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INTRODUCTION
1. Rationale
In recent years, the Vietnamese banking system has radically changed
organizational structure, operating mechanism and professional ... Banks
diversify their activities to meet the needs of international economic integration.
In this context, lending to individual clients is interested by both joint-stock
commercial banks and state-owned commercial banks in Vietnamese banking
system. However, the market for loans to individual clients is still small and is
not fully exploited by commercial banks.
Joint-stock commercial VPbank, Cau Giay branch was found early in
Hanoi. In recent years, branch has achieved fairly good performance and
contributed significantly to the success of the VPBank system. Lending to
individual clients of VPBank - Cau Giay branch was deployed successfully with
a variety of product; outstanding debt to individual clients was large and
occupied high proportion of total outstanding debt of VPBank - Cau Giay
branch. However, when compared with the total outstanding debt to individual
clients of VPBank system or with total outstanding debt to individual clients of
the whole banking sector in Hanoi, outstanding debt to individual clients of VP
Bank - Cau Giay branch was still small, not commensurate with the potentiality
of the market, also with the position of VPBank.
Aware of this issue, to be able to learn more this field and combine the
learned knowledge in school to the real, I choose the subject “Reality and
solutions for lending to individual clients at VP Bank - Cau Giay branch” for my
graduation thesis.
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2. Aims and subject of study
In all business activities of banks, lending activity can be considered as the
most significant and also the most risky activity which requires banks to be
vigilant in management. Therefore, the analysis and evaluation of the bank's
lending activity is essential. This research will help comprehend the theory of
lending operations. On this basis theory, a thorough and fact-finding study on
lending to individual clients at VPbank - Cau Giay branch will be conducted.
Through this study, we will understand development of lending activity to
individual clients and also the difficulties and advantages of banks in the
development of this activity from which proposes a number of measures to get
better results in credit activity.
Subject of this thesis is reality of lending to individual clients at joint-stock
commercial VPbank, Cau Giay - Ha Noi branch, then find solutions to help
banks overcome difficulties and develop this activity.
3. Scope of study
This thesis will focus on analysis and evaluation of individual lending
activity, especially sales of loans, debt collection, outstanding debt, and
delinquent debt… which took place from 2010 to 2012 at VPBank Cau Giay Hanoi branch.
4. Methodology
To complete my graduation thesis, besides the knowledge acquired in

school, I used some methods. They are gathering data and interviewing.
I gather data from reports of VPbank and Cau Giay branch. They are
income statement, balance sheet, and statement of cash flow…. From these
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documents, I receive information, figure of mobilization, lending, credit activity,
and business result of VPBank and Cau Giay branch. Moreover, to have basic
knowledge about credit and lending activity as well as, I collect document of law
of credit, magazines on economy, and figures about inflation rate, profit of bank
system. After gathering data, I using absolute, relative comparison to compare
and evaluate data, figure over years or selected years.
Secondary method which I used is interview. This interview is conduct in
VPBank –Cau Giay branch. I interview Mr. Nguyen The Dan – manager of
credit department - to understand regulations and procedures in lending to
individual clients, reason for fluctuation of sale, profit, debt, nonperforming
loans (NPL) ….
5. Structure of study
In addition to introduction and conclusion, the main content of the thesis
consists of three chapters:
Chapter 1: Overview of lending to individual clients
Chapter 2: Reality of lending to individual clients at VPbank, Cau Giay

branch
Chapter 3: Scalable solution for lending to individual clients at VPBank, Cau
Giay branch

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CHAPTER 1
OVERVIEW OF LENDING TO INDIVIDUAL CLIENTS
1.1. The definition
1.1.1. The definition of commercial bank
As the commodity production had grown, the economy also appeared
people who hold a temporary fund and people who need money for business.
Under the circumstances, in the second half of the 16th century in Europe, the
first bank that formerly was known as usury organization was born. At this time,
the Bank just kept and lent money.
Along with the continuous development of economy, the operation of the
commercial banks have also been strengthened and improved. Peter Rose
defined commercial banks as follows: “Bank is a financial institution providing a
list of the most diversified financial services - especially credit, savings and
payment services – and perform more financial functions than any business
institution in the economy”. And in Vietnam, according to the Law on Credit

