Graduation Thesis

Academy Of Finance
DECLARATION

I declare that this thesis and the work reported herein was composed by and
originated entirely from me. Information derived from the published and
unpublished sources has been acknowledged in the text by means of complete
references.

Hanoi, dated 29th May 2017
Student’s signature

Ngo Thi Phuong Nga

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ABSTRACT

Capital is one of the most significant input factors for any enterprises not just
banks- a special financial intermediation in the economy. Mobilizing capital is a
basic activity of commercial bank. Capital is not only the mean of banking business
activities but also the subject of commercial banks’ business operations. Mobilizing
capital is the primary objective of commercial banks’ business strategy. In the

context of global economic downturn, capital mobilization has become an urgent
requirement to commercial bank. The research studies the theories of capital
mobilization applied by the system of Vietnam commercial bank system. It focuses
on the actual mobilization of BIDV- Ha Noi branch by analyzing the figures and
information reflecting the bank’s financial situation. It also examines difficulties in
mobilizing capital facing commercial bank and mentions some achievements and
shortcomings in capital mobilization activities existing in this bank. More
importantly, the dissertation proposes measures and recommendations to help
commercial bank diversify its methods of raising capital and improve the efficiency
and quality of capital mobilization in the context of global economic downturn.

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ACKOWLEDGEMENT

First and foremost, I would like to express my sincere gratitude to my advisor,
Pham Thi Lan Phuong, M.A- Dean of Faculty of Foreign Languages, Academy of
Finance, for her continuous support of my graduation thesis, for her patience,
motivation, enthusiasm and immense knowledge. This thesis would not have been
possible without the help and advice of Pham Thi Lan Phuong, M.A. The good
advice, support her has been invaluable on both academic and personal level, for
which I am extremely grateful. I owe my deepest gratitude to my supervisor for her
constant and invaluable guidance during my graduation thesis. Her attention, moral

support and timely suggestions were precious in the preparation of my thesis. I am
very thankful to my supervisor for putting me in the track of this research.
Beside my advisor, I would like to express my deep appreciation to managers,
deputy of manager and all staff of Financial Planning Division at BIDV- Ha Noi
branch and also my mentor for the generous help and useful advice in particular
issues related to capital mobilization. They are always willing to give me the
necessary data for my research. With the profound knowledge, experience and
professional working manner in banking sector, members of Financial Planning
Division helped me a lot in analyzing data, gave me many constructive comments
and valuable suggestions.
I am very much grateful to BIDV- Ha Noi branch’s board of director for offering me
the internship opportunity. I am thankful to BIDV- Ha Noi branch leaders for
providing the nice and friendly working environment and creating favorable
conditions for me to accomplish my thesis.

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Moreover, it is a pleasure to thank all members of my thesis reading committee at
Academy of Finance for spending their time on careful reading of my thesis as well
as for their valuable comments
I met some very kind peers who made me stay enjoyable at BIDV- Ha Noi branch. I
am thankful to all of my colleagues in the Internship Group at BIDV- Ha Noi

branch during my Internship process for sharing me useful experience and
knowledge.
Last but not least, these acknowledgements would not be completed without
expressing my sincere thanks to my family and friends for their unconditional love
and support. It is their frequent encouragement during my process of implementing
this dissertation that has played as the spiritual foundation and given me strength to
fulfill this challenging task and make it such a success.

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LIST OF ABBREVIATIONS

1 BIDV: Bank for Investment and Development of Vietnam
2 CDs: Certificate of Deposits
3 HR: Human Resources
4 SVB: State Bank of Vietnam
5 WB: World Bank

