Banks’ Profitability in Selected Central and Eastern European Countries

In this study we assess the main determinants of banks’ profitability in five selected CEE countries over the period from 2004 to 2011. The sample contains 143 commercial banks from Romania, Hungary, Poland, Czech Republic and Bulgaria. We use as proxy for banks profitability the return on average assets, the return on average equity and net interest margin. The results show us that the empirical findings are consistent with the expected results. Management efficiency and capital adequacy growth influence the bank profitability for all performance proxies, while credit risk and inflation determine only the ROAA and ROAE. We notice that banks with higher capital adequacy are more profitable.