Building business strategy for retail banking in bank for investment anf development of Vietnam (BIDV) from 2011 to 2015

GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT BUILDING BUSINESS STRATEGY FOR RETAIL BANKING IN BANK FOR INVESTMENT AND DEVELOPMEN

CAPSTONE PROJECT REPORT

RETAIL BANKING IN BANK FOR

INVESTMENT AND DEVELOPMENT OF VIETNAM (BIDV) FROM 2011 TO 2015

Nguyen The Thang

Le Thi Phuong Hai Nguyen Hai Yen Dang Van Hai

Class: GaMBA 01.N06

H A N O I 2 0 1 1

GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM

CAPSTONE PROJECT REPORT

BUILDING BUSINESS STRATEGY FOR

RETAIL BANKING IN BANK FOR

INVESTMENT AND DEVELOPMENT OF VIETNAM (BIDV) FROM 2011 TO 2015

Student’s name : Nguyen The Thang

Le Thi Phuong Hai Nguyen Hai Yen Dang Van Hai

H A N O I 2 0 1 1

TABLE OF CONTENTS

CHAPTER 1 : THEORETICAL BACKGROUND OF THE CAPSTONE 3

1.1 Business strategy - Definition, roles and attributes 3

1.1.1 Definition 3

1.1.2 The roles of the business strategy 3

1.1.3 Business strategy characteristics 4

1.2 Process for building business strategy 4

1.2.1 Vision and missions 4

1.2.2 Internal and External environment analysis 5

1.2.2.1 External environment analysis 5

1.2.2.2 Internal environment analysis 10

1.2.3 Building Matrix for selecting business strategy 11

1.2.3.1 External Factors Matrix 11

1.2.3.2 Internal Factors Matrix 11

1.2.3.3 SWOT Matrix 12

1.2.3.4 BCG Matrix 12

1.2.3.5 GREAT Matrix to choose the best business strategy 13

1.2.4 Implementing process 14

1.2.5 Assessing the effects of the built business strategy 15

1.3 Introduction to the retail banking 15

1.3.1 The roles of retail banking in the commercial bank 15

1.3.2 The models of retail banking in the world 16

1.4 Retail banking environment in Vietnam banking system 17

1.4.1 The potentials 17

1.4.2 Retail banking environment 17

1.4.2.1 Legal framework 17

1.4.2.2 Overview of the retail banking in Vietnam 18

CHAPTER 2 : BIDV RETAIL BANKING RESULTS FROM 2008-2010 20

2.1 Introductions to BIDV 20

2.1.1 History and operational features of BIDV 20

2.1.2 The Bank’s organization and network 20

2.1.3 Bank operational results of BIDV from 2008-2010 20

2.2 Assessing retail banking operational results of BIDV from 2008-2010 22

2.2.1 General assessment 22

2.2.1.1 Mobilizing capitals from individuals and households 23

2.2.1.2 Lending activities to private customers 24

2.2.1.3 Retail banking services 25

2.2.1.4 Retail banking network 27

2.2.2 Some problems to be overcome in retail banking 28

2.2.2.1 The weaknesses 28

2.2.2.2 The causes 29

2.3 Building business strategy for retail banking in BIDV from 2011-2015 30

2.3.1 Analyzing and assessing environment on retail banking in the future 30

2.3.1.1 Macro environment (PEST model) 30

2.3.1.2 Industry analysis – Michael Porter‘s Five Forces Model 33

2.3.1.3 Competition 37

2.3.2 Opportunities and threats accessing 38

2.3.3 Building business strategy for retail banking in BIDV from 2011-2015 basing on the current conditions 39

2.3.3.1 Resources, core value of the BIDV 39

2.3.3.2 Strengths and weaknesses 41

2.3.3.3 Building business strategy matrix 42

CHAPTER 3 : BIDV RETAIL BANKING BUSINESS STRATEGY AND SOLUTIONS TO IMPLEMENT IN THE PERIOD FROM 2011 – 2015 53

3.1 BIDV operational targets and retail banking objectives from 2011 – 2015 53

3.1.1 Environment forecasting 53

3.1.2 Vision, core values 53

3.1.3 BIDV’s equitization process 54

3.1.4 Objectives by 2015 55

3.1.4.1 Market positioning 55

3.1.4.2 Main targets: 56

3.2 Choosing new business strategy for retail banking 57

3.2.1 SWOT Matrix synthetic 57

3.2.2 Strategy selection by Great Model 60

3.3 Solutions for business strategy for retail banking from 2011 - 2015 63

3.3.1 Operational management 63

3.3.1.1 Improving the management capacity 63

3.3.1.2 Complete the model of retail banking management and operation 64

3.3.2 Financial solutions 64

3.3.3 Marketing management 64

3.3.3.1 Develop a solid customer base and maximize customer value 64

3.3.3.2 Enhancing research and development of retail banking products and service 65

3.3.3.3 Develop and improve the efficiency of network and distribution channels 67

3.3.3.4 Promoting communication and marketing activities in retail banking 68

3.3.4 Human resource management 68

3.3.4.1 General solutions 68

3.3.4.2 Recruitment policy 69

3.3.4.3 Training policy 69

3.3.4.4 Compensation policies 69

3.4 Plan to implement the new business strategy for retail banking 71

3.5 Recommendations to authorities 72

3.5.1 Recommendations to the Government 72

3.5.2 Recommendations to SBV 73

LIST OF ABBREVIATIONS

ACB : Asia Commercial Bank

ALCO : Asset/Liabilities Management Committee

Agribank : Bank for Agriculture and Rural Development of Vietnam ATM : Automatic Teller Machine

