Credit Investment at Bidv Son Tay in the period 2012-2014

This has increased dramatically to 19.2% in 2014. This shift in the capital mobilization structure of Son Tay branch is consistent with the shifting trend of BIDV system.

Structure by mobilized currency : In the total mobilized capital of the branch, mobilization in domestic currency (VND) accounts for the majority, foreign currency accounts for a very small proportion. Looking at the above structure, we see that the proportion of foreign currency tends to decrease, this is due to low interest rates on foreign currency deposits. Moreover, in recent years, with strict foreign exchange management policies, the exchange rates of USD/VND and EUR/VND are relatively stable, so people tend to transfer foreign currency to VND for savings.

Thus, in the period 2012 - 2014, capital mobilization activities

The bank has actively contributed to the overall capital balance. This result is due to the flexible implementation of management solutions as well as the continuous and synchronous deployment of capital mobilization products for individual customers at the branch.

2.3.1.2 Capital use activities (mainly lending)

Along with capital mobilization, lending plays a decisive role in the bank's business operations. Son Tay Branch always strives to control hot credit growth, proactively invest in credit and grow reasonably, along with improving quality, reviewing, screening, selecting effective business customers, healthy financial situation, ensuring credit conditions, consumer loans to disperse risks... Conduct debt classification, identify potentially risky items to recover during the year. In general, the branch's credit work has improved but still faces certain difficulties. Changes in policy mechanisms, price fluctuations, businesses' hesitation when borrowing capital,... are issues in that difficulty. In that situation, the branch always pays attention to customer care, maintains incentives for traditional customers and customers

loans with large value, ... shows that credit growth is not massive but steady. Retail credit balance as of December 31, 2012 reached 360 billion VND, a growth rate of 20.32%. This is a good number exceeding the expected plan and by the end of 2014, personal credit increased by 166 billion VND, accounting for 10.3% of the total credit.

179% while corporate credit did not increase but decreased, proving that retail credit was on the right track and found its market. BIDV Son Tay is one of three branches with the highest retail credit growth rate in Hanoi area and is one of seven branches in Hanoi area.

Table 2.3: Credit investment at BIDV Son Tay in the period 2012-2014

Unit: Billion VND

INDICATORS

2012		2013				2014
Balance	Proportion (%)	Balance	Proportion (%)	Compared to 2012		Balance	Proportion (%)	Compared to 2013
Balance	Proportion (%)	Balance	Proportion (%)	Absolute	Rate (%)	Balance	Proportion (%)	Absolute	Rate (%)
Individual	360	20.32	449	25.66	89	24	526	29.2	77	17.2
Business	1,412	79.68	1,308	74.44	(104)	(7.4)	1,274	70.8	(34)	(2.6)
Total outstanding debt	1,772	100	1,757	100	(15)	(0.9)	1,800	100	43	2.5

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(Source: credit performance report of BIDV Son Tay from 2012 to 2014)

According to Table 2.3, we can see that lending to businesses has a decreasing trend. The specific data are as follows: In 2012, outstanding loans to businesses reached 1,412 billion VND, accounting for 79.68%. By 2013, businesses borrowed less than the previous year, the outstanding loans reached 1,308 billion VND, accounting for only 74.44%. By 2014, the amount of loans from businesses continued to decrease slightly to only 1,274 billion VND and the proportion had dropped to 70.8%, because at that time, the large fluctuations in capital mobilization interest rates made it impossible for many small and medium enterprises to access loans.

