Fund mobilization at vietnam prossperity joint stock comercial bank thang long branch,graduation thesis

THE STATE BANK OF VIETNAM BANKING ACADEMY Foreign Language Faculty - - GRADUATION THESIS FUND MOBILIZATION AT VIETNAM PROSPERITY JOINT STOCK COMMERCIAL BANK – THANG LONG BRANCH Lecturer : Nguyen Thi Thuy (MBA) Student : Nguyen Thi Bich Hanh Class : K15-ATCD Student Code : 15A7510063 Hanoi, May 2016 DECLARATION I declare this thesis entitled “Fund mobilization at VP Bank – Thang Long branch” is the intellectual product created by my own research This thesis has not been submitted for any degree and examination in any other university All information sources I have used have been cited in the references Signature Nguyen Thi Bich Hanh i ACKNOWLEDGEMENTS During the implementation of this thesis, I have received many valuable supports from many people whom I am very grateful First and foremost, I would like to express my immense gratitude to my supervisor, MBA Nguyen Thi Thuy, for her worthy suggestions and devoted instructions This thesis would not have been possible without her useful guidance from the beginning to final step In addition, my special thank goes to staff at customer relationship department at VP bank-Thang Long branch who spent their precious time supporting me enthusiastically in my collecting data and information as well as instructing me to complete my thesis I am also grateful to my family for their sacrifices throughout four years of education Especially, their financial and spiritual support have encouraged me to pursue the final goal of the research Besides, I would like to thank all of my friends at Foreign Language Faculty, Banking Academy who assisted and inspired me to write the thesis Finally, my thanks are owed to all readers for spending their valuable reading my graduation thesis ii LIST OF TABLES, FIGURES AND DIAGRAMS Diagram 1: Structural organization of Thang Long branch 20 Table 1: Mobilized fund at Thang Long branch between 2013 and 2015 22 Table 2: Total outstanding credit of Thang Long branch 2013-2015 .22 Table 3: Structure of fund mobilization based on the sources of capital 26 Table 4: Loan to deposit ratio of Thang Long branch 30 between 2013 and 2015 .30 Table 5: Net interest income of Thang Long branch between 2013 and 2015 32 Figure 1: Business achievement of Thang Long branch between 2013 and 2015 24 Figure 2: Scale of fund mobilization at Thang Long branch 2013-2015 25 Figure 3: Structure of fund mobilization based on terms 27 Figure 4: Structure of fund mobilization based on types of customer 28 Figure 5: Structure of fund mobilization based on currencies 29 Figure 6: The cost of fund mobilization at Thang Long branch .31 between 2013 and 2015 .31 iii LIST OF ABBREVIATION VP Bank: Vietnam Prosperity Joint Stock Commercial Bank VND: Vietnam Dong WTO: World Trade Organization HR: Human Resources SBV: State Bank of Vietnam TPP: Trans-Pacific Partnership ACB: Asia Commercial Bank Techcombank: Vietnam Technical Commercial Bank ANZ: The Australia and New Zealand Banking Group Limited 10 HSBC: Hongkong and Shanghai Banking Corporation iv TABLE OF CONTENTS DECLARATION I ACKNOWLEDGEMENTS II LIST OF TABLES AND FIGURES III LIST OF ABBREVIATION IV CHAPTER 1: INTRODUCTION 1 Rationale of study Research objectives Research questions Scope of the study Research methodology Thesis structure CHAPTER 2: OVERVIEW OF FUND MOBILIZATION AND EFFICIENCY OF FUND MOBILIZATION IN COMMERCIAL BANKS .4 Fund mobilization in commercial banks 1.1 Definition .4 1.2 Functions .4 1.3 Classification of fund mobilization in commercial banks .5 1.3.1 Based on the nature of fund mobilization .5 1.3.1.1 Deposit source of fund 1.3.1.2 Non-deposit source of fund 1.3.2 Based on terms of fund mobilization 10 1.3.3 Based on types of customers 11 1.3.4 Based on types of currency 12 Efficiency of fund mobilization 12 2.1 Definition 12 2.2 Criteria to evaluate efficiency of fund mobilization 12 2.2.1 Scale of fund mobilization 12 2.2.2 Cost of fund mobilization .13 2.2.3 Relationship between fund mobilization and utilization 14 2.3 Factors affecting efficiency of fund mobilization .15 v 2.3.1 Objective factors 15 2.3.1.1 Legal framework 15 2.3.1.2 Socio-economic situation .15 2.3.1.3 Customer‟s habit .16 2.3.2 Subjective factors 16 2.3.2.1 Bank reputation .16 2.3.2.2 Fund mobilizing policies 16 2.3.2.3 Technology .17 CHAPTER 3: REAL SITUATION OF FUNDS MOBILIZATION AT VP BANK- THANG LONG BRANCH OVER THE PERIOD 2013-2015 .18 Overview of VP bank and Thang Long branch 18 1.1 Foundation and development .18 1.2 Organizational structure 20 1.3 Main business activities and achievements 21 1.3.1 Fund mobilization 21 1.3.2 Credit activities 22 1.3.3 Other services 23 1.3.4 Business achievements 24 The real situation of fund mobilization at Thang Long branch over period 2013-2015 24 2.1 Scale of fund mobilization 24 2.2 Structure of fund mobilization .26 2.2.1 Based on the sources of capital .26 2.2.2 Based on terms of fund mobilization 27 2.2.3 Based on types of customer 28 2.2.4 Based on the types of currency .29 2.3 The efficiency of fund mobilization 30 2.3.1 Loan to deposit ratio (LDR) 30 2.3.2 The cost of fund mobilization .31 Evaluation to the fund mobilization at VP bank- Thang Long branch 33 3.1 Achievements 33 3.2 Limitations and causes 34 3.2.1 Limitations 34 vi 3.2.2 Causes of limitations .35 3.2.2.1 Objective causes .35 3.2.2.2 Subjective causes 36 CHAPTER 4: SOLUTIONS TO ENHANCE THE EFFICIENCY 