Islamic Banks vs. Commercial Banks

A Study on Islamic Banks vs.
Commercial Banks
(Comparative Financial Analysis)
By
M. Mujtaba Hussain Malik 5270-FMS/MBA/F11

Muhammad Waqas Afzal
5263-FMS/MBA/F11
A project report submitted to the Department of Business Administration

(Accounts and finance), faculty of Management Sciences, International Islamic
University Islamabad, in partial fulfillment of the requirement for the degree of
MASTERS OF BUSINESS ADMINISTRATION
(FINANCE)
Department of Business Administration(Accounts and finance)

Faculty of Management Sciences
International Islamic University Islamabad

A Study on Islamic Banks vs. Commercial Banks
(Comparative Financial Analysis)
By
M. Mujtaba Hussain Malik 5270-FMS/MBA/F11
Muhammad Waqas Afzal
5263-FMS/MBA/F11
MASTERS OF BUSINESS ADMINISTRATION

(FINANCE)
Submitted To
Sir.Waqas Ahmad
Lecturer
Department of Business Administration (Accounts and finance)

June 2014
Copyright 2013 by Mr. Mujtaba Hussain& Mr. Waqas Afzal.

All rights are reserved. No part of this Research Paper can be reproduced in any
form or any means such as photocopy or electronic media etc. without prior
approval of authors.
Supervisors Certificate
This is certified that Mr. M. Mujtaba Hussain Malik 5270-FMS/MBA/F11 and
Mr. Muhammad Waqas Afzal 5263-FMS/MBA/F11 of MBA-26 have completed
their project report entitled A Study on Islamic Banks vs. Commercial Banks
under my supervision. I have checked this report and found it bonafide work of
authors.
__________________
Waqas Ahmad
SUPERVISOR
Lecturer
______________________
Dr. Zulfiqar Ali Shah
Head, Department of Accounting & Finance
ACKNOWLEDGEMENTS
We bow our heads in deep gratitude before ALLAH Almighty for
Blessing us with the wisdom and the capability and granting us the strength to
accomplish this project. We are extremely grateful to our beloved teacher &
parents for catering to all our needs, affording every facility, consoling us when
we were fatigued, inspiring us when we started feeling that the project was getting
beyond our grasp and praying day in and day out for our success.
Table of contents
1. INTRODUCTION___________________________________________01
1.1. Executive summary01
1.2. Banking History..02
1.2.1. Kinds of Modern Banks..........03
1.2.2. International Monetary Fund....05
1.3. Islamic banking......................06
1.4. Islamic banking in Pakistan......07
1.5. Products Offered By Islamic Banks08
1.6. Objectives of the study..12
1.7. Methodology...13
2. OVERVIEW_______________________________________________14
2.1. Business Size...14
2.2. Analysis of Growth patter.15
2.2.1. Total Assets And Growth In Total Assets..16
2.2.2. Equity And Growth In Equity....18
2.2.3. Deposits And Growth In Deposits.....20
2.2.4. Advances And Growth In Advances.22
2.2.5. Revenues And Growth In Revenues.24
3. RATIS ANALYSIS
26
3.1.1. Return On Equity...26

3.1.2. Return On Asset 28
3.1.3. Deposits to total asset ratio....30
3.1.4. Deposits to Equity.....32
3.1.5. Capital ratio...34
3.1.6. Earnings per share.35
3.1.7. Loan deposit ratio..37

4. RISK ANALYSIS_____________________________________________39
5. CONCLUSION_______________________________________________42
Conclusions42
5.1. Limitations.42
5.2. Recommendations.43
6. REFERENCES______________________________________________ 45
List of Graphs
Graph 1 Total Assets comparison.26
Graph 2 Equity comparison..28
Graph 3 Deposits..............................................................................................30
Graph 4 Advaces..32
Graph 5 Revenues....34
Graph 6 Ratios.. ..40
List of tables
Table 1.01 List Of Selected Banks For Analysis.10
Table 2.01 Comparisons of branches and expansion.12

Table 2.02 The Comparison of Total Assets.13
Table 2.03 Growth Rates of Total Assets..14
Table 2.04 Comparison Of Equity15
Table 2.05 Growth In Equity15
Table 2.06 Comparison Of Deposits.17
Table 2.07 Growth In Deposits..17
Table 2.08Comparison Of Advances.19
Table 2.09Growth in Advances.19
Table 2.10 Comparison Of Revenues20
Table 2.11 Growth In Revenues20
Table 3.03 Return On Equity.24

Table 3.04 Return On Asset...25
Table 3.06 Investment to asset ratio..27
Table 3.07 Deposits to asset ratio.28
Table 3.07 Deposit to equity ratio.29
Table 3.09 Capital ratio.30

Table 3.10 Earnings per share..31
Table 3.13 Price earnings ratio.34
Table 3.14 Loan deposit ratio...35
Table 4.02Degree of Operating Leverage38
Table 4.03Degree of Financial Leverage.39
10
1. INTRODUCTION
1.1. EXECUTIVE SUMMARY
The Islamic banking is said to growing very fast in these days. Some sources say
Islamic banking is going to become the equal competitor of Conventional banking
in next a few years. It must be examined that the claim is really true or not. There
are a variety of financial tools that measure the financial performance and growth
of an organization. These tools can be applied to acquire better insight of these
industries. This study examines the financial growth and performance through
applying these financial tools. The top performing banks from both industries are
chosen for analysis purpose.
In the first section the brief history of Conventional banking is discussed and then
short account of history of Islamic banking is provided. The evolution of Islamic
banking in Pakistan is also described. The second section shows a closer view of
the growth pattern of Islamic banks as compared to Conventional banks. The third
section is based on financial analysis and comparison of financial performance.
Fourth and fifth sections are analyzed through investor`s point of view. Finally it
is concluded that the claim about growth of Islamic banking is true or not.
11
1.2. BANKING HISTORY

Basically according to the given records banking was started approximately 1800
B.C. In its early stage it was started as prototype banks of merchant, which used
to give loans to farmers and traders. This was under practice in Egypt, Babylon,
Roman Empire and Greece where these the temples used to practice this kind of
banking to approve and issue the loans accept the deposits and was acting as
money changer. Precious metals were pledged against loans which were issued to
the borrowers. These loans were issued on high rates of interest, with the passage
of time old banking techniques were modified in to modern banking by the Greek,
Roam and Jews.
The roots of modern banking techniques go to1st Central Bank of U.K which was
formed to advance the loans to the government and become a model for most
modern central banks. A point should not be forgotten that on the other side The
Bank of Amsterdam was formed in 17th century to accept the deposits. During
18th and 19thcentury development in different business sectors resulted
development in banking sector as well. After words in 20th century development
in I.T sector brought major changes in banking operations due to which there was
considerable changes were noticed in the size and geographic spread.
In the most modern era of banking and finance there are multiple types of banks
which are operating for the different purposes.
12
1.2.1. Kinds of Modern banks

