Measuring Profitability of Retail Products in Qatar

To increase bank profitability, it is important to distinguish between retail banking products that produce a high profit from those that produce a low profit.
(Open Solutions 2007) provides a profit analysis solution referred to as "ProfitVision". ProfitVision is a ready-to-deploy solution that can be adapted to the financial institution needs. It integrates with other accounting solutions to extract real-time data for its operations. The institution decides how deep their profitability measure goes by deciding which products, branches, and business units to include. The institution picks the data to use in profit calculations and the formulas to be applied to generate the results. The profit model defines processes, threshold, and indices that are specific to the enterprise to provide decision makers with custom reports.&nbsp.
ProfitVision allows managers to analyze and segment their customers, products and business entities according to profitability. Results can be exported to internal systems for automated action (Open Solutions 2007).
The Commercial Bank of Qatar (CQB) is the second largest bank in Qatar with 6.8 billion dollars as of June 2006 (Peninsula 2006). CQB provides a number of retail banking services such as customer accounts, loans, and credit cards.
Most information systems employed within banks do not provide bank managers with measurements of profitability of different bank segments dealing in different banking retail products. Bank managers base their decision making on hunches and not actual profitability of different bank segments. Terri Stonebraker, director of customer services at Bellco Credit Union, said "Bellco operated on hunches about its various segments. We needed to know who the most and least profitable segments are" (Marlin 2003).
CQB similar to most banks suffers from a lack of profitability measures of different bank segments. Bank senior managers lack the measures to highlight high and low profitability within bank segments. CQB senior managers require profitability analysis of bank sectors to improve the quality of financial management within the bank.