LV Thạc sỹ_Improving credit risk management in BIDV thang long branch

1 ABRREVIATION...4 LIST OF TABLES...5 INTRODUCTION...6 Chapter I: Credit risk management in commercial banks...8 1.1.Bank credit in commercial banks...8 1.2.Credit risk management in com

I would like to thank my supervisor, Ms and my instructor, Ms…, DeputyDirector of BIDV Thang Long Branch, for enthusiastic guidance and support to meduring the internship period

To complete this report, I have spent an enormous time and effort to collectinformation and practical knowledge However, because of short internship and limitation

of experience and understanding, my report inevitably has shortcomings I look forward

to receive recommendations from the supervisor, Ms … as well as officials at BIDVThang Long Branch to make this report better

1

ABRREVIATION 4

LIST OF TABLES 5

INTRODUCTION 6

Chapter I: Credit risk management in commercial banks 8

1.1.Bank credit in commercial banks 8

1.2.Credit risk management in commercial banks 12

Quantitative model: 13

Z - Credit scoring model 13

Chapter II: Current situation of credit risk management in Bank for Investment and Development of Vietnam 22

2.1.Overview of Bank for Investment and Development of Vietnam - Thang Long Branch 22

2.2.Business performance of BIDV Thang Long Branch in recent years 26

2.3.Current situation of credit risk management at Bank for Investment and Development of Vietnam – Thang Long Branch 30

2.4.Credit risk management evaluation in Bank for Investment and Development of Vietnam – Thang Long Branch 39

Chapter III: Solutions to improve credit risk management in Bank for Investment and Development of Vietnam – Thang Long Branch 44

3.1 Credit risk management orientations of Bank for Investment and Development of Vietnam – Thang Long Branch 44

3.2.Solution to improve credit risk management of Bank for Investment and

Development of Vietnam – Thang Long Branch 45

3.3.Recommendations 49

CONCLUSION 53

REFERENCES 54

LIST OF TABLES

Table 2-1: Deposit classification 27

Table 2-2: Service Activities 29

Table 2.2-3: Credit classification 31

Table 2.2-4: Debt Group 33

Table 2.2-5: Credit classification in term of industries 35

Table 2.2-6: Overdue Loans 35

Table 2.2-7: Provision for loan losses 37

Credit activity is one of the basic activities, brings much profit forcommercial bank in addition to other banking activities such as payments, guarantee,card services However, besides bringing back significant income, credit sector is alsoone of contributors to potential risks, which may lead to losses: at low level, credit risk

raise cost, reduces profitability At higher level, credit risk reduces the financial

capacity and reputation of the banks, being the reason of damages to other entities inthe economy

Credit risk is always parallel with credit activity, and cannot be completelyeliminated However, banks can apply measures to detect, prevent, limit or minimizelosses originating from credit risk From manager’s perspective, bankers always concedethe objective existence of credit risk and an expected loss rate because of credit risk,pre-determined in the strategies of the banking activities When losses are below theexpected level, the bank might consider it as a success in management Hence, thebanks always concentrate on managing and limiting credit risk

The Bank for Investment and Development of Vietnam – Thang Long Branch isone of the top branches of the Bank for Investment and Development of Vietnam (BIDV)with a quite stable growth However, in recent year, at this branch, bad debt accounts for

a large proportion and is usually above the entire BIDV’s average Therefore, it isessential to find out solutions to improve the management of credit risk in BIDV ThangLong Branch

The bank with effective business activity, strong financial capacity and performed risk management will gain good reputation with customers and partnersdomestically and abroad This is crucial for the bank to achieve sustainable and stronggrowth Hence, the topic “Improving credit risk management in the Bank for Investmentand Development of Vietnam – Thang Long Branch” is selected for this research

Chapter I: Credit risk management in commercial banks

Chapter II: Current situation of credit risk management in Bank for Investmentand Development of Vietnam – Thang Long Branch

Chapter III: Solutions to improve credit risk management in Bank for Investmentand Development of Vietnam – Thang Long Branch

Chapter I: Credit risk management in commercial banks

1.1 Bank credit in commercial banks

1.1.1 Definition of bank credit

The word “credit” is derived from the Latin word “Credo” The word “credo”means "I trust you" It is defined as" an exchange which is complete after the expiry of acertain period of time after payment Credit is explained as the sale of goods and servicesand money claims in the present in return for a promise to pay in the future The promiseusually based on the confidence and on the belief that the debtor whether a person, abusiness firm or a government unit will be able and willing to pay on demand or at somefuture time Credit therefore is defined in the following words: Credit is the right toreceive payment or the obligation to make payment on demand or at some future time onaccount of an immediate transfer of goods

