REALITY AND SOLUTIONS FOR LENDING TO INDIVIDUAL CLIENTS AT VPBANK – CAU GIAY BRANCH

However, the market for loans to individual clients is still small and isnot fully exploited by commercial banks.. Lending toindividual clients of VPBank - Cau Giay branch was deployed s

1 Rationale

In recent years, the Vietnamese banking system has radically changedorganizational structure, operating mechanism and professional Banksdiversify their activities to meet the needs of international economic integration

In this context, lending to individual clients is interested by both joint-stockcommercial banks and state-owned commercial banks in Vietnamese bankingsystem However, the market for loans to individual clients is still small and isnot fully exploited by commercial banks

Joint-stock commercial VPbank, Cau Giay branch was found early inHanoi In recent years, branch has achieved fairly good performance andcontributed significantly to the success of the VPBank system Lending toindividual clients of VPBank - Cau Giay branch was deployed successfully with

a variety of product; outstanding debt to individual clients was large andoccupied high proportion of total outstanding debt of VPBank - Cau Giaybranch However, when compared with the total outstanding debt to individualclients of VPBank system or with total outstanding debt to individual clients ofthe whole banking sector in Hanoi, outstanding debt to individual clients of VPBank - Cau Giay branch was still small, not commensurate with the potentiality

of the market, also with the position of VPBank

Aware of this issue, to be able to learn more this field and combine thelearned knowledge in school to the real, I choose the subject “Reality andsolutions for lending to individual clients at VP Bank - Cau Giay branch” for my

2 Aims and subject of study

In all business activities of banks, lending activity can be considered as themost significant and also the most risky activity which requires banks to bevigilant in management Therefore, the analysis and evaluation of the bank'slending activity is essential This research will help comprehend the theory oflending operations On this basis theory, a thorough and fact-finding study onlending to individual clients at VPbank - Cau Giay branch will be conducted.Through this study, we will understand development of lending activity toindividual clients and also the difficulties and advantages of banks in thedevelopment of this activity from which proposes a number of measures to get

better results in credit activity

Subject of this thesis is reality of lending to individual clients at joint-stockcommercial VPbank, Cau Giay - Ha Noi branch, then find solutions to helpbanks overcome difficulties and develop this activity

3 Scope of study

This thesis will focus on analysis and evaluation of individual lendingactivity, especially sales of loans, debt collection, outstanding debt, anddelinquent debt… which took place from 2010 to 2012 at VPBank Cau Giay -Hanoi branch

documents, I receive information, figure of mobilization, lending, credit activity,and business result of VPBank and Cau Giay branch Moreover, to have basicknowledge about credit and lending activity as well as, I collect document of law

of credit, magazines on economy, and figures about inflation rate, profit of banksystem After gathering data, I using absolute, relative comparison to compareand evaluate data, figure over years or selected years

Secondary method which I used is interview This interview is conduct inVPBank –Cau Giay branch I interview Mr Nguyen The Dan – manager ofcredit department - to understand regulations and procedures in lending toindividual clients, reason for fluctuation of sale, profit, debt, nonperformingloans (NPL) …

5 Structure of study

In addition to introduction and conclusion, the main content of the thesisconsists of three chapters:

Chapter 1: Overview of lending to individual clients

Chapter 2: Reality of lending to individual clients at VPbank, Cau Giay

branch

Chapter 3: Scalable solution for lending to individual clients at VPBank, CauGiay branch

CHAPTER 1 OVERVIEW OF LENDING TO INDIVIDUAL CLIENTS

1.1 The definition

1.1.1 The definition of commercial bank

As the commodity production had grown, the economy also appearedpeople who hold a temporary fund and people who need money for business.Under the circumstances, in the second half of the 16th century in Europe, thefirst bank that formerly was known as usuryorganization was born At this time,the Bank just kept and lent money

