Enhancing credit risk management in vietnam joint stock commercial bank for industry and trade hoang mai branch graduation thesis

Nâng cao quản lý rủi ro tín dụng tại Ngân hàng Thương mại Cổ phần Công Thương Việt Nam - Chi nhánh Hoàng Mai trong luận văn tốt nghiệp.

• Tác giả: Nguyen Van Truong
• Người hướng dẫn: MA. Ngo Tung Anh
• Trường học: Banking Academy of Vietnam
• Chuyên ngành: English in Banking and Finance
• Đề tài: Enhancing Credit Risk Management in Vietnam Joint-stock Commercial Bank for Industry and Trade – Hoang Mai Branch
• Loại tài liệu: graduation thesis
• Năm xuất bản: 2013
• Địa điểm: Hanoi

Mục lục chi tiết

• DEDICATION
• ACKNOWLEDGEMENT
• ABSTRACT
• TABLE OF CONTENTS
• INTRODUCTION
• 1. CHƯƠNG 1: THERORETICAL BACKGROUND OF CREDIT RISK MANAGEMENT IN THE OPERATIONS OF COMMERCIAL BANKS
• 1.1. Credit risk in the operations of commercial banks
• 1.2. The concept of risk and the credit risk
• 1.3. Classification of credit risk
• 1.4. Characteristics of credit risks
• 1.5. The main basis for determining the level of credit risk
• 1.6. Consequences of credit risk
• 1.7. Causes of the credit risk
• 1.8. Credit risk management
• 1.9. The necessity of the credit risk management
• 1.10. Mission of the credit risk management
• 1.11. Credit risk measurement
• 1.12. Basel core principles of credit risk management
• 1.13. The application of credit risk management models in Vietnam’s commercial banks
• 2. CHƯƠNG 2: REALITY OF CREDIT RISK MANAGEMENT IN VIETNAM JOINT-STOCK COMMERCIAL BANK FOR INDUSTRY AND TRADE – HOANG MAI BRANCH
• 2.1. Overview of Vietnam Joint-stock Commercial Bank for Industry and Trade – Hoang Mai Branch
• 2.2. The organizational structure of Vietnam Joint-stock Commercial Bank for Industry and Trade - Hoang Mai Branch
• 2.3. The organizational model
• 2.4. Function and duty of departments at Vietnam Joint-stock Commercial Bank for Industry and Trade - Hoang Mai Branch
• 2.5. Reality of Credit Operation and Credit Risk Management in Vietnam joint-stock commercial bank for Industry and Trade – Hoang Mai Branch
• 2.6. Reality and causes of credit risk
• 2.7. Reality of credit risk management
• 3. CHƯƠNG 3: MEASURES TO IMPROVE CREDIT RISK MANAGEMENT IN VIETNAM JOINT-STOCK COMMERCIAL BANK FOR INDUSTRY AND TRADE – HOANG MAI BRANCH
• 3.1. Viewpoints of the Vietnam Joint-stock Commercial Bank for Industry and Trade – Hoang Mai Branch on credit policy & credit risk management to 2015
• 3.2. The measures to improve the quality of credit risk management in Vietnam Joint-stock Commercial Bank for Industry and Trade – Hoang Mai Branch
• 3.3. Improving credit granting process
• 3.4. Building effective credit policy
• 3.5. Improving credit information system
• 3.6. Credit risk prevention measures
• 3.7. The solutions to reduce and offset losses when risks occur
• 3.8. Human Resources Solutions
• 3.9. Recommendations for the State Bank of Vietnam
• 3.10. Recommendations for the Government of Vietnam
• RECAPITULATION AND CONCLUDING REMARKS
• LIMITATIONS OF THE THESIS
• TABLE OF ABBREVIATIONS
• LIST OF TABLES
• LIST OF ILLUSTRATIONS

Tóm tắt

I. Tổng quan về Quản lý Rủi ro Tín dụng tại Vietinbank Hoàng Mai

Quản lý rủi ro tín dụng là một trong những nhiệm vụ quan trọng nhất của các ngân hàng thương mại, đặc biệt là tại Ngân hàng Thương mại Cổ phần Công nghiệp và Thương mại Việt Nam – Chi nhánh Hoàng Mai. Rủi ro tín dụng không chỉ ảnh hưởng đến hoạt động của ngân hàng mà còn tác động đến toàn bộ nền kinh tế. Việc nâng cao hiệu quả quản lý rủi ro tín dụng sẽ giúp ngân hàng giảm thiểu tổn thất và tăng cường khả năng cạnh tranh.

