The Objective of this study is to see how asset diversification affected the financial performance (ROA) of Ethiopian commercial banks. The survey and analysis is conducted by eight commercial banks in Ethiopia with a total of 80 observations were made using financial statements throughout a ten-year period from 2011 to 2020. The data was evaluated utilizing quantitative and secondary financial data using explanatory and regression analysis as a basis. To evaluate the collected data, the researcher employed the fixed effect model. Besides the descriptive interpretation, the researcher used tables and figures to present the findings of the study. The empirical findings of this study suggest that loans and advances had positive relationship with profitability with strongly statistically significant (p-value = 0.0001) at 1% significance level. This is an implication that diversification into loans and advance affects financial performance of commercial banks significantly and positively. Whereas financial asset and cash and cash equivalent negative effect but statistically significant impact on the financial performance on banks. On the other hand fixed asset don‘t have statistically significant effect on profitability as measured by net interest income (ROA). Therefor from the result we can conclude the findings, the majority of the variables have a statistically significant impact on the profitability of the bank.