nib bank business policy and strategy
TRANSCRIPT
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PRESENTED TO: PROF. MOHSIN RAUF
Project
GROUP MEMBERS
NAEEM YOUSAF L1F10BBAM2049
MALIK ASAD NAWAZ L1F10BBAM2059MALIK HARRIS LATIF L1F09BBAM2074
FAIZAN TAFZIL ABDULLAH L1F10BBAM2055
USMAN ISHAQ L1F10BBAM2048
PRESENTED TO:
PROF: MOHSIN RAUF
DATE:
30THOCT, 13
SECTION:
E
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PRESENTED TO: PROF. MOHSIN RAUF
About NIB Bank
NIB Bank is the largest foreign bank in Pakistan in terms of its branch network and
one of the largest corporate entities of the country with a paid up capital of Rs. 103
billion. The Bank through its banking footprint of 179 branches in 59 cities of thecountry continues to serve its more than 450,000 customers for all their financial
needs. The Banks resolve to provide world-class financial products and services tothe banking population of Pakistan is driven by its key business units including
Consumer Banking, Small Medium Enterprises and Commercial Banking,Corporate and Investment Banking and Treasury.
NIB Bank is headquartered at the P.N.S.C. Building in Karachi. Six floors of this
iconic building serve as the nerve center of the banking footprint in Pakistan.
History of NIB Bank
NIB Bank started operations in October 2003 when National Development Leasing
Corporation (NDLC) and Pakistan operations of IFIC Bank were amalgamated.
The Bank grew rapidly and further acquisitions took placethe Pakistan
operations of Credit Agricola Indosuez were acquired in April 2004, and in 2007,
PICIC Commercial Bank Limited merged with the Bank. Temasek Holdings ofSingapore continues to be the largest single investor in NIB Bank with a stake in
excess of 88%.
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provide quality financial services to individuals and corporate consumers with along term relationship with the consumer in Pakistan
NIBs Vision:
To become a leading provider of investment banking and wealth management
services.To be top-5 choice of employer, a premier developer of human talent, and an
organization that understands and honors its social responsibilities.To revolutionize banking for SME segment by creating new products and
distribution.
External Analysis of NIB Bank:
Banks have always been the most significant among all of the financial sectors;
these bodies facilitate the businesses in many ways regardless of their nature andsize. However, banks, like any other business are influenced by external factors
and below is a brief assessment of those factors using strategic tools. In brief,
PEST analysis affects the overall banking companies and provides us the
information about the external macro condition
PEST ANALYSIS OF NIB BANK
Political and Legal
We all know we are not in a strong political condition but we know our banksreally depend upon the political condition. It political environment is not good so
we cannot maximize profit. Political environment is directly related towards ourbenefits. New political changes may mean a shift in the countrys economicscene as well, which would in turn mean that NIB Bank would have tochange its credit policy or some other counter measure to offset theexternal pressure
All the promotional activities undertaken at NIB Bank are within the legal
boundaries that have been set for them. Often is the case that carelessadvertisements end up giving reason to other companies to create massivelaw suits
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Technological Factors:
Banks are using the latest technologies all over the country. We can see we havedeveloped an extranet system. In which we can use online banking, we can use our
accounts anywhere in the world very easily and you can get any information from
any of the linked bank. Most of the businesses in Pakistan are doing transactions
all over in Pakistan through banks and banks are playing very important role inpeoples life due to the technology but as far as technological issues areconcerned, an organisation operating in Pakistan willalways face massive problems, because it is harder for our people toactually introduce
new technology into the current working environment. Thus, it will take timefor thepeople working for this department to get used to working with newerconcepts
Competitive Analysis : Porters five forces
The Porter's Five Forces tool is a simple but powerful tool for understandingwhere power lies in a business situation.
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Source:
http://www.mindtools.com/pages/article/newTMC_08.htm
Threat of New Entrants:
Despite the regulatory and capital requirements of starting a new bank, after
2002 more than 20 banks were opened in Pakistan. These new banks entering themarket each year the threat of new entrants is moderate.