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LIST OF FIGURES AND TABLES

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TABLE OF CONTENTS

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INTRODUCTION

1. Rationale of the study
In recent years, Vietnam economy has positive transformation, in accordance with

the world’s development. All aspects of the economy have stronger and more
adventurous steps and have gained certain achievements. Banking is one of the top
aspects for the positive changes. Every year, banking system plays an important role
in development of not only service industry but also the whole economy. In the past
few years, Vietnam’s market has become more and more eventful, especially after
Vietnam took part in the World Trade Organization- WTO. As a result, trade
exchange between Vietnam and other countries is strengthened, which pushes
exchange demand up and leads to development of banking system. As one of the
biggest banks of Vietnam, Vietnam BIDV with its widespread branch system,
including Hanoi BIDV branch has always made effort as pioneers.
In the process of international economy integration, with the outburst of science
technology, demand about capital has increased significantly. Capital plays an
important role in business activities of commercial banks. Capital mobilization is
key mission as well as basis for commercial banks to implement their business
activities. Therefore, enhancing effectiveness of capital mobilization is considered
as critical requirement for existence and development of commercial banks.
Acknowledging this matter, in recent time, Joint Stock Commercial Bank for
Investment and Development of Vietnam Ha Noi Branch has focused on capital
mobilization. However, the fact has pointed out that in addition to achieved results,
drawbacks and difficulties that decelerate effectiveness of capital mobilization have
still existed. From the perspective of this situation, I choose the topic “Some
solutions for strengthening capital mobilization at Joint Stock Commercial
Bank for Investment and Development of Vietnam Ha Noi Branch” for my
graduation essay.

2. Aims of the study

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- Clarify activities and effectiveness in capital mobilization at Joint Stock
Commercial Bank for Investment and Development of Vietnam, then express roles

-

and factors affecting to effectiveness of capital mobilization
Assess overall activities of Joint Stock Commercial Bank for Investment and

-

Development of Vietnam and quality situation of capital mobilization at the branch.
Analyze based on logical basis about evaluation criteria for effectiveness of capital
mobilization to find out reasons for quality situation of capital mobilization at the
branch, then recommend some solutions for strengthening capital mobilization at

the branch.
3. Scope of the study
- Research object: capital mobilization at Joint Stock Commercial Bank for
Investment and Development of Vietnam Ha Noi Branch
- Research scope:
• Research content: activities in capital mobilization of commercial banks under the
effectiveness aspect.
• Research location: Joint Stock Commercial Bank for Investment and Development

of Vietnam Ha Noi Branch
• Research period: from 2014 to 2016
4. Methodology of the study
The essay uses the following research methods: system method, analyzesummarize method, comparative method, statistical method. Documents, data,
charts are collected as basis to make research issue clear.
5. Organization of the study
Not including introduction and conclusion, the graduation essay consists of three
chapters:
Chapter 1: Literature review
This chapter provides general background information of capital and capital
mobilization of commercial banks.
Chapter 2: The study
This chapter provides general background information of situation of capital
mobilization at Joint Stock Commercial Bank for Investment and Development of
Vietnam Ha Noi Branch.
Chapter 3: Recommendations

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This chapter provides some solutions for strengthening capital mobilization at Joint
Stock Commercial Bank for Investment and Development of Vietnam Ha Noi
Branch.


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CHAPTER 1: LITERATURE REVIEW

1.1 Capital and its roles in commercial banks.
1.1.1 Commercial banks and capital of commercial banks
1.1.1.1 Definition of commercial banks
According to Laws on Credit Institution in Vietnam, 2010, commercial bank
could be defined as follows.
Commercial bank is a credit institution that has business activities in the field
of monetary. Its main activities are accepting deposits with liability for
repayment and using these deposits to issue loans and provide payment
services or pay for other related services.
Customers can take advantage of a range of investment products that
commercial banks offer like savings accounts and certificates of deposit. The
loans commercial banks offer can vary from business loans and auto loans to
mortgages.
In the market economy, commercial banks play an important role for economic
development:

•
•

•
•
•

Ensure continuity of the process of manufacturing business
Play a role as a bridge between savings and investment
Accumulate and concentrate capitals
Stimulate manufacture and circulation of goods
Be a tool for the State regulate macro-economy
With these roles, commercial banks are certainly an indispensable part for any
economy of any countries.
1.1.1.2 Functions of commercial banks
A commercial bank is a credit institution with three main functions: credit
intermediary, payment intermediary and money creation.
According to Ph.D. Dang Thi Viet Duc and M.A. Phan Anh Tuan, 2016, The
Theory Monetary- Finance, the Information and Communication publishing
house, functions of commercial banks are explained as follows.

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 Credit intermediary
This is the most basic and typical function of commercial banks. As a credit

intermediary, commercial bank plays a role as a bridge between capital supply
and demand in the society, or between people having idle money and those
who need capital for business and investment. To implement this function, the
bank mobilizes and concentrates idle money from all subjects in the economy.
On the other hand, the bank uses mobilized capital to issue loans to meet
demand of economic subjects. Therefore, commercial bank is both borrower
and lender. Its profit is difference between deposit interest rate and lending
interest rate.

