CHAPTER 2.CURRENT SITUATION OF CREDIT RISK MANAGEMENT AT
2.1 Overview of Vietinbank - Ba Dinh branch
2.1.1 General information of Vietinbank - Ba Dinh branch
Bank Vietinbank Ba Dinh branch was established in 2008. The process of construction, development and innovation of Vietinbank Ba Dinh branch is associated with the renovation stages of the industry. Along with the whole system, Vietinbank Ba Dinh branch has expanded its activities in many fields, diversified and expanded business activities to create a fast, strong and comprehensive development step. continue to affirm the leading and key role of a large commercial bank in the area.
Functions of Vietinbank Ba Dinh branch:
Being the receiving point, organizing the implementation of products / services, managing products / services at the branch (product management).
Directly sell retail and non-credit retail credit products / services (capital mobilization, payment, currency exchange, card, E-banking, treasury, financial advice ...); is the focal point for proposing marketing programs, finding new customers, consulting, customer care ...
Complete the application procedures and retail credit procedures according to the authority and regulations and professional processes of Vietinbank.
Implementing the after-sales policy: analyzing and evaluating customers and proposing measures to take care of, maintain and increase the use of customers' products / services (customer management).
Duties of Vietinbank Ba Dinh branch
Selling banking products / services and Retail banking services (Retail credit, other personal and non-credit deposits).
Customer management: update customer information, evaluate customers, take care of customers and implement and propose measures to attract, maintain relationships and develop customers
Product / service management: a focal point for deploying and managing major retail banking products and services at branches, organizing deployment, reporting, proposals.
2.1.2 Organization structure of Vietinbank - Ba Dinh branch
As of December 31, 2018, Vietinbank Ba Dinh branch has 8 functional rooms with 4 transaction offices.
BOARD OF DIRECTORS
CUSTOMER MANAGEMENT
DIVISION
OPERATION DIVISION
RISK MANAGEMENT
DIVISION
INTERNAL MANAGEMENT
DIVISION
DIRECT DIVISION
Organization model of Vietinbank - Ba Dinh branch
Board of directors
Customer Management Division - Individual customer office - Business customer office
Operation Division
- Credit Administration office - Customer Transaction office
Risk Management Division - Risk management office
Internal Management Division - Financial Accounting office - Integrated Planning office
- Organization and Administration office
Direct Division
2.1.3 Key financial performances of Vietinbank - Ba Dinh branch
Banks are always concerned about how to achieve the highest profitability with an acceptable level of risk, while still fulfilling the bank's business plan. This is also the primary goal of Vietinbank Ba Dinh during the business process in the banking sector. The following table shows more clearly the results achieved by Vietinbank Ba Dinh in the last 3 years:
Business results of Vietinbank Ba Dinh in the period of 2016-2018
TT Index 2016 2017 2018 Growth rate (%)
2017/16 2018/17
I Indexs of scale
1 Total assets (VND billion) 6.851 8.440 9.319 23,2% 10,4%
2
Total outstanding loans at the end
of the period (VND billion) 4.953 5.207 6.146 5,1% 18,0%
3
Capital mobilization at the end of
the period (VND billion) 6.159 7.648 8.759 24,1% 14,5%
II Effective Indexs
1 Profit before tax (VND billion) 183,45 196,00 237,7 0,7% 21.3%
2 Net service revenue (VND billion) 35,7 28,9 33,4 -8% 15,5%
(Source: Integrated Planning office of Vietinbank Ba Dinh)
The above table shows the pre-tax profit of Vietinbank Ba Dinh with growth and stability over 3 years. In 2017, this index increased by 0.7% compared to 2016. In 2018, it increased by 21.3% compared to 2017. The average growth rate of 2016-2018 reached 14% / year. Operation scale has grown quite well, quality guaranteed. Most of the scale targets such as total assets, capital, and outstanding loans achieved good growth rates. In 2016, Vietinbank's total assets reached 6,851 billion VND and by 2018 this value reached 9,319 Billion VND. In addition to the growth in assets, the financial efficiency shown by the income from credit activities increased continuously over the years is also a part of the resources for Vietinbank to strengthen the financial capacity of its branches. This is also a part of resources for Vietinbank to reinvest in retail activities of its own branches.
