Building business strategy of global Petro Joint Stock Commercial Bank - Hanoi transaction office in the period of 2013-2017

GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT BUILDING BUSINESS STRATEGY OF GLOBAL PETRO JOINT STOCK COMMERCIAL BANK - HANOI TRANS

GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION

PROGRAM

CAPSTONE PROJECT REPORT

BUILDING BUSINESS STRATEGY OF GLOBAL PETRO JOINT STOCK COMMERCIAL BANK

- HANOI TRANSACTION OFFICE

Vu Thi Thuy Hong

HANOI 2013

COMMITMENT

This research theme is made by Group 03 of class GaMBA.M0311 of Global

Advanced Master of Business Administration Program - Griggs University We

guarantee that this is our own theme Our research results are honest that has never been

published in other themes.Up to date, the members of our group has no conflict of

interest with the Global Petro Joint Stock Commercial Bank — Hanoi transaction office

1.1.2 The basic characteristics of strategy

1.1.3 The role of strategy

1.2 Classification of strategy

1.3 Strategy formulation process

1.3.1 Defining vision, mission and goal

1.3.2 Analysis of the external environment

1.3.3 Analysis of the internal environment

1.3.4 Support tools for strategic options

1.3.4.1 External Factor Evaluation Matrix (EFE)

1.3.4.2 Competitive Profile Matrix (CPM)

1.3.4.3 Internal Factor Evaluation Matrix (IFE)

1.3.4.4 SWOT Matrix

1.3.4.5 QSPM Matrix

Chapter I]: OPERATING ENVIRONMENT ANALYSIS OF GLOBAL

PETRO JOINT STOCK COMMERCIAL BANK — HANOI TRANSACTION

2.1 Overview of Global Petro Joint Stock Commercial Bank (GP.Bank)

2.1.1 History and development

2.1.2 Organizing network, human resource

2.1.3 Vision, mission and core values

2.1.4 Products and services

2.2 Overview of Global Petrol Joint Stock Commercial Bank — Hanoi

Transaction Office (GP.Bank — Hanoi transaction office)

2.2.1 The process of formation and development

2.2.2 The organizational structure

2.2.3 Business activities

2.2.3.1 Credit Activities

2.2.3.2 Activities of raising capital

2.2.3.3 Activities of commercial sponsorship and international payment

2.2.3.4 Collection service

2.2.3.5 Business operating results of 2012

2.3 Analysis of external environment

2.3.2.3 Customers

2.3.2.4 Suppliers

2.3.2.5 Substitute products

2.3.3 Evaluating opportunities and challenges

2.3.4 External Factor Evaluation Matrix (EFE)

2.4 Analysis of internal environment

2.4.1 Analysis of internal factors of GP.Bank — Hanoi transaction office

Chapter III]: SELECTING STRATEGY AND IMPLEMENTATION

SOLUTIONS TO BUSINESS STRATEGY OF GLOBAL PETRO JOINT

STOCK COMMERCIAL BANK — HANOI TRANSACTION OFFICE IN

Transaction Office in the period of 2013 - 2017

3.1.1 General development goals

3.1.2 Development goals of Global Petro Joint Stock Commercial Bank —

Hanoi Transaction Office

3.2 Strategic Options

3.2.1 Strategic Options through SWOT matrix

3.2.2 Strategic Options through QSPM matrix

3.3 Implementation solution to strategic option

3.3.1 Solution to marketing, research and development

3.3.2 Solutions to organizational culture development

3.3.3 Solutions to human resource development

3.3.4 Solutions to organizational structure restructuring

Southest Asia Joint-Stock Commercial Bank — Transaction Office

Competitive strategy combining the strengths & opportunities of the enterprise (Strengths-Opportunities)

Competitive strategy combining the strengths & threats of the enterprise (Strengths-Threat)

Competitive strategy combining the Weaknesses & opportunities

of the enterprise (Weaknesses-Opportunities)

Competitive strategy combining the Weaknesses & Threat of the the enterprise (Weaknesses -Threat)

Strengths - Weaknesses - Opportunities — Threat Matrix

Competitive Profile Matrix

Internal Factor Evaluation Matrix External Factor Evaluation Matrix Financial Strength

rey SYsenithantaee

vironment Stabili Hi S rategie planning matrix, :

Gross national product

Association of Southeast Asian Nations

ASEAN agreement on the common effective preferential tariff

Automatic teller machine

LIST OF TABLES

Figure 1.1: SWOT matrix

Figure 2.1: Organizational structure of GP.Bank — Hanoi Transaction Office

Figure 2.2: Credit activities and credit structure according to the norms

Figure 2.3: Credit structure by sector

Figure 2.4: Structure of raising capital by customers

Figure 2.5: The situation of capital mobilization of GP.Bank — Hanoi Transaction Office

Figure 2.6: Activities of trade finance — international payment of GP.Bank — Hanoi

Transaction Office

Figure 2.7: Business Result as of 31/12/2012 of GP.Bank — Hanoi Transaction Office

Figure 2.8: Indicators for analysis of GP.bank’s position and its competitors’

Figure 2.9: Total assets, outstanding loans and mobilization of GP.Bank, SeABank, OceanBank

