865 solutions to improve international payment method by letter of credit at MB SGD1 branch

Academic year Jj Student ID ‰⅛ Advisor : 2017 - 2021 : 20A7510090 L : Dr Can Thuy Lien BANKING ACADEMY FALCUTY OF FOREIGN LANGUAGE NG AG GRADUATION THESIS TOPIC: SOLUTIONS TO IMPROVE THE PERFORMANCE OF L/C PAYMENT SERVICE AT MB-SGD1 BRANCH Student : Le Trung Kien Class : K20ATCC Ha Noi, May, 2021 CERTIFICATE OF ORIGINALITY I declare that this dissertation entitled “Solutions to improve International Payment Method by Letter of Credit at MB-SGD1 branch” is the result of my original research work The research is based on my reading and understanding of the original texts, and it is not published anywhere The other books, articles, and websites, which I have made use of are clearly referenced in the paper For the present thesis, which I’m submitting to the Banking Academy of Vietnam, has not been submitted to this or any other universities before Ha Noi, May 22, 2021 Author Le Trung Kien ACKNOWLEDGEMENTS This part is dedicated to the following beloved people Without them, I could not complete my thesis During the process of carrying out the final product of the research, I have received a great deal of support Firstly, I would like to express the deepest and sincerest gratitude to my supervisor, Ms Can Thuy Lien I am so thankful for her valuable guidance and constructive suggestions when I’m working on my research She provided me with knowledge that I needed to choose the right direction, methodology, and helped me to successfully complete my research In addition, I would like to thank my coworkers from MB-SGD1 branch for their helps They were always supportive and eager to provide the information I need for my study Moreover, having a chance to experiencing the working environment in Trade Finance Department of the branch also helps me a lot in understanding how L/C operations work Finally, I would like to thank my parents and as well as my friends for their supports and encouragements throughout my study 11 TABLE OF CONTENTS CERTIFICATE OF ORIGINALITY i ACKNOWLEDGEMENTS ii TABLE OF CONTENTS iii LIST OF ABBREVIATIONS vi LIST OF TABLES vii LIST OF FIGURES viii LIST OF APPENDICES xi ABSTRACT CHAPTER I: INTRODUCTION 1.1 Introduction 1.2 Background of the Study 1.3 Objectives of the Study 1.4 Significance of the Study 1.5 Scope and Limitation of the Study 1.6 Definition of Terms CHAPTER II: LITERATURE REVIEW 2.1 Literature Review 2.2 Theoretical and Conceptual Framework 12 2.2.1 Theoretical Framework .12 2.2.2 Conceptual Framework 13 CHAPTER III: RESEARCH METHODOLOGY 15 3.1 Locale of The Study 15 3.2 Research Design 15 3.3 Sources of Secondary Data 15 3.4 Evaluation Criteria of Secondary Data 15 3.5 Categories of Secondary Data for the study 16 3.6 Validity and Reliability 16 3.7 Self-Reflection on Secondary Data Collection Analysis .17 CHAPTER IV: RESULTS AND DISCUSSIONS 18 iii 4.1 Results18 LIST OF ABBREVIATIONS 4.1.1 Introduction of the profile of MBBANK and MB-SGDl branch 18 4.1.2 External factors affected trend of Trade Finance in Vietnam from 2018 to 2020 20 4.1.3 Results of L/C service operation at MB-SGD1 22 4.1.4 The percentage of L/C payment methods to other international payment methods at the branch 31 4.1.5 Competitiveness of MB-SGD1 branch through comparisons .35 4.2 Discussion .41 4.2.1 The L/C operation performance at MB-SGD1 41 4.2.2 The importance of L/C payment method at MB-SGD1 in comparison with other international payment methods 44 4.2.3 The fee policy of L/C service at MB-SGD1 branch 46 4.2.4 The market shares of import and export payment of MB-SGD1 in Hanoi city 48 CHAPTER V: CONCLUSION AND RECOMMENDATION 49 5.1 Summary of the Findings 49 5.2 Conclusion 49 5.3 Recommendations 50 5.3.1 To MB’S Head Office 50 5.3.2 To MB-SGD1 branch 52 REFERENCES APPENDIX ACRONYMS WORD’S MEANING D/C Documentary Collection L/C Letter of Credit Military Commercial Joint Stock Bank MB ιv SME TCB TTR VCB VP Small and Medium Enterprises Vietnam Technological and Commercial Joint- stock Bank Telegraphic Transfer Joint Stock Commercial Bank for Foreign Trade of Vietnam Vietnam Prosperity Commercial Bank Joint Stock TABLE PAGE Table 4.1.3.1: Total Sales from L/C operation at MB-SGDl LIST OF TABLES branch in the period 2018-2020 23 24 Table 4.1.3.2: Net profits from L/C operation at MB-SGD1 Branch in the period of 2018-2020 29 Table 4.1.3.3: L/C issuing transaction processing time during months