CHAPTER V

SUMMARY, CONCLUSION AND RECOMMENDATION

5.1 Introduction:
The performance of any economy is to largest extent dependent on the stability of the banking
sector. It is therefore important to allude to the fact that banks play a key role in the efficient
allocation of financial resources among economic agents. At this point, the study revealed that
analysis of financial statement is important to performance evaluation of banks and also support
decision making regarding the operations of an organization as observed in the ten years’
financial statements of the selected. The analysis of the financial statement has helped to address
the objectives of the study as it revealed the impact of financial statements on bank performance.
It was discovered that financial statements of banks influenced most investment decisions.
Categorically a large percentage of the sampled population relied on the ten-year summary of
banks in their performance evaluation.

Furthermore, there as a consensus opinion that financial statements were prepared to satisfy the
needs above facts that the major items of financial statement, i.e. statement of comprehensive
income, statement of financial position, statement of cash flow, statement of changes in equity,
had positive influence on major decisions regarding the operations of the banks and also a
veritable tool in performance analysis. There is definitely a need for the preparation of financial
statements by banks, due to the fact that financial statements show the position of bank in terms
of effective performance. The financial statement provides insight on how a bank is faring in an
economy and also its resilience in recuperating and maintaining a strong positon. Financial
statements also help in decision making by the bank, regulating authorities, potential investors
and other relevant information users. Financial statements are crucial for the development of
policies and other steps put in place to help improve and maintain successful ideal financial
performance as a bank. Financial statements shed light on areas that thrive and areas that require
improvement in a bank or any organization, however that is the limitation of it. It only indicates,
it does not give detailed steps on what to do to rectify an issue or what may have caused an issue.
That is why investors typically rely on interpretations by experts.
5.2 Summary
The study shows how financial statements are used in assessing bank performance, and identified
role financial statements play in evaluating the performance of First Bank Plc in Nigeria. The
statistical SPSS t-test regression analysis was conducted to establish the relationship between
financial statements and banks performance. The result showed that all the selected banks
performance indicators had positive mean value. The findings from this test support the fact that
financial statements have significant relationship with performance evaluation of the banks under
review. Furthermore, this was revealed in the earnings per share; a p-value of 0.000 which was
less than the 5% benchmark set by the SPSS t-test regression model. The foregoing, indicates
that the banks deployed their resources efficiently to achieve optimum return and support that the
financial statements effectively captures the performance of the banks. This facilitates
comparison between banks leading to better economic decisions. The model also revealed that
the financial statements helps to identify profit expense ratio (PER) as a critical indicator in
assessing profitability as it showed the p-value at 0.000 which was less than the 5% benchmark
set by the model. This indicated that the selected banks under study were profitable. Similarly,
the return on equity was observed to have a significant relationship with the financial statements.
The test revealed a positive return on shareholders’ investment. This is an important
measurement for potential investors because they would like to see how efficiently a bank will
use their money to generate net income.

After taking into context the analysis of the above findings and results of the ratio analysis, it
was obvious that financial statements improve bank performance and are efficient measures of
performance evaluation, through the analysing of the financial statements using ratio analysis to
identify areas risk and vulnerabilities with a view to mitigating them in a timely manner.
Although, there are other factors that could come into play at this stage such as good corporate
governance practices, customer satisfaction and macroeconomic environment, these factors do
not undermine the relevance of financial statements in improving bank performance, it serves as
a literal tell tale of how the bank is performing.
5.3 Conclusion
The research was carried out to ascertain the use of the financial statement for evaluating
performance in the bank, with particular reference to First Bank over a ten-year period (2010-
2019). The analysis supported the fact that financial statement support performance evaluation of
banks, and decision making in an organization. The analysis revealed that the three banks are
sound, stable and safe based on the results of the findings. It is also important to note that the
financial statements are a strong tool through which the performance of the institutions can be
assessed. Although, the reliability of financial reports has been challenged by stakeholders and
scholars due to the impact of inflation arising from the used of historical cost as a basis for asset
valuation as well as failure to recognize customer satisfaction, risk etc. Nevertheless, empirical
evidence suggest that financial statements are still the most efficient means of evaluating the
performance of a bank. As the economy continues to evolve and new policies are formulated
greater importance would continue to be placed on the preparation of financial statements.

5.4 Recommendations
Based on the result of the research findings, I wish to recommend the following:
1. Greater emphasis should continue to be placed on the preparation of financial statements
by banks
2. Banks should continue to provide adequate supporting information to their financial
statements for ease of analysis and interpretation by the relevant stakeholders.
3. The continuous and efficient preparation of financial statements in line with applicable
accounting standards and regulatory requirements.
4. The banks should continue to use financial statements as a yard-stick in regulating their
activities.