38 OF FUND MOBILIZATION AT VP BANK - THANG LONG BRANCH 38 SOLUTIONS TO ENHANCE THE EFFICIENCY OF FUND MOBILIZATION FOR VP BANK – THANG LONG BRANCH 38 1.1 Improving and diversifying the products of fund mobilization 38 1.1.1 Diversifying types of deposits 38 1.1.2 Customer expansion and division 38 1.1.3 Creating new modern and convenient deposit products .38 1.2 Concentrating on Internet and Electronic Banking System 39 1.2.1 Enhancing Internet Banking System 39 1.2.2 Improving ATM system‟s performance .39 1.3 Expanding and developing consumption credits have to be highlighted 40 1.4 Improving customer services .40 1.5 Highly concentrating on human resource policies 40 1.6 Promoting extensively the marketing programs 41 Recommendations for the Government and the State Bank of Vietnam 42 2.1 Recommendations for the Government .42 2.2 Recommendations for the State Bank of Vietnam 42 2.2.1 Improving the legal system and policies relating to banking activities 42 2.2.2 Concentrating on interest rate policy 43 2.2.3 Taking measures to stabilize exchange rate 43 2.2.4 Improving and developing the capital market 43 2.2.5 Implementing effectively the inspecting and checking assignments 44 CONCLUSION 45 REFERENCES 47 vii CHAPTER 1: INTRODUCTION Rationale of study For over two decades of renovation, Vietnam‟s economy has been shifted towards industrialization-modernization and has achieved critical success Along with these improvements, commercial banks have increasingly affirmed its essential role in promoting economy‟s development They are not only the most important financial intermediary but also indispensable links helping the economy run stably and efficiently By attracting idle money from surplus entities and making loans to deficit entities, commercial banks become one of the most popular fund channels meeting the capital need of the whole economy Furthermore, they also provide variable services to support economic entities in their business activities such as payment services, guarantee services,… However, to perform their operations smoothly, commercial banks are always in great need of capital since capital is the indispensable input as well as the subject of all commercial bank‟s activities Therefore, ensuring regular input at the lowest cost, in other words mobilizing funds effectively is always considered as the first objective of each bank Being aware of that importance, Vietnam prosperity Jointstock commercial bank (VP Bank), one of the earliest- established Joint-stock commercial banks in Vietnam, has always tried since its establishment to improve the mobilizing services, make a difference and build a trust to attract more customers as well as mobilize funds more effectively Among all VP bank‟s branches, it is necessary to mention Thang Long branch because it has some favorable conditions in fund mobilization when opened firstly in Hanoi with the new brand recognition system of VP bank However, due to the latest economic depression, the banking sector of Vietnam has experienced a downturn Fund mobilization at banks; therefore, has faced with significant difficulties and limitations The fact that many Vietnamese enterprises have gone bankrupt and cannot pay back the money for the bank causes the considerable slump in bank‟s funds In addition, the customers‟ fear of money devaluation leads to the serious lack of capital at commercial banks Especially, the increasingly fierce competition in banking system when Vietnam officially signed TPP has created more disadvantages for fund mobilization of all Vietnamese commercial banks, and VP bank in general and Thang Long branch in particular are not the exception If the negative changes in the scale, structure and efficiency of capital mobilization of Thang Long branch as well as VP bank still persist, they would harm the bank‟s entire operation Therefore, the reality of fund mobilization at Thang Long branch need to be recognized and evaluated immediately to find out the best solutions to solve the exiting problems and improve the efficiency of its fund mobilization in current situation Therefore, the topic “Fund mobilization at VP bank – Thang Long branch in the period 2013-2015” will be investigated in my graduation thesis Research objectives The thesis aims at clarifying the following objectives: The first objective of research is to analyze the reality of mobilizing fund at VP bank- Thang Long branch over the period 2013-2015 basing on its financial indicators Secondly, to evaluate the achievements and limitations in terms of fund mobilization that VP bank- Thang Long branch The final purpose is to propose some solutions and recommendations to enhance the efficiency of fund mobilization at Thang Long branch in the upcoming years Research questions After the research is completed, the following questions will be fully answered: What is the real situation of fund mobilization at VP bank- Thang Long branch in the period from 2013 to 2015? What are the problems of capital mobilization at Thang Long branch? What can VP bank- Thang Long branch to promote the efficiency of fund mobilization? Scope of the study The thesis is only based on the real situation of fund mobilization at Thang Long branch with data collected over the period from 2013 to 2015 Therefore, evaluation and suggestions can be practical from 2013 to 2015 Evaluation to the fund mobilization at VP bank- Thang Long branch 3.1 Achievements In general, Thang Long branch has