STATUS OF LOAN AND CREDIT GRANTING ACTIVITIES IN OPERATION CENTER – THE MILITARY COMMERCIAL JOINT- STOCK BANK

FOREIGN TRADE UNIVERSITY Finance and Banking Faculty -- MID-TERM INTERNSHIP REPORT Topic: STATUS OF LOAN AND CREDIT GRANTING ACTIVITIES IN OPERATION CENTER – THE MILITARY COMMERCIAL JOINT- STOCK BANK Student: Nguyen Tuan Anh ID: 1113340071 Intake: 50 – A21 – High quality class Instructor: Nguyen Thu Trang, MSc Hanoi, July 2014 ACKNOWLEDGEMENT At first, I am deeply indebted to my instructor - Mrs Nguyen Thu Trang, Msc., Lecturer of Foreign Trade University for her guidance during the whole of the internship and research period I wish to express my great appreciation to her huge support and responsiveness throughout the research period Her suggestion and comments were really a great source of spirit to make the report improved significantly Furthermore, I am also grateful with Mr Director Nguyen Cao Cuong , Mr Vice Director Nguyen Tuan Anh and Mr Do Huy Liem – officer Corporate Institutional Banking - customer department of Operation center, The Military Commercial Joint- Stock Bank and all staff who has been helpful with general advising and supporting from beginning to end of my internship period Finally, I wish to thank all staffs and successors of Operation Center - The Military Commercial Joint- Stock Bank for their support during the time I worked and research in the center PREFACE The more growing the economy is, the more demand for capitals increases sharply, it also means that loans and credit activities will grow along with the growth of the economy Currently, investment projects are holding an important position and participate in most of the economic activities, especially a credit relationship with commercial banks Granting Credits is one of the most important business activities and main sources of profit of any commercial bank Starting from this situation, combined with the process of 5-week internship in CIB Department – Operation Center – The Military Commercial Joint- Stock Bank and the knowledge acquired during studying in Finance and Banking Faculty – Foreign Trade University, I have chosen the research "Status of loan and credit granting activities in operation center – military commercial joint stock bank” The research divided into main chapters, apart from the preface and conclusion They are:  Chapter 1: An overview of Operation center of Military Join Stock Commercial Bank and  Chapter 2: Status of loans and credits activities– Operation Center  Chapter 3: Solutions to improve the efficiency of loans and credits activities Operation Center LIST OF ABBREVIATIONS Order Abbreviation Meaning MB Bank The Military Commercial Joint- Stock Bank CIC Credit Information Center CIB Department Corporate and Institutional Banking Department SMEs Department L/C INCAS SBV Small and Medium Enterprises Department Letter of credit Incombank Advanced System State Bank of Vietnam LISTS OF TABLES AND CHARTS Table Main share holders of MB Bank updated in June 2014 Table Affiliates of MB Banks updated in December, 2013 Table MB Bank Income Statement summary 2010 to 2013 Unit Billion VND Table Total credit surplus of Operation Center from 2010 to 2013 – Unit Billion VND Table The Credit based on the customers at Operation Center- MB Bank Table The percentage of credit based on type of customers Table Credit basing on the maturity of Operation Center – MB Bank Table Table Table 10 Chart The structure of credit basing on the maturity of Operation Center – MB Bank in percentage The quality of debt in Operation Center – MB Bank The structure of debt based on the quality of debt in Operation Center – MB Bank Changes in total credit surplus in Operation Center- MB Bank TABLE OF CONTENTS PREFACE LIST OF ABBREVIATIONS LISTS OF TABLES AND CHARTS CHAPTER 1: INTRODUCTION 1 The Military Commercial Joint- Stock Bank (MB Bank) 1.1 The formation and development 1.2 Performance of MB Bank The MB Bank Operation Center 2.1 Establishment and development 2.2 Main activities at MB Bank Operation Center Main tasks in internship period CHAPTER 2: LOANS AND CREDITS GRANTING ACTIVITIES IN HANOI OPERATION CENTER Type of credits offered in Operation Center 1.1 Classification based on maturity 1.2 Classification based on purpose of using fund Procedure of granting credits 2.1 Giving guidance, receiving and examining the dossiers of customer credit 2.2 Appraising the condition of granting credit limit/credit, preparing the Appraisal report, control and submit appraisal report 2.3 Independent evaluation of credit risk (in case requested) 2.4 Approve the credit limit/credit 10 2.5 Inform customers of credit limit and update customer data into the system; Drafting, controlling, completing