Introduction Abu Dhabi Islamic Bank (ADIB) and National Bank of Abu Dhabi (NBAD) are two leading banking institutions based in the capital city of United Arab Emirates, Abu Dhabi. This report comprises of a financial analysis of both banks while taking into consideration financial information in the past three financial years, i.e. 2009, 2010 and 2011. The financial analysis presented in this report includes, profitability ratios, liquidity ratios, leverage ratio and solvency ratios of the two banks. Overview of the Banks Abu Dhabi Islamic Bank was founded back in the year 1997 with the mission of conducting its operations in accordance with the Islamic principles as laid down under “Shariah Law” (Abu Dhabi Islamic Bank, 2011; Bloomberg, 2013). National Bank of Abu Dhabi was founded in the year 1968, and since then it has earned a great reputation not only in the region, but also in other parts of the world. Today, National Bank of Abu Dhabi is regarded as the largest financial institution in Abu Dhabi as far as its lending operations are concerned (National Bank of Abu Dhabi, 2011; Bloomberg, 2013). Financial Analysis Following is a comprehensive analysis of the financial position and performance of the companies selected in this report: Profitability Ratios Profitability ratios are determined in order to evaluate profitability of a business concern. Profitability ratios generally include, gross margin, operating margin, return on equity, return on investments, return on capital employed, etc. (Helfert, 2001; Siddiqui, 2006). Following profitability ratios have been determined for the banks selected for analysis in this report:                       Abu Dhabi Islamic Bank  National Bank of Abu Dhabi                       2009                    2010                        2011     2009     2010     2011    Return on Equity      1.51 %                  12.62 %                     13.48 %  14.77 %  15.27 %  14.05 % Return on Investment  0.12 %                  1.36 %                      1.55 %   1.53 %   1.74 %   1.45 %  Net Profit Margin     7.26 %                  43.68 %                     44.31 %  60.72 %  61.16 %  56.96 %  Source: (Abu Dhabi Islamic Bank, 2011; Abu Dhabi Islamic Bank, 2010; National Bank of Abu Dhabi, 2011; National Bank of Abu Dhabi, 2010; Bloomberg, 2013). The return on equity has increased significantly from 2009 to 2010 for Abu Dhabi Islamic Bank. The reason behind this substantial increase is the improvement in the bank’s earnings in 2010 and onwards. Moreover, since there is comparatively lower increase noted in total equity of the bank, and therefore, resulted in higher return on equity in 2010 and 2011. Similarly, for National Bank of Abu Dhabi the ratio has shown improvement from 2009 to 2010, but declined in 2011. The reason behind these fluctuating trends noted in return on equity for National Bank of Abu Dhabi is fluctuations in net income during the past three years. Similar to the trends noted in return on equity for the two banks in the past three years the return on investment for the two banks showed similar trends. Also, net profit margin also followed similar patterns for both banks. Due to significant increase in revenues of Abu Dhabi Islamic Bank, the net income increased considerably, the impact of which has been ultimately