BIDV : Bank for Investment and Development of Vietnam

BIC : BIDV Insurance Company

CAR : Capital Adequacy Ratio

CPI : Consumer price index

CIC : Credit Information Center

CPM : Competitive Profile Matrix

EFE : External Factor Evaluation matrix

FDI : Foreign Direct Investment

GDP : Gross Domestic Product

IFE : Internal factor environment matrix

NPL : Non-performing loan

M&A : Mergers and acquisitions

POS : Point of sale

RBO : Retail Banking Operation

SBV : The State Bank of Vietnam

SOEs : State-owned enterprises

VAS : Vietnamese accounting standards

VCB : Joint stock Bank for Foreign Trade of Vietnam

Vietinbank : Joint stock Bank for Industry and Trade of Vietnam

WTO : World Trade Organization

LIST OF TABLES

Table 1.1: SWOT matrix 12

Table 1.2: Strategy choices 14

Table 2.1: BIDV‘s business performances 21

Table 2.2 Retail Banking business performance result from 2008 to 30/6/2011 22

Table 2.3 Retail loan allocations according to purposes 25

Table 2.4 BIDV‘s banking network from 2008 to 6/2011 27

Table 2.5 Business performance result of ATM 28

Table 2.6 Major macroeconomic indicators 31

Table 2.7 Numbers of banks in Vietnam, 2001-2010 34

Table 2.8 Fund mobilization from 2008 – June 2011 37

Table 2.9 Outstanding retail loans, mobilized of some Vietnamese banks - 2010 38

Table 2.10 Internal Factors Matrix 42

Table 2.11 External Factors Matrix 43

Table 2.12 CPM 45

Table 2.13 Some indicators to compare between 6 banks (by the end of 2010) 48

Table 2.14 SWOT analysis for retail banking in BIDV 48

Table 3.1 Main targets for BIDV‘s RBO in the period from 2011 – 2015 56

Table 3.2 SWOT Matrix synthetic 57

Table 3.3 GREAT model to choose a suitable strategy 61

Table 3.4 The comparison of suggested strategies 62

LIST OF FIGURES, GRAPHS

Figure 1.1: Business Strategic Planning Process 5

Figure 1.2: Macro Environment 6

Figure 1.3: M Porter Five Forces Model 9

Figure 2.1 BCG Matrix of BIDV 50

INTRODUCTION

In the context of deeper and more comprehensive integration of Vietnam into the international economy, Vietnamese commercial banks have been facing with many challenges, such as the participation of multinational corporations which are powerful in finance, engineering and technology In this situation, commercial banks are forced to have strong innovation in their business strategies Once the economy was integrated, especially with the commitment of Vietnam to open domestic financial market for foreign investors, foreign commercial banks have powerful internal force as capital and technology will take many advantages to dominate the domestic market How to stand firmly in the face of fierce competition

of foreign banks is also the biggest challenge towards Vietnamese commercial banks Answer to it, many commercial banks has chosen to develop retail banking services as their sustainable and long term strategy Practical experience has been proving the appropriateness of this strategy Any commercial banks which built the strategy targeting to retail banking services gained success in dominating market and having marked revenue Even though the initial revenue has not been significant yet but this is the sustainable revenue and could bring the long term development to the banks

Vietnam retail banking market is assessed as a renewal and extremely potential market Until now, most of commercial banks in Vietnam recognized the importance of developing retail banking service Hence, the competition between commercial banks in Vietnam in the field of retail banking is increasingly strong Typical rivals are large commercial banks with optimum strategies built since the initial establishment, State owned banks with strength of scale and human resource and foreign banks with full experience and modern technology which are penetrating deeply into the retail banking field

BIDV is a commercial bank with long history of operation, experience and takes advantage in providing banking service for large enterprises BIDV‘s service for

individuals and households has limited and still not been taken care in adequate to its potential To accomplish the objectives of developing stably, safely, effectively, meeting the requirement of international integration as well as reaching to international practice and standard, BIDV need to boost its retail banking service, expand and strengthen it and take it to be the core activities of BIDV During recent years, in order to enhance its competitive capacity, BIDV has been diversifying, pushing some activities such as investing in technological base, developing banking service, enlarge the network of branches, transaction offices, ATM system, internet banking distribution channel…These are extremely important foundation to improve retail banking service of BIDV in future

Retail banking business is a rather new activity of BIDV, thus, it is absolutely

necessary to build the “Business strategy for retail banking in BIDV in the period

from 2011-2015” to bring awareness of position and importance of retail banking

activities, in line with determining clear objectives, orientation and logical route for the development of retail banking business The capstone consists of three chapters

as follows:

CHAPTER 1: THEORETICAL BACKGROUND OF THE CAPSTONE CHAPTER 2: BIDV RETAIL BANKING RESULTS FROM 2008-2010CHAPTER 3 : RETAIL BANKING BUSINESS STRATEGY AND SOLUTIONS TO IMPLEMENT IN THE PERIOD FROM 2011 – 2015

CHAPTER 1 : THEORETICAL BACKGROUND OF THE CAPSTONE

1.1 Business strategy - Definition, roles and attributes

Johnson and Scholes (1999) described ―Strategy is the direction and scope of an organization in the long-term in order to achieve advantage for the organization through its arrangement of resources within a demanding environment, to meet the markets and to complete the stakeholder expectations‖

Le el at (2009) summarized that strategy is an orientation and scope of an organization in long term in order to gain the competitive advantage for institution

by defining all resources in a changing environment to meet the market demand and satisfy expectations of stakeholders

1.1.2 The roles of the business strategy

- Business strategy helps the firms clearly define its objective; its target basing on that, the firm has the right direction for the business operation

- Business strategy helps the firm to see the opportunities and threats that may happen in current and future business in order to make analysis and forecast the

future market, take full advantage of opportunities, reduce the threats, improve the competitiveness of enterprise, and achieve great success

- Business strategy helps to improve the usage of the firm‘s resources, increase its competitiveness position in the market in order to ensure the sustainable development of the firm

- Business strategy helps the firms to create solid bases for setting the policies and decisions on the business in compliance with the market movement

- Compare strengths and weakness of the company, the mutual supporting relation between opportunities and challenges outside the company, and then create the competitive advantage for enterprise

1.1.3 Business strategy characteristics

- Business strategies shall recognize clearly necessary objectives which need to achieve in a specific period and shall be fully aware of at every aspect and any levels of the firm

- Business strategy shall establish a relationship between the firm‘s strengths and weaknesses and a mutual relationship between opportunities and threats to the firm

to gain competitive advantages

- Strategy is an instrument to put long-term objectives of the firm

- Business strategies shall make sure the maximization of resource utilization within the firm, the exploitation of strengths and taking of opportunities to gain competitive

- Business strategy shall be reflected in a continuous process

- Business strategy shall classify obviously reasonable scope of the firm

1.2 Process for building business strategy

1.2.1 Vision and missions

To build a business strategy, we first identify the firm‘s main visions and missions This stage provides a context for the firm‘s strategies What the business is trying to achieve in long-term is the vision of the firm Missions explain the purposes and products of the business We only have a good mission statement when we have the

purposes and bases which differentiate with the rest A mission statement may include the firm‘s business viewpoint and its behaviour to employees Regarding the firm‘s tasks, missions provide expectations of its employees and its overall image to stakeholders.

