Improving the quality of consumer loans at the Industrial and Commercial Bank of Nam Dinh Province

Improving the quality of consumer loans at the Industrial and Commercial Bank of Nam Dinh Province Improving the quality of consumer loans at the Industrial and Commercial Bank of Nam Dinh Province Improving the quality of consumer loans at the Industrial and Commercial Bank of Nam Dinh Province Improving the quality of consumer loans at the Industrial and Commercial Bank of Nam Dinh Province Improving the quality of consumer loans at the Industrial and Commercial Bank of Nam Dinh Province Improving the quality of consumer loans at the Industrial and Commercial Bank of Nam Dinh Province Improving the quality of consumer loans at the Industrial and Commercial Bank of Nam Dinh Province Improving the quality of consumer loans at the Industrial and Commercial Bank of Nam Dinh Province Improving the quality of consumer loans at the Industrial and Commercial Bank of Nam Dinh Province Improving the quality of consumer loans at the Industrial and Commercial Bank of Nam Dinh Province

Professional bachelor degree

in Finance-Banking-Insurance(Customer relationships management)

WORK PLACEMENT REPORT

Company: Vietinbank – Nam Dinh branchIMPROVING THE QUALITY OF CONSUMER LOANS AT NAM DINH

BRANCH 119 QUANG TRUNG

Names of student : Dang Tien Dat University year : 2017-2020 Tutor at TMU : Nguyen Thi Minh Thao Tutor at USTV : Marie-Josée Cambreling Tutor at (Company): Dang Vinh Quang

Hanoi-2020

During the internship I have completed , I have received great help andsupport from many people So I want to express my sincere thanks to all ofthem

Also, I would like to thank to all of teachers in UNIVERSITÉ VAR and Vietnam University of Commercial who provided to me basicknowledge and skills my education and internship

TOULON-Especially,I would like to thank Mrs.Nguyen Thi Minh Thao, Mr.DangVinh Quang who have excellent guidance in my education and redaction of thethis internship report

I would also like to thank Mr Le Minh Tuan, Head of Vietinbank NamDinh branch, Nam Dinh city and all of colleagues who accepted and allowed me

to access to data and documents, and who provided me professional advice andgood conditions for accomplishing my internship

Finally, I am thankful to my family for their patience and encouragement inthe course of the study, internship and other difficulties

TABLE OF CONTENT

ACKNOWLEDGEMENT i

TABLE OF CONTENT ii

LIST OF TABLES iv

LIST OF FIGURES v

INTRODUCTION 1

CHAPTER 1: OVERVIEW OF VIETINBANK AND THE INTERNSHIP 2

1.1 Company: 2

1.2 Host Firm: 2

1.3 Introduction of my internship : 4

CHAPTER 2: INTERNSHIP IMPLEMENTATION AT COMPANY 6

2.1 The internship position ,tasks, required skills, opportunities and the purpose to face 6

2.1.1 Internship position 6

2.1.2 Department structure of bank branch - Nam Dinh branch 8

2.1.3 Administrative procedures related to lending activities 8

2.1.4 Daily task 9

2.2 Definition of consumer loans 12

2.3 Consumer loan classification 12

2.3.1 Based on credit term 12

2.3.2 Based on the purpose of loan use 12

2.3.3 Based on the loan guarantee method 12

2.3.4 Based on the origin of the debt 13

2.3.5 Based on repayment method 13

2.4 The role of consumer lending 14

2.4.1 The role of consumer lending to customers 14

2.4.2 The role of consumer lending to businesses 14

2.4.3 The role of consumer lending to commercial banks 15

2.5 The quality of consumer loans at Vietinbank - Nam Dinh branch 15

2.5.1 The need to improve the quality of consumer loans 15

2.5.2 Factors affecting the quality of consumer loans 16

CHAPTER 3 : SITUATION ON THE QUALITY OF CONSUMER LOANS AT VIETINBANK – NAM DINH BRANCH 21

3.1 Overview of Vietinbank's operations – Nam Dinh branch in 2017-2019 21

3.1.1 Capital raising activities 21

3.1.2 Lending activity 24

3.1.3 Other activity 27

3.1.4 Business results 28

3.2 Current situation of consumer lending activities at the Joint Stock Commercial Bank for Industry and Trade of Nam Dinh branch in 2017-2019 29

