LV Thạc sỹ_Improving SME credit quality at Lienvietposbank hanoi

NATIONAL ECONOMICS UNIVERSITY ADVANCED EDUCATIONAL PROGRAM BACHELOR’S THESIS IN FINANCE IMPROVING SME CREDIT QUALITY AT LIENVIETPOSTBANK HANOI ACKNOWLEDGEMENTS Apart from the efforts of me, the accomplishment of this thesis depends greatly on the supports of many others This is a great opportunity for me to express my gratitude to the people who have played important parts in the completion of this thesis First and foremost, I would like to send my sincere thanks to all professors in Advanced Program whose valuable lectures had been a source of inspiration for me Especially, I want to show my great appreciation to Dr…, my supervisor, for her precious suggestions and guidance This thesis would not have been possible without her supports I also want to convey thanks to all Advanced Program’s managers who have always provided me with helpful information and tried their best to support me in many ways Besides, I wish to express my deep sense of gratitude to Ms…, the manager of Accounting and Finance Department of LienVietPostBank head office as well as all other members of this department for their enthusiastic guidance and helpful advice during my internship at the bank Not only did they provide me necessary data to complete this thesis but they also helped me obtain my very first practical working experiences Finally, yet importantly, I am forever indebted to my beloved parents and best friends, who have always been there for me, encouraged me, and loved me unconditionally TABLE OF CONTENTS ACKNOWLEDGEMENTS TABLES OF CONTENTS ABBREVIATION LIST OF TABLES LIST OF FIGURES CHAPTER I: INTRODUCTION 1.1 Rationale 1.4 Research methodology 1.5 Research objects and scope 1.6 Research structure CHAPTER II: THEORETICAL FRAMEWORK ON SME CREDIT QUALITY OF COMMERCIAL BANKS .4 2.1 Overview of SME credit of commercial banks 2.1.1 SMEs 2.1.2 SME credit 2.2 SME credit quality of commercial banks 13 2.2.1 The concept of credit quality 13 2.2.2 Measurements of SME credit quality 13 2.3 Factors affecting credit quality 16 CHAPTER III: THE FACTS OF SME CREDIT QUALITY AT LIENVIETPOSTBANK HANOI 23 3.1 LienVietPostBank at a glance 23 3.1.1 History and development 23 3.1.2 Mission and vision 25 3.1.3 Main duties and functions 26 3.1.4 Organizational structure 26 3.1.5 Operational results of LienVietPostBank Hanoi from 2009 to 2011 .28 3.1.6 General evaluation of LienVietPostBank’s operation .36 3.2 The facts of SME credit quality at LienVietPostBank Hanoi 38 3.2.1 The growth of SME credit 38 3.2.2 The safety of SME credit 41 3.2.3 The profitability of SME credit 44 3.3 Assessment of SME credit quality at LienVietPostBank Hanoi 44 3.3.1 Achievements 44 3.3.2 Limitations and reasons 46 CHAPTER IV: RECOMMENDATIONS AND CONCLUSION .50 4.1 Orientation to enhance SME credit quality at LienVietPostBank Hanoi 50 4.1.1 General orientation 50 4.1.2 Orientation of 2012 50 4.2 Recommendations to LienVietPostBank Hanoi .51 4.3 Other recommendations 57 4.3.1 Recommendations to LienVietPostBank Headquarter 57 4.3.2 Recommendations to the SBV .58 4.3.3 Recommendations to other related agencies 58 58 CONCLUSION .59 REFERENCES ABBREVIATION AAGR Average Annual Growth Rate CIC Credit Information Center SBV State Bank of Vietnam LienVietPostBank Lien Viet Post Joint-stock Commercial Bank LienVietPostBank Hanoi Lien Viet Post Joint-stock Commercial Bank – Hanoi Branch SME Small and Medium Enterprise VINASME Vietnam Association of Small and Medium Enterprises LIST OF TABLES LIST OF FIGURES CHAPTER I: INTRODUCTION 1.1 Rationale Nowadays, small and medium enterprises play a significant role in the economic development of all countries in the world, including both developed and developing countries According to the newest statistics, there are more than 500,000 of SMEs comprising about 98% of the total number of enterprises in Vietnam SMEs contributed over 40% of Vietnam GDP, and also provide about 50% of the total rural and urban employment and as such they play an important role in releasing the employment pressure and maintaining social stability.1 Vietnam economy is in the process of industrialization and modernization, so the development of SMEs is extremely necessary However, in order to create favorable conditions that facilitate the development and expansion of SMEs, Vietnam encounters a large number of urgent issues, including raising capital for SMEs The renewal of the economy has strong influences on the banking system Among activities that commercial banks operate, credit activity is considered the key activity that provides capital for the development of the economy, as well as generates profits for the banks Credit quality which determines the success or failure of each commercial bank is the first concern of all banking managers As a senior student pursuing major in banking – finance, I have taken a two-month internship program at LienVietPostBank Hanoi branch Since LienVietPostBank is one of the most reputable banks in Vietnam, the internship position has offered me a great