Improve the mortgaged real estate valuation at joint stock commercial bank for investment and development of viet nam so giao dich 1 branch

ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH --- NGUYỄN MINH HAI IMPROVE THE MORTGAGED REAL ESTATE VALUATION AT JOINT STOCK COMMERCIAL BANK FOR INVESTMENT AND DEVELOPMENT OF VIE

ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH

-

NGUYỄN MINH HAI

IMPROVE THE MORTGAGED REAL ESTATE

VALUATION AT JOINT STOCK COMMERCIAL BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM –

SO GIAO DICH 1 BRANCH

GIẢI PHÁP NÂNG CAO HIỆU QUẢ KINH DOANH

THẺ TẠI BIDV SỞ GIAO DỊCH 1

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

HÀ NỘI - 2020

ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH

-

NGUYỄN MINH HAI

IMPROVE THE MORTGAGED REAL ESTATE

VALUATION AT JOINT STOCK COMMERCIAL BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM –

SO GIAO DICH 1 BRANCH

GIẢI PHÁP NÂNG CAO HIỆU QUẢ KINH DOANH

THẺ TẠI BIDV SỞ GIAO DỊCH 1

Chuyên ngành: Quản trị kinh doanh

Mã số: 60 34 01 02

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

NGƯỜI HƯỚNG DẪN KHOA HỌC: PGS.TS HOÀNG ĐÌNH PHI

HÀ NỘI - 2020

DECLARATION

I assure that this is my own scientific research The documents used in the thesis are excerpted from reliable sources The assessments and judgments in this thesis are individually researched and based on the authentic documents

The dissertation author

I would like to express my sincere thanks to the Board of Directors, officers and employees of Bank for Investment and Development of Vietnam - So Giao Dich 1 Branch for their enthusiastic support during the data collection process to finish the thesis

Finally, I would like to express my sincere thanks to my family, friends and colleagues who have always created favorable conditions to help, encourage me during the time of writing my thesis

TABLE OF CONTENT

DECLARATION i

ACKNOWLEDGEMENT ii

LIST OF ABBREVIATION iv

LIST OF TABLES v

LIST OF FIGURES vi

INTRODUCTION 1

1 The necessity of the topic 1

2 Objectives of the study 2

3 Researched subjects 2

4 Research scope 2

5 Research methodology 2

6 The structure of the thesis 3

CHAPTER 1: THEORETICAL BASIS FOR MORTGAGED REAL ESTATE VALUATIONOF COMMERCIAL BANK 4

1.1 Overview of mortgaged real estate 4

1.1.1 Definition of Mortgaged real estate 4

1.1.2 Features of mortgaged real estate 6

1.1.3 The role of mortgaged real estate 7

1.2 Valuation of mortgaged real estate of joint stock commercial banks 8

1.2.1 Definition of Mortgaged real estate valuation 8

1.2.2 Foundation and principles of mortgaged RE valuation 9

1.2.3 Mortgaged real estate valuation methods 11

1.2.4 Mortgaged real estate valuation process 14

1.3 Factors affecting mortgaged real estate valuation of joint stock commercial banks 17

1.3.1 Objective factors 17

1.3.2 Subjective factors 19

CHAPTER 2: CURRENT SITUATION OF MORTGAGED REAL ESTATE AT JOINT STOCK COMMERCIAL BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM – SO GIAO DICH 1 BRANCH 20

2.1 Overview of Joint stock Commercial Bank for Investment and Development

of Vietnam - So Giao Dich 1 Branch 20

2.1.1 The process of formation and development 20

2.1.2 Organizational structure 21

2.1.2 Business situation of Joint stock Commercial Bank for Investment And Development Of Vietnam - So Giao Dich 1 Branch between 2016 and 2018 23 2.2 Analyze the status of mortgaged RE valuation at th Joint Stock Commercial Bank for Investment and Development of Vietnam - So Giao Dich 1 Branch 29

2.2.1 Types of mortgaged real estate at the Branch 29

2.2.2 Bases and principles of mortgaged RE valuation at the branch 30

2.2.3 Current situation valuation method at the Branch 42

2.2.4 Current situation of mortgaged RE valuation process at the Branch 45

2.3 Evaluate the status of mortgaged RE valuation at Joint Stock Commercial Bank for Investment and Development of Vietnam - So Giao Dich 1 Branch 53

2.3.1 Achieved results 53

2.3.2 Limitations and causes 54

CHAPTER 3: SOLUTIONS TO IMPROVE THE VALUATION OF MORTGAGED REAL ESTATE AT JOINT STOCK COMMERCIAL BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM – SO GIAO DICH 1 BRANCH 58

3.1 Development orientation of Investment and Development Bank of Vietnam - So Giao Dich 1 Branch 58

3.1.1 General development orientation 58

3.1.2 Orientation to improve the mortgaged RE valuation 59

3.2 A number of solutions to improve the mortgaged RE valuation at Joint Stock Commercial Bank for Investment and Development of Vietnam - So Giao Dich 1 Branch 60

3.2.1 Big data application in mortgage real estate valuation 60

3.2.2 Completing and strictly complying with the process of valuation for mortgaged RE 62

3.2.4 Improve the quality of RE valuation staff 65

3.2.5 Limiting risks and mistakes in valuation 67

3.2.6 Improve the organization of RE valuation activities 68

3.2.7 Strengthen the application of science and technology 68

CONCLUSION 70

LIST OF REFERENCES 71

APPENDIX 74

LIST OF ABBREVIATION

2 BIDV Bank for Investment and Development of Vietnam

LIST OF TABLES Table

name

Content

Page

Table 2.1 Capital mobilization results of BIDV So Giao Dich 1

Table 2.2 Credit activity results of BIDV So Giao Dich 1 Branch

Table 2.3 Service performance results of BIDV So Giao Dich 1

Table 2.4 Debit balance for mortgaged real estate of BIDV So Giao

Table 2.5 Number of assessed the real estate documents of Bidv- So

Table 2.6

The number of the real estate valuation documents with deviations from the revaluation of BIDV So Giao Dich 1 Branch between 2016 - 2018

Table 2.8 The number of assessed the real estate documents that

need to be adjusted by BIDV So Giao Dich 1 Branch 42

Table 2.9

The survey results of information collected are used for valuation mortgaged real estate of BIDV So Giao Dich 1 Branch

47

Table 2.10 Survey results of the time to evaluate the value of the real

Table 2.11

Survey results of the mortgaged real estate valuation process

LIST OF FIGURES

Figure 1.1 Mortgaged real estate valuation process of commercial

Figure 2.1 Organizational structure of BIDV So Giao Dich 1 Branch 22

Figure 2.2 The real estate valuation process of BIDV So Giao Dich 1

INTRODUCTION

1 The necessity of the topic

In today's world, the banking system in Vietnam has developed quite thoroughly, which plays an important role in the circulation of capital in the economy and contributes

to socio-economic development The general operational principle of commercial banks is safety and profitability To ensure two principles above, commercial banks create operational process as well as compulsory requirements for all credit activities In particular,, in credit lending activities, commercial banks often require customers to have collaterals Based on collaterals, commercial banks determine the loan and the appropriate loan amount Besides, the collaterals are very diverse Currently, most of the collaterals for bank loans are often the real estate

