Future economic benefits from the use of this trademark are recognized or established by law (if the License Contract is registered at the Intellectual Property Office).
Third, there is a future economic benefit, because the future economic benefit that this trademark brings to that business can increase revenue or other benefits arising from the use of this trademark.
Contributing capital with the value of intellectual property rights has become a common practice in the world. The Law on Foreign Investment in Vietnam allows foreign investors to contribute capital with this intangible asset, in which case the transferor is entitled to share profits according to the capital contribution ratio without receiving the transfer price, and the transferee is entitled to depreciate this intangible asset. Regarding the value of the right to use a trademark, when the transferee has reasonably valued it as an asset, the transferor is allowed to record a larger difference between the asset value due to revaluation when contributing capital compared to the book value, which is accounted for in other income according to Accounting Standards and Circular 23/2005/TT-BTC. However, this difference is not included in taxable income for calculating corporate income tax according to Official Letter No. 3041/TCT/CS of the General Department of Taxation.
Thus, there is still no consensus on whether or not a trademark is recognized as an asset of a business, so the term “brand” is even more distant in legal documents. Some documents have mentioned some contents of a brand but do not recognize the brand as an asset of a business - not recognized and not valued.
In addition, in the legal documents regulating the conversion of state-owned enterprises into joint stock companies, there are a number of documents with some contents related to brand valuation of state-owned enterprises:
- Decree 187/2004/ND-CP on converting state-owned enterprises into joint stock companies, has a content referring to brand asset valuation in Article 17 as follows: "The value of business advantages of an enterprise is determined
on the basis of the average profit margin after corporate income tax on state capital at the enterprise in the 3 consecutive years before equitization compared to the interest rate of 10-year government bonds at the most recent time multiplied by the value of state capital at the enterprise at the time of valuation" . Circular 126/2004/TT-BTC of the Ministry of Finance provides more specific guidance:
Business advantage value
=
of business
career
Value of state capital
according to the accounting books (accounting at the time)
valuation point
Average after-tax profit margin on state capital for 3 years prior to the time of determining enterprise value
Interest rate on government bonds with terms of 10 years or more
- up at the time ) closest to the time of price determination
corporate governance
In there:
After-tax profit margin on state capital. Average of 3 previous years = time of price determination
corporate governance
Average after-tax profit of 3 consecutive years prior to the time of determining enterprise value
State capital according to the average accounting books of 3 consecutive years prior to the time of determining the enterprise value
X 100%
"If a business has a brand value that is accepted by the market, then it is determined based on the market."
This Decree has suggested regulations that create a basis for calculating the correct and sufficient value of state-owned enterprises at the time of equitization, confirming the existence of intangible values of enterprises, including brands. However, the basis for determining brand value is still unclear, not specific and not feasible in recording brand value.
- Circular No. 146/2007/TT-BTC dated December 16, 2007 of the Ministry of Finance guiding the implementation of a number of financial issues when converting 100% state-owned enterprises into joint stock companies stipulates how to determine the commercial value of enterprises.
Brand value (including: trademarks, trade names) is determined based on actual costs for the invention, construction and protection of the enterprise's trademarks and trade names in the 10 years prior to the time of determining the enterprise's value or from the date of establishment for enterprises with less than 10 years of operation (including domestic and foreign advertising and propaganda costs to promote and introduce products and companies; website construction...)
Thus, the legal document system of Vietnam up to this point does not have an official definition of a brand. Legal documents mainly regulate some contents related to brands such as intellectual property, trademarks, geographical indications, trade names but do not directly mention brands in general and brand valuation in particular [10, 17, 18, 19, 20, 23, 24,
25, 27, 28, 29, 30, 31]
3.2 Current status of Vietnam's commercial banking system
3.2.1 Characteristics of Vietnamese commercial banks
The Vietnamese banking system has gone through a history of more than 60 years with many stages. In 1986 - the year of innovation in the organizational model of the Vietnamese banking system, the operating mechanism of the banking system was officially changed from "one level" to "two levels", accordingly, the State Bank performs the task of state management of currency, credit, payment, management and implementation of monetary policy..., while currency business, credit, banking services are carried out by credit institutions, mainly commercial banks. The Vietnamese commercial banking system has continuously developed in terms of scale such as charter capital, branch network, staff, quality of operations and business efficiency.
The Vietnamese commercial banking network has now developed strongly, covering all districts and counties, with some banks even having networks down to the commune and inter-commune levels. The Vietnamese commercial banking system currently includes:
including: state-owned commercial banks, joint stock commercial banks, foreign bank branches, joint venture banks and 100% foreign-owned commercial banks.
The total charter capital of the current Vietnamese commercial banking system is estimated at about 213 trillion VND, of which the structure is shown in the table below.
Chart 3.1: Charter capital of credit institutions as of December 30, 2012 (unit: billion VND) [16]
The Vietnamese commercial banking system has made important contributions to the stability and economic growth of our country over the past years. With many relatively diverse forms of capital mobilization, in the 1990s, the Vietnamese commercial banking system mobilized about 600 trillion VND, and up to now it has reached 3.2 million billion VND, from which banks lend to all economic sectors with outstanding loans up to now being 2.8 million billion VND. The commercial banking system is the main investment channel for key national programs, thereby contributing to promoting economic restructuring, implementing industrialization and modernization of the country, controlling inflation, promoting continuous economic growth at high speed, contributing to creating jobs for society, contributing to
poverty reduction part. …
The business performance of Vietnamese commercial banks generally has positive changes, with quite high profit growth.
