Tóm tắt Luận án Management of bad debts in credit activities of Vietnam Joint Stock Commercial Bank for Industry and Trade

tutions, 2005). - Rossi, S.P.S., Schwaiger, M.S., and Winkler, G. (How loan portfolio diversification affects risk, efficiency and capitalization: A managerial behavior model for Austrian banks, 2009). - Nguyen Duc Tu (Credit risk management at Joint Stock Commercial Bank for Industry and Trade of Vietnam, 2012). - Nguyen Tuan Anh (Credit risk governance of Vietnam Bank for Agriculture and Rural Development, 2012). 1.1.1.2 Studies on bad debts and factors affecting bad debts - Mohd Zaini Abd Karim, Sok-Gee Chan, Sallahudin Hassan (Bank efficiency and non-peforming loans: evidence from Malaysia and Singapore, 2010). - Raphael Espinoza and Ananthakrishnan (Nonperforming Loans in the GCC Banking System and their Macroeconomic Effects, 2010). - Nguyen Thi Thu Dong (Improving credit quality at Joint Stock Commercial Bank for Foreign Trade of Vietnam in the integration process, 2012). - Roland Beck, Petr Jakubik and Anamaria Piloiu (Non-Performing loans What matterSin addition to the economic cycle, 2013). - Alwyn Jordan and Carisma Tucke (Assessing the Impact of Nonperforming Loans on Economic Growth in The Bahamas, 2013). - Rabeya Sultana Lata (Non-Performing Loan and Profitability: The Case of State Owned Commercial Banks in Bangladesh, 2015). - Moh Benny Alexandri and Teguh Iman Santoso (Non Performing Loan: Impact of Internal and External Factor: Evidence in Indonesia, 2015). - Nguyen Thi Hong Vinh (Bad debt of Vietnam commercial banking system, 2017) 1.1.1.3 Research on bad debt management of commercial banks - Nguyen Thi Hoai Phuong (Managing bad debts in Vietnamese commercial banks, 2012). - Nguyen Thi Thu Cuc (Managing bad debts in Vietnam Bank for Agriculture and Rural Development, 2015). - Tran Thi Thanh Diep (Managing bad debts in Vietnam Joint Stock Commercial Bank for Industry and Trade, 2017), 1.1.2. Research gaps and scientific and practical values ​​of the thesis are inherited 1.1.2.1 Research gap Firstly, overseas studies are done in highly developed economies and banking industries. There, the market conditions, the management model, the legal corridor governing the economy and the internal conditions of the banks are very different from the characteristics of the Vietnamese economy and commercial banking system. Male present. Secondly, a number of domestic researches conducted in the previous periods (works of Nguyen Duc Tu (2012) and Nguyen Thi Hoai Phuong (2012)): old data information, while the business environment There have been changes in business, legal policies and management level. Although, past and elaborate past studies have practical value during the period of time when the topic is published, it may not be completely suitable for the current context. Thirdly, most published studies have approached in the perspective of Finance - Banking (studying credit risks/bad debt management process from identification, risk measurement, classification to debt settlement. bad), not researching from the perspective of the approach of Economic Management (researching management content according to management functions: (1) Develop and issue policies, strategies for managing bad debts and procedures for managing bad debts; (2) Organizational structure of bad debt management apparatus; (3) Organize the implementation of bad debt management activities. Thus, it can be affirmed that in the published studies there are very few comprehensive studies on bad debt management in credit activities of Vietnam Joint Stock Commercial Bank for Industry and Trade according to the management's functions during the period. most recently (2012-2018). From the comments above, the author of the thesis say some of the following gaps have helped the author study in order to implement the thesis topic well: - The theory of content, evaluation criteria and factors affecting the bad debt management of a commercial bank according to the approach of the major economic management. - The situation of bad debts and bad debt management at Vietnam Joint Stock Commercial Bank for Industry and Trade (according to management functions) for the period 2012-2018. - Solutions to complete and strengthen management of bad debts of Vietnam Joint Stock Commercial Bank for Industry and Trade. 1.1.2.2 Scientific and practical values ​​of the thesis are inherited In the process of researching and implementing the thesis, the PhD student has developed a number of theories on bad debts and credit risk management of commercial banks; Reference to sources of information and data drawn from the research of Nguyen Duc Tu (2012) and Tran Thi Thanh Diep (2017). 