ABSTRACT

The banking sector in recent times has witnessed a persistent rise in bank failures which has affected the Nigerian economy, leading to the merger of some banks and the liquidation of others. The cause of these banks distress and failures is connected to ineffective credit risk management. But in the midst of these crises, there are some banks which are waxing stronger and one of those banks is FBN PLC. Therefore, the need to examine the survival strategies of these banks and why others are failing lead to this research study on "Sound Credit Management As Survival Strategy For Commercial Banks In Nigeria." (A Case Study of First Bank Nigeria Plc). In addition, the following statements were made in identifying the problems which prompted this research; The biggest problem facing banking and financial Intermediaries is the risk of customers or counter party default. Also identified was the existence of predatory debts in the banking system whose modus operandi involves the abandonment of debts obligations in some banks only to contract new debts in other banks. Another problem is the increasing amount of nonperforming loans in the credit portfolio which is inimical to banks in achieving their objectives to operate successfully and profitably. Therefore the objectives of the study are as follows: To establish the impact of nonperforming loans on the survival of commercial banks. Accessing the impact of not adhering to the central's bank regulatory and supervisory framework on credit risk management. To establish the impact of loans and advances on banks financial performance. More so, some related works were also reviewed in this research study. Specifically, the works of Ahmad and Ariff, Kargi and others were reviewed. The researcher made use of various research tools thus: Questionnaires were well constructed and sent to various respondents and they were completed to the best of their knowledge. The answers collected were subsequently analyzed using linear regression of SPSS in the testing the hypothesis formulated with the total population of twenty one (21) and through the application of Taro Yemen formula ,a sample size of 20 respondent were selected.. In line with the above, the findings of the study are as follows: That non perfoiining loan has a significant effect on the survival (profitability) of commercial banks. That loans advances has a significant effect on the financial performance of commercial banks. Sound credit appraisal has significant effect on debt reduction.

TABLE OF CONTENT

Title Page 1

Declaration ii

Certification iii

Dedication iv

Acknowledgement v

Abstract vi

Table of content vii

List of table viii

CHAPTER ONE

INTRODUCTION

1.1 Background of study 1

1.2 Statement of the problem 5

1.3 Objectives of the study 6

1.4 Research questions 7

1.5 Research hypotheses 7

1.6 Scope of the study 8

1.7 Significance of the study 8

1.8 Definition of terms 9

CHAPTER TWO

2.1 Introduction 11

2.2 A review of related empirical literature 12

2.3 Credit risk management 14

2.4 The Role of Banks in an Economy 17

2.5 The role of Central Bank of Nigeria to Commercial Banks 19

2.6 History of First Bank Nigeria Plc 21

2.7 The role of Frist Bank Nigeria Plc in development of Nigerian

Economy 22

2.8 Credit Technique Appraisal of Banks 23

2.8.1 The Seven C's of Credit Technique 24

2.8.2 Character 24

2.8.3 Capacity 24

2.8.4 Cash Flow 25

2.8.5 Capital 26

2.8.6 Collateral

2.8.7 Others considerations or conditions

2.9 The Structure and Functions of a Modern Bank 28

2.9.1 Managing Bank Risks 29

2.9.2 The value of Human capital 30

2.9.3 Human Resources 30

2.9.4 Information technology 32

CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Research design 33

3.2 Method of Data Collection 33

3.3 Population of the study and sample size determination 33

3.4 Sample Procedure 34

3.5 Design and Administration of Questionnaire 34

3.6 Validity of the Instruments 35

3.7 Reliability of the instruments 35

3.8 Method of Data Analysis 36

3.9 Limitations of the study 37

CHAPTER FOUR

4.1 Data presentation and analysis 38

4.2 Discussions of findings 48

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1 Summary 51

5.2 Conclusion 51

5.3 Recommendations 52

REFERENCES 53

QUESTIONNAIRE

APPENDIX