Chart 3.2: Return on total assets (ROA) in 2012 (unit: %) [16]
Chart 3.3: Return on equity (ROE) in 2013 (unit: %) [16]
However, besides the positive aspects, the Vietnamese commercial banking system still has many weaknesses and shortcomings:
- About competitiveness
The commercial banking system cannot develop sustainably and have high competitiveness in the context of low economic competitiveness. Regarding financial development indicators, in the global competitiveness rankings
In 2012, announced by the World Economic Forum (WEF), Vietnam's ranking dropped exactly 10 places from 65th in 2011 to 75th.
Compared to other countries in the region, the scale of Vietnamese commercial banks is still small, total assets are low, and ROA and ROE indicators are very modest if based on evaluation criteria according to international practices.
Table 3.1: Comparison of Vietnam's banking sector with other countries in the region in 2012 [16]
Target
VN | Malaysia | Indonesia | Philippines | |
Total assets (billion USD) | 127.66 | 386.25 | 213.98 | 119.52 |
Total outstanding credit (billion USD) | 73.10 | 208.85 | 119.42 | 61.59 |
ROE (%) | 9.7 | 18.5 | 21.94* | 6.91 |
ROA (%) | 1.0 | 1.5 | 2.08* | 0.77 |
NPLs (%) | 3.5 | 2.2 | 3.8 | 4.51 |
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![Pre-tax Profit of Bidv Tien Giang in the Period 2011-2015
zt2i3t4l5ee
zt2a3gsnon-credit services, joint stock commercial bank
zt2a3ge
zc2o3n4t5e6n7ts
At that time, the Branch had to set aside a provision for credit risks, which reduced the Branchs income.
Chart 2.2. Pre-tax profit of BIDV Tien Giang in the period 2011-2015
Unit: Billion VND
140
120
100
80
60
40
20
0
63.3
80.34
89.29
110.08
131.99
2011 2012 2013 2014 2015
Profit before tax
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
However, through chart 2.2, it can be seen that BIDV Tien Giangs profit is still increasing continuously, and its operating efficiency is currently leaking. This is a contribution of non-credit services, and this service segment will be increasingly focused on growth by BIDV Tien Giang to ensure the highest profit safety because credit activities have many potential risks. At the same time, focusing on developing non-credit services is consistent with one of the contents of restructuring the financial activities of credit institutions in the project Restructuring the system of credit institutions in the period 2011-2015 approved by the Prime Minister in Decision No. 254/QD-TTg dated March 1, 2012 [14]: Gradually shifting the business model of commercial banks towards reducing dependence on credit activities and increasing income from non-credit services.
2.2. Current status of non-credit service development at BIDV Tien Giang.
2.2.1. BIDV Tien Giang has deployed the development of non-credit services in recent times.
Along with the development of the Head Office, BIDV Tien Giangs products and services are constantly improved and deployed in a diverse manner to ensure provision for many different customer groups in the area: individual customers, corporate customers, and financial institutions. Typical services are as follows: Payment services, treasury services, guarantee services, card services, trade finance, other services: Western Union, insurance commissions, consulting services, foreign exchange derivatives trading, e-banking services,...
2.2.1.1. Payment services:
In accordance with the Prime Ministers Project to promote non-cash payments in Vietnam [15], banks in Tien Giang province have continuously developed payment services to reduce customers cash usage habits through card services and electronic banking services such as: salary payment through accounts, focusing on developing card acceptance points, developing multi-purpose cards, paying social insurance by transfer, paying bills through banks, etc.
Chart 2.3. Net income from payment services in the period 2011-2015
Unit: Million VND
6000
5000
4000
3000
2000
1000
0
3922 4065
4720 5084 5324
2011 2012 2013 2014 2015
Net income from payment services
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
Along with the technological development of the entire system, BIDV Tien Giang has a payment system with a fairly stable transaction processing speed, bringing many conveniences to customers. The results of observing chart 2.3 show that the income from payment services that the Branch has achieved has grown over the years but the speed is not high and the products are not outstanding compared to other banks. Domestic payment products such as: Online bill payment, electricity bills, water bills, insurance premiums, cable TV bills, telecommunications fees, airline tickets, etc. bring many conveniences to customers. Regarding international payment, this is an indispensable activity for foreign economic activities, BIDV Tien Giang is providing international payment methods for small enterprises producing agriculture, aquatic food and seafood that have credit relationships with banks in industrial parks in Tien Giang province such as: money transfer, collection, L/C payment.
2.2.1.2. Treasury services:
BIDV Tien Giang always focuses on ensuring treasury safety and currency security, always complies with legal regulations, and minimizes risks in operations such as: counting and collecting money from customers, receiving and delivering internal transactions, collecting from the State Bank (SBV) or other credit institutions, receiving ATM funds, bundling money, etc. BIDV Tien Giangs treasury service management department is always fully equipped with modern machinery and equipment such as: money transport vehicles, fire prevention tools, money counters, money detectors, magnifying glasses, etc. to ensure absolute safety in treasury operations, immediately identifying real and fake money and other risks that may affect people and assets of the bank and customers. In addition, implementing regulation 2480/QC dated October 28, 2008 between the State Bank of Tien Giang province and the Provincial Police on coordination in the fight against counterfeit money, in the 3-year review of implementation, BIDV Tien Giang discovered, seized and submitted to the State Bank of Tien Giang province 475 banknotes of various denominations and was commended by the Provincial Police and the State Bank of Tien Giang province [17].
Chart 2.4. Net income from treasury services in the period 2011-2015
Unit: Million VND
350
300
250
200
150
100
50
0
105 122
309 289 279
2011 2012 2013 2014 2015
Net income from treasury services
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
However, as shown in Figure 2.4, income from treasury operations is not high and fluctuates. Specifically, in the period 2011-2013, net income increased and increased most sharply in 2013, then in the period 2013-2015, there was a downward trend. This fluctuation is due to the fact that fees collected from treasury services are often very low and can even be waived to attract customers to use other services.
