Rising profitability coupled with SBP’s policy to strengthen the capital of banks has contributed to rise in the risk based capital adequacy of banking system to 13.6% by September 2007 (relative to 8.8% in 2001).
Quality of capital has also improved (with the rise in risk weighted assets to Tier 1 capital) and the share of risk based capital now constitutes close to 80% of core capital. (ii)  Profitability: Performance of banks has been good converting the commercial banks’ losses, registered until early 2000, to positive: return on assets is now 2% and return on equity 20%.