Credit risk management in joint stock commercial bank for foreign trade of vietnam ngo qu,

STATE BANK OF VIETNAM BANKING ACADEMY OF VIETNAM FACULTY OF FOREIGN LANGUAGE - - GRADUATION THESIS TOPIC: CREDIT RISK MANAGEMENT IN JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIET NAM-NGO QUYEN BRANCH Student : Phung Thi Loc Nhung Class : ATCC – K14 Student code : 14A7510179 Supervisor : Can Thuy Lien (MA) Ha Noi, 20th May 2015 Banking Academy Graduation thesis Acknowledgement First of all, I would like to express my sincere thanks to my teachers in Banking Academy, who give me knowledgeable and useful lessons The lessons are the invaluable preparation for me to complete this graduation thesis as well as start my career in the future I am also extremely grateful to Mrs Can Thuy Lien for her provision of expertise and useful comments which support me to complete the graduation thesis successfully I would also like to show my gratitude to the working staff in Joint stock commercial bank for foreign trade of Viet Nam-Ngo Quyen branch for their enthusiastic support: providing necessary and significant materials for me during doing research period Nevertheless, I express my warm thanks toward my families and colleagues for their kind co-operation and encouragement which help me in completion of this graduation thesis Phung Thi Loc Nhung ATCC – K14 Banking Academy Graduation thesis Dedication I would like to dedicate my thesis to my beloved grandparents and close friends along with my hard working and respected teachers in Banking Academy of Viet Nam whose love and encouragement make me able to complete this thesis Phung Thi Loc Nhung ATCC – K14 Banking Academy Graduation thesis TABLE OF ABBREVIATIONS Abbreviation Meaning Vietcombank Joint stock commercial bank for foreign trade of Viet Nam IT Information technology NPL Non-performing loan VND Vietnam Dong Phung Thi Loc Nhung ATCC – K14 Banking Academy Graduation thesis LIST OF DIAGRAMS AND TABLES Diagram 1.1: credit management process Diagram 2.1: organizational structure .15 Table 1: totalmobilized capital 16 Table 2: outstanding loan by term .17 Table 3: outstanding loan by economic sectors 18 Table 4: outstanding loan by debt category 19 Table 5: outstanding loan by currency 20 Table 6: bad debt .22 Table 7: provision .24 LIST OF FIGURES Figure 1: outstanding loan by term 17 Figure 2: outstanding loan by economic sectors .18 Figure 3: outstanding loan by debt category .19 Figure 4: outstanding loan by currency 20 Figure5: bad debt ratio 23 Figure 6: provision 24 Phung Thi Loc Nhung ATCC – K14 Banking Academy Graduation thesis TABLE OF CONTENT Introduction .1 Chapter I The overview of credit risk and credit risk management in commercial banks 1.1 Credit risk in banking activities 1.1.1 Definition of credit risk 1.1.2 Classification of credit risk 1.1.3 Characteristics of credit risk: .4 1.1.4 Signals to recognize credit risk: 1.1.5 Causes and consequences: 1.2 Credit risk management .6 1.2.1 The goals of credit risk management: 1.2.2 The process of credit management .7 1.2.3 Measurements to manage credit risk 1.2.3.1 Manage loan portfolio .8 1.2.3.2 Prevent credit risk 1.2.4 The consequences limitations of credit risk 10 1.2.4.1 Loan classification and provision 10 1.2.4.2 Sale of loans 12 Conclusion of chapter I .13 Chapter II The real situation of credit risk management in Vietcombank- Ngo Quyen Branch 14 2.1 The overview of Vietcombank- Ngo Quyen branch .14 2.1.1 The development history 14 2.1.2 Organizational structure: 15 2.1.3 The duties of Ngo Quyen branch .15 2.2 Credit activities in Ngo Quyen branch ( 2012-2014) 16 2.2.1 Total mobilized capital from 2012 to 2014 16 2.2.2 Outstanding loan by terms .17 Phung Thi Loc Nhung ATCC – K14 Banking Academy Graduation thesis 2.2.3 Outstanding loan by economic sectors .18 2.2.4 Outstanding loan by debt category 19 2.2.5 Outstanding loan by currency 20 2.3 Credit risk management in Ngo Quyen branch .21 2.3.1 Management policies .21 2.3.1.1 Debt classification 21 2.3.1.2 Risk provision .22 2.3.2 Real situation of bad debt and provision in Ngo Quyen branch 22 2.3.2.1 Bad debt 22 2.3.2.2 Provision .23 2.4 Assessment of credit risk management in Ngo Quyen branch .24 2.4.1 Achievements 24 2.4.2 Drawbacks and reasons 25 2.4.2.1 Drawbacks .25 2.4.2.2 Causes 25 Conclusion of chapter II 26 Chapter Solutions to enhance the quality of credit risk management in Ngo Quyen branch 27 3.1 The orientation of Vietcombank- Ngo Quyen branch in 2015 27 3.2 Solutions to prevent risk 27 3.2.1 Improving the quality of assessing and analyzing credit 27 3.2.2 Managing, monitoring and controlling the process of disbursement and after lending .28 3.3 Measures to offset when credit risk happened .30 3.3.1 Enhancing the efficiency of processing problematic debt .30 3.3.2 Using insurance and loan security tools 31 3.3.3 Implementing loan classification and risk provision strictly 31 3.4 Recommendations for the branch 31 3.4.1 Completing credit grant process and credit procedures 31 3.4.1.1 Structural organization of the credit grant process .31 Phung Thi Loc Nhung ATCC – K14 Banking Academy Graduation thesis 3.4.2 Setting up effective credit policies 33 3.4.3 Completing credit information system .36 3.4.4 Improving the quality of human resources .37 3.5 Recommendations for Vietcombank .37 3.6 Recommendations for the state bank of Viet Nam 38 3.7 Recommendations for the Government 39 Conclusion of chapter III 39 Conclusion 40 Reference 41 Phung Thi Loc Nhung ATCC – K14 Banking Academy Graduation thesis Introduction Background to the study Credit is a basic activity of commercial banks and it is also the major income for commercial banks in recent period However, this activity contains potential risk which induces serious consequences not only to commercial banks but also to enterprises and the whole economy Therefore, enhancing the quality of credit risk management in commercial banks is a crucial factor in the development of banks The global economic situation is happening in a very complicated way after the consequence of the 2008 economic crisis and Viet Nam also suffers from it This circumstance requires commercial banks in Viet Nam, including VCB, to improve the quality of credit risk management to minimize potential causes inducing risks Besides, with the opportunities and challenges of globalization, the issue of enhancing the competitiveness ability of domestic commercial banks with foreign ones, in detail is improving the quality of credit risk management, is becoming necessary On the other hand, if commercial banks want to survive and develop, they need to give solutions to handle credit risk From that reality, the theme “Credit risk management: A case study of joint stock commercial bank for foreign trade of Viet Nam-Ngo Quyen branch” was chosen to be researched Objectives of the study Structure of thesis consists of three chapters, namely + Giving an overview about theoretical knowledge of credit risk in banking activities + Analyzing and assessing the credit risk of Joint stock commercial bank for foreign trade of Viet Nam-Ngo Quyen branch from 2012 to 2014 + Recommending solutions in order to enhance the quality of credit risk management in Joint stock commercial bank for foreign trade of Viet Nam-Ngo Quyen branch Phung Thi Loc Nhung ATCC – K14 Banking Academy Graduation thesis Subject and scope of the study - Study subject: Joint stock commercial bank for foreign trade of Viet Nam-Ngo Quyen branch - Scope of the study: credit risk and credit activities in Joint stock commercial bank for foreign trade of Viet Nam-Ngo Quyen branch from 2012 to 2014 Methodology: - Using qualitative methods including statistics, comparison, analysis, synthesis, dialectical materialism - Basing mainly on secondary data Thesis layout: Layout of the thesis consists of three chapters, namely: - Chapter I: The overview of credit risk and credit risk management in commercial banks - Chapter II: The real situation of credit risk management in Vietcombank- Ngo Quyen Branch - Chapter III: Recommend solutions to enhance the quality of credit risk management in Ngo Quyen branch Phung Thi Loc Nhung ATCC – K14 Banking Academy Graduation thesis Chapter Solutions to enhance the quality of credit risk management in Ngo Quyen branch 3.1 The orientation of Vietcombank- Ngo Quyen branch in 2015 In 2015, Vietcombank- Ngo Quyen branch wil continue to complete the purpose of keeping the stability and growth for deposits from residents Besides, the branch tends to increase credit activities by accelerating the search for new credit customers The branch also implements the evaluation to make disbursement the medium and long term contracts which were signed for large customers In term of bad debt and loan sale, the branch is oriented to take drastic measures in processing bad debts and to urge for recovery of the debt sale The ATM system did work really effectively in 2014, so that the branch will set up solutions to improve the performance of ATM system 3.2 Solutions to prevent risk 3.2.1 Improving the quality of assessing and analyzing credit Credit risk is rooted from inaccurate credit assessment which leads to the wrong lending decision This is one of the most important steps to limit credit risk with highest effectiveness and lowest losses The assessing and analyzing process need to ensure the carefulness on the basis of profit and risk analysis as well as satisfy the requirement about customer service quality : Implementing analysis and evaluation of the overall risk of the customer through determining credit line periodically months or a year This work will help the bank have an overview about the financial situation, the quality of business and then assess the development prospects of the business Thus the bank can realize the risks of the business and set a reasonable credit line To make it work, the branch should combine the qualitative and quantitative analysis to realize potential risks and control ability of the branch In quantitative analysis, the branch should complete customer credit rating system This system should be adjusted regularly to suit with the real economic situation of Viet Nam, Phung Thi Loc Nhung 27 ATCC – K14 Banking Academy Graduation thesis but should not be rigidly applied according to international standard The quantitative analysis will figure out potential risks and reflect clearly risk level of expected loans as well as set up strategies