Institutions, the legislature defines “A banking operation is a monetary business
operation or a banking service of regularly taking deposits and using such
deposits for granting credit and providing payment services”.
1.1.2. The concept of lending activity of commercial banks
In the book “Modern Banking”, David Cox stated that: “Most professional
activities of commercial banks are called banking service or foundations for
developing such service” and lending is main service. Provision 2 - Article 3 Decision 1627/2001/QD-NHNN on the regulation of lending by credit institution
to clients also provide that: “Lending means a form of extension of credit
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whereby a credit institution provides a client with an amount of money to be
used for a certain purpose and within a fixed period of time as agreed on the
basis of the principle of repayment of both principal and interest”.
Based on the balance sheet of commercial banks, we find that loans always
accounted for the largest proportion of the total assets of the bank. They also are
items which bring the highest income to the bank. But risk in banking activities
often focuses on the lending activity.
The loan is a liability to borrowers but is an asset to the bank. Loans are less
liquid than other bank’s property because they can not be converted into cash
before the loan are maturity. When a commercial bank grantees loan to the
borrower, the borrower is on their own initiative - can repay loan to the bank

ahead of time, in time or even extend for loan repayment. On the other hand,
commercial banks are only allowed to manage the loans that comply with the
signed contract.
1.2 Lending to individual clients activity
1.2.1. Definition of lending to individual clients
If classifying by clients, lending activity includes lending to corporation,
lending to financial institutions and lending to individual clients. Because the
object of this thesis is lending to individual clients of commercial banks, we will
consider lending activity to individual clients.
Lending to individual clients is a form of bank’s financing for individual
clients. It is the economic relation in which the bank transfers to individual
clients the right to use a sum of money with conditions agreed in the contract to

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serve the purpose of the client (According to “nghiệp vụ ngân hàng thương mại”
– Học viện Tài chính).
1.2.2. Characteristic of lending to individual clients
According to Ph.D. Nguyen Thi Mui, lending to individual clients has some
characteristics. (Nghiep vu ngan hang thương mai – Hoc vien tai chinh)
Borrowers

Borrowers are a person or a household. They are small traders, farmers,
handicraftsmen, tailors, mechanics, students, small manufacturing facility ... or a
representative of the household (who have the legal capacity and civil act in the
family) on behalf of the household to sign credit contracts, loan contracts and
repay loan to the bank.
Loan size
Lending to individual clients is usually small loan but amount of loan is
very large. So, the sensitivity of this group is very high, which requires banks to
have a separate, suitable marketing strategy. It brings the clients closeness, trust
and peace. Loan size often relies on the borrower but not collateral.
Purpose loan
Purposes of lending to individual clients are various. The different groups of
income, age, gender, social status... have different needs.
To low-income groups, their demand for credit is usually limited because
they are very difficult in spending. So they borrow to meet consumer demand.
To middle-income group, their credit demand has upward trend. Although
these people have financial resources, they really want to borrow to purchase
better products.
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To high-income groups, their credit demand supports for their business,

helps liquidity when their money tied up in long-term investments.
Lending interest
Because the size of loans is small, borrowing cost is higher than other costs.
Moreover, this is a loan with high-risk, short-term, weak collateral …. All of
things create the form of loans with the highest interest rate in the commercial
banks. The interest rate of these loans is often 1.5 as high as other interest.
Therefore, the faster these loans develop, the higher profit the bank gains.
Term loans
Loan purpose is for consumption of personals such as buying electronic
machine, car, motor, house, land and small-scale production. Therefore, value of
loan is small but large amount. At the time of making loans, clients not have
ability of payment, but they soon have it in short-term or medium-term. Because
of these reason the term of the loans are mainly short-term, partly medium-term
and little long-term.
1.2.3. Classification of lending to individual clients
1.2.3.1. Base on purpose loan
For business manufacturing purposes
They are loans to carry out small business plans of household such as
renting a shop, buying materials, buying machine… Characteristics of this loan
are that term loan often is long-term, scale depends on the client's business plan,
the risk of loan is very high, and this loan has the possibility of moral hazard.
For consumption purposes

