ASSETS MANAGEMENT OF COMMERCIAL BANKS IN THE
OVERVIEW OF COMMERCIAL BANK’ASSETS
According to Decision No 493/2005/QĐ – NHNN issued by the Governor of the State Bank of Vietnam on April 22, 2005, "bank asset" is defined as the monetary value of assets utilized for various purposes within a specific timeframe This concept highlights that bank assets are derived from the effective use of bank capital.
Assets are bought to increase the value of a firm or benefit the firm's operations, then generate higher profit for banks
Most banks primarily hold valuable securities and loans as their assets, which are characterized by high liquidity For instance, valuable securities can be easily converted into cash via the stock market or through discount operations Similarly, loans can be liquidated through the sale of debt instruments, providing banks with immediate cash flow.
Bank assets are influenced by various factors in the business environment, such as economic growth, inflation, market interest rates, the development of financial markets, and per capita income For instance, economic development boosts consumer and aggregate demand, resulting in increased investments and a higher demand for bank loans, which subsequently raises the debt balance Conversely, during an economic downturn, outstanding debt tends to decrease.
Bank assets face significant risks, primarily operational risks Key components of operational risk in commercial banks include credit risk, which arises from borrowers failing to meet repayment obligations; interest rate risk, which involves potential losses due to fluctuations in market interest rates; and foreign exchange risk, which pertains to losses incurred from exchange rate volatility in the foreign exchange market.
Financial investments and loans are crucial for generating profit for banks, yet their values fluctuate due to various market factors Bank assets and liabilities are interconnected, with liabilities serving as the source for asset utilization To optimize banking operations, it is essential to maintain a balance between the sources of funds and their usage, considering factors such as terms, interest rates, and currency.
These above-mentioned thinks are characteristic of assets that bank administrators need to focus on assets management in particular and business management in general
Bank assets can be classified according to many different criteria depending on process that capital are used:
Bank cash reserves consist of cash held in vaults, deposits at the central bank, deposits at other banks, and cash undergoing collection While these reserves do not offer significant profitability—earning low interest rates from central bank and interbank deposits—they provide a high level of liquidity essential for financial stability.
To ensure optimal liquidity for regular payments, banks strive to maintain their cash reserves at minimal levels The ratio of total cash reserves to assets varies among conventional banks, reflecting their differing approaches to liquidity management.
Securities investments play a crucial role, ranking second to loans in terms of income generation These investments typically consist of highly liquid marketable securities, which are essential for fulfilling payment obligations Consequently, a portion of a bank's investment portfolio serves as secondary reserves, enhancing financial stability and liquidity.
Commercial banks' primary asset group significantly contributes to their income, encompassing various types of loans such as commercial, consumer, business, real estate, and loans to financial institutions, as well as guarantees and leasing credit.
1.1.3.4 Fixed assets and other assets a Fixed assets
Tangible fixed assets consist of:
Headquarters and devices which are not profitable types of assets because they do not directly generate income for banks
Banks hold various types of real estate, primarily consisting of properties acquired through foreclosure when borrowers default on their mortgages This category excludes bank offices and equipment Consequently, ineffective lending practices can significantly contribute to a rise in the volume of real estate owned by banks.
Intangible fixed assets: Including copyrighted technology, high reputation or good terrain( location) b Other assets
Entrusted assets includes entrusted loans , investments entrusted by customers Accounts receivable: Accounts receivable includes customers , internal receivables ( such as prepayments for operations and bank staff officers )
Management of commercial bank assets
Asset management is the strategic process of acquiring, utilizing, and disposing of assets to maximize their value and potential over their entire lifecycle This approach also involves managing and mitigating the costs and risks linked to the assets.
Banks play a crucial role in the financial system, and it is essential for bank administrators to align their objectives with the overarching goals of economic growth, monetary stability, price stability, and job creation.
