UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Nguyen Dinh Quang POOR TRAINING QUALITY IN SAIGON COMMERCIAL BANK– CHINATOWN BRANCH’S CORPORATE BANKING DEPARTMENT MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City – Year 2020 TIEU LUAN MOI download : skknchat@gmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Nguyen Dinh Quang POOR TRAINING QUALITY IN SAIGON COMMERCIAL BANK – CHINATOWN BRANCH’S CORPORATE BANKING DEPARTMENT MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: Dr. Doan Anh Tuan Ho Chi Minh City – Year 2020 TIEU LUAN MOI download : skknchat@gmail.com EXCUTIVE SUMMARY Banking industry nowadays has been witnessing a lot of development, enhancing on its technology and global competition within commercial banks. According to the strategy of expanding the market, Saigon Joint Stock Commercial Bank (SCB) has a vision to create more than 50 branches and agencies throughout Vietnam from 2020-2022, that means SCB significantly needs of a high quality training and huge personnel to effectively act the business plan. Training is considered as one of the most fundamental aspects of human interaction and for organizations, it has become the main tools for achieving their strategic competitiveness.
More importantly, the quality of workforce within any departments plays a great role to the success and high profits of commercial banks nowadays. Moreover, team co-operation also has been found to benefit companies’ sustainability efforts and performances. Clearly, training is more likely to be successful if it is well-managed and well-concerned. However, SCB – Chinatown Branch’s Corporate Banking Department has been experiencing high turnover rate as well as low profits for many years due to poor quality of training for employees.
The biggest problem of SCB – Chinatown Branch’s Corporate Banking Department is dealing with poor quality of training. This makes the new employees in the Corportate Banking Department do not catch the job requirements at once. The quality of customer appraisals in this department is inefficient and causes bad debts increasing. Moreover, the lack of sales skills also leads to a considerable decrease in capital sales and credit.
Low ability of working mostly leads to increasing pressure on employees and raising the rate of quitting job at the branch. Due to distinct limitations, this thesis expects to propose potential solutions to boost the quality of current training at SCB – Chinatown Branch’s Corporate Banking Department in particular and in SCB’s system in the whole country. Firstly, the training has to set a specific and methodical plan, consistent with the working scheme of the staff. Secondly, the training programs have to be established relying on actual requirements of work tasks.
Thirdly, the trainers are required to have deep professional knowledges and lots of practical experiences. Finally, after each training course, it is more effective if there is an objective and general assessment of the quality of the deployed training course. Therefore, the branch in particular and SCB’s whole system in general can learn from experience and thoroughly improve the quality of staff training. TIEU LUAN MOI download 1 : skknchat@gmail.com ACKNOWLEDGEMENTS This study was conducted as my thesis under the level of Master at the Master of Business Administration Program in 2019.
I am honoured to give my sincere gratitudes to Doctor Doan Anh Tuan for all his support, encouragement, valuable suggestions and precious advices throughout the period of this study. I would also like to take this chance to show my gratitudes to all wonderful colleagues at workplace and classmates at ISB for their continuous help. I must also send my sincere thankfulness to my parents for their continuos encouragement and support. Nguyen Dinh Quang.
TIEU LUAN MOI download 2 : skknchat@gmail.com TABLE OF CONTENTS EXECUTIVE SUMMARY. General information about Saigon Joint Stock Commercial Bank – Chinatown Branch. SCB – Chinatown Branch’s Corporate Banking Department .1 High turnover rate .1 Mobilizing capital activity .3 High bad debt ratio .4 High provisioning expense .6 Negative cash flow situation .2 Inappropriate compensation regime .3 Poor quality of training courses .2 Problem existence and validation .3 The importance of the main problem .1 Unclear training targets .3 Poor training methods .4 Unpractical contents of training .5 Ineffective time management of training .6 Inappropriate frequency of training. 41 3 TIEU LUAN MOI download : skknchat@gmail.7 Insufficient training equipments .8 Lack of feedback after training .9 Lack of training evaluation .1 Unclear training targets .3 Lack of training evaluation.
89 LIST OF TABLES Table 1: Concepts about group of loans Table 2: Non – performing loans of SCB – Chinatown Branch and Corporate Banking Department in 2019 Table 3: Ratio of detailed provision Table 4: Provision expenses of SCB – Chinatown Branch and Corporate Banking Department in 2019 Table 5: Breakdown income report of SCB – Chinatown Branch in 2019 Table 6: Breakdown cashflow report of SCB – Chinatown Branch in 2019 Table 7: A summary of some researchers’ comments on the role of key factors in a training course Table 8: Estimated cost for developing professional trainers Table 9: Estimated cost for enhancing the quality of training evaluation Table 10: Action plan LIST OF FIGURES Figure 1: SCB – Chinatown Branch’s organizational structure Figure 2: Personnel structure arranging to work experience of SCB – Chinatown Branch’s Corporate Banking Department in 2019 Figure 3: Turnover rate of SCB – Chinatown Branch and Corporate 4 TIEU LUAN MOI download : skknchat@gmail.com Banking Department from 2017-2019 Figure 4: Total deposits of SCB – Chinatown Branch and Corporate Banking Department in 2019 Figure 5: The rate of implementing SCB – Chinatown Branch and Corporate Banking Department in 2019 Figure 6: Credit balance of Corporate Banking Department in 2019 Figure 7: The NPL ratio of SCB – Chinatown Branch and Corporate Banking Department and HCMC Region’s Corporate Banking Department in 2019 Figure 8: Provision expense of SCB – Chinatown Branch in 2019 Figure 9: Proportion of provision expense of SCB – Chinatown Branch and HCMC Region in 2019 Figure 10: Total post-provision profit of SCB – Chinatown Branch and HCMC region in 2019 Figure 11: Loan to deposit ratio of Chinatown Branch, Corporate Banking Department in 2019 Figure 12: Interest and similar receipts of SCB – Chinatown Branch in 2019 Figure 13: The average income of typical commercial banks in 2019 LIST OF DIAGRAMS Diagram 1: A stress-specific job model Diagram 2: The initial cause – effect map Diagram 3: Updated cause – effect map of SCB – Chinatown branch’s Corporate Banking Department Diagram 4: Benefits of effective training targets Diagram 5: Popular training methods Diagram 6: Final cause – effect map of SCB – Chinatown Branch’s Corporate Banking Department 5 TIEU LUAN MOI download : skknchat@gmail. General information about Saigon Joint Stock Commercial Bank – Chinatown Branch In order to expand the headquarter to improve customer service quality better, from 18th October 2010, Saigon Commercial Joint Stock Bank – An Dong Brach officially changed its name to Chinatown Branch and opened operating at the new location: No. 76-78-80 Hai Thuong Lan Ong, Ward 10, District 5, Ho Chi Minh City. The total number of current employees of the branch consists of 58 employees and has 04 departments.