Along with the continuous development of economy, the operation of thecommercial banks have also been strengthened and improved Peter Rosedefined commercial banks as follows: “Bank is a financial institution providing alist of the most diversified financial services - especially credit, savings andpayment services – and perform more financial functions than any businessinstitution in the economy” And in Vietnam, according to the Law on CreditInstitutions, the legislature defines “A banking operation is a monetary businessoperation or a banking service of regularly taking deposits and using suchdeposits for granting credit and providing payment services”

1.1.2 The concept of lending activity of commercial banks

In the book “Modern Banking”, David Cox stated that: “Most professionalactivities of commercial banks are called banking service or foundations fordeveloping such service” and lending is main service Provision 2 - Article 3 -Decision 1627/2001/QD-NHNN on the regulation of lending by credit institution

to clients also provide that: “Lending means a form of extension of credit

whereby a credit institution provides a client with an amount of money to beused for a certain purpose and within a fixed period of time as agreed on thebasis of the principle of repayment of both principal and interest”

Based on the balance sheet of commercial banks, we find that loans alwaysaccounted for the largest proportion of the total assets of the bank They also areitems which bring the highest income to the bank But risk in banking activitiesoften focuses on the lending activity

The loan is a liability to borrowers but is an asset to the bank Loans are lessliquid than other bank’s property because they can not be converted into cashbefore the loan are maturity When a commercial bank grantees loan to theborrower, the borrower is on their own initiative - can repay loan to the bankahead of time, in time or even extend for loan repayment On the other hand,commercial banks are only allowed to manage the loans that comply with thesigned contract

1.2 Lending to individual clients activity

1.2.1 Definition of lending to individual clients

If classifying by clients, lending activity includes lending to corporation,lending to financial institutions and lending to individual clients Because theobject of this thesis is lending to individual clients of commercial banks, we willconsider lending activity to individual clients

Lending to individual clients is a form of bank’s financing for individualclients It is the economic relation in which the bank transfers to individualclients the right to use a sum of money with conditions agreed in the contract to

serve the purpose of the client (According to “nghiệp vụ ngân hàng thương mại”– Học viện Tài chính).

1.2.2 Characteristic of lending to individual clients

According to Ph.D Nguyen Thi Mui, lending to individual clients has somecharacteristics (Nghiep vu ngan hang thương mai – Hoc vien tai chinh)

Borrowers

Borrowers are a person or a household They are small traders, farmers,handicraftsmen, tailors, mechanics, students, small manufacturing facility or arepresentative of the household (who have the legal capacity and civil act in thefamily) on behalf of the household to sign credit contracts, loan contracts andrepay loan to the bank

Loan size

Lending to individual clients is usually small loan but amount of loan isvery large So, the sensitivity of this group is very high, which requires banks tohave a separate, suitable marketing strategy It brings the clients closeness, trustand peace Loan size often relies on the borrower but not collateral

To high-income groups, their credit demand supports for their business,helps liquidity when their money tied up in long-term investments.

Lending interest

Because the size of loans is small, borrowing cost is higher than other costs.Moreover, this is a loan with high-risk, short-term, weak collateral … All ofthings create the form of loans with the highest interest rate in the commercialbanks The interest rate of these loans is often 1.5 as high as other interest.Therefore, the faster these loans develop, the higher profit the bank gains

Term loans

Loan purpose is for consumption of personals such as buying electronicmachine, car, motor, house, land and small-scale production Therefore, value ofloan is small but large amount At the time of making loans, clients not haveability of payment, but they soon have it in short-term or medium-term Because

of these reason the term of the loans are mainly short-term, partly medium-termand little long-term

1.2.3 Classification of lending to individual clients

1.2.3.1 Base on purpose loan

For business manufacturing purposes

They are loans to carry out small business plans of household such asrenting a shop, buying materials, buying machine… Characteristics of this loanare that term loan often is long-term, scale depends on the client's business plan,the risk of loan is very high, and this loan has the possibility of moral hazard

For consumption purposes

Loans for consumption are used mainly for consumption purposes such asbuying electronic machine, buying household goods… Object of this loan ispersonal (for consumption) and government (for expenditures) Characteristics ofthis loan are small, short-term, lower risk.

