Issue

Abstract

The study intends to investigate the effect of "Financial Performance of Commercial Banks in Nepal". The data was collected for the study from 10 commercial banks of 8 years of data from 2014/2015 to 2021/2022. The study employed descriptive and causal-comparative research designs, utilizing correlation and regression analyses for research investigation. Correlation analysis reveals the relationships between different financial indicators. The analysis of financial indicators highlights the importance of factors such as capital adequacy, asset quality, management efficiency, and earnings in driving profitability. Maintaining a strong capital base and high asset quality positively impacts profitability, while effective management practices significantly contribute to financial performance. Although not statistically significant, the cash reserve ratio may still indirectly influence profitability. The examined factors explain a significant proportion of the Return on assets and net profit margin variation. Incorporating these factors into decision-making and strategy development can enhance the organization's financial performance and sustainable growth. In conclusion, maintaining a strong capital base, high asset quality, efficient management practices, and favourable earnings are essential for enhancing financial performance in commercial banks. Strategic financial planning, risk management, and capital allocation can strengthen the capital base. Effective risk management strategies and promptly addressing non-performing assets are crucial for maintaining high asset quality. Optimizing processes, fostering collaboration, and investing in training can improve management efficiency. Diversifying revenue streams and monitoring vital financial metrics can drive profitability. Incorporating these factors into decision-making and developing strategies to leverage their positive effects can improve financial performance, competitiveness, and sustainable growth in the banking industry. Keywords: Capital adequacy, Asset quality, Management efficiency, Profitability, Cash reserve ratio, Return on assets, Net profit margin