Improving the quality of consumer loans at the Industrial and Commercial Bank of Nam Dinh Province

Improving the quality of consumer loans at the Industrial and Commercial Bank of Nam Dinh Province Improving the quality of consumer loans at the Industrial and Commercial Bank of Nam Dinh Province Improving the quality of consumer loans at the Industrial and Commercial Bank of Nam Dinh Province Improving the quality of consumer loans at the Industrial and Commercial Bank of Nam Dinh Province Improving the quality of consumer loans at the Industrial and Commercial Bank of Nam Dinh Province Improving the quality of consumer loans at the Industrial and Commercial Bank of Nam Dinh Province Improving the quality of consumer loans at the Industrial and Commercial Bank of Nam Dinh Province Improving the quality of consumer loans at the Industrial and Commercial Bank of Nam Dinh Province Improving the quality of consumer loans at the Industrial and Commercial Bank of Nam Dinh Province Improving the quality of consumer loans at the Industrial and Commercial Bank of Nam Dinh Province

Professional bachelor degree in Finance-Banking-Insurance (Customer relationships management) WORK PLACEMENT REPORT Company: Vietinbank – Nam Dinh branch IMPROVING THE QUALITY OF CONSUMER LOANS AT NAM DINH BRANCH 119 QUANG TRUNG Names of student : Dang Tien Dat University year : 2017-2020 Tutor at TMU : Nguyen Thi Minh Thao Tutor at USTV : Marie-Josée Cambreling Tutor at (Company): Dang Vinh Quang Hanoi-2020 ACKNOWLEDGEMENT During the internship I have completed , I have received great help and support from many people So I want to express my sincere thanks to all of them Also, I would like to thank to all of teachers in UNIVERSITÉ TOULONVAR and Vietnam University of Commercial who provided to me basic knowledge and skills my education and internship Especially,I would like to thank Mrs.Nguyen Thi Minh Thao, Mr.Dang Vinh Quang who have excellent guidance in my education and redaction of the this internship report I would also like to thank Mr Le Minh Tuan, Head of Vietinbank Nam Dinh branch, Nam Dinh city and all of colleagues who accepted and allowed me to access to data and documents, and who provided me professional advice and good conditions for accomplishing my internship Finally, I am thankful to my family for their patience and encouragement in the course of the study, internship and other difficulties TABLE OF CONTENT ACKNOWLEDGEMENT i TABLE OF CONTENT .ii LIST OF TABLES iv LIST OF FIGURES v INTRODUCTION .1 CHAPTER 1: OVERVIEW OF VIETINBANK AND THE INTERNSHIP 1.1 Company: .2 1.2 Host Firm: 1.3 Introduction of my internship : CHAPTER 2: INTERNSHIP IMPLEMENTATION AT COMPANY 2.1 The internship position ,tasks, required skills, opportunities and the purpose to face 2.1.1 Internship position .6 2.1.2 Department structure of bank branch - Nam Dinh branch 2.1.3 Administrative procedures related to lending activities 2.1.4 Daily task 2.2 Definition of consumer loans .12 2.3 Consumer loan classification .12 2.3.1 Based on credit term 12 2.3.2 Based on the purpose of loan use 12 2.3.3 Based on the loan guarantee method .12 2.3.4 Based on the origin of the debt .13 2.3.5 Based on repayment method 13 2.4 The role of consumer lending 14 2.4.1 The role of consumer lending to customers 14 2.4.2 The role of consumer lending to businesses 14 2.4.3 The role of consumer lending to commercial banks .15 2.5 The quality of consumer loans at Vietinbank - Nam Dinh branch 15 2.5.1 The need to improve the quality of consumer loans .15 2.5.2 Factors affecting the quality of consumer loans .16 CHAPTER : SITUATION ON THE QUALITY OF CONSUMER LOANS AT VIETINBANK – NAM DINH BRANCH .21 3.1 Overview of Vietinbank's operations – Nam Dinh branch in 2017-2019 .21 3.1.1 Capital raising activities 21 3.1.2 Lending activity 24 3.1.3 Other activity 27 3.1.4 Business results 28 3.2 Current situation of consumer lending activities at the Joint Stock Commercial Bank for Industry and Trade of Nam Dinh branch in 2017-2019 29 3.2.1 Regulations on consumer lending at Nam Dinh Bank of Industry and Trade branch .29 3.3 The reality of consumer lending at Vietinbank – Nam Dinh branch .34 3.3.1 About consumer loan outstanding 35 3.3.2 Interest income from consumer loans .42 3.3 Assess consumer lending activities at Vietinbank - Nam Dinh branch 43 CHAPTER : SERVICE ANALYSIS 45 4.1 Customer reaserch .45 4.2 SWOT analysis 53 4.3 KPI 54 CHAPTER : SOLUTION TO IMPROVE THE QUALITY OF CONSUMER LOANS AT VIETINBANK - NAM DINH BRANCH 55 5.1 Solutions to improve the quality of consumer loans at Vietinbank 55 5.1.1 Diversifying consumer lending products 55 5.1.2 Improve facilities, facilities and equipment .55 5.1.3 Improve the quality of human resources 55 5.1.4 Promote take care of customers .56 5.1.5 Expand marketing