Improve effectiveness of capital raising in my dinh trading room thang long branch, GP bank

ACKNOWLEDGEMENT

In the first place, I would like to express my sincere to Mrs Nga, for her
supervision and guidance.
Also I would like thank AOF teachers and fellow friends in helping me to
broaden my view and knowledge
Especially, my deepest appreciation to Mr. Bui Anh Duc,the head of My Dinh
Trading-room, Thang Long branch in helping me collecting necessary information
for my thesis.
Lastly, I offer my heartiest gratitude to my parents and all of those who supported
me in any respect during the completion of this thesis
Ngo Duc Tiep

1


TABLE OF CONTENT
ACKNOWLEDGEMENT
INTRODUCTION

1. Rationale of the Research
2. Problem statement
3. Objectives of the research
4. Methodology and the Research design
5. Scope and limitation
Chapter 1: Overview of capital raising and its effective at commercial banks.
1.1 Some introductions about commercial banks
1.1.1 The concept of commercial banks
1.1.2 Functions of commercial banks in the economy
1.1.2.1. Accepting deposits function
1.1.2.2. Grant of loans and advances

1.1.2.3. Providing advice for investors
1.1.3 Roles of commercial banks in the economy
1.1.2.1.Financing for businesses
1.1.2.2.Providing between linkage between Vietnamese economy and global
economy
1.1.2.3.Help to enhance efficiency of capital use, further supporting economic
development
1.2 Some introductions about capital and capital raising process in business
transactions of commercial bank
1.2.1. The definition of bank capital
1.2.2. Factors affecting effectiveness of capital raising
1.2.2.1 Quality of information resources
1.2.2.2. Level of modernization of banking technology
1.2.2.3. Capacity and ability of dealing officers
1.2.2.4. Changes in structure, procedures and policies
2


Chapter 2: Real situation of capital raising and its effectiveness in My Dinh trading

room-Thang Long branch-PG bank
2.1. The general overview of GP bank
2.1.1. History and development
2.1.2. GP bank’s organization structure and its branches
2.2. Overview of business operations of My Dinh trading room-Thang long branch
2.2.1. Types of of business product
2.2.2. Capital mobilization
2.2.3 Credit operations
2.2.4 Other products and services
2.2.5. Operating performance

2.2.6. Evaluation of capital raising operations at My Dinh trading room , Thang
Long branch
2.2.6.1. Achievements

2.2.6.2 Limitations
Chapter 3: Solutions to enhance effectiveness capital raising in My Dinh trading
room-Thang Long branch-PG bank
3.1 Orientations to improve capital raising
3.2 Solutions to enhance effectiveness of capital raising
3.2.1 Improving the quality of human resources
3.2.2 Building customer strategies
3.2.3 Deposit scoring and rating clients in an active way

CONCLUSION
REFERENCES

3


INTRODUCTION
1. Rationale

Raising capital is one of the activities of commercial banks, which produce the
majority of business income primarily to banks, especially the commercial banks
in Vietnam generally, and GP bank particularly. The consequence of raising
capital often causes many adverse effects for banks: increasing costs, reducing
revenue, worsening financial situation, and eroding reputation of the bank.
Vietnam is in the process of industrialization, modernization and aggressively
integration into the world economy. Over the past 10 years, the Country witnessed
a relatively higher level of economic growth rate to almost the rest of the world,

7.3%/year on average. To be able to achieve the goals of Vietnam economy’s
entities in the coming years, there exists the demand for a huge capital.
Moreover, the global financial depression 2009-2010 is hurting the world
economy most seriously since the World War II. The Financial sector is now
facing much changes and challenges, especially the merger and acquisition of
financial institutions in the world. The crisis in real estate leads to the bankrupt of
many giant banks in the world, such as: Lehman Brothers, Washington Mutual’s,
and Fannie Mae, Freddie Mac, Chiffon Bank, Colonial Bank… The failure of the
US financial bailout package has had effects not only on American, European
financial market but also in Asia and the whole world. While Financial Institutions
have faced difficulties over the recent period for a dozen of reasons, the major
cause of serious banking problems continues to be directly related to lax credit
standard for borrowers and counterparties, poor portfolio risk management…

