The international payment analysis ofHo Chi Minh City Development Commercial Joint Stock Bank (HDBank) PDF

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UNIVERSITY OF UEHBUSINESS COLLEGEBANKING DEPARTMENT---  ---The essay of final examinationInternational PaymentTopic: The international payment analysis of Ho Chi MinhCity Development Commercial Joint Stock Bank (HDBank)Class code:Lecturer:Name:Batch:Class:Ho Chi Minh City, December 20 21Contents St...

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UNIVERSITY OF UEH BUSINESS COLLEGE BANKING DEPARTMENT

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The essay of final examination International Payment Topic: The international payment analysis of Ho Chi Minh City Development Commercial Joint Stock Bank (HDBank) Class code: Lecturer: Name: Batch: Class: Ho Chi Minh City, December 2021

Contents I. About HDBank (Ho Chi Minh City Development Commercial Joint Stock Bank) ............................................................................................................... 1 1.

Development History ...................................................................................................................... 1

2.

Achievement .................................................................................................................................... 3

3.

Financial performance.................................................................................................................... 3

4.

Operational performance ............................................................................................................... 8

II.

International payment activities .................................................................10

A.

Theoretical basis............................................................................................................................ 10 1.

Telegraphic Transfer ................................................................................................................ 10

2.

Open Acount.............................................................................................................................. 11

3.

Clean collection and Documentary collection – D/P, D/A .................................................... 11

4.

Cash against documents (CAD) ............................................................................................... 12

5.

Letter of Credit (L/C) ............................................................................................................... 12

B.

International payment activities at HDBank .............................................................................. 12 1.

IMPORT FINANCING ............................................................................................................ 12

2.

IMPORT SERVICES ............................................................................................................... 14

3.

EXPORT FINANCING ............................................................................................................ 17

4.

EXPORT SERVICES ............................................................................................................... 18

III. Conclusion .....................................................................................................20 IV. References......................................................................................................21

List of table

Table 1. Balance Sheet

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Table 2. Business performance report 8

I. About HDBank (Ho Chi Minh City Development Commercial Joint Stock Bank) 1. Development History HDBank was established under Decision No. 47/QD-UB dated 1989

February 11, 1989 with the name of Ho Chi Minh City Housing Development Bank. HDBank received Operation License No. 0019/NHGP dated June 6 1992 issued by the State Bank of Vietnam, officially transformed into

1992

Ho Chi Minh City Housing Development Commercial Joint Stock Bank with a charter capital of 5 billion dong. HDBank increased its charter capital to VN 2,000 billion according

2010

to Official Letter No. 6554/NHNN-TTGSNH dated August 27, 2010 issued by the State Bank of Vietnam. In the same year, HDBank also launched card issuance and insurance services. On September 19, 2011, the State Bank of Vietnam issued a decision to approve the amendment of the name of Ho Chi Minh City Housing Development Commercial Joint Stock Bank to “Ho Chi Minh City

2011

Development Commercial Joint Stock Bank”. HDBank completed increasing its charter capital to VND3,000 billion through issuing shares to existing shareholders. HD acquired 100% equity of Société Générale Viet Finance

2013

(“SGVF”), of Société Générale Group (France) - one of the three largest financial companies in the market for consumer loans in Vietnam to become a subsidiary of HDBank named HDFinance.

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Merging Dai A Commercial Joint Stock Bank (DaiABank) into HDBank, increasing its charter capital to VND8,100 billion DaiABank with 20 years of banking operation, had charter capital o VND3,100 billion. Through the merger of DaiABank into HDBank HDBank increased its chartered capital to VND8,100 billion, tota assets of approximately VND90,000 billion and became one of the 10 largest commercial banks in Vietnam. HDBank successfully transferred 49% of its charter capital a HDFinance to Credit SAISON Co., Ltd. (Japan) and 1% of charter 2015

capital for Ho Chi Minh City Securities Joint Stock Company. HDFinance officially changed legal status from one member limited liability company to one limited liability company with two or more members and changed its name to HD SAISON.