activities in the bank 57 5.2 The difficulties encountered 58 5.3 Internship gained .58 5.4 Recommendation .58 5.4.1 Recommendations to the state bank 58 5.4.2 Recommend to relevant levels 59 5.4.3 Recommend to Vietnam Bank for Industry and Trade 60 CONCLUSION 62 LIST OF REFERENCES 63 LIST OF TABLES Table 1: Internship plan Table 2.1 : Daily task Table 3.1: Capital raising situation in 2017-2019 22 Table 3.2: The situation of outstanding loans by subjects in 2017-2019 25 Table 3.3: The situation of outstanding loans by term 2017-2019 26 Table 3.4: Other service activities 28 Table 3.5: Business results .28 Table 3.6a: Consumer lending situation at VietinBank Nam Dinh Branch 35 Table 3.6b: Consumer lending situation at Nam Dinh Industrial and Commercial Bank Branch 37 Table 3.7: Structure of consumer loan outstanding by the purpose of capital 38 Table 3.8 : Structure of consumer loan outstanding by collaterals 40 Table 3.9: Structure of outstanding credit outstanding by term 41 Table 3.10: Interest income from consumer lending activities at Nam Dinh Industrial and Commercial Bank 42 LIST OF FIGURES Figure 1: Gender of customers Figure 2: Age of customers Figure 3: Marriage of customers Figure 4: Monthly income of customers Figure 5: Customers use about consumer loan products of Vietinbank Figure 6: Customers know consumer loan products of Vietinbank through service Figure 7: Feeling of customers when using consumer loan products of Vietinbank Figure 8: Customers evaluate service quality of Vietinbank Figure 9: Customers recommend Vietinbank service to yoủ relatives and friends Figure 10: Occupation of customers INTRODUCTION The bank is one of the most important financial institutions of the economy The bank is a lender mainly to households (individuals, households) and with most local government agencies (cities, provinces, ) One of the activities that clearly shows the existence and development of banks is credit activities In a fiercely competitive environment, improving and expanding the quality of activities (especially credit activities) is the direction and motto of the banks Ensuring safety and improving the quality of loan operation efficiency is an objective requirement, a vital condition for commercial banks to survive and develop in a healthy way In the context of strong economic integration, increasingly fierce competition requires the bank to constantly innovate and perfect and diversify products and services towards potential new customers such as so it can survive and develop Consumer lending is a credit market segment that provides an important source of income and facilitates commercial banks to sell their full package of products and services to customers, so the bank promotes competition and expansion In the context of the current integration economy, people's income is increasingly improved, the living standard is improved, making the consumption trend of the people increase faster than the income, making the demand for consumer loans of people High population, this stimulates consumer lending development Moreover, the bank recognizes that consumption is the final stage of production, and the development of consumer products is the way to balance supply and demand in the economy In order to support production and business units to consume goods and services, the Government often stimulates demand through consumer lending policies CHAPTER 1: OVERVIEW OF VIETINBANK AND THE INTERNSHIP 1.1 Company: Vietnam Joint Stock Commercial Bank for Industry and Trade was established on March 26, 1988, on the basis of splitting from the State Bank of Vietnam according to Decree No 53 of the Council of Ministers .Vietinbank has a strong network of 148 branches, 07 member companies, 03 non-business units, more than 1,000 transaction offices in 63 provinces / cities nationwide The headquarter is at 108 Tran Hung Dao, Hoan Kiem District, Hanoi City, Vietnam The principal activities of Vietnam Joint Stock Commercial Bank for Industry and Trade are to conduct banking transactions including mobilizing and receiving short, medium and long-term deposits from organizations and individuals; short, medium and long-term loans to organizations and individuals based on the nature and ability of the Bank's capital resources; payments between organizations and individuals; performing foreign currency transactions, international trade finance services, discounting of commercial papers, bonds, other valuable papers and other banking services permitted by the State Bank of Vietnam 1.2 Host Firm: Vietnam Joint Stock Commercial Bank for Industry and Trade , Nam Dinh branch is located at 119 Quang Trung, Nam Dinh City is the cultural and socio- economic center of the province, where many types of economic concentration are concentrated, so customers diversity