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Loans for consumption are used mainly for consumption purposes such as
buying electronic machine, buying household goods…. Object of this loan is
personal (for consumption) and government (for expenditures). Characteristics of
this loan are small, short-term, lower risk.
1.2.3.2. Base on term loan
Term loan is a period from when clients start receiving loan to when he/she
repay the principal and interest which had been agreed in the credit contract
between the bank and the clients. (Frederic S. Minshkin)
Short-term loans
Short-term loans are loans with the term of 12 months or less. They are used
to make up the shortage of working capital of individual clients, organizations
and the short-term spending needs.
Medium-term loans
According to the current regulations of the State Bank of Vietnam (SBV),
the medium-term loan is loan with the term of over 12 months to 60 months.
These loans are often used for the purpose of purchasing fixed assets,
improvements or renovation equipment, expansion production and business
activities. They are also used for small-scale new projects and rapid recovery of
capital.
Long-term loans
Long-term loans are loans with the term of 60 months or more. Long-term
credit is provided to meet the long-term needs such as buying house, land,
equipment, transport means…
1.2.3.3. Base on payment methods
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Lump-sum payment at maturity
Lump-sum payment at maturity loans is loans to individuals and households
to meet instant cash needs. This loan only is paid once at maturity. The size of
the loan is relatively small. They are usually short term, low risk and used to pay
for the holiday, buying household or repairing auto motor….
Installment
Installment is short-term or medium-term loans paid in two or more times in
succession (usually monthly or quarterly). This method is used to finance
expensive assets such as cars, houses, lands or to finance the business plan.
Generally, these installments apply fixed interest rate, but floating rate is
becoming more popular.
Credit card
Credit cards as well as other card were quickly accepted. Credit cards
provide a revolving and regular credit that clients can use whenever they need.
Clients can take a lump sum payout or installment payout.
1.2.3.4. Base on loan forms
Direct lending
Direct lending is loan in which bank and clients meet each other, face to
face to conduct loans or debt collection.
Indirect lending
Indirect lending is loan in which bank buy debts incurred by enterprises

when they sell goods or provide services to their individual clients. In this case,
bank provides loans to individual clients through companies but not directly in
contact with clients.
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1.2.3.5. Base on form of security
Secured lending
Collateral is real estate, estate ...which are funds or assets owned by clients.
Collateral create pressure to force clients to pay debt. In the case clients can not
repay the debt, the bank will sell these asset to reduce losses.
Unsecured lending
Unsecured lending is lending based on reputation or third-party guarantee,
not collateral. Bank selects clients who have good reputation and good ability to
repay loans to lend money. Bank lends client money to meet the needs of clients
on the basis of salary. These loans are mainly small value, and short term.
1.3. Factors affecting the expansion of personal loan.
1.3.1. Subjective factors
Lending policy of bank
The bank's lending policy is a system of guidelines and regulations
governing the lending activities made by the board in order to effectively use
capital for businesses, organizations and households and individuals (Law on

credit institution).
The elements in lending policies have a strong impact on the expansion of
lending in general and lending to individual clients in particular. A bank can only
expand lending to individual clients when having a clear goal of lending
expansion. On the other hand, if a bank provides available, various lending
products to individuals, expansion is easier and more convenient.
Financial capacity and management ability of bank

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The financial capacity of the bank bases on factors such as the size of the
equity, ROE, ROA, earnings growth rate over the years, the proportion of
overdue debts. A bank with great equity, high ability to raise capital in the short
term, good liquid, less delinquency can be called the powerful financial bank.
The bank can invest and expand lending to individual clients. Where as bank
with low financial strength will not be enough capital to fund portfolios, which
leads to limited lending to individual clients. Therefore, this is a factor that helps
executives consider when making decisions to expand or restrict lending,
including lending to individual clients.
Number and professional qualification of bank officers
Credit staffs are directly involved in decision-making and contact to clients,

