full report - thu trang
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NATIONAL ECONOMICS UNIVERSITY
ADVANCED EDUCATIONAL PROGRAM
*****************************
Internship Report
Student’s name: Nguyen Thi Thu Trang
Class: Avanced Finance
Intake: 49
Internship guide: Nguyen Duc Thanh
Supervisor: Phd. Le Thi Huong Lan
Hanoi, 2011
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
PREFACE
The purpose of this report is to explain what I did and learned during my
internship period with the Corporate Customer Relationship Department at Bank for
Investment and Development of Vietnam (BIDV) – Southern Hanoi Branch. The report is
also a requirement for the partial fulfillment of Advanced Education Program for
Advanced Finance Intake 49. During my internship time, I made the very best of
opportunity to grasp the basic operation of a commercial bank, to observe how banking
officer perform their tasks day by day. Furthermore, I can also put my theoretical
knowledge into practice and obtain real working experience.
In this report, I focus primarily on the overview and structure of BIDV Southern
Hanoi Branch as well as the major functions and current business situation of the branch
over the last years. It is all the experience and knowledge that I myself did encounter
when handling assigned there. The report is presented in three main parts;
Chapter 1: Overview of the bank
Chapter 2: Current performance
Chapter 3: Findings about developing individual credit activities
Throughout my internship, I received lots of dedicated instructions and support
from my supervisor, Phd. Le Thi Hương Lan, my internship guide Mr. Nguyen Duc
Thanh, and other banking staff of Corporate Customer Relationship Department.
Therefore, I would like to give my special thanks to their motivation in helping me
accomplishing the report.
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
TABLE OF CONTENTS
PREFACE
TABLE OF CONTENTS
ABBREVIATION
LIST OF TABLESLIST OF DIAGRAMS
Chapter 1 : OVERVIEW OF THE BANK..........................................................................0
1.1 Profile of BIDV –Southern Hanoi Branch.............................................................1
1.1.1 Formation and development.........................................................................1
1.1.2 Achievements.................................................................................................2
1.2 Organizational structure.........................................................................................4
1.2.1 Structure of Management.............................................................................4
1.2.2 Function of Departments..............................................................................6
1.3 Core banking operations..........................................................................................8
1.3.1 Fund mobilization..........................................................................................8
1.3.2 Credit activities:.............................................................................................9
1.3.3 Other products and services.......................................................................10
Chapter2: CURRENT PERFORMANCE.........................................................................12
2.1 Fund mobilization:.............................................................................................12
2.2 Credit activities...................................................................................................14
2.3 Other activities....................................................................................................17
2.4 Business results...................................................................................................17
Chapter 3 :DEVELOPING INDIVIDUAL CREDIT ACTIVITY OF BRANCH............21
3.1 Real facts and figures.........................................................................................21
3.2 SWOT Analysis..................................................................................................23
3.3 Suggestions..........................................................................................................24
CONCLUSION
REFERENCECOMMENTsSupervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
ABBREVIATION
ATM Automatic teller machine
BIDV Bank for Investment and Development of Vietnam
L/C Letter of Credit
PLL Provision for loan losses
POS Point of sale
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
LIST OF TABLES
Table 1.1:....................................................................................................................... .3
Table 2.1:.......................................................................................................................15
Table 2.2:.......................................................................................................................18
Table 3.1:.......................................................................................................................22
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
LIST OF DIAGRAMS
Diagram 1.1:..................................................................................................................5
Diagram 2.1: .................................................................................................................12
Diagram 2.2:..................................................................................................................13
Diagram 2.3: .................................................................................................................14
Diagram 2.4:..................................................................................................................14
Diagram 2.5: .................................................................................................................14
Diagram 2.6:..................................................................................................................16
Diagram 2.7: .................................................................................................................19
Diagram 2.8:..................................................................................................................20
Diagram 3.1: .................................................................................................................21
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
Chapter 1 OVERVIEW OF THE BANK
1.1 Profile of BIDV –Southern Hanoi Branch
1.1.1 Formation and development
General information
- Full name: Ngan Hang Dau tu va phat trien Viet Nam chi nhanh Nam Ha Noi
- International trading name: Bank for Investment and Development of Vietnam –
Southern Hanoi Branch.
