The necessity of the topic
The banking system in Vietnam has significantly evolved, playing a crucial role in capital circulation and socio-economic development Commercial banks prioritize safety and profitability, establishing operational processes and mandatory requirements for credit activities In lending, banks typically require customers to provide collateral, which is used to determine the loan amount Real estate is the most common form of collateral for bank loans, reflecting the diverse nature of collateral options available.
Valuing mortgaged real estate is crucial for commercial banks' credit operations, as it enables them to set appropriate loan amounts while assessing potential risks This process not only enhances the banks' competitiveness by building their reputation and attracting customers but also improves the overall quality of their lending activities For customers, an accurate valuation of mortgaged properties facilitates capital conversion in production and business, fostering trust in the banks' services and positioning them as reliable partners for capital needs.
The Joint Stock Commercial Bank for Investment and Development of Vietnam - So Giao Dich 1 Branch has established a strong reputation and market presence in the region's credit activities, particularly in real estate mortgage valuation However, challenges remain, such as the involvement of the customer relationship department in loan valuations, which compromises objectivity Typically, the assessed value of real estate for loans is set at 70% of its market value, often falling short of the actual worth, thereby affecting loan limits and borrower benefits Additionally, the bank's evaluation methods lack flexibility, leading to frequent re-evaluation requests.
From the above practice, the author has chosen the topic: "Completing the valuation of
2 mortgaged real estate at Joint Stock Commercial Bank for Investment and Development of Vietnam - So Giao Dich 1 Branch " as the research topic.
Objectives of the study
- Provide basic theoretical issues on the real estate valuation, mortgaged real estate valuation of commercial banks
- Analyze the current situation of mortgaged real estate valuation at BIDV - So Giao Dich
1 Branch between 2016 and 2018 Indicate the achieved results but also clarify the limitations and their causes in the valuation of mortgaged real estate at the branch
- Propose a number of solutions to improve the mortgaged real estate valuation at BIDV -
So Giao Dich 1 Branch by 2025.
Researched subjects
The subject of the research is the valuation of mortgaged real estate at BIDV - So Giao Dich 1 Branch.
Research scope
This dissertation analyzes the current state of real estate valuation in lending activities at BIDV - So Giao Dich 1 Branch, utilizing both primary and secondary data It aims to propose solutions for enhancing the accuracy and effectiveness of mortgaged real estate valuation within the branch.
- In terms of time: Data collected during 2016 - 2018
- In terms of space: Dissertation at BIDV - So Giao Dich 1 Branch.
Research methodology
- The method of data collection
To evaluate the status of mortgaged real estate valuation at BIDV - So Giao Dich 1 Branch, the author utilizes secondary data from various sources, including textbooks, magazines, and online research related to commercial banks' property valuation Additionally, the author gathers information from the business reports of BIDV - So Giao Dich 1 Branch, as well as current legal documents from the State and BIDV concerning loan guarantees, property valuation, and other relevant real estate management regulations.
The author conducted a survey among employees at BIDV - So Giao Dich 1 Branch to assess the valuation activities of mortgaged real estate The survey focused on evaluating compliance with regulations governing mortgaged real estate valuation, the appropriateness of the valuation methods used, and the foundational criteria for determining the value of mortgaged properties.
The data is collected and summarized and processed by Excel software
- Methods of information analysis include:
The descriptive statistical method is employed to analyze the collected data on mortgaged real estate valuation at BIDV - So Giao Dich 1 Branch This analysis highlights the strengths and weaknesses of the valuation process, while also identifying limitations and inadequacies, along with their underlying causes.
+ Comparative analysis method: This method is used to compare statistical indicators, to compare the differences in the application of mortgaged real estate valuation methods
This analysis compares absolute numerical variations of economic indicators, highlighting the differences between the values observed and the baseline metrics.
The relative numerical comparison involves analyzing the actual figures against the original numbers, adjusted by a relevant coefficient This adjustment allows for a clear understanding of the percentage increase or decrease in relation to the baseline, providing insights into the analytical index's scale.
Graphing methods involve using various chart types and graphs to visually represent analytical criteria By examining the shape of a straight line or a bar graph, one can assess trends, gauge the degree of fluctuation in indicators, and evaluate the proportions of constituent parts effectively.
The author conducted a survey among employees engaged in mortgaged real estate valuation at BIDV - So Giao Dich 1 Branch The findings from this survey provide insights into the effectiveness and limitations of the real estate valuation processes at the branch.
The structure of the thesis
In addition to the introduction, conclusion, list of references, , the thesis consists of 3 chapters:
The valuation of commercial real estate is crucial for commercial banks as it informs lending decisions and risk management strategies This article examines the current state of mortgaged real estate valuation at the Joint Stock Commercial Bank for Investment and Development of Vietnam, specifically at the So Giao Dich 1 Branch Understanding these practices is essential for enhancing the bank's operational efficiency and ensuring accurate asset assessments in a competitive market.
Chapter 3 Solutions to perfect the valuation of mortgaged real estate at Joint Stock Commercial Bank for Investment and Development of Vietnam – So Giao Dich 1 Branch
THEORETICAL BASIS FOR MORTGAGED REAL ESTATE
Overview of mortgaged real estate
1.1.1 Definition of Mortgaged real estate
Real estate is a universal concept recognized globally, with different terms used in various languages; in English, it is referred to as "real estate," while in French it is known as "immobilier," and in China, the term "property" denotes assets linked to land In Vietnam, real estate is defined in Article 174 of the Civil Code, highlighting its legal significance in the country.
Real estate refers to immovable property, which includes land, houses, and construction works attached to the land, along with any associated properties However, distinguishing what qualifies as real estate can be complex, leading to misconceptions about its true value among business professionals and appraisers To ensure accurate real estate evaluations, it is essential to understand the specific characteristics of real estate and the criteria that differentiate it from movable property and other asset types.
Thus, RE are physical assets that cannot be relocated, and exist in long-term stability Thus, an asset is considered RE when the following conditions are met:
- Being a material element useful to people;
- Occupied by an individual or a community of people;
- Can be measured by certain values;
- Cannot be relocated or just limited relocated so that its properties, functions and morphology are not changed;
RE can be classified into the following groups:
Land is the foundational element of real estate (RE), as it is inherently tied to the concept of property Without land, real estate cannot exist, and all forms of real estate are intrinsically linked to land However, not all land qualifies as real estate; only areas that maintain their sovereignty and are minimally relocated, measured, and defined according to specific standards are considered real estate.
Construction projects are intrinsically linked to the land and properties they occupy, as permanent structures cannot be easily relocated These constructions are inseparable from the land they are built on, and their value must be assessed according to established measurement standards.
- Other properties associated with land such as perennial gardens; constructions for aquaculture, salt fields, tourism, recreation, sports and mining projects
The clear definition of real estate (RE) assists appraisers in grasping its fundamental nature, enabling them to identify the distinct characteristics of RE that serve as a foundation for assessing the value of real estate assets.
