1.0 Introduction“Bank” is a very common word for today's society as it is always applied in our daily lives. As we know, banks are involved in financial transaction and business investment activity. In Malaysian banking system, it can be divided into two main systems: Islamic banking system and conventional banking system. Both banking systems operate in different ways and offer a different perspective to different customers. In this article, I will investigate the level of efficiency of Islamic and conventional commercial banks before and after the global financial crisis. Islamic banking has the six principles for their operating system which is (1) money as capital, (2) Rabbulmal and Mudarib Relationships, (3) risk sharing, (4) markets set prices and generate profits, ( 5) Islamic banking stability and (6) Islamic banks as agents of economic growth (Ismail, 2010). For the Islamic banking system, the payment of interest is prohibited. Money invested in the business is considered potential capital and can be used to purchase goods and services. Furthermore, money advanced to a business is a debt of the business and cannot be applied to any interest. For conventional banks, their fundamental principle is that time has value, which means that the financial transaction amount will influence from the moment of payment (Ismail, 2010). The borrower is allowed to make the payment within a series of timeframes through the fixed conventional loan agreement. For example, if you buy a car and take out a loan, the bank will allow you to make the payment according to the agreed period. At the end of the period, you will find that the payment amount will exceed… half of the card… this brings less effect to the Islamic bank due to the principles they maintain in its management. Financial instability was prevented from this crisis due to the dominance of the Islamic financial system practiced by the bank. The rules involved, such as the ban on interest charging and profit and loss sharing, have acted as a shock absorber in this crisis. According to the International Monetary Fund (2010), the result also showed that the global financial crisis also has less impact on Islamic banks than others. During the crisis, Islamic banks remained stable in terms of financial performance, although profitability declined more than conventional banks due to weaknesses in risk management. Based on Figure 1, it is clearly seen that the profitability of Islamic banks is better than that of conventional banks in Malaysia.