Evaluation of the Financial Performance of Selected Private and Public Sector Banks: A Comparative Study of Afghanistan

Abstract

In this paper, an attempt has been made to present a comparative analysis of the financial performance of three private and three public banks in Afghanistan over five years (2018–2022). Furthermore, the authors used secondary data from audited annual financial reports published by banks on their websites. Therefore, Key financial ratios—including Net Profit, Return on Long-Term Fund (ROLTF), Return on Net Worth, Return on Assets, Gross Profit, Return on Capital, and Return on Equity—were employed to assess performance differences between the two banking groups. In addition, the author used descriptive statistics and Multivariate Analysis of Variance (MANOVA) to examine the significance of observed differences. The study based on descriptive results indicated that public banks, on average, recorded higher Net Profit and Gross Profit than private banks; however, they also exhibited more significant variability in performance, suggesting financial inconsistency. The MANOVA results revealed no statistically significant multivariate differences between public and private banks, although small to moderate effect sizes were observed for some indicators. In addition, Levene's Test highlighted significant differences in Net Profit and Gross Profit variances, indicating uneven financial stability between the two groups. Also, the author used the Tests of Between-Subjects Effects to confirm that none of the individual financial ratios showed statistically significant differences. The study found that while public banks may demonstrate higher average profitability, the financial performance between public and private banks in Afghanistan does not differ significantly statistically.

Keywords: Afghanistan, Financial Performance, Private Bank, Public Bank

DOI: 10.7176/RJFA/16-4-04

Publication date: May 30^th 2025