The banking industry has undergone a consolidation in which major banks seek toserve all of a customers financial needs under there. This consolidation furthers
http://www.mindtools.com/pages/article/newTMC_08.htmhttp://www.mindtools.com/pages/article/newTMC_08.htmhttp://www.mindtools.com/pages/article/newTMC_08.htm -
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the role of trust as a barrier to entry for new banks looking to compete with majorbanks, as consumer are more likely to allow one bank to hold all their accounts and
service their financial needs.
Ultimately the barriers to entry are relatively low for the banking industry. Whileit is nearly impossible for new banks to enter the industry offering the trust and fullrange of services as a major bank, it is fairly easy to open up a smaller bank
operating on the regional level in the major cities or provinces of Pakistan.
Bargaining Power of Suppliers:
Capital is the primary resource on any bank and there are four major suppliers,
various other suppliers contribute to a lesser degree of capital in the industry.
1. Customer deposits.2. Mortgages and loans.3. Mortgage-baked securities.
4. Loans from other financial institutions.
By utilizing these four major suppliers, the bank can be sure that they have the
necessary resources required to service their customers, borrowing needs whilemaintaining enough capital to meet withdrawal expectations.
The power of the suppliers is largely based on their market, their power changesbetween medium to high.
Bargaining Power of Buyers:
The individual doesn't pose much of a threat to the banking industry, but onemajor factor affecting the power of buyers is relatively high switching costs.
To try and convince customers to switch to their bank they had lower the price ofswitching.
The internet has greatly increased the power of the consumer in the bankingindustry. The internet has greatly increased the ease and reduced the cost for
consumers to compare the prices of opening/holding accounts as well as the ratesoffered at other Pakistan based banks.
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Substitutes:
NIB banks largest threats of substitution are not from rival banks but fromnon-financial competitors.The bank does not suffer any real threat of substitutes as far as deposits or
withdrawals, however insurances, mutual funds, and fixed income securities aresome of the many banking services that are also offered by non-banking
companies.There is also the threat of payment method for example, western union, express
pay, noble loans, easy paisa etc which are the services offered by various
companies. Sometimes these non-banking companies offer a lower interest rates on
payments.
Competitors Rivalry:
The banking industry is considered highlycompetitive. The financial
services in Pakistan has been around for 65 when this country got independence.
NIB bank must attempt to lure clients away from competitor banks. They do this
by offering lower financing, higher rates, investment services, and greater
conveniences than their rivals. The banking competition is often a race to
determine which bank can offer both the best and fastest services.
https://sites.google.com/site/bankingindustryandtheinternet/home/competitionhttps://sites.google.com/site/bankingindustryandtheinternet/home/competition -
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EFE matrix of NIB Bank
S.No. Key External Factors Weight Rating Score
Opportunities1. Innovative Products 0.1 3 0.3
2. State Banks increases Paid upcapital which is opportunity
for larger banks
0.05 3 0.15
3. Govt. focusing and support forover all exports
0.08 4 0.32
4. ERP and CustomerRelationship management
System
0.15 2 0.3
5. Investment opportunities 0.07 3 0.21
6. Increasing scope of SMEs 0.02 3 0.15
7. Trainning to high achieversand experienced professionals
0.08 3 0.24
8. Extension of Intl network ofbranches
0.05 3 0.15
Threats
Intense Competition 0.04 3 0.12
Uncertain economic conditions 0.08 2 0.16
Unstable political situation in country 0.03 2 0.06Govt. allows union activities inorganizations
0.03 3 0.09
Inflation trend 0.1 3 0.3
Fluctuation in Fiscal Policy by State
Bank0.04 3 0.12
Increase in interest rates 0.05 2 0.1
Total Score 1.00 2.77
The sum of our weighted score is 2.77, which represents that NIB Bank isresponding on an above average basis to opportunities and strengths toovercome threats.