1.2 Research questions From the above synthesis and analysis, the thesis will focus on the reply to the following questions: - What does Management of bad debts includes? Which criteria are used to assess the status of bad debt management of commercial banks? - How is the situation of bad debt management at Vietnam Joint Stock Commercial Bank for Industry and Trade? What are the main factors affecting the management of bad debts in credit activities at Vietnam Joint Stock Commercial Bank for Industry and Trade? Advantages, limitations and causes of the limitations and shortcomings in the management of bad debts at Vietnam Joint Stock Commercial Bank for Industry and Trade? - What measures should be done in management of bad debts in order to prevent and control bad debts in Vietnam Joint Stock Commercial Bank for Industry and Trade in the coming years? 1.3 The research method of the thesis 1.3.1 Method of collecting information and data * Primary information Primary information was collected by in-depth interview method to make appropriate assessments and assessments of the content presented in the thesis. In addition to the objective subject, the author interviewed a number of subjects who are managers, experts of State inspection and supervision agencies of the provincial / municipal State Bank branches (Appendix 7). * Secondary information PhD student conducted secondary information on the status of credit operations, bad debts and bad debt management at Vietnam Joint Stock Commercial Bank for Industry and Trade (2012-2018) (credit regulations, policies and principles, reports about bad debt of the bank). Websites of SBV, Vietnam Joint Stock Commercial Bank for Industry and Trade, and other commercial banks, 1.3.2 Method of aggregating and processing information and data * Processing primary information For the primary information collected by the method of in-depth interview with experts, the PhD student proceeded to transfer the information data from the interview to the word file format. Next, the data is screened, analyzed, synthesized and used in some topics. The results of the research are based not only on the summary of the interviewee's opinion on each specific content but also on the general assessment to draw comparisons with the qualitative analysis results. through secondary data collected (Appendix 4). The main method used in the thesis is a qualitative method in combination with in-depth interviews with experts, economic managers, experts, chief experts, and senior experts of the State Administration Committee of the State Bank, branch of provincial level/city. * Processing secondary information With secondary information collected, postgraduate used statistical research, comparison, analysis and synthesis methods; using supporting tools such as graphs, tables, tables to analyze bad debt management activities in credit activities of Vietnam Joint Stock Commercial Bank for Industry and Trade, based on that evaluation, comparison, to draw the results. discuss about management activities in credit activities of Vietnam Joint Stock Commercial Bank for Industry and Trade. In addition, postgraduate uses logical reasoning and methodology. 1.4. Research process of the thesis Overview of literature review Key words: bad debts, bad debt management, identifying research gap Determining research problems Bad debt management Determining research objectives and questions Systemizing theoretical basis – analysis of current situation – measures to complete Systemization ad development of theoretical basis Theories on bad debts and bad debt management Secondary data - Reviewing and collecting data - Checking data - Analyzing data Data collection Synthetize, analyze and report research results Primary data - In depth interview (In depth) Proposing orientations and solutions Figure 1.1 Research process of the thesis (Source: Illustration of the author) * Process of collecting and processing primary data Figure 1.2: Process of collecting and processing primary data (Source: Illustration of the author) Propose solutions and experiences Collecting data on bad debt management of Vietinbank and some commercial banks Analyse, evaluate current situation – dawning conclusion Determining objectives, subject and methods of research Building theoretical basis and bad debt management Information collected from interviewing experts Information from published studies, results Figure 1.3 Process of collecting and processing secondary data (Source: Illustration of the author) Chapter 2 THEORETICAL BASIS FOR BAD DEBT AND BAD DEBT MANAGEMENT IN CREDIT ACTIVITIES OF COMMERCIAL BANK 2.1 General arguments about bad debts in credit activities of commercial banks 2.1.1 Concepts of bank credit and bad debt 2.1.1.1 Bank credit and credit risk * Banking credit concept Bank credit is a credit relationship between two parties, necessarily on one side as a bank, on the other side as an individual, an enterprise or other organizations. This is essentially a transfer of the right to use capital between a bank lender and a credit recipient for a specified period of time. Upon the expiry of the agreement, the creditee must repay the creditor the original value and the added value. * Credit risk Credit risk is a type of risk arising in the process of a bank's loan, manifested by the fact that customers cannot pay debts or pay debts on time or inadequately to the bank. Thus, when the customer is due in due payment or does not pay or does not fully pay, it means that credit risk has occurred. 