Deposit Mobilization Situation of Banks in Ho Chi Minh City in Recent Years:

2013 accounted for 1/3 of the country's GDP, the gross domestic product (GDP) of Ho Chi Minh City increased by 9.5% on average in 3 years (2011-2013), 1.8 times higher than the GDP growth rate of the whole country (5.5%). The GDP growth rate of Ho Chi Minh City in this period was even higher and faster than in previous periods and years: 1.4-1.5 times higher than in the period 2007-2010; By the end of 2010, it had increased 1.74 times compared to 2009, and the increase in 2011 and 2012 was 1.7 times and 1.83 times compared to the previous year. The average income per capita of Ho Chi Minh City in 2013 reached 4,513 USD/person, a high increase compared to 3,700 USD/person in 2012. Therefore, in a dynamic economic environment, along with a high average income per capita, Ho Chi Minh City will be a potential environment for banks to develop their savings mobilization activities.

In addition, Ho Chi Minh City is also the most populous city in the country. According to statistics from the City Yearbook, the population of Ho Chi Minh City in 2013 reached 7,750,900 people, along with the number of visitors of more than 2.5 million people, bringing the number of residents in Ho Chi Minh City in 2013 to more than 10 million people. With such a large population, the demand for banking services in Ho Chi Minh City is increasing day by day, creating favorable conditions for banks to increase the development of retail banking services, including savings deposit services.

According to report No. 215/BC-UBND of the Ho Chi Minh City People's Committee dated December 4, 2013, on the summary of 3 years of implementing the economic restructuring program 2011-2013 and orientation for the period 2014-2015, the service industry has the highest growth rate and accounts for a large proportion of Ho Chi Minh City's GDP, the added value in the 4 years 2007-2010 increased by an average of 12.3%/year (2007: 13.6%, 2008: 12%, 2009: 10%, 2010: 12.2%), accounting for 53.6% of Ho Chi Minh City's GDP, and reaching an average of 11.1% in the period 2011-2013, the highest increase among all industries, according to the orientation of the Ho Chi Minh City People's Committee, the service industry will continue to promote the development of the service industry in the coming time. and strive to increase this figure to 13% in the period 2014-2015. The four main service sectors of Ho Chi Minh City are finance and banking, tourism, transportation services - ports - warehouses, post and telecommunications have strong growth, this shows that the structural shift of service sectors is going in the right direction, right subject.

With such an open and favorable business environment, local banks can promote their strengths to improve operational efficiency.

2.1.2.2 Characteristics of commercial banks in Ho Chi Minh City:

Not only is it considered a dynamic economic, cultural and social center, Ho Chi Minh City also has many potential economic and financial advantages to develop into a regional financial center, thus concentrating most types of banks operating together in the area, from joint stock commercial banks, state-owned commercial banks, 100% foreign-owned banks, joint venture banks... all creating a diverse picture for the Ho Chi Minh City banking and financial market. With different forms of capital mobilization, credit institutions compete fiercely in attracting capital sources, attracting customers, especially individual customers, to expand market share. Many forms of capital mobilization are diverse, novel, rich in terms, types of deposits as well as deposit forms, flexible and attractive interest rates along with promotional forms with attractive prize structures have really attracted customers to the bank. In addition, business culture is increasingly focused on by banks, customer service attitude is more attentive, professional, faster procedures have brought convenience to customers coming to transact. The above policies have contributed to helping banks increase capital mobilized from the population when interest rates are continuously decreasing.

With banks that operate similarly, we will divide the commercial banking system in Ho Chi Minh City into two groups: domestic banks and banks with foreign elements (foreign banks), each group has its own strengths in attracting customers to deposit savings. Specifically, for domestic banks when competing in attracting savings deposits, there will be advantages:

 Network : Domestic commercial banks have a wide network through branches and transaction offices. Foreign banks have limited operating networks, so their ability to reach customers is more difficult than domestic commercial banks.

In this group, although state-owned commercial banks currently have a wider scope of operations, their flexibility is lower, so their competitive efficiency is not equal to that of joint stock commercial banks.

 Traditional customer relationships : domestic banks have established relationships with a system of customers. Each bank has a traditional customer system to care for and is bound by many relationships over many years. Understanding local customers is also a great advantage that helps banks develop a good transaction network.

However, domestic banks in Ho Chi Minh City face some disadvantages compared to foreign banks in attracting depositors in the following points:

 Financial capacity: The financial capacity of domestic commercial banks is still weaker than that of the region and the world. Although charter capital has increased sharply compared to before, it is still small compared to that of the region and the world. The ability to mobilize capital within the economy is low, especially medium and long-term capital and domestic savings. Most commercial banks do not have a reasonable business strategy to be able to reach the international market. In addition, the banking accounting and auditing system is still not transparent, and financial security in banks has not yet been clearly formed. These limitations require domestic banks to see the leaks and have specific strategies and solutions.