2016

HDBank was ranked at B2 by Moody for long-term deposit credi rating with a stable outlook. The bank increased its chartered capital to VND8,829 billion through issuing shares to pay 7% dividend and 2% bonus shares to existing shareholders.

2017

The bank increased its charter capital to VND9,810 billion through private share issuance. IPO was successful and HDB was approved to list on HOSE.

2018

Listed on HOSE and in the group of 20 largest capitalization stocks on HOSE.

2

Moody's announced to raise the ranking of long-term deposits (domestic and foreign currencies), counterparty risk rating (CRR) and counterparty risk assessment (CRA) of HDBank to B1, a stable outlook.

2. Achievement These were some of the honors that HDBank received in 2019: HDBank has 3 awards as Best Trade Finance Service in 2019 awarded by Asiamoney; Best Cash Management Service in Vietnam in 2019 awarded by Euromoney; Asia Pacific Leading Trade Finance Service in 2019 awarded by Euromoney. Next, HDBank is the typical Green Credit Bank awarded by VNBA and IDC; Best Domestic Retail Bank of 2019 awarded by Asian Banking & Finance. Moreover, they won the Green Bank Award – The Bank with the best Green Trade Finance transactions in 2019 awarded by ADB; won the annual report Platinum award presented by LACP. HDBank is the Best Place to Work in Asia awarded by HR Asia; in the Top 6 most prestigious private joint stock commercial banks in Vietnam voted by Vietnam Report; is the Top 10 listed large-cap companies with the best Annual Report voted by HOSE and Investment Newspaper; in the Top 10 Sustainable Trading - Service Enterprises in 2019 voted by VCCI. In addition, HDBank is also the Standard Electronic Payment Implementation Bank in 2019 (MT 103) and (MT 202) awarded by JPMorgan; Green Credit sponsoring bank and Bank with the best service quality in 2019 voted by VnEconomy and Vietnam Economic Times 3. Financial performance

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Table 1. Balance Sheet Source: HDBank -

Total assets

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At the end of 2020, HDBank's total consolidated assets reached VND 319,127 billion, up 39.1 percent from the previous year and accounting for 104.5 percent of the plan. Besides growing in size, HDBank also maintained a strong balance sheet with good liquidity. Consolidated capital adequacy ratio reached 12.1%, a YOY increase of 0.9 percentage points, which effectively ensured capital adequacy requirement under Basel II. The asset structure continued to aim at increasing profitable asset proportion in the total assets, ensuring maximum profit for HDBank. HDBank successfully increased its charter capital from VND 9,810 billion in 2019 to VND 16,088 billion (65%) in 2020 through issuing shares as stock dividends in 2019 and increasing equity from owners’ equity. -

Mobilization performance

HDBank's overall capital mobilization in 2020 is VND 287,165 billion, up 40.9 percent from 2019. This equates to 104.3 percent of the target, assuring robust capital demand and healthy liquidity. Specifically, customer deposits (including valuable paper issuance) reached VND 208,953 billion, representing a YOY increase of 38.4%. Demand deposits accounted for 12.4% of the total customer deposits, which was the main factor to reduce mobilization cost and improve net interest margin. -

Credit performance

Total credit balance reached VND 188,228 billion, up 23.0% compared to 2019, reaching 105.8% of the plan and in line with the credit growth orientation of the State Bank. Especially, for small and medium-sized enterprise customers, HDBank has spent 10,000 billion VND in loans to stabilize the consumer goods manufacturing market and the make-in supply chain in Vietnam. supporting domestic farming, processing and manufacturing industries with a flexible interest rate of only 6.5%/year. Besides, HDBank spends VND 5,000 billion in preferential financing, with a preferential interest