Central Bank
It is a type of bank owned by the government which regulates the currency of the
country and takes all the important decisions related to the economy of the
country. It also makes all the rules and regulations about the Conventional banks.
1.
Commercial banks:
Commercial bank deals with the deposits and loans with individuals as well as
corporations. Economic development is mainly based on role of These banks
because they provide different kinds of services to the individual like the basic
facility of savings, granting loans and time deposits. These banks have to maintain
a specific amount of reserves.
2.
Mutual savings bank:
This is a type of financial institution, regulated by central government without

capital stock, owned by the members who create a common fund. Profits are
distributed between these members. The institution provides a place where
individual can save and invest in different types of securities.
3.
Investment Bank
These banks have basic purposes of providing facility to large organizations and
about the investment across the industry. Advices are provided about investment
and in promotion of corporate transactions
Modern developments in the technology has entirely changed the world and made
it global village due to which global business or multinational companies (MNC)
have come into being and this concept leads to the emergence of global financial
institutions. The development of multinationals definitely requires a kind of
international organization which can facilitate the business activities.
13
4.
World Bank:
The intention behind the formation of the World Bank was to issue advances to
the investors and to the states as well, further more to enhance the trade and
investment opportunities worldwide. It was established in 1944. World Bank is
the part of the World Bank Group, as well as the member of the United Nations
Development Group.
Now The World Bank's goal is to reduce the poverty. In the beginning it
contained two
institutions,
International
Bank for
Reconstruction
and
Development and International Development Association from 1944 to 1968, at

that time loans were only issued for the development of income generating
infrastructures, such as development of the seaports of any country, highways and
power generation sectors, because these are the sectors which enables the
countries to repay the debts. But after wards from 1968 to 1980 the bank
expanded its operations from basic infrastructure development to social services
and some other sectors, meanwhile the issuance of loans for the development
purposes rose near about 20% annually. Here the institution adapted few policies
which were strongly criticized by the UNICEF such as structural adjustment
policies which were designed for the enhancement of the economies of the
developing nations, but UNICEF was having point of view that these policies
were responsible for reduction in the health and education level of young
generation of Asia, Africa and Latin America. Just for this purpose the institution
has been funding to many non-government organizations for social services and
social benefit from 1989 till today and these policies include the protection of the
environment by promoting less harmful development activities such as in 1991 it
made an announcement that it will never finance any development activity in
Amazon forest just for the purpose of protecting the forest.
14
1.2.2. International Monetary Fund

It was established in 1945 started by just 29 member countries but this figure has
gone to 188.It was established to facilitate the nations to clear their debts (under
developed countries). It provides suggestions to its members related to
international banking. It has the basic function of enhancing the economic growth
and stability of the underdeveloped countries for this purpose it facilitates them by
providing the funds and suggestions for improving their economic policies.
Before it was performing only two functions i.e. monitoring the exchange rates of
the countries and helping them to manage their exchange rates by providing them
funds to manage their balance of payments (BOP) and it was done to avoid the
international economic crisis. After the Second World War it played the role in
developing the global economy. After floating exchange rates in early 70s it
changed it role and then it started to monitor and evaluate the economic policies
countries seeking loan to judge that weather their policies are capable or notofthe
economic recovery in future and by checking that policies will be helpful in the
reduction of economic crisis or not. Now its role is much more important as it
monitors the economic policies of different countries. It negotiates the policies
and put forward its conditions before issuing the loans to the country in order to
make sure that their present economic policy will be able to recover the economic
condition. It gives the facility to the low income countries by providing them
loans on non interest basis for specific time period through, Extended Credit
Facility (ECF), Standby Credit Facility (SCF) as well as Rapid Credit Facility
(RCF). On the other side it also provides loans on the basis of interest and has
adapted different policies, which includes Stand-By Arrangements (SBA),
Flexible Credit Line (FCL), Precautionary and Liquidity Line (PLL), Extended
Fund Facility and Rapid Financing Instrument (RFI). The member countries
economic and financial policies are also monitored by International Monitory
15
fund it analyses the economic policy of each member country just to ensure that
whether it is in accordance to its guidelines to achieve the economic growth as
well as toasses its effects on global economy.
1.3. ISLAMIC BANKING
After the hard work of Islamic scholars Islamic banking has been introduced,
abanking which is based on values of Islam, the principles and rules given to us
by Islamic Shariah.MirzaBasheerud din Mehmood Ahmed, MaulanaMaududi and
few other Islamic scholars emphasized on the need of Islamic banks. On the basis
of profit and loss shairing.In the modern era the first Islamic financial institution
was started in 1963 by Ahmed El Najar, in Egyptian town MitGharar. Itdid not
use the name of Islamic banking because of the political regime in the country
will take it as an effort to enforce Islamic fundamentalism. By 1967-1969 there
were many such banks which were running on profit loss sharing bases. They did
not use to work on the basis of interest. The depositors money was invested in
trade and industry directly. The profits or losses was shared between the
depositors and bankitself. During 1970 many Islamic banks were establishing
such as in 1973 Nassir social bank was started in Egypt, 1975 Dubai Islamic bank,
1977 Fasial Islamic bank and 1979 Bahrain Islamic bank.
In 1983 first full-fledged Islamic bank was formed in Malaysia by the name Bank
Islam Malaysia Berhad(BIMB). According to some researchers, Nasir social bank
is the first full-fledged Islamic bank but according to some say Dubai Islamic
bank was the first one. 144 Islamic institutions were established by 1955. Islamic
banking started its break through growth in 2002 and onwards. Now a days
Islamic banking prevails in more than 60countries in which Muslim and non
Muslim countries are included.
16
1.4. ISLAMIC BANKING IN PAKISTAN