opportunity to work in a professional banking environment and have a clearer picture of how a commercial bank operates; especially, I have a chance to learn more about credit activities and witness the current major issues of SME credit quality HTH, Thuong mai dien tu, http://www.taichinhdientu.vn/Home/Thuong-mai-dien-tu-Khong-so-thieu-cong-nghechi-so-thieu-niem-tin/20111/105655.dfis (Jan 2011) Considering these factors, I decided to go with the research: “Solutions to enhance the credit quality to small and medium enterprises at LienVietPostBank Hanoi Branch”, hoping that I can contribute ideas in my scope of knowledge to resolve the problems which LienVietPostBank Hanoi has to deal with 1.2 Research questions The research aims to answer these following questions:  What is SME credit quality and what are criteria to evaluate credit quality of SMEs?  What is the real situation of SME credit quality at LienVietPostBank Hanoi?  What recommendations can be raised to enhance SME credit quality at LienVietPostBank Hanoi? 1.3 Research objectives  Studying the basic theoretical issues on SME credit quality of commercial banks in the market economy  Assessing the business results of LienVietPostBank Hanoi, especially the SME credit quality in 2009-2011 based on basic financial criteria  Basing on the real situation to suggest some feasible solutions and recommendations to improve the credit quality at LienVietPostBank Hanoi 1.4 Research methodology  Collecting primary data from interviews with LienVietPostBank’s staffs and secondary data from the internet, books, newspapers, other researches, and LienVietPostBank Hanoi annual reports  Applying both quantitative and qualitative methods, logical and comparative method to analyze data and draw conclusions 1.5 Research objects and scope  Objects: The situation of SME credit quality of commercial banks  Scope: SME credit quality at LienVietPostBank Hanoi in the period 2009-2011 1.6 Research structure Based on research objectives, this thesis is divided into four main chapters which are:  Chapter I: Introduction  Chapter II: Theoretical framework on SME credit quality of commercial banks  Chapter III: The facts of SME credit quality at LienVietPostBank Hanoi  Chapter IV: Recommendations and conclusion 50 CHAPTER IV: RECOMMENDATIONS AND CONCLUSION 4.1 Orientation to enhance SME credit quality at LienVietPostBank Hanoi 4.1.1 General orientation LienVietPostBank Hanoi branch is implementing a comprehensive transforming program in the period of 2011-2014, aiming to the common goal of all branches in LienVietPostBank system which is making LienVietPostBank become “the best bank and leading enterprise" in 2015 The mission of the branch at this stage is to expand and develop banking activities to become a multifunctional commercial bank branch with economic criteria matching the regulations and general orientations of the whole banking industry Some main specific development orientations for LienVietPostBank branch from now to the end of 2013 is: • Bettering credit performance in both scale and quality of credit services Concentrating on developing medium, long-term loans, then exploiting profit from shortterm loans; at the same time providing other related service packages • Expanding depositing customers, and restructuring groups of customers, types of deposits that are suitable with each type of customers, with a view of fostering the efficiency of fund mobilizing activity and increasing the relative stability of mobilized funds • Make use of modern technology to provide customers with high quality products, creating differences and reputation of the branch 4.1.2 Orientation of 2012 • Continuing to consolidate and strengthen the branch into a modern, dynamic, highly competitive bank in the area, developing the model of multifunctional banks with highly diversified and high-quality products and services, contributing in hightening the position of Techcombank in the market 51 • Improving all shortcomings and limitations in activities of the branch, eliminating adverse impacts on banking activities • Effectively and effeciently searching for new customers and large projects to expand the branch’s relationships with customers; focusing on products and services for retailed customers, quickly occupying the market, increasing retailed market shares in the area, making this become the basis for the growth of short-term credit and development of services • Restructuring customer system, limiting relations with risky customers who are in weak financial situation, focusing on individual customers, non-state enterprises, joint stock companies, limited liability companies, and SMEs • Improving the efficiency in operation of transaction offices under control of the branch, developing the network of trading offices in the area Expanding the network to potential areas such as highly populated areas, new urban areas • Upgrading the facilities of all sub-branches to match with common standards and requirements 4.2 Recommendations to LienVietPostBank Hanoi With a lot of favorable conditions