BANKING ACADEMY, HANOI BTEC HND IN BUSINESS (FINANCE)

ASSIGNMENT COVER SHEET

NAME OF STUDENT REGISTRATION NO. UNIT TITLE ASSIGNMENT TITLE ASSIGNMENT NO NAME OF ASSESSOR SUBMISSION DEADLINE Chii Group_F02D Phan Thi Thuy Dung Celia F02 037 Nguyen Hong Nhung Chibi F02 135 Tran Thu Trang Maria F02 185 Unit 7: Business Strategy Group Assignment 1 of 2 Vincent Ng 23 November 2010

I, _______Chii Group_______ hereby confirm that this assignment is my own work and not copied or plagiarized from any source. I have referenced the sources from which information is obtained by me for this assignment. Phan Thi Thuy Dung_Celia Nguyen Hong Nhung_Chibi Tran Thu Trang_Maria ________________________________ Signature

______23/11/2010_______ Date

--------------------------------------------------------------------------------------------------------------FOR OFFICIAL USE (Course Administrator) Assignment Received By: Date:

Chii Group_F02D

Page 1

Unit Outcomes
Outcome Evidence for the criteria Feedback Assessors decision Internal Verification

Define the context of business strategy

Analyze how the business environment is considered in strategy formulation. (1)

Explain the significance of stakeholder analysis

Conduct an environmental and organizational audit of a given organization Apply strategic positioning techniques to the analysis of a given organization

Understand the process of strategic planning. (2)

Demonstrate an ability to think strategically

Merit grades awarded Distinction grades awarded

M1 D1

M2 D2

M3 D3

Chii Group_F02D

Page 2

Evidence for the criteria Comments by Assessor - Common Skills Outcome A B C

Feedback

Assessors decision

Internal Verification

Assignment ( ) Well-structured; Reference is done properly / should be done (if any) Overall, youve

Areas for improvement:

ASSESSOR SIGNATURE NAME:......................................................................................... (Oral feedback was also provided) STUDENT SIGNATURE NAME :........................................................................................ FOR INTERNAL USE ONLY VERIFIED YES NO DATE NAME : .......................................................................... : ........................................................................... DATE

DATE

VERIFIED BY : ...........................................................................

COMMON SKILLS & COMPETENCIES ASSESSED (indicated by X) Report about development strategic plan in Vietnam market of SOLVING D. MANAGING TASKS & A. MANAGING & DEVELOPING SELF
1. Managing own roles & responsibilities 2. Manage own time in achieving objectives 3. Undertakes personal and career development 4. Transfer skills gained to new/changing situations & contexts & RELATING TO OTHERS B. WORKING WITH 5. Treat others beliefs and opinions with respect 6. Relate & interact effectively with individuals & groups effectively as a team member 7. Work C. COMMUNICATING 8. Receive and respond to a variety of information information in a variety of visual 9. Present forms 10. Communicate in writing 11. Participate in oral & no-verbal communication X X X PROBLEMS 12. Use information sources 13. Deal with a combination of routine & nonroutine tasks solve routine & non-routine 14. Identify & problems E. APPLYING NUMERACY 15. Applying numerical skills and techniques F. APPLYING TECHNOLOGY 16. Use a range of technological equipment and systems DESIGN AND CREATIVITY G. APPLYING 17. Applying a range of skills and techniques to develop a variety of ideas in the creation of new / modified products, services or situations 18. Use a range of thought processes X

Chii Group_F02D

Page 3

Vietcombank

Prepared for: Mr. Vincent (Lecturer) and Mr. Tran (Tutor)

Banking Academy, Hanoi, Vietnam BTEC HND in Business (Finance) Unit 7: Business Strategy

Prepared by: Chii Group_F02D Student name: Phan Thi Thuy Dung_Celia_F02 037 Nguyen Hong Nhung_Chibi_F02 135 Tran Thu Trang_Maria_F02 185

23 November, 2010.

Chii Group_F02D

Page 4

Table of Contents
Page
I. II.

Assignment coversheet.1-5 Executive summary..6

III. Introduction The context of Vietcombank business strategy....7 IV. Main Body. A. The key stakeholders of the company in Vietnam and the significance of conducting13 B. Conduct an external environment and organizational audit of the company Structure and Culture..16 SWOT analysis..............20 Competitor..33 D. The strategic position of Vietcombank in Vietnam. TOWS matrix..37 V. Conclusion.43 VI. References.44

Chii Group_F02D

Page 5

Executive summary

The purpose of this report is to identify and assess clearly the strengths as well as weaknesses of Vietcombank after a long time developing. Vietcombank is evaluated as a trust and powerful brand in banking field and has strong financial situation and business performance. It always has effective management with good services and a wide network in Vietnam. However, it has the weaknesses are debit balance focuses on state-owned enterprises and retail in banking array develops slowly, bad debts have high proportion. Besides, explaining the significance of conducting a stakeholder analysis and conduct an external environment and organizational audit. In comparison with Vietinbank, one of the main competitors of Vietcombank, the strengths and weaknesses of Vietinbank are also listed. In the last part, Vietcombank uses TOWS Matrix to takes full advantage of strengths and opportunities and avoid the disadvantages of weakness and threats to have suitable and effective strategies.

Chii Group_F02D

Page 6

Introduction The context of Vietcombank business strategy

Vietcombank was established on April 1st, 1963 as a State-owned Commercial Bank. It is the oldest commercial bank for external affairs in Vietnam. During 45 years of build and growth, Vietcombank has developed and grown up in strength following the multipurpose bank model. Beside the field of finance and banking, Vietcombank has also taken part in contributing money, associated with many domestic and foreign businesses in many business fields such as: insurance, immovable, investment fund, etc. Now Vietcombank is the topranking bank of Vietnam with a strong competitive ability and the commitment to the customers is very good.

With many remarkable successes, Vietcombank becomes the first commercial bank in Viet Nam to deal foreign currencies, always takes the largest market share in the interbank forex market. It is the leading commercial bank in trade finance, international payment, forex dealings, advanced Banking - IT implementation with over 100 domestic banks and foreign
Chii Group_F02D Page 7

banks branches operating in Vietnam. Apart from normal lending activities, Vietcombank has been strengthening its activities through domestic and international interbank markets in a bid to improve capital usage efficiency contributing to increasing profits. In the past years Vietcombank always strengthens its role as the most prestigious bank in fields of funding, export and import payment, forex dealing, guarantee and international financial and banking services, thus in the background of drastic competition the Bank still maintains its stable and large market share. Nowadays, Vietcombank is a full member of: o o o o Vietnam Bankers Association Asia Bankers Association SWIFT Visa, MasterCard.

Although achieving many successes, Vietcombank always has to work under pressure because there are many banks have been just established in Vietnam. It means Vietcombank has more and more competitors. Besides, according to the report of BMI (Business Monitor International), to tighten monetary policy in 2010 will impact on Vietnamese Banks and small commercial banks in Vietnam might take a risk. However, BMI forecasted that banking industry of Vietnam will develop much more in the future because there will be participation of many foreign banks. This will make domestic banks work under pressure (Tra My, 2010). Banking system is the heart of the economy. During the previous years, the banking system has provided a great capital source for the economy, accounting for approximately 16% to 18% of GDP annually and was almost equivalent to 50% of total investment capital of the whole country. Vietnamese banking system has developed strongly, efficiently and played a crucial role as the connection between production, consumption, and savings (The Stated Bank of Vietnam).

