Tiểu luận môn rm solutions to enhance effectiveness in credit risk management of commercial banks in vietnam

Bộ tài Học viện tài Viện đào tạo quốc tế IIFE - TIỂU LUẬN MÔN RM SOLUTIONS TO ENHANCE EFFECTIVENESS IN CREDIT RISK MANAGEMENT OF COMMERCIAL BANKS IN VIETNAM Người thực hiện: Nguyễn Quang Hiển Lớp: DDP0501 Mã SV: DDP0501007 Giảng viên hướng dẫn: TS Lê Đình Hải & TS Lưu Quốc Đạt Hà Nội 2022 Table of contents Chapter 1: general introduction I, The urgency of the subject II, objectives of research and research tasks Chapter 2: overview of research, theoretical and practical research activities of commercial banks in vietnam credit risks in the operation of commercial banks credit risk management efficiency in commercial banks 10 Chapter 3: Research design and methods 15 3.1 Methods of data collection .15 3.2 Methods of data processing 15 3.3 Analytical methods 15 Chapter 4: Actual situation of effective credit risk management of commercial banks in Vietnam 27 4.1 Credit risk issues at commercial banks in Vietnam 27 4.2 Operational solutions .29 4.3 Current status of credit risk management in commercial banks .31 Chapter 5: Proposing solutions to improve the efficiency of credit risk management of commercial banks in Vietnam .33 5.1 Completing the organization of the credit granting apparatus and credit process 33 5.2 Building an effective credit policy 34 Chapter 1: general introduction I, The urgency of the subject Credit risk management plays an important role in securing bank credit and contributing to minimizing risks in banking operations The widening integration of the vietnamese economy into the world economy has facilitated the country' s financial activity, the banking market has many sắc, marking the new development of the vietnamese banking system However, with the characteristic of a sensitive business area, the influence of many direct and indirect factors, banking risk is inevitable and potentially a serious risk of affecting the sustainable development of the bank, the financial market, and the economy in general However, today' s credit risk management work in vietnam' s commercial banks remains khe, the maximum efficiency in reducing credit risk Because credit risk management plays an important role in securing bank credit and contributing to reducing risks in banking operations “SOLUTIONS TO ENHANCE EFFECTIVENESS IN CREDIT RISK MANAGEMENT OF COMMERCIAL BANKS IN VIETNAM” to be able to find out, research the measures to increase the effectiveness of credit risk management in Vietnam II, objectives of research and research tasks research objectives The heading towards achieving the following research objectives: Identifying factors affecting credit risks in the commercial banking system in vietnam Proposed solutions for contributing to improving credit risk management in vietnam' s commercial banking system research tasks To achieve the objectives, the subjects of the following research tasks: · Overview of credit risk management in commercial banks · Clarify the rationale / theory of credit risk management · Analysis of factors affecting credit risks in commercial banks · Assessment of the situation in credit risk management in commercial banks in vietnam · Proposed solutions for enhancing the efficiency of commercial credit risk management in vietnam research questions Any factors affecting the increase or decrease of credit risk in commercial banks? Which measures to reduce credit risk in commercial banks in vietnam subjects and scope of study research subjects Subjects of research subject to credit risk management in commercial banks and solutions to enhancing credit risk management in vietnam 4.2.Scope of study Time range: focus on assessing the effectiveness of credit risk management in vietnamese commercial banks in the 2018 - 2020 segment and offering solutions to improve the effectiveness of credit risk management consistent with the realities of vietnamese commercial banks Space coverage: commercial banks in vietnam Content scope: credit risk management contributions of subjects technically + rõ of credit risk management practices in vietnam + to clarify the factors affecting credit risk management at commercial banks in vietnam + recommendations for improving credit risk management efficiency in vietnam commercial banks practical + the meaning of the subject: Research results have implications for strategic solutions for commercial banks in the management of credit risks from which to find appropriate solutions to the problems of credit risk management and effectiveness of credit risk management At the same time the topic is more enriching than the theoretical basis and the practice of credit risk management in commercial banks, as a reference for similar research topics structure of the subject Chapter 1: general introduction Chapter 2: overview of research, theoretical and practical research activities of commercial banks in vietnam Chapter 3: design and methodology Chapter 4: effective situation of credit risk management by commercial banks in vietnam Chapter 5: propose solutions to enhancing credit risk management by commercial banks in Vietnam Chapter 2: overview of research, theoretical and practical research activities of commercial banks in vietnam credit risks in the operation of commercial banks In the market economy, providing credit is the basic economic function of the bank The risk in banks tends to focus mainly on credit portfolios This is