1.2.3.2 Base on term loan

Term loan is a period from when clients start receiving loan to when he/sherepay the principal and interest which had been agreed in the credit contractbetween the bank and the clients (Frederic S Minshkin)

Short-term loans

Short-term loans are loans with the term of 12 months or less They are used

to make up the shortage of working capital of individual clients, organizationsand the short-term spending needs

Medium-term loans

According to the current regulations of the State Bank of Vietnam (SBV),

the medium-term loan is loan with the term of over 12 months to 60 months.These loans are often used for the purpose of purchasing fixed assets,improvements or renovation equipment, expansion production and businessactivities They are also used for small-scale new projects and rapid recovery ofcapital

Long-term loans

Long-term loans are loans with the term of 60 months or more Long-termcredit is provided to meet the long-term needs such as buying house, land,equipment, transport means…

1.2.3.3 Base on payment methods

Lump-sum payment at maturity

Lump-sum payment at maturity loans is loans to individuals and households

to meet instant cash needs This loan only is paid once at maturity The size ofthe loan is relatively small They are usually short term, low risk and used to payfor the holiday, buying household or repairing auto motor…

Installment

Installment is short-term or medium-term loans paid in two or more times insuccession (usually monthly or quarterly) This method is used to financeexpensive assets such as cars, houses, lands or to finance the business plan.Generally, these installments apply fixed interest rate, but floating rate isbecoming more popular

Credit card

Credit cards as well as other card were quickly accepted Credit cardsprovide a revolving and regular credit that clients can use whenever they need.Clients can take a lump sum payout or installment payout

1.2.3.4 Base on loan forms

1.2.3.5 Base on form of security

Secured lending

Collateral is real estate, estate which are funds or assets owned by clients.Collateral create pressure to force clients to pay debt In the case clients can notrepay the debt, the bank will sell these asset to reduce losses

Unsecured lending

Unsecured lending is lending based on reputation or third-party guarantee,not collateral Bank selects clients who have good reputation and good ability torepay loans to lend money Bank lends client money to meet the needs of clients

on the basis of salary These loans are mainly small value, and short term

1.3 Factors affecting the expansion of personal loan.

1.3.1 Subjective factors

Lending policy of bank

The bank's lending policy is a system of guidelines and regulationsgoverning the lending activities made by the board in order to effectively usecapital for businesses, organizations and households and individuals (Law oncredit institution)

The elements in lending policies have a strong impact on the expansion oflending in general and lending to individual clients in particular A bank can onlyexpand lending to individual clients when having a clear goal of lendingexpansion On the other hand, if a bank provides available, various lendingproducts to individuals, expansion is easier and more convenient

Financial capacity and management ability of bank

The financial capacity of the bank bases on factors such as the size of theequity, ROE, ROA, earnings growth rate over the years, the proportion ofoverdue debts A bank with great equity, high ability to raise capital in the shortterm, good liquid, less delinquency can be called the powerful financial bank.The bank can invest and expand lending to individual clients Where as bankwith low financial strength will not be enough capital to fund portfolios, whichleads to limited lending to individual clients Therefore, this is a factor that helpsexecutives consider when making decisions to expand or restrict lending,including lending to individual clients.

Number and professional qualification of bank officers

Credit staffs are directly involved in decision-making and contact to clients,

so they can be seen as the image of the bank Numerous credit staffs with goodmoral and qualification is the positive impact of lending activity to individualclients The lending operations have time-saving, high-quality, limited risk,which help attach clients and expand lending to individual clients

Marketing activity of bank

Marketing are activities to introduce and promote the image as well as theservices that banks provide It is also an important activity contributing toexpand lending to individual clients Marketing help client understand the banks,the services that banks provide If there are good marketing activities, clients will

be impressed with the bank as well as banking services in general and lending toindividual clients in particular It also creates favorable conditions for lending toindividual clients expansion Because for a long period, state-owned commercial

great potential market in Vietnam A good marketing campaign will help thebank ensure the ultimate goal, profit and competitive strength.

