Determinants of Financial Performance of Five Big Deposit Money Banks in Nigeria

Abstract

This study examines bank-specific determinants of financial performance of top 5 listed Nigerian Deposit Money Banks drawn from the Nigeria Stock Exchange for the period spanning 2009-2018 based on the Central Bank of Nigeria 2019 classification. The banks are Access Bank, First Bank of Nigeria Plc, Guaranty Trusty Bank Plc, United Bank for Africa Plc and Zenith Bank Plc. The study employed ex-post facto research design with data from annual reports and financial statements of the sampled banks. Data were analysed using descriptive statistics, correlation and panel least squares (fixed effect) model techniques. Estimated panel results indicated positive and significant effect of capital adequacy ratio and Bank size while deposit ratio, loan to deposit ratio and off-balance sheet activities had positive but not significant on financial performance of five top Nigerian Deposit Money Banks. Based on these findings, the paper recommended among other things, that the regulatory authorities combine adequate capital requirements for banks with early corrective measures to prevent falling below specified levels. In addition, the study also recommended that Management of those Banks should engage in other activities to earn additional income for the decline of their earnings from traditional activities.