Effect of Credit Management on the Profitability of Deposit Money Banks in Nigeria

Abstract: This study examines how credit management influences the profitability of deposit money banks in Nigeria. The research is anchored on four specific objectives: (1) To analyze the effect of non-performing loans on bank profitability, ( 2) To examine the effect of loan loss provisions on the profitability of deposit money banks, (3) To assess how loans and advances influence bank profitability, and (4) To determine the effect of interest rates on bank profitability. Employing anex post facto research design, the study utilizes secondary data spanning from 2002 to 2023. The analysis employs the ordinary least squares ( OLS) model to evaluate effects of credit management on bank profitability .Data were sourced from the Central Bank of Nigeria's statistical bulletin (2024). The study identifies that non-performing loans have a significant and negative effects and loan loss provisions have an insignificant and negative effect on profitability, whereas loans, advances, and interest rates exhibit a significant and positive effects. Based on these findings, the study recommends that non-performing loans be rigorously monitored and loan loss provisions minimized through enhanced risk management. Additionally, interest rates should be strategically reviewed for creditworthy customers to optimize profitability.