Relationship between Profitability and Non-Performing Loan and A Comparative Financial Performance Analysis of Shari’ah Based Banks of Bangladesh

Abstract

In Bangladesh's banking sector is considered as the nerve system of economic activities nowadays. Banks' performances are considered as the indicator of a country's economic forthcoming. Banks are considered as an influential factor in reducing poverty and unemployment problem because of their capacity to have a higher investment. But this promising sector is facing the challenge of raising the level of nonperforming loans in recent times. The basic objective of the study is to analyze and measure the impact of NPLs on the profitability of shari'a based banks of Bangladesh for the period of the last five (2014-2018) years. For this, it has worked with a sample of five selected Islami banks. Through excel, regression and ratio analysis was used to find the bank's comparative financial performance and identify the variable that affects the profitability of shari’ah based banks of Bangladesh.  The findings of this paper recommend that if the authority of the banks becomes more careful about these issues then the performance of the banking sector will be better than previous and it could have an even more significant contribution to the country's economy.