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...........2
1.1 Company:...............................................................................................................2
1.2 Host Firm:..............................................................................................................2
1.3 Introduction of my internship :............................................................................4
CHAPTER 2: INTERNSHIP IMPLEMENTATION AT COMPANY....................6
2.1 The internship position ,tasks, required skills, opportunities and the purpose
to face............................................................................................................................ 6

1

2.1.1 Internship position...............................................................................................6
2.1.2 Department structure of bank branch - Nam Dinh branch................................8
2.1.3 Administrative procedures related to lending activities......................................8
2.1.4 Daily task.............................................................................................................9
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 3 : 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 4 : SERVICE ANALYSIS......................................................................45
4.1 Customer reaserch...............................................................................................45
4.2 SWOT analysis.....................................................................................................53
4.3 KPI........................................................................................................................ 54

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CHAPTER 5 : 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..............................................................................................5

Table 2.1 : Daily task...................................................................................................9
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

3


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

4

Figure 8: Customers evaluate service quality of Vietinbank
Figure 9: Customers recommend Vietinbank service to yoủ relatives and friends
Figure 10: Occupation of customers

5


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.

1


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-

2


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 1 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.

3


1.3 Introduction of my internship :
 Why choose the topic:
In addition, commercial banks often pursue a strategy of diversifying
products to minimize risks and ensure business efficiency. Therefore, consumer
credit will be focused on promoting development in the coming time.
But consumer lending to date in Vietnam is still not commensurate with its
inherent potential. Therefore, as the most important financial intermediary in the
economy, commercial banks need to promote that activity. Currently, for
Vietnamese commercial banks, credit is still the main income-generating
activity, so they are also very interested in developing consumer loans in the

near future. Nam Dinh Joint Stock Commercial Bank for Industry and Trade is a
state-owned commercial bank with an annual loan balance of up to trillions of
dong, in recent years, consumer lending activities of VietinBank have had
Significant developments, loan quality is improved year by year.
How to go along with the growth of outstanding loans is the quality of
credit card constantly improving? This is not only a concern for Nam Dinh
Commercial Bank but also for commercial banks in general. Given the urgent
situation of this issue, as a Banking major, I want to study and learn. Therefore,
after studying, I decided to choose the topic: "Improving the quality of
consumer loans at the Industrial and Commercial Bank of Nam Dinh
Province" in the hope of contributing to improving the quality of credit activity
in particular and the activities of VietinBank in general in the coming years.
Table 1: Internship plan
Start date
03/02/2020

End date
14/02/2020

Duration
12

Tasks
Read product documentation and

17/02/2020

31/03/2020

32

researches about company
Conduct survey

27/03/2020

27/03/2020

1

SWOT matrix analysis
Learn customer strategies, capital
rising strategies of Vietinbank Nam
Dinh branch

4


29/04/2020

29/04/2020

1

End of 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.
In Vietinbank Nam Dinh branch , I internship at individual customer room .
 Tasks :
_ Find customers who want to use consumer loan products or other types of
banking services.
_ Direct contact with customers, advise them of products, services, utilities
and how to complete the prescribed procedures of the bank based on the needs
and financial capabilities of customers.
_ Make an appraisal report according to the bank's process and submit to
the loan approval or refuse to approve
_ Must prepare credit contracts, mortgage contracts and related documents.
- When customers request disbursement, I will monitor and prepare the
disbursement records according to the bank's disbursement regulations.
- Check the use of loan capital according to the bank's regulations and
monitor the repayment of principal and interest according to the customer's
contract.
- In case of a loan giving rise to bad debt, bad debt, .. customer relationship
specialists must carry out the debt group transfer, handle debt recovery ahead of
schedule, initiate a lawsuit to recover the debt, urging customers. pay

 Required skills:

5


_ Honest : every dishonest behavior will have many serious consequences
for yourself and the bank.
_ Agility, flexibility, initiative, the ability to think and seize the opportunity
well. These factors will help you find more customers and make them happy to
move toward the purpose of using the product you consult.

