Nonperforming loans portfolio and its effect on bank profitability in Nigeria

Main Article Content

John N. N. Ugoani

Abstract

Huge nonperforming loans portfolio erodes the ability of banks to make profits. In the 1990s and beyond many Nigerian banks became weak and highly unprofitable due to excessive nonperforming loans portfolio accumulated by bank promoters and management that led to their demise. Insider dealing was the major cause of large nonperforming loan portfolio in Nigeria, involving over-extension of loans to promoters, directors and significant others that became bad and irrecoverable. To clean up the mess in the banking sector and return the banks to the paths of sound management and profitability, the CBN had to inject about N700bn in a bailout exercise while purging the system of bad and irresponsible management teams .The exploratory research design was adopted. Data generated were organized and coded before they were classified. To achieve the objective of the study data analyses were done through descriptive and regression analyses using the statistical package for the social sciences for the regression. With the regression result of Y = 78.353 – 4.04x it was found that nonperforming loans portfolio has negative effect on bank profitability.

Downloads

Download data is not yet available.

Article Details

Section
Articles
Author Biography

John N. N. Ugoani, College of Management and Social Sciences, Rhema University

John N. N. Ugoani, holds a PhD degree in management. He is a senior lecturer and coordinator College of Management and Social Sciences at Rhema University Aba, Nigeria, and teaches courses on business, management, production management, human resource management, industrial relations, psychology and industrial psychology. John has over scholarly publications with over 1000 full text readership downloads and 5000 abstract views worldwide. He is listed among Ten Top Authors by Social Science Research Network. His present research interests are in the areas of emotional intelligence, managerial psychology, global human resource management, bank management, conflict management, governance, knowledge management, leadership, entrepreneurship, diversity, public policy, among others. Before entering academia, he was a senior manager at First Bank until 2009.

References

ABIOYE, O. (2015) CBN orders banks to double provisions for loans. Saturday Punch, v. 7305, n. 1804, p: 55.

ADHIKARI, B. K. (2007) Nonperforming Loans in the Banking Sector of Bangladesh: Realities and Challenges: BIBM.

ALLI, Y. (2011) Ex-Bank PHB boss Atuche surrenders to EFCC. The Nation Tuesday May 17, p:53.

BARLTROP, C. J.; MCNAUGHTON, D. (1997) Banking Institutions in Developing Markets Interpreting Financial Statements. v. 2. The World Bank Washington, D. C.

CAPRIO, G.; KLINGEBIEL, D. (2002) Episodes of Systemic and Borderline Banking Crises. Managing the Real and Fiscal Effects of Banking Crises. The World Bank, Washington, D. C. pp. 31–48.

GREUNING, H.; BRATANOVIC, S. B. (2003) Analyzing and Managing Banking Risk. A Framework for Assessing Corporate Governance and Financial Risks. 2nd edition. The World Bank, Washington, D. C.

HANEEF, S.; RIAZ, T. (2012) Impact of Risk Management on Non-Performing Loans and Profitability of Banking Sector of Pakistan. International Journal of Business and Social Science, v. 3, n. 7.

IBRAHIM, U. (2012) Bank Shareholders’ funds hit N2.37trn in 2012. Nigeria Deposit Insurance Corporation (2012) Annual Report and Statement of Accounts, Abuja.

IBRAHIM, U. (2011) The Operating Environment. Nigeria Deposit Insurance Corporation (2011) Annual Report and Statement of Account, Abuja p: 123-159.

JIBUEZE, J. (2011) Akingbola, urges court to halt trail. Accuses EFCC of intimidation. The Nation Tuesday May 17, p: 17.

JIBUEZE, J. (2014) N62bn fraud EFCC re-arraigns Bank PHB ex-MD Atuche. The Nation, v. 9, n. 2766, p: 5.

LATA, R. G. (2014) Non-Performing Loan and its Impact on Profitability of State owned Commercial Banks in Bangladesh: An Empirical Study. Proceedings of 11th Asian Business Research Conference. 26-27 December, 2014, BIAM Foundation, Dhaka, Bangladesh, p: 1-13.

MATYSZAK, P. (2007) Ancient Rome on Five Denair a Day. New York, Themes & Hudson,pp. 144.

MCNAUGHTON, D.; DIETZ, C. T. (1997) Managing Credit Risk. Banking Institutions in Developing Markets. Building Strong Management and Responding to Change, vol. 1, The World Bank, Washington, D. C p. 31 – 63.

NACHMIAS, D. L.; NACHMIAS, C. (1976) Research Methods in the Social Sciences, New York, St. Martin’s Press Inc.

NIGERIA DEPOSIT INSURANCE CORPORATION (1991) Annual Report & Statement of Accounts.

NIGERIA DEPOSIT INSURANCE CORPORATION (1996) Annual Report & Statement of Accounts.

NIGERIA DEPOSIT INSURANCE CORPORATION (2002, 2003, 2004) Annual Report & Statement of Accounts.

NIGERIA DEPOSIT INSURANCE CORPORATION (2011) Annual Report & Statement of Accounts.

NNAMDI, I. S.; NWAKANMA, P. C. (2011) Marketing of Banking Services in Nigeria: Theory and Developments. Owerri, Stramark Communication Consult.

NWAZE, C. (2006) Bank Fraud Exposed with cases and Preventive Measures. 1st edition. Lagos control and Surveillance Associates Ltd.

OLAOLUWA, R. (2015) BOI Recovered N1.3bn NPL in 4th Qtr 2014, Target Below 3%. Business Journal, v. 001, n. 04, p. 16.

ONOH, J . K. (2014) Regulatory Challenges of the Ever Changing Global Financial Landscape. A keynote Address Presented on the Occasion of the 4th Accounting and Finance Research Association (AFRA) International Conference held between the 2nd & 5th November 2011 at the staff Development Centre, Abakaliki, Nigeria, p. 1-28.

SANNI, H. T. (2010) Global Economic Crises: The Need for African Government Intervention for Rapid Economic Recovery and Stability. Central Bank of Nigeria Bullion, v. 34, n. 2, p. 9–18

UGOANI, J. N. N. (2013a) Effect of Emotional Intelligence on Bank Success. German, Lambert Academic Publishing.

UGOANI, J. N. N. (2013b) Power of Bank Credit on Economic Growth. A Nigerian Perspective International Journal of Financial Economics, v. 1, n. 3, p. 93-102.

Most read articles by the same author(s)

1 2 > >> 
فروشگاه اینترنتی