Open AccessIn Nigeria, the Statement of Accounting Standards (SAS), Companies and Allied Matters Act (CAMA) and the Central Bank of Nigeria’s directives and regulations provide guidelines to banks in preparation and presentation of records of financial transactions. In recent time, some Nigerian banks appear to be engaging in non-standardized and unprofessional practices, which could lead to distress and liquidation. The objective of this study therefore was to investigate the relationship between level of compliance with Statement of Accounting Standards and performance of Nigerian banks. Twenty selected banks quoted on the Nigerian Stock Exchange formed the target sample and these were banks whose Annual Financial Reports for the period of study were fully available. Both primary and secondary sources of data were employed in carrying out the study. A researcher-designed questionnaire was used to obtain data from Senior and Managerial staff of each of the banks. The instrument was structured to accommodate the sixteen Statements of Accounting Standards which are related to banks and used in the assessment of banks’ compliance. Five hundred questionnaires were administered to the Senior and Managerial staff of the selected quoted banks. The Annual Financial Reports of the selected banks from 2005-2009 (post-consolidation era) were also used. The collected data were analyzed using CAMEL Ratios, and Pearson correlation analysis. The findings of the study indicated a significant positive relationship between level of compliance with SAS and banks’ performance. In line with the findings, it was recommended that the Nigerian Accounting Standards Board (NASB) should ensure effective monitoring of banks in order to enforce compliance, especially among banks that are performing below standard. The need to adopt International Accounting Standard practice among Nigerian banks was also emphasized.