Evaluating The Efficiency Of Consumer Lending Activities At Saigon Thuong Tin Commercial Joint

Disbursement packages without unsecured, lending at the point of sale are attracting more and more customers, with simple procedures, just need ID card and household registration, customers can buy products according to your needs. However, this also brings risks to the bank when bad situations occur and customers cannot repay their debts, especially in credit card activities.

2.4.3. Consumer loan collection situation

Besides lending activities, debt collection is also an extremely important task of all banks. Debts that are recovered on time, both principal and interest, will facilitate the bank to supplement capital for business activities, as well as avoid risks in credit activities. Debt collection activities are performed well, demonstrating the effectiveness of lending activities to customers of the bank.

Table 2.6. Sales of Sacombank - Hanoi credit card debt collection in the period 2010 - 2012

Unit: million dong

Targets	2010	2011	Year 2012	Difference in 2010-2011		Difference in 2011-2012
Targets	2010	2011	Year 2012	Amount of money	Relative (%)	Amount of money	Relative ( %)
Total debt collection	775.20	1386.49	2133.24	611.29	78.85	746.75	53.85
Revenue from debt collection CVTD	147.26	263.98	452.70	116.72	79.26	188.72	71.49
Proportion of debt collection of credit institutions (%)	18.99	19.04	20.22	-	-	-	-

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(Source: Report on credit card activities at Sacombank - Hanoi)

Debt collection revenue of the Branch in 2010 was VND 775.20 billion, of which the revenue from debt collection from CVTD reached VND 147.26 billion, accounting for 18.99% of debt collection revenue. In 2011, the branch's debt collection revenue increased to VND 1386.49 billion, of which the revenue from debt collection accounted for 19.04%, increased to VND 263.98 billion, and also increased by 116 compared to 2010 compared to 2010. .29 billion dong, equivalent to a growth rate of 79.26%. In 2012, the branch's debt collection revenue continued to increase, reaching VND 2133.24 billion along with an increase in both sales and proportion of debt collection, reaching VND 452.70 billion, accounting for 20.22%. total debt collection, increased by 188.2 billion VND compared to 2011 and equivalent to 71.49%. It can be seen that both debt collection in general and credit card debt collection in particular increased rapidly in the period from 2010 to 2012.

This proves that the branch's debt collection policy in recent years is really effective. The application of a strict consumer loan appraisal process from the beginning has been focused on by the Branch, at the same time, debt monitoring has also been enhanced, as well as the appraisal of special assets has been increasingly completed. helping banks minimize risks in consumer loans, low overdue debt ratio.

In 2010, the ratio of revenue from debt collection to credit card sales was 91.64%; 2011 is 87%, 2012 is 82.10%. This ratio shows that most of the loans have recovered the principal and interest, helping to stabilize the branch's operations and effectively use the borrowed capital.

2.5. Evaluating the efficiency of consumer lending activities at Saigon Thuong Tin Commercial Joint Stock Bank - Hanoi Branch

2.5.1. Qualitative indicators

Legal basis

Sacombank - Hanoi's consumer lending activities are always carried out on the legal basis of complying with the State's laws and regulations of the State Bank. In addition, credit card activities of the Branch are also carried out based on the general principles and regulations of Sacombank. An effective business bank shows the correctness and accuracy of the legal basis.

Consumer loan process

Basically, the stages in the consumer lending process are applied by the Branch in accordance with Sacombank's regulations. Especially the appraisal is focused on by the Branch because this is the most important step to consider whether to lend to customers or not. The branch's appraisal process adheres to the following principles:

Fast, transparent, accurate and efficient. The branch's credit staff always have a thorough knowledge of the business, update the market economic situation to be able to make timely recommendations for appraisal, dedicated to customers, and support customers. in completing the application to be considered for a loan as quickly as possible.

