Suggestions to improve personal loans in vietnam prosperity bank lang ha branch,graduation thesis

BANKING ACADEMY FOREIGN LANGUAGE FACULTY - - GRADUATION THESIS SUGGESTIONS TO IMPROVE PERSONAL LOANS IN VIETNAM PROSPERITY BANK – LANG HA BRANCH STUDENT : HA THUY NGA LECTURER : NGUYEN PHUONG LAN (M.A) COURSE : 2012 – 2016 CLASS : K15.ATCA May 2016 Banking Academy Graduation thesis ACKNOWLEDGEMENT I would like to express my sincerely thanks to those who supported me greatly to complete this thesis First of all, I would like to send many special appreciations to Ms Nguyen Phuong Lan (MA) who showed guidance and support on specialist knowledge from the beginning to the final level of the thesis Secondly, many thanks are also sent to my beloved teachers at Foreign Language Faculty as well as other faculties of Banking Academy of Vietnam, who delivered precious support in my student life This would be the most beautiful and priceless memories in my life On the completion of the graduation thesis, I have the opportunity to thank all the staffs in Vietnam Prosperity Bank – Lang Ha Branch for their enthusiasm in providing me information and support me with the task to accomplish the paper I am also thankful to my best friends at the university who have experienced with me over past years Last but not least, I highly appreciate my family members for their both physical and mental assistance and cooperation; without their helps, it would not have been possible to undertake this programme In brief, I owe a great deal of respect towards everyone who helped me to complete this session Ha Thuy Nga K15.ATCA Banking Academy Graduation thesis EXECUTIVE SUMMARY In recent years, economic difficulties have caused slow credit growth in business sector but it needs to raise capital, so most banks are looking for ways to boost personal lending However, it requires the Vietnamese banks to improve their quality, discover business opportunities and build their competitive position in order to implement this service effectively in the context of increasingly fierce competition By acquired knowledge and an intern period at Vietnam Prosperity Bank, the researcher collects and analyzes real statictis and information to evaluate current situation of personal credit in VPbank The study focuses on examining and assessing personal loans’ performance by three criteria groups: the general, the capital for safe use and the return criteria From these, achivements and limitations are showed in order to give solutions and recommendations suited with VPB’s direction of the action plan and core business targets Human resources, lending process, marketing activities and personal loan polices are suggested to reduce risks, increase customer base and outstading credit balance for VPBank in general and Lang Ha Branch particular Although the research has reached its aims, there were some inevitable limitations and shortcomings I look forward to the feedback from the teachers Ha Thuy Nga K15.ATCA Banking Academy Graduation thesis TABLE OF CONTENTS LIST OF ABBREVIATION LIST OF TABLES AND FIGURES CHAPTER 1: INTRODUCTION 1.1 REASON FOR CHOOSING THE TOPIC 1.2 PURPOSE OF THE THESIS 1.3 THE SCOPE AND LIMITATION 1.4 THE RESEARCH’S METHODOLOGY AND DATA COLLECTION 1.5 THESIS STRUCTURE CHAPTER 2: THEORETICAL BACKGROUND OF THE STUDY 2.1 BACKGROUND OF PERSONAL LOAN 2.1.1 Definition of personal loan 2.1.2 Features of personal loan 2.2 TYPES OF PERSONAL LOAN 2.2.1 Unsecured loans 2.2.2 Secured loans 2.3 BENEFITS OF PERSONAL LOAN 2.3.1 For the customers 2.3.2 For the bank 2.4 FACTORS AFFECTING PERSONAL LOAN 2.4.1 Objective factors 2.4.2 Subjective factors 2.5 CRITERIA TO EVALUATE THE EFFICIENCY OF PERSONAL LOAN 2.5.1 The general criteria 2.5.2 The capital for safe use criteria 2.5.3 The return criteria CHAPTER 3: RESEARCH METHODOLOGY AND DATA ANALYSIS 11 3.1 OVERVIEW OF VIETNAM PROSPERITY BANK AND VPB LANG HA BRANCH 11 3.1.1 Development history 11 3.1.2 The business activities 12 3.1.3 Organizational structure 13 Ha Thuy Nga K15.ATCA Banking Academy Graduation thesis 3.1.4 The overview of major business operations 14 3.2 CURRENT SITUATION OF PERSONAL LOAN IN VP BANK LANG HA 18 3.2.1 The products of personal loan 18 3.2.2 The size of personal loan services 19 3.3 EVALUATION OF THE QUALITY OF PERSONAL LOANS 21 3.3.1 Evaluation by the general criteria 21 3.3.2 Evaluation by the capital for safe use criteria 25 3.3.3 Evaluation by the return criteria 27 3.4 EVALUATION OF THE EFFICIENCY OF PERSONAL LOANS 29 3.4.1 Achievements 29 3.4.2 Limitations and causes 30 CHAPTER 4: SOLUTIONS AND RECOMMENDATIONS 34 4.1 DEVELOPMENT ORIENTATION OF