strategic management report (meezan)
TRANSCRIPT
Strategic Management Report on
“MEEZAN BANK LIMITED”
Introduction• The Bank commenced operations in 2002, on being issued the first-ever Islamic commercial banking license
by the State Bank of Pakistan; in 2012 Meezan Bank completed a milestone of 10 years of Islamic Banking in Pakistan
• Meezan Bank offers a range of personal and corporate Islamic banking products and services through a retail banking network of over 385 branches in 109 cities.
• Backed by a state-of-the art T-24 core banking system, the branch network is supported by 24/7 banking services.
• 281 ATMs, Meezan VISA Debit Cards, Internet Banking, SMS alerts and a 24-hour Call Center.
Product Selected:
Current Account:
• Meezan Current Account is a Rupee-based current account that provides you the convenience of putting your money in a Riba-free account
Vision
Establish I slamic banking as banking of first choice to facilitate the implementation of an equitable economic system, providing a strong
foundation for establishing a fair and just society for mankind.
To be a premier I slamic bank, offering a one-stop shop for innovative value-added products and services to our customers within the bounds of Shariah, while optimizing the stakeholders value through an organizational culture based on learning, fairness, respect for individual enterprise and performance.
To develop a committed service culture which ensures the consistent delivery of our products and services within the highest quality service parameters, promoting I slamic values and ensuring recognition and a quality banking experience to our customers.
Mission
Service Mission
Business ScopeMarket• Since large population are practicing Muslims belonging increasingly aware of
prohibition of interest in Islam. • Non-Muslims as well.• Customers who believe in Interest free bankingCustomers:• Conventional current account holders.• Uncatered customersBoundaries• Within Shariah principles.
S. No. Region Customer Need Specifications Product / Technology
1 Industrial Area Manufacturers / Exporters
Local & Foreign Trade facilities, Cash Management, Salary Disbursements, Business Transactions including online transfers, clearing & remittances , Loan
Online transaction facility, Loan Facility, Loan Slabs*
2 Commercial Markets Whole Sellers / Retailers Inter branch and interbank transactions through clearing and remittance counters
Online transaction facility
3 Residential AreasSalaried Individuals/ Self Employed Persons/ Small cash based business owners.
Current deposit account for safe keeping of money, remittance, clearing (occasional)
Online transaction facility
4 Rural Areas Agriculture and Dairy farmsCurrent deposit account for Fund management and its Safety.
Online transaction facility
Loan facility
Changes Effects• Mechanized Trade Facility for exporters and importers• running finance and term finance • Cash management facilities to customers with high transaction
• Islamic mode of banking in foreign transaction.• Provide Riba free facility to customers • Customer with large cash transactions will be captured by
mitigating there risk
Business Scope (cont.)
Objectives (cont.)1. Improve community awareness of the bank's services in different cities by increasing branch marketing program + Awareness session by 20% the end of the year.
Cities Seminars Cost2012 14 24 12000000
2013 17 29 14500000
2014 20 35 17500000
Objectives (cont.)2. Increase EPS to Rs 4.5 per share.
EPS 2012 EPS 2013MBL 3.50 3.95
HBL 17.02 17.15BI 0.35 0.58
3. Increase number of consumer deposit accounts by [35]% by the end of the year
2012 2013 Current Growth %
MBL 60,123,651.00 82,382,328.00 30
HBL 310,567,157.00 402,564,215.00 29
BI 11,294,000.00 12,276,000.00 11
Market StructureEnd Users
• Manufacturers /
Exporters• Whole Sellers /
Retailers• Salaried Individuals/
Self Employed Persons/ Small cash based business owners.• Farmers
Representative Product
• Current Account
Channels
• Branches• Designated
Marketing Teams
50%
20%
25%
5%
Market Structure (cont.)Changes Effects
• Increase numbers of branches in remote areas of Baluchistan, KPK and other areas with strong business activities.
• Increase branch network in urban areas.
• Normally remote areas are covered by few banks including NBP, MCB and HBL with low standard of services usually and only enjoying that deposit base of customers and also that of their counter parties due to coverage in those remote areas which can also be captured.
