PESTEL for HNB

8/11/2019 PESTEL for HNB

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Hashan

Aarthi

Muditha

Danalucxan

Janani


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Overview

Hatton National Bank is a premier private sector commercial bank

in Sri Lanka.

Over 300 Correspondent Banks around the world.

The HNB umbrella of today has two local subsidiaries - HNB

Assurance and Sithma Development.

Acknowledged globally by The Asian Banker as the Best Retail Bank

in Sri Lanka for five consecutive years.


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Vision:

To be the acknowledged leader and chosen partner in providingfinancial solutions through inspired people.

Mission:

Combining entrepreneurial spirit with empowered people and leading

edge technology to constantly exceed stakeholder expectations.


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Political

Government taxes

Political Stability

Trend Extent of the impact Impact to HNB Likelihood

The adopted

U.S. resolution

at the U.N.

Human Rights

Council in

Geneva

Negative

Sri Lankas budget deficit

will further increase

Reduced export earnings

will adversely affect the

economy

The government will be forced

to borrow from local banks

Threat of non payback or

delayed payback of loans

The resolution

was voted

against Sri

Lanka

Political

stability

Positive

Increases investor

attractiveness

Potential benefits to the

economy

Minimal threat of changes in

government legislations

Long term decisions can be

made

Stable and is

likely to remain

consistent

Government

taxes

Neutral

Taxes in return will help

develop living standards

and infrastructure

Impact on profits

Long term benefits of a growing

economy

Likely to change

according to

government


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Economical

Government taxes

Political Stability


GDP growth

2012 -6.5%

20137.0%

(Forecasted)

Positive

Improved living standards

Increased disposable incomes

Increased savings Savings are

likely to

increase

Forecasted

increase in

total gross

investment

(from 27.8% -

29.5% in 2011)

Positive

Increased private sector

investments in areas of

construction, manufacturing

and telecommunication.

Increase in demand for

loans

Loan demand is

likely to remain

constant

Growth in

tourism

(17% in 2012)

Positive

Increased number of tourist

arrivals

Influx of foreign currency Can expect

foreign currency

to flow as

tourism is

expected togrow rapidly


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Economical

Government taxes

Political Stability


Increasing

Interest rates

Positive

Rate of return on investments

increases

Increased investments in

fixed deposits and bonds

Savings likely to

increase

however loans

may decrease

Rising inflation

(7.0% - 7.4% in2012)

Negative

Decreases the value of savings

Decrease in demand for

savings

Likely to

decrease

Monitory

policy road

map

objectives

Positive

Predictable economic growth

attracting investments

Investment opportunities Investments are

likely to

increase

Increase in

foreign direct

investment

Positive

Influx of foreign currency to the

country

Encourages the

development of better

financial products

May reduce the

sensitivity of

the banking

system


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SocialTrend Extent of the impact Impact to HNB Likelihood

Increasingurbanization

PositiveExpanding cities and

developing rural areas

Population growth

An educated society

Opportunities to expand intodeveloping zones

Opportunities to offer more

banking services

Rapidurbanization

taking place

Consumers

capacity for

learning

Negative

Rural customers lack the

technological know-how

Many rural customers arereluctant to change from

traditional banking methods

Implementing mobile and

internet banking is made

difficult

Rapid

urbanization is

likely to change

this trend in the

future

Trends in

customer

behaviour

Neutral

High customer expectations

The need for extra services,

bonuses and benefits are high

Can gain a competitive edge

Currently a

major trend in

the bankingindustry

h l i l


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TechnologicalTrend Extent of the impact Impact to HNB Likelihood

Rise in mobile

and internetusage

Positive

Increased mobile subscribers

grew by 6.4% to 18.86 million as

of 2012

Opportunities in mobile and

internet banking

Cost savings

Internet and

mobile bankingare to be the

future of

banking

Online security

concerns

Negative

Sri Lanka is in a high risk

category ranked 16thwith 68.5%

under Local threats by country

Customer reluctance towards

online banking

Need for security measures

can be expensive

Customers are

likely to feel

safer online with

new security

improvements

Reduced costs

on broadband

and

telecommunic

ations

Positive

Reduced levy on internet andbroadband by 50%

More opportunities in mobile

and internet banking

Internet and

mobile banking

is to increaserapidly

Technological

breakthroughs

Positive

Development of sophisticatedonline security tools

Benefits of tools in risk

management and secure data

processing

Security features

are likely to

improvefrequently


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EnvironmentalTrend Extent of the impact Impact to HNB Likelihood

Climate

change and

global

warming

Positive

Critical shifting of the

country towards a low

emissions economy

Opportunities of being socially

responsible

society is likely

to embrace

socially

responsible

organizations

Demand for

clean energy

Positive

Sri Lankas geographical

positioning is key many

forms of renewable

energy sources

Can look into reducing energycosts

Investments in the clean energy

sector

A highpotential

industry and is

likely to be

exploited

Environmental

disasters and

erratic

weather

conditions

Negative

Recent drought and

excessive rain fall in

certain regions

Potential Tsunami threats

Affects investments on coastal

areas

Floods and droughts lead to non

payment or delayed payments

by customers (eg: Farmers)


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LegalTrend Extent of the impact Impact to HNB Likelihood

Central Bank

regulations(Amendments

of the banking

act of 2012)

Negative

Statutory ratio has been increased(1% - 8%)

Interest rates on credit cards and

housing loans has been limited

PositiveCustomer charter which makes it a

must to educate the customer on

all banking facilities

Reduced amount of bank

funds that can be lent

Affects the banks revenue

Further promotion of

banking services directly tocustomer

As legislations

theseconditions must

be met.

