Assessment of Branch Performance in Commercial Bank of Ethiopia: The Case of Gida Ayana Branch

Abstract

The study tries to asses branch performance in commercial bank of Ethiopia by mixed research method using documentary analysis for the period of 2009/10 to 2014/15 fiscal year and collecting primary data from  operational staff operating of Gida Ayana branch. The result of documentary analysis shows that the performance of the branch is high in deposit mobilization relative to loan disbursement. The performance analysis of the branch shows that the ratio of liquid asset to total asset is 4.3 percent. The loan to deposit ratio of the branch is less than one percent. The return on asset shows a declining trend indicating the branch is better in the financial soundness on the bank risk bearing capacity and in the ability to perform liquidity transformation. The amount of non-performing loans analysis shows a declining trend indicating the branch is efficient in the performance of nonperforming loan collection. The study from the survey result shows that internal management system, external business environment and bank rules and regulation affect the performance of branch. The employee knowledge about bank management system, information sharing system, training, electric power interruption, electronic payment system are also among other factors that affect branch performance. The correlation between rapid expansion of electronic payment system and owing of sound knowledge about bank management and that of internal organizational management factors and regularly informing on new systems affects positively branch performance at statistical significance p < 0.01. Correlation of rapid expansion of electronic payment system  with internal organizational management  factors and with regularly informing on new systems, and internal organizational management  factors and possession of sound knowledge about bank management shows positively affect branch performance at statistical significance p < 0.05. Managements and decision makers has  to make any adjustment in the areas of loan disbursement, in the development of uniform information sharing mechanism and provision of  refreshment training in the areas of customer management.

Keywords: bank, performance, liquidity, loan growth, capital adequacy, Gida Ayana