Meezan Bank Strategic Management Report

1. Strategic Management Report
on
“MEEZAN BANK LIMITED”

2. 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

3. Vision
Establish Islamic 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 Islamic 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 Islamic values and ensuring recognition and a quality banking
experience to our customers.
Mission
Service Mission

4. Business Scope
Market
• 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 banking
Customers:
• Conventional current account holders.
• Uncatered customers
Boundaries
• Within Shariah principles.

5. 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 Areas
Salaried 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 farms
Current 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.)

6. 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 Cost
2012 14 24 12000000
2013 17 29 14500000
2014 20 35 17500000

7. Objectives (cont.)
2. Increase EPS to Rs 4.5 per share.
EPS 2012 EPS 2013
MBL 3.50 3.95
HBL 17.02 17.15
BI 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

8. Market Structure
End 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%

9. 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.

10. 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%

11. Industry Future growth
Market Segment Years
Current Deposit Average Growth 2014 2015 2016 2017
Industry
13.69% 2,739,222,840.50 3,114,197,207.86 3,540,502,111.07 4,025,164,227.50

12. COMPETITION AND MARKET MATRIX
Historical Growth
Market 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
-
100,000,000
200,000,000
300,000,000
400,000,000
500,000,000
2010 2011 2012 2013
Meezan Bank
HBL
Bank Islamic
Bank Alfalah

13. Future Growth
Market Segment Years
Current Deposit Avg. Growth 2014 2015 2016 2017
Industry 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
Industry
Meezan Bank
HBL
Bank Islamic
Bank Alfalah
COMPETITION AND MARKET MATRIX (cont.)

14. Profitability Analysis
PROFIT 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
-
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
2010 2011 2012 2013
PROFITABILITY ANALYSIS
Meezan Bank HBL Bank Islami Bank Alfalah

15. DISTRIBUTION CHANNELS
Individual Commercial
Branches 385 385
Direct Selling 385 385

16. 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
-
200
400
600
800
1,000
1,200
1,400
1,600
Meezan Bank Habib Bank
Limited
Bank Islamic Bank Alfalah
Commercial
Individual
Industrial
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.

17. Driving Forces
Better 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

18. Operational Cost
S. No. Cost Heads Meezan Bank HBL Bank Al Falah Bank Islami
1 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

19. Measuring GAP & Action Plan
S. No. Cost Heads
1 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 basis
3 Rent Comparatively low
4 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

20. 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

21. 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

22. 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

23. 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 20
Social influence 8% 30 20 20 30
Service quality 19% 15 10 35 20
Religious Belief 19% 20 0 20 10
Media 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

24. Social Influence Reputation and Brand
Name
Service Quality
Accessibility
Responsiveness
Media Advertisement
Improve Fast
Question Its
Cost
Do not
Sweat
Keep It Up
Best
Same
Worst

25. 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

26. Recommendations:
• Aggressive marketing and advertising
strategy.
• Establishment of new branches.
• Service improvement.
• Islamic banking introduction trainings
in Universities/colleges.