services for business units.
(ii) Evaluate, propose, select, use and recommend handling and review responsibilities for positions of officers and employees in the Region.
(iii) Have general responsibility for credit activities in the Management Area.
2.2.3 Organizational structure of credit activities at VIB Vung Tau
Business Unit Manager:
Business Unit Heads include: Business Director, Branch Retail Director and Transaction Director/Head.
- Business Unit Heads are assigned the responsibility of approving credit with different limits depending on the criteria specified by VIB such as: credit operation experience, credit approval experience, business scale and efficiency, overdue debt, bad debt and compliance with procedures, regulations and policies in credit operations.
- Develop and organize the implementation of assigned credit targets: outstanding debt, bad debt, number of customers, etc.
- Supervise, assign and direct Customer Managers (CMs) to implement credit policies, business processes and regulations, credit appraisal and customer management.
- Check, monitor, evaluate credit applications and decide to grant/not grant credit, decide on collateral valuation and pricing policy in accordance with VIB's regulations.
- Decide to restructure the debt repayment period, handle loans according to the assigned judgment level, determine the cause and decide to handle or submit to the competent authority to decide to handle overdue loans, or loans at risk of overdue, or loans that are no longer recoverable.
- Review the responsibilities of the customer managers who have violated the unit and decide to temporarily suspend the participation in credit granting for the customers under their management who have violated regulations, business processes, have overdue debts, bad debts, participate in evaluating and recruiting, and arranging the use of customer managers.
- Synthesize, evaluate quality and classify credit, have general responsibility for credit granting activities at the unit under his/her management.
- The branch director (Business Director or Retail Director) approves the credit extension beyond the authority of the Director/Head of the affiliated Transaction Office within the scope of authority or decides to submit it to a higher level of approval if it exceeds the approval authority.
Customer management:
Classified by Business Block: Corporate Customer Management and Retail Customer Management.
- Proactively approach and learn about customer information, be the point of contact for customers, introduce products and guide procedures, receive documents from customers according to procedures and professional regulations.
- Assess and be responsible for the legality, completeness, accuracy and honesty of credit application documents and credit proposal information.
- Propose and complete procedures for submitting credit approval and take primary responsibility for credit proposals for customers. Do not have the right to refuse credit or refuse to appraise customers without the opinion of the Business Unit Manager.
- Participate in collateral appraisal, inspection, supervision of collateral and other issues related to credit facilities.
- Monitor and supervise the process of withdrawing, using capital and repaying debts of customers.
- Propose measures to ensure debt collection, debt restructuring, loan settlement, collateral and take responsibility until the debt is settled.
- Keep and be responsible for the accuracy, honesty, completeness and continuity of credit application files.
- Monitor, evaluate and supervise credit activities of customer groups, industries, fields and assigned areas.
Credit Transaction Department:At the business unit or at the Regional level, the department manages and completes credit contracts, loan guarantee contracts and only carries out disbursement procedures for customers when the disbursement request documents meet the requirements.
Fully and correctly comply with the approved credit granting conditions, request the Customer Managers and Customers to complete and supplement missing documents (if any), monitor and calculate the effectiveness of credit grants and if the credit grant does not ensure the approved effectiveness, request the Customer Managers to take measures to encourage customers to increase the use of VIB's services or adjust interest rates and service fees to ensure the effectiveness of credit granting according to approval.
Loan appraisal and decision:
- VIB issues credit granting procedures: customer marketing process, credit approval process, disbursement completion process and loan collection process.
- Ensure independence and separation of personal responsibilities between appraisal and loan decision stages:
(i) The Customer Management Officer at the business unit and the Re-Appraisal Specialist of the Re-Appraisal Department are individuals who perform the function of appraising and recommending credit to customers.
(ii) Credit approval levels are: Business Unit Head, Regional Director, Business Block Director, Credit Management Block Director, Credit Council, General Director, Credit Committee and individuals assigned by the General Director to approve credit after approval by the Credit Committee.
- The customer management and re-appraisal specialist (if the loan is submitted to the Credit Management Division or higher) after receiving the complete credit application of the customer must review and appraise: the qualifications, legal capacity and organizational structure of the borrower, the completeness, reasonableness and legality of the credit application, the customer's financial capacity, the feasibility and effectiveness of the credit proposal, appraisal of the customer's business market, appraisal of capital needs and debt repayment sources, appraisal of security measures, appraisal of the possibility of risks and measures to limit and prevent risks for the credit, and prepare a credit proposal with accompanying conditions.
