The study aimed at assessing the effect of credit risk management on the performance of financial institutions in uganda and it was guided by the following objectives; To examine the effect of Credit Risk identification on financial performance of Pride Microfinance Ltd Nakulabye branch, Kampala City, to analyse the effect of Credit Risk assessment on financial performance of Pride Microfinance Ltd Nakulabye branch, Kampala City and to investigate the relationship between Credit Risk control and financial performance of Pride Microfinance Ltd Nakulabye branch, Kampala City. The descriptive design was adopted, which aimed at assessing the effect of credit risk management on the performance of financial institutions in Uganda. The descriptive research design refers to the systematic process of gathering descriptions of existing phenomena. The results yielded an adjusted R2 value of 0.735 at significance 0.000 suggesting that on credit risk management were high significant predictors of the variance in the financial performance of the pride microfinance ltd, nankulabye branch as they predicted 73.5% of the variance in the financial performance while other variable predicted the remainder of 26.5% of the variance in the financial performance. This had commercial and mortgage banking institutions’ performance policy implications in that the achievement of the desired level of sales revenue and profitability depends on observance of effective risk management practices. Risk assessment was the highest predictor of the variance in financial performance of the bank (β = 0.644, t=8.153, sig = 0.000). This was followed by risk identification (β= 0.243, t=3.377, sig = 0.001). To achieve the desired sales revenue and profitability, the study recommends that the management of FIs should constantly identify and regulate the bank’s ability to absorb the credit risk, undertake to classify bond and money markets credit related risk in their credit risk identification. The above should be guided by a philosophy of continuously exploring all possible risk origins and their classification to guide credit risk assessment.