There are 4 mains part which showed very clearly about SHB. The first is introduction about SHB, we study about its foundation, structure, achievements, branches..docx

FACULTY OF MANAGEMENT & TOURISM REPORT ON BANK Tutor: Ms Dao Thanh Binh Tut: 01 Group 03 Members ID Dang Ha Anh 1904040002 Nguyen The Khai 1904040055 Trinh Quang Son 1904040102 Pham Dinh Thanh 1904040107 Abstract SHB, which is known as Saigon – Hanoi Joint Stock Commercial Bank in Vietnam, is one of the largest banks in Vietnam Over 28 years of construction and development, SHB is proud to be one of the commercial banks with a strong growth rate over the years, achieved great success thanks to a comprehensive development strategy in parallel with the goal of development for the benefit of the community With the operating strategy of “Trusted Partners, Appropriate Solutions” and an ever-in-a-long business strategy to bring value to customers and prosperity to shareholders – investors, SHB always satisfies customers and partners with synchronous banking products and services, utilities, quality and competition with professional service style SHB is currently in the Top largest private Joint Stock Banks in Vietnam that are not state-owned To respond to the subject of SHB’s financial situation in recent years, the report will present the overall data about SHB and its annual financial report There are mains part which showed very clearly about SHB The first is introduction about SHB, we study about its foundation, structure, achievements, branches Secondary data is about financial situation of SHB in recent years include its performance, risk management and capital management Table of Contents Abstract I Introduction about SHB Bank Foundation and Development of SHB Bank Management structure .4 SHB’s main services and products II Analysis of bank performance .6 Return on equity Return on asset Net interest margin III Interest risk management Interest sensitive gap analysis .9 Ability to mobilize capital and lending of SHB 10 Interest rate management of SHB .10 Liquidity Risk of SHB 11 IV Capital Management of SHB 11 Capital Management Process 11 Capital management ratio 12 Risk management policies 14 V Conclusion 15 I Introduction about SHB Bank Foundation and Development of SHB Bank The Saigon-Hanoi Commercial Joint Stock Bank (SHB), originally known as the Nhon Ai Rural Commercial Joint Stock Bank, was founded in Can Tho province on November 13, 1993 - Transformation period (2006-2011): Nhon Ai Rural Commercial Joint Stock Bank received clearance from SBV in 2006 to reform its business model to become an Urban Commercial Bank and change its name to Saigon – Hanoi Commercial Joint Stock Bank (SHB) with a charter capital of $22 million In 2008, it relocated SHB Bank’s headquarters from Can Tho to Hanoi's capital city, signaling a major shift in its size, position, and power From 2009 to 2011, it became one of the first Vietnamese commercial joint stock banks to be legally registered on the Hanoi Stock Exchange SHB built branches in Cambodia and Laos after receiving clearance from the State Bank, kicking off SHB Bank’s international investments (2011) Pioneering phase of mergers - acquisitions and penetration into regional financial markets (2012-2016): SHB Bank officially opened branches in Cambodia in the month 2/2012 with the total investment to $37 million and branches in Laos on 9/2/2012 with charter capital of 104 billion Kip Laos In the month 8/2012, SHB Bank merged with Hanoi Commercial Joint Stock Bank (Habubank) In the next years, SHB Bank received the President's Medal of Labor, Second Class (2013) It’s not over yet, SHB presented in 40 provinces and cities around the country, as well as in two nations, Laos and Cambodia; participation in the financing of significant capital projects of national significance (2014) And just two year later (2016), SHB Bank brought about the charter capital of approximately $500 million, the network up to almost 500 points in and outside the country Preparation and completion stage on platforms towards modern banking (20172018) In 2017, SHB increased financial capacity, and approved the establishment of a representative office in the Republic of Myanmar This is also a major move for SHB, as it expands its presence beyond the Indochina peninsula and into the South East Asian area Besides, SHB in 2018 won the Second and Third Classes Labor Medal from the State President, confirming its status as a major Vietnamese bank Also in this year, SHB Bank thoroughly implemented the restructuring of its organizational structure and operation model by merging many divisions in accordance with its development strategy; rearranging 100 percent of job titles and salary systems for employees; implementing key performance indicators (KPIs) across the system and completing many technology projects to support business - Comprehensive renovation phase (2019-present) In 2019, SHB completed a full re-structure, organization, and operating model with the merging of numerous departments of business in accordance with strategy development; using the indicators to analyze the overall system's work performance indicators (KPIs); execute several projects involving