BUSINESS STRATEGY OF PETROLIMEX GROUP OMMERCIAL JOINT STOCK BANK (PG BANK)

CAPSTONE PROJECT REPORT

DISSERTATION MBA

BUSINESS STRATEGY OF
PETROLIMEX GROUP OMMERCIAL
JOINT STOCK BANK (PG BANK)

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TABLE OF CONTENTS

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ACKNOWLEDGEMENT
Our group would like to express our sincere thankfulness to the Directors, the
Staffs and the Faculty from Center for Educational Technology and Career
Development (ETC) – Vietnam National University (VNU), School of Graduate
Studies (VNU); and Griggs University for having created us the best study conditions
and have encouraged us in all the time of research and writing this capstone.
We have further more to thank PG Bank’s General Director, the Managers
from the Headquarter and transaction offices of for their provided relevant
information, data and their supports for our Capstone.
We understand that due to our lack of experience and limited information, our
Capstone would have some shortcomings. However, we would really appreciate all
comments and suggestions for improvement in order to make the Capstone become,
somehow, more applicable and more meaningful to the current context.
We affirm that the work of this Capstone is our own independent research. All
information and data used are true and with traceable sources.

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LIST OF TABLES AND GRAPHS.
Unit
Table 1-1
Table 1-2
Table 1-3
Table 1- 4
Chart 2-1
Table 2-2
Table 2-3
Graph 2-4
Graph 2-5
Graph 2-6
Graph 2-7
Table 2-8
Graph 2-9
Table 2-10
Table 2-11
Graph 2-12
Table 2-5
Table 2-14
Table 2-15

Contain
Different phases in developing the strategy
The SWOT Matrix
The SWAT Matrix

The GREAT Matrix
PG Bank Organizational Chart
Structure of shareholders
Main Shareholders
Quarterly GDP Growth in the period of 2008-2010
Monthly Inflation Rate of 2010
Fluctuations of Exchange Rate VND/USD in 2010
Government Budget Deficit in the Period of 2005-2010
Typical competitors
Banking product and service classification in Vietnam
PG Bank’s External Factor Evaluation Matrix
PG Bank’s Competitive Profile Matrix
The situation of increase in liabilities of banking system.
The business situation of PG Bank from 2008 to 2010
Capital mobilization situation of PG Bank from 2008 to 2010
Situation of liabilities based on debt quality from 2008 to

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17
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26
27
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38
38
41
41
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Table 2-16
Table 2-17
Table 2-18
Table 2-19
Graph 2-20
Graph 2-21
Graph 2-22
Graph 2-23
Graph 2-24
Graph 3-1
Table 3-2
Table 3-3
Table 3-4
Table 3-5

2010
The situation of liabilities in time series from 2008 to 2010.
Loan situation in monetary units from 2008 to 2010
Loan situation for corporate outside of Petrolimex
Foreign Currency Trading Situation from 2008 to 2010.
ROA; ROE of some banks in the last few years.
Yearly ROA of PG Bank

ROE of PG Bank throughout the years
CAR of PG Bank throughout years
PG Bank’s Internal Evaluation Factors.
PG Bank’s IF Matrix
PG Bank’s SWOT Matrix
PG Bank’s SPACE Matrix
GREAT elements matrix of PG Bank.
Selections of prior strategies of PG Bank

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50
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56
57
58
59

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LIST OF ABBREVIATIONS IN THE CAPSTONE RESEARCH
PG Bank
WTO

WB
AFTA
CJS
Petrolimex
IFE
EFE
SPACE
GDP
ROA
ROE
SB
SOE
IT
ATM
BA
CITAD
SWIFT
CAR
USD
FDI
ICOR
LienVietBank
Ocean Bank
GP Bank

Petrolimex Group Commercial Joint Stock Bank (PG Bank)
World Trade Organization
World Bank
ASIAN Free Trade Area
Commercial Joint Stock

Vietnam National Petroleum Corporation
The Internal Factor Evaluation Matrix
The External Factor Evaluation Matrix
The Strategic Position and Action Evaluation Matrix
Gross Domestic Product
Return on Assets
Return on Equity
State Bank
State Owned Enterprises
Information Technology
Automated Teller Machine
Business Activity
Inter-Bank Payment System
Society for Worldwide Interbank Financial Telecommunication
Capital Adequacy Ratio
United States Dollar
Foreign Direct Investment
Incremental Capital-Output Ratio
LienViet Joint Stock Commercial Bank
Ocean Commercial Joint Stock Bank
Global Petro Commercial Joint Stock Bank

FOREWORD.
1.