 Payment intermediary
Commercial bank is the treasurer of businesses and individuals. It carries out
payment based on customers’ requirements, for example: deducting money
from their deposits to pay for costs of goods, services or entering money from
selling or other revenues into their deposits. Commercial banks provide
customers many convenient means of payment such as checks, payment card,
credit card… Customers can choose the most suitable mean of payment,
depending on their demands. Thanks to that, economic subjects need not to
keep money in their pocket or carry money for payment. Therefore, they can
save costs, time and guarantee safe payment.

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 Money creation
Money creation is an important function reflecting nature of commercial banks.
With the aim of making profit as a basic requirement for existence and
development, commercial banks with their typical business activities
unwittingly implement money creation function for the economy. Money
creation function is conducted based on basis of the other functions of
commercial bank: credit intermediary and payment intermediary. Through
credit intermediary function, the bank uses mobilized capital to issue loans
which are used to buy goods or pay services by customers while account
balance in their deposits is still considered as a part of transaction money,
continuously used to buy goods or pay services… With this function,
commercial banks increase means of payment in the economy, meeting
payment demand of the society.
1.1.1.3 Capital of commercial banks
To implement functions and run business effectively and profitably, it is
compulsory for the commercial bank to own a certain source of capital.
According to economists, capital of commercial bank is currency value that the
bank creates itself or mobilizes to make loans, invest and implement financial
activities. Therefore, capital mobilization is basis to perform commercial bank’s
functions. Capital mobilization is conducted by opening accounts to make
credits or deposits from customers (term deposit and non-term deposit from
economic institutions, or saved deposits from residents), issue bonds, borrow
other credit institutions or the central bank. By capital mobilization, banks
attract and aggregate idle capital of businesses and residents. Capital
mobilization is an important step in banks’ business process. The more it is
extended, the more the bank’s reputation and position is improved. However,
expanding sources of capital mobilization should be considered between
mobilized capital and spent cost of capital. After owning a certain source of
capital, commercial bank makes loans and investment to make profit.


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1.1.2 Capital’s roles in commercial banks
1.1.2.1 Capital is the basis to organize all business activities in commercial
banks
With characteristics of banking activities, capital is not only a main business
facility but also an important business object. The commercial bank is a
business organization with special type of goods in the market- currency.
Therefore, capital is the first point in the business cycle of commercial banks. It
is the reason why the bank has to pay attention to capital growth during
performance process.
1.1.2.2 Capital sets credit scale and other activities
It is dependent on scale and structure of mobilized capital for commercial
banks to decide investment scale and structure. With large capital, the bank has
enough potential to expand scope and quantity of loans throughout the
domestic market and even the international market. In contrast, due to limited
capital, small banks cannot react quickly to interest fluctuations, which affects
to investment attraction. In a summary manner, a bank which owns an
abundant source of capital can meet demand for loans, expand easily credit
market and enhance payment service as well as other banking services.
1.1.2.3 Capital determines payment capacity and guarantees the bank’s
reputation in the financial market.

In the market economy, to exist and develop, banks are required to have certain
reputation in the market. The reputation is firstly reflected by available
payment capacity whenever customers have demand. The higher the bank’s
payment capacity is, the larger the bank’s available capital is. To guarantee
above conditions, the bank must have a capital that meets both following
requirements: quantity and quality. Therefore, to use mobilized capital
effectively, the bank needs to extend credit scale and improve credit quality.

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1.1.2.4 Capital determines competitiveness of commercial banks.
The large source of capital is an advantage for the bank to extend credit
relationships with economic sectors about scale, quantity and loan maturity
date. In particular, nowadays, formation of a series of credit institutions has
caused intense competition among banks. With an abundant source of capital,
the bank can take the initiative to offer reasonable interest rate to attract
customers. With strong financial capacity, the bank can offer the lowest interest
rate to mobilize capital and the highest one to make loans with the aim of
maximizing profit and attracting investors.
1.2 Ways of capital mobilization of commercial banks
1.2.1 Non-term deposit
Non-term deposit is a deposit a bank or other financial institution that has an

undetermined maturity. It means that depositors can withdraw their deposits
whenever they want. For example, depositor has just put money in a bank
account in the morning, but he or she can withdraw it in the afternoon at the
same day if needed. If there is not demand for using, he or she can let the bank
keep it for a while.
Non-term deposit at any time into non-term accounts of commercial bank
makes it possible to write a check to pay or transfer money in need, so nonterm deposit is also called deposit in checking account. In this case, customers
do not have intention of saving or making interest. They only want to transfer
this currency into different one and prefer to pay by check rather than cash.
Convenient payment of non-term deposit depends on organizational way and
operation of commercial bank that issues it. For deposits in a non-term account
at a bank having widespread branch system and even in remote areas, checks
written by this account’s owner have payment efficiency as fast as cash. It is the
reason why non-term deposit is considered as the closest form to cash.
Transferring this into cash is the fastest and at any time, so in developed
countries, check is considered as strong money. However, for deposits in a bank