Pakistan came into existence on 14 August 1947 as the first Islamic republic
created in the name of Islam. Now according to it, it is the duty of state to follow
the instructions of Allah Almighty according to the Objectives Resolution, passed
in 1949. Islam is the official religion of Pakistan and all rules/ regulations should
be in accordance with Islamic injunctions (1956 constitution). In 2001 a meeting
was held under the Chairmanship of the President of Pakistan and the officials of
the related ministries and organizations where it was decided that the shift to
interest free economy would be a gradual process in a phased manner that would
avoid any disruptions. The State Bank of Pakistan issued criteria in 2001 for
establishment of Islamic banks in the private sector. Al Meezan Investment Bank
in 2002 was the 1st bank which got the license. Al Meezan Investment Bank is
now known as Meezan Bank Limited is operating as full fledge Islamic bank.
Meezan Bank is a pioneer of Islamic Banking introduces theMeezan Islamic
Funds (MIF) and the countrys first open end Islamic Mutual Fund. In the year
2004 theConventional banks opened new branches being a part of Islamic
Banking such as Bank Alfalah, Habib Bank and standard chattered etc.SBP has
also given permission and approval to open 10 more branches as an Islamic
Banks. In the year of 2005 for the first time in Pakistan the Islamic Banking
welcomed in new era of Islamic Insurance(Takaful). In 2007 it has been observed
that the Islamic Banking got a remarkable feedback from customers due to the
introduction of short-term, medium-term, long-term categories of product. For the
first time in the history of Islamic Banks Meezan bank offered ijarah financing for
the stock of finished goods. In 2009
different Islamic banks launched the Hajj
and Umrah Packages. The Albarkah Bank also give a support to Pakistani
economy as it expands its branches all over the state. By the year 2010 the Islamic
Banks stood to be the priority by most of the customers.In2013 the bank Dubai
17
opened 25 new branches, 40 branchless banking booths and introduced variety of

services such as Banka Takaful, and Cash Management.
The future of Islamic banking is very positive in Pakistan, as during the last forty
years it has made considerable progress. According to Governor State Bank of
Pakistan, in the last five years Islamic banking has shown impressive annual
growth rate.There are more than five hundred branches of Islamic banks in
Pakistan. Meezan Bank, Bank Islami Pakistan, Al barkah Bank and Dubai Islami
Bank are significant in Pakistan.
1.5. PRODUCTS OFFERED BY ISLAMIC BANKS
1.
Current Account
Current Account of Islamic banks provides the facility of putting money in an

interest-free account without any restrictions on withdrawal of the money.
Current Account is based on Qard contract. In this case Bank is liable to pay the
money back on demand to the customer. Bank can use these funds for different
investments. The account gives surety of money safely deposited with a bank
further more assurance that, the Bank is not investing the money in activities
which areagainstShariah principles.
Current Account can be opened by any one from individual to the limited
companies.
2.
Saving Account
The riba free saving account provides expected monthly returns as well as
different free benefits.
In this case Mudarabah relationship is made between customer and bank, where
customer becomes an Investor (Rab-ul-Maal) and
Bank becomes Manager
(Mudarib) of the fund. The Bank makes a pool of the funds; which is then utilized
for financing to customers in the shape of Murabaha, Ijarah, Istisna and
18
Diminishing Musharkah etc. Saving Account can be opened from Individuals to

limited companies.
3.
Foreign Saving Account
Riba-free Saving Account is a Mudarabah-based account and helps the investor

to diversify their investment to meet their business needs and to save the
investment against currency fluctuations.
This Account as well can be opened by individuals to Limited Companies.
4.
Business Account
Business account is a Mudaraba-based account that allows you to conduct your

banking transactions while availing a wide range of free services and therefore
provides you the ideal blend of convenience & flexibility that you deserve in
Islamic banking.
Business Account can be opened by Individuals, businesses (Sole Proprietorships,
Partnerships and Limited Companies).
Term Certificates
1.
Certificate of Islamic Investment
The Islamic Investment certificates is a Mudarabah-based deposit product, Where

investment is done from 3 months to 5 years and earn Halal profit on a periodic
basis.
2.
Amdan and monthly Mudarbah Certificate
Both of the certificates are Mudarabah-based long-term and short term deposit
product that offers a high expected return to investors and gives monthly expected
returns. It is ideal for individuals and corporate clients who need a regular
monthly income.
19
Certificates work on the principle of Mudarabah where Investor (Rab-ul-Maal),

and the Bank is the Manager (Mudarib). The Bank makes pool of funds; funds
from the pool are used to provide financing to customers under Islamic modes of
financing.
3. Foregin Currency Mudaraba Certificate
This Certificate is a deposit product in which investment can be done in foreign
currency, periods ranging from 3 months to 3 years and earn six-monthly or at
maturity profit payments on investment.
This Certificates works on the principle of Mudarabah.
The Mudarabah Certificate is an ideal investment for Individuals, Sole
Proprietorships, Partnerships and Limited Companies.
Others
1.
Kafalah/Takaful
A Shariah-compliant alternative to assurance that offers a unique combination of

saving, investment and protection.
It is basically for:
- higher education
- daughter's wedding
- Hajj
- having a comfortable retired life with savings
20
2.
Car Ijhara
Car Ijarah is Interest Free Islamic financing mode of Ijarah (Islamic leasing).
It is based on rental agreement, under which the Bank purchases the car and hand
it over to the custmour on rentbasis for an agreed period, according to the
contract. On the completion of the period the customer gets ownership of the car.
3. Home Finance
Home financing allows a customer to have a home on paying easy installments as
well as by keeping one save from interest base financing.
21
1.6. OBJECTIVES OF THE STUDY

Islamic banking is one of the emerging fields of todays world. As on one hand
few new Islamic banks have came into business, on the other hand conventional
banks have started opening Islamic windows. It is being said that Islamic banks in
the near future will be equal and strong competitors of Conventional banks.
The purpose of our study is simply what to apply the financial tools, which we
have learned during our Masters of Business Administration program on both, the
Islamic as well as Conventional banking, for the purpose of knowing where the
Islamic banking is standing today?The ambiguities and the few critics about
Islamic banking and the question about the income of the Islamic windows of the
conventional banks are related to Sharia Advisory Board which is keeping a strict
eye on it. We are more concern with the financial performance of the banking
industry.
The financial tools used in this study are
growth formula
financial statement analysis,
valuation models (capital asset pricing model)
To complete the project we have selected fewConventional banks from

conventional banking industry and few emerging Islamic banks from Islamic
Askari Bank
Meezan bank limited
Habib bank limited
Al-Baraka bank
Standard chartered
Muslim Commercial bank
Allied bank limited
22
Islamic banks
Conventional banks
banking industry. The list of selected banks is as follows:
Burj bank limited

Dubai Islamic bank
Bank Islamipakistan
1.7. METHODOLOGY
Different financial tools are used for financial analysis, in which some are for
internal analysis and some are for external analysis. Our focus is on external
analysis so we will use external analysis tools which consist of growth formula,
financial ratios and capital asset pricing model (CAPM).
The growth formula tells, the increase in the amount in any specific variable,
which it has gained in any specific time period. The formula is as follows:
P.R= (Vpr Vp)*100
Vp
P.R = % Rate
Vpr = Current Value
Vp = Previous Value
We will use this formulain order to find out the growth in
BRANCH NETWORK
TOTAL ASSET
TOTAL EQUITY
TOTAL DEPOSITS
TOTAL ADVANCES
TOTAL REVENUES
After averaging all of the growth rates then comparison will be done for Six years
from 2008 to 2013, with graphical representation. Specific ratios for banks are
included which will measure profitability, liquidity, leverage and other financial
indicators of the banks. Risk and return analysis are also incorporated.
23
2. OVERVIEW
Here attention will be given on banking industry with its growth pattern.
Comparison of increasing or decreasing trends and the comparative growth of
five conventional banks with five Islamic banks will take place including
comparison of
branch networks with study of their assets, equity, deposits,
advances, and revenues.

