Contents

Title ......................................................................................................................................................... 2
Introduction ............................................................................................................................................. 3
Motivation ............................................................................................................................................... 3
Literature Review .................................................................................................................................... 4
Key Research Questions ......................................................................................................................... 6
Methodology ........................................................................................................................................... 7
Research Scope ................................................................................................................................... 9
Significance of the Study ...................................................................................................................... 10
Research Planning ................................................................................................................................. 12
Review of the title: ............................................................................................................................ 13
Research aims and objectives ........................................................................................................... 13
Literature Review .............................................................................................................................. 13
Methodology ..................................................................................................................................... 13
Research Scope ................................................................................................................................. 14
Data Collection and Analysis ........................................................................................................... 14
Discussion of Ethical Consideration ..................................................................................................... 14
Conclusion ............................................................................................................................................ 14
Bibliography .......................................................................................................................................... 16


Title
It is imperative for an organization to learn that strategic moves should be targeted on the
shareholders and that the value should also be delivered to their financial statements.
Although many financial analysts would identify the aggressive strategies as better being
because it would allow the financial statements to be able to bear the impact of the economic
hit but this would also mean that there are certain benefits that may be utilized from the
conventional banking strategies (Edwards & Mishkin, 1995). Although the lust for
profitability which is visible in the banking sector would induce the organizations to further
deepen its position, but coherently it has to ensure that the point where it will have to exit its
stance does come across even though the potential to take profits from the market would still
be there. Although, the conventional banking strategy would secure the position of the
organization, but the risk and loss impact of the market would drive down the profitability
and the business would suffer from the behavior of the market (Goodhart et al., 2009).
Hence, the market should be able to benefit from the differing business strategies and use
them with the right skill to ensure that the stakeholder expectations are met.


Introduction
There is an evidence of varying trends in the economic environment at the global level that
has resulted in the suppositions being put to an end in the financial and banking industry.
This signifies that the models that offered profitable arbitrage opportunities in the financial
industry are no longer viable due to the way they fall backward. Apart from this, the
behaviour related to risk taking has also increased in accordance with the expectations of the
stakeholders and increase in the potential for taking of the profit from the financial market.
There is no doubt that the profit has seriously increased, but it also has some severe
consequences of an individuals income. This is because of no significant development in the
income per capita and increase in the inflation rates. It is evident from the financial period of
the last decade that organizations evolved with the waving development, but ended with the
profitable arbitrage opportunities to be at the level of below par. The concept through this
research gained is related to the understanding of exposure related to risk and their analysis
against the strategic planning of the conventional banking (Fiordelisi et al., 2010).
Motivation
There are many reasons for the conducting this research. In the current research, the idea that
will be evaluated will be to understand the difference in performances of the organization pre
and post global economic crisis. The comparison in terms of financial performance will also
be evaluated in relation to the changing climates of economics and financial markets and a
combination will be done in relation to the banking strategies being carried out by the
organizations. This comparison will allow us to be able to evaluate which banking strategy
has been successful in the growth of the organization and how well will it be able to
encapsulate future stance (HM Treasury., 2013). The comparison of the conventional banking
strategies will be compared with their counterparts with a more aggressive and open business
strategy on the outcomes of financial figures and growth of stakeholder values.

Literature Review
The banking and financial industry has evolved from the concept of traditional lending and
borrowing to the offering of various enhanced financial products to the customers on
individual and corporate level. This is due to the fact that the several developments are taking
place in the market and business ultimately. Therefore, the funds in the markets increase with
the progress and development in the purchasing power of consumers.
It is an obvious fact that the banking operations have utilized the scope of innovation and
technology creatively. The creation of a real time experience allowed the usage of knowledge
and experience of products to create and benefit from the arbitrage pricing and generate
profits (Brandter, 2010). If the banking concept is evaluated that initialized from the start of
1990s, the enhancement in the banking products offered resulted in the growth of a monetary
value. And, the standard of conventional banking related to lending and borrowing
maintained the standard status. With more usage of funds and relative increase in the business
growth, the banking sector had to offer a wide range of products to its customers. This clearly
meant that with the offering of a wide range of banking products, the risk was also bound to
increase. This would translate into the financial institutions defining their boundaries not
through the risk faction, but their ability to generate profits from the risk taking (Tinnila,
2012). Therefore, it is clearly evident that financial sector classified its offerings on products
in order to increase the returns on the utilization of the products offered so that the returns
could be enhanced subsequently. Due to this particular aspect, the competition in the
industry became intense and resulted in the increase in sales volume with less profitability per
unit. However, the strategy to opt for market penetration would be approached so that
revenue and profitability should increase accordingly and the desired target to attain market
share should be reached (Lee & Hsieh, 2013).
The analysis related to the financial review signifies as to how far the organizations are
performing. In accordance with the comparability of financial statements of financial
institutions against the benchmarked competition, a better picture would be available to seek
out for the better performance of an organization. The varying trends of the changes in the
financial institutions performance signify the change in an economic environment. When
reviewing the period of economic growth in the early 2000s the creation of financial
institutions spurred allowing the markets to use different financial products which would
bring market optimization (Mitchener & Wheelock, 2013). However, financial institutions
following the conventional banking strategy remained at the lower end of the tier of the
performing groups in the peers. This is primarily because they would be able to generate
increased revenue from the pricing models and increased business potential without taking on
the risks from the market (Huang & Lee, 2013). Although the risk taking behavior would not
be in built into the business perspective of the conventional banking strategies but coherently
would mean that the growth in the market would have a domino effect on the conventional
strategy driven organizations. Although technology would fare the organization to growth but
the concepts and banking strategies used by other organizations would bring the income of
these organizations higher.
With regards to the strategies developed by the conventional banking, the newly developed
financial institutions have expected growth due to the availability of an opportunity in the
market. The capitalization of the opportunity was developed from various financial products
that were creatively offered to the individual and corporate customers (Rossi et al., 2009).
The purpose behind this was to enhance the returns based on the nature of risk taken by the
organization. The financial products growth before the decline in economic growth was due
to the derivatives and hedging risk being offered by the products. And, this is how the
economic climatic change and relative increase in the taking of risk resulted in the over
coverage of the income capacity of individuals and the purchasing power of the consumers
finally and ultimately declined. This meant that as the profit taking nature over took the
capacity of the individuals to take on the risks and hence reduced the ability to repay created
defaults and the risk faction increasing. With the decline in economic growth, the
organizational performance would obviously decrease. And that is particularly evident that
with the sudden decline in economic growth, the revenues emulated by the profitability of the
organization reduced sharply. That is why; the organizations which had already adopted the
approach of conventional banking were deeply affected due to the fluctuations in the market
and that the financial sector got severely affected as well. The profitability slump was due to
a significant increase in the business costs and other impairments related to the loan that
further influenced the financial institutions (Glen & Velez, 2011). There was a substantial
increase in the segment of an impairment of the loan from the individual and corporate
customers. This got further aggravated due to the fact that pricing substantially dropped
which resulted in the market chaos and that produced in an eventual creation of the chain of
events in the organizational financial statements. On the other hand, there were some events
when such financial organizations were bound to undertake an evaluation of their assets and
had to forcefully bring down their organizational value.
Key Research Questions
The essential part of this research is primarily focused on conducting an evaluation of the
financial companies/institutions against the counterparts reflecting different business
strategies. The purpose to conduct this particular research is to explore the strategy
undertaken by the organizations to survive and how they realize the potential to expand
within their specific dimensions. This is further emulated by the understanding of how
stakeholders value is maximized by the execution of business strategy. This would definitely
help in identifying the strengths and opportunities for the organization which will help it to
maintain the sustainability during an economic slump. The ultimate research purpose is to
evaluate the usage of strategies in the conventional banking against the strategies being
implemented by the financial institutions that are still under developing phase (Amidu, 2013).
After understanding the research purpose, the research questions can be developed as under:
1. What are the difference in strategies of a conventional banking organization and a
financial institution?
2. How trends related to the performance of financial statements are identified and what
are the factors associated with those trends?
3. How different strategies correlate with the performance of an organization and
business growth?
Methodology
The basic idea of this research is to identify the different challenges that financial institutions
have faced with the changing trends of business strategies. Along with this, the perspective of
how conventional banking has come across the geographies and developed into a newer
perspective of business will be evaluated under this study. The idea is to understand how well
will an organization performs in relation to the changing economic climate and the relativity
of risk taking behavior. Financial institutions tend to reduce their risks, however, in climates
where the profitability is expected in the future the loss bearing cushion is always utilized.
The purpose of the methodology is to identify the approach towards the research and how the
study will be able to identify the challenges created in the performance of financial
institutions. The research also covers the ideas that have not been covered in other studies by
other researchers or a further review of the topic is being carried out to indent the decision
making for the different strategies. The purpose is to cover the various challenges that may be
faced at the time of research. Along with this, the methodology will also aim to gather
relevant data and information which will assist in identifying the difference in performances
of the organization following different strategies.