in geography, natural and human resources, SMEs in the east of Hanoi have the capability to develop, contributing more to the economy of the whole city To doing this, they need capital resources so as to operate activities and expand production However, in previous years, despite many attempts, the bank can not satisfy all capital requirements from enterprises, especially non-stated SMEs While banks in the area competitively focusing on stated-own enterprises as the target market, the potential market of non-stated enterprises is left neglected Finance supporting activities of banks for SMEs still not fully takes their maximum effect Behind the success are controversial issues that need to be overcome and resolved Standing in front of the branch’s real situation, during my internship period I would like to recommend some solutions to the branch’s current obstacles in order to promote not only the total oustanding loan of banks but also the development of SMEs in the area 52 a/ Improving marketing policies, especially toward corporate customers LienVietPostBank Hanoi branch has already had a rather reasonable customer policies; however, there are still some unresolved shortcomings such as problems of interest rates, loan terms etc To complete and improve the credit quality in the near future, the branch needs to focus on building a really flexible customer policies - Studying customers’ demand: understanding customers’s psychology and satisfying their needs The bank has to answer accurately and satisfactorily these questions: how much capital customers need for carrying businesses and investing, which type of loan is the most suitable with each customer, what benefits customers can earn when using the bank’s capital, etc However, in reality sometimes there are conflicts between customers and the bank’s benefits In that circumstance, the bank have to settle conflicts in a reasonable way which can ensure the profits of both parties Satisfying customers’ needs is an important step in building a flexible customer strategy in order to attract a large number of good borrowers - Creating good methods to attracting new potential customers as well as maintaining sustainable relationships with reputable customers who has done a lot of transactions with the bank Creating attractive product and service packages, at the same time actively looking for effective customers are very important activities to ensure a safe, rapid and sustainable credit growth Especially, while SMEs with small scale and financial limitations cannot mobilize funds from the securities market, the bank should actively make contacts with SMEs who can utilize their capital efficiently, because SMEs are the formation of large enterprises and corporations in the future - Diversifying customers: lending more to non-stated enterprises, including mostly SMEs This is suitable and necessary with Vietnam’s economic conditions when stateowned enterprises show limitation in business results, in contrast developing SMEs can operate efficiently - Building an attractive product system: In the increasingly competitive market, bank services are mostly identical and easy to be duplicated; therefore, if the bank wants to 53 attract customers, it must have strategies to distinguish itself from others Along with enhancing credit quality, the bank must continuously renew its products and services, have apealing product strategies to show customers the benefits they would get when using the bank’s new services b/ Improving the implementation of credit policies for SMEs SMEs is the type of enterprises which is being encourage to develop in the economy In fact, they SMEs account for the largest proportion in GDP and labor force As a result, applying preferential credit policies with appropriate interest rate is a necessary solution The bank can create various interest rates and duration for the same loan amount, depending on different customers; subsidy interest rate for loyal customers who have a good reputation with the banks in loan repayment SMEs have a very high demand of capital with many different loan terms; the bank can base on this to offer different interest rate levels which are suitable with customers’ wishes and their financial capability, simultaneously ensuring profits for the bank c/ Offering various types of credit products There is a large number of SMEs and they belong to many different business sectors and have different scales and resources leading to their different demands for the amount of capital, loan terms, repayment schedules As a result, the bank have to offer various types of bank credit so as to satify a wide range of customers, increasing the number of customers as well as the credit amount The branch should create favorable conditions for SMEs to access to medium and long-terms loans, helping them to invest in fixed assets, modern technology equipment to improve their competitiveness in the market The bank can also offer SMEs with multiple repayment schedules depending on their financial capacity d/ Enhancing the execution ofcredit