A survey on small and medium enterprises credit riks in agribank at tam trinh branch from 2013 to 2015,graduation thesis

THE STATE BANK OF VIETNAM BANKING ACADEMY Foreign Language Faculty - - GRADUATION THESIS A SURVEY ON SMALL AND MEDIUM ENTERPRISES CREDIT RISKS IN AGRIBANK AT TAM TRINH BRANCH FROM 2013 TO 2015 Lecturer Student Class Student Code : Tran Thi Thu Thuy (M.A) : Tran Thi Huong Giang : K15-ATCD : 15A7510050 Hanoi, May 2016 DECLARATION I hereby declare that the work in this thesis is based on research carried out at the Agribank at Tam Trinh branch No part of this thesis has been submitted elsewhere as far as the author’s knowledge All sources of information have been acknowledged references Signature Tran Thi Huong Giang i ACKNOWLEDGEMENTS I would like to thank few people who have helped me throughout this thesis and made this all possible First I would like to thank the Foreign Faculty of Banking Academy for giving me the opportunity and the trust for doing this thesis I would like to thank all the credit staff of Agribank Tam Trinh branch, for providing me with all the necessary facilities I wish to express my sincere thanks to Mrs Tran Thi Thu Thuy, my supervisor I am extremely grateful and indebted to her for her valuable guidance and encouragement extend to me Finally I would like to express my gratitude to my family and my friends for their motivation and endless support throughout my academic studies ii ABSTRACT In the credit history, the global economy witnessed the serious bank crisis of US in 2008 which derived from lending to under standard loans, not only causing severe damage to US economy but also affecting the banking sector of every countries In case of Vietnam, although credit operation brings from 60 to 80% turn-over to commercial banks, it is considered to be the most complicated and risky business operation Simple as it may be emerged by an uncontrolled bad debt in a small branch, inefficient risk management can lead to systematic loss or even bankruptcy As a result, banks all over the world are coping with a big question of managing risks, especially credit risks in order to maximize their profit and gain competitive advantage over their rivalries This is the starting point of this paper’s research problem The main objective of this thesis is to provide the case bank with an insight into credit risks in lending to small and medium enterprises, a main customer group of bank in the duration from 2013 to 2015 In addition, the readers will also have an overview of credit operations of the bank, the on-going solutions that bank is applying to prevent and minimize credit risks to small and medium enterprises (SMEs) and the effect of those solutions Two research questions will step by step guide the audience on how these objectives are solved In order to address this issue, a survey on credit risks in lending to SMEs in Agribank at Tam Trinh branch over period of 20132015 was conducted to identify the achievements and limitations of the existing credit operation and then propose recommendations to enhance effectiveness of credit operation there iii LIST OF ABBREVIATION Agribank Vietnam Bank for Agriculture and Rural development CIC IFC IPCAS Credit Information Center International Finance Corporation Interbank Payment and Customer Accounting System SMEs Small and Medium Enterprises VINASME Vietnam Association of Small and Medium-sized Enterprises iv CONTENTS ACKNOWLEDGEMENTS ii ABSTRACT iii LIST OF ABBREVIATION iv LIST OF CHARTS AND TABLES ix CHAPTER I: INTRODUCTION 1.1 Rationale of the study 1.2 Aims of the study 1.3 Research questions 1.4 Scope of the study 1.5 Methodology of the study 1.6 Structure of the study CHAPTER II: THEORETICAL BACKGROUND 2.1 Theoretic background of bank credit for small and medium enterprises (SMEs)4 2.1.1 Definition of SMEs 2.1.2 Definition and characteristics of bank credit for SMEs 2.1.2.1 Definition 2.1.2.2 Characteristics of bank credit to SMEs 2.2 Theoretic background of commercial banks’ credit risks in lending to SMEs 2.2.1 Definition of credit risks 2.2.2 Signals to realize credit risks 2.2.2.1 Group of financial signals 2.2.2.2 Group of non-financial signals 2.2.3 Classification of credit risks 2.2.4 Reasons leading to SMEs credit risks 10 v 2.2.4.1 Reasons from bank 10 2.2.4.2 Reasons from customers 11 2.2.4.3 Other reasons 12 2.2.5 The criteria to evaluate credit risks 13 2.2.5.1 Qualitative criteria 13 2.2.5.2 Quantitative criteria 13 2.2.6 Consequences of SMEs credit risks 15 2.2.6.1 To banks 15 2.2.6.2 To SMEs 15 2.2.6.3 To the economy 16 2.3 Theoretic background of preventing and minimizing SME credit risks in commercial banks 16 2.3.1 Definition of preventing and minimizing credit risks 16 2.3.2 Solutions to prevent and restrict credit risks 16 2.3.2.1 Diversifying investment portfolio 16 2.3.2.2 Co-sponsored lending 17 2.3.2.3 Collaterals for secured loans 17 2.3.2.4 Credit insurance 18 2.3.2.5 Setting loan loss provision 18 2.3.3 Criteria to evaluate effect of preventing and minimizing credit risks 