2.1. BUSINESS SIZE
Business size includes the no. of branches which any particular business has.
Table 2.01Comparison of Branches and Expansion:
Conventional banks
2008
2013
Islamic banks
2008
2013
Allied bank limited
766
950
BankIslamiPakistan
102
201
Habib bank limited
1508
1547
Al-Baraka bank
30
110
1040
1200
Burj bank limited
42
74
Standard chartered ltd
174
116
Dubai Islamic bank
25
124
Askari Bank
160
281
Meezan bank limited 160
351
Total
3648
4094
Total
860
359
From the table one can easily extract out that the branch network of
Conventionalbanksis much higher in numbers then Islamic banks but with the
passage of time the branch network of Islamic banks have shown considerable
growth as compared to the Conventional banks and have decreased the gap,
difference between the no. of branches between them.
When we have applied growth formula, we discover that Conventional banks
have growth rate of 12%while Islamic banks have growth rate 140% in there
branch network during the last six years.
24
2.2. ANALYSIS OF GROWTH PATTERN

First of all we will have an overview of overall growth patternsofbothbanking
sectors i.e. (Islamic and Conventional). By applying the growth formula we will
find out the increasing, decreasing or stable trends in both of the banking
sectors.The data is collected from the annual reports of the banks. Assessments
are as follows,
2.2.1. Total Assets &their Growth
An asset is a resource, may be tangible or intangible which is being owned and
controlled to produce value.
Table 2.02 Comparison Total Assets & their Growth
(All amounts in billion Rupees)
Year
2013
2008
2009
2010
2011
2012
Conventional banks
1774
2613
3223
3855
4535
5844
Islamic banks
349
451
693
787
551
636
Year
2008
2009
2010
2011
2012
2013
Conventional banks
12%
47%
23%
20%
18%
22%
Islamic banks
23%
53%
29%
14%
8%
15%
25
Graph 1
6000
4000
Conventional Bank
2000
Islamic Bank
0
2008 2009
2010 2011
2012 2013
Graph 2
60%
50%
40%
30%
Conventional Bank
20%
Islamic Bank
10%
0%
2008
2009
2010
2011
2012
26
2013
Explanation of Graphs & Tables:

The results of the comparison of total assets are showing that Conventional banks
have huge amount of assets as compared to Islamic banks. Islamic banks are far
behind in this field. The graphis alsoshowing the same thing, that total assets held
by Islamic banks are very low. Although the trend is increasing but they are far
behind the conventional banks as Islamic banks are at initial stage and
conventional are at their peak position.
The growth rate of Islamic banks is tremendously high as compared to growth
rate of Conventional banks. Both of the industries are showing growth. While as
comparison somewhere Islamic banks are ahead and somewhere Conventional
banks are ahead. This can be due to multiple factors. The advances and financings
are assets of the bank which ultimately contribute to total assets in balance
sheet.The up and downward movements of lines are showing growth in the assets
of Islamic banks and Conventional banks. The average growth rate for 6 years
is,Conventional banks 23% and Islamic banks 25%.
2.2.2. Equity and their Growth
Banks hold small amount of money as equity as more the equity less the
investment for advancing loan, and vice versa. butover the all they have to keep
the equity to meet the daily demand of money.
Table 2.03 Comparison Equity & their growth
All amounts are in billion Rs.
Year
2008
2009
2010
2011
2012
Conventional
210
220
280
352
362
27
2013
Growth In Equity
Year
2008
2009
2010
2011
2012
2013
banks
5%
5%
27%
26%
3%
13%
Islamic banks
12%
20%
7%
16%
8%
13%
Conventional
banks
408
Islamic banks
25
30
32
37
40
45
Graph 3
4
2
Conventional Bank
Islamic Bank
0
2008
2009
2010
2011
2012
2013
Graph 4
30%
20%
Conventional Bank
10%
Islamic Bank
0%
2008
2009
2010
2011
2012
28
2013

Islamic banks are for behind than conventional banks if we see them on the bases
of equity. By putting glance on the growth pattern both of the banks there is bit up
& down in the Islamic banks, but even than they must be appreciated because
there are very new & showing good performance. The performance of
Conventional banks is batter in terms of growth rate as there are fully mature & at
there peak. The difference in both of the sectors may be due to there nature of
bushiness as Islamic banks shares profit & loss while conventional banks take
fixed amount of interest.
2.2.3.Deposits and their Growth:
Deposits plays the role of life blood in all of the organization and sectors. In
banking sector specialy deposits increases the worth of that business. All the
investment and generation of revenue all depends upon the amount of deposits
that specific bank has. Table 2.06 shows comparison of deposits in both of the
sectors
Table 2.04 Comparison Deposit & their growth
Year
2008
2009
2010
2011
2012
2013
banks
1867
2090
2338
2694
3000
3300
Islamic banks
281
369
469
571
662
791
Year
2008
2009
2010
2011
2012
2013
banks
13%
12%
11%
15%
11%
10%
Islamic banks
24%
31%
27%
22%
16%
20%
Conventional
Conventional
29
Graph 5
3500
3000
2500
2000
Conventional Bank
1500
Islamic Bank
1000
500
0
2008 2009
2010 2011
2012 2013
Conventional Bank
Graph 6
35%
30%
25%
20%
Conventional Bank
15%
Islamic Bank
10%
5%
0%
2008 2009
2010 2011
2012 2013
Conventional Bank
30
From the data one can easily say that number of peoples deposits areincreasing in
Islamic banks as compaired to theConventional banks. There can be multiple
reasons in it such as increased awairnes about Islamic banking, their products etc.
The data clearly shows that the growth rate of deposiits in Islamic banks are in
better position thanConventional banks.
2.2.4. Advances and their Growth:

Advance of the banks are completely dependent upon the no of deposits and the
amount available with that specific bank.Advances of conventional banks are on
the basis of loans while Islamic banks does the same thing on the basis of risk
shairing and profit shairingi.e.musharakah and mudarbah etc.
Table 2.05 Comparison Advaces & their growth
Year
2008
2009
2010
2011
2012
2013
banks
1336
1491
1302
1232
1158
1456
Islamic banks
189
283
222
282
320
340
Year
2008
2009
2010
2011
2012
2013
banks
21%
13%
2%
-4%
3%
7%
Islamic banks
21%
8%
22%
8%
9%
10%
Conventional
Conventional
31
1500
1000
Conventional Bank
500
Islamic Bank
0
2008
2009
2010
2011
Islamic Bank
Conventional Bank
2012
2013
Graph 7
25%
20%
15%
Conventional Bank
10%
Islamic Bank
5%
0%
-5%
2008 2009
2010 2011
2012 2013
Conventional Bank

