internship report on credit card business plan for the joint stock commercial bank for investment and development of vietnam

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UNIVERSITÉ DE NICE SOPHIA ANTIPOLIS

Institut d’Administration des Entreprises

THANG LONG UNIVERSITYHanọ, Vietnam

INTERNSHIP REPORT ON

CREDIT CARD BUSINESS PLAN FOR THE JOINT STOCK COMMERCIAL BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM

Submitted by: NGUYEN DINH DUNG – AMI9A

ACADEMIC SUPERVISOR

Dr. TRAN DINH TOAN

Thang Long University

COMPANY SUPERVISOR

Mrs. DAO BICH DIEP

Director of Card Center

Bank for Investment and Development of Vietnam JSC.

Hanoi, September 2019

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I would never forget the kindness of all groups and all friendly staffs at BIDV Card Center to help and support me a successful completion of this internship.

Thank you, I truly value the course's valuable knowledge, guidance and information all the AMI professors. I am really glad of my classmates in the AMI course.

And finally, with this result I would like to dedicate and thank my family for always supporting and encouraging me to complete this course.

Wishing everyone health, happiness and success in life, work and study!

Thư viện ĐH Thăng Long

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ABSTRACT

This report is a general result after more than 4 months of internship at the Card Center of Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV). The purpose of this report is to research, evaluate and propose some solutions for BIDV credit card business in Vietnam market.

To carry out those tasks, I applied the knowledge I had learned and researched at the AMI by using methods to assess factors affecting credit cards (Stakeholder Matrix), analysis of credit card business environment (PEST and SWOT).

The next part of the report focuses on the process of deploying the jobs, collecting information and data to try to accomplish goals as above. Thenceforth, I have proposed some solutions and recommendations for BIDV to improve the efficiency of BIDV's credit card business in Vietnam market in the coming time to increase profits.

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1.5. Mission, vision and orientation goals:... 3

1.6. Basic financial data: ... 4

CHAPTER 2: COMPANY STRUCTURE AND ORGANIZATION CHART ... 7

2.1. Structure and organization chart of BIDV: ... 7

2.2. Explain the structure and organization chart of BIDV: ... 9

2.3. The intern’s position ... 14

CHAPTER 3: THE MISSION: ASSIGNED TASKS AND GOALS ... 15

3.1. The tasks assigned: ... 15

3.2. The link between the subject matter and mission: ... 15

3.3. The goals to reach ... 16

3.4. The contribution to the company ... 17

3.5. Theoretical knowledge applied ... 18

5.1. How the goals have been reached: ... 31

5.2. The shortcomings of the internship: ... 32

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INTRODUCTION

Today, with the strong development of information technology, there are a lot of fin-tech companies providing automatic, digital products in life and business activities. There is a great change of behavior, consumer habits and the differences of traditional payment channels and modern online payment channels.

In Vietnam, the government's effort for development of the cashless payment project from 2016 to 2020 has created many business opportunities for banks and technology companies a large strategy in technology has been created by many banks. Additional, most banks also cooperate with fin-tech companies to create high-tech products, automatize processes, improve service quality. By the way, it increases experience for customers, creates competitive advantage, operational efficiency.

At the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) - one of the leading financial institutions in the retail banking business has constantly determined the goal of digitizing activities to meet market needs, improve operational efficiency and profit.

For the credit card service business in Vietnam today, the competitive pressure is huge. Banks compete not only for prices, fees, and quality of service but also create a competitive advantage from modern features, added value as well as providing the best experience for customers. This fact raises the demand for credit card business at BIDV, which needs continuous evaluation, improvement and development to meet the needs of the market and increase profits.

This report will focus on evaluating and analyzing the influencing factors and competitive advantages of BIDV credit card and suggest some effective credit card solutions in the near future. Accordingly, my work consists of 05 chapters with the following contents:

Chapter 1: General description of BIDV: history, products and services, customers, basic financial data for 03 years;

Chapter 2: Structure and organization chart of BIDV and functions, tasks; Chapter 3: Describe about the tasks assigned and goals during the internship;

Chapter 4: Applying the knowledge learned at AMI course to propose some more effective credit card business solutions at the BIDV;

Chapter 5: Proposing some recommendations for the BIDV and general conclusions.

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 1994: Transformation of operation in the model of commercial banks.

 In 2012: BIDV successfully equitized, transformed into a Bank for Investment and Development of Vietnam.

