Tansian University Journal of Arts, Management & Social Sciences

The study assessed the effect of income patterns of commercial banks in Nigeria on its performance. Specifically, the study ascertained the effect of non interest income on the Return on Equity of commercial banks. It further investigated the effect of interest income on Return on Equity of commercial banks. Relying on the ex-post facto research design, a total of 7 licensed commercial banks with international operational scope was sampled over a period of 12 years ranging from 2013-2024. Descriptive and correlational analyses were preliminarily conducted to summarise the data obtained and analyse the research questions. Hypotheses formulated were tested using panel estimated generalised least square regression analysis. The findings revealed that non interest income has a significant effect on return on equity such that credit related fees had a positive and significant effect on ROE (? = 0.0171; p = 0.0000); letter of credit commission had a negative but significant effect on ROE (? = -0.0129; p = 0.0000); while electronic banking income and account Maintenance Income had positive and significant effect on ROE (? = 0.0331; p = 0.0000; ? = 0.0062; p = 0.0224) of listed commercial banks in Nigeria respectively. It was further discovered that interest income has a positive and significant effect on Return on Equity such that investment securities income had a positive and significant effect on ROE (? = 0.0798; p = 0.0000); loan and advances to banks had a positive and significant effect on ROE (? = 0.0045; p = 0.0002); while loan and advances to customers had a positive but statistically insignificant effect on ROE (? = 0.0122; p = 0.2071) of listed commercial banks in Nigeria.. In conclusion, this shows that interest income and non-interest income impact banks’ profitability and efficiency differently. Some fees and commissions boost return on equity while others do not. The study therefore recommended that the marketing and product development teams should intensify efforts to promote electronic banking services and credit-related fee products, while the risk management team should review and optimize letter of credit commission structures to improve Return on Equity.

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