4


The global financial depression and the merger and acquisition trend have put
Vietnam’s economy and financial market under pressure, which require new
changes to overcome such difficulties, for examples: the modernization of bank
system’s infrastructure, credit risk management, and human resource training…
For My dinh trading room, GP bank – Thang Long

Branch, raising capital

represent the heart of the banking industry, capital are the dominant asset which
generate the largest share of operating income and represent the Bank’s greatest
risk exposure. Departments joining in the credit/lending procedure as well as the
whole bank have paid such a properly giant attention and effort to improve the
loan quality and strengthening the capital management activities of GP bank

To ensure that the using of capital is safe, effective and sustainable, and
gradually integrated with the internationally standard process of supervision and
management, GP bank has developed and applied the internal capital grading and
rating system, which is particularly the system of rating borrowers. However, this
ranking system still contains many shortcomings, which need to be modified
adequately to meet the requirements of credit risk management in the current
conditions as well as ones in the future.
Stemming from the above requirements, thesis research has gone into the
project
“

Improve effectiveness of capital raising in My dinh trading-

room Thang Long branch, GP bank. ”
2. Objective
The research focuses on the following objectives:
- To gain a full view on capital raising or using capital rasing activities: the
features, importance, operation…

5


- To analyze the specific situation and shortcomings capital raising or using
capital rasing activities activities in My Dinh trading room, Thang long branchGP bank
-

Proposing some solutions to improve the effectiveness of capital raising

management in My Dinh trading room Thang Long branch.
3. Methodology

The thesis is implemented on the basis of quantitative and qualitative analysis
methods, in which the qualitative methods to study problems of theoretical and
practical activities of capital, capital management through a system of internal
ratings

are

primarily

applied.

Since

then,

the

consistent

solutions,

recommendations and conditions to reduce risk at GP bank are proposed and
implemented
4. Scope and limitation
- Objects of the project: the current situation of raising capital in My Dinh Trading

room
- Scope of the project: the whole range of system of Trading on the basis of
reported data from 2008 to December 2010.
5. Structure

The thesis is flown through following structure:
- Introduction
- Chapter 1: Overview of capital raising and its effective at commercial banks.
- Chapter 2 Real situation of capital raising and its effectiveness in My Dinh
trading room-Thang Long branch-PG bank.
- Chapter 3: Solutions to enhance effectiveness capital raising in My Dinh trading

room-Thang Long branch-PG bank
- Conclusion.

6


Chapter 1. Overview of capital raising and its effective at
commercial banks
1.1 Some introductions about commercial banks
1.1.1 The concept of commercial banks
A bank is an institution that provides financial services to consumers,
businesses, and governments. One major type of bank is the commercial bank,
which has fewer restrictions on its services than other types of banks. A
commercial bank is a financial intermediary which collects credit from lenders in
the form of deposits and lends in the form of loans. Commercial banks get profit
by taking deposits from customers, for which they typically pay a relatively low
rate of interest, and lending the deposits to borrowers at a higher rate of interest.
Commercial banks hold deposits for individuals and businesses in the form of
checkings and savings accounts and certificates of deposit of varying maturities
while a commercial bank issues loans in the form of personal and business loans
as well as mortgages.
From the above concepts we can draw characteristics of commercial banks :
Commercial banks run for profits. Indeed, Commercial banks are operated with

the objective of making a profit. Their fee structure and interest rate is designed
with the intention of making money for owners and shareholders. This
characteristic of commercial banks contrasts with the primary function of credit
unions, which are nonprofit community institutions that help individuals and
businesses manage their money Commercial banks make money by charging
clients who use their services and borrow their funds. Credit unions charge for
bank accounts and loans as well, but they charge less because their fee structure is
designed to cover their costs, rather than also making a profit.
Secondly, commercial banks are privately owned. Commercial banks are
owned by private individuals or collections of private individuals acting as
shareholders. They are regulated by government institutions and must follow all

