Universal banks generally provide
avenues for savings to those who have surplus funds. The bulk of such funds are
then lent out to needy personnel and business customers in loans and
overdrafts, its has been widely appreciated that more that half of the total
gross earnings of universal banks is earned from interest on loans and
advances, which constitute the single must importance assets of the banks. Demands
savings and time deposited constitute the major source of banks profitability,
it has to be aggression in its lending function. At the same time, it has to be
liquid to meets the depositors request and maintain public confidence. It therefore,
has to strike a balance between liquidity and profitability. As lending is one
of the most intricate services provide by banks, this paper will examine in
8rme details many theories emanating from developed environment and their
effect on the operation of universal banks especially the credit, lending
activities. They include the consumer loans theory, and the anticipated income
theory. Those theories will thus be evaluated to measure the extents to which
they guide the lending activity of the first bank of Nigeria Plc in a
developing environment. This is a with a view of highlighting the degree of
compliance to these theories by the universal banks and also proffer solutions
and recommendations to resolve the liquidity and profitability position in a
developing economy such as Nigeria.
TITLE PAGE i
TABLE OF CONTENTS vi-vii
1.1 BACKGROUND TO THE STUDY
1.2 STATEMENT OF THE PROBLEM
1.3 JUSTIFICATION OF THE STUDY/STATEMENT PF HYPOTHESIS
1.4 OBJECTIVE OF THE STUDY
1.5 SCOPE OF STUDY
1.6 ORGANIZATION OF THE STUDY
1.7 LIMITATION OF THE STUDY
1.8 DEFINITION OF THE TERMS
2.2 REVIEW OF RELATED LITERATURE
2.3 CONCEPTUAL FRAME WORK
2.2 LIQUIDITY THEORIES
2.5 LENDING PROCEDURE
2.6 CREDIT ADMINISTRATION IN
2.7 LIQUIDITY ON CREDIT
2.8 IMPORTANCE OF LIQUIDITY ON
2.9 PROBLEMS OF LIQUIDITY ON
2.10 REGULATORY BODIES ON BANK
LIQUIDITY AND CREDIT
2.11 PRUDENTIAL GUIDELINE ON
2.12 THE ROLE OF ASSET MANAGEMENT
3.0 RESEARCH METHODOLOGY
3.1 RESEARCH DESIGN
3.2 AREA OF STUDY
3.3 POPULATION OF THE STUDY
3.4 INSTRUMENT FOR DATA COLLECTION
3.5 METHOD OF DATA ANALYSIS
4.0 PRESENTATIONS AND ANALYSIS OF DATA COLLECTION
4.2 ANALYSIS OF PERSONAL DATA
1.1 BACKGROUND OF
management seeks to ensure the attainment of short term objectives of monetary policy,
which means maintenance of dose rue monetary aggregate. It is very important
aspect of monetary policy implementation and control.
banks create money every day, but when the quantity created is compatible with
the absorption capacity of the economy macro economic instability may result.
In order to maintain relative macroeconomics stability, mush reliance is placed
on liquidity, growth in the banking system.
and investment operation of universal banks have been widely and extensively
discussed in various literatures. It has also been stated that anyone who
expects to borrow from the universal banks should be most concerned with the
loans investment policy and techniques. The concept profit making activity of a
universal bank is making loan available to its customers. It faces
uncertainties and therefore risk of many kinds. A bank does not consider
earning alone instead it seeks some optimum combination of earning; liquidity
example to gather higher earnings, a bank has to increase more risk and
liquidity and vice versa. However, universal banks are limited in their ability
to assure risks because of the very high ratio of their liability to their
banking in Nigeria into the nineteenth century started as a means to facilitate
the slipping business of a British shipping line Elder Dempster agencies
operating in the Nigeria territory. The chairman of the company, Mr. Alfred
Jones perceiving the advantages that were acquirable, and its agents in Nigeria
Mr. George William Neville to establish a bank in Lagos.
was how the First Bank of Nigeria Plc was opened in Lagos in 1894.
1.2 STATEMENT OF THE PROBLEM
and credit management have implication on bank profitability and the authorities’
depositors and shareholders. It could trigger off mass cash withdrawal thus
plunging the bank into deeper crisis. In analyzing the credit and liquidity
management of First Bank of Nigeria Plc, I shall examine its assets quality,
which includes its performing and non – performing loans. In addition efforts
would be made to look into the bank’s capital adequacy ratio and its shocks of
risk assets different measures of liquidity and solvency.
1.3 JUSTIFICATION OF THE STUDY STATEMENT OF RESEARCH
following hypothesis is developed and tasked to ensure a more effective and
result oriented research work.