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that has a few branches or limited relationship with other banks, checks
written by this bank can be paid in this area but refused in other areas. It may
be the reason why check is not considered as strong money in developing

countries.
In Vietnam, non-term deposit is known as deposit that customers can
withdraw at any time and the bank must accept this request.
1.2.2 Term deposit
Term deposit is a deposit at a bank or a financial institution that has a fixed
return (usually via an interest rate) and a set maturity. That is, the depositor
does not have access to the funds until maturity.
“Term” means that the deposit has minimum maturity based on agreement
between the bank and depositor (customer) and can only be withdrawn after
the term has ended. If depositor has to withdraw money before maturity due of
special reasons, commercial bank will apply one of three following solutions:

• Refuse because that a customer suddenly withdraws deposit can cause loss of
profit for the bank. However, bank often applies two more flexible solutions.

• Request the customer to give a predetermined number of days notice about
withdrawal

• For such sudden requirements for withdrawal, interest rate that bank must pay
for the customer is very low because the customer must pay interest penalty
for affecting to business activities of the bank.
Term deposit has a fixed interest rate. However, deposits with different term
have different interest rate. The longer maturity is, the higher interest rate is.
Banks can use these deposits to invest in services or production with a longer
term, higher profit and stability. Interest rate that the bank offers for term
deposit is often much higher than one for no-term deposit. The reason is that
the bank can completely ease when making loans with stable maturity to make

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more profit by customer’s deposit. Therefore, interest rate must be higher to
attract more depositors.
Term deposits are idle money or savings of individuals, so their purpose for
depositing is to make profit. Term deposit depends on three main parameters:

• Interest rate that commercial bank offers
• Interest rate from other investments such as bonds, stocks…
• Personal income
The first parameter is the most important. Therefore, the most important thing
is how to offer suitable interest policy to attract customers and make returns,
which reflects governance ability of commercial banks.
1.2.3 Fiduciary deposit
Fiduciary deposit is an important financial source for commercial banks.
Fiduciary department supplies a large amount of money for bank as they
manage customer’s assets (including deposit), in which customers can be
enterprises, government agencies, individuals, households, humanitarian
organizations and charities.
During bank’s performance history, fiduciary is one of necessary service forms
which bring profit for customers. Because fiduciary service requires a large
number of highly qualified staff, it does not often bring large profit for bank.
However, along with trend of increasing cost of services, fiduciary business
activity in banks has become a popular source to get service fee. For example,

fiduciary department charges fee for asset management base on asset value
that customers request. Nowadays, these fees become popular to banks
because they are not often influenced by interest fluctuation as other income
sources.
For modern banks, fiduciary department plays a vital role in making high profit
including a significant amount of deposit. Moreover, many banks base on
fiduciary department to build investment funds with aim at facilitating

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customers to make fiduciary deposit as well as help the bank to expand quickly
scale of investment funds.
According to Assoc. Prof, Ph.D. Nguyen Thi Mui and M.A. Tran Canh Toan, 2011,
Commercial bank administration, Finance publishing house, types of deposits
are explained.
1.3 Factors affecting to capital mobilization of commercial banks
1.3.1 Subjective factors
1.3.1.1 Reputation
Reputation is a valuable factor of the commercial bank, especially in market
economy. However, not all banks have reputation built during long
performance process. Customers always go to reputable banks to make
deposits because they believe that the bank can meet well their demand and

limit risk for their investment. Even reputable banks offer lower interest rate
than others. Bank’s reputation can facilitate its customers to conduct extensive
transactions with their partners as partners can completely trust in bank’s
reputation, especially guarantee or international payment sector. Therefore, a
big bank with reputation for years has advantages in mobilizing capital,
stabilizing the mobilized capital and saving costs of mobilization.
Reputation effects on not only capital mobilization process but also other
bank’s activities. Conclusively, banks need to continuously enhance reputation
and deepen relationship with customers via mass media. In addition to access
domestic market, banks need to enhance reputation in the international
market and extend international cooperation.
1.3.1.2 Interest rate policy
Banks always try to find different capital sources with the lowest mobilization
interest rate to get the highest profit while borrowers want banks to pay high
interest rate. The higher interest rate is, the larger mobilized capital is, but the
higher the cost is. A low interest policy limits the number of depositor, which
cause difficulty for bank’s credit and investment. Therefore, banks need to keep

