Structure of Capital Mobilization from Individual Customers by Currency

compared to 2017 and 3,482 billion VND in 2019, an increase of 9.77% compared to 2018. In the period of 2017 - 2019, implementing the strategic direction of VietinBank's business development is to continue to promote wholesale and retail products and services, electronic banking products on a modern technology platform. VietinBank Bac Ninh Branch has successfully deployed many more diverse savings products, flexible capital mobilization, suitable for different groups of individual customers such as over-the-counter savings (at ATM, online), cumulative savings, combined deposits with insurance, preferential t-price deposits (commit to buy foreign currency at a t-price higher than the listed t-price if customers deposit savings at VietinBank), multi-term savings.

In addition to savings deposits, payment deposits have also been developed with many product packages such as VBIZ, V-Supper, Premium account. Each product package will have a required average monthly deposit balance maintained in the account in return for customers receiving preferential fees with the criterion of using more and more, the most outstanding incentive is free money transfers within and outside the system, attracting customers to maintain balance for transactions. The branch has actively directed the growth of capital, especially cheap capital, by measures such as: requiring borrowers' cash flow to transfer to accounts opened at the branch; encouraging customers to receive interest on savings deposits through payment accounts; selling beautiful account numbers (three flowers, four of a kind, fortune, progressive numbers, repeating numbers...) or account numbers according to customers' requests to encourage customers to open accounts and make payment transactions through VietinBank; developing salary payment services to ATM cards; Regulations require all staff in the branch to open a payment deposit account and all monthly salaries are transferred to that account; provide telecommunications, electricity and water collection services through payment accounts. Up to now, at VietinBank Bac Ninh, the number of opened payment accounts is not only large in quantity but the balance of payment deposits has also increased steadily over the years from 293 billion in 2017 to 325 billion in 2019. However, due to the habit of people not being used to not using cash in daily payment transactions, because the payment tools have not met the urgent needs of the people, the income of the people has not been able to accumulate, so the structure of payment deposits for science and technology still accounts for a modest proportion of 7.9% - 8.2%.

Regarding the issuance of valuable papers mobilized from KHCN, the scale of this form of mobilization also accounts for a low proportion, about 7% -7.4% of the total capital mobilized from KHCN. The main reason for the issuance of valuable papers is not more attractive than other forms of mobilization, due to fixed interest rates during the deposit period, the term is not diverse, and the habit of both banks and customers preferring traditional forms of capital mobilization. Since 2017, Vietinbank has conducted public sales of bonds to increase capital with terms of 8 years and 10 years. This is an effort of Vietinbank in general and Vietinbank Bac Ninh Branch to diversify the services provided to customers. Therefore, the form of mobilization by issuing valuable papers has increased over the years. In 2018, it increased by 3.41% compared to 2017, and in 2019, it increased by 4.76% compared to 2018.

2.2.2.2. Structure of capital mobilization from individual customers by currency

Table 2.11: Structure of capital mobilization from individual customers classified by currency at VietinBank Bac Ninh Branch (2017-2019)

Unit: Billion VND

Year

Target

2017	2018	2019	2018/2017 (+-)	2018/2017 (%)	2019/2018 (+-)	2019/2018 (%)
Capital mobilized from Science and Technology	3,588	3,750	4,093	162	104.52	343	109.15
Mobilization in VND	3,495	3,674	4,037	179	105.12	363	109.88
Foreign currency exchange convert to VND	93	76	56	-17	81.72	-20	73.68

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(Source: General Department - VietinBank Bac Ninh Branch)

Chart 2.3 : Structure of capital mobilization from individual customers classified by currency at VietinBank Bac Ninh Branch (2017-2019)

Capital mobilization from science and technology by currency includes: Mobilization in VND and mobilization in foreign currency, mainly USD and EUR. Mobilization in VND accounts for more than 97% of total mobilized resources, accounting for almost 99% by 2019. Mobilization in VND in the past 3 years has tended to increase while mobilization in foreign currency has gradually decreased. VietinBank Bac Ninh Branch is not out of that trend. The proportion of foreign currency deposits accounts for a very small proportion. Foreign currency mobilization is still low and has gradually narrowed partly because the ceiling interest rate on USD deposits has been adjusted down to 0.25% and to 0% to limit the psychology of hoarding foreign currency, stabilizing the foreign exchange market in the context of strong fluctuations in the international currency market, making depositors no longer interested. Vietinbank Bac Ninh Branch has focused on exploiting many sources of capital in VND and foreign currency by focusing on attracting customers, expanding remittance payment services, choosing reasonable rates, and buying foreign currency from customers to deposit in VND.