- Each approval level when considering credit approval must be based on: needs
credit demand, customer's ability to repay and reputation, feasibility and effectiveness of credit granting project, collateral value according to VIB's regulations, capital capacity, VIB's credit policy and assigned credit approval authority to make credit granting decisions and credit granting conditions.
- VIB's business units are responsible for monitoring, inspecting, and supervising the process of borrowing, using loans, and repaying debts of customers, in order to promptly warn and handle risky situations, urge customers to properly and fully implement the commitments agreed upon in the credit contract in accordance with the conditions, characteristics of business and capital use of customers, prepare reports on actual customer inspections and propose measures to manage credit grants or add conditions to manage risks (if any).
Regulations on valuation of collateral:
- Depending on the type of asset and factors related to the collateral, VIB stipulates the valuation bases: face value for valuable documents, asset purchase and sale price according to contracts, financial invoices, according to the price range for types of assets that the State has issued a price range, according to the price range prescribed by VIB based on market price surveys, market prices of assets based on mass information sources, remaining value according to accounting books, prices determined by independent organizations with expertise, prices determined by VIB's independent valuation team. VIB also stipulates: periodically every year or less when necessary, units must re-evaluate collateral assets to consider the ability to ensure the safety of collateral assets.
- Independent valuation team: established according to VIB's regulations, taking majority opinion, in addition to the valuation teams located at business units with the Head of the business unit as the Team Leader, VIB also has asset valuation teams under the Debt Management and Asset Exploitation Department, Credit Management Block participating in asset valuation for credit facilities with risk levels prescribed by VIB in each period, according to the operating area and credit facilities that the approval level requires the asset valuation team to directly value (if deemed necessary).
2.3 ANALYSIS OF CREDIT PERFORMANCE OF VIETNAM INTERNATIONAL COMMERCIAL JOINT STOCK BANK - VUNG TAU BRANCH
2.3.1 Credit activities at the Branch
Ba Ria Vung Tau province is considered a province with "favorable conditions" for economic development with extremely rich resources, abundant natural resources, people want to improve their economic life, the number of banks in the area is constantly increasing... with such resources, commercial banks located in the area in general and VIB Vung Tau in particular cannot ignore this opportunity to expand lending.
2.3.1.1 Debt group structure
Table 2: Debt structure by debt group
Criteria
Outstanding balance as of December 31 (unit: million VND) | ||||||
2011 | 2012 | 2013 | ||||
Outstanding debt | Proportion | Outstanding debt | Proportion | Outstanding debt | Proportion | |
Group 1 | 565,625 | 99.55% | 541,973 | 97.95% | 442,156 | 91.37% |
Group 2 | 2,567 | 0.45% | 11.08 | 2.00% | 19,400 | 4.01% |
Group 3 | 15 | 0.00% | 250 | 0.05% | 6,626 | 1.37% |
Group 4 | - | - | - | - | 13,257 | 2.74% |
Group 5 | - | - | - | - | 2,490 | 0.51% |
Total | 568,207 | 100% | 553,303 | 100% | 483,930 | 100% |
Overdue debt | 2,567 | 0.45% | 11,080 | 2.00% | 19,400 | 4.01% |
Bad debt | 15 | 0.00% | 250 | 0.05% | 22,373 | 4.62% |
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Looking at the overall loan data divided by debt group, we see that almost all outstanding loans are concentrated in group 1 debt, which is debt under 10 days. The proportion of this debt group accounted for 99.55% in 2011, 99.57% in 2012, and 91.37% in 2013. Meanwhile, overdue debt and bad debt accounted for only 0.45% of total outstanding debt in 2011, 2.05% in 2012, and 8.63% of total outstanding debt in 2013.
In 2011, the bad debt ratio was 0%, in 2012 it was 0.05% (group 3 debt) and in 2013 this ratio was 4.62% (in which group 3, group 4 and group 5 debt were 1.37%, 2.74% and 0.51% respectively). By the end of 2013, the overdue debt and bad debt ratio was 8.63% (an increase of 19.18% compared to 2011).
Although the ratio of overdue debt and bad debt in 2012 and 2013 increased compared to 2011, it was still at an acceptable level. From the above figures, we have an overview of the credit quality at VIB Vung Tau, which is relatively good. Credit records are always strictly controlled, thereby contributing to limiting cases with the possibility of bad debt arising in credit relations with VIB Vung Tau.
