Triển vọng kinh doanh ngoại tệ của Ngân hàng Vietinbank Thanh Hóa

Báo cáo thực tập về đề tài Triển vọng kinh doanh ngoại tệ tại Ngân hàng Vietinbank Thanh Hóa Báo cáo tập trung phân tích về các khía cạnh: + Giới thiệu khái quát về Vietinbank Thanh Hóa và phòng khách hàng doanh nghiệp + Thực trạng kinh doanh ngoại tệ tại ngân hàng Vietinbank: tập trung nghiên cứu về thị trường ngoại tệ, các thành tựu của Vietinbank Thanh Hóa + Bài học rút ra và một số đề xuất Bài viết được trình bày bằng tiếng anh, bố cục rõ ràng, có số liệu chi tiết kèm theo.

INDEX PREFACE CHAPTER I PROFILE OF VIETINBANK THANH HOA AND BUSINESS CUSTOMERS DEPARTMENT Corporate profile 1.1 1.2 History, development and achievement 1.3 Main activities 1.4 Core value and strategic vision .5 1.5 General information Organization chart Department profile 2.1 History and development 2.2 Functions CHAPTER II SITUATION OF FOREIGN EXCHANGE TRADING AT VIETINBANK THANH HOA .8 General theory about foreign exchange trading .8 1.1 Overview about foreign exchange market 1.2 Problems related to foreign exchange trading .11 1.2.1 Foreign exchange rate 11 1.2.2 Value date 12 1.2.3 Basic transactions in the interbank market 13 Achievements of foreign exchange trading at Vietinbank Thanh Hoa during the 2008 – 2010 13 2.1 Legal foundation of operations .13 2.2 Statement of foreign exchange flow .14 2.3 Transactions performed .15 2.4 Trading results 16 CONCLUSION 20 REFRENCE 21 ABBREVIATION CATALOG 22 TABLE – GRAPH CATALOG 23 PREFACE Globalization and liberalization have made influences on the movement and structure of banking system Free trade, therefore, has brought out an innovation in developing strategy of commercial banks If in the past, the major benefits came from credit services (up to 80 – 90%), in the present, modern services, especially foreign exchange trading have taken an increasingly important role in banking development From the reality and the knowledge of foreign exchange I have studied at university, I decided to choose the topic “Prospect of foreign exchange trading at VietinBank Thanh Hoa” Besides the preface and conclusion, this report is divided into parts: Chapter I: Profile of VietinBank Thanh Hoa and Business Customers Department Chapter II: The situation of foreign exchange trading at VietinBank Thanh Hoa The above topic deals with a complicated matter which requires a lot of real experience, knowledge and time Being analyzed and completed in the time of approximately five weeks, this report is unavoidable to face some mistakes Thus, I am willing to receive comments from anyone who are interested in this topic in order to improve the accuracy of the report I also express my grateful thank to Msc Tran Hong Ngan and VietinBank Thanh Hoa, especially officers in Corporate Customers Department who enthusiastically instruct and advise me to accomplish this report CHAPTER I PROFILE OF VIETINBANK THANH HOA AND BUSINESS CUSTOMERS DEPARTMENT Corporate profile 1.1 General information - Full name: Vietnam Joint Stock Commercial Bank for Industrial and Trade Head office: 108 Tran Hung Dao Street, Ha Noi, Viet Nam - Branch in Thanh Hoa: 17 Phan Chu Trinh Street, Thanh Hoa City, Thanh Hoa Province - Logo: - Website: http://www.vietinbank.vn 1.2 History, development and achievement Vietnam Joint Stock Commercial Bank for Industrial and Trade (abbreviated Vietinbank) was established on 01/07/1988 under Degree No 53/HĐBT dated 26/03/1988 Two months later, Vietinbank Thanh Hoa was stated to establish under Resolution No 65/NH-QĐ dated 08/07/1988 by General Manager (now called Governor) of Viet Nam State Bank and officially came into operation on 01/09/1988 Until now, VietinBank has been one of the four largest State-owned commercial banks of Vietnam and its total assets account for over 20 percent of the market share of the whole Vietnamese banking system Vietinbank also has developed an operating network including 01 transaction center, 149 branches, 527 transaction offices, 166 savings offices, 02 representative offices, 04 subsidiaries, 03 administrative units and 1042 Automatic Telling Machines (ATMs) It is 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 and VietinBank Training Center In addition, it is the founder of another Financial Credit Institutions, including Saigon Bank for Commerce and Industry, Indovina