UNDERGRADUATE THESIS DEFENSE ANALYSIS OF PERSONAL LOANS AT BIDV HAI VAN BRANCH

DUY TAN UNIVERSITY INSTITUTE OF INTERNATIONAL TRAINING FACULTY OF ECONOMIC MANAGEMENT - VIET MY (PSU)  UNDERGRADUATE THESIS DEFENSE ANALYSIS OF PERSONAL LOANS AT BIDV HAI VAN BRANCH INSTRUCTOR : MBA LUU THI THU HUONG STUDENT : NGUYEN NGOC ANH THU GRADE : K24PSU-QNH ID NUMBER : 24202403652 Da Nang, 2022 DISCLAIMER I certify that the attached thesis is my original work No other person’s work has been used without due acknowledgement Except where I have l clearly stated that I have used some of the this material , it has not been presented by me for examination in any other course or subject at this or any other institution I understand that the work submitted may be reproduced and/or communicated for the purpose of detecting plagiarism I understand that should this declaration be false, I am libel to be penalized under the Duy Tan University regulations Da Nang, May 2022 Student Nguyen Ngoc Anh Thu THANK YOU First of all, I would like to express my sincere thanks to Vietnam Investment and Development Joint Stock Bank (BIDV) – Hai Van branch, Credit Administration department and especially Mr Mai Dinh Huy - Head of Credit Administration department for helping me a lot during my internship at the bank I have gathered a lot of knowledge about banking in general and business processes in particular as well as learning about the experience and professional working style of everyone at the bank It also helps a lot to prepare for the future Besides, I also expressed my deep thanks to Ms Luu Thi Thu Huong, who taught me so that I could complete this essay well In the process of practicing and completing the course, due to the limitations of experience and knowledge, there are many shortcomings I hope that the teachers and brothers and sisters at the internship unit will contribute their opinions so that I can best complete this graduation course Da Nang, May 2022 Student Nguyen Ngoc Anh Thu TABLE OF CONTENTS TABLE CATEGORIES AND DIAGRAMS Figure Organizational structure model of BIDV Hai Van Figure 2.2: BIDV Hai Van's loan process Figure 2.3: Sales of IC loans for the purposes of BIDV Hai Van Figure 2.4: Sales of IC loans by term of BIDV Hai Van Figure 2.5: Sales of IC loans under bidv Hai Van's guaranteed method Figure 2.6: Sales of IC loans under bidv Hai Van's loan method ABBREVIATION CATEGORIES BIDV BIDV Hai Van LS DR AOD DEP EO FI CI CT RM VP SA FFL FITF Cer DD Cre IC MC Vietnam Investment and Development Joint Stock Bank Vietnam Investment and Development Joint Stock Bank – Hai Van branch Loan sales Debt revenue Average outstanding debt Deposit Economic organization Financial institutions Credit institutions Customer transactions Risk management Valuable papers Secured assets Formed from loans Formed in the future Certificate Deputy Director Credit Individual customers customer management PREAMBLE The urgency of the topic In the banking sector, lending is an extremely important form of activity that brings direct profits to commercial banks however, lending activities also carry quite a lot of risks Therefore, commercial banks always pay attention to the development of lending activities with the aim of stabilizing and developing banks, in addition to ensuring the supply of capital for production and business of enterprises In the past, with the traditional banking activity focusing only on lending to corporate customers, this has created fierce competition that makes the profitability significantly reduced, on the contrary, personal lending has a strong growth rate and increasingly brings high efficiency to banks In the trend of international integration, the system of banks is competing and aiming to strengthen credit products for individual customers The service of IC will ensure that the bank has a large mining market, reduces competitive pressure and helps the bank achieve high business efficiency Also because BIDV Hai Van branch is also trying to determine the effective safe direction Understanding the credit needs of customers in Da Nang, BIDV has launched many retail products (IC loans) suitable for each customer Therefore, the situation of lending to individual customers at BIDV Hai Van branch in recent years has achieved many encouraging achievements but it still contains many existences that need to be overcome In order for banking activities to become more and more efficient, minimizing lending risks, BIDV Hai Van branch should pay special attention to improving the efficiency of lending to individual customers in the coming time This has implications including improving operational capacity in the process of competition, integration with the region and the world From the above important reason, I decided to study the topic: "Analyzing the situation of personal customer lending at BIDV Hai Van branch " Research objectives - The theoretical basis system of individual customer lending activities of commercial - banks Analyzing and evaluating the actual page of personal customer lending activities at - BIDV Bank, Hai Van branch Set out a number of