II. Project implementation at BIDV Ha Tay

policy of the bank.

Process of house loan service for individuals

Step 1: Receiving and filling the loan application

First, customer care officer will present the information of house loan products to

customers and some advice regarding incentives, advantages and disadvantages of some

product packages.

The customer then fills in a loan proposal form. Data provided in the proposal form will

then be evaluated by credit officers.

Step 2: Appraisal of customer’s data

The profile of customer will be handled through the risk management department to

check the accuracy and the risk if any. This process will include:

+ Appraisal of Customer information: Loan conditions, legal entity, income, marital

status

+ Appraisal of loan payment ability.

+ Appraisal of customer purpose of borrowing.

+ Check the collateral asset information, and evaluate the value of asset in reality.

Step 3: Entering into a contract with a customer

The authorized leader of business can allow the loan.

The contract is established with the legal provisions on the obligations of the bank and

the customer, and the details of product package that customer receives. The customer and the

bank legal representative will execute in this contract, and the contract will take effect after

being executed by the two parties.

After that, the bank will carry out the disbursement of the loan and commence to

monitor customer’s payback activities.

1.2. Evaluating BIDV house loan product for individual

Through some data we collected and studied, we set up the SWOT table to have a

common view about BIDV individual house loan product.



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Table 1: swot of bidv individual house loan product

STRENGTHS

Has large budget and strong

operation.

Has high reputation

Staffs who have good training

programs about banking operations.

Various promotion forms

Product can meet a most demand of

customer ( 100% value of house..)

OPPORTUNITIES

Project building saw an increasing

trend

A huge demand of customer

This product has become more popular with

people.



WEAKNESS

Appraisal process loss much time

Similar product with other bank

Has many strong competitors.

Limited in poor advertisement



THREATS

The competition among banks

become more intense.

Bad debt is the most dangerous

with the bank



To evaluate house loan product for individual of BIDV in reality market, we choose the

similar product from Vietcombank and VIB bank, which are the one of the most largest bank

in Vietnam. All of them are direct competitors.

Table 2. Comparing house loan products among banks

Characteristics

Interest rate

Loan period

Maximum loan ratio

Loan records



BIDV



Vietcombank

7.5%

7.5%

20 years

15 years

100%

70%

 Notarized copies  Loan application



VIB

8.4%

25 years

80%

 Loan application



of ID or passport

form

form

 Proof of income

 ID/ Passport

 ID/ Passport

 Record

of  Family

record  Family

record

collateral

book

 Marital certificate  Record

of

 Loan application collateral

 Proof of income

form

 Temporary

 Notarized home



book

 Proof of financial



resident book/ family sales contract

record book

 Document related



to the purchase and

sale of real estate



capacity, repayment

capacity

 Document related



to real estate planned

to purchase

Customer age



From 20 to under 60 Under 45

From 18 to under 70

( Sources : Summarize from www.BIDV.com.vn/, www.Vietcombank.com.vn, and

www.vib.com.vn )

The table compares the characteristics of the house loan product offered by 3

commercial banks with state share. VIB bank and Vietcombank are two traditional

competitors of BIDV with comparable capacity in the market. In general, the products

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offered are different with some special benefits of each bank.

The most attractive interest rate of this product stays at 7.5% per annum, and it is

obvious to see BIDV and Vietcombank enjoys a better advantage in terms of interest rate.

Regarding loan period, VIB bank offers longer loan term than BIDV with 20 years and 15

years for the latter bank. In terms of a maximum loan ratio, borrowers of BIDV may enjoy a

better advantage as they could obtain a loan of 100% of the value, whereas this figure is only

70% and 80% of the other two banks. As a result, BIDV seems to enjoy better

competitiveness than the opponent in maximum loan ration with suitable interest rate and long

loan period.

The loan records include the same documents required by all 3 banks. It can be easily

understood as it is part of the regulations specified by the government. However, with respect

to the customer age, BIDV will grant loans to those above 20 years and under 60 years of age.

Meanwhile, the customers of Vietcombank are limited to those under 45, and VIB bank

welcomes a broad range of customers above 20 and under 70 years old to apply for house

loan product.

