The Bank's credit has been implemented quite well, the number of customers with loan demand has increased, leading to an increase in outstanding loans. However, debt collection has been implemented strongly but lending has not been given due attention, leading to outstanding loans only increasing strongly and unevenly in 5 years, which is not a good solution for the sustainable development of the Bank. Therefore, in order for the Bank to operate more sustainably and effectively, it requires the Bank to have measures to increase loan sales and increase outstanding loans.
commensurate with debt collection to increase credit turnover.
In summary, the above figures show that the general situation of debt collection as well as the efficiency of capital use of banks over the years has declined, leading to a lack of capital. It is very likely that in the near future, lending activities at banks will face difficulties if the situation does not improve.
Number of active customers
This indicator reflects the number of bank customers over time, showing the bank's ability to attract customers over time.
Table 4.9. Number of active customers of VPBank in the period 2011-2015
Target
2011 | 2012 | 2013 | 2014 | 2015 | |
Number of active customers dynamic (customer) | 248592 | 353000 | 635000 | 1305000 | 2088000 |
Customer growth rate compared to last year (%) | - | 42 | 79.89 | 105.51 | 60 |
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Source: VPBank's 2015 Annual Report and author's own calculation.
As Vietnam integrates more and more deeply, in addition to competition between domestic banks, they also have to compete with foreign banks. To improve competitiveness in the market, in addition to increasing charter capital, improving credit quality, developing human resources, diversifying products and services in the direction of technology and customer care policies is the way for domestic commercial banks to continue to maintain market share and develop and expand the market.
Chart 4.10. Number of active customers of VPBank in the period 2011-2015
2500000
120
2000000
100
80
1500000
60
1000000
40
Number of active customers
Customer Rate Compared to Last Year (%)
500000
20
0
0
2011 2012 2013 2014 2015
Source: Table 4.9 data
Through the chart above, we can see that the number of VPBank's customers has always been large over the years, which shows that customers' trust in VPBank is increasingly consolidated, the position of the Bank is also affirmed, and the Bank has a stable and sustainable position and development over the years, this is a good sign for the Bank when operating in a developing and fiercely competitive economy. The number of active customers has increased over the years, especially in the period 2013-2015, the number of customers almost doubled. In 2014, the number of active customers of the bank had strong growth, reaching approximately 1,305,000 customers, an increase of 105.51% compared to 2013 and completing the set plan. The number of customers has increased rapidly but is still fully served with increasingly improved service quality. In 2015, the number of active customers of the Bank reached more than 2 million, a growth of 60% compared to 2014. This is an important basis in pursuing the bank's business strategy.
Loan Sales Growth Rate (DSCV)(%)
Table 4.10. VPBank's loan turnover and loan turnover growth rate from 2011 to 2015.
Unit: Billion VND
Target
2010 | 2011 | 2012 | 2013 | 2014 | 2015 | |
Loan turnover | 25324 | 39376 | 44965 | 66263 | 95675 | 131463 |
Sales growth rate loan (DSCV) (%) | - | 55.49 | 14.19 | 47.37 | 44.39 | 37.41 |
Source: Audited consolidated financial statements of VPBank and author's own calculation. Chart 4.11. Loan situation at VPBank in the period 2011-2015
Billion VND 140000
120000
Loan turnover
131463
100000
95675
80000
66263
60000
Loan turnover
39376 44965
40000
20000
0
2011 2012 2013 2014 2015 Year
Source: Data from table 4.10
Chart 4.12. VPBank's loan sales growth rate (%) in the period 2011-2015
%
60
Sales growth rate for
get a loan (%)
50
40
30
20
Loan Sales Growth Rate (%)
10
0
2011
2012
2013
2014
2015
Year
Source: Data from table 4.10
- In 2011, loan turnover reached 39,376 billion VND, an increase of 14,052 billion VND compared to 2010. In 2012, loan turnover continued to increase by 5,589 billion VND, but the increase rate compared to the previous year was not high. The reason for the small amount of loans was mainly because the customers who needed to borrow still did not have the need or a feasible plan for production and business development to be able to borrow from the bank. With the set criteria and important requirements of both controlling inflation at a single digit level and ensuring reasonable economic growth, banks need to strive to achieve better credit growth in the coming years.
