INTERNSHIP REPORT

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 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: 03288
Major in Finance and Banking
Faculty of Business Administration and Management
Patuakhali Science and Technology University
Dumki, Patuakhali-8602

Submitted to
Supervisor
Md. Nur Nabi
Assistant Professor
Department of Finance and Banking
Faculty of Business Administration and Management
Patuakhali Science and Technology University
Dumki, Patuakhali-8602

And
Co- Supervisor
Kumar Debasis Dutta
Assistant Professor
Department of Finance and Banking
Faculty of Business Administration and Management
Patuakhali Science and Technology University
Dumki, Patuakhali-8602

Date of Submission: ..April, 2016

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 great
opportunity 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)

Letter of Transmittal
Date: -------------------------------To
Md. Nur Nabi
Assistant Professor and Chairman,
Department of Finance and Banking
Faculty of Business Administration and Management
Patuakhali Science and Technology University
Dumki, 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 of
the completion of the BBA program .For preparing this report I tried my level best to
accumulate 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 experience

regarding Inflation rate, interest rate, remittance and exchange rate. I hope that this report will
meet the standards of your judgments.

Faithfully Yours,

Arifur Rahman
Roll No: 1103050; Reg. No: 03288
BBA Program
Faculty of Business Administration and Management
Patuakhali Science and Technology University
Dumki, Patuakhali-8602

Acknowledgement
At first, I would like to express my gratitude to almighty Allah for enabling me the strength
and 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 in
every phase of our lives.
I am grateful to my parents without whom I cannot be here. They were beside me in every
single situation and are still with me. Without the support of my parents, I could not be able to
achieve 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 ways
throughout the time required to prepare this report. Finally, I am deeply grateful to all
concerned persons who provide valuable guidance, suggestions and advices in collecting
information, analyzing and preparing the report successfully.

Arifur Rahman
Roll No: 1103050; Reg. No: 03288
BBA Program
Faculty of Business Administration and Management
Patuakhali Science and Technology University
Dumki, Patuakhali-8602

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 Business
Administration 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 Rahman
Roll No: 1103050; Reg. No: 03288
BBA Program
Faculty of Business Administration and Management
Patuakhali Science and Technology University
Dumki, Patuakhali-8602

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 of
Business Administration (BBA), major in Finance and Banking from Patuakhali Science and
Technology University carried out by Arifur Rahman, Roll No-1103050, Reg No-03288 under
my supervision. Under my guidance and supervision this report is being carried out
successfully. 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

Table of Contents
SL
No.

Particulars

Preface
Letter of Transmittal
Acknowledgement
Declaration
Supervisors Certificate
Certificate of Bank
List of Tables
List Figures
List of Acronyms

Page
No.
I
II
III
IV
V
VI
IX
IX
XXIII

Chapter-01(Introduction)

1.
1.2
2.1
2.2
2.3

Abstract
Keywords
Introduction
Objectives of the Study
Limitations
Chapter-02: Methodology of the study
Sample of Conventional and Islamic Banks
Data source
Performance measures
2.2.1 Profitability Performance

1
1
2
3
3

2.2.2 Liquidity Performance

2.2.3 Credit Risk performance

6
7

4
5
5
5

Chapter-03: Literature Review

8-11

Literature Review
Chapter-04 : Conceptual Discussion
4.1

Islamic Banking and Conventional Banking

12

4.2

Comparison between Islamic bank and conventional bank (Table 2)

Chapter-5 Empirical Results and Analysis
5. A.1 Profitability Performance

13
14-16

5. A.2. Liquidity Performance

17-18

5. A. 3. Credit risk performance

19-21

Overall performance

22

5.A

5.
B.
8

6.1
6.2

6.3

Chapter-6 : Data Analysis and Findings

Comparative analysis and Findings
Graphical presentation
6.2.1 Profitability
6.2.2Liquidity
6.2.3 Credit risk
6.3 Individual Bank Performance
Chapter-7: Conclusion

