MINISTRY OF EDUCATION AND TRAINING
THANG LONG UNIVERSITY
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GRADUATION THESIS
TOPIC :
COMPLETING THE APPRAISAL OF ADDITIONAL WORKING CAPITAL LOANS FOR CORPORATE CUSTOMERS AT THE BANK
VIETNAM INDUSTRY AND TRADE JOINT STOCK COMPANY – DONG ANH BRANCH
STUDENT: PHAM THI LIEN STUDENT CODE: A15830 MAJOR: BANKING
HANOI - 2012
MINISTRY OF EDUCATION AND TRAINING
THANG LONG UNIVERSITY
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GRADUATION THESIS
TOPIC :
COMPLETING THE APPRAISAL OF ADDITIONAL WORKING CAPITAL LOANS FOR CORPORATE CUSTOMERS AT THE BANK
VIETNAM INDUSTRY AND TRADE JOINT STOCK COMPANY – DONG ANH BRANCH
Instructor: Ms. Pham Thi Bao Oanh Student: Pham Thi Lien
Student code: A15830
Major: Banking
HANOI – 2012
ACKNOWLEDGEMENTS
After a long time studying at school, it is time for my knowledge to be applied to practical work. I chose to do my graduation thesis to summarize all my knowledge. During the thesis process, I received a lot of help. I would like to thank my supervisor, Master Pham Thi Bao Oanh, for enthusiastically guiding me to complete my thesis report well. I would like to thank the Board of Directors of the Vietnam Joint Stock Commercial Bank for Industry and Trade - Dong Anh Branch and the credit officers of the Corporate Customer Department for giving me the opportunity to intern and work, research to suggest solutions to improve the quality of the bank's credit activities.
Thank you very much.
INDEX
INTRODUCTION
CHAPTER 1: SOME BASIC THEORIES ON APPRAISAL FOR ADDITIONAL WORKING CAPITAL LOANS FOR CORPORATE CUSTOMERS OF COMMERCIAL BANKS 1
1.1 Some basic issues about working capital of enterprises 1
1.1.1 Concept of working capital 1
1.1.2 Characteristics of working capital 1
1.1.3 The role of working capital in business operations 2
1.1.4 Classification of working capital 3
1.1.5 The significance of determining working capital needs in the production and business activities of enterprises 6
1.1.6 Determining the working capital needs of the business 7
1.2 Bank's working capital lending activities 8
1.2.1 Concept of working capital loan 8
1.2.2 Subjects of loans for additional working capital 8
1.2.3 Principles of lending for additional working capital 9
1.2.4 Conditions for additional working capital loans 10
1.2.5 Characteristics of working capital loans 11
1.2.6 The role of working capital loans 13
1.2.7 Classification of working capital loans 14
1.3 Appraisal for additional working capital loans 16
1.3.1 Concept of appraisal for additional working capital loans 16
1.3.2 Purpose of appraisal for additional working capital loan 16
1.3.3 The role of appraisal for additional working capital loans 17
1.3.4 Appraisal requirements 19
1.3.5 Sources of information used in the appraisal of additional working capital loans20 1.3.6 Appraisal process 22
1.3.7 Appraisal method 25
1.3.8 Appraisal content 26
1.3.9 Factors affecting the appraisal of loans for additional working capital 36
CHAPTER 2: CURRENT STATUS OF APPRAISAL FOR ADDITIONAL WORKING CAPITAL LOANS FOR CORPORATE CUSTOMERS AT VIETNAM JOINT STOCK COMMERCIAL BANK FOR INDUSTRY AND TRADE - DONG ANH BRANCH 41
2.1 Introduction to Vietnam Joint Stock Commercial Bank for Industry and Trade - Dong Anh Branch 41
2.1.1 General introduction 41
2.1.2 Formation and development process 41
2.2 General regulations in appraisal of loans for additional working capital for corporate customers at Vietnam Joint Stock Commercial Bank for Industry and Trade - Dong Anh Branch. 42
2.2.1 Appraisal process for additional working capital loans at Vietnam Joint Stock Commercial Bank for Industry and Trade - Dong Anh Branch 42
2.2.2 Contents of appraisal for additional working capital loan at Vietnam Joint Stock Commercial Bank for Industry and Trade - Dong Anh Branch 45
2.3 Current status of lending activities to supplement working capital for corporate customers at Vietnam Joint Stock Commercial Bank for Industry and Trade - Dong Anh Branch in the period of 2009 - 2011 58