OVERVIEW AND THE NECESSITY OF THE RESEARCH.
1.1.

Overview.

Nowadays,

globalization,

international

economic

integration,

trade

liberalization together with the rapid development of science and information
technology, indeed information technology, has spurred the development of every
country’s economy. Since its integration into the WTO (7th November 2006), the
Vietnam has increasingly emerged into the world’s economy. The integration has

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opened up with many opportunities for Vietnam, but in the same time it poses many
challenges as well. Moreover, in order to survive and develop in the competitive
market, an enterprise needs to have long- and short-term strategic business plans.
1.2.

The necessity of the research.

In the recent years’ economic context, Vietnam's economy has seen
breakthrough growth in many aspects. It gradually stabilizes and opens up to the
world’s market, as well as normalizes relations with different organizations such as

the International Monetary Fund (IMF); the World Bank (WB) and joined the
ASEAN Free Trade Area etc. The banking sector, with its specific business role, has
an important influence on the development of the country's economy and
simultaneously it is also very sensitive to the changes of economy, politics and
society both domestically and internationally.
On the other hand, the competitive pressure is fiercely increasing that requires
each bank to have its own strategies to sustain its market share and takes advantage of
opportunities and avoid the risks in the process of opening and integration. More than
ever, it requires every bank to make great efforts to develop an appropriate strategic
orientation in order to overcome challenges, improve competitiveness and develop
sustainable. In short, strategic management is regarded as the basic business
philosophy to help the bank achieve success in the long run.
PG Bank is one of the Commercial Joint Stock Banks in Vietnam with a wide
network of branches all over the country and has affirmed its position and reputation
in the market. However, the bank still exposes some shortcomings that need to be
overcome and improved to increase its competitive advantage. Therefore, researches
and suggestions are extremely necessary for the strategic development of PG Bank in
the period of 2010-2015. Those will help PG Bank develop stably, overcome
challenges and seize opportunities especially when Vietnamese economy is in the
transition of regional to international integration Moreover, this is also the concern of
PG Bank’s Board of Directors in order to develop the bank according to the planned
orientation: Secure-Trust-Effectiveness, as much as maintain and strengthen its brand
and recognition. For these reasons, our group has chosen the title “PG Bank’s
Business Strategy in the period of 2011-2015” as our capstone research.

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The study summarizes the development and strategic management of PG Bank
from its humble beginning, identifies the current strengths and weaknesses, and

recognizes the opportunities and threats for the future development.
Our group has our research done with the information and data from previous
strategic implementations, forecast of the world’s economy, the country’s situation in
the period 2011-2015 and future orientation of PG Bank to develop strategy for it in
the period of 2011-2015
1.3.

The meaning of the research.

Setting up an overall orientation in the period of 2011-2015 with clear
objectives to announce broadly within the bank and mobilize the inputs to
successfully perform the assigned goals.
2.

OBJECTIVES OF THE RESEARCH.
2.1.

Overall objectives

Creating PG Bank a rationale for sustainable development and becoming one
of the leading financial institutions in Vietnam.
2.2.

Concrete objectives

Forming and developing breakthrough strategies for PG Bank in the period of
2011-2015, namely in the below listed solutions:
• Developing the bank’s culture philosophy
• Heightening the financial capacity
• Bettering the service’s quality.

• Investment for development and increase the market share.
3.

SUBJECT AND SCOPE OF THE RESEARCH
3.1

Subject of the research

The capstone focused on researching the business of PG Bank in the last few
years, based on the factors that affected the business strategy, and completing the
strategic business for the bank as well as solution to accomplish the set goals.
3.2

Scope of the research

Scope of the research is mainly the business activities of PG Bank and some
competitor in the same industry.
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4.

RESEARCHING METHODOLOGY
Rational foundation for this capstone research deprived from the guidelines,

policies, practice-oriented activities of banking sector in Vietnam, theory of strategic
management, marketing management, information and data from different websites,
magazines, and reports of many banks.
5.

