Branch Business Planning

System

Author

Sohailuddin ALAVI

International Training Adviser, AIBF
(Consultant and Instructor in Management)
March 2012

Contents
1. Executive Summary ................................................................................................. 1
Section Two: Role of your branch in the overall management of the Bank value .......... 2
Section Three: Corporate Directions and the Branch mission statement ....................... 3
Section 4: Branch SWOT and Competition Analysis ...................................................... 4
Section 5: Branch Performance Goals, Objectives and Indicators.................................. 6
N.B. Refer to appendix for reviewing assumptions and detailed workingSection Six:
Action Plan.................................................................................................................. 8
Section Six: Action Plan ............................................................................................... 9
Building Customer Focus .................................................................................................... 9
Corporate Customers ............................................................................................................... 9
Retail Customers .................................................................................................................... 10
Walk-in Customers ................................................................................................................. 10
Corporate Customers ............................................................................................................. 11
Retail Customers .................................................................................................................... 11
Walk-in Customers ................................................................................................................. 11
Competitive Analysis .............................................................................................................. 12
Marketing Strategy (Mix) ....................................................................................................... 13
Enabling Objectives ................................................................................................................ 13
Organization and Human Resources Development .............................................................14
Organization Structure ........................................................................................................... 14
Position wise Performance Management Plan ...................................................................... 15
Employee Rotation, Training, and Development Plan ........................................................... 16

Risks and their Mitigates ........................................................................................... 17
Appendix I ................................................................................................................. 18
Assumptions: - ..................................................................................................................18
Projections Worksheet ......................................................................................................19

Business Planning Workbook

1. Section One: Executive Summary
(This section presents a synopsis of the entire business plan. It should be written in
essay format).
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Afghanistan Institute of Banking and Finance (Author Sohailuddin ALAVI) March 2012

Business Planning Workbook

Section Two: Role of your branch in the overall management of the Bank value
As Strategic Business Link between the bank and its constituents define your branch’s
role in the overall management of Bank’s Value:

To describe the role of your branch in the overall value management of the bank. Begin
by answering the following question:
What is the role of your branch in the overall profit function of the bank? For instance a
typical branch ideally operates as a strategic link for:
- Quality customer prospecting and retention
- Mobilizing quality deposits
- Selling quality credits
- Selling other financial services
- Building and sustaining bank image
It is not necessary that your branch can perform all activities in a profitable manner.
Therefore you should only focus on what your branch can do in a profitable manner.
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Afghanistan Institute of Banking and Finance (Author Sohailuddin ALAVI) March 2012

Business Planning Workbook

Section Three: Corporate Directions and the Branch mission statement
3.1 The Corporate Directions

Corporate direction is a broad level commitment and strategies of the senior
management in terms of where they wish to take the bank in future. This statement of
intent should be considered by the branches, to gear their business planning in the
direction the bank wants to move. Branch planning in isolation is likely to jeopardize the
harmony of directions critical for the overall success of the organization
Exemplified Corporate Directions: “The bank aims to accomplish the followings – Increase profitability (RoE) through better
management of financial assets and liabilities; improved customer focus; increased
market share; operational efficiency; better internal controls; enhanced regulatory
compliance; lower cost of operations; and, professionalism”...
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3.2 Branch Mission Statement

A mission statement is a broad level description of what the branch intends to
accomplish and how will it accomplish it? It therefore consists of two segments, namely;
the goals [impact] that are to be accomplished, and the strategies [means] whereby the
goals will be accomplished.
Exemplified Mission Statement: “Being an extension of the bank, we shall improve our market share and profitability
through differentiated financial services; building customer loyalties; focusing on
customer relationship management; improving employees’ work performance;
continuously increasing operating efficiencies; and, last but not the least minimizing the
risks”…
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Afghanistan Institute of Banking and Finance (Author Sohailuddin ALAVI) March 2012

