Strategy Analysis of Bank Asia Limited:

A Critical Overview

Presented by:
Md. Zahid Hossain
SEVP & Head of Gulshan Branch
Bank Asia Ltd.

October 09, 2018

INTRODUCTION
 Broad Objective

To explore the Strategy of Bank Asia Limited

For A Better Tomorrow

 Scope of Research
•Undertake case studies on strategic issues which
have relevance on revenue, cost, profit and employee
productivity.
•Discuss strategic factors in the context of Bank Asia
Ltd.
•Explain the effects on growth and more specifically
on Bank Asia.
•Finding the major areas of strategy of Bank Asia that
impact on revenue, profit and employee productivity.
•To understand how strategies are adopted to
improve the performance of Bank Asia and to achieve
its goal.
•Explore the opportunities that are available for
defining the strategic boundary of Bank Asia.
 Methodology

The study is used primary data from direct

interview of executives of Bank Asia.
The study is also used secondary sources of data
from:
• Bangladesh Bank Bulletin,
Research • Bank Asia Annual Reports
Methods • Finance and Accounts Department of Bank
Descriptive research has
Asia
been done considering
• Various publications of the Ministry of
primary and secondary data
Finance (MOF) etc.
analysis.
 Conceptual Framework: An Attempt

Bank Asia’s Vision, Mission,

Objectives and Core values
defining.

Ethics, CSR, Green

a.SWOT Generic Strengthening Bank Banking policy,
b.Porter’s 5 Competitive Asia’s competitive Strategy execution for
Forces Strategy of position, competing managing day to day
c.PESTEL Analysis Bank Asia internal market and banking operation,
corporate strategy. corporate culture and
leadership

Recommendation and Conclusion

 BANK ASIA:
AN OVERVIEW
 Banks in Bangladesh 1971
Banking industry in Bangladesh started its
journey after the independence, with 11
(eleven) banks:

•6 (six) Nationalized commercial banks

•2 (two) State owned specialized banks and
•3 (three) Foreign banks.
 Banks in Bangladesh 1971
Today there is 57 (fifty seven) scheduled
banks are operating in Bangladesh:

•4(Four) State-owned banks

•32 (Thirty one) Private commercial Banks
•9 (Nine) Foreign commercial banks
•8(Eight) Islami banks
•4(Four) Stpecilized banks
 Bank Asia From The Industrial Perspective
Milestones

28 27 16 February, 1 January, 1 April, 6 January,

September, November, 2001 2002 2003 2004
1999 1999

Obtained Inauguration of Acquisition of Acquisition of Started online Listed with

certificate of Bank Bangladesh Bangladesh Banking Dhaka Stock
incorporation and And 1st branch operation of operation of Operation Exchange and
certificate of i.e., Corporate Bank of Nova Muslim Chittagong Stock
commencement Branch Scotia of Commercial Exchange.
of business Canada. Bank of Pakistan.
 Stakeholders of Bank Asia

Customers
Local
Communication
Business
Partners

Subsidiary Bank Asia Investors

Government
and Board and
regulatory Management
authority Employees
 Corporate asset & Client Origination
Corporate Treasury operation
Corporate Liability
Business

Organogram SMR Business

Specialized credit
Retail Banking
Islamic Banking
Alternative Delivery channel
Credit Cards

Correspondence relationship
International Treasury Back Office
Foreign remittance management
operation Offshore Banking
Foreign Trade management

Service centers\
Operations Branches operation
Technology
AML & Compliance
Logistic support service
Legal process

Accounts Reconciliations and returns.

Account management.

President & Credit risk management.

Managing Director CRM-Small, medium & retail
Risk Treasury
Recovery
Management Risk Management

Finance control
Finance MIS
Financial reporting
Capital management
IT security
Marketing Market research
Corporate Affairs & Branding
Branch Development

Human capital management

Human Resource Human capital development.
 Financial Performance
Particulars 2017 2016 2015

ROE 10.21% 8.13% 14.36%

Net profit margin 8.98% 7.28% 11.97%

Total Asset turnover 0.0841 0.0890 0.1056

Profitability of Bank Asia

Financial leverage 13.5234 12.5610 11.3570

Operating profit margin 29.32% 27.87% 27.94%

Effect of Non operation items 0.6067 0.5552 0.6867

Tax effect 0.5046 0.4703 0.6241

Source: (BA Annual Report, 2017).