in 2020 at MB-SDG1 branch 32 Table 4.1.4.1: Percentage of each payment method from 2018 to 2020 in terms of total sales 33 Table 4.1.4.2: Net profits of each kinds of international payment method at MB-SGD1 branch from 2018 to 2020 36 Table 4.1.5.1: MB’s Standard Fees for Regular Customers in 2021 38 Table 4.1.5.2: Table of classification criteria and customer preferences at MB-SGD1 branch 40 Table 4.1.5.3: Total sales of international payment methods at MB-SGDl branch in comparison with Hanoi’s total importexport turnover v FIGURE Figure 4.1.2: The total number of enterprises temporarily ceasing LIST dissolution OF FIGURES operations, waiting for dissolution and completing procedures in 2020 PAGE 21 25 Figure 4.1.3.1: Numbers of L/C transactions at MB-SGD1 from 2018 to 2020 27 Figure 4.1.3.2: The process of issuing an L/C at MB-SGD1 branch 31 Figure 4.1.4.1: Total sales of different methods of payment at MBSGD1 branch from 2018 to 2020 35 Figure 4.1.4.2: Percentage of each payment method from 2018 to 2020 in terms of net profits 45 Figure 4.2.2: Proportion of total sales among methods of international payments from 2018-2020 at VCB-SGD Branch 47 Figure 4.2.3: Top 10 banks with the largest asset size in Vietnam in 2020 vι Appendix 2018 MB Consolidated Income Statement Appendix LIST APPENDICES 2019 MB OF Consolidated Income Statement Appendix 2020 MB Consolidated Income Statement Appendix Table of total MB’s Fees Appendix Appendix Appendix ECI’s Balanced Business Scorecard of Robert S Kaplan and David P Norton Performance Measurement across Six Dimensions of T.J Brignall Measuring Business Performance’s Report vii Nganhangvn (2021) Tìm hiểu tài trợ thương mại gì? Retrieved from Nganhang vn: http s://ngan-hang.vn/kien-thuc/tim-hieu-tai-tro-thuong -mai-lagi.html APPENDIX Robert S Kaplan, D P (1992) The Balanced Scorecard - Measures that Drive Performance Boston: Harvard Business School Publishing 2018 MB Consolidated Income Statement T.J Brignall, L F (1991) Performance Measurement in Service Businesses Management Accounting, 34 Topcv.vn (2021) RM gì? Thơng tin “từ A đến Z” Relationship Manager Military Joint stock Bank BOiTCTDHN Retrieved fromCommercial Topcv.vn: https://blog.topcv.vn/rm-laCONSOLIDATED INCOME STATEMENT gi/#:~:text=RM%20l%C3%A0%20vi%E1%BA%BFt%20t%E1%BA%AFt tor the year ended 31 December 2018 %20c%E1%BB%A7a,tr%E1%BB%B1c%20ti%E1%BA%BFp%20v%E1% BB%9Bi%20kh%C3%A1ch%20h%C3%A0ng Vietnam General Department of Customs (2020) Tình hình xuất khẩu, nhập hàng hóa Việt Nam tháng 12 năm 2019 Ha Noi: General Department of Vietnam Customs Vietnambiz (2019, September 3) Điều kiện D/A (Documents against Acceptance) gì? Tại D/A rủi ro D/P? Retrieved from Vietnambiz: https://vietnambiz.vn/dieu-kien-d-a-documents-against-acceptance-la-gi-taisao-d-a-rui-ro-hon-d-p-20190903093752606.htm Vladimir Anatolevich ERMAKOV, E M (2018) A letter of credit as an instrument to mitigate risks and improve the efficiency of foreign trade transaction Retrieved from revistaESPACIOS.com: https://www.revistaespacios.com/a 18v39n06/a18v39n06p31.pdf l⅛⅝L⅛S _ 2018 2017 VNO mΛ>on VNO Wikipedia (2021, 2) Documentary Collection definition Retrieved from rτhθ∣cc Interest and Similar income 24,624.365 19 Wikipedia: https://en.wikipedia.org/wiki/Documentary_collection Interest and Similar expenses (10,240,868) 875,026 (8,657,07 Net Interest and similar income 4) 27 14,583,497 Net fee and commission income Net gain from trading of foreign currencies 28 29 S, 719,062 (2,092,16 ayw>a Ms L0 Tħ∙ Huyon Trarg'"*"M7^Dang Thuy Dung Ms LeTht Deputy Head at General Chief Accountant Deputy ChIet Accounbng end Hepcrtng Oepartrrent Executive Officer ∙ Chief Fmanoal Officer Hanoi, Vietnam 20 Feoruary 2010 Trung Thal Executive Officer 2020 ⅛ND m√.ran Motes _ IntareM and ernιar income IrrtareM ard Rrnnar atparses Ne< Intereet and SlmIUr Income Feeandcorimesranraeome 2019 VNOmWcn _ 32,767 393 3 _ c∙nαrai Accourrtng Dcparlmenl Harκ>i Vielnam Marcl 2020 7,822,773 2,7M oncer BOiTCTD-HN ST T Mức phí áp dụng Khách hàng thông thường KHOẢN MỤC PHÍ Mức phí thơng _thường _ Tư vấn phát hành L/C nhập Miễn phí Table of Total MB’s Fees 2.1 r theo yêu KH 2.2 Phát hànhcầu L/Ccủa nhập 2.2.1 Ký quỹ 100% 0,075% * giá trị L/C 2.2.2 Ký quỹ 100% _ a Phần ký quỹ 0.075% b Phần không ký quỹ _ _ 2.2.3 L/C có thời hạn 180 ngày 0,05% * giá trị L/C L/C có nội dung dài (Số lượng 30 2.2.4 ký tự điện SWIFT vượt USD ' 2.3 10.000 tự) Sửa đổiký L/C nhập Phí tối