Enhancing residential capital mobilization at the joint stock commerical bank for investment and development of vietnam, branch of transaction office 1, in the period of 2017 2023

ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH --- NGUYỄN ANH TUẤN ENHANCING RESIDENTIAL CAPITAL MOBILIZATION AT THE JOINT STOCK COMMERCIAL BANK FOR INVESTMENT AND DEVELOPMENT OF

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

-

NGUYỄN ANH TUẤN

ENHANCING RESIDENTIAL CAPITAL MOBILIZATION AT THE JOINT

STOCK COMMERCIAL BANK FOR INVESTMENT AND

DEVELOPMENT OF VIETNAM, BRANCH OF TRANSACTION OFFICE 1,

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

-

NGUYỄN ANH TUẤN

ENHANCING RESIDENTIAL CAPITAL MOBILIZATION AT THE JOINT

STOCK COMMERCIAL BANK FOR INVESTMENT AND

DEVELOPMENT OF VIETNAM, BRANCH OF TRANSACTION OFFICE 1,

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

NGƯỜI HƯỚNG DẪN KHOA HỌC: TS TRẦN HUY PHƯƠNG

HÀ NỘI - 2021

DECLARATION

The author confirms that the research outcome in the thesis is the result of author’s independent work during study and research period and it is not yet published in other’s research and article

The other’s research result and documentation (extraction, table, figure, formula, and other document) used in the thesis are cited properly and the permission (if required) is given

The author is responsible in front of the Thesis Assessment Committee, Hanoi School of Business, and the laws for above-mentioned declaration

ACKNOWLEDGEMENT

I would like to send my most sincere thanks to all the professors of HSB-MBA program, especially the Dr Tran Huy Phuong - my supervisor I would also like to express my deep thanks to the teachers and aunts who are active in the field of preschool education for giving me useful advice and guidance for me to complete the thesis My family and friends are the people who have always encouraged, encouraged and created conditions for me to have time to study, learn and explore

in researching my thesis topic

I sincerely thank you!

TABLE OF CONTENTS

LIST OF TABLES i

LIST OF DIAGRAMS, CHARTS ii

PREAMBLE 3

1 Urgency of the title 3

2 Literature review 4

3 Research objectives 7

3.1 General objectives 7

3.2 Specific objectives 7

4 Object and scope of research 7

4.1 Object of study 7

4.2 Scope of research 8

5 Research methods 8

6 Thesis’s structure 8

CHAPTER 1: THEORETICAL BASIS FOR RESIDENTIAL CAPITAL MOBILIZATION BY THE COMMERCIAL BANKS 10

1.1 Concept, characteristics and role of residential capital mobilization 10

1.1.1 Concept 10

1.1.2 Characteristics of residential capital mobilization 11

1.1.3 Role of residential capital mobilization 12

1.2 Forms of mobilizing residential capital by commercial banks 13

1.3 Contents of residential capital mobilization of commercial banks 14

1.3.1 Setting up objectives of residential capital mobilization 14

1.3.2 Development of policies to mobilize residential capital 16

1.3.3 Performance of residential capital mobilization activities 18

1.4 Criteria to evaluate the mobilization of residential capital of commercial banks 20

1.5 Factors affecting the mobilization of residential capital of commercial banks 22

1.5.1 Subjective factors 22

1.5.2 Objective factors 24

CHAPTER 2: CURRENT STATUS OF RESIDENTIAL CAPITAL MOBILIZATION OF JOINT STOCK COMMERCIAL BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM – BRANCH OF

TRANSACTION OFFICE 1 FOR THE PERIOD OF 2017 - 2019 27

2.1 Overview of the Joint Stock Commercial Bank for Investment and Development of Vietnam, Branch of Transaction Office 1 27

2.1.1 Process of formation and development 27

2.1.2 Functions and duties 28

2.1.3 Organizational Structure 29

2.1.4 Business performance of the Branch 30

2.2 Capital raising activities at the Joint Stock Commercial Bank for Investment and Development of Vietnam, Branch of Transaction Office 1 33

2.2.1 Setting up the goal of mobilizing residential capital 33

2.2.2 Development of policies to mobilize residential capital 37

2.2.3 Performance of residential capital mobilization activities 44

2.3 Factors affecting the mobilization of residential capital of the Joint Stock Commercial Bank for Investment and Development of Vietnam Branch of Transaction Office 1 50

2.3.1 Subjective factors 50

2.3.2 Objective factors 57

2.4 General assessment of the mobilization of residential capital at Joint Stock Commercial Bank for Investment and Development of Vietnam, Branch of Transaction Office 1 59

2.4.1 Findings 59

2.4.2 Limitations and reasons 61

CHAPTER 3: SOLUTIONS TO IMPROVE THE EFFICIENCY OF RESIDENTIAL CAPITAL MOBILIZATION AT VIETNAM JOINT STOCK COMMERCIAL BANK FOR INVESTMENT AND DEVELOPMENT - BRANCH OF TRANSACTION OFFICE 1 IN THE PERIOD OF 2020 - 2023 64

3.1 Growth orientation of residential capital mobilization of the Joint Stock Commercial Bank for Investment and Development of Vietnam, Branch of

Transaction Office 1 64

3.1.1 Business development orientation 64

3.1.2 Objectives of the mobilization of resident capital at the Branch 65

3.2 Solutions to improve the efficiency of mobilizing residential capital of Joint Stock Commercial Bank for Investment and Development of Vietnam, Branch of Transaction Office 1 67