Through this analysis we can easily say that the performance of Islamic banks is
much better then the conventional banks, the reasons may be many.
32
2.2.5
Revenues and their Growth:
Revenues are the back bone of any kind of business, no matter what kind of
business it may be. Now nature of business is very much different of both of the
sectors, therefore there is much difference in their revennu generation. Revenues
of Islamic banks are fluctuating may be due to profit and loss sharing, while
Conventional banks gets the fixed amount i.e. interest.
Table 2.06 Comparison Revenues & their growth
All amounts are in billionRs.
Year
2008
2009
2010
2011
2012
2013
banks
555
618
564
722
740
860
Islamic banks
107
160
212
334
462
610
Conventional
Year
2008
2009
2010
2011
2012
2013
banks
7%
11%
-12%
28%
3%
16%
Islamic banks
76%
49%
33%
58%
38%
32%
Conventional
33
Graph 8
1000
800
600
400
Conventional Bank
200
Islamic Bank
0
2008
2009
2010
2011
2012
2013
Graph 9
80%
60%
40%
Conventional Bank
20%
Islamic Bank
0%
-20%
2008
2009
2010
2011
2012
2013

Now from the results it is crystal clear that both of the sectors are showing the
increasing trend but over all Islamic banks are showing nice performance in it as
compaired to fully developed conventional banks.
34
3. Ratio Analysis
A management always planes for the efficient use of resources and for this
purpose Ratio analysis is considered as a powerful tool. The ratios basically tell
about thefinancial results, trends, and key indicators of financial performance.
Company uses these tools to find out where the improvement is required and what
are the strengths and weaknessesof their firm. These ratios are also used by the
outsiders just in order to get information about the company and to comp[iar the
results with the other organizations in order to come on the result where should
they invest.
3.1. Return on Equity

This ratio measures the overall performance of the instition. It is of great
imp[ortance for the shareholders as well as the management of the company. High
ratio is better for the instirtion
ROE= Net Profit after tax
Equity
Table 3.01 Return on Equity
Return On Equity
Year
2008
2009
2010
2011
2012
2013
Allied bank limited
18.98%
26.65%
25.56%
26.16%
26.46%
28%
Habib bank limited
15.32%
16.87%
18.62%
21.30%
19.78%
20.78%
Conventional 28.43%
24.98%
22.69%
24.82%
22.43%
24.43%
Muslim
bank
35
Standard chartered bank 1.64%
1.99%
8.74%
11.78%
12.94%
13.4%
18.97%
19.24%
20.13%
22.29%
24.9%
limited
Askari Bank
Conventional
12.74%
Banks
Average
15.40% 16.84% 17.97% 18.84% 19.98% 22.10%
Bank IslamiPakistan
-1.22%
-10.2%
0.77%
8.96%
8.40%
7.0%
Al baraka Bank
3.31%
8.82%
6.30%
11.28%
5.25%
8.5%
Burj bank limited
0.70%
-6.29%
-12.5%
-5.99%
4.44%
2.40%
Dubai Islamic bank
-3.80%
3.25%
0.23%
4.05%
2.10%
6%
Meezan bank limited
9.70%
18.08%
17.79%
24.45%
22.66%
25.67%
Islamic banks average
1.54%
2.81%
2.87%
8.45%
8.57%
9.71%
Graph 9 of averages
25.00%
20.00%
15.00%
Conventional Bank
10.00%
Islamic Bank
5.00%
0.00%
2008
2009
2010
2011
2012
36
2013
Figures are showing the return on equity of bothe the banks. The results are
showing that Conventional banks are in much better position then the Islamic
banks, the latest signals have shown that Islamic banks have shown improvement
in this regard but over all gap is much higher it may be due to that Islamic banks
are very new in the field of banking as compired to the conventional banks.
3.2. Return On Asset
It is the one of the most comprehencive measurement regarding banks earning
capacity.It is used to tell that how much per rupee is eared by investing in assets.
ROA takes efficiency concept and earning percpective into its account due to this
characterstic it is widely used for representing the earning of the banks. How
much higher it is that much better it is for that instition. An increasing trend of it
shows the effiency of the management iof the bank.
ROA= Net Profit after Tax
Total Asset
37
Table 3.02 Return On Asset
Year
2008
2009
2010
2011
2012
2013
Allied bank limited
1.15%
1.80%
1.90%
1.52%
1.97%
2.2%
Habib bank limited
1.40%
1.60%
1.74%
1.95%
1.38%
1.9%
Muslim Conventional bank
3.52%
3.26%
2.86%
2.74%
2.56%
3.23%
bank 0.25%
0.30%
1.20%
1.56%
1.77%
1.92%
1.44%
1.52%
1.62%
1.48%
2.05%
2.09%
Standard
chartered
limited
Askari Bank
Conventional
Banks
Average
1.55% 1.70% 1.76% 2.15% 1.90% 2.27%

-
Bank islamiPakistan
0.25%
1.45%
Al baraka Bank
0.20%
0.40%
Burj bank limited

-
0.10%
0.52%
0.53%
1%
0.45%
0.30%
0.53%
0.46%
0.58%
0.20%
0.35%
2.52%
3.04%
1.06%
0.46%
0.06%
0.50%
0.55%
0.65%
1.43%
1.32%
1.70%
1.30%
1.79%
Dubai Islamic bank
0.55%
Meezan bank limited
0.75%
0.08% 0.25% 0.28% 0.45% 0.58% .87%
Graph 10 of Averages
38
2.50%
2.00%
1.50%
Conventional Bank
1.00%
Islamic Bank
0.50%
0.00%
2008 2009
Conventional Bank
2010 2011
2012 2013
From the facts and figure of ROA of both of the sectors i.e. Islamic banks and
Conventional banks, conventional banks are showing an increasing trend and their
returns are much higher then the Islamic banks on the other side Islamic banks are
showing progress but again as compaired to the conventional banks they are much
behind.
3.3.Deposits to total asset ratio:

This tool is used to show total debt verses total assets owned by the firm. This
ratio aiso tells the total worth/value of the company. Higher the ratio higher the
risk.
Deposits to asset ratio = Total deposits
Total asset
39
Table 3.03 Deposit to total asset ratio

