An Evaluation of Financial Performance of Commercial Banks

Financial performance is a subjective measure of how well a firm can use assets from its primary mode of business and generate revenues. A commercial bank is a financial institution which performs the functions of accepting deposits from the general public and giving loans for investment with the aim of earning profit. In fact, commercial banks, as their name suggests, profit-seeking institutions, i.e., they do banking business to earn profit. Financial performance of a commercial bank can be measured by profitability. Financial performance will look at the statement of an accounting summary that details a business organization's revenues, expenses and net income. The term is also used as a general measure of a firm's overall financial health over a given period. Analysts and investors use financial performance to compare similar firms across the same industry or to compare industries or sectors in aggregate. Monitoring your financial performance therefore creates more certainty and confidence in making both short and long term decisions. This in turn leads to a healthier business and faster growth rate.