To avoid being considered as lending “ debt rollover ” to conceal overdue debts and bad debts, coffee producers must prepare capital to repay the bank about 2-3 days in advance; then, the bank and the coffee producer re-establish the loan application and carry out the lending process as if lending a new loan. In addition to the inconvenience of paperwork, in order to “ pay off old debts to get new loans ”, many coffee producers have to borrow from outside the market, even have to borrow hot loans with high interest rates, to have capital to repay the old loan in time.
The phenomenon of " re-lending new loans right after collecting old loans " leads to the loan turnover and debt collection turnover of Dak Nong Bank for Agriculture and Rural Development almost arising at the same time in the period from February to April, peaking in March every year (Chart 3.4).
In principle, " re-lending a new loan immediately after collecting the old loan " is not against lending regulations, if the customer's production and business plan is effective.
(tr.đ)
Loan turnover
(tr.đ)
Debt collection turnover
(month) (month)
Source: IPCAS Data
Chart 3.4 Development of loan sales and debt collection for coffee producers
The problem is that the regulations on applying the method of lending each time are not suitable for the capital needs of coffee care, leading to the fact that coffee producers and banks have to redo the lending process from the beginning with full procedures and documents. In essence, it is just a formality, dealing with inspection and examination activities on compliance with lending regulations.
Because of the fact that " new loans are re-lent immediately after collecting old loans ", the results of the summary of outstanding loans for coffee producers at the Dak Nong Bank for Agriculture and Rural Development show that the outstanding loans for coffee producers have a continuous outstanding debt phenomenon (Chart 3.5), similar to the lending diagram according to the credit limit lending method ( see Chart 1.4 ).
(tr.đ)
(time)
Source: IPCAS Data
Chart 3.5 Development of outstanding loans to coffee producers
From the above issues, it can be seen that the actual application of lending methods for coffee production households at Dak Nong Bank for Agriculture and Rural Development: (1) In terms of procedures : applying the lending method for each time; (2) In terms of outstanding debt management : applying the lending method according to credit limits.
In addition, in almost all lending methods, NHNo & PTNT disburses cash directly to coffee producers. This can easily lead to risks due to misuse of capital. The cause of this problem is that the organization of non-cash payments in our country's economy in general, especially in the agricultural and rural areas of Dak Nong, is not well organized.
In general, the Dak Nong Bank for Agriculture and Rural Development applies lending methods in accordance with lending regulations. However, it is necessary to apply additional lending methods according to credit limits for coffee producers with regular capital needs, in accordance with the characteristics of credit solutions for coffee producers.
3.1.4 Status of implementation of loan access and loan disbursement
3.1.4.1 Loan form
a. Direct lending
Direct lending to coffee producers is the main form of lending at Dak Nong Bank for Agriculture and Rural Development, accounting for 100% of loans. That is, Dak Nong Bank for Agriculture and Rural Development conducts appraisal, disbursement, inspection, supervision, principal collection and interest collection directly to 100% of coffee producers.
Implementing direct lending to each coffee producing household, helping the bank's lending capital reach the hands of coffee producing households. However, along with the application of direct lending to other production and business entities, the application of direct lending in general, and direct lending to coffee producing households in particular, has caused the bank to be overloaded during the peak of the coffee production or harvesting season .
b. Lending through lending groups
During the period 2008 - 2011, Dak Nong Agricultural Bank did not coordinate with authorities at all levels and socio-political organizations to establish loan groups, and did not provide loans to coffee producers through loan groups, including cooperative groups established by farmers themselves or by grassroots socio-political organizations.
In fact, the Dak Nong Farmers' Association and the Dak Nong Women's Union have raised the issue, through the activities of the associations, to coordinate with banks to establish a Loan Group to help members borrow capital from banks, implementing the spirit of the Joint Resolution (1999) and the Inter-sectoral Agreement (2010), but it has not yet been implemented.
c. Lending through businesses
With the regulation on lending through agricultural production enterprises with contracts to coffee production households of Vietnam Bank for Agriculture and Rural Development, Dak Nong Bank for Agriculture and Rural Development does not implement the form of lending to coffee production households through enterprises; because in reality, in Dak Nong, there are no coffee production enterprises or cooperatives that meet the conditions as prescribed for lending to implement this form of lending.
