The credit risk management at bidv bank – thanh do branch 2018

INTERNATIONAL EXECUTIVE MASTER OF BUSINESS ADMINISTRATION PROGRAM THE CREDIT RISK MANAGEMENT AT BIDV BANK – THANH DO BRANCH Ha Thi Thuy Trang ID: VN1001807 Class: IEMBA INTAKE 01 March, 2018 INTERNATIONAL EXECUTIVE MASTER OF BUSINESS ADMINISTRATION PROGRAM THE CREDIT RISK MANAGEMENT AT BIDV BANK – THANH DO BRANCH Ha Thi Thuy Trang ID: VN1001807 Class: IEMBA INTAKE 01 March, 2018 DISSERTATION DECLARATION FORM I declare that this dissertation has neither been submitted to another master program nor any degree-issuing program before Additionally, I warrant that the dissertation has been soly conducted by me and I have applied relevant knowledge absorbed from the PGSM’s IEMBA Program to complete my dissertation All my dissertation citations have been acknowledged in the dissertation references I am fully aware that any breach of the above is considered as cheating and leads to the exclusion of my dissertation from the PGSM’s IEMBA Program Student’s Signature Ha Thi Thuy Trang i ACKNOWLEDGEMENT I would like to send our deepest gratitude to all lecturers I have studied your lectures and materials carefully and sought for various practical references to complete this Thesis I also would like to thank the leadership and staffs of the Bank for investerment and development of Vietnam JSC (BIDV) – Thanh Do Branch Who have enthusiastically shared with us data and relevant documents to accomplish this important Thesis I swear this is my thesis and I wrote and self-published first Yours respectfully, Student’s Signature Ha Thi Thuy Trang ii INDEX DISSERTATION DECLARATION FORM i ACKNOWLEDGEMENT ii INDEX iii LIST OF ABBREVIATION .vii LIST OF TABLE, DIAGRAM viii CHAPTER 1: INTRODUTION 1 The urgency of the topic Overview of related researches Research purposes and tasks: Research objects and scope: Research methodology: .8 Data processing and analysis method Contributions of the dissertation .10 Structure of the topic 10 CHAPTER 2: THEORY OF CREDIT RISK MANAGEMENT IN THE OPERATION OF COMMERCIAL BANK 11 2.1 Credit risk in the operation of commercial bank .11 2.1.1 Credit risk definition 11 2.1.2 Credit risk classification 12 2.1.3 Indicators reflect credit risk 13 2.1.3.1 Credit size 13 2.1.3.2 Credit structure 14 2.1.3.3 Overdue debt .15 2.1.3.4 Non-performing loans .15 2.1.3.5 Credit risk provision 16 2.2 Causes of Credit Risk 17 2.2.1 Causes of external environment 18 2.2.2 Causes from customers 18 iii 2.2.3 Causes from bank 19 2.3 Credit risk management in commercial bank 19 2.3.1 Definition and necessity of credit risk management .19 2.3.1.1 Definition 19 2.3.1.2 The necessity of credit risk management 20 2.3.2 Objectives and principles of credit risk management 21 2.3.2.1 Objective 21 2.3.2.2 Principle .21 2.3.3 Basic content of credit risk management .23 2.3.3.1 Risk Identification .23 2.3.3.2 Credit risk measurement 26 2.3.3.3 Risk management 34 1.3.3.4 Credit risk control and treatment .36 2.4 Factors affecting the management of credit risk .38 2.4.1 Factors from bank 38 2.4.2 Factors from customers 39 2.4.3 Factors from the business environment: 39 2.5 Experience of credit risk management in some banks over the world .40 2.5.1 Citibank Bank of America 40 2.5.2 Korea Development Bank (KDB) 42 2.5.3 Lessons 43 CHAPTER 3: REAL SITUATION OF CREDIT RISK MANAGEMENT IN VIETNAM JOINT STOCK COMMERCIAL BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM - THANH DO BRANCH 46 3.1 An overview of BIDV and Thanh Do Branch 46 3.1.1 Establishment and development of BIDV Joint Stock Commercial Bank 46 3.1.2 The formation and development of BIDV Thanh Do Branch 47 3.2 Business activities situation of BIDV Bank – Thanh Do Branch 48 3.2.1 Capital mobilization activities 48 iv 3.2.2 Credit Activities 50 3.2.3 Business activities results .52 3.3 The reality of risk management of BIDV – Thanh Do branch .53 3.3.1 Credit structure of BIDV – Thanh Do branch .53 3.3.2 Credit risk of BIDV – Thanh Do branch .56 3.3.3 Credit risk management of BIDV – Thanh Do branch 57 3.3.3.1 Risk management models of BIDV – Thanh Do branch 57 3.3.3.2 Credit risk management policy of BIDV – Thanh Do branch 60 3.4 General evaluation of BIDV – Thanh Do branch in risk management 71 3.4.1 Achievements 71 3.4.2.Limits and challenges 72 3.4.3 Reasons for the existing restricts 75 3.4.3.1 Caused by business environment .75 3.4.3.2 Caused by Customers 75 3.4.3.3 Caused by the bank 76 CHAPTER 4: ORIENTATIONS AND SOLUTIONS TO IMPROVE CREDIT RISK MANAGEMENT IN BIDV – THANH DO BRANCH TO 2022 78 4.1 Orientation of BIDV – Thanh Do branch on credit risk management in the coming time 78 4.1.1 Operation orientation of BIDV in the coming time 78 4.1.2 Credit risk management orientation of BIDV Bank – Thanh Do branch 80 4.2 Solutions to complete credit risk management at BIDV Bank – Thanh Do branch 82 4.2.1 Building an effective credit policy 82 4.2.2 Diversify credit portfolio to decrease credit risk 83 4.2.3 Improve the quality of credit appraisal and analysis .84 4.2.4 Internal credit interface order final 85 4.2.5 Reinforcing internal credit supervision and inspection 86 4.2.6 Improve the quality of human resources .88 v 4.2.7 Use derivatives .89 4.2.8 Boost up risk management in the level of portfolio and line of goods 91 4.3 Recommendations 92 4.3.1 Recommendations to the Government 92 4.3.2 Recommendations to the SBV 93 4.3.3 Recommendations to Head Office of BIDV 95 CONCLUSION 96 REFERENCES 97 ANNEX 99 SURVEY FORM 99 vi LIST OF ABBREVIATION DC Design Consultancy CI Construction investment F Factory E Enterprise JS Joint-stock OM One member L Limited vii LIST OF TABLE, DIAGRAM viii