Long-term loans are loans with a term of over 60 months or up to 20 years, serving large capital needs such as: purchasing land, houses. In general, for commercial banks, long-term credit has great potential risks.
Based on currency
Local currency lending is a loan disbursed to customers in local currency.
Foreign currency loans are loans disbursed according to customer needs in foreign currency but still ensure foreign exchange management regulations of the State Bank of Vietnam.
Based on loan purpose
Housing loans: These are loans to finance the purchase, construction or renovation of housing for individuals or households. The characteristics of this loan are long loan terms and large loan amounts.
Consumer loans for consumption purposes: These are loans to serve the needs of improving life such as purchasing vehicles, household items, travel, entertainment, etc. The characteristics of this loan are small scale, short term, lower risk than consumer loans for residential purposes.
Lending to science and technology for production and business purposes: These are loans to implement production and business plans for each household, renting shops, etc. The characteristics of these loans are that the loan period is often long, the scale depends on the customer's business plan, the risk of this loan is very high and there is a possibility of moral hazard.
Based on the payment method
Lending to KHCN in lump sum upon maturity: These are short-term loans from individuals and households to meet immediate cash needs and are paid in a lump sum when the loan matures. The size of the loan is relatively small.
Installment loan: Is a short-term or medium-term loan. The loan is paid in installments (monthly or quarterly) according to the agreement between the Bank and the customer.
This method is used to purchase expensive items such as cars, houses, etc. or to purchase business production plans, rent stores, purchase other current assets, etc.
Credit Card Loans: Bank credit cards, like other payment cards, have quickly become popular. Credit cards provide a regular and revolving credit limit that customers can use whenever they need it. Individual customers using credit cards can borrow in installments or pay in one lump sum depending on their financial capacity.
Based on the form of loan security
Secured Loans
It is a form of lending based on the loan being secured by assets such as real estate, personal property, etc. legally owned by the owner. The secured assets increase the safety of the loan because the Bank can sell the secured assets when the customer cannot repay the debt, helping to reduce losses for the Bank. There are two types of secured loans:
Type 1 loans are secured by assets that have been formed and are owned or used for a long time by individual customers/third parties. There are 2 types of security: pledge and mortgage.
Type 2 loans are secured by assets formed from loan capital. When an individual customer needs to borrow capital but does not have assets formed to secure it, the customer can use the assets formed from the Bank's funding source as collateral.
Unsecured Loans
Is a form of lending based on reputation (credit) or third-party guarantee, without collateral. The bank selects customers with good reputation and ability to repay debts to lend. The bank lends to customers to meet the needs of customers on the basis of salary credit, applied to customers with stable income, in addition to covering regular expenses, there is also a portion of savings to repay loans (civil servants, public employees on the state payroll, employees with labor contracts)
long-term operations, etc.), officers and employees at enterprises having relations with the Bank; in addition, income from production and business activities can also be used as a source of debt repayment. This form is suitable for loans of small value and short loan terms.
1.1.3.The role of personal loans
In addition to the general roles of credit activities, personal lending activities also have specific roles for economic entities:
For Commercial Banks
First of all, lending to individual customers is an activity that helps improve capital efficiency, diversify loan portfolio, disperse risks and bring profits to the Bank, contributing to the development and promotion of the Bank's image to customers.
In addition, lending to individual customers also helps the Bank expand its customer base, increase cross-selling of products, thereby increasing competitiveness and creating unique attractive features for the Bank.
For customers
It is a good solution to solve urgent financial needs of individuals and households, and also contributes to improving people's living standards when they are able to consume before they have the ability to pay at present.
Personal loans help customers create their own financial plan and implement it in the best way, which is especially effective for low and middle income people who want to improve their quality of life. It can be said that consumers are the ones who benefit the most from this lending activity, provided that they do not abuse it to spend on unnecessary things or spend beyond the allowed level, because this can reduce the ability to save and pay in the future.
