THEORETICAL BASIS ON CONSUMER LIVING ACTIVITIES
Overview of commercial banks' lending activities
According to Article 4, Law on Credit Institutions No 47/2010/QH12, lending is a form of credit extension whereby a bank transfers to a customer a sum of money to use for a certain purpose and for a certain period of time according to the agreement on the principle of repayment of both principal and interest.
1.1.2 Principles of lending of commercial banks.
Use capital for the right purposes as agreed in the credit contract.
The use of loan capital for certain purposes is agreed upon by the two parties: the bank and the customer and recorded in the credit contract Ensure that the loan is used for the agreed purpose in order to ensure the effective use of the loan and the ability to recover debt in the future Therefore, on the bank's side, when lending, it is necessary to understand clearly the purpose of the customer's loan, and at the same time, it must check whether the customer is using the loan because the use of the loan for the right purpose or not has a great influence on the customer ability to collect debt in the future The use of loans by customers for improper purposes easily leads to losses and increases waste, making the loan capital unable to generate cash flow to repay the bank.
On the customer side, the use of loans for the right purposes contributes to improving the efficiency of capital use, and helps businesses ensure the ability to repay loans to the bank Thereby, improving the customer's reputation for the bank and strengthening the loan relationship between the customer and the bank in the future.
The principal and interest must be repaid on time.
Debt repayment and loan interest is an indispensable principle in lending activities This comes from the temporary idle nature of the idle source of the capital that banks use to lend The vast majority of capital that banks use to lend is capital mobilized from depositors, so after lending for a certain period of time, borrowers must return the money to the bank for the bank to repay money back to the customer.
Moreover, the nature of the credit relationship is the temporary transfer of the right to use the loan, so the loan will be repaid in a certain period of time, both principal and interest.
Loans of equivalent value as collateral.
This principle is set out according to the inevitable and objective requirements of the law of money circulation, which requires banks when granting credit; must be based on lawful collateral; and have materials of equivalent value Equivalent values as security can be fixed assets; goods in stock or in transit; valuable papers; property rights…
1.1.3 Loan classification of commercial banks.
At present, commercial banks' lending activities have developed in a variety of forms The application of the loan form depends on the economic characteristics of the credit capital users in order to use and manage the loan capital effectively and in accordance with the movement and different economic characteristics of the credit institution each customer object.
Classification by time (loan term)
Short-term loans: are loans with a term of 12 months or less Banks provide short-term loans to finance the working capital needs of businesses, short-term government spending needs and personal consumption needs.
Medium-term loans: are loans with a term of more than 1 year to 5 years This loan is often used to renew, upgrade technical infrastructure, technological equipment or expand production.
Long-term loans: are loans over 5 years These amounts are often used to invest in fixed capital of businesses, basic construction, real estate and personal consumption loans for housing needs, means of transport
Loans secured by assets: this is a type of loan where customers must have collateral, pledge or third-party guarantee as security.
Non-asset secured loans: this type of credit is usually granted to reputable customers, usually customers who do business with regular profits, have a strong financial position, and rarely have debt melon, or the loan is relatively small compared to the borrower's capital.
Sort by nature of return
Direct repayment loan: A type of bank loan in which the borrower is the person who has to pay the debt directly to the bank.
Indirect repayment loan: A type of loan in which the borrower is not the payer, this type of loan is made by discounting commercial papers and valuable papers that are still due for payment or perform the factoring obligation.
Installment repayment loan: The loan is paid in installments and is repaid when the full amount of principal and interest under the credit contract is terminated.
One-time repayment loan: Loan capital and interest are paid once when the payment is due.
Loan repayment on demand: Loan capital is paid at the request of the donor. borrower or borrower.
Item loan: Is a lending method where each customer and the bank have to carry out the necessary credit procedures Item loans are also called one-time loans because when there is a need for capital, customers make an application to borrow an amount of money for a specific purpose of using capital.
Credit line loans: A type of loan where businesses only need to apply for a loan for the first time, then on the basis of a contract, the business plans to borrow and repay the loan and send it to the bank Applicable to businesses that need to supplement capital regularly and regularly, with fast capital turnover The bank determines the credit limit at the same time, open a loan account for the business to monitor borrowing and debt repayment.
Other lending methods such as: Advance loans, overdraft loans, co-financed loans and other types of loans.
Consumer lending activities of commercial banks
According to Article 4, Chapter I of Circular 39/2016/TT-NHNN issued on December 30, 2016: “Lending to meet daily life needs is the lending by a credit institution to an individual customer for payment pay expenses for the purposes of consumption, living of that individual, his family”.
Consumer lending also has the following characteristics:
Borrowers are individuals or households Only individuals and households can borrow for consumption purposes, the rest cannot borrow in any form.
The loan purpose is to serve personal and household consumption needs, not for business purposes Therefore, it depends on the needs and nature of each form. Compared with other lending activities, consumer lending has a small contract size (except for loans to buy real estate) As a result, the cost of lending is high, so the interest rate for consumer loans is often higher than that of other commercial and industrial lenders.
Borrowers are more concerned with the amount of money to be paid than the interest they are paying Customer psychology is mainly concerned with how much they have to pay monthly and less interested in real interest rates.
The quality of borrower information is not guaranteed It is easy for individual customers to hide adverse information and banks need time and regulations to protect themselves.
Borrower repayment sources can vary widely, depending on work history, skills and experience The customer's repayment source is derived from income, not necessarily from the result of using that loan account.
The status of the customer is difficult to determine, but determines the repayment of the loan Customers with a job, stable income and education are the criteria for commercial banks to decide to lend.
According to the loan term.
Loans by loan term include: short-term consumer loans, medium-term consumer loans and long-term consumer loans Short-term consumer loans are loans with a term of less than 12 months and are used to offset the needs and short-term targets of individuals.
Medium-term consumer loans are loans with a term of 1 to 5 years Long-term consumer loans are loans with a term of more than 5 years Medium-term and long- term loans are loans granted to meet needs such as building houses, purchasing equipment for living comforts, means of transportation, etc.
According to the purpose of using the loan.
Depending on the purpose of the loan, the bank will classify the loan as a car loan or buying a house, studying expenses, buying household appliances, etc.
