LV Thạc sỹ_The financial appraisal of investment projects in ACB thuy nguyen

I TABLE OF CONTENTS ACKNOWLEDGEMENTIII ABBREVIATION IV LIST OF TABLES V LIST OF FIGURES VI INTRODUCTION VII CHAPTER 1: OVERVIEW ABOUT THE FINANCIAL APPRAISAL OF INVESTMENT PROJECTS IN COMMERCIAL BANKS 1.1 Overview about commercial banks 1.1.1 Definition of commercial banks 1.1.2 Characteristics of commercial banks 1.2 Quality of financial appraisal of investment projects in commercial bank 1.2.1 Financial appraisal of investment projects in credit activities of commercial banks 1.2.2 Content of financial appraisal of investment projects 12 1.2.3 The quality of financial appraisal of investment projects 18 1.3 Factors affect the quality of the financial appraisal of investment projects 19 1.3.1 Subjective factors 19 1.3.2 Objective factors 21 CHAPTER 2: REAL SITUATION OF THE FINANCIAL APPRAISAL OF INVESTMENT PROJECTS IN ASIA COMMERCIAL BANK THUY NGUYEN 23 2.1 Introduction about ACB Thuy Nguyen 23 2.1.1 Background and history of ACB Thuy Nguyen 23 2.1.2 Organizational structure of ACB Thuy Nguyen 24 2.1.3 Real situation and results in operation of ACB Thuy Nguyen from 2009 to 2011 27 2.2 Situation of the financial appraisal of investment projects in ACB Thuy Nguyen 32 2.2.1 Situation of granting project loans in ACB Thuy Nguyen 32 II 2.2.2 Situation of financial appraisal of investment projects in ACB Thuy Nguyen 33 2.3 Evaluating the situation of financial appraisal of investment projects in ACB Thuy Nguyen 44 2.3.1 Results 44 2.3.2 Limitations 45 2.3.3 Causes of the limitations 46 CHAPTER 3: SOLUTIONS AND RECOMMENDATIONS TO IMPROVE THE QUALITY OF THE FINANCIAL APPRAISAL OF INVESTMENT PROJECTS IN ACB THUY NGUYEN 48 3.1 Orientation of granting project loans in ACB Thuy Nguyen and the necessary of improving quality of financial appraisal of investment projects 48 3.2 Solutions to maintain and improve the quality of financial appraisal of investment projects in ACB Thuy Nguyen 50 3.2.1 Solutions when appraising financial aspect of projects 3.2.2 Training and improving capability of appraisers 52 3.2.3 Improving quality of the sources of information 53 50 3.2.4 Continuously innovating technology 54 3.2.5 Coordinating between departments 54 3.2.6 Gathering experiences from other commercial banks 54 3.3 Recommendations 54 3.3.1 For the borrowing companies.54 3.3.2 For the Government, Ministries and other related agencies 3.3.3 For State Bank of Viet Nam 56 3.3.4 For Asia Commercial Bank CONCLUSION 59 REFERENCES A Appendix B 57 56 III ACKNOWLEDGEMENT “First of all, I would like to thank National Economics University (NEU); California State University, Long Beach; especially Advanced Program, for conveying valuable knowledge during the last school years and providing me opportunities to know real nature of the banking activities through this internship Secondly, during data collecting period, Mr…, a credit staff in ACB Thuy Nguyen branch, and his colleges helped me greatly, especially on collecting data Without this useful data, I wouldn’t finish this research For that reason, I would like to sincerely thank to him and his colleges Finally, I am heartily thankful to my supervisor, Associate Professor Doctor Tran Dang Kham, whose encouragement, guidance and support from the initial to the final level enabled me to develop an understanding of the subject Also, I would especially like to thank all my friends in Advanced Class for all their encouragement and intellectual support that has made this report possible Any mistake is my own responsibility.” IV ABBREVIATION ACB Asia Commercial Bank SBV State Bank of Vietnam NPL Non Performing Loan ROA Return on Assets NPV Net Present Value IRR Internal Rate of Return V LIST OF TABLES Table 2.1: Distributing capital mobilization in ACB Thuy Nguyen by currency (2009-2011) 29 Table 2.2: Investment categories of the project .35 Table 2.3: Summary of EP hotel’s estimated revenue 38 Table 2.4: Financial effectiveness of EP hotel project 39 Table 2.5: Summary of the solvency of VF Company 40 Table 2.6: Some financial indicators of VF Company 40 Table 2.7: Income statement of VF Company .41 Table A: Balance sheet of VF Company B Table B: Cost categories of EP hotel project C VI LIST OF FIGURES Figure 1.1: Process of granting banking credit Figure 2.1: Organizational structure of ACB Thuy Nguyen 25 Figure 2.2: Situation of capital mobilization in ACB Thuy Nguyen (2009-2011) 28 Figure 2.3: Status of credit balance in ACB Thuy Nguyen (2009-2011) .30 Figure 2.4: Credit balance by type of customers in ACB Thuy Nguyen (2009-2011) 31 Figure 2.5: Net profit of ACB Thuy Nguyen (2009-2011) 32 VII INTRODUCTION Rationale In 2011 and first half of 2012 – those first years of implementing 5-year Development Plan 2011-2015, Vietnam had some general advantages such as: stable politic condition; economy has recovered after one year affected by world’s economic crisis However, we also have to face several challenges: inflation increases dramatically; instable macroeconomic; complicated exchange rate’s fluctuation; interest rate increases to a very high level Along with that, many companies especially real estate companies operate poorly and even go bankruptcy This is a threat to banking activities, which forces bank to tighten credit policies, and in turn, makes companies worse because without capital from banking credit, they can’t continue operating and recovering In this situation, Government has issued many policies, plans to recover development of economic and control inflation such as: tightening monetary policies; restructuring banking system; proposing scheme of restructuring the whole economic… About banking activities, Government directs to reduce ceiling of mobilizing interest rate, which facilitates banks to reduce lending interest rate and stimulates corporates to borrow more to recover operation However, commercial banks – the heart of the economy – must also have effective solutions in order to sufficiently and promptly provide credit to those corporates which have good profitability and effectiveness; and guarantee the risks for those investments at once In order to that, banks have to wisely utilize their capitals, especially those medium and long-term capitals which finance investment projects because projects usually have large scale, make a lot of jobs, bring huge advantages to economic-social Simultaneously, in order to guarantee those capitals can come to VIII the right projects which have good economic effectiveness and solvency, the improvement of the appraisal, especially financial appraisal of investment projects must be focused more Notice the importance of this issue, in the internship period at ACB Thuy Nguyen branch, I proactively researched documents and realities of projects appraisal task at the branch Even though the branch was just established for years, it has become one of the most effective branches in the ACB’s system as its growth of mobilization and credit always exceeds target, especially it has maintained the result of zero-non-performing-loan for years in a row However, in 2012, when the economic condition is poor, the branch appears to have nonperforming loans and high probability of not meeting the developing target of 2012 Therefore, the re-assessment of appraisal task at the branch is necessary Research scope  Objects: Quality of financial appraisal of investment projects in commercial bank  Scope: Quality of financial appraisal of investment projects in ACB Thuy Nguyen branch Research questions This thesis tried to answer three questions:  What is the quality of financial appraisal of investment projects?  What are the issues of the quality of financial appraisal of investment projects at ACB Thuy Nguyen branch?  What are solutions and recommendations to improve the quality of financial appraisal of investment projects at ACB Thuy Nguyen branch? Research purpose  Studying the basic theoretical issues of the commercial banks and the quality of financial appraisal of investment projects in commercial banks IX  Analyzing and assessing the real situation of granting project loans and the quality of financial appraisal of investment projects in ACB Thuy Nguyen  Proposing measures to improve the quality of financial appraisal of investment projects in ACB Thuy Nguyen branch Research Methodology To learn comprehensively and accurately the quality of financial appraisal of investment projects in ACB Thuy Nguyen, the methodology used to approach and solve problems are the dialectical materialism, logic method and comparative method Research structure The thesis contains three parts: Introduction, Body, and Conclusion The body includes three following part:  Chapter 1: Overview about the financial appraisal of investment projects in commercial banks  Chapter 2: Real situation of the financial appraisal of investment projects in Asia Commercial Bank Thuy Nguyen  Chapter 3: Solutions and recommendations to improve the quality of the financial appraisal of investment projects in ACB Thuy Nguyen CHAPTER 1: OVERVIEW ABOUT THE FINANCIAL APPRAISAL OF INVESTMENT PROJECTS IN COMMERCIAL BANKS 1.1 Overview about commercial banks 1.1.1 Definition of commercial banks A commercial bank is a financial intermediary which collects credit from lenders in the form of deposits and lends in the form of loans A commercial bank holds deposits for individuals and businesses in the form of checking and savings accounts and certificates of deposit of varying maturities while a commercial bank issues loans in the form of personal and business loans as well as mortgages The term commercial bank came about as a way to distinguish it from an "investment bank." The primary difference between a commercial bank and its counterpart is that a commercial bank earns revenue by issuing primary loans from its pool of deposits while an investment bank brings debt and equity offerings to market for a fee