Effect of Portfolio Management on Financial Performance of Deposit Money Banks in Nigeria: Empirical Analysis

Abstract

This study examines the effect of portfolio management on the financial performance of deposit money banks in Nigeria over the period 2015-2025. Specifically, it investigates the impact of treasury bills, loans and advances, and investment securities on profit after tax, used as a proxy for financial performance. The study adopts a historical research design, relying on secondary data sourced from the annual reports and accounts of selected banks Zenith, GTB, First Bank, and FCMB. Panel data analysis was employed, utilizing descriptive statistics, correlation, and multiple regression techniques with E-Views software. The findings reveal that loans and advances have a significant positive effect on financial performance, while investment in securities also contributes positively and significantly. Conversely, treasury bills exhibit no significant effect on profitability. The results validate the Shiftability Theory, emphasizing that effective asset allocation enhances profitability. The study concludes that strategic portfolio management, particularly in credit and securities investments, is critical to sustaining bank performance and recommends enhanced credit risk management and diversified investment strategies to improve financial outcomes.