LV Thạc sỹ_Enhancing the quality of medium and long term credit in agribank

NATIONAL ECONOMICS UNIVERSITY FACULTY OF FOREIGN LANGUAGES ENGLISH FOR BUSINESS DEPARTMENT ENHANCING THE QUALITY OF MEDIUM AND LONGTERM CREDIT IN VIETNAM BANK FOR AGRICULTURE AND RURAL DEVELOPMENT – HUU LUNG BRANCH NATIONAL ECONOMICS UNIVERSITY FACULTY OF FOREIGN LANGUAGES ENGLISH FOR BUSINESS DEPARTMENT ENHANCING THE QUALITY OF MEDIUM AND LONGTERM CREDIT IN VIETNAM BANK FOR AGRICULTURE AND RURAL DEVELOPMENT – HUU LUNG BRANCH ACKNOWLEGMENT First of all, from bottom of my heart, I would like to send my most sincere thanks to Ms…, Faculty of Foreign Language - Department of Business English National Economics University, who has supported me during my report writing process Without her whole – hearted instruction, I could not have accomplished this report Secondly, I would also like to express my great attitude to Mr…, the director of Agribank – Huu Lung branch and all staff in Credit Department, who enthusiastically offered me with the very first ideas on research methods, precious comments and encouragement during my internship process I have learned a lot from his precious knowledge about credits as well as his industriousness and big dedication in work Thanks to his great assistance, I have finished this report Additionally, I also want to show my deep gratitude to all teachers of the Faculty of Foreign Languages, National Economics University for helping me to cultivate background knowledge of some subjects related to my research such as English for Banking and Finance, English for Management Finally, I want to give the last grateful sentence to my family and friends who always stand by me and continuously encourage me during four years in National Economics University They are really the greatest spiritual motivation for me to make my best efforts to perfect myself and overcome the most difficult time as a student Because of limited experience and lack of time, the report might have many shortcomings I am looking forward to receiving any comments to make my report better TABLE OF CONTENTS LIST OF ABBREVIATIONS .i LIST OF FIGURES ii LIST OF TABLES .ii EXECUTIVE SUMMARY iii INTRODUCTION .1 Introduction of the research topic .1 Rationales Research questions .2 Scope of the research Methodology .2 CHAPTER I: INTRODUCTION .4 1.1 Introduction of Agribank – Huu Lung branch .4 1.1.1 History of establishment and development 1.1.2 Organizational structure .5 1.1.3 Functions and missions 1.1.4 Several business results 1.2 The key term definitions 1.2.1 Credit 1.2.2 Outstanding loan 1.2.3 Overdue debts 1.2.4 Bad debt 10 CHAPTER II: THEORETICAL FRAMEWORK 11 2.1 Overview of medium and long-term credit 11 2.1.1 Definition of medium and long-term credit 11 2.1.2 The role of medium and long-term credit in the market economy 11 2.1.2.1 With respect to the economy 11 2.1.2.2 With respect to enterprises 12 2.1.2.3 With respect to banks 13 2.2 Criteria to assess the quality of medium and long-term credit 13 2.2.1 Overdue debt ratio .13 2.2.2 Income from credits 14 2.2.3 Credit capital turnover 14 2.3 Factors affecting to the quality of medium and long-term credit .15 2.3.1 Factors from banks 15 2.3.1.1 Lending strategy 15 2.3.1.2 The capability of the capital source 15 2.3.1.3 Lending procedure 16 2.3.1.4 The quality of human resource 16 2.3.2 Factors from customers 17 2.3.2.1 Customers’ capacity 17 2.3.2.2 Customers’ reputation 17 2.3.2.3 Customers’ asset ownership 18 2.3.3 Other objective factors 18 2.3.3.1 Economic environment 18 2.3.3.2 Legal environment 18 2.3.3.3 Policies from Government 19 CHAPTER III: ANALYSIS AND FINDINGS .20 3.1 Credit-worthiness and credit risk management in Agribank – Huu Lung branch 20 3.1.1 Loans situation 20 3.1.2 Structure of outstanding loans 21 3.1.3 Term loans based on type of business 24 3.1.4 Term loans based on economic sector .25 3.1.5 Bad loans 26 3.2 Assessment of medium and long-term credit quality in Agribank - Huu Lung branch 26 3.2.1 Achievements 26 3.2.2 Limitations .27 3.2.3 Causes 28 3.2.3.1 Subjective causes .28 3.2.3.2 Objective causes 29 CHAPTER IV: RECOMMENDATIONS 31 4.1 Orientation of Agribank - Huu Lung branch to enhance the quality of medium and long-term credit in the next periods 31 4.1.1 Business plan in 2013 of Agribank – Huu Lung branch 31 4.1.2 Orientation for developing medium and long-term credit activities 32 4.2 Recommendations to enhance the quality of medium and long-term credit at Agribank - Huu Lung branch .32 4.2.1 Strengthening capital mobilization and researches on the capital source with low cost 33 4.2.2 Advancing the quality of project assessment and the management of lending process 33 4.2.3 Enhancing the inspecting process before, during and after lending .34 4.2.4 Improving the quality of human resource 35 4.2.5 Expanding marketing activities 36 4.2.6 Developing customer consulting centers 36 4.2.7 Simplifying lending procedures 37 4.2.8 Supporting solutions from customers .37 4.3 Proposals to enhance the quality of medium and long-term credit at Agribank - Huu Lung branch 38 4.3.1 Proposals to the State 38 4.3.2 Proposals to the State Bank 38 4.3.3 Proposals to Agribank .39 CONCLUSION 40 APPENDIX REFERENCES LIST OF ABBREVIATIONS Agribank - Huu Lung branch Vietnam Bank for Agriculture and Rural Development - Huu Lung branch SMEs Small and Medium Enterprises VND Vietnam dong i LIST OF FIGURES Figure 1: Organizational structure of Agribank – Huu Lung branch Figure 2: The outstanding loans based on repayment time (2010 – 2012) 23 LIST OF TABLES Table 1: Functions of each level in the organizational structure Table 2: Loans situation (2010 – 2012) 20 Table 3: Ratio of total outstanding loans per total mobilized capital (2010 – 2012) 21 Table 5: Medium and long-term loans based on type of business (2010 – 2012) 24 ii EXECUTIVE SUMMARY Nowadays, Viet Nam has been developing the mechanism of socialistoriented market economy, which has been controlled by the clear-sighted leadership of the Vietnamese Party and State, and also has undergone the process of “Industrialization and Modernization”, which targets at the increase in people’s property, the nation’s strength, the society’s fairness, democratization, and civilization In facts, whether a country’s economy and society is strong and healthy or not, is much dependent on the effectiveness of banking and finance activities Therefore, to respond to the State’s the process, as well as reach these above targets, it is required that credit officers in banks need accomplish their roles in making right decisions to lend enterprises or households in order to obtain the highest profits, minimize the credit risks, and keep the capital source in safety also In Agribank – Huu Lung branch, credit activities play a key part in not only the existence and development of the branch but also the growth of its district and our country in general During the “Industrialization and Modernization” process, like other organizations throughout the country, enterprises in Huu Lung district also have been increasing the facility development, the technique renovation, and the technique equipment improvement This certainly asks for a great amount of medium and long-term capital, which can be well-supported by banks, specifically by the credit capital source from banks However, the problem here is how to make use of most of the medium and long-term capital’s positive aspects and to avoid wastefulness in enterprises’ and households’ business also In reality, it is not denied that the more the quality of medium and long term credit is expanded and improved, the more the medium and long term capital only can improve its positive roles However, the ceaseless changes of the market economy make it impossible to predict all potential risks and their influences on credit in general and medium and long-term credit of the whole banking system as well as of Agribank – Huu Lung Branch in particular It is the reason that urges me to choose the topic: “Enhancing the quality of medium and long-term credit in Agribank – Huu Lung branch” to a research The purpose of this report is to analyze the current situation of the medium and long term credit activity in Agribank – Huu Lung branch from 2010 to 2012 and then propose some solutions to enhance the quality of these kinds of credit iii Data was mainly extracted and calculated from its business department’s financial document and some other internal papers This dissertation is divided into four main chapters: Chapter 1: Introduction This chapter presents a brief overview of Agribank – Huu Lung branch’s establishment, organizational structure, missions and some business results in particular Chapter 2: Theoretical framework This chapter will provide readers with the essential background knowledge of the banking credit and especially the medium and long-term credit Chapter 3: Analysis and findings In this chapter, the author analyzes and evaluates the current situation about the quality of medium and long-term credit in Agribank – Huu Lung branch within years At the same time, the obtained results, limitations and causes will be drawn out Chapter 4: Recommendations The final chapter is supposed to give some recommendations to improve the effectiveness of the medium and long-term credit in Agribank – Huu Lung branch As a result, Agribank – Huu Lung branch should continuously pay much attention to improving the quality of credit, especially the quality of medium and long term credit so that the branch can gain the best outcomes contributing to the statement of its certain position in the whole banking system and actually making great contribution to the society’s development iv from banks Therefore, banks will lose the large number of potential customers and then lose chances to gain benefits 30 CHAPTER IV: RECOMMENDATIONS 4.1 Orientation of Agribank - Huu Lung branch to enhance the quality of medium and long-term credit in the next periods 4.1.1 Business plan in 2013 of Agribank – Huu Lung branch Up to this day, there have hardly had any better signals for the world’s economy Besides, all aspects in society now have been increasingly affected by the fluctuations of exchange rates, inflation and recession since 2007 Of course, Agribank – Huu Lung branch is not an exception Although the year of 2012 is considered as a positive year when the branch has gained some achievements, there are still some weaknesses the branch has to improve For that reason, the branch’s the