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Analysis of credit activities at Long An Investment and Development Bank - 1

CAN THO UNIVERSITY

FACULTY OF ECONOMICS - BUSINESS ADMINISTRATION



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Analysis of credit activities at Long An Investment and Development Bank - 1


GRADUATION THESIS


Topic :

ANALYSIS OF CREDIT ACTIVITIES AT INVESTMENT AND DEVELOPMENT BANK LONG AN BRANCH


Instructor : Students perform:

PHAN THI NGOC KHUYEN LUU THI CAM HOAI

Student number: 4043429

Class: Banking Finance Course: 30



Can Tho 2008

INDEX

CHAPTER 1.1 INTRODUCTION 1

1.1 REASONS FOR CHOOSING TOPIC 1

1.2 RESEARCH OBJECTIVE 2

1.2.1 General objective 2

1.2.2 Specific objectives 2

1.3 SCOPE OF RESEARCH 2

1.3.1 Space 2

1.3.2 Time 2

1.3.3 Research subject 2

1.4 SUMMARY OF RELATED LITERATURE 2

CHAPTER 2 THEORETICAL BASIS AND RESEARCH METHODOLOGY 4

2.1 THEORETICAL BASIS 4

2.1.1. Concept of credit activities 4

2.1.2. Credit classification 6

2.1.3 Principles of credit 7

2.2. RESEARCH METHODS 8

2.2.1. Data collection method 8

2.2.2. Data analysis method 8

CHAPTER 3 GENERAL INTRODUCTION TO INVESTMENT BANKING AND

DEVELOPMENT 11

3.1. OVERVIEW OF INVESTMENT AND DEVELOPMENT BANK 11

3.2. INTRODUCTION TO INVESTMENT AND DEVELOPMENT BANK BRANCH

LONG AN 14

3.2.1. Formation and development process 14

3.2.2. Organizational structure 15

3.2.3. Functions and tasks of departments 16

3.2.4 Products and services of branch 20

3.3. BUSINESS RESULTS 21

3.3.1 Profit 21

3.3.2 Income 22

3.3.3. Cost 22

3.4 DEVELOPMENT GOALS OF INVESTMENT AND DEVELOPMENT BANK

Future developments in credit activities 23

CHAPTER 4 ANALYSIS OF CREDIT SITUATION AT THE FIRST BANK

LONG AN BRANCH DEVELOPMENT AND CONSULTATION 24

4.1. ANALYSIS OF CAPITAL SITUATION 24

4.1.1 General analysis of capital situation 24

4.1.2 Capital structure 25

4.2. ANALYSIS OF CAPITAL MOBILIZATION SITUATION 25

4.2.1 General analysis of capital mobilization situation 25

4.2.2 Analysis of capital mobilization structure 27

4.3 ANALYSIS OF CAPITAL USE 29

4.3.1 Loan situation analysis 29

4.3.1.1 Analysis of lending situation by economic sector 29

4.3.1.2 Loan analysis by term 31

4.3.1.3 Loan analysis by industry 33

4.3.2 Analysis of debt collection situation of Bank 35

4.3.2.1 Debt collection analysis by economic sector 35

4.3.2.2 Debt collection analysis over time 37

4.3.2.3 Debt collection analysis by industry 39

4.3.3 Analysis of Bank's outstanding debt situation 41

4.3.3.1 Analysis of outstanding debt by economic sector 41

4.3.3.2 Analysis of outstanding debt over time 42

4.3.3.3 Industry Analysis 43

4.3.4 Overdue debt analysis 45

4.3.4.1 Analysis of overdue debt by economic sector 45

4.3.4.2 Analysis of overdue debt by term 47

4.3.4.3 Industry Analysis 49

4.4. ANALYSIS OF CREDIT PERFORMANCE 50

4.4.1. Debt collection ratio 51

4.4.2. Outstanding debt on mobilized capital 51

4.4.3. Mobilized capital on total capital sources 52

4.4.4. Total outstanding debt over total capital 53

4.4.5. Debt collection turnover on average outstanding debt (DSTN/DNBQ) or turnover ratio: ..53 4.4.6. Overdue debt on total outstanding debt (NQN/TDN) 54

