Urgency of the topic
As the economy grows, the demand for capital remains a top priority, particularly for commercial banks that play a crucial role in the financial market These banks primarily focus on lending, necessitating the mobilization of external capital to meet market demands By raising capital, banks can increase their income from loans and service fees, ensuring their survival and growth However, the past two years have posed significant challenges due to the Covid-19 pandemic, which led to workforce reductions and numerous business defaults This crisis has impacted both the global and Vietnamese economies, prompting banks to adapt by targeting new customer segments, particularly potential individual clients.
After conducting research on capital mobilization activities at Vietinbank Ngu Hanh Son, it is evident that deposit mobilization is crucial to the bank's operations To enhance the effectiveness of deposit mobilization activities at Joint Stock Commercial Banks, specifically at the Joint Stock Commercial Bank for Industry and Trade of Vietnam Ngu Hanh Son Branch, I have chosen the topic "Solutions to Develop Savings Deposit Mobilization Activities at Vietinbank – Ngu Hanh Son Branch."
Research objective
- Research the basic issues of deposit mobilization activities of commercial banks.
- Analyze and evaluate the current status of deposit mobilization activities of individual customers at Vietinbank Ngu Hanh Son.
- Propose some solutions and recommendations to increase deposit mobilization at Vietinbank Ngu Hanh Son.
Research question
- What is savings deposit mobilization at commercial banks? What are the contents of deposit mobilization activities, what are the factors affecting deposit mobilization activities?
- What is the status of savings deposits at Bank for Industry and Trade, Ngu Hanh Son branch?
- What solutions can help the Bank develop savings deposit activities of individual customers?
Objects and scope of research
- Research object: deposit mobilization activities at commercial banks.
- Research scope: deposit mobilization activities of Vietinbank, Ngu Hanh Son branch.
Research methods
The thesis employs descriptive and explanatory methods, alongside comparative analysis and synthesis It gathers additional information pertinent to the research problem from reference materials and data sourced from Vietinbank Ngu Hanh Son.
Thesis structure
In addition to the introduction and conclusion, the main content of the thesis is presented in 3 chapters:
- Chapter 1: Theoretical basis of deposit mobilization activities at commercial banks.
- Chapter 2: The situation of deposit mobile activities at industry and trade bank Ngu Hanh Son branch period of 2019-2021.
- Chapter 3: Some solutions to develop deposit mobilization activities at Bank for Industry and Trade Ngu Hanh Son branch.
THEORETICAL BASIS ON DEPOSIT DEPOSIT ACTIVITIES AT
THEORETICAL BASIS ON CAPITAL MODIFICATION ACTIVITIES AT
1.1 THEORETICAL BASIS ON CAPITAL MODIFICATION ACTIVITIES AT COMMERCIAL BANKS.
1.1.1 The concept of capital source of commercial banks.
The capital of a commercial bank refers to the monetary value generated or mobilized by the bank, which is utilized for lending, investing, and providing various business services.
Capital consists of both equity and borrowed funds In the context of commercial banks, capital refers to the idle money held by individuals and businesses, which the bank mobilizes to engage in various financial activities such as lending, guaranteeing, and leasing, ultimately enhancing cash flow.
1.1.2 Meaning of capital mobilization activities of commercial banks.
Mobilizing deposits from individual customers enhances economic savings by effectively utilizing idle capital instead of allowing it to remain as unproductive cash Additionally, individual banking transactions enable the government to proactively monitor and regulate the economy, fostering a more dynamic financial environment.
In today's retail banking landscape, individual customer deposits are crucial to the operations of commercial banks These deposits not only fulfill the demand for loan capital and enhance liquidity but also significantly influence the bank's brand and reputation.
Deposit mobilization offers individuals a secure option for asset storage, allowing them to temporarily hold idle capital while benefiting from a profitable investment savings channel Additionally, it facilitates access to convenient banking services, including payments, transfers, and loans By promoting the use of bank payment services, deposit mobilization minimizes the risks associated with cash storage, enhancing overall financial security for customers.