so they can be seen as the image of the bank. Numerous credit staffs with good
moral and qualification is the positive impact of lending activity to individual
clients. The lending operations have time-saving, high-quality, limited risk,
which help attach clients and expand lending to individual clients.
Marketing activity of bank
Marketing are activities to introduce and promote the image as well as the
services that banks provide. It is also an important activity contributing to
expand lending to individual clients. Marketing help client understand the banks,
the services that banks provide. If there are good marketing activities, clients will
be impressed with the bank as well as banking services in general and lending to
individual clients in particular. It also creates favorable conditions for lending to
individual clients expansion. Because for a long period, state-owned commercial
banks focused mainly lending to businesses, lending to individual clients has
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great potential market in Vietnam. A good marketing campaign will help the
bank ensure the ultimate goal, profit and competitive strength.
Bank network
The number of branches and transaction offices express the scale of the
bank. In order to facilitate the contact between clients and the bank, the bank
usually expands the branches and transaction offices. It also helps the bank

attract clients. The more branches and transaction offices the bank have, the
more favorable expansion of lending to individual clients are. Especially when
these branches and transaction offices are located in residential areas with more
demand for loans, banks easily meet clients’ demand. The banks also can get the
information from client to appraise, disburse and collect debt.
1.3.2. Objective factors
1.3.2.1. Factors from clients
Demand for capital of clients
Lending to individual clients is services, so the clients’ demand for capital
is a key factor that determines the forms of lending to individual clients of banks.
Capital needs of clients are the basis to build and expand product development
strategy for lending to individual clients. Individuals have diversified demands
ranging from the need for consumers to the need for production and business. In
each stage, there are always demands which need to finance. The problem is that
banks have to discover these needs to respond timely. The clients have different
career, marital status, ages will have different needs. For instance, young clients
(20-30) want credit card products to serve the needs of shopping, going
out...where as older clients have demands for buying house, land, car… So,
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determining the capital needs of clients take advantages for banks to expand

lending to individual clients.
Ability to meet condition for borrowing of client
Conditions for borrowing of clients are income, moral, and collateral to
ensure the safety of the loans. The bank not only discovers the needs for capital
but also discovers the need with high solvency. The need with high solvency be
considered as the need for whose repayment is assured.
Clients who have high academic standard, the understanding of loan will
have responsibility for the debts. If the clients have good moral character, they
also have awareness debt, repayment debt, which make credit risk is low. It is the
factor help the bank expand lending activity to individual clients.
There are also other factors such as: family size, features, characteristics
of clients, the ability to meet the client's loan terms such as collateral,
documentation of ownership.
1.3.2.2. Factors from bank’s operating environment
Economic environment
Bank is the most important financial intermediary for the economy.
Therefore, any fluctuations in the economy will affect the bank's lending activity
in including lending to individual clients.
When the economy develops stably, lending to individual clients tend to
increase. Standard of living improves; clients need more capital to serve their
business, which facilitate expansion of lending to individual clients. Otherwise,
the economy falls into recession causing income of consumers unstable. People

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will choose saving rather than making loans, which limit the expansion lending
to individual clients.
Law environment
Banks are financial intermediaries to hold a huge amount of capital and
assets in the economy, so banking activities are tightly controlled by the law. It
makes safety not only for banks, but also for client.
System of documents, decisions, regulations ... impacts on the lending
activity of banks in general, lending to individual clients in particular. Stable,
perfect legal system will boost lending to individual clients and improve quality
services, ensure the cooperation relationship between banks and clients.
Socio-cultural environment
The socio-cultural environmental factors such as lifestyle, habits, local
habits, tastes impact on making forms lending to individual clients of bank.
Where the people have habit of spending not savings, they tend to make loans for
consumer more than others.
Development of science and technology
Today, the continuous development of science and technology has
facilitated sectors, including the banking sector. With the development of science
and technology, processing of transactions become more quickly, easily.
Banking operations is handled by machinery instate of manual labor, which
reduce time of transactions between banks and clients, increase the accuracy of
analysis, credit evaluation, decrease the risk to the bank. As a result, lending to
individual clients will be expended.

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Competitors
The emergence of competitors in the financial markets leads to the lending
to individual clients market share will be reduce making the bank find new
strategy to attract clients, not only to retain old clients but also attract new
clients.

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CHAPTER 2:
REALITY OF LENDING TO INDIVIDUAL CLIENTS AT VPBANK, CAU
GIAY BRANCH
2.1. Overview of Vietnam Prosperity Bank (VPBank), Cau Giay branch

2.1.1. Overview of Vietnam Prosperity Bank
2.1.1.1. The formation and development
VPBank stands for of Vietnam Prosperity Joint Stock Commercial Bank
(formerly known as Vietnam joint-stock commercial bank for private enterprises)
Head office: No. 8. Le Thai To, Hoan Kiem District, Hanoi
Telephone: 043.9288869
Website: www.vpb.com.vn
Email:
VPBank has gone through three stages of development:
Stage 1: (1993-1996) Formation and development
VPBank was established under the business license No. 0042/NH - GP
issued by the Governor of the State Bank of Vietnam on 12 August 1993 with an
operation period of 99 years.
The initial charter capital was VND 20 billion. Then, VPBank increased
charter capital several times in order to meet its growing demand. Bank grew to
VND 174.9 billion under Decision No. 53/QD-NH5 on 18 March 1996 of the
State Bank of Vietnam and became joint-stock commercial bank with the largest
charter capital in Vietnam at that time. At the end of 1996, VPBank had Head
Office, 3 branch, and more than 200 employees with total assets of 864 billions.
Stage 2: (1997-2002) Crisis
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Causes of crisis included subjective and objective reasons. Subjective
reason was mistake in credit policy. It was the large unsecured loans with
shareholders (loans, L/C) and lax credit policies with other clients. Objective one
was the impact of the Asian economic crisis; clients took advantage of the
situation to “fish in troubled waters”.
Stage 3: (Since 2002) Recovery and growth.
From 2004 to present, VPBank has completed and developed its system.
Because of the growing demand, VPBank has continuously increased its charter
capital in 2004, 2006, 2008 up 198.4 billions, 1000 billions, 2000 billions
respectively. Now, VP Bank's charter capital is 5770 billion.
During the process of formation and development, VPBank has always paid
attention to extend the scale, enhance operation network in big cities. In the first
two year, VPBank had only 3 branches and 6 transaction offices. Now, VPBank
has a network of nearly 200 branches and transaction offices nationwide, and
550 payment agents of VPBank's fast remittance center - Western Union
By 31 December 2011, the total number of professional employees of
VPBank reaches over 3,000, over 92% of them is under 40 and about 80% of
them hold undergraduate and graduate degrees. Recognizing that the quality of
employees is the strength of the bank, VPBank has always paid attention to
enhancing its human resource management. Internal and overseas training
courses are regularly held by VPBank to improve the professional qualification
of its employees.
2.1.1.2. The organizational structure

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PICTURE 2.1: THE ORGANIZATIONAL STRUCTURE OF VPBANK

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2.1.2. Overview of Vietnam Prosperity Bank, Cau Giay branch
2.1.2.1. The formation and development
VPBank - Cau Giay branch (formerly known Cau Giay transaction office)
was established in 2006. Thank to the approval of SBV – Hanoi Branch and the
decision of VPBank Board of Directors, Cau Giay transaction (Address at No.2,
Nguyen Khanh Toan, Cau Giay district, Hanoi) has been converted into
secondary branch.
Since its formation, VPBank – Cau Giay branch has gone through six years
of operation and obtained remarkable achievements. Directly under Vpbank –
Thang Long branch, Cau Giay branch has always been a leader on operation in
the VPBank system.

The Branch has 50 staff, of which the total number of employees with
undergraduate and graduate degrees is more than 45 people (90%). Employees of
branch mostly are female. Staff has regularly gone into short-term or long-term
training organized by the head office, also by the branch.
2.1.2.2. Structure of VP Bank - Cau Giay branch

PICTURE 2.2: THE ORGANIZATIONAL STRUCTURE OF VPBANK,
BRANCH CAU GIAY

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2.2. Reality of lending to individual clients at VPBank, Cau Giay branch
2.2.1. Lending situation to individual clients at VPBank, Cau Giay branch
2.2.1.1. Application Subjects
VPBank lends to Vietnamese individuals and foreigners accordance with
current regulations of the SBV and VPBank.
2.2.1.2. Lending conditions
Borrowers of VPBank must meet the following conditions to make loans.
Firstly, clients must have civil legal capacity, full civil act capacity and civil
liability according to law.
Secondly, loan purpose must be clear and legal.

