VIET NAM NATIONAL UNIVERSITY HO CHI MINH CITY UNIVERSITY OF ECONOMICS AND LAW SUBJECT COMMERCIAL BANKING CASE STUDY ABOUT MB BANK GVHD NGUYEN THI DIEM HIEN CLASS CODE 221NH1503 GROUP MB STT FULL NAME[.]
VIET NAM NATIONAL UNIVERSITY HO CHI MINH CITY UNIVERSITY OF ECONOMICS AND LAW SUBJECT: COMMERCIAL BANKING CASE STUDY ABOUT MB BANK GVHD: NGUYEN THI DIEM HIEN CLASS CODE: 221NH1503 GROUP: MB STT FULL NAME MSSV Lâm Gia Linh K204041165 Tống Nhật Minh K204041167 Đặng Trung Hậu K204041159 Nguyễn Hữu Cường Thịnh K204041198 Phan Hoàng Thảo Nguyên K204040202 Friday, January 6, 2023 Table of Contents I Overview of Military Commercial Joint Stock Bank MBBank: General information: History of establishment and development of MB Bank: 2.1 From 1994 to 2004: 2.2 From 2005 to 2009: 2.3 From 2010 to 2016: 2.4 From 2017 to now: Vision and Mission: Governance model: 5 Management structure: 6 Lines of business: 6.1 Financial service activities: 6.2 Other currency intermediary activities: 6.3 Wholesale of metals and metal ores: Trading, buying and selling gold bars 6.4 Activities of insurance agents and brokers Financial ratios: 7.1 Total Assets: 7.2 Total Shareholder’s Equity: 7.3 Net profit before tax and after that: 7.4 ROA, ROE: 7.5 CAR: 10 7.6 EPS: 11 7.7 P/E: 11 MB Bank's business strategy: 12 8.1 Brand identity renewal: 12 8.2 Strong communication strategy to build a reputation: 12 8.3 MB Bank's business strategy on Distribution of locations and services to enhance customer experience: 15 8.4 Honor Marketing – Strategy to bring MB back to the top position: 16 8.5 Product strategy - pricing and preferential loans: 17 II Deposit in bank: 18 Types of deposits at banks and comparison of several types of deposits: 18 1.1 Term Deposit: 18 1.2 Demand deposit: 19 1.3 Deposit “Bình an phú quý”: 20 Bonds: 20 2.1 Release Bonds: 20 Change of deposit: 21 3.1 Deposits of other credit institutions: 21 3.2 Bank deposits: 22 III Loans: 22 Types of loan: 22 1.1 Real Estate Loans: 22 1.2 Loans for production and business: 23 1.3 Car loan: 24 1.4 Consumer loans: 24 1.5 Securities lending: 26 Loan data: 26 Compare with other banks (ACB, BIDV): 28 3.1 Total loans amount: 28 3.2 Total loans ratio: 28 3.3 Provision for loan risks: 29 3.4 Provision ratio for loan risks: 29 3.5 Non-performing loans: 30 3.6 Non-performing loans ratio: 30 Income/Expenses from activities: 31 IV Payment operations: 33 Payment system in Vietnam and at MB Bank: 33 1.1 Payment system in Vietnam: 33 1.2 International payment operations: 34 1.3 Results of payment activities of MB Bank: 36 V Other activities: 37 Foreign currency trading: 37 State budget collection service: 37 Social insurance collection service: 38 I Overview of Military Commercial Joint Stock Bank MBBank: General information: - Full name in Vietnamese: Military Commercial Joint Stock Bank - Abbreviated name: Military Bank (MB) - Full name in English: Military Commercial Joint-stock Bank - Date of establishment: November 4, 1994 - Charter capital (October 20, 2022): 45,339,861,330,000 VND - Stock code: MBB - Listed on: November 1, 2011 - Phone: 024 62661088 - Email: Info@mbbank.com.vn - Website: www.mbbank.com.vn - Head office address: MB Building, No 18 Le Van Luong, Trung Hoa Ward, Cau Giay District, Hanoi City, Vietnam History of establishment and development of MB Bank: 2.1 From 1994 to 2004: - According to the original idea of building a credit institution to serve military enterprises in production and business tasks in the pre-integration period, on November 4, 1994, Military Commercial Joint Stock Bank was established with capital of nearly 20 billion VND, 25 employees, and a single transaction point at 28A Dien Bien Phu, Hanoi 2.2 From 2005 to 2009: - This period marked an important transformation, creating an important foundation for strong development in the following years - 2005 - 2009 has created a solid foundation for MB to promote the implementation of strategic initiatives in the future, contributing to making MB one of the leading financial institutions in Vietnam today - In 2009, marking 15 years of development, MB was honored to receive the Third Class Labor Medal awarded by the President 2.3 From 2010 to 2016: - 2010 was a crucial turning point for MB to become one of the leading banks in Vietnam later - Against the background of economic difficulties (2011-2015), under the impact of the global economic crisis, MB is steadfast in its sustainable and safe development strategy and has risen to the top in many crucial financial indicators, achieving the goal of being in the TOP by two years – in 2013 - With these