COMPARATIVE ANALYSIS OF COMMERCIAL BANKS SOUNDNESS: A CAMELS STUDY OF NIGERIAN PRE AND POST CONSOLIDATION ERA

Abstract

This study examined CAMELS analysis of Nigerian quoted commercial banks from 1997– 2016 pre and post consolidation. The objective was  to x-ray and compare the Nigerian banking system soundness in the pre and post consolidation using the CAMELS criteria. Time series data of the variables were sourced from financial statements of the quoted deposit money banks within the period. The study used Capital to Risk Assets Ratio (CRA) and Adjusted Capital to Risk Assets (ACRA) as Capital Adequacy (C), Non Performing Loans and Advances to Total Assets (TLA/TA) as Assets Quality (A), Operating Expenses to Total Assets (OPE/TA), Total loans and Advances to Total Deposit (TLA/TD) as Management Quality (M), Net Interest Income to Total Assets (NII/TA) as Earnings (E), Total Liquid Assets to Total Assets (L) as liquidity (TLA/TA) and Net Interest Income to Gross Domestic Product (S) (TLA/GDP) as sensitivity. Simple average and ranking was used as data analysis method. Findings revealed that the performance of the commercial banks in the post consolidation is better than the pre-consolidation. The study concludes that there is a significant difference between the pre and post consolidation of the quoted commercial banks using the CAMELS criteria. It recommends that the banking sector reforms should be strengthened deepened and the capital and management of the commercial banks should be used for effective to achieve the objective of the banking sector reforms.

KEYWORDS: Capital Adequacy, Assets Quality, Management Quality, Earnings, Liquidity, Sensitivity, Consolidation