Business strategy of viet nam joint stock commercial bank for industry and trade -thang long branch (vietinbank thang long) period 2012 - 2016

Strategic Management CAPSTONE PROJECT REPORT BUSINESS STRATEGY OF VIET NAM JOINT STOCK COMMERCIAL BANK FOR INDUSTRY AND TRADE - THANG LONG BRANCH VIETINBANK THANG LONG PERIOD 2012

Strategic Management

CAPSTONE PROJECT REPORT

BUSINESS STRATEGY OF VIET NAM

JOINT STOCK COMMERCIAL BANK

FOR INDUSTRY AND TRADE -

THANG LONG BRANCH (VIETINBANK THANG LONG)

PERIOD 2012 - 2016

Group 9

NGUYEN GIANG HOAI

VU VIET TUAN PHUONG

PHAM HAI YEN NGUYEN CHIEN THANG

GAMBA M0110

HANOI 2012

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ACKNOWLEDGEMENT

To complete the course and fulfill graduation assignments with assigned

research, our group would like to thank most sincerely to the executive board, the

teachers of Global Advanced Master of Business Administration, Griggs University

- United States, Center for Educational Technology and Career Development (ETC)

Vietnam National University, Hanoi have created favorable conditions to help

us.We also thank Directors, department leaders of Vietnam Joint Stock Commercial

Bank For Industry and Trade (Vietinbank) - Nguyen Trai branch (now is Thang

Long Branch) for helping and providing necessary datas for us to do this subject

However, due to time constraints so the subject has unavoidable shortcomings

Therefore, the group is really eager to get the comments of the teachers to further

improve it and can apply effectively in the current economic conditions

We hereby guarantee Group assignment is an independent work of us

The datas, results stated in this assignment are honest and clear original

THE AUTHORS

CHAPTER I : THEORETICAL BASIS IN BUILDING THE BUSINESS

STRATEGY OF THE COMPANY

12

1.2.2 Research into business environment of the company 16

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CHAPTER II : ANALYSIS OF THE BUSINESS SITUATION IN

VIETINBANK THANG LONG

23

2.1.2 Establishment and development of Vietinbank Thang Long 25

2.2 SITUATION BUSINESS OF VIETINBANK THANG LONG 2009-2011 27

2.3 ANALYSIS OF BUSINESS STRATEGY VIETINBANK THANG LONG 31

2.3.2 Analysis of internal environment of Vietinbank Thang Long 50

CHAPTER III: BUILDING AND CHOOSING BUSINESS STRATEGY FOR

VIETINBANK THANGLONG UNTIL 2012

3.2 SOLUTIONS AND SUGGESTIONS ABOUT BUSINESS STRATEGY OF

VIETINBANK THANG LONG

63

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3.2.3.1 Solutions of organization structure, business management process and

regulation completion

71

3.3 PROPOSALS TO THE GOVERNMENT, STATE BANK AND

VIETINBANK

78

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LIST OF TABLE Table 1-1 The stages in the strategy building process

Table 1-2 SWOT Matrix

Table 1-3 Space Matrix

Table 1- 4 QSPM Matrix

Table 2-1 Business result of Vietinbank Thang Long 2009 -2011

Table 2-2 GDP growth through the years

Diagram 2-3 Foreign direct investment

Diagram 2-4 Inflation indicator through the years

Table 2-5 Exchange

Table 2-6 Growth credit and money supply

Table 2-7 The competitors

Table 2-8 Matrix of factors outside of Vietinbank Thang Long

Table 2-9 Competition image matrix

Table 2-10 The situation to mobilize funding from 2009-2011

Table 2-11 The situation according to the quality of loans outstanding in

2009-2011

Table 2-12 Status of the loan outstanding from time to time in 2009-2011

Table 2-13 Situation of balance capital Forex trading in 2009-2011

Table 2-14 Internal factor matrix of Vietinbank Thang Long

Table 3-1 SWOT Matrix

Table 3-2 SPACE Matrix

Table 3-3 QSPM matrix

Table 3-4 Priority strategy choice

IFE Internal factor evaluation Matrix

EFE External factor evaluation Matrix

SPACE The strategic position and Action Evaluation Matrix

QSPM Quantitative strategic planning matrix

GDP Gross domestic product

ATM Automated teller machine

CITAD Electronic Payment Interbank

SWIFT Society for Worldwide Interbank Financial Telecommunication

CAR Capital adequacy ratio

FDI Foreign direct investment

ICOR Incremental Capital - Output Rate

Vietcombank Viet Nam commercial trade joint stock bank

BIDV Bank for investment and development Vietnam

Agribank Vietnam Bank of Agriculture and Rural Development

WORLD ECONOMY OVERVIEW: We can say, public debt and Government

budget deficit is a hot topic during the past year, particularly in the euro zone 2011

started with a series of negative developments surrounding the euro rescue The

action by Moody's in lowering level of confidence in Greece and Spain has raised

concerns among investors; making borrowing costs of the weakest members in the

eurozone continuously increase Riots in Greece are creating additional pressure on

the government, causing bond yields to rise to record Across the Atlantic coast,

Standard & Poor's has moved the problem’s assessment of U.S debt from stability

to negativity, while the process of political compromise between the parties in the

