NATIONAL ECONOMIC UNIVERSITYEnglish Bachelor of Business Administration Nguyen Binh lam SITUATIONS AND RESOLUTION OF PERSONAL CONSUMING CREDIT OF ASIA COMMERCIAL BANK - O CHO DUA BRA
INTRODUCTION
Reasons for choosing the thesis
Vietnam's rapidly developing economy has significantly improved living standards, prompting Asian commercial banks, particularly ACB’s O Cho Dua branch, to enhance their products and services The branch primarily serves working-class immigrants, civil servants, and small business households, making consumer credit a major contributor to the bank’s revenue and loan sales Recognizing the vital role of consumer credit in its operations, the branch has consistently focused on consumer lending to establish itself as a leading retail bank Through ongoing training at EBBA National Economics University in Hanoi and practical experience at the O Cho Dua branch, staff have gained valuable insights into credit operations, emphasizing the importance of understanding and analyzing consumer credit for effective banking performance.
Stemming from the above reasons I chose the theme: REAL SITUATIONSAND RESOLUTION OF PERSONAL CONSUM CREDIT BANK OF ASIACOMMERCIAL BANK - O Cho Dua Branch
Research objectives
This research aims to achieve the following objectives:
Review the concepts and theories related to credits and banking loans.
Analyze and evaluate the current situation of customers loans of ACB – O Cho Dua branch.
Give some recommendations to improve the efficiency of consumer loans at commercial banks of Asia - O Cho Dua branch.
Research questions
This research aims to achieve the following questions:
How could a loan be gived by the Bank?
The current situation of customer loans at ACB – O Cho Dua branch highlights the bank's ongoing efforts to enhance lending activities and meet customer needs effectively To improve the efficiency of consumer loans at this branch, strategies such as streamlining the loan approval process, offering competitive interest rates, and expanding financial products are essential Implementing targeted marketing campaigns and providing personalized financial advisory services can also attract more customers and boost loan performance Overall, optimizing operational procedures and customer engagement will drive growth and strengthen the branch's position in the commercial banking sector.
Research scope
Object: customers in ACB - O Cho Dua branch.
Location: in Ha Noi and especially in ACB - O Cho Dua branch
Time: data collection from 2013 to 2015
Research methodology
Data was collected from diverse sources including books, newspapers, scientific journals, research reports, and reports from ACB - O Cho Dua branch This comprehensive data collection aimed to gather detailed information on business activities, customer demographics, and business performance outcomes.
THEORETICAL BACKGROUND
Concept
Credit, derived from Latin meaning "believes," is the trust that enables one party to provide resources or money to another without immediate reimbursement, creating a debt that is repaid later It can involve financial resources like loans or goods and services such as consumer credit, encompassing all forms of deferred payment Credit is extended by a lender (creditor) to a borrower (debtor), facilitating temporary resource transfer with the agreement to repay or return the value at a future date.
Credit is not solely based on monetary exchange; it also plays a vital role in barter economies through the direct exchange of goods and services In modern societies, however, credit is typically measured using a standard unit of account Unlike money, credit itself cannot function as a unit of account, highlighting the differences between these financial concepts.
Financial capital movements primarily rely on credit and equity transfers, with creditworthiness playing a crucial role in the ability to transfer funds The credit default swap (CDS) market exemplifies the purest form of credit trading, functioning as a market for credit insurance A CDS involves two parties exchanging default risk: the protection seller takes on the risk of default in exchange for periodic payments measured in basis points of the notional amount, while the protection buyer pays this premium and, upon default of the underlying asset, delivers the receivable to the seller and receives the full par value, ensuring protection against credit risk.
In specific financial relations, credit, property transactions on the basis of repayment between the two entities.
Credit also means a loan amount that financial institutions provide to customers.
A credit bank operates by facilitating transactions involving assets—such as money or goods—between lenders (banks and financial institutions) and borrowers (individuals and businesses) Borrowers utilize these assets over an agreed period, with the responsibility to repay the unconditional loan principal and interest payments when they are due This process is fundamental to maintaining effective credit mechanisms and financial stability.
Characteristics of Credit
Trading assets in trading credit relationship banks include two forms of the loan (in cash) and leasing (real estate, estate).
Repayment period is determined based to ensure the borrower will repay the lender assets dsung agreed time.
Values greater than the normal repayment at loan value, or in other words the borrower must pay the interest beyond the original capital.
Credit relationship is done by the credit agreement, the debt's indenture as a legal basis to enforce accountability among stakeholders.
The function of credit
3.1 Focus and redistributed on the basis of monetary capital repayment
The credit information system operates through two unified processes that facilitate financial transactions Credit acts as a crucial bridge between the supply and demand for currency, enabling the regulation of temporary excess funds from individuals and organizations to support business operations and personal needs This function ensures timely capital availability for productivity and consumption, highlighting the importance of credit as a vital investment in the fixed capital of enterprises.
At the stage of concentration, credit is where concentrate the temporary capital of society (in the form of deposits, issuing bonds …)
The distribution of currency credit serves as a vital mechanism for meeting the capital needs of businesses and individuals, supporting overall economic stability through loans, guarantees, and investments Credit within the financial system primarily focuses on providing funds for production activities, facilitating the circulation of goods and services This efficient allocation of capital significantly boosts economic growth and enhances the background economy's development.
To perform this function, credit has contributed to saving cash and costs of social circulation:
Idle capital in promoting social and dogn promptly put into reducing the amount of cash flow surplus, increase rotation rate of the currency to stabilize cash flow.
The concentration of capital often involves direct cash loans, where borrowers can issue valuable negotiable documents like promissory notes and bonds to raise funds Today, the financial sector has seen a shift towards more open and diversified development, boosting the use of non-cash payment methods such as checks, debit card authorizations, and electronic clearing systems These advancements in digital payments help reduce circulation expenses related to printing, storage, and physical transfer of cash, thereby increasing efficiency in financial transactions.