2.3.1 Disbursement situation of loans for additional working capital 58
2.3.2 Debt collection situation for additional working capital loans 59
2.3.3 Outstanding loan situation for additional working capital 60
2.3.4 Income situation from interest on loans to supplement working capital in the period 2009 - 2011. 68
2.3.5 Current status of working capital loan quality 69
2.4 Evaluation of appraisal work for loans to supplement working capital for corporate customers at Vietnam Joint Stock Commercial Bank for Industry and Trade - Dong Anh Branch 79
2.4.1 Points achieved 79
2.4.2 Existing limitations 80
2.4.3 Causes of limitations 81
CHAPTER 3: SOME SOLUTIONS TO IMPROVE THE APPRAISAL FOR ADDITIONAL WORKING CAPITAL LOANS FOR CORPORATE CUSTOMERS AT VIETNAM JOINT STOCK COMMERCIAL BANK FOR INDUSTRY AND TRADE - DONG ANH BRANCH 84
3.1 Orientation of Vietnam Joint Stock Commercial Bank for Industry and Trade - Dong Anh Branch in appraisal of loans for additional working capital for corporate customers in the coming time 84
3.1.1 Market trend assessment in the coming time 84
3.1.2 Development orientation of Vietnam Joint Stock Commercial Bank for Industry and Trade - Dong Anh Branch in the coming time 85
3.2 Some proposals to improve the appraisal of loans for additional working capital for corporate customers at Vietnam Joint Stock Commercial Bank for Industry and Trade - Dong Anh Branch 86
3.2.1 Adjusting the specific tasks of positions in the Corporate Customer Service Department 86
3.2.2 Improving the quality of information used in appraisal 87
3.2.3 Completing the appraisal content 90
3.2.4 Improving the professional qualifications of credit officers 92
3.2.5 Completing the infrastructure system serving appraisal work 94
3.2.6 Strengthening inspection and supervision work 95
3.3 Some recommendations to improve the appraisal of loans for additional working capital for corporate customers at Vietnam Joint Stock Commercial Bank for Industry and Trade - Dong Anh Branch 95
3.3.1 Recommendations to the Government 95
3.3.2 Recommendations to the State Bank 97
3.3.3 Recommendations to Vietnam Joint Stock Commercial Bank for Industry and Trade 98
LIST OF ABBREVIATIONS
Abbreviation Full Name
BDS Internal network system
BSVLĐ Supplement working capital
CBTD Credit Officer
CIC Credit Information Center
Board of Directors Board of Directors
INCAS Modernization Program System
KHDN Corporate customers
NHCT Bank for Industry and Trade
State Bank of Vietnam
Commercial Bank Commercial Bank
Transaction Office
Production and business
Joint Stock Commercial Bank
Limited Liability Company
TSBĐ Collateral
TTTĐ Appraisal report
Charter capital
LIST OF FIGURES AND TABLES
Diagram 1.1: Appraisal process for additional working capital loans 22
Diagram 2.2: Appraisal process for additional working capital loans at VietinBank
Dong Anh 43
Table 2.1: Business size scoring table 50
Table 2.2: Weighting table applied to financial criteria 51
Table 2.3: Weighting table applied to non-financial criteria 53
Table 2.4: Summary table of customer credit scores and ratings 53
Table 2.5: Sales situation of loans to supplement working capital 58
Table 2.6: Debt collection turnover for additional working capital loans 59
Table 2.7: Outstanding loans for additional working capital in the period 2009 - 2011 60
Table 2.8: Outstanding loans for additional working capital classified by debt group 61
Table 2.9: Outstanding loans for additional working capital classified by type of enterprise ..64 Table 2.10: Outstanding loans for additional working capital classified by customer group 66
Table 2.11: Income from lending activities to supplement working capital 68
Table 2.12: Quality of loans to supplement working capital in the period of 2009 - 2011 ...69 Table 2.13: Business results report of Cau Duong Joint Stock Company in the period
2009 – First Quarter of 2012 73
Table 2.14: Balance sheet of Cau Duong Joint Stock Company in 2009
– Quarter I/2012 74
Table 2.15: Financial indicators of Cau Duong Joint Stock Company in 2009
– Quarter I/2012 76