Summary of financial and banking phd thesis Development of commercial banks noncredit services in Vietnam

2 THE MINISTRY OF EDUCATION & TRAINING THE STATE BANK OFVIETNAM BANKING UNIVERSITY OF HO CHI MINH CITY THE MINISTRY OF EDUCATION & TRAINING THE STATE BANK OFVIETNAM BANKING UNIVERSITY OF HO CHI MINH CITY PHAM ANH THUY PHAM ANH THUY DEVELOPMENT OF COMMERCIAL BANK'S NON-CREDIT SERVICES IN VIETNAM DEVELOPMENT OF COMMERCIAL BANK'S NON-CREDIT SERVICES IN VIETNAM SUMMARY OF FINANCIAL AND BANKING PHD THESIS SUMMARY OF FINANCIAL AND BANKING PHD THESIS RESEARCH FIELD: BANKING AND FINANCE CODE: 62.34.02.01 SCIENCE INSTRUCTOR: PROF., DR TRAN HOANG NGAN HO CHI MINH CITY, 2013 HO CHI MINH CITY, 2013 INTRODUCTION PhD Thesis's necessity and importance Vietnam officially became the 150th member of the World Trade Organization (WTO) This WTO membership will bring both opportunities and challenges for commercial banks (commercial banks) in Vietnam requiring the commercial banks to implement their enormous reforms to maintain and develop their roles in the fiercely competitive business environment In Vietnam the banking competition is rather fierce All banks throughout the country are currently doing business with their great excitement For every minute, the banks are competing with each other by launching new products and services, offering low interest rates, process improvement, modern banking technology application In 2012, when Vietnam Government removed some restriction in field of bank finance, the foreign banks performed their business with more free access So far, for commercial banks, the main source of income is credit operations especially in respect of medium and long term credit, real estate credit Due to the credit operation is in possible risks and the State Bank of Vietnam (SBV) firmly decided to set the maximum growth rate, the commercial banks were forced to increase their income from non-credit operation However, this is not easy way for commercial banks in the current period It is one of financial restructuring activities of credit institutions in the master plan "Credit institutions restructuring for the period of 2011-2015" approved by the Prime Minister at Decision No 254/QD-TTg dated 01 March, 2012 that : To gradually restructure the business model of commercial banks with less reliance on credit operations and more income from non-credit services The non-credit services development is of socio-economic significance making the safe, accurate and fast payment; restricting corruption, illegal trafficking In addition, non-credit products will create more stable and safer income for commercial banks, although these banks have been facing with hard competition in the fierce business environment Therefore, Vietnamese banks have to prepare the appropriate steps in the near future to keep their existence and sustainable development meanwhile the state protectionism for domestic banks is step-by-step removed Moreover the development of non-credit services provides many positive social and economic impacts as more effective capital accumulation; safer, more accurate and easier monetary transactions; tightlycontrolled illegal income Based on the above approach, with a desire to participate in the development of commercial bank's non-credit services in Vietnam, I choose this PhD thesis "Development of commercial bank's non-credit services in Vietnam" for my financial economics and banking subject It is hoped that this PhD thesis will contribute to the development of Vietnam commercial bank's services in the near future Overview: According to the author, up to now there is no thesis on the development of commercial bank’s non-credit services in Vietnam In recent years, there are a lot of scientific studies, research articles on non-credit services in various aspects, with diversified methodologies and at different time As the result, this PhD thesis is completely not same as the previous research studies In particular, for this thesis, the author applied the new methodology of combined two research methods including qualitative methods (studying scale of non-credit service development) and quantitative methods (studying quality of non-credit service development) As qualitative research, the author conducts a data survey and analysis in 38/40 commercial banks in Vietnam It is the new point in his research on scale of Vietnam commercial bank's non-credit services development that the allocation of general operating expenses by operation type (types of credit service, non-credit service and other services) and the cost of provision for credit losses is itemized in the cost of credit operation As the result, the author calculates the contribution of each type of service to the profit before tax showing the real effectiveness of non-credit service development As quantitative research, the author conducts a customer survey for non-credit services in a number of commercial banks in Vietnam and SPSS software application to identify the impacts on the customer satisfaction Objectives To study the non-credit services development on two aspects of scale and quality for identification of both advantages and limitations to the development of commercial bank's non-credit services in Vietnam On that basis, the thesis proposes solutions for commercial bank's non-credit services development in Vietnam Subject and Scope of study Subject: Commercial bank‘s non-credit services in Vietnam Scope of study: Commercial bank‘s non-credit services in Vietnam Methodology The thesis is based on methods of statistics, analysis, synthesis, logic, comparison, inductive, synthesis, dialectical materialism, comparison between theory and practice, combined qualitative and quantitative researches and reference The fact study was performed in two steps: preliminary and official studies Preliminary study is performed basing on qualitative methods with expert opinions for adjusting QoS reference point for non-credit services and its impact on customer satisfaction Official studies are carried out basing on quantitative methods of direct interview and survey via Internet Thesis Content Apart from the introduction, conclusion, list of abbreviations, a list of tables, list of references The thesis consists of 03 chapters as follows: Chapter 1: Theory of commercial bank's non-credit services Chapter 2: Current development of Viet nam commercial bank’s non-credit services Chapter 3: Solutions for developing Viet nam commercial bank's non-credit services CHAPTER 1: THEORY OF COMMERCIAL BANK’S NON-CREDIT SERVICES 1.1 OVERVIEW OF BANKING SERVICES 1.1.1 Definition Banking services are banking operations providing customers services as required including deposit saving, lending, payment and foreign exchange trading, guarantee, advisory services, 1.1.2 Characteristics of banking products and services 1.1.3 Classification of banking services in term of income source 1.1.3.1 Credit Services 1.1.3.1 Non-credit services + Deposit saving, payment accounts and treasury services + Card Service + E-banking services + Foreign Currency Trading + Guarantee service (fee-based ) + Trust Service + Advisory Service + Banking supervision + Money brokerage + Other non-credit services 1.2 OVERVIEW OF NON CREDIT SERVICES 1.2.1 Definition Non-credit services are bank services creating income apart from interest and from the account payment services, treasury services, fee-based collection services, advisory services, trust services, foreign currency exchange 1.2.2 Development of non-credit services 