Figure 4.1: Ranking of total bank assets as of June 30, 2020 Interest rate situation at commercial banks
In 2019, the interest rate competition heated up the banking market quite fiercely throughout the third quarter. At this time, to compete to attract long-term deposits, banks continuously pushed up long-term mobilization interest rates through regular deposit tools and issuing long-term deposit certificates.
Explaining the reason for the interest rate race, some economic experts said that small commercial banks have to compete to mobilize capital to increase capital to meet the strict requirements of the State Bank. Due to the policy of tightening credit
The real estate sector - one of the important driving forces of credit growth many years ago, so credit growth in 2019 was kept at a moderate level. On the other hand, some enterprises encountered difficulties in production and business, so they reduced their borrowing from banks or sought other mobilization channels. From another perspective, the reason why commercial banks had to increase interest rates to mobilize deposits from the population was because the State Bank tightened money supply, while lending demand was still increasing. The decrease in money supply forced commercial banks to increase mobilization.
The development of the interest rate competition has many potential risks affecting the stability and health of the Vietnamese banking system, creating negative developments and psychology, potentially leading to a race on mobilization interest rates, causing instability in the currency market. In addition, increasing interest rates means increasing costs for businesses, increasing the cost of products and services sold to customers, leading to a decrease in revenue and profit of businesses.
In response to the interest rate race in the banking market, the State Bank of Vietnam has made decisions to adjust and reduce the maximum deposit interest rate in Vietnamese Dong (VND) of organizations and individuals at credit institutions and foreign bank branches (hereinafter referred to as credit institutions), the maximum short-term lending interest rate in VND of credit institutions for various economic sectors and industries. The Governor of the State Bank requested credit institutions to seriously implement solutions to stabilize interest rates and stabilize the macroeconomy; requested credit institutions to effectively implement solutions on interest rates and credit to improve business efficiency and ensure safety in banking operations. The State Bank affirmed that it will closely monitor the implementation of solutions on interest rates and credit of credit institutions and take measures to strictly handle violations of the provisions of law and the direction of the State Bank.
As a result, by mid-November 2019, the interest rate competition had cooled down and quickly reversed when commercial banks suddenly announced a reduction in both deposit and lending interest rates (although the end of the year is always the time when bank interest rates are "anchored" at high levels and tend to increase compared to other times). The State Bank of Vietnam has issued two decisions effective from November 19, 2019 on reducing the maximum interest rate applied to non-term deposits and deposits with terms of less than 1 month from 1.0%/year to 0.8%/year; the maximum interest rate applied to deposits with terms of 1 month or more.
The maximum short-term lending interest rate for capital needs for rural agriculture, export, supporting industry, small and medium enterprises, and high-tech enterprises has also decreased from 6.5%/year to 6.0%/year...
Before the State Bank made the adjustment decision, some commercial banks took the lead in reducing lending interest rates, such as Vietcombank, Vietinbank and BIDV. Vietcombank is the first bank in the group of four state-owned commercial banks to reduce lending interest rates by 0.5%/year for all enterprises. Notably, although the decision to reduce lending interest rates took effect from November 18, 2019, all enterprises that signed loan contracts with Vietcombank from November 1, 2019 will also enjoy this attractive interest rate policy.
VietinBank has adjusted the maximum short-term VND lending interest rate down from 6.5%/year to 6.0%/year for capital needs serving agriculture, rural areas, exports, supporting industries, small and medium enterprises, and high-tech enterprises. BIDV has adjusted the capital mobilization interest rate down by 0.2%/year for all terms (lower than the ceiling interest rate regulated by the State Bank). The adjustment to reduce the capital mobilization interest rate is the basis for BIDV to continue to reduce the lending interest rate by 0.2% - 0.5%/year compared to the current interest rate and maintain the priority lending policy of a maximum of 5.5%/year (lower than the newly adjusted regulation of the State Bank of 0.5%/year) for priority sectors...
The fact that commercial banks have adjusted their lending interest rates down at the end of the year is welcomed by businesses as a surprise gift. Because the interest rate reduction helps reduce the cost burden for businesses, giving businesses more opportunities to expand production and business (at the end of the year, the needs of people and businesses both increase). Thus, it is clear that the State Bank's decision to adjust interest rates down has a positive impact on the market. The interest rate cut, in theory, helps lower the cost of capital, which will stimulate businesses and investors to participate in the market more, promoting better economic development.
However, the question is whether businesses can easily access this cheap capital flow, and whether the interest rate reduction will spread widely in the market to establish a new interest rate level or not? This concern is not unrealistic, because many commercial banks have reached the credit growth ceiling for the whole year of 2019 and have not yet
supplemented by the State Bank. Therefore, in reality, cheap capital is still available, but not all enterprises are eligible to access it. In addition, although interest rates have decreased significantly compared to the previous period, they are still high, especially for small and medium enterprises. Thus, the recent reduction in short-term interest rates is not enough. Many enterprises still expect long-term lending interest rates to decrease further to facilitate production and business.
