Profitability Measurement of Private Commercial banks in Bangladesh

Abstract

This paper is in an attempt to examine the financial profitability measurement of private listed commercial banks in Bangladesh in terms of profitability. This research is based on cross-section data of annual financial statements of 13 listed commercial banks for the period 2014-2018. Fifteen determinants have been chosen for this study. The Correlation matrix analysis shows that capital adequacy, deposit, loan asset, asset management ratio, liquidity ratio and Log A position are related positively but net interest margin, investment in government securities, other investment, cost to income ratio, non-performing loan are related negatively on the other hand operating efficiency is neither positive nor negative .Step-wise regression method is followed to show the cause-effect relationship of the variables. This method identifies three models and automatically eliminates the insignificant variables following three steps and finally select model 3.This model is the best combination of the variables under analysis that most describes the profitability. It considers asset characteristic, operating performance and bank sizes significant determinants of profitability. On the other hand, liquidity position has positive but insignificant effect on profitability.