The branch provides all the products which SCB has with the diversity and outstanding competitiveness compared to other banks in the same area: Savings deposits, deposits flexible accumulation, lending to large enterprises, small and medium enterprises, small households, super-large enterprises, card products, etc. The branch not only contributes greatly to the development of SCB, but also helps to building a local economy to actively develop and support individuals and organizations in the area with convenient circumstances to build families and develop business activities. Since its establishment, the branch always strives to excellently complete all tasks assigned by SCB’s the Board of Management. Particularly in 2018, due to bad debt increasing, business efficiency brought quite limited and only completed the tasks.
Over 10 years of operation, the total deposits at the end of the period at 31st December, 2019 is VND 21.508 billion, accounting for 3% of the total deposit in Ho Chi Minh City region and the total outstanding loans are VND 11.935 billion, accounting for 1% of the region’s total outstanding loans with the total profit achieved after setting up the risk provision to the end of 31st December, 2019 is VND 4,250 million. 6 TIEU LUAN MOI download : skknchat@gmail.com Source: Internal SCB – Chinatown Branch’s Report 2019 Figure 1: SCB – Chinatown Branch’s organizational structure 1. SCB – Chinatown Branch’s Corporate Banking Department Corporate Banking Department of SCB – Chinatown Branch is responsible for originating and managing the relationships with corporates with focus in Ho Chi Minh City and selected provinces in South of Vietnam. Corporate Banking’s portfolio comprises of a wide Corporate Banking Department of SCB – Chinatown Branch is responsible for originating and managing the relationships with corporates with focus in Ho Chi Minh City and selected variety of industry segments.
The Corporate Banking Department is one of the key departments of SCB – Chinatown Branch in generating revenues and profits. The department currently has 58 employees including 01 Director and 01 Deputy Director, 27 officers in charge of small and medium corporates, 25 officers in charge of large corporates and 04 international payment officer. The key activities of the department are raising deposit and lending from corporate customers, cross- selling other products regarding corporates. Total outstanding loans of this 7 TIEU LUAN MOI download : skknchat@gmail.com department at 31st December, 2019 were VND 11.435 billion and the total deposit was VND 13.
Nguyen Thanh Nghiep – Director of the Department and Ms. Nguyen Le Hoang Thanh – Deputy Director of the Department are in charge of the Corporate Banking Department at SCB – Chinatown Branch. However, during the current hard time of operation, this department begins to show signs of going down while operating. Therefore, this thesis will find out and indicate the causes and effects of this issue at SCB – Chinatown Branch’s the Corporate Banking Department.1 High turnover rate According to the working time to categorize, the personnel in the department is divided into 03 different types.
Firstly, people with working experience from 03 years or above, including 12 employees, accounting for 21% of the total number of employees in this department. Secondly, employee with experience from 01 to 03 years, including 17 people, accounting for 29% of the total personnel. The rest are employees with less than 01 year experience. This is the segment that accounts for the highest proportion of this department with 29 people, accounting for 57% of the employees in this department.
8 TIEU LUAN MOI download : skknchat@gmail.com Figure 2: Personnel structure arranging to work experience of SCB – Chinatown Branch’s Corporate Banking Department in 2019 The following chart is the depiction of the turnover rate in SCB – Chinatown Branch’s Corporate Banking Department from 2017 to 2019 compared to other departments in SCB – Chinatown Branch. Thereby, it indicates that the turnover rate at the Corporate Banking Department was rising significantly annually: It was 36% in 2017, slightly up to 43% in 2018 and sharply rised up to 64% in 2019. In general, this ratio of the Corporate Banking Department was much higher than other deparments at SCB – Chinatown branch. Figure 3: Turnover rate of SCB – Chinatown Branch and Corporate Banking Department from 2017-2019 2.2 Low sales Total deposit and credit sales are the two major criterias that the Corporate Banking Department is required to execute.
Nevertheless, the business performance in 2019 of this department is considerably low compared to the annual plan and Ho Chi Minh City region’s plan. 9 TIEU LUAN MOI download : skknchat@gmail.1 Mobilizing capital activity Total deposits of SCB – Chinatown Branch’s Corporate Banking Department at December 2019 was VND 13.657 billion, contributing 39% of the total deposit of SCB – Chinatown Branch (VND 34.846 billion) and only reached 28% of year 2019’s plan. The ratio of this implementation was quite low compared to the implementation rate of the Retail Banking Department (VND 4.