presentation final22

7/28/2019 Presentation FINAL22

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Submitted By..

MOHAMMAD ROKUNUZZAMAN

ID NO: 3-07-11-039

Batch-11

Supervisor Name:PROFESSOR DR SHAHID UDDIN AHMED

Department of Management Studies

University of Dhaka


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Chapters

1. Introduction

2. Methodology of the report

3. Company Profiles

4. Analysis and Interpretation

5. Conclusions and Recommendations


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Introduction


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To analyse the strategy adopted by a

major bank in Bangladesh.

To have better direction on strategicmanagement activities specially business

level strategy

To compare the existing BLS of Agranibank limited with other commercial

banks.


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To identify and suggest scopes of

improvement in strategy of ABL.

To get an overall idea about the performance of

Agrani Bank Ltd.

To fulfill the requirement of the internship

program under MBA program


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The study gives me privilege to observe the

management of this bank.

It showed how strategy is working in a big

organization.

It also gave me opportunity to analyze balance

sheet, financial statement of the bank.


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It enhances my knowledge about ratio analysis,

calculation of CRG.

I can say this study has learned me about the

economy of Bangladesh; regarding issues like

how the financial activities are being operated,

how it should be conducted etc.


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Strategy is an integrated and coordinated set ofcommitments and actions designed to exploit core

competencies and gain a competitive advantage.

Strategic competitiveness is achieved when a firmsuccessfully formulates and implements a value

creating strategy.

Competitive advantage occurs when a firm implements

a value creating strategy and other companies are

unable to duplicate it or find it too costly to imitate


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Above average returns are returns in excess of

what an investor expects to earn from other

investments with a similar amount of risk.Risk is an investors uncertainty about the economic

gains or losses that will result from a particular

investment.

Average returns are returns equal to those an investorexpects to earn from other investments with a similar

amount of risk.


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The strategic management process is the full set of

commitments, decisions and actions required for a firm

to achieve strategic competitiveness and earn above-

average returns.Resources are inputs into a firms production process,

such as capital equipment, the skills of individual

employees, patents, finances and talented managers.

Capability is the capacity for a set of resources to performa task or an activity in an integrative manner.


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Core competencies are resources and

capabilities that serve as a source of

competitive advantage to a firm over its rivals.Business-Level-Strategy is an integrated and

coordinated set of actions the firm uses to gain a

competitive advantage by exploiting core

competencies in specific product markets.


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Cost Leadership Strategy is an integrated set of

actions taken to produce goods or services with

features that are acceptable to customers at the

lowest cost, relative to that of competitors.-Lowest cost compared to rivals

-Target market is broad

-Product is comparatively standard


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Differentiation Strategy is an integrated set of

actions taken to produce goods and services at

an acceptable cost that customers perceive as

being deferent in ways that are important to

them.


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Focus Strategy is an integrated set of actions

taken to produce goods or services that serve

the needs of a particular competitive segment.1)Focused Cost leadership strategy

-Target Market specific & small

-Product price is low

-Product is standard-Cost of production low


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Focused Differentiation Strategy-Product is different

-Target market is small

-Product quality is high

Integrated Cost Leadership & Differentiation Strategy

Relatively differentiated products at relatively low

costs is the products of integrated strategy


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Those firm doing well in market by using

integrated strategy who-

1) Adapt quickly to environmental changes

2) Learns new skills and technologies more

quickly3) Effectively leverage its core competencies while

competing against its rivals.


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The target populations of this study were employees of

different corporate branches of Agrani Bank Limited. The

sample size was allocated as 21. As this sample is very

small regarding the size of the population, randomsampling techniques were applied. A mix of convenience

and judgmental sampling was also performed to select the

samples for this research. The primary qualification for

being a respondent was those who are involved withAgrani Bank Ltd for many years.


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Data collection method was divided into twosources:

1 Data Collection from Primary SourcesFor the procedure of different banking operations,

I observed the operations and talked with theOfficers, I provided questionnaire to the

employees and also informally interviewed theABL Officials for getting more information.