ANALYSIS OF VISION, MISSION,
GOALS, OBJECTIVE AND VALUES
 VISION
Bank Asia's vision is to have a poverty free Bangladesh in course of a
generation in the new millennium, reflecting the national dream.

The vision is to build a society where

human dignity and human rights receive
the highest consideration along with
reduction of poverty.
 VISION

Critical evaluation of Vision

•A vision statement is a mental picture of what

Bank Asia wants to accomplish or achieve.
•Bank Asia wants to develop a poverty free
country in the long run.
•The vision statement of Bank Asia is concise
and easy to remember.
•It is easy for everyone in Bank Asia to focus on
the vision.
•While stakeholders of Bank Asia focus on the
vision, their daily activities are automatically
directed towards achieving the vision.
 MISSION

•To assist in bringing high quality service to

customers and to participate in the growth
and expansion of national economy.

•To set high standards of integrity and bring

total satisfaction to clients, shareholders and employees.

•To become the most sought bank in the country, rendering technology driven
innovative services by dedicated team of professionals.
 Critical Evaluation of
Mission Statement
•It will create a vibrant economy of the country by
creating and facilitating the development of value-
added banking businesses.
•Every stakeholders involve in the business understand
what the business will accomplish and how it will be
accomplished.
•Development of value-added Banking Businesses.
•Keeping everyone on the same page so they are all
pulling in the same direction.
•The directions are high quality service; stakeholder
participation in the growth and expansion of national
economy; set high standards of integrity and bring total
satisfaction to the clients, shareholders and employees;
become the most sought bank in the country; rendering
technology driven innovative services and a dedicated
team of professionals.
 CORE VALUES

•Place customer interest and satisfaction as first priority and

provide customized banking products and services.
•Value addition to the stakeholders through attaining
excellence in banking operations.
•Maintain high ethical standard and transparency in dealings.
•Be a compliant institution through adhering to all regulatory
requirements.
•Contribute significantly for the betterment of the society.
•Ensure higher degree of motivation and dignified working
environment for our human capital and respect optimal work-
life balance.
•Committed to protect the environment and go green.
 Critical Evaluation of
CORE VALUES

•Provide economically sound business opportunities

for stakeholder of the bank.
•Practice high ethical business standards.
•Respect and protect the environment and society.
•Produce high quality service and products for
customers.
•Meet the changing needs and desires of customers.
 GOALS & OBJECTIVES

Accelerating
Sustainable Capital
Financial
Growth Stewardship
Inclusion

Differentiating
Leaders In
Value Added Green Banking
Business
Services
 Balance Scorecard
Balance Scorecard
Financial Customer
Private Limited Product differentiation
company Moderate Cost
Involved in
Capital market
Strategic
Vision, Mission
and Goals
Learning and Growth Business Process
Up to date product and Develop and operational
knowledge excellence model to maximize
growth and margin.
Develop R&D to ensure unique
customized products.
EXTERNAL ANALYSIS
OF BANK ASIA
 Industry Analysis:
Balance Life Cycle
Scorecard
Presently the Banking industry is in
growth stage. The power of customers
Demand is increasing because capacity matches
with demand. 4th generation banks
also enter into market. In contrast, the
power of banks has increased because
by now the 57 banks are competitive
Industry in Growth Stage with each other for limited valued asset
customers for business development.
Size of Balance sheet of every bank
Declining
increases year by year. Introducing
Shake out Mature
unbanked people into bank is very
Birth
Growth
pleasing to Bank Asia. Threat from
substitutes is coming into the light, i.e.,
NBFI. Nonperforming Loan in the
industry is present alarming situation.
 Industry
Balance Traits
Scorecard

Superior Financial Efficient

Dynamism
Quality Strength Management

Excellent
State of the Art
Experts Working
Technology
Environment
 Drivers
Balance Scorecard