3.2.1 Regulations on consumer lending at Nam Dinh Bank of Industry and Trade branch 29

3.3 The reality of consumer lending at Vietinbank – Nam Dinh branch 34

3.3.1 About consumer loan outstanding 35

3.3.2 Interest income from consumer loans 42

3.3 Assess consumer lending activities at Vietinbank - Nam Dinh branch 43

CHAPTER 4 : SERVICE ANALYSIS 45

4.1 Customer reaserch 45

4.2 SWOT analysis 53

4.3 KPI 54

CHAPTER 5 : SOLUTION TO IMPROVE THE QUALITY OF CONSUMER LOANS AT VIETINBANK - NAM DINH BRANCH 55

5.1 Solutions to improve the quality of consumer loans at Vietinbank 55

5.1.1 Diversifying consumer lending products 55

5.1.2 Improve facilities, facilities and equipment 55

5.1.3 Improve the quality of human resources 55

5.1.4 Promote take care of customers 56

5.1.5 Expand marketing activities in the bank 57

5.2 The difficulties encountered 58

5.3 Internship gained 58

5.4 Recommendation 58

5.4.1 Recommendations to the state bank 58

5.4.2 Recommend to relevant levels 59

5.4.3 Recommend to Vietnam Bank for Industry and Trade 60

CONCLUSION 62

LIST OF REFERENCES 63

LIST OF TABLES Table 1: Internship plan 5

Table 2.1 : Daily task 9

Table 3.1: Capital raising situation in 2017-2019 22

Table 3.2: The situation of outstanding loans by subjects in 2017-2019 25

Table 3.3: The situation of outstanding loans by term 2017-2019 26

Table 3.4: Other service activities 28

Table 3.5: Business results 28

Table 3.6a: Consumer lending situation at VietinBank Nam Dinh Branch 35

Table 3.6b: Consumer lending situation at Nam Dinh Industrial and Commercial Bank Branch 37

Table 3.7: Structure of consumer loan outstanding by the purpose of capital 38

Table 3.8 : Structure of consumer loan outstanding by collaterals 40

Table 3.9: Structure of outstanding credit outstanding by term 41

Table 3.10: Interest income from consumer lending activities at Nam Dinh

Industrial and Commercial Bank 42

LIST OF FIGURES

Figure 1: Gender of customers

Figure 2: Age of customers

Figure 3: Marriage of customers

Figure 4: Monthly income of customers

Figure 5: Customers use about consumer loan products of Vietinbank

Figure 6: Customers know consumer loan products of Vietinbank through serviceFigure 7: Feeling of customers when using consumer loan products of Vietinbank Figure 8: Customers evaluate service quality of Vietinbank

Figure 9: Customers recommend Vietinbank service to yoủ relatives and friendsFigure 10: Occupation of customers

The bank is one of the most important financial institutions of theeconomy The bank is a lender mainly to households (individuals, households)and with most local government agencies (cities, provinces, .) One of theactivities that clearly shows the existence and development of banks is creditactivities In a fiercely competitive environment, improving and expanding thequality of activities (especially credit activities) is the direction and motto of thebanks Ensuring safety and improving the quality of loan operation efficiency is

an objective requirement, a vital condition for commercial banks to survive anddevelop in a healthy way

In the context of strong economic integration, increasingly fiercecompetition requires the bank to constantly innovate and perfect and diversifyproducts and services towards potential new customers such as so it can surviveand develop

Consumer lending is a credit market segment that provides an importantsource of income and facilitates commercial banks to sell their full package ofproducts and services to customers, so the bank promotes competition andexpansion In the context of the current integration economy, people's income isincreasingly improved, the living standard is improved, making the consumptiontrend of the people increase faster than the income, making the demand forconsumer loans of people High population, this stimulates consumer lendingdevelopment Moreover, the bank recognizes that consumption is the final stage

of production, and the development of consumer products is the way to balancesupply and demand in the economy.In order to support production and businessunits to consume goods and services, the Government often stimulates demandthrough consumer lending policies

CHAPTER 1: OVERVIEW OF VIETINBANK AND THE

INTERNSHIP1.1 Company:

Vietnam Joint Stock Commercial Bank for Industry and Trade wasestablished on March 26, 1988, on the basis of splitting from the State Bank ofVietnam according to Decree No 53 of the Council of Ministers .Vietinbankhas a strong network of 148 branches, 07 member companies, 03 non-businessunits, more than 1,000 transaction offices in 63 provinces / cities nationwide.The headquarter is at 108 Tran Hung Dao, Hoan Kiem District, Hanoi City,Vietnam

The principal activities of Vietnam Joint Stock Commercial Bank forIndustry and Trade are to conduct banking transactions including mobilizing andreceiving short, medium and long-term deposits from organizations andindividuals; short, medium and long-term loans to organizations and individualsbased on the nature and ability of the Bank's capital resources; paymentsbetween organizations and individuals; performing foreign currencytransactions, international trade finance services, discounting of commercialpapers, bonds, other valuable papers and other banking services permitted by theState Bank of Vietnam