3.2.1 Improving the reputation and brand name of the Branch 67

3.2.2 Investment in technology system 68

3.2.3 Improving the quality of human resources through training 69

3.2.4 Promoting marketing activities 71

3.2.5 Expanding the network of transaction points 72

3.2.6 Strengthening counseling to help people change their habit of keeping money at home 73

3.3 Impact on factors affecting the mobilization of residential capital 74

3.3.1 External factors 74

3.3.2 Internal factors 75

3.3.2.1 Types of capital mobilization used by banks 76

3.3.2.2 Business strategy of the Bank: 76

3.4 Conclusion and Recommendations 77

3.4.1 Conclusion 77

3.4.2 Recommendations 79

REFERENCES 83

APPENDIX 85

LIST OF TABLES

Table 2.1: Business performance of the Branch 31

Table 2.2: General objectives in mobilizing residential capital at Joint Stock Commercial Bank for Investment and Development of Vietnam, Branch of Transaction Office 1 in the period of 2017–2019 and the following years 34

Table 2.3: Plan on residential capital mobilization of BIDV Branch of Transaction Office 1 35

Table 2.4: VIP customer policy 37

Table 2.5: Policies for other customers 39

Table 2.6: Interest rate policy for citizen members of some banks 41

Table 2.7: Tasks of departments and units in residential capital mobilization 44

Table 2.8: Transaction network of the Branch 46

Table 2.9: Some propaganda and advertising activities 47

Table 2.10: Results of training staff to mobilize capital at BIDV, Branch of Transaction Office 1 49

Table 2.11: Human Resource Survey 51

Table 2.12: Banking Technology Survey 54

Table 2.13: Brand reputation survey 56

LIST OF DIAGRAMS, CHARTS

Diagram 2.1: Organizational structure of Branch 30 Chart 2.1: Number of residential capital mobilization products of the Branch 43

PREAMBLE

1 Urgency of the title

Currently in our country, the investment capital for production and business activities of the economy is mainly based on the credit capital of the banking system As the most important financial intermediary in the economy, the commercial banks have become an effective capital supply channel for the economy To be able to achieve the goals of economic development set up by the Party and State, making full use of capital in the economy is essential that the commercial banks have done

Recognizing the importance of capital mobilization as mentioned above, the commercial banks have implemented many measures to let people know and use the capital mobilization products provided by the banks to serve their life and also to contribute to the development of the country's economic situation Out of the total mobilized capital, capital mobilized from the citizens has always been considered by the commercial banks as a source of long-term strategic capital because of its high stability and great potential for mobilizing capital However, raising residential capital

is not an easy problem when most of the people lack the trust in the banks and are not really knowledgeable about profitability from idle amount Therefore, the access to attracting idle residential capital is limited and not really effective for the operations of commercial banks in general and Joint Stock Commercial Bank for Investment and Development of Vietnam, Branch of Transaction Office 1 in particular

Joint Stock Commercial Bank for Investment and Development of Vietnam, Branch of Transaction Office 1 is one of the large branches with a long operation period in the system of BIDV's branches Up to now, the branch has provided customers with a wide range of retail products and services, including products for mobilizing residential capital However, the efficiency of product and service provision at the Branch is not high when the proportion of residential capital

mobilization in the Branch is still low and does not meet the plan of the Board of Directors of the branch

Facing this situation, in order to ensure the sustainable development, increase the competitiveness in the market, and ensure liquidity for the Bank, increasing the mobilization of residential capital of BIDV Branch of Transaction Office 1 becomes a problem to be paid attention and studies Because, mobilized residential capital will create financial strength, increase the brand reputation of the branch as well as bring a stable source of capital to bring the business performance to the branch at a low cost and risk level For this reason, the author decides to choose the

title: "Enhancing residential capital mobilization at the Joint Stock Commercial Bank for Investment and Development of Vietnam, Branch of Transaction Office 1, in period of 2017 - 2023" for the graduation thesis

2 Literature review

Many authors which have made researches on capital mobilization in general and on residential capital mobilization in particular on this issue has published the following works in Vietnam:

Research by the author Che Thi Thanh Nguyet (2014) on "Strengthening the mobilization of citizen deposits at BIDV Quy Nhon Branch" The Research systematized, analyzed and synthesized the basic theoretical issues about mobilizing citizen deposits and enhancing the mobilization of citizen deposits It analyzed and evaluated the current situation of increasing citizen deposit mobilization at the Branch, then draw out the achievements, limitations and causes of the limitations in mobilizing citizen deposits at the Branch On the basis of the cause of the limitation, the author has proposed a system of solutions to increase the branch's citizen deposit mobilization

in the coming time

Research by the author Nguyen Van Tan (2017) on "Mobilizing residential capital at the Joint Stock Commercial Bank for Investment and Development of Vietnam - Ha Thanh Branch, Hanoi" The research has synthesized the theoretical

basis of mobilizing residential capital through an overview presentation of the capital mobilization activities of commercial banks; the concept and characteristics

of raising capital from citizen deposits; mobilization objectives and policies; forms

of mobilization, the criteria for evaluating the results of residential capital mobilization; Analyzing the factors affecting the commercial banks' ability to mobilize the residential capital Based on the theoretical basis, the author describes and evaluates the current situation, pointing out the reason for the restriction on residential capital mobilization activities of BIDV Ha Thanh, thereby serving as a practical basis to propose solutions to enhane residential capital mobilization of BIDV Ha Thanh in the coming period

Research by the author Tran Quang Vinh (2014) on "Strengthening capital mobilization for citizen deposits at the Joint Stock Commercial Bank for Investment and Development of Vietnam - Branch of Dien Bien Province" With methods to collect and statistic data; General analysis method; Comparative comparison method between theory and practice, comparing data over time The research title has: clarified the general theoretical issues about mobilizing citizen deposits at the commercial banks; Evaluated and clarified the current situation of mobilizing capital for citizen deposits at the BIDV, Branchoff Dien Bien Province; Since then, proposing solutions to improve the efficiency of mobilizing capital for citizen deposits at the Joint Stock Commercial Bank for Investment and Development, Brannch of Dien Bien province in the new stage

