A COMPARATIVE STUDY ON THE PROFITABILITY OF BANGLADESHI ISLAMIC BANKS
Abstract
Islamic banking was founded upon Sariah principles. It operates with the objective of not only prohibiting Reba or interest but also accelerating economic activities across the countries. To contribute to the economy of a country, sustainability in the operation of any institution is a prerequisite. In this empirical study, the sustainability of the operations of Islamic Banks in Bangladesh is explored through analyzing their profitability. Based on the published audited annual report of the Islamic banks in Bangladesh, the profitability has been determined. In this study, 42 annual reports of seven Islami Banks have been considered to address their profitability. It is found that all the banks are doing well as their ROA, ROE, Net Profit Margin, and EPS trend line is going upward. It also indicates that the scope of Islamic Banks in Bangladesh is also bright in the future. From analyzing various ratios, it is found that other than ICB Islamic Bank all Islamic bank's profitability ratios are going upward, and their net profit margin lies between 10% to 25%. These findings will induce the investors to invest more in Islamic Banks. Moreover, the government and the regulatory bodies can shape their tax and governance policies based on these findings.
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