23-24
24
24
25
25
26

Conclusion

27

References

28-30

Appendix

30

List of Tables
Table 1:
Table 2:
Table 3:
Table 4:
Table 5:
Table 6:
Table 7:
Table 8:
Table 9:
Table 10:
Table 11:
Table 12

1Sample of Conventional and Islamic Banks

Banks which is demonstrated bellow in the
ROA of conventional and Islamic banks
ROE of conventional and Islamic banks
COSR of conventional and Islamic banks
Net LTA of conventional and Islamic banks
Net LD & B of conventional and Islamic banks
EQTA of conventional and Islamic banks
EQL of conventional and Islamic banks
EQL of conventional and Islamic banks
Financial Performance of Islamic Vs Conventional Banking

04
13
14
15
16
17
18
19
20
21
22

List of Figures
Figure 1:
Figure 2:

ROA of conventional and Islamic banks

ROE of conventional and Islamic banks

14
15

Figure 3:
Figure 4:
Figure 5:
Figure 6:
Figure 7:
Figure 8:
Figure 9:
Figure 10:

COSR of conventional and Islamic banks

Net LTA of conventional and Islamic banks
Net LD&B of conventional and Islamic banks
EQTA of conventional and Islamic banks
EQL of conventional and Islamic banks
IMLGL of Conventional and Islamic banks
Profitability
Credit risk

16
17
18
19
20
21
23
25

10

Acronyms
SBL
NCC Bank
ROA
ROE
COSR
Net LTA
Net LD&B
EQTA
EQL
IMLGL
IBS
BB
BBA
%
WWW

11

:
:
:
:
:
:
:
:
:
:
:
:
:
:
:

Southeast Bank Ltd.

National Credit and Commerce Bank Ltd
Return on Assets
Return on Equity
Cost to Income Ratio
Net Loans to Asset Ratio
Net Loans to Deposit and Borrowing
Equity to Asset ratio
Equity to Net Loan ratio
Total Impaired Loans to Gross Loan ratio
Islamic banking scheme
Bangladesh Bank
Bachelor of Business Administration
Percentage
World-wide web

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 of
liquidity 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.

12

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 enterprises
or 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 the
first Islamic bank Islami Bank Bangladesh Limited. The innovation of interest-free banking
systems proved its worth in the countrys 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
13

the conventional Shariah products but also investing in the SMEs, 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

14

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
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.

2.2 Data source

15

Islamic Banks
Islami Bank Bangladesh Ltd.
Social Islami Bank Ltd.
EXIM bank Ltd
Shahjalal Islami Bank Ltd.

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--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. This
study uses the following basic three. They are:
Return on Assets (ROA) = net profit/total assets. . (1)
ROA is a good indicator of a banks 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)

22
Samad,

Abdus (2004), Performance of Interest-free Islamic banks vis--vis Interest-based Conventional

Banks of Bahrain. IIUM Journal of Economics and Management 12, no.2: 1-15.

16

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, the
less 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 the
LDBR, the higher is the liquidity risk. (Samad, 2004)

2.2.3 Credit Risk performance

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

17

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 borrowers 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)

18

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 by
different 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 Bahrains interest free Islamic banks and interest
based conventional banks during the post-Gulf War period. He examined banks performance
in three dimensions (a) profitability (b) liquidity (c) credit risk. Nine financial ratios were used
in this study. He applied students t-test in measuring the performance of Bahrains 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.

19

Jaffar and Manarvi (2011) examined and compared the performance of Islamic and
conventional banks operating inside Pakistan during 2005 to 2009 by applying CAMEL test.
A sample of 5 Islamic banks and 5 Conventional banks were selected to measure and compare
their performance. CAMEL test is a standard test to check the health of financial institutions
and to determine the performance of banks. Different ratios were used to evaluate each element
of CAMEL. The study found that Islamic banks performed better in possessing adequate capital
and better liquidity position while conventional banks pioneered in management quality and
earning ability. Asset quality for both streams of banking was almost the same; conventional
banks recorded slightly smaller loan loss ratio showing improved loan recovery policy
whereas, UNCOL ratio analysis showed a nominal better performance for Islamic banks.