STRUCTURE OF THE RESEARCH
Apart from the foreword and conclusion, the capstone is structured as follows:
Chapter I: Rational Foundation and the Development of an enterprise’s

business strategy
Chapter II: Analyzing PG Bank current business strategy
Chapter III: Business strategy of PG Bank by 2015.

CHAPTER 1: RATIONAL FOUNDATION AND THE DEVELOPMENT OF
AN ENTERPRISE’S BUSINESS STRATEGY.
1.1.

THE BUSINESS STRATEGY OF AN ENTERPRISE.
1.1.1. Definition of business strategy.
According to the Strategic Management textbook issued by Griggs University:

“Business strategy is a set of goals and policies set up by a group of people. It decides
methods and locates the business to improve profitability, create economic value for

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the owners and shareholders. Strategy helps to answer two key questions: “What
industry we should be involved in?” “How will we compete?”
According to Michael Porter, strategy is to create a unique position and value,
including the differentiation, the choices with changing-will to extract the most of all
resources, from which creates advantages for the company.
In other words, strategic is direction and scope of an organization in the long
term to gain a competitive advantage through mobilizing and formatting its resources
in a changing environment in order to achieve a certain purpose, to meet the market’s

demand and satisfy the expectations of different parties.
Thus, the strategy relates to the objectives of the enterprise. It is the way of
implementing selected actions and methods coordinating all the resources and
capacity like opportunities and threats of the external environment, the choice and
trade-offs in the competition to create the harmonization among the company’s
activities.
There are five tasks in strategic management: Develop the prospected
strategies and mission; Set goals; Build strategies to achieve goals; Implement and
perform the selected strategy; Evaluate, monitor, repair and adjust if necessary in each
task. (Source: The Textbook of Strategic Management – Statistical Publishing House,
2009). As a result, strategic management is a continuous activity to establish and
maintain strategic direction and business operations for an organization in order to
resolve challenges.
1.1.2. The role of business strategy.
In the market economy context with increasing competition, a company needs
to have better management strategies to get more opportunities and actively make use
of the competition in the market. With strategies, a company will become more agile
and dynamic in the market’s vicissitudes, come up with the right decision and control
the operations, take advantage of the opportunities and weaknesses, overcome threats,
strengthen the competitiveness and maintain market share position.
On the other hand, during the existence and development, specialization has
allowed improving productivity, efficiency of the business. Therefore, to make the

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most of available capacities and create a new competitive advantage, the enterprise
has to be the fastest to seize the opportunities in the market.
In short, we can say that strategy and strategic management have a crucial role
in the operation an organization, they contribute to the successes and failures of the

enterprise. Strategic management makes a company active rather than reactive against
the future.
1.1.3. Levels of strategic management.
There are different strategies used in an organization, but basically there are
three levels that used frequently:
Company level: Set up goals and business activities of the company, create
policies and plans to achieve the goals.
Business level: Determine the business market of the company, the
segmentation and products for each market.
Strategy level: Define solutions and plans for each business field.
1.1.4. Some business strategies in the actual banking sector.
Banking is a specific sector, therefore it also have some remarkable business
strategies as follows:
Improving market share: strengthen and improve the bank’s image and
reputation to resolve debts, improve product quality and services to attract customers,
maintain and develop the market share
Diversifying products and services: diversify products and services in different
operations to satisfy the customers’ highest demands and attract new customers
Strategy to expand distribution network: diversify and expand the bank's
distribution channels, widen the providing areas to bring customers the most
convenient way to exchange, and therefore attracts more customers and increases the
competitiveness
Focus: the company collects all its resources to achieve the objectives of
growth and high efficiency
Differentiation: develop plan based on the available strengths and
characteristics to achieve the goals
1.2.

SETTING UP AND SELECTING THE BUSINESS STRATEGY.

