Luận văn tốt nghiệp solutions to reduce credit risk in an binh commercial joint stock bank – hoang quoc viet branch

tế Ki nh iệ p ADVANCED EDUCATIONAL PROGRAM vă n tố tn gh NAME NATIONAL ECONOMICS UNIVERSITY BACHELOR THESIS Lu ận Major Topic:………… Student’s name MAJOR YEAR HANOI, 2017 tế Ki nh vă n tố tn gh ADVANCED EDUCATIONAL PROGRAM iệ p NATIONAL ECONOMICS UNIVERSITY ận BARCHELOR THESIS Lu Topic: SOLUTIONS TO REDUCE CREDIT RISK IN AN BINH COMMERCIAL JOINT STOCK BANK – HOANG QUOC VIET BRANCH Student: Nguyễn Thùy Giang Speciality: Finance Class: Advanced Finance 55A Student’s ID: 11130980 Supervisor: Acc Prof Đặng Ngọc Đức HANOI, 2017 tế Ki nh iệ p ACKNOWLEDGEMENTS Lu ận vă n tố tn gh I would like to express my sincere gratitude to Associate Professor Dang Ngoc Duc for his supervision, guidance, and encouragement from the initial to the final level of the thesis Also, I would like to thank National Economics University teachers and fellow friends in helping me to broaden my view and knowledge My deepest appreciations to Mr Minh Nguyen – relationship officer of An Binh Commercial Joint Stock Bank – in guiding and helping me collect information in the internship period And my deepest gratitude to my parents in supporting me Lastly, I offer my regards to all of those who supported me in any respect during the completion of the thesis tế Ki nh iệ p TABLE OF CONTENT Lu ận vă n tố tn gh Introduction Chapter – Theoretical framework of credit and credit risk in commercial banks 1.1 Overview of credit 1.1.1 Definition of bank credit 1.1.2 Features of bank credit 1.1.3 Roles of bank credit 1.1.4 Bank credit classification 1.1.5 Bank credit processes 1.2 Overview of credit risk 1.2.1 Definition and signs of credit risk 1.2.2 Classification of debts in commercial banks 1.2.3 Causes of credit risk 1.2.4 Impact of credit risk 1.3 Overview of credit risk management 1.3.1 Definition of credit risk management 1.3.2 Credit risk management processes 1.3.3 Factors influencing credit risk management in commercial banks Chapter – Current situation of credit and credit risk of ABBANK – Hoang Quoc Viet Branch 2.1 General introduction of ABBANK – Hoang Quoc Viet Branch 2.1.1 Establishment process 2.1.2 Organizational structure 2.1.3 Major activities 2.1.4 Business performance 2.2 Current situation of credit risk of ABBANK – Hoang Quoc Viet Branch 2.2.1 Lending structure 2.2.2 Overdue debts 2.2.3 Bad debts 2.2.4 Provision for loan losses 2.2.5 Credit risk management in ABBANK – Hoang Quoc Viet Branch tế Ki nh tố tn gh iệ p 2.3 General assessment of ABBANK – Hoang Quoc Viet Branch’s credit risk management 2.3.1 Achievements 2.3.2 Limitations 2.3.3 Reasons for limitations Lu ận vă n Chapter – Orientations, recommendations and solutions to reduce credit risk in ABBANK – Hoang Quoc Viet Branch 3.1 Orientations of credit risk management in ABBANK – Hoang Quoc Viet Branch 3.1.1 Orientations of credit activities 3.1.2 Orientations of credit risk management 3.2 Solutions to reduce credit risk in ABBANK – Hoang Quoc Viet Branch 3.2.1 Enhancing the information collection and use in credit activity 3.2.2 Improving lending activity 3.2.3 Improving the human resource quality 3.2.4 Monitoring and inspecting loans after lending to customers 3.2.5 Limiting losses when credit risk occurs 3.3 Recommendations 3.3.1 Recommendations to ABBANK 3.3.2 Recommendations to the Government, the SBV, and other related agencies Conclusion References tế Ki nh iệ p STATUTORY DECLARATION vă n tố tn gh I herewith formally declare that I myself have written the submitted Bachelor Thesis independently I did not use any outside support except for the quoted literature and other sources mentioned at the end of this paper I clearly marked and separately listed all the literature and all other sources which I employed producing this academic work, either literally or in content Lu ận Hanoi, ./ / 2017 Signature Ki nh tế ận vă gh tn n tố An Binh Commercial Joint Stock Bank Credit Information Center State Bank of Vietnam Lu ABBANK CIC SBV iệ p ABBREVIATIONS Ki nh tế Lu ận vă gh tn n tố Table 2.1 Results in capital mobilization Table 2.2 Results in credit activities Table 2.3 Total outstanding loans classified by debt group Table 2.4 Overdue debts Table 2.5 Bad debts Table 2.6 Provision for loan losses iệ p LIST OF TABLES tế Ki nh iệ p LIST OF FIGURES Lu ận vă n tố tn gh Figure 1.1 Bank credit classification Figure 1.2 Bank credit processes Figure 2.1 Organizational structure of ABBANK – Hoang Quoc Viet Branch tế Ki nh iệ p EXECUTIVE SUMMARY Lu ận vă n tố tn gh This thesis aims to study how credit risk affects commercial banking operations, and then propose solutions to minimize it This thesis depicts real situations of credit risk management in a commercial bank, namely ABBANK – Hoang Quoc Viet Branch Credit risk is one of the oldest and most important forms of risk faced by banks as financial intermediaries Managing this kind of risk is always one of the