Firstly, maximizing profits for banks
Secondly, minimizing risks in the bank's business activities
Ensuring the solvency of banks in both the short and long term is crucial, as these objectives are interrelated When profits rise, banks can create a substantial reserve fund to manage risks effectively Conversely, effective risk mitigation and secure liquidity contribute to improved business performance and enhanced reputation, ultimately driving profit growth.
1.2.2 The basic content of asset management
Effective management of a bank's asset structure involves supervising its asset portfolio and adjusting the allocation ratio between various listed items to ensure a balance of liquidity, profitability, and security, ultimately meeting the bank's overall financial objectives.
The composition of bank assets is crucial for the operational activities of commercial banks, as any alterations in scale and proportion can significantly impact solvency, profitability, and risk levels An optimal structure of bank assets not only enhances profit maximization but also minimizes capital usage risks.
Banks today are embracing asset management trends that focus on diversifying investment and loan portfolios This strategy involves broadening the range of customers, investment sectors, loan types, and loan durations By avoiding concentration in a single market, industry sector, or time frame for both investments and lending, banks aim to mitigate risks and enhance financial stability.
The objective of reserve management:
To meet the regulations of the law on guaranteeing safety in operations and implementation of monetary policy
Reserves managemant ensures the withdrawal demand, the operational requirements credit of the bank and provide other operational costs
Reserves management is to balance, identify the scale of reserved items sensibly , avoid wasting resources and ensure maximizing profits for the bank
1.2.2.3 Liquidity management of the Bank
The objective of liquidity management :
Liquidity is the ability of a bank to meet the demand for urgent payment, liquidating or giving credits for customers
Bank liquidity is crucial for ensuring both safety and profitability It remains the primary goal of all banking operations To achieve this, banks incur certain costs, making effective liquidity management essential for their overall performance.
Ensure timely affordability with reasonable cost
Predicting risk and liquidity risk losses that may occur
1.2.3 Managing an investment or securities
Investment securities are a key focus for banks, as they generate substantial income, enhance liquidity, and diversify portfolios, ultimately reducing risk and stabilizing income Additionally, they provide alternative income sources when loan revenues decline To optimize the management of securities portfolios, managers must address several critical factors.
These securities generally include three basic categories : debt securities , equity securities , and derivative securities However in most cases , the securities portfolio of the bank is largely debt securities
1.2.3.2 Selecting portfolio securities is effective
To select securities porfolio effectively, managers need to consider the following issues :
Firstly, the objective of securities porfolio include:
• Meeting liquidity needs: Banks can hold the stock as an investment towards profit but still can meet liquidity needs by selling securities which have high liquidity when needed
Banks can effectively manage interest rate risk, credit risks, and other financial risks by utilizing a securities portfolio This approach enables them to quickly adjust their sensitivity to interest rate fluctuations, as securities can be traded instantly and come with various maturities.
• Contributing to stabilize and increase profits
Managers need to effectively forecast the external environment by analyzing economic cycles, trends in savings and investment, and financial policies This includes predicting the progression of various stages of the business cycle, understanding changes in inflation trends, and monitoring supply and demand dynamics in capital markets.
Managers must evaluate the demand for bank stock to create a suitable list of investment securities Key factors to consider include interest rate sensitivity, alignment between investment and stock plans, risk assessment conditions, and the necessity for diversification.
For most banks, lending items accounted for the majority of asset values and major revenue generating for banks Here are the specific contents of loans items ‘s gorvenance:
Process of loan items management:
The loan items management process involves a series of interconnected stages and steps that follow a logical sequence, ensuring efficient lending practices.
Diagram 2: Process of lending items management
In this process, credit (3) is a particularly important step Bank’s department of credit is responsible for the analysis and assessments for most loan applications
1.2.5 Management of fixed assets and other assets
While banks may not have a significant portion of their assets tied up in equipment and headquarters, these elements are crucial to their operations Fixed assets are typically categorized for depreciation purposes, and banks implement strict regulations for equipment management to prevent theft, misuse, and damage, which are addressed through repairs, maintenance, and insurance policies.