PERSONAL LOANS IN VPB LANG HA 34 4.1.1 Advantages and disadvantages 34 4.1.2 Development orientation of personal loans 35 4.2 SOLUTIONS TO IMPROVE PERSONAL LOANS IN VPB LANG HA 35 4.2.1 Improving capacity of credit officers by KPIs 36 4.2.2 Improving the quality of the appraising, supervising and monitoring the personal loans 36 4.2.3 Stepping up marketing activities 37 4.2.4 Continuing to improve policies for personal loans 38 4.2.5 Developing and mordenizing Electronic Banking system 38 4.2.6 Diversifying products and enhancing competitiveness 39 4.3 SOME RECOMMENDATIONS TO IMPROVE THE EFFICIENCY OF PERSONAL LOANS 40 4.3.1 For VP Bank Lang Ha Branch 40 4.3.2 For VP Bank 41 CONCLUSION 42 REFERENCES 43 Ha Thuy Nga K15.ATCA Banking Academy Graduation thesis LIST OF ABBREVIATION VPB Vietnam Prosperity Bank LHA Lang Ha Branch Group Standard loan CBs Commercial Banks Group Criticized loan PL Personal loan Group Substandard loan SME Small and Medium Group Doubtful loan Group Loss loan loan/debt groups Enterprises UPL Unsecured personal loan SBV State Bank of Vietnam MBB Military Bank E – banking Electronic banking IR Interest rate Ha Thuy Nga K15.ATCA Banking Academy Graduation thesis LIST OF TABLES AND FIGURES No Name Page Diagram 3.1 Organizational structure of VPB LHA Branch 13 Table 3.1 General operational situation from 2014 to 1st quarter 2016 14 Table 3.2 The General business performance of LHA Branch 16 Table 3.3 Overdue loan and bad debt ratios of LHA Branch 17 Table 3.4 The number of personal loan customers from 2014 to 19 Q1/2016 Table 3.5 Revenues of Personal loans in LHA between 20 2014 – Q1/2016 Table 3.6 The outstanding credit of personal loans (LHA) 20 Table 3.7 Credit growth of personal loans in LHA Branch (2014 – 21 Q1/2016) Table 2.8 The structure of outstanding personal loans LHA 23 Table 3.9 Credit growth of personal loans in term of collateral in LHA 24 Branch Table 3.10 Delinquency rate in the total of delinquency rate of the 25 branch Table 3.11 Return criteria from personal loans in the branch from 2014 27 to Q1/2016 Chart 3.1 Revenues and Outstanding Credit of PLs in LHA Branch 24 from 2014 – Q1/2016 Chart 3.2 Ha Thuy Nga Return criteria from personal loans in the branch from 2014 28 K15.ATCA Banking Academy Graduation thesis to Q1/2016 Ha Thuy Nga K15.ATCA Banking Academy Graduation thesis CHAPTER INTRODUCTION 1.1 REASON FOR CHOOSING THE TOPIC The year of 2015 could be seen a return of golden age of banking sector It was largely due to the identify target customer of commercial banks in the context of small and medium enterprises who faced many difficulties Since 2014, commercial banks focused on individual customers instead of lending business when they had need of increasing outstanding loans Althoung the size of these loans is not large but the huge number, the banks will be distributed credit risks Therefore, individual customers play an increasingly important role in the strategic development of the commercial banks The banking products and services for individuals, especially credit products should be diverse, modern and highly competitive Foreseeing that trend, Vietnam Joint Stock Commercial Bank Prosperity has constantly innovated, improved operational efficiency and received prestigious awards by reputable international organizations in 2014, including “Best Commercial Bank Vietnam 2014”, “Straight-Through-Process”, “Best Banking Product Vietnam 2014”, and “Best Trade Finance Bank Vietnam 2014” In 2015, VPBank was presented with six prestigious awards by international organizations: Best Commercial Bank of the Year, Best Innovation in Retail Banking, Best SME Bank of the Year, Best Internet Bank, Best Banking Product and Best Practices Award for Enterprise Data Management Strategies However, besides the advantages in economic integration, trade barriers and fierce competition from commercial banks have brought about opportunities and challenges in the personal loan activities of VPBank During a practice in VP Bank Lang Ha, it was found that personal loan activity is facing many difficulties, not really commensurate with the current growth potential From the above reasons, I chose research topic: "SUGGESTIONS TO IMPROVE PERSONAL LOANS IN VIETNAM PROSPERITY BANK – LANG HA BRANCH" to graduation thesis Ha Thuy Nga K15.ATCA Banking Academy Graduation thesis 1.2 PURPOSE OF THE THESIS The most important purpose of the thesis is to analyze the situation and assess the performance of personal loans in VPBank Lang Ha based on theoretical and practical Thereby, some suggestions to enhance personal credit will be given 1.3 THE SCOPE AND LIMITATION The