Situation analysis of large corporate banking of maritime bank details a case study

1 ACKNOWLEDGMENT I would like to thank the numerous friends, colleagues, classmates and professors that have contributed to help me conduct this thesis Firstly, I would like to show my deep gratitude towards Associate Prof, Dr Nguyen Thanh Ha, my thesis tutor for his time spending on zealous guidance and kind encouragement while writing the thesis Secondly, my thankful attitude is expressed for all teachers of the EMBA program at Business School of National Economics University as well as Board of Director and staff who teach me much valuable knowledge including literature and analysis to apply to the work and life Especially, I also have honor of appreciating all my colleagues at Maritime Bank; whose contributions have supported the data, intelligent research and knowledge involving the studying areas of this research Finally, I acknowledge the motivation of my family and dearest friends who have always been besides me to understand and help me during the writing period TABLE OF CONTENTS ABBREVIATIONS LIST OF TABLES LIST OF FIGURES .7 LIST OF CHART EXECUTIVE SUMMARY INTRODUCTION .11 CHAPTER 18 LITERATURE REVIEW 18 1.1KPIs and its role for organization in performance appraisal .18 1.1.1 Performance appraisal .18 1.1.2 Key Performance Indicators its role for organization in performance appraisal .21 1.2The balanced scorecard by R Kaplan and D Norton 25 1.312- Step Model by David Parmenter 35 CHAPTER 38 SITUATION ANALYSIS 38 2.1.Maritime Bank Review 38 2.1.1 Maritime Bank profile 38 2.1.2 Objectives and strategy .44 2.1.3 Operations and results .46 2.2.System of measurement and appraisal of Maritime Bank 49 2.2.1 System of measurement by KPI 51 2.2.2 Some results in building KPIs in Maritime Bank 58 2.2.3 Advantages and disadvantages of KPI system in Maritime Bank 68 2.2.4 The need of KPIs for Product Development Department of Large Corporate Banking .70 CHAPTER 74 KEY PEFORMANCE INDICATORS FOR .74 PRODUCT DEVELOPMENT DEPARTMENT OF .74 LARGE CORPORATE BANKING 74 3.1.Strategy, plan and objectives of Product development department 74 3.2.Job description 75 3.2.1 Product Manager .78 3.2.2 Advanced Executive 79 3.2.3 Senior Executive 80 3.2.4 Executive 81 3.3.Identify main indicators and their weights 82 3.3.1 Identify indicators 82 3.3.2 Indentify weight 98 3.4.Form for evaluating 101 3.5.Some recommendations to apply KPIs successfully 101 LIST OF REFERENCES 107 APPENDIX 109 ABBREVIATIONS MSB LCs RM CSO CA CPC KPIs : Maritime Bank : Large corporate Banking : Relationship Manager : Credit Service Officer : Consultant Assistance : Centre of credit process : Key Performance Indicators LIST OF TABLES ABBREVIATIONS LIST OF TABLES LIST OF FIGURES .7 LIST OF CHART EXECUTIVE SUMMARY INTRODUCTION .11 CHAPTER 18 LITERATURE REVIEW 18 1.1KPIs and its role for organization in performance appraisal .18 1.1.1 Performance appraisal .18 1.1.2 Key Performance Indicators its role for organization in performance appraisal .21 1.2The balanced scorecard by R Kaplan and D Norton 25 1.312- Step Model by David Parmenter 35 CHAPTER 38 SITUATION ANALYSIS 38 2.1.Maritime Bank Review 38 2.1.1 Maritime Bank profile 38 2.1.2 Objectives and strategy .44 2.1.3 Operations and results .46 2.2.System of measurement and appraisal of Maritime Bank 49 2.2.1 System of measurement by KPI 51 2.2.2 Some results in building KPIs in Maritime Bank 58 2.2.3 Advantages and disadvantages of KPI system in Maritime Bank 68 2.2.4 The need of KPIs for Product Development Department of Large Corporate Banking .70 CHAPTER 74 KEY PEFORMANCE INDICATORS FOR .74 PRODUCT DEVELOPMENT DEPARTMENT OF .74 LARGE CORPORATE BANKING 74 3.1.Strategy, plan and objectives of Product development department 74 3.2.Job description 75 3.2.1 Product Manager .78 3.2.2 Advanced Executive 79 3.2.3 Senior Executive 80 3.2.4 Executive 81 3.3.Identify main indicators and their weights 82 3.3.1 Identify indicators 82 3.3.2 Indentify weight 98 3.4.Form for evaluating 101 3.5.Some recommendations to apply KPIs successfully 101 LIST OF REFERENCES 107 APPENDIX 109 LIST OF FIGURES Figure 1.1: Main reasons for measuring