Enhancing real estate appraisal at vietnam joint stock commercial bank for industry and trade (vietinbank) – dang van ngu 2 transaction office – dong da branch

BANKING ACADEMY FACULTY OF FINANCE  GRADUATION THESIS ENHANCING REAL ESTATE APPRAISAL AT VIETNAM JOINT STOCK COMMERCIAL BANK FOR INDUSTRY AND TRADE (VIETINBANK) – DANG VAN NGU TRANSACTION OFFICE – DONG DA BRANCH Instructor: MA Ta Thi Bich Thuy Student Name: Le Ha My Student ID: 20A4050238 Class: K20CLCE Hanoi, 2021 Tai ngay!!! Ban co the xoa dong chu nay!!! 17014126229551000000 BANKING ACADEMY FACUTY OF FINANCE  GRADUATION THESIS ENHANCING REAL ESTATE APPRAISAL AT VIETNAM JOINT STOCK COMMERCIAL BANK FOR INDUSTRY AND TRADE (VIETINBANK) – DANG VAN NGU TRANSACTION OFFICE – DONG DA BRANCH Instructor: MA Ta Thi Bich Thuy Student Name: Le Ha My Student ID: 20A4050238 Class: K20CLCE Hanoi, 2021 DECLARATION I assure that this thesis is the product of my own work The data and documents used in the thesis are excerpted from reliable sources and from the current appraisal activities of the bank All the materials used in this research have been specified in the references i ACKNOWLEDGEMENT I would like to express my gratitude and appreciation to all the people who helped and encouraged me during the process of completing my thesis I could not have completed it without their support First of all, I am really thankful to my instructor MA Ta Thi Bich Thuy for her guidance and suggestions that helped me thoroughly understand all aspects related to the study Secondly, I would like to express my sincere thanks to all officers at Dang Van Ngu Transaction Office in general and Ms Pham Thuy Linh, Ms Tran Thanh Huong in particular They have always enthusiastically guided, answered all my questions, supported me during the internship so that I could complete the research Finally, I would like to thank all of my family members and my friends who have always encouraged me during the time of my writing ii TABLES OF CONTENT DECLARATION i ACKNOWLEDGEMENT ii TABLES OF CONTENT iii LIST OF ABBREIATIONS v LIST OF TABLES vi LIST OF FIGURES vi INTRODUCTION .1 The necessity of the topic Objectives of the study Subjects and scope of research Research methodology .2 Structure of the thesis CHAPTER 1: LITERATURE REVIEW 1.1 Theoretical background 1.1.1 Overview of real estate 1.1.2 Overview of real estate appraisal .7 1.2 Empirical research .25 CHAPTER 2: REAL ESTATE APPRAISAL AT VIETNAM JOINT STOCK COMMERCIAL BANK FOR INDUSTRY AND TRADE (VIETINBANK) – DANG VAN NGU TRANSACTION OFFICE – DONG DA BRANCH 27 2.1 Introduction to Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) – Dang Van Ngu Transaction Office – Dong Da Branch .27 2.1.1 Introduction to Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) .27 2.1.2 Introduction to Dang Van Ngu Transaction Office – Dong Da Branch 32 2.2 Real estate appraisal at Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) – Dang Van Ngu Transaction Office – Dong Da Branch .33 2.2.1 Legal bases of real estate appraisal at VietinBank 33 2.2.2 Current situation of real estate appraisal at Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) – Dang Van Ngu Transaction Office – Dong Da Branch .34 iii 2.2.3 An illustrative example of real estate appraisal at Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) 45 2.3 Evaluate the real estate appraisal at Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) – Dang Van Ngu Transaction Office – Dong Da Branch 53 2.3.1 Achievements 53 2.3.2 Limitations 55 2.3.3 Causes .57 CHAPTER 3: SOLUTIONS TO ENHANCE THE REAL ESTATE APPRAISAL AT VIETNAM JOINT STOCK COMMERCIAL BANK FOR INDUSTRY AND TRADE (VIETINBANK) – DANG VAN NGU TRANSACTION OFFICE – DONG DA BRANCH .60 3.1 Development orientation of VietinBank 60 3.2 Solutions to enhance the real estate appraisal at VietinBank 64 CONCLUSION 68 REFERENCES 69 iv LIST OF ABBREIATIONS Abbreviated name Full name Vietnam Joint Stock Commercial Bank VietinBank for Industry and Trade COMP Comparable properties VAMC Vietnam Asset Management Company International Financial Reporting IFRS Standards DCF Discounted Cash Flow v LIST OF TABLES Table Page Table 2.1 VietinBank business performance in 2020 29 Table 2.2: Information of compables assets 45 Table 2.3: Analysis and adjustment of similar and different factors between the subject property and the comparables 47 Table 2.4: Appraisal result 52 LIST OF FIGURES Figure Page Figure 2.1: Organizational chart of VietinBank vi 29 INTRODUCTION The necessity of the topic In today's world, the banking system in Vietnam has developed quite thoroughly, which plays an important role in the circulation of capital in the economy and contributes to socio-economic development The general operational principle of commercial banks is safety and profitability To ensure two principles above, commercial banks create operational process as well as compulsory requirements for all credit activities In particular, in credit lending activities, commercial banks often require customers to have collaterals Based on collaterals, commercial banks determine the loan and the appropriate loan amount and the collaterals are very diverse Currently, most of the collaterals for bank loans are often real estate Mortgaged real estate appraisal is one of the most important operations in credit activities of commercial banks On the one hand, from banks' perspective, the valuation not only helps the bank to determine a reasonable loan level based on calculation and prediction of potential risks but also increases the competitiveness of commercial banks in establishing reputation and attracting customers in the field of lending, improving the quality of lending activities in particular, and credit activities in general of commercial banks From customers' perspective, the accurate and reasonable determination of the value of mortgaged real estate will accelerate capital conversion in production and business At the same time, it will build trust for customers in the quality of operations of commercial banks However, the determination of loan amount based on the appraisal of real estate mortgage is unsettled both in the process and methods of implementation, leading to the sketchy results and not reflect the actual value of assets Besides, other difficulties also affect the valuation results such as unstable real estate market causing disadvantages to the customers and the bank Thus, the appraisal of real estate mortgage needs to be improved for higher quality of credit activities From the above reasons, the thesis “Enhancing real estate appraisal at Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) – Dang Van Ngu Transaction Office – Dong Da Branch” is chosen for researching in order to advance the appraisal process Objectives of the study - The research provides basic theories related to the real estate valuation - Analyzes the current situation of mortgaged real estate valuation at Dang Van Ngu Transaction Office and indicate the achieved results, clarify the limitations and their causes in the valuation of mortgaged real estate at the transaction office - Proposes a number of solutions to improve the mortgaged real estate valuation at Dang Van Ngu Transaction Office in the future Subjects and scope of research Subject is the appraisal of real estate in lending operations of VietinBank However, this study only focuses on some key issues such as valuation organizations in banking, processes and methods are applied in appraising real estate mortgages for the purpose of bank loan The analyzing and assessing will be focused on the process and applied methods in appraisal of mortgage real estates in VietinBank – Dang Van Ngu Transaction Office – Dong Da Branch during process 2019 – 2020 Research methodology To achieve research aims, the research methods used are comparison, statistics analysis…This research also have the support from credit management officers and appraisal officers Structure of the thesis In addition to the introduction, list of references, conclusion… the thesis consists of chapters: Chapter Literature Review Chapter Real estate appraisal at Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) – Dang Van Ngu Transaction Office – Dong Da Branch