ASSIGNMENT commercial banking research a

STATE BANK OF VIETNAM BANKING ACADEMY Foreign Language Faculty ------COMMERCIAL BANKING ASSIGNMENT RESEARCH ABOUT SOURCES OF FUND & RAISING CAPITAL METHODS OF TECHCOMBANK FROM 2012

STATE BANK OF VIETNAM BANKING ACADEMY Foreign Language Faculty

- -COMMERCIAL BANKING ASSIGNMENT RESEARCH ABOUT SOURCES OF FUND & RAISING CAPITAL METHODS OF TECHCOMBANK FROM 2012 TO 2014

Group: Monday Lecturer: Pham Thu Thuy

Hanoi, October 2015 TABLE OF CONTENTS

I. THE OVERVIEW OF TECHCOMBANK

1 Introduction.

The Vietnam Technological and Commercial Joint Stock Bank, more commonly known as Techcombank is now one of the leading joint stock commercial Banks

in Vietnam Since the first opening on the 27th Sep 1993 in the head-office located

at 24 Ly Thuong Kiet, Hoan Kiem str with only 20 billion dong, Techcombank has experienced strong growth and market performance as well as been recognized, multiple times, as the Best Bank in Vietnam Today, with HSBC as our strategic shareholder, Techcombank has a strong and sound financial base of almost 179.934 billion dong ( in 2012) Besides, the strength of Techcombank also comes from the extensive service network of 315 branches and 1,229 ATMs which are linked to each other through their state-of-the-art banking technology

2 History of establishment and development

a. 1993 – 2003

- From 1994 to 1998, the branch networks of Techcombank were already covered three main regions with 1 head office and 2 branches in Hanoi, 2 branches in HCM City and 1branch in Da Nang

- From 2000 – 2001, Thai Ha sub-branch in Ha Noi was established Entered the 20th century, Techcombank signed a contract with a leading software supplier Temenos Holding NV to implement new banking software GLOBUS for all networks in order to meet the growing demands from customers

- On December 5th 2003, Techcombank commenced issuing F@stAccess cards

On December 16th 2003, the bank inaugurated the completion of deployment

of the Globus System

2

b. 2004 - 2014

- From 2004 to 2005, Techcombank launched the new logo on June 9th 2004 and signed a contract to purchase the switching and card management software with Compass Plus on December 13th In 2005, the new Switching and Card management System of Compass Plus were established Until December 12th, the core banking systems were upgraded to the latest version

of Temenos T24 R5

- From 2006 to 2007, the bank completed account system with new products: multifunctional savings, period interest paying savings In April 2007, Techcombank became the joint stock bank with the second largest transaction network including 130 branches During the first half of the year, the bank started the establishment of corporate service department, department of credit and risk management, completing structure of banking service and launched many new products In September, the “secret customers” program was set up, in order to access the service quality and attitude to customers of front-line staffs at Techcombank TSO

- In 2008, Techcombank launched Visa credit card in March and Card Deposit Machine (ADM) in May Many projects on technological modernization were taken, such as: upgrading the core banking system to sample T24.R7, member of two cooperated card organization Smart link and Bank net, opening free Call Centre ( 24/7) 1800 588 822

- From 2009 – 2011, Techcombank has won many prestigious awards, such as

“International star for Leadership in Quality” (2009), “Best bank in Vietnam” (2010), “Best Cash management bank in Vietnam” (2011) ect that were awarded by famous institutions

- In 2012, Techcombank’s total registered capital reached 179.934 billions VND – the highest figure in comparison with other commercial banks In

2013, the bank received 7 international awards, highlighted by best cash management and trade finance bank in Vietnam awards, Vietnam Best Bank and Asia's Best Employer

3 General business activities

a. Fund raising

• Receiving short term, medium term and long term of organizations and individuals from internal and

3

external economic sectors in Vietnam dong and foreign currencies

• Issuing certificates of deposit, bonds, promissory notes and perform different forms of raising capital as the regulation of State Bank

• Borrow short, medium and long-term loans from domestic financial institutions according to the regulation of State Bank

• Receive trust and endorse funding from economic organizations and individuals as stipulation of State Bank

b. Lending

• Supply short term, medium term and long term in Vietnam dong and foreign currency economic for organizations, individuals and families of all economic sectors

c. Providing banking services

• Guarantee: Techcombank provides customers with many types of guarantee that meet the demands of customers

• Foreign trading: Mobilizing capital, lending, foreign currency trading, international payment and other services for foreign exchange

• Fast Money Transfer Service: With a wide network that covers almost provinces via Globus software system, Techcombank supplies the clients with payment services within the shortest time and at competitive cost

d. Services business

• Buying and selling gold, silver and card services ATM, credit card, provide storage, safe rental, discount valued papers

e. Investments, contribute capital to other financial institutions.