Hi: the liquidity of universal banks
could be determined efficiently from the effectiveness of its credit
Ho: the liquidity of a universal
bank could not be determined efficiently from the effectiveness of its credit
investment operations of universal banks depend widely and extensively on its
Ho: Lending and investment
operations of universal bank does not depend widely and extensively on its
1.4 OBJECTIVE OF THE STUDY
bank is considered liquid it has sufficient cash and other liquid assets in its
portfolio together with the ability to raise fund quickly from other sources to
enable it meet its payment obligations and financial commitment in a timely
manner, therefore the main purpose is to highlight how liquidity and credit
management in this Nigeria Banking Industry is being discovered and the extent
to which First Bank of Nigeria Plc is guided in the management of its lending
1.5 SCOPE OR DELIMITATION OF THE STUDY
banks act as intermediaries by collecting deposits and paying interest on them
and granting loan charging the borrowers interest at the higher rate. Improving
these services to borrowers and the depositors the main goal of the bank is to
make profit. Apart from granting loans bank also generate profit on
investments. In order to maximize their earnings every bank attempts to
structure its assets and liabilities such a manner as to yield the highest
returns, subject to some constraints.
bank is considered liquid if it has sufficient cash and other liquid assets in
its portfolio, together with the ability to raise fund quickly from other
sources to enable. It meets its payment obligation and financial commitments in
a timely manner. This study therefore aims to cover the extent to which First
Bank of Nigeria, Plc is guided by the above enumerated theories in t he
management of it lending functions and know now it has been able to survive
over years in spite of the global liquidity problems to supplement his effort
the lending practices and procedure of the bank will also be evaluated.
ORGANIZATION OF THE STUDY
Liquidity is defined
in its broadest sense as the ability to meet cash quickly and at a reasonable
cost. Credit management is the way universal bank, lend money out to borrowers.
However, this study tends to reveal the problems that one involved in the
liquidity is essentially that of having sufficient fund to meet at all times
this demand of money that may be made on a bank. Bank must be maintain adequate
liquidity in order to provided for and line in deposit for and other
liabilities, to satisfy unforeseen increased investment in particular desirable
earning assets when such opportunities arises the liquidity requirement of any
bank out of the bank. It is the responsibility of management to measure these
requirements and to anticipate them on a current and continuous manner.
LIMITATIONS OF THE STUDY
research was faced with many problems in the course of collecting information
relating to this project, as many staff is not willing to divulge related
information. The directions at various departments dealing with credit
management and liquidity in first bank refuse to disclose detail information
relating to liquidity and credit management. Access to departmental ledger
account was denied through verbal information relating to questions, asked was
given another limitation was the inability to cover various branches of
Nigerian banks, which are throughout the federation. This was mainly due to the
financial and logistical difficulties that such exercise of this would entail.
1.8 DEFINITION OF TERMS
of universal banks the services offered by universal banks are numerous and
Mobilization of savings: - universal banks perform a very
important function to all sectors of the economy by providing facilities for
the mobilization of savings and making the available for investing purpose by
the process of granting credit facilities to other customers. In this may those
funds are made available to business to enable them expand their productivity
capacity and to individuals and household to facilitate consumptions.
Extension of credit facilities:- According to read (1984). He
establish that the primary function of universal banks is the extension of
credit to commuting borrowers. In making credit available, universal banks are
rendering great social service through their actions production is increased
capital investments are expanded and higher standard of living is realized.
Banks make it
possible for industries to produces a larger quantity of goods, which may
remain the stock as inventory before eventually being sold or reprocessed into
another from. A good example is the food industry where the quantity produced
may be far in express of what can be consume immediately.
Transfer of fund:- universal banks serve as medium
for transfer funds they facilitates payment by enabling business, government
and consumers to transact without cash, cheques and credit cards which are used
for bulk purchases as measured by naira amount of transaction cheques drawn and
deposited at the bank merely indicated transfer of fund from one account to the
Creating money:- universal banks create money
used to expand productive facilities otherwise there would be a short down of
economic activity generally as business would be forced to wait until
sufficient profits are made before they could expand. However, the money create
activity of universal banks is kept under the control by the monetary to ensure
that it is not excessive.
International trade services:- all universal banks are
involved in the financial aspect of international trade and services required supporting this
important part of the country’s economy, such include bill for collection,
documentary credit and open account which are investment used in import and
Buyers has the right to create
dispute within seven (7) days of purchase for 100% refund request when
you experience issue with the file received.
Dispute can only be created when
you receive a corrupt file, a wrong file or irregularities in the table of
contents and content of the file you received.
ProjectShelve.com shall either
provide the appropriate file within 48hrs or
send refund excluding your bank transaction charges. Term and
Conditions are applied.
Buyers are expected to confirm
that the material you are paying for is available on our website
ProjectShelve.com and you have selected the right material, you have also gone
through the preliminary pages and it interests you before payment. DO NOT MAKE
BANK PAYMENT IF YOUR TOPIC IS NOT ON THE WEBSITE.
In case of payment for a
material not available on ProjectShelve.com, the management of
ProjectShelve.com has the right to keep your money until you send a topic that
is available on our website within 48 hours.
You cannot change topic after
receiving material of the topic you ordered and paid for.