Tài liệu Một số giải pháp nâng cao hiệu quả sử dụng vốn tại tổng công ty tài chính cổ phần dầu khí việt nam (pvfc)

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TABLE OF CONTENTS ACKNOWLEDGEMENTS ...................................................................................... i ABSTRACT .............................................................................................................. ii TÓM TẮT ................................................................................................................ iv TABLE OF CONTENTS ........................................................................................ vi LIST OF FIGURES ................................................................................................ ix LIST OF TABLES ....................................................................................................x LIST OF ABBRIVIATIONS .................................................................................. xi INTRODUCTION .....................................................................................................1 CHAPTER 1: LITERATURE REVIEW ON THE PERFORMANCE OF CAPITAL UTILIZATION IN FINANCE COMPANY ........................................5 1.1 Introduction to finance company .......................................................................5 1.1.1 The definition and classification of finance companies .....................................5 1.1.2 The role of finance companies ...........................................................................6 1.1.3 The major activities of finance company ...........................................................9 1.2 Improve the performance of capital use in finance companies ....................12 1.2.1 Definition of capital efficiency ........................................................................12 1.2.2 The needs to improve the performance of capital use in finance companies ..14 1.2.3 Assessment on the performance of capital use in finance company ................15 1.3 Factors affect the performance of capital use in finance company ..............24 1.3.1 The impacts of State policies and regulations ..................................................24 1.3.2 Impacts of the development strategies and mechanism of the parent company ...................................................................................................................................25 1.3.3 The internal factors of the finance company ....................................................27 vi CHAPTER 2: ASSESSMENTS ON THE PERFORMANCE OF CAPITAL UTILIZATION IN PVFC.......................................................................................31 2.1 Overview of PetroVietnam Finance Joint Stock Corporation (PVFC) .......31 2.1.1 Company introduction ......................................................................................31 2.1.2 Scope of business .............................................................................................33 2.1.3 Business performance of PVFC in recent years...............................................35 2.2 Assessment on the performance of capital utilization in PVFC ...................43 2.2.1 Assessment of capital mobilization activities ..................................................43 2.2.2 Assessment of capital utilization ......................................................................47 2.2.3 Analysis of performance indicators of capital efficiency ...............................55 2.3 Achievements, limitations and causes .............................................................67 2.3.1 Achievements ...................................................................................................67 2.3.2 Limitations and causes .....................................................................................68 CHAPTER 3: SOLUTIONS TO ENHANCE THE PERFORMANCE OF CAPITAL UTILIZATION IN PVFC ...................................................................74 3.1 Opportunities and challenges for PVFC and its development orientation ..74 3.1.1 Opportunities and challenges ...........................................................................74 3.1.2 PVFC’s development orientation .....................................................................76 3.2 Solutions to improve the efficiency of capital use at PVFC ..........................76 3.2.1 Solutions to enhance capital mobilization activities ........................................76 3.2.2 Solutions to improve the performance of credit activities ...............................80 3.2.3 Solutions to improve the performance of financial investment, project investment .................................................................................................................87 3.3 The overall solutions for PVFC .......................................................................90 3.3.1 Investment, innovation, improvement in banking technologies ......................90 3.3.2 Improve the capability of assets- liabilities management ................................91 3.3.3 Enhancing the capacity of the internal control system ....................................92 vii 3.3.4 Marketing solutions ..........................................................................................93 3.3.5 Focus on developing human resources ............................................................94 3.4 Recommendations .............................................................................................95 3.4.1 Recommendations for SBV..............................................................................95 3.4.2 Recommendations for PVN .............................................................................97 CHAPTER SUMMARY .........................................................................................99 CONCLUSION ......................................................................................................100 BIBLIOGRAPHY .................................................................................................102 viii LIST OF FIGURES Figure 2.1: The structure of capital contribution of PVFC .......................................31 Figure 2.2: The chartered capital of finance companies under Vietnam economic groups ........................................................................................................................32 Figure 2.3: Growth of total assets over the years ......................................................36 Figure 2.4: Asset structure of PVFC in 2011 ............................................................36 Figure 2.5: Capital structure of PVFC in 2011 .........................................................37 Figure 2.6: PVFC’s revenue growth and structure over the years ............................40 Figure 2.7: PVFC’s growth of profit before tax over the years ................................40 Figure 2.8: Growth of mobilization activities from customers’ deposits and issuance of valuable papers .....................................................................................................44 Figure 2.9: Growth and structure of loans by term over the years ...........................50 Figure 2.10: Growth of investment activities over the years ....................................51 Figure 2.11: Profit/ loss of PVFC’s investment activities over the years .................51 Figure 2.12: Growth of total assets and ROE of PVFC, VPB, and SHB.................57 Figure 2.13: Loan classification by quality in 2011..................................................61 ix LIST OF TABLES Table 2.1: Growth of total assets over the years .......................................................35 Table 2.2: Some business indicators of PVFC ..........................................................39 Table 2.3: PVFC’s revenue structure over the years ................................................41 Table 2.4: Capital structure by mobilized sources ...................................................43 Table 2.5: Structure of trusted funds .........................................................................46 Table 2.6: Growth rate of loan balances over the years ............................................47 Table 2.7: Structure of loans and advances to customers by term ............................48 Table 2.8: Investment securities of PVFC ................................................................52 Table 2.9: Long-term investment and capital contribution .......................................54 Table 2.10: Comparison table of performance indicators between PVFC and VPB, SHB, and banking sector’s average data in two year 2009 and 2011 .......................56 Table 2.11: Quality classification of loans................................................................60 Table 2.12: NPL and overdue debt ratios ................................................................61 Table 2.13: Some indicators for liquidity assessment...............................................63 x LIST OF ABBRIVIATIONS PVFC PetroVietnam Finance Corporation PVN PetroVietnam SBV State Bank of Vietnam MSIHI Morgan Stanley International Holdings Inc VPB Vietnam Prosperity Joint-Stock Commercial Bank SHB Sai Gon-Ha Noi Commercial Jointstock Bank ROA Return on Assets ROE Return on Equity NIM Net Interest Margin CAR Capital Adequacy Ratio LDR Loan to Deposit Ratio NPL Non performing loans ICRRS Internal credit risk rating system xi INTRODUCTION 1. Necessity of the thesis Vietnam has been shifting from the centralized economy towards the market economy and continues its integration into the global economy. The development and utilization of financial resources plays an important role in developing Vietnam economy. The establishment of financial intermediaries including finance companies in recent decades has contributed significantly to provide a more efficient allocation of capital, channeling the capital from people who lack of effective investment opportunity to the person who are capable of investing such capital resource to produce goods and service in a more effective way. Regarding the development of economy, it should be aware of the strong development and contribution of State economic groups that are engaged in multisectors businesses. However, together with the development and expansion of those businesses, there is a big question of how to mobilize and utilize the capital resources effectively. As the result, this leads to the establishment of finance company under the State economic groups to facilitate the capital allocation among the member companies as well as individuals and organizations from different economic sectors. Vietnam Oil and Gas Group is the leading State own economic group with numerous successful projects which bring remarkable benefit to our country’s society and contribute significantly to state budget. In order to better manage the capital resources from the capital-surplus area to the capital-shortage areas as well as attracting more capital from outside the Group, in 2000, the PetroVietnam Finance Company, now known as PetroVietnam Finance Corporation, was established to perform this essential function. With more than ten years of experience, besides some achievements that the Corporation accomplished, there are still difficulties and challenges ahead that require the Company seeks appropriate measures to overcome such limitations. 1 Among the continuously fluctuated situation of global finance, with the purpose of conducting the research on the operations of mobilizing and using capital of PVFC as well as figure out some practical solutions to promote its performance in order to contribute to the development of Petrovietnam, I choose the topic “Some solutions to enhance the performance of capital utilization in PetroVietnam Finance Corporation (PVFC)”. 2. Research aim and objectives The overall aim of the study is to analyze and assess the current practices of capital utilization and to make suggestions to enhance the performance of this operation in PVFC. The thesis aims to achieve the following objectives: (1) Systemize the theoretical framework of finance companies in general and the capital utilization in particular. In addition, a set of assessment criteria will be discussed to evaluate the performance of the capital use in a finance company. (2) Develop the detailed analysis and assessments on the actual situation of capital utilization in PVFC. (3) Propose some practical suggestions and recommendations for the enhancement of capital utilization in PVFC 3. Scope of the research The overall business performance of a finance company is a broad topic. Therefore, this thesis only focuses on the performance of capital utilization in PVFC from year 2008 to year 2011, including three main activities that directly related to the topic, which are the capital mobilization, credit activity, and investment activity in order to develop suggestions and recommendations to enhance the performance of capital use in PVFC 2 4. Research methodology The main sources of data are selectively collected from secondary sources including both local and foreign materials such as data collected from the researched company, from other banks, books, internet, magazines, science reviews, and related journals The methods applied in this study include: logical reasoning combined with historical materialism, quantitative and qualitative analysis, statistic method, comparison method, economic analysis, method of synthesizing... to evaluate the performance of capital utilization in PVFC. 5. Significance of the research This thesis identifies numerous weaknesses in the current utilization of capital in PVFC; helps PVFC recognize and have further actions in solving its shortcomings. This thesis has proposed some practical solutions in order to enhance the performance of capital use in PVFC case which is the foundation for the improvement in the capital allocation among PVN and its members. Based on the same business environment and same operating models, other finance companies under the State economic groups are suffering the same issues as PVFC. Therefore, the recommendations for PVFC provided in this thesis can be seen as a practical case study for other finance companies to consider and apply into their businesses. 