Research Korner: Financial Ratio

Abstract The Hong Kong banking sectors does have innovative opportunities for small and medium-sized enterprises upon extending the customer base within the global marketplace. However, SCB and HSBC will need to adopt such approach to financial planning and management which deploy an effective banking network by linking towards a better financial approach determining financial statement in its value and strength. This research represents better framework for analysis and crafting of financial patterns of SCB and HSBC in their business strategy pointing to the management as well as execution of finance factors into SME context. This research investigation can be that the banks involved can achieve better financial status and competence without experiencing much delinquency of such financial statements found in cash flows and balance sheets with HK banking competencies for managing business relations as well as engagements with other banking sectors (in, Venkatraman and Henderson 1998).           INTRODUCTION   1.1  INTRODUCTION Financial statement is an important indicator wherein the strength of SCB and HSBC is looked upon in its business strategy towards SMEs in Hong Kong, there can accounts for delinquency and such pricing relationships in such financial statement understanding. The comparative analysis of SCB and HSBC can be supported by such case study evaluation and is backed up with qualitative and quantitative approach for research study as the banking sector in HK is aware of determining strength over delinquency when talking to effective presentation of financial statements in such cash flows and balance sheets of the two banks that can be ideal for SME assimilation into the HK region.             Background for the research Financial Institution such as the SCB and the HSBC incurs a useful potential to play major role in finance through SME companies in Hong Kong. With increased global competition, the finance function can be exploited to allow HSBC for instance, to gain financial advantage in the HK market stance as there can be delinquency of banking operations affecting the overall indication of the financial statement and its ways.  There has to be comparative case study between SCB and HSBC respectively. The methodology value by then, can be based on literature studies of the two banks through such reviewed studies on small and medium-sized in HK with the objective of understanding the background of the bank’s financial strength and how it relates to pricing opportunities as the banks do strive to become more finance competitive. The data required for case analysis have been collected by interviewing several senior managers of SCB and HSBC within a standard questionnaire. Aside, SCB and HSBC’s annual reports and statements have been referred for the collection of accurate data. The main objective of the research is to understand how the two banks developed good financial strength over the years, avoiding delinquencies to the financial statements. Thus, analyzing history of the company, its strategy and goals, strategies as well as the process they used to bring the company to the position as of the present.   For example, major banking decisions should involve the volume and timing of orders and deliveries and the packing of items in consolidation. There are several constraints influencing the level of stock and the speed of the material flow along the banking logistics chain. The level of stock and the speeds the material flow also depend upon the nature of the supply and demand. Transportation or shipping involves such matters as the modes of transportation, utilization of available capacity, scheduling of transportation equipment and maintenance of transportation facilities. Next comes capacity planning. The management of both long-term and short-term demand drives the level of capacity required.  The study examines different banking approaches to determine whether a bank will be associated with good financial concepts and will focus on certain clients. Hong Kong is a Chinese-dominated society with different types of banks and this allows for cross-section of cases in order to test the reality and applicability of research over financial statements with specific relationships such as pricing within the banking service ways. In order to clarify objectives of whether there is a indication of delinquency of SCB and HSBC statements that can adhere if there impose a good borrower of the banks into customer awareness and such hypothesis are developed as below.             RESEARCH HYPOTHESES H1. There is effective strength into financial approach of SCB in comparison to HSBC knowing whether certain profitable company shown in the financial statement would be more attractive borrower H2. There is no effective strength into financial approach of SCB in comparison to HSBC knowing whether certain profitable company shown in the financial statement would be more attractive borrower   CONTRIBUTIONS TO RESEARCH AND PRACTICE   The research calls for precise execution of factual knowledge supporting financial strength over delinquency within SCB and HSBC as geared towards SME’s in HK. Hence, for practice the recognition of resources to research and its evidences will amiably be a part of the whole continuum basically, achieving details of banking finance statements through cash flows and balance sheets and the underlying issues within finance sectors of SCB and HSBC in order to fully adopt and execute in the hope of maintaining good banking business in Hong Kong.   