Banks play a crucial role in managing entrusted assets, or consignment, by preserving and monitoring these assets while aiming to increase their income This involves carefully balancing the costs associated with mandated activities and the revenue generated from trusted fees Additionally, banks must consider how these mandated activities interact with other key functions, such as the growth of deposits and loans, to ensure overall financial health and performance.
Receivables represent a minor portion of a bank's assets, but it is crucial for bank administrators to minimize this item to improve asset liquidity and reflect better financial performance in bank management.
CURRENT SITUATION OF ASSET MANAGEMENT AT VIETINBANK, HOANG MAI BRANCH
Overview of Vietinbank, Hoang Mai, Ha Noi
2.1.1 Summary of establishment and development history
Vietinbank Hoang Mai, located at 2 Kim Dong Street in Hoang Mai District, was initially an agent of Hoang Mai Financial Company before being established as a branch Its primary responsibility is to manage and allocate funds from government and local budgets.
2.1.2 Structure of the branch’s organization
Vietinbank Hoang Mai is structured with an Executive Board and various departments, including Administration and Organization, Customer Relationship, Risk Management, Accounting and Finance, Credit, Planning and Capital Resource, Computing, and Treasury The branch operates several transaction offices, namely Kim Dong, Chuong Duong, Vinh Hoang, Truong Dinh, Dinh Cong, Minh Khai, Hoang Hoa Tham, and locations numbered 43, 48, and 65, along with two savings funds The branch employs a total of 310 staff members, encompassing both managers and officers.
Diagram 3: Structure of Vietinbank Hoang Mai
Planning and Capital Resource Department Credit Department
Duong, (2) Vinh Hoang, (3) Truong DinhTransaction Office
(10) Hoang Hoa Tham Transaction Office
Status of business at Vietinbank Hoang Mai
Vietinbank Hoang Mai is responsible for three basic functions of a commercial bank including: performing a function of a financial intermediary, creation of money and being a payment intermediary
A central bank serves as a crucial financial intermediary, converting savings into investments, which is essential for stimulating investment, enhancing the efficiency of financial markets, and fostering economic growth By utilizing the funds it raises, the bank lends to various economic sectors while also attracting idle money from households, individuals, and businesses.
The creation of money occurs through lending and investing activities when banks extend credit via loans and investments, leading to an increase in demand deposits and, consequently, the overall money supply Banks predominantly hold business deposits, as well as a significant portion of individual and government deposits While thrift institutions also provide demand deposits, banks maintain an unmatched dominance in this sector.
Being a payment intermediary: On behalf of clients, the bank pays for purchased goods and services In addition, the bank implements payment through out central banks or payment centers
2.2 Status of business at Vietinbank Hoang Mai
In 2013, the Vietinbank Hoang Mai branch introduced strategies to enhance its image and boost competitiveness, aiming to instill confidence in customers regarding deposits and payments These initiatives were designed to encourage clients to explore the potential capital opportunities available from savers.
Table 1: Fund rasing activities from 2010 to 2013
3 Deposits, borrowings from credit íntitutions
II Stablising funds and borrowings
(Source: Financial statements analysis of Vietinbank Hoang Mai)
The branch has successfully mobilized funds amounting to 1,344,207 million VND, accounting for 82.7% of total capital Compared to the previous year, treasury deposits decreased by 1.670 million VND, while savings deposits surged thirteenfold from 64,094 million VND to 852,023 million VND, reflecting the bank's strong reputation and high creditworthiness among customers Additionally, funds with a maturity of 12 months or more constituted 46.01% of mobilized funds, totaling nearly 627,917 million VND This consistent growth in long-term funds enhances the stability of the bank's capital structure, providing a solid foundation for sustainable business development.
Between 2010 and 2013, Vietinbank experienced a steady decline in stabilizing funds, which fell to 95.025 million VND Additionally, borrowing from the State Bank of Vietnam (SBV) reached a record low of zero in 2013.
