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The Present work aims to study the profitability of the banking system in Albania and the main factors that determine it. Among many variables, liquidity, capital adequacy and inflation are considered to be the most important deterministic variables. The Albanian banking industry has passed through many obstacles during the last decade; these obstacles significantly affected the banks’ profitability. For this reason the main focus of this article is to analyse the profitability of Albanian banking industry and to find which of these variables statistically explains the variation of profitability. The article tests the relationship between the explanatory variables and explained variable through a multiple regression analysis. The article is a quantitative analysis covering a time frame from 1998 until 2015 and is based on secondary data. The article is expected to prove the existence of a significant relationship between profitability and the determinants mentioned above.