Credit Contract / The contract of Guarantee 10 2.6 Track and manage credit limit (in case of granting credit limit); Signed addendums, contract amendments (if any) and adjust credit account information in INCAS (for with credit) 11 2.7 Controlling, monitoring credit 12 2.8 Debt collection / clearance guarantees / L/C payment and handling arising 15 2.9 Closing the credit documents 17 2.10 Transferring, controlling, recordkeeping 17 Analysis of loan and credit activities 17 3.1 Credit balance 17 3.2 Credit structure 19 CHAPTER 3: RECOMMENDATIONS 26 Evaluation the performance 26 1.1 Achievements 26 1.2 Drawbacks 26 Solutions 27 REFERENCES 30 CHAPTER 1: INTRODUCTION The Military Commercial Joint- Stock Bank (MB Bank) 1.1 The formation and development MB bank was founded on 4/11/1994 as the license number 0054/NH-GP issued on 14/09/1994 and the business certificate number 060297, issued by Plan and Investment Ministry on 30/09/1994 (amended on 27/12/2012) This bank was initially formed by 11 different companies which had strong financial health and operated in military field MB has a great financial health and competitiveness, always complies with capital adequacy requirement of State Bank Total assets of MB is constantly increasing, in terms of total assets and capital rules, MB is one of the largest commercial banks in the country With a wide range of products, MB Bank is developing with increasing pace and expanding its operation to many different segments Within years, MB Bank is ranked at level A – the highest standard regulated by State Bank of Vietnam and achieved several prizes in the banking field On 1/ 11/2011, that MB Bank stock was listed in HOSE (Ho Chi Minh Stock Exchange) is a great event, which marked a new stage of development and the determination of shareholders and Board of management, leaders of MB Bank towards a long-term vision and strategy As a listed corporation, MB Bank is enhancing their transparency efficiency in business and internationally standardizing the regulations in operation and management MB Bank is operating in a large scope of business as followed: Bank services under the provisions of the State Bank of Vietnam; Supply of derivatives; Insurance agents and other related services as provided by law; Trading in bonds and other valuable papers as provided by law; Buying, selling and processing and gold But we also need to notice that MB Bank is a joint stock bank operating in money business, credits and other banking services with the initial purpose of serving the needs of military enterprises The following table indicates the shareholders of MB Bank The statistics were collected in June, 2014 Name of share holders Rates Viettel Group 15.0% Vietnam Maritime Commercial Joint Stock Bank (Maritimebank) 9.95% Joint Stock Commercial Bank for foreign trade of Vietnam (Vietcombank) 9.59% Vietnam Helicopter Corporation 4.7% Saigon Newport Corporation 4.27% Others 56.5% Table 1: Main share holders of MB Bank updated in June 2014 During the operation, MB Bank has expanded their scope of business and established as well as invested in several companies as listed in the following table: Name of affiliates Asset management company (MB AMC) Investment and controlling Investment MB Stock company (MBS) Viet R.E.M.A.X company MB Land company Charter Contributed capital capital Rates 882.69 882.69 100% 100 164.5 82.26% 1,200 970.8 80.9% 100 80 80% 653.73 425 65% Unit: Billion VND Table 2: Affiliates of MB Banks updated in December, 2013 1.2 Performance of MB Bank Criteria 2010 2011 2012 2013 (Audited) (Audited) (Audited) (Audited) Total revenue(*) 9,616 15,091 16,687 15,147 Total costs 7,205 11,027 9,170 10,343 Profit before taxes 2,288 2,625 3,090 3,022 Profit after taxes (**) 1,712 2,127 2,306 2,276 Unit: Billion VND Table 3: MB Bank Income statement summary from 2010 to 2013 (*):Included revenue from products and services, revenue from finance and others (**): Deduct profit after taxes of shareholders (if any) Source- cafef.vn The above table summarize the performance MB Bank over the four recent years It can be clearly seen that: The total cost of MB Bank in 2012 underwent a fall from 11,027 to 9,170 billion VND, which is the result of a comprehensive re-structure MB bank recruited less and they recruited sale collaborator rather than official sale man who are paid with low fixed salary and an amount of commission based on the sale revenue they brought As many other banks, MB Bank also cut down the cost of products from to 10 per cent.1 Another outstanding feature from the table we should notice is the decrease in the profit of MB Bank in 2013.2 This could be explained by some main reasons: The first reason came from the fall in revenue causing