Báo cáo cải thiện chiến lược kinh doanh tại ngân hàng quốc tế việt nam VIB

Báo cáo Cải thiện chiến lược kinh doanh tại ngân hàng Quốc
tế việt nam VIB
IMPROVING BUSINESS STRATEGY FOR THE VIETNAM
INTERNATIONAL BANK FOR THE PERIOD OF 2015-2020

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TABLE OF CONTENTS

1
2
3
4
5
6

Contents
FOREWORD
Reason For Choosing Theme
Study Objectives
Object And Scope Of Study
Study Method
Expected Results
Theme Composition
Chapter I: THEORETICAL BASIS

Page
1
1
1

1
1
2
2
FOR

STRATEGIC

MANAGEMENT

3

1.1

Strategic Management and Strategic Concepts

3

1.2
1.3
1.3.1
1.3.2
1.3.3
1.3.4
1.4
1.5

Strategic Commitments
Strategic Analysis
Analyze Macro environment On PEST Model

Industry Environmental Analysis
Inside Environmental Analysis (internal)
SWOT Analysis And SWOT General Table

5
6
6
7
9
11
12
12

2.1.
2.2.
2.2.1
2.2.2.
2.2.3.
2.2.3.1
2.2.3.2.
2.2.3.3.
2.2.3.4.
2.2.3.5.
2.2.4.

Selecting And Building up Business Strategy
Performance and Evaluation
Chapter II: THE STATUS OF BUSINESS STRATEGY OF
VIETNAM INTERNATIONAL BANK (VIB) FOR THE PAST

14

TIME
General Introduction of Vietnam International Bank (VIB)
VIB's Present Strategy Evaluation
VIB's present strategy commitments
Analyzing Impact of Macro Environment On Business Activities of

14
15
15

VIB (Pestle Model)
Industry Environment Analysis (Five competitive forces - Poster)
Direct Competitors
Threat Of Substitute Products And Services:
Risk From Potential Rivals
Client Pressure
Suppliers
Analyzing The Impact Of Internal Environment On VIB's
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18
24
24
25
26
26
28
30

2.3
2.4
2.5

Operations
Some General Evaluations About VIB's Capability
General analysis of SWOT of VIB
VIB's Present Business Strategy
Chapter III: VIB'S BUSINESS STRATEGY IMPROVEMENT

3.1.
3.2.

SOLUTIONS VIB FOR THE PERIOD OF 2015-2020
Matters Required For Business Strategy Improvement
VIB's Business Strategy Improvement Solutions For The Period Of

3.2.1
3.2.2.
3.2.3.
3.2.4.
3.2.5.
3.3.

2010 – 2015
General Solution
Financial And Business Activity Solution
Human Resources Solution

Marketing Solution
Organizational Structure Improvement
Route And Expense Budget For The Implementation Of The

37
41
45
50
50
51
51
52
58
60
62
64

Solutions
RECOMMENDATIONS
CONCLUSION
References

65
66
67

FOREWORD
1.

Reason for choosing theme

After almost 20 years for changing and integration into the world, Vietnam is a dynamic
developing country with average growth rate was more than 7% during last 5 years,
considered as a high growth speed in region and on the world. In association with the
socio-economic development process, the commercial banking system in Vietnam is also
more developed, expanded and diversified. The Vietnam International Bank (VIB) is also
a link in the Banking system and fifth ranked among five leading joint stock commercial
banks in Vietnam. In order to develop within more severe competing environment, full of
challenges, VIB must change itself rapidly to deal with.

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For above issue, our group includes 4 members of class M0809 determine to choose the
theme as “Improving Business Strategy For The Vietnam International Bank For
the period of 2015-2020”
2.

Study Objectives

This is to analyze, evaluate business strategy of VIB during the period of 2015-2020,
strengths and shortcomings in the business strategy. And then propose solutions and
suggestions to improve it.
3.

