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To
analyze the profitability of the
banks the discussion about the main information and company profiles of the
banks is the most important fact. The two companies (banks) are selected for
these particular procedures both of these banks are operating in the region of
Saudi Arabia and one is a Saudi Arab based company meanwhile another one is the
foreign bank but working in Saudi Arabia. These are the BNP Paribas bank and Al
Rajhi bank. The financial reports and analysis are compared and generate to
analyze and measure the profitability of these banks. All kinds of financial
data will be utilized to compare both of these banks
Al Rajhi bank of
Analysis of profitability of banks a comparative study of domestic & foreign banks in Saudi
Arabia
The
Al Rajhi bank is referred to as a Saudi Arabian bank and it is also known as
the largest Islamic bank of the world. The capital of this bank is based upon
the data of 2015. The bank is considered as one of the major investors in the
business of Saudi Arabia. It is also known as one of the most important and
largest joints stock companies in the Kingdom of Saudi Arabia. In AUM it has
worth over SR330.5 billion as well as operating across the 600 branches. In
1957, this bank founded Al Rajhi bank is considered as one of the most well-known
and largest Islamic banks around the globe. It is operating allowing with the
SR343 billion. This bank has paid capital with the amount of 16.25 billion. It
was worth US$4.33 billion. 9600 associates this company is an employee based
over
Al
Rajhi Bank is operating with round about the experiences of the 60 years in the
trading and banking activities. Under the name of the Al Rajhi bank, there are
numerous individuals establishments are operating. These were merged under the
umbrella of the Al Rajhi bank exchange and trading corporation in 1978. The
bank was established in 1988 as a shareholding company in Saudi Arabia. Al
Rajhi bank is entirely rooted in Islamic banking principals. In bridging the
gap among the intrinsic value and modern financial demands the banking group is
considered as instrumental as Sharia-compliant, it leads towards the
development and the particular standards of the industry.
The
Al Rajhi Bank is operating with a vast network of the 570 branches in Saudi
Arabia. It has round about 152 branches that are only dedicated to the ladies.
Al Rajhi bank’s working with the 74612 POS terminals and more 4794 ATM’s are
working under the flag of the leadership of this bank. Additionally, more than
233 remittances are operation over the KSA (Kingdom of Saudi Arabia). In 1957
the firm men’s branch was opened in Aldirah along with the first ladies branch
that is being opened in 1979 in Shamsi. These kinds of the worth and reputation
of the Al Rajhi bank is one of the most important facts to analyze its
profitability
BNP
Paribas S.A of Analysis of profitability of banks a comparative study of domestic & foreign banks in Saudi
Arabia
BNP Paribas S.A is referred to as one of the most important
and international banking group that is related to the French banking sectors.
It is considered the largest bank around the globe. According to its assets,
its world's 8th largest bank is earning profitability from the
developed countries around the globe. It
is currently operating in 77 countries performing ineffective manners to earn
its growth in a good way. This bank was formed by the mergers of the Paribas
and Banque National de Paris. This merger occurred in 2000. In 1884 as national
its corporate identity has been stretching backed. It is known as one of the
most important and international major three French banks with the Crédit Agricole
and Société Générale (Macrotrends Net, 2019).
This
group has been listed on the component of the Euro 50 Stock market Index as
well as on the market of the Euro next Paris. It is also listed on the index of
the French CAC 40 index. BNP Paribas bank in operation in the five continents
and operating its function on both departments as investment banking operations
and retail banking section. There are more than 30 million customers who are
enjoying its retail banking services or networks for its three domestics
markets only. These markets are includes as; Italy, France, and Belgium by the
numerous brands such as Fortis and BNL.
In Africa and the Mediterranean region, the retail bank is operating. It
operates in the western United States in America as the bank of the West. It is
also known as one of the most important and banking groups in Hawaii
1.1 Problem
statement of Analysis of profitability of banks a comparative study of domestic & foreign banks in Saudi
Arabia
The current era is all about the competition
by providing high-quality products or services. The firms which intend to
provide their clients with efficient and quick services are the market leaders.
This study is conducted in the context of domestic and foreign banks in Saudi
Arabia. The main agenda behind conducting this study is to provide an analysis
of the profitability of the banks in Saudi Arabia by conducting the comparative
analysis of both the domestic and the foreign banks of Saudi Arabia. The
financial performance of the banks for the previous few years better helped to
evaluate the performance as well as the profitability of the selected banks in
Saudi Arabia.
