Evaluation of Capital Mobilization Activities of Lien Viet Post Joint Stock Commercial Bank

Customers depositing large transaction deposits into their accounts will be an advantage for the bank, current depositors will be able to become potential borrowers because of the mismatch between the production and business cycle and capital needs for investment, material reserves, and production expansion. At the same time, the bank has a basis for the financial situation of the bank through the regular deposit balance in the customer's account, creating favorable conditions for the bank to improve credit quality. With the goal of expanding non-cash payments to reduce the amount of money in circulation, curb inflation, and expand clearing payments, the quality of payments is improved day by day, shortening the capital turnover time of customers.

- Term deposits under 12 months

Unlike non-term deposits, this type of deposit is mainly mobilized from the population. This type of deposit has a decreasing proportion and trend. The amount of term deposits of socio-economic organizations tends to decrease because some enterprises are facing difficulties in capital. People tend to save more than consume, so the amount of short-term deposits is showing its popularity. In terms of proportion, in 2011, the amount of mobilized money decreased by 6.01% compared to 2010 and in general, in 2011, mobilization from term deposits under 12 months decreased by 1.1% compared to 2010. This is the most sensitive type of money to interest rates, customers deposit mainly for the purpose of receiving interest on deposits, so changes and differences in interest rates between banks greatly affect the amount of this deposit. Although the term is short, it is an important type of deposit for banks and needs to be focused on. To increase this deposit amount, the bank focuses on diversifying deposit terms and various forms of interest payment to create the most convenient conditions for customers.

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- Term deposits over 12 months

At the bank, this is the type of deposit with the smallest size and structure and is tending to decrease in structure (in 2010 it accounted for 9.57%, in 2011 it accounted for 7.45%). This type of deposit is mainly mobilized from the population. Although the bank has made efforts to improve the forms of mobilization, the amount of this deposit is still very modest.

- Loan

Mobilizing capital through the issuance of valuable papers is a flexible form of mobilization to solve immediate capital needs. In 2011, Lien Viet Post Joint Stock Commercial Bank - Hai Phong branch issued the first batch of valuable papers to meet medium and long-term capital needs. Capital mobilized from promissory notes and bonds reached

27,110,378 million VND, however, this is still the smallest source of mobilization, accounting for 12.47% of the bank's total mobilized capital in 2011. This issuance has provided the branch with a sufficient amount of capital to meet its capital needs in the coming time.

In general, the capital mobilized by branches has increased in the past two years, but mainly due to the issuance of valuable papers, demand deposits, and deposits with terms of less than 12 months are on a slight downward trend, while long-term sources are still very small. This makes it difficult for banks to plan capital sources, causing capital congestion if they do not lend out all of their loans, but if they lend too much, the branch will be passive in payment. Long-term capital accounts for a small proportion, making it difficult for banks to change the structure of outstanding debt over time.

Through the above analysis we draw the following conclusions:

- Non-term mobilized capital accounts for a relatively large proportion of total mobilized capital but tends to decrease, especially for customers who are socio-economic organizations.

- Unstable term funding sources:

+ The amount of deposits of credit institutions is not large in scale and is on a downward trend. Recently, due to the difficult economic situation, the number of socio-economic organizations and companies depositing money at branches is decreasing in both the number of customers and the balance of deposits at branches.

+ The source of deposits from residents has a relatively stable growth rate (this is the main source for banks to carry out lending and investment activities).

+ The source of funds borrowed from the issuance of securities also partly meets the branch's usage requirements.

2.2.4. Evaluation of capital mobilization activities of Lien Viet Post Joint Stock Commercial Bank - Hai Phong Branch

Capital mobilization activities of banks, like other banks, are always affected by the business environment, state policies and laws, and other factors related to the bank itself. From the current situation of capital mobilization of banks, the author draws some comments as follows:

2.2.4.1. Results achieved

Over the years, the bank has proactively determined its business strategy and operating principles for each period. Based on research and careful analysis of the difficulties and advantages, opportunities and challenges of the situation.

specific as well as predicting new problems that arise. Therefore, in general business activities and capital mobilization activities in particular, significant achievements have been achieved. The following are some achievements that banks have achieved in capital mobilization:

- Regarding the scale of external capital mobilization: With the business goals and strategies of continuously expanding scale and improving business performance, the bank sets the motto of focusing on effectively exploiting idle resources of economic sectors.

In recent years, the bank's external capital has increased gradually over the years, creating favorable conditions for the bank to carry out its investment and lending activities. Moreover, the proportion of deposits is much larger than that of loans, which has helped the bank reduce costs and increase profits.

