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2.1.1. The formation and development process of the Bank for Investment and Development of Vietnam
BIDV was established under Decision No. 177/TTg dated April 26, 1957 of the Prime Minister with the initial basic task of providing and managing State capital for the construction and reconstruction of the country. Up to now, BIDV has gone through 50 years (1957 - 2007) of formation and development with the following names:
• Vietnam Construction Bank (from April 26, 1957)
• Vietnam Construction and Investment Bank (since June 24, 1981)
• Bank for Investment and Development of Vietnam since (November 14, 1990)
2.1.1.1. Construction Bank with two strategic missions (1957-1980)
Vietnam Construction Bank, the predecessor of BIDV, was established under the Ministry of Finance with a small initial scale, including 11 branches and 200 staff. The main task of the Construction Bank was to allocate and manage basic construction capital from the budget for all economic and social sectors.
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During this period, the Bank provided capital for industrial, agricultural, transportation, and welfare projects, and especially prioritized capital for key projects of the national economy, including important projects such as: North-South Reunification Railway, Da Nhim Hydropower Plant, Ho Chi Minh Mausoleum, Vietnam Television, 3 units of Pha Lai Thermal Power Plant, Chuong Duong Bridge, etc.
2.1.1.2. Vietnam Construction and Investment Bank (1981-1989)
On June 24, 1981, the Government Council issued Decision No. 259-CP on transferring the Vietnam Construction Bank under the Ministry of Finance to the State Bank and changing its name to the Vietnam Investment and Construction Bank, under the direct direction of the General Director of the State Bank.
The main task of the Bank during this period was to allocate, lend and manage capital for basic construction investment in all areas of the economy under the State plan.
Table 2.1: Summary of capital allocation for basic construction 1980-1989
Unit: Million VND
1980
1981 | 1982 | 1983 | 1984 | |
3,713 | 3,039 | 14,409 | 20,339 | 28,366 |
1985 | 1986 | 1987 | 1988 | 1989 |
37,259 | 56,400 | 248,000 | 1,056,500 | 1,594,205 |
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(Source: Proceedings of “Half a century of Vietnam Development and Investment Bank” [17])
During this period, a series of major projects of the country were formed and put into operation such as: Song Da Hydroelectric Project, Thang Long Bridge, Hoang Thach Cement Factory, Bim Son Cement Factory, Ha Long Shipyard ...
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2.1.1.3. Bank for Investment and Development of Vietnam (1990 to present)
Since 1990, the operations of the Bank for Investment and Development of Vietnam have undergone qualitative changes, marking a new turning point in the development process. The Bank has made a breakthrough in eliminating subsidies in basic construction investment, experimented with implementing a medium and long-term investment credit mechanism for production and business projects by mobilizing capital for development investment and switching to commercial banking operations according to market mechanisms. In 10 years (1990-1999), the Bank's lending turnover reached 60,000 billion for the country's economic development programs (programs for developing electricity, energy, cement, oil and gas, post and telecommunications, etc. )
Since 2001, along with the entire Vietnamese banking industry, BIDV has entered a period of comprehensive restructuring with great results: The bank has continued to maintain its growth rate, reaching a total asset size of VND 184,780 billion (equivalent to USD 11.5 billion) as of March 31, 2007, 3 times higher than in 2000, up 10.2% compared to the beginning of the year and up 47.7% compared to the same period in 2006. Capital mobilization reached VND 142,844 billion, up 17.4% compared to the beginning of the year and up 59.3% compared to the same period in 2006. Outstanding credit reached VND 92,867 billion, up 14% compared to the same period last year. The bad debt ratio (according to Article 7/Decision 493) was at 6.44%, down 2.6% compared to the beginning of the year, and the absolute number decreased by nearly 2,500 billion VND, exceeding the plan set for the first quarter of 2007. Equity capital as of March 31, 2007 (if the 3,400 billion VND approved by the Government for additional funding is calculated) is estimated at nearly 13,700 billion VND, of which charter capital is nearly 7,500 billion VND.
According to Mr. Tran Bac Ha, General Director of BIDV, in the 5-year plan after equitization (2008-2012), BIDV will become a multi-owned, multi-industry banking and financial group, with banking activities as its core. By 2012, BIDV strives to achieve total assets of VND560,000 billion (equivalent to USD35 billion). [36] (May 9, 2007)
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2.1.2. Overview of business activities in the last three years
A general assessment when studying BIDV's business performance over three consecutive years 2004, 2005 and 2006, we can easily see that the results of the following year are higher than the previous year. BIDV's business performance is shown through the Bank's three main areas of operation, which are capital mobilization, credit and service activities.
2.1.2.1. Capital mobilization activities
In recent years, the capital mobilization market has always been complicated due to the constant changes in gold and oil prices and the interest rate increase of the US Federal Reserve (FED). On the other hand, credit institutions have also introduced many diverse capital mobilization products with attractive interest rates, creating strong competition. In this situation, BIDV has tried to maintain and increase its mobilized capital. Especially in 2006, the interest rate competition in the market was very fierce and the Vietnamese stock market developed strongly, but BIDV still mobilized 132,035 billion VND, an increase of 36,867 billion VND (38.74%) compared to 2005 and 57,495 billion VND (77.13%) compared to 2004.
The situation of fluctuations in BIDV's mobilized capital is shown in the following table:
Table 2.2: Capital mobilization situation
Unit: Billion VND
STT
Target | 2004 | 2005 | 2006 | ||||
Value | Proportion | Value | Proportion | Value 51,775 | Proportion | ||
1 | Deposit TCKT | 31,899 | 42.79% | 43,095 | 45.28% | 39.21% | |
2 | Deposit population | 35,882 | 48.14% | 43,931 | 46.16% | 64,087 | 48.54% |
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