Sujan, et al. (2013) studied the performance of 5 conventional and 5 Islamic banks of
Bangladesh from period 2008-2012 on banks profitability and liquidity. T-test and F-test have
been used in determining the significance of the differential performance of the two groups of
bank. The study found difference on the profitability. Along with ROA, ROE, EPS, P/E ratio
they also studied profit per employees and profit per branch of the selected banks. But they
found no significant difference in the liquidity position of the banks.

Safiullah (2010) emphasized on the financial performance analysis of both streams of banks to
measure superiority. The study indicated that financial performance (business developments,
profitability, liquidity and solvency, commitment to economy and community, efficiency and
productivity) of both streams of banks is notable. Study results, based on commitment to
economy & community, productivity and efficiency, and signified that interest-based
conventional banks were doing better than interest-free Islamic banks. But performance of
interest-free Islamic banks in business development, profitability, liquidity and solvency was
superior to that of interest-based conventional banks. That is, comparatively Islamic banks
were superior in financial performance to that of interest-based conventional banks.
Fayed (2013) analyzed the performance of Islamic and conventional banks of Egypt. He
selected 3 Islamic banks and 6 conventional banks. Data were analyzed from period 2008-2010
and data were collected from banks published statements. He used seven ratios two profitability
two liquidity and two credit risk ratios. And a model known as Bank-o-meter was used to
20

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
21

statistical point of view. Therefore, it can be safely assumed that the results derived from this
sample were representative of the "Islamic banking industry". For comparative purposes,
another sample of twelve conventional banks was chosen. These banks were chosen from
exactly the same countries from where Islamic banks were chosen. An attempt was also made
to choose banks roughly of the same size as the Islamic banks. Several hypotheses and common
perceptions about the practice of Islamic banking have been tested. The performance of Islamic
banks has been evaluated using both trend and ratio analyses. For this purpose, some objective
benchmarks for various ratios have been developed for the first time. The performance of
Islamic banks has also been compared with a control group of conventional banks. It was
found that, in general, Islamic banks have done fairly well during the period under study.
Islamic banking is interest free banking; making it compulsory to take active part in business
profit and loss sharing. Islamic banks prefer to take less risk. Sheikh & Ali (2009) in their
paper analyzed the risk management procedures of Islamic banking by giving differential
analysis of risk management based on unique characteristics. This paper has used ROE as a
bench mark. A sample of two Islamic banks and two conventional banks was taken.

22

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 interest5. 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

Quran, chapter 3,verse 130

Quran, chapter 2, verse 275
6
Bible, Deuteronomy chapter 23, verse 19
5

23

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
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 of

interest.

2. In contrast, it promotes risk sharing between provider of

capital (investor) and the user of funds (entrepreneur).

3. It aims at maximizing profit without any restriction.

4. It does not deal with Zakat.

3. It also aims at maximizing profit but subject to Shariah

restrictions.
4. In the modern Islamic banking system, it has become one
of 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 with

compounding interest is the fundamental function of
the conventional banks.

5. Participation in partnership business is the fundamental

function of the Islamic banks. So we have to understand our
customers business very well.

6. It can charge additional money (penalty and

compounded interest) in case of defaulters.

6. The Islamic banks have no provision to charge any extra

money from the defaulters. Only small amount of
compensation and these proceeds is given to charity.
Rebates are given for early settlement at the Banks
discretion.

7. In it very often, banks own interest becomes

prominent. It makes no effort to ensure growth with
equity.
8. For interest-based commercial banks, borrowing
from the money market is relatively easier.

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

aim is to ensure growth with equity.

9. Since income from the advances is fixed, it gives

little importance to developing expertise in project
appraisal and evaluations.

9. Since it shares profit and loss, the Islamic banks pay

greater attention to developing project appraisal and
evaluations.