to limit credit risk before granting credit for customers In quantitative analysis, the branch will research macro and micro environment, internal environment of enterprise, relationship of enterprises with the branch… So that the branch can set out more accurate granting credit decision Basing on the credit line which is approved, the branch should focus on risk analysis of each lending alternative to provide the expected risks, the ability to control of the branch and solutions to handle when bad situations occur In the appraisal of investment projects, many customers increase the value of the project so that they can borrow a larger amount of capital This leads to the risk because the capital which customers really own accounts for low proportion It also means that the repayment ability of customers is not possible and collecting debt ability of the branch reduces Therefore, it is very important for the branch to hire an independent and reliable appraisal organization to implement the whole assessment of the real value of the project as well as prove accurately the capital of customers It is necessary to combine conditions in credit contract such as interest rate, own capital proportion, collateral… to make sure that profit gained deserves to risks level The branch should rise the own capital proportion of customers and choose collateral with high liquidity ability of customers with low credit rating The tighter legal conditions in credit contract will ensure rights of the branch when risks occur, also, enhance the responsibility of customers in using lendings 3.2.2 Managing, monitoring and controlling the process of disbursement and after lending The branch should make disbursements in accordance with the credit regulations There should be reconciliation between the borrowing purpose, request disbursements and expenses in the capital needs of the client, ensuring the use of loans are fully valid documents Restricting cash disbursements unless special circumstances with typical characteristics of customers business as purchasing Phung Thi Loc Nhung 28 ATCC – K14 Banking Academy Graduation thesis agricultural and forestry products by households, paying workers… applying only transfer payment method to control the use of customer loans Credit risks often appear after lending because of the ineffective business plan or the improper use of funds of customers Besides, if the branch does not control the cash flow after finishing the business plan, which leads to the fact that customers using these funds for inefficient or non-transparent purposes, credit risks will occur To prevent these risks, the bank should implement strictly control after lending: + The branch should ensure appropriate use of loans with special characteristics of loans and customer quality Because each loan, each client has certain differences, it is necessary to build and select an inspection plan about using reasonable capital to ensure security for the branch but also to facilitate the business operations of customer and the relationship between the parties The branch should use the customer's credit rating as the basis for determining the monthly periodical, quarterly or semi-annual to check loan using Customers with high credit rating will have the longer duration of test while the customer with lower credit rating will have more times of checking using fund For customers who have bad debts, the branch should examine and classify them regularly to follow up strictly the situation of the client, so that the branch can set out proper identification, analysis and solution to minimize risk + In examining the use of capital, the branch should seriously examine the real situation to have an assessment of the use of funds, the collateral in order to promptly detect risks and take measures to handle, avoiding on-paper implementation + The branch needs analysis and timely evaluation of risk signs For example, customers have difficulty in repayment, the business environment changes suddenly, market conditions adversely affect the business plan, the signs of law violation appear Basing on a system of early warning signals about credit risk the bank can capture the ability to handle actively and timely these possible risks Phung Thi Loc Nhung 29 ATCC – K14 Banking Academy Graduation thesis + The branch should closely monitor the customer's funds on the basis of controlling for each type of loan: the dispatch date or the claim for the money of loans for export should be checked, the progress of works of basic construction loans should be checked; the inventory, monthly outstanding balance and the use of customer revenues of commercial loans should be checked This can help the bank collect debts on time with less amount of risk 3.3 Measures to offset when credit risk happened 3.3.1 Enhancing the efficiency of processing problematic debt Bad debt is something nobody wants, but it still exists in any bank, thereby establishing problematic debt settlement is a necessity To minimize losses when risks occur, there should be a clear delineation of functions and tasks of the relevant departments to solve the problems arising in the process In handling the problematic debt, the branch should take steps