MINISTRY OF EDUCATION AND TRAINING
THANG LONG UNIVERSITY
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GRADUATION THESIS
TOPIC:
SOLUTIONS TO PROMOTE THE EFFICIENCY OF Lending ACTIVITIES FOR PERSONAL CUSTOMERS AT MILITARY JOINT STOCK COMMERCIAL BANK
Instructor : Th.s Le Thi Ha Thu
Performed by students: Tran Thi Tuyet Nhung
Student code: A17568
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Solutions to promote the efficiency of lending activities for individual customers at Military Commercial Joint Stock Bank - 2 -
Lending Activities For Individual Customers -
The Necessity Of Promoting The Efficiency Of Lending Activities For Individual Customers
Specialization: Finance – Banking
HANOI – 2013
THANK YOU
I would like to sincerely thank the dedicated guidance of the instructor, Master Le Thi Ha Thu, who has always helped me, improved my knowledge, pointed out my shortcomings and helped me have better orientations. during my thesis work. I would also like to especially thank Ms. Hoang Thanh Thuy – Specialist of Credit Risk Management Department – Risk Management Division Headquarters of Military Commercial Joint Stock Bank for helping and providing useful information and documents. Helped me to complete this thesis.
Thank you sincerely!
October 30, 2013
Pupil
Tran Thi Tuyet Nhung
TABLE OF CONTENTS
FOREWORD
CHAPTER 1. GENERAL THEORETICAL BASIS ON EFFICIENCY OF Lending ACTIVITIES FOR PERSONAL CUSTOMERS OF COMMERCIAL BANKS ………… …………………………… …………………………… ………….first
1.1. The concept of lending activities of commercial banks ……………………………………………………….1
1.1.1. The concept of lending activities of commercial banks ……………………………………………………….1
1.1.2. The role of lending activities for commercial banks …………………………………………1
1.2. Lending activities for individual customers ………………………………………………………… ………3
1.2.1. The concept of lending activities for individual customers …………………………3
1.2.2. Characteristics of lending activities for individual customers………………………………………….4
1.2.3. The role of lending activities for individual customers …………………………………………………………………………. …4
1.2.4. Types of loans for individual customers …………………………………………………………….. …5
1.2.5. Loan operation process for individual customers …………………………………………7
1.3.1. The necessity of promoting the efficiency of lending activities for individual customers ………………………….. …………………………… …………11
1.3.2. Criteria to evaluate the effectiveness of lending activities for individual customers ………………………………………………………… …………………………… …………………………… ..twelfth
1.3.3. Factors affecting the improvement of the efficiency of lending activities for individual customers ………………………………………………………… …………………………… …………16
SUMMARY OF CHAPTER 1……………………………………………………….. …………………………………………18
CHAPTER 2. SITUATION OF LIVING ACTIVITIES FOR PERSONAL CUSTOMERS AT MILITARY JOINT STOCK COMMERCIAL BANK 19
2.1. Overview of Military Commercial Joint Stock Bank …………………………………………19
2.1.1. The process of formation and development ……………………………………. …………19
2.1.2. Organizational structure ………………………………………. …………………………… ….20
2.1.3. Service products …………………………………………………………………………………… ……………………………24
2.2. Business performance of Military Commercial Joint Stock Bank …………………………………………………………………………. …………………………… …………………………… 26
2.2.1. Fundraising activities …………………………………………………………………………… ………….26
2.2.2. Capital use activities (mainly lending activities) ………………………………………………………..30
2.2.3. Other business activities …………………………………………………………………………… ……………..36
2.2.4. Business results …………………………………………………………………………… …………37
2.3. General regulations on lending activities for individual customers at Military Commercial Joint Stock Bank ……………………….38
2.3.1. Lending principles …………………………………………………………………………… …………………………………………39
2.3.2. Object for loan………………………………………. ………….39
2.3.3. Collateral………………………………………. …………………………… ..39
2.3.4. Lending process …………………………………………………………………………… ……………………….40
2.3.5. Loan products for individual customers …………………………………………………………….. …………42
2.4. Actual situation of lending activities for individual customers of Military Commercial Joint Stock Bank ………………………………………… …………………………… …..44
2.4.1. Situation of loan sales for individual customers …………………………………………44
2.4.2. Outstanding balance of loans to individual customers …………………………………………………………… ………45
2.4.3. Debt collection situation for individual customers …………………………………………………………….. ……..48
2.5. Evaluating the effectiveness of lending activities to individual customers at Military Commercial Joint Stock Bank …………………………… …..50
2.5.1. Quantitative criteria …………………………………………………………………………… …………………………… 50
2.5.2. Quantitative criteria ……………………………………………………………………………………. …………………………………………51
2.5.3. Evaluation of the actual situation of lending to individual customers at Military Commercial Joint Stock Bank ………………………….. …………………………… ……56
SUMMARY OF CHAPTER 2……………………………………………………………………… ……………………………………….sixty one
CHAPTER 3. SOLUTIONS TO PROMOTE THE EFFICIENCY OF LOANS OF PERSONAL CUSTOMERS OF MILITARY JOINT STOCK COMMERCIAL BANK………. …………………………… …………62
