“Financial Statement Analysis and Performance Evaluation of Banks a Comparative Study Between...

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“Financial Statement Analysis and Performance Evaluation of Banks: A

Comparative Study between Conventional Banks and Islamic Banks in Bangladesh”

By

Arifur Rahman

Registration No: 03288 Session: 2011-12

Department of Finance and Banking

Faculty of Business Administration and Management

PATUAKHALI SCIENCE AND TECHNOLOGY UNIVERSITY

DUMKI PATUAKHALI- 8602.

April 2016

INTERNSHIP REPORT


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Internship Report on

Financial Statement analysis and Performance Evaluation of Banks:

A Comparative Study between Conventional Banks and Islamic

Banks in Bangladesh”

Submitted By

Arifur Rahman

Roll No: 1103050; Reg. No: 03288Major in Finance and Banking

Faculty of Business Administration and ManagementPatuakhali Science and Technology University

Dumki, Patuakhali-8602

Submitted to

Supervisor

Md. Nur Nabi

Assistant ProfessorDepartment of Finance and Banking

Faculty of Business Administration and Management

Patuakhali Science and Technology UniversityDumki, Patuakhali-8602

And

Co- Supervisor

Kumar Debasis DuttaAssistant Professor

Department of Finance and BankingFaculty of Business Administration and ManagementPatuakhali Science and Technology University

Dumki, Patuakhali-8602

Date of Submission: …………..April, 2016


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Preface

An Internship Program is very much effective for a student to get the practical knowledge. This

program makes an opportunity for conversion of the practical conception in real life situation.

Student can get real life test and can compare the knowledge with real situation. It is a greatopportunity for a student to understand the current market.

The present report is the outcome of the internship program under the Bachelor of Business

Administration (BBA) program at Faculty of Business Administration and Management,

Patuakhali Science and Technology University. I was assigned for preparing my internship

report on “Financial Statement Analysis and Performance Evaluation of Banks: A

Comparative Study between Conventional Banks and Islamic Banks in Bangladesh” for

the period 2011to 2014. The objectives of internship program were to familiarize the student

with the practical implementation of the knowledge provides the theoretical aspect of the

practical life that is implements in the practical life. Hence, the internship program works as

link between the theory & the practice.

While preparing the report, I have tried to gather as much information as possible and to gather

all the information pertaining the report to enrich it. I believe that it was a fascination

experience to apply theoretical knowledge in practical field.

There might have problems regarding lack & limitations in some aspects & some minor

mistakes such as typing mistakes. Please pardon me for those mistakes.

(Arifur Rahman)


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Letter of Transmittal

Date: --------------------------------

To

Md. Nur NabiAssistant Professor and Chairman,Department of Finance and BankingFaculty of Business Administration and ManagementPatuakhali Science and Technology UniversityDumki, Patuakhali-8602

Subject: Submission of Internship Report.

Dear Sir,

I am glad to submit you the Internship Report covering the topic “Financial Statement

Analysis and Performance Evaluation of Banks: A Comparative Study between

Conventional Banks and Islamic Banks in Bangladesh”. This report is an integral part ofthe completion of the BBA program .For preparing this report I tried my level best toaccumulate relevant and up-to-date information from all available sources.

This report is extremely valuable to me as it has helped me to gain practical experienceregarding Inflation rate, interest rate, remittance and exchange rate. I hope that this report willmeet the standards of your judgments.

Faithfully Yours,

……………………

Arifur RahmanRoll No: 1103050; Reg. No: 03288

BBA ProgramFaculty of Business Administration and ManagementPatuakhali Science and Technology UniversityDumki, Patuakhali-8602


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Acknowledgement

At first, I would like to express my gratitude to almighty Allah for enabling me the strengthand opportunity to complete the report in the schedule time successfully. I am taking this

privilege to deliver my gratefulness to each and every people who are involved with me inevery phase of our lives.

I am grateful to my parents without whom I cannot be here. They were beside me in everysingle situation and are still with me. Without the support of my parents, I could not be able toachieve my objectives and goals.

Then I am deeply grateful to my supervisor Md. Nur Nabi, Assistant Professor and Chairman,Department of Finance and Banking, Faculty of Business Administration and Management,Patuakhali Science and Technology University for his stimulating inspiration, kind guidance,

valuable suggestions and sagacious advice during my internship period. His suggestions &guidance have made the report a good manner.

I want to express my deep gratitude to my all friends who have helped me various waysthroughout the time required to prepare this report. Finally, I am deeply grateful to allconcerned persons who provide valuable guidance, suggestions and advices in collectinginformation, analyzing and preparing the report successfully.

…………………………… Arifur RahmanRoll No: 1103050; Reg. No: 03288BBA ProgramFaculty of Business Administration and ManagementPatuakhali Science and Technology UniversityDumki, Patuakhali-8602


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Declaration

I am Arifur Rahman, student of Business Administration and Management, Patuakhali Science

and Technology University, do hereby that the Internship Report entitled “Financial

Statement Analysis and Performance Evaluation Of Banks: A Comparative Study

Between Conventional Banks and Islamic Banks In Bangladesh”. Presented to the

department of Finance and Banking, Patuakhali Science and Technology University is the

outcome of the Dissertation report performed by me under the supervision of Md. Nur Nabi,

Assistant Professor and Chairman, Department of Finance and Banking, Faculty of BusinessAdministration and Management, Patuakhali Science and Technology University. I also

declare that no part of this report has been or is being submitted elsewhere for the award of any

degree, diploma or recognition.

---------------------------------Arifur RahmanRoll No: 1103050; Reg. No: 03288BBA ProgramFaculty of Business Administration and ManagementPatuakhali Science and Technology UniversityDumki, Patuakhali-8602


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Supervisors Certificate

This is to certify that the internship report on “Financial Statement Analysis and

Performance Evaluation Of Banks: A Comparative Study Between Conventional Banks

and Islamic Banks In Bangladesh” for partial fulfillment of the Degree of Bachelor ofBusiness Administration (BBA), major in Finance and Banking from Patuakhali Science andTechnology University carried out by Arifur Rahman, Roll No-1103050, Reg No-03288 undermy supervision. Under my guidance and supervision this report is being carried outsuccessfully. No part of the internship report has so for submitted for any degree of diploma,title, or recognition before.

I wish his every success in life.

…………………………... Signature of the Supervisor…………………………. Date

……………………................ Signature of the Co- Supervisor

…………………………….. Date


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Table of Contents

SL

No.

Particulars Page

No.

Preface I Letter of Transmittal II Acknowledgement III Declaration IVSupervisors Certificate VCertificate of Bank VIList of Tables IXList Figures IXList of Acronyms X-

XIIIChapter-01(Introduction)

Abstract

1Keywords 1Introduction 2

1. Objectives of the Study 31.2 Limitations 3

Chapter-02: Methodology of the study

2.1 Sample of Conventional and Islamic Banks 42.2 Data source 52.3 Performance measures 5

2.2.1 Profitability Performance 5

2.2.2 Liquidity Performance 62.2.3 Credit Risk performance 7

Chapter-03: Literature Review

Literature Review 8-11

Chapter-04 : Conceptual Discussion

4.1 Islamic Banking and Conventional Banking 12

4.2 Comparison between Islamic bank and conventional bank (Table 2) 13Chapter-5 Empirical Results and Analysis

5.A 5. A.1 Profitability Performance 14-16

5. A.2. Liquidity Performance 17-18

5. A. 3. Credit risk performance 19-21

5.