and abundance On the other hand, Nam Dinh Joint Stock Commercial Bank is one of the units with a unified leadership team, effectively implementing the functions and duties of the superior bank entrusted with the goal: "Economic development, security capital adequacy, respect the law, reasonable profit ” Vietinbank Nam Dinh branch is located at 119 Quang Trung, Nam Dinh City is the cultural and socio-economic center of the province, where many types of economic concentration are concentrated, so customers are dealing with the Bank very diverse and diverse On the other hand, Nam Dinh Industrial and Commercial Bank is one of the units with a unified leadership team, effectively implementing the functions and tasks of the superior bank entrusted with the goal: "Economic development development, capital safety, respect the law, reasonable profits ”Following the motto" Continue to innovate, improve accountability, respect customers " That has created conditions for Industrial and Commercial Bank Nam Dinh expands business volume Vietinbank Nam Dinh with the motto "Trust - Efficiency - Modern" has always sought measures to develop business operations safely and effectively Over the years, Vietinbank Nam Dinh has faced many difficulties but with the spirit of continuous efforts, striving to overcome challenges and now growing rapidly with various and diversified business contents effective Currently, Vietinbank Nam Dinh has established a business network including Head Office, 10 Transaction Offices with over 10,000 customers currently having transaction relations At the same time, reforming banking operations in the areas of money, credit, payment, construction, new working styles, training of staff with professional skills and investment in building payment networks electronics in the whole system, helping to quickly transfer capital in the economy, meeting the increasing demands of customers stronger, the population growth puts increasing pressure on housing issues Most customers are married and have stable income, but are unable to so, and want to improve their quality of life 4.2 SWOT analysis S W Strengths Weakness + Diverse consumer loan products + + Large scale, strong financial potential development but not yet applied to Modern technology and + Customers of consumer lending services the system at Vietinbank - Nam Dinh branch are very + The number of marketing activities diverse based on their age profiles and their to support and promote the product is income is quite wide limited + staffs of the company are friendly, + Need to expand more branches in sociable and always support and assist the countryside customers all times + Potential of developing and marketing consumer loan products to domestic and foreign markets O T Opportunities + The development Threats of information + There are more strong competitors technology systems, marketing and product + The needs of customers use more sales can be done via the internet and more tightly +Facilitate the expansion of cooperation and + The emergence of more and more business relations with foreign banks + banks brings consumer problems The nationwide information system is developing, giving banks more tools to develop products and promote brands 4.3 KPI Specific financial targets: 50 • Deposit growth: 12% • Credit growth: 12% In order to improve the competitiveness and quality of its products and services, the branch set out a development strategy: - Reviewing and continuing to implement business projects that have been implemented in 2019 related to the Corporate Banking and Science and Technology Division - Speeding up the deployment of a new distribution channel management model in parallel with the goal of reasonably implementing business costs - Continue to improve executive management activities 51 CHAPTER : SOLUTION TO IMPROVE THE QUALITY OF CONSUMER LOANS AT VIETINBANK - NAM DINH BRANCH 5.1 Solutions to improve the quality of consumer loans at Vietinbank 5.1.1 Diversifying consumer lending products Diversify the product portfolio, improve the competitiveness of consumer products Today, the needs of the people are more and more diverse, so in order to perfectly meet the needs of the people and compete in the market, banks need to research and apply translated products New crop, in accordance with the specific circumstances of Vietnam Thereby contributing to improving the image of Vietinbank Nam Dinh branch in the eyes of the subjects in the economy, attracting more customers to use the bank's products and services Diversifying the product portfolio is both increasing competition, and also a risk dispersion tool for banks In addition to developing new products, the bank also needs to focus on old products in the direction of building a reasonable, convenient, easyto-understand