solutions to improve the personal lending activities of BIDV Bank, Hai Van branch Research questions - What is the current situation of IC lending of BIDV Hai Van branch at the time of - 20219, 2020, 2021? What solutions are offered to complete the lending activities of BIDV Hai Van branch? Objects and scope of research - Research subjects: Personal customer lending activities at BIDV Joint Stock Bank, Hai Van branch - Scope of research: Space range: BIDV Joint Stock Bank, Hai Van Branch Time scope: Reports on results of agricultural and technological lending activities, between 2019 and 2021 Research methods The study uses the following methods: - Method of data collection: The data, information collected includes the bank's reports In addition, the topic also referes to the sources of documents searched through books, decrees, circulars of the Government, the State Bank of Vietnam and BIDV Vietnam in relation to the research issue - Method of data synthesis: After collecting sufficient data, conducting classification and selection of data and targets in accordance with the research objectives - Comparison method: This is the main method used in analyzing business activities to determine the degree of volatility of analytical indicators - Data analysis method: After compiling the data, conduct a cleaning and put into the analysis to reach the final conclusion so that the data is the most accurate Composition of the thesis The thesis consists of three chapters: Chapter 1: The basis of reasoning on the personal lending activities of commercial banks Chapter 2: Analysis of the situation of individual customer lending at BIDV Bank, Hai Van branch Chapter 3: Solution to complete personal customer lending activities at BIDV Bank, Hai Van branch 10 CHAPTER 1: THEORETICAL BASIS FOR PERSONAL CUSTOMER LENDING ACTIVITIES AT COMMERCIAL BANKS 1.1 The basis of reasoning on the lending activities of the central bank 1.1.1 The concept of lending The concept of lending of commercial banks is defined as follows: "Lending is a form of credit grant, whereby the bank assigns the customer a sum of money to use for certain purposes and periods under the agreement with the principle of repaying both principal and interest" [1] With the development trend of the economy, the lending business is increasingly diverse, rich, complete, invested in all sectors In order to meet the increasing demand for bank loans, the bank's lending activities are expanding, requiring the bank to have a strict management process The goal of managing the loan item is consistent with the common goal of the bank on the basis of ensuring safety The Bank gives the right to use capital to customers and customers who use this capital to invest in production and business for profit, ensuring the repayment of principal and interest to the bank Lending is the most profitable but most risky activity of commercial banks In order for the bank to survive and develop solidly, lending activities must be safe and effective To so, it must be done according to certain principles Firstly, the borrower must ensure the use of the loan for the agreed purpose This helps to limit the credit risk for the banks Secondly, the customer must ensure the repayment of the principal and interest on the loan on time agreed in the contract Third, the bank lends to projects that are feasible, effective and capable of repaying debts As a result, the bank makes a profit from lending 1.1.2 Lending principles  Use the loan for the agreed purpose Credit provided to the economy must be geared towards the objectives and requirements of socio-economic development in each stage of development For economic organizations, credit must also meet specific 86 structured and double with the ratio of collateral value In order to be able to determine the interest rate according to the level of risk of each bank customer, it is necessary to implement the internal credit rating of individual customers, first of all business customers The Bank also needs to ask the Department to clearly specify the correlation between the ratio of the value of secured assets and the interest rate to be able to apply flexibly Applying the coordination of interest rate policy with other measures in customer policy to increase the effectiveness of interest rate policy Diversifying forms of guarantees and increasing the proportion of medium and long-term loans Diversify the forms of security in two major directions: + Increase the proportion of credit loans: expand credit lending in consumer loans for workers with stable incomes and jobs This rate is still too low This requires the bank to make more efforts to reach these audiences and have breakthrough policies on interest rates, marketing promotion, cross-selling products to expand the customer base this + Diversifying the type of secured assets, especially reducing the proportion of real estate mortgages in the context that the real estate market still carries too many risks Strengthen the proportion of medium and long-term loans, reduce the proportion of short-term loans to better meet the needs of IC To