achievements, in 2014, MB was honored to receive the First Class Labor Medal In 2015, MB continued to be awarded the title of Hero of Labor - The solid foundations MB has built over the years will create solid momentum for MB in the new period 2.4 From 2017 to now: - This is a significant opening year of the new strategic period 2017 - 2021, in which MB orients the vision of "Becoming the most convenient bank" with the goal that by 2021, it will be in the Top of Vietnam's banking system in business efficiency and safety - In 2018, with the motto "Innovation, modernity, cooperation, sustainability", the Military Commercial Joint Stock Bank (MB) completed the tasks and business targets set out at the beginning of the year - MB not only exceeded business targets, but also completed the big goals set out, such as implementing the 2017-2021 strategy; digital banking with 2.6 million active users with the main product with many utilities, the MBBank App; changing image identity for 100% of transaction points, and drastically implementing projects for breakthrough growth MB is being aggressively implemented in the parent bank and its subsidiary companies, fostering a more creative, happy, and productive work environment - After more than 27 years of development and growth, MB is now regarded as a stable, dependable financial institution with a strong reputation for safe and sustainable growth MB maintains its position as one of Vietnam's leading banks Vision and Mission: - Vision: Become the most convenient Bank for customers - Mission: For the development of the country, for the benefit of customers - Core Value: Solidarity - Discipline - Dedication - Execution - Trust - Efficiency Governance model: 5 Management structure: Lines of business: Following the law and the State Bank of Vietnam, MB engages in a variety of commercial banking activities, including the following: 6.1 Financial service activities: - Finance-related activities (cash management services, banking and financial consulting, ; corporate financial consulting; entrustment, entrustment, agency in the fields related to activities) After receiving State Bank approval, you can engage in banking, insurance business, asset management, trading in valuable papers, purchasing government bond futures contracts, and other operations 6.2 Other currency intermediary activities: - Activities involving financial services (cash management services, banking and financial consulting, ; corporate financial consulting; entrustment, entrustment, and agency in the fields related to activities) Banking, insurance, asset management, trading in valuable papers, investing in government bond futures contracts, and other activities are permitted after approval by the State Bank 6.3 Wholesale of metals and metal ores: Trading, buying and selling gold bars 6.4 Activities of insurance agents and brokers Financial ratios: Total Assets 2017 2018 2019 2020 2021 313.877.82 29.601.170 362.025.36 34.172.858 411.487,57 39.885.814 494.982.16 50.099.495 607.140.41 62.486.023 14,583,497 17.999.997 20.277.795 26.199.554 Total Shareholder’s Equit y Net interest income 11.218.952 Operating expenses 5.999.239 8.733.802 9.723.706 10.555.457 12.377.188 Profit before tax 4.615.726 7.767.373 10.036.119 10.688.276 16.527.259 Net profit after tax 3.490.415 6.189.901 8.068.604 8.606.039 13.221.437 Liquidity Ratio 22% 18.83% 20.68% 18.18% 15.42% CAR 12% 10.9% 10.12% 10.42% 11.28% ROA 1.22% 1.83% 2.09% 1.9% 2.4% ROE 12.4% 19.41% 21.79% 19.13% 23.49% EPS 1.953 2.416 2.758 2.993 3.362 BVPS 16.305 15.817 17.150 18.066 16.538 P/E 12.71 6.28 5.78 6.91 7.39 7.1 Total Assets: - MB bank's total assets increased and developed between 2017 and 2021 Particularly in 2020 and 2021, total assets could increase by about 20% over the previous year In general, MB bank's asset structure is quite reasonable 7.2 Total Shareholder’s Equity: - It can be seen that from 2017 to 2021, MB bank's equity always grows and especially in 2020 and 2021 when its equity is VND 50,099,495 million and 62,486,023 million VND, an increase of about 24-26% compared to the previous year - The increase in owner's equity and total assets demonstrates MB bank's growth and development The alignment of asset structure and equity demonstrates MB Bank's effective business strategy 7.3 Net profit before tax and after that: - It can be seen that MB bank's profit before tax and after tax have increased over the years and will continue to increase strongly in 2021 (about 54% compared to 2020) 7.4 ROA, ROE: - In general, both return on assets (ROA) and return on equity (ROE) tend