CHAPTER 3: THE CURRENT STATUS OF SACOMBANK FROM 2007 TO
3.3. Products and services of Sacombank
Along with the development of status, Sacombank has not stopped diversifying its products and services to meet and serve the increasing demand of domestic and foreign customers.
3.3.1. Capital mobilization activity
In 2010, total mobilized capital reached VND 126,203 billion Sacombank, (up to VND 39,868 billion), equivalent to 46.18% compared to 2009. Thus, with the trend of economic recovery and stability of the financial and banking system in two years ago, the growth rate of capital mobilization was high in 2010 and equivalent in 2009.
Sacombank's capital mobilized mainly from the economic entities and residential areas. In 2010, Sacombank was rose from this field VND 103,804 billion, up approximately 82% of total deposits, up VND 25,307 billion, increasing 32.24% respectively in comparison to 2009. Sacombank mobilized from credit institutions for 16.08% in total deposits equivalent to VND20.296 billion in 2010 and up significantly from 2009.
Until 03/31/2011, the balance of capital increased to VND 123,761 billion, down VND 2,442 billion, down 1.93% compared with the end of 2010. Cause of the decrease is due to move into first quarter of 2011, the interest rate increases making it difficult to mobilized capital activities. In addition, mobilization of capital structure in Sacombank had fluctuation such as: decrease of deposits and loans from other credit institutions, increase the mobilization capital from economic institutions and residential areas. So, proportion of balance mobilized from the following sources: from credit institutions, banks and state government: 14.11%; from economic entities and residential areas: 84.04% and investment trust funds: 1.85%.
Table 3.4: Mobilized Capital
Unit: VND million
Source: Sacombank’s Financial Report (2009-2011)
41
6,006 20,296 17,458
78,497
103,804 104,007 1,832
2,103 2,296
0 20,000 40,000 60,000 80,000 100,000 120,000 140,000
2009 2010 Q1/2011
Unit: VND billion
Mobilization of Capital
Investment trust
Economic organization and residents area
Source: Sacombank’s Financial Report
Figure 3.3: Mobilization Capital of Sacombank
In general, growth of Sacombank‘s funding was quite high in 2010. Funds mobilized concentrated in residential areas and the trust capital of foreign financial institutions with the appropriate interest rate. This is one of the decisive factors in business performance of banks and present position of the bank. Sacombank has built a reputation among customers in domestic and especially in foreign financial institutions.
3.3.2. Consignment capital
In 2010, Sacombank received trust funds from international organizations and other organizations with a capital of VND 2,103 billion, an increase of VND 271 billion corresponding to 14.79% compared to 2009. Since it is unsecured loan with a relatively cheap cost and capital accounted for low proportion. In that year, trust funds from those organizations just accounted for only 1.67% of the total mobilization capital. This fund is disbursed according to the criteria by offering of the above organizations.
Until late quarter 1/2011, total surplus of trust fund was VND 2,296 billion, equivalent to 9.18% compared with the end of 2010. Sacombank always advocated mobilized funds to contribute for customers with quite cheap price.
3.3.3. Credit activities
In the end of 2010, total credit balance of Sacombank was VND 77,486 billion, up VND 21,989 billion, 39.62% of the corresponding increase from 2009.
Credit balance primarily came from customers, economic organizations and residents and activities of lending the credit institutions which accounted for low
42 proportion (ea balance of VND 127 billion in the end of 2009, accounting for 0.16%
of total outstanding loans).
To quarter 1/2011, the total credit balance of Sacombank was VND 78,487 billion, an increase of VND 1,128 billion, up 1.46% respectively compared with the end of 2010. In general, the level of credit growth in quarter 1/2011 was not high, caused by of lending rate increases with the increase of interest rates which made customers consider in lending, while banks gradual implementation of regulations on credit growth limits prescribed by state banks.