Regarding RE Mortgage in lending activity of commercial banks (CB)
Real estate (RE) is a crucial guaranteed asset that constitutes a significant portion of the total collateral held by commercial banks This includes key properties such as land, residential buildings, workshops, and construction works linked to these lands RE can comprise both existing assets and future assets, which may arise during or after the signing of a mortgage contract These future assets can include income generated from utilizing real estate, assets developed through loan capital, and upcoming construction projects.
To be collaterals in lending activities, RE must meet the following conditions:
- Under the ownership of the mortgage at the time of signing mortgage transactions RE
- RE without dispute: RE when signing a security transaction, the owner of that RE is not sued by a third person at a court or competent State agency
Real estate must be tradable and sellable, as it is not restricted from circulation under the law during mortgage transactions In commercial bank mortgage lending, the liquidity of the collateral is crucial Consequently, banks focus not only on the legal aspects of the real estate but also on its market transferability and liquidity.
To determine the appropriate loan size based on customer needs and collateral value, mortgage lending requires banks to assess real estate at the time of signing the guarantee contract Each type of asset is evaluated differently by banks, taking into account the asset's nature, characteristics, and the customer relationship Real estate is a unique and diverse property, with a complex valuation process that differs significantly from other assets, and is often treated distinctly in various countries.
Real estate is a powerful asset class, representing ownership and usage rights rather than the physical property itself Consequently, accurately assessing the value of real estate necessitates the use of specialized valuation methods.
1.1.2 Features of mortgaged real estate
Real estate assets possess unique characteristics that differentiate them from other types of properties, contributing significantly to their overall value These distinct features play a crucial role in determining real estate valuations, making it essential for appraisers to assess their impact on property worth.
Real estate (RE) is a fixed asset tied to a specific location, making its value and benefits closely linked to that position The significance of location is assessed not only through geographic measurements but also by proximity to key centers and public services, including commercial, cultural, medical, and educational facilities Additionally, regional factors play a crucial role in determining RE value, and it is the responsibility of appraisers to analyze how these location factors—such as natural, socio-economic, and environmental conditions—impact real estate values Consequently, any changes in these factors will directly influence the value of the real estate.
Real estate is unique and distinct, with its value primarily influenced by factors such as location, architectural style, orientation, and exterior landscape When assessing real estate, it is crucial to recognize the individuality of each property, as comparing them directly can lead to inaccurate valuations.
Real estate is a limited property type influenced by land area constraints and location factors, resulting in a shortage of available properties The ongoing imbalance between supply and demand, where demand consistently exceeds supply, fuels speculation in the market Consequently, this trend contributes to a long-term increase in real estate values, particularly in developing or high-potential areas.
Real estate significantly influences adjacent properties and plays a crucial role in socio-economic activities When assessing real estate prices, it is essential to consider the potential impact of upcoming real estate projects.
In addition, RE is also a property of great value and long term existence in terms of
When assessing real estate, it is crucial to factor in the crystallization expenses incurred during its development and the timeframe required for generating income for users This consideration impacts both the physical and economic aspects of real estate investments.
1.1.3 The role of mortgaged real estate
Valuation of mortgaged real estate of joint stock commercial banks
1.2.1 Definition of Mortgaged real estate valuation
According to Oxford Dictionary: "Valuation is a professional judgement about how much money something is worth; it’s estimated value"
Fred Peter Marrone, the Marketing Director of AVO (Association of Australia Evaluation), emphasized during a valuation training course in Ho Chi Minh City on May 25, 1999, that valuation involves determining the value of real estate at a specific time, considering the property's characteristics and the purpose of the valuation He explained that pricing requires the collection and analysis of comparative market data, which is then used to assess and compare the value of the assets in question.
Real estate valuation, as defined by the Law on Real Estate Business, involves consulting and determining the price of a specific property at a given time This process must adhere to technical standards and consider factors such as the property's nature, location, scale, current market conditions, and the actual situation of the real estate Furthermore, real estate valuation should be conducted independently, objectively, and honestly, in compliance with legal regulations.
On June 20, 2012, the National Assembly of the Socialist Republic of Vietnam enacted Article 4 of the Law on Prices, which defines valuation as the regulation of prices for goods and services by a competent State agency or individual production and business organizations.
From the above points of view, RE valuation is the determination of a specific
9 property value for a certain purpose, at a given time, taking into account the characteristics of the RE, potential economic factors in the RE market, according to certain methods and standards
Mortgaged real estate (RE) valuation is crucial for determining the loan amount for borrowers while minimizing lender risk This valuation considers the unique characteristics of the property and prevailing economic factors in the RE market The assessed value may align with, exceed, or fall short of the market value, and its accuracy largely relies on the appraiser's qualifications, experience, and the reputation of the valuation service providers, along with various social conditions.
In the author's perspective, the valuation of mortgaged real estate is essential for determining its worth at a specific time, which serves as the foundation for banks to assess lending levels based on real estate collateral This valuation process is crucial for commercial banks as it ensures the legality of the collateral and establishes appropriate lending rates.
1.2.2 Foundation and principles of mortgaged RE valuation
1.2.2.1 Foundation of mortgaged real estate valuation
First, it depends on the elements of the RE itself
Valuing a mortgaged estate requires consideration of various factors, including its surface area, location, and surrounding environment Additionally, the economic, social, and natural aspects play a crucial role in determining its worth The utility and intended use of the property, along with its structural integrity and architectural design, are also essential elements in the valuation process Lastly, the psychological perception of the property’s current state significantly influences its overall value.
The location of real estate plays a crucial role in determining its value and desirability Analyzing the relationship between a specific property and its surrounding real estate can provide insights into market trends and investment potential Understanding these dynamics is essential for making informed decisions in the real estate sector.
RE position compared to other RE, which plays role of RE valuation
Second, it is based on market conditions
Market competition and economic factors significantly influence real estate dynamics, particularly through the interplay of supply and demand As urban areas expand, there is a notable increase in demand for centrally located properties, driven by substantial investment capital Consequently, this heightened demand further stimulates the real estate market.
Third, it is based on legal basis
Including legal factors related to the real estate, laws not related to the real
The article discusses essential regulations governing real estate, focusing on general provisions related to property possession and usage It also highlights the legal frameworks surrounding valuation activities and the methodologies employed in determining land prices.
1.2.2.2 Principles of mortgaged real estate valuation
Real estate value is influenced by various factors, including use value, scarcity, demand, and solvency To effectively assess real estate valuation, it is essential to understand and apply relevant rules and principles that accurately reflect the impact of these factors.
The essence of the real estate valuation is the analysis of factors that influence the value formation process of a particular asset
Firstly, the best and most effective use principles
The optimal utilization of real estate involves maximizing its usefulness within suitable socio-economic conditions, adhering to economic, regulatory, and financial guidelines, ultimately enhancing the property's value.