6. Limitation of the thesis The research focuses on the performance of capital use in PVFC. Due to time and ability constraints, the thesis is not capable of covering a large size of data and information. The limited capability to approach the necessary primary data, the data used in this research is mainly collected from secondary sources. 3 At the time of conducting this research, the researched company is currently processing the procedure to transform its business model; in addition, the economic and financial situation is changing rapidly. Therefore, the results of this research will be limited in the practical application after the model transformation; the proposed solutions could be applied in short-term rather than long-term objective. 7. Thesis structure Thesis topic: “Some solutions to enhance the performance of capital utilization in PetroVietnam Finance Corporation (PVFC)” Introduction Chapter 1: Literature review on the performance of capital utilization in finance company Chapter 2: Assessments on the performance of capital utilization in PVFC Chapter 3: Solutions to enhance the performance of capital utilization in PVFC Conclusion 4 CHAPTER 1: LITERATURE REVIEW ON THE PERFORMANCE OF CAPITAL UTILIZATION IN FINANCE COMPANY 1.1 Introduction to finance company 1.1.1 The definition and classification of finance companies Finance company is a form of non-bank financial institution with the function of using the financial sources including its own capital, customer deposits and other funds for the purposes of lending, investment, providing advisory services in finance, monetary fields, as well as perform some other services as prescribed by law, but are not allowed to provide the payment service or receive deposits with term of less than 1 year as a commercial bank. Classification by business activities, finance companies can be divided into three main types as follows: First, sale finance company These companies indirectly grant credit to consumers to purchase goods from a retailer or from a certain manufacturer. This type of finance company is often established by the retailing or manufacturing company to support the consumption of their commodities. For instance, in the U.S., General Motors Acceptance Corporation specializes in providing financial supports for car buyers of GM. Second, consumer finance company This kind of finance company provides the majority of their capital for the household and individual loans for the purpose of purchasing consumer goods such as furniture, home appliances or repairs. Most of the loans are made under installments with higher interest rates compared to the market interest rates because these loans often contain high risks. Third, business finance company 5 This type of finance company provides credit for businesses under the forms of factoring and forfeiting, discounting the receivables of the businesses, or leasing, these companies provide loans to purchase machinery according to customer’s needs, then lease those items to customers, etc. [7,17] Based on the relationship of ownership, Finance companies are divided into First, the independent finance company which performs numerous operations, such as credit operations including loans and guarantees to commercial and manufacturing customers, the leasing of property; factoring; currency trading; financial advisory ... Second, the finance company established by economic groups is primarily engaged in the following activities: seeking investment capital to provide for the members of the group, management and investment of unused funds in corporations, managing and channeling the temporarily idle funds among the group’s members; being the hub and providing advisory to the group and its members in order to build relations with banks and investment partners; management and application of measures to prevent financial risks within the group; providing financial advisory services to the member companies ... besides that, the company also provides financial services for external customers such as loans to buy goods produced by the corporation, and other financial advisory services ... 1.1.2 The role of finance companies The role of the finance company for the economy in general The history of economic development of many countries shows that, in the market economy, finance companies always exist and become increasingly popular. The funds allocated dispersedly in the population and economic organizations can be gathered for long-term capital needs of a specific industry, a certain area, and the overall economy. 6 Because of few limitations, finance company is able offer loans to meet the diverse needs of customers in a more convenient manner compared to commercial banks. Through the activities of finance company, capital in society can be agglomerated to serve the capital needs of the economy as well as other long-term investments. Activities of these companies contribute to the expansion of the stock market. The operation of finance company on the stock market helps ensure sustainable stability of the market, ensure the safety and improve the business performance of those companies. In short, finance company is a financial intermediary in the economy market, despite some limitations compared to commercial banks, for the market economy, finance companies play an important role as follows: Firstly, finance companies generate capital for investments to develop the economy based on advantages of wide branch-network, providing variety of products and services. Facilitating the needs of borrowers and lenders via activities of capital mobilization and credit business Second, through the credit activities, finance companies facilitate the sustainability and expansion of businesses of all economic sectors. Third, finance