 Technology: Modern technology is a necessary factor for expanding network development, developing products and services as well as securing bank information. Although banks have paid attention and invested a lot in technology, it is still limited and not really effective, while foreign banks are far ahead of the level of banking technology with their system of machinery and equipment as well as information technology applications in banking operations. This is one of the points that attracts customers to deposit their money.

 Customer extroversion: in a survey conducted by the United Nations Development Program (UNDP) in collaboration with the Ministry of Planning and Investment in 2010, 50% of businesses and 62% of the population surveyed said they would choose

choose foreign banks to deposit money. The reason is that these banks have higher professionalism, simpler procedures, better service and higher reliability.

Therefore, banks themselves need to know what their current advantages and difficulties are in order to fully promote their internal strength, overcome limitations to bring about the highest efficiency in attracting deposit customers in Ho Chi Minh City today.

2.1.2.3 Deposit mobilization situation of banks in Ho Chi Minh City in recent years:

Table 2.1: Capital mobilized by banks in Ho Chi Minh City as of December 31, 2013

(Unit: billion VND)

Source: Ho Chi Minh City Statistical Office

Target

2007	2008	2009	2010	2011	2012	2013
Total capital mobilized	487,028	585,339	786,892	1,014,900	893,490	973,900	1,170,785
Divide by bank type
Commercial Bank State	158,073	179,995	204,839	226,030	263,701	305,875	348,570
Commercial Bank share	239,418	305,873	468,604	655,500	512,952	541,240	689,500
Bank with capital foreign investment	89,537	99,471	113,539	133,370	116,837	126,785	132,715
Divide by depositor
Residential deposits	420,034	294,166	407,465	567,260	375,332	473,614	632,224
Deposits of economic organizations	52,790	278,416	365,266	431,540	501,245	485,533	522,579
Customer deposits foreign goods	14,204	12,757	14,251	16,100	16,913	14,753	15,982
Divide by deposit type
In Vietnamese Dong	365,080	426,534	554,276	734,160	684,383	798,598	983,459
In there :
Save	144,783	198,157	259,881	35,432	317,596	413,062	550,737
In foreign currency	121,948	158,805	232,706	280,740	209.107	175,302	187,326

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In there:


Save	38,258	51,488	66,340	89,630	57,736	48,805	63,691

Looking at Table 2.5, we can see that the total capital mobilized by banks in Ho Chi Minh City from 2007-2010 increased gradually over the years and reached its highest level in 2010, reaching 1,014,900 billion VND, with an average growth rate of 36.13%/year. However, in 2011, the mobilized capital was only 893,490 billion VND, a decrease of 11.96% compared to 2010. This was mainly due to a sharp decrease in savings deposits in the residential sector from 567,260 to 375,332 billion VND, a decrease of 33.83%. Also in 2011, we saw a contradiction in capital mobilization between different types of banks. While the mobilized capital of state-owned commercial banks continued to increase by 16.67% compared to 2010, the mobilized capital of joint stock commercial banks decreased by 21.75%, and that of foreign banks decreased by 12.4%. This is explained by the fact that this is the time when the State Bank began to impose a ceiling on deposit interest rates, and strictly handle cases of violations exceeding the interest rate ceiling, so depositors will no longer benefit from the interest rate race as before, so a large amount of deposits have been transferred to other more attractive investment channels at that time such as real estate, stocks, etc. In addition, when the official deposit interest rate was imposed, the interest rate level was almost equal among banks, causing a quantity of deposits to shift from small commercial banks to large commercial banks and state-owned commercial banks, causing commercial banks that previously enthusiastically responded to the interest rate race to now be greatly affected.

In 2012, the total mobilized capital in Ho Chi Minh City increased by approximately 9% compared to 2011, reaching 973,900 billion VND, of which the increase was evenly distributed in all types of banks, specifically: in the state-owned commercial bank sector, it increased by more than 15%, in joint stock commercial banks, it increased by 5.6%, and in foreign-invested banks, it increased by 8.5%. However, there was a difference in depositors and types of deposits. While mobilization from the population increased by 26%, mobilization from economic organizations decreased slightly, besides

Accordingly, capital mobilization in VND increased by 13.9%, while foreign currency decreased by 6.7%. The reason for this is that the reason for the sharp increase in VND savings is because the interest rate on foreign currency savings at that time was at 1.25%/year to 2%/year, a huge difference compared to the interest rate on VND savings at 7%/year, along with a stable exchange rate and a safe and effective bank deposit channel, which encouraged people to sell the USD they had to deposit VND in banks. In addition, some individual customers who have some idle capital think that interest rates will continue to decrease, so they continue to deposit in banks. However, this does not happen to all banks. In reality, the situation of exceeding the ceiling interest rate for mobilizing VND still exists in the banking system, especially in short terms (1 - 3 months) and appears more in small and weak banks with the agreed interest rate at that time being up to 12%/year.

