From Table 2.10, it can be seen that in the period 2011 - 2015, the average bad debt ratio of Agribank's CNDN tree was significantly higher than that of other state-owned commercial banks, 3.22% compared to 2.68%, and even higher than that of non-state-owned commercial banks, 3.22% compared to 1.58%. The difference between the bad debt ratio of CNDN tree and the general bad debt ratio of the group of non-state-owned commercial banks was the largest, followed by Agribank, and finally the group of state-owned commercial banks (excluding Agribank). The bad debt ratio of CNDN tree of non-state-owned commercial banks was much lower than that of the group of state-owned commercial banks, showing that these banks have implemented many policies and measures to manage credit risks for CNDN tree better than the remaining banks. These policies include: stricter lending conditions, more thorough appraisal of borrowers, better risk diversification, regular checking and monitoring of loans and taking timely appropriate measures to handle loans as soon as problems arise.
2.2.3 Research results on factors affecting bank credit expansion for sustainable development of long-term industrial crops of commercial banks in Binh Duong province.
2.2.3.1 Operational capacity of commercial banks to expand credit for sustainable development of long-term industrial crops in Binh Duong province
Chart 2.12. Equity ratio to outstanding loans of commercial banks
Unit: %
STB MB VIB TCB ACB SCB VCB
VIETINBANK
BIDV
Agribank
2015
2014
2013
2012
2011
0
2
4
6
8
10
12
14
16
18
Source: Financial reports of commercial banks in Binh Duong 2011 - 2015 and author's synthesis
Chart 2.12 shows that the average equity/loan ratio of banks tends to increase over the years, in which it was 12.9% in 2011, 12.4% in 2012, 13.3% in 2013, 13.5% in 2014 and 13.7% in 2015. Among the banks surveyed in 2015, there were 4 banks with equity/loan ratios lower than the average: Agribank (11.10%), Vietinbank (12.9%), VCB (13.2%) and ACB (12.7%). Of these, the most worrying thing is that Agribank has a relatively low equity/loan ratio while the bad debt ratio is quite high, which poses a huge risk for this bank.
Chart 2.13 Outstanding credit balance over total assets of commercial banks in Binh Duong
Unit: %
80
70
60
50
40
30
20
2011
2012
2013
2014
2015
10
0
Source: Financial reports of commercial banks in Binh Duong 2011
– 2015 and author's synthesis
From chart 2.13, it can be seen that the average ratio of outstanding credit/total assets of banks in 2011 was 62.9%, in 2012 it was 66.1%, in 2013 it was 66.1%, in 2014 it was 66.1%, in 2015 it was 66.1%, in 2016 it was 66.1%, in 2017 it was 66.1%, in 2018 it was 66.1%, in 2019 ...
2013 decreased to 61.5%, in 2014 increased slightly to 62.6% and remained stable at 62.7% in 2015.
Commercial banks with a fairly high ratio of outstanding credit/total assets in 2015 are: MB (71.1%), STB (73.2%). These banks have a high level of concentration on credit activities, so in the coming years, if total assets do not increase significantly, there will not be much room for credit expansion.
Commercial banks with relatively low credit balance/total assets ratios in 2015 are: BIDV (55.6%), SCB (54.5%), TCB (57.1%). These banks are either lacking in lending, or focusing on large investment activities and providing non-credit services, so in the coming years, banks can continue to expand credit further.
Figure 2.14 Asset Liquidity Ratio
40
35
30
25
20
15
10
2011
2012
2013
2014
2015
5
0
Source: Financial reports of commercial banks in Binh Duong 2011 - 2015 and author's synthesis
Chart 2.14 shows that the asset liquidity ratio of commercial banks is on an increasing trend. Specifically, in 2011, the average ratio of banks was
24.1%, in 2012 the average rate in banks was 24.4%, in 2013 it increased to 27.9%, in 2014 it increased to 29.4% and in 2015 it continued to increase to 30.4%.
In 2015 alone, there were 5 banks with asset liquidity ratios lower than the average: Vietinbank (27.5%), ACB (27.5%), VIB (26.5%), MB (28.5%), STB (28.13%). The banks with the best liquidity levels currently are BIDV (35.2%), SCB (35.6%), TCB (32.7%). These are banks with a lot of capital room to continue expanding credit activities without much impact on liquidity risk.