In recent years, credit activities of Vietinbank Hoang Mai has worked effectively and its market position increasingly enhanced Growth rate over the years has been quiet outstanding:
Table 2: Credit activities at Vietinbank Hoang Mai from 2011 to 2013
(Source: Business Report 2013 about the operations of Vietinbank Hoang Mai)
Diagram 4: Propotion of commercial bank market share in 2013
In a highly competitive banking landscape, Vietinbank Hoang Mai has successfully maintained a significant presence, currently holding 28.27% of the total market share in currency trading and banking services This achievement is complemented by effective risk management and debt restructuring strategies Agribank leads the market with a commanding 32.7% share, while other banks hold 15.6% and 3.42%, respectively With a stable growth trajectory, Vietinbank is poised to enhance its position in the coming years, potentially surpassing competitors like Vietcombank, which holds 20% of the market.
2.2.3 International payment operations and foreign currency trading
In 2013, we successfully processed 675 international payment telegrams through the SWIFT network, ensuring timely, safe, and accurate transactions This included the issuance of 205 opening credit letters totaling $5,857,628 and €131,000, as well as 65 paying credit letters amounting to $1,969,497.18.
Making payment of collection documents: 75mon amount: $ 1,745,200 Transferring money payment of 230 items, amount: $ 2,439,836
• Professional business exchange: In 2013 foreign currency trading activities
Sales of purchasing foreign currency (converted to USD) is $ 407,080,000 180.6% increase
Sales of selling foreign currency (converted to USD) is $ 528,120,000 243.6% increase.
Situation of asset management at Vietinbank Hoang Mai branch
2.3.1 Asset Management structure in Hoang Mai branch Vietinbank
The asset structure of a bank comprises both large and small items, each playing a crucial role in the commercial banking sector Fluctuations in the size and density of these assets can significantly impact the bank's solvency and profitability Consequently, Vietinbank's Hoang Mai branch consistently prioritizes the management of its asset structure.
( Source: Business and financial report from Vietinbank Hoang Mai)
The provided table and figure illustrate a significant increase in assets over the years, with total assets rising from 998.961 million in 2010 to 1.597.970 million in 2014, indicating a doubling of value This growth reflects the bank's effective asset management aligned with its objectives and the overall development of the system To gain a clearer understanding of the Vietinbank Hoang Mai branch's performance, we analyze the asset growth rate.
Table 4: The growth rate of assets
Diagram 5: Comparision on the growth rate of assets at Vietinbank
(Source : Table summarizing the assets of Vietinbank Hoang Mai )
Looking at the data we found that:
The reserves increased sharply in 2012 ( 258 , 4 % ), mainly due to the central bank’s cash and deposits increased However, in 2013 this figure to decrease ( 123
% ) This is not a good sign which affect the liquidity of the banks Investments increased in 2012 (148 % ) , but decreased significantly in 2013 Banks should focus on raising the proportion of investments
Credit items have rapidly grown over the years This suggests the ability of banks to dominate the market
In 2012, fixed assets experienced a significant increase of 199.3%, positively impacting the bank's operations However, a sharp rise in receivables also occurred, which reduced asset liquidity and negatively affected the bank's overall performance.
Vietinbank's reserves are calculated as a percentage of demand mobilization and funds with maturities of less than 24 months The regulations governing these rates have evolved over time, reflecting changes in management policies and the macroeconomic control of the state's monetary policy.
Surplus reserve fund is calculated on using the formula:
Surplus reserves = Equity fund – required rereserve
The surplus reserve fund is crucial for public banks, as it directly impacts their liquidity To ensure that budgets are created and utilized wisely, safely, and in compliance with regulatory reserve requirements, Vietinbank Hoang Mai and all other branches must adhere to the guidelines set forth by Vietinbank VN regarding loans and internal expenditures.