II. TECHCOMBANK’S SOURCES OF FUNDS & CAPITAL

RAISING PRODUCTS

1. Sources of funds

a. Deposits

- Current accounts in VND

4

- Current accounts in foreign currencies.

- Term deposits in VND

- Term deposits in foreign currencies

b Non – deposits

- Borrowings from State Bank of Vietnam

- Borrowings from other credit institutions.

- Valuable paper issued.

- Other borrows and entrusted fund.

c Equities

- Capital.

- Share capital

- Reserves

- Retain earnings

- Securities held for trading

2 Techcombank’s capital raising products

a. Transaction deposit

Transaction deposit is designed for individuals and institution customers who want

to open account at Techcombank for their payment and expenditure demand The customers are able to open account by VND, USD, EUR…on their own purpose These services are very safety because the customers do not need to reserve

money at their houses Instead, they can withdraw money in Techcombank ATM

or use Homebanking to transfer money

 Techcombank visa credit cards

 Co-branding visa credit cards

 Techcombank visa debit cards

- Techcombank visa debit cards (Classic Gold)

- Techcombank F@st Access domestic debit cards

 Co-branding debit cards

b. Term deposit

Term deposit is a contract signed between the bank and customers that is regulated clearly about interest rate policy, payment instruments, interest payment methods The customers will be received the higher interest rate than transaction deposit

 Online term deposit

 Flexible term deposit

 Dual currency deposit

 Option- linked deposit

 Automatically accumulated deposit

 B- express deposit

c. Savings

5

c. This is the main raising capital technique of Techcombank with diverse forms that can meet the demand of customers

 Fast saving

 Normal saving

 Interest upfront saving

 Online saving

 Phat Loc saving

 Dac Loc saving

 Truong Loc saving

 Super Kid saving

 Value added saving

 Flexible saving







6

III. TECHCOMBANK’S FUND SOURCES AND TECHNIQUES OF

RAISING CAPITAL FROM 2012 TO 2014

1. Sources of funds from 2012 to 2014

a. Deposit

• Current accounts

 Current accounts

in VND

 2,425,62 0m

 66,526 m

 43,856 m

 Current accounts

in foreign currencies

(VND)

 8,591,30 9m

 3,839, 454m

 1,702, 786m



• Term deposits

 Term deposits in

VND

 7,330,82 5m

 5,560, 701m

 2,918,0 92m

 Term deposits in

foreign currencies (VND)

 2,881,78 0m

 2,388, 974m

 4,932,5 00m



b. Non-deposit



c. Equity

 Borrowing from

 Value paper issued  10,450,

843m

 5,643 ,295m

 6,253 ,623m

 Borrowing loans

from other institution in

VND

 6,196,4 38m

 1,150 ,000m

 3.186

182

 Borrowing loans

from other institution in

USD

 1 8 0 5 3 2 4 9



9



8

 Other borrows and

entrusted fund (VND)

 5 4 3 2 5 3 3



3



3

• Techcombank ‘s equity increased from 8.848 billion VND in 2012 to 8.878 billion VND in 2014

• Provision fund for equity: 5% profit after tax

• Financing provision fund: 10% profit after tax

• Provision fund: 53.611 billion VND in 2012 and 35.132 billion VND in 2014

 Capital (VND) 

1

 13

920 06 9

 14 986 05 0

 Share capital

(VND)



8

 8.8 78

079

 8.8 78 079

 Retain earnings

(VND)



9

 669 60 1

 1.5 56 411

 Securities held

for trading (VND)



7

 919 60 8

 2.0 86 246

3,

 4,3 72, 38 9

 4,5 51, 56 0



2. Techniques of raising capital

a. Economic measures

 Economic measures are based on the physical elements that through it banks can impact on demand and psychology of depositors of their banks

 To improve the efficiency of capital mobilization, economic measures that the bank may apply to attract customers is high interest rates policy, spend gifts for new and traditional customers through the mobilization mechanism

 Interest rate for saving account of individual customers in 2014



Tenor



Non



term

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mbank 0.5 4.4 4.45 4.6 5.15 5.4 6.05 6.25 6.35 6.85

bank

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 * Promotion programs for customers:

• 2012: 90-day great promotions for Techcombank cardholders: On the occasion of

Techcombank’s 21st anniversary, the bank will offer multiple attractive offers to the bank’s cardholders When making payment via card and opening new card, each customer will have opportunities to receive thousands of attractive benefits during the promotion period

• 2013: Enjoy the summer with Techcombank credit card.