18 CHAPTER III: METHODOLOGY AND DATA ANALYSIS 21 3.1 Research methodology 21 3.1.1 Real financial reports 21 3.1.2 Interviews 21 3.2 Data analysis 22 3.2.1 Financial reports 22 vi 3.2.1.1 Credit operation for SMEs at Agribank Tam Trinh branch from 2013 to 2015 22 from 2013 to 2015 22 3.2.1.2 Credit risks in lending to SMEs at Agribank Tam Trinh 28 from 2013 to 2015 28 3.2.2 Interview analysis 31 3.2.2.1 The existing credit risks in Agribank Tam Trinh 32 3.2.2.2 Ways of preventing and minimizing SMEs credit risks in Agribank Tam Trinh 33 CHAPTER IV: FINDINGS 35 4.1 Achivements 35 4.2 Limitations 36 4.3 Causes leading to limitations 37 4.3.1 Causes from the bank 37 4.3.2 Causes from SMEs 38 4.3.3 Other causes 38 CHAPTER 5: RECOMMENDATIONS AND CONCLUSIONS 40 5.1 Recommendations 40 5.1.1 Solutions to prevent and minimize SMEs credit risks in Agribank Tam Trinh 40 5.1.1.1 Group of preventing SMEs credit risks solutions 40 5.1.1.2 Group of minimizing SMEs credit risks solutions 42 5.1.1.3 Group of supporting solutions 42 5.1.2 Recommendations 44 5.1.2.1 Recommendations to the government 44 5.1.2.2 Recommendations to the state bank 45 vii 5.1.2.3 Recommendation to Vietnam bank for agriculture and rural development 45 5.2 Conclusions 46 REFERENCES 47 APPENDICES 48 viii LIST OF CHARTS AND TABLES Table Definition of SMEs on each industrial sector in Vietnam Table 2 Components of Getting Credit Indicator Table Structure of credit clients of Agribank Tam Trinh branch 22 Table Outstanding loans to SMEs of Agribank Tam Trinh branch from 2013 to 2015 23 Table 3 Ratios of outstanding loans to SMEs in Agribank Tam Trinh branch from 2013 to 2015 24 Table Outstanding loans classified by terms from 2013 to 2015 25 Table Outstanding loans classified by terms from 2013 to 2015 26 Table Outstanding loans classified by collaterals from 2013 to 2015 27 Table Ratios of overdue loans of SMEs in Agribank Tam Trinh branch 28 Table Ratios of non-performing loans of SMEs in Agribank Tam Trinh branch from 2013 to 2015 29 Table Ratios of provision and total outstanding loans of SMEs in Agribank Tam Trinh branch from 2013 to 2015 30 Table 10 Growth rate of SMEs’ loans turnover in Agribank Tam Trinh branch from 2013 to 2015 31 ix With respect to setting provision, it was undeniable that this solution helped the branch to improve its ratio of NPL and minimize losses of credit risks effectively through the years However, there were still some unsolved problems in reporting statistics, such as the reported data was inadequate, out of date, not accurate influencing the branch’s managers decisions on setting the right amount of provision Notably, there was an assets management company founded to buy the bad debts of the whole Agribank system However, other solutions to minimize credit risks such as buying credit risks’ insurance, or securitizing debts were not implemented in the branch Overall, the author expect that the interview will really help the readers understand the theories more by comparing the result of the survey on both data analysis and interview analysis 34 CHAPTER IV: FINDINGS 4.1 Achievements In the process of implementing preventing SMEs credit risks in credit operation, Agribank Tam Trinh branch achieved some significant results Firstly, under the board of director’s guidance, all credit officers always ensured updating completely customers’ information and their credit trustworthy to the branch Moreover, credit officers also directly investigated enterprises’ facilities to evaluate enterprises’ repay ability and projects’ feasibility Therefore, the bank could have more efficient work of assessment Secondly, Agribank Tam Trinh branch made its attempt at ensuring safety conditions in credit operation, mitigating possibility of credit risks and gaining more profit In order to get this target, credit officers strictly followed the lending conditions such as customers’ management ability, financial ability, repayment ability, and legality of collateral to analyze customers’ financial ability effectively Besides, the branch offered customers who were in need of ways to enhance their repayment capacity many useful advices to prevent doubtful debts and credit losses These advices were extremely necessary for customers who had signals of financial difficulty or warning signs of risks Therefore, the bank prevented and minimized most of credit risks caused by the loss of repayment capacity When the bank could not prevent credit risks, it actively use the collaterals to offset the loans, or consider some conditions to flexibly use loans’ reschedule as a solution to support enterprises overcome their difficulties These methods based on the form and attitudes of customer reduced losses for both the bank and customers, and helped the bank remain good relationship with customers Another achievement of the branch was that it planned itself a flexible lending policies for SMEs In the research duration, the branch set its interest rate to SMEs based on the combination between minimum lending interest rate of