US federal government about cutting expenses took place very slowly At the same

time, the earthquake and tsunami in Japan occurred in March pulled down the

financial markets in the world Oil prices rose unexpectedly in April because of

concerns about declining supply by political instability in the Middle East and

North Africa These complicated changes made the price of gold constantly set new

record levels in the period from July to September International investors rushed

for seeking for financial secure shelter, especially Standard & Poor's downgraded

the credit grade of US from AAA to AA + in August Notably, in 2011, China

overtook Japan to become the second largest economy in the world In the context

of post-stimulus, US government also had to constantly raise operation rate to

prevent inflation due to the fears that the growth would become too hot

According to the latest statistic of the OECD, world trade in the third quarter of this

year grew 6.8% over the same period in 2010, and the number of the whole year

will be hard to be better in the fourth quarter because of influence of a decrease in

demand and a slow growth of EU regions Particularly, the trade of OECD countries

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increased by 6%, while the non - OECD countries grew by 8.2% The fiscal

tightening will slow economic recovery in developed countries According to IMF,

the world economy will increase about 3.8% in 2012, down from 3.9% in 2011 and

5.2% in 2010 The new forecast updated in December revised down from

forecast figures published in early January 2011 This slowdown is a consequence

of the financial turmoil and the fear of public debt risks spreading outside

the European economy The austerity measures will replace the stimulus package

for 2010 -2011 and most developed countries have GDP below potential output in

2012 However, compared with developed countries, growth prospect of developing

economies were growing brighter because of the weakening of external demand is

expected to be offset by domestic demand thanks to flexible economic policies

of the Government (Source: IMF; forecast data was published in 12/2011)

VIETNAM’S ECONOMY: Along with vicissitudes of the world economy,

Vietnam's economy went through 2011 in the context of high inflation pressure,

production and business activities of enterprises, especially small and medium

enterprises encountered many challenges from high interest rates while the

government implemented a fairly tight monetary policy and fiscal policy in the

spirit of Resolution No 11/NQ-CP GDP growth rate for the whole year reached

5.89%: in the first quarter GDP rate reached 5.57%, 5.68% in the second quarter, in

the third quarter increased to 6.07% and 6.2% in the fourth quarter This increase is

lower than the growth rate of 6.78% in 2010 and lower than planned tasks (6%) but

in the context of the complicated world economy and domestic this growth rate is

still higher than some countries in the region such as Thailand, Malaysia In 5.89%

increase in general, the agriculture, forestry and fishery contributed 0.66% to

the general increase of 4%, industry and construction contributed 2.32% with 5.53%

increase and service sector contributed 2.91% with 6.99% increase

(Source: General Statistics Office)

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* Necessity:

Facing the opportunities and challenges of the world economy and domestic,

Vietinbank with continuous process of innovation and perfection achieved

high-performance business has become one of the leading commercial banks in Vietnam

With a vision to 2016, VietinBank will became a Group of Finance

& Banking with diversified services, the best quality products based on scientific

application of modern technology, advanced management degree with 2 basic

axis is currency trading and financial investment activities To achieve these

objectives towards this target, the role of building strategy, management and

implementation strategy is very important as follows: Potential finance, technical

solutions, technology exploitation, risk management, products and services

development, system optimization, product pricing and performance measurement

of products and services, administration management In the integration process,

Thang Long is a dependent member of VietinBank and will have to increasingly

intense competition To survive and develop, Vietinbank Thang Long needs to

analyze current business strategy, thereby building strategy and business

development to 2016 Stemming from the above needs, we choose the topic:

"Business strategy of VietinBankThang Long in the period from 2012 to 2016"

* Significance:

- Develop an overall direction for the bank during the period 2012-2016 This

direction has clear, wide spreading objectives in the bank to mobilize resources to

implement given objectives This topic will help to clarify the theoretical basis of

the strategy through the external factor evaluation (EFE) Matrix, internal

SWOT matrix, SPACE matrix and competitive advantage matrix of Michael

Porter in the case of Vietinbank Thang Long

- Identify strengths and weaknesses in the current business strategy of Vietinbank

Thang Long

- Build mission and vision of Vietinbank Thang Long to 2016

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- Propose solutions to improve the strategy, strategic management and

implementation of strategies of Vietinbank Thang Long to 2016 in the most

effective way

2 Objective and scope of the study:

Objective of this topic is aimed at following issues:

- The outline of the theory of model strategy as a basis for strategic research of

VIETINBANK Thang Long

- Analysis of the current strategy of Vietinbank Thang Long

- Analysis of internal and external environment affecting strategic management of

Vietinbank Thang Long

- Propose business strategy for Vietinbank Thang Long until 2016, breakthrough

solutions in:

• Developing corporate culture

• Improving financial capacity

• Improving the quality of service

• Investing in development and expand market share

3 Methodology of the study topic:

Rationale for the study of this subject is derived from the guidelines, policies

and practical orientation activities of banks in Vietnam, the theory of strategic

management course, marketing management, methodological science, etc with

information sources: Websites, Journal of the sector; the published reports To

complete this topic, we have used methods as follows: (1) collecting primary

documents In order to collect primary data, we used sampling techniques to select

a small part of the population under study; collection methods and expedited

processing of assessments of the leading experts in banking and finance sector;

observation method of customer behavior of Vietinbank Thang Long and method of

analysis secondary data that was analyzed, explained, discussed and

interoperated of the bank to gather data

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4 Structure of this topic:

This topic includes: the introduction, the conclusion; besides there are three basis

chapters as follows:

Chapter I: Theoretical basis in building the business strategy of the company

Chapter II: Analysis of the business situation in Vietinbank Thang Long

Chapter III: Building and choosing business strategies of Vietinbank Thang Long to

2016

1.1 BUSINESS STRATEGY OF THE COMPANY:

1.1.1 The concept of business strategy :

According to Johnson and Scholes, strategies are defined as follows:

"Strategy is the direction and scope of an organisation over the long-term: which

of resources within a challenging environment, to meet the needs of markets and to

