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A Critical Assessment of the Impact of Loan Defaults on Profitability of Banks: A Case Study of HSBC Bank PLC

Increasing default and bankruptcy in banking sector, has significantly increased the concern ofacademicians, investors, and research to assess the impact of loan default on financial performanceof banking sector. Therefore, main intent of the current research was to critically assess the impactof lo...

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Main Authors: Ullah, Naqeeb, Asghar, Umair
Format: Journal
Language:English
Published: 2023
Online Access:http://ur.aeu.edu.my/1176/1/A%20Critical%20Assessment%20of%20the%20Impact%20of%20Loan%20Defaults%20on%20Profitability%20of%20Banks%20A%20Case%20Study%20of%20HSBC%20Bank%20PLC.pdf
http://ur.aeu.edu.my/1176/
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spelling my-aeu-eprints.11762024-06-04T03:09:07Z http://ur.aeu.edu.my/1176/ A Critical Assessment of the Impact of Loan Defaults on Profitability of Banks: A Case Study of HSBC Bank PLC Ullah, Naqeeb Asghar, Umair Increasing default and bankruptcy in banking sector, has significantly increased the concern ofacademicians, investors, and research to assess the impact of loan default on financial performanceof banking sector. Therefore, main intent of the current research was to critically assess the impactof loan default on profitability of the banking sector, specifically on HSBC Bank Plc in UK. Forresearch method, secondary quantitative approach has been employed, and information wasderived on HSBC Plc, while covering period from 1993 to 2022. Regarding variables, NPL as anindicator of loan default was used as an independent variable, and ROA and ROI as an indicator ofprofitability were used as a dependent variable. For analysis, descriptive, correlation, and linearregression model were used via using SPSS software. Findings shows that NPL has a positive andsignificant influence on both ROA and ROI of HSBC bank. Thus, it suggested that increase inincrease in NPL leads to increase in profitability of the banking sector as well. However, this effectcould be result of a proportional relation between the NPL, number of approved loans andprofitability. As number of approved loans increases then proportion of NPL would also increaseand in the same as profitability. Findings in the current research suggested for future researchwhile integrating both quantitative and qualitative research approach. It also suggestedconsideration of control variables (i.e., bank size, liquidity, and capital structure) for furtherdetailed analysis. 2023 Journal PeerReviewed text en http://ur.aeu.edu.my/1176/1/A%20Critical%20Assessment%20of%20the%20Impact%20of%20Loan%20Defaults%20on%20Profitability%20of%20Banks%20A%20Case%20Study%20of%20HSBC%20Bank%20PLC.pdf Ullah, Naqeeb and Asghar, Umair (2023) A Critical Assessment of the Impact of Loan Defaults on Profitability of Banks: A Case Study of HSBC Bank PLC. Abasyn University Journal of Social Sciences, 16 (1). pp. 122-128.
institution Asia e University
building AEU Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Asia e University
content_source AEU University Repository
url_provider http://ur.aeu.edu.my/
language English
description Increasing default and bankruptcy in banking sector, has significantly increased the concern ofacademicians, investors, and research to assess the impact of loan default on financial performanceof banking sector. Therefore, main intent of the current research was to critically assess the impactof loan default on profitability of the banking sector, specifically on HSBC Bank Plc in UK. Forresearch method, secondary quantitative approach has been employed, and information wasderived on HSBC Plc, while covering period from 1993 to 2022. Regarding variables, NPL as anindicator of loan default was used as an independent variable, and ROA and ROI as an indicator ofprofitability were used as a dependent variable. For analysis, descriptive, correlation, and linearregression model were used via using SPSS software. Findings shows that NPL has a positive andsignificant influence on both ROA and ROI of HSBC bank. Thus, it suggested that increase inincrease in NPL leads to increase in profitability of the banking sector as well. However, this effectcould be result of a proportional relation between the NPL, number of approved loans andprofitability. As number of approved loans increases then proportion of NPL would also increaseand in the same as profitability. Findings in the current research suggested for future researchwhile integrating both quantitative and qualitative research approach. It also suggestedconsideration of control variables (i.e., bank size, liquidity, and capital structure) for furtherdetailed analysis.
format Journal
author Ullah, Naqeeb
Asghar, Umair
spellingShingle Ullah, Naqeeb
Asghar, Umair
A Critical Assessment of the Impact of Loan Defaults on Profitability of Banks: A Case Study of HSBC Bank PLC
author_facet Ullah, Naqeeb
Asghar, Umair
author_sort Ullah, Naqeeb
title A Critical Assessment of the Impact of Loan Defaults on Profitability of Banks: A Case Study of HSBC Bank PLC
title_short A Critical Assessment of the Impact of Loan Defaults on Profitability of Banks: A Case Study of HSBC Bank PLC
title_full A Critical Assessment of the Impact of Loan Defaults on Profitability of Banks: A Case Study of HSBC Bank PLC
title_fullStr A Critical Assessment of the Impact of Loan Defaults on Profitability of Banks: A Case Study of HSBC Bank PLC
title_full_unstemmed A Critical Assessment of the Impact of Loan Defaults on Profitability of Banks: A Case Study of HSBC Bank PLC
title_sort critical assessment of the impact of loan defaults on profitability of banks: a case study of hsbc bank plc
publishDate 2023
url http://ur.aeu.edu.my/1176/1/A%20Critical%20Assessment%20of%20the%20Impact%20of%20Loan%20Defaults%20on%20Profitability%20of%20Banks%20A%20Case%20Study%20of%20HSBC%20Bank%20PLC.pdf
http://ur.aeu.edu.my/1176/
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score 13.211869

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