Correspondence: Hussein A. Hassan Al-Tamimi, Department of Business Administration, College of Business and Management, University of Sharjah, P.O. Box 27272, Sharjah, United Arab Emirates. Tel: +9716 5050557; Fax: +9716 5585646; E-mail: darm2@emirates.net.ae

¹is Associate Professor of Finance at Sharjah University, where he teaches financial management, corporate finance, investments, financial markets and institutions, personal finance and portfolio management. His current research focuses on capital budgeting, captical structure, risk management, stock markets and financial performance.

²is a Retail Banking Department Head, Arab Bank for Investment & Foreign Trade, United Arab Emirates. His current research focuses on banks performance and risk management.

Received 16 November 2006; Revised 16 November 2006.

Abstract

This study investigates the operating and profitability efficiency of 15 branches of UAE-based commercial bank utilising the data envelopment analysis method. The results indicate that efficiency levels among the various branches vary and that there is room for improvement. Profitability efficiency appears to be higher than operational efficiency. Regarding the financial ratios analysis, a consistent effect cannot be obtained and it cannot be determined which branch has an overall position in terms of higher performance. The historical analysis of the branch network performance indicates that management should consider major operational improvement efforts to reduce employees' expenses and other operating expenses combined with an increase in the total loans portfolio. Improvement in both interest and non-interest revenues is required to increase profitability efficiency of the whole branch network.