2.3.1.2 Outstanding debt structure by industry Table 3: Outstanding debt structure by industry
Unit: million VND
STT
Industry | Year 2011 | Year 2012 | Year 2013 | |
1 | Agriculture and forestry | 462 | - | - |
2 | Seafood | 5,099 | 6,378 | 6,016 |
3 | Industry and mining | - | - | - |
4 | Processing industry | 19,756 | 12,837 | 15,446 |
5 | Production and distribution of electricity, gas and water | - | - | - |
6 | Build | 182,505 | 189,408 | 148,527 |
7 | Trade and repair of motor vehicles, Motorcycles, motorbikes, personal and household items | 62,557 | 59,888 | 53,575 |
8 | Hotels and restaurants | 42,229 | 32,504 | 32,602 |
9 | Transportation warehousing communications | 14,868 | 7,986 | 5,205 |
10 | Financial activities | - | - | - |
11 | Science and technology activities | - | - | - |
12
State management and business of national defense, party, mass organizations, social security are required. force | - | - | - | |
13 | Activities related to financial business accounts and consulting services | 1,400 | 3,117 | 1,713 |
14 | Education and training | - | - | - |
15 | Health and social relief | - | - | - |
16 | Cultural and sports activities | - | - | - |
17 | Personal and community service activities | 239,331 | 241,185 | 220,846 |
18 | Service activities at home | - | - | - |
19 | Activities of international organizations | - | - | - |
Total outstanding debt | 568,207 | 553,303 | 483,930 | |
Due to the specificity of its operating area, VIB only focuses on lending to low-risk industries with the ability to recover capital quickly and operate effectively. Outstanding loans at VIB Vung Tau are mainly concentrated in the following areas: personal and community services, construction, hotels and restaurants.
Although Vung Tau has advantages in seafood business, this is a rather risky industry due to the impact of nature, the cost of customers is large, however, the receivables of customers are often overlapped and depend a lot on the business situation of the customers' partners, these sources of income are often unstable. Because this is the main source of income of customers used to pay principal and interest on loans to VIB, therefore VIB Vung Tau does not encourage the development of outstanding debt in this industry.
2.3.1.3 Debt structure by currency Table 4: Debt structure by currency
Criteria
Outstanding balance as of December 31 (unit: million VND) | ||||||
2011 | 2012 | 2013 | ||||
Outstanding debt | Proportion | Outstanding debt | Proportion | Outstanding debt | Proportion | |
VND | 565,919 | 99.60% | 546,489 | 98.77% | 436,776 | 90.26% |
In which: bad debt | 15 | 0.00% | 250 | 0.05% | 22,373 | 4.62% |
USD | 2,288 | 0.40% | 6,814 | 1.23% | 47,155 | 9.74% |
In which: bad debt | - | - | - | - | - | - |
Other currencies | - | - | - | - | - | - |
Total | 568,207 | 100% | 553,303 | 100% | 483,930 | 100% |
- VIB only focuses on lending in the main currency of Vietnamese Dong (VND), US dollars are only lent to businesses, especially import businesses, accounting for a relatively small proportion of VIB's total outstanding loans.
- In terms of outstanding debt structure by currency, domestic currency loans always account for the majority of outstanding debt over time. Specifically, as of December 31, 2013, domestic currency loans accounted for 90.26% of total outstanding debt, foreign currency loans accounted for 9.74% of total outstanding debt.
- On the other hand, because the domestic currency always accounts for a high proportion of total outstanding debt, most of the bad debt is concentrated in outstanding debt in domestic currency, specifically in 2012 the bad debt ratio in domestic currency was 0.05% and 4.62% in 2013, while lending activities in foreign currency did not generate bad debt in recent years.
2.3.1.4 Debt structure by term Table 5: Debt structure by term
Criteria
Outstanding balance as of December 31 (unit: million VND) | ||||||
2011 | 2012 | 2013 | ||||
Outstanding debt | Proportion | Outstanding debt | Proportion | Outstanding debt | Proportion | |
Short term | 414,547 | 72.96% | 249,375 | 45.07% | 192,995 | 39.88% |
Central limit | 55,576 | 9.78% | 141,428 | 25.56% | 159,606 | 32.98% |
Long term | 98,084 | 17.26% | 142,500 | 29.37% | 131,328 | 27.14% |
Total | 568,207 | 100% | 553,303 | 100% | 483,930 | 100% |