7


applicable laws, but they are not owned by the government. Except under unusual
circumstances such as the 2008 financial bailout, the private individuals who run
commercial banks are responsible for major policy decisions. Unlike credit unions,
where depositors automatically become members and stakeholders by joining and
making deposits, shareholders in commercial banks must invest money specially
in ownership by purchasing stock.
Lastly, commercial banks are primarily interested in working busineses.
Commercial banks sometimes offer products and services to individuals, but their
primary interest is in working with businesses; in fact, commercial banks are also
sometimes known as "business banks." Banking services offered to individuals are
sometimes referred to as "retail banking," because they are often small scale
transactions. Business accounts tend to involve larger sums of money, and the fees
and profits that commercial banks reap from them tend to be greater.
1.1.2 Functions of commercial banks in the economy
Commercial banks are responsible for adding customer deposits in a safe and

lending the proceeds to worthy commercial, industrial, governmental and
nonprofit institutions. Commercial banks also provide market making activities in
municipal, government and corporate bonds. Banks provide consulting and
advisory services to customers as well as safekeeping and trust services.
1.1.2.1. Accepting deposits function
Commercial banks provide important services as financial intermediaries.
Commercial banks mobilise deposits from customers seeking safe, liquid, secure
investment opportunities and they find it convenient to deposit the amounts with
banks. Depending on the nature deposits, funds deposited with bank also earn
interest. Thus, deposits with the bank grow along with the interest earned. If the
rate of interest is higher, public are motivated to deposit more funds with the
bank. There is also safety of funds deposited with the bank.

8


1.1.2.2. Grant of loans and advances
The second important function of a commercial bank is to grant loans and
advances. Such loans and advances are given to members of the public and to the
business community at a higher rate of interest than allowed by banks on various
deposit accounts. The rate of interest charged on loans and advanced varies
depending upon the purpose, period and the mode of repayment. The difference
between the rate of interest allowed on deposits and the rate charged on the loans
is the main source of a bank ’ s income.
a ) Loans
A loan is granted for a specific time period. Generally, commercial banks
often grant short-term loans. But term loans, loans for more than a year, may also
be granted. The borrower may withdraw the entire amount in lumpsum or in
instalments. However, interest is charged on the full amount of loan. Loans are
generally granted against the security of certain assets. A loan may be repaid either

in lumpsum or in instalments.
b) Advances
An advance is a credit facility provided by the bank to its customers. It differs
from loan in the sense that loans may be granted for longer period, but advances
are normally granted for a short period of time. Further the purpose of granting
advances is to meet the day to day requirements of business. The rate of interest
charged on advances varies from bank to bank. Interest is charged only on the
amount withdrawn and not on the sanctioned amount.
1.1.2.3. Providing advice for investors
Commercial banks provide investment advice for investors. Investors can be
guided to mutual funds or direct investment by bank professionals. Banking
specialists can invest in stocks, bonds, preferred stocks and futures. The bank can
hold all investment securities as custodian as well as offer safety deposit boxes,

