Abstract

This study's primary goal is to determine how Nepalese commercial banks are affected by non-performing assets (NPA). This study's population consists of five commercial banks. The BASEL III Disclosure and each bank’s annual report provided the secondary data used in this study. Multiple regression analysis is the data analysis method employed in this investigation. Non-performing loans (NPL) served as the study's independent variable, while the price earnings ratio (PER), return on equity (ROE), and return on assets (ROA) served as its dependent variables. The study's findings indicate that while NPLs have a considerable impact on banks’ ROA, they have no discernible influence on their ROE or PER. Stated differently, this study demonstrates that NPL has a positive and significant impact on ROA, while NPL has a negative impact on PER and a favorable impact on ROE. NPLs have a favorable and large influence on ROA, but they also indicate possible dangers and difficulties, like credit risk and possible future losses, which banks must carefully manage.

Keywords: Return on assets, return on equity, price earnings ratio, non-performing assets, non-performing loans, profitability.