Solutions to promote the efficiency of lending activities for individual customers at Military Commercial Joint Stock Bank

Capital turnover ratio reflects fast or slow capital turnover in science and technology lending. Usually, a larger capital turnover indicates better debt recovery and vice versa. The data table shows that the loans to science and technology recovered from 2010 to 2012 are larger than 1 and increase gradually over the years.

In 2010 from 1.69 rounds increased to 1.81 rounds in 2011, and in 2012 reached 2.29 rounds. The reason is that the bank has been more careful in the credit approval process, strictly controlled the customer's debts during the period, making the bank's debt collection more convenient and easier.

With a relatively high capital turnover, the bank's ability to recover debts on time is relatively fast, ensuring liquidity as well as minimizing risks and having re-lending capital.

However, the bank still needs to take measures to maintain and increase the capital turnover in the coming time, to make the capital used more efficiently, to better meet the capital use needs of customers. row. In 2011, in 2012, the rate of overdue debt increased, especially in 2012 the overdue debt rate of Science and Technology exceeded 5%.

If the bank can carry out the recovery of these debts, the credit turnover will certainly be higher.

From there, the bank can use the recovered capital to increase revenue and improve its profit target.

Capital efficiency Table 2.13. Effective use of capital for individual customers Unit: Billion VND

Targets	2010	2011	Year 2012
Funds mobilized from individuals	7.317	8.073	9.264
Outstanding loans for science and technology	23.437	30.533	41.031
Effective use of capital for science and technology	31.22%	26.44%	22.58%

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(Source of Financial Report of Military Commercial Joint Stock Bank )

The efficiency of capital use for science and technology tends to decrease in 2010, this figure is 31.22%, down to 26.44 in 2011, down to 22.58 in 2012. Thereby, we can see that the efficiency of capital use is somewhat reduced. According to table 2.3, we see that the proportion of capital mobilized from individuals decreased: in 2012 it reached 7,317 billion VND, equivalent to 14.99; in 2011 reached 8,073 billion VND, equivalent to 13.67 and in 2012 reached 9,264 billion VND, equivalent to 12.44%. Meanwhile, the demand for loans of science and technology increased, making the efficiency of capital use decrease. However, the bank has partly limited the risks occurring in science and technology lending activities . In order for the mobilized capital to be used effectively, MBBank needs to pay more attention to the rigorous appraisal and approval of science and technology loans.

2.5.3. Assessing the current situation of lending activities to individual customers at Military Commercial Joint Stock Bank

2.5.3.1. These achievements

In recent years, although the economy has had many fluctuations and the business environment of the banking industry has faced many difficulties, with the efforts of the staff and management, MBBank has achieved many achievements. step forward. Lending activities still play a key role in generating profits for MBBank. Besides, MBBank still ensures to control the level of bank risk at an appropriate level, the ratio of bad debt to total outstanding loans is maintained by the bank below 2%.

Science and technology lending activities of banks are gradually expanding. The effectiveness of science and technology lending activities in recent years has improved significantly. The scale and growth rate of science and technology lending activities are increasing: lending activities in general and science and technology lending activities in particular of Military Commercial Joint Stock Bank are growing in both size and speed. MBBank has issued a credit policy to ensure that MBBank's credit activities are in the right direction of "reasonable, selective, safe and effective credit growth". MBBank has synchronously implemented credit policies, which are flexible, harmonious, and share difficulties with businesses. Actively coordinate with customers to build a reasonable debt structure plan, in accordance with regulations to help customers overcome immediate difficulties, create trust and appreciation of customers. Besides,MBBank also implemented many policies synchronously to accompany and strengthen close relationship with customers.

MBBank has established its own Risk Management Division, closely directing each branch's loans, in order to achieve the goal of best controlling risks from lending activities and bad debt risks. As a result, the inspection, review, assessment of the adequacy, effectiveness in direction and management and the effectiveness of business activities is always ensured.

After many years of operation, with continuous innovations in management quality and customer service in the direction of convenience, civilization and modernity, the bank has established and maintained good credit relationships with many customers. client. Increase the rate of regular customers and the rate of returning customers.

The loans are all focused on by MBBank in the appraisal and strict inspection before, during and after lending to ensure the right use of capital, right objects and safety for the bank. Raise the sense of responsibility of each staff member for each loan. In addition, MBBank also seriously reviewed the ethical violations of some bank staff.

