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Tài liệu tham khảo tài chính ngân hàng improving credit limit system in Vietcombank
CONTENTSABBREVIATIONS 4 LIST OF TABLES 5 LIST OF CHARTS . 7 INRODUCTION . 11 Chapter 1 . 14 THEORETICAL FRAMEWORKS ON CREDIT LIMIT AT COMMERCIAL BANKS . 14 1.1Bank Credit 14 1.1.1Definition . 14 1.1.2Characteristics of bank credit 15 1.1.3Roles of bank credit . 16 1.2Credit limit system in commercial bank . 19 1.2.1Definition of credit limit system 19 1.2.2Roles of credit limit system . 19 1.2.3Basis for credit limit system 21 1.3Factors effecting credit limit system in banks 34 1.3.1External factors 34 1.3.2Internal factors . 36 Chapter 2 . 38 CREDIT LIMIT SYSTEM AT VIETCOMBANK . 38 2.1Overview of Vietcombank and its performance . 38 2.1.1Introduction to Vietcombank 38 2.1.2Vietcombank’s major performance indicators 43 2.2Credit activities at Vietcombank . 45 2.2.1Overview of credit operation at Vietcombank 45 2.2.2Credit policies in Vietcombank . 48 2.2.3Credit activities 50 2.2.4Types of credits 56 2.3Credit limit system at Vietcombank . 58 2.3.1Structure of the system 58 2.3.2Regulations of credit limit system 62 2.3.3Procedure for approving credit limits . 62 2.3.4Process of determining the credit limit 63 2.3.5Process for credit coring and rating customer at Vietcombank . 70 2.4Assessing credit limit system at Vietcombank 79 2.4.1. Achievements . 79 2.4.2. Limitations . 81 2.4.3. Causes of limitations . 82 Chapter 3 . 86 PROPOSED SOLUTIONS TO IMPROVE CREDIT LIMIT SYSTEM AT VIETCOMBANK . 86 3.1.Orientation of VCB’s credit activities 86 3.1.1.Orientation 86 3.1.2.Objectivities of VCB’s credit activities to 2012 . 86 3.2.Solutions to improve credit limit system at VCB 88 3.2.1.Improve structure of VCB 88 3.2.2.Improve credit policies . 90 3.2.3.Improve credit scoring and rating . 92 3.2.4.Improve information technology systems 93 3.2.5.Strengthen human resources . 94 3.3.Recommendations 94 3.3.1.Recommendation to related agencies 94 CONCLUSIONS 97 REFERENCES . 98 2 ACKNOWLEDGEMENTFirst of all I would like to express the profound gratitude to my supervisor Assoc.Prof.Dr. Nguyen Van Dinh for his valuable advice and comments on my research work. I am sincere thank to his for kindly accepting my proposal to be my supervisor.I am grateful to professors for giving me advices and comments from step of presenting outline of thesis. It is the column of helping me to complete successfully my thesis. I would like to give my special thanks to my colleagues at the working place, the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) – Thanh Cong branch for their valuable supports cooperation throughout my study.In addition, I would like to thank all professors in NEU Business School for their knowledgeable lectures, who have kindly given me their helpful feedback to my research and inspiring me to deliver the report today.3 ABBREVIATIONSCAR Capital adequacy ratioCEO Chief executive officerCIC Credit information centerFDI Foreign direct investmentGSO General statistics officeH.O Head officeIT Information technologyL/C Letter of creditROI Return of investmentROA Return on assetsROE Return on equityBOD Board of directorSBV State bank of VietnamSMEs Small and medium enterprisesVCB Vietcombank – Joint Stock Commercial Bank for Foreign Trade of VietnamWTO World trade organization4 LIST OF TABLESABBREVIATIONS 4 LIST OF TABLES 5 LIST OF CHARTS . 7 INRODUCTION . 11 Chapter 1 . 14 THEORETICAL FRAMEWORKS ON CREDIT LIMIT AT COMMERCIAL BANKS . 14 1.1Bank Credit 14 1.1.1Definition . 14 1.1.2Characteristics of bank credit 15 1.1.3Roles of bank credit . 16 1.2Credit limit system in commercial bank . 19 1.2.1Definition of credit limit system 19 1.2.2Roles of credit limit system . 19 1.2.3Basis for credit limit system 21 1.3Factors effecting credit limit system in banks 34 1.3.1External factors 34 1.3.2Internal factors . 36 Chapter 2 . 38 CREDIT LIMIT SYSTEM AT VIETCOMBANK . 38 2.1Overview of Vietcombank and its performance . 38 2.1.1Introduction to Vietcombank 38 2.1.2Vietcombank’s major performance indicators 43 2.2Credit activities at Vietcombank . 45 2.2.1Overview of credit operation at Vietcombank 45 2.2.2Credit policies in Vietcombank . 48 2.2.3Credit activities 50 2.2.4Types of credits 56 2.3Credit limit system at Vietcombank . 58 5 2.3.1Structure of the system 58 2.3.2Regulations of credit limit system 62 2.3.3Procedure for approving credit limits . 