Chapter 1 NATIONAL ECONOMIC UNIVERSITY English Bachelor of Business Administration Nguyen Binh lam SITUATIONS AND RESOLUTION OF PERSONAL CONSUMING CREDIT OF ASIA COMMERCIAL BANK O CHO DUA BRANCH T[.]
INTRODUCTION
Reasons for choosing the thesis
Vietnam's rapidly developing economy has significantly improved residents' living standards, prompting Asian commercial banks like ACB – O Cho Dua to upgrade their products and services The O Cho Dua branch primarily serves the working-class immigrants, civil servants, and small business households, with consumer credit representing a major portion of the bank's loan portfolio and revenue stream Recognizing the critical role of consumer credit, the branch has consistently focused on consumer lending to establish itself as a leading retail bank Through ongoing learning at EBBA National Economics University-HN and practical exposure to credit operations, it has become clear that understanding and analyzing consumer credit activities are vital for the bank's success.
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?
What is the current situation of customers loans of ACB – O Cho Dua branch?
How to improve the efficiency of loans for consuming at commercial banks ofAsia - O Cho Dua branch?
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 for this study was gathered from a diverse range of sources, including books, newspapers, scientific journals, research reports, and reports from the ACB - O Cho Dua branch The information collected aimed to analyze business activities, understand customer profiles, and assess overall business performance This comprehensive data collection provides valuable insights into the company's operations and market presence.
THEORETICAL BACKGROUND
Concept
Credit, derived from the Latin word meaning "believes," refers to the trust that enables one party to provide funds or resources to another without immediate reimbursement, creating a debt that is settled later It can involve financial resources, such as loans, or goods and services, like consumer credit Essentially, credit covers any form of deferred payment, with a creditor or lender extending credit to a debtor or borrower.
Credit does not necessarily require money and can be applied in barter economies through direct exchanges of goods and services In modern societies, however, credit is typically expressed in a standardized unit of account Unlike money, credit itself cannot function as a unit of account, highlighting its role as a financial instrument rather than a medium of exchange.
Movements of financial capital primarily rely on credit and equity transfers, with credit depending on the creditworthiness of the responsible entity The credit default swap (CDS) market is the purest form of trading credit risk, acting as a form of credit insurance In a CDS, two parties exchange risk: the protection seller assumes the risk of default in exchange for a premium paid by the protection buyer This premium, expressed in basis points of the notional amount, compensates the seller, and in case of default on the underlying asset, the buyer delivers the receivable and receives the par amount, ensuring they are made whole.
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 facilitates financial transactions involving assets such as money or goods between lenders (banks and financial institutions) and borrowers (individuals, businesses, and other entities) During the agreed-upon period, borrowers utilize the borrowed funds or goods under specific terms It is the borrower’s responsibility to repay the principal amount and interest payments unconditionally and on time, ensuring the smooth functioning of the credit banking system.
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 the efficient functioning of financial markets Credit serves as a vital bridge between supply and demand for currency, enabling the regulation of temporary excess funds from individuals and economic organizations This function allows for the timely supplementation of capital needed for business production and personal consumption, making credit an essential tool for economic stability Additionally, credit today plays a crucial role as an investment in an enterprise's fixed capital, supporting long-term growth and development.
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 This credit system primarily focuses on replenishing funds through repayments, thereby financing production activities and facilitating the circulation of goods and services By efficiently allocating capital, currency credit significantly contributes to economic growth and boosts the overall development of the economy.
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 involves direct cash loans, where borrowers can issue valuable negotiable documents such as promissory notes and bonds to raise funds Today, the development of more open and diversified lending methods has led to an expansion of non-cash payment options, including payments by check, debit authorizations, and clearing systems These innovations significantly reduce circulation expenses related to printing, storing, and transforming physical currency, making financial transactions more efficient and cost-effective.
This function is the basic functions and most important of credit.
3.2 Payment Satisfaction and make money
Credits are granted to assist borrowers with purchasing, selling, and debt repayment, serving as a vital financial tool They also function as additional means of payment within the economy, facilitating economic transactions Moreover, credit creation contributes to increasing the money supply, thereby supporting overall economic growth.