Object and scope of study

Object of study: business strategy of VIB during the period of 2015-2020.
Scope of study: VIB in the overall of the banking system in Vietnam.
4.

Study method

Use qualitative method such as: existing documentation study (secondary
documentation) to review scope, structure and movement trend of the market. Almost
qualitative method is used to study, investigate, survey for collecting primary
documentations

5.

Expected results:

It is expected to help the bank leaders to recognize again realities of business orientations
and plans of the enterprise as the basis for setting up business strategy during the period of
2011 – 2015 so that increasing competitive power and owner's value.
Limit of the theme is not having full quantitative primary figures, private figures of the
study group. Simultaneously, scope of study is not expanded out of the Vietnam market.
6.

Theme composition

Aside from foreword and Conclusion, major contents of the theme composed of 3 chapters:
Chapter 1: Theoretical issues of Strategic Management
Chapter 2: Business strategy realities of VIB in recent period.
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Chapter 3: Some solutions to improve Business strategy of VIB during the period of
2011 - 2015.

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Chapter I: THEORETICAL ISSUES OF STRATEGIC MANAGEMENT
1.1.

Strategic and strategic administrative concepts

1.1.1 Strategic concept
Strategy is the process to confirm basic long-term goals, select ways to act and allocate
essential resources to reach the goals. On the other hand, strategy is also a unified,
comprehensive and combined plan designed to make sure basic goals of the company
would be reached.
1.1.2 Strategic administrative concept:
Strategic management :
- A set of administrative decisions and ways to specify long-term productivity of the company.
- Process studying, analyzing inside and outside environment of the company in
present and future; confirming goals, planning, performing and inspecting strategy in
order to use resources effectively for reaching desire goals.
1.1.3 Objectives of strategic management:
Strategic management includes five objectives having close relationship with each
other described in below diagram:
Diagram.1.1 : Describing 5 objectives having close relationship with each other in
strategic management

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Develop
Repair if

Strategic
required
Prospect and
Mission

Establish
Repair if the
goal
required

Set
Improve
up orthe
strategies
change iffor
attaining
required the
goal

Implement
Improveand
or
run the
change
chosenif
strategies
required

Assess
Restorethe

implementatio
1,2,3,4 if
n, required
monitor,
repair
and
adjust

Source: Strategic management Documentation – Statistical Publishing House 2009,
edited by Prof. PhD Le The Gioi
Setting up a strategic perspective: it is necessary to specify the image company wants
to set up.
Establishing goals: Transform strategic perspectives into real results.
Putting forward strategies: Analyze inside and outside environment of the company,
analyze industry competition as basis for putting forward strategy. This is to analyze
PEST, 5 forces and SWOT model.
Performing and executing strategies: This is usually the most difficult section. As one
strategy has been analyzed and selected, a task must be done is transforming it into
action in organization.
Evaluating performance and conducting adjustments in perspective, long-term
orientations, goals, strategies or performance on the basis of experience and conditions
to change ideas upon new opportunities.
1.1.4 Benefits of strategic management:
Depending on every line of business and scope of the Company, different benefits are
expected from strategic management. In generally, there are three most basic points,
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such as:
• More clarifying strategic perspective for the company;

• More accurate focusing on the most important thing of the strategy;
• Improving awareness of rapid change of the environment.
1.1.5 Strategic management process
Diagram 1.2: Strategic management process including:
Fuctions, objectives and strategic goals of the
enterpruse (1)

Enterprise internal analysis
(S,W) (3)

Business environment
analysis (O,T) (2)

Select strategies (4)
Company level strategy (5)
Business location and staff department strategy

Perform strategy (6)
Inspect and evaluate performance results

(7)

Feedback
information

Source: Lecture of teacher Prof, PhD. Ngo Kim Thanh
In order to create a good strategy, the enterprise needs competitive strengths,
sustainable competition and profit above average level.
1.2.

