Capital Mobilization Situation At Mb Viet Tri Branch

large, that bank will be able to operate business on an increasingly expanding scale, diversify service types and improve competitiveness.

In the recent period, the capital activities of MB Viet Tri Branch have always grown strongly. In 2010, with a reasonable interest rate adjustment policy and efforts to improve the quality of products and services, the total mobilization of the Branch was 967 billion VND, by 2012 the total capital mobilization was 1,245 billion VND, an increase of 28.7%. Capital mobilization activities at the branch are also very diverse in many different forms such as: receiving savings deposits from individuals and organizations with many terms from 1 week to 36 months, paying interest later or monthly; issuing valuable papers...

Table 2.1: Capital mobilization situation at MB Viet Tri Branch

(Unit: Billion VND)

INDICATORS

2010	2011	2012
Total capital mobilized at CN	967	1,080	1,245
According to the source of mobilization
- From the organization	222	204	231
- From the population	745	876	1,014
-By term
- Under 12 months	899	985	1.125
- Over 12 months	68	95	120
-By currency
- Vietnamese Dong	852	939	1,058
- Converted currency	115	141	187
Total capital	1,235	1,323	1,337

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(Source: Accounting balance sheet of 2010, 2011 and 2012)

Total capital mobilized

Total capital

1600

1400

1200

1000

800

600

400

200

2010

2011

2012

Chart 2.1: Capital mobilization situation at MB Viet Tri Branch

(Source: Balance sheet of MB Viet Tri Branch 2010, 2011 and 2012)

In general, mobilized capital increased steadily over the years from 2010 to 2012.

By mobilization source: as of December 31, 2012, economic organization deposits accounted for 18.5% of total mobilized sources, this is a relatively good ratio, however, capital mobilized from economic organizations is mainly concentrated on a number of large, traditional customers such as Lam Thao Super Chemical Company, Bai Bang Paper Corporation and Z121 Company. Residential deposits account for a large proportion of 81.5% although customers are mainly residents depositing small amounts of money. However, this is a relatively stable source of mobilization for the bank.

The management and use of capital of the Branch is carried out according to the motto of safety and efficiency to ensure both profitability and liquidity for the bank.

By term: capital mobilized by branches with terms of less than 12 months accounts for a large proportion. As of December 31, 2012, capital mobilized with terms of less than 12 months accounted for 90.3% of total mobilized capital.

By currency: VND deposits over the years have accounted for a larger proportion than foreign currency deposits.

2.2.2. On credit activities.

Table 2.2: Credit structure table at MB Viet Tri Branch

Unit: Billion VND

INDICATORS

2010	2011	2012
Total outstanding debt	1.002	876	822
+ Short term loans	701	626	616
+ Medium term loans	265	215	166
+ Long term loans	36	35	40
Total assets	1,235	1,323	1,337

(Source: Accounting balance sheets of 2010, 2011 and 2012).

Total outstanding debt

Total assets

1600

1400

1200

1000

800

600

400

200

2010

2011

2012

Chart 2.2: Credit structure chart at MB Viet Tri Branch

Because it has been in operation for 7 years while the competitive environment has become increasingly fierce in recent years, the branch's credit growth rate has slowed down compared to the early days of its operation. In 2011, inflation increased sharply, and lending interest rates were high, from 18%/year to 23%/year, which was also one of the reasons why outstanding loans could not grow. In 2012, the general economic market in the country became increasingly difficult, and production and business enterprises encountered many obstacles, so outstanding loans at the branch continued to decline, and this was also the average situation of credit institutions in the area in recent years.

Through the table above, it can be seen that the branch's long-term loan structure trend accounts for a small proportion of about 4.8% of total outstanding loans, which is also very suitable for the branch's capital structure because mobilizing long-term capital sources is relatively difficult.

2.2.3. Service activities

Service activities are highly focused on by commercial banks, considered as a fundamental factor to minimize risks, improve profit performance and create competitiveness for banks. Modern banking business is increasingly oriented towards increasing income from service activities instead of income mainly based on credit activities.

At MB Viet Tri, in addition to credit activities, the branch also focuses on developing service activities to increase profits and minimize risks. Up to now, the branch has expanded and developed many services such as: payment services, guarantees, money transfer services, remittances, asset custody, foreign currency trading, etc. Therefore, in addition to the main source of revenue from credit activities, the branch's service revenue has been constantly increasing.

The Branch's service activities include: payment and money transfer services; foreign exchange trading services; guarantee services and other services. Of which, payment and money transfer services account for the highest proportion of total service income, followed by income from guarantee services, other services and foreign exchange trading services.

The average growth rate of service income of the Branch over the past 3 years is 39.3%. In 2010, total service income was 3,101 million VND, in 2011 this figure reached 6,657 million VND, an increase of 114.67% compared to 2010; in 2012, total service income was 5,279 million VND, a decrease of 20.71% compared to 2011.