9


provide letters of credit for investment opportunities, and act as trustee for wills
and investment fund.
1.1.3 Roles of commercial banks in the economy
Market economy has always contained competitive factors, if businesses
want to dominate the market to improve their competitive position, they must
constantly improve quality and scale of their businesses. To do so, the most
efficient way is taking advantages of loans from banks. Thus, a commercial bank
plays important roles in the economy.
1.1.2.1.Financing for businesses
Bank is a tool for business to satisfy capital requirements for operation and
production. Especially when the internal accumulation of capital of these
enterprises is limited. It is very difficult to attract capital from capital markets for
small-scale enterprises, in those cases, capital from banks is even more important

for the survival and development of these enterprises. Therefore, banks are one of
the channels to satisfy the financing needs of enterprises to ensure business
operations are frequent, continuous, or meet the requirements of innovating
equipment; expanding scale production.
1.1.2.2.Providing between linkage between Vietnamese economy and global
economy
In transactions in International Trade, actual money does not usually change
hands. Nowadays, thanks to commercial banks, merchants don’t have to carry a
large amount of money to buy goods in other country and instead of that, they
only consign money on a domestic commercial bank, then using international
non-cash payment instruments of commercial banks such as letter of credit ( L\C ),
bill of exchange, promisorry note,…to facilitate the payment in International
Trade. Their partners will get money quickly and secured.
1.1.2.3.Help to enhance efficiency of capital use, further supporting economic
development

10


When commercial banks grant loans to businesses, they require enterprises
have plans and busineses projects that are feasible and economically efficient.
Enterprises, for themselves, also need to calculate the economic efficiency that
they have a profit and repay the principal and interests to the bank. At the same
time, banks also regularly inspect and supervise the use of enterprises' capital to
ensure those funds are used for proper, effective and profitable purposes. By
weeding out risky borrowers, commercial banks lessen the risk of financial losses.
As a result, loans that mature without any problems generate a larger pool of funds
for the bank to lend, further supporting economic development.
1.2 Some introductions about capital and capital raising process in business
transactions of commercial bank

1.2.1. The definition of bank capital
Bank capital is regarded as the difference between the value of a bank's assets
and its liabilities. The bank capital represents the net worth of the bank or its value
to investors. The asset portion of a bank’s capital includes cash, goverments
securities and interstearning loans like mortages letters of credit and inter-bank
loans. The liabilities section of a bank's capital includes loan-loss reserves and any
debt it. Bank capital includes : Equity, Long-term debt, Reserves.
Equity is ownership interest in a corporation in the form of common stock or
preffered stock. It also refers to total assets minus total liabilities, in which case it
is also refered to as shareholder ’s equity or networth or book value.
Long-term debt is a loan that an organization musr repay after a year or more.
A company may sign a long-term debt agreement if senior leaders believe that
retained earnings, or interal funds, are insufficient to meet short-term needs such
as vendor payments, salaries as well as administrative and technological costs. An
investment banker usually helps corporate top executives make long-term debt
decision based on the firm's financial robustness and economic conditions.

11


Reserves are funds set aside for day to day operations or meeting emergency
liquidity requirements. Reserves include provision for loan losses (PLL), reserve
for loan losses, capital reserve.
1.2.2. Factors affecting effectiveness of capital raising
1.2.2.1 Quality of information resources
These are factors that affect information collected by dealing officers. When
gathering information, dealing officers face many difficulties from the business
because for business enterprises, the problem of information security is of primary
importance. They do not want to disclose much information about competition
with other businesses or confidential information about the know-how of the

production. Therefore, the documents they provide to banks are not really accurate
and complete. This is also a reason for the difficulties in assessing and classifying
enterprises by dealing officers.
Therefore, such a clearly defined policy about publishing information of bank’s
activites will facilitate dealing officers to collect information easily and more
accurately, improving the quality of information sources that utilize efficiency of
capital raising work.
1.2.2.2. Level of modernization of banking technology
Clearly, the level of modernization of technologies and standards decides the
quality of capital raising effectiveness. The quality of capital raising cannot be
effective when the work is still carried out manually, depending on the subjective
evaluation by dealing officers. When the process is conducted according to the
scoring software, the result will be much better. When the automatic scoring
software is used, it will be limited to subjective errors made by staff, shortening
the time of scoring, thus enhancing the quality of this work.
1.2.2.3. Capacity and ability of dealing officers
Dealing officers are the persons who directly carry out the steps of capital
raising process, from gathering information, evaluating information to the