Borrower’s
Ability to meet
Lender
financial
obligations

Growing
Business
environmental
Opportunities
concerns
 SWOT Analysis of Bank Asia

Internal Strengths Internal Weaknesses

•Customer Satisfaction
•Quality of staff
•Customized products
•Banks internal policy
•Stakeholder Value
•Choice of doubtful borrower
•CSR activities
•Dignified working environment
•Proper work-life balance
•Environment Consciousness
•Talented Human Resource
 SWOT Analysis of Bank Asia
External
Opportunities External Threats
•Capital expenditure prospects •Slow implementation of Annual

•Financial inclusion program Development Plan (ADP)

•Shipbuilding sector •Foreign exchange reserve

•Power generation and •Acute shortage of Gas and other

renewable energy. Utility

•Agriculture and agro processing •International effects

businesses •Reduced credit demand

•Garment Exports •Rapid expansion of new banks

•Pharmaceutical Products export •Bearish trend in capital market

•Computer Software and

Hardware business
 Porter's five forces of Bank Asia Ltd
Threat of New Entrants
•There is high barrier to entry in the market of
banking industry.
•Government policy and regulation is high
•Capital requirements need to be fulfilled.
•Cost disadvantages independent of size
•Gaining of economies of scale is competitive.
•Product differentiation is difficult from existing
bank
•Developing brand equity
•Expansion of branches is costly
•Customer loyalty to established brands is a
continuous process.
•Industry profitability attractive to bring new
competitors.
 Porter's five forces of Bank Asia Ltd
Threat of Substitute Products and Services

•Customer propensity to look for substitute

or alternative financial solution.
•Relative price performance of alternative
financial products (NBFI Products).
•Asset customers switching costs is high from
one
bank to another bank.
•Perceived level of product differentiation
from one bank to another bank is same.
•Number of substitute products is not
available in
the market
•Quality of service is important.
 Porter's five forces of Bank Asia Ltd
Bargaining Power Customers
•Customer concentration to the existing bank.
•Degree of dependency upon existing bank
relationship
•Bargaining leverage, particularly in banking
industries with high costs (cost for documentation
and legal expense).
•Customer information and service quality availability
of other bank.
•Force down to prices to proceed business to the
bank.
•Availability of existing substitutes financial products
in non banking financial banking institution.
•Buyer price sensitivity
•Differential advantage (uniqueness) of industry
products
•Customer value analysis
•The total amount of trading business.
Porter's five forces of Bank Asia Ltd
Bargaining Power of Suppliers

•Switching costs relatively low to other bank

•Degree of differentiation of products interest
rate.
•Impact of prices differentiation from one bank to
other bank.
•Presence of substitute product available in the
market.
•Strength of distribution network of branches of
bank.
Porter's five forces of Bank Asia Ltd
Intensity of Competitive Rivalry

•Sustainable competitive advantage of

competitor’s bank.
•Competition between one bank to another
bank with different pricing (interest).
•Level of advertising expense incurred by
competitor banks.
•Influential competitive strategy
development by competitor bank.
PESTEL Analysis of Bank Asia Ltd
• Government policy
• Political stability or instability in overseas
markets
• Foreign trade policy
Political • Tax policy
• Labor law
• Environmental law
• Trade restrictions

• Governments interest rate control

• Taxation policy
Economical • Government expenditure
• Micro-economic Factors
PESTEL Analysis of Bank Asia Ltd
• Population Growth
• Total Headcount

Social

• New Joiners’ Percentage

PESTEL Analysis of Bank Asia Ltd
•New ways of producing goods and services
Technological •New ways of distributing goods and services
•New ways of communicating with target
markets

• Emphasis during the last 15 years

Environmental • Green Banking

• Health and safety

• Equal opportunities
Legal • Advertising standards
• Consumer rights and laws
• Product safety
Strategic Mapping of the Industry and Competitive Position

Ten Cs’ of Bank Asia

Comprehensiveness (Includes all aspect of Communication (Expected objectives are
business management) communicated to all stakeholders, build
transparency)