2.2.2.3. Structure of capital mobilized from science and technology classified by term

Table 2.12: Structure of capital mobilized from science and technology by term of VietinBank Bac Ninh (2017-2019)

Unit: Billion VND

Year

Term

2017	2018	2019	2018/2017		2019/2018
2017	2018	2019	(+-)	(%)	(+-)	(%)
Non-term deposits limit	552.63	543.24	544.61	-9.39	98.30	1.37	100.25
Short term deposits Term < 12 months	2,727.82	2,880.09	3,159.39	152.27	105.58	279.3	109.70
Medium and long term deposits Term >= 12 months	307.54	326.67	389.00	19.13	106.22	62.33	119.08
Capital mobilization verb science and technology	3,588	3,750	4,093	162	104.52	343	109.15

(Source: General Department - VietinBank Bac Ninh Branch)

Chart 2.4: Structure of capital mobilization from individual customers classified by term at VietinBank Bac Ninh (2017-2019)

From table 2.12, we can see that the capital mobilized at the branch is mainly concentrated in terms of less than 12 months (including terms of 1 month, 2 months, 3 months, 6 months, 7 months, 8 months, 9 months, 12 months).

Combining the data in Table 2.12 clearly shows: In terms of term, term capital accounts for the majority of total capital for science and technology. Non-term capital is an unstable and frequently fluctuating source of capital, accounting for only a small proportion. Non-term capital at Vietinbank Bac Ninh Branch accounts for 13-15% of total mobilized capital from science and technology. However, the balance of non-term capital has also maintained growth from 2017 to 2019. Non-term capital is mainly for customers performing payment services, low mobilization interest rates do not attract customers. However, this is also the branch's strategic capital source for payment deposit customers, both attracting cheap capital and combining accompanying payment services.

For term deposits of 12 months or less, the largest proportion is 76-77% of the total capital mobilized from the branch's science and technology. In 2018, the increase

152.3 billion VND compared to 2017, an increase of 5.6%, in 2019 it increased by 279.3 billion VND, an increase of 9.7%. Term deposits from residents still grew quite well, showing that the branch has made many efforts to mobilize deposits from residents more sustainably. At the same time, this is considered a sustainable source of capital for the branch, customers often choose deposit products of 12 months or less because the interest rate is suitable for their needs and if withdrawn early, customers will still be paid with non-term interest.

Deposits over 12 months at branches account for a low proportion of 8.6-9.5%, reaching 307.54 billion VND in 2017, 326.67 billion VND in 2018, an increase of 19.13 billion VND compared to 2017, and 389 billion VND in 2019, an increase of 62.33 billion VND compared to 2018. The reason why deposits over 12 months are low is partly due to people's reluctance to deposit money for long terms, fear of risks and interest rate fluctuations. Although short-term capital will cost less interest than long-term capital, short-term capital accounts for a high proportion, and instability can affect lending. Moreover, in difficult economic times, banks compete fiercely in capital mobilization, so having a stable, long-term source of capital is very important. Therefore, in the coming time, banks in general and VietinBank Bac Ninh in particular need to pay attention and have adjustment policies to increase the weight of long-term, stable capital sources for branches. Capital structure is one of the important factors that branch leaders need to pay attention to in order to have development orientations, expand capital sources in accordance with the market, the psychology of depositors to improve the efficiency of capital use, improve

profit in capital raising activities.

2.2.3. Analysis of market share of capital mobilization from individual customers of Vietinbank Bac Ninh branch compared to other credit institutions in the area

Table 2.13: Market share of capital mobilization for science and technology of commercial banks in the area (From 2017-2019)

Unit: Billion VND, %

Market share

TCTD

2017		2018		2019
Perform	Proportion	Perform	Proportion	Perform	Proportion
VietinBank Bac Ninh Branch	3,588	6	3,750	6.23	4,093	6.35
3 VietinBank branches: Tien Son Branch, Tien Son Industrial Park, Industrial Park Que Vo	10,166	17	10,353	17.20	11,151	17.3
Vietcombank	5,980	10	5,983	9.94	6,123	9.5
BIDV	5,980	10	5,628	9.35	6,381	9.9
Agribank	17,940	30	16,854	28.00	17,403	27
Other credit institutions	16,146	27	17,624	29.28	19,305	29.95
Science and technology capital in the area	59,800	100	60,193	100.00	64,457	100

(Source: Summary report of retail activities of VietinBank Bac Ninh Branch from 2017-2019)

Chart 2.5 : Market share of capital mobilization for science and technology of commercial banks in Bac Ninh province (from 2017-2019)

With the emergence of a series of joint stock commercial banks, state-owned commercial banks are facing the risk of being gradually dominated by joint stock commercial banks and foreign banks in the capital mobilization market. The banking system network in Bac Ninh has been expanded, especially in Bac Ninh city and some districts with concentrated industrial zones such as Tu Son town, Que Vo district, Yen Phong district, Thuan Thanh district, helping people to quickly and conveniently access banking services. However, the number of credit institutions as above shows the level of heat and fierce competition between banks in Bac Ninh.

