Financial Performance Evaluation of Domestic Commercial Banks: An Empirical Study in Malaysia

Hamid Mohsin Jadah, Noor Hashim Mohammed

Abstract


This study aims to evaluate the financial performances of commercial banks over the period from 2011 to 2015 in Malaysia. The sample comprises five domestic commercial banks; CIMB, Public Bank, Maybank, AmBank, and RHB Bank all listed in the Malaysian Stock Market (Bursa Malaysia). The data for this study taken from the annual reports of the banks and Bursa Malaysia official website. This data is analyzed by multiple regression and DEA efficiency scores to check the relationship between bank performance and bank size, operational efficiency and asset management. The asset management, operational efficiency and bank size are taken as independent variables along return on asset (ROA) as dependent variable. The findings of this study reveals there is significant relationship between ROA and asset management. The operational efficiency shows less significant relationship with bank performance. According to the comparison of all predictors, bank size has more strong relationship with bank performance because domestic banks are inefficient to control their costs than efficiently operating by optimized economies of scale. 

Key Word: Banks, ROA, Financial Performance, Asset Utilization, Operational Efficiency


Keywords


Banks, ROA, Financial Performance, Asset Utilization, Operational Efficiency

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