Amidst fierce competition from major credit institutions and the constantly evolving demands of the market, flexibility and innovation have become essential for survival in the banking sector. The Lam Dong Branch of the Co-operative Bank of Vietnam (Co-opBank) has implemented a strategic reform model: shifting its credit structure toward increasing the proportion of secured loans to individual customers. This approach lays the groundwork for stable development, improves credit quality, and ensures sustainable operational efficiency.
Current Situation and the Need for Reform
In recent years, Co-opBank Lam Dong Branch had consistently maintained a credit structure in which 40%–60% of total outstanding loans to individual customers were unsecured. While this approach allowed for quick customer access, it came with high risks and limited scalability.
Recently, however, the branch began encountering rising non-performing loan (NPL) risks in its unsecured lending portfolio. At the same time, outstanding balances in this category dropped sharply as commercial banks aggressively encroached on market share—negatively affecting overall performance. This prompted the urgent need for a new direction and a fundamental restructuring strategy, rather than continuing to rely on the old model.
The New Model: Structural Shift
The branch launched a strategic transformation with a clear orientation: shifting the loan portfolio from unsecured to secured lending. This decision marked a significant turning point, requiring comprehensive changes from mindset to method and strong commitment from all levels of the organization, from leadership to each credit officer (CO).
Challenges and Governance Reforms Under the New Model
The shift to secured lending expanded the branch’s customer base across the city and rural districts throughout Lam Dong Province. However, the wide geographical spread posed logistical challenges for the relatively lean credit team. Moreover, compared to unsecured loans, secured lending involves more complex procedures and stricter legal requirements—demanding a significant change in both mindset and practices. The leadership, from the credit operations department down to individual COs, had to embrace and adapt to this new operating model.
To ensure successful implementation, the branch’s management worked closely with the Corporate & Retail Banking Department and Transaction Office No. 1 to deploy the initiative. The leadership motivated department heads and COs to strengthen determination, foster unity, and concentrate their collective efforts. Together, they conducted thorough assessments of strengths, weaknesses, opportunities, and challenges, while redefining work methods and management styles. A major breakthrough was the complete overhaul of how tasks were assigned to credit officers. Previously, performance evaluation was relatively uniform (“equal scoring”). Starting in 2024, branch leadership directed each department to assign specific KPIs to every credit officer, using these as a basis for performance evaluation and ranking. This shift to detailed, individualized KPIs tied responsibility directly to outcomes, motivating staff to fully utilize their capabilities, work proactively, and fulfill their assigned roles with maximum efficiency. Moreover, it empowered COs to better retain and care for clients, while enhancing their capacity to identify and attract new customers. Regular review meetings and practical scenario-sharing sessions also became essential tools for boosting model effectiveness..
Mr. Le Minh Dat – Director of Lam Dong Branch Meeting with Credit Officers to Deploy Tasks
The New Model: Impressive Results and Expanding Impact
Thanks to strong determination and a methodical approach, the outcomes, especially in 2024 have been truly impressive. Outstanding loans to individual customers grew by 45%, all of which were secured by collateral. Meanwhile, unsecured loans fell by 25%. Non-performing loans were kept at a low level of just VND 359 million, with no potential bad debts incurred.
Beyond these internal performance indicators, the model also generated a positive ripple effect across the branch’s service area. In the past, many localities had never implemented secured lending. Today, outstanding loans are well distributed, with a broad base of borrowers across both cities and rural districts in Lam Dong province. This expansion has strengthened competitiveness, broadened the market, and reinforced the branch’s brand presence particularly in rural and remote areas where secured lending traditionally faces legal and procedural barriers.
In addition to quantitative outcomes, notable “soft” results were also achieved. There was clear professional growth and enhanced team spirit. Initially hesitant about the new model, credit department leaders and credit officers have since become proactive freely sharing experiences, supporting each other, and developing their personal capacities. This evolving culture is foundational for any sustainable strategy.
The New Model: Lessons Learned and Expansion Potential
This reform model serves as a compelling example of how strategic thinking combined with internal management improvements can lead to success. Rather than waiting for external support, the branch conducted a thorough self-assessment identifying strengths, weaknesses, opportunities, and challenges and then gradually implemented targeted solutions. Most importantly, the willingness to change from within the staff was the decisive factor behind the model’s success.
This achievement opens the door for replication across similar Co-opBank branches, especially those operating in challenging environments. The structured shift toward secured lending, along with a bold and proactive mindset, is the key to improving competitiveness and fostering sustainable growth in today’s volatile financial landscape.
Looking ahead, if supported by enhanced digital tools for asset appraisal, valuation, and automated credit documentation processes, the model could become even more efficient further fueling momentum across the entire system. With a solid foundation and clear development orientation, the Lam Dong Branch is poised to continue contributing meaningfully to the movement for innovation and sustainable, safe growth within the Co-opBank network./.
Credit Officer Conducting Loan Utilization Inspection at the Customer’s Agricultural Production Site
