This study examines the impact of managing credit risk and profitability of banks in Lagos state. It also focused on the need for prompt, effective and efficient service to numerous customers. The research hypothesis was tested and analyzed in relation to adequate credit risk management and its significant effect on banks’ profitability. It was also the aim of this research to evaluate how effective it is for a bank to manage its credit risk effectively to enhance profitability. In the course of this work, data was gotten through administering structured questionnaires which were answered by respondents. Correlation coefficient was used to decide whether or not credit risk management has an impact on profitability. It was then revealed through the analysis of data from the questionnaire that credit risk management operations plays a significant role in the profitability and performance of banks in Lagos State. Therefore, management need to be cautious in setting up a credit policy that might not negatively affects profitability and also they need to know how credit policy affects the operation of their banks to ensure judicious utilization of deposits.