The aim of this study is to examine the financial performances of Islamic and conventional banking systems in the United Arab Emirates (UAE). Four Islamic banks and seven commercial banks in the UAE are analyzed for the period of 2005-2014. In terms of Islamic banks, the findings indicated that the variables asset quality (ASQ) and liquidity (LQR) have negatively impacted return on assets (ROA) and return on equity(ROE). In addition, capital adequacy (CAR) had a positive relationship with ROA and a negative relationship with ROE, while size (LOGSIZE) had a positive influence on ROA but was statistically insignificant on ROE. Management efficiency (EFF) was statistically insignificant on Profitability. On the other hand, regression results of conventional banks showed that CAR, ASQ and LOGSIZE have negatively affected profitability. EFF had a positive impact on profitability, while LQR was statistically insignificant for conventional banks. The results of this study can be used to generate several recommendations for managers of both conventional and Islamic banks.

JEL Classification: G21; G29.

Keywords: Banks; Financial Performance; Profitability.

*Corresponding author.