Abstract
This study aims to systematically identify and analyze key financial metrics that influence the performance of commercial banks in Cambodia. Utilizing 2023 data from the National Bank of Cambodia across 59 banks, the research adopts an explanatory framework based on cross-sectional data analysis. Findings reveal a statistically significant positive correlation between Non-Performing Loans (NPLs) and Return on Assets (ROA), suggesting effective NPL risk management by Cambodian banks, contrary to traditional financial theory. Loan Growth (LG) does not significantly impact ROA, indicating that external factors like market conditions and loan quality are more critical. Furthermore, Market Share (MS) has no significant impact on ROA, suggesting that market share may not be a critical determinant of bank performance in Cambodia. A significant negative relationship is observed between the Loan to Deposit Ratio (LDR) and ROA, suggesting that higher LDRs expose banks to liquidity risks and reduced profitability. Both Loan Loss Provision (LLP) and Cost to Income Ratio (CIR) negatively affect ROA, while the Effective Tax Rate (ETR) shows a marginally positive relationship. The Net Interest Margin (NIM) significantly impacts ROA, underscoring the importance of managing interest-earning assets and liabilities. Recommendations include investing in advanced risk management frameworks, enhancing loan quality, maintaining a balanced LDR, utilizing technology for cost efficiency, focusing on effective tax planning, and optimizing NIM through competitive pricing. Future research should explore additional contextual factors that affect profitability dynamics in the Cambodian banking sector.. Keywords: Commercial Banks, Financial Metrics, Return on Assets (ROA), Non-Performing Loans (NPLs), Loan to Deposit Ratio (LDR), Cost to Income Ratio (CIR), Effective Tax Rate (ETR), Net Interest Margin (NIM), Loan Growth (LG), Market Share (MS).
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