to increase from 2017 to 2019, but decrease in 2020 due to the emergence of covid- 19 made the economy difficult in general, and the shares of MB bank were also impacted However, by 2021, the economy had improved 7.5 CAR: - The capital adequacy ratio in accordance with the Basel II Treaty is a frequently used indicator to assess risk generally in banking operations The capital adequacy ratio is a measurement of a bank's capital adequacy that is frequently used to safeguard depositors from bank risks and improve system stability and effectiveness To guarantee capital sufficiency for the bank, this sum must be larger than or equal to 8% - The individual capital adequacy ratio (CAR) of MB Bank for 2019, 2020, and 2021 is 10.12%, 10.90%, and 12%, respectively, and complies with existing State Bank standards while staying within the Basel II treaty's safety level 10 + Interest: paid periodically/with the same principal payment period - Collateral: Real estate, cars, valuable papers; - Customers: + Individual customers aged from 19 to 70 years old; + Customers have permanent residence in the province/city where MB is headquartered; + Customers have production and business activities or have stable income sources 1.3 Car loan: - Maximum loan period: Up to 84 months; - Loan amount: Up to 80% of capital requirement; - Debt repayment: customers actively monitor the loan, the expected repayment schedule, partial repayment / pre-payment of the full loan on the MBBank App - Customers: + The client has full civil legal capacity and civil act capacity; + Customers are from full 19 years old to no more than 70 years old at the time of loan termination; + Customers with household registration/temporary residence book (KT3) in the Province/City where MB is headquartered; + Customers have financial ability to ensure the repayment source for the loan; + Customers meet MB's lending regulations and conditions 1.4 Consumer loans: 1.4.1 Secured consumer loans: - Loan term: Up to 84 months; - Loan limit: Up to 80% of capital needs and not more than billion; - Customers: + Customers have full civil legal capacity and civil act capacity from 19-70 years old; + Minimum income of customer and spouse: 10 million VND/month; + Diversified collateral: Real estate, valuable papers, savings book/card, deposit contract, car - Other characteristics: Simple procedure, quick processing time 1.4.2 Unsecured loan: - Loan term: Up to 60 months; - Loan limit: Up to 800 million VND; - Customers: + Customers are not more than 55 years old for women and 60 for men at the time of loan termination; + Customers with household registration/temporary residence book (KT3) in the Province/City where MB is headquartered; + The customer is paid via the account and has worked at the current management unit for at least 01 year; + Customers meet MB's lending regulations and conditions - Other features: + Simple procedure, quick processing time; + Flexible repayment method, suitable for customers' cash flow 1.4.3 Valuable papers mortgage loan: 24 - Loan term: In line with customer needs; - Loan limit: Up to 100% of the value of the asset; - Customers: + Individual customers have full civil legal capacity and civil act capacity; + Valuable papers under the legal ownership of the customer or a third party (if any); + The customer commits to use the loan in accordance with the law; + Customers meet MB's lending regulations and conditions - Other features: + Flexible repayment method, suitable for customers' cash flow; + Preferential and competitive interest rates 1.4.4 Unsecured loans for government officials / employees: - Loan term: Up to 60 months; - Loan limit: Minimum 20 million, maximum up to 500 million; - Customers: + Customers are not more than 55 years old for women and 60 for men at the time of loan termination; + Customers with household registration/temporary residence book (KT3) in the Province/City where MB is headquartered; + Being cadres, civil servants, public employees receiving salary according to the state coefficient & officers and employees (employees) who are working under the form of labor contracts, at agencies, organizations, and state-owned enterprises ; + Customers meet MB's lending regulations and conditions - Other features: + Flexible repayment method, suitable for customers' cash flow; + Simple loan procedure, no collateral required 1.4.5 Overdraft loan / Quick withdrawal loan for individual customers: - Loan term: Up to 12 months; - Loan limit: Up to billion (with collateral); - Customers: - The client has full civil legal capacity and civil act