B. Overall performance 22


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Chapter-6 : Data Analysis and Findings

6.1 Comparative analysis and Findings 23-24

6.2 Graphical presentation 246.2.1 Profitability 246.2.2Liquidity 256.2.3 Credit risk 25

6.3 6.3 Individual Bank Performance 26

Chapter-7: Conclusion

Conclusion 27

References 28-30

Appendix 30


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List of Tables

Table 1: 1Sample of Conventional and Islamic Banks 04Table 2: Banks which is demonstrated bellow in the 13Table 3: ROA of conventional and Islamic banks 14Table 4: ROE of conventional and Islamic banks 15Table 5: COSR of conventional and Islamic banks 16Table 6: Net LTA of conventional and Islamic banks 17Table 7: Net LD & B of conventional and Islamic banks 18 Table 8: EQTA of conventional and Islamic banks 19Table 9: EQL of conventional and Islamic banks 20Table 10: EQL of conventional and Islamic banks 21Table 11: Financial Performance of Islamic Vs Conventional Banking 22 Table 12

List of Figures

Figure 1: ROA of conventional and Islamic banks 14Figure 2: ROE of conventional and Islamic banks 15

Figure 3: COSR of conventional and Islamic banks 16Figure 4: Net LTA of conventional and Islamic banks 17Figure 5: Net LD&B of conventional and Islamic banks 18Figure 6: EQTA of conventional and Islamic banks 19Figure 7: EQL of conventional and Islamic banks 20Figure 8: IMLGL of Conventional and Islamic banks 21Figure 9: Profitability 23Figure 10: Credit risk 25


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Acronyms

SBL : Southeast Bank Ltd. NCC Bank : National Credit and Commerce Bank Ltd ROA : Return on AssetsROE : Return on EquityCOSR : Cost to Income Ratio

Net LTA : Net Loans to Asset Ratio Net LD&B : Net Loans to Deposit and BorrowingEQTA : Equity to Asset ratioEQL : Equity to Net Loan ratioIMLGL : Total Impaired Loans to Gross Loan ratioIBS : Islamic banking schemeBB : Bangladesh BankBBA : Bachelor of Business Administration% : Percentage

WWW : World-wide web


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“Financial Statement Analysis and Performance Evaluation of Banks: A

Comparative Study between Conventional Banks and Islamic Banks in

Bangladesh”

(Arifur Rahman)1

Executive Summary

The purpose of this empirical study is to compare and analyze the performance of conventional

and Islamic banks of Bangladesh and find out which of the banking stream is the better

performer than the other. For this study, a sample of 10 conventional banks namely, southeast

Bank, Premiere Bank, NCC Bank, AB bank, Brac Bank, Bank Asia, Eastern Bank, Mercantile

Bank, Prime Bank and Standard Bank. 4 Islamic banks namely Islami Bank Bangladesh, Social

Islami Bank, Exim Bank and Shah -Jalal Islami Bank were selected. The method of study that

has been used is the ratio analysis in terms of profitability, liquidity and credit risk. 8 financial

ratios were selected for the measurement of performance. Only the internal factors are selected

for performance analysis and all the data used for this study are collected from the published

financial statements of these banks. Findings suggest that in case of profitability there is no

significant difference between these two. But conventional banks are leading in terms ofliquidity and the credit risk performance but not with a significant margin.

Keywords: Performance evaluation, conventional banking, Islamic banking, profitability,liquidity, credit risk, Bangladesh

Chapter 1: Introduction

1 Roll No: 1103050; Reg. No: 03288; BBA Program; Faculty of Business Administration and Management;Patuakhali Science and Technology University.


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Currently, banking industry is comprised of two basic forms of banking- one is Conventional

Banking System and the other is Islamic Banking System. Beside these two basic forms of

banking system, there is a mixed banking system comprising sate owned, private and foreign

commercial banks.

Strengthening the financial sector is a vital concern for an economy. Efficient banking or sound

financial system serves as an effective channel for mobilizing funds from savers to productive

sectors and thus helps to achieve economic growth. In Bangladesh, Banking sector plays a vital

role in the economic development. The banking sector of Bangladesh is comparatively larger

than many comparable economies with similar level of development and per capita income.

The total contribution of the service sector in the economy of Bangladesh is 54.04% and bank

is the biggest sector from all of them.

After the independence, banking industry in Bangladesh started its journey with 6 nationalized

commercialized banks, 2 State owned specialized banks and 3 Foreign Banks. In the 1980s

banking industry achieved significant expansion with the entrance of private banks. At present

among the schedule banks, there are 5 State-owned Commercial Banks SCBs, 3 Specialized

Banks (SBs), 39 private commercial banks PCBs, 31 conventional banks, 8 Islami Shariah

based PCBs,9 foreign commercial banks. Commercial banking is based on a pure financial

intermediation model, whereby banks mainly borrow from savers and then lend to enterprisesor individuals. They make their profit from the margin between the borrowing and lending

rates of interest. They also provide banking services, like letters of credit and guarantees. A

proportion of their profit comes from the low-cost funds that they obtain through demand

deposits. Commercial banks are prohibited from trading and their shareholding is severely

restricted to a small proportion of their net worth.

Islamic banking as a new paradigm started in Bangladesh in 1983 with the establishment of thefirst Islamic bank “Islami Bank Bangladesh Limited”. The innovation of interest-free banking

systems proved its worth in the country’s money market and many new banks have been

established to operate in compliance with Shariah and many traditional banks have opened

their Islamic banking branches. "Islamic Banking Business" means such banking business, the

goals, objectives and activities of which is to conduct banking business or activities according

to the principles of Islamic Shariah and no part of the business either in form and substance has

any elements not approved by Islamic Shariah. Islamic Banks are now not only focusing on


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the conventional Shariah products but also investing in the SME’s, Microfinance and

Agriculture Sectors.

1.1 Objectives of the study

The purpose of this study is to conduct comparative financial performance analysis of Islamic

& Conventional banking sectors in Bangladesh in order to document the results of each sector

during period under review. This study will help in channelizing resources in future including

deposits, finances, investments and other banking services. In summary following questions

are analyzed for fulfillment of the study.

1.

Which of the banking stream is relatively more profitable?

2.

Which of the banking sector is relatively more liquid?

3.

Which of the banking sector is exposed to relatively more credit risk?

4. The volatility of conventional and Islamic banks.

1.2 Limitations:

Despite the effort that has been engaged to derive a report as pragmatic and dependable as

possible but due to some imperfection in analysis method or human mistake there may be some

shortcomings.

Only last 4 years information is used for the measurement and comparison purpose. Quantitative information is given emphasis for the analytical purpose but there may be

some other influential issues.

