Luận văn some issues of credit risk management in vietnam commercial banks

With the favor in banking sector, especially credit risk management, I do a study about credit risk and credii risk management syslem al some Vietnam commercial banks, Graduation thesis

Some issues of credit risk management in Vietnam commercial banks

i SUPERVISOR: MA Chu Van Hung

STUDENT: Phan Thi Quy

CODE: 11071326 COHORT: IB2012A

MAJOR: International Business

Hanoi - Year .2016

Thank youl

To complete this thesis, I sincerely thank teaches, who have taught and guided me throughout study period at International schoal- VNU

Many thanks to Ma Chu Von Hung for whole- hearted, thoughtful guidance and

useful knowledge in my whole research process

Livied my best ta carry out this thesis However, because I start to be familiar with science analysis, access ta reality af economy and due to my limitations in

understanding asx well as experience, [ may not avaid making some mistakes in this study wish ta receive feedbacks and comments of teachers to improve quality of

thesis

Sincerely thank,

Leiter of Declaration

T hereby declare that the Graduation Project ° Some issues af credit risk

management in commercial bank is the results of my own research and has never been published in any work of others During the implementation process of this

project, I have seriously taken research ethics; all findings of this project are

results of my own research and surveys; all references in this project are clearly

according to regulations

T hear full responsibility for the fidelity of the manber and data and other

contents of my graduation praject

Hanoi,.31/1/2016

Phan Thi Quy

introduction

{ The imperiousness af topic

Credit is the most cotuplex activity in comparison with other business activities of

commercial banks, in spite of being profitable, it faces a great deal of difficulties

Therefore, if credit risk occurs, then it will have a huge impact and direct influence

on the survival and development of each credit institution; especially affects whole

banking system and entire econumy Credil risk snanagement is a difficult problem, but very urgent in the current conditions, especially for commercial banks in

Vietnam, because the credit income is essential, accounting for between 60-80% income of bank

Credit risk activities always have potential risks, thas enhancing the credit

management quality in order to reduce credit risk have decisive meaning to the

business activities of a bank, a commercial banking system and even for the whole

economy

With the favor in banking sector, especially credit risk management, I do a study about credit risk and credii risk management syslem al some Vietnam commercial

banks, Graduation thesis with the topic: “ Some issues of credit risk management in

Vietnam commercial banks” will provide an insight view into the reality of credit

risk management system as well as propose solutions to improve credit risk

management quality at two Vietnam commercial banks including Techeombank and

BIDV

2 Purposes of study

Thesis resolves four following primary issues:

* Clarifviag some issues in theoretical basis of credit risk management at

commercial banks

* Identifying credit risk management system at Techcombank and BIDV

* Assessments for credit management system of Techcombank and BTDV

Tables, charts

[Figm | Name

i "Loan classification

31 Organizational structure of Techeornbank

32 Loan quallly analysis of Teocbcombank T7 ”” |

Tables, charts

[Figm | Name

i "Loan classification

31 Organizational structure of Techeornbank

32 Loan quallly analysis of Teocbcombank T7 ”” |

4, Proposing some solutions ta improve credit risk management system in

Vietnam commercial banks ]ẦẮ——

41, Complete organizational structure of credit risk management system

4.2, Building effective credit policies

* Proposing some measures lo enhance quality of credit risk management ai

Techeornbunk and BIDV, which can be applied in realily

3 Study subject and sphere

+ Study subject: Viewam technological and commercial join- stock bank

(Techcombank} and Joint stock and Coumnercial Bank for Investment and

Development of Vietnam (BIDV)

¢ Stady sphere: credit risk management system of Victnam Technological and

Commercial Joint- stock Bank (Techcombank) and Joint stock Commercial Bank

for Investment and Development of Vietnam (BH2V)

© Period of time: 2013- 2014

4, Study method

Using the dialectical materialism method combined with statistical research,

comparison, analysis, go from theory Lo practice to address and clarify the purposes set out in writing

“Chapter 2: Methadology- analyzing case study

Chapter 3: Reality of credit risk management system at some Vietmam

commercial banks

#* Chapter 4:THseussion & analysis

1, Overview about credit

1.1, Definition of bank credit

12 Characteristics of bank credi

2 Credit risk of commercial banks

2.4 Definition of credit risk

Classification of credit risk

2.3 Causes of credit risk

2.3.1 Causes from banks

23.2

3

Causes from borrowers

3.1 Definition of credit risk nanageHIettl « es~eeo

3.2 Organizational structure and managerial mechanism of credit risk

343 Credit risk management policies

343.1 Limiting credit risk

34 Credit rish management procedures

3-41, Credit risk identification

34.2 Credit risk measurement

3.4.3, Credit risk observation and cowl

3.8 Internal credit ratÌngs systefo

3.6 Managementinfarmatio systent

3.7 Internal audit system

Chapter 2: Methodology- analyzing case study

1 Theory of analyzing case study

1.4 What isa case study

1⁄3 Analyze the results

2 Analyzing case study in this thesis

2.4, Reasons for choosing case af Techcombank and BIDV to analyz:

