Chuyên đề thực tập joint stock commercial bank for foreign trade of vietnam vcb

NATIONAL ECONOMICS UNIVERSITY ADVANCED EDUCATIONAL PROGRAM Internship Report JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIETNAM (VCB) Chuong Duong Branch Office Student’s name Nguyen Ngoc Quang[.]

ADVANCED EDUCATIONAL PROGRAM

JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE

OF VIETNAM (VCB) Chuong Duong Branch Office

Student’s name: Nguyen Ngoc Quang Class: ADVANCED FINANCE Intake: 51

Advisor: M.S Le Duc Hoang Internship guide: Mr Tran Tai Bach

Hanoi – 12/2012

Contents

Abbreviation 4

List of tables 5

List of diagrams 6

Introduction 7

Chapter 1: Overview of VCB and VCB Chuong Duong branch 8

1.1 Foundation and historical development of VCB 8

1.2 Foundation and historical development of VCB Chuong Duong Branch 8

1.3 Award and achievement 9

1.4 Organizational structure of VCB Chuong Duong Branch 9

1.5 Department duties 10

Chapter 2: Analysis of investment and operation in VCB Chuong Duong branch office 12 2.1 Mobilizing capital activities 12

2.2 Investing and lending activities 15

2.3 Forex trading activity 17

Chapter 3: Analysis of Credit Guarantee in VCB 18

3.1 The general term 18

3.2 The purpose of Credit Guarantee 19

3.3 The application of Credit Guarantee 19

3.4 Credit Guarantee principles 19

3.5 The nature of credit guarantees 20

3.6 Value Loan compared to the value to collateral 20

3.7 The type of collaterals 21

3.8 The types of pledged asset 22

3.9 Conditions for collaterals: The assets used to guarantee the loan must meet the following four conditions stated below: 23

Chapter 4: Risks in lending secured loan by real estate and how to prevent them in VCB 24

4.1 The advantages of lending loans secured by real estate 24

4.2 Risks of loans secured by real estate in VCB 25

4.2.2 Risk in credit analysis procedure 25

4.2.3 Risk in control of lending process 26

4.2.4 Risk in poor credit information system 26

4.3 Solutions to prevent risks in credit guarantee in VCB 26

VCB: Vietcombank

VND: Vietnam dong

SBV: State bank of Vietnam

BOM: Board of management

List of tables

Table 2.1: Capital mobilization structure 12 Table 2.2: Outstanding loans structure 14

Table 2.3: Revenue from Forex trading and commercial guarantee 16

List of diagrams

Diagram 1.1: Organization chart of VCB 9

Diagram 2.1: Capital Mobilization 12

Diagram 2.2: Structure of capital mobilization 13

Diagram 2.4: Credit quality of loans 15

Diagram 2.3: Structure of deposits by term of maturity 15

Diagram 2.5: Revenue from Forex trading 16

Diagram 2.6: Profit gained from Forex trading 17

Introduction

During my first internship from 5th November to 24th December, I was interned at Joint stock commercial bank Foreign Trade of Vietnam- 564 Nguyen Van Cu operation branch In more than one month internship, I have worked at customer department, did observe all credit process and learn a wide range of knowledge

The goals of this report is to acknowledge the basic information about VCB(including organization structure, duty and responsible of each department), presentbusiness operation, financial performance analysis The report includes four parts:

Chapter 1: Overview of VCB

Chapter 2: Analysis of investment and operation of VCB Chuong Duong Office

Chapter 3: Analysis of credit guarantee in VCB

Chapter 4: Risks in lending secured loan by real estate and how to prevent them in VCB

I want to say thank you to Mr Tran Tai Bach, Ms Nguyen Ngoc Diep- creditofficers and Ms Nguyen Thi Phuong Chi-manager of customer department at VCBChuong Duong branch for supporting and providing very useful data for me to complete

my report Moreover, I am heartily thankful to my supervisor, Th S Le Duc Hoang, whohas encouraged, supported and guided me to completing understanding of objectives

Chapter 1: Overview of VCB and VCB Chuong Duong branch

1.1 Foundation and historical development of VCB

In 48 years of development, VCB has contributed to the economic stability andgrowth of economy, upholding the role of major commercial trading bank, as well asexerting the influence all over the financial community In half century of development,VCB has affirm its position as lead banks, offer various financial service in bothinternational and internal market Besides are the marking important points of time thatVCB has gone through:

_ On 1/4/1963, VCB was established from the foreign exchange bureau (of the statebank of Vietnam)

_ On 2/6/2008, as the first state-owned commercial bank selected for pilotprivatization by government, joint stock commercial bank for foreign trade ofVietnam (Vietcombank) officially came into operation

_ On 30/6/2009, VCB officially listed (stock code: VCB) on the Ho Chi Minh stockexchange (HOSE)

_ On 30/9/2011, VCB successful concluded an agreement on strategic partnershipwith Mizuho corporate bank (MHCB) - a member of Mizuho financial corporation(Japan) by selling Mizuho 15% of its equity capital

1.2 Foundation and historical development of VCB Chuong Duong Branch

VCB Chuong Duong branch was level two branch established on 6th October,

2003 This is the 49th branch of the Bank for Foreign Trade of Vietnam (Vietcombank)and the third bank branch level two of VCB in Hanoi is put into operation Located at 564Nguyen Van Cu - Gia Lam - Hanoi Branch Chuong Duong will provide the mostadvanced available services that VCB has to residential and business community in thisarea In urban development strategy up to 2020, Gia Lam will be an open and emergingeconomic area, therefore, projects, industrial parks are also being planned and filled withstrength of technology, as well as the availability of modern services, so the presence ofVCB at this time in this area are very meaningful

1.3 Award and achievement

_ The best domestic trade finance bank, Vietnam in 2011 awarded by The AsianBanker.

_ The Asian banker talent and leadership development award in 201 awarded by TheAsian Banker

_ The Asian banker promising young banker award, 2011 in Pacific Asia, awarded

by The Asian Banker to Mr Pham Quang Dung –deputy general director of VCB_ The most famous brand in banking sector from the results of a survey jointlyconducted by FTA Market Research Vietnam – official Vietnamese representative

of Esomar (European Society for Opinion and Marketing Research) and VietnamChamber of Commerce and Industry (VCCI)

_ VCB was ranked among the world’s top 1000 banks by The Banker

_ The best trade finance bank in Vietnam awarded by global trade review (UK)_ Leading bank by national brand power index from the results of a surveyconducted by Nielsen

_ Vietnam strong brand name of 2011 voted and awarded by the Ministry of Tradeand Industry and Vietnam Economics Times

_ The biggest income tax payment bank in Vietnam among the 10 biggest corporateincome tax payers ranked by Vietnam Report, VNR500 Advisory Board andVietnam General Department of Taxation

1.4 Organizational structure of VCB Chuong Duong Branch

VCB Chuong Duong branch structure is designed as the centralized model which

is the modern model of banking system

Here is the diagram illustrating the structure of organization

General Director

Diagram 1.1: Organization chart of VCB

1.5 Department duties

 General Director has the following functions

_ Preparation for planning strategy for branch development_ Develop and manage the branch's business plan and the units related_ Ensure reaching business goals of the branch

_ Co-operate with other departments and relating units to implement development ofthe branch network

_ Manage, supervise, monitor activities of all department and employees

 Vice Director of the branch: Support for directors, represent Director to direct

some works, sign related document on behalf of director and responsible for all thetasks assigned

 Customer department in branch includes both personal credit department and

enterprise credit department: holds all the transactions with individual customers aswell as enterprises In particular:

Vice Director

Business and service departme nt

Business and service departme nt

Accountin g Departme nt

Human resource departme nt

Debt managem ent departme nt

Card payment departme nt

Business and service departme nt

Internatio

nal payment

_ Defining the target customer groups

_ Planning clients, directly involving in implementing and evaluating the plan_ Managing and developing customers

_ Performing the credit tasks and processing the credit transaction in order to

ensure compliance with current regulations

_ Conducting appraisal with clients, projects, business plans and making

recommendations to accept or reject the request for credit

_ Selling and running retailed baking services

_ Establishing sale plan to individual and enterprise customers

 International payment department performs the following tasks

_ Executing international payment, financing import and export trade such asL/C, money transferring, discounting, factoring according to the Vietnam andinternational laws

_ Implementing the underwriting activities for customers

 Business and service department has function of developing new deposit, loan

and merchant business for a specific target market of small to medium businessand business professionals

_ Performing payment orders, money withdraw from debit accounts

_ Performing payment through orders by Swift, Telex, cheque, etc

_ Implementing professional services relating to foreign exchange, deposits withmaturities…