Business Planning Workbook

Section 4: Branch SWOT and Competition Analysis
4.1 SWOT Analysis

The focus of SWOT analysis is on unraveling the opportunities and challenges (threats)
in the permeable external environment; and, strengths and opportunities in of the
organization. The analysis is essentially made with reference to the Mission Statement.
Meaning, external factors are neither opportunities nor threats unless these are analyzed
in the context of accomplishing the mission statement and so are internal characteristics
of the organization.
Strength refers to an internal characteristic that enables the organization to realize its
goals in an effective and efficient manner, while weakness is the characteristic that is
likely to hinder effective and efficient accomplishment of goals. For instance, high
deposit base could be strength for the branch (bank) if there is sufficient demand for
loans from good borrowers. However, it can turn into weakness if the weighted average
cost of the deposits is higher than what the branch could earn on loans.
External factors, which are likely to increase business potentials for the branch, are
termed as opportunities. For instance; credit culture, saving habits, etc. However;
existence of too many branches in a close proximity, bank avert attitudes, etc. are likely
to posse significant challenges (threat) for the branch in realizing its goals.
Please identify Strengths; Weaknesses; Opportunities; and, Threats faced by your
branch
Strengths…
Weaknesses…

Continued on next page

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Afghanistan Institute of Banking and Finance (Author Sohailuddin ALAVI) March 2012

Business Planning Workbook

Opportunities…

Challenges (Threats)…

4.2 SWOT Recap:
Make a conclusive summary of the “SWOT-Analysis” to aid formulating the branch
performance goals, objectives and indicators realistically...
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Afghanistan Institute of Banking and Finance (Author Sohailuddin ALAVI) March 2012

Business Planning Workbook

Section 5: Branch Performance Goals, Objectives and Indicators
5.1 Goals and Objectives
Financial Goals:
- To increase branch profitability by
- To increase average income on loans by
- To increase other income by
- To decrease average cost of deposits by
- To decrease branch expenses by
- To reduce loan defaults by
- To reduce operating risks
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Business Objectives:
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To increase deposits by
To increase loans by
To increase other business by
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Qualitative Objectives:
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To improve customer satisfaction

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To improve service standard

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To improve employee performance

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To improve branch environment

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To improve internal controls by

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(Check [X] the appropriate objective(s). Use extra spaces to include more objectives)

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Afghanistan Institute of Banking and Finance (Author Sohailuddin ALAVI) March 2012

Business Planning Workbook

5.2 Performance Indicators:
Deposit (Liability Products):
Exemplified: To contain the weighted average cost of funds (deposits) @ 5% + 10 basis points:

Type of Deposit
Savings Account
Short Term Deposits
Long Term Deposits
Current Deposits
Total

Percentage Share
30%
20%
20%
30%
100%

Cost
5%
8%
10%
Nil

WAC
1.5%
1.6%
2.0%
Nil
5.1%*

* The WAC will change if the % share of each category of deposit is altered.

Projections: Weighted average cost of funds is projected @
Type of Deposit
Percentage Share
Savings Account
Short Term Deposits
Long Term Deposits
Current Deposits
Total

%+
Cost

basis points
WAC

Loans and Credits (Asset Products):
Exemplified: To achieve the weighted average return on loans and credits @ 12% + 10 basis points

Type of Loan
Working Capital Running Finance
Working Capital Term Finance
Project Loans
Consumer Finance
Total

Percentage Share
30%
30%%
20%
20%
100%

Rate
20%
15%
16%
Nil

WAC
6.0%
4.5%
1.2%
Nil
11.7%*

* The WAC will change if the % share of each category of deposit is altered.

