Large number of banks, fierce competition among banks, strategies to
expand market share and market penetration of domestic banks and financial
institutions. Besides, it is the joining of foreign banks.
- Agribank's export credit focuses mainly on the export of agricultural,
forestry and fishery products. This is an area of potential risk; the agricultural
export sector always faces increasingly complex and strict trade barriers,
international standards for products produced and exploited. The tools to prevent
and limit risks in agriculture are lacking, so the investment efficiency of credit in
this area is still difficult.
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developments in both quantity and quality. The thesis has clarified
the limitations and causes in the export credit development at Agribank. This is
the basis for giving practical solutions to the export credit development in
particular and credit activities of Agribank in general during the integration
period.
Thirdly, the proposed solutions of the thesis were grounded and based on
the context of international integration. The thesis proposed key solutions and
some support solutions to develop export credit at Agribank. This is the basis for
Agribank to apply to develop its export credit, Specifically, the solution group of
the thesis: Firstly, strengthen market share expansion, improve customer policy in
the export credit development. Secondly, mobilize capital and enhance the
amount of foreign currency to meet the demand for loans and export payments.
Thirdly, prevent risks in loans and payments at Agribank; handle and prevent
risks in export lending. Additional solutions groups: improve technology quality,
export lending process; increase information; HR solutions.
5. Structure of the thesis
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In addition to the introduction, conclusion and list of research works of
research student related to the thesis topic, the list of references, the thesis
consists of 4 chapters:
Chapter 1: Overview of research situation and methods related to the thesis
topic.
Chapter 2: Theoretical basis for export credit development at commercial
banks.
Chapter 3: Current status of export credit development at Agribank.
Chapter 4: Orientation and solutions for export credit development at
Agribank.
CHAPTER 1
OVERVIEW OF RESEARCH SITUATION AND METHODS RELATED
TO THE THESIS TOPIC
1.1. RESEARCH WORKS RELATED TO THE THESIS
1.1.1. Studies on Agribank's business strategy and credit operations
1.1.2. Studies related to export credit at commercial banks
1.1.3. Studies on credit risk management
1.1.4. Studies related to factors affecting the export credit of commercial
banks
1.1.5. Studies related to green credit
1.2. RESEARCH GAPS
1.3. RESEARCH METHODS
1.3.1. Data collection method
1.3.1.1. Secondary data:
- The data on organizational structure and team, business activities are
mainly taken from the annual business result report of Agribank; annual business
result report of VCB, BIDV, Vietinbank. The figures of these reports are mainly
by year from 2012 to 2018.
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- The data on the system of Vietnamese commercial banks and state-owned
banks are synthesized from data from the Vietnam State Bank website and
specialized journals such as Banking Magazine, Finance magazine, Market -
Finance magazine, etc.
1.3.1.2. Primary data:
To learn, analyze and assess the current status of export lending activities
of Agribank. On that basis, collect data to build questionnaires, directly survey
opinions of existing customers and potential customers of Agribank
1.3.2. Methods of analysis and forecast
1.3.2.1. Methods of economic statistics:
1.3.2.2. Comparative method:
1.3.2.3. Forecast method:
CONCLUSION OF CHAPTER 1
From the overview of published research related to the thesis, the author
has set up 4 research questions to be the basis for determining the research
direction of the thesis. The thesis inherits research works that have important
implications for the export credit development of commercial banks, on that basis
to determine research methods to accomplish the research objectives of the thesis.
CHAPTER 2:
THEORETICAL BASIS FOR EXPORT CREDIT DEVELOPMENT AT
COMMERCIAL BANKS
2.1 GENERAL OVERVIEW OF EXPORT CREDIT ACTIVITIES OF
COMMERCIAL BANKS
2.1.1. The concept of credit
According to the author of the thesis: “Credit is a concept that shows the
relationship between lenders and borrowers. In this relationship, the lender is
responsible for transferring the right to use money or goods to the borrower for a
certain period of time. The borrower is obliged to pay the amount or value of the
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borrowed goods when the loan repayment term comes with or without an
interest”.
2.1.2. The concept of export credit of commercial banks
The author has generalized the concept of export credit as follows, “Export
credit is a form of credit in which commercial banks directly lend money to export
enterprises to supplement working capital, implement export business projects or
perform indirect lending, guarantee enterprises, in order to contribute to
financial security for export enterprises to carry out their export activities”.