Strategic commitments

1.2.1 Vision
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A good vision is an idea of the company image you have to achieve. Vision opens an
orientation for the future, a desire of one trademark about what it wanted to achieve
Vision is a brief and thorough message orienting long-term activities of a trademark.
Through vision, an enterprise shall specify what should do and should not do of a
trademark.
1.2.2 Mission.
Mission of the company is a concept used to specify purposes of the company, reasons
to establish the company and basis for its existence and development. Mission of the
company is declaration of the company for the society.
1.2.3 Core value
Core value does not care about public opinion; it has real value and remarkable
importance for people inside the organization. Core value is a rare group of guidance
principles may have very significant influences; it is soul of an organization and values
guiding every action.
1.3.

Strategic analysis

1.3.1 Analyze macros environment on PEST model
PEST model presents factors as Politics, Economics, Social and Technology. It is
described in below diagram:
Diagram 1.3: PEST Model
Politics & Law

Economic
Danger of potential rivals

Global

Provider's
negotiation
capacity

Competition of
existing
companies

Buyer's
negotiation
capacity

Threats of subsitute
products

Technology

Demography

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Culture & Society


Source: Strategic Administrative Document – Statistical Publishing House 2009 edited

by Prof. PhD Le The Gioi
Economic environment: Specify health and prosperity of the economy.
Technological environment: serious affecting to product life cycle and create changes
for the enterprise. .
Political - legal environment: create remarkable influences on the enterprise
through policies and regulations.
Global environment: create a lot of opportunities as well as challenges for the
enterprises.
1.3.2 Sector environmental analysis
Five competitive forces model
This model is proposed by Prof Michael E. Porter of Harvard Business Administration
College for helping the administrators to realize opportunity and risk that the enterprise
Danger
potential
has to deal with in an industry. This is so
calledofmodel
ofrivals
five competitive forces. In

which, it presents five competitive forces within an industry such as: (1) Participation
risk of the potential
competitors; (2) Competition level between existing companiesBuyer's
Provider's
Competition

negotiation

negotiation
of the industry;
(3) Negotiation power of the of

buyer;
(4) Negotiation power of thecapacity
existing
capacity
companies

seller; (5) Thread of the alternative products. As described in below figure, Porter
specified that if these forces are getting stronger, shall limit more abilities of the
Threatshigher
of subsitute
existing companies in increase of price and getting
profit.
products

Diagram 1.4: PORTER Model of five competitive forces

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Source: Strategic Administrative Document – Statistical Publishing House 2009 edited
by Prof. PhD Le The Gioi
External Factor Evaluation (EFE)
EFE is used to generalize, summarize and evaluates essential opportunities and risks of the
outside environment having influences on activities of the enterprise. It helps the strategic
administrators to be able to evaluate reactive of the enterprise with opportunities and risks,
aware of favorable factors/ difficulties of the enterprise at the same time.
Setting up EFE including 6 steps:
- Step 1: Set up list of the major opportunity and risk factors having large influences on
successful and failure as well as line of business of the enterprise.
- Step 2: Classify importance from 0.0 (non important) to 1.0 (very important) for

every factor. Importance of each factor depends on level of their influences on
successful and failure of the enterprise in its line of business. Normally, the
opportunities have higher classification of importance than risks. However, some risks
also may have the same classification level if it has extreme special influence on the
enterprise. Classification level is specified on the basis of comparison with the other
competitors or using specialist and group discussing methods. Achieved results based
upon agreement of the whole group. Total classification levels are fixed for all factors
must be 1.0.
- Step 3: Specify classification coefficient from 1 to 4 for every factor, coefficient of
each factor depends on reactive of the enterprise with it. In which: 4 - good reaction, 3
- above average reaction, 2 - average reaction and 1 - weak reaction. These coefficients
are specified by specialist method based upon performance results (present strategic
effect) of the enterprise.
So, classification of importance in step 2 based upon industry, meanwhile classification
coefficient in step 3 based upon reality of reactive of the enterprise.
- Step 4: Multiple importance of every factor with its own coefficient to specify total
importance mark of the enterprise.
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- Step 5: Plus total importance marks of all factors to specify total of which of the
enterprise.
No matter how much total of specified major opportunities and risk, total highest
marks achieved by an enterprise is just may be 4,0 and lowest is 1,0. Total average
importance mark is 2.5.
1.3.3. Inside environmental analysis (internal)
Plan and control strategic management about internal activities of the company is
very necessary. Internal factors of the company are factors may be controlled
including marketing, manufacturing management etc. Analysis of the internal
environment is to find out strengths and weaknesses of the company.