“Strategy is the creation of a harmony among the activities of a company The

success of the strategy relies on good conduct of many things and combine them

together The core of the strategy is "choose what not to do." Under this access, the

strategy is to create a competitive difference, find and implement

(what not to do) The nature of this strategy is to build (competitive advantage);

it exists only in unique activities In other words: The strategy is to build a unique

position and to impact a group of different activities

Strategic Management: is the process of identifying the strategic objectives of

organization building and planning policies to achieve the objectives and

distribute sources of it for the implementation to achieve objectives in the future

Features of this strategy are to create "competitive advantage", find and gain

sustainable advantage for customers and products Strategic missions are:

- Identify where is the way that organization wants to go

- Determine how organization can go

- Use what means and tools to get there

In other words, strategy is a orientation and scope of an organization in a long term

(in the future) to gain competitive advantage for organizations through the

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mobilization and determination of its resources in the changing environment to be

able to get a specific goal, meet the market demand and satisfy expectations of

parties Strategic management includes five tasks: Develop prospect of strategies

and mission; set goals and build strategies to achieve goals; Execute and manage

selected strategies; Performance Evaluation, supervise and repair through

each task if necessary (According to the book on strategic management

of Statistical Publishing House, 2009) As a result, strategic management is

a continuous operation for establishing, maintaining the strategic

direction and business activities of an organization to resolve challenges

1.1.2 Role of business strategy

This is a tool to share the vision of leadership for all levels of management in the

competent stakeholders

It demonstrates the consistency & the concentration of lines of business of the

company to avoid wasting resources on core activities as a management tool in

assessing the feasibility / identify priority / allocation of resources for strategic

business activities

This is a basis for building organizational structures to support reasonable business

activities, to be able to operate towards the strategic objectives set out

As a platform to build a business plan in detail

In the context of market economy and the environment with increasingly fierce

competition, companies need to make better management strategies to be more

active, see opportunities and competitive advantages in the market The strategy

will contribute to making business more responsive and dynamic shocks on the

market, free to make rational decisions and controlling their activities, make use of

opportunities and processing, troubleshoot risk, strengthen competition and help

businesses market share and maintain its position

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As a result, the strategy could have an important role during the operation of the

organization; contribute to the success or failure of your business Activity strategy

allows a company more dynamic reactive in shaping the future

1.1.3 The business strategy of banking operations today:

The industry is operating distinctive business; the banking industry has a number of

prominent business strategies as follows:

- Strategies to strengthen market share: fortify our strength, improve image,

reputation of the Bank, resolve unsolved, improve product quality services to attract

customers to maintain and develop market distribution

- Strategy to diversify products and services: diversification of products and

services in the network performance to satisfy the needs of the highest customer,

customer development

- Strategy to expand distribution network: diversification and expansion of the

Bank's distribution channels, Extensive expansion of the area in order to provide

customers the most convenience when transactions, thereby attracting customers

and increase competitiveness

- Strategic focus: Business focuses on all its resources to achieving the target

growth and high efficiency

- Differentiation strategy: Construction plans based on available strengths, business

characteristics, in order to achieve the objectives

1.2 BUSINESS STRATEGY BUILDING AND CHOICE

1.2.1 Building process of business strategy:

We can generalize periods and activities in the strategy building process

through the following table:

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Table 1-1: The stages in the strategy building process

Step 1 Systemization of information

Step 2 Combining information to make the set of feasible business

strategy

Step 3 Use all information overview to choose a best strategy for

business

Setting strategy is process of setting up business tasks, realizing survey

research for internal working out long-term objectives and choosing between

alternative strategies We can also call this phase strategic planning

Step 1: Strategies by collecting data, combined with the intuition, the actual

analysis and selection of viable alternative strategies with a number of strategic

management techniques such as external factor evaluation (EFE) matrix and

internal factors (IFE) matrix

Step 2: Using internal and external factor of the business to make a feasible

business strategy by using a matrix of tools such as: SWOT matrix, SPACE matrix

Step 3: By using information in period 1, objective audit in period 2, we can choose

a business strategy through a number of key tools such as QSPM matrix

To ensure the highest effectiveness during operations, strategists forced to

make the decision that strategic choices will benefit the company most Decisions in

the strategic period of forming organization will attach to the products, markets and

technologies in a long term The competitive advantage in the long term specified in

the strategy This is a very important period of strategic decisions, but will have

long-term or nasty or better effects for organization

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1.2.2 Research into business environment of the company

1.2.2.1 Macro - Environment

This is one of the two elements of the external environment may affect the

implementation of business objectives External environment is outside the business

that administrators do not control their effects, but they affect the operation of the

business Micro-environment includes:

These factors have a direct impact to the economic sector Businesses based on

impact, to influence policy making, business activities accordingly

Thus, the macro environment analysis helps to identify changes from the elements

of the external environment Bank allows businesses to realize the opportunities and

challenges from the macro environment

1.2.2.2 Micro-environment:

Micro-environment or industry environment is a variety of factors directly to the

Bank and its competitive actions, the competitive response of the Bank The

business sector is influenced by the micro-environment of the industry, including:

- For the potential

- Competitors-current

- Client

- Supplier

- The financial-market alternative

- Analysis of environmental factors will enable micro enterprises to identify clearly

what are the business opportunities that can utilize and what are the challenges and

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risks that businesses face in which the forces of change will bring, through war, to

build adaptive capacity

1.2.2.3 The external factor evaluation (EFE) Matrix:

EFE matrix is set sequentially as 5 steps:

* List of factors is decisive in the trades that business is business, including the

opportunities and challenges

* Reviews the level of importance of each factor score from 0.0 to 1.0 (level of

important ascendant) with a total score of factors equal to 1 This important level

based on sector business enterprises are activities

* Grading from 1 to 4 for each element with a score expressing the level of response

of the business with that element Point 4 is good response Point 3 is the response

on average Point 2 is the average response and point 1 is little response

* Determine the total number of points for each factor (by area of get in step 1 and 2)