by the fall in the investment, (profit from stock investment and capital contribution was just over 11 http://www.tinmoi.vn/cac-ngan-hang-cung-phai-tiet-giam-5-10-chi-phi-01773794.html http://kinhdoanh.vnexpress.net/tin-tuc/ebank/ngan-hang/ngan-hang-quan-doi-giam-lai-no-xau-tang-2910541.html - Inform customers about receiving payment requirements under guarantees and commitments to make payments for the guarantee directed by the required payment - If customers not actively make guarantee payment: Extract margin accounts, deposit account or to withdraw money from savings books, valuable papers of customer And / or debit loan accounts of customers with overdue interest rate by 150% for current interest  L/C - Check and handle documents / electric demanding money - Signing Bill of lading / authorization and send documents to the customer: after the customer has completed the payment procedure / debentures sign / accept payment L/C operation - When the loan is claimed by telegram: Get the inspection form documents from the International Transaction Center in the same way as claiming by mails - In case of issuing guarantees of delivery: Transfer documents to International Transaction Center; Print "guarantee of delivery", check, sign and seal in accordance  Debt Collection  Monitoring debt collection by the loans at maturity, including principal, interest and debt charges, notice to the customer on payment of loan are due  The customers will pay for debt by the currency of the loan, otherwise it must be allowed by the Loan Bank and the debt will be converted at the MB Bank exchange rate at the time of repayment 16  Perform the process of debt collection and accounting for loans  Clearance of guarantee commitments  Check the document of clearance requested, consider the approval  Submit the documents with approval of competent authorities to the Transaction Center  L/C Payments / Accept Payment  Accept deferred payment L/C : Prepare the written request to accept payments and send to the Transaction Center ; Print out the debt notice, SWIFT, charge services for VAT invoices delivered to customers  Payment L/C at sight: Transfer documents to the Transaction Center; Disbursements under the credit management profession; Print out the debt notice, SWIFT, charge card bill for service VAT to customers 2.9 Closing the credit documents 2.10 Transferring, controlling, recordkeeping  Make a receipt-delivery note in the delivery and transferring process of file  The recordkeeping complies with current regulations for loan, guarantee, L/C  Duration of implementation of recordkeeping is performed in accordance with the guidance of the State Bank and Director on keeping records and documents Analysis of loan and credit activities 3.1 Credit balance 17 2010 Credit balance at Operation center 2264.1 Percentage of changes credit balance 2011 2012 2013 2905.4 3695.65 4363.9 28.325% 27.199% 18.082% Source: Annual report - Operation Center Unit: Billion VND Table : Total credit balance of Operation Center from 2010 to 2013 As can be seen from the chart (next page) and the above table, the total of loan outstanding in Operation Center of MB Bank increased through out the surveyed period of years from 2010 to 2013 The continual increase derived from some following reasons:  MB Bank is always classified as a bank in group - the group has the highest limit of credit balance increase per year regulated by SBV This regulation brought the advantages to MB Bank to lend out easier  Interest rate policy also facilitate the increase in credit In February, 2012, MB Bank committed to develop some products with attracting interest rates and sympathized with the corporate to get through the difficulties.5 This is the reason why despite of a slight decrease in credit balance speed of Operation Center, this figure was still far higher than the average of the all the banks, which was just about per cent.6 However, the increasing speed in each year underwent different levels depending on different situations In 2013, the credit balance grow rate fell to 18.082 per cent This was the popular trend in banking at that moment and Operation center MB Bank was not an exception As stated in chapter 1, the bad debt in Mb bank systems in 2013 increased http://vneconomy.vn/20120227033034573P0C6/mb-duoc-tang-truong-tin-dung-17-trong-nam-2012.htm http://vneconomy.vn/2012122703142938P0C6/tang-truong-tin-dung-2012-lap-ky-luc-moi.htm 18 to 2.45 percent So instead of increasing credit balance, MB Bank in general and its operation center concentrated on dealing with bad debts and strict the regulations in grating credits Nevertheless, we also need to compare this figure of Operation Center and one of the total system of MB