Chii Group_F02D

Page 8

At the moment, Vietnam has 5 State-owned banks (except Vietcombank), 39 joint stock commercial banks, 40 foreign banks s branches, 5 joint-venture banks, 5 foreign banks (100%), 17 finance companies, 13 leasing companies.

Chii Group_F02D

Page 9

SOCBs take the significant part of banking market (but the main customers are large and medium enterprises), JSB have the ratio Capital/ Total assets much higher than SOCBs and have the ratio outstanding balance / deposit higher than SOCBs (VIB accounts for 80-83%). 1. Vision and mission According to Mintzberg (BPP Professional Education Business Environment course book, 2004, p.27), mission describes the organizations basic function in society, in term of the products and services it produces for its clients. Being one of the oldest commercial banks in Vietnam for external affairs, Vietcombank has known as the most prestigious bank in banking field. With the motto Always for customers success (Vietcombank, n.d), Vietcombanks dominant target is to uphold the role of a leading commercial bank in Vietnam and to be an international one in the region.

Chii Group_F02D

Page 10

Over 45 years of build-up and growth, Vietcombank has developed according to the model of a multifunctional bank with main activities following: mobilize and receive short, medium and long-term deposit funds from organizations and individuals; lending on a short, medium and long-term basis up to the nature and ability of the Banks capital resources; conducting settlement and cash services; and other banking services as approved by the SBV; conducting investments in associate, joint-ventures and other companies; investment in bonds and deal in foreign exchange in accordance with prevailing regulations (Vietcombank, 2008). Besides, Vietcombank supports services about insurance, financial and monetary consultant, investment consultant with function of a commercial bank (Vietcombank, n.d). Moreover, it plays an important role in assisting the State Bank of Vietnam to affect supply and demand of foreign currency in the market to stabilize monetary according to the States goal (Vietcombank, 2003). Generally, Vietcombank has undertook well the main roles of a commercial bank in providing banking products and services with high quality but at the same time has connected business effects with implementing the States policies. 2. Objectives Objectives 1: to increase the total assets by 15% in 2010. S-Specific: the number of total asset in 2010 increases 15% in comparison to last year. M-Measurable: 15%/year. A-Agreed: by managers of Vietcombank. R-Realistic: in 2009, the total assets of Vietcombank was 255,496 billion VND, increased 15% in comparison with 2008 15%/year are acceptable. T-Time bounded: Each year 15% more. Policy: accelerate corporate banking, speed up retail-banking segment to improve the banks capital structure in order to diversify assets and liabilities portfolio for risks management purpose. Objective 2: to reach the income before taxes: 4,500 billion VND. S-Specific: the number of income before tax in 2010 reaches 4,500 billion VND. M-Measurable: 4,500 billion VND A-Agreed: by managers of Vietcombank. R-Realistic: in 2009, the income before taxes of Vietcombank was 3,473 billion VND 4,500 billion VND are acceptable.
Chii Group_F02D Page 11

T-Time bounded: one year from 2009 to 2010. Policy: upgrade technology to meet increasing demand from customers as well as to serve business management and administration better, encourage international and public relations, enhance promotion of the Banks products, services and brand within the network and in the market. Objective 3: to increase total fund mobilization by 20%. S-Specific: the number of total fund mobilization in 2010 increase by 20%. M-Measurable: 20%/year A-Agreed: by managers of Vietcombank. R-Realistic: total fund mobilization of Vietcombank for the year 2009 increased by 17.5% against 2008 20%/year are acceptable. T-Time bounded: one year from 2009 to 2010. Policy: continue working with strategic partners, issue more stocks increase legal capital.

Chii Group_F02D

Page 12

Main Body The key stakeholders of the company in Vietnam and the significance of conducting
Being a Joint Stock Commercial Bank, stakeholders influence strongly on Vietcombank. As many other banks Vietcombank has enough three board of stakeholders. They are internal stakeholders (management and employees), connected ones (Shareholders, customers, competitors, suppliers), and external ones (Central government, local authorities, professional groups, and pressure groups). Basing on stakeholders mapping, there are four levels to evaluate the impact of stakeholders. They are: 1. 2. 3. Minimal effort (low interest, low influence segment, do not have great ability to Keep satisfied (low interest, high influence segment, must be treated with care, Keep informed (high interest, low influence segment, do not have great ability to influence strategy & do not have much interest in the organisation); capable of being key players); influence strategy but their views can be very important in influencing more powerful stakeholders); 4. Key players (high interest, high influence segment, strategy must be acceptable to them). (BBP, 2004, pp.42) Table: Stakeholder mapping of Vietcombank Types Stakeholders Key Internal Stakeholders Connected Stakeholders External Stakeholders
Chii Group_F02D

Stakeholders mapping Keep Keep Satisfied / / / / / Informed

Minimal Effort

Managers Employees Shareholders Customers Competitors Suppliers Central Government

Players /

Page 13

Local Authorities Professional Groups Pressure Groups

/ / /

For Vietcombank, the three main stakeholders considered as key players comprise of the Board of Directors (managers) and Central Government the State. As internal stakeholders, the board of director is considered key players because they have high influence in business and making profit for the bank by their direct participation into the operation and business decisionmaking process. Vietcombank always specifies that it is human resource which is a key factor in the Banks success (Vietcombank, 2003). They create the image for the Bank through theirs excellent performance and achievement. On March 15th 2005, at the meeting of Asian bankers in Bangkok, Thailand, Dr. Vu Viet Ngoan, the CEO of Vietcombank, was chosen to receive the Outstanding Asian Banker 2005 prize. According to a representatives explanation from Asian Banker Magazine, under the leadership of Dr. Vu Viet Ngoan, Vietcombank has succeeded in its restructuring program and raising its financial capabilities through convertible bond issuance. It has also been the most profitable of the state commercial banks in Vietnam (Vietnamnet, 2005). After taking the place of CEO from Dr. Vu Viet Ngoan, Mr. Nguyen Phuoc Thanh also has had much contribution to build and develop Vietcombank. On October 13 th 2008, Mr. Nguyen Phuoc Thanh was awarded the prize of Outstanding leaders in the retail sector in 2008 (Vietcombank, 2008). Additionally, Vietcombank Chairman Mr. Nguyen Hoa Binh was awarded Top 10 Outstanding businessman in exterternal trade affairs the first time in 2009 by The Vietnam Union of friendship Organisation, Voice of Vietnam and Van Hien Magazine; Vietnam Outstanding Businessman in 2009 awarded by Vietnam Chamber of Commerce and Industry (VCCI) (Vietcombank, 2009). In spite of having been privatized, Vietcombank is still under the main management of the State (Central Government) because the State has held about 70% of Vietcombanks total shares (Vietcombank, nd). As a result, the State is still the biggest shareholder of
Chii Group_F02D Page 14