According to the refund method.
Installment consumer loan is a form that allows borrowers to repay (both principal and interest) many times, according to a certain term within the loan term (month, quarter) Applies to loans of great value, long-term and customers cannot meet the requirement to pay off all debts in one go.
Non-installment consumer loan is a form of loan that requires customers to pay off all loans to the bank in a single time when the committed term is up. Applicable for small value loans and short term.
In the form of loan guarantee.
Loans secured by assets: this is a type of loan where customers must have collateral, pledge or third-party guarantee as security.
Non-asset secured loans: this type of credit is usually granted to reputable customers, usually customers who do business with regular profits, have a strong financial position, and rarely have debt melon, or the loan is relatively small compared to the borrower's capital.
Expanding consumer lending activities of commercial banks
1.3.1 The concept of expanding consumer lending activities
First of all, expansion is seen as the increase in quantity of a particular object. For example, expanding production and business activities of an enterprise is understood as increasing the indicators reflecting the quantity of production and business activities of that enterprise Since then, expanding consumer lending in its true sense is to increase the indicators that reflect the quantity of this activity Those metrics include: the bank's sales from consumer lending and its growth rate, the consumer loan balance and its growth rate, the percentage of consumer loans outstanding used on the total loan balance and the number of customers using the bank's consumer lending services.
1.3.2 Indicators reflecting consumer lending activities of commercial banks
The group of indicators reflects the scale
Sales of consumer loansis an indicator that reflects all loans that a bank has disbursed in a certain period of time, regardless of whether the loan has been collected or not Loan sales are usually determined by month, quarter, or year. Lending sales reflect the results of the development and expansion of lending activities with the bank's credit growth rate If other factors are fixed, the higher the loan turnover, the better the bank's loan expansion, whereas the lower the bank's loan sales when other factors are constant, the better the bank's loan turnover The bank's performance is not good.
Debt collection revenueis the total amount that the bank collects from customers in a period/period; (or vice versa: Is the amount of money that customers repay to the bank in a period/period.The indicator reflects all the loans that the bank collects upon maturity at a certain time Loan sales, debt collection are used to evaluate old customers, evaluate loan - pay history to calculate the benefits obtained from each customer, or sometimes to force customers to transfer revenue about the account at the bank.The time selected to calculate the sales is usually from the time the customer is granted the limit to the present time.
Outstanding consumer loans:Is an indicator reflecting the total amount of money that a bank lends to the economy at a point in time but has not yet recovered, or in other words it is the actual amount of capital that customers still owe the bank. High credit card balance shows that the bank can lend a lot and has a high ability to attract customers On the contrary, the low outstanding loan balance shows that the bank has difficulty in expanding and developing the credit portfolio, and the bank's marketing ability is poor However, it is not possible to rely solely on this indicator to assess whether credit card activities are good or bad, but must consider with the bank's credit policy as well as the safety and profitability of the credit portfolio.
Average outstanding balanceis a metric commonly used by creditors to determine the outstanding balance of a loan portfolio The mean is obtained by looking at the beginning and the end of a particular time period.
Ratio of overdue debt for consumer loans:According to Decision No.
293/2005/QD - NHNN and Decision No 18/2007/QD - NHNN stipulate: “Overdue debts are debts belonging to groups from 2 to 5, including debts that need attention, substandard debt, doubtful debt and potentially loss of capital.” This low indicator shows that the bank's business situation is good, most of the bank's loans are profitable and can be recovered On the contrary, if this indicator is high, the credit card activities of the bank are not very effective, the bank needs to review debt management measures, credit procedures, credit policies or the capacity of the staff. credit Overdue debt in banking is inevitable, but banks need to reduce this ratio to the lowest possible level
Bad debt: For bad debts, borrowers unable to pay debts when they are due for payment as committed in the credit contract more than 90 days from the due date of payment but have not yet fulfilled their repayment obligations will be considered as bad debts Bad debts are debts from group 3 to group 5.
Bad debts are divided into 5 groups:
Group 1: Qualifying debt is debt that is overdue for less than 10 days.
Group 2: Debts to pay attention to are debts that are overdue for up to 90 days. Group 3: Sub-standard debt is debt that is overdue from 91 to 180 days.
Group 4: Doubtful debts are debts that are overdue from 181 to 360 days.
Group 5: Debts likely to lose capital are debts over 360 days.
Bad debt ratio for consumer loans
Bad debt ratio Bad debt CVTD x 100
The bad debt ratio shows the quality and risk of a bank's loan portfolio, how much is classified as bad debt per 100 dong of outstanding loans This ratio is high compared to the industry average and tends to increase, which could be a sign that the bank is having difficulty in managing the quality of loans On the contrary, this ratio is low compared to previous years, showing improved credit quality Or maybe the bank has a policy to write off bad debts or change debt classifications.