Size of consumer lending activity

Realizing that CVTD is a potential market for banks because the consumer demand of customers is increasing, especially while the economy is showing signs of recovery. Therefore, in the loan structure of the Branch, this type of loan is always valued. According to the data indicated above, the branch's sales of consumer loans is growing. In recent years, Hanoi Branch has constantly improved and enhanced its reputation, maintained good relationships with customers; expanding and improving the quality of consumer lending.

The quality of the bank's personnel

Sacombank - Hanoi has a team of high-quality personnel, from the Board of Directors to all specialists in all departments in the bank. The leadership has built for all employees a positive working spirit and attitude. For customers always warm, dedicated service in the most thoughtful way. In terms of professional qualifications, the number of employees of the branch having a university degree or higher is 100%, more than 30% of the staff have a master's degree; many staff have experience and seniority working in the field of Banking and Finance. The branch's personnel structure is relatively young, which has helped the Branch quickly absorb new things of the market, technology and be quick in grasping reality. Young and dynamic staffs have helped the Branch to build an enthusiastic and enthusiastic image with customers.

Recognizing the importance of human resources in the success of the organization, for many years, Sacombank - Hanoi regularly organizes training courses on professional skills, soft skills, sales skills, negotiation skills, etc. judge, etc. for their staff. The training schedule is usually held twice a month with the participation of prestigious lecturers from major domestic and foreign financial and economic institutions. Parallel to the work, the Board of Directors does not forget to organize entertainment activities, visit activities, give gifts, emulate and reward to increase solidarity among colleagues, improve spiritual life. spirit for the staff and thereby, helping the staff to work effectively, enthusiastically, ready to stick with the organization for a long time.

Internal control activities, risk management of the Branch

Risk is inevitable in the banking business and risk management does not mean avoiding risk, but rather determining an acceptable level of risk, on which basis to devise measures. measures to ensure that the risk does not exceed a pre-determined level. Recognizing the importance of internal control and risk management, in recent years, the Branch has been more and more active in collecting information, detecting and controlling risks in the process. loan. The branch's officers also collect customer information from many different sources such as from the customer's business cooperation relationship with their own partners, the customer's reputation with the banks that were previously established. This customer has a credit relationship.All of the above actions are aimed at minimizing risks in the bank's business activities.

Bank's Reputation

According to the branch's statistics, nearly 80% of the customers who have used it will return to use the branch's credit card service. This shows that the bank has built a good image in the minds of customers, the bank's products and services have largely met the diverse needs of customers, the quality of consumer loans of the bank has improved. The bank has many positive signals and the bank's reputation in the area has been confirmed. Relatively good financial indicators help improve customers' confidence in the bank, help customers feel secure in the process of working and long-term cooperation with the bank. Maintaining customer loyalty and the number of regular customers is especially important in increasing the number of customers and expanding the bank's business.

2.5.2. Quantitative indicators

Overdue debt and bad debt

Overdue debt is an indicator that the bank's credit relationship is not perfect, when borrowers do not fulfill their debt repayment obligations to the bank on time. The increase in overdue debt will cause more costs to cause losses to the bank. Bad debts are debts belonging to groups 3,4,5.

Table 2.7. Ratio of overdue debt and bad debt of Sacombank - Hanoi in credit portfolio for the period 2010 - 2012

Unit: Billion VND

Targets	2010	2011	Year 2012
NQH consumer loans	2.11	4.01	7.69
Bad debt for consumer loans	0.47	1.21	2.26
Outstanding consumer loans	117.45	205.67	347.94
NQH/Total consumer loan balance(%)	1.8	1.95	2.21
Bad debt/Total consumer loan balance (%)	0.4	0.59	0.65
Bad debt/NQH for consumer loans(%)	22.27	30.17	29.38

(Source: Report on credit card activities at Sacombank - Hanoi)

