Solutions to improve lending efficiency at vietcombank

- Money creation function When performing the function of credit intermediaries and payment intermediaries, commercial banks can generate a credit bookkeeping, shown on customers' paymen

1 The urgency of the topic

The bank is an important entity and a leading channel of capital in each country's economy In the current competitive environment of the banking industry, each bank needs to have the right orientations and goals to help the bank survive and develop Besides operations such as accepting deposits, providing payment services through accounts, granting credits, banks must always pay special attention to lending activities Lending is one of the traditional activities that bring a crucial source of income for the bank It can be said that this is the business that the bank has the closest approach to the life of the people, to support them in improving their material and spiritual life

Human needs are increasing with the development of social-economy, along with a series of requirements that need to be satisfied The financial ability has become a very important factor to finance such needs, but most times the need for loans often appears before the private equity fund is formed There is a separation of time

factors for the loan needs and financial capacity of each person The credit was then used as an advance of the future private equity fund to satisfy current needs Because of that purpose, right from the time the State Bank issued the policy of stimulating demand for loan incentives and implemented by commercial banks, this type has received a positive response from the worker

Lending not only benefits the Bank but also has a profound social meaning, contributing to improving the lives of employees better and better At the same time, it is the link between the employees and the agencies and enterprises where they work From there, it can increase labor capacity and the ability to contribute to society Along with the trend of diversification in commercial bank operations and the fierce competition in resolving output for capital sources of banks The lending activity used by banks is the main solution

In recent years, lending activities have brought many benefits to the Bank and are

on the way of further development However, besides, the increasing competition

of domestic commercial banks and the introduction of international banks have somewhat reduced its effectiveness In the future, if Vietnam Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) wants to continue

to develop and gain the confidence of its employees, the Bank needs to change the way it operates That's why I chose the topic: "SOLUTIONS TO IMPROVE LENDING EFFICIENCY AT VIETCOMBANK", to come up with some solutions

to improve the loan performance of Vietcombank

2 Subjects and research purposes:

Research subjects: Lending activities at Vietcombank

Research objectives: Assess loan effectiveness at Vietcombank to provide solutions and recommendations to improve and enhance loan efficiency

5 The structure of the thesis

Besides the introduction and conclusion, the thesis consists of 3 chapters:

Chapter 1: Literature review of lending efficiency at commercial banks

Chapter 2: Lending efficiency at Vietcombank in the period of 2017-2019 Chapter 3: Solutions to improve lending efficiency at Vietcombank

CHAPTER 1 LITERATURE REVIEW OF LENDING EFFICIENCY AT COMMERCIAL BANKS

1.1 Overview of commercial banks

1.1.1 Definition of commercial banks

The concept of commercial banks has many and depending on each aspect there will be different definitions

According to Clause 3, Article 4 of the 2010 Law on Credit Institutions, a commercial bank is a type of bank that is allowed to conduct all banking activities and other business activities in accordance with this Law to spend profits

In France, they define commercial banks as enterprises whose occupation is

to receive public money in the form of deposits (or other forms) and use that resource for themselves in the credit, credit, and finance

From the above considerations, I use the following definition: Commercial banks are financial intermediaries, operating under the model of an enterprise Commercial banks trade in monetary, credit, and financial-banking services according to market principles Commercial banks operate for profit purposes

1.1.2 Function of commercial banks

Commercial banks have three main functions: credit intermediation function, payment intermediary function, and money creation function

- Credit intermediation function

This is considered the most important function of commercial banks In the economy, there are always two entities, one is a temporary spending shortage, and the other is a temporary surplus These two things exist independently of the bank and money from the second group will be transferred to the first group if both are

mutually beneficial At that time, financial relationships will be formed, which can

be direct credit or indirect credit Due to the limited information between different entities, it is necessary for financial intermediaries such as commercial banks to help connect capital holders and those who need capital Thanks to the professional operation of commercial banks, the subjects are connected with each other and create benefits for the parties For depositors, they have additional income from their free temporary money through bank deposit rates Moreover, deposits in banks, the deposit is secure and has convenient payment services For borrowers, they will have business capital, spending payment without having to search for capital

For the economy, the function of credit intermediaries contributes to promoting economic growth because it helps to promote the process of capital circulation and promote production and business development Since then, meet the capital needs

to ensure the reproduction process is carried out continuously With this function, the Bank will act as a financial intermediary, both accepting deposits and being lenders, and enjoying the difference between the deposit rates and the lending rates Therefore, lending is always the key activity and the traditional activity that creates a big profit for commercial banks

