Docstoc

PBP Final Presentation

Document Sample
PBP Final Presentation Powered By Docstoc
					National Chengchi University




                  Practical Business Project –

               Bank Of Oversea Chinese (BOOC):
                    Consumer Banking Credit Card
                             Business
                 Professor:
                                Charles Trappey, Robert Su
                 Advisor:
                                Professor Mia Twu
                 Prepared by:
                                Annie Wei 93933008
                                Jack Pai  93933029
                                Myra Yuan 93933015



                                                             1
National Chengchi University




  Team Advisor:                Academic Background:
                               Ph.D. in Business, University of
                               Indiana ,U.S.A.


                               Experience:
  Professor Mia Twu            Associate Professor, Department
                               of Finance,
                               National Chengchi University
                               (1991/2~)



                                                                  2
National Chengchi University


  Presentation outline
        Project Introduction
        Industry Background
        BOOC Company Background and Status
        BOOC Key Issues
        BOOC Strategy Suggestions
        Case Summary
        Teaching objectives

                                              3
National Chengchi University

  Project Introduction
 • Bank of Overseas Chinese (BOOC) was
   mainly focus on corporate banking but the
   interest rate spread is shrinking due to more
   competitors entering this market.
 • In order to replace the lost profit, BOOC is
   eager to extend its operations into some
   other business lines to replace the current
   lost profit.
 • The senior management team concluded
   consumer banking sector especially cards
   would be a great choice.

                                                   4
National Chengchi University




      Is it the right time to expand
   consumer banking card business?
                   How?




                                       5
National Chengchi University


 Industry Background
  • Card debt issue
        Over-issuance of credit cards
         and cash cards
        The excess fund in banks
        Consumer spending / GDP has been growing


                               Total write off amount
                               generated by cards business is
                               over $80 billion NTD from year
                               2004
                                                                6
National Chengchi University

   Industry Background

  • In 2005, Financial Supervisory Committee (FSC)
     announced regulations to tighten the credit card
    issuing policies
  • Most banks are reluctant to issue new cards and tend
    to shift their operating focus on Corporate Banking
    business
  • Impact
      • As corporate banking accounts for 80% of BOOC’s revenue
        stream, the business only achieved 75% annual revenue
        target.
                                                              7
National Chengchi University


          BOOC Background
    




         • 1959 preparatory office set up
         • Starts business on Mar. 1,1961
         • 58 business units with 2,118 employees as of March 2006
         • Dec. 21, 1998 Listed on the stock market ; present equity increased
           to NT$11,944.8 million
         • Major shareholder - Polaris Financial Group boosted from 7.38%
           to 22.12%, in 2004
         • Management: The Polaris Financial Group took over management
           in March.2006
         • Major Financial Business-Corporate banking; Personal banking
           Foreign exchange; Credit cards; Financial products ;Wealth
           management; Trust business etc.



                                                                                 8
National Chengchi University


           BOOC Background
                 Balance Sheet for the Past Five Years
                    Item       2001       2002       2003       2004       2005


     Total Assets              263,468    265,914    266,583    258,515    270,162

     Total Liabilities         253,879    255,149    257,213    246,542    258,834

     Shareholders’ Equity        9,589     10,765      9,370     11,973     11,327

     Capital Stock              16,752     11,376     11,376     11,945     11,945

     Accumulated Earning        (7,388)      (809)    (2,208)      (160)      (944)

     Net Value                    5.72       9.46       8.24      10.02       9.48

     BIS                         5.05%      5.53%      8.04%     10.54%      8.83%

     Unit:NT$ million
     Source: BOOC
                                                                                      9
National Chengchi University


            BOOC Background
            Income Statement for the Past Five Years
     Item                                 2001         2002         2003         2004         2005
    Operating revenue                       16,517       11,729       10,318        8,605       9,309
       Interest                             13,822       10,210        7,566        6,710       7,359
       Commissions and handling fees             998          985      1,050        1,338       1,217
       Gains on securities transactions      1,282            277      1,372            316          398
       Other operating revenue                   415          257          330          241          334
    Operating costs                         10,822        6,254        4,220        5,140       5,848
    Gross profit                             5,695        5,475        6,098        3,465       3,461
    Operating expenses                       3,373        3,174        3,045        2,999       3,028
    Operating income                         2,322        2,301        3,053            466          433
    Non-operating income                          75           70          131          152          134
    Non-operating expenses                       118           98           25           36           33
    Income before Income tax                 2,279        2,273        3,159            582          534
    Provision for possible losses            5,344        2,894        4,558        3,085            735
    Impairment of assets                          -            -            -            -           581
    Net loss                               (3,065)        (621)      (1,399)      (2,502)       (783)
    Cumulative Effect Of Changes In
    Accounting Principles                         -            -            -            -            -

