Similar to Vietcombank, ACB also divides the size of enterprises into large, medium, small and very small scale groups, of which very small scale is evaluated on a separate scale with the remaining groups.
The system of financial indicators in the credit society of ACB is evaluated based on the full-year financial statements, not using the quarterly financial statements. The financial information is evaluated through a set of 14 financial indicators.
The system of non-financial indicators includes more than 70 evaluation criteria belonging to five groups, including the group of indicators that reflect the debt repayment ability of the enterprise, the group of indicators that reflect the management level and the internal environment, the group of indicators that reflect the The group of indicators reflects the relationship with the bank, the group of indicators reflects the influences on the industry, the group of indicators reflects the factors affecting the operation of the enterprise. ACB divides into 26 industries corresponding to 94 detailed industries.
ACB’s credit system also classifies enterprises by type of ownership as state-owned enterprises, foreign-invested enterprises and other enterprises to calculate weighted scores of non-financial indicators. In addition, ACB also classified enterprises into two categories: unaudited enterprises and audited enterprises.
The combined score of both qualitative and quantitative factors after multiplying the weights will help determine the loan’s classification according to Table 1.8 and Table 1.9.
Table 1.8: ACB’s credit system for approval
| Total score | Rating | |
| 99 | 100 | AAA |
| 95 | 99 | AA |
| 85 | 95 | A |
| 72 | 85 | BBB |
| 68 | 72 | BB |
| 62 | 68 | B |
| 59 | 62 | CCC |
| 56 | 59 | CC |
| 48 | 56 | C |
| 23 | 48 | D |
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(Source: Asia Commercial Joint Stock Bank)
Table 1.9: Credit classification system of ACB’s debt
| Total score | Rating | Debt classification | |
| 95 | 100 | AAA | Qualification |
| 85 | 95 | AA | Qualification |
| 72 | 85 | A | Qualification |
| 70 | 72 | BBB | Need attention |
| 65 | 70 | BB | Need attention |
| 59 | 65 | B | Need attention |
| 56 | 59 | CCC | Below standard |
| 53 | 56 | CC | Below standard |
| 45 | 53 | C | Suspect |
| 20 | 45 | D | Potential loss of capital |
(Source: Asia Commercial Joint Stock Bank)
1.3.5 Lessons from experience in credit relationship for LienVietPostBank
Through the credit socialization models of domestic commercial banks, the study has drawn many valuable lessons for the current credit society model of LienVietPostBank.
LienVietPostBank’s CBA model should classify enterprises according to the nature of capital ownership and according to the criteria of audited or unaudited financial statements to apply and weight groups of financial and non-financial criteria in accordance with more suitable. The credit society model should divide the enterprise size by very small scale to have a separate rating scale with the remaining size groups, in addition to making the initial assessment points more detailed so that the financial indicators more segregated. Credit socialization at LienVietPostBank must be coordinated between the GE and credit managers to ensure objectivity. In addition, LienVietPostBank also needs to aim to classify debts by qualitative method according to Article 7 of Decision 493/2005/QD-NHNN of the State Bank.
1.4 Significance of perfecting the CBA system for commercial banks
The improvement of the credit system in general and the credit society of the enterprise in particular is the process of correcting, amending and supplementing the current credit society model with proposed solutions and recommendations to gradually complete the credit society system. The result of the process of perfecting the credit society is the overcoming of limitations that distort the results of the credit society, contributing to the result of the credit society reflecting accurately and properly the nature of the financial situation, production and business activities. business, risks and prospects of the business. Thereby, demonstrating the ability to meet the financial obligations of the credit-socialized enterprise to commercial banks.
Through the accurate screening and classification of corporate customers, debt classification and risk provisioning, the process of perfecting the commercial customer credit system of commercial banks is meaningful in helping to limit and limit credit risks in Vietnam. target level, towards the goal of profit maximization and protection of the stability of the banking system. When commercial banks lend money to good customers, the risk coefficient decreases, which inevitably leads to a decrease in credit risk assets. As a result, the capital adequacy ratio increases, which leads to a better image of the bank to the market, investors and supervisory authorities.
Conclusion of research problems in Chapter I:
In this chapter, the topic presented an overview of credit risk, the causes leading to credit risk, thereby showing the need for credit socialization in credit activities of commercial banks.
In credit activities, commercial banks will face risks that are inevitable. Credit risk occurs due to many reasons, there are objective causes, there are subjective causes. Measures to improve credit risk management are the top concern of commercial banks.
In order to manage credit risk, there are many tools, credit society is a scientific credit risk management tool that has been widely used in financial institutions around the world and is currently being used by commercial banks in the country. apply implementation.
The topic also presents the theoretical foundations of credit society, the credit society models of the world’s leading credit societies, requirements for a Basel II credit society system and a case study on credit society with Altman’s Z-score. At the same time, the topic also presented the instructions on the corporate credit society of the State Bank, some credit models of domestic commercial banks as a basis for comparison with the current model of credit society applied at LienVietPostBank, which will be presented in Chapter 2. II of this topic.
CHAPTER II: SITUATION OF LIENVIETPOSTBANK’S CREDIT RATE SYSTEM
Lien Viet Post Commercial Joint Stock Bank (LienVietPostBank) has built and implemented a credit socialization application for corporate customers since the end of 2008 under the guidance of the State Bank and the advice of domestic financial experts. Up to now, this internal ranking system has been adjusted to better suit the changing socio-economic conditions and international agreements and treaties that Vietnam is committed to implementing. Currently, the SBV is asking commercial banks to regularly review and adjust the internal credit system to be able to apply the debt classification according to Article 7 of Decision 493/2005/QD-NHNN, one of the requirements for with the credit system of commercial banks including:
1. The internal credit society system is suitable to the business activities, customers, and risk nature of the debt of that credit institution.
