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Analysis of personal credit activities at An Giang Bank for Agriculture and Rural Development - Thoai Son District Branch - 2

LIST OF SYMBOLS AND ABBREVIATIONS


NHNo & PTNT: Bank for Agriculture and Rural Development


NH: Bank

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Commercial Bank: Commercial Bank

Analysis of personal credit activities at An Giang Bank for Agriculture and Rural Development - Thoai Son District Branch - 2


KH: Customer


Production and business: Production and business


Business Activities: Business Activities


TD: Credit


SP : Product


TS: Assets

LIST OF TABLES USED


Table 2.1 Business performance of the bank in the period 2011-2013 Table 2.2 Capital mobilization situation of the bank in the period 2011-2013

Table 2.3 Personal loan turnover of NHNo & PTNT, Thoai Son district branch (2011-2013)

Table 2.4 Personal debt collection turnover of NHNo & PTNT, Thoai Son district branch (2011-2013)

Table 2.5 Outstanding personal loans of NHNo & PTNT, Thoai Son district branch (2011-2013)

Table 2.6 Bad debt situation of NHNo & PTNT, Thoai Son district branch (2011-2013)

Table 2.7 Indicators for assessing the personal credit situation of the Bank for Agriculture and Rural Development, Thoai Son district branch, period 2011-2013

LIST OF CHARTS, GRAPHS, DIAGRAMS, IMAGES


Diagram 1.1 Lending process at NHNo & PTNT, Thoai Son district branch Diagram 2.1 Organizational structure of NHNo & PTNT, Thoai Son district branch

Chart 2.1 Business performance results for the period 2011-2013


Chart 2.2 Capital mobilization situation of banks in the period 2011-2013 Chart 2.3 Personal loan turnover by term

Chart 2.4 Personal loan volume by loan purpose Chart 2.5 Personal loan volume by industry

Figure 2.6 Personal loan volume by secured method Figure 2.7 Personal debt collection volume by term

Chart 2.8 Personal debt collection turnover by loan purpose Chart 2.9 Personal debt collection turnover by industry

Figure 2.10 Personal debt collection turnover by secured method Figure 2.11 Personal loan outstanding by term

Chart 2.12 Outstanding personal loans by loan purpose Chart 2.13 Outstanding personal loans by industry

Chart 2.14 Outstanding personal loans by secured method Chart 2.15 Bad debt situation by term

Chart 2.16 Bad debt situation by loan purpose Chart 2.17 Bad debt situation by industry

Chart 2.18 Bad debt situation by security method


INTRODUCTION


1. Reason for choosing the topic

It can be said that with the current economic situation of our country, no field is more important than the banking sector. The banking system has a direct and comprehensive impact on all fields and aspects of social life. With its tools, banks will distribute capital from surplus to shortage areas, contributing significantly to the economic development of the country. Among the many tools of banks, capital mobilization and lending are the two most important, accounting for the largest proportion of total assets and capital of banks. Lending is the activity that generates the largest profit of banks, in which personal lending contributes greatly to the total profit achieved. In fact, personal lending is a very attractive field that attracts the participation of most banks, with high growth segments such as consumer lending, production and business.

Like other commercial banks, NHNo & PTNT Thoai Son district branch operates in the monetary sector with the main function of mobilizing capital for lending. Knowing the importance of personal lending, the bank is increasingly interested in individual customers, offering many attractive lending policies, launching many new and diverse products to meet the increasing needs of customers. With such importance, it is necessary to evaluate and analyze credit activities to see whether credit activities are effective? What risks will be encountered in the lending process? Know the strengths and weaknesses in the bank's credit activities. From there, propose effective solutions to improve the efficiency of the bank's credit activities. For the above reasons, I have chosen the topic "Analysis of personal credit activities at NHNo & PTNT An Giang - Thoai Son district branch" as the research topic for my thesis.

2. Research objectives

2.1 General objectives


Credit is an important business and accounts for a large proportion of the total assets of the bank, therefore, the research topic on personal credit activities at the Bank for Agriculture and Rural Development, Thoai Son district branch aims to find and promote the strengths, and at the same time overcome the weaknesses in the credit activities of the bank.


2.2 Specific objectives


General assessment of personal credit activities of NHNo & PTNT, Thoai Son district branch over 3 years 2011-2013.

Evaluate the current status of personal credit activities of the Bank for Agriculture and Rural Development, Thoai Son district branch over the 3 years 2011-2013.

Propose some solutions to improve the performance of personal credit activities at the Bank for Agriculture and Rural Development, Thoai Son district branch.

3. Research object and scope

3.1 Research subjects


The topic studies issues related to personal credit of the Bank for Agriculture and Rural Development, Thoai Son district branch such as: mobilized capital, loan turnover, debt collection turnover, outstanding debt, overdue debt and credit performance evaluation criteria.

3.2 Spatial scope

The topic was carried out at the Bank for Agriculture and Rural Development, Thoai Son District Branch.


3.3 Time range


The project was carried out from February 24, 2014 to April 20, 2014 through collecting and analyzing data of banks in the three years 2011-2013.