1.3.3.Factors affecting consumer lending activities of commercial banks
The size and reputation of the bank affects the number of consumer lending customers Does the bank have high or low equity capital, have many branch networks to facilitate transactions with customers or not The high or low reputation of the bank will also affect the number of customers to transact with the bank A small contributing factor to the success of consumer lending is the policies and regulations of the bank That is the policy of customer care before and after the loan is thoughtful or not, it is the regulations on high or low interest rates and credit fees, is flexible and suitable with the existing income of the people or not, regulations on credit term and debt maturity, collateral, method of disbursement and payment Is the loan application process complicated or simple, how long does it take to evaluate the loan application? If the appraisal time is too long, customers will not want to wait and go to other banks The qualifications and attitudes of the bank's credit officers are also decisive for the success of consumer loans Credit officers need to have good qualifications to accurately appraise customers and capital projects, thereby making the right decisions Credit officers also need to have professional ethics, be dedicated to their work, enthusiastically help and provide customers with necessary procedures In order for consumer lending to be known by many customers, banks need to have appropriate marketing policies The Bank needs to strengthen information and advertising activities in newspapers and radio, leaflets, promote the image of information and advertising activities on newspapers and radio, leaflets, promote the image of the Bank in general as well as the interests of the Bank benefits and policies on consumer lending in particular The attitude of the bank's credit officers is also decisive for the success of consumer lending Credit officers need to have good qualifications to accurately appraise customers and capital projects, thereby making the right decisions Credit officers also need to have professional ethics, be dedicated to their work, enthusiastically help and provide customers with necessary procedures In order for consumer lending to be known by many customers, banks need to have appropriate marketing policies TheBank needs to strengthen information and advertising activities in newspapers and radio, leaflets, promote the image of information and advertising activities on newspapers and radio, leaflets, promote the image of the Bank in general as well as the interests of the Bank benefits and policies on consumer lending in particular.The attitude of the bank's credit officers is also decisive for the success of consumer lending Credit officers need to have good qualifications to accurately appraise customers and capital projects, thereby making the right decisions Credit officers also need to have professional ethics, be dedicated to their work, enthusiastically help and provide customers with necessary procedures In order for consumer lending to be known by many customers, banks need to have appropriate marketing policies The Bank needs to strengthen information and advertising activities in newspapers and radio, leaflets, promote the image of information and advertising activities on newspapers and radio, leaflets, promote the image of the Bank in general as well as the interests of the Bank benefits and policies on consumer lending in particular Credit officers need to have good qualifications to accurately appraise customers and capital projects, thereby making the right decisions Credit officers also need to have professional ethics, be dedicated to their work,enthusiastically help and provide customers with necessary procedures In order for consumer lending to be known by many customers, banks need to have appropriate marketing policies The Bank needs to strengthen information and advertising activities in newspapers and radio, leaflets, promote the image of information and advertising activities on newspapers and radio, leaflets, promote the image of theBank in general as well as the interests of the Bank benefits and policies on consumer lending in particular Credit officers need to have good qualifications to accurately appraise customers and capital projects, thereby making the right decisions Credit officers also need to have professional ethics, be dedicated to their work, enthusiastically help and provide customers with necessary procedures In order for consumer lending to be known by many customers, banks need to have appropriate marketing policies The Bank needs to strengthen information and advertising activities in newspapers and radio, leaflets, promote the image of information and advertising activities on newspapers and radio, leaflets, promote the image of the Bank in general as well as the interests of the Bank benefits and policies on consumer lending in particular insure the customer for the necessary procedures In order for consumer lending to be known by many customers, banks need to have appropriate marketing policies The Bank needs to strengthen information and advertising activities in newspapers and radio, leaflets, promote the image of information and advertising activities on newspapers and radio, leaflets,promote the image of the Bank in general as well as the interests of the Bank.benefits and policies on consumer lending in particular insure the customer for the necessary procedures In order for consumer lending to be known by many customers, banks need to have appropriate marketing policies The Bank needs to strengthen information and advertising activities in newspapers and radio, leaflets,promote the image of information and advertising activities on newspapers and radio, leaflets, promote the image of the Bank in general as well as the interests of the Bank benefits and policies on consumer lending in particular.
Banking technology and management have an impact on consumer lending If the bank has modern technology, it will lead to quick and accurate processing of procedures, reducing cumbersome procedures for customers and more convenient management of customer records In addition to technology issues, banks need to have strict regulations, working rules of reward and punishment, good management to create motivation for bank employees, influence the working style of bank employees staff Wall All of the above micro-factors are internal bank factors that have an impact on consumer lending In addition to those factors, there are also objective factors outside the bank that also affect consumer lending, that is, customer ethics as well as risks of consumer lending activities If the customer is a person of good moral character, has a good sense of debt repayment, and risks lending to expand consumer lending activities, the lending regulations will not be too strict On the contrary, if customers do not pay their debts regularly and overdue debts are too high, it will inevitably inhibit consumer lending activities A bank that wants to develop consumer lending needs to take into account all the above macro and micro factors.
A number of macro factors affect consumer lending activities such as socio- economic environment, state economic policies, competition between banks, historical legal environment, cultural factors, etc and customers First of all, it is necessary to mention the characteristics of the market where the bank operates. Where it is an urban or a densely populated place, with a decent income and a high level of education, the demand for consumer loans will increase higher than in rural and remote areas where farmers are just around the corner years of knowing the fields and gardens, not even knowing the operation of the bank Next are the habits, customs, and psychology that affect the demand for consumer loans Vietnamese people often have the habit of saving, then when they accumulate enough money to shop and consume, they don't think about borrowing debt for shopping plus the fear of contact with banks, fear of cumbersome administrative procedures Therefore,the demand for loans of the people is still low.
The economic and political environment influences consumer lending If the economy develops well, the per capita income is high and the political environment is stable, consumer lending activities will also take place smoothly, develop steadily and limit possible troubles If the environment has fierce competition between banks to win customers, consumer loans of banks will also face difficulties The legal regulations of the State bank and the government can encourage and also limit lending in general and consumer lending in particular Those are regulations such as regulations of the State Bank of Vietnam that control commercial banks in mobilizing according to the ratio of their own capital, the maximum ratio of loans to a customer on their own capital, etc.
Chapter 1 presents general issues about consumer lending activities: concepts, objects, characteristics, classification, lending methods From there, the role of consumer lending activities is raised to the economy, to individuals, households and to banks The next part is the theoretical system of development activities for banks. Consumer loans include: concept, content, evaluation criteria and analysis of factors affecting the development of consumer lending activities.
The development of consumer lending in commercial banks has been growing strongly, in order to compete with other banks, and at the same time to diversify products and spread risks Therefore, consumer lending has become an indispensable requirement for the development of commercial banks today.
SITUATION OF CONSUMER LENDING AT SOUTHEAST
OVERVIEW OF SOUTHEAST ASIA COMMERCIAL BANK – DIEN
2.1.1 Overview of Southeast Asia Bank
Name of organization: Southeast Asia JOINT STOCK COMMERCIAL BANK
International transaction name: SOUTHEAST ASIA COMMERCIAL JOINT STOCK BANK
Head office is at 198 Tran Quang Khai, Hoan Kiem, Hanoi
Phone: Customer Service 1900 555 587/(024) 39448702 – Customer Service
Email: contact@seabank.com.vn
Website:https://www.seabank.com.vn/
Figure 2.1 Logo of Southeast Asia Commercial Joint Stock Bank
Southeast Asia Commercial Joint Stock Bank - Seabank was established in
1994, has undergone 29 years of development to achieve many achievements today with a charter capital of VND 20,403 billion, total assets of more than VND 231 trillion and a nationwide network with 180 branches and transactions In the context of the financial-banking market with many fluctuations due to the frozen economy caused by the Covid-19 epidemic, the entire economy was frozen With a steadfast will, SeABank has always remained steadfast with SeABank provides a full range of financial products and services to individual customers, individual business households, small, medium and large enterprises, optimize benefits for each customer and shareholder, ensure sustainable development, actively contribute to sustainable development,
With the slogan "Connecting life values" as an affirmation, a commitment to customers about the opportunity to enjoy the values of an authentic life Surely with such a Slogan, customers' confidence in SeABank will be strengthened.