A property is deemed most valuable when it is legally utilized and generates the highest net income or present value of future earnings This optimal use can remain consistent over a designated period The highest and best use of a property is reflected through four key factors.
- Legality of use and income stream
- The present value of net income flows of all elements constituting the largest the real estate
- Time for long and stable income
- Satisfying common selection criteria suitable for size
Therefore, when conducting the real estate valuation, it is necessary to evaluate the current status of the real estate in order to estimate the best value of RE
Secondly, the principle of supply and demand
The value of real estate is influenced by the relationship between supply and demand in the market As demand for real estate increases, its value rises, while an increase in supply tends to decrease its value Therefore, the dynamics of supply and demand directly affect real estate values, with value changing in direct proportion to demand and inversely proportional to supply.
The value of the real estate is determined by the supply-demand relationship, which has physical and socio-economic characteristics different from those of other the real estate
The value of real estate is influenced by the relationship between supply and demand, with prices determined at the point of demand equilibrium It is essential to anticipate the factors that can alter the supply and demand dynamics in the real estate market.
Thirdly, the principle of substitution
The value of a property is influenced by its relationship with other comparable real estate, particularly when multiple properties can serve as substitutes for one another Typically, the valuation of a property is assessed in relation to the worth of other interchangeable real estate options.
Factors affecting mortgaged real estate valuation of joint stock commercial
Commercial banks have varying perspectives on the valuation of mortgaged real estate, influenced by their distinct operational objectives and business strategies To expand credit in a stable economic environment, banks may relax lending conditions, including collateral requirements, which can lead to a more lenient approach to property valuation Additionally, banks' viewpoints on real estate valuation are shaped by their approach to mortgage activities, where the valuation process becomes crucial for risk mitigation and justifying loan amounts Consequently, the valuation of mortgaged properties may exceed their market value, reflecting the subjective nature of each bank's assessment based on risk levels, recovery rates, and competitive dynamics within the financial market.
The organization and methodology of real estate valuation play a crucial role in the mortgage process, reflecting the level of professionalism in the valuation Effective coordination among various components within the banking system is essential for accurate and reliable real estate assessments.
18 will make the organization of valuation become simpler Establishing a simple, clear and standard valuation process will shorten the time and cost of valuation work, thus affecting pricing too
When valuing real estate (RE), it is crucial to select the appropriate valuation method due to the unique characteristics of properties and the influence of various objective and subjective factors The chosen method significantly impacts the valuation outcome, as there is no universally accurate approach; rather, there are effective methods tailored to the specific conditions and types of mortgaged real estate Minimizing costs during the valuation process is essential By utilizing reliable information and data sources, appraisers can enhance trust and credibility with clients, providing a scientific basis for their evaluations while also reducing overall valuation expenses.
The effectiveness of a pricing information system in real estate valuation relies heavily on the subjective judgment of appraisers and the strategic approach of each bank Accurate property valuation necessitates that appraisers consistently gather and process reliable, complete, and timely information A well-structured information system serves as the foundation for appraisers to conduct precise evaluations and analyses, significantly influencing the outcomes and efficiency of the real estate valuation process.
Human resources play a crucial role in the real estate (RE) valuation process, as the ethical standards, qualifications, and experience of valuation staff significantly impact the outcomes The complexity of RE valuation requires appraisers to possess specialized knowledge about the property and the various factors influencing its value, including economic, technical, and social aspects Additionally, the moral integrity of valuation officers is vital, as unethical behavior can lead to inflated property values, compromising the quality of the appraisal and potentially harming the financial interests of stakeholders Therefore, a strong ethical foundation is essential for ensuring accurate and reliable real estate valuations.
Sixth, other subjective factors: In addition to the above subjective factors, there are other subjective factors that affect the valuation process and the quality of the valuation
19 work For example, the Bank's business strategy in stages; how to organize the mortgage; facilities system for valuation work: office, equipment, software system for information processing and interbank activities
Natural conditions play a crucial role in determining real estate value, as they establish both relative and absolute positions for properties Favorable locations with beneficial natural features typically lead to higher valuations, while less advantageous conditions result in lower values Additionally, the shape and size of real estate, along with surrounding areas, contribute to variations in valuation, highlighting the importance of these factors in the real estate market.
The legal environment and state policies play a crucial role in real estate (RE) management, as these properties are strictly regulated by law State regulations regarding property ownership, usage rights, and mortgage transaction conditions significantly influence the process of securing collateral through real estate and impact its valuation Additionally, government policies on land pricing and construction standards, along with various objective factors, affect the valuation of mortgaged real estate by banks.
The economic environment plays a crucial role in stimulating the real estate market, leading to significant price increases In regions with favorable economic conditions, real estate generates substantial income, resulting in higher property values compared to less advantageous areas As the economy grows, the demand for production capital rises, leading to an increase in loans from commercial banks and subsequently boosting property valuations Thus, the economic environment is a key objective factor that directly influences the valuation of mortgaged real estate.
The real estate market is influenced by various activities and development trends, particularly in relation to the stock market Valuation plays a crucial role in establishing and enhancing market dynamics, necessitating professional pricing as the market matures Accurate pricing of mortgaged real estate depends on the market's operational characteristics, making it essential to consider the developmental phases of the real estate sector The financial real estate market emerges when real estate assets are converted into capital and traded, closely linking it to the functioning of commercial banks and credit institutions that specialize in mortgage lending Consequently, the valuation of mortgaged real estate serves as a foundation for determining the capital value of securitized mortgage loans.
CURRENT SITUATION OF MORTGAGED REAL ESTATE AT
The process of formation and development
BIDV - So Giao Dich 1 Branch is a premier first-class branch of the Joint Stock Commercial Bank for Investment and Development of Vietnam As the legal representative of BIDV, it possesses its own seal and balance sheet, and is tasked with executing BIDV's operations as authorized by the General Director This branch functions as a dependent accounting unit within the BIDV system.
BIDV - So Giao Dich 1 Branch was established under Decision No 76 QD/TCCB on March 26, 1991, by the General Director of the Vietnam Bank for Investment and Development Created during the country's early transition years, it was tasked with piloting new business models for the Joint Stock Commercial Bank for Investment and Development of Vietnam and the broader banking system As a direct business unit of the head office, it plays a strategic role within BIDV Located at Tower A of Vincom Tower, 191 Ba Trieu, Hai Ba Trung District, Hanoi, BIDV - So Giao Dich 1 Branch has significantly strengthened over its 27 years of development, evolving in scale and service quality, which can be categorized into five main stages.
- Phase 1 (1991-1995): This is considered to be the most difficult phase of So Giao Dich 1 Branch, when both trading and shaping and perfecting the newly established organizational apparatus
- Phase 2 (1996-2000): This is a between of strong transition to an independent economic accounting business under the market mechanism
From 2001 to 2005, Phase 3 marked a significant period for the banking industry in Vietnam, highlighted by the successful implementation of the SIBS core banking system This phase involved a comprehensive restructuring of the organization, alongside advancements in technological innovation and human resource development These efforts were crucial in preparing the banking sector for the challenges of international economic integration within Vietnam's economy.