CHAPTER 5 ORIENTATION AND SOLUTIONS TO IMPROVE CREDIT EFFICIENCY

AT INVESTMENT AND DEVELOPMENT BANK LONG AN BRANCH 56

5.1 GENERAL ASSESSMENT OF THE BANK'S CREDIT ACTIVITIES..56

5.2 ORIENTATION OF BANK'S ACTIVITIES 57

5.2.1. General Objective 57

5.2.2.Specific indicators 59

5.3 SOLUTION 59

5.3.1 Capital sources 59

5.3.2. Credit, appraisal, guarantee 60

5.3.3 Credit quality 61

5.3.4 Business results, efficiency, risk provisions 61

5.3.5 Service Development 62

5.3.6 Information technology development and application plan 63

5.3.7 Network development: 63

5.3.8 Human resource training and development plan 63

5.3.9 Inspection and compliance with regulations on implementation of professional handbook63

5.3.10 Improving competitiveness and financial capacity 65

CHAPTER 6 CONCLUSION AND RECOMMENDATIONS 66

6.1 CONCLUSION 66

6.2 RECOMMENDATION 67

6.2.1 For State agencies 67

6.2.2 For the State Bank 67

6.2.3 For Investment and Development Bank, Long An branch 68

REFERENCES 69


LIST OF TABLES


Table 1: Business performance of Long An Investment and Development Bank 2005-2007 21

Table 2: Capital situation at the Bank over the 3 years 2005-2007 24

Table 3: Capital mobilization situation at the branch over three years 2005-2007 26

Table 4: Loan turnover by economic sector over 3 years 2005-2007 30

Table 5: Loan turnover by credit term over 3 years 2005-2007 31

Table 6: Loan turnover by industry over 3 years 2005-2007 33

Table 7: Debt collection turnover by economic sector over 3 years 2005-2007 35

Table 8: Debt collection turnover by credit term over 3 years 2005-2007 37

Table 9: Debt collection turnover by industry over 3 years 2005-2007 39

Table 10: Outstanding loans by economic sector over three years 2005-2007 41

Table 11: Outstanding loans by credit term over three years 2005-2007 42

Table 12: Outstanding loans by industry over three years 2005-2007 43

Table 13: Overdue debt by economic sector over three years 2005-2007 45

Table 14: Overdue debt by credit term over three years 2005-2007 48

Table 15: Overdue debt by industry over three years 2005-2007 49

Table 16: Debt collection ratio of credit activities over three years 51

Table 17: Debt to capital ratio over three years 51

Table 18: Capital mobilization index over total capital over three years 52

Table 19: Debt ratio over total capital over three years 53

Table 20: Credit turnover ratio over three years 53

Table 21: Overdue debt ratio on total outstanding debt over three years 54

Table 22: Summary of credit performance evaluation indicators over three years. 55


LIST OF IMAGES

Figure 1: Description of credit activity relationship 4

Figure 2: Organizational chart of Bank 15

Figure 3: Business performance results over 3 years 2005-2007 21

Figure 4: Capital structure over three years 2005-2007 25

Figure 5: Structure of mobilized capital by nature over three years 2005-2007 27

Figure 6: Structure of mobilized capital over three years 2005-2007 28

Figure 7: Loan sales structure by economic sector over three years 29

Figure 8: Loan sales structure over time over three years 32

Figure 9: Loan sales structure by industry over three years 33

Figure 10: Debt collection revenue structure by economic sector over three years 37

Figure 11: Structure of debt collection revenue over time of the branch over three years 38

Figure 12: Structure of debt collection revenue by branch industry over three years 39

Figure 13: Debt structure by economic sector over three years 41

Figure 14: Debt structure by term over three years 43

Figure 15: Branch's outstanding loan structure by industry over three years 44

Figure 16: Overdue debt structure by economic sector over three years 46

Figure 17: Overdue debt structure by term over three years 47

Figure 18: Overdue debt structure by industry over three years 50


LIST OF ABBREVIATIONS


NV Capital Source

Deposit TG

TG TCKT Deposit Economic Organization

Term

∑ Total

Medium and long term TDH

State-owned enterprise

Sales List

Capital mobilized

NQH Overdue Debt

CHAPTER 1

INTRODUCE


1.1 REASONS FOR CHOOSING THE TOPIC

With a fairly new environment, Vietnam's economy continues to grow strongly, gradually integrating into the global market economy, with many opportunities and many challenges. International economic integration is an inevitable trend of the 21st century. In the integration process, Banking is identified as one of the important and sensitive service industries.

Like other commercial banks, Long An Investment and Development Bank operates in the monetary sector with the main function of mobilizing capital for lending. Banking is a risky and sensitive activity that affects all economic activities. In which credit is an important business activity in the Bank's operations. The Bank's credits finance many different customer groups in the economy such as: manufacturers, distributors, builders, farmers, home buyers, traders, services and consumers... all of which depend on the Bank's credits.

Therefore, the Bank's credit activities play an important role in providing capital for the country's economy and it is also the main source of profit for the Bank.

However, in reality, the credit activities of the Bank are fraught with many risks and these risks originate from many different causes. In order for the business to develop stably, ensure efficiency but limit risks, credit analysis must first be done. Therefore, credit analysis is an indispensable goal for the credit activities of all Banks.

Based on the above problems, I chose the topic " Analysis of credit activities at the Investment and Development Bank, Long An branch " as my graduation thesis topic and from there I can better understand the credit operations of the Bank.

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