technology to assist company operations, management, and risk management Not only that, but at the same time, it established and implemented original project strategies: Board Strategy and Development, Board of Modernization Banking and Restructuring, Management and executive Management by the Chairman of the Board of Directors Continuing in the years 2020 and 2021, SHB Bank has made a significant change when the capital increased to almost $800 million; completed three pillars of the treaty of capital Basel II before the deadline, to meet compliance with the requirements of The State Bank Yet, Home Bank authorized increasing SHB Bank’s charter capital to over $836 million in May 2021 This is a critical backdrop for SHB to become more assertive and credible with the investment community in the country and abroad Management structure Management of SHB: First to be founded in 1993, after 24 years of development, Saigon-Hanoi Commercial Joint Stock Bank has been adapting and changing itself to fit the transformation of the banking industry associated with the rapid technological changes and customer behaviors The managerial system of SHB is currently recognized as one of the most accomplished systems among commercial banks in Vietnam as it was honored “Bank of the year in 2020” by The Banker (Le Phuong-TTXVN) The management structure of SHB is stimulated in the following diagram In general, the management mechanism of SHB is a mechanistic structure which is a rigid and tightly controlled structure The underlying reason for its structure is due to its specialization in managing the flows and the uses of assets For the same reason, the span of control of the institution is small and the decision-making process centralizes at a single point, the employees will have no or little rights in making decisions Moreover, according to the diagram the tasks are very well-formalized to maximize efficiency and minimize external and internal errors In terms of directory structure, its components are respectively “Board of Supervisory”, “Board of Director” and “General Director” which for short will be called as B.O.S, B.O.D and G.D The first component to mention is the “Board of Supervisory”, which has the highest position among the three and functions independently from the B.O.D and G.D but works directly to the “General assembly of shareholders” The core mission of the B.O.S is to supervise the activities of SHB through “Internal audit division” The other component to be mentioned is the “Board of directors” The B.O.D is in charge of controlling five committees and being reported directly from the G.D And the last part in the SHB system is the “General director”, the most important and complex among the three due to its direct obligation to the tasks and risk The G.D is the association of seven Departments and twelve Divisions In each department, the responsibilities are differently established as its call sign Hierarchically lower than the departments, the divisions are directly under the supervision of G.D Each division deals with specific tasks by being decomposed into smaller centers Thanks to an accomplished structure, the risk management activities at SHB are well constructed since the uncertainties must break plenty of defensive walls from the lowest to the highest in hierarchy order and even though one of the walls is drilled, the failure will be minimized and the damages will not be significant SHB’s main services and products - Main services: With being one of the largest joint-stock commercial banks in Vietnam, the services of SHB have always maintained safety and transparency in business operations Moreover, SHB also tries its best to improve better service for different kinds of customers (Individual customers and corporate customers) such as Personal banking and corporate banking In personal banking, there are many main services like card, savings, money transfer service, E-banking, credit, and current account… With many options of personal banking service, customers can choose the suitable way to use for their demand to have the best experience The saving interest rate of SHB from to months is approximately 3.35-3.6%/year, from to months is 5.5-5.8% and from 12 months or more is 5.8% Due to the pandemic of Covid 19, deposit saving money is rated very highly and attract many people to use their money to invest Being one of the biggest commercial banks in Vietnam, SHB has a variety of corporate customers, from small to large enterprises In corporate banking, services like credit, deposit account management, forex and treasury, investment, and hedging… are used frequently - Main products: SHB provides popular cards in the bank: domestic debit card, international debit card, and international credit card First, in domestic debit cards, there are Galle Privilege Prepaid Card, SHB Prepaid Card, and SHB Solid Card Second in international debit card includes SHB Visa Debit, SHB-FCB MasterCard Debit, and ManCity-SHB Visa Debit Final about International credit cards, there are many cards such as Mancity Visa Cashback, SHB Visa Platinum, SHB – FCB MasterCard Credit, SHB-Vinaphone MasterCard, Huba-SHB MasterCard, and SHB MasterCard With the variety of