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rate of only 6.5%/year to help businesses supplement capital sources to maintain the budget to pay salaries for staff; spend 3,000 billion VND to sponsor businesses operating in the field of supplying pharmaceuticals, medical equipment and supplies. The bank waives and reduces most transaction fees to share difficulties with customers affected by the Covid-19 pandemic. -

Capital adequacy ratio

According to the 2020 annual report, HDBank's capital adequacy ratio would reach 12.1 percent in 2020, exceeding the State Bank's minimum required threshold of 8.0 percent. Since 2019, HDBank has been among the first banks to receive approval by the State Bank to apply pillar 1 (Capital adequacy ratio - CAR) and pillar 3 (information transparency) under Basel II. Thriving on these achievements, in 2020, HDBank fulfilled all three pillars of Basel II, international standards, and Circular 13 of the State Bank of Vietnam. The Bank also ensured the safety pillar for effective and quality development according to the business strategy. -

Non-performing load

The bad debt percentage is kept under control at 1.32 percent. According to Circular 01/2020/TT-NHNN, HDBank has modified the payback period and retained the debt group for customers affected by the Covid-19 epidemic in order to assist customers impacted by the Covid-19 epidemic. HDBank also introduced policies in loan management to avoid new bad debts and accelerate debt collection and asset handling. As a result, although the banking industry was predicted to experiece an increase in bad debts due to the impact of natural disasters and the pandemic, HDBank still successfully controlled our separate NPL ratio at 0.93% (over a consolidated ratio of 1.32%). All VAMC bonds were settled in accordance with the targets assigned by the General Meeting of Shareholders.

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4. Operational performance

Table 2. Business performance report Source: HDBank

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Capital management, trading, monetary and capital market invesment

HDBank continued to expand and strongly invest in capital management, currency trading and investment in 2020. We constantly asserted our position and reputation in the monetary and capital markets while maintaining an active role in capital transactions, money investment and trading. During 2020, HDBank was always ranked in the top 10 members of the Government bond market by the Hanoi Stock Exchange (HNX). We also developed a wide and full range of products and services, specifically focused on deploying modern derivative products. The effective business performance had helped HDBank enhance the reputation, image and influence on the markets of money, foreign exchange and capital. We also earned high opinion and trust from our partners, which built a solid foundation for our continuous development and position in the future. -

Digitalization of customer engagement

Cashless payment is an important goal of the banking industry as consumers' payment habits have changed drastically after the COVID-19 pandemic. With the goal of becoming the leading digital bank in Vietnam by 2020, HDBank has launched the product "Di HDBank" and authenticated customer information online eKYC, whereby individual or corporate customers only need to open an account. online banking, make transactions on personal mobile devices. HDBank has tested a new L/C issuance method using the iPaper internal approval system and participating in the globally connected Contour network, established on the blockchain platform. Helping businesses reduce costs and expand the efficiency of foreign trade activities for Vietnamese businesses. -

Card operations

The year of 2020 marked a significant milestone in HDBank’s card operations, stemming from the transformation of our organizational and personnel structures. This transformation fully focused on product development, card services, digital 9

transformation and business activities, which are the core elements for further acceleration in 2021. In 2020, achievements of card services: A YOY increase of 79% in international card issuance; A YOY increase of 19.0% in card payment; A YOY increase of 7.5% in card profits. In addition, the Bank has successfully implemented many programs such as focus on developing more premium Platinum card products with many incentives and privileges to best serve VIP customers; implement comprehensively the online payment feature for all international card products with 3DSecure 2.0 authentication platform to improve customer experience and safety. -

Bancassurance

HDBank aims to become a top provider in banking and financial solutions and a multifunctional retail bank. We have deployed various products and services to fulfill this mission, including reputable, quality and competitive life and non-life insurance products. HDBank's insurance products are selected and distributed to suit the needs of customers' protection, health care, savings and investment insurance. During the implementation process, HDBank has cooperated with insurance partners to apply digital technology to help customers shorten the time to fill out documents. Buy insurance online, whereby from the time a customer submits a request for insurance, payment of fees to the issuance of an insurance policy, is done on an online technology platform. I.