the headquarters for each specific period and characteristics of SMEs customers For enterprises which have transacted with the bank in a long time, the bank applied a preferential interest rate For enterprises incurring transactions for the first time, the branch reduced interest rate and offered them some terms or credit line incentives to attract them Moreover, the branch had different 35 preferential interest rates to apply for different business sectors, the preferential levels depend on the orientations of the government and the state bank Finally, it was certain that for enterprises which were evaluated having high possibility of risks, a high rate of interest were applied to prevent risks and offset the credit supervision costs As a result, the level of interest appealed customers to borrow at the branch which increased the branch’s profit In term of organizational structure, Tam Trinh branch considered the human resource the most important factor deciding the success of the branch Doing well the work of arrangement, appointment and assignment jobs contributed a significant part in preventing and minimizing credit risks at the branch 4.2 Limitations Parallel with the achievements, Agribank Tam Trinh branch still had some on-going limitations in preventing and minimizing credit risks in lending to SMEs The limitations will be clarified as bellows Firstly, although the loans turnover increased in value, it was not commensurate with the growth rate The loans turnover in 2015 was 53.6 billion VND In contrast with the number in 2014, the growth rate was insufficient to reflect the size, the capacity, and the reputation of the branch Secondly, the branch was following a model of credit operation which lacked of specialization In Agribank Tam Trinh branch, each officer was required to be in charge of all steps in credit operations such as finding prospective loan customers, analyzing and appraising credit loans, approving loans, disbursement, monitoring, and even collecting loans Therefore, it took a lot of time and energy in order to provide credit to a customer whilst the work productivity and work effectiveness was not high Especially to SMEs customers which were enterprises operated in various businesses, credit officers were obligated to understand deeply about each business’s characteristics to be able to evaluate their customers Apparently, the insufficiency of specialization in division of work reduced credit operation’s effect and lead to high possibility of credit risks Thirdly, even though the branch had IPCAS to rank customers’ credit trustworthy, identify and classify credit risks; the indicators to differiate the size of enterprises were not really suitable Therefore, the works of indifying and classifying credit risks only 36 partly based on IPCAS ranking and still mainly executed by the experiences of credit officers and appraising officers Consequently, the branch’s credit evaluation contained emotional nature and greatly depended on the capacity and experience of credit officers which easily leaded to moral hazard Finally, the sources of information for the branch to analyze and assess were still limited Because of lacking reliable sources of information, the work of assessment and supervision credit risks faced many obsstacles 4.3 Causes leading to limitations 4.3.1 Causes from the bank The first reason should be mentioned is that the policies of the branch for customers in general and for SMEs in particular were still not suitable with the characteristics of the specific groups of customer As the branch did not built up a system of classification indicators to categorize its customers, the process of deploying customer policies often revealed many shortcomings such as inconsistent, incomplete, and not close to the reality Secondly, Tam Trinh branch credit officers were still lack of experiences in lending to group of SMEs customers In the previous years, the branch’s target customers were not group of SMEs customers, therefore most of credit staff did not really understand the features of SMEs customers Because of the high possibility of risks, credit officers were not confident in lending to SMEs and missed many potential opportunities Besides, although Tam Trinh implemented various forms of lending, in the reality SMEs were only allowed to approach the lump-sum lending, a traditional lending form This lending form helped the branch control its loans strictly; however it caused several problems for enterprises Because for each loan, enterprises were required to take the necessary procedures and sign credit contract again, enterprises would have to spend more time, costs, efforts, and they often hesitated to lend from the bank Finally, the products’ promotion of the branch to SMEs was not good since it was not widespread and professional Consequently, the promotion lacked of the connection between the SMEs, and the branch did not offer the most suitable products to its customers 37 4.3.2 Causes from SMEs First and foremost, the general situation of SMEs