DETERMINANTS OF PROFITABILITY IN THE NIGERIAN DEPOSIT MONEY BANKS

The issue of poor performance of deposit money banks in Nigeria has been a long standing one, Consequently this study examined the determinants of profitability of deposit money banks in Nigeria using both internal variables (capital adequacy ratio, asset quality ratio and liquidity ratio) and external variables (Gross Domestic Product , interest rate and rate of inflation). Seven banks were sampled and the scope of the study covered the period 2008-2013. The data which were obtained through secondary sources were analysed using ordinary least square regression. The findings revealed that some internal variables (capital adequacy ratio, and liquidity ratio) and external variable (Gross Domestic Product have significant impact on the profitability of deposit money banks in Nigeria, While Asset Quality Ratio, Interest rate and Inflation rates are statistically insignificant. It is recommended amongst others that efforts should be made to ensure that the prevailing credit policy of the Central Bank of Nigeria must be fully observed in considering credit request from customers to reduce default in loan refund in the Nigerian banking industry.