Credit risk management of banks: A look from NCC Bank PLC

Abstract

This report presents the field experience and theoretical knowledge gained through an internship at Darussalam Road Branch of National credit and Commerce Bank PLC (NCC Bank). As an interface between theory and practical financial activities, the analysis is a critical review of the recent strategic product changes in the NCC Bank in the highly competitive retail and CMSME industries. It particularly discusses the responsiveness of the bank to industry forces in coordinating its products to meet new market demands, consumer financing trends that are dynamic and the changes in regulations by the Bangladesh bank. One of the key points of the report is the detailed analysis of the focused marketing strategies and the main mechanisms of operation of the bank that underlie the main credit facilities. This consists of the regular Car Loan, the new Affordable Car Key (targeting used and environmentally friendly cars), Home and Home Improvement Loans and the greatly expanded Supply Chain Finance plant. Through an examination of the new Product Program Guidelines (PPGs), the paper draws our attention to how NCC Bank has segmented its consumer audience- serving all the way down to salaried executives to high-net-worth business owners. It elaborates on how the bank successfully employs tiered Debt Burden Ratios (DBR) and adjusted Loan-to-Value (LTV) limits to strike the right balance between the aggressive market growth and the careful risk management. Lastly, the report also ends with strategic and data-based marketing recommendations by evaluating the competitive positioning of NCC Bank with its counterparts in terms of commercial banks and other non-banking financial institutions (NBFIs). These practical recommendations focus on capitalizing on digital lead generation, streamlining customer onboarding experience by reducing application forms and aggressively marketing bundle deals to increase market penetration, boost customer acquisition rates and ensure long-term, sustainable growth of the portfolio.