Credit

Information

Bureau of SriLanka act

allows any individual or corporate

entity to request for his/her/its

own credit report or Self InquiryCredit Report from the bureau

Ability filter customers on

creditability

As legislations

these

conditions mustbe met.

Environmental

Laws

Neutral

Not of major impact

Banking activities to be

carried out according to

environmental laws

As legislations

these

conditions

must be met.


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Major TrendsTrend Extent of the impact Impact to HNB Likelihood

The adopted

U.S.resolution

Negative

Threatens internationalfunds

Affects international

trade and foreign

investors

The budget deficit may force the

government to borrow from local banks

Loan payback could be delayed due to

low resources within the government

International trade may affect exports

and adversely affect the economy

The resolution

was votedagainst Sri Lanka

hence its impact

is yet to be

observed

Increasing

interesting

rates

Increases the cost of

borrowing

Increased cost of

borrowing

Higher interest rates

increase the value of

exchange rate

Attract more customers to the bank for

fixed deposits and bonds

discourages people from borrowing

investors are more likely to save in

Lankan banks

Savings likely to

increase

however loans

may decrease


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Increase in

Foreign DirectInvestment

Positive

Influx of foreign

currency to the country

Encourage development of innovative

financial products

Improves the efficiency of the banking

sector

Better capitalization of banks

Better ability to adapt to changing

financial market conditions.

May reduce the

sensitivity of thebanking system

and lead

towards

financial stability

Consumers

capacity for

learning

Negative

Implementing an online

and mobile banking

system is made difficult

There is a significant number of people

lacking knowledge or the capacity to

learn about modern banking

Majority of the urban population has

high acceptance towards online and

mobile banking

With increasing

urbanization,

cheap internet

and awareness

this trend is

likely to change

into a positive

factor


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Increased

mobile andinternet

usage

Positive

Increased mobilesubscribers grew by

6.4% to 18.86 million

as of 2012

Internet penetration in

Sri Lanka has gone up

by 1.2 Million as of

March 2012

Opportunities in mobile and internet

banking where the market could beexploited

Cost savings due to reduced printing

and staff

A trend that is

likely to changebanking

completely

Increase in

statutoryratio

Negative

Has been increased

from 1% to 8%

Money within HNB that can be

invested will decrease

As a legislation

it must becomplied with


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Recommendation

Introduce more banking facilities suited for foreign investors

Improvement of mobile and internet banking and capitalize on its cost benefits

Focus more on corporate social responsibility by focusing on environmentally

friendly concepts

Introduce new banking facilities to support demographic needs

Give attention towards renewable energy projects in terms of investments and as

an alternative energy.

Carry out market research frequently to understand and adapt to market changes


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Conclusion

This presentation analyses the external environmental impact

towards HNB with use of the PESTEL factors

External trends identified were discussed under key areas including

Trend, impact to HNB, extent of the impact and likelihood of the

impact

With the analyzed trends, 5 can be considered of high importance

hence were further discussed as major trends

Recommendations suggested in this presentation are based on thekey trends identified


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References

1. Safe & Sound. (2012). Technology factors. Retrieved from HNB annual report 2012 website:

http://www.hnb.net/data/pdf/annual_reports/annual_report_2012.pdf

2. HNB Introductory Document. (2011).Environment factor. Retrieved from HNB.indd website:

http://www.hnb.net/data/pdf/articles/hnb_introductory_document.pdf

3. Directions, Determinations, Circulars and Guidelines. (2013).

Directions/Determinations/Circulars/Guidelines. Retrieved from Central Bank of Sri Lanka website:

http://www.cbsl.gov.lk/htm/english/09_lr/_popups/bsd.htm

4. Central Bank of Sri Lanka Annual Report (2011).Economic, Price and Financial System Stability Outlook

and Policies.Retrieved from Central Bank of Sri Lanka website:http://www.cbsl.gov.lk/pics_n_docs/10_pub/_docs/efr/annual_report/AR2011/English/5_Chapter_01.pdf

5. Central Bank of Sri Lanka Annual Report (2011).External Sector Developments and Policies.Retrieved

from Central Bank of Sri Lanka website:

http://www.cbsl.gov.lk/pics_n_docs/10_pub/_docs/efr/annual_report/AR2011/English/9_Chapter_05.pdf
http://www.hnb.net/data/pdf/annual_reports/annual_report_2012.pdfhttp://www.hnb.net/data/pdf/articles/hnb_introductory_document.pdfhttp://www.cbsl.gov.lk/htm/english/09_lr/_popups/bsd.htmhttp://www.cbsl.gov.lk/pics_n_docs/10_pub/_docs/efr/annual_report/AR2011/English/5_Chapter_01.pdfhttp://www.cbsl.gov.lk/pics_n_docs/10_pub/_docs/efr/annual_report/AR2011/English/9_Chapter_05.pdfhttp://www.cbsl.gov.lk/pics_n_docs/10_pub/_docs/efr/annual_report/AR2011/English/9_Chapter_05.pdfhttp://www.cbsl.gov.lk/pics_n_docs/10_pub/_docs/efr/annual_report/AR2011/English/5_Chapter_01.pdfhttp://www.cbsl.gov.lk/htm/english/09_lr/_popups/bsd.htmhttp://www.hnb.net/data/pdf/articles/hnb_introductory_document.pdfhttp://www.hnb.net/data/pdf/annual_reports/annual_report_2012.pdf

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PESTEL for HNB