Bank, Vietnam International Leasing Company – VILC and Vietinbank Insurance Company Ltd In the view of cooperation, the Bank has established correspondent relationship with 850 banks, financial institutions of 90 countries and territories all over the world Moreover, it is the official member of many international reputable organizations such as Vietnamese and Asian Banker’s Association, Society of Worldwide Interbank Financial Telecommunications (SWIFT) AND Visa International Services Association VietinBank is the first bank in Vietnam to apply modern technology and e-commerce in its banking operations Its remarkable achievements have a positive effect as well as an important role of the branch in Thanh Hoa Thanh Hoa Branch is among the biggest ones in Vietinbank system with over 170 employees, 80% of which graduates at least university By 12/2010, its capital mobilized is 1, 893 billion VND and its profit is 49, 815 million VND In comparison with early time, scale of capital increases 150 times while amount of labor halves We can analyze the following tables from annual reports of the years from 2008 to 2010 in order to estimate the Branch’s development Table 1.1.Capital mobilized during the period 2008 - 2010 Unit: billion VND Compared with previous year Year Capital Absolute Comparative (%) Compared with plan 2008 1, 285 231 22 103 2009 1, 554 269 21 97 2010 1, 893 339 21.8 87 (Source: Vietinbank Thanh Hoa, 2008 – 2010 Annual operating report 2008 – 2010 Thanh Hoa Province) Table 1.2.Revenue and profit during the period 2008 - 2010 Unit: million VND Year 2008 2009 2010 Revenue 239,341 211,385 333,106 Profit 31,489 27,791 51,766 (Source: Vietinbank Thanh Hoa, 2008 – 2010 Annual operating report 2008 – 2010 Thanh Hoa Province) 1.3 - Main activities Open account: both VND and foreign currencies are accepted + Currency account: current account of individual, organization, same account holder + Saving account: + Fixed deposit and deposit products: saving, bond, certificate of deposit + Other deposit account: guaranteed cheque account, fund transfer account, loan account … - Guarantee + Guarantee issuance, confirmation At the request of the customers, the Bank can issue guarantees, confirm guarantees through data transmitting network with test key; + Guaranteeing payments of the bills of exchange, promissory notes; + Others in accordance with the laws and regulations - Oversea remittances Import and export payment Support derivative products: spot, swap, forward, option Others services + Funding service: foreign exchange trading, purchase valid documents + International payment by cards such as Visa card, Master card, … + Investing activities: cooperating with other international and domestic credit and financial institutions + Financial advisory services 1.4 Core value and strategic vision - Core value: in the favor of all individuals’ and all corporate’ success - Strategic vision: Become a modern bank in meeting demand for products and services of domestic as well as international customers; an effective bank in organizing, operating and managing 1.5 Organization chart Operating network includes line departments, Ngan Hoa hotel, transaction Departments, dealing rooms, 10 ATMs with 40 thousands cards all over the province Director Deputy Directors Fina Busin Perso Mon Pers Risk Inform Overall Transac Ngan nce ess nal etary onel mana ative planning tion Hoa Acc Custo Custo Fund & geme Techni Dep offices Hotel ount mers mers ing Adm nt que Dep Dep Dep Dep inistr Dep Dep ative Dep Dealing room No3 Dealing room No4 Dealing room No5 Dealing room No8 Dealing room No10 Dealing room No11 Department profile 2.1 Dealing room No7 History and development Business Customers Department is established in the early day of the Branch with the duty of provide loans, payment and transferring services for businesses At the end of 2009, this department and International Payment Department are merged into Business Customers Department which is in charge of more perfect and plentiful services necessary for local businesses This reduces redundancy organizations, saves cost and helps management easier 2.2 - Functions Immediately explore capital in VND and any other foreign currencies from corporate customers - Provide marketing, advising and supporting information about products and services of