In the current research, the idea that will be evaluated will be to understand the difference in
performances of the organization pre and post global economic crisis. The comparison in
terms of financial performance will also be evaluated in relation to the changing climates of
economics and financial markets and a combination will be done in relation to the banking
strategies being carried out by the organizations (Park & Mercado Jr., 2014). This
comparison will allow us to be able to evaluate which banking strategy has been successful in
the growth of the organization and how well will it be able to encapsulate future stance. The
comparison of the conventional banking strategies will be compared with their counterparts
with a more aggressive and open business strategy on the outcomes of financial figures and
growth of stakeholder values.
The two different models are proposed to be the data set for this research. The first model of
an organization relates to that organization which has consistently followed the conventional
banking strategy. This further signifies that the risk undertaken by an organization is set
limited to the portion of the risk that is considered to be bearable by the organization. The
second financial model is that organization which focuses on maximizing the stakeholders
value and has been able to cover the financial variables meeting the expectations of its
stakeholders (Bhrena & Josefsen, 2013). The idea is to compare the difference of a more
vigorous, aggressive and creative business strategy and compare it will the one which is well
known to deliver on the expectations without taking on aggressive risk taking for the purpose
of profitability. In accordance with the study, the data will constitute of those variables from
the financial statements and financial ratios which are associated with the market and the
comparison is made with its counterpart in order to evaluate the performance ultimately.
Through this comparison, it will be made easy for the analysts to exhibit the financial
strength associated with the strategy.
Research Scope
The scope of this particular research is specifically related to the organizations financial
analysis. The key performance indicators are simply associated with a thorough market
analysis and fluctuating trends in the market. This further entails that each and every
component covering the market is to be discussed within which the financial model is
connected. Moreover, the research scope is solely based on the performance of an
organization and how the strategies influence the financial aspect of the organization. The
impact of each component will be analyzed thoroughly. This is an important factor to
understand that the organization has sufficient impact and analysis done for each parameter to
understand the flow from the parameters and how each of them is poised in the financial
statements. More importantly, the unusual parameters of the financial statements will be
analyzed and compared with each other to identify how they have impacted the performance
of the business strategy. Furthermore, the scope of this research is based on the quantitative
analysis. The financial analysis is done for the two institutions in order to get an awareness of
their developmental trends and factors. While completely knowing about the financial
performance and its indicators, it will be linked to the qualitative analysis of the report. And,
the final research will be analysed by integrating both the quantitative and qualitative aspects
of the research. The strategy that the organization will set will translate into how the financial
statements are set and stakeholder expectations are met. This is an integral part of this
research because this will define how the organization will be performing in the current
situation and will also define the future aspiration of the organization. The future aspirations
have to be connected from the strategies used in the current period and the strength of the
organization to consistently follow the norm.
Significance of the Study
The most significant part of this research is the analysis of two financial organizations
through financial ratios. Most importantly, the use of financial analysis and the ratios and
performance metrics are primarily not just figures but vary in terms of analysis and
understanding with variance in the industry. It is very important to know that financial ratios