study will focus on the personal loan activity in VPB Lang Ha branch in terms of unsecured and secured loans in the period from 2014 to the first quarter of 2016 Thus, it will be limited only to the products, size and some criteria in order to evaluate the efficiency of this credit, as well as the information from literatures that will be cited and reviewed 1.4 THE RESEARCH’S METHODOLOGY AND DATA COLLECTION The main research’s approach could be identified as:  Using statistical method  Analyzing figures  Summarizing information gathered in all media means 1.5 THESIS STRUCTURE The paper included four chapters following: Chapter Introduction Chapter Theoretical background of the study Chapter Research methodology and data analysis Chapter Solutions and recommendations Ha Thuy Nga K15.ATCA Banking Academy Graduation thesis Chart 3.2 Return criteria from personal loans in the branch from 2014 to Q1/2016 Unit: VND Billion 90 70.00% 82 80 70 66.00% 60 60 64.34% 64.00% 50 62.00% 40 30 35 60.00% 58.78% 20 21 15 58.00% 56.00% 10 54.00% Source: Finance reports of branch 2014 – Q1/2016 In conclusion, VPB LHA had considerable returns in the period of 2014 to the first quarter of 2016 but its profitability was not high It was found that profit from personal loans made the largest proportion in total profit; therefore, the branch should concentrate on this product 3.4 EVALUATION OF THE EFFICIENCY OF PERSONAL LOANS 3.4.1 Achievements Firstly, personal outstanding credit grew considerably and brought high profits to the bank Personal outstanding credit reached 476 billion in 2014 and this figure rose to 738 billion in 2015 At the same time, profit from PLs operations also grew by 18 billion from 2014 to 2015 and greater proportion on the total profits of the bank Because interest rate of personal loans, especially UPLs was generally higher than the others so the same capital money, the bank could obtain greater profits Moreover, this Ha Thuy Nga 29 K15.ATCA Banking Academy Graduation thesis was also the credit risk in control level so it may become the most interesting activity of the branch in the future Secondly, the loans were evaluated fairly safe Delinquency ratio decreased over the years which demonstrated the enhanced safety level of these loans, partly due to collateral loans In addition, customers had stable income so the bank had high capital recovery capabilities In 2015, a long with a sharp increase in the number of medium and long-term loans,the bad debt ratio had tended to increase slightly but still be controlled at below 3% The biggest risk in personal loan was the lack of information on borrowers so appraisal and evaluation processes had difficulties However, the client assessment of VP Bank was conducted in a scientific and accuracy manner, thanks to modern personal credit management software Thirdly, system innovation projects with brand identity and the expansion of the retail system brought about positive results Since 2014, a series of innovations was implemented by banks towards international retail banking standards like launching brand identity campaign and changing excellence retail banking model 4Ps (Product, Place, Process, People) In addition, the bank was the first in Vietnam launching E – Banking Easy Banking and online retail banking shop which attracted a growing number of customers on account of the convenience, simplicity and creation Besides, the improvement of lending process and the development of technologies such as T24 software – software to manage loan documents, VPB scoring – scoring and credit rating software, FinOne – approve submissions credit software, valuation software helped the bank cut operating costs, maintaining a significant profit margin 3.4.2 Limitations and causes 3.4.2.1 Limitations Ha Thuy Nga 30 K15.ATCA Banking Academy Graduation thesis Firstly, some of the personal loan products are not really popular with customers Although credit product portfolio of the bank was various, but only some products, such as loan for officers, armed forces, car buyers had rapid growth Meanwhile, the growth of the others such as student loans, overdrafts, installment loans to buy mobile phones was slow and accounted for a small segment of personal loan Moreover, VP Bank has not greatly implemented lending products via credit card Credit cards play increasingly important role in stimulating the consumption of the people, especially in a potential market in Vietnam Secondly, although the bad debt ratio of personal loans was still at a safe level but tended to increase slightly over the years Although the delinquency rate of bank was under 