This function is the basic functions and most important of credit.
3.2 Payment Satisfaction and make money
Credits are extended to assist borrowers with purchasing, selling, or debt repayment, serving as vital financial tools Additionally, credit functions as a means of payment within the economy, facilitating economic transactions Credit creation also contributes to increasing the money supply, thereby stimulating economic growth.
Sustainable business operations rely on consistent funding across all three phases: reserves, production, and circulation To manage fluctuations, companies often experience surplus or temporary shortages of funds Credit plays a crucial role by providing regulatory capital that ensures smooth, uninterrupted business processes, supporting ongoing growth and stability.
Securing adequate capital for expanding production is a top priority for businesses, as they must rely not only on their own funds but also tap into social capital from various external sources to support growth and development.
Thus, the credit has helped businesses shorten time to accumulate capital for the economy.
3.4 Credits contribute to stabilizing the currency and price stability
Credits are issued to serve a specific purpose and are committed to maintaining rotational returns This ensures that the money supply remains balanced with the amount of goods and services produced by the economy, supporting a stable purchasing power for the currency.
3.5 Credits contributed to stabilizing the life, create jobs and stabilize social order
Credits promote economic development, the production of goods and services to help enterprises expand production conditions will hire workers for production creates jobs for many people.
Banks play a crucial role in supporting residents by providing reasonable credit solutions that meet their financial needs, including family development, procurement of production materials, and daily expenses Access to credit enables individuals to create stable jobs for themselves and their families, contributing to local economic growth Sustainable social development, fueled by financial support, is essential for maintaining social stability and order within communities.
International credit plays a crucial role in expanding and developing economic relations among countries Facilitating international exchanges fosters closer ties and mutual support, helping nations grow and prosper together Effective credit systems are essential for boosting cross-border trade and strengthening global economic partnerships.
Classification of bank credit
Bank credit is classified based on the following grounds:
1 Based on the loan purpose
Credits are usually divided into the following categories:
Loans to real estate: the types of loans related to the purchase and construction of housing estates, land and property in the fields of industry, trade and services.
Loans to industry and commerce: the kind of short-term loans to replenish working capital for businesses in the fields of industry, trade and services.
Loans for agriculture: the kind of loan to cover the costs of production such as fertilizers pesticides, seeds, animal feed, labor
Loans to financial institutions: include providing loans to banks, finance companies, insurance companies, credit funds and other financial institutions.
Loans to individuals cater to consumer demand by providing financing options for purchasing expensive items and covering everyday expenses These include various types of loans, such as personal loans for significant purchases and credit cards that facilitate routine expenses, offering flexibility and convenience for consumers.
Based on the loan term, credit is classified into the following categories:
Short-term loans: lending period to 12 months, which is used to offset the shortage of working capital of the business and the short-term spending needs of individuals.
Medium-term loans: under current regulations of the State Bank of Viet Nam, this type of loan has a term of 12 months to 5 years.
Medium-term loans are primarily utilized for acquiring fixed assets and equipment, supporting business expansion, and funding new project construction These loans facilitate quick capital returns by enabling investments in innovative technologies and industry development In agriculture, medium-term loans are commonly directed toward purchasing tractors, water pumps, and building infrastructure for industrial crops like coffee and cashew, as well as livestock cultivation This strategic financial support fosters economic growth and modernization across various sectors.
Besides investment in fixed assets, medium-term loans as a source of working capital formation for business frequently, especially those newly established enterprises.
Long term loans: time limit of 5 years and a maximum of up to 20-30 years, some isolated cases can be up to 40 years.
Long term loans are credits provided to meet long-term needs such as housing construction, equipment, transport means large scale, build new factories
3 Based on the level of reputation for customers
Based on the level of confidence for customers and credit are classified into the following categories:
Unsecured loans are loans provided without collateral, pledge, or third-party guarantees, relying solely on the borrower's reputation and trustworthiness This type of lending is typically available to customers with a proven record of honesty in business and strong financial stability Lenders assess the borrower's creditworthiness based on their financial history and personal integrity, making unsecured loans suitable for individuals with healthy financial capabilities.
Loan guarantees involve collateral loans secured through mortgage contracts, which can be based on property with established legal titles prior to the credit transaction or formed during the loan agreement These collateralized loans provide security for lenders, ensuring repayment by leveraging property assets as guarantees Proper understanding of mortgage and guarantee arrangements is essential for effective lending and borrowing strategies.
4 Based on the mode of repayment
Based on the method of repayment, the credit is classified into the following categories:
Installment credit means loans including loan principal and interest is repayable once upon maturity.
Credit installment: the credits in which principal and interest are repaid many times in a period called the term loan debt is defined in a particular way in the credit agreement.
Loans with a term not: lend circulation are loans in which the principal and interest to be repaid in a term loan in circulation.
5 Based on the origin of the credit
Direct Loans: bank direct funding for people in need, and direct borrowers repay bank debt.
Indirect Loans: Loans are obtained through the acquisition of the contract or the documents which were incurred in the billing period.
The commercial bank lending indirectly under the following categories:
1 / The concept and characteristics of consumer credit:
Consumer’s consuming credit is a type of credit granted to individuals and households to finance consumption needs such as procurement of buildings,vehicles, economic development household, and other spending.
The size of small loans but loans more quantities.
In the trade and industry sectors, higher risk associated with certain loans typically results in elevated interest rates compared to other types of financing This increased risk factor influences lenders to set higher interest rates to compensate for potential defaults or losses As a consequence, businesses seeking loans in these sectors should be prepared for higher borrowing costs due to the inherent financial risks involved.
Customer loan demand depends on the economic cycle.
The inelastic to interest rates, the borrower often interested in borrowing the money rather than interest rates.
Income and education are factors closely related to consumer lending needs of customers.
The quality of the financial information of the customer is not high.
Principal source of repayment of the borrower can big changes.
As the customer is difficult to identify factors, but it is very important in determining the lending and repayment capacity of the loan.
