LV Thạc sỹ_Imporving short term loan quality at Agribank north hanoi branch

NATIONAL ECONOMIC UNIVERSITY BUSINESS SCHOOL Topic: IMPROVING SHORT – TERM LOAN QUALITY AT AGRIBANK NORTH HANOI BRANCH Bachelor of Business Administration in English (E-BBA) Thesis TABLE OF CONTENTS ACKNOWLEDGEMENT EXECUTIVE SUMMARY LIST OF TABLE LIST OF FIGURES .4 INTRODUCTION Rationale Research objective .5 Research methodology Research subject and scope Thesis structure CHAPTER I: OVERVIEW OF SHORT – TERM LOAN OF COMMERCIAL BANKS 1.1 Definition and basic activities of commercial bank 1.1.1 Definition .7 1.1.2 Basic activities of commercial banks .7 1.2 Short-term credit activity 1.2.1 Short-term fund and demand for short-term fund of companies 1.2.2 Feature of short-term loan 1.2.3 Forms of short-term loan .10 1.2.4 Short-term loan procedure 13 1.3 Short-term loan quality 14 1.3.1 Criteria to evaluate short-term loan quality 14 1.3.2 Factors that affect quality of short-term loan .17 CHAPTER II: ACTUAL CREDIT PERFORMANCE ON AGRIBANK NORTH HANOI BRANCH 19 2.1 An overview Agribank 19 2.2 Agribank North Hanoi branch 21 2.3 Comment about short-term loan activity at Agribank North Hanoi branch: 30 2.3.1 Achievements .30 2.3.2 Weaknesses and reasons: .31 CHAPTER III: SOLUTIONS TO IMPROVE THE SHORT – TERM LOAN QUALITY AT AGRIBANK NORTH HANOI BRANCH 33 3.1 Orientation of Agribank North Hanoi about credit activity and increasing credit quality: 33 3.1.1 Orientation of Agribank North Hanoi about credit activity 33 3.1.2 Orientation of Agribank North Hanoi about increasing credit quality 33 3.2 Solutions to improve the short-term loan quality at Agribank North Hanoi branch 34 3.2.1 Diversify short-term loan .34 3.2.2 Increase quality of collecting information process and analyzing process: 34 3.2.3 Restructuring outstanding loan: 35 3.2.4 Lending 35 3.2.5 Debt recovering 36 3.2.6 Increase quality of service and employee training .36 3.3 Recommendations 36 3.3.1 Recommendations for Agribank North Hanoi branch: 36 3.3.2 Recommendations for State Bank of Vietnam .38 3.3.3 Recommendations for customer: 38 CONCLUSION 39 REFERENCES 40 ACKNOWLEDGEMENT First, I want to express my thanks to the faculty members of the EBBA program at the Business School of National Economics University, the place that have given me valuable knowledge to complete years of university Especially, I would like to thank my supervisor Mrs Le Thi Bich Ngoc, Ph.D Her guidance and recommendation has helped me a lot in finishing this thesis With her instruction, I have completed my thesis more Last but not least, I want to thank all my family members include my year old nephew, for helping and encouraging me for 22 years EXECUTIVE SUMMARY In recent years, the worldwide baking industry has been sour and Vietnam’s is not an exception The bad results of long-term and mid-term loan has started reflecting in the financial report which cause high bad debt rate for many banks, the bad debt rate in the banking industry is 8.6% to 10% of total outstanding loan which equal to 2.5 – 2.8 million billion VND As a result, bad debt rate of banks has been a hot topic of society and concerned by many people Agribank has also met difficulties in last year when their bad debt rate was 3.8% - 3.9% Therefore credit activity of banks has met more challenges and their duty is raising credit quality This research will give a theoretical overview of commercial banks and evaluate real situation of Agribank North Hanoi branch Based on this evaluation, I will identify strengths and weaknesses of credit activity After analyzing actual business of Agribank North Hanoi branch, I have found out that one of their weaknesses is short-term loan quality In 2010, the bad debt rate was only 2.39% which is below 3% and accepted by State Bank of Vietnam However, short-term loan bad debt accounted for more than 70% of total bad debt and it is a hot issue that the branch has to solve immediately Based on the causes that the research has found out, I will suggest some solutions to improve the short-term loan quality of Agribank North Hanoi branch To analyze the actual credit performance of Agribank North Hanoi branch, I will base on their financial report in years 2009, 2010, some standards in the banking industry and other sources of information The research is aimed to complete following objectives: - Reviewing theoretical background on commercial banks and their business or product as well - Analyzing current performance of credit activity of Agribank North Hanoi branch to find out their problems - Identifying the reasons and causes for their problems - Giving some solutions and recommendations to solve the problem My research has found out some key weaknesses of Agribank North Hanoi branch: - Low short-term loan quality - Not effective credit procedure Based on the research findings, the solutions for weak points that I mentioned above are: - Diversify short-term loan - Restructuring outstanding loan - Increase quality of staff training - Adjust the