A Comparative Performance of Two Banks in United Arab Emirates

Abstract

The purpose of this study is to analyze the financial performance of two UAE based banks between the years 2004 and 2009. Quantitative analysis was undertaken by looking at various sets of ratios that are routinely used to measure bank performance. Conclusions were then drawn from the computation of the relevant ratios that allowed the author to make an effective comparison of said banks. The main ratios that were employed put a particular focus on the banks liquidity, profitability, management capacity, capital structure and share performance as reliable indicators of a bank performance. Subsequently, each bank performance was then ranked via the use of descriptive statistical analysis. This type of analysis was used to summarize the performance of each bank based on two criteria, dispersion and the overall stability of each banks performance. The findings showed that both banks performed reasonably well during the period studied. Liquidity levels were lower for the commercial bank of Dubai, while the national bank of Abu Dhabi benefitted by having an overall higher degree of profitability. The commercial bank of Dubai took better control of its operations when compared with the national bank of Abu Dhabi. Among its other superior qualities was a strong and highly resilient capital structure. Calculation of the four ratios of share performance clearly showed that the national bank of Abu Dhabi is largely better off financially than the commercial bank of Dubai.

Keywords: Banking, Financial Analysis, Performance Measurement, Financial Ratios, United Arab Emirates