are the best way to analyse the financial performance of any organization. This is because the
financial ratios measure the effectiveness of how well the organizations are performing in
terms of profitability, liquidity, efficiency and marketability. An organization which is in the
service industry or primarily in the financial sector will have to consider the performance
metrics to be more of revenue generating streams rather the products itself.
Before analyzing the financial aspect of a bank or a financial institution, it is the first and
foremost priority to learn the difference between a modern banking and a conventional
banking. The fundamental aspect of the financial performance is to be considered while
keeping in view the performance of the market as well. This will allow the analyst to
understand the actual performance of the organization in reference to the competition and
how it has fared keeping in light the impact of the market (Dima et al., 2014). The changing
trends of banking and banking products have driven the markets in the direction which has
fared different stockholders. This however, has also meant that the organizations which have
moved later into the market on the products have still been able to benefit from the artificial
growth.
The financial performance of the HSBC and Lloyds bank is carefully analysed from the
financial statements provided. Some of the key points should be covered in this proposal in
order to have a key understanding of the organization with conventional banking strategies
and the other one which has led to differing strategies. When evaluating the fundamentals at
Lloyds Bank the key financial figure of interest incomes depicts the actual performance of the
organization. Over the years, the income has continued to grow, but the burst in the economic
bubble and the artificial market growth hit the organization substantially. This is visible from
the negative 32% growth in income which continued to remain in trend till the recent period.
Although the Lloyds Bank attempted to recover from the initial first hit, but the same has not
been able to commensurate. The impact of the interest portions of the income has been on the
banks fee income which has treaded in the negative zones despite low stakeholder
confidence in the market. In comparison to this, HSBC which adopted a more modern
approach in banking has not experienced a greater stifle in the incomes. As discussed above,
although organizations may react quicker than the norms but the impact from the market may
still be there. This is visible in the domino effect in the banks interest and fee incomes
feeling the market correction over the period. However, the incomes have continued to
remain stable with a slight impact after consistent growth over the past few years. However,
an in-depth analysis of the income statement reveals that the major fall back in the incomes
have been in the investments in financial assets which have reverted in the market in terms of
income. The performance metrics of the Bank reveal that although the slowdown in the
global economy impacted on the financial performance but consistent performance and
management of products allowed the organization to maintain the returns and revenues.
The ratios through which the analysis is done include the profitability ratios which
incorporate Operating margin ratio, Net margin ratio, Return on equity, Return on Assets,
Debt to equity ratio, other liquidity ratios which incorporate the liquidity measure of the
company and other essential ratios like total assets to total equity, asset turnover, Debt to
assets ratio, earnings per share, revenue per share, etc. All the computations for such ratios
are discussed in the business analysis report.
Research Planning
This is also the most important aspect of the research proposal. Without such planning, it
would be favorable for the researcher to do research planning related to the timescale. This
can also include the Gantt chart as it would let us know how to research process was
conducted and completed. It can be seen that there are positive and favorable aspects of this.
Since the proper schedule of the research process can go along with the planning. The Gantt
chart is illustrated below:
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Review of the title
Research aims and
objectives