Some difficulties in accessing banking for businesses
According to the Ministry of Planning and Investment, as of December 31, 2018, the country had 714,755 operating enterprises, an increase of 9.2% compared to 2017. In the period of 2016 - 2018, the number of new enterprises grew strongly, with an average of nearly 123,000 enterprises entering the market each year with a registered capital of about 1.2 million billion VND, an increase of 49.3% in the number of enterprises and 155.8% in registered capital compared to the previous 3-year period.
According to the 2017 Economic Census Report of the Ministry of Planning and Investment, the small and medium-sized enterprises (SMEs) account for about 98.1% of the total number of enterprises nationwide, contributing about 45% of GDP, 31% to the total state budget revenue and attracting more than 5 million jobs. SMEs are considered an important production force of the economy, creating material wealth and jobs for society. However, with the limited scale of enterprises, it is basically difficult for SMEs to access capital from the stock market, issue domestic and international bonds, borrow foreign capital, investment funds... mainly focusing on loans from commercial banks on the basis of enterprises accessing themselves or through the Credit Guarantee Fund for Small and Medium Enterprises and the Small and Medium Enterprise Development Fund.
Studies show that the reasons why businesses have difficulty accessing bank capital include:
On the business side
The operating capacity of small and medium enterprises is mostly small in scale, with weak domestic and foreign competitiveness; outdated technology, lack of management experience; human resources lacking skills and experience; low risk tolerance, poor resilience to macroeconomic fluctuations. Enterprises have not yet linked with each other and with large enterprises to create a competitive value chain at the regional level.
- Most small and medium enterprises have private management and administration methods.
family, no vision, long-term business strategy. Limited management capacity
This is also the reason why small and medium enterprises have difficulty in finding and developing business plans and feasible investment opportunities, and lack of understanding of regulations when accessing loan sources.
- Regarding collateral, small and medium enterprises themselves have many potential risks due to their low asset value, limited cash flow, low credit history and credit rating with banks. Therefore, in addition to assessing business plans, banks tend to require collateral; while due to limited financial capacity, enterprises do not have enough collateral to mortgage to banks.
- The transparency of accounting data and financial accounting information is not up to standard, information is not transparent because small and medium enterprises do not attach importance to building this data system, financial reports are mostly not audited, and accuracy is limited.
On the banking system side
- In the process of lending to small and medium enterprises, due to the characteristics of small and medium enterprises having a short establishment time or business life cycle, there is a lack of stability in business operations and a lack of transparency in information provided to banks, making it difficult for banks to assess the effectiveness of the loan plan, as well as evaluate the customer's reputation to make a lending decision.
- Small and medium enterprises have difficulty in meeting related conditions.
to collateral according to general regulations of the banking system.
- In the context that small and medium enterprises still have limited information on accessing bank loans as well as the capacity to prepare loan applications, the current loan processes and procedures of commercial banks are still quite complicated for small and medium enterprises.
4.2 Sample and response rate
A total of 363 questionnaires were returned out of 400 distributed using convenience sampling method. 27 questionnaires were excluded from the data because they were incomplete and therefore not suitable for use in this study.
According to Sekaran (2003) and Crouch's (1984) recommendation, a sample size of between 300 and 500 is considered an appropriate size for most behavioral studies. Therefore, for the purpose of this study, this sample size is considered acceptable.
4.3 Descriptive statistics
The data in Table 4.1 show descriptive statistics of respondents who switched
bank switchers and respondents who did not switch banks.
