Hong Leong Bank: SWOT analysis
SWOT Analysis of Hong Leong Bank
Strength 1 – In 20th century , Hong Leong Bank is considered a bank which has quality bank with a strong market position. They undergoes a well-recognised transformed business franchise with a full range of banking experience, an establish of history entrench relationships with communities. Besides that , the bank have large share of customer segment,with over 70 % gross loan to retail customer. Hong Leong Bank entrench with mass affluent customer, with a 21% share of bankable population , as well as with the middle market business community.
They are well trust and embedded in the community . These core franchises are evident among four top bank for individual deposit size. They always underscoring their superior asset quality as their non-performing are lowest among in the sector . Furthermore, the bank also hold no 3 in institutional unit trust agent asset-under-management market share. Lastly, the bank also has an extensive integrate multi- channel sales and distribution capability that allow the bank to reach out to the community served.
Strength 2 – Hong Leong Bank is handed by advanced financial group . Despite financial crisis, Hong Leong bank financial performance in FY 09 was steady . Meanwhile, the pre-tax profit has increased from RM 1.01 billion to RM 1.132 billion in FY 08 . From year 2006 to 2009, pre-taxed profit has increase 1.5 times. They usually focus on strengthening and scaling up the business , risk and technology infrastructure to determine the grow profitably sustainably .
Furthermore, they also extend the reach of bank via alternate and electronic channel . In addition, Hong Leong Bank always maintain the discipline of abstaining from excessive risk-taking in the short term and avoiding the sacrifice to tomorrow’s credits, liquidity and franchise reputation for today’s profit. Besides , they also make a strategic investment in a Chinese banking sector through a 20% strake in the Bank of Cheng Du 2007 .The bank has established Sichuan Jincheng consumer finance Ltd Co, a joint venture with the bank of Chengdu to start consumer finance operation in central and western China.
Strength 3– Hong Leong Bank has long term planning to compete in an increasingly globalize environment. The domestic core businesses is strengthen by growing , embedding their domestic core position in the country . They broaden the local and regional franchise of Hong Leong Bank/ Hong Leong Islamic Bank. On the other hand , they broaden the Singapore and Hong Kong branches and building owned subsidiary bank in Vietnam from a greenfield state into a recognizable franchise in Vietnam. Next , they set apart by focus on prime value, which is the intrinsic value place by market on a business based on various factor including scalability, resilience, sustainability, brand recognition , transformational growth and global competiveness.
Strength 4 – Hong Leong Bank has a strong management. They are always spotting trend in customer expectation . As an example , increasing use of facebook was a way for the company to interface with their customer.
Morever, they do survey and research instead, always make sure the customer can reach them and get the service help they need. Nowadays, the customer usually like to talk to an expert. Therefore, they always improve the training of call agent and get their employee who are expert to take call from customers. Furthermore , they provide training and got people with the right skill who can operate in different country and environment. Besides, they also always build franchise model. Discuss the plan, experience the risk , and thus creating the positive feedback loop.Lastly, the punishment or fine will be given to who have break the rules of company, including the high position in the management.
W – Weakness
Weakness 1 – In line with its strong customer service culture, Hong Leong Bank continues to maintain its superior delivery standards which have been behind against international ISO standards. Hong Leong Bank is yet attained bank-wide ISO 9001:2000 certifications for customer service at the front office of its branches and bank-wide loan delivery service. This is a major drawback for the Hong Leong Bank to have a better customer base.
Weakness 2 – As to compete in the industry of banking, interest rate is a major challenge as customer will choose for a higher interest rate for savings account and for the lowest interest rate for the loans that the customers are seeking for their financial assistances and better service for the customer. Hong Leong Bank needs to change according to the environment as to compete and remain as the market leader.
Weakness 3 – As Hong Leong Bank has moved ahead to the E-Banking (Electronic-Banking) or transaction there are greater risks or security threats circulated to the users of online banking or transaction.
There are non-technical threats such as phishing whereby it is the act of tricking someone into giving them confidential information or tricking them into doing something that they normally wouldn’t do. The common applications of this approach is to send fake emails (email spoofing) to a victim purporting to come from a legitimate source and requesting information (such as the bank account number and the password) or directing the victim to a fake internet website where this information can be captured.
Weakness 4 – Hong Leong Bank is at the back foot when it comes to competing with competitors at overseas. The geographic reach of Hong Leong Bank is limited to South-East Asia only. The operations are concentrated mostly in Malaysia. Hence, their market may not be as wide and not as well-known as other established banks, such as Standard Chartered and Citibank. Thus, it made it harder for Hong Leong Bank to compete globally and establish themselves in the industry of banking outside of Malaysia.
O – Opportunity
Opportunity 1 – With increasing competition in the industry of bank, Hong Leong Bank can expand their business through mergers and acquisitions. Mergers and Acquisitions (M&A) are business strategy by buying, selling, dividing and combining of different companies and similar entities that can help the company to growth rapidly. A merger is a combination of two companies to form a new company, while an acquisition is the purchase of one company by another in which no new company is formed. For an example, Hong Leong Bank announced that it has completed its acquisition on EON Capital Bhd’s assets and liabilities, making Eon Bank part of Hong Leong Bank Group on 6th May 2011, creating the fourth-largest banking group in the country with assets totalling about RM140 billion and staff strength of 12,000.
Opportunity 2 – A human resources of a company can determine the strength of a company. The bank recruit more talented staffs and also provide effective training for staffs in order to makes the company working and providing better services to customers. This is not only can increase the income and expand the market of Hong Leong Bank but also enhance the economy of the whole country by reducing the unemployment.
Opportunity 3 – In business, consumers always expect for new things and more choices when they are considering the offer by the company. In order to increase customer base, Hong Leong bank growth by provide diversified offerings which can attract more customers. For an example, a payment gateway can be provided where ATM card could be used as like a credit card for everyday usages. Besides, the interest rate can be increased by encourage customers to save more to get more benefits.
Opportunity 4 – The customer target is changed to foreign customers who stay in Malaysia as the banking industry grows and provides opportunities for the local customers indirectly. They tend to use banking services more frequently to have different types of account to save the money and exchange their currency in the bank although they are far away from their home country.
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Threat 1 – Ease of distributing credit card could be a disturbing role the Hong Leong Bank is playing. Every people can apply a credit card with Hong Leong Bank if they are qualified. While the credit card repayments are depends fully on customer payment, if it is not paid, Hong Leong Bank has to go long way.
Threat 2 – Hong Leong Bank is not really in forefront position to introduce new products and service as market demand changes. It ifs often seen that Hong Leong Bank introduces the products in different name when the service is already available in the market by other bank. It is very hard for a bank to introduce new products among other competitors.
Threat 3 – Hong Leong Bank must follow all the law, everything must be black and white. Thus it is adversely impacted by any change in regulations and laws. When the law change Hong Leong Bank’s policy must changes too.
Threat 4 – Prevailing global financial markets crisis, sovereign debt crisis in Europe, increasing us debt levels, slowdown in the world economy, recession affecting various regions. These are the threats that Hong Leong Bank facing that will further lead to declining of economy.