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Setting up business strategy is the process of determining the objectives, and
basic tasks of a company’s business activities, the best way to implement the
objectives and key tasks. Process of setting up strategy includes the following basic
steps:
1.2.1. Setting up business strategy.
We can summarize the phases and activities through the following table:
Table 1-1: Different phases in the process of setting up strategy
Phase
Content
1
Systemizing the information
2
Combine information to come up with feasible strategies
3
Use all general evaluated information to select the best strategy for the
company
Setting up strategy is the process of establishing business mission, surveying to
identify the limited internal and external factors, listing long-term long - term goals
and selecting among alternative strategies. This phase can be called as the phase of
strategic planning.
Phase 1: Strategists work with data collection, combined with intuitive, real
analysis and selection made with alternative strategy through a number of strategic
management techniques such as External Factors Evaluation matrix (EFE), Internal
Factors Evaluation matrix (IFE).
Phase 2: By using the arrangement of elements collected from the internal and
external environment of the enterprise to make the strategy feasible by using tools
such as the SWOT matrix, the SPACE matrix.

Phase 3: By using the information in stage 1, objective evaluation in phase 2 to
choose a business strategy through a number of key tools like the QSPM matrix, the
GREAT matrix.
To ensure the highest effectiveness during operations, strategists are forced to
make strategic decision that will benefit the company most. Decisions in the period of
formation will attach the organization to its products, markets and technologies in a
prolonged time. The competitive advantage in the long term is defined in the strategy.
This is a very important phase of strategic decision, because it will have long-term
effects: either better or worse or for organization.
1.2.2. Research on the business environment.
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1.2.2.1.

Macro-environment.

This is one of the two elements of the external environment that can influence
the performance of business goals. The external environment is the factor outside the
enterprise, in which administrators do not control the impact on the operation of the
business. Macro-environment includes:
• Political
• Economics
• Socio-cultural
• Technological
Factors that are affecting directly the economy, the enterprise gives out policies
and suitable business activities.
However, there are some other requirements: Global Environment: The
economy’s global trend led to the integration of the economy in regionally and
globally. Therefore, it is necessary to capture the world’s economic trends and detect

potential markets, explore the evolution of political and economic experiences of
international business.
Thus, analyzing the macro environment helps to identify changes from the
elements of the external environment. It allows banks and businesses realize the
opportunities and challenges from the macro environment.
1.2.2.2.

Micro environment.

Micro environment is a range of factors directly to the bank, other competitive
actions and the competitive reaction of the bank. The business in the same sector is
influenced by the micro environment of the industry, including:
• Potential Competitors
• Current Competitors
• Customers
• Providers
• Substitute financial markets
For that reason, analyzing factors in micro-environment will allow businesses
to identify the opportunity that they can take advantage of and challenges and risks

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that they face that resulted in the change the five forces, thereby build the appropriate
strategy.
1.2.2.3.

The External Factors Evaluation Matrix (EFE).

The EFE Matrix is built following these five steps

• List factors: Gather a list of external factors. Divide factors in to two
groups: Opportunities and Threats.
• Assign a weight to each factor. The value of each weigh should be between
0 and 1.0 means the factor is not important. 1.0 is very important. The total
value of all weighs should equal 1.0
• Assign a rating to each factor. Rating should be between 1 and 4. Rating
indicates how effective the firm’s current strategies respond to the factor.
1= the respond is poor, 2= the respond is below average, 3= above average,
4= superior.
• Multiply each factor weight with its rating. This will calculate the weighted
score factor.
• Add all weights scores for each factor. This will calculate the total
weighted score for the company.
1.2.2.4.

The CPM Matrix.

This matrix shows a clear picture to the Company about their strong points and
weak points relative to their competitors in the same industry. This matrix is the
extension of EFE Matrix with the weight for each factor, meaning of each weight and
total weights score. The CPM matrix is different from the EFE Matrix because some
important factors are used for compare. Total weighted score of the competitors will
be comparing with the chosen model institutions.
1.2.2.5.

Internal Environment.

This is the process of analyzing internal environmental or analyzing the
conditions and resources of the bank. It can be understood as the analysis of internal
elements of the banking system that can be mobilized and controlled to do business.

Internal environment includes of tangible and intangible elements appear in the
operation of the business and directly influence the strategic management process.
Every business has different internal environment. The analysis of internal
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environmental will allow identifying the strengths (S) and weaknesses (W) of the
business. Since then, the chosen the strategy needs to maximize its strengths and
overcome the weaknesses of the business.
1.2.2.6.

