The operation of lending to small and medium enterprises in VietinBank Sam Som Branch

PROFESSIONAL BACHELOR OF BAKING AND FINANCE
COURSE 2012-2015
VIETNAM JOINT STOCK COMMERCIAL BANK FOR INDUSTRY AND TRADE
Sam Son Branch
INTERNSHIP REPORT
“The operation of lending to small and medium enterprises in
VietinBank Sam Som Branch”
Nam of student University Tutor
NGUYEN VAN BINH (08/12/1994) Mr. Nguyen Hoang
Mr. La Tien Dung
Topic: “The operation of lending to small and medium enterprises in
VietinBank Sam Som Branch”
Acknowledgements
Summary
PART I: LENDING OPERATION TO SMALL AND MEDIUM ENTERPRISES OF BANKS
(INTRODUCTION TO THE HOST BRANCH)
I. Overview of VietinBank
II. Overview of Sam Son Branch of VietinBank
1. History
2. Organizational Structure
3. Main activities
II. Lending operation to small and medium enterprises in Vietnam
1. Advantages
2. Challenges
PART II: PROJECT IMPLEMENTATION (WORK PLACEMENT TARGETS)
I. Overview of the individual project
1. Personal objectives
2. Objectives of the project
3. Estimated budget
4. Actual expenses
5. Project plan

6. Methodology
II. Data analysis
A.Reading loan records of customers
B. Data from bank
1. The performance of the bank
2. Overview of lending operation to small and medium enterprises
3. Total loan disbursement
4. Total loan collection
5. Gross loans
6. Overdue loan status
PART III: ADVANTAGES, CHALLENGES, AND POSSIBLE SOLUTIONS (EVALUATION
OF LENDING OPERATION)
I. Advantages
II. Challenges
III. Solutions to improve credit quality for small and medium enterprises
1. Improving capital mobilization
2. Expanding credit service for small and medium enterprises
a. Diversifying lending forms and entities
b. Developing strategies to meet customer demand
II. Solutions to improve the quality of credit services to small and medium enterprises
1. Improving the quality of project appraisal
2. Developing employee skills and capabilities
3. Enhancing supervision on credit accounts
4. Forming project appraisal group
PART IV: CONCLUSION
REFERENCES
ACKNOWLEDGEMENTS
On the completion of this project, I wish to express my deepest gratitude to my
supervisor, Mr. Nguyen Hoang and Mr. Dung who gave me benefit of his wisdom and his expert
knowledge as well as his constant encouragement in my work placement period. Without his

critical comments and valuable suggestions, this project could not have been completed.
I take this opportunity to express my sincere thank to all lecturers, the management and
officers at VietinBank Sam Son Branch for their useful lectures and assistance during my study
and work placement.
Finally, let my gratitude go to my family and friends, whose encouragement and
assistance are of extreme importance during the course of my writing.
Summary
Vietnam officially became a member of the World Trade Organization on 11 July 2006.
With more open market policies, this major event created a lot of new advantages for the
development of Vietnam national economy as well as the banking sector in particular.
In banking operation, lending activity is one of the businesses which bring not only huge
revenues but also great risks to the banks. Therefore improving the quality and ensuring safety of
lending operation will reduce risks in business. Then finding suitable solutions is an important
goal for the executive board.
Improving the quality of lending and decreasing risks will bring high benefits for both
banks and customers. This is a current pressing issue for banking industry in general and
VietinBank -Sam Son Branch in particular. The quality of lending is one of the decisive factors
of the development of banking in the context of integration and the fierce competition for market
now.
That is why I chose the topic: "The operation of lending to small and medium enterprises
in VietinBank -Sam Son Branch" for my personal practice report.
Topic: “The operation of lending to small and medium enterprises in VietinBank Sam Son
Branch”
PART I: OPERATION OF LENDING TO SMALL AND MEDIUM ENTERPRISES
I. Overview of VietinBank
- VietinBank was established on 26 March 1988 after its separation from the State Bank of
Vietnam in accordance with Decree No.53/HDBT by the Ministers Council.
- As one of the four largest state – owned commercial banks of Vietnam, VietinBank’s total
assets account for over 20 percent of the market share of the whole Vietnamese banking system.
VietinBank’s capital resources keep on increasing over the years and have been substantially

