Luận văn developing retail credit at vietnam joint stock commercial bank for industry and trade ha tinh branch

DEVELOPING RETAIL CREDIT AT VIETNAM JOINT STOCK COMMERCIAL BANK FOR INDUSTRY AND TRADE — HA TINH BRANCH TRUONG THUY CHUNG Advisor: Assoc Prof., Ph.D... 35 Figure 3,5 The income of ser

DEVELOPING RETAIL CREDIT AT VIETNAM JOINT STOCK COMMERCIAL

BANK FOR INDUSTRY AND TRADE — HA TINH BRANCH

TRUONG THUY CHUNG

Advisor: Assoc Prof., Ph.D Nguyen Van Dinh

Hanoi, 2018

essential ingredients in my completion of this thesis

T would also like to thanks the BOM & staff of Vietinbank Ha Tinh for providing the data of

the company

CONTENTS

ACKNOWLEDGMENTS - 0 222 22t nnrnrrnrrerrrrrrrrrrrrrrrrrrrrrreoi LIST OF TABLES AND FIGURES 7 1V

1.2.2 Main activities of commercial Danks —

1.2.3 Credit activities of commercial banks

1.2.4 Retailed credits of bar

CHAPTER 2; RESEARCH METHODB

2.2 Data collection method

2.3 The data analysis methods

2.4 Research design

2.4.1 Identify targets, objects and scope of research:

2.4.2 Choosing research methods of the topic

2.4.3 Leaming and studying the theoretical basis related to research topics

2.4.4 Collect data on retail credit status in Vietinbank Ha Tinh

2.4.5 Analyze, synthesize and put into the final research thesis

CHAPTER 3: CURENT SITUATION OF RETAIL CREDIT ACTIVITIES AT

3.1 Introcution to Vietinbank Ha Tinh

3.1.1 History

3.1.2, Organizational structure

3.1.3 Business operation results of Vietinbank Ha Tinh through 2 year (2015-2016)

3.2 Retailed credit activities in Vietinbank Ha Tình

3.2.1 Retail credit polices

3.2.2 Retail credit activities e

3.2.3, Retail credit products of the Brancl

3.2.4 Asessements of current situation

CHAPTER 4: ‘THLE PROPOSED SOLUTIONS DEVELOPMENT TO IMPROVE RETAIL CREDIT AT VIETNAM JOINT STOCK COMMERCIAT BANK FOR INDUSTRY AND

TRADE HA TINH BRANCH (VIETINBANE HA TINH)

4.1 ‘The orientations and objectives to expand retail credit activity

4.1.1 The orientations for development of retail credit in Vietinbank system

4.1.2 The orientations and objectives to develop retail credit activity at Victinbank Ha Tinh33

4.2 ‘The proposed solutions to improve retailed credit at Vietinbank Ha Tỉnh

41.2.1 Developing customer policy

4.2.2 Diversification of types, retail credit products

4.2.3 Developing distiibution channel system

QA Tinprove the quality of retail

4.2.5 Promoting marketing activity

4.2.6 Inoreasing risk management capacity and improve retail credit operation efficiency

4.3 The Recommendations

sovoaes

REFERENCES n nọnHHướH1mrdeeraeirrrrrrrereieoeoooe ĐỔI

LIST OF TABLES AND FIGURES

Table 3.1 Main performance indicators in 2015, 2016 232: Table 3.2 Capital raising results of Vietinbank Ha Tinh in the period of 2014 - 2016 33 Table 3.3 Loan result of Vietinbank Ha Tinh for the period 2014-2016 RTT Table 3.4 Compare the number of retail credit products of banks in the area 38 Table 3.5 the overview of retail credit activities of Vietinbank Ha Tinh Branch in the period

of 2014 - 2016 39 Table 3.6 Result of Loans for land purchase, construction and repair of houses 41

'Table 3.7 Result of Loans for business thấnaãsnaniaaadstiassasuiaia SfS, Table 3.8 Result of mortgated loans 43 Table 3.9 Result of car loans .44

Figure 2.1 Research đesign used in research topie (00643448410914442/341048600/244230đ 25 Figure 3.1 Organized at VietinBank Ha Tỉnh ¬-

Figure 3.2 Capital raising results of Vietinbank Ha Tinh in the period of 2014 - 2016 33

Figure 3.3 Loan results of Vietinbank Ha Tinh by period 2014-2016 35

Figure 3.4 Loan result of Vietinbank Ha Tinh by customers in Me 2014-2016 35

Figure 3,5 The income of services over the year at Vietinbank Ha Tinh 37 Figure 3.6 Outstanding retail loans at Vietinbank Ha Tinh branch for the period 2014 — 2016 3099) Figure 3,7 Outstanding retail credit products for the period 2014-2016 40 Figure 3.8 Outstanding of loans for land purchase, construction and repair of houses .42

Figure 3.9 Outstanding of loans for business — xHasaesaaossaamalB) 44 cas AS Figure 3.10 Outstanding of mortgaged loans

Figure 3.11 Outstanding of car loans

INTRODUCTION

Inrecent years, With the deepening integration process, Vietnamese commercial banks operate in

fierce competition, in order to innovate and improve service quality, Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) has chosen a long-term and sustainable

development orientation Developing retail banking services and consider retailing activity as the

most important strategies, in there focusing on retailed credit services is the one of activities that

bring in the main income and profit Therefore, The Vietinbank branches have been deploying

activities in accordance with the development orientation of the whole system

Ha Tinh in recent years has become one of the bright spots in attracting investment of the

country Vung Ang Economic Zone and many industrial clusters have been formed as

potential convergence places for economic development Accordingly, the development of

demand for capital and finance of enterprises and individuals increased rapidly Therefore, many banks have joined and created fierce competition in the retail market in the area

To capture the real demand as well as to strengthen the competitiveness with banks in the area, Vietinbank Ha Tinh Branch has developed different types of retail credit for corporate

clients and individuals, households However, retail credit balance of branch is not high, the

development of retail credit in the area is difficult, the number of products deployed is still

limited, the proportion of credit is still lower than the total outstanding loans of the bank On

the other hand, advertising, marketing as well as the development of retail credit network, human resources still exist difficulties, objective and subjective obstacles affecting the

development of retail credit activities of the Branch

From that reason, I decided to choose the topic "Development of retail credit in the Vietnam

Joint Stock Commercial Bank for Industry and Trade - Ha Tinh Branch" for thesis to provide general solutions to develop retail credit in the current period

The research topic of the thesis is through the theoretical foundation of developing retail credit services, analyzing the Bank's current resources in the local operating environment, determining the causes that limit the development of the Bank's retail credit services to show

the challenges that banks are facing, Thereby offering solutions to develop retail financial

services in the Vietnam Joint Stock Commercial Bank for Industry and Trade - Ha Tinh

Branch in the future

* Research Questions

With the title of the thesis topic, research questions are:

What is retail credit? What are the characteristics of retail credit?

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What are the results and limitations of retail credit activities in Vietinbank 11a Tình? Whal are the causes of those limilations?

To develop retail credit in Vietinbank Ha Tinh, what solutions should be implemented?