2.1.2 The birth of SeABank Da Nang branch:
With the goal of becoming a typical retail bank, in December 2006, the city's development potential was realized Da Nang and wishing to bring the Bank's best products and services to the business community and local people, SeABank has opened a Da Nang Branch at 23 Nguyen Van Linh, City Da Nang (now moved to new headquarters at SeABank Danang building - 373 Nguyen Van Linh, Da Nang City).
2.1.3 The birth of SeABank Dien Bien Phu transaction office.
SeABank Dien Bien Phu Transaction Office was established on September 9,
2010 At 505 Dien Bien Phu, Thanh Khe Dong Ward, Thanh Khe District, Da Nang City With 13 years of operation, Dien Bien Phu Transaction Office has increasingly affirmed its position in the area.
With the operating area, there are many competitive banks on Dien Bien Phu street SeABank Dien Bien Phu PGD mainly focuses on developing individual customers.
2.1.4 Functions and tasks of SeABank – Dien Bien Phu.
Mobilizing short-term, medium-term and long-term capital in the form of deposits of domestic legal entities and individuals in VND in accordance with regulations of the State Bank and Southeast Asia Commercial Joint Stock Bank.
Short-term, medium-term and long-term loans in Vietnam dong to economic organizations and individuals in the area as authorized by the General Director of the State Bank and Southeast Asia Commercial Joint Stock Bank.
Manage foreign currency trading, fast money transfer, issue domestic and international payment cards.
Comply with the monetary management regime of the State Bank and Southeast Asia Bank Develop human resources and train staff, manage human resources well, improve the service reputation of Southeast Asia Commercial Joint Stock Bank Making and implementing business plans, creating profitability for the bank such as capital balance plan, income - expense plan Regularly research and improve professional skills, improve product quality and service ability Implement the banking confidentiality regime on bank liquidity data, deposit accounts and other information related to transaction customers.
2.1.5 Organizational structure of SeABank Dien Bien Phu Transaction Office
Trader team leader Individual customer group leader
Figure 2.1- SeABank's organizational structure - Dien Bien Phu Transaction Office
(Source: organizational structure document of SeABank Dien Bien Phu Transaction Office)
Functions and duties of departments
Director transaction : Inspect and supervise the observance of business processes in accordance with the law Supervise the observance of regulations of the State Bank on ensuring safety in monetary activities, credit and banking services.
Individual customer group leader : Plan, organize, implement and manage individual and group sales activities to accomplish assigned KPIs Participate and support the Director in researching and analyzing customer needs, local markets, competitors and building specific business plans of the science and technology segment according to the orientation and business plan of the company ever.
Trader team leader : Control accounting transactions, support accounting activities, transactions and customer care at the transaction office Implement campaigns and programs to sell banking products and services for transactional customers according to the Bank's policies.
Personal Customer Relations Specialist : Responsible for achieving the assigned targets in terms of sales, products and services, and the number of new customers Directly manage customer portfolios, develop customer relationships in the assigned list.Perform other tasks as assigned by the customer group leader, transaction office manager Handling loans before, during and after lending and collecting and reminding debts. fund control specialist Tellers
Fund specialist : Complete the fund-raising work at the beginning of the day, during the day, closing the fund at the end of the day and collecting and spending money from customers at the transaction office in accordance with regulations. Complete the cash payment Report on work performance, periodical and ad hoc reports as required Perform other tasks as assigned by management
Tellers : Assist customers with transactions such as deposit, withdrawal or payment, resolve complaints or account discrepancies and answer questions Inform customers about products, services, programs bank promotions.
Table 2.1: Capital mobilization at SeABank – Dien Bien Phu Transaction Office (2020-2022)
(Source of year-end activity report at SeABank- Dien Bien Phu Transaction Office 2020-2022)
SeABank Dien Bien Phu's mobilized capital is formed mainly from payment deposits of economic organizations and individuals such as savings deposits, custodial deposits, guarantees, and deposits of organizations credit function. Looking at the table above, we see: Total mobilized capital in 2020 is 242,485 million VND by 2021, total mobilized capital in 2021 is 257,715 million VND, an increase of 15,230 million VND equivalent to 6.28% compared to 2020 2022 reached VND 287,917 million, an increase of 30,202 equivalent to an increase of 11.72% compared to 2021 This result is because SeABank Dien Bien Phu has launched many reasonable deposit interest rate strategies and has created a reputation in the hearts of customers customers by the position of the bank's prestige to customers In the structure of capital sources and mobilized banks, deposits from the population account for the largest proportion In 2020, deposits from residents reached VND 193.125 million, accounting for 84.61% of deposits In
2021, residential deposits will increase to VND 201,125 million, an increase of VND 8,000 million equivalent to an increase of 4.14% compared to 2020 In 2022, there will be a strong growth in residential deposits reaching VND 220,211 million, an increase of VND 19,086 million, equivalent to 9.49% compared to 2021. Residential deposits are the main capital mobilization activity of SeABank Dien Bien Phu, such an increase in residential deposits is due to the impact of the covid
19 epidemic causing production and business activities to be suspended Therefore, the people's idle money is large and since then the savings are deposited in the bank, so the capital source of the bank for 3 years from 2020 to 2021 will increase The loan amount of SeABank Dien Bien Phu also increased over the past 3 years year.
In 2021, banks will borrow VND 15,465 million, an increase of VND 1,230 million compared to 2020 by about 8.64%.