predominant challenges in running a bank Chapter is for the introduction of fundamental concepts of credits and credit risk, how they affect a commercial bank in particular Rules and factors of bank credit are also briefly discussed as well as the very basic idea of other risks in banking operation Types of credit risk were mentioned, of course, then the chapter ends in exposing subjective and objective causes of credit risk Chapter gives a picture of ABBANK in general, and its Hoang Quoc Viet branch in particular with recent business activities such as capital mobilization, lending, etc Credit risk management’s real situations in three years are thoroughly analyzed and explained according to different type of bank credit Underlying reasons for the pattern of credit risk are discovered and presented Chapter aims at proposing recommendations and solutions for the complex circumstances around ABBANK – Hoang Quoc Viet Branch’s credit risk management It also suggests strategies for lending activities in next several years tế Ki nh Lu ận vă n tố tn gh iệ p Together with the whole ABBANK system, the branch has applied the risk managerial model with the modern international standards and separate function departments as well as high specialization Accordingly, the lending process to customers must pass three departments: Customer Relation Department, Credit Risk Management and Credit Management, with specific functions + Customer Relation Department: performs sale function, provides all service products, and pricing model for customers Customer Relation Department is the initial department appraising credit and builds credit relationship with customers + Credit Risk Management Department: deeply evaluates customers’ documents and credit for customers to improve the quality of risk management Procedures transparency for granting credit to customers (some individual loans or loans with small value are not necessary to go to this department) + Credit Management Department: performing activities related to disbursements, debt collection; ensuring that the date on the system software matched the data on the document; keeping record of credit and ensuring the compliance in the credit issuing process - Increasing the rate of secured loan to raise the responsibility of customers as well as to limit losses when the credit risk occurs - Implementing fully the steps in credit process 2.3 GENERAL ASSESSMENT OF ABBANK – HOANG QUOC VIET BRANCH’S CREDIT RISK MANAGEMENT 2.3.1 Achievements Although having faced with complicated, unpredictable business conditions as well as internal difficulties, the ABBANK – Hoang Quoc Viet Branch endeavored to achieve many following results in mitigating credit risk: - Lending structure of the branch has diversified and showed a positive movement trend While the term structure witnessed a movement from medium and long-term loans with high potential risks to the short-term loans with capital flow faster and less risk, the currency structure saw a slight increase on the loans in VND About economic sectors, the diversification in lending activity to more economic sectors gave the branch one favorable condition to make some positive movements, such as, reducing the proportion of loans to state enterprises and increasing the proportion of 39 tế Ki nh Lu ận vă n tố tn gh iệ p loans to non-state sectors; raising gradually the proportion of retailer outstanding debts compared to economics organization outstanding debts - Good sign in reducing bad debt ratio, remarkably, the bad debt ratio are from 24% in 2014 down rapidly to 13% in 2016 - The application of internal credit rating system which allows the branch to fully assess the customers on financial capacity, developmental trend of the enterprises, capacity to pay back loans, impacts of the macroeconomic environment on customer’s operations, and so on provides the branch easier access to decide the loan amount; to ensure the safety for loans, efficiency and appropriation; and to reduce considerably credit risk to the branch - Based on general customer policies of ABBANK Head Office and customer credit rating classified result, the branch has built specific applicable guidelines to specific groups of customers These guidelines implementation has contributed significantly to the control and improvement of credit quality, as well as the building of an appropriate credit structure in the recent time According to the statistics of the credit risk management department, after nearly four years of new model application, operational errors decreased substantially, many procedure errors such as invalid disbursement documents, insurance expired, the lack of purchasing insurance for assets detected and overcame by cross-checking activity between departments - The branch made well the orientation and guideline for credit activity which was appropriate with the current situation of the branch 2.3.2 Limitations Besides the achievements mentioned