INTERNSHIP REPORT

CHAPTER 1: INTRODUCTION OF AGRIBANK PHU NHUAN BRANCH

1.1 Brief information about Agribank
The bank was founded on March 26, 1988 by the then-Council of Ministers of Vietnam as a specialized bank aimed at rural and agricultural development as Vietnam Bank for Agricultural Development. The bank built on the agency network of the State Bank of Vietnam for its branches. On November 14, 1990, it was replaced by the Vietnam Bank for Agriculture by a prime ministerial decision. On November 15, 1996, it was renamed again to Vietnam Bank for Agriculture and Rural Development (Agribank). Agribank is the largest bank in Viet Nam in terms of capital, assets, workforce, operating network and customer base. As of September 2011, the leading role of Agribank has been confirmed by:

Total fund resource: VND 524,000 billion Equity: VND 478,000 billion Total assets: VND 22,176 billion Total outstanding loans: VND 354,464 billion Operating network: 2,300 branches and transaction offices nationwide Personnel: 37,500 staffs Number of customers: 10 million households and 30,000 enterprises Agribank has 1,065 correspondent banks in 97 countries and territories (as of September 2011).

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1.2 Introduction of Agribank Phu Nhuan branch
The bank is established on May 21st, 2002 according to the chairman of Agribanks decree 110Q HQT TCCB, as the tier-2 branch, belonging to Agribank Saigon branch. The initial head office of Agribank Phu Nhuan branch was at 43C Ho Van Hue, Ward 9, Phu Nhuan District. Then, because of inconvenience, director of the bank decided to move the head office to 207B Hoang Van Thu, Ward 8, Phu Nhuan District, which is on the essential transport route of Ho Chi Minh city. Because the tier-2 branchs credit line is too limited to meet the capital need of people, the bank could not compete against other banks in the area. Therefore, Agribank Phu Nhuan branch was upgraded to tier-1 branch, according to Decree 421/Q TCCB from the chairman of Agribank. The bank bought a new building and move the head office here, at 135A Phan Dang Luu, Ward 2, Phu Nhuan District, on April 3rd, 2006. This head office location has remained unchanged up to now. Up to now, the bank has three transaction offices: Nguyen Van Troi Transaction Office, 207 Nguyen Van Troi, Ward 10, Phu Nhuan District. Nguyen Van Nghi Transaction Office, 212 Nguyen Van Nghi, Ward 7, Go Vap District. In 2006, the bank was rated AAA in operation by Agribank. The bank is also one of Agribanks leading agencies in developing bank card services (debit card, ID card), computerized administration as a modern bank. Agribank Phu Nhuan branch has received many awards from State Bank of Vietnam, Agribank, and People's committee of Ho Chi Minh City in last year, 2011.
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Organizational structure:

DIRECTOR

DEPUTY DIRECTOR

DEPUTY DIRECTOR

Personnel Depart.

Plannin g Depart.

Foreign Exchan ge Depart.

Nguyen Van Nghi Trans. Office

Nguyen Van Troi Trans. Office

Account ing Depart.

Comput ing Depart.

Market ing & Service Depart.

Internal Control Depart.

Business objectives in 2012: Minimum amount of capital growth is 12%-15% against the early 2012. VND outstanding increases maximum 8%-10%, and foreign currencies outstanding decreases 7%, in comparison with those in the beginning 2012. And, agricultural credit accounts for 20% against the general outstanding. Bad debt rate remains below 5%/general outstanding. Income from services increases 25%-30% against 2011.
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Income account rises 5% against 2011 and affords to pay for employees salary (V1+V2).