2 / Object of consumer’s consuming credit:
It is the individual and household demand for loans in order to address the need for expenditure in lives and their current income can not meet.
Individuals with low incomes, demand for loans is not high primarily in order to limit the possibility to obtain credits for their expenditures.
Individuals with average incomes often face borrowing requirements for recreation, shopping for valuable belongings, or covering expenses they currently lack the funds for or prefer not to pay upfront.
For those with high incomes, demand for consumer loans increased majnhh. It's very flexible grants in spending their funds especially when used for long-term investments.
That is the bank customer in person interview, assessment and credit decisions, this method is often done through the following forms:
Overdraft: allow customers to withdraw money from your account balance exceeds the own to a certain extent by the two parties.
Recurring payment credit (installment loans) borrowers and loan installments to banks periodically (contributing capital and interest), usually monthly, quarter and year.
Credit cards are banking products that enable customers to make payments and cash withdrawals up to a predetermined credit limit These credit operations facilitate convenient access to funds for various spending needs, making them essential tools for financial flexibility and efficient cash management.
This article explains the operation of purchasing receivables from sales companies to provide customer financing Customers, banks, and selling companies agree on loan terms, including the amount, interest rate, and repayment period If the customer cannot fulfill their payment, the recourse arrangements depend on the contract signed between the bank and the selling companies, which may include recourse or non-recourse options.
4 / The significance of consumer credit
Consumer credit contribute to addressing the urgent needs in the daily lives of borrowers, especially workers with average incomes.
Bank loans enable consumers to access high-quality goods before they can afford them, significantly improving their living standards This financial solution allows users to upgrade to advanced, technology-driven products faster, fulfilling essential needs and enhancing daily life By facilitating timely access to modern amenities, bank loans contribute to increased productivity and positive work efficiency, supporting overall economic growth.
Consumer credit contributing to diversify lending activities of banks, expanding relationships with clients, there are many more opportunities to sell other products as well as mobilizing more deposits
Consumer credit primarily consists of short- and medium-term loans paid through installment methods, catering mainly to individual borrowers Banks typically extend these relatively small loans to bulk customers, aiming to mitigate risk and ensure steady capital recovery By implementing routine lending practices, financial institutions maintain high solvency levels and minimize exposure to potential defaults.
Consumer credit boosts the productive capacity and competitiveness of enterprises by providing essential funding Indirect consumer finance companies play a crucial role in resolving capital challenges faced by manufacturing and service businesses Additionally, collaborations with banks enable these financial institutions to offer financing and valuable insights into customer demand, allowing businesses to adapt and improve their offerings effectively.
5 The measures to gaurantee credit
Property mortgage is the borrower's use of real estate assets owned by its legal or land use right value to the borrower's legitimate to ensure the repayment obligation.
Collateral is the property only At the same time satisfy two conditions:
Must have value and value in use.
Collateral must be owned by the mortgagor.
A pledge of property is the borrower over the assets owned by the lenders themselves held to ensure the implementation of the obligation to repay.
5.2.2 The types of pledging property
The types of assets (real) value and high liquidity as:
Machinery and equipment used in manufacturing and trading.
Guaranty is the third party commitments with lenders (guarantees), if the period to which the guarantee was not fully implemented its obligations.
When the borrower defaults on repayment, the lender has the right to seize the property to recover the debt This process may involve registering the property under the lender's ownership or reputation, especially if approved by the bank, to ensure the recovery of unpaid amounts Such measures are taken to protect the lender's interests and ensure responsibility for debt recovery when the borrower fails to fulfill their financial obligations.
As the world's legal or demand for bank loans but not enough credit, no collateral or pledge.
As lenders such as commercial banks, financial companies
6 / Analysis of consumer’s consuming credit
Credit analysis aims to identify potential risks that could impact the bank's financial stability, enabling the implementation of effective measures to prevent and mitigate possible losses.
On the other hand, analysis of bank credit to help check the accuracy of the information provided by the client from obtaining the right to the customer's attitude.
Contents of credit analysis is divided into two sectors: non-financial analysis and financial analysis.
Non-financial analysis involves assessing factors that indicate minimal or no financial problems for the customer This includes verifying the legality of the customer and examining the purpose of credit application Additionally, it entails analyzing the customer's lifestyle and business behavior to evaluate their creditworthiness This approach helps in understanding customer reliability, researching prospective clients, and predicting their future financial stability.
Financial analysis is essential for assessing a company's current financial health and forecasting future performance It involves evaluating capital management, business activities, and financial ratios to identify potential risks Cash flow analysis further helps in understanding liquidity and repayment capacity Accurate financial forecasting enables businesses to anticipate severe cases that may reduce customer repayment capacity, supporting informed decision-making and effective risk management.
OVERVIEW OF ACB – O CHO DUA BRANCH
Introduction
International Business name: Asia Commercial Bank
Head office: 442 Nguyen Thi Minh Khai Street, District 3, HCMC
MaroStores address: http: // acb marofin com
Website: www acb com VN
Slogan: Bank of any home.
Capital: Since the 27th / 11/2009 charter capital of the bank was 7.814 137.
550 000 VNDl (seven thousand eight hundred and fourteen billion one hundred and thirty seven million five hundred and fifty thousand Vietnamese dong).
Establishment permit: No 533 / GP-UB co People's Committee of Ho Chi Minh City dated 13.05.1993.
Operating Licence: No 0032 / GP NH- by SBV Governor dated 24.04.1993.
Business registration certificate: No 059 067 issued by the Department of
Planning and Investment of Ho Chi Minh City for the first time on 19/05/1993 registration and registration changes 05.11.2007 10th day.
Business live: monophyletic
The Group’s primary activities include mobilizing short, medium, and long-term capital through savings deposits, cash payments, and stock deposits It also involves receiving capital from investment trusts and credit institutions domestically and internationally, as well as providing various loan services across different terms The Group discounts commercial papers, bonds, and valuable securities, and invests in stocks and economic organizations Additionally, it offers payment services among customers, trades foreign currency and precious metals, and handles international transactions, factoring, brokerage, and stock investment Other key activities encompass custody services, corporate finance advisory, underwriting, investment services, debt management, asset exploitation, lease financing, and a wide range of banking services.