2.1.1.2. The concept of bad debt According to previous studies, the concept of bad debt and how to identify bad debt are complex and diverse. The term "bad debt" in English is "bad debt", is "non-performing loan", or "doubtful debt". According to Basel Committee, According to the Circular No. 02/2013/TT - NHNN dated January 21, 2013 of the State Bank of Vietnam, according to PHD candidate’s opinion, bad debt is a loan that is overdue and and / or principal repayment. under an agreement over 90 days and doubt the borrower's ability to repay the debt. Specifically, according to Article 6 or Article 7 of Decision 493/2005 / QD-NHNN, bad debts are debts of groups 3, 4 and 5, including substandard debts, doubtful debts, and potentially irrecoverable debts. . 2.1.2 Classification of bad debts - Classification of bad debts by time of overdue debt and debt recovery - Classifying bad debts according to the accounting principles 2.1.3 Method of determining bad debt - According to the quantitative method - According to qualitative methods 2.1.4 Impact of bad debt - The impact of bad debt on the financial situation of the bank -The impact of bad debts on the economy. 2.2 Management of bad debts of commercial banks 2.2.1 Bad debt management concept and goal * The concept of bad debt management According to Basel 2005, “Bad debt management is a process of developing and implementing credit management strategies and policies to achieve safety, efficiency and sustainable development; including strengthening measures to prevent and limit the arising of non-performing loans, together with measures to handle the arising bad debts, thereby increasing sales, reducing costs and improving quality. , business performance in both short and long term of commercial banks ”. * The goal of bad debt management Bad debt management is a part of credit risk management, this is one of the key activities of commercial banks. The bad debt management must focus on ensuring the effectiveness of credit operations and constantly improving the quality of credit operations of commercial banks. Bad debt management must aim to provide the most effective way to handle and minimize losses to commercial banks. 2.2.2 Contents of bad debt management The contents of the bad debt management include: Develop and issue policies and strategies for bad debt management and bad debt management process; (2) Organizational structure of bad debt management apparatus; (3) Organize the implementation of bad debt management activities. 2.2.3 Criteria for evaluating the management of bad debts of commercial banks According to management content, the PhD candidate focuses on analyzing 2 criteria: compliance and effectiveness. 2.2.3.1 Compliance Compliance is the responsibility of all managers, executives, and bank staff in complying with the State's laws and policies and the bank's own regulations on bad debt management. Therefore, according to management function the compliance shows in the commercial banks stage: formulating and issuing policies, strategies for managing bad debts and the process of managing bad debts; Is the organization of implementing the management activities strictly comply with the current regulations of the State Bank? 2.2.3.2 Effectiveness Efficiency (economic efficiency) is an important economic category that shows the comparative relationship between achieved economic results and the costs spent to achieve that efficiency. The effectiveness is also reflected in the commercial banks stage: developing and issuing policies, strategies for managing bad debts and the process of managing bad debts, organizational structure of bad debt management apparatus; Has the organization of implementation of the management activities been achieved well or not well, is the current level of the State Bank regulated? In general, efficiency is measured as follows: 1. Total bad debts in the balance sheet 2. The ratio of bad debts within the table 3. Proportion of provision of risk for bad debts 4. The bad credit ratio includes debt that has been settled by risk provisions. 5. Total off-balance sheet bad debts and ratio of off-balance sheet bad debts. 