CHAPTER 2: BANKING OPERATION STATE AND SOLUTIONS FOR IMPROVEMENT IN MEDIUM AND LONG TERM CREDIT
2.1 Credit process
Instruct customer about conditions and documents of loan Check up customers purpose of loan and documents Investigate, collect and summarize information of customer and their business project for this loan Clarify customers information through various sources: CIC ( Credit Information Center), customers previous credit file, customers partner and industry, etc. Analyze customers industry Assess customers characteristics Profit expectation of the bank from the loan Analyze and assess customers business project Implement loans guarantee Check up customers financial condition Grade and rank customer Make report on appraising the loan Reassess the loan Determine method and form of loan Consider capital capacity and settlement ability of the bank
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Approve the loan Sign loan agreement, transfer collaterals documents Comply with loan assessment time Disburse money for the loan Review and control the loan Collect interest, principal, and solve arising problems Terminate the loan Handle collateral assets

2.2 Operation state of medium and long term credit

2.2.1 Medium and long term credit size Table 1: Portion of medium and long term credit in three recent years Year Items Total liabilities Short-term debt Medium and long term 495 debt (Source: Planning Department of Agribank Phu Nhuan Branch) Based on the above table, we can see that medium and long term credit has been developed with increasing portion against the total liabilities of the bank throughout 2009, 2010, 2011. Medium and long term credit outstanding of 2010 increases 122.5bn VND in comparison with that of 2009, and the outstanding of 2011 increases 30.5 billion VND against 2010s. Medium and long term credit debts
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Unit: Billion VND 2011

2009 Amount 1295 800 61.78% Portion Amount

2010 Portion Amount

Portion

1424.5 807 56.65%

1467 819 55.83%

38.22%

617.5

43.35%

648

44.17%

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portion against total liabilities of 2011 is 44.7%, higher than that of the two previous years, and is approximately equal to the portion of short-term debt. This shows that the bank is increasingly focus on developing medium and long term credit. 2.2.2 Medium and long term credit in terms of economic sectors Table 2: Medium and long term credit in terms of economic sectors 2009 Items Medium and long term debt Public sector Private sector Individuals, households 495 73 197 225 14.75% 39.80% 45.45% 617.5 54.34 399.40 163.76 8.80% 64.68% 26.52% 648 58.58 416.15 173.27 9.04% 64.22% 26.74% Amount Portion Amount 2010 Portion Amount Unit: Billion VND 2011 Portion

(Source: Planning Department of Agribank Phu Nhuan Branch)

According to table 2, in the three recent years, private sector occupies the highest portion in medium and long term credit (64.22% in 2011). Credit in public sector tends to be declined ( the portion in 2011 is 9.04%, much lower than 14.75% of 2009). It is because of the considerable increase in the number of private enterprises and the privatization of state-owned businesses. Moreover, nowadays, it is much easier for people to establish private companies in our country, so individuals that have money can own a private company with less difficulty. Therefore, the portion of credit to individuals and households decrease from 45.45% (in 2009) to 26.74% (in 2011). 2.2.3 Bad debt Table 3: Bad debt Unit: Billion VND
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Item Medium and long term debt Bad debt Bad debt/total debt 2009 495 20 4.04% 2010 617.5 28.49 4.61% 2011 648 30.8 4.75%

(Source: Planning Department of Agribank Phu Nhuan Branch) The above table shows that bad debt of the bank has grown through 3 years. Bad debt of 2011 is 4.75%. This degree is still within the banks acceptable limit, so it does not cause negative effect on the banks business ( the amount of bad debt is less than 50 billion VND, and its portion against total debt does not excess 5%). Nevertheless, the bank should have solutions to eliminate bad debts.

2.3 Conclusion on medium and long term credit at Agribank Phu Nhuan branch
Good side Medium and long term credit has been extended and strengthened and thus, the banks competition capacity has been improved well. The bank has focused on invested credit capital in key industries. The bank also paid more attention to businesses in private sector, helped these businesses develop their operation, contributing to the development of Vietnams economy. The quality of medium and long term debts is quite good, bad debts ration is tolerable, due to the banks credit diversification policy. Besides, the bank has been always keeping up and improving good relations with regular customers. Moreover, loan assessment and customer classification have been effectively implemented.

