ABBREVIATION

1 NHNN Ngn hng Nh Nc The State Bank of Vietnam

2 NHCT

(VIETINBANK) Vietnam Joint Stock Commercial Bank for Industry and Trade

3 NHTM Ngn hng Thng mi Commercial Bank

4 TMCP Thng mi C phn Joint Stock Commercial

5 TSB Ti sn bo m Guarantee Asset

6 TS Ti sn Asset

7 CBTD Cn b tn dng Credit Oficers

8 CB-NV Cn b nhn vin Officers

9 CBQHKH Cn b quan h khch hng Customer Relationship Officer

10 CBQLRR Cn b qun l ri ro Risk Management Officer

11 LDPKH Lnh o phng khch hng Leader of customer department

12 LDPQLRR Lnh o phng qun l ri

ro The leader of risk management

13 PKH Phng khch hng Office Customers

14 PQLRR Phng qun l ri ro Risk Management Department

15 HDCTD Hp ng cp tn dng Credit Contract

16 TTT T trnh thm nh Appraisal Report

17 BCDX Bo co xut Report Proposed

18 DSCV Doanh s cho vay Loan sales

19 DSTN Doanh s thu n Debt collection

20 CVTD Cho vay tiu dng Consumer loans

21 XD SCN Xy dng v sa cha nh House construction and repair

loan

ACKNOWLEDGEMENT

Undergraduate thesis is essay summarizing the knowledge of four-year universities, is

the crystallization of the theory in books and practices. Completion of this thesis is, I

would like to thank sincerely to the teacher, the teacher training Faculty, Duy Tan

University has dedicated teaching rooms, equipped with the necessary knowledge to

help me go into practice. In particular, I send thank sincerely and profoundly to Master.

Nguyen Thi Tuyen Ngon was enthusiastically telling, instructions to help me complete

this thesis.

Through this, I aslo thank to the credit officer working in Consumer Banking

Department a Vietnam Joint Stock Commercial bank for Industry and Trade Danang

branch has created conditions to I good practice, provided the necessary documents,

data, help me complete the thesis, the valuable practical experience during practice at

the Bank.

Although there have been many attempts, but due to limited knowledge, so I've

inevitably make mistakes. So, the children are looking forward to receiving sympathy

and the opinion of the teacher to the thesis is complete.

iii

TABLE OF CONTENTS

ACKNOWLEDGEMENT

ABBREVIATION

TABLE OF CONTENTS ................................................................................................... iii

LIST OF TABLE AND CHART ........................................................................................ x

ABSTRACT ....................................................................................................................... xii

INTRODUCTION

Chapter 1: THE BASICS THEORY OF LENDING OPERATION TO HOUSE

CONSTRUCTION AND REPAIR IN COMMERCIAL BANK ..................................... 1

1.1. Overview of lending at commercial banks .................................................................. 1

1.1.1. The concept of lending ............................................................................................. 1

1.1.2. Basic principles of a loan .......................................................................................... 1

1.1.3. Classification of loans ............................................................................................... 4

1.2. The operation of house construction and repair loan in commercial bank ............. 8

1.2.1. The concept of house construction and repair loan .................................................. 8

1.2.2. Characteristics loan for house construction and repair loan ..................................... 9

1.2.3. The role of house construction and repair loan ...................................................... 10

1.2.3.1. To the bank ...................................................................................................... 10

1.2.3.2. To borrower ..................................................................................................... 11

1.2.3.3. To soicety ......................................................................................................... 11

1.2.1. Factors affecting on house construction and repair loan ........................................ 11

1.2.4.1. Objective factors .............................................................................................. 11

1.2.4.2. Subjective factors ............................................................................................. 13

1.2.5. A number of criteria used to analyze ...................................................................... 15

1.2.5.1. Sales of loan ..................................................................................................... 15

1.2.5.2. Debt collection ................................................................................................. 16

1.2.5.3. Outstanding loans............................................................................................. 16

1.2.5.4. NPL (Non performing loan) ............................................................................ 17

1.2.5.5. NPL ratio (Non performing loan ratio) ............................................................ 19

iv

Chapter 2: THE STATE OF LENDING OPERATION TO HOUSE

CONSTRUCTION AND REPAIR AT VIETNAM JOINT STOCK

COMMERCIAL BANK FOR INDUSTRY AND TRADE (VIETINBANK) DANANG BRANCH .......................................................................................................... 20

2.1. Overview of Vietnam Joint Stock Commercial Bank for Industry and Trade Danang branch ................................................................................................................... 20

2.1.1. The establishment and development of Vietinbank - Da Nang branch .................. 21

2.1.2. Organizational chart ................................................................................................ 22

2.1.3. The function and tasks of the department ............................................................... 22

2.1.4. Network operations the Vietnam Joint Stock Commercial Bank of Industry and

Trade Danang branch ..................................................................................................... 24

2.1.5. The Bank's business activities ................................................................................ 25

2.1.6. Business result at Vietinbank - Da Nang branch over 3 years (2010-2012) .......... 27

2.1.6.1. Mobilizing capital result at Vietinbank - Da Nang branch over 3 years

(2010-2012) ................................................................................................................... 27

2.1.6.2. The result of lending at Vietinbank-Danang branch over 3 years (2010-

2012) .............................................................................................................................. 30

2.1.6.3. Business operations result at Vietinbank - Da Nang branch over 3 years

(2010-2012) ................................................................................................................... 35

2.2. The state of lending operation construction and house repair in Vietnam Joint

Stock bank of Industry and Trade Danang branch over 3 years (2010 2012) ....... 38

2.2.1. The regulation of loan products to house construction and repair in Vietnam

Joint Stock Bank of Industry and Trade Danang branch ............................................... 38

2.2.1.1. The subject of lending ...................................................................................... 38

2.2.1.2. Loan applications ............................................................................................. 38

2.2.1.3. Loan payment method ...................................................................................... 39

2.2.1.4. Loan term ......................................................................................................... 40

2.2.1.5. Guaranteed loans form ..................................................................................... 40

2.2.1.6. The maximum loan .......................................................................................... 41

2.2.1.7. Loan applications ............................................................................................. 41

2.2.1.8. The regulation on time to finish loan procedures ............................................. 42

2.2.1.9. Loan process ..................................................................................................... 42

v

2.2.2. The state of lending operation construction and house repair at Vietinbank Da Nang branch over 3 years (2010 2012) .................................................................... 48

2.2.2.1. The state of lending general operation construction and house repair at

Vietinbank Da Nang branch over 3 years (2010 2012) ........................................... 48

2.2.2.2. The state of lending operation construction and house repair according to

the term loan at Vietinbank Da Nang branch over 3 years (2010 2012) ................. 52

2.2.2.3. The state of lending operation construction and house repair according to

the guarantee at Vietinbank Da Nang branch over 3 years (2010 2012) ................ 56

2.2.2.4. The state of lending operation construction and house repair according to

the purpose of loan at Vietinbank Da Nang branch over 3 years (2010 2012) ....... 60

2.2.2.5. The state of lending operation construction and house repair according to

the borrowers at Vietinbank Da Nang branch over 3 years (2010 2012) ................ 64

2.2.3. General comment of lending operation construction and house repair at

Vietinbank Danang brach over 3 years (2010 2012) .................................................. 69

2.2.3.1. The results achieved ......................................................................................... 69

2.2.3.2. The limitations .................................................................................................. 71

Chapter 3: SOLUTIONS AND SOME RECOMMENDATIONS TO PROMOTE

LENDING OPERATIONS TO HOUSE CONSTRUCTION AND REPAIR AT

VIETNAM JOINT STOCK COMMERCIAL BANK FOR INDUSTRY AND

TRADE (VIEINBANK) DANANG BRANCH ............................................................. 73

3.1 The advantages and disadvantages for the lending operations of construction

and house repair. ................................................................................................................ 73

3.1.1. Advantages. ............................................................................................................. 73

3.1.2. Disadvantage ........................................................................................................... 75

3.2. Development plan of the Vietnam Joint Stock Commercial Bank of Industry

and Trade (Vietinbank) - Da Nang branch...................................................................... 76