sequentially and carefully, avoid adverse impacts on those relationships which have been established with customers, especially the traditional customers - Clarify the status of business, collateral, customer attitudes: analyzing the resilience of business situation, debt repayment ability, customers’ collaboration, status and processing collateral capabilities - Choose methods to handle: work-out or liquidation The choice of handling method should be applied consistent with the characteristics and ability to pay of each customer to ensure high performance with affordable expenses  Work-out: This measure is chosen by many banks to apply in the settlement of overdue debts, bad debts The nature of this method is that banks create conditions for enterprises to have time to overcome these difficulties, work efficiently and repay bank loans in a fastest When the bank applies this method, it requires customers to have a high sense of responsibility and an appropriate plans to repay to the bank  Liquidation: In the case that work-out method is not convenient, there is no hope to recover the debt, the bank will adopt liquidation measure to obtain debt from customers Liquidation measure is taken when borrowers are not willing to pay, with the act of shirking responsibility, fraud or the financial situation is not fixable Phung Thi Loc Nhung 30 ATCC – K14 Banking Academy Graduation thesis 3.3.2 Using insurance and loan security tools Credit risks are caused from many diversified reasons which sometimes the bank can not anticipate Therefore using insurance and loan security tools to limit losses when risks occur is extremely important Some measures need to be performed: - Requiring borrowers to buy insurance in the process of building and construction insurance (for investment projects), cargo insurance In fact for the recent time, by using this request, loan losses caused by natural disasters have been paid by an insurance agency, leading to a significant reduce in losses - Requiring the legality of collateral to facilitate in processing collateral- the second debt income when credit risk occurs The recent handling collateral showed that unclear ownership of collateral makes it difficult to sell collateral (customers are afraid of buying ….) The reason for this situation is that many customers are afraid of high expense for registering the ownership for assets especially the fixed assets Besides, the bank does not stimulate customers to complete the formality about collateral due to the complicated procedure As a result, many assets which are set as collateral at the bank not have title-deed This leads to lots of difficulties in collecting debt by this collateral 3.3.3 Implementing loan classification and risk provision strictly The bank needs to implement loan classification in a serious way The bank should not abide by regulations in loan classification and risk provision inaccurately due to losses in business result It is also necessary to classify debt according to characteristics, re-collecting ability and set out risk provision to offset losses when risk occurs 3.4 Recommendations for the branch 3.4.1 Completing credit grant process and credit procedures 3.4.1.1 Structural organization of the credit grant process At the branch, the bank should convert credit risk management department into customer relation department and the debt management department The function of the customer relations department is receiving and evaluating the Phung Thi Loc Nhung 31 ATCC – K14 Banking Academy Graduation thesis customers’ credit applying form Meanwhile, the debt management department implements operations performed on the system, keeps records, checks the compliance in the implementation of the competent authorities’ decisions and resolves bad debts under the designation of branch managers Thus, this will ensure the parallel inspection and monitoring when the bank makes loans, also ensure credit decisions are implemented quickly and promptly to respond customers’ requirements 3.4.1.2 Credit procedure Credit procedures should follow direction - Based on specific elements of the client, the branch should unify credit process for businesses and improve credit procedures for individuals Thus the separation of two customer groups is justified by the specific factors which ensure the appropriateness of the credit process, and not complicate the credit process - In the credit process applying for businesses, customer relation department will be the department for evaluation and recommendation on credit before presenting it to the office authority for approval In case loans are in excess of the branch’s approval, the granting credit will be added a reassessment from the risk management department To minimize the time of procedures, regulations about determining the credit line will be applied to the business with large credit line and credit risk management department will be the place for implementation of this customers’ credit line - In terms of documents relating to the providing credit: documents relating to the credit are continuously revised and supplemented With the policy towards international standards, basing on the regulations of the central bank, the Bank for Foreign