Vietcombank, also known as joint stock commercial bank for foreigntrade of vietnam, is one of the four largest banks in vietnam

MINISTRY OF EDUCATION & TRAINING NATIONAL ECONOMICS UNIVERSITY COMMERCIAL BANKING Class: Corporate Finance CLC 63A Teacher: PhD Le Phong Chau Group Student ID Full name 11210407 Le Huy Anh 11210635 Nguyen Thi Quynh Anh 11217670 Pham Linh Chi 11211292 Vu Tien Dat 11211906 Nguyen Ngan Ha 11212669 Dinh Khanh Huyen 11213181 Le Phuong Linh 11213416 Phung Ngoc Linh 11213884 Nguyen Phuc Minh 11217386 Nguyen Tran Khanh Nha 11214802 Nguyen Ha Phuong 11218696 Dang Viet Thanh 11216283 Hoang Tuan Vu Ha Noi, 02/2023 MAIN CONTENTS A INTRODUCTION B SERVICES .1 I DEPOSITS 1 The advantages and disadvantages of deposits today .1 Assess Typical products II BANKING PAYMENT SERVICES III LENDING SERVICES Interest rates on lending products of Vietcombank and GP Bank .5 Service fees for loan products Loan procedures IV FOREIGN CURRENCY EXCHANGE V GUARANTEES Benefits Subjects of bank guarantee C CHALLENGES AND OPPORTUNITIES .10 I DEPOSITS 10 Opportunities 10 Challenges 14 II PAYMENT SERVICES 18 Opportunities 18 Challenges 20 III LENDING SERVICES 22 Opportunities 22 Challenges 28 IV FOREIGN CURRENCY 30 Opportunities 30 Challenges 31 V GUARANTEES 32 Opportunities 32 Challenges 33 A INTRODUCTION Vietcombank, also known as Joint Stock Commercial Bank for Foreign Trade of Vietnam, is one of the four largest banks in Vietnam Moreover, Vietcombank used to be the Foreign Exchange Department under the State Bank of Vietnam Although being less well known than VCB, GP Bank - Global Petro Commercial Joint Stock Bank is 100% state-owned bank operating and developing under the control and management of the State Few people know that GP Bank was acquired for VND in 2015 After being acquired, GP Bank was managed by one of the four largest banks in Vietnam jointly with the state bank, Viettinbank Due to the difference in size, history as well as the reputation of both banks, our group chose these two banks’ services as references for the first part B SERVICES I DEPOSITS Deposits are one of the most important services of the bank Thanks to this service, the person who does not need the money will be able to give money to the person who needs it through the banking system The advantages and disadvantages of deposits today a Advantages  Safe investment channel, stable profitability at the signed interest rate  Digital transformation helps people not necessarily go to transaction points anymore There is also a reduction in costs thanks to online deposits  Variety of packages sent b Disadvantages  Savings interest rates are usually not high and are variable over time  If customers settle in advance, they will receive a much lower non-term interest rate than the original interest rate  If customers not select carefully, they may choose bank with low liquidity, leading to easy deposits Typical products: Flexible deposits and withdrawals  Interest payment method: Pay interest later  Channel: Online or over the counter  Number of original withdrawals: unlimited Electronic online savings,  Interest payment method: Interest entered into principal or transferred to the customer's own VND payment account  Implementation channel: Online  Fixed interest rate during the deposit period Deposits returned at the end of the period  Interest payment method: End-of-term interest payment  Channel: Online or over the counter  Fixed interest rate during the deposit period  Interest payment method: Early interest payment Early return deposit  Channel: Online or over the counter  Fixed interest rate during the deposit period Interest rate (%) The following is a chart of annual interest rates of banks (%/year) The differences of deposit products between banks are:  Interest Document continues below Discover more from: Commercial Bank 199 documents Go to course Btap NHTM - full version 49 Commercial Bank 100% (16) Bank Management & Financial Services, 9e 768 Commercial Bank 100% (5) Giao-trinh-tai-chinh-tien-te 190 Commercial Bank 100% (3) Bank Management & Financial Services, 9e 768 Commercial Bank 100% (3) 2021 de thi Neufin 200 thang 8.LMS.without answer Commercial Bank 100% (3) Bank Management & Financial Services, edition 768 Commercial Bank 88% (8) With the difference in size between the banks, customers can clearly see the difference in interest rates compared to the size of each bank Vietcombank with much lower interest rates than GP Bank  Audience of the product Vietcombank is a leading commercial bank, so it only focuses on the general customer in the market, it is still large enough to be able to send foreign currency for a period of time GP Bank is a weak joint stock bank so they will focus on specific classes and offer