Dubai Islamic Bank and Bank of America, Research Paper Example

Return on Average Assets (ROAA)

The return on average assets essentially measures operational efficiency. This is the level of efficiency at which a given business uses the resources within its disposal. This is integral in helping determine the extent to which the business in question can expand.

Return on Average Equity (ROAE)

The return on average equity is essentially a measure of a company’s profitability within a given trading period. This ratio is important in giving an accurate picture of corporate profitability in cases where the shareholders’ equity has changed from the beginning of a trading period to the end of the trading period.

Net Interest Margin (NIM)

The net interest margin is a measure of performance that examines a financial institutions investment decisions against its debt situation.

Cost to Income Ratio

The cost to income ratio is a measure of efficiency of a financial institution. It depicts the ability of a financial institution to minimize cost and maximize profits.

While both banks depict relatively good performance, the Dubai Islamic Bank records better performance when compared to the Bank of America. D.I.B has a higher operational efficiency depicted by the higher ROAA. It also depicts higher returns relative to equity and better investment relative to their debt position. In general, D.I.B has a better performance.