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A powerpoint presentation on the Development of a Strategic Plan for Brac Bank, Bangladesh, which was prepared as part of Schoolwork.
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Developing a Strategic Plan for Brac Bank Ltd. for 2020
Introduction
Objectives
Broad Objective:
To identify and analyze the Key Performance Indicators
and formulate best suited Strategic Plan for 2020
Specific Objectives: To identify the Key Performance Indicators for the bank
Determining the desired perceived Identity for the bank
Setting specific strategic goals for 2020
Methodology
Primary sources: Depth interviews with bank officials, semi-structured
questions, 60-90 minutes
Secondary sources: Annual & Half Yearly Reports of peer banks
Bangladesh Bank publications
Other financial news
Company Overview
Highlights
Launched on July 04, 2001
86 Branches
21 SME Service Centers
48 SME/Krishi Branches
333 ATMs
Over 400 SME Unit Offices
More than 1,300,000 customers accounts
Vision, Mission and Values
Vision Statement
“Building a profitable and socially responsible financial institution focused
on Markets and Business with growth potential, thereby assisting BRAC and
stakeholders build a "just, enlightened, healthy, democratic and poverty
free Bangladesh”.
Vision, Mission and Values
Mission StatementSustained growth in ‘Small & Medium Enterprise’ sector
Continuous low cost deposit growth with controlled growth in Retained
Assets
Corporate Assets to be funded through self-liability mobilization. Growth
in assets through Syndications and Investment in faster growing sectors.
Continuous endeavor to increase fee based income
Vision, Mission and Values
Mission Statement (Cont.)Keep our Debt Charges at 2% to maintain a steady profitable growth
Achieve efficient synergies between the bank’s branches, SME unit
Offices and BRAC field officers for delivery of Remittance and Bank’s other
products and services
Manage various lines of business in a fully controlled environment with
no compromise on service quality
Keep a diverse, far flung team fully motivated and driven towards
materializing the bank’s vision into reality
Vision, Mission and Values
Core Values
Value the fact that are a member of the BRAC family
Creating an honest, open and enabling environment
Have a strong customer focus and build relationships based on integrity,
superior service and mutual benefit
Strive for profit & sound growth
Vision, Mission and Values
Core Values (Cont.)
Work as team to serve the best interest of our owners
Relentless in pursuit of business innovation and improvement
Value and respect people and make decisions based on merit
Base recognition and reward on performance
To be responsible, trustworthy and law-abiding in all that we do
Industry Analysis
PESTEL Analysis
Political Factors
Strength of Factor: 1 (Strong)
Duration of Effect: Mostly Short-term
Political Uncertainties and Unrest
Tax and Profit Repatriation policies
Entry mode regulations for local banks
PESTEL Analysis
Economic Factors
Strength of Factor: 1 (Strong)
Duration of Effect: Long-term
Interest rates
Credit accessibility
PESTEL Analysis
Social Factors
Strength of Factor: 2 (Medium)
Duration of Effect: Long-term
Population demographics
Changes in lifestyles and trends
PESTEL Analysis
Technological Factors
Strength of Factor: 1 (Strong)
Duration of Effect: Both Long-term and Short-term
New Innovations in Financial Services
Technological Advances and Electronic Platforms
PESTEL Analysis
Environmental Factors
Strength of Factor: 2 (Medium)
Duration of Effect: Long-term
Environmental Protection Laws
Popular and Government Attitude towards Environmental Safety
PESTEL Analysis
Legal Factors
Strength of Factor: 1 (Strong)
Duration of Effect: Both Long-term and Short-term
Employment Regulations
Operational Regulations
Porter’s Five Forces
HIGH
LOW
HIGH
HIGH
MODERATE
TRENGTHS
SWOT Analysis
• Young, energetic and dedicated resource pool
• Wide range online distribution channel
• Unique SME model • Strong technological platform• Strong brand• Diversified Business Model• Largest customer base among
PCBs including Mobile banking • Organizational flexibility
• Asset quality • Inconsistent customer experience • Absence of focused technology
roadmap • High CIR (Cost Income Ratio)• Low Non Funded Income
S
OPPORTUNITIES
THREATS
• Trade Finance • E-commerce • bKash infrastructure • Customer mining from parent &
subsidiaries • Growth in Medium, Emerging
and Small sectors • Derivative and FX products• Social Networking• Mobile phone based banking• Agent Banking
• New Competition • Talent Attrition, Staff turnover • Unstable capital market • Country Image crisis may result
withdrawal of facilities like GSP• Industrial Unrest causing investors’
interest shift to Myanmar, Vietnam, Sri Lanka etc.
