Luận văn credit risk management for small and medium enterprises at vietnam joint stock commercial bank for industry and trade vietinbank hanoi branch

+ Study the situation of credit risk management for small and medium enterprises at Vietnam Joint Stock Commercial Bank for Industry and Trade Vietinbank- Hanoi Branch.. Structure of th

STOCK COMMERCIAL BANK FOR INDUSTRY AND

TRADE (VIETINBANK)-HANOI BRANCH

AUTHOR: TRAN THI QUYNH SUPERVISIOR: Dr NGUYEN VAN DINH

Hanoi, June 2017

DECLARATIONS

T declare the following:

‘That the material contained in this mastar’s thesis is the end result of my own work and that due acknowledgement has been given in the bibliography and references to ALL sources be they printed, electronic or personal

‘That unless this master’s thesis has been confirmed as confidential, Ì agree to an entire electronic copy or sections of the master’s thesis to being placed on the e-Learning Portal, if

eemed appropnate, to allow future students the opportunity to see examples of past master’s

thesis I understand that if displayed on the-.caming Portal it would be made available for na longer than five years and those students would be able to print off copies or download, The authorship would remain anonymous

Lagree to my master’s thesis being submitted to a plagiarism dctection service, where

it will be stored in a database and compared against work submitted fom this or any other School or from offer institutions using the service In the event of the service detecting a high dogrec of similarity between conten! witlrin the scrvice this will be reported back lo my supervisor and second marker, whe may decide to undertake fiuther investigation that may ultimately lead to disciplinary actions, should instances of plagiarism be detected

SIGNED

DATE:

ACKNOWLEDGEMENT

Tam indebled a graat various thariks o many people giving support me during doing this master’s thesis

In the first place, 1 would like to express honest appreciation Dt Nguyen Van Dinh for

his 4 sistance in be process of doing master’s thesis, TTe spent time and effort on discussing and giving me helpful advice to ensure that the research was kept on the right track, Consequently, I was able to complete the research successtully

Secondly, 1 would like to thank all the lectures, tutors and staffs of International

School — Victnam National University Hanoi and University de Nantes who are always

enthusiastic for helping me to gain knowledge and experience during the studying

Thirdly, 1 would Hike to express my grateful thanks to the leaders of Vietinbank’s

‘branches in general and VicinbankHanoi branch in particular for their help and supports during my studying

Talso thank my family for their encouragements, supporl as well as motivation Last bụi not feast, T would Fike to thank all af my fiends who nat only encourage my spitit but also put inuch effort to help me check my writing styles

‘Thank yout

LIST OF FIGURES AND TABLES

Table 2.2: Summary of factor influencing on credit sk management in SMEs Bs lending _

Table 4.1: Business Porformanee of Victinbank — Hanoi Branch - - 27 Table 4.2: Shares of cost ilems by departments in Vietinbank —Tlanoi Branch 29 Table 4.3: Capital mobitization structure in Vietinbonk — Hanoi Branch 31

Table 4.4: Lending Size in Vietinbank Hanoi Branch Hà

Table 4.5: SMEs Lending Purposes Vietinbank Hanoi Branch

Table 4.6: Credit Grading Model of Vietinbank

Table 4.7: Credit Grades in Vietinbank

‘Table 4.8: Main causes of credit risk in Vietinbank — Hanoi Branch - cose AD

‘Table S.1: Products and Services in SMEs banking in Vietinbank - eon AB

Figure 2.3; Credit Risk Management Process " ôÐ Figure 2.4: Process of Credit 8eoring Đevrloprent nmđer Dala-divan Melhad cose VT Figure 4.1; Shares of Deparunents of Vietinbank Hanoi BranchinPOS seen BB Figure 4.2: Shares of Departments of Vietinbank Hanoi Branch in other serviees 28 Kigure 4.3: Organization structure of Vietinbank — Hanoi Branch 30 Figure 4.4: Capital mobilization structure by customer types

Figure 4.7: Lending proccduros for SMEs in Vicliribank — Hanoi Branch 35

Fignre 5.2: Risk-based pricing versus traditional pricing 49

Figure 5.3: End-to-End Collection Workdlow

ABBREVIATIONS

AMC Assel Management Company

IV Information Value

“NPL Nen-Performing Loans

ABSTRACT

This study aims to study about credit risk management in SMEs lending in Vietinbank

— Hanoi Branch ‘To do that, this study have objectives of systematizing several theoretical and practical matlers about credit risk management al Vielinbank - Hanoi Branch

udying

the situation of oredit risk management for small and medium enterprises at Vietinbank -

Hanoi Branch: and providing some solutions to improve the quality of risk management in

lending lo at Victinbank - Hanei Branch Morcover, qualilalive rescarch method is applicd

with secondary data is collected from books and joumals about credit risk management

Intemal reports about Vietinbank’s credit activities and credit risk management for SMEs

cualomers will be collected during period of 2012-2016 Other while, primary data is

collected trom interview with relevant people who are working in areas related to oredit risk management in Vietinbank — Hanoi Branch

Major findings stow that Victinbank — Hanoi Branch have alrzady lad lending

policies through two detail schemes General scheme requires that the firms need to satisty

credit approval checklist and have the credit grading is from BI} and above Moreover, when the firms apply loans in Viclinbank — Hanoi Franch, they must utilize al least 3 related

products, including saving, tax payment, salary payment, invoice payment, insurance, etc

Credit risk management process in Vietinbank Hanoi branch consists of 4 steps, including identification, measnrement, treatment, and implementation Vietinbank is now applying

credit scoring as credit risk management tools Morzover, the main cause of orcdit risk in

Vietinbank in general and Vietinbank — Hanoi Branch is limited in credit risk management capacily Mosl of interviewees show that they de nol receive proper training fram head

quarter in tenn of credit risk evaluation and credit risk identification.

+ Systematize several theoretical and practical matters about credit risk

management at Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank)- Hanoi Branch

+ Study the situation of credit risk management for small and medium

enterprises at Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank)-

Hanoi Branch

+ Recommend some solutions to improve the quality of Risk Management in

Lending to Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank)-

Hanoi Branch

To clear the above objectives, the thesis must resolve these research questions

+} =~ Whatare credit risks?

+ What are features of small and medium enterprises Vietnam?

+ How does Vietinbank - Hanoi manage their risks in lending small and medium

enterprises?

1.3 Scope of the study

The subject of the research is credit activities, emphasize on credit risk management in

lending small and medium enterprises in Vietinbank - Hanoi

The scope of the research concentrates in credit operations and credit risk management for small and medium enterprises at Vietinbank - Hanoi during 2012 - 2014 period

1.4 Structure of the study

Beside of Introduction and Conclusion sections, the study is developed with 3

chapters:

4 Chapter 1: Literature Review

+ Chapter 2: Situation of credit risk management for Small and Medium

Enterprises at Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank)-

Hanoi Branch

4 Chapter 3: Solutions to improve the quality of credit risk management in

lending to SMEs at Vietinbank- Hanoi Branch.

CHAPTER 1:INTRODUCTIO!

1.1 Rationale of the study

Economic reforms have tansformed Vietnam's cconamy and sill and medium-sized enterprises (SMEs) SMEs are central to the structural transformation of the Vietamese economy A report shows that total number of SMEs is nearing 400,000, represent 97% of tolal munber of businesses of the country This scetur also hus 2 major source of cmployrent generation accounting for about 77% of the workforce and contributed over 40% of GDP is produced However, the main obstacle to the development of the SME sector is the lack of

stable finance, leading lo banks are the muin soures of financing,

In recent years, the boom in the startup projects is causing the credit scale for SME to develop correspondingly to meet such demands Credit scale for SME are more and more extended, namely thal improving efficiency of the commercial tamks’ credit operations, irr particularly, the credit risk management for SME became more important and necessary The purpose of SME lending includes working capital financing, trade financing, mortgages for

commercial and industrial properly, investment in plant, equipment and supply chain

financing In this case, these loans have any problem It will have a direct effzot on national

econamic growth and can be quite risky for bank and all country’s commercial banks system

im general So, what should we do te both widon the credil scale and salisly demands of such

SME and ensure satety of loans? The answer is only to improve efficiency of credit risk

management for such type of enterprise From this idea and combining with my experience in

'Viemam Joint Stock Commercial Bank for Industry and Trade (Vietinbank)- Uanoi Branch,

the topic “Improve Risk Management in Lending to Small and Mecdiwn Enterprises at

Vietinbank — Hanoi Branch” is chosen for my thesis

1.2, Research objectives

As a crodil administration officar of Viotinbank - Hanoi, T have had the chances ta deal with documents and data concerning lending to enterprises generally and to small and medium enterprises particularly at my bank and my branch ‘The importance of this one in

Vietnam are unquestionable, years with the boom in the slartap

pecially in the projects, the loans are continuously increased in quantity Moreover, the quality of the loans is

still in a poor management

Objectives af the research include the followings:

CHATTER 4: CURRENT SITUATION OF CREDIT RISK MANAGEMENT FOR SME IN VIETINBANK - HANOT BRANCH

4.1, Overview of Vietinbank — Hanoi Branch

4.1.1 Establishment and development history of Vietinbank Hanoi Branch

4.1.2 Functions of Vietinbank — Hanoi Branch —

4.1.3 Organization structure of Viebnbank — Hanoi I3ranch 30

4.2.1 Situation of credit activilics lo SMEs

4.2.2 Credit risk management in lending to SMEs at Victinbank- Hanoi Branch hỢ014-

4.3 Evaluation of factors influencing on SMEs credit risk management of Vietinbank

CIIAPTER S:IMPROVING CREDIT RISK MANAGEMENT FOR SMEs AT

5.1 Development orientation of credit operation for SMEs of Vietinbank- Hanoi

5.2.2 Invest in technology and mnodernize the information system of the bank 48 5.3.3 Analyze and evaluate credi( risk level of customer 49

5.3 Recommendations

APPENTHX

REFERENCES

CHAPTER 1:INTRODUCTIO!

1.1 Rationale of the study

Economic reforms have tansformed Vietnam's cconamy and sill and medium-sized enterprises (SMEs) SMEs are central to the structural transformation of the Vietamese economy A report shows that total number of SMEs is nearing 400,000, represent 97% of tolal munber of businesses of the country This scetur also hus 2 major source of cmployrent generation accounting for about 77% of the workforce and contributed over 40% of GDP is produced However, the main obstacle to the development of the SME sector is the lack of

stable finance, leading lo banks are the muin soures of financing,

In recent years, the boom in the startup projects is causing the credit scale for SME to develop correspondingly to meet such demands Credit scale for SME are more and more extended, namely thal improving efficiency of the commercial tamks’ credit operations, irr particularly, the credit risk management for SME became more important and necessary The purpose of SME lending includes working capital financing, trade financing, mortgages for

commercial and industrial properly, investment in plant, equipment and supply chain

financing In this case, these loans have any problem It will have a direct effzot on national

econamic growth and can be quite risky for bank and all country’s commercial banks system

im general So, what should we do te both widon the credil scale and salisly demands of such

SME and ensure satety of loans? The answer is only to improve efficiency of credit risk

management for such type of enterprise From this idea and combining with my experience in

'Viemam Joint Stock Commercial Bank for Industry and Trade (Vietinbank)- Uanoi Branch,

the topic “Improve Risk Management in Lending to Small and Mecdiwn Enterprises at

Vietinbank — Hanoi Branch” is chosen for my thesis

1.2, Research objectives

As a crodil administration officar of Viotinbank - Hanoi, T have had the chances ta deal with documents and data concerning lending to enterprises generally and to small and medium enterprises particularly at my bank and my branch ‘The importance of this one in

Vietnam are unquestionable, years with the boom in the slartap

pecially in the projects, the loans are continuously increased in quantity Moreover, the quality of the loans is

still in a poor management

Objectives af the research include the followings:

1.3 Scope of the study

1.4, Structure of the study

CHAPTER 2: TITEORETICAL BACKGROUND AND LITERATURE REVIEW 10 2.1 Theoretical background

2.1.3.1, Definition of risk management - - - 12

2.1.3.2 2.1.3.2 Roles of credit risk management in commercial banks 14

3.1.4.3 Credil risk processes nan wanenmmennnnies we dS

2.1.5 Assessment of credit risk management in SMEs

2.2, Literature reviews about factory influencing on credit

CHAPTER 3: RESEARCH METHODOLOGY,

1.3 Scope of the study

1.4, Structure of the study

CHAPTER 2: TITEORETICAL BACKGROUND AND LITERATURE REVIEW 10 2.1 Theoretical background

2.1.3.1, Definition of risk management - - - 12

2.1.3.2 2.1.3.2 Roles of credit risk management in commercial banks 14

3.1.4.3 Credil risk processes nan wanenmmennnnies we dS

2.1.5 Assessment of credit risk management in SMEs

2.2, Literature reviews about factory influencing on credit

CHAPTER 3: RESEARCH METHODOLOGY,

LIST OF FIGURES AND TABLES

Table 2.2: Summary of factor influencing on credit sk management in SMEs Bs lending _

Table 4.1: Business Porformanee of Victinbank — Hanoi Branch - - 27 Table 4.2: Shares of cost ilems by departments in Vietinbank —Tlanoi Branch 29 Table 4.3: Capital mobitization structure in Vietinbonk — Hanoi Branch 31

Table 4.4: Lending Size in Vietinbank Hanoi Branch Hà

Table 4.5: SMEs Lending Purposes Vietinbank Hanoi Branch

Table 4.6: Credit Grading Model of Vietinbank

Table 4.7: Credit Grades in Vietinbank

‘Table 4.8: Main causes of credit risk in Vietinbank — Hanoi Branch - cose AD

‘Table S.1: Products and Services in SMEs banking in Vietinbank - eon AB

Figure 2.3; Credit Risk Management Process " ôÐ Figure 2.4: Process of Credit 8eoring Đevrloprent nmđer Dala-divan Melhad cose VT Figure 4.1; Shares of Deparunents of Vietinbank Hanoi BranchinPOS seen BB Figure 4.2: Shares of Departments of Vietinbank Hanoi Branch in other serviees 28 Kigure 4.3: Organization structure of Vietinbank — Hanoi Branch 30 Figure 4.4: Capital mobilization structure by customer types

Figure 4.7: Lending proccduros for SMEs in Vicliribank — Hanoi Branch 35

Fignre 5.2: Risk-based pricing versus traditional pricing 49

Figure 5.3: End-to-End Collection Workdlow

ABBREVIATIONS

AMC Assel Management Company

IV Information Value

“NPL Nen-Performing Loans

CHATTER 4: CURRENT SITUATION OF CREDIT RISK MANAGEMENT FOR SME IN VIETINBANK - HANOT BRANCH

4.1, Overview of Vietinbank — Hanoi Branch

4.1.1 Establishment and development history of Vietinbank Hanoi Branch

4.1.2 Functions of Vietinbank — Hanoi Branch —

4.1.3 Organization structure of Viebnbank — Hanoi I3ranch 30

4.2.1 Situation of credit activilics lo SMEs

4.2.2 Credit risk management in lending to SMEs at Victinbank- Hanoi Branch hỢ014-

4.3 Evaluation of factors influencing on SMEs credit risk management of Vietinbank

CIIAPTER S:IMPROVING CREDIT RISK MANAGEMENT FOR SMEs AT

5.1 Development orientation of credit operation for SMEs of Vietinbank- Hanoi

5.2.2 Invest in technology and mnodernize the information system of the bank 48 5.3.3 Analyze and evaluate credi( risk level of customer 49

5.3 Recommendations

APPENTHX

REFERENCES

+ Systematize several theoretical and practical matters about credit risk

management at Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank)- Hanoi Branch

+ Study the situation of credit risk management for small and medium

enterprises at Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank)-

Hanoi Branch

+ Recommend some solutions to improve the quality of Risk Management in

Lending to Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank)-

Hanoi Branch

To clear the above objectives, the thesis must resolve these research questions

+} =~ Whatare credit risks?

+ What are features of small and medium enterprises Vietnam?

+ How does Vietinbank - Hanoi manage their risks in lending small and medium

enterprises?

1.3 Scope of the study

The subject of the research is credit activities, emphasize on credit risk management in

lending small and medium enterprises in Vietinbank - Hanoi

The scope of the research concentrates in credit operations and credit risk management for small and medium enterprises at Vietinbank - Hanoi during 2012 - 2014 period

1.4 Structure of the study

Beside of Introduction and Conclusion sections, the study is developed with 3

chapters:

4 Chapter 1: Literature Review

+ Chapter 2: Situation of credit risk management for Small and Medium

Enterprises at Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank)-

Hanoi Branch

4 Chapter 3: Solutions to improve the quality of credit risk management in

lending to SMEs at Vietinbank- Hanoi Branch.

1.3 Scope of the study

1.4, Structure of the study

CHAPTER 2: TITEORETICAL BACKGROUND AND LITERATURE REVIEW 10 2.1 Theoretical background

2.1.3.1, Definition of risk management - - - 12

2.1.3.2 2.1.3.2 Roles of credit risk management in commercial banks 14

3.1.4.3 Credil risk processes nan wanenmmennnnies we dS

2.1.5 Assessment of credit risk management in SMEs

2.2, Literature reviews about factory influencing on credit

CHAPTER 3: RESEARCH METHODOLOGY,

CHATTER 4: CURRENT SITUATION OF CREDIT RISK MANAGEMENT FOR SME IN VIETINBANK - HANOT BRANCH

4.1, Overview of Vietinbank — Hanoi Branch

4.1.1 Establishment and development history of Vietinbank Hanoi Branch

4.1.2 Functions of Vietinbank — Hanoi Branch —

4.1.3 Organization structure of Viebnbank — Hanoi I3ranch 30

4.2.1 Situation of credit activilics lo SMEs

4.2.2 Credit risk management in lending to SMEs at Victinbank- Hanoi Branch hỢ014-

4.3 Evaluation of factors influencing on SMEs credit risk management of Vietinbank

CIIAPTER S:IMPROVING CREDIT RISK MANAGEMENT FOR SMEs AT

5.1 Development orientation of credit operation for SMEs of Vietinbank- Hanoi

5.2.2 Invest in technology and mnodernize the information system of the bank 48 5.3.3 Analyze and evaluate credi( risk level of customer 49

5.3 Recommendations

APPENTHX

REFERENCES

1.3 Scope of the study

1.4, Structure of the study

CHAPTER 2: TITEORETICAL BACKGROUND AND LITERATURE REVIEW 10 2.1 Theoretical background

2.1.3.1, Definition of risk management - - - 12

2.1.3.2 2.1.3.2 Roles of credit risk management in commercial banks 14

3.1.4.3 Credil risk processes nan wanenmmennnnies we dS

2.1.5 Assessment of credit risk management in SMEs

2.2, Literature reviews about factory influencing on credit

CHAPTER 3: RESEARCH METHODOLOGY,

LIST OF FIGURES AND TABLES

Table 2.2: Summary of factor influencing on credit sk management in SMEs Bs lending _

Table 4.1: Business Porformanee of Victinbank — Hanoi Branch - - 27 Table 4.2: Shares of cost ilems by departments in Vietinbank —Tlanoi Branch 29 Table 4.3: Capital mobitization structure in Vietinbonk — Hanoi Branch 31

Table 4.4: Lending Size in Vietinbank Hanoi Branch Hà

Table 4.5: SMEs Lending Purposes Vietinbank Hanoi Branch

Table 4.6: Credit Grading Model of Vietinbank

Table 4.7: Credit Grades in Vietinbank

‘Table 4.8: Main causes of credit risk in Vietinbank — Hanoi Branch - cose AD

‘Table S.1: Products and Services in SMEs banking in Vietinbank - eon AB

Figure 2.3; Credit Risk Management Process " ôÐ Figure 2.4: Process of Credit 8eoring Đevrloprent nmđer Dala-divan Melhad cose VT Figure 4.1; Shares of Deparunents of Vietinbank Hanoi BranchinPOS seen BB Figure 4.2: Shares of Departments of Vietinbank Hanoi Branch in other serviees 28 Kigure 4.3: Organization structure of Vietinbank — Hanoi Branch 30 Figure 4.4: Capital mobilization structure by customer types

Figure 4.7: Lending proccduros for SMEs in Vicliribank — Hanoi Branch 35

Fignre 5.2: Risk-based pricing versus traditional pricing 49

Figure 5.3: End-to-End Collection Workdlow

ABSTRACT

This study aims to study about credit risk management in SMEs lending in Vietinbank

— Hanoi Branch ‘To do that, this study have objectives of systematizing several theoretical and practical matlers about credit risk management al Vielinbank - Hanoi Branch

udying

the situation of oredit risk management for small and medium enterprises at Vietinbank -

Hanoi Branch: and providing some solutions to improve the quality of risk management in

lending lo at Victinbank - Hanei Branch Morcover, qualilalive rescarch method is applicd

with secondary data is collected from books and joumals about credit risk management

Intemal reports about Vietinbank’s credit activities and credit risk management for SMEs

cualomers will be collected during period of 2012-2016 Other while, primary data is

collected trom interview with relevant people who are working in areas related to oredit risk management in Vietinbank — Hanoi Branch

Major findings stow that Victinbank — Hanoi Branch have alrzady lad lending

policies through two detail schemes General scheme requires that the firms need to satisty

credit approval checklist and have the credit grading is from BI} and above Moreover, when the firms apply loans in Viclinbank — Hanoi Franch, they must utilize al least 3 related

products, including saving, tax payment, salary payment, invoice payment, insurance, etc

Credit risk management process in Vietinbank Hanoi branch consists of 4 steps, including identification, measnrement, treatment, and implementation Vietinbank is now applying

credit scoring as credit risk management tools Morzover, the main cause of orcdit risk in

Vietinbank in general and Vietinbank — Hanoi Branch is limited in credit risk management capacily Mosl of interviewees show that they de nol receive proper training fram head

quarter in tenn of credit risk evaluation and credit risk identification.

CHAPTER 1:INTRODUCTIO!

1.1 Rationale of the study

Economic reforms have tansformed Vietnam's cconamy and sill and medium-sized enterprises (SMEs) SMEs are central to the structural transformation of the Vietamese economy A report shows that total number of SMEs is nearing 400,000, represent 97% of tolal munber of businesses of the country This scetur also hus 2 major source of cmployrent generation accounting for about 77% of the workforce and contributed over 40% of GDP is produced However, the main obstacle to the development of the SME sector is the lack of

stable finance, leading lo banks are the muin soures of financing,

In recent years, the boom in the startup projects is causing the credit scale for SME to develop correspondingly to meet such demands Credit scale for SME are more and more extended, namely thal improving efficiency of the commercial tamks’ credit operations, irr particularly, the credit risk management for SME became more important and necessary The purpose of SME lending includes working capital financing, trade financing, mortgages for

commercial and industrial properly, investment in plant, equipment and supply chain

financing In this case, these loans have any problem It will have a direct effzot on national

econamic growth and can be quite risky for bank and all country’s commercial banks system

im general So, what should we do te both widon the credil scale and salisly demands of such

SME and ensure satety of loans? The answer is only to improve efficiency of credit risk

management for such type of enterprise From this idea and combining with my experience in

'Viemam Joint Stock Commercial Bank for Industry and Trade (Vietinbank)- Uanoi Branch,

the topic “Improve Risk Management in Lending to Small and Mecdiwn Enterprises at

Vietinbank — Hanoi Branch” is chosen for my thesis

1.2, Research objectives

As a crodil administration officar of Viotinbank - Hanoi, T have had the chances ta deal with documents and data concerning lending to enterprises generally and to small and medium enterprises particularly at my bank and my branch ‘The importance of this one in

Vietnam are unquestionable, years with the boom in the slartap

pecially in the projects, the loans are continuously increased in quantity Moreover, the quality of the loans is

still in a poor management

Objectives af the research include the followings:

+ Systematize several theoretical and practical matters about credit risk

management at Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank)- Hanoi Branch

+ Study the situation of credit risk management for small and medium

enterprises at Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank)-

Hanoi Branch

+ Recommend some solutions to improve the quality of Risk Management in

Lending to Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank)-

Hanoi Branch

To clear the above objectives, the thesis must resolve these research questions

+} =~ Whatare credit risks?

+ What are features of small and medium enterprises Vietnam?

+ How does Vietinbank - Hanoi manage their risks in lending small and medium

enterprises?

1.3 Scope of the study

The subject of the research is credit activities, emphasize on credit risk management in

lending small and medium enterprises in Vietinbank - Hanoi

The scope of the research concentrates in credit operations and credit risk management for small and medium enterprises at Vietinbank - Hanoi during 2012 - 2014 period

1.4 Structure of the study

Beside of Introduction and Conclusion sections, the study is developed with 3

chapters:

4 Chapter 1: Literature Review

+ Chapter 2: Situation of credit risk management for Small and Medium

Enterprises at Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank)-

Hanoi Branch

4 Chapter 3: Solutions to improve the quality of credit risk management in

lending to SMEs at Vietinbank- Hanoi Branch.

LIST OF FIGURES AND TABLES

Table 2.2: Summary of factor influencing on credit sk management in SMEs Bs lending _

Table 4.1: Business Porformanee of Victinbank — Hanoi Branch - - 27 Table 4.2: Shares of cost ilems by departments in Vietinbank —Tlanoi Branch 29 Table 4.3: Capital mobitization structure in Vietinbonk — Hanoi Branch 31

Table 4.4: Lending Size in Vietinbank Hanoi Branch Hà

Table 4.5: SMEs Lending Purposes Vietinbank Hanoi Branch

Table 4.6: Credit Grading Model of Vietinbank

Table 4.7: Credit Grades in Vietinbank

‘Table 4.8: Main causes of credit risk in Vietinbank — Hanoi Branch - cose AD

‘Table S.1: Products and Services in SMEs banking in Vietinbank - eon AB

Figure 2.3; Credit Risk Management Process " ôÐ Figure 2.4: Process of Credit 8eoring Đevrloprent nmđer Dala-divan Melhad cose VT Figure 4.1; Shares of Deparunents of Vietinbank Hanoi BranchinPOS seen BB Figure 4.2: Shares of Departments of Vietinbank Hanoi Branch in other serviees 28 Kigure 4.3: Organization structure of Vietinbank — Hanoi Branch 30 Figure 4.4: Capital mobilization structure by customer types

Figure 4.7: Lending proccduros for SMEs in Vicliribank — Hanoi Branch 35

Fignre 5.2: Risk-based pricing versus traditional pricing 49

Figure 5.3: End-to-End Collection Workdlow

+ Systematize several theoretical and practical matters about credit risk

management at Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank)- Hanoi Branch

+ Study the situation of credit risk management for small and medium

enterprises at Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank)-

Hanoi Branch

+ Recommend some solutions to improve the quality of Risk Management in

Lending to Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank)-

Hanoi Branch

To clear the above objectives, the thesis must resolve these research questions

+} =~ Whatare credit risks?

+ What are features of small and medium enterprises Vietnam?

+ How does Vietinbank - Hanoi manage their risks in lending small and medium

enterprises?

1.3 Scope of the study

The subject of the research is credit activities, emphasize on credit risk management in

lending small and medium enterprises in Vietinbank - Hanoi

The scope of the research concentrates in credit operations and credit risk management for small and medium enterprises at Vietinbank - Hanoi during 2012 - 2014 period

1.4 Structure of the study

Beside of Introduction and Conclusion sections, the study is developed with 3

chapters:

4 Chapter 1: Literature Review

+ Chapter 2: Situation of credit risk management for Small and Medium

Enterprises at Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank)-

Hanoi Branch

4 Chapter 3: Solutions to improve the quality of credit risk management in

lending to SMEs at Vietinbank- Hanoi Branch.

CHATTER 4: CURRENT SITUATION OF CREDIT RISK MANAGEMENT FOR SME IN VIETINBANK - HANOT BRANCH

4.1, Overview of Vietinbank — Hanoi Branch

4.1.1 Establishment and development history of Vietinbank Hanoi Branch

4.1.2 Functions of Vietinbank — Hanoi Branch —

4.1.3 Organization structure of Viebnbank — Hanoi I3ranch 30

4.2.1 Situation of credit activilics lo SMEs

4.2.2 Credit risk management in lending to SMEs at Victinbank- Hanoi Branch hỢ014-

4.3 Evaluation of factors influencing on SMEs credit risk management of Vietinbank

CIIAPTER S:IMPROVING CREDIT RISK MANAGEMENT FOR SMEs AT

5.1 Development orientation of credit operation for SMEs of Vietinbank- Hanoi

5.2.2 Invest in technology and mnodernize the information system of the bank 48 5.3.3 Analyze and evaluate credi( risk level of customer 49

5.3 Recommendations

APPENTHX

REFERENCES

1.3 Scope of the study

1.4, Structure of the study

CHAPTER 2: TITEORETICAL BACKGROUND AND LITERATURE REVIEW 10 2.1 Theoretical background

2.1.3.1, Definition of risk management - - - 12

2.1.3.2 2.1.3.2 Roles of credit risk management in commercial banks 14

3.1.4.3 Credil risk processes nan wanenmmennnnies we dS

2.1.5 Assessment of credit risk management in SMEs

2.2, Literature reviews about factory influencing on credit

CHAPTER 3: RESEARCH METHODOLOGY,

1.3 Scope of the study

1.4, Structure of the study

CHAPTER 2: TITEORETICAL BACKGROUND AND LITERATURE REVIEW 10 2.1 Theoretical background

2.1.3.1, Definition of risk management - - - 12

2.1.3.2 2.1.3.2 Roles of credit risk management in commercial banks 14

3.1.4.3 Credil risk processes nan wanenmmennnnies we dS

2.1.5 Assessment of credit risk management in SMEs

2.2, Literature reviews about factory influencing on credit

CHAPTER 3: RESEARCH METHODOLOGY,

ABBREVIATIONS

AMC Assel Management Company

IV Information Value

“NPL Nen-Performing Loans

CHATTER 4: CURRENT SITUATION OF CREDIT RISK MANAGEMENT FOR SME IN VIETINBANK - HANOT BRANCH

4.1, Overview of Vietinbank — Hanoi Branch

4.1.1 Establishment and development history of Vietinbank Hanoi Branch

4.1.2 Functions of Vietinbank — Hanoi Branch —

4.1.3 Organization structure of Viebnbank — Hanoi I3ranch 30

4.2.1 Situation of credit activilics lo SMEs

4.2.2 Credit risk management in lending to SMEs at Victinbank- Hanoi Branch hỢ014-

4.3 Evaluation of factors influencing on SMEs credit risk management of Vietinbank

CIIAPTER S:IMPROVING CREDIT RISK MANAGEMENT FOR SMEs AT

5.1 Development orientation of credit operation for SMEs of Vietinbank- Hanoi

5.2.2 Invest in technology and mnodernize the information system of the bank 48 5.3.3 Analyze and evaluate credi( risk level of customer 49

5.3 Recommendations

APPENTHX

REFERENCES

ABBREVIATIONS

AMC Assel Management Company

IV Information Value

“NPL Nen-Performing Loans

+ Systematize several theoretical and practical matters about credit risk

management at Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank)- Hanoi Branch

+ Study the situation of credit risk management for small and medium

enterprises at Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank)-

Hanoi Branch

+ Recommend some solutions to improve the quality of Risk Management in

Lending to Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank)-

Hanoi Branch

To clear the above objectives, the thesis must resolve these research questions

+} =~ Whatare credit risks?

+ What are features of small and medium enterprises Vietnam?

+ How does Vietinbank - Hanoi manage their risks in lending small and medium

enterprises?

1.3 Scope of the study

The subject of the research is credit activities, emphasize on credit risk management in

lending small and medium enterprises in Vietinbank - Hanoi

The scope of the research concentrates in credit operations and credit risk management for small and medium enterprises at Vietinbank - Hanoi during 2012 - 2014 period

1.4 Structure of the study

Beside of Introduction and Conclusion sections, the study is developed with 3

chapters:

4 Chapter 1: Literature Review

+ Chapter 2: Situation of credit risk management for Small and Medium

Enterprises at Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank)-

Hanoi Branch

4 Chapter 3: Solutions to improve the quality of credit risk management in

lending to SMEs at Vietinbank- Hanoi Branch.

ABBREVIATIONS

AMC Assel Management Company

IV Information Value

“NPL Nen-Performing Loans

1.3 Scope of the study

1.4, Structure of the study

CHAPTER 2: TITEORETICAL BACKGROUND AND LITERATURE REVIEW 10 2.1 Theoretical background

2.1.3.1, Definition of risk management - - - 12

2.1.3.2 2.1.3.2 Roles of credit risk management in commercial banks 14

3.1.4.3 Credil risk processes nan wanenmmennnnies we dS

2.1.5 Assessment of credit risk management in SMEs

2.2, Literature reviews about factory influencing on credit

CHAPTER 3: RESEARCH METHODOLOGY,

ABSTRACT

This study aims to study about credit risk management in SMEs lending in Vietinbank

— Hanoi Branch ‘To do that, this study have objectives of systematizing several theoretical and practical matlers about credit risk management al Vielinbank - Hanoi Branch

udying

the situation of oredit risk management for small and medium enterprises at Vietinbank -

Hanoi Branch: and providing some solutions to improve the quality of risk management in

lending lo at Victinbank - Hanei Branch Morcover, qualilalive rescarch method is applicd

with secondary data is collected from books and joumals about credit risk management

Intemal reports about Vietinbank’s credit activities and credit risk management for SMEs

cualomers will be collected during period of 2012-2016 Other while, primary data is

collected trom interview with relevant people who are working in areas related to oredit risk management in Vietinbank — Hanoi Branch

Major findings stow that Victinbank — Hanoi Branch have alrzady lad lending

policies through two detail schemes General scheme requires that the firms need to satisty

credit approval checklist and have the credit grading is from BI} and above Moreover, when the firms apply loans in Viclinbank — Hanoi Franch, they must utilize al least 3 related

products, including saving, tax payment, salary payment, invoice payment, insurance, etc

Credit risk management process in Vietinbank Hanoi branch consists of 4 steps, including identification, measnrement, treatment, and implementation Vietinbank is now applying

credit scoring as credit risk management tools Morzover, the main cause of orcdit risk in

Vietinbank in general and Vietinbank — Hanoi Branch is limited in credit risk management capacily Mosl of interviewees show that they de nol receive proper training fram head

quarter in tenn of credit risk evaluation and credit risk identification.

1.3 Scope of the study

1.4, Structure of the study

CHAPTER 2: TITEORETICAL BACKGROUND AND LITERATURE REVIEW 10 2.1 Theoretical background

2.1.3.1, Definition of risk management - - - 12

2.1.3.2 2.1.3.2 Roles of credit risk management in commercial banks 14

3.1.4.3 Credil risk processes nan wanenmmennnnies we dS

2.1.5 Assessment of credit risk management in SMEs

2.2, Literature reviews about factory influencing on credit

CHAPTER 3: RESEARCH METHODOLOGY,

ABBREVIATIONS

AMC Assel Management Company

IV Information Value

“NPL Nen-Performing Loans