performance .Error: Reference source not found Figure 1.2: .Strategic Alignment Pyramid .Error: Reference source not found Figure 1.3: .Four business perspectives of Balance Scorecard .Error: Reference source not found Figure 1.4: Cause-effect relationship in four perspectives .Error: Reference source not found Figure 1.5: .Managing strategy: Four process .Error: Reference source not found Figure 2.1: Rapid growth of Maritime bank over the development history Error: Reference source not found Figure 2.2: .Ranking by total assets of top Vietnamese banks .Error: Reference source not found Figure 2.3: .Overall structure Maritime Bank .Error: Reference source not found Figure 3.1: Business Areas .Error: Reference source not found LIST OF CHART Chart 2.1: Top 10 banks by total assets, in billion USD (2010) .Error: Reference source not found Chart 2.2: .Top 10 banks by net profit, in billion USD (2010) .Error: Reference source not found Chart 2.3: .Staff‘s general satisfaction of KPIs .Error: Reference source not found Chart 2.4: Staff‘s belief in KPIs .Error: Reference source not found Chart 2.5: Staff‘s belief in fitness of indicators .Error: Reference source not found Chart 2.6: Contribution of new product in volume .Error: Reference source not found Chart 2.7: Contribution of new product in profit .Error: Reference source not found EXECUTIVE SUMMARY Key Performance Indicators is a quite new concept in management but many organizations all over the world have recognized as a useful tool In recent years, organizations in Vietnam started to use KPIs for managing their targets and operation Especially in human resource management, KPIs are often used to appraisal employee‘s performance This research provides an analysis and evaluation of Key Performance Indicators system which supporting personnel appraisal activities of Maritime Commercial Join Stock Bank (Maritime Bank), and then develops Key Performance Indicators for employees at Product development department of Large Corporate Banking of Maritime Bank The research idea was formed when the researcher monitored and summarized results of personnel appraisal in Maritime Bank Based on the fact of Maritime Bank’s rapid growth in recent years, knowledge about usefulness of Key Performance Indicators in employee appraisal, and current situation that employees at Product development department of Large Corporate Banking (Maritime Bank) haven’t evaluated by Key Performance Indicators system yet, researcher chose this thesis The main target is to develop a more effective appraisal system for employees of Product development department by using KPIs Method of research is analysis, comparisons, synthesis to 10 examine both primary data and secondary data The report found the necessary of having KPIs for employees of Product Development Department to improve their activities, and developed a pilot The writer also recommended some factors to apply KPIs successfully in Maritime Bank: •Improve plan activity and flexibly adjust target if necessary •Use tools such as dashboard meeting and working diary to monitor, record and calculate performance more exactly •Closely attach KPIs to income, promotion and financial encouragement •Use information technology applications to reduce KPI appraisal costs •Update and improve KPIs frequently •Learn and apply 12-step Model of David Parmenter when implementing KPI 116 products that need many months to develop, pilot and apply Hence, if the period of appraisal is too short, the result of this criterion may be zero and don’t reflect exactly our performance In addition, when developing a product, we always have timelines, so that it may be a criterion to evaluate our effectiveness In your work, who you often contact with? Answer: Products come from customers’ needs, so that customers are the first and most important objects that we contact We sometimes work directly with customers, sometimes work through RM to learn their needs RM is direct sale force so we have to train them about products, support their sales and receive feedback from RMs and customers to improve existing products or develop new products Besides, in the process of developing