Figure 1- The credit intermediation function of commercial banks

(Source: author)

- Payment intermediary function

With this function, the bank acts as an "accountant and cashier" for businesses and

individuals with bank accounts The bank collects and pays the goods and services

at the request of customers, the payment is deducted from the customer's deposit

accounts The bank provides customers with many optimal payment methods such

as checks, collection/payment orders, credit cards, etc to help debtors pay quickly,

save time, and ensure safety Thereby, this function promotes the circulation of

goods, speeds up the speed of payment, the speed of capital flow, contributing to

economic development Besides, the non-cash payment through banks reduces the

amount of cash in circulation, helping to save printing costs, counting, preserving

money Collecting payment fees also helps increase profits for the bank, increase

the loan source shown on the balance in customers' deposit accounts

- Money creation function

When performing the function of credit intermediaries and payment intermediaries, commercial banks can generate a credit (bookkeeping), shown on customers' payment deposit accounts at banks From the initial deposit, the Bank lends by wire transfer, after which a portion of the amount will be returned to the bank as a deposit The continued and repeated process will result in deposits that are many times larger than the original deposits Thereby, the commercial banking system has increased the total means of payment in the economy, meeting the payment and payment needs of the society

The functions of commercial banks are closely related and complementary, of which the credit intermediation function is the most basic function, creating the basis for the implementation of the following functions When performing the function of intermediary payment and money creation function, the bank can increase credit capital, expand credit activities

1.1.3 Operation of commercial banks

 Capital mobilization and development activities

The bank mobilizes idle funds to make credit capital for lending Capital sources of commercial banks include Statutory Capital; Reserve funds; Mobilized Capital; Borrowed Capital; Trust capital; Other Capital Capital mobilization and development activities include activities such as the development of charter capital and funds, receipt of deposits, loans, receipt

of trust funds, and management of other deposits In particular, receiving deposits is an important and traditional activity in raising capital at banks According to Clause 13, Article 4 of the 2010 Law on Credit Institutions:

“Receiving deposits means activities of receiving money from organizations and individuals in the form of demand deposits, term deposits, and savings

deposits savings, issuance of deposit certificates, promissory notes, treasury bills, and other forms of deposit receipt on the principle of a full refund of principal and interest to depositors as agreed "

• Capital management and use activities

Capital management and use activities include Management of compulsory reserve assets and liquidity reserves, lending and discounting of valuable papers for organizations and individuals, financial leasing, bank guarantees for customers, investing activities, contributing capital, buying shares In particular, lending and investment activities are the two most important capital-using activities, which determine the viability and operation of banks

• Service fee collection

Fee collection service activities of commercial banks include domestic and international payment services, a collection of taxes, fees and charges; payment for remittance and remittance; services of providing credit cards, payment cards, ATM cards .; service of receipt and storage of precious assets and valuable papers; trading and buying and selling foreign currencies, gold, silver and gems; financial advisory, advice on issuing stocks and bonds; securities investment brokerage; insurance services

• Other business activities

In addition to the three main activities above, the bank also has a number of other business activities as follows:

- Borrowing capital from Central Banks, Credit Institutions, Financial

Institutions

- Trading and providing foreign exchange services and recycled products

- Bond trading

- Contributing capital, buying shares

1.2 Lending activities at commercial banks

1.2.1 Definition of lending at commercial banks

In Vietnam, Decision 1627 / 2001_QD_NHNN dated December 31, 2001 of the Governor of the Bank on the issuance of the lending regulations of credit institutions, stipulates that: Lending is a form of credit extension by

commercial banks commercial, ie the bank gives money to the borrower to use for a certain purpose and time as agreed, with the commitment that the customer must pay both principal and interest

1.2.2 Characteristic of lending at commercial banks

- Lending activities are expressed in cash or representative money Due to the nature of its business, to meet the demand for capital in a timely and adequate manner, the bank mainly uses the form of currency for its operations

- Borrowers are individuals with very diverse and diverse loan needs Due to diverse borrowers, the collection of bank information about customers is often complicated On the other hand, because customers' loan demands are for various purposes such as consumption and business, the source of debt repayment is collected from borrowers Therefore, when making a loan, the bank must verify the borrower's income to assess the repayment ability of the customer