2. Analyzing the actual situation of house loan for individual at BIDV Ha Tay

Table 3. The proportion of outstanding loans of individual customer at Ha Tay

Branch

Criteria



2014



2015



2016



2017 (4th quarter)



Total outstanding loans ( in VND

billion)



4215



5909



6974



7893



Outstanding loan of personal customer

( in VND Billion)



494



773



1026



1260



The proportion of individual/total

11.72 13.08 14.71

15.78

( in %)

(Source: the data from Customer relations management department)

This table compares the information about outstanding loans of BIDV Ha Tay branch

over a 4 year period from 2014 to 4th quarter of 2017 in billion dong.

Overall, individual outstanding loans increased continually over the years, which also

facilitated the improvement in lending effectiveness of BIDV Ha Tay branch.

In 2014, outstanding loans of personal customers accounted for only 11.72% of the total

loan amount, with just 494 billion dong. Following this, in 2015, we can see a slight rise of

13.08%, 1.36% more than the figure of 2014. By 2016, personal’s loans climbed to 1026

billion dong, and then reached a peak in 1260 billion in the 4 th quarter of 2017, accounted for

15.78% of total outstanding loan. These data imply that the effectiveness of individual lending

has resulted in positive changes in the direction of extending retail credit of BIDV system.

Figure 3: The increasing trend of outstanding balance of house loan.

Unit : million dong

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(Source : the data from Operation department)

This chart compares outstanding housing loans out of total individual loan forms. In

general, housing loans constituted the largest part in the total individual loans.

In 2014, the outstanding balance of this type of loans reached 294,754 million dong. In

2015, an increasing trend was seen in this loan type with 453,600 million dong, increasing by

43,2% against the figure of 2014. Following this, this figure continuously rose in 2016, with

582,486 million dong (up by 28.41%). Finally, this loan type reached a peak in 2017 with

634,908 million dong, increasing 52,422 million dong more than that of 2016 and 340,150

million dong more than that of 2014.

In 2017, in order to be in line with the market trend which increased the retail credit by

making housing loans become the key lending service, BIDV initiated the program “Nha tai

loc, don yeu thuong 2017” with specific incentives.

- Interest rate: the branch shall take initiative in determining for each specific

customer according to each program to ensure business efficiency.

- Insurance incentives: reduce insurance fees.

- BIDV Online, BIDV smart banking, BIDV-SMS.

Therefore, in 2017, there was a remarkable increase in housing loan products. The new

product allows loans to be up to a maximum of 100% of the value of the house with a flexible

combination of collateral assets. Loan terms is now raised up to 20 years, with loan security,

including other collateral of a customer or a third party, or a combination of guarantees. From

2014 to 2016, with the view that housing loans are the products that bring sustainable incomes

to banks, BIDV Ha Tay branch has provided the market with diversified housing loans and

services. On the basis of central housing loan packages such as the 15 trillion dong loan

package, BIDV also created appealing housing loans to attract individual customers. In

addition, the branch also associated with prestigious investors of quality projects such as cooperating with investors of housing projects in Xuan Mai, Vimeco, Van Phu, Van Khe, etc. to

obtain more individual customers.



9



Figure 4. The number of customers using house loan service in BIDV

Unit: People



(Source : data from the customer relations department)

The number of customers is very important when assessing the level of service of a

bank. It shows the satisfaction of customers with the service. Based on the demand for loans,

BIDV has provided appropriate personal loan products. The number of individual customers

at BIDV has been increasing since 2014as shown in the table.

The number of individual customers in 2014 was 1375 but by 2015 it increased to 1686, an

increase of 311 customers (22.61%) compared to 2014. By 2016, the number of customers reached

2252, with 566 customers more than 2015 and 877 customers more than 2014, up 41.16% from

2014. In 2017, the figure climbed to 2846 customers, 594 more than 2016.

Looking at the 2nd criteria, it can be clearly seen that the number of housing loan

customers rose slowly. However, housing loans still play an important role to create great

revenue for the bank. Finally, from 2014 to 2017, the number customers lending money to

buy apartment saw a significant rising trend. In 2014, the bank disbursed for 178 customers,

this figure slightly rose by to 365 in 2015 (an increase of 18.4%). In 2017, the number of

customers lending to purchase apartments grew to 450 customers, marking a growth rate of

52%. It is clear that the apartment segment in recent years has been very attractive, and BIDV

Ha Tay branch should pay attention to this segment and develop a suitable strategy to expand

this segment.

3. Survey implementation

The survey was used to measure the demand, the characteristics and opinions of

potential customers who want to borrow money for buying apartments. In this case, our group

conducted our research in 2 ways, including (i) Social network, and (ii) direct interview. The

type of customers, we chose was BIDV customers (The list of information is provided by our

supervisor) and the customers who had not used BIDV services.

