risk control tools, and client appraisal techniques to achieve financial performance objectives. This process interacts with intervening variables, including the level of supervision, client training, support documentation, and government policy. The outcome is manifested in sales, cash flows, net profit, and debtor turnover.

• Credit terms involve setting clear guidelines for selling on credit, requiring careful supervision at all levels to improve sales and debtor turnover, thereby enhancing financial performance.

• Client appraisal techniques help ascertain client creditworthiness but require support services and documentation to improve debtor turnover and profitability.

• Credit risk control tools help sell products to creditworthy clients by providing tools to avoid events leading to bad sales. This requires client training on record-keeping, proper documentation, and close supervision by the credit management team for timely repayments and ascertainable sales.

• Collection policies aim to accelerate collections from slow payers and reduce bad debt losses. However, this requires sound government policies and proper documentation to improve timely repayments, reduce defaults, and increase organizational profit.

CHAPTER TWO: LITERATURE REVIEW

2.0 Introduction

This chapter reviews literature on credit management and financial performance as it relates to the study objectives. The researcher focuses on credit management variables (client appraisal techniques, credit control tools, and collection policies) and financial performance variables (revenue, profitability, cash flow, and liquidity position). The chapter concludes with a summary of the literature review.

2.1 Theoretical Review

Previous literature shows that information asymmetry exists in assessing bank lending applications (Binks & Ennew, 1997). Information asymmetry describes a condition where relevant information is unknown to all parties involved in an undertaking (Ekumah & Essel, 2003). Studies on transaction costs show that such costs occur “when a good or a service is transferred across a technologically separable interface.” Transaction costs arise whenever a product or service is transferred from one stage to another where new technological capabilities are needed. Therefore, it may be more economical to keep an activity in-house to avoid expending resources on supplier contacts, meetings, and supervision. Managers must weigh internal versus external transaction costs before deciding whether to outsource an activity (Williamson, 1981). This chapter reviews asymmetric information theory and transaction cost theory in credit management.

2.1.1 Asymmetric Information Theory

Information asymmetry refers to a situation where business owners or managers know more about their business prospects and risks than lenders do (PWHC, 2002, cited in Eppy I., 2005). In a debt market, information asymmetry arises when a borrower taking a loan has better information about the potential risks and returns of investment projects for which the funds are intended, while the lender lacks sufficient information about the borrower (Edwards & Turnbull, 1994).

Binks et al. (1992) point out that perceived information asymmetry may create two problems for banks: moral hazard (monitoring entrepreneurial behavior) and adverse selection (making errors in lending decisions). Banks may find these problems difficult to overcome because it is uneconomical to devote resources to appraisal and monitoring when lending relatively small amounts, as the data needed to screen credit applications and monitor borrowers are not freely available to banks.

2.1.2 Transaction Costs Theory

First developed by Schwartz (1974), this theory suggests that suppliers may have an advantage over traditional lenders in verifying the real financial situation or creditworthiness of their clients. Suppliers also have a better ability to monitor and enforce credit repayment. These advantages may give suppliers a cost advantage over financial institutions.

Petersen and Rajan (1997) classified three sources of cost advantage: information acquisition, buyer control, and salvaging value from existing assets. The first source arises because sellers can obtain information about buyers faster and at lower cost, as it is gathered during normal business operations. For example, the frequency and amount of a buyer’s orders give suppliers insight into the client’s situation; a buyer’s rejection of discounts for early payment may alert the supplier to weakening creditworthiness; and sellers typically visit customers more often than financial institutions do.

2.2 Conceptual Review

2.2.1 Credit Management

Credit management is a critical activity in any company and cannot be overlooked by any economic enterprise engaged in credit, regardless of its business nature. It is the process of ensuring customers pay for products delivered or services rendered. Myers and Brealey (2003) describe credit management as the methods and strategies a firm adopts to maintain optimal credit levels and effective management. It is an aspect of financial management involving credit analysis, credit rating, credit classification, and credit reporting. Nelson (2002) views credit management as simply the means by which an entity manages its credit sales. It is a prerequisite for any entity dealing with credit transactions, as zero credit or default risk is impossible.