1.2 Host Firm:

Vietnam Joint Stock Commercial Bank for Industry and Trade , Nam Dinhbranch is located at 119 Quang Trung, Nam Dinh City is the cultural and socio-

economic center of the province, where many types of economic concentrationare concentrated, so customers diversity and abundance On the other hand, NamDinh Joint Stock Commercial Bank is one of the units with a unified leadershipteam, effectively implementing the functions and duties of the superior bankentrusted with the goal: "Economic development, security capital adequacy,respect the law, reasonable profit ”

Vietinbank Nam Dinh branch is located at 119 Quang Trung, Nam DinhCity is the cultural and socio-economic center of the province, where manytypes of economic concentration are concentrated, so customers are dealing withthe Bank very diverse and diverse On the other hand, Nam Dinh Industrial andCommercial Bank is one of the units with a unified leadership team, effectivelyimplementing the functions and tasks of the superior bank entrusted with thegoal: "Economic development development, capital safety, respect the law,reasonable profits ”Following the motto" Continue to innovate, improveaccountability, respect customers " That has created conditions for Industrialand Commercial Bank Nam Dinh expands business volume

Vietinbank Nam Dinh with the motto "Trust - Efficiency - Modern" has

always sought measures to develop business operations safely and effectively.Over the years, Vietinbank Nam Dinh has faced many difficulties but with thespirit of continuous efforts, striving to overcome challenges and now growingrapidly with various and diversified business contents effective Currently,Vietinbank Nam Dinh has established a business network including 1 HeadOffice, 10 Transaction Offices with over 10,000 customers currently havingtransaction relations At the same time, reforming banking operations in theareas of money, credit, payment, construction, new working styles, training ofstaff with professional skills and investment in building payment networks.electronics in the whole system, helping to quickly transfer capital in theeconomy, meeting the increasing demands of customers

1.3 Introduction of my internship :

 Why choose the topic:

In addition, commercial banks often pursue a strategy of diversifyingproducts to minimize risks and ensure business efficiency Therefore, consumercredit will be focused on promoting development in the coming time

But consumer lending to date in Vietnam is still not commensurate with itsinherent potential Therefore, as the most important financial intermediary in theeconomy, commercial banks need to promote that activity Currently, forVietnamese commercial banks, credit is still the main income-generatingactivity, so they are also very interested in developing consumer loans in thenear future Nam Dinh Joint Stock Commercial Bank for Industry and Trade is astate-owned commercial bank with an annual loan balance of up to trillions ofdong, in recent years, consumer lending activities of VietinBank have hadSignificant developments, loan quality is improved year by year

How to go along with the growth of outstanding loans is the quality ofcredit card constantly improving? This is not only a concern for Nam DinhCommercial Bank but also for commercial banks in general Given the urgentsituation of this issue, as a Banking major, I want to study and learn Therefore,

after studying, I decided to choose the topic: "Improving the quality of consumer loans at the Industrial and Commercial Bank of Nam Dinh Province" in the hope of contributing to improving the quality of credit activity

in particular and the activities of VietinBank in general in the coming years

Table 1: Internship plan

researches about company

Learn customer strategies, capitalrising strategies of Vietinbank NamDinh branch

CHAPTER 2: INTERNSHIP IMPLEMENTATION AT

_ Make an appraisal report according to the bank's process and submit tothe loan approval or refuse to approve

_ Must prepare credit contracts, mortgage contracts and related documents

- When customers request disbursement, I will monitor and prepare thedisbursement records according to the bank's disbursement regulations

- Check the use of loan capital according to the bank's regulations andmonitor the repayment of principal and interest according to the customer'scontract

- In case of a loan giving rise to bad debt, bad debt, customer relationshipspecialists must carry out the debt group transfer, handle debt recovery ahead ofschedule, initiate a lawsuit to recover the debt, urging customers pay

_ Professional credit and general economic knowledge are required.

_ Must be able to analyze quickly, efficiently and assertively at work

 Opportunities :_ Good working environment: most banks are fully equipped with theequipment and equipment needed for work In addition, colleagues are dynamic,young, friendly and sociable people

_ Because the nature of the job of personal customer relations is in directcontact with customers, I will have the opportunity to improve the ability tocommunicate and expand my relationship after many years of work

 The pressure to face:

_ Time pressure: there is no superiors or customers who like people whoare slow and sloppy Job processing speed is an extremely important standard inservice professions, especially banking

_ Sales pressure: the majority of banks use sales targets to promoteemployee work If I do not reach sales, will face many problems such as reducedwages, not receiving bonuses, penalties, even dismissal,

_ Pressure on accuracy: Besides the speed factor, it also needs accuracy Ifthe evaluation of records is inaccurate will lead to great harm