3.3. Solutions to promote lending activity to construction and repair housing in

Vietnam Joint Stock Commercial Bank for Industry and Trade Danang branch in the near future. ............................................................................................................... 78

3.3.1. Main Solution ......................................................................................................... 78

3.3.1.1. Simplify procedures of loans ............................................................................ 78

3.3.1.2. Diversification of products for lending construction and house repair ............ 80

3.3.2 The solution supports ............................................................................................... 82

vi

3.3.2.1 Human Resouce Solutions ................................................................................. 82

3.3.2.2. Solutions to marketing ...................................................................................... 85

3.4. Some recommendations .............................................................................................. 87

3.4.1 To the State Bank of Vietnam.................................................................................. 87

CONFERENCES ................................................................................................................ 90

APPENDIX 1: Process for lending construction and house repair at Vietinbank Danang branch ................................................................................................................... 91

LI M U

Chng 1: C S L LUN V HOT NG CHO VAY XY DNG V SA CHA NH TI NGN HNG THNG MI ............................................ 93

1.1. Khi qut chung v hot ng cho vay ti Ngn hng Thng mi ...................... 93

1.1.1. Khi nim cho vay .................................................................................................. 93

1.1.2. Nguyn tc cho vay ................................................................................................. 93

1.1.3. Phn loi cho vay .................................................................................................... 96

1.2. Hot ng cho vay xy dng v sa cha nh ti Ngn hng Thng mi ..... 101

1.2.1. Khi nim cho vay xy dng v sa cha nh .................................................. 101

1.2.2. c im cho vay xy dng v sa cha nh ................................................... 101

1.2.4. Vai tr cho vay xy dng v sa cha nh ........................................................ 102

1.2.4.1. i vi ngn hng .......................................................................................... 102

1.2.4.2. i vi ngi i vay ...................................................................................... 103

1.2.4.3. i vi x hi ................................................................................................ 103

1.2.5. Nhn t nh hng n cho vay xy dng v sa cha nh ............................. 104

1.2.5.1. Nhn t khch quan ....................................................................................... 104

1.2.5.2. Nhn t ch quan ........................................................................................... 106

1.2.6. Ri ro trong hot ng cho vay xy dng v sa cha nh .............................. 107

1.2.6. Mt s ch tiu s dng phn tch .................................................................... 108

1.2.6.1. Doanh s cho vay (DSCV) ............................................................................ 108

1.2.6.2. Doanh s thu n (DSTN) ............................................................................... 108

1.2.6.3. D n cho vay (DNCV) ................................................................................. 109

1.2.6.4. N qu hn (N xu) ..................................................................................... 109

vii

1.2.6.5. T l n qu hn (%) ..................................................................................... 111

Chng 2: THC TRNG HOT NG CHO VAY XY DNG V SA CHA NH TI NGN HNG TMCP CNG THNG VIT NAM (VIETINBANK) CHI NHNH NNG ................................................................ 113

2.1. Tng quan v Ngn hng TMCP Cng Thng Vit Nam (Vietinbank) chi nhnh Nng ................................................................................................................. 113

2.1.1. S hnh thnh v pht trin ca Ngn hng Vietinbank chi nhnh Nng .... 114

2.1.2. S c cu t chc ............................................................................................. 115

2.1.3. Chc nng v nhim v cc phng ban ................................................................ 116

2.1.4. Mng li hot ng ca Ngn hng TMCP Cng Thng Vit Nam chi nhnh Nng ............................................................................................................... 117

2.1.5. Cc hot ng kinh doanh ngn hng cung cp ................................................... 118

2.1.6. Tnh hnh kinh doanh ca Ngn hng Vietinbank chi nhnh Nng qua 3 nm (2010 2012) .......................................................................................................... 120

2.1.6.1. Tnh hnh huy ng vn ti Ngn hng Vietinbank chi nhnh Nng qua 3 nm (2010 2012) ............................................................................................. 120

2.1.6.2. Tnh hnh cho vay ti Ngn hng Vietinbank chi nhnh Nng qua 3 nm (2010 2012) ....................................................................................................... 123

2.1.6.3. Kt qu hot ng kinh doanh ti Ngn hng Vietinbank chi nhnh Nng qua 3 nm ( 2010 2012 ) ................................................................................. 127

2.2. Thc trng hot ng cho vay xy dng v sa cha nh ti Ngn hng TMCP Cng Thng Vit Nam chi nhnh Nng qua 3 nm (2010 2012) ...... 131

2.2.1. Cc qui nh v sn phm cho vay xy dng v sa cha nh ti Ngn hng TMCP Cng Thng Vit Nam chi nhnh Nng .................................................. 131

2.2.1.1. i tng vay vn .......................................................................................... 131

2.2.1.2. iu kin vay vn ........................................................................................... 131

2.2.1.3. Phng thc cho vay ...................................................................................... 132

2.2.1.4. Thi hn cho vay ........................................................................................... 133

2.2.1.5. Hnh thc m bo vn vay ........................................................................... 133

2.2.1.6. Mc cho vay ti a ........................................................................................ 134

2.2.1.7. H s vay vn ................................................................................................. 134

2.2.1.8. Qui nh v thi gian gii quyt th tc vay vn ........................................... 134

viii

2.2.1.9. Qui trnh cho vay ............................................................................................ 135

2.2.2. Thc trng hot ng cho vay xy dng v sa cha nh ti Ngn hng TMCP Cng Thng Vit Nam chi nhnh Nng qua 3 nm ( 2010 2012 ) ....... 140

2.2.2.1. Thc trng hot ng chung cho vay xy dng v sa cha nh ti Ngn hng TMCP Cng Thng Vit Nam chi nhnh Nng qua 3 nm ( 2010 2012 ) ........................................................................................................................... 140

2.2.2.2. Thc trng hot ng cho vay xy dng v sa cha nh theo thi hn vay ti Ngn hng TMCP Cng Thng Vit Nam chi nhnh Nng qua 3 nm ( 2010 2012 )..................................................................................................... 144

2.2.2.3. Thc trng hot ng cho vay xy dng v sa cha nh theo hnh thc m bo ti Ngn hng TMCP Cng Thng Vit Nam chi nhnh Nng qua 3 nm ( 2010 2012)................................................................................................... 147

2.2.2.4. Thc trng hot ng cho vay xy dng v sa cha nh theo mc ch vay ti Ngn hng TMCP Cng Thng Vit Nam chi nhnh Nng qua 3 nm (2010 2012) ....................................................................................................... 151

2.2.2.5. Thc trng hot ng cho vay xy dng v sa cha nh theo i tng vay ti Ngn hng TMCP Cng Thng Vit Nam chi nhnh Nng qua 3 nm (2010 2012) ....................................................................................................... 155

2.2.3. Nhn xt chung v hot ng cho vay xy dng v sa cha nh ti Ngn hng TMCP Cng Thng Vit Nam chi nhnh Nng qua 3 nm (2010 2012) 160

2.2.3.1. Nhng kt qu t c ................................................................................. 160

2.2.3.2. Nhng hn ch ................................................................................................ 162

Chng 3: GII PHP V MT S KIN NGH Y MNH HOT NG CHO VAY XY DNG V SA CHA NH TI NGN HNG TMCP CNG THNG VIT NAM CHI NHNH NNG ........................................ 164

3.1.Thun li v kh khn i vi hot ng cho vay xy dng v sa cha nh . 164

3.1.1. Thun li ............................................................................................................... 164

3.1.2. Kh khn ............................................................................................................... 166

3.2. nh hng pht trin ca Ngn hng TMCP Cng Thng Vit Nam chi nhnh Nng ................................................................................................................. 167

3.3. Gii php y mnh hot ng cho vay xy dng v sa cha nh ti Ngn hng TMCP Cng Thng Vit Nam chi nhnh Nng trong thi gian ti ....... 169

3.3.1.Gii php chnh ...................................................................................................... 169

3.3.1.1. n gin ha th tc vay vn ......................................................................... 169

ix

3.3.1.2. a dng ha sn phm cho vay xy dng v sa cha nh ........................... 172

3.3.2.Gii php h tr ..................................................................................................... 174