Among its assets, including loans, a commercial bank holds a portfolio of other securities to generate proprietary income 1.1.2 Characteristics of commercial banks 1.1.2.1 Financial intermediary Financial intermediary is an organization or individual which stand between two or more parties attending in a financial context Usually, there’s one party as financial service provider and one party as the consumer The financial contexts that commercial banks act as intermediaries are: - Capital intermediation (Credit intermediation): is seen as the most important function of commercial banks While performing the function of a credit intermediation, banks act as a bridge connecting between people whom are in need of capital and redundant of capital With this function, 46 CHAPTER 3: SOLUTIONS AND RECOMMENDATIONS TO IMPROVE THE QUALITY OF THE FINANCIAL APPRAISAL OF INVESTMENT PROJECTS IN ACB THUY NGUYEN 3.1 Orientation of granting project loans in ACB Thuy Nguyen and the necessary of improving quality of financial appraisal of investment projects In those recent years, ACB Thuy Nguyen has continuously achieved its targets and grown strongly despite the difficulty of economic condition However, from now to next decades, banking activities of Vietnam have to be reformed comprehensively according to orientations of State in order to adapt the market mechanism, serve and stimulate economic to develop and integrate to the world Therefore, the missions of each commercial bank in those coming years are to find the solution to create and develop its own strength Without innovating, there would be no opportunity for any bank to exist and develop Aware of these issues, ACB Thuy Nguyen has researched and crafted a longterm strategy on the basis of assessing advantages and difficulties of social, economic, international condition, experiences in years of development This strategy will be the guide to all activities, information and coordination of bank Strategic development goals of ACB Thuy Nguyen up to 2020 are: becomes one of the top commercial banks of Vietnam; multifunction operating with the combination of retail and wholesale; expands banking services; serving the development of domestic economy and becomes an international bank in the region Orientations of granting project loans: 47 - Maintain and promote effective mobilizing methods with high competitive ability in order to attract idle capital from residences and companies, improve high reputation with domestic and foreign market to receive fiduciary capitals from State and foreign organizations Only by doing so does bank have enough money to invest in big projects of - important sectors and companies of the State Credit activities guarantee the growth, safety and effectiveness Provide a large amount of credit for State own corporations, nationalscale projects Expand credit along with improve effectiveness and quality of credit, guarantee the solvency of the credit, maintain a low level of non-performing loans Orientations of appraisal task: Financial appraisal of investment projects is an activity with separate organizational management, process and group of staffs so before giving solution to improve, it’s also necessary to have clear orientations Under the scope of commercial banks (Asia Commercial Bank, specifically), in order to maximize the utilization of bank’s potential advantages in credit activities as well as general development strategy, following orientations should be noticed: - Financial appraisal of investment projects should stand on the perspective of lender to assess the feasibility, effectiveness of projects, and clearly - aware of those advantages of bank stick to the advantages of projects Promote from real situation of banking industry and serve credit activities - of ACB for each period Appraisal task has to be thoroughly understood by the whole system, not only by direct appraisers but also by staffs from other departments with - different requirements for the task Financial appraisal has to be continuously conducted with all proposed projects with all stages Even ACB Thuy Nguyen has tried so hard to utilize their strengths, but it’s impossible to anything without limitations Through above analysis, we can see the importance of appraisal task to the development of bank In order to overcome 48 those limitations I suggest some immediate solutions and recommendations as following 3.2 Solutions to maintain and improve the quality of financial appraisal of investment projects in ACB Thuy Nguyen After the internship period at the branch, by using knowledge and experiences from the realities of the internship as well as collected from related documents, I suggest some solutions to improve the quality of the financial appraisal of investment projects in ACB Thuy Nguyen: 3.2.1 Solutions when appraising financial aspect of projects As stated above, financial ratios of companies are very important to bank, however it’s still not paid attention