Abstract:
A loan that is in default or almost in default is considered non-performing. Non
performing loans (NPLs) have a negative impact on both the national economy and the
banking industry. The central bank's standards require banks to maintain provisions
against non-performing loans, which have a significant impact on the profitability of the
bank. The purpose of this study is to examine the effects of non-performing loans over the
previous 5 years in order to determine if they have had a notable effect on the profitability
of the four banks that were chosen. It also aims to identify the many reasons why non
performing loans occur in Bangladesh's banking industry. Return on Assets was chosen as
the study's dependent variable. Secondary data for this analysis was gathered from these
banks' annual reports during a 5-year period, from 2019 to 2023. Statistical methods are
applied to the data analysis. concentrating on determining if the factors employed in this
study have any link at all. As expected, the data analysis revealed a considerable
influence of NPL on profitability.
One of the study's primary conclusions focuses on the fundamental causes of the rising
number of categorized loans. There are several important steps that may be made to
soften the situation. This study may help in understanding how rising non-performing
loans (NPLs) affect bank performance and in taking proactive measures to manage them.
According to the report, non-performing loans (NPLs) have been the main issue facing
Bangladesh's banking industry over the past few decades. The non-performing loan
(NPL) rate is substantially higher in our nation than the 2 percent international guideline.
It has been shown that as time goes on, the NPL ratio increases progressively. Therefore,
Bangladesh Bank should place more of an emphasis on the NPLs of state owned
commercial banks in its capacity as a credit regulating body.