above in credit risk mitigation, ABBANK – Hoang Quoc Viet Branch still exists some limitations: Through analysis indicators, we can see that the credit quality of the branch had bad signs: - Although the ratio of bad debts and overdue loan over total outstanding debt showed a positive sign, but over years, these ratios of branch were always higher than entire ABBANK’s average (for example, in 2014, the bad debt ratio of the branch was about twice higher than the average) - Overdue debts in 2016 increased compared to in 2015 on both amount and proportion, especially, the considerable rise on amount of under-180-days and over40 tế Ki nh n tố tn gh iệ p 360-days overdue debt (eg: in 2016, under-180-days overdue debt increased 19 billion VND, about 20%, compared to 2015) - Bad debt ratios were high, mostly due to the large amount of debts in Group and (eg: in 2016, debts in Group increased 11 billion VND, over three times compared to 2015) - Besides, provisions for loan loss were quite large, reflecting high bad debt ratio and being a contributor to low operating effectiveness Lu ận vă 2.3.3 Reasons for limitations 2.3.3.1 Subjective reasons - Customers’ information collected is not completed and accurate enough In the credit approval process for customers, the credit officer mainly based on information and documents provided by the customers, but they don’t have the independently reliable information However, this is the general situation of every commercial bank because it is hard to collect completely the customers’ information, and credit information system of the SBV does not meet the branch’s requirements - The absolute believe of the branch in the mortgage properties of some loans is very dangerous because the mortgage properties are only liquidated when the credit risk happens Furthermore, when the risk occurs, the bank also encounters difficulties during the collateral process to collect debts - The assessment of projects and business plans of the enterprises was sometimes careless, lacked the evaluation on the impacts of the market and other objective factors, leading to risks and customers being unable to make payment timely at maturity - Because of the increasing competition in the local market, the branch has made preferential conditions for some customers on the procedures for application records, lending conditions in order to attract new customers and simultaneously to keep loyal customers Hence, a number of loans will suffer a high level of credit risk - Although the branch tries to diversify more types of customers, loans to economics organizations still accounts for a large proportion However, in the current economic context, many enterprises which are in financial trouble, especially construction, real estate and security companies, must renew debts, or impossibly repay bank debts 41 tế Ki nh Lu ận vă n tố tn gh iệ p - The credit approval process still has existed many limitations, the bank’s projects are mainly on the technical sectors: textiles, construction while the staff are mainly from economic background, so there is limited understanding on technical factors The branch has no source for supporting credit officers in analyzing the technical factors Therefore, the evaluation of technical aspect is not good, especially for projects with medium and long term - The credit officers in the branch are enthusiastic, dynamic, but most of them are still young and inexperienced in managing credit process or handling the unusual cases Besides, the credit balance over a credit officer is quite large, leading to overload, not stick to the business activities of borrowers, not fully control the spending of loans - Some credit officers, though only account for a very small number degenerate, violate professional ethics, such as: collude with customers to fake information, which cause bad debts and losses toward the branch - Credit method was inflexible Additionally, some regulations about credit in the direction of the SBV documents could be understood in narrow and inappropriate way, causing certain difficulties to credit activities and the quality of credit risk management - The banking technology still has numerous limitations, especially information and data system Besides, the branch still lacked information and software to warn risks to customers, software for evaluating work and the equipment for credit officers still lacked the synchronicity - The cooperation between departments and debt-solving groups is still loose, so the dealing with bad debt and off-balance-sheet debt problems is slow 2.3.3.2 Objective reasons - Because of some unfavorable business conditions, the output market of some customers is reduced, revenue declines, which makes many companies be in financial hurdle and unable to return debts on time or bankrupt and be unable to pay debts to bank - The legal regulations on the credit activities are sometimes inconsistency Many documents, regulations of the