The research "Solutions to improve the efficiency of capital mobilization activities of BIDV North Hanoi Branch" was published by Le Nhu Mai in 2012 The research title introduced the concepts of capital and efficiency of capital mobilization of commercial banks, the role of capital with business activities at the commercial banks Adhering to the given theories, the author conducted an assessment on the effectiveness of capital mobilization at BIDV North Hanoi Branch in the period of 2009 - 2012 Through research, the author gave some solutions as follows: (1) Perform well the analysis of the capital mobilization market, (2) Develop an effective customer care and access policy, (3) Manage

capital resources in accordance with methods and objectives, (4) Train and improve the qualifications and skills of staff

Bach Lan Chi's research (2011) on "Improving the efficiency of capital mobilization at Vietnam Technological and Commercial Joint Stock Bank" In the research, the author has analyzed and evaluated the current situation of capital mobilization at the Vietnam Technological and Commercial Joint Stock Bank - the period 2006-2010, on the basis of a synthesis of achievements and limitations in capital mobilization of Techcombank, the author, proposed solutions to improve capital mobilization in the coming time in the banking system, including: (1) Strengthening risk management in capital mobilization; (2) Implementing a flexible interest rate policy; (3) Diversifying forms of capital mobilization; (4) Improving customer policies; (5) Developing the network of transactions and investment in facilities; (6) Training to improve the quality of the staff, employees

After synthesizing and reviewing the previously published researches, it is found that each research has made important contributions to solving the basic theoretical problems of development, enhancing the efficiency of capital mobilization activities, analyzing the current situation of capital mobilization activities, evaluating the efficiency of capital mobilization of commercial banks with different subjects, and giving some solutions as well as recommendations to competent State agencies to develop and improve the efficiency of capital mobilization at the commercial banks However, the above works have not gone into depth analysis for a group of very potential customers that are residents Therefore, the author's master's thesis will supplement reference materials about the

mobilization of residential capital and the name of the chosen title is: “Enhancing residential capital mobilization at the Joint Stock Commercial Bank for Investment and Development of Vietnam, Branch of Transaction Office 1, in period of 2017 – 2023”

3 Research objectives

3.1 General objectives

The research objective of the title is to evaluate the current situation of mobilizing residential capital, clarifying the limitations and causes of limitations in the mobilization of residential capital at the Joint Stock Commercial Bank for Investment and Development of Vietnam - Branch of Transaction Office 1 and then propose the Branch's goals and solutions to increase capital mobilization

3.2 Specific objectives

- Systematize the theoretical basis of the mobilization of residential capital of commercial banks, focusing on clarifying the contents of the mobilization of residential capital, the criteria for evaluating the results of residential capital mobilization and the factors affecting to the commercial banks' ability to mobilize the residential capital

- Analyze and evaluate the current situation, pointing out limitations and causes of limitations in the mobilization of residential capital of BIDV Branch of Transaction Office 1

- Propose the solutions and recommendations to raise residential capital mobilization of the Joint Stock Commercial Bank for Investment and Development

of Vietnam, Branch of Transaction Office 1

4 Object and scope of research

4.1 Object of study

The research object of the title is the mobilization of residential capital at the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), Branch of Transaction Office 1

The study are also collected primary data by issuing 250 customer surveys of BIDV Branch of Transaction Office 1, on factors evaluating customer satisfaction with residential capital mobilization services The survey results have collected 245 customer votes of BIDV Data collected from these survey questionnaires are aggregated and analyzed on the contents that the customers evaluate about the bank's residential capital mobilization

6 Thesis’s structure

The thesis is structured with 3 chapters with the following main contents:

Chapter 1: Theoretical basis for residential capital mobilization by the commercial banks

Chapter 2: Current status of residential capital mobilization of Joint Stock Commercial Bank for Investment and Development of Vietnam - Branch of Transaction Office 1 for the period of 2017 - 2019

Chapter 3: Solutions to improve the efficiency of residential capital mobilization at Vietnam Joint Stock Commercial Bank for Investment and Development - Branch of Transaction Office 1 in the period of 2020 - 2023

CHAPTER 1: THEORETICAL BASIS FOR RESIDENTIAL CAPITAL

MOBILIZATION BY THE COMMERCIAL BANKS

1.1 Concept, characteristics and role of residential capital mobilization

1.1.1 Concept

The capital mobilization is to create the capital for the commercial banks, playing an important role, affecting the quality of the bank's operations.This activity provides a source of capital for the bank to perform other activities such as credit extension and supply of banking services to the customers The capital mobilization of a bank is reflected in the debtor's assets (Nguyen Thi Tuyet, 2014)

According to the law on credit institutions (2010) in Vietnam, the commercial banks are allowed to mobilize capital in the forms of: Receiving deposits from organizations, individuals and other credit institutions in the form of demand deposits, term deposits and other types of deposits; Issuing deposit certificates, bonds and other valuable papers to mobilize capital of domestic and foreign organizations and individuals when permitted by the SBV Governor; Borrowing capital from other credit institutions operating in Vietnam and foreign credit institutions; Borrowing short-term capital from the State Bank of Vietnam in accordance with the law of the State Bank of Vietnam

Citizen capital mobilization (ie mobilizing deposits from citizens) is an activity that a bank performs to mobilize capital from a population of citizens, agents with checking accounts, and term savings or purchases of valuable papers issued by a bank (Nguyen Van Tan, 2016)

The mobilization of residential capital of commercial banks is one of the main and most important activities of commercial banks It is to create the capital sources for commercial banks through different forms such as receiving demand and term deposits, issuing debt instruments to attract idle capital sources of the citizens

