Banking 

I: Your client is a retail bank which is facing a decline in profits. Analyse

C: For how long have the profits been declining? Is it Pan India? Are the competitors also facing similar issues?

I: The profits have been declining for 3 quarters, the problem is across India but urban branches are facing more issues, and this is a company-specific issue.

C: Okay. Profit decline means either revenue gone down or cost have increased

I: Are you sure these are the only possible ways?

C: No. It's also possible that

C: 1. Both Rev and cost increased but in different magnitudes

C: 2. Both Rev and cost decreased but in different magnitudes

C: 3. Rev deceased, cost increased

I:  Perfect. Our client cost remains same, revenue has decreased

C: I would like to divide revenue into core and non-core activities. Core is interest received on loans given and investment income

C: Non-core is Credit card operations, Account charges, Forex, Investment Services, Demat, etc.

C: Any changes in core / non-core revenue compared to earlier periods?

I: Yes. Core revenue remains same. Non core has changed. Particularly in credit card operations

C: Okay. Breaking this into 3 phases. Pre usage, during usage and post usage.

C: Pre-usage would be credit card subscription charges

C: During usage would be merchant commission of 2-3%

C: Post usage would be delayed payments ( Interest charged on outstanding balance)

C: Any change in one of these?

I: Yes. During usage.

C:  Okay. During usage revenue can be broken as per this formula

C: 1. No of Customers with CC

C: 2. Proportion of active customers

C: 3. Avg no of swipes per customer / year

C: 4. Avg amount swiped per swipe

C: 5. Percentage commission charged

I: Very impressive breakdown. There is a change in the number of people using our credit card as competitors have come up with better features making our card redundant. Thank you