Specifically, in Dak Nong, there are no companies or private enterprises operating in the field of coffee production, there are only 3 state-owned enterprises originating from former coffee farms and 1 agricultural cooperative with the following operating status: (1) Duc Lap Coffee Company: Has bad debt with the Dak Nong Bank for over 9 years that has not been resolved; (2) Thuan An Coffee Company: Has bad debt with the Dak Nong Bank for over 9 years that has not been resolved; (3) Dak Nong Coffee Company: operates at a standstill, assets do not meet the conditions for bank loans;
(4) Minh Anh Agricultural Cooperative: Registered coffee brand " Duc Lap -
Dak Nong ” and “ Dak Mil - Dak Nong ”, but currently only exist in name.
In summary, the fact that Dak Nong Bank applies direct lending for 100% of coffee production household loans, without implementing lending through lending groups or enterprises, leads to overloading of credit activities, increasing lending costs and limiting credit expansion.
3.1.4.2 Organization of the bank's transaction network
During the period 2008 - 2011, Dak Nong Bank for Agriculture and Rural Development upgraded 1 Transaction Office to Branch level, established 2 new branches and 2 transaction offices, ensuring that the Bank for Agriculture and Rural Development network expanded to all districts and some inter-commune areas (Table 3.10).
The results show that the coefficient of bank transaction points/district of the Dak Nong Bank for Agriculture and Rural Development in the area is: 1.6 in 2007; increased to 1.9 in 2011. On average, each district and town has nearly 2 bank transaction points.
In the general difficult situation of the economy in the period of 2008 - 2011, the increase in transaction points as above of the Bank for Agriculture and Rural Development of Dak Nong is a remarkable effort. However, in reality, there are still 5 areas belonging to administrative units with large areas and many residents, but there are no bank transaction points: (1) Nghia Tan commune area (Gia Nghia town); (2) Dak Song commune area (Dak Song district); (3) Quang Truc commune (Tuy Duc district); (4) Duc Xuyen commune area (Krong No district); (5) Dak RLa commune area (Dak Min district).
Table 3.10 Network expansion status
Dak Nong Bank for Agriculture and Rural Development ( transaction point)
Year
NHNo Headquarters
Delivery Room
Branch
& Provincial Rural Development | pandemic | Headquarters | Transaction Office | ||
2007 | 1 | 3 | 5 | 2 | 11 |
2008 | 1 | 4 | 8 | 1 | 14 |
2009 | 1 | 4 | 8 | 1 | 14 |
2010 | 1 | 4 | 8 | 1 | 14 |
2011 | 1 | 5 | 8 | 1 | 15 |
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![Pre-tax Profit of Bidv Tien Giang in the Period 2011-2015
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At that time, the Branch had to set aside a provision for credit risks, which reduced the Branchs income.
Chart 2.2. Pre-tax profit of BIDV Tien Giang in the period 2011-2015
Unit: Billion VND
140
120
100
80
60
40
20
0
63.3
80.34
89.29
110.08
131.99
2011 2012 2013 2014 2015
Profit before tax
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
However, through chart 2.2, it can be seen that BIDV Tien Giangs profit is still increasing continuously, and its operating efficiency is currently leaking. This is a contribution of non-credit services, and this service segment will be increasingly focused on growth by BIDV Tien Giang to ensure the highest profit safety because credit activities have many potential risks. At the same time, focusing on developing non-credit services is consistent with one of the contents of restructuring the financial activities of credit institutions in the project Restructuring the system of credit institutions in the period 2011-2015 approved by the Prime Minister in Decision No. 254/QD-TTg dated March 1, 2012 [14]: Gradually shifting the business model of commercial banks towards reducing dependence on credit activities and increasing income from non-credit services.
2.2. Current status of non-credit service development at BIDV Tien Giang.
2.2.1. BIDV Tien Giang has deployed the development of non-credit services in recent times.
Along with the development of the Head Office, BIDV Tien Giangs products and services are constantly improved and deployed in a diverse manner to ensure provision for many different customer groups in the area: individual customers, corporate customers, and financial institutions. Typical services are as follows: Payment services, treasury services, guarantee services, card services, trade finance, other services: Western Union, insurance commissions, consulting services, foreign exchange derivatives trading, e-banking services,...
