1 Maitala Jadi Binawa, and 2 John Uzoma Ihendinihu
Department of Accounting, College of Management Sciences,
Michael Okpara University of Agriculture Umudike
Profits of banks are often under pressure of huge nonperforming loan portfolios and this creates
weaknesses in the financial strength of banks, and sometimes leads to distresses and collapse of such
entities with negative consequences on stakeholders. This study investigates the effects of risk asset
management on the profitability of commercial banks during the post consolidation era in Nigeria.
Cross- sectional research design was adopted and panel data on three proxies of risk assets and
financial performance indicators were collated from the audited annual report of selected banks.
Data were analysed using descriptive and multiple regression techniques. Results indicate that loans
and advances, derivative assets and liquidity have no significant effect on ROA, ROE and EPS during
the post consolidation era. With the risk assets accounting for less than 3% of the variations in the
three financial performance measures, the study concludes that regulatory measures introduced
during the post consolidation banking era have positive trade-off effects on banks performance. This
study, therefore recommends that bank executives should improve and sustain high level of prudence
in management of their risk assets while maintaining efficient liquidity level in the banking sector.
Keywords: Derivative assets, nonperforming loans, derivative liabilities, liquidity, return on assets,
earnings per share, return on equity.
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