board of managers proposes specific orientations for 2013 as follows: Enhance the finance capacity: this is a target to which the branch gives priority so as to improve general activities in the branch as well as increase the quality of lending activity To reach this target, the bank is going to carry out a lot of activities including setting up a credit improvement plan and a healthy finance plan; improve sale effectiveness; restructure revenue resource; tighten expenditures; and build risk reserve fund Improve asset structure: upholding achievements in previous years, the branch is keeping capital growth at a high rate as well as more and more increasing the credit quality In addition, it will make its efforts to apply existing mechanisms to its activities in order to control capital resource smoothly, adjust capital structure suitably, actually minimize credit risks, and heighten capital using efficiency Increasingly use banking services and apply banking technology to the bank’s activities: To accomplish this aim, the bank tends to progressively equip the branch with hi-tech machines such as Home banking, Phone banking and Internet banking in order to widen banking service scales and also improve the effectiveness of credit using Especially, the branch encourages staff to build up software programs that helps the bank run its business such as managing human resources, checking-up credit situation, etc Regularly open training courses for staff: conferences and workshops with specialists in politics, economics, banking and finance are positive environment in which staff can cultivate their knowledge as well as improve their special skills Furthermore, to enhance the quality of human resources, the bank would like to 31 open training classes on specialist skills to instruct its officers to apply new regulations on real situations By this way, the board of managers hopes staff’s skills and qualifications will be improved 4.1.2 Orientation for developing medium and long-term credit activities As mentioned above, improving the credit quality also belongs to strategic development orientation of the branch in 2013 To easily carry out this orientation, the board of managers publishes specific plan on developing the quality of medium and long-term credit as below: Firstly, based on projects’ efficiency and reality, the branch will select credit projects suitable to national developing strategy in economic sectors and areas and enterprises’ overall developing plan Secondly, the branch will periodically classify and evaluate customers based on their profiles By doing that, the bank can easily set up credit limits, interest rate policy, supply services suitable to each customer and actually increase the bank’s profits Thirdly, the branch also tries to diversify kinds of customers including jointstock companies, non-state enterprises, and foreign-invested enterprises Moreover, the branch intensively establishes relationship with trustworthy enterprises which has enough finance capacity to cover loans when being in risks It also sets up marketing campaigns amongst individuals and organizations, collects information about local areas’ developing projects and enterprises’ business situation in order to timely consult credit services for them Finally, the branch still strictly obeys laws on credit as well as lending procedures and highly appreciates the role of project appraisal in deciding to give customers with an amount of medium and long-term credit Besides, regularly checking and controlling enterprises’ business situation is concentrated on so as to minimize overdue debt ratio and credit risks 4.2 Recommendations to enhance the quality of medium and long-term credit at Agribank - Huu Lung branch By analyzing the above figures, it can be seen that Agribank – Huu Lung branch has gained a lot of achievement and made great contributions to the development of society; however, there is still some disadvantages that the branch must overcome After taking three-month internship in Agribank – Huu Lung branch, I bravely give some suggestions to improve the quality of medium and 32 long-term credit in the branch as follows: 4.2.1 Strengthening capital mobilization and researches on the capital source with low cost To widen the scale of credit services as well as enhance the credit quality, the best solution is building the sustainable, healthy, low-cost and large-scaled capital resource In spite of the small amount of mobilized capital among local people, the branch should enhance capital mobilizing activities from these customers because of the fact that the number of local people running private business accounts for the majority, this source requires low interest rates and relatively stabilizes Specifically, the branch can follow these below recommendations: Diversify forms of capital mobilization: in addition to traditional forms, the branch should give attractive ones along with promotional programs Now, there are more and more fierce competitions amongst banks; therefore, to gain high profits from credit activities, it is required that the branch needs to specialize its services by saving time on lending process Establish credit relationships and keep on well with individuals and especially