© Research objectives

‘The major objectives of the research are

(1) Systemalize theories of relail credit and relail credit development,

(2) Analyze and assess the current situation of retail eredil activities in Vishinbank Ha

Tinh; and

(3) Proposed solutions to develop retail credit in Vietinbank Ha ‘Tinh

The first important lask of the research is to study the general theories of T2lail credit and rewail credit development for analysis Based on these models, the research will assess the

current situation of retail credit activities in Vietinbank Ila Tinh Finally, the research will

propose solutions to develop retail credit in Victinbank Ha Tinh based on the above standard

models and the results from the situation analysis of the bank

© The object and scope of the reseach

Research subject

Research subject

Research the related issues in the retail credit activilies im Uc aelual siluation of

‘Vietinbank Ha Tinh branch

Scope of the research:

Content: The rescarch topic focuses on the following main contents:

+ Actual retail credit activities in Vietinbank Ha‘linh

L The problems posed in the development of retail credit products branch mainly Loans for business and consumption for individuals and micro-enterprises; Loan for financial proof, study loan

Spatial range: Vietnam Joint Stock Commercial Wank for Industry and ‘Trade - La

Tinh Branch,

Time range: Data are collected, analyzed and used for three years from 2014 to 2016

* Rescarch methodology

- Svstematic method: Assess all the factors that can affect retail credit activities in Vietinbank

Va Tinh With this method, he assessment of factors affecting the bank’s retail credit activities inchides both external and infernal environment of Vietinbank Ha Tinh

- Secondary data analysis method: This method is used to study the theoretical background for the development of retailing credit

re

- Primary data analysis method: Assess the actual situation of Vietinbank {Ja ‘Linh in the

dovelaping retailed credit services and implementation retailed eredit activities

- Quantitative method: This method is used to select data and analyze

* Structure of the thesis

In addition to the Table of contents, Introduction and List of references, this thesis includes four following chapters:

Chapter 1: Tateralure rewi ww, theoretical background

Chapter 2: Research methods

Chapter 3: Curent situation of retail credit activities at Vietinbank Ila ‘Linh Branch

i} credil al Vicinam Joint

Chapter 4: The Proposed solutions

Stock Commercial Bank for industry and trade Ha Tinh Branch (Vietinbank Ha Tinh}

devalopmnent lo improve

CHAPTER 1: LITERATURE REVIEW AND THEORETICAL BACKGROUND

1.1, Literature review

Developing retail banking in general and retail loans service has become an imperative not

only for commercial banks, but also for articles in journals and surveys Masters of thesis or other scientific studies at our country and abroad

Typical articles on economic magazine

At the post number 2, economy and forecast review, Dr Nguyen Dai Lai, Deputy Director of

the Development Department of the Vietnam State Bank has written “Identify and propose

solutions to develop retail credit services at commercial banks in Vietnam” In the article, the

author raises the issue of the distinction between wholesale bank and retail bank and

simultaneously highlights the development of retail banking for commercial banks in

allocating fees as well as Cost accounting and selling price The author also outlines the current status of operations of Vietnamese commercial banks in the global economy, which

will serve as a basis for developing retail development plans in general and developing retail

credit services particularly, market strategy of commercial banks

Some master's thesis on the subject studied

a) Nguyen Thi Hai Ha, master thesis "Solution for developing retail credit services in Thanh

Xuan branch - Bank for Investment and Development of Vietnam", 2009

‘Throughout the thesis, in the general theoretical chapter, the author presents the general concepts

of commercial banks and the development of retail credit services at commercial banks The thesis analyzed the current status of retail credit activities of BIDV in general and Thanh Xuan branch in particular, From this situation, the author has presented a panoramic picture of retail

credit services of Thanh Xuan branch and analyzed the overall business environment of Thanh Xuan branch so that there are evaluations on the process of retail credit services Based on the

overall analysis of the business environment and the current status of retail credit services at Thanh Xuan branch, the author outlines the causes that exist objectively and subjectively while learning business Experienced in developing retail credit services of banks around the world The

thesis has provided basic solutions in terms of market access and customer management, technology, human resources development, financial capacity building as the basis for the

development of retail credit services at BIDV Thanh Xuan

However, throughout the essay, the authors did not analyze each specific factor affecting the

retail operation at BIDV Thanh Xuan, but rather the general situation of the Bank for

Investment and Development of Vietnam from which infer to Thanh Xuan Branch, so the

porsuasiveness of the solution is not high

b) Vo Thi Hong Hien, master thesis "Strategic development of retail credit services at

Vietcombank Quang Ngai Branch’, 2010

Unlike Nguyen Thi Tai 1a, Vo Thi Tiong Tien analyzes the current status of retail credit operations at Victcombank Quang Neai branch through strategic cloments, brand names, products, organizational structure, personnel and finance to identify the strengths and weaknesses of Vielcombank Quang Ngai Branch in combination with external socio economic and political analyzes to help Vietcombank Quang Ngai Branch to plan its

operational strategy retail credit as well as solutions to implement that strategy most

cllevtively From the above situation, the author has introduced solutions; Developing technology, people, distribution channels, product development, brand name, risk management in retail credit activities at Vietcombank Quang Ngai branch also issued a mumber of recommendations to the Government, the State Bank and related agencies to achicve the ultimate goal of developing retail credit services at Victcombank Quang Ngai,

By analyzing the same research topics on retail credit development as mentioned above, we find that although the anthors have provided basic solutions to develop retail credit services, However, most of the theses still go from gencral theory, These have not applicd a specific theoretical model to develop specifie solutions to develop retail oredit service

Recogniving the outstanding issnes of the studied research on the development af relail cradil

al Vietinbank Ha

services together with the stalemient "Development of rolail credit servic

Tinh is a new field of research but in the future It will bring many development opportunities that previously had no research work on this field in Ja ‘Tinh branch The author went from systemativing the genoral theoretical issues of commercial barik credit services ta concurrent application of the Ansoff matzix combined with the analysis of individual factors of Ha Tinh town where Vietinbank JJa ‘Tinh operates as well as retail credit analysis, l'rom the point of view, Ute author provides the solutions for devcloping retail crcdil scrviecs of the Viclinbank

commercial banks usually occupies the largest share in size of asseís, market share and numiber pÊ typzs Bank

‘The bank is one of the most important financial intermediaries, The Bank pursues economic policies, especially monetary policy, so it is an important channel in the economic policy of the Government to stabilize the economy

Banks can be defined by the fimnctions, services or roles they parfoom in the cconomy But the most prudent approach is to consider banks in tems of the types of services they provide: “Banks are

financial institukons that provide the mos! diversified portfolio of fmancial services

especially credit, savings, payment services, and performs the most financial fimetions in the economy "

(source: The Law on Credit institutions of the Socialist Republic of Vietnam }

Accariling to [he Taw on Credil Institutions of the Socialist Republic of Vicinam slales thal

“The achvities of banks are monetary trading and banking services with the regular content of receiving deposits and using money to provide credit and provision of payment services”

Commercial banks are the largest savings institution in most economies Millions of

individuals, houscholds, cntcrpriscs and socio-cconomic organizations send moncy to banks

Loans from banks are an important source of income for many households This is a major Jending organization for corporates, individuals and households For companies, commercial

banks arc usually ercdit organization to serve the purchase of reserve goods or plant

construction, procurement of technical equipment When companies and consumers pay for purchases of goods and services, they usually use checks, debil anthorizations, credit cards or

dleetronie accounls When they need financial information or financial planning, they oflen

come to the bank for advice Bank credits to the Goverment are an important source of

financing for development A commercial bank is a credit organization that represents its mos| basic task of mobiliving capital and providing loans Cormnercial banks are the bridge between individuals and organizations that draw from idle capital and inject money into the shortage ‘the commercial banks’ activities are aimed at trading a special commodity that is