2.2.1.1. Payment services:
In accordance with the Prime Ministers Project to promote non-cash payments in Vietnam [15], banks in Tien Giang province have continuously developed payment services to reduce customers cash usage habits through card services and electronic banking services such as: salary payment through accounts, focusing on developing card acceptance points, developing multi-purpose cards, paying social insurance by transfer, paying bills through banks, etc.
Chart 2.3. Net income from payment services in the period 2011-2015
Unit: Million VND
6000
5000
4000
3000
2000
1000
0
3922 4065
4720 5084 5324
2011 2012 2013 2014 2015
Net income from payment services
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
Along with the technological development of the entire system, BIDV Tien Giang has a payment system with a fairly stable transaction processing speed, bringing many conveniences to customers. The results of observing chart 2.3 show that the income from payment services that the Branch has achieved has grown over the years but the speed is not high and the products are not outstanding compared to other banks. Domestic payment products such as: Online bill payment, electricity bills, water bills, insurance premiums, cable TV bills, telecommunications fees, airline tickets, etc. bring many conveniences to customers. Regarding international payment, this is an indispensable activity for foreign economic activities, BIDV Tien Giang is providing international payment methods for small enterprises producing agriculture, aquatic food and seafood that have credit relationships with banks in industrial parks in Tien Giang province such as: money transfer, collection, L/C payment.
2.2.1.2. Treasury services:
BIDV Tien Giang always focuses on ensuring treasury safety and currency security, always complies with legal regulations, and minimizes risks in operations such as: counting and collecting money from customers, receiving and delivering internal transactions, collecting from the State Bank (SBV) or other credit institutions, receiving ATM funds, bundling money, etc. BIDV Tien Giangs treasury service management department is always fully equipped with modern machinery and equipment such as: money transport vehicles, fire prevention tools, money counters, money detectors, magnifying glasses, etc. to ensure absolute safety in treasury operations, immediately identifying real and fake money and other risks that may affect people and assets of the bank and customers. In addition, implementing regulation 2480/QC dated October 28, 2008 between the State Bank of Tien Giang province and the Provincial Police on coordination in the fight against counterfeit money, in the 3-year review of implementation, BIDV Tien Giang discovered, seized and submitted to the State Bank of Tien Giang province 475 banknotes of various denominations and was commended by the Provincial Police and the State Bank of Tien Giang province [17].
Chart 2.4. Net income from treasury services in the period 2011-2015
Unit: Million VND
350
300
250
200
150
100
50
0
105 122
309 289 279
2011 2012 2013 2014 2015
Net income from treasury services
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
However, as shown in Figure 2.4, income from treasury operations is not high and fluctuates. Specifically, in the period 2011-2013, net income increased and increased most sharply in 2013, then in the period 2013-2015, there was a downward trend. This fluctuation is due to the fact that fees collected from treasury services are often very low and can even be waived to attract customers to use other services.
2.2.1.3. Guarantee and trade finance services:
BIDV Tien Giang, thanks to the advantages of the province and the favorable location of the Branch, has continuously focused on developing income from guarantee services and trade finance.
Chart 2.5. Net income from guarantee and trade finance services in the period 2011-2015
Unit: Million VND
14000
12000
10000
8000
6000
4000
2000
0
5193 5695
2742 3420
8889
3992
11604 12206
5143 5312
2011 2012 2013 2014 2015
Net income from guarantee services Net income from Trade Finance
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
Through chart 2.5, we can see that BIDV Tien Giangs income from guarantee services and trade finance has grown over the years. The reason is: Among BIDV Tien Giangs corporate customers, the construction industry is the industry with the highest proportion of customers after the trading industry, this is a group of customers with potential to develop guarantee services. The second group of customers is corporate customers in the fields of agricultural production, livestock and seafood processing with high import and export turnover in the area.
are the target of trade finance development. In addition, BIDV Tien Giang also focuses on continuously developing these customer groups to increase revenue for many other products and services in the future.