- Abbreviation name: BIDV Nam Hanoi
- Address: no1281 – Giai phong street, Hoang Mai district, Hanoi
- Established date: 31st October, 1963
Development
BIDV-Hanoi Southern Branch was realized as the 2nd level BIDV Thanh Tri branch,
which was belonged to the 1st level BIDV Hanoi branch. Under the Decision of BIDV
Vietnam Board of Director – No29/QD-HDQT, signed on 31st October, 2005, Thanh
Tri branch was renamed as BIDV-Hanoi Southern Branch (the 1st level branch).
For nearly 50 years, the branch has experienced several important periods of time.
Date Development
1963 – 1985
- Name: Bank for Construction of Vietnam - Tuong Mai Branch
- Main tasks: In the wartime (1963-1975), it managed a number of
defense forces as well as provided capitals to build infrastructure in
Hai ba trung, Dong da and Thanh Tri. From 1975 to 1985, it
continued to support for developing Hanoi economy through
allocating and managing basic construction fund from the State
budget to all economic and social areas.
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
1986-1990 - Name: Bank for Investment and Construction of Vietnam – Thanh
Tri Branch.
- Main tasks: This period marked the transition of the centralized,
State-subsidized mechanism toward market mechanism under State
management in implementation of the State’s reform policy.
BIDV’s duties therefore were changed radically: Continuing to
receive State budget fund to lend State policy projects; mobilizing
medium and long term capital to make development loans; dealing
in money market and credit operations
1991 – Oct
2005
- Name: Bank for Investment and Development of Vietnam – Thanh
Tri Branch.
- Main tasks: This is a milestone for the radical transformation of
BIDV by getting license to operate as a diversified and
comprehensive commercial bank, catering mainly for the
development investment of the country. Some of its core activities
are foreign currency trading, credit and banking services
Nov 2005 –
Now
- Name: Bank for Investment and Development of Vietnam – South
Hanoi Branch.
- Main tasks: This is considered a period of “transformation, reform
and growth embracing the country’s development”, preparing a
strong foundation and giving impetus to the “take-off” of BIDV
after 2005. BIDV has reaffirmed its role and position in the cause
of national reform, contributing to the country’s industrialization
and modernization. The Branch has focused on a wide range
service of a commercial bank, especially in the field of
construction and investment.
1.1.2 Achievements
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
Since BIDV Southern Hanoi Branch was established, its accomplishments can be
summarized in four following aspects.
Organizational development
Back to the establishment time, BIDV Southern Hanoi Branch’s organization
structure consisted of only a small size transaction office with less than 10
employees and an old-fashionable computer. In 2004, it expanded to three
transaction office (besides head office) and over 50 staff. Up till now, a corporation
model has been formed for this branch, with five transaction units, spreading over
Hoang Mai District, Ha Dong District and Thanh Tri District. Together with the
development of the system, the total staff and employees have risen to more than
140 in which 80% are graduates and post graduates
Table 1.1: Current management size of branch
198
6
1996 2004 2010
Member units (number of offices) 1 2 4 6
Staff and employees (number of people) 10 21 57 145
(Source: Administration and Human Resources Department)
Development fund allocation and credit activities
After overcoming the initial barriers, South Hanoi Branch has gradually performed in
an effective way and fulfilled all the tasked relating to credit and fund mobilization
assigned by BIDV Vietnam. In 1995, it successfully got 20.8 billion VND for fund and
lent to numerous firms about 59 billion VND. In the time of unfavorable market (2008-
2009), this branch still maintained safe ratios following business plan with over 2,400
billion VND in deposits and over 1,400 billion VND in credits. Up to present, in
implementing the State’s reform guidelines, the bank has been active to mobilize
medium and long term capital besides the State budget fund for important projects and
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
works. Henceforth, all projects which would regain fund had to borrow to make
investment.
Technology development
Determining that technology is among the prerequisites for the development of a
modern bank, BIDV has invested considerably into this area. Apart from the intra-
bank payment network, BIDV also participates in interbank clearing system SWIFT-
TELEX, connecting cross border payment with other banks, equipping ample server,
terminals and central payment program and serving governance tasks. Especially with
the successful launch of the Bank Modernization Project, by the end of 2004’s first
quarter, BIDV had broadened the ATM network to over 200 places at all important
areas in the country.
Many products and services applying information technology like Home banking,
ATM, Phone banking, Mobile Banking etc have been introduced in different scale and
levels
Human resources development
Human resource development has kept abreast of the expansion speed of BIDV’s
network. By the early 2011’s first quarter, BIDV has had over 160 staff, in which the
young staff accounted for 65%, who is highly qualified and devoted to the bank’s
development. In order to meet the demand of the new stage, training and retraining are
sufficiently paid attention to.