Current status of consumer lending at SeABank - Dien Bien Phu
2.2.1 introduced consumer lending products at SeABank- Dien Bien Phu Transaction Office
Customers Individuals who are living and working legally in Vietnam
Age between 18 and 65 years old Individuals who are working receive their monthly salary transferred to a bank account.
No history of bad debt in the last 12 months (SeABank Customer)
No bad debt within 18 months (Customers outside SeABank)Customer pays salary: Working for at least 6 consecutive months at the unit they are working for, signing a contract of 12 months or more.
Loan purpose Used for the purpose of supplementing personal consumption expenses in accordance with the provisions of law.
Loan limit Persons with income > 15 million: maximum 3 times the entrance exam, not more than 50 million.
Income from 10 to under 15 million: maximum 2 times of income.
Under 10 million: maximum 1 time income.
Consumer loans without collateral - SeABoy
Individuals who are living and working legally in Vietnam.
Male between 18 and 60 years old.
Female from 18 to 55 years old.
Individuals who are working or receiving a monthly pension.
Customer pays salary via SeABank
The loan term must not exceed the remaining term on the labor contract and the legal period of living and working in Vietnam. Lending comdition
Customers receive salary via SeABank for at least the last 3 months.
No history of bad debt in the last 12 months (SeABank Customer)
No bad debt for 18 months (Customers outside SeABank) Loan purpose Use for personal consumption purposes in accordance with the provisions of the law.
Loan limit Minimum 5 million VND
Up to 500 million VND The loan amount is calculated based on the needs and repayment capacity of the customer.
Customers Individuals who are living and working legally in Vietnam.
Male from 18 to 60 years old Female from 18 to 55 years old People with good income.
Subjects receiving monthly salary at agencies and organizations.
If the fixed asset is land use right, the maximum term is 120 months.
Paying customers: working for at least 6 consecutive months at the unit they are working for, signing a contract of 12 months or more.
No history of bad debt in the last 12 months (SeABank Customer)
No bad debt within 18 months (Customers outside SeABank) Loan purpose Use for personal consumption purposes in accordance with the provisions of the law.
Collateral Houses, apartments, residential land of customers or third parties
Loan rate 70% of the value of fixed assets Loan limit Minimum: 10 million VND
Maximum: 500 million VND The loan amount is calculated based on the needs and repayment ability of the customer.
Customers Individuals who are living and working legally in Vietnam.
Male from 18 to 60 years old
Female from 18 to 55 years old.
Max : Trucks and specialized vehicles: 48 months Vehicles remaining 60 months
No history of bad debt in the last 12 months (SeABank Customer)
No bad debt within 18 months (Customers outside SeABank) Loan purpose Borrowing to buy a car for use, not for business or rental purposes. Collateral It is the car formed from loan capital
65% for special vehicles60% for other vehicles50% for used car
Loan limit Minimum: 100 million VND
Maximum: depending on the customer's needs, repayment capacity and value according to the specified collateral.
Loans to buy and repair houses - SeAHome
Buy a house, complete d residentia l land
Buying houses, apartments, apartments, villas, residential land, etc is in the process of being completed
Build, repair or upgrade a home
Individuals who are living and working legally in Vietnam Male from 18 to 60 years old
Female from 18 to 55 years old Customers receive a decent income, middle-aged people need to buy a house to live in, repair the house.
Households are granted resettlement land in the city where they live.
Purpose of building a house: 240 months
Home repair purpose 120 months Lending comdition
Customers working for a monthly salary have worked for at least 6 consecutive months at the unit they are working for, signed a contract of 12 months or more, with a total cumulative working time of 2 years.
Individual business households, individuals self-employed for more than 1 year.
No history of bad debt in the last 12 months (SeABank Customer)
No bad debt within 18 months (Customers outside SeABank)
Loan purpose Borrow to buy a house and land
Borrowing for construction and home repair Collateral Houses, apartments, residential land formed from loans or other houses, other apartments, other residential land under the lawful ownership and use of both the borrower or the guarantor of a third party.
The special asset is an automobile that does not exceed 20% of the total loan value.
Maximum loan ratio: 70% of the value of the fixed asset is real estate Loan limit Minimum 50 million VND
Up to 70% of the asset value formed from loan capital
If there is a house on the land: the maximum rate of 70% of the capital requirement.
If only the land use right rate is 50% of the capital demand.
Up to 70% of the asset value formed from loan capital
Minimum 50 million VND The maximum loan amount is based on the design and quotation of organizations or individuals that carry out home repair and construction with the appraisal of SeABank.
Customers Relatives of students, students studying abroad
Tenor Minimum: 6 months, up to 60 months
The maximum time limit for a foreign individual does not exceed the time limit for living in Vietnam Lending comdition
Customers who work for a monthly salary and have worked for at least 6 consecutive months at the unit they are working for, signed a contract of 12 months or more.
The remaining term on the labor contract does not exceed the loan term.
Have a household registration book or register for permanent residence at the bank where the head office is located.
Having relatives to study abroad and have their eligibility for admission confirmed by a foreign training institution Loan purpose Use for the purpose of paying tuition and living expenses in accordance with the law and the training unit.
Collateral Real estate, government bonds, deposits at SeABank Maximum rate of 70% of the value of special assets.
Customer guarantees to repay the debt with his salary and legal income.
Loan limit Minimum: 10 million VND
Maximum: 1 billion (Do not exceed 70% of the value of special assets)
2.2.2 Loan process for individual customers at SeABank - Dien Bien Phu Transaction Office.
2 Customers come to the bank to apply for a loan
4 Personal CRO staff gathers documents and send them to Da Nang branch for approval and prepares documents for PGD
5 Finalize credit profile and disbursement
Figure 2.2 Lending process and loan appraisal at Southeast Asia Commercial Joint Stock Bank – Dien Bien Phu Transaction Office - Da Nang Branch Step 1: Marketing advertising
The Bank advertises services related to purchased products on the mass media, billboards or leaflets introducing lending procedures and conditions Banks can send flyers to potential customers to use loan products and services.
Step 2: The customer proposes a loan request a Personal Customer Relations Officers (CROs) in contact with customers: When a new customer comes to the bank, the CRO CN staff is responsible for contacting, introducing products and services to the customer and finding relevant information, including:
- Information about the borrower's legal status (Full name, phone number, ID number or passport number, other identification documents) and related people.
