The study deals about credit risk management of housing and commerce bank of Eritrea(HCBE).The primary objective of CRM of HCBE is to maintain credit risk This thesis has the following specific research objectives;to assess the credit policy,existing method of loan request approval,bank’s credit investigation and customers’creditworthiness,to examine the credit administration aspects ofbanks relating,credit disbursement and monitoring and to find out the effectof credit risk management on the performance of Housing and Commerce Bank.This study was carried out using qualitative and quantitative research methods.To empirically examine the impact of credit risk on profitability of HCBE,10 years(2005-2014)financial data was collected and analyzed using descriptive statics and panel data regression model.　　The analysis showed that credit risk management occupies an indispensible position when lending decisions are carried out.Collaterals play a very important role in credit granting decisions of HCBE.Every branch of the HCBE has a copyof the credit policy manual but this credit policy is not communicated downwards to all of them. The loan application is reviewed and evaluated by consideringthe 5 Cs.The bank has three credit risk management committee to oversee credit risk management.Credit monitoring is conducted through customer contact,annual reviews,risk rating,collateral,and documentation.The result of CRM on Performance showed non-performing loan,loan loss provisions and capital adequacy have a significant impact on the profitability of HCBE.The study suggested a need for enhancing CRM to maintain the prevailing profitability of the bank.