1.1.2 Characteristics of residential capital mobilization

Citizen capital mobilization often mobilizes short term deposits

Citizen capital includes people's payment deposits, which are amounts for consumption or business, usually transferred from one account to another, from one bank to another or withdrawn cash for spending purposes As a result, this amount stays very short in a customer's account Most term deposits and personal savings are also typically deposited with terms less than 12 months With the purpose of deposit to increase income, individual customers cannot grasp the changes in the macro economy that will affect interest rates, other investment channels and the bank's deposit policies That is why they tend to deposit with short term deposits Therefore, residential capital mobilization often mobilizes short term capital sources

Citizen capital mobilization is more stable than mobilizing capital from economic organizations

Due to the characteristics of individual customers, which are very large numbers of customers and each customer deposits a smaller amount than corporate and organization customers, the effect of an individual customer withdrawing deposits on the mobilized capital has much less impact than withdrawing deposits from an organization or enterprise In addition, the citizens depositing in commercial banks are usually savings (term deposits) In this form, the customers will reach agreements with the bank on the term and interest rate of deposits The customers can still withdraw before maturity, but most customers can determine their deposit period and only withdraw when the maturity date or continue to deposit that amount back at the bank Therefore, the residential capital mobilization source has high stability Based on this characteristics, the commercial banks can use residential capital for medium and long-term loans, this is an advantage of residential capital

Citizen capital mobilization has a high cost

Due to the stable characteristics and interest-earning purpose of customers, the cost of residential capital mobilization is high The cost of residential capital mobilization includes interest costs and non-interest costs The interest expense is the interest payable on the types of deposits that the bank issues based on the interest rate agreed by the bank and the customer Non-interest expenses are diverse, including direct costs to depositors such as gifts, insurance, salary costs for bank staff, utility costs for depositors such as : open more branches, transaction offices

1.1.3 Role of residential capital mobilization

For the society: Commercial banks' residential capital mobilization is used to

supplement capital for the economy and improve people's living standards instead

of using that capital for other expenses Thanks to the spending savings, production and business activities have been enhanced, jobs created for workers, and people's living standards improved through the indirect benefits of using capital savings from the business activities When the mobilized residential capital is large, the benefits to the society will be higher The use of this capital will bring benefits to both enterprises and people, the State will reduce an investment in the economy In addition, through mobilizing residential capital will contribute to the development

of personal payment deposit accounts, contributing to the development of non-cash payments, saving issuance costs and cash circulation for the economy

For citizen customers: Customers participating in the capital mobilization

activities of commercial banks will get income from the profits of amounts they deposit to the bank If using the capital mobilization products of bank, the customers are guaranteed capital safety, enjoy interest and most importantly, have access to convenient and quick payment services

For banks: Because capital is the prerequisite condition, the first condition

for a bank to carry out its business, so if not considering the influence of other factors, the more a bank attracts abundant capital, the greater the business opportunity is The citizens are the largest mobilization object of all commercial

banks, the main and most important object that the bank aims to The thorough attraction of residential capital not only has great social significance, but even the bank itself also carries an important meaning

Capital attracted from the citizens accounts for a relatively large proportion

on the balance sheet of a commercial bank The more capital a bank can mobilize from the citizens, the stronger the financial capacity is The citizens are not only the objects

of commercial banks' capital mobilization, but also the bank's customers When there is

an idle income, a part of the citizens will deposit this idle amount into the bank, while another has a business opportunity but does not have capital they will come to the bank

to ask the bank to provide finance them in the form of loans Thus, the mobilization from citizens of commercial banks brings benefits to everyone and for the Bank itself

1.2 Forms of mobilizing residential capital by commercial banks

The commercial banks can mobilize residential capital in the following forms:

- Open a personal checking account: Payment deposit includes interest payment deposit and interest-free payment deposit This is the most volatile source

of capital and difficult to predict about the size of the transaction deposit The lowest interest rate paid for this account balance leads to very low funding costs

- Make mobilization from residential term deposits: This is a type of deposit that has an agreement between the bank and customers on interest rates, deposit term and is a source of intermediate deposits between current deposits and deposit saving Term deposits usually have long terms and high interest rates, therefore, it is

a relatively stable source

- Make mobilization from citizen demand savings deposits: Savings deposits are designed to attract capital from people who want to set aside an amount for a variety of purposes or for an anticipated financial need in the future The interest rate for deposits is much lower than term savings

- Make mobilization from the issuance of valuable papers: This is a form of bank mobilizing monetary capital by issuing certificates of value including certificates of deposit, promissory notes, and bonds Deposit certificate is a short-term debt with a specified par value, a bond is a medium and long-term debt A bond is a short-term (1-year) valuable paper It has the same characteristics as a bond but has a shorter term than a bond, therefore, it is used for short-term funding

by banks These types of debt bills are issued by banks in installments depending on certain purposes

1.3 Contents of residential capital mobilization of commercial banks

1.3.1 Setting up objectives of residential capital mobilization

The objectives in mobilizing residential capital of a commercial bank include: a) Looking for cheap capital

Interest expense is considered as the biggest expense of the Bank in mobilizing residential capital, in which the biggest expense is interest payment for capital mobilized from term deposits of citizens Normally, there are three ways to pay interest to calculate the cost of mobilizing residential capital of the bank, including: Paying interest in advance, paying interest when it is due and paying interest in installments

Among the types of capital mobilized from residents, transaction deposit is the lowest-cost source of capital because the Bank has to provide some utility services for this type of capital, on the other hand it is deposited and withdrawn out

at any time Therefore, this is the kind of low-cost residential capital mobilization that commercial banks need to seek and increase

b) Create a stable source of capital and appropriate structure

The structure of capital mobilized from citizens needs to be diversified, reflected in maintaining a ratio between short-term and long-term deposits, between

domestic and foreign currencies A bank with a high quality of residential capital mobilization will have an abundant source of capital and a balanced capital structure, preventing the bank from falling into financial stress under the constantly changing business environment