Internal factors are used to measure and compare the performance of banks but there may

be significant external factors that affect that the performance of banks.

A sample of 10 conventional and 4 Islamic banks were chosen for the study. So the results

may not show absolute result for whole of the banking sector.

Chapter 2: Methodology of the study


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In evaluating banks’ performance, this study uses ratio measures. The use of ratio method has

many advantages. The most important benefit is that it compensates bank disparities. Banking

firms are not equal with respect to sizes. The use of ratio removes the disparities in sizes and

brings them at par. The ratios are divided into three heads: profitability, liquidity and credit

risk. The ratios that I have selected to gauge profitability, liquidity and credit risk have been

used in a different study by Samad (2004).

The study evaluates inter- bank performance of Islamic and conventional banks in terms of

profitability, liquidity and credit risk. Banks performance is measured on set critical factors

that are thought to be specific to performance of any bank. The required ratios are calculated

and necessary arithmetical and statistical working workings are done to see the performance

year wise. Then I have taken the performance ratios every bank and calculated arithmetical

mean. So I found arithmetic mean for every bank and for every ratio. Then combined

arithmetical mean of every separate bank mean gave me the sector wise performance for each

ratio. CV is calculated by standard deviation divided by arithmetic mean.

2.1Sample of Conventional and Islamic Banks (Table: 1)

Conventional Banks Islamic Banks

Southeast Bank Ltd.Premier Bank Ltd. NCC bank Ltd.Bank Asia Ltd.Brac bank Ltd.Mercantile Bank Ltd.Prime bank Ltd.Eastern bank Ltd.Standard Bank Ltd.AB Bank Limited Ltd.

Islami Bank Bangladesh Ltd.

Social Islami Bank Ltd.

EXIM bank Ltd

Shahjalal Islami Bank Ltd.

2.2 Data source


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The data is being collected from published annual reports of the 10 selected conventional banks

and 4 Islamic banks for period of four years from the year 2011 to 2014, necessary data have

been collected to calculate all the profitability, liquidity, and credit risk ratios.

2.3 Performance measures

This study uses internal factors, those related to items of balance sheet and income statement

of banks and well within the control of the bank management. After examining the income

statement and balance sheet of Islamic banks and conventional commercial banks of

Bangladesh, this study utilizes eight financial ratios for evaluating the financial performance

of Islamic vis-à-vis conventional banks of Bangladesh. These financial measures of

performance are placed under three categories as given below:

a. Profitability Performance

b. Liquidity Performance

c.

Credit (loan) Risk Performance

These ratios which I have selected to measure to gauge profitability, liquidity and credit risk

have been used in a study by Samad (2004). 2

2.2.1 Profitability Performance

There are several financial measures for evaluating profitability performance of a firm. Thisstudy uses the following basic three. They are:

Return on Assets (ROA) = net profit/total assets. ……………………. (1)

ROA is a good indicator of a bank’s financial performance and managerial efficiency. It shows

how competent the management is in allocating asset into net profit. The higher the ROA, the

higher is the financial performance or profitability of the banks. (Samad,2004).

Return on Equity (ROE) = net profits/equity. ………………………… (2)

2 2Samad, Abdus (2004), “Performance of Interest-free Islamic banks vis-à-vis Interest-based ConventionalBanks of Bahrain.” IIUM Journal of Economics and Management 12, no.2: 1 -15.


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It shows a rate return on base capital, i.e., equity capital. The higher the ROE, the more efficient

is the performance. [(Gul, Irshad and Zaman (2011)3

Cost to Income Ratio (COSR) = total cost/total income. ……………… (3)

Cost incurred per dollar generation of income or in other words, income generated per dollar

cost. It is indeed considered to be one of the best indices for measuring economic efficiency or

profit performance. The lower the COSR ratio, the better is the profitability performance of a

bank. According to Tripe (…..) Cost to income ratio is defined as non interest costs excluding

bad debts and doubtful expenses, divided by total of interest income and non-interest income.

2.2.2 Liquidity Performance

Liquidity is the life of a commercial bank. Liquidity means cash availability: how quickly a

bank can convert its assets into cash at face value to meet the cash demands of the depositors

and borrowers. The higher the amount of liquid asset for a bank, the greater is the liquidity of

the bank. Among the various liquidity measures, this study uses the following:

Net Loans to Asset Ratio (NetLTA) = net loans/total assets. …………… (4)

NetLTA measures the percentage of assets that are tied up in loans. The higher the ratio, theless liquid the bank will be. (Samad, 2004)

Net Loans to Deposit and Borrowing (NetLD&B) = net loans/total deposit and borrowings.…………………………………………………………………………… (5)

It indicates the percentage of the total deposit locked into non-liquid asset. The higher theLDBR, the higher is the liquidity risk. (Samad, 2004)

2.2.3 Credit Risk performance

3Gul S, Irshad F, Zaman K (2011). Factors Affecting Bank Profitability in Pakistan, Romanian Econ. J.14(39):61-87.


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Credit risk is the risk that a bank is unable to collect the loans and advances it makes to a person

or organization. It arises either from the borrower’s inability or the indifference to repay his

debt. Three financial ratios are used for measuring loan/credit risk performance of a bank.

These are:

Equity to Asset ratio (EQTA) = common equity/assets. ………………… (6)

It measures equity capital as a percentage of total assets. EQTA provides percentage protection

afforded by banks to its investment in asset. It measures the overall shock absorbing capacity

of a bank for potential loan asset losses. The higher the ratio of EQTA, the greater is the

capacity for a bank to sustain the assets losses. (Samad, 2004)

Equity to Net Loan ratio (EQL) = total equity/net loans…………………. (7)

It measures equity capital as a percentage of total net loans. EQL provides equity as a cushion

(protection) available to absorb loan losses. The higher the ratio of EQL, the higher is the

capacity for a bank in absorbing loan losses.

Total Impaired Loans to Gross Loan ratio (IMLGL) = impaired (non-performing loans)

loans/gross loans. ……………………………………………………….. (8)

This is one of the most important criteria to assess the quality of loans or asset of a commercial

bank. It measures the percentage of gross loans which are doubtful in banks’ portfolio. The

lower the ratio of IMLGL, the better is the asset/credit performance for the commercial banks.

(Samad, 2004)


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Chapter: 3

Literature Review

Banks performance can be measured both by using qualitative and quantitative methods and

techniques. Different variables and statistical techniques have been used for analysis bydifferent studies and results are drawn from them aiming at performance evaluation. Banks

performance can be measured in terms of profitability, growth, efficiency, liquidity, credit risk

performance, and solvency. There is a general agreement in literature that Islamic banks are

superior to conventional or mainstream banks in terms of their performance (Samad, 2004;

awan,2009; Rosly and AbuBakar, 2003; Safiullah, 2010). Keeping in view the importance of

banking sector, different studies have been carried out for evaluating performance of banks.

Hanif, et al. (2012) analyzed and compared the performance of Islamic and conventional

banking in Pakistan. For this study, a sample of 22 conventional banks and 5 Islamic banks

were selected. Key performance indicators were divided into external and internal bank factors.