Bank network

The number of branches and transaction offices express the scale of thebank In order to facilitate the contact between clients and the bank, the bankusually expands the branches and transaction offices It also helps the bankattract clients The more branches and transaction offices the bank have, themore favorable expansion of lending to individual clients are Especially whenthese branches and transaction offices are located in residential areas with moredemand for loans, banks easily meet clients’ demand The banks also can get theinformation from client to appraise, disburse and collect debt

1.3.2 Objective factors

1.3.2.1 Factors from clients

Demand for capital of clients

Lending to individual clients is services, so the clients’ demand for capital

is a key factor that determines the forms of lending to individual clients of banks.Capital needs of clients are the basis to build and expand product developmentstrategy for lending to individual clients Individuals have diversified demandsranging from the need for consumers to the need for production and business Ineach stage, there are always demands which need to finance The problem is thatbanks have to discover these needs to respond timely The clients have differentcareer, marital status, ages will have different needs For instance, young clients(20-30) want credit card products to serve the needs of shopping, goingout where as older clients have demands for buying house, land, car… So,

determining the capital needs of clients take advantages for banks to expandlending to individual clients.

Ability to meet condition for borrowing of client

Conditions for borrowing of clients are income, moral, and collateral toensure the safety of the loans The bank not only discovers the needs for capitalbut also discovers the need with high solvency The need with high solvency beconsidered as the need for whose repayment is assured

Clients who have high academic standard, the understanding of loan willhave responsibility for the debts If the clients have good moral character, theyalso have awareness debt, repayment debt, which make credit risk is low It isthe factor help the bank expand lending activity to individual clients

There are also other factors such as: family size, features, characteristics

of clients, the ability to meet the client's loan terms such as collateral,documentation of ownership

1.3.2.2 Factors from bank’s operating environment

Economic environment

Bank is the most important financial intermediary for the economy.Therefore, any fluctuations in the economy will affect the bank's lending activity

in including lending to individual clients

When the economy develops stably, lending to individual clients tend toincrease Standard of living improves; clients need more capital to serve theirbusiness, which facilitate expansion of lending to individual clients Otherwise,the economy falls into recession causing income of consumers unstable People

will choose saving rather than making loans, which limit the expansion lending

to individual clients

Law environment

Banks are financial intermediaries to hold a huge amount of capital andassets in the economy, so banking activities are tightly controlled by the law Itmakes safety not only for banks, but also for client

System of documents, decisions, regulations impacts on the lendingactivity of banks in general, lending to individual clients in particular Stable,perfect legal system will boost lending to individual clients and improve qualityservices, ensure the cooperation relationship between banks and clients

Socio-cultural environment

The socio-cultural environmental factors such as lifestyle, habits, localhabits, tastes impact on making forms lending to individual clients of bank.Where the people have habit of spending not savings, they tend to make loansfor consumer more than others

Development of science and technology

Today, the continuous development of science and technology hasfacilitated sectors, including the banking sector With the development of scienceand technology, processing of transactions become more quickly, easily.Banking operations is handled by machinery instate of manual labor, whichreduce time of transactions between banks and clients, increase the accuracy ofanalysis, credit evaluation, decrease the risk to the bank As a result, lending toindividual clients will be expended

Competitors

The emergence of competitors in the financial markets leads to the lending

to individual clients market share will be reduce making the bank find newstrategy to attract clients, not only to retain old clients but also attract newclients

CHAPTER 2:

REALITY OF LENDING TO INDIVIDUAL CLIENTS AT VPBANK,

CAU GIAY BRANCH

2.1 Overview of Vietnam Prosperity Bank (VPBank), Cau Giay branch

2.1.1 Overview of Vietnam Prosperity Bank

2.1.1.1 The formation and development

VPBank stands for of Vietnam Prosperity Joint Stock Commercial Bank(formerly known as Vietnam joint-stock commercial bank for privateenterprises)

