Internship report on Financial Analysis on Credit Card Customers of Standard Chartered Bank Limited

Standard Chartered Bank houses a wide variety of customers for all of its Retail Banking Products. However, within the Retail Banking Product Suite (Deposits, Lending products), there is an immense opportunity to tap those existing customers who have any product with SCB except credit card. As new customers are on-boarded to increase their credit card product share holding of SCB, the existing customers of SCB remain hugely untapped. Customer acquisition always entails a financial cost. Since the customers’ approach towards a Stan Chart Credit Card would largely vary depending on whether he/ she has any other relationship with the bank, it is assumed that the acquisition cost for existing customers would be far lower than that of new customers and thereby leading to better take-up ratio and higher profitability for credit card product.

This report aims to differentiate the profitability in selling credit cards to “Existing to Bank” (ETB) customers as opposed to “New to Bank” (NTB) customers of Stan Chart. The report seeks to highlight the financial analysis on existing vs new customers and present the project implementation plan for selling credit cards to the more profitable customer segment.

The credit card market in Bangladesh is a booming market with a rise of the emerging affluent segment. While more and more new customers are showing keen interest to avail the credit card offer, the number of customers who are maintaining an existing deposit account relationship with SCB, remain hugely untapped. SCB houses a rich pool of existing customers who do not have credit card facility. This base of existing customers will show better loyalty and affiliation with SCB if a pre-approved credit card is offered to them based without any further income documentation hassle. This will not only lead to higher number of credit cards generated but also will add significantly to the rise in deposit accounts as the customers will be more comfortable in banking multiple relationships with a single bank. SCB should focus on increasing PPC (product per customer) through offering credit cards to existing base as the existing base proves to be more financially profitable as well as ensuring stickiness of the customer base.

An insight into the ETB Base’s profitability shows an After Tax Incremental Net Annualized Revenue of USD 69 million for five years and a superior positive NPV.

1.1 Origin of the Report
This report is prepared as a requirement of the internship program under the MBA program at the Institute of Business Administration (IBA), University of Dhaka. The organization which this report represents is Standard Chartered Bank (SCB). The internship program at SCB was done in the Consumer Banking Credit Card department for organization attachment period for 10 weeks. The preparation of the report was done under direct supervision of Professor Dr. Md. Jawadur Rahim.

1.2 Objectives of the Study
The broad objective of the report is to find out the profitability of the customers in general for the credit Card product of Standard Chartered Bank and how it will influence project decisions depending on the chosen customer bases. .

The specific objectives of the report include –
  • To find the Net Annualized Revenue for Existing to Bank (ETB) and New to Bank (NTB) customers.
  • To find the After Tax Incremental Impact for the ETB project.
  • To carry out NPV as the Capital Budgeting Technique to accept/reject the ETB Project
  • To find out how ensuring multiple products under single customer leads to higher customer stickiness and rise in the product revenue line for the Bank.

1.3 Scope of the Study
For the purpose of this report, a scope is defined within which the research will be carried out. This report will cover the case of Credit Card Product in Consumer Banking division of Standard Chartered Bank situated in Bangladesh only. The corporate banking division or branches of the bank situated outside the country is not a part of this report. Also, the findings and analysis of this report is only applicable for Consumer Banking division of Standard Chartered Bank situated in Bangladesh; these implications may not be the same for similar other financial institutions.