 In 2014: BID code is listed and traded on Ho Chi Minh Stock Exchange

1.3. Products and services:

 Commercial banking activities: capital mobilization (deposits, bonds, promissory notes...); credit extension (loans, guarantees, discounts, credit card issuance...); payment services and funds, and other commercial banking business activities.  Insurance business activities: through the method of establishing a related company

or becoming an agent for insurance companies: life, non-life, reinsurance, others insurance field according to regulations of the Law.

 Other business activities: through direct or indirect investment. BIDV may hold shares or contribute capital as prescribed by law. BIDV establishes a debt management and asset exploitation company to receive, manage, exploit and sell other assets of customers used to pay BIDV debts and other activities in accordance with law.

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1.4. Customers:

 State-owned, private corporations, corporations/large enterprises.

 Economic organizations, domestic and international enterprises of all economic sectors.  Domestic, international financial institutions, credit institutions.

 Individual customers.

1.5. Mission, vision and orientation goals:

 Mission: BIDV brings the best benefits and utilities to customers, shareholders, employees and social community.

 Vision to 2020: Striving to become one of the largest banks in Asia; striving to become the leading bank in Southeast Asia.

o Organizing business administration according to the modern and advanced banking model, aiming at the practices, ensuring transparency, publicity and efficiency, in which priority is given to the development of digital banking strategy in a comprehensive manner all aspects of business operations.

o Developing of high quality human resources; fostering BIDV corporate culture and developing the brand BIDV to be a valuable bank brand, strong brand, spreading widespread awareness to the domestic and international markets.

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1.6. Basic financial data:

Figure 1: Some key business results in the period of 2016 – 2018

Unit: VND billion

ase 2017/2016

Increase/decrease 2018/2017

 Total assets in 2018 reached VND 1.31 million billion, up 9% compared to 2017, continuing to maintain its position as the bank with the largest total assets in the market. Interest and similar income continued to grow well compared to previous years, specifically: an increase of 26% in 2017 and 27% in 2018. Corporate income tax in 2018 only increased by 12% compared to 2017.

 The growth rate of profit after tax decreased from 12% in 2017 compared to 2016 to 9% in 2018 compared to 2017. By the end of 2018, the bank recorded profit after tax of VND 7,542 billion.

Figure 2: BIDV's net interest structure in the period of 2016 – 2018

Unit: VND billion

1 Interest and similar income 62,559 83.99 78,629 85.15 90,074 86.45

3 Income from trading gold and

4 Income from trading securities 728 0.98 697 0.75 997 0.96

5 Income from investment

6 Income from other activities 3,785 5.08 4,594 4.97 3,789 3.64

contribution, share purchase 1,214 1.63 336 0.36 142 0.14

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 BIDV's total revenue in 2018 increased by VND 11.8 trillion compared to 2017, reaching VND 104.2 trillion. This increase is due to interest and similar incomes increased by 11.4 trillion VND in 2018 compared to 2017. This is also the main source of income in BIDV's total revenue, accounting for 85.15% in 2017 and 86.45% in 2018.

 Income from services continued to grow well: 2018 increased by VND 1,190 billion, the growth rate of 2017, making the proportion of total income also increased from 6.08% in 2017 to 6.53%. 2018.

 Income from other business activities that declined in 2018, including: income from trading securities (from VND 344 billion to VND 260 billion), income from other activities (from VND 4,594 trillion to VND 3,789 billion) and income from capital contribution and share purchase (from VND 336 billion to VND 142 billion).

Figure 3: Financial situation of BIDV in the period of 2016 – 2018

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2017 to 95.8% in 2018.

Regarding business results: profit before tax/equity capital after increasing slightly from 17.7% in 2016 to 18.6% in 2017, has dropped sharply to 14.2% in 2018.  The highlight is that the proportion of net income from service activities / profit

before tax increased annually from 32.8% in 2016 to 35% in 2018, showing the trend of shifting the structure of income from interest to income from other products and services.

 Solvency tended to decrease: in 2016 it was 15.78%, in 2017 it was 15.49% and in 2018 it was only 14.24%. The ratio of short-term capital used for medium and long-term loans decreased over the years and remained at 33.33% in 2018. The dividend/par value ratio was maintained at 7% in all 3 years.

