TASK OF FINANCIAL EVALUATION OF INVESTMENT PROJECTS IN THE BANK BIDV HUE BRANCH (BANK INVESTMENT AND DEVELOPMENT OF VIETNAM)

UNIVERSITÉ PARIS 12 REPORT TASK OF FINANCIAL EVALUATION OF INVESTMENT PROJECTS IN THE BANK BIDV - HUE BRANCH (BANK INVESTMENT AND DEVELOPMENT OF VIETNAM) SUPERVISOR: Ms Nermin Kassib Accou Realized by: PHAN LE NHU UYEN ABREVIATIONS LIST BIDV: Bank of Investment and Development of Vietnam BIDV Hue: The Bank for Investment and Development of Vietnam - Branch of Thua Thien Hue CIC Credit Information Center of the State Bank WACC: Weighted Average Cost of Capital TPR: Risk Prevention Center BIDV system IRR: Internal Rate of Return NPV: Net present value ROCE: Return on invested capiatux TABLE OF CONTENT INTRODUCTION 1.Problematic Research Objective .2 Purpose of Research .2 Delimitation of the research Structure of Essay CHAPTER 1: GENERAL THEORY OF FINANCIAL EVALUATION OF INVESTMENT PROJECTS .3 1.1 The investment project 1.1.1 The definition of the investment project 1.1.2 The classification of projects investisement 1.1.3 The exigences of an investment project 1.1.4 The project cycle .6 1.2 The financial evaluation of investment projects to the commercial bank 1.2.1 The concept of financial evaluation of projects investisement commercial banking 1.2.2 The methods of financial evaluation of investment projects to the commercial bank 1.2.2.1 The comparison indices 1.2.2.2 The order valuation method 1.2.2.3 The evaluation method based on the analysis of the sensitivity 1.2.2.4 The prediction method 1.2.3 The contents of the financial evaluation of investment projects of commercial banks 1.2.3.1 Examine the financial capacity of the borrower customer .8 1.2.3.2 Examine finance the investment project 1.2.4 The indices appreciated the work of the financial evaluation of investment projects 13 1.2.4.1 The qualitative indices 13 1.2.4.2 The quantitative indices 14 1.2.5 Factors influencing the task of the financial evaluation of investment projects 16 1.2.5.1 Group subjective factors 16 1.2.5.2 objective factors of group 17 SUMMARY CHAPTER 1: ANALYTICAL FRAMEWORK 19 CHAPTER 2: THE ASSESSMENT OF FINANCIAL TASK EVALUATION OF INVESTMENT PROJECT TO BANK BIDV HUÉ 20 2.1 The introduction of BIDV Bank Hue .20 2.1.1 The history of the formation and development 20 2.1.2 The situation of assets and capital resources 21 2.1.3 Operating income 24 2.2 The current status of the task of the financial evaluation of investment projects to the bank BIDV Hue .25 2.2.1 Regulations, the process of evaluation 25 2.2.2 The illustration project 26 2.2.2.1 The information based on the investment project 26 2.2.2.2 The contents of the financial evaluation of the investment project .27 2.2.3 The indices appreciated the work of the financial evaluation of investment projects to the bank BIDV Hue 34 2.3.2 The limitations exitantes .41 SUMMARY CHAPTER 2: SUMMARY ANALYSIS .43 CHAPTER 3: SOLUTIONS TO IMPROVE THE QUALITY OF FINANCIAL TASK EVALUATION OF INVESTMENT PROJECTS IN THE BANK BIDV HUÉ 44 3.1 The direction of development of the bank BIDV Hue 44 3.1.1 The orientation of the credit activity 44 3.1.2 The orientation in the evaluation of investment projects activity 44 3.2 The solutions to improve the quality of financial evaluation of investment projects BIDV Hue 44 3.2.1 Improving the quality of a staff team 45 3.2.2 The financial evaluation methods 45 3.2.3 financial assessment content 46 3.2.4 Improve information and raise the quality of information used for financial evaluation of investment projects system 46 3.2.5 Regularly check the project and the evaluation results before, during and after loan 47 CONCLUSION 48 LIST OF TABLE Table1.1 Classification of investment projects based on the importance àn the book scales Table1.2 Comparison of indices of financial efficiency 12 Table 2.2 The situation of assets and capital resources of the bank BIDV Hue (2010 – 2014) 22 Table 2.3 Structure of loans by term (2010 - 2014) 23 Table 2.4 Le résultat d’exploitation de BIDV Hué (2010 – 2014) 24 Table 2.5 Comparing the growth of profits of BIDV Hue to that of its competitor .25 Table 2.6 Number of students and business training recipe Driving School (2010 - 2011) 28 Table 2.7 Recipe Statistics study fees B1, B2 of the period from 2010 to 2011 and first months of 2012 28 Table 2.8 Transportation Statistics High School Transportation Hue 29 Table 2.9 The receipts of the purchase investment project cars for train driving classes B1, B2 .30 Table 2.10 The costs of purchasing investment project cars for train driving classes B1 30 Table 2.11 Profits and cash flows of the purchase investment project cars for train driving classes B1, B2 .31 Table 2.12 The repayment plan of purchasing investment project cars for train driving classes B1,B2 33 Unit: million dong .33 Table 2.13 Balance of reimbursement of resources in purchasing investment project cars for train driving classes B1, B2 33 Table 2.14 The fluctuation of the balance of investment projects of loan debts of the bank BIDV Hue 35 Tableau 2.15 The proportion of investment projects for loans in the credit structure of the