Profit sharing is a contract between two parties whereby one party provides capital to the other party who undertakes the management in exchange of a share in the output.
Mudarabah is one method of Profit sharing applied by BBL.
Mudharabah achieves the interest of both parties, the capital owner who may not have the time or the experience to turn over capital & trade with it and the Mudharib who may not have the adequate capital to put to use his experience.
BBL in this sense provides capital to the Mudharib (client) who in turn utilizes his/her expertise for the investment of capital in exchange of a share in a pre-agreed upon profit.
At the end of the mudharabah agreement and after recovering the mudharabah capital, both the Bank and the Client calculate their profits and distribute them based on the agreed upon shares.
Another way of applying Mudharaba is when depositors (institutions and individuals) tender their money to BBL as capital owners to be invested by the Bank as Mudharib on the basis of profit sharing according to specific ratios agreed upon.