capacity; - Customers with household registration/KT3 in the province/city where MB is headquartered; - Customers have financial ability to guarantee repayment of loans; - Customers meet MB's lending regulations and conditions - Other features: + Competitive interest rates; + Use capital quickly and conveniently through many transaction channels 1.4.6 Granting automatic credit limit for Military: - Loan term: Up to 60 months; - Loan limit: Up to billion (specifically based on military rank and monthly income); - Target customers: Professional officers and soldiers (from second lieutenant level and above) - Other features: + Preferential loan interest rates; 25 + Time to add documents proving the purpose of capital use: 30 days after disbursement 1.5 Securities lending: 1.5.1 Advance loans for selling securities: - Loan term: From the date of transaction to match order to sell securities to before the payment date (T+2) 01 working day; - Loan limit: + Preferred shares: Up to 100% of the total value of shares at the preferential selling price; + Shares registered for free: Up to 50% of the total value of shares according to the actual auction price - Customers: + The client has full civil legal capacity and civil act capacity; + The customer is the holder of a securities trading account or a person legally authorized by the account holder; + The customer commits to use the loan in accordance with the law; + Customers meet MB's lending regulations and conditions 1.5.2 Equitization loan: - Loan term: Up to 36 months; - Loan amount: Maximum equal to the amount of securities sold (after deducting transaction fees and loan interest) - Customers: In case the Customer is an employee of the equitized enterprise: + Customers with labor contracts/working contracts of indefinite term or with a term of 01 year or more; + Having the certification of the equitized enterprise on the income level and working seniority; In case the Client is an Individual Investor: + Customers are not over 60 years old at the time of loan; + Customers have household registration/temporary residence book (KT3) in the province/city where MB lends Loan data: 2017 2018 2019 2020 2021 Loans to 182.062.458 211.474.953 247.129.710 293.942.764 354.797.094 customers Loan 184.188.142 214.685.958 250.330.623 298.296.983 363.554.778 Risk provisions (2.125.684) (3.211.005) (3.200.913) (4.354.219) (8.757.684) Loans to 58% 58,41% 60,06% 59,38% 58,44% customers/Total assets - On the consolidated balance sheet, loans to customers are combined with their principal outstanding balance as of the reporting date Customers' loans will be classified as debt by 26 MB Bank Customer loans from 2017 to 2021 will often climb more over time (184,188,142 million VND to 363,554,778 million VND) - Additionally, on the consolidated balance statement, provisions for loans to clients are reported and shown as a distinct line Moreover, throughout time, the provisioning for loans to MB Bank customers has grown, especially between 2020 and 2021, when it did so quickly The Covid-19 epidemic's effects in recent years have made it difficult for clients to make timely loan payment The chart shows MB bank's customer loans from 2017 to 2021 27 The chart shows the risk provisions of MB bank from 2017 to 2021 Compare with other banks (ACB, BIDV): 3.1 Total loans amount: 3.2 Total loans ratio: 28 3.3 Provision for loan risks: 3.4 Provision ratio for loan risks: 29 3.5 Non-performing loans: 3.6 Non-performing loans ratio: 30 Income/Expenses from activities: Loans customers to Loan loss Bad debt Net interest Interest expense and Provisions income similar expenses 2015 121.348.630 1976382 1949594 7.318.000 2016 150.737.702 2050313 1987197 2017 184.188.142 2125684 2217657 11.218.952 -8.657.074 2018 211.474.953 3211005 2859688 14.583.497 -10.240.868 31 -3.449.000 2019 247.129.710 3200914 2897638 17.999.997 -13.196.607 2020 298.296.983 4354219 2897638 20.277.795 -12.489.598 2021 363.554.778 8757684 3247806 26.199.554 -12.265.378 4414000 26.394.000 -10.789.000 Quý III 426.233.000 2022 - 2017: In all, customer loans totaled VND 184,188 billion in 2017, up 21% from the end of 2016, while MBBank generated VND 11,218 billion in net interest revenue, up 35% from 2016, accounting for 81% of the bank's total operating income - 2018: For the entire year, MB's net interest income increased 30% to $14,583 billion Accordingly, while it was close to 80% in 2017, credit activities only made up 74.5% of MB's overall operating income - 2019: MB's total net interest revenue for the entire year of 2019 was close to VND 18,000 billion, up 23%, and