Figure 1.1: Business Strategic Planning Process

(Source: Strategic management slide lecture, GaMBA program, Griggs University)

1.2.2 Internal and External environment analysis

1.2.2.1 External environment analysis

The second step is analyzing the external environment of the firm This analysis enables the firm to identify opportunities (O) and threats (T)

PEST analysis is a technique people use to identify, assess and evaluate external factors affecting the performance of an organization A PEST analysis is undertaken

to help an organization gain an understanding of the wider business environment and may be carried out as part of an ongoing process of environmental analysis or scanning The aim is to provide information to assist those responsible for strategy development and decision making PEST analysis may be used in the context of overall organizational strategy or more specifically to evaluate the feasibility of a new product or service, or expansion into a new market

Main objectives and missions

Analysis of internal environment (S, W)

Analysis of external environment (O, T)

Strategic choice

Strategy implementation

Result evaluation

Feed back

The factors in PEST analysis are (1) political/legal, (2) economic, (3) socio-cultural and (4) technological elements

Figure 1.2: Macro Environment

(Source: Strategic management slide lecture, GaMBA program, Griggs University)

- Political and legal environment: Politic and legislation factors affect developing

strategy of enterprises in different directions They may be opportunities to this firm but in contrast, be disadvantage to other firms Stable politic brings good condition for developing economy, vice versa, unstable politic will have negative influences

on economy Besides, running in an economy which are adjusted by strict law system, enterprises may face both advantages and disadvantages because a clear and full law system will create healthy competitive environment and be a foundation for

an attractive environment in the future One of the typical trends in recent years is the redirection to deregulation The eradication of exhibitions and regulations makes the import barrier become lessen and creates an intensive competition in some fields

Threats of substitutes

Threat from new entrants

Global

Social Technological

of industry In addition, the policy of encouraging various economic elements to include actively in business activities is the risk for state owned firms but the great opportunity for private enterprises because they can participate in the market more conveniently and easily

- Economic environment: In the economic environment, the organizational analysis

should centre on those aspects of the economic system that directly impact the type

of project being considered For example, inflation, labour laws, and opportunity

costs for researchers in public institutions directly impact organizational activities

- Cultural and Social Environment: Social and cultural forces at local, national,

and often regional levels have profound influence on the way organizations conduct their work and on what they value in terms of outcomes and effects For example, the mores of an indigenous culture have a bearing on the work ethic and on the way

in which people relate to one another Undoubtedly, the most profound cultural dimension is language The extent to which organizational members can participate

in the discourse of the major scientific language will determine the extent to which research efforts focus inwardly or contribute to regional and global research agendas Understanding the national/regional/local values toward learning and research provides insight into the type and nature of research that is valued For example, what is the relative priority placed on contract research in partnership with local clients, e.g testing products and procedures with indigenous populations, as opposed to sharing information with academic peers internationally, or generating biostatistician data that will shape national or regional policy? Arriving at these priorities involves culture-based decisions

- Technological Environment: Technical progressions have influence on many

aspects of the whole society These impacts are through products, technical process and new materials Directions and fluctuations in technology may be chance for enterprises which are able to mobilize capital quickly and effectively, but vice versa, it is threat for firms fixed with old technologies and slow to adjust One of the most important effects of changing technology is on barriers of import and export

and the restructuring thoroughly sector‘s structure as well as on the creation of new jobs

According to M Porter (2009), technological change is not important to technological benefit itself, but it is important if it impacts on competitive advantages and sector‘s structure On the other hand, the development of technology will shorten product circle, thus, firms should pay attention to the trend

of technological innovation Every firm has relation with many different and related kinds of technology Its business activities also have that various relation Therefore, a technology is very important to competition if it impacts on firm‘s competitive advantages or on structure of financial sectors

In sum, PEST is useful before SWOT - not generally vice-versa - PEST definitely helps to identify SWOT factors There is overlap between PEST and SWOT, in that similar factors would appear in each That said, PEST and SWOT are certainly two different perspectives: PEST assesses a market, including competitors, from the standpoint of a particular proposition or a business SWOT is an assessment of a business or a proposition, whether it is your own or a competitor's Strategic planning is not a precise science - no tool is mandatory - it's a matter of pragmatic choice as to what helps best to identify and explain the issues PEST becomes more useful and relevant the larger and more complex the business or proposition, but even for a very small local businesses a PEST analysis can still throw up one or two very significant issues that might otherwise be missed

Besides PEST we can use Porter‘s five forces model to access the industry environment Michael Porter five forces model provides useful input for SWOT Analysis and is considered as a strong tool for industry competitive analysis Porter‘s model of competitive forces assumes that there are five competitive forces that identify the competitive power in a business situation: the substitutes, new entrants, intense rivalry, bargaining power of suppliers and bargaining power of buyers

Figure 1.3: M Porter Five Forces Model

-

(Source: Michael E.P (1980), Competitive Strategy, Free Press, New York)

- Threat of substitutes: means how easily your customers can switch to your

competitors product Threat of substitute is high when there are many substitute products available, customer can easily find the product or service that you‘re offering at the same or less price, quality of the competitors‘ product is better, substitute product is by a company earning high profits so can reduce prices to the lowest level When there are actual and potential substitute products available then segment is unattractive Profits and prices are affected by substitutes so; there is need to closely monitor price trends In substitute industries, if competition rises or technology modernizes then prices and profits decline

- Threat of new entrants: A new entry of a competitor into your market also

weakens your power Threat of new entry depends upon entry and exit barriers Threat of new entry is high when capital requirements to start the business are less, few economies of scale are in place, customers can easily switch (low switching cost), your key technology is not hard to acquire or isn‘t protected well, and your product is not differentiated

- Industry Rivalry: Industry rivalry means the intensity of competition among the

existing competitors in the market Intensity of rivalry depends on the number of competitors and their capabilities Industry rivalry is high when there are number of small or equal competitors and less when there‘s a clear market leader, customers

have low switching costs, industry is growing, exit barriers are high and rivals stay and compete, fixed cost are high resulting huge production and reduction in prices

- Bargaining power of supplier means how strong is the position of a seller, how

much your supplier has control over increasing the price of supplies Suppliers are more powerful when suppliers are concentrated and well organized, a few substitutes available to supplies, their product is most effective or unique, switching cost, from one suppliers to another, is high, you are not an important customer to supplier