Bank The percentage increase of MB Bank in 2013 is 17.8 per cent, while that of Operation Center is 18.082 per cent 5000 4500 4000 Blillion VND 3500 3000 2500 2000 1500 1000 500 2010 2011 2012 2013 Year Chart 1: Changes in total credit surplus in Operation Center- MB Bank 3.2 Credit structure Besides the changes in credit surplus, we also need to consider the quality of credit granted to the customers And actually, this thing is the most important factor that any bank need to be aware In this part, we will scan the structure of credit in Operation center to see the quality of the credit 3.2.1 Base on customers 19 Criteria 2010 Large enterprises 2012 2013 1540.00 1245.00 1450.00 1650.00 623.56 756.54 1010.40 1433.65 1711.90 650.00 812.00 1002.00 2264.10 2905.40 3695.65 4363.90 SMEs Individual Total credit balance 2011 Source: Annual report - Operation Center Unit: Billion VND Table 5: The Credit based on the customers at Operation Center- MB Bank We should notice that The Operation Center considers the enterprises which have total revenue is over 1,000 billion VND or total asset over 500 billion VND as large enterprises and the others as SMEs In Operation center, large enterprises play an important role in credit structure which included loans, guarantees and many other forms To investigate the structure of credit balance we use the following formula: Percentage of credit balance of each type of customer = Total credit balance of each type customer (table 5) Total credit balance of the year (table 4) Criteria Large enterprises SMEs Individual 2010 2011 2012 2013 52.738% 42.851% 39.235% 37.810% 21.354% 25.908% 34.777% 22.372% 38.793% 21.972% 39.229% 22.961% Table 6: The percentage of credit based on type of customers The most striking feature in the loan structure classified by customers is the increase in the proportion of SMEs loans from 21 per cent to 39 per cent in 2010 and 2013, respectively 20 This might derive from the fact that the need of capital in this sector of the economy in increased dramatically, especially in 2011 And the policy of MB Bank in this period was concentrating on SMEs To be more specifically, in the end of 2012, MB bank claimed that they will prioritize the SMEs customer in granting credit in which they would provide 4,000 billion VND to importing companies, 2,000 billion VND to agricultural and rural development companies and 2,000 billion VND to distributor companies.7 In 2013, the SBV encouraged many banks to promote the capital to restructure SMEs enterprises On the other hand, the proportion of loan balance in large enterprises reduced gradually This can be assumed to the fact that the bad debts in commercial banks among large enterprises (state- owned companies) risen, leading to the reluctance of granting credit to this sector In 2012, the bad debts in large state-owned company in bank grew to 200,000 billion VND in commercial banks In MB Bank, this sector accounted for 55 per cent of total bad debts which was equal to 1140.15 billion VND in the third quarter of 2013, while this figure for Operation center is about 60 per cent at 181.35 billion VND in the whole year 2013 The total MB Bank systems only granted 17,000 billion VND to large state-owned companies and even this sector accounted for a large percentage of credit structure in operation center but it also reduced greatly Another factor also can be explained for this trend is the concentration of large enterprise credit in biggest stateowned commercial banks because the interest rate for medium and long term loans was 11.5 – 12.8 per cent for stated- owned commercial bank, whereas that of Joint stock commercial bank as MB Bank was higher at 12- 13 percent The credit granted for individual customers hovered around the rate of 23 per cent But in 2012, this rate reduced greatly because of the decreasing trend in individual consumption The real estate was frozen The prices of housing was still high so reducing http://vneconomy.vn/20120227033034573P0C6/mb-duoc-tang-truong-tin-dung-17-trong-nam-2012.htm http://www.tinmoi.vn/no-xau-cua-doanh-nghiep-nha-nuoc-len-toi-200000-ty-dong-011060509.html http://www.thesaigontimes.vn/home/taichinh/nganhang/111463/ 21 the interest rate was not enough And the other factor ruling the individual credit balance was the postpone of borrowing to wait another fall in interest rate of the individual customers Even the interest rates offered by MB Bank were just around 13 per cent for consumer loans, which was quite competitive at that moment, the disbursement process was still slow In 2013, with the stimulus package of the government valued 30,000 billion VND the figure for this sector in Operation center gradually recovered to 22.961 per cent 3.2.2 Base