Tài liệu Situation, solutions to improve the efficiency of credit operation to smes in the sai gon joint stock commercial bank (scb), hong bang branch, hai phong city

1 Graduation Thesis DECLARATION Signed hereby, certify hereby that this is my own research. The content and the figures presented in the thesis reflected a fair and true situation of the internship organization. Ha Noi, May 9th, 2016 Student Pham Thi Thuy Hang Pham Thi Thuy Hang CQ50/51.02 2 Graduation Thesis ABSTRACT This thesis is aimed at studying situation and solutions to improve the efficiency of credit operation to SMEs in Sai Gon Joint Stock Commercial Bank (SCB), Hong Bang branch, Hai Phong city from 2012 to 2014. This thesis was clearly analyzed through using the following methodology: comparing, statistics, analysis, synthesis, description, etc. All data were collected from the financial statement, income statement, annual reports of SCB – Hong Bang branch from 2012 to 2014. It can be said that the branch has gained some achievements in improving the efficiency of credit operation through facilitating loans to SMEs in the period of economic crisis, success in controlling bad debts and overdue loans and implementing some appropriate strategies about the structure of banks' loans and loan security. However, there are still shortcomings including low loan sales to SMEs, low outstanding loans to SMEs, unprofessional in lending procedures, only focusing on loans to SMEs in the short term. From the results, some proposals were given to the Government, the State Bank of Viet Nam, SMEs and SCB's headquarter. Hopefully, this thesis will provide general support for SCB–Hong Bang branch, Hai Phong city to have a better result in credit operation to SMEs in the near future. Pham Thi Thuy Hang CQ50/51.02 3 Graduation Thesis ACKNOWLEGEMENTS To fulfill this thesis, I would like to give my special thanks to many people for their significant helps, contributions, recommendations and encouragement during my writing process. Firstly and foremost, I would like to give my heartfelt thanks to Ms Pham Phuong Oanh, my supervisor who has provided me the valuable support, practical insights and helpful feedback from the beginning of forming thesis’s topic until the completion. Secondly, I also express profound gratitude to all staffs of SCB – Hong Bang branch, Hai Phong city, credit department and especially Mr Do Thanh Trung, my instructor for his enthusiastic instructions and useful data that he gave to me. In addition, I highly appreciated indirect support from Finance - Accounting Department staffs, who gave me a straightway instruction, reminded me of the internship schedule, supported reference documents, and were always available anytime for help. Finally, I owe my sincere thanks to my family and friends. Their continuous assistance and encouragement helped me a lot during time of internship and attempt to finish this study. Pham Thi Thuy Hang CQ50/51.02 4 Graduation Thesis Pham Thi Thuy Hang CQ50/51.02 5 Graduation Thesis TABLE OF CONTENTS DECLARATION i ABSTRACT ii ACKNOWLEGEMENTS iii TABLE OF CONTENTS iv LIST OF ABBREVIATIONS vii INTRODUCTION 1 CHAPTER 1 4 LITERATURE REVIEW 4 1.1. Commercial banks 4 1.1.1. Definition 4 1.1.2. Basic activities of commercial banks. 5 1.1.3. Bank credit 1.2. Small and medium - sized enterprises (SMEs) 8 11 1.2.1. Definition 11 1.2.2. Characteristics of SMEs 11 1.2.3. Roles of SMEs 12 1.2.4. Standards of SMEs in the world and Viet Nam 13 1.2.5. SMEs in Viet Nam and Hai Phong 1.3. Credit operations to SMEs 15 16 1.3.1. Definition of lending 16 1.3.2. Features of credit operation 17 1.3.3. Goals of credit operation 17 1.3.4. The efficiency of bank credit 1.4. The necessity of credit efficiency improvement 18 22 Pham Thi Thuy Hang CQ50/51.02 6 Graduation Thesis CHAPTER 2: CURRENT SITUATION OF CREDIT OPERATION TO SMEs IN SAI GON JOINT STOCK COMMERCIAL BANK, HONG BANG BRANCH, HAI PHONG CITY 23 2.1. Overview about Sai Gon Joint Stock Commercial Bank, Hong Bang branch, Hai Phong city 23 2.1.1. The formation and development of Sai Gon Joint Stock Commercial Bank, Hong Bang branch, Hai Phong city 23 2.1.2. Structure of SCB, Hong Bang branch, Hai Phong city 24 2.2. Current situation of business