- Information about customer background: Education level, main occupation, work history, activities, family relationships,
- Information on customer needs and conditions: Contents of loan plan, amount, duration, interest rate loan, proposed credit guarantee plan (mortgage, pledge, guarantee).
- CN CRO staff need to quickly compare with the current regulations of the Bank and the SBV to be able to assess whether the conditions are appropriate or not - CRO CN staff inform customers about loan procedures and conditions.
- CRO CN staff inform customers about loan procedures and conditions.
- Guide customers to do the necessary procedures and documents. b Receiving loan applications from customers:
The customer profile that needs to be provided to the bank includes:
- Copy of CCCD or ID card, household registration, certificate of marriage or singleness.
- Customer information collection form (according to the form)
- Loan plan to serve loan needs.
- Documents related to the purpose of using capital (purchase contract, payment slip, etc.)
CRO CN staff need to check the loan application, if it is found that the application is not satisfactory in terms of quantity, validity or does not meet the requirements of the bank in terms of content, then request the customer to supplement and edit.
Step 3: Appraisal of loan documents:
At SeABank, there is a regulation that the collateral is appraised via CRO CN or through Thanh Cong valuation company in cooperation with SeABank for valuation. a Evaluation of KH's status and background
- History of the borrower's background, circumstances, and working history.
- Comment on health, ability to work, relationships between members of the borrower's family
- Evaluation of borrowers in the following aspects: Education level, expertise, opinions in some fields, experience in the field related to the use of loans, legal knowledge, responsibility for loans borrowing and assessing public opinion in the workplace. b Appraise the purpose of using the loan, the feasibility of the loan plan and the debt repayment ability of the customer.
- The purpose of borrowing money must be legal, the Bank can monitor the loan purpose of the customer.
- The capital use plan must be feasible and effective in terms of life. Customers are entertained with guaranteed income sources for debt repayment.
- The customer makes an explanation of the loan purpose (or the capital valve plan), which declares the sources of income and commits to the repayment plan to the Bank The legitimacy of the plan Identify other conditions that may affect the implementation of the plan: Objective and subjective conditions can have a positive or negative impact on the implementation and effectiveness of the plan, customer measures to prevent and limit the harmful effects of possible risks, confirm the need for loans and qualitatively assess the effectiveness, implementation time of the plan and sources of debt repayment. c Submit the application to the director of the PGD.
The CRO submits the file to the director and under the director's review and appraisal for approval and forwards the file to the Da Nang branch.
Step 4: Submit dossier on provincial operation.
The CRO submits the application to the provincial operations department at the Da Nang branch, where it checks and approves the application through many steps, then prepares a document for the customer.
Step 5: Complete credit profile and disburse to customers.
The CRO brings the documents prepared from the branch and completes the required information and secures the collateral to deliver to the bank's treasury. After all procedures are complete, disbursement will be made to customers.
Step 6: Check and handle loans
Evaluation of consumer lending activities at SeABank - Dien Bien Phu
Profits from consumer lending activities are increasing, accounting for a large proportion of 54%-58% of the bank's loan sales This is the most important criterion that reflects the bank's performance.
Despite the economic downturn, recent fluctuations due to the epidemic have affected the bank's business activities However, in 3 years 2020-2022, Dien Bien
Phu Transaction Office has achieved positive results Specifically, consumer loans still grew at a relatively high rate, and loan sales in the following year were always higher than the previous year Business scale increased along with the improvement of credit quality.
For SeABank Dien Bien Phu products, various types of loans have been made, the lenders create conditions to expand credit, increase credit capital turnover, disperse and reduce risks Thanks to offering loan packages to buy, build and repair houses; car loan; consumer loans; study abroad loans.
The recovery of short-, medium- and long-term debts as well as loans secured by assets and non-assets is focused on properly recovering capital and reducing bad debts to a low level Such as regular work reminding customers about debts that are coming due, resolutely against customers who intentionally delay paying due debts.
With such strict debt collection, banks have more capital to lend and partly limit the arising of bad debts.
In addition to the results achieved in consumer lending, SeABank - Dien Bien
Phu Transaction Office still has the following problems:
The number of customers using consumer lending services has increased slowly, which proves that the bank's consumer lending efficiency is not really good, not really interested and focused on expanding customer relationships .
The bad debt ratio for consumer loans of banks tends to increase from 2020-
2021 In 2020, the bad debt ratio for consumer loans is 0.93%, in 2021 this rate will reach 1.13% By 2022, the bad debt ratio for consumer loans will decrease to
0.53% Although this is a small level compared to many other transaction offices and other commercial banks, this shows that the transaction office's credit risk prevention still has many notable problems in the current complicated economic conditions now Despite positive debt collection, the bank still has many outstanding debts, debts and overdue debts of CVTD that are handled slowly and of low quality.
Although in the past years, SeABank has launched many consumer loan product packages, consumption activities at SeABank - Dien Bien Phu Transaction
Office have seen many changes and developments, but are still not significant compared to customer needs The bank's products are still uneven, focusing mainly on home loans for purchase, construction and repair, accounting for 42%-46% of consumer loan sales In addition, other products account for a very small proportion, at least student loans account for only 4%-7% of consumer loan sales That leads to underdeveloped lending products.
Firstly: The consumer lending market is still small and the competition is fierce among banks in Da Nang.SeABank Dien Bien Phu's main lending market is still small, mainly around the suburbs of Da Nang, has not yet established a network of collaborators or has suitable solutions to exploit the market's potential well .
Second: The inspection, urging, debt recovery has not been thorough.
Although the debt collection work of the transaction office has gradually improved over the years, certain limitations still exist Sometimes the responsibility of each stage, each department in checking and urging debt recovery is unclear and overlapped Divisions and departments still lack coordination in reviewing, comparing, adjusting and thoroughly handling debts The organization of customer verification, research and evaluation of records, exploitation of debt collection assets sometimes has many shortcomings Post-borrowing inspection and control by banks still have some limitations Leads to arising bad debts and bad debt ratio affecting the bank's sales When evaluating and making loan decisions, The bank considers the customer in the current situation, but the use of capital and repayment of the bank's debt depends on the customer's situation in the future Therefore, customer control is essential.