interest expenses were close to VND 13,197 billion, up 29% from last year Lending to clients increased by close to VND 250 billion during this period, 17% more than in 2018 - 2020: More than 298 trillion dong worth of credit was extended by MB, a rise of 19% from the year's start (individual banks expanded credit by 18.8%) The bank's net interest revenue exceeded VND 20,000 billion, an increase of 12.2%, as a result of the significant rise in credit It is clear from the credit structure that MB boosted lending to risky sectors significantly in 2020 Loans for real estate specifically increased by 75.6%, securities lending at MBS was VND 4,123 billion, up 53.3%, and corporate bond investments were more over 24.7 trillion dong, more than twice the same period last year The Covid-19 pandemic, slower lending growth, and the collection of service fees all had an impact on the bank in 2020 MB's investment also grew more slowly than 2019 - 2021: The current value of MBBank's customer loans is 363,555 billion, increasing 21.9% from the previous year According to financial reports, MBBank would earn about 37,000 billion VND in total operating income in 2021, an increase of 35% from the previous year Which saw a gain of 29.2% in net interest revenue to more than 26,000 billion dong, as well as a 51.5% rise in net profit from non-interest commercial activities The bank's running costs were kept under control and grew far more slowly than revenue (operating expenditures rose by 17.2%), thanks to significant digital transformation Additionally, the bank's provision expenses didn't rise too dramatically in 2021 (provision expenses rose by 32%, equal to the increase in total income), because to solid credit quality and high bad debt coverage 32 - Quarter III 2022: Loans to consumers were VND 426,233 billion, an increase of 14.8% from the year's beginning Regarding loan quality, MB's bad debt climbed by 26% to 4,414 billion dong by the end of the third quarter compared to the end of the previous year, and as a result, the bad debt ratio increased from 0.9% to more than 1% When MB Bank's outstanding loans to clients are examined, it becomes clear that the manufacturing and processing sector, household employment, the creation of tangible goods, and consumer services receive the majority of the outstanding loans Particularly, the VND 42,152 billion (or roughly 10%) building and real estate industry is growing IV Payment operations: Payment system in Vietnam and at MB Bank: 1.1 Payment system in Vietnam: 1.1.1 Inter-bank electronic payment system: - The Interbank Electronic Payment System (IBPS) is a cutting-edge, online electronic payment system that was created in accordance with international standards It is currently thought to be the fastest payment method in Vietnam A payment order can be executed in no more than 10 seconds - The IBPS system consists of 03 sub-systems, including: + The High Value Payment Subsystem (HVSS) uses an instant total payment platform to process urgent payments and high value payments of at least VND 500 million + With no immediate need for transaction processing time, the Low-Value Payment Subsystem (LVSS) provides net settlement by session to clear low-value payments under VND 500 million The LVSS system operates by the IBPS system's overall operation schedule, although it ends the working day an hour sooner, at 16:00 each day, an hour before the IBPS system does HVSS + Sub-system for handling payment deposit accounts (Capital settlement sub-system) 1.1.2 Electronic clearing/paper clearing system: - Before the IBPS was put into place, the SBV's electronic clearing/paper clearing systems were developed with the primary goal of meeting the low value payment requirements in 63 provinces and cities Members who are local credit institutions create clearing accounts at those branches - Intra-provincial clearing is the term used to describe inter-bank clearing (TTBT) applied between credit institutions of various systems located in the same province or city Paper TTBT and electronic TTBT are the two versions of interbank TTBT - Since May 2002, the electronic information communication system has been in use Depending on each location and the number of documents generated, this system typically processes clearing and settlement in one to two sessions per day before transferring the payment order to the recipient bank 1.1.3 The payment system is chaired and operated by commercial banks: - Multi-currency payment processing system at Joint Stock Commercial Bank for Foreign Trade of Vietnam (VCB-Money) + In order for customers who