Moses Odhiambo AluochAngima, Geoffrey Nyamari2024-02-052024-02-052023-10https://ir-library.ku.ac.ke/handle/123456789/27520A Research Project Submitted to the School of Business, Economics and Tourism in Partial Fulfilment of the Requirement for the Award of the Degree of Master of Business Administration (Finance Option) Of Kenyatta University, October 2023.Banks raise loan repayment interest rates to bring in enough money to cover deposit costs as well as other expenses like loan nonpayment. In addition, a significant increase in these interest rates could damage the banks' relationships with their customers. As a result, it is challenging for the managing an account segment to strike a adjust between the two. In light of that situation, the aim of the study was to determine how bank characteristics affect the financial performance of Kenya's top-tier commercial banks. The study's specific goals were to look into how Kenya's tier 1 commercial banks' financial performance was impacted by non-performing loans, bank size, capital sufficiency, and operational costs. The study's direction was provided by the balance score card model, organization theory, trade-off theory, segmented market theory, and liquidity preference theory. Descriptive research methods were used. Kenya's eight Tier 1 commercial banks served as the study's analytical unit. The study's secondary source for data was the banks' audited financial statements. The descriptive data analysis employed means and standard deviations. Additionally, inferential statistics were used to determine the relationship between the variables. The study found that operational cost, bank size, capital adequacy, and non-performing loans all contributed positively to Kenya’s tier 1 commercial banks’ financial performance. The findings supported the bank’s effective operational and administrative cost management strategy. Capital adequacy reduces the risk of bank failure while ensuring the efficiency and soundness of a country’s financial system. The high interest rates charged on bank loans meant that many borrowers defaulted on their debts. This had a negative impact on the banks’ financial health. In order to reduce operating costs, the study proposed that all tier 1 commercial banks should have effective operating processes and strategic plans. The banks ought to offer items that empower sparing and money related consideration since doing so will increment the banks' capacity to loan cash to speculators, in this manner upgrading their money related execution. The central bank ought to pay extraordinary consideration to the capital ampleness proportion of commercial banks when making monetary laws on liquidity since the objective of monetary direction is to extend banks' capacity to extend liquidity and dissolvability. The Tier 1 commercial banks should reduce their interest rates so that borrowers from all different economic backgrounds can afford them.  enBank CharacteristicsFinancial PerformanceTier OneCommercial BanksKenyaThesis