CREDIT MANAGEMENT AND THE PROFITABILITY OF DEPOSIT MONEY BANK IN NIGERIA (A CASE STUDY OF UNITED BANK FOR AFRICA)
Credit management is the process of controlling and collecting payment from customers. This is the function within a bank or company to control credit policies that will improve revenues and reduce financial risks.
Credit management can also be seen as an integral part of lending and as such in its, absence, good loans and other credits can turn bad. Good credit management requires the establishment of an adherence to sound and efficient credit policies of the government. Credits must be made by banks to people who are capable of utilizing it well and repaying the loan at its maturity.
However, credit management, in deposit money bank plays vital roles in the mobilization of saving of surplus economic units and channeling same to the deficit economic units for investment purpose in the form of credits (loads and advances).
Deposit money bank like any other business is to make profit for this reason they may employ their funds with the objectives of acquiring certain kinds of earnings approval investment. There are needs for an efficient credit administration in Nigeria. Deposit money bank can help the bank achieve the earning and objectives while holding risk to reasonable units.
The defaults risk is concerned with the assets held by banks as account payable While they face withdrawal or liquidity risk in connection with its liabilities. The cost associated with the defaults and liquidity risk could be very high.
It can threaten the liquidity and reserve position of a bank, thus, inhibiting the banks ability to satisfy the legitimate needs of their customers for credit especially during periods of peak credit demands as well as reducing the profitability of the bank. Managing credit has been identified as a major economic function of deposit efficiently and effectively they must emphasize their risk management function especially in lending.
This project aimed at evaluating empirically, the effect of credit management on the profitability of deposit money bank in terms of loans and advances and profit after tax.
- To find out the options for effective credit management of deposit money bank (UBA) for reasonable profitability.
- To identify the tool used for credit management in United Bank for Africa for reasonable profitability.
- To examine the problems impeding effective credit management in
United Bank for Africa.
- To find out the ways of improving credit management in United Bank for Africa to achieve adequate profitability.
- What are the option for effective credit management of Deposit Money Bank (UBA) for reasonable profitability?
- What are the tools used in credit management in a deposit money bank
for reasonable profitability?
- What are the problems impeding effective credit management in
Nigerian deposit money banks?
- What are the ways of improving credit management in deposit money
Banks to achieve adequate profitability?
- SIGNIFICANCE OF THE STUDY
This study will afford deposit money banks especially United Bank for Africa.
Sufficient policies and guidelines that will facilitate, improve performance of their business. This research work will provide solutions on how credit management techniques adopted by Banks can be helpful in meeting the Banks objectives.
Further more, this research work will also the researcher to be knowledgeable about the topic (credit management and the profitability of Deposit Money Bank in Nigeria) including other researchers on this topic, equipping and expanding their knowledge about the topic.
- SCOPE AND LIMITATIONS OF THE STUDY
This research is on credit management and the profitability of deposit money bank, it is being restricted to United Bank For Africa. It’s volume which does not allow extensive coverage is limited to about 45 pages being National Diploma (ND) which also contribute as a constraint to the research work.
Moreover, the limited time allowed and financial constraint has further serve as a hindrance to this research work. However this constraint has not stopped the validity of the research findings.
- ORGANIZATION OF THE STUDY
This study is presented in five chapters. The first chapter is the
Introductory part which has to do with the background of the study, state of the problem, objectives of the study, research questions, significance of the study, scope and limitations of the study , organization of the study and definition of terms. In chapter two the reviews of related literature were presented by scholars, experts and other researchers on the subject while chapter three was the research methodology. It comprises of the Introduction, Restatement of research questions, Design of the study, Area of the study, Population of the study, Sample and sampling techniques, Instrument for data collection and data analysis technique.
In chapter four, data presentation, analysis and interpretation were presented while chapter five, the findings, conclusions and recommendations.
CREDIT: Credit can be defined as a transaction between two parties in which the creditor or lender supplies money, goods and services or securities by the debtor or borrower.
CREDIT MANAGEMENT: This is a process of controlling and collecting of payment from customers.
BANK LOAN: This is an act of lending or money advanced to a borrower usually to be paid with interest and evidence by note, house, land and bonds.
COLLATERAL: Assets, the customers may offer as security to obtain credit in case of bad debt.
CREDIT CONTROL: This refers to the control of bank credit by the banking authority.
BANK: Bank is an establishment authorized by government to accept deposits, pay interest, clear checks, makes loans, act as intermediary in financial transactions and provide other financial service to it customers.