MARKET INTEREST RATES AND COMMERCIAL BANK PROFITABILITY(A CASE STUDY OF FIRST BANK OF NIGERIA PLC(2000-2004)

The Nigerian banking in recent times has witnessed so much fluctuation in market interest rates, which has called for concern. The market interest rate controversy has been addressed by experts with a lot of pessimism with different views regarding commercial banks profitability and the economy at large following the return from deregulation of interest rates to pegging in the 1991 budget. Profitability of banking depends on the ability of the bank to arrange and perform its activities in order to trade off optimally between solvency, liquidity and profitability. This is by no means an easy task with the manipulation of several economic variables to the advantage of the bank. The problems associated with this can be expressed in question for as follows. i. Are commercial banks in the country really profitable? ii. Do market interest rates affect commercial banks profitability? iii. If yes to what extend are effects and of what dimension, that is wither positive or negative.