2.3.3 Managing investment items at Hoang Mai Vietinbank
The Vietnamese stock market officially commenced operations in July 2000 However, after 14 years, its scale remains limited, with strict regulations in place This is largely due to a lack of diverse financial products and inadequate, outdated information regarding listed companies' business statuses Additionally, the absence of specific management measures and a shortage of experienced consultants have hindered market development Consequently, the involvement of financial institutions, particularly banks, has been minimal.
2.3.4 Administration of lending items at Vietinbank Hoang Mai
Credit Bank's performacne are closely oriented ith business goals, development orientation of the whole system
Table 5: Results of Credit activities
Between 2010 and 2013, Vietinbank Hoang Mai experienced significant growth in its loan portfolio, with outstanding debts doubling within this period This remarkable achievement highlights the bank's strong credibility and market position The success can be attributed to a series of strategic measures implemented by Vietinbank Hoang Mai, showcasing its commitment to enhancing financial services and customer trust.
To establish a robust financial foundation that enhances resource competition, Vietinbank aims to exceed risk provisions while ensuring employee income aligns with its policies The focus is on promoting thriftiness and boosting revenues, particularly those that secure interest spreads in accordance with regulatory standards.
2.3.4.2 Administrating structure of the loans
- Classified by the lending period
Table 6: Loans classified under the lending terms
Term 2010 2011 2012 2013 (+), (-) compared to 2012 Million % Million %
( Source: Report of Vietinbank business results, Hoang Mai branch )
Over the years, there has been a notable increase in all timeframes, with short-term growth rising by 23.7%, medium-term growth increasing by 20%, and long-term growth experiencing a significant boost of 38%.
Short Term credit structure compared with no long- term has no changes In
2012, Short Term credit’s proportion was 52.1 % and reached to 52.4 % in 2013 Medium credit was 42.8 % in 2012 which dropped to 41.9 % in 2013 Long term credit in 2012 was 5.1 % and the rose to 5.7 % in 2013
Short-term loans have consistently represented a significant portion of the lending portfolio at Vietinbank Hoang Mai, primarily due to the needs of local households and private businesses in the agricultural sector, which often require seasonal financing Additionally, small and medium enterprises frequently rely on short-term bank loans to address their working capital shortages, ensuring smooth operational continuity This reliance on short-term loans not only supports the liquidity of these businesses but also enables the bank to maintain a dynamic lending environment, preventing stagnation in its financial activities.
2.3.5 Managing the implementation of the lending process
Vietinbank Hoang Mai adheres to a structured loan process to ensure compliance with business protocols, recognizing that each type of credit involves distinct procedures The first step in this process is the submission of the loan application.
Requirements about loans evaluation period :
The project plans, approved by the branch director of the city-province, allow for significant lending to state-owned enterprises (SOEs) with amounts of 50 billion and 30 billion, while non-state business producers can receive up to 2 billion Vietinbank is committed to processing short-term loan applications within five working days and long-term loans within 15 working days, provided that all necessary documentation and information from the customer are complete Lenders are required to make a decision and inform customers about the approval or denial of their loan requests promptly.
Vietinbank Hoang Mai aims to process short-term loan applications within 5 working days and long-term loans within 15 working days, contingent upon the timely submission of required information by the customer's bank Following the receipt of the application, Vietinbank Hoang Mai will notify the applicant of approval or disapproval within the specified timeframe.
Step 5: Monitoring, collection and disposal of credit
Throughout the project's implementation, from the initiation of the first loan until the complete recovery of principal and interest, credit staff must consistently monitor and document all business activities, particularly financial transactions When fluctuations in active loan businesses are identified that could impact credit returns, the credit staff promptly prepares reports to address and resolve any issues.
Clearly defined steps in the process of contributing to credit efficiently, orderly to easily check, control and particularly minimize the risk of credit that may occur
To enhance the management of lending items, the Bank has introduced several measures aimed at ensuring the effective execution of credit personnel's procedures Nevertheless, challenges continue to arise in the implementation of the Bank's loan processes.