With all production and business activities, the target of scale and quality of customers is the first criterion to show the development and success in business. Vietinbank Ba Dinh always focuses on customer development and care. Customer development in the area of Vietinbank Ba Dinh has achieved some remarkable results in the period 2016-2018. The number of customers over the years is shown in the following table:
Statistics of customers of Vietinbank Ba Dinh branch in the period of 2016-2018 (Unit: Person, %)
Indicators 2016 2017 2018
Growth rate 2017/16
Growth rate 2018/17
Average growth
rate Total customers 88.075 120.861 132.218 37,23% 9,40% 23,31%
Total individual
customers 86.296 118.734 129.672 37,59% 9,21% 23,40%
Detail
Important customer 939 1.290 1.386 37,38% 7,44% 22,41%
Close customer 1.994 2.251 2.379 12,89% 5,69% 9,29%
Universal customers 83.363 115.193 125.907 38,18% 9,30% 23,74%
Proportion of individual
customers/total customers 97,98% 98,24% 98,07%
(Source: Integrated Planning office of Vietinbank Ba Dinh) From the results table, the number of customers of Vietinbank Ba Dinh has increased steadily over the years in the period of 2016-2018. In 2016, the total number of individual customers reached 86,296 people, accounting for 97.98% of the total number of customers of the branch. In 2017, the size of individual customers increased 37.59% to 118,734 people. In 2018, the number of individual customers reached the absolute value of 129,672 people, an increase of 9.21% compared to 2017.
2.2 Credit operation of Vietinbank - Ba Dinh branch 2.2.1 Credit products of Vietinbank - Ba Dinh branch
Consumer loans
Vietinbank provides the credit product “consumer loans” for individual and household customer having stable income and financial capability to repay the loans for borrowing needs to serve their lives, such as purchasing consumer goods and family items. Vietinbank provides the credit product “consumer loans” for individual and household customers having stable income and financial capability to repay the loans for borrowing needs to serve their lives, such as purchasing consumer goods and family items.
Main feature - Currency: VND
- Loan term: maximum 60 months
- Loan amount: maximum 80% of the cost
- Interest rate: fixed, floating; overdue interest rate is 150% of due interest rate - Loan security: with or without assets as collateral or third-party guarantor - Disbursements: full disbursement or in partial disbursements (multiple disbursements)
- Repayment of principle and interest: single or multiple principle payment, monthly repayment on interest or regular repayment as negotiated.
Delivery channels
Vietinbank branches/transaction offices or E-banking.
Technology applied
Vietinbank uses automated system (IPCAS) to track customer information, accounts, amounts of interest payment, etc. with the highest security and accuracy.
Loans for new construction, repair, renovation, upgrading, buying residential houses
Vietinbank supports costs for construction, repair, renovation, upgrading, buying houses for Vietnamese household or individual customers who have the legal land use rights, whose houses not prohibited from renovation, re-construction in accordance with the planning and building permits; Vietnamese individuals living in other countries are permitted to purchase land as stipulated in Decree No.
81/2001/ND-CP dated 5 November, 2001.
Main feature - Currency: VND
- Maximum loan term: 5 years
- Maximum loan amount: up to 85% of total capital requirements according to estimates or of the total contract value stated in the purchase or sale contracts of customers
- Lending rates: fixed, floating. Overdue interest rate not exceeding 150% term loan interest rate
- Loan security: with or without assets as collateral or third-party guarantor - Disbursements: full disbursement or in partial disbursements (multiple disbursements)
- Repayment of principle and interest: single or multiple principle payment, monthly repayment on interest or regular repayment as negotiated.
Delivery channel
Direct mail, branches/transaction offices, ATM’s, Mobile Banking, Internet Banking
Technology applied
Vietinbank uses automated system (IPCAS) to track customer information, accounts, signatures, photos, amounts of interest payment, etc. with the highest security and accuracy.
