Monzer KahfTable 18 relates net profit to equities. Since the profit figures that we are
using are those that are before deduction of reserves and zakah, they
represent the total return achieved for the year. We preferred not to deduct
income tax too so that the comparison can be more just, especially because
only one bank is mainly subjected to taxes.
Table 18: Per Cent of Net Profit/Equities
BANK 1998 1999 2000 2001 98/99 99/00 00/01 98/01 Avg.
A 8.64 4.94 5.50 2.61 -42.82 11.36 -52.55 -69.78 5.43
B 10.20 11.84 5.88 7.25 16.05 -50.33 23.32 -28.91 8.80
C -3.37 9.59 10.91 13.41 384.59 13.74 22.96 0.40 7.64
D 7.87 9.25 7.09 4.92 17.51 -23.29 -30.69 -37.52 7.28
E 22.87 18.87 11.80 18.10 -17.47 -37.47 53.38 -20.84 17.91
F --- 4.37 2.58 4.46 --- -41.00 72.93 2.03 3.81
G 24.85 23.10 21.92 21.39 -7.05 -5.13 -2.38 -13.92 22.82
Average 11.84 11.71 9.38 10.31 58.47 -18.87 12.42 -24.08 10.52The index of profit on equity remained high in two of the seven banks.
Its average over the four years reached 22.82 per cent and 17.91 per cent in
banks G and E respectively. There are two reasons for this: a rise in the ratio
of assets to equities, as we shall see later, and the pricing policy adopted by
these two banks. On the other hand, the average of this index came within
the average range in three banks but was below average in banks A and F,
although the average of assets to equities in these two banks was close to the
average of the two top banks G and E.
The seven banks recorded an average profit/equity index of 10.51 per
cent for the four years and 11.71 per cent for 1999; both figures are less than
the achievement of US commercial banks that made an average of 13.5 per
cent in 1999, the year for which we have the data. Similarly, while the highest
that a US bank achieved was 39.0 per cent, the highest comparable figure for
Islamic bank was not more than 23.1 per cent in 1999 and 22.82 per cent
average for three years.^10
Table 19: Per cent of Equity Growth
BANK 1998/99 1999/2000 2000/2001 1998/2001 Average
A 3.34 3.61 -1.65 5.30 1.77
B 3.40 157.24 -1.28 162.59 54.20
C 4.69 3.81 4.31 13.36 4.45
D 9.73 6.42 4.61 22.15 7.38
E 4.04 13.00 10.76 30.21 10.07
F --- 0.69 4.09 4.81 2.40
G 13.73 13.01 10.41 41.89 13.96
Average 6.49 28.25 4.46 40.04 13.46