SOLUTIONS AND RECOMMENDATIONS FOR
General orientation
The primary goal is to sustain growth at a manageable level to ensure balance, safety, and profitability This involves enhancing the quality of banking services to maintain competitiveness, while prioritizing investments in modernization and the training of human resources for future integration.
To successfully implement the overall goal, in 2014, Hoang Mai Vietinbank need to perform some specific growth targets as following :
Specifically , the total local currency deposits increased by 22% compared to
31/12/2014 31/12/2013 Foreign currency to rise 15 % 31/12/2014 Up to 31/12/2014, the total loans increased 16% to reach 1,780 billion.The percentage of long- term normally doesn’t exceed 45 % of total loans Overdue less than 2 %
Finance: ensuring sufficient income to offset expenses, salaries, shift meal, and provisions for income risk for workers which reach the maximum level, not less than the amount spent in 2013
Fee income: increase the proportion of 5% over 2014, according to calculations based on the new method
Orientation on property management’s mission
Debt restructuring: reflecting the true state of operations and financial condition Vietinbank Hoang Mai
Improved affordability and liquidity: Balance between liquidity and profitability , while ensuring liquidity and profits, strive to meet the reserve’s requirements and demand for loans and cash withdrawals of customers
Enhancing the loan portfolio involves the effective classification of loans based on risk levels, which are categorized into very high quality, good quality, and medium quality This approach is particularly beneficial for small and medium-sized projects, while the remaining classifications are designated for new investment initiatives.
To strengthen risk management systems, banks must enhance their assessment, prediction, and mitigation of potential risks across all business operations This approach ensures safety while boosting the credibility and reliability of client creditworthiness By focusing on improving credit quality through stringent evaluations of borrowers, banks can foster greater self-responsibility among units and individuals.
Solutions to complete asset management activities at Vietinbank Hoang
3.2.1 Restructure assets of Vietinbank Hoang Mai
Recent times have seen a notable increase in the scale of bank assets, yet the asset structure remains imbalanced Loans dominate the asset composition, while investment items are significantly underrepresented To enhance the safety and profitability of its asset structure, the branch must undertake a comprehensive asset restructuring.
To improve financial stability, banks should increase their investment proportion to 20-25% of total assets while decreasing the share of loans Although achieving this target may be challenging initially, a gradual balance between lending and investments can be established This strategy will ensure adequate liquidity and enhance the overall liquidity of the bank through specific securities.
Regular monitoring and evaluation of shortcomings are necessary to adjust to the appropriate targets and measures to urge the departments to ensure the implementation of proposed plans
3.2.2 Improving the quality of governance and liquidity reserves at Vietinbank Hoang Mai
In the upcoming year, banks are expected to engage in increasingly diverse and complex business activities, resulting in heightened market sensitivity and a corresponding increase in their reserve ratios.
Vietinbank Hoang Mai is currently focused on developing a cash management plan that aligns with customer demand trends, economic development, and social sector conditions The bank recognizes the importance of categorizing liquidity needs into three segments: regular, seasonal, and unexpected demands This strategic approach enables the bank to maintain optimal reserve levels, ensuring they can proactively manage cash flow and avoid shortages.
Regular demand is typically addressed using cash reserves held in vaults and short-term valuable papers Additionally, funding needs are met through borrowings on money markets, leveraging prior credit agreements with lenders that specify the amount, duration, and interest rates Lastly, non-deposit borrowings, such as the issuance of transferable certificates of deposit and borrowed funds on the interbank market, are utilized to manage unpredictable financial demands.
The current cash management system at Vietinbank Hoang Mai ensures that payment processes are generally smooth due to adequate reserves However, a persistent cash shortage occasionally necessitates requests for cash transfers from higher management, leading to delays in payments To address this issue, Vietinbank Hoang Mai must implement a comprehensive set of solutions.
