Problems and ways of improving the organization of consumer lending in the bank (on the example of JSC "Kredobank")
Students Name: Muzyka Vasyl Vasylovych
Qualification Level: magister
Speciality: Finance, Banking and Insurance
Institute: Institute of Economics and Management
Mode of Study: part
Academic Year: 2022-2023 н.р.
Language of Defence: ukrainian
Abstract: Consumer credit increases the total solvent demand for consumer goods and services, stimulating production. The war with Russia and the negative phenomena caused by it in the economy and the financial sector led to significant restrictions on the credit activity of banks due to a substantial increase in risks. In their works, a considerable number of domestic scientists investigate the specifics of consumer lending organizations in crisis conditions [1-3]. Given this, studying the prerequisites for the restoration of consumer lending and new approaches to its organization is necessary for current conditions. The object of the study is the activity of JSC "Kredobank" on the market of financial services in Ukraine. The subject of the study is the procedure for providing consumer loans at JSC "Kredobank". The purpose of the work is to develop practical recommendations for improving the organization of consumer lending in JSC "Kredobank". In the first section of the work, it is determined that in the conditions of insufficient development of the securities market, consumer lending becomes a significant source of income for banking institutions. The bank’s financial condition assessment showed that all components of the bank’s assets grew during 2019-2021. 52% of the bank’s loans were granted to legal entities, and 48% to individuals. Of them, the central part was car loans and mortgage loans, while other consumer loans made up 10% of the bank’s loan portfolio volume. This structure of the loan portfolio is quite risky. The priority task for the bank today is to maintain its position in the market of consumer lending to individuals and to find new opportunities for cooperation with clients. In the second chapter, we carried out a SWOT analysis of the bank’s activities. At the same time, we mainly pay attention to the threats caused by the war and the deterioration of the economy. We built a model of the organization of consumer lending at JSC "Kredobank", which makes it possible to evaluate and forecast its behavior. The advantage of using such a model is the possibility of including several parameters characterizing the situation on the credit market, particularly the demand for loans and average statistical values of borrowers’ solvency level. The forecasting of the volume of issued loans and assets of JSC "Kredobank" showed positive trends. However, the dynamics of the loan portfolio will depend significantly on external factors related to the war and its negative impact on the economy. The third section defines the directions of problem consumer credit management - debt restructuring, debt collection, and sale of problem loans. Such areas can be implemented using such methods as hedging, credit rating, provisioning, stress testing, and risk-oriented approach. Increasing competition in the credit market requires speeding up and ensuring the validity of decision-making, which becomes possible thanks to the introduction of innovative information technologies. The latest technological solutions provide a perspective on standardizing consumer loans and automating the lending process. The thesis proposes a model for optimizing the assessment of the borrower’s solvency, which involves four main blocks - obtaining input information, analyzing it, determining the lending model, and making a decision about the model. The model’s application will positively affect the volume of loans granted, net interest income, and the amount of retained earnings, all other things being equal. Keywords: bank, credit, consumer lending, credit risk, problem debt. References: 1. Volkova, N., Statkevych, H. (2021) “Development of consumer lending in crisis conditions”. Ekonomika ta derzhava, (11), 106-111. 2. Dubyna, M., Kravchenko, A. (2021) “The essence and main features of unsecured consumer lending”. Problemy i perspektyvy ekonomiky ta upravlinnia. (3 (27)), 165-175. 3. Rysin, V., Leso, Y. (2022) “The impact of the covid-19 pandemic on the credit and investment activities of banks in Ukraine”. Naukovyi visnyk Uzhhorodskoho natsionalnoho universytetu. Seriia «Mizhnarodni ekonomichni vidnosyny ta svitove hospodarstvo». (41), 93-98. https://doi.org/10.32782/2413-9971/2022-41-17