THEORETICAL BASIS ON SAVING DEPOSIT MOBILE ACTIVITIES FOR
1.2.1 The concept of savings deposit mobilization.
A personal deposit account is a type of deposit account that can be opened by an individual in their own name, either with a fixed term or as a demand balance This account allows individuals to deposit money into a commercial bank for various purposes, including non-cash payments and savings The mobilization of deposits from individual customers involves accepting different types of deposits, such as demand deposits, time deposits, savings deposits, and certificates of deposit, all of which ensure the full return of both principal and interest to the depositors as per the agreed terms.
A demand savings deposit allows for withdrawals at any time, but it cannot be used for transactions with third parties While the balance in this type of account may not be substantial, it tends to be more stable, leading banks to offer higher interest rates compared to other payment deposits.
A term savings deposit is a financial agreement that specifies both the duration of the deposit and the timing of withdrawal, offering higher interest rates compared to demand deposits This savings option is widely recognized in Vietnam, where banks typically offer a range of terms from one month to over a year, making it a popular choice for individuals looking to maximize their savings.
- Savings deposit in VND: is a form of savings deposit in which the savings deposit is in Vietnam dong, which has been calculated in units of the local currency.
Savings deposits in foreign currency involve holding funds in foreign currencies, with calculations based on the respective currency units At Incombank's Ngu Hanh Son branch, the primary currency for these deposits is the US Dollar (USD).
1.2.2.3 Classification by form of interest payment
- Prepaid interest savings: is a form of savings where customers receive interest when depositing money.
- Savings with interest payment later: is a form of savings where customers only receive interest when the payment term is due.
- Savings with periodic interest payment: is a form of savings in which customers receive interest according to the term agreed with the bank.
The demand for savings deposits fluctuates throughout the year, often following a cyclical and seasonal pattern across the four quarters: Q1, Q2, Q3, and Q4, influenced by the prevailing economic and business conditions.
Commercial banks enhance their competitiveness by diversifying savings products and increasing convenience to attract customers, thereby boosting their deposit market share Each bank tailors its savings mobilization products to target specific customer segments, resulting in unique offerings that cater to varying needs Key savings deposit products offered by commercial banks include a range of options designed to meet diverse financial goals and preferences.
1.2.3 Characteristics of savings deposits mobilized from individual customers
Most of the capital mobilized from the population is usually deposited with short term:
Residential capital primarily consists of consumer and business payment deposits, which are frequently transferred between accounts or withdrawn for spending This money typically remains in customers' accounts for a short duration, as most time deposits and personal savings are often set for terms under 12 months Individual customers, lacking insight into macroeconomic changes that influence interest rates and bank deposit policies, tend to favor short-term deposits However, for those focused on stability, it is common to either renew their savings upon maturity or withdraw and reinvest in new terms Consequently, the capital mobilized from the population generally reflects a longer actual term.
Capital mobilized from the population is more stable than capital from economic organizations:
Individual customers, characterized by their large numbers and smaller deposit amounts compared to corporate and institutional clients, have a minimal impact on the overall financial total when one customer withdraws funds.
Mobilized capital from residents is generally more stable than deposits withdrawn by institutional or corporate clients While checking account deposits can be volatile, individuals typically use term deposits for savings, agreeing on specific terms and interest rates with the bank Although customers can withdraw funds before maturity if necessary, most prefer to keep their money deposited until the agreed term ends This stability allows commercial banks to leverage residential capital for medium and long-term loans, providing a significant advantage in capital management.
Mobilizing residential capital involves high costs due to its stable characteristics and the aim of generating profits from customers These costs comprise both interest and non-interest expenses Interest expenses refer to the interest payable on deposits, determined by the agreement between the bank and its customers Non-interest expenses are varied, encompassing direct payments to depositors, such as gifts and insurance, as well as operational costs like salaries for bank staff and expenses related to enhancing services for depositors, including the establishment of additional branches and transaction offices.
