International Journal of Economics, Commerce and Management United Kingdom Vol. II, Issue 10, Oct 2014 Licensed under Creative Common Page 1 http://ijecm.co.uk/ ISSN 2348 0386 INFLUENCE OF ASSET LIABILITY MANAGEMENT ON FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN KENYA: A CASE STUDY OF DIAMOND TRUST BANK Makau, Ngati Francis Diamond Trust Bank Kenya, Kisii Branch, Kenya ngati.francis@yahoo.co.uk Memba, Florence School of Business Administration Jomo Kenyatta University of Agriculture and Technology, Kenya Abstract Asset Liability Management is critical for sound management of the finances of any organization that invest to meet its future cash flow needs and capital requirements. Efforts are required to monitor and co-ordinate the activities of asset liability management. Lack of autonomy, weak supervision by Central Bank of Kenya and non-compliance of the commercial banks leading to drop in profits, merging and collapsing of commercial banks. This study is an evaluation on the influence of asset liability on financial performance of commercial banks in Kenya with specific interest in Diamond Trust Bank. The objectives of the study were; to determine the influence of customer deposits; loans advanced to customers; management of the loans advanced to customers and management of loans from other banks influence the Net Interest Income (NII) of Diamond Trust Bank. The study adopted a case study design and made use of Secondary data which was obtained from the bank's annual audited financial statements from 2006-2013. The significance of the regression model was tested using the t-test. Analyzed data was presented in time series plots, tables and graphs. The study concludes that banks should lay more emphasis on encouraging increased customer deposits and the advancement of more loans to customers so as to increase their financial performance. Keywords: Banks, Financial Performance, Asset Liability, Kenya