was that they lack of ability to manage and take advantage of the loans effectively Due to the insufficient of knowledge and experience, SMEs often faced difficulties in planning their projects, computing expected returns and losses, and forecasting possibility of risks Hence, they easily went to failure and be unable to repay loans to the bank The second reason, as known as the most popular reason was that SMEs were in shortage of information about domestic business and finance, so that they were unable to adjust their business activities to adapt with the market movements Because the information of market, partners, competitive stituation were not disclosed, SMEs often invested in the sector that was almost saturate, or their products did not meet the need of their partners The third reason related to the asymmetry of information between the bank and its customers that caused credit risks to the bank by problems of adverse selection and moral hazard Because of inadequate information in both quantitative and qualitative from borrower’s side for the bank to assess borrowers’ credit worthiness, customers could engage in excessively risky activities, or customers could behave immorally by engaging in excessively risky activities after receiving the loans which caused overdue loans for the bank In fact, there were many SMEs using the bank loans without the regularly supervision of credit officers could cause a great risk to the bank Additionally, SMEs with low reputation in the market often seeked the ways to postpone their repayments, increasing the rate of credit risks to the bank 4.3.3 Other causes It is undeniable that there are a lot of established laws on the business activities of banks and SMEs However, the incomplete and complicated terms in these laws caused difficulties for both the banks and SMEs In the most cases, the bank received SMEs assets, normally real estate, as collaterals for loans Since the legal procedures related to collaterals were intricate, time-consuming, and inadequate, they negatively influenced the capacity of providing credit, and the procedure of dealing with collaterals Besides, the government’s regulations on lending to SMEs about collaterals, financial capacity were very strict creating barriers to the enterprises While it was apparent that SMEs were the potential sector, and they needed more favorable conditions to access the capital funds Actually, the strict regulations sometimes forced SMEs involving in 38 fraudulence to get the bank loans, which in the same time caused credit risks possibility to banks 39 CHAPTER 5: RECOMMENDATIONS AND CONCLUSIONS 5.1 Recommendations 5.1.1 Solutions to prevent and minimize SMEs credit risks in Agribank Tam Trinh 5.1.1.1 Group of preventing SMEs credit risks solutions 5.1.1.1.1 Building a reasonable credit policy for SMEs Firstly, the branch needs to create the specialization in its credit operation by applying a working model in which credit procedures can be assigned to some groups of credit officers such as relationship managers, appraising officers and credit supportive officers At the same time, it is necessary that each specific group of credit officers ensure its support to other groups so that credit operations reach the highest effect Secondly, the branch should design suitable credit products based on the features of their target customers Instate of introducing only a credit product to SMEs, the branch should provide them a financial services’ package including financial consulting, credit providing, payment service to enhance credit quality Moreover, the process of designing a suitable product also gives the branch information and signals to timely prevent credit risks Finally, the branch should diverse their list of customers The fact that the branch only focuses on the traditional group of SMEs which is belong to some businesses such as importing, exporting, transporting, or food processing can bring a lot of risks to branch if these businesses face fluctuation Therefore, the branch should actively seek and provide credit to more customers operating in variable business sectors, especially in the potential sectors to spread risks In addition, the branch needs to establish a clearer credit regime on building credit relationship with the newly SMEs which not have financial documents or profits to assess Because it is quite risky to give lending decision based on the feasibility of their projects and collaterals, the work of evaluation will depend mainly on non-financial information of those enterprises 40 5.1.1.1.2 Improving the quality of credit analysis and assessment Credit risks derive from carelessness and inaccuracy in the step of analysis and assessment It is apparent that credit evaluation plays a crucial role enhancing credit quality and ensuring the optimal efficient in credit operations with the least risks In order to improve the quality of assessment, first and foremost, the relationship managers who collect information directly from customers have to work more effectively