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because the interest rate is pushed up to too high a level. Moreover, the difficult economic situation and high inflation have slowed down the consumption of goods, making it difficult for many businesses to have a stable source of income, making it difficult to pay interest if they borrow from banks. Meanwhile, outstanding loans to individuals have fluctuated a lot in the period of 2012 - 2014 and tend to increase. In 2012, the loan amount was 360 billion VND due to the Government and the State Bank's 2012 resolution of capital mobilization and lending interest rates, which helped many individuals access loans at lower costs than in 2011. In addition, the signs of economic recovery, improved people's lives, and increased salaries of staff have boosted consumer spending such as buying houses, especially buying apartments because the current price of apartments has decreased significantly compared to the previous hot times, from more than 20 million VND/m2 to only 12 - 13 million VND/m2. The situation became more positive when in 2013, the outstanding loans to individuals reached 449 billion VND and in 2014 it was 526 billion VND. This shows that retail credit at BIDV Son Tay has made significant progress. In addition, the credit structure of Son Tay branch also shifted positively by term and product.

Table 2.4: Personal loan balance and loan balance structure

Unit: Billion VND

Target

2012	2013	2014
Total outstanding personal loans	360	449	526
1. Outstanding debt by term
-Short term	252	250.45	270.31
Proportion of total outstanding debt	70.21	55.78	51.39
- Medium and long term	108	1951.54	255.69
Proportion of total outstanding debt	29.79	44.22	48.61
2.By loan product	360	499	526
- Housing support loans	61.74	127.74	205.56
Proportion of total outstanding debt	17.15	28.45	39.08
- Car loans	12.13	15.17	11.57
Proportion of total outstanding debt	3.37	3.38	2.20
-Business Loans	249	272.76	266
Proportion of total outstanding debt	69.18	60.75	50.57
- Mortgage loans	17.1	5.2	11.68
Proportion of total outstanding debt	4.75	1.16	2.22
- Unsecured loans	3.74	5.34	7.73
Proportion of total outstanding debt	1.04	1.19	1.47
- Overdraft loan	4.14	4.98	4.31
Proportion of total outstanding debt	1.15	1.11	0.82
- Visa	3.49	3.90	6
Proportion of total outstanding debt	0.97	0.87	1.14
Loan for employees	8.57	6.69	13.15
- Proportion in total outstanding debt	2.38	1.49	2.50

(Source: BIDV Son Tay Credit Management Department)

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The table above shows that the proportion of short-term retail credit always accounts for over 50% of total retail debt. However, this proportion has gradually decreased over the years until 2014, when short-term, medium-term and long-term loans were approximately the same. This is because BIDV Son Tay branch promoted personal loans for households for production and business loans, loans for buying and repairing houses. Other retail credit products such as car loans, loans against valuable papers, loans for officers and employees... account for a lower proportion. In addition to the above products, BIDV also has other products such as: Loans for studying abroad, loans for advance payment for selling securities... however, BIDV Son Tay has not yet developed these products.

2.3.1.3 Other products and services

The branch's retail service activities have developed quite well in recent times. As of December 31, 2014, net income from retail banking services was 3.5 billion (19.02% of total net service income), focusing mainly on payment services and card services.

Table 2.5: Net income from card services in 2014

Unit: VND

STT

Service	Amount	Proportion (%)
1	BSMS	468,036,000	13:30
2	Card	807,186,121	22.95
3	WU	79,606,580	2.26
4	Insurance	21,570,794	0.61
5	Fund	577,467,445	16.42
6	Pay	1,163,829,637	33.08
7	Other	400,180,764	11.38
	Total	3,517,877,341	100.00

(Source: Retail business results report - Customer Relations Department )

Payment services: With modern technology, fast transaction processing speed, attentive service attitude of transaction staff, domestic payment services are the strengths of BIDV Son Tay that no other bank in the area can match. This has contributed to attracting customers to transfer money, bringing in a large source of revenue for the branch. In 2014, net revenue from retail payment services was 1,163 billion VND, accounting for 33.08% of total net revenue from retail services. However, according to some customers, BIDV Son Tay's payment service fees compared to other banks in the area are quite high (domestic money transfer fee is 0.07%, minimum 25,000 VND; money transfer within the BIDV system is 0.05%, minimum 20,000 VND), so to dominate the market and improve competitiveness between banks in the coming time, the branch needs to consider reducing this money transfer fee rate. By reducing this fee rate, in the short term, the total branch payment service fees may decrease, but in the long term, it will contribute to increasing payment service fees.