_ Professional credit and general economic knowledge are required.
_ Must be able to analyze quickly, efficiently and assertively at work.
 Opportunities :
_ Good working environment: most banks are fully equipped with the
equipment and equipment needed for work. In addition, colleagues are dynamic,
young, friendly and sociable people.
_ Because the nature of the job of personal customer relations is in direct
contact with customers, I will have the opportunity to improve the ability to
communicate and expand my relationship after many years of work.
 The pressure to face:
_ Time pressure: there is no superiors or customers who like people who
are slow and sloppy. Job processing speed is an extremely important standard in
service professions, especially banking.
_ Sales pressure: the majority of banks use sales targets to promote
employee work. If I do not reach sales, will face many problems such as reduced
wages, not receiving bonuses, penalties, even dismissal, .....
Director
_ Pressure on accuracy: Besides
the speed factor, it also needs accuracy. If
the evaluation of records is inaccurate will lead to great harm
_ Pressure on job responsibilities: because I have to search for customers,
appraise records, ... should be responsible for the losses that can cause the bank
because
customers cannot pay debt.
Vice
Director
Vice Director

Vice Director

2.1.2 Department structure of bank branch - Nam Dinh branch

Customer
room 1

Customer
room 2

Individual
room

Accoungti
ng
departmen
t

Warehous
e room

6

Phòng
QLRR

General
room

Organizati
on and
administra

tion room

Transactio
n offices


Source: (Organizational structure of the management system of Industrial and Commercial
Bank of Nam Dinh branch )

2.1.3 Administrative procedures related to lending activities
The first is that the speed of issuing land use right certificates, house
ownership and title transfer and tax payment procedures ... in Vietnam is still
very slow and heavily administrative. This makes it difficult for both the
borrower and the bank itself. Many customers, although having legal real estate,
have not yet been issued with a certificate, are able to repay debts well, but still
cannot borrow capital. Or because capital is needed for a short time but due to
the time of procedures related to collaterals is too long, it is impossible to
borrow bank loans, leading to many customers having to look to the non-bank
market with interest rates. higher.
The procedures related to collaterals such as notarization of mortgage
contracts, registration of security transactions take a lot of time, the cost makes
people afraid to borrow money, so they often turn to Other loan channels.
The process of handling collaterals and selling assets in Vietnam is timeconsuming and does not protect the interests of lenders. A bad credit goes to the
court to solve, the sale usually lasts 1-2 years which costs time and money.
2.1.4 Daily task
Table 2.1 : Daily task
Time

Outcome

Place of internship

7


3/02/2020 -14/02/2020 • Over view of Nam Dinh Joint 119 Quang Trung, Nam
Stock

Commercial

bank

for Dinh

province,

Nam

Industry and Trade: The process of Dinh city
formation , development , major
business

fields,

products

and

services provide by the bank


A

brief

management

overview

of

structure

the
and

operation of Vietnam Joint Stock
Commercial Bank for Industry and
Trade Nam Dinh province. Learn
functions and tasks
• Learn about technical facilities,
equipment and the application of
modern technology in the operation
of the unit
17/02/2020- 9/03/2020 • Learn
regulations

about
on

the

Bank's
customer

classification
 Searching for figures and general
comments on business performance
of the unit in the last 3 years (2018- 119 Quang Trung. Nam
2020)
Dinh province, Nam
 Conduct a survey

8

Dinh city


10 /03/2020

 Mid-term report completion:

16/03/2020

Internship plan report, overview of
internship location
•

Submit

individual

mid-term

reports,

internships,

detailed

internships and internships diary
17/03/2020-

• Learn account opening procedure,

20/03/2020

simple transaction process at the
counter, access related documents
and documents.
• Learn account opening procedure,

23/03/2020-

simple transaction process at the

31/03/2020

counter, access related documents
and documents.