Market scope
Primarily focused on individual customers, for enterprises the priority is for small and medium enterprises
Operating areas: Hanoi city, surburban customer, not over 50km far from headquater O Cho Dua transaction.
- Individual: As people who have stable income in the urban areas and key economic regions;
- Enterprise: As small and medium enterprises have effective history of economic sectors not too sensitive to economic fluctuations - society;
- The financial institutions inside and ouside the country (VietNam).
Organization structure
Comissions Steering committee of strategic project
Office of board of management Internal control board
Board of policies and credit management
ICT center Board of control
The ACB's organizational system is based on an online-function model, leveraging the expertise of dedicated departments within an integrated online system This approach maintains management integrity at various levels while enhancing coordination between online operations and functional departments Since October 10, 2001, ACB has implemented this model to support online banking transactions, exemplified by their commitment to the Complete Banking Solution (TCBS) for retail banking operations.
4.1 Structure management apparatus of ACB
ACB has implemented a governance structure aligned with the standards governing commercial banks, as outlined in Decree 49/2000/ND-CP and relevant guidelines This structure adheres to the regulations for the organization and operations of the board, supervisory board, and general manager within state-owned commercial banks, ensuring compliance with Decision 1087/QD-NHNN.
The Board of Management of ACB comprises eight members, with no executives directly involved in decision-making The Council meets quarterly to oversee the bank’s activities, playing a crucial role in shaping its long-term strategic direction and setting financial objectives for the Executive Board It supervises and guides the Executive Board’s activities to ensure alignment with the bank’s goals Additionally, the Bank has established specialized councils, such as the Internal Control Council, Credit Council, Asset and Debt Management Council, and Investment Council, to support effective governance and risk management.
The Board of Directors is comprised of the Chief Executive Officer and seven Deputy General Directors assisting the CEO The Executive Board is responsible for executing the strategic objectives and plans set by the Board, including the overall business plan and operational strategies They provide vital advice to the Board on strategic issues and policies, while also overseeing the daily operations of the bank to ensure alignment with its long-term goals.
The Internal Board of Control was officially established on March 13, 1996, now known as the Internal Control Committee Its mission is to monitor and supervise the bank’s operational compliance with legal regulations, banking sector provisions, and internal policies The committee assesses the regulatory quality and performance of each unit within ACB, providing guidance to the Executive Board and recommending solutions to address weaknesses and mitigate risks.
4.2 Asia Commercial Bank - Branch O Cho Dua
O Cho Dua, the Director of ACB, is responsible for setting targets, developing strategic business plans for the subsidiary, and overseeing their implementation He directly supervises the activities of the Sales Department to ensure sales objectives are met Additionally, he manages TBP transactions allocated to his direct supervision, including operations within the trading department and customer service functions, ensuring smooth and efficient departmental performance.
Staff personal financial advisors (PFC) play a crucial role in actively promoting banking products and expanding their customer base They employ effective counseling techniques by understanding product features and highlighting unique benefits, helping customers make informed decisions PFCs focus on building trust and differentiation through personalized service, ensuring customers see the value in choosing bank products Additionally, they continuously update their knowledge of the latest financial products and market trends to provide professional, accurate, and relevant advice, ultimately enhancing customer satisfaction and loyalty.
- Employees in marketing and customer development (A / O): marketing and customer development, guide borrowers (guarantees, L / C ), customer evaluation, establish evaluation report the customer
- Customer service staff vay- LOAN CSR: contact, client counseling, guidance borrowers (individuals and businesses), disbursement, monitoring and management, loans and settlement of derivative works in the lending process,
- Comptroller transaction: exercise control over the transactions in the account, current account transactions, transactions and other transaction, the most popular access the professional guidance issued insider trading.
- CSR: employees of international payment services.
- Teller: receiving daily cash balance, Cashbox TCBS enter, perform a cash flow business,
4.3 The organization chart of departments of ACB – O Cho Dua branch
History and development process
In the early 1990s, as Vietnam's economy began to open up, a group of teachers chose to leave the classroom and venture into business, focusing on capital movements rather than traditional manufacturing or trading Recognizing emerging opportunities, they and other entrepreneurs established banks, leading to the founding of Asia Commercial Bank Officially licensed on April 24, 1993, with license number 0032 / GP NH- issued by the State Bank of Vietnam, Asia Commercial Bank started with an initial charter capital of VND 20 billion.
From its inception, the bank has aimed to become Vietnam's leading retail commercial bank, focusing on serving individuals and small to medium enterprises Embracing this innovative vision, especially as a newly established entity under the ACB brand, represents a significant shift in Vietnam's banking sector amidst the country's evolving socioeconomic landscape.
During 16 years of operation, the bank has maintained steadyand strong growth
In 2009, ACB and its subsidiaries achieved a consolidated profit before tax of over 2,818 billion VND, exceeding the budget by 118 billion VND The bank's income was diversified, with 20% from credit operations, 26% from service charges, 25% from bonds and stock investments, 4% from interbank transactions, and 25% from trading and investment funds ACB's total assets soared to 171,957 billion VND, marking a 63.24% increase compared to 2008 The total loans reached 62,025 billion VND, while total deposits grew to 123,968 billion VND, up 35.33% The mobilized funds from the population amounted to 115,065 billion VND, reflecting a 40.86% rise over the previous year.
Asia Commercial Bank (ACB) has established itself as a leading player in Vietnam's banking sector, particularly in the commercial retail segment Since its inception in 1996, ACB has achieved significant milestones, including becoming Vietnam's first joint-stock commercial bank to issue credit cards in partnership with MasterCard International These landmark events highlight ACB's innovative approach and pioneering role in advancing retail banking services in Vietnam.