obtained many encouraging results in capital mobilization over the period 2013-2015 Firstly, thanks to many marketing strategies in current years, the branch‟s reputation as well as VP Bank brand was positioned into the customers‟ mind Especially, with the good service quality, the professional staff and the attentive service attitude, the branch always satisfied customers Secondly, Thang Long branch also focused on strengthening the relationships with loyal customers, especially VIP customers In addition, Thang Long also actively looked for new and potential customers to increase the number of transactions for the branch Besides, they always pay attention to implement the most suitable policies for particular customers Especially, the branch has regularly capture the changes of the market (interest rate or application of new types of services) to be able to just increase its competitive capacity in the capital mobilization Thirdly, the branch‟s mobilized fund always maintained a high growth rate through the period and deserved with title focal branch of VP bank in the west area of Hanoi TL branch tried to find all measures to increase funds mobilized such as expand the forms of saving deposits, set out many kinds of terms with different methods of interest payment to attract its customers and mobilize from various sources (issuing special bonds, debentures ) Especially, it also raised the amount of capital from domestic financial institutions and banks to replenish its business capital Thanks to the effective capital mobilization, branches not only met its capital need in the business activities but also transferred temporarily idle funds in the branch to another branches On the other hand, the capital utilization coefficient of the branch through the past years continued to increase Therefore, it can be basically said Thang Long branch used the funds mobilized effectively Furthermore, the mobilized capital amount in the form of customer deposits increased gradually over the years and always accounted for the largest proportion of total mobilized funds This was a good sign representing VP bank in general and Thang Long branch in particular have created trust and favorable impression for our customers In addition, deposit products have met the different needs of customers 33 TL branch has offered a series of new saving products, namely, Prosperity Savings with Floating Interest Rates (service is designed for Customers when the market interest rates tends to fluctuate), Accumulative Savings (a form of fund accumulation for future financial purposes), Over-one-month Flexible Savings (the product offers the highest interest and extreme flexibility), and Online Savings (service offers customers to deposit money anytime, anywhere via the Internet without having to go to the transaction offices) At the same time, the amount of the short term capital of Thang Long branch showed a sharply upward trend in three years, which made the cost of fund mobilization lower This was the result of the transaction deposit development Transaction deposit was continuously upgraded and added more advantages by the branch Each account of a customer was accompanied with various flexible services such as account management system via SMS, E banking service Therefore, the capital mobilized from transaction deposits significantly increased over that period Finally, the proportion of the mobilizing cost in the total mobilized fund reduced in the recent years The branch, hence, had condition to offer more competitive lending interest rates for its customers and enhance its competition capacity 3.2 Limitations and causes 3.2.1 Limitations Besides these achievements, funds mobilization of branch had some drawbacks need improved in order to enhance capital mobilization efficiency and maximize business profit The first downside is the unstable growth rate of mobilized capital Although mobilized capital have increased over the years, the growth rate decreased in 2015 It demonstrates the instability of capital which can lead to difficulties in lending activity In addition, structure of raising funds need to be diversified The proportion of short term deposits in total mobilized resources was low while the branch mainly focused on customer deposits On the other hand, funds mobilized from the interbank market were relatively large However, this source was unsteady and expensive because of the high mobilizing cost Besides, the issuance of valuable papers only focused on the credit institutions, which wasted the idle funds from residents The number of deposits in foreign currency was not much and tended to decrease in 34 2015 This situation will affect the branch‟s business activities relating to foreign currency such as the L/C issuance, payment for import-export activities of their customers Moreover, the products of the branch were not really plentiful and diverse Although new and supplementary products were offered by branch, their features were limited Furthermore, the high technology products and unique ones to enhance the competitive capacity for branch were still deficient The last disadvantage was the branch‟s limitation in infrastructure and information technology Payment services via internet take a long time of customers to log in and have one successful transaction while the registration fee of the services was relative high Card issuing activity mostly focused to the number of opened cards other than that of activated