cards, customers have many choices to use SHB anywhere, anytime, and suitable for their demand https://www.shb.com.vn/ https://bnews.vn/lai-suat-tiet-kiem-ngan-hang-shb-hom-nay/191652.html https://baoquocte.vn/nguoi-dan-dang-gui-tien-nhieu-hon-vao-ngan-hang-155441.html https://www.dienmayxanh.com/kinh-nghiem-hay/shb-la-ngan-hang-gi-co-uy-tin-khong1333730#hmenuid2 II Analysis of bank performance Return on equity The Return on equity of SHB is calculated by using the following formula: The DuPont equation breaks down the ROE as the following expression: ROE= Or ROE = ROE= Net profit margin × Asset utilization ratio × Equity multiplier 2019 2020 ROE 13.06% 10.85% Net profit margin 7.99% 7.57% Asset utilization 8.28% 8.34% Equity multiplier 19.74x 17.17x In general, the ROE witnessed a significant drop of 2.22% from 2019 to 2020 which mainly resulted from the decrease of equity multiplier while the net profit margin and asset utilization remained almost unchanged Equity multiplier is the ratio which reflects sources of fund decision In 2020, this ratio reduced by 2.57x which means the main source of funds used in 2020 derived from owner equity financing policy Both net profit margin and the asset utilization from 2019 to 2020 are observant with small change Specifically, the net profit margin decreased insignificantly of 0.42% whilst the asset utilization appeared with a minor increase of 0.06% In terms of net profit margin, it reflects the effectiveness of expense management and service pricing policy Although in 2020, the whole Vietnamese economy was hammered by the COVID-19 which affected the growth of GDP of only 2.91%, the lowest rate in the past years, the banking industry in general and the SHB in particular still managed to overcome the pandemic-year Even though in 2020, the profit of SHB increased by over 200,000 million VND, however, the operating expense flew up which created a minor fall in Net profit margin Moreover, the increase in profit is the achievement of the effort to control the bad debt (SHB news) Besides, in 2020, SHB proactively lowered interest rates for existing customers and lowered interest rates for new loans which resulted in positive profit In terms of asset utilization It is the reflecion of the portfolio management policy, the mix and the yield on assets Due to the severe effects of the pandemic, the credit services could not operate as well as they did in 2019 SHB itself had adapted quickly to be immune to COVID The bank was in speculation mode when increasing the available-for-sale-securities by over 9,000,000 million VND and dressed the held-to-maturity by about 2,000,000 million VND The bank also raised its equity securities by over 10,000,000 million VND https://www.shb.com.vn/xu-ly-quyet-liet-no-shb-giam-ty-le-no-xau-ky-luc-ve-171/? fbclid=IwAR21KHqzsOpHjh-152pxugdjzvxD38svHwtgjhpvFrs9Q6bMFDS2_RuYmOM 2020 Total equity capital 2019 24.036.220 18.507.443 0,80 Tax management efficiency 0,80 Expenses control efficiency 0,41 0,56 Assets management efficiency 0,02 0,01 Funds management 17,17 19,74 ROE 10,85 13,06 From four elements of ROE listed on the table above, it is clear that compared to 2019, in 2020 SHB witnessed a decline in funds management ratio while the rest increased So, in short, SHB was doing well in controlling their operation effectiveness, well-used of financial leverage and fund resources even though the bank had to undergo a hard time during 2020 However, it is noticeable that the asset management efficiency went down from 0,02 to 0,01, which mean that there should be a examination why it happened, (perhaps because of the downfall in both revenues and assets, which is understandable since 2020 most banks fall on hard times due to the pandemic) and what should be done to achieve the 2021's goal Return on asset ROA is an important ratio which is measuring how profitable a company is relative to its total assets ROA is based on three simple component ratios: ROA = Net interest margin + Net noninterest margin + Special transactions affecting net income = ( Interest income−Interest expense ) ( Noninterest income−Noninterest expense) ( PPL ± securities gains ( ¿ lo + + Total assets Total assets T Net income (¿) = Total assets 2019 2020 ROA 0.70% 0.67% According to the data, it is can be seen that the ROA of SHB in 2020 (0.67%) decline slightly compared to 2019 (0.70%) This can understand that during 2020, the pandemic Covid19 has affected seriously the economy in the world However, SHB made the effect of Covid19 not to overcontrol with ROA just decrease only 0.03% This is reason why SHB aims to be the number target budget in terms of business efficiency and technology in the commercial banking system in Vietnam Net interest margin Net interest margin (NIM) is a measurement comparing the net interest income a financial firm generates from credit products like loans and mortgages, with the outgoing interest it pays holders of savings accounts and certificates of deposit Net interest margin calculated by the formula: Interest income−Interest expense Net Interest margin = Total earing asset 2019 2020 Net interest margin 2.51% 2.83% From the data above, in 2020, the NIM of SHB increase slightly from 