12


analyzing and scoring. Thus, the capacity and ability of dealing officers are the
factors directly affecting the quality of this work. If dealing officers have firm
understanding of the financial as well as non-financial criteria to accurate evaluate
and consider the reports of the business, and experience in analyzing and
considering, then the ranking results will be very reliable. However, these qualities
financial as well as non-financial criteria to accurately evaluate and consider the
reports of the business, and experience in analyzing and considering, then the
ranking results will be very reliable. Credit officers are required not only firm

expertise but also professional ethics are also very important issues. In many
banks, the regulations in which credit officers do not receive commissions for
clients are stemmed from the fear of professional ethics issues
1.2.2.4. Changes in structure, procedures and policies
To apply the capital raising rating for business clients, banks need to build a
capital raising scoring system: the capital raising scoring process, the system of
indicators used to score, and how to score the criteria must be consistent with
practices and regulations promulgated by the Government. A system of
transparent policy mechanisms will help synchronize the work of capital raising to
be widely and uniformly applicable.

Chapter 2. Real situation of capital raising and its effectiveness
in My Dinh trading room-Thang Long branch-PG bank.
2.1. The general overview of GP bank
2.1.1. History and development
Name: Global Petrol Bank (GP bank)
-

Global Petrol Bank (GP bank), rooted from Ninh Binh rural commercial

bank, was formally transferred from rural bank to urban one in 07/11/2005. At that
time, GP bank had only 10 staffs, poor infrastructure, and simple products.

13


-

Nevertheless, with the effort and ambition, GP bank has developed quickly

its branches as well as staff. GP bank now has over 1000 staffs and 67 branches in
mostly provinces and cities such as: Ha Noi, Ho Chi Minh City, Ninh Binh, Hai
Phong, Vung Tau, Da Nang…
-

Especially, it is 2007 that marked the sharp development of GP bank. Its

chartered capital was increased to 1.000.000.000.000 VND (1000 billion VND),
its profit was 101 billion VND, and ROE was 19.44 %...
-

11/01/2010, GP bank announced that its chartered capital gained 2000

billion VND.
-

11/8/2010, its chartered capital increased to 3018 billion VND.

-

As of 31/12/2010 the GP bank gained lots of achievements:

+

The total amount of GP bank’s asset was 19,000 billion VND,

+

Its equity was 71% higher than that in late 2009,

+

Profit after tax was 8 times as high as that in the same period of last year

2.1.2. GP bank’s organization structure and its branches
a) Board of Management.

President of BOM

Vice president of BOM

Vice president of BOM

14


Member of BOM

Chart 1: Board of management (BOM).
b) Executive Board.

CEO
Pham Quyet
Thang
Deputy CEO
Duong Thi Bich
Lien

Deputy CEO
Do Trung Thanh

Deputy CEO
Nghiem Tien Sy

Chart 2: Excutive Board of GP bank

c) Department Organizational structure
1. Financial accounting department.
2. Board of management department.
3. CEO department.
4. Administrative office.
5. PR department.
6. Human resources management and training department.
7. Internal Accountant department.
8. Controller department.
9. IT department.
10. Risk management department.
11. Revaluation department.

15


12. Foreign exchange department.
13. Domestic payment department.
14. Credit management department.
15. Legal department.
16. Investment department.
2.2. Overview of business operations of My Dinh trading room-Thang long
branch
2.2.1. Types of of business product

a. Personal banking services: checking account, saving account, forex
remittance (domestic money transfer, WU transfer), lending products (for
buying car, house, consumption…)
b. Corporate banking: checking account, domestic payment, forex products,
warrantees services, lending products.
c.