cards Sometimes, banking transactions were affected by defective machines; for example, the machines swallowed the cards, the transactions were not successful but the account remained being charged 3.2.2 Causes of limitations 3.2.2.1 Objective causes Firstly, the economic and social environment was quite volatile In recent years, Vietnam's economy has had many complicated movements unfavorable for banks Economic growth rate was still slow Many businesses and companies narrowed operation which caused the reduction in using of utilities and banking Along with this, the financial and monetary market was fluctuations Therefore, the growth rate of deposits tends to decrease The second reason is non-cash payment in Vietnam is still underdeveloped People not have the habit of transaction through banks The vast majority of Vietnamese people still mainly use cash in the payments Cash payments accounted for 30% in wholesale and 95% in retail in Vietnam The utilities of retail banking services especially card payment services are virtually unfamiliar with residents Therefore, the amount of fund mobilized from the transaction deposits and short term deposits is small On the other hand, another difficulty in fund mobilization is that the information of new products can not reach the customers There are various types of services and products However, customers lack of information about them (features of products and services, the current regulations, rights and obligations when using the 35 service,…) This creates hesitation in searching, accessing and using banking products especially for old people and farmers The fourth cause is the fierce competition between domestic and foreign banks Due to the process of integration and liberalization in the banking sector in Vietnam, commercial banks in general and the branch in particular are under pressure of strong competition from foreign banks in all operations fields including mobilizing funds Therefore, market share of fund mobilization probably decreases Almost large enterprises or foreigners living in Vietnam are using the services of foreign banks such as ANZ, Citibank, HSBC, because these banks have management skills and higher technology than Vietnamese bank Finally, the infrastructure of telecommunications in Vietnam is not really modern and does not meet the requirements of social development in all aspects: equipment, quality and cost The modern products of bank depend heavily on telecommunications networks These malfunction and delay in the process of providing and using services is partly due to unstable quality of communications networks 3.2.2.2 Subjective causes The important cause of the limitation in fund mobilization of Thang Long branch is that the raising forms and products was poor and fail to meet the diverse needs of different customers Process of research and development of new products is not really effective Compared with other banks like ACB, Techcombank, the funds mobilization products of VP bank are not really competitive Secondly, the banking technology faces some shortcomings Facilities, machinery and equipment are not modern Many machines especially personal computers of employees are old and broken which lengthens the process of business operations On the other hand, qualifications and ability of staff are limited The staff are young, agile; however, their qualification has been uneven and fail to meet the requirements in integration process Sometimes, HR is not responded promptly The fact that most of the transaction desks are served by new staff lead to caring customers is not good, process of dealing with requirements of the customers is still not fast, customer advisory function is not focused Most tellers are not aware of that the sale of the products to the customer is the focal Moreover, with the new products, most of them study by theirselves via text instead of training This is an 36 obstacle in the process of selling capital mobilization products and communicating with customers Lastly, marketing activities at branch only have improved in recent years, but not really professional and efficient There are a lot of disadvantages which need further improvement The research on demands of customers and competitors are not conducted regularly and systematically Customer strategy are not consistent with the real situation of the bank is unknown Advertising and marketing strategies are not clear and not serve specific objectives 37 CHAPTER 4: SOLUTIONS TO ENHANCE THE EFFICIENCY OF FUND MOBILIZATION AT VP BANK - THANG LONG BRANCH Solutions to enhance the efficiency of fund mobilization for VP Bank – Thang Long Branch 1.1 Improving and diversifying the products of fund mobilization 1.1.1 Diversifying types of deposits The diversification of deposit products is highly emphasized by the branch This activity will help the branch attract more customers and improve its performance in capital mobilization Hence, VP Bank – Thang Long branch has to deploy rapidly customer researches to offer new products, especially, personal banking products to meet the customers‟ needs which are increasingly diverse 1.1.2 Customer expansion and division Customer expansion and division is supposed as the second solution for the branch to achieve capital growth as well as limit risks Currently, the branch has diversified its products based on three types of customers which are personal, small and medium enterprise, and corporate Although the product