3% following the provisions of the SBV, but overdue loans of the medium and long term in previous years made the recovery of bank debt facing difficulties On the other hand, the decision to approve a loan also depended on the subjective views of credit officers So, along with the growth of personal loans, the bad debt ratio also tended to increase slightly over the years Although there were many improvements in the lending process, many customers still complained about it 3.4.2.2 Causes  Objective reasons In the first place, a part of the population is still psychologically afraid of loan products of banks The psychology of people is one of the particularly important factors affecting personal loans Despite the positive changes in the habit of using the products of the bank, the people are still afraid to reach out the bank's services The Ha Thuy Nga 31 K15.ATCA Banking Academy Graduation thesis people have the habit of saving before consumption When having borrowings, they feel the burden of debt repayment obligations so this impatcs personal loans The second, the fierce competition: In an integrated and development economy, a “pie” of financial services is subdivided into several sections Most banks want to expand their market share, develop and invest in modern infrastructure in order to increase competitiveness Product and service portfolio of the bank are also extremely diversified Lending policies are also more flexible, more open in customer care, marketing, after-sales services, etc In addition to the contribution of the three banks with 100% foreign capital (Standard Chartered Bank, HSBC, ANZ) and more than 30 sub-branches of foreign banks operating in Vietnam, the market is becoming increasingly fierce  Subjective reasons The first one is that business strategies have innovation but are still limited: In comparision with business loans, personal loans show serveral disadvantages Firstly, business loans are often large and less costs than individual loans; in addition, profit from lending business brings about huge proportion Furthermore, personal loans incurred more costs and the risk is the highest in credit operations That is the reason why the bank is cautious about personal lending The second is human resources in personal loans: VP Bank has not really trained credit officers about sales skills as well as the retail customer relationship Despite the preparation of personnel since 2013 to draw their focus on the retail sector, effective work has not really been improved markedly Especially, the delinquency ratio of unsecured loans tends to increase slightly over the years In addition, the branch has not established credit risk management division so credit officiers have to evaluate, monitor and collect debt The third is inefficient marketing activity Although the branch had marketing campaigns in 2014 and 2015 such as: delivering leaflets, organizing road shows at local markets and crowed residential areas, they were not effective The Ha Thuy Nga 32 K15.ATCA Banking Academy Graduation thesis number of customers that is aware of bank’s products is not high Therefore, credit products are not popular, especially UPL The advertising just focuses on lending process and features of personal loans instead of its benefits, so customers not recognize which benefit personal loans bring to them While it is essential to pique the customer's demand As the result, the customers of personal loans primarily are traditional customers or through the recommendation of their relatives and friends The last is credit policy Generally, VPBank’s interest rate is higher than the others’ For example, ANZ’ IR is from 18 to 25% with unsecured loans, MBB’ IR is from to 12 % with secured loans While VPBank offers borrowers IR from 20% to 32% with unsecured loans and 13% with secured loan This impacts considerably on credit activity In addition, product policies are not consistency VPB has Business intelligence competency Center in which credit products are researched, created and changed to conform to customer segments However, there are many problems when this center issues a decision or decree The announcement to the staff is slow, inconsistent and constantly changing so they get troubles in lending process CONCLUSION CHAPTER In conclusion, LHA’s credit performance from 2014 to the first quarter of 2016 was positive Outstanding and profit credit of personal loans rose and showed upward trend in the year of 2016 However, it also revealed its limitations and shortcomings which need to be completed and improved in order to implement VPB action plan and development oriented Ha Thuy Nga 33 