specific incentive packages: the elderly, low-income people But also because of its small size, this bank does not have foreign currency deposit products II BANKING PAYMENT SERVICES Vietcombank Advantage GPBank - Quick payment, easy service - Services associated with ecommerce platforms, payment applications widely and conveniently - Cash can be withdrawn on foreign ATMs: ITMX (Thailand), PayNet (Malaysia), KFTC (Korea) and LaoVietBank - As one of the leading banks in - Already applied interbank payment, Napas fast payment terms of safety and security - Take the lead in updating user 24/7 - Integrating other electronic trends - There are many advantages wallets, but not too popular when using the service - The annual fee is quite low Customers can pay online for services… - Update some incentives when buying goods and using GP Bank's services Disadvantag - High fees related to bank - Haven't updated some quick accounts: money transfer fees, user trends e SMS fees - Many card transactions take a long time to update in the application - Some affiliate utilities failed - Internet Banking is not yet popular and trusted by many people III LENDING SERVICES Criteria Interest Vietcombank High (mostly 7.5% per year) The amount of 90% of PCE (Personal money is able to Consumption Expenditures) be lended 70% ~ 80% value of collateral Procedure GP Bank Low (5.5% to 6.25%) 80% of PCE Up to 100% value of collateral There are ways: There are ways: 1, At the counter, the paperwork 1, At the counter, the paperwork 2, Send online via app 2, Send online via app Interest rates on lending products of Vietcombank and GP Bank a For consumer loans  Vietcombank:  6.79%/year for the first months with loans of 12 months or less  6.99%/year for the first months with loans over 12 to 24 months  7.29%/year in the first month with loans over 24 months  GP Bank:  Support up to 70% of production and business capital needs for individual customers (products classified as consumer loans)  Loan period up to 60 months  Flexible lending and repayment methods to best meet the needs of customers  Competitive lending rates  The interest rate applied by GP Bank to customers when taking out a loan is quite low compared to the common ground, at approximately 5.5%- 6.25%, meanwhile the interest of Vietcombank is mostly 7.5% per year Interest rates of lending products are always stable, and in the mid-range in the market The service, enthusiasm and convenience of GP Bank are the advantages to attract customers, the main targets are small business households, focusing more on consumer lending The lending services of Vietcombank will have many incentives but not as diverse as those of GP Bank b For business loan products  Vietcombank: In the first period of 2022, Vietcombank has spent VND 80,000 billion to implement a short-term production and business loan program for individual customers and business households to borrow additional working capital with preferential interest rates such as: after:  5.5%/year for loans under months  6.1%/year for loans from to months  6.6% with 10 to 12-month loan  GP Bank: Low-interest rate, more favorable than many other banks in the market Interest rates will range from 5.5 %/year to 6.99 %/year depending on the loan package and the customer's profile and credit history Loan packages such as business support with an interest rate of 6.25%/year, unsecured overdraft loan with an interest rate of 8.25%/year  Most of GP Bank's business loan products are aimed at small businesses and small business households The products are often created with interest rates that are not considered high compared to other commercial banks in the country Including Vietcombank In addition, the lenders that Vietcombank's products target are usually small and medium-sized enterprises with highinterest rates compared to the lending market Not only that, but for big banks, they are improving their services more and more to increase their competitiveness with each other, as well as with new products Technical infrastructure for card payments has been improved, the number of ATMs and POSs has grown rapidly; by the end of September 2015, over 16,850 ATMs and over 208,470 POS/EDCs were installed (ATM increased by 47% and POS/EDC increased by 300% compared to the beginning of 2011) With the direction of the State Bank (SBV), card switching companies have completed connecting ATM systems nationwide, through which a bank's card can be used to withdraw money and pay at most ATMs of other banks III LENDING SERVICES Currently, demand for lending in Vietnam is really huge while retail banking has been strongly promoted, helping the lending market to have a stronger development momentum Opportunities The potential for development of the