2.1.3. Forms of export credit
2.1.3.1 Loans for production and trading of export goods
2.1.3.2 Discount bill of exchange
2.1.3.3 Discount a set of goods' documents
2.1.3.4 Credit advances to exporters
2.1.3.5 Factoring
2.1.3.6 Bank guarantee
2.1.4. Export credit process of commercial banks
2.2. EXPORT CREDIT DEVELOPMENT AT COMMERCIAL BANKS
2.2.1. Perspectives of export credit development
From a development perspective, the thesis can generalize the export credit
development as follows: The export credit development is the fact that banks
increase loan balance, discount, guarantee, factoring for export activities; At the
same time, banks must diversify export credit products, combine to improve the
quality of export credits to better meet customer needs in order to achieve the
bank's target.
2.2.2 Criteria to reflect the export credit development of commercial
banks
2.2.2.1. Qualitative criteria
Export credit process
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Compliance with export credit principles
Customer satisfaction level on export credit activities of commercial
banks.
2.2.2.2. Quantitative criteria
Criteria to evaluate the export credit development of commercial
banks
(1) Scale of sales, export credit balance, number of customers, export credit
market share:
Loan sales for export enterprises:
Export credit debit balance:
Number of customers having export credit relations with commercial
banks:
(2) Export credit growth rate of commercial banks
Growth rate of loan sales for export enterprises:
Credit debit balance growth rate for export enterprises:
Customer growth rate of export enterprises:
(3) Indicators reflect the structure of export credit debit balance
Export credit structure by manufacturing industry
Structure of export credit debit balance by loan products
Export credit structure by term
Criteria to evaluate the quality of export credit products
Bad debt ratio and potential debt of capital loss for export credit
Income from export credit activities
Performance using export credit capital
Criteria to evaluate the export credit through factors affecting the
environment of export credits (green credit criteria)
2.2.3. Management of export credit activities of commercial banks
2.2.3.1. The concept of management of export credit activities
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Management of export credit activities of commercial banks is the
activity of managing, inspecting and supervising the application of policies and
regulations of credit institutions and laws of the state on credit activities, ensuring
credit activities, complying with regulations, limiting to the lowest risks and
bringing optimal performance in this activity.
2.2.3.2 The objective of managing export credit activities of
commercial banks
Develop export credit activities in both depth and width.
2.2.3.4. Content of managing credit activities at commercial banks
Manage credit customers
Control credit activities at commercial banks
Manage structure and sector of export credit
Classify debts and set up risk provisions
2.3. FACTORS AFFECTING THE EXPORT CREDIT DEVELOPMENT
OF COMMERCIAL BANKS
2.3.1. External factors
2.3.1.1 International rules for export lending activities
2.3.1.2. Group of factors in the legal environment
2.3.1.3. Group of factors from customers
- Qualifications and ethics of the leadership team
- Business strategy of enterprises
- Financial ability of enterprises
2.3.1.4. Other factors
- The political, social and economic environment inside and outside the
country
- Exchange rate
2.3.2. Group of factors from the bank granting export credit
2.3.2.1. Credit policy of the bank
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2.3.2.2. Credit processes
2.3.2.3. Qualifications of export credit staffs
2.3.2.4. Credit information
2.3.2.5. Capital work
2.3.2.6. Internal inspection and control
2.4. EXPERIENCE OF THE EXPORT CREDIT DEVELOPMENT OF
SOME COMMERCIAL BANKS IN VIETNAM
2.4.1. Activities of China Export-Import Bank (EXIMBANK in
China)
2.4.2. Activities of Export-Import Bank of Malaysia Berhad
2.4.3. Export credit activities of Vietnam Joint Stock Commercial Bank
for Industry and Trade (VietinBank)
2.4.3. Export credit activities of The Joint Stock Commercial Bank for
Investment and Development of Vietnam (BIDV)
2.4.3. Export credit activities of Joint Stock Commercial Bank for
Foreign Trade of Vietnam (Vietcombank)
2.4.4. Lessons learned about the export credit development for
Agribank
- Pay attention to policies to support exports, in which export credit
instruments are used as an important method to promote long-term and
sustainable export growth. Export credit in countries is made through an
organization that is Export-Import Bank, or through two organizations: Export-
Import Bank and Export Credit Insurance Company.