    Net Loss                               (3,065)        (621)      (1,399)      (2,502)       (783)
    Loss per share(NT$)                     (1.83)       (0.37)       (1.23)       (2.21)      (0.66)

        Unit:NT$ million Source: BOOC                                                                      10
National Chengchi University


  BOOC Current Status
     Credit Card Business
    


        • BOOC Credit Card Business Structure Chart
          Credit card center set up in 1997
          Departments: Customer service/Credit/fraud/marketing/Collection etc.
          110 employees

        • BOOC Credit Card Product Types
          Normal/Gold/Platinum ; Affiliate /Joint Venture Card

        • BOOC Credit Card Business Data
           Performance:NTD1.3Hundered million
           CIF: Approximately 800,000; active card:33,000

                                                   Cont…

                                                                主要卡別
          大潤發25% 愛車卡20% 高球卡10% 商務卡10% 紐約10%

                                                                次要卡別
                                                                                 11
National Chengchi University

  BOOC Current Status
   Comparison with peer company       Source: FSC Oct.2006)
 Credit Card Spending Ranking                                 Active Card Ranking
                                Card in Force Ranking                                      NPL Ranking
                                                               1                            台灣中小企
   7   玉山銀行         5,262,267    8    花旗銀行        1,537,701        萬泰銀行     362,560   27            472,726
                                                               2                              銀

                                                               1                      2
  8    永豐信用卡        5,087,901    9    新光銀行        1,292,177        兆豐銀行     352,340         陽信銀行    421,137
                                                               3                      8
                                 1                             1                      2
  9    荷蘭銀行         3,553,750         荷蘭銀行        1,095,014        日盛銀行     349,005         合作金庫    387,014
                                 0                             4                      9

  1                                                            1                      3
       香港匯豐         2,999,794    11   慶豐銀行         981,187         慶豐銀行     341,901         土地銀行    276,570
  0                                                            5                      0

   1                             1                             1
       新光銀行         2,645,992         萬泰銀行         927,842         中華銀行     328,571   31    三信銀行    266,161
   1                             2                             6
   1                             1                             1                      3
       華僑銀行         2,172,828         華僑銀行         793,824         華僑銀行     327,612         華僑銀行    193,258
   2                             3                             7                      2

   1                             1                             1                      3
       美國運通         2,051,020         兆豐銀行         774,753         遠東銀行     324,852         臺灣商銀    176,489
   3                             4                             8                      3

  1                              1                             1                      3
       兆豐銀行         1,973,913         合作金庫         767,118         華南銀行     307,071         臺中銀行    165,310
  4                              5                             9                      4

   1                             1                             2                      3
       友邦           1,649,761         中華銀行         725,924         新竹銀行     240,133         寶華銀行    131,850
   5                             6                             0                      5

  1                               1                            2                      3
       遠東銀行         1,542,524         華南銀行         704,740         上海銀行     239,227         彰化銀行    119,555
  6                               7                            1                      6

   1                             1                             2
       第一銀行         1,498,339         遠東銀行         703,846         第一銀行     232,061   37    萬泰銀行    106,497
   7                             8                             2

                                                                                                              12
National Chengchi University


  BOOC Current Status
          2005~2006 Business status
                                                                 Revolving Balance
        2,900,000