consumer lending market is huge Vietnam's economy recovers with growth rate being quite high (6.5 - 7% in the period 2021-2030) and increasing income per capita (about 6%/year to 2030) a Government The government has and will continue a number of support packages for socio-economic recovery and development, as well as the policy of restructuring credit institutions, thereby contributing to stimulating consumer demand and reducing black credit Banks begin to lower lending rates for real estate Up to now, all state-owned banks (Big4) have preferential loan programs, reducing interest rates to support customers - Agribank will consider applying a policy of reducing interest rates up to 3% per year for customers with outstanding loans for real estate business as of January 31 Agribank also said that it is expected that in 2023, Agribank will continue to spend more than VND 100,000 billion to implement preferential credit programs with interest rates for corporate customers, import-export customers, the healthcare 21 industry, and the education industry, education; reduce interest rates for customers in industries that face difficulties in production and business activities;… - SeABank launched a preferential package of VND 3,000 billion, reducing the lending interest rate up to 1%/year for short-term loans for business purposes such as livestock, agriculture, forestry, fisher In addition, SeABank also reduced 0.5%/year for business loans not in the above-mentioned fields - Vietcombank also committed to reduce interest rates by 0.5%/year for all customers with existing and new outstanding loans from the beginning of 2023 - Sacombank offers preferential loan interest rates for individual customers and corporate customers nationwide with interest rates from 7.5%/year, applicable to businesses that need capital to pay for imported goods, import, export goods or close business customers b People's habits of consumption and borrowing are increasingly changing In recent years (excluding 2020 due to the impact of the COVID-19 epidemic), the economy has grown rapidly, per capita income has increased, the middle class has increased, so the demand for household consumption and shopping has increased, leading to an increase in the demand for credit and consumer lending Analysis - 36 million more consumers may join Vietnam’s consuming class by 2030 They are defined as consumers who spend at least 11 USD a day in purchasing power parity terms This is a major change In 2000, less than 10 percent of Vietnam’s population were members of the consuming class, which has risen to 40 percent today By 2030, this figure may be close to 75 percent The two highest tiers of the consuming class (those spending 30 USD or more per day) are growing the fastest and may account for 20 percent of Vietnam’s population by 2030 22 - Urbanization is an important contributor to income growth Cities are likely to be Vietnam’s engine of growth, contributing roughly 90 percent of all consumption growth over the next decade The story of Vietnam’s urbanization has often been centered around the populous cities of Hanoi and Ho Chi Minh City, with each city home to more than 10 million people and most of Vietnam’s middle class However, our analysis finds that over the next decade, sources of urban consumption are likely to spread to smaller cities, including Can Tho, Da Nang and Hai Phong - Across Asia, households are shrinking The size of the average Vietnamese household has decreased by around 20 percent over the past two decades, from 4.5 people per household in 1999 to 3.5 people per household in 2019 If the experience of other Asian markets holds true in Vietnam, the declining size of households may lead to new types of demand, including smaller homes, increased ownership of pets and new forms of entertainment - Vietnam remains a young country overall, with a median age of 32 in 2020 However, the number of people aged 60 and over is projected to increase by million; seniors could account for more than 17 percent of Vietnam’s population by 2030 Spending by seniors is expected to triple in the next decade, growing at more 23 than double the rate for the population as a whole So-called digital natives born between 1980 and 2012, including members of Generation Z and millennials, are expected to account for around 40 percent of Vietnam’s consumption by 2030 - Members of this digitally savvy generation live online and on their mobiles Almost 70 percent of Vietnam’s population in 2020 are internet users Rapid digitisation is changing the daily channels and communication methods used by Vietnamese people, particularly in e-commerce, where regional players, such as Shopee and Lazada, and local players such as Tiki, are active - The rapid