Table 3.5: Credit activities at Sacombank
Section
Dec 31th, 2009
Dec 31th, 2010
Mar 31th, 2011 Overdue debt rate 0.88% 0.56% 1.00%
Non-performing loan (NPL) 0.69% 0.52% 0.56%
Capital Adequacy ratio (CAR) 11.41% 9.97% 9.43%
Total outstanding loan for customers
(VND million) 55, 247904 77,359,055 78,487,074
Source: Financial Report of Sacombank (2009 –Q1/2011)
According to the recovery of the economy in Vietnam, in 2010, quality of credit had improved significantly in comparison to 2009. The overdue debt rate decreased to 0.560% in 2010 which was lower than versus 2009. So, this is a great effort in managing the quality of credit. Sacombank had established departments to prevent and treat the debt from the beginning in order to maximize debt settlement experience, understand and share difficulties with borrowers in the debt settlement process, implement reevaluation of collateral, evaluate loans and sense of balance sheet commitments to strengthen the management measures. Constant in three years ago, the ratio of overdue debt ratio and NPL of total outstanding loans in Sacombank always was maintained at less than 1%. NPL, in 2010, was 0.521%, compared with the end of 2009, reduced to 0.167%. CAR, in 2010, was 9.97%, decreased to 1.44% compare to the late 2009 which is relatively low, but is also showed the efficiency in using capital and assure a minimum level of safety was 9%
by the State Bank‘s regulations.
To first quarter of 2011, the situation of quality in credit and CAR was not more volatile than the end of 2010, which located in fairly well and in the regulations of the State bank
43 0.88% 0.69% 0.56% 0.52% 1.00%0.56%
11.41%
9.97%
9.43%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
2009 2010 Q1/2011
THE QUALITY OF CREDIT
Overdue debt rate
Non-performing loan (NPL)
Capital Adequacy ratio (CAR)
Source: Sacombank’s Financial Report (2009-Q1/2011)
Figure 3.4: The quality of credit in Sacombank
3.3.4. Service activities and foreign currency trading
Payment activities: thanks to application in modern technologies, payment activities of Sacombank increased developing, automated, expanded many kinds of services/scope and increase processing speed.
Domestic payment operations: In 2010, turnover in transferring money increased to VND 1,227,087 billion, reaching to VND 2,834,292 billion respectively, up 76% compared to 2009. In particular, cash was transferred in the system being VND 1,021,971 billion and outside the system being VND 1,812,322 billion. In 2010, Sacombank expanded payment services to promote the payment system network by linking payments to commercial banks, implementation services of revenue expenditure, payment of salaries via accounts with the incentive policy for customers.
International payment activities: total sales of international payments in 2010 was USD 5,726 millions (increased 37% versus 2009)
Business activities in foreign currencies field: the sales of foreign currency trading, in 2010, reached USD 41,038 million, up USD 12,779 million, corresponding with 45% compared to 2009. Foreign currency trading activities implement currency services such as forward contracts, swap and options.
44 Source: Sacombank’s prospectus (2008-2010)
Figure 3.5: The sales of foreign currency trading and international payment
Investment activities
Table 3.6: Investment Activity
Unit: VND billion
Source: Sacombank’s prospectus (2009 – Q1/2011)
Total investment securities balance, on 31/12/2010, was VND 21,126 billion, accounting for 89.84% of all capital of investment activities, up 117.39% compared to 2009. Sacombank mainly invested in debt securities being released by government, the credit institutions and economic organizations (accounting for 99.44%). Focusing primarily on investment securities available to sale, increase liquidity and reduce risk to. Total outstanding long-term investment capital contribution in 2010 was VND 2.390 billion, up 153 billion compared with 2009.
On March 31th, 2011, the total outstanding securities and long-term investment capital contribution was VND 22.295 billion, down 1.221 billion, down
0 5 10 15 20 25 30 35 40 45
2008 2009 2010
33.287
28.259
41.038
3.729 4.176 5.726
Unit: USD million
THE SALES OF FOREIGN CURRENCY TRADING AND INTERNATIONAL PAYMENT
Thesales of foreign currency trading
The sales of international payment
2009 2010 Q1/2011
Investment
Balance Proportion Investment
Balance Proportion Investment
Balance Proportion Investment
securities 9,718.29 81.29% 21,126.04 89.84% 19,907.73 89.29%
Contribution in long-term
investment capital 2,237.23 18.71% 2,390.38 10.16% 2,387.49 10.71%
Total 11,955.52 100% 23,516.42 100% 22,295.22 100%
45 63,364
67,469 98,847 141,800
140,137
0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000
2007 2008 2009 2010 2011
Unit: VND billion
Total assets
Total assests
19.5% respectively at the end of 2010. The main reason explains for this is that the number of investment securities was reduced.