The Reality Of Lending To Personal Customers Of Military Commercial Joint Stock Bank

Unsecured lending

Loan limit: Maximum loan amount is up to 500 million VND.

Maximum loan term: 48 months.

Flexible repayment method: Installment payment, fixed annuity interest, addon principal payment, principal payment, interest according to the decreasing balance.

Loans to advance securities sales

Loan limit: Up to the amount of securities sold (after deducting transaction fees and loan interest).

Maximum loan term: 3 working days.

Equitization loan

For preferred shares: up to 100 total value of shares at the preferred selling price; For freely registered shares: up to 50 total value of shares at actual auction price.

Maximum loan term: 36 months.

Diversified special assets: stocks formed from loans or real estate, valuable papers, means of transport independent of loans.

2.4. The reality of lending to personal customers of Military Commercial Joint Stock Bank

2.4.1. Loan sales for individual customers

Loan turnover is the total amount of money that the bank has disbursed to customers for a certain period of time, which can be quarterly, monthly or yearly (in this thesis, loan sales are calculated by year). . If the amount of money mobilized by the bank is high and the loan turnover is high, it shows that the bank has used the mobilized money effectively, with the aim of bringing profit to the bank.

But high loan sales does not mean good lending performance, but it also depends on debt collection in the period. Sales of science and technology loans of MBBank in the period from 2010 to 2012 are presented in the following table:

Table 2.6. Loan turnover for individual customers in the period 2010 - 2012

Unit: billion dong

Targets	2010	2011	Year 2012	Difference
				2011/2010		2012/2011
				Amount increased (+) decreased (-)	Reach rate (%)	Amount increased (+) decreased (-)	Reach rate (%)
Loan sales	69,281	100.128	141.043	30,847	44.52	40,915	40.86
Sales of science and technology loans	12,945	15,569	20.072	2.624	20.27	4.503	28.92
Proportion of loan sales science and technology (%)	18.68	15.55	14.23	-	-	-	-

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

From Table 2.6, we can see that lending activities for science and technology tend to decrease in proportion in loan sales but still increase in quantity. This is one of MBBank's efforts when designing many new products and services, expanding operating areas and developing credit products.

That is a remarkable achievement of the bank. Lending sales to HCN in 2010 reached 12,945 billion VND, equivalent to 18.68% of total loans. By 2011, loan turnover for science and technology was VND 15,569 billion, accounting for 15.55%, an increase of VND 2,624 billion compared to 2010, equivalent to an increase of 20.27.

In 2012, loan sales for science and technology reached VND 20,072 billion, accounting for 14.23% of total loan sales, continuing to increase compared to 2011 at VND 4,503 billion, equivalent to an increase of 28.92 . According to Table 2.3, the main borrowers of banks are financial institutions because they have better repayment capacity than science and technology, have collateral as collateral and the lending process is simpler.

Moreover, lending to science and technology carries a higher risk because customers use capital for the wrong purpose, unforeseen health risks occur. Therefore, the proportion of S&T loan sales is low (less than 20% of total loan sales) and is decreasing. However, the bank still attracted a new amount of science and technology thanks to its reputation, so the sales of science and technology loans increased.

The science and technology lending market is a market that banks are not allowed to leave when currently banks such as Techcombank, ACB, MSB, etc. are aiming to become a selling bank. Meanwhile, MBBank is moving away from that goal. Therefore, MBBank needs to have better measures to maintain its relationships with science and technology.

2.4.2. Loan balance situation for individual customers

Total outstanding loans is an indicator that reflects the amount of money a bank provides to the economy at a time. Total outstanding loans include short-term, medium-term and long-term loans.

The low total loan balance shows that the bank's operations are still weak, inability to expand, the bank's marketing ability is poor, and the qualifications of its staff are low.

However, it does not mean that the higher this ratio, the higher the lending efficiency because behind those loans there are credit risks that banks encounter. The indicator of total outstanding loans reflects the bank's lending scale and the bank's reputation for science and technology.

