AN INVESTIGATION INTO EFFECT OF BAD DEBT ON PROFITABILITY OF BANKS (A CASE STUDY OF UNION BANKS OF NIGERIA ILORIN)

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TABLE OF CONTENT

Title page                                                                 i

Certification                                                             ii

Dedication                                                               iii

Acknowledgement                                                    iv

Table of content                                               vii-viii

CHAPTER ONE

  1. Introduction                                             1-2
    1. Statement of the problem                        3-4
    1. Aims and objectives                                 3-4
    1. Scope of the study                                   4-5
    1. Significant of the study                            5
    1. Limitation of the study                             6
    1. Research methodology                             6
    1. Research question                                   6-7
    1. Definition of terms                                   7

CHAPTER TWO      

  • Literature review                                      10-27
    • Prudential guideline analysis of effects of bad debt 28 -30
    • Implication of bad debt to organization staff customers and shareholders                        30-33

CHAPTER THREE

RESEARCH METHODOLOGY

  • Introduction                                             34
    • Source of data collection                          34-36      
    • Methods of data collection                               36-37
    • Methods of data analysis                         37-38

CHAPTER FOUR

PRESENTATION ANALYSIS OF DATA

  • Introduction                                             39
    • Effect of recoveries on profitability of a bank 39-40
    • Analysis of recoveries to profitability                41-44
    • Recoveries strategies                                        44-47
    • Analysis of bad debt to loan and advances portfolio                                47-49
  • Analysis of bad debt to total assistant     49-51

CHAPTER FIVE

SUMMARY, CONCLUSION, RECOMMENDATION AND SUGGESTIONS

  • Summary                                                 52-54
    • Conclusion                                              54-56
    • Recommendation and suggestions          56-58

Bibliography                                                    59   

CHAPTER ONE

1.0   INTRODUCTION

        Banking operation is very important in the stating of any economy in the functions of commercial bank in an economic system is the transfer of funds from the surplus unit to the deficits units. The surplus unit provides the fund needed to the deficits unit for investment purposes, this is essential for economic growth of any country. The commercial bank are the intermediaries between the demand side and the supply side.

        Banks in the process of performing their code of financial intermediaries between surplus unit and deficit unit create deposit when a bank give out loan to a customer account with the amount involved. The credit to the customers account which has become now deposit which is allowable to the bank for further lending to their prospective borrowers.

        The ability of a commercial banks to grant loan is on the level of deposit of hours generated and the legal reserve requirement supposed by the central bank A bank earns a return for performance of the role mobilizing is important as well as the bad debt account due to the numerous reason which may includes the likely death of a borrows, possible illegal diversion of funds, poor state of the economic, not all the loans granted by banks to if customers are rapid when due, such problems on loan and advances are classified as bad debt and doubtful debt.

 This has two major concern to both management and shareholders, but debt are less as bank and therefore, are capable of reducing the returns that the shareholders and contributions of the bank to economic and social development of the country.

1.1   STATEMENT OF THE PROBLEM

        The study investigated into the management of debt in Union Bank, it had been discovered that several factors affects the decision of the bank management in the numerous factors considered are the time factors, the nature of the business of the company involved and its management team and the type of industry in to which the company’s falls.

        A study concern itself with the examination of low factors like non products financial management, natural disorder, prevailing economic difficulties which has caused many countries to operate below capacity and other have affected management of bad debt.

1.2   AIMS AND OBJECTIVES

        The bank is a business enterprises aim of maximization of profit payment of handsome dividend to the shareholders and contributing if quote to the economic growth of the nations.

        The main objectives of this research topic is to defall the bad debt activities through the strategies they are using in order to minimize the rapid growth of debt to become bad, effort would be made to draw out the impact of bad debt on the entire banking industry including the staff, customer and marketing activities, there by consisting a major constrains on the achievement for their desire objectives.

 The project is also to touch the effort of prudential guide lines on bill debt and categories of bank debt, study the process of credit appraisal identify the major causes of bad and doubtful debt analysis their effects and offer suggestions on the minimization and effective management of bank debt in union bank.

AN INVESTIGATION INTO EFFECT OF BAD DEBT ON PROFITABILITY OF BANKS (A CASE STUDY OF UNION BANKS OF NIGERIA ILORIN)