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CHAPTER 2: COMPANY STRUCTURE AND ORGANIZATION CHART

2.1. Structure and organization chart of BIDV:

CaviFood Co., Ltd BIDV MetLife Life

Insurance Limited Company

JOINT VENTURES

Vietnam- Russia Joint Venture Bank

BIDV Tower Joint Venture Company

Bank for Investment and Development of Cambodia Plc (*)

SUBSIDIARIES

BIDV Asset Management Company Ltd BIDV International Holdings Company

Ltd. BIDV Insurance

Joint Stock Corporation BIDV Securities

Joint Stock Company MHB Securities

Corporation

International Investment and

Development company Investment and

Development Cambodia Company (*)

Lao-Viet Insurance Joint Venture Company (*) BIDV-SuMi TRUST Leasing

Company Ltd Lao-Viet Joint Venture Bank

Nam Do Debt Settlement Committee

BANKING

Departments/Centers at Head Office

Representative offices Information Technology BIDV Training

School Branches

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GENERAL MEETING OF SHAREHOLDERS

WHOLESALE BANKING

CIB DEPT

SME DEPT

FINANCIAL INSTITUTION DEPT

INTERNATIONAL TRUST FUND DEPT

OVERSEA ENTERPRISE DEPT

RETAIL BANKING

RETAIL BANKING DEVELOPMENT

CREDIT MANAGEMENT

MARKET AND OPERATION RISK

MANAGEMENT DEPT

DEBT SETLEMENT CENTER

PAYMENT CENTER

CUSTOMER SERVICE CENTER

TRADE FINANCE COMMERCIAL

VAULT MANAGEMENT AND

SOUTHERN VAULT SERVICE CENTER

FINANCE & ACCOUNTING

ACCOUNTING DEPT

FINANCIAL DEPT

MIS&ALCO DEPT

OPERATIONAL PERFORMANCE

INVESTMENT MANAGEMENT

BUSINESS SUPPORT

PERSONNEL ORGANIZATION

PLAN AND STRATEGY DEPT

COMMUNICATION DEPT

LEGAL DEPT

IT DEPT

STATE PROPERTY MANAGEMENT

NORTHERN PROJECT MANAGEMENT DPT

SOUTHERN PROJECT MANAGEMENT DPT

UNION OFFICE

PARTY COMMITTEE SUPERVISORY BOARD

INTERNAL AUDIT

STRATEGY AND ORGANIZATION COMMITTEE

BOARD OF DIRECTORS

RISK MANAGEMENT COMMITTEE

HUMAN RESOURCES COMMITTEE

IT COMMITTEE

OTHER COMMITTEES RISK COMMITTEE

ALCO COMMITTEE BOD’S SECRETARIAT

RESEARCH CENTER

BOARD OF MANAGEMENT AND CHIEF ACCOUNT

ALCO COMMITTEE

Structure and organization chart of BIDV’s Head Office:

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Structure and organization chart of BIDV’s branches:

2.2. Explain the structure and organization chart of BIDV: 2.2.1. General structure and organization of BIDV:

 BIDV's organization system as described in section 2.1 above including: o Head office;

o System of affiliated units: transaction center, branches, representative offices, non-business units;

o Subsidiaries;

o Joint-venture companies

 Overview of the relationship between BIDV and its affiliate systems:

o These entities depend entirely on BIDV, deploying business activities, accounting, organization, personnel and other related activities according to the decentralization and authorization of BIDV according to the organizational system Organization and activities apply to these units in each period.

o Based on the General Director's proposal, the Board of Directors approves the organization and operation regulations of the attached units. Accordingly, financial obligations arising from legal contracts and commitments made by the attached units, BIDV will be responsible.

CUSTOMER DIVISONS

RISK DIVISONS

CREDIT MANAGEMENT

CUSTOMER BANKING DIVISIONS

VAULT DIVISONS/UNITS

ORGANIZATION & ADMINISTRATION

TRANSACTION OFFICES

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 Relationship between BIDV and its subsidiaries:

o BIDV assigns and assigns the authorized representative to act directly on behalf of BIDV to manage BIDV's investments in subsidiaries within the lawful charter of these entities.

o Based on the proportion of contributed capital, BIDV may participate in or dominate the subsidiaries in its business operations.

 Relationship between BIDV and joint venture companies:

o BIDV acts as a shareholder contributing capital, having rights and obligations of shareholders in accordance with the company's charter and the provisions of the Law. o BIDV may appoint participants to run the company or only receive benefits from

shareholders or capital contributors.