3.3.2.1. Gii php v nhn s ...................................................................................... 174

3.3.2.2. Gii php v Marketing .................................................................................. 176

3.4. Mt s kin ngh ........................................................................................................ 178

3.4.1. i vi Ngn hng Nh Nc Vit Nam ............................................................. 178

3.4.2. i vi hi s chnh Ngn hng TMCP Cng Thng Vit Nam ....................... 179

KT LUN ....................................................................................................................... 181

TI LIU THAM KHO ............................................................................................... 182

PH LC 01: Quy trnh cho vay xy dng sa cha nh ti Ngn hng Vietinbank Nng. ..................................................................................................... 183

x

LIST OF TABLE AND CHART

1 Table

2.1

Mobilizing capital situation in Vietinbank - Da Nang branch over 3

years (2010-2012)

2 Table

2.2

The situation of lending at Vietinbank-Danang branch over 3 years

(2010-2012)

3 Table

2.3

Business operations results at Vietinbank - Da Nang branch over 3

years (2010-2012)

4 Table

2.4

The general situation of lending at Vietinbank - Danang branch over 3

years (2010-2012)

5

Table

2.5

The situation of lending operation construction and house repair

according to the term loan at Vietinbank Da Nang branch over 3

years (2010 2012)

6

Table

2.6

The situation of lending operation construction and house repair

according to the guarantee at Vietinbank Da Nang branch over 3

years (2010 2012)

7

Table

2.7

The situation of lending operation construction and house repair

according to the purpose of loan at Vietinbank Da Nang branch

over 3 years (2010 2012)

8

Table

2.8

The situation of lending operation construction and house repair

according to the borrowers at Vietinbank Da Nang branch over 3

years (2010 2012)

9 Chart

2.1

Mobilizing capital result at Vietinbank - Da Nang branch over 3 years

(2010-2012)

10 Chart

2.2

The result of lending operation at Vietinbank-Danang branch over 3

years (2010-2012)

xi

11 Chart

2.3

Business operations result at Vietinbank - Da Nang branch over 3

years (2010-2012)

12 Chart

2.4

The situation of NPL ratio lending operation at Vietinbank-Danang

branch over 3 years (2010-2012)

13 Chart

2.5

The situation of outstanding construction and house repair loan

according to the term loan at Vietinbank Da Nang branch over 3

years (2010 2012)

14 Chart

2.6

The situation of NPL of construction and house repair according to

the guarantee at Vietinbank Da Nang branch over 3 years (2010

2012)

15 Chart

2.7

The situation of outstanding construction and house repair loan

according to the purpose of loan at Vietinbank Da Nang branch

over 3 years (2010 2012)

16 Chart

2.8

The situation of NPL construction and house repair according to the

officers at Vietinbank Da Nang branch over 3 years (2010 2012)

xii

ABSTRACT

Through the process of understanding and researching, I realized demand for loans for

new construction, remodeling of the people in the area is very large. So, I chose the

topic The state of lending operation construction and house repair at Vietnam Joint

Stock Commercial Bank for Industry and Trade Da Nang branch. With this topic,

the goal is to understand the overall lending activity to build and repair houses in the

bank based on data provided by the bank. From there, stated the he advantages and

disadvantages of bank current, proposed a number of solutions for the construction

loan, home repair based on the overall assessment of the bank. The process of analyze

is using the method: synthesis, comparison, interpretation, induction to inductive

system of lending activities to build and repair houses in the bank. Thereby, the

expected result is to evaluate the current status of lending construction and repairing.

Proposed some methods to the bank possible develop and improve product, while

improving profitability of bank. In addition, this topic provides references for students.

INTRODUCTION

1. Reason for choosing the topic

In recent years, Vietnam's economy has made the change, income people are improved,

improved standards of living. Da Nang is also not out of that development. Danang city

are on the rise with growing population. Under the city's policy impact on the

architectural planning of the city, many people have and are being removed or

renovated housing. In addition, the city of Danang is ideally located near the sea, the

River should be more of the bad influence of the natural environment and the weather.

Therefore, the construction and house repair of people across the city become

necessary.

In addition to the support, promotion and financial issues of the city but the people that

needs the loan to construct or repair spacious house. Catching these factors,

commercial banks gave out loans to construct and repair housing to meet the needs of

the people.

So, I choose topic: The state of lending operation construction and house repair at

Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank)

Danang branch

Project structure includes three chapters:

Chapter 1:The basis theory of lending operations to house construction and

repair in commercial banks

Chapter 2: The state of lending operation construction and house repair at

Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) Danang

branch

Chapter 3: Solutions and some recommendations to promote lending operations

to house construction and repair at Vietnam Joint Stock Commercial Bank for Industry

and Trade (Vietinbank) Danang branch

Research Objective:

The system is the general theory of constructing and repairing houses in the

commercial banks.

Assessment of the state of the loan operations to build and repair housing at

Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) Danang

branch

Proposes some solutions to the Bank can execute in order to develop and

improve the product house construction and repair in banks, at the same time

enhancing the Bank's trading profits.

Provide documents to consult on the construction and repair of houses.

1. Object and research time:

Research Subjects: Industrial and Commercial Bank Vietnam - Da Nang

branch

Research time: The data of the branch from 2010 to 2012

2. Scope of the study: the state of lending operation construction and house repair

3. Research method: topic is based on methods:

Statistical methods

Comparative methods

Inductive method and interpretation.

1

Chapter 1: THE BASICS THEORY OF LENDING OPERATION TO HOUSE

CONSTRUCTION AND REPAIR IN COMMERCIAL BANK

1.1. Overview of lending at commercial banks

1.1.1. The concept of lending

In the economy there is a difference in the areas of production and business activities,

the differences in scale and duration of the use of capital economic organization. In the

circulation and flow that occurred surplus or shortage of capital in the economy

temporarily. Lack of capital is not only a demand for businesses operating in the field

of production, circulation but also needs additional temporary shortfall between

revenues and expenditures of other organizations and individuals in society, including

the state budget. Therefore, the role of the bank is financial intermediary institutions

regulate cash flow in the economy. Bank focus temporarily idle funds in the economy

brought distribute capital shortfall based on the principle of return to be balanced and

timely response to the needs of capital for individuals and economic organization.

Therefore, pursuant to Item 16 of Article 14 of the Credit Institutions Act 2010 (Act

No: 47/2010/QH12) regulations.

"Lending is a form of credit, under which a lender or delivery commitments to

customers an amount to be used for identification purposes in a certain period of time

as agreed with the principle of repayment of principal and interest"

1.1.2. Basic principles of a loan

Principle number 1: principal and interest of a loan must be paid back.

Borrowers need to pay the loans back on time with an amount certain of interest

included. This is because loan capital of banks is primarily gathered or called capital

from all of the business sectors in society. Thus, borrowers of the bank after a certain

amount of time have to pay back principal and interest. Borrowing entity after a fixed

length of time have to pay the banks an agreed income because this is the mainly

income sources of a bank and this is the basic for banks to post in the accounts and to

perform duties to government budgets. If a borrowing entity does not pay back its debt

2

to the bank on the due date, the bank will mark that debt as an overdue debt and the

entity has to pay a greater interest rate than normal interest rate. Simultaneously, it

ensures the unity between the movement of materials, goods and the monetary

movement within the economy; it also contributes to monetary as well as price

stablizing.

Based on this principle, banks are able to preserve their capital and put their capital to

business activities timely. So banks can generate revenue to cover expenses and make

profit in order to maintain and improve activities of banks.

Principle number 2: loan capital must be guaranteed by an asset.

This principle is to maintain the balance of the relationship between money-product,

and to respect to the rules of currency circulation and reduce the risk for the Bank.

When customers do not have the ability to repay the secured loan is the debt collection

resources of the Bank.

The Bank loans are to present the full documents, invoices, goods purchase contracts.