The change in mobilized capital structure depends partly on the adjustment plan of the Bank and factors outside the Bank, requiring the Bank to regularly study and access the market to determine the capital source structure mobilized from the citizens in accordance with business operations of the bank A proper capital mobilization strategy in accordance with the plan to use capital in the same period will create conditions for the commercial banks to achieve the goal of maximizing profits and increasing capital, which is capital balancing of the bank In the process of meeting the capital needs for development investment, the capital balance plays a very important role for any commercial bank Through capital balance, the commercial banks will know the current situation and make predictions about demand for capital fluctuations in the future From there, it is possible to propose appropriate mobilization policies in terms of quantity as well as currency and term of mobilization Thereby, it will enhance the activeness of commercial banks in capital mobilization

c) Stable capital growth

Banks wishing to expand operations need a large scale of capital, in which capital mobilized from the citizens is an important part The amount of capital mobilized from residents must reach a certain size according to the Bank's mobilization plan To do this well, it is necessary to harmonize other factors such as interest rates, customer marketing policies, forms of mobilizing residential capital, the bank's reputation

However, rapid growth of residential capital is not good, the growth should

be consistent with the Bank's scale of operations, equity capital, lending and investment capabilities of the Bank

1.3.2 Development of policies to mobilize residential capital

The commercial bank's residential capital mobilization policy is one of the decisive factors to the success of raising residential capital mobilization Because at each period, the bank's capital needs have different changes The commercial banks' policies to mobilize residential capital are as follows:

a) Customer policy

Customer policy includes all contents related to the bank's operations and business oriented to serving each customer group The success or failure of a bank is determined by its ability to attract the customers to use its funding products

Depending on the specific situation, the bank has appropriate policies, uses different measures to attract customers, and does not affect customers' trust and expectations with the Bank

b) Interest rate policy

The interest rate is the price of the loan The banks, when mobilizing residential capital, always want low deposit rates so that their cost of mobilization is low, but citizen customers who deposit the amount or lend completely, on the contrary, always want high mobilizing interest rates

With different types of residential capital mobilization, the banks offer different interest rates, such as low interest rates for citizen deposits, but high savings rates In the same mobilization method, but with different terms, the interest rate is also different The longer the term is, the higher the interest rate is, and banks often have to guarantee positive real interest rates to attract savings depositors Therefore, when implementing the mobilization of residential capital, the commercial banks should consider changing interest rates so that both banks and customers feel mutually beneficial, satisfied and in line with the policy of SBV From there, the new capital mobilization from the citizens of commercial banks will

be strengthened

In the product policies, the banks often focus on developing their portfolio of capital mobilization products and services This is the activity when the banks increase the number of products provided to the customers, creating a richness in the bank's financial services to help the customers have more choices when they need to use capital mobilization products of the bank An important requirement of developing a portfolio of products and services to mobilize residential capital is to develop new products: completely new products for both the market and the bank; New products in category (copied from other banks, new to the bank but already in the market) Developing new products will diversify the bank's product and service portfolio, help the bank improve its competitive position and minimize losses when risks arise due to shared risks for many types of products

The bank's product policy must derive from the market demand, the competitive environment, and the demands of the bank to expand its business Developing a reasonable product policy, diversified product quantity will bring many benefits to the bank, helping the bank expand and develop the business of mobilizing residential capital

1.3.3 Performance of residential capital mobilization activities

a) Setting up business network

Business network is a means of providing capital mobilization products and services to the customers in need The business network is the bridge between the bank and citizen customers, the way that commercial banks access the market and provide capital mobilization products Therefore, setting up business network is a way and a measure to mobilize residential capital mobilization activities of commercial banks

In the context of a strong economic development, the booming information technology revolution in the 4.0 period, the commercial banks must diversify distribution channels, expand business networks, and combine flexibly between investment and development of modern business networks (ATMs; telecommunications networks; Online savings: Pos, App ) and traditional business networks (branches, transaction offices) to increase the opportunities to access capital mobilization services of citizen customers

+ For traditional business network: requires banks to invest in synchronous system of machines, working equipment (computers, printers, tables, chairs ); training staff, transaction staff, directly contact with customers

+ For a modern business network: This is a distribution channel system that brings many benefits to the customers and banks by reducing the workload to be handled; save time and money; increase transaction accuracy Building these business locations requires banks to invest heavily in technology systems, limit transaction interruptions due to system failure or transmission failure; focus on training to standardize the contingent of technicians, information technology staff, operational staff to increase the safety and efficiency of online retail transactions, and also improve the level of security in customer information The development of modern business networks such as ATM, online savings, Pos, App is the basis for the bank to attract demand deposits of citizen customers

b) Propaganda and advertising:

Groups of individual and household customers are groups of customers with lower access to banking services than wholesale customers Therefore, in the service business to mobilize residential capital, in order to increase the understanding of customers about the products, the commercial banks must focus

on implementing communication and advertising activities Through propaganda and advertising activities (via TV, loudspeaker, mobile poster logo, Facebook, Intasagram, ), the bank can promote the images, introduce capital raising products

to the group of targeted customers Increasing customer understanding of products

is a prerequisite for the bank to attract the customers and expand customer scale From there, increasing the bank's service delivery and capital mobilization will have conditions for development