to in appraisal task Appraisers usually underestimate the important of the utilization of ratio analysis, and when those ratios are not satisfied the requirement, it will lead to the consequence of increasing risks to banks’ capitals Leverage and current ratio are two of the most important financial indicators When appraising, it’s necessary to think about the target of appraisal and reject the projects whose leverage and current ratio less than 0.5 When assessing effectiveness of the project, it’s important to utilize popular methods such as IRR, PP, and especially NPV because this method is simple to calculate and there’s no probability of getting error like Internal Rate of Return (IRR) method and with big scale projects, this indicator is more reliable However, there’s some notice about the use of NPV method:  Calculate free cash flows for each year: The revenues and expenses of each year are calculated based on the real capacity of the project for this year and the estimated price  Estimate of the reasonable discount rate for each project To accurately calculate the discount rate, appraisers should notice those factors: 49 - Inflation rate The added rate due to the tradeoff between projects which based on the determination of opportunity costs This added rate is accounted in the - case of exclusive projects The added rate account for the error and residual The financial ratios system is only an aspect of assessing and analyzing financial condition of the project In order to come to the final conclusion and decision, there’re also some notices: - Each indicator from indicator system would be compared to standard indicator in order to come to the decision of accepting or rejecting For example, projects must have NPV larger than zero, IRR larger than - WACC to be accepted When there’re exclusive projects, project with highest IRR or NPV would - be accepted Appraising financial aspect of projects must be combined with appraising - operating result and financial condition of companies About project’s life: With the project which doesn’t state the project’s life, appraisers should base on depreciated time of equipment to - analyzing Calculating contents: Appraiser should calculate costs, revenues or free - cash flows for the whole project life rather than just some years Sensitivity of projects: Bank should employ the sensitive analysis in order to assess the fluctuation of IRR, NPV… in risky condition with the fluctuation of exchange rate, inflation, discount rate… This method is - more effective than just using the qualitative analysis (SWOT analysis) About profit margin indicator: Appraiser should assess this indicator based on the product cycle to forecast the liquidity in next periods because companies might be profitable at the moment but not the future - when the product comes to the last stage In the case of project conducted by joint venture companies, bank should carefully examine the different of their proposal’s structure with domestic 50 companies’ Bank also needs to update and apply advanced financial appraisal methods from popular banks in the world All the methods are present carefully in various documents, but the employ of those methods and apply them in real condition are really challenged 3.2.2 Training and improving capability of appraisers Appraising projects in general as well as appraising financial condition of projects always center the role of human aspect as the most important factor that affects quality of appraisal The financial appraisal of investment projects is a very complicated specialist skill, related to many fields of social and economic Besides, it largely affects the capital and profitability of banks, and can lead to the bankruptcy because projects are always required a huge amount of capital, long period and contain high risks Therefore, the competence of specialists must satisfy the requirements, which are professional ability, realistic experiences, business ethics, and steady skills About professional ability, specialists must at least have bachelor degree, general knowledge about economic market, financial activities, laws and regulations, fluently foreign languages and computer skills related to the appraisal field Specialists also have to be skillful and creative in analyzing and assessing projects, initiatively discovering new methods About experiences, specialists must be the ones who directly supervise, monitor and manage projects, know how to summarize experiences from other fields to serve their own profession About ethics, specialists have to be honest, high discipline, high responsibility and enthusiastic to the job 3.2.3 Improving quality of the sources of information In this era, information is the most important weapon in competitive environment The winner is the one who catches the right information at the right 51 time Information is the main material which makes a high quality appraisal of projects Accurate and prompt information help