The Impact Of Deposit Mobilization And Loan Disbursement On Financial Performance Of Awash Bank S.Co

Abstract

The primary objective of this study was to analyze the impact of deposit mobilization and loan disbursement on the financial performance of Awash Bank S.co, The target population included Awash Bank's financial data from 2010 to 2024, as well as insights from management and stakeholders. A purposive sampling technique was utilized to select relevant data from the bank's annual reports and financial statements, covering a five-year period. The study utilized secondary data, primarily sourced from Awash Bank's audited financial statements, annual reports, and publications from the National Bank of Ethiopia. Data collection followed a secondary data analysis method to establish reliability and accuracy. Quantitative data analysis methods were employed, involving descriptive statistics such as mean standard deviation, Pearson correlation analysis was used to examine the relationship between variables and regression analysis to evaluate the impact of independent variables on dependent variable. As the study used secondary data, conventional response rates were not applicable. Major findings revealed that increasing deposits negatively affected net profit after tax due to management expenses, while a significant positive relationship was found between loan disbursement and net profit after tax, indicating that lending activities are key drivers of profitability. Non-performing loans negatively impacted profitability, necessitating better credit risk management. Additionally, a stronger positive relationship exists between total assets and net profit after tax, indicating that larger banks benefit from scale operations, whereas the liquidity ratio demonstrated minimal effect on profitability, suggesting efficient money flow management through lending. In conclusion, while deposit mobilization serves as an essential funding source, effective loan distribution creates the best conditions for increased profitability. The study recommends that Awash Bank enhance its financial performance through improved deposit management, expand its loan portfolio with high-quality transactions, and strengthen credit risk governance.