- In 2013, loan turnover reached 66,263 billion VND, an increase of 21,298 billion VND compared to 2012, corresponding to an increase of 47.37%. The low demand for loans combined with the fear of bad debts made both banks and customers cautious. Never before has bank credit faced such a challenge and difficulty in growth because it always has to deal with both ensuring economic growth according to the target and ensuring capital safety. Customers do not qualify for loans, production and business plans are not feasible, while banks are not allowed to lower credit conditions and principles, and are not allowed to continue to have bad debts. On the other hand, the current low level of financial transparency of enterprises makes it more difficult for banks to determine the ability to repay principal and interest.
- In 2014, loan turnover reached 95,675 billion VND, an increase of 29,412 billion VND, equivalent to an increase rate of 44.39% compared to 2013. The fact that banks achieved growth according to the adjusted plan
Adjusting is extremely difficult because it depends on whether customers use the loan capital effectively, release inventory or expand the consumer market.
- In 2015, credit institutions forecast that outstanding credit will continue to increase in the first quarter and the whole year of 2015. In particular, domestic currency credit increases faster than foreign currency credit. It is forecasted that outstanding credit in the first quarter of 2015 will increase by about 3.5% and the whole year of 2015 will be nearly 14.6% compared to 2014. That makes loan turnover increase by 35,788 billion VND compared to 2014.
corresponding to an increase of 37.41%.
Up to this point, most of the loans of credit institutions are mainly focused on manufacturing industries such as: Processing agricultural and aquatic products for export; investing in industrial machinery and equipment and supporting industries; purchasing raw materials and fuels for production and purchasing goods for the upcoming Lunar New Year.
Outstanding loans are pushed up, market liquidity is good, these are also positive signals for credit institutions to resolve bad debts in 2015. Many commercial banks expect to reduce bad debts to below 3% of total outstanding loans as prescribed. That makes loan turnover increase by 35,788 billion VND compared to 2014, corresponding to an increase rate of 37.41% .
CHAPTER 5. CONCLUSION AND SOLUTIONS TO IMPROVE THE EFFICIENCY OF LENDING ACTIVITIES
5.1. Conclusion
Customers feel more and more satisfied when doing business with the Bank, the Bank's reputation is constantly improving; compliance with State policies and regulations is quite strict, maintaining safety ratios in lending.
Lending efficiency is quite good, shown through:
- The number of customers has been increasing over the past 5 years. The number of customers using internet banking or mobile banking services has increased quite high, in addition, the number of customers using new cards in 2015 reached nearly 350 thousand cards, besides that the number of customers of small and medium enterprises has also increased. This shows that the reputation of the bank has been enhanced, customers have increased satisfaction and trust, thereby promoting the development of other service areas of the bank, typically lending activities, which have also gained many new customers.
potential with large, highly feasible projects, many projects have been disbursed, and some large projects are being appraised.
- Loan turnover has increased continuously over the years. If in 2013 the bank's loan turnover was 39,376 billion VND, by 2015 this number had tripled to 131,463 billion VND. It is forecasted that in the coming years it will be even higher, with a more stable growth rate, as customers are becoming regular customers of the bank.
- Debt collection turnover: has been promoted by the Bank, over the years, debt collection has increased significantly compared to loan turnover. In 2011, loan turnover was 39,376 billion VND, debt collection turnover was not less, up to 35,516 billion VND. By 2015, debt collection turnover seemed quite low compared to the amount of money that the Bank had lent, reaching 93,038 billion VND, but compared to 2011, debt collection turnover increased by 162%.
- Outstanding loans: 2015 was a year of outstanding success for personal loan products with the ending balance increasing by 81%. This success was mainly due to the diversification of sub-products, thereby meeting most of the customers' needs while increasing VPBank's competitiveness in the market. Unsecured loans also reached the end of 2015 with a high total outstanding balance, at 136%.
Project and customer appraisal work is being carried out better and better, applying more scientific methods and more complete appraisal techniques. The inspection and supervision of the lending process and the collection of off-balance sheet debts are also being carried out closely and smoothly among the relevant departments. With the drastic and prompt direction from the Board of Directors and departments, bad debts and debts with signs of delay have all been recovered, leading to increased debt collection revenue.
