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Standard Chartered Bank (Hong Kong) Financial Problem
Added on -2019-09-23
Standard Chartered Bank (SBC) Hong Kong Limited is facing financial problems due to high Cost to Income Ratio (C/I ratio). This article explains what C/I ratio is, why it is a problem for SBC, and how the bank is using finance principles to reduce it. According to the KPMG HK Team (2017) “Banking Survey in HK” report, it was found that SBC HK Limited found to have the highest C/I ratio among the top 10 locally licensed banks in this region. The article also discusses the strategies that the bank is following to reduce the C/I ratio.
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Standard Chartered Bank (Hong Kong) Financial Problem Introduction Standard Chartered Bank (SBC) is one of the largest bank in the world in terms of their assets,operations and presence all across the world. Today, SBC operates in more than 70 countrieswith more than 1200 branches. More than 87000 people are working under this multi-nationalfinancial corporation. Although it is a UK company but 90% of the profit comes from Asia, Africaand Middle-East region. SBC Hong Kong Limited is one of the major subsidiary of the group which got licensed bankstatus in Hong Kong (HK) in 2004. Since then, it has been among the top 5 licensed banks in HKregions. Although having name and wide operation in HK region over 14 years, it has beenfacing financial problems in this region. [SCB Team , 2017]As we are supposed to discuss one of such problem, I am taking Cost to Income Ratio as thecurrent problematic area for SBC HK limited. What is Cost to Income Ratio? In finance, Cost to Income ratio (Also called as C/I ratio) is the measurement of the cost ofrunning an organization in comparison to the operating income. It is important from bank’sperspective. It is an important performance indicator (PI) because the ratio expresses how efficiently theorganization is managing its cost and revenue. “The lower the C/I, the better it is.” Normally, less than 50% is taken as the standard normfor this ratio. . [Borio, C.,et.al2017]This ratio is calculated as-Operating Expense/Operating Income
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