RESEARCH APPROACH The ideal research approach significant for this study is by means of vivid realization and precise applications of a comprehensive and detailed research paradigm through assimilation, collation and clear understanding of research information and evidences in forms of relevant research materials as directed to financial aspect of the banks as supported by reliable case studies presented through academic journals and articles as based on the topic. The content involvement within the literature plays a vital factor also for the research approach to value application of financial approaches within SCB and HSBC case patterns and such financial context and principles.             THE REVIEW OF LITERATURE   SMALL AND MEDIUM SIZED ENTERPRISES The ability of SMEs to gain competitive advantage is thought to be related to issues of marketing, market research, marketing strategy, new product development, the technologies and processes and, the manufacturing and operations strategy adopted and not only have SMEs limited financial resources in terms of acquiring suitable technology, but they also lack human capabilities, which contribute to a general lack of skills and knowledge within the organization to cope with new ideas, concepts and technologies. The relevance of innovation in gaining and maintaining enterprise competitiveness has been widely addressed in the managerial literature (in, Freeman, 1997; Chan et al., 1993; Grosse, 1996; Medina, 1996). Successful enterprise analysis clearly shows that triumph mainly derives from innovation oriented managerial and organizational processes. First, the innovation process involves huge financial resources, and is quite risky (in, Baldwin and Scott, 1987). Then, such elements are undoubtedly better managed by big firms because of the greater funds available and the possibility of diversifying risks implementing several research projects. Moreover, it often happens that innovations allow diversification strategies which may be better pursued by large organizations rather than SMEs. With specific respect to product innovation, it is critical to have already established commercial channels enabling economies of scale in production and sales activities. In particular, the primary research highlighted that the banks inability to allocate better finance ways will be in favour of more banking growth in certain areas. INFORMATION ON SCB AND HSBC   Standard Chartered Bank (SCB) SCB is known and trusted for having high standards of corporate responsibility as the bank is committed to building sustainable business through social inclusion, environmental protection and good governance, by combining the global capabilities with deep local knowledge, SCB develop innovative products and services to meet the diverse and ever-changing needs of individual, corporate and institutional customers in some of the world's most exciting and dynamic markets. There is about SCB in terms of their SME Banking which offers variety of products and services to help small and medium-sized enterprises manage the demands of growing business through providing global support in Standard Chartered, the bank knows that doing business in today's economic climate is challenging and situations as well as business needs can change overnight as the SCB can help SMEs in HK for such business expansion plans. The SME Banking team is dedicated to the people and the business thus, helping SME business reach ample potential by means of customize product packages, responsive services and access to expert advice incurring effective business operations. Thus, at SCB such benefits are possible such as enjoying of preferential pricing on business transactions, gain rewards on banking services rendered and have unlimited access to products and services through SCB  relations executives. Thus, there can be about cash management when dealing to SME ways such as for example, when making important business decisions, it's vital that the business have accurate and updated financial information in Standard Chartered, the bank provide tools needed to manage business cash flow efficiently and effectively. Then, at SCB SME Treasury Services plays a vital role, by having such international network of more than 1,500 branches in 50 countries across Asia, SCB gives unlimited access to expert advice and regular market updates at SME Treasury Services, the services and solutions are designed to help minimize foreign exchange risks and have competitive rates for a range of foreign currencies. Standard Chartered Bank, in their products will help businessmen to manage their exposure on the foreign currencies and interest rates that are associated with international trade. Thus, allowing cross-border financing by having products and services in order to meet cross-border financing needs of subsidiaries, affiliates or associates that are incorporated in diverse jurisdiction to that of the parent company. The presence of SME Mortgages can be effective through loans to help finance owner-occupied and investment property purchases ideal for commercial use within Hong Kong. Adopted at: <http://www.standardchartered.com/about-us/en/index.html> As the Standard Chartered Bank is one of the pace setters in Asian and African corporate citizenship. Its chief operating officer presented some of the company’s work at Ethical Corporation’s recent Asia conference in Hong Kong with the fact that Ben Hung, the Hong Kong-based chief operating officer of Standard Chartered bank, is well versed in corporate responsibility bodes well for the future of corporate citizenship awareness across the region. Hung’s brief was to discuss how the company handles its approach to corporate social responsibility across region where differences in operating environments are particularly marked. Standard Chartered has 12 senior managers in Hong Kong, the other of its two main bases being London. One third of the Hong Kong senior team are women. Hung acknowledged that although this is a start the company is “by no means perfect” on this area of diversity.   