Rural Bank of Suares Case Analysis (Paper of Our Group)

Rural Bank of Suares

Point of View: Banking Consultant

I. Introduction

Facts: The Rural Bank of Suares’s main branch is located in Suares, a 25km rural area from the capital city. Many current borrowers of the bank are residents of the city. Under the Marcos regime, a program called Masagana 99 forced the bank to write off uncollectible loans which hindered the bank from paying dividends to its stockholders and expanding the bank. It was only in 1993 that he bank reported modest profits for the first time after years of breakeven operations.

Time frame: 1990s - The greater part of the 1990s is characterized by an improved economy with the election of a new president, Fidel V. Ramos. It was also during his time as president that the Philippine Stock Exchange was one of the best in the world. The president’s vision of Philippines 2000 was powered by technological advances that were projected toward industrializing the country.

Problem: Given the bank’s substantial growth in profitability during the recent years:

(1) How far can it go about expanding both its deposit base and lending activities?

(2) Long-term: How can the bank expand its deposit base and lending activities?

(3) Short-term: How can the bank’s profitability be improved?

II. Areas of Consideration:

* customer loyalty (for new customers)

* target market (customers who can avail the loan of Php100,000-Php400,000)

* demographics (from province to the city)

* budget for expansion (must not exceed Php10 million)

* higher profitability in current year

III. Assumptions:

* The bank caters to middle class citizens.

* Current customers are loyal to the bank.

IV. Alternative Courses of Action

Alternatives | Pros | Cons |

Improve other operational activities in main bank | * Minimal cost * Less risk * Better service to customers | * Less gain than expanding bank * Limited target market |

Open a branch in the capital city | a. Own land and...