* Determine the total score of the importance of the business by the total number of

points obtained in step 3

The highest point total is 4 and the lowest is 1 The average is 2.5 points The higher

the score shows businesses react well to the elements outside

1.2.2.4 Competition image matrix:

This matrix identifies the principal competitors of the business This matrix is the

expansion of the EFE matrix with the level of importance of the factors, the

significance of each factor score and total score is important has the same meaning

Matrix photos EFE matrix with other competitors in that: there are a number of

factors within the importance the decision also was put on to compare Total score

evaluation of the competitors will be compared with the enterprise was selected as

the template

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1.2.2.5 The internal factor evaluation (IFE) Matrix:

This is the environment within the enterprise system elements, including tangible

and intangible elements that exist in the operation of the business or organization

and influence directly to the process management strategy Every business has

different internal environment The analysis of internal business will allow

identification of the strengths (S) and weaknesses (W) of the business Through

analysis we use the matrix element inside (IFE) Since then, the business strategy is

selected to maximize the strengths and overcoming weaknesses of enterprises

The Setup matrix IFE includes 5 steps:

• Establish portfolio of the elements inside the role to decide

• Assess the level of importance of each factor score from 0.0 to 1.0 (level of

important ascendant) with a total score of factor of 1 This important level based on

the importance of it for business; irrespective of this factor are the strengths or

weaknesses of enterprises

• Grade from 1 to 4 for each element with a score expressing the internal

characteristics of the business for that element Point 1 is the biggest weakness,

point 2 is the smallest weakness, point 3 is the smallest strengths, point 4 is the

largest strengths

• Determine the total score for each element (by number of scores in step 2 and step 3)

• Determine total score on the importance of the business (in total points in step 4)

The highest point total is 4 and the lowest is 1 The average is 2.5 Important score

lower than 2.5 shows weak internal business, points higher than 2.5 shows strong

business about internal

1.2.2.6 SWOT Matrix:

Using SWOT matrix to assess in order to determine the strengths (S-Strength),

weaknesses (W - Weakness), opportunities (O-opportunites), challenge (T-Threats)

from the effects of the business environment for enterprises to devise strategies,

solutions to promote the strengths, overcome weaknesses, leverage opportunities,

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limiting and controlling the challenge Through SWOT matrix can plan strategies:

strategic COMPARISON:

 SO strategy: use the strengths within the enterprise in order to take

advantage of and exploit the opportunities derived from the external

environment

 WO strategy: take advantage of the strategic opportunity from the

external environment to limit the weakness of enterprises

 WT strategy: strategy to overcome weaknesses in order to limit the threat

of enterprise's external environment

 ST strategy: strategy and leverage FROM the more advanced strength

inside of the business in order to exceed or reduce the impact from the

threat of outside environment

Strategic analysis is largely based on SWOT model This model is suitable for the

assessment of the current state of the company through the situation analysis

(Strengths and Weaknesses) inside and outside (Opportunities and Threats)

company SWOT made filter information according to an order more

understandable and easy to handle

Table 1-2: SWOT Matrix (S- Strength), (W-Weakness), (O – opportunites), (T-

Threats)

Opportunites (O) SO strategy: Use these

strengths to take advantage

of the opportunities

WO strategy: Overcome these

weaknesses by taking advantage

of the opportunities

Threats (T) ST strategy: Use these

strengths to avoid threats

WT strategy: a minimum of the

weaknesses and avoid the threat

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Perform a SWOT analysis for the competitive position of the enterprise, shall be

charged to:

Strengths: advantages of enterprise resources mainly and as needed

Weaknesses: must know his weaknesses to avoid and overcome Consider the issue

on the basis of inside and outside Get the stars competitor can do better themselves

Opportunity: Must see clearly and make good use of all opportunities Draw

lessons upon opportunities that do not take advantage of

Threats: aware of the obstacles that are taking place Consider thoroughly the

technology changes what with business risk or not? There are weak points which

are threatened

1.2.3 Business strategy choice

1.2.3.1 Propose Strategy:

Using matrix elements inside –outside IFE to determine the current location of the

business here is the use of key points of the EFE matrix reflects on the shaft and

matrix IFE on the bounce The intersection between IFE and EFE matrix of

business will give us the current businesses are located and how to use the business

strategy for the future as "strategy development and construction" (penetration in

the market, product development etc) or use the "strategy of holding, maintain ";

"strategy of harvesting and omitted"

There are many methods and tools that support the stage reviews strategic options,

however this only mentions big assignments support tool selection process

efficiency strategy, which is the matrix as matrix SPACE

of which criteria matrix Space as tools to identify the determinants of the

Organization's strategic location

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Table 1-3: Space Matrix

These factors include: the Organization's financial strength (FS); The Organization's

competitive advantage (CA); the stability of the business environment (ES); Power

of attraction (IS)

1.2.3.2 The best of strategy choice (QSPM):

Strategy election is a derivative of the whole process of planning business strategy

The makers of strategic management will base on the analysis from the input to

select the optimal deployment strategy into reality Strategic analysis and selection

mainly the subjective decisions based on objective information, to determine the

progress of activities may choose to ask for them that the company can fulfill its

responsibilities and goals There are many methods and tools that support the stage

Attack strategy

CA -6 -5 -4 -3 -2 -1

-1 -2

-3

-4 Defensive strategy -5

-6 ES

Competition strategy

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reviews strategic options; however this only mentions big assignments support tool

selection process efficiency strategy, which is the SPACE matrix and QSPM matrix:

Audit point

Rules change point

Audit point

Rules change point

In summary, the company in business process must be always determining

the short - term and long-term objective for themselves Business strategy is the

way and the steps by steps on the way to reach objective In chapter I was referring

to is the essential task of the strategic overview and governance strategies is the

basis for building, options and implementation strategies This is exactly the basis

of reasoning needed to research the status of Vietinbank Thang Long and

application of business strategy into business activities of Vietinbank Thang Long

in the future

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CHAPTER II

ANALYSIS OF THE BUSINESS SITUATION IN

VIETINBANK THANG LONG

2.1 BASIC INFORMATION ABOUT THE VIETINBANK

2.1.1 Establishment and development of Vietinbank

Full name: VIETNAM JOINT - STOCK COMMERCIAL BANK FOR

INDUSTRY AND TRADE

Trademark: (international transaction name): VIETNAM BANK FOR

INDUSTRY AND TRADE VIETINBANK

* Being one of the four largest State-owned commercial banks of Vietnam,

VietinBank’s total assets account for over 20 percent of the market share of the

whole Vietnamese banking system VietinBank’s capital resources keep on

increasing over the years and have been substantially rising since 1996 with the

annual average growth of 20 percent, especially up 35 percent a year against that of

last year

* VietinBank has developed an operations network comprising of 01 Transaction

Centers, 149 branches, 527 transaction offices, 166 savings offices, 02

Representative offices, 04 Subsidiaries, 03 administrative units and 1042 Automatic

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Telling Machines (ATMs) It has established correspondent relationship with 850

banks, financial institutions of 90 countries and territories all over the world

* Being diversified with 04 independent accounting subsidiaries: VietinBank

Leasing Company, VietinBank Securities Company, Ltd., VietinBank Asset

Management Company, VietinBank Insurance Company and 03 non-profit making

units: VietinBank Information Technology Center, VietinBank Card Center and

VietinBank Training Center

* Being the founder of the following Financial Credit Institutions:

- Saigon Bank for Commerce and Industry

- Indovina Bank (the first joint-venture bank in Vietnam)

- Vietnam International Leasing Company – VILC (the first financial leasing

company in Vietnam)

- Vietinbank Insurance Company Ltd

* Being the official member of :

- Vietnam’s Banker Association

- Asian Banker’s Association

- Society for Worldwide Interbank Financial Telecommunications (SWIFT)

- Visa International Services Association

* Being the first bank in Vietnam to apply modern technology and e-commerce in

its banking operations

Mission: Be the leading financial group in Vietnam with versatile operation,

providing products and services according to the international standards to increase

the value of life

Vision: To become a leading modem and efficient financial group in both domestic

and international scopes

Core values :

- Focus on customers

- Be active, creative, professional, devoted, transparent and modern

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- Create a work place where our employees can contribute the most to and receive

the most from the Bank Each individual is respected as much as any prominent

employee and is treated fairly based on their performance

Business philosophy :

- Safely, efficient, sustainable and international standard

- Solidarity, cooperation, sharing and social responsibility

- Customer's prosperity is the success of VietinBank

Slogan: Improving the values of life

- Charter capital: on the basis of the approval of the Government, is the first State

Vietinbank NHTMCP has a foreign strategic partner and has completed the

Chartered capital increase through the sale of 10% of Charter capital for foreign

partners French Onion add for IFC simultaneously existing shareholders (3,372

billion VND) for a total of Charter capital of Vietinbank to 31/12/2011 up to level

33 billion increase 20,230% compared with 2010 and second the whole industry

(Source: Website VietinBank vn)

2.1.2 Establishment and development of Vietinbank Thang Long:

Vietinbank Thang Long established and upgraded to No.1 branch depend

Vietinbank July 2006, previously known as sub-branches depend Vietinbank

Nguyen Trai Ha Tay Branch was renamed Thang Long Branch with Decision No

913QD - Board-NHCT1 on 9/04/2012 The organizational structure of Thang Long

Vietinbank formed the boundary based on activity and structure of economic

development in the locality to establish, at present, including: Board of Directors,

07 department, the function at branches, 02 transaction offices, 02 savings

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ORGANIZATION CHART OF VIETINBANK THANG LONG

(Source: Vietinbank)

General structure, organization activity of Vietinbank Thang Long present

not consistent compared to the scope of activity, business requirements and

organization management at the Centre of the capital, Hanoi, on the immediate as

well as long-term

2.1.3 Mission and Vision:

Mission "target: leveraging powerful brands of Vietinbank to expand, developing

mesh lining to become the leading retail bank in Hanoi Diversification of the

portfolio has control ensure mastery is the financial situation, focusing increasing

equity, guarantees achieve the business efficiency evaluation and operational safety,

sustainable development” Objective: to focus resources on consolidating and

expanding business network systems, strengthening financial, improving the quality

and efficiency of business activities Maintain the status of the market, development

of current expansion activities in the field of retail banking, wholesale banking and

promoted, focusing expanded market share in key customer areas on the basis of

secure and highly lucrative Vietinbank Thang Long will ensure growth, the rate of

profit (ROE, ROA), capital safety ratio (CAR), the ratio of solvency, high rate, etc

to reach lower bad debt in Vietnam and in accordance with international

- Increase the scale of assets annually on average 20%

office

Saving counter Deputy

Director

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- Enhances credit risk guarantee bad debts accounted for under 2%

- Credit is the main business activity, competitive market principles, adjusts the structure

of credit reasonably match the strengths of Vietinbank

- The proportion of revenue services in total income from trading activities achieves 10%