are financial institutions or economic organizations to execute domestic interbank foreign currency trading transactions, VCB-Money plays a crucial part in the entire payment system of VCB Many foreign branch banks with operations in 33 Vietnam as well as the majority of domestic credit institutions open and maintain foreign currency accounts at VCB + Main services of VCB-Money System include: Money Transfer, Payment Authorization; Buy/sell foreign currency; Payroll services and other payment services - Bilateral payment systems: + Along with VCB, a number of other sizable commercial banks, including BIDV, Agribank, and Vietinbank, developed and implemented an electronic bilateral interbank payment system to send, receive, and settle money based on bilateral clearing payments to member banks of these lead banks and to each other that are not urgent and are of low value 1.1.4 System of switching, clearing and settlement of interbank cards: - A system for interbank card switching, clearing, and settlement offered by the card switching organization to its members that enable clients to withdraw cash or make payments using ATMs or POS terminals at any bank that belongs to the card switching organization - Types of transactions of this system include: + Domestic Switching Service: Domestic cardholders can conduct transactions on the ATM/POS networks of other member banks thanks to this service, which links the ATM/POS systems of member banks with domestic switching companies Bank of members Banknetvn serves as the switching hub for interbank card transactions in this scenario + International switching service: As of right now, Banknetvn is linked to a number of foreign card and switching companies, including China UnionPay, Union Card - UC (Russia), and participants in the Asian Payment Network (APNs) + Interbank electronic money transfer service: The infrastructure of member banks' ATM connections and switches serves as the foundation for the interbank electronic money transfer service Customers of member banks can use this system to transfer funds in real-time via ATM, Internet, and mobile banking channels from accounts at one bank to accounts at another + Electronic payment gateway service: Enables online payments, facilitates licensing, and enables the exchange and processing of electronic transaction data Banknetvn serves as a bridge between banks and online sales representatives Products can be purchased online and paid for 1.1.5 Securities clearing and settlement system - Following existing rules, payments for securities are made through the Securities Depository Center (VSD), and clearing banks, and must adhere to the copper securities transfer concept payment on time - The following operations are carried out by this system: opening a deposit account for clearing securities transactions for VSD and VSD's depository members; providing BIDV with loan support in the event of a liquidity crunch by the contract for mandatory loan support; and settling securities transactions through member accounts opened at BIDV 1.2 International payment operations: 1.2.1 International payment system: - The main international payment methods used worldwide today include: + Cash in advance; + Letter of credit; + Document collection; + Open an account; 34 + Shipment 1.2.2 Cash in advance: - Prior to the items being delivered and dispatched to the buyer, the buyer completes the payment and pays the vendor in full - Although there are numerous ways to pay for a cash advance, the two that are most frequently utilized are credit card payments and bank transfers (sometimes known as electronic payments made through banks) - Although this is a desirable choice for sellers, purchasers run a very high risk because it results in unfavorable cash flows and there is no assurance that the items will arrive in excellent condition - Cash advance methods include: + Payment by debit card; + Transfer telegrams; + International check 1.2.3 Letter of Credit: - One of the safest international payment solutions for importers and exporters is a letter of credit since it has the backing of reputable financial institutions like banks and a high level of determination on both sides - Payment is done through the banks of both the buyer and the seller when using a letter of credit Once the commercial terms and conditions have been confirmed, the buyer tells his bank to transfer the sum that has been agreed upon by both parties to the seller's bank The Letter of Credit is then sent to the seller's bank by the buyer's bank as evidence of adequate and legitimate funds Payment is