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MAJOR COMPETITORS:
KASB Bank
HABIB Bank ( HBL)
Bank of Pakistan (NBP)
Competitive Profile Matrix
NIB BANK
NIB BANK
BANK KASB BANK
S.no CSF Weight Rating Score Rating Score Rating Score
1 Advertising 0.3 2 0.6 1 0.3 3 0.9
2 Quality 0.1 2 0.2 2 0.2 2 0.2
3
Price
Competitiveness 0.1 3 0.3 1 0.1 4 0.4
4 Position 0.15 1 0.15 2 0.3 1 0.15
5 Promotion 0.2 4 0.8 3 0.6 2 0.4
6 Placement 0.15 2 0.3 4 0.6 1 0.15
Total 1 2.35 2.1 2.2
Internal Audit
Culture of NIB BANK:Over the years NIB BANK has developed strong relationships with itscustomers by understanding their needs and treating them with respect,dignity and importance. The driving force behind its commitment andservices is its focus on customers, ensuring that it not only meets, but
exceeds their expectations.NIB BANK strives to achieve excellence by ensuring that every moment oftheir time is spent in adding value, making sure that things are done right,first time, every time. With this quest for quality, NIB BANK has alwaystaken initiatives in bringing banking into a new arena; from cash to theconvenience of plastic; from branch banking to internet bankingand from face-to-face customer interaction to online accessibility.
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It encourages diversity and treats each of its employees with fairness,giving constructive feedback for their continuous development and seekingsuggestions from all employees for further improvement. It ensures that
quality performance is acknowledged and rewarded and exercise utmostresponsibility in decision-making with regards to their employees. Integrityof their employees is the strength of their performance
INTERNAL FACTOR EVALUATION (IFE)
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BCG Matrix:
StarQuestion
Mark
CashCow Dog
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Space Matrix
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QSPM
SWOT Analysis:
Strength:
NIB Bank has the following strengths:
1. The standard of service is good and customers are satisfied.
2. They have computerized system and online banking
3.NIB is 7
th
largest bank in Pakistan with over 240 Branches.4.NIBs ATM are linked with a number of leading local and foreign banks as
well.
5. The employees at NIB are offered reasonable monetary benefits and non
monetary benefits as well.
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Weakness:
NIB bank has following weaknesses:
1. Branch area is very small with respect to hired employees
2. When was merged with PICIC commercial and PICIC investment bank, all
their employees also became part of NIB bank, those employees needed
great deal of training.
3. Online recruitment (unable to collect a pool of candidates)
4. Branch managers dont have much authority to fire an employee.
Opportunities:
With the strengths, the bank can snatch opportunities. NIB bank has following
opportunities:
1. Many areas for opening new branches in Pakistan.
2. Great market potential.
3. Increase credit facilities to lower income level and to SMEs.
4. In the economy of Pakistan where other banks are very carefully lending the
different loan, NIB is giving personal loan in huge quantity. This results in
great market share in future.
Threats
In the context of Banks NIB external environment, existentially following are the
potential threats:
1. Devaluation of money in Pakistan
2. Already many huge banks are doing business in Pakistans banking sector.
3. Foreign banks creating their value in the eyes of customers.4. Huge competition with local and foreign banks.
5.New entrants with new security plans to stop data hacking and viruses.
As compared to its competitors it is on growth stage its competitors are playing
this game strategically to dont overcome others.
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Economically Pakistan is in crises but still Pakistan is Asias most reliable
economy so economy is not very big thread for it.
According to political threads few years back Pakistans politics was instablewhich was infecting financial investments and loans but its almost stable so
political thread is also not a big issue for this bank.
Demographically people feel not safe so they dont carry money with them thats
why banks are their most important preference to deposit their money in them.
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Management
Planning is the very important part in the success of an organization. NIB bank
management took the feedback from their employees and decisions are fully madeon the higher level of management they just plan and forecast about future by top
management.