Head office: No 8 Le Thai To, Hoan Kiem District, Hanoi

Telephone: 043.9288869

Website: www.vpb.com.vn

Email: clientcare@vpb.com.vn

VPBank has gone through three stages of development:

Stage 1: (1993-1996) Formation and development

VPBank was established under the business license No 0042/NH - GPissued by the Governor of the State Bank of Vietnam on 12 August 1993 with anoperation period of 99 years

The initial charter capital was VND 20 billion Then, VPBank increasedcharter capital several times in order to meet its growing demand Bank grew toVND 174.9 billion under Decision No 53/QD-NH5 on 18 March 1996 of theState Bank of Vietnam and became joint-stock commercial bank with the largestcharter capital in Vietnam at that time At the end of 1996, VPBank had HeadOffice, 3 branch, and more than 200 employees with total assets of 864 billions

Stage 2: (1997-2002) Crisis

Causes of crisis included subjective and objective reasons Subjectivereason was mistake in credit policy It was the large unsecured loans withshareholders (loans, L/C) and lax credit policies with other clients Objective onewas the impact of the Asian economic crisis; clients took advantage of thesituation to “fish in troubled waters”

Stage 3: (Since 2002) Recovery and growth.

From 2004 to present, VPBank has completed and developed its system.Because of the growing demand, VPBank has continuously increased its chartercapital in 2004, 2006, 2008 up 198.4 billions, 1000 billions, 2000 billionsrespectively Now, VP Bank's charter capital is 5770 billion

During the process of formation and development, VPBank has always paidattention to extend the scale, enhance operation network in big cities In the firsttwo year, VPBank had only 3 branches and 6 transaction offices Now, VPBankhas a network of nearly 200 branches and transaction offices nationwide, and

550 payment agents of VPBank's fast remittance center - Western Union

By 31 December 2011, the total number of professional employees ofVPBank reaches over 3,000, over 92% of them is under 40 and about 80% ofthem hold undergraduate and graduate degrees Recognizing that the quality ofemployees is the strength of the bank, VPBank has always paid attention toenhancing its human resource management Internal and overseas trainingcourses are regularly held by VPBank to improve the professional qualification

of its employees

PICTURE 2.1: THE ORGANIZATIONAL STRUCTURE OF VPBANK

2.1.2 Overview of Vietnam Prosperity Bank, Cau Giay branch

2.1.2.1 The formation and development

VPBank - Cau Giay branch (formerly known Cau Giay transaction office)was established in 2006 Thank to the approval of SBV – Hanoi Branch and thedecision of VPBank Board of Directors, Cau Giay transaction (Address at No.2,Nguyen Khanh Toan, Cau Giay district, Hanoi) has been converted intosecondary branch

Since its formation, VPBank – Cau Giay branch has gone through six years

of operation and obtained remarkable achievements Directly under Vpbank –Thang Long branch, Cau Giay branch has always been a leader on operation inthe VPBank system

The Branch has 50 staff, of which the total number of employees withundergraduate and graduate degrees is more than 45 people (90%) Employees ofbranch mostly are female Staff has regularly gone into short-term or long-termtraining organized by the head office, also by the branch

2.1.2.2 Structure of VP Bank - Cau Giay branch

PICTURE 2.2: THE ORGANIZATIONAL STRUCTURE OF VPBANK,

2.2 Reality of lending to individual clients at VPBank, Cau Giay branch

2.2.1 Lending situation to individual clients at VPBank, Cau Giay branch 2.2.1.1 Application Subjects

VPBank lends to Vietnamese individuals and foreigners accordance withcurrent regulations of the SBV and VPBank

2.2.1.2 Lending conditions

Borrowers of VPBank must meet the following conditions to make loans.Firstly, clients must have civil legal capacity, full civil act capacity and civilliability according to law

