Vietcombank In Vietnam | Course Paper

1

HANOI UNIVERSITY

FACULTY OF MANAGEMENT AND TOURISM

VIETCOMBANK IN VIETNAM

Tutor: Dao Thanh Binh

Subject: Bank Management

Class: Tut 2 – FB 16

Date: 2nd December, 2018

Hanoi – 2018

2

PEER EVALUATION FORM

Team

member

ID

Task given (in written form)

Task given

(%)

Mark

perform

Nguyễn Thị

Ánh

1604040015

Task 1: Insurance and other services

Task 2: Asset utilization or efficiency

ratios

Task 3: One of the goals of interest rate:

Hedging

Task 4: Tier 1, 2 Capital

Task 5: Conclusion, Reference

100%

Phạm Thị

Ngọc Diệp

1604040021

Task 1: Non-Financial Services

Task 2: The impact of size on

Performance

Task 3: One of the greatest asset liability

management challenges

Task 4: Tier 1, 2 Capital

Task 5: Individual loans

100%

Dương Thị

Mai Ly

1604040067

Task 1: Financial Services

Task 2: Determining long-range

objectives, Maximizing the value of the

firms.

Task 3: Introduction, Conclusion,

Limitations of duration gap

Task 4: How much capital is really

needed, Regulatory approach to

evaluating capital needs

Task 5: Corporate loans

100%

3

Hoàng Thị

Thanh Thảo

1604040101

Task 1: Introduction, Commercial

banking

Task 2: Maximizing the value of the firm

Task 3: The concept of duration and

Using duration to Hedge against Interest

rate risk

Task 4: Tier 1, 2 Capital

Task 5:Liquidity management

100%

TABLE OF CONTENTS

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INTRODUCTION………………………………………………………………………………………………………………. 1

DISCUSSION …………………………………………………………………………………………………………………….. 1

I. MAIN SERVICES ……………………………………………………………………………………. 1

1. Financial Services …………………………………………………………………………………………………. 1

1.1. Commercial Banking …………………………………………………………………………………………….. 1

1.2. Investment Baking ………………………………………………………………………………………………… 2

1.3. Other Financial services …………………………………………………………………………………………. 3

1.4. Insurance ……………………………………………………………………………………………………………… 4

2. Non-Financial Services ………………………………………………………………………………………….. 4

II. BANK PERFORMANCE …………………………………………………………………………. 6

1. Determining long-range objectives ……………………………………………………….…………………. 6

2. Maximizing the value of the firm ……………………………………………………………………………. 6

3. Profitability ratios …………………………………………………………………………………………………. 8

4. Asset utilization or efficiency ratios …………………………..………………………………………….. 10

5. The impact of size on Performance ……………………………………………………………………….. 11

III. BANK RISKS …………………………………………………………………………………………. 12

1. One of the greatest asset liability management challenges ……………………………………………………….. 12

1.1 Force determining Interest Rates …………………………………………………………………………… 13

1.2 The measurement of Interest Rates ……………………………………………………………………….. 13

1.3 The components of interest rate …………………………………………………………………………….. 14

1.4 Risk premium……………………………………………………………………………………………………… 14

1.5 Yield curves ……………………………………………………………………………………………………….. 14

1.6 The maturity gap and the yield curve …………………………………………………………………….. 15

2. One of the goals of interest rate Hedging ………………………………………………………………………………. 15

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3. The concept of duration and Using duration to Hedge against Interest rate risk ………………………….. 16

4. The limitations of duration gap ……………………………………………………………………………………………. 18

IV. BANK CAPITAL ……………………………………………………………………………………. 19

1. How much capital is really needed? ……………………………………………………………………………………… 19

2. Regulatory approach to evaluating capital needs …………………………………………………………………….. 19

3. Tier 1, 2 Capital ………………………………………………………………………………………………….. 20

3.1. Basel I ……………………………………………………………………………………………………………….. 20

3.2. Base II ……………………………………………………………………………………………………………….. 22

V. BANK LOANS ……………………………………………………………………………………….. 23

1. Liquidity management …………………………………………………………………………………………. 23

2. Corporate loans …………………………………………………………………………………………………… 26

2.1. Short- term loans to business firms………………………………………………………………………… 27

2.2. Long-term loans to business firms …………………………………………………………………………………. 27

3. Individual loans ………………………………………………………………………………………………….. 28

CONCLUSION ………………………………………………………………………………………………………………... 29

REFERENCE …………………………………………………………………………………………………………………… 30

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INTRODUCTION

Joint Stock Commercial Bank for Foreign Trade of Vietnam, commonly referred to as

Vietcombank, was founded on April 1, 1963 and span off from the Foreign Exchange

Bureau of State Bank of Vietnam. Being the first state commercial bank chosen for

pilot privatization by the Government, Vietcombank officially came in to operation on

June 2, 2008 after effectively implementing the equitization plan through Initial Public

Offering. On June 30, 2009, Vietcombank’s stocks (code: VCB) formally listed on the

Ho Chi Minh Stock Exchange (HOSE).

During more than a half-century of growth and advancement in the market, VCB has

contributed significantly to the stability and development of national economy,

maintaining the role of a major foreign trade bank in encouraging efficient domestic

economic growth as well as influencing substantially on regional and global financial

community. As a result, Vietcombank became one of the biggest commercial bank in

Vietnam with more than 15,000 employees, in excess of 500 branches/ transaction

offices/ representative office/ affiliates both in Vietnam and abroad. In details, it

comprises Head Office in Hanoi, 1 representative office in Singapore, 1

representative office in Ho Chi Minh city, 101 branches, over 395 exchange

workplaces all over the country, 3 subsidiaries in Vietnam, 2 subsidiaries in other

countries and 4 joint ventures. Additionally, Vietcombank has also built up an

Autobank framework with over 2,300 ATMs and more than 43,000 merchants

nationwide. Bank’s operations are usually supported by a network of over 1,726

correspondent banks from 158 nations and territories all over the world. (Giới thiệu

chung về Vietcombank)

DISCUSSION

I. MAIN SERVICES

1. Financial Services

1.1. Commercial Banking

In terms of financial services offered, Vietcombank provides customers with different

ones. First of all, it plays a dominant role as a commercial bank. That means it raises

funds primarily by checkable deposits, saving deposits and time deposits. According to

Baoviet securities, 2017, Vietcombank’s total asset was 788.169 billion VND in 2016

with an enormous number of 590.398 billion in customer’s deposits, which and

452.683 billion VND in lending customers, which was expected to reach 678.98 billion

VND and 528.019 billion VND in 2017, respectively. From the data above, it cannot be

denied that Vietcombank was one of the largest commercial banks in Vietnam with a

fast growing speed (Báo cáo về ngân hàng TMCP Ngoại Thương Việt Nam của

BaoViet Securities)

1.2. Investment Baking

Secondly, Vietcombank is seriously considered as an investment banking. As regards

this business, instead of taking deposits and then lending them out, the bank is

referred to a different type of intermediary helping a corporation issue securities with

two steps. The first is to advise the corporate which type of securities will be issued

maybe stocks or bonds. The next step is underwrite the securities issued by purchasing