GRADUATION THESIS
TOPIC:
SOLUTIONS TO PROMOTE THE EFFICIENCY OF CONSUMER LIVING ACTIVITIES AT SAIGON TRADING JOINT STOCK COMPANY BANK HANOI BRANCH
Instructor : Th.s Le Thi Ha Thu
Performed by students: Nguyen Thi Lan Anh
Student code: A16786
Specialization: Finance – Banking
HANOI – 2014
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Solutions to promote the efficiency of consumer lending activities at Saigon Thuong Tin Commercial Joint Stock Bank - 2 -
Factors Affecting The Improvement Of The Efficiency Of Consumer Lending Activities -
Overview Of Saigon Thuong Tin Commercial Joint Stock Bank – Hanoi Branch
I would like to thank the teachers in the Economics department, Thang Long University for their good and useful lectures, helping me to apply those professional knowledge in my graduation thesis. In particular, I would like to express my deep gratitude to my teacher – Th.S Le Thi Ha Thu for guiding and helping me complete this thesis. In the process of researching and writing this thesis, with her dedicated guidance, I have answered many questions and difficulties I still have about knowledge in books as well as in reality about lending activities in general. and consumer lending activities in particular at banks today. Not only that, she also taught me valuable knowledge or experiences that she had accumulated.
In addition, to carry out this thesis topic, I also received enthusiastic help from my uncles and aunts in the internship unit. I would like to express my sincere thanks to Ms. Dinh Thi Thu Huong, Head of Accounting – Treasury Department and the staffs of the personal credit department of Saigon Thuong Tin Commercial Joint Stock Bank – Hanoi Branch for creating favorable conditions for I got an internship and enthusiastically helped me during my internship at the Branch to complete this thesis.
Hanoi, March 24, 2014
Pupil
Lan Anh
GUARANTEE
I hereby declare that this graduation thesis is my own work with the support of my supervisor and has not copied the work of others. The secondary information used in the Dissertation is original and clearly cited.
I take full responsibility for this pledge!
Pupil
Lan Anh
TABLE OF CONTENTS
FOREWORD
CHAPTER 1. BASIC ISSUES ABOUT COMMERCIAL BANK’S CONSUMER LIVING ACTIVITIES ………… …………………………..first
1.1. Consumer lending operations of commercial banks ……………………………………………………………………..1
1.1.1. Concept of consumer lending operations …………………………………………………………………….. ………………..first
1.1.2. Features of consumer lending operations ……………………………………………………………………………………….. ………………….first
1.1.3. The role of consumer lending activities ……………………………………………………………….. ………………..2
1.1.4. Classification of consumer lending activities …………………………………………………………….. ……………..4
1.1.4.1. Depending on the purpose of the loan …………………………………………………………….. ……………………………4
1.1.4.2. Based on the method of payment …………………………………………………………………………………… …………5
1.1.4.3. Based on the origin of the debt …………………………………………………………….. …………5
1.1.4.4. Based on the form of loan guarantee …………………………………………………………………………. ……………..5
1.2. Efficiency of consumer lending at commercial banks …………………………………………6
1.2.1. Necessity of promoting the efficiency of consumer lending …………………………………………6
1.2.2. Indicators to evaluate the effectiveness of consumer lending activities ……………………………………………………….7
1.2.2.1. Quantitative goals ……………………………………………………………………………………. ……………………………7
1.2.2.2. Quantitative metrics …………………………………………………………………………… …………………………………8
1.2.3. Factors affecting the improvement of the efficiency of consumer lending activities ………………………………………………………… …………………………… ……………………………………..twelfth
1.2.3.1. The subjective factor ……………………………………… ………………………………….twelfth
1.2.3.2. The objective factors ……………………………………… ……………………………14
SUMMARY OF CHAPTER 1……………………………………………………….. ……………………………15
CHAPTER 2. CURRENT SITUATION OF CONSUMER LIVING ACTIVITIES AT SAI GON THUONG TIN JOINT STOCK COMPANY BANK – HANOI BRANCH ………………………….. …………………………… ……………………………16
2.1. Overview of Saigon Thuong Tin Commercial Joint Stock Bank – Hanoi Branch ………………………………………………………… …………………………… ………….16
2.1.1. The process of formation and development ……………………………………. …………16
2.1.2. Organizational structure ………………………………………. …………………………… ….17
2.1.3. Service products …………………………………………………………………………………… ……………………….20
2.2. Business performance of Saigon Thuong Tin Commercial Joint Stock Bank – Hanoi Branch ………………………………………….. …………………………… …21
2.2.1. Fundraising activities …………………………………………………………………………… ………….21