Vietcombank and holds authority and responsibility in operating Vietcombanks activities. Besides the influence of a shareholder, the State has impact on Vietcombank through macroeconomic policies. For example, one of typical macro policies which have been adopted by the Government recently is Circular 13. The circular specify the rates on the safety of the activities of credit organizations, which was officially promulgated on 5/20/2010, replacing Decision 457 of the State Bank (SBV). The increase in CAR from 8% to 9% has impact first to the commercial banks which do not currently achieve this ratio. In particular, the capital adequacy ratio of VCB is currently at 8.45%. Responding to this policy, VCB has plans to increase its capital to 17 trillion in 2010 (after a proposed capital increase, the Vietcombanks CAR will can reach 9.1%), this will cause Vietcombanks shares diluted. In addition, Vietcombank also announced about its divestments at the EIB and PVD as well as a number of other organizations. Article 18 of this circular implies the ratio of bank credit will be reduced to 65-70%. However, pressure from reduce lending rates which led to increases in input costs cannot offset by increasing output rates. With proportion about 80% of Vietcombanks revenue now from the array of credit, even if there are some positive signals from Circular 19, the impact from Circular 13 will significantly reduce the rate of profit margins, leading to reduce the attractiveness of bank shares (atpvietnam, 2010). Clearly, it can be said that Vietcombanks activities as well as business effectiveness and efficiency have been influenced directly and significantly from the Governments macro policies.

Chii Group_F02D

Page 15

Conduct an external environment and organizational audit of the company

Structure and culture

1. Structure Every organization should have a good structure because Good organizational structure leads to efficiency, and less conflicts. The organization structure provides for consistent functions and roles, irrespective of changes in individual membership. (BPP Professional Organisation and behavior course book, 2004, p.6). Vietcombank might have centralization in its organization, following business line. Managers made the decisions, and employees obey the managers, doing what managers ask. Along with centralization structure might be the narrow span of control as well as a tall structure in Vietcombank. Having a large number of levels of management hierarchy, Vietcombank can narrow control spans and a large number of steps on the promotional ladders assists management training. Besides, small groups enable team members to participate in decisions. However, for this reason, the initiatives of employees can be blocked, and the same work has to pass through too many hands. Other disadvantages of tall organization are: inhibit delegation and increase administration and overhead costs, communication problems, as decisions take time to filter down. (BPP Professional Organisation and behavior course book, 2004, p.64). More than that, centralization has some main advantages such as: decisions are made at one point and so are easier to co-ordinate, senior managers in an organization can take a wider view of problem and consequences, and quality of decisions is higher due to senior managers skills and experience. (BPP Professional Organisation and behavior course book, 2004, p.66).

Chii Group_F02D

Page 16

Chii Group_F02D

Page 17

Organizational structure of Vietcombank

Chii Group_F02D

Page 18

2. Culture

Organisational culture is the intangible assets of each business. Along with the development of market economy, the construction of organizational culture is an essential job but quite difficult. Apart from subjective factors, to build organizational culture must also focus on the objective factors. They are the set up market, the benefit of consumers expressed through the principle to protect consumers, and the process of integration into the regional and international economy. A foreign bank participating in the Vietnam market has taken the motto "well-informed about local culture" to penetrate and build its corporate image, to compete with domestic banks. This can be seen as organizational culture is an important factor in making business policy and strategic vision which businesses in general and banks in particular should consider building. At the moment, the operation of banks is competing fiercely. Therefore, to attract customers, beside the improvement of the quality of products and services, an important solution in the competitive problem is the use of manual business culture, including transaction style of bank staffs. Vietcombank was evaluated that the attitude and serving style of staffs is very good. At a transaction room of Vietcombank on Hang Trong Street (Hanoi), customers can feel the respected attitude and the friendliness of every staff. On this street, there are many transaction rooms of other banks, but the number of guests come to this room is always crowded. Established in 1963, Vietcombank now is a State Bank of Vietnam. At this time, the State of Vietnam owns nearly 1,098 billion of the shares of Vietcombank, equal 90.72% (Vietchina business, 2010). Therefore, culture of Vietcombank has been controlled by the State and its operation could not be active like many other commercial banks. However, the trend of Vietcombank is more and more active, not like Agribank. Vietcombank is not active just at some towns which the business effect is weak.

Chii Group_F02D

Page 19

SWOT analysis of Vietcombank

Strengths A trust and powerful brand in banking field. Strong financial situation and business performance. Effective management with good services. A wide network in Vietnam. Products and services are diversified. Opportunities The economy is recovering after the crisis, many businesses need capital, and this is a great opportunity for development of commercial banks. Vietnam's banking sector has huge potential to grow. International integration (joining in WTO) offers many opportunities for Vietcombank. Threats Competition in banking sphere is increasing remarkably, so that market share for mobilization and lending capital is decreasing. Deeper integration of banking industry brings more challenges for Vietcombank. Macro factors such as economic, political and management policy have significant industry. Credit activities are not really effective. impact on banking Weaknesses Debit balance focuses on state-owned enterprises and retail in banking array develops slowly. Bad debts have high proportion. Small and medium sized customers and individual customers are difficult to approach Vietcombank.

Strengths:

S1: Vietcombank is a trust and powerful brand in banking field.

Chii Group_F02D Page 20

According to Vietcombank.com.vn, Vietcombank operated more than 45 years (1/4/1963). It is established while Vietnamese credit system was in the newly formed. Foreign currency trading and import-export payments is an outstanding area of bank beside the development of many other services such as banking cards, credit, investment etc. The Bank for Foreign Trade of Vietnam (Vietcombank) is the unique representative of Vietnam which has been awarded six prizes related to foreign currency business and money managing. These prizes include: the best domestic Provider of FX Services 2009, the best trader on foreign currencies in the 2006-2008 period, the best cash management 2009, the best bank for its creative ideas in foreign currency services, the best intermediary in the trade of foreign currencies, and the bank owning the best online trading background (vietnaminvestment.net). Moreover, in 2008, Vietcombank was selected as the best Vietnamese domestic bank, best foreign exchange service provider and best trade payments service provider by the AsiaMoney and the Trade Finance magazines. Asiamoney was established in 1989 and is a member of Euromoney Group who responsible for writing articles about the finance and banking market in Asia region. Following to qdnd.vn, Vietcombank was awarded the prizes for the best provider of foreign currency services, the best trader on foreign currencies in the 2006-2008 periods, and the best cash management. As one of the largest and the most prestigious banks in Vietnam, Vietcombank now occupies a large market share, holding 10 percent of loans, 12 percent of deposits, 23 percent of international payments and 55 percent of card payments. Besides, Vietcombank was also ranked as the best bank for its creative ideas in foreign currency services, the best intermediator in the trade of foreign currencies and the bank owning the best online trading background. Viecombank also plays the role as the Foreign Exchange Department of the Central Bank (now State Bank) to advise the Committee of the State Bank on foreign exchange management policy, gold, silver, foreign currency management fund; foreign currency trading of Vietcombank is the most powerful and longest in Vietnam (from 1962 to present). So that, VCB is a great brand and has reputation in Vietnamese banking field. S2: Vietcombank has strong financial situation and business performance. S2.1: Strong financial situation

Chii Group_F02D

Page 21

Vietcombank has larger assets and capital scale in the commercial banking system after Agribank and BIDV. Charter capital of the Vietcombank after equitization of 15,000 billion VND, in which the state accounts for 70% and 30% for other shareholders to meet the minimum capital adequacy ratio of 8% according to international standards (vietcombank.com.vn). Furthermore, in 2010, Vietcombank will continue selling shares to increase its chartered capital while maintaining the States ownership in the Banks chartered capital of no less than 51%. Following to Fitch Rating, Vietcombank continues to benefit from a relatively low proportion of loans compared with its total assets (61% at end2009) and therefore its LDR was moderate at 87%. However, it had climbed 15 percentage points since end2008, the highest increase in the Fitchrated sample.