• In urban areas customers prefer nearby branches due to law and order situation, which is also helpful in capturing those customers.
Market Segment(Historical growth of Industry)PAST FOUR (4) YEARS
Market Size Years Growth Per Year
2010 2011 2012 2013 Year Increase
Current Deposit
1,639,778,560
1,879,900,480
2,138,447,360
2,409,398,400
2010 N/A
2011 15%
2012 15%
2013 13%
Industry Future growthMarket Segment Years
Current Deposit Average Growth 2014 2015 2016 2017
Industry13.69% 2,739,222,840.50 3,114,197,207.86 3,540,502,111.07 4,025,164,227.50
COMPETITION AND MARKET MATRIXHistorical GrowthMarket Segment Years
Current Deposit 2010 2011 2012 2013
Meezan Bank 36,970,326.00 47,587,663.00 60,123,651.00 82,382,328.00
Habib Bank Limited 186,234,235.00 240,687,417.00 310,567,157.00 402,564,215.00
Bank Islami 8,975,862.00 10,101,628.00 11,294,000.00 12,276,000.00
Bank Alfalah 119,435,697.00 141,881,781.00 160,786,090.00 187,026,587.00
2010 2011 2012 2013 -
50,000,000 100,000,000 150,000,000 200,000,000 250,000,000 300,000,000 350,000,000 400,000,000 450,000,000
Meezan BankHBLBank IslamicBank Alfalah
Future GrowthMarket Segment YearsCurrent Deposit Avg. Growth 2014 2015 2016 2017Industry 13.69% 2,739,222,840.50 3,114,197,207.86 3,540,502,111.07 4,025,164,227.50 Meezan Bank 30.69% 107,669,027.15 140,717,307.82 183,909,535.02 240,359,324.63 HBL 29.30% 520,508,495.47 673,008,389.12 870,188,086.79 1,125,137,990.29 Bank Islamic 11.01% 13,628,029.21 15,128,965.48 16,795,208.83 18,644,965.51 Bank Alfalah 16.15% 217,223,626.50 252,296,235.89 293,031,617.55 340,344,074.42
14%
30%
29%
11%
16%
NEXT FOUR YEARS
IndustryMeezan BankHBLBank IslamicBank Alfalah
COMPETITION AND MARKET MATRIX (cont.)
Profitability AnalysisPROFIT 2010 2011 2012 2013
Meezan Bank 2,126,960 4,356,300 5,230,226 5,646,664
HBL 27,040,030 34,321,398 35,561,757 36,133,328
Bank Islamic 608,587 626,442 462,996 308,152
Bank Alfalah 1,368,745 5,433,718 6,783,202 6,807,211
2010 2011 2012 2013 -
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
PROFITABILITY ANALYSIS
Meezan Bank HBL Bank Islami Bank Alfalah
DISTRIBUTION CHANNELS
Individual CommercialBranches 385 385Direct Selling 385 385
DISTRIBUTION ANALYSIS WITH COMPETITION
Commercial Individual Industrial
Meezan Bank 385 385 385
Habib Bank Limited 1500 1500 1500
Bank Islamic 141 141 141
Bank Alfalah 574 574 574
Meezan Bank Habib Bank Limited Bank Islamic Bank Alfalah -
200
400
600
800
1,000
1,200
1,400
1,600
CommercialIndividualIndustrial
As HBL is capturing maximum market share in all three segments, so in comparison Meezan Bank Limited is almost 25% of it due to less number of branches as HBL have.To increase its market share, Meezan has to increase number of its branches to cover more areas either in domestic region / International.
Driving ForcesBetter and
timely service.Increase of
awareness regarding Islamic banking.
Larger branch network.
Low charges.
Timely and satisfactory response to complaints
and issues.
Econmic, political and law & order
condition.
