A STUDY ON IMPACT OF OPERATING EXPENSES ON PROFITABILITY OF COMMERCIAL BANKS

The banking industry is one of the significant sectors of the financial system in most countries. Banks play a crucial role in promoting the growth of the economy by mobilising savings and using the mobilised savings in financing the most productive sectors of the economy. Profitability refers to money that a bank can produce with the resources it has. The goal of the most organisation is profit maximisation. Factors that influence commercial bank’s profitability are divided into internal and external. Internal factors are those factors which bank’s managers can control whereas external factors are those outside or beyond bank’s management control. The main objective of the study is to study the impact of operating expenses towards profitability of banks and to analyse their relationship through dependent and independent variables. For this purpose a sample of 3 banks was used for the study, five years data were collected from the balance sheet of the banks and were analyzed using correlation and multiple regressions. It is concluded that operating expenses of the selected banks have a minimal impact on the Return on Investment