The paper aims to analyze the determinations the financial performance of Islamic banks and conventional banks in Malaysia, covering the period of 2006 to 2011. The data was based on the financial statements of Islamic banks and conventional banks in Malaysia from 2006 to 2011. Financial performance measures were expressed in term of various financial ratios in which were categorized into profitability, liquidity, risk and solvency and efficiency. Mann-Whitney Pearson was employed to compare the differences financial performance of Islamic banks and conventional banks. In Mann-Whitney Pearson test, found that both banking system were having significant differences significant among each other’s. Furthermore, ordinary least square test is applied to determine the factors that influencing the financial performance of all the banks. It is evident from gearing ratio, bank size and non-performing loan found to have significant relation to Islamic banks and conventional banks, whereas the capital adequacy is statistically significant in conventional banks only. Besides bank types were included as a dummy variables to confirm the Mann-Whitney Pearson result and we found that the main contribution effect of bank types is mainly focus in term of profitability and efficiency perspective.

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