The external factor analysis included studying the customer behavior and perception about both

Islamic and conventional banking. Internal factor analysis included measures of differences in

performance of Islamic and conventional banks in terms of profitability, liquidity, credit risk

and solvency. Nine financial ratios were used to assess profitability, liquidity and credit risk;

and a model known as “Bank -o-meter” was used to assess solvency. In terms of profitability

and liquidity, conventional banking leads. However, in credit risk management and solvency

maintenance Islamic banking dominates. Motivating factors for customers of Islamic banking

were the location and Sharah compliance, while in case of conventional banking it was the

wide range of products and services.

Samad (2004) examined the performance of Bahrain’s interest free Islamic banks and interest

based conventional banks during the post-Gulf War period. He examined bank’s performance

in three dimensions (a) profitability (b) liquidity (c) credit risk. Nine financial ratios were used

in this study. He applied student’s t-test in measuring the performance of Bahrain’s banks from

period 1991- 2001 and concluded that there is no difference in the profitability and liquidity of

Islamic and conventional banks of Bahrain. However, the study found that there is significant

difference in credit performance.


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gauge solvency. Findings indicate the superiority of conventional banks over Islamic ones in

profitability, liquidity, credit risk management as well as solvency.

Rosly and Abu Bakar (2003) [23] found that Islamic banking scheme (IBS) banks in Malaysia

have recorded higher return on assets (ROA) as they were able to utilize existing overheads

carried by mainstream banks. As this lowers their overhead expenses, it was found that the

higher ROA ratio for IBS banks did not imply efficiency. It was also inconsistent with their

relatively low asset utilization and investment margin ratios. This finding confirmed the

contention that Islamic banking that thrives on interest-like products (credit finance) was less

likely to outshine mainstream banks on efficiency terms. Although Islamic credit finance

products may have complied with Shariah rules, their lack of ethical content was not expected

to motivate IBS banks to strive for efficiency through scale and scope economies.

Bader et, al., (2008), documented that there is no difference between the overall efficiency of

conventional and Islamic banks which includes cost, revenue and profit efficiency, after

studying performance of 43 Islamic and 33 conventional banks for the period 1990-2005 in 21

countries using Data Envelopment Analysis. This study assessed the average and overtime

efficiency of banks based on their size, age, and region using static and dynamic panels.

Awan (2009) [19] analyzed the vertical growth of Islamic banking and compared it with its

counterpart conventional banking. Six newly formed Islamic banks in Pakistan and six

conventional banks of the same size were selected for the purpose of comparison. Data relating

to their performance and profitability were collected from primary and secondary sources from

2006 to 2008. The ratio analysis technique was applied to measure the performance of key

indicators of both Islamic and conventional banks. The results of the study were very

encouraging. Islamic banks outperformed conventional banks in assets, deposits, financing,

investments, efficiency, and quality of services and recovery of loans. It predicted the bright

future of Islamic banking in Pakistan.

Iqbal (2001) [20] used data for the 1990-98 period. For this study, a sample of twelve Islamic

banks was chosen. These banks together account for more than 75 percent of total capital as

well as total assets of "private" Islamic banks and thus form a very large sample from a


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Chapter: 4

Conceptual Discussion

4.1 Islamic Banking and Conventional Banking

Both Islamic Banks and Conventional Banks are financial intermediation that helps to

transfer the funds from investors, depositors or savers to borrowers or investors. Regular

Conventional Banks cannot be involved in venture transactions or merchandizing transactions,

which is allowed for Islamic Banks. But there are merchant banks who are allowed to do

merchandizing. The main difference between Islamic Banks and Conventional Banks are that,

interest rate and speculative transactions, investment in alcohol, in tobacco and in pig made

products are prohibited in accordance with Islamic Principles. Generally, Conventional

Banking Principles are man-made, whereas in Islamic Banks principles and rules are based on

Shariyah who set up the principles, simply to say transactions of Islamic banks are based on

profit and loss sharing. As we are aware of, that interest rate for Conventional Banks is main

source of earnings. As a proof, interest is forbidden in not only Islam and in Christianity as

well. Likewise, as it is being stated in Quran ” O you who have believed, do not consume usury,

doubled and multiplied, but fear Allah that you may be successful.”4 And another proof in

Quran is “Allah has permitted trade and has forbidden interest”5. In the Bible states “Do not

charge your brother interest, whether on money or food or anything else that may earn

interest.” 6 Unlike Islamic Banks, the Conventional Banks are not allowed to purchase

commodities with the aim of reselling them, in other words it is forbidden for them to buy

capital assets or fixed assets such as: building, tracks, cars, machineries with the purpose to

resell them with markup unless they do not use for their own. On the article from internet that

4 Quran, chapter 3,verse 1305 Quran, chapter 2, verse 2756

Bible, Deuteronomy chapter 23, verse 19


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contains table which briefly describes the differences between Islamic Banks and Conventional

Banks which is demonstrated bellow in the Table: 2.7

Convent Conventional Bank Banks Islamic Bank

1. The functions and operating modes of conventional banks are based on fully manmade principles.

1. The functions and operating modes of Islamic banks are based on the principles of Islamic Shariah.

2. The investor is assured of a predetermined rate ofinterest.

2. In contrast, it promotes risk sharing between provider ofcapital (investor) and the user of funds (entrepreneur).

3. It aims at maximizing profit without any restriction. 3. It also aims at maximizing profit but subject to Shariahrestrictions.

4. It does not deal with Zakat. 4. In the modern Islamic banking system, it has become oneof the service-oriented functions of the Islamic banks to be a

Zakat Collection Centre and they also pay out their Zakat.

5. Lending money and getting it back withcompounding interest is the fundamental function ofthe conventional banks.

5. Participation in partnership business is the fundamentalfunction of the Islamic banks. So we have to understand ourcustomer‟s business very well.

6. It can charge additional money (penalty andcompounded interest) in case of defaulters.

6. The Islamic banks have no provision to charge any extramoney from the defaulters. Only small amount ofcompensation and these proceeds is given to charity.Rebates are given for early settlement at the Bank’s discretion.

7. In it very often, bank‟s own interest becomes

prominent. It makes no effort to ensure growth withequity.

7. It gives due importance to the public interest. Its ultimate

aim is to ensure growth with equity.

8. For interest-based commercial banks, borrowingfrom the money market is relatively easier.

8. For the Islamic banks, it must be based on a Shariahapproved underlying Transaction.

9. Since income from the advances is fixed, it giveslittle importance to developing expertise in projectappraisal and evaluations.

9. Since it shares profit and loss, the Islamic banks paygreater attention to developing project appraisal andevaluations.

10. The conventional banks give greater emphasis oncredit-worthiness of the clients.

10. The Islamic banks, on the other hand, give greateremphasis on the viability of the projects.

11. The status of a conventional bank, in relation toits clients, is that of creditor and debtors. 11. The status of Islamic bank in relation to its clients is thatof partners, investors and trader, buyer and seller.

7 Ust Hj Zaharuddin Hj Abd Rahman, Differences between Islamic and Conventional Banks, SenaraiLengkap Artikel, http://zaharuddin.net/index.php?option=com_content&task=view&id=297&Itemid=72,Thursday, 22 February 2007 18:02, 1.