During the operation, the loans of HCN of MBBank were effectively implemented. This not only brings profits to customers, but also helps customers operate efficiently. Therefore, MBBank has built a strong team of customers who have a trusting relationship with each other.

2.5.3.2. The existence and causes

In addition to many progressive achievements in recent years, MBBank still has certain limitations in terms of regulations, mechanisms and governance models in the implementation of credit risk management.

About the loan process:

The lending process revealed some limitations and was not strictly and fully implemented at some branches. At MBBank, CBTD is the person who searches for customers, analyzes customer reviews, approves loans, and checks for during and after lending.

While the credit process at advanced banks is a systematic structure in which many people are involved and each key staff member participates in one or several operational stages to specialize and minimize risk. With the current process, MBBank's credit officers have to do many things, so it's very difficult to specialize in each operation. The reality after the inspection shows that the post-lending check has not been taken seriously. In recent times, there have been branches that have violated the lending process that banks have to handle. Some processes do not stipulate the coordination between related departments in stages where many departments are involved in management such as the management of special assets or issuing internal documents in time when there are changes in decisions. by ALCO, Credit Council.

Regarding the appraisal:

The appraisal of loan conditions and loan documents of customers, the collection of customer information by credit officers is limited and subjective, such as: a sketchy appraisal report, not done yet. clarify the cause of the inconsistency between the documents and documents provided by the customer, the input contract according to the customer's business plan has expired but the customer has not added a new economic contract or signed an Appendix The economic contract extends the contract performance period, or the report does not fully reflect the information.

However, loans are still submitted for approval, making it difficult and time consuming for specialized departments to evaluate, which can lead to inaccurate lending decisions, which greatly affect the quality of the loan. banking management as well as reducing the efficiency of lending activities.

Regarding loan security:

In this work, there is still a lack of implementation of necessary regulations to ensure the interests of MBBank if losses occur such as:

Errors in signing the mortgage contract or not completing the mortgage procedure lead to the mortgage contract not guaranteeing MBBank's interests as the contract has not been notarized and secured transactions have not been registered.

In addition, there are still cases where insurance has not been purchased, and insurance benefits are transferred to MBBank.

Mortgage contract does not fully guarantee the customer's financial obligations.

Mortgage contracts do not specify the mortgagor (third party) to mortgage the property to secure the civil obligations of which party (mortgage or borrower) or specify that the collateral will guarantee for credit contracts.

Most of the special assets are formed from loans, the bank has signed a contract to mortgage the assets formed from the loan. However, the bank has yet to monitor and check the formation of assets and put them into use and collect original documents on assets.

Regarding disbursement and post-lending control:

The quality of post-lending inspection has not been guaranteed, the purpose of capital use has not been fully checked, the customer's business performance has not been checked, or the inspection content has not been updated with the production and business situation. business or financial situation of the customer, may not timely detect bad signs or abnormalities in the customer's business activities, leading to risks for the bank in the process of loan recovery.

Although the bad debt ratio has been maintained below 2, it is rising to the 2% mark. The rate of overdue debt has exceeded 5% in the last 2 years, which shows that the bank's lending efficiency has somewhat decreased. Those are alarming signs for the bank. This shows that the bank is facing a very high risk of capital loss. This problem is always the most painful and worrying issue of commercial banks, especially in the current difficult economic situation.

The bank is still depending on debt restructuring to reduce bad debt.

This will help customers reduce pressure on due debts but increase the risk of losing capital.

About human resources:

Most credit bureaus are still very young, inexperienced in granting credit, not keeping abreast of the actual situation, and are still apprehensive about credit relations with customers. Some staff have worked for many years with experience, so they rarely learn and update the changes of the market economy, and their technological skills are still limited. In the lending process, many credit officers lack the ability to judge and do not have a comprehensive view of the actual and comprehensive effectiveness of the loan plan proposed by the business, so they only revolve around the direct collaterals. affect lending performance.

The moral quality of some credit officers declined, increasing the risk of loans, affecting the bank's profits and reputation.

Causes of these restrictions:

Objective reasons:

The cause comes from the environment, economic policies and remote supervision of the State Bank: the development orientations of the State often change, adjusting mechanisms and policies affects the entire economy. Legal documents on collateral still have many shortcomings, especially in determining the ownership of properties used as collateral, which have not really dealt with businesses that violate the ordinance. The bank's lawsuit procedure is cumbersome. The SBV has not been able to overcome the remote supervision and on-site inspection (ie, maintaining the analysis and continuous monitoring via computer network for all credit institutions in the banking system). On the other hand,Like other commercial banks, banks are not used to exchanging information about customers' situation with other banks because of competition, so up to now, the information system at the credit center of the State Bank of Vietnam (CIC) has not met the demand. of the bank.