2.2.1.3. Guarantee and trade finance services:
BIDV Tien Giang, thanks to the advantages of the province and the favorable location of the Branch, has continuously focused on developing income from guarantee services and trade finance.
Chart 2.5. Net income from guarantee and trade finance services in the period 2011-2015
Unit: Million VND
14000
12000
10000
8000
6000
4000
2000
0
5193 5695
2742 3420
8889
3992
11604 12206
5143 5312
2011 2012 2013 2014 2015
Net income from guarantee services Net income from Trade Finance
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
Through chart 2.5, we can see that BIDV Tien Giangs income from guarantee services and trade finance has grown over the years. The reason is: Among BIDV Tien Giangs corporate customers, the construction industry is the industry with the highest proportion of customers after the trading industry, this is a group of customers with potential to develop guarantee services. The second group of customers is corporate customers in the fields of agricultural production, livestock and seafood processing with high import and export turnover in the area.
are the target of trade finance development. In addition, BIDV Tien Giang also focuses on continuously developing these customer groups to increase revenue for many other products and services in the future.
2.2.1.4. Card and POS services:
As a service that BIDV Tien Giang has recently developed strongly, it can be said that this is a very potential market and has the ability to develop even more strongly in the future. Card services with outstanding advantages such as fast payment time, wide payment range, quite safe, effective and suitable for the integration trend and the Project to promote non-cash payments in Vietnam. Cards have become a modern and popular payment tool. BIDV Tien Giang early identified that developing card services is to expand the market to people in society, create capital mobilized from card-opened accounts, contribute to diversifying banking activities, enhance the image of the bank, bring the BIDV Tien Giang brand to people as quickly and easily as possible. BIDV Tien Giang is currently providing card types such as: credit cards (BIDV MasterCard Platinum, BIDV Visa Gold Precious, BIDV Visa Manchester United, BIDV Visa Classic), international debit cards (BIDV Ready Card, BIDV Manu Debit Card), domestic debit cards (BIDV Harmony Card, BIDV eTrans Card, BIDV Moving Card, BIDV-Lingo Co-branded Card, BIDV-Co.opmart Co-branded Card). These cards can be paid via POS/EDC or on the ATM system. In addition, with debit cards, customers can not only withdraw money via ATMs but also perform utilities such as mobile top-up, online payment, money transfer,... through electronic banking services.
In order to attract customers with card services, BIDV Tien Giang has continuously increased the installation of ATMs. As of December 31, 2015, BIDV Tien Giang has 23 ATMs combined with 7 ATMs in the same system of BIDV My Tho, so the number of ATMs is quite large, especially in the center of My Tho City, but is not yet fully present in the districts. Basic services on ATMs such as withdrawing money, checking balances, printing short statements,... BIDV ATMs accept cards from banks in the system.
Banknetvn and Smartlink, cards branded by international card organizations Union Pay (CUP), VISA, MasterCard and cards of banks in the Asian Payment Network. From here, cardholders can make bill payments for themselves or others at ATMs, by simply entering the subscriber number or customer code, booking code that service providers notify and make bill payments.
Chart 2.6. Net income from card services in the period 2011-2015
Unit: Million VND
3500
3000
2500
2000
1500
1000
500
0
687
1023
1547
2267
3104
2011 2012 2013 2014 2015
Net income from card services
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
Through chart 2.6, it can be seen that BIDV Tien Giangs card service income is constantly growing because the Branch focuses on developing businesses operating in industrial parks, which are the source of customers for salary payment products, ATMs, BSMS. Specifically, there are companies such as Freeview, Quang Viet, Dai Thanh, which are businesses with a large number of card openings at the Branch, contributing to the increase in card service fees [25].
Table 2.6. Number of ATMs and POS machines in 2015 of some banks in Tien Giang area.
Unit: Machine
STT
Bank name
Number of ATMs
Cumulative number of ATM cards
POS machine
1
BIDV Tien Giang
23
97,095
22
2
BIDV My Tho
7
21,325
0
3
Agribank Tien Giang
29
115,743
77
4
Vietinbank Tien Giang
16
100,052
54
5
Dong A Tien Giang
26
97,536
11
6
Sacombank Tien Giang
24
88,513
27
7
Vietcombank Tien Giang
15
61,607
96
8
Vietinbank - Tay Tien Giang Branch
6
46,042
38
(Source: 2015 Banking Activity Data Report of the General and Internal Control Department of the Provincial State Bank [21])
Through table 2.6, the author finds that the number of ATMs of BIDV Tien Giang is not much, ranking fourth after Agribank Tien Giang, Dong A Tien Giang, Sacombank Tien Giang. The number of POS machines of BIDV Tien Giang is very small, only higher than Dong A Tien Giang and BIDV My Tho in the initial stages of merging the BIDV system. Besides, BIDV Tien Giang has a high number of cards increasing over the years (table 2.7) but the cumulative number of cards issued up to December 31, 2015 is still relatively low compared to Agribank, Vietcombank, Dong A (table 2.6).
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div.maincontent .s40 { color: black; font-family:Times New Roman, serif; font-style: normal; fo](https://tailieuthamkhao.com/uploads/2022/06/06/dich-vu-phi-tin-dung-tai-ngan-hang-thuong-mai-co-phan-dau-tu-va-phat-8-1-120x90.png)
![Pre-tax Profit of Bidv Tien Giang in the Period 2011-2015
zt2i3t4l5ee
zt2a3gsnon-credit services, joint stock commercial bank
zt2a3ge
zc2o3n4t5e6n7ts
At that time, the Branch had to set aside a provision for credit risks, which reduced the Branchs income.