emergence of digital consumers has fuelled innovation in retail and purchasing behavior d Digital lending – a revolutionary change for SMEs and banks The strong digital transformation process has created many opportunities for the lending market to modernize, diversify products, improve customer experience, reduce costs and increase customer access Value of lending loan book via digital financial services in Vietnam from 2019 to 2021, with forecasts for 2022 and 2025 In 2021, the value of lending loan books via digital financial services in Vietnam reached two billion U.S dollars By 2025, the digital lending loan book 24 value was forecast to amount to 18 billion U.S dollars Vietnam has a fast-growing fintech sector, with digital payments being the largest segment within this sector Analysis - Artificial Intelligence: AI can offer a few advantages to the lending industry including convenience, efficiency, a more organized application process, and the ability to make lending decisions fairer + The ease of a process in which an interested home buyer is able to log on, apply for lending, submit all documentation, and then receive a pre-approval On the other side of things, the lender can increase their client list, without spending time screening applicants or tracking down information, instead, leaving it to the technology of AI + A fully automated lending experience challenges the following barriers: Borrowers who give up on the process Borrowers who are too busy to handle multiple phone calls Loans falling through because of missing information A lengthy process as many of these barriers can lead to a lengthy preapproval process Examples of Artificial Intelligence in the Lending Industry - Artificial intelligence in lending has already proven to be successful Some top-name lenders have implemented it successfully to not only reduce human error but to also identify borrower habits Artificial intelligence is able to indicate when borrowers may have trouble making payments, while also giving suggestions so they can maintain their credit rating Others have used it to track market changes and even estimate upcoming trends - With an estimated 15% of venture funds raising capital for AI in the banking industry, it’s clear that artificial intelligence is an important part of the future of the lending industry  Online Lending - Faster lending, with an automated timeline, in an online setting, can help lenders increase their earnings and close sales faster, which allows them to take on even more clients In addition to streamlining the borrower’s experience, this comprehensive experience also makes it easier for lending officers to keep track of 25 numerous applications No longer will they have to repeatedly contact borrowers to request additional information because it will all be done, right in the system - Users can upload all required documents, including credit application, income statements, W-2s, Social Security number, bank statements, proofs of down payment, photo ID, and 1040s, with an online checklist  Mobile Lending - Because customers prefer to conduct their banking tasks online through smartphones, studies show that mobile check deposits have increased Whereas many banks and lenders have some digital presence, not all offer mobile lending opportunities When mobile opportunities are applied to the lending process, it can significantly speed up the process, providing borrowers with alerts when additional documents are needed - The mobile opportunity also provides borrowers with a better experience It is not just the lending experience that can be frustrating and lengthy to a borrower Consider a traditional home buyer Once they have chosen a lender, then they have to find a realtor, appraiser, inspector, and title company If the sale falls through or there are additional questions about the borrower’s credit history, it can slow down the process and in some cases, require them to start over - In addition to the long list of required documents, the process can also be especially confusing to buyers They are not always informed of when to obtain insurance, submit income documents, schedule an inspection, or when they can expect to close With an automated system, they are given updates throughout the process If we have learned anything in 2020, it is that consumers, including borrowers, want convenience, especially in the banking industry → Banks must act quickly to give smaller businesses state of the art digital lending SMEs will benefit from a much more automated, slicker and faster process Banks should see their operating costs fall while increasing their lending as barriers to credit are removed Most importantly, they can leverage core lending into more loyal SME customers, whose needs