Through the group’s discussion and guideline of our supervisor, the questionnaire

includes 11 questions :

- Question 1-3 : The characteristics of customers who want to buy apartments

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- Queston 4-8 : Focusing on the demand using home loan service to buy apartments

- Question 9-11 : The opinion of customers about BIDV home loan products

There are 5 areas we focus on the research: Ha Dong, Thanh Xuan, Cau Giay, Nam Tu

Liem and Dong Da District.

The consequence we received is 467 responses included 300 valid opinions and 167

invalid opinions.

During the analyzing process, we use to calculate the information and check the validty

of response.

Figure 5 : Age groups of customers

Figure 6 : marriage situation

Unit : %



We divided customers into 4 age groups including under 25, from 25 to 35, from 36 to

45, from 46 to 55. According to the results of the survey, it is noticeable that the age group

from 25 to 35 years old accounted for the biggest proportion than the other groups, with 48%

of loan borrowers, while the under 25 stood at only 1% in this rate. The proportion of those

from 46 to 55 years of age occupied a second important figure with 36%. The group from 36

to 45 just accounted for 15% of all.

During the interview process, we had a small talk with customers to gather more

information. So, in the age group 25-35, we saw that this age group was very important as

they are financially independent. They have jobs, actively save money for the future, and

prepare to get married. For the older group (46-55), they mainly spend money to invest in

their children’s education. As a result, they tend to save for the future by investing in houses

According to the survey, 37% of the 300 customers are still single.

Figure 7 : Occupation

Unit : %



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The results described some information about customers’ current occupation. This type

of information is necessary to evaluate the validity of response in our survey. Officers or civil

servants are major customers of our interview with 44% response. Then, freelancers

accounted for 36%. We saw that the development of the internet brings more job opportunities

with good salary for freelancers, especially relating to information technology like graphic

design. Followed by this, businessmen just occupied 15%, higher than workers (4%) and

others (1%).

Figure 8 : The demand of customers in price of apartment

Unit : %



This chart shows the information about the demand of customer in the price of the

apartment. House price in Hanoi is very expensive. So, we divided into 4 choices, including

1-1,5 billion VND, 1,5-2 Billion VND, 2-2,5 Billion VND and above 2,5 billion VND. We do

not make a choice for under 1 billion VND because it is not suitable with a price at the

moment. Some information we collected show that the apartments which fall in the price of

900 million VND in Hanoi are very rare and difficult to look for. Otherwise, having a lower

price is the apartment segment, which is social building or built for the compensation for

people due to land clearance for construction. This type of apartments is usually very far

from Hanoi center. 64% of the results shows that customers were interested in the apartment

having a price from 1 to 1.5 billion. They said that it was suitable price for them with the

apartment, acreage from 60m2 to 70m2. 23% of customers chose the choice of 1.5-2 billion

VND, while 11% of them wanted a larger space with a price 2-2.5 billion and just 2% of the

interviewed was satisfied with the price of above 2.5 billion VND.



12



Figure 9 : Some issues customer care when they buy apartment

Unit : %



This result shows some data about the issues that people care when they buy an

apartment. Contrary to our prediction, just only 16% of customers had the most concern about

economic conditions. In recent years, many banks offered more house loan packages which

are competitive with a long time period and suitable interest rates. As a result, they have a

variety of choices and do not much worry much about this issue. The biggest concern of

customers always focus on convenient location ( 47%). Following that, the environment

issues accounted for 32%, greater than security issue (5%).

Figure 10 : Budget sources

Unit : %



According to customers’ opinion about the buying apartment budget, the question that

they can choose more answers. We divided in 3 choices, including Saving, Borrow from

family and friends, borrow from banks. In reality, they admitted that money to buy houses or

apartment did not usually only come from 1 source. The income of each person must pay for

living costs. They can save money, but they must wait for a long time. On the other hand, they

were not sure that their family and their friends always have money to help them. Finally,

when borrowing from the bank, borrowers must have a certain amount of money because the

bank never lends them with 100% value of the house. Our survey result showed that the

majority of customers chose an economical method (87%) and the most popular method is

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borrowing from banks (92%). Borrowing from family and friends constituted a lower rate

(62%) than the other methods.