2.2.1.4. Card and POS services:
As a service that BIDV Tien Giang has recently developed strongly, it can be said that this is a very potential market and has the ability to develop even more strongly in the future. Card services with outstanding advantages such as fast payment time, wide payment range, quite safe, effective and suitable for the integration trend and the Project to promote non-cash payments in Vietnam. Cards have become a modern and popular payment tool. BIDV Tien Giang early identified that developing card services is to expand the market to people in society, create capital mobilized from card-opened accounts, contribute to diversifying banking activities, enhance the image of the bank, bring the BIDV Tien Giang brand to people as quickly and easily as possible. BIDV Tien Giang is currently providing card types such as: credit cards (BIDV MasterCard Platinum, BIDV Visa Gold Precious, BIDV Visa Manchester United, BIDV Visa Classic), international debit cards (BIDV Ready Card, BIDV Manu Debit Card), domestic debit cards (BIDV Harmony Card, BIDV eTrans Card, BIDV Moving Card, BIDV-Lingo Co-branded Card, BIDV-Co.opmart Co-branded Card). These cards can be paid via POS/EDC or on the ATM system. In addition, with debit cards, customers can not only withdraw money via ATMs but also perform utilities such as mobile top-up, online payment, money transfer,... through electronic banking services.
In order to attract customers with card services, BIDV Tien Giang has continuously increased the installation of ATMs. As of December 31, 2015, BIDV Tien Giang has 23 ATMs combined with 7 ATMs in the same system of BIDV My Tho, so the number of ATMs is quite large, especially in the center of My Tho City, but is not yet fully present in the districts. Basic services on ATMs such as withdrawing money, checking balances, printing short statements,... BIDV ATMs accept cards from banks in the system.
Banknetvn and Smartlink, cards branded by international card organizations Union Pay (CUP), VISA, MasterCard and cards of banks in the Asian Payment Network. From here, cardholders can make bill payments for themselves or others at ATMs, by simply entering the subscriber number or customer code, booking code that service providers notify and make bill payments.
Chart 2.6. Net income from card services in the period 2011-2015
Unit: Million VND
3500
3000
2500
2000
1500
1000
500
0
687
1023
1547
2267
3104
2011 2012 2013 2014 2015
Net income from card services
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
Through chart 2.6, it can be seen that BIDV Tien Giangs card service income is constantly growing because the Branch focuses on developing businesses operating in industrial parks, which are the source of customers for salary payment products, ATMs, BSMS. Specifically, there are companies such as Freeview, Quang Viet, Dai Thanh, which are businesses with a large number of card openings at the Branch, contributing to the increase in card service fees [25].
Table 2.6. Number of ATMs and POS machines in 2015 of some banks in Tien Giang area.
Unit: Machine
STT
Bank name
Number of ATMs
Cumulative number of ATM cards
POS machine
1
BIDV Tien Giang
23
97,095
22
2
BIDV My Tho
7
21,325
0
3
Agribank Tien Giang
29
115,743
77
4
Vietinbank Tien Giang
16
100,052
54
5
Dong A Tien Giang
26
97,536
11
6
Sacombank Tien Giang
24
88,513
27
7
Vietcombank Tien Giang
15
61,607
96
8
Vietinbank - Tay Tien Giang Branch
6
46,042
38
(Source: 2015 Banking Activity Data Report of the General and Internal Control Department of the Provincial State Bank [21])
Through table 2.6, the author finds that the number of ATMs of BIDV Tien Giang is not much, ranking fourth after Agribank Tien Giang, Dong A Tien Giang, Sacombank Tien Giang. The number of POS machines of BIDV Tien Giang is very small, only higher than Dong A Tien Giang and BIDV My Tho in the initial stages of merging the BIDV system. Besides, BIDV Tien Giang has a high number of cards increasing over the years (table 2.7) but the cumulative number of cards issued up to December 31, 2015 is still relatively low compared to Agribank, Vietcombank, Dong A (table 2.6).
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Pre-tax Profit of Bidv Tien Giang in the Period 2011-2015
zt2i3t4l5ee
zt2a3gsnon-credit services, joint stock commercial bank
zt2a3ge
zc2o3n4t5e6n7ts
At that time, the Branch had to set aside a provision for credit risks, which reduced the Branch's income.