companies strengthen the development of securities markets, through the issuance of the major instruments of financial markets, for instance debentures, bonds and shares. Forth, finance companies also play the role as an important channel for capital flows of foreign investment. With its functions, finance company can provide consultancy to both local and foreign investors on the methods and forms of investment, how to promote effective management of capital investment. [8,20] The role of finance companies in economic groups For finance companies operating under economic groups, thanks to better understanding of business activities of member companies, and capturing more 7 internal information, they can provide loans to the customers of the member companies which help generate higher revenue. The key roles of finance companies in economic groups are: First, the establishment of finance companies in economic groups help expand business operations, diversify businesses, reduce risk and generate new source of revenues from those industries of high profitability, finance company in economic group has better conditions and ability compared to a commercial bank in term of managing the financial risks for the member companies. Second, the establishment of finance companies under economic groups assists those groups in seeking and mobilizing external funding channels through the determination of the methods of raising capital, the amount of capital needed, deposits’ period, lending and repayment terms ... to timely meet the capital needs of parent company at the lowest possible cost. Third, the establishment of finance companies helps holding companies effectively manage the optimal capital through ensuring the investment to be in line with the overall development orientation, selecting the most potential projects of high economic profitability, thereby improving business performance of the group. Fourth, the establishments of finance companies help parent companies to harness the power on the financial and monetary market through the unified and centralized management of financial resources, regulating the temporarily idle funds, ensuring flexible management of capital, maximizing internal capacity through the implementation of currency trading and participating in the financial and monetary markets both locally and overseas. Fifth, the establishment of finance companies in economic groups help facilitate activities of the group towards a systematic, centralized and uniform orientation; economic groups have large advantages in term of development resources, vast market, governments often promote policies to encourage and create favorable conditions for economic groups including the finance companies under those groups. [8,20] 8 1.1.3 The major activities of finance company 1.1.3.1 Mobilization activities Capital mobilization from customers Finance companies in economic groups can borrow funds from the organization customers, however only medium and long term capitals with term of equal or over 12 months are allowed according to the regulations of the law on credit institutions. Issuance of shares, bonds, debt certificates Issuance of shares: The prerequisite for the establishment of any finance company is to have sufficient legal startup capital. Initial charter capital of the company is contributed by the holding company and/ or its affiliates. In addition, finance companies can raise more capital from the public sources by issuing shares or bonds of that finance company. Issuance of medium and long term bonds: bond is a type of debt certificate, representing the long-term borrowings of finance company and will be paid off after a certain period. Bondholders are entitled to a fixed income and depend on the business results of the finance companies. Finance companies often raise capital in the form of bonds. Issuing debt certificates: debentures issued by the finance companies in order to mobilize capital in the money market to meet the urgent needs for cash or shortterm funds Borrowings from credit institutions The finance company under economic group can borrow from the credit institutions on the principle: credit institutions shall operate according to legal provisions; lending and borrowing activities shall comply with credit agreement and loans must be secured by mortgage, pledge or guarantee Borrowings from parent company 9 Besides the issuance of shares, bonds, certificates of debt or borrowing from other credit institutions, finance company in economic groups can borrow from its holding company. The economic groups, based on the reputation and business advantages, will mobilize capital through the issuance of bonds, and then transfer the capital to the finance companies. On the other hand, when the economic group issue bonds, it is not bound to the regulations on reserve rate, interest rates… by the SBV because they do not operate as credit institutions. 1.1.3.2 Activities of capital utilization a. Lending A key business activity of finance company in economic groups to generate profits, incomes from interest rates will offset the costs of capital mobilization, preservation costs, management costs, taxes, and costs of investment risks. Lending activities are diverse and abundant including the following forms: Based on forms of loans, lending activities include:  Advances to customers is provided on the basis of the credit agreement, in which customers (individuals, businesses) are granted a certain lending amount in an agreed period. Credit advances contain two types: Secured advances and advances without guarantee.  Overdraft: also known as credit limit, is a form of credit advances particularly made on the basis of the credit agreement, in which the customer is allowed to use a limited credit balance over a specified period.  Commercial paper discounting: a short-term credit operation, the good or service suppliers provide the commercial papers which represent the goods and services supplied, then transfer the ownership of those commercial papers to the finance company which would be paid prior to maturity at par value amount of commercial paper subtracting interests and commission fees; finance companies are 10 responsible for collecting money from the purchasers of goods and services upon their maturity. Based on the types of borrower, lending activities include:  Lending to different business sectors known for business loans, for instance, lending to industries, trading, services, agriculture, real estate...  Loans to consumers to purchase consumer items such as cars, durable products such as home repairs, credit cards, personal expenses...  