The main purpose of this paper is to investigate the bank specific factors which can affect the financial performance of private commercial banks in Ethiopia. A total of 6 private commercial banks (those having full organized financial data till 2017) were purposefully taken & their audited annual financial reports were analyzed for the period of 2011 to 2017. For this purpose, descriptive statistic, Pearson Correlation Coefficient and Multiple Linear Regression Analytical approaches were applied. For this study, return of equity, return on asset and net interest margin as the dependent variables and bank specific factors like banks size, liquidity management, asset quality, management efficiency and capital adequacy as independent variables were used. Any autocorrelation problem was checked. The results indicated that capital adequacy, management efficiency and size of banks have positive and statistically significant effect on financial performance of private commercial banks of Ethiopia measured by return on assets (ROA), return on equity (ROE) and net interest income (NIM). But, liquidity management has negatively significant impact on financial performance of private commercial banks of Ethiopia (ROE). The result also indicates asset quality was not significant determinant for sound financial performance of private commercial banks of Ethiopia. Therefore, due attention should be taken to have adequate capital, optimum liquidity, efficient expense management system and adequate size of assets by commercial banks for better performance and profitability of in their own area of business.

Keywords: Private commercial banks, financial performance, Ethiopia, bank specific factors.