LIST OF TABLES
Table 1: Analysis of Trend in Total Lending and Total Deposits of Union
Bank
Table 2: Trend
in Union Bank Lending, classified debt and Provision for bad debts
Table 3: Relationship between
provisions for bad debts charged and total classified debts in union bank of
Nigeria plc
Table 4: Relationship between provisions for bad debts gross earnings of
Union Bank of Nigeria Plc
CHAPTER FOUR
DATA PRESENTATION AND SUMMARY OF
FINDINGS
4.1 Data
Presentation and Summary of Findings
Table
1: Analysis of Trend in Total Lending and Total Deposits of Union Bank
|
Year
|
Secured Loan
|
Unsecured
Loan
|
Total
Loan
|
%charge Loan
|
Total Loan
|
% charge in depreciation
|
% of loan to depreciation
|
|
2007
|
2505931
|
34400
|
2849931
|
-
|
4876544
|
-
|
58.44
|
|
2008
|
2833281
|
415239
|
3245520
|
113.99
|
5782832
|
118.58
|
56.18
|
|
2009
|
2833281
|
415239
|
324852
|
110.89
|
9379730
|
110.32
|
56.47
|
|
2010
|
3295412
|
1082526
|
4377932
|
121.53
|
9739954
|
152.67
|
44.02
|
|
2011
|
4801392
|
1486484
|
6287876
|
143.63
|
15712902
|
161.32
|
40.02
|
|
2012
|
614435
|
1566283
|
7710718
|
122.63
|
2014764
|
128.01
|
38.33
|
Source: Union
Bank of Nigeria Plc annual report and account for the various years.
Trend in Union Bank’s Lending and
Deposit Activities
Table
1 above contains an analysis of the trend in bank lending as well as deposit
base. As shown in the table, aggregate loans and advances increasing from N2,
849, 931 million in 2007 to N7.710, 718 million in 2012.
With 2007 as a base a year, the figure shows N4,860,787
million increase during the six period. The also shows that the total deposits
of the bank increase from N4,876,544 million in 2007 to N20,144,764 million in
2012 representing in increases of N15,238,220 million. The table further shows that
the banks have maintained an average loan – deposit ration of 3%. This gives
enough liquidity position.
Table 2: Trend
in Union Bank Lending, classified debt and Provision for bad debts
|
Year
|
Total Lending
|
Total Classified
Debt
|
Pro-
Charge
|
%charge
In loan Lending
|
%charge
In classified
|
%charge
In Provision
|
|
2007
|
2849931
|
379436
|
99896
|
-
|
-
|
-
|
|
2008
|
3249931
|
471321
|
99062
|
113.99
|
124.22
|
99.17
|
|
2009
|
3602320
|
610653
|
152710
|
110.89
|
129.56
|
154.16
|
|
2010
|
4377932
|
819206
|
367620
|
121.53
|
134.15
|
246.72
|
|
2011
|
6287876
|
1250039
|
731828
|
143.63
|
152.59
|
199.08
|
|
2012
|
7710718
|
1459174
|
352168
|
122.63
|
116.73
|
48.12
|
Source: Union Bank of Nigeria Plc annual
report for the various years.
Table
2 above shows that despite the declining percentage rate of the charge in total
lending except 2010 and 2011, the percentage change in classified debt has been
consistently high and positive and in each year higher than the percentage
charge in lending except for 2012 when percentage in total lending was
marginally higher than percentage charge in total lending between 2007 and 2012
increased by N4860787 million while total classified debts increased by N1,079,738
million. The trend is quite deeming and calls for serious attention. This could
be stemmed with good loan management.
Table 3: Relationship between provisions
for bad debts charged and total classified debts in union bank of Nigeria plc
|
Year
|
Classified debts
|
Provision
|
%Provision
To classified debt
|
|
2007
|
379436
|
99896
|
26.33
|
|
2008
|
471321
|
99062
|
21.02
|
|
2009
|
610653
|
152710
|
25.02
|
|
2010
|
819206
|
367610
|
44.87
|
|
2011
|
1250039
|
731828
|
58.54
|
|
2012
|
1459174
|
352168
|
24.13
|
Source: Union Bank of Nigeria Plc annual
report and Accounts.
Table 3 above shows that 26.33% of the classified debt
were charged to profit and loss as provision for classified debts were 24.13%.
on the average about 30% of the classified debts were charged to gross earnings.
Annually as provision for doubtful debts. This is rather on the high side and
may suggest a week recovery efforts on the part of the bank. But as a result of
the establishment of a debt recovery unit charged with the responsibility of
managing and recovery classified debts, the percentage provision of classified
debts, full from 58.54% in 2011 to 24.13% in 2012.