Figure 11 : The estimated payment each month

Figure 12 : Loan period

Unit : %



Through the responses we collected, the estimated money spent on bank loan each

month fell in the range under 10 million ( 52%) and around from 10 to 20 billion VND

(39%). 9% of customers agreed to pay around 20 to 30 million VND per month. Moreover,

almost all customers were interested in making a loan with a longer time period. About the

loan period, the results show that 54% of customers chose the choice above 20 years. From

15-20 years was the second good choice, with 42% response, while from 5-10 years just

represents an insignificant 6%.

Figure 13: Some channels that make customers know about BIDV product

Unit : %



The house loan product of BIDV is known through 2 main channels, namely the media (

31%) and Internet (38%). We saw that the reputation of BIDV is broadened by investment in

advertisements on TV or banners while the confidence of customers comes from the data,

information and policy that BIDV announced on the Internet and some reviews of economics

professors, evaluation reports of some popular organizations. Moreover, the success of BIDV

plays an important role to increase their reputation. However, the number of customers who

have no idea about house loan product of BIDV accounted for 20% of all responses.



14



Figure 14: Some factors in loan product that customers care.

Unit : %



Among some factors which resulted in the customers’ interest in BIDV House loan

product, it is noticeable that long term of loan is the most important factor (49%). Following

that,the interest rate is the second factor that customers care about with 42% of all responses.

Figure 15: The limitations of BIDV

Unit : %



According to the results, the limitations of BIDV services are very clear. Cumbersome

procedure is the specific reason with 72% response. Moreover, some opinions showed that the

lending conditions are often harder than other banks. However, nobody had opinions about

the capacity of BIDV staff.

4. Recommend practical solutions for the branch

According to the survey results, BIDV Ha Tay branch requires our group to propose

some practical solutions which can improve the bank activities. In our opinion, to improve

housing loan services, we can develop in some ways:

Improving relationship with the investors and the real estate enterprises

In Hanoi, real estate market is very crowded while bank market is very competitive.

Some banks constantly offer some incentive programs to attract customers. As a result, BIDV

Ha Tay branch should expand and have a good relationship with investors. The bank can

create a special house loan product which is aimed at projects of real estate companies to help

allure more customers. This will not only reduce financial pressure of customers, but also

increase the sales of apartments.

Individual financial management services.

There are 2 types of interest rates that are currently applied in the bank: Fixed rate and

15



floating rate. Some incentive programs of banks always apply the floating rate for the

customer. The risk of customer is that when the interest rate have a significant increase

following the common market index, the money they must pay is higher which lead to the

financial pressure they bear.

Because the floating rate needs the customer having a smart view about financial market

attitudes, so in our opinion, the bank can build up the Individual Financial Management

Service to support their customers about the house sales plan, estimating the market situation..

All of this can help the customer having the exact choice for themselves.

Marketing activities

Plan 1: Traditional way – Leaflet

Leaflet is a very popular way of advertising. As a result, we proposed to make a feasible

marketing plan in accordance with the survey results to improve BIDV’s leaflet:

Targeted customers include officers and civil servants from 25 to 35 years old

The apartment segment falls in the range from cheap to medium price.

The targeted locations include university campuses, hospitals, and companies in the Ha

Dong, Thanh Xuan and Cau Giay Districts

Time to conduct is within 2 months

Our goal: we set a relatively ambitious goal of obtaining above 100 customers using

BIDV house loan program and making customer know about BIDV.

Estimated cost 4 million VND per month for printing.

2 million VND for Supporting cost ( oil, meals..)

Implementation :

. Attractive slogan“Share opportunities, cooperate successfully “

. Colors: Red, Navy, White – 3 specific color of BIDV. Leaflet must be designed more

colorful in A4 form with some incentives of programs and contact.

. Staff must be trained about attitude when they communicate with customers. Staff

uniform should include red hat, white shirt and navy trousers.

. We say NO with organizing reference or customer meeting because time is gold. The

focusing customers are officers, civil servants who always busy with 8-hours-job, so we do

not occupy their flexible time. We determine that the information of house loan product will

be sent to the customer, and they can research or exploit that through BIDV Customer Care

service if they really want.

Recording result, each weak and writing report each month.

Plan 2: Cost optimization way - Through Bidv customer

According to the information that BIDV Ha Tay has connected with some companies,

hospitals, schools and universities to pay officer salary through the card in Ha Dong and

Thanh Xuan District areas, we can see that there is a potential customers to improve housing

loan service. The customer default uses BIDV mobile service because of checking their

income into account. It is very convenient for BIDV Ha Tay to provide some information

about incentives program and house loan product through the banking SMS system or sending

16