4. Research methods

4.1 Historical method


Historical method is a method based on data collected in the past, the author will analyze and give an overview of the bank's personal credit situation in recent years.

4.2 Logical method


Based on the analysis of past data, the logical method helps the author find the logic and the inevitable to outline the nature, laws of movement and objective development of credit activities.


4.3 Data analysis method


Absolute comparison method: is the result of subtracting the value of the analysis period from the base period of the economic indicator.

x = x 1 – x 0

In which: x: is the difference between the increase and decrease of economic indicators x 1 : next year's indicator

x 0 : previous year's target

This method is used to compare the following year's data with the previous year's data of economic indicators to see if there are any fluctuations, find the cause of the fluctuations and then propose solutions to overcome them.

Relative numerical comparison method: is the result of division between numerical values

of the analysis period compared with the base period of economic indicators.

x =

x 1 x100% -100%

x 0

In which: x: represents the growth rate of economic indicators x 1 : next year's indicator

x 0 : previous year's target

This method is used to reveal the fluctuations of economic indicators in a certain period of time. Compare the growth rate of indicators between years and compare the growth rate between indicators. From there, find the cause and remedy.

Analyze credit performance evaluation criteria.


5. Topic structure

In addition to the introduction and conclusion, the research topic is divided into 3 chapters:


Chapter 1: Theoretical basis of personal credit

Chapter 2: Analysis of the current situation of personal credit activities at An Giang Bank for Agriculture and Rural Development - Thoai Son District Branch

Chapter 3: Solutions to improve the efficiency of personal credit activities at An Giang Bank for Agriculture and Rural Development - Thoai Son District Branch


CHAPTER 1. Theoretical basis of personal credit


1.1 Overview of personal credit


1.1.1 Concept of personal credit

Bank credit: bank credit is the relationship of transferring the right to use capital from the bank to the customer for a certain period of time at a certain cost.

Personal credit: based on bank credit, personal credit is a form of credit in which the commercial bank acts as the transferor of the right to use capital to individual customers for a certain period of time for the purpose of serving life or serving production and business in the form of individual business households. After the loan term, the customer is obliged to repay both principal and interest to the bank according to the original agreement. Personal credit is a broad area including personal loans, personal guarantees and credit card payment issuance... With the scale of the topic, I would like to focus on the personal lending area, considering personal credit as personal lending.

1.1.2 Personal credit characteristics

The size of each loan is small, the number of loans is large: individual customers borrow from banks mainly for consumption or for production and business purposes on a family scale, so the loans of customers are often not large. In addition, banks also limit the loan amount of individual customers, the loan amount depends on the reason for borrowing, the ability to repay the debt, and the collateral. However, due to the diverse needs of individual customers, from low-income to high-income people, the number of personal loans is very large.

Riskier than corporate credit: credit appraisal for individual customers is more difficult than corporate customers, leading to more hidden risks for individual credit. The reason is that banks can easily know the information of the business such as the purpose of capital use, the reputation of the business, and collateral through financial reports, thereby leading to accurate appraisal with less risk. For individual customers, the information is often incomplete and unclear, credit guarantee is often a fixed monthly income source. If the customer loses his job or his income is affected, it will affect the ability to repay the bank. In addition, the number of individual credit applications is large, so


The appraisal will not be as careful and accurate as business credit. Therefore, personal credit is riskier than business credit.

Costly: due to the large number of individual customers, serving customers quickly, promptly and accurately will cost a lot of money such as opening transaction offices, recruiting staff to handle credit file appraisals, marketing and advertising costs to attract customers and some other costs.

1.1.3 The role of personal credit

Improve the material and spiritual life of individual customers: along with the development of the economy, the material and spiritual needs of people are increasingly improved. But the satisfaction of that need depends on the current payment ability. For example, customers today have a need for housing but do not have enough money to buy, then personal credit will help solve the problem of satisfying housing. Instead of having to accumulate enough money to buy a house, customers only need to pay a part of the house value, the bank will lend the rest to customers at a certain interest rate, meaning that customers will buy a house first by choosing to borrow from the bank and then accumulate and repay. This role is extremely meaningful in the case of purchasing essential goods of high value such as houses, cars... or urgent expenses such as weddings, medical treatment. In these cases, instead of having to seek loans from outside banks with sky-high interest rates, customers can rest assured to borrow capital from banks with reasonable interest rates and loan terms. In addition, personal credit also plays a role in financing the production and business activities of households, helping them to expand their production scale and improve their capabilities in the industry.

Risk dispersion, enhancing the brand of the bank: If a bank only focuses on lending to corporate customers, the risk is very high, because corporate customers often have large capital needs. If these corporate customers encounter difficulties affecting their ability to repay debts, it will greatly affect the bank's business activities. Therefore, banks develop personal credit as a way to disperse risks because with a large number of individual customers and small loans, when one customer or a few customers encounter risks leading to the inability to repay debts, it will have little impact on the bank's business activities. In addition, there are many individual customers, so developing personal credit will help the bank's image to be widely disseminated. Through personal credit, customers will know many other products and services of the bank such as payment transactions, card payment issuance, etc., to satisfy the maximum needs of customers.

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