Table 2.3. Income structure from service activities at MB Viet Tri in the period 2010 - 2012

Unit: million VND

Year

Target

2010	2011	2012	Compare (%)
2010	2011	2012	2011/ 2010	2012/ 2011	BQ 2012/2010
I. Service income	3.101	6,657	6.106	214.7	91.7	153.2
1. Payment and money transfer services	1,178	2,342	2,242	198.8	95.7	147.3
2. Foreign exchange trading	496	1.131	1,100	228.0	97.2	162.6
3. Guarantee	775	1,531	1,400	197.5	91.4	144.5
4. Other services	652	1,653	1,364	253.5	82.5	168.0
II. Service income/total ratio income (%)	2.1	3.69	3.8	175.7	102.9	139.3

(Source: Summary report of MB Viet Tri 2010, 2011, 2012)

The structure and growth rate of service income are shown in the chart below:

Chart 2.3. Structure and growth rate of service income at MB Viet Tri

(Source: Military Commercial Joint Stock Bank, Viet Tri Branch)

Although total service income increased unevenly over the years (in 2011 it increased compared to 2010, and in 2012 it decreased compared to 2011), the ratio of service income to total income tended to increase. This increase in ratio is shown in the chart below:

Chart 2.4. Service income ratio to total income at MB Viet Tri

(Source: Military Commercial Joint Stock Bank, Viet Tri Branch)

2.2.4. Business results

In the past time, although the business activities of the commercial banking system in general and the MB system in particular encountered many difficulties, the business activities of MB Viet Tri still achieved good results.

Profit before tax in 2010 reached 9.6 billion VND, in 2011 this figure reached 12.3 billion VND, an increase of 22% compared to 2010; in 2012 profit before tax reached 9.6 billion VND, a decrease of 22% compared to 2011. Profit after tax in 2012 decreased compared to 2011 due to the decrease in outstanding debt, income from lending activities decreased (loan outstanding debt decreased), income from service activities also decreased while bad debt increased, the Branch had to increase credit risk provisions.

Table 2.4. Business results of MB Viet Tri in the period 2010 - 2012

Unit: billion VND

Year

Target

2010	2011	2012	Compare (%)
2010	2011	2012	2011/ 2010	2012/ 2011	BQ 2012/2010
1. Total income	150.2	180.1	160.7	119.9	89.2	104.5
2. Total cost	140.6	167.8	151.1	119.3	90.0	104.6
3. Profit before tax	9.6	12.3	9.6	128.0	78.0	103.0

(Source: Summary report of MB Viet Tri 2010, 2011, 2012)

The growth rate and relationship between total revenue, total expenses and pre-tax profit in the period 2010 - 2012 of the Branch are shown in the chart below:

Figure 2.5. Relationship between total revenue, total cost and pre-tax profit

Tax period 2010 - 2012 at MB Viet Tri

(Source: Military Commercial Joint Stock Bank, Viet Tri Branch)

2.3. Current status of credit quality at MB Viet Tri Branch through specific indicators:

After 7 years of operation in Phu Tho province, thanks to our own efforts and support from customers and the whole system, the branch's operations in general and the branch's credit operations in particular have achieved remarkable results.

Encouraging achievements contributing to the promotion of local socio-economic development. The branch has been exploiting its potential, expanding customer relationships, enhancing the ability to participate in larger, longer-term project programs. As of December 31, 2012, the branch had over 800 borrowers with outstanding loans reaching 822 billion VND. In addition to lending for construction and housing repair, the branch also promotes lending to small and medium-sized enterprises to develop production. In addition, it focuses on lending to individual customers to promote private economic development. This is also the result of the branch's activities in supporting small and medium-sized enterprises in the area to expand production and make new investments. However, after a period of operation, the branch's bad debt tends to increase, the credit scale stagnates... Therefore, in order to assess more specifically the credit situation of MB Viet Tri Branch, some contents need to be considered:

2.3.1. Scale and structure of outstanding debt.

* About outstanding debt scale:

Table 2.5: Outstanding loans of 14 Commercial Bank branches in Phu Tho province.

Unit: Billion VND

STT

BANK NAME	Outstanding debt 2010	2011		2012
BANK NAME	Outstanding debt 2010	Outstanding debt	Increase/decrease % vs. 2010	Outstanding debt	Increase/decrease % vs 2011
1	2	3	4	5	6	7
1	Vietinbank Phu Tho Branch	1,387	1,686	21.5%	1,921	13.9%
2	Vietinbank Den Hung Branch	1,431	1,634	14.2%	1,710	4.7%
3	Vietinbank Hung Vuong Branch	601	792	31.8%	780	-1.5%
4	Vietinbank Phu Tho Branch	647	590	-2.9%	559	-5.2%
5	Agribank Viet Tri Branch	5.125	5,689	11.0%	6,446	13.3%
6	BIDV Viet Tri Branch	1,426	1,686	18.2%	1.525	-9.5%
7	MB Viet Tri branch	1.002	876	-12.6%	822	-6.2%

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