Training is concentrated on two fronts: professional skill training and managerial skill
training. Many training program have been conducted professionally and
systematically (post graduate training, subject training etc). Overseas training courses
for best employees of year are also maintained regularly.
1.2 Organizational structure
1.2.1 Structure of Management
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
The management of BIDV Southern Hanoi Branch includes one general director and
three vice directors, who are in charge of different divisions. Up to now, there are five
divisions, consisting of 10 departments and five transactions offices.
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
Diagram 1.1
(Source: Administration and Human Resources Department)
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
BIDV SOUTHERN HANOI BRANCH
Customer Relationship
Division
Corporate Customer
Relationship Department
Individual Customer
Relationship Department
Risk Management
Division
Risk Management Department
Operation Division
Credit Administration
Department
Corporate Customer Service
Department
Individual Customer Service
Department
Budget Management Department
Internal Management
Division
Planning Department
Administrative and Human Resources
Department
Accounting – Finance
Department
Subsidiary Division
Transaction office 1, 2, 3,
4, 5
1.2.2 Function of Departments
Corporate Customer Relationship Department
- Promotion and customer relationship development: identify and develop
potential customers in the extent of companies, organizations and institutions
through PR, media and marketing approach; Sell branch’s products and services at
hands of customers such as wholesale banking, guarantee and remittance.
- Credit activities: Suggest credit limit, issue credit based on actual conditions of
each projects, and comply with branch’s credit limit policies; supervise customers
in using loan, collateral and refunding principal and interest; recognize possible
risks and provide some solutions.
Individual Customer Relationship Department
- Promotion and customer relationship development: identify and develop potential
individual customers, carry out current products (credit, deposits and insurance)
suitable with BIDV orientation; exploit customer-focused marketing program by
investigating the needs and comments of the customer about branch products and
submitting evaluation reports to make suitable adjustments.
- Selling retail banking services: Establish selling plans for individual customers;
advise customers to choose their best services.
- Credit activities: Receive loan proposal from promising clients, collect essential
information to analyze and make evaluation, disburse loans to customers, monitor
the operation of customers and classify debt, credit ranking and assess them
periodically.
Risk Management Department
- Credit management: Enhance the quality of credit by managing potential risks
linked to the credit portfolios, offer board of manager credit adjustments and credit
limit for each industry or each customer group, suggest solutions to reduce bad
debt and restructure customers’ loan schemes.
- Credit risk management: Handle credit proposal or guarantee services for
customers in the given authority, coordinate with Customer Relationship
Department to handle the bad debts, take responsibility for establishing and
running risk management system.
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
- Operation risk management: Deliver credit policy to all the staff of branch and
support them in working process, apply management system to measure and assess
the operation risks.
- Other functions: Laundering money prevention, ISO system management, internal
controlling.
Credit Administration Department
- Perform operation, lending management and guarantee the completeness and valid
of the lending profiles before approving credit proposal and managing
disbursement plan and debt payment.
- Create PLL based on the debt classification result of Customer Relationship
Department and comply with the internal controlling process exactly.
Corporate Customer Service Department
- Administer customers’ accounts, make face-to-face transactions and receive
comments about products and services.
- Prevent money laundering for additional transactions.
- Ensure the legality, the comprehensiveness and the precision of transaction
vouchers.
Individual Customer Service Department
- Administer customers’ accounts, make face-to-face transactions such as card
transactions or foreign currency payment, and receive comments about products
and services from them.
- Prevent money laundering for additional transactions under government law.
- Ensure the legality, the comprehensiveness and the precision of transaction
vouchers.
Budget Management Department
- Manage cash and others equivalent to cash such as collateral documents, valuable
notes, and gold and so on, which are owned by bank and its clients.
- Suggest terms and conditions for improving the safety and soundness of the
budget.
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
Planning Department
- Gather necessary information of social-political-economic conditions,
competitiveness and business progress of branch.
- Set up short - term and long – term detailed business plans for each department
(financial ratios, operation plans and performance estimation).
Administrative and Human Resources Department
- Human resources management: Sort out the branch staff profiles, do salaries
payment, appraisal system and other allied policies, take responsibility for
recruiting and training new employees in a proficient method.
