The indigenization programme of the 1970s, which left

The banking sector plays an important role in the economic
development of any country such as Nigeria. The
Nigerian banking system has in recent times undergone numerous structural
changes and been known to face various challenges which have affected the
banking industry in particular and the economy as whole and this phenomenon
(vis-à-vis the structural changes various challenges) have attracted the
attention of stakeholders such as scholars, owners and managers of banks,
policy makers, governments, among others. According to Aremu, Ekpo and Mustapha (2013), there is a direct link between
the nation’s banking sector and national development.

With regards to the structural changes, Anyanwu (2010)
cited by Kalu and Mgbemena (2015) noted that the Nigerian banking sector has experienced
five distinct phases of banking sector reforms. Following a chronological order,
the first occurred during the periods of 1986 to 1993. During these periods,
the banking sector of Nigeria was deregulated so as to accommodate private
sector participation thus making it an oligopolistic market system as stated by
Asogwa (2005). Kalu and Mgbemena (2015) identify that, prior to this period, the
banking sector was dominated by banks which emerged from the indigenization
programme of the 1970s, which left the Federal and State governments and thus
could be said to operate a monopoly market system. The second stage was the re-regulation
period between 1993 and 1998, which follows the deep financial distress of the
nation. The third stage was initiated in 1999 with the return of liberalization
and the adoption of the universal banking model. The fourth stage commenced in
2004 with banking sector consolidation as a major component and was meant to
correct the structural and operational weakness that constrained the banks from
efficiently playing its leading role of intermediation. The fifth stage address
the combined effects of the global financial and economic crisis, as well as
the banks’ huge exposure to oil/gas and margin loans, which were largely
non-performing; weak corporate governance and outright corruption among
operators in the system.

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With regards to the
challenges, Mahmud, Mallik, Imtiaz and Tabassum (2016) stated that poor
performance of banks due to the elastic challenges facing the banking system can
cause wide array of problems like bank failure. This can affect the banking
system and hence cause economic slow or meltdown and thus affect the sustainable
development in the banking sector and national development. A number of studies
have stated that various challenges or factors are known to serve as threat to
the profitability, growth and sustainability of banks in developing countries
such as Nigeria (Mahmud et al., 2016).
 Juxtaposing the structural changes and
the challenges facing the Nigerian banking system, it could be deduced that
both caused impetus to the profitability,
growth and sustainability banking system in Nigeria. The elastic effect
of these effect could be more conceptualized when one note that the effect of
these structural changes and the challenges are not only affecting the banking
system but extends to the nook and cranny of the nation.

Ayanda et al. (2013) noted that banks profitability,
growth and sustainability
contribute elastically to the economic development of nations and also contributes
to the income of the investors leading to a higher dividend and thereby
improving the standard of living of the people and thus enhancing development
at the long run. Here, development could be conceptualized to include
individual, sectoral, community and national development. Whilst some banks performed
well and beat prior years’ results others performed well below expectations and
thus, overall growth in the banking sector were not as fantastic as seen in
previous years thus, the profitability, growth and sustainability of the banks
in Nigeria is called to questioning (Nairametrics, 2013). To this end, it would
be prerogative to understand the threats to the profitability, growth and
sustainability of the Nigerian banking industry.

Ayanda et al. (2013) noted that the existence, growth and sustainability of banks
mostly depend upon the profit earned which in this study is conceptualized as
profitability. An increased profitability increases the value of shareholders
and thus the worth of the bank in the sector. Profitability in this sense could
refer to the ability of the bank to maintain its profit yearly (Ayanda et al., 2013). Growth could
also be conceptualized in this study as meaning expansion of the banks and it
is tied to the profitability of the banks. 
(2016) defines sustainability as the management of an organization’s
impact on the triple bottom line (people, planet and profit). Furthermore, in
order for a business entity such as any given bank to continue to be sustainable,
there is need for its profit to be relatively stable for its expansion and
growth over time thus leading to the achievement of organizational objectives
(Aremu, Mejabi, and Gbadeyan, 2011). Thus, from the assertion of Aremu et al.
(2011) and Victor-Laniyan
(2016), it won’t be a gain saying to deduce that, profitability, growth
and sustainability of banks are directly connected and affect each other
however in an ascending order of magnitude such as the profitability of banks
affect their growth and thus their sustainability. Furthermore, it could also
be conceptualized that what affect profitability of banks could also affect
their growth and thus their sustainability in the long run.

to Ayanda et al. (2013), the
threats to profitability which could be thus be extended to banks’ growth and sustainability
are empirically well explored although its definition varies among studies. From
a general perspective, Ebiringa
(2011) and Kostyuk (2011) noted that there are early signals of problems
militating against banks in Nigeria and these include increasing portfolio of
nonperforming loans, sustained drop in earnings per asset, high turnover of
staff, consistent sourcing of funds from the interbank market, turnover of
depositors, growing incidence of fraud, inability to meet statutory
requirements, instability in corporate management.