Bank Lending, Credit Administration and Its Management in Nigeria Commercial Banks

Abstract

This study focused on credit administration and its management in Nigeria commercial banks with the view of evaluating the impact of effective credit administration in detecting falsified customers’ security documentation and more importantly to evaluate the relationship between non-performing loans and profitability in Nigerian commercial banks. The Bank under reference was randomly selected for a case study, among commercial banks in Nigeria and the study relied on both primary and secondary sources of data collection. Data were obtained from both questionnaires and audited annual reports and accounts of the Bank under reference covering the period of 2005 to 2015. Regression method of data analysis was employed in analysing the data using SPSS 20.0 and E View version. The study found that effective credit administration has significant impact in detecting falsified customers’ security documentation in Nigerian commercial banks while a positive relationship exists between efficiently managed loans and advances and resulting profitability and on the other hand, there is a negative result relationship with non-performing loans and profits after tax (PAT) of the relative banks. Thus, the study revealed that effective credit management will lead to reduction in non-performing loans of commercial banks. The study therefore recommends that banks’ managements should invest more in loans and advances as it was discovered that there exists a significant positive relationship between loans and advances and profitability. Also, banks are advised to intensify effort at increasing the creation of good quality loans and advances, based on properly developed credit policies that are in tandem with best international practices and local regulatory provisions. Commercial banks in Nigeria, in the last two decades, more than ever before have been grievously confronted with the problem of customers’ credit defaults, therefore new strategies are needed by banks’ managements to control the upwards trend of non-performing loans.