The economic situation in recent years of the world in general and Vietnam in particular is very bleak. 2012 was a really difficult year for Vietnamese businesses. The global economic fluctuations caused the market to shrink, inventories increased... Banking operations faced many difficulties, bad debts were high, credit growth of the whole system was very low, estimated at 8.91%. . VND lending interest rates decreased by 5-9%, VND deposit interest rates decreased by 3-6% compared to the end of 2011. The key programs of the banking system: restructuring and handling bad debts have made progress but is still slow, has not made positive changes.

Fixed assets from bank loans are usually real estate or means of transport. The risk of price fluctuations in the market, difficulty in selling assets, falling in value or changing the status quo…. Especially when the real estate situation freezes, the prices of apartments continuously decrease, along with the economy slumps, people reduce consumption, causing the value of special assets to drop. This has also caused credit risk for the bank.

In reality today, lending work is being passive in updating information from lenders, the source of information is mainly based on loan documents, project files,... is there any source of information? Information in banks is just an overview without specific details, so accuracy, science and objectivity are still limited. Therefore, the information collected to evaluate and make lending decisions is inaccurate, reducing profits and lending efficiency, causing high overdue debt.

Subjective reasons:

Due to the transformation to a new organizational model under specialized banks and supporting blocks, the number of newly established units increased. The management apparatus has not yet been synchronously connected, vertically and horizontally, so there have arisen many difficulties in management coordination, increasing intermediaries, wasting time and reducing efficiency. lending work.

MBBank does not have an overall long-term risk management strategy. In the modern banking governance model, the development of an overall long-term risk management strategy plays an important role in directing the operation of the risk management system, ensuring the system's operations. effectively and achieve set goals. For MBBank at present, the risk management strategy is being integrated into a number of operational regulations and regulatory documents on functions and duties of departments. However, an overall, officially standardized strategy has not yet been developed, applied and disseminated by the bank in the system.

Although the bank's credit officers are young and dynamic, their professional qualifications are not high. Currently, the bank does not have a team of in-depth appraisal staff who are concurrently experienced, on the other hand, the ability to implement the project is extremely inadequate, most of which are based on practical experience but have not been properly trained. for projects of a technical nature, the appraisers only rely on documents, they themselves do not have enough experience to appraise such projects.

Failure to promptly update internal regulatory documents leads to non-compliance with the necessary regulations in the implementation of lending activities, thus creating risks.

SUMMARY OF CHAPTER 2

Chapter 2 of the thesis briefly introduced the history of formation, development, organizational structure, and business activities of Military Commercial Joint Stock Bank. In addition, chapter 2 also mentions the actual situation of lending and the effectiveness of lending activities for individual customers at Military Commercial Joint Stock Bank.

Thereby, we can find out and give some limitations, the causes of existing limitations in lending activities to individual customers. This is the basis for giving some solutions and recommendations to partially overcome the above limitations in lending to individual customers at MBBank in chapter 3.

CHAPTER 3. SOLUTIONS TO PROMOTE THE EFFICIENCY OF LOANS FOR PERSONAL CUSTOMERS OF MILITARY JOINT STOCK COMMERCIAL BANK

3.1. Operation orientation of Military Commercial Joint Stock Bank

With the goal of building MBBank to become the leading joint stock commercial bank in Vietnam in selected market segments in major urban areas, focusing on traditional corporate customers, economic groups and enterprises. big business; selectively focusing on small and medium enterprises , developing science and technology services. Expanding business activities in the capital market, developing investment banking activities, closely linking members in the banking industry towards becoming a financial group. In order to implement its development strategy, MBBank's orientation will focus on the following key tasks:

3.1.1. Improving financial capacity, perfecting technology and governance

Implement the increase of charter capital according to the necessary schedule to meet the minimum charter according to the regulations of the government in 2013. It is expected that the charter capital in 2013 will increase by 15 to 15,000 billion dong. The increase of charter capital is determined firstly through issuing shares to existing shareholders, converting bonds into shares, combined with extracting additional profits to increase charter capital and from annual profits.

Continue to maintain the growth rate of mobilized capital, promote forms of capital mobilization through the stock market such as medium and long-term bonds, short-term bills and convertible notes according to the capital increase plan and roadmap. regulations.