- All countries have carried out export credit insurance operations and have
paid attention to this role.
- Diversify import and export credit service forms and products to suit the
characteristics of each industry, each economic sector and development
orientation.
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- Programs for export credit at Vietnamese commercial banks are aimed
at key commodities: agricultural products, seafood, rubber, coffee, leather shoes,
textiles,...
CONCLUSION OF CHAPTER 2
The thesis has clarified the theory of export credit development at
commercial banks. In particular, show the concept of export credit development;
criteria for measuring export credit development; analyze the factors affecting the
export credit of commercial banks; especially systematize the theory of
management in export credit activities, content of managing export credit
activities of commercial banks. The thesis has studied the experience of export
credit development of a number of domestic and foreign commercial banks such
as Export-Import Bank of Malaysia Berhad; Export-Import Bank of China;
BIDV, Vietinbank, Vietcombank. Lessons learned for Agribank in the export
credit development
12
CHAPTER 3
CURRENT STATUS OF EXPORT CREDIT DEVELOPMENT AT
AGRIBANK
3.1. THE PROCESS OF FORMATION AND DEVELOPMENT OF
VIETNAM BANK FOR AGRICULTURE AND RURAL DEVELOPMENT
3.1.1 History
a. General introduction
Established on 26 March 1988, operating under the Law on Credit Institutions
of Vietnam, until now, Agribank Vietnam is a 100% commercial bank owned by the
state budget, plays a key and important role in the economic development of Vietnam,
especially investment in agriculture, farmers and rural areas.
As of 31 December 2018, Agribank continued to maintain the leading
position of commercial banks in the ranking of 500 largest enterprises in Vietnam
in 2016 (VNR 500) with scale:
Total assets: 1.282.448 billion Vietnam dongs.
Total capital: 1.186.228 billion Vietnam dongs.
Charter capital: 30.473 billion Vietnam dongs.
Total debit balance: 1.006.442 billion Vietnam dongs (debit balance accounted
for 70,5%)
Operation network: nearly 2,300 branches and transaction offices throughout
the country, Cambodia Branch.
Personnel: nearly 40,000 employees.
3.1.2. Organizational structure
3.1.3. Main business results of Agribank
3.1.3.1. About total assets
3.1.3.2. About mobilized capital and credit debit balance
3.1.3.3. Non-credit activities
3.1.3.4. Profit of the bank
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3.2. CREDIT ACTIVITIES AT AGRIBANK
3.2.1. Results of credit activities
3.2.2. Credit structure by industry at Agribank in Vietnam
3.3. CURRENT STATUS OF EXPORT CREDIT DEVELOPMENT AT
AGRIBANK IN THE PERIOD OF 2012-2018
3.3.1. Objects and conditions for export credit activities of Agribank
3.3.1.1. Objects of export credit
(1) Issuing export credit for enterprises to purchase, produce and process
exports of groups:
* Group of agricultural, forestry and aquatic products::
* Group of handicraft goods:
* Group of industrial products:
(2) Vietnamese enterprises participate in the export of goods and services
on the list of priority items to encourage to export and promote the advantages of
Vietnam.
(3) Foreign customers can also get loans to buy goods and services on the
list of encouraged goods of Vietnam, but to borrow capital they must have the
guarantee from the Government or the Central Bank of the buyer.
3.3.1.2 Conditions for issuing export credit
3.3.2. Results of export credit activities
3.3.2.1. Situation of general export credit debit balance of Agribank
Export credit of Agribank accounts for a small proportion of total debit
balance of the whole system
The growth rate of outstanding export credit balance over the years at
Agribank was quite clear from 2015-2018; There was a slight decrease in 2014-
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2015. In 2016, the growth rate of outstanding export loans was 4.33%. In 2018,
the growth rate was 5.91%.
3.3.2.2. The situation of export debit balance by term at Agribank
3.3.2.3. The situation of export debit balance by industry
3.3.2.4. The situation of export credit debit balance by forms
3.3.3. Current status of export credit quality at Agribank
3.3.3.1. Analysis of the criteria for evaluating the export credit quality
3.3.3.2. Green credit for export support at Agribank
3.3.3.3. Export credit management at Agribank
* Customer management activities
Agribank has always focused on building and developing relationships with
customers, business partners and stakeholders to develop export credit and
customer care activities to develop markets and expand customer network for
export credit activities.