only transferred once the shipment has been sent and all mentioned conditions have been satisfied by all parties - Letter of credit is also sometimes referred to as LC, commercial bank's credit or documentary credit 1.2.4 Document collection: - Document collection is a process in which both the buyer's and the seller's bank act as facilitators of the transaction - The seller gives their bank the necessary paperwork, such as a bill of lading required to transfer ownership of the items, that the buyer wants The buyer's bank is subsequently given these documents and payment instructions by the seller's bank Documents are only issued in exchange for payment and are either supplied right away or at a future date - With a collection of documents, also known as a Bill of Exchange, the seller essentially leaves the responsibility of collecting payments to his or her bank 1.2.5 Open accounts: - Open Accounts, also known as Accounts Payable, allow for the shipment and delivery of goods before receiving payment This is a very appealing alternative for purchasers, particularly when it comes to cash flow However, sellers are at a high risk end of the spectrum - With this method of payment, the vendor sends the items to the buyer with a credit period attached This often lasts for 30, 60, or 90 days, during which the buyer is required to make the full payment 35 - Open Accounts are generally only recommended for trusted and reputable buyers, for buyers and sellers who already have a long and trusted relationship, and/or for valuable export items relatively lower value to reduce risk 1.2.6 Shipment: - In that the payment is not made until the buyer has received the products, the shipping process is analogous to the establishing of an account - The point of payment is where the discrepancy exists The overseas buyer is only required to make payment under the consignment arrangement once the items have been sold to the end consumer This international payment procedure is based on a contract that grants the foreign seller title to the items up until a sale is made The buyer is then in charge of overseeing and selling the products to the final consumer - In general, consignment is only advised for buyers and sellers who have a solid working connection or reliable distributors and suppliers Due to the significant risk involved, sellers should make sure they have enough insurance to protect their items from the point of transportation to the point of sale and to limit any damage in the event that the buyer doesn't pay 1.3 Results of payment activities of MB Bank: - In the last two years, the COVID-19 pandemic has been a "variable" that has significantly affected the world economy, especially Vietnamese enterprises Banks became the economy's lone bright light in such situation For MB, the recent period has been a "perfect time" to advance the customer experience in the digital sphere and speed up the process of digital transformation By the conclusion of the first nine months of 2021, MB has amassed close to million users of the MBBank App, with over 4.5 million of those users coming from only 2021, and close to 60,000 enterprise-level managers using BIZ MBBank Clients who use the MBBank App now make up 75% of the bank's total number of individual customers, up 120% from the end of 2020 94% of the transactions were made using MB's digital channel - In the first half of 2022, MB Group's total assets grew by 26% over the same period last year, significantly higher than the average rate of 19%/year, the growth rate in the 2018-2021 period - The bank has been successful in implementing numerous products and services with high technological content to suit consumer preferences thanks to ongoing testing and research on customer experience - Opening a beautiful digital account, an account like the phone number on the MBBank App, paying with VietQR code, or most recently the MB Hi Collection card line with 2-in-1 features (ATM and credit) are all fast products quickly attract users right after launch - The customer experience is demonstrated even more plainly using "talking" numbers In particular, this bank stated that 391 million transactions on the MBBank App occurred in 2021 Even for global banks, this amount is substantial, according to the leader of MB - 94% of bank transactions will be made digitally in the first half of 2022, up from 65% prior to the COVID-19 pandemic Transactions are now handled exclusively through digital channels, and the bank's whole internal functioning has undergone a major transformation - The bank is being encouraged by digital