Credibility (Establishment of trust among top Cost effectiveness (Competitive and

management, employee and other transparent governance system)
stakeholders) Change (Continuous improvement for
betterment of the Bank)

Commitment (Customer and Employees

attitude)

Control (Ensure operational effectiveness Customer care (Meet the requirements of

with Bank Guideline) internal customer services to minimize
grievance)

Competence (Individual competence meet Creativity (Competitive advantage comes

Bank’s required competence) from unique strategies of Management)
 Industry Group Mapping

High
Price
HSBC
High
Price SCB

Bank Asia
Dhaka Bank
MTBL
Prime Bank
South East Bank Ltd
Sonali Bank
Agrani Bank
Rupali Bank
Uttara Bank Ltd

Low Price

Low High

Business Coverage (Asset and Liability) Business)

 Key Success Factors
Balance of Bank Asia
Scorecard

Fostering
Minimizing
Innovation and
distribution costs
creativity

Controlling the
Providing
quality of
outstanding
products and
customer service
services
 Generic Competitive Strategy

Lower Cost Differentiation

Overall Low-Cost Broad
Large market for provider Strategy Differentiation
Depositors and Strategy
creditors (Bank Asia)
Best Cost
provider
Strategy
Focused Low Cost Focused
Strategy Differentiation
Strategy
Narrow market
segment: Cards,
Retail focus etc.
Strategy for Competing in International
Markets
DIVERSIFICATION
OF BANK ASIA
 Market Diversification

Product
Diversification

Geographic
Diversification
 Types of Diversification

Related & Unrelated

Diversification

Full, Partial and

Tapered
Diversification
Internal Operations of Bank Asia
Bank Asia Security agency, Software Bank Asia Bank Asia
Shield Security Support- ERA Securities LTd Exchange Ltd
Info Tech

Transport facilitator

ATM, hardware,
software service
Horizontal scope of Bank Asia

Advertisement
agency

Vertical scope of Bank Asia

Graphics and
Interior Design.

Construction
Contractor
Figure: Managing Internal Operation of Bank Asia
 Corporate Strategy

Make
Evaluate Clarify Define Examine Sense of It
Resources Goals Customers Competitors
All
 ETHICS, CORPORATE SOCIAL
RESPONSIBILITY, ENVIRONMENTAL
SUSTAINABILITY STRATEGY AND
CULTURE OF BANK ASIA.
 CSR Activities of Bank Asia
• Education:
•Offers scholarships to poor students based on SSC and HSC results.
621 students given scholarship till 2013
•Scholarship and Food Grant to 25 Nurses of BSMMU
• Computer Learning:
• In Collaboration with D net Bank Asia supports computer learning
centers in rural areas since 2006 s
• Provides ICT training in these centers
•Health:
•Bank Asia has been operating Ophthalmological Operation of all
recoverable born-blind children in Bangladesh in collaboration of
Bangladesh Eye Hospital (BEH) since 2005.
•Built a nine storied Nursing Hostel for BSMMU Nurses. The project
cost taka 103.72 million
 Environment Sustainability

Reducing
Disaster Solar Home
Energy Savings Carbon
Management Systems
footprint

Financing
Greenhouse
Water Usage Renewable
Gas Prevention
Energy
 Corporate Culture of Bank Asia
• 3% growth in human capital from 2012 to 2013

•Implementation of Smart KPI for transparent Performance

Appraisal.
Benefits of smart KPI:
•Reduce the number of decisions and make decisions based on
objectivity and facts.
•Quantify the achievement of goals.
•Focus on facts and see where individual improvement is/are needed.
•As individual initiative grows, it becomes more difficult to remain as
close to the operational details as it is, in such case, KPI results can bring
back to reality.
•Employees are clear about his/her obligations to deliver during the year
and accordingly would be able to plan to meet the expectation.
•Last but not least, unbiased performance evaluation at the end of the
year.
ACROSS THE FRAMEWORK
OF BANK ASIA
Relationship with Culture Metaphor

Morgan’s
Culture
Image of Bank Asia
Metaphor

•Knowledge
Ideas Vision is poverty free Bangladesh
Social Values Innovation & flexibility in service
Laws Establishment of trust and dependence
Behavioral Patterns Compliance culture develop
Rituals Human capital development.
Adding value for stakeholder.
Customer interest gets highest priority.
Symmetrical mind set up for all employees to
execute task.
Establishment of female values culture and
handling grievance for development of internal
marketing.