- Lending activities are also risky, as the subjects vary from individuals, households to companies and businesses, so besides external factors such as natural disasters, loss season, unemployment, economic cycles also have subjective factors from customers In addition, even though banks hold collateral, customers still face the risk of income reduction, business stagnation, or even bankruptcy On the other hand, lending rates are often rigid, so when the capital mobilizing interest rates rise, banks face interest rate risks

- Customers' demand for loans is often inelastic with interest rates Typically, borrowers are more interested in the amount they pay than the interest they incur, and the majority of individual customer loan needs are smaller than corporate customers

- Income level and education level are two variables that are very closely related to customers' loan needs When customers' income is high, the satisfaction of their personal needs is also higher, so the demand for loans also increases

- The quality of financial information on borrowers is usually not high Information about customer income, consumption plan, financial capacity, and reputation of customers may be hidden by customers, changing information that credit officers can hardly recognize and distribute

- Principal repayment sources of customers can fluctuate greatly, depending on their work history, skills, and work experience These factors can impact clients' work efficiency and the main source of funding

- Loans are often secured by assets: Due to the high risk of lending, most of them are secured by assets, usually those that are easy to sell in the market

1.2.3 Function of lending activities at commercial banks

• For commercial banks

- Diversifying commercial products and services:

Today, in the growing trend of the increasingly competitive banks market, diversification of loan products is essential The diversification of lending products will help the bank increase its competitiveness among domestic and foreign banks,

at the same time satisfy the increasing demands of customers, and attract more new customers

- Helping banks spread risks:

Diversifying the bank's activities both helps the bank disperse risks and helps the bank create close relationships with customers and help the bank adapt in time to market changes

- Increasing income for banks:

In addition to the above roles, lending also helps the bank increase and expand relationships with customers, thereby increasing its ability to mobilize capital, so that the bank can diversify its business activities and income improvement for the bank

• For customers

- For consumers:

In life, people have a lot of needs for using nature and essential money: buying land to build houses, buy houses, buy cars, study but not yet able to afford it, which will give rise to consumer demand for loans Consumer loans will help consumers be able to buy the goods they need, meet spending needs, and improving the lives of borrowers At the same time, when the loan has met their

essential needs, it will then motivate them to work and stimulate learning to work effectively and achieve better results

- For production and business enterprises:

Creating conditions for enterprises to quickly turn capital production: One of the difficulties of enterprises in production and business is to want to spend and use goods but they do not have enough economic potential Then, the loan will help customers be able to pay and purchase goods, which will help businesses sell goods to recover capital and return capital faster Maximize profits and expand production scale for businesses: Thanks to the support from lending from banks will stimulate the increase in consumption of goods and services in the market, helping businesses to increase profits and expand production and business

1.2.4 Categories of lending activities at commercial banks

• Sort by loan term

- Short-term loans: loan term up to 12 months, to meet the needs of short-term expenditure or working capital needs of enterprises Short-term capital flows along with the business cycle of customers, so the payback period is quick, liquidity risk

is also reduced Short-term lending rates are often lower than medium-long term loans and risks are also lower

- Medium-term loan: loan term is from 12 months to 60 months

- Long-term loans: the loan term is over 60 months

Providing medium and long-term loans to customers to support the purchase of fixed assets, purchase of equipment, setting up new projects, expanding production and business, etc Due to customers' fixed assets and capital, medium, and long-

term credits of commercial banks are often associated with investment projects However, medium-term credit is usually the intensive investment, while long-term loans focus on expansion projects Medium and long-term borrowers often pay by installments, which helps the bank maintain liquidity, reduce risks, and also secure debt collection However, due to the longer loan term, customers 'ability to predict repayment is still limited and customers' financial ability may change after a long time, so risks of medium loans long-term loans are often higher than short-term loans The bank will require customers to have collateral to borrow medium and long-term loans The interest rate for medium-long-term loans is usually higher than short-term loans and this interest rate is adjusted according to market

fluctuations Interest rates vary by industry, project, and agreement of the bank with customers