thiểu Phí tối đa F 30 USD 50 USD 500 USD 5.000 USD 500 USD 4.000 USD 20 USD Reviewed by Piepered by >/ IhiTiSfyGt i∣i>ic Ms LeTNHuyenTreno Deputy Head of General Accouncng OepadriiaHl Harv⅛ Vietruwn β February 2021 *'( cti.rYa9 k∖yti∖SMt Ms Dang Thuy Ourg M* Ngvyen ThI Therri Nga * Ml u>ατ∣vno Trvni Chief F nancial OMcar ` Chief Executive Othcer 2.3.1 2.3.2 2.3.3 2.3.4 2.4 2.5 ■26 2.6.1 2.6.2 a , b 2.7 2.8 2.9 ' 2.10 2.11 2.12 2.13 ' 2.14 2.15 Sửa đổi L/C tăng tiền _ Sửa đổi gia hạn làm L/C vượt 180 ngày Sửa đổi làm nội dung điện SWIFT vượt 10.000 ký tự Sửa đổi khác Hủy L/C nhập Thanh toán L/C nhập Chấp nhận toán L/C (Áp dụng cho LC trả chậm) Ký quỹ 100 % Ký quỹ 100% Phần ký quỹ Phần không ký quỹ Ký hậu vận đơn bảo lãnh nhận hàng Phát hành thư bảo lãnh nhận hàng Phí thu KH khơng hồn bảo Ký tờ lãnhCargo nhận Receipt/Giấy hàng kháchậu vận đơn (Trừ bảo lãnh Ký nhận hàng) Thu xếp mở L/C xác nhận hoàn trả trả chứng từ theo Chuyển L/C Điện phí mở LC Điện phí khác Như phí phát hành L/C 10 USD 0.05% 20 USD 30 USD 15 USD 15 USD0,2% * số tiền toán 20 USD 30 USD 50 USD _ 50 USD 60 USD 50 USD 50 USD USD 0,05% * giá trị L/C xác 50 USD + phí chuyển _nhận hoàn phát 30 USD/điện _5 USD/điện 50 USD 10.000 USD Financial Perspective GOALS MEASURES Cash flow Survive Succeed Prosper ECI’s Balanced Business Scorecard of of Robert S Kaplan and David P Quarterly sales growth and operating income by division Norton Increased market share ond ROE ECIzS Balanced Business Scorecard Customer Perspective ∞ALS MEASURES New products Percent of sales from new products Percent of sales from proprietary products Responsive supply Preferred supplier On-time delivery (defined by customer) Share of key accounts' purchases Ranking by key accounts Customer partnership Number of cooperative engineering efforts Internal Business Perspective GOALS MEASURES Technology capability Manufacturing excellence Manufacturing geometry vs competition Cycle time Unit cost Yield Design productivity New product introduction Silicon efficiency Engineering efficiency Actual introduction schedule vs plan Innovation and Learning Perspective ∞ALS MEASURES Technology leadership Time to develop next generation Manufacturing learning Process time to maturity Product focus Percent of products that equal 80% sales Time to market New product introduction vs competition Dimensions ci performance - — Types of measure Performance Measurement Six Dimensions of T.J Brignall Relative across market share and position DETERMINANTS RESULTS Competitiveness Sales growth Measures of the customer base _ Profitability Table Performance measures across SIX dimensions Financial performance Liquidity Capital structure Market ratios Quality of service Reliability Responsiveness AestheticsZappearance CtearrIinessZtidiness Comfort FnerTdIiness Communication Courtesy Competence Access Availability Security Flexibility Volume flexibility Delivery speed flexibility Specification flexibility Resource utilisation Productivity Efficiency Innovation Performance of the innovation process Pericrmance of individual innovations Measuring Business Performance’s Report C ɔ Carter&Coley s w* Chartered Accountants & Business Advisors , Measuring business performance Whal are Hie best ways to assess your firm's performance? Changing market conditions make it more important than ever to Profitability measure your business' performance on a regular basis Every business hopes Io Inaease profits as these are the Iifeblood of their company Things Ioconsider include: • gross profit margin - total amount after sales but before tax • break-even - the volume of sales needed Io start making a profit • net profits - figure after all overheads, interest and tax deductions • return on assets - level of profit in relation Io net assets AAeasuring profitability should highlight areas for potential growth or underperforming aspects of your business The impact caused by recent events, such as the vote to leave the EU in June 20 lố and the snap general election, have added to the Uncerlaint/ felt by business owners around the UK Knowing your business' strengths and weaknesses will help you manage your business efficiently, There are various tools and techniques out there to help you assess rhe performance of your market, but knowing where Io start can be the trickiest obstacle of all Finance Accounting ratios One of the biggest challenges is Io ensure there is always enough cash Io pay expenses