SAMPLE SCB FINANCIAL STATEMENTS Cash flows from operating activities Profit before taxation 629,526 561,759 Adjustment for : Dividend income ( 713) ( 713) Depreciation 18,491 30,372 Gain on disposal of property, plant and equipment (81) (259) Gain on disposal of securities available-for-sale (33,479) (17,416) Amortization of premium less accretion of discount on securities available for sale 25,081 29,394 Operating profit before working capital changes 638,825 603,137 Changes in working capital: Deposits and placements with banks and other financial (5,027,400) (1,486,186) institutions Securities purchased under resale agreement 13,524 862,851 Securities held for trading (1,034,043) 81,126 Loans, advances and financing 249,170 (2,257,691) Other receivables (533,417) (254,483) Statutory deposits with Bank Negara Malaysia (13,441) (92,000) Deposits from customers 5,366,317 5,700,099 Deposits and placements of banks and other financial (597,271) (2,661,184) institutions Securities sold under repurchase agreements (1,177,842) 1,345,942 Bills and acceptances payable 136,865 347,201 Recourse obligations on loans sold to Cagamas (189,263) (10,750) Other payables 571,000 306,527 Cash (used in)/generated from operations (1,596,976) 2,484,589 Income taxes paid (219,891) (201,763) Net cash (used in)/generated from operating activities (1,816,867) 2,282,826 Cash flows from investing activities Dividend received 713 713 Purchase of property, plant and equipment (12,845) (21,424) Proceeds from disposal of property, plant and equipment 81 259 Purchase of securities available-for-sale (14,603,129) (12,133,870) Proceeds from disposal of securities available-for-sale 16,067,641 10,782,002 Net cash generated from/(used in) investing activities 1,452,461 (1,372,320)   Assets   Cash and balances at central banks 8,991 11,813 7,698 Financial assets held at fair value through profit or loss 9 19,344 13,082 15,715 Derivative financial instruments 10 18,441 12,721 13,154 Loans and advances to banks 11 21,108 16,750 19,724 Loans and advances to customers 11 151,953 119,550 139,307 Investment securities 13 52,230 46,037 49,497 Interests in associates 257 206 218 Goodwill and intangible assets 6,217 4,459 6,179 Property, plant and equipment 2,302 1,767 2,169 Deferred tax assets 522 492 519 Other assets 11,890 7,653 8,601 Prepayments and accrued income 3,571 3,618 3,268 Total assets 296,826 238,148 266,049 Liabilities Deposits by banks 14 26,846 21,994 26,233 Customer accounts 15 160,242 130,176 147,382 Financial liabilities held at fair value through profit or loss 8 13,117 8,420 9,969 Derivative financial instruments 10 19,235 13,390 13,703 Debt securities in issue 16 27,254 24,953 23,514 Current tax liabilities 131 410 68 Other liabilities 17 13,733 11,198 11,357 Accruals and deferred income 3,008 2,430 3,210 Provisions for liabilities and charges 42 56 45 Retirement benefit obligations 18 356 466 472 Subordinated liabilities and other borrowed funds 19 13,279 10,805 12,699 Total liabilities 277,243 224,298 248,652 Equity Share capital 20 701 667 692 Reserves 21 18,324 12,683 16,161 Total parent company shareholders’ equity 19,025 13,350 16,853 Minority interests 22 558 500 544 Total equity 19,583 13,850 17,397 Total equity and liabilities 296,826 238,148 266,049 * Amounts have been restated as explained in note 30 on page 61.             Indeed, in Hong Kong, where Standard Chartered Bank PLC generates approximately one-third of its revenues, the banking environment has changed rapidly in recent years. This has forced financial institutions to become more nimble and creative with customer offerings or to pay  high price for failing to do so. Beginning in the mid-1990s, the Hong Kong Monetary Authority (HKMA) deregulated interest rates on short-term time and savings accounts, as well as demand deposit (checking) accounts. Interest rates became highly competitive, but parity products made it much more difficult to attract or retain customers based on rates alone. At roughly the same time, virtually all of Asia was impacted by the “Asian Economic Crisis,” a major economic downturn that sent property values plummeting by up to 60%. Sales volumes slowed to a trickle, creating fierce competition among banks for a smaller number of loans. This squeezed margins razor thin, as financial institutions fought to retain their customers.  There was also a considerable amount of industry consolidation, as financial institutions merged or acquired other banks that were a good fit. Even Standard Chartered got into the act, acquiring the assets of Chase Manhattan Bank’s Hong Kong-based retail banking business. Thus, Standard Chartered Bank knew that to stay ahead of some of its more agile competitors and retain its best customers, it needed to reinvent itself in the area of service. The company turned to Oracle [Siebel] to address these many challenges. “In the past, it was fine to have relatively standard products and sell them in standard ways--and the ample margins would ensure a profit,” Parker remarked. “We decided that, strategically, the ground that we needed to play on was brand assurance, customer focus, and quality service.” The bank recently moved swiftly and decisively to develop and implement a sweeping change program called Customer One. Designed to achieve market differentiation and enhance employee satisfaction, the ambitious business transformation strategy sought to strengthen the bank’s brand identity and help the bank become more customer-focused and performance-oriented. Apart from the Bank's on-going support in extending loans to small and medium-sized enterprises, SCB has also joined with the government and private sectors to set up various activities in support of SMEs, such as radio programs, exhibitions, seminars, advice on investment opportunities and SME fairs to promote the distribution of quality SME goods. In addition, the Bank has SMEs Online services, which allows SME customers to conduct financial transactions with the Bank through their personal computers.     