ABSTRACT

 This research study used Return on Equity and Return on Total Assets as a measure of profitability to examine the Short Term Effects of the 2006 banking sector consolidation on profitability of Nigerian banks. The banks examined were those that fairly retained their identities before and after the consolidation exercise. The three-year (2003-2005) pre-consolidation mean of Return Equity and Return on Total Assets of the banks were compared with the three-year (2006-2008) mean of post-consolidation period. Using the ex post facto statistical design in conjunction with the paired sample-tests statistic, it was found that there was a significant increase in the profitability of only four of the banks and a significant decrease in the profitability of the rest. The findings here confirmed the existing belief in some quarters that new generation banks and the up-coming ones are more aggressive in their profit drive than their old generation counterparts. It is recommended that banks should reconsider the amount of money they invested in long term projects, especially in information communication technology which does not yield fruitful results both to the banks and to the individual customers. Similarly, banks should reconsider the number of branches in relation to the demand of the services. The studies acknowledged the existence of branch offices in some rural areas with less than one hundred customers, and transactions in such branches are very low. The banks should maintain and upgrade the existing ones to meet the requirement of modern banking sector.