CREDIT RISK MANAGEMENT AND BANK PROFITABILITY IN NIGERIA

ABSTRACT

This study  examine credit risk management and bank profitability in Nigeria.  The study employ secondary data collected from annual reports selected quoted banks in the Nigerian Stock Exchange for the periods  2008 to 2012 . Mean and standard deviation was used for descriptive analysis. Correlation and multiple regression was used for empirical testing. The empirical analysis revealed that non-performing loan as a credit risk variable has a negative significant impact on bank profitability (ROE) at 5% level of significance. The variable, loan and advances have a positive and insignificant impact on bank profitability in Nigeria. Total deposits have a positive and insignificant impact on bank profitability in Nigeria. Therefore, this study recommended that banks should develop database management to management portfolio data ,present information about exposure for timely management and control of credit risk. Banks should adopt a pricing model that reflects variation in the risk profile of various exposures to ensure that higher risks are compensated by higher returns.