Full Report - Thu Trang

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.


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


LIST OF TABLES

Table 1.1:....................................................................................................................... .3

Table 2.1:.......................................................................................................................15

Table 2.2:.......................................................................................................................18

Table 3.1:.......................................................................................................................22


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


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.


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


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


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


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.


Diagram 1.1

(Source: Administration and Human Resources Department)


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.


- 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.


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


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.


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


-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


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


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


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 (%)


Diagram 2.4

VND92%

Forein currency8%

Deposit based on Currency (%)


2.2 Credit Activities


Diagram 2.5: Total Credit 2007-2010

2007 2008 2009 20100

200400600800

100012001400160018002000

710

11581410

1847Bi

llion

VN

D


- 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 %


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:


Diagram 2.6

91%

9%

Component strucrure of Loans (%)

Credit for enterprises Retail Credit

2010

97%

3%

2009


- 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.


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%)


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.


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.


- 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


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


: 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


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,


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%


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


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


- 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


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.


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!


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


http://www.vneconomy.com/

http://www.vietnambusinessasia.com/

http://www.bidv.com.vn/

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