On that basis, the Bank conducted a review of lending is equivalent to the value of

supplies of goods have to be indicated on the voucher, invoice, contract, this applies to

State enterprises. The business enterprise want the Bank's loans are mortgages with

assets, bank lenders typically by 60-70% of the mortgage value. When a customer is

not able to pay back the loan, guaranteed loan will be the secondary source for the bank

to collect debts. Guaranteed assets must be legally possessed by the borrower and that

asset must have usable value and is accepted by the market. Guaranteed assets can be:

Products and expenses of the process of products producing and circulating.

Jewelry

Certificate of Deposit, bonds, shares banking bills, bills of exchange...

Real estates must include the certificate of the owner (original copy); the

certificate must be notarized. If the asset is owned by a group of people, the agreement

of that group to put the asset as guarantee must be included.

3

Besides these mentioned guarantees, banks are also able to make a loan base on:

Credit guarantee: only available to customers who have been doing business

with the banks in a long-time and high credit. Related financial information

must be carefully analyzed.

Sponsor guarantee: in this case, borrower can ask another people to be sponsor

for their loan. Sponsor must be a legal entity. Necessary documents and guaranteed

assets from sponsor are required in this case. Sponsorship must be conducted by

documents which are signed by jurisdictional offices. Sponsor must be responsible for

the loan if the borrower cannot pay it back.

During the use of loans, loan units are valuable materials to ensure equal. This

principle makes the unit a loan used effectively. Bank lending safely avoid unnecessary

risks in the business of banking. In addition, this rule ensure balance relations between

commodity money in circulation and to stabilize prices.

Principle number 3: loan capital must be used legally and effectively.

The customer needs are loan banks to plan, apply for bank loans to complete the

following: loan amount, time limit use of capital, purpose and use of loans

effectiveness of bank loans. On that basis, consider checking the bank, if the bank

loans bring economic benefits and debt service, the loan decision. On the other hand on

the basis of the plan for a loan of the borrower, the banks themselves have to plan for

their loans to be active in credit investments. Principles to ensure borrowers have

enough capital and borrowing plans. At the same time this principle in order to save

capital, capital investment is key and economically efficient. If customers have demand

for loans incurred outside the plan, the bank deems it necessary and appropriate, in

balance with its resources, can lend additional borrowers.

Ensure proper use of loan agreements aim to ensure effective use of loans and loan

recovery capacity later. On the bank side, the use of loan funds for the purpose of

4

contributing to improving efficiency loans while helping customers ensure solvency for

banks.

Three basic principles which are discussed above have a close-knit relationship.

Together, they form an overall unity which has a strong impact on credit relationship

between banks with other business sectors. They help banks to prevent risky factors in

order to maintain credit security and to create premise and make some pressures to

force business sectors to improve their efficiency. Credit businesses of banks need to

change its trend fast and correctly to real business processing, promptly impulse

reorganize the objective economy of credit bank services according to market

mechanism under the macro adjusted management of socialist oriented government.

1.1.3. Classification of loans

In the market economy, lending activity of commercial banks is very diverse and rich

with various types of credit different.The application form for the loan will depend on

the economic characteristics of the object used to use credit capital and manage credit

capital effectively and consistent with the movement as well as different economic

characteristics of credit subjects. The following are the criteria for loan classification

Classified according to lending term

+ Short-term loans: the form of a term loan of up to 12 months. The loan is used to

supplement or offset the shortage of working capital of the business, the short-term

spending needs of the individual.

+ Medium-term: the form of a term loan from 12 months to 60 months. The purpose is

investment purchase of fixed assets, improvements and equipment innovation,

technology, business expansion, new construction projects are small and quick payback

time. Besides, it can also be used to invest in regular assets of the business, especially

start-up businesses.

+ Long-term loans: the form of a term loan of 60 months or more. Purpose is to meet

the long-term investment demand as housing construction, equipment and vehicles

have large-scale, large construction firms.

5

How to split over time help to calculate the resource bank loans, providing loan level in

a certain time period. Media businesses of banks is to borrow short-term, but from

about the 70s back, banks have switched to general business, which often seek to

increase density for long-term loans.

Classified according to loan purpose

+ Real estate loans: the types of loans related to the purchase and construction of

housing, land or property. Loans are put into production, the first rise, creating income

for the borrower.

+ Industrial and commercial loans: short-term loan is to supplement the working

capital of the business activities in the field of industry, trade and services.

Loans are an asset class with low liquidity can not sell, transfer or mortgage and high-

risk, but they bring more of income for banks. Therefore the loan industry and

commerce accounted for most of the total assets of the bank.

Industrial and commercial loans, including short-term loans for working capital

(budget support loans) and loans to medium and long-term fixed capital. The short-

term loans for working capital includes current loans (loans in the current account),

discounting commercial paper and mortgage credit. Medium and long-term loans for

investment in fixed assets such as land leasing, building factories, warehouses and

yards, equipment procurement means business ...

+ Agricultural Loans: lending is to cover the cost of agricultural production, such as

buying fertilizer, pesticides, plant seeds, feed, labor, fuel, agricultural lending ...

facilitate help farmers restructure production, specialized production of agricultural

export value, restoration and development of traditional industries, develop rural

infrastructure ...

+ Consumer loans: a form of short-and medium-term loans at an interest rate agreed

between the bank and the customer, the form of loans to meet the individual needs as

consumers purchase household items, buy automotive, construction and repair of

6

dwelling houses, student, medical, .... The borrower must have a legitimate need, and

must demonstrate a reasonable source of steady income to pay debts.

+ Loans export business: lending is to support business activities of the import and

export business. This support contributed to promote import and export business

development, attract potential customers.

Classified according to the nature guarantee

+ Loans guaranteed by assets: the form of loans secured on the basis of such mortgage

loan, mortgage or guarantee of third party assets, capital assets acquired assets used

on.The guaranteed loan must meet the conditions of the market and stable. The form of

unsecured loans as secured by securities (valuable papers), by contract farming, with

supplies and goods, with real estate

+ Non-loans guarantee by assets: the loan without collateral pledging or without the

guarantee of a third party. In this case, Bank lending based on the client's reputation.

Loans guarantee by properties is the relative form of adventure of the Bank should

have to comply with the conditions of the loans are as follows:

Firstly, the law has required that credit institutions only lend to customers who

have enough capacity in the subject, i.e. the qualified law of capabilities and behaviors.

Second, the reputation of borrowers as a condition of the loan, is the most

important condition for the subject is the borrower without collateral.

Third, to the Bank's loans in the form of loan guarantee by the property,

borrowers must have a healthy financial situatio.

Classified by the method of refund

+ Installment loans: loan type is that the repayment and interest rate periodically. This

type of loan apply for these loans are long time as real estate lending, consumer loans

for those high-value assets. In addition, this form is also used for some types of loans

have little value as loans for small entrepreneurs (market lenders), loan fund for

agricultural equipment.Usually there are 4 installment methods:

7

Additional methods.

Methods of pay equal principal and interest according to the balance at the end

of each period.

Methods of pay equal principal and interest calculated on the return of the

original capital.

Methods of pay which principal and interest are equal in all periodically

(methods).

+ Non-loan installment: is a one-time payment for the agreed term.

+ Loans repaid on demand: the types of loans to repay many times but there is no

specific term that depends on the financial ability of borrowers who can repay at any

time, apply for buying used transactional account.

Classified according to origin of credit

+ Direct loans: Bank of direct financing to customers. Complete direct borrowers to

repay the loan to the Bank.

+ Indirect loans: loans are made through the acquisition of the escrow, certificate from

the debt was incurred and remaining in the billing period as negotiable discount, buy

the votes to sell consumer goods, farm equipment or purchase installment debt.

Classified according to the method of lending

+ Single lending (lending according to the menu): the method that each loan needs

arise forcing the borrower must conduct the procedures apply for loans (loans to profile

customers, Bank loan review, ... ) and signed the credit contract.

This method is applicable to customers who need occasional loans, irregular in nature,

do not assign the credit limit.

+ Lines of credit loan: is the loan that the bank allows maintaining maximum loans

outstanding levels are maintained within a given time limit for customers. Maximum

amount of a loan is the credit limit

8

The Bank based on the purpose of your loan needs, the maximum lending rate

compared to the collateral, the Bank's capital ability to calculate and deal a credit limit

for the given time limit. Customers are disbursed and repaid several times over a

certain limit so that the total outstanding is higher credit limit.This method is

applicable to the customer is borrowing needs and debt service regularly, has a

reputation for the Bank.