The internal factor evaluation matrix (IFE).

The IEF Matrix is set up through 5 steps:
• List factors including strengths and weakness that affect the company.
• Classify the weight of each factor base on a scale 0 – 1.
• Identify the weigh for each factor base on a scale from 1 to 4
• Multiply the weight of each factor with its rating to have the weighted score
• Sum the weighted score for each factor to have to total weighted score
If the total weighted score of the Matrix is below 2.5: the company is weak at
internal factors and if it is above 2.5: the company is strong at internal factors.
1.2.3. Setting up and selecting feasible business strategies
Using IFE and EFE matrices to determine the current position of the enterprise,
this means to add weighted scores of EFE Matrix’s vertical axis and IFE’s horizontal
axis. The connection point of two axes shows us where the company is and what
strategy should it use in the future.
The SWOT matrix: Are tool combines strengths (S), weaknesses (W),
opportunities (O) and threats (T) from the environment to come up with strategies.
Through SWOT matrix, following strategy could be planned:
• SO Strategy: Using internal strengths to make use of external opportunities.

• WO Strategy: Overcome weaknesses by make use of external opportunities.
• WT Strategy: minimize risks to avoid external threats.
• ST Strategy: Using strengths to avoid risks.
When analyzing strategy, SWOT Matrix is used. This is the suitable model to
evaluate the status of the company through evaluating internal Strengths and
Weaknesses, external Opportunities and Threats of the company. The SWOT Matrix
filters information in an easily understandable way.
Table 1-2: The SWOT Matrix
SWOT Matrix
Opportunities

Strengths (S)
SO strategy: Using strengths to WO
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Weaknesses (W)
strategy:
Overcome


(O)

make use of opportunities.

weaknesses

by

make

use

of

Threats (T)

opportunities.
ST strategy: Using strengths to WT strategy: minimize risks to

avoid risks.
avoid threats.
To analyze the SWOT of an enterprise, we have to take into account of:
Strengths: Advantages, main and necessary resource of the enterprise
Weaknesses: Know your weaknesses to avoid and overcome. We need to look
at all the internal and external factors as well as our competitors to improve the
company situation.
Opportunity: Make use of opportunities and avoid wasting opportunity
Threats: Knowing what threats are happening. Analyzing if the change in
technology causes any threats for the company? Which threats need to be warned
about?
Selection strategy is an important stage of the whole business strategy process.
The strategists will, based on the analysis from the input control phase, to select the
optimal strategy to implement. The analysis of strategic choice is mainly subjective
decision, because it is mainly based on objective information. Identifying the right
process will help the companies can fulfill their responsibility and goals. There are
many methods and tools to support the evaluation and selecting strategy, however this
capstone only mentioned tools that support effective strategy selection, which are
SPACE and GREAT Matrices, in which SPACE Matrix is an effective measure to
determine the strategic decision of the company:
Table 1-3: The SPACE MATRIX

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The factors include Financial Strengths (FS), Competitive Advantage (CA),
Environmental Stability (ES) and Industrial strengths (IS) of the company.
The GREAT Matrix is form according to the following scheme:
Table 1- 4: The GREAT Matrix.
Indicator

Strategies
Strategy
1
…
Strategy n
Weigh
Rating Weighted Score
Rating Weighted Score

1
2
3
4=2x3
…
i
j=2xi
Gain (G)
Banking Risk (R)
Expense (E)
Applicable (A)

Timing (T)
Total
1
xx
Xx
1.3. THE CHARACTERS OF BANKING SECTOR THAT AFFECT
DEVELOPING STRATEGY.
1.3.1. Potentials and needs of using banking services.
The potential is the element that affects the company the most. The listed
factors can help us the need for future banking service:
• The increase of population in urban area, the increasing amount of
industrial zones and residencies leads to the increase in need of banking
service

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• The average income of the people increases. The volume of needs is getting
bigger and the bank can make use of the scale improve business activities
and services.
• Activities with foreign partners.
• The structure of total payment.
1.3.2. The management of State bank.
The State Bank (SB) is a state agency managing the currency. This is the
agency responsible for issuing currency, managing money and advising policies
related to monetary for the government such as issuing currency, exchange rate
policy, policies on interest rates, management foreign reserves management, drafting
a bill on banking, credit. The bank transfers financial policies in the economy
Therefore, when developing strategies every bank is governed by laws and
regulations issued by SB