In business operations, maintaining continuous operation depends on adequate funds across three key phases: reserves, production, and circulation Surplus and temporary shortages of funds are common challenges faced by organizations Credit plays a crucial role in regulating capital, ensuring seamless business processes and preventing operational disruptions.
Securing adequate capital for business expansion is a primary concern for enterprises, which must rely not only on their own funds but also harness social capital from 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 granted with a clear purpose and are designed to support economic rotation returns This ensures that the amount of money circulating in the economy remains balanced with the total value of goods and services produced Maintaining this balance helps preserve the stability of the currency's purchasing power, fostering a stable economic environment.
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 options that meet their individual needs, such as family economic development and procurement of production materials Access to credit enables individuals to engage in activities like food provision and event organization, creating stable jobs for themselves and their families Sustainable social development, fostered through responsible banking and economic support, is essential for maintaining social stability and order.
International credit plays a crucial role in expanding and developing economic relations between countries Facilitating international exchange fosters closer relationships, encouraging mutual support and collaborative growth By strengthening foreign economic ties through credit, nations can enhance their development and global cooperation.
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 needs by providing financing options for purchasing expensive items and covering everyday expenses These include various loan types such as personal loans for large purchases and credit card solutions to manage routine expenditures, ensuring accessible financial support 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 such as equipment, tractors, and water pumps, which support business growth and innovation These loans facilitate the expansion of new projects across various sectors, offering quick returns on capital In agriculture, medium-term financing is essential for investing in industrial crops like coffee and cashew, as well as livestock, helping farmers modernize operations and increase productivity.
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 that do not require collateral, pledge, or third-party guarantees, relying solely on the borrower's reputation These types of loans are granted based on the customer's honesty and trustworthiness in business Lenders typically approve unsecured loans to individuals with a strong financial background and healthy financial capabilities.
Loan guarantees are a type of collateral used in loan agreements, secured through mortgage contracts or guarantees Collateral loans involve property that may already have legal ownership rights prior to the credit transaction or may be established specifically for the purpose of securing the loan These guarantees provide security to lenders and help facilitate credit approval by ensuring that there is valuable collateral backing the loan.
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 sector, loans typically carry higher interest rates compared to other types of financing This is due to the increased risk associated with these loans, which necessitates a higher return for lenders to compensate for potential defaults As a result, businesses seeking trade and industrial loans should be prepared for elevated interest costs compared to standard loan options.
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 needs for recreation and purchasing valuable possessions, as they lack sufficient funds or prefer not to deplete their savings This financial behavior highlights the common challenges faced by middle-income earners in maintaining their lifestyle and managing expenses Proper financial planning can help mitigate the reliance on borrowing for leisure and luxury items, ensuring improved financial stability.
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 financial products issued by banks that enable eligible customers to access credit limits for various spending needs These credit operations allow users to make payments and cash withdrawals conveniently, fulfilling their financial requirements effectively Proper management of credit card usage can enhance financial flexibility and supports customer payment convenience.
The operation involves purchasing receivables from sales companies to allow customers to defer payments In this process, customers, banks, and selling companies agree on loan amounts, interest rates, and repayment terms If a customer is unable to pay, the outcome depends on the contract between the bank and the selling companies, which may involve recourse or non-recourse arrangements.
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 allow consumers to access desired goods before they can fully afford them, enhancing their quality of life This financial option enables customers to quickly upgrade to high-tech, modern products, meeting their needs promptly By improving living standards and facilitating timely access to innovative solutions, bank loans contribute to increased work efficiency and positive productivity outcomes.
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 credits are primarily short- to medium-term loans provided through installment payment methods, catering to individual borrowers Banks typically focus on relatively small loans aimed at bulk customers, allowing them to minimize risk and ensure efficient capital recovery This approach helps maintain high solvency levels, making consumer credit a reliable financial product for both lenders and borrowers.
Consumer credit boosts the productive capacity and competitiveness of enterprises by providing essential capital resources Indirect consumer finance companies play a crucial role in resolving financing challenges faced by manufacturing, service, and business sectors Additionally, collaboration with banks allows these financial institutions to offer capital funding and gather valuable customer demand information, enabling businesses to better tailor their products and services to market needs.