• Answering customers' inquiries
regarding account opening records
 Approach to the voucher method
 Conduct a survey

1/04
-03/04/2020

/2020 • Learn the process of registering
SMS, Internet banking services
• Cash deposit into account / Cash
withdrawal from account
Learn the process of transferring
money

within

the

Vietinbank, in addition

9

system

of


06/04

/2020

- • Learn about the benefits of

10/04/2020

consumer

lending

products,

consulting for customers
13/04/2020
17/04/2020

–

• Access the process of changing
information at the counter
• Learn the process of opening and
closing cards

20/04/202024/04/2020

• Access to the process of opening
cards, closing cards, and registering
related services
• Learn about Vietinbank savings
products

• Learn and access to savings
deposit

procedures,

related

documents
(To prevent the spread of the
COVID-19 epidemic, Vietnamese
businesses have allowed interns to
work at home)
27/04/2020

• SWOT matrix analysis
• Learn customer strategies, capital
raising strategies of VietinBank

28/04/2020

Nam Dinh branch.
• Ask for seals and comments from

29/04/2020

businesses
 End of internship

2.2 Definition of consumer loans
Referring to the main activities of the bank, it is impossible not to mention

lending activities. Especially for Vietnamese banks, the profit from lending

10


activities makes up a large part of the total profit. Therefore, it can be said that
lending is a key activity of commercial banks.
On that basis, the lending activity can be understood as follows:
“Consumer loan is a transaction of assets (money or goods) between the lender
(banks and other financial institutions) and the borrower. Borrowers
(individuals, businesses and other entities), in which the lender transfers assets
to the borrower for a specified period of time as agreed upon, the borrower is
responsible for unconditional repayment. Principal and interest to the lender
when the payment is due ”.
2.3 Consumer loan classification
2.3.1 . Based on credit term
• Short-term consumer loans (with a term of less than 12 months): This
type applies short-term interest rates, often used to provide loans to serve
consumer needs and personal activities.
• Medium-term consumer loans (from over 12 months to 60 months): These
loans often serve the needs of fixed asset procurement.
• Long-term consumer loans (from over 60 months): This type of credit is
used to fund capital construction, improvement and expansion of production.
2.3.2. Based on the purpose of loan use
• Residential consumer loans
• Non-residential consumer lending
2.3.3. Based on the loan guarantee method
• Consumer loan secured by assets
Mortgage loan: is a form of bank lending to customers for consumption
purposes but the bank keeps customers 'assets in order to ensure customers' debt

repayment obligations.
Salary mortgage loan: Usually applied to customers who have stable
income jobs (working for the State environment), in addition to monthly
expenses, they have accumulated enough to repay loans.

11


Lending with secured assets formed from loan capital: A form of consumer
lending applicable to customers who need to borrow to buy assets of great value
and long-term use
• Unsecured consumer lending: A form of consumer lending that is
guaranteed not by assets but based on the borrower's reputation and relationship
with the bank.
2.3.4 Based on the origin of the debt
• Indirect consumer lending: A form of bank purchase of debts incurred by
a retail company that sells goods or services to consumers, which is lent through
businesses that sell goods or services without direct contact with Customer.
After that the retail company and the consumer enter into a sales contract.
Normally, consumers have to pay a part of asset value in advance, the retail
company will hand over the assets to consumers and officials who sell goods
bear the goods to banks. The bank, based on the set of documents, will pay the
loan to the retail company. Finally, the borrower pays the installment payment
periodically to the bank.
• Direct consumer lending: A consumer loan in which the bank directly
contacts customers to issue loans and recover debts.
2.3.5. Based on repayment method
• Installment loan: This is a loan that borrowers have to pay loan (including
both principal and interest) to the credit institutions for many consecutive terms
as agreed in the credit contract (usually monthly or quarterly). Interest rates for

installment loans
are often high in the lending interest rate framework, banks often require
customers to pay an amount in advance and pay attention to the type of
collateral.
• Non-installment consumer lending: is a form of loan in which the loan is
paid to the bank only once upon the expiry of the contract agreed by both
parties.

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• Circulating consumer lending: A form of lending where the bank allows
customers to use credit cards or issue current account overdraft checks to pay for
goods and services.
2.4 The role of consumer lending
2.4.1 The role of consumer lending to customers
For consumers, especially those with low average income, through the
consumer lending business, they will be able to buy necessary goods of high
value, satisfying their demand. use and improve life.
In fact, there are many natural and essential needs that are important in life
for individuals and households.These needs must be met sooner or later.
complacent. For example, the need for shopping, repairing houses, buying
appliances, buying motorbikes, cars, preparing for marriage, travel, studying ...
Therefore, people often buy houses, living facilities ... when they get older,
when the benefits of enjoying are all decreasing. Consumers will therefore find a
way to cleverly combine demand fulfillment with the time and solvency of
present and future, meaning consumers will find ways to enjoy Advance
payment of money will be available in the future.
2.4.2 The role of consumer lending to businesses
If businesses want to increase profits for their companies, promote