Besides, levels of reserves to gross loans vary widely, from a very low 0.8% at ACB and 0.7% at Sacombank to a more reasonable but still limited 3.4% at Vietcombank at end2009. This suggests that Vietcombank is trying to stabilize the financial situation in the strong development of the banking industry today.

Chii Group_F02D

Page 22

Besides, about profitability, ROA and ROE of Vietcombank over the years are higher than other banks, often reaching 20%, higher than the average of the 10 banks which have the highest ROE was 17.4% and higher than industry average (8:57%). Specially, in 2008, ROE of VCB is 18.43% that is higher than industry average is 12.50%, ROA reached 1.21% at approximately 1.24% of the industry (vietcombank.com.vn). The growth in profitability of VCB shows the stable and balanced finance of VCB over the years.

Chii Group_F02D

Page 23

Chii Group_F02D

Page 24

Source: TVSI S2.2: Business performance In 2009, consolidated total assets as at 31/12/2009 were VND 255,496 billion, up 15.04% compared to 31/12/2008, and 3.7% higher than business plan. Total assets of the bank itself as at 31/12/2009 reached VND 255,067 billion, increasing 15.6% compared to that of 31/12/2008. Also, loans portfolio grew by 25.56%, customer deposits increased by 5.92%; loan quality was improved considerably with NPLs ratio of 2.47%; consolidated income before tax was 5,004 billion VND, increased by 39.39% compared to 2008, leading to a high ROE of 25.58% (vietcombank.com.vn). Some other ratios, such as profit before tax in 2009 reached VND 5,004 billion, up 39.4% compared to that of 2008, which was 50.7% above the target; profit after tax totalling VND 3,944.8 billion; net profit (excluding minority interest) reached VND 3,921 billion, claim the stability and growth of assets and capital of Vietcombank. As a result, this effective business performance is an important strength to help Vietcombank compete with other competitors in future. Moreover, the proportion of cash and balances with the State Bank of Vietnam in total assets was decreased from 15.3% to 11.6% in the year 2009. It shows that Vietcombank has maximized the effectiveness of the use of funds and while ensuring its liquidity. S3: Vietcombank has effective management with good services. S3.1: Business management is effective. Vietcombanks Board of directors has ability and long experience in the banking industry. Some members such as Ms. Nguyen Thi Tam - Deputy General Director of Vietcombank, Mr. Nguyen Van Tuan, Director and Vietcombank CEOs Special Assistant; Mr. Dao Minh Tuan, Director of Vietcombank IT Center; and Mr. Pham Quang Dung, Director of Vietcombank Financial Institutions Department have graduated from universities abroad , so that they have modern working style and administration. It is useful in economic integration nowadays. S3.2: The basic of technology is good. As the first bank in Vietnam completed core banking in 1999, VCB has the more advantages than other banks about the system of centralized data management and product development. VCB has been actively building the Center for Information Technology and development
Chii Group_F02D Page 25

foundation of modern information technology, capable of supporting a maximum of banking operations with investments of about 20-30 million dollars annually for the solution technology. S3.3: Services of Vietcombank dominate in Vietnamese market. Vietcombank has the advantage in the payment activity. Almost every financial institution in Vietnam will open an account at VCB, plus the advantage of IT systems and banking corebanking helped shorten the time of payment, transfer money ... and improving service quality. Ratio of net profit from these activities in total income increased; in 2008 this rate is nearly 11%. VCB accounted for 11.8% (estimated figures to 31/12/2008) market share of deposits of the banking system of Vietnam. Also, the VCB is considered the center of foreign currency payment of Viet Nam's banking system also offers advantages for VCB in the mobilization and foreign currency business. Whats more, about card service, the year 2008 witnessed an impressive growth in the Banks card business: Vietcombank firmly maintained its leading position in number of cardholders with 3.36 million newly issued cards, up 34.47% against 2007. International card payment soared to reach USD642.63 million (up 42% against 2007), making up 59.7% of national card payment turnover. Continuously expanded and upgraded, ATM and point of service (POS) network throughout the country reached 1,244 ATMs and 7,800 POSs in total, strengthening the leading role of the Bank in payment network (vietcombank.com.vn). S4: Vietcombank has a wide network in Vietnam. S4.1: Business location is convenient. In accordance with Vietcombank.com.vn especially in annual reports 2009, it is said that Vietcombank today has grown into a universal bank with presence in all major cities and provinces throughout the country, comprising 1 Head Office in Hanoi, 1 Operations Centre, more than 300 branches and transaction offices nationwide, 3 local subsidiaries, 1 subsidiary in Hong Kong, 4 joint ventures, 3 associated companies and 1 representative office in Singapore. The customer service network is further extended and diversified with 11,183 ATMs and POS across the country. The Banks operation is supported by its relationship with more than 1,300 correspondent banks in approximately 100 countries and territories. S4.2: Extensive network of clients, particularly corporations, large state enterprises.
Chii Group_F02D Page 26

Vietcombank has a system of clients including many large enterprises, especially these businesses have activities related to import and export. S4.3: Vietcombank has relationships with agencies widely. Also thanks to the payment of import and export, Vietcombank is the first bank to build relationships with dealers and foreign banks and maintain a wide international network. Vietcombank has the largest international relationship with about 1200 banks in 85 countries around the world, and has hundreds of accounts at foreign banks such as Foreign Trade Bank of Cambodia, International Moscow Bank, Russian Joint Stock, etc (vietcombank.com.vn). This is a convenient chance for VCB to develop its service charge by providing services such as international payments, money transfer, international payment cards, foreign exchange etc. S5: Products and services of Vietcombank are diversified. For more than 46 years of continuous development, Viecombank has projected itself as the leading banking service provider in Vietnam including traditional services such as international settlement and trade finance, fund mobilization, lending, project finance, etc. as well as modern banking services such as treasury and derivatives, card service, e-banking and so on. The bank takes a significant market share in various business lines, such as: lending (~10%), deposit taking (~12%), international settlement (~23%) and card service (~55%), etc. With advantage of modern banking technologies, Vietcombank is the pioneer in applying advanced technologies in automatic processing of banking services and launching electronic banking services e.g. Internet banking, VCB-Money (Home banking), SMS Banking, Phone banking in order to make banking services familiar to customers (Vietcombank.com.vn). Weaknesses:

W1: Debit balance focuses on state-owned enterprises and retail in banking array develops slowly. In 1999, VCB opened the retail banking system VCB 2010 an advanced banking technological product. The adoption of VCB 2010 facilitates the Bank not only to standardize business and operation processes, shortening transaction time of customers... but also be a fundamental for technology development for the following years. However, currently the proportion of personal lending accounts for only 10% of total outstanding loans of Vietcombank, the proportion of personal businesses lending, small and medium enterprises is
Chii Group_F02D Page 27

low. So to develop according to the right direction of a retail banks, Vietcombank will need a pretty big adjustment. For example, to enhance customer service quality, Vietcombank has issued the Standards of customer service required for tellers and points of transaction; Fee Schedule for Individual customers, Criteria for retail banking activity assessment, etc.

