Description
INTRODUCTION
Every commercial bank targets the attainment of its desired objectives. They therefore aim towards efficiency and proper effectiveness in conducting its affairs. However, the level of this efficiency and effectiveness of any bank or the extent to which it is able to achieve its desired goals depends to a large extent on the quality of the available accounting information and on how the bank utilizes the available information.
For any commercial bank to be sure of success in the management of their portfolios in this day’s rapid changing environment, the management and staff must update themselves with every relevant and current accounting information that will be beneficial in determining the predetermined goals. Management must therefore plan the course of action of the bank by identifying the long, medium and short term goals based on the detailed analysis of feasibility, bearing in mind the socio-economic and political situation that might affect the plans to be achieved.
Optimal bank portfolio management is a continuous struggle of maintaining a balance between liquidity, profitability and risk. Banks need liquidity because such a large portion of their liabilities are payable on demand. The decision to choose one combination of portfolio over another, given the liquidity size and capital accounts of
the bank would have direct and significant effect on bank’s profitability, liquidity and risk.
Commercial banks are very important financial institution in the economy in the expansion of investments and risks. Unfortunately, a deviation from profits to losses in portfolios will bring about wrong investment decisions by the bank which will bring about a defeat in their future risk taking policies and profit performance. A thorough analysis of the risk presented by an investment will improve the portfolio management thereby yielding less risk and more profitable portfolios.
The bank’s portfolio management is a major success factor of bank management. Numerous discussions on the new capital adequacy proposals enlighten the necessity to consider the banks portfolio management from both the internal and regulatory point of view. The question now is: with a simplified bank portfolio, is it possible to examine the impact of the regulatory risk limitation rules on the optimal situations under unfavorable market condition and intensifying competition bearing in mind that they are exposed to decreasing return margin on the portfolio and at the same time, their shareholders demand for higher risk premium for the capital they invested.
Based on this, this research work is assessing the extent to which banks are enlightened on how to strike a balance between risks and portfolios and whether commercial banks use accounting information especially on decisions to buy or not to
buy a portfolio considering factors like the personality and integrity of the prospective investor and the Nigerian stock exchange trade guidelines.
TABLE OF CONTENTS
CHAPTER ONE
1.0 INTRODUCTION
1.1 Background Of The Study
1.2 Statement Of The Problem
1.3 Objectives Of The Study
1.4 Research Questions
1.5 Statement Of Hypotheses
1.6 Significance Of The Study
1.7 Scope Of The Study
1.8 Limitation Of The Study
CHAPTER TWO
2.0 LITERATURE REVIEW
2.1 Portfolio Management
2.2 Role And Purposes Of Portfolio Management
2.2.1 Maximize The Value Of The Portfolio
2.2.2 Seeking The Right Balance Of Portfolios
2.2.3 Ensuring That The Portfolio Is Strategically Aligned
2.2.4 Picking The Right Number Of Portfolios
2.3 Prerequisites For Effective Portfolio Manangement
2.3.1 Establishing General Criteria And Objectives
2.3.2 Forecast The External Environment
2.3.3 Inventorying The Portfolio Needs
2.3.4 Formulating Principles And Strategy
2.3.5 Establishing The Machinery For Administration, Appraisal And Review
2.4 Modern Portfolio Theory
2.5 Portfolio Management Techniques
2.5.1 Heuristic Model
2.5.2 Scoring Technique
2.5.3 Mapping Or Visual Technique
2.6 Principles And Practices Of Portfolio Management
2.6.1 Emphasizing A Disciplined Process To Eliminate Response To Short-Term Market Volatility
2.6.2 Delivering Great Capability To All Investment Management Solutions
2.6.3 Aligning The Investment Strategy With The Objectives And Risk Tolerance
2.6.4 Emphasizing The Importance Of Asset Allocation
2.6.5 Plan Implementation Using The Most Appropriate Investment Strategies.
2.6.6 Monitoring And Adjusting The Portfolio
2.6.7 Assessment Of Progress
2.7 Diversification Of Portfolios
2.7.1 Spreading Out The Portfolios
2.7.2 Continous Building Of The Portfolio
2.7.3 Being Aware Of The Time To Exit
2.8 Methods Of Portfolio Analysis
2.8.1 Bond Portfolio Analysis
2.8.2 Stock Portfolio Analysis
2.9 Financial Ratios Analysis
2.9.1 Liquidity Ratios
2.9.2 Profitability Ratios
2.9.3 Leverage Ratios
2.10 Role Of Accounting Information In Bank’s Portfolio Decisions
2.11 Limitations Of Accounting Information
REFERENCES
CHAPTER THREE
3.0 RESEARCH METHODOLOGY
3.1 Research Design
3.2 Sources Of Data
3.3 Area Of Study
3.4 Population Of The Study
3.5 Sample Size And Sampling Technique
3.6 Validity And Reliability Of The Instruments
3.7 Technique For Data Analysis
CHAPTER FOUR
4.0 DATA PRESENTATION AND ANALYSIS
4.1 INTRODUCTION
4.2 Data Presentation
4.3 Testing Of Hypotheses
CHAPTER FIVE
5.0 SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION
5.1 Summary Of Findings
5.2 Conclusion
5.3 Recommendation
APPENDIX
QUESTIONNAIRE