Thirdly, clients must have healthy financial situation and have ability to
repay the loan and interest as commitments in the contract.
Fourthly, clients do not have overdue debts at other credit institutions.
Fifthly, clients have feasible, effective investment projects, plans for
production, business, and services with feasible repayment plan for the bank.
And lastly, clients must implement the provisions of the loan guarantee
under the provisions of the Government and the guidance of the State Bank.
2.2.1.3. Loan term
Loan term is based on the agreement between VPBank and clients. It
depends on the business cycle of the clients, the time for recovery of capital
investment of projects, ability to repay of clients, source of capital for loan of
VPBank. VPBank currently applies three types of loan terms: Short-term loan
(Not more than 12 months), medium-term loan (from 12 months to 60 months)
and long-term loan (over 60 months).
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2.2.1.4. Loan profile
Loan profile of VPbank includes application for loans, documentation of the
loan project, documentation of the manufacturing, business situation, life and
financial ability of the clients or the guarantors, secured credit profile, and other
records and documents (if necessary)

Application for loans must be made in the form of VPbank.
Documentation of the loan project is the plan for production, business or
investment projects relating to the use of the loan. It also is the repayment
schedule for VPBank, the economic contracts of sale of materials, goods,
machinery and equipment ... or other contracts to implement business plans. For
long-term loans, clients need send more documents of evaluation of economic
and technical situation.
Documentation of the production, business situation, life and financial
ability of the clients or the guarantors is the declaration of financial situation,
manufacturing and business activities, income. The clients who borrow capital in
next time just add documents of the financial situation at that time.
Fourth document if secured credit profile. Clients whose loans secured by
assets need provide documents to prove legal ownership of the asset. If loans are
secured by the guarantee of other credit institutions, the clients need provide the
original letter of guarantee.
In addition, in loan process, clients need supplement, update some other
relevant documents, such as insurance records for asset, the documents relating
to the transfer property rights, extraordinary reports relating to mortgage.

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2.2.1.5. Lending interest
VPBank applies flexible interest rate policy for each client at a particular
time and in accordance with the provisions of SBV. In each specific case,
VPBank and clients agree to interest rate which is fixed rate, floating rate, gross
interest (for clients who receive preferential interest rates prescribed by the
Government, SBV or VPBank).
2.2.1.6. Overdue debt
As the loans comes repayment period or maturity, if the clients do not have
the ability to repay principal in time and the loan are not adjusted or extended,
the entire credit balance in agreement was changed to overdue debt.
In the repayment of interest period, if clients do not have the ability to repay
the interest in time and the interest are not adjusted or extended, the entire credit
balance in agreement was changed to overdue debt.
Since when the debt is changed to overdue debt, the VPBank will take all
necessary measures in accordance with the laws and regulations of SBV and
VPBank to recovery debt.
2.2.1.7. Payment methods
The branch applies different payment methods including: pay perpetual
annuities (Clients pay principal and interest each month or quarter to paying off
the debt), pay uneven annuities (clients pay monthly principal and interest paid
on the principal balance), or pay monthly interest, principal paid at maturity.
However, the repayment method which is often applied is perpetual annuity
because this method will facilitate clients to pay (Every month pay an equal

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amount of money). With small loans (under 10 millions VND), the bank applies
the method of paying principal and interest at maturity.
2.1.2.3. Lending result of Vpbank, Cau Giay branch
Mobilization situation
TABLE 2.1. MOBILIZATION ACTIVITIES AT VPBANK, CAU GIAY BRANCH

Unit: VND million
Criteria

2010
Amount

%

of money
Total deposit
Based

2011
Amount
%

%

of money


differe

2012
Amount
%

%

of money

differe

2,037,650

100

nce
(16.4)