Chart 2.2. Pre-tax profit of BIDV Tien Giang in the period 2011-2015
Unit: Billion VND
140
120
100
80
60
40
20
0
63.3
80.34
89.29
110.08
131.99
2011 2012 2013 2014 2015
Profit before tax
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
However, through chart 2.2, it can be seen that BIDV Tien Giang's profit is still increasing continuously, and its operating efficiency is currently leaking. This is a contribution of non-credit services, and this service segment will be increasingly focused on growth by BIDV Tien Giang to ensure the highest profit safety because credit activities have many potential risks. At the same time, focusing on developing non-credit services is consistent with one of the contents of restructuring the financial activities of credit institutions in the project "Restructuring the system of credit institutions in the period 2011-2015" approved by the Prime Minister in Decision No. 254/QD-TTg dated March 1, 2012 [14]: "Gradually shifting the business model of commercial banks towards reducing dependence on credit activities and increasing income from non-credit services".
2.2. Current status of non-credit service development at BIDV Tien Giang.
2.2.1. BIDV Tien Giang has deployed the development of non-credit services in recent times.
Along with the development of the Head Office, BIDV Tien Giang's products and services are constantly improved and deployed in a diverse manner to ensure provision for many different customer groups in the area: individual customers, corporate customers, and financial institutions. Typical services are as follows: Payment services, treasury services, guarantee services, card services, trade finance, other services: Western Union, insurance commissions, consulting services, foreign exchange derivatives trading, e-banking services,...
2.2.1.1. Payment services:
In accordance with the Prime Minister's Project to promote non-cash payments in Vietnam [15], banks in Tien Giang province have continuously developed payment services to reduce customers' cash usage habits through card services and electronic banking services such as: salary payment through accounts, focusing on developing card acceptance points, developing multi-purpose cards, paying social insurance by transfer, paying bills through banks, etc.
Chart 2.3. Net income from payment services in the period 2011-2015
Unit: Million VND
6000
5000
4000
3000
2000
1000
0
3922 4065
4720 5084 5324
2011 2012 2013 2014 2015
Net income from payment services
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
Along with the technological development of the entire system, BIDV Tien Giang has a payment system with a fairly stable transaction processing speed, bringing many conveniences to customers. The results of observing chart 2.3 show that the income from payment services that the Branch has achieved has grown over the years but the speed is not high and the products are not outstanding compared to other banks. Domestic payment products such as: Online bill payment, electricity bills, water bills, insurance premiums, cable TV bills, telecommunications fees, airline tickets, etc. bring many conveniences to customers. Regarding international payment, this is an indispensable activity for foreign economic activities, BIDV Tien Giang is providing international payment methods for small enterprises producing agriculture, aquatic food and seafood that have credit relationships with banks in industrial parks in Tien Giang province such as: money transfer, collection, L/C payment.
2.2.1.2. Treasury services:
BIDV Tien Giang always focuses on ensuring treasury safety and currency security, always complies with legal regulations, and minimizes risks in operations such as: counting and collecting money from customers, receiving and delivering internal transactions, collecting from the State Bank (SBV) or other credit institutions, receiving ATM funds, bundling money, etc. BIDV Tien Giang's treasury service management department is always fully equipped with modern machinery and equipment such as: money transport vehicles, fire prevention tools, money counters, money detectors, magnifying glasses, etc. to ensure absolute safety in treasury operations, immediately identifying real and fake money and other risks that may affect people and assets of the bank and customers. In addition, implementing regulation 2480/QC dated October 28, 2008 between the State Bank of Tien Giang province and the Provincial Police on coordination in the fight against counterfeit money, in the 3-year review of implementation, BIDV Tien Giang discovered, seized and submitted to the State Bank of Tien Giang province 475 banknotes of various denominations and was commended by the Provincial Police and the State Bank of Tien Giang province [17].
Chart 2.4. Net income from treasury services in the period 2011-2015
Unit: Million VND
350
300
250
200
150
100
50
0
105 122
309 289 279
2011 2012 2013 2014 2015
Net income from treasury services
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
However, as shown in Figure 2.4, income from treasury operations is not high and fluctuates. Specifically, in the period 2011-2013, net income increased and increased most sharply in 2013, then in the period 2013-2015, there was a downward trend. This fluctuation is due to the fact that fees collected from treasury services are often very low and can even be waived to attract customers to use other services.