Table 4: Relationship between provision for
bad debts gross earnings of Union Bank of Nigeria Plc.
|
Year
|
Cross
|
Provision on
|
%Provision
|
|
|
Earning
|
Charged,
N.000
|
Cross
caning
|
|
2007
|
773728
|
99896
|
12.91
|
|
2008
|
1059418
|
99062
|
9.35
|
|
2009
|
142077.8
|
152710
|
10.75
|
|
2010
|
1824117
|
367610
|
20.15
|
|
2011
|
269987
|
731828
|
27.10
|
|
2012
|
39377.4
|
352168
|
8.94
|
Source: Union Bank of Nigeria Plc annual
report and Accounts.
Table
4 above shows that a reasonable proportion of Union Bank is gross earnings are
taken by provision for bad debts. To recover the debts, the costs are always
high and of course effects profitability.
4,2 Provision
and Analysis of Data Question
|
Response
|
Number
|
Percentage
|
|
Short
term
|
20
|
40%
|
|
Medium
term
|
30
|
60%
|
|
Long
term
|
-
|
-
|
|
Total
|
50
|
100%
|
Source:
Field survey, 2012
Table
4: shows that 20% or 40% of the responses believed that Union Bank provides
short term financial assistance to both public and private sectors while 30% or
60% of the responses accepted that their banks provide medium term financial assistance
to customers.
Question
for table 1 is does your bank provides financial assistance to both the public
and the private sector to responds is the table above.
Question 2: Does your bank encounter cases
of bad debts?
|
Response
|
Number
|
Percentage
|
|
Yes
|
50
|
100%
|
|
No
|
-
|
-
|
|
Total
|
50
|
100%
|
Source:
field survey, 2012.
Table
ii, shows that 50 or 100% of the response received that banks encounter cases
of bad debt from 2007 – 2012.
Question
3: if yes, was the amount involved in such case startling.
|
Response
|
Number
|
Percentage
|
|
Yes
|
41
|
82%
|
|
No
|
9
|
18%
|
|
Total
|
50
|
100%
|
Source:
field survey, 2012.
The table above shows that 41 or 82% of the response
received accepted that the amount involved in cases of bad debts were
staggering startling while 9 or 18% of the response opined that the amounts
were not startling.
Question 4: Does fund diversion have any
effect on bad debt in your bank from the period 2007 – 2012.
|
Response
|
Number
|
Percentage
|
|
Yes
|
47
|
94%
|
|
No
|
3
|
6%
|
|
Total
|
50
|
100%
|
Source:
field survey, 2012.
It shows that 47 or 94% of the response received
accepted that fund diversion has some effect on bad debt in Union Bank while 3
or 6% of the response believes that it has no effect on bad debt in union Bank.
Question 5: to what extent has
inadequate collateral securing provision effect the incidences of bad debts in
your banks
|
Response
|
Number
|
Percentage
|
|
Great
extent
|
40
|
80%
|
|
An
extent
|
10
|
20%
|
|
No
extent
|
-
|
|
|
Total
|
50
|
100%
|
Source:
Field survey, 2012.
It shows that 40 or 80% of the response received were
of the opinion that inadequate collateral security provisions by customers
affects in incidence of bad debts in money-Deposit banks (Union Bank) to a
great extent for the started period. Where as 10 or 20% of the responses
accepted that if affects the incidence of bad debt in Union Bank to an extent
for the stated period.
Question 6: Does your bank encounter any
problems in the recovery of these loans?
|
Response
|
Number
|
Percentage
|
|
Yes
|
50
|
100%
|
|
No
|
-
|
-%
|
|
Total
|
50
|
100%
|
Source:
field survey, 2012.
It
shows that 50 or 100% of responses received opined that Union Bank encounters
problems in recovery of the loan given to customers during the started period.
Question 7: Does the central Bank
interest rate ceiling pose a problem to your bank in granting these loans?
|
Response
|
Number
|
Percentage
|
|
Yes
|
48
|
96%
|
|
No
|
2
|
4%
|
|
Total
|
50
|
100%
|
Source:
Field survey, 2012.
The
above table shows that 48 or 96% of the responses received that central bank
interest rate ceiling poses a problem to the bank in granting loan to
borrowers.
Questions 8: Does improper project
evaluation have any significant relationship with bad debt in Union Bank from
the period?
|
Response
|
Number
|
Percentage
|
|
Yes
|
50
|
100%
|
|
No
|
-
|
|
|
Total
|
50
|
100%
|
Source:
field survey, 2012.
