Title:
FINANCIAL PERFORMANCE OF RURAL BANKS IN THE PHILIPPINES: APPLICATION OF CAMELS MODEL

Authors:
Jennifer B. Cabaron

Abstract:
This study evaluated the financial performance of selected rural banks in the Philippines using the CAMELS model, namely: Capital Adequacy, Asset Quality, Management Efficiency, Earnings Capability, Liquidity, and Sensitivity to Market Risks. The study utilized secondary data of eighty (80) rural banks retrieved from the Bangko Sentral ng Pilipinas (BSP) website. Frequency and percentage were applied to answer the problem set of the study. There was a corresponding formula and criteria used to come up with the CAMELS rating. A rating of 5 corresponds to excellent performance, while a rating of 1 considers the poor performance of the rural bank involved. In general, the results of the CAMEL analysis indicate that sampled rural banks have excellent performance in both Capital Adequacy and Management Quality. They have satisfactory performance on Earnings Quality but poor performance in Asset Quality, Liquidity, and Sensitivity to Market Risk. Thus, the researcher concludes that all rural banks under study have provided ongoing competition in achieving their respective objectives as to financial performance.

Keywords:
CAMELS, financial performance, rural banks