bank BIDV Hue .35 Table 2.16 The proportion of successful projects to the bank BIDV Hue 36 Tableau 2.17 The proportion of bad debts loans for investment projects to the bank BIDV Hué 36 Table 2.18 capital cycle of the investment projects 38 Table 2.19 The proportion of errors of assessment of investment projects in BIDV Hue 40 LIST OF FIGURES Figure 1.1 The project cycle LIST OF GRAPH Graphique 2.1 The proportion of investment projects for loans in the credit structure in the period 2012 - 2014 35 Graphique 2.2 The fluctuation and the proportion of bad debts of investment projects for loans in the period 2012 - 2014 .37 Graphique 2.3 The amount of debt recovery of investment projects in Hue BIDV in the period 2012 – 2014 38 Graphique 2.4 Le cycle des capitaux de projets d’investissement BIDV Hué dans la période 2012 – 2014 39 INTRODUCTION 1.Problematic Vietnam is increasing development, from a country with a backward agriculture into an industrial country that is developing market economies However, to achieve the objective, in 2020 Vietnam became an industrialized and modernized country, we need to make more efforts Vietnam should focus investment infrastructure, equipment, machinery and technology moderns in all sectors In reality, he faces a big obstacle is limiting financial resource companies So to be able to meet demand funds, companies mainly bank borrowing through its timeliness and efficiency Regarding banks, lending for investment projects is a form of credit that pays an important source of profit and sustainable banks However, this activity also involves risks, because projects often require large capital and long term So to get good projects with high feasibility, banks should carefully perform the investment projects In particular, the financial evaluation of investment projects is one of the important contents of the evaluation of investment projects Project evaluation helps to distinguish the good / bad projects, identify risks and actively seek measures controlling risks to reduce By carrying out the project evaluation task, the banks improve credit quality, ensure compliance and effective for the intended purpose and use of this capital high possibility of recovering them In recent years, the financial evaluation of investment projects has been more interested in the banks but it has not yet produced results, some projects can not recover the capital invested Improve the task of the financial evaluation of investment projects is a vital need to ensure the safety of loans and the quality of investment projects, contribute to the development of the country In Vietnam, the Bank for Investment and Development of BIDV is recognized for its mission to finance mainly investment projects Worldwide, the prestige is good thanks to his credit Indeed, the 12.11.2013, the international investment bank IIB signed with BIDV a loan agreement of EUR 50 million in the fiscal target projects of small and medium sized Vietnamese companies For these reasons, I Interesē me realize the subject: "Appreciating the work of the financial evaluation of investment projects to the Bank for Investment and Development of Vietnam BIDV - Hue branch." Research Objective The thesis focuses on the financial evaluation task of investment projects of the Bank of Investment and Development of Vietnam - The branch of Hue The objective is detailed as follows: - Systematize theoretical issues of investment projects, evaluation of investment projects and financial assessment of investment projects - Assess the current situation of the financial evaluation of investment projects in the BIDV Bank Hue - Propose Measures to improve the quality of the financial evaluation of investment projects in the BIDV Bank Hue Purpose of Research The task of the financial evaluation of investment projects to the Bank for Investment and Development of Vietnam BIDV - the branch of Hue Delimitation of the research ♣ In time: the search covers the period from 2010 to 2014 ♣ In space: the search is carried out at the Bank for Investment and Development of Vietnam BIDV - the branch of Hue Research Methodology ♣ Data Collection Method Secondary data are collected in books and magazines, online, in earlier reports and BIDV Bank Hue ♣ method for processing data +Comparative Method Compare Bank data indices of major institutes of the world, branch +Statistical method used to collect and synthesize data And combine econometrics to process and analyze +synthetic method: Based on the collected and processed data, perform analysis and compare, and deduce a conclusion on the research problem Structure of Essay Apart from the general introduction at the beginning and the general conclusion at the end of memory, it is divided into three chapters: Chapter 1: General Theory of financial evaluation of investment projects Chapter 2: Appreciate the work of the financial evaluation of investment projects in the BIDV Bank Hue Chapter 3: Solutions to improve the quality of the financial evaluation of investment projects task to BIDV Bank Hue CHAPTER 1: GENERAL THEORY OF FINANCIAL EVALUATION OF INVESTMENT PROJECTS 1.1 