Secondly, loan purpose must be clear and legal

Thirdly, clients must have healthy financial situation and have ability torepay the loan and interest as commitments in the contract

Fourthly, clients do not have overdue debts at other credit institutions Fifthly, clients have feasible, effective investment projects, plans forproduction, business, and services with feasible repayment plan for the bank.And lastly, clients must implement the provisions of the loan guaranteeunder the provisions of the Government and the guidance of the State Bank

2.2.1.3 Loan term

Loan term is based on the agreement between VPBank and clients Itdepends on the business cycle of the clients, the time for recovery of capitalinvestment of projects, ability to repay of clients, source of capital for loan ofVPBank VPBank currently applies three types of loan terms: Short-term loan(Not more than 12 months), medium-term loan (from 12 months to 60 months)and long-term loan (over 60 months)

2.2.1.4 Loan profile

Loan profile of VPbank includes application for loans, documentation of theloan project, documentation of the manufacturing, business situation, life andfinancial ability of the clients or the guarantors, secured credit profile, and otherrecords and documents (if necessary)

Application for loans must be made in the form of VPbank

Documentation of the loan project is the plan for production, business orinvestment projects relating to the use of the loan It also is the repaymentschedule for VPBank, the economic contracts of sale of materials, goods,machinery and equipment or other contracts to implement business plans Forlong-term loans, clients need send more documents of evaluation of economicand technical situation

Documentation of the production, business situation, life and financialability of the clients or the guarantors is the declaration of financial situation,manufacturing and business activities, income The clients who borrow capital innext time just add documents of the financial situation at that time

Fourth document if secured credit profile Clients whose loans secured byassets need provide documents to prove legal ownership of the asset If loans aresecured by the guarantee of other credit institutions, the clients need provide theoriginal letter of guarantee

In addition, in loan process, clients need supplement, update some otherrelevant documents, such as insurance records for asset, the documents relating

to the transfer property rights, extraordinary reports relating to mortgage

2.2.1.5 Lending interest

VPBank applies flexible interest rate policy for each client at a particulartime and in accordance with the provisions of SBV In each specific case,VPBank and clients agree to interest rate which is fixed rate, floating rate, grossinterest (for clients who receive preferential interest rates prescribed by theGovernment, SBV or VPBank)

2.2.1.6 Overdue debt

As the loans comes repayment period or maturity, if the clients do not havethe ability to repay principal in time and the loan are not adjusted or extended,the entire credit balance in agreement was changed to overdue debt

In the repayment of interest period, if clients do not have the ability to repaythe interest in time and the interest are not adjusted or extended, the entire creditbalance in agreement was changed to overdue debt

Since when the debt is changed to overdue debt, the VPBank will take allnecessary measures in accordance with the laws and regulations of SBV andVPBank to recovery debt

2.2.1.7 Payment methods

The branch applies different payment methods including: pay perpetualannuities (Clients pay principal and interest each month or quarter to paying offthe debt), pay uneven annuities (clients pay monthly principal and interest paid

on the principal balance), or pay monthly interest, principal paid at maturity.However, the repayment method which is often applied is perpetual annuitybecause this method will facilitate clients to pay (Every month pay an equal

amount of money) With small loans (under 10 millions VND), the bank appliesthe method of paying principal and interest at maturity.

2.1.2.3 Lending result of Vpbank, Cau Giay branch

Amount

of money

differe nce Total deposit 1,209,500 100 2,438,750 100 101.6 2,037,650 100 (16.4) Based

on

loan

terms

Short-term 979,695 81 1,993,570 81.7 103.5 1,609,743 79 (19.3) Medium and

Source: Annual Report 2010, 2011, 2012 by VPBank, Cau Giay - Hanoi branch

Through the table “mobilization activities at VPbank, Cau Giay branch” in

3 years, we can see the funding situation of bank

In 2010, the total funds were approximately 1,209.5 billions accounting for10% of VPBank system’s Base on loan terms, short-term deposits accounted for81% of total mobilization resources; and long-term deposit was 19% of totalresources mobilized This figure shows that in 2010, mobilized funds were