10. The conventional banks give greater emphasis on

credit-worthiness of the clients.

10. The Islamic banks, on the other hand, give greater

emphasis on the viability of the projects.

11. The status of a conventional bank, in relation to

its clients, is that of creditor and debtors.

11. The status of Islamic bank in relation to its clients is that

of partners, investors and trader, buyer and seller.

Islamic Bank

8. For the Islamic banks, it must be based on a Shariah

approved underlying Transaction.

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.

24

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 each
of the selected ratios. And subsection two shows comparative mean performance
analysis for every KPIs 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)
Conventional banks

2011

2012

2013

2014

Mean

CV

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:

2.50 %
2.00 %
1.50 %
Conventional banks
1.00 %

Islamic banks

0.50 %
0.00 %
2011

2012

2013

2014

Figure 1 ROA of conventional and Islamic banks

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

25

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 on
Equity(ROE)
Conventional banks

2011

2012

2013

2014

Mean

CV

21.430%

16.620%

9.211%

9.910%

14.293%

47.367%

Islamic banks

23.202%

14.505%

11.623%

8.370%

14.425%

53.417%

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

25.00 %
20.00 %
15.00 %
Conventional banks
10.00 %

Islamic banks

5.00 %
0.00 %
2011

2012

2013

2014

Figure 2 ROE of conventional and Islamic banks

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.

26

III. Cost to Income ratio (COSR)

COSR is calculated using the equation3 based on the data [see appendix 3].The calculated
results are given below in table [5]
Table [5] COSR of conventional and Islamic banks
Cost to Income ratio
(COSR)
Conventional banks

2011

2012

2013

2014

Mean

CV

36.130%

41.280%

44.116%

44.290%

41.454%

12.117%

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:
50.00 %
45.00 %
40.00 %
35.00 %
30.00 %
25.00 %
20.00 %
15.00 %
10.00 %
5.00 %
0.00 %

Conventional banks
Islamic banks

2011

2012

2013

2014

Figure 3 COSR of conventional and Islamic banks

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.

27

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 calculated
results are given below in table [6]
Table [6] Net LTA of conventional and Islamic banks

Net Loan to Asset 2011

ratio (Net LTA)
Conventional banks
69.920%

2012

2013

2014

Mean

CV

65.810%

60.904%

59.380%

64.004%

8.128%

Islamic banks

72.398%

66.311%

65.999%

69.747%

5.452%

74.280%

[Own calculation]
Also the calculated results are shown in graph in the following:
80.00 %
70.00 %
60.00 %
50.00 %
40.00 %
30.00 %
20.00 %
10.00 %
0.00 %

conventionalbanks
Islamic banks

2011

2012

2013

2014

Figure 4 Net LTA of conventional and Islamic banks

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.

28

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 calculated
results are given below in table [7]
Table [7] Net LD & B of conventional and Islamic banks
Net Loans to Deposit
& Borrowing
(Net LD&B)
Conventional banks

2011

2012

2013

2014

Mean

CV

84.410%

80.210%

73.501%

73.360%

77.870%

8.605%

Islamic banks

90.051%

81.251%

78.016%

78.595%

81.978%

7.554%

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

100.00 %
90.00 %
80.00 %
70.00 %
60.00 %
50.00 %
40.00 %
30.00 %
20.00 %
10.00 %
0.00 %

Conventional banks
Islamic banks

2011

2012

2013

2014

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

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%.

29

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 calculated
results are given below in table [8]
Table [8] EQTAof conventional and Islamic banks

Equity to Asset ratio

(EQTA)
Conventional banks

2011

2012

2013

2014

Mean

CV

10.870%

10.580%

9.637%

9.590%

10.169%

10.766%

Islamic banks

8.328%

9.500%

8.54%

9.01%

8.938%

12.952%

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

12.00 %
10.00 %
8.00 %
6.00 %

Conventional banks

4.00 %

Islamic banks

2.00 %
0.00 %
2011

2012

2013

2014

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%).

