Medium and long term capital mobilization
Table 2.8: Capital mobilization situation by term period
Unit: Billion VND
Target
Year 2009 | Year 2010 | Comparison 2010 -2009 | Year 2011 | Comparison 2011 – 2010 | |||
Amount | % | Amount | % | ||||
Total capital mobilize | 3,273.47 | 3,680.60 | 407.13 | 12.44 | 4,680.01 | 999.41 | 27.15 |
Short term | 1,784.59 | 2,069.45 | 284.87 | 15.96 | 2,977.01 | 907.55 | 43.85 |
T&DH | 1,488.88 | 1,611.15 | 122.26 | 8.21 | 1703.00 | 91.85 | 5.70 |
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Current Status of Medium and Long Term Credit Risks at Vietnam Bank for Agriculture -
Solutions to improve the efficiency of medium and long-term personal credit at the Joint Stock Commercial Bank for Foreign Trade, Hai Duong Branch, Sao Do Transaction Office - 2 -
Improving the quality of financial appraisal of investment projects in medium and long-term lending at the Military Commercial Joint Stock Bank, Hoang Quoc Viet branch - 14 -
Expanding bank credit for sustainable development of long-term industrial crops of commercial banks in Binh Duong province - 19 -
Improving the quality of financial appraisal of investment projects in medium and long-term lending at the Military Commercial Joint Stock Bank, Hoang Quoc Viet Branch - 2
(Source: Annual summary report of the branch of the Bank for Agriculture and Rural Development of Phu Tho province)
The above table shows that in the capital mobilization structure of the branch, short-term capital accounts for a higher proportion than medium and long-term capital. In 2009, short-term capital was 1,784.59 billion VND, accounting for 54.52%, while medium and long-term capital was 1,488.88 billion VND, accounting for 45.48% of the total mobilized capital of the branch. In 2010, short-term mobilized capital increased by 15.96% compared to 2009, accounting for 56.23%, while medium and long-term capital increased very little, only 8.21%, accounting for 43.77%. In 2011, the development of capital structure over time was similar to 2010: short-term capital increased by 43.85%, T&DH capital increased by only 5.7%. The reason is that due to the constant fluctuations in interest rates in the market, long-term interest rates are low and not as attractive as short-term interest rates. This can cause instability in the branch's business operations if the branch wants to expand its medium and long-term lending activities.
In general, the branch's capital structure is relatively stable, which is the result of
The branch has been making constant efforts over the years but the trend is declining.
Outstanding medium and long term loans
In general, the outstanding credit balance of T&DH in the period of 2009-2011 tends to increase, but the proportion of outstanding credit balance of T&DH in total outstanding credit tends to decrease. This may be due to the fact that in recent years the economy has been constantly fluctuating, making credit activities riskier, businesses falling into difficult situations, and there are few new effective projects. Therefore, banks tend to reduce T&DH credits to ensure the safety of credit activities, and the Phu Tho branch of the Bank for Agriculture and Rural Development is no exception.
Through the table below, we can see that the proportion of outstanding T&DH credit over the years is lower than short-term credit, specifically: In 2009 and 2010, the Government launched interest rate support packages including incentives for medium and long-term investment, agricultural and rural investment, so the outstanding medium and long-term debt has grown strongly.
Table 2.9: Medium and long-term credit structure on total outstanding debt in the period 2009-2011
Unit: Billion VND
Target
Year 2009 | Proportion (%) | Year 2010 | Proportion (%) | Year 2011 | Proportion (%) | Compare 2010-2009 | Compare 2011-2010 | |||
Number money | % | Number money | % | |||||||
Total outstanding credit use | 4,323 | 100 | 5.125 | 100 | 5,690 | 100 | 802 | 18.55 | 565 | 11.02 |
Short-term debt | 2.205 | 51.01 | 2,625 | 51.21 | 3,057 | 53.72 | 420 | 19.05 | 432 | 16.46 |
T&DH balance | 2.118 | 48.99 | 2,500 | 48.79 | 2,633 | 46.28 | 382 | 18.04 | 133 | 5.32 |
(Source: Annual summary report of the branch of the Bank for Agriculture and Rural Development of Phu Tho province)
In 2010, T&DH credit accounted for 48.79%, short-term credit accounted for 51.21%. In 2011, when there were no more interest rate support packages to expand production and business, outstanding debt also increased slowly, T&DH credit reached 2,633 billion VND, an absolute increase of 133 billion VND, a relative increase of 5.32% compared to 2010, but in the credit structure, T&DH credit only accounted for 46.28% while short-term credit accounted for 53.72%. The reason was that the short-term credit growth rate in 2011 was 16.48%, higher than the short-term T&DH credit growth rate of only 5.32%.