Trade of Vietnam issued the lending regulations in a tighter direction However, the time for issuing guidelines often takes such a long time, even some Government regulations were abolished but the branch still got no changes in regulations, this leads to the embarrassing implementation of the Phung Thi Loc Nhung 32 ATCC – K14 Banking Academy Graduation thesis regulations Therefore, the branch should ensure the implementation of the guidelines documents is updated to suit the law - The credit line for working capital loans recently is reasonable, however it is necessary to set out regulations about the total amount of lending for project investment of customers to have separate control because lending for project investment contains more risks than other types of lending (longer loan period makes it harder to foreseen difficulties and volatilities, risk predictability and control is limited ) Regulations for determining the credit line should be more closely, avoid applying in a subjective and irrational way, which can lead to credit risk 3.4.2 Setting up effective credit policies Building credit policies needs to base on goals and the economic and social situation of the branch to ensure the balance between profit maximum and risks minimum It also helps improve potential growth and enhance credit quality as well as ensure security for the branch It is necessary for these policies to be issued for all staff because they will be the background for credit officers to implement credit process effectively Therefore, Ngo Quyen branch should set up credit policies which can satisfy these requirements: + Reflect the operations of the branch in each period and ensure a united management + Be appropriate to special features of the area where the branch is located so that it can present advantages as well as disadvantages of each local area and reduce risk in investment in uncompetitive sectors + Balance the profit and the risk, ensure credit growth and safe investment in an acceptable bad debt amount + Bring into play the competitive advantages of the branch compared with other banks Credit policy is the lodestar in identifying completed goals in providing credit, so that building appropriate and effective credit policies helps credit activities run in a clear orientation, prevent risks basing on analyzing and Phung Thi Loc Nhung 33 ATCC – K14 Banking Academy Graduation thesis researching market carefully and completely With VietNamese economic and social situation, the credit risk policies of the branch should focus on: + Customer policy: The branch should make evaluation on customers and classify them in particular groups, so that it would be much simpler for banks to decide the appropriate amount of loan for each customer and limit the credit risk due to a thorough understanding of customer’s financial situation The customer classification should be divided into groups as follow: Customer rate The level of risk AAA, AA, A Low Customer policy applied - Satisfy credit demand of customers immediately on the basis of illegal regulations and appropriate secure rate - Possibly make loans without collateral or noncompulsory collateral, not apply regulations about rate BBB, BB Average - Apply preferential interest - Satisfy credit demand of customers promptly - Make loans with collateral in some particular circumstances, possibly to lend 50% of total lending amount without collateral - Apply preferential interest with risk offset B Phung Thi Loc Nhung High - 34 Remain the relationship ATCC – K14 Banking Academy Graduation thesis with customers but only satisfy suitable credit demand of customers - Make loans with collateral - Apply a higher interest rate compared with the above ones CCC Fairly high - Only satisfy credit demand of customers in really necessary and appropriate situations - Control the customers using on of spending loans - Make loans with collateral which has high liquidity ability Lower than CCC Extremely high - Set up no relationship with the new customer in this group - Apply regulations very to tight the old customer in this group + Customer orientation:  Focus on investing for small and medium size enterprise which are getting supports from government Therefore, small and medium size enterprises will have potential development in the future which create beneficial environment for credit investment Besides, making loans for small and medium size enterprises is very appropriate to VietNamese economic situation as well as the ability of bank staff so that the level of credit risk can be limited Phung Thi Loc Nhung 35 ATCC – K14 Banking Academy  Graduation thesis Develop retail credit It means that the branch should make small loans for individual customers with particular carefulness It is also important for bank to ensure repayment ability of these loans  Pay special attention to enterprises with foreign investment The number of enterprises with foreign investment is increasing in recent years due to globalization so that it will be a potential customer group with strong financial ability and competitive ability in the market Thus, this customer group needs a high attention from the branch 3.4.3 Completing credit information system Credit information