Internal factors affecting the profitability of commercial banks- Case study at PG Bank

Abstract

 For commercial banks, determining the influence of factors affecting the profitability of the bank is of very importance. In this paper, the authors have identified the internal factors affecting the profitability of commercial banks including the size of total assets, equity size, deposit size, outstanding loans and performance of cost management. The authors used the OLS regression method (least square estimate) by Eviews 5 software to analyze the factors affecting profitability at Petrolimex Group Commercial Joint Stock Bank (PG Bank). The research results show that three factors negatively affect the profitability of a bank: the size of total assets, the size of equity, the size of deposits. Two factors that positively affect the profitability of a bank are outstanding loans and cost management efficiency. Based on the research results, a number of proposed solutions have contributed to improving the operational efficiency of Petrolimex Group Commercial Joint Stock Bank in particular and commercial banks in general