Success Factors of Islamic Banks: An Empirical StudyRevenues, Expenses, Profits as percentage of
Invested Assets02468101214ABCDEFG
Banks%Revenues/ Invested Assets Expenses/ Invested Assets
Profits/ Invested AssetsFigure 2
Table 17 shows the trend of change in the net profits, regardless of its
relationship to invested assets. What is striking is that bank F was able to raise
the rate of growth of its profits from 40 per cent to 80 per cent between 2000
and 2001 despite the decline in its total earnings in the same period. The
reason is that the bank re-priced some of its services and was able to increase
the bank’s share of investment returns from unrestricted and restricted
investment deposits from 4 per cent and 12.4 per cent in 1999 to 14.6 per
cent and 13.7 per cent in 2000; then to 18.1 per cent and 20.3 per cent in
2001 respectively. This had a big impact on the bank’s net profit despite the
decline in deposits and investments. What the bank did was very important in
affecting the bank’s profitability, thus emphasizing the importance and
effectiveness of bank’s pricing policy in achieving results.
Table 17: Growth Rate of Shareholders’ Net Profit
BANK 1998/99 1999/2000 2000/2001 1998/2001 Average
A -40.91 15.38 -53.33 -68.18 -22.73
B 20.00 27.78 21.74 86.67 28.89
C 26900.00 18.07 28.26 51.44 17.15
D 28.95 -18.73 -27.50 -23.68 -7.89
E -14.13 -29.34 69.87 3.07 1.02
F --- -40.59 80.00 6.93 3.47
G 5.71 7.21 7.77 22.14 7.38
Average 4483.27 -2. 84 18.12 11.20 3.90