on maturity Criteria 2010 Short term 2011 2012 2013 1461.80 1946.45 2654.25 3183.25 Medium term 505.10 582.05 613.15 619.85 Long term 297.20 376.90 428.25 560.80 2264.10 2905.40 3695.65 4363.90 Total Credit Balance Source: Annual report - Operation Center Unit: Billion VND Table 7: Credit basing on the maturity of Operation Center – MB Bank As can be seen, the figure that Operation Center- Mb Bank granted in each maturity grew continually However, we can see the changes in the structure of the total loan outstanding in the next table: Criteria 2010 2011 2012 2013 Short term 64.564% 66.994% 71.821% 72.945% Medium term 22.309% 20.033% 16.591% 14.204% Long term 13.127% 12.972% 11.588% 12.851% Table 8: The structure of credit basing on the maturity of Operation Center – MB Bank in percentage 22 As can be seen from the given table, the short-tern credits accounted for a large percentage of the structure The medium term credits witnessed a decrease from 22.31 per cent to 14.2 percent in the total credit in 2010 and 2013, respectively With the similar trend, the figure for long term also reduced slightly from 13.13 per cent to 12.85 per cent This can be explained by some following reasons:  The medium and long term credits are the most profitable products for the bank, but the risks of maturity are always accompanied with  The demand for long and medium credits mostly comes from the corporations and companies within the economy But in this period, affected by the economy crisis and the too high level of interest rate In 2013, the interest rate for medium and long term loans was 11.5 – 12.8 per cent for stated- owned commercial bank and the that of Joint stock commercial bank as MB Bank was at 12- 13 percent However, the corporations had to face the interest rate higher than that level 1- per cent 10 This leaded to the reluctance of corporations in borrowing capital from banks in general and from MB Bank in particular  Over the period from 2010 to 2013, Bank are reluctant to granting long term credit due to the fact that the increasing of bad debt in each bank  Short term fund accounted for a large percentage of fund mobilization structure of Operation center MB Bank hungered for long term fund but the market just provided short one so they had to concentrate on lending with shorter term to have a balance between short term fund and short term loans to improve the liquidity in the bank Being aware of this requirement, MB Bank and operation center created a policy to concentrate on offering short term loans with attracted annual interest rate at about per cent 10 http://laisuat.vn/tin-tuc/Kho-cho-vay-trung dai-han-7194.aspx 23 Because the bank plays an important role in mobilizing and distributing the capital to develop the economy, and the bank gains their highest profit from granting long and medium term loans, the bank needs to find a way to balance the structure of loans 3.2.3 Base on standard of credit Criteria 2010 Standard Debt 2011 2012 2013 2202.15 2743.30 3475.60 4061.65 Noticeable Debt 31.30 120.20 151.45 194.95 Sub-Prime Debt 6.25 15.30 14.95 32.65 Doubtful Debt 3.55 0.55 21.65 33.70 20.85 26.05 32.00 40.95 2264.10 2905.40 3695.65 4363.90 Potential irrevocable debt Total Credit Balance Source: Annual report - Operation Center Unit: Billion VND Table 9: The quality of debt in Operation Center – MB Bank Criteria 2010 2011 2012 2013 97.264% 94.421% 94.046% 93.074% Noticeable Debt (Group 2) 1.382% 4.137% 4.098% 4.467% Sub-Prime Debt (Group 3) 0.276% 0.527% 0.405% 0.748% Doubtful Debt (Group 4) 0.157% 0.019% 0.586% 0.772% Potential irrevocable debt (Group 5) 0.921% 0.897% 0.866% 0.938% Standard Debt (Group 1) Source: Annual report - Operation Center Table 10: The structure of debt based on the quality of debt in Operation Center – MB Bank 24 We will concentrate on the the debt in group 2,3,4,5 only in this section The most striking feature is the increase of bad debts in the four lower groups And the bad debt in group witnessed the greatest increase and group 2,3, and increased slightly This trend could be explained by some reasons  Firstly, the objective reason is the bad situation of the economy causing some difficulties: production consumption, and investment shrank dramatically and the account receivable of the companies could not be collected The account receivable and the bad debts in the business entities over the period increase rapidly, especially in real estate investment projects So the customers could not pay back the credit And the poor performance of large state – owned companies ,as mentioned in credit structure analysis, also caused the bad debts in Operation center worsen  The subjective reasons : Years before the bad debts had been always under 