rising since 1996 with the annual average growth of 20 percent, especially up 35 percent a year
against that of last year.
- VietinBank has developed an operations network comprising of 01 Main Operation Center, 150
branches, over transaction offices/saving offices. It has established correspondent relationship
with 900 banks and financial institutions of more than 90 countries and territories all over the
world.
- It established 07 independent financial subsidiaries including VietinBank leasing
Company,VietinBank Securities company, VietinBank Asset Management Company,
VietinBank Gold and Jewellery company, VietinBank Global Money Transfer company and 03
non – profit units: VietinBank Information Technology center, VietinBank Card Center and
VietinBank Training Center.
- VietinBank is also the founder of the following financial credit institution:
+ Saigon Bank for Commerce and Industry
+ Indovina Bank (the first joint – venture bank in Vietnam)
+ Vietnam International Leasing company – VILC (the first financial leasing company in
Vietnam)
+ VietinBank Insurance Company Ltd.
- VietinBank is the official member of:
+ Vietnam’s banker association
+ Asian banker’s association
+ Society for worldwide interbank financial telecommunications (SWIFT)
+ Visa international Service association
- It is the first bank in Vietnam to apply modern technology and e-commerce in its banking
operations.
Vision
To be a modern and more diversified financial institutions towards international standards by
2018.
Mission
To be a financial leader in Vietnam that offers full spectrum of international standard banking
services and financial solutions to individuals and corporate clients.

Core values
• Staying focused on customers: Serving our customers is at the heart of our business and we are
committed to constantly explore better ways to deliver advanced services and a differentiated
experience to meet each and every financial need of our clients.
• Aiming for perfection: With internal strength and resources, VietinBank management and staff
always work hard to steadily reform towards perfection.
• Dynamic, creative, professional & modern: We understand that our continued success as a
financial services organization is dependent on the innovative, dedicated services we provide.
We always put our relationships with the clients and partners first in everything we do.
• Integrity, Honesty & Transparency: We have solid foundation of openness and accountability.
We ensure each and every transaction is transparent and available for public viewing.
• Respect: Fair dealing is basis of our business, treating every individual with respect and
dignity.
• Brand protection and development: VietinBank staff and management are proud to be
responsible for the reputation of our brand name and always carry it with honour and dignity.
• Sustainable development and social responsibility: Our motivation is driven by constant reform
and creativity with clear objective of strong growth, prudent business & sustainable
development. It is an honour to give our staff the opportunity to participate in various volunteer
programmes and to allow them to reach out further to the community and take responsibility for
the society and fellow citizens.
Business philosophy
• Safe, effective and sustainable.
• Loyal, dedicated, passionate & committed, wise and principled.
• The prosperity of VietinBank customers is our ultimate success.
Slogan: improving the values of life
II. Overview of Sam Son Branch of VietinBank
1.History
In accordance with the Resolution of 3
rd
Conference and Decree No.53/HDBT dated 26 March

1988 of Ministers Council (now the Government) on the reform of the financial system and the
introduction of commercial banks in Vietnam. On 1 July 1988, Bank for Trade and Industry of
Vietnam Sam Son Branch was established after being separated from the State Bank of Vietnam.
Its head office located at 02 Doan Thi Diem Road, Truong Son District, Sam Son Town,
ThanhHoa Province.
It is a large commercial bank with an important role in ThanhHoa Province and Sam Son Town
in particular.
VietinBank Sam Son Branch has been in operation for 20 years. During its development, Sam
Son Branch has overcome many challenges and found different ways to expand its business to
meet the demand for capital for production of every economic sector.
In order to satisfy the capital demand of customers, Sam Son Branch has set up a wide-spreading
network of branches and transaction offices including department of corporate banking, retail
banking, monetary and funding, etc. VietinBank Sam Son Branch has always built new working
morale, trained staff for stronger specialization and made up e-payment network for the whole
system, ATM system, as well as participated in international payment network through Swift for
quick circulation of capital in the economy and meet customer demand.
2. Organizational Structure
The organizational structure of VietinBank Sam Son Branch includes
- Executive Board consists of 1 Director and 02 Vice Directors.
- Departments:
Executive Board
of VietinBank
Sam Son Branch
Transaction Offices
Departments
Numb
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Numb
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Numb

