Outstanding Loans of Bidv Son Tay by Product in 2014

However, in 2013, the branch's credit activities tended to decline. Specifically, the total outstanding debt decreased from 1,772 billion VND at the end of 2012 to 1,757 billion VND at the end of 2013. The main reason was that the outstanding debt for corporate customers decreased sharply by 104 billion VND, so even though the outstanding debt for KHCN increased by 89 billion, it could not compensate for the decrease in outstanding debt for corporate customers.

The causes of the above decline include both subjective and objective reasons. It can be said that in the period of 2009 - 2012, the world economy witnessed many difficulties and instabilities. Especially in 2011, political and social fluctuations in the Middle East and Africa countries had a great impact on the prices of oil, gold and food. The global financial market continuously suffered the consequences of public debt "storms". In the face of the hot situation of the world economy, the Vietnamese economy also encountered many obstacles. The real estate market froze, businesses were operating at a loss, the production of goods was stagnant, and unemployment increased. However, subjective factors were also a major cause leading to the total outstanding credit balance of the Branch decreasing, including the decline in personal credit. Firstly, the staff at the Branch were mainly new and inexperienced. The science and technology staff has not been proactive in finding new customers, and always has the mindset of waiting for customers to come to them. Secondly, customer care has not been focused on, promotion and communication work is still limited, the competition between banks in the area is getting bigger and bigger, leading to the branch's customer market share being increasingly narrowed.

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With the retail banking development orientation set out in the development strategy, the increase in personal loan balance in the total credit balance of the branch over the years is a remarkable result.

2.2.3.2. Number of customers

During the years from 2012 to 2014, the strategy of developing retail banking and promoting lending to SMEs had a strong impact on the number of customers at the branch. The number of customers increased rapidly over the years, as shown in the table below.

Table 2.2. Number of individual customers from 2012-2014

Unit: Billion VND

Target

(Source: data at BIDV Son Tay)

Through the table above, it can be seen that the number of individual customers has increased significantly over the years. In 2013, the number of customers increased the most in both absolute value and growth rate. Over the years, the number of customers has tended to increase, however, outstanding loans have tended to stagnate in 2014.

The reason for this situation is that due to the fluctuating economic situation and unstable business operations, some customers tend to reduce their outstanding loans to cut costs. The number of customers increases, but each loan has a small outstanding loan balance, so the outstanding loan balance does not grow as fast as the growth rate of the number of customers.

The underlying reason for the large increase in the number of customers but the outstanding loans for KHCN did not increase proportionally is that the outstanding loans for each product have changed a lot over the years. In previous years, high outstanding loans were often concentrated on customers borrowing to buy houses and for business activities. However, in 2013 and 2014, in order to diversify retail credit products and capture customer market share, BIDV developed consumer loans for employees and production and business loans for small traders and retail stores, so the number of loans increased significantly but the outstanding loans were all small (only from 50 million to 200 million), so the growth rate of outstanding loans was no longer as strong as in previous years. This will be seen more clearly in the analysis of the number and structure of BIDV Son Tay's loans.

2.2.3.3. Number and structure of loans by product

Table 2.3. Outstanding loans for science and technology by product 2012-2014

Year/Product Type

(Source: BIDV Son Tay data)

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11.7

10 21.1

205.6

266

Loans with collateral

Credit loans Production and business loans Car loans

Housing loan

GTCG mortgage loan

11.6

Chart 2.2: Outstanding loans for science and technology of BIDV Son Tay by product in 2014

To clearly see the increase in outstanding debt as well as the rate for each product, let's analyze to understand the cause for each product.

Secured consumer loans

The purpose of the loan is to serve the needs of individuals and households to purchase household equipment. Although newly implemented, the consumer loan product has increased rapidly in both the number of customers and outstanding loans. In 2014, the number of customers increased by 20 people and outstanding loans increased by 2 billion VND compared to 2013. With quick loan procedures, no management of assets formed from loan capital (such as car loan products), long loan terms (up to 5 years), the consumer loan product has increased very quickly compared to the branch's expectations.

