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 Statement
Sustained 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 banks branches, SME unit
Offices and BRAC field officers for delivery of Remittance and Banks 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 banks 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
Porters Five Forces
HIGH
LOW
HIGH
HIGH
MODERATE
EAKNESSES
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
PPORTUNITIES
HREATS
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 2012
INDUSTRY 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
Think SME, Think BBL
Delightful Customer Experience
Socially Responsible & Sustainable
Preferred Trade Bank
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: 11
th
position in 2012
Recommendations:
Increase the ranking by 2 from 2014 to 2017 and
reach 5
th
position
Aim for the 2
nd
position in 2020
Focus on Non-Funded Income such as LC

Strategic Objectives : 2020

Fund Under Management
Present Status: 8
th
position in 2012
Recommendations:
Reach 2
nd
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: 5
th
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: Banks 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: 2
nd
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 Jewel
Head of Business Planning and Analysis
Finance Division, Brac Bank Limited

Mr. Benozeer Ahmed
Senior Manager, Business Planning and Analysis
Finance Division, Brac Bank Limited

Mr. Salman Ahmed
Senior Manager, Business Planning and Analysis
Finance Division, Brac Bank Limited

Acknowledgement
Thank you
Q & A