transformation to significantly increase its customer base When compared to the prior year, the number of users using the MBBank App climbed by 3.1 times, the number of transactions on digital banks increased by 4.3 times, and 36 the number of new customers joining in a given year was almost equivalent to that of 26 years ago - In the first eight months of 2022, the number of people using the MBBank App continued to increase, 1.5 times higher than in 2021, confirming the right steps in the digital transformation process - The bank has won numerous important accolades as a result of its digital transformation efforts At the Vietnam Digital Awards 2022 in October of last year, MB "won big" when all three of its digital products—the Wealth Management financial investment platform on the MBBank App, the BIZ MBBank platform for enterprises, and the Charity App—were recognized - With the vision of "Becoming a Digital Enterprise, a Leading Financial Group head," MB Group establishes lofty and difficult targets for the years 2022 to 2026, including the desire to rank among the "Top markets in terms of efficiency, approaching the Top in Asia." "Digital Acceleration - Customer Attraction - Corporation Synergy - Sustainable Safety" is the company's working philosophy V Other activities: Foreign currency trading: - MB Bank is a joint stock commercial bank under the Ministry of National Defense with great reputation in the market, providing customers with flexible foreign currency conversion and business services MB provides a variety of foreign exchange conversion services: + Instant foreign exchange conversion service - customers convert, buy and sell foreign currency at the counter or online, according to MB Bank's foreign currency exchange rate at the time of transaction Payment on the same day or the 2nd day after the transaction + Term foreign exchange service - Customers convert, buy and sell foreign currencies at MB Bank's exchange rate Time of payment at a specified date in the future The customer will determine and negotiate with the bank on the time of payment + Foreign exchange service – customers convert foreign currency to foreign currency The buyer has the right to choose the foreign currency in his favor and pay the bank fees Time to pay in the future, limited from 03 to 365 days - Online banking, mobile banking, or the MB Banking app for business are all options for conducting business and transacting in foreign currencies These options allow for flexible currency conversion, the brevity of documentation, and speedy operations State budget collection service: - As a service, MB works in conjunction with the General Departments of Customs and Taxation to collect taxes, fees, charges, and other state budget revenues from companies, households conducting business in Vietnam, as well as from individuals South, including but not restricted to the following taxes: value added tax on imports and exports of commodities made in the country; corporate income tax; personal income tax - Customers, individuals, organizations, and business households (including foreign people, organizations, and business houses) operating on Vietnamese territory and desiring to contribute to the state budget Customers who have opened an account at MB or those who have a current account but haven't done so - Types of MB collection: + Cash collection: for current customers 37 + Collection by bank transfer or electronic channels (App Biz MB, eMB ): for customers who already have an account at MB - Service Certificate: Documentation of payments made to the state budget or tax payment statements (in the format required from time to time by the Ministry of Finance), as well as receipts for fees collected by the state budget (if any) Currency: Occasionally, VND or other foreign money Social insurance collection service: - Through MB's payment channels, MB provides a collection service for Social Insurance (Social Insurance), Unemployment Insurance (UI), and Health Insurance (HI) for individuals who participate in Social Insurance (Social Insurance) - Customers: + Corporate customers pay social insurance, unemployment insurance and health insurance premiums for employees; + Individuals and households pay voluntary social insurance and voluntary health insurance - Types of trading channels: + Pay at the counter: Customers go to any transaction point of MB to make payment of social insurance; + Payment via electronic payment channels (App, Biz Mb, eMB, BankPlus ): Customers using APP/BIZ MB/eMB service can transfer money to the account of the local social insurance agency 38