However, if considering credit from the angle being a basic function of the banks,credit will be seen as following: bank credit is a transaction on assets (money or goods)between the lenders (banks and financial institutions) and the borrowers (individuals,enterprises and other economic organizations) While the lenders transferring their assets

to the borrowers for using in a specific period according to the agreement, the borrowershave the responsibility of repaying the principals and the interests to the lenders at thematurity date

From the definition above, the nature of bank credit is a transaction on asset thatbased on the repayment and has following features:

– After signing loan agreement, banks will transfer their assets to the borrowers(individuals, economic organizations) only when banks believe that they willreturn banks at the maturity date

– The borrowing party must return unconditionally to banks after ending the term.

In general, the repayment will more valuable than the initial lending amount Thisdifference is called the interest

Therefore, banks take the participation in credit activity with role of the lender

1.1.2 Bank credit classification

Credit is a type of asset accounting for the biggest proportion in total assets ofmost commercial banks, reflecting the main activity of banks There are different kinds ofbank credit, including

1.1.2.1 Maturity

– Short-term credit: tenor is lower or equal 12 months

– Medium-term credit: tenor is from 12 months to 5 years

– Long –term credit: tenor is more than 5 years and maximum tenor could be up

to 20 – 30 years, depending on the project and investment licenses Someparticular situations it can come up to 40 years

1.1.2.2 Types of finance

– Lending: lending is that banks give money to customers with commitmentreturning the principal and interest in a specific period

– Discount: banks give customers amount of money in advance that is in proportion

to the value of commercial papers minus banks’ earning part when they own a to-maturity commercial papers

not-– Leasing: banks use their money to buy the asset, and then to hire it out tocustomers with certain agreements After a certain period, customers must payback the principal and interest

– Guarantee: Bank guarantee means that the bank opens a written certificate to thebeneficiary at the consignor's request As the guarantor, bank has theresponsibilities to handle the debt or obligations instead of the consignor Therights and obligations of both parties would be prescribed by the contract

– Factoring: Factoring is the sale of commercial accounts receivable invoices to abuyer, or factor, at a discount, in order to obtain cash on the invoices, with the

factor assuming full responsibility for credit analysis, payment collection andcredit losses on the new accounts There are usually three parties involved when

an invoice is factored: the seller of the product or service who originates theinvoice, the debtor is the recipient of the invoice for services rendered whopromises to pay the balance within the agreed payment terms, and the factor

1.1.2.4 The purpose of borrowing loans

– Loans for business and production: serve the purposes of production andbusiness

– Consumption loans: serve consumption purposes of individuals and households

1.1.2.5 The others

Besides some types of bank credit above, people can divide bank credit based onmode of lending (installment loans, loans for projects, loans based on credit limit ), thelevel of risk (doubtful debt, recoverable debt, non-recoverable debt)

1.1.3 Importance of bank credit

1.1.3.1 Bank credit responds the capital demand for maintaining reproduction process

as well as contributes to economy development

The capital demand in production and business processes is always a pressingproblem to every entrepreneur Besides, the relation of selling or purchasing on account

always exists in the market Hence, credit activity contributes to rotate more speedilycapital in the economy, which provides capital demanders easier access to find aneffective capital source for maintaining production and business activities continuously,and could provide people with surplus capital and a chance to secure, as well as to make aprofit in surplus capital.

In commodity economy, credit is one of sources forming entrepreneurs’ capitalwhich is a contributor to foster technological applications in production processes inorder to hasten the social reproduction process

1.1.3.2 Credit hastens capital and production centralization processes

Specific nature of banking activity is to mobilize temporarily unused monetarycapital, then to disperse in the economy, in society by make loans to economicorganizations that have capital demands serving production and business processes Thatcentral investment is an unavoidable need of the commodity economy, limits the waste ofcapital, and saves all resources, such as time, capital mobilizing cost

1.1.3.3 Credit hastens goods and currency - trading processes

Credit directly takes part in the process of trading goods and currency, which givesone favorable condition to develop economics, especially major economic fields in eacheconomic development period Credit activity is always governed directly by economicdeveloping policies of government, so it contributes to faster currency exchangingprocess in market economy, restricts at the lowest level of the capital stagnancy inproduction and business activities, and betters capital flow