“eapilal-moncy" The deposil rale is lower than the Iending rate and the interes! differenec is

the profit of the commercial bank Commercial banks! activities provide for all capital needs

of all classes, types of businesses and other organizations in the society Different from commercial banks, The State Bank (central bank) does nol operate for profit or monetary purposes, Each country has only one state-owned bank, which may be called a parent bank, which functions to issue money, acrinister, implement and monitor monefary policies; and thore are many counmerciat bariks, which can be considered as the fimetion bariks to transfor money in the economy, In the case of commercial banks standing on the bankruptoy, the

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central bank will be the Last source of finding that commercial banks seek In commercial

barks, depasitors' money is called “debit a is, money for companies and individuals, as well as deposits in other banks, and the number of bark-owned bonds called credit assets, The difference between the amount of money raised and the amount of money lent to banks and bonds is called equity,

In developing countrics like Victnam, commercial banks really play a very important roÌc, as

it assumes the role of keeping the flow of capital of the economy circulated and thus contributing lo the lubricant for the fimctioning of a weak trarkel economy,

1.2.1.2 Cheracteristios

Firstly, the commercial bank intermediary is the financial performing currency business A commercial bank és a financial institution which primarily doels with the transfor of savings

into investment, requiring contact with two types of individuals and organizations in the

economy: (1) individuals and organizations with a deficit of expenditure, that is, expenditures for consumption and investment that exceed income and thms are additional to capital; (2) individuals and organizations have a surplus of expenditure, like as their curent income is greater than the expenditures on goods and services and thus they have the money to save

‘There are two types of individuals and organizations that are completely independent af commercial banks It is inevitable that moncy will move from group (2) to group (1) if both are mutually beneficial ‘thus, increased income is the driving force behind the Gnancial relationship between the two groups If cash flow moves on the Telurn of a larger amount af

‘uses business techniques to limit, disperse risks and reduce transaction costs Commercial banks are willing to accept high tisk loans while issuing low-risk securities to depositors, In fact,

ds of

cormercial bamks engage in risky business Commercial harks also salisfy the hquidily ne

many customers Commercial banks are a payment intermediary On behalf of customers, the bank performs the payment of goods and services with various forms of payment such as checks, collcetion orders, cards providing ofcctronic payment network Connect fimds and provide money when customers need it, Banks also make mutual offsetting through the Central Bank or

through the payment center Ciurently, the bank becomes the largest payment intermediary in

most countnes One season baniks thrive is the ability to cvaluale information Uncven distribukion,

of information and capacity for information analysis are known as "asymmetric information” that reduces the efficiency of the market but creates a profitability for banks, where expertise and experience in evalnating financial instruments and the ability to choose the tools with the most

attractive risk-reward clements

Secondly, banks are organizations that must have conditions The bank is more closely regulated

by the goverment than any other organivation in the economy, as the bank is the treasurer of the economy A bank that wishes to obtain a license must have a certain amount of capital committed

io implement certain policies, such as lending, financing a project or expenditure, and in the process The bunk is subject lo striel managsment by the Stale In order fo perform well, the bank contimously increases its capital base, recruits qualified and qualified staff and has a wide network of branches to meet the needs of customers and perform many activities Other, to gain great profits, limits risks for both depositors and banks

12.2 Main activities of commercial banks

1.2.2.1 Fund mobilization

» Mobilize cquity

Equity of a bank usually consists of own capital (capital contribution), capital surplus and accunulaied profil, To start a banking activity (legally allowed), the banker must have a certain amount of capital Depending on the nature of each bank, the sources of capital

formation are different: State banks are allocated by the state budget, joint-stock banks

contributed by sharcholders, Joinl-verture banks conlributed by joint-vznlurc parties; Private

banks arc privatcly owned In the course of opcration, the bank must constantly imercasc its

equity by: the accumulation of profits (tuming a part of net income into capital); capital

surplus, additional sources from additional contribulions, additions — or from funds and

sources of debt that can be converted into shares (medium and long-term loans)

© Depo

Deposits ftom customers are the most important resource and account for the highest proportion of total commercial banks’ finds in order fo increase deposits in a competitive environment and (0 obtain mors and belter quality cash, banks have Taunched and implemented various forms of mobilization such as

+ Payment deposits are deposits of individuals or enterprises that are sent and kept by the

bank within the allowed balance ai very low or zero rates,

- ‘Term deposits of enterprises and social organizations: the money of enterprises or social organizations deposited in banks with certain ferms (imay be 1 month, 3 months, 6 months, 1 year, 2 years .) with the corresponding term interest rate The higher the deposit rate, the higher the deposit raie Senders can go to the withdrawal bank if there is a need to spend money, but only lower interest rates due to not withdrawn on time

- Savings deposit: the moncy deposited in a bank with a certain term The bank offzrs a

variety of attractive deposits and interest rates (eg deposits with different maturities, savings

in foreign currency or gold)

- Deposits from other banks: For settlement purposes and other purposes, this conunercial bank may deposit money at other banks However, this source is usually not large

* Borrowing from other organizations:

Deposits are the most important source of commercial banks [lowever, when needed, hanks

often borrow more with various types of borrowing:

- Loans from the State Bank: ‘his is a loan that addresses the urgent need of commercial

banks In the case of shortage of reserves (lack of compulsory reserves or payment reserves), commercial banks usually borrow fiom the Stale Bank The form af lending is mainly

rediscount or recapitalization,

- Loans from other credit institutions: ‘Fhese are mutual loans between hanks and other eredil imshilutions on the interbank markct This source is used lo mecl the need for

stockpiling and emergency payments and in many cases it replaces and replaces loans

borrowed from the State Bank

- Borrowing in the capital market: This is a source of debt ñmancing to compensate for the

shortage of medium and long term loans Banks borrow moncy by issuing debt instruments

(bills, bills, bonds)

1.2.2.2 Credit and investment activities

‘The main activity of a commercial bank is to seek capital to use for profit

* Treasury Operations: Banks have to put a certain amount of cash in a bank so they can pay quickly when it's available to their neods, Therefore, in order to meet both liquidity targets and create an income for the bank, banks usually have a deposit at the State Bank, banks and

other banks

* Securities investment activities: Commercial banks hold securities for liquidity and diversification purposes Commonly held bank sceurities are: government sccurities: Securities of other banks, finance companies and securities of other companies Banks hold securities becanse they bring income to the bank (arger than deposits at the State Bank and

9

credit institutions) and can sell to raise finds when needed Lut it is important to understand

thal investing in sccurilics is investing in bonds, bills rather than investing in stocks Investing in stocks belonging to the bank's equity partnership

* Credit activities: It is a typical activity of commercial banks, accounting for the largest

proportion and bring the biggest income to the bank There are many ways to classify the type

of credit; over time (short, medium and long term), in the form of financing Gncluding loans, guarantees, leasing, discount .), according to property guaranteed, at risk Gneluding high, imedinzn, and low security Hema), or by industry Gndustry, agricullure, ete), or by sponsorship (commodity, or real estate .) or by purpose (production, consumption .)