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 a property is legally or requestively transferred to the bank or approved by the bank, it serves as collateral to secure the loan This process ensures the bank can take ownership or control of the property if the borrower defaults on debt payments The bank assumes responsibility for managing the collateral, providing security for the loan, and protecting its interests Proper collateralization minimizes the risk for lenders and guarantees that the bank can recover its funds if the borrower fails to fulfill repayment 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 is essential for identifying potential risks to the bank by assessing borrower financial stability and creditworthiness It enables banks to implement preventive measures to mitigate losses and safeguard financial health, ensuring sound lending practices and overall risk management.
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 evaluating factors related to a customer's minimal or no financial issues by verifying their legal compliance and assessing the purpose of credit requests It also examines the behavior of reputable clients both in personal and business contexts, particularly in household economic activities, to better understand their credibility Additionally, this analysis includes researching current customers and prospects to gauge their future economic stability and payment reliability.
Financial analysis is essential for assessing a company's financial health and forecasting future performance, including identifying potential severe cases that may impact customer repayment capacity It involves a comprehensive evaluation of capital management and business activities, analyzing key financial ratios, and conducting cash flow analysis Additionally, financial forecasting helps predict future trends and potential risks, enabling better decision-making and 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 main activities include mobilizing short, medium, and long-term capital through savings deposits, cash payments, and stock deposits, while also receiving capital investment trusts and funds from domestic and international credit institutions They engage in various financing operations such as granting short, medium, and long-term loans, discounting commercial paper, bonds, and valuable securities, as well as investing in stocks and economic organizations Additionally, the bank offers payment services among customers, trades foreign currencies and precious metals, and handles international payments, factoring, brokerage, and stock investments The group also provides custody, corporate finance advisory, underwriting, investment services, debt management, asset exploitation, lease financing, and other 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
Transaction offices, branches and transaction offices
The ACB's organizational system is built on an online-function model, which leverages industry experts within functional departments to enhance efficiency This model ensures management integrity at various levels while fostering seamless coordination between online systems and operational functions Notably, ACB launched online banking transactions on October 10, 2001, marking a significant milestone in their retail banking operations through The Complete Banking Solution (TCBS), enhancing customer experience and operational effectiveness.
4.1 Structure management apparatus of ACB
ACB has established a governance structure aligned with the standards set for commercial banks, as outlined in Decree 49/2000/ND-CP and Decision 1087/QD-NHNN This structure complies with regulations governing the organization and operation of boards, supervisory boards, and general managers in state commercial banks, ensuring robust management and operational efficiency.
The Board of Management at ACB comprises eight members with no direct executive involvement, meeting quarterly to oversee the bank's activities This council plays a vital role in shaping the bank's strategic direction and long-term objectives, setting financial goals for the Executive Board Additionally, the Council supervises and guides the Executive Board's activities through various specialized committees, including the Internal Control Committee, Credit Council, Asset and Debt Management Council, and Investment Council, among others.
The Board of Directors comprises the Chief Executive Officer and seven deputy general directors serving as assistants to the CEO The Executive Board is responsible for implementing the strategic objectives established by the Board, including developing plans and business strategies They advise the Board on key strategic issues and policies, and oversee the overall operations of the bank to ensure alignment with organizational goals.
The Internal Board of Control, established on March 13, 1996, is now known as the Internal Control Board Its core mission is to oversee and ensure legal compliance across all banking units, adhering to sector regulations, rules, and internal policies The committee evaluates the regulatory adherence and operational performance of each unit, providing advice to the Executive Board and proposing solutions to address weaknesses and mitigate potential risks.
4.2 Asia Commercial Bank - Branch O Cho Dua
O Cho Dua, Director of ACB, is responsible for setting targets, planning, and executing the business strategies of the subsidiary He directly oversees the activities of the Sales Department and manages TBP transactions allocated to his supervision within the trading department Additionally, he ensures the smooth operation of customer service and other related functions to support overall business growth.