1.2.2.1 Background The author's views: + Development both in scale and quality : Each bank initially builds its investment plan of non-credit services development It is necessary to improve existing non-credit services with the application of international standards and practices, the maximum exploitation to strengthen customer confidence and optimizing investment On the other hand, it is required to access to new technologies for developing the customer and market networks However, the investment capital should not be wastefully and inefficiently allocated It is essential to harmonize the diversification with quality + Development in line with control capacity and market demand: The bank itself can control the arising risks to meet the customer needs The massive and out-of-controlled development can lead to unsafe condition at one unit, section or affect the bank's entire operations 1.2.2.2 The need to develop commercial bank’s non-credit services + For Banks - Non-credit service is highly profitable for banks because of its low cost - Non-credit service not require banks to use more capital - Non-credit service helps banks reducing potential risks as its safe and low-risk level - Non-credit service to help banks in recruiting and staff retraining - Non-credit service to help banks in public relation, brand name promotion and market survey - Non-credit service development is consistent with the trend of banking sector development - Non-credit service to help bank cooperation for development + For the economy - To meet the rising demand for banking service in the economy - Required banking modernization to develop a modern economy 1.2.2.3 Impacts on the non-credit service development The impacts on the development of commercial bank’s non-credit services is classified into two types + Internal impacts First, the financial capacity Second, the information technology infrastructure Third, governance capacity and effective human resources strategy Fourth, the distribution channels Fifth, customer policy + External impacts First, the legal basis Second, the level of international economic integration and intra competition Third, economic growth and social environment Fourth, the political situation and social order and security Fifth, the client's needs Sixth, the government's policy Seventh, competitors 1.2.2.4 Criteria for the non-credit service development The level of non-credit service development is rated basing on the following criterion First, the criterion for the scale of non-credit service development + Sales and income increase + Customer and market share increase + Number of services Second, the criterion for the quality of non-credit service development + Increased benefits and safety of bank products + Response to customer demand + Bank brand name and reputation The criteria evaluation and measurement of banking service quality can be represented upon the model and customer perception of banking services quality According to previous studies, the banking service quality is often measured by the SERVQUAL model (five-component model) RVPERF model and FSQ & TSQ models - SERVQUAL model (five components) Reliability Responsiveness Tangibles Capability Empathy 1.2.3 Risks of developing non-credit services 1.2.3.1 Liquidity risk 1.2.3.2 Interest rate risk 1.2.3.3 Exchange rate risk 1.2.3.4 Operational risk 1.2.3.5 Technology and operational risks 1.3 EXPERIENCE ON NON- CREDIT SERVICE DEVELOPMENT OF FOREIGN BANKS AND LESSONS FOR COMMERCIAL BANKS IN VIETNAM 1.3.1 Experiences of some international banks 1.3.1.1 Hang Seng Bank (Hong Kong) 1.3.1.2 Standard Chartered 1.3.1.3 Citibank (Japan) 1.3.2 Lessons for Vietnamese commercial banks First, to improve the legal environment for banking services, especially e-banking services Second, to create the necessary infrastructure for the banking service development, especially the information technology-based and associated tools and means Third, to develop governance capacity and professionalism of bank staff, employees Fourth, to diversify bank products and services, modernizing traditional services in parallel with developing up-to-date services Fifth, to pay reasonable attention and develop the appropriate banking network Sixth, to pursue the right customer policies Seventh, to focus on advertisement, public relation, introduction of banking services benefits Eighth, to set up reasonable prices Conclusion of chapter : non-credit service, development of non-credit services (in terms of scale and quality of service) and the risks of non-credit services performance for commercial banks in Vietnam In particular, regarding to the development of non-credit services, the author points out the widely applied models for rating banking service quality and customer satisfaction to build the theory framework for quantitative study shown in Chapter In addition, the thesis refers to the experiences of non-bank credit services development in the world to draw out key valuable lessons for reference for commercial banks in Vietnam The above arguments help to form basical theory for the realization of taskoriented thesis For Chapter 1, the thesis systematically presents the basic theory of commercial bank services, non-credit service, experiences on developing non-credit services in the world and lessons for commercial banks in Vietnam For the overview of banking services, the thesis presents banking service concepts, the characteristics of banking products and services and income-based service classification For the overview of non-credit services, the thesis presents the concept of CHAPTER 2: CURRENT DEVELOPMENT OF VIETNAM COMMERCIAL BANK’S NON- CREDIT SERVICES 2.1 CURRENT OPERATION OF VIETNAM COMMERCIAL BANKS As of 31 December, 2011, the Vietnam banking system consists of 01 Development Bank, 01 Bank for Social Policy, state-owned commercial banks of which 03 state-owned equitized commercial banks, 35 joint-stock commercial banks, 50 branches of foreign banks, 05 100% foreign invested banks, joint-venture banks Thus, currently the total number of Vietnam commercial banks is 40 Vietnam banking system is continuously expanded and diversified in terms of scale, ownership and business However, the weakness of the Vietnam banking system are shown as following: First, a very high level of debt with bad debt compared to the economic growth level; Second, liquidity problem in respect of interest racing for the past time; Third, weak management of corporate and risk, business losses and inefficiency 2.1.1 Financial capacity 2.1.1.1 Capital and capital adequacy ratio of commercial banks + Capital of commercial banks In 2011, the average chartered capital of commercial banks in Vietnam is VND 6043 billion (equivalent to USD 290 million - as the average inter-bank exchange rate announced by the State Bank of Vietnam on 31 December, 2011) Now there are 14/40 banks with chartered capital of over VND 5,000 billion, of which banks with over VND 10,000 billion in capital namely as Vietnam Bank for Agriculture and Rural Development (VND 21,511 billion), Vietnam Joint Stock Commercial Bank for Industry and Trade (VND 20,230 billion), Joint Stock Commercial Bank for Foreign Trade of Vietnam (VND 19,698 billion), Joint Stock Commercial Bank for Investment and Development of Vietnam (VND 12,947 billion), the Vietnam Export Import Commercial Joint Stock Bank ( VND 12,355 billion), Saigon Commercial Joint Stock bank (VND 10,740 billion), Saigon commercial bank (VND 10,584 billion) Till 31 December, 2011, three small banks