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Title page

Approval page




Table of content




1.1        Background of the study

1.2        Statement of problem

1.3        Objective of the study

1.4        Research Hypotheses

1.5        Significance of the study

1.6        Scope and limitation of the study

1.7       Definition of terms

1.8       Organization of the study




3.0        Research methodology

3.1    sources of data collection

3.3        Population of the study

3.4        Sampling and sampling distribution

3.5        Validation of research instrument

3.6        Method of data analysis



4.1 Introductions

4.2 Data analysis


5.1 Introduction

5.2 Summary

5.3 Conclusion

5.4 Recommendation











This study is on analysis of financial ratios for improving bank performance in Nigeria. The total population for the study is 200 staff of CBN, Abuja. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made human resource managers, accountants, customer care officers and junior staff was used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies











  • Background of the study

In any country, the banking sector occupies an important place in the financial system. The reasons for this are the role banks play in the development of an economy. Banks among others play the following roles in an economy. They act as intermediary between the deficit and surplus units in an economy, that is, they mobilize funds and allocate them among competing ends. Secondly, they facilitate the use of appropriate monetary policy instruments as well as make the transmission mechanism reliable and policies effective. Thirdly, the banking sector is instrumental in the pursuit of stabilization policies and in structural transformation. The main source of funds for Banks is deposits and the main application of funds is loan and investment. In spite of this progress and successes achieved by the banking and financial institutions, it still have challenges which will require further intensive efforts on the part of these institutions. Such to enhance the quality of its products and services and diversity, and to keep pace with the rapid developments taking place in the world in this field. Banks have been attacked by the globalization, competition and volatile market dynamic pressures, (Casu et al, 2010). So banks attempt to find new method to improve their services. To understand the superior performance and struggle for it, managers and policy makers stated the major question is “What drives performance?” To address this question, researchers have focused their efforts on the operational details (Soteriou and Zenios, 2012). An important requirement, to answer this question, is the financial ratios which can be used for measuring performance. The widely used measures to assess banks’ performance are return on total assets (ROA) and return on total equity (ROE).  According to Gilbert and Wheelock, (2013) these measures have been used by analysts and bank regulators in;

(a) Assessing industry performance

(b) Forecasting market structure trends (used to predict bank failures and mergers) and

(c) Other purposes where a profitability measure is wanted. Over the past several years, an increased attention has been received by financial institutions (particularly commercial banks) on performance analysis. As a result, the research focuses on analysis of financial ratios for improving bank performance in Nigeria. Even though an important and relevant information about bank’s financial performance can be provided by accounting and financial ratios, assessing the relationship among many factors that are related to bank performance such as assets, revenue, profit, market value, number of employees, investments, and customer satisfaction can assist in improving bank productivity.


Financial measures have long been the foundation for business performance measurement. These measures expressed the performance and achievement in monetary terms, included in the chart of accounts, and provided a high level of aggregation of information. More importantly, financial measures are well recognized and followed the rules of General Accepted Accounting Principles (GAAP). The financial measures are still popular among most of the companies because non financial measures such as customer satisfactions, quality, market share and human resources, tend to be subordinated to financial figures. In addition, the fundamental reliance by managers on financial performance measures dominates organization strategy particularly in short run. In addition, the financial measures have been used for decades and managers are frequently comfortable with them. Whilst it is acknowledged that the immediate outlook for the global financial markets and ensuing world economic growth prospects appear challenging, the commercial banks operating in healthy situation will remain resilient. Financial performance could be defined as a measurement of the results of a firm’s polices and operations in monetary terms. In assessing the overall financial condition of a company, the income statement and the balance sheet are important reports, as the income statement captures the company’s operating performance and the balance sheet shows its net worth. Financial performance could be assessed using the following key measures which are important to assess the current financial position and performance. These are descriptive and analytical measures of financial position and performance. Descriptive measures include total assets, total liabilities, stockholders equity, total revenues, total expenses and net income. And analytical measures of financial position and performance could include profit-ability, efficiency, liquidity and solvency measures


The objectives of the study are;

  1. To analyze the financial performance of the banks
  2. To examine the financial factors that could be the determinant of the current financial performance of the bank
  3. To investigate whether bank capital ratio, size and loans of the bank are related to its profitability
  4. To evaluate which performance measure (ROA or ROE) is better to be used in measuring the profitability of the bank

For the successful completion of the study, the following research hypotheses were formulated by the researcher;

H0there are no financial factors that could be the determinant of the current financial performance of the bank

H1there are financial factors that could be the determinant of the current financial performance of the bank

H02: bank capital ratio, size and loans of the bank are not related to its profitability

H2: bank capital ratio, size and loans of the bank are related to its profitability


The importance of the study is to improve the financial performance of Banks for Investment and Finance; improve banks’ operations and technology, therefore, this will lead to improve the Nigeria economic society and be more developed: (i) Recognize the importance of financial performance in general and the banking sector in Nigeria , and, (ii) Emphasis on attention to the financial performance and financial ratios, including analysis contribute to decision-makers to take correct decisions.


The scope of the study covers analysis of financial ratios for improving bank performance in Nigeria. The researcher encounters some constrain which limited the scope of the study;

  1. a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study
  2. b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.
  3. c) Organizational privacy: Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities.



 FINANCIAL RATIO: A financial ratio or accounting ratio is a relative magnitude of two selected numerical values taken from an enterprise’s financial statements. Often used in accounting, there are many standard ratios used to try to evaluate the overall financial condition of a corporation or other organization.

BANK PERFORMANCE: Although banking institutions have become increasingly complex, the key drivers of their performance remain earnings, efficiency, risk-taking and leverage. … “Efficiency” refers to the bank’s ability to generate revenue from a given amount of assets and to make profit from a given source of income.


This research work is organized in five chapters, for easy understanding, as follows

Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding.  Chapter five gives summary, conclusion, and recommendations made of the study.



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