In 1997, ACB launched its international credit card, ACB-Visa, marking a significant milestone in its global banking efforts That year also saw the bank initiate a comprehensive two-year banking training program led by international experts, aimed at modernizing its operations This program enabled ACB to systematically grasp the principles of modern banking, adopt international standards and best practices in risk management, particularly within retail banking, and apply relevant research tailored to Vietnam's banking environment.
In 1999, ACB implemented programs to introduce modern banking information technologies and develop wide area networks, aiming to computerize trading activities By the end of 2001, ACB officially launched TCBS (The Complete Banking Solution), a comprehensive core banking technology that interconnected all branches and transaction offices, facilitating instant transactions and shared access to a centralized database for streamlined banking operations.
Between 2000 and 2004, ACB implemented a strategic restructuring following years of preparation since 1997, to enhance its development The organizational structure was realigned to focus on business-oriented and support functions, with the business sector comprising Private Banking, Business Banking, and the Treasury Division Support units such as the Information Technology Division, Block Monitoring Operations, Business Development Division, and Human Resource Management were organized under direct management of the CEO Additionally, certain business operations were relocated to the Exchange in Ho Chi Minh City to streamline processes This restructuring aimed to establish a comprehensive management system focused on customer-centric product management, tailored to different customer segments, while emphasizing business growth and effective risk management.
In 2003, ACB implemented a comprehensive quality management system in accordance with ISO 9001:2000 standards, enhancing operational excellence The bank received accreditation in key areas including capital raising, short- to medium-term loans, international payments, and human resource supply at its Department These advancements demonstrate ACB’s commitment to maintaining high service quality and expanding its financial and operational capabilities.
In 2005, Standard Chartered Bank (SCB) signed a comprehensive technical support agreement with ACB and became a strategic shareholder of ACB During this period, ACB launched the second phase of its modernization program, implementing advanced banking technology This phase included enhancing server infrastructure, replacing transaction processing software with integrated solutions compatible with the core banking platform, and installing new ATM systems to improve customer service and operational efficiency.
2006: ACB listed on the Hanoi Stock Exchange.
In 2007, ACB expanded its network by establishing new branches and 31 transaction offices, strengthening its presence in the financial sector The bank also founded financial leasing companies, including ACB Finance Leasing, to diversify its offerings Strategic partnerships played a key role this year, with ACB collaborating with Opening Solution (OSI) - Thien Nam to upgrade its core banking system, and teaming up with Microsoft to enhance information technology applications for operations and management Additionally, ACB partnered with Standard Chartered Bank to issue bonds, raising over 1,800 billion VND from an issuance of 10 million shares at a par value of 100 billion VND.
2008: ACB newly established 75 branches and transaction offices, in cooperation with American Express travel SOC, instrument service deployment accepts JCB card payment ACB increase charter capital to 780 billion VND 821.
In 2009, ACB was recognized as the "Best Bank in Vietnam" by Euromoney magazine in Hong Kong, affirming its leading position in the industry The bank's extensive distribution network comprised 202 branches and transaction offices spread across 31 out of 61 provinces and cities nationwide That year, ACB received the prestigious second-class Labor Medal awarded by the President of Vietnam and was honored by the Chinese Rivals State Bank of Vietnam Notably, ACB made history as the only Vietnamese bank to be simultaneously awarded six international accolades for "Best Bank of Vietnam in 2009" by renowned global financial institutions such as Asiamoney, FinanceAsia, Euromoney, Global Finance, The Asset, and The Banker.
Evaluate the company: ACB
In 2014, ACB successfully completed its profit plan registration with the board, demonstrating strong financial performance The bank effectively mobilized growth aligned with capital demand, while reducing average capital expenditures Additionally, ACB managed to keep bad debt levels below 3%, showing improved credit risk management compared to the beginning of the year However, a key challenge remains, as credit growth was relatively low, falling below the industry average, which may impact future expansion opportunities.
Review the following specific items:
(1) ACB group profit reached 1215 billion, increased 17% compared to 2013, while profits “Goodbank” reached 3202 billion, perform risk provisioning full prescribed.
Net income experienced a 10% growth, driven by a 3% increase in loan interest income from individual customers and an 11% rise from enterprise customers Additionally, operating income from financial investments surged by 60%, thanks to efficient marginal profitability management and strategic exploitation of market opportunities in business investment bonds.
Non-interest activities saw a 20% increase in net income across both individual and corporate customers, reflecting strong growth in various service sectors Commissions from Western Union services surged by 30% compared to 2013, while international payment charges increased by 22%, and ATM fee revenues grew by 21% Additionally, card-related profits reached approximately 170 billion, approaching the initial target of 175 billion set at the beginning of the year, demonstrating the bank’s successful expansion of non-interest income sources.
Profit of 2 subsidiaries ACBS and ACBL contribute positively to the Group's profitability, particularly ACBS took advantage of good market opportunities to improve efficiency, increase sales
(2) Operating Cost effective control, lower than the growth rate of total net income.
(3) Mobilizing growth of 11%, interest rates were operating flexibility, lower average cost of capital
Mobilizing corporate customers increased 18% YTD (perform 106% of the plan).
Mobilization of individual customers rose 10% YTD (perform 100% of the plan).
(4) Personal credit outstanding grew 21% compared to 2013, exceeding the target by 2014.
(5) Reached the targetcontrolling the bad debt below 3%
(6) Improving the efficiency of business processes
In 2014, business vault safety significantly improved compared to 2013, with a notable decrease in the number of incidents This reduction was mainly due to enhanced process clarity when managing small transactions, leading to quicker recoveries in most cases.
Implement a standardized exceptions list for operational business transactions and credit activities, empowering authorized personnel to approve exceptions while implementing measures to mitigate associated risks Regularly review significant risks and refine transaction and credit processes accordingly to strengthen risk management Establish centralized control protocols for high-limit and rare food transaction risks to ensure enhanced oversight and security.