Firstly, set up tracking software of term deposits and withdrawals of clients
To effectively manage customer withdrawal periods, banks should implement monitoring software that tracks clients' withdrawal terms This approach helps balance capital, facilitates the creation of preparation plans, and minimizes liquidity risk.
In the era of modern information technology, software enables the seamless segmentation of terms into various interest rates Banks can leverage these solutions to enhance their offshore funding strategies, effectively attracting more customers.
To foster strong customer relationships, banks must conduct thorough organizational research to develop tailored policies for each client By implementing strategies that encourage referrals and offer tangible benefits, banks can enhance customer care and satisfaction This approach not only drives business growth but also attracts new clients through effective promotion and robust customer relations.
In addition, banks should promote the electronic payments, bilateral payments, payment network with larger units to attract capital from international organizations, socio-political organizations and financial institutions
3.2.3 Solutions for the management of investment items at Vietinbank Hoang Mai
The stock market has shown significant progress recently, yet it continues to face instability and inaccuracies in market information These challenges impact commercial banks' ability to effectively select their securities portfolios Nevertheless, banks can strategically manage their investments by balancing their purchases of government securities with their lending activities.
Banks must actively engage in the inter-bank market to enhance partnerships and strengthen relationships with other financial institutions This participation provides additional sources of liquidity, essential for effective liquidity management strategies that integrate with their assets.
By actively participating in investment activities and financial will help the bank diversify an investment and raise the share of this item in the assets catalog
3.2.4 Solutions for governance of lending items atVietinbank Hoang Mai branch
3.2.4.1 Develop an effective credit policy
Developing credit policies is the concretization of the regulations on bank lending at Vietinbank Hoang Mai branch based on the operation of the technology
A lending policy should have clearly defined and must be communicated to all relevant parts in the form of specific documents
Based on the assessment of lending items’s management in recent years, according to the authors of the bank credit we should have additional points as following :
• Pay attention to attract more business customers Especially, the enterprises which have overseas investments and medium businesses and meet credit demand for all segments of the population
• Expanding loans to industrial and commercial sectors and consumption loans
• Lending policy should also state the type of loans which can provide geographic areas, industries and services that need to focus
• Policy makers should also lend the structure of these loans , their proportion in the total loans of the bank
The sustainability and growth of a bank hinge on its ability to effectively engage with customers throughout the cycles of mobilization, lending, and capital circulation To thrive in a competitive environment, banks must implement clear, long-term customer policies that foster strong relationships Establishing robust mechanisms for customer engagement is essential for maintaining these valuable connections.
All followings are the main contents of a client policy that Vietinbank Hoang Mai branch should develop in the future: a Customer classification
Customers play a crucial role in the lending process, as they can either responsibly use capital and repay loans on time or struggle to meet their repayment obligations This creates a dilemma for banks, which may misinterpret the intentions of borrowers and face moral hazards Additionally, if banks fail to meet customer loan demands or impose excessively high interest rates, potential borrowers may choose to forgo loans altogether Consequently, banks risk significant losses due to a sharp decline in the number of borrowers.
Building tailored strategies for each customer type is crucial in lending operations, as it enhances the overall business process Establishing strong and lasting relationships with clients is essential for long-term success.
In banking operations, customers play a dual role as both providers of capital for credit activities and users of these resources Therefore, effective customer policies are crucial Building strong, long-term relationships with clients enables banks to gather valuable insights and tailor appropriate policies, ensuring their competitiveness in the market Additionally, implementing strategies that offer tangible benefits can further attract and retain customers.
Recommendations to implement the proposed solutions
The Government has introduced a comprehensive legal framework aimed at streamlining asset management for debt recovery This initiative seeks to alleviate the ongoing challenges in debt collection, minimize risks for banks, and facilitate quicker capital recovery, especially in cases where borrowers are uncooperative.
Loans without asset guarantees should remain unsecured and closely linked to managing bad debts and overdue loans It is essential for the government to provide timely support to both borrowers and banks in this context.