Government and the SBV have been issued, but they are quite general and overlap without the specific instructions Besides, the documents usually change slower than the actual situation of banking activities 42 tế Ki nh Lu ận vă n tố tn gh iệ p - No mechanisms to support the branch in solving bad debts, the process of claims settlement, bankruptcy procedures, liquidation of assets, and enforcement of judgments are still slow, leading to unexpected losses for the bank - A number of borrowers’ subsidiary companies have officers outside Hanoi or in various regions and some collateral which are operating internationally make difficulties for the branch to monitor the use of loan, and to check the value of collateral for loans 43 tế Ki nh tn gh iệ p CHAPTER 3: ORIENTATIONS, RECOMMENDATIONS AND SOLUTIONS TO REDUCE CREDIT RISK IN ABBANK – HOANG QUOC VIET BRANCH ORIENTATIONS OF CREDIT RISK MANAGEMENT IN ABBANK – HOANG QUOC VIET BRANCH 3.1.1 Orientations of credit activities - The branch commits to follow the orientations and guidance of the Government, the SBV, and ABBANK in order to deploy synchronously and timely solutions, specific measures supporting for the enterprises, such as: to decrease lending interest, to restructure debts-returned maturity for customers in temporary troubles - Hastening the control of cash flow in lending process, asking the enterprises to commit the maintenance of deposit remainder Resolutely solving the debt recovery in case of customers using capital - Priority credits for customers, areas follow the orientation of ABBANK Head Office, focusing on traditional customers with credit rating of A or higher, small and medium enterprises, along with developing retail credit by expanding the scale of individual customers Lu ận vă n tố 3.1 3.1.2 Orientations of credit risk management Following the orientation of ABBANK, credit activities orientation of ABBANK – Hoang Quoc Viet Branch in the coming years as following: - Assessing current situation of customers in debt Group to have appropriate solutions to decline the proportion of debt Group over total outstanding loans, to control strictly bad debt, and to reduce the use of provision for loan losses - Improving credit risk management capacity in the branch: building credit management details by industries, customers and controlling the credit limit for some industries, applying credit rating well to evaluate and to classify customers more accurately, enhancing role of self-examination and the control of credit activities in the branch - Improving staff qualification to meet the need of the branch and market 44 tế Ki nh SOLUTIONS TO REDUCE CREDIT RISK IN ABBANK – HOANG QUOC VIET BRANCH 3.2.1 Enhancing the information collection and use in credit activity Complete, precise information about customers plays a crucial role on ensuring lending quality, limiting risks Therefore, to avoid the reality of information collected from in many cases is incomplete and inexact, the bank should implement effectively following phases: - Collecting customers’ information: at the present, the collection of customers’ information is usually based on enterprise customers’ financial statements in recent years or information provided by borrowers However, financial statements set up by customers aren’t usually audited, or if they are, they are often late, insufficient, or incorrect Consequently, besides collecting information from customers, the assessing employees need to collect more secondary information from: + Customers’ partners (eg: suppliers) + Banks that customer has ever haven relationship of borrowing, depositing, leasing, so on + Customer information center of ABBANK Head office + Credit information center of the SBV (CIC) - Collecting information from markets: besides information collected about customers, the employees have to exploit market information on products customers are trading, such as prediction on demand-supply situations, products’ price, and guarantee assets - After that, the staff must analyze, evaluate enterprise credit ranking based on the information collected in order to consider customers’ borrowing proposals and to limit risks Lu ận vă n tố tn gh iệ p 3.2 3.2.2 Improving lending activity - To avoid the lending too much to a small group and reduces risk when customers hit risks and can’t pay debt back, beside traditional economic sectors like construction & installation , the branch should expand lending activity to other economic sectors, other customer types such as retail customers by developing more retail products &services (retail credit, POS, credit card, ) 45 tế Ki nh Lu ận vă n tố tn gh iệ p - Following and applying strictly credit process on every customer to restrict errors, risks and to enhance loan quality - Executing credit insurance, such as lending activity insurance, asset insurance, loan insurance to reduce loss when credit risk occur - Having the simple, neat procedures, however, still ensuring