Chart 2.15 Ratio of outstanding loans to total deposits
120
100
80
60
40
20
2011
2012
2013
2014
2015
0
Source: Financial reports of commercial banks in Binh Duong 2011 - 2015 and author's synthesis
Chart 2.15 shows that the ratio of outstanding loans to total deposits of most banks fluctuates around 70% to 80%. In 2011, the average ratio of outstanding loans to total deposits of banks was 87%. In 2012, the average of this ratio in both groups of state-owned and non-state-owned commercial banks was 83%. By 2013, this ratio in the group of state-owned commercial banks decreased to 78%, while the group of non-state-owned commercial banks increased sharply to 92%, mainly due to VIB, MB and STB increasing their lending, causing the ratio to increase.
The ratio of loans/total deposits at these banks reached approximately or exceeded 100%. In 2014, the ratio of outstanding loans to total deposits at both groups of banks decreased, the group of state-owned commercial banks decreased to 77%, and the group of non-state-owned commercial banks decreased to 80%. By 2015, the ratio of outstanding loans/total deposits at both groups of banks increased, the group of state-owned commercial banks increased to 79%, and the group of non-state-owned commercial banks increased to 85%.
Banks with high loan/total deposit ratios in 2015 continued to be VIB (95%), STB (95%). Banks with relatively low loan/total deposit ratios were BIDV (72%), SCB (72%). As analyzed above, these are two banks with relatively low bad debt ratios, so these banks have the basis to continue to expand lending activities.
2.2.3.2. Results of assessing the impact of the operational capacity of commercial banks on credit expansion for sustainable development of long-term industrial crops in Binh Duong province through the Thompson - Strickland model.
Based on the Thompson - Strickland model developed in chapter 1, the author assesses the impact of the operational capacity of commercial banks on credit expansion for sustainable development of CNDN in Binh Duong province.
Research data
This study uses primary data from two surveys conducted by the author:
The first survey form aims to identify the factors that evaluate the operational capacity of banks and the corresponding weights that show the importance of these factors. The survey form on the content of the assessment of the operational capacity of banks was set up to interview experts on the content of the assessment of the operational capacity of commercial banks and the importance of the factors in the Thompson - Strickland model (Appendix 1). The survey results show that most experts agree with the 10 factors proposed in the Thompson - Strickland model. Other factors proposed are not consistent among experts, so the author does not add new factors to the model.
The second survey sample is to calculate the average score for each factor. The scale of each factor is built from many observed variables. The questionnaire is set up to interview bank employees about the factors in the Thompson - Strickland model (Appendix 2). In total, there are 46 observed variables for 10 factors (excluding 3 observed variables of the credit expansion factor. Therefore, the sample size of the survey is n ≥ m*5 = 230. To ensure reliability, the author conducted 280 survey questionnaires. The number of survey questionnaires collected is 265, the number of survey questionnaires with full information for analysis is 258.
The importance of factors that make up the operational capacity of a bank.
The results of collecting opinions from banking experts on the importance of factors constituting operational capacity were synthesized and calculated into values: total score of each factor, average score and factor weight. The results are shown in Table 2.11.
Table 2.11 Importance of factors constituting the operational capacity of commercial banks
Factor
Total score | Average score | Weight | |
1. Financial capacity | 270 | 4,219 | 0.119 |
2. Management and executive capacity | 257 | 4,016 | 0.114 |
3. Human resource capacity | 245 | 3,828 | 0.108 |
4. Capacity, reputation and brand | 241 | 3,766 | 0.106 |
5. Service quality capacity | 220 | 3,438 | 0.097 |
6. Marketing capacity | 217 | 3,391 | 0.096 |
7. Interest rate competitiveness | 211 | 3,297 | 0.093 |
8. Product development capacity | 208 | 3,250 | 0.092 |
9. Technological capacity | 202 | 3,156 | 0.089 |
10. Network development capacity | 193 | 3,016 | 0.085 |
Total | 2,264 | 1,000 |
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Source: Author's survey results
From the survey results in table 2.11, the factors can be divided into 2 groups.
The group of factors that play the most important role in the operational capacity of banks and the remaining group of factors.
The group of the most important factors includes 4 factors: financial capacity (weight 0.119), management capacity (weight 0.114), human resource capacity (weight 0.108) and reputation - brand capacity (weight 0.106).
The remaining group of factors: have weights from 0.097 to 0.085, specifically service quality capacity (weight 0.097), marketing capacity (weight 0.096), interest rate competitiveness capacity (weight 0.093), product development capacity (weight 0.092), technology capacity (weight 0.089) and finally network development capacity (weight 0.085).