Table 4.2 Statistics on subjects switching to use banking services
Subjects of conversion using banking services
Quantity | Proportion | ||
Object | No conversion in 3 recent years | 230 | 63.4% |
Convertible within 3 years recently | 133 | 36.6% | |
Total | 363 | 100.0 | |
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![Pre-tax Profit of Bidv Tien Giang in the Period 2011-2015
zt2i3t4l5ee
zt2a3gsnon-credit services, joint stock commercial bank
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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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![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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Analyze and propose solutions to improve individual customer satisfaction with lending services of Global Petroleum Joint Stock Commercial Bank GP. Bank, Vung Tau branch - 2 -
Solutions to increase individual customer loyalty at Vietnam Joint Stock Commercial Bank for Industry and Trade by 2018 - 2 -
Individual Customer Ranking at Bidv Quang Binh -
Measuring Individual Customer Satisfaction on Service Quality of Joint Stock Commercial Bank for Foreign Trade of Vietnam - Ho Chi Minh Branch Through Survey
Source: Author's synthesis
Table 4.3 Demographic characteristics statistics with bank switching rate
Customer characteristics
Number | Rate (%) | Bank changed (People) | |||
Number | Rate (%) | ||||
Sex | Male (1) | 144 | 39.7 | 54 | 37.50 |
Female (0) | 219 | 60.3 | 79 | 36.07 | |
Year old | From 18-23(0) | 142 | 39.1 | 53 | 37.32 |
23-60(1) | 221 | 60.9 | 80 | 36.20 | |
Job | Civil servants | 36 | 9.9 | 7 | 19.44 |
Workers | 36 | 9.9 | 15 | 41.67 | |
Office staff | 36 | 9.9 | 16 | 44.44 | |
Student | 38 | 10.5 | 16 | 42.11 | |
Self-employed | 108 | 29.8 | 38 | 35.19 | |
Other | 109 | 30.0 | 41 | 37.61 | |
Income | Under 9 million (0) | 125 | 65.6 | 12 | 9.60 |
Over 9 million (1) | 238 | 34.4 | 121 | 50.84 | |
Degree | No college degree (1) | 111 | 30.6 | 10 | 9.01 |
Have a college degree (0) | 252 | 69.4 | 123 | 48.81 | |
Source: Author's synthesis
From the 363 usable questionnaires, it was found that 36.6% (133) of the respondents had switched banks in the past 3 years, while 63.4% (230) of the respondents had not switched banks. Of these, 39.7% were male and 60.3% were female. The dominant groups were in the age group of 23-60 years old, accounting for 60.9%. The majority of the respondents had a university degree, 69.4% (252). In terms of occupation, the dominant groups were respondents in other types of occupations, 30% (109), and self-employed, 29.8% (108).
The respondents were differentiated based on switching or non-switching behavior, with 230 respondents who did not switch banks having demographic characteristics of gender (90 males and 140 females) and education (101 without a university degree and 129 with a university degree).
However, the characteristics of age, occupation and income between those who switched and those who did not switch banks were different. The younger group tended to switch banks more than the older group. The highest proportion of respondents who switched banks were office workers, accounting for 44.44% of the total number of office workers, while the highest proportion of respondents who did not switch banks were civil servants (19.44%).
4.4 Research results
4.4.1 Cronbach's Alpha reliability test
Table 4.4 Cronbach's Alpha reliability test results table
STT
Observation variable | Scale mean if variable excluded | Scale variance if variable is excluded | Total variable correlation coefficient | Cronbach's Alpha coefficient if excluded variable | |
PRICE Cronbach's Alpha = .873; N = 4 | |||||
1. | G1 | 14.85 | 21,191 | ,713 | ,843 |
2. | G2 | 15.20 | 19,691 | ,725 | ,839 |
3. | G3 | 14.87 | 20,343 | ,792 | ,813 |
4. | G4 | 15.36 | 20,060 | ,690 | ,854 |
REPUTATION | |||||
Cronbach's Alpha = .691; N = 5
5. | DT1 | 18.53 | 24,847 | ,494 | ,621 |
6. | DT2 | 18.49 | 24,510 | ,515 | ,612 |
7. | DT3 | 18.76 | 25,807 | ,376 | ,673 |
8. | DT4 | 19.47 | 26,140 | ,385 | ,667 |
9. | DT5 | 18.64 | 25,154 | ,469 | ,632 |
SERVICE QUALITY Cronbach's Alpha = .715; N = 5 | |||||
10. | CLDV1 | 16.04 | 24,299 | ,581 | ,622 |
11. | CLDV2 | 16.05 | 24,335 | ,579 | ,623 |
12. | CLDV3 | 17.01 | 25,014 | ,552 | ,635 |
13. | CLDV4 | 16.55 | 27,336 | ,384 | ,703 |
14. | CLDV5 | 16.92 | 29,330 | ,288 | ,737 |
In the table above, we see that the variable CLDV5 has a correlation coefficient with the total variable of 0.288, less than 0.3, so we proceed to remove this observed variable. SERVICE QUALITY (after removing variable CLDV5) Cronbach's Alpha = .737; N = 4 | |||||
15. | CLDV1 | 12.32 | 17,272 | ,579 | ,648 |
16. | CLDV2 | 12.33 | 16,850 | ,615 | ,626 |
17. | CLDV3 | 13.28 | 17,773 | ,558 | ,661 |
18. | CLDV4 | 12.83 | 19,884 | ,375 | ,762 |
ADVERTISING COMPETITION Cronbach's Alpha = .649; N = 4 | |||||
19. | CTQC1 | 13.33 | 15,388 | ,550 | ,489 |
20. | CTQC2 | 12.91 | 16,384 | ,557 | ,493 |
21. | CTQC3 | 14.13 | 16,679 | ,470 | ,552 |
22. | CTQC4 | 13.14 | 21,489 | ,176 | ,738 |