Culture
Every enterprise has its own culture. Culture is combination of values, faiths, attitudes,
customs, regulations and personalities. Enterprise culture has very serious impacts on
business activities of the enterprise.
Human resources
Human resources play extreme important role for successful of the company. The man
shall provide input database to plan the targets, analyze environment background,
select, perform and inspect strategy of the company. Therefore, correct valuation of the
human resources is very important.
Technology and equipment
Study and evaluation of level of technology and equipment is to recognize realities of
existing machines and equipments of the enterprise, trends and development level of
the technology in region and on the world so that putting forward technological
strategy to guarantee competitive advantage.
Finance
Analyze and evaluate financial resources to have a thorough grasp of all activities of
the Company. Functions of finance include analysis, planning, mobilizing, performing
and inspecting performance of financial plan and situation of the company. All
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activities of the company having close relationship with financial resources, hence, it
must be analyzed in the financial aspect.
Manufacturing management
Level of executing and managing manufacture is an important field of action of the
company. Therefore, effective managing manufacture would be a competitive
advantage of the enterprise.
Marketing
Analyze marketing level is analyze a process of market study, advertisement and
bringing product onto the market and promotion of trademark. Through market study,

may discover strengths and limits of the enterprise to put forward suitable strategies
helping to increase strengths and minimize weaknesses of the enterprise.
Internal Factor Evaluation (IFE)
IFE generalizes, summarizes and evaluates basic strengths and weaknesses of the enterprise. It
presents strengths should be promoted as well as weaknesses should improved so as to
improve its achievements and competitive advantage. This is an important instrument in
planning strategy for the enterprise. There are 5 steps to build up IFE:
- Step 1: List the factors even with strengths and weaknesses having remarkable
influences on development of the enterprise.
- Step 2: Classify importance from (non important) to 1.0 (very important) for every
factor. Importance of each factor depends on level of their influences on successful and
failure of the enterprise in its line of business. Normally, the opportunities have higher
classification of importance than risks. No matter strengths or weaknesses, the factor is
considered as having largest influences on activities of the enterprise shall be classified
in its importance at the highest level. Total classification levels fixed for all factors
must be 1.0.
- Step 3: Specify classification coefficient for every factor, coeff8icient of which
depends on strong and weak points of the enterprise. In which: 4 - very strong, 3 - faire
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strong, 2 - fair weak and 1 - very weak. These coefficients are specified by specialist
method based upon evaluation results of internal environment of the enterprise.
- Step 4: Multiple importance of every factor with its own coefficient to specify total
importance mark of the enterprise.
- Step 5: Plus total importance marks of all factors to specify total of which of the
enterprise.
No matter how much total of specified major strengths and weaknesses, total highest
marks achieved by an enterprise just may be 4.0, lowest is 1.0. Total average
importance mark is 2.5.

1.3.4 SWOT analysis and SWOT general table
SWOT analysis
SWOT is an abbreviated name of four letters as Strengths,
Weaknesses, Opportunities and Threats. SWOT provides a strategic
analysis instrument to check, evaluate position, orientation of a
company or of the business project, develop product and service etc.
In order to analyze SWOT for competitive position of a company, it is usually to
analyze strengths, weaknesses, opportunities and challenges of the enterprise and then
plan suitable business strategy.
Gerenal analysis table of SWOT
In order to develop strategy based upon SWOT analysis
table, the companies must design matrix of factors so
called SWOT matrix.
Basic strategies of the matrix model:
(1) SO: Strategies based upon advantages of the company to use the environmental
opportunities.
(2) WO: Strategies based upon ability to overcome weaknesses of the company to use
the environmental opportunities.
(3) ST: Strategies based upon advantages of the company to avoid risk of the market.
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(4) WT: Strategies based upon ability to overcome or maximum limit weaknesses of
the company to avoid environmental risks.
1.4.