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Chapter: 5

Empirical Results and Analysis

In this section results and analysis are shown in two subsections. In subsection one

comparative performance has been shown for the banks from year to year for eachof the selected ratios. And subsection two shows comparative mean performance

analysis for every KPI’s sector wise.

A. Year to year performance for each ratio

5. A.1 Profitability Performance

I.

Return on asset (ROA)

ROA is calculated using the equation1 based on the data [ see appendix 1].The

calculated results are given below in table [3]

Table [3] ROA of conventional and Islamic banks

Return on Asset(ROA)

2011 2012 2013 2014 Mean CV

Conventional banks 2.280% 1.730% 0.881% 0.990% 1.470% 51.754%

Islamic banks 2.004% 1.346% 1.275% 0.999% 1.406% 32.481%

Also the calculated results are shown in graph in the following:

The Mean ROA shows a better result for the conventional banks. But the coefficient ofvariation (CV) shows the greater riskiness of conventional banks. Both show a decreasing

pattern in their ROA.

Figure 1 ROA of conventional and Islamic banks

0.00 %

%0.50

%1.00

%1.50

%2.00

%2.50

2011 2012 2013

Conventional banks

Islamic banks

2014


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II. Return on equity (ROE)

ROE is calculated using the equation3 based on the data [see appendix 2].The calculated results

are given below in table [4]

Table [4] ROE of conventional and Islamic banks

Return onEquity(ROE)

2011 2012 2013 2014 Mean CV


Islamic banks 23.202% 14.505% 11.623% 8.370% 14.425% 53.417%


The mean ROE of Conventional and Islamic banks are almost equal. But CV shows the higher

volatility for the Islamic banks than the conventional banks. The ROE shows a decreasing

pattern for both conventional and Islamic banks.

Figure 2 ROE of conventional and Islamic banks

%0.00

%5.00

10.00 %

%15.00

%20.00

25.00 %

2012 2011 2014 2013

Conventional banks

Islamic banks


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III. Cost to Income ratio (COSR)

COSR is calculated using the equation3 based on the data [see appendix 3].The calculatedresults are given below in table [5]

Table [5] COSR of conventional and Islamic banks

Cost to Income ratio(COSR)

2011 2012 2013 2014 Mean CV


Islamic banks 28.512% 40.842% 33.261% 45.037% 36.913% 22.243%

[Own calculation]Also the calculated results are shown in graph in the following:

From the above calculations we can say the performance of conventional banks is much better

than the Islamic banks with the mean CV of 12.117%. But the mean value does not show a

great difference. For both of them COSR shows an increasing pattern.

Figure 3 COSR of conventional and Islamic banks

0.00 %

%5.00

%10.00

15.00 %

%20.00

% 25.00 %30.00

35.00 %

%40.00

%45.00

50.00 %

2011 2012 2013 2014

Conventional banks

Islamic banks


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5. A.2. Liquidity Performance

I.

Net Loans to Asset ratio (Net LTA)

Net LTA is calculated using the equation4 based on the data [see appendix 4].The calculatedresults are given below in table [6]

Table [6] Net LTA of conventional and Islamic banks

Net Loan to Assetratio (Net LTA)

2011 2012 2013 2014 Mean CV


Islamic banks 74.280% 72.398% 66.311% 65.999% 69.747% 5.452%

[Own calculation]


The result shows conventional banks are more liquid but they are also more volatile than the

Islamic banks. This gives the Islamic banks a better performance in this ratio. Both type of

banks shows a decreasing pattern of their liquidity.

Figure 4 Net LTA of conventional and Islamic banks

%0.00

%10.00

%20.00

%30.00

% 40.00 50.00 %

%60.00

%70.00

%80.00

2011 2012 2013 2014

conventional banks

Islamic banks


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II. Net Loans to Deposits & Borrowing ratio (Net LD&B)

Net LD&B is calculated using the equation5 based on the data [see appendix 5].The calculatedresults are given below in table [7]

Table [7] Net LD & B of conventional and Islamic banks

Net Loans to Deposit& Borrowing(Net LD&B)

2011 2012 2013 2014 Mean CV


Islamic banks 90.051% 81.251% 78.016% 78.595% 81.978% 7.554%


Net LD&B shows almost the same result as Net LTA. The conventional banks are more liquid

than the Islamic banks. But the volatility of Islamic banks is less than the conventional banks

with a mean of 7.554% over 8.605%.

Figure 5: Net LD&B of conventional and Islamic banks

%0.00

%10.00%20.00

%30.00

%40.00

50.00 % 60.00 %

70.00 %

%80.00

%90.00

100.00 %

2011 2013 20142012

Conventional banks

Islamic banks


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5. A. 3. Credit risk performance

I. Equity to Asset ratio (EQTA)

EQTA is calculated using the equation6 based on the data [see appendix 6].The calculatedresults are given below in table [8]

Table [8] EQTAof conventional and Islamic banks

Equity to Asset ratio(EQTA)

2011 2012 2013 2014 Mean CV


Islamic banks 8.328% 9.500% 8.54% 9.01% 8.938% 12.952%


Figure 6 EQTA of conventional and Islamic banks

EQTA of conventional banks is higher meaning that they are more able to absorb credit risk.The CV also in favor of conventional banks (10.766%) dominating over Islamic banks

(12.952%).

%0.00

%2.00

% 4.00

6.00 %

%8.00

%10.00

%12.00

2012 2011 2013 2014

Conventional banks

Islamic banks


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II. Equity to Loan ratio (EQL)

EQL is calculated using the equation7 based on the data [see appendix 7].Thecalculated results are given below in table [9]

Table [9] EQL of conventional and Islamic banks

Equity to Loan ratio(EQL)

2011 2012 2013 2014 Mean CV


Islamic banks 11.218% 13.382% 12.470% 13.320% 12.598% 15.858%


The conventional bank EQL is higher than the Islamic banks. Also the Conventional banks are

less volatile than the Islamic banks. The mean EQL of conventional banks is 15.915% whereas

for the Islamic banks is 12.519%. The CV of conventional banks 9.508% and Islamic banks is

15.858%.

Figure 7 EQL of conventional and Islamic banks

%0.00

%2.00%4.00

% 6.00 8.00 %

10.00 %

12.00 %

14.00 %

16.00 %

18.00 %

2013 2011 2012 2014

Conventional banks

Islamic banks


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III. Impaired loans to gross loans (IMLGL)

IMLGL is calculated using the equation8 based on the data [see appendix 8].The calculated

results are given below in table [10]Table [10] EQL of conventional and Islamic banks

Impaired loans to grossloans (IMLGL)

2011 2012 2013 2014 Mean CV


Islamic banks 2.855% 2.313% 3.503% 5.218% 3.472% 40.404%


Figure 8 IMLGL of Conventional and Islamic banks

Islamic banks IMLGL mean is better than the conventional banks but their volatility is higher

that is because their IMLGL increased more than double from 2011 to 2014. But the

conventional banks loans are not much of a high quality but their volatility is less than the

Islamic banks.

