CHAPTER 2: CURRENT CIRCUMSTANCE OF RISK MANAGEMENT IN
2.1 General introduction about Vietnam Joint Stock Commercial Bank for
2.1.3 Business performances and earning results of Vietnam Joint Stock
2.1.3.1 Capital mobilization
Capital takes a significant role in the production and business activities of any business or company. For banks, capital also plays an important role when banks need to finance their daily trading activities. For that reason, capital mobilization has a great impact on other banking activities. Thanh Xuan Branch has been paying attention to capital mobilization and has concretized by professional measures to attract idle money for the bank.
Table 2.1: Capital raising situation of Thanh Xuan Branch
Unit: million VND
Targets
2017 2018 2019
Amount Prop ortio n(%)
Amount Proport
ion(%) Growth (%)
Amount Proporti on(%)
Growth (%) Mobilized
capital
4.563.92
8 100 6.154.679 100 34,85 6.559.196 100 6,57 1.Accordi
ng to customers
Residents 3.562.15
3 78,05 5.102.807 82,9 43,25 5.723.771 87,26 12,17 Economic
organizati ons
1.001.77
5 21,95 1.051.872 17,01 5,00 835.425 12,74 - 20,58 2.
Currency
VND 4.382.67
3 96,03 5.985.171
97,25 36,56 6.397.221 97,53 6,88 Foreign
currency convertibl e
181.255 3,97 169.508 2,75 - 6,48 161.975 2,47 - 4,44
Targets
2017 2018 2019
Amount Prop ortio n(%)
Amount Proport
ion(%) Growth (%)
Amount Proporti on(%)
Growth (%)
3. Term
Non-term interest rate
452.817 9,92 768.143 12,48 69,64 612.122 9,33 - 20,31 (short
term interest rate) <12 months
473.287 10,37 865.895 14,07 82,95 837.186 12,76 - 3,32
12-24 months
3.425.62
5 75,06 4.053.498 65,86 18,33 4.840.362 73,8 19,41 (long term
interest rate) >24 months
212.199 4,65 467.143 7,59 120,14 269.526 4,11 - 42,30
(Sources: Finance and Accounting Department, Vietnam Joint Stock Commercial Bank for Industry and Trade - Thanh Xuan Branch, 2019)
The mobilized capital of the branch has increased in recent years. In 2018, the total mobilized capital was VND 6,154,679 million, which witnessed an increase of VND 1,590,751 million compared to this category 2017. By 2019, the mobilized capital VND 6,559,196 million, increased VND 404,517 million compared to 2018 amount. Deposits from residents in 2018 were VND 5,102,807 million, which is an increase of VND 1,540,654 million compared to 2017. In 2019, VND 5,723,771 million were mobilized that equivalent to VND 620,964 million compared to 2018. From the table of data, it can be seen that the mobilized capital from the residents a major proportion in the mobilized capital of the bank. Therefore, the branch is not a prioritize investment channel of economic organizations. Meantime, we can see that the majority of mobilized capital from Vietnam Dong is medium-term loans.
2.1.3.2 Credit activities
In addition to the capital mobilization, the mobilized capital of the bank must ensure the use of its capital to achieve the purpose of capital adequacy, promoting economic development and earn high profits. The branch has conducted credit business under the market mechanism and the capital supply-demand relationship.
Table 2.2: Outstanding loans from Thanh Xuan Branch
Unit: million VND
Years 2017 2018 2019
Target Amount Proporti
on(%) Amount Proporti
on(%) Amount Proporti on(%)
Total loans 3.889.396,54 100,00 5.593.604,5
9 100,00 5.900.721,95 100,00
I. To term
1. Short-term
loans 1.342.563,86 34,52 2.189.058,6
5 39,14 1.555.042,10 26,35 2.Medium-
term loans 2.546.832,68 65,48 3.404.545,9
4 60,86 4.345.679,85 73,65 II. To
economic classification
1. State
enterprises 3.189.346,68 82,00 3.338.116,2
5 59,68 3.329.498,93 56,43 2. Non-State
Enterprises 483.834,64 12,44 580.390,09 10,37 1.582.573,89 26,82 3. Individual
and household business
216.215,22 5,56 1.675.098,2
5 29,95 988.649,13 16,75 III. To
industry
1. Industry 1.034.759,21 26,60 2.254.850,4
6 40,31 2.933.869,82 49,72 2.
Agriculture, forestry,
15.656,25 0,40 1.493,72 0,03 22.439,61 0,38
fisheries
3. Services 2.838.981,08 73,00 3.337.260,4
1 59,66 2.944.412,52 49,90
(Sources: Finance and Accounting Department, Vietnam Joint Stock Commercial Bank for Industry and Trade - Thanh Xuan Branch, 2019)
The data show that the loan balance of the bank increased rapidly over the years. In 2018, the total loan balance was VND 5,593,604.59 million, an increase of VND 1,704,208.05 million compared to 2017. By 2019, the increase of VND 307,117.36 million showed that the bank's lending activities were very good. At the same time, we also see that the proportion of loans to state-owned enterprises accounts for a large proportion, affirming that the agriculture, forestry and fishery companies are the main and important customers of the bank. Moreover, outstanding loans accounted for a high proportion in the service sector and were mainly in the medium and long term.
- In terms of scale: Total outstanding loans increased gradually in recent years, from 2018 to 2019 the total capital increased from VND 5,593,604 million to VND 5,900,721 million (corresponding to 5, 49%) wearing Although capital mobilization activities have decreased. This proves that the financial capability and capital sources of a bank branch are strong enough and meet the demand for loans in the economy, quality lending activities, effective loan management are sufficient to create enough. profit to offset costs. Add to that the resilience of the local economy in particular and the Vietnamese economy in general - although it is still very slow, business lines, industries, tourism, investment sectors. In the province, it is being encouraged and given priority to expand production and business, leading to
higher capital needs of people and economic organizations.
- Regarding lending structure: Short-term loans accounted for a smaller proportion of medium and long-term loans (in 2019 the proportion of short- term loans accounted for 26.35%, while medium and long-term loans accounted for 73.65% higher than 3 times higher than short term). Although the risks in investment at this time are still high, most of the borrowers are businesses, economic organizations in the district (because this component in Thanh Xuan district accounts for a large proportion and affects the foundation). the economy is very high so there is a need for loans more than the population); These financial institutions often borrow to expand production and expand markets; restore the capacity of your business.
Besides, due to rising inflation, people need to spend more and tend to save more, so the demand for short-term loans in 2019 decreased by 28.96%
compared to 2018; Contrary to the trend of increasing medium and long-term loans (in 2019 increased by 27.64% compared to 2018). This is a good sign for both the bank and the economy.
- By type of economy: Credit activities for state-owned enterprises, although accounting for a large proportion in the structure (in 2019, they accounted for 56.43%; in 2018 accounted for 59.68%) but tended to decrease slightly. (0.26%). Lending to non-state enterprises increased sharply (from 1,582,573 million in 2017 to 1,582,573 million in 2019 - corresponding to an increase of 172, 67% - a huge result but following with the current situation of the background. Also, the bank decreased 40.98% of loans for individual households from 1,675,098 million in 2018 to 988,649 million in 2019.
Thereby, we see that the object of the branch's focus on investment is non- state-owned enterprises - The component is on the way of recovery and has a
large demand for loans. With the ability to be proactive and flexible about input and output interest rates plus the strong enough capital source that the bank has provided. develop new borrowers and create prestige with old customers.