Chart 2.2. Pre-tax profit of BIDV Tien Giang in the period 2011-2015
Unit: Billion VND
140
120
100
80
60
40
20
0
63.3
80.34
89.29
110.08
131.99
2011 2012 2013 2014 2015
Profit before tax
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
However, through chart 2.2, it can be seen that BIDV Tien Giangs profit is still increasing continuously, and its operating efficiency is currently leaking. This is a contribution of non-credit services, and this service segment will be increasingly focused on growth by BIDV Tien Giang to ensure the highest profit safety because credit activities have many potential risks. At the same time, focusing on developing non-credit services is consistent with one of the contents of restructuring the financial activities of credit institutions in the project Restructuring the system of credit institutions in the period 2011-2015 approved by the Prime Minister in Decision No. 254/QD-TTg dated March 1, 2012 [14]: Gradually shifting the business model of commercial banks towards reducing dependence on credit activities and increasing income from non-credit services.
2.2. Current status of non-credit service development at BIDV Tien Giang.
2.2.1. BIDV Tien Giang has deployed the development of non-credit services in recent times.
Along with the development of the Head Office, BIDV Tien Giangs products and services are constantly improved and deployed in a diverse manner to ensure provision for many different customer groups in the area: individual customers, corporate customers, and financial institutions. Typical services are as follows: Payment services, treasury services, guarantee services, card services, trade finance, other services: Western Union, insurance commissions, consulting services, foreign exchange derivatives trading, e-banking services,...
2.2.1.1. Payment services:
In accordance with the Prime Ministers Project to promote non-cash payments in Vietnam [15], banks in Tien Giang province have continuously developed payment services to reduce customers cash usage habits through card services and electronic banking services such as: salary payment through accounts, focusing on developing card acceptance points, developing multi-purpose cards, paying social insurance by transfer, paying bills through banks, etc.
Chart 2.3. Net income from payment services in the period 2011-2015
Unit: Million VND
6000
5000
4000
3000
2000
1000
0
3922 4065
4720 5084 5324
2011 2012 2013 2014 2015
Net income from payment services
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
Along with the technological development of the entire system, BIDV Tien Giang has a payment system with a fairly stable transaction processing speed, bringing many conveniences to customers. The results of observing chart 2.3 show that the income from payment services that the Branch has achieved has grown over the years but the speed is not high and the products are not outstanding compared to other banks. Domestic payment products such as: Online bill payment, electricity bills, water bills, insurance premiums, cable TV bills, telecommunications fees, airline tickets, etc. bring many conveniences to customers. Regarding international payment, this is an indispensable activity for foreign economic activities, BIDV Tien Giang is providing international payment methods for small enterprises producing agriculture, aquatic food and seafood that have credit relationships with banks in industrial parks in Tien Giang province such as: money transfer, collection, L/C payment.
2.2.1.2. Treasury services:
BIDV Tien Giang always focuses on ensuring treasury safety and currency security, always complies with legal regulations, and minimizes risks in operations such as: counting and collecting money from customers, receiving and delivering internal transactions, collecting from the State Bank (SBV) or other credit institutions, receiving ATM funds, bundling money, etc. BIDV Tien Giangs treasury service management department is always fully equipped with modern machinery and equipment such as: money transport vehicles, fire prevention tools, money counters, money detectors, magnifying glasses, etc. to ensure absolute safety in treasury operations, immediately identifying real and fake money and other risks that may affect people and assets of the bank and customers. In addition, implementing regulation 2480/QC dated October 28, 2008 between the State Bank of Tien Giang province and the Provincial Police on coordination in the fight against counterfeit money, in the 3-year review of implementation, BIDV Tien Giang discovered, seized and submitted to the State Bank of Tien Giang province 475 banknotes of various denominations and was commended by the Provincial Police and the State Bank of Tien Giang province [17].
Chart 2.4. Net income from treasury services in the period 2011-2015
Unit: Million VND
350
300
250
200
150
100
50
0
105 122
309 289 279
2011 2012 2013 2014 2015
Net income from treasury services
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
However, as shown in Figure 2.4, income from treasury operations is not high and fluctuates. Specifically, in the period 2011-2013, net income increased and increased most sharply in 2013, then in the period 2013-2015, there was a downward trend. This fluctuation is due to the fact that fees collected from treasury services are often very low and can even be waived to attract customers to use other services.
2.2.1.3. Guarantee and trade finance services:
BIDV Tien Giang, thanks to the advantages of the province and the favorable location of the Branch, has continuously focused on developing income from guarantee services and trade finance.
Chart 2.5. Net income from guarantee and trade finance services in the period 2011-2015
Unit: Million VND
14000
12000
10000
8000
6000
4000
2000
0
5193 5695
2742 3420
8889
3992
11604 12206
5143 5312
2011 2012 2013 2014 2015
Net income from guarantee services Net income from Trade Finance
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
Through chart 2.5, we can see that BIDV Tien Giangs income from guarantee services and trade finance has grown over the years. The reason is: Among BIDV Tien Giangs corporate customers, the construction industry is the industry with the highest proportion of customers after the trading industry, this is a group of customers with potential to develop guarantee services. The second group of customers is corporate customers in the fields of agricultural production, livestock and seafood processing with high import and export turnover in the area.
are the target of trade finance development. In addition, BIDV Tien Giang also focuses on continuously developing these customer groups to increase revenue for many other products and services in the future.
2.2.1.4. Card and POS services:
As a service that BIDV Tien Giang has recently developed strongly, it can be said that this is a very potential market and has the ability to develop even more strongly in the future. Card services with outstanding advantages such as fast payment time, wide payment range, quite safe, effective and suitable for the integration trend and the Project to promote non-cash payments in Vietnam. Cards have become a modern and popular payment tool. BIDV Tien Giang early identified that developing card services is to expand the market to people in society, create capital mobilized from card-opened accounts, contribute to diversifying banking activities, enhance the image of the bank, bring the BIDV Tien Giang brand to people as quickly and easily as possible. BIDV Tien Giang is currently providing card types such as: credit cards (BIDV MasterCard Platinum, BIDV Visa Gold Precious, BIDV Visa Manchester United, BIDV Visa Classic), international debit cards (BIDV Ready Card, BIDV Manu Debit Card), domestic debit cards (BIDV Harmony Card, BIDV eTrans Card, BIDV Moving Card, BIDV-Lingo Co-branded Card, BIDV-Co.opmart Co-branded Card). These cards can be paid via POS/EDC or on the ATM system. In addition, with debit cards, customers can not only withdraw money via ATMs but also perform utilities such as mobile top-up, online payment, money transfer,... through electronic banking services.