1.1.3.4 Credit contributes to hasten economic posting regime

With financing credit of banks, enterprises have to implement a more explicit andeffective economic posting regime When using loans from banks, enterprises mustrespect credit contracts, must take responsibilities of paying principal and interest ontime, as well as execute required regulations in contracts such as financial problem

Therefore, when using loans of banks, enterprises must care about enhancingeffectiveness of using capital, decreasing production cost, and increasing profit

1.1.3.5 Credit is the tool financing capital for the less developed economics industries

and main economics industries

With credit tool, government will finance the less developed economics industries

by the incentive loans with low interest, long term, and large capital scale Furthermore,government also concentrates credit capital on developing key industries, motivatingother economics industries to develop

1.2 Credit risk management in commercial banks

1.2.1 Definition of credit risk management

“Credit risk is the probability of unexpected losses suffered by the banks that the borrowers do not pay the loan on time, cannot pay or cannot pay the full principal and interest loan to the banks”

The objective of credit risk management is to maximize a bank’s risk-adjustedrate of return by maintaining credit risk exposure within acceptable benchmark Banksmust manage the credit risk inherent in the entire portfolio as well as the risk inindividual credits or transactions Banks should also consider the relationships betweencredit risk and other risks The effective credit risk management is a crucial factor

of a comprehensive approach to risk management

1.2.2 Credit risk management procedure

1.2.2.1 Credit risk recognization

Business activity is impossible to immediately collapses during one night, everyfailure is usually has some previously alert signs, so is credit risk However, some signsare blurred, and the others are really obvious We can recognize credit risk based on somesigns, such as: less vault cash, higher receivables, inventory and so on

1.2.2.2 Measurement and management of credit risk

a Measurement of credit risk in classifying of a single borrower

 Qualitative model: 6Cs model

To find out and to analyze borrowers, credit officers need to study detailedly 6characters of borrowers: Character, Capacity, Cash, Collateral, Conditions and Control.Only when all criteria are evaluated being good, loans are feasible.

 Character – specific purpose of loan and serious intent to repay loan

 Capacity – legal authority to sign binding contract

 Cash – ability to generate enough cash to repay loan

 Collateral – adequate assets to support the loan

 Conditions – economic conditions faced by borrower

 Control – does loan meet written loan policy and how would loan be affected bychanging laws and regulations

6Cs model helps credit officers reply the overview question: Is borrower enoughconditions to be borrowed?

 Quantitative model:

 Z - Credit scoring model

Z – Credit scoring model is formed to score credit for American manufacturingcompanies and now it is applied by many Vietnamese banks Z is the general meter toclassify credit risk in term of the borrowers, which depends on:

1- Financial indicators of the borrower (Xi)

2- The importance of these indicators in determining default probability of theborrowers in the past

Z= 1.2X1+ 1.4X2 + 3.3X3+ 0.6X4+ 1.0 X5

Where: X1: net working capital / total assets

X2: accumulated profit / total assetsX3: profit before tax / total assetsX4: Market price of stock/ Book value of long-term loansX5: revenue / total assets

• Z < 1.8 : High risk

• 1.8 < Z < 2.99 : Undeterminable

• Z > 2.99 : Impossible default

From above conclusion, banks won’t issue credit for customers having Z-scoreabove 1.8

 Internal credit rating model

- Assessed customers: Company and individual

- Factors for assessment: Financial ability, risk level, borrower’s intention to repaythe loans

- Criteria for assessment: Qualitative: non-financial criteria; Quantitative: financialability (financial statement)

- Basically ratings describe the creditworthiness of customers Hereby quantitative

as well as qualitative information is used to evaluate a client In practice, the ratingprocedure is often more based on the judgment and experience of the ratinganalysist than on pure mathematical procedure with strictly defined outcomes

- In internal rating system, banks consider many different drivers of the consideredfirm’s economic future:

o Future earnings and cash flows

o Debt, short- and long – term liabilities, and financial obligations

o Capital structure

o Liquidity of the firm’s assets

o Situation (political, social, etc) of the firm’s home country

o Situation of the market, in which the company has its main activities

o Management quality, company structure

After assessing and grading customers, banks will classify customers into groups

as a following example (different banks possibly have different classifications):