Investment banking: financial consulting service, investment authority

In general, My Dinh trading room-Thang long branch has witnessed a significant
development in recent years: becoming the trading room gaining revenues greater
than expenditures, working staff are paid stably (coefficient of wages in 2010 was
1:52); reducing the delinquency rates of 10% to below 1% (in 2010 the bad debt
ratio over the total outstanding loans was only 0.7%); business results are higher
than the previous one, and receiving regularly high award in the system of GP
bank
2.2.2. Capital mobilization
Over time, raising capital has always been considered a key task to ensure the
ability of balancing capital requirements to meet business expansion and to
successfully implement the targets assigned GP bank.
With various and attractive forms of raising capital, and positive, proactive and
timely measures, capital resources of the branch has relatively high growth.
However, the growth rate of funds mobilized is lower than the growth rate of bank
credit, therefore, this creates difficulties for the branch in balancing funds.
16


The explanation for this is because in recent years, capital growth has mainly
relied on the compensation for site clearance in the area. When the compensation
moved to the bank or when people received and deposited the compensation into

the branch, it will make funds of the branch soared, especially for large projects.
However, for this source of capital, after only a short period of time, people
gradually take out for shopping, building and repairing houses, leading to a very
large variation between months
The mobilization of capital of Thang Long branch over the period 2008- 2010 is
shown in Table 2.1
Table 2.1 Capital structure of GP branch, period 2008-2010

Indicators
31/12/08
31/12/09
31/12/2010
Unit: billion
VND No
Total capital
1.391
1.287
1.532
- Growth rate (%)
-7.47
19.03
Compared to 31/12
1
Classified by currency
- Domestic
1.301
1.203
1.436
Compared to
93.52

-7.5
19.36
31/12 (%)
93.47
93.47
Over the total
capital (%)
- Foreign
90
84
96
Compared to
6.47
-6.66
14.28
31/12(%)
6.52
6.26
Over the total
capital (%)
2
Classified by terms
- No term &
778
968
1.201
Lower 12 months
Compared to
55.93
24.42

24.07
31/12 (%)
75.21
78.39
Over the total
capital (%)
- More than 12
613
319
331
months

17


Compared to
31/12 (%)
Over the total
capital (%)
3
- From
households &
individuals
Compared to
31/12 (%)
Over the total
capital (%)
- From
organizations
Compared to

31/12 (%)
Over the total
capital (%)
- From financial
institutions

44.07

1.192

-47.96
24.79

3.76
21.61

Classified by capital sources
1.076
1.267

85.69

-9.73
83.60

17.75
82.70

199

210

265

14.31

5.52
16.40

26.19
17.3

0

0

0

(GP bank, Thang long branch, Summary report of the situation of business
activities in the period 2008-2010)
Table 2.2 Capital structure of My Dinh trading –room period 2008-2010

Item
Domestic deposit account
Saving account
Saving account= foreign currency and
gold
Foreign deposit account
Margin deposit= VND
Margin deposit= foreign currency

Revenue (billion)
69,690
533,418
140,891
4,300
80,7620
41,8490

In terms of structure, deposit funds from households and individuals accounts for
over 83% of total capital. This factor has made the relatively high stability of
capital, creating the extra capital sent to central bank. To effectively attract this
18


source of capital, raising capital activities were organized carefully, from
assigning officers, gathering information, maintaining relations, and supporting
people to raise capital effectively.
Table 2.3 Raising capital plan of Thang long branch year 2010

The Table shows the volume of capital of My Dinh trading- room occupies
12% of total capital of Thang Long branch.
2.2.3 Credit operations
Considering the overall period of 2008-2010, total outstanding debt of My Dinh
Trading, Thang Long branch has declined. Although credit growth rate in period
of 2008-2010 was relatively high but the outstanding loans of Thang Long branch
still remain low compared to other banks in Hanoi. Capital structure is not
reasonable; the ratio of deposits from households and individuals over the total
capital is still at high level that makes the average interest rate high, too. The
average outstanding loans per officer are 5 billion VND, which is much lower than

the whole industry. Medium-term debt ratio over total outstanding loans made up
only 25%, which creates an unstable level of outstanding loans.
19