In general, VietinBank Bac Ninh has made great efforts in finding market share in its business area. Capital mobilized from KHCN has increased steadily over the years, but only accounts for 6-7% of the market share of capital mobilized from KHCN in the whole area. Being in the top 4 largest state-owned commercial banks, VietinBank Bac Ninh ranks 4th after Agribank, always holding the largest market share of nearly 30% of the market share in the whole area, Vietcombank and BIDV account for nearly 10%. One of the reasons is that VietinBank Bac Ninh was established in 1997 and then split into 3 other branches: VietinBank Tien Son, VietinBank Tien Son Industrial Park, VietinBank Que Vo Industrial Park, so in addition to transferring the balance to the 3 VietinBank branches above, competition in both banks outside the system and banks in the same VietinBank system will be difficult. Therefore, in the coming time, to promote capital mobilization as well as credit balance, VietinBank Bac Ninh will have to:

Ninh needs to expand and develop its network to expand its market share.

2.2.4. Expenses and income from capital mobilization activities from individual customers at VietinBank Bac Ninh branch

Along with the growth in the branch's mobilized capital in the period 2017-2019, the cost of mobilizing capital for science and technology in this period also increased over the years from 213.5 billion in 2017 to 318.5 billion in 2019. In the cost of capital mobilization, the cost of paying interest to customers accounted for the majority, reaching about 82%-85%.

Table 2.14: Costs and profits from capital mobilization activities at VietinBank Bac Ninh (from 2017-2019)

Unit: Billion VND

Year

Target

2017	2018	2019	2018/2017		2019/2018
2017	2018	2019	(+/-)	(%)	(+/-)	(%)
Total mobilized capital	4,282	4,632	5,046	350	108.17	414	108.94
Capital mobilization science and technology movement	3,588	3,750	4,093	162	104.52	343	109.15
Cost of mobilization science and technology capital	213.5	293.7	318.5	80	137.56	25	108.44
- Interest expense	183	251	269	68	137.16	18	107.17
- Costs other	30.5	42.7	59.5	12	140.00	17	139.34
Net interest income (NII) from capital mobilization Science and Technology	60	64	76	21	106.67	12	118.75
Completion rate science and technology capital mobilization plan	98.34%	102.72%	99.81%	4.38%	104.45	-2.19%	97.17

(Source: General Department - VietinBank Bac Ninh 2017-2019)

From 2017 to 2019, VietinBank Bac Ninh Branch, with its efforts in many aspects, has maintained a stable growth rate of deposits. To achieve the above results in difficult market conditions, in addition to improvements in operations and product and service quality, VietinBank Bac Ninh also had to implement many more policies to retain old customers and attract new customers. The increase in interest expenses in the context of a corresponding increase in mobilized capital, especially when the market

The market has many fluctuations, banks competing with each other on mobilization interest rates is acceptable. Because mobilization interest rates for banks are costs, but for customers, they are direct economic benefits, which is one of the important factors affecting customers' decisions and deposit behavior. Interest costs may be lower than other banks and decrease compared to previous years due to lower interest rates, but to offset interest costs, banks must increase other costs of customer care, advertising, etc. to retain customers, so the total cost of capital mobilization still increases. However, the average interest payment cost in 2019 tends to decrease, which shows that capital mobilization activities at Vietinbank Bac Ninh are more effective.

In addition to paying interest to customers, banks also incur other non-interest costs in capital mobilization such as deposit insurance, risk provisions, advertising costs, bonus promotion costs, etc. These costs account for more than 20% of the total capital mobilization costs. Although in the process of mobilization, they have tried to continuously minimize related costs, but under the pressure of strong competition in capital mobilization, especially from 2011 to present, when capital mobilization interest rates are controlled by the interest rate ceiling of the State Bank, the agreed interest rate increase cannot be implemented, so they have introduced capital mobilization products with many forms of promotions, causing non-interest costs to increase.

If we only consider the aspect of interest payment expenses, we can only partly assess the effectiveness of the branch's capital mobilization. In terms of income indicators, NII of Vietinbank Bac Ninh Branch has grown quite well. In 2017-2019, the branch received net income from KHCN capital that increased steadily over the years, the growth rate in 2019 compared to 2018 reached 118.75%. Much higher than the growth rate in 2018 compared to 2017. This is indeed a positive signal for capital mobilization activities at Vietinbank Bac Ninh Branch.

2.3. Factors affecting capital mobilization activities of individual customers at Vietinbank Bac Ninh branch

2.3.1. Objective factors

2.3.1.1. Economic environment

Currently, Bac Ninh is one of the provinces with the fastest economic growth rate.