In order to attract customers with card services, BIDV Tien Giang has continuously increased the installation of ATMs. As of December 31, 2015, BIDV Tien Giang has 23 ATMs combined with 7 ATMs in the same system of BIDV My Tho, so the number of ATMs is quite large, especially in the center of My Tho City, but is not yet fully present in the districts. Basic services on ATMs such as withdrawing money, checking balances, printing short statements,... BIDV ATMs accept cards from banks in the system.
Banknetvn and Smartlink, cards branded by international card organizations Union Pay (CUP), VISA, MasterCard and cards of banks in the Asian Payment Network. From here, cardholders can make bill payments for themselves or others at ATMs, by simply entering the subscriber number or customer code, booking code that service providers notify and make bill payments.
Chart 2.6. Net income from card services in the period 2011-2015
Unit: Million VND
3500
3000
2500
2000
1500
1000
500
0
687
1023
1547
2267
3104
2011 2012 2013 2014 2015
Net income from card services
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
Through chart 2.6, it can be seen that BIDV Tien Giangs card service income is constantly growing because the Branch focuses on developing businesses operating in industrial parks, which are the source of customers for salary payment products, ATMs, BSMS. Specifically, there are companies such as Freeview, Quang Viet, Dai Thanh, which are businesses with a large number of card openings at the Branch, contributing to the increase in card service fees [25].
Table 2.6. Number of ATMs and POS machines in 2015 of some banks in Tien Giang area.
Unit: Machine
STT
Bank name
Number of ATMs
Cumulative number of ATM cards
POS machine
1
BIDV Tien Giang
23
97,095
22
2
BIDV My Tho
7
21,325
0
3
Agribank Tien Giang
29
115,743
77
4
Vietinbank Tien Giang
16
100,052
54
5
Dong A Tien Giang
26
97,536
11
6
Sacombank Tien Giang
24
88,513
27
7
Vietcombank Tien Giang
15
61,607
96
8
Vietinbank - Tay Tien Giang Branch
6
46,042
38
(Source: 2015 Banking Activity Data Report of the General and Internal Control Department of the Provincial State Bank [21])
Through table 2.6, the author finds that the number of ATMs of BIDV Tien Giang is not much, ranking fourth after Agribank Tien Giang, Dong A Tien Giang, Sacombank Tien Giang. The number of POS machines of BIDV Tien Giang is very small, only higher than Dong A Tien Giang and BIDV My Tho in the initial stages of merging the BIDV system. Besides, BIDV Tien Giang has a high number of cards increasing over the years (table 2.7) but the cumulative number of cards issued up to December 31, 2015 is still relatively low compared to Agribank, Vietcombank, Dong A (table 2.6).
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div.maincontent .s40 { color: black; font-family:Times New Roman, serif; font-style: normal; fo](data:image/svg+xml,%3Csvg%20xmlns=%22http://www.w3.org/2000/svg%22%20viewBox=%220%200%2075%2075%22%3E%3C/svg%3E)
Pre-tax Profit of Bidv Tien Giang in the Period 2011-2015
zt2i3t4l5ee
zt2a3gsnon-credit services, joint stock commercial bank
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zc2o3n4t5e6n7ts
At that time, the Branch had to set aside a provision for credit risks, which reduced the Branch's income.
Chart 2.2. Pre-tax profit of BIDV Tien Giang in the period 2011-2015
Unit: Billion VND
140
120
100
80
60
40
20
0
63.3
80.34
89.29
110.08
131.99
2011 2012 2013 2014 2015
Profit before tax
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
However, through chart 2.2, it can be seen that BIDV Tien Giang's profit is still increasing continuously, and its operating efficiency is currently leaking. This is a contribution of non-credit services, and this service segment will be increasingly focused on growth by BIDV Tien Giang to ensure the highest profit safety because credit activities have many potential risks. At the same time, focusing on developing non-credit services is consistent with one of the contents of restructuring the financial activities of credit institutions in the project "Restructuring the system of credit institutions in the period 2011-2015" approved by the Prime Minister in Decision No. 254/QD-TTg dated March 1, 2012 [14]: "Gradually shifting the business model of commercial banks towards reducing dependence on credit activities and increasing income from non-credit services".
2.2. Current status of non-credit service development at BIDV Tien Giang.
2.2.1. BIDV Tien Giang has deployed the development of non-credit services in recent times.
Along with the development of the Head Office, BIDV Tien Giang's products and services are constantly improved and deployed in a diverse manner to ensure provision for many different customer groups in the area: individual customers, corporate customers, and financial institutions. Typical services are as follows: Payment services, treasury services, guarantee services, card services, trade finance, other services: Western Union, insurance commissions, consulting services, foreign exchange derivatives trading, e-banking services,...
2.2.1.1. Payment services:
In accordance with the Prime Minister's Project to promote non-cash payments in Vietnam [15], banks in Tien Giang province have continuously developed payment services to reduce customers' cash usage habits through card services and electronic banking services such as: salary payment through accounts, focusing on developing card acceptance points, developing multi-purpose cards, paying social insurance by transfer, paying bills through banks, etc.