Foreign branches
Operational CostS. No. Cost Heads Meezan Bank HBL Bank Al Falah Bank Islami1 Average Cost of Deposit 4.52 5.38 5.1 5.78
2 Salaries & Perks 27.59 24.53 33.12 36.23
3 Rent 8.97 5.89 13.25 18.42
4 Repair & Maintenance 2.82 2.61 3.88 2.61
5 Communication & Transportation
3.45 1.48 2.80 3.91
6 Advertisement publicity Expenses
0.78 1.65 1.62 1.90
7 Subscription Charges 1.21 0.39 0.95 2.83
8 Security Charges 1.98 1.55 1.03 3.94
Measuring GAP & Action PlanS. No. Cost Heads1 Average Cost of Deposit Average cost of capital is low as compare to industry and competitors but
same position can not be maintained only by capturing urban current deposit market and expansion in rural areas is required
2 Salaries & Perks Appraisal and bonuses should be evaluated on performance basis3 Rent Comparatively low4 Repair & Maintenance Centralized Administration should manage all related issues to low down
cost.
5 Communication & Transportation
Cost increased due to staff transportation service.
6 Advertisement publicity Expenses
Comparatively low
7 Subscription Charges Include portfolio management fees of Al Meezan Investment Management Limited.
8 Security Charges Manage cash shipment and security guards matters
Strategic Cost• Research and development cost on human resource department
• Disaster Recovery Data Center or DRDC cost
• Implementation cost of Temenos T24
• Rural expansion of branch network
• Expansion cost required to approach international market
Operational Growth Indicators• Total deposits increased to Rs. 330 billion
• The Bank recorded 24% growth in its Profit-after-tax
• Substantial recovery efforts during the year on its non-performing financing portfolio
• The Bank's total revenues increased to Rs. 26.7 billion
• The income from core banking business grew to Rs. 14.1 billion
Strategic Performance Indicators• The Bank has already met its minimum capital requirement of Rs. 10 billion
• Commercial Banking business targets the 'middle-market' segment of customers
• Commercial Banking business segment by 85% in 2013
• The Bank also entered the Agriculture sector and set up a dedicated Agriculture Unit
Customer Buying Criteria
Factors considered by customers while selecting a particular bank
Meezan Bank
HBL
Bank Islamic
Bank Alfalah
WEIGHTAGE given by
customers*
Reputation 37% 30 40 20 20Social influence 8% 30 20 20 30Service quality 19% 15 10 35 20Religious Belief 19% 20 0 20 10Media advertisement 17% 5 30 5 20
The below table shows the weightage given by customers to each of the factors and the position
of MBL, and its competitors.
*taken from a research paper on Islamic Banking
Social Influence Reputation and Brand Name
Service QualityAccessibility
Responsiveness
Media Advertisement
Improve Fast
Question Its Cost
Do not Sweat
Keep It Up
Best
Same
Worst
Strengths
• Interest free banking.• Pioneer in the industry of Islamic Banking, Market
leader.• Authentic and Credible Shariah board with
members consist of famous religious scholars.• High market coverage as compared to its
competitors.• An acquisition of conventional Bank (HSBC) has
increased its reputation and goodwill.
Opportunities
• Convert conventional current account holders to MBL customers.• Awareness to uncatered customers, as people are still fully not aware
regarding Islamic banking principles.• Awareness to Islamic Institutions regarding their practices.• Currently, State bank is targeting banks with lower equity (KASB), so
MBLS’s high equity can be used as an added advantage to attract new customers.
• Mergers with Telecom industry for mobile banking (easy paisa etc) can be done.
• Increase in the no. of branches in rural areas.• Improved customer service.• Global acceptance of Islamic banking system, Target the global market as
well.
Threats
• Banks converting to Islamic banking from conventional banking, growing competition.
• Mobile banking technology is increasing in the world and can act as a threat to MBL.
• Misconceptions and misunderstandings among the general public about Islamic banking.
• Government restrictions on Islamic banking.• Non availability of conventional banking products
(credit cards etc).• Aggressive marketing by conventional banks.
Weaknesses
• Numbers of branches are less in rural areas.• Customer service needs improvement.• No global coverage discourages big customers.• Clearing time of foreign transactions is lengthy.• No benchmarking available in the market using
conventional banking benchmarks.• Limited availability of human resources with Islamic
banking knowledge.
S W
TO
SWOT ANALYSIS
Recommendations:
• Aggressive marketing and advertising strategy.• Establishment of new branches.• Service improvement.• Islamic banking introduction trainings
in Universities/colleges.