Performance dynamics of an industrial organization in Bangladesh: a case of ONE Bank Limited

7/30/2019 Performance dynamics of an industrial organization in Bangladesh: a case of ONE Bank Limited.

1/10

1 | P a g e

Term Paper

Performance dynamics of an industrial organization in Bangladesh: a

case of ONE Bank Limited.


2/10

2 | P a g e

Table of Content

Topic Page

01.Historical Background 0302.Product profile 0303.Competitive status 0304.Trends & performance 0405.Growth rate 0506.Productivity 0607.SWOT Analysis 0708.Possible Measures to Improve Performance 0709.Conclusion & remarks 08


3/10

3 | P a g e

Historical Background

ONE Bank limited is a private sector commercial bank incorporated with the Registrar of Joint Stock

Companies under the Companies Act 1994. The Bank commenced its banking operation on 14 July 1999

by obtaining license from the Bangladesh Bank on 02 July 1999 under section 31 of the Bank CompanyAct 1991. As per the provisions of Bangladesh Bank license, the Bank has offered initially its shares to

public by Pre-IPO and subsequently sold shares to the public through IPO in the year 2003. The shares of

the Bank are listed with both Dhaka Stock Exchange Ltd. and Chittagong Stock Exchange Ltd. The

number of branches of the Bank was sixty four (64) and the number of booths was nine (9) as on 31

December 2012.

The Bank is pledge-bound to serve the customers and the community with utmost dedication. The prime

focus is on efficiency, transparency, precision and motivation with the spirit and conviction to excel as

ONE Bank in both value and image.

The name 'ONE Bank' is derived from the insight and long nourished feelings of the promoters to reach

out to the people of all walks of life and progress together towards prosperity in a spirit of oneness

Vision Statement:

To establish ONE Bank limited as a Role Model in the Banking Sector of Bangladesh. To meet the needs of our Customers, Provide fulfillment for our People and create Shareholder

Value.

Mission Statement:

To constantly seek to better serve our Customers. Be pro-active in fulfilling our Social Responsibilities. To review all business lines regularly and develop the Best Practices in the industry. Working environment to be supportive of Teamwork, enabling the Employees to perform to the

very best of their abilities.


4/10

4 | P a g e

Product Profile

OBL is a private sector commercial bank dedicated in the business line of taking deposits from public

through its various saving schemes and lending the fund in various sectors at a higher margin.

The banks financing concentrate in both, working capital finance and long-term finance. OBL has major

concentration of financing in medium and large industries. Since the short-term finance carries low risk

compared to long-term finance; the financing strategy of OBL will assist the bank to keep the risk at

minimal.

Products and Services:

i. Retail Bankingii. Institutional Banking

iii. Corporate Bankingiv. Commercial Bankingv. On-Line Banking

vi. Merchant Banking Advisory Servicesvii. Capital Market Operation

viii. Islamic Banking Servicesix. Credit to Women Entrepreneursx. Consumer Credit Facility

xi. Counter for Payment of Billsxii. Other Services


5/10

5 | P a g e

Competitive Scenario:

The banking sector alone accounts for a substantial share of financial sector assets, with 48 banks

accounting for about 95 percent of the sectors total assets as of the end of December 2011. Since 2002,

the domination of the banking system by the state owned commercial banks (SCBs) has been decliningwhile private commercial banks (PCBs) and foreign commercial banks (FCBs) have been gaining

market share in both deposits and bank loans and advances (Bhattacharya and Chowdhury 2003),

reflecting an increased competition in the banking industry. The market share of the SCBs declined

substantially to 28.75 per cent of the total industry assets in 2011 as against 54.4 per cent in 1990, while

PCBs' share rose to 65.24 per cent in 2011 as against 22.6 per cent in 1990. Similarly, FCBs have also

shown slight increase holding total industry assets over the last ten years. FCBs hold 6.0 per cent of the

industry assets as of 2011.

The consumers, corporate houses, farms, semi-government and government organizations etc. are the

target market of banking industry of the country. Therefore, One Bank Limited is highly confident that

the demand for banking in Bangladesh will continue to increase significantly in the foreseeable future.

As reported in the media, the operating profit of the country's private commercial banks (PCBs) was

estimated to have grown by Taka 5.0 billion during the year 2004, which translates to 28.63 Percent

growth for the industry over the previous year. Therefore, the growth in percentage terms for ONE Bank

has been three & half times the average industry growth. This achievement in a very competitive industry

is something that makes the bankers very proud.