_ Pressure on job responsibilities: because I have to search for customers,appraise records, should be responsible for the losses that can cause the bankbecause customers cannot pay debt

2.1.2 Department structure of bank branch - Nam Dinh branch

Vice Director Vice Director

Director

Vice Director

Source: (Organizational structure of the management system of Industrial and Commercial Bank of Nam Dinh branch )

2.1.3 Administrative procedures related to lending activities

The first is that the speed of issuing land use right certificates, houseownership and title transfer and tax payment procedures in Vietnam is stillvery slow and heavily administrative This makes it difficult for both theborrower and the bank itself Many customers, although having legal real estate,have not yet been issued with a certificate, are able to repay debts well, but stillcannot borrow capital Or because capital is needed for a short time but due tothe time of procedures related to collaterals is too long, it is impossible toborrow bank loans, leading to many customers having to look to the non-bankmarket with interest rates higher

The procedures related to collaterals such as notarization of mortgagecontracts, registration of security transactions take a lot of time, the cost makespeople afraid to borrow money, so they often turn to Other loan channels

The process of handling collaterals and selling assets in Vietnam is consuming and does not protect the interests of lenders A bad credit goes to thecourt to solve, the sale usually lasts 1-2 years which costs time and money

time-2.1.4 Daily task

Table 2.1 : Daily task

3/02/2020 -14/02/2020 • Over view of Nam Dinh Joint

Stock Commercial bank forIndustry and Trade: The process offormation , development , majorbusiness fields, products andservices provide by the bank

119 Quang Trung, NamDinh province, NamDinh city

Warehous

QLRR

General room

Organizati

on and administra tion room

Transactio

n offices

 A brief overview of themanagement structure andoperation of Vietnam Joint StockCommercial Bank for Industry andTrade Nam Dinh province Learnfunctions and tasks

• Learn about technical facilities,equipment and the application ofmodern technology in the operation

of the unit

119 Quang Trung NamDinh province, NamDinh city

17/02/2020- 9/03/2020 • Learn about the Bank's

23/03/2020- Mid-term report completion:

Internship plan report, overview ofinternship location

• Submit mid-term reports,individual internships, detailedinternships and internships diary

• Learn account opening procedure,simple transaction process at thecounter, access related documentsand documents

• Learn account opening procedure,simple transaction process at the

31/03/2020 counter, access related documents

• Access the process of changinginformation at the counter

• Learn the process of opening andclosing cards

• Access to the process of openingcards, closing cards, and registeringrelated services

• Learn about Vietinbank savingsproducts

• Learn and access to savingsdeposit procedures, relateddocuments

(To prevent the spread of theCOVID-19 epidemic, Vietnamese

businesses have allowed interns towork at home)

• Learn customer strategies, capitalraising strategies of VietinBankNam Dinh branch

businesses

2.2 Definition of consumer loans

Referring to the main activities of the bank, it is impossible not to mentionlending activities Especially for Vietnamese banks, the profit from lendingactivities makes up a large part of the total profit Therefore, it can be said thatlending is a key activity of commercial banks

On that basis, the lending activity can be understood as follows:

“Consumer loan is a transaction of assets (money or goods) between the lender(banks and other financial institutions) and the borrower Borrowers(individuals, businesses and other entities), in which the lender transfers assets

to the borrower for a specified period of time as agreed upon, the borrower isresponsible for unconditional repayment Principal and interest to the lenderwhen the payment is due ”

2.3 Consumer loan classification

2.3.1 Based on credit term

• Short-term consumer loans (with a term of less than 12 months): Thistype applies short-term interest rates, often used to provide loans to serveconsumer needs and personal activities

• Medium-term consumer loans (from over 12 months to 60 months):These loans often serve the needs of fixed asset procurement

• Long-term consumer loans (from over 60 months): This type of credit isused to fund capital construction, improvement and expansion of production

2.3.2 Based on the purpose of loan use

• Residential consumer loans

• Non-residential consumer lending

2.3.3 Based on the loan guarantee method

• Consumer loan secured by assets

Mortgage loan: is a form of bank lending to customers for consumptionpurposes but the bank keeps customers 'assets in order to ensure customers' debtrepayment obligations

Salary mortgage loan: Usually applied to customers who have stableincome jobs (working for the State environment), in addition to monthlyexpenses, they have accumulated enough to repay loans.

Lending with secured assets formed from loan capital: A form of consumerlending applicable to customers who need to borrow to buy assets of great valueand long-term use

• Unsecured consumer lending: A form of consumer lending that isguaranteed not by assets but based on the borrower's reputation and relationshipwith the bank

2.3.4 Based on the origin of the debt

• Indirect consumer lending: A form of bank purchase of debts incurred by

a retail company that sells goods or services to consumers, which is lent throughbusinesses that sell goods or services without direct contact with Customer.After that the retail company and the consumer enter into a sales contract.Normally, consumers have to pay a part of asset value in advance, the retailcompany will hand over the assets to consumers and officials who sell goodsbear the goods to banks The bank, based on the set of documents, will pay theloan to the retail company Finally, the borrower pays the installment paymentperiodically to the bank

• Direct consumer lending: A consumer loan in which the bank directlycontacts customers to issue loans and recover debts

2.3.5 Based on repayment method

• Installment loan: This is a loan that borrowers have to pay loan (includingboth principal and interest) to the credit institutions for many consecutive terms

as agreed in the credit contract (usually monthly or quarterly) Interest rates forinstallment loans

are often high in the lending interest rate framework, banks often requirecustomers to pay an amount in advance and pay attention to the type ofcollateral

• Non-installment consumer lending: is a form of loan in which the loan ispaid to the bank only once upon the expiry of the contract agreed by bothparties.

• Circulating consumer lending: A form of lending where the bank allowscustomers to use credit cards or issue current account overdraft checks to pay forgoods and services

2.4 The role of consumer lending

2.4.1 The role of consumer lending to customers

For consumers, especially those with low average income, through theconsumer lending business, they will be able to buy necessary goods of highvalue, satisfying their demand use and improve life

In fact, there are many natural and essential needs that are important in lifefor individuals and households.These needs must be met sooner or later.complacent For example, the need for shopping, repairing houses, buyingappliances, buying motorbikes, cars, preparing for marriage, travel, studying Therefore, people often buy houses, living facilities when they get older,when the benefits of enjoying are all decreasing Consumers will therefore find away to cleverly combine demand fulfillment with the time and solvency ofpresent and future, meaning consumers will find ways to enjoy Advancepayment of money will be available in the future

2.4.2 The role of consumer lending to businesses

If businesses want to increase profits for their companies, promoteproduction, one of the important stages is the consumption of goods, because it

is the final and important stage for businesses to account and have theDevelopment-oriented strategy for the business With the needs of customersincreasingly diverse and quality but can not be satisfied with the existingfinancial resources, the goods of the business can not be stagnant in thewarehouse waiting for customers' financial resources to accumulate enough tobuy , and bank financing is an optimal solution for businesses to accelerateproduct consumption

2.4.3 The role of consumer lending to commercial banks

With the main activity of taking deposits, the responsibility to repay anduse that money to make profits, commercial banks need to make efforts to raisecapital, besides, they must exploit the credit market thoroughly to, that is, seekways to ensure that the ability to meet and on that basis best satisfies the mostneeds of the economy 's lending Therefore, it would be wrong and omiss toignore the consumer lending market where the size of a small number of needs

is small but the number of lending needs is based on the number of potentialcustomers and the variety of consumer demand is extremely large Therefore,commercial banks are always interested in and focusing on developing this type

of loan

In addition, the risk of consumer lending is often very small and individuallending compared to customer loans is a simple business Meanwhile, the bank'srevenue through this consumer lending activity is significant due to theattractive consumer credit interest rates, especially the very high interest rate oninstallment loans, which makes the operation Consumer loans account for asignificant proportion of the Bank's profit structure Therefore, the expansion ofconsumer lending to individuals and households is a promising and safeeconomic direction for the Bank

2.5 The quality of consumer loans at Vietinbank - Nam Dinh branch

2.5.1 The need to improve the quality of consumer loans

2.5.1.1 For economy

Today, along with the "storm" of the economy, consumer lending plays animportant role in this development Therefore, its quality is also moreconcerned Good consumer loan quality means that the bank has met customerneeds well, creating a profit for the bank The Government's policies have beenincreasingly implemented in the right direction such as: rational economicrestructuring, balanced development among industries and regions throughoutthe country thanks to that, people's living standards have been improved Inaddition, the loan quality also contributes to curb inflation, the amount of capital

is used effectively and rotates faster to avoid stagnation This is also the cause ofinflation.

2.5.1.2 For customers

Businesses are trying their best to best serve this god because according tothe current concept, customers are the ones who keep the business alive Attractmore customers, the more businesses are likely to exist and develop in thefuture In banking, this philosophy still has its meaning Therefore, when theloan quality is improved, the needs of customers are met in the most completeand convenient manner However, not only did their needs be met, but at thesame time, the customers were also more interested in the Bank such as:checking, controlling the use of capital From there, helping customers detectand correct shortcomings errors in its financial operations The ultimate goal is

to contribute to the development of production, business and financial health ofcustomers