procedures - Collateral evaluation In order to improve the branch’s credit quality, a necessary task is to improve the branch’s evaluation system To so, LPB Hanoi needs to create a standard manual for 54 bank’ collateral evaluations, strengthening their own expertise to ensure the objectivity and fairness of collateral evaluations Except for cases in which the branch cannot make reliable evaluations with reliable market data such as the market prices of assets, it will be encouraged to ask outside appraisers to conduct the evaluation - Credit appraisal Credit appraisal is the essential part of determinning the eligibility of loans, an vital element affecting lending decisions and the effeciency of capital utilization If the process of credit appraisal does not receive enough attention, the possibility of credit risks will definitely be higher Credit appraisals are very complexed and difficult because they often depends on more than just numbers They depend on the appraiser’s understanding and beliefs about the risk to the bank and ability of the borrowing organization to pay back the loan Good lenders understand the challenges of making accurate credit appraisals and embrace the knowledge, skills and motivation that they need to make good credit decisions28 e/ Enhancing fund mobilization activity LienVietPostBank Hanoi branch is located in a large and populous area with a lot of economic growth potential, so there is a large amount of idle capital from the population Meanwhile, the bank’s financial capacity is not sufficient for the capital demand from enterprises Fund mobilization activities also contributed significantly in supporting capital to SMEs It should be paid more attention to, expecially stable long-term fund Beside the solutions which the branch has done to strengthen capital mobilization activities, some other methods should also be considered • Diversifying types of deposits, improving depodit and withdraw procedures and sent, training the branch’s staff to have proper, polite and enthusiastic serving manners to customers • Expanding the network of capital mobilization throughout the city in order to easily access to a large amount of customers 28 Credit appraisal determines your loan eligibility, http://articles.economictimes.indiatimes.com/2010-1107/news/27573337_1_loan-eligibility-credit-appraisal-borrower (2010) 55 • Implementing multiple forms of capital mobilization, focusing forms with stable interest rates, such as certificates of deposit, promissory notes, bonds; offering various ways of withdrawal which is the most convenient to different customers • Having competitive flexible interest rates, actively catching upp with changes in the interest rate market in order to offer customers with an appropriate interest rate, and give advice to customers, setting up closer relationships with customers • Expanding the banking network, establishing some new sub-branches and upgrading transaction offices What needs to be done is collecting information about the branch’s market segment, potential customers and their income, demand, the advantages of competitors and so on Based on that, the branch will be able to reasonably distribute its transaction across the area, allowing customers to use the branch’s services in much more easy and convenient ways • Applying attractive promotion policy for customers who have deposited a large amount of money in the bank, encouraging them to make long-term deposits by offering attractive interst rates • Apart applying propaganda campaigns to promote new services, the bank can allow transactions which take place outside the office hours or in weekends to attract more deposits from customers • Applying modern technologies in business operations, simultaneously enhancing the technical skills of banking officers to avoid wasting investment capital, particularly in application of information technology Taking advantage of suppoting capital from other financial institutions to extending credit to SMEs with preferential interest rate and other favorable conditions f/ Bettering investment consultancy to customer The problem is that the government and the bank already have various programs to support SMEs, but such programs are not well known to SMEs so they are not fully utilized In fact, there has been no intergrated information system to provide SMEs with information about supportive programs Meanwhile, the bank with relationships with customers belong to many industry sectors and professional information collectors and 56 analysists can provide SMEs with necessary information In this situation, the bank is recommended to launch a portal site to support SMEs This kind of website with a userfriendly interface will provide SMEs with an intergrated and tailored search function on overall SME-related information, helping them to reduce production costs and other expenses and to avoid unreliable information Besides, the branch should broaden consultancy services to SMEs Advisory does not only stop at explaining regulations and procedures to customers; it also includes