with capital of less than VND 3,000 billion as Petrolimex Group Commercial Joint Stock Bank (VND 1,000 billion), Bao Viet commercial bank (VND 1,500 billion) and Saigon commercial bank for Industry and Trade (VND 2460 billion) + CAR Ratio 10 Table 2.4: CAR Ratio of Vietnam commercial banks % 100% Unit : % Category CAR Ratio Year 2008 2009 2010 8,94 9,53 11,02 Source : The securities company analysis [12] 13,9 2011 80% 11,92 10,8 16,0 11,1 Year Category 2007 2008 2009 2010 Bad Debt Ratio 1,6 2,1 2,6 3,0 Source: Annual Reports of State Bank of Vietnam [42] 4,3 8,4 12,7 15,1 14,8 70% 60% 2.1.1.2 Equity In recent years, the commercial bank credit operation have been blooming out of control especially in respect of medium and long-term loan for real estate projects causing economic threat of bad debt in Viet Nam Table 2.7: Bad Debt ratio of Vietnam commercial banking system Unit : % 50% 87,3 40% 76,7 74,1 69,2 76,2 30% 20% 10% 2011 0% Năm 3,3 2.1.1.3 Business Performance Results + First, the income statement Table 2.9: Business Performance of Vietnam commercial banks Unit: VND million Category 9,4 90% Year 2009 54.932 11.743 12.698 79.373 29.844 2007 2008 2009 2010 2011 Lãi từ hoạt động khác Lãi từ hoạt động phi tín dụng Thu nhập từ hoạt động tín dụng Source: Annual Reports of 38 Commercial Banks in Vietnam and the author's analysis [8, 10, 11] 2007 2008 2010 2011 Income from credit operation 46.291 52.466 84.969 132.067 Net gain from non-credit service 8.377 10.722 14.202 12.707 Net gain from other operations 5.674 7.658 12.364 6.470 Total income (1+2+3) 60.342 70.846 111.535 151.244 Total operating expenses 17.016 21.041 43.945 57.926 Net operating profit before provision of 43.326 49.805 49.529 67.590 93.318 credit losses (5-6) Cost for provision of credit losses 28.016 26.488 14.650 23.237 37.296 Profit before tax (6-7) 15.310 23.317 34.879 44.353 56.022 Source: Annual Reports of 38 Vietnam Commercial Banks and the author's analysis [8, 10, 11] The year of 2011 is a difficult year for commercial bank's operation in the monetary market However, as shown in the business performance of a number of commercial banks, the commercial banks 's profit have increased over the years Table 2.11: Net gain from non-credit service of Vietnam commercial banks Unit: VND million Year Category 2007 2008 2009 2010 2011 Net gain from payment service 1.236 2.331 3.739 5.687 6.208 Net gain from treasury service 145 238 355 765 882 Net gain from guarantee service 547 1.098 1.599 2.018 2.752 Net gain from trust service 26 53 101 397 303 Net gain from advisory service 15 150 112 24 Net gain from other services 1.822 2.199 2.560 3.338 2.332 I Total net profit from services (1->6) 3.791 5.925 8.504 12.318 12.500 II Net profit from foreign currency 4.586 4.797 3.239 1.884 207 trading operations III Net profit from non-credit services 8.377 10.722 11.743 14.202 12.707 (I+II) Second, the operating income structure of Vietnam commercial banks Figure 2.1: The operating income structure of Vietnam commercial banks Source: Annual Reports of 38 Vietnam Commercial Banks and the author's analysis [8, 10, 11] Table 2.12: Proportion of net profit from non-credit services of Vietnam commercial banks 10 11 12 Unit : % Category Net gain from payment service Net gain from treasury service Net gain from guarantee service Net gain from trust service Net profit from advisory service Net gain from other service Net profit from foreign currency trading operations Total net gain/loss from non-credit services Year 2007 2008 2009 2010 2011 14,8 1,7 6,5 0,3 0,2 21,8 54,7 100 21,7 2,2 10,2 0,5 0,1 20,5 44,7 100 31,8 3,0 13,6 0,9 1,3 21,8 27,6 100 40,0 5,4 14,2 2,8 0,8 23,5 13,3 100 48,9 6,9 21,7 2,4 0,2 18,4 1,6 100 Source: Annual Reports of 38 Vietnam Commercial Banks and the author's analysis [8, 10, 11] As shown in Table 2.12 in respect of proportion of net profit from non-credit activities, payment, treasury, guarantee services are growing with stable net gain The trust services, advisory services and foreign currency trading business and other services are unstably growing In particular, net gain from foreign currency exchange operations seriously decreased over the years of 2007-2011 and accounted for lower proportion of total income from non-credit services Third, the net income of each business after allocation of operating costs Table 2.14: Income statement of Vietnam commercial banks Unit: VND million Year Category 2007 2008 2009 2010 2011 Income from credit operation 46.291 52.466 54.932 84.969 132.067 Operating expenses for credit operation 13.054 15.582 20.654 33.478 50.581 Cost of Provision for credit losses 28.016 26.488 14.650 23.237 37.296 I Net gain after provision for credit losses 5.221 10.396 19.628 28.254 44.190 and operating expenses allocation Net gain from non-credit service 8.377 10.722 11.743 14.202 12.707 Cost for non-credit activities 2.362 3.184 4.415 5.596 4.867 II Net gain from non-credit activities after 6.015 7.538 7.328 8.606 7.840 operating expenses allocation Net gain from other operations 5.674 7.658 12.698 12.364 6.470 Costs for other activities 1.600 2.275 4.775 4.871 2.478 III Net gain from other operations after 4.074 5.383 7.923 7.493 3.992 allocation of operating expenses IV Total net gain = Profit before tax 15.310 23.317 34.879 44.353 56.022 Source: Annual Reports of 38 Vietnam Commercial Banks and the author's analysis [8, 10, 11] Table 2.14 shows the net income of each business (including credit and non-credit services and other services) as taking costs for provision for credit losses into net gain from 11 credit services and operating costs allocation for each business After such allocation, the total net profit from the bank business is equal to the profit before tax Table 2.15: Proportion of net profit per each business to Total profit before tax Unit: % Year Category 2007 2008 2009 2010 2011 Net gain after provision for credit losses and allocation of operating 34,1 44,6 56,3 63,7 78,9 expenses Net gain from non-credit activities 39,3 32,3 21,0 19,4 14,0 after allocation of operating expenses Net gain from operations after 26,6 23,1 22,7 16,9 7,1 allocation of operating expenses Total net gain = Profit before tax 100,0 100,0 100,0 100,0 100,0 Source: Annual Reports of 38 Vietnam Commercial Banks and the author's analysis [8, 10, 11] Table 2.16: Proportion of Operating income of Viet Nam commercial banks Unit: % Year Category 2007 2008 2009 2010 2011 Net gain from credit operation 76,7 74,1 69,2 76,2 87,3 Net gain from non-credit operation 13,9 15,1 14,8 12,7 8,4 Net gain from other operation 9,4 10,8 16,0 11,1 4,3 Total operating income 100,0 100,0 100,0 100,0 100,0 Source: Annual Reports of 38 Vietnam Commercial Banks and the author's analysis [8, 10, 11] As shown in Tables 2.15 and 2.16 net gain from credit operation takes a smaller proportion of the profit before tax than that of operating income over the years 2007 to 2011 It is proved that the credit operation is the major source of income for Vietnam commercial banks but potentially risky Meanwhile, income from non-credit activities are taking greater proportion of profit before tax than that of operating income over the years 2007 to 2011 It is proved that income from non-credit operation is less risky and more profitable for Vietnam commercial banks 2.1.2 Rate of return (%) 2.2 CURRENT DEVELOPMENT OF VIETNAM COMMERCIAL BANK ’S NONCREDIT SERVICES IN TERM OF SCALE 2.2.1 Services 2.2.1.1 Deposit account services, payment and treasury services + First, deposit account services - Product and features Deposits, withdrawals, bank transfers, loan guarantees, loan guarantees to third parties in the bank; collection at the request of customer; other products as flexible savings account – floating interest rate : Customers can deposit more or withdraw a partial capital 12 13 14 on the interest payment day Moreover, customers can withdraw all before maturity when needed Benefit and quality of service: Deposits, withdrawals, transfers, payments; monthly salary receiving; Overdraft account; card issuance, checque issuance; Sign up for e-banking services; online banking services via the internet; banking services via mobile message; banking by phone 24/7; Automatic Transfer for periodic payments; payment transactions, withdrawal, money transaction for securities trading, for auction, online dividends receiving with affiliate securities companies; confirmation of financial capacity for abroad travel, study, savings account for loan payment or bank transfer to the other account Capital raising performance: Table 2.19: internal capital raising of Vietnam commercial banks To best serve the cardholders, Vietnam commercial banks are constantly expanding their card acceptance points and ATM network throughout the provinces and the cities for ready response to domestic and foreign customer' demands Customers can use the payment service through ATM and POS as payment for electricity, water, postal charges, shopping in commercial centers International Settlement International settlement provided by Vietnam's commercial banks is well growing thanks to the wide network of correspondent banks around the world Payment service performance Table 2.20: Net gain from payment service of Vietnam commercial banks Unit: VND million Year Category 2007 2008 2009 2010 2011 Income from payment service 1.582 3.022 4.462 6.830 7.828 Cost of payment service 346 692 723 1.143 1.620 Net gain from payment service 1.236 2.331 3.739 5.687 6.208 Ratio of Net gain / income from 78,1 77,1 83,8 83,3 79,3 payment service (%) Increase or decrease rate of payment (0.01) 60,4 52,1 9,2 service over the previous year (%) Unit: VND million Category Capital raising from cooperation Increase or decrease rate comparing to the previous year (%) 2007 924.922 - 2008 1.262.51 Year 2009 1.618.46 36,5 28,2 2010 2.235.331 38,1 2011 2.467.18 10,4 Source: Annual Reports of 38 Vietnam Commercial Banks and the author's analysis [8, 10, 11] As shown in Table 2.19, the growth rate of capital raising of Vietnam commercial banks continuously increased over the years 2007-2011 In 2011, the capital raising has been facing with difficulties due to the impact of tightened monetary policy and strict control of the foreign exchange market In addition, capital mobilization has been facing much more challenges due to the unfair competition of a number of commercial banks, + Second, the payment service - Domestic Payment - Product and features: Domestic payment products include payment order, collection order, checque payment and card payment Payment, online payment, payment for electricity, telephone bills, shopping invoices, , airline tickets buying ;monthly salary receiving; overdraft account; bank cards issuance: Smartlink, Banknet, and VNBC; checque issuance; registered electronic banking services: Internet banking, Mobile banking, Home banking; automatical money transfer for the periodical payment; payment transactions, withdrawal, money transaction for securities trading, for auction, online dividend receiving from securities companies affiliated with banks; -Benefit and quality of service 13 Source: Annual Reports of 38 Vietnam Commercial Banks and the author's analyis [8, 10, 11] As shown in Table 2.20, the ratio of net gain from payment service always reaches at 77% to 83.8% Thus, the payment service is highly profitable for Vietnam commercial banks Currently, banks are competing on bank fee for non-credit services Fee schedule of the state-owned commercial banks are more competitive than that of joint-stock commercial banks in recent years However, the Vietnam commercial banks apply some not appropriate fee as account management fees, charges for account close, cash withdraw in case the account holder deposited into his account or got interest within two days, high charge for account statements extraction up to VND200,000 / account / month, charge for certified audited balance, charges for all deposits with maturity within days fees are sometimes too rigid not to create incentives for large and loyalty customers + Third, treasury services - Product and features The treasury services include cash collection/withdrawal service with quick and safe deposit and withdraw; Acquisition, change of unqualified VND cash; collection of foreign cash that are crumpled, sticky chemicals, fire, termites and expired at circulation, not qualified for circulation; professional guidance for recognizing fake foreign currency at authorized exchange dealers and other bank units - Benefit and quality of products Easy account opening and transaction; open an account in VND or foreign currency; Cash on business account is kept safe, secure; convenient deposit and withdrawal at all 14 15 16 bank branches; instant bank account transfers; diversified payment services with convenience and low fee through a network of bank branches and extensive authorized dealers; modern electronic banking services; special support such as: automatic investment, centralized capital management - Treasury service performance Table 2.21: Net gain from treasury services of Vietnam commercial banks Unit: VND million Year Category 2007 2008 2009 2010 2011 Incomes from treasury service 207 416 567 1.021 1.194 Cost of treasury service 62 178 212 256 311 Net gain from treasury service 145 238 355 765 882 Ratio of Net gain / income from treasury service 70 57,2 62,6 74,9 73,9 (%) Increase or decrease rate of net gain from treasury 64,1 49,0 115,5 15,4 services over the previous year (%) The main benefits of E-Banking are: Providing account information, inquiry, transfer, payment, registration, advisory and other banking operations - E-banking service performance: Cost savings, increased revenue: E-Banking transaction fee is assessed to be very low compared to traditional transactions, particularly transactions through the Internet, thereby to increase operating income for banks 2.2.1.4 Guarantee service - Functionality: Guarantee services provided by the Vietnam commercial banks are providing loan guarantee, payment guarantees, bid security, agreement performance guarantee, guarantee for tax payment for import and export, advance payment guarantee, warranty guarantees, counter-guarantees, guarantees for specific purposes - Benefits and quality of guarantee services Vietnam commercial banks with their high reputation in the domestic and international markets, long experience in advisory and providing both domestic and international guarantee services; Commercial banks establish their broad relationships throughout the country and the agency relationships with leading banks in more than 80 countries and territories around the world; - Guarantee service performance : Table 2.25: Net gain from guarantee service of Vietnam commercial banks Unit: VND Year Category 2007 2008 2009 2010 2011 Income from guarantee service 549 1.099 1.601 2.024 2.763 Cost of guarantee service 2 11 Net gain from guarantee service 547 1.098 1.599 2.018 2.752 Ratio of Net gain/ income from guarantee service 99,6 99,8 99,9 99,7 99,6 (%) Increase or decrease