2008
2009
2010
2011
2012
2013
81.1%
78.6%
82.1%
77.5%
81.3%
81
79.9%
79.3%
80.8%
81.3%
75.5%
78.02
74.3%
71%
75.5%
74.8%
70.5%
75.12
65.1%
67.28%
64.7%
66.7%
68
79.1%
78.69%
78.4%
78.5%
78.%
80.12
76%
74.5%
76.8%
75.36% 74%
76.69%
65.7%
81.6%
84.83%
85.7%
86.5%
85.06
Al baraka Bank
81.2%
80.9%
81.4%
84.7%
86.0%
85.48
Burj bank limited
53.0%
52.1%
71.5%
72.55%
76.3%
76.59
79.3%
79.1%
78.7%
79.6%
83.4%
83.98
82.6%
79.9%
84.7%
83.78%
83.6%
84
Allied bank limited
Habib bank limited

Standard chartered bank 65.6%
limited
Askari Bank
Conventional
Banks
Average
bank islamiPakistan
Dubai Islamic bank
Meezan bank limited
72.36% 74.72% 80.23% 81.23% 83.1%
40
83.02%
Graph 11 of averages
85%
80%
75%
Conventional Bank
Islamic Bank
70%
65%
2008 2009
2010 2011
2012 2013
Conventional Bank
The ratio tells that Islamic banks are higher than conventional banks in this
matter which means that Islamic banks have more risk factor as they work on the
basis of shairing risk and profit, bank works as partner with its custumer just due
to this reason Islamic banks have high risk factor than the conventional banks.
3.4.Deposit to equity ratio:
It basically tells the policy of the management of the company. It tells how the
company finances its projects i.e how much from debt and equity.
Deposit to equity ratio= Total deposit

Total equity
41
Table 3.04 Deposit to equity ratio

Year
2008
2009
2010
2011
2012
2013
Allied bank limited
1.3
1.4
0.7
1.3
0.80
1.2
Habib bank limited
0.7
0.80
0.4
0.49
1.6
1.69
0.4
0.7
0.3
0.4
0.8
1.00
Standard chartered bank limited
0.30
0.3
0.3
0.3
0.4
0.6
Askari Bank
0.9
0.6
0.8
0.69
0.85
.96
0.72
0.64
0.5
0.63
0.89
1.09
bank islamiPakistan
0.06
0.04
0.08
0.17
0.3
0.5
Al baraka Bank
1.36
1.4
1.7
1.05
0.4
0.6
Burj bank limited
0.02
0.3
0.08
0.09
0.54
0.78
Dubai Islamic bank
0.01
0.03
0.17
0.3
0.25
0.4
Meezan bank limited
0.64
0.89
0.56
0.7
1.2
1.5
0.41
0.53
0.518
0.46
0.53
0.75
Conventional Banks Average
1.5
1
Conventional Bank
0.5
Islamic Bank
0
2008
2009
2010
2011
2012
42
2013
From the data we can conclude that conventional banks has greater deposit to
equity ratio which shows that conventional banks are using more debt financing
as compaired to the equity, while Islamic banks are using equity in greater ratio
for financing the result may be due to that still no. of deposits are not very much
with them and due to the rules and regulations which they are working on..
3.5.Capital ratio:
It is also known as Capital to risk asset ratio. It is a ratuio of the risk of the bank
to its capital. The purp[ose is, the safety of the accountholders and the promotion
of the efficiency of financial system.
Capital ratio= Total equity

Total asset
Table 3.05 Capital Ratios
Year
2008
2009
2010
2011
2012
2013
Allied bank limited
5.7%
6.19%
6.9%
7.3%
6.85%
7.2
Habib bank limited
8.5%
8.71%
9.4%
8.8%
7.4%
7.9
11.8%
12.3%
12.5%
12.3%
11.78% 12
16.6%
14.1%
14.8%
14.2%
12.7%
13.2
Askari Bank
7.6%
8.7%
8.8%
9.2%
8.6%
8.9
10.04% 10%
10.49% 10.36% 9.46%
9.84%
bank islamiPakistan
27.4%
13.7%
10.5%
8.75%
7.5%
7.9
Al baraka Bank
5.8%
5.19%
4.72%
4.8%
5.05%
5.09
Burj bank limited
43.9%
36.9%
24.15%
20.9%
12.4%
13.02
43
Dubai Islamic bank
15.7%
17.09%
15.17%
12.9%
10.7%
11.2
Meezan bank limited
7.4%
7.8%
6.9%
6.66%
5.65%
6.02
18.56% 16.01% 12.28% 10.80% 8.22%
8.64%
Graph 13 of Averages:
20.00%
15.00%
10.00%
Conventional Bank
5.00%
Islamic Bank
0.00%
2008
2009
2010
2011
2012
2013
Ratios of Islamic banks are higher then the Conventional banks which may give
the impact that Islamic banks are more cautious about it as they are in their
developing stage.
3.6.Earnings per share:
The ratio tells about the profit allocation of
a company against its every
outstanding share. It also tells the profitability of the organization.
Earnings per share= Earnings available to ordinary shareholders

Number of ordinary shares in issue
44
Table .06 Earnings per share

Year
2008
2009
2010
2011
2012
2013
Allied bank limited
6.44
10.07
10.6
11.9
12.56
13
Habib bank limited
13.2
14.72
17.0
20.27
18.44
19.02
24.5
22.6
22.21
23.09
23.09
23.19
0.18
0.24
0.98
1.44
1.56
1.68
Askari Bank
8.35
8.54
9.0
12.17
15.75
15.92
10.53
11.23
11.958 13.78
14.28
14.56
bank islamiPakistan
-0.10
-0.92
0.09
0.79
0.79
0.82
Al baraka Bank
0.96
2.12
1.44
2.4
1.6
1.8
Burj bank limited
0.09
-0.59
-1.07
-0.39
0.12
0.16
Dubai Islamic bank
-0.31
0.4
0.02
0.29
0.52
0.62
Meezan bank limited
1.27
2.53
2.73
4.23
3.89
4.02
0.382
0.70
0.64
1.47
1.384
1.48
15
10
Conventional Bank
Islamic Bank
0
2008
2009
2010
2011
2012
45
2013
Conventional banks are having more earning per share as compaired to the
Islamic banks whoch in simple words attracts more investor then the Islamic
banks. But with passage of time it is hope ful that Islamic banks will also come in
good position.
3.7.Loan deposit ratio:

Thus ratio is very much specific to the banking sector as they deal in the
advancing of loans. This ratio tells about the liquidity of the company further
more it should be stable as if it is high or on the other hand if it is very much low
both situations are not ideal for the bank, it should be moderate one.
Loan deposit ratio= Advances
Deposits
Table 3.07 Loan to deposit Ratios
2008
2009
2010
2011
2012
2013
Allied bank limited
75.19%
76%
72.32%
65.64%
56.15%
56
Habib bank limited
80.42%
71.79%
67.33%
53.94%
45%
44.65
Muslim
82.65%
73.4%
63.58%
50.90%
48.2%
48
70.69%
74.36%
70%
63.60%
63.24
80.82%
77.52%
66.35%
60.48%
57.05%
57
Banks Average
79.60%
73.86%
68.76%
59.68% 53.97%
54%
bank islamiPakistan
53.60%
38.35%
52.1%
49.58%
43.52%
44%
Al baraka Bank
83.40%
71.74%
65.85%
57.45%
53.08%
53%
Conventional bank
Standard
chartered 78.91%
bank limited
Askari Bank
Conventional
46
Burj bank limited
111.50% 73.74%
49.38%
65.08%
67.05%
66.05%
Dubai Islamic bank
73%
74.93%
74%
63.56%
51%
50.6%
Meezan bank limited
57.84%
44.09%
49%
44.54%
41%
40.86%
75.67%
60.56% 58.22% 56.02% 51.11% 50.90%
Islamic
banks
average
80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
Conventional Bank
Islamic Bank
2008
2009
2010
2011
2012
2013
The figers are giving the result that both of the sectors are moving towards the
minimum amount. Why they are doing this?the factors may be many. Such types
of institutions try their level best to keep minimum amount of cash with them in
order to invest more and more, and to generate more profit for them. We can see
that the conventional banks have higher ratios as compared to the Islamic banks.
47
4. RISK ANALYSIS
Here we will taik about risk in the sence of return, i.e when the investor invests in
any security or in simple words in any organization he/she basically look for the
return which the one will get back out of it. Everybody does investment just to get
back something out of it.Peopleinvest by watching the past pattern. If any
uncertainity comes that the investor will not get back the expected return that
uncertainity is called risk. While discussing risk two types must be defined,
Systematic and Unsystematic Risk.Systematic risk is not controllable in it
company is completely dependent upon the market.The unsystematic risk can
becontrolledor reduced through different tools, such as portfolio diversification.
RISK Calculation.
(DOL) Degree of Operating Leverage:

This tells the effect of change in the Revenues of the companies earning before
the interests and taxes.It involves a major proportion of fixed costs to variable
costs. Higher the DOL, higher volatility in the fig of EBIT will be, keeping
other things constant.
D O L= % change in EBIT/% change in Revenues

Table 4.01 Degree of Operating Leverage
Year
2008
2009
2010
2011
2012
2013
Allied bank limited (%)
0.052
0.093
0.058
0.301
0.032
0.045
Habib bank limited
1.18
1.38
1.04
0.94
1.06
1.09
0.76
0.75
0.72
0.63
0.67
0.7
48
Standard
chartered
bank
1.3
limited
2.88
1.98
1.46
1.04
1.28
Askari Bank
12.19
5.97
4.87
4.04
3.38
3.4
Average
3.4
2.03
1.62
1.39
1.28
1.30
bank islamiPakistan
1.88
1.98
0.95
0.83
0.74
0.72
Al baraka Bank
0.52
0.46
0.60
0.38
0.35
0.41
Burj bank limited
0.54
0.55
0.46
0.46
0.39
0.41
Dubai Islamic bank
0.56
0.65
0.68
0.68
0.67
0.66
Meezan bank limited
0.078
0.231
0.194
0.235
0.26
0.265
0.7
0.77
0.49
0.57
0.48
0.49
Conventional
Banks
3.5
3
2.5
2
Conventional Bank
1.5
Islamic Bank
1
0.5
0
2008
2009
2010
2011
2012
49
2013
The data shows that both of trhe sectors are round about in the same position and
showing round about the same results i.e impact of EBIT is normal to both of the
sectors. If the amount becomes to high the company becomes inpredectable about
the earnings
Degree of Financial Leverage:
It helps in calculation of the comparative change in net income due to change in
the capital structure of the company. Higher the leverage of the company higher
risk it has.Further more it tells the effect of change in EBIT on EPS of a company.
Degree of Financial Leverage = % change in EPS/ % Change in EBIT
Table 4.02 Degree of Financial Leverage
Year
2008
2009
2010
2011
2012
2013
Allied bank limited (%)
4.97
3.92
4.22
2.97
3.14
3.44
Habib bank limited
2.6
2.66
2.38
2.32
5.85
4.22
Muslim
Conventional
bank
2.46
2.12
2.46
2.35
2.46
2.44
Standard chartered bank
3.05
limited
7.29
9.2
2.95
2.38
2.3
Askari Bank
5.06
3.05
3.65
3.18
3.32
Average
4.4
4.9
2.5
2.22
3.3
3.2
bank islami Pakistan
-2.19
-1.18
4.2
5.75
6.62
7.02
Al baraka Bank
0.0045
0.0013
0.0017 0.0009
0.0013 0.002
Burj bank limited
1.4
-2.8
-1.54
-6.86
1.87
2.00
Dubai Islamic bank
-10.02
10.37
22.00
-9.02
-1.45
-12.01
Meezan bank limited
1.54
1.69
1.7
1.76
1.8
1.92
Conventional
Banks
50
-1.8
1.61
5.2
-1.6
-1.68
-0.2
6
5
4
3
2
Conventional Bank
1
0
-1
-2
Islamic Bank
2008
2009
2010
2011
2012
2013
Data shows conventional banks has greater DFL then Islamic banks which clearly
states high risk in them and % change in the EPS of conventional bank has greater
effect on EBIT.
51
5. CONCLUSION
After analyzing the facts and figures available to us we have reached to the
conclusion that Islamic banking industry is a fast growing industry as people are
now accepting it. It has to cross still multiple of hurdles as its compitator is
Conventional bank which is touching its peak and has fully matured and Islamic
banks are very much behind from them in multiple fields, ofcourse due to the
reason that they are very new and facing problems from people as well as through
regulations by the government. Some of the Islamic banks are showing great
growth signals but still there performance needs improvements. It is quite obvious
that any new sector or field always needs a lot of improvements by this way or by
that way. Hopefully in the coming few years Islamic banks will be as huge and
large industry as today conventional banks are. The biggest indicator of the
success of Islamic banks is, round about all of the Conventional banks have
opened their Islamic windows whuich clearly states that there is huge demand of
Islamic banking industry by the general public.
5.1. LIMITATIONS
Every kind of reacerh has bundle of limitations, same is the case here.
Evolution Stage.
Islamic banks came infront of the public since last two decades on the other side
conventional banks are working for a century, in a nut shell there is no
compairision of both of these industories because shuch types of reaseaches goes
completely in the favor of one or the other.
Environment
State bank of Pakistan is the regulator In the country all of the rules and
regulations related to banking sector is completely on the basis of intrest,
Although it is Islamic Republic of Pakistan but Islamic laws are merely followed
in the country.Hardly one can find a rule which will be proIslamic. In this type of
52
situation poor performance of Islamic banks can easiliy be justified and