In deposits, non-term deposits always account for a significant proportion, on the one hand creating conditions to increase balance, reduce input costs (non-term deposits have the lowest interest rate, almost negligible), on the other hand helping banks expand services related to capital mobilization such as card issuance, etc. Deposits from the population account for a high and stable proportion, creating favorable conditions for banks to conduct their business activities.

- Regarding the structure of mobilized capital: Like other joint stock commercial banks, the bank's main source of mobilized capital is short-term capital.

- The bank has diversified capital mobilization methods combined with flexible use of interest rate tools to attract deposits from all classes of people and businesses, meeting the capital needs of the economy and creating stability for business capital.

- Banking facilities and technology serving capital mobilization activities have been and are being innovated and upgraded.

- Regularly monitor and grasp the fluctuations of interest rates to make appropriate forecasts about fluctuations in capital sources in the market.

- Staff qualifications are increasingly improved, with the ability to handle well all situations arising in capital mobilization work.

- Continue to develop close relationships with traditional customers, units with large capital sources through making payments convenient and fast. At the same time, expand new customer relationships to mobilize capital from organizations.

- Actively exploiting and mobilizing local capital, at the same time the branch has taken advantage of timely and effective support from internal capital sources of Lien Viet Post Joint Stock Commercial Bank, meeting the capital needs of customers.

2.2.4.2. Existence and causes of existence

- The existence

In the process of implementing its capital mobilization policy, the bank has also encountered subjective and objective obstacles such as:

+Deposits from economic organizations decreased compared to the previous year, which significantly increased the branch's input interest rate, so it is necessary to continue to pay more attention to businesses with large deposits, creating preferential conditions for them to continue to trust and maintain long-term relationships with the bank.

+ Capital mobilization is not really linked to and meets the capital demand. The bank's capital mobilization is unbalanced in terms of terms. While short-term capital temporarily meets the bank's planning goals, medium and long-term capital is still not enough to meet the bank's medium and long-term business needs. The conversion of capital to invest in medium and long-term loans is still limited because to do this, the bank will have to face interest rate risks and liquidity risks. The current growth rate of locally mobilized capital is still lower than the capital demand. Therefore, the bank still has to receive an annual amount of capital regulation. This creates an increasing dependence of branches on the head office.

+ Customer policies and advertising and propaganda have not been properly invested in, thus creating many limitations for capital mobilization as well as other business activities in the bank.

+ Capital mobilization channels through the issuance of valuable papers such as promissory notes and bonds have not really attracted customers and promoted their effectiveness in mobilizing medium and long-term capital for banks. Besides, the forms of medium and long-term capital mobilization have not been really diverse, creating customer attraction.

+ The interest rate mechanism has not really created attraction for customers, in which service forms have not been developed much.

- Causes of the existence:

The reason why capital mobilization still exists at Lien Viet Post Joint Stock Commercial Bank - Hai Phong Branch is due to the following basic reasons:

+ In recent times, the global economy in general and the Vietnamese economy in particular are in crisis, and banks are not immune.

struggling to mobilize capital. On the other hand, the economy in this period contains unpredictable factors of inflation, exchange rates, interest rates, bankruptcy, etc. Therefore, customers often choose to deposit short-term savings so that they can easily convert the purpose of capital use to buying gold, foreign currency, etc. rather than depositing savings.

+ People's preference for cash also greatly affects the branch's capital mobilization work.

+ In mobilizing VND capital, there are many mobilization channels with attractive interest rates and ensuring high liquidity such as government bonds, promissory notes of oil and gas companies, etc. Therefore, capital mobilization of commercial banks in general and Lien Viet Post Joint Stock Commercial Bank - Hai Phong in particular faces many difficulties, especially in mobilizing medium and long-term capital.

+ General regulations related to banking operations also affect capital mobilization. For example, the State Bank's regulation of interest rate ceilings creates difficulties for banks in competing to attract capital sources.

+ The bank does not have a clear and suitable capital mobilization strategy. The bank's marketing department mainly focuses on customers who borrow money and customers who use financial services, and does not pay due attention to customers who deposit money, especially individual customers. The bank's capital mobilization products are not really diverse, and their utility is not high, although the bank has made certain improvements and attention.

+ The city has a seaport that is convenient for developing waterway transport, creating conditions for banks to expand their operations, but at the same time, banks must accept fierce competition from many banks, branches, and transaction offices in the city.

+ Problems in credit activities: Although the outstanding loans to the economy have a growth rate of 20.46%, looking at the structure of medium and long-term loans, it is still low, so the total outstanding loans at the branch often fluctuate greatly due to the high proportion of short-term loans. The process of handling collateral is still slow. Limitations in credit activities partly affect the capacity and reputation of the bank, thereby contributing to hindering the bank's capital mobilization activities.

