Internal Financial Factors Affecting the Profitability of Banks in Laos

This study examines the relationship between internal financial factors and the profitability of banks in Laos. Data were collected from 27 commercial banks that publicly disclosed their annual financial statements over a five-year period from 2019 to 2023. The study employs summary statistics and multiple regression analysis. The independent variables include loan growth rate, deposit growth rate, total asset growth rate, bank age, bank size, and loan-to-deposit ratio, while the control variables are Laos’ GDP growth rate and the US dollar/kip exchange rate. The findings indicate that the total asset growth rate has a significant positive effect on Net Profit Margin (NPM) and Return on Assets (ROA), while bank size and the loan-to-deposit ratio have significant negative effects on both NPM and ROA. However, none of the examined variables had a statistically significant effect on Return on Equity (ROE).