A Critical Analysis of Key Financial Performance Indicators in the Banking Industry in Ghana

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DOI: 10.21522/TIJMG.2015.02.02.Art010

Authors : Dominic Tetteh Sackitey, Taratisio Ndwiga


The banking industry is considered to be an important source of financing for most businesses. In Ghana, the financial systems tend to evolve around the banking system. This study therefore sought to critically explore the key financial performance indicators in the banking industry. This study made use of secondary data obtained from published annual reports of Ecobank Ghana Limited from 2005-2015.

It was found that the Key Financial Performance Indicators for assessing the financial performance of Ecobank Ghana are:

· Profitability which is measured using the following criteria: Return on Assets (ROA), Return on Equity (ROE) and Cost to Income Ratio (CIR).

· Liquidity performance is measured using Liquid assets to deposit-borrowing ratio (LADST), Net Loans to total asset ratio (NLTA), Net loans to deposit and borrowing (NLDST).

· Asset Credit Quality (Credit Performance) is measured using Loan loss reserve to gross loans (LRGL).

Management of the bank should ensure that Key Performance Indicators are aligned with the specific goals and objectives of the bank.

It was recommended that key performance indicators must be quantifiable. The goal must be stated in concise terms and capable of being measured. A time frame must also be established for all key performance indicators, with key checkpoints at various intervals.

Keywords: Agriculture Development Bank, Amalgamated Bank, Analysis of Variance, Accident Ratio, Automated teller machines, Business Activity Monitoring, Barclays Bank of Ghana Limited, Bank of Credit and Commerce, Bank for Housing and Construction, Cal Merchant Bank, Credit to Deposit Ratio, Credit To Deposit Ratio, Cash Flow, Cost to Income Ratio, Cash in Transit Services, Customer Loyalty, Customer Retention, Customer Satisfaction Rate, Deliver Performance to Customer Performance, Ecobank Ghana, Financial Result, Ghana Commercial Bank, Gender Ratios, Internal Efficiency, Internal Promotions, Investment Rate, Liquid Assets to Deposit-Borrowing Ratio, Loan Loss Reserve to Gross Loans, Merchants Bank of Ghana Limited, Post-Dated Cheque Collection, Performance Indicators, Point of Sale, Return On Capital Employed, Return on Equity, Return on investment.


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