Prepare literature review
Methodology preparation
Choose research scope
Formal access to data
Data collection
Data analysis
Findings
Witting the first draft of
the report

Writing final project
report


Review of the title:
It is important for the organizations to understand that their tactical moves will impact not only their
stakeholder values but will also be visible in their financial strength. For an organization to be able to
strategize its move it is important that it encapsulates the expectations of the stakeholders and is also
able to deliver value on the financial statements of the organization
Research aims and objectives
The primary objective of this research is to evaluate the performance of the financial
institutions in comparison to their counterparts with a differing business strategy
Literature Review
The concept of banking and financial products has evolved over the period. This has moved
from conventional lending and borrowing relationship to complicated suite of products today
which are not only being offered to individual consumers but also corporate and institutional
clients
Methodology
The data set for the purpose of this research study will be two different business models of
the financial institutions. An organization which has consistently followed on the
conventional banking strategy where each concept is given value and the faction of risk taken
by the organization is limited to the amount of risk that the organization can bear. Hence, in
this situation the organization will have a limited portfolio to grow in terms of volume and
profitability. The other organization made part of this study is the organization which has
been able to deliver on the stakeholder values and has been able to emancipate into delivering
the financial parameters meeting their expectations. In the same way, all the above planned
topics are briefly discussed in the previous sections.
Research Scope
The performance of the key fundamentals will be connected with the market analysis and
behaviour in the markets. This will involve that each parameter is encapsulated with the
behaviour from the market and how well is the financial metric connected.
Data Collection and Analysis
The data for two institutions named as Lloyd bank and HSBC was collected in accordance
with their financial ratios like profitability, efficiency and liquidity etc. They were examined
as analysed accordingly.
Discussion of Ethical Consideration
It was not simply easy to carry out a research for this particular purpose since it was not
possible to gather the data for two well-known institutions. Sometimes, the data is
confidential and is never shown or exhibited to the people generally to the public. There may
be a fear of some competitor trying to disclose some of the hidden information. Such ethical
issues were also faced while conducting the research because in order to carry out a research,
it is always important to learn about the ethical policies and guidelines before carrying out
such research because only then a researcher will be able to deal with such issues. The
approval had to be acquired from the University, which was to be shown and exhibited to the
organization being researched later. Apart from this, there were no major ethical issues. The
research project will not involve any human subject as the financial statements require a
publicly available data and there would not be any interaction with any individual regarding
this as the financial statements are available online on the official websites of the companies.
Moreover, the research project will not include any kind of nonhuman animal subjects. This
is because, the analysis of financial statements has no concern and association with
nonhuman animal research. Therefore, there wouldnt be any ethical issues regarding this.
Apart from this, there will not be any other reference from a private person who would assist
in seeking a private information from a company or a corporation. The complete financial
information is known from the financial statements online. Therefore, the research project
will not exhibit any significant risk to the environment because it is already mentioned above
that there is no relationship between financial statements and environmental concern. It can
be concluded that there would not be any ethical issues in this research project as the
financial statements are publicly available online.
Conclusion
As part of the financial, strategic management, the banking needs to evaluate what is
expected from the organizations by the stakeholders. This will mean that in a situation where
the organization can deliver on the aggressive business strategy, it will have to ensure that the
risk taking is covered to the point where the organization can take the cushion for losses. This
is important that the financial analysts build into the model the tipping point to the losses.
Although the lust for profitability which is visible in the banking sector would induce the
organizations to further deepen its position, but coherently it has to ensure that the point
where it will have to exit its stance does come across even though the potential to take profits
from the market would still be there. When evaluating the outlook and performance of HSBC
Bank, what is visible is the fact that the cushion to loss taking in the form of loan impairment
was understood and allowed the business to exit the hedged positions and the asset lending
market and derivatives at the point where its cushions would breach (Brissimis & Magginas,
2005). This would essentially mean that the risk taking behavior was controlled and the
management and the financial analysts knew the extent to which the risk could be borne.
Although, the conventional banking strategy would secure the position of the organization
but the risk and loss impact from the market would drive down the profitability and the
business would suffer from the behavior of the market. Hence, the market should be able to
benefit from the differing business strategies and use them with the right skill to ensure that
the stakeholder expectations are met.



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