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 er 6 Numb er 3 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 e Truon g Son Trans action Office Number 1 Numb er 7 Numb er 5 Numb er 2 - 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. [...]... 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. .. 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. .. 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. ..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. .. 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... 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. .. 1,692,14 Small and medium enterprises 9 1,887,28 6 -6,263 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%) yearon-year Medium and long-term... 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. .. 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. .. 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 . the topic: " ;The operation of lending to small and medium enterprises in VietinBank -Sam Son Branch& quot; for my personal practice report. Topic: The operation of lending to small and medium. 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. 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