Impact of Non-Performing Loans on Profitability of HBL and NBP
Keywords:
Non-Performing Loan, Profitability, HBL, NBPAbstract
The aim of this study was to comparatively analyze the impact of Non-performing Loans on Profitability of Banks because for any country it is very important that its banking system should be in a good position. The banking system is like a backbone for the economy, because it acts as an agent between the borrower and the lender. The borrower is the one who has need of money and the lender is the one who has the surplus of money. On the basis of results, it is concluded that there is a negative impact of the non-performing loans on the profitability of HBL and NBP. It is also found that HBL is good in getting the profit while securing itself through investing in Govt bonds and securities whereas NBP is not getting that return from its operations and it is recommended that both banks should lower down their risk of non-performing loans by securing the loan through a mortgage asset and the valuation of the mortgage assets should be determined on the basis of market value which explains that what will be the market value of the assets in the future, if the borrower becomes defaulter in paying back loan amount.
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