Solutions to Improve Business Efficiency of Vietnam Technological and Commercial Joint Stock Bank

practical for customers' daily needs. Strengthen and promote the development of retail products according to the needs of each small segment and risk level. Strengthen partnerships and existing corporate customers to maximize business opportunities for all parties as well as bring many benefits to customers. Customer care and promotion programs continue to be focused on to bring additional benefits to customers.

+ Wholesale banking services

The orientation of focusing on developing transaction banking solutions, first of all cash flow management and international payment/trade finance solutions is one of the three strategic spearheads of the bank, and is a platform that is focused on solutions to create long-term competitiveness of the wholesale banking strategy, combined with the strong development of relationships with domestic and international financial institutions to ensure the ability to develop and provide excellent and consistent products for customers. The wholesale banking strategy and the construction of high-end and effective financial solutions for customers are closely combined with the solutions of the capital and financial markets sector, investment banking solutions. This is one of Techcombank's breakthroughs in creating capital tools and effective corporate financial management tools for customers.

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People-centric

Techcombank will continue to strengthen its corporate culture based on honesty, cooperation, responsibility and respect. The bank will invest in human resources through professional training programs, business growth targets, and at the same time build a safe, friendly and inspiring working environment for all officers and employees.

+ Human resource development

People are the key factor for the sustainable success of the bank, so Techcombank always focuses on attracting and maximizing the potential of a dynamic, ambitious workforce ready for the next stage.

new stage of development with the scale and position of the best bank in Vietnam. Techcombank continues to cooperate with international human resource consulting organization HayGroup to conduct a survey on the level of efficiency. The Human Resource Management Division continues to be a strategic partner of the business unit in improving the quality of human resource services; coordinating to control and reduce costs, improve compliance; improve the satisfaction rate of internal customers; improve the level of commitment of staff to Techcombank.

+ Customer is the center

The bank strives to bring business decisions closer to customers through four core principles: Convenience, simplicity, efficiency and sustainability.

Convenience

In the new era, more and more customers want to combine transaction time with other activities at home, at work or on the go. With modern technology and systematic investment in customer-centric operating systems, banks are determined to bring their products and services closer to customers.

Simplify

Techcombank is increasingly applying new research findings, embedding the role of customers more deeply in the product design process. This strategy helps the bank create products and services that are tailored to the needs of each customer segment. As a result, the bank will have a better understanding of the overall economy, thereby introducing appropriate products to customers and managing risks more effectively.

Efficiency

Faced with a volatile economic situation, banks need to focus on finding optimal solutions in providing products and services to customers, while improving business efficiency. The bank pays special attention to internal labor productivity improvement programs to improve core processes of the bank.

banking. Not only will it make processes more efficient and consumer-friendly in the long term, in the short term, the program will help solve the bank's cost management problem.

Sustainability

Across the system, Techcombank implements policies that demonstrate high responsibility towards the communities where the bank operates. Together with its team, the bank is committed to continuing to build and develop the proud legacy of the Techcombank brand. The bank is committed to joining hands to contribute to the community in both breadth and depth. In addition to local community programs, corporate social responsibility initiatives continue to focus on education with the program "Teccombank - red scarves to school". The bank will maintain close relationships with the community through practical activities that help increase community value, especially in the field of education. The golden key to helping the bank strengthen community relations is not massive communication campaigns or eloquent reports; but long-term programs that help strengthen the relationship between businesses and the community from the root.

Some basic financial indicators for the period 2015 - 2020

+ Total assets increased by 75% to VND 275,656 billion.

+ 3 times increase in outstanding debt to 206,656 billion VND.

+ Double mobilization to VND 254,720 billion, focusing on individual customers and small and medium-sized enterprises.

+ Profit before tax reached 5,739 billion VND

+ Increase ROA and ROE profitability ratios to 1.9% and 25.5%

+ Income structure focuses on net interest income (about 75 - 77%)

+ Promote service quality improvement to increase fee income by 19%

+ Ensure bad debt is below 3% of total outstanding debt.

4.2. Solutions to improve business efficiency of Vietnam Technological and Commercial Joint Stock Bank

One is: Group of solutions to enhance effectiveness and efficiency of management.

Strengthening strategic management

+ Apply modern management methods, management by objectives and business plans, improve from the stage of building business strategies to the stage of short, medium and long-term development plans, strengthen risk control and expand cooperation. In the development process, constantly improve customer relationships, implement transparency internally and with society.

+ Create a scientific way of thinking, working and managing based on an accurate and complete information system with maximum support from machines, apply a decision support system to serve leaders at all levels in operating and managing banking activities. Enhance technical equipment, working facilities, build a synchronous transaction software program to meet the requirements of operating procedures, specific business processes of the branch and exploit the database well during operations.

Build complete risk management processes and systems

The early warning model was completed in 2011 and is being implemented to help Techcombank detect early loans with potential risks when they are still type 1 debts so that immediate measures can be taken to handle them, contributing to good control of the bank's credit quality. It is necessary to review the entire risk detection process and immediately improve weak points.

After the recent financial crisis, an important lesson learned in risk management for credit institutions is not only to manage risks well in their own organization but also to understand the risk management capabilities of their partners. Due to the nature of system-based operations, the risks of another financial institution can greatly affect the operations of the Bank. Therefore, Techcombank needs to complete the construction of a credit risk management framework for financial institutions to identify risks, assess and measure risks, and at the same time build risk appetites, internal credit scoring systems and guidelines for customers who are financial institutions.

