SWOT Analysis of NIB Bank

NIB Introduction NIB bank provides services to more than 450,000 customers through a countrywide network of 179 branches all over Pakistan. It is one of the fastest growing banks in Pakistan. NIB started operations in October 2003 with a paid up capital of Rs. 1.2 bn. Operat Operation ions s for NDLC, NDLC, IFIC’s IFIC’s Pakist Pakistan an and Credit Credit Agrico Agricole le Indosu Indosuez ez Pakistan were amalgamated with their assets and liabilities in April 2004.  Temasek Holdings acquired 25% shareholding in NIB in March 2005 through Bugis Investments which was enhanced to over 70% in June 2005. NIB has branches all over Pakistan.

A SWOT Analysis A SWOT analysis guides us to identify the positives and negatives inside our organization (S-W) and outside of it, in the external environment (O T). Developing a full awareness of our situation can help with both strategic planning and decision-making.  The SWOT method was originally developed for business and industry, but it is equally useful in the work of community health and development, education, and even personal growth. SWOT is not the only assessment technique we can use, but is one with a long track record of effectiveness. Compare it with other tools found in the Community Tool Box to determine if this is the right approach for our situation. The strengths of this method are its simplicity and application to a variety of levels of operation. A SWOT analysis can offer helpful perspectives at any stage of an effort. We can use it to: • •

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Explore possibilities for new efforts or solutions to problems. Make decisions about the best path for our initiative. Identifying our opportunities for success in context of threats to success can clarify directions and choices. Dete Determ rmin ine e wher where e chan change ge is poss possib ible le.. If we are are at a junc junctu ture re or turning point, an inventory of our strengths and weaknesses can reveal priorities as well as possibilities. Adjust and refine plans mid-course. A new opportunity might open wider avenues, while a new threat could close a path that once existed.

SWOT also offers a simple way of communicating about our initiative or program and an excellent way to organize information we've gathered from studies or surveys.

SWOT Analysis of NIB Bank 1. Internal • •

Strengths Weaknesses

2. External • •

Opportunities  Threats

Internal Analysis Strengths Strength can be defined as an area where a company is best at doing som somethi ethin ng or a feat featu ure that that puts puts a com compan pany at an adv advanta antage ge in comparison to its competitors. NIB Bank enjoys the following strengths. •

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 The Standard of service is very good and customers are satisfied with that service.  They have computerized computerized system, and online online banking. NIB is the 7th largest bank in Pakistan with over 240 branches. NIB bank’s ATM’s are linked with a number of leading local and foreign banks. Automated Systems made NIB Bank to rise with the pressure of  rising competition.  The employers at NIB are offered reasonable monetary benefit. Normally two bonuses are given Eid – ul - Fitar & Eid – ul - Azha. NIB bank has well established website and is up to date about the bank.

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Promotes high standards of borrower creditworthiness

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Financial Sustainability

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Facilitates high credit rating

Weaknesses A wea weakne kness is defin efined ed as an area area in an organ ganizat izatio ion n wher here the the organization is not as good at doing something where the organization is not not as good good doin doing g some someth thin ing g as its its comp compet etit itor ors s or a thin thing g whic which h an organ organiza izatio tion n lacks lacks or dis disadv advant antage age in compar compariso ison n to its compet competito itors. rs. Based on the above definition NIB Bank has the following weaknesses. •

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Branch area is very small with respect to hired employees. When nib merges PICIC commercial and PICIC investment in it than the old employees become part of the NIB.  Those employees need great deal of training and development. As they are doing conventional banking and NIB’s slogan is relationship base banking. Online recruitment (unable to collect a pool of candidate because net is not available everywhere in the country).

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Increases city/utility costs of borrowing.

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Creates regulatory problems or uncertainty

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Creates obstacles to efficient management management

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Branch manager cannot fire any employee on his bad performance as they hired as permanent employees.  To enhance competition and efficiency, consolidation of small inst instit itut utio ions ns into into bigg bigger er unit units s is requ requir ired ed whic which h can can be done done by focusing on the legal and regulatory framework

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NIB Bank rely on borrowing and contributions to fund their asset growth. In some regions, urban areas of Pakistan service of NIB Bank is not good as compared to other privatized banks  The application time is also also quite lengthy

External Analysis Opportunities An opportunity can be defined as a change in external environment, which if prop proper erly ly expl exploi oite ted d with with the the orga organi niza zati tion onal al stre streng ngth ths s will will resu result lt in enhanced sales, market share, or income. Using its strengths, NIB Bank can avail the following opportunities. •

Increase credit facilities to lower income and also to SME’s

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Many areas for new branch opening.

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In the economy of Pakistan where other banks are very carefully lending the different loan NIB giving personal loan in huge quantity.  This will result in great market market share in future. future. Creativity and financial innovation.

Develo Develop p expert expertise ise in specia specializ lized ed credit credit evalua evaluatio tion n of cities cities and utilities Provid Provide e focal focal point point for identi identifyi fying ng and acting acting on obstac obstacles les to or opportunities for city and city enterprise borrowing. Proper orientation of employees in all branches can help them to cope up with foreign banks. Call centre services should be improved to enhance their network

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Aggressively monitor borrowers and help resolve borrower financial problems. As a Bank, NIB has business relationships covering a very large fraction of the economy in the country. These relationships make the perfect partner to drive the initial free registration of businesses. Attraction of new capital by the NIB Bank.

Threats  Threat can be defined as a change in external environment which if not met with proper strategies will result in loss of revenues, market share, or income. In the context of NIB Banks external environment, the following potential threats exist: •

Foreign banks operating in Pakistan are playing a significant role by incorporating new technologies and providing better quality services thus creating a threat to the local banks especially to NIB Bank which tries to develop its image in the eyes of customers.

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Already many huge banks are doing business in the banking sector.

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Devaluation of Pakistani currency.

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 The bank is facing threats with the emergence of new competitors especially in terms of foreign banks.

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Large and Increase competition

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Lack of Huge Deposits

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Systemic investment risks (tariffs set by local radas; all cities rely heavily on Inter-governmental Inter-governmental transfers) Reliance on market interest rates and maturities may make loans unaffordable