Study on financial performance analysis of islamic banking in Srilanka (special reference to Amana bank)

Abstract

The Islamic banking industry is one of the most important and growth industry of Sri Lankan economy, not only the Sri Lankan economy but whole world also. There are many banking sectors such as commercial, private and public banks working in Sri Lanka. Banking sectors are growing faster and competition.This study investigates the financial performance Amana Bank, Sri Lanka during the period of 2011-2015.Gradual development of Islamic banking had created competition among Islamic windows and conventional banks. Since Islamic banks offered products under Islamic principles, most of Muslim preferred Islamic banks rather than conventional banks. Currently, even non-Muslim prefer Islamic banking as the banks starting to offer an attractive products and services. However, some people still in doubt and argued on Islamic banks’ performance. That is why, considering the performance of Amana bank, on attempt has been made in this paper to study the financial analysis of Amana bank. Researchers have rendered their knowledge to present this study on all Performance of Amana bank PLC. In this study, it is shown that various operational activities can be used in the evaluation of the operation of this Bank. This study’s main objective is tostudy the current assets and current liabilities so as to know whether the shareholders and normal customers could invest in Amana Bank or notand also evaluate how effectively the bank is utilizing its assets against the industry average, as well as measure the profitability,financial positionand liquidity position of the bank. The study is based on secondary data, which covers a period of five years, i.e. 2011-2015. To analyze the data and find out Ratio analysis was used as a method of analysis.Considering the productivity ratio, current ratio, quick ratio, profitability ratio, solvency ratio. This study found through its last year (2015) performance that this bank is trying to increase its performance efficiency.The findings of the study show the fluctuation of the financial position for Amana Bank and some of their financial factors influence the financial performance of the bank. Then, it is found that the overall financial performance of Amana Bank is fluctuating in terms of liquidity ratios, asset quality ratios and profitability ratios (ROA, ROE). This study suggests a set of recommendations regarding the development and enhancing of some banking operations, which will boost the bank's profitability and improve the financial performance of the bank.