this, it is necessary to strengthen the credit risk management capacity of the departments related to individual customer lending 3.2.2 Add-on solutions 3.2.2.1 Diversification of IC lending products Currently, in the branch, there is only the CM department and the customer service department The branch needs to have a marketing department, always 87 research to understand the needs of customers, choose the target market, target customers, competitors to identify products for IC loans suitable for the Branch 3.2.2.2 Restructure the loan product portfolio in a reasonable manner Assemble department need right side have add many product dye also as chapter submit advise Forever, pros treat return interest rate Limb branch need real appear product pole every chapter submit advise Forever Pros treat interest rate give borrow for with IC put PAB, development open every product dye give borrow Du learn, product dye give borrow pepper use different come with guest row Every guest row borrow capital put buy real estate period silver row need see consider Digital lake primary borrow capital, jurisdiction fix able often pay debt, source pay debt also as collateral put avoid risk 3.2.2.3 Improving the quality of human resources - Credit officer level plays an important role in screening good customers Credit officer necessarily has to have a lot of contact with customers in many different business areas Therefore, in order to have an accurate assessment of the customer, they must really understand the customer, the field of industry in which the client does business, the environment the customer is living in In addition, cbtd also needs to have analytical skills from detail to overall information about customers as well as about the project of loan proposal At the same time, each cbtd also needs to be able to predict problems related to borrowers Therefore, it is necessary to encourage and create favorable conditions for employees to learn to improve their level Regularly or periodically organize training classes, training, fostering, improving professional skills The training should be in line with the expanding lending needs with a wide range of new types of customers Officials need to be more trained in analyzing the financial statements of the enterprise, detecting signs of credit risk from the financial indicators of the enterprise 88 -Have a policy of screening and effective use of cbtd team Every year, it is necessary to review, evaluate and classify credit officer to have timely training and supplementation directions, avoiding shortages Perform substandard credit officer rotation to another department - Having a foreign language proficiency is an indispensable condition for bank officials Therefore, it is necessary to have a training policy to improve the quality of foreign languages for officials - Selection is also an important factor in determining the quality of credit officer The bank needs to have a reasonable, fair recruitment regime, avoiding negative cases - Regularly train and check the level of staff through the construction of exam papers and online exams on the currently in-use workstation system, building bidv Hai Van's internal Forcal on existing infrastructure - The study of the quality of work associated with credit officer salary payment is based on net efficiency instead of sales of securities delivery indicators - Determine investment in when the agricultural and rural sectors are traditional markets Implementing and implementing the National Target Program on building new rural areas Expand lending through loan institutions to reduce pressure on cbtd In addition, the establishment of an independent appraisal department with the Credit Department in order to clearly separate between the appraisal stages and the stage of credit management and loan decisions Accordingly:  Appraisal Department: After receiving the full dossier provided by the Customer Relations Department, carry out the analysis, assessment, quantitative risk and have an independent risk report before proposing the leader to approve the loan The separation into two independent departments helps the credit issuance and monitoring process, monitoring the loan is distributed and clearly assigned the responsibilities of the departments in the credit issuance process, ensuring that one task is always done by one department and there is another department monitoring in parallel, controlling each other, detecting in time to limit risks However, in order to avoid prolonging the disbursement time, affecting customers due to having to go through two independent departments when granting credit, the Branch needs to have 89 a written regulation specifying the maximum time that each department must complete In addition, it is possible that the direction of credit growth goes hand in hand with credit quality not because of business targets but lower loan conditions, carefully appraise before lending and have appropriate lending mechanisms to reduce the workload for employees such as actively lending through the group, assemble In order to give credit officer time to appraise