With each classified group above, banks will have the different credit issue level(or refuse the credit issue) and collateral asset requirement.

b Measurement of credit risk of portfolio

• Overdue loans

Overdue loans are debts that part or all of principal and/ or interest havebeen over the maturity In other word, overdue loans are loans not paid back on time,not allowed and being not eligible to be extended In order to manage overdue loans, thebank divide the overdue loans by the specific period of time: 1-90-days overdue loans,

90-180-days overdue loan, 180-360-days overdue loan and over-360-days overdue loan.The longer time overdue, the higher risk for the banks Banks must have appropriatesolutions for each group of overdue loans to recover the principle capital and to mitigatethe losses.

The higher this ratio indicates the more delinquency credit and the greater riskthe bank must suffer

• Bad debts

Bad debts are loans that the banks cannot collect and all reasonable effortshave been exhausted to collect the amount owed Bad debt usually includescircumstances: the borrower is unable to pay debt on time, collateral asset devalues and

is unavoidable to banks Depending on various situations, bad debt could be much or less.Some general characteristics of bad debt:

– Unusual and no-reason slowness in providing financial statement and paying debts– To corporations, the unusual changes in depreciation calculation method,inventory value, tax account ; debt restructuring; credit downgrades; stock pricechanging adversely

– Net profit decreases, changes in ROA, ROE, EBIT,

– Unfavorable changes in capital structure, liquidity, or operating level

This debt is written off by crediting the borrower’s account and so eliminatingany balance remaining in that account The higher bad debt ratio, the lower level ofcredit risk management of the bank

• Provision for loan loss

Provision for loan loss is the non-cash expense for banks to account for futurelosses on loan defaults Banks assume that a certain percentage of loans will default orbecome slow-paying Banks enter amount of money or specific percentage over totalasset as an expense when calculating their pre-tax incomes This guarantees a bank'ssolvency and capitalization when the risks occur The loan loss provision allocated each

year increases with the risk of the loans bank suffering A bank making a small number ofrisky loans will have a low loan loss provision compared to a bank taking higher risks

• Unpaid interest

An easy way to recognize the unpaid interest is the accrued interests of thedebts which the bank could not collect The bank with high unpaid interest ratio may

be suffering from high risk

1.2.2.3 Credit risk management

Credit risk management is one of important management activities of commercialbanks To manage credit risk, banks take some solutions to limit credit risk, including:

- Limiting the generation of doubtful loans, overdue loans

o Implementing rules and regulations on credit safety in credit organizationlaw and decrees of the State Bank of Vietnam

o Identifying the list of finances with different risk levels

o Building credit policies and credit analysis process

o Determining the signs of doubtful loans, credit limit and diversification

- Solving bad debts and overdue debts

o Establishing department that manages bad debts

o Classifying overdue debts and bad debts in term of regulations, and thenanalyzing reasons, reality and capacity to solve

o If borrowers are in temporarily financial troubles and still have capacity toreturn debts, banks can apply some supports, such as: renew debts, decreaseinterest rate

o If borrowers defraud, or impossibly return debts, banks apply liquidationpolicies, such as sell mortgage assets, take borrowers to court

1.2.2.4 Report on credit risk

Credit officer must classify debts in term of months and customers Every month,credit officers take responsibility of reporting detailed amount and proportion of baddebts, overdue debts, bad-debt recovered situation as well as name and borrowed amount

of customers having bad debts and overdue debts to their manager and then, thesemanagers will report to deputy director and director.

1.2.3 Factors influencing credit risk management in commercial banks

1.2.3.1 Subjective factors

a Business strategy of the banks

Each bank’s goals and business strategies are different If the banks select creditactivity as priority to develop, or main source of revenue, the target of the bank is tocontinue credit growth, to raise the number of loans, to expand the target borrowers andlending fields The growth of credit following profits and increasing competitions withother banks to gain more market share can cause of the loose of control over creditquality, such as: removing credit requirement, not following the regulations of loanimplementation, and lacking of lending guidance lead to invest in backward areas, lesspromising development the loose of credit quality will cause higher credit risk for thebank