2.2.2. The management structure of BIDV:

 General Meeting of Shareholders:

This is highest decision-making authority of BIDV, including all shareholders with voting rights. The General Meeting of Shareholders operates through annual or extraordinary meetings in the form of collecting written opinions at the meeting.

 Supervisory Board:

This is voted by the General Meeting of Shareholders. Functions and responsibilities: representing shareholders in independent, objective and honest control and evaluation of BIDV's entire business, administration and administration activities as well as BIDV's financial situation. The Supervisory Board is responsible for the scope of responsibility assigned to the General Meeting of Shareholders. Number of members: 03 people.

 Board of directors:

This is the governing body of BIDV, in the name of BIDV, at its sole discretion, to perform the rights and obligations of BIDV, except for those within the authority of the General Meeting of Shareholders. The Board of Directors is responsible to the shareholders for the performance of BIDV. Number of members: 07 people.

 Board of Management:

The Board of Management is responsible for administering and managing BIDV's affairs in accordance with BIDV's charter of operation. The Board of Management is the supervising body for the activities of the Board of Management. Some councils directly under the Board of Management are: Debt - Asset Management Council; The Credit

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Council and the Debt Sale Council shall account off-balance sheet. Number of members: 10 people (including 02 heads of divisions).

 Functional blocks at BIDV Head Offices:

 Wholesale banking: Maintaining and developing the relationship between BIDV and institutional customers (enterprises, financial institutions, insurance companies, securities, fund management ...); carry out the introduction of products, services and business performance management.

 Retail banking: comprehensively implements research, development, sales and marketing of standard products for individual customers.

 Treasury: performing capital and currency trading activities according to the management requirements of the Debit - Credit Property Council (ALCO); marketing and directly dealing in capital and currency trading products with external customers and affiliates in BIDV system.

 Risk Management: controls and manages credit operations and other risks (operational risks, operational risks, etc.) of BIDV. Examine the business activities proposed by other businesses (for example, assessing credit risk for credits that are beyond the jurisdiction of branches, etc.).

 Operations: make direct payment and payment for domestic payment transactions, international money transfer, SWIFT; loan management, customer service, treasury and trade finance.

 Financial & Accounting: responsible for financial and accounting activities of the banking system, subsidiaries. Being the focal point providing accounting information of the whole system; financial management, analysis and monitoring.

 Investment: manages BIDV's investment and capital contribution activities.  Business support: overall support of BIDV's activities.

Therefore:

o In general, the function blocks at BIDV Head Office are mostly responsible for performing the function of managing and operating the overall operation of the system vertically (according to customer groups); do not directly conduct business and customer management (except for the Treasury) and do not approve centralized credit.

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o Wholesale and retail banking: comprehensive focal points on banking products and services provided to these customers, not business and customer management.

o Risk management: in the field of credit business, head office (through the Credit Risk Management Committee) will approve credit risk for cases of credit extension beyond its authority ruling of the Branches (according to the amount of money, the specific time of credit extension as stipulated by BIDV for each branch in each period).

o Credit card business activities at BIDV (in retail banking): BIDV applies a distributed business model. Details:

 At the branch: the sales department (customer management) is responsible

for marketing, finding customers, approving card credit according to the decentralized authority of the branch, then transferring the dossier to the Head Office to issue a card.

 At the Head office (Card center): receive the branch's proposal, issue the

card to return to the Branch (or pay directly to the customer upon request). The card center is also the unit that sends notices of credit card statements (via email, messages, paper mail) to each customer; performing centralized debt collection operations on the due date of credit card outstanding of customers registering for automatic debit service via payment deposit

accounts at BIDV.

 The branch is still responsible for the comprehensive management of each credit card customer, including the collection of bad debts, indicators of overdue debt ratios, and bad credit card debt of customers.

2.2.3. The branch organization structure chart of BIDV:

 Currently, BIDV has 191 branches (including 01 branch in Myanmar).

 Branches are also divided into 05 blocks, which are divided into 2 groups according to the function of direct business and non-direct business (support, operation):  Customer management divisions, affiliated units: including business customer

divisions; individual customer divisions; transaction offices directly dealing with each group of customers. Inside:

o Customer divisions (business, individual) at the branch office: has the function and task as a focal point to deploy business activities at the branch in the direction of customers (enterprises and individuals). Each branch can have

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number of corporate customer rooms and some individual customer rooms based on the operation scale and resources of each branch.

o The transaction office acts as a miniature branch model, which is an extension of the branch's business operations.

o The transaction office has its own seal, the leader of the transaction office with the title of director and deputy director of the transaction office shall perform the tasks assigned based on the decentralization of authority assigned by the branch director in writing.