lending process, a clear lending procedure, and creating the best conditions for Borrowing customers at the bank Existing products of the bank also need to research, explore the market, the needs of customers as well as products of competitors to add more outstanding utilities 5.1.2 Improve facilities, facilities and equipment Most of the services of banks are highly uniform, so the important issue is that banks that know how to make a difference in services, benefit customers more will have advantages compete in the market Technology is the foundation that helps banks make that difference It is an effective competitive tool in the current period Currently, Vietinbank Nam Dinh branch has also deployed and applied core banking system, developed ATM system But to develop consumer lending activities, it is necessary to invest in this field more 5.1.3 Improve the quality of human resources Firstly, improve the quality of recruiting personnel: Recruitment information should be publicly and widely disclosed in the media, the official 52 website of the bank in order to attract good candidates Best The recruitment must have standards suitable to the professional qualifications, personalities and working experience of each position at Nam Dinh Industrial and Commercial Bank For example, for the position of personal finance consultant, the most suitable personnel are experienced credit officers and good sales and communication skills The recruitment process should be conducted closely, rigorously, with specific action plans closely linked with the development of good remuneration policies to attract good candidates with good qualifications and experience in employment at the Industrial and Commercial Bank of Nam Dinh branch Secondly, strengthening training and re-training: Ensuring that all employees are trained in a unified, focused program, avoiding "hands-on" training, the content of training required The combination of theory and practice, work experience, skills to ensure that after training employees can quickly catch up with the job Need to develop a practical training program, with a lot of knowledge about communication, customer service style with the participation of reputable experts Regularly check the skills and skills of the employees Thereby there are policies for retraining accordingly Employees should periodically attend both professional and practical courses to improve their qualifications Regular training sessions for staff to disseminate new policies of the bank itself and relevant agencies to be able to grasp the content and properly implement 5.1.4 Promote take care of customers The bank needs to develop a customer care strategy suitable for each type of customers, depending on each location, psychology and culture of customers The segmentation of customers creates favorable conditions for the bank to have an appropriate customer care policy Each type of customer: VIP customers, traditional customers, ordinary customers need to have their own accordingly 53 policies 5.1.5 Expand marketing activities in the bank Firstly, improve the advertising quality of traditional channels, and develop new advertising channels At present, Vietinbank Nam Dinh branch mainly advertises its products and images through newspapers, specialized magazines, the bank's official website, has advertisements on television but only stopped at level of general image promotion for banks but not introduced, going into specific consumer products Especially, the habit of reading newspapers of Vietnamese people still accounts for a small proportion, the magazines in the industry are very few readers, mainly people in the industry, economists and investors And consumer loans are mainly individuals and households, this form of advertising is not effective Nam Dinh Industrial and Commercial Bank needs to choose a more popular and popular advertising channel Specifically: Advertising on television and radio: This is a popular channel Although the cost of advertising on television is huge, with an image, the message is broadcast, there are hundreds, millions of viewers Thereby improving customers' understanding of consumer lending products of Nam Dinh Industrial and Commercial Bank Advertising via email: Today the internet is a widely used information channel and growing day in Vietnam Banks can email or carry advertisements on newspaper pages that people often visit Increasing advertising by cooperating with external units: taxi companies, buses so that customers who not need to know the bank's consumer products and especially when they need to borrow money they will come Enhance customers' understanding of consumer products of the bank by sending letters or text messages announcing new products, changes in current products equipped with TV screens at transaction