Staff personal financial advisors (PFCs) actively engage with customers by proactively offering financial products and developing new client relationships They utilize effective counseling techniques that highlight product features, differentiating ACB to persuade customers to choose bank products confidently Additionally, PFCs continuously update their knowledge of the latest financial market trends and product information to provide clients with professional and informed advice.
- 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 transitioned from academia to entrepreneurship, choosing to establish a bank instead of engaging in manufacturing or trade On April 24, 1993, Asia Commercial Bank was granted an operating license (number 0032 / GP NH-) by the State Bank of Vietnam, with an initial charter capital of VND 20 billion This move reflected the trend of capital movement and the growing demand for banking services during Vietnam’s economic reform period.
Since its inception, the bank has committed to becoming Vietnam’s leading retail commercial bank At a time when Vietnam’s socioeconomic landscape was rapidly evolving, focusing on retail banking—serving individuals and small to medium enterprises—represented a pioneering strategic shift, particularly for a newly established bank like ACB.
During 16 years of operation, the bank has maintained steadyand strong growth
In 2009, ACB and its subsidiaries achieved a consolidated pre-tax profit of over 2,818 billion VND, exceeding the target by 118 billion VND The bank's earnings were diversified, with 20% from operational credit, 26% from service charges, 25% from bonds and stock trading, 4% from interbank operations, and another 25% from trading and investment funds ACB's total assets grew significantly to 171,957 billion VND, marking a 63.24% increase compared to 2008 Total loans reached 62,025 billion VND, while total deposits soared to 123,968 billion VND, reflecting a 35.33% rise over the previous year Additionally, mobilized funds from the population amounted to 115,065 billion VND, representing a 40.86% increase from 2008.
Asia Commercial Bank (ACB) has established its leading position in Vietnam's banking system, particularly in the retail banking sector A landmark milestone was achieved in 1996 when ACB became Vietnam's first joint-stock commercial bank to issue credit cards in partnership with MasterCard International, highlighting its innovative approach and commitment to expanding financial services in the country.
In 1997, ACB launched its international credit card, ACB-Visa, marking a significant step in expanding its financial services During the same year, the bank embarked on a transformative journey toward modern banking by implementing a comprehensive two-year training program, featuring foreign experts to enhance banking expertise This program enabled ACB to systematically understand the operating principles of modern banks, adopt international standards and best practices in risk management, especially within retail banking, and apply relevant research tailored to Vietnam's banking context.
In 1999, ACB implemented advanced banking information technology programs and constructed wide area networks to modernize banking operations and enhance trading activities By the end of 2001, ACB officially launched TCBS (The Complete Banking Solution), a comprehensive core banking system that connected all branches and transaction offices, enabling instant transactions and a shared central database for improved efficiency.
Between 2000 and 2004, ACB undertook a comprehensive restructuring to align with its development strategy, following preparations initiated since 1997 The organizational structure was reorganized into two main segments: business units—including Private Banking, Business Banking, and the Treasury Division—and support units such as the Information Technology Division, Block Monitoring, Business Development, HR Management, and several departments reporting directly to the CEO Business operations were centralized at the Exchange in Ho Chi Minh City to optimize management This restructuring aimed to create a customer-oriented product management system tailored to different customer segments, enhance business development efforts, and strengthen risk management across the organization.
In 2003, ACB implemented a comprehensive quality management system aligned with ISO 9001:2000 standards The bank achieved accreditation in key areas including capital raising, short- to medium-term loans, international payments, and human resource supply services These developments underscore ACB's commitment to maintaining high-quality standards and expanding its service capabilities within the banking industry.
In 2005, Standard Chartered Bank (SCB) signed a comprehensive technical support agreement with ACB and became a strategic shareholder, marking a significant partnership During this period, ACB launched the second phase of its modernization program, integrating advanced banking technologies This included upgrading servers, replacing transaction processing software with a more compatible system integrated into the core banking platform, and installing new ATM systems to enhance customer service.
2006: ACB listed on the Hanoi Stock Exchange.
