The main differences between conventional bank and Islamic bank - Essay Example

Qatar Islamic Bank and Doha Bank: Differences between their Balance Sheets: Balance Sheet The asset category of both Qatar Islamic Bank and Doha Bank resemble where their sub-categories are concerned. The balance sheet representation of asses in both banks begins with cash balances in the respective banks. As of year ending December 2010, Qatar Islamic Bank claimed 1,874, 550 Qatari Riyaals while Doha Bank claimed around 10, 378, 704 Qatarri Riyals. Both amounts were expressed in Qattari Riyyals for both banks.

Both banks show amount due from investments, loans and financing Activities after showing relative cash balances. Even this is unchanged in the asset category. All assets including fixed assets and other assets are summed accordingly after that. The total assets are written below. Doha Bank had an additional investment in an associate company which Qatar Islamic Bank did not have. In the liabilities section, again there are a lot of similarities. Net liabilities at the end of 2010 for Doha Bank stand at 39, 319, 885 Qattari Riyals while those of Qatar Islamic Bank stand at 20, 979, 710 Qatari Riyals.

Qatar bank had liabilities due from Sukook financing activities which are nowhere to be seen in the Doha Bank balance sheet statement. Total shareholder’s equity of Qatar Islamic Bank stood at 9,124, 004 while that of Doha Bank stood at 6,043, 493 (All amount in Qatarri Riyals) . There is hedge reserve in Doha Bank while Qatar Bank did not have any hedge reserve. Income statement: Net income for Qatar Islamic Bank as of year ending December 2010 is specified as 1,833,139 while that of Doha Bank is 1,054,245 (all figures stated in QR).

The way in which income is calculated is very different for both banks. In Doha Bank net operating income is calculated as the sum of net income from insurance activities, net Islamic financing and investing income, net fees and net commission income. In Qatar Islamic bank the above categories are not used. In Qatar Islamic Bank, net operating income is calculated as the sum of income from financing and other activities, commissions fees and nets and income gains from foreign exchange operations.

Expenses are similar. Doha Bank reports on weighted average number of shares while QIB reports on Basic and diluted earnings per share in Qatari Riyals per share. In QIB , the minority interest and suksk shares are also subtracted from net profit while the same does not happen in Doha Bank Qatar Islamic Bank and Commercial Bank Comparison of 2009 reports: Balance Sheets: There are some marked differences between the balance sheets of both banks. In the Assets category, Commercial bank does not use Investment properties held for leasing while Qatar Islamic bank does use that category.

Liabilities for Qatar Islamic Bank has only 3 sub categories while liabilities for the commercial bank consists of the following additional sub-categories: Debt issued and other borrowed funds Other liabilities Total liabilities excluding unrestricted investment accounts These sub-categories are not present in Qatar Islamic bank. In commercial bank, holders of unrestricted invested accounts are represented as a part of the total liabilities while they are represented differently in Qatar Islamic bank.

In equity section, Qatar Islamic Bank contains foreign currency translation reserve which is not a part of the commercial bank while the commercial bank comprises of cumulative changes in fair value which is not a part of Qatar Islamic International Bank. Income statement In the income statement, Qatar International Islamic Bank does not use net income from Islamic financing and other activities while Commercial Bank does use it to calculate operating income. Both income statements resemble a lot with very minor differences.

Share of result of associates is included in the income statement for Commercial Bank while the same is not included in the income statement for Qatar Islamic Bank. References: Bank, World. "Afghanistan: Pioneering Donor Coordination for Microfinance." 4 2 2004. . [Retrieved 3 1 Dec 2011] "Bereke." 2010. Mixmarkets. 3 01 2011 . [Retrieved 3 1 Dec 2011]