2.51% to 2.83% compared to 2020 This is result from bank income structure in 2020: Net profit from gold and foreign exchange business is 192 billion VND, contributing 1.57% of total banking income Net profit from service activities was 514 billion VND, accounting for 4.20% of total operating income Net interest income was valued at 9,965 billion VND, contributing 81.45% of total operating income Total operating income is worth 12,235 billion VND Net profit from securities trading was at 1,306 billion VND, accounting for 10.68% of the Bank's income structure https://finance.vietstock.vn/SHB-ngan-hang-tmcp-sai-gon-ha-noi.htm? tab=BCTN&fbclid=IwAR0ZH7GCCOWh9UOSJ57aKbdgLVAULxqXzqgk2k2Tdn_PqgkzWPyq9hZIL0 https://tienphong.vn/xu-ly-no-xau-trong-dai-dich-covid-19-post1348502.tpo https://www.shb.com.vn/category/ve-chung-toi/nhung-moc-son-lich-su/ http://vcbs.com.vn/vn/Research/Company?stocksymbol=SHB III Interest risk management Interest sensitive gap analysis Overdue free of interest up to month to months to months to 12 months to years over years Total 2020 13,298,528 14,468,197 31,884,664 106,378,288 -70,855,357 -47,934,426 -29,766,136 11,262,586 28,736,34 Cumulative 13,298,528 27,766,725 59,651,389 166,029,677 95,174,320 47,239,894 17,473,758 28,736,344 57,472,68 2019 11,073,655 22,842,662 27,490,438 87,693,341 -61,482,054 -50,671,230 -22,129,308 8,103,443 22,920,94 Cumulative 11,073,655 33,916,317 61,406,755 149,100,096 87,618,042 36,946,812 14,817,504 22,920,947 45,841,89 Table 1: SHB Bank's interest-sensitive gap in 2020 Interest-sensitive gap management, one of the most common interest rate hedging methods, was utilized as an effective instrument to control the risk of banks As shown in table 1, SHB Bank's assets and liabilities were split into eight categories to quantify interestsensitive gaps: overdue, free of interest, up to month, 1-3 months, 3-6 months, 6-12 months, 1-5 years, and more than years In the table, for up to 3-6 months, 6-12 months, and 1-5 years of maturities, SHB Bank showed a negative gap (which interest-sensitive assets-interest-sensitive liabilities 0) Meanwhile, if the market interest rates increase, or conversely, if interest rates increase, making interest income increase more slowly than the cost of interest (NIM decreased), interest rate risk will re-appear The reason for the variance from to months maturity was that customer deposits (VND 76,531,534) were significantly larger than loans to customers (VND 6,903,269), debt acquired, and securities investments (VND 7,179,285) but deposits and borrowings from other institutions (VND 5,453,693) were smaller than them Similarly, negative gaps in other maturities (6-12 months and 1-5 years) were caused by considerably higher deposits and borrowings from other institutions and customer deposits compared to loans to customers, debt acquired, and securities investments Table also clearly showed that there were positive gaps in late, free of interest, up to month, and 1-3 months (interest-sensitive assets-interest-sensitive liabilities > 0) At this time, if the market interest rate increased, it would increase the profit for commercial banks But if market interest rates fell, interest income fell faster than interest expense (NIM decreases) and risk also emerged The positive gaps occurred as a result of a considerably greater proportion of loans to customers and debt acquired, as well as investments in securities, when compared to deposits and borrowings from other institutions and client deposits In 1-3 months, for example, the loan to customer and debt acquired was VND 170,313,950, more than three times the number of customer deposits (VND 56,581,589) Ability to mobilize capital and lending of SHB In general, there is a bonding relationship between interest-sensitive gap and the capital mobilization plus lending SHB has a positive interest-sensitive gap which is represented by the amount of interest-sensitive assets greater than the interest-sensitive liabilities With a positive interest-sensitive asset, theoretically the bank is easily harmed by the fall of the interest From 2019 to 2020, many banks lowered the interest rate due to the COVID but SHB did not decrease interest-sensitive assets to offset the loss and still increased by over 20,000,000 minion VND The way that SHB Bank used to prevent NIM from falling is slightly different Because the financial firm could not gain profit as much as it did from basic banking services before the COVID, it had to find other sources of income therefore, it obtained more securities for sale by 2,500,000 million VND It also increased the short-term loans by 177,000,000 and extended the due date of previous loans Thanks for those efforts, the NIM of SHB the witness a raise by percent 10 Interest rate management of SHB 2020 is a hard time for the banking industry in Vietnam as a whole due to the pandemic which led to the economic downturn and reduced the interest rates in most of the time of both lenders and borrowers Though, at the end of the year SHB still witnessed a decent growth rate in many areas thanks to the efficient interest rate risk management strategy and carefully carried out by the staff and managers Firstly, a wise