Selecting and building up business strategy

According to Micheal Porter, there are four essential strategies in general strategy, such
as: Leading strategy in cost, product differentiation strategy, concentration strategy

(low cost) and concentration strategy (product differentiation).
Competitive advantage

1.5.

Performing and evaluating
Range

In order to perform strategy, aside from the necessary theories and instruments, the
administrator also has to know about:

Leading cost

Product
defferentiation strategy

Concentratio
n strategy
(cost)

Concentration strategy
(product defferentiation)

1.6.1 Organization structure:
All organizations need a structure model to perform and manage its strategies.
Structure of one organization is formed initial upon strategy selection of the
organizations. And once it is established, structure has influences on present strategic
activities as well as strategic selections in the future
1.6.2 Control system:
Every organization needs an inspection activity to guide performance of strategy,

specify how to compare real results with expected results and remind activities to
overcome and provide for refusal of the real results because they are too different with
expected results.
Normally, there are two ways to control the organization:
- Strategic control
- Financial control.
1.6.3 Building up performance route:
In order to perform selected strategy, the organizations are necessary to put forward
specific performance route for every period.

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Building up performance route shall help the organization to control progress and
results of each strategic period and have adjustments so that suitable with the strategic
goals. This also helps the organization to prepare and distribute investment resources
actively and effectively.

Chapter II:: EVALUATE PRESENT BUSINESS STRATEGY OF THE
VIETNAM INTERNATIONAL BANK IN RECENT PERIOD
2.1. General introduction of the Vietnam International Bank (VIB)
Overview of Vietnam International Bank:
The Vietnam International Bank (abbreviated as VIB) whose principal headquarters
located at 198B Tay Son Street, Dong Da district, Hanoi), established upon Decision
No. 22/QĐ/NH5 dated 25th January 1996 of the Governor of the State Bank of
Vietnam. Foundation shareholders of the VIB including individuals and businessmen
who are now successful in Vietnam and on the worlds, State Bank of Vietnam and
Bank for Agriculture and Rural Development of Vietnam.
VIB provides its customers with a series of package financial products and services,
who are core clients such as healthy-trading small and medium scale enterprises and

stable income individuals and/or families. Up to now, chartered capital of the VIB is
more than four thousand billions Vietnam Dong. Total assets are approximately VND
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60,000 billions. The VIB is usually best ranked by the State Bank of Vietnam upon
evaluation criteria for Vietnam Banking system during consecutive years.
Aside from Headquarters in Hanoi, the VIB there is more than 100 business units in
Hanoi, Ho Chi Minh City, Hai Phong, Quang Ninh, Hai Duong, Vinh Phuc, Phu Tho,
Thai Nguyen, Thai Binh, Ha Tay, Thanh Hoa, Nghe An, Hue, Da Nang, Quang Ngai,
Binh Dinh, Khanh Hoa, Dac Lak, Dong Nai, Binh Duong, Vung Tau, Can Tho, An
Giang, Kien Giang and Tay Ninh etc.
Present organization structure of VIB:
VIB's organization structure is in compliance with the Law on Credit Organizations,
Enterprise Law and Organization and operation Regulations of the State Bank of
Vietnam. In which, in accordance with the real situation, VIB established its
organization structure in a matrix model divided into business blocks, business units
and departments, as follows:
• General meeting of shareholders
• Board of Management
• Board of Inspection
• Board of Execution
• Business blocks: Enterprise - customer block; Individual customer block; Credit
management block; Technology block; Card block; Capital resource block; General aid
block; and Branch & service block.
• Business locations. Including Headquarters, Head branch; Basic branch; and
Transaction offices.
2.2. VIB's present strategy evaluation
2.2.1 VIB's present strategy commitments
Vision:

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“…VIB becomes one of the leading Joint stock bank in the market, providing
multi-purpose and package banking financial services for the core customers at the key
economic areas in Vietnam…”
Mission of VIB:
- Solid develop with the developing small and medium enterprises
- Create and diversify service products for individuals who are stable in earnings
and dynamic, safety in business
- Comprehensive Banking financial service
- Ally with the financial institutions as their strategic partners
Core value (5 values)
- Focusing on customers
- Dynamic - Creative
- Cooperative – Sharing
- Honesty – Reliable
- Absolute compliance
Commitments of VIB
*/ For the customers:
- Effective, rapid service exact meeting demands
- Diversified products are convenient in use
- Safety, security
*/ For personnel
- Reliable and mutual respect working environment
- Working culture focusing on results, praising hard-working individuals
- Opportunities to develop, working ability and career
*/ For investor
- Solid and competitive growth of investment value.

- Constant and long-term development of VIB
*/ For society
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- Having responsibility to contribute into development of the society.
Business activity of VIB during the period of 2007-2010
Possible to say that during the period of 2007 – 2010 marked a turning-point in
operation of the financial banking in general and VIB in particular. From the year of
2006 – 2007, almost all commercial banks achieved high business results. In 2008,
because of influences of housing credit crisis in USA as well as tight monetary policy
of the Government in order to control inflation, development speed of the banks failed
to maintain and revealed disadvantages due to hot credit development
Business results during the period of 2007 – 2009 and estimate 2010 of VIB as shown in
below figure table:
Table 2.1: Business result report of VIB during the period of 2007-2009 and estimate 2010

Unit: billion VND
Target
1- Total assets
2- Capital raising from TT 1
3- Total balance
4- Total net revenue
5- Net revenue of the service
6- Before tax profit
7- Chartered capital
8- Card number
9- Quantity of CN, Deputy

2007

39,318
19,240
16,744
803.7
68.8
425,7
2,000
178,335

2008
34,600
23,800
19,799
709.2
91.8
224
2,000
350,116

2009
56,823
34,184
27,353
1,164
116.5
550
2,400
688,548

82

106
123
Directors
10- ROA(*)
1.89%
0.65%
1.30%
(*)
11- ROE
35.51%
11.2%
22%
12- Bad dept rate (NPLs)
1.21%
1.84%
2.2%
13- Revenue rate DV/TT
8.6%
12.9%
10%
(Source: Annual conclusion report of VIB during the years of 2007, 2008,
estimate 2010)
Service products of VIB
• Enterprise banking service:
- Deposited money
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2010
94,000
61,000

41,700
1,430
164.2
1,057
4,000
800
135
1.12%
26.43%
1.35%
11.5%
2009 and


- Loan for Business, Investment Project, Import and Export
- Payment Guarantee
- Cross exchange
- Corporation support service
• Retail Banking Service: International Banking provides products for the
individuals including:
- Saving
- Account
- Consumption credit, business Individual
- Payment
- Certification of financial ability
- Card
- Cross exchange
• Institution banking service:
VIB provides services for the banks, financial organizations and non-financial
organizations including deposited money services, loan services, co-sponsoring

service and cross exchange service.
• Investment service and services for the investor:
VIB provides these services for the investors optimizing investment opportunity and
cross selling products with the securities companies.
• Electronic Banking service:
For convenient for the customers in using products, services of VIB, VIB provided
the customers with below electronic banking products:
- SMS Banking
- E- Banking
- VIB4U