30

II. Equity to Loan ratio (EQL)

EQL is calculated using the equation7 based on the data [see appendix 7].The
calculated results are given below in table [9]
Table [9] EQL of conventional and Islamic banks

Equity to Loan ratio

(EQL)
Conventional banks

2011

2012

2013

2014

Mean

CV

15.630%

16.070%

15.769%

16.190%

15.915%

9.508%

Islamic banks

11.218%

13.382%

12.470%

13.320%

12.598%

15.858%

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

18.00 %
16.00 %
14.00 %
12.00 %
10.00 %
8.00 %
6.00 %
4.00 %
2.00 %
0.00 %

Conventional banks
Islamic banks

2011

2012

2013

2014

Figure 7 EQL of conventional and Islamic banks

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%.

31

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 gross 2011
loans (IMLGL)

2012

2013

2014

Mean

CV

Conventional banks

3.160%

3.120%

4.955%

5.220%

4.114%

31.612%

Islamic banks

2.855%

2.313%

3.503%

5.218%

3.472%

40.404%

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

6.00 %
5.00 %
4.00 %
3.00 %

Conventional banks

2.00 %

Islamic banks

1.00 %
0.00 %
2011

2012

2013

2014

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.

32

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

Mean
1.470%
14.293%
41.454%

CV

Mean
1.406%
14.425%
36.913%

CV

Conventional
banks
are
dominating on ROA and ROE
and Islamic
banks are
dominating in COSR

Mean
64.004%
77.870%

CV

Mean
69.747%
81.978%

CV

Mean
10.169%
15.915%
4.114%

CV

Mean
8.938%
15.915%
3.472%

CV

Profitability
ROA
ROE
COSR

51.754%
47.367%
12.117%

32.481%
53.417%
22.243%

Liquidity
Net LTA
Net LD&B

8.128%
8.605%

5.452%
7.554%

Conventional banks are

dominating

Credit Risk
EQTA
EQL
IMLGL

33

10.766%
9.508%
31.612%

12.952%
15.858%
40.404%

Conventional
banks
dominating in credit
management.

are
risk

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 banking
sector 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%)
34

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

6.2.1Profitability
45.00 %
40.00 %
35.00 %
30.00 %
25.00 %
Conventional banks

20.00 %

Islamic banks

15.00 %
10.00 %
5.00 %
0.00 %
ROA

ROE

COSR

Figure 9: Profitability

35

6.2.2Liquidity

90.00 %
80.00 %
70.00 %
60.00 %
50.00 %
Conventional Banks

40.00 %

Islamic Banks

30.00 %
20.00 %
10.00 %
0.00 %
NetLTA

NetLD&B

Figure 10: Liquidity

6.2.3 Credit risk

18.00 %
16.00 %
14.00 %
12.00 %
10.00 %
Conventional banks

8.00 %

Islamic banks

6.00 %
4.00 %
2.00 %
0.00 %
EQTA

EQL

IMLGL

Figure 11: Credit Risk

36

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
IBBL
SIBL
EXIM
Shah Jalal
Mean

37

ROA

ROE

COSR

Net LTA Net ld&b EQTA

EQL

IMLGL

1.149%

15.263%

38.672%

75.038%

87.004%

7.644%

10.206%

2.991 %

1.170%

13.000%

39.840%

63.100%

75.160%

9.110%

14.470%

4.380%

1.706%

15.874%

34.274%

73.782%

86.942%

10.640%

14.446%

2.891 %

1.547%

19.247%

34.506%

71.385%

83.080%

7.990%

11.263%

3.305 %

1.393%

15.846%

36.823%

70.826%

83.046%

8.846%

12.596%

3.392 %

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. Shariah
compliance 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.

38

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Money, Banking and Credit 32:1
Awan, A., (2009). Comparison of Islamic and Conventional Banking in Pakistan, Proceedings 2nd
CBRC, Lahore, Pakistan, November 14, 2009.