 The rest of units: perform indirect support tasks for business units in daily operations of the branch.

 Operating competence: BIDV assigns written decentralization to Branch Directors in the areas of personnel, finance, crediting in each period based on scoring the scale of operations, the annual branch ranking results, the executive management score results, the credit quality of each branch.

 Credit business: BIDV decentralizes credit granting authority to executive levels from the Head Office to each Branch, transaction office involved in the process of granting credit to customer groups (including loans, guarantees, credit via credit card).

Accordingly, the Branch Manager within the scope of authority assigned by the Headquarters is proactively decentralizing the authority to all levels from the Branch leaders, the heads of the customer offices, transaction offices to implement the process of granting credit (including credit card credits)

o When the Head Office processes cases outside the branch's jurisdiction, the increased time will also affect the quality of customer service.

o The Head Office divides the annual business plan (scale, efficiency, quality) for branches, will support, review and evaluate the results of the business plan each quarter.

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2.3. The intern’s position

At my own request, I was assigned to research and practice at the Card Center under the retail division of BIDV. The director of the Card Center is the person who directly guides and supports me during that time.

In order to understand BIDV's credit card business in general and BIDV's credit card business in particular, I have built a research plan, general understanding about BIDV's organizational structure, products and services; as well as the current system of documents and processes for issuing credit cards of BIDV.

Since then, I have joined and coordinated with business groups to evaluate the influencing factors, competitive advantages, outstanding issues of BIDV credit cards and propose some advanced solutions business performance of BIDV credit card in the next time.

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CHAPTER 3: THE MISSION: ASSIGNED TASKS AND GOALS

3.1. The tasks assigned:

I participated in researching and studying in the following groups: Strategic Reports, International Cards, Card Credit so that I could access and assess more details of BIDV's credit card business, in collaboration with officers/groups who have suggested some solutions to improve the credit card business efficiency of BIDV. Including:

 Researching and general understanding on BIDV:

 BIDV's structure and organization chart from head office to branches.  Business lines, products and services of BIDV

 BIDV's general financial situation in the last 03 years.  Research and learn about BIDV Card Center:

 Features and business card model of BIDV

 Functions and responsibilities of the groups at the Card Center  Evaluating, analysing and proposing BIDV's credit card business:

 Applying the learned knowledge of AMI course to analyze the factors affecting BIDV's current credit card business.

 Proposing some solutions for BIDV.

 Recommending some contents for BIDV Card Center

3.2. The link between the subject matter and mission:

The company supervisor guided me through the steps to link between assigned topics and mission.

Firstly, I have to understand the structure and organizational structure of BIDV's business activities from the Head Office to branches, products and services that BIDV is providing to customer groups.

Next, I need to learn about the card business model at BIDV, the task of the groups in this unit to be able to answer the question how to operate card business more effective.

After that, I need to collect information about external and internal factors related to BIDV's credit card business as a foundation for future proposals.

Finally, synthesizing the necessary information, I performed the analysis through the tools PEST, SWOT analysis to suggest some solutions and recommendations for effective credit card business at BIDV in the next time.

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3.3. The goals to reach

With an internship period of more than 04 months, through the guidance and support of my company supervisor, I will have to participate in studying, researching and proposing credit card business solutions at BIDV as a role of a member at the Card Center. Therefore, I have developed an individual plan to achieve as follows:

Researching and general understanding about BIDV

- Understanding BIDV's model, organizational structure and apparatus from the headquarter to branches,

- Know about BIDV's business activities, products and services, - Overview of BIDV's general financial situation

- Finding information through annual reports, financial statements, prospectus in the period of 2016 - 2018,

- Discussing and learning through the company supervisor to better understand the model, organizational structure, corporate culture of BIDV.

15/06

Studying and learning about BIDV Card Center and credit card business

- Understanding the models, functions and tasks of the groups at the Card Center

- Learning about credit card business models and methods at BIDV.

- Searching for information through regulations on functions and duties of BIDV Card Center, assigning tasks to groups at the Card Center. - Directly discussing with the company's supervisor, strategic reporting team, management levels and officials for more detailed information about credit card business activities at BIDV.

10/07