Loans against valuable papers
“Loans against valuable papers” is a product of Vietinbank credit for individual customers who legally own the pledged assets, having the needs for loans serving their lives.
Main features
Papers that can be pledged: must be papers that are legally issued and transferable, including saving books, bill of exchange issued by commercial banks, treasury bills, treasury bonds, public debt; shares, bonds, fund certificates issued by enterprises.
- Currency: VND
- Term: not exceeding the remaining term of the valuable papers. With listed stocks, bonds and fund certificates: not exceeding 06 months.
- Loan amount: up to 80% of the total costs in the contract
- Interest rate: fixed, floating; overdue interest rate is 150% of due interest rate.
- Maximum loan amount shall not exceed the original price plus interest minus interest paid during loan period; up to 50% of the market price at the time of lending as for listed securities; up to 50% of the IPO shares by State-owned companies, joint- stocks companies issuing shares to increase capital and does not exceed 75% of the value of pledged assets; being the difference between the average bid price and preferential price for employees to buy preferred shares by the state-owned issuing company.
- Interest rate: fixed, floating;
- Loan security: by valuable papers, the rate prescribed by the Governor of the State Bank in each period.
- Repayment of principal and interest: once and receive valuable papers back.
- During the loan period, if the price of collateral stock reduced to 60% of the price at the time of collateral, then customers must provide additional assets or guarantee within 2 working days or Vietinbank shall collect the loan before the due date (specified in the contract).
Delivery channel
Vietinbank branches/transaction offices or E-banking.
Technology applied
Vietinbank uses automated system (IPCAS) to track customer information, accounts, amounts of interest payment, etc. with the highest security and accuracy.
Installment loan
Vietinbank provides credit product "installment loan" for all customers having needs and meeting conditions to repay the loan over the term.
Condition of use
- To use credit product "installment loan" of Vietinbank, customer needs to have regular income and pledged assets for the loan.
- Tenor must conform to business cycle and the ability to repay over the agreed upon installment payment.
Delivery channels
Vietinbank branches/transaction offices or E-banking.
Technology applied
Vietinbank uses automated system (IPCAS) to track customer information, accounts, amounts of interest payment, etc. with the highest security and accuracy.
Loans for purchasing vehicles
Vietinbank introduces the credit product of “Loans for buying vehicles” to the customers who are individuals or households having the needs of loans for buying cars, motorbikes or other means of transport.
Main features - Currency: VND
- Term: Short, medium, long term
- Loan amount: maximum 85% of the total cost.
- Interest: fixed, floating
- Loan security: with or without assets as collateral or third-party guarantor - Disbursements: full disbursement
- Repayment of principle and interest: single or multiple principle payment, monthly repayment on interest or regular repayment as negotiated.
Delivery channel
Vietinbank branches/transaction offices or E-banking.
Technology applied
Vietinbank uses automated system (IPCAS) to track customer information, accounts, amounts of interest payment, etc. with the highest security and accuracy.
Loans for overseas studying
Individual and household customers who are relatives of students studying overseas can use the credit product “Loans for overseas studying” to cover costs of living expenses and tuition fees of their relatives overseas.
Main features
- Currency: VND, foreign currencies - Term: Short, medium, long term
- Loan amount: negotiable, up to 85% of total cost
- Interest: fixed, floating
- Loan guarantee: with/without the guarantee of assets; guarantee by the third party
- Disbursements: full disbursement or in partial disbursements (multiple disbursements)
- Repayment of principle and interest: single or multiple principle payment, monthly repayment on interest or regular repayment as negotiated.
Delivery channels
Vietinbank branches/transaction offices or E-banking.
Technology applied
Vietinbank uses automated system (IPCAS) to track customer information, accounts, amounts of interest payment, etc. with the highest security and accuracy.
Short term loans for production, business operation
Vietinbank provides loans for customers including individuals and households to cover the shortage of working capital for production and business.