diversification is quite well-done, in order to enhance its competitive capacity to other banks and satisfy more customers‟ needs, VP Bank – Thang Long branch should divide customers into more particular groups according to the specific features of customers The following banking products and services should also be designed and developed based on the specific characteristics of each group of customers.For example, offering more attractive policies and interest rates for universities and companies to pay tuition fees and salaries through bank account is considered as an effective solution to raise capital 1.1.3 Creating new modern and convenient deposit products The branch should create some new modern and convenient deposit products which have been applied successfully in Citibank, ANZ such as E – savings account, My Dream account, Pay roll account, and Women‟s account This will offer great opportunities for the bank to innovate, connect with its customers, and provide value-added service 38 1.2 Concentrating on Internet and Electronic Banking System 1.2.1 Enhancing Internet Banking System In details, the branch should concentrate on high technological products and services such as iBanking, SMS banking, e-Banking and Mobile Banking which are prominent in the banking market to make differences from other banks The products and services should be operated smoothly and securely under a highly encrypted banking system in order to ensure the safety of customers‟ information and transactions Moreover, their user interface also has to be friendly and intelligent with a wide range of customers 1.2.2 Improving ATM system’s performance The role of the ATM is rapidly evolving as financial institutions want offer more services while reducing operational costs In other words, if the ATM management strategies are invested effectively, customer experience will be improved significantly, and the branch will obtain more electronic transactions Due to the importance of ATM system, VP Bank – Thang Long branch should concentrate on the below issues to improve its ATM system‟s performance a Increasing the number of ATM kiosks at reasonable locations As with the property market, for ATMs, location is king Generally, customers usually prefer the branch having a wide and dense ATM kiosk system since it make them feel convenient in transferring and withdrawing money As a result, the branch should increase the number of its ATM kiosks at crowded places such as markets, hospitals, schools to improve the electronic transaction volumes b Maintaining and Upgrading ATM’s hardware and operating system regularly The banking industry always worries about the bad influence of lags and hacking issues to the ATM system and its owned bank Therefore, the branch‟s ATM system must be maintained and upgraded regularly in term of hardware and operating system in order to ensure the productivity and stability of its ATM system Apparently, the convenience and safety of the electronic banking system will encourage customers in registering new accounts and increase the number of daily transactions c Providing sufficient cash at each ATM kiosk In fact, there are many ATMs of the branch have often insufficient cash and hence reject request of the customer particularly during holidays This leads to the 39 unsatisfied mentality from customers to the reputation of the bank Therefore, providing sufficient cash at each ATM kiosk is necessary 1.3 Expanding and developing consumption credits have to be highlighted Expanding and developing consumption credits have to be highlighted The branch should launch more promotion programs which offer attractive gifts and discounts for new customers and ones who highly expense by credit This will make the bank‟s products and services more attractive to customers 1.4 Improving customer services Because customer‟s satisfaction will decide the number of customers and increase the reputation of branch, it need research and understand about the customers‟ needs and their preference After that the branch combines this understanding with its own creative capacity and skills to offer services satisfying its customers In addition, to improve customer services and customer‟s satisfaction, the branch should develop a long-term relationship with the customers in order to improve customer loyalty; expand the number of branches to cover more customer segment; improve serve style and procedures to make customer feel more comfortable and satisfied; as well as launch promotion and appreciation programs regularly to improve the connection between the branch and its customers In details, the branch‟s staffs should be trained regularly to improve their professional qualifications, capability of adapting with new technical issues in order to solve promptly customers‟ problems As a result, customers feel more satisfied with the services of the branch as well as improve the customer loyalty Moreover, applying emotional intelligence in working place is required in order to build a friendly and professional serve style which can position the image of the branch 1.5 Highly concentrating on human resource policies In the competitive environment, employees of any business organization are the key factor deciding the success of commercial banks in general and the branch in particular In order to obtain a guaranteed workforce in both quality and quantity, 40 the branch needs to develop a strategic development of human resources which is