The impact of forex risk management on profitability in banking: a case study of United Bank for Africa
- Project Research
- 1-5 Chapters
- Abstract : Available
- Table of Content: Available
- Reference Style:
- Recommended for :
- NGN 5000
Background of the Study
Foreign exchange (forex) risk management is crucial for banks operating in international markets, where fluctuations in currency values can have a significant impact on profitability. United Bank for Africa (UBA) employs various forex risk management strategies—such as hedging, diversification, and real-time monitoring—to mitigate losses from currency volatility (Okafor, 2023). Effective risk management allows UBA to stabilize its profit margins and safeguard its international transaction portfolio. Advances in digital analytics and algorithmic trading have improved the bank’s ability to predict and respond to forex market movements, enhancing overall profitability (Afolabi, 2024).
Despite these innovations, managing forex risk remains challenging due to unpredictable market dynamics and geopolitical uncertainties. The bank’s approach involves continuous adjustment of hedging positions and careful monitoring of economic indicators. This study will assess the impact of forex risk management practices on UBA’s profitability by analyzing financial performance data, risk management reports, and market analyses. The findings will reveal whether robust forex risk management translates into higher profit margins and lower exposure to market shocks, thus providing strategic insights for improving risk mitigation frameworks.
Statement of the Problem
Although UBA has implemented sophisticated forex risk management practices, persistent market volatility and external shocks continue to challenge profitability. Sudden currency devaluations and unpredictable exchange rate fluctuations sometimes result in losses that outweigh the benefits of hedging strategies (Chinwe, 2023). Additionally, integration issues between real-time monitoring systems and risk management tools can delay responses to market shifts, thereby exposing the bank to avoidable risks. These challenges are compounded by regulatory constraints and global economic uncertainties that further complicate risk assessment. As a result, UBA’s ability to maintain stable profitability in a turbulent forex environment is not fully optimized. This study seeks to identify the key factors that limit the effectiveness of current forex risk management practices and propose strategic enhancements to better protect profitability.
Objectives of the Study
– To evaluate the impact of forex risk management on UBA’s profitability.
– To identify operational and market-related challenges in managing forex risk.
– To recommend improvements for more effective risk mitigation.
Research Questions
– How does forex risk management affect profitability at UBA?
– What challenges hinder effective forex risk mitigation?
– What strategies can enhance forex risk management outcomes?
Research Hypotheses
– H₁: Robust forex risk management is positively correlated with higher profitability.
– H₂: Delays in market response negatively impact risk mitigation effectiveness.
– H₃: Enhanced integration of digital monitoring improves risk management outcomes.
Scope and Limitations of the Study
The study focuses on UBA’s forex operations and risk management processes. Data will be collected from financial statements, risk reports, and market data. Limitations include external economic volatility and the complexity of forecasting forex movements.
Definitions of Terms
• Forex Risk Management: Strategies employed to mitigate losses from currency fluctuations.
• Profitability: The degree of financial gain realized after risk adjustments.
• Hedging: The use of financial instruments to offset potential losses.
Related Project Materials
The impact of big data analytics on business banking decision-making: A case study of Citibank Nigeria, Lagos
Background of the Study
The advent of big data analytics has transformed decision-making processes across various industrie...
ENVIRONMENTAL FACTORS AND ACADEMIC PERFORMANCE OF STUDENTS A STUDY OF ENUGU STATE UNIVERSITY OF SCIENCE AND TECHNOLOGY
ABSTRACT
A school is an environment where knowledge is acquired at various levels. The buildings or environment where th...
IMPACT OF CAREER MANAGEMENT ON ORGANIZATIONAL PERFORMANCE
Background Of Study
The imperative of modern human resources practice articulates an integrated approac...
An Examination of Procurement Practices and Efficiency in Hospital Drug Supply: A Case Study of Healthcare Providers in Taraba State
Background of the Study
Procurement practices play a significant role in ensuring that hospitals have the necessary medications and suppl...
AN EVALUATION OF ENTREPRENEURSHIP CENTRES AND ITS IMPACT ON JOB CREATION IN NIGERIA
Background to the Study
Human economic development will greatly contribute to the promotion of people&#...
An Assessment of Pragmatic Variations in Nigerian Digital Forums: A Comparative Analysis of Online Discussions
Background of the Study
Digital forums have revolutionized communication, providing spaces for users to engage in discussi...
The effect of financial deregulation on banking sector performance in Nigeria: Evidence from Zenith Bank
Background of the Study :
Financial deregulation involves reducing government controls to foster a more competitive and efficient banking...
An inquiry into digital marketing automation on streamlining campaign processes: A study of an online retailer in Kaduna, Nigeria
Background of the study
Digital marketing automation has revolutionized the way online retailers manage and optimize their...
DEVELOPING VOCATIONAL TRAINING PROGRAMS FOR GREEN CHEMISTRY PRACTICES
ABSTRACT: Developing vocational training programs for green chemistry practices is essential for fostering environmentally sustainable chemica...
An assessment of the influence of traditional music on phonetic production among the Igbo in Owerri
Background of the study
Traditional music is a vital cultural expression that influences many aspects of language, includi...