+ Syndicated loan: according to the regulation of credit institutions customers (issued

decision No. 1627/2001/decision-State Bank on 31/12/2001 of the Governor (the State

Bank) is: "for the syndicated loan type is composed of a group of credit institutions and

loans for a project loan or loan schemes. In particular, a credit organization as focal

point arrangements, in cooperation with the other institutions. The syndicated loan

made under the provisions of this regulation and the regulation on co-financing of the

credit institution by the Governor of the State Bank issued ".

+ Overdraft Loan: loan form is associated with the use of current accounts of

individuals or businesses through the use of a balance over the limit allowed to the

deadline stipulated by the Bank and fees. Right to overdrafts is divided into two

categories:

Overdraft Privilege: is the most common form for the spectacle. This right is

granted to the customer and specified in the conditions of use of the account. The

customer has the right to withdraw a balance allowed without prior notice to the Bank.

Overdraft Privilege agreement: when the client wants to withdraw the balance

then the customer must ask permission.

1.2. The operation of house construction and repair loan in commercial bank

1.2.1. The concept of house construction and repair loan

Loan for house construction and repair is a form of credit Bank. In particular, the Bank

gives the client a sum of money under a certain level. Customer borrow money to build

and repair housing and is responsible for full repayment of principal and interest on

capital as required.

9

This is the type of lending banks for individual clients, families. The produce to build

and repair housing help to diversify the Bank's products, expand customer market

share. Moreover, construction loans and home repairs helps banks increase

competitiveness in comparison with other banks in the market economy. The trend of

the Bank focused on exploring and developing the consumer sector is increasingly

powerful.

1.2.2. Characteristics loan for house construction and repair loan

Loan demand is dependent on economic cycles. As the economy develops, raise the

living standard, improve the income, raising the need to meet on the housing

Therefore, the customer's loan demand is also increasing. Conversely, when the

economy recession, difficult lives, income is not high, people will have no need to

borrow in order to improve your life because they worry will not have the ability to

repay.

Lending operations with small or large scale, the Bank must give out the costs to

credit appraisal, disbursement, monitoring, debt collection, etc.Therefore, costs for the

lending operations are usually higher.

Loan demand also depends on the education level and income level. Individuals

who have high and stable income usually need a loan because they have the ability to

pay the loan.

Individual borrowers should proof of financial capacity is difficult because they

are easily concealed, or provide false information. Therefore, the quality of the

financial information of borrowers is usually not high.

Long-term loan, source of repayment customers can large fluctuations,

depending on the work, skill, experience, healths ...

Personality, qualities of clients is difficult to determine, based mainly on the

ability to assess the experience of credit evaluation but is very important in deciding

the loan's repayment.

10

1.2.3. The role of house construction and repair loan

1.2.3.1. To the bank

Increase profit

For the Bank, when it decided to put off any one of the products, the Bank shall

calculate the expected and products that will help to increase Bank profits. Besides, the

level of competition among banks increasingly fierce not only among commercial

banks in the country but also in competition with foreign banks requires the bank to

expand the client objects. Vietnam is developing rapidly should the demand for a loan

for consumption is also increasing. Therefore, the Bank is constantly developing new

products to meet the needs of the market potential and increase profits. But today, in

fierce competition with other financial institutions, banks are forced to expand

customer and product diversification to reduce risk and increase profits.Thus, the

individual is increasingly interested in more attention. Especially in countries with

developing economies or is growing strongly, the need for a loan for the consumer

sector is also growing rapidly. Therefore, the bank is constantly developing new

products to meet the needs of the market potential.

Diversification of the Bank's products.

Previously, most of the commercial banks are restricting consumer credit because that

it is the small loans and high risk. Today, the Bank has focused on implementing and

delivering the product to individual customers in order to increase the competitive

position on the market. Loans for house construction and repair is a product available

for individual clients so it contributed to implementing to diversify the products of

commercial banks

The bank has established a relationship with the customer.

By the time relatively long lending operations should the relationship between the

customer and the bank can be stretched for years, creating intimate relationships. The

clients become the best advertisement for the bank, helped the bank raise the credibility

in the market and increase the number of new customers in the future.

11

Acilitate expanded market share, raise the image of the Bank.

Through the use of loan products to build and repair housing, clients will know and use

the products and services of the bank, raise market share. This also contributed to the

increase in competitiveness and raising the Bank's good image in the minds of

customers.

1.2.3.2. To borrower

Helping to solve difficult customer financial

If as before, to repair or build houses, people must save perennial borrowers through

acquaintances, or borrowers. So, owning house, must undergo a long time living in

temporary houses or house to rent. The born of loan for house construction and repair

promptly solved the customer's financial difficulties.

Ensure professional life to settle

Former residents living in temporary homes by devastating natural disasters, house rent

or do not have the influence to unstable jobs. Through this form of lending to

contruction and repair housing contributed to the people living in these homes,

spacious. From there, the people peace of mind at work, job stability, improved

standards of living.

1.2.3.3. To soicety

Contributing to the solution the demand for social housing

This type of loan to build and repair housing problems contributed to the housing needs

of the people. Not only help them stabilize their lives, but also the peace of mind to

improve the living standards of the people. From temporary homes, house or no house

rent is through lending activities help people to live in a spacious house, fully.

Contribute to promoting economic development

Lending operations building and repairing houses make capital flow and revolving

speed faster than generating profits, contributing to economic development

1.2.1. Factors affecting on house construction and repair loan

1.2.4.1. Objective factors

12

Economic environment

The economic environment comprises all activities all economic sectors that

characterized the level of economic development, national income, average per capita

income, population. Economic factors influence to the income, spending by

individuals, households and will affect their needs for banking services. As the

economy developed and stable, the variable prices, inflation, exchange rate stability,

currency import, personal spending, households increased, so their need for banking

services also arose, as a result, consumer credit is extended. Conversely, when the

economy is unstable and stagnant, falling demand, reduce borrowing needs of the

people, because the people for the difficult situation that continue to occur in the future.

Therefore, the information on economy, per capita income, economic growth and

economic stability are all factors that need attention to bank lending activities

effectively

Social-cultural environment

Social-cultural environment including specific factors such as customs, the habit of

using Bank services, the savings rate, education level, the tastes of home, work, ...

People's consumer culture affect the behaviour and needs of banking services.

Specifically, in an environment where people have the habit of spending more saves or

tend to consume the high-value goods, consumer lending services can expand. Or in a

society of farmers, the people easy access to banking technology, easily received the

services of the Bank. For these workers the limb they desire to have stable lives, at

least when thinking about spending, improve, or enhance the standard of living,

thereby affecting the use of the Bank's products. Study on the social and cultural

factors, not only clearly define the impact behavior using the banking services and the

choice of the Bank's customers, but also help the bank officers have behaved in ways

consistent in communicating with clients.

Legal environment

13

The legal environmental , including the legal system, the system measures to ensure the

law is implemented and strictly observe the laws of the participants in business and

related disciplines. The banking business is one of the sectors subject to the close

scrutiny of the law and the relevant authorities of the Government. Thus, lending

operations to build and repair housing of the banks also do not fall outside the legal

environment. The advocates, the State's policy impact on lending works to build and

repair housing. The legal environment to give the Bank a series of new opportunities

and new challenges, such as the change in interest rate policy, regulation, ...

Competitive environment

Since the WTO so far, the banking industry has made fundamental changes to the

foreign financial institutions may hold shares of the Bank and the arrival of the foreign-

owned banks. Therefore, the degree of banking competition is increasing, not only

among the commercial banks in the country, but also to compete with the bank group

100% foreign capital. Foreign banks often have a private customer segments, the

majority of business is coming from their countries. They served the clients for so long

in the other markets and when customer open market to Vietnam, the Bank also opened

a representative office. Foreign banks are also not struck the barriers that now many

commercial banks in the country are made, such as stock lending limit, bad debt in

property lending. In particular, foreign banks have the ability to connect with a wide

network across the country. Therefore, the commercial banks in the country to innovate

products and services, have to weigh and calculate before making the appropriate

policies, create new competitive advantage of the Bank.