* Other capital using activities: Other activities are activities such as payment activities, trast

activities, capital contribution activitics (banks participating in capital contribution with other

organizations in the foun of holding shares joint ventures, joint ventures, etc.), other capital use activities such as procurement, housing and equipment for the customer's business and leasing,

1.2.2.3 Other banking services

In addition to the traditional and spccitie activitics, commercial banks also carry out other

activities to seek for profits such as: providing trust services, consulting services, investment

brokerage services Securities, insurance services, agent services

Payment and trcasury activities arc very important activitics and marked The particularity of commercial banks, thanks to this activity that the payment transactions of the whole economy

is imptemented smoothly and Cavorably Others also contributed to a significanl, reduction in tho amount of cash flowing into the cconomy Commercial banks provide payment and tveasury operations in various forms as

- Providing payment facilities

- hnplementing domestic payment services

- Providing other payment services in accordance with the regulations of the SBV

- Providing intemational payment services when permitted by the SBV

- Providing payment services

- Carry out the services of tallying, sorting, preservation and transportation cash,

41.2.3 Credit activities of commercial hanks

1.2.3 The concept of bank credit

Credit is an objective economic category, a process of birth, survival and development along with the development of commodity economy It reflects the borrowing relationship between cnlitics based on the principle of rspayment Accordingly, the lender wilt transfor the right of

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use of the goods or its own currency to the borrower and the borrower is obliged to repay the lender a value greater than the initial value already reecived

Bank credit 1s the transfer of the right to use capital from banks to customers (organizations or individuals) for a certain period of time at a certain cost In other words, bank credit is the credit relationship between the bank and the organizations and individnals carried out in the form of banks raising moncy in cash and lending to the above objects Banking credit is particularly important in the economy, its operations are diverse and plentiful Bank credit and development associated with the birth and development of the bariking system, The subject of Dank credit is monetary capital, in which: the bank is the lender also the organization, the individual is the borrower

Rank crodil is the most profitable activity for commercial banks bul the highest risk This is the most important activity of banks in particular and financial intermediaries in general, accounting for the highest proportion of total assets and generating large interest income Credit is also a financing activity of the bank for customers, Credit relations are largely determined through a credit agreement with a focus on identifying the ability and willingness

of the recipient to perform the contract, (source: Law on Credit Institutions)

1.2.3.2 The Principles of hank credit

Bank credit is both a business and production credit, linked to business and consumer credit, not linked to business However, banking credit is always guaranteed 3 basic principles:

Firslly, customers must commit to repay principal, inferest with a fixed hme The principat credils originated irom the deposits of customers and thơ loang the bank borrows Therefore, banks always require credit recipients to comply with this commitinent, This is a condition for banks to survive and develop

Scconilly, customers must commil to usc credit for the purpose agreed with the bank, nol contrary to the provisions of law and other regulations of the higher level The law regulates the scope of activities for banks Kach bank can have its own purpose and scopes of activity,

‘The purpose of the grant is stated in he eredit agrecment to onsure thal the bank dozs not fund illegal activities and that the financing is not appropriate for the bank's platform

‘Thirdly, loans must bs secured by assets (except in the case of unsecured, unsecured loans.) Bank leans based on (or projects) are effectively To mplementation of the first principle, Efficient botrower's solution demonstrates the ability to recover capital and make profits to repay the bank, the bank's fnding must be associated with the figure In case of inseourity, the

‘bank requires the berrower to lave collateral for the loan

il

1.2.3.3 Nahưe Qƒ roles bank credit

‘The nature of cradil is generally the systsm of sconomie relations between the tender and the borrower By that, capital is mobilized from one subject to another on the principle of repayment to meet the different needs of the economy Bank credit plays a very important role

in the survivat and development of the economy Internal conflicts of credit exist in two opposite directions: positive and negative affect on social-economic, If crcdit development is rampant, uncontrolled, it will lead to excessive amount of money in circulation, supply exceeds demand which will cause inflation to affect social-economic fife Thus, credit actually develops with the following positive roles:

© Promoting production and cireulation of goods

Credit is both a tool to mobilize capital and an effective tool to provide capital to the economy, meet the capital needs for production and business activities of organizations and enterprises timely The credit is concentrated in excess, idle in the sovicty and redisttibuted to the capital, such as enterprises, economic organizations, ‘'hrough credit, monzy is used effectively In alll socio-economic times, credit plays an important role in all sectors of society:

For enterprises: With the mobilived capital, credil activities ean supply capital for production and business activities, meeting the demand for fixed capital (purchase of machinery and equipment, constrnetion of infrastructure floor, .}, working capital (purchase of materials and

malcrials for goods production) On the other hand, credit also controls the circulation of

goods in the economy

For people (consumers): credit for mobilizing idle capital from people, orgamizations and

cnlarprises Enteotssge people lo save and accusmulate for investment

© Currency stabilization

‘With the focus on capital, eredit has helped to reduce the amount of money circulating in the economy, especially the amount of cash in the population, reducing the inflationary pressure, contributing to currency stability in the economy

Credit to provide capital for the economy, contribuling lo expand and develop prodnetion, creating products and services more and more, meeting the increasing demand of society, stabilizing prices in the market

© Stabilize life, social order and create jobs

Providing capilal to creale conditions for production activities is ensured continnausly, creating many diversified jobs, solving employment for laborers, reducing the unemployment zate, helping to stabilize the order It contrilmtes to the stabilization of life and the improvement of the living standard of the people

12

«- Diay anactive rolc in cxternal relations

‘The development of credit is incessantly within the boundaries of a country that extends beyond the international arena Cross-country credit is requirsd to meet the capital needs of countries, contiibuting to shortening the gap between countries, supporting capital for development or international organizations (World Bank, United Nations - IME, etc.) for poor, developing countzies Vietnam is a developing comtry International credit creales @ Friendly tolationship that brings

1.2.3.4 Categories of bank credit

Bank credit can be divided into different categories depending on classification crtetia

© countries closer logothor and grows together

© Based on purpose of credit

According {o this credit criterion can be divided into the following categories:

- Loans for commercial production and business;

- Consumer loans;

- Loan for real estate:

- Loans for agricultural production;

- Loans for expart msiness,

© Based on credit term

- Short-term credit means a credit activity of a maximum duration of 12 months, the usual

purpose being to firrance Ihe investmnent in fiquid assels:

- Medium-term credit means a oredit granting activity with a term of from 12 months to 60

months; the usual purpose is to finance the investment in fixed assets:

- Long-crm credil is a credil granting activity with a term of ver 60 months The purpose is usually to fund investment projects

© Based on the level of trust af customers

- Unsecured collateral: Loans without collateral, mortgages or guarantees of third parties, but

based on the credibility of cuslomers themselves ta decide on the loan,

- Secured Loans: Loans based on loan guarantees such as mortgages, mortgages or guarantees

by a third party

© Based on the method of credit

Loans for each time

Loans for credit limits

Loans for overdraft Limits

1.2.4 Retailed credits of banks

F241 Definitions

Retail credit along with wholesale credit are tvo components that make up the credit activity

of commercial banks Retail credit is a form of bank providing utilities as well as providing credit services (by lending, discomnting, guaranteeing and other operations) to individual

customers (Victnamese individuals Houscholds and forcigner individuals) to borrow capital to

meet the demand for capital for production, business, service, investment and living ‘Ihe individuals mentioned here are individuals with legal capacity (alsa representing a household), capacity for civil acts and civil liability in accordance with the law These individuals belong to different sectors such as public servants, non-state employees, and self- employed workers