The investment project 1.1.1 The definition of the investment project According to the World Bank, an investment project is the set of policies, activities and costs that bind, and it is planned to achieve certain objectives within a specific time According to the Vietnam Investment law enforcement since 2006, an investment project is all capital offers medium and long term to achieve the investment activities in compass and for a specific time • In terms of form: an investment project is all the documentary record showing in detail and order activities, the cost to achieve the results and objectives identified in the future • In terms of content: an investment project is the set of interrelated activities to achieve the objectives set by creating concrete results in precise time through the resources identified as the market, products, technology, the economy and finance 1.1.2 The classification of projects investisement Depending on the nature, importance of the project, the characteristics of the area of operation, capital and scale of the project, we choose different criteria for classifying projects In general, there are several classifications method, the most common are: a Based on the importance and scale of the construction of the work According to the Decree No12 / 2009 / dot-CP on 12/02/2009 government management investment project and construction, projects have generally been classified as follows: annual interest Source amortization Resource earnings Balance of reimbursement of resources 856 1.710 2.027 727 1.710 2.810 556 1.710 3.872 385 1.710 5.187 214 1.710 6.929 1.938 2.596 3.829 5.315 6.929 The project's repayment sources is taken from depreciation, annual after-tax profits of the project He is committed to using all depreciation and profits to repay the bank If project revenues not guarantee the ability to repay the investor agrees to use other external legal sources to repay bank loans Note: loan repayment plans are highly concentrated by the bank Investors should inform the bank that the project will be used how many percentage of profits to repay the bank According to the characteristic of each project (an extensive project or a new project), investors will have different repayment commitments The bank still creates optimal conditions for the investor in the project implementation process In this project, the investor can repay the loans with extension of months The sources of repayment is taken from depreciation, annual after-tax profits of the project This is consistent with the official note of the State Board evaluation of investment projects of the No 30 / HDTD in terms of loan repayment and projects This school can make this problem because it is an extensive investment project, so it still benefits from other sources 2.2.3 The indices appreciated the work of the financial evaluation of investment projects to the bank BIDV Hue a The balance of the loan debt of the investment project 34 Table 2.14 The fluctuation of the balance of investment projects of loan debts of the bank BIDV Hue Unit: Millions VND 2012 2013 2014 Total loans 1.305.217 1.527.780 2.628.799 Loan oustanding balance at 666.295 666.125 1.235.536 medium and long term Loan oustanding balance of 569.315 532.900 1.040.851 project The loans outstanding balance for the investment projects of the bank in 2012 2013, he has almost no tendency of increase because the bank is trying to achieve the structural change activities to focus more credit to safer short terms Therefore, in reality, although the bank's outstanding credit strongly increases over time, the loan outstanding balance of project does not change significantly In 2014, the economy recovers and stabilizes gradually, so the bank focuses more ready for investment projects, specifically the growth of the debt balance increased over 95% compared to 2013 Tableau 2.15 The proportion of investment projects for loans in the credit structure of the bank BIDV Hue Unit: Percentage 2012 43,62% 2013 34,88% 2014 39,59% Loan oustanding balance of project / Total loans Loan oustanding balance projets/ Loan 85,44% 80% 84,24% oustanding balance at medium and long time (Source: Planning office – Summary, BIDV Hué) Graphique 2.1 The proportion of investment projects for loans in the credit structure in the period 2012 - 2014 The proportion of investment projects loans represents a specific percentage of the total credit outstanding balance Because although Project loans are risks, but this 35 form of credit also reported a significant source of profit and sustainable banks In the structure of loans to medium and long term in particular, the proportion of project loans decreased slightly in 2013 and then increased to 84.24% in 2014 b The proportion of successful projects In the period 2012 - 2014, the proportion of effective projects more and more increased, it reflects that the task of assessing and project financial evaluation reach high quality Table 2.16 The proportion of successful projects to the bank BIDV Hue Unit: Project, Percentage 2012 2013 2014 Number of assessment projects 14 13 16 Number of projects accepted the