products, we have to work with many sections as IT, legal department, risk management… Do you think that evaluation of related sections should be a criterion in your performance appraisal? Answer: Maybe, but I think it is minor because they sometimes don’t understand absolutely our work Not all requests from customers, RM or others can be realized into products 10 What you think about evaluation of direct manager? Answer: You know that this criterion existing in all KPI in 117 Maritime Bank, maybe for Vietnamese custom But I’m aware that direct manager (for me being Head of LC) is the person who know deeply my work We often communicate quarterly about plan and result, so that he would evaluate my effectiveness not only based on financial criteria or number of products Sometimes, because of general troubles of the economy and banking industry, as now, despite we tried much, it’s difficult to reach plan Thank you for your cooperation! 118 APPENDIX Form No MARITIME COMMERCIAL JOIN STOCK BANK Headquarter: 88 Lang Ha Str., Dong Da Dis., Hanoi *Tel: 04 3771 8989 - Fax: 04 3771 8899 www.msb.com.vn PERFORMANCE APPRAISAL FORM FOR INDIVIDUAL For Product Manager Full name: Staff code: MSBPosition: Product Department: Product Develop Gender: Bank: Large Corporate Manager Banking Date of birth: Department Date of signing labor Period: Quarter 2/ 2012 contract: Direct manager: Position: Head of Large Corporate Banking I – PERFORMANCE APPRAISAL Performance Wei Target Perform Percen KPI Unit ght Plan (%) ance tage (a) (b) (c) (d=c/b) (e) Completion rate with weight (g=e*a) 119 Financial Net income Average volume Number of new product 100% milli on Billi on prod Number of improving uct prod product Number of Marketing uct prog campaign Customer Number of customers ram use new products Satisfaction of customers Satisfaction of colleagues Satisfaction of RM 30% 100% 10% 100% 5% 100% 5% 100% 5% 100% 100% custo 5% 100% % 5% 100% % 5% 100% % 10% 100% mer 120 Internal Process Learning and growth Appraisal of supervisor % % 5% 5% 100% 100% % 10% 100% 100 Ranking Standard KPI % >= 140%: A1 >= 100% < 140%: A2 >= 70% < 99 %: A3 >= 20 < 69%: A4 Rank < 20%: A5 II – EVALUATION, GENERAL IDEA OF DIRECT MANAGER (required) Advantages: Disadvantages: III- PLAN OF TRAINING AND PROMOTION TT Training program Deadlines Note Dat Signature Staff Position 121 e Dat e Dat e Signature Direct manager Position Signature Head of bank Position dicator Account posit (FD) 122 APPENDIX BUSINESS PLAN 2012- LARGE CORPORATE BANKING Jan Feb 1,803,45 2,010,37 4,164,54 5,184,5 erm loans 85 d long term 6,247,81 Mar 2,217,2 Apr May 2,424,2 2,631,12 Jun 2,838,0 Jul 3,044,9 Aug 3,251,8 Sep 3,458,7 92 4,893,6 5,622,70 08 6,351,7 7,080,87 42 7,809,9 58 8,539,0 75 9,268,1 92 25 9,997,2 10,726,29 11,455,3 25 5,450,7 92 6,552,2 7,387,60 58 8,222,9 42 8,948,0 25 08 9,608,9 10,435,11 11,096,02 11,573,3 5,817,9 83 53 93 6,298,6 6,400,26 6,501,89 6,501,89 17 78 84 6,857,5 7,213,30 7,213,30 Oct 3,665,70 Nov 3,872, 7,518,1 7,823,0 7,823, 273,3 30 332,4 337,18 345,5 353,8 95 365,80 376,61 383,2 90 394,5 80 404,19 80 408,9 bt ome from 34 21,14 94 19,5 22,50 42 23,2 95 25,64 26,9 29,9 23 31,14 33 32,1 35,07 34,8 ome from 12,50 36 12,58 15,37 99 16,26 18,23 77 19,03 03 21,10 22,5 91 23,20 25,41 25, 9 42 79 123 ome from 5,02 5,3 6,77 7,41 8,5 9,11 10,29 11,17 11,66 12,9 13,3 3,86 29 3,7 4,46 4,6 36 5,2 5,51 6,13 6,48 6,70 31 7,3 7,4 t service from 45 97 42 6 42 service 1,9 1,87 2,2 2,3 2,62 2,7 3,06 3,2 3,3 3,67 3,7 from FX 33 (19 (18 33 (22 49 (23 (26 56 (27 (30 43 (32 53 (33 (36 (3 3) 7) 3) 5) 2) 6) 7) 4) 5) 7) from f FX from rvices 124 APPENDIX BALANCE SHEET 2011 31/12/201 31/12/201 VND m VND m ASSETS Cash, gold and gemstones Balances with the State Bank of Vietnam (“the SBV”) Due from banks Placements with other banks Loans to other banks Provision for credit losses of loans to other banks Trading securities Trading securities Provision for impairment of trading securities Derivative financial instruments and other financial assets Loans and advances to customers Loans and advances to customers Provision for credit losses of loans to customers Investment securities Securities - available-for-sale Securities - held-to-maturity Provision for impairment of investment securities 1,220,867 912,185 964,132 453,495 28,761,65 30,467,55 28,477,58 30,375,90 290,000 102,000 (5,924) (10,352) 50,691 82,692 89,186 92,825 (38,495) (10,133) 74,103 37,388,43 31,521,53 37,752,93 31,829,53 (364,505) (308,000) 34,087,71 28,473,18 34,123,34 28,501,39 (35,629) (28,211) 125 Long-term investments Investments in joint ventures Investments in associates Other long-term investments Provision for impairment of long-term investments Fixed assets Tangible fixed assets Cost Accumulated depreciation Financial Lease assets Cost Accumulated depreciation Intangible fixed assets Cost Accumulated amortization Investment Property Cost Accumulated amortization Other assets Receivables Interest and fee receivables 31/12/201 31/12/201 VND m VND m 1,754,772 533,582 1,754,772 533,582 724,903 241,739 350,373 (108,634) 303,083 312,780 (9,697) 180,081 219,593 (39,512) 1,076,725 1,092,413 (15,688) 615,381 149,111 225,311 (76,200) 309,726 312,780 (3,054) 156,544 188,245 (31,701) 72,022 72,800 (778) 22,204,45 8,270,999 2,962,891 2,254,509 3,070,797 1,553,632 126 Deferred tax asset Other assets Provision for impairment of other assets TOTAL ASSETS - 18,396,31 2,257,491 (20,180) 114,374,9 115,336,0 98 83 31/12/201 31/12/201 VND m VND m LIABILITIES Borrowings from the Government and the SBV Due to banks Deposits from other banks Borrowings from other banks Due to customers Derivative financial instruments and other financial liabilities Debts issued and other borrowed funds Valuable papers issued by the Bank Other liabilities Interest and fee payables Tax payables Other payables Provision for other risks TOTAL LIABILITIES 10,116,22 22,830,50 20,350,69 2,479,809 62,294,52 11,833,17 33,358,86 33.099.54 259.320 48,626,70 78,869 394,048 1,271,144 12,195,32 7,178,500 2,061,318 1,644,417 1,296,142 821.529 301,474 293.281 432,353 503.802 31,349 25.805 104,875,1 109,008,4 17 94 127 31/12/201 31/12/201 VND m VND m OWNERS’ EQUITY Capital and reserves Capital Chartered capital Capital to purchase of fixed assets Share premium Treasury shares Preference shares Other capital Reserves Foreign currency translation reserve Asset revaluation reserve Retained earnings TOTAL OWNERS’ EQUITY TOTAL LIABILITIES, OWNERS’ EQUITY 8,400,607 8,000,000 607 400,000 410,670 688,604 9,499,881 114,374,9 98 5,528,610 5.000.000 607 528.003 381,583 417,396 6,327,589 115,336,0 83 128 APPENDIX INCOME STATEMENT 2011 2011 VNDm Interest and similar income Interest and similar expenses Net interest and similar income Fees and commission income Fees and commission expenses Net gain from fees and commission income Net gain/(loss) from foreign currencies trading Net gain/(loss) from securities trading Net gain/(loss) from securities investment Income from other operating activities Expenses from other operating activities Net gain/(loss) from other operating activities Share of profit in associates and joint ventures and dividend income TOTAL OPERATING INCOME Payroll and other staff costs Depreciation and amortization charges Other general operating expenses TOTAL OPERATING EXPENSES Profit before provision for credit losses Provision for credit losses of loans to other banks Provision for credit losses of loans to customers and off-balance-sheet commitments 2010 VNDm 14,078,65 8,246,078 (12,521,1 (6,326,175 77) ) 1,557,476 1,919,903 440,193 248,498 (96,442) (41,477) 343,751 207,021 41,904 (106,983) (35,017) (12,496) (29,308) 389,390 829,332 124,550 (417,270) (14,329) 412,062 110,221 121,610 2,412,478 (578,456) (69,076) (608,372) (1,255,90 4) 1,156,574 73,007 2,580,063 (418,307) (33,804) (472,096) (5,924) - (924,207) 1,655,856 (237,052) (186,824) 129 Reversal of provision for credit losses during the year PROFIT BEFORE TAX Current enterprise income tax Deferred enterprise income tax Enterprise income tax expense PROFIT AFTER TAX Minority interest NET PROFIT FOR THE YEAR Basic earnings per share (VND/Share) Basic earnings per share, included adjustments (VND/Share) 122,997 1,036,595 (239,255) (239,255) 797,340 797,340 1,413 1,202 49,156 1,518,188 (361,071) (361,071) 1,157,117 1,157,117 3,511 3,234 130 APPENDIX AN EXAMPLE OF ROLE PROFILE [...]