1.3.3. The development level of related and supporting sectors.
The development of the bank is not separated from the development of the
concerned sectors and supports such as securities, insurance, information technology
(IT). These aspects support each other and help the business to develop.
The development of this field raises capital and channels for new investment,
reduce risk, reduce transaction costs. The IT creates credit cards, automated teller
machines, etc.
Therefore, the presence and development of related and support fields will
increase the productivity and competitiveness to the banks
1.3.4. Competitors.
The competitors always know each other, therefore strategic confrontations
happen often. On the other hand, banks have to compete and in the same time
cooperate because the failure of a bank will adversely affect the whole safety system
of credit institutions.
1.3.5. Internal factors of the bank.
Banking is a sophisticated service sector with high risk, therefore, the banking
industry requires highly on human resources, capital, technology base and science.

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Human resources is reflected in factors such as: the level of education,
professional proficiency, motivation, level of attachment to the enterprise, manner and
working style.
The capacity of technology: Technology is the most important component in
the bank. It helps shorten the operation time, improve accuracy, bringing convenient
banking services, developing modern services, informing risk within the bank.
Reputation of the bank gains customers’ trust, attracts customers, enhances
competition.
The level of product diversity and quality services for our customers: banks

offer many types of services in accordance with the market’s demand will make the
banks to have advantage, create the banks more stable development and gain high
efficiency.
Network operating system is very important to the operation of banks.
Management capacity and organizational structure: Good management
capacities maintain and improve the operational efficiency of the bank. The
organizational structure of banks is reflected in the division of functional
departmental, the supporting divisions and the relationship among them
In short, the enterprise should always identify annual and long-term goals for
themselves in business process. Business strategy is the path to reach the goal. In
Chapter I, our group has mentioned general concepts of strategy and strategic
management, which are the basis for the development, selection and implementation
of strategies. These are also theoretical foundation needed to do the research on status
of PG Bank and applicable business strategy for PG Bank’s business activities.
CHAPTER 2: STRATEGIC ANALYSIS OF PETROLIMEX GROUP
COMMERCIAL JOINT STOCK BANK (PG BANK).
2.1.

GENERAL OVERVIEW OF PETROLIMEX GROUP COMMERCIAL

JOINT STOCK BANK (PGBANK).
2.1.1 History of establishment and development of PG Bank.

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The initial name of Petrolimex group commercial join stock bank
(abbreviation: PG Bank) was Dong Thap agricultural commercial joint stock bank. In
1993, Dong Thap agricultural commercial joint stock bank was licensed to operate
within Dong Thap province with the chartered capital of 700,000,000 VND by the

governor of State Bank of Vietnamese. Implementing the strategy of restructuring the
bank, in July 2005, Dong Thap agricultural commercial joint stock bank invited new
shareholders, increased the chartered capital to 90 billion VND. Some new
shareholders were financially potential and experienced in the financial fields such as
Vietnam Petrolimex Corporation (Petrolimex), Saigon Securities Institution (SSI). In
March 2007, PG Bank was licensed to change into urban commercial bank according
to Decree no 125/QĐ-NHNN date 12/01/2007 and changed its name to Petrolimex
group commercial joint stock bank according to Decree 368/QĐ-NHNN date
08/02/2007. Consequently, PG Bank has the ability to expand its network nationally
and conduct international payment jobs, trade foreign currencies. On 17th March
2010, PG Bank officially changed it’s headquarter from Dong Thap to Hanoi
according to Decree no 3209/QĐ-NHNN date 25/12/1009. The new headquarter of
the bank is Office no 5, building 18T1-18T2, Trung Hoa Nhan Chinh new urban zone,
Le Van Luong street, Nhan Chinh ward, Thanh Xuan District, Hanoi.
The developments of PG Bank:
• On 26th June 2007, PG Bank officially opened its branch in Hanoi,
marking its participation in heated bank market of major economic area –
Hanoi.
• In December 2008, PG Bank increased its chartered capital to 1,000 billion
VND
• In November 2008, PG Bank was classified as “A level bank” by State
Bank of Vietnamese and allowed to do international payments.
• On 29th March 2009, PG Bank was awarded as Strong Vietnamese Brand
2008 by Viet Trade Promotion Agency and Vietnam Economic Times.
• In December 2009, PG Bank was proudly awarded as Top Trade Services
2009 by Ministry of Commerce and Newspaper of Trade.