loan 10 11 Number of effective projects 11 Proportion of effective projects 85,71% 90% 100% (Source: Planning office – Summary, BIDV Hué) a The proportion of bad debts Tableau 2.17 The proportion of bad debts loans for investment projects to the bank BIDV Hué Unité: Millions de dongs, Pourcentage 2012 2013 2014 Loans outstanding balance of project 569.315 532.900 1.040.851 Bad debts of project 17.658 8.092 11.870 The proportion of bad debts of projets 3,10% 1,52% 1,14% Proportion of bad debts of banks in Vietnam 4,08% 4,65% 3,25% (Source: Planning office – Summary, BIDV Hué) 36 Graphique 2.2 The fluctuation and the proportion of bad debts of investment projects for loans in the period 2012 - 2014 In 2012, the government began to pay attention bad debts Statistics showed that the situation most alarming banks by the proportion of bad debts which exceeded the level of standard The branch was not an exception, only the bad debts of the investment project amounted to 3.1% In this period, the loans outstanding balance has concentrated volatile sector like construction, real estate The stagnation of the property market has most construction companies and building materials, which has suffered a loss because of large stocks So the large companies playlist can not pay their debts at maturity, it is because of bad debts increased during 2012 The removal of the risk forecasts are too big because of rising bad debts, it is also the why bank profits greatly reduced, the medium and long term credit and project lending grew slowly However, after carrying out the measures to resolve the bad debts that are up: actively increase forecast risk, reduce unnecessary costs, adjust guarantee assets and urge the recovery of debts with the appearance of the Society of Management 'Vietnam assets 07/2013, the bad debts of the bank quickly reduces the security level which is only 1.52% in 2013 and 1.14% in 2014 In addition to the above measures, the bad debts is limited to a low level, that is to say, the branch has realized very careful in giving the project loan decision This reflects in part the quality of the financial evaluation of investment projects in the bank With sound financial evaluation of projects, the Bank has analysis and accurate calculations From there, it identifies effective projects and invest d The capital cycle The amount of debt recovery cycle strongly influences the lending of capital investment projects So, before searching the fluctuation of this cycle, we must examine the situation of debt recovery at the branch to withdraw more accurate conclusions 37 Graphique 2.3 The amount of debt recovery of investment projects in Hue BIDV in the period 2012 – 2014 The sum of the recovery of investment projects of debts is increasing over the years and holds the majority of debts medium and long terms, because it is the main form of long-term credit Although the amount of the recovery increased gradually over the years, it holds less than 10% of all debt recovery, because this is the type of credit with long recovery time, secondly, companies face difficulties to repay maturing debt In addition, the bank is trying to achieve the change of business structure to focus more on short-term credit, then the amount of debt recovery to more than annual short term, it is normally In the period 2013 - 2014, the recovery of debts project is a significant increase (over 70%) This is a positive signal that the bank's efforts to implement various measures to recover debts: urge to recover the debt or accelerate the underlying assets to minimize bad debts Table 2.18 capital cycle of the investment projects Unit: Cycle 2012 2013 2014 Recovery projects debt / loans outstanding balance 0,024 0,029 0,035 average Recovery projects debt / loans outstanding balance at 0,045 0,063 0,074 medium and long term Recovery projects debt/loans outstanding balance 0,05 0,079 0,085 average of project (Source: Planning office – Summary, BIDV Hué) 38 Graphique 2.4 Le cycle des capitaux de projets d’investissement BIDV Hué dans la période 2012 – 2014 The capital cycle of investissment project is generally less than and not as fast as turning the short-term cycle, because of client funds appropriation for the long term The means of project finance capital is 0.07 cycles / year Specifically: in 2012, the cycle reached 0.05 cycles This year has been affected by the global economic crisis, the companies of the locality were at a loss and the inability to pay debts when due So the amount of debt recovery has dropped and bad debts have rise Then, this cycle increases to 0,079 cycles in 2013 and 0,085 in 2014 In the cycle provided a higher average debt balance, the project capital cycle is greater than the medium and long-term cycle This reflects that the task of loan and debt recovery for investment projects were improved website by the bank e The proportion of errors The false sense of proportion of bad loans projects is declining This proves the quality of increasingly high evaluation task Despite the accepted non effective lending projects are only a small proportion of total projects approved loans