For the economy
Lending to individual customers is considered as a lever to stimulate the growth of demand for goods. This activity promotes capital circulation in the economy, improving
purchasing power of consumers, stimulating the development of production, thereby enhancing the competitiveness of domestic goods. This requires manufacturers to effectively utilize resources, increase labor productivity, thereby creating jobs for workers, reducing unemployment, helping the state achieve both economic growth and social goals.
1.2.Developing personal customer loans of Cooperative Bank.
1.2.1. Viewpoints on the development of personal customer loans
According to Vietnamese dictionary : Development is the determined movement tendency of things: upward direction from low to high, from less perfect to more perfect.
Thus, in the banking sector: Developing science and technology loans means increasing the proportion of science and technology loans at banks, while increasing the quality of science and technology loans.
Developing lending to individuals is the process of increasing the use of its resources to increase lending activities to individual customers in terms of both sales and loan quality. Accordingly, developing lending to individuals is not only aimed at increasing profits from lending activities to individuals but also at enhancing the reputation and image of the bank in the minds of individuals.
Bank is a financial intermediary, an important capital channel for the entire economy. In an increasingly competitive environment, improving and expanding activities is the direction and also the motto for banks to survive and develop. In the activities of banks, there is lending, however, banks in the past often focused on lending to corporate customers and did not pay attention to lending to individual customers.
From that reality, it can be seen that as society develops, not only do companies and businesses need capital to produce and expand their markets, but individuals also need to borrow and use capital more than ever. Life is becoming more and more modern, living standards are also improving, life is now not only limited to "Eat well, wear warmly", but has gradually shifted to "Eat well, dress well", and also
Many other needs need to be met. Now the psychology of individual customers considers borrowing to satisfy the need to use goods before having the ability to pay.
To meet this need, banks have expanded the supply of capital to individual customers in need, helping society solve the temporary shortage of capital, making the production process continuous, improving the quality of life. In addition, banks also have an additional income from interest, helping the bank survive and develop. Lending to individual customers not only brings income to the bank but also helps the bank to disperse risks. Personal credit, especially lending to individuals, is of interest to many banks, even one of the growth spearheads and the trend of this field will continue to increase in the coming time.
Indicators of the proportion of loans to science and technology such as: Number of individual customers, outstanding loans to science and technology.
Quality indicators of science and technology loans such as: Bad debt ratio of science and technology loans, provisions for science and technology loans, income from science and technology lending activities.
1.2.2. Indicators reflecting the development of personal customer lending activities
1.2.2.1. Qualitative indicators
Qualitative indicators are the prerequisites for good lending quality, and are more difficult to standardize than quantitative indicators, but they contribute significantly to the assessment of lending quality of cooperative banks. Qualitative indicators include:
Lending principles
The lending activities of the cooperative banks are based on the regulations of the State and the State Bank. The activities of the cooperative banks are considered to be of good quality when the Bank properly implements those regulations. In addition, if the legal system is simple but still ensures strictness, the credit policy
If the Bank's policies are flexible and suitable to the economy, credit quality will still be improved and vice versa.
Credit process
With a standard lending process, implementing it quickly while still ensuring the correct principles is the measure of the lending quality of the cooperative bank. This is an important indicator that affects the quality of lending.
Reputation of NHHTX
Customer evaluation of the cooperative bank is an objective evaluation of the service quality of that cooperative bank, through a number of factors such as: satisfying customers' loan needs, quick and timely loan time... This is one of the indicators that reflects the good lending quality of the cooperative bank, because no bank with poor quality in lending activities can gain the trust of customers.
In short, lending activities are considered to be of good quality when they are carried out in accordance with the law, relevant regulations and rules; attracting many customers while still ensuring the application principles.
1.2.2.2. Quantitative indicators
Indicators reflecting the scale of science and technology lending development
(1) Outstanding loans for science and technology
Outstanding loans are indicators reflecting the amount of money provided for lending activities to SMEs at a given time. This indicator reflects the scale of lending and also reflects the reputation of the bank. If the outstanding loans to SMEs are higher, it shows that the bank's lending activities to SMEs are growing in quantity. Conversely, low outstanding loans show that the bank has not expanded its customer network.
The absolute increase is calculated as the difference between the outstanding loan balance of the reporting period and the original outstanding loan balance.