production, one of the important stages is the consumption of goods, because it
is the final and important stage for businesses to account and have the
Development-oriented strategy for the business. With the needs of customers
increasingly diverse and quality but can not be satisfied with the existing
financial resources, the goods of the business can not be stagnant in the
warehouse waiting for customers' financial resources to accumulate enough to
buy. , and bank financing is an optimal solution for businesses to accelerate
product consumption.
2.4.3 The role of consumer lending to commercial banks
With the main activity of taking deposits, the responsibility to repay and
use that money to make profits, commercial banks need to make efforts to raise

13


capital, besides, they must exploit the credit market thoroughly. to, that is, seek
ways to ensure that the ability to meet and on that basis best satisfies the most
needs of the economy 's lending. Therefore, it would be wrong and omiss to
ignore the consumer lending market where the size of a small number of needs
is small but the number of lending needs is based on the number of potential
customers and the variety. of consumer demand is extremely large. Therefore,
commercial banks are always interested in and focusing on developing this type
of loan.
In addition, the risk of consumer lending is often very small and individual
lending compared to customer loans is a simple business. Meanwhile, the bank's
revenue through this consumer lending activity is significant due to the
attractive consumer credit interest rates, especially the very high interest rate on
installment loans, which makes the operation Consumer loans account for a
significant proportion of the Bank's profit structure. Therefore, the expansion of
consumer lending to individuals and households is a promising and safe

economic direction for the Bank.
2.5 The quality of consumer loans at Vietinbank - Nam Dinh branch
2.5.1 The need to improve the quality of consumer loans
2.5.1.1 For economy
Today, along with the "storm" of the economy, consumer lending plays an
important role in this development. Therefore, its quality is also more
concerned. Good consumer loan quality means that the bank has met customer
needs well, creating a profit for the bank. The Government's policies have been
increasingly implemented in the right direction such as: rational economic
restructuring, balanced development among industries and regions throughout
the country ... thanks to that, people's living standards have been improved. In
addition, the loan quality also contributes to curb inflation, the amount of capital
is used effectively and rotates faster to avoid stagnation. This is also the cause of
inflation.
2.5.1.2 For customers

14


Businesses are trying their best to best serve this god because according to
the current concept, customers are the ones who keep the business alive. Attract
more customers, the more businesses are likely to exist and develop in the
future. In banking, this philosophy still has its meaning. Therefore, when the
loan quality is improved, the needs of customers are met in the most complete
and convenient manner. However, not only did their needs be met, but at the
same time, the customers were also more interested in the Bank such as:
checking, controlling the use of capital ... From there, helping customers detect
and correct shortcomings. errors in its financial operations. The ultimate goal is
to contribute to the development of production, business and financial health of
customers.

2.5.1.3 For commercial banks
The last object related to improving the quality of consumer loans is also
the Bank. The increased loan quality will mean a reasonable increase in profits.
Show that the bank has many efficient customers, this will increase its reputation
to a new level, leading to a rapid increase in the number of customers. Along
with that is the increasing debt balance and the existence and development of the
bank in the future guaranteed with its loyal customer base.
2.5.2 Factors affecting the quality of consumer loans
There are many factors that affect consumer lending, but we can divide it
into two main types of factors: the group of objective factors and the group of
subjective factors.
2.5.2.1 Group of objective factors
This is a group of factors that the bank itself does not control, it includes
the following factors: economic environment, legal environment, social
environment, government policies.
a. Economic environment
This is a factor that has a great influence on the bank's consumer lending
activities. It may be a favorable condition promoting this activity or vice versa.