1.1. Khái niệm và tầm quan trọng của Quản lý Rủi ro Tín dụng

Quản lý rủi ro tín dụng là quá trình xác định, đánh giá và kiểm soát các rủi ro liên quan đến việc cho vay. Điều này bao gồm việc phân tích khả năng trả nợ của khách hàng và các yếu tố ảnh hưởng đến khả năng này.

1.2. Đặc điểm của Rủi ro Tín dụng tại Vietinbank Hoàng Mai

Rủi ro tín dụng tại Vietinbank Hoàng Mai có những đặc điểm riêng biệt, bao gồm sự đa dạng trong danh mục cho vay và sự biến động của thị trường. Những yếu tố này cần được xem xét kỹ lưỡng trong quá trình quản lý.

II. Thách thức trong Quản lý Rủi ro Tín dụng tại Vietinbank Hoàng Mai

Ngân hàng Thương mại Cổ phần Công nghiệp và Thương mại Việt Nam – Chi nhánh Hoàng Mai đang đối mặt với nhiều thách thức trong việc quản lý rủi ro tín dụng. Tỷ lệ nợ xấu gia tăng và sự cạnh tranh khốc liệt từ các ngân hàng khác là những vấn đề cần được giải quyết kịp thời.

2.1. Tỷ lệ nợ xấu và ảnh hưởng đến hoạt động ngân hàng

Tỷ lệ nợ xấu tại Vietinbank Hoàng Mai đã tăng lên mức báo động, ảnh hưởng đến khả năng sinh lời và uy tín của ngân hàng. Việc kiểm soát nợ xấu là một thách thức lớn.

2.2. Cạnh tranh từ các ngân hàng khác

Sự gia tăng cạnh tranh từ các ngân hàng thương mại khác đã tạo ra áp lực lớn lên Vietinbank Hoàng Mai trong việc duy trì thị phần và cải thiện chất lượng dịch vụ.

III. Phương pháp Nâng cao Quản lý Rủi ro Tín dụng tại Vietinbank Hoàng Mai

Để nâng cao hiệu quả quản lý rủi ro tín dụng, Vietinbank Hoàng Mai cần áp dụng một số phương pháp và chiến lược cụ thể. Những biện pháp này không chỉ giúp giảm thiểu rủi ro mà còn cải thiện chất lượng dịch vụ cho khách hàng.

3.1. Cải thiện quy trình cho vay

Quy trình cho vay cần được cải thiện để đảm bảo tính chính xác và nhanh chóng trong việc đánh giá khả năng trả nợ của khách hàng. Việc áp dụng công nghệ thông tin vào quy trình này sẽ mang lại hiệu quả cao.

3.2. Xây dựng chính sách tín dụng hiệu quả

Chính sách tín dụng cần được xây dựng dựa trên các tiêu chí rõ ràng và minh bạch, giúp ngân hàng dễ dàng quản lý và kiểm soát rủi ro tín dụng.

IV. Ứng dụng thực tiễn và Kết quả nghiên cứu tại Vietinbank Hoàng Mai

Việc áp dụng các phương pháp quản lý rủi ro tín dụng tại Vietinbank Hoàng Mai đã mang lại những kết quả tích cực. Nghiên cứu cho thấy rằng việc cải thiện quy trình cho vay và chính sách tín dụng đã giúp giảm tỷ lệ nợ xấu.

4.1. Kết quả từ việc cải thiện quy trình cho vay

Quy trình cho vay được cải thiện đã giúp ngân hàng giảm thiểu thời gian xử lý hồ sơ và nâng cao độ chính xác trong việc đánh giá khách hàng.

4.2. Tác động của chính sách tín dụng mới

Chính sách tín dụng mới đã giúp ngân hàng thu hút nhiều khách hàng hơn, đồng thời giảm thiểu rủi ro tín dụng thông qua việc đánh giá kỹ lưỡng hơn.