But if these projects have high amount of loans, this will influence the situation of overdue debts and bad debts of the bank However, the refusal of good project loans still has relatively high rate in the period 2012 - 2014 When the bank refuses them, influenced more or less prestige bank also reduced some clues such as: the amount of the loan, the amount of the recovery and the balance of bank debts But in the current period, the economy still difficult and limited resources, then the refusal of the loan of some projects is inevitable 39 Table 2.19 The proportion of errors of assessment of investment projects in BIDV Hue Unit: Project, Percentage 2012 2013 2014 Number of assessment projects 14 13 16 Number of accepted projects 10 11 Number of projects refuses Error type 1: Accept bad projects Percentage Error type 2: Deny good projects Percentage 0 14,29% 0% 0% 28,57% 0% 20% (Source: Planning office- Summary BIDV Hué) Generally, two main reasons the loan refusal a good project consist of the evaluation period and the loan rate of interest that are not competing with other banks (ie the interest rate higher loan) To overcome this situation, the branch is actively communicating with the Head Office in order to obtain the most favored interest rates for customers, both the head of the evaluation office chooses the good qualified agent to consider 2.3 Assess the situation of the financial evaluation of investment projects task to BIDV bank Hue 2.3.1 the Success The medium and long-term credit is the highlight of the BIDV bank Since the training, the branch of the bank BIDV Hue argued forever The branch has lent many projects and most projects achieve the high efficiency after marketing They reported the interest to investors, the bank's contribution to tax revenues and social interest To get these results, to consider the role of the task of evaluation and financial evaluation Through there, the bank can classify projects and lend efficacies projects This reflects that the quality of the branch evaluation task is increasingly improved Precisely, in the last years, the assessment task in Hue BIDV has achieved the following results: ♣ The procedure of evaluation The traditional operation of BIDV served the investment and development, evaluates projects and conducts major programs of economic development Therefore, the BIDV evaluation task is systematic and accumulated from many experiences Enjoying this, the assessment at the branch is performed according to a clear, scientific and rational 40 There is coordination and clear division of responsibilities between the offices This helps to improve the efficiency of the assessment, to prevent and limit risks The work allocation is made the basis of the knowledge area of the examining agent This creates specialization in the assessment task, contributing to increased efficiency and quality of the evaluation report ♣ The human resource for the assessment task The staff team for the assessment task, we have the right level, youth and dynamism (the average age is 31), well suits this stressful operation In addition, the bank also has agents working for several years that are rich in experiences This ensures the application of the assessment of significant and complex projects In addition, the bank is also interested in advancing the professional level of agents across the deep training programs and exchange experiences ♣ information The details of the assessment task resources are increasingly developed Previously, information offertent only from the client, so they are incomplete and poor reliability This makes it much difficulty in the project evaluation process Now the officer can also use other information resources such as internal information system of the BIDV Risk Prevention Centre (TPR), the Centre of credit information of the state bank (CIC) ♣ The proportion of bad debts, the cycle of loan capital for investment projects In the period 2012 - 2014, the banking sector in Vietnam has gone through series of changes, but the operation of the branch in general and lending for investment projects in particular have been controlled, then we have positive results The effectiveness of the projects capital cycle is reflected in the index of the recovery amount of project debt to total average debt balance, there are appreciable improvement after the decline in profits in 2012 In particular, bad debts were treated the security level to 1.14% in 2014, it helps to stabilize and consolidate the bank's lending and limiting losses 2.3.2 The limitations exitantes Alongside the results above, the financial evaluation of projects to the task BIDV bank Hue has the following limitations: _First, the technical evaluation The indices used for evaluation of financial efficiency are simple and easy to use, but sometimes they lack precision Indeed, money is influenced by factors such as inflation, opportunity costs, economic and social conditions So the money has time value However, in the evaluation process, the time value of money is not careful enough so the result of the financial evaluation is not correct completely In