K15.ATCA Banking Academy Graduation thesis CHAPTER SOLUTIONS AND RECOMMENDATIONS 4.1 DEVELOPMENT ORIENTATION OF PERSONAL LOANS IN VPB LANG HA 4.1.1 Advantages and disadvantages  Advantages  Consumer demand in the economy is growing strongly Economic growth rate in Vietnam is high and GDP in 2015 is the highest of recent years 6.68%; this figure is predicted 6.7% in 2016 Moreover, Vietnam's population is now more than 90 million people, with a golden population structure the labor force accounted for approximately two-third of the population On the other hand, although there is a great demand for consumption, the customers not have sufficient financial capacity, especially the younger generation so PLs help them get a stable life  The field of personal loans have growth potential On February 04th, 2016, Vietnam and 11 countries attended the signing ceremony of Trans-Pacific Partnership Agreement (TTP) in Auckland, New Zealand With economic growth and tax reduction roadmap of WTO and TTP, automotive demand will continue to increase in the coming period According to the overall planning of urban development orientation by 2020, the urban population will account for 45% of the national population, leading to demand for housing in the city to rise It leads to the demand for home loan, as well as consumption for unsecured loans  Disadvantages: Some difficulties as SBV will continue to maintain prudent monetary policy when setting credit growth target of 13-15%, which leads to forced competition for the CBs  Although the demand for personal loans is not small, few consumers meet the loan requirements Ha Thuy Nga 34 K15.ATCA Banking Academy Graduation thesis The reason is that consumers not have registration book or can not prove income Personal lending rate is quitly high (UPLs interest rate from 20 to 32%) and lending conditions is strict  The legal environment is not complete Some legislation and management mechanisms in areas such as procedures for granting Red book, car registration, etc are still difficult, complicated, causing consumer behaviors and difficulties for the bank in determining the collateral  The economic environment is not really stable development Commodity, real estate, automotive prices change constantly Interest rates fluctuate as well, while personal loans are mainly medium and long terms 4.1.2 Development orientation of personal loans In the future, the branch should focus on developing traditional consumer loans associated with utility services as this is the type of lending which accounted large customers and major profit for the bank With a target market towards individual customers, the branch should make appropriate policies to develop this type, such as: Reducing interest rates or offering preferential interest rates corresponding to the borrowing limit to suit the financial needs of consumers Providing products and services with more choices for customers to achieve lower interest rates, giving insurance to borrowers, increasing credit limit, developing personal loans without collaterals (UPL) Young customer oriented personal-lending development is key strategy because this is a potential customer group, accounting for a large proportion in the total population of Vietnam Young clients have many needs of buying houses, cars, loans for shopping, consumer activities, etc 4.2 SOLUTIONS TO IMPROVE PERSONAL LOANS IN VPB LANG HA From above analysis, assessing the current situation the personal loan operations of the branch, identifying VPB development-oriented combined with forecasting favorable and difficulties in the coming years, the paper gives some of the following solutions: Ha Thuy Nga 35 K15.ATCA Banking Academy Graduation thesis 4.2.1 Improving capacity of credit officers by KPIs Vitally, the business has been able to lay a strong foundation of human capital management by not only setting up a very efficient channel for acquiring the best talent in the market, but also effective policies and strategies for training, development, motivation, and rewards As a result, the business has been able to retain key talent quite successfully Currently, the branch has the advantage of a team of young employees, who have bachelor's degree, are selected carefully and have good qualifications However, that salesforce does not have much experience, product knowledge and limited customer relationships Consequently, an important task is to foster credit staff expertise and general knowledge to meet the expanding needs of its customers The bank can implement a number of following measures:  Encouraging employees to attend training and retraining, as well as