ABSTRACT
The
research was undertaken to evaluate credit risk management Perception in
Nigeria commercial banks using First bank of Nigeria Plc and Union bank of
Nigeria Plc as a case study.The work was intended to achieve the following
objectives; to examine the causes of credit risks in Nigeria commercial banks.
To review the strength of the Commercial banks in combating this menace.To also
ascertain the level of contribution of the central bank of Nigeria in helping
the commercial banks mitigate credit risk. Relevant data were collected from
both primary and secondary data sources. Questionnaire was the main primary
data collection instrument employed while data from various relevant
publications and annual reports constituted the secondary data. Based on the
study, the following conclusions were drawn: There are several causes of credit
risk to commercial banks in Nigeria Credit risks do really affect or reduce the
operational efficiency of these banks. Employment of strategies in reducing
this credit risk is more sophisticated in first bank of Nigeria plc than in
union bank of Nigeria plc. Central bank of Nigeria has over the years been
assisting the commercial banks in fighting these credit risks. On the basis of
the above findings the following recommendations were made: Commercial banks
should employ more strategic means in monitoring credit losses in their banking
system.
Commercial banks should assess the workability of
each strategy before implementation. Since strategies are costly and may
involve heavy capital investment.
More
research should be conducted in assessing the lending behaviour of Nigeria
commercial banks.
CHAPTER ONE
1.1 Background of the Study
The changing environment in which banks finds themselves present major opportunities for banks,
but also entails complex, variable risk that challenge traditional approaches to bank management.
Recently, there was increase in non-performing
credit portfolios in banks and other financial institutions
and these significantly
contributed to the
financial distress in the banking sector.
Consequently,
banks must quickly gain financial risk management capabilities in order to
survive in a market oriented environment, withstand competition by foreign
banks, and support private sector-led economic growth. An external evaluation
of the capacity of a bank to operate safely and productively in its business
through effective credit risk management is normally performed once each year.
All animal assessment is similar in nature, but has slightly different focuses
depending on the purpose of the assessment.
Risks
faced by banks are numerous but this study is essentially concerned with credit
risk management in Nigeria commercial banks with First Bank Nigeria Plc and
Union Bank Nigeria Plc. as case studies.
The
credit risk management in commercial banks should be adequately attended to by
banks that want to succeed in its over-all business operation.
For most banks, loans are
the largest and most obvious source of credit risk, loans and advances
constitute almost sixty to seventy percent of the assets side of the balance
sheet of any bank. As long as the borrower pays the interest and the principal through proper
amortization of loan on the due dates, a loan will be a performing asset.
The
problem however arises once the payment are delayed or defaulted and such
situations are very common occurrences in any bank. Delay or defaults in
payment of bank loan affects the cash forecast made by banks and further result
in a changed risk profile, as the bank will now have to face an enhanced
interest rate risk, liquidity risk and credit risk.
Bank
are increasingly facing credit risk in various financial instruments other than
loans, which includes inter bank transactions, trade financing, foreign
exchange transactions, financial futures, swaps, bonds, equities, options, and
in the extension of commitments and guarantees; and the settlement of
transactions.
The
late 1980s and early 1990s witnessed a great rising non performing credit
portfolio in commercial banks especially in First Bank Nigeria Plc. and Union
Bank Nigeria Plc. The use of status enquiries on bilateral basis between banks
was characterized by some weaknesses. Status enquiries is.....
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Item Type: Postgraduate Material | Attribute: 102 pages | Chapters: 1-5
Format: MS Word | Price: N3,000 | Delivery: Within 30Mins.
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