The outstanding loans for science and technology loans of Military Commercial Joint Stock Bank in 3 years 2010, 2011 and 2012 are shown in the table below:

Table 2.7. Outstanding loans to individual customers of Military Commercial Joint Stock Bank in the period 2010 - 2012

Unit: billion dong

Targets	2010		2011		Year 2012		Difference
	2010		2011		Year 2012		2011/2010		2012/2011
	Amount of money	Billion (%)	Amount of money	Billion (%)	Amount of money	Billion (%)	Amount of money increased (+) decreased (-)	Gain the ratio (%)	Amount of money increased (+) decreased (-)	Gain the ratio (%)
Total outstanding personal loans	7.317	100	8.073	100	9.264	100	756	10.33	1.191	14.75
I. Over time
1. Short term	4.964	67.85	5.563	68.91	6.447	69.59	599	12.07	884	15.89
2. Medium term	2.158	29.49	2.296	28.44	2.401	25.92	138	6.39	105	4.57
3. Long term	195	2.66	214	2.65	416	4.49	19	9.74	202	94.39
II. By loan currency
1. VND	6.014	82.19	6.452	79.92	7.323	79.05	438	7.28	871	13.50
2. Foreign currency (conversion)	1.303	17.81	1.621	20.08	1,941	20.95	318	24.40	320	19.74
III. According to collateral
1. Have collateral	6.255	85.49	6.774	83.91	7.421	80.11	519	8.30	647	9.55
2. No collateral	1.062	14.51	1.299	16.09	1.843	19.89	237	22.32	544	41.89

(Source of Financial Report of Military Commercial Joint Stock Bank for the period 2010 - 2012)

In terms of scale of science and technology loans

MBBank's total outstanding loans to science and technology increased in both quantity and proportion:

2010 reached 7,317 billion dong; 2011 reached 8,073 billion VND, an increase of 756 billion VND, equivalent to an increase of 10.33 compared to 2010; reached 9,264 billion VND in 2012, an increase of 1,191 billion VND, equivalent to 14.75% compared to 2011. The reason is that the bank has diversified its lending products to meet the more specific needs of customers. In addition, science and technology lending activities are more focused. However, according to Table 2.3, we see that science and technology loans account for a small proportion of the total loan balance of the bank (less than 15%), but the current goal of the bank is to increase science and technology lending activities. This poses for MBBank the problem of how to increase the outstanding balance of science and technology loans but still ensure the safety and effectiveness of the loan.

In terms of science and technology lending structure

Structure over time:

Because the bank's main source of capital mobilization is short-term capital mobilization, the bank gives priority to short-term loans, so short-term loans account for a large proportion of total outstanding loans to science and technology. Outstanding short-term loans in 2010 reached VND 4,964 billion, accounting for 67.85% of total outstanding loans to science and technology. In 2011, short-term loans increased by VND 599 billion, equivalent to an increase of 12.07 dong.

By 2012, short-term loans to science and technology were VND 6,447 billion, equivalent to 69.59% of total loans to science and technology. The period 2010 - 2012 were difficult years for the economy. Although banks have issued many credit cards, the real demand for loans of the people is not much. Moreover, because the economy is difficult, income is also more difficult, so all consumption needs decrease.

Therefore, the demand for short-term loans increases, and medium and long-term loans decrease. Medium-term loans are mainly from S&Ts to buy equipment and build factories for production. The balance of medium-term loans to science and technology increased in absolute terms, but the proportion gradually decreased over the years: in 2010 reached 2,158 billion VND (equivalent to 29.49), in 2011 reached 2,296 billion VND (equivalent to 28.44 USD). ) and in 2012 was 2,401 billion VND (equivalent to 25.92 total outstanding loans to science and technology). Long-term loans accounted for the smallest proportion of total outstanding loans to science and technology: 2.66 (in 2010), 2.65 (in 2011) and 4.49 (in 2012). Long-term borrowers mainly serve the purpose of buying cars, buying houses, studying abroad, or exporting labor. Currently, when society develops, families want their children to study in developed countries, so the demand for study abroad loans increases.That is the reason for the increase in the long-term loan balance.

Structure by type of loan:

Outstanding loans of science and technology in domestic currency are mainly, increasing in absolute number but decreasing in proportion: in 2010 reached 6,014 billion VND (equivalent to 82.19), in 2011 reached 6,452 billion VND (equivalent to VND 6,042 billion). 79.92 ) and in 2012 reached 7,323 billion VND (equivalent to 79.05%). According to Table 2.2, the main source of capital mobilization of the bank is from local currency.

Moreover, the majority of customers are domestic residents, so the loans are mainly for domestic consumption. Therefore, outstanding loans in local currency to science and technology account for a large proportion of total outstanding loans to science and technology. Circular No. 20/2011/TT-NHNN stipulating the purchase and sale of foreign currencies in cash by individuals with credit institutions, individuals and financial institutions are not allowed to freely buy, sell and consume in foreign currencies, so the ratio of loans in small foreign currency. In 2010, outstanding loans to science and technology in foreign currencies reached VND 1,303 billion, equivalent to 17.81% of total outstanding loans to HCN; 2011 increased by 318 billion VND, equivalent to 24.40; by 2012, reached 1,941 billion VND, equivalent to 20.95% of the total outstanding loans to science and technology. Customers borrow foreign currency to meet the purpose of studying abroad, labor export or doing business with foreign partners. Currently, the number of customers using th VISA,Master increases, so the demand for foreign currency increases.

Structure according to special assets:

Through the data table, we can see that loans to science and technology with special assets account for a higher proportion than loans without special assets. However, from 2010 to 2012, the proportion of loans with special assets is gradually shrinking and the proportion of loans without special assets is expanding. Specifically, in 2010, outstanding loans with special assets were VND 6,255 billion, equivalent to 85.49%, in 2011 it was VND 6,774 billion, accounting for 83.91, in 2012 increased by VND 647 billion to reach VND 7,421 billion, equivalent to VND 7,421 billion. 80.11% of total outstanding loans to science and technology with special assets. Loans to science and technology without special assets over the three years 2010, 2011 and 2012 were 1,062 billion VND (14.51%), 1,299 billion VND (16.09) and 1,843 billion VND (19.89), respectively. This is explained by the fact that in the appraisal of loan documents, the bank has performed well and fully completed the procedures, only accepting customers with healthy finances.having full civil act capacity to borrow capital, most customers needing capital do not need special assets. In addition, the number of previous borrowers has gradually built up a reputation with the bank, so they can get loans without special assets. However, this also creates risks for the bank in the worst situations such as customers' inability to repay due to difficult circumstances, unemployment, etc.

2.4.3. Debt collection situation for individual customers

Besides lending activities, debt collection is an extremely important task of all banks. Debts that are recovered on time, both principal and interest, will create conditions for the bank to supplement resources for business activities. In addition, the debt collection activities are performed well, demonstrating the effectiveness of lending activities for the bank's customers.

Table 2.8. Debt collection situation for individual customers of Military Commercial Joint Stock Bank in the period 2010 -2012

Unit: billion dong

Targets	2010	2011	Year 2012	Difference
				2011/2010		2012/2011
				Amount increased (+) decreased (-)	Reach rate (%)	Amount increased (+) decreased (-)	Reach rate (%)
Debt collection revenue	56.085	78,297	109.126	22.212	39.60	30,829	39.37
Sales of science and technology debt	9.853	13,926	19,835	4.073	41.34	5.909	42.43
Proportion of debt collection for science and technology (%)	17.57	17.79	18.18	-	-	-	-

(Source: Financial report of Military Commercial Joint Stock Bank)

In 2010, the debt collection revenue of Military Commercial Joint Stock Bank reached VND 56,085 billion, of which the revenue of science and technology debt collection reached VND 9,853 billion, accounting for 17.57% of total debt collection. In 2011, the bank's debt collection increased to VND 78,297 billion, along with that of science and technology debt also increased in both absolute numbers and proportions, reaching VND 13,926 billion, up from 4,073 in 2010 compared to 2010. billion dong respectively increased 41.34 .

In 2012, along with the increase in loan sales, the bank also accelerated debt collection.

Both debt collection and debt collection from science and technology increased in 2012, debt collection revenue reached 109,126 billion VND and personal debt collection reached 5,909 billion VND, equivalent to an increase of 42.43%.

From there, it can be seen that the revenue of science and technology debt increased in both quantity and proportion.

This is a commendable achievement of MBBank. Part of the reason is that customers' production and business activities were strongly affected by the economic crisis, unable to repay bank loans, so they applied for debt restructuring.

Debt restructuring can mean adjusting repayment terms, extending debt for customers who have difficulty paying debts as originally agreed. Although debt restructuring slows down the bank's capital collection, on the other hand, it also helps the bank to reduce the pressure to increase bad debts, keeping the debt group after restructuring also reduces the pressure to increase. provisioning, reducing costs for the bank.

At the same time, debt restructuring is a way for banks to help their customers overcome difficulties and generate revenue to repay loans. In addition, because the customers keep their reputation, they are responsible for the loan. The increase in debt collection over the years shows that MBBank has effectively applied debt collection policies for science and technology such as closely monitoring risky debts, focusing on settling overdue debts, use foreclosure measures against customers who are no longer able to repay their debts.