The lending situation of Thang Long branch development in 2008-2010 is shown
in
Table 2.4.
Table 2.2
Credit
operations of
Thang long
branch,

Targets

31/12/08

I

Outstanding
626.7
loans
Growth rate (%)
-17.66

Compared to
31/12 (%)
Over the total
loans (%)

3
- State-owned
enterprises

90.01

62
9.99

31/12/10

516

581
12.59

Compared to 31/12

1
Compared to
31/12 (%)
Over the total
loans (%)
- Foreign
Compared to
31/12 (%)
Over the total
loans (%)
2

- Short term
Compared to
31/12 (%)
Over the total
loans (%)
- Medium &
Long-term

31/12/09

Classified by currency
-15.7
20.16
92.24
98.45
40
-35.48
7.76

8
-80
1.55

476
75.95

Classified by terms
380
420
-20.16

10.52
73.64
72.28

150

136

161

24.05

-9.33
26.36

18.38
27.72

0.5

Classified by clients
48
8.5

Compared to
31/12 (%)
Over the total
loans (%)

0.08

9.500
9.3

-82.29
1.46

- Private

333

184

282
20


enterprises
Compared to
31/12 (%)

53.13

Over the total
loans (%)
- Households and 287.5
Individuals
Compared to
45.84
31/12 (%)

Over the total
loans (%)

II

Bad debt/
total loans

-44.74
35.65

53.26
48.53

280

285

-2.6
54.26

1.78
49.05

0.04

0.28

0.7

Table 2.5: Lending situation of My Dinh trading room development in 2010
(billion)

Item

No

Amount of lending

1

Short- loans item

116,355

2

Medium-loans items

26,551

3

Long-loans items

32,096

4

Short-loans items by foreign currency and

gold.

9,876

Table 2.6 Lending plan and the percentage of achievements of Thang long branch

TT
1
2
3
4
5
6

Trading- room
Hoàng Quốc Việt
Trần Duy Hưng
Mỹ Đình
Nguyễn Trãi
Nguyễn Thạch Cơ
Văn Quán

Plan for lending
(billion )
34.246
28.670
34.180
20.661
31.872
18.704

%
88
85
98
82
88
82
21


7
8

Hà Đông
Thăng Long

21.863
25.885

81
80

My Dinh trading – room has an effective lending plan, achives 98% agains
objectives. Notably, the outstanding debt of My Dinh Trading- room hang Long
branch is subject to the seasonal fluctuations of big enterprises so it often highly
fluctuates. On the other hand, the high proportion of loans for commerce and
services along with the low proportion of medium and long-term loans are the
main reasons for the instability of outstanding debt of My Dinh Trading- room .
This is the result of increasing the quality of customer appraisal and selection

2.2.4 Other products and services
The international payment and foreign currency trading operations have been
deployed since 2003. In addition to traditional treasury services and payment, My
Dinh Trading- room has implemented a number of new services such as
remittance payment service “Western Union”, issued ATM cards… But in general,
they are still low-scale transactions that have attracted only an insignificant
number of clients.
Table 2.7

Order

Trading-room

The number of issued The number of issued
cards in 2009
cards in 2010

1

Hoàng Quốc Việt

80

87

2

Trần Duy Hưng

100

92

3

Mỹ Đình

96

109

4

Nguyễn Trãi

75

74

5

Nguyễn Thạch Cơ

96

105

6

Văn Quán

110

124

7

Hà Đông

25

27

8

Đông Anh

9

11

9

Thăng Long

198

283

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2.2.5 Operating performance:
This table shows the financial results of the My Dinh Trading- room, which have
constantly improved.
Table 2.8. planned income and achieved income of Trading-room

Order

Trading-room

planned income

achieved income

(million)

(million)