HSBC HSBC’s strategic direction reflects its position as ‘the world’s local bank’ with its uniquely cosmopolitan customer base. Group strategy is aligned with the key trends shaping the global economy. HSBC recognizes that emerging markets are growing faster than developed economies, world trade is expanding at a greater rate than GDP, and life expectancy is increasing virtually everywhere. HSBC is, therefore, reshaping its business by investing primarily in the faster growing emerging markets and, in developed markets, focusing on businesses which have international connectivity. The first half of 2008 saw the most difficult financial markets for several decades, marked by significant declines in profitability throughout much of  industry, with consequent recapitalization and restructuring as the HSBC was not immune from the turmoil.       Financial strength maintained HSBC’s commitment to maintaining its financial strength is unwavering. HSBC remains both strongly capitalized and liquid. The tier 1 capital ratio was 8.8 per cent and tier 1 capital grew by US$6.2 billion during the period. We have maintained our key credit ratings, generated good profitability in adverse market conditions and continued to focus investment on our strategic priorities. The principal concerns in this environment have been risk management, strict cost control, supporting customers and continued investment to support long-term strategic ambitions in broad-based and resilient revenue streams continue to provide stable platform from which to achieve strong, long-term performance. The economic and financial environment in the first half of the year deteriorated progressively. In the major developed economies where we operate, economic growth slowed as asset prices, particularly of residential property, declined; this in turn affected consumer confidence and hence spending. In credit markets, illiquidity remained a major issue, with trading volumes low and no sign of resumption of normal activity levels in the securitization markets.             HSBC’s strategic direction reflects its position as ‘The world’s local bank’, combining the largest global developing markets banking business and a uniquely cosmopolitan customer base with an extensive international network and substantial financial strength. The Group’s strategy is aligned with key trends which are shaping the global economy. In particular, HSBC recognizes that, over the long-term, developing markets are growing faster than the mature economies, world trade is expanding at a greater rate than GDP and life expectancy is lengthening virtually everywhere.  HSBC’s strategy is focused on delivering superior growth and earnings over time by building on the Group’s heritage and skills. Its origins in trade in Asia have had a considerable influence over the development of the Group and, as a consequence, HSBC has an established and longstanding presence in many countries.  HSBC is progressively reshaping its business by investing primarily in faster growing markets and, in the more developed markets, by focusing on businesses which have international connectivity. Central to these reshaping activities is a policy of maintaining HSBC’s capital strength and strong liquidity position.                       HSBC FINANCIAL STATEMENT     Depreciation, amortization and impairment ................................................ 1,766 1,184 1,338 Gains arising from dilution of interests in associates ................................. – (1,076) (16) Revaluations on investment property .......................................................... (27) (48) (104) Share-based payment expense .................................................................... 427 413 457 Loan impairment losses gross of recoveries ............................................... 10,436 6,635 11,547 Provisions for liabilities and charges .......................................................... 107 282 707 Impairment of financial investments .......................................................... 418 18 86 Charge for defined benefit plans ................................................................. 234 342 385 Accretion of discounts and amortization of premiums ............................... (461) (392) (57) 12,900 7,358 14,343 Change in operating assets Change in prepayments and accrued income .............................................. 2,294 (2,280) (2,789) Change in net trading securities and net derivatives .................................. (29,675) 10,487 (15,459) Change in loans and advances to banks ...................................................... 1,605 (357) (8,565) Change in loans and advances to customers ............................................... (76,452) (66,739) (65,147) Change in financial assets designated at fair value .................................... 