W2: Bad debts have high proportion. In accordance with Fitch Rating, it is illustrated the loan quality trends for the Fitchrated banks. NPLs (loans classified as substandard, doubtful and loss, generally 90 days overdue) ranged from 3.5% at Vietcombank to 0.7% at Sacombank at end 2009. SMLs (loans classified in regulatory Class 2, generally at least 10 days overdue) show a different pattern. At most banks, SMLs to gross loans declined, with the most notable exception of Vietcombank, whose SML ratio climbed to 5.5% at end2009. However, in 2008, VCB's bad debt ratio increased to 4.6% and in the macro-economic conditions as the current difficulties, bad debts will continue to increase if bank looses credit back (vietcombank.com.vn). Causes lead to increasing of overdue debts situation at commercial banks are: the lenders rely on collateral assets, while real estate market and commodity market is underdeveloped and more complicated.

Chii Group_F02D

Page 28

Source: TVSI W3: Small and medium sized customers and individual customers is difficult to approach Vietcombank. Because the VCB history mainly serves large customers, VCB will get troubles when it wants to develop activities related to those objects, while this is growing economic area. So that VCB improve its services to suit individual customers more by providing many other new products which have been implemented in various areas such as credit, bank guarantee, fund raising and internet banking. Opportunities:

O1: The economy is recovering after the crisis, many businesses need capital, and this is a great opportunity for development of commercial banks. GDP data in quarter 3/2009 showed that Vietnam's economic is recovering remarkably though the export sector remains difficulties. According to doanhnhantimes.com, Economist Intelligence Unit forecasts that real GDP growth in 2009 will be the lowest in nearly two decades and then maintained at an average of 6.5% from 2010 to the end of 2013. However EIU indicates that there are some obstacles for economic recovery. Some solution to recover economic in 2008 and 2009 may cause high inflation.

Chii Group_F02D

Page 29

O2: Vietnam's banking sector has huge potential to grow. From 2002 to now, Vietnam's banking sector has very high growth rates; in there average growth in debt is 29.3% and 27.7% was mobilized in a year. The reason is that the overall combination of factors: high GDP growth, private economic growth and many new industries in the early stages therefore develop faster and grow higher in trade etc. In 2008, growth of the banking sector slowed slightly by the impact of the global economic crisis and rising domestic inflation, but still achieved 21% growth in outstanding loans. Population of Vietnam is more than 83 million people, of which only approximately 10% own bank account. Banking services are unknown to many people, especially in rural areas. So Vietnam was still a potential market for the long-term commercial bank to invest. Year Deposit/GDP Cash/Deposit 2000 37% 31% 2001 43% 31% 2002 48% 29% 2003 52% 28% 2004 60% 26% 2005 68% 23% 2010 (divisor) 100%

Source: NHNN v ACNielsen Vietnam O3: International integration (joining in WTO) offers many opportunities for Vietcombank. After 2010, the intervention and protection of the state will reduced according to WTO commitments. This is an opportunity to help Vietcombank demonstrate its capacity and qualifications. Besides, thanks to robust integration process, the bank will have the opportunity to learn experience, the level of technology and management from foreign banks which are often rated as financially strong, technology and executive management. Joining in WTO means that foreign investors will come to Vietnam more and more. People's awareness on the use of banking services will change. Number of individual accounts at

Chii Group_F02D

Page 30

banks will increase fast. These factors create an opportunity to expand markets, products and services for the banking industry. Beside the domestic market, the integration also creates for Vietnam's banking market opportunities to expand foreign market in accordance with international commitments. The integration creates favorable conditions to help domestic credit organizations expand its operations into foreign markets through other forms of service provision in the WTO framework, especially commercial presence and supplying through border. Threats:

T1: Competition in banking sphere is increasing remarkably, so that market share for mobilization and lending capital is decreasing. Currently, only 5 banks with 100% foreign capital (HSBC, Standard Chartered (UK), ANZ (Australia-New Zealand), Shinhan (Korea), Hong Leong Bank of Malaysia) operate in Vietnam. Although these banks' market share is still small, but with the advantages of capital, experience, managerial skills, technology and personnel, they are formidable opponents. However, competitive pressures of the bank sector come not only from the appearance of more and more foreign banks, but also a competition between domestic banks together. For nearly 20 years, the number of banks has increased significantly. From 9 banks in 1991, to October in 2009, the market has a total of 43 domestic banks (three state-owned commercial banks, 40 joint stock commercial banks) (eHow.vn). The bank is constantly evolving both in assets and capital. Until 2008, total assets in whole of banking sector reached 1.7 million billion VND. And the bank also increased its charter capital to meet minimum capital of 3,000 billion VND in late 2010 under the provisions of the State Bank (eHow.vn). Obviously, with this momentum, only the competition to achieve mobilizing market share and lending market share between domestic banks has also fierce. Currently, over 60% mobilizing market share and lending are in the hands of state-owned banks (eHow.vn). Thus, together with an increase in the number of banks, piece of cake for stock commercial banks will increasingly be scaled. No. 1 2 3 4 5 Credit Institutions System in Vietnam State-owned Commercial Bank Bank for Social Policies Development Bank Joint-Stock Commercial Banks Joint-Venture Banks Quantity 5 1 1 34 5
Page 31

Chii Group_F02D

6 7 8 9 10

Branches of Foreign Banks Representative Office of Foreign Banks Finance Companies Financial Leasing Companies People's Credit Fund

31 43 6 11 927 Source: SBV

T2: Deeper integration of banking industry brings more challenges for Vietcombank. The competition among banks is increasingly fierce, especially after 2010. State intervention in business activities of banks will be increasingly reduced and protection is no longer under the WTO commitments. The State is primarily at the macro-management through policy. Before this context, Vietcombank need be more dynamic in business activities. Moreover, human resources in banking field are also a challenge in the integration process. Unless human resource is good, conflicts will arise between the use of human resources and competition for development. Whats more, the international integration that allows foreign banks to participate in all banking services in Vietnam forced the Vietnamese commercial banks have deeper specialization about banking operations, bank management, asset management, risk management, improving credit quality, enhancing efficiency in using of capital, banking services and develop new banking services that foreign banks are expected to apply in Vietnam. Besides, risk management of banking system is still rudimentary due to inadequate knowledge and technology. Financial crisis in Asia in 1997 showed that the risk monitoring, system security is a very important issue of the economy and is a major challenge for the Vietnamese banking system in the integration process. T3: Macro factors such as economic, political and management policy have significant impact on banking industry. 2008 was a typical year showed the impact of macroeconomic, political and management policies of the State Bank on the activities of banks. As a bank 70% owned by the State, these effects on the VCB is unavoidable and deeper with other stock commercial banks. In the overall assessment of the Standard & Poor's (S & P) on Vietnam's weakness indicated that the banking system is a high-risk, state owned large proportion. Policy is instability and
Chii Group_F02D Page 32