Figure 2.10: Operating results of GP.Bank, OceanBank, SeaBank in 2011, 2012

Figure 2.11: Competitive Profile Matrix of GP.Bank — Hanoi Transaction Office

Figure 2.12: Matrix of external factors of GP.Bank — Hanoi Transaction Office

Figure 2.13: The structure and level of staff of GP.Bank — Hanoi Transaction Office

Figure 2.14 : Business activities of GP.Bank — Hanoi Transaction Office

Figure 2.15: Structure of asset securing for the loans in GP.Bank — Hanoi Transaction Office

Figure 2.16.: Key financial indicators over the years of GP.Bank — Hanoi Transaction Office

Figure 2.17: Matrix of internal factors of GP.Bank — Hanoi Transaction Office

Figure 2.18: SWOT matrix of GP.Bank — Hanoi Transaction Office

Figure 3.1: Matrix QSPM of GP.Bank — Hanoi Transaction Office

Figure 3.2: Roadmap for implementing strategy of GP.Bank — Hanoi Transaction Office gg

in the period of 2013 - 2017

Figure 3.3: Budget for deploying the strategy of GP.Bank — Hanoi Transaction Office in 99 the period from 2013 to 2017

INTRODUCTION

1 Reason for choosing research theme:

During the early years of the twenty-first century, it can be seen that the Vietnamese economy has strongly shifted to the market economy and international integration, many economic sectors have been forced to open by the Vietnam’s roadmap of joining the World Trade Organization (WTO) The Vietnamese enterprises have no longer been protected by the State, instead, they have to face with the vital problems of competition Vietnam's banking sector is not out of those problems Vietnamese commercial banks are striving to survive and develop in the context of

increasingly fierce competition today when financial corporations, foreign banks have

been constantly entering Vietnam such as: HSBC, Citigroup, ANZ, Tokyo - Mitsubishi UFJ, The Bank of New York This has led to the risk of narrowing the market for the

Vietnamese commercial banks In the process of international economic integration,

financial markets are expanding their scope of activities almost without borders, not

only to facilitate increased cooperation, but also to make competition deeper and more

severe So a problem arising is how Global Petro Joint Stock Commercial Bank - Hanoi Transaction Office (GP.Bank — Hanoi Transaction Office) must build the development

strategies to survive and develop in the future? Building development strategy is not

new, but it is always a problem that any organization must care and plan For banks in

general and GP.Bank - Hanoi Transaction Office in particular, in this period, again the

problem of building development strategy is given and become more necessary than

- Systematizing issues on the theory of strategic management

- Making analysis and assessment of enterprises’ business situation in the context of

the Vietnamese economy.

- Making support for enterprises to identify their positions in the market and since then has plans to build and implement strategies for their sustainable development

- Providing a number of strategic solutions for enterprises in the period 2013 - 2017

3 The object and scope of research:

Object of research: Making research on issues in the process of building the actual arising business strategy of GP.Bank — Hanoi Transaction Office

Scope of research: Making research on the business activities of Global Petro commercial joint stock bank — Hanoi Transaction Office and making comparison with

competitors that are Southeast Asia commercial Banks — Hanoi transaction office, Ocean commercial Joint Stock Bank - Hoan Kiem Branch

4, Research Methodology:

Using statistical method, comparative method, synthetic method, analytical

method to assess the factors that may affect business activities, affect the construction

and implementation of the business strategy of Global Petro joint stock commercial bank - Hanoi transaction office, assess the factors affecting the strategy including the internal and external environment of the enterprise

Using the minor data collection method from the teaching materials of Business Administration, resources of the State Bank of Vietnam, the results of business

activities of GP Bank - Hanoi transaction office and of the entire sector in recent years

to lay the foundation for the development of enterprise’s strategic development

5 The significance of theme:

Providing the scientific methodology, assessing the situation and proposing some content in order to improve the overall business strategy development to ensure the development objectives of Global Petro Joint Stock Commercial Bank - Hanoi transaction office in the period of 2013-2017

6 The layout of theme:

In addition to the table of contents, list of abbreviations, list of tables, figures,

introduction, conclusion, list of references, the content of theme is divided into three

chapters:

- Chapter 1: Theoretical basis

- Chapter 2: Analysis of the operating environment of Global Petro Joint Stock

Commercial Bank — Hanoi Transaction Office

- Chapter 3: Strategic Options and solutions to implement the business strategy

of Global Petro Joint Stock Commercial Bank — Hanoi Transaction Office in the period

2013 - 2017

CHAPTER I THEORETICAL BASES OF ENTERPRISE’S BUSINESS STRATEGY

1.1 Concepts, features and the role of business strategy

1.1.1 Concepts of strategy and strategic management:

1.1.1.1 The concept of strategy:

Nowadays, with the rapid development of the world economy, leading to the growth and development in the fields of politics, culture, society because of showing the nature of decision and impact of economy on the fields of social life, The application of the "strategy" theory has become more popular and elevated by many different definitions of modern opinion and in accordance with the capacity that makes

a difference with the external environment

Currently, there are many different definitions of strategy, the cause of this

difference is due to the different systems of concepts in term of organization in general

and the different approaches of the organization's strategy in particular

In term of ontology, depending on the perspective of positivism or trend of constructivism, the essence of strategy is determined by the law of nature or the significant impact of subject In fact, strategy is usually defined practically to facilitate the process of practice within the organization

