A Case Study On The Financial Performance And Risks Of Three Different Nationality Proprietor Commercial Banks In Sierra Leone

This thesis is entitled A Case Study on the Financial Performance and Risks of Three Different Nationality Proprietor Commercial Banks in Sierra Leone.The aim of this study is to compare the financial performance and risks of banks belonging to different nationalities in Sierra Leone.In this research,the selected banks are Rokel Commercial Bank(SL)Limited,Guaranty Trust Bank(SL)Limited and Ecobank(SL)Limited.This study will evaluate various journals and research resources to highlight certain factors that create a difference in financial performance and risks.The difference in the financial performance and risks of the banks will be analysed based on ratio analysis of the financial statements.Furthermore,each bank will be studied based on associated risks such as credit risk,default risks,market risk,operational risk and liquidity risk.This research is designed in a way whereby catering the relevant aim for the comparison of bank performance with different nationality using financial and non-financial performance indicators.The methodology for this research used audited financial statements of each bank and analyses it using financial tools.For the comparative and financial performance,the literature identified different factors that should be calculated for each bank on the basis of the Basel Accord.These factors include such as;liquidity of the bank which is determined on the basis of banks size,credit policy,asset quality,management efficiency and financial leverage.While other essential performance measures such as profitability which is measured in terms of each bank return on assets,return on employed capital and return on equity.The comparative performance of the banks is also influenced by the associated risk which can be due to the capital structure,source of financing and credibility.The calculation of relevant ratios identified that Guaranty Trust Bank(SL)Limited has higher return,liquidity and debt to income percentage in comparison to the other two banks.Rokel Commercial Bank(SL)Limited is performing well in terms of the profits by generating higher net income with comparatively more portion of equity and the more ratio of assets in comparison to liabilities indicating that it can adequately finance its obligations,while EcoBank’s capital structure consists of more level of debt and this debt is used to finance its assets.In addition,EcoBank also have a higher interest coverage ratio highlighting that it is significantly paying its debt cost because comparatively the percentage of debt in the EcoBank is more.While in terms of return on the employed capital the three banks have the same performance in generating the return on investments.The financial leverage percentage of the three banks is also the same,however,it is lower than the required level of the bank’s leverage.This research highlighted that the different nationalities of bank influence the performance due to changes in the regulation of the country,the change in management decision.This study highlighted the importance of nationality in the generation of profitability and income.The research identified that the banks have a different percentage of assets,capital and debt resulting in different net income and profitability.In addition,this research discovered that financial performance and risk of the bank also depended on the type of shareholding that is private or public holding.Such as,in this case,Rokel Commercial Bank have its shares available to the general public which means the business is generating a return on equity and ultimately it has a high income.Therefore ultimately highlighting that comparatively,the three banks that belong to different nationalities have different ratios,different level of shareholding and profit indicating the concept of performance differences in the three different nationality proprietor banks.This research is significant because it helps the policy and decision makers in the identification of risks and factors that are associated with the bank’s performance.This analyses how banks with different nationalities and ownership structure perform differently,thereby providing information to the banks that have global operations to understand the effect of nationality.As a result of this research,the policymakers of banks and different nationality proprietor commercial banks can manage the risk with the achievement of growth and development of the financial framework.In addition,the literature of comparative performance of nationality proprietorship banks specifically within Sierra Leone is not widely available so this study is significant in terms of understanding the Sierra Leone banking sector in more detail.This research also adds in previous literature by extending the information about relevant performance indicators for banks.