1.5 per cent in Operation center but we could not this figure had been measured precisely They might make this up this number to reduce the bad debt provision and increase the profit This fact leads to the accumulative bad debts through period and when the bank faced the difficult situation in economy and the credit restriction of SBV, the real situation presented  But the most important reason is the lack of control in granting credits and loans Additionally, the lack of of transparency and the group benefit in stock market (suppressing the bad debts to make the performance of the bank more “beautiful” , moral hazard also contributed to this problem) 25 CHAPTER 3: RECOMMENDATIONS Evaluation the performance 1.1 Achievements Over the period of establishment and development, MB Bank Operation center is recognized as the best performance braches of all branches in MB Bank system with over VND 35,000 billion in total asset (Accounting for 19 per cent of total asset of MB Bank) top and top of all branches which have the highest surplus in credit and fund mobilization The loan outstanding of Operation Center often accounts for percent in the total loan outstanding of MB Bank The quality of credit granting is judged as one of the best ones in total system Operation center also has an advantages which is a large number of loyal customers especially big enterprises and individuals 1.2 Drawbacks In spite of achievements, credit balance is relatively high and still focus too much on short-term loans, fails to encourage business to borrow long and medium term investment At MB Bank Operation Center, the process of granting credit is very careful, but sometimes it is too long to complete Compared to other banks, the process of MB Bank comprised ten steps Besides the drawback above, we also can see that the debts which have been not standard is increasing Although this figure is still in control and smaller than the average, we should not be over confident The trend of this figure puts us into comprehensive consideration 26 Solutions  Recommendations for increasing the medium and long term credits granting The operation Center also should strive to increase the proportion of long term loans in the structure, which can be seen as the more profitable way to the bank To boost up the percentage of safe long term loans the Operation Center and MB Bank in general should try to implement some following solutions:  Operation center need to attract more stable long- term fund There are two things that MB Bank should to mobilize these fund is offering attractive interest rates and creating the belief in the customers depositing their fund in bank But these interest rates should be set at suitable level unless the cost to provide credit will be higher  Offer suitable loan interest rates and interest rate schedules for corporate which need long term capital to invest  Simplify the procedure MB Bank and Operation Center can skip some steps for some particular objects For example, for those who want to have new credit limit , should be prioritized in the step of re- valuation And to valuate the risk, the officers in MB Bank have to check and submit the documents and their valuation reports to departments (Customer department, Risk management department, Credit council in Head office), which is very timeconsuming MB Bank can set a specific level of value of loan or specific customers that not need to be checked to all three departments Or they also can allocate the power to decide grant credit with a department with a specific product MB bank also should try to increase the speed of disbursement  Recommendations for credit risk control As stated in chapter and chapter 2, the bad debt tends to increase and to ensure the quality of loans, I would like to recommend some solutions related to risk measurement  Dealing with bad debts: 27 MB Bank and the operation center can sell the bad debt to asset management company (MB Bank is the owner of Asset management company – Military Bank (MBAMC) The Bank needs to have a suitable salary and merit policy This policy can help the bank to cut the cost and support the bad debt provisions  Increase the transparency in bad debts, provisions As mentioned before, one of the reason of increasing bad debt is the suppressing information leading to lack of provisions To improve the situation MB Bank and Operation Center need to be transparent in their bad debt statistics and comply with the provision regulation of SBV  In the long term, MB Bank can improve their credit risk measurement : - The Architecture of internal rating system MB Bank Operation Center should ensure that the internal rating system commensurate with the size, nature and complexity of their business