addition, 41 the calculation of NPV indices, TRI, IP and breakeven is not yet fully used to evaluate and select projects _Second, the content of the evaluation The bank was careful to evaluate all aspects of the project However, the necessary information is often available while information resources are limited and the level of importance between assessment content is not determined In general, the system of financial analysis indices used currently in the bank includes: the profitability of the project, the capital repayment ability, the safety of the project Néanmois in reality the bank is particularly interested in profitability indices In addition, during the process of analysis, examining agent generally the calculation of financial indices and comparison between years He rarely compares with the average standards of the sector and other similar companies _Third, information The customer-related information used during the analysis process, they are not yet complete Althoughthe the bank made efforts in collecting customer information across several measures, key information used in the analysis of the project is based on the investor's report But the reliability of these reports is reliable In addition, the data used in the financial analysis of the company about or years, so the examining agent is difficult to grasp the overall situation of the company _Fourth, the information technology system Do not make the benefits of the information technology system The bank does not regularly apply forecasting software during the project evaluation process and risk analysis So the effectiveness of the project is considered static and incomplete The bank does not complete the information of borrowers channel, projects and evaluation Results for operation of the project Accordingly, the agent does not yet take advantage of the information resources of previous projects to the evaluation of the following projects _Fifth, the value of underlying assets is not interested correctly The guarantee assets are the second source of repayment of debts further receipts of the project, including debts are irrecoverable risk However, assessment of value and liquidity of underlying assets without attention from the start, it will be difficult to liquidate assets to recover debts It should be noted that the obligation of the borrowers carries out contract clauses such as liquidation of assets, purchase, operate and use or sue the borrower, to use the legal tools they lose time and costs In addition, for the low liquidity of assets, the bank can not use them, but it pays the costs of conservation Accordingly, the limitation of bad debts should begin the first steps of the evaluation process to find the 42 right customers and feasible projects The requirement of underlying assets is intended only to limit the risks of the project at a minimum SUMMARY CHAPTER 2: SUMMARY ANALYSIS NO Index The loan proportion of investment projects The proportion of successful projects The proportion of bad debts loans for investment projects The loan capital cycle of investment projects The proportion of errors Trend Comments Loan outstanding balance Maintaining and developing loan medium and long terms, proportion of investment projects after falling in 2013, it is related to the bank's capital increased Complete the financial assessment of the project task Combine manner consistent positive trend assessment methods The higher the proportion Enjoy all financial aspects of the of successful projects is project, be careful to accurately increased, the more the assess profitability, capital financial evaluation task repayment capacity and safety of is completed There are the project The evaluation more effective project contents are changed flexibly depending on the scale and characteristics of the project negative trend The bad debts decrease gradually over the years Although bad debts have This proportion reflects improved, we must put the the quality of the financial emphasis on projects that lent to evaluation If it decreases, limit potential bad debts in the that is to say the financial future evaluation task is well done positive trend Concentrate financial evaluation Over the project cycle of of the project to minimize the bad capital, the higher the and urge repayment to more quality of loans and debt efficient capital cycle recovery is better Further improve the valuation task negative trend Pay attention to the development The higher the proportion of a qualification agent team of errors, the lower the Complete the basic system project quality of the financial data, borrowers evaluation is high Apply scientific progress technology in processing and analyzing data 43 CHAPTER 3: SOLUTIONS TO IMPROVE THE QUALITY OF FINANCIAL TASK EVALUATION OF INVESTMENT PROJECTS IN THE BANK BIDV HUÉ 3.1 The direction of development of the bank BIDV Hue 3.1.1 The orientation of the credit activity The strategy of the Bank for Investment and Development of Vietnam during 2011 - 2015 and vision to 2020 will become one of the 20 modern banks qualifying, efficacies and réputatives first in the South - East Asia