These weights will be used to calculate the performance factor scores of commercial banks.
Average score and performance factor score of factors
In survey sample 2, the data were processed using SPSS 22.0 software. Through testing with Cronbach's Alpha coefficient, all scales had Cronbach's Alpha coefficients greater than 0.6, indicating acceptable reliability. Only the observed variable SP3 was removed from the scale due to the total item correlation coefficient being less than 0.3, the remaining observed variables all met the requirements.
Table 2.12 Reliability testing of the scale
Scale
Cronbach's Alpha without eliminating variables | Cronbach's Alpha after removing variables | |
1. Financial capacity | 0.852 | 0.852 |
2. Management and executive capacity | 0.889 | 0.889 |
3. Human resource capacity | 0.759 | 0.759 |
4. Capacity, reputation and brand | 0.686 | 0.686 |
5. Service quality capacity | 0.777 | 0.777 |
6. Marketing capacity | 0.930 | 0.930 |
7. Interest rate competitiveness | 0.786 | 0.786 |
8. Product development capacity | 0.606 | 0.678 |
9. Technological capacity | 0.830 | 0.830 |
10. Network development capacity | 0.743 | 0.743 |
Source: Appendix 5
Next, the author proceeds to calculate the score for each factor in the operational capacity scale of commercial banks in Binh Duong.
Table 2.13 Operating capacity of commercial banks in Binh Duong
Operational capacity factors (ranking)
by performance score)
Weight NLHD | Average score NLHD army | Factor Score NLHD | |
(1) | (2) | (3) | (4=2*3) |
1. Financial capacity | 0.119 | 3,806 | 0.453 |
2. Management and executive capacity | 0.114 | 3,844 | 0.438 |
3. Human resource capacity | 0.108 | 3,625 | 0.392 |
4. Capacity, reputation and brand | 0.106 | 3,959 | 0.420 |
5. Service quality capacity | 0.097 | 3,647 | 0.354 |
6. Marketing capacity | 0.096 | 3,786 | 0.363 |
7. Interest rate competitiveness | 0.093 | 2,644 | 0.246 |
8. New product development capacity | 0.092 | 3,609 | 0.332 |
9. Technological capacity | 0.089 | 3,869 | 0.344 |
10. Network development capacity | 0.085 | 3,855 | 0.328 |
Total | 1 | 3,670 |
Source: Author's survey results
From the results in Table 2.13, the total score of the operational capacity factor of commercial banks is 3,670 points, reaching a fair level. Except for the factors of reputation, brand, and technological capacity, most of the remaining factors have a fairly low average operational capacity score. In particular, there are 4 factors with the lowest scores: product development capacity, network development capacity, service quality capacity, and interest rate competitiveness capacity.
- Financial capacity is considered to be of the highest importance. However, the average score of NLHD for this factor is only 3.806 points, ranking fifth in the
10 factors that make up operational capacity. This result suggests that, to improve operational capacity, commercial banks need to focus especially on improving financial capacity.
Table 2.14 Financial capacity of commercial banks
Criteria
Average score | |
TC1: Does the bank have large equity and a spacious headquarters? | 3,767 |
TC2: Banks have capital available to meet credit needs. your use? | 3,826 |
TC3: Does the bank always meet your payment requirements? | 3,760 |
TC4: Press information shows that banks are always profitable? | 3,876 |
TC5: The Bank always reinvests in its facilities every year. year? | 3,802 |
Average Factor Score | 3,806 |
Source: Author's survey results
Among the factors that make up financial capacity, the factor of good liquidity (Does the bank always meet your payment requirements?) and the factor of physical facilities (Does the bank have large equity capital, a spacious headquarters?) are rated the lowest. For many years, banks have increased their loan balance without thoroughly assessing the effectiveness of loan use. As a result, when the economy entered a recession, a series of borrowers encountered difficulties, many businesses were forced to go bankrupt, leading to a sharp increase in bad debt at banks. Meanwhile, most commercial banks have small capital scale, and their ability to mobilize long-term capital lacks diversity and flexibility. This causes serious liquidity risks for many banks, especially small banks, for a long time.
- Management and operation capacity is the second most important factor, but the average score of NLHD for this factor is only 3.844 points, ranking fourth among the factors that make up operational capacity. Thus, along with the financial capacity factor, banks need to pay more attention to improving management and operation capacity.