1.2.4.2. Subjective factors

The bank's reputation

At present, the number of banks operating many of the borrowers who need care that is

the choice of the Bank would have the credibility to believe. The banks reputation

have very important role in the introduction of the image of the bank to the customer. It

is the first factor, which helps the bank confirms the name, location in the heart, giving

14

customers firm emotional support in sending asset and loan demand, thereby attracting

many customers.

Credit policy

Credit policy including loan limits with customers, interest rate, term loans, fee,

payment method, the ability of customers to repay debts. ... All the elements that make

up the product characteristics for building and repairing houses of banking, creating

differences in lending products to build and repair houses of this bank in comparison to

other banks, expanding lending activity of the Bank to the customer. In addition, the

lending rate is an important factor affecting lending operations and the Bank's income,

is the broth. If the interest rate reduction increases the borrowing needs of the

customer. However, interest rates fell too low, the banks could not offset the costs,

prevention of risks, making a profit. If the interest rate is too high reduce the borrowing

needs of the customer. So banks need to identify short term goals and long term credit

policy, in line with the goals set out

The credit process

The credit evaluation process was also a factor in the decision to the Bank's lending

activities. The evaluation process with a system scale evaluation criteria, scientifically

but sensible, no-frills credit quality shows. In addition, the evaluation of customer

information are also equally important, including: the capacity, the capacity of human

behavior, the financial capacity of the client, ethical customer, collateral ... Currently,

Vietnam has only credit information center CIC (Credit) of the State Bank of Vietnam

to help commercial banks seek customer information but much of this data is not

updated in time and incomplete information. Therefore, the evaluation of client nhnti

their banks were difficult and risky.

The quality credit officers and facilities

Bank officers are factors that contribute to the success of the bank, is the image of the

Bank to the customer. Due to the products of the bank with non-material, should

employees need to have high professional level, flexible communication capabilities

15

and increased competitiveness, attract more customers to the bank, the represents the

effect of credit quality.

The facilities, the equipment is another advantage of the bank about lending operations

to house contruction and repair. Science and technology development, modern

equipment to facilitate banks in the storage, search, and manage customer information.

Therefore reduce costs, reduce risk, increase profits from lending operations to house

contruction and repair in the bank.

Risk of lending operations to house construction and repair

Lending operations to house construction and repair often contain many risks because

there are many problems that occurred during the period of borrowing as on interest

rates, the economy, health, natural environment.

The risk in lending operations to house construction and repair mainly credit risk, is the

risk of repayment ability of clients as the original non-repayment, the interest rate paid

on time ....Source of repayment for the Bank is essentially a regular income of client.

Your income depends on work, health status. Long term causes the underlying risk of

repayment by the client. When customers encounter events in life are likely to fail to

pay the customer's debt is huge. Therefore, the remedy to avoid this risk occurring as

banks buy insurance, or the Bank is forced to liquidate collateral of the borrower and

the collateral is property the client build or repair. However, troubled banks in the

liquidation of the secured property because the property is real property, the property

type is not liquidity high and volatile price swings. Therefore, before the loan, the Bank

must assess carefully and accurately. Moreover, factors such as natural disasters,

floods, typhoons ... also causes risks for lending operations to build and repair housing.

In addition, the Bank encountered ethical risks. The client configuration with the seller

to make false papers or customer document with credit officers false asset appraisal in

order to seize the capital of the Bank.

1.2.5. A number of criteria used to analyze

1.2.5.1. Sales of loan

16

Loan sales are the total amount the Bank has disbursed in the form of cash or wire

transfer in a given time. This indicator refers to the scale of the Bank's activities in a

period and capital supply situation for the economy, the relationship between the Bank

and the customer. In addition, the speed increase is loan target reflects the ability to

extend loans to constraction and repair housing of the Bank. This increase

demonstrates that bank lending this year more than the previous year, lending

operations to house construction and repair is open. In contrast, the index is down then

the Bank for borrowers at least. Formula:

The level of absolute growth in loan sales = (loan sales) n (loan sales) n-1

Growth rate of loan sales (%) = 1001

1

n

nn

loansales

loansalesloansales

n: the moment in n

n-1: the moment in (n-1)

1.2.5.2. Debt collection

Sales of debt collection is the total amount the Bank had recovered from the loans in a

given time. It reflects the Bank's debt situation. The higher the debt collection with

increasing loan guarantees the quality of loans. If sales of debt overdue outstanding

loans showed low, the possibility of lower interest rates and payback the credit quality

is poor. This indicator represents the capacity of the staff of credit through the debt

collection and quality evaluation of the credit staff. Formula

The level of absolute growth in debt collection

= (debt collection) n (debt collection)n-1

The growth rate of debt collection sales (%) =

n: the moment in n

n-1: the moment in (n-1)

1.2.5.3. Outstanding loans

time. It is the amount of money the Bank has not yet recovered, the amount remaining

17

after taking loans minus the amount the customer paid for the Bank. If high loan rate

demonstrates the banks have yet to recover debts, should promote the work of

collecting the debt. Also, the higher the debit balance demonstrates the scale of the

Bank's activities in the greater but also reflects the huge risk the Bank faces the

problem of overdue debt. Formula:

The level of absolute growth in outstanding loans

= (outstanding loans) n ( outstanding loan) n-1

Growth rate of outstanding loans (%) =

n: the moment in n

n-1: the moment in (n-1)

1.2.5.4. NPL (Non performing loan)

NPL is an indicator reflects the ability to manage and withdrawal of bank debt, the debt

is from group 3 onwards: Substandard, Doubtful, or Loss debt. There are many causes

that lead to bad debts such as: the instability of the economy, economic policy change

....The cause may also be derived from the reviews, analysis of credit officers when

analysing the loan does not have the ability to repay the credit review, ethics.

Circular No. 02/2013/circular-the State Bank on 21/01/2013 in article 10 have

regulations on classification of debt, set up contingency risks of credit institutions. This

is the basis for the Bank reviews, customer credit ratings. The debts are defined as

follows:

Group 1: (Current) includes:

- The term debts and credit institutions can assess the recoverability of the full

principal and interest on time.

- The bad debt less than 10 days and credit assessment institutions capable of full

recovery of principal and interest were expired, the full recovery of principal and

interest on time.

- Borrowings are classified in Group 1 under paragraph 2 of this Article.

18

Group 2: (the debt notes) include:

- Bad debts from 10 days up to 90 days.

- The debt repayment term adjustment (for business clients, the Organization, the

credit institution must have customer reviews about the possibility of full repayment of

debt principal and interest time be adjusted first).

- The debts are classified in Group 2 as defined in paragraph 3 of this article.

Group 3: (Debt under standard) include:

- Bad debts from 91 days to 180 days.

- Debt rescheduling.

- The debt is interest rate or by the customer was unable to pay the full interest

under the credit agreement.

- The debt is recovered by the Inspector concluded.

- Debt is classified into 3 groups, as defined in paragraph 2 and paragraph 3 of

this article.

Group 4: (doubtful Debt) include:

- Bad debts from 181 to 360 days.

- The debt restructuring deadline to repay the overdue under 90 days according to

the repayment deadline was restructuring

- The debt restructuring the repayment period for the second time.

- The debts specified in point c of paragraph 1 of this article the term from 30

days to 60 days which has not yet recovered.

- The debts are classified into 4 groups according to the provisions in paragraph 3

of this article.

Group 5: (the debt is likely to lose the capital) includes:

- Bad debts on the 360 days.

- The debt restructuring deadline to repay the overdue from 91 days or more

according to the repayment deadline was first restructuring.

19

- The debt restructuring deadline to repay the overdue second term of repayment

is restructuring for the second time.

- The debt restructuring the repayment term of the third over, including the not

yet expired or has expired.

- The debts specified in point c of paragraph 1 of this article is out of date on the

60 days of the decision to recover.

- The debt is recovered by the Inspector concluded but already too time

recovering over 60 days and haven't recovered.