%0.00

1.00 %

% 2.00

3.00 %

%4.00

5.00 %

6.00 %

2011 2012 2013 2014

Conventional banks

Islamic banks


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5. B. Overall performance

This section provides the sector wise performance for three core areas of profitability,liquidity, credit risk by simple sector wise averages for both streams of banking.

Table 11: Financial Performance of Islamic Vs Conventional Banking

Performance measures Conventional Banks Islamic Banks Comments

Profitability

ROAROECOSR

Mean CV Mean CV Conventional banks aredominating on ROA and ROEand Islamic banks aredominating in COSR

Conventional banks aredominating

Conventional banks aredominating in credit riskmanagement.

1.470%14.293%41.454%

51.754%47.367%12.117%

1.406%14.425%36.913%

32.481%53.417%22.243%

Liquidity

Net LTA Net LD&B

Mean CV Mean CV64.004%77.870%

8.128%8.605%

69.747%81.978%

5.452%7.554%

Credit Risk

EQTAEQLIMLGL

Mean CV Mean CV

10.169%15.915%

4.114%

10.766%9.508%31.612%

8.938%15.915%

3.472%

12.952%15.858%40.404%


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Chapter 6:

Data Analysis and Findings:

6.1: Comparative analysis and Findings

ROA, ROE and COSR are the financial measures that depict the profitability of Islamic banks

and conventional banks. ROA of conventional banking sector is 1.470% which is higher than

Islamic banking sector that is 1.406% and this indicates that assets of conventional banks are

capable of yielding more return than Islamic banks. Similarly ROE also shows that

conventional banks are more profitable than Islamic banks which depicts that conventional

banks are more efficient in generating profits from every unit of shareholders equity/bank

capital. But in case of COSR Islamic banks are leading with an industry average of 36.913%

that is much better than the conventional banks whose average is 41.454%.So it is very difficult

to conclude which bank is dominating in profitability.

Two different indicators (Net LTA, Net LD&B) are used to measure the liquidity risk of

portfolios of Islamic and conventional banking. Net LTA(net loans to asset ratio) of Islamic

banking sector is 69.747% while Net LTA of conventional banking sector is 64.004% .Higher

ratio of Islamic banking sector shows that this sector is tied up in loans and has lower liquidity

as compared to conventional banks. So, conventional banks are more liquid as compared to

Islamic banks. Net LD&B (Net Loans to Deposits and Borrowing ratio) of Islamic bankingsector is 81.978% while that of conventional banking sector is 77.870%. Higher Net LD&B of

Islamic banking sector shows that Islamic banks face more liquidity risk than conventional

banking sector. Overall liquidity management of conventional banking is better than Islamic

banking.

Credit risk of both banking sectors is depicted by EQTA, EQL and IMLGL. It depicts from

table-8 that EQTA (Common Equity to Total Assets ratio) of Islamic banking sector is 8.938%

while EQTA of conventional banking sector is 10.169% showing that there is not much

difference in conventional and Islamic banks. This ratio also shows that conventional banks

have more capacity to absorb potential expected or unexpected loan asset losses as compared

to conventional banks. But there is much more difference in EQL of conventional banks and

Islamic banks. The EQL of conventional banks are 15.915% when the EQL of Islamic banks

are 15.915% which means that conventional banks are better able absorbing loan losses than

Islamic banks. IMLGL (Impaired Loans to Gross Loans) of Islamic banking sector (3.472%)


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is lower than conventional banking sector (4.114%). This clearly shows that the quality of

assets or loans of Islamic banks is better than conventional banks.

Again in the credit risk performance of both of conventional and Islamic banks are almost

same. But we can conclude that when the conventional banks are better able in absorbing loan

losses, Islamic banks are better able in controlling loan losses.

6.2 Graphical presentation

Figure 9: Profitability

6.2.1Profitability

%0.00

%5.00

%10.00

%15.00

20.00 %

%25.00

%30.00

35.00 %

%40.00

%45.00

ROE COSRROA

Conventional banks

Islamic banks


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6.2.2Liquidity

Figure 10: Liquidity

6.2.3 Credit risk

Figure 11: Credit Risk

%0.00

10.00 %

%20.00

%30.00

%40.00

%50.00

%60.00

70.00 %

%80.00

%90.00

NetLTA NetLD&B

Conventional Banks

Islamic Banks

%0.00

%2.00

%4.00

%6.00

8.00 %

%10.00

%12.00

14.00 %

%16.00

%18.00

EQL IMLGLEQTA

Conventional banks

Islamic banks


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6.3 Individual Bank Performance

Table 10 Conventional Banks

Bank ROA ROE COSR Net LTA Net ld&b EQTA EQL IMLGL

SOUHEAST 1.425% 12.433% 26.644% 63.843% 77.835% 11.384% 17.785% 4.044 %

PREMIRE 1.220% 13.540% 66.440% 61.920% 73.800% 8.930% 14.500% 5.020 %

NCC 1.408% 13.263% 33.725% 64.918% 79.683% 10.498% 16.166% 4.549 %

AB 1.898% 16.415% 37.374% 69.835% 76.101% 10.788% 15.383% 3.154 %

BRAC 0.986% 12.657% 49.140% 57.060% 73.650% 7.467% 13.104% 6.651 %

BANK ASI 1.243% 15.554% 36.621% 66.449% 80.896% 8.451% 12.894% 3.314 %

EASTERN 2.112% 16.384% 35.794% 66.004% 81.413% 12.682% 19.177% 2.667 %

MERCA 1.331% 16.502% 42.817% 63.446% 75.924% 7.996% 12.681% 3.384 % PRIME 1.54% 15.43% 37.26% 64.64% 77.82% 9.79% 15.19% 2.87 %

Standard 1.557% 15.967% 38.123% 65.135% 79.013% 9.730% 14.985% 3.059 %

Mean 1.463% 14.686% 40.646% 64.235% 77.458% 9.776% 15.209% 3.961 %

Table 4 Islamic Banks

Bank ROA ROE COSR Net LTA Net ld&b EQTA EQL IMLGL

IBBL 1.149% 15.263% 38.672% 75.038% 87.004% 7.644% 10.206% 2.991 % SIBL

1.170% 13.000% 39.840% 63.100% 75.160% 9.110% 14.470% 4.380%

EXIM1.706% 15.874% 34.274% 73.782% 86.942% 10.640% 14.446% 2.891 %

Shah Jalal1.547% 19.247% 34.506% 71.385% 83.080% 7.990% 11.263% 3.305 %

Mean1.393% 15.846% 36.823% 70.826% 83.046% 8.846% 12.596% 3.392 %


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Chapter: 7

Conclusion

Financial system of Bangladesh consists of central bank, commercial banks, NBFIs, capital

market, microfinance institutions, and co-operatives and so on. Among contributory

organizations in financial system commercial banks both conventional & Islamic banks are

making significant contribution in the economic development of Bangladesh. To figure out

sustained growth and development performance evaluation study of banks is very important.

