FINANCIAL PERFORMANCE OF BANKS IN PAKISTAN: A COMPARATIVE ANALYSIS OF PUBLIC AND PRIVATE SECTORS
This study is an attempt to analyze and compare the financial performance of MCB Bank Ltd and National Bank of Pakistan by applying common size analysis and ratio analysis of financial statement of banks. The secondary data was utilized in analysis of balance sheet, profit and loss statements and other accounting information for the financial year 2005-09. Both banks are very important financial institution and are providing different facilities to the customers. The banks also give advances to the other industries, companies and other deficit economic units. The results obtained shows considerable improvement in financial performance by banks in both public and private sectors. The financial strengths of banks depend on the liquidity, profitability and the ability of banks to pay its debt. All these three have showed improvements but there are some of the financial indicators in both which still needs improvement like current ratio, return on equity and operating profit of both banks. The findings of the analysis of financial statements of both banks show that MCB had utilized their assets more efficiently and effectively as compared to NBP. The return on equity ratio of MCB Bank is much better then National bank of Pakistan for the FY-2005-09 which banks ability to produce earning & therefore is an excellent indicator both of viability & capability of banks management. Both banks must invest more in liquid assets like marketable security and market treasury bills to boost the trust of the depositors on banks. Both banks should also decrease their debt level in order to utilize the funds at the right time and at the right level to enhance their net profits.
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