the appraisal more effective, and limit risks The issue here is where and how to collect high quality information In order to solve this problem, banks have to construct a comprehensive information system Specifically: - Information about borrowers (companies): In order to collect the needed information, besides financial statements and other documents provided from companies themselves, specialists can also collect information by inspecting the operating place of borrowers, and directly interview managers of projects The branch can also request companies to verify the trustworthiness - of provided information by hiring an independent audit company Information from records of banks: A bank has to store documents from borrowers, which provide a lot of information about credit Bank can track from the records about the historical transactions, balance of saving and - cheque account… of borrowers Sources of information other than credit information such as: products market, technology and environment, from relationships competitors of borrowers, from media, related agencies and ministries… 3.2.4 Continuously innovating technology The application of information technology into banking activities is a critical issue, directly affects the success of a bank in this period, especially in the financial appraisal of projects where the calculation is very difficult and complicated that the manual calculation will cost so much times and efforts but the results brought is not high as expectation The application of professional software will help overcome those problems In order to quickly modernize the information system, bank should give more priority to the investment of the information system, especially in automating the trading and accounting system in bank 52 3.2.5 Coordinating between departments Financial appraisal is not just a specialized task of appraisal department and specialists It requires a strong coordination with other departments Other department when joins and provides appropriate information will help appraisal result more effective, sufficient and feasible Problems arising from appraisal task that specialists don’t know or not sure about can be solved by the help of other departments 3.2.6 Gathering experiences from other commercial banks Project appraisal required high skills, experiences and sensitivity and nonstop learning to improve profession ACB Thuy Nguyen was just established and operated for a short period so experience is not much Therefore, ACB Thuy Nguyen should learn from appraisal task of other banks as well as other branch of ACB especially from syndicated loan 3.3 Recommendations 3.3.1 For the borrowing companies In the poor condition when the economy goes down, companies need capital the most in order to overcome the difficulty The paradox here is that at that moment, banks hesitate over the request from companies Even the mobilizing interest rate just declines and some banks have the signal to reduce borrowing interest rate, the number of companies which can approach those credits is not much The truth is that banks are just business institution, and they also operate by the principle of maximizing profit and safety The tighten credit policies of banks might resulted from the creditability crisis between banks and borrowing companies Realities have shown that the competitiveness of Vietnam’s enterprises is very limited The proportion of small and medium enterprises which have charter capital bellowing billion VND is very high Small and medium enterprises, which 53 most likely to be “hurt” when economic crisis happens, are mostly operate exceed their financial capability Even, there’s some small and medium enterprises have debts nearly equal total assets, and exceed equity capital for hundred times Ranked in 142 countries, Vietnam’s enterprises are always outdone Specifically, “competitive advantage” ranks 134/142, “control of distribution on international market” ranks 112th, “proficient of production process” ranks 108 th, “development level of value chain” ranks 101st , “quality of supplier” ranks 92nd The internal management of companies is also not paid attention from management ability to the providing of information for banks, which restricts them from approaching banking credit It’s not hard to understand why many credit proposals of companies cannot pass through the appraisal, even the projects and business plans which are assessed as effective ones Therefore, companies have to save themselves by improving the competitiveness, financial transparency in order to facilitate the appraisal process of banks to promote the role of accurately assess the potential and profitability of projects 3.3.2 For the Government, Ministries and other related agencies State has to increasing improve legal environment, especially decisions, decrees about issues related to investment, financial management, audit, accounting, tax… Thence, State can facilitate activities of corporates