According to Johnson and Scholes, strategy is defined as follows:

"Strategy is the determination of direction and operating scope of an organization in the long term, in which the organization must gain the advantage

through a combination of resources in a challenging environment, to meet the best

market needs and meet the expectations of agents related to the organization"

Professor Michael L Porter — a father of the theory of competition said that:

"Strategy is the art of building a solid competitive advantage for defense"

We can make a general definition of strategy as follows: "Business Strategy is a series of complex actions to mobilize all the resources an organization / individual may have in order to achieve a certain purpose"

Thus, the strategy is related to enterprise’s objectives Strategy is the way of implementing the actions and decisions are closely related to each other and selecting methods to coordinate those actions and decisions Enterprise’s strategy must exploit

‘he strengths (resources and capacity), fix the enterprise’s weaknesses and take into account the opportunities and challenges of the external environment

1.1.1.2 The concept of strategic management:

According to Alfred Chandler, strategic management is the process of identifying basic iong-term goals of the enterprise, choosing the way or direction of action and allocating essential esources to implement those objectives

According to John Pearce and Richard B Robinson, strategic management is a system of decisions and actions to establish and implement plans to achieve enterprise’s objectives

In view of the team researching theme, strategic management is a systematic process from developing strategy, implementing strategy, controlling and reviewing strategy in order to achieve goals set by enterprise

1.1.2 The basic characteristics of strategy

On the basis of analyzing the origin of strategy above, we find that so far there still have been many different views and approaches of strategy By any aspect, in any period, the basic characteristics of the business strategy are conceived in a relatively unified and particular way:

- Business strategy defines the basic business goals and orientations needed to

achieve in each period and thoroughly completed in all aspects and all areas of

corporate management activities

- Business strategy only outlines operating directions of the enterprise in the long term, the enterprise’s operational framework in the future It is only oriented in practice that requires a combination of strategic objectives and economic objectives of the

enterprise

- Business strategy of the enterprise is built on the basis of competitive advantages of the enterprise to ensure maximum mobilization of the exploiting and using of resources of the enterprise

- Business strategy is reflected in a continuous process from building to implementing, checking, adjusting strategy

- Business strategy is formed and implemented on the basis of promoting strength, taking advantage of business opportunities in order to achieve the highest

business performance

- Developing, implementing, testing, evaluating and adjusting strategies that are focused on the enterprise’s high-level administrators

- Business strategy is often built in the long term: 3 years, 5 years and 10 years

By studying the characteristics of strategy, we can see that the outstanding issue

of strategy is creating ideas, plans to support so that an enterprise can make successful competition with its competitors This is a modern approach to study the competitive

position of the enterprise

1.1.3 The role of business strategy:

Business strategy plays such an important role, determining the success or failure, the mission of the enterprise Strategy identifies where an enterprise is and will

be, where it wants to go and how Strategy makes enterprise know what it has What its competitors have? Strategies facilitate enterprise to use resources efficiency that increases competitive advantage compared to its competitors

Business strategy plays an important role and has important properties for the business performance of enterprise since strategy identifies enterprise’s mission, goals

and direction in the future as the guideline for all activities of the enterprise Business

strategic plays the role of orienting enterprise’s activities in the long-term; it is a solid basis for the operational implementation The absence or lack of strategy or the setting

of strategy is not clear having no solid argument that will make business disorientation, arise problems easy to find but not in the long-term without seeing local role in the

entire enterprise’s operational activities

Helping enterprise identify business opportunities at the same time by strategy also define and analyze clearly its risks and threats Through strategy also helping enterprise identifies its strengths advantages and also indicates weaknesses needed to

overcome.

Strategies help allocate and use resources of the enterprise resource in the most effective way, increase its competitive position and promotion image, brand, products

of the enterprise

Strategy is the most solid and scientific basis so that the economists, economic experts, enterprises can give the most reasonable solutions, policies

1.2 Classification of business strategies:

1.2.1 Business strategies of the enterprise in general:

There are 3 types of strategies which are the most commonly used by enterprises

today:

1.2.1.1 Company Strategy

Company strategy is a long-term strategy that is related to the overall mission and objective, the size of enterprise to meet the expectations and expenditures of the bosses, the senior managers of the enterprise The company strategy is long-term with sweeping views that dominates all other strategies such as business strategy, functional strategies

1.2.1.2 Business strategy (SBU)

Business strategy is a business strategy regarding how an enterprise can compete successfully in a specific market that involves strategic decisions on product selection, satisfying the customers’needs, finding a competitive advantage compared to its competitors, ing and creating new opportunities

1.2.1.3 Functional strategy

Functional strategy is operational strategy regarding how each department of the enterprise will organize, deploy, and review to implement business strategy and corporate strategy Functional strategy focuses on specific resources and deployment strategy: product strategy, pricing strategy, distribution strategy, market entry strategy 1.2.2 Practical business strategy in banking activities

