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NATIONAL ECONOMICS UNIVERSITY ADVANCED EDUCATIONAL PROGRAM

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Internship Report
Students name: Nguyen Thi Thu Trang Class: Finance Intake: Avanced 49

Internship guide: Nguyen Duc Thanh Supervisor: Huong Lan Phd. Le Thi

Supervisor: PhD. Le Thi Huong Lan

Nguyen Thi Thu Trang Advanced Finance 49

Hanoi, 2011

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 Hng 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 TABLES LIST OF DIAGRAMS C : OVERVIEW OF THE BANK........................................................................................0 hap ter1 1.1 Profile of BIDV Southern Hanoi Branch............................................................6 1.1.1 1.1.2 1.2.1 1.2.2 1.3.1 1.3.2 1.3.3 Formation and development.......................................................................6 Achievements................................................................................................7 Structure of Management............................................................................9 Function of Departments...........................................................................11 Fund mobilization......................................................................................13 Credit activities:.........................................................................................14 Other products and services......................................................................15

1.2 Organizational structure........................................................................................9

1.3 Core banking operations......................................................................................13

Chapter2: CURRENT PERFORMANCE........................................................................17 2.1 2.2 2.3 2.4 Fund mobilization:............................................................................................17 Credit activities.................................................................................................19 Other activities..................................................................................................22 Business results.................................................................................................22

C :DEVELOPING INDIVIDUAL CREDIT ACTIVITY OF BRANCH...........................26 hap ter3 3.1 3.2 3.3 Real facts and figures.......................................................................................26 SWOT Analysis.................................................................................................28 Suggestions........................................................................................................29

CONCLUSION REFERENCE
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang Advanced Finance 49

COMMENTs

ABBREVIATION
ATM BIDV L/C PLL POS Automatic teller machine Bank for Investment and Development of Vietnam Letter of Credit Provision for loan losses 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

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Chapter 1OVERVIEW OF THE BANK 1.1Profile 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 31 st 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 1963 1985


Development 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.
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1986-1990

Name: Bank for Investment and Construction of Vietnam

Supervisor: PhD. Le Thi Huong Lan

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 States reform policy. BIDVs 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 countrys development, preparing a strong foundation and giving impetus to the takeoff of BIDV after 2005. BIDV has reaffirmed its role and position in the cause of national reform, contributing to the countrys industrialization and modernization. The Branch has focused on a wide range service of a commercial bank, especially in the field of construction and investment.

1.1.1 Achievements Since BIDV Southern Hanoi Branch was established, its accomplishments can be summarized in four following aspects.

Organizational development
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang Advanced Finance 49

Back to the establishment time, BIDV Southern Hanoi Branchs 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 19861996 2004 2010 Member units (number of offices) 1 2 21 4 57 6 145

Staff and employees (number of people) 10

(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 (20082009), 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 States 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
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang Advanced Finance 49

Determining that technology is among the prerequisites for the development of a modern bank, BIDV has invested considerably into this area. Apart from the intrabank payment network, BIDV also participates in interbank clearing system SWIFTTELEX, 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 2004s 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 BIDVs network. By the early 2011s first quarter, BIDV has had over 160 staff, in which the young staff accounted for 65%, who is highly qualified and devoted to the banks 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.

1.1Organizational structure
1.1.1 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)

Supervisor: PhD. Le Thi Huong Lan

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1.1.2 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 branchs 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 branchs 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.
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Supervisor: PhD. Le Thi Huong Lan

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 competitiveness and business progress of branch.

conditions,

Supervisor: PhD. Le Thi Huong Lan

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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.
1.1Core banking operations 1.1.1

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


Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang Advanced Finance 49

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. 1.1.1 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
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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.
1.1.1 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

Supervisor: PhD. Le Thi Huong Lan

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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.

Supervisor: PhD. Le Thi Huong Lan

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Chapter 1
Chapter2: CURRENT PERFORMANCE
2.1 Fund 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

(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.

In terms of customer types

Diagram 2.2

Fund mobilization based on client types


(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
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang Advanced Finance 49

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

Diagram 2.4

(Source: Planning Department)

2.1

Credit Activities Diagram 2.5: Total Credit 2007-2010


(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
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang Advanced Finance 49

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 Loans (Billion VND) Total Credit Enterprise Credit Retail Credit 1,158 1,125. 6 32.4 1,410 1,362.3 47.7 1,847 1,641 170 2008 2009 2010 % 2009 compared to 2008 1,850 1,670 47% % 2010 compared to 2009 22% 21% 256% % completed plan of 2010 31% 20% 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

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Diagram 2.6
(Source: Operation Division)

Based on the credit term, in 2010: Outstanding short-term debt was 934 billion VND, 46% higher than 2009, accounting for 50.6% of total credit. 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.
2.1

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).

Supervisor: PhD. Le Thi Huong Lan

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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 wellestablished import and export operations, while others have close operations at the bank.
2.1

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


3 4 Nghe c ng m STT 1 . 2. Types of Revenue Revenue-expenditure difference (including off balance sheet debt & PLL) Difference between revenues and expenditures (not including debt collection) Bonus income from raising capital through FTP Income from raising capital Result (VND)
85.36 billion

Contribution (100%)

82,555 million

100%

2.1 3.2

21,882 million 20,960 million

26.5% of total difference 25.4% of total

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operations 3.3 3.4 Income from credit operations Income from services 16,264 million 23,449 million

difference 19.7% of total difference 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 (Source: Finance Accounting Department) Last year the branchs 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
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Supervisor: PhD. Le Thi Huong Lan

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)

(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 positivelyNghe

c ng m

Chapter 1: DEVELOPING INDIVIDUAL CREDIT ACTIVITY OF


BRANCH

3.1 Real 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
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang Advanced Finance 49

Considering the growth of individual fund utilization


Diagram 3.1: Individual Credit 2008 2010 (Billion VND)

(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, 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) Individual Credit Retail Credit Individual credit / retail credit 2008 28 32.4 86.4% 2009 38 47.7 79.7% 2010 106 170 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

(1) Business loan (2) Car loan

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(3) Home equity loan: for both Vietnamese citizens and foreigners who are residing in Vietnam. (4) Overseas study loan: applicable for studying in some countries such as the UK, Australia, USA, Singapore or New Zealand. (5) Salary Loan: the loan can be up to five month salaries (6) Stock loan: investment in securities. (7) Credit card

(8) Overdraft deposit account (9) Consumer loans mortgage (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.

3.1 SWOT Analysis


3.1.1Strengths

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. 3.1.1Weaknesses 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.
Supervisor: PhD. Le Thi Huong Lan Nguyen Thi Thu Trang Advanced Finance 49

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.
3.1.1 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.
3.1.1Threats

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.
3.1

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.
Nguyen Thi Thu Trang Advanced Finance 49

Supervisor: PhD. Le Thi Huong Lan

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.

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. 2. 3. 4. Southern Hanoi Branch. Annual report 2007, 2008, 2009, 2010. Southern Hanoi Branch. Orientation and development 2010, 2011. BIDV. Thi bo u t v pht trin. 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