Following review of the legal compliance of all deposit products, lending by banks.
Policy issued manage fraud risk; "Blacklist" in risk prevention and fraud awareness training organized fraud risk Hanoi and Ho Chi Minh city.
(8) Complete upgrading project TCBS-DNA and ACB Online
(9) Continue to implement the restructuring work on distribution networks
(1) Target not achieved loan growth target set earlier this year and lower than the industry average growth rate: Loans outstanding system reached only
8.5%, excluding the damage to real growth of 10.5% loans Some reasons:
- Other outstanding cautious growth 6TDN 2014;
- Outstanding enterprise customers lower growth (5%), not meet expectations; (i) the SME segment: not actively working in sales, yet the pace of market growth.
(ii) Array MM / LC: No scripting respond well to market pressures.
(2) The treatment / recovery of debts is limited:
In general, the work of dealing with debts in 2014 is limited, debt sale VAMC factors mainly contribute in reducing the NPL ratio of the system.
- Debt Delinquency and Group 2 is a high proportion in the system, the risk of bad debt in 2015 moved higher.
- Recovery rate sheet hanging low Interest suspended until the end of month balance sheet increased by nearly 39% compared 12/2014 2013.
- Efficiency bad handling at low northern region.
- The speed of the 2014 debt settlement system 6TDN stagnation.
The establishment of processors within the distribution channels is progressing slowly, impacting overall efficiency Additionally, the mechanisms for operation, monitoring, and evaluating the effectiveness of debt settlement organizations remain unclear, hindering performance assessment The proactive and aggressive approach of the QLN center is insufficient, leading to a relatively passive stance by ACBA in pursuing non-litigation solutions Improving these processes and clarifying operational protocols are essential for enhancing debt resolution effectiveness and streamlining distribution channels.
- Business debt recovery and debt risks handling sell VAMC not paid adequate attention Many units still rely on selling debt solutions for VAMC.
(3) Performance KPP also some drawbacks:
- The system still exist many units hole total loss equivalent to 6% profit of the KPP.
- Hanoi area balance system on the lowest level the region has the highest bad debt KPP system, profit fell 23% over the previous year.
- Profit sector fell 80% post-river north due to bad debt in a number of units in this area is high but ineffective treatment costs leading to higher provisioning.
Park City Vu has achieved solid growth with a 12% increase, reflecting successful mobilization efforts; however, its credit growth remains low at just 7%, indicating cautious lending activity Although the company previously experienced significant profits, its contribution to the overall profitability of KPP declined by 2% compared to 2013, highlighting a need to focus on sustainable growth strategies.
The quality of customer service remains below expectations, with survey results indicating that our bank's service levels are inferior to some competitors, particularly in the southern and northern regions of Hanoi and Ho Chi Minh City Customer feedback from 2014 highlights concerns over the "service attitude of staff," especially among tellers, customer service representatives, and security personnel Improving staff professionalism and customer interaction is essential to enhance overall satisfaction.
The five-month Information Technology Progress project focused on enhancing TCBS DNA to improve multiple application performance in service business operations Although the project faced initial challenges and was not fully successful upon launch, ongoing efforts are necessary to recover and optimize system functions These improvements aim to address restrictions on processing speed, customer transaction handling, data mining, and reporting capabilities, ultimately supporting more efficient and reliable service delivery.
The current Customer Relationship Management Program (ACMS) has limitations in connection speed and usability, which hampers its effectiveness in supporting sales activities and managing overdue debts within the distribution channel These constraints reduce operational efficiency and diminish the program's ability to optimize customer interactions and debt control To enhance overall performance, it is essential to upgrade the system's connectivity and streamline its user interface for better support of sales forces and timely debt recovery.
- The rate of adoption of IT in low operation and multi-stage operation was performed manually, not timely service business operations.
- Project billing center ACB inland: to move the time of completion to31.03.2015 due to be evaluated more in terms of risk.
ANALYZING THE CURRENT SITUATION OF
Analysis by tenor of loans
The rate of short-term loans/ consumer’s consuming loans
Sources: Financial reports of ACB - O Cho Dua branch
Short-term loans are primarily used to meet consumer needs, including family activities, home repairs, and vehicle purchases Currently, short-term lending accounts for approximately 25% of total consumer loans Notably, this lending rate has increased by 2.6%, indicating growing demand for quick financing options among consumers.
In 2015, the total customer short-term lending rate for consumer loans decreased slightly by 0.9% compared to 2014, reflecting efforts by Asia Commercial Bank's O Cho Dua branch to increase consumer lending in 2014 The short-term loan-to-consumer ratio remained below 50%, indicating a lower loan density for medium- and long-term consumer loans This trend is primarily due to the fact that most personal or household consumption loans are structured as amortized loans, with repayment sources mainly derived from salaries and allowances.
Structure of customer’s consuming loans by time
Chart 3: Comparision short-term, long-term loans to total customer’s consumingloans
Sources: Financial reports of ACB - O Cho Dua branch
Consumer activities loans for construc tion and repair of houses
Loan s for buyin g vehic le loans suppo rt to study abroa d
Consu mer activiti es loans for constr uction and repair of house s
Loans for buying vehicle loans support to study abroad
Sources: Financial reports of ACB - O Cho Dua branch
Between 2014 and 2015, loans for construction and house repair consistently dominated the lending market, representing 66% in 2014 and increasing to 70% in 2015, indicating a strong emphasis on housing development Conversely, loans supporting study abroad remained the smallest segment, accounting for just 1.23% in 2014 and decreasing slightly to 1.15% in 2015, reflecting limited investment in educational internationalization through loans.
Loans for buying vehicle accounted for 20.26 in 2014 and fell to 17.95 in 2015.
As social development and higher living standards advance, people's physical needs and desire for an affluent lifestyle increase, leading to higher demands for purchasing houses and cars Consequently, shopping needs are rising, and more parents are supporting their children’s aspirations to study abroad Recognizing these evolving needs, Asia Commercial Bank - O Cho Dua branch has actively promoted consumer lending and educational loans to support study abroad initiatives Moving forward, the branch should continue to strengthen these efforts to expand its share in the market and better serve the growing demand for financial services in this sector.