In the practices of the banking industry, it is possible to generalize some typical strategies as follows:

1.2.2.1 Strategy of consolidating market share

Strategy of consolidating market share aims to strengthen the position and image

of bank through improving management model, making review and completing the

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control system, improving the quality of products and services to maitain its customers This strategy is often applied by the banks in the period of credibility crisis 1.2.2.2 Strategy of diversifying products and services

Strategy of diversifying products and services aims to diversify products and Services to satisfy customers’needs the best to develop customers and increase profits This strategy is usually applied by banks in the period business activities with high growth rate

1.2.2.3 Strategy of expanding distribution network

Strategy of expanding distribution network aims at diversifying and expanding the bank's distribution channels This strategy is often applied by the banks in the period of accelerating to compete

1.2.2.4 Focus strategy

Focus strategy defines segments, fields, products that banks can be the most

powerful from which focuses all resources of the bank in order to achieve high growth and efficiency

1.2.2.5 Differentiation strategy

Differentiation strategy identifies the building of typical aspects of the bank of their own products and services, distribution channels, marketing policies compared to other competitors in order to achieve their goals

1.3 The process of building strategy

The process of building strategy can be divided into five main steps, including:

- Step 1: Identifying the strategic mission and objectives of the enterprise

- Step 2: Making analysis of the external environment to identify opportunities

- Step 5: Implementing strategies

In the scope of this research, the following theoretical models will be selected to analyze the situation, position of GP.Bank — Hanoi Transaction Offices of chapter 2, as

a basis for selecting strategies and providing recommendations to implement strategy for GP.Bank - Hanoi Transaction Office in the period 2013 -2017 in chapter 3 of the theme

1.3.1 Defining the business vision, mission, objectives of the enterprise

The determination of vision and mission aims to identify what the enterprise is,

in which position of the current context it is, which desired positionn it wants in the future, what its long-term goal is Determining the mission, goals is very important in building strategy that helps strategic planners identify sources of information needed to

be collected, processed and set for strategy

1.3.2 Analysis of external environment

Operating environment of enterprise combines bothinternal and external factors,

forces and institutions that regularly impacts affecting the enterprise’s operational results

Operational environment of the enterprise can be divided into macro environment and micro environment

1.3.2.1 Macro-environment

PEST model is used to analyze the external environment of the enterprise It

includes elements, institutions that generally affects different enterprises:

- Political, legal environment;

- Subsfitute products

The analysis of external environment of the enterprise is quantitative and

difficult to determine In strategic management, models are used to measure and

evaluate the environmental impacts on the enterprise’s operation that is the external factor evaluation matrix (EFE) and competitive profile matrix

1.3.3 Analysis of internal environment

If the study of external environment helps enterprise use, make awareness of the Opporiunities and challenges encountered in its process of operation, the analysis of internal environment of the enterprise will help managers be aware of the enterprise’s strengths and weaknesses From which can choose the appropriate business strategy in order to maximize the strengths and overcome the weaknesses of the enterprise

The enterprise’s internal environment is evaluated through the resources that are:

1.3.4 Tools supporting for strategic options

1.3.4.1 External environment factor evaluation matrix (EFE)

EFE matrix makes evaluation of external factors, generalizes and summarizes

the primary opportunities and risks of the external environment that affects the enterprise’s operational process Through which helps enterprise’s managers assess the response level of the enterprise to opportunities, risks and make judgments about the

external factors which is favorable or difficult for the company

To build this matrix, it is necessary to implement 5 following steps:

- Making a list of factors that play a decisive role for the success as identified in the inspection process of external factors; This includes a total of 10 to 20 elements

including the opportunities and threats affecting the enterprise and the business sector

of this enterprise

- Classifying the importance from 0.0 (not important) to 1.0 (very important) for each element This classification shows the respective importance of these factors to the success of the enterprise’s business sector The opportunity often has higher classification than threat; however threat may also be aware of the higher classification

if it is especially severe or identifiable threat The appropriate classification level can be determined by making comparison of successful competitors with unsuccessful competitors or by discussing this factor and achieving group consensus Total classification levels are assigned to these factors must be 1.0

- Classifying from 1 to 4 for each determinant of the success to show how the current strategy of the enterprise responses to this factor, in which 4 is the best response, 3 is above- average reaction, 2 is the average response and | is the less reaction These levels are based on the effectiveness of strategies in enterprise Thus,

this classification is based on the enterprise, while the classification of step 2 is based

- If the total score is 4 showing that the enterprise is responding well to the

opportunities and risks

- If the total score is 2.5 showing that the enterprise is averagely responding to

the opportunities and risks

- If the total score is 1 indicating that the enterprise is weakly responding to the opportunities and risks

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1.3.4.2 Competitive Profile Matrix (CPM)

Of all the events and trends that the environment can affect the strategic position

of a company, the impact of competition is often considered to be the most important Competitive profile matrix identifies the main competitors with their special advantages and disadvantages