 For customers opening new Techcombank Visa credit card:

 Chance to win a trip to Maldives for 2 people when open a new credit card and have at least 1 successful transaction

 Not apply for cobranded Vietnam Airlines Techcombank Visa

 For customers spending by Techcombank Visa credit card:

 During 90 days, instant cash back of 200.000 VND for the first 20 customers with spending volume from 2 millions VND

 Not apply for cash withdrawal

• 2014: 21 years - Always keep the faith.

 Deposit customers from 200 millions for 1 month period(*) will receive 1 ceramic cup or 1 Ecup or 1 set of 2 rice bowls

 Deposit customers from 500 millions for 1 month period(*) will receive 1 set of 2 soup bowls or 1 small ceramic cooking pot

 Deposit customers from 1 billion for 1 month period(*) will receive 1 set of 4 rice bowls and 1 medium ceramic cooking pot

b. Technical measures

 Technical measures for expanding the bank's fund include technological solutions and solutions to enhance the qualifications of staff, participate directly or indirectly in raising capital

• Transfering money via social network:

 Money transfer via Facebook, Google+ , SMS

 Request to transfer money via Facebook, google + and SMS

 Attach voice messages, pictures, video clips

• SMS banking – Home banking:

 Every time and everywhere, you can receive and request for information via your phone

 0 minute to the bank, only need to make a phone call or access to your email

 Registration is free

 Annual fee is waived Fee applies for the second phone number registered for the service

 Register once, use forever



c. Psychological Measures

 When customers send money to the bank, they always expect to be received high interest rates paid and timely service payments that make they feel safe and trustful Therefore, meet the requirements in terms of customer psychological as well as building the credibility and trust from customers is the success key for the mobilization of bank capital Today, banks are constantly improve themselves and improve credibility in the market to attract customers

 In addition, the policies to encourage bank staff plays an important role Improving the wages and incomes for staffs is very important because if the employees feel joy and comfort in their work due to be respectful, be wide communication spacious, timely reward, they will contribute enthusiastically to the development of the bank

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 In addition, the promotion of bank’s prestigious on media will also create beautiful image of the bank Then it will strengthen customers’ faith when they deposit to banks

 * Techcombank’s awards from 2012 to 2014

 2012: Strongest bank in Vietnam, awarded by The Asian Banker

 Best Bank in Vietnam, awarded by Finance Asia

 Best Cash management Bank, awarded by Corporate Treasure

 2013: Best Internet Bank Vietnam, awarded by Global Banking

 Vietnam Golden star, awarded by Young Entrepreneur Association

 Best Bank in Vietnam, awarded by Alpha SEA.

 2014: Most favorite brand ASEAN, Awarded by Ministry of Industry and Trade

 Trust and Value, awarded by Vietnam Economics Times

 Best Bank in Vietnam, awarded by Finance Asia

 The economic measures, technical above are also effective psychological impact

on customers and bank staff, thus creating a better trend in the work of the bank's funding

 The implementation of economic, technology and psychology measures have a positive impact to the business of bank and have a positive impact to the efficiency of fund raising

IV. FACTORS AFFECT TO FUNDS RAISING ACTIVITIES AND

MOBILIZATION PLANS OF TECHCOMBANK.

1. Factors affect to funds raising activities

a. Factors outside the bank

• Economic development circle: The shortage of economic development is a macro

factors which directly impact on the operation of banks in general and the

mobilization of capital in particular If the economic is on the move and stable, the income of the people is guaranteed, their demand will be higher, then the volume of deposits in the bank will be increased or the ability of mobilizing capital will be increased In additions, when the economy grows strongly and keep stablely, the demand for capital will increase, the bank may extend credit volume by increasing their interest rates in order to stimulate people to deposit to create funds to meet the demand for credit in the economy In contrast, when the economy falls into recession, the bank will encounter difficulties in mobilizing capital, and reserves management

• Regulatory environment: All operations, including operations of the Bank shall be

governed by law Banks are now operating in the monetary field,which contains great risks so that banks must follow the provisions of the law

• Competitive environment: The two main competitions are the interest rates and

services therefore the bank must st up the suitable rate, and the most attractive rate combine with their fame and prestige to increase market share

• People's savings : Capital mobilization of bank almost based on monetary resources

of population These are idle money earned from people’s current savings to expect to