Empirical Analysis of the Relationship Between Loan Maturity Structure and Bank Profitability in Nigeria

The maturity structure of loan portfolios influences both the risk profile and the profitability of commercial banks, yet the empirical relationship between loan maturity composition and bank profitability in the Nigerian context has not been adequately investigated. This study empirically analyses the relationship between loan maturity structure and profitability of deposit money banks in Nigeria for the period 2010 to 2022. Loan maturity structure was measured by the ratio of short-term loans to total loans, the ratio of medium-term loans to total loans, and the ratio of long-term loans to total loans. Bank profitability was measured by return on assets and net interest margin. Control variables included bank size, capital adequacy, non-performing loan ratio, and macroeconomic controls. Secondary data were extracted from the annual reports of twelve deposit money banks and the Central Bank of Nigeria Statistical Bulletin. Panel data fixed effects regression was employed. Results showed that short-term loan ratios positively and significantly predicted net interest margin (coefficient = 0.031, p < 0.05), while long-term loan ratios negatively predicted return on assets (coefficient = -0.018, p < 0.05). Medium-term loan ratios had no significant independent effect on profitability. These findings suggest that Nigerian banks earn more efficiently from short-term credit exposures but face profitability pressures from long-term loan concentration. The study recommends a balanced approach to maturity diversification and dynamic loan pricing strategies to optimise the risk-return profile of loan portfolios in the Nigerian banking sector. Keywords: loan maturity structure, bank profitability, net interest margin, deposit money banks, Nigeria