Hong Leong Bank PESTEL Analysis - PESTEL - CSR - YIP Global - Trend Analysis

2. • Established under the name of Kwong Lee
Mortgage & Remittance Company in 1905 in
Kuching, Sarawak
• Was listed on the Bursa Malaysia in October
1994

3. An outstanding financial services organization,
highly competitive and profitable, where people
make the difference.
Graphic Easy to understand

4. • Contributing to charity organisation & NGO
• Sponsoring scholarship
Identify a long-term
durable mission
• Conducting Human Capital Development
opportunities for all worker
Contribute “what we
do”
• Involved in environmental activities
• Take effective steps
Contribute specialised
services to a large-
scale undertaking

5. PESTEL
Analysis
Economic
Factor
Political/
Legal
Factor
Social
Factor
Technological
Factor
Ecological
Factor
 Inflation rates HIGH, loan
interest rates INCREASE,
income HIGH
 HIGH economic growth,
HIGH income
 Stability of political
environment
 Central Bank of Malaysia
Act 2009, Financial
Services 2013, Exchange
Control Act 1953
 Target Generation Y
 Different banking
solution for different
income group
 Digital banking
services
 Mobile banking app
for smartphones
 Conduct eco-efficient
strategies & take
action
 Implement 3R method

6. Yip
Global
Market
Driver
Cost Driver
Government
Driver
Competitive
Driver
 HSBC, CIMB bank
 Offer lower
financing ,
preferred rates
 Hong Kong, Vietnam, Singapore
 Similar desires & needs
 Risk management, treasury
services & investment services
 Lower cost of
start-up &
operation
 Higher profit
margins
 Comply government policy
 Less government
regulation

7. Porter’s
Five
Forces
Threat of
New
Entrants
Power of
Suppliers
Power of
Buyers
Availability
of
Substitutes
Competitive
Rivary
 start up a bank is not easy
 bill payment through
internet
 large banks that able
enter market
 human capital might
be lured
 excellent employees
 individual
customer does
not threats
 stay instead of
keep switching
bank
 provide more
service and keep
improving
 non-banking
financial
services
company
 some company
offered
financing which
are 0%
 financial services exist
long time
 attract customers but
indirectly lower return
on assets

8. Inbound logistics Operations Outbound logistics Marketing and sales Service
Funding
capital
Deposit
services
ATM network Competitive
affairs
Customers
service
Labor Loan
administration
Credit card
service
New account
acquisition
Machinery Treasury
operations
Mobile
banking
Public relations
(Road shows &
events)
Item processing Internet
banking
Payment
processing
Branch
network
The Value Chain (VCA) unique as it is based on the production of services
Primary activities

9. General administration - Headquarters
Level 2, Wisma Hong Leong,
18 Jalan Perak; Kuala Lumpur;
Wilayah Persekutuan, 50450
- 329 branches nationwide
- Total Employees: 5,378
Human resource management - Ramon Chelva (COO, Group
Human Resources)
- Recruiting method
- Training
Research, technology, and
system development
- Online internet system
- ATM machine
- HR management system
Support activities

10. Resource – Based View (RBV)
Threshold resources
-Building
-Machinery and
technology (include
computer, ATM
machines, internet, air-
conditioning, banking
system and more)
-Capital
Threshold
competences
-Cash rich
-Professional bank
management team
Distinctive
resources
-Reputation
-banking knowledge
and experience
Distinctive
competences
-effective
transaction
-customer service
Threshold
capabilities
Distinctive
capabilities

11. Financial position of Hong Leong Bank Berhad
Profitability ratios/performance ratios
Earning and efficiency ratios
Liquidity ratio
Asset credit quality
Equity and capital ratios

12. Profitability
ratios/performance ratios
• 2012 improved slightly to 17.5% from
2011 which is 16.3%
• Then decrease 1.1% in 2013 which is
16.4%
Return on
equity (ROE)
• Increasing each year by each year
from 2011-2013
• Highest ROA in 2013
• The higher the ROA, the more profit
that bank earns.
Return on
asset (ROA)

13. Earning and efficiency ratios
• Highest net interest margin in 2013
• The bank has made an optimal
decision in the new loan pricing
segment
Net interest
margin
• Lowest cost-to-income ratio in 2013
compared with 2011 & 2012
• Hong Leong Bank Berhad having a
good performance in 2013
Cost-to-
income ratio

14. Liquidity ratio
Loans to deposits
ratio
• Increasing each year by each
year from 2011-2013
• Highest loans to deposits ratio in
2013
• Hong Leong Bank Berhad having
a low liquidity to cover any
unforeseen fund requirements
Asset credit
quality
Gross impaired
loans ratio
• Reducing each year by each
year from 2011-2013
• Having a low gross impaired
loans ratio
• Because the lenders successful
recovered the likely amount of
loan during these 3 years

15. Tier-1
capital
ratio
• Increasing each year by each year from 2011-2013
• Highest Tier-1 capital ratio in 2013
• Because Hong Leong Bank Berhad having a good
management in lending activities
Risk-
weighted
capital
ratio
• Improved each year by each year from 2011-2013
• Highest Risk-weighted capital ratio in 2013
• Hong Leong Bank’s capital position is consistently
strong to support the asset growth and business
strategies
Equity and capital ratios

16. Trend analysis
Favorable trend
Good & stable
performance
Making profit

18. Inflation changes
 Interest rate
 Exchange rate
Dealing with foreign
transaction.
 ↓ demand of loans & ↑ foreign
competition
Create foreign exchange risk

20. Major challenge → Interest Rate
 Customer choose
 interest rate for saving
account
 interest rate for loans.
HLB will be force to change according to
the environment.
Remain market leader of bank industry,

21. Online Banking System
- Tricking someone to
provide their confidential
information (
)

23. Degree of Impact Why???
Economic Factor Inflation makes benefits
Political Factor Raise up operation cost
Social Factor Able satisfy different customers
Technology Factor Help cut cost & increase efficiency
Ecological Factor Good behavior
Threat of new competitors
Competitor able to lure customer
because of globalization
Power of suppliers Human capital lured by competitors
Power of Buyers
Procedures switching time
consuming & complicated
Threat of substitute
service
Competition rise when competitor
provide better services
Competitive rivalry
Efficiency & quality service are the
Intensity of competitors

24. Globalization
& external
environment
factors bring
benefits.
Focus
negative
result show in
Porter’s 5
forces.
Strong
reputation &
management
team
Good
looking
profit