Competitive profile matrix is an extension of external factor evaluation matrix in

case levels of importance, classification, and the total important scores are of

significance Competitive profile matrix is different with the external factor evaluation matrix by internai factors are of importance determining the success can also be included in it, for example the financial stability, the effectiveness of advertising, the

expertise for research and development activities In addition, the difference between

two matrices is the classification level of the competitor companies included in the

competitive profile matrix with a total importance scores of these companies are also calculated Total assessed score of competitor companies is compared with the sample companies The special classification levels of the competitor companies can be compared with the classification level of the sample companies This comparative analysis provides important strategic information

1.3.4.3 Internal Factor Evaluation Matrix (IFE)

Tools forming IFE strategy summarize and evaluate the strengths and

weaknesses of the functional business departments, and it also provides the basis for identifying and assessing the relationship between these departments To develop an

IFE matrix, intuitive comment is needed, so the formality of scientific method must be interpreted to show that this is the most effective technique IFE Matrix can be developed by five steps:

- Listing the critical success factors as identified in the internal control process Using all of 10 to 20 internal factors, including strengths and weaknesses

- Assigning the importance by classifying from 0.0 (not important) to 1.0 (the most important) for each factor The importance assigned for each certain factor shows the relative importance of that factor to the success of companies of the industry Not mentioning whether that major factor is the internal strength or weakness, the factors

seen as the most influential ones to the organization’s performance must be considered

to be the most important The total of all these critical levels must be 1.0

- Classifying from | to 4 for each factor that will denote that factor represents the biggest weakness (classified by 1), the smallest weakness (classified by 2), the smallest strength (classified by 3), or the greatest strength (classified by 4) Thus, the classification is based on the company while the importance level of step 2 is based on the industry

- Multiplying each level of importance of each factor with its type to determine

the critical score for each variable

- Summing all the important scores for each variable to determine the total importance scores of the organization

Assessment: Not mentioning how many factors IFE matrix has, the total importance scores can be classified from the lowest level of 1.0 to the highest one of 4.0, and the average score of 2.5 The total importance score is lower than 2.5 showing that internal company is weak, and the score higher than 2.5 showing that the internal company is strong An IFE matrix should have 10 to 20 key factors The number of factors does not effect for group of total importance score as the sum of the importance levels is always equal to 1.0

1.3.4.4 Analysis by S.W.O.T model

SWOT analysis model is a useful tool for understanding and decision-making in any situation for any business organization It stands: Strengths, Weaknesses, Opportunities and Threats

Strengths and Weaknesses are internal factors of the company while Opportunities and Threats are external impact factors SWOT allows the analysis of different factors affecting relatively competitiveness of the company SWOT is often

associated with PEST (Political, Economic, Social, Technological analysis), models of

market analysis and potential assessment are through external factors in terms of politics, economy, society and technology Analysis by SWOT model is the evaluation

of data arranged in the form of SWOT in a logical order to help you understand, present and discuss for easier decision-making

SWOT matrix is used to form the strategic plan that follows these steps:

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- Step 1: Generalizing the results of analysis of the business environment -

Opportunities and risks

- Step 2: Generalizing the results of internal business environment analysis - strengths and weaknesses

- Step 3: Generalizing the results and forming the SWOT matrix - Strengths and weaknesses - Opportunities and threats

Group of strategic plan formed:

- S-O strategy aims to use the strengths of enterprise to take advantage of external opportunities

- W-O strategy aims to overcome weaknesses to take advantage of external

Oipportunities

- S-T strategy usesenterprise’s strengths to deal with external threats

- W-T strategy aims to overcome weaknesses to reduce the external risks

SWOT matrix is illustrated by the following picture:

In addition to the classification of strategies for the establishment of a priority list,

according to documents only one analysis technique is set to determine the relative attiractiveness of feasible strategies that can be replaced This technique is the Quiantitative Strategic Planning Matrix - QSPM, it is third stage of the framework for striategic profile analysis This technique shows objectively which alternative strategy is the: best QSPM Matrix use the inputs by the analysis in the first stage and the combined

results of the analysis in the second stage to assess, decide objectively strategies which can be replaced, firstly, based on the external and internal key success factors that have been identified As well as the analysis tools for the formation of other strategy, QSPM matrix requires good intuitive judgment

Positive aspects of OSPM matrix:

- Strategic groups can be studied at the same time There is no limit to the number of strategies which can be studied at the same time when using QSPM matrix Requiring that strategists must combine internal and external appropriate factors

the decision-making process QSPM Matrix can be used for all profit and non-profit

organization, suitable for almost any type of organization

Limitations of OSPM matrix:

- QSPM matrix requires intuition judgment based on experience

- QSPM Matrix can only be as good as the important information and analysis of

combinations on which it is based

CHAPTER 2 ANALYSIS OF OPERATING ENVIRONMENT OF GLOBAL PETRO JOINT STOCK COMMERCIAL BANK- HANOI TRANSACTION OFFICE

2.1 Overview of Global Petro Joint Stock Commercial Bank (GP Bank)

2.1.1 Process of forming and development

In 1993: Formerly as Ninh Binh Rural Joint Stock Commercial Bank, including

05 transaction offices and trading in gold in Ninh Binh Province with registered capital

of 05 billion VND

In 2005: Officially became Urban Bank, by the name of the Global Commercial

Joint Stock Bank (G-BANK), its Head office was at 17 Ly Thuong Kiet, Hoan Kiem,

Hanoi with its charter capital of 135 billion dongs

In 2006: G-BANK announced its strategic shareholder - PetroVietnam Its

transaction office was moved to 273 Kim Ma, Ba Dinh, Hanoi and increased its charter

capital to 500 billion dongs

In 2007: Officially renamed the Global Petro Joint Stock Commercial Bank

(GP.Bank) with a charter capital of 1,000 billion dongs

In 2009: GP.Bank increased its charter capital to 2,000 billion dongs Its Head Otfice moved to 14 Ngo Quyen Street, Hoan Kiem District, Hanoi It is of top 500

brands in Vietnam in 2009 It is of top 500 largest private enterprises in Vietnam in

2009

In 2010: GP.Bank increased its charter capital to 3018 billion dongs Its Head

office moved to 109 Tran Hung Dao Street, Hoan Kiem District, Hanoi Also in 2010,

GP.Bank set up its first affiliated company: Asset exploitation and debt Management limited Company of Global Petro Joint Stock Commercial Bank (GP.Bank AMC) 2.1.2 Organizing HR and network

As of the end of 2012 the business network of GPBank nationwide included: Head Office, 01 Transaction office and nearly 80 branches / transaction offices and savings along with a team of over 1,400 staff trained professionally

GP.Bank much focuses on attracting and building new human resources, in which focuses on gathering a team of young human formally trained from universities

and experienced workforce of the banking sector Currently, over 94% of GP.Bank’s

staff has university degrees, postgraduate degrees and professional expertise

2.1.3 Vision, Mission and Core Values

- Providing a full range of financial products and services perfectly in

accordance with international standards, to best meet the diverse needs of customers

- Contributing to the economic development of the country based on timely and flexibly satisfying the customers’ needs of production - business - service with modern

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facilities, new products and services with professional serving style to bring the highest profits and benefits for GP.Bank and its shareholders and create favorable conditions

for GP.Bank staff

- Modern information technology systems

2.1.4 Products and services

GP.Bank provides a full range of internationalky financial - banking services

such as: deposits guarantee credit, international payments, financial service — study abroad, foreign exchange trading, cards, money transfer services, mobile banking

services and other banking services With the mission "commit to success", GP.Bank

provides many financial and banking services based on advanced technology to

maximize customers’ benefits

In 2010, GP Bank made increasing utility for GP.Mobile services and expanded the network of POS with the successful connection with Banknet card alliance

Modern information technology system is one of GP Bank’s current advantages

to increase the competitiveness and moreover to bring customers the leading banking services and utilities GP.Bank is one of the first banks sucessfully applying T24 core banking system software (Core Banking) of the Swiss company — Temenos that is

capable of handling more than 10,000 transactions / second Currently, GP.Bank is

upgrading T24 core banking software to the version R9 - the latest version, T24-R9 helps the bank optimize operating processes while still maintaining the flexibility to the business changes

2.2 Introduction on GP.Bank — Hanoi Transaction Office

2.2.1 The process of formation and development

According to operational development policy of GP.Bank, GP.Bank - Hanoi Transaction Office was established in November/2009 at 14 Ngo Quyen Street, Hoan Kiem District, Hanoi City under Decision No 501 /2009/QD dated on May 19th, 2009

of the GP.Bank’s Chairman of the Board Its Business Activities were under business registration no: 2700) 13651-012 firstly issued on May 25", 2009, its the fifth change was on January 12nd, 2012 issued by Hanoi Department of Planning and Investment - Business Registration Office No 1

GP.Bank’s main area of activity — Hanoi Transaction Office was trading in currency - credit - bank and financial services with the basic transactions including:

- Mobilizing deposits of organizations and individuals domestically and

internationally

- Loan

- Guarantee

- Domestic deposit and payment services

- Comercial finance and international payments

- Other financial and banking services

2.2.2 Organizational structure of GP.Bank — Hanoi Transaction Office

As for organizational structure, GP.Bank — Hanoi Transaction Office is divided

into 05 rooms and 04 subordinate business units The organizational structure of

GP.Bank - Hanoi Transaction Office is as follows:

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TT (Source: Administration and organization Dept oƒŒP Bank — Hanoi Transaction

Office)

Figure 2.1: Organizational structure of GP.Bank — Hanoi Transaction Office

2.2.3 Business activities of GP.Bank - Hanoi Transaction Offices

In recent years, the world economy has gone through very difficult stages and faced a lot of challenges such as economic recession, inflation, unemployment Not outside that general trend, the Vietnamese economy has experienced extremely difficult times with instable macroeconomy when inflation has been still high, the budget deficit

is not significantly reduced, interest rates and exchange rates are unpredictable, banking and financial system is unstable, not good support for the economy, Economic crisis affects income directly, business results of each enterprise, individual from which affects the operational results of the banking system in general and GP.Bank — Hanoi Transaction Office in particular In rerent years, GP.Bank — Hanoi Transaction Offices has shared difficulties with its customers by reducing lending rates as well as increasing provision for bad debt management risk that has made the profit gained of GP.Bank -