influencing the economy in general and in particular for banks (e.g increase inthe CPI over the last months about 11.75% (according to the General StatisticsOffice) ), which made funding from long-term sources meet difficulties Due tothis reason, mobilized capital resources were mostly from short-term Base onmarket, mobilization from the market (I) accounted for 54.5%; and the market(II) was 45.5% The table also shows that the funds that got from individuals andorganizations had higher than interbank Branch mobilized equity from small,residential, retail sources, and mostly short-term.

In 2011, there was a rapid increase in the total capital of banks Thedifference of total deposit increased to over 100% comparing to 2010 Thereason was that the bank attracted and enticed more new clients who ownedrelatively large deposits, which made branch’s capital become more abundant.Moreover, the total capital of bank increased steadily Short-term capitalincreased to 103.5%, medium and long-term capital increased to 93.7% over

2010 According to market criteria, raising capital from the market (I) (Fromeconomic organizations and residents) rose up 121.9% and from the market (II)(From the inter-bank) increased to 77.3% This figure suggests that themobilization from institutions, residents increases faster than the interbank Itreflects the banks’ focus of raising capital from institutions and resident because

it is cheap, effective and safe

In 2012, total raised capital decreased compared to 2011 (401,100, equal to 16.4%) The cause of decrease in funding in 2012 was changes in the economy.The people converted savings into gold instead of banking deposits Base onloan term, short-term funds reduced by 19.3%; medium-term and long-term

-reduced 3.9% over 2011 So, medium-term and long-term capital decreasedmore slowly than short-term capital Although it could increase funding costs ofbanks, this was the safe capital which can help banks gain huge profits

Proport ion (%)

Amount of money

% difference

Amount

of money

% difference Sale of loans 503,350 100 840,200 66.92 1,207,240 43.68 Based

on

loan

terms

Short-term 234,650 46.62 419,730 78.87 587,504 39.97 Medium and

long-term

268,380 53.32 415,000 54.63 604,700 45.71

Other 320 6 5,470 1,609.37 15,036 174.88 Based

Summarizing data for last 3 years of lending activities in Cau Giay branch,

we found that the lending situation had achieved initial success Evidence wasthe increase in sale of loans of bank But if looking at percentage difference ofeach year, we also found that the different tended to smaller and smaller.Comparing to the total deposits of the VPBank system, this figure was still

In 2010, sale of loans reached 503,350 millions VND accounting for 1% oftotal system’s According to loan term, sale of short-term loans was 234.650millions VND; the sale of medium and long-term was 268.350 millions VND;the sale of other loans was 320 millions VND making up 46.62%, 53.32%, and6% respectively These data indicate that although banks raised capital primarilyfrom short-term source, loans were mainly in the medium and long-term, whichreduced the stability and sustainability of the credit Base on currency, the bankmainly lent to clients by VND Lending by foreign currencies only accounted forapproximately 4%.

In 2011, total sales of loans increased to 66.92% over 2005 Lendingactivity contributed significantly to enterprises’ plan in 2010 Especially, thebank supported nearly 350 business households, individual to buy, repair houseand equipment, which stabilized and improved living standards of residents inthe city The proposition of medium and long-term loans and the proportion oflending by VND still accounted for a bigger proportion

In 2012, sale of loans increased to over 2011 is 43.68% Although sale ofloans risen, percentage difference fell down 23.24% According to the differenttypes of loans term, short term loans increased up to 39.97%, the sale of mediumand long-term loans increased up to 45.71%, and other sale of other loansincreased up to 174.88% over 2011 These figures show the scale of loansincreased differently among the different types of loans VPBank - Cau Giay hadbeen diversified the types of loans, which was a big advantage in the competitionamong the banks to keep their traditional clients and attract new and potentialclients Based on currency, the lending by VND increased up to 49.98%, foreign