BB-Bangladesh Bank (2013) Annual report 2013-14

http://www.bangladeshbank.org/pub/annual/anreport/ar1314/index1314.php
BB- Bangladesh Bank Website. http://www.bangladesh bank.org/fnansys/bankfi.php
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2014)http://www.bangladeshbank.org/pub/quaterly/bbquarterly/jul-sep2014/bbquarterly.php
Fayed, M., (2013). Comparative Performance study of Conventional and Islamic Banking in Egypt,
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Conventional and Islamic Banking in Pakistan, International Journal of Economics and Finance
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Iqbal, M., (2001). Islamic and Conventional Banking in the Nineties: A Comparative Study. Islamic
Economic Studies 8: 2.
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Paul,S.,Bhowmik,P.,Islam,M.,Kaium,M.,Masud,A.,(2013). Profitability and Liquidity of

Conventional Banking and Islamic Banking in Bangladesh: A comparative Study, European journal
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Rosly, S.A., and Abubakar, M.A.,(2003). Performance of Islamic and mainstream banks in
Malaysia. International Journal of Social Economics 30 :12.
Rosly, S.A., and Abubakar, M.A.,(2003). Performance of Islamic and mainstream banks in
Malaysia.International Journal of Social Economics 30:12.
Samad, A., (1999). Comparative Efficiency of the Islamic bank Malaysia vis--vis Conventional
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Samad, A. (2004). Performance Of Interest-Free Islamic Banks Vis--Vis Interest- Based
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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.

40

Appendix
Appendix 1 ROA:
Conventional Banks:

SBL
PBL
NCCBL
BAL
BBL
MBL
Prime
EBL
Standard
ABBL
average

2011
2.10%
2.60%
3.19%
1.69%
1.83%
3.05%
1.64%
2.35%
2.06%
2.28%

2012
1.21%
0.68%
2.16%
2.98%
1.29%
1.73%
2.17%
1.51%
1.85%
1.77%
1.73%

2013
0.862%
0.738%
1.150%
0.900%
0.300%
0.602%
1.627%
0.889%
1.134%
0.610%
0.881%

2014
2.10%
0.87%
0.92%
0.52%
0.67%
0.81%
1.60%
1.30%
0.83%
0.33%
0.99%

2013
1.276%
1.247%
1.301%
1.276%
1.275%

2014
0.991%
0.964%
1.050%
0.991%
0.999%

Islamic Banks:
IBBL
SIBL
EXIM
Shahjalal
average

2011
1.152%
1.171%
3.057%
2.637%
2.004%

2012
1.398%
1.230%
1.556%
1.198%
1.346%

41

Appendix 2 ROE
Conventional Banks:

SBL
PBL
NCCBL
BAL
BBL
MBL
Prime
EBL
CBL
ABBL
average

2011
16.12%
28.23%
24.16%
19.65%
27.33%
20.51%
19.84%
20.85%
16.21%
21.43%

2012
9.87%
7.66%
19.25%
26.57%
17.29%
19.27%
17.49%
18.04%
19.25%
11.48%
16.62%

2013
8.334%
8.441%
11.940%
8.581%
4.709%
6.481%
13.871%
12.471%
12.883%
4.401%
9.211%

2014
15.41%
9.84%
8.60%
6.35%
8.98%
9.14%
13.66%
15.66%
8.73%
2.69%
9.91%

2011
19.074%
15.256%
27.767%
30.709%
23.202%

2012
16.747%
11.033%
13.945%
16.296%
14.505%

2013
1.400%
12.586%
18.074%
14.431%
11.623%

2014
1.086%
9.198%
11.907 %
11.288 %
8.370%

Islamic Banks:
IBBL
SIBL
EXIM
Shahjalal
average

42

Appendix 3 COSR
Conventional banks
2011
20.43%
40.12%
27.87%
29.91%
46.93%
36.60%
31.95%
40.38%
34.93%
43.88%
36.13%