• Classification by use purposes

- Consumer loans

The purpose of a consumer loan is that the customer must use the loan for

consumption, property procurement, and personal purposes The bank has a wide range of consumer lending products to meet the daily spending needs of its

customers Consumer loan packages are often short term, when people want to buy

an item, or pay for living that they do not have enough money, then these loan products will quickly meet the needs of the customer For small and short-term consumer loan packages, the bank does not require customers to mortgage with assets, or the bank will collect the debt through the customer's salary fund For large loans, customers are mortgaged with the same property they intend to buy or the customer's existing assets The main objects of consumer loans are individuals and households Consumer loans are small in size but the number of loans is large,

so consumer loans often carry more risks than business loans, and banks will have

to manage more Due to the number of loans being numerous However, consumer lending is more profitable for commercial banks Interest rates for consumer loans are usually set by banks throughout the life of the loan

- Business loans

This loan is mainly for individuals, households, or organizations that want to

borrow for their business activities (expanding production scale, building factories, buying equipment, etc supplies, ) You are required to repay the loan both

principal and interest upon maturity In contrast to consumer loans, business loans are often large in size but small in number, so the bank will spend less on

administrative costs Business lending rates are also less than consumer loans and flexible interest rates, which vary with market fluctuations

• Sorting by trustworthiness with customers

- Lending with collaterals

Lending with secured assets means lending with customers' properties as loan security, in the form of a pledge, mortgage or guarantee of a third party In

business or in daily consumption, there are many risks that customers cannot

repay, so banks need to have customer assets or have the second source of

repayment for the worst case This is to avoid damage to the bank

- Lending without collaterals

Lending without collaterals means that banks will lend money to customers without collaterals, mortgages or guarantees of a third party, lending only based on the reputation of the customers themselves Customers who are traditional, honest

in business, have good financial ability, good management and effective business

plan, the bank can provide credit based on the reputation of the customers themselves However, unsecured loans still bring many risks to the bank, so bank needs to be carefully appraised before making loans to customers

• Classification by economic sector

- Lending to individual customers

- Lending to economic organizations

• Classification by business lines

- Agriculture forestry seafood

- Industry

- Trade and services

- Transporting warehousing

1.3 Lending efficiency at commercial banks

1.3.1 Definition of lending efficiency at commercial banks

Lending efficiency is understood as meeting the needs of customers in the loan activity, to both create profit for the bank itself and bring efficiency in production, business activities, and daily life

From the perspective of commercial banks: lending efficiency is reflected in the scope, extent, credit limit that must be suitable with the bank's own capacity Collecting a debt in full and on time will bring profits and minimize risks, ensuring that banks can survive and develop

From the customer perspective: loans provided to customers must have reasonable interest rates and terms, simple, fast, convenient procedures and attract many customers But still, ensure the loan conditions and use of the loan capital for the right purpose

Seen from the socio-economic aspect: lending activities are closely linked to the objectives of socio-economic development; ensure sustainable economic development, and help improve the quality of life of the people

1.3.2 The role of improving lending efficiency at commercial banks

Lending is a core and traditional activity of the bank The effective lending activity reflects the bank's cash flow in the right direction and the capital source generating adequate profits If the loan is not well implemented, it is likely to cause insolvency, which can lead to bankruptcy and collapse of the banking system, so improving the efficiency of lending activities is essential It helps a safer business bank ensure long-term survival and development Moreover, the good lending performance reflects the professionalism in the organization and management of the bank's apparatus Thereby building up the image of a reputable commercial bank helps increase the loyalty of old customers and attract more new customers, increasing profits for the bank

Improving the quality of lending activities is an important factor to promote economic development High lending efficiency at banks also contributes to the exploitation of the nation's resources, helps the money flow effectively in the market, reinforces the sustainability of the economy

1.3.3 Set of criteria to measure lending efficiency at commercial banks

• Qualitative indicators:

- Legal basis

The State Bank of Vietnam has mandatory criteria: minimum interest rate and minimum capital adequacy ratio The commercial bank's compliance with the regulations of the State Bank will minimize risks in the loan process In addition to complying with loan procedures and regulations, the bank must also comply with the provisions of law Compliance with the provisions of the law also contributes

to improving the effectiveness of lending at commercial banks

- Lending process

Effective lending activities must always comply with lending regulations and processes From their own characteristics, most banks research and come up with the most appropriate lending regulations In particular, banks have established a Credit Handbook, which provides specific concepts, regulations, procedures, and guidelines for bank officials It aims the rules in the lending process that are

specifically applied at making the loan effective Therefore, compliance with these processes is an important condition, the premise of an effective loan