However, in order for the propaganda and advertising activities to be truly effective, the banks must diversify traditional forms; building advertising programs and contents that are attractive and different in contents compared to other banks The more attractive communication and advertising activities will attract customers and the more effective the bank's retail fund raising services will be

c) Promotion activities

Promotion is a parallel activity with advertising In the mobilization of residential capital, the commercial banks carry out the promotions that apply in the following situations: Encouraging customers to use new services and use new distribution methods Developing loyal customer relationships; Show preference to loyal customers; Increase customer attraction at times of fierce competition The bank often uses various forms of promotion in capital mobilization, including gifts, customer conferences, lucky draw numbers, document donations

d) Staff training

The human factor is also one of the factors that helps increase the mobilization of residential capital of commercial banks A bank that builds up a

team of highly qualified, solidarity, friendly, dynamic staff with a reasonable scientific organizational structure, meeting the requirements of business development will have advantages in mobilizing residential capital and vice versa

1.4 Criteria to evaluate the mobilization of residential capital of commercial banks

a) Capital mobilization balance

The residential capital mobilization balance is an indicator reflecting the size

of deposits mobilized from the citizens of commercial banks at a time, usually at the end of the quarter or year This indicator is larger, reflecting the expanding scale of capital mobilized from citizens

b) Number of citizen customers depositing

The number of customers who deposit the amount is also one of the criteria reflecting the ability of commercial banks to expand and increase the mobilization

of residential capital The increase in the number of customers reflects the expanded capital mobilization, not only, therefore, the number of customers increases also shows the trust of customers in the bank The commercial banks determine the number of customers by statistics of the CIF (customer information file) of customers who have deposit relationships with the bank created in each period CIF number is a number automatically generated by the bank's electronic network system when a customer first makes transactions with the bank In a banking system, a CIF number is unique to a customer

c) Capital mobilization balance growth rate

To evaluate the mobilization of residential capital, in addition to the target of the size of the mobilized residential capital, the commercial banks also use the target of mobilized capital growth The scale of the mobilized capital only reflects the increase in capital in absolute quantity, that is to consider only the absolute number of each year, so to fully reflect the ability to raise capital The commercial banks over the years need to use the target of the growth rate of the capital

mobilization balance The mobilized capital growth target over the periods is calculated by the following formula:

- 1 Mobilized capital in

previous period This indicator shows the expansion of the scale of the mobilized residential capital, and also reflects the fluctuation of capital sources In case the capital growth rate is> 0, the amount of capital mobilized by the commercial banks will increase and vice versa If it <0, the amount of capital mobilized by the commercial banks decreases Mobilized capital of commercial banks that has increased at approximately the same rate over the years represents a stable capital growth

d) Proportion of mobilized residential capital to the total mobilized capital This indicator shows that in the total mobilized capital of commercial banks, how much is the citizen deposit proportion The formula is as follows:

Citizen capital

mobilization proportion

=

Citizen mobilized capital

balance

x 100 Total mobilized capital

source The proportion of mobilized residential capital may not be high, but it is a long-term stable capital source with the majority of customers, if this source accounts for a high proportion or increases over time, it proves that the commercial banks are growing capital; If this rate is low, it requires commercial banks to take timely measures to increase mobilization of residential capital

e) Ability of the population to meet the capital requirements for capital use activities

The ability of the population to meet the capital needs (mainly lending to the economy) is assessed through the following criteria:

Citizen capital used

coefficient in year =

Outstanding loan in year

x 100 Total mobilized loan

This coefficient measures the ability of commercial banks to use their mobilized capital sources, how much a bank lends out of a capital mobilized from citizens The Bank always tries to maximize its capital mobilization for lending and investment to increase its income and keep this ratio close to 1 (in the condition of ensuring safety limits on required reserve ratio and ensure a safe liquidity ratio) Through the coefficient of using deposits mobilized during the year, the bank can determine how much capital it can raise to lend, how much additional capital needs

to be raised to meet the demand for capital or have used up capital capacity is not,

to have the best plans and measures to use the mobilized capital

1.5 Factors affecting the mobilization of residential capital of commercial banks

In terms of professional qualifications

With high professional qualifications of the bank staff, in the course of business operations, all operations are done quickly, accurately and effectively, from which the Bank has the opportunity to expand business and attract be used by customers using the products of mobilizing residential capital provided by the Bank

Service attitude

The service attitude is a subjective factor affecting the size of the capital mobilized by the population of commercial banks If the bank operates well, has a long-standing reputation, the bank staff are always open, enthusiastic towards customers, always creating favorable conditions for customers in transactions, they will create a good reputation with customers, thereby attracting citizen customers to use capital mobilization products and mobilizing capital from citizens of commercial banks is also increased

1.5.1.2 Banking technology

Due to the characteristics of banking products and services that are invisible, unknowable, unable to hold, the customers find it difficult to evaluate the quality of products and services before use, during use and after use In order to reduce uncertainty when using banking products and services, the customers are forced to look for banks that demonstrate good quality of products and services such as transaction locations, technology equipment level, the bank's reputation,

Therefore, the banking facilities and technology are one of the factors that directly affect the expansion and improvement of service quality, increasing mobilized residential capital of commercial banks Through technology, it will bring customers satisfaction thanks to good quality residential mobilization products, shortened transaction time, safety and security With commercial banks, the modern technology will create a breakthrough in the exploitation of products and services to mobilize residential capital in both quantity and quality, indirectly affirming the reputation of the bank From a management perspective, thanks to

technology, the internal management in the bank will be stricter and more effective, better risk management in residential capital sources Thus, in the process of providing capital mobilization services to the population, in order to develop and increase mobilized capital, in addition to the ability of management and administration, the management ability of the staff and the bank also depends a lot

on facilities and technology

1.5.1.3 Bank reputation

Large reputable commercial banks are often prioritized by the citizens to deposit The credit of a commercial bank is reflected in the bank's business operations and brand value of the bank The banks only create the prestige by making people trust by enthusiastic, attentive and quick service, the capital raised is fully returned both principal and interest on time

