Effect of Non-interest income on Performance of Deposit Money Banks in Nigeria

• Post by: birpo
• May 28, 2026
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Olorunmola, Emmanuel Glory¹ & Prof. Ikechukwu .I. Okpe²

Abstract         

The study conducted empirical analysis to examine the effect of non-interest income on the performance of Deposit Money Banks (DMBs) in Nigeria from 2013 to 2022. Specifically, it investigated the effects of Dividend Income, Rental Income, Foreign Exchange Income, Fixed Income Securities, and Foreign Currency Revaluation Income on the Profit for the Year of deposit money banks in Nigeria. The study selected nine DMBs listed on the Nigeria Exchange Group during the period and analyzed time series data from their annual audited financial statements using various statistical tools. In particular, Panel Data Regression Analysis was used to test the five null hypotheses formulated for the study. Results of the analysis suggested that Dividend income, Fixed income securities and Foreign Currency Revaluation Income had positive and significant effect on profit for the year of the sampled deposit money banks in Nigeria during the period under review with coefficient: 0.689884; P-Value: 0.0000, coefficient: 0.162996; P-Value: 0.0005 and coefficient: 0.092439; P-Value: 0.0122 respectively. While rental income and foreign exchange income had positive and non-significant effect on profit for the year of the sampled deposit money banks in Nigeria during the period under review with Coefficient: 0.095541; P-Value: 0.3267 and coefficient: 0.089419; P-Value: 0.1832. The implication of these findings suggested that non-interest income served as a valuable tool for improving profitability and risk mitigation in the banking sector in Nigeria. Based on these findings and the implications, the study recommended that: (i) Deposit money banks (DMBs) in Nigeria should increase profitability by investing in shares of quoted firms, the dividends from such investments would significantly boast the banks’ profitability. (ii) The banks would also enhance its profitability by engaging in real estate’s investments to generate rental incomes. Given that real estate was a viable investment in the country, it had the potential to significantly increase the profitability of the firms. (iii)The deposit money banks should increase profitability by trading in foreign exchange. The presence of a thriving foreign exchange market in Nigeria would contribute to the growth of profitability for the banks. (iv) The banking institutions should equally invest in fixed income securities such as bonds or treasury bills, underwriting and issuance fees and so on to banks’ profitability. However, if bank actively trade Government bonds for gains or participate in underwriting new Government bond issuances, it contributes to non-interest income. Hence, the study concluded that deposit money banks should increase their stock of foreign currencies, to enable them benefit from the profit arising from foreign currency revaluations.

Keywords: Non-Interest Income, dividend income, rental income, foreign exchange income, fixed income securities, foreign currency revaluation, Performance

Cite: Olorunmola, E. G. &  Okpe, I. I. (2026). Effect of Non-Interest Income on Performance of Deposit Money Banks in Nigeria. International Journal of Accounting Research and Financial Insights,4(4), 248-255.https://doi.org/10.5281/zenodo.20426509