- VPBank's 2015 business results report shows that, after adding both subsidiaries (FE Credit and VPBank AMC), net interest income from lending activities increased by 3,700 billion VND and pre-tax profit increased by more than 1,000 billion VND, equal to 1/3 of the bank's total profit. If in 2014, VPBank's total outstanding debt only reached nearly 78,379 billion VND, by 2015, this number skyrocketed to 116,804 billion (up 49%), of which personal loans reached 62,235 billion VND, up 71% year-on-year and accounted for 53.3% of total outstanding debt, surpassing credit for businesses.
5.1.1. Limitations and causes
5.1.1.1. Limitations
- Credit turnover is not high
The structure of the bank's outstanding debt is mainly focused on the short term, so the credit turnover must also be high to match the maturity level for optimal operation. However, the current credit turnover of the bank is not high, which means that the time gap between lending, debt collection and then lending again is not really optimal. Although the debt collection ratio at the bank is relatively high, the bank's credit turnover is not high.
relatively high (in 2011 it was greater than 90%) but the debt collection period is very long, which limits the effectiveness of credit activities in VPBank's lending system.
- High rate of bad debt and overdue debt
The bad debt ratio and the amount of bad debt increase over the years, the overdue debt ratio tends to decrease but the risk of overdue debt will still be latent, easily leading to bad consequences if the cause is not promptly monitored and thoroughly resolved.
5.1.1.2. Subjective causes (from the Bank)
- Currently, VPBank has a young credit staff, although very enthusiastic.
enthusiastic and dynamic but lacking experience in credit work along with limited ability to grasp policies, mechanisms and operations. Therefore, it affects
to consulting, guiding, appraising, collecting information from customers and especially evaluating customers, leading to the creation of loan applications or debt management and collection being limited, easily causing risks affecting business opportunities of both banks and customers; Because customers are a diverse subject, the bank's provision of credit cannot avoid confusion, which is the cause of credit risks. Or is the process
The lending process is not rigorous, lacks accurate information, does not clearly understand the customer's financial strength as well as the customer's reputation, does not rely on credit analysis, and does not comply with lending conditions and principles.
- Bank credit policy:
Although it has been supplemented and corrected, compared to the requirements of the domestic, regional and global market economy, it requires further improvement of mechanisms, legal procedures and administrative procedure reform towards further simplification. The lending process and credit granting procedures are still somewhat cumbersome, slowing down the loan approval process.
affecting the bank's lending capacity.
- Collateral policy is not really flexible
Normally, customers only receive a loan from 50% to 70% of the value of the collateral, in many cases not meeting all the customers' borrowing needs. Although the Bank has accepted the collateral as movable property when most of the customers' assets exist in the form of movable property (inventory, receivables...), they can all guarantee a certain amount of credit to develop production and business activities, but still cannot meet all the customers' needs.
- The Bank's credit rating system has not yet fully reflected the internal strength of customers. Because the construction of the credit rating system is still in the process of improvement, its operations in the past have still encountered difficulties and obstacles, and have not yet properly and truly assessed the credit quality.
- Marketing strategy has not been given due attention, and a department specializing in Marketing has not been established. The promotion and introduction of the Bank's products to increase the Bank's reputation and market share have not been carried out well and thoroughly. Although maintaining good relationships with traditional customers, the Bank has not yet fully utilized its reputation and capabilities to attract more new and potential customers to the Bank.
- Customer lending form: has not yet met all the needs of small and medium enterprises, interest rate policies, collateral, not suitable to the characteristics of customers, so loan sales have not yet fully reflected the Bank's resources.
Income from lending to small and medium-sized enterprises is not high, while the potential for lending to small and medium-sized enterprises is huge.
5.1.1.3. Objective reasons (from customers)
- Business plans and strategies of enterprises
Often short-term, business activities are mainly seasonal, following the majority without a long-term development strategy, so it is easy to lose money, not highly effective, and not convincing enough to access capital sources from the Bank.
- Technical level and working ability of the workforce at medium-sized enterprises