1.2 Research
objectives of
Analysis of profitability of banks a comparative study of domestic & foreign banks in Saudi
Arabia
The research
objectives for the current research work are as given:
·
To provide the identification of the factors
that help to evaluate the factors related to the bank’s growth.
·
To determine the parameters related to the
bank’s profitability.
·
To evaluate the financial growth of the banks
under consideration.
·
To identify the firm’s growth based on ratio
analysis.
1.3
Research
questions of
Analysis of profitability of banks a comparative study of domestic & foreign banks in Saudi
Arabia
The current
research work is conducted with the consideration of the research questions as
given:
·
Does the employee’s job performance tend to
increase the profitability of the banks in Saudi Arabia?
·
Do effective strategies help to increase the
profitability of the banks in Saudi Arabia?
·
Does the analysis of the competitor’s strategies
help to enhance the operational efficiency of the banks in Saudi Arabia?
1.4 Significance of
the study of Analysis of
profitability of banks a comparative study of domestic & foreign banks in Saudi
Arabia
The current
study intends to provide both theoretical and practical implications. It
provides the basis for future research work. The researchers who intend to
conduct the research work in a similar context can better take help from the
current research work. As far as the practical implications are concerned the
current work will better help the managers to formulate the strategies and the
plans for their organization. it will better help the firm to enhance its
profitability, market share, as well as the customer count.
1.5 Limitations of the study of Analysis of profitability of banks a comparative study of domestic & foreign banks in Saudi Arabia
The limitations
of the current research work are as given:
·
The current research work might have been
provided with an enhanced period.
·
It could have been conducted for some banks
other than those which are selected for the current research work
·
The results and the findings of the current work
might vary based on the varying data collection method.
·
The environment being selected for conducting
the current research work is if changed then it can provide the different
outcomes.
1.6 Summary of Analysis of profitability of banks a comparative study of domestic & foreign banks in Saudi Arabia
The current
chapter is based on providing the details of the banks being selected for the
current study. The research aims and objectives, research questions, problem
statement, significance of the study and the research limitations are a part of
the current research work. The sequence of the next chapters includes as given:
research methodology, analysis and discussion, and conclusion &
recommendations.
Chapter 2
Research Methodology of Analysis of profitability of banks a comparative study of domestic & foreign banks in Saudi
Arabia
2.1.Introduction
of chapter
In this chapter, all the details
about the research methodology of the current study are given. The study topic
is better provided with these methods. They are aimed at providing the current
research work with the data for the existing study. For the said purpose, the
nature of the data is well defined in this chapter. The design of the research
study is an important part of the current chapter. The study population, the
sample size, strategy for the sampling purposes, the methodology for the data
collection along with the data collection and analysis tool are better defined
in the current chapter. The clear the methodology of the study is the better it
helps to achieve the objectives of the study. This is how the research
objectives are streamlined with the research methodology. The tool is selected
for the analysis and the evaluation of the data is being discussed in the
current chapter. Also, the tests used on the data are a part of this chapter.
2.2. Research Design
It is the design of the study which
helps to evaluate the nature of the data and the test required to be applied to
the data. It better helps to achieve the objectives of the research work. The
nature of the data is if quantitative then it shows that the data is numeric.
The opposite case exists for the subjective approach which determines that the
data is non-numeric. The approach for the research, along with the type of
investigation as well as the unit for the analysis purpose is a part of the
research design.
2.3. Research
Approach of Analysis of profitability of
banks a comparative study of domestic
& foreign banks in Saudi Arabia
The research approach is based
entirely on the form of the data which exists for the current research work.
For the present research work, it is clear and confirmed that the nature of the
data is numeric and quantitative because it is obtained from the financial
reports of the banks in Saudi Arabia. The nature of the data serves as the
basis for defining the nature of the data.
If it is the case of the qualitative
data, then it can be said that the verbal data exists for the said purpose. In
the case of quantitative methodology, there does exist the numeric type of the
data. So as is the case with the current research work. It helps to provide the
numerical type of data. The numerical data for the two banks have been obtained
from their financial reports. The banks were selected for the said purpose
include Al Rajhi Bank and BNP Paribas S.A. The data for these banks is better
obtained from their financial reports.
The numerical nature of the data is
being confirmed because the data is gathered from the financial reports of the
said banks. The data thus obtained is passed from different tests. The outcomes
of these tests provided the basis to perform different types of analyses and
comparisons between two banks in Saudi Arabia.
2.4.Type of investigation of Analysis of profitability of banks a comparative study of domestic & foreign banks in Saudi
Arabia
For the current research work, the
ratio analysis of the financials of the two of the selected banks in Saudi
Arabia is being performed.