suitable to its development needs, including: a Structure, arrange and appoint capable, qualified and experienced staffs which can satisfy the requirement of the banking business in short term and long term periods In addition, recruiting more dynamic employees is necessary to bring a new blood into the bank‟s staffs b Research and apply modern information technology to manage human resource effectively; evaluate the staffs‟ productivity and professional ethical standards; and respect talents and encourage them in order to maximize the efficiency of using human resource in each developing period c Focus on training, fostering their professional qualifications, professional skills, and management and administration abilities; gradually improve the quality of human resources evenly and firmly in the direction which is synthetical and specialized, highly competitive, and always towards customers d Improve and innovate the retention policies in term of wages regime, welfare schemes in order to motivate employees‟ devotion and zeal which can improve the productivity of the bank e Issue new policies to attract professionals, capable employees and retain them through better remuneration such as higher salary, bonus, and more promoting opportunities 1.6 Promoting extensively the marketing programs To improve its ability of fund mobilization and meet the capital needs for lending, investment, the branch also need to focus on market research Understanding the needs of the customers is an important element to help the bank set up the reasonable policy of fund mobilization and interest rates, as well as expand the different types of service suitable with the increasingly diverse needs of society Furthermore, early detection of new demands in society also help branch get a potential competitive advantage in attracting customers 41 Recommendations for the Government and the State Bank of Vietnam 2.1 Recommendations for the Government The macro-economic environment, one of the most essential factors effecting to commercial bank‟s operations can be developed and stabilized by intervention of Government Firstly, the legal framework should be fully develop so that commercial bank can determine the scope of operation Besides, related laws need be completed and guided clearly The Government should also take measures to strictly handle negative cases, making the banking activities cleaner and stronger and increasing public confidence in the banking system Secondly, Government should has appropriate propaganda to change the residents‟ habit of savings in gold, foreign currency and payment in cash This not only brings benefits for the banks but also contributes to develop the country‟s economy Thirdly, monetary and financial policies must be come out promptly to stabilize the economy With public‟s greater trustworthiness in healthy economy, commercial banks will have more opportunities to develop Finally, Vietnamese Government should take close attention to expand international relationship so that banks at Vietnam can have the opportunity to take advantage the support of international monetary organizations 2.2 Recommendations for the State Bank of Vietnam 2.2.1 Improving the legal system and policies relating to banking activities Currently, the Law on Credit Institutions has been issued with many new rules, many new properties which indicate the progress in line with the new situations as well as creating a favorable legal framework for the activities of the credit institutions in the economy market However, there are still some unclear provisions in the law such as the stipulation of the bank equity and the content of capital mobilization As a result, the Law on Credit Institutions as well as the particular text under Law and other relevant Act by Congress need to be continuously studied, modified and supplemented accordingly in order to ensure the fairness in the operation of credit institutions SBV should also promote some common tools that enhance the control of monetary policy This is better than making directly impact on interest rates which causes the negative fluctuations to the investment situation 42 These documents should be issued in a more systematic way in order to ensure all financial operations, monetary and credit as well as creating a stable legal environment for the development of banks 2.2.2 Concentrating on interest rate policy Interest rates are an important tool for commercial banks to mobilize capital from individuals, enterprises and other credit institutions The interest rate policy only affects the capital mobilization when monetary is stable and price is less volatile The policy has to be built based on the basis of practical sciences in accordance with developing conditions of socio-economic background in each period Besides, the SBV should also take measures to control the range of interest rates of capital mobilization in which the interest rates only fluctuate lightly If there are fluctuations, they should be made positively by the economic environment rather than being negative due to the unfair competitions among banks in the same location 2.2.3 Taking measures to stabilize exchange rate When the exchange rate fluctuates rapidly, although the foreign interest rates are lowered and domestic interest rate stays at a high level, the domestic capital mobilization also not grow significantly Meanwhile, the enterprises with the high demand for loans prefer domestic currency This puts