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The bank is endeavoring to make the lending process shorter and more effective for the convenience of customers. Bad side Methods of loan payment are still restricted to mainly installment loans and project loans, which may limit the number of customers. One credit officer must complete the whole process of a loan, so the time management is not effective and quality of loan is badly influenced. Another disadvantage is that the staffs of credit department are almost young, lack of experience. The banks marketing are still immature field of the bank because it has been paid much attention to since 2011. The staffs are still inexperienced and unprofessional in this field, so the marketing activities cannot get the maximum effectiveness. Moreover, there are some other factors influencing the banks credit effectiveness: unsystematic credit document of Vietnam, complicated loan process and conditions.

CHAPTER 3: INTERNSHIP PERIOD SUMMARY

3.1 Professional knowledge review
As I have studied specialist subjects which is related to banking operations at Banking university, for example: Bank credit, English for bank management, Bank accounting, etc. this real-situation internship helps me confirm and develop the knowledge that I have already known and provides me with new helpful information in the credit field.

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Organizational structure of Agribank Phu Nhuan branch: line structure which separate departments according to functions Basic concepts about credit in general, and medium and credit in particular: Loan process Loan documentation Purpose of medium and long term credit Loans candidates Loan requirements Loan duration: Medium term: 12-60 months Long term: more than 60 months

Interest calculation Credit line Characteristics of medium and long term credit

3.2 Practical skills and qualifications for credit officer

According to the banks staff in Planning Department (implementing credit operations), these are skills needed for credit work: Communication skill: communicate, negotiate with customers and with related people, recognize the characteristics of customers (maybe the honesty of them) Language skill: ability to use different foreign language, especially English is an advantage, helps credit officers interact with customers from foreign countries and bring benefit to the bank. Professional skill: have thorough grasp of credit documents and regulations, know characteristics of different industries
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Situation handling skill: have nimble reaction in difficult situation with customer Analyzing skill: evaluate, calculate a loan to be able to answer customers questions

3.3 Practical experience

After the internship period and thanks to the helpful instructions of the banks staff, I have had some experience: Observing the loan process and knowing the importance factors of a loan agreement, of how to assess the loan Learning how to check the honest of a customer Knowing the obstacles and difficulties in this job

3.4 Work contributed to the bank

During the period, I have mostly observed the work of people in Planning Department and sometimes assisted my supervisor in some work: Photocopy and print documents Classify and arrange documents Transfer documents through departments Accompany the supervisor and assist her in some papers-related work at Notary Publics Office, Police Office, Department of Natural Resources and Environmentetc.

3.5 Recommendations
After internship period observing and learning at credit section of Agribank Phu Nhuan branch, I would like to raise some ideas for improvement in medium and long term credit of the bank.

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Firstly, about human resources, I think the bank should recruit more credit officers and improve the credit staffs qualification. As now one credit officer must carry out the whole process of a loan, which causes work overload and time consuming, increasing the number of credit officers can solve this problem. The bank can also assign work to each staff in each area, which is more convenient for them to complete the task effectively and timely. In addition, regular professional training courses, practical instructions, moral education for credit officers can improve staffs qualification. Secondly, the bank should promptly and effectively carry out the loan process. Namely, loan process should be simplified for customers convenience. Furthermore, assessing section and lending section must be separated, which means that the bank should form a separate assessment team, so as to make the credit sections more specialized and accurately. In addition, to better handling bad debt, the bank should intensify loan review operation: regular and irregular site visit to customers workplace and internal control as well. Thirdly, marketing activities should be promoted so that the bank can exploit the maximum number of potential customers. The bank, therefore, should create more attractive marketing programs to draw customers interest in the bank and improve the banks publicity in the financial market. Moreover, the bank should supply modern equipment for improvement in credits information treatment. These above are my own recommendations with the hope that medium and long term credit of Agribank Phu Nhuan branch will improve and operate more effectively. I expect that the bank will get more success and prestige in national and international financial market. As my inexperience and limited time, this internship report does not keep away from mistakes. It is my pleasure to receive critics from the bank as well as from the university.

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