Financial Performance Analysis of Private Commercial Banks of Ethiopia

Abstract

The study aimed to examine the performance of private commercial banks of Ethiopia with liquidity, profitability, risk & solvency and efficiency ratio for the period 2014-2017. To meet the objective of the study, secondary sources of data, such as annual reports of the bank have been utilized After collecting the necessary data, appropriate financial ratios and descriptive statistical techniques were employed for analyzing, interpreting and giving a condensed picture of the collected data. According to the overall performance of financial ratio analysis Addis International Bank stood on the top followed by Birhan International Bank. Whereas Bank of Abyssinia stood the least. In general, Addis international bank has better average performance in order to minimize the degree of financial risk, utilizing of asset to generate income, meeting its shortterm obligation and performing interims of profit, but Bank of Abyssinia has less profit per birr, utilizing of asset, margin of safety on average. AIB, BOA and UB are weak on the average rank of financial factors. Therefore, the managers of the banks advised to share experience from other high achievable banks such as ADIB, BIB on the average ranks of financial factors profitability, liquidity, efficiency, risk and solvency. In addition they make more advertisement for customers by reward increase interest for the deposit of their customers and give special training for their employees how to use asset, how to attract customers, how to motivate the investors that use their bank

Keywords: Key words: Financial Performance, liquidity ratio, profitability ratio, efficiency ratio, financial statement

DOI: 10.7176/RJFA/11-13-01

Publication date:July 31^st 2020