er 4
Corpo
rate
Banki
ng
Retail
Banki
ng
Import
and
Export
Payme
nt
Accou
nting
Monet
ary
and
Budge
t
Nghi
Son
Trans
action
Offic
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Truon
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Trans
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Office
Number
1
Numb
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- Transaction offices: 07
3.Main activities
+ Director is in charge of the performance of the branch according to the functions,
responsibilities and scope of the bank branch.
+ Vice Directors: deal with the arising issues in the business operations of the branch as
assigned by the director.
Functions and duties of departments:
+ Department of Corporate Banking grants loans to customers, inspects the use of loans,
draw up statistic report, builds up capital plans for the branch and makes plans for credit
operations.
+ Department of Accounting carries out operations relating to payment including collecting
money under customer order (standing order), opening accounts for customers, settling daily
accounts to identify operational capital of the bank, transferring accounts from the bank to the
central bank, clear cheques for customers if requested.
+ Department of Retail Banking mobilizes capital under deposits of citizens and current
accounts of enterprises, bill of exchange.
+ Department of Budget makes cash payment and receipt as requested. With the
confirmation of Department of Accounting, the department will give out or collect money from
customers’ accounts.
+ Department of import and export payment trades foreign currencies, grants loans in
foreign currencies, makes international payment.

+ Transaction offices carries out functions like main operation center such as credit, capital
mobilization, payment, etc.
II. Operation of lending to small and medium enterprises in Vietnam
1. Advantages for small and medium enterprises
+ Flexibility in business, quick response to the market.
+ Capability to supply highly customized services
+ Ease to adjust operations
 Enterprises can quickly expand their scale to make use of the advantages to increase their
profit.
2. Challenges to small and medium enterprises
+ Limited technological application.
+ Poor business management skills
+ Problematic business and production strategies
PART II: PROJECT IMPLEMENTATION
I. Overview of the individual project
 Description
- I came to the bank early and appeared with formal dress on the first day of my work
placement at Vietinbank at samson branch because I realized the importance of my first
impression in my dream bank. A professional appearance can help me to show my respect for a
valuable opportunity of the work placement. My feeling was strange and I felt a bit nervous.
- I entered the room, greeted and introduced myself to all employees of the department of
corporate banking where I spent the whole time of the work placement. I tried to get acquainted
with them because, in my opinion, learning knowledge and experience from predecessors is one
of the best ways during my work placement.
- Being accustomed to a new environment also meant learning how to use a scanner,
photocopier, fax machine, and light system.
 Difficulties encountered
 I described myself as a person who had bad communication skill. But my communication
skill was not good .
 Staffs in the department of corporate banking were always busy with a huge workload.

Sometimes, I felt difficulty when starting up conversation with them
 Solutions
- I strived to change myself with efforts to escape my shyness. I seek for advice from my close
friends, my relatives to help me improve communication skills.
- I took advantage of tea break or free time to start conversation with staff.
- I was active to ask them how I can help and was willing to help them
- Another way to attract people is to always smile at them whenever I can.
1. Personal Objectives
- Fully understand the operation of lending to small and medium enterprises at VietinBank Sam
Son Branch
- Find out possible pros and cons, problems and solutions for improving lending services to
attract more customers and increase profitability
- Make written report into informative and effective oral presentation
2. Objectives of the project
- To gather information
- To review the performance of VietinBank Sam Son Branch over the year.
- To find out advantages and challenges to the operation of lending to small and medium
enterprises
- To suggest solutions to improve the quality of lending to small and medium enterprises at
VietinBank Sam Son Branch.
RESEARCH QUESTIONS
- What are the challenges to small and medium enterprises in borrowing from banks?
- What are the difficulties of the bank in lending small and medium enterprises?
- What are the advantages and challenges to small and medium enterprises in Sam Son?
- What are the lending policies to small and medium enterprises of the bank?
- How is the situation of lending to small and medium enterprises of the bank?
- How is the bank’s credit performance to small and medium enterprises?
- What are the solutions to develop credit operation to small and medium enterprises?
3. Estimated budget
Travel expenses: rather low thanks to shuttle bus for staff from 101 Le Lai Street to the