Projections: Weighted average return on loans is projected @
points
Type of Loan
Percentage Share
Working Capital Running Finance
Working Capital Term Finance
Project Loans
Consumer Finance
Total

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%+
Rate

Afghanistan Institute of Banking and Finance (Author Sohailuddin ALAVI) March 2012

basis
WAC

Business Planning Workbook

Non Fund Based Business:
Exemplified: To earn gross revenue of Rs.125,000.00 + 10% from non fund based services
Percentage
Type of Service
Project Revenue

Documentary Credits
Guarantees
Inland Remittances
Exchange Business
Safe Deposit Lockers
Miscellaneous Services, such as Utility
Bills
Total

60,000.00
30,000.00
10,000.00
10,000.00
5000.00
5000.00
120,000.00

Projections: To earn gross revenue of Rs.

Type of Service

50%
25%
8.33%
8.33%
4.16%
4.16%

+

% from non fund based services

Project Revenue

Percentag
e

Documentary Credits
Guarantees
Inland Remittances
Exchange Business
Safe Deposit Lockers
Miscellaneous Services, such as Utility
Bills
Total
Others:
Key Areas
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To improve customer satisfaction

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To improve service standard

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To improve employee performance

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To improve branch environment

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To improve internal controls by

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Expected impact/outcome
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N.B. Refer to appendix for reviewing assumptions and detailed working

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Afghanistan Institute of Banking and Finance (Author Sohailuddin ALAVI) March 2012

Business Planning Workbook

Section Six: Action Plan
This section elaborates upon the strategies and tactics used in accomplishing the above
mentioned branch targets.
6.1 Branch Marketing Plan

Each customer (or group of customers) has unique needs and expectations. A branch is
faced with the challenge of satisfying different customer groups, simultaneously. In
order to do this, it is undoubtedly essential for the branch to better understand their
varying needs and expectation and to deal with them accordingly.
This entails a systematic planning process. It consists of building customer focus;
assessing branch’s competitive position and determining appropriate marketing mix.
Building Customer Focus
Example

Customer
Segment(s)
Entrepreneur

Financial Status /
Preferences
Affluent;
Comfortable Life,
Convenience,
Respect.

Financial Needs

Expectations

Business Loans
Int’l Credit Card
Funds Management

Priority Banking
Pre-approved Status
Relationship

Corporate Customers – These are businesspersons who conduct diversified business

transactions with your branch on rather continued basis. These may be your existing
customers; potential customers; and, past customers.
Customer
Financial Status /
Segment(s)
Preferences
Corporate Customers
Big Entrepreneurs

Financial Needs

SMEs

Micro Entrepreneurs

Govt./Public Offices

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Afghanistan Institute of Banking and Finance (Author Sohailuddin ALAVI) March 2012

Expectations

Business Planning Workbook

Retail Customers – Customers who bank with your branch for their personal financial

requirements. They maintain deposit accounts, borrow for their personal requirements,
or avail of other financial services again in their personal context.
Customer
Segment(s)
Retail Customers
Professionals / Sr.
Executives

Financial Status /
Preferences

Financial Needs

Expectations

Employed
Individuals
House Wives

Students

Retired / Senior
Citizens

Walk-in Customers – Customers who happen to visit your branch once in a blue moon

to avail of a service, such as to purchase foreign exchange travelers’ cheques;
remittance of funds; claim pension; and, even payment of their utility bills.
Customer
Segment(s)
Walk-in Customers
Core Services

Financial Status /
Preferences

Financial Needs

Non Core Services

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Afghanistan Institute of Banking and Finance (Author Sohailuddin ALAVI) March 2012

Expectations

Business Planning Workbook

Consolidated Customers’ Profile
Customer
Preferred Financial
Segment(s)
Products and Services
Corporate Customers
Big Entrepreneurs

Price Sensitivity

% Total

(High – Mod – Low)

Revenue

SMEs

Micro Entrepreneurs

Govt./Public Offices

Retail Customers
Professionals / Sr.
Executives
Employed
Individuals
House Wives

Students

Retired / Senior
Citizens
Walk-in Customers
Core Services
Non Core Services

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Afghanistan Institute of Banking and Finance (Author Sohailuddin ALAVI) March 2012

