Banking

BBK Project:

BBK (Bank of Bahrain and Kuwait) is one of the premier regional financial services enterprise in providing superior products and services of highly quality through innovation, technology and lifelong client relationships. The bank has expanded in its overseas presence in more locations in which it chooses to operate in order to satisfy the diversified needs of clients. Their project and strategy is to gain a competitive advantage by implementing new projects in the Kingdom and abroad. New projects are opening new Financial Malls across the country, acquire and acquisition of business opportunities arises, and therefore be the leading Bank in Bahrain.

Bank Plans:

The bank have planned to increase its operation abroad through opening it subsidiary company CrediMax in Kuwait market to better support and expand in its credit card services. While their branch in UAE is an investment branch that does not have a commercial banking services; which it differs in Kuwait and India where they have a full commercial bank with all its benefits and activities.

Financial Statements:

The format of the income statement is in multistep form. The increase in gross profit and net income shows that the bank is growing and it is in the right path within becoming the financial leaders in Bahrain market. The bank is in progress and it shows in its financial statements that the bank is growing and will expand in the future to reach its maximum potential and to benefit from its financial services.

The management may decide to keep a high gross margin from sales and increase sales and the amount of gross margin by increasing operating expenses. You can see that BBK have invested a lot in advertising, by building a new hospital in Muharraq city in the Bank’s name or by the posters on the Highway and commercials in TV.

Even though this shows that most of the banks financing is by creditors, but in a commercial bank as BBK its finance must be from loans, deposits and customer accounts for the bank to operate. But this shows that the creditors are interested in the bank as it pays its creditors with interest. The more debt the bank is the more profit it must earn to ensure the payment of interest to creditors. BBK strong Interest Coverage Ratio of 1.5 shows that it was in no danger of being unable to make interest payments. As the market price is 5 times earnings, investors are paying a high price in relationship to earnings. They do so in the expectations that this bank will continue to be successful. High PE ratios should be interpreted cautiously because low earnings can produce an artificially high PE ratio.

As this is a bank and not company, it does not have most of the liquidity ratios and some other related to inventory and sales ratios.

I personally choose this topic due to their strong project management team that is being reflected in the growth of the country. I work in a competitor Bank, but these facts should be taken into consideration and highly appraise the project management team in BBK. As we studied this course that project management has several benefits to any organization as per the following: a) better efficiency in delivering services b) improved customer satisfaction c) enhanced effectiveness in delivering services d) improved growth and development internally within the organization e) gain competitive advantage f) better flexibility g) increased risk assessment h) increase in quality and quantity.

It would be interesting to see how the coming years will benefit BBK and maybe by this strategy and plan be the leading Financial Institute in the Kingdom.

http://www.bbkonline.com

http://www.bbkonline.com.kw

http://www.bbkindia.com/

So many companies have taken a similar approach to the continued weakness in the world economy of downsizing that it was a nice change of pace for me to hear about a local Chicago-based company, William Blair, who has taken the approach of increasing in size. This company’s approach of staying debt free and staying away from risky trading strategies has kept it profitable even in this time of economic uncertainty and William Blair continues to expand its staff in order to increase business and serve its customers better. “What fed William Blair’s growth spurt”, an article in Crain’s Chicago Business, explained this approach and stated, “We’re happy with our return on investment”. This statement seemed strange to me as many companies think that profits are most important, no matter the costs. This could contribute to some of the issues that we are currently facing with our economy.

Lehman Brothers and MF Global are examples of companies that used excessive debt and risky trading strategies to try and make excessive profits. These companies seemed to have never been “happy with their returns”. By overleveraging and having risky trading strategies that did not provide a correct risk hedge, these companies went bankrupt. In turn customers lost their life savings, jobs were lost, and some clients will probably forever have trust issues with banking institutions.

It is my experience in the grain industry that many customers are willing to pay extra for great customer service and this service from a trustworthy company can be well worth any extra cost. I have also noticed from my trading experiences that although excessive debt and risky trading strategies can produce huge profits and be very sexy when receiving a salary these short-term profits can affect the long-term strength of the company. This can affect perhaps the strength of the industry as a whole.

In the end, companies in the current market seem to be hesitant to hire more people with the complete uncertainty in the world economy. While companies, such as William Blair, are taking a strategic approach of sucking up talent in this market and have given up short-term profits by keeping debt low and limiting risk for that of a solid return on their business strategy, others have chosen the opposite and are now suffering the consequences. The question becomes do short-term profits justify possible long-term negative effects as shown by MF Global and Lehman Brothers? I think it’s refreshing to see a company with management willing to give up these short-term profits. To me it almost becomes an ethical question, where a manager can decide what is most important to the company.

Sources

Marek, L. “What fed William Blair’s growth spurt”. Crain’s Chicago Business. 26 Nov. 2012

http://www.chicagobusiness.com/article/20121124/ISSUE01/311249989/what-fed-william-blairs-growth-spurt

“Lehman, MF Global Dominate October Claims Trading”. WSJ. 29 Nov. 2012

http://blogs.wsj.com/bankruptcy/2012/11/29/lehman-mf-global-dominate-october-claims-trading/

Operations and Project Management in Today's Competitive Environment

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BBK- Project Plan & Strategy

“We’re Happy with our Return on Investment”