Main features - Currency: VNĐ
- Type of loan: Short-term
- Loan amount: upon negotiation. Customers must have equity participation of at least 10% of the total capital needs.
- Lending rates: fixed, floating
- Loan security: with or without assets as collateral and third-party guarantor - Disbursements: full disbursement or in partial disbursements (multiple disbursements)
- Repayment of principle and interest: single or multiple principle payment, monthly repayment on interest or regular repayment as negotiated.
Delivery channel
Direct mail, branches/transaction offices, ATM’s, Mobile Banking, Internet Banking
Technology applied
Vietinbank uses automated system (IPCAS) to track customer information, accounts, signatures, photos, amounts of interest payment, etc. with the highest security and accuracy.
Loans for crop season intervals
This is Vietinbank credit product for household or individual customers in the intensive cultivation of rice and having rice-growing areas intercropping with other short-term plants of the next season interval, who are in need of loans for production.
Main features - Currency: VNĐ
- Term: Short term, not exceeding the term of the next crop.
- Loan amount: not exceeding the actual balance of the previous loan contract.
Customers need to have equity participation of at least 10% of the total capital requirements.
- Interest: interest rate applicable at the time of loan
- Loan security: with or without assets as collateral or third-party guarantor - Disbursements: full disbursement or multiple disbursements
Repayment of principle and interest: single or multiple principle payment, monthly repayment on interest or regular repayment as negotiated.
Delivery channel
Direct mail, branches/transaction offices, ATM’s, Mobile Banking, Internet Banking
Technology applied
Vietinbank uses automated system (IPCAS) to track customer information, accounts, signatures, photos, amounts of interest payment, etc. with the highest security.
Fixed assets loan
Vietinbank provides individual and household customers with “fixed assets loan” for buying fixed assets such as factories, heavy equipment and industrial machinery for project purposes.
Main features
- Currency: VND, foreign currencies - Term: medium to long term
- Loan amount: upon negotiation, customers must have equity participation of at least 15% of the total capital needs.
- Interest rate: fixed, floating
- Loan security: with or without assets as collateral or third-party guarantor - Disbursements: full disbursement or in partial disbursements (multiple disbursements)
- Repayment of principle and interest: single or multiple principle payment, monthly repayment on interest or regular repayment as negotiated.
Delivery channels
Branches/transaction offices, borrowing groups, enterprises, credit institutions or Internet Banking
Technology applied
Vietinbank uses automated system (IPCAS) to track customer information, accounts, amounts of interest payment, etc. with the highest security and accuracy.
Short-term working capital loan
Vietinbank provides short-term working capital loan for individual customers that need short-term working capital loans regularly.
Main features - Currency: VND
- Term: short term, not exceeding the duration of the next financing
- Loan amount: not exceeding loan amount of the previous credit contract, customers must have equity participation of at least 10% of the total capital needs.
- Interest rate: rates applicable at the time of loan
- Loan security: with or without assets as collateral or third-party guarantor - Disbursements: full disbursement or in partial disbursements (multiple disbursements)
- Repayment of principle and interest: single or multiple principle payment, monthly repayment on interest or regular repayment as negotiated.
Delivery channels
Branches/transaction offices, borrowing groups, enterprises, credit institutions or Internet Banking
Technology applied
Vietinbank uses automated system (IPCAS) to track customer information, accounts, amounts of interest payment, etc. with the highest security and accuracy.
Syndicated loan
Individual or household customers with borrowing needs for business operations much larger than standard limits allowed by Vietinbank can apply to use
“syndicated loan” of Vietinbank.
Main features
- Currency: VND, foreign currencies - Maximum loan term: 12 months
- Loan amount: customers must have equity participation of at least 10% of the total short term capital needs and of 20% of total medium to long term capital needs.
- Interest: fixed, floating
- Loan security: with or without assets as collateral, or by 3rd party guarantor - Lending method: single or multiple lending as requested by customers
- Repayment of principle and interest: single or multiple principle payment, monthly repayment on interest or regular repayment as negotiated.