- Phase 4 (2006-2008): The stage of restructuring operations in parallel with the organizational restructuring, actively increasing the credit scale for small and medium enterprises, promoting retail business
Since October 2008, Phase 5 has focused on successfully implementing transformation and restructuring the organizational model in line with the TA2 framework This approach aims to minimize risks, specialize banking activities, enhance competitiveness, and align with the standards of an advanced banking institution.
Since its establishment in 1998, the BIDV – So Giao Dich 1 Branch has evolved into a multi-purpose business model by 2000, following its split into an independent accounting branch Over the past 27 years, the Branch has consistently developed and established itself as a trustworthy institution, earning recognition as a "Leading Bird" in the industry, as praised by the CEO of BIDV.
Organizational structure
Over the past 27 years, BIDV - So Giao Dich 1 Branch has successfully expanded its presence in Hanoi by establishing seven level 1 branches This growth reflects the branch's commitment to fulfilling its tasks and enhancing its network of services under BIDV's guidance.
As of December 2018, BIDV - So Giao Dich 1 Branch operated with 22 departments and five transaction offices across Hanoi, effectively managing its commercial banking functions The branch is actively preparing to establish new transaction offices and enhance its savings services Committed to evolving into a modern and dynamic bank, BIDV - So Giao Dich 1 Branch aims to boost competitiveness and solidify its reputation, embodying the motto "Share opportunities - Successful cooperation" with customers amidst the challenges of global economic integration.
The organizational structure of BIDV's So Giao Dich 1 Branch is shown in detail in Figure 2
Figure 2.1 Organizational structure of BIDV - So Giao Dich 1 Branch
Source: Human Resource Department of BIDV – So Giao Dich 1 Branch
BIDV - So Giao Dich 1 Branchwas established with the following three main functions:
To ensure effective management and financial efficiency, it is crucial to uniformly check, evaluate, and supervise state budget-funded development investment projects, particularly in infrastructure construction Given their nationwide scope and diverse characteristics, these projects necessitate stringent oversight to meet varying requirements and maintain accountability.
Before implementing new operations and structural projects across the entire BIDV system, it is essential to conduct thorough testing As the economy experiences growth alongside fluctuating financial markets and increasing competition from foreign banks, rapid adaptation is crucial However, it is equally important to minimize errors during this process Therefore, testing initiatives to gain insights and refine new business strategies remains a vital objective for enhancing overall performance.
23 competitiveness and minimize risks for BIDV
BIDV is committed to enhancing its business management alongside the overall management of its Head Office As the organization continues to grow and expand, establishing a cohesive and rigorous management and supervision system from the central to grassroots levels is essential This approach aims to boost operational efficiency while ensuring timely detection and resolution of potential risks.
From the above functions, the tasks of the So Giao Dich 1 Branch include:
- Effective use of mobilized credits
- Development of capital, assets and other resources
- Testing new products and restructuring projects of BIDV
- Manage the lists, debts, fees receivable - payables in the summary of assets within the scope of capital of the Department
- Perform obligations to customers as committed
- Receiving deposits: Savings deposits, demand deposits, time deposits, issuance of certificates of deposit, promissory notes, treasury bills and other forms of deposits
- Credit extension: Lending, discounting, factoring, financial leasing, guarantee
- Providing non-cash payment services: Performing cheque payment services, payment orders, payment orders, collection orders, collection orders, bank cards, letters of credit…
Business situation of Joint stock Commercial Bank for Investment And
Capital mobilization is a critical focus for commercial banks and businesses, as securing capital is essential for fostering its effective utilization across various purposes To achieve the lowest cost of capital, the most effective strategy involves mobilizing funds from the economy, primarily through economic organizations and individuals.
BIDV - So Giao Dich 1 Branch is committed to fostering capital creation as a foundation for sustainable growth, actively implementing diverse capital mobilization strategies to meet customer demands As a result, the bank's capital resources continue to expand steadily.
Capital raising results of BIDV - So Giao Dich 1 Branch are summarized
Table 2.1: Capital raising results of BIDV - So Giao Dich 1 Branch between 2016 - 2018
Mobilized from the financial institutions 12 268 12 946 13 376 678 5, 53 430 3, 32
Deposit from corporate customers 22 129 25 628 30 842 3 499 15, 81 5 214 20, 34 Deposit from people 4 947 5 346 6 247 399 8, 07 901 16, 85
Source: Summary report of 2016, 2017, 2018 of BIDV - So Giao Dich 1 Branch
Between 2016 and 2018, the economy showed signs of recovery despite a challenging business environment and intense competition among banks, influenced by the State Bank's strict control over market interest rates During this period, So Giao Dich 1 Branch achieved commendable results in capital mobilization, with an average growth rate of 13.17% per year Notably, in 2018, capital mobilization surged by over 6,545 billion compared to 2017, reflecting a significant growth of 14.9%.
Between 2016 and 2018, capital mobilization from financial institutions experienced slow growth, peaking at 5.53% in 2017 before declining to 3.32% in 2018 Notably, the increase in capital mobilization was primarily driven by corporate clients, with significant deposits from key customers such as Viettel Military Telecom Corporation (VND 2,013 billion), Vietnam Oil and Gas Group (VND 1,011 billion), and Vietnam Social Insurance (VND 784 billion) BIDV - So Giao Dich 1 Branch benefits from strong relationships with major economic and financial institutions, leading to a substantial portion of its capital—87%—coming from these entities However, this heavy reliance on corporate deposits also poses a potential disadvantage for the branch.
25 economic between was instability and difficulty, businesses lack capital for manufacturing and business, inevitably leading to a decrease in mobilization from these customers
In recent years, the proportion of capital mobilized from the population has been steadily increasing, demonstrating a more stable and less volatile source of funding compared to economic organizations The Branch has implemented various flexible capital mobilization strategies, including direct mobilization at transaction locations and initiatives in residential areas, to enhance community engagement While the absolute growth in this area may not be substantial, the average annual growth rate of population mobilization from 2016 to 2018 was 11.66%, which slightly outpaced the branch's overall capital mobilization growth rate of 11.3%.
The Branch prioritizes the development of credit operations, recognizing their significance in the financial landscape With extensive experience serving major clients and a team of highly specialized officers in credit appraisal, the Branch operates in a densely populated area and maintains strong relationships with numerous businesses and economic organizations nationwide This enables the Branch to effectively mobilize abundant capital resources, allowing it to meet complex credit and commercial financing needs of its customers Recent data on the Branch's credit operations can be found in Table 2.2.