potential enterprises: They are important partners who are both borrowers and lenders of the bank because their source of money requires low cost, including salary and expenditure Improve the quality of customer services and diversify payment forms: By doing that, customers will feel convenient when using the branch’s credit services 4.2.2 Advancing the quality of project assessment and the management of lending process Project assessment before lending plays a vital role in credit activity; therefore it is necessary to further enhance the inspection of the quality of project assessment This step targets at reexamining technical and economic details of investment projects such as technological equipment, investment scale, and machine capacity In addition to testing the adequacy and legality of the legal documents of projects, the branch also needs to check up practicability and feasibility of these projects It is also important to increase the management quality in the lending process, supervise and speed up the process of taking-back debts and collecting profits If enterprises use loans for the purpose regulated in the contract, it is a good 33 sign for further signing credit contracts later In contrast, if enterprises use loans for other purposes which are not agreed in the contract, they will be treated as in the credit regime In addition, it is necessary to supervise enterprises’ business situation to make an accurate evaluation on developments in the relationship between customers and enterprises As a result, the branch can timely discover overdue debts and bad debts and take an immediate action While evaluating the project is the first step deciding whether signing the lending contract or not, then the process of supervising and speeding up covering debts is also an extremely important task Credit officers are in charge of supervising and speeding up collecting debts on time If the term of lending projects terminates, enterprises have not got repayment source, the bank should consider rescheduling based on regulated credit regime If there are overdue debts according to lending projects, credit staff must regularly supervise changes to timely withdraw in order to avoid bad debts To solve bad debts, the bank should take suitable measures to bring enterprises out of difficulties in business production The branch should provide enterprises with consultancy to reduce overdue debts and bad loans When old debts have not been settled, it is inadvisable for the branch to grant a new loan 4.2.3 Enhancing the inspecting process before, during and after lending Credit management is considered as an important step in lending process as well as an essential condition that ensures the quality of lending decision It consists of checking and controlling loans before, during and after lending After signing credit contract, credit officers should gradually keep track of customers’ capital using situation and plan implementation progress as in contracts Nowadays, the branch still does not have enough updated information about accounting and finance of customers; therefore it is suggested that credit staff should regularly check financial reports to update these information so as to have clear understanding customers’ business situation Additionally, credit officers had better carry out both periodic and unscheduled inspections on each customer’s business situation in order to find out the real aim of loans using When implementing inspections, credit officers need make objective appreciation on borrowers’ responsibility for using capital and discuss their payment obligation and others concerned Furthermore, they should evaluate enterprises’ solvency by analyzing some solvency criteria such as fast 34 solvency, current solvency to determine whether customers can cover loans or not One more important thing is that credit employees also pay attention to enterprises’ finance situation, capital structure, and profit division If there is any a change for the worse, it means that customers’ business does not run smoothly; in this case, the bank must take immediate actions to avoid credit risks Especially, in non-state enterprises, owners often does not distinctly divide capital source into parts used for production or parts for daily expenses Consequently, when checking enterprises’ business situation, credit officers should be clever to ask for capital using situation, owners’ finance management and then can have clear understanding about capital using capacity and capital using efficiency 4.2.4 Improving the quality of human resource It is not denied that human beings always play a decisive role in every activity relating to the economics, politics and society in general and credit activities particularly Except for men, not any machines can complete all activities including running credit procedures, signing lending contracts and taking back loans Therefore, what a lending contract can bring benefits for banks or not is much conditional upon credit officers’ skill, qualification, creativeness, and professional ethics Luckily, Agribank – Huu Lung branch owns skilled and qualified staff that specializes in banking and finance at college level and upper However, there are more and more complicated