Term Paper

Performance dynamics of an industrial organization in Bangladesh: a case of ONE Bank Limited.

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Table of Content
Topic 01. Historical Background 02. Product profile 03. Competitive status 04. Trends & performance 05. Growth rate 06. Productivity 07. SWOT Analysis 08. Possible Measures to Improve Performance 09. Conclusion & remarks Page 03 03 03 04 05 06 07 07 08

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Historical Background
ONE Bank limited is a private sector commercial bank incorporated with the Registrar of Joint Stock Companies under the Companies Act 1994. The Bank commenced its banking operation on 14 July 1999 by obtaining license from the Bangladesh Bank on 02 July 1999 under section 31 of the Bank Company Act 1991. As per the provisions of Bangladesh Bank license, the Bank has offered initially its shares to public by Pre-IPO and subsequently sold shares to the public through IPO in the year 2003. The shares of the Bank are listed with both Dhaka Stock Exchange Ltd. and Chittagong Stock Exchange Ltd. The number of branches of the Bank was sixty four (64) and the number of booths was nine (9) as on 31 December 2012. The Bank is pledge-bound to serve the customers and the community with utmost dedication. The prime focus is on efficiency, transparency, precision and motivation with the spirit and conviction to excel as ONE Bank in both value and image. The name 'ONE Bank' is derived from the insight and long nourished feelings of the promoters to reach out to the people of all walks of life and progress together towards prosperity in a spirit of oneness

Vision Statement:
To establish ONE Bank limited as a Role Model in the Banking Sector of Bangladesh. To meet the needs of our Customers, Provide fulfillment for our People and create Shareholder Value.

Mission Statement:
To constantly seek to better serve our Customers. Be pro-active in fulfilling our Social Responsibilities. To review all business lines regularly and develop the Best Practices in the industry. Working environment to be supportive of Teamwork, enabling the Employees to perform to the very best of their abilities.

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Product Profile
OBL is a private sector commercial bank dedicated in the business line of taking deposits from public through its various saving schemes and lending the fund in various sectors at a higher margin. The banks financing concentrate in both, working capital finance and long-term finance. OBL has major concentration of financing in medium and large industries. Since the short-term finance carries low risk compared to long-term finance; the financing strategy of OBL will assist the bank to keep the risk at minimal.

Products and Services:

i. ii. iii. iv. v. vi. vii. viii. ix. x. xi. xii. Retail Banking Institutional Banking Corporate Banking Commercial Banking On-Line Banking Merchant Banking Advisory Services Capital Market Operation Islamic Banking Services Credit to Women Entrepreneurs Consumer Credit Facility Counter for Payment of Bills Other Services

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Competitive Scenario:
The banking sector alone accounts for a substantial share of financial sector assets, with 48 banks accounting for about 95 per cent of the sectors total assets as of the end of December 2011. Since 2002, the domination of the banking system by the state owned commercial banks (SCBs) has been declining while private commercial banks (PCBs) and foreign commercial banks (FCBs) have been gaining market share in both deposits and bank loans and advances (Bhattacharya and Chowdhury 2003), reflecting an increased competition in the banking industry. The market share of the SCBs declined substantially to 28.75 per cent of the total industry assets in 2011 as against 54.4 per cent in 1990, while PCBs' share rose to 65.24 per cent in 2011 as against 22.6 per cent in 1990. Similarly, FCBs have also shown slight increase holding total industry assets over the last ten years. FCBs hold 6.0 per cent of the industry assets as of 2011. The consumers, corporate houses, farms, semi-government and government organizations etc. are the target market of banking industry of the country. Therefore, One Bank Limited is highly confident that the demand for banking in Bangladesh will continue to increase significantly in the foreseeable future. As reported in the media, the operating profit of the country's private commercial banks (PCBs) was estimated to have grown by Taka 5.0 billion during the year 2004, which translates to 28.63 Percent growth for the industry over the previous year. Therefore, the growth in percentage terms for ONE Bank has been three & half times the average industry growth. This achievement in a very competitive industry is something that makes the bankers very proud.