Consumer credit loans

Outstanding consumer credit loans in 2012 were 19 billion VND, and increased steadily over the years. In 2014, the increase was relatively high because the Branch focused on overdraft products and loans through Visa cards. The number of borrowers increased from 91 in 2012 to 172 in 2013. Number of

The number of customers increased rapidly but each loan was small, only from 50 million to 100 million VND, so the outstanding debt increased but still accounted for a low proportion of the total outstanding debt of KHCN. Although accounting for a small proportion, there was a large increase in both quantity and proportion. This shows that BIDV Son Tay has focused on and developed consumer credit loan products for officers and employees in the area.

Production and business loans

During the period 2012-2014, the structure of outstanding loans for production and business increased from 249 billion in 2012 to 272.8 billion in 2013, however, by 2014 there were signs of slowing down and decreasing to 266 billion.

Small business production activities are increasingly developing. In the town, there is Nghe market area with more than 700 stalls selling many items from clothes, shoes, electrical appliances, iron products..., there are traditional craft villages such as tailoring in Tam Hiep (Phuc Tho), Phung Xa metalworking; Binh Phu rattan and bamboo; Huu Bang wooden furniture (Thach That) with production facilities mainly being households. This is the branch's abundant and potential source of customers. In 2013, both the number of customers and outstanding loans for production and business were the fastest growing, but in 2014, both outstanding credit and the number of customers decreased. The main reason is due to the difficult situation of the economy, stagnant production and business, many old customers of the branch have reduced production and business activities, cut costs to reduce outstanding bank loans.

Business production loans always account for the highest proportion of outstanding loans for KHCN, are the branch's traditional products, are most loved by customers and have been known for a long time. With quick appraisal procedures, simple documents, business production loans for individuals and business households are increasingly attracting more borrowers.

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Car Loan

Outstanding loans for car purchases from 2012-2014 have grown, but the proportion has decreased compared to the total outstanding personal credit. This growth is not commensurate with BIDV Son Tay's advantages in terms of interest rates and fees (competitive interest rates, no early repayment fees) while the product criteria are similar to other banks (loan up to 70% of the car value, maximum loan term of 60 months).

The reason for the growth in outstanding auto loans not being commensurate with BIDV Son Tay's advantages is that: because the living standards of people in the town are still low, the number of customers buying cars is not much and because of the strict loan application review process. In addition, BIDV Son Tay also does not have a commission policy for car sales staff, so car sales staff will not prioritize introducing loan applications to the bank. The above reasons lead to the outstanding auto loans increasing very little over the years.

Housing loan

The structure of outstanding loans for housing needs (including buying houses, land, repairing houses) accounts for a high proportion of total outstanding loans for science and technology, the proportion has increased steadily over the years until 2014 when it decreased. The emergence of Phu Thinh new urban area, Trung Hung new urban area, Doi Den urban area with reasonable areas and prices is meeting the increasing housing needs of the people. However, not everyone has enough financial resources. Therefore, BIDV Son Tay develops housing loan products including buying houses, land, building and repairing houses and loans for buying project houses to meet the capital needs of customers.

Loans secured by valuable papers

Outstanding loans secured by valuable papers have decreased over the years. In particular, in 2013, outstanding loans secured by valuable papers decreased by 11.9 billion compared to 2012, but by 2014, it increased to 6.5 billion compared to 2013. Reason

are valuable paper mortgages that usually have a short loan term (usually from 1 to 3 months) due to the sudden need of customers to use the money, so the balance changes at the beginning of the year compared to the end of the year and this is not a particularly important product of the Branch, because the outstanding balance of this product is often unstable.

Compared to competitors in the area, the number of products of BIDV Son Tay branch is quite diverse but somewhat less flexible than the products of other banks. Let's consider this in the table below:

Table 2.4: Loan products at local banks

Echo

row

(Source: BIDV Son Tay retail market report)

BIDV Son Tay has deployed quite a few products, fully meeting customers' loan needs, but compared to other banks above

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