2.2.1.3. Guarantee and trade finance services:
BIDV Tien Giang, thanks to the advantages of the province and the favorable location of the Branch, has continuously focused on developing income from guarantee services and trade finance.
Chart 2.5. Net income from guarantee and trade finance services in the period 2011-2015
Unit: Million VND
14000
12000
10000
8000
6000
4000
2000
0
5193 5695
2742 3420
8889
3992
11604 12206
5143 5312
2011 2012 2013 2014 2015
Net income from guarantee services Net income from Trade Finance
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
Through chart 2.5, we can see that BIDV Tien Giang's income from guarantee services and trade finance has grown over the years. The reason is: Among BIDV Tien Giang's corporate customers, the construction industry is the industry with the highest proportion of customers after the trading industry, this is a group of customers with potential to develop guarantee services. The second group of customers is corporate customers in the fields of agricultural production, livestock and seafood processing with high import and export turnover in the area.
are the target of trade finance development. In addition, BIDV Tien Giang also focuses on continuously developing these customer groups to increase revenue for many other products and services in the future.
2.2.1.4. Card and POS services:
As a service that BIDV Tien Giang has recently developed strongly, it can be said that this is a very potential market and has the ability to develop even more strongly in the future. Card services with outstanding advantages such as fast payment time, wide payment range, quite safe, effective and suitable for the integration trend and the Project to promote non-cash payments in Vietnam. Cards have become a modern and popular payment tool. BIDV Tien Giang early identified that developing card services is to expand the market to people in society, create capital mobilized from card-opened accounts, contribute to diversifying banking activities, enhance the image of the bank, bring the BIDV Tien Giang brand to people as quickly and easily as possible. BIDV Tien Giang is currently providing card types such as: credit cards (BIDV MasterCard Platinum, BIDV Visa Gold Precious, BIDV Visa Manchester United, BIDV Visa Classic), international debit cards (BIDV Ready Card, BIDV Manu Debit Card), domestic debit cards (BIDV Harmony Card, BIDV eTrans Card, BIDV Moving Card, BIDV-Lingo Co-branded Card, BIDV-Co.opmart Co-branded Card). These cards can be paid via POS/EDC or on the ATM system. In addition, with debit cards, customers can not only withdraw money via ATMs but also perform utilities such as mobile top-up, online payment, money transfer,... through electronic banking services.
In order to attract customers with card services, BIDV Tien Giang has continuously increased the installation of ATMs. As of December 31, 2015, BIDV Tien Giang has 23 ATMs combined with 7 ATMs in the same system of BIDV My Tho, so the number of ATMs is quite large, especially in the center of My Tho City, but is not yet fully present in the districts. Basic services on ATMs such as withdrawing money, checking balances, printing short statements,... BIDV ATMs accept cards from banks in the system.
Banknetvn and Smartlink, cards branded by international card organizations Union Pay (CUP), VISA, MasterCard and cards of banks in the Asian Payment Network. From here, cardholders can make bill payments for themselves or others at ATMs, by simply entering the subscriber number or customer code, booking code that service providers notify and make bill payments.
Chart 2.6. Net income from card services in the period 2011-2015
Unit: Million VND
3500
3000
2500
2000
1500
1000
500
0
687
1023
1547
2267
3104
2011 2012 2013 2014 2015
Net income from card services
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
Through chart 2.6, it can be seen that BIDV Tien Giang's card service income is constantly growing because the Branch focuses on developing businesses operating in industrial parks, which are the source of customers for salary payment products, ATMs, BSMS. Specifically, there are companies such as Freeview, Quang Viet, Dai Thanh, which are businesses with a large number of card openings at the Branch, contributing to the increase in card service fees [25].
Table 2.6. Number of ATMs and POS machines in 2015 of some banks in Tien Giang area.