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Performance Trends:

Particulars 2012 Total Capital Total assets 8,437,921,139 84,585,883,816

73,055,774,154

2011 7,700,158,932 67,619,044,045

57,240, 154,812

Change 9.58% 25.09%

Total Deposits

27.63%

Total Loans & Advances Return on investment (ROI) Income from investment Earnings per share

60,216,129,302 14.33% 552,388,074 2.55

47,926,683,737 14.94% 1,441,430,733 4.54

25.64% (4.11)% (61.68)% 43.92%

Credit deposit ratio %

82.42%

83.73%

(1.56)

Factors Influencing Performance

Deposits of the Bank Loans and Advances of the Bank Net profit of the Bank Number of branches of the Bank Number of the employees of the Bank Earnings per share of the Bank

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Growth rate:
The banking sector alone accounts for a substantial share of financial sector assets, with 48 banks accounting for about 95 per cent of the sectors total assets as of the end of December 2011. Since 2002, the domination of the banking system by the state owned commercial banks (SCBs) has been declining while private commercial banks (PCBs) and foreign commercial banks (FCBs) have been gaining market share in both deposits and bank loans and advances (Bhattacharya and Chowdhury 2003), reflecting an increased competition in the banking industry. The market share of the SCBs declined substantially to 28.75 per cent of the total industry assets in 2011 as against 54.4 per cent in 1990, while PCBs' share rose to 65.24 per cent in 2011 as against 22.6 per cent in 1990. Similarly, FCBs have also shown slight increase holding total industry assets over the last ten years. FCBs hold 6.0 per cent of the industry assets as of 2011.

Productivity:
Deposits and Shareholders Equity represented are the two biggest resources of funds for the Bank. As at December 31, 2012, the deposit to third parties liability ratio is 94.68% and Equity to third parties liability ratio is 9.62%. The Bank tries to mobilize deposits from low cost sources and prudently invest the fund for raising the profitability of the Bank. Through careful planning, a prudent dividend policy and expenditure on capital items and investments, the Bank ensured optimization of the Shareholders Equity.

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SWOT Analysis:
Strengths
Satisfactory Capital Adequacy Satisfactory business growth Experienced top management Diversified product lines Satisfactory asset quality

Weaknesses
Decreasing market share Deposit growth is less than Peer and industry growth Does not have own training institute Dependency on term deposit

Opportunities
Investment in SME and Agro based Industry. MIS in continuous development process. Basel-II compliance for capital adequacy.

Threats
Increasing cost of fund. Increased competition in the market.

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Possible measures:
The loan sanctioning process should be easier so that the customer can feel convenient to take loan from the bank. The Bank authority should lay emphasis on the quality of service. The Bank should hunt low cost deposit from the depositor to provide borrowing customers lower of rate. The Bank should train its all officers and executives to provide quick and quality service to the customers. The Bank needs to set up more branches in different commercial area of Dhaka, Chittagong and other towns to make a good network all over the country. The Bank needs to introduce more promotional programs to promote its producers and services to the people.

Others things to remember: Coping with Instable Economic State: To cope with the ever changing economic environment,
the management of OBL should always be watchful and should constantly analyze the organizations overall environment. As a learning organization BPL should keep their practices of flexibility to encourage innovation for the times of much needed change. Again, as Government is going to pass a new version of law, involving the banking industry one bank should prepare their arrangements to cope with the coming changed business environment.

Handling Competitions: Since, OBL business strategy is to focus on particular segments of the
total market they should be operating with the view to becoming the market leader of those areas. In the mean time, they should look forward to grow their business as much as possible both in national and international market.

Negotiating with the Government: In order to ensure more prospects in the import and export
activities of one bank needs to negotiate to adjust several business laws and regulations with the Government. Such approach can be proved as a benefit of the company. 9|Page

Concluding Remark:
ONE Bank could maintain steady performance measured in terms of key indicators. After analyzing all available data it was observed ONE Bank is in better position in all respects Despite hard competition among banks operating in Bangladesh, both local and international, ONE Bank has made tremendous and remarkable progress practically in every sphere of its activities. The Bank is maintaining its position as one of the leading new generation private Banks in the country both in terms of capital base and good governess. There are, however, a number of areas where ONE Bank needs to lay emphasis in order to sustain steady growth rate.

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