VietinBank As a result, the department suggests proper - innovation and solutions to improve quality of service Estimate, verify and apply credit margin for corporate customers who are - in need of credit services and commercial funding Update and analyze economic activities, financial ability of customers in order to assure the credit activities operate effectively CHAPTER II SITUATION OF FOREIGN EXCHANGE TRADING AT VIETINBANK THANH HOA General theory about foreign exchange trading 1.1 Overview about foreign exchange market - Definition and function + Foreign exchange means the money of a foreign country; that is, foreign currency bank balances bank notes, checks and drafts + The foreign exchange market is the mechanism to carry out foreign exchange transactions, by which the participants:  Transfer purchasing power between countries;  Obtain or provide credit for international trade transactions;  Minimize exposure to the risks of exchange rate change - Characteristics + Foreign exchange market is anywhere foreign exchange trading happens , so it is called space market; + The market spans the globe, because of the difference in time of areas, transactions happen all day, thus, it is sleepless market; + Interbank is the centre of market with major participants are commercial banks, Sate Bank and foreign exchange brokers, which accounts for 85%; + Communication is carried out through telephone, fax, and internet; so information is transferred exactly and efficiently; + The exchange rate quoted in countries seems to be flat price, it means that the difference is insignificant; + USD is the most used currency accounting for 41.5% of all currencies and similarly to 83% of all transactions in the market; + Foreign exchange market is sensitively affected by economic and politic events, especially from big countries’ policies + London, New York and Tokyo is among the markets with the highest transaction revenues - Participant parties + The foreign exchange market consists of tiers: Interbank or wholesale market and Client or retail market FOREIGN EXCHANGE MARKET (100%) INTERBANK (85%) NONINTERBANK (15%) (Wholesale market) (Client/ retail market) BANK – CLIENT (14%) CLIENT – CLIENT (1%) + Five broad categories of participants within these two tiers:  Bank and nonbank foreign exchange dealers: They operate in both interbank and client market and get profit from buying the foreign exchange at a “bid” price and reselling it at a slight higher “offer” or “ask” price  Foreign exchange brokers: agents who facilitate trading between dealers without themselves becoming principals in the transactions Unlike a dealer, a broker does not take a position in assets he or she trades – that is, the broker does not maintain inventories in these assets The profits are determined by the commissions they charge to the users of their services (the sellers, the buyers or both)  Individuals and firms: for example, individual such as tourists and firms such as importers, exporters and MNEs They conduct commercial and investment transactions in the foreign exchange market Some of them use the market to cover an open position in order to “hedge” the foreign exchange risk Hedgers, therefore, are also call “risk averse”  Central banks and treasuries use the market to acquire or spend their countries’ foreign exchange reserves as well as to influence the price at which their own currency is traded They act to support the value of their own currency because of the policies adopted at national level or because of commitments entered into through membership in joint agreements The motive is not to earn a profit as such, but rather to influence the foreign exchange value of their currency in a manner that will benefit interests of their citizens  Speculators and arbitragers seek to profit from trading in the market itself They operate in their own interest, without a need or obligation to serve clients or ensure a continuous market Speculators are risk bearers who buy low sell high at different time in the same or different market, while arbitragers are risk neutral who buy low sell high at the same time in different market Order Retailer Order Commercial Bank State Bank Bilateral Order Commercial Bank Order aution Inside price order Inside price Dealer/ Broker 10 order Retailer 1.2 Problems related to foreign