- Bargaining power of buyer means how much control the buyers have to drive

down your products price, can they work together in ordering large volumes Buyers have more bargaining power when few buyers chasing too many goods, buyer purchases in bulk quantities, product is not differentiated, buyer‘s cost of switching to a competitors‘ product is low, shopping cost is low, and buyers are price sensitive

1.2.2.2 Internal environment analysis

The third step to establish a business strategy is analysing internal environment to find out the firm‘s strengths (S) and weaknesses (W) Hence, chosen business strategies would help the firm make use of strengths and overcome weaknesses The internal environment analysis of strengths and weaknesses focuses on internal factors that give an organization certain advantages and disadvantages in meeting the needs of its target market Strengths refer to core competencies that give the firm an advantage in meeting the needs of its target markets Any analysis of company strengths should be market oriented/customer focused because strengths are only meaningful when they assist the firm in meeting customer needs Weaknesses refer to any limitations a company faces in implementing a strategy Weaknesses should also be examined from a customer perspective because customers often perceive weaknesses that a company can not see Being market focused when analyzing strengths and weaknesses does not mean that non-market oriented strengths and weaknesses should be forgotten Rather, it suggests that all

firms should tie their strengths and weaknesses to customer requirements Only those strengths that relate to satisfying a customer need should be considered true core competencies

1.2.3 Building Matrix for selecting business strategy

1.2.3.1 External Factors Matrix

Analysing external environment is qualitative, subjective and abstract Therefore two suggested tools to score and to quantify impacts of the external environment to

a firm are external factor evaluation matrix (EFE) and company profile matrix (CPM)

The EFE matrix is the strategic tool used to evaluate firm existing strategies, EFE matrix can be defined as the strategic tool to evaluate external environment or macro environment of the firm include economic, social, technological, government, political, legal and competitive information

The EFE matrix is similar to IFE matrix The only difference is that IFE matrix evaluates the internal factors of the company and EFE matrix evaluates the external factors

Wheelen and Hunger (2005) demonstrated the steps to develop the EFE matrix: (i) Identify a list of KEY external factors; (ii) Assign a weight to each factor, ranging from 0 (not important) to 1.0 (very important); (iii) Assign a 1-4 rating to each critical success factor to indicate how effectively the firm‘s current strategies respond to the factor; (iv) multiply each factor‘s weight by its rating to determine a weighted score; (v) Sum the weighted scores The higher the total score is, the better the firm responds to external factors Average total weighted score is 2.5

1.2.3.2 Internal Factors Matrix

Similar to analysing the external environment, internal factor environment matrix (IFE) is suggested to quantify the internal environment assessment: (i) List key internal factors as identified in the internal audit process; (ii) Assign a weight that ranges from 0.0 (not important) to 1.0 (the most important) to each factor; (iii) Assign a 1 to 4 rating to each factor to indicate whether that factor represents a

major weakness (rating = 1), a minor weakness (rating = 2), a minor strength (rating

= 3), or a major strength (rating = 4) Note that strengths must receive a 4 or 3 rating and weaknesses must receive a 1 or 2 rating; (iv) Multiply each factor‘s weight by its rating to determine a weighted score for each variable and (v) Sum the weighted scores for each variable to determine the total weighted score for the organization The final value of total weighted score should range from 1.0 (low) to 4.0 (high) The average weighted score for IFE matrix is 2.5 The total score indicate how the firm responds to its current and expected internal factors

1.2.3.3 SWOT Matrix

SWOT matrix is a tool to combine strengths (S), weaknesses (W), opportunities (O) and threats (T) to formulate and choose from four types of strategy as following: + SO strategies: apply internal strengths to take advantage of external opportunities + WO strategies: take advantage of external opportunities to improve internal weaknesses

+ ST strategies: apply the firm‘s strength to avoid the impact of external threats + WT strategies: are defensive tactics directed at reducing internal weaknesses and avoiding external threats

Table 1.1 : SWOT matrix

S - Strengths W - Weaknesses O- Opportunities S-O strategies W-O strategies T- Threats S-T strategies W-T strategies

(Source: Strategic management slide lecture, Griggs University)

1.2.3.4 BCG Matrix

In the early of 1970‘s, Boston Consulting Group, a leading management consultancy in USA developed BCG matrix It helps enterprises to evaluate business activities of strategic business units BCG matrix provides a framework for

a company to allocate its resources among different business units and allow one to compare many units The BCG matrix is an important internal business analysis tool

that puts into perspective the growth rate and the market share of a company's products A product might either have low or high growth rate and again low or high market share It classifies products according to the following four criteria:

1 Stars, a product that has a star attribute is one that has a high market share accompanied by a high growth rate A star product can contribute to a company's success in that it its high market share and its high growth rate means more sales and more returns from it

2 Cash cows, cash cows are products that have high market share in a market with low growth rate These types of products also have a big chance of success because the growth rate might be low but the high market share will have a say in the success of the said products

3 Dogs are products that have the characteristics of both low market share and low growth rate The chances of a success coming out of products that exhibit dogs are low Also these are types of products that no company wants to be associated with them because they practically see nothing useful coming out of it at both the short and the long run

4 Question marks, these are products that have the potential to either succeed or fail They can become tomorrow's star or likewise tomorrow's dog Investing with these types of products can either be risky or lucrative and either way is a possibility and a company can either have them or avoid them at all costs

1.2.3.5 GREAT Matrix to choose the best business strategy

The next step is choosing the business strategy After develop the matrixes above, the firm can choose its own business strategy They need to select an optimum strategy because they can not implement all strategies at a time or each strategy by a random order It will cost time, efforts and resources That‘s why it‘s necessary to

do selection for a best strategy which will serve well the development objectives of the enterprise given its advantages and disadvantages

On the synthesis of all strategies which has been figured out through the SWOT analysis S-O, S-T, W-O, W-T, we can use GREAT matrix to identify fundamental features of each strategy, which will help us to find out the desired strategy

Table 1.2: Strategy choices

Criteria

Strategies Strategy 1 Strategy 2 Strategy 3 Strategy n

Source: Strategic management, GaMBA program, Griggs University, USA

Step 1: Recognize key aspects to be considered as criteria in column 1

Step 2: Anticipate the impacts of those criteria on the general strategy; use the weight of impacts to show the importance and its degree of influence on strategic factors (weight in the range of 0-1, with the total of weights is 1)

