VIETNAM ACADEMY OF SOCIAL SCIENCES
GRADUATE ACADEMY OF SOCIAL SCIENCES
LE THU HUONG
CREDIT RISK MANAGEMENT AT VIETNAM
PROSPERITY JOINT STOCK BANK
Major: Business administration
Code: 934.01.01
BUSINESS ADMINISTRATION
DOCTORAL THESIS
Hanoi, 2020
The dissertation has been completed at
GRADUATE ACADEMY OF SOCIAL SCIENCES
Supervisors: 1. Assoc. Prof.Dr. Tran Huu Cuong
2. Dr. Pham Huy Vinh
Reviewer 1: Assoc. Prof.Dr. Le Thai Phong
Reviewer 2: Assoc. Prof.Dr. Ngo Quang Minh
Reviewer 3: Assoc. Prof.Dr. Nguyen Thi Bich Loan
This doctoral dissertation will be defended before the Council of
Examiners, at Graduate Academy Of Social Sciences At… on…. 20
This doctoral dissertation can be found at:
National Library of Vietnam
Library of Graduate Academy of Social Sciences
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OPENING
1. Urgency of topic
Banks are considered as the lifeblood of the economy. Thanks to the
operation of the commercial banking system (commercial banks), especially the
credit granting, it has ensured all economic conditions for entities to operate,
meeting timely capital sources for operations, production and business
activities, thereby ensuring improving labor productivity, expanding production
effectively, providing quality products for the society. As a result, safety in the
credit granting activities of banks is always the top concern of managers.
In practice, according to the data reported on the banking sector every
year, the interest income of the banking system in Vietnam accounts for 75% -
80% of the total revenue of the bank. However, based on many domestic and
foreign research projects, at the same time stemming from the fact that banks
increasingly promote outward capital flows to create motivation for production
and business development, The economic target is also potentially more risky
and if not strictly controlled, the consequences will be very ominous. Therefore,
the introduction of a management system that limits risks in credit granting
activities and balances the development pressure and credit risk management to
suit the development conditions of the market economy in Vietnam generally,
and commercial banks in particularly, are always very important issues.
Currently, in the group of commercial banks in Vietnam, although it is only a
private joint-stock bank, VPBank (Vietnam Prosperity Joint Stock Commercial
Bank) in recent years has always maintained its position in the top commercial
banks with the most profitable commercial banking system in Vietnam.
Besides, VPBank has also participated in the top 50 most valuable brands in
Vietnam as announced by the world-famous brand valuation firm Brand
Finance. Two fundamental motivations for VPBank to achieve impressive
growth in the past few years are the remarkable prosperity in retail services and
consumer credit services. Both of these two business segments are aimed at
individual customers, according to analysts, with the penetration of the
consumer market of Vietnamese commercial banks still at a low level as today,
along with With the advantages of existing legal regulations and the dominance
of FE Credit (a subsidiary of VPBank), VPBank has and will still dominate the
consumer lending market in Vietnam. In addition, VPBank's credit products are
also diversified and through many credit channels such as retail, small and
medium enterprises, small businesses, CMB & CIB, ..., which has ensured the
growth rate to be maintained. credit school average above the banking system
average in recent years. With such credit growth, the inevitable consequence is
the growth rate of bad debts, and the NPL ratio of VPBank tends to increase
year by year. VPBank's overdue debt ratio increased in the same direction with
the development of consumer loans. Currently, VPBank's business strategy is
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still expanding into consumer credit, so bad debt at VPBank is expected to
continue to increase. Thus, it is clear that along with the rapid growth in credit
at VPBank, there will also be an increase in NPLs that are at a worrying level,
for this reason, it is the task of VPBank to generate the most effective credit
management to ensure both business development and safety factor for banking
operations.
VPBank is currently one of the large-scale commercial banks in the
Vietnamese commercial banking system, and credit activities and credit risk
management arising at VPBank can be considered common issues carried out in
the commercial banking system. in Viet Nam. Therefore, the study of credit risk
management at VPBank will also have similarities with credit risk management
of the Vietnamese commercial banking system.
In terms of theory, there have been many different studies on risks, risk
management in general and credit risk management in particular in commercial
banks in Vietnam. However, there are still some limitations such as many
studies are too qualitative, not pointing out the losses, or not measuring the
risks that banks have to suffer when credit risk arises. Some quantitative studies
on the factors that affect banking operation have not been systematically
statistic. In addition, for credit activities and credit risk management at
VPBank, there are no adequate scientific researches on credit risk management
at VPBank, including the current status of credit activities, credit risk at the
bank; factors affecting credit risk management of VPBank and the
achievements and limitations in credit risk management at this bank. Therefore,
it is necessary to conduct theoretical research on credit risk management at
commercial banks in general and VPBank in particular to have a complete and
scientific system. Stemming from the above practical and theoretical issues
with an aim to improving credit risk management is a critical and extremely
urgent issue for VPBank, the author chose the topic "Credit risk management at
Vietnam Prosperity Joint Stock Commercial Bank" as the research topic for his
doctoral thesis.
2. Aims and research tasks
2.1. Aims
The thesis on credit risk management at Vietnam Prosperity Joint Stock
Commercial Bank comprises of the reality of credit risks, management and
several factors affecting such process.
2.2. Research tasks
(1) Studying theoretical research on credit risk, credit risk management in the
operations of the commercial banking system.
(2) Studying the experience of credit risk management of some commercial
banks in the world and draw lessons for credit risk management in the
Vietnamese commercial banking system.
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(3) Researching the current situation of credit risk management at VPBank to
properly assess the credit risk management situation in this bank, point out the
successes and limitations of credit risk management at VPBank.
(4) Searching factors affecting credit risk management at VPBank
(5) Proposing solutions to improve credit risk management at VPBank
3. Subject and scope
3.1. Subject
The credit risk management of commercial banks.
3.2. Scope
Scope of content: The author focuses on researching the essential contents of
credit risk, credit risk management at commercial banks in general and VPBank
in particular. Based on the practices arising in credit risk management at
VPBank, the author draws the achievements, the shortcomings and the causes
of the limitations, and then recommends some solutions to improve governance
Credit risk at VPBank.
Scope of space: Researching into credit risk management in the entire VPBank
system
Scope of time: secondary data collected from 2010 to June 2019. 2010 is the
time to mark VPBank receiving the State Bank's decision to allow VPBank to
change its name from Joint Stock Commercial Bank to Non-state Enterprises of
Vietnam to Vietnam Prosperity Joint Stock Commercial Bank.
Primary data is surveyed from September 2018 to January 2019.
4. Research methods
Collecting information method
Secondary data:
Collected sources: the banking industry and local reports, books,
newspapers, magazines, domestic and international research, workshop
documents, conferences, information on the internet, annual reports, which are
announced by VPBank.
Collected content: data on VPBank's business performance in the
period 2010-2018, review of VPBank's credit sector in particular and a
Vietnamese commercial bank, relevant reviews and data on credit activities
inside and outside Vietnam, data related to credit activities and credit risk
management at VPBank.
Primary data:
Collected content: the assessment of VPBank staff and employees and
customers who have had credit relationships with VPBank about credit risk
management of VPBank on credit operations, credit risk management and other
factors affect this activity.
Subjects: VPBank officers and employees working in positions related to
credit activities such as sales, credit support, appraisal, approval, credit