This study covers four year period (2011-14) and includes a sample of 10 conventional and 4

Islamic banks to study the comparative performance of both streams of banking. For

performance study I constructed a portfolio of two streams of banking to perform analysis and

document findings in the form of sector wise averages. On the basis of the results I can

conclude that there is no significant difference in the profitability. But conventional banks are

leading in terms of liquidity and the credit risk performance but not with a significant margin.

Islamic banks in Bangladesh have less market share than the conventional banks with

approximately 18%. This little market share than the conventional banks may be the reason for

the lesser profitability and liquidity of Islamic banking than the conventional banks. Shariahcompliance is the only difference of the Islamic banking with the conventional banking which

must be ensured by the practitioners of Islamic banks. This shariah compliance is the unique

selling proposition for this industry and can bring a competitive advantage for the Islamic

banking. Any weakness on this front can jeopardize its very existence. It is recommended to

the uses of this study that size of the both streams of banking must be kept in view while

interpreting results and making decisions on their basis.


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References

Aggarwal, RK. And Yousef, T., (2000). “Islamic Banks and Investment Financing.” Journal of Money, Banking and Credit 32:1

Awan, A., (2009). Comparison of Islamic and Conventional Banking in Pakistan, Proceedings 2ndCBRC, Lahore, Pakistan, November 14, 2009.

BB-Bangladesh Bank (2013) Annual report 2013-14http://www.bangladeshbank.org/pub/annual/anreport/ar1314/index1314.php

BB- Bangladesh Bank Website. http://www.bangladesh bank.org/fnansys/bankfi.phpBangladesh Bank quarterly review July-September2014)http://www.bangladeshbank.org/pub/quaterly/bbquarterly/jul-sep2014/bbquarterly.php

Fayed, M., (2013). Comparative Performance study of Conventional and Islamic Banking in Egypt, Journal of Applied Finance and banking 3:2.

Gul S, Irshad F, Zaman K (2011). Factors Affecting Bank Profitability in Pakistan, Romanian Econ.

J. 14(39):61-87.Haque,S., (2013). The Performance Analysis of Private Conventional Banks: A Case Study InBangladesh, IOSR Journal of Business and Management12:1.

Hanif, M., Tariq, M., Tahir,A., &Momeneen, A., (2012). Comparative Performance Study ofConventional and Islamic Banking in Pakistan, International Journal of Economics and FinanceIssue 83.

Iqbal, M., (2001). Islamic and Conventional Banking in the Nineties: A Comparative Study. Islamic Economic Studies 8: 2.

Jaffar, M., & Manarvi, I.,(2011). Performance Comparison of Islamic and Conventional Banks inPakistan. Global Journal of Management And Business Research 11: 1.


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Paul,S.,Bhowmik,P.,Islam,M.,Kaium,M.,Masud,A.,(2013). Profitability and Liquidity ofConventional Banking and Islamic Banking in Bangladesh: A comparative Study, European journalof Business and Management 5:24.

Rosly, S.A., and Abubakar, M.A.,(2003). Performance of Islamic and mainstream banks inMalaysia. International Journal of Social Economics 30 :12.

Rosly, S.A., and Abubakar, M.A.,(2003). Performance of Islamic and mainstream banks inMalaysia.International Journal of Social Economics 30:12.

Samad, A., (1999). Comparative Efficiency of the Islamic bank Malaysia vis-à-vis ConventionalBanks. Journal of Economics and Management 7:1.

Samad, A. (2004). Performance Of Interest-Free Islamic Banks Vis-À-Vis Interest- Based

Conventional Banks Of Bahrain, IIUM Journal Of Economics And Management 12:2.

Safiullah, M. (2010). Superiority of Conventional Banks & Islamic Banks of Bangladesh:AComparative Study. International Journal of Economics and Finance 2: 3.

Ust Hj Zaharuddin Hj Abd Rahman, Differences between Islamic and Conventional Banks,

Senarai Lengkap Artikel,

http://zaharuddin.net/index.php?option=com_content&task=view&id=297&Itemid=72,

Thursday, 22 February 2007 18:02, 1.

http://zaharuddin.net/senarai-lengkap-artikel.htmlhttp://zaharuddin.net/senarai-lengkap-artikel.htmlhttp://zaharuddin.net/index.php?option=com_content&task=view&id=297&Itemid=72http://zaharuddin.net/index.php?option=com_content&task=view&id=297&Itemid=72http://zaharuddin.net/index.php?option=com_content&task=view&id=297&Itemid=72http://zaharuddin.net/senarai-lengkap-artikel.htmlhttp://zaharuddin.net/senarai-lengkap-artikel.htmlhttp://zaharuddin.net/senarai-lengkap-artikel.html


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Appendix

Appendix 1 ROA:

Conventional Banks:

Islamic Banks:

2011 2012 2013 2014SBL 2.10% 1.21% 0.862% 2.10%

PBL 2.60% 0.68% 0.738% 0.87% NCCBL 2.16% 1.150% 0.92%BAL 3.19% 2.98% 0.900% 0.52%

BBL 1.69% 1.29% 0.300% 0.67%MBL 1.83% 1.73% 0.602% 0.81%

Prime 3.05% 2.17% 1.627% 1.60%EBL 1.64% 1.51% 0.889% 1.30%

Standard 2.35% 1.85% 1.134% 0.83%ABBL 2.06% 1.77% 0.610% 0.33%average 2.28% 1.73% 0.881% 0.99%

2011 2012 2013 2014IBBL 1.152% 1.398% 1.276% 0.991%SIBL 1.171% 1.230% 1.247% 0.964%EXIM 3.057% 1.556% 1.301% 1.050%Shahjalal 2.637% 1.198% 1.276% 0.991%average 2.004% 1.346% 1.275% 0.999%


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Appendix 2 ROE

Conventional Banks:

Islamic Banks:

2011 2012 2013 2014

SBL 16.12% 9.87% 8.334% 15.41%

PBL 28.23% 7.66% 8.441% 9.84%

NCCBL 19.25% 11.940% 8.60%

BAL 24.16% 26.57% 8.581% 6.35%

BBL 19.65% 17.29% 4.709% 8.98%

MBL 27.33% 19.27% 6.481% 9.14%

Prime 20.51% 17.49% 13.871% 13.66%

EBL 19.84% 18.04% 12.471% 15.66%

CBL 20.85% 19.25% 12.883% 8.73%

ABBL 16.21% 11.48% 4.401% 2.69%

average 21.43% 16.62% 9.211% 9.91%

2011 2012 2013 2014

IBBL 19.074% 16.747% 1.400% 1.086%SIBL 15.256% 11.033% 12.586% 9.198%EXIM 27.767% 13.945% 18.074% 11.907 %Shahjalal 30.709% 16.296% 14.431% 11.288 %

average 23.202% 14.505% 11.623% 8.370%


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Appendix 3 COSR

Conventional banks2011 2012 2013 2014

SBL 20.43% 25.50% 29.833% 30.82%PBL 40.12% 81.10% 78.866% 65.65%

NCCBL 27.87% 28.90% 35.355% 36.92%BAL 29.91% 31.42% 42.948% 45.22%BBL 46.93% 51.84% 50.212% 47.57%MBL 36.60% 35.67% 36.459% 37.75%