issues happening in the market economy, it requires human resource to be increasingly skilled, dynamic, and creative To meet the economy’ demand, banking officers must gradually cultivate professional knowledge to perfect themselves and then help banks to increase the credit quality In order to improve the quality of medium and long-term credit, Agribank – Huu Lung branch ought to put forward personnel policy to improve staff’s skill and qualification First of all, the branch should open training and practising courses for officers, especially young officers Besides, organizing conferences or workshops is a good chance for staff exchange experiences with each other, show feelings, or give recommendations to build up the branch By doing that, both personnel quality and work efficiency will increase a lot Secondly, managers should divide credit officers into small groups responsible for groups of customers, for example three or four people in a group It is supposed that working in groups often brings a lot of advantages in most working 35 environment; and banking place is not an exception When each group is assigned to be in charge of a group of customers, credit staff in the group can spare much time on find out information about their customers’ business, more concentrate on their duties, cut down investigating fees, minimize mistakes in investigation and actually contribute to enhance the quality of lending activities Finally, the branch should set up suitable commendation mechanisms as well as strict discipline mechanisms to timely encourage excellent officers and strictly solve mistakes By doing that, excellent officers will more and more try their best to well accomplish their duty, and weak ones may make their efforts to perfect themselves to make greater contributions to the branch 4.2.5 Expanding marketing activities At first, the branch should build up marketing and promotional programs to provide customers with clear information about banking services, especially credit services Agribank – Huu Lung branch plays an important role in the general development of Agribank in Lang Son province, is usually assigned significant duties in implementing investing projects including supporting medium and small-sized enterprises with medium and long-term credit Thus, the branch ought to regularly keep in touch with these enterprises to timely consult suitable credit services in need Getting on well with customers is an effective way to seek loyal customers, and then thanks to these loyal customers, the branch can easily spread its brand name nationwide Additionally, the branch should carry out regular researches on general market, enterprises and households’ business in order to set up suitable credit services timely meeting customers’ demand In facts, there is increasingly tough competition amongst commercial banks; thus it is advisable for the branch to pay attention to this task 4.2.6 Developing customer consulting centers Due to some weaknesses of enterprises and households, they sometimes cannot put their ideas into practice although these ideas are so creative, so consultants will give suggestions on using credit services for enterprises as well as equip them with knowledge of economic situations in order that they can take experiences from previous projects and then be able to implement their projects swimmingly The officers also instruct enterprises to run business procedures and then consult them to build up effective business plans In facts, consulting is not easy at all An officer is asked to have wide 36 knowledge of both credit and fields which borrowers invest in; therefore, to well finish a consultative role, he frequently updates information about all aspects in society from economics, politics to social issues in order to be able to make quick recommendation for customers in need 4.2.7 Simplifying lending procedures Nowadays, some customers hesitate to using lending services from some banks because of being compulsory to give collaterals and guarantees; instead, they sign credit contracts with outside creditors and lenders although the safety of these contracts is not higher than ones signed with commercial banks Currently, when deciding to lend customers and enterprises, credit officers must obey all steps in the State Bank’s lending procedures in order to ensure the safety of contracts, so occasionally, this process wastes much time of both these credit officers and customers However, the application should be flexible When considering lending conditions, the branch should be more flexible in applying lending procedures to each real situation If customers have no collaterals but their business and production plan is highly effective and feasible, the branch should consider granting loans By doing that, the branch both build up good relationship with customers and get more profits in its credit activities 4.2.8 Supporting solutions from customers To increase the medium and long-term credit quality, the branch itself plays an important role, but it still needs supports from outside factors including customers and enterprises In fact, enterprises are so cautious to give information about their business situation because they are afraid of exposing their weaknesses