counters to broadcast images of consumer products Secondly, Enhance the brand image of banks through participating in community and social activities Nam Dinh Industrial and Commercial Bank needs to actively participate in gratitude activities, charitable work, scholarships 54 for poor students to overcome difficulties These actions will create a good image of the Industrial and Commercial Bank Nam Dinh is a socially recognized society that must be considered as a bank's responsibility 5.2 The difficulties encountered _Communication skills with customers are not confident and fluently _ Searching and researching information of the company is still slow _ Skill to get information from customers is not smart _ Due to the spread of Corona, internship plan had to change a little bit 5.3 Internship gained _ Read and understand lot of information about the bank I internship ( Vietinbank – Nam Dinh branch ) _ I have searched and collected information related to my reports, forms, characteristics of consumer loans, customer information _ Analyze and collect information about customers' needs for consumer loans _ Survey customers by giving them a coupon to fill out their feelings, meeting customers at the same place to advise them on consumer loan products _ Enter customer information and data into the company's computers 5.4 Recommendation 5.4.1 Recommendations to the state bank The State Bank should quickly issue specific decisions related to the consumer lending sector as a guide for consumer lending activities of development commercial banks Regulations on credit balance, loan security, handling and sale of foreclosed assets should be studied and promulgated to suit the reality of the whole industry The State Bank should continue to implement flexible monetary policies, in line with market fluctuations through effective use of monetary policy instruments to curb inflation and stabilize economic activities macroeconomic, economic growth The State Bank should continue to improve the credit information center (CIC) with high technology, regularly updating customer information so that 55 when an individual or a business has problems with any credit institution credit institutions are acceptable Termination and handling of cases of unfair competition, concealing information between credit institutions Currently, the data is not updated, the reliability is low, which makes many commercial banks and guest credit organizations less use the documents provided by CIC Therefore, the State Bank should focus on improving the effectiveness of the credit information center, from updating data to providing accurate data to save appraisal costs for commercial banks trade, reduce risks in lending activities in general and consumer lending activities in particular, ensure two-way information exchange between Credit Information Center and commercial banks The State Bank also needs to strengthen the inspection and control of commercial banks and credit institutions in credit lending activities in order to detect and correct errors and prevent financial risks early, etc create healthy competition in credit lending activities of commercial banks 5.4.2 Recommend to relevant levels In order for the consumer loan business to be effective, it is necessary to have the support from local functional agencies such as the People's Committees of wards and communes, the management agencies where customers have loans This agency must cooperate and provide accurate and accurate information before a bank can make an appropriate credit decision The authorities of the state also need to reorganize their activities in relevant areas such as the certification of property ownership as credit guarantee or the process of handling these assets to recover debts These agencies should limit negative errors that are detrimental to the bank In fact, there are still some bureaucratic officials who deliberately obstruct difficulties when customers have to certify documents to carry out loan procedures at the bank It is necessary to have a coordinated coordination between agencies in the handling of mortgaged assets, particularly between courts and enforcement agencies, so that the handling of mortgage collateral can be conducted smoothly The state should 56 abolish unnecessary and cumbersome procedures to avoid the fact that many regulations are too strict and unnecessary, while some are too loose to create an opening for some individuals to take advantage of 5.4.3 Recommend to Vietnam Bank for Industry and Trade Improve the maximum loan level and extend the loan term with officials and employees In fact, the current maximum lending level is small and not suitable because: It will reduce the competitiveness of their banks with rival banks when they have a larger maximum loan level of their