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2 Data Collection from Secondary Sources

Data was collected from different statements

and the annual reports of the bank. Besides,

different books and training pamphlets were

also a good source of information.


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For collecting books and periodicals, I have used

the following.

ABTI Library

Agrani bank Ltd web site

Janata bank Ltd web site

Brac Bank web site

Duch-Bangla Bank web site


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The bank started operation with 249 branches

with its head office in Dhaka. Now Agrani

Bank ltd is operating with 867 branches and its

total manpower is 10921 at 31st December

2008. The Bank also has two wholly owned

subsidiary Companies named Agrani Exchange

House (Pvt) Ltd. in Singapore and AgraniRemittance House SDN, BHD, Malaysia.


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Agrani Bank has been converted into governmentowned banking company from nationalizedcommercial

bank on 15th May 2007 Bank was registered in JointStock Companies and Farm as public limited company.

On 15thNovember by Vendors agreement betweenAgrani Bank and Government, Agrani Bank took overall its assets and liabilities from government and

becames Agrani Bank Limited. Though 100% share is

owned by government but Agrani Bank ltd is now apublic Limited company


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To help rebuild the economy of Bangladesh byadvancing money to all socio-economic activitiesand developments.

To give banking services to all types of peopleand finance them for their productive purposes.Besides giving advances to general business,

priority is given to make advance on agriculture

and industrial sector and expanding foreign trade.


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To taking banking services to the rural people

by expanding their branch network to the rural

area.

To help government by giving dividend

through earning profit.


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Accepting deposits.

Providing advances and helping in investment.

Discount and purchase of bills.

Financing trade (both local and foreign).

Facilitating remittance (both local and foreign).

Providing various information's, guidance and suggestions to

the entrepreneur


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DEPOSITS: (A) 1. Savings Account 2. Current Deposit Account

3. Special Notice Time Deposit (SNTD) 4. Fixed Deposit Receipts A/C 5. Monthly Deposit Pension Scheme A/C (B) 1. Foreign currency account

2. Non-resident foreign currency deposit account 3. Resident foreign currency deposit account 4.Foreign remittance


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LOANS:

Overdraft

Cash Credit(Hypo)

Cash Credit(Pledge)

Rural Credit

Industrial Credit

IBP( Inland Bill Purchased)Local Guarantee


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Foreign Trade and Foreign Exchange:

Letter of credit

Packing credit

Payment against document(PAD)

Loan against imported merchandise(LIM)

Foreign guarantee


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LOANS (Sector-Wise): 1. Agriculture 2. Large & Medium Scale Industries 3. Working Capital (Jute) 4. Working Capital (Other than Jute) 5. Jute Trading 6. Jute and Jute Goods Export 7. Other Exports 8. Other Commercial Lending

9. Urban Housing 10. Special Program Small Industry 11. Other Special Program 12. Others


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FEE BASED SERVICES: 1. Collection of Bills/Cheque etc. 2. Issuance of Demand Draft/Pay-Order/Mail

Transfer/Telegraphic Transfer

3. Issuance of Bank Guarantee 4. Opening of Letter of Credit 5. Exchange AccountF.C.

6. Export Bills 7. Godown Rent Record/ Locker

Services 8. Dividend Warrant 9. Underwriting 10. Miscellaneous.


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Investments:

1. Purchase of Treasury Bills

2. Purchase of Approved Securities of the

Govt.

3. Purchase of ICB share certificate

4. Purchase of Debenture of different

Autonomous Bodies5. Other Investment


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ProfitabilityIn 2009, the Bank earned operating profit of TK. 644crore. In recent past bank has to sustain cumulative netloss charging of cumulative provision shortfall against

loans and advances and superannuation fund since1972. It was done as per provisions of IAS-30,Implemented by the Bangladesh Bank vide their BRPDcircular No.14 dated 25 June 2003 and as such theauditors certified the accounts without any qualification.

In spite of huge volume of accumulated loss, the Bankis on the path of recovery and has taken steps toconsolidate its position.