premises. My house is only 3km away from 104 Le Hoan.
4.Actual expenses
* Gasoline and Travel Expenses: 300.000vnd
* Parking Expenses :
3.000 x 90 = 270.000vnd
5.000 x 18 = 90.000vnd
Total Parking Expense: 360.000vnd
* Printing and Reproduction (copying) Expenses :
+ Information of VietinBank: 10.000vnd
+ Data sample: 15.000x2 = 30.000vnd
+ Project – related documents: 25.000 x3 + 12.000 = 87.000vnd
+ First draft: 45.000
+ Second draft: 50.000
+ Third draft: 92.000
+ Final draft: 450.000
• Total Printing and reproduction expense: 764.000 vnd
• Telecommuting Expenses :1.424.000 vnd
5. Project detailed plan
(1) Brainstorm and select target banks and banking –related problems
(2) Contact the bank and receive their signed agreement documents
(3) Identify topics and look for general supporting data
(4) Choose a bank to work at and brainstorm main topics/problems for that specific bank
(5) Submit project profile sheet
(6) Determine the importance of topics by survey and/ or interviews
(7) Gather and analyse information received from different sources
(8) Submit intermediate report
(9) Find out solutions to the problem and any other potential difficulties
(10) Connect all materials and compose main report
(11) Review and revise, repeat if necessary
(12)Prepare oral presentation and practise

6. Methodology
+ Collecting data and information about VietinBank Sam Son Branch based on specific
objectives, then analyzing the collected data.
+ Setting up interviews with managers if possible with the aim of gathering opinion as well as
useful information.
+ Creating survey questionnaires to collect data about customers’ need

II. Data analysis
A.Reading loan records of customers
 Description
- When Mrs. Ha allowed me to read loan records, I took out several signed loan records of
customers from filling cabinet.
- I comprehended the list of documents in loan records of customers and try to remember
appropriate order of different types of document in each loan record.
- I read many loan records of different customers but I took note information of several loans in
order to make me easy to remember the content. Here is the loan document of Mrs. Nguyen Thi
Lien. Her loan documents contain:
a.Legal files
 Business registration authorization: She mainly sells a wide range of watermelons
 Her identity number is 28.01.156.059, made on 2, March, 2014.
 Report: from February 2012 to 2, March, 2014. Mrs. Lien only borrowed money at
Vietinbank, Sam son branch with the outstanding loan of 750.000.000 VND and she had no bad
debt history.
 Personal ideas
 Mrs. Lien is now 49 years old, her age is lower than maximum age - 60 years old. In
addition; an identity card has 16 years of expire date thus her identity card is valid until 2024.
 Her address in the household record book is the same as the address of the bank. This is a
basic loan requirement for a bank loan.
b. Loan application files
 Loan application form

 Total capital demand for the business plan: 3.000.000.000 VND (Total Loans limit : )
 Owner equity involved: 1.750.000.000 VND
 Proposed loan amount: 1.250.000.000 VND with
 Loan duration: 12 months
 Business plan
 Business purpose: Invest fixed assets
 She has many regular customers in Thanhhoa market and other market
 Business location: Business in thanhhoa city
 Estimated turnover: 4.050.000.000 VND
 Estimated profits : 1.620.000.000 VND
 Personal ideas
 The business purpose is lawful and suitable to business fields in her business registration
authorization.
 Debt equity rate (DER) shows the rate between debt and equity in the financial structure. Her
DER =
0001.750.000.
0001.250.000.
= 0.71
The rate is equal with the standard rate of Vietinbank. If the rate is high, it might cause risks
for the bank in debt collection.
c. Reimbursement files
 Credit contract :
 Loan amount: 1.250.000.000 VND
 Credit contract takes effect from 2, March, 2014 to 2, March 2015
 Interest rate: 11 %/year
 Penalty interest rate for overdue debt
 The method which Vietinbank extents credit to its customers is paying directly to
sellers of its customers based on purchasing receipts between sellers and its
customers.
 Difficulties encountered