V. Kết luận và Tương lai của Quản lý Rủi ro Tín dụng tại Vietinbank Hoàng Mai

Quản lý rủi ro tín dụng tại Vietinbank Hoàng Mai cần tiếp tục được cải thiện để đáp ứng yêu cầu ngày càng cao của thị trường. Tương lai của ngân hàng phụ thuộc vào khả năng quản lý rủi ro hiệu quả và bền vững.

5.1. Định hướng phát triển trong quản lý rủi ro tín dụng

Ngân hàng cần xác định rõ định hướng phát triển trong quản lý rủi ro tín dụng, từ đó xây dựng các chiến lược phù hợp để nâng cao hiệu quả hoạt động.

5.2. Tầm quan trọng của công nghệ trong quản lý rủi ro

Công nghệ sẽ đóng vai trò quan trọng trong việc nâng cao hiệu quả quản lý rủi ro tín dụng, giúp ngân hàng theo dõi và phân tích rủi ro một cách chính xác hơn.

Trích đoạn nội dung tài liệu

THE STATE BANK OF VIETNAM BANKING ACADEMY FACULTY OF FOREIGN LANGUAGES -----*****----- GRADUATION THESIS Topic: Enhancing Credit Risk Management in Vietnam Joint-stock Commercial Bank for Industry and Trade – Hoang Mai Branch Supervisor: MA. Ngo Tung Anh Student: Nguyen Van Truong Class: ATCB - K12 Major: English in Banking and Finance Student Code: 12A7511194 Hanoi, May 2013 DEDICATION This thesis is dedicated to my parents who have supported me since the beginning of my study. Also, this thesis is dedicated to the lecturers and students in faculty of foreign languages. Finally, this thesis is dedicated to Banking Academy of Vietnam.

ACKNOWLEDGEMENT I would like to express my sincere gratitude to my supervisor Mr. Ngo Tung Anh for his continuous support, patience, motivation, enthusiasm, useful comments and remarks. Without his guidance and persistent help this thesis would not have been possible. I would like to give the deep appreciation to recruitment team of Vietnam joint- stock commercial bank in Industry and Trade (Vietinbank) – Hoang Mai Branch for considering my CV, interviewing and offering me an internship opportunity at the branch.

In addition, I would like to thank the Non-performing Loan Recovery Department Manager at Vietinbank Hoang Mai, Mr. Hoang Van Kiem, who has introduced loan recovery operations to me as well as supported me during practical loan recovery process. Finally, I would like to thank all the lecturers and classmates at Banking Academy for their dedication and support during the 4-year course. Hanoi, May 28, 2013 ABSTRACT After Vietnam joined World Trade Organization (WTO), banking and finance industry in Vietnam is approaching many opportunities as well as facing many challenges.

Currently, the non-performing loan (NPL) ratio of commercial banks in Vietnam in general and Vietnam Joint-stock Commercial Bank for Trade and Industry (Vietinbank) in particular witnessed the signs of rising beyond the allowed rate under the State Bank of Vietnam’s provisions. This does not only have influence on commercial banks but also the national economy. However, commercial banks still encounter difficulties in managing NPLs. This thesis is going to clarify some basic issues about the theoretical basis in the credit risk management of commercial banks.

After analyzing business situation and credit risk management activities, some measures will be discussed to improve the effectiveness of risk management in Vietinbank. TABLE OF CONTENTS INTRODUCTION .1 CHAPTER 1: THERORETICAL BACKGROUND OF CREDIT RISK MANAGEMENT IN THE OPERATIONS OF COMMERCIAL BANKS. Credit risk in the operations of commercial banks. The concept of risk and the credit risk.

Classification of credit risk. Characteristics of credit risks .4 The main basis for determining the level of credit risk. Consequences of credit risk. Causes of the credit risk.

Credit risk management. The necessity of the credit risk management. Mission of the credit risk management.3 Credit risk measurement:. Basel core principles of credit risk management.