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Year

Net Profit(in Crore.

TK)

2005 214

2006 358

2007 526

2008 633

2009 644


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year

Deposit

(in Crore.

TK)

2005 7731

2006 7491

2007 7129

2008 7209

2009 7357


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Year

Advance

(in Crore.

TK)

2005 9940

2006 10587

2007 11849

2008 11336

2009 12224


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year

Export

(in Crore.

TK)

2005 4171

2006 5171

2007 4892

2008 4954

2009 4461


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year

Import

(in Crore.

TK)

2005 5119

2006 11592

2007 11343

2008 10062

2009 7753


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year

Remittances

(in Crore.

TK)

2005 3457

2006 3930

2007 4281

2008 5269

2009 5587


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year

Total

Assets

(in Crore

TK)

2005 7541

2006 8358

2007 9509

2008 9511

2009 10346


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Main Issues to find

-Are the products are low cost?

-Are the market is broad?

-Are the product is acceptable to customers.-Relative position of differentiation

-Cost of Product.


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HBL Interest Rate

11.512

12.513

13.5

1414.5

1515.5

16

Agrani

Bank

DBBL Brac N.C.C.

Bank name

Intere

stRate

HBL Interest Rate

HBL Interest Rate Agrani Bank DBBL Brac N.C.C.

13 14 14 15.5


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Cash Credit Interest Rate

Agrani Bank

DBBL

N.C.C.

MTBL

13

13.5

14

14.5

15

15.5

16

16.5

Agrani

Bank

DBBL N.C.C. MTBL

Cash Credit Interest

Rate

Cash Credit Interest Rate

Agrani Bank DBBL N.C.C. MTBL

14 15 16 15


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FDR Interest Rate

Agrani BankDBBL

BracN.C.C.

0

2

4

6

8

10

12

14

Agrani Bank DBBL Brac N.C.C.

FDR Interest Rate

FDR Interest Rate

Agrani Bank DBBL Brac N.C.C.

10 11 12 13


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100

300 300

0

50

100

150

200

250

300

350

Agrani Bank Janata Bank Dhaka Bank

Bank

PPEndors

eComm.

(inTK)

Passport Endorse

Commission Agrani Bank Janata Bank Dhaka Bank

(in TAKA) 100 300 300


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After comparison with above five

different products we see

products are low cost.


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Total Advance at 2007

0

2000

4000

60008000

10000

12000

14000

Agrani

Bank

Janata

Bank

Brac

Bank

Dhaka

Bank

Total Advance at2007

Total Advance at 2007 (In Crore)

Agrani Bank Janata Bank Brac Bank Dhaka Bank

11900 12000 3300 2000


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Deposit at 2007

0

5000

1000015000

20000

25000

Agrani

Bank

Janata

Bank

Brac

Bank

Dhaka

Bank

Deposit at 2007

Deposit at 2007 (In Crore)

Agrani Bank Janata Bank Brac Bank Dhaka Bank

13600 19800 3800 2300


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Two of the main indicator of a financial

institute is advance and deposit. From

above two comparison we see market of

this bank is broad. As the branch numberof this bank is 867 they are able to gain

this competitive advantage. And off course

products is acceptable to customers.


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Interest Income62%

Investmentincome

13%Commission

Income

7%

ExchangeEarning

13%

Other OperativeIncome

5%

Income Sectors of Agrani Bank Ltd.

Interest Income

Investment income

Commission Income

Exchange Earning

Other Operative Income

c


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Income Sectors of Brac Bank

Interest Income

58%Income from

Investment

20%

Commission,Exchange

22%

Other Operative

Income

0%

Interest Income

Income from Investment

Commission,Exchange



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Income Sectors of DBBL

Interest Income

43%

Income fromInvestment

24%

Commission,Excha

nge

27%

Other Operative

Income

6%

Interest Income

Income from Investment

Commission,Exchange



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From above information we can say

differentiation of product is relatively

standard. This banks number of income

sectors is as like other commercial banksincome sector.


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Cost of production of this bank is lowest

compared to other commercial banks.

