CHAPTER 2: ANALYZING THE SITUATION OF CONSUMER LENDING ACTIVITIES IN SAI GON JOINT
2.2.2 Analyzing the categories of consumer lending activities in the branch
The need for a peaceful career is a need that every individual wants to aim for, but to satisfy this need, not everyone can afford it. Stemming from this, the Bank branch launched a home repair and construction product package to meet the majority of the population in need.
Table 2.3 Consumer loan for home repair and buying cars at SCB Dong Da Branch
Unit: Billion VND
Types of
consumer loans Indicators
Year Changes
2020 2021 2022 2021/2020 2022/2021
Amount Amount % Amount %
Loan sales
Home repair 260.1 302.82 308.12 42.72 16.42% 5.3 1.75%
Buying cars 150.4 180.56 210.32 30.16 20.05% 29.76 16.48%
Debt collection
Home repair 162.23 190.1 206.33 27.87 17.18% 16.23 8.54%
Buying cars 82 101.4 145.6 19.4 23.66% 44.2 43.59%
Outstanding loans
Home repair 97.87 112.72 101.79 14.85 15.17% -10.93 -9.70%
Buying cars 68.4 79.16 64.72 10.76 15.73% -14.44 -18.24%
Bad debt Home repair 1.42 1.38 1.37 -0.04 -2.82% -0.01 -0.72%
Buying cars 1.38 1.37 1.36 -0.01 -0.72% -0.01 -0.73%
Source: Accounting and Fund Department
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a. Consumer loans for home repair
In 2021 compared to 2020, loan sales for this item increased by 42.72 billion VND, equivalent to 16.42%, due to the increased demand for homeownership even though they have not accumulated enough money. Debt collection revenue for this item increased by VND 27.87 billion, equivalent to 17.2%, due to credit officers actively monitoring and urging customers to pay debts to limit risks. Outstanding loans for this item increased by 14.85 billion dong, equivalent to 15.17%, because loan sales of this item increased more than debt collection during the year. Bad debts decreased by 0.04 billion VND, equivalent to -2.82%, because these debts are mainly medium and long-term loans, and are divided into many terms to pay based on income. Therefore, it is easy for customers to repay the debt because customers have a high sense of debt repayment.
Figure 2.9 Consumer loans for home repair in the period 2020-2022
20200 2021 2022
50 100 150 200 250 300 350
260.1
302.82
308.12
162.23 190.1
206.33
97.87
112.72
101.79
Loan sales Debt collection Outstanding loans
Source: Accounting and Fund Department In 2022 compared to 2021, loan sales of this item increased by 5.3 billion dong, equivalent to 1.75% increase, due to the high competitiveness of other commercial banks, so lending sales increased slowly. Revenue from debt collection for this item increased by VND 16.23 billion, equivalent to an increase of 8.5%, mostly due to collection of due debts from previous years. The outstanding balance of this item decreased by 10.93 billion dong, equivalent to
-9.7% increase due to the increase in debt collections for the majority of long- term debts, so the outstanding balance had a downward trend. Bad debt of this item decreased by 0.01 billion dong, equivalent to -0.72% of decrease, because customers have goodwill to repay the debt, thus debt collection is easy.
b. Consumer loan for buying cars
Road traffic is growing, so the demand for purchasing personal cars for travel increases, the demand for loans to meet this legitimate desire is shown as follows:
In the period of 2020 - 2022, the sales of consumer loans to buy cars continuously increase, specifically, in 2021, an increase of 30.16 billion VND (up 20.1%) compared to 2020, in 2022 it will continue to increase to 29.76 billion VND (equivalent to 16.48%) compared to 2021. Since people’s incomes and lives are increasingly stable and developed, and transportation is convenient, most customers have the need to own personal cars, to meet this demand, not all customers are financially available. Therefore, a part of customers has a need to borrow money to meet their needs before having a source of income in the future.
Figure 2.10 Consumer loans for buying cars in the period 2020-2022
20200 2021 2022
50 100 150 200 250
150.4
180.56
210.32
82
101.4
145.6
68.4 79.16 64.72
Loan sales Debt collection Outstanding loans
Source: Accounting and Fund Department Debt collection revenue of this item has also continuously increased over the past 3 years. In 2021, this target will increase by VND 19.4 billion (equivalent to an increase of 23.66%) compared to 2020, by 2022, an increase of
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VND 44.2 billion (up 43.59%) compared to 2021. Since the loan sales of this item increased, a sharp increase in debt collection is also achieved.
As loan sales increased more than debt collection, the outstanding balance of this item also continuously increased in the period of 2020 -2022. Specifically, in 2021, the outstanding balance of this item will increase by 10.76 billion VND (up 15.73%) compared to 2020, in 2022. However, in 2022, the outstanding loans for buying cars decreased down to 14.44 billion VND (equivalent to 18.24%) compared to 2021.
Borrowers in this category are usually people with high positions and incomes, so debt collection is less difficult, making bad debts decrease over the years. Specifically, in 2021, bad debt will decrease by 0.01 billion dong (down -0.72%) compared to 2020 and by 2022, it will continue to decrease by 0.01 billion dong (approximately -0.73%) compared to 2021.
2.2.2.2 Consumer loans for other demands
Other consumer needs are consumer loans for the purpose of studying abroad, buying household items, tourism, labor export, etc. It can be shown in the below table:
Table 2.4 Consumer loans for other demands at SCB Dong Da Branch Unit: Billion VND
Indicators
Year Changes
2020 2021 2022 2021/2020 2022/2021
Amount Amoun
t % Amoun
t %
Loan sales for other demands
349.8 7
496.7 4
609.5
6 146.88 41.98
% 112.82 22.71
% Debt
collection for other demands
289.6 7
402.2 8
536.1
5 112.61 38.88
% 133.87 33.28
%
Outstandin g loans for other demands
60.19
5 94.46 73.41 34.265 56.92
% -21.05
- 22.28
% Bad debt
for other demands
1.26 1.24 1.23 -0.02 -1.83% -0.01 -0.93%
Source: Accounting and Fund Department In the period of 2020 - 2022, sales of consumer loans in the other demand category have also continuously increased over the years. Specifically, in 2021, an increase of VND 146.88 million (up to 41.98%) compared to 2020, and an increase of VND 112.82 billion in 2022 (equivalent to an increase of 22.71%).
The reason is that SCB has launched many new products with many utilities for customers such as unsecured loans with a maximum term of 36 months (consumer credit loans, loans to government employees), consumer loans, etc. (to meet 100% of customer’s capital needs with a maximum term of 15 years). The diversity of these products will attract the attention of all classes and segments of the society.
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Debt collection of this item also increased over the years. In 2021, debt collection revenue will increase by VND 112.61 billion (equivalent to an increase of 38.88%), by 2022 it will increase to VND 133.87 billion (up to 33.28%) compared to 2021. Since loans in this category are short-term, recovery is relatively quick and partly because the management requires the debt manager to closely monitor the customer’s capital use process and take appropriate measures when the customer has a problem of inability to pay interest and principal.