Credit risk control for loan products in commercial banks. Case: BIDV
Nguyen, Linh (2017)
Lataukset:
Nguyen, Linh
Haaga-Helia ammattikorkeakoulu
2017
All rights reserved
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-201704184874
https://urn.fi/URN:NBN:fi:amk-201704184874
Tiivistelmä
In the world of banking, competition between commercial banks is increasing more and more. Lenders are trying to satisfy customers in various credit services, which include lending services. To keep themselves in the play, banks focus on improving credit growth. However, higher credit growth will not truly bring higher profits if banks fail to manage credit risk. This thesis studies credit risk control for business loan products and aims to identify different approaches to control the risk effectively.
The thesis includes theories that relate to credit risk management. For the empirical part, a mixed research method of qualitative and desktop research is used to study the credit risk issue of a case bank, Bank for Investment and Development of Vietnam (BIDV). Qualitative research are carried out by interviews via email with the target bank’s officers and its supervisors. In addition to primary data from the interviews, the research includes secondary data from reliable sources such as the case bank’s annual reports, local gov-ernment regulations, and international banking standards.
The outcomes of the thesis point out some problems that limit the credit risk management of the case bank as well as recommendations for the State Bank of Vietnam and BIDV. With regard to BIDV, firstly, its assets classification process follows old local credit regulations which need to be amended. Secondly, the credit organization is facing difficulties in checking credit profile due to the lack of a transparent information system. Thirdly, loan covenants are used to supervise and monitor borrowers, however, they have not been utilized. Out of these issues, the State Bank of Vietnam is recommended to revise and adjust the assets classification regulation and consider to grant more rights to the state-owned bad bank, Vietnamese Assets Management Company, to support credit risk management in the commercial banking sector. In terms of BIDV, investments in building a transparent information technology system are fundamental. Besides that, the lender should offer more training programs for employees and establish official internal instructions for using loan covenants.
The thesis includes theories that relate to credit risk management. For the empirical part, a mixed research method of qualitative and desktop research is used to study the credit risk issue of a case bank, Bank for Investment and Development of Vietnam (BIDV). Qualitative research are carried out by interviews via email with the target bank’s officers and its supervisors. In addition to primary data from the interviews, the research includes secondary data from reliable sources such as the case bank’s annual reports, local gov-ernment regulations, and international banking standards.
The outcomes of the thesis point out some problems that limit the credit risk management of the case bank as well as recommendations for the State Bank of Vietnam and BIDV. With regard to BIDV, firstly, its assets classification process follows old local credit regulations which need to be amended. Secondly, the credit organization is facing difficulties in checking credit profile due to the lack of a transparent information system. Thirdly, loan covenants are used to supervise and monitor borrowers, however, they have not been utilized. Out of these issues, the State Bank of Vietnam is recommended to revise and adjust the assets classification regulation and consider to grant more rights to the state-owned bad bank, Vietnamese Assets Management Company, to support credit risk management in the commercial banking sector. In terms of BIDV, investments in building a transparent information technology system are fundamental. Besides that, the lender should offer more training programs for employees and establish official internal instructions for using loan covenants.