2.2.2. Capital use activities (mainly lending activities) …………………………………………27
2.2.3. Other business activities …………………………………………………………………………… ……………………….thirty first
2.2.4. Business results …………………………………………………………………………… …………32
2.3. General regulations on consumer lending activities at Saigon Thuong Tin Commercial Joint Stock Bank – Hanoi Branch ……………..34
2.3.1. Principles of consumer lending …………………………………………………………….. …………34
2.3.2. Consumer loans …………………………………………………………………………… ……………………………35
2.3.3. Collateral………………………………………. …………………………… ..36
2.3.4. Types of consumer loans …………………………………………………………………………… …………37
2.3.5. Consumer lending process …………………………………………………………………………… …………………………39
2.4. The current situation of consumer lending activities at Saigon Thuong Tin Commercial Joint Stock Bank – Hanoi Branch in the period 2010-2012…………………………… ..forty six
2.4.1. Sales situation of consumer loans …………………………………………………………….. ………………..forty six
2.4.2. Consumer loan balance …………………………………………………………………………… …………47
2.4.3. Debt collection situation for consumer loans …………………………………………………………….. …………52
2.5. Evaluating the efficiency of consumer lending activities at Saigon Thuong Tin Commercial Joint Stock Bank – Hanoi Branch………………………….. ……………..53
2.5.1. Quantitative goals ……………………………………………………………………………………. ………….53
2.5.2. Quantitative metrics …………………………………………………………………………… ………………………55
2.5.3. Evaluation of the current situation of consumer lending activities of Saigon Thuong Tin Commercial Joint Stock Bank – Hanoi Branch ………………………….. ………………………..sixty one
2.5.3.1. These achievements……………………………………… ……………………………….sixty one
2.5.3.2. Difficulties and limitations ……………………………………………………………………………………. …………62
2.5.3.3. Reasons for the limitation ……………………………………………………………………………………. …………………………….sixty four
SUMMARY OF CHAPTER 2……………………………………………………………………… …………………………………………65
CHAPTER 3. SOLUTIONS TO PROMOTE THE EFFICIENCY OF CONSUMER LOANS AT SAI GON TRADING JOINT STOCK COMPANY BANK HANOI BRANCH ………… ………………………………………….66
3.1. Development orientation of Saigon Thuong Tin Commercial Joint Stock Bank – Hanoi Branch………………………………………… …………………………… ……………66
3.1.1. Development orientation of Saigon Thuong Tin Joint Stock Commercial Bank ………………………………………………. …………………………… ……………………………………..66
3.1.2. Development orientation of Saigon Thuong Tin Commercial Joint Stock Bank – Hanoi Branch ………………………………………………………… …………………………… …………….sixty seven
3.1.2.1. General direction …………………………………………………………………………… …………………………………….sixty seven
3.1.2.2. Development orientation of consumer lending activities ……………………………………………………………………..68
3.2. Solutions to promote the efficiency of consumer lending activities of Saigon Thuong Tin Commercial Joint Stock Bank – Hanoi Branch ………………….. ……..69
3.2.1. Diversifying service types and completing loan products………69
3.2.2. Developing preferential policies for customers …………………………………………………………….. ….70 Thang Long University Library
3.2.3. Completing the consumer lending process and monitoring the loan closely …………71
3.2.4. Promote consumer loans in installments on the basis of association with sales partners. …………………………… ………….72
3.2.5. Cut costs …………………………………………………………………………………….. ………….72
3.2.6. Enhancing marketing effectiveness …………………………………………………………………………… ………..72
3.2.7. Improving the capacity of bank staff along with the innovation of banking technology ………………………………………………………… …………………………… …………74
3.3. Request ………………………………………… …………………………… …………75
3.3.1. For Saigon Thuong Tin Commercial Joint Stock Bank – Hanoi Branch ………………………………………….. …………………………… ……………………………75
SUMMARY OF CHAPTER 3……………………………………………………………………… …………………………………………76
LIST OF Abbreviations
Abbreviation Full name
CVTD Consumer loans
Employees Staff Officers
DPRR Provision for risks
NCCL Restructured debt
SBV State Bank
Commercial Bank Commercial Bank
NQH Overdue debt
Sacombank Saigon Thuong Tin Commercial Joint Stock Bank
Credit risk Credit risk
Credit institutions Credit institutions
Joint Stock Commercial Joint Stock Company
Special Assets Secured assets
VND Vietnamese Dong
LIST OF TABLES, DIAGRAMS
Table 2.1. Capital mobilization activities at Saigon Thuong Tin Commercial Joint Stock Bank – Hanoi Branch………………………………………… …………………………… 23
Table 2.2. The situation of lending activities at Saigon Thuong Tin Commercial Joint Stock Bank – Hanoi Branch …………………………………………………… …………………………… …….28
Table 2.3. Business performance at Saigon Thuong Tin Commercial Joint Stock Bank – Hanoi Branch………………………….. …………………………… …….33