From Table 2.7, it shows that the overdue debt ratio of the branch's credit portfolio is quite healthy (from 1.8% to 2.21%) but the increase rate is quite high. In 2011, overdue debt increased by 1.9 billion VND, equivalent to 90.04% compared to 2010. In 2012, overdue debt was 7.69 billion VND, continued to increase by 91.77% compared to 2011. This is due to the prolonged economic crisis, production stagnation, business activities decline, businesses cut payrolls, customers who lost their jobs find it difficult to find jobs in a competitive market... the customer is not able to repay the loan according to the original signed contract. Also due to the increasingly difficult economy, high inflation makes prices also increase, people have to spend more money for their own and family's essential needs, so they don't have enough money to pay. debt to the bank.

In addition, because the Branch is too trusting in some customers, it is subjective in collecting information about customers and monitoring loans loosely, leading to unpredictability of risks; When customers encounter difficulties, the Branch does not have remedies as well as measures to recover capital and loan interest. Specifically, in 2011, a customer applied for a loan to buy a car. As a loyal customer, the branch's credit officers were not careful in appraising the customer's current situation. when customers had financial difficulties and could not pay interest, it was because the overdue debt during the year increased. Although in 2012, the Branch paid more attention to loan appraisal and supervision, but due to the rapid increase in outstanding loans, the rate of overdue debts still increased.High overdue debt alarms the branch's risk in credit card. The branch needs to take measures to remedy, prevent and find all measures to handle and recover overdue debts, such as handling special assets, requesting the loan guarantor to repay, if necessary, they can handle them. by law ... thereby minimizing risks in credit card.

CVTD's bad debt was at a low level with absolute numbers of VND 0.47 billion (in 2010), VND 1.21 billion (in 2011) and VND 2.26 billion (in 2012). The proportion of bad debt in total outstanding loans is also low, accounted for 0.4% in 2010, 0.59% in 2011 and 0.65% in 2012. Comparing with bad debt data from time to time with other banks, Sacombank is always one of the few banks with low bad debt ratio, and Sacombank - Hanoi is always one of Sacombank's excellent branches. has a lower bad debt ratio than the whole system, is an example for other branches in the same system to learn. To maintain bad debt at such a low level is the efforts of Sacombank in general as well as Sacombank - Hanoi in particular. The branch has set up committees and sub-committees to prevent and handle debt from the beginning of the year in order to maximize its experience in debt settlement,understand and share difficulties with borrowers in the process of debt settlement, implement the re-appraisal of special assets, evaluate loans and off-balance sheet commitments to strengthen debt management measures. Currently, the Branch's credit risk is low compared to other banks in the system, but credit risk is still possible, the Branch should not subjectively neglect bad debt management and take preventive measures. appropriate risk mitigation under any circumstances.take appropriate risk-limiting precautions in any case.take appropriate risk-limiting precautions in any case.

The ratio of bad debt to overdue debt in 3 years was 22.27% (in 2010), 30.17% (in 2011) and 29.38% (in 2012). It can be seen that this percentage has increased sharply over the years. In 2011, the ratio of bad debt to overdue debt increased because the growth rate of bad debt (157.44%) was higher than the growth rate of overdue debt. By 2012, the bank had restructured a number of customers' debts, so the bad debt to overdue debt ratio had decreased compared to 2011, but still remained at a high level. If the bad debt ratio accounts for the majority of overdue debts, it will affect the bank's business activities. The bank has introduced a debt restructuring measure, but should not be too dependent on this method because it will make customers subjective and irresponsible for the loan, which can lead to the possibility of capital loss. Although, most of the consumer loans at the Branch were secured by the customer's collateral,But with the current growth trend of loans without special assets, the Branch will face the risk of not being able to fully recover the principal and interest, so it needs to use the provision to compensate. cover debts when risks occur.