the safety for customers and the banks In some situations, depending on customers’ loan scale, loan purpose, borrowing history at branch , the branch can cut down some procedures - Receiving feedbacks from customers to evaluate the quality of products and services supplied by the branch to have adjustments about bank’s operation and policies that will be more suitable Besides, approaching directly customers to know well needs and demands on capital and services that customers need 3.2.3 Improving the human resource quality Credit is the main activity bringing profit predominantly to bank On the other hand, credit activity being effective or ineffective depends on the abilities of credit officers Hence, to enhance operating effect, ABBANK – Hoang Quoc Viet Branch should apply solutions for improving the staff quality In detail: - The branch should have training courses from basic to advanced level; organize technical seminars for credit staff, such as training rules, regulations related to new organizational structure; training some knowledge related to business fields that branch’s borrowers are operating: textiles, construction, - Distributing the staff suitably in term of quantity, quality to maximize their capabilities, and to avoid the overload, overlap in work which can lead to errors in credit procedures and credit risk in the future - Professional ethics is also a very important factor, especially in credit activity Therefore, credit officers must have good virtue, honesty, bravery with all situation, self discipline, dedication and responsibility in work - Standardizing the requirement for credit officers to meet the current requirements in a fiercely competitive environment among banks nowadays - About the professional qualifications, the credit officers must have strong knowledge about credit activities and credit risk management, relatively broad knowledge about guideline, regulation, policies related to credit activities 46 tế Ki nh gh iệ p - Building an equal, reasonable policy on rewards and penalties in order to improve the strict discipline in credit working area, and to reduce risks and losses for the branch Lu ận vă n tố tn 3.2.4 Monitoring and inspecting loans after lending to customers After lending, the branch should continue following solutions to recognize risks and having timely solutions to minimize risks: - Having the scientific, reasonable appraisement process of projects; evaluating well the input and output of projects to ensure payment capacity and to adjust loan term suitably toward the market and business activities of enterprises - Cooperating tightly with credit information center to have more necessary information on customers’ situations of using loans, progress of projects, operating effectiveness - Updating frequently information on economics, technology, prediction on industrial development potentials, price in the market, average profit rate of an industry or a type of product as well as concerning about the reality and future fluctuation trend of market where customer companies’ products join in Considering profit coefficient of investing capital that company received to recognize timely potential risks - Building the early warning criteria system about credit risk - The early warning criteria system about credit risk reflects views and assessment of the banks on the signs reflecting the decrease of production activity and the increase of risk level of customers This system built bases on theoretical basic on banking risk management and the basis of customers which is specific of each bank - Need to build bad-debt and overdue-debt appraising system in order to hasten speedily the treatment of bad debts at bank - When customers have signs of arising bad debts, the branch need to + Find out the reasons to have suitable solutions + Help customers with revoking debts appropriated + Gives customers more advices, such as: restructures business activity, changes management system, shifts from kind of production to another, cuts down costs, clears unnecessary assets 47 tế Ki nh Lu ận vă n tố tn gh iệ p + Receive more collateral assets or the guarantees and monitor the inventory - When customers have signs of arising overdue debts: + The branch instructs, consults customers about problems like the capacity of making products and profit + Extend or adjust deadline for customers to reduce impedingly payable amount Besides, the bank continuously lends to customers to increase financial competence for customers and to recover business and production operations in case of customers being in financial hurdle, along with hastening inspective and supervisory activities + Suggest customers manage their spending budget tightly, buy some valuable assets, and reduce the inventory + Offer customer should renovate business system, reorganize production activity, and renew equipment, machines and technology Besides, the bank encourages customers to withdraw deferred debts