credit procedure to make it more effective and convenient for customer LIST OF TABLE Table 1: Business result of Agribank North Hanoi branch .24 Table 2: Outstanding loan of Agribank North Hanoi branch 26 Table 3: Outstanding loan divined into economic sectors 27 Table 4: Bad debt of Agribank North Hanoi branch 28 Table 5.Credit cycle of short-term loan (Source: Agribank North Hanoi branch) 29 LIST OF FIGURES Figure 1.Credit line for whole period .11 Figure 2.Credit line for the end of period 12 Figure 3.Factors that affect quality of short-term loan 17 Figure 4.Organization of Agribank North Hanoi branch .21 Figure 5.Credit activity based on duration of loan 27 INTRODUCTION Rationale Credit is the most basic and most profit activity of commercial banks Nowadays, when the relationship between commercial banks and firms is tighter, the commercial banks system provides a huge amount of fund to firms Through credit activity, commercial banks also play an important role in supplying fund to the economy, boosting the development of the economy Because of the important role of credit activity, increasing the quality of credit activity is a necessity with every commercial bank, especially in the current competitive market of Vietnam In recent years, Agribank North Hanoi branch has continuously expanded credit activity and received some remarkable achievments The branch is situtated in Ba Dinh province with many companies and big, potential firms which have high demand in funding and continuously increasing This is favorable condition for Agribank North Hanoi branch to expand credit acitivity and increase profit However, Agribank North Hanoi branch has met some problems with short-term loans for example: procedure or marketing activity,etc the urgent demands is finding solutions to solve this problem Therefore, I decide to research on this problem and my topic for the graduation is: ” Imporving short-term loan quality at Agribank North Hanoi branch ” Research objective Improving short-term loan quality is an important and necessary action with business of commercial bank The purpose of the research includes: * Research the theoretical framework which are related to credit activity of Agribank North Hanoi branch * Evaluate short-term loan activity at Agribank North Hanoi branch * Giving solution, recommendation to improve short-term loan quality of the branch Research methodology The information for the research will come from main sources: primary and secondary data  Secondary data Secondary data will mainly come from financial report Other sources of secondary data includes: magazine, newspaper, Internet and other relevant document  Primary data In-depth interview: - Interview head of credit department to understand the overview of credit activity - Arrange to meet, discuss or exchange email with chief accountant to understand about finance of the bank Research subject and scope Research subject: outstanding loan and credit activity Range of research: from 2009-2011 Due to some limitations, the research is lack of some information that Agribank North Hanoi branch can not public Thesis structure Apart from Cover pages, Table of Contents, Abbreviation, List of figures, List of tables, Acknowledgements, Executive summary, References and Appendixes, the body of the thesis is divided into chapters as follows:  Chapter 1: Overview of short-term loan of commercial banks  Chapter 2: Agribank North Hanoi branch  Chapter 3: Solutions to improve the short-term loan quality at Agribank North Hanoi branch 26 About bad debt, the branch has kept it lower than 3% of total outstanding loan of both years: 2.39% for 2010 and 2.81% for 2009 According to the State Bank of Vietnam, the bad debt rate lower than 3% is accepted so they can satisfy with the result Moreover, the bad debt rate has decreased 0.42% from 2009 to 2010 However, in 2011, the bad debt rate was 3.8%, it is a huge problem for the branch because it increased approximately 1% in one year and we will find out more about this problem in the next part  Short-term loan performance Proportion of short-term loan in recent years has the trend of increasing compare to mid or long term loan In detail, increase from 55.1% (2009) to 58.2% (2010) We can see that short-term loan proportion is always higher than 50% Outstanding loan 2009 2010 Billion Proportion Billion Proportion VND VND 2,405 100% 2,708 100% Short-term Mid, long-term 1,324 1,080 55.1% 44.9% 1,575 1,133 58.2% 41.8% Table 2: Outstanding loan of Agribank North Hanoi branch (Source: Agribank North Hanoi branch) The proportion of short-term loan in 2009 is 55.1%, 2010 is 58.2% It means that short-term loan is increasing in both proportion and scale The reason for this is that the economic environment is more unstable so short-term loan is less risky than mid-term and long-term loan Total outstanding short-term loan had increased from 1,324 to 1,575 which mean 19% growth rate, it was a good development of the bank 27 Figure 5.Credit activity based on duration of