exchange trading 1.2.1 Foreign exchange rate Foreign exchange rate (foreign currency exchange rate) is the price of one country’s currency in units of another currency For example, VND 22, 600/USD1 means that USD is exchanged for 22, 600 VND From national view, there are kinds of exchange rate quotation, including direct and indirect quotation Direct quotation or price quotation indicates a home country price of a unit of a foreign currency For example, we take Vietnam as a home country: VND 20 610/USD, VND 29 881/ EUR, VND 33 779/GBP On the contrary, indirect quotation or volume quotation indicates a foreign currency price of a unit of a home country For example: USD 0.000485/VND, EUR 0.0000335/VND, GBP 0.0000296/VND Interbank market includes banks that are called quoting bank and asking bank Quoting bank is the one who quotes the foreign exchange rate and has to be ready to buy or sell at this rate without condition when the others want to make transaction Similarly, asking bank is the one who asks the quoting bank for foreign exchange rate and carry out transaction if the price is accepted As a result, we have “bid” and “ask” price A bid is the price in one currency at which a dealer will buy another currency An ask (offer) is the price in one currency at which the dealer will sell another currency For example, VND/USD = 22 050 – 22 060, it means that the bank will buy USD at 22 050 VND and sell at 22 060 VND Therefore, dealers make profit from the spread between buying and selling price, which is named bid-ask spread Bid – ask spread = Ask – Bid Example: VND/USD 22 050 – 22 060 Bid – ask spread = 22 060 – 22 050 = 10 Bid – ask spread (%) = (Ask – Bid)/Bid 11 Example: Bid – ask spread (%) = (22 060 – 22 050)/22 050 = 0.045% 1.2.2 Value date In foreign transactions, contract date – CD and actual payment date are different The date when participants make payment is known as value date – VD Spot value date – SVD: the most important day in foreign exchange transaction, normally it is the second day after contract day If we denote T the contract day: SVD = T + (when means working days) Forward value date – FVD: FVD is normally the second day after forward contract is expired If we denote n the time of forward contract (n ≥ 1): FVD = T + n + Tomorrow value date – Tom: in foreign exchange transaction with value date happening one working day after contract day: Tom = T + Today value date – Tod: in foreign exchange transaction with value date similar to contract date: Tod = T Value dates are illustrated in following axis: CD – Tod T Tom Spot Forward T+1 T+2 (T + n) +2 12 1.2.3 Basic transactions in the interbank market - Spot transactions: A spot transaction in the interbank market is the purchase of foreign exchange between banks, with delivery and payment to take place normally, on the second following business day - Forward transactions: An outright forward transaction (usually called just “forward transactions”) requires delivery at a future value date at a specified amount of one currency for a specified amount of another currency - Future transactions: A future transaction is an alternative for a forward transaction that calls for future delivery of a standard amount of foreign exchange at a fixed time, place and price However, a future transaction is exchange-traded but a forward transaction is over-the-counter - Swap transactions: A swap transaction in the interbank market is the simultaneous purchase and sale of a given amount of foreign exchange for two different value dates - Option transactions: A foreign currency option is a transaction giving the option purchaser (the buyer) the right, not the obligation, to buy or sell a given amount of foreign exchange at a fixed price per unit for a specified time period (until the maturity date) Achievements of foreign exchange trading at Vietinbank Thanh Hoa during the 2008 – 2010 2.1 Legal foundation of operations Operating activities of VietinBank Thanh Hoa, first of all, are based on legal documentary system issued by National Assembly, Government and Vietnam State Bank, especially documents for commercial banks In addition, its operations are determined by strategic targets, operating methods of Vietnam Joint Stock Commercial Bank for Industrial and Trade 13 Consequently, quoting foreign exchange rate is firstly determined