Table 2 2: Credit performance of BIDV - So Giao Dich 1 Branch between 2016 - 2018
1 Debit balance according to customers
5 Ratio of medium and long-term loans to total outstanding loans
Source: Summary report of 2016, 2017, 2018 of - So Giao Dich 1 Branch
In recent years, the branch has experienced significant credit growth, surpassing the average of the entire system Notably, the growth rate reached 23.43% in 2017 compared to 2016, followed by a remarkable 28.9% increase in 2018 This impressive performance can be attributed to the strategic policies implemented by both the branch and head office, effectively leveraging the branch's strengths and position amid a recovering and expanding economy.
The branch primarily focuses on providing credit to corporate customers, with over 89% of outstanding loans allocated to this sector Notably, the top 10 corporate clients account for 57% of the total loan balance, enabling rapid credit growth However, economic fluctuations pose risks, as changes in customer business activities can lead to significant reductions in the debt balance To mitigate this risk, the branch is diversifying its credit operations by actively marketing to small and medium enterprises, micro enterprises, and foreign direct investment (FDI) clients Additionally, the branch is gradually increasing its loan portfolio for individual customers.
In recent years, the growth rate of outstanding loans to individual customers and households has slowed, despite an increase in absolute values Specifically, the debit balance for science and technology households rose from 2,516 billion VND in 2016 to 3,426 billion VND in 2017, marking a 36.17% increase By 2018, this balance further increased to 4,237 billion VND, reflecting a growth of 23.67% This trend highlights a strategic approach to risk diversification, reducing reliance on large corporate clients.
Branches primarily offer medium and long-term credit products, with the ratio of these loans to total outstanding loans being 54.9%, 63.4%, and 67.8% over the past three years This trend indicates a continued focus on the growth of medium and long-term credit activities within the branch.
The branch faces the dual challenge of managing credit growth while maintaining high standards of credit quality, safety, and operational efficiency Currently, the bad debt ratio remains stable at under 1%, as shown in Table 2.2 However, with increasing credit growth, there is a concerning trend of rising bad debt To ensure financial stability, the branch must closely monitor and manage its bad debt levels, aiming to keep the ratio below 1% in the coming year.
BIDV - So Giao Dich 1 Branch has taken significant steps to enhance the quality of its products and services by offering tailored consultancy and effective product introductions that meet customer needs The branch has adopted a flexible and competitive service fee policy to attract more clients It emphasizes the promotion of high-revenue-generating services such as payment services, guarantees, and trade sponsorship Additionally, the branch continues to expand its offerings, including BSMS card services and Internet/Mobile Banking The results of banking services between 2016 and 2018 are summarized in Table 2.3.
Table 2 3: Service performance results of BIDV - So Giao Dich 1 Branchin the between 2016 - 2018
Source: Summary report of 2016, 2017, 2018 of BIDV - So Giao Dich 1 Branch
Between 2016 and 2018, net service revenue experienced stable growth, with an average annual increase of approximately 2% A significant portion of this revenue came from fee sources, including payment service fees, guarantee fees, and trade finance fees, which benefitted from a strong customer base and economic recovery While other fee sources such as credit fees, card service fees, insurance premiums, e-banking, bill payments, and electronic tax collection showed slight growth, their contribution to total service revenue remained modest.
To enhance service fee collection relative to traditional revenue from credit activities and capital mobilization, the Branch is diversifying its revenue sources by promoting various products and services These include credit and international debit cards, payroll services, insurance products integrated with credit activities, and money transfer options like Western Union Additionally, the Branch offers Internet Banking, mobile banking, Smart banking, BSMS, VNTopup, and Bankplus While these offerings may be small in scale, they play a significant role in the overall revenue strategy.
29 good cross-selling ability, high potential for development and a stable source of fee collection for banks
2.2 Analyze the status of mortgaged RE valuation at th Joint Stock Commercial Bank for Investment and Development of Vietnam - So Giao Dich 1 Branch.
Types of mortgaged real estate at the Branch
Real estate often serves as collateral for loans from commercial banks, which is crucial for ensuring the bank's safe operations To facilitate effective supervision and management of real estate, it is essential to adhere to the principles of mortgage law This includes recognizing houses, construction works, and land use rights as valid forms of collateral, as indicated by staff surveys conducted at BIDV.
From 2016 to 2018, BIDV - So Giao Dich 1 Branch provided loans secured by various types of real estate, including apartments, agricultural and forestry land, production and business land, commercial premises, trade centers, as well as land and assets attached to land.
Table 2.4: Debit balance for mortaged the real estate of BIDV - So Giao Dich 1 Branch between 2016 and 2018
Land used for production and business, business premises and trade centers 1,911 513 2,378 642 3,071 846 Residential land and properties attached to the land 24.181 7,914 29 671 11,352 43.125 16.145
Source: List of security assets for the between of 2016 - 2018 of BIDV
Chart 2.1: Structure of debit balance under the collaterals of BIDV - So Giao Dich 1
Source: Structure of debit balance by collaterals for the 2016-2018 between of BIDV
As Chart 2.1 shows, outstanding loans with secured assets accounted for a large proportion of total debit balance In particular,, the ratio of debit balance with collaterals in
From 2016 to 2018, the proportion of debit balances with real estate collateral rose steadily, reaching 88%, 92%, and 95% respectively In contrast, the share of unsecured debit balances remained low, fluctuating between 5% and 12% during these years Notably, the percentage of debit balances backed by real estate collateral increased from 71.32% to 83.34%, indicating a consistent upward trend year after year.
Lending secured by real estate at the branch has shown a significant upward trend over the years, with total outstanding loans rising from VND 18,074 billion in 2016 to VND 33,617 billion in 2018, marking an increase of nearly 1.76 times This growth reflects the broader economic development in the region The primary types of real estate collateral include residential land, properties on land, and apartments, while agricultural, forestry, and business-related lands account for a smaller share, aligning well with the urban landscape of Hanoi.
Bases and principles of mortgaged RE valuation at the branch
2.2.2.1 Based on the mortgaged RE valuation at the branch
Currently, the valuation of mortgaged RE at BIDV - So Giao Dich 1 Branch
Dư nợ không có tài sản đảm bảo Dư nợ có BĐS đảm bảo Dư nợ theo
Debit balance with Other collaterals v v
Debit balance with The real estate collaterals
31 is based on the following legal documents:
- 2013 Land Law and Government Decrees on the implementation of the Land Law;
- Decree No 102/2017/NĐ-CP, September 1, 2017 of the Government on registration of security measures;
- Decision No 1161/QD-BXD, October 15, 2015 of Ministry of Construction on announcing construction investment rate;
- Decree No 153/2007/NĐ-CP issued by the Government, October 15, 2007, providing guidelines for a number of articles of the Law on RE Business;
- National Assembly's Resolution No 19/2008/QH12, June 3, 2008, on piloting of foreign organizations and individuals to buy and own houses in Vietnam;
Decree No 51/2009/NĐ-CP, issued by the Government, provides guidance on implementing specific articles of the National Assembly's Resolution No 19/2008/QH12, dated June 3, 2008 This decree focuses on the pilot program that allows foreign organizations and individuals to purchase and own property in Vietnam, facilitating foreign investment in the real estate sector.