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2.2.2. Analyzing Impact of Macro Environment On Business Activities of VIB
(Pestle Model)
2.2.2.1. Politics and law
Political environment in Vietnam is evaluated as a stable environment, within
innovation work of the country, Vietnam expanded diplomatic relationship with more
than 200 countries and territories on the world, paid special attention into countries in
ASEAN region and increased cooperation with the developed countries such as USA,
Japan, Korea, European Union etc. This opened an opportunity to extend business and
production activities but it's also a challenge for the domestic enterprises. The Banking
sector in Vietnam is a conditioned line of business from establishment and business
activity is under very close supervision of law. Therefore, law barriers with the newly
established banks are very significant. For instance, coming to the period of 20052007, the banking business sector attracted many organizations and individuals desire
to establish the Bank. However, in order to guarantee newly-established Banks must be
strong, modern to meet requirements of international standards, in 2007, the State Bank
of Vietnam submitted to the Government Licensing Regulations for Establishment of
the Bank for approval with so much more tightened conditions, such as: Shareholders

participating in establishment of the bank are enterprises or individuals are necessary to
own minimum owner's equity is 500 billions. Apart from the commercial banks, fund
for establishment of the bank must be minimum total assets is 10 thousand billions
Vietnam dong. Besides, any enterprise desires to carry out banking business is
necessary to meet other criteria such as: at least business period os 5 years and
profitable in banking business at least in consecutive three years. The commercial
banks must own bad dept under 2% and safety in business during consecutive three
years.
One enterprise or bank is not allowed to raise capital for establishing more than 2
banks but only one bank is possible if 10% ownership rate of chartered capital and
more. One shareholder is an organization is allowed to own maximum 20% at the bank
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he/she founded. If exceeding this rate, it is necessary to consult and obtain consent of
the Governor of the State Bank of Vietnam.
For foundation shareholders are individuals also not allowed to raise up capital for
establishment of more than 2 banks, ownership of more than 5% chartered capital is
only condition to establish 01 bank. Shareholder is individual is not allowed to own
more than 10% chartered capital. Therefore, despite of many applications for license,
but only there were two Banks licensed to establish from 2007 to 2009.
Nevertheless, so as to guarantee stable and solid development of the economy and
perform commitments with WTO, the Vietnamese Government shall remove gradually
law regulations aiming to help the domestic enterprises and adjust laws conforming to
laws and international practice. The Commercial Banks, in which VIB, is going to
suffer pressure from the competitors, pressure of increasing stockholder's equity to
guarantee CAR coefficient, classify debts and depreciation and apply international
standard accounting system
Aside from changes in law policy properly with the international practice, law system
and market mechanisms are still unsolved. As well as other banks in Vietnam, VIB

meets with many other difficulties because of insufficient, non-synchronous and
inconsistent law system in the country, still existing shortcomings to meet the banking
economic integration requirements. Inexplicitness of the information, particular
regulations of finance, accounting, labor contract, credit contract and other economic
sanctions caused a lot of difficulties for the banks, especially when law enforceability
is limited. In addition to, stability of the law regulations is low causing the enterprises
are hard to work out long-term plans or strategies specifically and authentically.
2.2.2.2. Economic factors
In Vietnam during the last months in 2007 and at the beginning of 2008, as the
economy fell into inflation, the commercial banking system is also meeting with
certain difficulties. Many banks were obliged to increase mobilization interest rates.
Coming to the year of 2009 and 2010 economic situation is still getting worse, growth
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rate reached to 5.32% (in 2009); 6.8% (2010). Although Vietnam is ranked among high
growth rate acquired economies against other countries on the world and in region,
however, it is not large in comparison with that during last years.
On the other hand, according to prediction of the experts, personal consumption was
reduced in 2009 and would be recovered during the period from 2010 to 2015. High
increase of usable consumption in 2010 until the end of 2015 shall increase consumer goods
demands, especially when Vietnam market is not absolute developed for those goods
Prediction table of basic economic indicators of Vietnam in 2011 – 2015
In the background of Vietnam's WTO integration to be rather deeply and widely,
therefore, the above situation of the world economy shall immediate impact on it. The
economic experts put forward predictions of the basic economic indicators of Vietnam
in 2015-2020 as shown in below figure table:
Table 2.2: Predictions of Vietnam economic indicators in 2015-2020