by foreign exchange rate and fluctuation margin published by Vietnam State Bank and VietinBank Moreover, Thanh Hoa adjusts foreign exchange rate in accordance with local entity view and its own business strategies in each period 2.2 Statement of foreign exchange flow Table 2.1.Statement of foreign exchange flow during 2008 - 2010 Unit: thousand USD Year 2008 2009 2010 Outflow 6,970 8,320 11,910 Inflow 7,150 8,500 12,095 Statement +180 +180 +185 (Source: Vietinbank Thanh Hoa, 2008 – 2010 Annual forex trading report 2008 - 2010) The above table shows statement of foreign exchange flow in recent years We can see that, foreign exchange inflow and outflow intend to increase gradually However, flow in 2010 rises remarkably in comparison with that in 2009 This is explained by global economic recession in the last 2008, which began to recover in the last 2009 As a result, economic activities in province are out of fluctuation and foreign exchange trading is also improved 14 Graph 2.1.Statement of foreign exchange flow during 2008 – 2010 Thounsand USD 14000 12000 10000 8000 Outflow 6000 Inflow 4000 2000 2008 2009 2010 Year From this graph, we can see that: the Branch experience the long statement of flow It means that foreign exchange inflow is more than foreign exchange outflow Moreover, in these years, USD is appreciated which means that the Branch has earned profit from foreign exchange trading Besides, the foreign exchange reserves for increasing demand of local businesses have been ensured From the view of managing risk in foreign exchange market, inflow and outflow should be approximately equal We can see that in recent years, statement of foreign exchange flow in the Branch intends to be in balance This, therefore, is a potential sign for its development 2.3 Transactions performed In reality, commercial banks in general only perform basic services of foreign exchange In VietinBank Thanh Hoa Branch, therefore, there are only kinds of transaction, including Spot transaction and Forward transaction Nevertheless, the proportion of each service in total transaction made shows quite different and seems to be more suitable to globalization 15 Table 2.2.Proportion of foreign exchange transaction rate during the period 2008 - 2010 Unit: % Year 2008 2009 2010 Spot 79.5 74.27 70.1 Forward 20.5 25.73 27.3 Total 100 100 100 (Source: Vietinbank Thanh Hoa, 2008 – 2010 Annual forex trading report 2008 – 2010 Thanh Hoa Province) This table indicates that spot transaction is still the major one, which accounts for a significant proportion (over 70% for all years) This makes no surprise because spot transaction is the most basic and popular in business as well as daily activities Foreign exchange rate for spot transaction is applied to spot foreign exchange rate of the date the contract is made Although forward contract accounts only for below 25%, it has gone in an increasing direction, as a result of reduction in spot one This is good news in diversifying the Branch’s services as well as controlling risk to customers The Branch applies new regulation about foreign exchange trading of the State Bank This means that forward foreign exchange rate is sometimes lower than the spot rate because of the daily fluctuation in interbank market 2.4 Trading results First of all, we look into the number of transactions the Branch has made in years from 2008 to 2010 We can see that the number of transactions made between the Branch and customers has gradually decreased 16 Table 2.3.Growth of foreign exchange trading during the period 2008 – 2010 Year 2008 2009 2010 Number of 1,407 1,311 1,224 Growth level +43 - 96 -87 Growth rate +3.15% -6.8% -6.64% transactions In 2007: number of transactions is 1,120 (Source: Vietinbank Thanh Hoa, 2007 – 2010 Annual forex trading repor 2007 – 2010 Thanh Hoa Province) However, the rate and the level of reduction have gone in a positive direction with a lower rate and level in 2010 in comparison with that in 2009 This explains why profit fell considerably from 1700 to 1200 million VND in 2009 and recovered to 1600 million VND in 2010 Table 2.4.Results of foreign exchange trading during the period 2008 – 2010 Year 2008 2009 2010 Profit/Loss 1,700 1,200 1,600 Growth level +450 -500 +400 Growth rate +189.33% -43.24% +84.76% (million VND) 17 Profit from foreign exchange transactions