MCF 304 Bank Management Lecture 2 1 Branch

MCF 304: Bank Management Lecture 2. 1 Branch Banking 1

Branch Banking • • The business of a bank is carried out by the branch office The branch network system is the most convenient and efficient way to expand banking business and services because each branch operates as a profit center 2

Advantages of Branch Banking • • • Reduce the population per branch ratio Use the banks resources more effectively Diversify the assets and deposits of banks Mobilize funds more effectively Provide better services Provide competitive edge 3

Disadvantages of Branch Banking • • Operations of branch are controlled by head office Differences in terms of powers given to branch managers between branches 4

Problems of Branch Banking Operations - Self related - Computer related - Customer related Staff - Absenteeism - Motivation - Inexperienced staff 5

Problems of Branch Banking HQ-Branch Relationship - Sharing of resources - Different goals - Interdependent work activities - Difference in value and perception - Communication problems • - Business Promotions Manpower shortage Competition Product’s ability to compete - Policies & rules 6

Problems of Branch Banking Performance • The main objective of evaluating the performance of branches is to access the actual performance in comparison with the budgeted performance 7

Performance Evaluation Criteria - The effectiveness of an organization can be evaluated based on various criteria but no one single standards can provide a complete evaluation on the effectiveness of the organization Performance Measurement - Utmost importance: (i) total loans to total deposits ratio in line with efficient organization concepts which links output with input (ii) operating expenses to operating income ratio (iii) the ratio of net profit compared to amount loans 8

Thank You! Izdihar Baharin @ Md Daud Post Graduate Centre HP: 006019 -5170817 Email: izdi@oum. edu. my 9