PROFITABILITY ANALYSIS OF COMMERCIAL BANKS IN NEPAL

Abstract

This study entitled “Profitability Analysis of commercial banks in Nepal” is secondary data-based research study. The main aim of this study is to examine the impact of profitability of three commercial banks in Nepal from 2013/14 to 2022/23. The independent variables were total loan to deposit ratio, non performing loan ratio, capital adequacy ratio, and loan loss provision ratio and bank size. The study was conducted to analyze whether or not these independent variables have significant impact on the dependent variable profitability i.e. ROA and ROE. This research used a purposive sampling method for the research. The research is quantitative in nature. Descriptive and casual comparative research design was adopted to achieve objectives of this study. These approaches were conducted using Statistical Package for Social Sciences (SPSS). It was revealed from the study that there is negative relationship of ROA with bank size. On the other hand, there is positive relationship of ROA with non-performing loan ratio, loan loss provision ratio, total loan to deposit ratio and capital adequacy ratio. Likewise, the study resulted ROE have positive relationship with non-performing loan ratio. However, the study also revealed that there is negative relationship of ROE with total loan to deposit ratio, loan loss provision ratio, bank size and capital adequacy ratio. Thus, it is essential for every commercial bank to analyze their profitability.