Performance Of Islamic Banking Product

This thesis examines the performance of Islamic banking financing product and its
contribution to the Islamic bank's profits. Credit risk management is also analyzed to
determine the comparative performance of Islamic banking and its conventional banks.
Statistical observations and linear regression are used to measure the performance of
key financial variables and financing contracts. These internal variables would predict
its relationship with bank's profitability. Four financial ratios are used to measure the
credit risk efficiency by applying t-test to financial ratios for Islamic and conventional
banks. This thesis concludes that bai'bithaman ajil (BBA) and alijarah thumma albai'
(AITAB) are the most financing contracts apply to the financial products. Thus, this
would suggest that house financings and hire-purchase financings are the most financial
products consumed by the banks consumers. BBA contract contributes most to the
Maybank IBS's financial assets, while AITAB contributes most to the AMMB IBS's
and Public Bank IBS's financial assets. This would also suggest that Maybank IBS's
focuses on house financings, while AMMB IBS and PBB IBS focuses on hire-purchase
financings. Overall Islamic banks maintain lower equity and better non-performing
financings compare to mainstream banks. Equity and Base Lending Rate (BLR) are the
determinants to the Islamic banks profitability. However, financing volume and
financing contracts are not significantly difference to predict profitability. Thus, this
study could not determine the financing products that contribute to the banks' earnings.