Table 2.4. Sales of consumer loans at Saigon Thuong Tin Commercial Joint Stock Bank – Hanoi Branch in the period 2010 – 2012………………………….. …………………………… forty six
Table 2.5. Outstanding consumer loans of Saigon Thuong Tin Bank, Hanoi Branch for the period 2010 – 2012 ………………………………………………………… …………………………… ……….49
Table 2.6. The situation of debt collection of Sacombank – Hanoi in the period of 2010 – 2012 ………………………………………………………… …………………………… ………….52
Table 2.7. Ratio of overdue debt and bad debt of Sacombank – Hanoi in credit portfolio for the period 2010 – 2012………………………………………………………. …………………………… ………….55
Table 2.8. NCCL ratio, default rate in credit portfolio …………………………………………………………….. ……..57
Table 2.9. Rate of setting aside DPRR CVTD …………………………………………………………………. …………58
Table 2.10. Risk-offering coefficient for processed consumer loans …………………59
Table 2.11. Turnover ratio of CVTD capital …………………………………………………………….. ..60
Table 2.12. Profits from consumer loans …………………………………………………………….. …………………..sixty one
Diagram 2.1. Organization of operation apparatus of Saigon Thuong Tin Commercial Joint Stock Bank – Hanoi Branch………………………………………… …………………………… …….18
Diagram 2.2. Process of consumer lending activities of Saigon Thuong Tin Commercial Joint Stock Bank – Hanoi Branch ………………………………………………………… …………………………… …..40
FOREWORD
1. Urgency of the topic
In the current conditions, when international economic integration is no longer a new issue, besides the cooperation process on the principle of mutual benefit, between countries is always accompanied by fierce competition conditions. In such an economic environment, the objective and urgent requirement for our country is to improve its competitiveness in order to integrate more deeply and effectively. One of the measures to improve competitiveness is to make the financial – banking system healthy.
The outstanding feature in recent years is that Vietnam’s commercial banking system has grown strongly in both scale and quality of operations, making a significant contribution to the industrialization and modernization of the country. The growing economy leads to an increase in the spending needs of the people. In order to meet that spending demand, one of the credit products of commercial banks is consumer loans, which are increasingly attracting the attention of customers. Consumer loans not only effectively diversify business activities for banks, meet the necessary needs of current customers, but also contribute to promoting economic development. Vietnam with a population of about 90 million people and an increasing income level of the people promises to be an open retail playground for commercial banks in particular and all credit institutions in general.
During the past years, Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) has been affirming the trust of customers in providing banking products, services, especially banking products. loan products. Consumer lending is one of the products that banks are focusing on developing and gradually improving. For Sacombank in general and Sacombank – Hanoi Branch in particular, promoting efficiency and improving the quality of consumer lending activities is the bank’s immediate and long-term goals, in order to develop banking operations. retail as well as maintain its position as one of the leading commercial banks in Vietnam.
Therefore, after a period of internship at Sacombank – Hanoi Branch, I am aware of the potential of this activity and the importance of promoting the efficiency of consumer lending for long-term development. bank length. Therefore, I have chosen: “Solutions to promote the efficiency of consumer lending activities at Saigon Thuong Tin Commercial Joint Stock Bank – Hanoi Branch” as my thesis research topic, with the desire to can contribute somewhat to help expand and improve the efficiency and health of the credit activities of commercial banks today.
2. Research objectives of the topic
Research on the general theoretical basis on the efficiency of consumer lending activities and the current status of consumer lending of commercial banks.
Analyze and evaluate in a general and systematic way the consumer lending activities of Saigon Thuong Tin Commercial Joint Stock Bank – Hanoi Branch, thereby pointing out the achieved results and limitations. problems that need to be overcome.
Proposing solutions to boost the efficiency of consumer lending activities at Saigon Thuong Tin Commercial Joint Stock Bank – Hanoi Branch.
