Overview of Business Activities of Lao Agricultural Bank

As of December 31, 2016, the number of employees of the Lao Agricultural Bank was 1,040 people. The head is the General Director with 6 Deputy General Directors assisting. The organization of the Bank includes the head office and 16 dependent branches. At the head office, there are: 04 management departments, 01 Center and 07 functional departments (diagram 2.1)

2.2.2. Overview of business activities of Lao Agricultural Bank

In recent years, banking operations have encountered many difficulties due to the global economic crisis in general; the impact of the domestic economic downturn; however, with the efforts of the Lao Agricultural Bank, basically all business targets of the Lao Agricultural Bank have grown and developed, many targets have exceeded the assigned plan.

2.2.2.1. Capital mobilization

Maybe you are interested!

Capital mobilization is an activity that Lao Agricultural Bank pays great attention to, with the goal of ensuring loan capital, liquidity safety, and creating a basis for rapidly increasing assets, enhancing the position of Lao Agricultural Bank in the system of commercial banks in Laos. Therefore, over the years, capital mobilization activities from the business and residential sectors as well as from the interbank market have been thoroughly exploited by Lao Agricultural Bank.

However, competition in capital mobilization among credit institutions in recent years has been extremely fierce. Some large banks in Vietnam, Thailand and China have expanded their networks to Laos such as: MB, Vietinbank, HSBC, Kasikon, ICBC... making competition in the market increasingly fierce. Since 2014, the banking industry has encountered more difficulties, due to the increasing number of banks in Laos. However, the Lao Agricultural Bank has used many solutions synchronously and flexibly to create stability in attracting capital sources to serve business activities. Agricultural Bank

Laos mobilizes funds from economic organizations and individuals through many flexible forms to meet the deposit needs of organizations and residents.

The capital mobilization situation of the Lao Agricultural Bank in the period of 2014 - 2017 is shown in (Table 2.1 ). The data shows that the mobilized capital of the Lao Agricultural Bank has increased continuously over the years . In 2016 alone, the total mobilized capital reached 399,482 million kip, an increase of 111,462 million kip compared to 2015, an increase of 38.70% . This is a high growth rate compared to the market . In 2017, the total mobilized capital of the Lao Agricultural Bank reached 426,254 million kip, an increase of 6.7% compared to 2016. Although the Lao market is facing fierce competition from domestic and foreign banks, thanks to the construction of the right business strategy and development orientation, along with the close, timely and effective guidance solutions of the Board of Directors and the efforts of all officers and employees, the Lao Agricultural Bank continues to promote its existing advantages. Currently, the Lao Agricultural Bank is in the top 4 banks in terms of capital mobilization market share, along with the Lao Foreign Trade Bank, the Lao Development Bank, and the Lao-Vietnam Joint Venture Bank .

Table 2.1 : APB's capital mobilization situation in the period 2014-2017

Unit: million kip

Source: APB Annual Report 2014-2017

Chart 2.4 : APB 's capital structure

Source: APB Annual Report 2014-2017

In terms of deposit type and currency, the mobilized capital is mainly savings deposits. In 2014, the total mobilized capital was 219,243 million kip, of which savings deposits accounted for 66.28%, non-term deposits accounted for 9.75%, the rest were term deposits and other deposits. In 2015, the total mobilized capital reached 288,020 million kip, an increase of 68,777 million kip compared to 2014, an increase of 31.37%. Of which, savings deposits were 199,374 million kip, accounting for 67.84%, non-term deposits were 39,070 million kip, accounting for 13.55% of the total mobilized capital of the year, the rest were term deposits and other types. In 2016, savings deposits were 251,442 million kip, accounting for 62.94%, demand deposits were 41,302 million kip, accounting for 10.34% of total mobilized capital. In 2017, savings deposits at the Bank were 273,520 million kip, accounting for 64.2%, demand deposits were 39,543 million kip, accounting for 9.3%, term deposits were 107,542 million kip, accounting for 25.2% of total mobilized capital.

In general, the mobilized capital of Lao Agricultural Bank has increased continuously over the years, demonstrating the ability and reputation of Lao Agricultural Bank in the banking market.

2.2.2.2. Lending work

Lending is a basic business, bringing the main source of profit for the Bank. In order to effectively and safely exploit mobilized capital, creating a stable source of income, Lao Agricultural Bank provides a diverse portfolio of credit products: short, medium and long-term loans; unsecured loans or loans with collateral, loans in many different currencies: Kip, Bath, USD...

In addition, the Lao Agricultural Bank always attaches importance to the quality of credit investment through market penetration, customer selection, project appraisal and lending to qualified and effective business projects. Thanks to that, the Bank's lending activities have achieved encouraging results in recent times.

