4. ranked 8th in Fortune 500 companies
1st among bank holding companies
11th in the Business Weeks 2007 top global brands
has the world's largest financial services network
spanning 140 countries with approximately 12,000 offices &
300,000 staffs
holds over 200 million customer accounts across 6 continents
world’s largest bank by revenues as of 2008
5.
6. PROBLEM STATEMENT
Studies on commercial banks in Bangladesh , using
regression and ratio analysis are available, showing ROI,
ROE, EPS, DSCR etc. But, these studies do not tell us where
to improve by what amounts. Further analysis is needed to
provide insight to activity stages - through operation to
intermediation till getting the final output.
7. RATIONALE
o Banks are the intermediaries that borrow from supply side
and lend to the demand side
o Banks are thus in the centre of economy
o High efficiency is of a great importance
o Analysis of current efficiency level required with solution –
where to improve and to which extend to become fully
efficient
11. REPORT OBJECTIVES
Primary Objective:
To measure productivity & profitability efficiency of selected
private commercial banks, and to make a comparison
between the performance efficiency of Citibank, N.A. and the
other 14 sampled commercial banks.
METHODOLOGY: RESEARCH DESIGN
12. REPORT OBJECTIVES (CONT.)
Secondary Objectives:
To present a brief overview of Citigroup, Citibank N.A. and its
operations in Bangladesh along with SWOT analysis. SWOT
To compare the productivity & profitability efficiency of the
sampled banks
To identify the productivity efficiency factors for improvement to
use it as a managerial tool. DEFINING VARIABLES
13. SWOT
• STRENGTHS • WEAKNESSES
• Global product • Narrow operating span
• Strong global image • Limited & low marketing
• Personalized approaches • Short term presence
• Expert local management
• Citi’s global policy
• THREATS
• larger branch network of other
• OPPORTUNITIES banks
• Direct Custody and Clearing (DCC) • higher singe borrower limit of
• Most profitable customers others
retaining policy • doesn’t offer retail banking
• Product Innovation • Radical moves of the law and
infrastructure
• M&A expertise
• Slowdown of global economy
14. DEFINING VARIABLES
Improvement
Input-output mix
Parameters
Operation Approach:
Input 1 (x1) = Total deposits in BDT
Input 2 (x2) = Number of employees
Input 3 (x3) = Number of branches
Input 4 (x4) = Total Expenses (Interest + labor + other)
Input 5 (x5) = Total Fixed Assets
Output 1(y1) = Total loans in BDT
Output 2 (y2) = Net investments in BDT
REPORT OBJECTIVES (CONT.)
16. METHODOLOGY:
RESEARCH DESIGN
Research category:
o Secondary research: done on secondary data collected
from published and unpublished database sources and
internet
o Quantitative research
Sampling:
o Stratified purposeful sampling - where each of the strata
would constitute a fairly homogeneous sample. 14 PCBs &
Citibank, N.A. as 1 FCB, operating in Bangladesh
17. METHODOLOGY:
RESEARCH DESIGN
Analysis Models:
o DEA Approach : Input Oriented
o CCR Model (Charnes, Cooper and Rhodes , 1978)
Production process of the DMUs has been divided into two stages:
Absorbing resources and spending resources. That means –
productivity efficiency and profitability efficiency. The first stage is
called ‘Intermediation Approach’ and the second stage is called
‘Operation Approach’.
o Farrel (2003) measures. REPORT OBJECTIVES
18. WHAT IS DEA APPROACH?
o A linear programming application used to determine the
relative efficiency for a set of homogenous Decision Making
Units (DMU)
o Very useful technique where the presence of multiple inputs
and outputs makes comparison difficult ; such as banks
19. DEA APPROACH (cont.)
o Efficiency is measured by the ratio of output to input
oThe performance of a bank is conceptualized as the extent to
which the bank is able to utilize its resources to generate
business transactions and it is measured by an efficiency ratio.
oDEA identifies the most efficient banks in a population and
provides a measure of inefficiency for all others
oThe most efficient banks are rated to have an efficiency score
of 1 while the less efficient banks have a score between 0 and 1
20.
