CAMEL analysis of Islamic banking and conventional banking in Malaysia / Badrul Hisham Kamaruddin and Rohani Mohd

• Main Author: Mohd, Rohani
• Format: Article
• Language: English
• Published: Faculty of Business Management 2013
• Online Access: http://ir.uitm.edu.my/id/eprint/8739/1/AJ_BADRUL%20HISHAM%20KAMARUDDIN%20BMQR%2013.pdf; http://ir.uitm.edu.my/id/eprint/8739/; http://www.bmqruitm.com/
• Institution: Universiti Teknologi Mara

This study examines the financial performance of Bank Islam Malaysia Berhad (BIMB) over the period 2007 to 2011 and makes comparative assessment in terms of an interest free Islamic bank (BIMB) and Malayan Banking Berhad (Maybank), an interest-based conventional commercial bank. The financial performance of these banks is measured by using the CAMEL model. The findings revealed that in terms of capital adequacy and liquidity, BIMB's performance is above Maybank. In this regard, this study presents some policy implications that are relevant to the conduct of Islamic banks in managing liquidity. Meanwhile, asset quality, management capability and earnings are on par with Maybank. In terms of business volume, namely total deposits; total loans and financing; total assets; and total shareholders‟ equity, BIMB is far below that of Maybank. All of the above verify that age in terms of duration of banking business and extent of financial landscape are in favor of the conventional banking system. Given time, the Islamic banking business will gradually be on level playing ground with their conventional counterpart as desired by the Malaysian government for the two systems to run and develop in parallel to each other.