| Abstract: | Evaluation of banks performance is very important to ensure sound and
stable financial system in the economy, and then to increase the
contribution of the banking industry towards the growth and
development of the economy. Thus, this study was conducted bearing
this purpose aimed at evaluating the performance of four Ethiopian
private commercial banks namely, Dashen Bank, Nib International
Bank, Wegagen Bank, and Zemen Bank, they maintained over the past
five years, 2010 through 2014. The study employed CAMELS model i.e.
evaluating the performance of those banks based on six parameters
such as Capital adequacy, Asset quality, Management efficiency,
Earnings ability, Liquidity and Sensitivity to market risk, and followed
descriptive method of data analysis. The data were collected from
secondary sources, such as, from 2010 to 2014 annual reports of each
bank. The researcher then analyzed the five year financial statements of
those banks, using respective performance indicator ratios per each
CAMELS component and the researcher compared the banks each
other and assessed their trend throughout the five year periods. The
study found out that, there was inconsistency in the performance of
those banks over the five years and among themselves. The researcher
forwarded recommendations for those banks to design appropriate
credit policy; to maintain good quality of their asset; to use their
maximum effort to increase their capital; to build appropriate mix of
assets and liabilities; and to design appropriate policy for composition
of liquid and illiquid assets for maintaining good liquidity position. In
addition, the researcher recommended the regulatory bodies such as
National Bank of Ethiopia should set standardized bank performance
indicator ratios along with their benchmarks to facilitate the evaluation
of banks performance. |
