Impact of Risk Assets on the Financial Performance of Banks in Nigeria:- Ohiagu, Ihechinyerem C.

ABSTRACT

Commercial banks are the hub of financial institutions and play an important role in the lubrication and development of a country’s overall economy. They accept deposits from the surplus unit ofthe economy and grant facilities (loans) to the deficit unit of the economy which brings to view the main objective of the study which is to determine the impact of risk assets (bank loans) on the financial performance of commercial banks in Nigeria between the years of 2006 to 2015 with particular reference to First Bank ofNigeria Pic. The study extracted the bank’s gross earnings, profit before interest and tax, profit after tax, loans and advances to customers, due from other banks, and advances under finance lease from the annual reports of First Bank of Nigeria Pic. The study engaged the ordinary least squares based simple regression method of data analysis to determine the level of impact risk assets had on the financial performance of First Bank of Nigeria Pic. The findings so far revealed that there exist a strong and positive impact on financial performance of banks in Nigeria by its risk assets. On the basis of this findings, the study recommend that a consistent and quantitative approach to an efficient management ofrisk assets should be adopted by the management of banks to avoid future fluctuations on its gross earnings, profitability and liquidity. In addition to this, the management of banks should institute a workable internal control procedure to safeguard the movement of risk assets and there should be a proper credit documentation being done.