- Profit before tax increased 20% in 2012

- Open new trading room minimum 3; to 2016 should have at least 10 rooms dealing with

scale to meet the model of modern retail banking for 10%

2.2 SITUATION BUSINESS OF VIETINBANK THANG LONG 2009- 2011

Vietinbank Thang Long momentum also gradually developed under the common

development of both systems should have achieved concrete results the following

Table 2.1: Business result 2009 -2011 Unit: million VND

Standard 31/12/2011 31/12/2010 31/12/2009

Imple mentat ion

%

implementation

of the

plan

Impleme ntation

%

implementation

of the

plan

Implem entatio

n

%

implementation

II Outstanding loan 976 81,33% 792 88,6% 560 100%

1 Short-term loans out

2 Medium and long-term

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Annex 1: Finance report 2010 (page 83)

Annex 2: Finance report 2011 (page 89)

* Product:

Vietinbank Thang Long creates the difference of their products, particularly in the

present moment there are dozens of different banks on a table Therefore Vietinbank

Thang Long to create traits-separate images with other banks in the area but still not

unified on the policy, the general picture of Vietinbank It is the differences in

product, service of supply to the market, Vietinbank distribution channel, ad

operations promote, communicate

* Objective market:

Traditional client and principal of Vietinbank Thang Long is small and medium

businesses, individual clients in the traditional industries in the District of Hanoi,

capital, loans, services in time through well focused primarily on the subjects of

these customers and from residential sources Due to activity on the area Hanoi,

should have more potential for retail financial services on areas including: loans,

mobilize against GDP, number of the bank account on the 1,000 inhabitants, the

number of transactions the Bank over 1,000 inhabitants Catch this Vietinbank

Thang Long was and trying to push network expansion, product diversity,

improving quality, style … in order to accomplish the goal soon became the retail

banking top versatile

* Quality service:

Client is the prerequisite to the Bank to survive and grow The key of success in

competition is maintained and constantly improve quality of service through the

meet the needs of customers in the best way Because the quality of service reflects

the Bank's ability to adapt, it is even higher than the expectations of customers and

needs to be maintained regularly, consistently Far less responsive Vietinbank

Thang Long, demanding expectations of customers, maintain the quality of

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provided services through the application of uniform solutions to management,

shortening the process to provide services

* Distribution channel:

With the advantage of trading network which is spread throughout the provinces

and cities across the country, Vietinbank Thang Long still do not take advantage to

exploit the expanded mesh lining, providing products, banking amenities for many

clients… to contribute to developing and consolidating images, products of

VietinBank Thang Long

* The work of building the brand:

Brand Vietinbank Thang Long was and being known and see this as an advantage in

promoting the brand, reach your customers branch Thang Long

* Organization structure:

Structure of Vietinbank Thang Long is not really rational and scientific Staff

marketing medium is in charge of marketing advertising reach customers both

directly accepting the settlement profile records, not assigned in the direction of

specialization into each customer segment Currently department Room Vietinbank

Thang Long computerised information or present only department 02 customers

(instead of the customer which is 03 room: room large business customers; Room

small and medium enterprise customers; Room individual clients According to the

model of the modern Bank of Vietinbank are applied) This shows the structure of

the Department: by profession irrational, not specialization leads to high

professionalism has not yet advanced to harness the array of professional so the

governance and enforcement strategies of Vietinbank Thang Long not effective

during time is easy to understand

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* Training:

Vietinbank Thang Long has identified construction human resource development is

vital factors, the position is particularly important for the development of

Vietinbank Thang Long At the newly established only 50% of qualified University

then now is over 90% The number of people on the University level in nearly 60

employees of the branch currently is 8 people The training time has helped move

popular awareness of each member bank is deeply conscious absorbent serves, "the

customer is the pay) rather than as previously Vietinbank Thang Long now has 1

personnel department and training specialised implementing construction strategy

training and development of human resources of the entire

branch

The policy with staff:

+ Recruitment policy and training:

Vietinbank issued the regulation of labour recruitment, whereby Vietinbank made

the recruitment of qualified labour, the capacity to meet the requirements of

business and standard titles Being aware of the importance of human resources in

the development of Vietinbank Thang Long, VietinBank Thang Long regularly

organized internal training, and encouraged employees to improve through

participation in courses sponsored by Vietinbank outside Besides having

consistency in the training, Vietinbank also use of manpower, issue regulation

training, foster personnel for the entire system

+ Salary policy, bonus, benefits: salary and bonuses paid to workers in Thang Long

VietinBank pursuant to principles based on business performance, productivity,

achievement of each individual to contribute to the branch, job titles and salary

regime applicable under regulation paycheck is issued

* Information system:

From June 2006 Vietinbank completed phase I project of modernizing the Bank,

building core banking system, connect online from Headquarters to branch offices,

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offices, transactions, savings nationwide INCAS System allowing head office can

monitor closely the implementation of business processes in each branch To date,

Vietinbank are implementing phase II development to add new business Module,

edit existing Module upgrades, last year 2011 has invested more aesthetic program

and independent risk management Which improve governance, operating check

risk management, control, security and security of data? Sufficient storage system

designed towards centralization and virtual goods to ensure the core banking system

(Core Banking) active stable, willing to meet development needs within the next 3

to 5 years etc Vietinbank Thang Long has had the opportunity to take advantage of

the good and are pass no less the Orange go in the process of international economic

integration and to reap the tremendous achievements, contributed no less to the

economic development of the country and of Vietinbank during those years

Source: annual report Vietinbank Thang Long 2009 - 2011

2.3 ANALYSIS OF CURRENT BUSINESS STRATEGY OF VIETINBANK

THANG LONG

2.3.1 Analysis of external factors

2.3.1.1 Macro environment

* Law & politic factors:

- Politic factors: Vietnam's socialist countries Political system performs only a