uncertainty. For example, The countrys monetary policy is not addressed properly and not flexible enough, the central bank does not respond quickly and appropriately to rising inflation and excessive credit growth (en.baomoi.com). Position of the VCB under International ratings agency Standard & Poors (S&P) is rated as follow: Standard & Poor's Ratings Services has cut the outlook on its counterparty credit rating on Bank for Foreign Trade of Vietnam (Vietcombank) to 'negative from 'stable' and the ratings agency has affirmed the counterparty credit rating at 'BB/B' (highbeam.com). Obviously, according to the evaluation of S & P, credit rating of VCB is equal to the ceiling national credit rating for Vietnam. This is the highest rating of S & P for a financial institution in Vietnam. T4: Credit activities are not really effective. Access to customers information is more difficult. Banking activities is lack of appropriate sanctions when customers breach the credit agreement, causing damage to the bank. On the other hand, state enterprises are accounted remarkably in total outstanding bank credit. This is the business sector whose activities are often less effective than private enterprise and the solving of problems arising when having overdue debts, bad debts are often complex. The challenge to improve credit operations is extremely large.

Competitor of Vietcombank
1.

Vietinbank: one of the main competitors

The Industrial and Commercial Bank of Vietnam (Incombank) was established in 1988 after being separated from State Bank of Vietnam. After carrying out IPO, the new brand name of Viet Nam Bank for Industry and Trade will be changed from Incombank to VietinBank in all branches nationwide from 15 April 2008. Being one of the biggest banks in Vietnam, Vietinbank total assets account for over 20 percent of the whole Vietnamese banking system (Vietinbank, 2009). Vietinbank is the first bank in Vietnam was certified ISO 9001: 2000. The profession of Vietinbank is presented more clearly through the experiences of its staffs. Vietinbank always concentrates on the quality of staff with high education and qualifications in order to run effectively the business organization of Vietinbank. Vietinbank also is the first bank in Vietnam which applies modern technology and e-commerce in its banking operations (Vietinbank, 2009). Besides, Vietinbank achieved some awards such as golden Cup for the third Trademark - Brand name ; award ISO golden cup IV 2008 held,
Chii Group_F02D Page 33

elected and handled by Ministry of Science and Technology, The international quality award - International Star Award (ISAQ) at Swiss. Strengths and weaknesses of Vietinbank are listed as below: STRENGTHS 1. Strong and prestigious brand name in domestic 2. The branch network is large 3. Healthy financial situation and effective business 4. Effective management, good services 5. Diversified products and services WEAKNESSES 1. Main field of business is credit that covers high risks from inexplicit financial report of companies, and unstable economics. 2. Complicated procedures and strict credit condition 3. Cumbersome management system

Some figures to show the market shares of Vietcombank and Vietinbank

Chii Group_F02D

Page 34

Source: TVSI
2.

Competitive environment

Up to the ending of 2010, Vietnam has had 5 state commercial banks; 5 joint-venture banks; 5 banks with 100% foreign capital; 49 branches of foreign banks; 37 stock commercial banks. The following table shows the strong competition among big banks in the banking field in term of total assets (in compared with the whole banking industry), the market share in lending, and the market share in mobilizing, profit after tax.

Total asset Bank compared to industry (%) Agribank BIDV VCB Vietinbank ACB Sacombank Techcombank EAB 21.83 13.43 12.1 10.55 5.74 3.73 3.22 2.43

The market share in lending (%) 27.72 15.05 10.41 11.38 3.32 3.33 2.5 2.89

The market share in mobilizing (%) 25.25 13.75 13.22 10.24 5.41 3.88 3.33 15.33

Proportion of after-tax profit (%) 11.4 10.6 13.58 9.66 11.48 5.11 6.34

Proportion of after-tax profit compared to equity (%) 14.7 18.39 14.63 28.46 12.31 21.03

Source: SBV

Chii Group_F02D

Page 35

However from August 2008, Vietnam government stopped providing license for establishing new commercial banks to avoid the situation of so much existence of banks. This is a good opportunity for Vietcombank to have enough time for prepare for the upcoming competition. From 2005 to 2010, the number of foreign banks and its branches increased. At this time, there are 5 foreign banks and 49 branches of foreign banks. The increasing of banks creates a competitive pressure for Vietcombank (sgtt, 2010). Intensity of competition increases with bank upon the occurrence of groups of banks with 100% foreign capital. Foreign banks are usually available a specific customer segments, most of the enterprises from their countries. They have been serving these customers for a long time in other markets as consumers and expand the market to Vietnam; the bank also opened representative offices. Foreign banks have also not caught the barriers that now many banks are suffering, typically limit securities lending, nonperforming loans in real estate lending. They do have the advantage early and have many choices while no fewer banks in the country, this is not possible. In addition, foreign banks have many advantages such as superior service infrastructure, professional customer service, better technology (typically Internet banking system). And his ability is important to connect with extensive networks in many countries of foreign banks. To compete with this group of banks, domestic banks have been equipped with technology infrastructure, products and services, human scale ... pretty. Advantages of domestic banks are close relationships with customers is available. Domestic banks are willing to lend flexibility to the incentives for their important clients (Trinh Viet Dung, 2009). A different point also making a high competitive level is not much difference between services of banks. Almost banks in Vietnamese banking field has nearly same products and services, it leads to high competition level towards Vietcombank as well as in the banking industry. Therefore the quality and price of service will be key factor to determine banks success (Trinh Viet Dung, 2009).

Chii Group_F02D

Page 36

The strategic position of Vietcombank in Vietnam TOWS Matrix

Strengths S 1. A trust and powerful brand in banking field. 2. Strong performance. 3. Effective 4. A wide management network in with good services. Vietnam.
Chii Group_F02D

Weaknesses W 1. Debit balance focuses on state-owned enterprises and retail 2. Bad in debts banking have array high develops slowly. proportion. 3. Small and medium sized customers and individual customers are difficult to
Page 37

financial

situation and business

5. Products and services Opportunities 1. The crisis, businesses economy is recovering after the many need are diversified. SO Strategies 1. Vietcombank continues to renovate activities regional and to and seizes modernize all aspects of banking of the catch up with standard world. (S1, S2, S3, O3) 2. Vietcombank chances, prove available advantages to develop and expand activities efficiently in both width and depth. (S1, S2, S3, S4, S5,O1, O2, O3)

approach Vietcombank. WO Strategies 1. Diversification of banking products and services to meet the increasing demands of market economy and needs of all customers (both organizations O2, O3) 2. Complete the process of restructuring the bank to have an organizational model of modern science, in line with the objectives and ensure business efficiency, risk control, capable of and providing products and individuals). (W1, W3, O1,

capital, and this is a great opportunity for development commercial banks. 2. Vietnam's sector has banking huge of

potential to grow. 3. A trust and powerful brand field. in banking

services banking diversity in array of retail banking. (W1, Threats 1. Competition banking increasing remarkably, so that market lending share capital for and is mobilization decreasing. 2. Deeper integration of banking brings
Chii Group_F02D