In addition, the bank branding and promotion policies will also be a good measure

to increase the bank's reputation The more reputable the bank is, the more trust customers will trust when using capital mobilization products, and the efficiency of residential capital mobilization will also be enhanced Therefore, the commercial banks need to pay attention

to creating their own brands, besides asserting their position and reputation in the market, it

is necessary to set up their vision, mission, and goals; establish a unified brand identity system for banks and branches

1.5.2 Objective factors

1.5.2.1 Legal environment

The policies introduced by the State have a great influence on the mobilization of capital in general and the mobilization of residential capital in particular of commercial banks, especially the economic policies, in particular:

The State Bank of Vietnam's regulation on interest rates: Commercial banks are intermediary financial institutions that take out loans to lend at higher interest rates Therefore, there must be an appropriate interest rate policy as the basis for the Bank to improve the efficiency of mobilizing capital for the population, that is to

ensure the following conditions: protecting the interests of depositors, in addition to interest, there are other benefits such as safety, convenient payment,

Investment policies: The State has introduced many policies to encourage investment, expand production and business, create conditions for all economic sectors to develop; Increasing people's income will create favorable conditions for the mobilization of residential capital of the bank

Tax policy: Tax is a factor that directly affects people's income Once the State has a preferential personal income tax policy, an increase in people's income will affect people's deposits in banks

Deposit insurance is also one of the SBV's policies It works not for profit but to maintain the stable, safe and healthy development of the banking system; thereby giving customers peace of mind when depositing in the bank

1.5.2.2 Economic environment

The economic environment - where all activities of a commercial bank take place Like humans, the commercial banks also need a clean, healthy and stable environment; By doing this, the banking activities can survive and develop This is

a group of prerequisites that not only greatly affects the bank's residential capital mobilization in particular, but also the entire operations of the bank In a favorable economic environment, inflation is moderately curbed, actors in the economy have many conditions to develop and earn a lot of profits, the bank's residential capital mobilization from then on becomes easier

1.5.2.3 Customers

People's income: greatly affects the demand for savings in the bank People will deposit money into the bank when their lives are secured, their life needs are satisfied Therefore, when people's income increases and their ability to satisfy daily needs is enhanced, the need to deposit money in banks increases From then on,

there will be conditions for commercial banks to increase capital mobilization activities

The habits of customers also significantly affect the mobilization of residential capital of commercial banks Due to the influence of the previous economy, when there is excess, idle amount, instead of depositing into the bank, people often have the habit of storing in the house in the form of cash or gold This habit of people making it difficult for banks to mobilize citizen deposits, making the amount of money in circulation become more and not used effectively Therefore, the gradual change of the habits and habits of keeping money at home will help the bank's mobilization of residential capital achieve higher efficiency

CHAPTER 2: CURRENT STATUS OF RESIDENTIAL CAPITAL MOBILIZATION OF JOINT STOCK COMMERCIAL BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM – BRANCH OF

TRANSACTION OFFICE 1 FOR THE PERIOD OF

2017 - 2019

2.1 Overview of the Joint Stock Commercial Bank for Investment and Development of Vietnam, Branch of Transaction Office 1

2.1.1 Process of formation and development

Joint Stock Commercial Bank for Investment and Development of Vietnam, Branch of Transaction Office 1 has a history of development associated with the establishment and development of Bank for Investment and Development of Vietnam The Bank for Investment and Development of Vietnam, formerly known as Vietnam Construction Bank, under the Ministry of Finance, was established on April

26, 1957 to receive capital from the State budget and provide loans to basic construction investment projects In 1981, it was renamed to Bank for Investment and Construction of Vietnam, under the State Bank of Vietnam In 1990, its name was changed to Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) From December 1994, the model was transformed into a commercial bank In May 2012, the company was equitized and transformed into a Joint Stock Commercial Bank for Investment and Development of Vietnam In May 2015, it implemented the merger with MHB Bank After merging with MHB, BIDV became the bank with the largest total assets among commercial banks in Vietnam

Up to now, BIDV Branch of Transaction Office 1 has 15 professional offices and 5 transaction offices with nearly 300 officers and employees The branch has been restructured in the model of one-stop transaction, convenient for customers and information management, online payment Retail services, loans to small and medium enterprises will be transferred to newly separated branches while Branch of Transaction Office 1 will focus on 3 main tasks: raising capital to meet business

needs joint in place and contribute to increase capital for the whole industry; serving large customers, corporations, corporations regardless of ownership type; developing banking services

2.1.2 Functions and duties

BIDV Branch of Transaction Office 1 is to implement the following operations:

- Receive savings deposits, demand deposits, term deposits, demand deposits from organizations and citizens at home and abroad in Vietnamese dong and foreign currencies; Issue certificates of deposit, treasury bills, promissory notes, bank bonds and other forms of capital mobilization to serve the requirements of economic development and banking operations

- Provide short, medium and long-term loans in VND and foreign currencies

to economic organizations, individuals, households of all economic sectors, according to the credit mechanism of the State Bank of Vietnam and Joint Stock Commercial Bank for Investment and Development of Vietnam

- Discount commercial paper, promissory notes and valuable papers according to the regulations of the State Bank of Vietnam and Joint Stock Commercial Bank for Investment and Development of Vietnam; Perform L/C payment, guarantee or re-guarantee, foreign currency trading according to regulations of Joint Stock Commercial Bank for Investment and Development of Vietnam; Perform other payment operations such as: payment, domestic and international money transfer, remittance payment, check payment and other banking services