This is the team of executive committee:
Badar Kazmi Director, President and CEO
Adil Rashid Group HeadConsumer
Uzma Khan Head - Strategic Business Development
Shah Miftaah Ul Azim Azmi Group Head - Treasury & Capital Markets
Khusro Mumtaz Group Head SME & Commercial Banking
Yameen Kerai Chief Financial Officer
Tufail Jawed Ahmad Chief Risk Officer
Ahmed Fawad Hashmi Head of Special Asset Management
Khurram Gul Agha Group Head - Operations and Technology
Najeeb Gilani Head of Internal Audit Group (IAG)
Asma Shaikh Group HeadHuman Resources
Rahim Valliani Head of Business Planning and Analysis
NIB bank tries to specialized their employees in their work field so they organizethe work very efficiently everyone knows their work they are specialized in their
work. Bank is purely departmentalize to make it easy for employees. Management
purely believe in delegation of power, management knows if the lower managers
have the rights to do just on time then its important for them to have the authority
to deal with it.
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Assessing current human resources begins by developing a profile of the
organizations current employee.
Generally there are two methods:
Human resources inventory report
Human resource information system NIB bank used HRIS
Human Resource Information system (HRIS):
It is a computerized system that assists to find out how many employee an
organization has currently. In other words we can say it is data base system NIB
bank is support information technology for enhancing bank services, without the
usage of computer no organization exist in this world thats why like other banksNIB bank have HRIS to find out information of its current employee.
Marketing:
NIB focusing to create the desire of banking in the consumers and trying to
maintain their product to satisfy them. Marketing team is more focusing on the
betterment of product keep changing in the product so consumers get best
satisfaction.
They are selling their services I a very unique manner somehow it is different from
the other banking channels they are focusing on branch selling and in other
mediums they are using adds on TV and newspaper, bill boards and personal
calling is also involve.
Services wholly planned by management on the feedback of consumers and staff
also to diversifying their product and make them unique.
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MISIN NIBBANK
Temasek Holdings of Singapore continues to be the largest single investor in NIB Bank with
a stake in excess of 88%they are using MIS name VIRSES.
With the help of information technology NIB BANK record the daily transactions
that took place from all over the Pakistan into a centralized database in real time,
which means there is no Batch processing is taking place in NIB all over the
Pakistan. Every bank branch is an online branch, which is directly connected to the
centralized server to keep the data up to date to avoid any problems.
As time is money, and due to NIB BANK make thousands of transactions per day. In
fact, IS makes whole process much more quickly, simple and reliable. Due to IS
employees can easily connect with other branches, customer service gets improved,
online banking emerged and lot of others benefits.
EBBS
Core banking is the heart of any organization; NIB BANK core banking application is
EBBS (ElectronicBasic Banking System)which is the actual strength of this bank.
EBBS is the single software suit that work on these basic modules
Saving / Current Accounts
Customer Information System
New Accounts
Demand Deposits
Clearings
Time Deposits
Loans
Credit Lines
Automatic Transfers
Tax Information
Cashiers Checks
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ECAP (ELECTRONIC CARD PROCESSING
SYSTEMS)
Another core banking application that NIB BANK is using is ECAP (Electronic
Card Processing System) which is used to manage all the Credit and Debit Cards of
the account holders. The software has these two basic modules
Debit Card
Credit Card
SERVERS OF NIB BANK
NIB BANK has a centralized server
machines running day and night to
ensure the maximum uptime and top-
notch quality to their applications,
which dramatically support their
whole business process. The bank
servers resides in different cities and
data centers of Pakistan i.e. Karachi,
Lahore, Islamabad and all of them are
interconnected with each other for real
time data update and synchronization.