The higher the amount and age of accounts receivable, the higher the finance costs to maintain them. If receivables are not collected on time and urgent cash needs arise, a firm may resort to borrowing, with the opportunity cost being the interest expense paid. Nzotta (2004) opined that credit management greatly influences the success or failure of commercial banks and other financial institutions, as the failure of deposit banks is largely influenced by the quality of credit decisions and risky assets. He further notes that credit management provides a leading indicator of the quality of a deposit bank’s credit portfolio.

A key requirement for effective credit management is the ability to intelligently and efficiently manage customer credit lines. To minimize exposure to bad debt, over-reserving, and bankruptcies, companies must gain insight into customer financial strength, credit score history, and changing payment patterns. Credit management begins with the sale and continues until full final payment is received; it is as important as closing the sale. Technically, a sale is not complete until the money is collected. Sound lending principles aim to ensure, as far as possible, that the borrower will make scheduled payments with interest in full and on time; otherwise, the profit from interest earned is reduced or eliminated by bad debt when the customer defaults. Credit management is primarily concerned with managing debtors and financing debts, with objectives of safeguarding the company’s investment in debtors and optimizing operational cash flows. Policies and procedures must be applied for granting credit, collecting payment, and limiting the risk of non-payment.

2.2.2 Financial Performance

According to Business Dictionary, financial performance involves measuring the results of a firm’s policies and operations in monetary terms, reflected in return on investment, return on assets, and value added. Stoner (2003), as cited in Turyahebya (2013), defines financial performance as the ability to operate efficiently, profitably, survive, grow, and respond to environmental opportunities and threats. Sollenberg and Anderson (1995) assert that performance is measured by how efficiently an enterprise uses resources to achieve its objectives. Hitt et al. (1996) believe that many firms’ low performance results from poorly performing assets.

A firm’s financial performance can be measured in terms of profitability, revenue, cash flows, and others. Van Horne (1989) stated that a firm should evaluate its credit policy in terms of return (profits) and costs, which include selling and production costs, administration costs, and bad debt losses. Management must establish a system for trade debtors by addressing factors such as cash discounts for prompt payment, credit period offered, customer creditworthiness evaluation, and clearly stating steps for late payment in its credit policy. Credit standards—the strength and creditworthiness of customers—must be demonstrated for potential clients to qualify for credit.

2.2.3 Profitability

Profitability is measured by income and expenses. Income is money generated from business activities (e.g., sales proceeds). Expenses are the costs of resources used or consumed by the business, including opportunity costs of tying up funds in debts, costs of running credit operations, time costs for debt collection, bad debt costs, and debt recovery costs (Leong, 2009). Profitability can be defined as either accounting or economic profits. Accounting profit is the excess of income over expenses. While a single non-profit year may not seriously harm a business, consecutive years of losses may jeopardize its viability (DONs, 2009).

Accounting profit is measured to ascertain business success, the business’s chances of survival, and its ability to reward owners for their investment—the main goal of management. Accounting profit is measured using instruments such as the income statement, which projects business profitability for the coming accounting year.

Economic profit is computed by deducting opportunity costs from net income (Graham, 2000). Opportunity costs include the money, labor, and management ability directed toward credit allocation. Economic profit provides a long-term perspective on the business’s continued operation. A firm’s profitability is influenced by the structure of revenue-generating assets like credit in MFIs, which generate revenue through interest income. Profitability also depends on the firm’s ability to eliminate risks in asset operations to ensure correspondence between assets and liabilities (Bobakova, 2003).

2.2.4 Cash Flow and Liquidity Position

A cash discount is the percentage reduction on the amount of debt to be paid by creditors, acting as an incentive for customers to repay credit obligations within or before the credit period. Cash discounts accelerate credit collections, helping the firm reduce the level of receivables and associated costs (Reigner & Hill, 1997; Mosic, 1982). Pandey (1995) defines cash management as the management of cash flows into and out of the organization, cash flows within the firm, and cash balances held at a point in time, including financing deficits or investing surpluses.