Increase in outstanding debt = Reporting period outstanding debt – Original period outstanding debt
Measuring and evaluating outstanding loans for science and technology through the growth rate of outstanding loans for science and technology. Growth of outstanding loans for science and technology is an indicator reflecting
credit growth in scale. High growth in outstanding loans shows that the bank serves more customer needs; the quality of bank loans is high and vice versa, low growth in outstanding loans shows that the quality of bank loans has not received due attention.
science and technology loan
Loan growth rate for= | Personal credit balance year (t+1) | *100% |
Personal credit balance year t |
Maybe you are interested!
-
Developing personal customer loans at Vietnam Cooperative Bank - Bac Ninh Branch - 10 -
Expanding personal customer loans at Vietnam Joint Stock Commercial Bank for Investment and Development - Son Tay Branch - 14 -
Solution to Improve Customer Relationship Management in Personal Lending at Hoa Binh Investment and Development Joint Stock Commercial Bank -
Solutions to improve personal customer relationship management at BIDV Hoa Binh Joint Stock Commercial Bank for Investment and Development - 16 -
Credit risk management for personal loans at Nam A Commercial Joint Stock Bank - Quang Ninh Branch - 13
This is an indicator to evaluate the level of development of science and technology lending activities. The increase in outstanding science and technology lending shows that the bank's science and technology lending activities are expanding, creating conditions for the development of this activity. However, the development of science and technology lending activities only has a real chance to develop if the outstanding science and technology lending increases both in absolute quantity and relative quantity (the ratio of outstanding science and technology lending to total outstanding loans).
(2) Growth rate of outstanding loans for science and technology
Outstanding debt growth rate (%) = (This year's outstanding debt - Last year's outstanding debt)/Last year's outstanding debt x 100%
- This indicator is used to compare the growth of outstanding credit balance over the years of KHCN loans to evaluate the lending capacity, find customers and evaluate the implementation of the bank's credit plan.
The higher the index, the more stable and effective the bank's operations are. On the contrary, the bank is facing difficulties, especially in finding customers and showing ineffective implementation of the credit plan.
However, the expansion of science and technology loans will only be truly effective if the outstanding balance of science and technology loans increases both in absolute quantity and relative quantity (depending on the outstanding balance of science and technology loans compared to the total outstanding balance).
(3) Proportion of outstanding loans to individual customers:
Proportion of outstanding loans for science and technology = Outstanding loans/Total outstanding loans x 100%
The structure of outstanding loans for science and technology compared to other types of loans such as business loans and loans to credit institutions is also an important indicator to evaluate.
When the proportion of outstanding loans for science and technology increases, while the proportion of other types of loans decreases, or the proportion of outstanding loans for science and technology this year compared to last year increases with a higher percentage than the corresponding proportion of other types of loans, then the bank's science and technology lending activities have achieved good results.
(4) Number of customers borrowing capital and market share of science and technology loans
The number of customers is a common and important indicator to evaluate any business activity. In a market economy, "customers are king" because it is customers who bring profits and success to the business, or in other words, it is customers who pay the wages of employees.
The banking sector is no exception because the more customers come to a bank, the more successful the bank is, and the bank's products and services meet the needs of customers.
Indicators reflecting the quality of personal customer loans
(1) Overdue debt and overdue debt ratio:
Overdue debt ratio (%) = Overdue debt/Total outstanding debt x100%
This indicator shows the overdue debt situation at the bank, and also reflects the bank's credit management ability in lending and debt collection for loans.
This is an indicator used to assess credit quality as well as credit risk at the bank.
The higher the overdue debt ratio, the worse the bank's credit quality is, and vice versa.
(2) Bad debt and bad debt ratio
Developing science and technology lending activities must go hand in hand with increasing the quality of science and technology lending. The quality of science and technology lending is partly reflected in the level of safety and credit capital through the bad debt ratio and assessment of debt recovery ability.
Science and Technology Loans
Bad debt ratio= | Bad debt for science and technology loans | *100% |
Outstanding loans for science and technology |