Another problem is that enterprises regularly provide inaccurate information because they want keep the data secret Therefore, the branch often has troubles in controlling their financial situation as well as real capital using efficiency To catch up subjective information about enterprises’ business, credit officers should be skilled to investigate and require enterprises to frequently report their financial situation If there are any bad signs about business results, it is necessary to turn to the bank’s consultancy to prepare providing plans in order to minimize risks as well as avoid the worst situation 37 4.3 Proposals to enhance the quality of medium and long-term credit at Agribank - Huu Lung branch 4.3.1 Proposals to the State To improve the quality of medium and long-term credit, it is suggested that the State should build legal environment synchronous with the characteristics of lending activity by setting up area and region programming as well as economic sector developing programming, periodically making orientation plan for developing regions in the whole of country, and adjusting interest rate suitably Moreover, the State should consider to establish finance auditing and capital managing organizations which are responsible for checking and controlling enterprises’ capital using process and confirming the reality of financial reports in need in order to assist credit officers to save time on investigating enterprises’ business situation One effective way to increase the credit quality is intensifying the State’s management in enterprises’ business by giving out strict measures to force enterprises to comply with Ordinance on Accounting and Statistics It is advisable that the State also continuously perfects the stock market, which allows banks to buy and sell long-term money certificates Additionally, the State also permits commercial banks to issue bonds and mobilize foreign capital source and publish and improve national legal system to make basis for credit activities 4.3.2 Proposals to the State Bank The State Bank is named as “a bank of every bank” and also plays a key part in managing banking system throughout the country Responding to the Government’s policy which helps enterprises to approach credit capital source and use it effectively, the State Bank need issue clear instruction documents in order to assist commercial banks to run lending process easily Moreover, it is vital that the State Bank should quickly improve legal system on credit activity and then make synchronous legal environment to implement lending process Currently, the State Bank issues a lot of instruction documents on credit and some of them overlap; besides, there are too much circulars and instructions on credit published by relating industries Therefore, when signing lending contracts, credit officers have to compare too much documents, which wastes a lot of time of customers and these officers 38 The State Bank should study and build up a set of indicators, which reflects the credit quality, in order to control relationship between credit growth and credit quality Additionally, the Bank should intensively carry out researches and inspections on commercial banks and other credit organizations’ business so as to improve weaknesses and prevent credit risks Furthermore, the State Bank also ought to give chances for banking officers to cultivate knowledge about banking and finance by organizing training courses and encouraging credit officers to study abroad By doing that, the credit quality of commercial banks will increasingly improve 4.3.3 Proposals to Agribank After taking a three-month internship in Agribank – Huu Lung branch, I bravely give some recommendation to improve the quality of medium and longterm credit in the branch as follows: Firstly, Agribank Vietnam should more get on well with the State Bank to have right understanding of credit instruction documents, effectively apply credit information to real credit activities, expand the impacts of credit information and then avoid or minimize credit risks Secondly, Agribank Vietnam ought to frequently organize conferences on credit services to give opportunities for banking staff in all branches to exchange experiences and then perfect their skill and qualification Thirdly, Agribank should bravely cut down unnecessary credit procedures to simplify lending process and save time and cost for customers, officers, and bank system Next, Agribank also had better equip workplace with hi-tech equipment to support officers to conveniently gather and process statistics Finally, it is advisable for Agribank Vietnam to intensify inspections on internal bank system to stabilize branches’ business and staff 39 CONCLUSION Keeping pace with the ceaseless development of the market economy and the positive growth of the whole banking system, Agribank – Huu Lung branch’s the medium and long-term credit service has affirmed its important position in expanding business and production activities of enterprises The total of medium and long-term outstanding loans increases constantly through studied years (between 2010 and 2012) As above, it can be seen that he branch has been making its best efforts in overcoming challenges and improving shortcomings