BSMS Service: BSMS service has been deployed for a long time and has brought quite good results in recent years. In 2014, net revenue from BSMS service was 468 million, an increase of 168 million compared to 2013; the number of customers registering for this service was 7,233 contracts, accounting for 38% of customers with payment accounts at BIDV Son Tay. Thus, BSMS service still has a lot of market to develop if the branch has introduction and marketing policies.

Internet Banking, Mobile Banking (IBMB) service: Although newly deployed, with the promotion, this service has attracted many customers to participate and use, by the end of 2014, there were 419 contracts exceeding the plan by 11%. IBMB product with many outstanding features and utilities is a potential product that the branch focuses on developing in the coming time.

Bill payment service: Recently, the branch has implemented a program to pay electricity bills for customers in the area. This is a service that is quite suitable for the actual needs of customers and initially achieved 350 contracts. However, because this product was implemented after other banks

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other in the area, so it has less competitive advantage. In 2014, the branch only completed 30.6%. Besides implementing electricity bill payment, the bill payment service also brings many other benefits such as paying for airline tickets.

Fly Jestar, Air Mekong, top up VIETPAY, shop online, pay off debt

Viettel... but due to low demand in the area and poor advertising and marketing, these services are underdeveloped.

Western Union Service: BIDV Son Tay's operating area has many people working abroad, and many Lao and Cambodian students studying abroad, so the source of remittances is quite large. Understanding that reality, BIDV Son Tay has improved its marketing and transaction style, ensuring that WU transactions are carried out quickly in accordance with WU's regulations, not exceeding 10 minutes. This has contributed to attracting customers, bringing in service fee revenue of 79 million. In addition to collecting service fees, this is also a channel to attract foreign currency deposits transferred to the branch. However, compared to the potential, this service activity of the branch is still not really good, the revenue from this service is still small.

Insurance services: The implementation of BIC insurance products has not been thoroughly implemented. Cross-selling of BIC products on the Bancas channel has not been done well, so insurance sales are not high, the insurance premium commission in 2014 only reached 21.5 million, accounting for a very small proportion.

2.3.1.4 Business performance results of BIDV Son Tay branch

Table 2.6: Business performance results

Unit: Billion VND

Target

Year 2012	2013			2014
Balance	Balance	Increase, decrease compared to 2012		Balance	Increase, decrease compared to 2013
Balance	Balance	+/-	%	Balance	+/-	%
1. Income difference spend	61.5	54.2	-27.3	-33.5	55.6	+1.4	+2.58
2. Excerpt from DPRR	31.5	22.7	-8.8	-27.9	18.6	-4.1	-18.6
3. Pre-tax profit tax	30	31.5	+1.5	+5.0	37	+6	+19.0

Thus, the business results of the Son Tay branch of the Investment and Development Bank have increased over the years. The pre-tax profit in 2013 was 31.5 billion VND, an increase of 1.5 billion VND, an increase of 5%, but in 2014 it increased by 6 billion VND, an increase of 19% compared to 2013. Over the past 3 years, the Son Tay branch of the Investment and Development Bank has had a fairly stable growth, although in recent years, the economy has encountered many difficulties. To achieve such results, the Son Tay branch of the Investment and Development Bank has promoted the development of products as well as payment services, card services, etc., which have developed and a series of technology applications have been applied to catch up and integrate with domestic and international banks. Son Tay Branch Investment and Development Bank increases investment in modern equipment, upgrades infrastructure, trains and retrains staff. In addition, the bank also implements many solutions to stabilize and promote capital sources such as increasing marketing, designing attractive capital mobilization products, innovating transaction style... Every year, the bank sets its own targets to do

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