- Each document in loan records was the results of Mrs. Ha‘s work. Thus when reading these
documents, I had a lot of questions. For example: which basis to evaluate value of collaterals,
how credit staff identified loan amount for each customer or where did CIC report come from.
- At the beginning of the week that I did this mission, I was confused about the content of
these documents and felt hard to remember its order.
 Solutions
- I took note and asked Mrs. Ha. Luckily, she gave me clear explanations, even she illustrated
by actions. For instance, in order to explain the nature of CIC report, she visited www.cic.org.vn,
which is a website of the State bank of Vietnam, entered required information of a customer and
inquired a report of debt history of the customer.
B. Data from bank
1.Business performance of the Bank
Unit: million VND
Indicators 2012 2013 2014
2013/2012 Difference 2014/2013 Difference
Figure % Figure %
Total revenue
392,81
6 276,552
384,43
4 -11,6264 29.59% 107,882 39.00%
Total cost
359,68
6 246,005
349,35
0 -11,3681 31.60% 103,345 42.00%
Profit 33,129 30,547 35,083 -2,582 7.79% 4,536 14.84%
Table 1: THE BANK’S BUSINESS PERFORMANCE
(Source: Department of Corporate Banking at VietinBank Sam Son Branch)
In general, the bank’s performance over the last three years has been positive with the profit

relatively increasing except for 2013. In 2013 exceptionally the profit of the bank decreased
compared to the previous year to VND 116,264 million, equal to 29.59% of 2012. In 2014, the
revenue of the bank increased by VND 107,882 million, equivalent to 39%, and it also saved a
lot of costs.
Due to a decrease in revenue, the profit of the bank in 2013 was not as much as 2012 as it was
affected by natural disasters leading to the fall in both revenue and costs. However, in 2014, the
situation got better with the cost of VND 103,345 million (42.00%) higher than 2013 and the
revenue of VND 12,803 million (11.77%) more than the previous year resulting in VND 4,536
million increase in proft. It showed the improved performance of the bank in 2014 to facilitate
the development in the future. It was attributed to the positive development of the local economy
and the more professional work of officers in VietinBank Sam Son Branch.
As one of the large banks in the area, its profit has always been high. It is currently implementing
selected credit policy in order to improve the efficiency of investment capital, increase
profitability, and ensure security in performance. With this policy, the bank will soon strengthen
its position to contribute to the local economic development.
2. Review on the lending operation to small and medium enterprises
Unit: million VND
Indicators 2013 2014
2014/2013
Difference
Figure %
1. Loan disbursement
1,692,14
9
1,887,28
6
195,13
7 11.53%
2. Loan collection
1,389,69

7
1,481,32
4 91,672 6.59%
3. Gross loans 379,364 429,415 50,051 13.31%
4. Overdue loans 8,843 5,423 -3,420 -38.67%
Table 2: OPERATION OF LENDING TO SMALL AND MEDIUM ENTERPRISES
(Source: Department of Corporate Banking at VietinBank Sam Son Branch)
In recent years, the bank has paid attention to dealing with past loans, collecting loans and
preventing bad debts to arise. This policy also applies to credit operation to small and medium
enterprises as can be seen through the figures.
- Loan disbursement on the rise seems to be a positive signal to the bank with significant
increase in 2014 of VND 195,137 million (11.53%) year-on-year.
- Loan collection also rises at VND 1,481,324 million in 2014 with VND 91,672 million (6.59%)
more than the previous year.
- Gross loans in 2014 goes up VND 50,051 million (13.31%) compared to 2013.
- Overdue loans in the recent two years have taken the downward trend. In 2014, overdue loans
reached VND 5,423 million with VND 3,420 million (38.67%) down compared to 2013. It may
be the result of efforts of the bank staff and the support from the state. In general, overdue loans
still account for a small percentage in gross loans. The bank needs to apply many solutions to
better control overdue loans.
It is obvious that in recent 2 years, the performance of the bank has improved, and credit services
for small and medium enterprises accounted for a large and important part in the performance of
the bank.
3. Loan disbursement
It reflects all the credit accounts the bank takes for loans in a certain period regardless of
paybacks. Loan disbursement is usually calculated in months, quarters or years.
Unit: million VND
Indicators 2013 2014
2014/2013
Difference

