Case let I:
Our client is a major retail bank facing declining profits and is unable to compete. You have
been approached to find the problem and suggest changes. The problem is being faced by a
specific branch located in a metropolitan region. There has been a decline of 20% in profits.
The issue has been around for 3 Quarters now. Revenue has grown at a steady rate, but the
costs have increased at a much higher rate. All the costs of a retail bank can be mostly
divided into three heads: Interest, Provisioning and Operating expense. The interest expense
is similar to comparable branches and the bad debt levels are also at par with the region.
operating costs of the branch. The major operating expenses of the branch would include
employee/agents’ salary, rent, utilities, stationery & postage, maintenance and depreciation
expense. The rent per square foot is similar to other banks in the area and has remained
unchanged for the past year, maintenance, depreciation and utility expenses have also roughly
been the same. The salary structure of employees for various positions is similar to that of
comparable branches.