- Trade in securities, acting as a broker, and as an agent to issue securities

- Perform the tasks of ensuring the safety of vault, important seals, storing collateral records, managing securities, timely meeting the need to pay/receive cash, preserve documents of fixed assets Customer's mortgage and valuable papers are

safe and accurate according to the regulations of the State Bank of Vietnam and BIDV

2.1.3 Organizational Structure

Currently, the organizational structure of the Joint Stock Commercial Bank for Investment and Development of Vietnam, Branch of Transaction Office 1 is arranged as follows:

Affiliated Department

IM Department

FP Division

HR Division

Lotte TO

Quoc Tu Giam TO

Kham Thien

TO

Ngo Thi Nham TO

Hoa Binh

TO

Operation Department

CM Division

CT Division

FM&S Division

CM

Department

RM Department

CC

Division 1

BOARD OF DIRECTORS

RM Division 2

Diagram 2.1: Organizational structure of Branch

Although the departments in the Branch of Transaction Office 1 have

different duties, in general, they all perform the basic functions

- Act as a clue to propose, advise and assist the Director in building monthly, quarterly and annual work plans and programs; propose measures and solutions to effectively implement according to the assigned responsibilities and tasks

- Proactively organize the implementation of assigned tasks, directly perform, handle and operate operations in the assigned fields in accordance with regulations, competence, professional processes, contributing to the completion of tasks business of the whole branch

- Take full responsibilities for the correct and accurate compliance of processes, regulations, professional regimes, ensure safety and efficiency within the scope of operations of assigned departments, contributing to ensuring safety and improve the operational efficiency of the Branch of Transaction Office 1

- Closely coordinate with other affiliates in the Bank according to the processes and operations; Organize record keeping, information management, synthesize and make reports within the scope of operations and duties of the department to serve the management and operation of the Board of Directors, of BIDV and at the request of State management agencies

2.1.4 Business performance of the Branch

The period of 2017 - 2019 is the stage of implementing activities with the motto "Discipline - Responsibility - Efficiency", inheriting the achievements in the previous period, especially the innovations in the management method, the business activities of BIDV, Branch of Transaction Office 1 have still maintained safe and efficient growth The business results of the Branch are as follows:

Table 2.1: Business performance of the Branch

Total outstanding

loans

3.57% 2.57% 2.53% -1% - -0.04% -

Source: BIDV Branch of Transaction Office 1

In general, the mobilized capital of BIDV Branch of Transaction Office 1 grew higher than the credit growth rate, the balance of capital was safe and

effective As of December 31, 2019, the Branch's capital mobilization reached 39,929 billion VND, in 2018 reached 37,024 billion VND, an absolute increase of 2,905 billion VND compared to 2018, up 7.8% (of which, citizen deposits in 2019 accounted for 18.7% of total mobilization) The Branch's credit balance has grown continuously in all years, closely following the growth rate of the entire banking industry, in line with the capital absorption capacity of the economy: 2018 credit balance of the Branch 22,202 billion VND, up 8.3% compared to 2017; As of December 31, 2019, outstanding loans reached 22,262 billion VND, an increase of 0.27% compared to 2018 This result was due to the increase in loan sales of the Branch, the branch applied a flexible interest rate policy in accordance with each customer object and interest rates are always kept stable without much change in a short time And also, the Branch's lending activities focus on key industries such as: processing industry, construction, fisheries, commerce, electricity, post office and corporations, large corporations (Aviation, petroleum),…Therefore, the Branch's credits are stable and bring sustainable development to the business activities of BIDV Branch of Transaction Office 1

In addition to the growth of capital sources, credit balance and good control

of bad debts, the profit of BIDV, at branch, has also grown steadily In 2018, the branch's pre-tax profit increased by 8.1% and in 2019 increased 54.8%, reaching 1,202 billion VND Achieving the above positive results is thanks to the Branch's increased credit quality control, seeking new credit customers in order to diversify customer bases and create stability for business operations, and take well care of big customers, traditional customers that affect the branch's mobilized capital, focusing

on investment in developing and applying new technologies; building a digital banking ecosystem that includes banking services and non-banking services such as health consulting, education and insurance (in the near future) in the context of the Industrial Revolution 4.0 is growing strongly From 2017 to now, the Branch has provided to the market many high-tech products and services such as: BUNO - transfer without needing to remember account number, Payment via Samsung Pay, VN Topup, Quick money transfer 24/7 interbank banking on internet channels, mobile phones and

ATMs, 24/7 electronic customs tax payment service, BIDV SmartBanking products; Payment using QR code; Young + card, Bilateral payment with Tax agencies, Social insurance, contribute to increasing convenience for customers, while providing good and stable service fees for the Branch (The branch's net income from services over the years: 2017 reached 169 billion VND, 2018 reached 179.6 billion VND, 2019 reached 126.8 billion VND)

Thus, the business operation of BIDV Branch of Transaction Office 1 is highly effective, the Board of Directors of the branch always strives to apply a flexible interest rate policy, diversify activities, especially exploit effectively the banking services, overcoming difficulties, completing the set plan The increasingly profitable business activities are the conditions for the branch to increase the income fund and other beneficial expenses for the Bank's employees, creating a driving force for the efforts

of staff and employees increasingly high

2.2 Capital raising activities at the Joint Stock Commercial Bank for Investment and Development of Vietnam, Branch of Transaction Office 1

2.2.1 Setting up the goal of mobilizing residential capital

Implementing the project of developing non-cash payments of the State Bank

of Vietnam, combined with the policy of increasing the proportion of income from banking services, BIDV Branch of Transaction Office 1 has set the orientation is to increase the proportion of demand deposits and payment deposits of customers Because the cost of raising these deposits is small, the branch can take advantage of the revenue from the service provision With this orientation, BIDV, Branch of Transaction Office 1 branch has set the target of raising residential capital in the period 2017-2019 as follows: