1247 Credit risk management for personal banking at Vietnam Prosperity Joint Stock Commercial Bank– Ben Thanh Branch 2021.docx

MINISTRY OF EDUCATION AND TRAINING STATE BANK OF VIETNAM BANKING UNIVERSITY OF HO CHI MINH CITY DOAN HOANG MINH CREDIT RISK MANAGEMENT FOR PERSONAL BANKING AT VIETNAM PROSPERITY JOINT STOCK COMMERCIAL[.]

MINISTRY OF EDUCATION AND TRAINING STATE BANK OF VIETNAM BANKING UNIVERSITY OF HO CHI MINH CITY DOAN HOANG MINH CREDIT RISK MANAGEMENT FOR PERSONAL BANKING AT VIETNAM PROSPERITY JOINT STOCK COMMERCIAL BANK– BEN THANH BRANCH GRADUATION THESIS MAJOR: FINANCE AND BANKING CODE: 7340201 SUPERVISOR PH.D LE THI ANH DAO HO CHI MINH CITY, 2021 MINISTRY OF EDUCATION AND TRAINING STATE BANK OF VIETNAM BANKING UNIVERSITY OF HO CHI MINH CITY DOAN HOANG MINH CREDIT RISK MANAGEMENT FOR PERSONAL BANKING AT VIETNAM PROSPERITY JOINT STOCK COMMERCIAL BANK– BEN THANH BRANCH GRADUATION THESIS MAJOR: FINANCE AND BANKING CODE: 7340201 SUPERVISOR PH.D LE THI ANH DAO HO CHI MINH CITY, 2021 ABSTRACT Credit risk has always been a vicinity of concern not only to bankers but to all in the business world because the risks of a trading partner not fulfilling his obligations in full on the due date can seriously jeopardize the affairs of the other partner At the VPBank, credit risk management is always the top concern of the managers accompanying credit development Even though operational profit and credit development achieved numerous excellent outcomes from 2018 to 2020, overdue debt is high and continuously increases over time, which is a significant worry for the Bank The objective of this study is to have a clearer picture of VPBank's credit risk management, thereby making comments on the advantages and disadvantages of risk management at the Bank along with recommendations for the Bank, VPBank, the State Bank, and the Government In this light, the study undertook based on a combination of credit risk theory, credit activity analysis, and the current situation of credit risk management at VPBank Ben Thanh Branch from 2018 to 2020 As a result, solutions to reduce credit risks had offered to improve personal credit risk management at the Bank DECLARATION OF AUTHENTICITY This thesis is the author's research work, the research results are honest, in which there is no previously published content or content made by others except for source citations in the thesis Ho Chi Minh City, September 2021 Doan Hoang Minh ACKNOWLEDGE No one walks alone on the journey of life Apart from my efforts, the success of any report depends largely on the encouragement and guidelines of many others This study bears on the imprint of many people I take this opportunity to express my gratitude to the people who have has been instrumental in the completion of this study First and foremost, I would like to convey my heartfelt appreciation to my advisor, Ph.D Le Thi Anh Dao, for her unwavering support of my research, as well as her patience, inspiration, enthusiasm, and immense knowledge Her advice was invaluable throughout this study's research and writing I couldn't have asked for a better advisor and mentor for my studies Besides my advisor, I would like to give special thanks to all teachers at the Faculty of Finance and Banking - Banking University of Ho Chi Minh City, who have imparted extensive knowledge as well as hands-on experience for me during my studies at school, as well as creating conditions for me to develop my strengths I also appreciate and sincerely thank the managers and all staff at Vietnam Prosperity Commercial Joint Stock Bank - Ben Thanh Branch for welcoming me as an intern and for their assistance and guidance Thank you for your passionate assistance in facilitating practical interaction, gaining experience, and providing the required knowledge Last but not least, I would like to thank my family, who always have spiritual support, and friends who have always been a source of encouragement and support for me during the study TABLE OF CONTENTS INTRODUCTION OVERVIEW OF RESEARCH SITUATION, THEORETICAL BASIS ON CREDIT RISK AND CREDIT RISK MANAGEMENT .5 1.1 Bank credit activities 1.1.1 The concept of bank credit 1.1.2 Credit classification 1.1.3 Concept of personal credit 1.1.4 Features of personal credit 1.2 Credit risks in banks 1.2.1 Concept of credit risks 1.2.2 Classification of personal credit risk 1.2.3 Factors of credit risk 1.2.4 Credit risk measurement 12 1.3 Credit risk management 15 1.3.1 Concept of credit risk management 15 1.3.2 Credit risk management procedure 15 CONCLUSION CHAPTER 22 CURRENT SITUATION OF personal CREDIT RISK MANAGEMENT AT VPBANK - BEN THANH BRANCH 23 2.1 Overview of VPBank - Ben Thanh Branch 23 2.1.1 General introduction about VPBank 23 2.1.2 General introduction about VPBank Ben Thanh Branch 24 2.1.3 Organizational structure, functions, and tasks of VPBank - Ben Thanh Branch 25 2.2 Business performance of VPBank - Ben Thanh Branch in the period of 2018 2020 26 2.2.1 Overall assessment of VPBank's business results - Ben Thanh Branch .26 2.2.2 Loan mobilization of VPBank – Ben Thanh Branch 28 2.2.3 Credit activity at VPBank - Ben Thanh Branch 30 2.3 Current situation of credit risk management for personal customers of VPBank - Ben Thanh Branch Error! Bookmark not defined 2.3.1 Credit risk management organizational structure at VPBank 31 2.3.2.Credit activities of personal customers at VPBank – Ben Thanh Branch32 2.3.3 Overdue debt and risk provision for personal customers at VPBank – Ben Thanh Branch 35 2.4 Current situation of credit risk management for personal customers at VPBank - Ben Thanh Branch 38 2.4.1 Credit risk identification 38 2.4.2 Credit risk measurement 39 2.4.3 Credit risk monitoring and control 43 2.4.4 Credit risk financing 44 2.5 Assessing the current situation of credit risk management of personal customers at VPBank - Ben Thanh Branch 46 2.5.1 Achievements 46 2.5.2 Limitations 47 2.5.3 The cause of the limitations 48 CONCLUSION OF CHAPTER 52 SOLUTIONS TO IMPROVE PERSONAL CREDIT RISK MANAGEMENT AT VPBANK - BEN THANH BRANCH 53 3.1 General orientation on credit development at VPBank .53 3.2 Orientation to develop credit activities of personal customers at VPBank Ben Thanh Branch 54 3.3 Credit risk management solutions at VPBank - Ben Thanh Branch 54 3.3.1 Fully execute and review the credit procedure on a regular basis 54 3.3.2 Enhance exploitation of customer relationship management systems (CRM) 55 3.3.3 Improve the quality of staff 56 3.3.4 Strengthen appraisal and assessment for new loans 56 3.3.5 Set up risk provisions for bad debts, overdue debts and actively handle bad debts and overdue debts 57 3.4 Some other recommendations 57 3.4.1 Recommendations for VPBank 57 3.4.2 Recommendations to the State Bank of Vietnam 59 3.4.3 Recommendations to the Government 60 CONCLUSION OF CHAPTER 61 Conclusion 62 LIST OF ABBREVIATIONS No Abbreviations Definition VPBank SMEs Small and medium enterprises EAD Exposure at Default PD LGD EL Expected Loss CIC Credit information center CRM Customer relationship management eKYC Electronic know your customer 10 FATCA Foreign Account Tax Compliance Act Vietnam Prosperity Joint-Stock Commercial Bank Probability of Default Loss Given Default LIST OF TABLES Table 2-1 - Business performance of VPBank – Ben Thanh Branch in 2018 - 2020 26 Table 2-2 - Loan mobilization of VPBank – Ben Thanh Branch in 2018-2020 .28 Table 2-3 - Credit activity of VPBank – Ben Thanh Branch in 2018-2020 30 Table 2-4 - Loan classification by term of VPBank – Ben Thanh Branch in 20182020 33 Table 2-5 - Loan classification by type of loans of VPBank – Ben Thanh Branch in 2018-2020 34 Table 2-6 - Debt classification for personal customers of VPBank – Ben Thanh Branch in 2018-2020 35 Table 2-7 - Bad debt and overdue debt ratio for personal customers of VPBank – Ben Thanh Branch in 2018-2020 36 Table 2-8 - Risk provision for personal customers of VPBank – Ben Thanh Branch in 2018-2020 37 Table 2-9 - VPBank Internal Credit Rating System for Personal Customers 40 Table 2-10 - VPBank Internal Credit Rating System for Collaterals .41 Table 2-11 - VPBank Internal Credit Rating Result 42 Table 2-12 - Risk Provisioning Levels 44 LIST OF FIGURES Figure 2-1 - Organizational structure of VPBank – Ben Thanh Branch 25 ... situation of personal credit risk management at VPBank - Ben Thanh branch Chapter 3: Solutions to improve personal credit risk management at VPBank - Ben Thanh Branch OVERVIEW OF RESEARCH SITUATION,... Ben Thanh Branch .26 2.2.2 Loan mobilization of VPBank – Ben Thanh Branch 28 2.2.3 Credit activity at VPBank - Ben Thanh Branch 30 2.3 Current situation of credit risk management for personal. .. debt and risk provision for personal customers at VPBank – Ben Thanh Branch 35 2.4 Current situation of credit risk management for personal customers at VPBank - Ben Thanh Branch