Business Planning Workbook

Competitive Analysis

Here the Branch’s competitive power is measured verses other bank branches operating
in the permeable vicinity. This analysis together with customers’ profile helps to identify
ideal branch positioning; the areas requiring attention; and, also in formulating the
enabling objectives.
Branch
Ranking
(a)

Average Competitor
Ranking
(b)

Relative
Position
(a – b)

Corporate Customers
Brand Image
Financial Products & Services
Service Quality
Customer Loyalty
Retail Customers
Brand Image
Financial Products & Services
Service Quality
Customer Loyalty
Walk-in Customers
Brand Image
Financial Products & Services
Service Quality
Customer Loyalty
Relative Ranking Scale: 01 Inferior – 05 Average – 10 Superior.

Conclusion:
Relative Advantages
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Relative Disadvantages
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Overall Branch Positioning
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Afghanistan Institute of Banking and Finance (Author Sohailuddin ALAVI) March 2012

Business Planning Workbook

Marketing Strategy (Mix)

Elaborate the plan-of-actions with respect to improving and/or sustaining branch
positioning, business development, and customer relationship management.
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Enabling Objectives

Enabling objectives refer to specific actions planned in the context of accomplishing
marketing strategy. These actions should essentially be written on SMART criteria i.e.
Specific; Measurable; Attainable; Realistic and Relevant; and, Time bounded.

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Afghanistan Institute of Banking and Finance (Author Sohailuddin ALAVI) March 2012

Business Planning Workbook

Organization and Human Resources Development

Living the branch’s business plan can never become possible without the development of
organization and human resources in harmony with the mission statement. Organization
development refers to defining (or redefining) the organizational structure, processes,
and interdependencies within the branch. Human resources development is twin
concept. It essentially entails empowerment – setting shared direction, building
commitment, up-scaling competencies and defining roles and responsibilities in harmony
with the mission statement.
Organization Development Plan

Organization structure (organogram) should preferably be process oriented and
empowering, especially for the front-end positions. Moreover, structure should clearly
define the roles, responsibilities and interdependencies of each position.
Organization Structure

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Afghanistan Institute of Banking and Finance (Author Sohailuddin ALAVI) March 2012

Business Planning Workbook

Human Resources Development Plan
Position wise Performance Management Plan
Key
Team Member
Title/Position
Responsibilities

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Performance
Indicators

Afghanistan Institute of Banking and Finance (Author Sohailuddin ALAVI) March 2012

Goals / Targets

Business Planning Workbook

Human Resources Development Plan (Continued)
Employee Rotation, Training, and Development Plan
Competence
Team Member Current Position Next Movement
Gap

Training
Recommended

Competence = Morale and Motivation; Work skills and knowledge; Attitude; Moral and Emotional
Development; and, Soft skills.

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Afghanistan Institute of Banking and Finance (Author Sohailuddin ALAVI) March 2012

Business Planning Workbook

Risks and their Mitigates
Risk refers to adverse impact on the branch business plan as a result of expected and
unexpected contingencies both in the internal and external scenarios. Such as, change in
the Govt. regulations may limit branch’s lending opportunities, entry of new players in
the financial market may affect branch’s ability to mobilize deposits at lower interest
rates. Similarly, exit of key persons from the branch may affect its working adversely, in
the short run. Happening of such contingencies may erode the branch’s prospects if no
alternative arrangements (mitigates) were already planned (or made).
Projected Risks and Possible Mitigates

External Contingencies…

Internal Contingencies…

Mitigates for External Contingencies…

Mitigates for Internal Contingencies…

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Afghanistan Institute of Banking and Finance (Author Sohailuddin ALAVI) March 2012

Business Planning Workbook

Appendix I
Use this page to list your assumptions underlying the business projections
Assumptions: 

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Afghanistan Institute of Banking and Finance (Author Sohailuddin ALAVI) March 2012

Business Planning Workbook

Appendix II
Projections Worksheet

Use additional worksheets if required

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Afghanistan Institute of Banking and Finance (Author Sohailuddin ALAVI) March 2012

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