IIARD International Institute of Academic Research and Development

IIARD INTERNATIONAL JOURNAL OF BANKING AND FINANCE RESEARCH (IJBFR )

E-ISSN 2695-1886
P-ISSN 2672-4979
VOL. 8 NO. 3 2022
DOI: https://doi.org/10.56201/ijbfr.v8.no3.2022.pg115.127

---

Risk Assets Quality and Profitability of Listed Commercial Banks in Nigeria Stock Exchange

Ebieri JONES, Ihechinyerem Chidozie OHIAGU, Grace Nkechi EKWONYE and Chinatu UBALI

---

Abstract

The dynamics in banking business had made their function of financial intermediation susceptible to inherent systemic risks and uncertainties as the role strictly require banks to ensure depositors’ funds are not endangered based on economic consequences it portends. The study therefore investigated risk assets quality and profitability of listed commercial banks in Nigeria and adopted ex post facto research design. It engaged non-probability sampling technique and purposively used 5 top banks licensed with international authorization. It collected relevant data from annual reports of these banks covering 2009 to 2018, a post banking sector consolidation era after the world financial crisis. Risk assets ratio and loan deposit ratio were derived and used as joint proxies for risk assets quality whereas log of profit after tax represented the dependent variable. It engaged panel data regression to evaluate the variables. It established that 64.4% of the total variation in profitability was attributable to risk assets quality of the banks. It proved risk assets ratio and loan deposit ratio has positive and negative significant effect on profitability of the banks respectively. The result further gave evidence that each bank maintained risk assets quality that has significant effect of their respective profit after tax during the period and concluded that risk assets quality has significant effect on profitability of commercial banks in Nigeria. It therefore recommended that management of banks should sustain appropriate risk assets ratio, maintain suitable loan deposit maturity profile and enhance its services to attract depositors.

keywords:

Risk assets quality, Risk assets ratio, Loan Deposit ratio, Profitability, Commercial banks.

---

References:

Abata, M. A. (2014). Assets quality and banks performance: A study of commercial banks in
Nigeria. Research Journal of Finance and Accounting 5(18); 39-44 www.iiste.org

Adegbie, F. F & Dada, O. T. (2018). Risk assets management, liquidity management and
sustainability performance in Nigeria deposit money banks. International Journal of
Accounting Research, 6(2): 178.

Adeusi, S. O., Akeke, N. I. A., Obawale, S. & Oladunjoye, O. (2013). Risk management and
financial performance of banks in Nigeria, IOSR Journal of Business and Management 14(6):
52-56.

Ahtiala, P. (2005). The new theory of commercial banking and bank lending behavior, Scottish
Journal of Political Economy 52(5), 769-792.

Akinselure, O. P. & Akinola, T. A. (2019). Impact of credit risk management on profitability of
selected deposit money banks in Nigeria, International Journal of Economics, Commerce and
Management 7(9): 254-268.

Balsley, H. L. & Clover, V. T. (1988). Research for business decisions: business research methods
(4 th ed.) Columbus, Ohio : Publishing House.

Central Bank of Nigeria (2010). Prudential guidelines for deposit money banks in Nigeria. Effective
1 July 2010. www.cbn.gov.ng.

Central Bank of Nigeria. (2010). Circular on monthly submission of credit portfolio classification
by banks. Central Bank of Nigeria, Abuja.

Chukwunulu. I. J., Ezeabasili, N. V. & Igbodika, N. M. (2019). Risk management and the
performance of commercial banks in Nigeria (1994-2016). IIARD International Journal of
Banking and Finance Research 5(1); 64-71

Corporate Finance Institute (2019). Top banks in Nigeria, Overview of Nigeria’s leading financial
institutions, corporatefinanceinstitute.com.
Daily Trust (2020, January 4). Again, CBN raises banks’ deposit ratio, www.dailiytrust.com.ng.

Etale, L. M. & Ujuju, L. E. (2018). Risk management, risk concentration and the performance of
deposit money banks in Nigeria International Journal of Business and Management Review
6(10), 56-68.

Global Legal Group (2020). Banking regulation 2019 Nigeria, Global Legal Insights, www.glg.
Gujarati, D.N. (2013). Basic econometrics (African Edition) Glasgow: Bell and Bain Ltd.
Gujarati, D.N. & Porter, D.C. (2009). Basic econometrics (5th Edition) Boston; McGraw Hill.

Hapsari, I. (2018). Moderating role of size in the effect of loan to deposit ratio and non-performing
loan toward banking financial performance, Advances in Social Science Education and
Humanities Research, 231, 5 th International Conference on Community Development 351-
353.

Harcourt, E. E. (2017). Risk management and performance of deposit money banks in Nigeria,
International Journal of Managerial Studies and Research (IJMSR) 5(8), 47-57.

Jones, E., Onuche, S. V. E. & Nmesirionye, J. A. (2019). Empirical investigation of intellectual
capital and return on assets of listed commercial banks on Nigeria stock exchange:
comparative analysis of banks, European Journal of Accounting, Finance and Investment
5(2),
47-60,
.Published
by
Center
for
International
Research
Development.
www.cird.online/EJFAI/:

Nwaeze, C. & Nnabugwu, I. U. (2014). Banks and other financial institutions management, Aba-
Nigeria: Okpatancs Group.
Olasanmi, O., Uwuigbe, U. & Uwuigbe, O. R. (2015). The effect of risk management on banks
financial performance in Nigeria. Journal of Accounting and Auditing: Research and Practice
1-7 Article ID 239854 IBIMA Publishing.

Proshare (2019). List of deposit money banks and financial holding companies in Nigeria as
at
September 30, 2018, www.proshareng.com.

DOWNLOAD PDF

---

Back