- Decree No 102/2010/NĐ-CP issued by the Government, October 1, 2010, guiding a number of articles of the Enterprise Law (Decree 102);
- Decision No 24/2005/QĐ-BTC, November 1, 2005 of the Minister of Finance on the issuance of valuation standards 03 Vietnam (TDGVN 01, 03, 04);
- Decision No 77/2005/QĐ-BTC, November 1, 2005 Promulgating 03 Criteria of Vietnam appraisal of prices (VNR 02, 05, 06);
- Decision No 129/2008/QĐ-BTC of the Minister of Finance promulgating 06 standards of appraisal of Vietnamese prices (phase 3);
- Decree No 71/2010/NĐ-CP, June 23, 2010 guiding the Housing Law;
Circular 16/2010/TT-BXD, issued on September 1, 2010, provides detailed guidance on implementing specific provisions of Decree No 71/2010/NĐ-CP, which was enacted on June 23, 2010 This decree outlines the operational framework for the Housing Law, ensuring clarity and compliance in housing regulations.
- Decree No 69/2009/NĐ-CP, August 13, 2009, additional regulations on land use planning, land prices, land acquisition, compensation, support and resettlement issued by the Government onions;
The regulations governing mortgaged real estate (RE) are outlined in legal documents from the Government, the State Bank, and commercial banks, which are regularly updated to enhance the legal framework for valuing mortgaged RE lending across credit institutions, particularly in certain domestic joint-stock commercial banks Currently, BIDV - So Giao Dich 1 Branch is actively involved in the appraisal process.
RE according to the documents issued by the State Bank:
Circular No 36/2014/TT-NHNN, issued on November 20, 2014, establishes essential limits and prudential ratios that credit institutions and foreign bank branches must consistently uphold Key provisions include the minimum capital adequacy ratio, credit limits, solvency ratios, and the maximum ratio of short-term funds allocated for medium and long-term loans Additionally, the Circular outlines restrictions on capital contributions and share purchases, as well as the ratio of outstanding loans to total deposits, ensuring the stability and soundness of financial operations.
Circular No 18/2016/TT-NHNN, issued on June 30, 2016, updates specific provisions of Circular No 21/2012/TT-NHNN, originally dated June 18, 2012 This regulation, established by the Governor of the State Bank of Vietnam, governs the lending and borrowing activities as well as the definitive purchase and sale of valuable papers between credit institutions and foreign bank branches.
Circular 06/2016/TT-NHNN, issued on May 27, 2016, updates certain provisions of Circular No 36/2014/TT-NHNN, dated November 20, 2014, by the Government This circular empowers the Governor of the State Bank to establish prudential ratios and operational ratios for credit institutions and foreign bank branches.
- Decision No 8955/QD-PC dated December 31, 2014 of the General Director of Bank for Investment and Development of Vietnam regarding Regulations on security transactions
- Decision No 96/2014/QĐ-UBND dated December 29, 2014 of Hanoi City People's Committee, promulgating the regulations on prices of land types in Hanoi city, applicable from January 1, 2015 to December 31, 2019
(2) Based on the elements of RE itself
* Conditions for land use rights:
Obtaining a certificate of land use rights and ownership for houses and properties is essential for legal recognition This includes documents such as Certificates of Land Use Rights, Certificates of Ownership for Houses, and other equivalent proofs of residential land use rights.
Documents demonstrating the complete exemption or satisfaction of financial obligations, including land use levies and land rent payments, have been submitted to the State Furthermore, any land use levy paid does not derive from the State budget, if applicable.
- Land use right without litigation
- Land use right not be distrained to guarantee judgment
- The remaining land use term is at least 03 years from the time the customer
To request a loan, applicants must have at least two years remaining until the loan's due date The duration of the remaining land use is established according to the terms outlined in the Land Use Right Certificate.
* Conditions on properties attached to land:
To secure a mortgage, homeowners must provide a certificate of ownership for the house or construction work If the property on the land lacks ownership certification, it is considered an indivisible part of the land use rights The property owner must commit to the bank that the attached property will also be included as part of the mortgage assets.
- Not located in areas banned from construction under the provisions of construction law
In urban districts and wards governed by the Central Government, as well as in provincial cities where BIDV's Business Units are situated, real estate (RE) is defined as properties located on street frontages or within inner town areas This includes properties at road surfaces listed as acceptable collateral by BIDV, which is updated periodically.
- RE on the road and street of urban districts and wards of cities and provinces where BIDV has not had its head office;
Real estate (RE) located in alleys within urban districts of Ho Chi Minh City must meet specific criteria to be officially recognized The alley should have a minimum cross-sectional width of 1.5 meters, and the distance from the curb or street to the mortgaged property should not exceed 1 kilometer along the designated road or street If the alley is not already named, it will be considered as a single lane for these purposes.
The minimum width for a cross-section gateway from the curb to mortgaged real estate is 2 meters, and the distance from the road surface to the listed routes must not exceed 500 meters when considering real estate as collateral in BIDV for mortgage purposes.
In the alleys of communes in suburban Hanoi and Ho Chi Minh City, the minimum required width for real estate collateral is 3.5 meters from the curb to the property line Additionally, the distance from the road surface to the mortgaged real estate must not exceed 300 meters, as outlined in BIDV's list of roads eligible for real estate collateral.
- RE in the inner lane of other cities where BIDV's Branch/Transaction Center is
The minimum lane width for cross sections adjacent to the road is set at 2 meters, while the distance from the pavement for routes involving mortgaged real estate as collateral in BIDV must not exceed specified limits.
Current situation valuation method at the Branch
In the valuation of mortgaged real estate, BIDV – So Giao Dich 1 Branch utilizes standard valuation techniques, primarily the comparative and cost methods, to establish the market price of collateral properties The final value of the mortgaged real estate is determined by averaging the price range derived from these calculation methods.
The market price set by the valuation officer must not exceed K times the price bracket established annually by the People's Committee of the province or city The K coefficient, determined by the General Director, varies based on the development level of each locality For instance, specific regulations are currently in place for certain districts in Hanoi.