12.4.2 Characteristics of retailed credit

The object of providing retail credit products is very broad, the number of customers is

enormous, including individual households and small and medium enterprises in the

cconanty, but the valuc of loans usually small

The quality of financial information of the borrower usually not high, for individual

customers and households is difficult ta determine, for small and medium-sized enterprises af

the financial statements arc not audited

“Lhe proportion of medium and long-temm loans for retail credit tends to be higher than the average vale, as the demand for medium and long ler loans lo buy houses in residential land, purchase

fixed assels uccounted for a large proportion; In addition, borrowers olen do wot actively plan

cash flow, the demand for consumer loans usually has a tem of more than 12 months

‘he need for retail credit of customers is strongly affected and depends largely on the cconamie cycle; Strong increasing in the period of good cconomie growth, high iseore, inoreased spending, investment in production and business services of small profitability; Conversely, when the economy is in recession, memployment increases many individuals

houscholds, limiting spending on consumer loans, small and medium cnterpriscs rapidly

Procedures and records in retail credit are relatively quicker and simpler than other types of credit products beeause the amount of Toans is nol large, the appraisal record is neither complicated nor necessary, Analysis and evaluation of financial statements as in oredit to enterprises

1.2.4.3 Roles and the importance of retail credit in the economy

© Far the social economy

Credit activity generally plays an important role in promoting econamic development, while

rolail eredil has some spacific roles sueht as:

Contibute to speeding up the process of money circulation, to use capital sources efficiently,

so that small and medium enterprises and households can expand their production of goods

and servic s and hands large volumes of jobs High tole of th sonumttic sectors in fhe

economy, increasing contribution in GDP

Contribute to stimulating consumer demand: With loans for housing, cars, equipment for

family activitics in accordance with the ability to pay customers, consumer ercdit products

‘Through domestic and international cards, it stimulates people to increase theiz expenditures, thereby boosting enterprises to invest in increasing their production capacity and economic growth

Helping to reverse the black oredit, usury in many places: retail oredit channel opened to help individual customers, households, small businesses easy access to capital bank profits

Attractive interests will lirsit san in any places

«© For the retailad customers

Maximizing internal resources of individual customers, houscholds, small and mediun

enterprises, exploiting the potential of land, goods, machinery, workshops in a reasonable

and effectiveness

Contribute to improving the material Life and spirit of the people and create conditions to raise the people, formed the habit of using the products and services of modem banking, in accordance with the requirements of industrialization and modernization of country

© For the commercial banks

Retail credit is one of the credit operations of the Bank, in addition lo corporate or business

credit Accelerated retail credit rate contributed to accelerate outstanding loans, which means

that the income growth of the Bank ‘his brings to the bank large income on service fees Developing a diversified range of services in the direction of improving payment methods, simplifying procedures and expanding the network In addition, the bank can develop support

services such as payroll services for people with accounts at various banks, transfer cash

is

transactions directly to recipients will attract more and more, Customers come to the bank, thereby increasing the bank's revenuz from scrvices

In order to be able to compete with other banks, the bank has to meet the increasing demands

of customers such as researching new products, improving service quality ‘he bank is increasingly improving itself, becoming stranger rivals of other banks

It can be scen that since the commercial banks in Victnam applicd the provision of retail credit products and services, beside the traditional credit products, the bank's product portfolio has been much more diverse Overdrafis for deposil, accounts, housing loans, auto foans, advance loans for sale of listed securities, loans for employees

Product portfolio expanded, service quality increased If can be said that retail credit has

bringing their images into the minds of customers

1.24.4 Retailed credit products

© The loans for retailed customers

On the basis of the forms of credit extension, along with the development of the economy, banks are constantly rescareking and introducing a lot of now products, se thal they can mect

the diversified demands increasingly advanced customers The products are designed on the basis of careful study of customer needs, based on the purpose of using loans, some popular products today include:

Loans for production and business: These are short-term credit products to meet capital

Tequirements for domestic production and business such as purchasing materials and goods,

Jabor costs, fil taxes, Tmporl and exporl materials, goods, usually through crodit litnil or by

cach time

Loans for investment fixed asset: ‘These are long-term credit products aimed at supplementing new investment capital or repairing and upgrading snachinery and equipment, transport

means, working offices

Loans for purchase of houses and houses for residential purposes: It is a product for individual

Glionts to borrow tony for the construction, purchase, repair, trans!

the house of the State, transfer the land use tight

Mortgage of valuable paper, savings card: It is a form of secured lending by valuable

fr of the righ! lo sublease

papers and savings cards issued by the Govemment, the Bank or other credit institutions

in order ta respond qnickly customer's nocds for capilat when valnable papers and credil

cards are not due.

Lending to employess: This prodnot provides loans to customers who are employees to develop sub-farnily cconomy and / or mezl the necds of living staff of exmployzes who source debt is income Frequent of them

Loans for purchase of cars: Customers get loans to own and use a beautiful new car for consumption and business,

1.2.4.5 Criteria to evaluate retailed credit of banks

Bank credit can be divided into different categories depending on the classification criteria

+ Based on the purpose of credit:

According to this credit criterion can be divided into the following categories:

- Loans for commereial production and business;

- Consurner tars,

- Loan for real estate;

- Loans for agricultural production;

- Lending for export business,

+ Based on the credit term:

- Short-term credit means a credit activity of’ a maximum duration of 12 months, the usual

prpose bøing to finance the investment in fiqnid assets;

- Medium-term eredit means a credit granting activity with a term of from 12 months to 60

months; the usual purpose is to finance the investment in fixed assets;

- Long-lerm credil is a credit granting aclivily will a lerm of over 60 months The purpose is

usually lo fund investment projects

+ Based on the level of trusted customers:

- Loans without collateral: Loans without collateral, mortgages or guarantees of third parties,

‘but based on the eredibilily of customers themsclves to decide on the loạn,

- Secured Loans: A type of loan based on loan guarantees such as mortgages, pledges or guarantees from a third party

+ Based on the method of loans: According to this criterion, credit can be divided into the

following types:

- Loans under the loan,

- Lending by credit line;

- Lending under overdraft limit

« Based on the repayment method

- Loans have only one repayment term, also called one-time repayment loans,

- Loans with multiple repayments or so-called installment loans;

17

- Loans repay many times but there is no specific repayment schedule but depending on the financial ability of the borrawer can repay al any tirne

1.2.4.6 Factors affecting retail credit of banks

© Objective factors:

~ ment of retail credit are the factors that directly participate in credit relations Society: The social faclors that directly influence the developTrends in demographic change thal are sludicd include total population, population growth rals, population structure changes, population movement trends are important data sources From these figures, the bank identifies the potential market for credit activity and the hank's capacity relative to its

country last time with the rate of 3.2% per year, is very fast compared to the region and twiec

as high rate of population growth in the country If the urban population in 2015 accounted for 29.6%, in 2016 rose to 30.5% about 26.3 million people ‘Ths proportion of people in working age is quilc large, secaunling for 65% of the population Mors than 70% of urban Vietnarnes:

households currently have an average annual income of over 57 million VND The high

growth rate of population and income leads to high demand for consumption

~ Legal and political cuvironment: Banking business is one of the branches subject to strict supervision of the law, regulations of the State Bank First of all, State policies have a strong

influence in the field of lending, especially the policies and programs related to economic Far

indispensable role There are no laws or laws that arg no! in line wath the market economy's

development requirements, and all activities cannot be smooth With the assurance role of tzansforming a spontaneous, unorganized market economy into a more civilized market economy, the law has a tremendous task in creating a legal framework that helps the production and business aplivitics wre favorable, ininging high cconomic efficiency, resolving conthets, disputes and complaints Therefore, the law is vary important for the operation of ths bank in general and the quality of credit in particular Only in the condition that the

