IMPACT OF CREDIT RISK MANAGEMENT ON DEPOSIT MONEY BANK PERFORMANCE IN NIGERIA (A CASE STUDY OF A SELECTED BANKS IN NIGERIAN)

ABSTRACT This study investigates the relationship between credit risk management and financial performance of selected Deposit Money Banks in Nigeria, focusing on First Bank, United Bank for Africa (UBA), and Union Bank from 2015 to 2024. The study examines key variables including Return on Assets (ROA), Capital Adequacy Ratio (CAR), Loan Loss Provision (LLP), Non-Performing Loans (NPL), Gross Loans and Advances (GLA), and Profit After Tax (PAT). Data were sourced from the banks’ annual reports and the Central Bank of Nigeria statistical bulletin. Descriptive statistics, correlation analysis, and multiple regression were employed to analyze the data. Findings reveal that ROA, CAR, and GLA significantly influence bank profitability, while NPL and LLP have limited direct impact. Gross Loans and Advances were identified as the strongest predictor of Profit After Tax, demonstrating the critical role of lending activities in revenue generation. Correlation results indicated that well-capitalized banks exhibit higher profitability, and effective credit management supports financial stability. The regression model explained 86.8% of the variation in profitability, indicating strong explanatory power. Hypothesis testing confirmed that loans and advances, non-performing loans, and loan loss provisions jointly affect bank profitability. The study underscores the importance of robust credit risk management, adequate capitalization, and strategic loan expansion in enhancing the performance of Nigerian banks. Findings are relevant for bank management, regulators, and policymakers in strengthening the financial sector.