Chart 2.3. Net income from payment services in the period 2011-2015
Unit: Million VND
6000
5000
4000
3000
2000
1000
0
3922 4065
4720 5084 5324
2011 2012 2013 2014 2015
Net income from payment services
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
Along with the technological development of the entire system, BIDV Tien Giang has a payment system with a fairly stable transaction processing speed, bringing many conveniences to customers. The results of observing chart 2.3 show that the income from payment services that the Branch has achieved has grown over the years but the speed is not high and the products are not outstanding compared to other banks. Domestic payment products such as: Online bill payment, electricity bills, water bills, insurance premiums, cable TV bills, telecommunications fees, airline tickets, etc. bring many conveniences to customers. Regarding international payment, this is an indispensable activity for foreign economic activities, BIDV Tien Giang is providing international payment methods for small enterprises producing agriculture, aquatic food and seafood that have credit relationships with banks in industrial parks in Tien Giang province such as: money transfer, collection, L/C payment.
2.2.1.2. Treasury services:
BIDV Tien Giang always focuses on ensuring treasury safety and currency security, always complies with legal regulations, and minimizes risks in operations such as: counting and collecting money from customers, receiving and delivering internal transactions, collecting from the State Bank (SBV) or other credit institutions, receiving ATM funds, bundling money, etc. BIDV Tien Giang's treasury service management department is always fully equipped with modern machinery and equipment such as: money transport vehicles, fire prevention tools, money counters, money detectors, magnifying glasses, etc. to ensure absolute safety in treasury operations, immediately identifying real and fake money and other risks that may affect people and assets of the bank and customers. In addition, implementing regulation 2480/QC dated October 28, 2008 between the State Bank of Tien Giang province and the Provincial Police on coordination in the fight against counterfeit money, in the 3-year review of implementation, BIDV Tien Giang discovered, seized and submitted to the State Bank of Tien Giang province 475 banknotes of various denominations and was commended by the Provincial Police and the State Bank of Tien Giang province [17].
Chart 2.4. Net income from treasury services in the period 2011-2015
Unit: Million VND
350
300
250
200
150
100
50
0
105 122
309 289 279
2011 2012 2013 2014 2015
Net income from treasury services
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
However, as shown in Figure 2.4, income from treasury operations is not high and fluctuates. Specifically, in the period 2011-2013, net income increased and increased most sharply in 2013, then in the period 2013-2015, there was a downward trend. This fluctuation is due to the fact that fees collected from treasury services are often very low and can even be waived to attract customers to use other services.
2.2.1.3. Guarantee and trade finance services:
BIDV Tien Giang, thanks to the advantages of the province and the favorable location of the Branch, has continuously focused on developing income from guarantee services and trade finance.
Chart 2.5. Net income from guarantee and trade finance services in the period 2011-2015
Unit: Million VND
14000
12000
10000
8000
6000
4000
2000
0
5193 5695
2742 3420
8889
3992
11604 12206
5143 5312
2011 2012 2013 2014 2015
Net income from guarantee services Net income from Trade Finance
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
Through chart 2.5, we can see that BIDV Tien Giang's income from guarantee services and trade finance has grown over the years. The reason is: Among BIDV Tien Giang's corporate customers, the construction industry is the industry with the highest proportion of customers after the trading industry, this is a group of customers with potential to develop guarantee services. The second group of customers is corporate customers in the fields of agricultural production, livestock and seafood processing with high import and export turnover in the area.
are the target of trade finance development. In addition, BIDV Tien Giang also focuses on continuously developing these customer groups to increase revenue for many other products and services in the future.
2.2.1.4. Card and POS services:
As a service that BIDV Tien Giang has recently developed strongly, it can be said that this is a very potential market and has the ability to develop even more strongly in the future. Card services with outstanding advantages such as fast payment time, wide payment range, quite safe, effective and suitable for the integration trend and the Project to promote non-cash payments in Vietnam. Cards have become a modern and popular payment tool. BIDV Tien Giang early identified that developing card services is to expand the market to people in society, create capital mobilized from card-opened accounts, contribute to diversifying banking activities, enhance the image of the bank, bring the BIDV Tien Giang brand to people as quickly and easily as possible. BIDV Tien Giang is currently providing card types such as: credit cards (BIDV MasterCard Platinum, BIDV Visa Gold Precious, BIDV Visa Manchester United, BIDV Visa Classic), international debit cards (BIDV Ready Card, BIDV Manu Debit Card), domestic debit cards (BIDV Harmony Card, BIDV eTrans Card, BIDV Moving Card, BIDV-Lingo Co-branded Card, BIDV-Co.opmart Co-branded Card). These cards can be paid via POS/EDC or on the ATM system. In addition, with debit cards, customers can not only withdraw money via ATMs but also perform utilities such as mobile top-up, online payment, money transfer,... through electronic banking services.
In order to attract customers with card services, BIDV Tien Giang has continuously increased the installation of ATMs. As of December 31, 2015, BIDV Tien Giang has 23 ATMs combined with 7 ATMs in the same system of BIDV My Tho, so the number of ATMs is quite large, especially in the center of My Tho City, but is not yet fully present in the districts. Basic services on ATMs such as withdrawing money, checking balances, printing short statements,... BIDV ATMs accept cards from banks in the system.
Banknetvn and Smartlink, cards branded by international card organizations Union Pay (CUP), VISA, MasterCard and cards of banks in the Asian Payment Network. From here, cardholders can make bill payments for themselves or others at ATMs, by simply entering the subscriber number or customer code, booking code that service providers notify and make bill payments.
Chart 2.6. Net income from card services in the period 2011-2015
Unit: Million VND
3500
3000
2500
2000
1500
1000
500
0
687
1023
1547
2267
3104
2011 2012 2013 2014 2015
Net income from card services
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
Through chart 2.6, it can be seen that BIDV Tien Giang's card service income is constantly growing because the Branch focuses on developing businesses operating in industrial parks, which are the source of customers for salary payment products, ATMs, BSMS. Specifically, there are companies such as Freeview, Quang Viet, Dai Thanh, which are businesses with a large number of card openings at the Branch, contributing to the increase in card service fees [25].
