An Evaluation of Credit Management and its Effect on Banks' Profitability: a Comparative Study of First Bank plc and Guaranty Trust Bank PLC

Abstract

This study; An Evaluation of Credit Management and its Effects on Banks' profitability; A comparative Study of First Bank PLC and Guaranty Trust Bank PLC is concerned with examining the process of credit management in the banks and the effect of non performing loans on the performance of Nigeria Banks. The results show that the impact of loan loss reserve has a negative impact on profit. This implies that higher credit risks result in low profit. The methodology used was interview technique for data collection. Managers and lending officers of the two Banks were interviewed, and it was discovered that Guaranty Trust Bank PLC which is a new generation bank performed better during the period under review. This was discovered to be as a result of their highly skilled personnel and intensive computer network. In summary, it was recommend that Nigeria banks should discard the "colonial' policies and other internal problems that delay credits to worthy customers in order to build confidence in the system and make bank credits worthwhile venture at the same time improving performance. Also, there should be less interference from top management staff and board of directors.