supported.
Windows Islamic banking
As the Islamic banking is now moving towards progress, due to the increased
demand of of Islamic banking now a days, Conventional banks have started their
windows operation as Islamic banking due to which now while analysis it is really
difficult to under stand that how much contribution is their of Islamic windows in
their revenue and how much of conventional branches.
Differences in operations methods
Both of the banks have very much different operating methodology. Conventional
banks purly work on the basis of Interest with merely no chances of loss on the
other side Islamic banks work on Islamic principles on the basis of profit and loss
shairing, due to which results will automically differ of both of the sectors.
Research
Whole the work is done on the analysis without deeply moving in the banking
field. All the work is done on the basis of available data through different
resources which cant be claimed as 100% correct.
5.2. RECOMMENDATIONS
On the basis of study done by us we have come to the conclusion that by
taking following steps Islamic banking can be improved very soon.
Employment of effective management, which will lead the bank to more

customers.
Full support by state bank of Pakistan, so that it can come as a great

competator of Conventional banking system.
Shariah advisors should be the part of State Bank of Pakistan, as a

permanent membors.
53
Educational campaigns should be started by the Islamic Banks them selves

to educate people.
Salybus should be introduced at bechlors level of Islamic banking which

will attract people to wards Islamic banking.
People should be hired who have thoroughly studied the Islamic banking,
and must be awaire of the basic concepts of Islamic transactions.
Islamic banks should try their level best to move their branches to the
remote areas of yhe country including the main cities.
They have to do promotions through different and unique ways, such as

using the FATVAS and by requesting the ULAMAS to say some thing or
to tell the right thing to yhe people.
Islamic banks should concentrate on niche market, i.e. they should work
with small and medium enterprises, should concentrate on farmers and
enterprenures.
In order to attract people ther must have to give more profit then
conventional banks just to get once their confidence.
Such types of rules should be made by the govt. that Internationally

renouned Islamic Banks should vome and invest in Pakistan, through
which not only direct forien investment will come in the country but as
well as poverty reduction will take place.
Internationally financially strong groups will easily compete with present

conventional banks.
54
6. REFERENCES
1. Jones Stephany .2001. Governance of the World Bank . DFID
2. Lastra Rosa.2010. The role of the IMF as a global financial authority .LSE
Financial Markets Group Paper Series
3. Weiss A.Martin.2013 International Monetary Fund: Background and Issues for
Congress. Congressional Research Service
4. Bossone Biagio.2008. The Effectiveness of IMF Surveillance A study on global
financial governance. World Economics.Vol 9 No 4
5.Malik, M., 1999, Financing in Islam: an operational approach, 1st ed, Islamabad
(Pakistan), malik publications
6.Meezan bank ltd, (nd), 2010, history of Islamic banking and highlights of
Meezan
bank
ltd,
[online],
available
at
http://www.meezanbank.com/pages.aspx?iPageID=34, [accessed on 15 dec,

2012].
7.Commerce solutions, 2010, assignment on state bank of Pakistan and Islamic
banking,
[online],
17
july,
available
at
http://commerceplus.blogspot.com/2010/07/assignment-on-state-bank-ofpakistan.html, [accessed on 15 dec, 2012].

8.Van Horne, J., Wachowicz, J., 2006, Fundamentals of Financial Management,
13th ed, UK, Pearson Education.
9.Market Treasury Bills Auction Results, 2005 (Revised), EDMD, (Cmnd.
Circular 07), Karachi, State Bank of Pakistan.
55
Links to financial statements:

http://www.dibpak.com/AboutUs.aspx?tab=6
http://www.burjbankltd.com/about/financial-highlights
http://www.meezanbank.com/pages.aspx?iPageID=403
http://www.albaraka.com.pk/investor-relation/financial-statements.php
https://www.mcb.com.pk/ir/fin_data_rep.asp
http://www.standardchartered.com.pk/pk/about-us/financial-statements.html
https://www.abl.com/investor-relations/financials-reports/
http://www.hbl.com/investor-relations-annual-reports-2012.php
http://www.askaribank.com.pk/financial_report.php
56

Islamic Banks vs. Commercial Banks

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A Study on Islamic Banks vs.

M. Mujtaba Hussain Malik 5270-FMS/MBA/F11

A project report submitted to the Department of Business Administration

Department of Business Administration(Accounts and finance)

International Islamic University Islamabad

MASTERS OF BUSINESS ADMINISTRATION

Department of Business Administration (Accounts and finance)

Copyright 2013 by Mr. Mujtaba Hussain& Mr. Waqas Afzal.

3.1.1. Return On Equity...26

3.1.7. Loan deposit ratio..37

Table 1.01 List Of Selected Banks For Analysis.10

Table 2.01 Comparisons of branches and expansion.12

Table 3.03 Return On Equity.24

Table 3.09 Capital ratio.30

1.2. BANKING HISTORY

1.2.1. Kinds of Modern banks

Mutual savings bank:

This is a type of financial institution, regulated by central government without

Development and International Development Association from 1944 to 1968, at

1.2.2. International Monetary Fund

1.4. ISLAMIC BANKING IN PAKISTAN

different Islamic banks launched the Hajj

opened 25 new branches, 40 branchless banking booths and introduced variety of

Current Account of Islamic banks provides the facility of putting money in an

Bank becomes Manager

Diminishing Musharkah etc. Saving Account can be opened from Individuals to

Foreign Saving Account

Riba-free Saving Account is a Mudarabah-based account and helps the investor

Business account is a Mudaraba-based account that allows you to conduct your

Certificate of Islamic Investment

The Islamic Investment certificates is a Mudarabah-based deposit product, Where

Amdan and monthly Mudarbah Certificate

Certificates work on the principle of Mudarabah where Investor (Rab-ul-Maal),

A Shariah-compliant alternative to assurance that offers a unique combination of

1.6. OBJECTIVES OF THE STUDY

financial statement analysis,

valuation models (capital asset pricing model)

To complete the project we have selected fewConventional banks from

Meezan bank limited

Habib bank limited

banking industry. The list of selected banks is as follows:

Burj bank limited

We will use this formulain order to find out the growth in

branch networks with study of their assets, equity, deposits,

advances, and revenues.

Allied bank limited

Habib bank limited

Muslim Commercial bank

Burj bank limited

Standard chartered ltd

Dubai Islamic bank

Meezan bank limited 160

2.2. ANALYSIS OF GROWTH PATTERN

Explanation of Graphs & Tables:

Explanation of Graphs & Tables:

Explanation of Graphs & Tables:

2.2.4. Advances and their Growth:

Explanation of Graphs & Tables:

Revenues and their Growth:

Explanation of Graphs & Tables:

3.1. Return on Equity

Allied bank limited

Habib bank limited

Standard chartered bank 1.64%