2012
25.50%
81.10%
28.90%
31.42%
51.84%
35.67%
34.52%
42.75%
34.84%
46.24%
44.116%

2013
29.833%
78.866%
35.355%
42.948%
50.212%
36.459%
37.517%
46.10%
36.867%
46.999%
44.116%

2011

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 %

SBL
PBL
NCCBL
BAL
BBL
MBL
Prime
EBL
Standard
ABBL
average

2014
30.82%
65.65%
36.92%
45.22%
47.57%
37.75%
39.18%
42.04%
42.39%
55.32%
44.29%

Islamic Banks

43

Appendix 4 Net LTA

Conventional Banks:

SBL
PBL
NCCBL
BAL
BBL
MBL
Prime
EBL
Standard
ABBL
average

2011
67.17%
68.00%
78.20%
62.99%
74.22%
69.60%
73.24%
72.27%
63.58%
69.92%

2012
65.65%
64.00%
67.97%
67.71%
60.49%
68.45%
67.62%
65.41%
66.89%
63.87%
65.81%

2013
63.562%
60.437%
59.951%
66.622%
53.519%
62.475%
63.806%
56.475%
63.030%
59.166%
60.904%

2014
59.00%
55.25%
66.83%
66.80%
51.23%
60.65%
62.99%
58.66%
56.38%
56.00%
59.38%

Islamic Banks:

IBBL
SIBL
EXIM
Shahjalal
average

2011
76.417%
63.116%
80.888%
76.700%
74.280%

2012
78.168%
61.007%
75.610%
74.806%
72.398%

2013
63.961%
67.766%
69.557%
63.961%
66.311%

2014
64.328 %
70.863 %
64.475 %
64.328 %
65.999 %

44

Appendix 5 Net LD&B

Conventional Banks:

SBL
PBL
NCCBL
BAL
BBL
MBL
Prime
EBL
Standard
ABBL
average

2011
82.81%
82.84%
77.80%
82.35%
86.15%
89.35%
86.62%
88.15%
83.58%
84.41%

2012
80.56
76.67%
82.97%
72.43%
77.40%
84.81%
82.77%
77.14%
80.13%
87.18%
80.21%

2013
76.949%
70.937%
72.311%
72.158%
67.992%
78.122%
77.077%
65.828%
75.175%
78.456%
73.501%

2014
71.02%
64.75%
83.77%
82.01%
66.85%
74.50%
76.45%
74.12%
67.85%
72.24%
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 %

Islamic Banks:

45

2011
13.01%
9.20%

SBL
PBL
NCCBL
BAL
13.21%
BBL
8.59%
MBL
6.71%
Prime
14.85%
EBL
8.25%
Standard
11.25%
ABBL
12.73%
average
10.87%
Appendix 6 EQTA

2012
12.26%
8.90%
11.21%
11.21%
7.44%
68.99%
12.41%
8.34%
9.61%
15.43%
10.58%

2013
10.343% 9.93%
8.746%
9.633%
10.493%
6.361%
9.285%
11.731%
7.126%
8.801%
13.853%
9.637%

2014
9.93%
8.88%
10.65%
8.25%
7.48%
8.82%
11.73%
8.27%
9.51%
12.33%
9.59%

Conventional banks:
Islamic Banks:

IBBL
SIBL
EXIM
Shahjalal
average

2011
6.039%
7.675%
11.010%
8.588%
8.328%

2012
8.348%
11.146%
11.155%
7.349%
9.500%

2013
8.225%
9.910%
7.200%
8.842%
29.278%

2014
7.962%
10.483 %
8.821%
8.775%
29.826 %

46

Appendix 7 EQL
Conventional banks:

SBL
PBL
NCCBL
BAL
BBL
MBL
Prime
EBL
CBL
ABBL
average

2011
19.37%
13.53%
16.89%
13.64%
9.04%
21.34%
11.26%
15.57%
20.02%
15.63%

2012
18.67%
13.91%
16.49%
16.55%
12.30%
13.13%
18.36%
12.75%
14.36%
24.16%
16.07%