The relationship managers should work in specific groups which are responsible for lending to enterprises in specific business sectors so that staff can have opportunities to enhance the knowledge in their lending segment Moreover, the information including financial and non-financial information should be collected from several sources With regard to appraisers who evaluate customers, they must be selected and educated by the seniors who are rich of real experiences Assessing officers have to evaluate customers meticulously in many aspects such as legal capacity, financial capacity, repayment plan, credit history, current limitations, customers’ prospect, business sector’s prospect Besides, they need to cooperate closely with relationship managers to solve problems arising in lending to customers 5.1.1.1.3 Developing a system of early warning signals Developing a system of signals to early identify credit risks will help the branch detect risks timely and have reasonable measures to prevent, minimize credit losses To identify and estimate the impact of these signals, all credit officers are required to be sensitive, understand customers’ business sectors, and strictly monitor customers’ business operation The branch also needs to forecast changes of the economy, the specific business sectors, and specific customers to impose suitable preventing credit risks’ policies 5.1.1.1.4 Strengthening credit operation’s inspection In order to strengthen credit risks management, the branch is required to regularly monitor loans, re-evaluate lending terms, assess customers’ business, financial capacity, and credit limit of customers 41 Moreover, the branch needs to make disbursements in accordance with the decisions of the credit approval officers It must be synchronous between loans’ purpose, disbursement request and cost structure in lending demand of customers to ensure a legal and valid use of loans 5.1.1.2 Group of minimizing SMEs credit risks solutions Credit risks stems from various causes that the bank cannot anticipate Therefore, the bank should use insurance and require loans’ collaterals as a method to limit losses in case risks incur Firstly, the bank can transfer a part of risks to insurance company so that it gains more truth of customers and reduces the possibility of risks for itself Because of having insurance company control risks, the bank can focus its resources in providing services to customers and work more flexiblely Secondly, it is obvious that insurance companies with their experts have more favorable conditions in specializing, evaluating, and building preventing risks strategies Hence, the bank with the support of insurance companies will enhance its sustainability, reliability and reputation All in all, the bank can offer diverse insurance products to customers to reduce losses from credit risks and share benefits with insurance companies 5.1.1.3 Group of supporting solutions 5.1.1.3.1 Improving skills and quality of credit officers Improving the quality of credit officers means that the bank should focus on equipping their staff with major knowledge and necessary skills, at the same time, the bank is required to ensure credit officers have good moral qualities Firstly, in order to execute work of training effectively, the bank has to ensure a transparent recruitment which is impartial and objective to select the qualified credit officers Then, it needs to open advance training classes to provide staff knowledge about credit, related legal regulations, market, and business environment to help credit operation achieve good results Moreover, the bank should retrain staff periodically to update knowledge, enhance staff’s working capacity to detect and prevent abusing tricks of customers Finally, the bank should have incentive regimes for rewarding and promoting to motivate its elite staff 42 In term of moral qualities, credit staff must always cultivate and enhance their moral qualities such as sense of responsibility, honest, enthusiastic, active, etc They should be trained by deep expertise and skillful banking experts in order to be proficient in applying communication skills, investigation skills, analyzing skills, and negotiation skills to work with borrowers 5.1.1.3.2 Enhancing the information system to avoid credit risks As mentioned in the previous chapters, asymmetric information between the bank and enterprises is considered the cause of credit risks in Agribank Tam Trinh branch Therefore, the branch needs to improve the efficiency of collecting information to serve the work of internal credit rating, assessment, and analyzing repayment capacity of SMEs The solutions in particular includes exploiting multi-sources of information, effectively taking advantages of CIC, building an internal information system, connecting with SMEs associations, and building a database system of SMEs customers Firstly, credit officers have to raise their ability to collect information from various sources It is proved that rather than financial information, non-financial