the biggest and often occurring risk When the bank falls into serious financial state, the common cause arises from credit activities 1.1.Concept credit risk is a risk that arises in the bank' s credit, in fact, through the customer' s inability to repay debt or improperly repay the bank credit risk is also known as insolvency risk and false risk, which is the type of risk associated with bank credit You can see that credit risks have two levels: the customer is not due on time and the customer can' t repay the bank 1.2.Credit risk classification Based on the causes of risks, credit risks are divided into two types of transaction risk (transaction risk) and category risk (portfolio risk) Diagram 1: credit risk classification -Transaction risk: is a form of credit risk that causes it due to limitations in transactions and lending, customer reviews The transaction risk has three main components: +The risk risk is the risk associated with the evaluation and analysis of credit, when the bank selects effective borrowing options to make decisions for lending +The risks arising from the standards of guarantee such as the terms in the loan contract, the types of assets guaranteed, the subject guarantee, the method of ensuring and lending on the value of the collateral +Professional risks are risks related to loan management and lending activities, including the use of risk rating systems and handling of problems with problems -Category risk: is a form of credit risk that causes the cause of the bank' s lending portfolio management Category risks are divided into categories: internal risks and concentration risks +Internal risk (intrinsic risk) comes from factors, features that are specific, unique inside of each borrower or sector, economic sector It comes from the characteristics of activities or the use characteristics of borrowing customers 16 +The concentration risk (concentration risk) is the case that the bank is invested in a lot of loans for some customers, lending through many businesses operating in the same sector, a field of economic, in a certain geographical area, or a high - risk loan Credit risk forms: credit risks may occur in cases for interest and principal debts as follows: not earning the right interest on time, not fully earning profits, not earning capital on time, and not fully capital The case in which the bank accounts for different tracking items such as hanging or overdue debts When it is not collected on time, risk risks are at a low level and need to be put into suspended interest If the bank can' t collect enough interest, it will have a frozen interest item, except for the cases where such interest is reduced to the enterprise When the capital is not collected on time, the bank shall have overdue debts However, this has not yet been considered a complete loss of the bank' s loss because of some reason, the enterprise slowly pays the debt repayment and will pay after the commitment of the contract If this loan is not able to recover (for example, a bankrupt enterprise), the bank is now at a high level of credit at a high level because the debt is not likely to be recovered, except for special cases, the capital - borrowing enterprise is likely to be considered to remove the debt to the enterprise credit risk exists in many forms, which are always changing to each other, which is the last level of debt that is not able to recover When studying credit risks people often focus on risks of risks such as the actual interest rates, especially the debt arising, the frozen interest and the overdue debt are not likely to be seen as the real risk situation, which is often considered to be addressed bases for determination of credit risks classification According to article 6, article decided 493 / 2005 / qd - nhnn dated april 22, 2005, by the governor of the state bank' s 493 / 2005 / qd - nhnn on the amendment of a number of articles of 493 / 2005 / qd - nhnn issued by the governor of the state bank (qđ 18), the credit institution classification of debts into groups (qđ 18 / qd - nhnn dated april 25, 2007) of the governor of the state bank (qđ 18 / qd - nhnn dated april 25, 2007) At present, pursuant to decision no 780 / qd - nhnn dated april 23, 2012 (the state bank of vietnam), the debt - related debt - controlled debt term, the debt - extending debt extension of the customer' s credit institutions tends to be good and the debt - repayment capability shall be retained in accordance with the deadline for adjusting the debt repayment period, the debt extension shall be retained overdue debts and bad debts -Overdue debts: overdue debts are debts that a portion or whole of the principal or / or interest has expired In other words, overdue debts are non refundable credits, not allowed and ineligible for extension To ensure strict management, the bank' s overdue debts are divided into four groups (from group to group 5) -Or bad debts (or problems with problems, bad debts, bad debts,…) are overdue debts from 91 days or more without requiring and refund.Bad debts have characteristics: customers who have failed to fulfill their debt repayment obligations with the bank' s termination of the financial situation of the customer' s financial situation and have a bad tendency to lead to the bank' s inability to recover interest and ; collateral is considered the value of non trang In vietnam, bad debts include: overdue debts or non - payable; debts related to lawsuits, lawsuits which have been instituted but cannot be recovered, owing to the handling of assets that are not handled by the government causes credit risk The causes of credit risk vary widely, from the customer side, from the bank (subjective causes) and objective causes objective It is the non - will of customers and banks such as: natural disasters, fire ; due to the change of economic management policies, such as regional planning, … Since then, the enterprise has goodwill but still cannot pay bank debts the cause of the client It is an internal cause of each customer such as a poor financial ability, weak operating capacity, inefficient business governance system, customer' s management level leads to poor use of loans or loss, affecting solvency It may also be due to the lack of goodwill in debt repayment or by the customer deliberately causes from the bank -Bank officials are not strictly serving credit and lending conditions -Policies and procedures for non - strict loans, which have no effective risk management process, have not focused on customer analysis, credit risk classification to calculate loan conditions and solvency -The capacity to forecast, analyze and evaluate credit, detect, and handle a loan with a problem of credit officials, especially for high - level knowledge intensive sectors leading to errors in lending decisions -Lack of information about the customer or the lack of reliable credit information, timely, accurate and accurate, before granting credit -The capacity and ethical qualities of a number of credit officers, including the supervision leaders are not enough and the management of the bank, the improper use of the bank is the cause of credit risks consequences of credit risk for banks When the credit is at risk, the bank does not collect credit capital allocated and loan interests, but the bank must pay capital and interest to the mobilized money when it is due, which causes the bank to lose balance When the debt is not collected, the turnover of the credit capital is slowed down as an inefficient business bank and may lose liquidity This reduces the trust of depositors, serious influence on bank credit for the economy Banking activities involve many individuals, enterprises, many fields in the economy So, when a bank is at risk of credit or bankruptcy, the wild sender fears and each other to withdraw money from the bank but also in other banks, making the entire banking system difficult The bankruptcy bank shall affect the production and business situation of enterprises owing no wage payment or purchase of raw materials The price of goods will be increased by this time, the purchasing power,the economy in recession credit risks can spark a financial crisis, affecting the country and possibly the whole area credit risk management efficiency in commercial banks credit risk management 1 concept Credit risk management is the process of building and implementing strategies and policies for management and business in credit activities to achieve safe and sustainable objectives and development In which the emphasis is on enhancing the overdue debt prevention and control measures, bad debts in credit activities Thereby increasing revenue, reducing costs and enhancing the efficiency of commercial bank credit 2 objectives Planning and plan for prevention of credit risks How much credit risk can occur, in which condition, what causes, and how the consequences of the prevention of credit risk in a scientifically controlled way are intended to achieve specific objectives, the safety threshold and the acceptable extent To develop professional programs and mechanisms for control of credit risk prevention and control, and to take over 21 and responsibility for each member, to select technical and preventive measures for credit prevention and risk prevention and risk handling meaning In banking operations, when risks occur, the risks are difficult to overcome and the consequences are not easy to overcome Therefore, risk management is the focal point of the commercial banks, because the strict risk control means effective use of mobilized capital sources On the other hand, if the risk is not accepted, it is impossible to create new investment opportunities, and therefore, risk management is an essential demand in the existence of the commercial banks, the development of commercial banks should be governed by credit risks to minimize the damage, which means maximizing profits and maximizing the value of the shareholders 2 credit risk management efficiency 2 concept 10 lệch tổng dư nợ Nợ hạn Nợ xấu Cơ cấu nợ xấu Tỷ lệ nợ xấu 2018 627183053 10004079 6187836 1.60% 0.99% 2019 728945394 8364465 5769259 1.15% 0.79% 2020 832876112 7979049 5335254 0.96% 0.64% 2018/2019 số tiền 101762341 -1639614 -418577 % 16.23% -16% -7% 2019/2020 số tiền 103930718 -385416 -434005 % 14.26% -4,6% -8% Although Vietcombank's total outstanding loans have increased continuously over the past years, it can be seen that Vietcombank has controlled the bad debt situation very well, specifically, the number of bad debts and overdue debts have decreased continuously since last year 2018 to 2020 In 2019, Vietcombank's overdue debt decreased by 16%, equivalent to VND 1639614 million, and continued to decrease by 4.6%, equivalent to VND 385416 million in 2020 Similar to overdue debts, total bad debt also tends to decrease, specifically in 2019, bad debts decreased by 7%, equivalent to VND 418577 million compared to 2018 and continued to decrease by 8%, equivalent to VND 434055 million in 2019 2020 Vietcombank's ability to control bad debt well is reflected in the ratio of bad debt structure and bad debt ratio when they both decreased sharply over the years With the bad debt ratio always below 1% in the past years, the bank has kept the bad debt at a safe level compared to the loan balance according to the regulations of the Central Government With very convincing policies, along with good customer management, strict customer appraisal as well as drastic in debt recovery, along with credit officers who always urge customers to Timely repayment is the main reason why Vietcombank achieves such efficiency d Evaluation of net profit from credit activities tổng dư nợ lãi từ hđv tỷ lệ thu nhập lãi TD 2018 627183053 3402492 0.54% 2019 728945394 4306844 0.59% 2020 832876112 6320660 0.76% 2018/2019 số tiền % 101762341 16.23% 904352 26.58% chênh lệch 2019/2020 số tiền % 103930718 14.26% 2013816 46.76% 22 Proportional to the total outstanding loans, Vietcombank's net interest from credit activities has increased continuously from 2018 to 2020 Specifically, in 2019 Vietcombank's net interest from credit activities increased by 26.58%, equivalent to 904352 million VND compared to 2018 and continued to increase by 46.76% or 2013816 million VND in 2020 These numbers are very impressive especially in 2020 which is the beginning year of the COVID19 pandemic, however the rate Vietcombank's net profit growth from credit activities still reached nearly 50% The achievement of large net profit in recent years is because Vietcombank has done well in marketing, improving service quality, diversifying product packages to attract customers from individuals to businesses Besides, the bank has controlled credit costs quite well, so the profit from credit loans has increased continuously over the years +) Analysis of lending activities of MBB MB was built and developed during nearly 17 years of operation and has a strong foothold in the market MB is known as a stable bank with high growth rate, creating the trust of existing customers, potential customers and investors MB's brand is recognized as a dynamic bank that still maintains a stable position for sustainable development, contributing to the overall success of customers, the bank and the community Contributing to the success of lending activities is the main profit-making activity for banks Lending is the main form of investment of MBbank, so the bank pays great attention to developing this activity In the period from 2018 to 2020, due to the impact of objective factors (covid-19 pandemic, ) and subjective factors, the credit indicators of banks' lending activities had many variables motion The following is the evolution of some credit indicators at MBbank Loan balance by customer type 2018-2020 a Debt balance structure Chỉ tiêu Dư nợ cho vay 2018 176513452 % 100% 2019 233081924 % 100% 2020 255212815 % 100% 23 Tổ chức kinh tế Khách hàng cá nhân Khác 115885704 60106848 520900 65.65% 34.05% 0.30% 139312517 93608777 160630 59.77% 40.16% 0.07% 152707084 102376048 129683 59.84% 40.11% 0.05% The balance structure of MB bank is divided into main parts: loans to economic organizations, loans to individual customers and other loans From Table 3.1, we can see the change of loan balance structure of each item over the years 2018-2020, specifically as follows: Over the years from 2018 to 2020, total outstanding loans increased continuously, in which the ratio of loans to economic organizations accounted for the largest proportion, followed by loans to individual customers and finally other loans For lending to economic organizations, the loan ratio decreased from 2018-2019 with a decrease of 5.88% (from 65.65% to 59.77%) and increased slightly from 2019-2020 with an increase of 0.07% (from 59.77% to 59.84%) For personal loans, the loan ratio increased from 20182019 with an increase of 6.11% (from 34.05% to 40.16%) and decreased slightly from 2019-2020 with a decrease of 0.05 % (from 40.16% down to 40.11%) For other loans, the loan ratio decreased continuously from 0.30% (in 2018) to 0.07% in 2019 and only 0.05% in 2020 Especially strongly decreased from 2018-2019 with a decrease of 0.23% The continuous increase in the proportion of outstanding loans to economic organizations in the 2018-2020 period shows that the good management of customer loans, especially creating good incentive packages to help attract customers The proportion of outstanding loans of individual customers has decreased slightly in the period of 2019-2020, partly due to the objective cause of the covid-19 pandemic However, the bank has taken good measures to cope during the pandemic to avoid a deep reduction in outstanding loans to individual customers b Loan balance growth chênh lệch 2018/2019 Dư nợ cho vay khách hàng doanh 2018 176513452 115885704 2019 233081924 139312517 2020 255212815 152707084 Số tiền 56568472 23426813 Số % 32.05% 20.22% 2019/2020 Số tiền 22130891 13394567 Số % 9.49% 9.61% 24 nghiệp Khách hàng cá nhân Khác 60106848 520900 93608777 160630 102376048 129683 33501929 -360270 55.74% -69.16% 8767271 -30947 9.37% -19.27% Total outstanding loans of MB bank have increased over the years from 20182020, especially in the period of 2018-2019 with an increase of 32.05%, equivalent to VND 56568472 million of 2019 compared to 2018 By the period of 2019-2020, the total balance debt no longer has a strong growth as in the period of 2018-2019 due to the impact of the covid-19 pandemic However, in this period, the growth figure still reached 9.49%, equivalent to VND 22130891 million The reason for this strong growth is that MB Bank has well implemented the management of lending interest rate policy, upgraded technology, enhanced staff management as well as attractive incentive packages for customers customers, ensuring that customers have convenient, safe, and high-preferential services In addition, the strengthening of marketing helps create a solid reputation for the bank as well as promote product and service packages to customers quickly c Assessment of MBB’s bad debt structure in the period of 2018 to 2020 tổng dư nợ Nợ xấu Tỷ lệ nợ xấu 2018 176513452 6517546 3.69% 2019 233081924 5793991 2.49% 2020 255212815 7484908 2.93% 2018/2019 số tiền 56568472 -723555 Chênh lệch 2019/2020 % số tiền 32.05% 22130891 -11% 1690917 % 9.49% 29% Regarding bad debts, in the period from 2018-2019 MB bank has controlled well, so the bad debt ratio has decreased by 11% In the period of 2019-2020 due to the objective factor of the covid-19 pandemic, the bad debt of 2020 has increased by 29% compared to 2019 In the period from 2018-2020, MB bank's bad debt ratio decreased from 2018-2019 and increased from 2019-2020 In the period of 2018-2019, MB bank's total outstanding loans increased sharply, but the bad debt ratio also decreased by 1.2%, showing the strict management of the bad debt situation of this bank However, 25 in the period of 2019-2020, the bad debt ratio increased by 0.44%, not mainly from subjective reasons from the bank, but also from objective factors that during this period were suffering the consequences of the pandemic The covid-19 pandemic has caused many businesses to go bankrupt and default on their debts However, the bad debt ratio did not increase too high with 0.44% The NPL ratio has shown that MB bank's ability to control bad debts is quite good Despite suffering from many objective factors that had a great negative impact on the bank, the bad debt ratio was still not high With a good adjustment of the bad debt structure to less than 3%, MB still kept the level of bad debt at a safe level compared to the regulations of the State d Evaluation of net profit from credit activities chênh lệch tổng dư nợ lãi từ hoạt động cho vay tỷ lệ thu nhập lãi 2018 176513452 2019 233081924 2020 255212815 8674755 10977571 11874027 4.91% 4.71% 4.65% 2018/2019 số tiền % 56568472 32.05% 2302816 26.55% 2019/2020 số tiền % 22130891 9.49% 896456 From Table 3.4, we can see that the net interest income from lending activities of MB bank increased continuously from 2018-2020 In the period of 2018-2019, net interest from borrowing activities increased by 26.55% and 8.17% in the period of 2019-2020 Although there is a slowdown in the period of 2019-2020, the growth rate is still quite good However, the ratio of interest income from lending activities to total outstanding loans has decreased over the years This is an important thing that MB bank needs to improve From 2018 the rate was 4.91%, reduced to 4.71% in 2019 and by 2020 only 4.65% Although the reduction is not too much, this is still a problem that MBB needs to overcome in order to achieve the 26 8.17% highest profit efficiency The impact of the covid-19 pandemic is the reason why MBB's net interest from lending activities in the 20192020 period did not increase as strongly as in the 2018-2019 period Although there are still unresolved issues, MBB still performed well and achieved high profits from lending This success is due to good and strict management in lending activities, and at the same time, upgrading technology to be more suitable with current trends to help cope with objective impacts, especially the pandemic covid-19  General assessment: Through comparisons, comments, assessments and examples of credit risk management at commercial banks in Vietnam, we can see that the commercial banking system has done quite well in credit risk management use Although there are still many issues that need to be resolved, commercial banks still ensure effective governance, reduce bad debt ratio, have appropriate provisioning levels and other options to minimize risks for loans debt and especially the development of CIC has brought a reliable source of information for banks in credit risk management Chapter 4: Actual situation of effective credit risk management of commercial banks in Vietnam 4.1 Credit risk issues at commercial banks in Vietnam 1- The current concern of the credit market is considered the hot growth of bank credit in the face of capital pressure of the economy Bank credit is the main form of capital mobilization of enterprises in our country Credit institutions, especially state-owned credit institutions, still operate mainly in mobilizing and lending with traditional forms of credit, accounting for 75 80% of the market share as well as assets of the whole system banking system The ability to access capital of non-state enterprises is still limited, which is caused by two sides: non-state enterprises lack loan conditions, credit institutions are afraid of loan safety issues Therefore, credit allocation is still considered to be more priority for state-owned enterprises, especially to concentrate a lot of capital for a number of corporations 90, 91 Capital structure as well as investment structure has not yet been established suitable and satisfying medium and long-term investment requirements for 27 infrastructure works that are fundamental for industrialization and modernization, especially in the fields of agriculture and rural areas 2- For the system of credit institutions, the capacity of loan supervision and risk management has not yet met international standards, the pressure on designated lending has decreased but still remains The process of restructuring the banking system is slow and facing many difficulties Overdue debts are likely to continue to arise due to the rapid expansion of credit, some credit institutions tend to loosen regulations conditions for loans, lowering interest rates to win customers, providing loans by appointment for many large projects, economic efficiency has not been fully assessed and appraisal is not rigorous Along with other objective and subjective reasons, the credit quality of many credit institutions is not high, potential and contains many risks for both state and regional credit non-state economy - the loss of the time - limit of credit capital, as well as the excessive use of long - term lending capital for a number of credit institutions should be carefully reviewed, avoiding becoming possible to be the potential factors in the credit market Despite strengthening the mobilization measures, the ability to mobilize capital, long term capital of credit institutions remains low compared with the long - term capital capital needs of the economy Moreover, the capital mobilized mainly is the traditional form of savings, accounting for 80% total deposits from the population The loss of the term between capital sources and use of capital, while the short - term mobilized capital accounted for 70% total capital sources, the medium - term loan owed to the total debit balance of the economy Therefore, before the pressure of the economy, the use of short - term mobilized capital for long term loans is considered a situation of the state bank' s current situation (allowing credit institutions to carry out a maximum rate of 30%) However, if the credit institutions fail to maintain the stability of capital mobilization according to the plan, as well as the ability to collect a long - term debt inconsistent with the payment requirements due to the due date, it may result in the risk of insolvency the preferential credit market exists in parallel with the commercial credit market, but the boundary between these two markets is not clearly defined The establishment of the previous development assistance fund and the current social policy bank is to separate the lending of policy lending with commercial lending however, the operation of these organizations has a 28 significant impact on the formation of objective interest rates according to the market demand, affecting the health and liberalization of the state bank' s supply of money through credit - the rapid increase in credit institutions is necessary for the credit market to develop However, the more credit institutions and financial institutions, the more intense the market competition is Credit institutions are likely to expand their operational areas by setting up and developing more branches, even on the same small area (in the same small administrative unit of districts, towns, but there are also - branches of the same bank established independently) 4.2 Operational solutions On credit administration The state bank shall continue to implement credit solutions to control the credit scale suitable to the orientation, and improve the quality of credit and control inflation and create favorable conditions for access to credit capital By synchronous solutions, in the first nine months of 2021, despite the negative effects of covid - 19, credit grew from the beginning of the year and improved the same period in 2020 According to the state bank' s data, as of october 7, 2021, the total credit balance and investment of the entire system of credit institutions in vietnam rose 42% to the end of 2020, higher than the same period 2020 (the same period of 2020 increased by 48%) With the situation of the epidemic under control and the determination of credit institutions, the end of 2021 will be close to the growth of credit proposal from the beginning of the year On the results of the structure of debt structure for customers affected by the covid - 19 - billion - dollar debt - repayment period of the state bank of 2020, the credit institutions have restructured the debt repayment term for 278, 000 billion by 2020, about 531, 000 billion in debt rescheduling, the group of creditors from 23 / 2020, about 531 trillion ($ 2020, 000, 531), the debt generating group, for customers from 23 january 2020, is about 531 billion In addition, the banking sector has actively implemented other programs that support people, enterprises that are overcome by covid - 19 For pay - off programs, and pay recovery wages (under the government' s resolution no 68 29 / nq - cp of july 1, 2021, and the decision no 23 / 2021 / qd - ttg of july 7, 2021, the prime minister' s $ 130, 741) About utility banking services: Banking and banking operations continue to grow strongly The legal and policy framework in payment activities continues to be completed by the state bank in order to develop non - cash payment (ttkdtm), create favorable conditions for the people to make payment for payment in the period of social reform, many programs, etc., etc.) Ttkdtm still grows In the first eight months 