use of Internal fund transfer pricing of SHB headquarter in the late of 2020 help the bank to focus mainly upon social needs, which mostly are short-term loans for businesses and companies for their recovery after the frozen time economics Other products of the banks such as deposits and loans for individuals and customers, along with other interest expenses are also monitored carefully in order to maximize the gain from their priority products During the period, SHB maintained a suitable balance of the term structure, repricing terms of assets and liabilities, and establishing appropriate interest structure in evaluating loans, which help the institution to eliminate potential interest rate such as the repricing risk, basic risk The strategy of SHB to combat interest rate risk when they offer loans for businesses consist of two components: Limitation between interest sensitive assets and interest sensitive liabilities at the time new interest rate applied (repricing gap) and limitation of net interest income changes due to interest rate changes When it come to the term asserting corporation’s value for lending loan, this factor will first be considered to see if the organization is worth to lend money or not Furthermore, the tool and method SHB use include: Interest sensitivity gap analysis; Interest rate changes to net interest income; Economic value of owner's' equity evaluation; required equity for risk through Delta EVE method with Basel III model Finally, for the predictions of interest rate movement, SHB build up and apply two scenarios: The interest rate moves horizontally and the interest rate fluctuate differently in each period, estimated based on information from previous year Liquidity Risk of SHB Liquidity risk encompasses the risk of being unable to mobilize assets at appropriate maturities and interest rates, as well as the risk of being unable to sell assets at a suitable price and in a fair period Liquidity risk is measured, monitored, and managed through the use of indicators relating to cash flow, capital demand, and the liquidity of SHB's assets SHB also creates and implements a system of credit limitations and approval authority for each portfolio based on risk measurement results Holding a reasonable quantity of cash and cash equivalents in the form of Nostro accounts, term deposits with the SBV and other credit institutions, and precious papers reduce liquidity risk Liquidity risk is also managed using risk-weighted prudential ratios SHB frequently conducts interest rate differential analysis in comparison to domestic and international markets to make timely adjustments Furthermore, the application of internal risk management processes has become more effective as a result of the deployment of the Centralized Money Management System and Centralized Payment System, which allows the SHB's Head Office to handle all fund and payment activities Furthermore, the bank's liquidity risk management framework has been fully established in terms of organizational structure and management, with a comprehensive system of policies, processes, regulations, and limits, meeting the requirements of Circular 13/2018-TTNHNN on the internal control system, and is also reviewed, updated, and supplemented with amendments following SBV regulations on prudential limits and ratios To comply with the SBV's rules in Circular 22, SHB's liquidity risk management policies and regulations have 11 been reviewed and updated to incorporate risk management, measurement, monitoring, and reporting systems that conform with SBV regulations on solvency and liquidity ratios Furthermore, the bank has established liquidity risk management instruments such as risk early warning criteria, liquidity stress testing in normal business situations and liquidity crises, and contingency planning The Risk Council – which produces the Bank's risk appetite framework – and the Assets and Liabilities Management Council (ALCO) – the Liquidity management execution body – ensure compliance with the Risk Council's risk appetite and warning limits/thresholds (Annual report,SHB) https://www.shb.com.vn/wp-content/uploads/2020/10/BCTN-2019_EN.pdf IV Capital Management of SHB Capital Management Process Capital management is a critical function of all financial institutions, particularly banking systems It can assist banks in recognizing that adequate capital and retention of sufficient capital to defend the interests of customers, workers, owners, and the public are one of the primary issues in managing suppliers to offer financial services So, capital management at SHB Bank was constantly rigorous and competent at every stage SHB Bank had collaboration between Risk Management Units, Financial Units, and Technology Units to generate precise and accurate procedures and reports in order to focus on the most professional treatment feasible SHB Bank's capital management process is incredibly rational and scientific; it creates an automated system to propagate and implement the procedure of determining the Capital adequacy ratio (CAR) More specifically, it collects, evaluates, and aggregates input data for the computer system, ensuring that the data was given properly and on time; calculates