enhance their professional skills Not only training staff on legal knowledge but also improving understanding of policies and documents related to the regime of credit activity  Using Key Performane Indicators (KPIs) to measure value, assess the capacity of credit staff Then the branch should have rewards for excellent officers to encourage the others 4.2.2 Improving the quality of the appraising, supervising and monitoring the personal loans The cause of the overdue debts, bad debt comes from a lack of parsimony in granting personal credits, namely the appraisal of loans The borrower evaluation process faces many difficulties because there is no or incomplete infomation Consequently, the branch should develop management methods such as:  Maintaining relationship with customers: Credit officers should regularly contact customers (at least time per month) to ensure customer’s information such as financial status (changing jobs or positions, how production and business activities and so on), residence information and family Whenever there is the event which can affect the repayment capacity of customers, credit officers should report to the director to seek appropriate measures  Storing customer database: Ha Thuy Nga 36 K15.ATCA Banking Academy Graduation thesis The branch can set a storing customer database system In which all customer’ private information, creditworhthiness,etc.are recorded It would reduce the time of assessing and appraising customers and ensure the accuracy  Implementing policies on management of safe loans to limit risks VPB Lang Ha should suggest borrowers who take out a secured loan buy property insurance during the loan period and transfer the beneficiary to VPB For example, if the security property is an apartment, land, customers can buy fire, explosives insurances If collateral is means of transport, insurance is that asset Additionally, the branch should establish risk management division which is independent from credit department in order to forecast the risks and take measures to handle debt problems 4.2.3 Stepping up marketing activities The heart of your business success lies in its marketing In banking sector, marketing activities are the media, advertisement, establishing distribution channels, customer services, etc These are activities playing an important role in the customers psychology that have majority-driven habits The bank can strengthen marketing activities through the mass media such as television, newspapers, radio, social networks Nowadays, the global techonology revolution affects almost all aspects of people’ life, so the development of E – banking is very important to push up the bank’s competitiveness E – banking services should be invested and more focused on in the near future in term of mobile and internet banking In addition, VPB should co-operate with unions, organizations, companies and enterprises to expand marketing network as well as increase the number of customers from these organizations Moreover, this activity brings about high efficiency, so the Branch should establish a marketing department, which is responsible for researching customer sentiment, market and brand promotion in a professional manner, to recognize the right direction, customer segment and then provide useful measures For example, Ha Thuy Nga 37 K15.ATCA Banking Academy Graduation thesis performing market segmentation, developing a strategy to focus on customers who have good incomes 4.2.4 Continuing to improve policies for personal loans Currently, the personal lending process of VP Bank has specified and improved in order to meet the demands of borrowers However, there are some suggestions to improve this kind of loans below  Expanding lending to individual customers Many customers become more sensitive even though the bank requires the lowest service fees as well as changes in interest rates So far, retail banking concentrates mainly on attracting people with regular income from wages that is not interested in self-employment or homemakers having no regular income Therefore, to expand its customers, the bank should have products for business customers themselves or homemakers as long as they meet certain requirements and have good moral character Besides main customers are officiers, military force with stable income, VPBank can create loan products for salespeople in markets in big cities Although they are self-trading and not have salary, they are interest rate sensitive Therefore, if they meet requirements and have good moral, they rarely delay repayment  Developing strategies with reasonable interest rate In the fiercely competitive