Impact of Capital Adequacy on Bank’s Profitability: An Empirical Analysis on Rupali Bank PLC.” Submitted in partial fulfillment for the degree of Masters of Business Administration

Abstract

This internship report examines the empirical relationship between capital adequacy and profitability at Rupali Bank PLC, a state-owned commercial bank in Bangladesh. Anchored in the Basel III regulatory framework, the study evaluates how key capital components—such as the Capital Adequacy Ratio (CAR), Tier 1 Capital Ratio, Common Equity Tier 1 (CET1), Capital Conservation Buffer (CCB), leverage ratio, risk-weighted assets (RWA), and the nonperforming loan (NPL) ratio—affect the bank's financial performance, measured by Return on Assets (ROA) and Return on Equity (ROE). The research spans a nine-year period (2015–2023) and adopts a quantitative approach using secondary financial data extracted from the bank’s annual reports, regulatory filings, and relevant publications. The methodology includes descriptive analysis, correlation matrices, and multiple linear regression models to determine the strength, direction, and significance of the relationships between capital adequacy indicators and profitability. The report is contextualized within both global and local banking literature, highlighting the complex and often non-linear dynamics between regulatory capital and earnings. By focusing specifically on Rupali Bank PLC, this study fills a gap in existing research which often generalizes across institutions without accounting for the unique characteristics of state-owned banks in developing economies. Through detailed statistical analysis and a focused institutional lens, the report provides a datadriven perspective on how capital structure, asset quality, and regulatory compliance interact to shape profitability in the context of a large public financial institution.