To achieve this strategy, the bank has established goals and specific steps for each period and for all branches of the system BIDV Hue branch does not cease to have the efforts in operating activities to develop together with all the BIDV system Continue to implement the motto: "Quality, efficiency and security of credit," Hue BIDV has set development objectives in the operation of business and credit activity, in particular: Improve quality and expand credit activity on the basis of existing customers, develop and increase the funds for new customers by ensuring the safety, quality and sustainability in the orientation of the Bank for Investment and Development Vietnam Achieving customer restructuring to increase the loan amount to non customers - state, loan guarantee by assets Extend loans to shorter terms and loans to support exports and imports Extend credit objects in several sectors and occupations In the credit to medium and long term, we must attach importance to the loan projects to increase the income of the branch 3.1.2 The orientation in the evaluation of investment projects activity The branch notes that the investment project is the general trend of the economy Therefore, lending to investment projects must be focused and interested in the future The project evaluation task and also financial assessment needs to improve to ensure credit quality The branch will increasingly interested in the activity of the financial evaluation of investment projects Indeed, improving the Language @ financial evaluation will help the bank to invest effectively, improve the quality of the medium and long term credit, and improve the efficiency of banking activities 3.2 The solutions to improve the quality of financial evaluation of investment projects BIDV Hue Improving the quality of financial evaluation - one of the decisive tasks, this improvement is very necessary for the bank Based on the current situation and the 44 assessment of the financial evaluation task BIDV Hue, there are solutions to improve the quality of financial evaluation of projects such as: 3.2.1 Improving the quality of a staff team The person is a key factor in deciding the success or failure in all activities, including banking This factor is particularly important in the credit, it is the operation requires analytical ability, synthesis and directorial flair Because the examining agent will contact directly with investors, evaluate the project and also advise management to make investment decisions Objectivity, accuracy and completeness in evaluation reports depends on many factors that tells: knowledge, experience, qualification and moral agent BIDV Hue has a young staff, dynamic and competent but they not have several experiences To improve the quality of project evaluation in general and the financial evaluation in particular, the bank can not spend on improving the quality of agents on the operating specialty and morality Through intensive training, the officers will acquire examining techniques, processes and evaluation experiences How the officers to receive the knowledge of modern techniques and practice them actually immediately? You have to give them real scenarios so that students can approach the systematic, choose the appropriate method and process And they can refine to suit every type of projects in each sector and region specific Create relationships with professionals, appropriate counseling organizations to support the assessment process For large, complex projects, cooperate with the specialized research organization, or hire outside consultants known when assessing the project This collaboration is a solution to help agents and examining the bank they can study the experiences and improve their ability professsionnelle 3.2.2 The financial evaluation methods The environment is still experiencing fluctuations, however the methods the bank uses is not put importance on this characteristic forecasting methods must be applied more fréquentement With the scientific and technological innovations, the forecast domain has been very successful The bank must enjoy them in the evaluation process to have reliable information on market fluctuations in the future to improve the quality of evaluation results The criteria NPV, IRR are the basic indices reflecting the efficiency that can not be ignored in the evaluation However, when the bank uses, we must be careful The NPV disadvantage is the high sensitivity to the change in the discount rate This is the cause that the NPV is not a good criterion incorrectly if we determine the discount 45 rate Therefore, in order to evaluate properly the financial efficiency of the project, the branch must use additional indicators such as: the profit index, project profitability You have to have a detailed and clear statement of financial evaluation indices In particular, we must emphasize the importance and cons of each index From there, the examining agent will point more correct and complete view of the project's effectiveness 3.2.3 financial assessment content Currently, BIDV has the project evaluation contained instructions to all