FINANCIAL REPORTING AND PROFITABILITY IN ISLAMIC BANKS APPLYING IFRS: A QUANTITATIVE STUDY OF KEY ACCOUNTING INDICATORS

Abstract

This article is devoted to investigate how key financial indicators reported in IFRS-based financial statements affect the profitability of Islamic banks. Using data from five leading Islamic banks - Al Rajhi Bank, Bank Islam Malaysia (BIMB), Dubai Islamic Bank (DIB), Kuwait Finance House (KFH), and Maybank Islamic Malaysia - over the period 2015 to 2024, a multiple linear regression model is applied with Return on Assets (ROA) as the dependent variable. The selected indicators include fee-based income, Islamic financing margin (IFM), Return on Equity (ROE), and the Equity-to-Asset Ratio. The results show that ROE and capital strength are strongly associated with higher profitability, while fee-based income and financing margins show significant negative effects. These findings highlight the importance of internal capital efficiency in IFRS-reporting Islamic banks and offer insights into how profitability is reflected in their financial disclosures.