LIQUIDITY MANAGEMENT AND PROFITABILITY OF COMMERCIAL BANKS IN NIGERIA: EMPIRICAL EVIDENCE OF UNITED BANK FOR AFRICA PLC

Liquidity management and profitability are critical aspects of banking operations, especially for commercial banks in Nigeria, where economic volatility and regulatory changes pose significant challenges. The interplay between these factors is pivotal in determining the financial health and operational efficiency of banks. Maintaining adequate liquidity is essential for meeting regulatory requirements and ensuring operational stability, excessive liquidity can lead to opportunity costs, potentially impacting profitability. This research is on liquidity management and profitability of commercial banks in Nigeria: empirical evidence of UBA Plc. This research study is mainly a survey type of research. The research work is carry out under descriptive and exploratory manner of the subject matter. The study employed time series analysis method in obtaining the data used for analysis. The time series data covers from 2015-2024 accounting year. The study made use of descriptive statistics like frequency tables and simple percentages to analyse data collected and simple linear regression analysis technique was used to test the hypothesis at 0.05% level of significance. Finding among others showed that liquidity management significantly influence the profitability of commercial banks in Nigeria in terms of cash and cash equivalents (holding liquid cash positions) and return on assets (ROA) for the period. It also discovered that cash and cash equivalents (holding liquid cash positions) influences return on assets (ROA) of commercial banks in that liquidity management supports bank stability in the period of economic uncertainty, sufficient cash and cash equivalents is essential for managing risks and lower risks of insolvency. Based on this and other findings, the study recommended among others that commercial banks should maintain optimal levels of cash and cash equivalents to meet obligations without holding excessive idle funds that reduce profitability.