Abstract:
Purpose: The purpose of this study was to Evaluate bank performance measures and proposes
a common measure for commercial banks in the East African Community (EAC) countries
Methodology: The study used cross country data analysis of 100 commercial banks and
collected secondary data from annual published audited financial statements for the period
1997-2011
Results: The results indicate that the OPM which combines productivity and profitability
captured a high percentage of similar banks when the top 20 commercial banks were ranked;
80% for return on assets, 60% for profit margin and 55% for net interest margin.
Policy recommendation: The study recommended that OPM will enable central banks to assess
the performance levels of banks and be able to detect those that are underperforming and take
corrective measures to either improve productivity, profitability or both. For policy makers in
the EAC secretariat, the measure will enable comparison on the performance of banks in East
Africa for subsequent integration to the monetary union.