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Hanoi Transaction Offices be reduced Besides, the enterprise’s amount of idle cash

strongly declines that affects mobilized funds of GP.Bank - Hanoi Transaction Offices

The mobilization of GP.Bank - Hanoi Transaction Offices gets many difficulties due to

fiercely competing with banks of Hanoi city Business operating results of GP.Bank -

Hanoi Transaction Offices will be specially analyzed as follows:

2.2.3.1 Credit Activities

As for credit operations, in 2011 and 2012 due to tight credit policy of the State

Bank, Along with high inflation, production and business of enterprises and individuals

got many difficulties, rates of mobilization and loan strongly changed, scarce money,

lending rates of 2011 and early 2012 sometimes went up to 23-24% / year that exceeded

the customers' ability and made a very large impact on the results of credit activity of

the banking sector in general and GP.Bank - Hanoi Transaction Offices in particular

During the past time, mobilized capital structure of banks has mainly been short-term

mobilized capital (under 03 months),

The last actions of the state banks, including lowering interest rates, loosing

credit for real estate and securities, supporting enterprises to process loans of overdue

payments enabled GP.Bank — Hanoi Transaction Office to improve the situation of

credit growth affected by the economic difficulties as mentioned above, Restructuring

loan and facilitating customers to be easier to access to loans, empowering enterprises

to continue to stabilize production and business development

The operation of credit and credit structure according to the criteria are specified

in the following table:

(Source: Report on the business results of GP Bank - Hanoi Transaction Offices)

Figure 2.2: Credit activities and credit structure according to the norms

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Construction, real estate, construction materials

ø Electricity, chemicals, telecommunications

= Households business

(Source: Report on the 2012 business results of GP.Bank - Hanoi Transaction Office)

Figure 2.3: Credit structure by sector 2.2.3.2 Activities of raising capital

Recently, the Vietnamese economy which is directly banking and financial sector has got difficulties due to the influence of the world economic crisis, leading to significantly affected income of enterprises, household and individuals from which affects the mobilization result of capital of the banking sector in general and GP.Bank - Hanoi Transaction Offices in particular Thanks to management efficiency and the

staff's efforts of GP.Bank - Hanoi Transaction Offices, in 2011 the mobilization

activities of GP.Bank - Hanoi Transaction Office poorly developed compared with

2010, but in 2012 this decrease was slow and maintained stably To exploit idle capital

of society and be more active in business activities, in recent years, GP.Bank - Hanoi Transaction Office has implemented various products of mobilized capital by

Vietnamese dong and foreign currencies, with many different terms in order to attract

strongly capital and meet the customers’ diverse needs Currently, GP.Bank - Hanoi

Transaction Office mobilizes saving mainly in terms of 1 month, 2 months, 3 months, 6

months, 12 months Besides, with the goal of becoming a multi-functional retail bank, capital mobilization policy of GP.Bank has focused on individual customers, small and

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medium enterprises, corporations To ensure the steady growth of capital mobilization

activities, GP.Bank - Hanoi Transaction Offices has applied flexible products for

raising Capital, customers have more appropriate options for their demand, together

with which is many exciting promotions

(Source: Report on the business results of GP.Bank - Hanoi Transaction Office)

Figure 2.4: Structure of raising capital by customers The situation of capital mobilization in GP.Bank - Hanoi Transaction Offices is

specified in the following table:

2.2.3.3 Activities of trade finance - international payment

Figure 2.5: The situation of capital mobilization of GP.Bank — Hanoi Transaction

Along with raising capital and credit, activities of trade finance - international payment

are also focused to develop by the Board of directors of GP.Bank — Hanoi Transaction

Office This is a service activity actively supporting and being related to credit

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operations, capital raising, exchange trading Activities of Trade Finance - International payment of GP.Bank — Hanoi Transaction Offices include:

- Issuance and payment of import letters of credit; notice, certification, import

letter of credit payment

- Import and export Collection; bills of exchange collection and acceptable bills

of exchange collection

- Western Union money transfer

Despite having remarkable and long developments, the contribution of international trade finance activities into total collection of GP.Bank -— Hanoi Transaction Office is still modest Over 70% of the bank's revenue is derived from traditional lending activities and from services related to payment Results of Trade Finance - International patyment of GP.Bank - Hanoi Transaction Office is specified in the following table:

Unit: Million VND

723,64 | 760,17 | 621,32 4,81% -22,35% sales

Collection (D/A,

lz 8,76 23,41 8,29 62,58% -182,39% D/P)

P TTR Money

1.4 194,52 | 217,22 | 174,42 10,45% -24,54% transfer

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| According to 7

customers

Economic

Figure 2.6: Activities of trade finance — international payment of

GP.Bank — Hanoi Transaction Office 2.2.3.4 Service collection

By the end of 2012 the total service collection of GP.Bank - Hanoi Transaction Office was over 6.8 billion dongs The property of net service collection of business profits reached over 25% - a very impressive result in the current competitive condition The

net service collection of GP.Bank — Hanoi Transaction Office includes domestic and

international payment service collection, professional collection from guarantee activities, from trading foreign currency, from the transactions related to the budget and payment accounts, other collection Of the above service collections, foreign banking services remains to be its strength providing the highest revenue for GP.Bank — Hanoi

