Impact of Non-performing Investment on Bank’s Profitability- A comparative study between SJBL and AAIBL

Muhsina Aktar and Dr. Md. Firdaus Hossain
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Muhsina Aktar: Assistant Professor, Department of Business Administration, Manarat International University
Dr. Md. Firdaus Hossain: Associate Professor, Department of Islmaic Studies, Bangladesh Islami University

International Journal of Research and Scientific Innovation, 2025, vol. 12, issue 2, 230-240

Abstract: The aim of this study was to make a comparative analysis of of Non-performing Investment on Bank’s Profitability between Shahjalal Islami Bank PLC. and Al-Arafah Islami Bank PLC. The study consists five years data of two sample banks and use both primary and secondary data sources to analyse the data. This research conducted a survey using five-point likert model questionnaire from 04 branches of both sample banks to identify the factors responsible for NPI. Poor loan Monitoring and Political Influence regarding loan sanctioning and disbursement plays a vital role to increase NPI as per the opinion of bankers from selected sample banks. This research shows that Non-Performing Investments (NPIs) badly affects the financial condition of both banks by decreasing profitability, using up the liquidity and stretching the capital adequacy ratios. In both sample banks, NPI is increasing over the years and maximum percentage of NPI is in agricultural sector. However, In some year though the NPI ratio was reduced but it has no impact on ROE and ROA because of some other positive factors. This paper also emphasize having Islamic practices in recovery processes and industry-specific approaches to increase financial resilience. This paper doesn’t conduct any survey among bank’s customer to identify the factors responsible for non-performing investment and used only ten factors by reviewing several literatures to identify the NPI factors. The present study opens an avenue for more studies in this direction.

Date: 2025
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