Unit: Machine
STT
Bank name
Number of ATMs
Cumulative number of ATM cards
POS machine
1
BIDV Tien Giang
23
97,095
22
2
BIDV My Tho
7
21,325
0
3
Agribank Tien Giang
29
115,743
77
4
Vietinbank Tien Giang
16
100,052
54
5
Dong A Tien Giang
26
97,536
11
6
Sacombank Tien Giang
24
88,513
27
7
Vietcombank Tien Giang
15
61,607
96
8
Vietinbank - Tay Tien Giang Branch
6
46,042
38
(Source: 2015 Banking Activity Data Report of the General and Internal Control Department of the Provincial State Bank [21])
Through table 2.6, the author finds that the number of ATMs of BIDV Tien Giang is not much, ranking fourth after Agribank Tien Giang, Dong A Tien Giang, Sacombank Tien Giang. The number of POS machines of BIDV Tien Giang is very small, only higher than Dong A Tien Giang and BIDV My Tho in the initial stages of merging the BIDV system. Besides, BIDV Tien Giang has a high number of cards increasing over the years (table 2.7) but the cumulative number of cards issued up to December 31, 2015 is still relatively low compared to Agribank, Vietcombank, Dong A (table 2.6).
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Credit risk at Bank for Investment and Development of Vietnam: Current situation and preventive solutions - 11 -
Solutions to improve credit quality at Bank for Investment and Development of Vietnam - Phu Tho Province Branch - 2
Add
Source: Dak Nong Bank for Agriculture and Rural Development
In short, the Dak Nong Bank for Agriculture and Rural Development is very interested in expanding its transaction network. However, in the coming time, it is necessary to continue to establish more bank transaction points in some areas and densely populated areas.
3.1.5 Debt management, loan recovery and risk handling
3.1.5.1 Debt management
a. Customer classification
In fact, customer classification through the scoring and classification process of coffee producers has not been applied at Dak Nong Agricultural and Rural Development Bank. This is a common problem of the entire Agricultural and Rural Development Bank system in Vietnam.
The reason for this phenomenon is that the information technology of the customer transaction system is still in the process of completion, the input data for classification and scoring needs to be supplemented with many indicators in the system, the number of customers who are households and individuals borrowing from banks is very large, leading to the entire system of the Vietnam Bank for Agriculture and Rural Development still not being able to implement it, although regulations and a system of indicators have been issued for implementation.
b. Debt monitoring and control
- Check before lending
For coffee producing households borrowing for the first time, credit officers of the Dak Nong Bank for Agriculture and Rural Development conduct relatively strict checks, going directly to each coffee producing household to appraise and compare data between loan applications and reality. However,
However, for coffee producers who borrow many times, credit officers of Dak Nong Bank for Agriculture and Rural Development usually only appraise loans based on paper documents.
- Check while lending
During the disbursement process, Dak Nong Bank strictly checks the disbursement to the right customers, ensuring the validity and legality of paperwork. Some branches and transaction offices arrange accounting departments for disbursement transactions, so the checking during lending is also the responsibility of the accounting department.
- Check after loan
According to information provided by branches and transaction offices on post-lending inspection, the situation of inspection and supervision of coffee production loans of the Dak Nong Bank for Agriculture and Rural Development in the period of 2008 - 2011 is as follows: The number of inspections was 5,199 times compared to 28,231 loans, only reaching 18.4%, not meeting the requirement of 100% post-lending inspection and supervision (Table 3.11). The cause of the above situation is the overload of bank staff in lending activities of the Dak Nong Bank for Agriculture and Rural Development.
Table 3.11 Status of inspection and supervision of loans to coffee production households
Inspection status
Inspection record number | Rate (%) | ||
2008 | 6,482 | 1,128 | 17.4 |
2009 | 8,608 | 1,433 | 16.6 |
2010 | 5.550 | 1,090 | 19.6 |
2011 | 7,591 | 1,548 | 20.4 |
Add | 28,231 | 5,199 | 18.4 |
Year Total number of borrowers
Source: Dak Nong Bank for Agriculture and Rural Development
In summary, the Dak Nong Bank for Agriculture and Rural Development has not yet classified debts; therefore, it has not created favorable conditions for lending to coffee producers; at the same time, it has not done a good job of checking and supervising the use of loans after lending.
c. Debt classification and provisioning
There are some noteworthy contents in the classification of loans for coffee production households: Overdue loans for coffee production households have increased sharply over the years at an average rate of 241.0% per year, the increase in overdue debts is concentrated in debts requiring attention (group 2) at an average rate of up to 415.3% per year. This shows that the phenomenon of coffee production households extending debts and restructuring debt terms too much, posing potential risks . The reason is due to delays in paying principal and interest.