Communist Vietnamese leadership, with the credo is: the State Party leaders, and

people management Vietnam is held internationally acknowledged as having the

most stable political Asia Institutional economic market-oriented socialist continue

to be constructed and deployed incrementally improved gradually Many legal

mechanisms of economic policy continue to scrutinize the milk, additional

construction and create more favorable legal environment for investors, business

This is one of the solid foundation of economic development activities as well as

the banking industry in General and stable environment to Vietinbank business in

particular

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- Legal corridor for banking activities: legal framework for banking operations

gradually improved to meet the needs of international economic integration,

improve the performance of currency Bank, namely the law of the State Bank and

the law on credit institutions has been supplemented and modified in 2003 v à 2004

Especially on 16/6/2010 Congress did ban State Bank law and the law on credit

institutions shall apply officially on 1/1/2011 The amendment aims to build a

modern banking system, in accordance with international standards and practices,

minimizing the intervention of regulators on activity of the Bank Legal framework

constantly improving and innovating towards loosening the control of banking

services and financial market as securities law No 70/2006/QH11 Congress issued

29/06/2006, law of electronic transaction no 51/2005/QH11 Congress issued

29/11/2005 Vietinbank activity in legal corridor has been established is the basis

for Vietinbank Thang Long oriented to development

- Management and administration of monetary policy: in the management and

administration, the State Bank has been successful in conducting monetary policy,

gradually the stable value for money; promote economic growth, ensuring the

stability and development of the banking system The tools of monetary policy was

to use indirect tools such as market opening, swap currency was substituted for the

tools of administrative nature Interest gradually been liberalized, the exchange rate

was converted from a fixed exchange rate regime to a flexible exchange rate regime

can regulate on the basis of the market The mechanism about managed Forex,

credit, payment operations is increasingly flexible, ventilation, exchanging, and self

responsibility of the banks The policy of competition, insolvency, restructuring the

commercial banks and other financial institutions, the regulation of lending, deposit

insurance, risk, credit terms and scope are impacting business operations of the

Bank

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* The economic factors

*Economic growth:

Along with the ups and downs of the world economy, Vietnam's economy has gone

through 2011 in the context of pressure on inflation, production and business

activities of enterprises, especially small and medium enterprises encounter many

disadvantages from the interest at high levels while the Government made quite

consistent policy tightening monetary and fiscal lock-in the spirit of resolution No

11/NQ-CP GDP growth in that year reached 5.89% GDP pace quarter reached

5.57%5.68%, quarter, quarter II increased 6.2% and the fourth quarter is 6.07%

The increase is lower than the increase of 6.78% in 2010 and lower mission

planning (6%), but in the context of complications of economy in the world and in

this country, the growth rate is still higher than some countries in the region such as

Thailand, Malaysia

(Source: General Statistic Office -17.01.2012)

Table 2-2: GDP growth through the years

The point to note is the industrial and construction sector has slow growth compared

to 2010 Industrial production activities are no longer kept the role of economic

head in 2011 when it only increased 6.8% compared to the previous year In the

GDP: Agricultural GDP: Service GDP: Agricultural

GDP: Industrial &

Construction

Source: General Statistics Office

Chart 1: Volatility of economic growth indicators Chart: 2 GDP growth of countries

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manufacturing sector, while the distribution of electricity, gas, water and processing

industry increased by about 10%, the mining industry decreased by 0.1% The

industry of exploiting the raw materials used in the construction of growth fell

nearly 4% in comparison with 2010 while inventory index of production of cement,

lime, mortar up to over 60% As such, the policy of tightening monetary and fiscal

made quite consistent in time was quite negative implications to the construction

industry and industrial exploitation and production of construction materials This

poses for Vietinbank Thang Long to build strategic choice to invest in the trades

business production has the potential to grow in the future

On the service sector, domestic consumption increased in the fourth quarter than the

3/2011 first quarter due to declining inflation level compared to the previous month

Total retail sales of goods and services increased 12 May 2011 consumer 24.2%

compared to the previous year However when the exclusion factors raise prices,

total retail sales increased by only 4.7%, 1/3 speed increase by 2010 Meanwhile,

the proportion of the business sectors in the total retail level quite stable compared

with the previous year, in particular, the business is still business amounting to

78.8% of the total retail, hotels and restaurants accounted for 11.3% accounted for

0.9% of tourism, mainly focus in Hanoi and Ho Chi Minh City This is also a good

premise for making bright spot Vietinbank Thang Long in expanding the network to

grow market share

(Source: research and analysis Bureau VCBS-17.01.2012)

* Investment:

Foreign direct investment: Flows of foreign direct investment into Vietnam 2011

continues to decrease Specifically, source of FDI in 2011 reach 14.7 billion, down

26% from the same period in 2010, in which newly-rising to 35% when only 11.6

billion Causes decline of foreign investment could be due to the economy also

suffered much pressure from the public debt crisis in Europe, natural disasters and

political instability in many countries However, the weakness of the economy with

high inflation, production and business activities were stagnated as well as factors

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that limited resources (such as lack of skilled labor, lack of power, weak transport

infrastructure) as well as the factors that impact on the psychology of investors

abroad

Diagram 2.3: Foreign direct investment

Besides occurring status delay in disbursement of investment from the State budget

and capital Government bonds, wasting, loss of capital in all aspects of the process

of managing investment projects The characteristics of this are alarming in terms of

both immediate as well as long-term before that situation poses many challenges for

Vietinbank Thang Long in setting development policies for each group of clients,

economics (Source: research and analysis Bureau VCBS-17.01.2012)

