Abstract:
Purpose of Study: The main puipose of conducting this study is to determine the impact of bad
debts on the profitability of banks specifically ABL, HBL & UBL. Banks play an integral role in
running the economic affairs ofthe country. In the past few years the banking sector has shown a
significant growth pattern. The recovery of these payments is the major earnings of the bank
however; the other side of the picture is that they also had to bear some challenges like, default
in recovery ofinstalment payments.
Methodology: the research is quantitative and descriptive in nature. Regression testing and
correlation testing is used in order to determine the relationship between independent and
dependent variables. The independent variable includes (bad debts - Independent variable) and
profitability as dependent variable. The sample size includes financial records for last 10 years of
ABL, HBL & UBL banks.
Findings: The findings from the study suggest that, there is an impact of bad debts on
profitability the banks but the impact is low because, these banks have maintained the level of
debts up to a certain extent and is increasing avenues of profitability. This means that,
specifically in these three banks the impact of bad debts on profitability is there but its impact is
low.
Conclusion: In conclusion, the research highlights that, there exists some relationship between
bad debt and profitability and it can also hurt the bank’s profitability if measures are not taken.
The study provides some evident recommendations through which these banks can reduce the
bad debts