Relationship between Morgan’s Culture Metaphor and Bank Asia

EXECUTION OF CORPORATE
STRATEGY AND MANAGING
INTERNAL OPERATIONS:
AN ANALYSIS
Principal Components of Strategy
Execution process
Business model

Governance Risk and

Strategy and
resource opportunities
allocation

General Outlook Basis of

Guideline preparation and
presentation

Performance
Strengthening Organizational Capability
for Strategy Execution
BA has developed
as a learning
BA always thrives
organization that A well formulated
recruiting and
increases policy for
training right
capabilities. subsidiary
people to right
company of BA.i.e;
A well established place.
BA Exchange
multidivisional House
structure for BA always
executing strategy. allocates sufficient
resources from HR
and Finance
Department.
The action agenda for
executing strategy
A established
corporate culture
for executing A well formulated
strategy. core business
operation policy
for day to day
business
BA has developed Operation.
Key performance BA may adopt
A well established decentralize
indicator (KPI) for
ICT department business practice
performance
for information for business.
appraisal.
technology
support.
 Building Capability

Staffing the Organization:

•The management committee (MANCOM) is responsible for recommending strategy and monitoring
business performance of the bank and its subsidiaries. Management committee consists of the
president and Managing Director, Deputy Managing Directors, Executives and the Heads of major
operational departments.
Bank Asia vibrant about human capital management and cautious to set up HR applications and best
practices for developing employee talent and leveraging employee skills in the organization.
Resources and
Building and strengthening Core Competencies and competitive capabilities: Capabilities of Bank
Strategy execution for borrowings from other banks, financial institutions and agents
Strategy execution for borrowings Deposits and other accounts
Asia
Strategy execution for Other liabilities comprise items such as provision for loans and
advances/investments, provision for taxes, interest payable, interest suspense, accrued expenses,
obligation under finance lease etc.
Strategy execution for HR development.
Strategy execution for compliance issues for sustainability development.

 Structuring the Organization and work effort.

.Multidivisional structure of Organogram set for delegation of authority for decision making.
Formulate the boundary for decision making of each committee.
Establish of separate department for risk mitigation, maintaining compliance and support the branches
Bank Asia’s structure
from corporate central office. supports strategy.
 Competitive growth

•Infrastructural Resources
•Equipment and Machinery Resources
•Financial Resources
•Human Resources
•Branding
•Mobile Financial Services
•Agent Banking
•Brand Name Recognition
•Value-Added Products and Services
•Customer Experience
•Quality
RECOMMENDATIONS
 Recommendation
•LC and LG issuing power to Branch Managers
•Call report processing time- not more than 3 days
Credit Portfolio •10-15 days time for credit proposal processing
•Immediately regret doubtful credit customers

• Strengthening net and sms services

System and • New services for ATM booths

Software • Changing type of Savings account (from S05 to
Development S02)
• Linking to central server of the Govt.
• Automatic generation of loan and deposit
statements
 Recommendation
• Continuous marketing through printing and
electronic media
• Branding through news coverage or corporate

Marketing program coverage

Development • Increasing CSR activities

• Sponsoring public places
• Birthday greetings to premier customers

General •Service charges for passport and BRTA

Services •POS services to shops, outlets and retail chains

Improvement •Premier facilities for premier customers

 Recommendation
Strategy Execution
• Rationalization of Human resources
• Employees benefit enhancement

Human Resources • Organogram of new branches need to be

more rational
• Employee Motivation

• Priority banking
• One branch on ATM and Deposit machine
• Similar outlook in all branches
Operational
• App development for better service
Process
• R&D and Reconciliation Department
• SMS Marketing
QUESTIONS???