A study of the factors affecting profitability of Zambian commercial banks: a case of ZANACO.
Date
2024
Authors
Mumba, Prudence
Journal Title
Journal ISSN
Volume Title
Publisher
The University of Zambia
Abstract
All businesses regardless of the nature require profitability for them to progress. Therefore, this thesis aimed at assessing Zanaco’s profitability using ratio analysis, through three major objectives (i) To ascertain Zambia National Commercial Bank’s ability to generate return to its shareholders during the period 2016-2021. (ii) To determine Zambia National Commercial Bank’s ability to convert sales into profit during the period 2016-2021. (iii) To identify internal factors influencing Zambia National Commercial Bank’s ability to generate profit and returns to its shareholders during the period 2016-2021. The study used both primary and secondary information. Primary information was collected through structured questionnaires. Data analysis was done through SPSS V26 for primary data and excel for secondary data for the period 2016 - 2021, the response rate of primary data collection which was physically administered to Zanaco employees was 35 respondents indicating a 65%. Secondary data was collected through the analysis of Zanaco’s financial statements for the period 2016-2021. The findings review that the profitability ratios show that the bank has a stable ROA, and ROE, but low EPS and ROCE. The Low NPM below 30% for the years under review thus implying that Zanaco is minimally profitable, because of Zanaco’s high Expense operational ratios EOR. Zanaco bank is liquid as it is able to convert its assets to cash easily, but does not have enough cash flow. Additionally, the bank is affected, by inflation and macro-economic factors, however due to the bank size, capital, asset quality, credit rating and effective cost management strategies the bank is able to withstand turbulent economic impacts.
Description
Thesis of Master of Science in Accounting and Finance.