 Card payment department has many important functions relating to card

payment

_ Issuing debit cards of VCB

_ Issuing, collecting debt from debit cards and paying others cards of VCB

 Debt management department has following functions: control the credit to

ensure compliance with the provisions of the bank about customer management,credit processes; ensure accuracy and security data, data management andreporting as prescribed; ensure full store, precise and secure the entire credit recordand bank information

 Human resource & administration department has functions:

_ To advise to directors about the development and implementation of therecruitment plan and training, and manage the human resource on the entiresystem

_ Implementation of the administrative process for the Bank's operations

_ Perform general accounting

_ Store, reports, and provide information in accordance with accounting standardrule

 Supervisory department has the following functions: advising and assisting the

board of directors in monitoring and supervising the implementation of laws andregulations of the SBV

Chapter 2: Analysis of investment and operation in VCB Chuong Duong branch office

2.1 Mobilizing capital activities

In 2011, capital mobilization was extremely difficult due to tightened monetaryand strict foreign exchange policies Capital mobilization nevertheless faced even tougherchallenges resulting from unhealthy competition instigated by other credit institutions

Against such complicated market development, VCB’s Board of Management hasconsidered capital mobilization its top priority for the year VCB on one hand conformed

to the State Bank’s regulations and on the other hand flexibly seek solutions to speed upcapital mobilization such as strengthening customer care policies, diversifyingmobilization products, etc In addition, VCB proactively mobilized overseas capital, andactively participated in the operations on inter-bank market

Table 2.1: Capital mobilization structure

586.00Annual growth Billion - 30.47 258.00

Annual growth rate % - 10.24% 78.66%

-Diagram 2.1: Capital Mobilization

2009 2010 2011 0

Diagram 2.2: Structure of capital mobilization

2009 2010 2011 0

Billion

In addition to implementing many issuances of valuable papers, VCB has appliedmany ways to enhance mobilization of capital as follows:

_ Enhanced customer service through the active collaboration between thedepartment to provide better solutions for many consumer’s problem: Bao Vietcorporation, Vietnam airline and expand relations with other customers …

_ Expand networking of transaction branches and pay more attention to thedevelopment of retail ATM network, increasing trading hours, and improvingcustomer service attitude Vietcombank has also expanded funding by setting uppayment clearing center mainly for foreign currency transactions with othercommercial banks

_ In conclusion, it can be said that VCB has recently depended on capital subsidyfrom state bank, instead, it actively seek for customers By diversifying the source

of raising capital, total capital increased system regularly

2.2 Investing and lending activities

Table 2.2: Outstanding loans structure

Outstanding loan Billion

882.35

1,476.00

1,893.49Outstanding short-term loan Billion

518.31

1,080.74

1,429.81Outstanding long-term loan

Billion 364.04 395.26 463.68Credit quality

Performing loan Billion

859.63

1,070.80

1,273.78Non-performing loan Billion

22.72

405.20

619.71Non-performing rate % 2.575% 27.452% 32.729%

In previous three year, outstanding loan has trend to increase slightly over eachyear In 2011, total outstanding loan reached at 1,893.49 billion vnd, increased 28.25% incomparison with 2010 In term of loan structure, short-term loan continued to be mainsource of mobilizing capital with 75.48% of total loan in 2011 Moreover, short-term loanalso has higher growth rate of 32.31% whist long-term just increase 17.31% This loan

structure with high percentage of short-term loan can explain tighter credit policies ofVCB to reduce interest, credit and liquidity risk in operation However, non-performingloan has increased in recent year, especially in 2011, reach 619.71 billion Therefore, infuture, VCB Chuong Duong branch making effort to improve asset quality, improve riskcontrol and credit process

2009 2010 2011 0.00%

Diagram 2.3: Structure of deposits by term of maturity

2.3 Forex trading activity

Table 2.3: Revenue from forex trading and commercial guarantee

Revenue from foreign exchange currency Million $

193.00

208.00 277.36Outstanding balance of commercial

162.32

421.81 418.54Gain (loss) from Forex trading business Million

vnd

414.24

(6,238.41)

25.07

The revenue from Forex trading has increased hugely from 193 million dollar in

2009 to 277.36 million in 2011 (increased 43.7%) Nevertheless, the profit gained fromforex trading just reached 25.07 million vnd in 2011 or even lost up to 6238.41 millionvnd It is obviously that forex trading business is very risky and ineffective, so VCBChuong Duong branch should consider maintaining this business and using this capital toinvest in more profitable area

Diagram 2.5: Revenue from Forex trading