2021, the total number of transactions via the interbank electronic payment system rose 32% to 133, 69%, via a qr channel for the first eight months of the year, via the corresponding tăng, 81%, and 133, 69%, qr, via the qr code, 66, 69%, via a qr, code, qr channel via the qr, kênh, qr channel via the qr, 69%, qr channel, via a qr and 133 About bad debts According to the state bank' s data, from 2012 to the end of june 2021, the entire system of credit institutions handled around 530, 000 billion of bad debt In which, accumulated from august 15, 2017 to 30 / / 2021, the entire system of credit institutions handled nearly 350, 000 billion of the bad debts determined by the national assembly' s resolution no 42 / 2017 / qh14 Meanwhile, if the report of credit institutions, total bad debts determined by resolution 42 / 2017 / qh14 of the entire system of credit institutions in vietnam to june 30, 2021 is 425, 500 billion, down 4% from the end of 2020 Accumulated from 15 / / 2017 to 30 / / 2021, the entire system of credit institutions in viet nam processed 354, 600 billion of bad debts determined by the resolution no 42 / 2017 / qh14 (the state bank calculated from 15 / / 2021), which is at least 2, 600 billion dong and months) According to the report of credit institutions, credit institutions who have handled the bad debts are 183, 000 trillion (51, 61% total bad debts determined by resolution 42) Handling outstanding debts outside the balance sheet determined by resolution no 42 / 2017 / qh14 is 93, 500 billion vnd (accounting for 26 37% total bad debts under resolution no 42 / 2017 / qh14) Handling of bad debts determined by resolution no 42 / 2017 / qh14 sold to vamc (vamc) is 78, 100 billion dong (tpđb) On the basis of 30 / / 30 2020, the entire system of credit institutions handled 55 trillion in bad debts determined by resolution 42 / 2017 / qh14 Thus, from two different sources of data (aggregated data and announced by the nước; bank of), credit institutions, there is a difference in the result of bad debt handling and bad debt rates at the same time, but not much However, both sources of data show that credit institutions have been very determined to handle bad debts, flexible and diverse forms of debt handling, nhau; resolution no 42 / 2017 / qh14 of the national assembly, which have been coordinated with the functional agencies and organizations that are involved in a very strong process of handling bad debts However, due to the objective factor of the covid - 19 epidemic, the potential rate of bad debt increases in the past two years, poses new challenges in 2022 when enterprises are still difficult by the epidemic and resolution no 42 / 2017 / qh14 Besides the levels, the functional sectors and the support for recovery of local socio - economic development in the new phase of the epidemic should not be much interested in the coordination of bad debts in the resolution of resolution 42 4.3 Current status of credit risk management in commercial banks Commercial banks have implemented the following management policies: • Credit risk management policy for customers: Customer credit risk is managed by comprehensive, comprehensive in all stages of the ability to generate credit risks, through specific regulations of each credit service type - Limit credit for customers: complying with regulations on lending limits and guarantees for customers according to the regulations of the state bank Limit credit to business customers: perform internal credit rating to quantify the risk of each customer' s risk, determine the limits of credit to manage the total credit risk Internal credit rating has 10 classes: aaa, aa, a, bbb, bb, b, ccc, cc, c, d, customers with credit rating from cc or lower Point to - point structure, point - to - point, grade - scoring techniques applied in the continuous credit rating shall be continuously approved in order to conform to reality  Credit allocation policy 31 Geographical distribution : to perform the division of credit - level credit within the geographical area based on the capacity, position and position of each nhánh; subject to the extension of the credit activities in the areas where the credit extension is extended and the credit quality is guaranteed, the maximum credit balance shall be imposed on the credit - quality branches - Distribution by type of product, customer object, item and field: diversifying the products in principle of minimizing risks, diversification of the risks nhừm customers reduce risk of possible risks, diversification of items and investment sectors in accordance with the trend in economic development • regulations on assessment of risks : Make periodical reports on credit quality in the system to assess risk management, and propose measures to improve credit quality  Loan guarantee The feasible business plan is the criteria for deciding the lending However, credit risks are very diverse and there are risks beyond the control of human beings that are unpredictable The application of loan security measures will enhance the accountability and risk sharing of customers with the bank, to increase the application of loan security measures, diversify the form of collateral, to contribute to the decrease in losses, thus contributing to the loss of the risk of the risk • Bad debt handling: To effectively handle bad debts, request commercial banks to operate in the construction of appropriate debt handling solutions in accordance