Strategic Essay

2787 words - 12 pages

1. Introduction to the Organization
The banking sector remains always the most dominant sector of the financial sector. Hatton National Bank PLC (HNB) is Sri Lanka’s second largest private sector bank in terms of assets (behind Commercial Bank of Ceylon) and is the fourth largest amongst all banks (after accounting for the two state banks, Bank of Ceylon and Peoples’ Bank). HNB accounts for 10% of banking system assets. HNB provides a broad range of banking products and services in the areas of; Corporate Banking, Small and Medium Size Enterprise Banking, Trade Finance, Retail and Consumer Banking, Asset Leasing, Loan Syndication and Project Finance. HNB has an AA- credit rating from ...view middle of the document...

This report explains about the competitive strategy of bank, market analysis in which HNB operates, strategic capabilities and core competencies of HNB. As mentioned earlier HNB has received Best Retailer Bank for six consecutive years for providing vast range of products and services as listed below.

• Savings Accounts
o Capital Savings
o HNB Adhishtana
o Money Market Savings Account
• Minor Savings Accounts
o Singithi Kirikatiyo
o Singithi Lama
• Youth Savings Accounts
o HNB YOU
o HNB Teen Account
o HNB Yauwanabhimana
• Senior Savings Accounts
o Senior Citizens Scheme
• Current Accounts
o Privilege Current Account
o Shareline Current Account
• Term Deposits
o Fixed Deposits
o Senior Citizens Term Deposits
o Call Deposits
• Loans
o Dream Drive
o Personal Loans
o Shanthi Home Loans
o Educational Loans
• Leasing
In comparison to corporate banking, HNB’s retail banking holds major part of the bank portfolio where it constitutes more than 45% of its total portfolio. The retail banking sector also earns higher profit margins enabling the bank to increase its profitability.

2. PESTEL Analysis of Banking Industry

The banking industry is subject to change according to the changes in the environment. The PESTEL framework is a tool to identify macro environmental influences facing the bank in order to identify opportunities that are open and also to identify to threats it faces.

Figure 2.1: PESTEL Framework

The PESTEL framework includes macro environmental influences such as Political, Environmental, Social, Technological, Economic and Legal. All of these macro environmental factors are interrelated with each other.

Political & Legal Environment

Political & legal factors determine how a government can influence on the banking industry and the government regulation imposed on it. It affects the banking industry significantly.

• Regulatory framework

Central Bank of Sri Lanka (CBSL) is the central authority which governs banking industry in Sri Lanka. The CBSL issues licenses to two kinds of banks i.e Licensed Commercial Banks and Licensed Specialized banks. It was established under Monetary Law Act. It is governed by a five member Monetary Board, comprising the Governor of the CBSL as Chairman, the Secretary to the Ministry of Finance and Planning and three members appointed by the President of Sri Lanka, on the recommendation of the Minister of Finance, with the concurrence of the Constitutional Council. The impact of change of president of CBSL from Ajith Nivard Cabraal (2005-2015) to Arjuna Mahendran (2015) is awaiting for the response in the industry.

The regulatory and supervisory function relating to banks licensed by the Monetary...

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