2.5.1.3 For commercial banks

The last object related to improving the quality of consumer loans is alsothe Bank The increased loan quality will mean a reasonable increase in profits.Show that the bank has many efficient customers, this will increase itsreputation to a new level, leading to a rapid increase in the number of customers.Along with that is the increasing debt balance and the existence anddevelopment of the bank in the future guaranteed with its loyal customer base

2.5.2 Factors affecting the quality of consumer loans

There are many factors that affect consumer lending, but we can divide itinto two main types of factors: the group of objective factors and the group ofsubjective factors

2.5.2.1 Group of objective factors

This is a group of factors that the bank itself does not control, it includesthe following factors: economic environment, legal environment, social

environment, government policies.

a Economic environment

This is a factor that has a great influence on the bank's consumer lendingactivities It may be a favorable condition promoting this activity or vice versa.The economic environment includes: the level of economic development,average income per capita, people's living standards When the economy has ahigh and stable growth rate, people's living standards are also improved, then thedemand for consumption also increases because they are assured about theirincome in the future hybrid As a result, consumer lending activities will haveconditions to thrive When the economy is in crisis or stagnation, the psychology

of consumers is also very careful in spending because they want to reserve forthe future, so the demand for consumer goods only stops at a sufficient level soconsumer lending will be more difficult

b Regulatory environment

We see that any activities of individuals or social organizations mustcomply with the laws of that country and country In this way, the country willhave a long-term stability, and therefore the operation of banks in general andconsumer lending activities in particular are also within the framework of thelaw, it must also follow the State regulations, laws of credit institutions, civillaw and other regulations If the law on general consumer lending is unclear,lacks synchronism and has many gaps, it will make it difficult for banks tooperate, there is no legal basis to solve arising problems If the law stipulatesfully, clearly and strictly, it contributes to promoting the healthy development ofbanking activities in general and consumer lending in particular And when there

is a law on consumer lending, it will facilitate this activity to develop more andbring high efficiency It is a key factor affecting the goals and strategies of eachbank

c The social environment

These factors include customs, educational level, lifestyle, habits It willgreatly affect consumer needs and thereby affect the consumer lendingrelationship between customers and banks For example, depending on the

region with different living habits, the salary they spend to satisfy the presentand the future is different There are places where they tend to spend theirincome mainly on eating, but also where they spend less on food and drink and

to accumulate more home appliances Or there are also places where people arehard-working, diligent, the demand of these places is not high, and there are alsoplaces where people come for entertainment, for consumption, these placesoperate Consumer loans have many opportunities to grow and expand

d Policy of the Party and State

These are macroeconomic policies and often have a relatively long time It

is usually set according to the task of each year For example, to encourageforeign investment, to increase investment in a number of domestic industries, tostimulate demand to facilitate circulation of monetary goods to promoteeconomic growth, or to reduce the ceiling interest rate regulation of all banks All of these are aimed at making the economy grow and develop sustainably, ifdone properly, people's lives will be improved, society will develop needs.consumption and educational level also change towards favorable conditions fordevelopment of consumer loans Along with it are policies on income tax, tax ongoods and services, incentive programs to support development, povertyreduction, economic development in remote areas, mountainous areas andislands Such factors have an immediate and long-term impact on people'sconsumption demand

2.5.2.2 Group of subjective factors

This group of factors depends on the bank itself Therefore it will be thedominant banking factor If the bank has a comprehensive and long-termstrategic policy for consumer lending activities, this activity will have conditionsfor development and more and more perfect But if the bank does nothing toencourage it, this activity will have no opportunity and no motivation to thrive

a Credit policy

The credit policy is the limit for a single customer, interest rates and fees,collaterals and the way to handle bad debts Therefore, an appropriate and

diversified credit policy will attract many customers to apply for a loan, andwhen it meets the needs of consumers, the bank will certainly succeed inexpanding for Consumer loans In contrast to the inflexible, inflexible creditpolicy, it will limit borrowing and reduce the operational competitivenessamong banks.

b Customer evaluation

This process is very important for considering whether or not to lend, but it

is also a barrier if it is too complicated and cumbersome It discourages themigrant while this process takes them a lot of time and effort And in order tolimit this, the evaluation must be based on reasonable scientific procedures and

in parallel with it, the implementation must be strict, it is the decisive factor forevaluation quality and quality Credit In addition, mobilized capital and equitycapital play a very important role in the bank's business operations, it also partlyshows the reliability and ability of that bank

c Credit information

The nature of the bank is borrowing and lending, which relies on the trust

of the bank with that customer: what financial situation they are, able to repaythe interest and principal within the time period which time In order to make adecision whether or not to lend, the bank must have reliable information, inother words, the quality of credit information For example: status, prestige,management capacity, social situation, economic development trends And therequest of that credit information must be accurate, timely and complete, for allThe information is only valid for a definite period of time and some banks donot catch the information in time so they have not met the demand for capital forcustomers, limiting the expansion of consumer loans

d Quality of credit officers

The quality of credit officers is reflected in professional qualifications andethics, as well as the ability of credit officers to communicate If credit officershave good professional qualifications but do not have professional ethics, thebenefits of the bank will be more harmed than the benefits they bring But

besides that, credit officers need to have a high level of expertise, a deepunderstanding, so that the customer appraisal will be accurate, thereby making anew and correct decision, minimizing risk to the bank Because customers aredirect contacts with credit officers, according to them, credit officers will be theface of the bank The friendliness and openness proper will make customersmore satisfied and trust in the bank and thus become more familiar customers ofthe bank.

