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COMMITMENT
I hereby commit that the entire content of the project titled: “Credit Risk
Management for Corporate Customers at Saigon Thuong Tin Commercial Joint
Stock Bank - Dong Do Branch” is my own research work, and all cited data is
accurate and has clear sources. This project does not duplicate any similar research
works. I certify that I meet all the thesis requirements specified by VNU-IS. I would
like to apply for an oral defense of my master’s thesis
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ACKNOWLEDGEMENTS
The completion of this Master's thesis has provided me with valuable knowledge,
important lessons, and a research methodology that effectively bridges theory with
practical applications. The knowledge and methodologies I have gained from the
courses in the Master’s Programme in International Business at the International
School - Vietnam National University, Hanoi, have greatly supported me in the
completion of this thesis as well as in addressing the tasks I will face in the future.
I would like to express my sincere gratitude to the esteemed lecturers of the
International School - Vietnam National University, Hanoi, for their dedication in
teaching and supporting me throughout my academic journey. I am particularly
grateful to Associate Professor Dr. Tran Thi Thanh Tu for her meticulous guidance,
constructive feedback, and invaluable assistance in helping me complete this thesis.
I would also like to extend my heartfelt thanks to all the staff of Saigon Thuong Tin
Commercial Joint Stock Bank - Dong Do Branch, for their enthusiastic support during
the period I conducted this research.
However, due to my limited knowledge, there may still be some shortcomings in the
thesis. I would greatly appreciate any comments or suggestions from professors and
interested individuals to further improve this work.
I sincerely thank you all!
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TABLE OF CONTENTS
COMMITMENTS ................................................................................................. i
ACKNOWLEDGEMENTS ................................................................................. ii
LIST OF TABLES ........................................................................................... vii
LIST OF CHARTS ......................................................................................... viii
LIST OF DIAGRAMS ...................................................................................... ix
ABBREVIATIONS .............................................................................................. x
INTRODUCTION ............................................................................................... 1
1. The Necessity of the Topic ........................................................................ 1
2. Overview of Related Research Works ....................................................... 2
2.1. International Research Trends ............................................................ 2
2.2. Domestic Research Trends ................................................................. 2
2.3. Research gaps and thesis contributions ................................................ 3
3. Research Objectives ................................................................................... 4
4. Research Subject and Scope ....................................................................... 4
4.1. Research Subject ................................................................................. 4
4.2. Research Scope ................................................................................... 5
5. Research Methodology .............................................................................. 5
5.1. Secondary Data Collection Method .................................................... 5
5.2. Data Processing Method ..................................................................... 5
5.3. Data Analysis Method ......................................................................... 5
5.4. Comparative Method .......................................................................... 5
5.5. Proportional Method ........................................................................... 6
5.6. Descriptive Statistical Method .......................................................... . 6
5.7. Forecasting Method ............................................................................. 6
5.8. Structure of the Project ....................................................................... 6
CHAPTER 1
THEORETICAL BASIS OF CREDIT RISK MANAGEMENT FOR
CORPORATE CUSTOMERS AT COMMERCIAL BANKS ....................... 7
I. OVERVIEW OF CREDIT OPERATIONS AND CREDIT RISK FOR
CORPORATE CUSTOMERS AT COMMERCIAL BANKS ........................ 7
1.1. Credit Operations for Corporate Customers at Commercial Banks ............ 7
1.1.1. Definition .......................................................................................... 7
2. Credit risk for corporate clients of commercial banks ................................... 7
2.1. Definition ............................................................................................. 7
2.1.1. Definition of Risk ........................................................................ 7
2.1.2 Definition of Corporate Credit Risk............................................. 8
2.2. Classification of Corporate Client Risk .............................................. 8
2.3. Causes of Corporate Credit Risk ........................................................ 9
2.3.1. External Causes (Objective Causes) ............................................ 9
2.3.2.Internal Causes (Subjective Causes).......................................... 10
3. Damage from corporate credit risk ............................................................... 11
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II. CREDIT RISK MANAGEMENT FOR CORPORATE CLIENTS AT
COMMERCIAL BANKS .................................................................................. 11
1. Definition ................................................................................................. 11
2. Objectives of credit risk management for corporate clients ...................... 11
3. Key Components of Credit Risk Management for corporate clients in
Commercial Banks ............................................................................................... 11
3.1. Identifying Credit Risk of Corporate Clients ............................. 12