when they are due, as running out of cash will threaten the survival of your busmess They make it easier to interpret financial statements by giving you a Cashflow Regularly reviewing and updating your cashflow forecasts will show the amount of money flowing in and out of your business This IS usually done on a monthly and annual basis Comparing your forecasted sales and profits against your costs should enable you Io identify any potential problems before they arise Accounting ratios compare one aspect of your business against another greater insight into your business* performance The previous list of bullet points can be used In the ratios which measure profitability Other important ratios to consider include • liquidity ratios - measure your business’ ability Io pay debts • efficiency ratios - measure how well you are utilising your • gearing ratios ■ measures your business' financial leverage business assets For example, to calculate liquidity ratios you divide current assets by current liabilities The result will indicate whether your business has sufficient assets Io cover its liabilities at that specific time Measuring business performance Customers Berchmarkrg Wil help you look at what is drɪvrg success in yoư sector Retaining existing clients is as important as Oflracting new CUSkxrefS Talking to your GUSlCirers will tel you if you're keeping up with their demands and expectations Even if the feedback IS generafy positive there may StiB be areas to improve Your sales data would be a good place to start but questionnaires and comment cards can also help identify if your dɪents are satisfied Social media platforms, such as Twitter or Facebook, also offer an Is a rival offering more Cffiroaive prices? Ls their Customer service simply better? Or has Q recent marketing campaign gamed SdH cent traction? By pinpointing these factors, you can Stoy at the Jorehont of innovation Strategic benchmarking goes one step beyond, measuring your performance against the best-in-class or what IS considered to be WOrldxIass performance This invokes looking at other industries to try ard establish best practice, which then be transferred to drive up standards in your sector accessible opportunity to engage with CUStorrers, while a functional website should offer several ways for customers to get in touch If your business IS performing poorly, clients may lake the option to formaδy complain But bear in mind many Unsatisfred customers will Simply switch provider if they're unhappy Engaging Wiit clients can help your enterprise identify how your Measurement methods KPIs Using key performance indicators (KP∣S∣ can help measure all of the customers' needs are changing and where improvements can be aforementioned criteria to gauge your busmess’ performance against mode to your products and services, staff or business procedures key objectives However, be warned there Ofe thousands of KPls to choose from and it Staff is vital you select the fight one for the right task The more successful your business becomes the more StaH you are KPls are most commonly used to measure financial metrics, such as IikeFy to employ and measuring their performance within the business profits, costs and sales, but you can easιfy become bogged down therefore becomes an important consideration The Inck Is to limit the number of KPIs to a manageable figure and focus Inlormal meetings, Such as one∙toones, and annual appraisals can on monitoring the KPls that are vital to your business achieving its goals offer practical ways 10 treasure and mon∣tcr staff performance as Wei as an individual s development aspirations If workers have specific targets to meet, measuring their performance SWOT analysis can be useful Assessing your strengths, weaknesses, oppcrtun∣t∣es and threats (SWOT) Sales or marketing targets, productivity figures and profits generated can be a useful way of measuring business performance Ask yourself could be tied in with Incentives and enable you Io ensure your teams • strengths what are you doing well? • weaknesses ∙ identify the areas in which you are not • opportunities - are there any f OiOurabIe developments you can • threats - factors with the potential to have a negative effect on ore working elfKZienlIy AnotFier thing to consider is how your Stofl reflect the identity of performing well your business, particularly if they are dealing with clients on a daily basis For example, they adhere to a ce