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interest rate that guarantees benefit of both customers and the bank. Deposit
interest rate depends on lending interest rate, interest rate of market, basic

interest rate set by the Central bank, deposit maturity and groups of
customer… For enterprises, they send money into banks for the payment
purpose, so they do not mind interest rate. They concern about services of the
bank and this kind of deposit is called non-term deposit having low interest
rate. Besides, interest rate has significant impact on term-deposit of
enterprises and saved money of residents.
In the context of fierce competition, each bank needs to offer flexible interest
rate. If difference about service quality among banks is trivial, customers will
choose bank having higher deposit interest rate. However, competition by
interest rate is limited. Interest rate influences not only mobilized capital but
also bank’s costs for mobilization. Therefore, exact calculation for deposit
interest rate is considered as a basic factor to determine revenue that the bank
gains from its business assets, then the bank will set fee for each its service.
Conclusively, interest rate is a decisive factor in capital mobilization process of
commercial banks.
1.3.1.3 Facility and technology
Banking activities associate with the strong development of information
technology. Almost banks want to apply the most modern in their activities
because they help banks save transaction time and upgrade convenient
services for customers such as the automatic bank, automatic teller machine or
fast money transfer. If the bank applies technology effectively, it can expand
activity scope, serving time and provide the best services for its customers.
These are auxiliary factors increasing ability to attract capitals as customers
find that they get not only profit but also useful services when making deposits
into the bank.
Technology has changed basically banking activities and made them be
conducted more easily. In past years, thanks to development of information

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technology, many new services and products have been launched. For example,
development of computer network allows banks to provide banking service
24/24 hours, home banking service, credit card, automatic teller machine or
electronic payment system… Distance limitation between domestic and foreign
market is also eliminated by global information network.
1.3.2 Objective factors
1.3.2.1 Economic situation
Economic growth or downturn is shown by criteria: growth rate, GDP, average
income per capita, inflation rate, unemployment rate. Banking is a sector of
national economy; however, it runs business in a sensitive sector as currency,
so banking activities are much influenced by economic turbulences. The more
economy develops, the higher income per capita is. This increases public
savings, belief of the public and stimulate residents to send money into banks.
Besides, economic growth pushes production extension of enterprises, leading
to higher demand for loans, and stimulating banks to strengthen capital
mobilization. In the other hand, when the economy falls into recession, income
decreases and unemployment rate goes up, domestic currency faces to rapid
devaluation, residents do not have income or do not want to send money into
banks. Businesses must downsize production, causing deposit and credit
demand to be reduced.
1.3.2.2 Social- Political situation
A country with stable social- Political situation, high security is a favorable for

economic activities. Residents can trust when sending money into banks. It is
also a good opportunity for domestic banks to apply mobilization forms such as
issuing bonds into foreign market, or attract foreign investors as they find that
investment environment is safe, risk is low and ability to recover capital is high.
1.3.2.3 Psychology and habits of consumers
Consumption habits also have impact on capital mobilization activity of
commercial bank. If residents often use idle money in form of storage, it will be

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difficult for capital mobilization. In contrast, when residents hope to make
profit or conserve their property, they will send money into banks.
In developed countries, banking transactions are very popular. Almost people
having income open an account to conduct banking transactions. However, in
under-developed countries, people have low income, so demand for banking
transactions is low and a few people open an account. This limits bank’s ability
to create money and does not promote effectiveness of transaction accounts.