3.2. Risk Measurement ...................................................................... 12
3.3. Risk Control ............................................................................... 13
3.4. Overdue debt handling ................................................................ 19
3.4.1. Robust Credit Risk Assessment ......................................... 19
3.4.2. Diversification of Loan Portfolio ....................................... 19
3.4.3.Strengthening Collateral Management ................................ 19
3.4.4. Stringent Credit Approval & Monitoring ........................... 19
3.4.5. Hedging & Risk Transfer Strategies ................................... 19
3.4.6. Strengthening Loan Recovery & Resolution ....................... 19
3.4.7. Leveraging Technology & Data Analytics .......................... 20
III. INDICATORS FOR EVALUATING THE RESULTS OF CREDIT RISK
MANAGEMENT FOR CORPORATE CLIENTS IN COMMERCIAL
BANKS.. .............................................................................................................. 20
1. Indicators for assessing debt collection capability .................................... 20
1.1. Overdue Debt Ratio .................................................................... …. .20
1.2. Indicator: "Clients with Overdue Debt" ............................................ 20
1.3. Indicator "Overdue Debt Structure" ................................................... 20
1.4. Non-performing Loan (NPL) Ratio of Corporate Clients .................. 21
2. According to article 10 of circular 11/2021/TT-NHNN dated july 30, 2021, on
the classification of loans and off-balance-sheet commitments using the quantitative
method ................................................................................................................. .21
3. Factors Affecting Credit Risk Management for Corporate Customers at
Commercial Banks ............................................................................................. 22
1. External Factors ................................................................................... 22
2. Internal Factors .................................................................................... 22
CONCLUSION OF CHAPTER 1 ....................................................................... 25
CHAPTER 2
THE PRACTICAL SITUATION OF CREDIT RISK MANAGEMENT FOR
CORPORATE CLIENTS AT SAIGON THUONG TIN COMMERCIAL
JOINT STOCK BANK – DONG DO BRANCH ............................................ 26
I. OVERVIEW OF SAIGON THUONG TIN COMMERCIAL JOINT STOCK
BANK - DONG DO BRANCH AND THE CURRENT SITUATION OF
CORPORATE CLIENT CREDIT AT THE BRANCH. ............................... 26
1. Overview of Saigon Thuong Tin Commercial Joint Stock Bank - Dong Do
Branch .................................................................................................................. 26
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1.1. History and Development ............................................................... 26
1.2. Organizational Structure ................................................................. 27
1.3. Overview of Dong Do Branch's Business Operations ..................... 28
1.4. Status of Business Loan Activities at Sacombank - Dong Do Branch.36
2. Credit risk management for corporate clients at saigon thuong tin commercial
joint stock bank – Dong Do branch ................................................................... 42
2.1. Credit Risk Management Model for Corporate Clients at Saigon Thuong
Tin Commercial Joint Stock Bank – Dong Do Branch ....................................... 43
2.2. Risk Management Content in Corporate Lending at Sacombank – Dong
Do Branch ............................................................................................................ 44
2.2.1. Risk Identification ................................................................... 44
2.2.2. Risk Measurement and Analysis ............................................ 45
2.2.3. Credit Risk Assessment ......................................................... 50
2.2.4. Risk Management and Risk Funding ..................................... 52
2.3. Assessment of the Current State of Credit Risk Management for
Corporate Clients at Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank)
– Dong Do Branch .............................................................................................. .55
2.3.1. Strengths and Weaknesses of Sacombank – Dong Do Branch in
Corporate Credit Risk Management ................................................................... 55
2.3.2. Causes of the Limitations in Corporate Credit Activities ...... . 58
CONCLUSION OF CHAPTER 2 ................................................................... ...60
CHAPTER 3
SOLUTIONS TO ENHANCE THE EFFECTIVENESS OF CREDIT RISK
MANAGEMENT FOR CORPORATE CLIENT LOANS AT SAIGON
COMMERCIAL BANK – DONG DO BRANCH ........................................ . 61
I. Direction and objectives for enhancing the effectiveness of corporate credit
operations at sacombank – Dong Do branch by 2028 ......................................... 61
II. Some solutions to enhance the effectiveness of credit risk management for
corporate loans at sacombank and sacombank - Dong Do branch .................... 63
1. Modernizing Credit Assessment with Predictive Analytics to manage the
weakness of over-reliance on historical data ..................................................... . 63
2. Standardizing Qualitative Criteria through HR Training to manage the
weakness of subjectivity in qualitative assessment ........................................... . 63
3. Strengthening the Governance Framework through the Adoption of Basel III
and IFRS 9 to address the weakness of difficulty in early risk detection ............ 63
4. Enhancing Early Risk Detection through EWS Integration to address the
weakness of difficulty in early risk detection ...................................................... 64
5. Strategic Portfolio Diversification against Cyclical Risk to avoid the problem
of concentrating credit in high-risk sectors ..................................................... . 64
6. Establishing a Dedicated Local Debt Recovery Unit to overcome and solve the
difficulty in debt collection caused by the remote location of the recovery unit. 64
7. Fulfilling social responsibility and promoting community development . 64
8. Recommendations for the State Bank of Vietnam (SBV) ...................... 65
CONCLUSION OF CHAPTER 3 .. ................................................................... . 67