In 2007, ACB expanded its network by establishing new branches and 31 transaction offices, while also founding financial leasing companies in collaboration with partners like Opening Solution (OSI) - Thien Nam to upgrade its core banking system The bank partnered with Microsoft to enhance information technology application for operations and management, and collaborated with Standard Chartered Bank on bond issuance Furthermore, ACB issued 10 million shares at a par value of 100 billion, generating proceeds of over 1,800 billion, marking significant growth and strategic investment in that year.
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 named "Best Bank in Vietnam" by Euromoney magazine in Hong Kong, highlighting its recognized excellence That year, ACB expanded its distribution network to 202 branches across 31 provinces and cities in Vietnam, demonstrating significant growth and reach The bank received the second-class Labor Medal from the President of Vietnam and was awarded by the Chinese Rivals State Bank of Vietnam, underscoring its prominence in the banking industry Notably, ACB made history as the first Vietnamese bank to be simultaneously honored with six prestigious international awards for "Best Bank of Vietnam in 2009" from renowned global financial institutions including Asiamoney, FinanceAsia, Euromoney, Global Finance, The Asset, and The Banker.
Evaluate the company: ACB
In 2014, ACB successfully achieved its profit plan registered with the board, reflecting strong financial performance The bank effectively mobilized growth aligned with capital demand, while capital expenditures decreased on average to optimize costs ACB maintained strict control over bad debt levels, keeping them below 3% and reducing them compared to the beginning of the year However, despite these positive indicators, credit growth remained subdued, falling below the industry average, which poses a challenge for future expansion.
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 increased by 10%, driven by a 3% rise in loan interest income from individual customers, an 11% increase from enterprise customers, and a significant 60% growth in operating income from financial investments This positive performance reflects efficient management of marginal profitability and effective exploitation of market opportunities in business investment bonds.
Non-interest net income experienced a 20% growth across both individual and corporate customers, reflecting robust performance in non-interest activities Revenue from service surcharges saw significant increases, with commissions from Western Union services rising by 30% compared to 2013, while international payment charges grew by 22% ATM fee revenues improved by 21%, and card-related profits reached approximately 170 billion, close to the initial target of 175 billion set at the beginning of the year.
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 saw significant improvements compared to 2013, with a notable decrease in the number of security incidents The reduction was primarily due to increased clarity in handling small transaction volumes, which helped prevent errors Most incidents that did occur were resolved successfully, contributing to a safer and more reliable business environment.
Implement a standardized exceptions list for operational business transactions and credits, with clear authority to approve and manage exceptions to mitigate risks Regularly review significant risks and adjust operational processes and credit procedures to strengthen risk control Emphasize centralized control over high-risk transactions and high-limit credit transactions to ensure effective risk management across the organization.
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 development of processors within the distribution channel cluster is progressing slowly The operational mechanisms, as well as the monitoring and evaluation of the effectiveness of debt settlement organizations and the debt collection process, lack clarity Additionally, the proactive and aggressive approach of the QLN center is limited, while ACBA tends to be more passive in pursuing non-litigation debt resolution strategies.
- 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, highlighting its strong market momentum However, the company experienced low credit growth at just 7%, indicating cautious lending practices Despite maintaining profitability levels around five, its contribution to the overall profitability of KPP declined by 2% compared to 2013, suggesting challenges in expanding its financial impact within the group.
Customer service quality has not met initial targets, with survey results indicating that our bank's service quality remains inferior to competitors, especially in southern Hanoi and Ho Chi Minh City Customer feedback from 2014 highlights dissatisfaction with staff service attitude, particularly among tellers, customer service representatives (CSRs), and security personnel Improving staff professionalism and customer interaction in these areas is essential to enhance overall customer satisfaction and competitiveness.
The five-month Progress project within the TCBS DNA initiative significantly impacted the ability to handle multiple applications in service business operations Although the project did not achieve full success during its initial launch, it is slated for ongoing recovery efforts These adjustments aim to address limitations affecting processing speeds, customer transaction efficiency, data mining activities, and reporting capabilities, ultimately enhancing overall operational performance.
The Program Customer Relationship Management (ACMS) faces 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 the system's ability to provide timely and efficient assistance, impacting overall sales performance and debt control Improving ACMS accessibility and performance is essential to enhance sales support and better manage overdue accounts in the distribution network.