... background, problem statement, scope and limitation of the research as well as methodology Chapter 1: Literature review - provides the theory information 17 of concepts of Balance Scorecard, Key Performance Indicators Chapter 2: Situation analysis of large- corporate banking of Maritime Bank details a case study: Large- corporate banking of Maritime Bank with the analyses about current situation applied from... same job Absolute judgment is an appraisal format that asks supervisors to make judgments about an employee’s performance based solely on performance standards Trait appraisal instrument is an appraisal tool that asks a supervisor to make judgments about worker characteristics that tend to be consistent and enduring Behavioral appraisal instrument is an appraisal tool that asks managers to assess a worker’s... performance measurement framework that added strategic nonfinancial performance measures to traditional financial metrics to give managers and executives a more 'balanced' view of organizational performance The balanced scorecard has evolved from its early use as a simple performance measurement framework to a full strategic planning and management system The balanced scorecard transforms an organization’s... Secondary data is the data within two years (2010 – 2011)  Research Methodology This research has been carried out in Large Corporate Banking of Maritime Bank The researcher used some methodologies such as statistics, analysis, comparisons, synthesis to examine both primary data and secondary data a Primary data: The primary data was gathered by using the following data collection methods: survey and in-depth... in the organization must maintain comparable rating standards • Management is the overriding goal of any appraisal system Appraisal should be more than a past-oriented activity that criticizes 19 of praises workers for their performance in the preceding year Rather, appraisal must take a future-oriented in the organization This means that managers must provide workers with feedback and coach them to... company’s strategy For the small business owner, measuring the right KPIs and creating actionable items from the data can elevate a company above the 12 competition Maritime Bank is one of the first commercial banks in Vietnam and targets to become one of the biggest commercial banks in Vietnam To the end of 2011, Maritime Bank s chartered capital is at the level of 8,000 billion VND and total assets reach... in relation to certain pre-established criteria and organizational objectives Performance appraisal includes the identification, measurement and management of human performance in organizations • Identification means determining what areas of work the manager should be examining when measuring performance Rational and legally defensible identification requires a measurement system based on job analysis. .. Telecommunication, Vietnam Maritime Administration, Civil Aviation Authority of Vietnam required to develop KPI system for employees This was expressed in resolutions of General Assembly of Shareholders 2012 and Maritime Bank s orientation of human resources of Talent Management Division With such rapid development requirement and ambitious target, Maritime Bank really needs a practical tool as KPIs to measure... now, many organizations have applied the balance scorecard and received good results Organizations have used systems consisting of a mix of financial and non-financial measures to track progress for quite some time One example of such a system was created by Art Schneiderman in 1987 at Analog Devices, a mid-sized semiconductor company; the Analog Devices Balanced Scorecard was 26 similar to what is... Conclusion: Summarizes the main points pointed out from the thesis 18 CHAPTER 1 LITERATURE REVIEW 1.1 KPIs and its role for organization in performance appraisal 1.1.1 Performance appraisal Performance appraisal is one of important contents in managing human resource of any organizations Performance appraisal is a systematic and periodic process that assesses an individual employee’s job performance and productivity