- Administration management: Outline rules and regulations for managing the
branch and organize internal activities of Southern Hanoi Branch.
Accounting – Finance Department
- Perform and manage all accounting and financial activities, especially making
consolidate accounting.
- Do post-checking all business activities and find out unexpected errors.
- Propose accounting and financial methods and applications, and submit complete
reports.
Subsidiary Division (including Transaction office 1, 2, 3, 4)
- Administer customers’ accounts, make face-to-face transactions, provide all
available banking services (for example transferring, foreign exchange, or agents)
and receive comments.
- Mobilize funds through several channels such as deposits, issuing valuable notes in
VND or other foreign currencies.
- Do credit activities with all types of customers: lending money, discounting notes,
disbursing loans and so on.
1.3 Core banking operations
1.3.1 Fund mobilization
This is one of two core activities of banks that banks always put a special emphasis
on. Mobilization of capital resources focus on three types of subject, including
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
individuals, enterprises and financial institutions. Here are some examples of
savings products:
Demand deposits: ordinary demand deposits and deposits with interest rates
stratified by the balance
Time deposits:
- Fixed interest rate with prepaid interest
- Fixed interest rate with postpaid
interest
- Floating interest rate with prepaid
interest
- Deposits with extremely flexible
withdrawal
- Floating interest rate with postpaid
interest
Valuable papers: The interest rate is usually higher than interest rates on
deposits with the same term. With valuable papers, customers can transfer,
discount or pledge with financial institutions to borrow money.
Typical deposits
- Deposit for Treasury: A demand or time deposits held in BIDV to ensure the
implementation of a financial obligation of that organization for BIDV or
stakeholders.
- Deposit for specially purposed capital: This account is used to reflect the
amount of VND in a special purpose for certain customers at BIDV as capital
construction investment, deposit management of capital construction projects.
- Deposits for security investments: A demand deposit of investors is to open for
securities trading accounts in securities companies, who indicated that their
customers are required to open an account BIDV through BIDV @ Securities.
1.3.2 Credit activities:
Business Loans
- Investment Loans: loans for shipbuilding, construction and installation.
- Enterprise Overdraft: providing credit to customers by allowing them to use the
excess balance of payment of deposit accounts opened at the BIDV to offset the
temporary shortage of working capital in production and business activities.
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
Individual Credit
- Residents and Households: (1) Business Loans: based on the legality and financial
capacity of clients as well as the feasibility of the project business. (2) Car Loan:
depending on the owner's income and current status of the vehicle for the branch to
determine the loan. (3) Home Equity Loan: supporting not only for Vietnamese
citizens and households but also for foreigners who are residing in Vietnam. (4)
Student Loan: lending to individuals who study abroad or their relatives to cover
the tuition fee or accommodation in some countries such as the UK, Australia,
USA, Singapore or New Zealand.
- Employee Credit: (1) Salary Loan: providing loans to officials and employees to
meet the needs of living cost. Payment is taken from their regular income. (2)
Stock Loans: discounting valuable papers for investment in securities.
- Mortgage Credit (credit cards, overdraft deposit accounts, consumer loans
mortgage): a form of consumer loans with three different products depending on
the type of customer. For example, condition of the overdraft loans is that
customers are paid income through their account at BIDV or personal consumer
loans require customers to gain an average monthly income of 2 million VND or
more. Moreover, if customers want to use credit card products, they must ensure
that average income from 4 million to 10 million per month is existed. Branches
will also be based on the income level to determine the customer's credit line
mortgage.
1.3.3 Other products and services
Card Services
-Types: Domestic Debit card BIDV (Entrans365, Power, Van Dam), BIDV
international debit card VISA (BIDV Precious, BIDV Flexi).
International payment
-Remittances of foreign currency have accepted over 120 different currencies.
-Multiple payment products are provided: raw payment amount, payment fast during
the day in Asian market rates
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
-Value Added Services: consulting contracts, providing market information partner
or investigation.
Trade finance: with several types of loans and discounting for import and export
- Cost Savings (preferential interest rates, service charges international payments
or foreign exchange rates
- Consulting Services: Business professional advice on international payments and
financing import and export, providing information on markets, partners and
verification services quickly, accurately
- Working Capital Financing: The business of working capital added quickly, in
time meet the demands of production, import and export business
- Flexible mode: inventories, L/C, foreign trade contracts, export documents,
import lots and other properties to ensure conformity with the provisions of law
are acceptable collateral.