It show that 50 or 100% of the responses received were
of the opinion that improper project evaluation has a significant relationship
with bad debt in Union Ban of Nigeria PLC form the period.
Decision Rule
Reject
Ho, if calculated value if greater than table value otherwise accept Ho. Source
of test for question 1
|
Response
|
Oi
|
Ei
|
Oi-ei
|
(oi-ei)
|
(oi-ei)2/ei
|
|
Yes
|
47
|
25
|
22
|
484
|
19.36
|
|
No
|
3
|
25
|
-22
|
484
|
19.36
|
|
|
|
|
|
|
38.72
|
Calculated
value x2.05 =
38.72
Total
value x2 05 = 3.841
Decision
Since
computed value is grate than table value, 38.77 > 3.841 reject Ho which
means that fund diversion affects bad debts in Union Bank of Nigeria.
Statement for Hypothesis Three
Ho: Government intervention has no influence
on union Bank of Nigeria plc bad debts.
Test Technique
Chi-square = X2
test
Oi = observed frequency
F = Degree of freedom = 1o
Level
of significance = 5%
Decision Rule
Reject
Ho: if calculated value is greater than table value, otherwise accept Ho.
Source
of test for question 2
|
Response
|
Oi
|
Ei
|
Oi-ei
|
(oi-ei)
|
(oi-ei)2/ei
|
|
Yes
|
48
|
25
|
23
|
529
|
21.16
|
|
No
|
2
|
25
|
-23
|
529
|
21.16
|
|
|
|
|
|
|
43.32
|
Calculated
value x2.05 = 42.32
Total
value x3 = 3.841
Decision
Since computed value is greater than table value,
42.32>3.841, reject Ho which means that government intervention has direct
influences on Union Bank of Nigeria Plc bad debts.
Statement of Hypothesis
Ho: Inadequate collateral provision by
borrowers does not increase the incidence of bad debts in Union Bank of Nigeria
PLc.
Test technique
Chi-square
x2 test
Formular
for test technique
X2
= (oi-ei)
where
x2 = chi-square
oi = Observed
frequency
ei = Expected
frequency
f = Degree
of freedom = (c-1) (R-1)
(3-1)
(2-1)
(2) (2-1)
= 2
Level
of significance 5%
Decision Rule
Reject
Ho, if calculated is greater than table value, otherwise accept Ho.
Source
of test for question 1
|
Response
|
Oi
|
Ei
|
Oi-ei
|
(oi-ei)
|
(oi-ei)2/ei
|
|
Great
extent
|
40
|
16.67
|
23.33
|
544
|
32.63
|
|
An
extent
|
10
|
16.67
|
-6.67
|
44
|
2.64
|
|
No
extent
|
-
|
16.67
|
-6.67
|
278
|
16.68
|
Calculated
value x2 = 05 = 51.95
Total
value x2 05 = 5.991
Decision
Since computed value is greater than table value,
51.944 > 5.001, reject Ho which means that inadequate collateral provisions
by borrows increase, the incidence of bad debts in union Bank of Nigeria plc.
Statement of hypothesis two
Ho: Fund diversion does not affect bad debt in
Union Bank of Nigeria plc.
Test Technique
Chi-square
x2 test
Formular
for test technique
X2 = (oi
– ei)2
Where
x2 = chi-square
Oi = observed frequency
ei = expected frequency
f = Degree of freedom = 10
level of significance = 5%
Statement of Hypothesis Three
Ho: Improper project evaluating has no significant relationship with
bad
debt in Union bank of Nigeria plc.
Test Technique
Chi-square = x2 test
X2 = (oi
– ei)2
ei
Where
x2 = chi-square
Oi = observed frequency
ei = expected frequency
f = Degree of freedom = 10
Level of significance = 5%
Decision Rule
Reject Ho, if calculated
value is greater than table value, otherwise accept Ho.
Source of test for question 2
|
Response
|
Oi
|
Ei
|
Oi-ei
|
(oi-ei)
|
(oi-ei)2
|
|
Yes
|
51
|
25
|
25
|
625
|
22
|
|
No
|
-
|
25
|
-25
|
625
|
25
|
|
|
|
|
|
|
50
|
Calculate
value x2 .05 = 50
Total
value x2 .05 = 3.841
Decision
Since computed value is greater than
table value, 50 > 3.841, reject Ho which means that improper project
evaluation has significant influence on the bad debt of union bank of Nigeria
Plc