RETURN ON INVESTMENT
NIB BANK is financially strong so it has invested the of its partners and shareholders in the
huge amount and there rate of return on its whole investment is 46% and by there research and
development department focuses on the new needs of the customers . R&D is doing its job well
this good return on investment is the result of its progress and growth
Growth of the Company
Any company whose activity generates significant positive cash flows or earnings
that are growing at significantly faster rate than the overall economy. A growth of
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company tends to be very profitable reinvestment opportunities for its own retainedearnings. Thus, it usually pays little or no dividends to shareholders, opting instead
to plow all or most of its profits in its expanding business.
NIB BANKs growth strategy involves investing in:A system capable of supporting volumes and product innovation
Hiring the best in the marketTraining and development
Establishing credit controls to achieve sustained income as well as growth
In accordance to the above elements of the growth strategy followed by NIB
BANK, it also happens to have a divisional structure.
NIB BANK is a gigantic organization, which has many different branches to it, for
example, consumer banking, corporate banking, investment. Also it is spread outacross the country, thus, following a flatter organizational structure which proves
to be a lot easier to manage as per its vast geographical coverage, variety of
different products and services and a substantially diverse customer base.
Products & Marketing
Auto financeCharges in Rupees.
Description Rupees
Application processing 4000/-
Late payment 500/-
Cheque return 500/- per Cheque return
Earlier termination Cheque 500/- of principle outstanding
Vehicle repossessing 500/- as per approval
Issuance of duplicate NOC Up to 1500/-
Appraisal charges Up to 7500/-
PO change 2000/-
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Legal fee As per actual
Cheque return 600/- per Cheque
Prepayment penalty 5% of principle outstanding
Loan enhancement fee 5000/-
Late payment 500/-
Litigation As per actual
NIB personal loan
Small business loan
Facility charges 1.5 of the loan or 2000/- (higher)
Late payment 10% of the installment
Repayment 5% of the outstanding
Credit life insurance
a) accident insurance
b) full insurance 1.5 % of the loan3.0 % of the loan
Enhancement & top up fee 1500/-
NIB committee
Description Rupees
Application processing 1% of loan or 1500/- whichever higher
Life insurance premium Accident 1.5% of loan
Cheque return 500/- per Cheque return
Repayment penalty 1styear 5%,2nd & on 3% on outstanding
Late payment 500/- or 10% of the due installment
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Services charges(for every new deal)
3% of gross deposit amount
ATM card
ATM card annual fee 100/-
ATM issuance fee Nil
ATM card reissuance in case if lose, stolen and damaged card Nil
ATM transaction service
Financial transaction (1 link & M_net) 15/-
Financial transaction (only M_net) 05/-
Lockers
Description Small Medium Large
Securities deposit(refundable) Up to Rs 3500/- Up to Rs 5000/- Up to Rs7500/-
Annual rent Up to Rs 2500/- Up to Rs 3500/- Up to Rs 5000
Broken charges Up to Rs 5000/- or actual, whichever higher
Sale and purchase of securities
Sale & purchase of
shares and securities
Up to 0.50% on the first 10,000 on the paid up value of
minimum 125/- up to 10,000 0.20% will charged
Charges of collection of
return & dividend
Up to 0.30% on the amount of interest
And Rs 100/- whichever is higher
Agriculture Finance
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Recommendations
Following I will give the best performance for the suggestions of the Bank:
Duties will offer employees better management mechanism .
A separate counter of ladies you should be there
The Bank's services should be very careful as the granting of loans.
Personal Interests homework is not given importance and clients
Solvency care staff must be used with the public relations desk duties are,
they laid in each branch orientation, and the complaints of clients right on
the spot.
Online banking should be in all branches entered.
Campaign advertising should be aggressively introduced through the press
and media to new electronic products and vigorous marketing plan policy
Starting event.
New talents / professionals to front contracted service should have asked in
the Industrialized competitive.
Information technology should be enter in all branches to improve the
efficiency.
The duties of the most transparent financial statements are reliable there.
Duties Financing consumption is beginning to capture the market share.
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Promoting the induction of employees there always transfer duties on merit
to Haran.
To motivate employees has managed compensation / salaries should be with
you by top tier banks made.