NCCL and lost debt in CVTD

Table 2.8. NCCL ratio, debt loss ratio in CVTD

Unit: Billion VND

Targets	2010	2011	Year 2012
NCCL in CVTD	0.33	1.78	3.57
Debts lost in CVTD	0.04	0.17	1.03
Overdue debt CVTD	2.11	4.01	7.69
Ratio of NCCL/NQH CI(%)	15.63	44.88	46.42
Ratio of lost debt / Bad debt CVTD(%)	1.89	4.24	13.39

(Source: Report on credit card activities of Sacombank - Hanoi)

In 2010, because the economy was still quite stable, the branch's customers performed well in paying debts under contracts, so the NCCL ratio and the default rate were quite low.

Out of 2.11 billion dong of overdue debt, only 0.33 billion dong, equivalent to 15.63%, was restructured and only 0.04 billion dong, equivalent to 1.89%, could not be recovered. Until 2011 due to economic difficulties that made customers unable to repay, the Branch took the initiative in approaching difficult borrowers, seeking support to restructure loans. customers' debts, thereby helping customers to cope with and overcome short-term difficulties, thereby improving the branch's ability to recover debts. Therefore, NCCL increased compared to 2010 to reach VND 1.78 billion, accounting for 44.88% of overdue debt. Besides, defaulted debt also increased to 0.17 billion dong, accounting for 4.24% of overdue debt. In 2012, the economy still showed no signs of recovery, leading to the Branch's debt collection still facing many difficulties.The branch in order to reduce the bad debt ratio should continue to consider restructuring some of its customers' debts, the NCCL ratio continued to increase, accounting for 46.42% of overdue loans. Especially in 2012, there was a serious problem at the Branch, specifically, a credit officer of the bank who knew the customer was negligent in appraising the customer and that customer's special assets, leading to customers go bankrupt and cannot pay their debts. When the Branch handles the special assets of that customer, it discovers that there is a problem in the ownership, the processing becomes lengthy and the possibility of recovering that property is low. That made the branch's default debt skyrocket to 1.03 billion dong, accounting for 13.39% of bad debt. The Branch's debt restructuring for customers can help customers overcome difficulties,thereby maximizing the amount of recoverable debt as well as creating other opportunities for the bank for these customers. Besides the positive aspects, debt restructuring may lead to customer's subjective situation, lack of responsibility for loans, and increase long-term risks for the Branch due to increased debt collection time. up.

Provision rate for DPRR CVTD

Table 2.9. Provision rate for DPRR CVTD

Unit: Billion VND

Targets	2010	2011	Year 2012
DPRR for consumer loans is deducted	1.67	3.43	5.74
Outstanding consumer loans	117.45	205.67	347.94
Extraction rate (%)	1.43	1.67	1.65

(Source: Report on credit card activities at Sacombank - Hanoi)

The provisioning ratio for consumer loans DPRR shows how much credit risk provision in consumer loans is set aside compared to the total outstanding loans. The branch always pays attention to the issue of credit safety, especially with CVTD products that always contain many risks. In addition to always maintaining bad debts below 2% of the total outstanding loans, the bank also determines that in the worst case, there will still be a provision to handle when risks occur. Therefore, the Branch always maintains a higher DPRR ratio than the bad debt balance. In 2010, despite the difficult but less volatile economy, together with reasonable credit policies and measures, the branch's risk provisioning ratio was only 1.43% and the DPRR was calculated as follows: 1.6 billion dong. In 2011, the provisioning rate was 1.67% and the DPRR was 3.43 billion dong, an increase of 1.76 billion dong compared to 2010, equivalent to 105%.

The reason for the increase is that the provision of DPRR is always parallel with the growth of the credit balance. Moreover, in 2011, the economy faced many difficulties, causing more risks in credit card activities, the Branch paid more attention to ensuring the safety of loan sources, the ability to compensate when risks occur. CVTD also needs to be further improved. This is also the reason why the DPRR in 2012 continued to increase by VND 2.31 billion, equivalent to 67.34% compared to 2011. However, the ratio of provisioning for DPRR in 2012 was only 1.65%. .