Mortgaged real estate valuation is one of the most important operations in credit activities of commercial banks On the one hand, from banks' perspective, the valuation not only helps the bank to determine a reasonable loan level based on calculation and prediction of potential risks but also increases the competitiveness of commercial banks in establishing reputation and attracting customers in the field of lending, improving the quality of lending activities In particular, and credit activities in general of commercial banks From customers' perspective, the accurate and reasonable determination of the value

of mortgaged real estate will accelerate capital conversion in production and business At the same time, it will build trust for customers in the quality of operations of commercial banks, which is truly considered as a "midwife" when customers need capital

Joint stock Commercial Bank for Investment and Development of Vietnam - So Giao Dich 1 Branch has increasingly affirmed the prestige and market share in credit activities in the area With credit activities, the Branch always focuses on the valuation of mortgaged real estate However, there still exist many shortcomings in the mortgaged real estate valuation at the branch such as: customer relationship department is still involved in the real estate loan valuation without showing complete objectivity To ensure the safety of

a loan, the value of the real estate usually accounts for 70% of the market value and this price scale is often lower than the real value of the real estate, which, as a consequence, influences the loan limit as well as the benefits that the borrower may have Moreover, the application of evaluation methods is still not flexible and re-evaluation requests are still popular

From the above practice, the author has chosen the topic: "Completing the valuation of

mortgaged real estate at Joint Stock Commercial Bank for Investment and Development of Vietnam - So Giao Dich 1 Branch " as the research topic

2 Objectives of the study

- Provide basic theoretical issues on the real estate valuation, mortgaged real estate valuation of commercial banks

- Analyze the current situation of mortgaged real estate valuation at BIDV - So Giao Dich

1 Branch between 2016 and 2018 Indicate the achieved results but also clarify the limitations and their causes in the valuation of mortgaged real estate at the branch

- Propose a number of solutions to improve the mortgaged real estate valuation at BIDV -

So Giao Dich 1 Branch by 2025

- In terms of time: Data collected during 2016 - 2018

- In terms of space: Dissertation at BIDV - So Giao Dich 1 Branch

5 Research methodology

- The method of data collection

+ Secondary data: To analyze and assess the status of mortgaged real estate valuation

at BIDV - So Giao Dich 1 Branch, the author collects secondary data from textbooks, magazines, Internet, the research works related to mortgaged real estate valuation of commercial banks At the same time, the author collects from the business reports of BIDV - So Giao Dich 1 Branch; The current legal documents of the State and BIDV related to loan guarantee, property valuation and other legal documents related to the real estate management

+ Primary data: The author surveyed employees tubers a BIDV - So Giao Dich 1 Branch related to valuation activities mortgaged real estate The content of the survey aims

to evaluate the real estate valuation at BIDV - So Giao Dich 1 Branch such as the compliance with the regulations on mortgaged real estate valuation, the reasonableness of the mortgaged real estate valuation method, the basis for valuating mortgaged real estate at

the branch

Sample size: 70 staffs

Sampling method: Random selection

- Data processing method:

The data is collected and summarized and processed by Excel software

- Methods of information analysis include:

+ Descriptive statistical method: Summing up the collected data and data to describe the situation of mortgaged real estate valuation of BIDV - So Giao Dich 1 Branch, showing the advantages and disadvantages, the limitations, inadequacies and causes

+ Comparative analysis method: This method is used to compare statistical indicators, to compare the differences in the application of mortgaged real estate valuation methods

Comparison with absolute numbers: Through the results of the word between the values of the analysis between compared to the base between of economic indicators, the absolute numerical variation of the analytical criteria is found

Relative numerical comparison: From the results of comparison between the actual number and the original number, it has been adjusted according to a coefficient of the relevant norm in the direction of the scale of the analytical index to see reality compared to the base between how many percentages increase or decrease?

+ Method of graphing: The method of representing analytical criteria through chart types and graphs From the visual recognition of the shape of a straight line or a bar graph, It is possible to assess the trend, the degree of fluctuation of the indicators, or to evaluate the proportion of the constituent parts

+ Survey method: The author collects information from the survey subjects who are employees involved in mortgaged real estate valuation at BIDV - So Giao Dich 1 Branch Through the results of the survey, the author assesses the results and limitations in the real estate valuation activities at BIDV - So Giao Dich 1 Branch

6 The structure of the thesis

In addition to the introduction, conclusion, list of references, , the thesis consists

of 3 chapters:

Chapter 1 Rationale for commercial the real estate valuation of commercial banks Chapter 2 Actual situation of mortgaged real estate valuation at Joint Stock Commercial Bank for Investment and Development of Vietnam - So Giao Dich 1 Branch

Chapter 3 Solutions to perfect the valuation of mortgaged real estate at Joint Stock Commercial Bank for Investment and Development of Vietnam – So Giao Dich 1 Branch

CHAPTER 1

THEORETICAL BASIS FOR MORTGAGED REAL ESTATE VALUATION

OF COMMERCIAL BANK

1.1 Overview of mortgaged real estate

1.1.1 Definition of Mortgaged real estate

The real estate is a commonly used concept in almost every country in the world In English people use the word “The real estate” In French the concept of the real estate (RE)

is represented by the word “Immobilier”; China uses the term “Property” (assets associated with land) In Vietnam the concept of RE is expressed in Article 174 of the Civil Code:

“The real estate is immovable property including: Land, houses, construction works attached to land, including properties associated with such houses and constructions; Other properties associated with the land; Other properties prescribed by law” Identifying properties as real or the real estate is not simple Whether all the buildings and architecture are called RE; Similarly, are all properties associated with the construction work also RE? Even to all lands are considered RE? These difficulties often make business or the real estate appraisers have misconception about the true value of the RE consideration In order to avoid errors in RE evaluation, we need to study to identify the specific characteristics of RE, criteria to distinguish between RE and movable property, and other properties

Thus, RE are physical assets that cannot be relocated, and exist in long-term stability Thus, an asset is considered RE when the following conditions are met:

- Being a material element useful to people;

- Occupied by an individual or a community of people;

- Can be measured by certain values;

- Cannot be relocated or just limited relocated so that its properties, functions and morphology are not changed;

- Long-term existence

RE can be classified into the following groups:

- Land: Land is the first element and a basic component of RE Without land there cannot be RE and vice versa no kind of RE that is not tied to the land So the land itself

is RE and it is also an integral part of other RE However, not all lands are RE Only those areas of land that are not relocated or relocated insignificantly, which have their own sovereignty defined, measured and quantified according to certain measurement standards