18

subjects involved in credit relations comply strictly with the law, the new credit relations bring efficicney and benefits to both partics and the quality of credit is guarantood,

— Economic environment: The economic environment includes factors that affect the ability

of people to income, payment, expenditures, and capital needs As the economy recession, incomes decline, inflation and unemptoyment tise, the unfavorable business environment also affects the business plan of the bank On the other hand when the cconomy is flourishing, production and business activity development will be a good opportunity to carry out banking operations Trends in the use of banking services are increasing: with 86 million people, only 17% opened bank accounts, but the growth rate of banking services in the last 3 years was

over 30% Types of businesses, products and services that support the consumption of people

inoroase, Financa companias, financial loasing, bank collaboration with supplicrs, boost trade offers credit products Interest rates will determine the demand for lending, commercial banks often offer attractive interest rates to attract borrowers Of course, it must be based on the basic interest rate of the State Bank to control the market High inflation makes it difficult for banks to control prices and amounts of moncy Businesses and individuals will be hesitant to aeposit money into the bank, raising interest rates will increase Enterprises have limited investment in production and business projects because the risk in this time is quite high Therefore, in order to encourage borrowing, banks must lower lending rates,

= Technology environment: ‘the emergence and development of modem technology has changed the face of the banking industry The new lechnolagy allows the Bank to movals

not only on the business process bul also on the way it is distributed, ally the development of new products and services, such as the development ofa computer network that allows the Bank to provide banking services According to the development trend of the digilal information age, banks increasingly foeus on applying information teclmology to business process innovation and distribution, Especially, the development of new products and services, including retail credit technology applications will be the trend in the coming tine, Consumption trond associated with access to teclmology: Inlemel access rale is 77 subscribers per 1,000 people, intemet users 20.8 million people make up 25% of population;

‘The number af fixed and mobite phone subscribers is 921 per 1000 people, just behind the US and Singapore in terms of speed of development

= The social and cultural environment: The behavior of customers and their competitors is dominated by cultural factors Consumption behavior is also influenced by cultural factors, so italso affects the domand for consumer lending products of the bank Therofors, tha tevel of

culture is one of the factors that the bankers carefully study in business strategies and apply

lọ

the current marketing methods Different geographical areas have different cultural characteristics of customs, ways of communication, demand for goads and services in gencral and banking products and services in particular These conditions have formed populated places, trade centers, tourist centers, manufacturing centers and iniluenced the bocking of a transaction office or a branch of a bank The expansion of the network in the areas with good income, the cconomic development environment is favorable for business in general and retail loans

Competitors: Compelitor activities also have a significant impact on the Bank's operations, especially when the banks offer the same product, targeting the same target audience in the same area ‘The banking market is more active, the competition among banks has become

more aculo As a rosnil, banks arc increasingly sponding much of their tira rescarching the market structure and behavior of banks in the marketplace, studying, the specific behavior of

each competitor (direct competitors, potential competitors .) in order to actively propose a

dynamic and effective competition strategy

~The units support the operation of the bank: Finding and establishing a mutually beneficial relationship between the Bank and its affiliates contributes to improving the Bank's performance and image The units snpporting the aperation of the hank are the mits that have relations with banks in business activitics such as organizations providing marketing scrvices, financial intermediaries, credit media the masses, the State organs, With the current situation, many banks have litle experience in nurketing activities, so it should use this service in

professionst organizations, Will rogular eradit and financial intermediaries, the banks doat with these organizations through three types of services: insurance, credit capital, and valuable paper services or example, the relationship with the insurance company for the collatcral is car generated from the loan, or the mutual smpply between Gnanciat institutions - credit, credit sources are relatively widely implemented Banks should look for these possibilities because buying credit capital at commercial banks is often cheaper than at central banks,

~ Customers: Customers are the most important factor determining the suecess of the bank as castomers are directly involved in the process of providing banking products and services directly to enjoy the prodnel Therefore, the demand, desire and usage of banking products and services will be important factors influencing the quantity, structure and distribution of produets and services

Customers play an imporlant rola in banking business As custornars ars dircolly involved int

the process of providing banking products and services, both direct use and enjoyment of

20

produets ‘Therefore, the demand, desire and nsage of products and services of customers will

be the decisive factors in terms of quantity, structure, quality of products and services and results of business operations of the bank The important task of banking marketing is to research, analyze and understand the needs of the customers to identify the individual they are Jooking for from the bank Pay attention to the potential customers The advantages of

banking scrvices compared with competitive banks Checking the usc of loans hiclps the bank

understand the evalution of the loan so that it can adjust or intervene when necessary, soon to see the canse and prevent possible risks Choosing and applying effective controls will establish an effective risk prevention system for credit quality

© Subjective factors:

— Loans policy of the bank: The influence determines the existence and development of the tank's lending If the development and diversification of credit activities are not part of a

bank's development policy or the bank's policy docs not promote credit growth, it is difficult

for customers to borrow money Meeting the demand of spending or demand for loans for production and business Hxcept for cases where the bank is sure to recover debt from repulable customers That is, this policy docs nol cneourage people to borrow money to meet the needs of living or the need to borrow small business loans so they will have difficulty in the process of borrowing On the contrary, when the bank determines that credit activities are

a direction for business development, the hank will set poticies to promote this activity such

as interest rate policy, guaranteed asset ratio borrowing capital, conditions for borrowing,

Capital size and development potential of the bank: Business objects of the bank are

mmonclary so the capital size and financial status of a bank play an important role, The larger

the scale, the more financial indicators on the report, the more psychological peace of mind

for the customer In addition, the development of credit products, technology applications in Jending activilies always associated with the investment in the purchase of new equipment,

software The value of these investments is quite So it is not possible for small banks to

make it So, with the large capital, the banks not only make themselves active in front of all activities but also crzate their ability to sland hefore the competition

— Marketing activities of the Bank: With the information gathered, the department will synthesize, analyze, make conclusions about the research problem, the solutions to achieve the goal: attract more and more customers, occupy the market Jligh market share, high profitability, inereased competitivencss in the markel, completed the plan of the Board af

Directors, the target shareholders

Qualification of staff Virst of all, the managers shall require the person skilled

sat the bank Besides, due to specific characteristics of the expansion of lending activities

professionals, able ta analyze and judge, was the firs| responsible for the eompetitiver

depends largely on the qualifications of staff Customer Relationship Managers directly contact customers through the transaction process, suggesting product improvement ideas ar service delivery Therefore, the management should have a policy to arouse the capacity of labor, creativity for the staff of customer relations, especially promoting the effectiveness of reward policy, motivating employees to be attentive Good service anid attract many customers for the bank