ST Strategies in is 1. Commercial operations develop to are banking core, primarily expand

W2, W3, O1, O3) WT Strategies 1. Focus on promoting capital mobilization by developing an array of retail banking, logical control credit to bad growth debt coupled with credit quality (classified by qualitative) must not exceed 3.5%. (W1, W2, T1, T4) 2. Develop services new for banking small and in by

sphere

wholesale and continue Vietconbanks domestic network. (S1, S4, S5, T1, T4) 2. Enhancing capacity and competitiveness integration WTO

industry more

Page 38

challenges Vietcombank.

for

striving to improve the CAR reached only 1012% ratios and the othe to

medium sized customers and individual customers to compete with foreign banks in the depth of economic integration today. (W1, W3, T1, T2)

3. Macro factors such as economic, and policy banking industry. 4. Credit activities are not really effective. political have management

important

financial

according

international standards, striving for ratings 'AA' under standard of international T2, T3) ranking

significant impact on

organizations. (S2, S3,

1. Vietcombank continues to renovate and modernize all aspects of banking activities to catch up with standard of the regional and world. (S1, S2, S3, O3) This strategy is suitable and possible for Vietcombank in short-term future. To set up this, Vietcombank takes full advantage of strengths such as a trust and powerful brand in banking field, strong financial situation and business performance, effective management with good services as well as some opportunities of a trust and powerful brand in banking field. One of the standards of the regional and world is CAR which is a measure of bank's capital safety, expressed as a percentage of a bank's risk weighted credit exposures. CAR is defined as (Tier 1 capital + Tier 2 capital)/Risk weighted assets *100 percent (stockbiz.vn). This is used to determine the ability of banks' payments at all terms and ensure that it can face other types of risks such as operational risk. In other words, if banks are able to maintain this ratio at regulated level, they have created a safeguard against financial shocks, which could protect themselves and the depositors. From October 1, 2010, according to Circular No. 13/TT-NHNN dated May 20, 2010 of the State Bank of Vietnam (SBV), this rate would be adjusted to nine percent (the popular CAR in the world is 12 percent). Also according to qdnd.vn, the partly-privatised Vietcombank on Sept. 7 received Government approval to raise their charter capital by 33 percent to 17.59

Chii Group_F02D

Page 39

trillion VND (902 million USD). The move aims to help increase the bank's capital adequacy ratio (CAR) to 9-10 percent from 8.45 percent. Whats more, increasing CAR will ensure the operation of the entire system, as banking operations become more risky. So that, Vietcombank should renovate and modernize all aspects such as about banking, securities, etc to improve and catch up with standard of the regional and world. Moreover, Vietcombank also should attract foreign investment to increase working capital. It is useful for Vietcombank to ensure requirements about CAR (9-10 percent) as now. This strategy is an important stepping stone to help Vietcombank integrate deeper and develop further in overseas markets. 2. Vietcombank seizes chances, prove available advantages to develop and expand activities efficiently in both width and depth. (S1, S2, S3, S4, S5,O1, O2, O3) For this strategy, Vietcombank holds opportunities (the economy is recovering after the crisis, huge potential Vietnam's banking sector to grow and a trust and powerful brand in banking field) so as to maintain and enhance its strengths (a trust and powerful brand in banking field, strong financial situation and business performance, effective management with good services, a wide network in Vietnam and products and services are diversified). This strategy helps Vietcombank confirm its position in providing its services diversely while there are more opponents in market such as ACB, Vietinbank, BIDV, ect. 3. Diversification of banking products and services to meet the increasing demands of market economy and needs of all customers (both organizations and individuals). (W1, W3, O1, O2, O3) Most banks in Vietnam are moving toward this strategy. And Vietcombank is one of them. It expands products and services based on some chances (the economy is recovering after the crisis, huge potential Vietnam's banking sector to grow and a trust and powerful brand in banking field), hence improve its weaknesses (debit balance focuses on state-owned enterprises and retail in banking array develops slowly and small and medium sized customers and individual customers is difficult to approach Vietcombank). Implementation of this strategy means that VCB is expanding its market share and business market. 4. Complete the process of restructuring the bank to have an organizational model of modern science, in line with the objectives and ensure business efficiency, risk

Chii Group_F02D

Page 40

control, capable of providing products and services banking diversity in array of retail banking. (W1, W2, W3, O1, O3) To enhance concentration of debit balance on state-owned enterprises and develop retail in banking array as well as decrease the proportion of bad debts and help small and medium sized customers and individual customers approach Vietcombank better, this bank should restructure to manage activities itself more efficiently based on some favorable chances such as the economy is recovering after the crisis, many businesses need capital and the high position of Vietcombank - a trust and powerful brand in banking field. This strategy will improve stagnancy of Vietcombank now and overcome obstacles about capital, management, so on in future. 5. Commercial banking operations are core, develop primarily wholesale and continue to expand Vietconbanks domestic network. (S1, S4, S5, T1, T4) Be a leading bank in Vietnamese banking field, Vietcombank focuses on commercial banking operations mostly. Besides, this bank should improve its strengths about brand, network and diversification in products to get over some remarkable threats about credit activities and competition between other banks in Vietnam market. Therefore, this strategy is proposed to enhance credit activities of Vietcombank by concentration more on wholesale as well as domestic market.

6.

Enhancing capacity and competitiveness in integration WTO by striving to improve the CAR reached only 10-12% and the other important financial ratios according to international standards, striving for ratings 'AA' under standard of international ranking organizations. (S2, S3, T2, T3)

This strategy is a long-term objective to Vietcombank achieve in future. Based on strengths such as strong financial situation and business performance and effective management with good services, Vietcombank try to solve some problems about deeper integration of banking industry as well as the impact of macro factors such as economic, political and management policy on banking field. Fitch Ratings has today affirmed Vietnams BB- (BB minus) Long-term foreign currency Issuer Default Rating (IDR) and its BB Long-term local currency IDR, but revised the
Chii Group_F02D Page 41

Outlook to Negative from Stable. At the same time, Fitch has also affirmed its Short-term foreign currency IDR at B and the Country Ceiling at BB- (BB minus) (amchamvietnam.com). Vietcombank in particular and Vietnamese banking industry in general should strive remarkably to get rating AA under standard of international ranking organizations. 7. Focus on promoting capital mobilization by developing an array of retail banking, logical credit growth coupled with credit quality control to bad debt (classified by qualitative) must not exceed 3.5%. (W1, W2, T1, T4) In accordance with qdnd.vn, Fitch Ratings recently lowered Vietcombank's individual rating from D to D/E, removed the rating from Rating Watch Negative, and affirmed Vietcombank's Support Rating at 4. Fitch said the downgrade reflected Vietcom-bank's substantially weakened balance sheet that arose from excessively strong loan growth and the fragile quality of loans. Vietcombank's credit profile was said to be comparable to D/E-rated Stateowned banks, even though the bank's loan to deposit ratio was among the lowest. Hence, to get higher ranking in individual rating, Vietcombank need develop more services for this customers and focus on management business operations better to increase bad debt and risks from capital mobilization. This strategy is suitable and possible for Vietcombank in shortterm future because it minimizes Vietcombanks weaknesses such as debit balance focuses on state-owned enterprises and retail in banking array develops slowly as well as bad debts have high proportion and avoid threats about competition and ineffective credit activities.