2,923 (5,872) (7,488) Change in other assets ................................................................................. (1,826) (924) (11,405) (101,131) (65,685) (110,853) Change in operating liabilities Change in accruals and deferred income .................................................... (4,219) 547 4,572 Change in deposits by banks ....................................................................... 20,947 29,661 2,933 Change in customer accounts ...................................................................... 63,277 84,496 115,310 Change in debt securities in issue ............................................................... (16,522) (1,086) (11,403) Change in financial liabilities designated at fair value ............................... (181) 5,755 6,549 Change in other liabilities ........................................................................... 6,093 3,875 8,886 69,395 123,248 126,847 Cash and cash equivalents comprise Cash and balances at central banks ............................................................. 13,473 16,651 21,765 Items in the course of collection from other banks...................................... 16,719 23,152 9,777 Loans and advances to banks of one month or less .................................... 244,608 220,136 232,320 Treasury bills, other bills and certificates of deposit less than three months ............................................................................. 28,067 32,684 41,819 Less: items in the course of transmission to other banks ........................... (15,329) (20,339) (8,672) 287,538 272,284 297,009 Interest and dividends Interest paid ................................................................................................. (31,752) (31,002) (32,624) Interest received .......................................................................................... 53,945 47,423 55,970 Dividends received ...................................................................................... 1,339 1,426 407             The HSBC Group has an international pedigree which is unique. Many of its principal companies opened for business over a century ago and they have a history rich in variety and achievement. The HSBC Group is named after its founding member, The Hong Kong and Shanghai Banking Corporation Limited, which was established in 1865 in Hong Kong and Shanghai to finance the growing trade between China and Europe.  The inspiration behind the founding of the Bank was Thomas Sutherland, a Scot who was then working as the Hong Kong Superintendent of the Peninsular and Oriental Steam Navigation Company. Then, HSBC helps SMEs grow as in addition to financial services, HSBC helps small and medium-sized enterprises grow their business by becoming more profitable and productive as well as by providing counseling services. Supported by the Business Environment Council and the Hong Kong Council of Social Service, the Living Business program have ideal components such as the annual HSBC Living Business Awards recognizes socially and environmentally responsible SMEs in Hong Kong, through seminars where SMEs can get practical advice on sustainable business practices and the website which provides information and advice on a range of corporate responsibility issues  The Bank provides various counseling services to help SMEs develop and grow their business. Since 2001, HSBC has supported the Business Advisory Service program organized by the Hong Kong Trade Development Council.   Financial Statements Indeed, objective of financial statements is to provide information about the financial strength, performance and changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions and it should be understandable, relevant, reliable and comparable. Reported assets, liabilities and equity are directly related to an organization's financial position. Financial statements are intended to be understandable by readers who have "a reasonable knowledge of business and economic activities and accounting and who are willing to study the information diligently. Then, SCB and HSBC require financial statements to make important business decisions that affect its continued operations. Financial analysis is then performed on these statements to provide management with a more detailed understanding of the figures as these banks are external users can be outside the business but need financial information about the business for diverse number of reasons. They are financial institutions able to decide whether to grant company with fresh working capital or extend debt securities to finance expansion and other significant expenditures.         Cash Flow Statements In financial accounting, cash flow statement or statement of cash flows is a financial statement that shows company's incoming and outgoing money during a time period as the statement shows how changes in balance sheet and income accounts affected cash and cash equivalents, and breaks the analysis down according to operating, investing, and financing activities. As an analytical tool the statement of cash flows is useful in determining the viability of company, particularly there can be accounting standards that deal with cash flow statements. The balance sheet is a snapshot of a firm's financial resources and obligations at a single point in time, and the income statement summarizes a firm's financial transactions over an interval of time. These two financial statements reflect the accrual basis accounting used by firms to match revenues with the expenses associated with generating those revenues. The cash flow statement includes only inflows and outflows of cash and cash equivalents; it excludes transactions that do not directly affect cash receipts and