The study aimed at exploring the relationship between efficiency and profitability of private
commercial banks operating in Pakistan. The efficiency represented by technical efficiency has
been assessed by non-parametric data envelopment analysis approach while profitability indicated by return on
assets has been computed through conventional ratio analysis for period 2009 to 2013. The analysis revealed that
technical efficiency declined during the study period and remained at 89%.
HMB was identified as the top-performing bank in technical efficiency
while MCB remained highly profitable. Banks were then grouped based
on TE and ROA. MBL, UBL, DIB, SCB, BAH, HBL and HMB observed as
top-performing banks based on TE and ROA. These banks are considered
a role model for other inefficient and less profitable banks. Whereas, other
banks were grouped as weak, based on below-average ROA and TE scores.
These banks can adopt distinct product mix or business strategies to
become profitable in future.
1-Farhat Ullah Khan Assistant Professor, Department of Business Administration, Gomal University, Dera Ismail Khan, KP, Pakistan.2-Aman Ullah Khan Assistant Professor, Department of Business Administration, Gomal University, Dera Ismail Khan, KP, Pakistan.3-Siraj -Ud- Din Assistant Professor, Department of Management Sciences, Khushal Khan Khattak University, Karak, KP, Pakistan.
Efficiency, Profitability, Commercial Banks, Return on assets, Technical Efficiency, Data Envelopment Analysis.