- Construction works associated with the land and properties attached to such works Permanent construction houses cannot be relocated, or are not moved significantly, construction works attached to land The properties attached are inseparable from that construction These constructions must be able to measure and quantify into values according to certain measurement standards

- Other properties associated with land such as perennial gardens; constructions for aquaculture, salt fields, tourism, recreation, sports and mining projects

The above delimitation of RE helps appraisers understand the essence of RE, thereby drawing the unique characteristics of the RE to have a basis for determining the value of the real estate assets

Regarding RE Mortgage in lending activity of commercial banks (CB)

RE is always an important guaranteed asset and accounts for a large proportion in the total collateral of commercial banks, including major properties such as land, houses, workshops, construction works attached to land and properties associated with construction works They may be existing assets, they may also be assets formed in the future (i.e assets formed during and after the time of signing the mortgage contract) such as income gained from using RE, assets formed from loan capital, construction works in the future

To be collaterals in lending activities, RE must meet the following conditions:

- Under the ownership of the mortgage at the time of signing mortgage transactions RE

- RE without dispute: RE when signing a security transaction, the owner of that RE is not sued by a third person at a court or competent State agency

- RE must be allowed to be traded and able to be sold: The real estate is not prohibited from circulation as prescribed by law at the time of signing the mortgage transaction For activities of mortgage lending of commercial banks, the requirements on the liquidity of the collateral is of paramount importance Therefore, besides the conditions

on the legal nature of the real estate, the condition of the ability to transfer or the liquidity

in the market of collateral is very interested in commercial banks

In order to determine the loan size based on customer requirements and the value of collateral, one of the first requirements in mortgage lending is to require the bank to valuate the real estate at the time of signing the guaranteed contract For each type of asset, depending on the nature, characteristics of the asset and the relationship with customers, the bank has different ways of evaluating RE is a kind of special property, diversity, the components of the real estate value is very complex and also very different than the property is the real estate or other assets, even in some countries it is considered

property the real estate is the power assets (i.e the assets expressed in the form of ownership and the right to use RE, not the RE itself) Therefore, determining the value

of RE requires specific methods of determination

1.1.2 Features of mortgaged real estate

In addition to the characteristics created by an asset, the real estate assets have their own characteristics that other properties do not make the property different from other properties At the same time, it is also one of the factors that create the real estate value Therefore, appraisers need to consider how these characteristics affect RE values

First of all, RE is an asset attached to land or is a land that cannot be relocated, so it

is always considered a fixed asset Therefore, the value and benefits of RE are associated with each specific position The location factor is not only determined by common geographic measurement criteria, but it is assessed primarily by the distance to centers, to public service points, to public facilities such as commercial, cultural, medical, educational and dependent on accessibility Also because RE has a fixed position and is associated with a certain location, the value and benefits of the real estate are affected by regional factors It is the duty of the appraisers to evaluate the impact of location factors on RE values such as natural, socio-economic and environmental conditions When there are changes in the above factors, the value of RE will change accordingly

The real estate is also a special property and individual The difference of RE is primarily due to the difference in plot location; different in structure and architecture, different in direction, different in landscape and exterior Therefore, when evaluating RE, it

is necessary to pay attention to the difference of each RE individual, can not valuate and compare stamping between RE with each other

The real estate is a form of property with limited surface area size due to land area limits and location factors, which leads to the real estate shortage In addition, the supply-demand relationship of the real estate always unbalanced in the direction of supply is smaller than demand, leading to speculation about the real estate, so in the long term, the real estate value tends to increase, especially in the developing areas or potential development areas

The real estate is a type of property that has a very strong influence between adjacent the real estate and has a strong impact on the related socio-economic activities When evaluating the real estate prices, it is necessary to take into account the impact when other the real estate projects will be born

In addition, RE is also a property of great value and long term existence in terms of

both the physical life and economic life of RE Therefore, when evaluating the RE, it

is necessary to consider and calculate the crystallization expenses in the process of forming RE and the time to bring income to RE users

1.1.3 The role of mortgaged real estate

For property owners

While customers mortgage the real estate, customers not only have capital for production and business but also can continue to use the mortgaged real estate, improving the efficiency of the real estate use At the same time, when customers come to mortgage the real estate to borrow capital, mortgaged real estate must have legal papers, so customers need to go to the state management agency to complete the documents This has reduced the real estate without legal documents while speeding up the issuance of papers and reforming administrative procedures

This is a form of capital mobilization when necessary, effective, fast for individuals and organizations However, the organizations and individuals who use this form often encounter a great difficulty and difficulty, i.e., the real estate when being mortgaged is usually only valuated by commercial banks at very low prices, which is the price when the market was quietest Thus, the value of mortgaged real estate is not accurately valuated, causing disadvantages for individuals and organizations when borrowing capital

For credit institutions (mainly Banks)

Bank is a financial business organization Therefore, currency rotation is the main activity Getting mortgaged real estate In particular, and getting property mortgages in general are one of the activities that help the currency flow regularly

Getting the real estate mortgages can increase the amount of reserve capital by commercial banks' assets, generating profits for banks (interests that mortgage collectors must pay to banks) Banks, when realizing mortgage loans, will gain profit from lending, contributing to increase the bank's overall profit, from which the bank will ensure business activities, create conditions for The banking system has developed in both size and quality, contributing to managing the volume of circulating currencies in the monetary policy of the State Bank

Getting mortgaged real estate In particular, and collaterals in general can enhance the borrower's responsibility to fulfill debt repayment commitments, and at the same time prevent risks when the borrower's expected repayment plan fails to perform or unforeseen risks occur

For economy

The mortgage of RE at banks to borrow capital helps individuals and economic organizations get the necessary capital to invest in production and business, create material products to serve society, raise revenues It also contributes to improving the material and spiritual life of the people, contributing to the development of relevant economic sectors and at the same time contributing to the overall development of the country's common economy

Banks making mortgage loans RE products will profit from lending, from the profits of the operation of mortgage lending helped increase overall profitability

of commercial banks, thereby bank trade will ensure business activities, create favorable conditions for the banking system to grow in both size and quality, contributing to managing the volume of circulating currencies in the monetary policy of the State Bank, thereby promoting financial markets to develop healthily and sustainably A healthy financial market is an essential element to ensure macroeconomic, contribute to economic growth and improve the competitiveness of the economy

1.2 Valuation of mortgaged real estate of joint stock commercial banks

1.2.1 Definition of Mortgaged real estate valuation

According to Oxford Dictionary: "Valuation is a professional judgement about how much money something is worth; it’s estimated value"

According to Fred Peter Marrone - Marketing Director of AVO (Association of Australia Evaluation) presented in a valuation training course in Ho Chi Minh City on 25/05/1999 “Valuation is the determination of the value of RE at a time, taking into account the nature of the property and the purpose of its valuation So pricing is applying the comparative market data that you collect and analyze, and then compare it with the assets you value to determine their value ”