environment where credit products are very easy to copy, the lending rate is still a competitive factor So building a reasonable policy of interest rates is essential for the bank VPB should have a priority lending rate policy for VIP, traditional customers and customers having bank accounts Furthermore, the bank regularly offers promotions, lower interest rates, lucky-draw programs to exploit the full potential of the market segment in order to push transactions via E – banking and online BankStore Supermarket 4.2.5 Developing and modernizing Electronic Banking system Digital technology and online channels have been becoming increasingly important and inevitable for customers in banking transactions VPBank should Ha Thuy Nga 38 K15.ATCA Banking Academy Graduation thesis consider digital banking services to be a focal point of the Bank’s development strategy, via three approaches:  Continuous and deep digitization in every traditional banking transactions and services  Strengthening partnerships with financial technology companies with a view to rapidly implementing disruptive, innovative ideas in banking services  Establishing a standalone digital bank to meet the requirements of earlyadopters 4.2.6 Diversifying products and enhancing competitiveness The branch should develop personal loans in terms of the purpose, the form, the customer approach and the repayment method Firstly, the purpose of the loan The demand of the customer is always expanding, so it needs to diversify products for the borrowers’ purposes, such as loans for exported labor, traders in markets, etc Secondly, the bank should pay attention to the form of loans Currently, unsecured loans products in the form of overdrafts and credit card are noticeable With these loans, customers can meet the needs of temporary working capital deficiency such as paying bills, paying for goods These flexible forms are highly interested as they met immediately the customers’ needs and not need to prove the purpose of capital use Additionally, credit cards have not been fully exploit their advantages and has not been widely deployed, there is the potential to develop this product for the branch The third is the customer approach Credit officers of LHA branch approach their customer in the direct method Customers have needs and come to the branch to learn and be instructed on the product or credit officers search, directly contact with customers, introduce and persuade them to use the product LHA branch could use indirect methods with the third party The branch establishes relationships with retail businesses such as auto showrooms, real-estate companies and other companies The branch can pay incentives for salesperson in accordance with each loans which they introduce The other way is the companies of existing customers Because of majority- Ha Thuy Nga 39 K15.ATCA Banking Academy Graduation thesis driven habbits of customer, they have certain trust in bank so the branch can find potential customers in that companies In addition, the branch should diversify the repayment method to create favorable conditions for customers to repay debt and interest At present, the branch is mainly applied collections form of fixed annuity, but this method dóe not fit all customers; therefore, the branch should be adjusted to suit debt collection period Moreover , the branch should adopt a flexible interest rate rather than applying a fixed interest rate for all customers Depending on the customer’s reputation, creditworthiness, the value of collateral, the branch might consider to reduce interest rates for customers 4.3 SOME RECOMMENDATIONS TO IMPROVE THE EFFICIENCY OF PERSONAL LOANS Objective factors have impacts on credit operations of the bank Therefore, the branch requires attention from the competent authorities to support effective consumer loans I would like to give some suggestions as follows: 4.3.1 For VP Bank Lang Ha Branch Lang Ha branch is the unit within the organizational structure of VP Bank so all activities of the branch are directly impacted by the operational policies of VP Bank Therefore, Region Director as well as VPB needs to support LHA branch such as:  The credit operation orientation is to improve the quality of personal loans, boosting retail banking services  Constructing lending process in line with personal loans, adjusting flexible lending conditions and credit policies for each of borrower Also researching market for the development of existing personal credit and the creation of new products  Supporting fund for strengthening the advertisement activities  Implementing the advertising programs, sponsoring events