Tuesday: The product strategy is unclear, mainly focusing on one or two main lending products such as loans to buy, build and repair houses; car loans and other consumer loans SeABank's product development strategy - Dien Bien Phu Transaction Office is still limited and lacks flexibility while people's demand increases in consumption because their living standards are increasing, but the bank only focuses on for products in the form of collateral because to ensure safety and limit the risk of bad debt, the products are still not diversified.
Firstly, it's the customer's cause Due to the impact of the epidemic, the per capita income in Da Nang is not high, so compared to high-value consumer products and services such as houses, cars, etc., the financial capacity of customers is relatively small Besides, due to the impact of the epidemic, customers' income has been affected Therefore, it is necessary to have preferential policies on interest rates suitable to the situation when the economy recovers after the pandemic to attract customers.
Second, is the legal environment State administrative procedures cause many difficulties for customers and banks The verification of documents such as land use rights, registration of mortgage transactions often causes a lot of trouble and time, affecting the time of procedures, approval and disbursement of banks.
The third is about the economy The macro-economic environment, the economy has many complicated developments due to the impact of the epidemic,such as economic recession, inflation, interest rate fluctuations, price fluctuations small to the banking business Since these are important factors in determining the loan interest rate, the value of the loan's collateral, any fluctuations in this factor will directly affect the bank's loan.
Fourth, about the competitive environment In Da Nang market in general and
Dien Bien Phu street in particular, there are many banks and financial companies operating, fierce competition Domestic banks all focus on consumer lending and see this as a potential and profitable market in the future Therefore, banks try to increase competition with products and service quality, making the consumer lending market narrow for each bank.
The content of chapter 2 outlines the process of formation and development of SeABank - Dien Bien Phu Transaction Office in terms of history, business operations (such as capital mobilization, credit extension and other services) The main content of the chapter is to mention the development of consumer lending activities of SeABank - Dien Bien Phu Transaction Office in recent years has achieved many positive results: loan sales are constantly increasing, quality Loan quality is guaranteed, the time to complete loan procedures is shortened, creating trust and prestige for customers More and more customers are individuals and households who know and want to establish a transaction relationship with
SeABank - Dien Bien Phu Transaction Office, not only borrowing but also using other services such as opening a payment account , money deposit.
However, the development of consumer lending activities of the bank still has many limitations that need to have solutions to overcome to contribute to the completion of the business plan of the transaction office.
SOLUTIONS FOR DEVELOPMENT OF CONSUMER
Development orientation of consumer lending activities at Southeast Asia
SeABank - Dien Bien Phu Transaction Office with 13 years of establishment, despite having achieved many achievements, is still on the way to affirm the brand, build trust from customers as well as compete with big banks strong in Da Nang city Therefore, it is necessary to have a direction to develop more and more strongly:
Constantly innovating and learning to be able to meet the increasing needs of customers as well as compete with banks in the area Create a sustainable position in the hearts of customers, and develop further in the future.
Paying attention to local capital mobilization, improving advertising and marketing in more diverse and richer forms.
Fostering officers and employees, employees, professional workers, with a sense of responsibility and high professional ethics.
Combined with local authorities, agencies and departments in the collection of bad debts, debts that have been handled with risks, subjects with poor morals intentionally do not pay debts.
3.1.2 Demand for consumer loans of the market in the coming time in Da Nang
Da Nang is not only a city with a strategic socio-economic position, it is an important traffic hub in terms of road, railway, sea and air routes, is the main international gateway and one of the most important international destinations in the world attractive tourist destination in the region Da Nang is also a vibrant and bustling land of financial - banking activities and is gradually becoming a financial - banking center of the central region Especially with the city's strong economic growth in recent years, Da Nang has become a "golden place" in the central region and the whole country.
In the context of the economic recovery after the pandemic, it makes perfect sense for SeABank Dien Bien Phu to focus on taking care of consumers because Da Nang's population is currently quite large (more than 2,102 million people) and is constantly increasing due to the large number of people living in the city. immigration from the provinces, followed by the need to use money for small things such as shopping, home repair, especially buying a car, buying a house with huge installments Consumer loans are at a low value, with collateral as well as repayment options, so for banks these are safe, low-risk and easy to recover loans. The relatively high economic growth rate has improved many people's lives in
Da Nang The material and spiritual life of the people is cared for and monitored in a positive way The investment in the city's infrastructure construction is constantly focused, the process of urban embellishment is rapid, manifested by many roads and works that have been regularly repaired and upgraded has made the appearance of the city more spacious and modern This is also a factor that increases the spending needs of city people, especially the need to spend on housing construction on these roads It is a good condition for SeABank - Dien Bien Phu Transaction Office to take advantage of these opportunities to develop the bank's consumer lending products and services.
In addition, consumer lending is one of the activities to stimulate capital for the economy, a policy that the government has set out to stimulate the economy to recover after the pandemic Moreover, the legal corridor of the bank is increasingly being improved, the government and local authorities have many policies and solutions to remove difficulties, create favorable conditions for business stability, thereby stabilizing income for employees , employees Therefore, SeABank Dien Bien Phu needs to take timely measures to further expand products to promote consumer lending activities at the bank.
3.1.3 SeABank's consumer lending orientation – Dien Bien Phu Transaction Office
Based on the data provided by the bank as well as the practical process of internship at SeABank - Dien Bien Phu Transaction Office combined with the theory obtained, I would like to propose the following orientation:
Improve management, inspection and internal control to promptly detect insignificant errors that affect the bank's operations, especially lending activities.
Strictly in the credit appraisal process to minimize the risks that the bank may face
Regularly open training courses not only on expertise, but also on law and legal knowledge in order to improve the professional qualifications of credit officers in appraising documents, making it easier to develop implement methods to streamline customer loan applications.
Further improve the legal framework and mechanisms and policies for consumer lending, complete the consumer lending process, targeting specific customers Eliminate cumbersome, time-consuming and costly procedures On the other hand, diversify the types of products and services.
Solutions to expand consumer lending activities at SeABank- Dien Bien
Promote the bank's image and brand by distributing leaflets, recruiting collaborators and running ads on social networking sites to expand the market.
