TABLE OF CONTENTS
Title
Page
Certification
Dedication
Acknowledgement
Table
of contents
1.0 CHAPTER ONE: INTRODUCTION
1.0 Introduction
1.2 Statement of the problem
1.3 Objective of the study
1.4 Scope of the study and limitation
1.5 Significance of the study
1.6 Plan of the study
1.7 Definition of terms
1.8 Research Methodology
2.0 CHAPTER TWO: LITERATURE REVIEW
2.1 Historical overview of commercial bank
2.2 Functions of commercial bank
2.3 Treasury management in commercial bank
2.4 Various sources of funds
2.5 Various cost of funds
2.6 Cost control
2.7 Essence of treasury management
2.8 Impact of treasury management in commercial
bank
3.0 CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Historical background of the study
3.2 Research Population
3.3 Method of data collection
3.4 Methods of data analysis
3.5 Source of data collection
4.0 CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
4.1 Data presentation techniques
4.2 Liquidity management
4.3 Sources of liquidity
4.4 Asset management
4.5 Liquidity measurement
4.6 Determining liquidity needs
4.7 Profitability to liquidity
4.8 Table showing the sources of bank
liquidity
5.0 CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION
5.1 Summary
5.2 Recommendations
5.3 Conclusion
5.4 Bibliography
Chapter
one
Introduction
Commercial bank is an economic unit with
its main objectives of maximizing profit.
The role of a commercial bank is
different from that of central bank in the utmost aim of making profit from the
public through providing banking-services for personal and commercial
customers.
There are other factors that can
distinguish the commercial bank from the central bank, like ownership of the
commercial banks which is owned by the shareholders like any to other stock
company.
According to Reed et al (2002), the main
role of the commercial bank is converting short term deposit into long term
deposits into long term loan and resolves it to generate income to themselves.
commercial banks brings together people who are willing to save and they can
assured or guaranteed their money any time they need it.
The commercial banks act as
intermediaries of collecting deposits and receiving interest on loan issued out
to lenders. Commercial banks due to its great competition faced in the global
market, it must struggle to attain profits in other to keep the bank and name
in progress and by so doing the following have to be adhered to:
(A) The
shareholders funds: which is gotten through the selling and the buying of
ordinary shares, preference shares redeemable share etc.
(B) Reserves:
As the undistributed profits which belongs to the shareholders and kept with
the Central bank of Nigeria (CBN).
(C) Loan
Capital or debenture Stock: Are the long and medium term loans to the bank
at a fixed rate of interest and repayable over a fixed period of time to
finance certain capital project of a bank.
(D)Customer
Deposits: Made up of the balance held by the bank on behalf of its customer
whether on current accounts or savings in relation to gaining interest
commercial banks at the end of the accounting year prepares it financial
statement to show the rate of performance the bank could achieve during the
year.
The commercial banks have to balance sheets in two
categories namely, the assets side and the liability sides.
The assets side indicates the useful of fund i.e. show how
the funds generated was used and the liability side indicates the sources of
funds for the bank.
Having said all, commercial bank is strictly aimed at
maximizing profit at cost.
1.1 STATEMENT OF THE PROBLEMS
The project will look at the problem faced by the
commercial banks in managing and checking the equilibrium between liquidity and
profitability. Some of the problems that are faced by the commercial banks are
managing equilibrium between liquidity and profitability arises from many
factors like:
1. The
duty of the commercial banks to their shareholders who have invested in the
bank with the aim of a good return interim of future dividends. It is clearly
seen that the banks assets which produce income substantially higher than that
paid on deposit.
2. The
minimum level of liquidity that a bank must maintain as regards to holding cash
and other liquidity assets which can be converted into cash. By doing this
there would be adequate funds to meet the demands from depositors and to
maintain public confidence.
3. The
need to harmoniously balance the indifference motives and maintenance
4. To
adequate liquidity and profitability in the commercial banks would be examined
in detailed in the process of the projects.
1.2 OBJECTIVES OF THE STUDY
Due to the great importance of the subject matter,
(profitability and liquidity management) to the efficiency, continuity and
evaluation of commercial bank management. Also, the project is aimed at
bringing out the effect of the regulatory power given to central bank of Nigeria over
the commercial banks in Nigeria
as contained in the CBN decrees 24 of 2002 and Botin 25 of 1991
In the summary, the objectives of the study are then
analyze the effectively and also on the profitability management to sustain the
bank activities.
- To improve
the managers of the commercial banks on the essence of profitability and
liquidity management.
- To evaluate
the existing theories with contemporary economy
- evaluating the
extent and liquidity affects other elements of banks management
- To give way
for more analysis by future study of the subject matter
- To identify
various components of profitability and liquidity management that the
commercial bank needs to function effectively.
1.3 SCOPE OF THE STUDY AND LIMITATION
In other for this study to be very meaningful, this study
therefore will be limited to basis principles applicable in profitability and
liquidity management in commercial banking.
The study will also look into the
components of profitability and liquidity of commercial banking management at a
glance through treasury management,
The study is a theoretical topic that focuses attention on
the centrals of the banks management, reconciling bank goals of liquidity and
profitability that will affect the operations of he commercial banks.
1.4 SIGNIFICANCE OF THE STUDY
Commercial bank management is just the same as found in
any other profit seeking organization mainly to maximize the wealth of the
owner.
Commercial bank profits are important to every group in
the economy. The stock holders are interested in investing capital in order of
receive dividend or returns on the sum of capital invested. Bank profit
resolves in the benefits of the depositors by producing a strong safer and more
efficient banking system through the increased in reserve and improvement in
services.
The management of funds is one of the significant of the
study which is a complicated factor, however, a bank is considered liquid if it
has adequate resources of liquidity instrument which includes assets that are
readily saleable without material loss in advance of maturity.
Another significant of the study is the way commercial
banks can give an impressing return on their daily activities such as on their
balance sheets at the end of the year and so on.
1.5
PLAN
OF THE STUDY
The study is divided into five chapters, chapter one which
covers the introduction of what is being carried out research methodology.
Chapter two concerns with the literature review and the
study of treasury management in commercial banking.
Chapter three focuses on the commercial banking
profitability. The Chapter four covers the commercial banking liquidity
management, considering all other element of profitability and liquidity of
assets.
Chapter five covers the summary of the study and the
findings, recommendations, conclusion and bibliography.
1.6 DEFINITION OF TERMS
The study is using different terms in the course of this
project and in order to make them clear to all readers, some important of the
term have been defined below:
PROFITABILITY:
Is the main motive of the bank to ensure maximum survival of the bank and the
keeping asset that can quickly be converted into a substantial analysis of
money.
LIQUIDITY:
Is the liability of the bank to meet the demands of their customers. It is the
determination of the bank to be able to meet needs of their depositors at any
time.
FIXED ASSETS:
Is the bank investment in building (premises) equipment and furniture’s etc.
OTHER ASSETS:
Are items under the group of prepayments, accrued interest receivables,
suspense resource and un-capitalized expenditure
1.7 RESEARCH METHODOLOGY
In the course of this research into the study, secondary
data are being used, that is data from text books, journal, publications and
seminars. This is because secondary data are readily available on the topic
compared with the other source of data and its also cost effective and quicker.
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