they better understand and can serve The technology and demand exist Banks need to act now, or risk FinTech and others taking market share in SME lending 26 Challenges a Banks required to cut rates to support economic recovery Governor of the State Bank of Vietnam (SBV), has directed banks to continually reduce input costs with an aim to cut loan interest rates Banks have been required to cut operating costs and unnecessary expenses, as well as administrative procedures, so as to have room for lending interest rate reduction to support the economic recovery and development Banks have been also instructed to continually promote the implementation of the Government’s interest rate support programme for loans of enterprises, cooperatives and business households according to the Government's Decree 31/2022/NĐ-CP dated May 20, 2022 “The SBV will monitor banks, which continue to raise interest rates, and take measures to deal with the violation cases,” the Governor noted At a recent meeting, the Vietnam Bankers Association (VNBA) called on its members to keep deposit interest rates at 9.5% or below to reduce lending interests and boost economic recovery The move was made after many banks raised their rates to up to 11.5% per year for a 12-month term Bank representatives at the meeting agreed with the proposal to keep deposit interest rates at 9.5% maximum Up to now, all state-owned banks (Big4) have preferential loan programs, reducing interest rates to support customers Most recently, VietinBank announced the implementation of the SME UP interest rate incentive package with a scale of VND 10,000 billion, applied to small and medium-sized businesses that borrow money at VietinBank for the first time, or have not disbursed loans within the past months Previously, Vietcombank committed to reduce interest rates by 0.5%/year for all customers with existing and new outstanding loans from the beginning of 2023 The period from January 1, 2023 to the end of April 30, 2023 , applied to individual and institutional customers with existing and new outstanding loans at the bank, except for the group of customers operating in risky fields such as real estate, securities, etc Also applied until the end of April 30, 2023, BIDV implemented a shortterm loan package with a scale of VND 30,000 billion Customers participating in 27 the loan package to serve production and business needs will enjoy a preferential interest rate of only 8%/year for loans with a term of less than months; or only 9%/year for loans from 6-12 months At the end of 2022, Agribank also announced a further 20% reduction in lending interest rates to support customers Most recently, this bank has just announced a maximum reduction of 3% interest rates for real estate borrowers The program applies to customers with outstanding loans for real estate business as of January 31, 2023, having difficulties due to the impact of the COVID-19 epidemic, or the impact of the macro economy In the private group, many banks have pioneered to reduce interest rates From February 10, MB will reduce the loan interest rate by 1% for corporate customers with revenue below 100 billion Sacombank has just announced the implementation of preferential lending rates for individual and corporate customers nationwide For individual customers to borrow money for short-term production and business purposes (including agricultural production) or consumption for daily life, Sacombank applies a minimum interest rate of only 8.99%/year Sacombank applies a preferential interest rate of only 7.5%/year for corporate customers who need capital to pay for imported or exported goods According to experts, in order to make banks feel secure in agreeing to lower deposit interest rates, the SBV has made efforts to support liquidity for banks through the open market operation (OMO) channel Under the newly issued document, the SBV also directs banks to give loan priority to agriculture, export, small- and medium-sized enterprises, supporting industries, high-tech enterprises, industrial park construction and solvent real estate projects for low income people Banks must strictly control credit risks for investment activities in corporate bonds, securities and real estate sectors, according to the documents - VNS b Inflationary Undoubtedly, inflation is one of the main measures of the health of the economy When the indicators of inflation increase, which means that there is a devaluation of the currency, investors will consider switching to safer reserve 28 channels rather than gold or USD, thereby reducing the supply funds to lend and raise interest rates Citing data at the Forum "Vietnam Economic Forecast 2022-2023, Dr Nguyen Bich Lam, former Director of the General Statistics Office