2.3 Factors affecting the management of bad debts of commercial banks 2.3.1 Group of subjective factors - Awareness of bank officials in each position. - Information technology system of commercial banks. - Ethics and professional qualifications of bank officials and employees. - Equity of the bank 2.3.2 Group of objective factors - Business environment - Policy mechanisms and legal corridors - Inspection and supervision of the Central Bank - Consciousness from borrowers 2.4 Experience in managing bad debts in credit operations of some commercial banks and lessons learned for Joint Stock Commercial Bank for Industry and Trade of Vietnam 2.4.1 Experience in managing bad debts of some commercial banks In the research content of bad debt management experience, the PhD student referenced the experience of two banks: Bank for Investment and Development of Vietnam (BIDV) and Joint Stock Commercial Bank for Foreign Trade of Vietnam (VCB). These are two large banks with similar characteristics to Vietnam Joint Stock Commercial Bank for Industry and Trade, so the banks' bad debt management experience is a valuable lesson for Vietnam Joint Stock Commercial Bank for Industry and Trade. 2.4.2 Lessons learned for Vietnam Joint Stock Commercial Bank for Industry and Trade From researching the management experience of the two banks, the PhD student draws some lessons that Vietnam Joint Stock Commercial Bank for Industry and Trade can refer to or avoid repeating: - Firstly, about the organizational model. Although Vietnam Joint Stock Commercial Bank for Industry and Trade has implemented a vertical organizational model, it needs to clearly identify the learning of BIDV's organizational model as a vertically focused organization model with the motto of streamlining - compact organizational structure, improve operational efficiency, focus on customers. In particular, NH proactively and boldly researched as VCB, at the same time applying the management methods with reasonable processes and procedures, improving the quality, effectiveness, and efficiency of the management. - Secondly, the identification of credit risk of each credit and the list of VCB is done regularly, with scientific basis and high reliability. For credit portfolio risks, the measurement is quite accurate, the customer scoring system already covers the PD risk component (Probability of Default - probability of not being able to repay the debt); LGD (Loss Given Default - loss due to non-repayment). In addition, VCB's early warning system has been effective in identifying risks to minimize risks in credit contracts. - Thirdly, improve the effectiveness of internal audit; developing and managing effectively bank staff, especially improving the capacity of credit assessment, appraisal and professional ethics of bank staff, is always an important factor to limit and manage. Good bad debt. - Fourthly, apply a modern credit risk management method, in line with international practices, step by step approach to debt classification according to international standards (both quantitative and qualitative), helping to classify Accurate debt type, accurate and complete DPRR deduction.. - Fifth, the bank should proactively settle the debt before it is sold to VAMC. Because the early repurchase of debt sold to VAMC could bring more benefits to the bank.. Sixthly, the lesson of Joint Stock Commercial Bank for Industry and Trade of Vietnam should be avoided: Accrued interest (expected to be earned in the future) has been recorded as profit from previous years, but so far has not been collected (not to mention BIVD), so the accrued interest is not collected. become bad debt, even very bad. This is a lesson that should be replicated from BIDV's experience. Seventh, perfect the debt classification according to Basel II international standards. Although both qualitative and quantitative methods have been clearly specified by the SBV in Circular 14/2014 / TT-NHNN on debt classification, setting up and using provisions to handle credit risks, but currently There are only a few Vietnamese commercial banks applying both methods (as of early 2017, only four banks have applied: Argibank, VCB, BIDV and then Vietnam Joint Stock Commercial Bank for Industry and Trade). Compared with banks before, Vietnam Joint Stock Commercial Bank for Industry and Trade is the last bank to apply both methods above. Thus, two experienced research banks namely BIDV and VCB are in the process of applying debt classification according to Basel II, which combines both quantitative and qualitative aspects with some disadvantages that the bank itself does not want to have. that is: Disadvantage 1: In order to apply the qualitative method, commercial banks must build an internal credit rating system that is not easy to implement. Disadvantage 2: because Circular 09/2014 / TT-NHNN does not have clear guidelines on the application of qualitative methods. Disadvantage 3 (usually the biggest disadvantage): because if applying both qualitative and quantitative methods at the same time, the bad debt ratio will skyrocket, which is not many commercial banks want. Therefore, in order for credit risk management/or credit management, lessons should be learned for Vietnam Joint Stock Commercial Bank for Industry and Trade to avoid the disadvantages that BIDV and VCB have encountered, it is necessary to strengthen and improve more