Step 3: Evaluate and Grade every criterion in each strategy The grade scale is 1-5, which is equivalent to 5 levels: poor, average, above average, good, and excellent Step 4: Calculate the grades into equivalence by multiply column 2 with the responsive weight, then we come up with the total grade for each strategy in the final row

Finally, we highlight 1-3 strategies with highest grades, which are strategies to be focus on

1.2.4 Implementing process

In many cases, business strategy does not succeed due to the lack of necessary resources Developing a strategic plan is a top down process If the management team don‘t give out a right conclusion at this step, the strategic plan will not work at the following steps So:

Being proactive in implementing the strategic plan is the key mission of any manager Companies don‘t implement the strategic plan itself, but the human beings

do The tasks of strategy implementation including: Building capacity, ability and resources, setting up a budget, establishing supporting policies and regulations, Selecting best practices and encouraging the innovations, Setting up the information system, Connecting and running, attaching penalty or bonus to the business target in order to enhance the business implementation, create strategy oriented working environment and make necessary decisions to implement better the strategy

1.2.5 Assessing the effects of the built business strategy

Although control systems must be tailored to specific situations, such systems generally follow the same basic process Feedback from evaluating the effectiveness

of the strategy may influence many of other phases on the strategic management process A well-designed control system will usually include feedback of control information to the individual or group performing the controlled activity Simple feedback systems measure outputs of a process and feed into the system or the inputs of system corrective actions to obtain desired outputs The consequence of utilizing the feedback control systems is that the unsatisfactory performance continues until the malfunction is discovered One technique for reducing the problems associated with feedback control systems is feed forward control Feed forward systems monitor inputs into a process to ascertain whether the inputs are as planned; if they are not, the inputs, or perhaps the process, are changed in order to obtain desired results

1.3 Introduction to the retail banking

1.3.1 The roles of retail banking in the commercial bank

Providing personal financial services or retail banking operations (RBO) is one of the traditional activities that form the system of commercial banks in the world Along with the evolution of the economy, the banking and financial services are also constantly diversified and increased to meet the needs of society better Today, many commercial banks operating in the world considered RBO as a core activity to build, consolidate and develop a solid customer base and thereby expand other businesses of the bank

Now there are many different concepts and definitions of RBO but generally RBO

is understood as a bank‘s activity towards customers including individuals and small business households, and in some cases they may include small and medium enterprises, depending on the specific strategy of each bank

As for banks‘ RBO with an target customers of very large number of individual ones and households, has and will bring stable and dispersed income and reduce risks and contribute an important part in expanding the market, improving competitiveness and creating a solid foundation for the operations of banks

RBO increasingly plays an important role in the operations of commercial banks in the world, ensuring the sustainability of the bank In particular, the recent global economic crisis showed that while most banks have a concentrated strategy on retail operations are able to withstand, the large investment banks primarily serve the corporations has been in troubles, even bankruptcy (like Merrill Lynch, Lemon Brothers ) So the trend today is that most banks in the world develop RBO

1.3.2 The models of retail banking in the world

There is currently no standard organizational model for RBO in the world Each bank depends on its specific features and business strategies to organize RBO in a suitable way However, generally it can be classified into three basic types of RBO organizational model as follows:

- Vertical organizational model: banking activities are divided into two separate

ones: wholesale banking and retail banking (RB) RBO is governed by the following basic units: Card service management unit, financial services and individual investment management unit, Personal payment service management unit, E-banking service management unit, Personal credit services management unit Each unit will be responsible for all phases of market research, product & services development, bringing products to the market, monitoring and evaluating products, marketing products, risk management, operational activities

- Horizontal RB management model is divided into management units according

to specific operations such as sales management unit, product development unit, operational risk management unit, support unit

- Mixed RB model is managed both horizontally and vertically Accordingly, some

stages will be governed vertically such as in product & services development, monitoring and evaluation of products, services, the other stages is managed horizontally like product marketing and risk management, other operational activities

1.4 Retail banking environment in Vietnam banking system

1.4.1 The potentials

At the moment, the size of the retail banking in Vietnam is still small compares to its potentials According to some reseaches, until now there are only 17% of Vietnam citizen have the account in the bank With the stable political, economical environment of Vietnam and with the more deeply process of intergration, high population density, the increasing social income (annual GDP per capita in 2010 is about USD 1,200, increased by 3 times in the past 10 years) and the low related banking and financial services, Vietnam is evaluated as the potential market for developing the retail banking They also estimated that the turnover from retail banking will increase with the ratio of 25-30% each year in the next 5-10 years

1.4.2 Retail banking environment

1.4.2.1 Legal framework

Overall legal environment for RBO is still inadequate, such that regulations on cash payment is outdated, some documents of the management unit built on the basis of transactions in manual method is not compatible with the process with modern technology Recently, the Government and the State Bank of Vietnam (SBV) have taken steps to gradually improve the legal environment, playing an important contribution to promote the development of RBO in Vietnamese market such as issuing some policies of promoting RBO (project of non-cash payments, regulations on the payment through accounts, Decision No 20 promulgating the

non-Regulation on the issuance, payment, using and providing support services in bank card, the agreed interest rate upon the regimes for consumer loans )

1.4.2.2 Overview of the retail banking in Vietnam

In recent years, the banking industry has undergone great pressure of increasingly intense competition the on the fields of banking services supply and the rapid development of technology In the past years, the banking industry has been rapid growth in the volume and scale The current number of banks operating in Vietnam

is 80 banks and most of them are involved in RBO

In general, banks are developing RBO in Vietnam through the expansion of branch network, transaction, application of information technology in banking operations (such as core banking program, ATM installation, POS, E-banking, Mobi-banking, phone-banking, Contactcenter) and diversification of products and services, enhancement of the advertising and promotion programs to attract customers Except for a few foreign banks in Vietnam with modern technology in RBO and focus mainly on customers with high incomes, generally RO services of commercial banks in Vietnam still have many problems to fix Many commercial banks in Vietnam have not developed plans for develop the synchronous RB Services are not diversified enough to meet the diverse needs of customers, modern RB services

is still limited; Traditional trading methods have not been developed sufficiently to attract customers; the marketing and product introduction is not professional; Using modern technology as a tool for developing RBO has not achieved desired results The quality of providers of information technology networks are not good