Improve the quality of loan information:

Forming a leadership information channel to provide timely and accurate information to serve management and make smart and accurate decisions. Lending information is a fundamental factor in credit management in a broad sense. In lending, information is a decisive factor that helps the Bank decide whether to invest or not. Lending information can be obtained from available sources at the bank (loan records, information between credit institutions, analysis by credit officers, etc.), from customers (according to the periodic reporting regime or direct reflection), and from other information sources (mass media, courts, etc.). Information provided by customers is often incomplete and inaccurate, so credit officers need to grasp and process information on all issues related to plans and projects from many different sources. On the other hand, the organization stores and collects customer information, technology information, builds a system to provide customer credit scoring and rating information, etc. based on the application of computer software. This will be the basis for more accurate assessment of loan customers and improve the ability, processing speed, and decision making for lending and investment.

To ensure that the information system of commercial banks operates effectively and is a reliable place to help credit officers grasp necessary information, the following measures need to be taken:

 Implement mandatory auditing for corporate clients. First, audit documents, balance sheets and financial performance of loan applicants, initially for projects of medium or larger scale (If there is no audit, there must be a tax settlement report).

 Organize data based on standardized credit indicators, provide information and reports online to all commercial bank branches and departments of the Central Commercial Bank.

Improve the quality of credit control activities

Most banks have established an Asset Liability Management Committee (ALCO Committee) and a Credit Council under the management board to propose and

Monitor the implementation of policies and risk control procedures in general and credit risk in particular. In the credit sector, the development of a credit manual with detailed instructions on the appraisal process, credit scoring, and loan approval in accordance with international standards is a prerequisite to ensure consistent and strict application of credit policies of banks. Over-focusing on credit growth targets in the past has put Techcombank in a state of credit risk, with the consequence that bad debt shows signs of increasing. Techcombank needs to seriously re-control its credit growth target in relation to its resources and ability to control credit risk.

Review the number and qualifications of staff performing credit work, avoid overloading in work which can easily lead to carelessness in appraising and approving loans, thereby increasing bad debt. Techcombank also needs to boldly assign responsibility to staff appraising loan applications, and determine responsibility at each stage for violations. The customer information management and reporting system needs to be transparent, limiting excessive credit concentration in state-owned enterprises.

Measures to improve the quality of credit assets and reduce non-performing loans ultimately aim to increase the profitability of the Bank.

Innovation in loan appraisal and approval process

Currently, Techcombank has successfully implemented the automatic credit file transfer process from branches to approval experts. This is an important factor in eliminating the geographical distance between the place where the file originates and the approval expert at the headquarters, while helping to store and manage files better, monitor service quality commitments professionally, and shorten credit approval time. However, investment loan files before being signed by leaders need to be comprehensively, accurately and objectively reviewed from the file preparation stage, commenting on the business's management and operation capacity, financial capacity, business results, feasibility of the plan, etc. Therefore, if only one

Credit officers in charge of all stages will inevitably make mistakes due to the different professional qualifications and experience of each officer.

Second: Group of solutions to improve operational capacity

Improve asset quality, promote debt settlement

Techcombank makes the most of the activities of the Asset Management and Exploitation Company (AMC) to resolve difficulties and obstacles in credit activities, thereby contributing to increasing financial results and increasing the competitiveness of the bank. Through AMC, the handling of bad debts and handling of collateral will be transparent and specialized with active and appropriate measures to collect bad debts, minimize asset losses and improve the financial situation.

In the immediate future, Techcombank needs to actively strengthen the handling of outstanding debts with the risk reserve fund, and on the other hand, it needs to increase the effectiveness of AMC: exploiting foreclosed assets, recovering debts from businesses with strong measures, including suing these businesses in court.

Another solution to the problem of dealing with outstanding debt is to securitize the debt in the form of CDO (Collaterized Debt Obligation). Techcombank needs to evaluate which loans can be securitized, which will remove the debt from the balance sheet, thereby improving the quality of assets. Securitization has a relatively high risk, is done by debt consolidation, and guarantees for investors, so support from the State is very necessary.

Handling bad debt from the bank's own resources

According to market principles, when bad debts arise in a bank, the first responsibility for handling bad debts will belong to the bank. The sources for handling are risk provisions, collateral, retained earnings and finally equity capital. In terms of economic efficiency, risk provisions and collateral will be the two most prioritized resources. However, in the current difficult economic context, to exploit this resource, banks need to:

- Strictly implement debt classification and provisioning, use provisions properly; strictly implement safety regulations.

- Actively coordinate with customers to restructure debt, extend debt repayment period, and convert debt into equity for customers with temporary financial difficulties. Focus on checking and evaluating business capacity.

- Develop a systematic plan for handling collateral assets, from completing legal documents to assessing the legality and marketability of the assets. However, it is necessary to promote the principle of proactively handling the enterprise's collateral assets through negotiation, bargaining and support.

- Improve internal control and audit capacity.

Reduce operating costs :

Control operating expenses to below 40% of net operating income. To do so, the bank needs to:

+ Reduce salary costs and salary-related costs around the threshold of 40% of operating costs by minimizing manual labor in professional and operational aspects while controlling personnel costs due to ineffective work allocation; build performance evaluation criteria and staff allocation levels for each department, improve employee productivity. Periodically determine and evaluate the profitability per employee, the profitability of equipment, technology, etc.

+ Tightly control the increase in office costs such as: Electricity, water, telephone, printing costs...

Select low-risk customer segments

Focus on customers with stable income working in fields with development potential such as: education, healthcare, finance, banking, insurance, and staff working in administrative units.

Make sure customers understand the risks and potential benefits of any new product.

Continue to cooperate with international multilateral financial institutions such as WB, ADB, JICA, SECO, IFC...

This strategy is not only for capital mobilization and reducing deviation.