Success Factors of Islamic Banks: An Empirical StudyIf equity increase comes about from retained profits under various names
and from the increase in paid-up capital, we shall find the effect on banks’
profit if we examine retained earnings. Table 19 gives per cent of equity
growth. Bank B increased its capital by attracting new funds while banks A
and G increased their capital through renaming their retained profits and
other reserves.
It is expected that the bank that can assign the highest profit to
shareholders from total profit would be the one that would be capable of
raising the equities. This was the case in banks G and E, both of which were
able to raise equities by 42 per cent and 30 per cent respectively over three
years.
It is perhaps necessary, before ending this sub-section to take a look at
Figure 3 which compares shareholders rate of profit with depositors’ share.
Except for bank F, all Islamic banks suffer serious disparity between deposits
profit and stocks profit. Stocks profit reached almost five times as much as
deposits profit in two of the banks and hovered around twice as much with
other three. In bank F where average deposits profit surpassed average equity
profit, there are a few factors that are responsible, including pricing policy
and the bank’s inability to develop its revenues as well as the weakness of its
old/inherent returns on the bank’s assets investment.
Shareholders' vs Depositors' Rate of Profit0510152025ABCDEFG%Shareholders' Average Profit/ Equity Depositors' Average Share/ DepositsFigure 3