According to the Law on The real estate Business, RE valuation is an activity of consulting and determining the price of a specific RE at a specified time The valuation

of RE must be based on technical standards, nature, location, scale, real situation

of RE and market price at the time of valuation RE valuation must be independent, objective, honest and compliant with law

According to Article 4, the Law on Prices was passed by the National Assembly of the Socialist Republic of Vietnam on June 20, 2012 “Valuation is the regulation of the competent State agency or the organization of individual production and business prices for goods and services”

From the above points of view, RE valuation is the determination of a specific

property value for a certain purpose, at a given time, taking into account the characteristics

of the RE, potential economic factors in the RE market, according to certain methods and standards

Therefore, mortgaged RE valuation is an estimate of the value of mortgaged RE for the purpose of determining the loan amount to the borrower, limiting the risk to the lender

at a specific time, taking into account the characteristics of RE and the potential economic factors in the RE market The assessed value of RE may be equal to, higher or lower than the market value The accuracy of the estimated price depends on the qualifications, competence and experience of the appraiser, the reputation of the valuation service providers and other social conditions

In author’s view, mortgaged real estate valuation is determining the value of mortgaged real estate In particular, by morphological currency at a specific time, as basis for determining the level of lending by banks based on the collateral is RE Valuation of mortgaged real estate is one of the important processes and the indispensable rules of lending

by commercial banks in order to determine the legality of collateral RE and is the basis for inclusion of reasonable lending rates

1.2.2 Foundation and principles of mortgaged RE valuation

1.2.2.1 Foundation of mortgaged real estate valuation

First, it depends on the elements of the RE itself

The valuation mortgaged estate must be based on elements of the value of RE that surface area, location, space, environment, economic, social, natural, Based on the utility, purpose of use and exploitation of RE Based on the artificial form of the real estate such as structure, architecture of the real estate; the durability of the real estate; Psychology related to the current self of the real estate

Based on factors of the real estate location and the influence of the location: Location of RE, the relationship between this RE in the overall with other RE to see this

RE position compared to other RE, which plays role of RE valuation

Second, it is based on market conditions

These are the competition of the market and factors of the economy, supply and demand for the real estate, the impact and economic development in general such as the expanding areas, the demand for the real estate in the center increases, with large investment capital amount, the demand for the real estate also increase

Third, it is based on legal basis

Including legal factors related to the real estate, laws not related to the real

estate itself, which are general provisions, regulations on the possession and use of the real estate functions, but provisions of law related to valuation activities and methods of determining land prices

1.2.2.2 Principles of mortgaged real estate valuation

The value of the real estate is formed by many impact factors such as use value, scarcity, demand, solvency When studying the valuation process, it is necessary to consider and apply the rules and principles to accurately evaluate the impact of such factors on the real estate valuation

The essence of the real estate valuation is the analysis of factors that influence the value formation process of a particular asset

Firstly, the best and most effective use principles

The best and most effective use of the real estate is to achieve the maximum level of usefulness in practically appropriate socio-economic circumstances, which can

be economically, regulatory, financially and economically permissible, bringing the greatest value to the real estate

A property is considered to be the most effective and most effective if it shows at the time of valuation that the property is being used legally as well as giving the greatest net income or the ability to give the greatest present value of future The highest usage can persist continuously for a specified between of time The highest and most effective use reflected in the four faces is:

- Legality of use and income stream

- The present value of net income flows of all elements constituting the largest the real estate

- Time for long and stable income

- Satisfying common selection criteria suitable for size

Therefore, when conducting the real estate valuation, it is necessary to evaluate the current status of the real estate in order to estimate the best value of RE

Secondly, the principle of supply and demand

The value of a the real estate is determined by the supply - demand relationship of that the real estate in the market In contrast, the value of the real estate also affects supply and demand of the real estate The value of the real estate changes proportional to demand and inversely proportional to the supply of the real estate

The value of the real estate is determined by the supply-demand relationship, which has physical and socio-economic characteristics different from those of other the real estate

properties This attribute is reflected in the supply and demand relationship and the value

of the real estate The price of the real estate must be determined at the time of the demand balance and must predict the factors that change the supply and demand of the real estate in the market

Thirdly, the principle of substitution

In case two or more the real estate can replace each other in the process of using the value of the property is determined by the interplay of the real estate to the real estate other The valuation of the value of the real estate is usually related to the value of other the real estate that can be replaced

When two the real estates are equally helpful, which the real estate offered at the lowest price will be sold first The upper limit of the real estate value tend to be set by the cost of buying a the real estate replace necessary equivalent terms without undue delay alter affect replacement

Fourth, the principle of expected future benefits: The value of the real estate can be

determined by the expected profitability in the future of The real estate Estimating the value of the real estate is always based on future prospects, the benefits received from future property rights

Fifth, the principle of contribution

The extent to which each part of RE contributes to the total income from all RE or

is the value of each of the parts of RE that affects the value of that RE When new elements are changed, the value of RE will change according to its contribution to RE This is the basic principle in considering the feasibility of additional investment in RE when determining the best and most effective use of RE

1.2.3 Mortgaged real estate valuation methods

There are 5 methods of mortgaged real estate valuation but commercial banks commonly used 2 following methods:

1.2.3.1 Direct comparison method

Concept: Mortgage the real estate valuation under the direct comparison method is

an estimate of the value of mortgaged real estate based on market evidence of similar the real estate traded in the most recent time

The direct comparison method is built primarily on compliance with the principle

of substitution The value of the target assets is considered completely comparable with the value of comparable assets

Accordingly, the real estate valuation by direct comparison method is the estimate

of the real estate values based on market evidence of similar the real estate transactions in the most recent time

Pricing techniques:

The order of RE valuation by the comparison method is as follows:

Step 1: Find information about the RE that has been traded in the nearest time that

can be compared with the target RE in the following aspects:

- Terms and conditions of the transaction

Step 2: Check and analyze evidence transactions to ensure the properties

are comparable to the target RE In order to perform this step well, when checking and analyzing market transactions, it is necessary to clarify: The origin, characteristics and characteristics of transactions

Step 3: Select some of the most comparable the real estate According to

experience, usually take from 3 to 6 the real estate comparison

Step 4: Identify the different factors between target the real estate and the real

estate evidence Based on various factors, conduct an analysis and adjustment of prices of comparable the real estate

Step 5: Estimates of target RE price on the basis of the compared RE adjusted Advantages:

- A simple valuation method with little technical difficulties;

- It is a method of expressing the assessment of the market: These are clear

evidences, recognized in reality;

- As the basis or input of other methods: Cost method, surplus method

Disadvantages:

- Transactions in similar RE in the same area must be made for comparison If there

is little RE for comparison, the result is of poor accuracy

- The evidence information is historical, quickly becomes outdated after a short

time

- Requires appraisers to have a lot of experience and market knowledge

Terms and conditions:

- Quality of information must be appropriate, complete, reliable and verifiable;

- The market must be stable;

- Often used for the following cases:

+ The RE homogeneous: Condo, apartment, blocks from the same type of building, shops

+ The vacant land

1.2.3.2 Cost pricing method

Concept: The mortgage method of cost method is the estimation of the value of

mortgaged real estate based on reasonable expenses to create that mortgaged real estate

The cost method is built primarily on the use of substitution principles The real estate valuation by the cost method is the estimation of the value of RE based on the reasonable costs of creating that RE

Pricing techniques

Step 1: Estimate the value of a piece of the real estate by considering it to be

vacant and being used under the best and most efficient use

Step 2: Estimate current construction costs for existing structures on land

Step 3: Estimate the discount level of the construction, considering all causes

Step 4: Estimate the value of the construction work by subtracting the discount

from the current cost of new construction

Step 5: Estimate the value of the target RE by adding the estimated value of the

land to the estimated value of the building

Advantages:

- This method is used when there is no market evidence to be suitable for

comparison as well as with RE rarely change owners and lack the basis for forecasting future benefits In some situations, it is the last resort when other methods are unusable

- Suitable when evaluating RE used for separate transactions and purposes If the

appraisers are highly qualified, experienced, it is possible to limit errors when the supply and demand show signs of excess

Disadvantages:

- The cost method is also based on market data, so it also has the limitations of a

direct comparison method

- The cost method must use the addition method, but the sum of many parts is not

necessarily equal to the total value

- The estimation of some discounts can be very subjective and difficult to make

- Requires appraisers to have a lot of experience and especially to be proficient in

construction techniques

Terms and conditions:

- It’s an appropriate method when evaluating many types of the real estate with specific uses, such as churches, hospitals, schools,

- Applied to determine compensation when building insurance contracts and other

types of compensation

- It is a common method of people participating in bidding or bidding inspection

- Often used as an additive or checking agent for other methods

1.2.4 Mortgaged real estate valuation process

The valuation process is a sequential step in the valuation process, starting from the time the valuation technician prepares to conduct the valuation until the end of the job, i.e sending the valuation report to the customer At each step of the process, the content of the work to be performed, the time for each task, the functional department and the official responsible for the work is specified In each commercial bank, depending on the conditions and characteristics of operation, there are regulations and sequence of steps in determining the value of RE

Normally, the process of mortgaged RE valuation involves the following basic steps

Figure 1.1 Mortgaged RE valuation process of commercial banks

Source: Ngo Thi Phuong Thao, 2011 Step 1 Identify pricing issues

In this step valuation officers should clearly identify the types of mortgaged real estate to valuate, which is land, houses or factories, The real estate characteristics such as location, economic, technical and legal characteristics of the real estate; mortgage borrowers

Step 2 Plan pricing

On the basis of clearly determining the type of the real estate to be valued and the characteristics of RE and its customers, the valuation department needs to clearly plan the valuation work: determine the time, send staff for evaluation, identify the information and documents to be collected, reliable sources of information, and market data, plan and schedule the work

Step 3 Collect and analysis data

In this step the appraisers need to collect documents that provide information about the target property This information can be extracted from customers or surveyed from reality

Identify valuation issues

Plan valuation

Collect and analysis data

Apply valuation method to conduct target the real

estate valuation

Reconcile actual values and estimated values

Complete the valuation report

Collect documents as a basis for comparison, analysis, evaluation and adjustment such as: Purchase and sale documents, consumption norms, cost unit prices, property tax rates, brokerage fees, proceeds from land use

Collect legal documents of the state and local governments related to land use rights, ownership of construction works, regulations on the purpose, rights and lease term Appraisers need to collect full range of legal documents affecting the right to exploit the benefits of RE

Comprehensive documents on economy, politics, culture, society such as: the situation of economic development and growth, indices such as GDP, CPI, inflation, housing price index, guidelines of the State on housing policies, housing and land tax policies, changes in planning and urbanization, the ability of the State to control the real estate market

These sources of information may be obtained from professional organizations, international organizations, banks, from private or government investigations This information helps appraiser to analyze market movements and provide factors affecting the valuation results

Based on the documents and information gathered, the appraisers needs to select the information that is reliable enough and best suited to the target RE valuation for processing and analysis

Step 4 Apply valuation method to conduct target the real estate valuation The above analysis will be the basis for appraisers to use appropriate valuation methods There are in fact many different methods for the real estate valuation However, a method that is recognized as basic, has a strong theoretical basis and has a scientific basis

is a method built on the basis of considering, analyzing and assessing the impact of influence factors and especially must fully and absolutely adhere to the principles of valuation In the real estate valuation, there is no single accurate method, only the most appropriate method In order to choose the most appropriate and appropriate method, it is necessary to rely on the properties of the asset, the ability to use market data, the purpose and the pricing principle The appraisers may apply one or more valuation methods, depending on different circumstances Commonly used valuation methods: Comparison method, Cost and profit method, Surplus value method (residual value), Investment method

Step 5 Reconcile actual values and estimated values

After calculating the value of RE on the basis of calculation by valuation methods,

appraisers need to survey the actual market value to compare the accuracy of the valuation If there are many deviations, adjustments can be made, and an official conclusion about the price to be determined

Step 6 Complete the valuation report, submit to the higher level for approval, send

to the customer and related departments

The final step in the valuation process is that the appraiser needs to complete the valuation report with all the necessary contents showing the entire valuation process and submitting it to the higher level for approval If there is no change in the decision made by the superior, the valuation value stated in the valuation report will be the basis for implementing the credit granting process to the customer

1.3 Factors affecting mortgaged real estate valuation of joint stock commercial banks

1.3.1 Objective factors

First of all, the different views of the Commercial banks about mortgaged real

estate valuation: Each commercial bank pursues different operational objectives and in order to achieve that goal, commercial banks will identify business strategies to conform their operating conditions in each specific between Therefore, the views of each bank

on mortgaged RE valuation are not the same With the view to expanding credit in the context of stable economic development, low-risk market, Commercial bank will reduce the conditions for lending including provisions on collaterals, as that the valuation of collateral assets in general and ensure estate particular will be eased and vice versa The Commercial banks’ viewpoint on valuation is also expressed through the viewpoint on development of mortgaged real estate activities With a view to mortgage assets only for the purpose of the loan, then the problem valuation estate mortgage will be banks as basis for determining the lending justified on the basis of risk mitigation, so prices valuation estate mortgage will far more than the market value of RE, and the mortgaged real estate valuation will bring the subjectivity of each bank, or for each type of bank units based on the level of risk determination and the rate of recovery of RE when customers cannot repay the debt, as well as the level of competition in the financial and monetary market

Second of all, the method to organize and the process of mortgaged real estate

valuation: The organization of valuation is also a very important factor affecting the mortgage the real estate valuation, showing professionalism or unprofessionalism in the valuation process The close coordination between the components in the banking system

will make the organization of valuation become simpler Establishing a simple, clear and standard valuation process will shorten the time and cost of valuation work, thus affecting pricing too

