Degree

Master of Business Administration Executive

Faculty / School

School of Business Studies (SBS)

Year of Award

2025

Advisor/Supervisor

Yaseen Ahmed Meenai, Lecturer, Department of Mathematical Sciences

Project Type

MBA Executive Research Project

Access Type

Restricted Access

Keywords

Bank, Soneri Bank, Operational challenges

Executive Summary

Soneri Bank Limited, incorporated on September 28, 1991, is a Pakistani bank with a focus on small and medium-sized entrepreneurs and export financing, operating over 470 branches across the country, including remote areas.

Here's a more detailed look at Soneri Bank's history:

- Incorporation and Early Years

- Expansion and Branch Network

- Focus on SME and Export Financing

- Technology and Innovation

After the introduction of SBL, we will share the comparison between the results of SBL with peer banks and their financial numbers along with trade and advances business. However, our focus will be upon the operational expenses of Soneri Bank which has been increased in past few years and its income is stagnant. After discussing or highlighting the issues related to higher operating expenses in detail, we will suggest some solutions to reduce the operating expenses.

Operating expenses have indeed been a significant management focus for Soneri Bank in recent years. Despite challenges such as high inflation and an ambitious branch expansion strategy, the bank has implemented effective cost control measures to manage these expenses.

Soneri Bank has demonstrated consistent growth in recent years, expanding its branch network and reporting increased profits. However, like many financial institutions in Pakistan, it faces significant challenges, particularly in managing operational expenses.

Initially, the proposal will be discussed with the history of soneri bank limited

Operational Expenses Amid High Inflation

The bank's strategic expansion, including the addition of 101 new branches in 2024, has inevitably led to increased operational costs. Despite implementing prudent cost-control measures, the bank reported a 26.20% rise in non-markup expenses in 2024 compared to the previous year. This increase is largely attributed to the inflationary pressures prevalent in Pakistan's economy. Balancing growth initiatives with effective expense management remains a critical challenge for the bank.

Soneri Bank has been navigating a fine balance between expansion and cost management. The 26.20% rise in non-markup expenses underscores the impact of inflation on operational costs, which is a common challenge for financial institutions in Pakistan.

Despite this, their decision to expand with 101 new branches suggests confidence in future growth. The key challenge will be ensuring that this expansion translates into higher revenues without significantly eroding profitability.

Scope and Focus

This project aims to balance Soneri Bank’s expansion strategy with effective cost management in the face of rising inflation. While the bank has added 101 new branches, operational expenses have increased by 26.20% in 2024. The project will explore strategies to optimize growth while controlling costs, ensuring sustainable profitability.

To address Soneri Bank's rising operational expenses amid high inflation while maintaining growth, a multi-pronged strategy is necessary. Here are some key solutions:

  1. Digital Transformation & Cost Optimization
  2. Smart Branch Expansion
  3. Reducing Energy and Facility Management Costs
  4. Staffing Optimization
  5. Improving Operational Processes
  6. Technology and Innovation Adoption
  7. Regulatory Compliance and Risk Management
  8. Customer-Centric Approach to Reduce Service-Related Costs
  9. Revenue Diversification

Here’s a breakdown of potential objectives for the project:

  1. Identify Key Areas of Operational Expense
  2. Analyze the Impact of High Inflation
  3. Examine the Bank's Response to Rising Costs
  4. Impact on Profitability and Financial Health
  5. Recommendations for Managing Operational Expenses
  6. Forecasting and Planning

In conclusion, our analysis will show that while inflationary pressures are unavoidable, Soneri Bank should implement certain strategies to mitigate its effects, such as streamlining operational processes, adopting technology to increase efficiency, and focusing on cost management measures. Furthermore, the bank must continue to adapt its approach by exploring innovative financial products that align with the changing economic environment.

Pages

ix, 42

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