21. RESULT SHEETS
Through DEA solver, for each of the years from 2006-2010,
3 result sheets were produced against the 1 data input
sheet per approach–
1) Efficiency
2) Targets
3) Slack
TOTAL 40 SHEETS
22. Table: DEA Solver input data via Intermediation approach (2010)
Total Expenses(Interest + Investment with Gov. &
DMU Name Total deposits # of Employees # of Branches Total Fixed Assets Loans and advances
labor+ other) others
Bank Asia 83,601,263,368 1,237 49 2,441,545,139 1,837,283,978.00 79,504,232,613 12,075,700,932
Dhaka Bank 67,742,518,136 1,109 56 1,714,736,557 977,385,392.00 63,591,387,406 8,443,201,485
City Bank 67,419,801,730 2,685 88 3,200,831,687 3,206,205,668.00 60,326,545,084 12,473,962,726
DBBL 83,244,772,836 2,763 96 2,960,624,703 2,934,359,758.00 67,657,062,364 11,001,605,828
Eastern Bank 56,425,228,517 973 49 2,073,766,734 3,614,398,915.00 58,607,085,693 9,827,197,073
EXIM Bank 94,949,400,069 1,686 59 1,810,108,689 463,743,339.00 93,296,648,855 6,012,855,886
Merchantile Bank 73,739,392,053 1,605 65 1,928,685,597 1,647,581,148.00 66,377,697,326 10,937,201,791
One Bank 50,873,707,749 1,247 50 1,447,357,626 619,951,616.00 42,190,397,165 7,490,869,936
Prime Bank 124,799,314,775 2,139 94 3,769,667,412 1,743,653,375.00 118,837,290,007 22,198,536,395
Pubali Bank 98,850,499,250 5,534 399 3,769,667,412 3,330,313,913.00 89,106,206,559 16,516,388,559
Shahjalal Bank 62,964,948,065 1,671 63 1,322,254,120 1,472,502,085.00 61,440,075,905 2,228,851,599
Southeast Bank 107,253,190,318 1,373 76 1,737,739,216 4,463,638,993.00 93,981,202,323 18,869,071,237
Trust Bank 50,413,290,971 1,376 52 1,365,390,204 431,006,157.00 39,799,923,991 8,559,939,769
Mutual Trust Bank 45,846,309,207 1,050 67 1,351,934,730 722,053,009.00 37,730,458,690 9,098,954,386
Citibank, N.A. 23,387,196,816 195 4 802,519,497 192,487,379.00 19,295,322,778 4,647,484,581
23. Table: CRS efficiency scores and Optimal lambdas with benchmark via Intermediation approach (2007)
Input-Oriented
Optimal Lambdas
with Benchmark
CRS Sum of
DMU Name Efficiency lambdas RTS
Bank Asia 1.00000 1.000 Constant 1.000 Bank Asia
Dhaka Bank 1.00000 1.000 Constant 1.000 Dhaka Bank
City Bank 1.00000 1.000 Constant 1.000 City Bank
DBBL 0.77664 0.566 Increasing 0.203 Merchantile Bank 0.363 Southeast Bank
Eastern Bank 1.00000 1.000 Constant 1.000 Eastern Bank
EXIM Bank 1.00000 1.000 Constant 1.000 EXIM Bank
Merchantile Bank 1.00000 1.000 Constant 1.000 Merchantile Bank
One Bank 0.89051 0.771 Increasing 0.041 Merchantile Bank 0.049 Southeast Bank 0.682 Mutual Trust Bank
Prime Bank 1.00000 1.000 Constant 1.000 Prime Bank
Pubali Bank 0.87201 1.822 Decreasing 1.208 Eastern Bank 0.338 Shahjalal Bank 0.275 Mutual Trust Bank
Shahjalal Bank 1.00000 1.000 Constant 1.000 Shahjalal Bank
Southeast Bank 1.00000 1.000 Constant 1.000 Southeast Bank
Trust Bank 1.00000 1.000 Constant 1.000 Trust Bank
Mutual Trust Bank 1.00000 1.000 Constant 1.000 Mutual Trust Bank
Citibank, N.A. 1.00000 1.000 Constant 1.000 Citibank, N.A.