Inflation: in 2011, the average 12-month inflation rose 18.58% compared with the

corresponding period of the year 2010 and 18.13% compared to 12/2010 Level of

inflation in the 12 months is up to 3.32% in April due to pressure from Exchange

rates, commodity prices and money supply energy From May onwards, thanks to

efforts to stabilize the Government's drastic, CPI has continued to slow down and

down below 1% since March 8, 2011 Out of the 11 groups, only the Group of

telecommunications has negative growth rates of about 4% in 2010 and all the rest

are pretty high speed increase, especially food and catering services (which are

mainly food and food) and education However, the larger elements of the price of

Source: General Statistics Office

add capital capital disbursement

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the goods, to loosen monetary policy during a few years back are considered major

factors impact on inflation in 2011 when the basic inflation except food, food

falling 15.1%, and if excepting for energy, it increased 14%

Chart 2.4: Inflation indicator through the year

Rates: rate USD/VND 2011 had much upheaval in the early months of the year and

thereafter maintained fairly stable throughout the year with an increase in the

amplitude adjustment allows/-1% However, from mid-October until the end of

2011, rates have gradually increased over the 20,700 VND/USD and USD/year at

20,828 handles USD Overall, the Cabinet last year has reduced the price on the

currency of 0.65% since the last adjustment of rates in February 2011 and 10%

discount compared to the USD at the time of the year Moreover, the gap between

the rates in the banking system and market freedom no longer much difference,

especially with the strong hand of management Dynamics for SBV with Forex

market and freedom to navigate the foreign currency in the country

Chart 5: Fluctuations of Consumer Price Index Chart 6: CPI flowing industry (%)

CPI Foof group Beverages Textiles House Heath care Transportation

Source: General Statistics Office

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Diagram 2.5: Exchange

With the impact of inflation and rates is a challenge for Vietinbank Thang

Long in making predictions to operate the asset management policy of debt/assets to

ensure the use of the property was the most effective

(Source: research and analysis Bureau VCBS-17.01.2012)

*Monetary policy:

Before the pressure of inflation, right from the first year, the Government issued the

resolution 11/NQ-CP on those solutions primarily focused to curb inflation,

macroeconomic stability, ensuring social security In particular, the solution of tight

monetary policies, prudent solution is Basic Accordingly, monetary tightening was

done fairly consistent throughout the year 2011

* On interest: but the basic interest rate remain unchanged at 9% throughout the

year but interest discount and interest refinancing have been adjusted in order to

raise the cost of capital increase of the Bank when borrowers from, since it limited

the commercial banks and the return back into the State Bank cautions than in the

credit Specifically, the discount was increased from 7% to adjust level of 12% in

the first quarter and up 13% for the quarter level III and IV also refinancing interest

rate is adjusted up from level 1 up to 9% in the March quarter from 15%

The average USD lending interest rate, in fact, as reported by the State Bank, is

Chart 11: Fluctuations of exchange USD/VNĐ Chart 12: Reserve of foreign currency

Source: State bank

Exchange bank Unit

Price

Reserve of foreign currency

Exchange VCB exchange

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fairly stable throughout the year 2011 Specifically, the interest of agriculture, rural

areas and exported about 17-19% per year interest rate loan products-other business

for about 17-21% per year interest rate for loan field of Africa produced about

22-25% per year Meanwhile, the maximum interest of raising capital by Vietnamese

of credit institutions is also not much has changed The extent to which capacity

ceiling for deposit maturity from 1 month up to be applied throughout the year 2011

is 14% per year, while the interest rate ceiling for no deposit maturity and maturity

under 1 month was 6% level control State bank/year Against the USD, interest

mobilized USD for individuals and for businesses still mainly 2% per year and

0.5% per year according to the regulations of the SBV while loan interest rates still

popular USD 6-7.5% per year for short-term and 7.5-8% per year for the medium

and long term

(Source: General Statistics Office VCBS-17.01.2012)

Credit growth: reached 12% in 2011, while the total means of payment is also only

a 10% increase, still much lower than the levels allowed under resolution No

83/NQ-CP respectively is 15-20% and 16% for the whole year In general credit

increase 12%, while the growth of credit currency is fairly low cabinet with

increased 10.2% foreign currency, credit growth is still relatively high with 18.7%

Also in the effort to curb credit growth rate, foreign currency reserves required for

deposits in foreign currency by the credit institution in the year 2011 constantly

tuned to increase, from 4% to 7% earlier this year from June and 8% from March 8

to may deposit maturity under 12 months For the term deposit has 12 months, the

national reserve also turn the adjustment increased the level 4% from May and 6%

from September until the end of 2011

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Diagram 2.6: Growth credit and money supply

Can be seen conducting quite consistent Government towards tightening monetary

and fiscal policy in the year 2011 has led operations of most businesses etc more

difficult As reported by the Ministry of planning and investment, to the end of

September, 2011 has had 50 thousand enterprises, veins, corresponding to about 9%

of the total business, has closed and the actual number can be up to 30%-35%

Moreover, the impact of latency of this policy also is thought to influence the

business in 2012 (Source: research and analysis Bureau VCBS-17.01.2012)

Overall, several factors, macro impact greatly to the mobilization of capital,

investment lending and business services of Vietinbank Thang Long However with

the team of young, dynamic leadership, professional Vietinbank Thang Long will

soon in action go beyond the difficulties and development boom compared to the

commercial bank branches in the country

* The cultural-social factors:

According to the notice of the General Directorate of statistics, by the end of 2011,

the average population throughout the country was estimated at 87.84 million, an

increase of 1.04% compared with 2010 Vietnam is currently the third most

populous countries of Asean and the 14th in the world, the scale in the

socio-economic area, in which urban areas accounted for 29.6%, representing 70.4%,

Chart 17: Credit growth (%) Chart 12: Money supply M2 (%)

Source: State bank & VCBS

Money supply Credit growth (yoy)

Credit growth (ytd)

Credit growth