In 2013, the growth momentum continued, capital mobilization in Ho Chi Minh City continued to increase by 20% compared to the previous year, estimated at 1,170 trillion VND. The fact that banks in this period all promoted capital mobilization activities while credit growth rate was still low and bad debt increased was explained by the following reasons: the circulation of cash flow in banks, especially small banks, was slower than before, due to increasing bad debt, and the State Bank's money injection through the open market was limited, so most banks chose the solution of mobilizing from residents and economic organizations to prepare for the source of money to pay depositors. Banks also need more capital to lend with the expectation that credit will increase further towards the end of the year. In addition, the imbalance in mobilization and lending, that is, short-term mobilization, but medium and long-term lending, also makes it easy for banks to fall into a state of short-term money shortage to pay depositors, causing them to increase deposit interest rates at this time.

In general, the capital mobilization situation of banks in Ho Chi Minh City has gradually increased over the years. However, in the context of low credit growth, many banks, including large banks, are still trying to increase capital mobilization, through promotional programs, preferential interest rates... to solve the current tense liquidity problem. If they do not continue to compete to mobilize capital,

Capital will easily lose market share when your bank increases the attractiveness of interest rates. However, if not careful, interest rates will create difficulties for the bank itself when competing to mobilize savings because it is not easy to lend out.

2.2 Evaluation of savings mobilization activities of Vietnamese commercial banks in Ho Chi Minh City:

To compete in mobilizing savings deposits, banks now believe that increasing "financial benefits" for customers, including savings interest rates and service fees, is the fastest and most important factor to attract customers to deposit savings at their banks. Although the interest rate for mobilizing savings deposits is capped according to the regulations of the State Bank, banks are still competing on interest rates for long terms: the highest mobilization interest rate belongs to HDBank, mobilizing savings from people with an interest rate of 9.5%/year for 24-month and 36-month terms. The 15-month and 18-month terms are applied at 9%/year. Meanwhile, at Orient Commercial Bank (OCB), mobilization is at a high interest rate of 8.75% for 13-month terms. GPbank and Vietbank both have the highest interest rate of 8.7%/year. In this race, the big banks are less enthusiastic when announcing less attractive deposit interest rates, but they have a different strategy, most of the big banks only publicly list symbolic deposit interest rates on their websites, while the rest of the customers have to directly contact the bank to know the actual deposit interest rate schedule. Specifically, on the official website, Vietinbank lists the highest interest rate of 6.8%/year for terms from 9 months to 12 months. However, Vietinbank adds: "This is only the interest rate ceiling, to know the specific interest rate, customers please contact VietinBank branches/transaction offices nationwide".

Regarding “products”, most banks today pay a lot of attention to this when continuously launching diverse products to meet all needs and ages of customers. Applying preferential interest rates and accompanying promotions, Dong A Bank launched a savings product “giving wings to your children”, with savings cardholders being children aged 0 to 15 years old, all transactions related to savings deposits are done through the guardian or legal representative of the child,

The advantage of the product is that it allows customers to deposit money many times and regularly to accumulate a large amount of money, the parents' savings are maximized to prepare for their children. For older customers, understanding the need to save for a prosperous life and understanding the concerns when facing old age, Bac A Bank has launched a "savings for the elderly" product exclusively for customers aged 50 and over. In addition to receiving incentives plus incentive interest rates, flexible interest payment methods, customers are also given 24-hour personal accident insurance worldwide with flexible application policies and a blood pressure monitor worth up to 1 million VND. It can be seen that these diverse savings products increasingly meet the savings goals of different customer groups.

A suitable “product” along with a “good customer care policy” is one of the goals that many banks are aiming for. Most banks are trying to perfect the process, simplify procedures to carry out transactions in the fastest, most effective way, reducing customers’ waiting time. Along with sending birthday greetings to customers, giving moon cakes, calendars, etc., which have been implemented by most banks, there are also many customer care programs with the unique characteristics of each bank, typically the “lovely rainy season” program implemented by Saigon Commercial Joint Stock Bank (SCB), according to which each customer will be given a raincoat or fashionable umbrella for all savings customers when the 2014 rainy season is coming, or the program “18 years accompanying Ocean Bank” with many gifts for all savings customers such as Thai glass bowls, electronic thermometers, watches, helmets, blood pressure monitors, etc.

In addition, banks are now creating a convenient environment for customers to transact. In addition to perfecting the Internet Banking system, banks are also deploying online banking integrated on current technology devices such as tablets, Iphone, Ipad... on many different browsers such as Internet Explore, Google Chome... helping customers to conduct banking transactions anytime, anywhere.

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