AN EVALUATION OF CREDIT MANAGEMENT, CREDIT POLICY AND THE PERFORMING OF BANK IN AKURE, ONDO STATE NIGERIA

ABSTRACT: This study was carried out with the purpose of analyzing Credit management, credit policy and the performing of  Bank in Akure, ondo state Nigeria. Specifically, the study sought to establish whether there is a relationship between credit policy and performance, capital adequacy and performance and credit risk control and performance. In achieving the objectives assigned by the study, a causal research design was undertaken and that was facilitated by the use of secondary data which was obtained from published audited financial statements of commercial banks and the BOU annual supervision reports.  The study used universal sampling techniques, where 7 banks licensed and operational in Akure, Ondo state, Nigeria   were   selected, multiple regression was used. The findings indicated a significant relationship (r = 0.639) between credit management and the   financial   performance   of   commercial banks in Akure, Ondo state, Nigeria. The coefficient of determination R² was 0;408 meaning that credit management indicators explain up to 40.8% of   variations   in   the   financial performance of commercial banks in Akure, Ondo state, Nigeria. The results from the   coefficients summary in the regression model indicate that the significance of   coefficients   of credit policy (LR), capital adequacy (CAR) and Credit Risk Control  (NPL/TL) are - 0.031, -0.555 and -1.005 respectively. It was therefore found that both the CAR and the NPL/TL are significant though have an impact  at   different   significance   i.e. capital adequacy and Credit Risk control have a greater impact compared to Credit policy (LR) on the financial performance of commercial banks in Akure, Ondo state, Nigeria. It was established that there is no significant relationship between credit policy and performance of banks   in Akure, Ondo state, Nigeria, however, a significant relationship between the credit risk control, capital adequacy and the performance of commercial banks was established. It was recommended that should use a moderate credit policy as a stringent credit will undermine the financial   performance.   Moreover,  banks should seek to adequately control their credit risk by keeping lower their ratio of nonperforming loans which is the major determinant   of   commercial   banks’ financial performance as shown in the study. The Central Bank of Nigeria should encourage banks in Akure, Ondo state, Nigeria to use credit metrics model in controlling its risks.