system is a crucial factor for limiting credit risk in banking activities However, using information in the branch is not actually effective and not meets the requirement of preventing credit risk Thus, the branch should create a more effective credit information system as follow: - Basing on the information about enterprises, the information system of the branch need to summarize and give assessment as well as analysis to the whole system to consider providing credit - Establishing connection with other organizations which provide international information to exploit or buy information when it is necessary This will help satisfy the information demand from the branch - Organizing customer information system in a reasonable manner, avoiding duplication of data collection, ensuring the comprehensive information complied with characteristics of customers Along with the collection of information, the branch should use the modern analytical tools to improve the accuracy of the assessment results to make the right decision - Updating and adding regularly to credit handbook Credit handbook has not been updated and changed is the reason for limiting the ability to grasp new issues of credit officers Therefore, it is necessary to update and reprint credit handbook with adjustment, maybe once a year to update the legislation to meet the requirements for training and professional studies Phung Thi Loc Nhung 36 ATCC – K14 Banking Academy Graduation thesis 3.4.4 Improving the quality of human resources Human is not only the key factor in realizing, assessing and limiting credit risk but also the cause for credit risk In spite of a perfect model and strict credit procedures, the credit risk can still occur if people have limited or no capacity to meet the ethical requirements Thus, solutions to improve the quality of human resources play a very important role in building methods to prevent credit risk - Choosing staff with professional qualifications and moral manner to arrange in credit department In banking operation, credit is an activity which requires qualified ability and responsibility, so that the branch need to enhance the quality of credit staff according to the criteria of ability and moral Furthermore, having an appropriate recruitment plan is very significant - Having an adequate allocating and reasonable division of work for the staff, to avoid overload for staff so that they can have enough time to research, evaluate and monitor loans in an effective way - Increasing the training, re-training routine for credit staff to improve the quality of human resources in the management of credit risk - Building a clear commendation and discipline regime basing on the quality of credit and the working efficiency of each staff The provisions of the reward and discipline must be united in the entire system and must be done thoroughly Thus it can enhance the responsibility about credit decisions of the officials involved - Rotating staff in customer management to reduce negative impacts due to a too long relationship between staff and customers It also creates conditions for staff access to different customers 3.5 Recommendations for Vietcombank To improve the quality of credit, it is necessary to build the credit risk management department- an internal control department independently with full authority and separation benefits to the branch At the same time this new organizational structure must ensure the reduction of administrative procedures and the process of application does not affect the quality of customer service, does not Phung Thi Loc Nhung 37 ATCC – K14 Banking Academy Graduation thesis take long for the credit granting process Therefore, the proposed solution of building the credit grant process as follows - The bank should not establish credit risk management department in the branch but set credit risk management department in the region directly under the headquarters for the execution of functions in the management area The establishment will ensure the independence and objectivity of the credit decision of the credit risk management department, enhance inspection and control ability of the internal control department At the same time, when credit risk management department is set up in the regions, it would be simpler for credit managers to capture these characteristics, the local situation and the market promptly to address the requirements of the branches and shorten the processing - To ensure the objectivity and control ability of the compliance with principles of credit operations, there should be an independent department to the disbursement Basing on the regulations of the approval authority, this independent department will disburse correctly, ensure the ability to control the use of customer funds, so that it would be easier for debt management department at the branch to control the disbursement of all customers 3.6 Recommendations for the state bank of Viet Nam The state bank of Viet Nam should complete the banking legislation in two ways The first one is that the State bank of Viet Nam should co-coordinate with offices in reducing bad debt and difficulties in credit procedure The other way is that the State bank should take researches to