Figure %
Small and medium enterprises
1,692,14
9
1,887,28
6
195,13
7 1.68
1. Short-term
1,671,22
3 1,872,596
201,37
3 4.77
2. Medium and long-term 20,926 14,690 -6,263 -8.84
Table 3: LOAN DISBURSEMENT TO SMALL AND MEDIUM ENTERPRISES
ACCORDING TO TERMS
(Source: Department of Corporate Banking at VietinBank Sam Son Branch)
At VietinBank Sam Son Branch, loan disbursement for small and medium enterprises has been
rising with VND 1,887,286 million in 2014, increasing by VND 195,137 million (1.68%) year-
on-year.
Medium and long-term loans have recently decreased and short-term loans increased. However
medium and long-term loans still account for a small percentage in the total loans disbursement.
Short-term loans in 2014 went up by VND 201,373 million, equal to 4.77% compared to the
previous year.
In conclusion, despite some changes, short-term loans still make up of a large part in the total
loans. The imbalance can be resulted from both the bank and the enterprises.
- From the bank
+ It is certain that the bank uses capital raised from the public and other economic
organizations for lending. However, there are few individuals and organizations depositing
money in the banks with the term of over 12 months. Therefore, most banks use short term

deposits for long-term lending, which exposes banks to risks.
+ The longer the lending term, the higher the risks, so banks always focus on reappraisal to
medium and long-term loans. This also limit the expansion of medium and long-term loans.
- From small and medium enterprises
+ Most enterprises borrow money to meet short-term demand for capital without
investment in expansion. Thus, most loans are short term.
+ Among those who need medium and long-term loans to expand production, only few
enterprises can submit feasible business plan to apply for loans.
4. Loan collection
It includes all the debts that the bank collected from loans in this year and the years before.
Unit: million VND
Year 2013 2014
2014/2013 Difference
Figure %
Small and medium
enterprises 1,389,697 1,481,324 91,627 6.59
1. Short-term 1,389,697 1,480,204 90,507 6.51
2. Medium and long
term - 1,120 1,120 100
Table 4: LOAN COLLECTION TO SMALL AND MEDIUM ENTERPRISES
ACCORDING TO TERMS
(Source: Department of Corporate Banking at VietinBank Sam Son Branch)
Loan collection from small and medium enterprises in 2014 was VND 1,481,324 million
increasing by VND 91,627 million (6.59%) compared to 2013. Loan collection from small and
medium enterprises at VietinBank Sam Son Branch rose, which means in recent years it has paid
more attention to loan collection to ensure the efficiency of capital use.
Small and medium enterprises short-term loan collection
- Short-term loan collection in 2013 was VND 1,389,697 million
- Short-term loan collection in 2014 was VND 1,480,204 million with the fall of VND 90,507
million, equivalent to 6.51%.

- Total loan collection as well as medium and long-term loan collection were on the rise.
However, to compete with other banks in the future and get higher profit, it is necessary for the
determination and efforts of the whole branch.
Short-term loan collection still accounts for a large part in the total number because of the faster
increase compared to medium and long term loan collection.
5. Gross loans
This indicator shows how much the bank is lending at a certain point of time, and the receivables
of the bank.
Unit: million VND
Year
2013 2014
2014/2013
Difference
Figure %
Small and medium enterprises 379,364 429,415 50,051 13.19
1. Short-term 320,854
384,67
2 63,818 19.89
2. Medium and long-term 58,510 44,743
-
13,767 23.52
Table 5: GROSS LOANS TO SMALL AND MEDIUM ENTERPRISES
ACCORDING TO TERMS
(Source: Department of Corporate Banking at VietinBank Sam Son Branch)
* To short-term:
Gross short-term loans to small and medium enterprises tended to rise.
- In 2013 gross loans reached VND 379,364 million
- In 2014 they totaled at VND 429,415 million, increasing by VND 50,051 million, equal to
13.19% of 2013.
* To medium and long-term:

Gross medium and long-term loans decreased.
- 2013 medium and long-term loans valued at VND 58,510 million
- They reduced by VND 13,767 million (23.52%) in 2014
6. Overdue loans
It shows loans which customers are unable to pay back at their due dates without justification.
The bank will transfer from loan account to another account called overdue loan. This indicator
reflects the quality of credit operation at banks.
Unit: million VND
Year 2013 2014
2014/2013
Difference
Figure %
Small and medium enterprises 8,843 5,423 -3,420 38.67
1. Short-term 1,867 - -1,867 100
2. Medium and long-term 6,976 5,423 -1,553 22.6
Table 6: OVERDUE LOANS TO SMALL AND MEDIUM ENTERPRISES
ACCORDING TO TERMS
(Source: Department of Corporate Banking at VietinBank Sam Son Branch)
The overdue loans to small and medium enterprises are generally decreasing. In 2013, overdue
loans were VND 8,843 million, but in 2014 they were only VND 5,423 million, with a drop of
VND 3,420 million (38.67%). The status of overdue loans at the bank in recent years has been
positive with high rate of reduction. This shows the great management of the bank’s executive
board.
PART III. ADVANTAGES, CHALLENGES AND SOLUTIONS
I. Advantages
- The bank has received the effective assistance from Vietnam Bank for Industry and Trade
as well as local authorities for its development.
- As a branch of one in four large banks in Vietnam, during its operation, it has established
good reputation among customers.
- The timely attention and encouragement by the executives help build up the responsibility

and loyalty of staff in the bank.
- The workforce has good professional knowledge and skills.
- The offices are fully equipped with modern facilities.
- The bank has actively applied advanced technology in operation to create many new
services facilitating its operation and shortening time of transaction for customers.
II. Challenges
- There are now more than commercial banks in ThanhHoa City and there will be more in
the future. Thus, the competition between banks will get fiercer.
- Due to diseases, natural disasters and bankrupt enterprises, the bank can encounter
difficulties in collecting loans.
III. Solutions to improve the quality of credit services to small and medium enterprises
1. Improving the quality of project appraisal
Project appraisal is an important issue in credit quality. From both theory and practice, once
project appraisal is well implemented, the quality of credit will rise significantly with minimal
subjective risks. Project financial appraisal requires the following points:
- The criteria for project financial appraisal should be closely connected to reflect the
efficiency of the project accurately.
- The criteria should be divided into two groups reflecting the profitability and risks. The
bank usually care more for the payback period of the project.
- To enhance collecting and analyzing information from customers, it is necessary to cross
check the information carefully based on different sources to reduce risks.
2. Developing employee skills and capabilities
Human resources is the determining factor to the success or failure of a bank. Credit
officers should be professionally qualified to evaluate the financial strength of customers. Their
work includes dealing with loan application of customers in which any wrong decisions,
misjudgment or carelessness may cause serious problems.
Therefore, the bank needs to apply standards to credit officers. The branch is required to
train its credit officers by inviting university lecturers to teach training courses on site to improve
staff knowledge on the market economy, customer research methods, credit analysis methods
focusing on financial and non-financial criteria.

3. Enhancing supervision credit account
- Assigning skilled experienced officers to checking and supervision section.
- Ensuring checking all stages before, during and after lending with more focus on pre-
lending period.
- Doing monthly check on all debts of the banks to timely tackle problematic loans to
reduce risks.
4. Forming appraisal executive group
The project appraisal group should include members from different specialized areas such
as scientists, experts from institutes, which can play an important role in improving the appraisal
quality. Moreover, VietinBank Sam Son Branch can build the relationship to exchange
information between the bank and other business fields to assist potential risk assessment.
RECOMMENDATIONS
After the work placement period at the bank and completing my paper, I would like to
make the following recommendations:
- To further develop its capital source, the bank needs to coordinate with local authorities to
promote its services through meetings at the residential areas by leaflets introducing brief deposit
steps for the citizens.
- The bank is required to adopt new credit methods to diversify medium and long-term loan
forms. It also needs to keep direct and regular contact with business registration offices in the
city to access start-up businesses, find out their capital needs and provide loans quickly.
- The bank needs its own information office to provide and collect information for the
executive board and credit officers in the process of project appraisal. It will help them make the
right decisions. The office will collect and combine with information from other sources such as
Credit Information Center under the State Bank of Vietnam, ThanhHoa Chamber of Commerce
and Industry, the Internet and other official channels from ministerial management agencies.
- It is necessary for the bank to set up its marketing department to promote, guide
customers, grasp customers’ demand and provide consulting services.
- It is also essential to advertise on mass media and design an attractive and informative
website to expand transactions.
- The bank needs to open working space of Department of Corporate Banking to make

waiting room for customers