Improving business efficiency of Vietnam Technological and Commercial Joint Stock Bank

An effective bank must meet the following criteria: Total assets and equity increase with a reasonable structure; Equity increases rapidly; Credit quality is improved; Growth in operating scale is associated with increased income and profit; Liquidity is guaranteed; Domestic and international payment activities are expanded, growing and improving quality; Ensuring minimum capital safety ratio.

Mai Van Ban, “Commercial banking” [5], Nguyen Minh Kieu, “Commercial banking operations” [39], Nguyen Dang Don, “ Modern commercial banking management ” [18] also used 5 out of 6 indicators of the CAMELS analysis system to analyze the business activities of commercial banks: Equity capital; Asset quality; management capacity, profitability, reserves and liquidity.

These studies do not address the theoretical basis of bank performance. The performance indicators do not address the social perspective.

Besides theses and textbooks researching the issue of banking business efficiency, there are also a number of works published in journals addressing this issue such as:

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Vo Hong Duc (2013) in “ A new approach to credit rating of Vietnamese commercial banks ” [19] has shown that an effectively operating bank will have a high credit rating, creating easier conditions for banks in the process of accessing capital from domestic customers, shareholders as well as more outside the country. This study is based on the theoretical foundation of evaluating the operational efficiency of banks through analyzing financial statements and simultaneously conducting it in combination with the practical operations of the Vietnamese banking system. The study has selected the necessary financial indicators to measure the operational efficiency and financial capacity of Vietnamese commercial banks, including: (1) Profitability (profit after tax, return on equity, profit/total assets, profit/equity, net interest income ratio, operating income ratio, marginal interest rate and marginal non-interest income ratio); (2) Management efficiency (cost/asset ratio, service profit ratio); (3) Liquidity (loan/asset ratio, loan/deposit ratio);

(4) Safety and financial structure (capital adequacy ratio); (5) Credit/asset quality;

(6) Growth rate (capital).

Le Hoang Nga (2007) “ Performance efficiency of Vietnamese banks: Current situation and solutions” [58] , analyzed the strengths, weaknesses, opportunities, and challenges of Vietnamese banks, the applications of modern technology applied in banking, thereby providing solutions to improve the efficiency of the banking system. The study does not mention theories about efficiency, and does not evaluate efficiency by quantitative indicators.

There are a number of studies on the competitiveness of commercial banks, which mention that the operational efficiency of banks is a prerequisite for winning in competition, such as: the study of the Ho Chi Minh City Institute of Economics [81] studying the competitiveness of commercial banks in Ho Chi Minh City; the Ministry of Planning and Investment [4] studying the competitiveness and the impact of liberalization on the operations of the banking sector; Nguyen Thi Hien [29] studying the advantages of developing banking services among the population; Nguyen Thi Quy [67] discussing Michael Porter's competition, building strategies to enhance competition for commercial banks in Vietnam; Ngo Quoc Ky [39] perfecting the legal system to help Vietnamese commercial banks stand firm...

In summary, the above studies have analyzed quite clearly the indicators for evaluating the business efficiency of commercial banks. However, most of them use financial indicators to analyze business efficiency from the banking perspective. Social efficiency is hardly mentioned. The author could not find any official study on the business efficiency of banks that fully reflects the social efficiency such as the issue of creating jobs for workers, contributing to the state budget, and the lending market share compared to the entire system to see the level of influence, position and development ability, and competitiveness in the market in the future of the bank. Studies on the social business efficiency of banks in Vietnam have not received due attention although this is a very necessary and highly applicable issue.

There are journals and theses analyzing the operations of a group of banks including

Vietnam Technological and Commercial Bank such as:

Phung Thi Lan Huong (2015), "Financial analysis to improve the business performance of Vietnamese commercial banks" [27] has shown the need to evaluate in detail the business performance of banks, to identify, judge, forecast, make financial decisions, funding and investment decisions, and make certain adjustments to improve the performance of banks. At the same time, this study has provided financial analysis including indicators to evaluate the performance of banks including: (1) Equity size and capital adequacy ratio; (2) Group of indicators on asset size and quality (shown through the growth rate of total assets, lending ratio, credit quality shown through the bad debt ratio); (3) Profitability indicators (Profit, return on average assets (ROA), return on equity (ROE), net interest margin (NIM)). The study analyzed the performance of 6 banks, namely Agribank, BIDV, VCB, Vietinbank, Techcombank, in the period 2009 - 2013 based on financial indicators. The study did not discuss the theory of business efficiency and did not evaluate social efficiency.