In 2011, the situation continued to be the same as in 2010 and the growth rate of short-term credit was still higher than the growth rate of T&DH credit by 11%. This shows that to ensure the safety of credit activities in the face of continuous fluctuations in the economy, the Phu Tho branch of the Bank for Agriculture and Rural Development has focused on short-term credit to limit credit risks and interest rate risks.
Looking at the structure of T&DH credit by currency, we see that: T&DH credit contracts of the branch are mainly disbursed in VND and tend to increase gradually. T&DH credit in VND increases in both absolute and relative numbers.
Table 2.10: Medium and long-term credit structure in the period 2009-2011
Unit: Billion VND
Target
Year 2009 | Proportion | Year 2010 | Proportion | Year 2011 | Proportion | Comparison 2010-2009 | Comparison 2011-2010 | |||
Amount | % | Amount | % | |||||||
Total outstanding debt T&DH | 2,118.26 | 100 | 2,500.78 | 100 | 2,632.89 | 100 | 382.53 | 18.06 | 132.11 | 5.28 |
1. By type money | ||||||||||
VND | 1,989.49 | 93.92 | 2,397.28 | 95.86 | 2,572.86 | 97.72 | 407.79 | 20.50 | 175.58 | 7.32 |
Foreign currency change | 128.76 | 6.08 | 103.50 | 4.14 | 60.02 | 2.28 | -25.27 | -19.62 | -43.48 | -42.00 |
2.According to the city KT part | ||||||||||
State-owned | 25.44 | 1.20 | 44.86 | 1.79 | 46.99 | 1.78 | 19.43 | 76.36 | 2.13 | 4.74 |
Overseas business | 2,092.82 | 98.8 | 2,455.92 | 98.21 | 2,585.90 | 98.22 | 363.09 | 17.35 | 129.98 | 5.29 |
3. According to branch | ||||||||||
Agriculture | 970,208 | 45.8 | 1,245.78 | 49.82 | 1,316.45 | 50.00 | 275.57 | 28.4 | 70.67 | 5.67 |
CN-XD | 200,386 | 9.46 | 102,045 | 4.08 | 96.82 | 3.68 | -98.34 | -49.08 | -5.23 | -5.12 |
TN- DV | 631,675 | 29.82 | 752.09 | 30.07 | 832.56 | 31.62 | 120.42 | 19.06 | 80.47 | 10.70 |
Other industries | 315,986 | 14.92 | 400,869 | 16.03 | 387.06 | 14.70 | 84.88 | 26.86 | -13.81 | -3.44 |
(Source: Annual summary report of the branch of the Bank for Agriculture and Rural Development of Phu Tho province)
In 2009, T&DH credit in VND was only 1,989.49 billion VND, accounting for 93.92% of total T&DH credit balance, but in 2010 it reached 2,397.28 billion VND, accounting for 95.86%, an increase of 407.79 billion VND, equivalent to 20.5% compared to 2009. In 2011, T&DH credit balance in domestic currency reached 2,572.86 billion VND, accounting for 97.72% and compared to 2010, the absolute increase was 175.58 billion VND, and the relative increase was 7.32%. Thus, the average growth rate of T&DH credit in Vietnamese Dong of the branch in the period 2009-2011 was 14%. The growth of T&DH credit in local currency is consistent with local credit characteristics and credit growth orientation of NHNo Vietnam.
On the contrary, the outstanding credit balance of T&DH disbursed in foreign currency tends to decrease both in absolute and relative terms. In 2009, T&DH loans in foreign currency reached 128.76 billion VND, accounting for 6.08% of the T&DH credit structure, but by 2011 it was only 60.02 billion VND, accounting for 2.28%. The average decrease rate of T&DH credit balance in foreign currency in the period 2009-2011 was over 31%. This is because in recent years, due to the global financial crisis, prices fluctuated erratically, oil prices, gold prices, and exchange rates increased, making it difficult for customers to repay bank loans when borrowing capital in foreign currency, so banks have proactively reduced T&DH credit balance in foreign currency to limit credit risks in general and exchange rate risks in particular.