Third of all, choose the appropriate valuation method: RE is the properties with

special characteristics, especially, under the influence of many factors both objective and subjective Therefore, the choice of valuation method will directly affect the valuation result In the RE valuation, there is no most accurate method, only the appropriate and effective method that is on the scale of compliance with the applicable conditions and type

of Mortgaged real estate, and it is more important to minimize costs in the valuation process Selecting an appropriate valuation method based on available and reliable information and data sources will help appraisers to offer a high level of trust and persuade customers to have a scientific basis and reduce the cost of valuation

Fourthly, the pricing information system: Although information is an objective

factor from the market, the construction of the information system completely depends on the subjective of the appraisers and the strategy of each bank To determine the value

of RE requires appraisers to regularly collect and process information Standard information systems, reliable, complete and timely information sources will be the basis for assessors to evaluate and analyze accurately, thereby greatly affecting the results and time for the RE valuation

Fifth, human resources for the valuation: Under any conditions, the human

resources for the valuation work are also very important The ethical qualities and qualifications and experience of the valuation staff greatly influence the RE valuation process and results RE valuation is a difficult task, complicated and requires valuation officers must have expertise, be trained, knowledgeable about the real estate itself and the factors affecting its value, master the economic, technical and social knowledge to apply in the valuation process Besides moral quality is also a factor that influences and dominant greatly to the valuation by the valuation of the mortgaged real estate will affect the lives the value of loans and thus will arise the dominant relationships affecting the work of the appraisers and may falsify valuation results Therefore, if the valuation officer does not have good ethical qualities, for personal gain, he/she may collude with the mortgagee in order to raise the value of RE beyond its real value, thus affecting the quality and valuation results

Sixth, other subjective factors: In addition to the above subjective factors, there are

other subjective factors that affect the valuation process and the quality of the valuation

work For example, the Bank's business strategy in stages; how to organize the mortgage; facilities system for valuation work: office, equipment, software system for information processing and interbank activities

1.3.2 Subjective factors

Firstly, factors about natural conditions: Natural conditions are an objective factor,

creating a relative and absolute position for estate, thereby affecting the value of RE which needs to be valued For example: RE in favorable locations, with good natural conditions,

in accordance with the development conditions of estate, the value of RE will be valued higher and vice versa The RE have shape, size, other areas will also be different valuation

Secondly, the legal environment, mechanisms and policies: RE is the property

under the strict management of the State and law Therefore, the provisions of the State property, use property, conditions estate involved in mortgage transactions will impact significantly on the process of getting collateral as RE and will affect the valuation The state policy in the framework of land prices and construction norms as well as the objective factors affecting the mortgaged real estate of valuation of Banks

Thirdly, the economic environment: The development of economic conditions will

stimulate the RE market, causing the RE market price to soar Therefore, RE in areas with favorable economic environment, the use of RE creates a large income, the value of RE in those areas will be higher than in other areas In addition, as the economy develops, so does the demand for capital for production, thus increasing the amount of loans at commercial banks, which makes the number of valuations increasing Such economic environment as well as one of the objective factors have a direct impact to the mortgaged real estate valuation

Fourthly, the real estate market activties, development trends of financial the real estate market and stock market Valuation is the activity of establishment and development associated with market activities The stronger the market develops and operates, the more professional pricing is required For pricing mortgaged real estate is based on the nature and conditions of operation of the market is very important Therefore, the mortgaged RE valuation should be based on the development characteristics of each stage of the market RE Financial RE market occurs when the conversion of RE assets value into capital value and is traded on the market As such, this market is closely associated with the operation of the commercial banking system and credit institutions specialized in mortgage lending The valuation of mortgaged RE will be the basis for determining the value of capital for mortgage loans have been securitized

CHAPTER 2 CURRENT SITUATION OF MORTGAGED REAL ESTATE

AT JOINT STOCK COMMERCIAL BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM – SO GIAO DICH 1 BRANCH

2.1 Overview of Joint stock Commercial Bank for Investment and Development of Vietnam - So Giao Dich 1 Branch

2.1.1 The process of formation and development

Joint Stock Commercial Bank For Investment And Development Of Vietnam - So Giao Dich 1 Branch (referred to as BIDV – So Giao Dich 1 Branch) is a special-ranked first-class branch of BIDV, is the legal representative of BIDV, has a seal, a summary of assets (the balance sheet) and is responsible for implementing BIDV's activities as authorized by the General Director and a dependent accounting unit in BIDV system

BIDV - So Giao Dich 1 Branch is a unit established under Decision No 76 QD/TCCB dated March 26, 1991 of the General Director of Vietnam Bank for Investment and Development of Vietnam Born in the context of the country in the early years of the transition, BIDV- SGD 1 was assigned important tasks, undertaking a great mission: Pilot new business models before deployment on the entire system of Joint Stock Commercial Bank for Investment and Development of Vietnam In particular, and the whole banking system in general In addition, BIDV - So Giao Dich 1 Branch is the direct business unit of the head office, performing strategic tasks of BIDV Currently BIDV - So Giao Dich 1 Branch is headquartered at Tower A of Vincom Tower 191 Ba Trieu, Hai Ba Trung District, Hanoi After more than 27 years developing, BIDV- So Giao Dich 1 Branch has grown stronger in terms of scale, service quality, and development stage of So Giao Dich 1 Branch can be divided into 5 main stages as follows:

- Phase 1 (1991-1995): This is considered to be the most difficult phase of So Giao Dich 1 Branch, when both trading and shaping and perfecting the newly established organizational apparatus

- Phase 2 (1996-2000): This is a between of strong transition to an independent economic accounting business under the market mechanism

- Phase 3 (2001-2005): Successful implementation of SIBS core banking system, complete the project of restructuring the entire organization, technological innovation and human resource development, preparing for the process International economic integration

of banking industry and Vietnam's economy

- Phase 4 (2006-2008): The stage of restructuring operations in parallel with the organizational restructuring, actively increasing the credit scale for small and medium enterprises, promoting retail business

- Phase 5 (October 2008 - up to now): Successful implementation of transformation, restructuring of the organizational model according to TA2 model to minimize risks and specialize banking activities, improve competitiveness, meet the standards of an advanced bank

Since 1998, the Branch has been split into an independent accounting branch and

by 2000, BIDV – So Giao Dich 1 Branch really moved into a multi-purpose business model During the past 27 years, since its inception, the Branch has gradually grown up, affirmed itself as a reliable address, a brand worthy of being the "Leading Bird" as CEO of BIDV has praised

2.1.2 Organizational structure

In addition to expanding the network of branches, performing the tasks entrusted by BIDV, So Giao Dich 1 Branch has been continuously separating and successfully establishing level 1 branches under BIDV in the area Hanoi In 27 years of establishment and development, BIDV - So Giao Dich 1 Branch has split and established 07 level 1 branches of BIDV