- 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 primarily cater to consumer needs like family activities, home repairs, and vehicle purchases Currently, these loans account for approximately 25% of total consumer lending Notably, the short-term lending rate has increased by 2.6%, indicating a rise in borrowing costs for short-term financial needs.
In 2014, Asia Commercial Bank’s O Cho Dua branch made significant efforts to increase consumer loans compared to 2013 However, the short-term lending rate on total customer consumption loans decreased slightly by 0.9% in 2015 relative to 2014 The analysis indicates that the short-term loan-to-consumer ratio remained below 50%, reflecting a lower loan density for medium- to long-term consumer loans This trend is primarily due to most personal and household consumption loans being structured as amortization loans, with repayments mainly sourced from salary income 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 repairs dominated the lending market, accounting for 66% in 2014 and increasing to 70% in 2015 Conversely, loans supporting studying abroad represented the smallest portion, comprising just 1.23% in 2014 and slightly decreasing to 1.15% in 2015.
Loans for buying vehicle accounted for 20.26 in 2014 and fell to 17.95 in 2015.
As social development and higher living standards increase, people's physical needs and desire for an affluent lifestyle—such as buying houses and cars—also grow Consequently, demand for shopping and lifestyle-related services is rising, while more parents are considering studying abroad opportunities for their children Recognizing these evolving needs, Asia Commercial Bank's O Cho Dua branch has actively promoted consumer lending and study abroad loans Moving forward, the branch must continue to intensify efforts to expand this sector and capture more market share.
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 enhanced efficiency in loan evaluation processes and closely monitored customer debt commitments compared to 2014, significantly improving customer repayment collections To achieve stronger growth, the bank needs to focus on increasing sales and implementing effective strategies to control delinquency rates.
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
Profit from lending activities for consumer loans has been the primary source of income for the bank, with individual profitability levels steadily increasing over the years Specifically, profits in 2014 saw a 37% rise compared to 2013, followed by a 21.7% increase in 2015 compared to 2014 The ACB – O Cho Dua branch has consistently expanded its revenue streams, particularly in non-interest revenues, contributing significantly to the bank's overall growth.
Chapter 2 provides a solid theoretical foundation of consumer credit, enabling an analysis of loan activities at ACB – O Cho Dua branch Over the past three years, staff at this branch have dedicated significant effort to fulfill their responsibilities, contributing to Asia Commercial Bank’s goal of becoming a leading retail bank This commitment reflects efficient use of bank capital, evidenced by increasing loan sales and decreasing delinquency rates annually To ensure continued growth, the bank should consider implementing strategic recommendations and solutions to enhance consumer lending activities in the future.
Completion and implementation of strict lending process
- How well the customer appraisal.
Effective assessment of a customer's repayment ability and willingness is crucial for credit risk management Credit staff should focus on thoroughly analyzing loan usability and repayment capacity to minimize risks for the bank and ensure the accuracy of customer information Conducting comprehensive post-disbursement evaluations is essential to monitor repayment behavior and detect potential issues early, leading to better loan performance and customer satisfaction.
Staff responsible for this work should not be assigned credit tasks due to their primary focus on credit granting; instead, dedicated credit officers or specialized departments should handle these responsibilities By reallocating credit-related duties, credit personnel can concentrate on enhancing their performance, maintaining and developing customer relationships, and acquiring new clients through existing contacts This approach reduces risk and improves overall service quality in marketing and customer reception.
Diversification of consumer credit products and promoting consumer’s
Diversifying credit products enables banks to disperse risks and enhance stability This strategy improves capital efficiency and boosts loan sales, positioning banks more competitively in the financial market In the current period, expanding scale and operational networks further support banks in managing risks and capturing new market opportunities.
For small loans, customers typically have sufficient financial resources, reducing the need for collateral Traders in the market often focus on confirming management credentials and assessing the lease market conditions Additionally, a valid business license can be considered as part of the loan approval process, streamlining access to financing for small-scale businesses.