and banks Corporates can easily invest and business; banks can have firm legal basis to handle appraisal task State should also improve economic-technology norms system, effectiveness indicators of each industry, sector in order to established a standard assessing system for bank to use as the appraisal basis 54 Ministries and other related agencies should strongly coordinate in appraising and approving projects which companies submits in order to avoid the formally approval, not concentrated and not feasible, which makes banks waste time to appraisal but rejected anyway since the project don’t have economic effectiveness 3.3.3 For State Bank of Viet Nam SBV should assist the training for specialists of commercial banks in improving knowledge and specialized skills In order to assist commercial banks in training, SBV can organize periodic classes with foreign financial and banking experts from countries that have highly developed financial system or from WB, IMF Training sessions should focus on real practice using appraisal software programs directly on computer Besides, commercial banks should appoint persons that already have knowledge and experiences about appraisal and ability to learn and transfer knowledge to other specialists in the own bank SBV should improve the effectiveness of Credit Information Center (CIC) in providing credit information for commercial banks’ appraisal Information from CIC is still limited and not satisfies the requirements of commercial banks Some information is even not sufficient, not appropriate and not updated On the other hand, CIC doesn’t have a specialized department to analyze provide information in order to response noticeable issues to commercial banks In order to improve the coordination role of CIC, SBV should have compulsory requirement about providing credit information sufficiently and promptly Besides, SBV should also expand the field of providing information for CIC, not just credit information but also economic information to serve banks in appraisal According to this, CIC operates as a company which specialized in consulting and providing information SBV also has to increase activities in making information contract and coordination with economic management agencies, information providing specialized agencies such as Ministry of Planning and Investment, General Statistic 55 Office … in order to update newest information about market and mechanisms, policies of State 3.3.4 For Asia Commercial Bank From the policies of Government and SBV, ACB has established a more specific and updated system, process about appraisal ACB should specifically instruct specialist at all the branches in order to develop their role and skill as well as give them the obligation to be self-responsible for their decision when appraising projects The construction of plans to improve quality of specialist must have a clear process of arranging, recruiting employees in the system First of all, ACB should assess those specialists in skills, experiences, ethics, health… which helps to classify, arrange specialists to study and train, which gives them opportunity to work for bank for a long-term ACB also have to stress in the recruitment of new employees At the moment, the number of people who graduated with major in Banking is too high for the recruitment demand However, in reality, in order to success in the work, employees must practice and learn a lot Therefore, in the recruitment process, ACB should apply advanced methods that has main idea of assessing employees based on their intellectual ability, which means appreciate working ability of employees in the future rather than what they’ve known 56 CONCLUSION Improving the quality of project appraisal as well as financial appraisal is necessary for the appraisal task of commercial banks in order to guarantee the granting decision of banks will bring advantages for both parties For banks, they’re safety, profitability, no arising of non-performing loans For companies, projects perform effective, bring profits, and pay back promptly to banks In order to that, the appraisal process of banks must be implemented carefully, correctly, and scientifically Through the research of theory in combination with the practical of the financial appraisal of investment projects at ACB Thuy Nguyen branch, I’ve finished this topic In the thesis, I have mentioned and focused on solving some general issues as following: - Generalize the issues related to financial appraisal of investment projects: Definitions, concepts related to projects; assessment criteria system; the - importance of financial appraisal; affecting factors… Learn the practical of financial appraisal tasks at ACB Thuy Nguyen branch: - real status, results and drawbacks On the basis of theory and practice, I’ve suggested some solutions and recommendations for the related parties in order to improve the quality of financial appraisal of investment projects in ACB Thuy Nguyen as well