+ Districts of Ba Dinh, Dong Da, Hai Ba Trung and Cau Giay: K = 4;
+ Thanh Xuan, Long Bien, Hoang Mai and Tay Ho districts: K = 3.5;
Maximum loan rate: For RE positions 1.2, the maximum loan rate is 75% of the valuation price; while RE is at 3,4 position, the maximum loan rate is 70% of the valuation
Position 1 is the parcels of a land user and has at least one side adjacent to the road or street
Position 2 is the land parcels of a land user, at least one side adjoining alleys, alleys and alleys and has the smallest lane cross section of 3.5 m or more
Position 3 is the parcels of a land user, with at least one side adjacent to the alley and the smallest alley from 2 m to 3.5 m
Position 4 is the parcels of a land user, at least one side adjacent to the lane and the smallest cross-section less than 2m
In real estate valuation, the market value of a property serves as a crucial basis, representing the estimated price at which it can be traded between a willing buyer and seller in an objective and independent transaction under normal commercial conditions This market value takes into account various elements of the property, including its frontage, parcel of land, technical infrastructure, and surrounding social infrastructure The determination of market price is typically based on successful transactions of comparable properties, which can be sourced through various channels such as newspapers, the internet, direct investigations, company records, and real estate brokerage offices.
Despite the application of valuation methods aligned with the branch's real estate (RE) valuation, the results remain below expectations Notably, there is a significant number of documents showing discrepancies in the mortgage locations of the real estate, and the volume of valuation records requiring adjustments continues to rise.
Chart 2.2: Number of documents with deviations in the location of mortgaged real estate of BIDV– So Giao Dich 1 Branch
Source: BIDV Risk Management Department, BIDV - So Giao Dich 1 Branch
Table 2.2 indicates a significant decline in the number of records with location deviations in RE Specifically, the number of misleading RE position files dropped from 28 in 2016 to 23 in 2017, and further decreased to 14 in 2018.
Between 2016 and 2018, the number of mortgaged real estate valuation dossiers requiring price adjustments persisted, leading to customer dissatisfaction despite their relatively small proportion.
Table 2 8: The adjusted number of the real estate valuation records of BIDV–
Total number of RE valuation records 16,431 20,330 26,894 3,899 23.73 6.564 32.29 The number of records must be adjusted
The proportion of records must be adjusted
Source: BIDV Risk Management Department, BIDV - So Giao Dich 1 Branch
Recent data indicates a decline in the number of documents related to real estate valuation that require adjustments in recent years, as shown in Table 2.8.
Số hồ sơ BĐS sai lệch về vị trí BĐS
The number of documents with deviations in the location of RE
45 appraisal dossiers required to be adjusted in 2016 is 18, accounting for 0.11%, in 2017 reduced to 16 records, accounting for 0.08%, by 2018, there were only 13 lakes records must be adjusted, accounting for 0.05%
Statistics indicate that the number of rehabilitation records requiring adjustments is minimal compared to the total number of valuated records This highlights the increasing significance of mortgaged real estate valuation Furthermore, the improvement in mortgaged real estate valuation at the branch is enhancing the efficiency of lending operations.
Current situation of mortgaged RE valuation process at the Branch
Mortgaged real estate valuation is a crucial step in the credit approval process at BIDV - So Giao Dich 1 Branch After the credit officer evaluates the customer's loan profile, including loan capacity, purpose, financial capability, and reputation, the branch will proceed with document assessment and the valuation of the mortgaged property, provided that all factors align with the bank's business policies and acceptable risk levels.
BIDV's regulations mandate that all valuation request documents must be reviewed by the Head of the Business Department prior to being sent to appraisers, prohibiting credit officers from conducting valuations independently without Branch leadership's guidance A dedicated valuation team has been established, comprising the Head of the Corporate Banking Department, leadership from the credit division, and credit department staff The credit officer is responsible for directly valuing security assets, which include real estate such as houses and residential land, as well as machinery and valuable papers belonging to customers.
According to BIDV, the mortgaged RE valuation in BIDV - So Giao Dich 1 Branch1 is conducted according to the process includes the following steps:
Figure 2 2 The real estate valuation process of BIDV - So Giao Dich 1 Branch
The initial step in the real estate (RE) valuation process at BIDV involves the comprehensive identification of the property requiring valuation, along with the assessment of its market or non-market value This critical phase demands high accuracy, as even minor errors can significantly distort the final valuation outcomes.
Appraisers must define the fundamental legal, economic, and technical characteristics of the assets being valued This general framework is essential for facilitating comprehensive information gathering, ensuring that no critical elements are overlooked.
The valuation department must clearly identify that the primary purpose of valuation is to facilitate credit provision to customers via mortgages By establishing the purpose of accurate valuation, the process can be conducted more efficiently, allowing for the selection of the most suitable valuation method.
To effectively assess the real estate (RE) value, it is crucial to establish clear criteria for identifying the valuation object, as these parameters will guide the entire valuation process The pricing department is responsible for formulating specific assumptions and conditions that are essential for accurate evaluations.
- Requirements and purposes of securing loans through mortgaged RE
Overview of the real estate to be valued
PROCESS OF THE REAL ESTATE VALUATION
Step 6: Report the results, create the valuation records
Evaluate the real estate valued
Step 3: Field survey, collect information
- Legal restrictions, use of RE as mortgage loan
- Rights and obligations of the pricing department under the transaction contract
- Restrictions on information related to mortgaged RE
The setting of restrictions and constraints of the valuation department must be based on policies in accordance with the applicable laws and regulations
To ensure an efficient and timely real estate (RE) valuation process, the valuation officer must first assess the relevant restrictions Establishing the appropriate timing for the valuation is crucial, as it facilitates a swift process and enhances the prestige of valuation activities BIDV has outlined clear guidelines for determining the timing of RE valuations.
The timing for property valuation should be established right after the valuation contract is signed, ensuring that the assessment of the real estate's value remains within the boundaries set by the contract.
- Determining data sources needed to be priced
- Determining the basic value of RE
This article explores the characteristics and classifications of real estate (RE), focusing on valuation measures and clarifying the distinction between market value and non-market value as foundational elements for accurate property valuation.
At step 1, BIDV emphasizes the importance of appraisers understanding the fundamental concepts of real estate valuation and the timeframe for conducting the assessment This foundational knowledge equips appraisers with the essential tools needed for effective real estate valuation.
Once the valuation date is established, the next step is to create a valuation plan that outlines the tasks to be completed, the timeline for each specific task, and the overall duration required for the valuation process.
The content of the plan must include the following basic tasks:
- Identify appropriate supply and demand factors with functions, characteristics and rights attached to RE to be valued in the market
- Identify documents to be collected about RE to be valued, documents about RE to be used for comparison
- Identify and test sources, ensure they are reliable and must be verified
- Develop research progress, determine the order of data collection and analysis, and allowable duration of the order to be performed
- After completing the second step, the appraisers have basically grasped the contents to be valued as well as the order of collecting information about these contents
Step 3: Field survey, collect information
Field surveys are very important for valuation The information obtained from the field reality of RE subject to valuation is the information directly and decisively affecting the valuation results
Appraisers must conduct a thorough survey of the actual location of real estate (RE), ensuring it aligns with the registration map and accurately describing the legal details associated with the property Key aspects to assess in the field include the physical attributes of the RE, its surrounding environment, and any relevant zoning regulations.