Guarantee: BIDV committed to writing in the form of letter of
guarantee/guaranty contract with the guarantee for the performance of financial
obligations on behalf of clients (guaranteed party) when the customer does not
comply or obligation is not properly committed to the guarantee.
Chapter 2
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
Chapter2: CURRENT PERFORMANCE
2.1Fund mobilization:
From the perspective of BIDV, raising capital is determined as the operation
priority; fund growth is the basis for growth in other activities at branch. Recently,
branch has focused on boosting fund mobilization from financial institutions,
economic organizations with active, large and stable cash resources. Although
South Hanoi Branch confronted the instability of financial markets in the last few
years, it usually exceeds the years’ targets of capital raising recently.
- Considering the overall trend:
Diagram 2.1
Fund mobilization
Unit: Billion VND
2007 2008 2009 20100
500
1,000
1,500
2,000
2,500
3,000
3,500
1,560
1,905
2,570
3,491
(Source: Planning Department)
Over the period of 3 years (2008 - 2010), the amount of fund raised increase
rapidly from 1,560 billion VND in 2007 to 3,491 billion VND in 2010 with
sustainable growth rates (22 %, 26%, and 36% respectively) in spite of high
inflation rate and tight monetary policy.Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
- In terms of customer types Diagram 2.2
Fund mobilization based on client types
2008 2009 20100
500
1000
1500
2000
2500
3000
3500
4000
350 433941
560877
990995
1260
1560 From individuals & households
From corporations
From financial insti-tutions
Unit: Billion VND
(Source: Planning Department)
In particular, in 2010, the branch continued to have access to such customers (credit
institutions, financial institutions, and economic organizations) and successfully
raised large amounts of deposits from BaoViet Group, Tasco firm, Phosphate Van
Dien Company, and other fund management companies in the area. Moreover,
deposits from several insurance or debt trading companies have also increased. All
of the changes lead to a positive result of funds from financial institutions and
business entities, which had double after 3 years from 910 billion VND (2008) to
1931 billion VND (2010) (deposits from FIs was 941 billion VND, reaching 100%
of plan and increasing by 117% compared to 2009 while fund from enterprises went
up to 990 billion VND, reaching 104% of plan, more than 13% compared to the
same time of 2009).
Regarding the individual customer, residential deposits covered a high proportion of
the whole with 53%, 49% and 45% from 2008 to 2010 since branch has exploited
various forms of flexible capital raising from transaction office to residential areas
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
or credit institutions. At the end of 2010, deposits of private individuals were 1560
billion VND as expected and over 23% compared to 2009:
- With regards to term of deposits and types of deposit currencies, VND mobilization
made up a majority of total deposits with 92%; and short-term deposits is about 76%
of total in 2010
Diagram 2.3
Medium,
long term24%
Short term76%
Deposit based on Term (%)
(Source: Planning Department)
Diagram 2.4
VND92%
Forein currency8%
Deposit based on Currency (%)
(Source: Planning Department)
2.2 Credit Activities
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
Diagram 2.5: Total Credit 2007-2010
2007 2008 2009 20100
200400600800
100012001400160018002000
710
11581410
1847Bi
llion
VN
D
(Source: Planning Department)
- During the last three years, the level of total outstanding loans has been growing as
schedule.
In the early 2010, the board determined the target of sustainable credit growth,
planned appropriate disbursement and debt collections. Branch has implemented
strictly the guidance of the General Director on forming outstanding credit limit
(1850 billion VND).
Therefore, total of 2010 outstanding credit (including investment trust to VinaShin
Finance Corporation, but not ODA or pending debt) was 1847 billion VND as the
planned limit and more than 24% compared to 2009. The average outstanding loan
till to 31st December, 2010 was 1712 billion VND, increasing by 24% compared to
2009, completing 101% of assigned plan. With the figures of total credit, it
exhibited a gradual growth rate around 20 %– 30% over four years.
- In terms of types of customers
Table 2.1: Credit based on customers over 2008-2010
Year 2008 2009 2010 % 2009 % 2010 %
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
compared
to 2008compared
to 2009
completed
plan of
2010
Loans (Billion
VND)
Total Credit 1,158 1,410 1,847 1,850 22% 31%
Enterprise Credit
1,125.6 1,362.3 1,641 1,670 21% 20%
Retail Credit 32.4 47.7 170 47% 256% 95%
(Source: Operation Division)
The same trend happened with whole sale credit. On the other hand, it can be seen
a significant increase in the growth rate of retail credit in 2010 (nearly four times
as many as that of 2009). The main reason to explain for this huge change is that
in 2010, the branch established Individual Customer Relationship Department in
charge of retail operations. As a result, it showed very positive results with the
increase in the number of customers and retail credit, rising BIDV profits to
compete with other commercial banks in the area. The branch should keep its
growth at a sustainable and stable rate from now on.