Loans to other credit institutions  Loans to parent company and member companies Based on the loans’ term, lending activities are divided into:  Short-term loans (loan period less than 1 year)  Medium-term loans (loan period from 1 year to 5 years)  b. Long-term loans (loans period equal to or over five years) Investment activities Investment activities in securities: finance companies in economic groups are also investors in financial market. Investment securities are the second important source of profit after the lending business, it also helps companies improve financial liquidity, reservation, and diversification of business activities in order to diversify risks and improve the efficiency of business operations of finance companies. Overall, the finance companies under economic groups usually develop concrete policies for investment in securities. Portfolios of securities range from the safest securities as Treasury bonds to relatively safe or the relatively risk securities. In addition to direct investment in the centralized market, finance companies participate in the OTC market creating an investment channel to increase the liquidity and risk diversification. 11 And other financial investments: finance companies also participate in joint ventures, equity contributions, other long-term investment in projects and businesses. In addition to the main activities of mobilization, lending and investment to be covered within this thesis, finance companies are also engaged in a number of other activities such as property leasing including operating leases and financial leases, factoring operations, the issuance services of securities, foreign exchange trading, and other financial services such as mortgage of commodities, materials, foreign currencies ... [7,10,17,20] 1.2 Improve the performance of capital use in finance companies 1.2.1 Definition of capital efficiency Capital is a prerequisite for any business, either engaged in industries or services in the economy. To conduct business activities, enterprises need to hold a certain amount of capital. Capital is the concept which includes all the elements arranged to produce goods and services. Capital is put into production in various forms. It consists of tangible assets and intangible assets as well as all the accumulated knowledge of the business, management and operational levels of leadership as well as staffs’ qualification. There are different definitions for capital; some of them can be defined as follows: “Wealth in the form of money or assets, taken as a sign of the financial strength of an individual, organization, or nation, and assumed to be available for development or investment” In terms of accounting “money invested in a business to generate income” In terms of economics “Factors of production that are used to create goods or services and are not themselves in the process” (businessdictionary.com) 12 “Cash or goods used to generate income either by investing in a business or a different income property” “The money, property, and other valuables which collectively represent the wealth of an individual or business” (investorwords.com) The concept of efficiency can be defined as follows: “The comparison of what is actually produced or performed with what can be achieved with the same consumption of resources (money, time, labor, etc.). It is an important factor in determination of productivity” (www.businessdictionary.com) “Efficiency in general describes the extent to which time, effort or cost is well used for the intended task or purpose. It is often used with the specific purpose of relaying the capability of a specific application of effort to produce a specific outcome effectively with a minimum amount or quantity of waste, expense, or unnecessary effort.” (www.wikipedia.com) First of all, the initial concept of efficiency in general is how to use the resources of the economy in the most effective way to satisfy the needs and expectations of the participating parties. Capital efficiency, or the performance of capital use of a business can be understood as the relationship between how many expenses are incurred by the company to how much money is used to manufacture a good or service. Thus, from the above-mentioned concepts and definitions, in the opinion of the author: "The effective use of capital in credit institutions in general and finance companies in particular are assessed in terms of financial performance as the result of capital activities, reflecting the correlation between the financial performance and the total capital use, represented through the use of resources, governance capacity, financial capacity and the level of risk control on the financial activities” Business process of a finance company requires capital in advanced. The final result of business operation is the net profit and the ability to maintain safety of the 13 operation. In the longer term, the level of safety is also reflected through net income (provision for losses). Therefore, the rate of net profit reflects the most common way of using the capital in the finance company. Profit is an important measure in assessing the efficiency of capital use. In finance field, profit and risks always comes together. Therefore, evaluating the effectiveness of capital use should be fully evaluated on both aspects of profit and the accompanying risks. Basically, improving efficiency in the use of capital in finance companies means seeking measures to increase the return on capital spent. 1.2.2 The needs to improve the performance of capital use in finance companies In the market economy, improving the efficiency of capital use is always associated with competition; this is an objective principle of the production of goods, a matter of market mechanism. Competition will result in a number of enterprises in general and finance companies in particular will be excluded from the market, while other companies still exist and further develop. Competition in the financial market also leads to the constant improvement of capital’s effective use. By improving the efficiency of capital use, the finance company can:  More capital accumulation. Consequently, increasing equity, support companies to purchase more modern equipments and new technologies to further improve performance.  Higher dividends: increasing the market value of company’s shares  Increase the incomes, bonuses and other benefits of the employees, this is an important factor to promote service quality, reduce risks in finance companies.  Customers, the depositors and borrowers of finance companies can also benefit through the expansion in operations and business scale.  Increase the tax contribution to State budget [20] 14
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