Till December 2018, the organizational model of BIDV - So Giao Dich 1 Branch had 22 operational departments to fully perform the operations of commercial banks, including 5 transaction offices in the districts of Hanoi city Cabinet and branch are promoting activities to prepare for the establishment of new transaction offices and saving funds The organizational model of BIDV - So Giao Dich 1 Branch His continuing to improve in the direction of a modern, dynamic bank, improving competitiveness, contributing to BIDV to affirm the prestige and brand of a unit that is always "Share opportunities - Successful cooperation” with customers in the between of intensive integration into the international economy

The organizational structure of BIDV's So Giao Dich 1 Branch is shown in detail

in Figure 2

Figure 2.1 Organizational structure of BIDV - So Giao Dich 1 Branch

Source: Human Resource Department of BIDV – So Giao Dich 1 Branch

BIDV - So Giao Dich 1 Branchwas established with the following three main functions:

- Uniformly check, evaluate and supervise development investment projects funded

by the state budget, especially in the field of infrastructure construction With a nature of

spreading throughout the country, not segmented by location, with different characteristics

and requirements, these projects require strict control to ensure management efficiency as

well as financial efficiency

- Test new operations, new structural projects before applying them to the entire BIDV system In the context that the economy is on the rise with the fluctuations of the

financial market, with the appearance of many foreign banks, creating a fierce competitive

environment, requiring quick adaptation but not accepting the error Testing to learn from

experience and perfecting new businesses is always an important task to enhance the

Operational division

BOARD OF DIRECTORS

Customer Relationship

division

Risk management division

Internal management division

Affiliated division

Customer relations department 1 (Personal)

Risk management department 2

Risk management department 1

Credit administration Department

Customer transaction department

Treasury services management deparrtment

Financial planning Department

Human resource Department

Transaction Ngo Thi Nham

Transaction Kham Thien

Transaction Hoa Binh

Transaction Lotte

competitiveness and minimize risks for BIDV

- In charge of business management in addition to the general management of the Head Office BIDV is increasingly growing and expanding in scale, so it is necessary to set

up a unified and strict management and supervision system from the central to grassroots levels in order to improve the operational efficiency, in addition to timely detect and handle risks

From the above functions, the tasks of the So Giao Dich 1 Branch include:

- Effective use of mobilized credits

- Development of capital, assets and other resources

- Testing new products and restructuring projects of BIDV

- Manage the lists, debts, fees receivable - payables in the summary of assets within the scope of capital of the Department

- Perform obligations to customers as committed

Authorities of SGD 1 Branch:

- Receiving deposits: Savings deposits, demand deposits, time deposits, issuance of certificates of deposit, promissory notes, treasury bills and other forms of deposits

- Credit extension: Lending, discounting, factoring, financial leasing, guarantee

- Providing non-cash payment services: Performing cheque payment services, payment orders, payment orders, collection orders, collection orders, bank cards, letters of credit…

2.1.2 Business situation of Joint stock Commercial Bank for Investment And Development Of Vietnam - So Giao Dich 1 Branch between 2016 and 2018

2.1.2.1 Capital raising activities

Capital mobilization is always a matter of great concern to commercial banks and businesses Because only when the capital is guaranteed will create momentum for the rational use of capital for different purposes And to be able to create their own capital with the cheapest cost, the best way is to bank mobilize from the economy but mainly from economic organizations and people

Recognizing that problem with the motto of capital creation as the way to pave the way to create a solid growth capital floor BIDV - So Giao Dich 1 Branch has tried in capital mobilization with many different forms of mobilization to meet the needs demand

of customers Therefore, the capital source of the bank is constantly growing

Capital raising results of BIDV - So Giao Dich 1 Branch are summarized

Compare 2018/2017 Amount

of money

Ratio

%

Amount

of money

Source: Summary report of 2016, 2017, 2018 of BIDV - So Giao Dich 1 Branch

In the between of 2016 - 2018, the economy in the recovery between, although the business environment was still difficult, fierce competition among banks in the context of the state bank tightly controlling market interest rates, but So Giao Dich 1 Branch has got quite good capital raising results The average growth of capital mobilization in the between of 2016 - 2018 reached 13.17%/year In 2018, capital mobilization increased by more than 6,545 billion compared to 2017, equivalent to a growth of 14.9% compared to

2017 In the 2016 - 2018 between, capital mobilization from financial institutions tended to increase slowly, the growth rate in 2017 reached 5.53% but in 2018 decreased to 3.32% Instead, capital mobilization growth has mainly come from corporate customers Some traditional customers of the branch increased their deposits at the branch such as Viettel Military Telecom Corporation (increased VND 2,013 billion), Vietnam Oil and Gas Group (increased VND 1,011 billion), Vietnam Social Insurance (increased 784 billion) Due to its specific characteristics, BIDV - So Giao Dich 1 Branch has the advantage of relationships with major economic and financial institutions Therefore, the capital raised from financial institutions and enterprises is very large (accounting for 87% of the capital

of the Branch) but this is also a disadvantage of the Branch, due to the fact that the

economic between was instability and difficulty, businesses lack capital for manufacturing and business, inevitably leading to a decrease in mobilization from these customers

Although the proportion is not large in the total mobilized capital, but in recent years, the proportion of mobilized capital from the population has tended to increase and make solid steps Capital mobilized from the population is assessed to be stable and less volatile than that of economic organizations In recent years, the Branch has combined various forms of flexible capital mobilization from direct mobilization at transaction locations of the branch to the organization of mobilizing working capital in residential areas to promote Strong capital mobilized from the population Although the absolute growth is not significant, in terms of growth, the average growth rate of population mobilization in the between of 2016 - 2018 is 11.66% per year This growth rate is still smaller than the average branch capital mobilization growth of 11.3%

2.1.2.2 Credit activities

Recognizing the importance of credit operations, the Branch always pays special attention to the development of credit activities With a long history of operation as a focal point for major customers of the system, officers are highly specialized in credit appraisal activities, operating in a densely populated area and relationships with many businesses, economic organizations throughout the country, abundant sources of capital mobilized The branch is fully able to meet the customer's complex credit and commercial financing requirements Credit operations of the branch in recent years are shown

Compare 2018/2017 Amount

of money

Ratio

%

Amount

of money

and long-term loans to

total outstanding loans

(%)

Source: Summary report of 2016, 2017, 2018 of - So Giao Dich 1 Branch

Credit growth of the branch in recent years has been growing and at a high level, higher than the average of the whole system In particular,, the growth rate in 2017 increased

by 23.43% compared to 2016; in 2018, an increase of 28.9% compared to 2017 The reason for this encouraging achievement is the policy of the branch and head office, in part to make the most of the strength and the position of the branch in the context of the economy is recovering and growing