SWOT Analysis
Financials
Industry Highlights: December 2012INDUSTRY SCENARIO Operating Profit PBT FUM CIR NPL
As on 31st December 2012 BDT_M Growth BDT_M Growth BDT_M % %
Islami Bank Bangladesh 15,608 10.9% 12,096 16.9% 758,324 36.2% 3.8%
National Bank 3,725 -61.2% 3,275 -65.1% 283,500 69.1% 4.3%
Prime Bank 8,551 15.1% 5,335 -21.1% 342,943 36.6% 3.8%
UCBL 5,762 -3.5% 3,739 -27.7% 306,602 43.4% 3.7%
Southeast Bank 5,434 -6.5% 3,584 -16.9% 280,217 29.5% 4.5%
Pubali Bank 11,511 21.7% 4,317 -20.2% 272,487 46.7% 5.1%
Eastern Bank 8,844 13.5% 5,581 9.3% 188,501 36.9% 3.2%
Dutch Bangla Bank 5,205 0.9% 4,816 5.9% 217,034 81.1% 3.0%
BRAC Bank 5,145 3.5% 1,988 -33.9% 238,271 52.8% 7.4%
AB Bank 8,435 8.9% 3,190 7.9% 246,092 70.4% 3.3%
Dhaka Bank 5,343 -14.2% 1,440 -60.6% 197,567 39.7% 6.3%
Bank Asia 5,052 25.0% 2,723 -20.7% 202,391 48.6% 5.7%
NCC Bank 4,027 -4.5% 2,743 -24.4% 176,866 61.0% 5.5%
The City Bank 4,537 6.3% 1,763 -49.2% 177,432 46.6% 14.9%
Mercantile Bank 6,209 0.6% 3,351 -4.3% 225,705 45.2% 4.4%
Industry Highlights: December 2012
INDUSTRY SCENARIO Ranking
As on 31st December 2012 Op. Profit PBT FUM CIR NPL
Islami Bank Bangladesh 1 1 1 14 11
National Bank 15 10 4 3 9
Prime Bank 4 3 2 13 10
UCBL 7 6 3 10 12
Southeast Bank 8 8 5 15 7
Pubali Bank 2 5 6 7 6
Eastern Bank 3 2 13 12 14
Dutch Bangla Bank 10 4 10 1 15
BRAC Bank 11 14 8 5 2
AB Bank 5 11 7 2 13
Dhaka Bank 9 16 12 11 3
Bank Asia 12 13 11 6 4
NCC Bank 14 12 15 4 5
The City Bank 13 15 14 8 1
Mercantile Bank 6 9 9 9 8
Findings
Desired Perceived Identity
Q & A: Depth Interview What are the main goals for 2020? The main goals for 2020 are to be within top five banks in terms of Operating Profit and
be the 2nd largest bank in terms of Fund under Management. What are the main challenges ahead? The major challenges are political unrest, NPL reduction and cost income ratio
reduction What is the desired growth in the SME sectors? BBL aims to achieve a greater market share at the end of 2020.
Would the loan mix change to focus on Corporate and Retail more? Retail and Corporate must grow but the focus would still be SME.
What is the desired deposit mix? The deposit mix should change with greater focus on CASA.