+ Regarding infrastructure facilities and equipment serving the bank's business activities, although there have been significant investments in recent years, there are still certain limitations. In the coming time, the bank will continue to gradually

Steps to implement the Bank's modernization program in all aspects such as: Innovation of facilities, equipment network, improvement of service quality for the Bank's business activities, etc.

+ In the past, although the branch has paid attention to training the bank's staff, this team is still young, inexperienced, and has limited professional qualifications.

From the current situation of capital sources and capital mobilization of Lien Viet Post Joint Stock Commercial Bank - Hai Phong Branch, the problem is that there must be solutions to strengthen capital mobilization to meet the requirements of continuous expansion and improvement of the bank's business results.

CHAPTER 3: SOLUTIONS TO STRENGTHEN CAPITAL MOBILIZATION AT LIEN VIET POST JOINT STOCK COMMERCIAL BANK - BRANCH

HAI PHONG

3.1. Orientation for developing capital mobilization activities at Lien Viet Post Joint Stock Commercial Bank - Hai Phong Branch

With our country's economy being affected by the world economic situation, there have been many fluctuations in the past year that have caused the economic growth rate to slow down, inflation to increase, while the joint stock commercial banking system is not strong enough, the operating time and experience are not much, the operating capital is mainly based on capital from the population, which has to pay high interest. Therefore, during this time, the bank has encountered many difficulties in capital mobilization. Based on the analysis and experience from the business performance results in the past two years, especially in 2011, the branch has set out the direction, goals and solutions to carry out business tasks in 2012 and the coming years as follows:

-Continuously consolidate and improve the operational efficiency of the branch, best satisfying market demand. Continue to modernize banking technology, improve staff qualifications and management skills, create the premise for expanding high-quality financial products and services, gradually increasing the competitiveness of the bank in service activities. Specify and perfect the processes and regulations governing the branch's operations with the motto of creating close connections between departments and divisions to link the relationship of responsibility and efficiency in business activities with the interests of employees.

-Continue to gradually expand the market with the motto of stable and solid development to increase market share in business, ensure healthy credit quality, improve financial capacity, and adapt quickly in the integration process.

- Expanding capital mobilization forms, banks can offer diverse forms of mobilizing savings deposits and term deposits, proactively exploiting new sources with high stability.

- Improve the quality and payment services, innovate and modernize the payment system in the direction of reducing the constraints on documents, increasing safety in payment activities, contributing to strengthening customer trust.

- Adjust the capital mobilization structure over time to suit the usage, ensure medium and long-term capital, meet the demand for long-term asset growth, prevent possible risks through solutions such as: increasing the stability of capital sources, implementing deposit insurance, controlling interest rate gaps.

- Conduct market segmentation according to different criteria (by location, regional business conditions, consumer habits, level of competition, etc.) to develop product strategies, prices, and appropriate mobilization methods for each market segment.

3.2. Solutions to increase capital mobilization at Lien Viet Post Joint Stock Commercial Bank - Hai Phong Branch

3.2.1. Diversify forms of capital mobilization

The bank continues to diversify its mobilization products, further improving the utility through the quality and diversity of the products. In the long term, the bank strives to achieve the goal: any individual or organization with unused funds can find a type of mobilization at the bank that suits their needs. Particularly for the traditional form of term savings mobilization, there needs to be flexible modifications to facilitate customers.

3.2.2. Linking capital mobilization with effective capital use

In banking business, there is a constant, close, supportive, and mutually controlling relationship between capital sources and capital use. Capital sources are the basis and premise for banks to invest and lend. Only when banks invest and lend will capital generate profits. Therefore, capital use is an important basis for banks to decide on the volume and structure of capital sources to be mobilized. Effective capital management and use is the most stable way to create and develop capital, because when investment and lending capital are effective, the economy develops, people's income increases, and thanks to that, banks can attract increasingly large capital sources. Banks need to pay special attention and do a good job of capital management and use with the motto: Credit expansion must go hand in hand with improving credit quality, ensuring safety and capital growth. To implement the above motto:

- The bank must closely follow the business development orientation and operational solutions of the General Director of Lien Viet Post Joint Stock Commercial Bank. Regularly approach and closely follow major projects under the Government's strategic goals to be able to provide effective solutions to serve effective investment work.

Evaluation of Capital Mobilization Activities of Lien Viet Post Joint Stock Commercial Bank - Hai Phong Branch

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