Applying CAMEL model in analyzing and evaluating the business performance of securities companies

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Dissertation submitted in partial fulfillment of the

Requirement for the MSc in Finance

FINANCE DISSERTATION ON

APPLYING CAMEL MODEL IN ANALYZING AND EVALUATING THE BUSINESS

PERFORMANCE OF SECURITIES COMPANIES

….

LE PHUONG ANH

ID No: 21071824

Intake 5

Supervisor: Dr. Bui Huy Trung

September 2022

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ACKNOWLEDGEMENTS

I would first like to thank my thesis advisor Dr. Bui Huy Trung of the Banking Academy. The

door to Dr. Trung office was always open whenever I ran into a trouble spot or had a question

about my research or writing. He consistently allowed this paper to be my own work, but steered

me in the right direction whenever he thought I needed it.

Finally, I must express my very profound gratitude to my teacher Mrs. Dang Thi Thao at Banking

Academy for providing me with unfailing support and continuous encouragement throughout my

years of study and through the process of researching and writing this thesis. This

accomplishment would not have been possible without her. Thank you!

Author

Le Phuong Anh

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Table of Contents

ACKNOWLEDGEMENTS...........................................................................................................2

INTRODUCTION......................................................................................................................5

CHAPTER I: GENERAL THEORETICAL ISSUES ABOUT ANALYSIS AND EFFICIENCY ASSESSMENT OF

BUSINESS ACTIVITIES OF SECURITIES THROUGH THE CAMEL MODEL...................................... 10

1.1. Overview of the company's business activities ..................................................................10

1.1.1. Definition and characteristics of securities companies..................................................................10

1.1.2. Functions of securities companies...................................................................................................11

1.1.3. Operating principles of a securities company ....................................................................................12

1.1.4. The activities of securities company: .................................................................................................13

1.2. Overview of the company's business performance ............................................................14

1.2.1. Definition: .........................................................................................................................................14

1.2.2. The value of business performance analysis ..................................................................................15

1.2.3. Methods of evaluating business performance ................................................................................15

1.3. Overview of CAMELS model ...........................................................................................16

1.3.1. General introduction to the CAMELS model................................................................................16

1.3.2. Contents of CAMEL model applied to Vietnam Securities Company ........................................17

1.3.3. Scoring method.................................................................................................................................21

CHAPTER II: ANALYZING AND ASSESSING BUSINESS EFFICIENCY OF SECTORS THROUGH CAMEL

MODEL................................................................................................................................. 24

2.1. Introduction of securities companies in the study .............................................................24

2.1.1. General introduction about SSI Securities Joint Stock Company (SSI) .....................................24

2.1.2. General introduction about Securities Joint Stock Company Bank for Investment and

Development of Vietnam (BSC)........................................................................................................................25

2.1.3. General introduction about Asia - Pacific Securities Corporation (APEC)................................26

2.2. Analysis of the current state of business performance of securities companies .................27

2.2.1. Capital Adequacy .............................................................................................................................27

2.2.2. Asset Quality.....................................................................................................................................31

2.2.3. Management .....................................................................................................................................34

2.2.4. Earnings............................................................................................................................................36

2.2.5. Liquidity............................................................................................................................................40

2.3. Result ...............................................................................................................................42

2.4. Limitations and causes......................................................................................................43

CHAPTER III: SOLUTIONS AND RECOMMENDATIONS TO IMPROVE EFFICIENCY IN BUSINESS

ACTIVITIES OF SECUTITIES COMPANIES ................................................................................. 47

3.1. Prospects for the development of the securities industry...................................................47

3.2. Some solutions and recommendations to improve the operational efficiency of securities

companies....................................................................................................................................48

3.2.1. Solutions for securities companies..................................................................................................48

3.2.2. Recommendations for state management agencies .......................................................................53

CONCLUSION........................................................................................................................ 56

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REFERENCES ......................................................................................................................... 57

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INTRODUCTION

1. Rationale of the research:

In July 2000, the Ho Chi Minh City Securities Center was the predecessor of the Ho Chi

Minh Stock Exchange. Ho Chi Minh City Stock Exchange (HOSE) officially opened and opened

the first trading session with only 2 stock codes, marking the birth of Vietnam's stock market.

Two years later, Vietnam's stock market continued to make new strides with the launch of the

Hanoi Securities Center and the Securities Depository Center. At that time, the Hanoi Securities

Center, the predecessor of the Hanoi Stock Exchange (HNX), operated under the model of an

over-the-counter market (OTC) as a secondary market organization for securities that were not

yet available. listed under the agreement mechanism. In 2017, derivative securities were put into

operation with the expectation of helping to diversify investment portfolios, improve the

underlying securities portfolio for investors, especially institutional investors, providing tools to

hedge risks and promote liquidity on the underlying stock market. For more than 20 years,

Vietnam's stock market has continuously improved in structure and developed strongly,

becoming a market with a significant size in the region, contributing to the development of the

national financial system in the direction of a more balanced, sustainable and become an

important capital mobilization channel for the economy. The existence and development of the

stock market must include the great contribution of securities companies, an intermediary

financial institution performing operations on the stock market. Being involved in many

international agreements gives securities companies many challenges and strong competition in

terms of scale and experience. Therefore, the urgent issue now is that securities companies need

to have accurate assessments of their business activities to promote their strengths and overcome

limitations, thereby developing the financial playing field increasingly harshly.

After more than 20 years of operation and development, securities companies have

achieved many successes with certain business results. However, in the face of changing

requirements for further improvement in business activities and sustainable development, even

securities companies with large capitalization to small capitalization need certain metrics to

evaluate their performance. business to improve efficiency and competitiveness in the market.

Recognizing the importance of the problem, I chose the topic: "Applying CAMEL model in

analyzing and evaluating the business performance of securities companies".