(For more details please see Appendix 1)

Conclusion for Chapter I

This chapter focuses on the fundamental theories on builing a business strategy We mentioned different definitions about business strategy to provide an overview on this subject of the capstone Characteristics and roles of business strategy are also presented to explain why we have to think carefully when building business strategy We indicate the procedure to build a business strategy (from setting the

firm‘s vision and goals, analyzing internal and external environment, developing matrices to choose a suitable strategy, implementing and evaluating results of the implementation process)

Besides, this chapter represents the overview of the retail banking, its role in the progress of the bank‘s development Retail banking becomes the major trend in the way the banks in the world to develop In Vietnam, the socio-economic conditions

in recent years have been improved, the legal framework for the bank to operate is completed, GDP per capita is increasing, the demand for financial and banking products is expanding considerably These favorable conditions are potentials for the retail banking in BIDV To take the advantages of the intergration process in Vietnam, retail banking expansion is obvious trend

CHAPTER 2 : BIDV RETAIL BANKING RESULTS FROM 2008-2010

2.1 Introductions to BIDV

2.1.1 History and operational features of BIDV

Full name: Bank for Investment and Development of Vietnam (BIDV) Address: BIDV Tower, 35 Hang Voi Street, Hoan Kiem District, Hanoi City

Founded on 04/26/1957, BIDV is one of the oldest commercial bank in Vietnam

As a long-established bank, BIDV has funded many investment projects and key economic areas of the country BIDV has also built the largest enterprise customers, while confirming the implementation of prestigious items, objectives, economic programs and social security of the country BIDV functions as a leading experienced bank of finance services, brokerage, loan syndication and advisory, modern, convenient banking products

2.1.2 The Bank’s organization and network

- With more than 16,000 officers, employees and financial consultants who are well-qualified and well-trained with full experience and have been accumulated and transferred for over half of a century, BIDV always brings its customers the benefits and reliability

- Banking network: BIDV has 108 branches and 500 transaction offices, thousands

of ATMs and POS transactions in 63 provinces and cities nationwide

(Please see Appendix 2 - BIDV‘s organisation chart for more detail)

2.1.3 Bank operational results of BIDV from 2008-2010

Although in 2010 the world economy has almost escaped from the bottom of the crisis and began to show some signs of recovery but is not really sustainable Entering 2011, the world economy continues to suffer severe effects from the debt crisis in some European countries, US‘s downgrade credit ratings by Standard and Poor‘s Commodity prices continue to escalate, especially gold has consistently made the peaks of all time in history Vietnam's economy is influenced by that world‘s complicated economic developments The business environment in 2010 and the first months in 2011 are considered difficult for the commercial banks in

general and BIDV in particular BIDV is a leader bank in the implementation of Resolution No 02/NQ-CP on 09/01/2011 by the Government

According to the audited report of BIDV, at the end of 2010, BIDV's total assets reached 366 trillion VND; outstanding loans reached 254 trillion VND, equivalent

to the growth rate of 23.6 compared with those in 2009 Mobilized capital/funds reached 252 trillion VND, growing at 23.8% Profit before tax was 4.6 trillion VND, growing at 28.3% Indicators of business performance have reached and exceeded the established plan, ROA was 1.13%, ROE was 17.96%, and CAR is 9.2% BIDV's business performance in 3 years from 2008 to 2010 is shown in the following table:

Table 2.1: BIDV’s business performances

Billions of VND

I Size Indicators

1 Total assets 246,519 296,432 366,268 388,474

2 Total mobilized fund (end of period) 181,048 203,298 248,898 267,229

3 Outstanding loans (end of period) 160,983 206,095 253,874 245,980

4 Equity 13,466 17,639 24,220

1 Outstanding of medium, long term loans over

total outstanding loans

40.50 46.57 43.52 43.1

2 Arrears over total outstanding loans 61.20 64.83 66.05 65.03

3 Secured loans over total loans 67.84 72.80 73.70 74.00

4 Net outstanding loans over total assets 63.60 67.80 69.10 70.20

1 Bad debts ratio 2.75 2.80 2.6 2.54

2 Group II debt over total outstanding 20.70 16.25 15 15.5

4 Ratios of incomes from interests 74.5 68.7 77.4 77

5 Outstanding loans over mobilized funds 89 82 85 80

Sources: BIDV’s annual report from 2008-2010, BIDV’s Business performance

report for the first half of 2011

2.2 Assessing retail banking operational results of BIDV from 2008-2010

2.2.1 General assessment

RBO of BIDV has been provided to the private customers since 1995 when the BIDV began to operate with full commercial bank functions Although affected by the economic environment very much and intense competition among the banks but RBO of BIDV has recently been implemented in a flexible manner and achieve relatively positive results Specifically as follows:

Table 2.2 Retail Banking business performance result from 2008 to 30/6/2011

N

Growth ratio (%)

First half

2011

A Mobilized fund from

individuals & households

1 Total mobilized fund Bil.VND 58,251 75,406 100,003 29% 115,497

2 Average outstanding loans Bil.VND 55,930 67.139 86.952 20% 105,491

3 Total retail mobilized

fund/total mobilized funds % 31% 34% 35% 12% 43%

B Retail loans

1 Outstanding loans Bil.VND 15,562 19,302 29,832 24% 32,784

2 Bad debt (Group 4 and 5) % 2% 1,9% 2% -5% 2%

3 Total retail loans/total

4 Net incomes from NCS Bil VND 155 209 314 50% 146

Sources: BIDV’s annual report from 2008-2010, BIDV’s Business performance report

for the first half of 2011

2.2.1.1 Mobilizing capitals from individuals and households

- Assessment in terms of scale and growth rate: The capital mobilization from

citizen had a relative growth in the period 2008-2010 At the end of 2010, the total mobilized funds from individuals and households reached 100,003 billion VND, increasing 30% compared with the end of 2009 The average growth for 2008-2010 reached 15% per year By the end of June 2011, total mobilized funds from individuals and households reached 115,497 billion VND, equivalent to 15% growth compared to 2010 and increased 27% over the same period last year

- Assessment in terms of structure, quality and efficiency:

 Total mobilized funds from individuals and households frequently accounts for more than 30% of the total mobilized capital of BIDV In 2008, it accounted for 31% and continued to increase in the past three years, reached 35% in 2010

 Recently, the structure of retail deposits shifted positively with the trend that the proportion of VND deposits, term deposits, including valuable papers has been increased

- Assessment in terms of tenor: In 2008, term deposits of less than 12 months grew

sharply, accounted for a proportion of 65%, while deposits of 12 months or more decreased from nearly 30% to 28%, the wave of rising interest rates, especially in the short term to ensure the liquidity of the banking along with the residents‘ psychology of interest rate expectation continuingly increased By 31 December

2010, short term deposits reached 70,002 billion VND, accounting for 70% and long term ones reached 20,001 billion VND, accounting for 20%

- Assessment in terms of products: Payment deposits and current deposits are to

meet the needs of customers; therefore, the proportion is not high, only about 7% with the balance of 7,000 billion VND at 31 December 2010 Term deposits are leading product in the list of deposits which are concentrated on mobilizing by BIDV with competitive interest rates and the variety of products Its average growth rate is 7% per year, accounting for 85% - 90% of the total deposits, with the balance

up to 31 December 2010 of 85,002 billion VND Certificates of deposits attract more customers and its balance is 9,974 billion by 31 December 2010

- Products for mobilizing capital: in the first months 2011, in order to attract

customers, increase competitiveness and diversify the products, BIDV has continued launching into the market the deposit products with more features, attractive facilities, especially the reward savings program such as savings products

―Loc xuan may man‖ (Lucky Spring gift), ―Tiet kiem an loi‖ (Safe savings with more benefits)

2.2.1.2 Lending activities to private customers

- Scale and growth rate: Outstanding retail loans increased continuously in the past

3 years It reached 15,562 billion VND by the end of 2009 and 29,832 billion VND

by the end of 2010, grew by 24% in comparison with the end of 2009 By the end of June 2011, outstanding retail loans reached 32,784 billion VND, equivalent to 10% growth as compared to 2010

- Structure and quality:

 The quality of retail credit is in the bank‘s control, debt groups 4 and 5 is often below 2% in the period 2008-2010 and continues to be maintained at 2% in the first haft of 2011

 Structure of term retail loans, in the end of June of 2011, the percentage of term loans accounted for 29% This structure does not change significantly in 2010

long- Retail outstanding loans by products: BIDV concentrates on implementing three major products are household lending for business, mortgage lending by valuable papers, and lending for supporting the housing demand In the past three years, retail outstanding by products continues to be improved in a positive way, with the balance of household lending in the end of June 2011 accounted for 41.7%, lending for supporting the housing demand accounts for 29% and mortgage lending by valuable papers accounted for 9.5%

Table 2.3 Retail loan allocations according to purposes

Proportio

n

Outstand ing loans

Propor tion

Outstand ing loans

1 Loans for buying house 1,655 10.6 3,613 19.40 7,393 24.8 9,838 29.44

2 Loans for buying cars 193 1.20 770 4.10 1,001 3.4 1,091 3.27

3 Loans for officers 1,044 6.70 1,308 7.00 1,619 5.4 1,583 4.74

4 Loans for student study abroad 6 0.00 10 0.10 16 0.1 19 0.06

7 Loans for labor exporting 1 0.00 2 0.00 3 0.0 1 0.00%

5 Loans for overdraft 192 1.20 314 1.70 652 2.2 901 2.70

6 Loans for buying 1st issued shares 471 3.00 169 0.90 161 0.5 149 0.45

8 Loans for households 9,185 59.00 8,279 44.60 12,141 40.7 13,943 41.73

11 Loans for stock mortgages, repo 711 4.60 680 3.70 95 0.3 142 0.42

12 Loans for securities mortgage 1,317 8.50 1,385 7.50 4,251 14.2 3,178 9.51

13 Real estate mortgage loans 0 0.00 1,079 5.80 1,767 5.9 1,792 5.36%

14 Other purposes 787 5.10 951 5.10 628 2.1 632 1.89%

Sources: BIDV’s annual report from 2008-2010, BIDV’s Business performance report

for the first half of 2011

2.2.1.3 Retail banking services

By the end of June, 2011, total fees gains from retail services was 129 billion VND,

grown by 15% compares to the same period last year and accounted for 13.5% of

the total fees from service activities The retail banking customers basis continues to

increase with the number of customers is now 3 million

- Card activities:

 Scale and growth rate: Defined as one of the core services of retail operations,

with a focus direction of the Board of Management, from 2008-2010, card activities

have gained the strong development

 Total number of cards issued in 2010 reached 2,355,884 ones, in which the

number of domestic/local debit card is 2,336,791 (increased 28.9% in comparison

with the last year) and international credit cards which just implemented in the

beginning in 2009 are 19,093 ones Until 30 June 2011, the number of issued cards

has increased to more than 300,000 ones

 Card payment services via POS/EDC formally implemented from August 2007 helped BIDV gain new types of customers as the card acceptance unit and increase the benefits to the BIDV cardholders

 Net services charges of credit activities have a relative growth, which in 2008 reached 16.5 billion VND, in 2009 reached 30.5 billion VND and in 2010 was estimated at 50.3 billion VND, grew by 3 times compared with in 2008

- The other non-credit services:

In the past three years, with the goal of providing with diversified products and services to meet the highest demand for financial services for all customers, other retail products such as bill payment, payroll, remittance services, BSMS, BIDV Direct Banking has been in an active research, implementation and has gained the relatively fast growth Specifically:

 Remittance transfer service: the network of domestic payment services is expanding, allowing BIDV to have the stable quality and increased service fees The remittance transfers also have been developed with many remittance products:

WU, AFX, PER including the most notably WU In the first six months, 2011, there were 135 thousand transactions, service volume reached 88.7 million USD, and therefore the service charge was 118 thousand USD

 Electricity bill payment services for EVN have been deployed since January 2006

in HCM City The payment volume and the number of transactions increased over the years, in 2007 reached 257 million VND with 314 transactions, through June of

2011 reached 215 billion VND with 29,000 transactions After nearly five years of implementation, the service has made a positive change in the perception of customers about the habits of non-cash payment, and supported the branches carry out other services (payroll, BSMS,)

 E-banking services: This is the products prepared for Internet Banking, Mobile Banking on the basis of the advanced technology of BIDV in the future time

BSMS services are piloted in late 2006 and officially since 2007, services have achieved many positive results Up to 30/6/2011, customers' service usage increased