22 Sources af information for analysis

2.4 Problems of banks need tn he analyzed

Chapter 3; Reality of credit risk management system at some Vietnam

commercial banks

1 Credit risk management system at Vietnam Technological and Commercial

Joint stock Bank

4.1 Credit information at Techcombank in 2013-2014

4.2 Organizational structure and managerial mechanism of credit risk

1.3 Internal credit risk cating system of Techcombak

1⁄4 Credit risk management provedures of Techcombank

1.4.1 Credit risk identification

* Proposing some measures lo enhance quality of credit risk management ai

Techeornbunk and BIDV, which can be applied in realily

3 Study subject and sphere

+ Study subject: Viewam technological and commercial join- stock bank

(Techcombank} and Joint stock and Coumnercial Bank for Investment and

Development of Vietnam (BIDV)

¢ Stady sphere: credit risk management system of Victnam Technological and

Commercial Joint- stock Bank (Techcombank) and Joint stock Commercial Bank

for Investment and Development of Vietnam (BH2V)

© Period of time: 2013- 2014

4, Study method

Using the dialectical materialism method combined with statistical research,

comparison, analysis, go from theory Lo practice to address and clarify the purposes set out in writing

“Chapter 2: Methadology- analyzing case study

Chapter 3: Reality of credit risk management system at some Vietmam

commercial banks

#* Chapter 4:THseussion & analysis

introduction

{ The imperiousness af topic

Credit is the most cotuplex activity in comparison with other business activities of

commercial banks, in spite of being profitable, it faces a great deal of difficulties

Therefore, if credit risk occurs, then it will have a huge impact and direct influence

on the survival and development of each credit institution; especially affects whole

banking system and entire econumy Credil risk snanagement is a difficult problem, but very urgent in the current conditions, especially for commercial banks in

Vietnam, because the credit income is essential, accounting for between 60-80% income of bank

Credit risk activities always have potential risks, thas enhancing the credit

management quality in order to reduce credit risk have decisive meaning to the

business activities of a bank, a commercial banking system and even for the whole

economy

With the favor in banking sector, especially credit risk management, I do a study about credit risk and credii risk management syslem al some Vietnam commercial

banks, Graduation thesis with the topic: “ Some issues of credit risk management in

Vietnam commercial banks” will provide an insight view into the reality of credit

risk management system as well as propose solutions to improve credit risk

management quality at two Vietnam commercial banks including Techeombank and

BIDV

2 Purposes of study

Thesis resolves four following primary issues:

* Clarifviag some issues in theoretical basis of credit risk management at

commercial banks

* Identifying credit risk management system at Techcombank and BIDV

* Assessments for credit management system of Techcombank and BTDV

* Proposing some measures lo enhance quality of credit risk management ai

Techeornbunk and BIDV, which can be applied in realily

3 Study subject and sphere

+ Study subject: Viewam technological and commercial join- stock bank

(Techcombank} and Joint stock and Coumnercial Bank for Investment and

Development of Vietnam (BIDV)

¢ Stady sphere: credit risk management system of Victnam Technological and

Commercial Joint- stock Bank (Techcombank) and Joint stock Commercial Bank

for Investment and Development of Vietnam (BH2V)

© Period of time: 2013- 2014

4, Study method

Using the dialectical materialism method combined with statistical research,

comparison, analysis, go from theory Lo practice to address and clarify the purposes set out in writing

“Chapter 2: Methadology- analyzing case study

Chapter 3: Reality of credit risk management system at some Vietmam

commercial banks

#* Chapter 4:THseussion & analysis

14.2 Credit risk measurement

2 Credit risk management system at Joint'stock Commercial Bank for

Investment and Development of Vietnam

2.4, Credit information at BIDV in 2013-2014

2.2 Organizational structure and managerial mechanism of credit risk

24 Credit risk management procedures of BIDV

24.1 Credit risk identification _

Chapter 4: Discussion and analysis

1 Assessment for credit risk management system at Techcombank

1, Overview about credit

1.1, Definition of bank credit

12 Characteristics of bank credi

2 Credit risk of commercial banks

2.4 Definition of credit risk

Classification of credit risk

2.3 Causes of credit risk

2.3.1 Causes from banks

23.2

3

Causes from borrowers

3.1 Definition of credit risk nanageHIettl « es~eeo

3.2 Organizational structure and managerial mechanism of credit risk

343 Credit risk management policies

343.1 Limiting credit risk

introduction

{ The imperiousness af topic

Credit is the most cotuplex activity in comparison with other business activities of

commercial banks, in spite of being profitable, it faces a great deal of difficulties

