CHAPTER ONE INTRODUCTION 1.1 BACKGROUND OF THE STUDY
The first bank as a commercial bank is a profit making organization it’s objective include profit maximization, maximization of earning per share and maximization of share price through increase virtual banking and other programmers. The level of achievement of there objective is essentially a measure of business efficiency. The need therefore arises for the first bank to rigorously pursue it’s goal by making effective use of all the resources at it’s disposal. Hence it has become ever more important in recent time due to the general economic downtown and sector by the government for the banking to move from one sphere into other areas of commerce and industry which are deemed to be profitable as asset portfolio adequately meet this needs. However, it should be noted that it is folio but rather, it is mandatory that the organization aims at working with the optimal combination of investment and the financing thereof which would produce the desired result, and this calls for effective management. Bearing in mind that investment induces the killing of an option; the option of productivity investment at any time in the future, the manager of the portfolio should exercise adequate skill and caution an efficient and effective manager would take into consideration. The high volatile and unpredictable nature of the money and capital markets in working out an investment policy and such policy should in be highly flexible so as to absolute the disadvantage by changes in government fiscal and monetary policies.
1.2 STATEMENT OF THE PROBLEM
The following which constitute the research question, stand at the heart of the research problems.
To what extent do first ban assets manager portfolio theory in practices?
How does assets portfolio diversification reduce risk in an empirical situation?
What factors actually determine the investment mix that reduces risk taking into account the Nigerian situation?
How difficult is portfolio management in practices?
How what extent does first bank participate various market, the money and capital market the real estate sector e.t.c
Does management of bank portfolio requires a financial expert?
1.3 OBJECTIVE OF THE STUDY
Portfolio management and its impact on profit ability level of banks in Nigeria is therefore a venture that requires adequate skill (s) and intellectual application gained through experience and bank practices. However there is one great asset of portfolio management which is a special note and this is the ability of portfolio managers to significantly reduce risk through diversification.
The following objective comes to mind in the choice of the topic:
1) To determine to what extent portfolio management theory is applied in practice by first bank in the assets portfolio management.
2) To determine the similarities and the difference in the portfolio management strategies between the banks.
3) To determine the relative importance of effectively managed assists to first bank operational to absolve the disadvantage created by change in fiscal and monetary policies.
1.4 SCOPE OF THE STUDY
It is intended in this study to appraise thoroughly the theoretical foundation on which the actual practice of assets portfolio management and it impact on the profitability level of banks in Nigeria is built in order to be acquired with the basic factors about investment markets, price movement and firm analysis, previous works on the theory of assets portfolio management and its impacts on profits level will be looked upon extensively. The researcher will examine the extent to which the practice agree with theory portfolio management as far as marking investment decision is theory concerned, establishing the objective of the bank investment policy, formulation of flexible policies and strategies delegation of authority and control etc. Also to consider is the impact of assets portfolio on the operational results of the bank which includes the effectiveness of bank management, by measuring actual performances of the department against the set goals and measuring equally the return on investment against the system of portfolio in the bank.
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