The overdue debt situation in Table 3.12 also shows that the bad debt ratio increases and decreases unstably: In 2008 and 2010, the bad debt ratio was greater than 3% according to credit quality assessment standards ( Vietnam Bank for Agriculture and Rural Development, 2011 ), ( Government, 2011 ); in 2009 and 2011, the bad debt ratio tended to decrease, and credit quality tended to improve.
Table 3.12 Overdue debt situation for coffee production households
Overdue debt at year-end (million VND) Comparison of growth and decline rates (%)
Target
1. Outstanding loans to coffee producers
2008 2009 2010 2011 September 8 September 10 October 11 BQ
315,645 388,315 291,670 554,666 23.0 -24.9 90.2 25.2
2. Overdue debt 27,039 58,300 60,129 222,517 115.6 3.1 270.1 241.0
Overdue debt ratio (%) 8.6 15.0 20.6 40.1 6.4 5.6 19.5 13.3
- Debts requiring attention 16,071 48,497 50,696 216,280 201.8 4.5 326.6 415.3
- Bad debt 10,968 9,803 9,433 6,238 -10.6 -3.8 -33.9 -14.4
Bad debt ratio (%) 3.5 2.5 3.2 1.1 -1.0 0.7 -2.1 -0.8
Source: Dak Nong Bank for Agriculture and Rural Development
In general, with large and unusual fluctuations in overdue debt and bad debt, it can be assessed that the credit quality of loans to coffee producers of Dak Nong Bank for Agriculture and Rural Development is only at an average level.
3.1.5.2 Loan recovery
The issue of recovering overdue and bad debts is always of concern to Dak Nong Bank for Agriculture and Rural Development. The organization of loan recovery is considered by Dak Nong Bank for Agriculture and Rural Development as one of the important tasks in its operations.
In fact, the solution to recover overdue and bad debts is applied to bank officers. If credit officers allow overdue and bad debts to arise, during the competition period (month, quarter, year), depending on the level, they will be classified as officers at medium or low levels. Even if there is a large bad debt situation, there is a risk of losing capital, they will be suspended from work and transferred to work as debt collectors and will only receive basic salary.
3.1.5.3 Risk Management
During the period 2008 - 2011, in addition to proactive solutions to recover overdue and bad debts, Dak Nong Bank for Agriculture and Rural Development also initiated legal proceedings against many cases of coffee producers who subjectively caused overdue debts, had the capacity but deliberately avoided and delayed paying bank loans (Table 3.13).
Table 3.13 Debt collection and risk handling situation for coffee production households
Debt collection and risk handling Collection through litigation
Debt Collection Debt Collection Lawsuit
Year
Number of debt handled risk
Risk handling balance
Number of dishes
Amount
Number of items filed
Amount of lawsuit
Number of dishes
Amount
(household) | (tr.đ) | (household) | (tr.đ) | (household) | (tr.đ) | (household) | (tr.đ) | |
2008 | 451 | 10,250 | 240 | 654 | 24 | 528 | 18 | 410 |
2009 | 421 | 9,850 | 258 | 1,330 | 61 | 1,352 | 40 | 854 |
2010 | 385 | 8,520 | 235 | 980 | 48 | 1.104 | 35 | 725 |
2011 | 328 | 7,922 | 186 | 1.201 | 42 | 980 | 37 | 701 |
Source: Dak Nong Bank for Agriculture and Rural Development
In summary, with reasonable and active administrative measures in debt collection and risk handling, Dak Nong Bank for Agriculture and Rural Development has reduced the risk of credit loss in the process of lending to coffee producers.
3.2 Credit performance and efficiency
3.2.1 Results and effectiveness for the Bank for Agriculture and Rural Development of Dak Nong province
3.2.1.1 Loan results for coffee production households
The results of lending to coffee producing households of the Dak Nong Bank and Dak Nong Rural Development Bank are shown in the following contents: (1) Results of outstanding loans calculated by household; (2) Results of outstanding loans to coffee producing households by ecological region.