b Bank Technologies

Informational technology system of a bank can be a system of information, data,machinery, equipment, and software for banking activities Each bank can only operate,manage their activities based on a certain technology basis Especially for creditactivities, information technology is a crucial factor An adequate information systemwould be helpful for the evaluation to make decisions for each loan such as customerinformation, data being more diverse, corresponding with fully processing technologywill help the bank have more accurate credit decisions, help the banks not miss the bestloan and avoid the bad loans which can cause great damage to the bank On the contrary,the limited information or technology of the banks may be one contributor to wrongdecision making (refusing good customers and loans while accepting borrowers beingunable to pay back the loan), leading to credit risk

c Human resource management

Human resource are one of crucial resources of any organization, so training andmanaging people is a very important job, but a difficult job and if it is successful, it willbring huge efficiencies to the banks In credit activities, credit officers need to haveprofessional knowledge on credit, to be flexible in obtaining and processing information,data related to the loans and borrowers, to be prudent in dealing with debtrecovery, and above all to have professional business ethics If credit officers arelack of business ethics, collude with borrowers to take money from the bank, creditrisk obviously occurs, causing great losses on capital and reputation of the bank.Besides, credit officers are not professional, unable to determine the risks and to assesscustomer loans, along with internal management control process of the bank beingloosen, having several gaps, it will lead to credit risk and potential losses for thebank

d Credit approval process

The credit process of commercial bank includes the order of phases, steps whichfollows a certain procedure in lending, collecting debts The State Bank of Vietnam hasissued specific regulations, directions on credit process in commercial banks However,each bank has its own process for the approval of credit proposal The meaning of creditapproval process: in terms of efficiency, an appropriate credit process will assist thebanks to improve credit quality and to minimize credit risk; in terms of management,credit process allows the banks to determine the tasks and responsibilities in creditactivity of each department, it is also a basis to set records, and lending procedure

e Awareness of applying standard credit risk management techniques

To each commercial bank, applying standard techniques on credit riskmanagement is necessary to reduce the risks and potential losses of the banks However,the application of these techniques depends on the abilities of each bank If the banks canapply the standard techniques, it will improve the quality of credit management; reducethe potential risks in credit process Banks which cannot use the standard mitigation

techniques may suffer credit risk With the updated regulations from the State Bank ofVietnam, each commercial bank should consider the business environment, the legalconditions and then apply the appropriate mitigation techniques for their own banks.

1.3.2.2 Objective factors

a Environmental factors

The factors of natural environment or political environment, such as: naturaldisasters (floods, landslides, hail, droughts, ), war, riots, epidemics, political instability are hard to predict and often engender very heavy destructions outside the control ofhuman When natural disasters happened, both borrowers and the lenders - banks willface with various risks: borrowers’ business plans, investment projects can be in troubles,leading to face with the losses and cannot pay back the loan to the banks while the banksalso have to face with credit risk when loans cannot be recovered from customers

b Macro factors

There are changes in the economic policies of the government, changes in legaland society These changes may bring advantages or disadvantages to variousstakeholders in the economy Therefore, when these changes occur suddenly, thestakeholders can not immediately adapt to changes As a result, sometimes it bringsnegative impacts on these stakeholders In this case, the possibility to pay back the loans

of borrowers decreases and the banks will suffer credit risks

c Borrowers’ morals and business ethics

Moral is one of popular factors leading to credit risk of the bank Numbers ofborrowers are willing to face with hazardous business to gain the target profits To gaintheir goals, they do not hesitate to use deceptive tactics to borrow and to capture capital

of the banks such as: faking the borrowing documents, providing incorrect information,bribing credit officers Varieties of borrowers are possible to pay back the loan butpurposefully delay to prolong the debt, delinquent to use capital and refuse to pay the

loans In this case, the consequent is very bad, related to the prestige and responsibility ofcredit officer in particular and the entire bank in general.

Chapter II: Current situation of credit risk management in Bank for Investment and Development of Vietnam

2.1 Overview of Bank for Investment and Development of Vietnam - Thang

Long Branch

2.1.1 The foundation and development of BIDV Thang Long Branch

On April 3rd, 1974 Bank for Investment and Development of Vietnam Thang LongBranch that was originally a functional department of Central Construction Bank, wasfound under the Decision No 103/TC-QĐ/TCCB The Department had head officelocated at Dong Ngac Commune, Tu Liem District, Hanoi and operated with mainfunctions: distribution, payment and the control of basic constructional capital for ThangLong Bridge Project

On July 17th, 1981 State Bank of Vietnam Governor issued Decision

No.75/NH-QĐ to named Department as “Branch of Bank for Investment and Build of Thang LongBridge” with functions of management of the capital distribution on basic constructionalinvestment, payment, and lending activities; cash management, salary budget control ofbasic construction investment segment