1,209,500

100

2,438,750

100

nce
101.6


979,695
229,805

81
19

1,993,570
445,180

81.7
18.3

103.5
93.7

1,609,743
427,907

79
21

(19.3)
(3.9)

on

Short-term
Medium and


loan

long-term

terms
Based

Market (I)

659,350

54.5

1,463,250

60

121.9

1,283,719

63

(12.3)

on

Market (II)

550,150


45.5

975,500

40

77.3

753,931

37

(22.7)

market

Source: Annual Report 2010, 2011, 2012 by VPBank, Cau Giay - Hanoi branch
Through the table “mobilization activities at VPbank, Cau Giay branch” in 3
years, we can see the funding situation of bank.
In 2010, the total funds were approximately 1,209.5 billions accounting for
10% of VPBank system’s. Base on loan terms, short-term deposits accounted for
81% of total mobilization resources; and long-term deposit was 19% of total
resources mobilized. This figure shows that in 2010, mobilized funds were
mainly from short-term one. In this time, the market had much fluctuation
influencing the economy in general and in particular for banks (e.g. increase in
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CQ47/51.03

24

the CPI over the last months about 11.75% (according to the General Statistics
Office) ...), which made funding from long-term sources meet difficulties. Due to
this reason, mobilized capital resources were mostly from short-term. Base on
market, mobilization from the market (I) accounted for 54.5%; and the market
(II) was 45.5%. The table also shows that the funds that got from individuals and
organizations had higher than interbank. Branch mobilized equity from small,
residential, retail sources, and mostly short-term.
In 2011, there was a rapid increase in the total capital of banks. The
difference of total deposit increased to over 100% comparing to 2010. The
reason was that the bank attracted and enticed more new clients who owned
relatively large deposits, which made branch’s capital become more abundant.
Moreover, the total capital of bank increased steadily. Short-term capital
increased to 103.5%, medium and long-term capital increased to 93.7% over
2010. According to market criteria, raising capital from the market (I) (From
economic organizations and residents) rose up 121.9% and from the market (II)
(From the inter-bank) increased to 77.3%. This figure suggests that the
mobilization from institutions, residents increases faster than the interbank. It
reflects the banks’ focus of raising capital from institutions and resident because
it is cheap, effective and safe.
In 2012, total raised capital decreased compared to 2011 (-401,100, equal to
-16.4%). The cause of decrease in funding in 2012 was changes in the economy.
The people converted savings into gold instead of banking deposits. Base on
loan term, short-term funds reduced by 19.3%; medium-term and long-term

reduced 3.9% over 2011. So, medium-term and long-term capital decreased more
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Dinh Kieu Trang

CQ47/51.03

25

slowly than short-term capital. Although it could increase funding costs of banks,
this was the safe capital which can help banks gain huge profits.
Lending situation
TABLE 2.2. LENDING ACTIVITIES AT VPBANK, CAU GIAY BRANCH

Unit: VND million
Criteria
Sale of loans
Based Short-term
on Medium and
loan

long-term
Other

terms
Based Lending by
on

curren

2011
Amount of

%

2012
Amount

%

money

ion (%)

money

difference

of money

difference

503,350
234,650
268,380

100
46.62

53.32

840,200
419,730
415,000

66.92
78.87
54.63

1,207,240
587,504
604,700

43.68
39.97
45.71

320

6

5,470

1,609.37

15,036

174.88


485,370

96.43

795,000

63.79

1,192.320

49.98

17,980

3.57

4,200

151.39

14,920

255.24

VND
Lending by
foreign

cy


2010
Amount of Proport

currency

Source: Income statement in 2010, 2011, 2012, VP Bank Cau Giay - Hanoi
branch
Summarizing data for last 3 years of lending activities in Cau Giay branch,
we found that the lending situation had achieved initial success. Evidence was
the increase in sale of loans of bank. But if looking at percentage difference of
each year, we also found that the different tended to smaller and smaller.
Comparing to the total deposits of the VPBank system, this figure was still
small.

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