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• N 4th April 2010, PG Bank was awarded as Strong Vietnamese Brand
2009. This is the second year that PG Bank was awarded this prize.
• In December 2010, PG Bank was proudly awarded A level bank in 3
consecutive years by State Bank of Vietnamese (According to report no
2097/NHNN-HAN8 date 14/12/2010).
• PG Bank was one of the top banks operating in financial services awarded
“Top Trade Services 2010”. This is the second year that PG Bank was
awarded this prize.
• Total assets calculated until 31st December 2010 were 16,378 billion VND,
increased 58% in comparison with 2009; liabilities were 10,886 billion,
increased 74% in comparison with 2009(industry growth rate 27,65%);
Profits before tax were 316.8 billion, reached 109% plan with 29% profit
before tax ratio and 22% profit after tax, increased 7% from 2009. The
chartered capital was 2,000 billion.
• Until 2010, PG Bank had 64 branches, transaction offices, and commercial
centers in major economic areas of Vietnam. Following the common trends,
in the future, the network of PG Bank will be expanded nation-wide.

2.1.2 Organizational Structure:

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(Source: Annual Report of PG Bank 2010)
Chart 2-1: Organizational structure of PG Bank.
By 30th December of 2010, the structure of shareholders is:
Table 2-2: Structure of shareholders
Shareholders

Number

of Equity capital

Ownership ratio

shareholders
I. Organizations

12 1,247,863,500,000

62.4%

1. State

1

800,000,000,000

40%

2. Foreign

0

0

0

3. Others

11

447,863,500,000

22.4%

II. Individuals

849

752,136,500,000

37.6%

Total

861 2,000,000,000,000

100%

Main shareholders
Table 2-3: Main shareholders
Shareholders
Vietnam

Type of shares
Petrolimex

Common shares
Corporation (Petrolimex).

Saigon Securities Institution Common shares

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Total value

Ownership ratio

800,000,000,000

40%

199,500,000,000

9.98%


Shareholders’ meeting is organized once a year, after 5 years (except first
year), the election is organized to appoint, dismiss the positions of chairman,
controlling board, to approve development directions and target annual growth rate
In general, organizational structure of our bank has been specialized to create
most favorable environment for product developments
2.1.3. Vision and Mission of PG Bank.
PG Bank is committed to become one of the leading commercial bank in
Vietnam. PG Bank has been striving to build skilled, devoted staff to create added
values for corporate and personal customers through wise financial solutions with low
costs, making sure customer satisfaction.
PG Bank always tries to create unique organizational culture in the period of
world integration. The corporate culture focuses on 5 core values
• Compliance

• Sense of responsibilities
• Creativity
• Professionalism
• Always strive towards efficiency
With these above directions, despite 18 years of operations, PG Bank has been
actually recognized in recent 3 years and become a sparkle in the financial and
banking market in Vietnam.
2.2.

EXTERNAL ENVIRONMENT ANALYSIS.
2.2.1. Macro environment.
Macro environmental factors affecting business activities are:
2.2.1.1.

Political and Legal Factors.

Politics: Vietnam is the socialist republic country. The political system only
accepts one party regime- Vietnam Communist Party with the motto: Communist
Party leads, State manages and People take control. Vietnam is recognized as having
the most stable politic in Asia. Socialist-directed market mechanism will continue to
be developed and completed. Many economic policies will be modified, complement
to create legally favorable conditions for investors. This is the firm foundation for
economic development activities for banking generally and stable environment for PG
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Bank particularly, especially in the environment in which major shareholders is
Petrolimex. The stable politic gives ground to receive support from Petrolimex.
Legal framework for bank activities: Legal framework for banking activities
has been improved to meet the needs of world economic integration, increased the