Funds mobilized from the population have a large scale in the total mobilized capital of CB, but are dispersed according to the number of customers:
The capital mobilization structure of CB encompasses sourcing funds from financial institutions, economic organizations, and the general population Individuals tend to avoid risks, prioritizing the safety of their investments while seeking reliable returns Consequently, depositing money in a bank emerges as a preferred solution to meet these needs, resulting in a substantial scale of capital mobilization from the population for CB.
INDICATORS FOR ASSESSMENT OF DEPOSIT DEPOSIT ACTIVITIES AT
1.3 INDICATORS FOR ASSESSMENT OF DEPOSIT ACTIVITIES AT COMMERCIAL BANKS.
When evaluating the effectiveness of savings deposit mobilization in commercial banks, the size of capital, or the total amount of deposits, is crucial This capital should align with lending activities and asset utilization; excessive capital mobilization without timely lending can lead to stagnation and potential losses Some banks may resort to risky lending practices without thorough credit assessments, increasing the likelihood of bad debts and insolvency Additionally, expanding capital incurs new costs, as larger mobilized capital results in higher marginal costs that can impact the bank's profitability Therefore, it is essential for commercial banks to carefully calculate an optimal capital size.
Deposit size alone is not a comprehensive measure of a bank's ability to mobilize deposit accounts While it indicates the total amount of deposits, a range of relative indicators derived from this scale provides a clearer picture of a bank's deposit mobilization capabilities The growth rate of deposit accounts is particularly significant, as it illustrates fluctuations in capital over time, highlighting both increases and decreases in deposit mobilization.
Savings deposit growth rate = (Total savings this year - Total savings last year)/(Total savings last year)*100%
Growth rate > 0: the size of capital from the bank's deposit account increases.
Growth rate < 0: the size of capital from the deposit account of the bank decreases.
Effective capital mobilization from savings is essential for meeting demand at a low cost, while ensuring stability and avoiding sudden fluctuations in capital usage This principle is particularly relevant to banking and deposit mobilization activities.
A bank must ensure that its capital grows steadily to meet credit demands and support various activities, while also maintaining stability over time For instance, if a bank relies heavily on volatile residential deposit accounts to fulfill credit needs without properly assessing the stability of these funds, it risks jeopardizing its operations and exposing itself to unforeseen risks Conversely, a bank that mobilizes a smaller but more stable source of capital can make safer investments, ultimately leading to greater profitability.
1.3.2 Proportion of mobilized capital from savings deposits.
The formula for calculating the proportion of savings deposits in the total mobilized capital each period:
The ratio of capital mobilized from deposit accounts to the total capital mobilized by the bank highlights the significant role deposit accounts play in the bank's operations This metric is directly linked to how effectively capital from residential deposit accounts contributes to the bank's overall capital generation efficiency.
This large proportion shows that the level of capital mobilization from the deposit account is high, which also means that the change in the amount of the
Proportion of savings = (Difference amount)/(Total savings in previous year)*100% deposit account will have a great influence on the total mobilized capital of the bank.
A low capital mobilization ratio indicates that the bank's ability to attract funds from deposit accounts is limited, suggesting that fluctuations in deposit sources have minimal impact on the overall capital mobilized by the bank.
In banking, a substantial amount of mobilized capital is essential for effective credit and operational activities By maximizing the capital sourced from deposit accounts, banks can significantly lower their reliance on more expensive funding sources, such as interbank borrowing Consequently, the ratio of capital mobilized from deposit accounts to the total mobilized capital serves as a key indicator of the effectiveness of a bank's deposit mobilization efforts, reflecting both the success of capital acquisition and its impact on overall funding costs.
Raising capital from residential savings deposits primarily incurs interest expenses, along with additional costs such as deposit insurance, management fees, and marketing expenses aimed at attracting customers Furthermore, expenses related to purchasing machinery and equipment, as well as other associated costs, contribute to the overall fundraising activities.
Interest expense paid by banks to customers reflects the nominal interest rate announced by the bank, influenced by various factors such as deposit term, type, and the bank's business strategy However, the actual interest rate on residential savings accounts is typically higher due to additional expenses banks incur beyond interest payments Consequently, the cost of deposits relative to total capital raised from deposit accounts can be evaluated using two additional criteria.