Thirdly, the State Securities Commission should coordinate and operate smoothly in the new situation , and must set forth the policies and mechanisms appropriate to the operational characteristics of bank
To enhance the stability and legality of non-state enterprises, government departments should draft a decree that establishes clear business regulations and fosters a supportive legal environment for private sector growth Strengthening oversight of these enterprises is essential for ensuring compliance and promoting sustainable economic development.
Fifthly, accelerating the equitization process of large scle state-owned business which are effective but not in critical areas to create growth rate
3.3.2 Recommendations to State Bank of Vietnam
To enhance open-market operations, the central bank must collaborate with relevant ministries to establish a repurchase market for valuable documents on the secondary market, facilitating transactions between the State Bank and credit institutions or among banks This initiative plays a crucial role in influencing the pricing of credit within banks.
To enhance the efficiency of the information bank center, it is essential to establish an environment conducive to free trade This approach encourages banks to deliver comprehensive and accurate information, fostering transparency and reliability in financial transactions.
Enhance the banking sector by attracting international projects and training programs that focus on professional staff development, project evaluation, and risk assessment analysis Equip bank personnel with modern technology to ensure they are prepared for the challenges of the evolving financial landscape.
Vietinbank's leadership must establish clear guidelines for securities and investment management To achieve this, the bank should form a specialized team of professionals dedicated to developing and implementing effective policies for investment securities.
Taking measures to boost the company's debt management and exploiting assets of Vietinbank Vietnam
Vietinbank aims to enhance its project evaluation process by forming an organization of experts across various fields, including engineering construction and agriculture This initiative will provide the necessary support for assessing large projects and addressing complex knowledge-based inquiries.
Regularly training operation classes and professional legal credit documents related to credit activities for credit staff directly
Considering and partially supporting for branch’s capital so that the branch can actively manage their operations, then helps the administration of bank implemented fully and completely in all respects
Organizing workshops and seminars between banks and business associations, such as the Vietnam Chamber of Commerce, Hanoi Trade Association, Vietnam Fertilizer Association, Association of Small and Medium Enterprises, and Vietnam Farmers Union, aims to foster collaboration These initiatives focus on signing joint resolutions and memorandums to establish coordinated programs and working principles, enhancing unity in transactions among affiliated entities and industry systems.
Modernising information management systems, data warehouse construction and setting up management software of Vietinbank as well as allowing operators online and fast data
Developing policies, regulations, wages, promotion, reward, discipline closely tied with the principle of the results Recruiting staff according to current job needs and must meet the selection criteria
Sorting organizational structure towards two executive level business directly, eliminating the intermediate administrative level
Developing master plan for long-term management including planning the objectives, strategies, business plans which provide the basis for specific annual plans quarterl
What I have mentioned above are some solutions and recommendations that I make to contribute to improve governance of assets at Vietinbank Hoang Mai Ha Noi
Effective management of bank assets is crucial for overseeing a bank's business activities, directly influencing operational performance and quality This thesis emphasizes the significance of asset management in banking governance, highlighting its impact on overall bank performance.
1 Systemizing some basic theories of administration underlying each item of assets Giving the concept, characteristics and objectives of reserve management, liquidity management, portfolio management, loans item management, fixed asset management and other assets Also, I refers to the methods, strategies, factors affecting the quality of each asset item’s administration
2 Analyzing the current situation of the asset management at Vietinbank
Hoang Mai Since then, the thesis show all the results as well as existing problems and the causes of the existence there
3 On a theoretical basis, the thesis give actual status of the asset management at Vietinbank Hoang Mai and provides some key solutions and recommendations to contribute to improving the quality of corporate governance in bank assets
Although I myself have strived my best to accomplish these results, the thesis should not avoid these shortcomings due to the field of study of the subject is a very broad and relatively complex and the limited time and practical I am looking forward to the contribution of the teachers, offical staff at Mai Vietinbank and anyone of those who care about this issue.