effectiveness of bank’s cash flow, for example: State Bank of Vietnam’s Law and
Law of Credit Agencies were modified and completed in 2003 and 2004. Especially
on 16th June 2010, National Assembly of Vietnam introduced State Bank of
Vietnam’s Law and Law of Credit Agencies and is going to officially enforce these
laws from 1st January 2011. New modifications are aimed at establishing modern
banking system, suitable with banking practices and world standards, reducing
intervention of governmental agencies into banking activities. The legal framework is
continuously improved and modified, loosening control over banking services and
financial market such as Law of Assignment Instruments no 49/2005/QH11
introduced on 29th November 2006, Law of Securities no 70/2006/QH11 introduced
on 29th June 2006, Law of Electronic Transactions no 51/2005/QH11 introduced on
29th November 2005… PG Bank operates in the set legal framework which creates
foundation for development directions.
Monetary Policy Administration: In administration, State Bank of Vietnam has
made some certain success in administering monetary policies, gradually stabilizing
value of Vietnam currency, promoting economic growth, ensuring stability and
development of banking system. The used instruments of monetary policies are
indirect ones such as open market operations, currency exchange which replaced
administrative instruments. Interest rates were liberalized, exchange rate was changed
from fixed exchange rate system to flexible exchange rate system regulated basing on
economic environment. Foreign currency, credit and international payment
administration regimes are loosened and flexible. Banks have more control and
responsibilities. Policies about bankruptcy, merger, organizational structure, loan
regulations, deposit guarantee, credit risk management, and fund management will
affect bank business activities.

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2.2.1.2.

Economic Factors.

Economic Growth: In 2010, Vietnam economy continued to recover rapidly
after global economic recession. The graph 1 shows the GDP growth rate from 2006
to 2010, average GDP growth rate was 7% per year and GDP per capita was 1,160
USD in 2010.

Graph 2-4: GDP growth rate from 2008 to 2010.
Growth indicators of many industries demonstrated clear recovery signs.
Industry is the major driver of Vietnamese economy. Industrial production value
index was calculated to increase 14% in comparison with 2009. In industry, service
sector also recovered after recession but at a slower pace. The growth rate of service
sector was 7.5% in 2010. Total values of agricultural, forestry and aquiculture
production increased 2.8%. Increasing GDP is good ground for PG Bank to expand its
network.
Investment: Economic recovery is an important reason for promoting
investment. Social venture capital yielded positive results in 2010. Estimated, total
social venture capital was 800 billion VND, increased 12.9% from 2009 and made up
41% of GDP. Investment capital from individuals and residents was 31.2% of social
venture capital, state investment capital was 22.5%, increased 4.7% from 2009. These
results show that domestic potentials were positively gathered. In terms of foreign
direct investment (FDI), until November, our country attracted 883 new projects with
13.3 billion USD registered capital, equals to 60% of this last year. Operating capital
was 10 billion USD, increased 9.9%. Even though FDI registered capital was lower
than this in 2009, operating capital over registered capital ratio was much higher. This

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can be considered a good point in attracting FDI in 2010. The fact shows us the longterm commitment of foreign investors to Vietnamese market. On the one hand, high
growth rate of capital demonstrates the accumulated relations – consumption has
moved positively. On the other hand, it showed limitations in capital efficiency. If in
1997, the growth rate had been 8.2% with investment capital 28.7% of GDP; with the
same growth rate (8.5%) we would have invested 43.1% of GDP. Until 2010, when
total social venture capital was 41% of GDP, growth rate was only 6.7%. ICOR rate
was excessively high, more than 8 in comparison with 6.6 in 2008. ICOR index of
companies, especially limited liability companies was 3-4 while ICOR index of state
economy and state investments was 9-101. Besides, there were the delays in
disbursement in investment from state budget and government bonds, wastes, losses
of investment due to administration. All the features are alarming in both long-term
and short-term perspectives. In the situation, PG Bank will face challenge in
establishing development policies for specific group of customers and industry.
Inflation:

(Source: General Statistics Office)
Graph 2-5: Inflation rate in 2010 throughout months
Inflation rate and prices of 2010 are exceptionally high deriving from many
reasons. First, economic recovery encouraged the increasing needs for goods and
services especially food. In addition, the disasters and floods in middle part of
Vietnam increased the needs even more. Second, prices of some imports in the world
market were raised due to economic recovery leading to the increase in production
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