This research work is determine, “The effect
of credit management on profitability of Bank in Nigeria using First Bank of Nigeria
plc as a case study. It is also examine the performance of banks based on its
ability to generate income through the provision of various credit management
service to customers. The project employed the use of questionnaire to sources
of data which is administered to the banks staff as well as personnel interview
and observation while the collected data was analyzed through the use of
regression analysis in the testing of hypothesis. The result shows that credit
management reduces the level of fraudulent practices in banks and boost its
profitability. Finally, it is clear in the finding that a lot still need to be
done in the area of innovation and regulatory requirement to enhance its better
performance before banks can reap the benefit of credit management
TABLE OF CONTENT
Title Page i
Table of Contents iv-vii
of the Study 2
of the Study 2
of the Study 2
of the Study 3
of the Study 3-4
of the Terms 4
2.0 Literature Review 5
2.1 The historical perspective
from which the same or related problems. 6
2.2 The theoretical
perspective from which the same or related
been studied previously. 6-7
2.3 The generalization
resulting from the identification of the
theoretical implication of its evolution. 8
methodology most appropriate for its further study 8
bank of Nigeria plc profile. 8-9
of research methodology 10
of data collection 10
of data collection 10-11
of data presentation. 11
of Return 11
Analysis and Presentation. 13
of Return 13
of respondent of Bio-Data 13-15
Conclusion and Recommendation 20
5.1 Summary 20
Appendix I 23
Appendix II 24-25
has become necessary to take a cursory look at the concept of debts, its
ramification and problems associated with management.
The issue of problem associated with
loans advance management prompts the this central bank of Nigeria (CBN) to
reduce the guidelines in a circular entitled “prudential guidelines for
licensed Banks” the main purpose of this, is to ensure that the financial guideline
ensure conformity with stand to facilitate comparison across banks. The true
financial position of bank is often obscured by the accounting period involving
its assets and liabilities. The prudential guidelines focus o the assets side
of banks balance sheet i.e. loans and advances.
In the past, bank different
scientifically on the condition under which loan is classified recoverable, doubtful
As such conditions were inherently judgment
and there were high potentials for substantial under provision implying that
many banks could appear healthier than they really are.
Total saving deposit in the
commercial banking system represented 85.3% and 8.3%. such saving deposit in
the financial system in this period respectively consequently, it is obvious from
forgoing, that commercial banks occupy a strategic position in the economy and
are able to influence the course of event in the economy. However, numerous
complaints have been made against them by the general public (especially their
customers) and the monetary authority as regard their inability to meet the
demand for credit by their non-challant attitude in respect of the various
monetary policies and their non- fulfillment of the credit guidelines on the
The techniques employed by banks in
this intermediary function should provide them with perfect knowledge of the
out comes of lending such that funds will be allocated to investment in which
the profitability of full payment is certain. Virtually all lending decisions are
made under creditors on uncertainty, the credit and uncertainty associated with
The statement implies that if
credits are to be money deposit banks should be based less in quantitative data
and more on principles too subjective to provide sound and unbiased judgment.
Furthermore, the banks depend heavily on historical information as a
basis for decision making.
Apparently aware of the inadequate
of his decision base, the bank lending has often sought solace in tangible and
marketable assets as security is an insurance. The increasing trend of
provisions for doubtful in most money-deposit banks is a major source of
concern not to management but also top the shareholders who are becoming more
aware of the dangers posed ,by these credits. Credit destroy part of the
dangers posed by these credit. Credit destroy part of the earning assets of
banks such as loans and advances which have been described as the liquidity and
solvency which generate two major problem, that is profitability and liquidity,
has to earn sufficient income to meet its operating costs and to have adequate
return on to its investments.
OF THE PROBLEM
The problem for this study is to
appraise the landing and credit management policies of a typical money-depot
bank (the first bank of Nigeria plc) with a view to examine the inadequacies in
the system and to suggest policy recommendation that would go a long way in
bringing about an efficient and optimal lending pattern in the Nigeria economy.
Again, experience may arise in
respect of lapses on the part of the banks credit officers. For instance there
may be excesses over approved facility, unformatted facilities and expired
facilities not renewed on time. In each of these cases the customers may easily
deny even owning the bank all or part of the amount.
OF THE STUDY
The major justification of the study
is that, an aggregate industry figures must be employed while the trends in the
individual banks and the actual figure may vary widely from this, giving a
different pattern of information and perhaps influence there from.
The data employed are secondary. It
is important to keep in mind that constituencies are usually associated been
obtained form sources considered must reliable in the present circumstances.
The fact is that bank activities are influenced by social and political
development in economy may not present the accurate position of the study.
This study is designed to test the following hypothesis
is no need for banking sector to operate with a standard credit policy.
is need for banking sector to operate with a standard credit policy
Ho: In first bank plc, there is no available
system for appraising of loan request before they are granted.
Hi: In first bank plc, there is available
system for appraising of loan request before they are granted
statement is not important in analyzing reports.
statement is important in analyzing reports.
OF THE STUDY
The main purpose of this study is to examine the effects of loans and
advances management on profitability of Nigerian banks.
In this research, the research presents a set of procedure on how data
for the study was collected, the sources of data use in the presentation of
data and statistical tools used for these analysis of the data.
Description of research methodology
Research in finance is based on findings out solution to financial
problems, the business entity relies on research to find answer to specific
The research instruments to be used in obtaining information from the
population have to be stated
Using regression analysis to
N = Number of paired observation
X = Independent variables (credit)
Y = Dependent variables (profit)
E = Summation
regression (r) = n∑ x y - ∑ x ∑y
x2 – (∑ x)2 (n ∑y2 - ∑y)2
OF THE STUDY
Time Constraint: During the course of
written this research work, the respondent that justify the question took a lot
of time before making an effect on the questionnaire paper.
The time for the research works is
so short to go on extra mile for move data.
Inadequate Data: This research work
will be limited to the volume of information acquired through materials like
national dailies, periodic journals, text books speeches, internet materials and
write-ups on related subject.
Lack of Adequate Finance: During the
course of writing this research, there is lack of finance to travel from one
place to another place for the collection of more data for the research work.
Unco-operate Attitude of Respondents: As
it is unduly know that banks are often busy, so questionnaire administration
were not answered very well because majority of the staff were occupied with
the customers. This constraints might be regard as the non-response during peak
These are terms that can be found in
this research project:
Asset: An asset can be anything owned
by a business organization or individuals which has commercial or exchange value
Olakanmi K.O (2001)
Vault: This is the banks strong room
where money and valuable materials are kept. RALP K.O (1980)
Fiduciary Issue: Issue of banks notes
by the banks which are not having gold banking
Currency: This includes both paper
money and metallic money coins. This term is generally used for money. Femi
Bank: The bank and the financial institution
Decree of 1991 (BOFID) section b1 defined bank any person receiving deposit on
current accounts or other similar accounting paying or collecting of cheques
drawn or paid in by customers.
Provision of Finance: Such other business
as the governor of the central bank may resonate.
First bank Nigeria plc: This can be said to be bank
established with the aim of maximizing profits.
Financial institutions that engage in financial intermediator
that is, process of mobilizing deposit from the surplus sector and lending it
to deficit sector and lending sector for investment.