6/10

6 | P a g e

Performance Trends:

Particulars

2012 2011 Change

Total Capital 8,437,921,139 7,700,158,932 9.58%

Total assets 84,585,883,816 67,619,044,045 25.09%

Total Deposits73,055,774,154

57,240, 154,812

27.63%

Total Loans & Advances 60,216,129,302 47,926,683,737 25.64%

Return on investment (ROI) 14.33% 14.94% (4.11)%

Income from investment 552,388,074 1,441,430,733 (61.68)%

Earnings per share 2.55 4.54 43.92%

Credit deposit ratio % 82.42% 83.73% (1.56)

Factors Influencing Performance

Deposits of the Bank Loans and Advances of the Bank Net profit of the Bank Number of branches of the Bank Number of the employees of the Bank Earnings per share of the Bank


7/10

7 | P a g e

Growth rate:

The banking sector alone accounts for a substantial share of financial sector assets, with 48 banks

accounting for about 95 percent of the sectors total assets as of the end of December 2011. Since 2002,

the domination of the banking system by the state owned commercial banks (SCBs) has been decliningwhile private commercial banks (PCBs) and foreign commercial banks (FCBs) have been gaining

market share in both deposits and bank loans and advances (Bhattacharya and Chowdhury 2003),

reflecting an increased competition in the banking industry. The market share of the SCBs declined

substantially to 28.75 per cent of the total industry assets in 2011 as against 54.4 per cent in 1990, while

PCBs' share rose to 65.24 per cent in 2011 as against 22.6 per cent in 1990. Similarly, FCBs have also

shown slight increase holding total industry assets over the last ten years. FCBs hold 6.0 per cent of the

industry assets as of 2011.

Productivity:

Deposits and Shareholders Equity represented are the two biggest resources of funds for the Bank. As at

December 31, 2012, the deposit to third parties liability ratio is 94.68% and Equity to third parties

liability ratio is 9.62%. The Bank tries to mobilize deposits from low cost sources and prudently invest

the fund for raising the profitability of the Bank. Through careful planning, a prudent dividend policy and

expenditure on capital items and investments, the Bank ensured optimization of the Shareholders Equity.


8/10

8 | P a g e

SWOT Analysis:

Strengths

Satisfactory Capital Adequacy Satisfactory business growth Experienced top management Diversified product lines Satisfactory asset quality

Weaknesses

Decreasing market share Deposit growth is less than Peer and industry growth Does not have own training institute Dependency on term deposit

Opportunities

Investment in SME and Agro based Industry. MIS in continuous development process. Basel-II compliance for capital adequacy.

Threats

Increasing cost of fund. Increased competition in the market.


9/10

9 | P a g e

Possible measures:

The loan sanctioning process should be easier so that the customer can feel convenient to takeloan from the bank.

The Bank authority should lay emphasis on the quality of service. The Bank should hunt low cost deposit from the depositor to provide borrowing customers lower

of rate.

The Bank should train its all officers and executives to provide quick and quality service to thecustomers.

The Bank needs to set up more branches in different commercial area of Dhaka, Chittagong andother towns to make a good network all over the country.

The Bank needs to introduce more promotional programs to promote its producers and services tothe people.

Others things to remember:

Coping with I nstable Economic State: To cope with the ever changing economic environment,

the management of OBL should always be watchful and should constantly analyze the

organizations overall environment. As a learning organization BPL should keep their practices of

flexibility to encourage innovation for the times of much needed change. Again, as Government is going

to pass a new version of law, involving the banking industry one bank should prepare their arrangements

to cope with the coming changed business environment.

Handling Competiti ons: Since, OBL business strategy is to focus on particular segments of the

total market they should be operating with the view to becoming the market leader of those areas. In

the mean time, they should look forward to grow their business as much as possible both in national

and international market.

Negotiating with the Government: In order to ensure more prospects in the import and export

activities of one bank needs to negotiate to adjust several business laws and regulations with the

Government. Such approach can be proved as a benefit of the company.


10/10

10 | P a g e

Concluding Remark:

ONE Bank could maintain steady performance measured in terms of key indicators. Afteranalyzing all available data it was observed ONE Bank is in better position in all respects

Despite hard competition among banks operating in Bangladesh, both local and international,ONE Bank has made tremendous and remarkable progress practically in every sphere of its

activities. The Bank is maintaining its position as one of the leading new generation private

Banks in the country both in terms of capital base and good governess.

There are, however, a number of areas where ONE Bank needs to lay emphasis in order to sustainsteady growth rate.

Documents

Performance dynamics of an industrial organization in Bangladesh: a case of ONE Bank Limited