- Loan terms and loan contracts

- Diversify lending methods

- Diversifying the loan industry

The above qualitative groups of indicators were able to reflect a part of lending effectiveness These are almost mandatory criteria for a loan to be considered effective However, in order to consider in detail, carefully and comprehensively,

we need to consider quantitative indicators

• Quantitative indicators

- Outstanding balance growth target

This indicator helps assess the profitability of lending activities of a commercial bank Outstanding balance is the amount of money that customers owe to the bank, the greater the loan balance, the more customers the bank or the bank has large loans At the same time, it also represents the expected returns as well as the bank's future system scalability

- Evaluation criteria for overdue debts

Overdue debt ratio = Total overdue debt / Total outstanding debt:

Overdue debts are those that are due to the loan repayment term or the loan term expires with an extended-term (if any) but the customers have not yet paid it The overdue debt is determined according to the debt classification prescribed by the State Bank The smaller the ratio of overdue debts, the higher the credit quality If the bank rate is less than 5%, it is very good Conversely, this ratio is too large, the bank will face difficulties in business because of the risk of high capital loss, loss

of solvency and income According to the CIC system - Vietnam National Credit Information Center, the five bad debt groups are the following groups:

Group 1 (Standard debt) includes: Current debts; debts capable of recovering both principals and interests on time; Debts which are overdue for less than 10 days (Customers who are overdue for between 1 and 10 days will have to pay an

additional interest of overdue penalty of 150%)

Group 2 (Special mention) includes: Debts which are overdue from 10 days to less than 30 days; Debts are restructured repayment term for the first time

Group 3 (substandard debt) includes: Debts which are overdue for a period of between 30 days and less than 90 days; First-time rescheduled debts which are overdue for less than 30 days; Debts of which interest was waived or reduced because the customer was not able to fully pay interest in accordance with the credit contract

Group 4 (Doubtful debts) includes Debts which are overdue for a period of

between 90 days and less than 180 days; First-time rescheduled debts which are overdue from 30 days to less than 90 days within the first restructured repayment term; Debts which are restructured repayment term for the second time

Group 5 (Potentially irrecoverable debt) includes: Over 180 days overdue debts will be classified into this group capable of losing capital; First-time rescheduled debts which are overdue for more than 90 days within the rescheduled payment term; Debts which are restructured repayment term for the second time being overdue; Debts which are restructured repayment term for the third time or more, including not yet overdue or overdue

(Taichinhonline, 2018)

Of the five specified debt groups, overdue debts are those of group 2 to group 5

- Bad debt assessment criteria

NPL ratio = Total bad debt / Total outstanding debt

NPLs reflect the credit quality situation at banks Bad debts are those classified into Group 3 (below the standard), Group 4 (doubtful) and Group 5 (high capital loss) in the credit classification and classification table of the CIC system The ratio of bad debt shows how many bad debt is in a dollar Bad debt has a very high level of risk, the ability to recover capital is relatively difficult, the bank's capital is

no longer risky, but has caused damage to the bank This is a direct result of the quality of the credit given to the customer If the high ratio of non-performing loans proves that the quality of bank credit is extremely low and the bank needs to revise its entire credit operation, if not unintended consequences Bad debt is debt from group 3 to group 5 according to CIC's regulations on the system of debt groups

- Debt collection targets

Debt collection ratio = (Debt collection turnover / Loan turnover) * 100%

This indicator measures the growth rate of debt collection over time The high growth rate of debt collection revenue proves that the bank's debt collection is well conducted Conversely, if this rate is low, it may be due to the decline in loan sales

or the collection of debts

- Criteria for assessing the ratio of loans with secured assets

Lending to collateral assets = (Outstanding loans for secured assets / Total

outstanding loans * 100%)

The ratio of loans without collaterals = (Outstanding loans of unsecured assets / Total outstanding loans * 100%)

This indicator assesses the safety level of mortgage lending at banks The higher the ratio of loans with the collateral, the more secure the debt is, the less the risk when customers have collateral such as houses and mortgages go

- Interest income from lending activity

This indicator assesses the efficiency of lending activities as well as the profits earned after lending The higher the index, the better the income from bank credit activities

1.3.4 Factors affecting lending efficiency at commercial banks

1.3.4.1 Objective factor

Economic situation:

The demand for purchase and sale of goods and services of the population depends greatly on the state of the economy When the economy is in the development stage, the growth rate is high and stable, the living standard of the people is

growing more and more the people have more demand for shopping and

business, limiting saving Therefore, the demand for loans will increase because they believe that when the economy is stable and developing, their income in the future can pay off debts to serve the purpose of improving the quality of life

