SOME SOLUTIONS FOR THE DEVELOPMENT OF CONSUMER LENDING AT TECHCOMBANK HOANG QUOC VIET

SOME SOLUTIONS FOR THE DEVELOPMENT OF CONSUMER LENDING AT TECHCOMBANK HOANG QUOC VIET

NATIONAL ECONOMICS UNIVERSITY FACULTY OF FOREIGN LANGUAGES ENGLISH FOR BUSINESS DEPARTMENT ------ ***----- LƯU THỊ KHÁNH VÂN Topic: SOME SOLUTIONS FOR THE DEVELOPMENT OF CONSUMER LENDING AT TECHCOMBANK HOANG QUOC VIET Hanoi- May, 2012 Luu Thi Khanh Van - CQ503814 - Business English 50B NATIONAL ECONOMICS UNIVERSITY FACULTY OF FOREIGN LANGUAGES ENGLISH FOR BUSINESS DEPARTMENT ------ ***----- LƯU THỊ KHÁNH VÂN SOME SOLUTIONS FOR THE DEVELOPMENT OF CONSUMER LENDING AT TECHCOMBANK HOANG QUOC VIET Supervisor: Nguyễn Thị Phong Lan Hanoi – May, 2012 2 Luu Thi Khanh Van - CQ503814 - Business English 50B ACKNOWLEDGEMENT To finish this report, I am deeply grateful to all those who have shared ideas, valuable comments and encouragement during my writing of this paper. First of all, I would like to express the deep sense of gratitude to my supervisor, Ms Nguyen Thi Phong Lan for her useful guidance, critical comments and valuable suggestions on this report. Without her help, this report could not have been completed. Besides, my sincere thanks also give to the Faculty of Business English, National Economics University for the devoted teaching of all the lecturers and for giving me the knowledge and studying methods.Their teaching not only helps me gain valuable knowledge and skills during four years but also lays the foundation for my future work. Next, I would like to express my special thanks to the staff at the Techcombank Hoang Quoc Viet Branch for their big support so that I could finish my internship there and finish the paper successfully. Last but not least, I wishes to extend my thanks to my family and friends for their support, contribution and encouragement in the making of this report. However, owing to my lack of experience and knowledge as well as the limited scope of the research, some shortcomings and mistakes are unavoidable. Please kindly take into account. TABLE OF CONTENTS i Luu Thi Khanh Van - CQ503814 - Business English 50B General Director .4 Deputy Director 4 Deputy Director 4 Deputy Director 4 LIST OF CHARTS Chart Title Page Chart 1 Organizational Structure 1 LIST OF TABLES Table Title Page Table 1 The procedures of making credit loans in Techcombank Hoang Quoc Viet 16 Table 2 The rating structure for consumer loans at the Techcombank Hoang Quoc Viet 17 Table 3 Indices of consumer loans 19 Table 4 Profits on credit loans 21 ii Luu Thi Khanh Van - CQ503814 - Business English 50B LISTS OF ABBREVIATIONS • THQV: Techcombank Hoang Quoc Viet • Vietinbank:Vietnam Joint Stock Commercial Bank for Industry and Trade • Vietcombank: Vietnam Joint Stock Commercial Bank for foreign trade of Vietnam Agribank: VietnamBank for Agriculture and Rural Development • BIDV: Bank for Investment and Development . • ACB: Asia Commercial Bank • MB: The Military Commercial Joint- Stock Bank • TienPhong Bank: Tien Phong Commercial Joint- Stock Bank • SHB: Saigon – Hanoi Commercial Joint Stock Bank iii Luu Thi Khanh Van - CQ503814 - Business English 50B EXECUTIVE SUMMARY Consumer lending plays an important role in the development of commercial banks. In Vietnam, personal credit activities are increasingly expanding, attracting many banks, individuals and households. In the near future, these activities will certainly grow more, not only banks but also other financial institutions. During my internship in Techcombank Hoang Quoc Viet at the department of Credit, I have gained some understanding of consumer loan operations and marketing activities. Thus, based on primary theories and practical experiences on the branch on this field, I have decided to choose the following topic for my internship report: “Some solutions for the development of consumer lending at Techcombank Hoang Quoc Viet ” The purpose of this report is to analyze the current situation of consumer lending activity at THQV in connection with the impact of economic environment. The result gained from the analysis is used to assess the efficiency of THQV’s consumer loans and find out the strength, the weakness as well as the reason for its shortcomings. Then, based on the limitations, this report puts forward some suggestions for the development of consumer lending. Apart from the introduction and conclusion, my final report is divided into four chapters Chapter 1: Introduction. In this first chapter, I gave a brief overview of the THQV’s establishment, organizational structure as well as its functions and missions. Besides, I introduce some general information about the consumer lending with regards to orientations of THQV and its current status. iv Luu Thi Khanh Van - CQ503814 - Business English 50B Chapter 2: Theoretical framework. This chapter will provide readers with the knowledge of credit, consumer lending and an essential background related to consumer loans at THQV. Chapter 3: Analysis and Findings. This main chapter will analyze the figure and the assessment of the current situation. Some limitations and shortcomings of the entity will also be drawn out. Chapter 4: Recommendations. This final chapter is supposed to give some solutions to improve and promote the