PROFITABILITY POSITION OF DEVELOPMENT BANKS IN NEPAL

Abstract

Profitability is a critical aspect for the growth and survival of banks, and managing the balance between profitability and liquidity is crucial. This study investigates into the profitability status of development banks in Nepal, aiming to examine their liquidity position, profitability status, and the relationship between liquidity and profitability. Adopting a descriptive research approach, secondary data from the annual reports of Nepalese development banks and the NRB were utilized. The analysis involved correlation and regression techniques to explore the connection between liquidity, deposits, loans, advances, and profitability, measured through indicators like ROA and ROE. The study spans a decade, from 2012/13 to 2021/22, covering five development banks: MNBBL, GBBL, MBBL, JBBL, and KSBBL. The findings reveal a mixed relationship between liquidity indicators and profitability measures, with some indicators showing significant correlations while others remain insignificant. Overall, the study suggests a positive and significant relationship between liquidity, deposits, loans, advances, and profitability among Nepalese development banks over the examined period. Notably, GBBL and MNBBL demonstrate strong positions in liquidity, deposits, loans, advances, and profitability. However, it's essential to note that these findings are specific to the selected banks and may not be generalized across the entire banking sector.