SWOT Analysis of banking sector in India

Strengths 1. Continuous increase of credit off-take for past decade because of strong economic growth, high disposable incomes and easy credit access. 2. Robust asset growth. 3. Large manpower. 4. Diversification in their operations - Banks offer an entire gamut of services including insurance, investment banking, asset management, private equity,foreign exchange, payment of utility bills to customers, mobile and internet banking 5. Penetration of ATM machines and penetration into rural areas. 6. Increasing deposits @ CAGR of 12%, with total deposits of $1274.3 billion. (Exhibit 1) 7. Stability of the banking sector despite global upheavals. 8. Continuous increase in asset base Assets of public sector banks, which account for 73 per cent of the total banking asset, grew at an average of 7.5% - (Exhibit 3) Opportunities 1. Total credit off-take estimated to grow Estimated Growth of $1140 million (Exhibit 2). 2. Growing demand for both corporate and retail loans. 3. Increase access to banking system due to government efforts 4. Growing lending and deposits Weakness 1. 2. 3. 4. 5. 6. 7. Low operating size and High operating costs High level of nonperforming assets Financial exclusion Under-utilised capacity particularly in rural areas Unsatisfactory work culture Inadequate access to global financial system The cost of banking intermediation in India is higher and bank penetration is far lower than in other markets 8. Inadequate risk management skills particularly to cope with market risks and per Basel II norms 9. Structural weaknesses such as a fragmented industry structure, restrictions on capital availability and deployment, lack of institutional support infrastructure, restrictive labour laws, weak corporate governance and ineffective regulations beyond Scheduled Commercial Banks (SCBs) 10. The inability of bank managements (with some notable exceptions) to improve capital allocation, increase the productivity of their service platforms and improve the performance ethic in their organisations could seriously affect future performance

Threats 1. Competition among banks for highly rated corporates needing lower amount of capital may exert pressure on already thinning interest spread. Further, huge implementation cost may also impact profitability for smaller banks. 2. The biggest challenge is the re-structuring of the assets of some of the banks as it would be a tedious process, since most of the banks have poor asset quality leading to significant Proportion of NP. This also may lead to Mergers & Acquisitions, which itself would be loss of capital to entire system 3. Huge surplus manpower, absence of good work culture, antiquated labour laws, inflexible and inefficient labour and existence of strong labour union. 4. High level of Non Performing assets(NPA). 6 percent of the advances are still blocked up which is about 58000 Crore. Therefore problem of non recognition of interest income and loan loss provisioning exists. 5. The house hold savings comprising financial assets are moving away from bank deposits to more sophisticated form of financial assets such as mutual funds, stocks and derivatives. 6. Asset liability mismatch 7. Demanding customers are ready to jump from one bank to another when they are not satisfied with the service provided. This causes major threat particularly to PSUs. 8. Competition from new players. 9. Competition at global level in terms of product innovation and product mix. 10. Keep pace with the fast growing technology. 11. The current business environment demands

SWOT analysis - Citi bank - India

Strengths: 1. Global network - (Exhibit 4) 2. Innovative product offering; And innovative selection of financial products and services 3. Strong data and privacy policies 4. Good corporate citizen Opportunities: 1. Large potential customer base 2. Growing market Weakness: 1. Tarnished brand name 2. Online operations based towards US Clientele 3. IT Strategy and size of company challenges clear focus across all divisions

Threats: 1. Foreign exchange fluctuations 2. High competition from boutique banks 3. Growing demand for both corporate and retail loans. 3. Competition from Nationalised banks. 4. Increase access to banking system due to government 4. Demanding customers are ready to jump from efforts one bank to another when they are not satisfied 5. Growing lending and deposits. with the service provided. This causes major threat particularly to PSUs.

SWOT analysis Strengths:

1. Largest Bank in Middle East and North Africa in terms of total assets, net profits 2. Strong presence in Middle East 3. Largest bank in Qatar in terms of market share, customer base and number of branches 4. Highest rated bank in the world 5. Has its offices and presence in over 15 countries Opportunities: 1. High opportunity to expand in other African countries through acquisitions 2. Demand for bond market in Qatar and Middle East will propel banks growth 3.Growth in Islamic banking will help in banks growth Weakness: 1. 1. Not much presence in southern parts of Africa, Americas and Europe 2. Slow down in deposit growth affecting the banks operations

Threats: 1. Decrease in foreign investments in Qatar and Middle East affecting the bank 2. Dependency on foreign banks for funds and loans is a major threat in the current uncertain global markets

SWOT ANALYSIS - BANKING SECTOR: UAE REGION

Strengths: 1. High economic growth fuelling the growth of Banking sector of UAE 2. Favourable demographics aid the growth of banks 3. High stake of government in banks provide advantage to the UAE banks 4. Healthy Competition 5. High credit ratings - hence strong profitability 6. High expatriate population - more customer base Weakness: 1. Fragmented sector 2. No credit history for expatriate population hence no proper data to verify credibility of the customer 3. High exposure to real estate and mortgages; Hence rippling system can take place for any disturbance in the real estate sector. 4. Banks resort to higher costs of funding like EMTNs, syndicated loans and sukuks. These have raised their funding costs on one side and created better asset liability management on another side Threats: 1. Lack of experienced banking executives 2. Less manpower 3. Credit concentration in certain sectors like Oil&Gas, Retail, etc. 4. Possible scope for heavy competition leading to pressure on market share and margins 5. Rising cost of funding.

Opportunities: 1. Tremendous growth opportunity in well established segments such as Retail, mortgage, SME, Islamic lending 2. Growth opportunity in burgeoning sectors like housing, tourism, manufacturing, etc.