as well as possess flexibility to accommodate present and future risk profile of the bank, the anticipated level of diversification and sophistication in lending activities A rating system with large number of grades on rating scale becomes more expensive due to the fact that the cost of obtaining and analyzing additional information for fine gradation increase sharply However, it is important that there should be sufficient gradations to permit accurate characterization of the under lying risk profile of a loan or a portfolio of loans - The operating Design of Rating System At MB Bank Operation Center risk ratings should be assigned at the inception of lending, and updated at least annually MB Bank Operation Center should, however, review ratings as and when adverse events occur As part of portfolio monitoring, institutions should generate reports on credit exposure by risk grade Adequate trend and migration analysis should also be conducted to identify any deterioration in credit quality MB Bank Operation Center should establish limits for risk grades to highlight concentration in particular rating bands 28 CONCLUSION Bank credit is capital channel, meets the capital needs, and plays an important role in performing socio-economic goals of the country Particularly, bank credit is becoming essential in the integration and development process of Vietnam In the trend of development of the economy, the majority of businesses require capital supported from banks and income from credit activities still accounts for a large proportion of the total profits of the banks This puts banks in growth opportunities, but also potentially risky if the credit portfolio quality is not carefully evaluated, therefore it could be recollected Therefore, improving credit quality is not only an urgent requirement of Operation Center - MB Bank, but also of all commercial bank in Vietnam today With the goal of giving solutions to improve the credit quality in MB Bank, the content focused on some tasks:  Analysis of the current situation in the credit quality of Operation Center - MB Bank, see the positive side to continue to develop and objectively look at the causes and limitations of this center  Provide several suggested solutions to improve the efficiency of loans and credit activities at Operation Center - MB Bank 29 REFERENCES Peter S Rose, 2002, Commercial Bank Management, McGraw-Hill Higher Education, A Division of the McGraw-Hill Companies Nguyen Van Tien, 2005, Evaluation and prevention of credit risk in banking, Thong Ke publisher Decision No 439/2005/QĐ-NHNN of the State Bank promulgating the Regulation on debt classification, extracting for setting up and use of the reserve fund for settling credit risks of banking activities of credit institutions Decision No 18/2007/QD-NHNN of State Bank dated April 25, 2007, on amendment and addition to a number of articles of the regulations on classification of debts, and establishment and use of reserves to deal with credit risk in banking operations by credit institutions, issued with Decision No.493-2005/QD – NHNN of the State Bank Annual reports of MB Bank Annual reports 2010-2011- 2012-2013 of MB Bank Operation Center Websites:  http://s.cafef.vn/hose/MBB-ngan-hang-thuong-mai-co-phan-quan-doi.chn  https://www.mbbank.com.vn/eng/Pages/default.aspx  http://laisuat.vn/tin-tuc/Kho-cho-vay-trung dai-han-7194.aspx  http://cafef.vn/tai-chinh-ngan-hang/ngan-hang-quan-doi-lai-2278-ty-dong-trong-nam2013-no-xau-tang-gap-ruoi-2014021422392983010ca34.chn  http://www.tinmoi.vn/cac-ngan-hang-cung-phai-tiet-giam-5-10-chi-phi-01773794.html  http://kinhdoanh.vnexpress.net/tin-tuc/ebank/ngan-hang/ngan-hang-quan-doi-giam-lai-noxau-tang-2910541.html  http://www.baomoi.com/Ngan-hang-nao-dang-no-xau-nhieu-nhat/126/13185897.epi  http://vneconomy.vn/20120227033034573P0C6/mb-duoc-tang-truong-tin-dung-17-trongnam-2012.htm  http://vneconomy.vn/2012122703142938P0C6/tang-truong-tin-dung-2012-lap-ky-lucmoi.htm  http://www.tinmoi.vn/no-xau-cua-doanh-nghiep-nha-nuoc-len-toi-200000-ty-dong011060509.html  http://www.thesaigontimes.vn/home/taichinh/nganhang/111463/ 30 ... chosen the research "Status of loan and credit granting activities in operation center – military commercial joint stock bank? ?? The research divided into main chapters, apart from the preface and. .. 5-week internship in CIB Department – Operation Center – The Military Commercial Joint- Stock Bank and the knowledge acquired during studying in Finance and Banking Faculty – Foreign Trade University,... improve the efficiency of loans and credits activities Operation Center LIST OF ABBREVIATIONS Order Abbreviation Meaning MB Bank The Military Commercial Joint- Stock Bank CIC Credit Information Center