2. Credit risk management policies, credit risk monitoring models, effective methods of identifying and measuring credit risks, including ways to assess customers’ debt repayment ability goods, credit contracts, collateral assets, debt recovery ability and management capacity of the credit institution.
3. Every year, the credit institution must re-evaluate the internal credit society system and risk provisioning policy to suit the actual situation and the provisions of law.
Thus, in order to meet the requirements of the State Bank on debt classification, and further improve the effectiveness of risk management, LienVietPostBank must regularly review and adjust its credit system to be able to screen and more precise customer types.
2.1 Overview of LienVietPostBank’s business activities:
Lien Viet Commercial Joint Stock Bank was officially established under the license number 91/GP-NHNN dated March 28, 2008 by the Governor of the State Bank of Vietnam, is the first joint-stock commercial bank established after 15 years of limited success. establishment of commercial banks of the State Bank. The founding legal shareholders of LienVietPostBank include Him Lam Joint Stock Company, Saigon Trading Corporation (Satra) and Tan Son Nhat Airport Service Company Limited.
By July 2011, with the merger of Postal Savings Service Company, Lien Viet Commercial Joint Stock Bank changed its name to Lien Viet Post Commercial Joint Stock Bank, and at the same time increased the charter capital of LienVietPostBank to VND 6,010 billion. LienVietPostBank has been developing a transaction network spanning 3 regions of the country, in addition to the Bank’s Head Office in Hau Giang province and the main operating center in Hanoi, LienVietPostBank also has more than 30 branches and nearly 100 transaction offices. translation in provinces and cities in the country.
In more than 3 years of operation, from a young bank, until now LienVietPostBank has achieved many achievements and encouraging criteria in terms of total assets, capital mobilization and market lending 1. Some summary indicators LienVietPostBank’s performance in recent years is presented in Table 2.1.
Table 2.1: Summary of LienVietPostBank’s performance in recent years
| Only target – Year | ĐVT | 2009 | 2010 | 2011 |
| total assets | Billions VND | 17.367 | 35.521 | 56,132 |
| Capital mobilization TT1 | Billions VND | 8.315 | 13.454 | 26,662 |
| Loan balance TT1 | Billions VND | 5.423 | 14.047 | 17.399 |
| Profit before tax | Billions VND | 540 | 759 | 1.086 |
| Profit after tax | Billions VND | 540 | 683 | 977 |
| Authorized capital | Billions VND | 3,300 | 3,650 | 6.010 |
| Overdue debt ratio | % | 1.49% | 0.99% | 3.19% |
| Bad debt ratio | % | 0.26% | 0.42% | 0.47% |
2.2 Credit policy of LienVietPostBank
LienVietPostBank builds credit policies in the direction of ensuring the initiative and flexibility in practical operations in order to best seize opportunities for credit investment development in accordance with business-oriented goals from time to time, ensuring business objectives. risk management goals in a way that is not too concentrated for a group of customers, industries that are related to each other or change with a currency.
Credit policy focuses on compliance with relevant laws, an equal view towards customers, regardless of economic class or form of ownership. on the financial capacity and risk level as well as the willingness to repay each customer. Credit policy also focuses on promoting personal responsibility in order to improve transparency and quality in credit activities.
2.3 Principles of scoring and using the results of the credit assessment
The credit society system is an important tool to enhance objectivity, improve the quality and efficiency of credit operations. Credit scoring model is a method to quantify the level of risk through rating scale, the evaluation criteria in the scoring models are applied differently for each type of customer.
LienVietPostBank uses a different credit scoring model that applies exclusively to financial institutions, businesses and individuals. This topic only mentions and evaluates the credit model for corporate customers. LienVietPostBank’s credit scoring principle is to calculate the initial score of each evaluation criterion according to the point corresponding to the closest indicator level that the customer actually achieved. If the client’s target level falls in between the two guideline levels, the starting point is the lower target level. The score used to synthesize the credit score is the product of the initial score and the weight of each indicator, the weight of each group of indicators.
Credit results are used for credit limit determination purposes; decide whether to accept or deny credit, loan interest rates, and determine collateral requirements; assess the current status of customers in the loan monitoring process; credit portfolio management and risk provisioning; preferential banking fees and other incentives.
LienVietPostBank’s goal is to build a flexible credit system that can be adjusted and supplemented to ensure high practicality. Therefore, the evaluation and calibration of the system will be carried out periodically. The results of credit scoring will be kept fully along with the customer’s credit file, even for customers who are denied credit.
2.4 Credit rating model for corporate customers of LienVietPostBank
LienVietPostBank’s CBA model is being used as a single-variable model that uses quantitative and non-financial indicators based on qualitative analysis to evaluate in order to supplement the limitations of statistical data. of the quantitative method. Compared with other commercial banks, LienVietPostBank is only in the early stages of applying the credit scoring model for corporate customers, not applying the rating scoring model to classify debts according to the qualitative method for loans. Credit society according to traditional analysis is based on financial indicators, collateral, expected efficiency of loan use and non-financial information.
The scoring model consists of two parts: quantitative scoring according to indicators calculated directly from the financial statements of enterprises, and qualitative scoring based on the bank’s assessment of different aspects and aspects. of the enterprise. Information used to score an enterprise is the latest annual or quarterly financial statement, non-financial information updated to the time of grading.