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 prioritize recovering debt based on the customer's repayment ability rather than relying solely on collateral liquidation Consumer loans are typically small in size, making customers uncomfortable with mortgages, yet their repayment capacity remains the key factor in loan recovery.
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.
Current regulations allow customers to accept bank loans exceeding 70% of their assets, provided they have the capacity and need Housing remains a suitable option even if it's less than 20m², as long as it is in a good location.
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’consuming loans/ total loans and other loans
Table 2: Comparison between targets and implementations in ACB – O Cho
Target Implement Target Implement Target Implement
Sources: Financial reports of ACB - O Cho Dua branch
From the above table shows, the ACB bank - O Cho Dua branch's total loans perfomances is always higher than the plan Detail:
In 2013, the implementation is 10.47 billions VND higher than the plan
In 2014, the implementation is 10.5 billions VND higher than the plan
In 2013, the implementation exceeded the plan by 30.43 billion VND, demonstrating strong performance By 2015, the bank's operations had become significantly more effective, surpassing previous years' results This remarkable growth led to the bank achieving nearly three times the targets set two years earlier, reflecting sustained improvements in financial performance.
1.2 / Analysis at the rate of consumer’s consuming loans / Total mobilized capital
Table 3: Consumer’s consuming loans / Total mobilized capital
Sources: Financial reports of ACB - O Cho Dua branch
A balanced loan-to-total mobilized capital ratio is essential for assessing a bank's lending capacity; an excessively high percentage indicates that the bank has allocated nearly all mobilized funds to lending, which can compromise liquidity and financial stability Conversely, a too-low ratio may suggest underutilization of resources, potentially limiting profitability Therefore, maintaining an optimal balance ensures the bank's ability to meet client liquidity needs while effectively managing risks and maximizing returns.
However, this ratio is too low, the bank is no longer a bridge between people who lack capital and capital surplus.
The ratio of consumer loans to total mobilized capital reflects the bank's efficiency in utilizing mobilized funds for lending; a higher ratio indicates more effective use of resources This rate increased by 13.22% in 2014 compared to 2013 and continued to grow by 11.66% in 2015 compared to 2014, demonstrating a positive trend in consumer lending performance.
Adding that when total mobilized capital increases, consumer’s consuming loans also increased, namely:
In 2014, the amount of total mobilized capital increased compared to 2013 was 17.77 billions VND , while the number of consumer’s consuming loans increased in 2014 compared to 2013 was 19,87 billions VND.
In 2015, the amount of total mobilized capital increased compared to 2014 was 10.5 billions VND , while the number of consumer’s consuming loans increased in 2015 compared to 2014 was 18.21 billions VND.
Despite currently low consumer loan uptake relative to total mobilized capital, Asia Commercial Bank - O Cho Dua branch should focus on strategic marketing initiatives to attract more customers Implementing flexible and effective social marketing policies is essential to boost consumer engagement Additionally, bank staff must be dedicated and enthusiastic in promoting bank services through targeted marketing activities to realize growth in consumer loans and strengthen the bank’s market presence.
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 mainly cater to consumer needs like family activities, home repairs, and car purchases Currently, short-term lending accounts for approximately 25% of all consumer loans Notably, the short-term lending rate has increased by 2.6%, indicating a shift in borrowing trends within the consumer credit market.
In 2015, the total customer lending slightly decreased by 0.9% compared to 2014, reflecting a slight decline in short-term consumer loan rates Despite efforts by Asia Commercial Bank's O Cho Dua branch in 2014 to boost consumer lending, overall short-term loan ratios remained below 50%, indicating a lower loan density for medium to long-term consumer loans This trend is primarily due to most personal and household consumption loans being structured as amortization 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
During 2014 and 2015, loans for construction and house repair represented the largest share of total loans, increasing from 66% in 2014 to 70% in 2015 In contrast, loans supporting study abroad constituted the smallest proportion, accounting for just 1.23% in 2014 and slightly decreasing to 1.15% in 2015.
Loans for buying vehicle accounted for 20.26 in 2014 and fell to 17.95 in 2015.