Table 2.15 Management and operational capacity of commercial banks
Criteria
Point medium | |
QT1: Does the bank where you transact have enough staff? Expertise in understanding the specifics of each loan? | 3,837 |
QT2: The bank manages the loan capital from the time of dissolution. bank to collect principal and interest and terminate the loan process? | 3,868 |
QT3: The bank has enough staff to meet the requirements. transaction? | 3,888 |
QT4: Your transaction is processed by the bank. exactly? | 3,841 |
QT5: The transaction documents you receive are always available. signature of the control department? | 4,004 |
QT6: Information about the products and services you use Are the applications always provided fully and accurately by the bank? | 3,868 |
QT7: The bank understands the risks that may occur to each loan for each customer? | 3,601 |
Average Factor Score | 3,844 |
Source: Author's survey results
According to table 2.15 for management and administration capacity, the criteria with the lowest scores are: the bank understands the possible risks for each loan for each customer, your transactions are carried out accurately by the bank, the bank where you transact has enough specialized staff to understand the characteristics of each loan.
Although most banks have built a scientific organizational structure, the level of adaptation to profound changes in the business environment is still low. Therefore, when there are adverse fluctuations in the macro environment, banks are forced to change their organizational structure. The process of restructuring banks is a clear demonstration when many banks have shifted from focusing on the wholesale segment to the retail segment, while some other banks have narrowed their market to focus on segments with their own strengths.
Important decisions in banking, including investment and credit decisions, are considered to be flawed. This was most evident in the period 2006-2008, when many banks increased real estate lending, contributing to price fevers and rapidly increasing virtual demand, leading to the formation of bubbles. When the real estate market declined, soaring inventories left huge bad debts in the banking system.
The control system in commercial banks is assessed to still have many loopholes. This has contributed to causing unpredictable risks in operations such as capital mobilization, credit, and investment in banks. In the period of 2013 - 2014, a series of frauds in the banking sector are the clearest evidence.
The average service quality score of commercial banks is 3.647 points, ranking among the four factors with the lowest average score. Although this factor is only rated as the 5th most important, in the context of Vietnam's increasingly deep integration into the world economy, the level of competition in the financial and credit sector is forecasted to become very fierce, the service quality capacity factor will increasingly play a decisive role in the existence and development of commercial banks. Therefore, to improve competitiveness as well as operational capacity, commercial banks need to pay more attention to improving service quality.
Table 2.16 Service quality of commercial banks
Criteria
Average score | |
DV1: Modern banking facilities create trust for client? | 3,864 |
DV2: How fast is the service? | 3,678 |
DV3: Banks meet customers' service needs as promised? | 3,380 |
DV4: Does the bank create trust in customers? | 3,717 |
DV5: Does the bank flexibly meet customer needs? | 3,733 |
DV6: Bank resolves customer complaints satisfactory? | 3,512 |
Average Factor Score | 3,647 |
Source: Author's survey results
According to table 2.16 for the service capacity factor, the criteria with the lowest scores are: the bank meets the service needs of customers according to commitments, the bank satisfactorily resolves customer complaints.
In general, the response to service needs at some banks is still not in accordance with the commitment. For example, with a contract in which the lending interest rate is adjusted every 3 months, based on the 13-month mobilization interest rate plus the adjustment margin, when the mobilization interest rate increases, the bank will adjust the lending interest rate immediately when the adjustment deadline comes. On the contrary, if the mobilization interest rate is decreasing, the bank is usually not in a hurry to adjust the lending interest rate when the adjustment deadline comes, but only when the customer proactively requests it will the bank make the adjustment.
Bank credit products are designed according to predetermined standards and credit contracts are highly accesible, meaning that customers only have the choice of accepting or not accepting the contract and are rarely able to negotiate to change the terms. Customer complaints have not been fully and promptly received by the bank and have not been satisfactorily resolved. Especially complaints about capital disbursement time and information transparency in debt collection.
Table 2.17 Interest rate competitiveness of commercial banks
Criteria
Average score | |
LS1: Does the bank have reasonable deposit interest rates? | 3,097 |
LS2: Bank loan interest rates change flexibly? | 3,357 |
LS3: Are the bank's service fees correct and valid? | 2,550 |
LS4: Are bank penalties reasonable? | 1,574 |
Average Factor Score | 2,644 |
Source: Author's survey results