Delivery channel
Direct mail, branches/transaction offices, ATM’s, Mobile Banking, Internet Banking
Technology applied
Vietinbank uses automated system (IPCAS) to track customer information, accounts, signatures, photos, amounts of interest payment, etc. with the highest security.
Loans to projects as directed by the Government
For individual or household customers in need of loans and meeting loan conditions for production and business of the projects funded by the Government, Vietinbank has credit product “Loans to projects as directed by the Government”
available.
Main features - Currency: VND
- Term: short, medium and long term
- Loan amount: specified in Government’s instructions - Interest rate: fixed, floating
- Loan security: with or without assets as collateral or third-party guarantor - Disbursements: full disbursement or in partial disbursements (multiple disbursements)
- Repayment of principle and interest: single or multiple principle payment, monthly repayment on interest or regular repayment as negotiated.
Delivery channels
Vietinbank branches/transaction offices or E-banking.
Technology applied
Vietinbank uses automated system (IPCAS) to track customer information, accounts, amounts of interest payment, etc. with the highest security and accuracy.
Loan for issuing credit card
Vietinbank provides product "Loan for issuing credit card" for individual customers with a maximum loan amount up to VND 100 million for the gold cardholders.
Main features - Currency: VND
- Term: maximum 12 months
- Loan limit: 80% of the amount spent on cards; Maximum VND 100 million for gold cards, VND 50 million for standard cards, VND 30 million for domestic debit cards
- Interest rate: fix, floating
- Loan security: cash deposit, saving books or valuable papers issued by Vietinbank or loan without security depending on type of customers.
- Disbursements: full disbursement or multiple disbursements depending on customer needs.
- Repayment of principle and interest: Minimum monthly payment at 20% of the amount spent according to monthly card transactions. The amount spent on the card shall not be deducted from the amount deposited as loan security.
- Repayment before term: interest calculated from the date of borrowing to the date of repayment. Total fees paid before the term is stated in the contractual agreement.
- Overdue penalty: overdue interest rate equals to 150% of due interest Delivery channels
Vietinbank branches/transaction offices or E-banking.
Technology applied
Vietinbank uses automated system (IPCAS) to track customer information, accounts, amounts of interest payment, etc. with the highest security and accuracy
Loan to repay foreign debts before due date
This is Vietinbank credit product for individual customers who are Vietnamese citizens residing in foreign countries for over 12 months or foreign citizens residing in Vietnam for over 12 months having the need to pay foreign debts before due date.
Main features
- Currency: VND, foreign currencies - Term: medium, long term.
- Loan limit: Customer equity participation of at least 20% of the total demand for loans.
- Interest rate: fix, floating
- Loan security: with or without assets as collateral or third-party guarantor - Disbursements: full disbursement or multiple disbursement
- Repayment of principle and interest: single or multiple principle payment, monthly repayment on interest or regular repayment as negotiated.
- Repayment before term: interest calculated from the date of borrowing to the date of repayment. Total fees paid before the term is stated in the contractual agreement.
Delivery channels
Vietinbank branches/transaction offices or E-banking.
Technology applied
Vietinbank uses automated system (IPCAS) to track customer information, accounts, amounts of interest payment, etc. with the highest security and accuracy.
Flexi loan over credit limit
Vietinbank provides individual and household customers with “flexi loan over credit limit” to cover the costs of production and business operation which likely to increase beyond the level originally expected.
Main features
- Currency: VND, foreign currencies - Term: short term, medium and long term
- Flexi loan amount: as negotiated, customers must have equity participation of at least 10% of the total short term capital needs and of 20% of total medium to long term capital needs.
- Interest rate: fixed, floating
- Fees: fees are scheduled whether enterprise uses over credit limit loan or not - Loan security: with or without assets as collateral or third-party guarantor - Disbursements: full disbursement or in partial disbursements (multiple disbursements)
- Repayment of principle and interest: single or multiple principle payment, monthly repayment on interest or regular repayment as negotiated.
- Repayment before term: interest calculated from the date of borrowing to the date of repayment. Total fees paid before the term is stated in the contractual agreement.