CHAPTER 3 : SITUATION ON THE QUALITY OF

CONSUMER LOANS AT VIETINBANK – NAM DINH

BRANCH3.1 Overview of Vietinbank's operations – Nam Dinh branch in 2017- 2019

3.1.1 Capital raising activities

Capital mobilization is an important operation of the bank, it collects idlecapital of all economic sectors to create capital for the bank's business, thecapital mobilization is carried out Mainly through forms such as:

- Maintain traditional customers who already have a balance at the bank

- Reach and market potential customers, and attract customers withseasonal sources of free long-term capital in the area

- Diversifying forms of capital mobilization, applying flexible interestrates, convenient methods of quick deposit and promotion policies to attractcustomers

- Finding and attracting large amounts of capital from economicorganizations and financial institutions

Capital raising activities are a prerequisite for other activities ofcommercial banks Therefore, one of the important goals in the bank's operation

is to promote capital mobilization Through the following data table, we will seethe results of capital mobilization of Vietinbank- Nam Dinh branch:

Table 3.1: Capital raising situation in 2017-2019

- Deposits with term of

less than 12 months

- Deposits with term

over 12 months

(Source: Report on business results in 2017-2019)

Based on the table of capital mobilization above, we see: The mobilized

capital in 2017 is VND 3,886 billion, 2018 is VND 3,769 billion, down from

VND 117 billion in 2017, equivalent to a decrease of 3.01 % In 2019, the

mobilized capital is VND 4,417 billion, an increase of VND 648 billion

compared to 2018, corresponding to the growth rate of 17.19%

 Classified by subjects of mobilization:

Deposits from residents in 2017 were VND 2,032 billion (equivalent to

52.29%), in 2018, deposits of residents were VND 1,949 billion (equivalent to

51.72%), decreasing by VND 83 billion compared to 2017 corresponding to the

reduction rate of 4.08% In 2019, the deposit of the population was VND 2,215

billion (accounting for 50.14% of the proportion), an increase of VND 266

billion compared to 2018 with a corresponding increase of 13.65%

Deposits of economic organizations in 2017 were 1,854 billion VND

(accounting for 47.71% weight), 2018 was 1,820 billion VND (equivalent to

48.28%), down 34 billion VND compared to 2017 equivalent to speed of 1.83%reduction In 2019, deposits of economic organizations were VND 2,202 billion(accounting for 49.86%), an increase of VND 382 billion compared to 2018 andequivalent to an increase of 20.98%.

Thereby, we can see that the proportion of capital mobilized from thepopulation always accounts for a larger proportion than the capital mobilizedfrom economic organizations and tends to increase The bank is now payingmuch attention to individual customers

• By term:

Demand deposits: 2017 was VND 1,119 billion (accounting for 28.95%),

2018 was VND 949 billion (corresponding to the proportion of 25.17%),decreasing by VND 170 billion compared to 2017, corresponding to reduction is15.19% In 2019, demand deposits were VND 1060 billion (accounting for24.02%), increasing by VND 111 billion compared to 2018 with acorresponding growth rate of 11.69%, but still lower than VND 59 billion with2017

Deposits with term of less than 12 months: 2017 was VND 1649 billion(accounting for 42.65%), in 2018 was VND 1670 billion (44.32%), an increase

of VND 21 billion compared to 2017, corresponding to the growth rate is1.27% In 2019, the term deposit under 12 months was VND 2056 billion(46.54%), increasing by VND 386 billion compared to 2018 with thecorresponding growth rate of 23.11%

Term deposits with over 12 months: 2017 was VND 1,098 billion (28.4%),

2018 was VND 1,150 billion (accounting for 30.51%), increasing by VND 52billion compared to 2017 with an increase of 4 ,seventy three% In 2019,deposits with term of 12 months and over were VND 1,301 billion (29.44%),increasing by VND 151 billion, equivalent to an increase of 13.1%

Thereby we can see: In the structure of capital resources by term, depositswith under 12 months account for a large proportion and tend to increase,deposits with terms over 12 months also tend to increase, deposits Non-term

deposits tended to decrease sharply From that, it can be seen that the bank haspolicies to increase the proportion of time deposits in order to boost the focus onstable capital sources and avoid the passivity of customers withdrawing money.

