JEFMS Journal

ABSTRACT:

Banking world over is adjusting to profound changes following the backdrop of current economic downturn with its significant impact on global financial outlook. In the face of corona virus diseases 2019 (covid 19) pandemic, most entities including Banks are experiencing general economic conditions associated with financial market volatility and erosion, deteriorating credits and loan portfolio, liquidity concerns, further increases in government intervention, increasing unemployment and layoffs, broad declines in consumer discretionary spending, increasing inventory levels, and general reductions in production because of decreased demand. This study investigates loan portfolio quality and efficiency of Quoted Deposit Money Banks (DMBs) in Nigeria amidst these phenomena. The population of the study consists of all the quoted Deposit Money Banks in Nigeria with sample of selected8surviving Deposit Money Banks with international authorization in Nigeria as at December, 2019. Using data envelopment analysis. The findings of the study reveals that the percentage value of loan portfolio at risk (VaR) and compliance level to prudential provisioning has negative effect on the efficiency of Quoted Deposit Money banks in Nigeria. While Management response to early warning triggers of non-performing loan has a significant positive impact on efficiency but capital adequacy does not in any way determine how efficient Quoted Deposit Money Banks in Nigeria are performing. The study therefore, recommends that, the management of Quoted Deposit Money Banks in Nigeria should intensify efforts in monitoring their loan portfolio and put in place adjustable risk coverage mechanism for safeguarding the asset quality. The managements of the banks are also advised to strengthen internal credit policies that will screen out potential bad loans and build a healthy and recoverable loan portfolio.

KEYWORDS:

Loan portfolio quality, Bank efficiency, Value at risk and Deposit Money Banks.

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