by hastening accountreceivable revoking process 3.2.5 Limiting losses when credit risk occurs - When credit risk occurs, the branch should review entire customers’ files, and then investigate and analyze deeply to specify accurately main reasons leading to risk and the level of risk - Departments quickly combine to solve bad debts and overdue debts when credit risk happens, avoiding heavier losses - In case of seeing that customers are still possible to recover business activity and return bank’s debts, the bank could give some supports to customers, such as: issue more loans, renew debts, and decrease interest rate - In case of seeing that borrowers couldn’t recover business and production activities; the borrowers are intentional to not return debts or defraud, the bank can choose some liquidation policies: ask customers to transfer debt chasing rights to the bank, sell mortgages, block borrowers’ deposit accounts at other banks, or take them to court - Using provisions for loan losses to eliminate unrecovered bad debts from on-balance sheet 48 tế Ki nh - Learning experiences from losses, and then building solutions to avoid similar iệ p losses Lu ận vă n tố tn gh 3.3 RECOMMENDATIONS 3.3.1 Recommendations to ABBANK 3.3.1.1 Developing the internal credit rating system In recent years, to reduce credit risk, the ABBANK system has developed the internal credit rating system (assessment of financial and non-financial indicators) to classify customers following the regulations about internal credit rating, loan classification under Article 7-Decision 493 as a basis to identify and to set up provision for loan losses as well as to give the customer policies, lending policies, interest rate However, it still exists some limitations in deploying process in entire system, including ABBANK – Hoang Quoc Viet Branch Therefore, to build a more complete credit rating system, ABBANK Head Office should cooperate tightly with the branches, transaction offices and learn credit rating systems of banks in developed countries to adjust suitably and deploy synchronously 3.3.1.2 Enhancing the management of credit activity - Researching and applying risk managing models that are suitable to current regulations, bank’s operating characteristics and international rules - Co-coordinating with related units in organizing training courses and cultivating knowledge in order to raise the ability of assessment, measurement, and credit-risk analyses for the officers Making provision for loan losses based on risklevel classification that suits enterprise ranking 3.3.1.3 Consolidating and improving credit information system In the dynamic economic environment and many complex changes nowadays, any organization needs to have a useful information system to succeed in business, especially, business activities in finance and banking sectors which always exists various implicit risks Therefore, information system plays an important role in operation of banks and other financial institutions However, in reality, Vietnamese banks, including ABBANK, information about customers is still insufficient, inaccurate and not really 49 tế Ki nh Lu ận vă n tố tn gh iệ p transparent, which will affects the credit assessment process, and lead to potential losses in the future In recent year, the Credit Information Center of the SBV has made great efforts in creating databases about enterprises borrowing capital from credit institutions, as well as evaluations on business activities and for credit assessment; however, the ability to meet these requirement is still limited Hence, the ability to use the information for credit evaluation is not high and didn’t meet the hedging requirements Therefore, to support better for credit departments, the ABBANK Head Office should set up a repository of customer information for the entire ABBANK system by collecting customers’ information from its branches, transaction offices Besides, the bank should set up the linkages with other banks and financial institutions to be able exploit information to collect more information and database 3.3.2 Recommendations to the Government, the SBV, and other related agencies 3.3.2.1 Improving management, control quality Improving the quality of macroscopic management, control of the government Besides, the government should have the detailed and suitable-toreality plans before issuing law documents, which limits errors and faults On the other hand, the SBV needs to check documents related to banking field, especially banking credit Continuously completing lending, loan guarantee regulations based on ensuring the safety for credit activity Complete the process of issuing credit, classifying debts, making and using a provision for loan losses Have detailed instructional mechanisms and policies for credit organizations to let them can be initiative in dealing with and exploiting customers’ assets The SBV has to have regulations on auditing compulsorily enterprises’ financial