Transaction Office In which trade finance services always occupy the leading position,

accounting for 40% of total service collection Services of foreign currency trading have experienced many difficulties, and the main objective of GP.Bank — Hanoi Transaction Office is fully and timely satisfying customers' demand for foreign currency, but not tending to interest collection of foreign exchange trading Achieving this result must thank to GP.Bank — Hanoi Transaction Office which has good grasp of market signals, proactively takes care of the foreign currency source for the purpose of foreign exchange collection of charge In 2012, revenue from payment service and treasury grew evenly compared to 2011 that continues to assert its dominance when for years it has maintained its continuous position of being the focal point for transfer of

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furds in the system and being a unit having service collection with the most stable

growth rate

2.2.3.5 Business operating results of 2012

In 2012, the total assets of GP.Bank — Hanoi Transaction Offices was 2064.27

billion dongs, reduced by 26.57% compared to 2011 that was caused by the difficult eccnomic situation affecting the activities of capital mobilization and lending of GP.Bank — Hanoi Transaction Office Although in 2012 the raising of capital of

GP Bank — Hanoi Transaction Office reached higher growth rate compared to 2011 by 0.95%, the growth rate of credit of 2012 strongly declined 22.31% compared to 2011

Thus, this made the total assets of GP.Bank — Hanoi transaction office of 2012

decreased compared to 2011

Unit: Billion VND

3 | Credit balance 2.027,72 | 1.861,02 Loco -22,31%

6 | Profit after tax 59,02 48,66 20,82 | -133,72%

Source: Report on the business results of GP Bank - Hanoi Transaction Office)

Figure 2.7: Business Result as of 31/12/2012 of GP.Bank — Hanoi Transaction Office

In difficult trading condition of the entire industry, to survive and compete, the leadership of GP.Bank — Hanoi Transaction Offices and all staff have to manage, make more utilities for customers to maintain its stable operation, retaining market share, customers is one of the solutions that GP.Bank — Hanoi Transaction Offices has performed and directed but not merely directed to profits and attracted capital Therefore, although in 2012 business result was still profitable that did not achieve given goals and was lower than in 2011, the number of customers of GP.Bank — HanoiTransaction Office had almost no strong decline

2.3 Analysis of the external environment

2.3.1 Macro environmental analysis

Macro environmental analysis can help us find out opportunities and challenges affecting the business activities of the enterprise at the present time as well as in the future The macro-environmental factors affecting the current business activities of enterprises include: political factors, economic factors, social and technological factors 2.3.1.1 Political and legal environment

Political environment:

- Vietnam is considered as a country having stable political and social environment in comparison with other countries of the region Compared to other

ASEAN countries such as Indonesia, Malaysia, the Philippines and China, Vietnam has

less issue related to religious and ethnic conflicts After implementing the "renovation"

policy, Vietnam has achieved high GDP growth and maintained its political and macro-

economic stability

- A stable political environment makes favorable conditions and opportunities for the development of domestic enterprises It also creates attraction, to foreign enterprises to expand their investments into Vietnam

- Political stability will reduce the risk of terrorism, strike Thus helping the enterprises’ process of production, busines avoid the risks And through which, it will attract investment in industries, including the banking sector

Legal environment:

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- Any enterprise is also subject to the strong impact of the law, especially for enterprises trading in the banking sector, a sector affecting the entire economy The activities of the banking sector are closely adjusted by the provisions of the law, moreover commercial banks are also subject to the close control of State Bank

- In recent five years, the legal framework for banking activities has been gradually improved to meet the needs of international economic integration To build a modern banking system, in accordance with international practices and standards, improving operational efficiency of the banking sector, in 2010 the State Bank Law and the Law on Credit Institutions were supplemented and modified Until now, the banks are operating under the Law on Credit Institutions No 47/2010/QH12, formally adopted by the National Assembly and taken effect from the date of January 1°, 2011 For recent years, the State Bank has repeatedly changed the measures of operating monetary policy to stabilize the value of money, promote economic growth, ensure the stability of banking system development through the operating tools such as open

market operations, foreign currency swap Management mechanism of foreign

exchange, credit, capital mobilization and payment is more and more flexible,

improving the self-control and self-responsibility of banks

2.3.1.2 Economic Environment

Business structure and operating results of enterprises in the area of Hanoi city:

- In recent years, the economy of Hanoi has recorded its development in terms of the common difficulties of the economy with higher interest rates, more enterprise have got difficulties in making access to capital Hanoi’s growth rate of 2012 reached 8.1%, the output of the 14/21 key industrial product of the city has tended to fall through

months Registration number of establishing new enterprises decreased significantly In

2012, there were 15,000 new enterprises with their capitals of 83,000 billion dong,

equivalent to 90% number of enterprises and 70% of the registered capital in 2011 and

there were 12 249 decommissioned In which, 420 enterprises have business

dissolution, 5273 enterprises made their suspension of business, 6556 escaped In particular, of 81 592 enterprises making corporate income tax declaration, there were 57,866 enterprises declaring their losses, accounting for 71% In addition to objective