Therefore, if credit risk occurs, then it will have a huge impact and direct influence

on the survival and development of each credit institution; especially affects whole

banking system and entire econumy Credil risk snanagement is a difficult problem, but very urgent in the current conditions, especially for commercial banks in

Vietnam, because the credit income is essential, accounting for between 60-80% income of bank

Credit risk activities always have potential risks, thas enhancing the credit

management quality in order to reduce credit risk have decisive meaning to the

business activities of a bank, a commercial banking system and even for the whole

economy

With the favor in banking sector, especially credit risk management, I do a study about credit risk and credii risk management syslem al some Vietnam commercial

banks, Graduation thesis with the topic: “ Some issues of credit risk management in

Vietnam commercial banks” will provide an insight view into the reality of credit

risk management system as well as propose solutions to improve credit risk

management quality at two Vietnam commercial banks including Techeombank and

BIDV

2 Purposes of study

Thesis resolves four following primary issues:

* Clarifviag some issues in theoretical basis of credit risk management at

commercial banks

* Identifying credit risk management system at Techcombank and BIDV

* Assessments for credit management system of Techcombank and BTDV

34 Credit rish management procedures

3-41, Credit risk identification

34.2 Credit risk measurement

3.4.3, Credit risk observation and cowl

3.8 Internal credit ratÌngs systefo

3.6 Managementinfarmatio systent

3.7 Internal audit system

Chapter 2: Methodology- analyzing case study

1 Theory of analyzing case study

1.4 What isa case study

1⁄3 Analyze the results

2 Analyzing case study in this thesis

2.4, Reasons for choosing case af Techcombank and BIDV to analyz:

22 Sources af information for analysis

2.4 Problems of banks need tn he analyzed

Chapter 3; Reality of credit risk management system at some Vietnam

commercial banks

1 Credit risk management system at Vietnam Technological and Commercial

Joint stock Bank

4.1 Credit information at Techcombank in 2013-2014

4.2 Organizational structure and managerial mechanism of credit risk

1.3 Internal credit risk cating system of Techcombak

1⁄4 Credit risk management provedures of Techcombank

1.4.1 Credit risk identification

14.2 Credit risk measurement

2 Credit risk management system at Joint'stock Commercial Bank for

Investment and Development of Vietnam

2.4, Credit information at BIDV in 2013-2014

2.2 Organizational structure and managerial mechanism of credit risk

24 Credit risk management procedures of BIDV

24.1 Credit risk identification _

Chapter 4: Discussion and analysis

1 Assessment for credit risk management system at Techcombank

introduction

{ The imperiousness af topic

Credit is the most cotuplex activity in comparison with other business activities of

commercial banks, in spite of being profitable, it faces a great deal of difficulties

Therefore, if credit risk occurs, then it will have a huge impact and direct influence

on the survival and development of each credit institution; especially affects whole

banking system and entire econumy Credil risk snanagement is a difficult problem, but very urgent in the current conditions, especially for commercial banks in

Vietnam, because the credit income is essential, accounting for between 60-80% income of bank

Credit risk activities always have potential risks, thas enhancing the credit

management quality in order to reduce credit risk have decisive meaning to the

business activities of a bank, a commercial banking system and even for the whole

economy

With the favor in banking sector, especially credit risk management, I do a study about credit risk and credii risk management syslem al some Vietnam commercial

banks, Graduation thesis with the topic: “ Some issues of credit risk management in

Vietnam commercial banks” will provide an insight view into the reality of credit

risk management system as well as propose solutions to improve credit risk

management quality at two Vietnam commercial banks including Techeombank and

BIDV

2 Purposes of study

Thesis resolves four following primary issues:

* Clarifviag some issues in theoretical basis of credit risk management at

commercial banks

* Identifying credit risk management system at Techcombank and BIDV

* Assessments for credit management system of Techcombank and BTDV

Tables, charts

[Figm | Name

i "Loan classification

31 Organizational structure of Techeornbank

32 Loan quallly analysis of Teocbcombank T7 ”” |

Tables, charts

[Figm | Name

i "Loan classification

31 Organizational structure of Techeornbank

32 Loan quallly analysis of Teocbcombank T7 ”” |

14.2 Credit risk measurement

2 Credit risk management system at Joint'stock Commercial Bank for

Investment and Development of Vietnam

2.4, Credit information at BIDV in 2013-2014

2.2 Organizational structure and managerial mechanism of credit risk

24 Credit risk management procedures of BIDV

24.1 Credit risk identification _

Chapter 4: Discussion and analysis

1 Assessment for credit risk management system at Techcombank

34 Credit rish management procedures

3-41, Credit risk identification

34.2 Credit risk measurement

3.4.3, Credit risk observation and cowl

3.8 Internal credit ratÌngs systefo

3.6 Managementinfarmatio systent

3.7 Internal audit system

Chapter 2: Methodology- analyzing case study

1 Theory of analyzing case study

1.4 What isa case study

1⁄3 Analyze the results

2 Analyzing case study in this thesis

2.4, Reasons for choosing case af Techcombank and BIDV to analyz:

22 Sources af information for analysis

2.4 Problems of banks need tn he analyzed

Chapter 3; Reality of credit risk management system at some Vietnam

commercial banks

1 Credit risk management system at Vietnam Technological and Commercial

Joint stock Bank

4.1 Credit information at Techcombank in 2013-2014

4.2 Organizational structure and managerial mechanism of credit risk

1.3 Internal credit risk cating system of Techcombak

1⁄4 Credit risk management provedures of Techcombank

1.4.1 Credit risk identification

1, Overview about credit

1.1, Definition of bank credit

12 Characteristics of bank credi

2 Credit risk of commercial banks

2.4 Definition of credit risk

Classification of credit risk

2.3 Causes of credit risk

2.3.1 Causes from banks

23.2

3

Causes from borrowers

3.1 Definition of credit risk nanageHIettl « es~eeo

3.2 Organizational structure and managerial mechanism of credit risk

343 Credit risk management policies

343.1 Limiting credit risk

Tables, charts

[Figm | Name

i "Loan classification

31 Organizational structure of Techeornbank

32 Loan quallly analysis of Teocbcombank T7 ”” |

introduction

{ The imperiousness af topic

Credit is the most cotuplex activity in comparison with other business activities of

commercial banks, in spite of being profitable, it faces a great deal of difficulties

Therefore, if credit risk occurs, then it will have a huge impact and direct influence

on the survival and development of each credit institution; especially affects whole

banking system and entire econumy Credil risk snanagement is a difficult problem, but very urgent in the current conditions, especially for commercial banks in

Vietnam, because the credit income is essential, accounting for between 60-80% income of bank

Credit risk activities always have potential risks, thas enhancing the credit

management quality in order to reduce credit risk have decisive meaning to the

business activities of a bank, a commercial banking system and even for the whole

economy

With the favor in banking sector, especially credit risk management, I do a study about credit risk and credii risk management syslem al some Vietnam commercial

banks, Graduation thesis with the topic: “ Some issues of credit risk management in

Vietnam commercial banks” will provide an insight view into the reality of credit

risk management system as well as propose solutions to improve credit risk

management quality at two Vietnam commercial banks including Techeombank and

BIDV

2 Purposes of study

Thesis resolves four following primary issues:

* Clarifviag some issues in theoretical basis of credit risk management at

commercial banks

* Identifying credit risk management system at Techcombank and BIDV

* Assessments for credit management system of Techcombank and BTDV

34 Credit rish management procedures

3-41, Credit risk identification

34.2 Credit risk measurement

3.4.3, Credit risk observation and cowl

3.8 Internal credit ratÌngs systefo

3.6 Managementinfarmatio systent

3.7 Internal audit system

Chapter 2: Methodology- analyzing case study

1 Theory of analyzing case study

1.4 What isa case study

1⁄3 Analyze the results

2 Analyzing case study in this thesis

2.4, Reasons for choosing case af Techcombank and BIDV to analyz:

22 Sources af information for analysis

2.4 Problems of banks need tn he analyzed

Chapter 3; Reality of credit risk management system at some Vietnam

commercial banks

1 Credit risk management system at Vietnam Technological and Commercial

Joint stock Bank

4.1 Credit information at Techcombank in 2013-2014

4.2 Organizational structure and managerial mechanism of credit risk

1.3 Internal credit risk cating system of Techcombak

1⁄4 Credit risk management provedures of Techcombank

1.4.1 Credit risk identification

14.2 Credit risk measurement

2 Credit risk management system at Joint'stock Commercial Bank for

Investment and Development of Vietnam

2.4, Credit information at BIDV in 2013-2014

2.2 Organizational structure and managerial mechanism of credit risk

24 Credit risk management procedures of BIDV

24.1 Credit risk identification _

Chapter 4: Discussion and analysis

1 Assessment for credit risk management system at Techcombank

14.2 Credit risk measurement

2 Credit risk management system at Joint'stock Commercial Bank for

Investment and Development of Vietnam

2.4, Credit information at BIDV in 2013-2014

2.2 Organizational structure and managerial mechanism of credit risk

24 Credit risk management procedures of BIDV

24.1 Credit risk identification _

Chapter 4: Discussion and analysis

1 Assessment for credit risk management system at Techcombank

* Proposing some measures lo enhance quality of credit risk management ai

Techeornbunk and BIDV, which can be applied in realily

3 Study subject and sphere

+ Study subject: Viewam technological and commercial join- stock bank

(Techcombank} and Joint stock and Coumnercial Bank for Investment and

Development of Vietnam (BIDV)

¢ Stady sphere: credit risk management system of Victnam Technological and

Commercial Joint- stock Bank (Techcombank) and Joint stock Commercial Bank

for Investment and Development of Vietnam (BH2V)

© Period of time: 2013- 2014

4, Study method

Using the dialectical materialism method combined with statistical research,

comparison, analysis, go from theory Lo practice to address and clarify the purposes set out in writing

“Chapter 2: Methadology- analyzing case study

Chapter 3: Reality of credit risk management system at some Vietmam

commercial banks

#* Chapter 4:THseussion & analysis

4, Proposing some solutions ta improve credit risk management system in

Vietnam commercial banks ]ẦẮ——

41, Complete organizational structure of credit risk management system

4.2, Building effective credit policies

introduction

{ The imperiousness af topic

Credit is the most cotuplex activity in comparison with other business activities of

commercial banks, in spite of being profitable, it faces a great deal of difficulties

Therefore, if credit risk occurs, then it will have a huge impact and direct influence

on the survival and development of each credit institution; especially affects whole

banking system and entire econumy Credil risk snanagement is a difficult problem, but very urgent in the current conditions, especially for commercial banks in

Vietnam, because the credit income is essential, accounting for between 60-80% income of bank

Credit risk activities always have potential risks, thas enhancing the credit

management quality in order to reduce credit risk have decisive meaning to the

business activities of a bank, a commercial banking system and even for the whole

economy

With the favor in banking sector, especially credit risk management, I do a study about credit risk and credii risk management syslem al some Vietnam commercial

banks, Graduation thesis with the topic: “ Some issues of credit risk management in

Vietnam commercial banks” will provide an insight view into the reality of credit

risk management system as well as propose solutions to improve credit risk

management quality at two Vietnam commercial banks including Techeombank and

BIDV

2 Purposes of study

Thesis resolves four following primary issues:

* Clarifviag some issues in theoretical basis of credit risk management at

commercial banks

* Identifying credit risk management system at Techcombank and BIDV

* Assessments for credit management system of Techcombank and BTDV

Tables, charts

[Figm | Name

i "Loan classification

31 Organizational structure of Techeornbank

32 Loan quallly analysis of Teocbcombank T7 ”” |

4, Proposing some solutions ta improve credit risk management system in

Vietnam commercial banks ]ẦẮ——

41, Complete organizational structure of credit risk management system

4.2, Building effective credit policies

4, Proposing some solutions ta improve credit risk management system in

Vietnam commercial banks ]ẦẮ——

41, Complete organizational structure of credit risk management system

4.2, Building effective credit policies

1, Overview about credit

1.1, Definition of bank credit

12 Characteristics of bank credi

2 Credit risk of commercial banks

2.4 Definition of credit risk

Classification of credit risk

2.3 Causes of credit risk

2.3.1 Causes from banks

23.2

3

Causes from borrowers

3.1 Definition of credit risk nanageHIettl « es~eeo

3.2 Organizational structure and managerial mechanism of credit risk

343 Credit risk management policies

343.1 Limiting credit risk

1, Overview about credit

1.1, Definition of bank credit

12 Characteristics of bank credi

2 Credit risk of commercial banks

2.4 Definition of credit risk

Classification of credit risk

2.3 Causes of credit risk

2.3.1 Causes from banks

23.2

3

Causes from borrowers

3.1 Definition of credit risk nanageHIettl « es~eeo

3.2 Organizational structure and managerial mechanism of credit risk

343 Credit risk management policies

343.1 Limiting credit risk