Average deposit rate = Total interest payable/Total mobilized capital
The interest expense relative to total capital mobilized from residential savings accounts indicates the cost incurred by the bank to generate each dollar of capital from these accounts, reflecting the interest rates offered to customers.
The cost of interest payments relative to the total capital raised from residential savings accounts indicates the bank's expenditure for each dollar mobilized from these deposits.
In summary, the cost of depositing savings accounts/total capital raised from the savings accounts is used to assess how much a bank's deposit of deposits needs to spend.
To assess the effectiveness of capital mobilization from residential savings deposits, it is crucial to maintain a reasonable cost of capital, ensuring that income generated can cover these costs and yield profits for the bank A lower capital cost indicates more effective mobilization However, achieving this requires a strategic approach, including lowering deposit interest rates and optimizing management, preservation, and reserve costs associated with mobilized savings Offering a competitive yet sustainable deposit interest rate is essential to attract depositors while safeguarding the bank's interests Additionally, minimizing non-interest expenses enhances the overall effectiveness of the bank's deposit mobilization efforts.
FACTORS AFFECTING DEPOSIT MOBILE ACTIVITIES
A bank's business strategy is crucial for its performance and must be tailored to its unique internal and external conditions To develop an effective strategy, banks should assess their current position within the financial system, identifying strengths, weaknesses, opportunities, and threats This analysis allows banks to anticipate environmental changes and formulate a comprehensive strategy that emphasizes the growth and quality of capital Each bank must also align its capital mobilization and utilization goals with the directives of the Central Bank and its actual operational circumstances, ensuring a balanced approach to capital management.
Understanding a bank's business efficiency is crucial for investors, as it involves analyzing key performance indicators such as revenue, costs, and profits For depositors, a bank's effectiveness directly impacts its reputation Consequently, effective management of business performance is vital for enhancing the bank's capital mobilization efficiency.
Capital mobilization in banks is influenced by various factors, including the forms and terms of services offered, such as home transactions, automatic withdrawals, and business consulting The efficiency of capital mobilization is enhanced by meeting the diverse needs of customers, as different clients have unique requirements when interacting with banks A bank that provides convenient, flexible, and varied deposit options is more likely to attract new customers and retain existing ones In addition to traditional savings deposits, banks are now promoting a range of deposit methods, including deposit accounts, promissory notes, and bonds, each with different par values and terms, to further enhance their capital mobilization efforts.
Interest rate policy plays a crucial role in capital mobilization for banks, as it significantly influences individuals and organizations when deciding to deposit money To attract and retain capital, banks must offer competitive interest rates, including preferential rates for large and regular depositors However, a high interest rate alone does not guarantee increased deposits; it must also provide a return that exceeds the inflation rate, necessitating accurate inflation forecasts by banks Additionally, the interest rate decision is influenced by factors such as deposit maturity, conversion capabilities, risk levels, and regulatory requirements While higher interest rates can draw in more depositors, they also require corresponding increases in lending rates to maintain profitability Therefore, banks must balance attractive deposit rates with the need to remain appealing to borrowers while managing their capital mobilization costs and comparing their rates to those of competitors.
Banking technology innovation is significantly transforming the payment stage of financial services As commercial banks evolve, they are increasingly prioritizing the integration of modern science and technology into their operations, particularly in enhancing payment processes.
Efficient capital flow enhances customer safety in deposits, withdrawals, and loans, minimizing the risks associated with cash circulation By promoting non-cash payments, banks can attract idle funds from the economy, thereby reducing the costs associated with printing, storing, and managing cash.
Effective marketing activities are crucial for banks to understand customer needs and aspirations By doing so, banks can develop suitable capital mobilization strategies, interest rate policies, and credit policies Additionally, banks must gather timely and comprehensive market information to stay ahead of competitors and secure a competitive advantage.