in 2007 is 1,250 million USD (Source: Vietinbank Thanh Hoa, 2007 – 2010 Annual forex trading report 2007 – 2010 Thanh Hoa Province) Table 2.5.Proportion of profit from foreign exchange trading during period 2008 - 2010 Year Total profit 2008 2009 2010 31.489 27.791 49.815 1.7 1.2 1.6 5.4% 4.32% 3.21% ( billion VND) Profit from foreign exchange trading ( billion VND) Proportion (%) (Source: Vietinbank Thanh Hoa, 2008 – 2010 Annual forex trading report 2008 – 2010 Thanh Hoa Province) In accordance with growth of profit, the growth of its proportion has gone on gradually downward line In 2009 and 2010, although profit from foreign exchange trading increased, its proportion declined This means that development of foreign exchange service has not caught up with the devlopment of other service in the Branch We can see more clearly by the following graph 18 Graph 2.2.Proportion of profit from foreign exchange trading during period 2008 – 2010 Million VND 60000 50000 40000 Profit from foreign exchange trade 30000 Profit from the other services 20000 10000 2008 2009 2010 19 Year CONCLUSION From the early establishment, Corporate Customer Department, in particular, officers in foreign exchange trading have made continuous efforts to complete tasks assign and have gained many remarkable achievements Because of many subjective and objective matters, the Brach has to face a lot of troubles The first matter is market share Thanh Hoa is a province where export and import activities have not developed, production almost supply for citizens inside the province or other surrounding areas In addition, foreign exchange trading is a quite new and strange to corporate, especially derivative transactions The demand for foreign exchange, therefore, is still low although it intends to increase gradually in recent years The second matter is the riskiness of this service In the economy just recovered form crisis, foreign exchange rate fluctuates unpredictably which makes it very difficult to ensure the profit of the Branch However, there has been no loss in any annual reports of the Bank which is a good sign for its development The last matter is the lack of labor for foreign exchange trading because there are only two officers in the Department responsible for International Payment Despite these difficulties, foreign exchange trading has gone in a positive and potential direction Even in crisis period, the service also gained a considerable profit and keep revenue in a balance Foreign exchange operating has diversified in quality, method and type of service which promises a potential development In the near future, foreign exchanger trading will take a major role in earning profit for VietinBank Thanh Hoa Branch 20 REFRENCE Nguyen Van Tien (2009), “Textbook Foreign Exchange Trading”, Ha Noi, Statistic Publisher Nguyen Van Tien (2010), “Textbook International Finance”, Ha Noi, Statistic Publisher VietinBank Thanh Hoa 2007 – 2010 Annual Operating Report 2007 – 2010 Thanh Hoa Province VietinBank Thanh Hoa 2007 – 2010 Annual foreign exchange trading Report 2007 – 2010 Thanh Hoa Province VietinBank Thanh Hoa 2010 Annual organizing report of Overall planning Department Thanh Hoa Province Mai Thu Hien (2011), Slide “Foreign exchange market” Mai Thu Hiề n (2011), Slide “Foreign exchange rate” Website http://www.vietinbank.vn 21 ABBREVIATION CATALOG Abbreviation VietinBank Full meaning Vietnam Joint Stock Commercial Bank for Industry and Trade Forex Foreign exchange Dep Department USD The United State Dollar VND Vietnamese Dong EUR European Monetary unit GBP Great Britain Pound 22 TABLE – GRAPH CATALOG Table/graph Table 1.1 Content Page Number Capital mobilized during the period 2008 – 2010 Table 1.2 Revenue and profit during the period 2008 – 2010 Table 2.1 Statement of foreign exchange flow during 14 2008 – 2010 Table 2.2 Proportion of foreign exchange transaction 16 rate during the period 2008 – 2010 Table 2.3 Growth of foreign exchange trading during 17 the period 2008 – 2010 Table 2.4 Results of foreign exchange trading during 17 the period 2008 – 2010 Table 2.5 Proportion of profit from foreign exchange 18 trading during period 2008 – 2010 Graph 2.1 Statement of foreign exchange flow during 15 2008 – 2010 Graph 2.2 Proportion of profit from foreign exchange trading during period 2008 – 2010 23 19