loan 2009 Total short-term outstanding loan State-owned enterprise Private Enterprise 2010 1,324 100% 1,575 100% 917.5 69.4% 825.3 52.4% 227.7 17.3% 467.8 29.7% FDI enterprise 13.4 1.04% 9.45 0.6% Individual 165.4 12.45% 272.45 17.3% Unit: Billion VND Table 3: Outstanding loan divined into economic sectors (Source: Agribank North Hanoi branch) According to the table, Agribank North Hanoi branch chose the strategy to decrease loan for state-owned enterprise and tried to find more private enterprise or individual customers FDI enterprise was also left behind with billion VND decrease The state-owned enterprise loan decreased remarkably from 917.5 (69.4%) to 825.3 (52.4%) which meant it decreased in both proportion and scale, meanwhile, the loan for private enterprise increased from 227.7 (17.3%) to 467.8 (29.7%) and individual increased from 165.4 (12.45%) to 272.45 (17.3%) This number reflected the strategy of the bank, they wanted to expand the loan to individual and private enterprise and cut down the loan for State-owned enterprise 28 It was the good decision of Agribank North Hanoi branch to make because stateowned enterprise was having trouble with their business For example: Vinashin, one of the biggest state-owned enterprises, had announced their lost and debt situation In 2010, the total amount of debt of Vinashin was 120,000 billion VND, accounted for 6.2% GDP of Vietnam, this number had made investors and banks wanted to avoid state-owned enterprises Besides that, many state-owned enterprises have announced huge lost in 2011 such as EVN with 2,589 billion VND, Petrolimex with 2,390 billion VND, Vinalines with 791 billion VND This has proved that the strategy of the branch was appropriate to avoid state-owned enterprise to find more potential and profitable customers 2009 Proportion (%) Short-term Amount (Million VND) 48,959 Mid, long-term Total 2010 Proportion (%) 72,35 Amount (Million VND) 46,162 18,711 27,65 18,427 28,53 67,670 100 64,589 100 71,47 Table 4: Bad debt of Agribank North Hanoi branch (Source: Agribank North Hanoi branch) Although the amount of bad debt of short-term loan decreased from 48,959 (72.35%) to 46142 (71.47%), the proportion of bad debt of short-term loan was still high, about more than 70% of total bad debt Short-term loan only accounted for more than 50% of total outstanding loan but bad debt of short-term loan accounted for more than 70% of total bad debt This is the problem that the bank has to solve immediately to improve in the future Bad debt is common problems for banks and there are some reasons for this: credit assessment procedure, creditor or customer’s ethic About credit procedure, as I mentioned before, the procedure of Agribank North Hanoi branch is not very effective and sometimes time-consuming for customer Besides that, the result of short-term loan bad debt somehow reflects the weakness 29 of the procedure in choosing the right customer as well as supervising the loan and ending contract Besides that, ability of creditor is also a main reason for bad debt Even when a procedure is perfect, a person that implements those steps cannot perform appropriately, the result of the procedure will be ruined and not precise Even when the creditor has the ability to judge the situation but he is bought by customer and colludes with company to cheat the bank, it still leads to bad debt for the bank Thus, creditor must have both ability and well-manner to perform well the procedure Last but not least, the external factor that affects the result of a loan is customer Fraud is common in banking industry and it is not the exception in Vietnam Many customers try to fake their report to have the loan from the bank although they not have the responsibility to repay it Now I will use credit cycle to evaluate the ability of using capital Credit cycle: Loan revenue Average outstanding loan 2009 2010 09/10 Short-term loan revenue 2,178 2,644 +466 Average outstanding loan 2,256 2,557 +301 Credit capital cycle 0,96 1.03 0,15 Unit: Billion VND Table 5.Credit cycle of short-term loan (Source: Agribank North Hanoi branch) As we can see from the table, the credit capital cycle increased from 0.96 cycle per year in 2009 to 1.03 cycle per year in 2010 There was a small improvement but the rate is not really high, back to 2005, the rate was 1.05 cycle per year To increase the 30 efficiency of using credit capital, Agribank North Hanoi branch has to concern more and has some methods to improve credit quality in the near future to have higher credit capital cycle 2.3 Comment about short-term loan activity at Agribank North Hanoi branch: 2.3.1 Achievements Although Vietnamese economy is in hard time, Agribank North Hanoi branch has had some certain achievements The growth of Agribank North Hanoi branch has contributed to the economic growth of Vietnam Through figures above, we see that quality of short-term loan of Agribank North Hanoi branch has been quite good with steady improvement To achieve this performance, Agribank North