62 2.3.4Process of determining the credit limit 63 2.3.5Process for credit coring and rating customer at Vietcombank . 70 2.4Assessing credit limit system at Vietcombank 79 2.4.1. Achievements . 79 2.4.2. Limitations . 81 2.4.3. Causes of limitations . 82 Chapter 3 . 86 PROPOSED SOLUTIONS TO IMPROVE CREDIT LIMIT SYSTEM AT VIETCOMBANK . 86 3.1.Orientation of VCB’s credit activities 86 3.1.1.Orientation 86 3.1.2.Objectivities of VCB’s credit activities to 2012 . 86 3.2.Solutions to improve credit limit system at VCB 88 3.2.1.Improve structure of VCB 88 3.2.2.Improve credit policies . 90 3.2.3.Improve credit scoring and rating . 92 3.2.4.Improve information technology systems 93 3.2.5.Strengthen human resources . 94 3.3.Recommendations 94 3.3.1.Recommendation to related agencies 94 CONCLUSIONS 97 REFERENCES . 98 6 LIST OF CHARTSABBREVIATIONS 4 LIST OF TABLES 5 LIST OF CHARTS . 7 INRODUCTION . 11 Chapter 1 . 14 THEORETICAL FRAMEWORKS ON CREDIT LIMIT AT COMMERCIAL BANKS . 14 1.1Bank Credit 14 1.1.1Definition . 14 1.1.2Characteristics of bank credit 15 1.1.3Roles of bank credit . 16 1.2Credit limit system in commercial bank . 19 1.2.1Definition of credit limit system 19 1.2.2Roles of credit limit system . 19 1.2.3Basis for credit limit system 21 1.3Factors effecting credit limit system in banks 34 1.3.1External factors 34 1.3.2Internal factors . 36 Chapter 2 . 38 CREDIT LIMIT SYSTEM AT VIETCOMBANK . 38 2.1Overview of Vietcombank and its performance . 38 2.1.1Introduction to Vietcombank 38 2.1.2Vietcombank’s major performance indicators 43 2.2Credit activities at Vietcombank . 45 2.2.1Overview of credit operation at Vietcombank 45 2.2.2Credit policies in Vietcombank . 48 2.2.3Credit activities 50 2.2.4Types of credits 56 2.3Credit limit system at Vietcombank . 58 2.3.1Structure of the system 58 7 2.3.2Regulations of credit limit system 62 2.3.3Procedure for approving credit limits . 62 2.3.4Process of determining the credit limit 63 2.3.5Process for credit coring and rating customer at Vietcombank . 70 2.4Assessing credit limit system at Vietcombank 79 2.4.1. Achievements . 79 2.4.2. Limitations . 81 2.4.3. Causes of limitations . 82 Chapter 3 . 86 PROPOSED SOLUTIONS TO IMPROVE CREDIT LIMIT SYSTEM AT VIETCOMBANK . 86 3.1.Orientation of VCB’s credit activities 86 3.1.1.Orientation 86 3.1.2.Objectivities of VCB’s credit activities to 2012 . 86 3.2.Solutions to improve credit limit system at VCB 88 3.2.1.Improve structure of VCB 88 3.2.2.Improve credit policies . 90 3.2.3.Improve credit scoring and rating . 92 3.2.4.Improve information technology systems 93 3.2.5.Strengthen human resources . 94 3.3.Recommendations 94 3.3.1.Recommendation to related agencies 94 CONCLUSIONS 97 REFERENCES . 98 8 ABBREVIATIONS 4 LIST OF TABLES 5 LIST OF CHARTS . 7 INRODUCTION . 11 Chapter 1 . 14 THEORETICAL FRAMEWORKS ON CREDIT LIMIT AT COMMERCIAL BANKS . 14 1.1Bank Credit 14 1.1.1Definition . 14 1.1.2Characteristics of bank credit 15 1.1.3Roles of bank credit . 16 1.2Credit limit system in commercial bank . 19 1.2.1Definition of credit limit system 19 1.2.2Roles of credit limit system . 19 1.2.3Basis for credit limit system 21 9 1.3Factors effecting credit limit system in banks 34 1.3.1External factors 34 1.3.2Internal factors . 36 Chapter 2 . 38 CREDIT LIMIT SYSTEM AT VIETCOMBANK . 38 2.1Overview of Vietcombank and its performance . 38 2.1.1Introduction to Vietcombank 38 2.1.2Vietcombank’s major performance indicators 43 2.2Credit activities at Vietcombank . 45 2.2.1Overview of credit operation at Vietcombank 45 2.2.2Credit policies in Vietcombank . 48 2.2.3Credit activities 50 2.2.4Types of credits 56 2.3Credit limit system at Vietcombank . 58 2.3.1Structure of the system 58 2.3.2Regulations of credit limit system 62 2.3.3Procedure for approving credit limits . 62 2.3.4Process of determining the credit limit 63 2.3.5Process for credit coring and rating customer at Vietcombank . 70 2.4Assessing credit limit system at Vietcombank 79 2.4.1. Achievements . 79 2.4.2. Limitations . 81 2.4.3. Causes of limitations . 82 Chapter 3 . 86 PROPOSED SOLUTIONS TO IMPROVE CREDIT LIMIT SYSTEM AT VIETCOMBANK . 86 3.1.Orientation of VCB’s credit activities 86 3.1.1.Orientation 86 3.1.2.Objectivities of VCB’s credit activities to 2012 . 86 3.2.Solutions to improve credit limit system at VCB 88 3.2.1.Improve structure of VCB 88 10 [...]... 