Solutions to promote the efficiency of consumer lending activities at Saigon Thuong Tin Commercial Joint Stock Bank

Because the Branch has made great efforts to improve the loan appraisal, making the loan more secure from the beginning, the risks encountered will be less, the provision ratio will be lower compared to 2011.

Risk Coverage Factor for processed consumer loans When loans have been processed, i.e., a loss has occurred in the bank, this risk offset will indicate that the bank whether it is able to make up for the lost debt balance with the provision for credit losses.

Table 2.10. Risk-offering coefficient for processed consumer loans

Unit: Billion VND

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 (%)
DPRR CVTD is quoted	1.67	3.43	5.74	1.76	105.38	2.31	67.34
Debts handled	1.22	2.26	4.09	1.04	85.24	1.83	80.09
Compensation coefficient (times)	1.17	1.51	1.40	0.34	29.05	(0,11)	(7,28)

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

The Branch's risk premium on credit cards in the three years 2010-2012 is all greater than 1. This shows that the Branch's ability to cover risks from provisions is relatively good. In 2011, the risk compensation coefficient was 1.51 times, an increase of 0.34 times compared to 2010. In 2012, this coefficient decreased to 1.40 times, a decrease of 0.11 times compared to 2011.

That is, 1 VND of lost loan balance is only compensated by VND 1.4 of provision. This decrease is due to the increase of the outstanding balance (increased by 80.09%) higher than the increase in provision for risks (increase of 67.34%). This indicator decreased, although not much, but the branch should pay special attention because it directly reflects the safety and stability of capital as well as credit quality of the branch. However, DPRR is also an expense, if DPRR is deducted a lot, the capital is guaranteed, but it also reduces the branch's capital, thereby reducing lending efficiency. The branch needs to set aside DPRR reasonably so that it is both safe and effective in its other activities.

CVTD's capital turnover

Credit turnover ratio reflects the number of credit cycles of commercial banks to customers of credit card activities, indicating whether the loan collection time is fast or slow. Usually, the larger the turnover ratio, the better the collection of debts and vice versa.

Looking at Table 2.11, it can be seen that the turnover of consumer loans of the branch is all greater than 1 and is relatively stable, with no major changes. The capital turnover of the Branch in 2010 reached 1.25 rounds and the turnover increased in the next two years.

In 2011 capital turnover reached 1.28 rounds; increased by 0.03 rounds compared to 2010. By 2012, credit turnover increased by 0.02 rounds compared to 2011, reaching 1.3 rounds.

Table 2.11. Turnover ratio of CVTD's capital

Unit: Billion VND

Targets	2010	2011	Year 2012
Revenue from debt collection CVTD	147.26	263.98	452.70
Average outstanding loans CVTD	117.45	205.67	347.94
CVTD's capital turnover	1.25	1.28	1.3

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

This is due to the increase in revenue from debt collection in 2 years, especially in 2011 which increased by 78.85% compared to 2010 (according to the data in Table 2.6) and higher than the growth rate. increase in outstanding loans (credit balances in 2011 increased by 75.11% compared to 2010). In addition, the carefulness in the credit approval process and closer supervision of capital use and debt collection helped the Branch increase its debt collection revenue. Better credit quality, stable income, and profitable customers make the bank's debt collection more convenient and easier. With a relatively high capital turnover, it has shown that the bank's ability to recover debts on time is relatively fast, helping the Branch to ensure liquidity, reduce risks and have capital for re-lending.Especially in the context of the difficult economic situation in 2011 and 2012, but the capital turnover of the Branch did not decrease but tended to increase, which is a positive sign in the bank's business activities. . In order to continue to maintain and be able to increase the credit turnover in the coming time, the Branch needs to apply good and effective measures that have been done in the past time to improve loan quality as well as promote public investment. debt collection, from which the Branch can use the recovered capital to increase revenue and improve its profit target.effectively done in the past time to improve loan quality as well as speed up debt collection, so that the Branch can use recovered capital to increase revenue, improve profit targets of the Company. me.effectively done in the past time to improve loan quality as well as speed up debt collection, so that the Branch can use recovered capital to increase revenue, improve profit targets of the Company. me.

Profit from CVTD activities

Lending activities bring a significant source of income for the Branch. From Table 2.11, we can see that in 2010, profit from lending activities reached VND 28.26 billion, in 2011 profit increased to VND 36.05 billion compared to 2010, corresponding to a growth rate of 27.56 %. In 2012, it increased to 48.07 billion VND, an increase of 12.02 billion VND, equivalent to 33.34% compared to 2011.