rate of net gain from guarantee 100,7 45,7 26,2 36,3 service over the previous year (%) Source: Annual Reports of 38 Vietnam Commercial Banks and the author's analysis [8, 10, 11] As shown in Table 2.25, the ratio of net gain/income from guarantee service reached at over 99% annually and for the period from 2007 to 2011 Thus, the guarantee service creates a very high rate of return for Vietnam commercial banks 2.2.1.5 Trust Service Table 2.26: Net gain from authorized trust service of Vietnam commercial banks Source: Annual Reports of 38 Vietnam Commercial Banks and the author's analysis [8, 10, 11] 2.2.1.2 Card services Card services are much invested with modern technology but not bring corresponding benefit with Vietnam commercial banks’s investment However, the development of card service promotes brand names of Vietnam commercial banks and provides other support services such as billing and account services Table 2.22: Number of ATM, POS and bank cards through the years Year Category 2007 2008 2009 2010 2011 ATM (unit) 5.234 7.051 9.000 11.137 13.636 POS (unit) 23.543 29.215 36.620 37.258 37.432 Bank Card (million card)) 12,1 13,4 17 24 40 Source: Statistics of Viet Nam Card Association [44 2.2.1.3 Electronic banking services - Product and features: Internet Banking: banking transactions via the global Internet network Phone Banking: banking transactions via the telephone network SMS Banking: banking transactions through SMS mobile messages ATM: banking transactions through ATMs WAP Banking: banking transactions over the web on your mobile phone Call Center / Contact Center: answer questions, provide information and banking transactions over the telephone Mail Banking, Fax Banking, Video Banking: banking by e-mail, Fax, Video - Benefits and quality of product: 15 Category Income from trust service 16 2007 349 Unit: VND million Year 2008 2009 2010 2011 763 743 746 648 17 18 Cost of trust service Net gain from trust service Ratio of net gain / income from trust service (%) 323 26 710 53 642 101 349 397 345 303 7,4 7,0 13,6 53,2 46,7 103,8 89,9 291,7 (23,7) Increase or decrease rate of net gain from trust service (%) Source: Annual Reports of 38 Vietnam Commercial Bank in and the author's analysis [8, 10, 11] As shown in Table 2.26, in 2010 and 2011 trust service brought relatively high net gain However, trust service now accounts for a very small proportion of net gain from non-credit service of Vietnam commercial banks Vietnam banks should pay attention to the service development in the near future 2.2.1.6 Advisory Services Table 2.27: Net gain from advisory service of Vietnam commercial banks Unit: VND million Year Category 2007 2008 2009 2010 2011 Income from advisory service 480 501 820 520 475 Cost of advisory service 465 495 669 408 452 Net gain from advisory service 15 150 112 24 Ratio of net gain/ income from advisory 3,1 1,2 18,3 21,6 5,0 service income (%) Increase or decrease rate of net gain from (60) 2.363,2 (25,3) (79,0) advisory service Source: Annual Reports of 38 Vietnam Commercial Banks and the author's analysis [8, 10, 11] As shown in Table 2.27, the advisory service produces net gain for Vietnam commercial banks However, in recent years, this service has not fully been developed by Vietnam commercial banks 2.2.1.7 Other non-credit services Including derivatives of interest rate, portfolio management, securities services, fund management services, rental services, gold trading etc Table 2.28: Net gain from other services of Vietnam commercial banks Unit : VND million Category 2007 2.445 623 1.822 74,5 2008 3.114 915 2.199 70,6 Year 2009 4.133 1.573 2.560 61,9 2010 2011 Income from other services 5.335 5.939 Cost of other services 1.997 3.607 Net gain from other services 3.338 2.332 Ratio of net gain/income from other services (%) 62,6 39,3 Increase or decrease rate of net gain from other 20,7 16,4 30,4 -30,1 services (%) Source: Annual Reports of 38 Vietnam Commercial Banks and the author's analysis [8, 10, 11] 17 2.2.2 Foreign currency trading services 2.2.2.1 Foreign Exchange Table 2.29: Net gain from spot foreign currency trading service Unit: VND million Category Year 2007 2008 2009 2010 2011 9.199 10.615 11.202 12.931 12.872 4.811 6.035 7.715 10.540 12.732 4.388 4.579 3.487 2.391 140 Income from spot foreign currency trading service Cost of spot foreign currency trading service Net gain from spot foreign currency trading service Ratio of net gain/income from spot foreign currency 47,7 43,1 31,1 18,5 1,1 trading service (%) Increase or decrease rate of net gain from spot foreign 4,4 (23,9) (31,4) (94,1) currency trading service (%) Source: Annual Reports of 38 Vietnam Commercial Banks and the author's analysis [8, 10, 11] 2.2.2.2 Foreign exchange derivatives Table 2.30: Net gain from foreign exchange derivatives trading service Unit: VND million Year Category 2007 2008 2009 2010 2011 Income from foreign exchange derivatives 621 674 1.068 1.244 2.200 trading service Cost of foreign exchange derivatives trading 423 456 1.316 1.750 2.133 service Net gain from foreign exchange derivatives 198 218 (248) (506) 66 trading service Ratio of net gain/income from foreign 31,9 32,3 (23,2) (40,7) 3,0 exchange derivatives trading service (%) Increase or decrease rate of net gain from foreign exchange derivatives trading service 10,1 (214,0) 104,0 (113,1) (%) Source: Annual Reports of 38 Vietnam Commercial Banks and the author's analysis [8, 10, 11] Table 2.31: Net gain from Vietnam commercial bank's foreign currency trading service Unit: VND million Year Category 2007 2008 2009 2010 2011 Income from foreign currency trading 9.820 11.289 12.271 14.174 15.072 service Cost of foreign currency trading service 5.234 6.492 9.032 12.291 14.865 Net gain from foreign exchange trading 4.797 3.239 1.884 207 4.586 service Ratio of net gain/income from foreign 42,5 26,4 13,3 1,4 46,7 currency trading service (%) 18 19 Increase or decrease rate of net gain from foreign currency trading service (%) 20 4,6 (32,5) (41,9) (89,0) Source: Annual Reports of 38 Vietnam Commercial Banks and the author's analysis [8, 10, 11] 2.3 CURRENT DEVELOPMENT OF NON-CREDIT SERVICES OF VIETNAM COMMERCIAL BANKS IN TERM OF QUALITY 2.3.1 Research model SERVQUAL model is a popular model and extensively used in marketing research and helpful in systematizing criteria for measuring banking services quality 2.3.2 Research Process 2.3.2.1 Information collecting method Study data were collected in the form of a questionnaire by convenient random sampling method 2.3.2.2 Data analysis First of all, the measuring criteria is coded as shown in Annex 2.3.3 Research results of Vietnam commercial bank's non-credit service quality The number of feedback votes was 298 of which the appropriate votes for statistical analysis was 281 (17 remaining incomplete votes ) 2.3.3.1 Survey-based evaluation of Vietnam commercial bank's non-credit service quality 2.3.3.2 Cronbach Alpha reliability coefficients-based evaluation of service quality criteria using As the analysis, the Cronbach's alpha reliability coefficient is greater than 0.7 and the coefficient of correlation > 0.3 So the criteria is reliable and all observed variables are used in subsequent factor analysis 2.3.3.3 Analysis of EFA factor Table 2.39: Final analysis results of EFA factor of Vietnam commercial banks Component Variances TC03 ,743 TC05 ,711 TC01 ,703 TC02 ,649 TC04 ,648 NLPV10 ,778 NLPV11 ,714 NLPV09 ,683 NLPV12 ,655 HH21 ,800 HH20 ,653 HH19 ,646 HH22 ,632 DU07 ,856 DU06 ,806 DU08 ,665 DC15 ,744 DC16 ,706 DC14 ,646 DC18 ,736 HH23 ,586 DC17 ,567 Source: The author' summary and analysis 2.3.4 Research results of Vietnam commercial bank's non-credit service quality’s impacts on customer satisfaction 2.3.4.1 Customer satisfaction rating with Cronbach Alpha reliability coefficient 2.3.4.2 EFA factor analysis 2.3.4.3 Study models of the relationship between the quality of non-credit services and customer satisfaction - 1st adjustment 2.3.5 Model testing by multiple regression analysis 2.3.5.1 Correlation matrix of variables 19 20 21 22 2.3.5.2 Multiple regression analysis Table 2.49: Statistical parameters of variable in the regression equation Standardized Unstandardized Coefficients Coefficients Model T Sig VIF B Std Error Beta Constant -,176 ,103 -1,715 ,087 STC ,160 ,022 ,214 7,325 ,000 1,242 NLPV ,105 ,022 ,136 4,720 ,000 1,203 HH ,179 ,023 ,223 7,616 ,000 1,244 DU ,335 ,020 ,477 16,710 ,000 1,183 DC ,171 ,021 ,242 8,218 ,000 1,263 TT ,124 ,023 ,170 5,422 ,000 1,422 Source: The author' summary and analysis As shown in Table 2.49, the regression function takes the following form: SHL = 0.214 +0.136 STC NLPV +0.223 HH +0.477 DU DC +0.242 +0.170 TT The model shows that the Response factor (largest standardized regression coefficients) has the strongest positive effect to the satisfaction of customers using noncredit services It is followed by the Empathy, Tangible, Reliability, Convenience and Capacity The positive regression coefficients show that the variables are directly proportional to customer satisfaction In other words, the more these variables value increases the more customer satisfaction increase 2.4 ASSESSMENT OF CURRENT DEVELOPMENT OF COMMERCIAL BANK’S NON-CREDIT SERVICES 2.4.1 Achievements and reasons 2.4.1.1 Achievements + Vietnam commercial banks constantly promote the financial strength, distribution channels supporting non-credit services development + Non-credit service quality is gradually improved based on modern technology to meet the increasing demand of customers + Gains from non-credit services create less risky income for commercial banks + Vietnam commercial banks constantly strengthen the human resources and product services development and customer care + Wide and extensive network, deep understanding of local market, large number of customers 2.4.1.2 Main reasons for achieved results + Vietnam commercial banks constantly increase the financial resources pursuant to the State Bank's schedule or requirements + Increasingly developed banking technology + Increasingly improved quality of human resources + Increasing competitiveness in the banking industry + State Bank's special attention and support 21 2.4.2 Limits and Reasons 2.4.2.1 Limits +Limited financial capacity compared to that of other banks in the Southeast Asian region + The non-credit services are mainly traditional, simple, not diversified and at low quality + Non-credit services market growth is below potential level, competitiveness is not high + Credit service is still the main type of service of Vietnam commercial banks + Price policy for non-credit services is not appropriate + Bank technology is not extensively and fully developed + Foreign currency trading services are underdeveloped + Unequal competition ie monopoly, the state-owned commercial banks are accounting for the dominant market share and getting great financial resources under the State support + Commercial banks not really come into cooperation for development + Criteria for evaluation is not momentums for development + Vietnam commercial banks have not developed the reasonable list of business services 2.4.2.2 Main reasons + The legal environment is still limited for banking operations + Inter-bank electronic payment system is limited + Economic environment not really facilitates the strong development of banking services + Limited human resources +Too many state-owned commercial banks backed by the State Bank Conclusion of Chapter For chapter 2, on the basis of the theoretical framework built in Chapter 1, the thesis outlines the operation of Vietnam commercial banks in terms of financial capacity and the rate of return ratio Next, the thesis focuses on analysis and assessment of Vietnam commercial bank's non-credit services development In particular, the thesis takes a look at deposit, payment accounts and treasury services; guarantee service; advisory service; trust service; other noncredit and foreign currency trading services Then, the thesis present the survey and quantitative research on non-credit service quality of Vietnam commercial banks The contents are shown including modeling studies, research process, research results on quality model of non-credit services, research results on non-credit service quality’s impacts on customer satisfaction using Cronbach's Alpha coefficient, EFA analysis; model test by multiple regression analysis The last, the thesis makes an overview of achievements, limitations and reasons of Vietnam commercial bank's non-credit services development 22 23 24 The presentation in Chapter is the scientific basis for practical solutions and recommendations for non-credit services development of Vietnam commercial banks 3.2.1.4 To raise the proportion of profit from non-credit services of total planned profit Understanding the necessity of promoting non-credit services, Vietnam commercial banks should set up a reasonable profit proportion of total profits and regularly control this proportion 3.2.1.5 Market expansion and customer care To develop bank network, POSs, ATMs in universities, commercial centers, condominiums, apartments, etc in order to enhance the bank reputation and brand name and image It is ensured that banks operate for 24/7 ATMs should be improved with more features, ensuring customers can use banking services at all times, including weekends, holidays, New Year 3.2.2 Solutions for quality development of non-credit services to improve customer satisfaction Based on the regression equation on customer satisfaction of non-credit services quality: SHL = 0,214 STC + 0,136 NLPV + 0,223 HH + 0,477 DU + 0,242 DC +0,170 TT Thus, in order to improve customer satisfaction of non-credit service quality, Vietnam commercial banks should give priority to measures in the following order: 3.5.2.1 Solution for increased “Responsiveness” Vietnam commercial banks should quickly solve any arising problem and effectively handle complaints, and be willing to help customers and meet the customer requirements In other words, “Responsiveness” is the response from the service provider to customer requirement such as: ready to help customers; quick and immediate service; positive response to the customer requirement and effort to solve problems of customers 3.2.2.2 Solution for increased "Empathy" Vietnam commercial banks should care customer, provide the best treatment and warm welcome to customers at all times Customer service staffs play the core role for bank success The more customer care, the more "Empathy" 3.2.2.3 Solution for increased "Tangibles" “Tangible” which consists of the bank facilities, equipment, machinery, staff attitude, documents, , guidance leaflet and communication systems plays very important role at customer's first look 3.2.2.4 Solution for increased "Reliability" Vietnam commercial banks should create “Reliability” in customer transactions such as precise non-credit services operation without errors right from the first time and keep the bank commitment 3.2.2.5 Solutions for increased "Capacity” Customer trust and confidence