the capital adequacy ratio; examines the results of the capital adequacy ratio computation, assuring the correctness of the data according to the input data and the procedures indicated; uses the secured capital adequacy ratio data for analysis and reporting That is why SHB Bank always ensures correct and convenient data in computation stages Furthermore, capital management is associated with the control of the branch's raw data Before entering this data into the computer system, not only will the place where it was obtained be validated, but so will the commencement of the data Furthermore, this data is examined on an annual basis in order to better automate and eliminate mistakes that may occur as a result of conventional gathering techniques Capital management ratio On balance sheet items Cash Deposit at State Bank Consumers loans Derivative and other financial assets Balance with and loans to other credit institution Value 1.619.927 14.806.140 302.199.056 Risk weighted 0% 0% 100% 133.872 50% 31.250.514 20% 12 Fixed assets Investment securities Government bond Debt securities issued by credit institutions Debt securities issued by economic entities Shares issued by other credit institution Shares issued by other economic entities Government bond Securities issued by economic entities 4.866.063 28.639.598 4.221.179 100% 100% 0% 1.597.469 20% 10.505.905 100% 796 20% 60.658 835.146 100% 0% 526.536 0% other local local local local Total 401.262.859 Off balance sheet items Loans guarantees Foreign exchange commitment Letter of credit commitment Other guarantee 22.695 15.068.742,00 16.434.126 11.034.636 Total 42.560.199 0% 50% 100% 100% Tier capital Common stock Retained earning Preferred stock Intangible asset Total Value 17.510.091 3.323.293 107.716 4.281.077 25.274.177 Tier capital Loans and lease Value 14.279.161 Regulatory capital 1.Excluded items when calculate capital Consolidated Excluded from tier capital Excluded from tier capital Other excluded Total Regulatory capital value Tier capital (after excluded) Tier capital (after excluded) Total regulatory capital 5,260 1,090,360 44,014 1,139,634 24,035,197 13,188,801 37,179,984 Based on the Basel framework and report of condition by the institution, in 2020 the total tier of SHB is 24,035,197 million VND while tier capital worth 13,188,801 million VND Finally, with the following total risk weighted assets of 368,911,723 million VND, we have the capital adequacy ratio (CAR) and core capital to total risk weighted assets calculated as follow: 13  CAR = Regulatory capital / Total risk weighted assets  = 37,179,984 / 368,911,723 * 100% = 10.08% Core capital to total RWA ratio = Tier capital / Total risk weighted assets = 24,035,197 / 368,911,723 * 100% = 9.01% In Vietnam, the state bank has issued Circular 41/2016/TT-NHNN and Circular 13/2018/ TT-NHNN as the legal framework for implementing the three pillars of Basel In terms of the reserve requirement and capital adequacy ratio regulation, the policies issued by Vietnam National Bank stated that “banks without subsidiary companies and/or foreign bank branches must maintain the minimum capital adequacy ratio higher than 8% By the end of 2020, SHB have no other subsidiary companies to function as insurance company, so it is normal to use the consolidated balance sheet to calculate capital adequacy ratio Also, it is obvious that SHB has met the requirement In the same year, SHB continued to pursue to finish the items on pillar on the internal capital adequacy assessment process (ICAAP) This process is a comprehensive assessment of capital, including overall risk management, risk profile, business plan, capital plan; and the coordination of different units for capital stress test, the calculation of the required capital for critical risks under normal and stressful conditions Up to now, SHB has completed all items of ICAAP and reported the results of ICAAP implementation to SBV, meeting compliance with all 03 Pillars of Basel II earlier than regulation During the implementation of ICAAP, in addition to calculating the amount of capital needed to meet all critical risks, SHB has built stress test models to assess capital adequacy for the next 03 years in both normal and unfavorable conditions SHB’s stress test scenarios are selected on the basis of analyzing past events and forecasting macroeconomic developments to ensure the requirements, principles of quantitative analysis and practicality when applied Risk management policies Due to Risk Management Committee of SHB: “- Risk Management Committee has the function of advising and assisting the Board of Directors in building a risk management system and issuing strategies, processes and policies under the authority of the Board of Directors related to risk management in banking activities in accordance with the law and SHB’s Charter - Risk Management Committee consists of 05 members and is chaired by an independent member of the BOD In 2020, the Risk Management Committee identified the objectives and plans to meet the requirement of continuing to develop and perfect the modern risk management system, ensuring compliance with the requirements and regulations of the State Bank according to Basel