operation in SCB, Hong Bang branch, Hai Phong city in 2012-2014 25 2.2.1. Capital mobilization activity 25 2.2.2. Lending activity 28 2.2.3. Business result of SCB, Hong Bang branch, Hai Phong city 30 2.3. Current situation of credit operation efficiency to SMEs in SCB, Hong Bang branch, Hai Phong city. 32 2.3.1. Credit products and services to SMEs in SCB, Hong Bang branch, Hai Phong city 32 2.3.2. The process of granting credit terms to SMEs in SCB, Hong Bang branch, Hai Phong city 32 2.3.3. Scales and the situation of credit operation efficiency to SMEs in SCB, Hong Bang branch, Hai Phong city 36 2.4. Evaluation of credit operation efficiency to SMEs in SCB, Hong Bang branch, Hai Phong city in 2012-2014 47 2.4.1. Achievements in credit operation efficiency to SMEs in SCB, Hong Bang, Hai Phong city 47 2.4.2. Limitations of credit operation efficiency in SCB, Hong Bang branch, Hai Phong city 49 Pham Thi Thuy Hang CQ50/51.02 7 Graduation Thesis 2.4.3. Reasons for limitations of credit operation efficiency in SCB, Hong Bang branch, Hai Phong city 50 CHAPTER 3: SOLUTIONS TO IMPROVE THE EFFICIENCY OF CREDIT OPERATION TO SMEs IN SCB, HONG BANG BRANCH, HAI PHONG CITY 52 3.1. Development orientation of SCB, Hong Bang branch, Hai Phong city 52 3.1.1. General orientation of SCB, Hong Bang branch, Hai Phong city 52 3.1.2. Orientation towards the improvement of credit operation efficiency to SMEs in 2015-2020 53 3.2. The experience of some countries in Asia about credit operation to SMEs and lessons learned to Viet Nam 54 3.2.1 The experience of some countries in Asia about credit operation to SMEs 54 3.2.2. Lessons learned to Viet Nam 55 3.3. Solutions to improve the efficiency of credit operation to SMEs in SCB, Hong Bang branch, Hai Phong city 55 3.3.1. Focusing on the quality of capital mobilization activity. 55 3.3.2. Building a flexible lending rate mechanism to SMEs 56 3.3.3. Improving the efficiency of appraisal to SMEs 56 3.3.4. Simplifying loan procedures, loan profile to SMEs 57 3.3.5. Regular monitoring of credit to SMEs 57 3.3.6. Completing the information system 58 3.3.7. Improving the level of credit officers 58 3.4. Recommendations to the government, State Bank of Vietnam, SMEs and SCB's headquarter 3.4.1. Recommendations to the Government 59 59 Pham Thi Thuy Hang CQ50/51.02 8 Graduation Thesis 3.4.2. Recommendations to the State Bank of Viet Nam 59 3.4.3. Recommendations to SCB's headquarter 60 3.4.4. Recommendations to SMEs CONCLUSION 61 62 REFERENCE 63 LIST OF ABBREVIATIONS AOF Academy Of Finance EBT Earnings Before Tax ECU European Currency Unit ESAF Enhanced Structural Adjustment Facility EU European GDP Gross Domestic Product GSO General Statistic Office JPY Japanese Yen No Number ODA Official Development Assistant SCB Sai Gon Joint Stock Commercial Bank Pham Thi Thuy Hang CQ50/51.02 9 Graduation Thesis SISME Science Institution of Small and Medium - sized Enterprise SMEs Small and Medium - sized Enterprises US United States VND Viet Nam Dong Pham Thi Thuy Hang CQ50/51.02 10 Graduation Thesis LIST OF FIGURES AND TABLES Figure 1: Organizational structure of SCB, Hong Bang branch, Hai Phong Table 1: Types of loans in commercial banks 7 Table 2: Standards of SMEs in some countries 13 Table 3: Standards of SMEs in Viet Nam 14 Table 4: Total mobilized capital of SCB, Hong Bang branch, Hai Phong city from 2012 to 2014 26 Table 5: Lending situation of SCB, Hong Bang branch, Hai Phong city from 2012 to 2014 29 Table 6: Business results of SCB, Hong Bang branch, Hai Phong city from 2012 to 2014 31 Table 7: Loan sales to SMEs in SCB, Hong Bang branch, Hai Phong city from 2012 to 2014 36 Table 8: The outstanding loans to SMEs in SCB, Hong Bang branch, Hai Phong city from 2012 to 2014 38 Table 9: The outstanding loans situation to SMEs was classified by term in SCB, Hong Bang branch, Hai Phong city from 2012 to 2014 39 Table 10: The situation of outstanding loans to SMEs was classified by collateral in SCB, Hong Bang branch, Hai Phong city from 2012 to 2014 41 Table 11: The situation of the outstanding loans to SMEs was classified by economic sectors in SCB, Hong Bang branch, Hai Phong city in 2012-2014 42 Table 12: The rate of SMEs' overdue loans in SCB, Hong Bang branh, Hai