3. Object and scope of research
The object of the study is the efficiency of consumer lending.
The scope of the study is the efficiency of consumer lending activities at Saigon Thuong Tin Commercial Joint Stock Bank – Hanoi Branch in the period 2010 – 2012.
4. Research Methodology
The topic is based on descriptive statistics, comparison and combination using analytical data. The thesis has assessed in general the performance and status of consumer lending of banks through economic indicators in order to find out related issues, from which recommendations can be made. solutions to boost the efficiency of consumer lending activities of banks.
5. Thesis structure
In addition to the introduction, conclusion, table of contents, list of tables, diagrams, references, the structure of the thesis consists of 3 chapters:
Chapter 1: General theoretical basis for the efficiency of consumer lending activities at commercial banks.
Chapter 2: Actual situation of efficiency of consumer lending activities at Saigon Thuong Tin Commercial Joint Stock Bank, Hanoi Branch.
Chapter 3: Solutions to promote the efficiency of consumer lending activities at Saigon Thuong Tin Commercial Joint Stock Bank, Hanoi Branch.
CHAPTER 1. BASIC ISSUES ABOUT COMMERCIAL BANK’S CONSUMER LIVING
1.1. Consumer lending business of commercial banks
1.1.1. Consumer lending business concept
Consumer lending is a form of loan where a bank temporarily transfers the right to use capital to an individual or household customer in order to finance their spending needs, with certain conditions. agreed in the contract on the principle of full repayment of both principal and interest. This is an important financial source to help customers (consumers) be able to cover their needs in life such as housing, transportation, living facilities, study, travel, etc. health services…
According to Dr. Dinh The Hien, full-time member of Eximbank’s Strategy Committee, consumer lending in Vietnam is only in the early stages of development, although relatively new, with a population of 90 million people, the majority of If it is a young age, has a good income and high demand for shopping, the potential for development of credit card activities in our country is great. Studies also show that Vietnam’s credit portfolio will develop very strongly in the coming time. Specifically, market research firm Euromonitor forecasts that, in the period of 2013-2016, credit cards will grow by 20-22%; consumer goods increased by 15-17%; home loans increased by 12%; Loans to buy cars increased by 7% and motorbikes by 5%. According to research by Vietcombank Research Group, during this period, credit cards increased by 25-30%, consumer goods increased by 20% and motorbikes increased by 10%. Recognizing that development potential, banks are now increasingly focusing on promoting lending activities to individual customers in general and credit cards in particular.
1.1.2. Features of consumer lending activities
Credit card activities finance the spending purposes of customers in life such as buying houses, living utensils, means of transportation; home improvement and repair; to cover for students’ study at home and abroad; cover hospital fees; travel expenses…
Customers of credit card activities are individuals and households, the object of this activity is the consumption needs of customers. Unlike lending to businesses and economic organizations, CVTD’s customers have a large number and their borrowing needs are directly related to their income and educational level. If customers’ income is high, they will tend to increase consumption and vice versa. Consumer loan demand also depends on the economic, cultural and social environment.
Depending on the type of loan and the purpose of the loan, CVTD’s loans have terms: short-term, medium-term and long-term. However, current customers often borrow to buy houses, buy cars, study abroad, etc., so loans with medium and long-term forms account for a large proportion.
Customers of credit card activities have a large number, but the size of each contract is smaller than that of other lending activities because the funding source mainly serves the daily living needs of customers. This leads to high costs that banks spend on a loan contract (including transaction costs, appraisal, approval, loan management, etc.). In addition, because CVTD’s customers are individuals and households, finding financial information about customers is also more difficult and expensive than other lending activities.
Because finding and verifying information of individual and household customers is more difficult than that of other customer groups, the management and control of customer loans in CVTD are also more risky. Moreover, the situation of CVTD customers can change depending on their health and work status, so the source of repayment for the bank is often unstable and depends on many other factors such as the economic cycle, economic structure, customer level. If one of the above factors has fluctuations contrary to the bank’s prediction, it will cause risks to credit card activities.
Interest rates on credit cards are usually higher than other loans of commercial banks. The reason is that CVTD’s expenses are large and its loans have a high level of risk. Typically, most credits are valued based on the prime rate plus the marginal return and risk premium. Consumer demand is often inelastic with interest rates. However, when consumer lending activities are focused on by commercial banks and competition is fiercer, interest rates are still a factor that helps banks to attract customers and increase competitiveness. .