standards, minimizing the material risks and supporting SHB's operations and business in the direction of profitable, safe, and sustainable growth In addition to regular professional meetings every week, every month during the year, the Risk Management Committee conducted 04 meetings according to the regulations on organization and operation: 14 - Through the meetings, by reports, recommendations and resolutions, the Risk Management Committee advised the Board of Directors and coordinated with the Board of Management, Risk Management Division, and Basel II Project Committee to implement the 2020 action plan and achieved important results as follows: + Develop and issue sufficiently risk management policies as required by the State Bank to meet the reality of SHB operations; Re-issue the regulations on risk limits, prudential ratios, and limits for SHB operations according to Circular 22/2019/TTNHNN of the State Bank (effective from January 01, 2020) in replacement of Circular 36 regulating prudential limits and ratios in the operations of commercial banks and overseas branches; + Complete CAR calculation and report CAR according to Circular 41 from January 2020; + Build SHB's internal control system to meet the requirements of Circular 13: Adjust the organizational structure of the Risk Management Division to supplement and fully operate the risk management functions to ensure the internal control system is organized according to independent protection lines; + Deploy and report ICAAP under Circular 13 ahead of time, making SHB one of the first banks to fully complete pillars according to Basel II standards, complying with the requirements specified in Circular 13 and Circular 41 of the State Bank in 2020; + Have timely recommendations and reports to cope with the COVID-19 epidemic outbreak Direct the implementation of plans to maintain business continuity throughout the system to respond to epidemic situations, adjust credit policies, and interest rate policies according to the State Bank's direction Ensure that SHB's operations are maintained continuously with no arising case of transaction cessation; + Supervise the adjustment of the debt collection and settlement system, establish the Problem Debt Management and Settlement Division and the Internal Control and Compliance Monitoring Department, ensuring the organization and implementation of functions and duties in accordance with the approved request of the Board of Directors; + Monitor and evaluate the periodic risk reports of the Board of Management and give notices, recommendations, and proposals to approve the reports and resolutions of the Risk Management Committee, with special attention being paid to solutions and measures to improve credit quality, ensure centralized management of 15 information, and properly, sufficiently, and promptly record NPL information, and increase efficiency in handling problem debts Propose and review the implementation of organizational structure, problem debt management solution and model in the direction of systematization and professionalization + Complete ahead of time the proposals of the State Bank Inspector on the activities of the Risk Management Committee, ensuring that the Risk Management Committee operates in accordance with the regulations and requirements of the risk management work.” Analysis of bank loans Lending management of SHB a Overview of SHB’s loans Theoretically, loans are the most important source of income and the dominant category in the bank’s assets Following the theory, SHB is not an exception From 2019 to 2020, SHB’s total asset increased for 47,215,75 million VND and the total amount of loans increased 1.46% which accounted for approximately 7,000,000 million VND The rise of loans granted associated with the rise of the risk and for minimizing risk, loan issuance must be associated with a comprehensive management policy Banks as well as the SHB apply different methods to categorize the portfolio of loans that they hold a Analysis of loan portfolio based on loan group Overview, the bank has a good loan group diversification For Group - the group of loans for qualified creditors, from 2019 to 2020, although it witnessed a minor decrease in the proportion, it was always represented as the main source of income of SHB with a dominant proportion For the other four groups, which broadly can be classified as unqualified loans, from 2019 to 2020, always accounted for an insignificant proportion in the total amount of loans granted for customers The dominance in the proportion of good loans as well as the soar in the amount of good loans are the result of a well-established lending policy and credit evaluation The comprehensive loan policy associated with a good establishment of credit evaluation combined with strenuous effort in bad debt settlement, the bad debt ratio of SHB has decreased from 1.83% in 2019 to 1.7% by 2020 16 b Analysis of loan based on customers group Generally, the customer group of SHB is divided into main types: individual customers and corporational customers In two years, the group of institutional customers have ranked as the entities who had the highest demand for funds From 2019 to 2020, the percentage