Table 2.6. Number of ATMs and POS machines in 2015 of some banks in Tien Giang area.
Unit: Machine
STT
Bank name
Number of ATMs
Cumulative number of ATM cards
POS machine
1
BIDV Tien Giang
23
97,095
22
2
BIDV My Tho
7
21,325
0
3
Agribank Tien Giang
29
115,743
77
4
Vietinbank Tien Giang
16
100,052
54
5
Dong A Tien Giang
26
97,536
11
6
Sacombank Tien Giang
24
88,513
27
7
Vietcombank Tien Giang
15
61,607
96
8
Vietinbank - Tay Tien Giang Branch
6
46,042
38
(Source: 2015 Banking Activity Data Report of the General and Internal Control Department of the Provincial State Bank [21])
Through table 2.6, the author finds that the number of ATMs of BIDV Tien Giang is not much, ranking fourth after Agribank Tien Giang, Dong A Tien Giang, Sacombank Tien Giang. The number of POS machines of BIDV Tien Giang is very small, only higher than Dong A Tien Giang and BIDV My Tho in the initial stages of merging the BIDV system. Besides, BIDV Tien Giang has a high number of cards increasing over the years (table 2.7) but the cumulative number of cards issued up to December 31, 2015 is still relatively low compared to Agribank, Vietcombank, Dong A (table 2.6).
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Current status of investment activities in bond trading of Vietnam Commercial Bank -
Current Status of Credit Risk Management for Individual Customers at Vietnam Technological and Commercial Joint Stock Bank - Thai Nguyen Branch -
Current Status of Lending Scale of Vietnam Technological and Commercial Joint Stock Bank -
Current Status of Loan Quality for Small and Medium Enterprises at Joint Stock Commercial Bank for Foreign Trade of Vietnam, Hanoi Branch (Vietcombank Hanoi)
(Source: Overall strategy for developing Vietnam's service industry to 2020 and vision to 2025, page 264 Note: *: pre-tax profit)
Within the industry, the presence of foreign banks has increased competitive pressure. Foreign commercial banks not only compete with domestic commercial banks in providing modern financial services, but also compete in traditional products such as credit, payment, deposit taking, etc. Although domestic banks have a comparative advantage in terms of network and traditional customers thanks to their historical role, they are inferior in terms of competitiveness compared to foreign banks in terms of the level of modernization of banking technology, human resources, operational management level and risk management issues. Reality shows that a competitive commercial bank needs: Creativity; Ability to allocate and reallocate asset portfolio and capital; Ability to improve productivity and resource management; Payment capacity, capital and liquidity; and strong owners. That means, to improve competitiveness, capital increase is very necessary but not yet
enough but need to create capacity and motivation to compete and the very important factor is customer evaluation.
- Second, about product catalog and quality
The services that Vietnamese commercial banks are currently providing, although diversified, are still monotonous, mainly traditional products. Modern banking services have not developed or have developed but are synchronous. Many services have not developed commensurate with their potential, especially retail services, services for high-end customers, asset management services, financial consulting and support, monetary intermediary, financial instrument exchange, financial information provision and conversion services. Investment banking activities and electronic distribution channels have grown rapidly but their convenience and economic efficiency are not high. Monetary activities, interest rates, exchange rate tools, foreign exchange derivatives and investment tools are still in the early stages. The banking product market is still developing below its potential, and competition models are still simple. The level of meeting social needs for banking services is not high due to limitations in quantity, quality and accessibility. Competition in service quality, technology and brand is not yet popular, so it is easy to lead to instability in the service market, thus easily creating price competition (interest rates) to attract customers. If banking services are not strongly improved, service development is not oriented towards customer needs, and consumers' thoughts are not really taken into account, the domestic banking system will find it difficult to maintain its market share. At this point, the advantages of tradition and network will find it difficult to help Vietnamese commercial banks develop new services and non-credit services - services that require technology and expertise of bank staff. (HSBC Vietnam's report shows that revenue from international payments accounts for 1/3 of the bank's total revenue. 3 years ago, Vietnamese corporate customers accounted for only 3%, but now they have reached 50% of HSBC's total customers. It is predicted that by 2012, Vietnamese corporate customers will increase to 70%) .
- Third, on management capacity and banking technology
Up to now, although risk management for each commercial bank has been focused on, it has not really become an effective tool for management and operation. The situation of borrowing with fluctuating interest rates in the interbank money market in the past time ultimately stems from the fact that banks have not managed well the liquidity of both capital and assets. In addition, the technology factor can help reduce 76% of the bank's operating costs, but to have a modern technology platform, it requires large investments, which is very difficult for Vietnamese commercial banks. Due to limited capital and financial capacity, some banks find it difficult to implement, so operational management as well as banking technology management is a big challenge for the Vietnamese commercial banking system.
- Traditional market is getting narrower
With a young financial market with a large number of banks, each market segment has fierce competition to maintain market share. Most Vietnamese commercial banks retain customers with interest rates and promotions without improving the quality, convenience of services, technological advantages and management skills, and do not really have a strategy for customer trust. Especially with some small, newly established banks that have not had the conditions to affirm their reputation with customers, have not had the conditions to develop non-credit services, only focusing on credit activities, strongly developing consumer loans, securities and real estate loans with negotiated interest rates, so when lacking capital, they "collude" with deposit interest rates, causing lending interest rates to increase, creating additional burdens on output interest rates, risks from many aspects, and increasing bad debt.