with the actual situation Basic solutions have been taken over time + to set up a bad debt settlement committee at branches including members of the department of professional departments in order to build plans and specific measures, advise the director of the branch to make timely and timely decisions The bad debt handling board shall make periodic meetings once a month to ensure the inspection and supervision of the handling of debt handling and continuously + general orientation of the banks in the handling of bad debts is to implement reasonable solutions on the basis of the analysis of each specific customer' s situation Implementation of negotiation, coordination with customers in debt handling for rapid implementation and less time For customers with a lack of cooperation, ỳ and thác liability, then resolute in taking legal measures, initiating lawsuits to enhance debt recovery 32 Chapter 5: Proposing solutions to improve the efficiency of credit risk management of commercial banks in Vietnam 5.1 Completing the organization of the credit granting apparatus and credit process 5.1.1 Organizational structure of the credit granting apparatus To improve the quality of credit through strengthening the credit capability with an independent credit assessment unit, the effectiveness of the inspection work, the control of the internal inspection and control division, must build a credit risk management unit, the independent internal inspection and control division The proposal for the construction of a credit institution' s system of credit institutions as follows: - To set up the management of credit risk management, internal inspection rooms in the areas attached to the main branch to perform the functions in the management area - Within the scope of the delegated scope, the risk management department shall consider and approve the cases beyond the competence of the branch To create an intermediate layer that affects the speed of processing of the dossier, the vay of the district - level risk management department shall be submitted directly to the higher level (general director, deputy general director) - The jurisdiction of branches of branches: decentralization, decentralization is a requirement in management work 5.1.2 Credit Process With the modification of the credit institution structure, the credit process should follow: 33 - Based on the specific factors of customers, the process of the credit process for enterprises (regardless of d) state oanh and other big businesses) and build credit for private, individual - In the credit process applicable to enterprises, the customer relations office shall be the part of the assessment and suggestions for the credit to the competent authority at the branch approving the branch - To ensure objectivity and control of compliance with guidelines in credit, disbursements always require an independent component, based on decisions made by the approval level, to be precise, ensuring the ability to control the use of customers' capital - Credit limit is limited to working capital lending such as the current logic, but it is necessary to set up a regulation on the total investment loan for the customer' s project to be controlled by the project lending 5.2 Building an effective credit policy It is necessary to develop a reasonable and effective credit policy as follows: - To conform to the specific characteristics of the investment branch of the branch, to promote the local strengths and have limited measures in credit investment for the fields and trades which are not advantaged in the business competition - Reflect credit policy in each period, ensuring unified management on the overall view - To meet the requirements for business efficiency, increase market share , balance between maximizing profits and reducing risks, ensuring credit growth and safe investment in the incidence of bad debts 34 - On customer policy: customer policy will include marketing policies, credit policy policies, lending policy policies, policy guarantees, policies on services, service charges, service charges, and the extent to which the customer policy is applied to the use of the customer' s policy (financial indicators, non - financial) and the extent to which the customer policy is applied - Customer orientation: retail lending on the basis of new conditions on the basis of selection and routing roadmap Conclude Along with the global trend of improving the efficiency of credit risk management, commercial banks in Vietnam have been performing well their tasks and goals Risk management is extremely important and a must in the operation of commercial banks Based on the theoretical foundations of credit risk management, the essay has delved into the study of the current situation, the causes, from which to draw experiences and give specific solutions to improve the effectiveness of credit risk management credit risk management in the Vietnamese commercial banking system Reference list Báo cáo thường liên Ngân hàng TMCP Ngoại thương Việt Nam 2005, 2006, 2007, 2008, 2009,2010,2011 Giáo trình “Quản trị ngân hàng thương mại”- Trường Đại học Kinh tế TP.HCM Giáo trình “Nghiệp vụ Ngân hàng thương mại”- Trường Đại học Kinh tế TP.HCM Website Cổng thông tin điện tử tư pháp: http://www.moj.gov.vn Website Ngân hàng TMCP Ngoại thương Việt Nam www vietcombank.com Website Bộ Tài chính: http://www.mof.gov Website Wikipedia Others website : www.vnexpress.com, www.vnecono my.vn 35 36