change and complete rules about foreign exchange, debt classification which is appropriate to international standard and real situation in Viet Nam It is very necessary for the State bank of Viet Nam to operate effective monetary policy The bank needs to manage the interest policy and other tools flexibly to support commercial banks to ensure liquidity and security in business operation Furthermore, the bank should operate foreign exchange rate effectively according to the real situation of the market, stimulate exportation, control importation, and intervene promptly to operate foreign exchange market Moreover, Phung Thi Loc Nhung 38 ATCC – K14 Banking Academy Graduation thesis the State bank should analyze, assess and anticipate economic and monetary developments in Viet Nam and worldwide to set out appropriate operating strategies The State bank of Viet Nam should focus on enhancing the quality of inspection system The first way to complete it is that the bank should improve the quality of implementing the inspection under the two forms which are on-site inspection and remote inspection The other one is constructing the inspection program in a detailed, rational and effective way 3.7 Recommendations for the Government - Balancing between developing economy and stabilizing monetary market, focusing on the stable development of commercial banks, avoiding sudden change in developing orientation which can have adverse impacts on commercial banks - Completing the legal system to create a healthy competitive environment among commercial banks - Encouraging enterprises to business as well as protecting the legitimate interests of commercial banks Conclusion of chapter III From the real situation of credit risk management in Vietcombank- Ngo Quyen branch in recent years, the solutions and recommendations for the branch focus on dealing with existed problems which have adverse impacts on credit quality and improving the risk preventing ability of the branch Besides, recommendations for Vietcombank contribute to complete a united system from office to branch which helps limit credit risk not only for the branch but also for the whole system of Vietcombank Furthermore, recommendations for the State bank of Viet Nam and the Government help create a competitive business environment and effective credit risk management system The effort of all parties makes it possible to get the target of developing credit effectively and contribute to the fast and stable development of Vietnamese economy Phung Thi Loc Nhung 39 ATCC – K14 Banking Academy Graduation thesis Conclusion In recent period, Vietcombank- Ngo Quyen branch has witnessed the positive changes in credit activities This partly presents the efficiency of credit management in Vietcombank- Ngo Quyen branch However, the credit activities always contain a lot of potential risks which cannot be predicted The consequences that credit risk brings are extremely serious not only to commercial banks but also to the whole economy Thus, enhancing the quality of credit risk management is one of the most important missions of Vietcombank- Ngo Quyen branch in recent years Based on theoretical knowledge of credit risk and credit risk management in banking activities, the thesis focuses on the recent situation of credit activities in Vietcombank- Ngo Quyen branch and gives assessment for it From that background, the author gave several detailed solutions and recommendations which are based on the development orientation of the branch to improve the quality of credit risk management The author also gave some recommendations for the State bank of Viet Nam and the Government to support for stable development The thesis may include some limitations about knowledge because the lack of real experiences of the author, so that supports and comments from audience are welcome Thank you Phung Thi Loc Nhung 40 ATCC – K14 Banking Academy Graduation thesis Reference Decision No 02/2013/TT- NHNN of the State Bank of Viet Nam Decision 50/QD-NHNT.SGD of the chairman of Ngo Quyen branch Annual report of Vietcombank- Ngo Quyen branch Balance sheet of Vietcombank- Ngo Quyen branch Decision 118/QD-VCB.CSTD on 18th March 2010 of chairman of Vietcombank, Ngo Quyen https://www.vietcombank.com.vn/ English falcuty- Banking Academy of Viet Nam(2014).Commercial bank – Text book Joel Bessis(2008) Risk management in bank http://luanvan.net.vn/luan-van/giai-phap-nang-cao-hiet-qua-quan-tri-rui-ro-tindung-tai-ngan-hang-thuong-mai-co-phan-a-chau-54203/ http://doc.edu.vn/tai-lieu/luan-van-nang-cao-hieu-qua-quan-tri-rui-ro-tin-dung-taingan-hang-thuong-mai-co-phan-ngoai-thuong-viet-nam-22427/ http://ndh.vn/vietcombank-nam-2015-len-phuong-an-sap-nhap-tctd-dinh-huongthanh-ngan-hang-so-1-viet-nam-2015042104185730p149c165.news http://vneconomy.vn/tai-chinh/muc-tieu-loi-nhuan-2015-ngan-hang-nao-bao-nhat2015012210555054.htm https://voer.edu.vn/m/rui-ro-tin-dung-cua-ngan-hang-thuong-mai/3b2d53b8 http://tailieu.vn/doc/luan-van-han-che-rui-ro-tin-dung-tai-ngan-hang-nno-ptnt-chinhanh-vung-tau-1213682.html http://doc.edu.vn/tai-lieu/de-an-rui-ro-tin-dung-va-mot-so-bien-phap-phong-nguarui-ro-tin-dung-tai-cac-ngan-hang-thuong-mai-viet-nam-45557/ Phung Thi Loc Nhung 41 ATCC – K14