EFFECT OF CREDIT MANAGEMENT ON PERFORMANCE OF DEPOSIT MONEY BANK IN NIGERIA (CASE STUDY OF SELECTED DEPOSIT MONEY BANKS IN NIGERIA)

This study examined the effect of credit management on the performance of deposit money banks in Nigeria spanning 2017 to 2021. Specifically, the study determined the effect of loans to debt ratio, non-performing loans ratio, loan and advance ratio, loan loss provisions ratio and secured loan ratio (independent variables) on the return on equity (depedent variable) of deposit money banks in Nigeria. Cross-sectional data were sourced from the annual statements and accounts of five (5) selected deposit money banks, and the data sourced were estimated using both pooled regression and the outcome of the correlation showed a moderately negative correlation between non-performing loans and the return on equity of DMB. While the result from the estimation showed that non-performing loans have a negative and significant effect on return on equity, loan loss provision has a negative and insignificant effect on return on equity, while the loan-to-deposit ratio has a negative and significant effect on return on equity. However, secured loans, total loans, and advances have significant positive effects on return on equity. The study concluded that total loans and advances, and secured loans have positive effects on return on equity while non-performing loans, loan loss provision, and the ratio of loans to deposits have negative effects on return on equity. It was recommended that the credit management team, as nominated or selected by the board of directors, should be those with impeccable characters who understand the implications of credit going bad so that they can put in their effort to ensure that all credits meet the lending objectives of profitability, liquidity and stability.