VALUE ADDED DISTRIBUTION AND FINANCIAL PERFORMANCE OF DEPOSIT MONEY BANKS IN NIGERIA

Abstract

The financial performance of the Nigerian banking industry has shown resilience in the face of economic and regulatory challenges. However, the industry faces persistent challenges such as high non-performing loans (NPLs), foreign exchange instability, and inflationary pressures. This research examined the effect of Value Added Distribution on the financial performance of Deposit Money Banks in Nigeria. Adopting an ex post facto research design, the study focused on 14 deposit money banks in Nigeria, with a purposive sample of seven banks. Secondary data were drawn from the banks’ annual reports spanning 15 years (2009–2023). Multiple regression analysis, conducted using SPSS version 22, revealed  positive and significant effects of both Value Added retained in the business and that distributed to employees on financial performance as measured by Returns on Equity (ROE) and Returns on Assets (ROA) while the effects of Value Added to investors and to government all had negative and significant effects on financial performance as measured by ROA but the effect of Value Added to government on ROE was negative and insignificant. The study recommended that banks be more cautious in the distribution of Value Added as Value Added retained in the business for growth and Value Added to employees in the form of payment of salaries and other benefits have tendencies of improving financial performance as measured by ROE and ROA. Moreover, Banks should trade Value Added to investors and to government carefully as increase in same results to decrease in financial performance.