more pressures on the market and make the VND shortage become tenser As the rapid fluctuation of the exchange rate, commercial banks try to maximize its foreign exchange position Due to that, many organizations and individuals are cautious to raise VND unless the government issues policies to stabilize the exchange rate If the exchange rate is stable, there are more VND capital being mobilized in which the interest rate not increase 2.2.4 Improving and developing the capital market The formation and development of capital are the factors promoting the development of the commodity market When the capital market is formed and developed effectively, it will produce favourable conditions for raising capital through the issuance of valuable papers The capital market is a meeting place between people being capable of providing capital and ones with the need of capital As a result, the isolated funds with small quantities are gathered to form 43 large ones in order to invest effectively and create significant benefits to the development of the country 2.2.5 Implementing effectively the inspecting and checking assignments The SBV has to implement effectively its management function as well as enhancing the inspecting and checking activities; correcting and handling promptly illegal acts and manifestations which cause the loss of funds owned by the State and the people Conducting effectively the operation of credit institutions under strict discipline and continuously improving the reputation of the banking system in the market is highly emphasized Besides, the SBV should also consider and take measures to strictly handle the unfair competition in interest rate among banks in order to enhance the quality of competition in the monetary market 44 CONCLUSION It is undoubted that banks have played a vital role in the international economic integration as well as in the period of Industrialization - Modernization of the country since they are the most important financial intermediary probably meeting the capital demand for the whole economy To undertake that function, Vietnamese commercial banks in general and Thang Long branch in particular have always considered fund mobilization as one of the most crucial activities and their first target In detail, over the past few years, Thang Long branch has continuously made efforts to enhance efficiency of capital mobilization and then has achieved some encouraging achievements The branch has implemented policies to attract customers through the various marketing programs, initially met the customer‟s needs, improved service quality, and upgraded technological systems As a result, the scale of mobilized fund increased significantly during three years from 2013 to 2015 and Thang Long branch become the focal branch of VP bank in terms of fund mobilization In addition, it can be said that the branch raised successfully a large amount of deposit which accounted for over 70 percent of the total fund and was a lower-cost source of fund than the others In addition, the cost of fund mobilization also reduced in the recent year As a result, Thang Long branch could offer a competitive lending interest rate to its customers In summary, these advantages are the favorable conditions for Thang Long branch to increase its competitiveness in the market and promote its capital mobilization further However, under the pressure of crisis, depression of economy and the tough competitiveness of the banking system in integration period, Thang Long branch has faced many problems and limitations in fund mobilization The growth rate of fund mobilization at Thang Long branch was unstable from 2013 to 2015 On the other hand, the capital structure of Thang Long branch needs to be diversified Most of mobilized deposit capital was saving deposits and long term ones while the transaction deposits and short-term fund was only accounted for small proportion of total funds Besides, the mobilizing product of the branch has not been diverse and plentiful, mainly focused on deposit forms Under this situation, the branch should immediately figure out some solutions along with the supports of the Government and State Bank in order to improve the limitation and enhance the efficiency of fund mobilization Firstly, it is necessary for Thang Long branch to diversify product portfolio as well as add more functions 45 in the products and services to catch up increasingly variable demands of the customers Furthermore, the branch should concentrate the internet and electronic banking system and high technology network to enhance the competitive capacity in integration period Finally, human resource quality must be concerned to the image of bank better inside the customers It is believable that with the efforts of all staff members and the leadership of the wise leaders, Thang Long branch will get much more successful in business general and in the activity of raising capital in particular 46 REFERENCES Annual reports of VP bank 2013 -2015 Income statements of VP bank Rose, P.S & Hudgins, S.C (2008) Bank Management & Financial Service (7th Ed) New York, NY: McGraw-Hill/Irwin, 385-390 Suresh, P & Paul, J (2010) Management of banking and financial services (2nd Ed) New Delhi, ND: Pearson Education India http://www.vpbank.com.vn/ Berger, A.N., Hasan, I., Korhonen, I & Zhou, M (2010, June 21) Does diversification increase or decrease bank risk and performance? 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