information play a much more crucial role in evaluating SMEs Therefore, credit officers, especially relationship managers, should diverse their collecting sources of information, they can collect from customers’ credit profile, from CIC, from enterprise owners’ interviews, customers’ partners, and from even enterprises’ staff Besides, credit staff can directly have a visit to enterprises to understand customers’ situation, production process to confirm the authenticity of the provided information Another source of information should be considered is the information from the press, internet, and specialized journals Secondly, credit officers have to fully exploit the information provided by CIC system CIC system normally gives credit officers a report of enterprise’s credit history which help them know that whether the enterprise had a bad credit before or not, which are the recent credit institutions lending enterprise, and how much enterprise’s outstanding loans are as well Moreover, the branch also needs to have an internal information system that allows credit officers providing and sharing information in order to cooperate and work more effectively Additionally, a tightly mutual connection between the branch and SMEs associations such as Vietnam association of craft villages, young business association can help the branch update information about business situations, capital demands of SMEs At the same time, it is a channel to transmit the bank’s policy, products’ information to SMEs 43 Finally, a SMEs’ database should be collected in storage and classified by criteria of business sectors The customers’ database then should be updated regularly to conveniently use in the process of monitoring loans 5.1.1.3.3 Strengthening the bank’s technical system Nowadays, it is undeniable that technology plays an important role in the development of banking system Modern technology will help the bank execute its business operation quickly, simultaneously, it also support the bank manage credit risks more effectively Therefore, the branch should strengthen its technology by enhancing technical infrastructure, fully investing necessary equipment, promoting research and apply advance software to support credit operation 5.1.2 Recommendations 5.1.2.1 Recommendations to the government In the trend of global integration, without the support of the government, SMEs will face many challenges which make SMEs hard to operate stable, even in the domestic market Hence, it is expected that the government creates equality between types of enterprises; and support SMEs in finance, management skill, market information, technology and international cooperation Because of the weak financial market, bank lending is the main channel to provide capital funds to all economic institutions, especially to SMEs Therefore, if the government has more policies to support SMEs in financial aspect, SMEs can approach funds easier to invest in their projects Besides, the vast majority of SMEs has small size of capital, and their collaterals’ value are normally evaluated lower than the lending projects’ value However, according to the current regulations, enterprises are obligated to create profit in two consecutive years in order to borrow unsecured loans It is apparent that the government should ease and detailed legal regulations on unsecured lending to SMEs so that the bank can be more independent in making lending decisions Furthermore, to help SMEs develop in the scenario of integration, it is suggested that the government should implement cooperate programs, demand stimulus programs facilitate SMEs export their products abroad; hold domestic and international fairs in order to introduce and promote SMEs’ products 44 Once the above recommendations are implemented, investment in SMEs will be encouraged which help promote the power of all economic institutions and enhance competitive advantage of the country in the region 5.1.2.2 Recommendations to the state bank To improve credit operation’s quality, the state bank should implement some recommendations below for Agribank in general and for Agribank at Tam Trinh branch in particular Firstly, the state bank should complete mechanism and specific measures in order to enhance the power in complying the regulations, in the credit procedures, and in internal inspection Besides, the lending procedures should be really simple, reasonable, and strict to facilitate SMEs borrow funds easier and more effective Especially, the legal framework on collaterals of SMEs should be completed to create a solid foundation in providing credits to SMEs In addition, the state bank should raise the quality of CIC by invest in the infrastructure and equipment labor in order to improve the quality and the value of the provided information in credit operation 5.1.2.3 Recommendation to Vietnam bank for agriculture and rural development With respect to Vietnam bank for agriculture and rural development, the bank should strictly follow the government’s strategies on developing socio-economy