- Nevertheless, the level of retail credit still accounted for no more than 9% of total
credit:
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
Diagram 2.6
91%
9%
Component strucrure of Loans (%)
Credit for enterprises Retail Credit
2010
97%
3%
2009
(Source: Operation Division)
- Based on the credit term, in 2010:
o Outstanding short-term debt was 934 billion VND, 46% higher than 2009,
accounting for 50.6% of total credit.
o Outstanding long-term credit was 912 billion, going up 13% over 2009,
accounting for 49.4% of total outstanding loans in which the medium and long
term trade was 504 billion VND; loans of long-term co-financing was 372 billion
VND, including 36 billion VND lending to institutions (VinaShin Finance)
- About credit quality
In 2010, total overdue loan is 62 billion VND, increased by 42 billion in 2009.
Overdue loan over total loan is 3.44%, with 1.99% more than in 2009. Bad debt
under Article 7/ Decision 493 is 11.82 billion VND, just amounting to 0.64% of
total credit (less than planned: 1.7%), in which the debt is mainly on Bao Tuan
Exporting Company, Hai Huong Ltd. Company. At the beginning of 2009, BOD set
up strict rules for classifying and managing bad debt and overdue debt through
checking carefully the purpose of using loan, the financial condition of customer
and the profitability of business loan in progress of approving credit. Therefore,
there has been a gradual downward trend in bad debt ratio recently.
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
2.3 Other activities
Card services
- The number of credit cards issued in 2010: 70 cards, 92% of plan
- Quantity issued ATM cards in 2010: 3452 cards only 85% plan
E-banking activities
- Some targets in the business remains incomplete, especially the retail charge
indicators such as charge card services or service charge BSMS.
- In addition, fees from electronic banking activities were collected in the low
percentage with others (each type of it was no more than 250 million VND).
At the beginning of 2010, service revenue growth was in the right movement when
a new business plan was set up. Besides the guarantee service development,
payment services, trade finance or foreign currency trading has made up
significantly to the growth in branch services as a whole. During this year, the
branch has attracted a number of new customers, many of whom have well-
established import and export operations, while others have close operations at the
bank.
2.4 Business results
According to the following figure, income from services was contributed the
largest percentage (28.4%) of total difference between revenues and expenditures
because of the long - term direction and administration of focusing on service
development. The second place belongs to revenue from mobilization and income
from credit activity made up the lowest proportion with 19.7%.
Table 2.2
Revenue in 2010
STT Types of Revenue Result (VND) Contribution (100%)
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
1. Revenue-expenditure difference
(including off balance sheet debt &
PLL)
85.36 billion
2. Difference between revenues and
expenditures (not including debt
collection)
82,555 million 100%
2.1 Bonus income from raising capital
through FTP
21,882 million 26.5% of total
difference
3.2 Income from raising capital
operations
20,960 million 25.4% of total
difference
3.3 Income from credit operations 16,264 million 19.7% of total
difference
3.4 Income from services 23,449 million 28.4% of total
difference
(Source: Finance – Accounting Department)
- In near future, BIDV Vietnam aims to strengthen services business, restructure
banking operations, increase the contribution of service activities on the whole
income of the branch to According to the target of, the branch has focused
expansion and development of banking services, actively introduced customers to
new services and advised them to choose the appropriate ones.
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
Diagram 2.7
2010 Services Fee Structure
Guarantee51%
Foreign Currency Trading5%
Domestic payment + transfering
overseas21%
Internatioal payment
8%
Credit 8% Other Services (Card, treasury..) 6%
(Source: Finance – Accounting Department)
Last year the branch’s services have accomplished the following achievements:
- During 2010, net service fee obtained 23,449 million VND, reaching 102% of the
plan year and over 24% compared to 2009.
- Revenue from guarantee fee was gained at 11,962 million VND, with growth rate
of 30% compared to 2009, representing 51% of service revenue. As the result, it
shows the importance of guarantee service in service basket of the branch.