Q & A: Depth Interview What is the aspired ranking in the industry in terms of Profit? The aspired ranking in the industry in terms of Profit is to remain within top 5. What is the aspired ranking in the industry in terms of FUM? The aspired ranking in the industry in terms of FUM is 2nd.
What should be the communication strategy? Effective but efficient (less costly) communication strategy should be used.
Are there probable going international plans? BBL will focus on internal consolidation first then extend footprints internationally
What are the technological prospects? Innovation & Technological Advances are continuous processes. BBL aims to turn its IT
into a profit centre through the launching of biTS, BRAC IT Services Ltd.
Q & A: Depth Interview
How can you improve the efficiency of the workforce? BBL has a separate Learning & Development Division for training thus efficiency
improvement of their employees. How can you reduce the costs? Staff cost can be reduced through efficiency and specialization/ job rotation where
relevant. Are there any plans of leveraging subsidiaries? bKash channel could be used to reduce dependency on corresponding bank. What ROE would you like to offer the shareholders? Shareholder wealth maximization thus higher ROE offering is essential and one of the
major goals for 2020.
Analysis & Recommendations
Strategic Objectives : 2020
SME Market Share Present Status: 6% market Share Recommendations:
Focus on the medium segment A 2% increase per year would make the share
20% at the end of 2020
Year 2013 2014 2015 2016 2017 2018 2019 2020
SME Market Share 6% 8% 10% 12% 14% 16% 18% 20%
Strategic Objectives : 2020
Operating Profit Present Status: 11th position in 2012 Recommendations:
Increase the ranking by 2 from 2014 to 2017 and reach 5th position
Aim for the 2nd position in 2020 Focus on Non-Funded Income such as LC
Strategic Objectives : 2020
Fund Under Management Present Status: 8th position in 2012 Recommendations:
Reach 2nd position by 2020 Loans and Advances and Deposits should
grow at 30% per year Deposit mix should increase its share of CASA
so that low cost funds are more and net interest margin is higher
Strategic Objectives : 2020 Operating Cost
Present Status: 5th position in 2012 in terms of cost income ratio
Recommendations: A fundamental redesign of the way the bank operates
to reduce cost sustainably Approach: A small team should be formed from various departments of the
bank to conduct a series of bottom-up and top- down analyses to develop aggressive goals
Team: Bank’s leadership team must visibly lead the effort and must illustrate both their vision for short-term changes and their long-term view in town hall meetings, electronic newsletters, social- networking sites, and Q&A sessions for small groups
Engagement: The entire organization must be mobilized throughout the process by a systematic change program that ensures the right amount of information is communicated to the right people at the right time.
Strategic Objectives : 2020
Non Performing Loans Present Status: 2nd position in 2012 Recommendations:
The credit division needs to be more careful and obtain relevant trainings if required from experts / organizations.
The collection team also needs to be more aggressive and motivated to reduce the NPL
Strategic Objectives : 2020
Return on Equity Present Status: 5.47% in 2012 Recommendations:
It should be around 10% in 2013 and increase in the following way in the coming years:
Year 2013 2014 2015 2016 2017 2018 2019 2020
ROE 10% 12% 14% 16% 18% 20% 22% 25%
Conclusion
Strategic Management is very important to ensure that employees and other stakeholders are working toward common goals
The bank should focus on few specific areas rather than too many targets for achieving their desired position in 2020: SME market share, Profit, FUM, Costs, NPL & ROE
BBL must think ahead of time and act ahead of competitors to retain leadership in innovative banking
Mr Najmul Hoque JewelHead of Business Planning and AnalysisFinance Division, Brac Bank Limited
Mr. Benozeer AhmedSenior Manager, Business Planning and AnalysisFinance Division, Brac Bank Limited
Mr. Salman AhmedSenior Manager, Business Planning and AnalysisFinance Division, Brac Bank Limited
Acknowledgement
Thank you
Q & A