Customer's Debt is credit institutions are the State Bank announced the latest in

exclusive control of foreign bank branches, with the blockade of capital and assets.

- The debts are categorized into 5 groups according to the provisions in paragraph

3 of this article.

1.2.5.5. NPL ratio (Non performing loan ratio)

NPL ratio is the ratio of bad debt and the total outstanding loans. This clearly reflects

the criteria for the quality of the Bank's lending to customers and risks for loans ...

NPL ratio (%) = (NPL / Total outstanding loan) * 100

Any bank would also have bad debt but at the level of the rate is different. Bad higher

rates reflect the risk of loss of capital of the Bank, as well as the risk of reducing the

Bank's income, could even lead to the risk of liquidity loss if this rate is too high. When

the Bank has a high rate of bad debt will be rated as low loan quality. When low bad

debt rate, can the Bank is pursuing the policy of lending, less risk with customers

should not extend loans for many with this type of outstanding growth rate and sales

will be lower. As required by the State Bank, the rate of bad debt on total outstanding

is greater than 7% is weak, this ratio at a level less than or equal to 5% of the assessed

banks have good credit quality.

20

Chapter 2: THE STATE OF LENDING OPERATION TO HOUSE

CONSTRUCTION AND REPAIR AT VIETNAM JOINT STOCK

COMMERCIAL BANK FOR INDUSTRY AND TRADE (VIETINBANK)

DANANG BRANCH

2.1. Overview of Vietnam Joint Stock Commercial Bank for Industry and

Trade Danang branch

Vietnam Joint Stock Commercial Bank for Industry and Trade Danang branch is

headquartered at 172 Nguyen Van Linh - Thanh Khe District - Da Nang.

Trade name: Vietinbank.

English name: Vietnam Joint Stock Commercial Bank for Industry and Trade.

Logo:

Sologan: Improving the values of life

Website: www.vietinbank.vn

Mission

To become the leading fnancial and banking corporation in Vietnam that operates in

diverse areas, as well as provides products and services that conform to international

standards, aiming to improve the values of life.

Vision

To become one of the most modern and efective fnancial and banking group in and

outside the country.

Core Values

Customer-oriented operations;

Dynamic, innovative, professional, devoted, transparent, modern;

Workers have the right to make their best efort and contribution they

have the right to receive rightful compensation they have the right to pay homage to

outstanding individuals and workers.

21

Business Philosophy

Safe, efective, sustainable, and in compliance with international

standards;

United, ready to cooperate, share, and be socially responsible;

Your prosperity is our success.

2.1.1. The establishment and development of Vietinbank - Da Nang branch

Industrial and Commercial Bank of Vietnam was established in 1988 after separating

from the State Bank of Vietnam. As one of four commercial banks in Vietnam's

largest, Industrial and Commercial Bank had total assets of more than 25% market

share of Vietnam's banking system. Bank sales network spread throughout the country

with Exchange, 130 branches and 700 transaction offices.

In November 1988, according to the decree 53/HBT the banking system conversion

level 1 to level 2 bank system, the separation of the two functions of the banking

business specializing in business and management of the State Bank of Central.

Therefore, the Industrial and Commercial Bank branch in Quang Nam - Da Nang was

born and ordinances operation in banking, the credit institutions and the Finance

Company. Industrial and Commercial Bank headquarters located in Da Nang, the

branches: Hoi An, Tam Ky, Khanh Hoa, Ngu Hanh Son.

After the separation of the province in 1997, Industrial and Commercial Bank of

Quang Nam - Da Nang split into two branches is Industrial and Commercial Bank of

Quangnam and Industrial and Commercial Bank of Da Nang. Danang Industrial and

Commercial Bank lived in 172 Nguyen Van Linh - Hai Chau District - Da Nang city,

officially put into operation on 01/01/1997 Decision 14 Industrial and Commercial

Bank - Decision 17/12/1996 director General of the Industrial and Commercial Bank of

Vietnam. In July 2009, Industrial and Commercial Bank - Da Nang branch renamed

Vietnam Joint Stock Commercial Bank for Industry and Trade - Da Nang branch,

operating as a joint-stock commercial banks. Vietnam Bank for Industry and Trade -

22

Da Nang branch from its inception until now, closely targeted economic development

industry, services, import and export of the city. Branch has continuously grow in

many ways, including funding increased on average 12% per year, loans and

investments increased by an average of 15% per year.

Vietinbank Danang brach had the growth in all aspects: the growing number of

customer, there are many forms of mobilization make mobilized a total of branch

increased, large loan, the loan quality. Every year the Bank set aside hundreds of

billions in short-term loan capital to meet loan demands of customers. Besides the

Bank's capital to meet hundreds of billion to the project limits, the key projects of the

Da Nang City contribute to promoting the economy of Danang city and region.

2.1.2. Organizational chart

After 16 years of operation and development Vietinbank - Danang branch has a staff of

experienced, skilled organization with many different departments. Organizational

Chart Vietinbank - Danang branch:

2.1.3. The function and tasks of the department

Board of directors: This is the highest level of management, is

responsible for the headquarters of the business activities in the unit. The Board of

Directors consists of one director and two deputy directors.

Director branch: is the legal representative of the business, responsible

for the entire previous General Director Vietnam Bank for Industry and Trade, the

general executive branch operations, direct the department, administrative

organizations and corporate client room.

Deputy Director branch: on behalf of the Director direct the business

activities of the specialized departments of treasury currency, trading transtraction

office, residential deposit management, accounting administration, is responsible for

operations of the branch manager authorization.

The departments:

23

(Personal and Administration Department Vietinbank Danang)

Consumer Banking Department and Enterprise Banking Department:

These are two important rooms and the largest of the unit, specializing in monetary

transactions, credit, international payment ... This is the place to bring the main source

of income for banks. The main feature of the room is the mobilization of capital and

research, considering the level of credit for clients in various forms, depending on the

capacity and ability to repay.

Transaction Office: is the unit, perform the function of banking business

such as loans, savings, money transfers and other services.

General Department: the synthetic statistics, balance of business capital,

business strategy, market development, marketing program development banks,

research and development services card.

Line Relationship

Functional Relationship

Risk and npl

management

rtment

Second class trade

office (9 offices)

Consumer Banking

Department

Organizational

administrative

office

General Department

Computing

information office

Internal control

office

First class trade office

(5 offices)

Enterprise Banking

Department

Board of Directors

Cash and Vault

Department

Accounting

Transaction

Department

24

Accounting Transaction Department: perform accounting tasks, notes

based on the business operation of currency, credit, payment ... processing transactions

related to financial management, internal criteria at the branch.

General Department: perform function check reasonableness, legitimate,

honest and level of caution in management, business operations, controlling the

activities of the Bank.

.Cash and Vault Department: perform banking operation on the vault,

cash income and expenditure for the customers.

Organization Administrative: perform functions in support of the

operations of the branch, shopping tools, equipment, arrange, organizing conferences,

meetings, receptions, domestic and foreign relations, management, asset protection

Bank. Implementation of the policy of the regime and the benefits for employees,

advised the Board on planning, promotions, appointment, training, personnel

movement, organization branch network.

Risk and npl management Department: performing credit risk

management branch, the parts inspection, monitoring, evaluation and re-evaluation of

the loan application, proposed provision, handling risks.