as other commercial banks However, this is really a broad and complicated topic that related to many field of economic-social, which required not only specific knowledge but also the wide understanding, the sensitive and experiences Therefore, my thesis cannot avoid from making a lot of mistakes and omissions I need to research more about both theory and practical in order to perfect this topic A REFERENCES ACB Thuy Nguyen (2010) Appraisal reports Asia Commercial Bank (2010; 2011; 2009) Annual report for shareholder Bich Diep (2012, April) Doanh nghiệp "đói" vốn khủng hoảng niềm tin ngân hàng Retrieved from Dan tri News: http://dantri.com.vn/c76/s76583847/doanh-nghiep-doi-von-va-cuoc-khung-hoang-niem-tin-cua-nganhang.htm Various authors (various) Graduated thesis of previous intakes B APPENDIX Table A: Balance sheet of VF Company Assets A Current assets I Cash II Account receivable IV Inventory V Other current assets B Fixed assets and long-term investments I Tangible fixed assets Costs Depreciation On-going construction Total assets Liabilities and Stockholders’ equity A Liabilities I Current assets 1.Short-term debts Account Payable Taxes II Long-term liabilities B Stockholders’ equity I Capital Charter capital 10 Net income Total liabilities and stockholders’ equity 31/12/2008 16,011,996,501 14,258,215,000 538,457,641 1,003,677,460 211,646,400 23,609,488,705 23,609,488,705 19,926,362,889 -666,000,000 4,349,125,816 39,621,485,206 31/12/2008 5,938,472,911 5,938,472,911 2,000,000,000 3,500,500,000 437,972,911 33,683,012,295 33,683,012,295 32,000,000,000 1,683,012,295 39,621,485,206 31/12/2009 1,705,339,219 240,495,241 17,957,641 873,266,097 573,620,240 40,535,828,504 40,535,828,504 18,821,501,735 -1,212,000,000 22,926,326,769 42,241,167,723 31/12/2009 7,289,416,221 5,289,416,221 2,000,000,000 2,000,500,000 422,916,221 2.866.000.000 34,951,751,502 34,951,751,502 32,000,000,000 2,951,751,502 42,241,167,723 C Table B: Cost categories of EP hotel project No Costs A Variable costs I Materials Leasing rest rooms Leasing conference room Restaurant II III Interpretation %/Revenue No material expenses No material expenses For high quality restaurant, material 50% expenses account for 50% revenue Health care Materials including aromatics, cosmetics 10% service account for 10% revenue Other services Material expenses are determined as 10% including mainly goods sold at bar, detergents … they cost 10% of revenues Personnel VND expenses Reception + Bar Salaries for 15 hotel and bar receptionists, 540,000,000 average million VND/person/month Leasing rest Salaries for 20 office staffs, average 2.5 600,000,000 rooms million VND/person/month Leasing Salaries for employees assisting and serving 180,000,000 conference rooms technical field of conference room as well as the whole hotel, average 2.5 million VND/person/month Restaurant Salaries for chefs, average 15 million 600,000,000 VND/person/month; salaries for scullions and waitresses, average 2.5 million VND/person/month Health care Salaries for 12 personnel in health care 432,000,000 service service, average million VND/person/month Other services Utilizing employees from other service supply to reduce expenses Service % Revenue purchased outside expenses Leasing rest Electricity + water bills for 84 rooms, 6% rooms accounts for 6% revenue Leasing Electricity + water bills for the conference 1% conference room room, accounts for 1% revenue Restaurant Electricity + water bills for the restaurant, 5% accounts for 5% revenue Health care Electricity + water bills for massage service, 10% service accounts for 10% revenue D Other services Total variable costs B Fixed costs I Security expenses II Depreciation expenses Equipment depreciation III VI Electricity + water bills for other services, 2% accounts for 2% revenue Salaries for 15 security guards, average million VND/person/month Depreciation of the building in 20 years + depreciation of equipment in 10 years Costs of equipment of the hotel are estimated to be 21.6 billion VND and depreciate in 10 years Building The building is estimated to cost 36.9 billion depreciation VND and depreciates in 20 years Management Salaries for management teams including: expenses CEO, Deputy CEO, COO, CAO, accountants, cashiers Interest expenses Interest rate: Average 16.5%/year VND 360,000,000 4,009,250,00 2,160,000,000 1,849,250,000 3% ...II 2.2.2 Situation of financial appraisal of investment projects in ACB Thuy Nguyen 33 2.3 Evaluating the situation of financial appraisal of investment projects in ACB Thuy Nguyen 44 2.3.1 Results... loans in ACB Thuy Nguyen and the necessary of improving quality of financial appraisal of investment projects 48 3.2 Solutions to maintain and improve the quality of financial appraisal of investment. .. of financial appraisal of investment projects at ACB Thuy Nguyen branch?  What are solutions and recommendations to improve the quality of financial appraisal of investment projects at ACB Thuy