In the period of 2012-2017, the number of customers with credit and export
payment relations at Agribank increased markedly, in 2016, there were 1606
customers with credit and international payment relations, in 2018, there were
2071 customers, up 13,5% compared to 2017. However, this number of customers
is still quite modest. Export enterprises have a positive evaluation of export credit
activities at Agribank
* Risk management in export credit development
The issue of export credit risk of Agribank in the period of 2012-2017 has
always been concerned. Agribank has constantly renewed credit risk management
in general and export credit in particular according to the requirements of
sustainable, safe and integrated development.
3.4. EVALUATION OF THE IMPACT OF FACTORS AFFECTING
EXPORT CREDIT AT AGRIBANK
3.4.1. Evaluation of the impact of factors on export credit at Agribank
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3.4.1.1. The legal environment factor
In the period of 2012-2018, the export of domestic products that cannot be
produced is paid attention to by the state, it created conditions for development.
So that it will be given the priority to mechanisms and interest rates for export
lending.
3.4.1.2 Factors from customers
(1) Qualifications and ethics of owners of enterprises
(2) The ability and willingness to repay debts of export enterprises who are
borrowing at Agribank
3.4.1.3. Factors of Agribank
Credit policy of Agribank
Ability to meet capital needs for borrowing needs for export
Qualifications and staffs of export credit
Process and information of export lending activities
Customer marketing
Inspection work after disbursement:
3.4.2. Customers’ assessment for export lending activities at Agribank
3.4.2.1 Objectives of the survey
Perform customer survey and assessment for the quality of service
provision of export lending activities at Agribank (a number of typical branches)
from that, we can get the customers' opinions and comments about this activity of
branches, the good points are highly appreciated by the customers as well as the
limitations that make the customers unhappy. On that basis, it is proposed to
improve mechanisms and policies for export lending products to satisfy
customers' needs.
3.4.2.2 Survey objects and methods
Objects are enterprises that have been borrowing capital to serve export
business activities at Agribank's branches and export enterprises that Agribank's
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branches are marketing, areas of enterprises include: industry, agriculture,
fisheries, trade and services
3.4.2.3 Survey results (Appendix no. 2)
Total votes issued: 200 votes, total votes collected: 197 votes, of which 148
enterprises have been borrowing capital, 49 enterprises are in the process of
marketing.. All 197 enterprises, they have a relationship of borrowing with at least
one bank.
3.5. GENERAL EVALUATION
3.5.1 Achieved results
3.5.1.1. Export credit growth rate of Agribank Vietnam has grown strongly
in the past time.
3.5.1.2. The export credit sectors of Agribank Vietnam support for key
sectors of Vietnam
3.5.1.3. Export credit of Agribank has made the effective contributions to
the implementation of rural agricultural development solutions.
3.5.1.4. The quality of export credit of Agribank has improved
3.5.2 Limitations
+ The export credit market share is still limited, customers of Agribank
mainly focus on purchasing and processing agricultural products; lending
activities for the fisheries sector are narrowed; lending activities for industry,
electronics, supporting industry, processing industry and high-tech applications
for export are not wide. The capital provision for export credit has not been
diversified: Agribank's main export credit focuses on lending to producers of rice,
coffee, rubber, seafood, catfish processing, etc ...; the participation in the value
chain is still limited. The issuing of export credit from planting to processing and
consumption is not yet interested by Agribank.
+ Export lending products are still traditional, not yet diversified: it only
focuses on some traditional methods such as lending each time and lending on a
17
limit, and other forms of lending have not been paid attention to apply, therefore,
it does not meet the diverse needs of customers. Export lending activities are not
closely linked to the development of products and services in the modern banking
model.
+ Analyze according to customer details, there are still many potential risks
when the debt balance focuses mainly on a number of large customers, it has not
focused on meeting the capital needs of the type of private enterprises or small
establishments; the number of customers is still low, the structure of investment
sectors is still monotonous, there is no investment in parts of foreign-invested
enterprises.