3.2.2 Valuation of commercial bank brands in Vietnam
Although brand building and development has been of interest and focus to Vietnamese commercial banks in recent years, valuation
Commercial bank branding is still an open issue. State legal documents in the banking sector have not mentioned commercial bank branding in general and commercial bank brand valuation in particular.
The role of brand in banking activities is undeniable, but how much it means in terms of financial value is still a difficult question to answer, especially in important cases such as the equitization of state-owned commercial banks and the trend of mergers between banks, determining brand value is even more meaningful.
Failure to calculate the financial value of a bank brand has distorted the results of bank valuation. This can be considered in each specific case as follows:
Firstly, the valuation reports of Vietnamese state-owned commercial banks for IPOs do not include the value of the brand when calculating the value of the bank. In fact, in recent times, the issue of enterprise valuation in the process of preparing for equitization is a complicated and costly issue. Because determining the value of a bank is also calculated like determining the value of an enterprise, which is the process of determining the actual value of the enterprise at the time of valuation. Decree No. 187/2004/ND-CP dated November 16, 2004 of the Government stipulates: "The actual value of an equitized enterprise is the value of all existing assets of the enterprise at the time of equitization, taking into account the profitability of the enterprise that is acceptable to both buyers and sellers of shares". Thus, the bases for determining the actual value of a bank include: Data in the bank's accounting books at the time of equitization, quantity and quality of assets according to actual classified inventory, market value of assets at the time of equitization including land use rights value, business advantages, reputation, exclusivity of products and services, brand, profitability...
However, it is very difficult to value a bank's business advantage. According to state regulations, a bank's business advantage is similar to a business advantage.
The value of a business includes geographical location, brand value and development potential. According to current regulations in Circular No. 126/2004/TT-BTC, if the method of determining the value of a business by the asset method, the value of the business advantage of the business is only suitable for normal production and business enterprises and is not really suitable for state-owned commercial banks because in addition to geographical location and high development potential, state-owned commercial banks have very large brand value. And determining how much a bank's brand is worth is very difficult. In addition, the discounted cash flow method when calculating the value of a bank does not mention how to calculate the value of business advantage and brand. Another issue that needs attention is the calculation of brand value. According to current regulations, the value of business advantages in terms of reputation is determined based on the average profit margin after corporate income tax on state capital at the enterprise within 3 consecutive years before equitization compared to the interest rate of 10-year government bonds at the time of valuation. This regulation is not suitable for valuing bank brands in both theoretical basis and practical verification. Determining the value of business advantages in terms of reputation according to the above regulations for commercial banks will make the actual value of the bank brand too low compared to the actual credit of the bank before customers. Therefore, when determining the actual value, especially the intangible assets of the bank, it will reduce the value of the bank, causing damage to the state.
The valuation reports of state-owned commercial banks that have IPO’d in the past have clearly demonstrated this. The intangible asset items do not have any record of brand value, which means that banks as well as organizations conducting bank valuations have implicitly ignored brand value – while this is a very large contribution to the total assets of institutions such as commercial banks.
Second, recent mergers of Vietnamese commercial banks have caused much controversy surrounding the determination of the value of the banks involved.
merger. Typically, there are two mergers of three joint stock commercial banks, De Nhat, Sai Gon and Tin Nghia, into Sai Gon Joint Stock Commercial Bank. Each common stock of the three old banks will be converted into one SCB share of Sai Gon Joint Stock Commercial Bank (the newly merged bank) according to the principle of par value. Because this is a merger of three banks of the same owner, factors such as reputation and brand of the three banks are different and are eliminated.
The second deal is the merger of the entire Hanoi Commercial Joint Stock Bank (HBB) into Saigon - Hanoi Commercial Joint Stock Bank (SHB) and the new bank is Saigon - Hanoi Commercial Joint Stock Bank (SHB). According to the merger plan, all assets, employees, customers... of HBB will be merged into SHB, SHB shareholders owning 1 share will receive an additional 0.21 SHB shares, and HBB shareholders will receive SHB shares at a rate of 0.75, meaning that after the merger, shareholders who initially own 1 SHB share will have 1.21 new SHB shares, shareholders who currently own 1 HBB share will have 0.75 new SHB shares. Thus, the value of each share of HBB is only 60% of the value of each share of SHB before the merger, which is determined based on the valuation consultancy of both HBB and SHB by the Foreign Trade Bank Securities Company and the auditing company Ernst & Young. It is worth mentioning here that the value of HBB's intangible assets in the financial statements before the merger is only the cost that HBB invested, upgraded and innovated in intangible assets (59 billion VND, page 5 of HBB's financial statements) without brand value. This is a huge disadvantage for HBB shareholders when merging because over the past 20 years, HBB has had a fairly solid position in the market with a network of 240 branches, transaction offices and nearly 2,000 employees nationwide, with great prestige with individual customers, but in HBB's own financial reports with the HBB valuation report to calculate the basis for the merger, the factor belonging to the HBB brand is not taken into account. Next are the Bank's deals
Western Commercial Joint Stock Bank with Petroleum Finance Joint Stock Company, Ho Chi Minh City Housing Development Joint Stock Commercial Bank with Dai A Commercial Joint Stock Bank, the brand factor is almost not considered in the merger process. This disadvantage is inevitable because what is the basis for accurate and reliable brand valuation, where is the source of information to conduct valuation, thereby making the recognition of brand value in financial reports very difficult.
CONCLUSION OF CHAPTER 3
Chapter three presented the current status of the commercial banking system and the legal system on brand valuation in Vietnam. These are important bases for the next chapters of the thesis to complete the fourth, fifth and sixth objectives of the thesis: proposing a brand valuation model for Vietnamese commercial banks; Testing the proposed brand valuation model to value the brand of the Bank for Investment and Development of Vietnam (BIDV); Establishing conditions for applying the Vietnamese brand valuation model in practice.