Analysis situation of loans overdue
Table 5: Status of loans overdue by year
Sources: Financial reports of ACB - O Cho Dua branch
The situation of delinquency rose 1% in 2014 compared to 2013 However, by
2015 the proportion of overdue loans in total for consuming decline (by 9.9%) in
In 2015, the bank demonstrated improved efficiency in evaluating customer loans and closely monitoring debt, leading to higher customer repayment collections To strengthen this progress, the bank must focus on increasing sales and implementing effective delinquency control measures to ensure sustainable growth and financial stability.
3 / Analysis profitable of lending activities for consuming :
Table 6: Profit for consumer loans over the year
Sources: Business reports of ACB - O Cho Dua branch
Lending activities for consumer loans have been the primary source of profit for the bank, with individual profitability levels showing a consistent upward trend over the years In 2014, profits from consumer lending increased by 37% compared to 2013, and in 2015, they rose by 21.7% relative to 2014 This makes consumer lending a vital and increasingly significant income stream for the bank.
ACB – O Cho Dua branch continue to increase their revenues in parallel with other revenue sources especially revenues onn-interest revenues.
Chapter 2 provides a solid theoretical foundation of consumer credit, enabling analysis of real-world loan practices at ACB O Cho Dua branch Over the past three years, staff efforts have significantly contributed to fulfilling their responsibilities and supporting Asia Commercial Bank's goal of becoming a leading retail bank This consistency demonstrates efficient capital usage, evidenced by increased loan sales and decreasing delinquency rates annually To ensure sustainable growth, ACB O Cho Dua branch should implement targeted strategies and recommendations to further improve consumer lending activities in the future.
Completion and implementation of strict lending process
- How well the customer appraisal.
Effective credit analysis requires staff to thoroughly assess the customer's ability and willingness to repay, focusing on both usability and repayment capacity Conducting comprehensive evaluations at this stage helps minimize risks for the bank and ensures the customer provides accurate information, fostering trust and transparency Additionally, diligent post-disbursement monitoring is essential to ensure repayment performance and address potential issues promptly.
Staff responsible for credit-related tasks should not be assigned other duties, as their focus needs to be solely on credit processing; this role should be dedicated to additional credit officers or a specialized department By allocating credit responsibilities to dedicated personnel, organizations can improve work performance, strengthen customer relationships, and attract new clients through existing customers This specialization helps reduce credit risk and enhances overall service quality in marketing and customer support efforts.
Diversification of consumer credit products and promoting consumer’s
Diversifying credit products enables banks to disperse and reduce risks effectively while enhancing capital efficiency This strategy also boosts loan sales and fosters increased competition among banks, especially in today’s market where banks are expanding their scale and operating networks to stay competitive.
For small loans, customers typically have sufficient financial resources, eliminating the need for collateral Traders in the market can verify management's credibility and assess the lease market stalls, while a valid business license may also be considered as part of the approval process.
Do not see collateral is primarily base to make lending decisions
Collateral is the secondary source of repayment, prevent customer risk losing the ability to pay debts to banks, not borrowers game absoluteness of collateral because:
A good analysis of financial factors as well as other elements of the customer is now the role of collateral is not necessary.
Lending banks primarily base debt recovery on a customer's repayment capacity rather than relying on collateral liquidation Consumer loans, typically small in size, are designed to minimize customer discomfort associated with mortgages, emphasizing the borrower's ability to repay over collateral assets This approach ensures a fair and customer-centric lending process while maintaining the bank's risk management standards.
Collateral real estate mainly to low liquidity Besides cost and procedure for the release of assets is not always low and simple.
For these reasons, banks should be flexible mortgage conditions for collateral when lending decisions.
Currently, customers holding assets are permitted to accept bank loans exceeding 70% of their total assets, according to existing regulations Housing options remain acceptable if they are under 20m², provided the property is in a good location This regulatory framework balances borrowing capacity with property size and location considerations, ensuring accessible and manageable housing loans for consumers.
Banks should also diversify collateral The capital brought into the case quickly and fast withdrawal should also consider not need collateral
Valuation of collateral shoulg be scientifically accurate
Property Valuation Division should ensure more accurate pricing , close to half the market price may decide the maximum for customers and increased sales of bank lending
Comparison of consumer’s consuming loans to total mobilized capital
Sources: Financial reports of ACB - O Cho Dua branch
1.3/ Analysis by tenor of loans
The rate of short-term loans/ consumer’s consuming loans
Sources: Financial reports of ACB - O Cho Dua branch
Short-term loans are primarily used to meet consumer needs like family activities, home repairs, and vehicle purchases Recent data indicates that short-term lending accounts for approximately 25% of all consumer loans The short-term lending rate has experienced an increase of 2.6%, reflecting changing market conditions and borrowing trends.
In 2015, the short-term lending rate on total customer consuming loans decreased slightly by 0.9% compared to 2014, despite significant efforts by Asia Commercial Bank – O Cho Dua branch to increase consumer loans in 2014 The short-term loan rate for consumer loans remains below 50%, indicating a lower density for medium- and long-term loans This trend is primarily due to the fact that most personal or household consumption loans are amortized, with repayment mainly sourced from salaries and allowances.
Structure of customer’s consuming loans by time
Chart 3: Comparision short-term, long-term loans to total customer’s consumingloans
Sources: Financial reports of ACB - O Cho Dua branch
Consumer activities loans for construc tion and repair of houses
Loan s for buyin g vehic le loans suppo rt to study abroa d
Consu mer activiti es loans for constr uction and repair of house s
Loans for buying vehicle loans support to study abroad
Sources: Financial reports of ACB - O Cho Dua branch
During 2014 and 2015, loans for construction and house repair represented the majority of borrowing, accounting for 66% in 2014 and increasing to 70% in 2015, indicating a strong demand for housing infrastructure Conversely, loans supporting study abroad were the least utilized, comprising only 1.23% of total loans in 2014 and decreasing slightly to 1.15% in 2015, reflecting minimal financial support allocated to international education during this period.