The seniority and reputation of a bank play a crucial role in shaping its market image and success Established and reputable banks enjoy significant advantages in their banking operations, particularly in capital mobilization Customer trust enables these banks to stabilize their capital volumes and reduce mobilization costs, allowing for greater business agility A bank with a long-standing history, strong reputation, quality facilities, and qualified staff fosters a positive image that attracts customers, enhancing its trading system and overall appeal.
The economic development cycle significantly influences capital mobilization within banks During periods of economic growth and stability, individuals experience guaranteed income, leading to increased demand for savings and higher bank deposits This environment allows banks to raise deposit interest rates, encouraging further savings to meet the growing credit demands of the economy Conversely, in times of recession, declining real incomes and heightened volatility erode consumer confidence in currency stability, resulting in reduced deposits and potential withdrawals from the banking system Consequently, banks face challenges in capital mobilization, reserve management, and restoring customer trust.
The legal environment significantly influences bank operations, as all activities of credit institutions in Vietnam are governed by state regulations and the law on credit institutions As corporations, banks must adhere not only to national laws but also to specific regulations set by the Central Bank regarding interest rates, reserves, and loan limits These legal constraints impact the scale and quality of capital mobilization activities, which are crucial for banks operating in the high-risk monetary sector Consequently, strict compliance with legal provisions is essential for the stability and success of banking operations.
In a market economy, competition is an inherent and objective reality, particularly evident in the banking industry, which is characterized by high competitiveness and growing complexity The financial market has become increasingly dynamic due to the involvement of various banks and non-bank financial institutions The rising number of operational banks, coupled with the robust growth of numerous non-banking organizations, has diminished the banking system's monopoly, thereby impacting its overall performance amidst limited idle capital in both the population and economic organizations.
The bank's capital mobilization largely relies on the savings of the population, which are derived from idle monetary sources accumulated through current consumption and savings for future expenditures This interdependence means that without savings, there can be no capital for investment in production Various factors influence the savings behavior of individuals, including income levels, spending habits, and economic stability In times of economic instability, people tend to convert their local currency into stronger currencies or invest in stable assets like gold, silver, or real estate Additionally, the distribution of the population across different regions introduces diverse psychological, cultural, and lifestyle influences Therefore, banks must understand these psychological factors to develop effective capital mobilization strategies.
Chapter 1 of the thesis presented an overview of the contents related to capital mobilization and savings deposit activities of individual customers at CB.
The evaluation of individual customer savings deposit activities at CB is based on three key criteria: growth rate, proportion, and mobilization cost Additionally, various factors influencing the mobilization of savings deposits at CB will be thoroughly analyzed in Chapter 2 of the thesis.
THE SITUATION OF DEPOSIT MOBILE ACTIVITIES AT
THE STATUS OF DEPOSIT DEPOSIT AT INDUSTRY AND TRADE BANK
Affected by the Covid-19 epidemic, the branch's business activities will still be profitable in 2020 and 2021 Profit before tax in 2019 reached VND 2,310 billion, in
Between 2020 and 2021, the Vietnam Bank for Industry and Trade experienced a profit increase of 7.88% in 2020, amounting to VND 182 billion, followed by a 5.1% rise in 2021, translating to VND 127 billion Despite facing challenges over the past three years, the bank successfully met its profit targets, thanks to the unwavering dedication and hard work of its staff, who adapted to changing economic conditions and policies.
2.2 THE STATUS OF DEPOSIT IN NGU HANH SON BRANCH.
2.2.1 Products to mobilize savings deposits of individual customers at Vietinbank Ngu Hanh Son.
Vietinbank Ngu Hanh Son offers savings deposit products designed for Vietnamese individuals and foreigners living in Vietnam, making these accounts a significant part of their mobilized capital To attract individual customers, the branch provides a variety of savings options with different deposit terms and interest payment schedules While all savings products share the common goal of accumulating capital for future financial needs and allow withdrawals upon maturity, each product is tailored to meet the specific preferences of different customer groups, highlighting their unique features.
Table 2.4: Personal savings deposit products at Vietinbank Ngu Hanh Son
No Product name Subject Term of use Deposit type Period
- Minimum balance: 100,000 VND, 10 USD, 10 EUR.
- Interest rate: according to the regulations of the Bank of Vietnam for each term.
Customers can choose the sending term according to the number of days or months.
2 Unlimited savings Individual customers - Minimum balance: 100,000
- Interest is accrued daily, principal is entered on the last day of the month.
At the end of the original term or at the time of registration or when the customer pays off before the due date.
Interest is calculated on the basis of actual balance, actual number of deposit days and corresponding interest rate at registered or original terms.
Individual customers - Minimum balance: 15,000 units of foreign currency
- The preferential exchange rate is based on the amount of foreign currency the customer sells to the Incombank.
- The amount of savings deposit is not lower than the amount of foreign currency
EUR Customers choose the deposit term in monthly units, the minimum term is 1 month. converted at the preferential exchange rate.
5 Cumulativ e savings Individual customers - Period of deposit: 1 month/time
- Customer is not allowed to pay at the last period.
- Interest payment and interest rate adjustment cycle: 03 months or 12 months.
- Customers are allowed to pay off early, not to withdraw part of the principal before the due date.
- Current account cannot be re-matured.
- Interest rate: Online savings customers with a term of 3 months or more will receive an interest margin of 0.15%/year compared to the normal VND deposit interest rate at the counter.
- Interest payment method: pay interest at the end of the
- Payment before maturity: to be paid before due date.
(Source: General Department of Vietinbank Ngu Hanh Son)
2.2.2 Procedures for mobilizing savings deposits.
2.2.2.1 Procedures for depositing and receiving savings deposits, paying and withdrawing savings deposits at the counter:
Procedures for sending and receiving new savings deposits:
Customers must visit a VietinBank transaction point to submit their General Depository Account or Legal Representative information During this visit, they are required to provide complete deposit records, register their signature sample, and obtain a deposit receipt in accordance with VietinBank's regulations.
- After VietinBank successfully records the deposit transaction, the customer receives the VietinBank's accounting voucher and savings card.
Procedures for sending and receiving savings deposits into the issued book/card:
To make a cash deposit, customers are required to visit a World Bank transaction point, where they must present their issued savings card along with the necessary documents as specified by VietinBank The transaction point will then update the account balance on the savings card and return it to the depositor.
Customers can easily initiate transactions from their current accounts at Vietinbank, either by visiting a deposit account transaction point, similar to cash deposits, or by following the guidelines outlined in the bank's Deposit Account product regulations.
Procedures for withdrawal and payment of savings deposits:
To withdraw funds, customers must visit the deposit account transaction point in person and provide necessary verification documents, including their savings card, cash receipt, and any other required paperwork as per Vietinbank's regulations.
Vietinbank will complete the deposit process by recording both the principal and interest payments for savings deposits, following the customer's preferred withdrawal method and upon the return of the savings card.
- Customers receive Vietinbank's accounting documents.
2.2.2.2 Procedures for sending and paying savings deposits on electronic means (iPay channel/ATM machine):
To deposit savings through electronic transaction channels at Vietinbank, customers must fulfill one of the following requirements: they must be registered for Vietinbank's internet banking service to deposit via the Vietinbank iPay channel, or they must possess a Vietinbank-issued domestic or international debit card to make deposits at Vietinbank ATMs.
- Customers operate to send a deposit account according to the instructions on Vietinbank iPay/ATM machine, agree to the terms and conditions of deposit account on Vietinbank iPay/ATM.
- According to the customer's registration, Vietinbank will automatically extend the deposit term or pay the principal/interest of the deposit account to the customer's own current account.
- Customers can prepay their deposit accounts by electronic means (on iPay channel/ATM) or at Vietinbank's transaction points.
2.2.3 Status of savings deposits at Vietinbank Ngu Hanh Son in the period of2019-2021.
2.2.3.1 Analysis of the volatility of deposit accounts by term
Vietcombank offers two main types of savings deposits: term deposits and demand deposits Term deposits constitute a significant portion of the bank's total deposit accounts and feature various types with interest rates that increase with longer terms In contrast, demand deposits cater to individuals with smaller and more irregular saving patterns, representing a smaller share of overall deposits.
Table 2.5: Movement of deposit accounts by term at Vietinbank Ngu Hanh Son.
AOM PP (%) AOM PP (%) AOM PP (%) AOM Ratio
(Source: General Department of Vietinbank Ngu Hanh Son)
Figure 2.4: Movement of deposit accounts by term at Vietinbank Ngu Hanh Son.
In 2020, the savings account size at the branch was 653,000 billion VND, reflecting a decrease of 23 billion VND or 3.4% compared to 2019 In 2021, this trend continued, with further developments in the account size.
In 2020, Da Nang city experienced a significant cash inflow decrease, totaling 732 billion VND, primarily due to the impact of the epidemic that necessitated over two months of distancing directives As a result, the cash inflow is projected to increase by 79 billion VND, reflecting a decrease rate of 12.1%.
Term deposits make up a significant portion of total deposits, offering higher interest rates compared to demand deposit accounts, which leads many individuals to prioritize them By the end of 2020, the balance of term deposits reached 542 billion VND, representing 83% of total deposits, reflecting a decrease of 9.21% or 55 billion VND from 2019 However, in 2021, the balance rose to 617 billion VND, accounting for 84.29% of total deposits, marking an increase of 13.84% or 75 billion VND from the previous year.
Deposit accounts with terms of less than one month are not popular among customers, as they offer a low interest rate of only 0.2% per year Consequently, these accounts represent a mere 3% of the total savings deposits at the branch, highlighting their minimal impact on overall deposit statistics.
Deposit accounts with terms of 1 to 3 months represent a small percentage of total deposits, primarily due to their short duration and low interest rates, averaging around 3.1% per year These accounts typically make up about 5-6% of the total savings deposits at the branch.
In 2019, deposit accounts with a term of 3-6 months mobilized 74 billion VND, representing 10.95% of total deposits From 2020 to 2021, this amount consistently grew by 10-12% annually, with a savings interest rate of 3.4% per year While this segment constitutes a small portion of overall deposits, it plays a crucial role in enhancing the bank's capital, thereby supporting its operational stability.
ASSESSMENT THE EFFICIENCY OF MODIFYING DEPOSIT DEPOSIT AT
Between 2019 and 2021, the business environment presented both challenges and opportunities for deposit mobilization at Vietinbank Ngu Hanh Son While the macro-economy showed positive trends and local economic growth positively influenced banking operations, the COVID-19 pandemic complicated capital mobilization efforts and debt collection Despite these challenges, the branch achieved notable business success, expanding its scale and improving operational efficiency To enhance customer development, the branch implemented effective marketing and customer care strategies, including promotions and innovative transaction methods In managing deposit interest rates, the branch adhered to State Bank regulations while offering competitive rates to attract customers without inflating interest rates excessively In response to the pandemic's impact, the branch adopted flexible capital mobilization strategies, such as promotional campaigns and preferential rates for larger deposits Additionally, it identified key periods for capital availability, focusing on maximizing mobilization efforts at the beginning and end of the year.
The Industrial and Commercial Bank Ngu Hanh Son branch faces significant challenges in its operations, particularly in competing for savings deposits within Ngu Hanh Son district The integration of state and foreign banks has created an uneven playing field, with competitors like Vietcombank, BIDV, and Shinhan Bank possessing superior human and financial resources Additionally, the economic instability in the district post-COVID-19 has led to a lack of focus on banking transactions among residents The pandemic has hindered economic activities in Da Nang and Ngu Hanh Son, adversely affecting bank deposits and loan activities Furthermore, the introduction of new deposit service products requires substantial time and resources, and the bank's offerings have yet to effectively differentiate themselves in a competitive market.
Vietnam boasts a stable socio-political and economic environment, making it a safe haven for businesses across various sectors This stability enhances the security of people's lives, encouraging them to confidently deposit their money in banks.
Under the leadership of the city government, enhanced coordination with relevant agencies has improved the management of economic activities, including anti-smuggling, combatting commercial fraud, and addressing tax evasion This collaborative effort has fostered a more competitive and efficient business environment in the city, ultimately facilitating better conditions for banks in terms of debt collection, lending, and deposit mobilization.
- As a state-owned commercial bank:
Banking plays a vital role in the economy, largely due to its state ownership, which fosters public trust and confidence This strong support from the government enhances the bank's operational efficiency and effectiveness in its financial activities.
NHCT.NHS's branch on Ngu Hanh Son road serves as a vital traffic hub, connecting the city center to surrounding areas This prime location enhances the bank's ability to promote its brand effectively and facilitates prompt customer feedback, enabling swift adjustments to its policies.
The prestige of a bank is not acquired overnight; it is cultivated over time alongside societal and community development Despite being in operation for just over a decade, the bank has consistently strengthened its reputation through significant growth across various sectors.
- Quality of customers coming to the bank:
Having established itself for over a decade, the bank boasts a substantial customer base, surpassing many competitors in the district Furthermore, it has successfully cultivated relationships with new clients, who are expected to become loyal, long-term customers.
The branch of Vietnam Commercial Banks operates in a highly competitive environment, with 22 different commercial banks in the city and several in the Ngu Hanh Son district, including the State Bank of Vietnam and the newly established East Asia Bank This intense competition has led to a decrease in the bank's market share for deposit accounts, as it must compete with other financial institutions Currently, the primary players in capital mobilization activities are Insurers and the State Bank, while the relatively new Dong A Bank has a limited presence in the savings market.
The State Bank of Vietnam (SBV), a state-owned commercial bank, primarily focuses on mobilizing and lending to rural areas and small-scale producers In recent years, the SBV has expanded its scope and implemented various policies to attract deposits, including offering competitive interest rates that exceed those of the State Bank itself, particularly for savings deposits Promotions like the chance to win gold have successfully drawn many customers However, competition has intensified as other banks, including joint stock commercial banks, have also introduced significant deposit mobilization strategies and attractive promotions As more banks establish branches and develop unique business strategies, the market share for deposit accounts will become increasingly fragmented, making mobilization efforts more challenging.
The primary source of deposit accounts for the bank comes from local residents in Ngu Hanh Son, a district predominantly reliant on fishing, leading to limited and unstable incomes Many individuals deposit their funds, primarily compensation from the State for land and housing, to earn interest The bank's clientele mainly consists of state-owned enterprises in the industrial sector, which currently benefit from significant State protection However, with Vietnam's rapid international integration, including its accession to the WTO, this protection is expected to diminish, raising concerns about the survival of these enterprises If they fail to compete, they may struggle to repay their bank loans, resulting in increased overdue debts that could severely impact the bank's capital and recovery efforts.
- On the scale of organization and training:
Currently, middle-aged employees make up a significant portion of bank staff, while newly established joint stock commercial banks boast a younger workforce characterized by modern and flexible working styles Although these younger employees may lack the experience of their older counterparts at the Invalids Bank, their youthful energy is an advantage A challenge for banks today is the high percentage of senior staff, which necessitates retraining to help them adapt to the evolving environment This process is time-consuming and complicated, particularly in the current era where computer literacy and foreign language skills are essential As a result, banks face considerable difficulties in rejuvenating their workforce.
In Da Nang and many other regions, a significant number of individuals believe that storing money at home is safer than depositing it in a bank Additionally, a considerable portion of the population holds negative perceptions of banks, making it a challenging endeavor for financial institutions to shift these views positively.
Chapter 2 of the thesis analyzes the savings deposit situation of individual customers at the IACB, Ngu Hanh Son branch, highlighting both the results achieved and the limitations in capital mobilization It examines the subjective and objective factors influencing the efficiency of deposit mobilization from individual customers at the Bank of Vietnam, providing a foundation for developing solutions to enhance capital mobilization at the branch.