EFFECT OF CREDIT RISK MANAGEMENT ON FINANCIAL PERFORMANCE OF NIGERIAN LISTED DEPOSIT MONEY BANKS

Credit risk management is a critical aspect of banking operations, as it directly affects the financial performance and stability of banks. Effective credit risk management focus on identifying, assessing and mitigating credit risks to minimize losses and maximize returns. Therefore, the study examined the effect of credit risk management on financial performance of Nigerian deposit money banks. The study used only secondary source of data collection through 5years (2019-2023) financial report of fourteen (14) Deposit Money Banks listed on Nigerian Exchange Group (NGX) as at 2023 as the sample for the study, while STATA version 13 through correlation and regression analysis was used as method of data analysis. The findings of the study revealed that, non- performing loan ratio (NPLR) findings showed a negative and insignificant relationship with financial performance (ROA) of the deposit money banks in Nigeria. Also loan to deposit ratio (LDR) results showed positive but insignificant relationship with financial performance (ROA) of Deposit Money Banks which signifies that LDR also has no significant relationship with financial performance (ROA) of deposit money banks in Nigeria, while results on capital adequacy ratio (CAR) showed positive and significant relationship with financial performance (ROA) of deposit money banks in Nigeria. The study recommended among others that, deposit money banks (DMBs) should continue to prioritize effective credit risk management, despite the lack of significant statistical influence of NPLR on ROA. Though the relationship appears insignificant, high NPL levels can erode investor confidence and may affect long-term stability. Banks should strengthen loan monitoring, adopt early warning systems, and enhance recovery strategies to prevent potential deterioration of asset quality over time.