Financial Management and Profitability of Selected Deposit Money Banks in Ogun State, Nigeria

Abstract

This study examined the financial management and profitability of selected deposit money banks in Ogun state, Nigeria. The major aim of the study was to find empirical evidence of the relationship between capital structure management and profitability, and how capital structure affects the profitability of selected deposit money banks. The study adopts an ex-post facto research design. Five (5) deposit money banks in Ogun state were selected for this study and they are Access Bank Plc, First Bank Plc, Guaranty Trust Bank, United Bank of Africa, and Zenith Bank Plc. The data used for the study were obtained from online annual financial report of the Selected banks covering a period of 2015 –2019.
The data obtained were analysed using descriptive and inferential statistics. The findings of the study show that all explanatory variables show a moderate mean and acceptable standard variability. Similarly, R2 0.8799307, =F-value = 42314.635; P<0.05 = ROA, R2 = 0.96714366, F-value = 68.24986; P<0.05 = ROE indicates a significant positive relationship between capital structure and profitability because their proxy bank ROA and ROE showed a significant relationship with the explanatory variables.
The study concluded that there is a positive significant relationship between capital structure management and profitability and that capital structure affects the profitability of the selected deposit money banks. It was recommended that management of the selected deposit money banks pay greater attention to those factors that determine their optimal capital structure and optimise the level of profitability of their core business operations and therefore, the wealth of shareholders. And that deposit money banks should develop stringent measures aimed at curtailing the problem associated with their non-performing loan, provision for loan, liquidity ratio, and inflation rate in order to improve their profits.