are gained by the professional service, good technical knowledge, manners, courtesy and good communication skills Customer can feel safe in using bank services: 3.2.2.6 Solution for increased “Convenience" The sixth factor affecting non-credit service quality is “Convenience” The bank transaction office should be convenient The bank instruction board and and shelves are conveniently arranged CHAPTER 3: SOLUTIONS FOR DEVELOPING VIETNAM COMMERCIAL BANK’S NON- CREDIT SERVICES 3.1 STRATEGY OF VIETNAM COMMERCIAL BANK’S NON-CREDIT SERVICES DEVELOPMENT TO THE YEAR 2015 WITH A VISION TO 2020 3.1.1 Dynamic, creative implementation of non-credit services in line with the bank capability 3.1.2 Technological development for the main goal of modern, integrated and competitive bank 3.1.3 Focused development of non-credit financial services 3.1.4 Focused human resource development 3.2 SOLUTIONS FOR VIETNAM COMMERCIAL BANK’S NON CREDIT SERVICES DEVELOPMENT 3.2.1 Solutions for development of non-credit service's scale 3.2.1.1 Existing products and services diversification and improvement The banks always pay their attention to the improvement of existing products and services such as capital raising service, card service, payment service, remittance service and foreign exchange service, treasury service etc Door-to-door banking service development: To help banks to creating a friendly, close customer relation, improving customer care, and also making banks dynamic With door-to-door banking service, the banks will save costs for serving more customers Online banking service development: In line with the continuous development of information technology and telecommunication, in response to increasing customer needs, online banking services as home banking, phone banking, mobile banking, internet banking etc tend to be strongly developed creating significant profit for banks 3.2.1.2 New banking services Vietnam commercial banks are interested in service packages as fees collection service, student card issuance, automatically account management services for universities; collection service and account management services for electricity sector Commercial banks can develop new services such as tax and personal income tax payment For customer with only one income source, he can authorize the employer to pay his income tax However, for customer with various income sources, it is complicated and time-consuming to make the income tax calculation, declaration and payment The banks are required to develop this new service in the future Besides, trust service should be improved in the future 3.2.1.3 To enter the market and attract customers To develop banking network in respect of opening branches and transaction offices and POS systems To conduct customer survey, investigation and classification and market research, to identify potential customers, targeted customers, strategical customer and customer care period The leading commercial banks should quickly draw up the strategy of foreign market development For extending their services into foreign markets, banks are required to study the business conditions, law, business environment of targeted foreign country 23 24 25 26 3.2.3 General measures for non-credit service development 3.2.3.1 Improvement of financial capacity and competitiveness 3.2.3.2.Improvement of governance capacity and quality of human resources Human resources are the most important factor to bring success to bank business Because non-credit services are easy to copy, so for banks with the same level of technology, the quality of human resources will make a difference in the quality of noncredit products and services 3.2.3.3 Modernization of banking technology Nowadays, when domestic commercial banks are actually involved in "international market playfield" where the foreign banks equipped with technological strength take dominance of non-credit services variety, quality and benefits Thus, with the awareness of the role of technology for bank development in general and banking services development in particular, the domestic commercial banks have launched the appropriate investment for the development and application of modern banking technology 3.2.3.4 Good customer policies It is always necessary for Vietnam commercial banks to enhance customer’s awareness and to satisfy customer needs and create customer loyalty 3.2.3.5 Proposed marketing strategy The banks should push up marketing activities to create their images by the following activities: To improve the staff’s marketing skills and knowledge especially for customer staffs To carry out advertising activities, product promotion; to participate in social activities and sponsoring useful programs on television Website design with high benefits and attractive interface, unique website-based advertisement for new and modern products & services 3.2.3.6 Diversified forms of transaction and distribution channels for non-credit services With the motto "Close to customers" to make it easy for customers, to set up multiple channels to increase customer number and thereby contributing to the creation of brand and image of Vietnam commercial banks in the business 3.2.3.7 Standardized business processes Vietnam commercial banks should pay attention to the standardization of business processes to ensure both precise and convenient customers transaction with simplified procedures, business processes, shortened service time as keeping the soundness, accuracy, timeliness for better serve 3.2.3.8 Controlled proportion of profits from non-credit services For Vietnam commercial banks’ awareness, it is required to give up the traditional business of credit service, competitive interest rates and exchange rates, increased market share mainly by network expansion because of its high cost of input, potential risk, low efficiency 3.2.3.9 Promoted scientific research Vietnam commercial banks should promote scientific research activities to make studies well applied and effectively contributing to their business performance 25 3.2.3.10 Strengthened bank partnership and cooperation 3.2.4 Measures to develop various types of non-credit services 3.2.4.1 Measures for deposit account, payment and treasury services For payment service, to study the payment service requirement of specific large customers (financial institutions, corporations, large enterprises) to upgrade software program with additional features, building mechanism, combined package to encourage customers to use the service For treasury services, Vietnam commercial banks should proactively and dynamically establish the relationships with large enterprises in collection / payment service 3.2.4.2 Measures for card service To continuously invest and upgrade information technology infrastructure for card issuance and payment To fully upgrade ATMs and POSs Vietnam commercial banks should cooperate in ATM and POS development for the initial investment cost saving 3.2.4.3 Measures for e-banking service The development of e-banking services should be part of the national strategy In current conditions, the banks are developing e-banking services to the extent in consistent with the actual situation, economy growth level; customer needs such as: website development; mobile banking; Home banking 3.2.4.4 Measures for guarantee service To diversify the bank guarantee service in many different aspects, to develop new services on the basis of improving the existing services in terms of content and form, to develop the relatively and absolutely new services To