24. Table: Efficient input target and output target via Intermediation approach (2007)
Efficient Output Target
Efficient Input Target
Total Expenses(Interest + Investment with Gov. &
DMU Name Total deposits # of Employees # of Branches labor+ other) Total Fixed Assets Loans and advances others
Bank Asia 30004088739.00000 639.00000 29.00000 1316315575.98913 498428682.00000 28456944137.00000 4203135875.00000
Dhaka Bank 48730676321.82380 842.00000 41.00000 1159004257.00000 291259210.00000 39971903240.00000 5971748749.00000
City Bank 40539634035.00000 1990.99998 83.00000 1316315570.41092 1390732179.94957 26788466306.80990 7550606492.00000
DBBL 32704232138.28920 584.13632 25.03207 579338774.59499 740950482.80182 28369578068.10010 5909323040.00000
Eastern Bank 29878501670.00000 690.00000 28.00000 951589162.00000 871267742.99915 30895706294.00000 3456990107.00000
EXIM Bank 41546568591.80200 1104.00000 35.00000 912218527.99160 200702928.00000 40195239222.00000 2457716314.00000
Merchantile Bank 38139901767.00000 945.00000 41.00000 1016510458.98400 593203096.00000 31877860104.14200 7099966878.00000
One Bank 21803350013.01550 485.30847 24.37119 380910490.19792 313424932.98628 19709302397.02650 3587478621.00000
Prime Bank 70544071295.00000 1400.00000 61.00000 1574232708.99945 662350336.00000 57781997118.23800 12698020628.00000
Pubali Bank 50573951457.76940 1180.58613 50.88673 1372750637.45745 1178750255.19468 50549167102.00000 5556578405.00000
Shahjalal Bank 22618187303.00000 555.00000 26.00000 313816132.00000 127055566.99791 20616605335.00000 858994699.00863
Southeast Bank 68714672575.00000 1080.00000 46.00000 1026854672.00000 1708110172.00000 60281260389.00000 12299606871.00000
Trust Bank 27101585100.71990 842.00000 31.00000 474951358.00000 194224790.00000 18682164654.04730 3785450925.00000
Mutual Trust Bank 24776924968.00000 578.00000 30.00000 424484555.00000 301871320.99912 22683227657.00000 3956528943.00000
Citibank, N.A. 24655856230.79660 173.00000 4.00000 520681707.99935 144102659.99957 16999528039.00000 2772355156.00000
25. Table: Input slacks and output slacks via Intermediation approach (2007)
Input Slacks Output Slacks
Total Expenses(Interest + Investment with Gov. &
DMU Name Total deposits # of Employees # of Branches labor+ other) Total Fixed Assets Loans and advances others
Bank Asia 0.00000 0.00000 0.00000 0.01087 0.00000 0.00000 0.00000
Dhaka Bank 0.17620 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000
City Bank 0.00000 0.00002 0.00000 5.58908 18.05043 168.80992 0.00000
DBBL 0.00000 28.62904 13.02307 470517486.23207 150080237.60495 0.10011 0.00000
Eastern Bank 0.00000 0.00000 0.00000 0.00000 0.00085 0.00000 0.00000
EXIM Bank 0.19801 0.00000 0.00000 0.00840 0.00000 0.00000 0.00000
Merchantile Bank 0.00000 0.00000 0.00000 0.01600 0.00000 0.14200 0.00000
One Bank 0.00000 210.17879 2.34407 152005060.53805 0.00000 0.02652 0.00000
Prime Bank 0.00000 0.00000 0.00000 0.00055 0.00000 0.23804 0.00000
Pubali Bank 0.00000 3414.91987 263.90979 0.00000 13490527.65916 0.00000 0.00000
Shahjalal Bank 0.00000 0.00000 0.00000 0.00000 0.00209 0.00000 0.00863
Southeast Bank 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000
Trust Bank 0.28009 0.00000 0.00000 0.00000 0.00000 0.04731 0.00000
Mutual Trust Bank 0.00000 0.00000 0.00000 0.00000 0.00088 0.00000 0.00000
Citibank, N.A. 0.20337 0.00000 0.00000 0.00065 0.00043 0.00000 0.00000
26. Summary of Intermediation approach
2006-2010
o This is the productivity efficiency analysis
o the average efficiency scores during 2006-2010 range from
0.95096 to 0.96928.
o Haphazardly, in 2007 it increased by 1.6% from 2006,
decreased in 2008 by 0.5% than 2007, and again decreased by
1.3% than 2008. Finally, it increased by 1.8% in 2010 than
2009
o 4 DMUs were consistently efficient - Eastern Bank Ltd., EXIM
Bank, Southeast Bank, Citibank, N.A.
27. Summary of Operation Approach
2006-2010
o This is profitability efficiency
o Average efficiency scores of the sampled DMUs during 2006-
2010 ranges from 0.94772 to 0.98916; stable for the latest
three years (2010, 2009, 2008)
o 4 DMUs found to be constantly maintaining efficiency score
1: Eastern Bank Ltd., Pubali Bank, Southeast Bank, Citibank,
N.A.
28. Summary of the two approaches
2006-2010
o Only 3 DMUs have been proved to be efficient constantly
every year - Eastern Bank, Southeast Bank and Citibank, N.A.
o More efficient in operation approach than in intermediation
approach
o That means, during 2006-2010 the DMUs have been capable
of efficiently utilizing labour, capital etc. to generate
revenues; whereas these were incapable of efficiently
utilizing intermediates.
29. CONCLUSION
o In comparison to all the sampled banks, Citibank, N.A. was
found to be constantly efficient
o This report can serve as a very effective and descriptive tool
for the managers for finding improvement opportunities in
selected activities
30. LIMITATIONS
Only 14 PCBs & 1`FCB have been sampled due to
unavailability of information and avoidance of complexity in
DEA
Qualitative data have been ignored
Augmented sample would have provided more appropriate
results