considering the project efficiency with customers, helping customers setting up business plans One weakness of SMEs is building feasible projects; moreover, most of SMEs not have the habit of using professional consultancy services Some issues needed to be consulted include information technology, market’s preferences, investment portfolio structure, organizational management, and long-term efficiency g/ Promoting interest rate subsidies on loans to SMEs The global financial crisis in the pass few years had serious impacts to the survival and the business situation of enterprises, especially SMEs SMEs with small amount of capital were subjected to high production costs and high interest rates on bank loans during inflation, but when bank interest rate droped SMEs only had low demand for loans due to lacking investment projects, leading to the delay in production and higher unemployment rate of the economy To recover the economy, in 2009 and following years, the government has offered many economic stimulus packages including interest rate subsidies on loans to SMEs so as to help SMEs overcome difficult period and continue to expand production h/ Enhancing the quality of recruiting and training processes, improving credit officers’ competence As mentioned earlier, credit offiers’ competence plays a vital role in the bank’s credit quality, so bank should pay more attention to human resource management by implementing effective crecruiting and training processes in order to hire the best employees working for the bank Not only must they have professtional knowlede on 57 banking and finance sector, they also need to have knowledge on many other industry sectors as well as soft skills such as communication skill, presentation skill, persuation skill and so on - The recruitment process should consist of several rounds to test applicants’ abilities such as paper test, IQ test, teamwork, interview with the bank’s managers - Appointing excellent officers to attend training courses in foreign countries - Having attractive reward and recognition policies to encourage employees to make dedications to their works, encouraging them to study to get higher qualifications - Disseminating regulations and policies of the government and the bank to each credit officer - Regularly holding workshops and contests so that loan officers can discuss and compete with each other and gain more experiences; workshops are great chances for loan officers to promote their ideas and solutions to improve the credit quality as well as the performance of other banking activities - Regularly creating exams to encourage credit offiers’s ability of self-study 4.3 Other recommendations 4.3.1 Recommendations to LienVietPostBank Headquarter - Creating a suitable, flexible, and consistent marketing strategies - Providing the bank’s staffs with competitive treatment policies including appropriate salaries and award – punishment policies in order to recognize the contribution of the bank’s staffs as well as encourage them to dedicate their efforts to the bank’s development - Organizing workshops and training programs so that bank officers from different branches can participate, exchange their experiences and improve their technical knowledge as well as professional ethics - Regularly send officers to branches and transaction offices to supervise, ensuring credit procedures and credit policies are implemented efficiently, simultaneously collecting feedbacks from branches’ managers and other employees 58 4.3.2 Recommendations to the SBV - Issuing clear and consistent policies and regulations relating to administrative procedures in commercial bank’ operation, credit forms, interest rates, collateral evaluation criteria and so on, with the view of facilitating the development of banking activities - Improving the quantity and quality of credit information in CIC, creating close relationships with commercial banks, VINASME, and other organizations and institutions in order to have various sources of information 4.3.3 Recommendations to other related agencies Recommendation toward VINASME: - Conducting analysis, evaluation and classification of enterprises in the association so that banks can have appropriate supporting policies to each customer group - Complying with the agreements with banks, enhancing the effectiveness of the collaboration between the association and the banks 59 CONCLUSION Although LienVietPostBank has participated in the system of commercial banks in Vietnam for a short period of time, its contributions and achievements are remarkable and undeniable Through a lot of ups and downs in the development history of the bank, lending activities have been continuously expanded, supplying a large amount of investment capital to SMEs However, there are still some issues needed to be concerned if the bank wants to improve its credit quality Depending on this situation, this research has done the followings: Firstly, the research has systemized and clarified some basic issues related to SME credit quality, including: the concept and roles of