set up reasonable and competitive guarantee fee schedule To set up the flexible guarantee for improved competitiveness 3.2.4.5 Measures for trust service Trust services requires banks to have the extensive knowledge of law, investment and other knowledge related to asset management Therefore, Vietnam commercial banks need professional staff to master the knowledge related to the trust and agency services to provide the best products and services to customers 3.2.4.6 Measures for foreign currency trading service To apply exchange rates forecasting to prevent and reduce risks Currency trading unit can use instruments such as: IRP (interest rate parity), PPP (purchasing power parity), IFE (International Fisher effect), the interest rate curve, Mismatch, 3.3 RECOMMENDATIONS TO THE GOVERNMENT AND STATE OF BANK 3.3.1 To improve the legal environment 3.3.2 To enhance the role of State Bank 3.3.3 Publicity and transparency of information on banking activities The transparency of information on banking activities can help customers choosing appropriate bank for their services, supervising the bank operation and help the bank to understand its responsibility 26 27 28 3.3.4 To open market for banks In recent years, Vietnam commercial banks have enjoyed the protection from the government and the state bank for more market share However, under WTO commitments, the banking sector is required to gradually remove such protection Vietnam government and SBV should protect the weak and newly-established commercial banks 3.3.5 To gradually reduce the administrative measures of financial and monetary policy governance SBV should gradually reduce its interference in monetary financial market with administrative measures It is better to let the market self-regulated 3.3.6 To create a healthy environment, equality for Vietnam commercial banks In recent years, the state-owned commercial banks have been received support and favor of the state bank Conclusion For Chapter 3, the thesis outlines the strategy of Vietnam commercial bank’s noncredit services development to 2015 and vision of potential non-credit services to 2020 On the basis of the achievements, limitations and reasons mentioned in Chapter 2, the thesis proposes solutions to develop the Vietnam commercial bank’s non-credit services in the near future including: First, the solutions for developing scale of non-credit services Second, the solutions for improving non-credit service quality SUMMARY The objective of thesis is to make theoretical summary; analysis, assessing the development of Vietnam commercial bank’s non-credit services during past years, to identify their achievements, limitations and reasons; to evaluate non-credit service quality and its impact on customer satisfaction in Vietnam commercial banks; to propose solutions to develop Vietnam commercial bank’s non-credit services in the coming years The thesis presents the main points as following: First, the thesis presents the basic theory of commercial bank’s non-credit services In addition, the thesis presents a number of experiences of non-credit services development in Hang Seng (Hong Kong), Standard Chartered Bank (Singapore) and Citibank (Japan) Thereby, the author summarizes eight major lessons for valuable reference for Vietnam commercial banks The above theories are considered as the basis for the realization of thesis’s objectives Second, the thesis presents the overview of Vietnam commercial bank performance in respects of financial capacity, rate of return Next, the thesis focuses on the analysis and assessment of Vietnam commercial bank non-credit service development In particular, the thesis takes a look at deposit service, payment accounts and treasury; guarantee services; advisory service; trust service; other non-credit services and foreign currency trading service The thesis assesses the performance of Vietnam commercial bank's non-credit services for the period 20072011 with the overview of strengths, weaknesses and reasons The author conducts the survey and quantitative research on commercial bank’s non-credit service quality including: study models, research methods, research process, research results of quality model, research results of non-credit service quality’s impacts on customer satisfaction through Cronbach's alpha coefficient rating, EFA analysis and model test by multiple regression analysis Thirdly, on the basis of the current development of Vietnam commercial bank’s non-credit services, the thesis summarizes Vietnam commercial banks development strategy to 2015 and vision to 2020 On the basis of the achievements, limitations and reasons mentioned in Chapter 2, Chapter 3, the thesis proposes solutions to develop Vietnam commercial bank’s non-credit services in the near future including: Solutions for developing scale of non-credit services: to diversify and improve existing products; to develop new services, to enter the market and to attract customers; to raise the proportion of profits from non-credit services; to expand markets and customer care Solutions for developing quality of non-credit service: solution for increased "Responsiveness", solution for increased "Empathy", solution for increased "Tangibles", solution for increased "Reliability", solution for increased "Capacity" and solution for increased "Convenience" To realize the proposed solutions, the author points out measures including: The general measures for non-credit services development: To improve financial capacity and competitiveness; To improve governance capacity and quality of human resources; To modernize banking technology; to implement customer policies; To develop marketing strategy; to diversify forms of trading and distribution channels of non-credit services; to standardize business processes; to build and control the proportion of profits from non-credit services; to promote scientific research activities in the Vietnam commercial banks; to promote the bank partnership and cooperation Measures for developing various types of non-credit services: Measures for deposit account services, payment and treasury services; measures for card service; Measures for electronic banking service; Measures for guarantee service; Measures for trust service and measure for foreign currency trading service Then, the thesis outlines a few recommendations to the government and state bank including: improved legal environment; improved role of the state bank; publicity and transparency of information on banking activities, to open bank market; to reduce administrative measures of governing the financial and monetary policies; to make fair market playing field for all Vietnam commercial banks 27 28 29 LIST OF THE AUTHOR’S RESEARCH STUDIES Pham Anh Thuy (2009), Banking services in Ho Chi Minh City in 2008 and a number of concerned issues , Journal of Banking Issuance No 4, February 2009 Pham Anh Thuy - Dao Le Kieu Oanh (2012), The role of non-credit services in Vietnam commercial banks, Journal of Development & Integration, Issuance No – September, October, 2012 Pham Anh Thuy (2012), Development of Vietnam commercial bank’s non-credit services, Journal of Banking Issuance No 18, September, 2012 Pham Anh Thuy-Nguyen Thi Thu Trang (2012), The current development of Vietnam commercial bank’s non-credit service, Journal of Banking Technology Issuance No 78 September 2012 Pham Anh Thuy - Dao Le Kieu Oanh - Nguyen Quynh Hoa (2012), Development of commercial bank’s non-credit services, Scientific research of Banking University of Ho Chi Minh City 29