60
50
40
30
20
10
0
58.71
45.8
49.82
29.82
30.07
9.46
4.08
3.68
Year 2009
2010
2011
In the credit structure of T&DH classified by branch industry, the industry accounts for
The highest proportion is in the agricultural sector. The proportion of medium and long-term outstanding loans in the agricultural sector in the period 2009-2011 averaged about 47%. This reflects the characteristics of the Vietnam Bank for Agriculture and Rural Development in general and the Phu Tho Provincial Bank for Agriculture and Rural Development in particular, which mainly operates to serve agricultural and rural development. The proportion of credit for industry and construction has a tendency to decrease gradually from 9.46% in 2009 to 2011, accounting for only 3.68% of the total outstanding credit for industry and construction. In contrast, the proportion of outstanding loans for industry and services has a tendency to increase gradually from 29.82% in 2009 to 31.62% in 2011. This result partly reflects the economic shift trend in the province in the period 2009-2011.
Medium and long term capital utilization coefficient
Table 2.11: Medium and long-term capital utilization coefficient in the period 2009-2011
Unit: Billion VND
Target
Year 2009 | Year 2010 | Compare 2010 – 2009 | Year 2011 | Compare 2011 – 2010 | |||
Amount | % | Amount | % | ||||
Medium and long term | 2,118.26 | 2,500.78 | 382.53 | 18.06 | 2,632.89 | 132.11 | 5.28 |
Capital T&DH | 1,488.89 | 1,611.15 | 122.26 | 8.21 | 1,703.00 | 92 | 5.7 |
Utilization factor T&DH capital | 1.42 | 1.55 | 0.13 | - | 1.54 | - 0.01 | - |
In the last 3 years, the bank's T&DH capital utilization ratio has been relatively high, always greater than 1, showing that the bank's ability to lend T&DH is quite good, but it also has potential liquidity risks. In general, in the period 2009-2011, T&DH capital was not enough to meet T&DH capital needs, the branch had to use short-term capital to lend T&DH, specifically the ratio of short-term capital used for T&DH loans in 2009, 2010, 2011 was 42.27%; 55.2%; 54.6% respectively, all higher than the maximum allowed level of 30%. Due to liquidity factors, many credit institutions pushed up mobilization interest rates, sometimes short-term mobilization interest rates were higher than long-term mobilization interest rates, distorting the interest rate curve, leading to difficulties in mobilizing medium and long-term capital. This shows that the capital structure for T&DH credit is relatively risky. Therefore, in the coming time, the branch needs to take measures to attract more T&DH capital sources to ensure T&DH credit activities.
Medium and long term loan sales
Looking at the data table below, we see: the turnover of medium and long-term loans in the period 2009-2011 tends to decrease, with multi-dimensional fluctuations. In 2010, the turnover of T&DH loans increased in absolute numbers but decreased in proportion compared to 2009.
T&DH loan turnover increased slightly and reached 1,427.21 billion VND, accounting for 21.20%
of total loan turnover during the year.
Table 2.12: Sales situation of medium and long-term credit loans
period 2009-2011.
Unit: Billion VND
Target
Year 2009 | 2010 | 2011 | Compare 2010-2009 | Compare 2011-2010 | ||||||
Value (Billion VND) | Ratio weight (%) | Value (Billion VND) | Ratio weight (%) | Value (Billion VND) | Ratio weight (%) | Amount (Billion VND) | % | Amount (Billion VND) | % | |
Sales loan | 6,047.45 | 100 | 6,732.50 | 100 | 8,207.25 | 100 | 685.05 | 11.33 | 1,474.75 | 21.9 |
Short term | 4,622.45 | 76.44 | 5,305.29 | 78.80 | 6,984.71 | 85.1 | 682.84 | 14.77 | 1,679.42 | 31.66 |
T&DH | 1,425.01 | 23.56 | 1,427.21 | 21.20 | 1,222.54 | 14.9 | 2.21 | 0.16 | -204.67 | -14.34 |
Outstanding debt T&DH | 2,118.26 | _ | 2,500.78 | _ | 2,632.89 | _ | 382.52 | 18.05 | 132.11 | 5.28 |
Thus, in 2010, although T&DH credit balance increased by 18.05% compared to 2009, T&DH loan turnover only increased slightly by 0.16% compared to 2009. The reason is that in 2009, the bank implemented interest rate support loans according to the Government's policy, the T&DH credit balance from the end of 2009 transferred but customers have not been able to pay due to long loan terms and customers wanting to receive incentives from interest rate support is very large. However, in 2011, T&DH loan turnover only reached 1,222.54 billion VND, accounting for only 14.9% of total loan turnover in the year, down 204.67 billion VND, a decrease of 14.34% compared to 2010. This shows that the Bank is narrowing T&DH credit and expanding short-term credit to limit credit risk and interest rate risk. On the other hand, after the interest rate support loan period, customers are no longer interested in investing in more projects due to high inflation, the impact of economic downturn is still severe.