Comparative Analysis of Financial Performance Using Financial Ratios: Evidence from Private Commercial Banks in Ethiopia

A sound financial position of banks is essential for depositors, shareholders, employees, and the overall economy. This study examines the comparative financial performance of selected private commercial banks in Ethiopia using panel data from eight banks covering the period 2013–2022. A quantitative research approach was employed, and a random effects regression model was applied for analysis. Return on Assets (ROA) was used as a proxy for financial performance, while capital adequacy, asset quality, management efficiency, earnings ability, and liquidity were examined under the CAMEL framework. The findings indicate that capital adequacy, earnings ability, and liquidity have a positive and statistically significant effect on financial performance. Conversely, asset quality and management efficiency show a negative and significant relationship with financial performance. The results further reveal that most selected banks performed in line with the standards set by the National Bank of Ethiopia (NBE). The study recommends that bank managers focus on key bank-specific factors to enhance profitability and sustain financial performance.