Analysis of financial performance of Islamic banks in Bangladesh: special reference to Al-Arafah Islami Bank Limited (AIBL)

Bangladesh as a developing economy has encouraged developing its banking industry to push economic growth. Money is that the life blood of an economy where bank is that the trader of that cash. As an integral a part of any economy banking sector facilitates the way to the development of a country through the correct management & best utilization of cash and that is why it’s obvious to watch & assess the performance of its activities. The point of this paper is to inspect the financial performance of Islamic banking of Bangladesh particularly in Al-Arafah Islamic Bank Limited (AIBL). Financial performance evaluation methodology used to ascertain the objectives in terms of credit performance, profitability, productivity, liquidity, leverage, valuation & growth ratios. The financial data of AIBL from 2014 to 2018 has been used and observed that almost all the trends of all the symptoms are significantly positive. The credit performance is gradually increasing but the productivity shows a mixed trend whereas profitability, liquidity, leverage as well as growth & valuation ratios of AIBL are in danger and every one of those issues needed to monitored with sincerity and efficiency. Like other Islamic banks in Bangladesh the investment mode of AIBL is generally short term basis. For  a  continued  expansion  of  the  Islamic  banking  system,  however,  a  number  of  issues  that  pose  serious  problems  for  Islamic  banks  will  need  to  be  carefully  addressed.  In  order  to  bring  out  the  potential growth through Islamic banking  there  has  to  be  a  strategic  time  bound  roadmap  setting  out  all  the landmarks to be achieved. Islamic banks can satisfy most of the efficiency conditions if they will operate as a sole system in an economy. In spite of being operated in non-shariah economic structure of Bangladesh Islamic banks should increase Islamic capital market, Islamic financial instruments and proper zakat distribution and employment opportunities for the betterment of the society. The paper goes further to research some understanding on the household and worldwide difficulties which are confronting Islamic financial segment.