3.1. Operation orientation of Military Commercial Joint Stock Bank …………62
3.1.1. Improving financial capacity, perfecting technology and governance ………………………………………….. …………………………… …………………………… ..62
3.1.2. Network development …………………………………………………………………………… …………62
3.1.3. Maintaining a low bad debt ratio …………………………………………………………………………. …………63
3.1.4. Continuing to maintain and develop business activities………………………………………….63
3.2. Solutions to promote the effectiveness of lending to individual customers at Military Commercial Joint Stock Bank …………………………… ….63
3.2.1. Improving the quality of information collection …………………………………………………………….. ……………..63
3.2.2. Completing the credit process for individual customers ……………………………………………….63
3.2.3. Monitor loans closely ………………………………………………………………………. ……………………………….sixty four
3.2.4. Improving qualifications of credit officers ……………………………………………………………….. …………65
3.2.5. Strengthening internal inspection and control in the bank …………………………………65
3.2.6. Enhancing marketing effectiveness …………………………………………………………………………… ……………66
3.2.7. Development of consulting services …………………………………………………………………………… ………………………………….sixty seven
3.3. Some recommendations………………………………………. …………………………… ….sixty seven
3.3.1. Recommendations to the State Bank and the Government………………………………………………………..67
3.3.2. Recommendations for Military Commercial Joint Stock Bank ……………………….68
SUMMARY OF CHAPTER 3……………………………………………………………………… …………………………………………70
CONCLUDE
LIST OF Abbreviations
Abbreviation Full name
CBTD Credit officer
CIB Large corporate and financial institutions
DPRR Provision for risks
Science and Technology Individual customers
Business customers Corporate customers
Board of Directors Board of Directors
Commercial Bank Commercial Bank
Joint Stock Commercial Bank Joint Stock Commercial Bank
MBBank Military Commercial Joint Stock Bank
Credit risk Credit risk
SME Small and Medium Enterprises
GSO Economic organization
Credit institutions Credit institutions
Special Assets Secured assets
LIST OF TABLES, DIAGRAMS
Table 2.1. List of subsidiaries of Military Commercial Joint Stock Bank …….24
Table 2.2. The situation of capital mobilization of Military Commercial Joint Stock Bank in the period
period 2010 – 2012 ……………………………………………………………………… …………………………… ………..27
Table 2.3. Outstanding loan balance of Military Commercial Joint Stock Bank in the period 2010 – 2012 ………………………………………… …………………………… ………………………thirty first
Table 2.4. Situation of overdue debt and bad debt of Military Commercial Joint Stock Bank in the period 2010 – 2012 ………………………………………………………… …………………………… ……….35
Table 2.5. Business results for the period 2010 – 2012 ………………………………………….37
Table 2.6. Loan turnover for individual customers in the period 2010 – 2012……..44
Table 2.7. Outstanding loans to individual customers of Military Commercial Joint Stock Bank in the period 2010 – 2012………………………….. ………………………………………….forty six
Table 2.8. Debt collection situation for individual customers of Military Commercial Joint Stock Bank in the period of 2010 -2012 ………………………………………………………… …………………………… 49
Table 2.9. Situation of overdue debt and bad debt on total outstanding loans for individual customers in the period 2010 – 2012 …………………………………………………………………………. …………………………… ………..51
Table 2.10. Provision ratio for loans to individual customers …….53
Table 2.11. Risk-offering coefficient for lending to individual customers…………………………………………54
Table 2.12. Loan turnover for individual customers …………………………………………55
Table 2.13. Effective use of capital for individual customers ……………………………………………….56
Diagram 1.1. General process of lending activities for individual customers ………..7
Diagram 2.1. Organizational structure of Military Commercial Joint Stock Bank for the period 2010 – 2015 ………………………………………………………… …………………………… ……………………….21
FOREWORD
1. URGENTITY OF THE TOPIC
Over the past years, Vietnam’s commercial banking system has grown strongly in both scale and quality of operations, greatly contributing to the industrialization and modernization of the country. Along with the explosion of science and technology, the outstanding development of the economy, the need to improve infrastructure to create a premise to improve people’s living standards has become increasingly urgent. To create conditions for them to access capital for production and business, housing investment, means of transportation to improve their lives, the role of bank lending products is extremely important. Banks are the bridge that helps individuals and households improve their quality of life with their services.
In the actual operation of commercial banks, the group of individual customers usually accounts for a smaller proportion than the corporate customers, the analysis and appraisal for individual customers is also quite simple. simple, so commercial banks often tend not to focus on this customer. However, in the current retail business trend of commercial banks, the market share of individual customers will increasingly grow and play an equally important role compared to corporate customers.
During 18 years of establishment and development, Military Commercial Joint Stock Bank has been affirming the trust of customers in providing banking services and products, especially products for customers. get a loan. Corporate customers are always the main customers of the bank. Military Commercial Joint Stock Bank in recent years has begun to focus on lending to individual customers and is gradually completing the lending work for this audience. However, banks cannot avoid shortcomings in this lending activity.
As a student majoring in banking and finance, with the knowledge acquired at school plus practical understanding during my internship at Military Commercial Joint Stock Bank, I chose the topic: “Solutions to boost the efficiency of lending activities for individual customers at Military Commercial Joint Stock Bank” as the topic of my university graduation thesis.
2. RESEARCH OBJECTIVE OF THE TOPIC
Analysis of the theoretical basis of the effectiveness of lending activities for individual customers of commercial banks.
Review and evaluate in a general and systematic way lending activities for individual customers of Military Commercial Joint Stock Bank.
Proposing a number of solutions to boost the efficiency of lending activities for individual customers of Military Commercial Joint Stock Bank.
3. SUBJECTS AND SCOPE OF RESEARCH
Research object: The efficiency of lending activities.
Research scope: The effectiveness of lending activities for individual customers at Military Commercial Joint Stock Bank in the period 2010 – 2012.
4. RESEARCH METHODOLOGY
In the research process, the thesis has combined the use of methods of information collection, statistics, analysis, comparison and synthesis in order to solve the relationship between theory and practice in terms of operational efficiency. loans to individual customers of commercial banks.
5. STRUCTURE OF THE THESIS
In addition to the introduction, conclusion, table of contents, list of tables, diagrams, references, the thesis structure has 3 chapters:
Chapter 1: General theoretical basis on the effectiveness of lending activities for individual customers of commercial banks.
Chapter 2: Actual situation of effective lending activities for individual customers at Military Commercial Joint Stock Bank.
Chapter 3: Solutions to promote the efficiency of lending activities for individual customers at Military Commercial Joint Stock Bank.
CHAPTER 1. GENERAL THEORETICAL BASIS ON LIVING EFFICIENCY FOR PERSONAL CUSTOMERS OF COMMERCIAL BANK
1.1. The concept of lending activities of commercial banks
1.1.1. The concept of lending activities of commercial banks
Lending activities have existed through many socio-economic forms. The lending relationship arose right from the time when the primitive communal system began to disintegrate. When private ownership of the means of production appeared, at the same time, relations of exchange of goods appeared. During this period, lending activities were carried out in the form of borrowing in kind – goods. Later, this activity changed to the form of borrowing in currency.
Lending is the primary economic function of banks to finance the spending of businesses, individuals and government agencies. Bank lending is closely related to economic development in the banking sector, because lending promotes the growth of businesses and individuals, creating vitality for businesses and individuals. economy.
The concept of lending is defined differently in a number of legal documents as follows:
According to Decision No. 1627/2001/QD-NHNN of the Governor of the State Bank issued on December 31, 2001 on the lending regulations of credit institutions (CIs) to customers, the concept of lending was introduced. Loan is a form of credit extension, whereby a credit institution assigns a customer to use a sum of money to use it for a certain purpose and for a certain period of time as agreed upon with the principle of repayment. both principal and interest”.
In Clause 16, Article 4 of the Law on Credit Institutions No. 47/2010/QH12 of the National Assembly as follows: “Lending is a form of credit extension whereby the lender assigns or commits to hand over a sum of money to the customer. money to be used for a specified purpose within a certain period of time in accordance with the principle of repayment of both principal and interest”.
1.1.2. The role of lending activities for commercial banks
Lending was born from the beginning of the bank and has become one of the two basic tasks of the bank. This is also the main business of the bank because only lending interest can offset the costs incurred by the bank such as intermediaries, management costs, reserve costs, etc.
Lending activities meet the demand for capital and harmonize the supply-demand relationship for the economy
Banks were born in association with the movement in the production and circulation of goods. The rapid development of commodity production has promoted the deepening, complex and enveloping commodity-money relationship, covering all activities of the economy and society. On the other hand, it is the production and circulation of goods that are born and expanded, which will lead to capital mobilization and is the foundation for creating the first money business organizations with the characteristics of a bank.
When they want to do business, or expand production and business but lack of capital, businesses will come to borrow capital from banks. But the enterprise only earns profit as well as being able to repay the bank debt when the enterprise sells all the products and goods it has produced, or there is a part of consumers who buy and have the ability to buy it. that product. On the consumer side, with a certain level of income, they cannot have enough money to buy the goods they want. They can only afford to buy after a long period of accumulation. That is the cause of the business cycle and capital turnover stall. The business will not recover enough money to make the production cycle.