Here we see Interest paid by this bank is

only 66% compared to Brac banks 82%.


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Number of branches covering almost all over the country.

Amount of confidence regarding this bank in the mind of

mass people (being a government bank everyone thinks

the policy of this bank will not be changed very rapidly).

Ability to give advances in big volume with lowest interestrate.

Ability to handle remittances efficiently.

Ability to give loans to rural areas especially to farmers.

Ability to take help from government to collect classifiedloans


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-Technology used by the bank is not up-to-date.

-Service given by the bank is below customers satisfaction level.

-Inefficient employees in comparison to other private commercial

banks.

-Political intervention over this bank is more than other private

banks. -Recovery rate of loans is low compared to private banks.

-Salary structure of the employees of the bank is very inefficient. In

2006 the number employees were 11793 and the amount was used

to give them salary was 2,511,990,943 tk (including salary and

allowances). Per month 17500 (almost) tk for each person. This isless than the lowest salary getter of many private sector banks

(excluding allowances).


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-Net interest income (NII) is increasing day by day.

-Amount of classified loan is decreasing.

-Operating profit is increasing gradually.

-Import-export business is very much favorable to bank now a days.

-Loss-making branches has been reducing for last few years.

-Remittances increased by 13.68 percent. -Human resources management division is getting more emphasis

from top management.

-Huge number of IT specialist is being employed to up grade

computer system and network.

-Salary structure is also improving in some extent.


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-The banking industry is the main threat of the bank as many potential

competitors are in competition on the market.

-Technological drawback is a big problem.

-Salary structure is a big threat not to attract potential and efficient

employees from market.

-Outlook and interior design is not attracting customers as they areattracted by other commercial banks.

-Government is a big threat also. Because to balance deficit budget and

to pay different dues of various government organization like BPC

government is dependent of this bank.

-Though classified loan condition is improving but still it is in danger one.

-And off course still trade union is a big threat to it, as the CBA leadersare more interested to take leadership than to do well for the bank.


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Target market is broad for this Bank. Bank is giving advances for various

reasons to all type of customers. It includes poultry loans, SME loans,

hatchery loans, shallow water pump loans to high industrial loans. The

range of advancement is from 5,000 taka to 2000 ml taka.

Cost of product is lowest among competitive banks. In comparison to

other commercial banks especially private sector bank the rate ofinterest of this bank is so minimum. Sonali bank and Janata Bank is also

giving advance to their customers all most same rate but most cases

those rate are more than the rate given by Agrani bank Ltd. Moreover

different general banking services given by Agrani bank Ltd is lower in

comparison to all bank in the banking industry.

As the market of this bank is broad i.e. hole Bangladesh is their marketand almost every type of people is their customer we can say , the

business level strategy followed by this bank is cost leadership strategy.


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The market of this bank is broad i.e. hole Bangladesh is their market and almost

every type of people is their customer. Bank is giving advances to their

customers on big amount as well as very little amount. Besides small sized loan

bank is pursuing Industrial loans, syndicated loan with other banks which are

very huge in volume. And the customers of those loans are big businessmen. So

as there is no special emphasis on any particular segment of market we can

easily recognize that the bank is pursuing cost leadership strategy. In addition to

this we can say, as there are very little differences between the four state owned

commercial banks in Bangladesh from the point of view of uniqueness the bank

is not unique from others, so they are not performing differentiation strategy.


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-Some uniqueness should be assessed by strategy

formulators and special emphasis is needed to highlight

people on that uniqueness. i.e.; integrated low cost

differentiation strategy should be implemented.

-The bank should invest more to coup up with the currenttechnological changes and adopt online banking in a vast

way.

-The salary structure should be rational with other banks.

-More training is needed to make current employees ascustomer friendly.


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-Top management should be free to formulate banks own strategy.

-bank should focus on broader business issues by having outside

experts handle various operational details.

-An appropriate organizational culture encourages the development

of an entrepreneurial orientation among employees so the change of

the organization culture is necessary.


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presentation final22

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