International payment activities

A. Theoretical basis 1. Telegraphic Transfer

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Payer, Buyer, Institution import…required the Bank serve me to transfer the most amount intended to pay the beneficiary (seller, exporting organization, person receive money) at a specified location (account number-NH) for a while certain. 2. Open Acount The bookkeeping method is the method of payment of debt, collected and paid at the same time at a certain time (month-end, quarter-end). Usually this method is used in payment between two units, regular relationship and mutual trust together. 3. Clean collection and Documentary collection – D/P, D/A Collection of payment: The method of collecting is the Bank's handling of the documents specified in accordance with only Marketing received for: That document is paid or accepted; Delivered when documents are received paid or accepted; Deliver documents properly other terms and conditions Documents: Financial documents: bill of exchange, promissory note (promissory notes, cheques) or similar means. Commercial documents (Commercial documents): invoices (invoices), documents transport documents, certificates get quantity - weight - quality, packing slip, sanitary quarantine certificate, etc. Types of Collections: Thanks to the smooth collection (Clean Collection): It is thanks to the collection of financial documents mainly without documents Commerce. For example by collecting sheets and checking in payment.

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Asking for collection of documents (Documentary Collection): Method of asking for collection with evidence from thanks to the collection of financial documents attached according to commercial documents. In this payment method, organization exports thanks to the Bank goods collect money from the importing organization not only based on bill of exchange, but also on evidence commercial word accompanied by exchange promissory note. 4. Cash against documents (CAD) The CAD method is the method payments in which the organization enters export on the basis of a sales contract Open request for the Bank of the exporting country trust account (Trust account) to pay money to the team export organization when the exporter exports submit all documents in accordance with the agreement favorable. 5. Letter of Credit (L/C) Letter of credit (L/C) is the document (letter) of the bank opening the LC to the beneficiary, it is written at the request of the applicant to open the LC, in order to express the payment commitments of the bank to the beneficiary together with the terms and conditions. and specified conditions. Documentary credit is an arrangement whereby a bank (the opening bank) meets the requirements of a customer (the applicant), commits or authorizes a pay, accept drafts or discount documents at the request of the beneficiary of the L/C when the terms and conditions specified in the L/C are properly and fully performed. B. International payment activities at HDBank 1. IMPORT FINANCING  Import L/C

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Import Letter Of Credit (Import L/C) issued by HDBank at the request of the customer (importer/buyer) committing to pay a certain amount to the beneficiary (exporter/buyer) when the beneficiary presents a set of documents in accordance with the terms and conditions of the L/C and international practices. Customers: Economic organizations operating legally in Vietnam need to use import L/C services. Product convenience: Import L/C is the most common and safest payment method in international trade. Customers when using the product will receive free advice to minimize risks and costs and receive financial support through the import sponsorship program. In addition, the procedures have quick processing time, safety and confidentiality of information. In addition, HDBank also provides services such as: Issuance/amendment of import L/C at sight, deferred payment; Guarantee/authorization to receive goods according to L/C/endorsement of bill of lading; Notify and check the documents presented under the import L/C; Accept payment/Payment of import L/C; Cancellation of import L/C; HDBank also provides services of issuing, amending, and querying imported L/Cs via Internet Banking - eL/C saving time and effort, connecting 24/7, storing information online at a constant cost. , simple procedures.  UPAS L/C UPAS L/C is an import finance product under a deferred LC for the importer, with a provision allowing immediate payment to the exporter upon presentation of a valid set of documents. The product is financed coordinately by HDBank and the world's leading banks from Japan, Singapore, China, and the Asian Development Bank (ADB). Customers:Importing enterprises who need to use import L/C and/or are not subject to foreign currency loans according to regulations of the State Bank of Vietnam. 13

Customers using this product will enjoy a number of benefits provided by HDBank: Free acceptance of deferred payment of letters of ...