70% workload in the process of determining the credit limit 22 Credit limit system includes credit scoring system and credit rating system After determining the class of business, based on equity, collateral, field of the business, credit officers can determine credit limit for customers 1.2.3.1 Credit scoring Credit scoring A statistical technique used to determine whether to extend credit (and if... designing and maintaining a credit limit system is crucial to Vietcombank s development, Although Vietcombank has already implemented its credit limit system and credit activities clearly and uniformly but a lot remains to be done for the final purpose of the perfection of this system Therefore, the author decided to choose the theme ‘ improving credit limit system in Vietcombank ’ in order to find out... marketing strategies towards customers to less risk - Estimated bad debts to extract up reserve credit risk In short, the purpose of credit scoring and ranking is to anticipate the risks may occur in the business Principles of credit scoring and ranking In the process of credit scoring, staff gets the initial point and total point to rank customers - Initial point is point of each grading criteria that credit. .. responsible for credit scoring and ranking customers Manager is in charge of controlling credit scoring and ranking customer Results of credit ratings: The rating is used for credit purposes: - Define credit limit - Refuse or accept granting loan, duration, interest loan and collateral - Assess current status of customers - Manage credit list and extract credit risk reserve Credit scoring and ranking enterprise... All credit limits are exceeded authority, the branch must submit to head office for approving Depend on credit limit, the branch can approach needs of customers actively, even refuse customers that are not good 1.2.3 Basis for credit limit system To determine credit limits in a credit limit system, the first step and also the most important step is credit scoring and rating Credit scoring and rating... as: financial institutions, enterprises, households and individuals In this thesis, the scope of credit limit system in banking only focuses on customers which are enterprises to analyze then issue recommendations to improve credit limit system in Vietcombank The research refers to theoretical frameworks on Credit scoring and rating at commercial banks and the actual credit limit system in Vietcombank. .. different types of customers Credit scoring for three different types of customers: financial institutions, enterprise and individuals This thesis refers to scoring enterprises Principal of credit scoring enterprise: - If point of customer is between two level, chose higher point - Ranked point is result of the initial point and weight Using credit scoring system Scoring division Credit officers are those... Credit rating Credit rating A credit rating assesses the credit worthiness of an individual, corporation, or even a country Credit ratings are calculated from financial history and current assets and liabilities Typically, a credit rating tells a lender or investor the probability of the subject being able to pay back a loan However, in recent years, credit ratings have also been used to adjust insurance... to support bank in: - Decision granting loan is determining credit limit amount of loan/guarantee, term, interest rates/fees, and security measures for credit - Monitoring and evaluating customer when remain outstanding loans to help bank anticipate the signs of bad loans and give out countermeasures in time 31 In term of managing the entire portfolio of credit, credit scoring and ranking customers... board of credit, not by any individuals In determined credit limit, manager of branch can decide on his ruling Thus, the integration of the individual judgments on the credit limit to ensure safety and objectivity of individual’s decisions Expand initiative of branch in credit activities to meet flexible needs of customers In determined credit limit, the branch can pre-determined actively possible level . currency trading, consulting...1. 2Credit limit system in commercial bank1.2.1 Definition of credit limit systemA credit limit is the maximum amount of credit. maintain and improve their competitive positions. However, expanding credit means increasing risk in credit activities of banks. Credit limit system