Pandey (1995) further states that cash management involves managing a firm’s cash flows and balances by financing deficits or investing surpluses. Cash sales generate cash that must be disbursed; surplus cash must be invested, and deficits must be borrowed. Cash management must be accomplished at minimum cost. Bodil (1999) notes that a business cannot survive without sufficient cash to pay bills and finance growth, but having too much cash is inefficient and costly. Therefore, firms should keep their money at work to maximize value and, when investing excess cash, strive for a balance between risk and expected return.

Business analysts report that poor cash management is the main reason for business failure. Poor cash flow handling is a critical stumbling block for entrepreneurs. Managers who ignore cash flow effectiveness hinder management of the business’s lifeblood.

2.3 Empirical Literature Review

2.3.1 Effect of Client Appraisal on Financial Performance

The first step in limiting credit risk involves screening clients to ensure they have the willingness and ability to repay a loan. The Microfinance Support Centre uses the 5Cs model (character, capacity, collateral, capital, conditions) to evaluate potential borrowers (Abedi, 2000). The 5Cs may improve loan performance by helping the institution know its customers better. Character refers to the trustworthiness and integrity of business owners, indicating willingness to repay and ability to run the enterprise. Capacity assesses whether the business (or household) cash flow can service loan repayments. Capital refers to the assets and liabilities of the business or household. Collateral is access to an asset the applicant is willing to cede in case of non-payment, or a guarantee by a respected person to repay the loan if the borrower defaults. Conditions include a business plan considering competition, product/service market, and the legal and economic environment.

The 5Cs should be included in the credit-scoring model, a classification procedure where data from application forms for new or extended credit lines are used to assign applicants to “good” or “bad” credit risk classes (Constantinescu et al., 2010). Inkumbi (2009) notes that capital (equity contributions) and collateral (security required by lenders) are major obstacles for entrepreneurs, especially young entrepreneurs or those with no money to invest as equity or assets to offer as security. Improving access to finance requires addressing challenges related to capital and collateral. Taking collateral is a straightforward way to guarantee loan recovery and secure depositors’ funds. However, although MSC uses the 5Cs model, year-end financial reports indicate that this does not fully prevent defaults, leading the researcher to conduct further study to address this gap.

Sheilah (2011) commented that the ability of financial institutions to promote growth and financial performance depends on the extent to which financial transactions are conducted with trust, confidence, and minimal risk. This requires sound and safe loan appraisal to assess the financial character of loan applicants before any steps are taken. This dictates the conditions applied to loan covenants, helping to curb bank-customer relationships that may positively influence financial performance. Sheilah argues that proper and adequate loan appraisal is key to controlling the level of interest income, return on assets, and return on equity, thereby positively influencing financial performance. However, the study found that loan appraisal did not adequately assess the value of assets to be invested in customers beyond return on equity to guide appropriate credit decisions.

Nagarajan (2011) observed that the time taken to appraise bank clients is crucial for identifying return on deposits, which influences the bank’s financial performance and reflects management’s ability to utilize customer deposits to generate profits. Dhankal (2011) added that the challenge with this policy is the attractiveness of banks to customers to encourage frequent deposits and offer incentives for delayed deposits, thereby generating more revenue toward improved financial performance. However, the study identified a gap: this involves not only the collection procedure details provided by the bank but also the procedure for lawful collection.

2.3.2 Effect of Credit Risk Control on Financial Performance

Key credit controls include loan product design, credit committees, and delinquency management (Churchill & Coster, 2001). Although most MFIs have tried to apply these tools, credit committees still face challenges in determining institutional credit policy and spotting potential risks in various transactions. Therefore, the researcher intends to conduct further study to evaluate the effectiveness of these credit risk control tools in relation to credit management and financial performance.

Mwangi (2010) investigated factors affecting MFIs’ credit risk management practices in Kenya, focusing on how portfolio quality, market infrastructure, and market concentration affect credit risk. The study found that all three factors did affect MFI credit risk. Nyaker