branches of the system However, these are general guidelines So, they carry great generality and should be carefully adjusted when applying for specific projects They provide a lot of content to evaluate But in fact, it is difficult to evaluate fully and accurately all cotenus because of the limitation of the collected information and other objective reasons Therefore, the agent can not fully evaluate the project, or the entire project, but the result of this evaluation does not reach a good quality So among the evaluation contents, the bank should assess the most important aspects and require examiners evaluate the most qualifying way This will ensure a high precision investment decision The system of financial indicators currently used in the bank consists of project profitability, the capital repayment ability, the safety of the project However, the bank puts the importance on project profitability indicators such as NPV, IRR Therefore, the bank should add the index of safety as the mandatory basis of the assessment The link between financial assessment content should be more concerned to ensure the accurate conclusions about the client and the project 3.2.4 Improve information and raise the quality of information used for financial evaluation of investment projects system The financial evaluation of investment projects depends much on quantity and quality of information collected The information helps the staff with a reviewable basis, comparable and evaluated the feasibility and effectiveness of projects Being able to have the information necessary for evaluation of investment projects, examining agent should seek information from different sources to collect information directly from the client, investigate the company in fact, seek reliable source as CIC of state organizations and other organizations In addition, the bank needs to collect information on the project such as a feature of the machines, a production technology, to ensure a return receipts of the project, a product market, competitors and market materials first to assess the cost of 46 production and a price From there, the bank will have the most accurate conclusion about the prospect in the future of the project The collection of information must consistently perform within a specific time based on different sources So, next to the person factor, the bank also needs modern and advanced technology to manage and provide access information to customers in a systematic and timely manner Also, apply the development of technological science to develop softwares for the financial evaluation task, in particular, the forecasting software This will help improve the quality of information provided and thus the quality of the result of the financial evaluation 3.2.5 Regularly check the project and the evaluation results before, during and after loan There are cases, the construction period of the long project, the company has some difficulties in production, such as: policy change or offering extra demand, loss of business, natural calamity However the audit did not radically runs to cover false and difficulties of the company, particularly after the capital disbursed In addition, using the bank is only the extension of the debt or loan surcharge, the advisory role and oriented to customers solve problems is not yet well represented 47 CONCLUSION In the duration of my internship at the Bank of Investment and Development of Vietnam - the branch of Hue, I note that the evaluation of investment projects task, in particular, the financial evaluation plays a very important role for the bank's credit activity The high quality assessment task is the necessary condition for the banks to lend efficacies projects And this brings interest to investors, the bank and the company Therefore, the assessment of the financial evaluation of investment projects task is an essential and significant practical problem for the entire banking system in general and in particular the branch It is a complex problem with many branches and different hierarchies, both inside and outside the bank So it requires a deep study and solutions synchronized with the efforts of several sides In this thesis, I presented the theoretical issues based on the financial assessment of investment projects, analyzed and clarified the current situation of the financial evaluation of projects to task the Bank of Investment and Development Vietnam - Hue branch So I have proposed practical solutions to improve the work of the financial evaluation of investment projects in this location However, due to capacity limitations, knowledge and time, this memory can not avoid imperfections In particular, the indices used in the assessment of the financial evaluation task that is only for the short time period in 2012 - 2014 So the reality of this task to the bank is not measured accurately In the future, I would like to study more deeply about it I would also evaluate several indices for long time to get the best look In addition, I would look for solutions to attract good projects to increase the balance of credit debt medium and long term of the bank 48