consumer lending business at THQV v Luu Thi Khanh Van - CQ503814 - Business English 50B INTRODUCTION Introduction of the research topic and rationale Nowadays, banking is one of the most important financial channel for the economy. Improving and expanding banking activities are the orientation and guideline for banks to survive and grow in the increasingly fierce competition. Among that, credit activity is a vital field in the bank and decides most of other activities in the national economy. It is also a main source of creating profitability and decides the existence and development of the bank. For a long time, most banks only focused on lending the production business but not much paid attention to the final stage of producing – consuming. Actually, when society increasingly grows, not only the enterprises need capital to make business and expand the current market but the individual need more capital than ever before as well. People’s living standards are more and more improving, not only in need of basic necessities like food, clothes but also tons of needs both in mental and physical life. People’s psychology has changed now, which considered borrowing as the need to use the goods before liquidity. To meet that need, banks have developed a new credit mode: consumer loans. It contributes to raise bank’s revenue. It means consumer loans help individual obtain capital to improve their lives. After studying the activities of Techcombank Hoang Quoc Viet for a period of time, I found out that the bank was concerned about the consumer loans. However, it has not been actually the major activity of the bank. Therefore, continuing research and offering solutions would bring enormous significance for both theoretical and practical aspects for the diversification of the bank’s activities. For this reason, the issue “Some solutions for the development of consumer lending at Techcombank Hoang Quoc Viet ” has been chosen for my internship report. Research questions The report is mainly a descriptive analysis of available data to find out the answers to the following questions: 1. What is consumer loans and its related features? 2. What is the current situation of consumer loans at Techcombank Hoang Quoc Viet? And what are the reasons for existing limitations? 1 Luu Thi Khanh Van - CQ503814 - Business English 50B 3. How can consumer loans activity be better implemented at Techcombank Hoang Quoc Viet? 4. Scope of the research This report mainly aims at: • Referring factors affecting the development of consumer loans • Analyzing figures and data relating to the operations of consumer loans at THQV • Describing the THQV’s current situation of consumer loans • Evaluating the effectiveness of those activities • Suggesting some solutions to improve the branch’s competitiveness. Methodology 1. Desk research: the study is based on figures and information from Techcombank Hoang Quoc Viet’s internal data and theory mainly from David Cox ( 1997 ), Modern Banking Operations 2. Other secondary data : information of Techcombank, THQV, Vietnam’s economy and policies, etc were collected from the TV, internet, newspaper, magazines … 3. Primary data: Interviews to executive managers at the department of Credit Activities in THQV, as well as staff who directly involves in consumer loans operations. 2 Luu Thi Khanh Van - CQ503814 - Business English 50B 3 CHAPTER 1 – INTRODUCTION 1.1Introduction of Techcombank, Hoang Quoc Viet Branch 1.1.1 Establishment Vietnam Technological and Commercial Joint Stock Bank - Techcombank was born on 27 September, 1993 with a charter capital of 20 VND billion. After sixteen years, Techcombank has joined one of the leading joint-stock banks. Currently, Techcombank has chartered capital to 5,400 VND billion and total assets up to 92,500 VND billion (according to 31/12/2010). Techcombank brand has attracted the credit institutions such as HSBC, the Asian Development Bank ADB, Vietnam Airlines, Vietnam Life Protection, Vinacontrol, etc. Moreover, with a network of nearly 200 transaction points nationwide with over 4,000 trained employees and leading position in technology when deploying modern banking services, Techcombank is becoming familiar with the public and clients operating in many different fields such as engineering, technology, trade, service . In recent years, Techcombank has been recognized as a strong brand in the market of Vietnam. Techcombank Hoang Quoc Viet Branch was established in 1996. Since its foundation, it has created prestige and awesome images in each customer’s eyes. Mobilization of capital is a strength of THQV. 1.1.2 Organizational Structure Taking account of the organizational structure of THQV will give us a clearer and more comprehensive view of the branch which contributes to the better evaluation of the whole business as well as the consumer loans activity. The main structure of its organization and operation can be described in the following chart : . its related features? 2. What is the current situation of consumer loans at Techcombank Hoang Quoc Viet? And what are the reasons for existing limitations?. activities. For this reason, the issue Some solutions for the development of consumer lending at Techcombank Hoang Quoc Viet ” has been chosen for my internship