Phong city from 2012 to 2014 44 Table 13: The rate of bad debts of SMEs in SCB, Hong Bang branch, Hai Phong city from 2012 to 2014 45 Pham Thi Thuy Hang CQ50/51.02 11 Graduation Thesis Table 14: Income ratio of SCB, Hong Bang branch, Hai Phong city from 2012 to 2014 46 Pham Thi Thuy Hang CQ50/51.02 12 Graduation Thesis INTRODUCTION 1, Rationale of study Small and medium – sized enterprises (SMEs) play an important role for Viet Nam's economy, especially in the period of industrialization, modernization as well as international economic integration. The fact shows that SMEs have contributed nearly 40 percent of GDP and 50 percent of jobs for the society. Therefore, this type of enterprises receives a lot of interest and support from the government. It is confirmed that the bank credit greatly contributes to the success of SMEs. The reason is that commercial banks are considered as a funding channel of national and global economy. They are very important position in financial intermediation system. In commercial banks, lending activity is one of the most basic and practical activity. However, commercial banks are cautious when deciding to make loans to SMEs because this type of enterprises has potential risks affecting the continuity of business operation of the banks and leads to the loss of banks' solvency now. As a result, SMEs are difficult to access to capital of commercial banks and not many chances to innovate technology. It causes that the credit operation to SMEs of commercial banks is limited. Commercial banks in general and Sai Gon Joint Stock Commercial Bank (SCB), Hong Bang branch, Hai Phong city in particular also make efforts to enhance the quality of credit to SMEs, but in fact, these banks only focus on loans to SMEs in the short term with high interest rates to limit risks, give complex loan procedures and resolutely say no to customers who do not meet the lending conditions. As a result, it significantly affects commercial banks' profits and SMEs miss investment opportunities. Clearly, improving the Pham Thi Thuy Hang CQ50/51.02 13 Graduation Thesis efficiency of credit operation to SMEs is very important. Based on this viewpoint and current situation of credit operation to SMEs in SCB, Hong Bang branch, Hai Phong city, I chose the topic: "Situation, solutions to improve the efficiency of credit operation to SMEs in the Sai Gon Joint Stock Commercial Bank (SCB), Hong Bang branch, Hai Phong city" to study. 2, Aims of the study The study focused on the efficiency of credit operation to SMEs and solutions to improve the efficiency of credit operation to SMEs in SCB, Hong Bang branch, Hai Phong city. The research aimed at three main purposes. Firstly, the thesis gave theoretical background about credit operation efficiency to SMEs in commercial banks. Secondly, the thesis analyzed and evaluated current situation of credit operation to SMEs in SCB, Hong Bang, Hai Phong city. Finally, the thesis gave solutions and recommendations to improve the efficiency of credit operation to SMEs in SCB, Hong Bang branch, Hai Phong city. 3, Scope of study Studying the issues that clearly reflect the efficiency of credit operation to SMEs including the process of granting credit to SMEs, credit products and services to SMEs, the current situation of lending activity to SMEs, debt collection to SMEs, bad debts and overdue loans to SMEs of SCB, Hong Bang branch, Hai Phong city in the period of 2012-2014. From that, giving solutions to improve the efficiency of credit operation to SMEs in the branch. 4, Methodology To achieve the purpose of research, the thesis used some instruments as follow: Pham Thi Thuy Hang CQ50/51.02 14 Graduation Thesis The first is data analysis method. Specially, the thesis analyzed the situation of credit operation to SMEs in the branch through comparing data in the period of 2012-2014 to show the growth of credit operation to SMEs. Besides, the thesis also used financial ratios to evaluate the efficiency of credit operation to SMEs in the branch. The second is comparing method. The thesis compared standards of SMEs between some countries and Viet Nam, SMEs situation between Hai Phong and Viet Nam and the credit operation between theory and practice in order to improve the persuasiveness of thesis and gave reasonable solutions. The third is statistical and descriptive method. The purpose of these methods is to measure, describe, present data, and then give conclusions from the data. With these methods, current credit situation to SMEs in the branch clearly pointed The fourth is synthetic method through analyzing rationale of study in chapter 1 and data in chapter 2. 