~ Credit processes: Credit procedures include provisions to be made in the process of lending

and debt collection to cnsure the sal sly of crodil, TL starts with the preparation of the lean, disburses the loan, checks the process of using the loan until the debt is recovered Guaranteed credit quality does not depend on the good execution of the loan, Staged procedures and close coordination between the steps in the credit process In the credit process, the preparation of the loan is very important, as the basis for risk assessment in the provess of lending In this step, the quality of credit depends on the quality of loan appraisal as well as the conditian of loan procedures af each bank

CHAPTER 2: RESEARCH METHODS

2.1 Research approach

For years, the research approach has been divided into two modes: inductive and interpretive

On the inductive approach, it is the way in which researchers develop new theories through the exploration, discovery and application of existing theories and the application of such

theories into research Thus, if an inductive approach is applied, the author will not introduce

a new theory that will use the theory that was previously developed into the particular

research environment On the interpretive approach, this is the way of argument that begins

by recognizing a general rule or principle and then applying it to explaining the phenomenon

of things The interpretation differs from the inductive induction of reasoning from the

observation of things, phenomena and the conclusion of a general principle With this

research topic, the author will use the inductive approach With this approach, the author will study theories, the previous scientific work on business management from which applied

research to Vietinbank Ha Tinh to achieve the goals and the research task of this thesis

2.2 Data collection method

The main research methods used in the thesis include two main methods: (1) data collection

method, (2) data processing method

The published information and data will be an important basis for the researcher to create a theoretical basis, methodology and overall picture of the socio-economic situation of the study

area Methods of collecting information and data published in the following order:

1) List the necessary information that can be collected, systematized according to the content

or location of the collection and expected information provider

2) Contact the information provider

3) Carry out the collection by recording, copying

4) Check the actuality of the information through direct survey and cross-checking

As follows:

Information Document Sources

Theoretic! bascs related to

topics, data and information

world

+ Cuniclums and Tectures corporate governance, business administration, planning motheds, investment

development

+ Arti related arti

from magazines, fiom the

Data on the overall situation

of the company such as

organizational structure,

nmmiber of employees, number

of agents, policies, business

programs, quantity of goods

sold, turnover, profit + Income statement over the

years of the company

+ Strategy, action plan of the company

| Policies on business

activities of the company

+ Reports of agencics, data

2.3 The data analysis methods

Descriptive statistics methods: The method involved data collection, summary presentation, calculation and description of different characteristics to reflect the general object of study

Feonciic statistical mncthods: This method is used to synthesize, analyze and compar: qualitative and quantitative indicators to reflect the dynamics and naturc of the phenomenon,

Comparative statistical methods: Through absolute numbers, the relative number for

comparison shows the change in the phenomenon of the study

System of analysis criteria: The proportion of outstanding loans, bad debt ratio, growth rate of

outstanding loans

2.4 Research design

‘The research design or resuarch process is summarized im Figure 2.1 below:

24

Research design

Determine the

Identify targets,

meaning and objects and scope

the theories of bank of secondary data on the -

and put into the final

credit, retail credit and status of activities at

Figure 2.1 Research design used in research topic

Accordingly (Figure 2.1), the rescarch design used in the thesis includes the following main

contents:

(1) Identify targets, objects and scope of research

(2)Determine the meaning and methodology of the topic

(3)Understand and study the theories of bank credit, retail credit and retail banking products

(4)Collection and processing of secondary data on the status of activities at Vietinbank

(S)Analyze, synthesize and pul into the final rescarch thesis

2.4.1 Identify targets, abjects and scope of research:

Must, the dissertation researcher will determine the objectives, subjects and scope of research

of the topic to have orientation to exploit the contents related to the topie being studied In this

essay, the author identifies:

Research subject:

Research the related issues in the retail credit activities in the aclual situation of Vietinbank

Ha Tinh branch

Scope of the research:

Content: The research topic focuses on the following main contents

~ Actual relail credil activitics in Viclinbank Ha Tinh

25

‘The problems posed in the development of retail credit products branch mainly: Loans for business and consumption for individuals and micro-cnierprisss, Loan for financial proof,

study loan

Spatial range: Vietnam Joint Stock Commercial Bank for Industry and ‘Trade - la ‘Tinh Branch

Time range: Data arc collected, analyzed and used for three ycars from 2014 to 2016

2.4.2 Choosing research methods of the topic

As the bas

s [or the systemutization of theoretical as well as the analysis of retail credit slatus

in Vietinbank Ha Tinh, Chapters 1 and 2 will elaborate on the overview of the research situation and the synthesis of research methods to be used in the thesis, Accordingly, the

arch section will make a slater

through the process of studying the previous research,

The synthesis of research methods will be used in the dissertation to present the research methods as well as the research design used in the thesis Accordingly, the specific contents of the dissertation will be implomented

2.4.3 Learning and studying the theoretical basis related to research topics

After determining the objectives

study and study the thcorctical basis rclated to rescarch topics, ic the basis of bank credit, credit retail In this context, methods of collecting secondary data from books, textbooks, scientific reports, previous studies, and secondary dala processing methods will be used The

subjects and scope of the study, the author undertakes to

coneepls of retail erodit, roles as well as related eontent will be etarified, in particular

2.4.4 Collect data on retail credit status in Vietinbank Ha Tink

Authors will collect secondary data from previous studies, including reference essays, jouruls, articles related to retail banking activilics in Vielinbank Ha Tinh from 2014 to 2016 Then, based on the research methodology, the authors will select, process and analyze data related to the real situation of retail credit in Vietinbank La ‘tinh

2.4.5 Analyze, syrthesize and put into the final research thesis

According to the results, the author analyzes, sums up and applies the final research thesis, which

is used in the dissertation in the form of a text or a graphic representation Data processing methods will he thoroughly used m this section Content anil y

the final study results will give the final assesament of the real situation of retail credit in Vietinbank Ha ‘Tinh from 2014 fo 2016 and as a basis for proposing solutions of developing and

s and synthesis, pai.into the thests

improving the quality of retail credit in Vielintank Ha Tinhin the coming years

26

CHAPTER 3: CURENT SITUATION OF RETAIL CREDIT ACTIVITIES AT

VIETINBANK HA TINH BRANCH

3.1 Introcution to Vietinbank Ha Tinh

3.LL History

In 1988, following the decree of the Government, the establishment of specialized banks

separated from the State Bank, the banking sector in Vietnam had shifted from a one-tier

banking system to a two-tier banking system Since then, commercial banks have been

formed: Bank for Foreign Trade of Vietnam, Bank for Agriculture and Rural Development of

Vietnam, Bank for Investment and Development of Vietnam VietinBank was established and put into operation on the basis of the Credit Department of the Ministry of Industry and Trade

and the Department of Commercial Credit of the Central State Bank, together with the

Industrial and Commercial Credit Departments of the Bank Branch Local government, marks

a tuming point in the cause of innovation and development of the banking system in Vietnam

VietinBank has subsidiaries such as VietinBank Leasing Company, VietinBank Securities

Limited Liability Company and VietinBank Asset Management In addition, VietinBank is co-founder and major shareholder of Indovina bank, Saigon Commercial Joint Stock Bank,

International Finance Leasing Company of Vietnam, Asia Insurance Joint Venture Company,

Vietnam National Financial System VietinBank is an official member of the Association of

Asian Banks, the Association of Vietnamese Banks, the Swift Interbank Global Payments