Table 2.12. Profits from consumer loans

Unit: billion dong

Targets	2010	2011	Year 2012
Profits from lending activities	28.26	36.05	48.07
Profit from CVTD	5.71	7.93	10.94
Profit margin from CVTD / Profit from lending activities (%)	20,20	21.99	22.5

(Source: Business results report of Sacombank - Hanoi)

The above results show that lending activities always bring high profits to the Branch with an annual growth rate of over 25%. This is the result of the enthusiastic direction of the Board of Directors, along with the coordination of the employees, so the search for new customers of the Branch went smoothly, loan sales increased steadily over the years, profit from lending also increased, lending efficiency improved and improved.

In lending activities, consumer lending activities have been bringing a good source of income for the Branch over the years. The proportion of profit from consumer lending activities in the profit gained from lending activities of the Branch has continuously increased over the years. In 2010, the profit from credit card was 5.71 billion dong, accounting for 20.20% of the total profit from lending activities of the Branch; In 2011, the profit from credit card business increased to VND 7.93 billion, accounting for 21.99% of the total profit from lending activities. By 2012, this figure was 10.94 billion dong, accounting for 22.75% of total profit from lending activities. Consumer borrowers are becoming the Branch's target audience, and the number of customers coming to the Branch is increasing. Customer acquisition, appraisal, marketing,advising customers on consumer loans better and more effectively.

2.5.3. Assessing the current situation of consumer lending activities of Saigon Thuong Tin Commercial Joint Stock Bank - Hanoi Branch

2.5.3.1. These achievements

In terms of qualitative

Customers feel more and more satisfied when they come to do transactions with the Bank, the reputation of the Bank is constantly being improved; the compliance with policies and regulations of the State and Sacombank - Hanoi is quite strict, maintaining the safety ratios in lending. Moreover, the improvement of products and services, quality improvement, service style has gradually created trust for customers. The quick review and processing of documents, according to commitments is also an important factor in attracting customers. The branch has been more proactive in finding and linking a number of partners to produce goods to promote consumer demand. Checking process,Internal control as well as risk management activities have always been focused on by the Branch and have partly helped to ensure the safety of credit card activities in particular and the activities of the Branch in general. Consumer lending activities have contributed to improving lending efficiency and increasing income of the Branch.

Quantitatively

Consumer loan sales and CVTD debt collection both achieved positive results, constantly increasing during this period, and it is forecasted that in the coming years will be higher and more stable, with a more stable growth rate. that consumer customers are becoming regular customers of the Branch. The appraisal of projects and customers is done better and better, applying more scientific methods and more complete appraisal techniques. The inspection and supervision of the lending process and off-balance sheet debt collection were also conducted closely and smoothly among the relevant departments. Along with the drastic and quick direction from the Board of Directors and departments, most of the bad debts and showing signs of inactivity were recovered, leading to a high increase in debt collection.

Outstanding consumer loans in 2011 and 2012 both increased (growth rate from 69.17 to 75.11%) and increased quite high compared to the whole banking system (growth rate from 15.28 to 75.11%) 23.45%). Medium and long-term loans accounted for an increasing proportion of total outstanding loans with a growth rate of over 70%, foreign currency outstanding loans also increased significantly (a growth rate of over 140%).

The ratio of overdue debt and bad debt in the credit portfolio is not too high (the highest rate of overdue debt in 2012 was 2.21% and the highest bad debt ratio was 0.65%) and was strictly controlled. The ratio of bad debt to overdue debt CVD decreased in 2012 to 29.38%. That shows that the credit quality of the Branch is quite good, however, the Branch still needs to pay more attention in the lending process because there are still many potential risks, group 2 debts may become bad debts. The ability to compensate for the occurrence of risks in the credit portfolio is always guaranteed with the amount of DPRR in the credit portfolio increasing in proportion to the growth rate of the credit balance and the relatively high risk-offering coefficient. The operation of the branch's credit portfolio is quite effective with a relatively stable and steadily increasing credit turnover over the years.Profit from credit card activities increased steadily over the years and accounted for an increasing proportion of total profit from lending activities of the Branch.

2.5.3.2. Difficulties and limitations

Besides the positive business results, the branch's consumer lending still has certain limitations:

The balance structure of consumer loans by purpose is unbalanced, mainly focusing on home loans, other products have not been really focused, accounting for a low proportion of the total outstanding loans for consumer loans. The service system is still not diversified, just stops at home repair and upgrade loans, home purchases, car loans, study abroad loans, etc. For the purposes of borrowing money for medical needs, tourism calendar or other less-exploited purposes.