about the medium and long-term capital resources in order that enterprises’ medium and longterm capital resources can be best satisfied At the same time, the branch has also concentrated on inspection and evaluation before, during and after lending process; controlling loans carefully with the purpose that it can minimize the risk level, guarantee safety for medium and long-term loans Therefore, the branch has achieved outstanding successes in improving the quality of medium and long-term credit Besides the accomplishments, however, it is unavoidable for the branch to deal with some certain limitations As a result, enhancing the operational efficiency of medium and long-term credit is a target which the branch should immediately try its best to reach as a priority In this report, the writer has supplied a background understanding about the credit in general and the medium and long-term credit in particular, and next, has made a deep analysis of the real situation of the medium and long-term lending activity in Agribank – Huu Lung branch Finally, the writer also has given some suggestions on widening the medium and long-term capital scale and boosting the medium and long-term credit quality for the branch I expect that the credit service in general and the medium and long-term credit service of the branch in particular will obtain more successes in the future Furthermore, I also expect that the branch will keep and further promote its significant role in the development of Agribank – Lang Son province branch as well as the whole of Vietnam Agribank system in order to make much more contributions to accomplish the comprehensive construction and innovation process of the national economy During the research process, because of limited experience and lack of time, my report might have not avoided some shortcomings Actually, I am quite willing 40 to receiving any comments to make my report better One again, I would like to show my sincere gratitude to M.A… as well as all officers of Agribank – Huu Lung branch especially all staff of sale department for much encouraging and supporting me to complete this report 41 APPENDIX DATA CALCULATION Table 4: Outstanding loans based on time payment (2010 – 2012) Unit: billion VND Targets 2010 2011 2012 Total outstanding loan 815 906 738 Short-term outstanding loan 635.2 730.1 603.2 Medium and long-term outstanding loan 179.8 175.9 134.8 Outstanding loan rate / Total outstanding loan + Short-term outstanding loan % 77.94 80.58 81.73 + Medium and long-term outstanding loan % 22.06 19.42 18.27 (Source: Business Department- Agribank – Huu Lung branch) Table 6: Medium and long-term loans based on economic sector (2010 – 2012) Unit: billion VND Target Agriculture Industry, construction Commercial service Total Value 54.41 2010 Density % 30.26 Value 42.43 2011 Density % 24.12 Value 22.97 2012 Density % 17.04 66.83 37.17 72.07 40.97 61.75 45.81 58.56 32.57 61.4 34.91 50.08 37.15 179.8 100 175.9 100 134.8 100 (Source: Business Department- Agribank – Huu Lung branch) 42 Table 7: Bad loans ratio (2010 – 2012) Unit: billion VND Target Total outstanding credit Total bad loans Disparity between 2011/2010 Density Value (%) Disparity between 2012/2011 Density Value (%) 2010 2011 2012 Total Total Total 815 906 738 91 11.17 - 168 - 18.54 27.63 25.13 22.41 - 2.5 - 9.05 - 2.72 - 10.82 Bad loans ratio (%) 3.4 2.8 3.0 Total medium and long-term outstanding 179.8 175.9 134.8 - 3.9 - 2.17 - 41.1 - 23.37 loans Medium and long4.53 2.94 3.07 - 1.59 - 35.1 0.13 4.42 term bad loans Medium and longterm bad loans ratio 2.52 1.67 2.28 (%) (Source: Business Department- Agribank – Huu Lung branch) 43 REFERENCES Vietnamese: Lê Văn Tề (2009) Tín dụng ngân hàng, 10, 202-203, Nhà xuất Giao thông vận tải T.S Nguyễn Minh Kiều (2007) Nghiệp vụ ngân hàng đại, 185, Nhà xuất thống kê English: Duong Thu Ha, Truong Nhat Quang New rules on debt classification and loss reserves, 1-2 From http://www.ykvnlaw.com/publications/Decision%20493.v2_eng.pdf Neil H Jacoby, Raymond J Saulnier (1942) Term Lending to Business, 912, UMI Peter S Rose (2004) Commercial Bank Management, Author House, 251297 Shin-ichi Fukuda (2001) Working paper No 77, Business Columbia University Bad debt Retrieved from Dictionary of Banking and Finance (2003), A&C Black, 85 Credit Retrieved from http://en.wikipedia.org/wiki/Credit_(finance) Outstanding loan Retrieved from http://www.ehow.com/fact_6885935_definition-outstanding-loans http://www.voer.edu.vn/bai-viet/kinh-te/cac-nhan-to-anh-huong-den-chatluong-tin-dung.html http://voer.edu.vn/bai-viet/kinh-te/vai-tro-tin-dung-trung-va-dai-han-cuangan-hang-thuong-mai-trong-nen-kinh-te-thi-truong.html 44 ...  Identifying factors affecting the quality of the medium and long- term credit activity  Describing and analyzing the real situation of the medium and long- term credit activities in Agribank. .. medium and long- term credit in Vietnam Agribank in general and Agribank – Huu Lung branch in particular, and then find out some solutions to increase the quality of the medium and long- term lending... II: THEORETICAL FRAMEWORK 11 2.1 Overview of medium and long- term credit 11 2.1.1 Definition of medium and long- term credit 11 2.1.2 The role of medium and long- term credit in the