Telecommunications Association, the Visa, Master Card Association, the Chamber of

Commerce and Public Works Viet Nam Association of Small and Medium Enterprises

(APEC) Financing Organizations

Vietnam Joint Stock Commercial Bank for Industry and Trade - Ha Tinh Branch was

established in 2004 under the Decision No 177 / QD-HDQT-NHCT1 dated 26/10/2004 by the Chairman of Vietnam Joint Stock Commercial Bank for Industry and Trade Vietinbank

Ha Tinh is the first branch under Vietnam Joint Stock Commercial Bank for Industry and

Trade Vietinbank Ha Tinh branch is located at 82 Phan Dinh Phung Street, Ha Tinh City, Ha

Tinh Province From the early days of establishment, the branch has only 26 members from other commercial banks in the area moved to 5 professional departments Over the 14 years of

establishment and development, as of December 31, 2017, Vietinbank Ha Tinh has grown steadily with a network of 01 head office, 3 transaction offices class I, 2 transaction offices class II and over 105 employees This is one of the large bank branches with modern technology system that connects all products, banking services, qualified staffs, experienced

27

and enthusiastic, helping branches can provide øuztomers with nodern banking producis with high quality As a business unil in the Geld of currency, borrowing lo lend and carry ont other business services, with continuous efforts, Vietinbank Ha Tizh has gradually overcome all difficulties and challenges confident, standing on the market VietinBank’s business activities

in Tla Tinh always grows firmly and firmly The market share in the business has been expanded in terms of gcographic location and market size, fulfilling its assigned tasks, contributing positively on socio-economic development in Ha Tinh province Over the past years with the progress of economic development in general and the social econamic siluation:

of Ha Tinh is also developing strongly, the activities of Vietnam Joint Stock Commercial Bank for Industry and ‘Trade - Branch Ha Tinh also achieved certain improvements Victinbank Ha Tink has always boon ane of S yoar successive the branches to achigve the branch of excellence in the system of Industrial and Commercial Bank, Nearly 14 years of establishment and development Vietinbank has overcome many difficulties, challenges, always pioneering in business as well as social security, contributing actively implementing the policy dircetion of the Party and Govcinment Victinbank Ha Tinh bas constantly strived

to rise and aflirm its position as the leading commercial joint stock bank in Ha Tinh, Besides,

in the banking system located in Tla Tinh province, VietinBank- la Tinh Branch always pioneers in the application of modem technology and c-commercs, non-stop Rescarch and improve existing products and services and develop new products to meet the highest demands of cuslorners

‘The dovelapmiont abjective of Vicnam Joint Stock Commercial Bank for Industry and Trade -

Ha Tinh branch to 2020 is “To build VietinBank Ha Tinh into a leading and modem commercial bank in the locality, to operate efffsctively, secure and sustainable, healthy credit quality, rulti-furctional business, strong devstopment of banking services Reiail, capable of edge with the system of commercial joint stock banks in Ha Tinh province”

Figure 3.1 Organized at VietinBank Ha Tinh

(Source: Vietinbank Ha Tinh)

- Director:

To sign and execute contracts and other documents related to credit limit-granting activities,

contracts for the purchase and sale of valuable papers, secured contracts, contracts related to the handling of debts, Disposing of secured assets, according to regulations of Vietinbank Deciding on authorization levels verdict credit to branch manager level 2, head of trading, head of transaction within the level authorized by the council credit facility is decided, but not exceeding 70% verification of credit Authorization shall be made to deputy directors within

the scope of their competence, in accordance with the qualifications, capabilities and

experiences of the authorized person

Decision on credit limit, loan limit, guarantee limit loan, guarantee under investment plan,

project for a customer below the authority of the credit committee Department

To propose the General Director to decide on the establishment, merger or dissolution of

transaction points, the appointment, dismissal, disciplining and rewarding of titles, heads and deputy heads of units of transaction units

- Deputy director:

On behalf of the Managing Discetor, there are some matters when the Dircetor is absent (under the authorization of the Director) and report the results of work when the Director is present at the unit

Assist the director in the management of a number of operations assigned by the Director and

‘be responsible to the Director for his decisions

Discussing and commenting with the Director on the performance of the tasks of the Branch under the principles of democracy and the regime of heads

- Administration and Organization Department

Itis a function room to assist the Director in matiers relating to the organization of the Branch such as: personnel work, recruitrrent, reception and arrangement of slaff in accordance with the principle

Performing the management of seals, performing other administrative tasks, clerical documents, typing, documenting, archiving documents at ths request of the Board of

Directors, receptionists, mcans of transport, protection , medical agency

Performing regular repairs, procurement of assets, and stationery

- Enterprise Departnent and Retail Department

Developing a customer strategy for lending, appraisal and rc-appraisal, proposing lean

modalities for projects under the jurisdiction of Vietnam Joint Stock Commercial Bank for Indastry and Trade - Ta Tinh Branch

To reevive and perforrn lean operations for crlerprise customers and individual eliens in the

Jocality under their management and according to their competence

Assist the director in directing and inspecting the credit activities of the transaction bureaus in

the localities, as well as the information for the preventian and (reatment of eredil tisks

Performing analysis of outstanding loans, quarterly overdue debts and implementation of credit professional documents, organizing training courses and examinations for credit officers ‘To receive

and imnplamcnt programs and projects fimded by dormostic and forcign capital

to the regulations of the State bank and VietinBank

30

'fo make financial plans for the whole branch, fo assign financial targets of the entire branch,

to assign financial targets, lo make financial stalcments for the departments, lo perform the payment accounting and statutory remittances

- General Department

To advise the branch's leadership in the formulation, elaboration, assignment of plans,

summing up reports at branches, Dealing with problem debt

Analyzing the financial situation of the whole branch as 4 basis for advising and proposing the Board of Directors lo work out plans and stralegies for business development of the Branch

- Treasury and currency Department

‘To supervise, monifor and inspect vaults and all specialized machines and equipment in the

ld of reasury money, supervise and monitor the cash balmec and cash transactions of the

transaetors in the system, The system is designed to detect early differences and transactions are questioned by the transactor

Performing the counting, selecting, classifying and packing of money, ensuring the cash disbursed from the funds of the branches mecting the circulation standards and the regulations

of the State bank and VietinBank

- Transaction Department

To implement programs and products for capital mobilization, Marketing programs, salos support to: exploit capital Vietnamese Dong and foreign currency fiom customers according

to the current regulations of VietinBank

Performing credit activities for individual clients, houscholds and institutional clients in accordance with current regulations of Vietinbanik

3.1.3 Business operation results of Vietinbank La Tinh through 2 year (2015-2016)

In the 2 yoars from 2015 - 2016, Victinbank Ha Tinh has implemented the Iechnology modemization of fhe Bank With this technology, the branch has been able to provide banking services to clients with the one-stop transaction model - a new organizational model following the World Bank’s technical assistanee consultancy, which is implemented synchronously creating a breakthrough in banking technology and a prerequisite for improving service qmality and diversifying banking products and services,

‘The application of modem banking tectmology has facililaled the deployment of new products and services based on advanced utilities of the system such as eapital mobilization products, savings deposits and money certificates send money, home checks, traveler checks, remiUaneos, VISA CARD, MASTER CARD, currency exchange ATM card issuanco, automatic messaging, payroll services In the credit products, in addition to providing short,

31