The proportion of consumer loans to total loans of the bank is still low (from 14.96% to 15.96%), revenue from this activity is not really high (from 20.20% to 15.96%). 22.75% of the Branch's total revenue from lending activities). In addition, outstanding loans accounted for a low proportion compared to total mobilized capital (only from 3.5% to 7.5%). Although the branch's lending potential is large, it has not been fully utilized due to the lending process as well as the high requirements for special assets, so the lending efficiency has not reached the optimal level, the branch has not exploited its full potential. of the market.

Although the rate of bad debt and overdue debt of the Branch is not too high, the proportion of NCCL in overdue debt is increasing. This issue is quite worrisome, as debt restructuring also brings more risks in the long run for the Branch. Non-performing loans also skyrocketed in 2012, proving that there are still many mistakes in the work of ensuring the safety of the branch's capital. The compliance with the credit card process still has some shortcomings, the control is not regular; largely due to the fact that CBTD took advantage of the short working relationship, leading to risks for the Branch.

In a competitive market to attract consumer borrowers, time to complete loan documents and disburse is very important; However, this time limit at Sacombank - Hanoi is still quite long, not saving time for customers. The loan application procedures and lending process are still too cumbersome and unnecessary, which slows down the loan process and makes many customers unable to access capital in time, thus reducing the efficiency of their business. Branch.

The branch's staff also revealed certain limitations such as a lack of professionalism, poor attitude and customer service style of some employees. Many customers still do not know much about the branch, although marketing is always focused. The lack of professional knowledge or negligence of the staff in the appraisal of customers, appraisal of loan plans as well as special assets brings more risks to the Branch.

The scale of Sacombank - Hanoi's credit portfolio is not really as expected, compared with the current market demand for credit cards, it is still small compared to its potential. The link between banks and manufacturers is still weak, focusing only on certain businesses. Currently, the great development of information technology has gradually changed the payment method of Vietnamese people, especially of Hanoians, the use of credit cards has become popular. Since then, the demand for consumer loans through credit cards of credit institutions is very large, but Sacombank's card services are still very weak, unable to meet the needs of the market.

2.5.3.3. The cause of the restriction

Subjective reasons come from the bank

The branch's lending policy is still limited: Sacombank - Hanoi focuses on corporate credit rather than personal credit, moreover, consumer lending has only really been focused on by the Branch in recent years. So consumer loan products are not really diversified and rich. In addition, the branch's consumer loan level is still low, each loan is up to 70% of the value of special assets. This amount is still small compared to the customer's need to borrow even the value of the customer's assets, so it has missed the lending opportunity for many customers, especially those with high repayment ability in the future and current capital needs. Due to ensuring the safety of loan sources and credit card activities are always high risks, the branch's lending process is still quite strict in terms of procedures, making customers still hesitant when they want to borrow capital from the Branch. Coordination between departments,The department is not logical and efficient, causing inconvenience and loss of customer time.

The branch is afraid of the risk of bad debt: in the context of volatile market, customers have difficulty in repaying bank loans. In order to reduce the bad debt ratio and reduce the DPRR cost, the branch allows customers to restructure debts, causing the NCCL ratio to increase. In addition, there are still many gaps in customer appraisal as well as loan monitoring of the Branch.

High interest rates make it difficult for consumers to borrow: Currently, the branch introduces a loan program to buy houses, cars ... with more preferential conditions than before, but the new pressure on interest rates makes customers want to borrow fear capital. Branch marketing activities have not been effective: Sacombank - Hanoi does not have an independent marketing department, so improving the bank's image is still limited. Although the branch's promotion activities are always focused, the preferential policies for customers are still limited, the promotion only focuses on Hai Ba Trung district, not expanding to other areas. in Hanoi city, making the branch's market still limited. The information system does not meet the standards: The branch's collection of information about loans and customers is still limited, which makes it difficult to make credit decisions.

Objective reasons

Fierce competition between banks in Vietnam: If in the past years, commercial banks focused mainly on lending for production, business and services, but recently, they have focused on promoting consumer lending.

Promoting consumer lending is a way to help commercial banks disperse risks. Competition between banks is getting fiercer. The customer groups that banks lend to consumers are increasingly expanding and the purposes of capital use are also increasingly diversified, with many preferential policies giving customers more options to choose from.

Consumer loan customers are more difficult to identify information than corporate customers, so it is more difficult to prove the source of debt repayment. Consumer loans are small and scattered, so their outstanding balance is not stable. The psychological factor of customers is also a reason, due to the habit of Vietnamese people afraid to go to banks for fear of complicated procedures, fear of others knowing the loan information... The economy in recent years There are many fluctuations such as: high inflation rate (at double digits), CPI increase, along with constant fluctuations in exchange rates in the foreign exchange market and interest rates in the deposit market. … has caused difficulties for both the Branch and customers who want to access the Branch's capital.