3.1.2 Lending activity

Lending activity is the activity that creates the main revenue for the bank,deciding the business results of the whole bank The purpose of this activity is toprovide diversified and diversified loan products, serving the borrowing needs

of domestic and foreign businesses, organizations and individuals

Supporting the demand for short, medium and long-term loans in domesticand foreign currencies for businesses, organizations and individuals of alleconomic sectors, investing in the fields of production, business, trade andtranslation service,

Lending for living needs helps customers (who have stable income, but areunable to do so) to purchase household appliances (transportation, electronics,refrigeration, etc.) ), repairing houses, repairing motor vehicles, doing householdeconomy, studying abroad,

Through the table below, we can see the outstanding loans of the JointStock Commercial Bank for Industry and Trade of Nam Dinh branch:

Table 3.2: The situation of outstanding loans by subjects in 2017-2019

(Unit: VND billion)

Targets

Amount of money

Propor tion (%)

Amoun

t of money

Prop ortio n (%)

Amount of money

Proportion (%)

(Source: Report on business results in 2017-2019)

Outstanding loans of corporate customers in 2017 were VND 1,756 billion

(equivalent to 50.2% weight) In 2018, corporate customer loan balance was

VND 1,928 billion, an increase of VND 172 billion compared to 2017,

corresponding to an increase of 9.8% In 2019, corporate customer loan balance

was VND 2,169 billion, an increase of VND 241 billion with an increase of

12.5%

Outstanding loans of retail customers in 2017 was 1,741 billion VND

(equivalent to 49.8% weight) In 2018, outstanding loans were VND 1,874

billion, increased by VND 133 billion compared to 2017, equivalent to a growth

rate of 7.64% In 2019, individual customer loan balance was VND 2442 billion,

an increase of VND 568 billion compared to 2018 with a growth rate of 30.3%

Thereby, we saw that the outstanding loans of both corporate and

individual customers increased in the period of 2017-2019 The reason is that

the economy is stable and regains its growth momentum, so economic sectors

such as enterprises actively borrow to invest in expanding production and

business; individuals have a stable income, meeting the requirements of the

borrowing life to serve consumption, improve and improve their lives

Amount Proportion Amount Proportion Amount Proporion

Outstanding loans in 2018 were VND 3,497 billion, in 2017 was VND3,802 billion, an increase of VND 305 billion compared to 2017, equivalent to

an increase of 8.72% In 2019, the outstanding debt was VND 4,611 billion, anincrease of VND 809 billion compared to 2018 with an increase of 21.27%

Outstanding short-term loans: in 20167 was VND 1,924 billion (accountingfor 55.02%) By 2018, short-term loan balance was VND 2,161 billion (with aproportion of 56.84%), an increase of VND 237 billion compared to 2017,corresponding to a growth rate of 12.32% In 2019, short-term loan balance wasVND 2,405 billion, an increase of VND 244 billion compared to 2018 andcorresponding to an increase of 11.29%

Outstanding medium and long-term loans: in 2017 was 1,573 billion VND(44.98%), in 2018 was 1641 billion VND (corresponding to 43.16%) increased

68 billion VND compared to 2017 and increased at a rapid rate is 4.32% By

2019, medium and long-term loan balance is VND 2,206 billion (47.84%), anincrease of VND 565 billion compared to 2018 with a corresponding growth rate

of 34.43%

The reason is that the economy is stable and regains its growth momentum,

so all economic sectors actively borrow medium and long-term loans to expandproduction and business The bank is expanding its lending business andapproaching closer to customers inside and outside the area to increase loansales

3.1.3 Other activity

In addition to the two main activities of capital mobilization and lending,the bank also provides other services such as:

• Providing domestic and international payment services:

- Receive payments in VND and foreign currencies (USD and EUR) forindividuals, businesses and economic organizations

- Make payments by many methods such as: money transfer, collection,quick payment, credit payment of L / C documents,

• Foreign currency trading

The Bank carries out a number of major foreign currency transactions togenerate additional revenue for the unit, such as:

- Trading in foreign currencies with customers: spot trading, term trading,swaps, to meet the foreign currency-related demands of customers and banks

- Trading in price differences: relying on the listing of exchange rates thatare inconsistent between markets to make a profit without having to investcapital and without risk

- Payment of salaries to officials and employees through card account

- Centralized account management

- Quick remittance service

- Internet banking services

Here are the results of other services of Nam Dinh Commercial Joint StockBank in 2017-2019

Table 3.4: Other service activities

(Unit: Billion VND)