- The international payment, domestic payment and foreign currency trading have
contributed to the overall income of branch and these kinds of incomes are
growing at high speed. The products and services such as card services or salary
payments made up a low level of revenues. Furthermore, new products such as
selling insurance through banks, Western Union money transfer, BIDV-smart @
count, Internet Banking, VISA Card, POS and VNTopup Branch have developed
and introduced to customers but the need of them in the areas is still low.
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
- Besides guarantee and payment service, fees collected from other activities in
2010 were not at high percentage, reaching 1,453 million VND, accounting for
6.2% by weight of the branch collection services (in which treasury services
revenue was 208 million VND, card service revenue was 292 million VND, cards
contract and fees from other services was 971 million VND). Nevertheless, client
background of the branch in 2010 was significantly improved; it approached to a
number of different customers including both several SMEs and individual
customers.
Diagram 2.8: Earning before tax and Service income 2007 - 2010 (billion VND)
2007 2008 2009 20100
10
20
30
40
50
60
70
80
90
17
3741.9
84.4
6.6
12.618.9
23.4
Earning before taxService income
(Source: Planning Department)
Implementing the motto "Sustainable Growth - Quality - Efficiency - Safety",
decisive but flexible in operating the business, make savings in internal spending, South
Hanoi branch has always balanced funds, calculating the interest rate difference outputs -
inputs to ensure effective business. Board of director had already determined the
effectiveness of short-term and medium term goals, and identified the target number and
quality of concrete work. The structure of growth in the right direction: focusing on
short-term credit, attracting businesses with import and export activities, taking credit
growth targets to promote services. All of the orientation of business operation has
performed successfully and the results were shown positively
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
: DEVELOPING INDIVIDUAL CREDIT ACTIVITY OF BRANCH
3.1Real facts and figures
Following the main strategy of the branch in period of 2006 - 2010 and 2010 – 2013,
individual credit activity is considered as a highly focused operation of Southern
Hanoi Branch to enhance the pathway becoming one of leading branch of retail
banking services. Numerous strategic plans and efforts are being putting on this field
and they leads to optimistic results. It all shows that credit for individual is now really
potential to develop in not only the range of service but also the quality of it.
However, to make it possible the branch needs to try more on improving quality of
staff and banking technology.
Individual fund utilization
- Considering the growth of individual fund utilization
Diagram 3.1: Individual Credit 2008 – 2010 (Billion VND)
2008 2009 20100
20
40
60
80
100
120Individual Credit
(Source: Operation Division)
From the above figure, we can see that the branch has succeeded in utilizing fund from
individual customers for several years. In 2009, the amount of fund increased slightly
over 30% compared with that of 2008 due to the instability of financial market affecting
to banking industry. Surprisingly, one year later the volume of individual credit saw a
significant rise from 38 billion VND to 95 billion VND (more than twice). In addition,
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
this figure is prone to go up in 2011 since Southern Hanoi Branch is applying several
methods to boost the level up.
In accordance with the orientation of board of director, individual credit is always the
largest part of retail credit, remaining more than 60% during the period of 2008 to 2010
(86.4%, 79.7% and 62.3% respectively). It indicates the important roles of individual
contributed to retail credit activity
Table 3.1: Proportion of individual credit in total retail credit
Loans (Billion VND) 2008 2009 2010
Individual Credit 28 38 106
Retail Credit 32.4 47.7 170
Individual credit / retail credit
86.4% 79.7% 62.3%
(Source: Operation Division)
Types for individual credit
At that time, there are about 10 different types of credit products specialized for
individual customers, in which four of them were first developed in 2010. It shows
the strategy of branch to promote that credit. Furthermore, all of them are under
managed by the Individual Customer Relationship Department. They includes
o (1) Business loan
o (2) Car loan
o (3) Home equity loan: for both Vietnamese citizens and foreigners who are
residing in Vietnam.
o (4) Overseas study loan: applicable for studying in some countries such as the
UK, Australia, USA, Singapore or New Zealand.
o (5) Salary Loan: the loan can be up to five – month salaries
o (6) Stock loan: investment in securities.
o (7) Credit card
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
o (8) Overdraft deposit account
o (9) Consumer loans mortgage
o (10) Overseas working loan
Credit quality
Over the last five years, quality of individual credit of branch is always high.