- Exterior and interior details of RE including land area and architectural structures This information needs to be directly measured and appraised by appraisers
- Considering the surrounding scenery, infrastructure of the area (water supply and drainage, telecommunications, electricity, roads )
- Type of architecture, structure, modernity, age of works, status of maintenance, repair
Valuation of works in progress requires a thorough approach that integrates field site surveys with comprehensive reports from investors and contractors involved in the construction activities.
- During the survey process, to have full evidence for the valuation, appraisers can take pictures of RE in different forms and directions
In addition to information and data collected from a field survey, the valuation department must collect other information related to RE It is the information surrounding
- Information related to the cost of formation, cost of construction, use history and income of comparable properties
- Information about market supply and demand factors, market participants, dynamics of buyers and potential sellers in the market
- Information about the legal status of RE
- Information, data on economy, society, environment, factors affecting the specific value of RE (address, cadastral map, planning, administrative border, infrastructure floor )
For the real estate valuation, information must be obtained from a variety of sources including, for example, previously recorded purchases, asking prices, sales
This article explores 49 effective methods for buying and selling real estate, detailing various payment options and transaction volumes It provides practical insights gathered from field experiences, interviews with real estate companies and related services, as well as data from banks, credit institutions, and legal documents Additionally, it incorporates information from press releases to offer a comprehensive understanding of the real estate market.
Appraisers at BIDV – So Giao Dich 1 Branch gather information from various sources, including field surveys, online research, and media outlets However, it is essential to evaluate this information thoroughly before utilizing it for mortgaged real estate valuation.
Survey results on branch information collected are as follows:
Table 2.9: Survey results on information collected for mortgaged real estate valuation of BIDV – So Giao Dich 1 Branch
Accuracy at an acceptable level 44 62.86
Accuracy is at a very low level 5 7.14
Evaluate the status of mortgaged RE valuation at Joint Stock Commercial
Valuation of mortgage the real estate at BIDV- So Giao Dich 1 Branch has achieved certain results:
Real estate valuation plays a crucial role in the credit department by supplying essential data on the value of mortgaged properties This information serves as a foundation for making informed loan decisions and aids in executing credit management tasks, all while adhering to the loan regulations set forth by the State and BIDV.
The signing of loan security contracts is conducted in compliance with regulations, ensuring that all collaterals, especially mortgaged real estate, are properly valued before finalizing the mortgage agreement This valuation process is crucial for determining the worth of the mortgaged properties at the branch.
The mortgage real estate value is explicitly outlined in the loan security contracts, ensuring that it covers the total loan amount, which includes the principal, interest, and associated fees, as agreed upon by the parties involved.
The use of a straightforward valuation method, in compliance with state regulations and the established unit price framework, ensures that the valuation process is conducted efficiently, seamlessly, and with a solid legal foundation.
Real estate valuation plays a crucial role in asset management by ensuring that loans are secured efficiently and frequently It facilitates thorough registration of guaranteed transactions, which helps clarify the validity of mortgaged real estate contracts and third-party involvement This process significantly contributes to BIDV's objective of enhancing credit safety and minimizing risks.
Regular re-evaluation of real estate collateral every six months enables banks to closely monitor loans and promptly assess customers' asset situations This process ensures that if property values decline, customers can be required to add additional collateral to secure the loan Furthermore, these periodic revaluations provide banks with valuable insights into the real estate market, allowing them to identify trends that inform future valuations.
Despite of the achieved successes and certain results but in the work of the real estate valuation, there are still some following limitations:
The valuation method for mortgaged real estate at BIDV – So Giao Dich 1 Branch relies on market value references without utilizing comparable properties or making adjustments This approach is strictly governed by BIDV's regulations on real estate valuation, ensuring consistency and adherence to established standards.
The valuation process for mortgaged real estate at BIDV – So Giao Dich 1 Branch lacks clarity and rigor, primarily relying on descriptive methods This approach falls short of established theoretical frameworks, indicating significant gaps in the process and a lack of specificity in the tasks required at each stage.
Although there is basic training in valuation, valuation is a very difficult field, requiring basic skills and a deep understanding of other disciplines related to the value of
In the real estate sector, particularly within the construction and furniture industries, gaining a precise understanding of land value is crucial By analyzing these industries, professionals can better assess the worth of real estate, ensuring more accurate valuations However, many employees in these fields may lack the necessary insights to achieve this level of accuracy.
55 valuation department are very young, sometimes they do not have enough experience to handle, so they still face certain limitations in determining the value of RE - land
Valuation information is currently limited, primarily relying on data provided by mortgagors Due to time constraints, valuation officers struggle to gather and process comprehensive information related to the real estate in question Additionally, BIDV's information storage and utilization capabilities are inadequate, as there is no software in place for officers across the system to access and share information effectively Consequently, appraisers are often restricted to information obtained from mortgagors or their previous valuation experiences with various mortgaged properties.
The quality of real estate valuation for mortgaged properties is often inadequate, failing to accurately represent their true market value at the time of assessment Typically, these valuations rely on price frameworks established by state agencies rather than reflecting the actual market conditions of the property in stable markets.
2.3.2.2 The causes of the limitations
The application of valuation methods in mortgaged real estate is often rigid and lacks standardization Branch officers primarily rely on the comparative and cost methods, using state-issued land unit price brackets and property compensation unit prices for valuation, rather than actual market prices Consequently, the field value basis serves merely as a reference and is seldom utilized in the final results of mortgaged real estate valuations conducted by the Branch.
Awareness among branch officers regarding the valuation of mortgaged real estate is insufficient, as many view it as a secondary task This lack of understanding undermines the critical role that accurate valuation plays in ensuring credit safety and optimizing real estate resource utilization within the banking sector Additionally, there is a noticeable absence of recognition and incentives for departments and officers engaged in this essential work, which fails to motivate them to excel in their valuation responsibilities Consequently, some appraisers adopt a superficial approach, merely going through the motions rather than fully committing to the valuation process.
Thirdly, according to the survey result, the level of staff directly working on the valuation and management of Mortgaged real estate is still limited due to the nature
Most officers lack intensive training in the valuation and management of mortgaged real estate, focusing primarily on financial and banking operations Feedback indicates that 21.43% of staff are highly qualified, while 64.29% are considered average and 14.28% are viewed as poorly qualified Given the complexity of business valuation and management in this area, it is essential for professionals to possess in-depth knowledge and receive proper training to effectively handle these tasks.
The current valuation system within the branch is incomplete, as the valuation team consists of credit officers who also serve as leaders of operations departments There is no independent valuation department established from Headquarters to Branches, leading to a subjective approach in real estate valuation Pricing is primarily determined by valuation officers, who are supervised and re-inspected by departmental and branch leaders based on the reports and information they provide This lack of independence and control often results in disagreements among valuation team members regarding the valuation outcomes.
* Cause from the external environment
According to the survey of valuation staffs, the external causes that the Branch faces when evaluating price including: