STATE BANK OF VIETNAM BANKING ACADEMY OF VIETNAM FACULTY OF FOREIGN LANGUAGES o0o GRADUATION REPORT MAJOR ENGLISH FOR BANKING AND FINANCE ENHANCING CREDIT QUALITY IN BAOVIET COMMERCIAL JOINT STOCK BANK STUDENT STUDENT ID CLASS SUPERVISOR HANOI, May 2022 ACKNOWLEDGEMENT In fact, success is always associated with support and help, whether more or less, directly or indirectly from others During the time I started studying at the Banking Academy until now, I have received a lot of attention and help.
STATE BANK OF VIETNAM BANKING ACADEMY OF VIETNAM FACULTY OF FOREIGN LANGUAGES o0o - GRADUATION REPORT MAJOR: ENGLISH FOR BANKING AND FINANCE ENHANCING CREDIT QUALITY IN BAOVIET COMMERCIAL JOINT STOCK BANK STUDENT : ……………… STUDENT ID : ……………… CLASS : …………… SUPERVISOR : ……………………………………… HANOI, May 2022 ACKNOWLEDGEMENT In fact, success is always associated with support and help, whether more or less, directly or indirectly from others During the time I started studying at the Banking Academy until now, I have received a lot of attention and help from teachers, family and friends I would like to express my deepest gratitude to the teachers at the Foreign Language Department of the Banking Academy with their knowledge and enthusiasm to impart valuable knowledge to us during this time study here And especially, I would like to sincerely thank Ms Nguyen Thi Minh Hang for wholeheartedly guiding me through the talks and discussions on the issues of my internship report Without her guidance and teachings, I think my report would be very difficult to complete In addition, I would like to thank the officers and managers in the credit department of Baoviet Bank for creating the best conditions for me to develop myself My first time going into practice, learning about credit in commercial banks, my knowledge is still limited and there are still many surprises Therefore, it is inevitable that there will be shortcomings, I look forward to receiving valuable comments from teachers and colleagues to improve my knowledge in this field Finally, I would like to wish all the teachers in the department good health and faith to continue carrying out their noble mission of imparting knowledge to future generations Hanoi, May 2022 VŨ ĐỨC NAM-K21ATCB Enhancing Credit Quality In Bao Viet Commercial Joint Stock Bank STUDENT DECLARATION Student name: Vũ Đức Nam Class: K21ATCB Student Number: 21A7510102 Declaration I declare that the work attached is entirely my own and that I have given due acknowledgment as required by the Faculty of Foreign Languages I understand that the work submitted may be reproduced and/ or communicated to detect plagiarism This work is entirely my own I have not copied another student’s work I have not copied or used in any way material from a text, journal, website, or other published source without acknowledgment (including non – English sources) I have cited and referenced fully and correctly as required by the Faculty of Foreign Languages where applicable I have not reworded material from another source and presented it as my own I have not used this work in a previous class (self–plagiarism) TABLE OF CONTENTS ACKNOWLEDGEMENT STUDENT DECLARATION EXECUTIVE SUMMARY LIST OF ABBREVIATIONS LIST OF FIGURES AND TABLES PART I INTRODUCTION OF THE BAO VIET JOINT STOCK COMMERCIAL BANK 1.1 History of Development 8 1.2 Functions and Responsibilities of the Bao Viet Bank 11 1.3 Organizational structure of Bao Viet Bank 12 1.4 Business Volume 14 1.5 Introduction of the credit department of BaoViet Bank 15 1.5.1 A brief introduction of the credit department of BaoViet Bank 15 1.5.2 Starting and ending dates of internship 17 1.5.3 Characteristics of the position 17 PART 2: CURRENT BACKGROUND OF THE CREDIT QUALITY AT BAOVIET COMMERCIAL JOINT STOCK BANK 2.1 Bank regulations on credit granting and credit quality 18 18 2.1.1 Nature of credit 18 2.1.2 The role of bank credit 19 2.1.3 Regulations on credit policy 20 2.2 The reality of the credit quality at Bao Viet Commercial Joint Stock Bank 22 2.3 Assess the current status of credit quality 31 2.3.1 Achievements 31 2.3.2 Limitations 32 2.2.3 Causes of limitations in BaoViet Bank 33 PART RECOMMENDATIONS FOR IMPROVING THE CREDIT QUALITY OF BAOVIET BANK 3.1 Increase the efficiency of governance activities while minimizing risks 35 35 3.2 Strengthen facility quality and apply technology and science to operational processes 36 3.3 Enhance the quality of credit officers' professional qualifications and ethical standards, and strengthen training of youth resources 37 3.4.Recommendations for Government Entities and the State Bank of Vietnam 37 CONCLUSION 39 EXECUTIVE SUMMARY The report focuses on the following issues: assessing and analyzing the current condition of credit quality at Baoviet Commercial Joint Stock Bank using data provided by the bank as well as direct experience In this report I can analyze the bank's credit activities' strengths and weaknesses, as well as its credit quality As a result, I may recommend solutions to improve the bank's credit quality so that it is compatible with the features of the operating area as well as the bank's resources The report is based on the data collection technique, which includes using information and data provided by the bank via financial statements for the period 2019-2021, as well as the metrics of the entire banking system provided by the State Bank of Vietnam During my internship at the bank, I was able to provide the most impartial remarks, analyses, and assessments of individuals in the process by observing and contributing to the direct experience of the loan process and operations at Baoviet Bank This is a significant benefit as a result of the internship process In addition to the introduction and conclusion, the table of contents, the list of tables, and the references, the internship report includes three main chapters as follows: Part Introduction Of Bao Viet Joint Stock Commercial Bank Part Reality Of The Credit Quality At Bao Viet Joint Stock Commercial bank Part Recommendations For Improving The Credit Quality Of Bao Viet Joint Stock Commercial bank VŨ ĐỨC NAM-K21ATCB Enhancing Credit Quality In Bao Viet Commercial Joint Stock Bank LIST OF ABBREVIATIONS BVB Bao Viet Joint Stock Commercial Bank SBV State Bank of Vietnam SME Small and Medium Enterprise CIC Credit Information Center VAMC Vietnam Asset Management Company LIST OF FIGURES AND TABLES Page Figures Figure The BaoViet Bank Organization Chart 13 Figure Loan Turnovers Of BaoViet Bank in the period of 2019-2021 23 Figure Debt Collection Turnover of BaoViet Bank in the period of 24 2019-2021 Figure Total Outstanding Loans To Customers of BaoViet Bank 25 2019-2021 Figure Structure of outstanding loans by customers of BaoViet Bank 26 in the period of 2019-2021 Tables Page Table Total Assets of BaoViet Bank 14 Table Loans and debt collection turnovers of BaoViet Bank 2019- 23 2021 VŨ ĐỨC NAM-K21ATCB Table Total outstanding loans to customers of BaoViet Bank 2019- 25 2021 Table Overdue debt ratio of BaoViet Bank in the period of 2019- 28 2021 Table Bad debt ratio of BaoViet Bank in the period of 2019-2021 29 Table Provisions for credit risks at BaoViet Bank in the period of 30 2019-2021 Table Provision ratio of BaoViet Bank in the period of 2019-2021 31 Enhancing Credit Quality In Bao Viet Commercial Joint Stock Bank PART I INTRODUCTION OF THE BAO VIET JOINT STOCK COMMERCIAL BANK 1.1 History of Development ● Legal name: Bao Viet Joint Stock Commercial Bank ● Transaction name: BaoViet Bank (BVB) ● Legal form: Joint stock company ● Address: Corner Stone Building, No 16 Phan Chu Trinh, Phan Chu Trinh Ward, Hoan Kiem District, Hanoi ● Tax Identification Number: 0103126572 ● Certificate of operation number: 328/GP-NHNN dated 11/12/2008 ● Charter Capital: 3.150 billion VND (2021) ● Total Assets: 59.822 billion VND (2021) ● Chairman Of The Board: Mr Lưu Quyết Thắng ● General Manager: Mr Cao Nam Giang ● Tel: 024 3928 8989 ● Fax: 024 3928 8989 ● Email: callcenter@baovietbank.vn ● Swift code: BVBVVNVX ● Ticker symbol: BVB ● Website: https://www.baovietbank.vn Baoviet Joint Stock Commercial Bank (BAOVIET Bank) was established under the Governor of the State Bank of Vietnam's operation license No 328/GP-NHNN dated 11/12/2008 as the newest member of the Baoviet Financial Insurance Group, Enhancing Credit Quality In Bao Viet Commercial Joint Stock Bank as well as the youngest commercial bank in Vietnam's credit institutions system The develop policies rapidly to handle and avoid bad debts and overdue debts from expanding, particularly in 2021, when the global pandemic scenario has not ended the economy's capital needs Economic growth is required to battle and overcome the epidemic's impacts Table Provision ratio of BaoViet Bank in the period of 2019-2021 Unit: % Risk Provision Ratio 2019 2020 2021 1,08 0,9 0,94 Source: Analysis from data provided by BVB The risk provision ratio set by BVB reached 1.08 percent in 2019, when the ratio of bad debt and overdue debt was the maximum in the three-year research period The recorded provision ratio dropped from 1.08 percent to 0.9 percent by the end of 2020, when the bank has better addressed the condition of bad debts and overdue payments due to substantial adjustments in credit policy This demonstrates that BaoViet Bank's credit quality has been significantly improved By 2021, the number of problematic loans and outstanding payments had skyrocketed due to the Covid19 pandemic, despite the bank's support for extending the payback time for customers afflicted by the epidemic In addition to the fact that the bank has been unable to collect debts from extended loans, the bank must provide a total risk provision of more than 278 billion VND, at a rate of 0.94 percent This demonstrates that BVB's credit quality, as measured by the risk provision ratio under the pressure of the epidemic, has begun to decline, forcing the bank's early implementation of corrective policies, especially since the global epidemic status remains uncertain 2.3 Assess the current status of credit quality 2.3.1 Achievements In the period 2019-2021, the bank's commercial activities will be highly challenging due to the influence of numerous variables within and without the economy, forcing the bank to continuously adapt and aggressively develop science and technology, simplifying the process, and increase service quality The following are some of Bao Viet Bank's outstanding credit quality achievements from 2019 to 2021 Credit policy is suitable for the bank's resources and responsive to market fluctuations: The Bank constantly observes and evaluates market movements in order to make suitable and timely adjustments credit policy while adhering to the State Bank's regulatory requirements Meanwhile, Baoviet Bank regularly adjusts credit policy to promote competitiveness, satisfy customer market needs, and manage economic fluctuations, focusing on developing competitive interest rates, lending terms, enhancing credit procedures, and market access Product development and innovation: In terms of products, from 2019 to 2021, Baoviet Bank has been highly effectively implementing new credit services and product promotions with many new utilities, with the goal of expanding customer network and meeting the diversified demands of the economy Credit offerings are still planned and implemented in a consistent manner by the bank Individual clients and SMEs are the primary targets of the bank's loan activity However, the bank continues to ensure that other clients' credit needs are met in a timely and thorough manner Limiting and managing bad debts and overdue debts: The bank has continually improved its credit management and monitoring system, as well as raised officers' understanding of the importance of being cautious and cautious in the process of the project assessment and appraisal, as well as the property value The bank is also continually striving to improve the quality of care operations and regulate the customer's capital usage behavior, as well as actively participating in debt recovery activities and providing acceptable levels of risk reduction provision 2.3.2 Limitations Although it has achieved highly encouraging achievements in recent years, Baoviet Bank's credit activities continue to have several limitations, which have a negative impact on the bank's credit activity efficiency and efforts to improve credit quality The following are some of the main causes of BVB credit quality deterioration: Credit policy remains to have points that make it very hard for consumers to reach products: due to the effect of the Covid-19 pandemic in 2020, numerous customers are also having difficulty making timely loan payments, resulting in a record of past due debt group in CIC The bank's policy makes it difficult for customers who have had group loans within the last 12 months to apply for a loan This is the bank's right strategy in order to prevent risks as much as possible; nevertheless, given that the Covid-19 outbreak is still having a significant impact on production and commercial activities Regulations imposed on consumers who have a history of group outstanding loans may also have a positive influence The technology platform is inadequately developed and uncompetitive: The ability to develop and use technology for lending activities has not been extremely effective; the Internet Banking application for users is still complicated to use, and system failures happen occasionally In comparison to other elements, technological products that support customers' demands more conveniently and minimize complexity in credit officers' working processes, such as the Live Bank system and the BVB CRM program, have still not achieved high efficiency when compared with that large commercial joint-stock banks like as Techcombank, MBBank, and BIDV The bad debt ratio hasn't really significantly improved throughout the years: When analyzing Baoviet Bank's credit quality from 2019 to 2021, it is obvious that credit quality has improved significantly year after year, particularly in 2019 Despite encountering numerous difficulties as a result of the epidemic's impact, the bank contains a steady bad ratio and overdue debt, particularly in 2021 However, the bank's negative ratio really hasn't improved considerably since 2020, despite the fact that the total loan balance continues to expand, indicating that the bank's credit quality has not yet reached the anticipated effect Baoviet Bank must adopt reform initiatives as quickly as possible 2.2.3 Causes of limitations in BaoViet Bank a Obtained from the bank Based on analysis and discussions with colleagues, it is obvious that BaoViet Bank's credit quality is limited as mentioned above, in part due to the following reasons The increase in bad debt and late debt is still mostly mainly a result of Covid-19, which has caused many challenges for clients' business initiatives, causing payback schedule delays In comparison to the market's dynamic and continuous swings during the epidemic period, the product policy remains limited and inflexible Credit officers continue to make mistakes and neglect their responsibilities, leading to low- quality, risky loans Since the bank has not spent sufficiently on updating its scientific and technological core, it has lost competitiveness in the market b Obtained from customers Consumers have brought the following factors to the current situation of BaoViet Bank's credit quality In the agreement with the bank, the consumer is dishonest, provides misleading information, and misuses funds - The customer has a viable business idea but lacks the essential monetary capacity, as well as a distinguishing asset that is not legal and tricky to value As a result of the impact of epidemics and natural disasters, manufacturing faced numerous challenges c Other aspects Through research, the current situation of BaoViet Bank's credit quality is also influenced by a few other objective factors, such as: Administrative and legal actions with State administrative agencies such as notaries, judges, and so on are time-consuming and restrictive, negatively impacting the working process as well as the ability to handle bad debts and late debt The state's economic, social, and legal policies are incoherent Enhancing Credit Quality In Bao Viet Commercial Joint Stock Bank PART RECOMMENDATIONS FOR IMPROVING THE CREDIT QUALITY OF BAOVIET BANK 3.1 Increase the efficiency of governance activities while minimizing risks The overdue bad debt crisis of BaoViet Bank is expected to worsen in 2021 The bank has implemented excellent measures to assist consumers, yet the bad debt rate and overdue debt keep rising In 2021, total bad debts and late obligations continued to rise sharply Furthermore, with debt rescheduling procedures for clients, the bank's capacity to recover liabilities is limited As a result, BaoViet Bank must be more aggressive in its managing risk First and foremost, banks must reform their supervisory and internal control apparatus in order to strengthen their impact and responsibilities in operating and preventing risks in credit activities The internal control system must constantly monitor the process of working with clients, ensure transparency, and minimize negative events or faults that result in an expansion of bad debts, harming the bank's capacity to collect debts and reputation Officers must increase their responsibility in order to strictly follow the credit processes provided by the Head Office The bank must also increase the efficiency of the business plan quality evaluation procedure, as well as the appraisal and valuation of collateral assets In the context of an increasingly unstable economy, bank officers must be more vigilant and cautious when assessing customers' business plans It is essential to gain a better understanding of many various areas of the economy in order to obtain accurate assessments of the project's required capital, business plan, and profitability As a result, the bank can make more accurate credit decisions, minimizing risk in the case that the customer's business plan failed The bank must also strengthen the quality of post-disbursement control to guarantee that borrowers use the loan properly and in line with the appropriate loan purpose Furthermore, the bank must maintain an acceptable amount of risk provisioning in order to guarantee the safety of credit activities and preserve profitability 46 Enhancing Credit Quality In Bao Viet Commercial Joint Stock Bank 3.2 Strengthen facility quality and apply technology and science to operational processes Until now, BaoViet Bank has succeeded in preserving and enhancing the reliability of its facilities, which become modern and attractive, with all of the essential equipment to support the professional operations of the bank's employees while also ensuring the convenience of the customers With its favorable geographical location, BaoViet Bank needs continuously improve the standard of its facilities Banks must assure the quality of their facilities, which must be comfortable for their clients BaoViet Bank must also emphasize professionalism in its employees' attitudes and working styles in order to provide efficient customer support activities and avoid controversies that damage the bank's reputation However, the bank's application of science and technology in its business activities is still ineffective The bank's technological products are still quite basic and insufficient, and they cannot be broadly applied throughout the system As a result, BaoViet Bank must also encourage the development and implementation of a scientific and technological basis for the business process, with the goal of improving customer care services and increasing the bank's competitiveness in the modern world Presently, BVB's Mobile banking application is full of services ranging from deposit transactions to credit card payments; nevertheless, the mobile application is still difficult to use, and system faults sometimes appear to influence the customer's experience The BVB CRM application is a very valuable tool for assisting bank officers in managing operational results and performing customer support services remotely without having to visit a branch This is a really essential and efficient product for growth Unfortunately, BVB has not yet made this application available to all branches If BVB can perfect this software product inside the supporting credit operations processes and widely apply it to systems integration, credit officers will save a lot of time in monitoring and analyzing, updating customer information so that it reaches all departments, and reducing the traditional procedures To 47 Enhancing Credit Quality In Bao Viet Commercial Joint Stock Bank accomplish this, BVB must start engaging in the digitalization platform, develop the human 48 resource system for operation and management, analyze and integrate product utilities, while preserving prudence and accuracy in data collection, as well as in the development of a client information security system 3.3 Enhance the quality of credit officers' professional qualifications and ethical standards, and strengthen training of youth resources BaoViet Bank seems to a remarkable job of supporting and retraining its employees to strengthen their professional and ethical qualities However, there is still a situation of distraction in the credit mobilization process, which leads to delays and decreases the quality of the bank's credit operations As a result, banks must be more stringent in reforming employees' attitudes, and working techniques Additionally, banks must strengthen credit process specialization, assuring a credit system with a comprehensive range of appraisal, debt management, and credit monitoring departments Banks must pay special attention to refining and raising the quality of the credit monitoring and control system, as this is a component that has a significant impact on the efficacy of the bank's credit quality Furthermore, during internship recruiting programs, it is also vital to aggressively expand the search for and training of high-quality human resources Baoviet Bank must actively promote new staff recruitment and training by expanding the participation range throughout universities and increasing teaching quality Banks must also give interns systematic and scientific training procedures to assist students to comprehend and acquaint themselves with the working process in each profession of a banker 3.4 Recommendations for Government Entities and the State Bank of Vietnam To ensure the banking system's operational efficiency and credit quality, the SBV needs to increase the efficiency of monitoring and supervising activities through its inspection and remote monitoring methods To ensure strict control of commercial banks' business activities, as well as transparency and efficiency of lending activities, the State Bank needs specialized explanations as soon as it detects mistakes that result in damages to the banking system's capital The SBV should also work on enhancing the efficiency of the Vietnam National Credit Information Center (CIC), which will also help to maintain the system's reliability and responsiveness in providing credit history information to banks In accordance with State Bank regulations, commercial banks must maintain accurate client data on a constant basis CONCLUSION Credit quality is an important indicator for assessing the amount of risk in commercial banks' credit activities; it impacts the efficiency of credit activities and ensures the bank's ability to manage risks and recover debts As a result, in the study, I studied and appraised the present credit quality condition at BaoViet Bank for the year 2019- 2021, as well as evaluated and identified the successes and limitations In the timeframe 2019-2021, BVB's credit quality is unstable Since then, I have provided long-term solutions that are appropriate for the bank's resources and socioeconomic circumstances, assisting in improving BaoViet Bank's credit quality based on existing difficulties and limits exist in the period 2019-2021 I worked very hard in the process of analyzing, gathering data, analyzing and assessing, and giving recommendations to assist BaoViet Bank in effectively improving credit quality My suggestions include enhancing the efficiency of the bank's credit policy, optimizing and continuing to develop the system of governance, internal control, improving the quality of risk mitigation activities, improving facilities, adapting technology and science to lending activities, and improving the quality of the bank's credit human resources These are critical criteria that directly influence the efficiency of the bank's credit operations, as well as the bank's capacity to control risks and recover capital The study, however, contains several limits and weaknesses due to many limitations in experience and knowledge I sincerely hope that my teachers and colleagues would provide me with feedback, comments, and suggestions so that I can learn from my mistakes and develop Once again, I would like to express my sincere thanks to my supervisor, Ms Nguyen Thi Minh Hang and the officers of BaoViet Commercial Joint Stock Bank for helping me successfully complete this graduation report REFERENCES [1] Annual Report of Bao Viet Joint Stock Commercial Bank in the period of 2019-2021 [2] Financial report of Bao Viet Joint Stock Commercial Bank in the period of 2019-2021 [3] Website: https://www.baovietbank.vn/ [4] Retrieved from https://finance.vietstock.vn/BaoVietBank-ngan-hang-tmcpbao-viet.htm EVALUATION OF THE ORGANIZATION SUPERVISOR’S COMMENTS ● Leave space for supervisor to write the comments SUPERVISOR COMMENTS …………………………………………………………………………………… …………………………………………………………………………………… …………………………………………………………………………………… ……………………………………………………… (Evaluating the student’s attitude, effort, work efficiency, and contact frequency with the supervisor in the process of writing internship report.) Supervisor - (Sign & write full name) ... network in Thanh Hoa, Gia Lai, and Thai Nguyen provinces The honor of being "The Bank with Innovative Banking Product/Service in 2018" and "Top 100 Best Products and Services for Families and Children... full range of banking services as accepting deposits from other domestic and foreign organizations, individuals and credit institutions in the form of demand deposits, term deposits and other types... can expand steadily and act as a jumping-off point for economic progress The construction and development of bank credit is a significant step forward for the global economy in general and the