Basel core principles of credit risk management. The application of credit risk management models in Vietnam’s commercial banks .22 CHAPTER 2: REALITY OF CREDIT RISK MANAGEMENT IN VIETNAM JOINT-STOCK COMMERCIAL BANK FOR INDUSTRY AND TRADE – HOANG MAI BRANCH. Overview of Vietnam Joint-stock Commercial Bank for Industry and Trade – Hoang Mai Branch. The organizational structure of Vietnam Joint-stock Commercial Bank for Industry and Trade - Hoang Mai Branch .1 The organizational model.

Function and duty of departments at Vietnam Joint-stock Commercial Bank for Industry and Trade - Hoang Mai Branch. Reality of Credit Operation and Credit Risk Management in Vietnam joint-stock commercial bank for Industry and Trade – Hoang Mai Branch. Reality and causes of credit risk:. Reality of credit risk management .45 CHAPTER 3: MEASURES TO IMPROVE CREDIT RISK MANAGEMENT IN VIETNAM JOINT-STOCK COMMERCIAL BANK FOR INDUSTRY AND TRADE – HOANG MAI BRANCH.

Viewpoints of the Vietnam Joint-stock Commercial Bank for Industry and Trade – Hoang Mai Branch on credit policy & credit risk management to 2015. The measures to improve the quality of credit risk management in Vietnam Joint- stock Commercial Bank for Industry and Trade – Hoang Mai Branch. Improving credit granting process. Building effective credit policy.

Improving credit information system. Credit risk prevention measures. The solutions to reduce and offset losses when risks occur. Human Resources Solutions.

Recommendations for the State Bank of Vietnam. Recommendations for the Government of Vietnam .63 RECAPITULATION AND CONCLUDING REMARKS.65 LIMITATIONS OF THE THESIS .67 TABLE OF ABBREVIATIONS Abbreviations Meaning CIC Credit Information Center IT Information Technology NPL Non-performing Loan Vietinbank Vietnam Joint-Stock Commercial Bank for Industry and Trade SBV The State Bank of Vietnam SME Small and Medium Enterperise USD U.S Dollar VND Vietnam Dong WTO World Trade Organization LIST OF TABLES Table 1: Total Outstanding Loans from 2009 to 03/2013 (Unit: Billion VND) .33 Table 2: Portfolio structure in terms of economic sector (Unit: billion VND) .35 Table 4: Loan Classification from 2009 to 03/2013 (Unit: Billion VND) .36 Table 5: Customer Policy .51 LIST OF ILLUSTRATIONS Diagram 1: Executive committee .24 Diagram 2: Operation structure .25 Diagram 3: Credit granting process .41 Graduation Thesis Banking Academy INTRODUCTION 1. Rationale to the study Credit is the most complex banking operation compared to other banking operations. Inspite of the profits, this activity brings many risks.

Therefore, credit risk will not only impact directly to the existence and development of each credit institution, but also affect the entire banking system and the whole economy. Credit risk management is the difficult task but urgent, especially for commercial banks of Vietnam as income from credit mainly accounts for 60-80% of banks’ income. In the last quarter of 2012, the non-performing loan (NPL) ratio of commercial banks in Vietnam in general and Vietnam Joint-stock Commercial Bank for Trade and Industry (Vietinbank) in particular witnessed the signs of rising beyond the allowed rate under the State Bank of Vietnam’s provisions. So what is the cause? How to improve the quality of credit risk management in the credit operation of Vietinbank? In this context, as a student studying at Banking Academy of Vietnam with the encouragement of the faculty, I would boldly choose the subject "Enhancing credit risk management in Vietnam Joint-stock Commercial Bank for Industry and Trade – Hoang Mai Branch "as the thesis subject.

Objectives of the study The thesis is going to resolve 3 main issues as follows: - Clarifying some basic issues about the theoretical basis in the credit risk management of commercial banks. - Analyzing business situation and credit risk management activities in Vietinbank, thereby giving the positives as well as the drawbacks of this administration task. Nguyen Van Truong 1 ATCB – K12 Graduation Thesis Banking Academy - Proposing measures to improve the effectiveness of credit risk management can be applied in practice to improve the effectiveness of risk management at Vietinbank. Subject and Scope of the study - Study Subject: Industrial and Commercial Bank of Vietnam – Hoang Mai Branch.