of funds granted in this group were 75.72% and 78.82% proportionately and raised 3.1% between two years Among the economic entities, the Joint stock companies and the Limited liability company were the two entities that, in two years, have led in the top in the demand for loans Specifically, the Joint stock companies which were not State’s owned accounted for 45.11% of total loans granted in 2019 and decreased minorly to 44.60% in 2020 The Limited liabilities companies The Limited liabilities companies accounted for 18.65% of total funds granted in 2019 then increased dramatically at 27.42% in 2020 The other entities accounted for a trivial proportion of amount funds granted in 2019 and 2020 From figures of granted loans in 2019 and 2020, the fact that “Financial intermediaries, usually banks, are the most important part of funds used to finance business.” was strongly strengthened 2.Liquidity management One of the most important tasks in managing banks is to meet the liquidity requirement A bank is considered to be “liquid” if it has available access to immediately spendable funds at reasonable cost at precisely the time those funds are needed This suggests that a liquid financial firm either has the right amount of immediately spendable funds on hand when they are required or can raise liquid funds in a timely fashion by borrowing or selling assets When banks have problems with liquidity, there are many ways to handle it The banks can borrow from the discount window at discount rate, or borrow from other banks at interbank rate, or 17 sell short-term securities to meet the liquidity needs, e.x By using cash position indicator and liquid securities indicator a, the interpretation for liquidity management of SHB can be manifested as follows Cash position indicator The cash position indicator shows the percentage of cash financial having on hand to total asset as well as to show how liquid the bank is From 2019 to 2020, from the figure above, it can be seen that SHB bank was less liquid as the indicator when the cash indicator reduced 1.74% The main reason for the decline was that the deposit from the current account spotted a decrease from 31,141,297 million VND in 2019 to 12,589,35 million VND Liquid securities indicator The liquid securities indicator which presents the percentage of securities that can be converted into cash From the figures above, it can be seen that the liquidity that can be raised by selling securities increased 1.03% as SHB increased the amount of available-for-sale securities for more than 9,000,000 million VND 3) Conclusion for liquidity management By analyzing the cash position indicator and liquid securities indicator, it can be concluded that the liquidity mechanism was very well-functioned As the amount of deposit from institutional customers decreased the bank had immediate movement to offset the amount of shortage in the liquidity V Conclusion It can be said that the SHB’s Finance in recent years is quite developed and not to different The use of financial models in a reasonable way has enabled SHB to accurately calculate the numbers and data in the report With great achievements as well as continuous contribution to Vietnam’s Finances, SHB in the future will grow and strengthen Reference: (2021) “Lãi suất tiết kiệm ngân hàng SHB” Retrived from: https://bnews.vn/lai-suat-tietkiem-ngan-hang-shb-hom-nay/191652.html 18 (2021) “Người dân gửi tiền nhiều vào ngân hàng” retived from:https://baoquocte.vn/nguoi-dan-dang-gui-tien-nhieu-hon-vao-ngan-hang155441.html (2021) “Xử lý liệt nợ, SHB giảm tỷ lệ nợ xấu kỷ lục về1,71%” Retrived from: https:// www.shb.com.vn/xu-ly-quyet-liet-no-shb-giam-ty-le-no-xau-ky-luc-ve-171/? fbclid=IwAR21KHqzsOpHjh-152pxugdjzvxD38svHwtgjhpvFrs9Q6bMFDS2_RuYmOM https://finance.vietstock.vn/SHB-ngan-hang-tmcp-sai-gon-ha-noi.htm? tab=BCTN&fbclid=IwAR0ZH7GCCOWh9UOSJ57aKbdgLVAULxqXzqgk2k2Tdn_PqgkzWPyq9hZIL0 (2021) “Xử lí nợ xấu đại dịch Covid-19” Retived from: https://tienphong.vn/xuly-no-xau-trong-dai-dich-covid-19-post1348502.tpo “Những mốc son lịch sử” Retrived from: https://www.shb.com.vn/category/ve-chung-toi/nhung-moc-son-lich-su/ “Hồ sơ doanh nghiệp” Retived from http://vcbs.com.vn/vn/Research/Company? stocksymbol=SHB “Báo cáo thường niên” Retrived from: https://www.shb.com.vn/wp-content/uploads/2020/10/ BCTN-2019_EN.pdf Apendix Appendix A: ROE = ROE= Net profit margin × Asset utilization ratio × Equity multiplier 2019 2020 ROE 13.06% 10.85% Net profit margin 7.99% 7.57% Asset utilization 8.28% 8.34% Equity multiplier 19.74x 17.17x 2020 2019 24.036.220 18.507.443 Total equity capital 19 ... overall data about SHB and its annual financial report There are mains part which showed very clearly about SHB The first is introduction about SHB, we study about its foundation, structure, achievements,. .. from the G.D And the last part in the SHB system is the “General director”, the most important and complex among the three due to its direct obligation to the tasks and risk The G.D is the association... seven Departments and twelve Divisions In each department, the responsibilities are differently established as its call sign Hierarchically lower than the departments, the divisions are directly