SUMMARY OF CHAPTER 2

Chapter 2 briefly introduced the history of formation and development, the organizational structure of Sacombank in general and of Sacombank - Hanoi in particular. In addition, the chapter presents data and overview information on the business performance of Sacombank - Hanoi in the year 2010 - 2012. Chapter 2 also provides analysis and assessment of operational efficiency. CVTD, thereby giving advantages and limitations to overcome in the near future. It is also the basis to be able to give some solutions and recommendations to promote the effectiveness of credit card activities at Sacombank - Hanoi in chapter 3.

CHAPTER 3. SOLUTIONS TO PROMOTE THE EFFICIENCY OF CONSUMER LIVING ACTIVITIES AT SAI GON TRADING JOINT STOCK COMPANY

3.1. Development orientation of Saigon Thuong Tin Commercial Joint Stock Bank - Hanoi Branch

3.1.1. Development orientation of Saigon Thuong Tin Joint Stock Commercial Bank

In 2013, with the perception that the economic situation in the year will continue to be difficult, the banking industry still has to face internal difficulties as well as new challenges in parallel with the implementation of key tasks of the industry. in 2013 are: operating tight and flexible monetary and fiscal policies; linking fiscal policy with monetary policy with the goal of enhancing macro stability and ensuring reasonable growth with the total means of payment increasing by 14-16% and credit increasing by about 12%; continue to lower credit interest rates in line with the decrease in inflation; operating the exchange rate according to market signals, ensuring the value of the Vietnamese dong; improving the balance of international payments and increasing foreign exchange reserves… In 2013, the Board of Directors and Board of Directors of Saigon Thuong Tin Commercial Joint Stock Bank also set targets to strive to maintain the achieved results. ,continue to accelerate growth, dominate the market on the basis of focusing on operational efficiency and sustainable development, continue to maintain its position as one of the leading retail banks in Vietnam. Some specific targets that the bank has set in 2013 are as follows: Total assets increased by 14%, charter capital growth reached 53%, mobilized capital increased by 16%, total credit balance increased by 12%. , pre-tax profit growth is set at 113%, bad debt ratio is reduced to below 3%, and all resources are focused on developing a 35% increase in individual customer base.charter capital growth reached 53%, mobilized capital increased by 16%, total credit balance increased by 12%, profit before tax growth was targeted at 113%, bad debt ratio fell below 3% and focused on Focusing all resources to develop the personal customer base increased by 35%.charter capital growth reached 53%, mobilized capital increased by 16%, total credit balance increased by 12%, profit before tax growth was targeted at 113%, bad debt ratio fell below 3% and focused on Focusing all resources to develop the personal customer base increased by 35%.

To achieve that goal, the bank has launched key development strategies in the coming period, which are to increase labor productivity, focus on effective cost management and improve management methods - processes. business process, maximize the benefit value per customer unit; in parallel, focusing on rapidly increasing total assets and equity in order to improve financial capacity, promote and improve governance capacity to ensure safer and more efficient operations; at the same time, it is necessary to renew the mechanism of formulating, assigning and implementing business plans according to product lines, towards serving customers; improve the quality of human resources; continue to restructure policy mechanisms; restructuring of business operations and restructuring of assets and financial portfolios;perfect banking technology and continue to expand key networks to dominate the market, increase market share, deploy new products and services and improve risk management capacity.

3.1.2. Development orientation of Saigon Thuong Tin Commercial Joint Stock Bank - Hanoi Branch

3.1.2.1. General direction

In order to achieve the goals set out in 2013, the whole system of Sacombank in general and Sacombank - Hanoi in particular are making efforts to implement many expansion programs in both width and depth. Along with the implementation of the joint efforts of the whole system, Sacombank - Hanoi has determined the specific directions and tasks in 2013 as follows:

Striving to raise the total mobilized capital in 2013 to reach VND 5,467 billion, an increase of 16% compared to 2012, of which VND mobilization is 4,264.26 billion VND, accounting for 78%, foreign currency mobilization converted to 1,202.74 billion VND account for 22%. Total outstanding loans of Hanoi Branch reached VND 3486 billion, up 60% compared to 2012, of which VND outstanding loans were VND 2,858 billion, accounting for 82%, outstanding loans in foreign currency converted to VND 628 billion, accounting for 18%. Profit before tax reached 150 billion dong, equivalent to a growth rate of 40%. The rate of overdue debt should not exceed 1.5% and the bad debt ratio should be minimized to less than 0.5%.

To achieve those results, the Board of Directors as well as the departments have introduced the following specific measures: