The role that banks as key intermediaries play in the modern economy activities is unquestionable, it is admitted that banks remain one of the key financial intermediaries that provide a variety of services in the economy of every state. However, not all financial intermediaries have a significant impact on modern economies, only a stable and profitable banking sector can adequately play the role of financial intermediary in economy. The bank, as an intermediary in the modern economy must be profitable, and this profitability depends on a number of factors that are referred to in this study as determinants of bank profitability. The effect of internal and external determinants of the bank profitability in South Africa is the main focus of this study. It utilized annual time series internal and external data for the period 2001 to 2013. Quantitative approach methodology using secondary data and panel data technique to measure the impact of the determinants was used in the study. The sample consists of nine banks, followed for 12 years and sampled annually. The results for bank-specific consist of four statistically significant variables such as bank size, non-interest income and non-interest expense and credit risk and four non-significant variables (equity capital, loan, saving deposit, fixe term deposit) also the industry-specific consist only one significant variable (market concentration) while macro-economic determinants consist of three non-significant variables (economic growth, inflation, and lending interest rate). In conclusion, the empirical result shows that the bank specific factors are directly controlled by the Management thereby it has a positive correlation to the bank profitability while the industry specific (market concentration) also positively affects the bank profitability. However, the macroeconomic variables which are beyond the scope of management control were non-significant to profitability but show positive sign. Therefore, the variables which are significant affect positively the bank profitability, and the non-significant variables affect the bank profitability negatively. The findings were consistent with mixed results found in prior literature. / Business Management / M. Com. (Business Management)

M.Comm. (Financial Management) / There is a wide perception that bank net interest margins (NIMs) in Sub-Saharan Africa in general and South Africa in particular, are higher compared to other regions. The study investigates four commercial banks in South Africa with the aim of identifying the relevant factors affecting the behaviour of NIMs in commercial banking in South Africa, and draws comparisons with other markets. The study employs the Classical Linear Regression Model (CLRM) using the Ordinary Least Squares (OLS) data estimating technique to analyse net interest margins over the period 2000 to 2010. The study takes note of Ho and Saunders’s seminal work produced in 1981, and subsequent extensions and modification by other authors and researchers. Net interest margins are modeled in a single-step together with explanatory variables driven from the theoretical model. Using data obtained from the Bankscope data base, the variables examined in the study are; competitive structure of the market, average operating costs, management’s propensity for risk aversion, credit risk exposure, the quantum of the bank’s operations, short-term money market interest rate volatility, the opportunity cost of holding reserves and quality of management running the institution. The findings of the study suggest that market power, average operating costs, degree of risk aversion, credit risk exposure, and size of operations are major factors explaining the behaviour of NIMs in South Africa. These variables are major in terms of the number of banks that exhibit statistical significance. Market power, interest rate volatility and opportunity cost of holding reserves are also relevant factors, although they affect fewer banks than the major factors. Comparison of South African net interest margins determinants with those from other regions reveals some fundamental differences. These differences indicate that banks from different countries and regions are faced with different operating environments and risk profiles that drive net interest margins.