8. Develop new banking services for small and medium sized customers and individual customers to compete with foreign banks in the depth of economic integration today. (W1, W3, T1, T2) Vietcombank gets more difficulty in debit balance because it focuses on state-owned enterprises and retail in banking array develops slowly as well as small and medium sized customers and individual customers are difficult to approach Vietcombank. Therefore, to compete with domestic and foreign competitors, it is useful for Vietcombank in development new banking services for small and medium sized customers and individual customers while this market share is potential and developing in future. In the depth of economic integration

Chii Group_F02D

Page 42

today, this strategy will help Vietcombank minimize its weaknesses and avoid some threats such as increasing competition in banking as well as deeper integration of banking industry.

Conclusion
Vietcombank now is known as the best bank of Vietnam. To have this success, it had to experienced many difficulties in the past and after doing privatization, it has been reached many remarkable achievements. This also showes the positive aspect of privatization process in Vietnam. After many years keep going on and improve, Vietcombank now is the top-ranking bank of Vietnam with a strong competitive ability and the commitment to the customers is very good. Vietcombank always sets up many effective objectives to expand and develop its business activities. As a member of WTO, Vietnam obviously
Chii Group_F02D Page 43

must be influenced by global economy and global crisis. All economic parts within Vietnam will be under that impact including Vietcombank. However with support itself, Vietcombank expresses the economic rehabilitation and proves that Vietnam is a potential destination for foreign investors by striving to complete suitable and possible strategies in short-term future such as Vietcombank continues to renovate and modernize all aspects of banking activities to catch up with standard of the regional and world as well as focus on promoting capital mobilization by developing an array of retail banking, logical credit growth coupled with credit quality control to bad debt (classified by qualitative) must not exceed 3.5%,enhancing capacity and competitiveness in integration WTO by striving to improve the CAR reached only 10-12% and the other important financial ratios according to international standards, striving for ratings 'AA' under standard of international ranking organizations, etc. All objectives Vietcombank points out so as to get the vision always for customers success.

References
1. American Chamber of Commerce in Vietnam, Vietnam's Ratings: Moody's, Standard & Poor's, Fitch's, etc, [online], (accessed 28th October 2010), available from:<http://www.amchamvietnam.com/427>. 2. Atpvietnam (2010), Bo co chuyn su , [online], (accessed 28th October 2010), available from:<http://atpvietnam.com/Library/Doc/94/2010/10/TVSI_20101015_VCB_BCSau.pdf>.

Chii Group_F02D

Page 44

3. BoMi.com, S&P praises economic progress, [online], (accessed 28th October 2010), available from:<http://en.baomoi.com/Info/SP-praises-economic-progress/5/53800.epi>. 4. BPP professional education (2004) Business Environment. 1st ed., London: BPP Professional Education Aldine House, Aldine Place. 5. BPP professional education (2004) Organization and Behavior. 1st ed., London: BPP Professional Education Aldine House, Aldine Place. 6. Doanhnhantimes, EIU d bo v kinh t Vit Nam giai on 2009 2013, [online], (accessed 28th October 2010), available from:<http://doanhnhantimes.com/S65N3241/EIUdu-bao-ve-kinh-te-Viet-Nam-giai-doan-2009-%E2%80%93-2013-.html>. 7. eHow.vn, Ngn hng 2010: p lc nhiu pha, [online], (accessed 28th October 2010), available from:<http://www.ehow.vn/home/modules.php? name=News&op=viewst&sid=6093>. 8. Fitch Ratings, Outlook on Vietnamese Banks, [online], (accessed 28th October 2010), available from:<http://www.vietnameconomics.com/Client/upload/News/User_9/2010/T2/outlookonvn bank.pdf>. 9. HighBeam research, S&P cuts outlook on Vietcombank's counterparty credit rating, [online], (accessed 28th October 2010), available from:<http://www.highbeam.com/doc/1G1178626200.html>. 10. OCB (2010), Xy dng vn ha doanh nghip ngn hng [online], (accedded 16th Novemeber 2010), available from: <http://www.ocb.com.vn/newsdetail-lag-1-tid-2-id909.html>. 11. Peoples Army Newspaper Online, Vietcombank rated Vietnams best bank by AsiaMoney, [online], (accessed 28th October 2010), available from:<http://www.qdnd.vn/qdndsite/vi-VN/61/72/182/156/191/90022/Default.aspx>. 12. Peoples Army Newspaper Online, Vietcombank receives official approval to increase capital, [online], (accessed 28th October 2010), available from:<http://www.qdnd.vn/qdndsite/vi-vn/75/72/182/156/191/123160/Default.aspx>.

Chii Group_F02D

Page 45

13. Stockbiz, Increasing capital adequacy ratio logical, easy to achieve, [online], (accessed 28th October 2010), available from:<http://www.stockbiz.vn/News/2010/9/4/140265/increasing-capital-adequacy-ratiological-easy-to-achieve.aspx>. 14. Tra My (2010), BMI d on lc quan v ngnh ngn hng Vit Nam [online], (accessed 15th November 2010), available from: <http://bee.net.vn/channel/2043/201005/BMI-dudoan-lac-quan-ve-nganh-ngan-hang-Viet-Nam-1754833/>. 15. Vietchina business (2010), Nh nc s hu gn 11 t c phn VIetcombank [online], (accessed 20th November 2010), available from:<http://www.vietchinabusiness.vn/kinhdoanh/ngan-hang/20179-nha-nuoc-so-huu-gan-11-ty-co-phan-vietcombank>. 16. Vietcombank, Annual Report 2008, [online], (accessed 28th October 2010), available from:<http://www.vietcombank.com.vn/en/annual%20report/2008/Performance%20in %202008.pdf>. 17. Viecombank, Annual Report 2009, [online], (accessed 28th October 2010), available from:<http://www.vietcombank.com.vn/AnnualReports/2009/vietcombank_AR09_100622% 20English.pdf>. 18. Vietcombank, Milestones, [online], (accessed 28th October 2010), available from:<http://www.vietcombank.com.vn/en/Content/About%20VCB/Milestones.htm>. 19. Vietcombank, Correspondents and Nostro Accounts, [online], (accessed 28th October 2010), available from:<http://www.vietcombank.com.vn/en/Content/About %20VCB/Correspondents.htm>. 20. Vietcombank (2003), Ngn hng Ngoi thng 40 nm xy dng v pht trin, [online], (accessed 28th October 2010), available from:<http://www.Vietcombank.com.vn/annualreports/2003/nhnt%2040%20nam%20xd.pd>. 21. Vietnamnet (2005), Vietcombank leader honored as outstanding Asian banker, [online], (accessed 28th October 2010), available from:<http://english.vietnamnet.vn/biz/2006/03/550957/>. 22. Vietnam Investment Gateway, Asiamoney names Vietcombank for top honors in Vietnam, [online], (accessed 28th October 2010), available
Chii Group_F02D Page 46

from:<http://www.vietnaminvestment.net/news/asiamoney-names-vietcombank-for-tophonors-in-vietnam/>.

Chii Group_F02D

Page 47