As social development and higher living standards increase, people's physical needs and desire for an affluent lifestyle grow, leading to rising demand for buying houses and cars Consequently, shopping needs are expanding, and more parents are considering abroad studies for their children Recognizing these evolving needs, Asia Commercial Bank - O Cho Dua branch has been actively supporting consumer lending and study abroad loans Moving forward, the branch should intensify efforts to further boost its share in these growing markets.
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, the bank demonstrated improved efficiency in pre-loan evaluations and debt monitoring compared to 2014, which positively impacted customer repayment collections To further strengthen performance, the bank must focus on increasing sales and implementing effective strategies to control loan delinquency.
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 steadily increasing over the years Specifically, profits from lending activities grew by 37% in 2014 compared to 2013 and by 21.7% in 2015 compared to 2014, highlighting the significance of this income stream Additionally, the ACB – O Cho Dua branch has seen continuous revenue growth, particularly in non-interest income, aligning with the overall trend of increasing revenues across various sources.
Chapter 2 provides a solid theoretical foundation on consumer credit, enabling an analysis of lending practices at ACB - O Cho Dua branch Over the past three years, staff at this branch have shown dedicated effort in fulfilling their responsibilities, contributing to Asia Commercial Bank's goal of becoming a leading retail bank The bank has demonstrated efficient capital utilization, evidenced by increasing loan sales and decreasing delinquency rates annually To sustain growth, it is essential for Asia Commercial Bank - O Cho Dua branch to implement strategic recommendations and innovative 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 bustling with numerous companies and large wholesale markets, making it highly profitable in raising funds and providing specialized consumer credit Its spacious premises and underground parking offer convenient access for customers, further enhancing its ability to attract and serve a high volume of clients effectively.
Banks implement effective human resource policies that promote staff development and enhance overall performance Regular training programs ensure employees stay updated with the latest industry knowledge, fostering a skilled and competent workforce Bank staff are characterized by their professional qualifications, youth, enthusiasm, and dynamism, with a strong focus on delivering high-quality service They maintain high discipline, excellent solidarity, and a culture of mutual reminding to improve team efficiency Currently, ACB has specialized departments for professional marketing and customer acquisition, which has resulted in increasing customer inflow and strengthening the bank's market presence.
The ACB - O Cho Dua branch, as one of the pioneering banks in the area, has built a strong reputation and gained customer trust through flexible, thoughtful, and considerate service Despite intense competition from other banks, its commitment to quality and technological improvements has enhanced operational efficiency and productivity Continually innovating, the bank strives to provide superior services, attracting more customers and reinforcing its position in the banking industry.
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 numerous advantages; however, it accounts for approximately 37% of total deposits To improve operational efficiency, the bank's board of directors increased deposit targets to around 1.5 billion in 2016 Additionally, the bank's marketing activities are currently weak, highlighting the need for enhanced promotional strategies.
The start-up team responsible for PFC search marketing has struggled to achieve strong customer engagement, resulting in low professionalism and inconsistent performance Frequent staff fluctuations and internal competition among ACB branches have further hindered PFC's growth Due to intense sales pressures, branches have been forced to cut maximum interest rates for customers, which negatively impacts overall profitability and risks alienating existing clients.
Collateral valuation far below its real value.
Lower asset valuations at BOA help ensure the bank's safety by preventing market fluctuations from adversely affecting its financial position Evaluators should focus on the borrower's repayment capacity and sources of income rather than solely relying on asset valuations However, undervaluing assets may lead to reduced lending rates and limit the bank’s ability to maximize consumer loan sales, impacting overall profitability.
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), operated by state-owned banks, was established to collect and provide credit information to support banking credit activities However, the CIC offers only general information that is not updated regularly, limiting its reliability for banks in making informed lending decisions As a result, the center may not provide consistently accurate or detailed credit data necessary for effective risk assessment.
Most customers east habitually use banking services.
Many clients have unmet financial needs but are discouraged by complex banking procedures, such as notarized documents and additional requirements before disbursement They prefer to avoid dealing with banks due to cumbersome processes and high-interest external loans Additionally, negative credit reports, such as a score of A12 submitted to credit agencies, significantly impact their ability to access traditional banking services and credit activities.
Customer information supplied is not accurate.