Hanoi branch has been very active in mobilizing capital which facilitates increasing outstanding short-term loan In addition, transaction activity of Agribank North Hanoi branch has been simpler so it can attract more customers Moreover, Agribank North Hanoi branch has done a good job in customer assessment and purpose of loan assessment so they can choose potential customer with high chance of repayment Last but not least, we also have to mention effort of all employees in the branch They not only follow the rules of the bank closely but also be creative in business Sense of responsibility of everybody is always sharpened with the motto: customer is god so every complaints of customer are rapidly solved with a win-win result Those are the reasons why the branch has achieved successes in their business with good reputation and attract more and more customers Short-term loan has lower interest compare to mid-term and long-term so it has lower profit, however, short-term loan has lower risk, especially in current unstable economic environment Therefore, increasing short-term loan is suitable in current situation 2.3.2 Weaknesses and reasons: North Hanoi branch has achieved some success but it still has some weakness that have to be improved in the near future 31 The procedure and time of transaction has been shorten and simpler but it is still frill and time-consuming, due to this, customer cannot have fund for their business Time and procedure are important factors in attracting customer in current economic environment so Agribank North Hanoi branch should improve this weakness immediately Besides, some loans have been approved but disbursement has been slower than expectation also affect business of customer and backlog fund of the bank Moreover, the bad debt rate is lower but bad debt rate of short-term loan is high, account for more than 70% of total bad debt, the bank should try to improve quality of short-term loan Last but not least, the credit cycle of the branch is not high and should be improve in the near future We can divide the reason for those weaknesses into main sources: bank and customer  Bank - Credit assessment procedure is not effective The procedure include channels: profile assessment, reality assessment, collected information assessment With profile assessment, customer sometimes use fake information in their profile so it is hard for creditors and the result may be wrong With reality assessment, the field of business of customer is wide and variety but the branch does not have specialization in each field Thus, it is hard for creditors to evaluate different companies in different field especially young creditors who not have experience With collected information assessment, creditors also have some trouble with source of information The information is mainly collected from Credit Information Center, Government or mass media However, those information sources are limited or low quality Information from Credit Information Center or Government is precise but limit, the amount of information is very little In contrast, information from mass media is plentiful and various but not precise - Short-term loan product is not various To increase profit and quality of loan, the branch has to find a way to diversify form of loan to serve needs and conditions of customer - The ability of creditor is limited Creditor directly receive application, evaluate customer, evaluate business plan and write a report about this Therefore, ability of 32 creditor will directly affect quality of loan If assessment of creditor is wrong, the bank may have contract with ineffective customer or business plan - Supervising activity is not effective Supervising plays an important role in guarantee purpose of the loan In situation of contract violent, the bank will have appropriate methods such as stop disbursement, cancel credit contract or reminding It guarantees debt collecting activity of banks - Agribank Hanoi branch mainly use inventory or real estate as mortgage However, real estate market of Vietnam is currently frozen, can not reflect true value of the mortgage Therefore, the bank also has difficulties in evaluating value and handle mortgage  Customer In Vietnam, monetary market and fund market have not been developed, the ability of company or organization is limited so they have to take loan from the bank for working capital and this has high proportion of short-term loan When they can not sell products or service, they will not have money to repay the bank Another reason is that business ethics of individual or organization, they sometimes use fake financial report, business plan to trick bank to invest in high risk project or delay the repayment even when they have the ability to repay 33 CHAPTER III: SOLUTIONS TO IMPROVE THE SHORT – TERM LOAN QUALITY AT AGRIBANK NORTH HANOI BRANCH 3.1 Orientation of Agribank North Hanoi about credit activity and increasing credit quality: 3.1.1 Orientation of Agribank North Hanoi about credit activity The orientation and investment policy of Agribank North Hanoi is built and completed based on orientation of Agribank Credit activity must be follow guidance of Government about modernizing and industrializing agriculture, changing structure of economy Basically, the target of the branch in near future is increasing credit activity to help company expand business and improve technology Besides that, quality of credit is also concerned The perspective of the branch is:  Expanding credit always goes along with increasing quality of credit In order to that, the target customer must be profitable company or projects which have feasibility, suitable with guidance of Government However, expanding activity must be controlled well by the branch to avoid bad debt  Expanding credit but also guarantee benefit of customer, profit and safety for the bank as well as abide the law  Expanding credit must be suitable with speed of economy‘s growth 3.1.2 Orientation of Agribank North Hanoi about increasing credit quality Orientation of Agribank North Hanoi branch about improving credit quality is following indicators: + Perform mobilizing capital methods from domestic market, exploit and use effectively fund from international organization, handle bad debt to satisfy demand of new customer + Growth rate of credit must be suitable with growth rate of mobilizing capital, the expectation and management ability + Operate according to the law of government, consider carefully loan request, mortgage from customer Especially increase credit quality and avoid bad debt 34 + Increasing supervising activity, loan procedure and loan approve, rearrange organization, increase employee training to serve future purpose + Adjusting procedures, credit activity to be more suitable but also compliance with the law 3.2 Solutions to improve the short-term loan quality at Agribank North Hanoi branch 3.2.1 Diversify short-term loan In fact, short-term loan products of Agribank North Hanoi branch mainly are shortterm working capital loan and short-term loans for production and business (one loan at a time) Overdraft product is not used yet When a customer comes to a bank, they choose the product that the bank serve and they not always demand for products that the bank does not serve Therefore, the ability to satisfy customer of the bank is limited Moreover, diversification of credit activity can help the bank decrease risk and increase profit Those are the reasons why diversification is necessary with increasing short-term loan quality Borrowing by means of discounting valuable notes is not popular in Vietnam because our economic environment is not fully developed yet, however, it surely will become popular in the future and Agribank North Hanoi branch should study more about this to come ahead of competitors 3.2.2 Increase quality of collecting information process and analyzing process: - Increase quality of collecting information process: Appraisal activity mainly bases on information from this process so to have accurate appraisal activity, the information has to be accurate first It depends a lot on the policy of the bank Besides compulsory information in application form, the bank has to collect more real information to guarantee objectiveness The collected information is various, sometimes contrast others, thus the bank should only use accurate information from government and high reputation organization such as Wall street journal, KPMG or BBC, etc… - Increase quality of analyzing process: Besides appraisal of company, the bank should also pay attention to the plan of using loan of company Through that, the bank can judge the ability to repay the loan of company 35 3.2.3 Restructuring outstanding loan: - Credit department has to understand clearly the instruction of Board of management about credit growth and execute strictly the plan The branch has to base on capital expanding to expand the business and outstanding loan Concentrate on traditional customers, individuals to balance capital and create liquidity - Concentrate on customer who has stable business, mortgage asset and accepts reasonable interest rate - Try to find more customer with small or medium scale, decrease outstanding loan with big customer to decrease the risk of bad debt when they have trouble with their business - Check the identity of customer to select potential customer and recommend about adjusting outstanding loan of each customer, supervise loan strictly Must decrease the outstanding loan of customer who has overdue debt, bad debt or poor performance - Check the current mid and long term loan, reevaluate the loan to have suitable decision whether to end the disbursement or not - Try to find more customers who want loan for exporting, based on that, increase the turnover with this kind of customer - With customer who has trouble with business, reevaluate the situation and if necessary, restructure the repayment plan to guarantee recover full the debt 3.2.4 Lending - Increase the quality of credit assessment, identify reasonable interest rate and maturity date Implement strictly the procedure according to the rule of Agribank North Hanoi branch - Evaluate, classify customer to have preferential treatment with potential customer - Be proactive to find potential project or business plan of small and middle company which has stable business, healthy finance and decrease the outstanding loan with company which has unstable business, low interest rate, participate in real estate market and construct building - Guide creditor to supervise closely the business of customer to avoid risk 36 - Apply reasonable interest rate according to the rule of Agribank and average interest rate of the market to guarantee benefit of both bank and customer - Increase internal supervising activity Inspect regularly how customer uses their loan to guarantee the purpose of the loan, creditor will have responsibility with the report - Try to connect credit activity with other service of the bank, 100% company who have loan at the branch have to open salary paying account 3.2.5 Debt recovering - Check the due debt every month and urge customer to repay the debt, limit credit extending - Focus on overdue debt, with customer who does not willing to repay the debt, creditor immediately complete the information about mortgage asset for public sale or sue them to the court - Establish debt recovering team based on type of customer to increase the responsibility of creditor, urge customer to repay overdue loan Send creditor frequently to customer’s business to control cash flow - Guarantee 100% customer who has credit line transaction at the bank, through that, the bank can control and supervise the cash flow, understand clearly the business of customer 3.2.6 Increase quality of service and employee training - Improving working method, working style of employee, departments co-operate with other to serve customer in best way, create good reputation for the bank - Implement strictly the procedure and guidance of Agribank about credit activity Employee training should be held frequently to increase the ability of creditor - Increase the role of internal audit and management to supervise the branch better 3.3 Recommendations 3.3.1 Recommendations for Agribank North Hanoi branch: After my internship at Agribank North Hanoi branch, I have found out some problems and I want to make some suggestions for these: - Management: The branch should update latest documents which are related to credit activity or documents from State Bank of Vietnam, Agribank Moreover, 37 departments should hold meeting frequently to share problems in business to have appropriate adjustment - Human resources: As mention above, quality of staff also plays an important role in deciding credit quality Therefore, the branch should concentrate on this aspect more to have competitive advantage in the future The branch should care more about training for employees to update for them new knowledge such as: international law, foreign language, etc… In 2015, ASEAN is going to integrate so we must not be outdated compare to other country because it is not only a chance for us but also a challenge More and more foreign company will come to Vietnam and the competition is harder Besides that, there should be some policies to prevent the collusion between creditor and customer to fraud the bank such as punishment - Customer relationship: When the competition in the market is getting rougher customer relationship is the key for the bank to compete with other competitors The branch should hold regular meeting with customer to have feedback about both good and bad activities Based on that, the branch can have adjustment to satisfy customer more and they can also create a good image and good relationship with customer Moreover, they also should have some special privilege programs and preferential for loyal customer to maintain relationship - Strategy: In long term, the branch should try to aim customers who are non-state enterprise or individual because state-owned enterprises are not potential customers anymore with huge bad debt Besides that, experience of other branch of Agribank or other commercial banks is valuable source for Agribank North Hanoi branch to have appropriate policy and strategy as well in the future - Marketing activity: Agribank has already been one of the biggest banks in Vietnam and its reputation is high However, in my own view, marketing activity is still needed to be concerned more about There are more and more competitors in banking industry so the competition is very tough so we have to use every possible way to gain the market share In current time, the marketing activity of Agribank North Hanoi branch is not concern properly, they should pay more attention to it for example: + Use media to introduce and advertise about the branch and new product + Sponsor famous event to promote image of the bank 38 + Organize more press conferences to introduce new product as well as new policy of the branch 3.3.2 Recommendations