DETERMINANTS OF UBL’S PROFITABILITY: INTERNAL FACTORS ANALYSIS

Abstract

The purpose of this study is it to identify the factors that affect the bank’s profitability. The bank selected for the study is United Bank Limited. The internal variables of this bank are considered in this study to see the relationship and their impact on its profitability. The data for this study is taken from the balance sheets and profit and loss account of UBL’s quarterly reports from the time period of 2005-2012. The internal factors selected for this study are total assets, total equity, total liabilities, Non mark-up interest income and administrative expenses. The dependent variable is profit after tax (PAT) is considered in this study. The multiple regression analysis is used in this study among these independent variable and dependent variable on MINITAB software. The findings of this study tells that considering internal factors total equity, total liabilities, non mark-up interest income have positive impact on profitability while, total assets, mark-up interest income and administrative expenses have negative relationship with its profitability. This means that it is not necessary that higher total assets will lead to higher profit and banks should not be dependent only on their primary source of income but also diversified it through non mark-up interest income.