bank credit, the criteria to measure credit quality, the importance of credit quality in the process of economic development Secondly, the research has analyzed the business results of LienVietPostBank’s operations, especially the real situation of LienVietPostBank Hanoi’s credit activities to SMEs, withdrawing the achievements and limitations of LienVietPostBank Hanoi and the reasons for these issues Thirdly, based on theoretical framework and actual situation, the rearch has proposed some solutions aiming to strengthen credit activities as well as heightening the SME credit quality of LienVietPostBank Hanoi Because of time and knowledge limitations, mistakes and shortcomings are unavoidable All comments are appreciated so that I can compete and enhance my thesis Last but not least, I would like to send many thanks to my supervisor Ph.D and my instructor at LienVietPostBank for their enthusiastic support 60 REFERENCE Vietnamese: Phan Thi Thu Ha, Commercial Bank Management National Economics University pulisher, Hanoi (2007), Phan Thi Cuc, Bank Credit Statistics Pulisher, Hanoi (2008) Development orientations for small and medium enterprises in Vietnam National Politics Pulisher, Hanoi (2008) Dinh Duc Thinh and Pham Hong Yen, Bank Accounting, Banking Academy Pulisher (2011) LienVietPostBank Credit Manual Lien Viet Post Joint-stock Commercial Bank Annual Reports from 2009 to 2011 Lien Viet Post Joint-stock Commercial Bank – Hanoi Branch Balance sheets and financial statements from 2009 to 2011 Decision No.493/2005/QD-NHNN dated April 22, 2001 by the SBV on the loan classification, provision for credit losses calculation and utilization to settle credit risk in the bank’s operation Decision No.18/2007/QD-NHNN dated April 25, 2007 by the SBV on amendment of and addition to a number of articles of the Regulations on classification of debts, and establishment and use of reserves to deal with credit risks in banking operations by credit institutions, issued with Decision 493/2005/QD-NHNN of the SBV dated April 22, 2005 10 Circular No.15/2010/TT-NHNN dated June 16, 2010 by the SBV 11 Decree No.90/2001/ND-CP dated November 23, 2001 of the Goverment on support for development of SMEs, Article 12 Decree No.56/2009/ND-CP dated June 30, 2009 of the Government on 13 14 15 16 17 assistance to the development of SMEs, Chapter I, Article Vietnam Law on Credit Institutions 2010, Chapter I, Article Vietnam Law on Credit Institutions 2010, Chapter IV, Section 2, Article 98 Decisions of LienVietPostBank’s Board of Directors Nguyen Viet Long, Performance and obstacles of SMEs in Viet Nam (2011) Pham Ngoc Quang, Solutions to improve credit quality of commercial banks (2011) English: 18 Edmund Malesky, Dinh Tuan Minh, To Trung Thanh, Nguyen Duc Thanh, The effects of interest rate subsidy policies on the operation of enterprises (2010) 19 Peter S Rose & Sylvia C Hudgins, Bank Management & Financial Services (2008) 20 Peter Raynard and Maya Forstater, Implications for Small and Medium Enterprises in Developing Countries (2002) 21 OECD, Promoting SMEs for Development (2004) 22 Bashir Ahmad Fida, The Importance of SMEs in Economic Development (2008) 23 Nigel Rusby & Stephen Gildert, Origination for SME Lending – Management of high volume, low ticket value lending (2007) Website: • HTH, Thuong mai dien tu, http://www.taichinhdientu.vn/Home/Thuong-mai-dien-tu-Khong-so-thieu-congnghe-chi-so-thieu-niem-tin/20111/105655.dfis (Jan 2011) • China – Vietnam SME Trade Exchange and Cooperation Seminar, Beijing 2010, The development of SMEs in Vietnam, http://businessinsides.com/development-vietnam-small-medium-enterprises.html • Nguyen Minh Kieu Ph.D, Credit procedure of commercial banks, http://www.saga.vn/Taichinh/Thitruong/Nganhang/12258.saga (2008) • Credit Information Center – State Bank of Vietnam website, http://www.cic.net.vn/ • PESTLE analysis, http://www.marketingminefield.co.uk/pestle-analysis/ • LienVietPostBank official website, http://www.lienvietpostbank.com.vn/en/about/introduction/content/about-us-111111 • VNPost invests in LienVietBank, http://www.vnpt.com.vn/en/News/NewsEvents/View/tabid/219/newsid/13825/seo/VN Post-invests-in-LienVietBank/Default.aspx (2011) • Vietinbank, http://www.baomoi.com/VietinBank-9-thang-ty-le-no-xau-thap-hon-nhieu-so-binhquan-nganh/126/7252673.epi (2011) • Credit appraisal determines your loan eligibility, http://articles.economictimes.indiatimes.com/2010-11-07/news/27573337_1_loaneligibility-credit-appraisal-borrower (2010) THESIS ASSESSMENT Signature of supervisor ... questions:  What is SME credit quality and what are criteria to evaluate credit quality of SMEs?  What is the real situation of SME credit quality at LienVietPostBank Hanoi?  What recommendations... of credit quality 13 2.2.2 Measurements of SME credit quality 13 2.3 Factors affecting credit quality 16 CHAPTER III: THE FACTS OF SME CREDIT QUALITY AT LIENVIETPOSTBANK... facts of SME credit quality at LienVietPostBank Hanoi 38 3.2.1 The growth of SME credit 38 3.2.2 The safety of SME credit 41 3.2.3 The profitability of SME credit