        2,600,000

        2,300,000

        2,000,000
                         3月


                               5月


                                    7月


                                         9月




                                                            3月


                                                                 5月


                                                                      7月


                                                                           9月
                                                月




                                                                                  月
                  1月




                                                       1月
                                              11




                                                                                11
                 年




                                                      年
               94




                                                    95
                                                                 Credit Card Spending
        2,400,000


        2,100,000


        1,800,000


        1,500,000
                         3月


                               5月


                                    7月


                                         9月




                                                            3月


                                                                 5月


                                                                      7月


                                                                           9月
                                                月




                                                                                  月
                    1月




                                                      1月
                                              11




                                                                                11
                 年




                                                      年
               94




                                                    95




                                                                                        13
National Chengchi University

BOOC Current Status
Issuer                                      Card in force          Active cards   Market share by CIF   Ranking
Chinatrust Commercial Bank                          6,245,890         3,895,761        15.82%             1
Taishin International Bank                          3,702,902         2,140,462         9.38%             2
Cathay United Bank                                  3,459,072         1,895,546         8.76%             3
Union Bank of Taiwan                                2,974,219         1,266,562         7.54%             4
Taipei Fubon Bank                                   2,294,315         1,518,768         5.81%             5
E. Sun Commercial Bank, Ltd.                        2,245,320         1,404,732         5.69%             6
AnShin Card Services Co., Ltd.                      1,719,968           893,254         4.36%             7
Citibank N. A.                                      1,548,719         1,204,390         3.92%             8
Shin Kong Commercial Bank                           1,296,127           473,894         3.28%             9
ABN AMRO Bank                                       1,096,452           482,741         2.78%             10
Chinfon Commercial Bank                                  995,476        344,889         2.52%             11
Cosmos Bank, Taiwan                                      947,783        370,887         2.40%             12
Bank Of Overseas Chinese                                 795,815        328,441         2.02%             13
Mega International Commercial Bank
(former The International Commercial Bank                794,014        354,707         2.01%             14
Taiwan Cooperative Bank                                  768,018        189,073         1.95%             15
                       :                             :                  :                  :               :
Total                                              39,469,984        20,880,296        100.00%            46

                                                                                                                  14
National Chengchi University


  BOOC Current Status
     Credit Card Business

        • Credit Card Risk Management
           - Utilize Credit Score Card Model recently

        • Credit Card Policy
           - no data mining but Risk and Revenue analysis conducted

        • Credit Card Marketing Strategy
          - Focus on special client

        • BOOC’s Strengths
           -Low NPL; High Quality Customer;


                                                                      15
National Chengchi University


  BOOC Key Issues
         The impact of the Cash Card and Credit Card Crisis
        -Conservative/cautious of Consumer behavior
        - How to stimulate consumption? Acquire new cardholders?

         Regulatory Restrictions
        -Marketing restriction; NPL Control etc.

         Economic Conditions Effects
          -Spend less
        Maintain High Quality Client and Increase Interest
         and Handling Fee Income
         -BOOC does not have much credit card revolving balance in its
          interest earning. (accounts for 2% of total loan outstanding)

         Capital Budget Issues
                                                                          16
National Chengchi University


BOOC Strategy Proposal

        Business opportunity
           - Corporate banking Consumer banking Credit Card
        From researching competitor status, a more complete
       income structure for a bank should have consumer
       banking to account for around 30% of total income.




       Source: China-Trust and Taishin Commercial
       Bank annual report

                                                                17
National Chengchi University


BOOC Strategy Suggestion

       Marketing related
            • Target market selection
                  Identify customer profile
                  Generate the revenue and loss information
                  Analysis and select target market




                                                               18
National Chengchi University


BOOC Strategy Suggestion

       Marketing related
            • Attract new customers
                  New channel
                     Bulk sale to staffs who work in major
                      corporate account’s

                  New product
                     Cobrand card
                     Linked with target clients




                                                              19
National Chengchi University


BOOC Strategy Suggestion

       Marketing related
                 • Maintain existing customer - stimulate spending
                      New events & promotional campaign
                      Receivables build up programs
                      Reallocate bank’s resources(budget)




                                                                     20
National Chengchi University


BOOC Strategy Suggestion
       Credit loss management
            • Skilled and analytical personnel can help to produce
              losses versus profit information based upon customer
              segments
            • To decide risk preference and risk tolerance level
            • Timely adjust current credit acceptance criteria to
              mature the credit policies
            • Sep up tier pricing to get
              reasonable income



                                                                     21
National Chengchi University


Case Summary

 1) The bank was not directly impacted by the card debts crisis.
 2) Other market players are reluctant in aggressively issuing new cards to
    new card holders.
 3) The risk of issuing new card are much lower than before. (easy to identify
    those with bad credit since they are mostly disclosed in the crisis)
 4) If consumer banking can increase to 20% to 30%, BOOC will be a more
    robust bank in terms of income structure.




                                                                                 22
National Chengchi University


    Teaching Objective

     • Identify how potential threat or unfavorable events
       may be identified as possible opportunities
     • How to construct new strategic proposal from data
       analyzing?


                                                                   Strategy
                                            Data analysis
Data Collection           Useful                                   Proposal
                       data selection


                                 Strategy              Strategy
                                 Decision              Selection


                                                                              23
National Chengchi University




                               Thank You~

                                        24

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:14
posted:1/18/2011
language:English
pages:24