For the said purpose, the ratios
being computed include as given: the efficiency ration, ratio for the
profitability, the liquidity ratio as well as the financial leverage for the
said banks are being performed. This is how the efficiency and the performance
of the said banks are being evaluated and determined.
2.5.Unit of Analysis of Analysis of profitability of banks a comparative study of domestic & foreign banks in Saudi
Arabia
The unit of analysis is based on the
source of the data. The source for the current study is about the banks in
Saudi Arabia. The unit of analysis is about the financial reports of both the
banks Al Rajhi
Bank and BNP Paribas S.A. The ratio analysis for these banks is performed on
the data from the financial reports. A specified tenure is selected for the
analysis purposes and the analysis of different past years helped to evaluate
the same.
2.6.Time Horizon of Analysis of profitability of banks a comparative study of domestic & foreign banks in Saudi
Arabia
The time horizon is about the period
for which the data is gathered. For the objectives of this study, the data is
gathered for just once. It helped to achieve the purpose of the study. It thus
confirms that the nature of the study is cross-sectional. The data is collected
for just once. No follow-ups are required for this. The follow-ups are if
required then the data will be longitudinal.
The data is gathered for the
analysis purposes is collected for a specific tenure it confirms the
cross-sectional data nature. For the said purpose, the ratios being computed
include as given: the efficiency ratio, ratio for the profitability, the
liquidity ratio as well as the financial leverage for the said banks are being
performed. This is how the efficiency and the performance of the said banks are
being evaluated and determined. These ratios are calculated by making use of
the data of the financial reports of the firm.
The analysis is performed on
the data obtained from financial statements. It helped to determine the
profitability of the banks for different periods.
2.7.Research Strategy of Analysis of profitability of banks a comparative study of domestic & foreign banks in Saudi Arabia
The collection of the data is
time-series. The
banks were selected for the said purpose include Al Rajhi Bank and BNP Paribas
S.A. The data for these banks is better obtained from their financial reports.
For the said purpose the official websites of the banks helped to gather the
data. This is how the data for the banks is gathered.
2.8.Research Methodology of Analysis of profitability of banks a comparative study of domestic & foreign banks in Saudi Arabia
For the current research work, the
secondary data is being used. The data for these banks is better obtained from
their financial reports. As the financial reports are the reliable source of
the data so the reliability of the data is being confirmed. The financial
reports present the true picture of the firm's performance. This is how the
financial standing of both banks is better evaluated. It helped to depict the
true picture of the performance of both the banks.
2.9.The population
of the study of Analysis of profitability of
banks a comparative study of domestic
& foreign banks in Saudi Arabia
For the current research work, the
population of the study is related to all the banks in Saudi Arabia. It
includes both domestic and foreign banks.
2.10.Sample and
sampling strategy of Analysis of
profitability of banks a comparative study of domestic & foreign banks in Saudi
Arabia
The sample is a subset of the
population. For the current study, the financial reports of the selected banks
of Saudi Arabia are used for a specified tenure of the time. The sampling technique
which is used for the current study is the non-probability
convenient sampling technique. As the financial reports are the reliable source of the data so the
reliability of the data is being confirmed.
2.10.Data
Collection Method of Analysis of profitability
of banks a comparative study of domestic
& foreign banks in Saudi Arabia
The
banks were selected for the said purpose include Al Rajhi Bank and BNP Paribas
S.A. The data for these banks is better obtained from their financial reports.
For the said purpose the official websites of the banks helped to gather the
data. This is how the data for the banks is gathered. The data for the
specified period is being gathered from the official websites of the selected
banks in Saudi Arabia. It helped to perform the comparison of the performance
of the selected banks in Saudi Arabia.
2.11.Pilot Study of Analysis of profitability of banks a comparative study of domestic & foreign banks in Saudi
Arabia
For current work, the ratios being
computed include as given: the efficiency ratio, ratio for the profitability,
the liquidity ratio as well as the financial leverage for the said banks are
being performed. This is how the efficiency and the performance of the said
banks are being evaluated and determined. The data is used from 2009-onward (i.e.,
2019) is being used. It helped to generate the desired outcomes. This is how
the objectives of the current research work are obtained.
2.12. Measurement Error of Analysis of profitability of banks a comparative study of domestic & foreign banks in Saudi
Arabia
It is tried to avoid measurement
errors to a possible extent. The data is gathered from reliable resources and
the calculations, as well as the data analysis, is performed carefully. For the
said purpose proper precautionary measures are taken.
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