payments. The cash flow statement is intended for providing information on the bank's liquidity and solvency and its ability to change cash flows in future circumstances as well as improve the comparability of performance by eliminating the effects of different accounting methods  and to indicate the amount and probability of future cash flows as involved as the standard financial statement because it eliminates allocations which might be derived from different accounting methods. CONCEPTS OF FINANCIAL STRENGTH   The term “financial strength” is used in this paper to describe the extent to which an entity is constrained by its financial situation in pursuing its strategic goals or policies. An entity is financially strong when it is relatively unconstrained and weak when financial constraints are binding on policy choices. The financial strength of the banks is intimately linked to the successful management of the enterprise. Hence, enterprises with a large market capitalization have either been successful at generating earnings in the past and/or are expected to be profitable in the future. In a competitive market environment, profitability or market capitalization should be correlated with economic efficiency. Thus, these measures of financial strength would reflect efficient production of whatever good or service is produced by the enterprise. In less competitive markets, profitability is less likely to be correlated with economic efficiency and indeed, basic microeconomics demonstrates that a profit maximizing monopolist will produce an output at a lower than socially optimal level and charge a higher than socially efficient price. More generally, short-term profitability may not be reflective of economic efficiency. Random factors which management may not reasonably have been expected to hedge against can impact profitability even if management performance is exemplary and economic efficiency maintained. That said, enterprise financial strength and profitability over an extended period can be said to be accurate summary metrics of the relative efficiency and effectiveness of enterprise performance. Furthermore, what appears to be confusion over micro and macro performance is responsible for a certain lack of general understanding about the importance of central bank financial strength. SCB and HSBC financial accounts do provide useful information on the cost of achieving policy outcomes. Indeed they provide information vital to any discussion as to whether the outputs are being attained at least cost.  The bank deals in financial markets to achieve policy goals, not to maximize its revenues. For this reason the level of operating expenses is a better indicator of the bank’s stewardship of public resources.” In exploring precisely whether financial performance and financial strength of the bank impacts policy performance it must be noted that in a number of countries the bank is financially so strong that it is very difficult to imagine it becoming an obstacle to policy and the focus of the public discussion in those countries is squarely on the micro elements of central bank performance. When the issue of financial strength does arise in those countries, it is difficult to argue that a marginal deterioration in HSBC bank financial strength for instance would be inimical to macroeconomic performance—and indeed in those countries that is correct. For that reason, when central bank losses do occasionally arise there, the debate naturally tends to center not on policy constraints but on the rather remote notion of financial insolvency.         SCB and HSBC financial strength is positively associated with good policy performance. Financially weak central banks generate losses which undermine macroeconomic stability and call into question the credibility of their policies. In assessing central bank financial strength a careful examination of the policy regime and the volatility of the economic environment is necessary. Conventional measures of private enterprise financial strength, profitability and capital can be very misleading when applied to banks.   METHODOLOGY   Research Design The descriptive method of research was used for this study. To define the descriptive type of research, Creswell (1994) stated that the descriptive method of research is to gather information about the present existing condition. The emphasis is on describing rather than on judging or interpreting. The aim of descriptive research is to verify formulated hypotheses that refer to the present situation in order to elucidate it. The descriptive approach is quick and practical in terms of the financial aspect.  Moreover, this method allows a flexible approach, thus, when important new issues and questions arise during the duration of the study, further investigation may be conducted.      Quantitative data collection methods are centred on the determination of the weighted mean of the given statements. When these methods are used, the researcher is usually detached from the study and the final output is context free. Measurement, numerical data, and statistics are the main substance of quantitative instruments (2003). With these instruments, an explicit description of data collection and analysis of procedures are necessary. Quantitative approach is useful as it helps the researcher to prevent bias in gathering and presenting research data. Quantitative data collection procedures create epistemological postulations that reality is objective and unitary, which can only be realized by means of transcending individual perspective. This phenomenon in turn should be discussed or explained by means of data analysis gathered through objective forms of measurement. The quantitative data gathering methods are useful especially when a study needs to measure the perception of the respondents regarding the topic. The purpose of the quantitative approach is to avoid subjectivity by means of collecting and exploring information which describes the experience being studied (2003).             