5, Organization of the study Besides introduction and conclusion, the thesis is divided into three main chapters as following: Chapter 1: Rationale of credit operation efficiency to small and medium – sized enterprises in commercial banks. Chapter 2: Current situation of credit operation for small and medium – sized enterprises in Sai Gon Joint Stock Commercial Bank, Hong Bang branch, Hai Phong city. Pham Thi Thuy Hang CQ50/51.02 15 Graduation Thesis Chapter 3: Solutions and recommendations to improve credit operation efficiency for small and medium – sized enterprises in Sai Gon Joint Stock Commercial Bank, Hong Bang branch, Hai Phong city. CHAPTER 1 LITERATURE REVIEW 1.1. Commercial banks 1.1.1. Definition Commercial banks have considered as circulation system of capital to the national and global economies. Their main activity is to mobilize the temporarily idle funds in the economy and provide for the people who need money in order to ensure continuous business process and make profit. Discussing the concept of commercial banks, each country has its own definition. For example, according to the Danish banking law in 1930, commercial banks are essential banks including deposit operations, trading in gold and silver, practicing commercial or real estate fields, credit facilities and the draft to transfer funds and insure. According to US's assertion, commercial banks are companies specializing in providing financial services and operating in financial service industry. In Vietnam, according to Decree No 59/2009/ND - CP dated on July 16, 2009 by Government about the organization and operation of commercial banks, a commercial bank is a bank performing all bank activities and other business Pham Thi Thuy Hang CQ50/51.02 16 Graduation Thesis activities so as to make profit under the provisions of the Credit Institutions Law and other provisions of law. From above three definitions, it is confirmed that all commercial banks have three main features. Firstly, commercial banks accept deposits with the responsibility to repay. Secondly, commercial banks use deposits to make loans, invest and discount. Finally, these banks implement payments and provide services to their clients. 1.1.2. Basic activities of commercial banks. In consonance with Article 4, Section 12 of Credit Institutions Law dated on June 16, 2010 by the XII National Assembly, banking operation is the business and the regular supply of one or more transactions as follow: a) Acceptance of deposits; b) Granting credit, c) Providing payment services through accounts. Nowadays, bank activity makes significant progress; however, it still contains three main activities. According to Mr Pham Ngoc Dung and Dinh Xuan Hang, 2011 in Finance and currency, commercial banks' activities includes: 1.1.2.1. Capital mobilization activity of commercial banks It is a basic operation and affects the quality of the banking operation. Commercial banks raise capital from the following sources: The first source is bank owners. Capital consists of authorized capital, reserved funds and other debt assets under the regulations of central bank. It is a decisive factor and life preserver for banks' business scale, especially as banks faced the loss of solvency and bankruptcy. Pham Thi Thuy Hang CQ50/51.02 17 Graduation Thesis The second source is economic entities. This is the most important capital source reflecting the banks' nature "borrow money to lend money". The capital was mainly formed through payment deposits and known as current account, termed deposits, savings deposits The third source is borrowing. Commercial banks can borrow from the central bank or other credit institutions in domestic and foreign. The last is other sources. Commercial banks can raise capital from other sources such as support capital, investment and development capital, investment trust funds to lend under the program or construction project, deposits of other banks, etc. 1.1.2.2. Asset specialization - using funds Asset specialization- using funds involves using the capital raised from debt asset specialization. It includes three main activities. They are lending activity, investment, joint venture capital contribution and budgetary operation. The first activity is lending. Lending operation is the most important activity of commercial banks. This activity provides variety of loan types to customers: ● Short - term loan is the type of loan with less - than- one - year terms and high lending turnover. This type is necessary for the business to offset the shortage of working capital of businesses as well as capital demand of individuals in short term. ● Medium - term loan is the type of loan with one - year to five - year terms. These loans are useful to investing and purchasing fixed assets, improving or renovating equipment and expanding production ● Long - term loan is the type of loan with a term of more than five years or a maximum term of 20-30 years, even 40 years. It is used to finance capital for Pham Thi Thuy Hang CQ50/51.02 18 Graduation Thesis construction, transportation, programs and projects of socio-economic development with large scales. In table 1, the nature of each type of loan is indicated: Pham Thi Thuy Hang CQ50/51.02 19 Graduation Thesis Table 1: Types of loans in commercial banks Targets Term Short-term ≤ 1 year Medium-term Long-term 1 year < loans ≤ ≥ 5 years 5 years Loan offset the invest and purchase finance capital for purpose shortage of fixed assets, improve, construction, working capital renovate equipment transportation, and expand programs and projects production of socio-economic development with the large-scale Interest low high highest Liquidity high low lowest Risk high highest low The second activity is securities investment. Commercial banks play the role as investors and sponsors to help businesses invest securities. Commercial banks make profits through yield securities and stock market price differences on the market. The third activity is joint venture capital contribution. Commercial banks invest an amount of capital to associate with other commercial banks, credit institutions and enterprises in the field of production, trade and services with determination to increase equity participation and create competitive position on the market. The last activity is budgetary operation. This activity contains cash reserve demand so as to pay for clients, deposits in other banks and deposits in the Pham Thi Thuy Hang CQ50/51.02 20 Graduation Thesis central bank. Although it doesn't directly create profit, it plays an extremely important role in the process of payment for clients, liquidity risk reduction. 1.1.2.3. Service operation of commercial banks Apart from credit activities, commercial banks also constantly improve services such as payment services, guarantee, foreign currency, trust fund activities, information activities, consultancy to earn additional income. 1.1.3. Bank credit 1.1.3.1. Definition There are many definitions of bank credit. For example, credit is a property transaction between borrowers and lenders on the basis of borrowers' repayment promise in the future. Another definition is that credit is a contractual agreement in which a borrower receives something of value now and agrees to repay the lender at some date in the future, generally with interest However, we will have a full and brief definition in finance and currency textbook of AOF Press. According to Mr Pham Ngoc Dung and Dinh Xuan Hang, 2011 in Finance and currency, credit is the credit relationship between lenders and borrowers based on the principle of repayment. From the above definition, bank credit defined as the credit relationship between banks and economic entities (businesses, individuals, organizations) in the national economy based on the principle of repayment. 1.1.3.2. The nature of bank credit Bank credit has four principal characteristics: The first nature is that bank credit is a transaction between banks and borrowers based on equity and mutual benefit. Pham Thi Thuy Hang CQ50/51.02