the loan more thoroughly Credit officer needs to control loan debt well, especially not to incur group debt 3.2.2.4 To specialize in the process of lending IC Branch directors should consider reorganizing the credit process for individual customer, each stage in the credit process assigned specifically to each different department in charge Employees in each department must have professional qualifications, professional manners, understand the position and job requirements Therefore, employees need to go to professional school from the training center of the Department 3.3 Some proposals and recommendations 3.3.1 For Vietnam Investment and Development Joint Stock Commercial Bank - Firstly, strengthen marketing for branches in the same system Joint Stock Commercial Bank for Investment and Development should invest more in marketing activities in each branch: support the branch to establish a separate, independent Marketing department or increase costs for marketing and customer care This is of great importance for the branch in expanding and expanding its lending activities for IC as well as other activities, helping the branch to actively implement the expansion strategy for customer loans natural persons as well as successfully completing the business plan set forth by the Head Office 90 - Secondly, develop and train resources to receive resources In order to further improve the quality of the staff, the Joint Stock Commercial Bank for Investment and Development of Vietnam should expand the training of capable and promising staff throughout the system, organize more training courses train, train and invite experts to teach staff to improve their qualifications The Bank should propose more reward emulation programs, create motivation to train and improve the professional qualifications of employees In addition, it is necessary to introduce reasonable reward regimes, helping officials at BIDV to maintain the rules and discipline in their work as well as make efforts to develop their business and express themselves Regularly conduct unscheduled inspections of the trading style and behavior of bank employees from which there is a reward processing mechanism It is necessary to organize recruitment, build a team of staff, especially CR and RM staff and allocate to the branch, ensuring enough number of receptions for branches to meet the workload The planning target of the Department is increasing due to the fact of competing with other credit institutions, while the current situation is that the branches are mostly a cadre who has to take on too many tasks at the same time, leading to the failure to complete the target, the quality of work efficiency is not high Therefore, ST Bank for Investment & Development of Vietnam needs to get the opinions of branches on the issue of personnel addition to plan the recruitment and training of staff to assign branches to ensure that the needs and tasks of the assigned work are met - Third, build an advanced and modern credit management system BIDV Bank needs to build appropriate credit management systems, minimize the process, withdraw the time to appraise and approve loans In particular, it is necessary to build a credit document system so that it is necessary to manage the credit limit suitable to each industry, each product, each group of customers and proceed to manage the credit line according to each credit officer Perfect the mechanism of limiting credit risk in personal loans from the Head Office to branches with a clear decentralization of the level of judgment, the function of each department, and develop policies suitable for the purpose of limiting credit risks in 91 personal loans Strengthen the inspection and supervision of credit activities and appraisal to promptly prevent and take appropriate measures In order for the bank to develop in a healthy way, it is necessary to reduce overdue debt, making the turnover of capital from the Bank to customers and the bank regularly, avoiding delays on the part of customers or banks, causing disadvantages for both parties Limiting overdue debt is a solution that helps the bank's operations and credit grow To limit overdue debt, BIDV Bank needs to take some of the following measures: + Develop effective and detailed safe credit policies to branches in the system + Good implementation of debt renewal policy, debt reduction and adjustment of repayment term The debt extension, debt reduction and adjustment of repayment term are based on the basis when there is a request for extension of the customer, so it is necessary to regularly check the debt situation of the customer and remind the customer to repay the debt on time if the customer finds it impossible to repay the debt on time, it is necessary to apply for a timely extension to roll over the debt situation the credit department reviewed and to the board of directors Implementing the debt extension for customers is to create conditions to help customers with temporary economic difficulties Monitor overdue debt management Management monitoring of overdue debts must be conducted regularly, continuously helping the bank know the exact debts of its unit Depending on the specific debt status, there is a flexible solution The immediate time may not be able for customers to repay the debt to the bank but after a short period of economic recovery, customers can repay the debt to the bank, it is not necessary to distribute assets forever to recover debts - Fifth, develop and complete the list of products and standardized processes BIDV Bank needs to build a diverse portfolio of products and services, many utilities based on modern technology platform in which selecting some highly competitive products to invest, develop into "large" products of BIDV, creating a difference with other banks, create the inherent brand of BIDV Build a portfolio of highly standardized retail products and services with product segmentation, identifying the target group of customers that the product aims for Develop and 92 synchronously implement a system of regulations, internal processes on risk management, operation between departments and customers, in which special attention is paid to the development of credit handbooks, regulations on assessment of loan customer ratings, credit quality assessment and handling of bad debts, at the same time help the loan officer settle the loan faster 3.3.2 For the State Bank SB can organize more training sessions, exchange experiences throughout the banking industry to improve professional qualifications, enhance understanding of both theory and practice for ICOs and strengthen cooperation among employees Regularly synthesize and analyze market information, make objective and scientific judgments and forecasts, especially related to retail credit activities so that employees have a basis for reference and orientation in making their credit policies so as to ensure reasonable development, just prevented the risk SB needs to complete the system of legal documents, creating the necessary foundation for ic lending development In the coming time, SB should issue a system of specific guiding documents on the types of products and services of CB, while also issuing documents of support and encouragement for CB, creating a clear and adequate legal corridor to protect the rights of employees to develop this activity SB needs to continue to improve the credit information center with high technology, regularly updating customer information So that when an individual or a business has a problem with a credit institution, other credit institutions are aware and updated as quickly as possible End and handle cases of unfair competition, concealing information between credit institutions To propose the State Bank to develop a separate regulation on IC lending of CB From there, it will provide guidance documents on the types of IC loans that banks and credit institutions can implement Having a separate law on IC lending will help banks have grounds to facilitate the expansion of customer lending in this market that is very potential for development 93 3.3.3 For governments and local authorities Continue to promote the role of the State's macro-regulatory management of the economy on the basis of respecting the laws of the market economy Ensure capital and liquidity for the economy, promote investment growth, prevent inflation and ensure the safety of the banking and financial system In general, if a country has a stable financial and monetary system through the stability and perfection of the relevant legal system, participants will have many opportunities to develop in an equal and comprehensive way The Government should also direct people's committees at all levels and competent state agencies (department of natural resources and environment) to speed up the process of issuing certificates of home ownership and land use rights to households and individuals, facilitating them in taking these assets as collateral when borrowing at banks If this operation is well implemented, there will be more IC loans from banks because they already have secured assets People's Committees of provinces and cities need to build housing price brackets close to market prices to ensure the rights of customers and banks in the procedures for valuing real estate as collateral for debt The government needs to facilitate the further development of information technology Information technology is an important factor influencing the modernization of the banking industry Implement administrative management with modern information technology, to be able to manage all information about employment, identity Of every individual in society, if this can be done With a good personal information management system of the Government, the bank will easily deploy personal loan products without collateral for customers such as managers, employees by quickly identifying accurate sources of income, personal reputation and management borrowed by individuals, minimizing investigative costs, simplifying loan application procedures, saving paperwork The State needs to build safe legal corridors: Housing law, economic law, civil law, in order to create a solid legal basis to protect the rights of borrowers and banks 94 Especially the notary office and the registration office ensure that the two departments have an important role, supporting the bank to mortgage behavior, pledge assets between customers and banks, this is the legal basis for later disputes The government needs to have specific regulations to protect the rights of lenders In case the borrower fails to repay the debt in the land law, civil law The Government should have a strict method of handling acts of corruption in all forms of cadres, avoiding the phenomenon of abuse of position and causing damage to the state Besides, of cadres, avoid the phenomenon of abuse of position, causing damage to the state Besides, there are also policies to reward well-performing officials to encourage the working spirit of cadres 95 CHAPTER SUMMARY On the basis of applying scientific research methods and analyzing and evaluating the data, the thesis has completed some of the following contents: Systematize issues related to lending and analyze the situation of individual customer lending at the Bank Analyzing and evaluating the situation of lending to individual customers at BIDV Hai Van branch; pointing out the difficulties and existence of the branch affecting the process of lending to individual customers On the basis of assessing the status of individual customer lending activities, along with the development orientation of BIDV in general and BIDV Hai Van branch in particular, the author has proposed a number of solutions to improve the efficiency of personal customer lending activities at BIDV Hai Van branch 96 CONCLUDE After the internship at BIDV Hai Van, I have somewhat understood more about the organizational structure and business process here Being in contact with officials in the bank, seeing the working process of the staff, I have learned and understood more about the business activities, accumulated a lot of useful knowledge, this will help a lot in the implementation of the topic of graduation internship as well as retrofitting the future work process In the situation that the whole world economy is seriously affected by the Covid-19 pandemic in general and the Vietnamese economy in particular, almost all industries in Vietnam are more or less affected and the Bank is no exception Despite suffering a lot of impacts, BIDV Hai Van is constantly growing and developing Through the analysis of the business situation of the Branch in years from 2019-2021 and the introduction of product and service groups to help us better see the development situation of the Branch Capital mobilization is a very important input If raising a lot of capital, the Branch has conditions to expand credit, enhance competitiveness as well as gain resources to implement customer care policies Thereby affecting a variety of other related products, making the bank's business efficiency increase, the competitive position in the market is increasingly solid Because of the limitations of time as well as the capacity of the self, the report also has shortcomings I hope that the teachers will help you to contribute to your internship report to be more complete REFERENCES According to Circular No 39/2016/TT-NHNN Circular No 02/2013/TT-NHNN classifying assets with the level of deduction of the method of setting up BIDV Vietnam Joint Stock Bank (2012) Decision on name change of BIDV Hai Van Bank BIDV Hai Van Bank, Regulation No 6959/QD – NHBL dated November 3, 2014 on regulations on retail credit issuance State Bank, Circular No 39/2016 – individual customers dated December 30, 2016 of the State Bank on lending activities Liu Thuy Linh, Improving the quality of personal customer lending activities at commercial banks in the part of Vietnam's industrial and commercial branch of Dong Da branch TS Nguyen Thieu Minh Type, Commercial Banking Profession Hanoi: Statistics Publishing House, 2009 Prof Dr Phan Thieu Cuc, Bank Credit Syllabus TP HO CHI MINH CITY, Vietnam: Oriental Publishing House, 2012 "Report summarizing the business activities of BIDV Hai Van" 2018-2021 10 Financial magazine [Online] http://tapchitaichinh.vn 11 Vietnam Banking Association [Online] http://www.vnba.org.vn COMMENTS OF THE INTERNSHIP UNIT Da Nang, the day month 2022 Internship unit COMMENTS FROM THE INSTRUCTOR Instructors: Comments of instructors: Da Nang, the day month 2022 Instructor COMMENTS FROM THE CRITICAL LECTURER The lecturer countered: Comments of the critical lecturer: Da Nang, the day month 2022 Critical lecturers ... Organizational structure model of BIDV Hai Van Figure 2.2: BIDV Hai Van' s loan process Figure 2.3: Sales of IC loans for the purposes of BIDV Hai Van Figure 2.4: Sales of IC loans by term of BIDV Hai. .. BIDV Hai Van Figure 2.5: Sales of IC loans under bidv Hai Van' s guaranteed method Figure 2.6: Sales of IC loans under bidv Hai Van' s loan method ABBREVIATION CATEGORIES BIDV BIDV Hai Van LS DR... BANK HAI VAN BRANCH 2.1 Overview of BIDV Bank – Hai Van Branch 2.1.1 History of establishment and development of BIDV Bank – Hai Van Branch Vietnam Investment and Development Bank – Hai Van branch