Abstract:
This study assesses the effect of assets and Liability Management on the Profitability of some
selected Deposit Money Banks in Nigeria. The profitability of deposit money banks is vital for the
smooth operation of the financial system of a country. To get a picture of the profitability of the
banks, ROA, which is a measure of profitability, was employed. ROA reflects the ability of a
bank’s management to generate profits from the bank’s assets and was calculated as net profit after
tax divided by Total assets. A sample of ten (10) banks was selected for the study that covered a
period of ten (10) years, from 2008 to 2017. A purposive sampling technique method was used in
the selection of the sample. The ten Banks selected represents forty-five percent (45%) of licensed
Deposit Money Banks in Nigeria and with a widespread branch network this sample is assumed to
be a true representation of the quoted banks in Nigeria. The study made use of secondary data and
analysis was done using correlation and panel regression analysis. The study finds that ALM
position negatively affects bank profitability (ROA) (β=- 0.003, z = -0.02, p > 0.05). A unit
increase in the ALM proportion necessitated by either an increase in advances or a decrease in
deposits results into a decline in the ROA by up to 0.003 (0.3%). This may be explained by the
possibility that the increase destabilizes the bank liquidity position and compels the bank to source
for more expensive financing to fund the liquidity gaps The findings revealed that loan to
customers’ deposit have significant effect on profitability of selected deposit money banks in
Nigeria. Also, the results of hypothesis revealed that loans to customers have adverse effect on
profitability of selected Deposit Money Banks in Nigeria. The study concluded that the asset-
liability management has significant effect on profitability of Deposit Money Banks in Nigeria.
Finally, the study recommends that banks need to improve credit administration, monitoring and
improve on credit quality. Risks should be timely identified and mitigated in order to secure tradingfunds. It also recommends that banks should focus on improving their capital levels to improve
their financial performance.
