OWNERSHIP STRUCTURE AND FINANCIAL PERFORMANCE OF COMMERCIAL BANKS: A COMPARATIVE STUDY OF TWO MAJOR BANKS IN TANZANIA

The study is a comparison based on performance of Two Major Banks of Tanzania- NMB bank with major ownership of Europeans and CRDB Bank with major ownership of Tanzanians applying t-test to investigate any significant difference between select CAMEL ratios. The study reveals that there is a significance difference between the performances of both the banks in all the CAMEL ratios applied except Return On Assets (ROA). The NMB bank’s performance in Capital Adequacy Ratio(CAR), Non Performance Assets ratio(NPA) and Net Interest Margin ratio(NIM) comparatively appears to be better whereas the CRDB Bank performance was comparatively higher in Operating Expenses Ratio(OER), Loan Deposit Ratio(LDR) and Return On Assets with lower variability. It signals that CRDB management is concentrating on efficient functioning of the bank as its OER is comparative lower and its LDR is higher indicating effective use of deposits to increase its ROA instead of concentrating on comparative lower performance in Capital adequacy, Asset quality (NPA) and volume of business (NIM). As against this, NMB Bank is concentrating maintaining higher capital adequacy, asset quality and higher NIM instead of efficiency in use of its resources both human and financial. This may be due to differences in ownership structures and also managerial variability. Both need to improve their performance learning each other’s experience.