- Scope of study: Business Activity of Industrial and Commercial Bank of Vietnam - Hoang Mai branch. Study questions - What is the theoretical basis related to credit risk, credit risk management? - How does Vietinbank Hoang Mai operate its business? How does it manage credit risk in reality? - What could Vietinbank Hoang Mai, the State Bank of Vietnam and the Vietnamese Government do to enhance credit risk management and reduce the loss caused by credit risk? 4. Methods of the study This thesis employs a qualitative method including statistics, analysis and comparison in combination with the knowledge of economics, finance and banking to address and clarify the purposes set out in the thesis. The thesis is based mainly on the secondary data collected from financial reports, relevant information of the bank on the website or newspapers, database of reliable market data providers, etc.

so that all qualitative and quantitative indicators are evaluated. Significance of the study Nguyen Van Truong 2 ATCB – K12 Graduation Thesis Banking Academy The thesis will help commercial banks to realize the potential danger of credit risk as well as the importance of credit risk management. Therefore, they can apply appropriate measures to evaluate, manage, and reduce credit risk and its consequences. Thesis structure Beside the introduction, recapitulation, implications and references, the thesis is divided into three chapters, namely: Chapter 1: Theoretical background credit risk management in the operation of commercial banks.

Chapter 2: Reality of Credit Risk Management in Vietnam Joint- Stock Commercial Bank for Trade and Industry – Hoang Mai Branch. Chapter 3: Enhancing credit risk management in Vietnam Joint- Stock Commercial Bank for Trade and Industry – Hoang Mai Branch. Nguyen Van Truong 3 ATCB – K12 Graduation Thesis Banking Academy CHAPTER 1: THERORETICAL BACKGROUND OF CREDIT RISK MANAGEMENT IN THE OPERATIONS OF COMMERCIAL BANKS 1. Credit risk in the operations of commercial banks 1.

The concept of risk and the credit risk Risk is the unwanted event that can result in the loss of the bank's assets, the decline in actual profit or an additional expense to complete a certain financial service. In banking business, credit operation definitely creates both mostly banks’ profitability and potential risks. The recent statistics and research show that credit risk accounts for 70% of total banking risks. Although there has been a structural shift in bank profits, in which income from credit activities tends to decrease and income from services tends to increase, income from credit still accounts for ½ to 2/3 banking income (Peter Rose, commercial bank Management).

Banking Business is a business of risks, pursuing profits with acceptable risk. Volker, former chairman of the U. Federal Reserve (Fed) said: "If banks do not have bad loans, it is not operating business ". Credit risk is one of the major causes of losses and seriously affects the quality of banking business.

There are many other definitions of credit risk: In "Financial Institutions Management - A Modern perspective" by A.Lange, credit risk is defined as the potential loss of bank when granting credit to a customer that the projected income stream from bank loans cannot be fully implemented in both quality and deadlines. It is also stated by Timothy W.Koch that once banks hold higher-yielding assets, risks occur when the customers default on their loans that they do not pay principal and interest under the agreement. Credit risk is the potential change of net income and market value derived from the customers’ payment failure or late payment. According to paragraph 1 Article 2 in the Regulation on loan classification, provisioning and use of reserves to handle credit risk in banking operations of credit Nguyen Van Truong 4 ATCB – K12 Graduation Thesis Banking Academy institutions issued together with Decision 493/2005/QD-NHNN dated 22/4/2005 of the SBV’s Governor, credit risk is the possibility of loss in banking activities of credit institutions caused by the customers’ failure or inability to perform obligations themselves as committed.

In summary, we can draw the basic content of credit risk as follows: - Credit risk occurs when there is default in customers’ repayment obligations under the contract, including principal and / or interest. Default may be delayed payment or nonpayment. - Credit risk will lead to financial losses, which would be a decrease in net income and market value of equity. In serious cases, it can lead to a business loss, or even bankruptcy.

- In developing countries (such as Vietnam), the lack of diversity in financial and banking services make credit considered primarily profitable services, especially for small banks. Therefore, credit risk, high or low, will determine the efficiency of the banking business. - On the other hand, the risk and expected return of the bank are two of the covariant variables in a certain range (the higher the expected return, the greater the potential risk). - Risk is an objective factor; therefore, it cannot be eliminated completely but we can manage its appearance as well as its harm.

Classification of credit risk 1.