THE ANALYSIS OF BANKS’ PROFITABILITY IN SAUDI ARABIA USING CAMELS MODEL

Abstract

The goal of every business is to make a profit. Banks are not exempt from this, as they are in business in order to make profits. The main source of income for banks is through interest on loans to customers. Banks are also make profits from other businesses they carry out and charge customers for the services they offer. The profitability of banks can be measured using CAMELS rating. Thus, this work was done to determine the profitability and performance of the banking sector of Saudi Arabia using the CAMELS rating. This work was done based on quantitative method. The study was conducted on banks in Saudi Arabia where Riyad bank and National Commercial Bank (NCB) using the CAMELS rating model. The CAMELS rating include six aspects that give the profitability of banks. These aspects are capital adequacy, asset quality, management efficiency, earnings, liquidity and sensitivity to risk. The findings have shown that both banks have adequate capital to cater for their operations. Furthermore, the asset quality, management efficiency, earnings quality and  liquidity management for both banks were good.

CCS Concepts

• Information systems➝Database management system engines   • Computing methodologies➝Massively parallel and high-performance simulations.