Conversely, when the economy falls into recession, inflation and unemployment increase, the demand for spending will decrease because at this time the population tends to accumulate rather than consume

Social - political situation:

The political environment has a great influence on the activities of commercial banks In a country with a stable political situation, investors feel assured that the production and business activities will grow, the economy will grow more and the people's life will be improved; Since then, the operation of the bank in general and lending activities, in particular, will be increasingly developed If the political environment is unstable, disputes between parties, wars take place continuously, the economy will be underdeveloped, people's life will be difficult; That could lead

to a disruption in banking operations

Legal capacity:

Each subject in society has the freedom to follow their interests, what they want to

do and what they want to buy depends on themselves but within the framework allowed by law Therefore, in the lending relationship with the Bank, everyone has the right to borrow whenever they need it but must comply with all regulations of the State Bank Therefore, if the provisions of the law are not clear, coherent,

asynchronous, unstable, untimely and have many loopholes, it will cause many difficulties for commercial banks in lending activities However, if the legal

documents are clear, complete, synchronized, timely and stable, it will create an extremely solid legal corridor, contributing to the healthy competition between banks commercial goods in lending activities And that is also the legal basis for the Bank to resolve complaints and denunciations when any disputes occur in lending activities

Competitors:

Competitors are agents that directly affect the business quality of the bank The main competitors in the market can be direct competitors or potential competitors Direct competitors often compete fiercely by diversifying products and services

and having appropriate pricing policies; While potential competitors with abundant financial resources and later can learn from the experience of the previous banks, taking advantage of the advantages of the latter bank can also impose great force for the bank This requires the bank to increasingly improve and improve the

quality of its products and services, including lending if it does not want to lose its market share At the same time, besides researching and developing the business strategy of the bank, the bank must also grasp the business strategies of the

competitors to take timely measures to cope with and introduce solutions

appropriate business decisions

State policy:

The State's policies affect the activities of commercial banks in general and lending activities in particular If the State encourages and promotes the expansion of

activities to attract foreign investors, the economy will have conditions for

development, average income will increase and the unemployment rate will

decrease In addition, policies on taxes, reasonable fees, incentive programs to support the development and promote poverty reduction However, if you want

to implement all those policies and activities, It is necessary to have close

coordination among branches, levels, agencies and enterprises with commercial banks

1.3.4.2 Subjective factor

Credit policy of the bank:

Credit activity is an overarching activity of the bank, this is an important and large-scale activity, so this activity is implemented according to a clear policy built and completed over many years, called credit policy Credit policy is a guideline for credit activities The credit policy of each

bank is different depending on the period and the situation of each bank

If the credit policy is well planned, in accordance with the rules of the market and satisfying customers, the bank will improve its lending

performance On the contrary, if the credit policy is not appropriate and harmonious, the bank will not attract customers to use its products and services, which will inhibit the development and efficiency of operations for the bank Therefore, the bank must regularly research and make appropriate and reasonable credit policies depending on the period and development goals of the bank

Credit granting process:

The loan approval process summarizes the Bank's principles and

regulations in granting credit, including specific steps in a certain order from preparing the credit application file to when the loan relationship ends

The development of a complete and effective loan approval process is of great significance in preventing and limiting risks, and it also attracts customers

Lending quality and diversity of lending products:

The quality of lending is a very important and critical decision for credit institutions Therefore, the good management of loans will create a lot of profits for banks, thereby creating a driving force for the expansion and development of lending activities

In today's competitive market, lending is highly valued by banks in their business strategy, creating a difference, improving loan quality and diversifying products to meet demand Customers' are essential Since

then, it will attract many customers interested in and use the bank's

products, contributing to expand the bank's lending activities

Quality of staff:

The organization of the bank is the establishment and concretization of positions and relationships among departments and divisions in the bank in a

scientific and rational manner, ensuring smooth and flexible coordination

Favorable conditions for the bank to best meet the requirements of borrowers At the same time, monitor and closely manage the capital mobilized and lent,

contributing to improving the loan quality of the bank

In addition, the development of a market economy and science and technology requires the bank to recruit personnel with good professional qualifications and the ability to gain and apply modern science and technology People are an important factor in determining the success or failure of the management of loans as well as

in other banking activities

Technology - technical application level of the bank:

In the area of industrialization - modernization is now being promoted very strongly, the investment and equipment of modern technology and equipment are socially appropriate and timely to meet the needs of customers as well as speed improvement, work efficiency These are factors that can help the bank improve its competitiveness and attract more customers to the bank With modern equipment, the bank's operations will take place quickly, improve the ability to capture the market, and help shorten loan processes and procedures In addition, the

application of modern technology will also help the bank devise appropriate

business strategies and meet customer needs

CHAPTER 2 LENDING EFFICIENCY AT VIETCOMBANK IN THE PERIOD OF 2017 – 2019

2.1 Overview of Vietcombank

2.1.1 Establishment and development

- Name: Joint Stock Commercial Bank for Foreign Trade of Vietnam

(Vietcombank)

- Established April 1, 1963

- Headquarters: 198 Tran Quang Khai, Ly Thai To Ward, Hoan Kiem District, Hanoi

- Chairman of the Board Mr Nghiem Xuan Thanh

- General Director: Pham Quang Dung

- Charter capital: VND 37,089 billion

- Total assets: VND 1,222,719 billion (2019)

Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), formerly known as the Bank for Foreign Trade of Vietnam, was established in April 1963 Vietcombank is the first State-owned commercial bank selected to perform stock piloting Partialized by instructions of the Vietnamese government, and Vietcombank officially operated as a joint stock commercial bank in June

2008 Over 57 years of establishment and development, Vietcombank has

contributed a lot stability and development of the country's economy As a major external bank, Vietcombank has made an important impact on the global and regional financial community

The original task of the bank was the external economy, then Vietcombank today has expanded its activities to become a multi-sector and multi-sector bank

Vietcombank always wishes to provide customers with a full range of traditional financial services and leading modern technology services in international trade Traditional banking activities such as capital trading, capital mobilization, credit, project financing Some modern digital banking services such as foreign

currency trading and derivative services, card services, e-banking Vietcombank

is constantly improving its technical infrastructure, applying high technology in service activities, diversifying products to attract numerous customers with

convenience, quickness, safe, effective, creating a habit of non-cash payment for many customers

Currently, the bank has more than 111 branches, 441 transaction offices, 7

subsidiaries at home and abroad, in addition the bank has many representative offices and related non-business units nationwide Up to now, Vietcombank has more than 16,800 employees and a system of more than 2,500 ATMs and more than 60,000 points of payment receipt (POS), to serve the huge needs of today's consumers

Thanks to the prestige and standards in business operations, Vietcombank has been continuously voted as "The best bank in Vietnam" by reputable organizations in the world This is also the first and only bank in Vietnam ranked by The Banker Magazine in the Top 500 leading banks in the World

(Vietcombank, 2019)

2.1.2 Functions and fields of activity

Vietcombank may carry out the following professional activities according to Vietnamese Law and stipulate that commercial banking activities are allowed to proceed as follows

• Capital raising activities:

Vietcombank has a diverse range of deposit products and offers preferential

interest rates and services for its customers The product packages fully meet the increasing demands and increasing expectations of customers The Bank still

maintains a full range of traditional capital mobilization activities such as receiving demand deposits - term deposits, savings deposits and other types of deposits In addition, the bank issued additional deposit certificates, promissory notes and bonds to mobilize domestic and foreign capital Another source of Vietcombank's mobilization is borrowing from the State Bank in the form of refinancing in

accordance with the law and borrowing from other credit institutions

• Credit activities:

Lending is the main credit activity at the bank, Vietcombank always has enough reserves to provide loans to necessary customers Lending products at banks now have short, medium and long-term loans; consumer loans; loans to buy real estate; Car loan; business loans;… Several other credit activities at banks such as a

discount, re-discount of negotiable instruments and valuable papers; Bank

guarantee; issuing credit cards; Payment services and treasury: opening deposit accounts, payment accounts;

• Providing other means of payment

The Bank provides payment instruments to help customers through checks,

payment orders, payment orders, collection orders, collection orders, letters of credit, bank cards, collection and payment services; organize internal payment, join the national inter-bank payment system

consolidation, merger of enterprises, and investment consultancy in accordance with the law; Buying and selling government bonds, corporate bonds; monetary boundary services; Real estate business

(Vietcombank, 2018)

2.1.3 Organizational structure

Vietcombank currently has more than 560 branches / transaction offices /

subsidiaries with more than 16,800 employees nationwide

The Chairman of the Board of Directors is Mr Nghiem Xuan Thanh, and 8

members of the Board of Directors