Computing Information Department: updated, data storage operations

branch developed the electronic program of network management system and related

applications to customers

2.1.4. Network operations the Vietnam Joint Stock Commercial Bank of

Industry and Trade Danang branch

Branch Headquarters at 172 Nguyen Van Linh, Thanh Khe District, Da Nang

The transaction type 1 of the branch include:

+ Hai Chau transtaction counter, 36 Tran Quoc Toan, Danang, Tel: 05113.821.333

+ Hung Vuong transtaction counter, 123 Hung Vuong, Danang, Tel: 05113.891.875

+ Hung Vuong transtaction counter, 374 Hung Vuong, Danang, Tel: 05113.828.151

25

+ Transtaction counter number 04 Dien Bien Phu, 46 Dien Bien Phu, Danang, Tel:

05113.646.538

+ Transtaction counter number 05 Dien Bien Phu, 344 Dien Bien Phu,, Danang, Tel:

05113.648.929

+ Phan Chau Trinh transtaction counter, 12 Phan Chau Trinh, Danang, Tel:

05113.843.109

The transaction type 2 of the consumer banking department include:

+ Hung Vuong transtaction counter, 324 Hung Vuong, Danang, Tel: 05113.893.257

+ Transtaction counters at 215 Ong Ich Duong Street, Danang, Tel: 05113.696.661

+ Nui Thanh transtaction counter, 407 Nui Thanh, Danang, Tel: 05113.643.786

+ Le Duan transtaction counter, 163 Le Duan, Danang, Tel: 05113. 867.016

+ Tran Cao Van transtaction counter, 189 Tran Cao Van, Danang, Tel: 05113.714.515

+ Trung Nu Vuong transtaction counter

+ Cam Le transtaction counter

+ Son Tra transtaction counter

+ Lotte Mart transtaction counter

2.1.5. The Bank's business activities

Capital mobilization

Non-term deposits account and term by USD and exchange of economic

institutions and the general population.

Get savings account with diverse form and attractive: non-term savings and term

by VND and foreign exchange, savings plan, the accrued savings account

Issuing notes, bonds,

Loan, Investment

Short term loan by USD and Exchange

Medium-and long-term lending in foreign currency and USD

Net export financing; the discount vouchers

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Co-financing and syndicated loans for large projects, long payback period.

Finance loans, authorized under the program: Taiwan (SMEDF); Free Germany

(DEG, KFW) credit agreements and frameworks.

Consumer loans, overdrafts.

Joint ventures, associated with the credit institutions, financial institutions in

domestic and international

Investment in capital markets, money market in domestic and international

Guarantee

Guarantee, re-guarantee (domestic and international): The tender guarantee;

Guarantee implementation contract; Guarantee of payment.

Payment and Trade financing

Issuing, payment letters of credit; notification, confirmation,

Collection of net export (Collection); documents again payment (D/P) and

documenst again acceptance (D/A).

Domestic and international money transfers.

Express money transfer Western Union

Making payment to pay orders, receive orders, cheque.

Pay wages for business through your account, via ATM

Pay remittances ...

Funding

Purchase, sell foreign currency (Spot, Forward, Swap, etc.)

Purchase, sell the vouchers (Government bonds, Treasury bills, stocks ...)

Currency, cash foreign currency and USD household ...

Rental of safes; store a store of gold, silver, gems, valuable papers, patents.

Cards and electric banking

Release and domestic credit card payment, international credit cards (VISA,

MASTER CARD...)

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ATM cards, cash cards (Cash cards).

Internet Banking, Phone Banking, SMS Banking

Other operating

Exploitation of life insurance, property-casualty insurance.

Investment consultant and Financial.

Financial leasing.

Brokerage, proprietary trading, underwriting, portfolio management, consulting,

depository.

To receive, manage and exploit the properties you'll debt through debt

management companies and mining assets.

To improve the existing services in order to meet the increasing demand of

customers, create momentum for development and integration with countries in the

region and internationally, VietinBank always visionary in investment and

development, concentrated in three areas:

human resources development

developing technology

developing distribution channels

2.1.6. Business result at Vietinbank - Da Nang branch over 3 years (2010-

2012)

2.1.6.1. Mobilizing capital result at Vietinbank - Da Nang branch over 3

years (2010-2012)

Over three years, the economy and the banking system continues to be difficult and

challenging. However, under the leadership of the Central Bank and the supervision of

the Management Board, the Executive Committee, the determination of staff system-

wide; Viettinbank Da Nang have actively taken the appropriate policy and achieve the

business results relatively satisfactory.

Comment:

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From table 2.2, the total capital mobilization Vietinbank Danang steadily increasing

over the three years. Specifically, mobilized in 2011 is 2,128,858 millions dong, an

increase of 531,420 millions dong compared to the year 2010, corresponding to the

proportion of 33.27%. In 2012 the total capital mobilization was 2,206,906 millions

dong increased 78,048 millions dong compared to 2011, respectively percentage of

3.67%. This shows that the situation of financing of the Branch performs well. In

which, the individual deposits are funds mobilized the highest proportion and stability.

In 2010 is the year that the proportion of individual deposits accounted for the highest

individual in mobilizing resources accounted for 56.16% The main cause is due to the

world economic crisis, rising inflation drag on the economy was back. Real estate

market froze, stock investment is no longer exciting, difficult business situation should

the client wish to deposit savings in the Bank. At the same time, the period of interest

deposite rate is quite high; in 2010 ranged between 17%-18% per year by 2012 about

10%-12% per year and send the savings is a method of conservation of capital, profits,

low risks for customers. On the other hand, the volume of deposits increased due to the

efforts of Bank staff in the orientation, product development, enhance the quality of

service.The second capital mobilization sources are economic deposits held relatively

high proportion of total mobilization, accounting for an average of approximately 46%.

How high is because the branch had a long term relationship and with the business in

the city of Da Nang as joint stock company Hoa Tho ... However, the amount of

corporate deposits in 2012 plunged compare to 2011. This notice, the pace of economic

growth slowed, rising public spending, raising taxes, increasing unemployment status

... leading to the business of the business. On the other hand, during this time the

people focus of resources saving deposit because this is the benefit, less risk, in the

current economic situation. In addition, the mobilization contribute specialize capital

deposit. This deposit sources is representing the small average approximately 0.8%, but

this deposit sources contributing to the increase in capital resources.

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Table 2.1 Mobilizing capital result at Vietinbank - Da Nang branch over 3 years (2010-2012)

Unit: millions dong

CRITERIA

2010 year 2011 year 20102 year Difference 11/10 Difference 12/11

Amount Percentage

of (%) Amount

Percentage

of (%) Amount

Percentage

of (%) Amount

Percentage

of (%) Amount

Percentage

of (%)

1.Individual

deposits. 897,158 56.16 1,011,157 47.50 1,186,034 53.74 113,999 12.71 174,877 17.29

2. Economic

deposits 685,714 42.93 1,102,407 51.78 1,003,743 45.48 416,693 60.77 -98,664 -8.95

3. Releasing

valuable papers 0 0 0 0 0 0 0 0 0 0

4.Specialized

capital deposit 14,566 0.91 1,294 0..72 17,129 0.78 728 5 1,835 12

5. The total

capital

mobilization

1,597,438 100 2,128,858 100 2,206,906 100 531,420 33.27 78,048 3.67

(General Department Vietinbank Danang)

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Chart 2.1 Mobilizing capital result at Vietinbank - Da Nang branch over 3 years

(2010-2012)

2.1.6.2. The result of lending at Vietinbank-Danang branch over 3 years

(2010-2012)

Vietnam Joint stock commercial bank for industry and trade is a State-owned company

operating in the field of currency, Bank focus mission Vietinbank-Danang branch is

mobilized and lending. The lender's branches need to be effective, in order to repay the

loan due to the mobilization of capital for credit operations. Here is the use of the

Bank's capital Vietinbank-Danang branch over three years.

Comment:

The credit situation in the branch has difficulty due to credit tightening policies

aimed at tackling soaring bad debt situation. Through it, many conditions bound within

the credit woes before, during and after the disbursement is applied through the

promulgation of professional writing. Positive activities, the initiative of the Board of

Directors and credit officers were searching, touted prospect, improving the quality of

customer service. So the affiliate's lending operations have achieved encouraging

results as: sales of loan and debt collection growth through three years, outstanding

stability and growth, achieving the plan, meeting the needs of customers.

Sales of loan:

31

Overall sales for the past three years has increased borrowing. Sales of loan was

397,603 millions dong in 2011 increased compare to 2010 , respectively percentage of

8.98%. Sales of loan increased 723,868 millions dong in 2012 compare to 2011,

respectively percentage of 15%. Achieving growth rate for such loans require dynamic

sensitivity and flexibility in customer policies, policy interest rates and lending limits

of industry capture economic information timely market, the Bank has launched

measures and specific business direction consistent with each period, the time to

achieve a high growth rate and attract more customers. In addition, the total amount of

the loans short term l