In recent years, the Lao Agricultural Bank has maintained a high growth rate. In 2014, the total outstanding credit balance was 206,090 million kip, in 2015 it was 250,705 million kip, an increase of 44,660 million kip compared to 2015, corresponding to 21.6%, in 2016 it was 308,810 million kip, an increase of 58,105 million kip compared to 2015, corresponding to 23.2%. The total outstanding balance in 2017 was 357,520 million kip, an increase of 48,710 million kip compared to 2016, corresponding to 15.8%.

The scale of lending activities of the Lao Agricultural Bank is shown in Table 2.2:

Table 2.2: APB Bank's lending situation during the period

2014-2017

Unit: Million kip

Source: APB Annual Report 2014-2017

The outstanding loan structure of the Lao Agricultural Bank, in which short-term loans account for a high proportion (chart 2.5) . Therefore, along with expanding the scale, the Bank always pays attention to adjusting the loan structure, strengthening the supervision of capital use, urging customers to repay debts. Especially focusing on perfecting the Bank's loan management.

Chart 2.5 : APB 's outstanding debt structure

Source: APB Annual Report 2014-2017

2. 2. 2. 3business performance

The business results of the Lao Agricultural Bank have grown steadily over the past 3 years, with a profit in 2017 of 15,747 million kip, an increase of 171 million kip compared to 2016, corresponding to an increase of 1.1%. In 2016, the profit was 15,576 million kip, an increase of 858 million compared to 2015, corresponding to an increase of 1.1%.

5.8%. This is quite an impressive growth rate in the current period of fierce competition between many banks in the market.

Total revenue in 2017 reached 168,952 million kip, an increase of 7,921 million compared to 2016, corresponding to an increase of 4.9%. In 2016, total revenue reached 161,031 million kip, an increase of 25,635 million kip compared to 2015, corresponding to an increase of 19%.

Total expenditure in 2017 was 153,205 million kip, an increase of 7,750 million compared to 2016, corresponding to an increase of 5.3%. Total expenditure in 2016 was 153,205 million kip, an increase of 24,807 million kip compared to 2015, corresponding to an increase of 20.6%. (Table 2. 3 )

The above business results are due to the fact that the Lao Agricultural Bank has focused on expanding capital mobilization, lending, increasing customer service and strengthening credit management.

Table 2.3 : APB business results in the period 2014 - 2017

Unit: million kip

Source: APB Annual Report 2014-2017

It can be seen that in the period of 2014-2017, the Lao Agricultural Bank has successfully completed the basic business targets, ensuring stability, safety and efficiency. The reason for achieving the above business results is that the Lao Agricultural Bank has focused on expanding capital mobilization, lending, increasing and improving the quality of service provision, creating trust from a large number of domestic customers.

2.3 Current status of card business development of Lao Agricultural Bank

The thesis analyzes the current status of card business development of Lao Agricultural Bank according to two groups of criteria: quantity and quality.

2.3.1 Quantity criteria group:

2 . 3 . 1 . 1 List of cards supplied to the market

Before 2014, the Lao Agricultural Bank only provided the market with a single card product, an ATM card with the function of withdrawing money, checking account information, and transferring money within the Lao Agricultural Bank system. Because the card product was monotonous, the ATM network was small, and marketing activities to promote card products were not focused on, the number of customers using Lao Agricultural Bank cards was very small .

In 2014, after Lao Agricultural Bank successfully converted the SmartBank system to the Flexcube Corebanking system, Lao Agricultural Bank also upgraded its ATM card systems and gradually joined in connecting with many other card payment organizations such as Laps . At the same time, joining in connecting with other card organizations, Lao Agricultural Bank also developed and launched more domestic card products, specifically :

- Domestic ATM debit card:

Is a payment instrument designed and issued by APB for cardholders to use to withdraw cash and make other transactions within the amount of money in the cardholder's account opened at APB within the limit specified by APB from time to time .

- Tax payment card - Smart Tax

Smart Tax Card is designed to pay taxes through the Bank of Agriculture of Lao PDR's banking system as a substitute for cash. The cards with modern chip technology will ensure security while making tax payments for customers. However, the cards cannot be used for cash withdrawal or other purposes.

Benefits: Save time and reduce cash transactions for tax payments. Ensure fairness and transparency in the payment of state obligations by individuals, companies or import-export companies.

- International card at APB ATM

APB accepts other international cards CUP allows cardholders to withdraw cash at APB ATMs. Cash withdrawals become more convenient and faster, 24/7 at any Lao Agricultural Bank ATM located throughout the country.

- Link card products:

Comment