CHAPTER 1 OVERVIEW OF VIETNAM’S COMMERCIAL BANKS OPERATION

CHAPTER 1

OVERVIEW OF VIETNAM’S COMMERCIAL

BANKS OPERATION
1


Chapter expected learning outcomes
 Review the basic knowledge about commercial banks

 Understand the concept and characteristics of Vietnam’s

commercial banks
 Evaluate the effectiveness of service sectors at commercial
banks
 Understand the operation of commercial bank deeply
 Understand the legal requirements for banking activities in
Vietnam

2


References
 Commercial banking operation textbook.

 Law on credit institutions (Law No. 47/2010/QH12

and No. 17/2017/QH14)
 Circular stipulating minimum safety limits and ratios
for transactions performed by credit institutions and

branches of foreign banks (No. 36/2014/TT-NHNN)
and related documents
 Decision on the issuance of regulation on the debts
classification, provisioning and use of provisions
against credit risks in the banking activity of credit
institutions (No. 493/2005/QD-NHNN) and related
documents
3


Content

Overview of
Commercial
Banks

Commercial
banking
operations

4

Influence of the
legal
environment on
the operation of
commercial
banks

Overview of Commercial Bank
Definion:
 Commercial bank means a type of bank
which may conduct all banking operations
and other business activities for profit.
 Banking operations means the trading in
and regular provision of one or some of the
following services:
 Deposit taking;
 Credit extension:
 Via-account payment.
(Article 4 - Law on credit institutions 2010)
5


Overview of Commercial Bank
Characteristics:
A traditional bank type.
 Implement the most diversified financial services
compared to other types of banks: Receive
deposits, mobilize capital by issuing valuable
papers, lending, providing trust, guarantee and
financing services for trading, trading foreign
exchange, international banking services,
payment and treasury services ...
=> This is full service Bank


6

Overview of Commercial Bank

7


Overview of Commercial Bank
 Based on ownership:

State – owned commercial banks
 Joint – stock commercial banks
 wholly foreign – owned banks
 Joint - venture banks
 Foreign banks’branches and Representative Offices of
Foreign Banks
 Based on business strategy:
 Retail bank
 Wholesale bank
 Based on organizational relationship:
 Bank head office
 Bank branch level 1,2, transaction office


Classification

8


Overview of Commercial Bank
Functions of commercial banks:

 Financial intermediation;
 Payment intermediaries;
 Create money;
 Financial services and other banking
services

9


10


Functions of commercial banks
Financial intermediation:
Lenders
(organization,
individual)

Financial intermediaries
Commercial Banks

The intermediary rotates capital in the
economy, from capital surplus to lack of
capital

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Borrowers
(organization,
individual)

Functions of commercial banks
 Payment intermediation and management of

payment facilities: Commercial banks act as
cashiers for businesses and individuals,
making payments at the request of
customers.
 promoting goods circulation, saving
circulation costs, creating a foundation for
commercial banks to perform lending
operations.

12


Functions of commercial banks
 Create money

13


Major activities of commercial banks
 Capital mobilization activities:

Receive deposits from organizations and
individuals
 Release valuable papers
 Borrowing from domestic and foreign credit

institutions
 Short-term loan from the SBV
 Credit granting activities:
 Loan
Guarantee
 Discount
Financial leasing…
 Factoring


14


Major activities of commercial banks
 Payment and treasury service activities:

Provide payment facilities
 Cash collection and payment: collection and
payment
 Payment services to join the domestic and
international inter-bank system.
 Other activities:
 Investment
 Trading in Foreign exchange
 Trust and receive trust
 Finance support
 Preserving valuables, insurance ...


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Commercial banking
operations
 Based on type of customers:



Individual activities
Bussiness activities

 Based on the balance sheet:




Balance Sheet
Off-Balance Sheet

16


KEY STATISTICAL INDICATORS (Q1/2019)
Categories of CIs

State-owned banks

Vietnam Bank for Social Policies
Joint stock commercial banks

%Shortterm
Total
Regulatory Charter
CAR
funds/
Assets
capital
Capital
long- term
loans
4.929.765
282.199
149 9,61
30,99

204.785

13.893

4.629.867

352.305

268.87 11,10

31,52

Joint venture, 100% foreign-owned
1.124.962
banks, foreign banks'branches

177.037

116.62 25,90

-

173.849

36.315

26.42 20,91

29,43

33.179

3.939

3.027 19,21

28,56

Finance and leasing companies
Cooperative bank
People's Credit Funds
Whole system

118.270
11214678

4.548
851.795

582.38 12,19

1728,01


Total Assets of the credit
institutions in Vietnam (Q1/2019)

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Charter capital of Vietnam’s commercial Banks
(VND Billion, 2018)

19


WHOLLY FOREIGN – OWNED BANKS
No
Name of Banks
1 ANZ Bank (Vietnam) Limited - ANZVL
CIMB Bank (Vietnam) Limited -CIMB Việt
2
Nam

Address Charter capital

Hanoi
3,000
Hanoi

3 Hong Leong Bank Vietnam Limited - HLBVN HCMC
Hongkong-Shanghai Bank Vietnam Limited HCMC
HSBC
5 Public Bank Vietnam
Hanoi
4

6 Shinhan Bank Vietnam Limited - SHBVN

HCMC

Standard Chartered Bank (Vietnam) Limited
7
Hanoi
- SCBVL
United Overseas Bank (Vietnam) Limited –
8
HCMC
UOB Vietnam
Woori Bank Vietnam Limited -Woori Bank
9
Hanoi
Vietnam

3,203.20
3,000

7,528
3,000

4,547.10
4,215.30

3,000
4,600 20


Number of branches & transaction centers

21


Credit growth (9/2019)

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