to help popular brand of VPB, creating favorable conditions for the branch to attract more customers  Performing review of personal loan product packages to reduce ineffective product Ha Thuy Nga 40 K15.ATCA Banking Academy Graduation thesis 4.3.2 For VP Bank  Fostering rapid expansion of core customer segments and selected market segments as defined in the Bank’s strategy  VPBank required detailed guidelines and specific development oriented for personal loans in the context of strong competition and diverse life, such as improving the system of lending guidelines to employees overseas, automobile loans  Completing the salary regime, remuneration, recruitment to enhance competitiveness and attract talents The bank also should build professional staff, agile behavior, efficiency in the inspection process of operation papers, collateral to avoid mispricing, taking advantage of loopholes for illegal procedure  Giving regularly the priority policy for the credit staff for living conditions as well as the financial support packages with preferential interest rates  Making a difference in business operations based on product factor, diversifying products  Simplifying lending process and requirements for borrowers  Enhancing its advanced technology system to ensure smooth support for rapid business growth and service quality improvement  Focusing on high performance quality and efficiency in every key aspect, considering reducing or offering preferential interest rate in the fierce competition environment  Creating the link between Bank – Insurance – Customer to limit credit risks  Innovating and modernizing banking technology to save costs, serve customers more conveniently and increase customer satisfaction with services of VPBank Ha Thuy Nga 41 K15.ATCA Banking Academy Graduation thesis CONCLUSION In theoretical basis, analyzing the situation at VP Bank Lang Ha Branch, the paper focuses on solving some of the following issues: The first is some theoretical basis for the personal credit operation of commercial banks in general and applying to analyze as well as clarify the research problems Next, the thesis analyzes current situation of personal loans at VPBank LHA Branch from 2014 to the first quarter of 2016 It can be said that VP Lang Ha has the right steps, in line with the development trend, but exposes some limitations that because of the evaluation of the customer financial situation and the fierce competition between banks, etc Finally, I give some solutions and suggestions to improve personal loans in VPB in general, LHA in particular These solutions focus on improving evaluation work and training of credit officers (KPIs), enhancing the quality of products in order to limit credit risks However, in the fiercely competitive environment and constantly fluctuating economy, VP Lang Ha need support from the competent authorities facilitating to develop personal loans and meet consumer needs, improve the people’s life The year of 2016 opens up the opportunities and challenges to the operation of PLs of VPBank Lang Ha I hope that with the right business strategy, catching up with the change of the market economy, the direction of the directors board and the efforts from the loan officer is the main driving force to contribute to the sustainable development of VP Bank in the future as well as VPB LHA Ha Thuy Nga 42 K15.ATCA Banking Academy Graduation thesis REFERENCES Mishkin, Frederic S (7th edition) The economics of money, banking, and financial markets Nguyen Van Tien, (2014) “Giáo trình Tín dụng ngân hàng”, Thống kê Press State Bank of Vietnam, (issued on April 22, 2005) Decision No 493/2005 /QDNHNN on loan classification, provisioning and use of provisions against credit risk in banking activities of credit institutions, State Bank of Vietnam, (issued on June 03, 2004) Circular No 49/2004 / TTBTC of June 3, 2004 Guidance criteria assessing the financial performance of the credit institutions of the State The Prime Minister, (December 31, 2003 ) Decision No 271 / QD-TTg on promulgating the regulations to monitor and evaluate the performance of stateowned enterprises Article 17 Nguyen Thi Hien, 2013, “Phát triển dịch vụ tài tiêu dùng Việt Nam”, Monetary and Financial Markets Newspaper, No 10, Page 29 VPBank Annual reports 2014, 2015 VPBank, Finance reports of LHA branch 2014, 2015 and Q1/2016 Website: Vietnam Prosperity Joint-Stock Commercial Bank www.vpbank.com.vn 10 Website: State Bank of Vietnam http://www.sbv.gov.vn/ 11 Website: Vietnam economy http://www.economy.vn/ 12 Website: ANZ http://www.anz.com/,, MBBank http://www.mbbbank.com.vn/ Ha Thuy Nga 43 K15.ATCA