for State Bank of Vietnam The law of State Bank of Vietnam and law of credit organization has been established about 10 years, it has been very useful for banks in their business However, with some new legal documents, some rules in the law is not suitable with reality especially rules about loan security Loan security is the tools to lower risk, allow credit organization to collect debt legally and guarantee the development of credit organization Therefore, the State Bank of Vietnam should be proactive in establishing or adjusting the law to facilitate the business of credit organization Moreover, in current economic environment, State Bank of Vietnam should let banks be more independent to avoid some risk or deal with unexpected situations and catch opportunities In recent years, rules about accounting with mortgage is created by credit organization itself, the State Bank of Vietnam does not have any specific guidance Thus, State Bank of Vietnam should have some adjustments about this through Credit Information Center Credit Information Center is created to help credit organization lower the risk and build strong banking system and assist authorities to judge loan of credit organization To this, Credit Information Center must update information from credit organization regularly If information about customer is not updated from credit organization, Credit Information Center can not provide information which is not met the requirements Besides that, Credit Information Center also has to improve profession and technology to guarantee the quality of information that they provide In conclusion, Credit Information Center should have more important role in credit system and it should be provided additional material conditions, human resources 3.3.3 Recommendations for customer: Customer always comes to bank when they have needs about fund to serve their purpose but they are not always provided fund immediately Therefore, customer should have knowledge about law or how banks operate Based on this, customer can wisely choose suitable product from the bank In signing contract, customer should provide full and honest information to the bank After that, customer should use the loan properly according to the rules in contract 39 CONCLUSION Increasing credit quality is always the most concerned of every bank because credit plays an important role in develpoing banks especially in current economic environment It is a long-term process and it needs deep research from the branch itself In my research, I have made som recommendations for the bank and I hope it can be helpful for increasing short-term loan quality The thesis has made following results:  Research the theoretical framework which are related to credit activity of Agribank North Hanoi branch  Evaluate short-term loan activity at Agribank North Hanoi branch  Giving solution, recommendation to improve short-term loan quality of the branch However, credit quality is not only depended on the bank but also the government, suitable policy from the government is indispensible to improve credit quality The bank can only change its policy and strategy when that policy and strategy is legal and based on the decision of government Therefore, increasing credit quality must be assisted by government Due to some reasons, the results of thesis is still limited with some deficiencies I am glad to receive comments or opinion about my thesis to complete it more and give helpful recommendation for Agribank North Hanoi branch as well 40 REFERENCES VIETNAMESE Pháp lệnh ngân hàng (1990) Luật tổ chức tín dụng (1997) Báo cáo tài 2010 Agribank chi nhánh Bắc Hà Nội Báo cáo tài 2009 Agribank chi nhánh Bắc Hà Nội NGƯT TS.Tô Ngọc Hưng TS Nguyễn Kim Anh (2008) Giáo trình nghiệp vụ kinh doanh ngân hàng, NXB Thống kê ENGLISH Indian Institute of Banking & Finance (2010), Bank Financial Management (India: Macmillan Publishers India, 2010), 500 pages WEBSITE NGUYÊN HÀ 2012, Nhiều tập đồn , tổng cơng ty lỗ nghìn tỷ , nợ xấu hàng trăm tỷ (Online), Hà Nội: Vneconomy Address: http://doanhnhan.vneconomy.vn/2012112008543605P0C5/nhieu-tap-doantong-cong-ty-lo-nghin-ty-no-xau-hang-tram-ty.htm Trang chủ Agribank Address: http://www.agribank.com.vn/default.aspx MINH ĐỨC 2012, Chủ tịch Agribank::” Chúng không giấu nợ xấu!” (Online), Hà Nội: Vneconomy Address: http://vneconomy.vn/20120110035615857P0C6/chu-tich-agribank-chung-toikhong-giau-no-xau.htm ... the short- term loan quality at Agribank North Hanoi branch 3.2.1 Diversify short- term loan In fact, short- term loan products of Agribank North Hanoi branch mainly are shortterm working capital loan. .. activity of Agribank North Hanoi branch * Evaluate short- term loan activity at Agribank North Hanoi branch * Giving solution, recommendation to improve short- term loan quality of the branch Research... are related to credit activity of Agribank North Hanoi branch  Evaluate short- term loan activity at Agribank North Hanoi branch  Giving solution, recommendation to improve short- term loan quality