Targets

2011

2012

2013

2014

2015

GDP

6.5%-7%

6.5%-7%

6.8% -7,5%

7% -7.8%

7.2% -8%

CPI

8%-12%

8%-10%

8%-10%

8%-10%

8%-10%

Saving interest rate (%)

12-15%

10-12%

9-11%

8-10%

7-10%

Exchange rate

20.000 –

20.170 –

20.342

20.523
600-1000

-20.708
700-1000

20.35 -20.80

20.40 -20.90

Stock (Vn-index)

20.339
500-800

700-1000

700-1000

FDI (billion USD)

75-85

80 -90

90 -110

95 -120

100 -120

Gold price (million

32-37

30-35

30-35

30-35

30-35

20%GDP

20%GDP

15%GDP

14%GDP

13%GDP

VND/tael)
Deficit of commercial
balance

According to the above table, we found that Vietnam economic shall continue strong
growth rate during the next decades. It is because of good development of the private
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economic sector, increased competition and more effective in allocation of resources.
Economic innovation helps to improve faith indicator of the foreign investors, growth
of FDI and higher technology and competitiveness.

Bank is a financial intermediary, blood vessel of the economy. All fluctuations of the
economy having influences or are expressed through business activity happening of each
bank. Vietnam economy is during the development period in rather high speed, it is a
convenient condition for VIB as well as other Banks to develop and extend its scope.
2.2.2.3. Natural factor
Business activity of the commercial bank is under impact of the domestic and
international business environment.
*/ International business environment
Basic features of the international business environment today are countries,
enterprises changed the way to see the international market from confrontation
to cooperation and integration, together developing opportunities to exist and
develop together.
Besides, in international financial banking market, integration into international also
powerful happened creating opportunities to exchange international cooperation
between the commercial bank in business activity. In banking sector, modern
technology, and administrative experience helped to expand scope and service types of
the banks and financial institutions aiming at allocation of the capital resources.
However, business effect is reduced due to pursuit of scope growth target caused risk
and danger of collapse of the bank and instability on the world financial market. The
banks depend much more into high liquidity assets.
*/ Domestic business environment
Business activity of the Commercial Bank is under general influences of the
macroscopic and industry environments. At every period, influence level and
role of the environments shall have different impacts and influences on
activities of the Commercial Bank.
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- Economic

environment:

Vietnam economy acquired many remarkable

achievements during last years. Gross domestic product during the years of 2000
to 2007 always increased with average speed 8%. Coming to the year of 2009 and
2010, although the world economic crisis broke out, GDP growth speed in
Vietnam still acquired more than 6%.
Credit for the economy kept increasing in the direction of transforming agricultural
structure, processing agricultural product, forest product and arts and crafts industry.
The financial areas out of the bank also acquired remarkable growth rate, particularly
insurance business. Payment service products also rapid and diversified developed so
that meeting demands of the young people.
- Cultural and social environment: For scope of population is more than 80 millions
people, in which more than 40% of which is in working age. This is creating a large
scope market for the modern and dynamic products.
- Legal and political environment: Stable legal and political environments are a good premise
for economic development in general, and banking industry development in particular.
2.2.2.4. Technology factor
Gigantic development of science and technology, especailly Internet brought rapid
integration in culture, economy and society to the people. Some advances of science
and technology may create opportunity or risk for some enterpsies. In banking sector,
electronic informatic technology may be more safety and convenient for the users.
Service supply technology at almost Commercial Banks has been raised to a higher
level so as to meet more and more enough diversified demands of the customers with
getting better quality. Nevertheless, in comparison with the world technology level is
using by the international banks, it is still a underdeveloped technology of the
Commercial Banks in Vietnam.
Associative between Banks in technology solution is low, a reason for poor,
inconvenent and inattractive banking services. International integration in Banking

sector increased fund transactions, meanwhine, management mechanism and banking
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