In terms of customers, the branch primarily provides credit to corporate customers The proportion of outstanding loans to corporate customers often accounts for over 89% of total outstanding loans In particular,, the branch has a very high level of credit focus on the group of large corporate customers (the group of 10 customers with the highest debit balance, accounting for 57% of the total outstanding loans of the branch) This can help the branch grow credit quickly This can help the branch grow credit quickly However, there are limitations in the case of economic fluctuations, and the branch debt balance can be significantly reduced due to the change in business activities of customers Therefore, in the direction of the branch's credit operations, in addition to traditional businesses, the branch's large enterprise is still proactive and actively marketing

to customers of small and medium enterprises, micro enterprises, FDI customers aim to diversify customers, gradually reducing the risk of focusing credit on big customers Besides, the Branch also gradually increased the debit balance to individual customers and

households In recent years, although the outstanding loans to individual customers and households have increased in absolute value, the growth rate has tended to slow down In particular,: Debit balance to science and technology, households in 2016 reached 2,516 billion VND, in 2017 reached 3,426 billion VND (an increase of 910 billion VND), equal

to 36.17% compared to 2016 In 2018, the outstanding debit balance for science and technology and households reached VND 4,237 billion, an increase of VND 811 billion, equal to 23.67% It is also one of the branches' risk diversification methods to reduce dependence on large corporate customers

In terms of credit terms, branches mainly provide medium and long-term credit products The ratio of medium and long term loans to total outstanding loans of the year was 54.9%; 63.4% and 67.8% This shows that the branch is still developing medium and long-term credit activities

In addition to the pressure on the scale of credit growth, the branch must also ensure the criteria of credit quality, safety and operational efficiency According

to Table 2.2, the bad debt ratio of the branch is kept stable at less than 1% However, along with the credit growth, the bad debt ratio of the branch is also on the rise Therefore, in the coming time, the branch needs to pay attention to this bad debt balance to ensure the bad debt ratio next year is not higher than the previous year and to ensure stability at less than 1%

2.1.2.3 Service activities

BIDV - So Giao Dich 1 Branch has implemented measures to improve the quality

of products and services through consultancy, product introduction suitable for customers, bringing practical efficiency There is a flexible, competitive service fee policy to attract customers Focus on promoting products and services that bring in major revenue sources such as: Payment services; Guarantee; Trade sponsorship At the same time, continuing to expand services such as: BSMS card services, Internet Banking/Mobile Banking, Results from banking services for the between of 201 6 - 201 8 are summarized in Table 2.3:

Table 2 3: Service performance results of BIDV - So Giao Dich 1 Branchin

the between 2016 - 2018

Unit: Billion VND

Compare 2017/2016

Compare 2018/2017 Amount

of money

Ratio

%

Amount

of money

6 Card service fee 4, 5 5, 8 7, 5 1, 3 28, 89 1, 7 29, 31

7 Other service fees 28, 1 30, 1 33, 2 2 7, 12 3, 1 10, 30

8 Net service

income 223, 40 268, 50 326, 60 45, 1 20, 19 58, 1 21, 64

Source: Summary report of 2016, 2017, 2018 of BIDV - So Giao Dich 1 Branch

According to Table 2.3, net service revenue in the between 201 6 - 2018 achieved a stable growth, the average net service income grew by approximately 2% per year Fee sources accounted for a large proportion, such as payment service fee, guarantee fee collection, trade finance fee collection, which had good growth, partly because the branch has a good customer base, and economic recovery Fee sources such as credit fees, card service fees, insurance premiums, e-banking, bill payment, electronic tax collection, etc saw a slight growth, although the proportion of total service revenue was modest

With the aim of increasing the proportion of service fee collection compared to the traditional revenue sources from credit activities and capital mobilization, diversifying service fee revenue sources, the Branch has promoted the deployment of products and services such as: Credit card products, international debit cards, payroll services; Combining insurance products with credit activities, Western Union money transfer, Internet Banking, mobile banking, Smart banking, BSMS, VNTopup, Bankplus Although they are all small products and services, these are products with

good cross-selling ability, high potential for development and a stable source of fee collection for banks

2.2 Analyze the status of mortgaged RE valuation at th Joint Stock Commercial Bank for Investment and Development of Vietnam - So Giao Dich 1 Branch

2.2.1 Types of mortgaged real estate at the Branch

In fact, there are much the real estate was taken out as collateral for loans from commercial banks However, to ensure the safe operation of the bank as well as to create favorable conditions for the RE supervision and management, according to the staff survey results in BIDV and according to principles of mortgaged types of RE at banks including: Houses and construction works attached to land and land use rights, which are prescribed by mortgage law

In the period of 2016 - 2018, BIDV - So Giao Dich 1 Branch lent with mortgaged RE such as: Apartments; Agricultural and forestry land; Production and business land, business premises, trade centers; Land and assets attached to land and other the real estate

Table 2.4: Debit balance for mortaged the real estate of BIDV - So Giao Dich 1 Branch between 2016 and 2018

Unit: Billion VND

RE Type

Asset value

Debit balance

Asset value

Debit balance

Asset value

Debit balance

Agriculture and forestry land 135 47 168 50 214 53 Land used for production

and business, business

premises and trade centers 1,911 513 2,378 642 3,071 846 Residential land and

properties attached to

the land 24.181 7,914 29 671 11,352 43.125 16.145 Other the real estate 24,866 5.185 32,763 7 721 48,628 12.035

Source: List of security assets for the between of 2016 - 2018 of BIDV

- So Giao Dich 1 Branch

Chart 2.1: Structure of debit balance under the collaterals of BIDV - So Giao Dich 1

Branch

Source: Structure of debit balance by collaterals for the 2016-2018 between of BIDV

- So Giao Dich 1 Branch

As Chart 2.1 shows, outstanding loans with secured assets accounted for a large proportion of total debit balance In particular,, the ratio of debit balance with collaterals in

2016, 2017, 2018 reached 88%, 92% and 95% respectively The proportion of debit balance without collaterals accounts for only 5% to 12% in years In particular,, the proportion of debit balance with the real estate collaterals accounted for 71.32% to 83.34%, and the trend increased gradually, the following year was higher than the previous year

In particular,: According to Table 2.4, the situation of lending with the real estate at

the branch tends to increase over the years If in 2016, the total outstanding loans with secured assets were the real estate was VND 18,074 billion, by 2018, it would have reached VND 33,617 billion, an increase of nearly 1.76 times compared to 2016 This was

a between of economic development so the Branch's debit balance also grew significantly The real estate of the branch is mainly residential land and properties on land; Apartment Agricultural and forestry land; Production and business land, business premises and trade

centers only account for a small proportion This is quite consistent with the city of Hanoi

2.2.2 Bases and principles of mortgaged RE valuation at the branch

2.2.2.1 Based on the mortgaged RE valuation at the branch

(1) Legal regulations

Currently, the valuation of mortgaged RE at BIDV - So Giao Dich 1 Branch

0 5000