According to Decision No.38 NH-QĐ on April 2nd, 1991, to be suitable toorganizational structure of Bank for Investment and Development of Vietnam, Branchwas renamed Bank for Investment and Development Thang Long Branch, whichbelonged to Bank for Investment and Development of Vietnam and moved head office toPham Van Dong Street, Co Nhue Commune, Tu Liem District, Hanoi In 1994, theGovernor of SBV released Decision No 38 NH/QĐ – NH on October 9th, 1994 thatadjusted BIDV Thang Long Branch’s functions to allow Branch to operate as acommercial bank and belonged to Bank for Investment and Development of Vietnam

On December 2nd, 2008 BIDV Board of Management released Decision No.1243/QĐ-HĐQT about the movement of BIDV Thang Long Branch’s head office.According to decision, BIDV Thang Long Branch’s head office would move from Pham

Van Dong Street, Tu Liem District, Hanoi City to No 08 Pham Hung street, Dich VongCommune, Cau Giay District, Hanoi City.

2.1.2 The organizational structure of BIDV Thang Long Branch

The organizational structure of BIDV Thang Long Branch is currently divided intofive divisions of activities: customer relation, risk management, operation, internalmanagement and sub-offices, each group of 2 or 3 divisions is directly managed by oneDeputy Director

– Customer Relation Division: includes 3 departments with one individual customerrelation department and two corporate customer relation departments beingresponsible for developing customer relationship as well as marketing and sellingbanking products and services

– Risk Management Division: propose regulations and measure to manage creditrisk; prevent money laundering; manage ISO system, detection-risk; controlinternal

– Operation Division: include credit management department with function of ;customer service department with dealing with processes of business andindividual customers( opening account, payments, transfers, deposits );international payments with international trade functions;

– Support: support other departments and overall operation og the branch; includingfinance and accounting department, organization and administration department,general planning department, IT department

– Transaction offices: at the present, Branch has 10 transaction offices with majortask being to mobilize capital

2.1.3 Major activities of BIDV Thang Long Branch

The major activities of BIDV Thang Long Branch include:

1.3.1.1 Credit activities

- Lending short-term, medium-term and long-term loans in VND and foreigncurrencies to organizations and individuals

- Discounting commercial and valuable papers

- Financing export and import

- Consulting commercial investment, appraising partners

1.3.1.2 Capital mobilization activities

Mobilizing short-term, medium-term, and long-term deposits in VND, and foreigncurrencies (mostly in USD and EUR) from organizations and individuals

1.3.1.3 Other services activities

- Commercial financing service

- Foreign currency trading service

- E-banking services:

o Transferring money electronically, ATM services, VnTopup…

o Home banking, phone banking

2.2 Business performance of BIDV Thang Long Branch in recent years

2.2.1 Capital mobilization activities:

Capital mobilizing activity is a traditional activity of each bank, and plays acrucial role to commercial banks as the source of all business activities under the forms

of loans, investment, funds mobilization, services support, etc It is undeniable that theactivity is the background for stable growth of capital basis for all banks Consequently,BIDV – Thang Long Branch considered it as one of main tasks and always focused onenhancing and diversifying capital-mobilizing products, along with deployingcoordinated policies and taking variety of varied methods to attract unused resources ofcapital from residents to create other resources which support for its clients’ needs.Hence, there was an increase in both quantity and quality of mobilized capital of branch

This was obviously expressed by the table below:

Table 2-1: Deposit classification

From the table we can see that in the period from 2009 to 2011, the branchwitnessed a quite stable growth on capital - mobilized amount with approximately 13%,and 12% in 2010 and 2011 respectively That total capital mobilized over the yearsincreased gradually caused mostly by the increase of capital sources mobilized fromfinancial institutions and residents which partly derived from the rapid increase in depositinterest rate; the tightly control of the government and the SBV on two other traditionallymoney-saving channels, these are, gold and foreign currencies (especially USD) and thegloom of two investment channels: security market and the real – estate market in recentyears, so the sending money to banks was a judicious choice In detail, in 2011, theamount of capital mobilized from residents grew about 25.6% compared to 2010 and hit1,752 billion VND while the amount of capital mobilized from financial institutionsjumped above 43% to 967 billion VND from a year earlier However, in general, the