in specific local areas to orient Tam Trinh branch invest in a right, safe and high effective way Based on these orientations, the bank and the branch will actively in seeking customers to expand credit operation, especially credit operation with SMEs The bank should synchronize and establish documents using in credit operation in the system to set up simple credit procedures which are in accordance with current laws, and ensure the security objectives in credit operation Besides, the lending regime of the bank should be changed in order to be suitable with each group of customers and each types of loans, avoid causing inconveniences to customers The bank should also regularly organize seminars to exchange situations, experiences in credit operation among the branches In order to enhance the level of managing and evaluating customers’ project, the bank’s staff should participate in professional training courses which help the staff step by step standardize their quality in accordance with the international standards 45 Finally, the bank should help SMEs have more opportunities to access credit by setting a specific fund, then allocate the fund to its branches so that the enterprises can approach fund easier 5.2 Conclusions In the current period time, the economy witnesses an increasing number of SMEs going to bankruptcy because of difficult economic situation, which severely impacts credit quality in lending to SMEs Without any doubt, SMEs credit risks are unavoidable, and need to receive the proper concern from all the components in the society, especially from the banks During my internship at Agribank Tam Trinh branch, I researched and completed a thesis with topic: “A survey on small and medium enterprises credit risks in Agribank at Tam Trinh branch from 2013 to 2015” in order to contribute my limited knowledge in preventing and minimizing SMEs credit risks in Tam Trinh branch The thesis would not be able to complete without the applying the research methodology in the real process of internship as well as the valuable instructions of Mrs Tran Thi Thu Thuy, my lecturer, Mrs Nguyen Thi Huyen Thanh, my supervisor in Agribank Tam Trinh branch, and the precious interview with Mrs Nguyen Thi Thuong Hieu, the head of business planning department of Tam Trinh branch Basically, the content of the thesis mentioned and solved the given objectives, which firstly systematizes the basic theories about bank credit to SMEs, SMES credit risks and solutions to prevent and minimize SMEs credit risks Secondly, analysis of the current situation of credit operation in lending to SMEs at Tam Trinh branch was used to evaluate achievements, limitations and find out causes of limitations in the work of preventing and minimizing SMEs credit risks of the branch Finally, the thesis suggested some solutions and recommendations to help the bank restrict SMEs credit risks better In the process of developing the thesis, there are some unavoidable mistakes The author is looking forward to receiving any feedbacks and contributions from the readers 46 REFERENCES Peter S.R (2008) Bank management & Financial Services, 7th Edition [Adobe Digital Editions] Retrieved from ebook library Charles, H & Boon-Chye, L (Ed.) (2002) The Role of SMEs in National Economies in East Asia Edward Elgar Publishing Do Thi Thanh Vinh and Nguyen Minh Tam (2014, September) Credit approaching capacity of SMEs Financial Magazine World Bank Group (2015) Ease of doing business in Vietnam 2016 Retrieved from http://www.doingbusiness.org/data/exploreeconomies/vietnam/ Agribank Tam Trinh branch (2013, 2014, 2015) Financial reports Agribank Tam Trinh branch (2013, 2014, 2015) Annual reports Agribank Tam Trinh branch (2013, 2014, 2015) Reports on credit operations Websites: Cafe finance (2015, March 20) SMEs credit pie, is this easy to swallow? Retrieved from http://cafef.vn/tai-chinh-ngan-hang/mieng-banh-tin-dung-sme-lonnhung-co-de-xoi-20150320171655923.chn Café finance (2014, May 21) Unsecured loans cause bad debts? Retrieved from http://cafef.vn/tai-chinh-ngan-hang/cho-vay-khong-dam-bao-bang-tai-san-co-gayra-no-xau-2014082120063878016.chn 10 General situation of SMEs in 2014 (n.d.) Retrieved from http://business.gov.vn/Gi%E1%BA%A5yph%C3%A9p/tabid/203/catid/826/item/1 3891/khai-quat-tinh-hinh-doanh-nghi%E1%BB%87p-va-tr%E1%BB%A3-giupphat-tri%E1%BB%83n-dnnvv-n%C4%83m-2014.aspx 11 Basu, C (n.d.) Four basic types of financial ratios used to measure companies performance Retrieved from http://smallbusiness.chron.com/four-basic-typesfinancial-ratios-used-measure-companys-performance-25299.html 12 Vinasme (2015, March 27) Vietnamese SMEs and the demand of legal supports Retrieved from http://vinasme.vn/Doanh-nghiep-nho-va-vua-o-Viet-Nam-hiennay-va-nhu-cau-ho-tro-phap-ly-17-3169.html 47 APPENDICES Interviewed questions What types of credit risks occurred in the research period in Agribank at Tam Trinh branch? What were the solutions that the branch applied to prevent and minimize those credit risks in the duration from 2013 to 2015? 48