nib bank business policy and strategy

8/12/2019 NIB Bank Business Policy and Strategy

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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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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.

nib bank business policy and strategy

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