The promotion of the bank's image and brand is very important in expanding markets and improving product quality The bank must have a market access policy by allowing employees or recruiting collaborators to approach customers to promote the image and brand directly to customers by distributing leaflets, posting on websites Social Or organize activities such as propagating useful information about the bank's news to customers in order to create trust and help the bank better understand the bank's products Sponsoring small-scale social activities such as: giving scholarships to disadvantaged students, giving gifts to lonely elderly people, etc to create a good image and impression of the bank to customers.
Improve the quality of consumer loan products.
If a bank wants to attract many customers to use its products, the products and services that the bank provides must have many utilities and high quality The higher the utility and quality, the more trust is created with customers, thereby applying a long-term relationship between the bank and customers.
Improve the consumer lending business processes to ensure the rigor but to reduce the time and cost for customers in completing consumer loan procedures such as:
- Flexibility in lending levels for customers If the customer has a high income and they can prove their income is long-term through an employment contract, the bank may consider lending with a higher rate and with a longer term without fear of risk.
- Simplify loan procedures Currently, the bank's lending procedures are still complicated, causing time-consuming for banks and borrowers Therefore, banks need to adjust the lending process in a flexible, fast and convenient way but still ensure the safety of the bank For example, the table forms to get information from customers are not clear, need specific instructions for customers to be able to fill out and identify Therefore, banks need to adjust the information sheet templates to be easier to use.
- Flexible interest rate policy: For reputable long-term borrowers and customers with accounts at banks, banks should have priority policies on interest rates For long-term customers who have regular transactions and purchases of bank products, customer information, customers' ability to repay debts, and customer ethics are partly expressed through the times In pre-transactions, the bank costs less in guiding and appraising customers, etc., which means less costs than loans. Therefore, banks should offer more attractive interest rates to customers This is essential to retain customers and limit risks for consumer lending As for customers who have an account at a bank, it is also a financial source to ensure the customer's loan repayment obligation.
Credit officers must regularly monitor customers after disbursement in order to assess whether the loan is used for the right purpose as committed and control the level of credit risk arising in the process of using capital This helps credit officers to detect arising problems early, promptly propose handling measures to adapt to the customer's income situation, and avoid future risks At the same time, take measures such as:
- Monitor customer account activity at the branch.
- Meet and inquire with customers to control the borrower's residence. Regularly asking customers is a very accurate feedback channel about the quality and position of banking products.
- Check the assessment of the loan collateral according to the current value and condition of the collateral.
- Monitor the situation, movement and development trends of industries to take measures to adjust lending to customers in these industries in time when there are unexpected changes.
- Check the information obtained from other sources such as: CIC, tax authorities, courts.
Strengthening debt management and settlement of overdue debts
Debt management of SeABank - Dien Bien Phu Transaction Office in recent years is still not good To solve that problem as well as improve the quality of loans, the bank strengthens debt management and settlement of overdue debts, so that the rate of overdue debt in consumer loans is always low and low does not create much risk for the bank.
Debt management and settlement of overdue debts directly and decisively affect the performance of a loan's closed cycle and is a vital issue for banks, so it is always considered the top priority by commercial banks in their work your manager:
- Debt management: The Bank must strictly comply with current decisions on credit activities, promptly detect and recommend unreasonable things,inconsistent with regulations of the State Bank, in order to take measures timely remedy, well implement the terms specified in the credit regime and regulations on loan review and approval procedures, manage loan documents, monitor the use of loans by customers Banks need to strictly control loans with collateral, ensuring that the collateral must have all the elements (legal and valuable) for easy trading when necessary.
- Settlement of overdue debts: In order to minimize the possibility of future losses of the bank, in parallel with the serious implementation of debt classification and risk provisioning by the State Bank In addition, the bank needs to analyze the causes and status of overdue debts to come up with solutions to overcome In addition, banks need to improve the debt settlement process in case of overdue In case customers have financial difficulties, temporarily but still have the ability and sense of debt repayment, banks should apply support policies such as additional loans, debt extension This on the one hand contributes to creating conditions for customers to repay, on the one hand, contributing to strengthening the relationship between the bank and customers In case the customer is deliberately inactive, the bank should cooperate with the departments, headquarters and customer agencies working to recover the debt.
3.2.2.1 Improve the quality of resources
Strengthen training courses on professional skills, sales skills, customer care for employees In addition, SeABank regularly organizes experience exchange sessions In addition, build a reward system commensurate with the capacity of each employee.
3.2.2.2 Promote promotion, advertising and marketing programs
Promote the survey and market research to grasp the needs of customers.
Offer appropriate policies to engage with customers and administrative units.
Promote the recruitment of collaborators, distribute commissions and promote running of ads on the media and social networks to promote propaganda to customers.
Currently, the main consumer loans at SeABank - Dien Bien Phu Transaction Office are serving individuals and government employees with stable income with installment loans For these customers, the bank needs to have preferential policies to attract them to come to the branch more and use the bank's services The object of consumer loans that the bank targets are people with stable income and ability to pay, however, the bank is currently making consumer loans with customers such as: : teachers, staff members of the people's armed forces, officers and employees with a stable income On the other hand, this customer accounts for a small part of the population Meanwhile in Da Nang, people with small needs to consume as small traders, working in private companies, joint ventures, joint stock companies and foreign companies are very numerous Meanwhile, many people not only have stable income but also quite high Therefore, this is the source of potential customers of the bank.
3.2.3.1 Recommendations to the State, relevant ministries and branches
In order for consumer lending in the commercial banking system in Vietnam to continue to grow steadily and effectively, the government and relevant ministries and sectors need to create all conditions for society:
Firstly: Implement a series of measures to stabilize the macro environment, thereby determining the strategy to develop the economy, increase investment, carry out economic restructuring towards an increasing proportion of the public sector. industries, services, maintaining the inflation rate at a level that is beneficial to the economy Stabilizing the economic, political and social environment will create conditions for the development of the economy, raise incomes and living standards for the population, and improve the population's ability to accumulate and consume. promote economic sectors to feel secure in production and business to create more goods and services.
Second :The Government should soon promulgate the Consumer Credit Law, creating a solid legal foundation for the development of consumer lending To do so, the state needs to prepare the necessary conditions to perfect and issue theConsumer Credit Law as soon as possible.