CREDIT RISK MANAGEMENT AND PROFITABILITY OF DEPOSIT MONEY BANKS IN NIGERIA

This study examines the relationship between credit management and the profitability (measured by ROA) of Deposit Money Banks (DMBs) in Nigeria for the period 2006 to 2015. Secondary data were sourced from the Central Bank of Nigeria Statistical Bulletins and the annual reports of the banks studied. Using multiple regression analysis with Ordinary Least Squares (OLS) via E-View 9, the study finds that loans and advances, as well as loan loss provisions, have a positive but statistically insignificant effect on profitability, while non-performing loans exhibit a negative and insignificant effect. The regression models demonstrate good fit, with R² values of 84% and 79% for models one and two, respectively. Durbin-Watson statistics of 2.808 and 2.500 indicate no autocorrelation among variables, and the overall regressions are statistically significant. The study concludes that effective credit management enhances profitability and strengthens the financial position of DMBs. It recommends that banks implement sound credit management policies, properly issue recoverable loans and advances, and provide adequately for loan losses to manage credit risk and improve profitability.