THE RELATIONSHIP BETWEEN THE INVESTMENT PORTFOLIO AND BANKING FINANCIAL PERFORMANCE IN NIGERIA

The study aims to investigate the relationship between the investment portfolio and banking financial performance in Nigeria. The study took an ex post factor research design and firm was used as the unit of analysis. A population of the 15 commercial banks was taken but Skye Bank was screened out due to the unavailability of data and 14 banks were used as the sample for this study. Panel data analysis was used to analyze the data with E-views version 9 using the three models; without effect, random effect and fixed effect. The study reveals that investment in bond has a significant but negative effect on return on the asset while cash reserve had a positive but an insignificant effect on financial performance and treasury bills has a negative and an insignificant effect on financial performance. There is also a need for the management of investment companies to have a solid organization structure, as it will influence their investment portfolio choice, to avoid insignificant choices like treasury bills which do not impact on their financial performance. The research, therefore, recommends that the management of commercial banks should decrease their investment in bonds, cash reserve and treasury bills so as to avoid depleting the return on asset and consider investment in other portfolios like insurance, pension, forex and so on. Keywords: Investment Portfolio, Banks, Financial Performance, Treasury bill, Cash reserve