The questionnaire was structured in such a way that respondents will be able to answer it easily. Thus, the set of questionnaire was structured using the Likert format with a five-point response scale. A Likert Scale is a rating scale that requires the subject to indicate his or her degree of agreement or disagreement to a statement. In this type of questionnaire, the respondents were given five response choices. These options served as the quantification of the participants’ agreement or disagreement on each question item. The following output was revealed:   Recommendations In this research study, it becomes apparent that SCB and HSBC in their banking strategy is among the vital aspects for SMEs in HK to succeed and meet the goal of having satisfied clients. From this discussion, several important points had been suggested. In order for SCB and HSBC to stay competitive, their pricing strategy must comprise the requirements of the first two of the ten ways in varying the price (see, Appendix two) which are: keep the same price currently charged but give clients greater banking products quality and keep the same price currently charged but give  quantity of a particular item.  In this manner, SCB and HSBC are trying to keep their basic prices for that would meet the demands of the customers regarding music listening.  Great offers with affordable cost have been the basic pricing strategy used because SCB and HSBC knew that there are many competitors in the field.  SCB and HSBC must be able to utilize each chosen business model to generate loyalty among its customers.  They must have the capability of prioritizing their customers giving all they wanted and trying to provide a product that would get them involved in the process.               Appendix One   Research Questionnaire Part I.  Demographic Profile   Directions: Please fill up in all the necessary information about yourself.  Don’t leave any item unanswered. a.      Age  ________ b.      Gender Male ( )                 Female ( )   Part II. Perception of the Study Direction:       Check the number corresponding to your answer                           5          -           Strongly Agree                         4          -           Agree                         3          -           Uncertain                         2          -           Disagree                         1          -           Strongly Disagree     1. Perception of Respondents Regarding SCB and HSBC   Statements 5 4 3 2 1 1. With respect to banking strategy, SCB and HSBC has been able to initiate efficient and effective strategy to meet the needs of the customers.           2. Staff or employees understand the mission, vision, and goal of their present organization as part of their efficient finance strategy           3. SCB and HSBC adopts a financial driven strategy to satisfy the needs of the clients.           4. HK banking industry handles customer relations effectively.           5. With the help of the current SME realization, SCB and HSBC enables to understand and reach out to the needs of clients           6. The management of SCB and HSBC address the need to cope with different financial statement for finance strength and development.           7. The banking management does respond to such ample need to have qualified and competent auditors and finance personnel as part of the business strategy.           8. SCB and HSBC used efficient banking communication approach to satisfy customers.                                   Appendix Two   Examples of Ten ways to vary the Price <li class="MsoNormal" style="text-align: justify"> Keep the same price currently charged but give the customer greater (or lesser) product quality. </li> <li class="MsoNormal" style="text-align: justify"> Keep the same price currently charged but give the customer a smaller (or larger) quantity of a particular item. </li> <li class="MsoNormal" style="text-align: justify"> Change the time of payment, such as by allowing a customer four months to make payment. </li>   <li class="MsoNormal" style="text-align: justify"> Offer a rebate or a dollars-off coupon. </li> <li class="MsoNormal" style="text-align: justify"> Provide cash, quantity, and/or trade discounts. </li> <li class="MsoNormal" style="text-align: justify"> Charge different prices to different types of customers. </li> <li class="MsoNormal" style="text-align: justify"> Charge different prices based on the time of day, month, or year. </li> <li class="MsoNormal" style="text-align: justify"> Offer to accept a trade-in from the customer. </li> <li class="MsoNormal" style="text-align: justify"> Accept partial or full payment in the form of goods and services instead of money</li> <li class="MsoNormal" style="text-align: justify"> Bundle the product or service with other products and services and charge a single price lower than the combined individual prices.</li>           http://moneycentral.msn.com/investor/charts/chartdl.aspx?Symbol=hbc           http://www.corporateinformation.com/CompanySnapshot.aspx?cusip=C82641970

The Hong Kong banking sectors does have innovate opportunities for small and medium-sized enterprises

Abstract The Hong Kong banking sectors does have innovative opportunities for small and medium-sized enterprises upon extending th...