Prime 31.95% 34.52% 37.517% 39.18%EBL 40.38% 42.75% 46.10% 42.04%Standard 34.93% 34.84% 36.867% 42.39%ABBL 43.88% 46.24% 46.999% 55.32%average 36.13% 44.116% 44.116% 44.29%

Islamic Banks2011 2012 2013 2014

IBBL 38.870% 36.235% 34.357% 46.681 %

SIBL 24.055% 54.249% 34.777% 40.215 %

EXIM 23.865% 38.237% 29.552% 46.569 %

Shahjalal 27.258% 34.646% 34.357% 46.681 %

average 28.512% 40.842% 33.261% 45.037 %


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Appendix 4 Net LTA

Conventional Banks:

2011 2012 2013 2014SBL 67.17% 65.65% 63.562% 59.00%PBL 68.00% 64.00% 60.437% 55.25%

NCCBL 67.97% 59.951% 66.83%BAL 78.20% 67.71% 66.622% 66.80%BBL 62.99% 60.49% 53.519% 51.23%MBL 74.22% 68.45% 62.475% 60.65%Prime 69.60% 67.62% 63.806% 62.99%EBL 73.24% 65.41% 56.475% 58.66%Standard 72.27% 66.89% 63.030% 56.38%ABBL 63.58% 63.87% 59.166% 56.00%average 69.92% 65.81% 60.904% 59.38%

Islamic Banks:

2011 2012 2013 2014IBBL 76.417% 78.168% 63.961% 64.328 %

SIBL 63.116% 61.007% 67.766% 70.863 %EXIM 80.888% 75.610% 69.557% 64.475 %Shahjalal 76.700% 74.806% 63.961% 64.328 %average 74.280% 72.398% 66.311% 65.999 %


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Appendix 5 Net LD&B

Conventional Banks:

Islamic Banks:

2011 2012 2013 2014SBL 82.81% 80.56 76.949% 71.02%PBL 82.84% 76.67% 70.937% 64.75%

NCCBL 82.97% 72.311% 83.77%BAL 77.80% 72.43% 72.158% 82.01%BBL 82.35% 77.40% 67.992% 66.85%MBL 86.15% 84.81% 78.122% 74.50%Prime 89.35% 82.77% 77.077% 76.45%EBL 86.62% 77.14% 65.828% 74.12%Standard 88.15% 80.13% 75.175% 67.85%ABBL 83.58% 87.18% 78.456% 72.24%average 84.41% 80.21% 73.501% 73.36%

2011 2012 2013 2014

IBBL 101.922% 75.637% 76.101% 77.273 %

SIBL 73.389% 73.865% 79.289% 83.456 %EXIM 95.897% 89.126% 80.572% 76.378 %

Shahjalal 88.995% 86.376% 76.101% 77.273 %

average 90.051% 81.251% 78.016% 78.595 %


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Appendix 6 EQTA

Conventional banks:

Islamic Banks:

2011 2012 2013 2014SBL 13.01% 12.26% 10.343% 9.93% 9.93%PBL 9.20% 8.90% 8.746% 8.88%

NCCBL 11.21% 9.633% 10.65%BAL 13.21% 11.21% 10.493% 8.25%BBL 8.59% 7.44% 6.361% 7.48%MBL 6.71% 68.99% 9.285% 8.82%Prime 14.85% 12.41% 11.731% 11.73%EBL 8.25% 8.34% 7.126% 8.27%

Standard 11.25% 9.61% 8.801% 9.51%ABBL 12.73% 15.43% 13.853% 12.33%average 10.87% 10.58% 9.637% 9.59%

2011 2012 2013 2014

IBBL 6.039% 8.348% 8.225% 7.962%SIBL 7.675% 11.146% 9.910% 10.483 %EXIM 11.010% 11.155% 7.200% 8.821%Shahjalal 8.588% 7.349% 8.842% 8.775%average 8.328% 9.500% 29.278% 29.826 %


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Appendix 7 EQL

Conventional banks:

Islamic Banks:

2011 2012 2013 2014

SBL 19.37% 18.67% 16.273% 16.273 %PBL 13.53% 13.91% 14.471% 14.471 %

NCCBL 16.49% 16.068% 16.068 %

BAL 16.89% 16.55% 15.751% 15.751 %

BBL 13.64% 12.30% 11.885% 11.885 %MBL 9.04% 13.13% 14.862% 14.862 %

Prime 21.34% 18.36% 18.385% 18.385 %EBL 11.26% 12.75% 12.617% 12.617 %

CBL 15.57% 14.36% 13.964% 13.964 %

ABBL 20.02% 24.16% 23.413% 23.413 %average 15.63% 16.07% 15.769% 15.769 %

2011 2012 2013 2014IBBL 7.903% 10.679% 11.068% 11.174 %SIBL 12.161% 18.270% 14.624% 14.794 %EXIM 13.612% 14.754% 10.351% 13.681 %

Shahjalal 11.197% 9.824% 13.824% 13.642 %average 11.218% 13.382% 45.330% 45.982 %


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Appendix 9 CV

Conventional Banks:

ROA ROE COSR NETLTA NETLD&B EQT EQL IMLGL

SBL 36.839% 31.436% 17.810% 5.566% 6.611% 13.047% 8.283% 10.376%PBL 75.216% 72.622% 28.328% 8.744% 10.501% 2.134% 7.744% 13.211%

NCCBL 46.850% 41.060% 12.615% 6.684% 8.027% 7.612% 1.789% 35.870%BAL 72.748% 63.473% 20.942% 8.014% 6.200% 18.993% 13.544% 26.516%

BBL 62.852% 55.308% 4.672% 9.783% 10.162% 12.202% 9.501% 9.281%MBL 50.654% 61.658% 2.342% 9.270% 6.827% 13.911% 20.753% 42.289%Prime 32.009% 19.934% 8.956% 4.743% 7.381% 11.682% 7.547% 31.263%

EBL 24.541% 19.306% 5.610% 11.912% 11.306% 7.272% 9.149% 41.937%CBL 44.570% 36.550% 9.524% 10.342% 10.960% 10.584% 8.642% 66.676%

ABBL 71.261% 72.317% 10.370% 6.227% 8.080% 10.219% 8.128% 38.703%average 51.754% 47.367% 12.117% 8.128% 8.605% 10.766% 9.508% 31.612%

Islamic banks

ROA ROE COSR NETLTA NETLD&B EQT EQL IMLGLIBBL 17.076% 21.740% 9.244% 3.966% 12.635% 14.152% 15.187% 31.777%SIBL 10.707% 98.495% 33.481% 2.356% 2.449% 93.910% 93.198% 20.011%EXIM 54.663% 51.506% 21.281% 7.768% 8.286% 5.316% 3.881% 44.295%Shahjalal 47.479% 41.926% 24.964% 7.717% 6.846% 10.430% 15.166% 65.532%

average 32.481% 53.417% 22.243% 5.452% 7.554% 30.952% 31.858% 40.404%


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“Financial Statement Analysis and Performance Evaluation of Banks a Comparative Study Between...

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