COMPARATIVE ANALYSIS OF ASSET-LIABILITY MANAGEMENT AND PROFITABILITY OF JAIZ BANK AND SELECTED CONVENTIONAL DEPOSIT MONEY BANKS NIGERIA

Abstract

This study aimed to provide a comparative analysis of asset-liability management (ALM) and profitability of Jaiz Bank and conventional deposit money banks (CDMBs) in Nigeria. To this end, a panel data of 9 CDMBs and 1 non-interest deposit money bank (NIDMB) - namely Jaiz Bank Plc - during the period from 2015 to 2024 was used in the analysis. The banks' profitability was measured using return on asset (ROA) while their ALM was proxied by a number of variables including liability-to-asset ratio, loan-to-assets ratio, and capital adequacy ratio. Data on these ratios was computed from the published annual reports of the selected banks. The findings of the study reveal that bank size, liability-to-asset ratio, loan-to-assets ratio, and capital adequacy ratio significantly determine returns on assets. It was also found that conventional banks outperform Islamic banks due to larger asset size and capitalization. However, Islamic banks incur lower liability management costs but face higher loan risks. The findings provide empirical evidence on ALM's influence on profitability, highlighting key differences between conventional and Islamic banking frameworks in Nigeria. As part of the study's recommendations, both CDMBs and NIDMBs should seek larger capitalization to prevent insolvency, and to sustain profitability during unprecedented deposit outflow, bad loans and financial crisis.