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1.4 Criteria to evaluate effectiveness of capital mobilization of
commercial banks
1.4.1 Scale of mobilized capital
The scale shows the amount of capital that the bank mobilizes. The higher the
scale of mobilized capital is, the more capital the bank has to operate, develop
and expand its business. The scale also facilitates the bank to increase liquidity
and stability of the source of capital as well as customer’s belief.
The scale of mobilized capital is different through periods. Banks with the wide
scale often take advantages in capital mobilization than small banks. In the
context of competition about market shares, there are not many differences in
interest rate among banks, so customers often choose banks which have wide
scale to ensure safety, high liquidity for their deposits.
1.4.2 The growth rate of mobilized capital
The growth rate of mobilized capital shows the fluctuation of sources of capital,
the bank’s ability in expanding the scale and controlling source of mobilized
capital through years, which effects to enhance and expand the bank’s business
market. The stable growth rate will facilitate the bank to actively determine
long-term developing strategies as well as build the belief for customers to
make deposits and invest in the bank. In another hand, this criterion illustrates
the bank’s competitiveness compared to other commercial banks in capital
mobilization.
Under the quantitative aspect, the criterion about the growth rate of mobilized
capital is often evaluated through the following formula:


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The
growth

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Total amount of capital mobilized from
this period- Total amount of capital

rate of
mobilized
=

mobilized from the previous period

∗100

Total amount of capital mobilized from

capital

the previous period

This creation reflects the fluctuation in the scale of capital mobilization
through periods. If it is beyond 100%, it means that the scale of source of

capital was expanded. The continuous expansion with higher and higher
growth rate of source of capital proves that business scale of the bank is larger
and larger, effectiveness of capital mobilization is more and more improved. In
addition, this creation is used to make a comparison with the growth rate of
other commercial bank’s source of capital or average growth rate of source of
capital in the whole system.
1.4.3 Mobilized capital structure
Mobilized capital structure influences asset structure and average operation
costs of the bank, then affects to lending interest rate. Mobilized capital
structure must be suitable with used capital structure to meet the using
demand, maximum credit and investment outstanding, then maximum profit
without paying interests for abandon source of mobilized capital. By
determining mobilized capital structure, the bank can determine its strengths
and weaknesses in business activities.
Mobilized capital structure is rational when its components meet the capital
using plans and its mobilization costs are the lowest. Capital facilitates the
smooth operation. Then the bank can restructure source of capital, expand the
business scale. Mobilized capital structure can be evaluated based on
proportion of source of mobilized capital:

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Proportion of
each source of =
mobilized

capital

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The amount of each source of
mobilized capital

*100

Total amount of mobilized capital

This proportion reflects relationship about proportion among kinds of sources
of mobilized capital, the suitability of capital mobilization process for different
sources of capital. Mobilized capital structure should be diversifiable and equal.
It is necessary to ensure a rational proportion among short, medium and long
term sources of capital, between domestic and foreign currency… Each source
of capital has its typical strengths and weaknesses in mobilization and
deployment. Therefore, changes in mobilized capital structure lead to changes
in using capital then changes in profit and the safe level of the bank. Changes in
mobilized capital structure partly depend on active regulation plans from the
bank and fluctuation of external factors, which requires the bank to always
concern and research the market to have suitable and immediate adjustments.
1.4.4 Capital mobilization costs
Capital mobilization costs are total costs that the bank spends on capital
mobilization. Capital mobilization costs consist of two types: costs for interest
payment (mobilization interest) and non-interest costs.
Costs for interest payment account for a large amount in total mobilization
cost. The rest amount is non-interest costs such as: costs for salaries of staff,
marketing, machines, facilities…
The main cost which banks concern about is cost for interest payment.

Mobilization interest rate is often determined based on supply- demand
relation in the market. If source of capital is abandon while customers continue
to send money, mobilization interest rate will decrease. In contrast, in the
context of the economic depression or when the Government applies the tight
monetary policy, the shortage of capital in banks will push mobilization

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interest rate up. Besides, depending on competition policy of every bank, banks
can offer higher or lower interest rate than the one of the market.
When evaluating effectiveness of capital mobilization under the cost aspect, the
bank must achieve the following criteria:
Firstly, the bank must find out the lowest source of cost to not only ensure
lending and investment demand but also meet requirements about scale,
maturity and structure.
Secondly, the bank increases profit without taking high risks due to pressure
from increasing mobilization cost. Basically, the bank’s profit is calculated by
total income minuses total cost, mainly costs for interest payment. In order to
maximum profit, the bank must minimum costs. Short- term source of capital
often spends the low and unstable cost. In contrast, the longer the term of
source of capital is, the higher and the more stable the cost is. Therefore, to
plan the business strategy for each period, according to the law, regulations

and costs for interest payment, the bank suggests suitable capital mobilization
policy. To compete to expand source of capital, banks always make efforts to
build their typical advantages, including the advantage in mobilization costs.

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Ngô Thị Phương Nga

CQ51/51.04