1.2 times compared with the end of 2010 which reached 531,000 customers (including 42,480 enterprise customers and nearly 488,520 individual customers) With various utilities, supplying information to customers about their account transactions, services have contributed to improving service quality and customer satisfaction and bring adequate fee charges to the bank, the charges in 6 first months

in 2011 was 15.9 billion, and grew up 45% in comparison with 2010

2.2.1.4 Retail banking network

Branch network and operational efficiency of the network were significantly improved in the past three years The rearrangement of the network under Decision No.13/2008/QD-NHNN has increased the number of trading rooms throughout the system which is the distribution base for retail products Up to now, BIDV's network is spread across 63 provinces/cities nationwide, mainly concentrated in 2 key economic zones Branch network is located in the central of urban areas, well equipped and focused, with a favorable location for retail banking operations

Until 31/10/2010, the whole system has 597 network points of RBO, (including 113 branches, 349 transaction offices and 135 Saving bank points), ranking the third on the network size (after Agribank and Vietinbank)

Table 2.4 BIDV’s banking network from 2008 to 6/2011

Sources: BIDV’s annual report from 2008-2010, BIDV’s Business performance report

for the first half of 2011

Modern banking network (ATM – POS, IBMB, home banking)

 POS: By the end of 2010, there were about 54,000 machines that accepted POS The network expansion has many difficulties By 06/30/2011, the number of new POS increased by 1,222 POS

 ATM is a familiar channel transaction On the market, there are 11,755 ATM Agribank ranks the first, followed by Vietinbank, VCB, ACB and BIDV ATM

network has continued to expand with a very high growth rate in terms of the number of transactions and trading sales By 06/30/2011, BIDV had 1,085 ATM machines, representing 13.1% market share of ATM machines

Table 2.5 Business performance result of ATM

Year Number

of ATM

Transaction volume (bil VND)

Number of transactions

Fees (bil VND)

Total Debit

Card

Banknet Card

Visa Card

Sources: BIDV’s annual report from 2008-2010, BIDV’s Business performance report

for the first half of 2011

Internet banking, mobile banking (IBMB)

At the moment, IBMB distribution channels are in the testing process, therefore, the old customers still use Home banking distribution channels applied to the customers

of financial institutions and enterprises Until 06/30/2011, the whole system had 52 branches of Home banking service deployment, providing for 354 customers The number of transactions via Home banking reached 38,000 ones, grew up 17% in comparison with the same period of 2010

2.2.2 Some problems to be overcome in retail banking

2.2.2.1 The weaknesses

- Mobilized funds from individuals and households had a strong growth and increased sharply in June 2011 led to many risk factors and reflected the unsustainable sign

- Now there are some branches that have not established a single department of individual customer relationships and therefore have not facilitated customer relations staff at the branch focused on the retail operations

- The arrangement of individual customer transactions areas at the transaction points

is not homogeneous, which has not facilitated to improve the staff's capacity of accessing to customers

2.2.2.2 The causes

- Strategic plan for RBO development is not yet properly concerned The view of RBO development at many executive levels, especially the branch level was not consistent

- Organizational model of the management of RBO are in the completion stage, is not specific and lack of system:

 The organization of RBO at branches is not yet professional, Personal Customer Relation Department at the branch does not actually comply with the prescribed functions

 In RBO management, the reception and deployment of new products at the branch

is also distributed in many departments (Customer Relation Department and Customer Service Department)

- There is a lack of human resources management experience in the field of RBO Knowledge, sales skills and experience of the retail staff is limited The attitude of service is poor Selling skills of the staff is weak, have not been trained according to RBO standard

- Retail products are less competitive due to the process and procedures are complex, lack of facilities and features, law stability level of the technology in the production, card products lack of diversity in facilities as well as type the card The product development does not really link to each customer segment, therefore the effectiveness of the product is limited Do not provide the packages that fit customer needs There is no system of monitoring and evaluating the effectiveness

of each retail product

In summary, in the period from 2008-2011, the RBO at BIDV had initially been

considered to develop, especially since the first of September 2008, while BIDV converted the model of organization that separated the wholesale and retail operations according to the recommendation of the consultant TA2 RBO has contributed to the certain results of operations of the whole system

2.3 Building business strategy for retail banking in BIDV from 2011-2015

2.3.1 Analyzing and assessing environment on retail banking in the future

2.3.1.1 Macro environment (PEST model)

In particular, the State Bank is urgently drafting another Decree to replace Decree

No 64/2001/ND-CP dated 20 September 2001 on payment activities through organizations providing payment services as the legal basis for the payment operations of credit institution on the basis of the reference of payment practices These are important elements to the Vietnamese market of RB services flourished

- Economical factor

Gross domestic product (GDP) in the first six months 2011 is estimated to increase 5.57% compared with the same period in 2010, in which the 1st quarter rose 5.43%, the 2nd quarter increased 5.67% Consumer Price Index (CPI) in June 2011 increased 13.29% compared with December 2010 and grew up 20.82% over the same period last year

Thus, within six first months of 2011, GDP continued to increase stably, the production recovered, the import and export goods grew which were the opportunities for BIDV in its business activities However, the economy continues

to face challenges: (i) high inflation and trade deficit, (ii) The stock market declines, the real estate market gets complicated; (iii) the attraction of foreign direct investment decreased, (iv) interest rate (due to the effects of inflation) remain high

effect on the production BIDV will have difficulty with the market when the retail banking business in the fluctuations of interest rates, exchange rate

Table 2.6 Major macroeconomic indicators

Source: Economy 2010 – 2011 Vietnam and the World

- Social - culture factor

According to the Report on the world population from United Nations (UN), in

2010, the Vietnam population reached 89 billion people In Vietnam, the population size is increasing while the habits of using banking services have not yet widely popular, there will be more potential demands for developing banking services Young population is the special factor determining the high demands for advanced technology banking services in the near future, especially the modern banking services like internet, IBMS

With regards to demography, high population density in urban areas and economic, cultural and political centers should be taken into consideration in developing banking business network Urbanization trend with the population growth rate of average 1% annually in the big cities, in 2010, city population accounted for 30%

In which the people in the mature period for working is quite high (the age from 60), is 52% of the whole population

18-The expansion in consuming trend: according to TNS Vietcycle, the growth rates of the income in the family are as follows: Below 15% family in cities have the total monthly income from 3 million VND to lower, above 45% family in cities have the total monthly income from 4.5 to 20 million VND The saving rate of Vietnamese has decreased from 17% of the total income in 1999 to 9% in 2010