A study on the determinants of profitability of selected universal banks for the period 2000-2007

• Main Authors: Alvero, Rachel, Florentino, Andrea Lorraine, Ong, Russelle Camille
• Format: text
• Language: English
• Published: Animo Repository 2008
• Subjects: Banks and banking > Philippines; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/6296
• Institution: De La Salle University

This study tried to identify the determinants of profitability of universal banks and its subsidiaries in the Philippines in the years 2000-2007. The study used multiple regression analysis to do a bank-specific data analysis, comparing and contrasting the model of each bank and made a summary of results of all sample banks. Moreover, the study also combined all the variables in each bank to represent the aggregate model for the five banks. According to the results of bank-specific analysis, the determinants of profitability are spread, non-interest margin, non-performing ratio and operating expenses. In addition, these variables have strong correlation with net income after tax, thus the said variables significantly affect profitability. On the other hand, the aggregate model for the five sample banks, spread appeared to determine profitability. Relatively, considering the trends in the models of the sample banks, the study concluded that spread, non-interest, non-performing ratio and operating expenses are determinants of profitability in the Philippines. Consequently, these variables have significant effects to profitability.