Loans for buying vehicle accounted for 20.26 in 2014 and fell to 17.95 in 2015.
As social development and higher living standards continue to improve, people's physical needs are increasing, leading to a greater desire for a more affluent lifestyle, such as buying houses and cars Consequently, shopping demands are rising, and many parents are now more inclined to support their children studying abroad Recognizing these changing needs, Asia Commercial Bank’s O Cho Dua branch has been actively promoting consumer lending and providing loan support for students pursuing international education Moving forward, the branch should intensify efforts to further expand its share in this growing market segment to capitalize on the increasing demand for educational and lifestyle-related loans.
2 Analysis situation of loans overdue:
Table 5: Status of loans overdue by year
Sources: Financial reports of ACB - O Cho Dua branch
The situation of delinquency rose 1% in 2014 compared to 2013 However, by
2015 the proportion of overdue loans in total for consuming decline (by 9.9%) in
In 2015, improved evaluation processes and close monitoring of customer loans and debt collection efforts led to increased efficiency in repayment collections compared to 2014 To strengthen this growth, the bank must focus on increasing sales and implementing effective delinquency control measures, ensuring more robust financial performance.
3 / Analysis profitable of lending activities for consuming :
Table 6: Profit for consumer loans over the year
Sources: Business reports of ACB - O Cho Dua branch
Lending activities for consumer credit have been the primary source of profit for the bank, with individual profitability steadily increasing over the years In 2014, profits from lending activities grew by 37% compared to 2013, followed by an additional 21.7% increase in 2015 compared to 2014 This highlights the significance of consumer lending as a key income stream contributing to the bank's overall financial performance.
ACB – O Cho Dua branch continue to increase their revenues in parallel with other revenue sources especially revenues onn-interest revenues.
Chapter 2 provides a solid theoretical foundation on consumer credit, which we analyzed through the loan activities at ACB - O Cho Dua branch Over the past three years, staff at Asia Commercial Bank's O Cho Dua branch have demonstrated significant dedication, contributing to the bank's goal of becoming a leading retail banking institution This effort is reflected in the effective utilization of capital, evidenced by increased loan sales and a consistent decline in delinquency rates annually To ensure continued growth and success, it is essential for Asia Commercial Bank - O Cho Dua branch to implement strategic recommendations and solutions to further enhance its consumer lending activities in the future.
CHAPTER 3 SOME REVIEWS AND RECOMMENDATIONS TO
IMPROVE THE EFFICIENCY OF CONSUMER LOANS AT COMMERCIAL BANKS OF ASIA - O CHO DUA BRANCH
Asia Commercial Bank's O Cho Dua branch is strategically situated in a densely populated area, surrounded by numerous companies and large wholesale markets, making it highly profitable for raising funds and providing consumer credit Additionally, the branch benefits from spacious premises and convenient underground parking, which enhance customer accessibility and satisfaction, further attracting more clients.
Banks implement effective human resource policies that promote staff development and capacity building Regular training sessions enhance employee knowledge and skills, ensuring a highly qualified, professional, and enthusiastic workforce The bank's staff are young, dynamic, and committed to delivering high-quality service, demonstrating strong discipline and solidarity Currently, ACB has dedicated departments for professional marketing and customer acquisition, which continuously attract more customers and support the bank's growth.
The ACB - O Cho Dua branch has established a strong reputation and earned customer trust as one of the earliest banks in the area Its flexible and thoughtfully designed service policies attract many customers despite intense competition from other banks Committed to enhancing quality and integrating technological advancements, the bank continually improves its efficiency and productivity to provide superior banking solutions.
Not maximizing sales of consumer loans:
Besides the strengths remain many weaknesses should not maximum consumer loan sales particularly in recent years sales of consumer loans in the ACB
O Cho Dua offers many advantages; however, it accounts for approximately 37% of the total deposits In response, the bank's board of directors increased the target to about 1.5 billion in 2016 to improve operational efficiency Additionally, the bank's marketing activities are currently weak, indicating a need for enhanced promotional efforts to attract more deposits and strengthen market presence.
The start-up team tasked PFC with search marketing and customer outreach, but performance remains inconsistent due to a lack of professionalism and frequent employee turnover Underperforming brands are further impacted by internal competition among PFC's numerous branches, driven by intense sales pressure To boost sales, PFC has implemented reductions in maximum interest rates for customers, which has negatively affected overall profitability and customer satisfaction.
Collateral valuation far below its real value.
Ensuring that the valuation of assets for BOA remains lower than their market value helps safeguard the bank's stability before fluctuating asset prices Evaluators should focus primarily on the source of repayment and the customer's repayment capacity when assessing asset worth However, low asset valuations may impact the bank's lending rates and limit the maximum volume of consumer loans that can be granted.
When evaluating employees and not paying much attention to the volatility of customer repayment source in the future.
Activities of credit center (CIC) not very effective
The Credit Information Center (CIC), established by state-owned banks, is designed to collect and provide credit information to support banking credit activities However, the CIC mainly offers only general information that is not updated regularly, which raises concerns about the reliability of the data provided to banks As a result, the center’s credit data may lack accuracy and timeliness, affecting effective lending decisions Ensuring accurate and up-to-date credit information is essential for sound financial operations and risk management in banking.
Most customers east habitually use banking services.
Many clients have unmet financial needs but face barriers due to limited exposure to banking services and cumbersome procedures, such as notarized documentation and additional requirements before disbursement They often prefer not to deal with traditional banks, which can involve complex processes and high-interest external loans Additionally, the practice of reporting to credit agencies like A12 has significantly impacted banking credit activities, further limiting access to affordable financing options for these clients.
Customer information supplied is not accurate.