The Determinants of Bank Profit: A Disaggregated Analysis of Commercial Bank’s Profit in Nigeria
Ibi, Esor Egbe; Collins Etim Udofia

Abstract
This study sought to establish if market structure, policy and regulatory variables contributed in any way to bank profitability in Nigeria using ten Nigeria banks. In order to find out how the above mentioned variables relates to bank profitability in Nigeria, we use the ordinary least square multiply regression method on secondary data pertaining to 1994 through 2003 of these ten selected banks. We found that market structure variables represented by total asset, total deposit and number of bank branches to be the major determinant of profitability of First bank, Union bank, Zenith bank and Afribank. We found policy variables represented by demand deposit to total deposit rate, time/saving deposit to total deposit ratio and loans/advances to total deposit ratio to be the determinant of profit in only cooperative development bank while regulatory variables represented by inflation rate, interest rate and exchange rate to be the determinant of profit in first bank, guaranty trust bank, cooperative development bank and chartered bank. We therefore recommend among others that monetary authorities should create an enabling environment to enable the banks to adopt policies that will enhance their performance, particularly in their lending activity and that they should continue with the policy of expansion of bank braches particularly in the rural areas and that such expansion should be approved only when it is certified that there would be greater incremental revenue to the banks than incremental expenses.

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