In “ Analysis of business performance of the Vietnamese joint stock commercial banking system ”, Lieu Thu Truc and Vo Thanh Danh, [74] evaluated the business performance of the joint stock commercial banking system after the banking system reform took place in 1990 until now based on financial structure analysis including: Profitability (Ratio of operating income margin, reflecting the ability to maintain growth of main sources of revenue from lending, investment and service fees compared to the increase in expenses mainly from interest payments on deposits, loans in the money market, salaries and benefits; the difference between interest income and interest expenses (NIM); non-interest income; profitability index ROA and ROE); Financial risk ( Liquidity risk assessment, credit risk assessment (bad debt ratio); assessment of the risk level of total assets (equity/asset ratio)). Research shows that in the current trend of integration and competition on a global scale, the joint stock bank model is considered the most optimal and brings the best efficiency. However, with the rapid increase in

The number of joint stock commercial banks in the past time, the efficiency in the operation of this system is not really good. The study surveyed 22 joint stock banks including Techcombank. However, the business efficiency from a social perspective was not mentioned.

Nguyen Quynh Hoa (2014), "Restructuring the Vietnamese commercial banking system" [28] systematized the theory of restructuring the banking system, analyzed the current status of operations and restructuring of the Vietnamese commercial banking system, proposed solutions and recommendations to contribute to promoting the restructuring process of Vietnamese banks by 2020. The study was limited to 12 commercial banks, including the Vietnam Technological and Commercial Bank.

The author also found some separate studies on Vietnam Technological and Commercial Joint Stock Bank at master's level in other aspects, such as:

Nguyen Lan Anh, " Improving marketing mix - Mix at Vietnam Technological and Commercial Joint Stock Bank " [1]; Dinh Thi Thu Ha, " Solutions to improve the competitiveness of Vietnam Technological and Commercial Joint Stock Bank " [30]; Truong Quoc Doanh, " Credit risk at Vietnam Technological and Commercial Joint Stock Bank, current situation and preventive solutions " [14]; Ta Thi Kim Dung, " Solutions to improve loan quality at Vietnam Technological and Commercial Joint Stock Bank " [16]; Luu Thi Bich Thao, " Some measures to prevent and limit bad debt, overdue debt at Vietnam Technological and Commercial Joint Stock Bank " [76] studied the business situation, marketing activities, systematized the theory of credit risk of Techcombank, and at the same time proposed solutions to improve the activities of this bank in the coming time.

Studies on Vietnam Technological and Commercial Joint Stock Bank have summarized and evaluated the general performance as well as the specific operations of this bank in recent years. However, the studies have not summarized the strengths and analyzed the existing details of this bank. There is no study evaluating the business efficiency of this bank to show the overall status of business efficiency, competitiveness and development.

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Besides domestic articles that directly research both theoretically and practically the issue of commercial bank business efficiency, there are some foreign authors analyzing the current situation and solutions for commercial bank performance.

1.2.2. Foreign documents

(1). In terms of concept, nature and forms of commercial banks mentioned in foreign documents are similar to those of domestic scholars. They agree on the concept that commercial banks are a type of currency trading company, taking profit as the ultimate criterion for evaluation.

(2). Regarding the analysis and evaluation of business performance, although there are similarities, there are also differences. Foreign studies have surveyed and evaluated the performance of banks, thereby proposing solutions to improve business performance.

However, quantitative indicators measuring effectiveness in some studies are rarely mentioned:

Scholar Boriboon Pinprayong (2012) with the article: “ Restructuring for organizational efficiency in the banking sector in Thailand: A case of Siam commercial bank ” [87] studied the issue of restructuring to improve the operational efficiency of Thai banks. The 1997 Asian financial crisis caused Siam Commercial Bank - a bank with a long history of development, never changing its corporate culture for 95 years, but also to be shaken. The study investigated and compared the business activities and operational efficiency of this bank before and after restructuring as a typical case to show how the success of restructuring has improved the operational efficiency of this bank after the economic crisis and used it as a lesson for other commercial banks.

Scholars Devinaga Rasia, Tan Teck Ming and Abd Halim Bin with the article: “ Mergers Improve Efficiency of Malaysian Commercial Banks ” [92] raised the issue

Mergers and Acquisitions to Improve the Efficiency of Malaysian Commercial Banks. This study measured the impact of voluntary mergers among commercial banks to achieve efficiency. The paper shows that mergers and acquisitions among domestic banks improve the efficiency of banks, their profitability and create value as Bank Negara Malaysia showed in 1999. Mergers among banks will create economies of scale with high efficiency.