statements Nowadays, there isn’t regulation on auditing compulsorily enterprises’ financial statements, so banks are difficult to identify the accuracy, honesty, and reasonableness of financial statements’ data that the enterprises provide for the banks The SBV should issues regulations on standards, requirements to risk management system; stipulate on the inspection, control in banks, in debit-credit asset management system and in credit risk management system 50 tế Ki nh Enhancing the operating effect of Credit Information Center (CIC) Establishing credit information system to be more helpful according to the following ways: - Relying on the cooperation, the SBV makes the data connection between banks to supplement, to increase the accuracy and sufficiency of data bank, not only data about customers, but also appreciations and predictions on industries which is foundation in analyzing and appraising credit - Based on information on enterprises, industries, projects financed credit, CIC needs to summarize and to give assessment, analyses, and then to provide effective information for entire system to use in credit appraisement This data bank needs to be open in order to be possible to integrate with data banks of other banks in meeting cooperation need in currently international environment - The CIC needs to set up the relationship with organizations, service providing information in the world to possibly exploit, buy data when is necessary, with a view to respond information requirement from branches, especially information about financial situations, mother companies’ operation – foreign partner of companies, especially foreign-invested companies 3.3.2.3 Improving the inspection, supervision - Improving the inspection by catching timely technical skills, modern banking services; applying new technologies to supervise continuously commercial banks under two forms of the local inspection and the remote supervision, including: - The local inspection will enhance the validity of dealing with violation against law regulations causing by objective reasons to apply specific mechanisms - The remote supervision assists with warning timely mistakes, which provides commercial banks methods to prevent risks in business operation in general and in credit activity in particular - Researching and orienting credit-risk preventing, limiting activities; acquiring selectively experiences of developed countries to help commercial banks to grow safely and to be possible to compete with foreign credit institutions Lu ận vă n tố tn gh iệ p 3.3.2.2 51 tế Ki nh iệ p CONCLUSION Lu ận vă n tố tn gh ABBANK – Hoang Quoc Viet Branch is one of the branches having the largest operating scale in the ABBANK system, is also one of the banks having high total outstanding debt on Cau Giay District – Hanoi In recent years, along with credit growth, the branch always concentrate on activities of risk management, credit risk mitigation, and the application of standard mitigation techniques on reducing credit risk, improving the quality of credit risk management, toward safety and efficiency However, besides the gained achievements, credit risk management of ABBANK – Hoang Quoc Viet Branch still exists problems, limitations needed to overcome in the future By researching the theoretical basic on commercial bank activities, credit risk in the bank and credit risk management, combined with analysis the current situation of credit activities and credit risk management in ABBANK – Hoang Quoc Viet Brach, the thesis solved some following problems: First, the thesis has synthesized the basic theoretical problems on the credit risk of the banks; standardized credit risk management in the banks: concepts, classification, causes, principles, consequences, mitigation technique for managing credit risk Second, the thesis has researched the current situation of credit risk management in the ABBANK – Hoang Quoc Viet Branch during period 2014 – 2016, evaluating the quality of credit risk management: achievements, limitations and causes Third, based on theoretical background of credit risk management and the current situation of credit risk management in ABBANK – Hoang Quoc Viet Branch, the thesis has proposed solutions to improve the quality of credit risk management, as well as to limit and to prevent risk in the branch, and given suggestions and proposals to the Headquarter of ABBANK, the Government, the State Bank of Vietnam to improve regulations, business environment for credit risk management 52 tế Ki nh iệ p REFERENCES tố tn gh Vietnamese: Phan Thị Thu Hà (2007) Ngân hàng thương mại Nhà xuất Đại học Kinh tế quốc dân n vă ận Lu English: Peter S Rose & Sylvia C Hudgins (Eighth Edition) Bank management & Financial Services Peter S Rose (2001) Commercial Bank Management, Financial Publisher ABBANK – Annual Report 2014-2016 ABBANK – Credit handbook Websites: http://www.abbank.vn http://www.directrecovery.com http://www.sbv.gov.vn 53