2013
16.273%
14.471%
16.068%
15.751%
11.885%
14.862%
18.385%
12.617%
13.964%
23.413%
15.769%

2014
16.273 %
14.471 %
16.068 %
15.751 %
11.885 %
14.862 %
18.385 %
12.617 %
13.964 %
23.413 %
15.769 %

Islamic Banks:

IBBL
SIBL
EXIM
Shahjalal
average

2011
7.903%
12.161%
13.612%
11.197%
11.218%

2012
10.679%
18.270%
14.754%
9.824%
13.382%

2013
11.068%
14.624%
10.351%
13.824%
45.330%

2014
11.174 %
14.794 %
13.681 %
13.642 %
45.982 %

47

Appendix 8 IMLGL:
Conventional Banks:

SBL
PBL
NCCBL
BAL
BBL
MBL
Prime
EBL
CBL
ABBL
average

2011
4.26%
4.66%
2.16%
6.19%
1.80%
1.99%
1.79%
1.18%
4.42%
3.16%

2012
3.51%
4.28%
2.67%
2.86%
6.14%
2.45%
1.93%
2.61%
1.37%
3.44%
3.12%

2013
4.469%
5.388%
5.465%
4.119%
6.830%
4.432%
3.169%
4.370%
3.834%
7.477%
4.955%

2014
3.94%
5.73%
5.52%
3.47%
7.45%
4.58%
3.58%
4.77%
5.09%
8.07%
5.22%

Islamic Banks:

IBBL
SIBL
EXIM
Shahjalal
average

2011
2.711%
4.812%
1.989%
1.909%
2.855%

2012
1.769%
3.964%
1.631%
1.889%
2.313%

2013
3.392%
4.273%
2.955%
3.392%
3.503%

2014
5.367%
3.671%
6.467%
5.367%
5.218%

48

Appendix 9 CV
Conventional Banks:
ROA
SBL
36.839%
PBL
75.216%
NCCBL 46.850%
BAL
72.748%
BBL
62.852%
MBL
50.654%
Prime
32.009%
EBL
24.541%
CBL
44.570%
ABBL 71.261%
average 51.754%

ROE
31.436%
72.622%
41.060%
63.473%
55.308%
61.658%
19.934%
19.306%
36.550%
72.317%
47.367%

COSR
17.810%
28.328%
12.615%
20.942%
4.672%
2.342%
8.956%
5.610%
9.524%
10.370%
12.117%

NETLTA
5.566%
8.744%
6.684%
8.014%
9.783%
9.270%
4.743%
11.912%
10.342%
6.227%
8.128%

NETLD&B
6.611%
10.501%
8.027%
6.200%
10.162%
6.827%
7.381%
11.306%
10.960%
8.080%
8.605%

EQT
13.047%
2.134%
7.612%
18.993%
12.202%
13.911%
11.682%
7.272%
10.584%
10.219%
10.766%

EQL
8.283%
7.744%
1.789%
13.544%
9.501%
20.753%
7.547%
9.149%
8.642%
8.128%
9.508%

IMLGL
10.376%
13.211%
35.870%
26.516%
9.281%
42.289%
31.263%
41.937%
66.676%
38.703%
31.612%

ROE
21.740%
98.495%
51.506%
41.926%
53.417%

COSR
9.244%
33.481%
21.281%
24.964%
22.243%

NETLTA
3.966%
2.356%
7.768%
7.717%
5.452%

NETLD&B
12.635%
2.449%
8.286%
6.846%
7.554%

EQT
14.152%
93.910%
5.316%
10.430%
30.952%

EQL
15.187%
93.198%
3.881%
15.166%
31.858%

IMLGL
31.777%
20.011%
44.295%
65.532%
40.404%

Islamic banks
ROA
IBBL
17.076%
SIBL
10.707%
EXIM
54.663%
Shahjalal 47.479%
average 32.481%

49

50