Scholar Mangeli and George M (2014) with the article: “ E-business and operating efficiency of commercial banks in Kenya ” [99] studied the impact of e-commerce on the performance of commercial banks in Kenya and the challenges faced when implementing e-commerce. The authors collected data using questionnaires and analyzed it using descriptive statistics, thereby showing the positive impact of e-commerce on the performance of banks such as improving the quality of services provided to customers and improving employee productivity. At the same time, the authors also pointed out some challenges that hinder the implementation of e-commerce in commercial banks such as lack of infrastructure, threats from computer viruses and weak commitments from senior managers and banks have come up with strategic responses to deal with these challenges such as reducing e-banking costs, employing well-trained workers on e-commerce applications in banks. The study also concluded that commercial banks in Kenya need to invest more in e-commerce to improve their operational efficiency.

The article: “ Improving Efficiency The new high ground for banks ” [93] in the magazine “Deloitte” (2009) researched by the Deloitte Center for Banking Solutions raised the issue of improving efficiency to increase the position of banks. The article emphasized that improving operational efficiency has become a competitive necessity in the context of a turbulent financial market, along with the economic recession that has changed the financial services environment. The article raised the issue of building efficient operations is not

sufficient but must be stable, continuously improving performance and also describes the key factors that drive success such as awareness, business processes, metrics, technology and culture.

In addition, the author also found some studies using quantitative indicators to measure bank efficiency such as:

In the study of bankruptcy in the Indonesian market, scholars Judijanto, L. and Khmaladze, E., V. (2003), “ Analysis of Bank Failure Using Published Financial Statements: The Case of Indonesia (Part 1 )” [97] selected 12 indicators from 32 financial indicators to evaluate the performance of commercial banks. The groups of financial indicators include: Operational efficiency and profitability (profit before tax/employee costs, profit/equity, return on earning assets, profit margin); capital adequacy (equity/earning assets, equity/loans); interest rate spread (margin, lending income/interest expense); credit (average profit and cost of capital); liquidity (liquid assets/total deposits); member company deposits/loans, quality of earning assets (risk provisions/loans). The research sample includes 213 banks in the period 1994 - 1996 has been synthesized and divided into groups depending on the financial situation of the bank. Some indicators given by him can be used to study and evaluate the business efficiency of a commercial bank.

In the report of the International Monetary Fund (IMF), measuring banking stability to assess the changes affecting the stability of the banking system in countries such as the US and Europe is a central issue. In this report, Charles and Miguel (2008) [90] conducted an empirical examination of the impacts of foreign-invested banks on the financial system in countries in Latin America, Asia and Eastern Europe. The study measured banking stability by assessing: (i) the overall risk of the banking system; (ii) the risk of each individual bank; (iii) the risk of each bank affecting the system; (iv) the risk impact of banks on each other. This study applied statistical probability in calculating the liquidity tolerance of banks in each country.

Evaluate.

Scholars Podviezko, A. and Ginevičius, R. (2010) with the study: “ Economic Criteria Characterising Bank Soundness And Stability ” [103] conducted a study on the impact of financial indicators in assessing the financial situation and measuring the stability of banks. The authors used 6 financial indicators according to the CAMELS analysis system to evaluate banks in Lithuania. CAMELS includes the following factors: (1) Capital adequacy; (2) Asset quality; (3) Management; (4) Earnings; (5) Liquidity; (6) Sensitivity to market risk. Podviezko and Ginevicius (2011) stated that crises have increased the risk of bank bankruptcy. Inheriting previous bank evaluation studies, the group of authors developed a process for analyzing and evaluating commercial banks. Accordingly, the step of selecting indicators is considered the initial and most important step. The group of authors selected 6 indicators according to the CAMELS analysis system and from the results achieved, concluded that quantitative factors play a very important role in measuring the business performance of banks. At the same time, scholars emphasized stable development and considered it as a good or bad development index for a bank.

Scholars Mabwe, K. and Robert, W. (2010) conducted an empirical study on the performance of banks before and after the crisis, 2005-2009 in South Africa [100]. Major commercial banks were assessed on profitability, liquidity and credit quality through 7 financial factors. The results showed that there was a significant decline in profitability, low liquidity, poor credit quality when the crisis occurred in all banks. The study also found that the liquidity level in South African commercial banks reached alarming levels after the crisis.

In the assessment of financial situation for each bank, the group of scholars Lee, J., Y., Gandy, B., Longsdon, J., Young, M. and Santarelli, F. (2012), “ Global Financial Institutions Rating Criteria ” [98] mentioned the issue of criteria for rating the scale of commercial banks. The indicators are divided into many different groups.

Improving business efficiency of Vietnam Technological and Commercial Joint Stock Bank - 5

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