The impact of corporate finance services on bank’s profitability (a case study of first bank of nigeria plc)

Thesis Overview

<p> <b></b></p><p><b><b>1.0 &nbsp; INTRODUCTION</b></b></p><p><b><b></b></b></p><b><b><p>&nbsp; &nbsp; &nbsp; &nbsp; With the deregulation of the economy and<br>the emergence of several government regulations, the traditional role of Universal<br>Bank as providing short term finance has undergone an economic metamorphosis<br>resulting in the granting of license by Nigeria Stock Exchange to universal bank<br>to participate to a greater extent or length in the capital market.</p><p>And these<br>enhance banks to go into various capital project financing through their corporate<br>finance unit thereby erecting more profit or revenue generation.</p><p><b>1.1 &nbsp; BACKGROUND<br>TO THE PROBLEM</b></p><p><b></b></p><b><p>The deregulation<br>and liberalization of the banking industry in 2004 has changed the industry<br>landscape in many aspect, prominent among the changes are: –</p><p>– &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; <br>Decrease in the number of banks</p><p>– &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; <br>Specialization in banking industry and non-bank financial<br>institution, discount house, finance house and micro finance.<b></b></p><b><p><b></b></p><b><p>– &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; <br>Automation in banking industry, computerization and<br>technology enhancement.<b></b></p><b><p><b></b></p><b><p>– &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; <br>Raising of minimum paid up capital to N25 billion for both<br>universal and Merchant banks. &nbsp;<b></b></p><b><p><b></b></p><b><p>The highlighted<br>changes among other gave N25 billion paid-up capital for a degree completion<br>resulting in innovation and product development or service development. A number<br>of banks had been forced to patronize the capital market to source for fund in form<br>of capital. Thus, the current wave of development of new service product become<br>a reaction by bankers to the consciousness aroused with respect to the<br>treatment to be met out to customer as well as the need for sound improvement<br>on their liquidity position and capital base.</p><p>However,<br>the new service products are directly aimed at mobilizing deposit and revenue<br>generated through fee based transactions which are mostly directed to corporate<br>customers. And with the target of providing a corporate finance services to corporate<br>body with capital project through their corporate finance unit with the aim of generation<br>more profit or income.</p><p><b>1.2 &nbsp; STATEMENT<br>OF THE PROBLEM &nbsp;</b></p><p><b></b></p><b><p>In the<br>statement of this research work, corporate finance takes on various investment services<br>to institutional and private investors such that these adequate services does not<br>reduce some abnormality that may hinder the much needed profit in their operation<br>which can be deduced from the understand:</p><p>i. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; <br>That bank ensures the adequate collections of<br>collateral before loan are given out.</p><p>ii. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; <br>That bank does not operate within the aggregate limit in<br>their finance services in order to facilitate the achievement of government<br>social economic programme and profitability.</p><p>iii. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<br>And that bank does not ensure correction measure or<br>action to be taken if the borrower does not repay in accordance with the agreement<br>as arranged.</p><p><b>1.3 &nbsp; OBJECTIVE<br>OF THE STUDY</b></p><p><b></b></p><b><p>The<br>examination of corporate finance service on Universal banking in Nigeria is pertinent<br>at this time of little or no bank failure couple with government concern for<br>stable and self reliance economy through high sustainable productive capacity,<br>since such service provides companies with the necessary finance is for dynamic<br>base to meet future challenges.</p><p>However,<br>the aim of the study is to identify the corporate finance services offered by<br>Nigeria Universal Banks as compared with banks in developed economy.</p><p><b>1.4 &nbsp; STATEMENT<br>OF RESEARCH HYPOTHESIS</b></p><p><b></b></p><b><p>According<br>to Kertiger, F. H Dictionary “An hypothesis is a guessed statement of a<br>relationship between two or more variables.</p><p>The above definition<br>serves as a guide for the research test for hypothesis</p><p><b>Hi:</b>&nbsp; That corporate finance management reduces the<br>level of fraudulent practice in bank and boost profitability.</p><p><b>Ho:</b>&nbsp; That corporate finance management does not reduce<br>the level of fraudulent practices in banks and hinders their level of profitability.</p><p><b>Hi:</b>&nbsp; There is significant correlation between the corporate<br>finance services in reducing the level of fraudulent act and profit generation.</p><p><b>Ho:</b>&nbsp; There is no significant correlation between the<br>corporate finance services in reducing the level of fraudulent act and profit generation<br>restriction.</p><p><b>&nbsp;</b></p><p><b></b></p><b><p><b>1.5 &nbsp; JUSTIFICATION OF THE STUDY</b></p><p><b></b></p><b><p>The research<br>work is conducted mainly on corporate finance service as it relates to institutional<br>leaders and its impact on banks profitability with little emphasis on universal<br>banking. And to be a guide for academic excellent and to companies who are unaware<br>of such service facilities in banks.</p><p><b>1.6 &nbsp; SCOPE OF<br>THE STUDY</b></p><p><b></b></p><b><p>The project<br>covered corporate finance services in universal bank but limited to those in<br>existence presently at First Bank of Nigeria Plc. &nbsp;</p><p><b>1.7 &nbsp; LIMITATION<br>OF THE STUDY </b></p><p><b></b></p><b><p>The study<br>like many other studies has a share of limitation as in every human undertaken there<br>are always constraints in achieving the set down goals in which this project is<br>not left out. Some of these constraints include the following: – &nbsp;</p><p><b>a. &nbsp; &nbsp; Time Factor: </b>– It would be<br>generally agreed upon that carrying out research work involves a lot of timout this<br>project is very short. &nbsp; &nbsp;<b>&nbsp; &nbsp; &nbsp;</b></p><p><b></b></p><b><p><b>&nbsp;</b></p><p><b></b></p><b><p><b>b. &nbsp; &nbsp; The problems of data collection and its accuracy:<br>– </b>It is well known fact that bank staffs are always busy during<br>and after business hour with customers and balancing of each day account. So as<br>a result of this questionnaire set out were not returned on time even many questions<br>were not answer or retuned. The reason behind this might be due to the amount of<br>secrecy as professional ethic of the job.</p><p><b>c.</b>&nbsp; &nbsp; The problems of finance to augement the<br>effectiveness of the project.</p><p><b>d.</b>&nbsp; &nbsp; Also, the book that were available in the<br>school library here are outdated, beside these is the lack of power supply (electricity)<br>in the school environment for more research online.</p><p><b>1.8 &nbsp; DEFINITION OF TERMS</b></p><p><b></b></p><b><p><b>Corporate Finance: </b>– This is concerned with making<br>the provision and the use of a firm’s finance which involves the allocation of scarce<br>capital resources among competition opportunities</p><p><b>Corporate Finance Services:</b>&nbsp;– This is<br>the services rendered to companies or business organization by provision them<br>with fund to run smoothly the business usually from a bank.</p><p><b>Profitability</b>: – This is the ability of the corporate<br>finance operator to earn profit or gain to the extent that the principal sum,<br>interest and desire profit of an advance made is repaid.</p><p><b>Bank</b>: – This is an institution or financial<br>intermediaries that offer various financial services to both individual and corporate<br>customers</p></b></b></b></b></b></b></b></b></b></b></b></b></b></b></b></b></b></b></b><br> <br><p></p>