15


The economic environment includes: the level of economic development,
average income per capita, people's living standards. When the economy has a
high and stable growth rate, people's living standards are also improved, then the
demand for consumption also increases because they are assured about their
income in the future. hybrid. As a result, consumer lending activities will have
conditions to thrive. When the economy is in crisis or stagnation, the psychology
of consumers is also very careful in spending because they want to reserve for
the future, so the demand for consumer goods only stops at a sufficient level. so

consumer lending will be more difficult.
b. Regulatory environment
We see that any activities of individuals or social organizations must
comply with the laws of that country and country. In this way, the country will
have a long-term stability, and therefore the operation of banks in general and
consumer lending activities in particular are also within the framework of the
law, it must also follow the State regulations, laws of credit institutions, civil law
and other regulations. If the law on general consumer lending is unclear, lacks
synchronism and has many gaps, it will make it difficult for banks to operate,
there is no legal basis to solve arising problems. . If the law stipulates fully,
clearly and strictly, it contributes to promoting the healthy development of
banking activities in general and consumer lending in particular. And when there
is a law on consumer lending, it will facilitate this activity to develop more and
bring high efficiency. It is a key factor affecting the goals and strategies of each
bank.
c. The social environment
These factors include customs, educational level, lifestyle, habits ... It will
greatly affect consumer needs and thereby affect the consumer lending
relationship between customers and banks. For example, depending on the
region with different living habits, the salary they spend to satisfy the present
and the future is different. There are places where they tend to spend their
income mainly on eating, but also where they spend less on food and drink and

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to accumulate more home appliances. Or there are also places where people are
hard-working, diligent, the demand of these places is not high, and there are also
places where people come for entertainment, for consumption, these places
operate. Consumer loans have many opportunities to grow and expand.

d. Policy of the Party and State
These are macroeconomic policies and often have a relatively long time. It
is usually set according to the task of each year. For example, to encourage
foreign investment, to increase investment in a number of domestic industries, to
stimulate demand to facilitate circulation of monetary goods to promote
economic growth, or to reduce the ceiling interest rate regulation. of all banks ...
All of these are aimed at making the economy grow and develop sustainably, if
done properly, people's lives will be improved, society will develop needs.
consumption and educational level also change towards favorable conditions for
development of consumer loans. Along with it are policies on income tax, tax on
goods and services, incentive programs to support development, poverty
reduction, economic development in remote areas, mountainous areas and
islands ... Such factors have an immediate and long-term impact on people's
consumption demand.
2.5.2.2 Group of subjective factors
This group of factors depends on the bank itself. Therefore it will be the
dominant banking factor. If the bank has a comprehensive and long-term
strategic policy for consumer lending activities, this activity will have conditions
for development and more and more perfect. But if the bank does nothing to
encourage it, this activity will have no opportunity and no motivation to thrive.
a. Credit policy
The credit policy is the limit for a single customer, interest rates and fees,
collaterals and the way to handle bad debts. Therefore, an appropriate and
diversified credit policy will attract many customers to apply for a loan, and
when it meets the needs of consumers, the bank will certainly succeed in
expanding for Consumer loans. In contrast to the inflexible, inflexible credit

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policy, it will limit borrowing and reduce the operational competitiveness among
banks.
b. Customer evaluation
This process is very important for considering whether or not to lend, but it
is also a barrier if it is too complicated and cumbersome. It discourages the
migrant while this process takes them a lot of time and effort. And in order to
limit this, the evaluation must be based on reasonable scientific procedures and
in parallel with it, the implementation must be strict, it is the decisive factor for
evaluation quality and quality. Credit. In addition, mobilized capital and equity
capital play a very important role in the bank's business operations, it also partly
shows the reliability and ability of that bank.
c. Credit information
The nature of the bank is borrowing and lending, which relies on the trust
of the bank with that customer: what financial situation they are, able to repay
the interest and principal within the time period. which time. In order to make a
decision whether or not to lend, the bank must have reliable information, in
other words, the quality of credit information. For example: status, prestige,
management capacity, social situation, economic development trends ... And the
request of that credit information must be accurate, timely and complete, for all
The information is only valid for a definite period of time and some banks do
not catch the information in time so they have not met the demand for capital for
customers, limiting the expansion of consumer loans.
d. Quality of credit officers
The quality of credit officers is reflected in professional qualifications and
ethics, as well as the ability of credit officers to communicate. If credit officers
have good professional qualifications but do not have professional ethics, the
benefits of the bank will be more harmed than the benefits they bring. But
besides that, credit officers need to have a high level of expertise, a deep
understanding, so that the customer appraisal will be accurate, thereby making a
new and correct decision, minimizing risk to the bank. Because customers are

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