The main purpose of the study is to measure the effect of credit and liquidity risk on the profitability of commercial banks in Nepal. The panel least squares regression model was used to analyze the balance data of ten commercial banks for the years 2012–2021, with 100 observations. Non-performing loan ratio (NPLR), capital adequacy ratio (CAR), investment ratio (IR), capital ratio(CR), liquid assets to total assets (LTA and liquid assets to total deposits(LTD) are independent variables, and return on Equity (ROA) is a dependent variable. The necessary data are collected from the annual report of sample banks, banking and financial statistics, and the bank supervision report published by the Central Bank of Nepal. This study has used a descriptive and causal comparative research design. Similarly, Eviews-12 computer software has been employed for diagnosis, model fit, and analysis of data. Likewise, descriptive statistics, Pearson's correlation analysis, and multiple regression models have been used in the study. The random effect model was taken as fitted models after the model diagnosis using Eviews-12 computer software. The regression model revealed that CAR has a positive and statistically significant effect on ROE, whereas IR has a negative and statistically significant effect on ROE. However, CR has a negative and statistically significant effects on ROE, at the same time, capital adequacy ratio, investment ratio, and capital ratio also have significant impact on ROE. So, a strong credit and Liquidity performance and a wide non-performing loan decrease the profitability of the bank.