Overdue loan just made up less than 2% of total credit and bad debt ratio for
individual amounts to a rather small proportion of total loans (not more than
0.06%). This is the result of appropriate policy of the bank in pricing collateral,
supervising the debts continuously, and make update from customers.
3.2SWOT Analysis
3.2.1 Strengths
- With nearly 50 years of experience, branch creates a good image on customers and
keep along with a number of patrons
- Branch has maintained the durable growth in credit for individual up to now.
- Branch offer a wide range of differentiated individual credit products, which can
serve several needs of residents at the same time
- The quality of credit is quite good based on ranking customer regularly, checking on
collateral and preventing overdue loans in time.
3.2.2 Weaknesses
- There was no tight connection between the branch and other branches of BIDV, as
well other banks in interbank network in issuing cards and exploiting of new
services.
- Individual Customer Relationship Department established just nearly two years need
more time to improve the operations, customer care and structure management
better.
- Marketing strategy for approaching individuals is not really effective.
3.2.3 Opportunities
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
- Branch actively improves technology, upgrade computer system for banking sector
to meet the needs of customers in sub transactions.
- Branch opened a new transaction office, expanding the number of branches and
transaction offices to five. Branch, on the roadmap, is gradually developing network
to serve every customer segment.
- At the end of 2010, it established Individual Customer Relationship Department in
charge of retail operations and has shown very encouraging results with the number
of customers and outstanding individual credit growth in the first quarter of 2011.
3.2.4 Threats
- Due to the adjustment of fiscal policy, inflation in the economy.
- Due to changes in interest rates and credit policy of State Bank of Vietnam in the
last few years.
- Due to the expansion of some large banks to the south, making the number of
branch and transaction office in the Hoang Mai, Thanh Tri area increases rapidly.
This has caused the market share of branch being reduced
According to the resolution of the board, the retail banking operations of the branch
plays an important role to help branch become one of the leading commercial banks in
the area with attractive credit products for individuals. Because of several competitive
banks, the credit business of the branch was not really strong enough to hold and
enlarge its market share.
3.3 Suggestions
- Set up detail back up plans in case of interest rate adjustments and other changes
of market.
- Improve the quality of Individual Customer Relationship Department staff in
terms of professionalism in transaction, communication skills, sales skills and the
awareness of the importance of individual credit.
- Ensure quality of each credit product, in addition to develop the number of new
types of services.
- Do market research, explore advantages and disadvantages of each product
compared with those of its competitors to improve services and to promote BIDV
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
image.
- Pay more attention to customer care, advise clients on new services
- Develop credit scoring software to make consistent decisions and reduce time to
approve loan application, which helps increase sales of individual credit.
In an open economy, demand for banking services is increasingly high, especially
with the credit need when the standard of living is improved. Considering the sense of
financial and banking management, credit for residents is more stable and certain than
other credits because of the lower risks. Furthermore, individual credit activity plays
an important role in expanding markets, improving competitiveness, creating medium
and long term funding for leading banks and contributing to the diversification of
banking activities. For customer services, retail banking offers convenience and
safety, savings for clients in the process of payment and spending of their income. In
2011, BIDV South Hanoi Branch keeps trying further efforts to follow and implement
the direction and orientation of BOD, contributing to make it become one of effective
branches of BIDV.
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
CONCLUSION
After more than 40 years of development, BIDV Southern Hanoi Branch has
achieved several accomplishments and has been one of the leading branches of BIDV
Vietnam. It is proved by the continuous efforts of all branch staff on improving service
quality as well as maintaining a sustainable growth in both fund mobilization and credit
activity. Although there are still some certain difficulties existing, the appropriate
strategies and targets of branch guarantees it a stable position in the eyes of customers.
It will be a memorable time of my life when I learnt the way to behave and polish
my abilities, had the experience and exposure of performing and handling tasks.
Moreover, working as an internee assists me to comprehend more about banking system,
which is very useful for my future career.
To conclude, I would like to express my gratefulness to everyone, who support me
fulfill this report!
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
REFERENCES
1. Southern Hanoi Branch. Annual report 2007, 2008, 2009, 2010.
2. Southern Hanoi Branch. Orientation and development 2010, 2011.
3. BIDV. Thời báo Đầu tư và phát triển.
4. Website: www.bidv.com.vn
www.vietnambusinessasia.com
www.vneconomy.com
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
COMMENTS
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49
INTERNSHIP REPORT ASSESSMENT
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang – Advanced Finance 49