Public Bank Analysis
1.0 Defining Banking Industry & 3 Drivers of Change
1.1 Introduction
Padmalatha and Paul (2011) stated that a bank is a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly or through capital markets. A bank connects customers with capital deficits to customers with capital surpluses. Banking is generally a highly regulated industry, and government restrictions on financial activities by banks have varied over time and location (Cotter, 2003). In addition, Fabozzi and Drake (2009) declared that a commercial bank is one of the types of bank in Malaysia and also a type of financial intermediary and a type of bank. Commercial banking is also known as business banking. It is a bank that provides checking accounts, savings accounts, and money market accounts and that accepts time deposits.
Figure 1: GDP Growth by Economy Activities (at 2000 constant prices); source: (Malaysia Productivity Corporation, 2009).
According to the Table 1, there are five main industries, which are contributing to the economy of Malaysia, include agricultural, mining, manufacturing, construction and services industries. Additionally, since bank is under the category of services industry, the GDP growth for services industry has grown from 2006 to 2007, from 7.02% to 10.39%. However, the industry has declined from 2007 to 2008 as well as from 2008 to 2009, from 10.39% to 6.68% and to 2.50%. Therefore, it can be said that the services industry in the decline stage in the life cycle. Besides, there is no growth rate but only decline rate.
Figure 2: Productivity Level & Growth of the Finance Sector, 2005-2009; source: (Malaysia Productivity Corporation, 2009).
By looking at Table 2, the productivity level for finance sector in Malaysia is having a constant growth rate from 2005 (3.86%) to 2006 (4.06%) and to 2007 (4.87%). This showed that the finance sector is very competitive where the players are competing with productivity
1.1 Introduction
Padmalatha and Paul (2011) stated that a bank is a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly or through capital markets. A bank connects customers with capital deficits to customers with capital surpluses. Banking is generally a highly regulated industry, and government restrictions on financial activities by banks have varied over time and location (Cotter, 2003). In addition, Fabozzi and Drake (2009) declared that a commercial bank is one of the types of bank in Malaysia and also a type of financial intermediary and a type of bank. Commercial banking is also known as business banking. It is a bank that provides checking accounts, savings accounts, and money market accounts and that accepts time deposits.
Figure 1: GDP Growth by Economy Activities (at 2000 constant prices); source: (Malaysia Productivity Corporation, 2009).
According to the Table 1, there are five main industries, which are contributing to the economy of Malaysia, include agricultural, mining, manufacturing, construction and services industries. Additionally, since bank is under the category of services industry, the GDP growth for services industry has grown from 2006 to 2007, from 7.02% to 10.39%. However, the industry has declined from 2007 to 2008 as well as from 2008 to 2009, from 10.39% to 6.68% and to 2.50%. Therefore, it can be said that the services industry in the decline stage in the life cycle. Besides, there is no growth rate but only decline rate.
Figure 2: Productivity Level & Growth of the Finance Sector, 2005-2009; source: (Malaysia Productivity Corporation, 2009).
By looking at Table 2, the productivity level for finance sector in Malaysia is having a constant growth rate from 2005 (3.86%) to 2006 (4.06%) and to 2007 (4.87%). This showed that the finance sector is very competitive where the players are competing with productivity