forecast, Vietnam's inflation may surpass 5% in 2023 The socio-economic recovery and development program with a scale of 350 trillion VND, along with the support packages of 2021 that are penetrating all areas of the economy, will cause a sudden increase in aggregate demand and demand The sharp increase in consumer demand for goods and services after a long period of being affected by the pandemic will put great pressure on inflation in 2023 In addition, inflationary pressure also comes from rising raw material prices When raw materials were broken due to the war between Russia and Ukraine; The Covid-19 pandemic will have a strong impact on Vietnam's economy Based on the impact factors from supply chain inflation; supply shortage; aggregate demand spiked sharply With labor shortage and expected increase in regional minimum wages, our country's inflation may surpass 5% this year (about 5%-5.5%) IV FOREIGN CURRENCY EXCHANGE Opportunities a The sponsors oversea give more suppliance foreign currency to Vietnam At the end of 2022, International Development Finance Corporation (DFC) signed a loan of 200 million USD to SeABank; ADB and VPBank signed a social loan package worth 500 million USD Having more foreign currencies means commercial banks can lend more foreign currencies b The amount of remittances increases Remittances contribute and create a very important source of foreign currency for commercial banks, helping to reduce pressure and balance foreign currency loans, especially at the end of the year In addition, remittances help stabilize the exchange rate If foreign currency is scarce and the VND depreciates, the exchange rate of VND against foreign currencies will rise and increase inflation Therefore, at the end of the year, when the Lunar New Year approaches, 29 the amount of remittances transferred to Vietnam increases, which is an opportunity for the commercial bank's foreign currency business to prosper c The exchange rate fluctuates strongly The period of strong exchange rate fluctuations is a favorable time and an opportunity for banks to surf and make profits in foreign currency trade As in 2022, the difference between buying and selling US dollars at listed banks sometimes increases to 280-300 dong/dollar, while in 2021 it only revolves around 150-200 dong/dollar With the highest increase of up to twice as much, it is not difficult to understand why banks make great profits in this activity Challenges a The world economy is strongly affected by the conflict between Russia and Ukraine The pressure to increase energy and food prices, commodity prices, world inflation sharply increased, the trend of tightening monetary policy continued and spread across the globe To control inflation, the US Federal Reserve (Fed) continuously raised the target interest rate at about 4.25 - 4.5%, leading to the decline of most currencies in the world Thus, in general, commercial banks will suffer losses when they have to earn less profit because of the decrease in the value of foreign currencies This affects the profitability of commercial banks Because foreign currency trading activities bring profits to commercial banks from the difference between buying and selling exchange rates b In Vietnam, there is a flow of money moving abroad Some reasons for Vietnamese money to be transferred abroad: studying, getting medical treatment abroad, traveling abroad, paying fees and charges abroad, one-way money transfer for legal needs This puts pressure on the supply of foreign currency of the commercial banking system, leading to the difference between the USD/VND exchange rate on the official market and the free market 30 V GUARANTEES Opportunities a Many large banking institutions support guarantee to make financial exchange in Vietnam easier Example: The Asian Development Bank to provide $100 million guarantees to support trade finance in Vietnam The ADB, under its Trade Finance Program (TFP), will immediately provide the guarantees to the unlisted Ho Chi Minh City Development Bank (HD Bank) and Saigon - Hanoi Commercial Bank (SHB), one of Vietnam's biggest partlyprivate lenders by assets The ADB, under the agreements with HD Bank and SHB, has placed a cap of $25 million on its guarantees for each of the two lenders However since the average maximum amount of time for trade contracts in which the ADB financing could be transacted under the TFP in Vietnam is six months, the ADB will be able to support up to $50 million a year in trade transactions through each bank Also, the ADB would annually review the financing with the two banks so that it could determine whether and how much to extend its guarantees ADB’s Trade Finance Program has been operating in Vietnam since 2009 Since then the program has supported $6.5 billion in trade in Vietnam of which $2.1 billion was financed by ADB and $4.4 billion was co-financed by the private sector  The purpose of the program is that through guarantee, ADB will bear the risk of commercial banks in developing countries whose credit ratings are not good enough to successfully conduct transactions with international banks b Relying on the PPP (Public-Private Partnership) model, to provide sovereign guarantees to attract private investment in major transport infrastructure projects Example: Vietnam mulls PPP Law with sovereign guarantees to reassure investors 31 Government guarantees are among the 10 points the Vietnam Ministry of Planning and Investment (MPI) listed in a document it sent to relevant ministries and agencies to collect opinions for its PPP bill Thus, MPI’s proposal on government guarantees, if approved, might help remove some bottlenecks in the participation of foreign investors in major transport infrastructure projects Also, Under the MPI bill, projects considered for minimum revenue guarantees will be those that need National Assembly and prime ministerial approval The guarantees will be considered on a case-by-case basis For projects entitled to guarantees, for the first five years the guaranteed minimum revenue will equal 75 percent of revenue estimated in the contract It will come down to 65 percent for the following five years However, if the revenue exceeds 125 percent of the estimated revenue in the first five years of operation and 135 percent in the following five years, the investor must hand over the excess portion to the government The State Bank of Vietnam has said many times it is very difficult to create a foreign exchange guarantee mechanism since the country’s forex reserves are not stably good, in fact warning against issuing foreign exchange guarantees on a large scale Challenges a Difficulty in adapting to strict conditions and requirements for small and medium-sized enterprises in the hope of getting a guaranteed loan Strict requirements, especially regarding collateral, are one of the most critical reasons for the dramatic drop in the number of loans that Credit Guarantee Schemes (CGSs) have guaranteed in Viet Nam since 2014, when Decree 2004, in accordance with Decision 2013, required the condition of guarantees for Small and Medium-sized enterprises (SMEs) when SMEs must have collateral valued at least at 15% of the capital requiring a guarantee According to the Credit Guarantee Funds (CGFs) in Ho Chi Minh City, before Decision No 58/2013/QD-TTg came into being, the fund implemented the activities of SMEs quite favorably 32 Until 2014, the total number of SMEs with guaranteed loans was 59 at 10 bank branches (Figure and Figure 8) It is noteworthy that, supporting the policy of the Government of Viet Nam in accelerating access to finance for SMEs through the banking system, a large number of banks have become involved in the credit guarantee scheme as partner banks However, they have guaranteed a limited number of firms after years of establishment, despite the fact that people consider Ho Chi Minh’s CGF as one of the most successful nationwide for assisting local SMEs in obtaining loans The funds’ director believed that, with the current regulations, SMEs lack collateral and cannot borrow bank loans to seek funds requiring guarantees, and this regulation is limiting the activities of the CGFs for businesses 33 b Inexperienced Staff Conducting Guaranteeing Tasks The capacity of Viet Nam’s CGS staff in evaluating creditworthiness is still inadequate or incompetent, most of them are part-time officials Furthermore, the financial reporting system of SMEs in Viet Nam lacks transparency; enterprises can submit different financial reports to tax authorities, credit institutions, and funds Enterprises may be dishonest in declaring their tax debts or credit balance to create a qualifying profile for a guarantee, which would cause a risk to the fund Meanwhile, CGSs and tax authorities not have a coordinated mechanism to grasp the corporate tax situation Therefore, without adequate competence of the staff delivering credit assessment, a rational decision from CGFs regarding an SME’s eligibility to receive a guaranteed loan is questionable Conclusion: Banking services in Vietnam have improved greatly in procedures and the facilities thanks to the help of technology, changes in consumers’ habitat and some shortterm policies However, there are still some challenges concerning legal frames and economics situations In general, commercial banking services is doing great in developing their services and helping Vietnam economic grow Nevertheless, some potential services remain under-develope such as guarantee ***** THE END ***** 34