+ Export credit capital has not fully met customers' requirements:
Currently, the demand for loans from export enterprises is increasing while the
bank has not had a large capital source to prioritize this sector. In addition, with
capital mobilized from residents and economic organizations, the medium and
long-term capital is still low, the amount of payment deposits is not high, it made
difficult to implement medium and long-term financing projects with high value.
+ The collection of information about foreign partners (partners of
customers) is still limited and not properly focused, this affected the appraisal
quality when lending as well as did not meet the needs of customers.
+ The handling of bad debt is still inadequate: Agribank's method of
handling bad debts is mainly provision for credit risk to offset losses in export
credit activities. The methods of direct debt collection from customers are limited;
Export credit insurance has not been paid much attention; the provision for credit
losses affected the profitability of Agribank.
In summary, through the analysis of current situation of export lending at
Agribank during the period of 2012 - 2018 by analyzing methods from general to
specific view and assessing the indicators, we see Agribank has achieved
relatively good results in investing in export lending activities. However, the
18
above mentioned drawbacks made the development of export lending in Agribank
still has not reached the expected level. In the coming time, Agribank needs
practical solutions to improve and further enhance the scale and quality of export
lending activities, contribute to increase income and become a versatile modern
bank.
3.5.3. Causes
3.5.3.1. Causes from export enterprises
3.5.3.2. Causes from Agribank
CONCLUSION OF CHAPTER 3
In export credit activities, Agribank focused on agricultural export loans as
the key; supporting industries, processing industry, high-tech application,
production, processing and consumption of clean agricultural products,
supporting start-up businesses ... are being focused on developing by Agribank.
Agribank has enhanced credit investment in agricultural products in the form of
purchasing and processing. However, in addition to increasing the export credit
balance, Agribank focused on diversifying export loans, preferential export
loans...
In order to develop export credit, Agribank needs to resolve well the
limitations and challenges of export credit; carefully analyze the factors affecting
export credit development to have appropriate solutions for developing its export
credit, when the market is fiercely competitive today
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CHAPTER 4
SOLUTIONS FOR EXPORT CREDIT DEVELOPMENT AT AGRIBANK
4.1. THE CONTEXT OF THE WORLD AND THE COUNTRY AFFECTS
THE EXPORT CREDIT DEVELOPMENT AT AGRIBANK
4.1.1. The world context affects the export credit development
China–United States trade war
Technology 4.0 and the strong development of electronic banking
services and digital banking services in the context of globalization.
Risks in banking operations
4.1.2. Domestic context affects export credit development
The process of reforming the banking system associated with the
handling of bad debts of the banking system under the Government's direction
and the state bank until 2020
Vietnam's commitments in the integration process
Requirements for compliance with standards
Human resources meet requirements:
4.2. Advantages and disadvantages for export credit development at
Agribank.
4.2.1. Advantages
- Export market size increased sharply, in the period of 2011-2018 is a
period of outstanding growth in export turnover
- Export enterprises increase both in quantity and quality.
- In the field of credit, many specific policies related to agriculture and
export supporting industries are implemented such as pilot lending for agricultural
development, lending for rice purchase, lending for aquaculture, purchasing,
processing, exporting seafood, lending to support offshore fishing fishermen,
lending to develop garment industry, handicrafts, ...
20
- Agribank has strong financial capacity, wide network, is a branded bank;
Abundant human resources, quality is improved; Large traditional customer
market; Modern information technology system, technology application in
management and administration.
4.2.2. Disadvantages
- Large number of banks, fierce competition among banks, strategies to
expand market share and market penetration of domestic banks and financial
institutions. Besides, it is the joining of foreign banks.
- Agribank's export credit focuses mainly on the export of agricultural,
forestry and fishery products. This is an area of potential risk; the agricultural
export sector always faces increasingly complex and strict trade barriers,
international standards for products produced and exploited. The tools to prevent
and limit risks in agriculture are lacking, so the investment efficiency of credit in
this area is still difficult.
- Although the legal environment has many policies to facilitate export
development, in fact, the policy documents that facilitate the export credit
development are still limited, it is not specific to the commercial banking system.
Preferential policies still focus only on state export credits implemented by
development banks.
- The coordination between banks and relevant agencies is not
synchronized with export credit. There is no professional agency in providing
financial information of exporters, the source of financial information is still
based on the financial statements provided by enterp
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