in applying the classification according to Basel international standards. II. Chapter 3 CURRENT SITUATION OF BAD DEBT AND MANAGEMENT OF BAD DEBT IN CREDIT ACTIVITIES OF COMMERCIAL BANKS VIETNAM INDUSTRIAL AND TRADE JOINT STOCK COMPANY 3.1 Brief introduction about Vietnam Joint Stock Commercial Bank for Industry and Trade 3.1.1. The process of formation and development of Vietnam Joint Stock Commercial Bank for Industry and Trade 3.1.2 Organizational structure and governance structure 3.1.3 Main business results of Vietnam Joint Stock Commercial Bank for Industry and Trade 3.2 The status of credit and bad debt in credit activities of Vietnam Joint Stock Commercial Bank for Industry and Trade 3.2.1 Actual situation of credit activities of Vietnam Joint Stock Commercial Bank for Industry and Trade Credit outstanding classified by: forms of credit; time; customer type and type of business; By business line. 3.2.2 Actual situation of bad debts of Vietnam Joint Stock Commercial Bank for Industry and Trade Table 3.3 Bad debt and bad debt ratio in Vietnam Joint Stock Commercial Bank for Industry and Trade for the period 2012-2018 Chỉ tiêu Unit Year 2012 Year 2013 Year 2014 Year 2015 Year 2016 Year 2017 Year 2018 1. Total debt outstanding tỷ đồng 333.357 376.289 439.869 538.080 661.988 790.688 864.923 2. bad debts tỷ đồng 4.888 3.769 4.905 4.941 6.980 9.011 13.691 Group 3 tỷ đồng 994 515 352 1.411 2.350 1.243 2.191 Group 4 tỷ đồng 1.789 1.005 2.468 735 811 2.550 2.054 Group 5 tỷ đồng 2.105 2.249 2.085 2.795 3.819 5.217 9.446 3. Bad debt ratio % 1,47 1,00 1,12 0,92 1,02 1,14 1,58 Debts dealt with provision and sold to VAMC VND Billion 20.868 26.378 30.351 35.406 40.514 46.809 13.426 Source: Author synthesized from Annual Report, Management Report of Vietnam Joint Stock Commercial Bank for Industry and Trade 2012-2018). 3.3 Current situation of bad debt management of Vietnam Joint Stock Commercial Bank for Industry and Trade 3.3.1 Actual situation of building the issuance policy, strategy of bad debt and procedure for managing bad debts of Vietnam Joint Stock Commercial Bank for Industry and Trade In terms of lending activities; debt classification and provisioning for credit risk; Regarding activities to ensure capital safety; About the process of inspection, supervision of credit extension. 3.3.2 Actual situation of structural model of management bad debt in Vietnam Joint Stock Commercial Bank for Industry and Trade 3.3.3 Actual situation of organizing the implementation of bad debt management activities at Vietnam Joint Stock Commercial Bank for Industry and Trade 3.3.3.1 Actual situation of bad debt control and prevention 3.3.3.2 Actual situation of measuring, classifying and dealing with bad debts at Vietnam Joint Stock Commercial Bank for Industry and Trade * Regarding measurement and classification of bad debts at Vietnam Joint Stock Commercial Bank for Industry and Trade * Regarding the handling of losses from bad debts at Vietnam Joint Stock Commercial Bank for Industry and Trade Stock Commercial Bank for Industry and Trade 2012-2018) 3.3.3.3 Actual situation of inspection, supervision and handling of violations 3.3.3.4. Actual Situation of making reports on bad debt management results at Vietnam Joint Stock Commercial Bank for Industry and Trade Vietnam Joint Stock Commercial Bank for Industry and Trade established a system of information and reports serving bad debt management activities, ensuring bad debt management activities with a full database serving comprehensive, effective management requirements and meet the requirements of bad debt management of banks. 3.4 Assessing the status of bad debt management of Vietnam Joint Stock Commercial Bank for Industry and Trade 3.4.1 Achievements and causes 3.4.1.1 Achievements Firstly, on the formulation and promulgation of policies, strategies for managing bad debts and the process of managing bad debts; Secondly, the organizational structure of bad debt management system; Thirdly, in terms of the organization of implementation of management activities: - Control and prevention; - Measure, classify and handle bad debts; - Activities of inspection, supervision of management of bad debts; - Report on bad debt management results. 3.4.1.2 Causes of achievements Firstly, strengthen communication activities on risk appetite and risk culture. Secondly, focusing on training, improving the qualifications and ethical qualities of employees. Third, increase investment in banking information technology. 3.4.2 Limitations and causes 3.4.2.1 Limitations Firstly, on the formulation and promulgation of policies, strategies for managing bad debts and the process of managing bad debts; Secondly, the organizational structure of bad debt management system; Thirdly, in terms of the organization of implementation of management activities: - Control and prevention; - Measure, classify and handle bad debts; - Activities of inspection, supervision of managem