1

Hoàng Quốc Việt

358575.38

256002.84

2

Trần Duy Hưng

167132.43

90533.016

3

Mỹ Đình

139588

94084.99

4

Nguyễn Trãi

83338.65

78582.33

5

Nguyễn Thạch Cơ

70127.77

76211.63

6

Văn Quán

53295.9

23856.13

7

Hà Đông

46136.57

75874.90

8

Thăng Long

111118.86

1117749.1

2.2.6. Evaluation of capital raising operations at My Dinh trading room , Thang
Long branch
2.2.6.1. Achievements
Through many times of construction and implementation, the current capital
raising operations of My Dinh trading room, Thang Long branch has developed
quite completely, the steps taken to evaluate and rate clients are fully implemented
through a common procedure, the criteria cover a fairly broad number of activities

of the business. Thus, the capital raising operations of the branch has brought
some successes.
Firstly, the implementation of the operations has helped the Thang Long
branch approach the modern method of banking operations, gradually eliminate

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the sentimental assessment of clients as before, create new thinking, viewpoints
and styles in performing capital raising activities.
Secondly, the internal capital raising operation system has helped the branch
develop a basis for acquiring systematic evaluation throughout the process of
customer analyzing and assessing; loan making decisions and loan pricing.
Lastly, capital raising operation rating results help dealing officers make
appropriate decisions in line with each type of clients, such as approving or not
approving loans; offering a consistent clients policy as well as determining interest
rates and measures to secure loans... since then, contributing to its reputation with
clients
After the above successes, the results of businesses classification can be
shown as follows

Item
Total income
Total costs
earnings before tax
earnings after tax
Total assets
Capital fund

Growth

Year 2008
Year 2009
(billion)
(billion)
799.198
929.968
833.140
806.957
19.779
167.575
54.455
128.300
8.259.167
17.319,049
1.005.122
2.129 950

residual
130.77
-26.183
147.796
73.845
9059882
1.124.828

As you can see total income in 2008 is 799.198 billions and in 2009 is 929.968 ,
increases 130.77 billions. Total costs in 2008 is 833.140 billions and in 2009 is
806.957 billions, decreases 26.183 billions, this makes earnings after tax

increase 128.300 billions.
2.2.6.2 Limitations
The capital raising operations for My Dinh Trading room has achieved a
certain number of successful results and contributed to prevent, limit credit risk,
and meet the borrowing requirements of clients. However, in the process of
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implementation, there also exist some problems, which do affect the quality of the
capital raising for business clients
Firstly, information sources used are poor and unreliable. Currently, the
branch is using information collected by the Trading-room itself, from customer
records such as financial statements, but lack of information collected from
outside the enterprise and the branch, such as tax authorities, suppliers of raw
materials, the purchasers of the business, mass media, and other banks... This leads
to the difficulties in assessing the actual reliability of information. In fact, the
phenomena in which financial statements of the business do not reflect the actual
financial situation, the implementation of the accounting regime does not follow
regulations, or one business may have many different financial reports on the
status of activities to provide information-used agencies (tax, banking...) are not
rare. Another drawback is that many businesses cannot perform and prepare
financial statements, thus the information provided by these enterprises often are
not systematic.
Moreover, the branch has not had the information management department; this
should cause difficulties for Credit officers in the process of collecting and
processing information
Secondly, the system of non-financial index are quantifiable, but yet so many
targets have to be built to cross compare data such as industry prospects, the
number of competitors... This should make Dealing officers confuse during the
analysis process, leading to the problem that capital raising rating quality may be

heavily influenced by subjective thinking of the persons who conduct. The
standards for comparison are inadequate
Thirdly, among financial indicators relating to the performance of the enterprises,
there does not exist any indicator, which figures out the distinction between the
corporate with low profit and the ones with losses. If calculated in this credit
rating system, a business with low profit and a business with loss are both rated at
the minimum grade.
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