own With small loans, it is difficult to serve the large consumer demands such as buying houses, land, cars Reduce unnecessary paperwork in the loan application Through the implementation of consumer lending, there are too many formal documents that are too formal and unnecessary It is allowed to deploy installment loans for officials and employees and low-income households to buy houses and land for a long time and will always use such assets as collateral Formulating, completing and improving credit policies in consumer lending regarding conditions, processes, procedures, etc The Bank should promptly issue guidelines to promote consumer lending both in terms of borrowers and loan forms In order to diversify consumer lending products, in the coming years, in addition to strengthening existing products, banks need to be proactive and creative in providing some new types of consumer loans to attract customers, increase competitiveness with other banks In addition, Vietinbank – Nam Dinh branch needs to have specific policy strategies to guide the branches in the system to build business strategies and policies suitable to the specific conditions of each operating area Specifically, building financial mechanisms in marketing and preferential policies for each type of customers The unification of business strategies and customer policies will help branch banks be more proactive in applying to their areas with high efficiency, creating competitive advantages with other banks 57 Vietinbank- Nam Dinh branch needs to improve the system of individual consumer ratings In recent years, individual lending activities of banks have expanded, while information on private loans (sources of debt repayment, purposes of loan use, etc.) is often more difficult to grasp With businesses, the credit rating of natural persons becomes more urgent CONCLUSION We can see that in any country, including countries with developed economies and countries with developing economies, the mission and activities of the bank always play a role Particularly important in the country's economic growth and development It is considered to be the most important financial intermediary in the economy, and has far-reaching implications for all other industries, so reforming and regularly improving the efficiency of banks is a task not only For the Industrial and Commercial Banking system of Vietnam, it is also the duty of all other commercial banks Currently, most of the bank's 58 revenue originates from credit activities Although bank credit activity is a highrisk activity, but in the face of the fact that credit plays an important role in banking activities, the interest to develop credit is also a necessary So in addition to improving the quality of old products and services, the bank should also expand the development of new products and services, one of which is consumer lending Because it is a new and potential market, it requires thorough research in many different aspects In general, in recent years, consumer loans have grown steadily, at a good rate, credit quality is very good with almost no risks But total consumer lending still accounts for a modest proportion of total bank loans However, that is only the general situation of most banks today With the combination of my theory and practice I hope that the article will be effective in promoting the development of further consumer lending activities of the branch Due to limitations in many aspects: study time, references and actual contact, the article cannot avoid mistakes I would like to ask the teachers for their comments and additional knowledge to improve the article Thank you sincerely ! LIST OF REFERENCES Commercial Banking Management Curriculum (Assoc Prof Mrs Nguyen Thi Mui, Mr Tran Canh Toan - Publisher 2011 - Financial Publishing House) Financial Analysis syllabus (Assoc Prof Dr Nguyen Trong Co, Assoc Prof Mrs Nguyen Thi Tha - published in 2017 - Financial Publishing House) 59 Credit Administration Curriculum HVTC Commercial Bank (Assoc Prof Dr Dinh Xuan Hang, Master Nguyen Van Loc - published in 2012 Financial Publishing House) Annual report and financial statement of Industrial and Commercial Bank of Nam Dinh branch in 2017-2019 60 ... consumer loans in terms of outstanding loans Secondly, Vietinbank Nam Dinh branch is one of the best retail banks in Vietnam, the Industrial and Commercial Bank of Nam Dinh branch has grown and. .. improve the quality of consumer loans .15 2.5.2 Factors affecting the quality of consumer loans .16 CHAPTER : SITUATION ON THE QUALITY OF CONSUMER LOANS AT VIETINBANK – NAM DINH BRANCH... banking industry, the outstanding loans for general consumer loans and outstanding loans for the purpose of use of Nam Dinh Industrial and Commercial Bank grew slowly Real estate loans in 2019 only