The benefit will be considered the most serious and often poses the greatest risk to the bank. If there is sufficient evidence of wrongdoing, the bank can request the individual officers to proactively compensate the bank for damages or request the court or police to investigate and criminally prosecute the individuals who committed the violations.... In addition to the material significance, this solution also has spiritual significance, that is, it has the effect of deterring and preventing subjective risks due to intentional errors and self-interest.
1.2.6.4. Group of solutions related to people
When it comes to management, it is about human activities. Therefore, any management activity in any field cannot fail to mention people. The human factor affects the entire process of credit risk management and determines the implementation of credit risk management solutions, ensuring that credit risks are correctly identified, measured and evaluated, effectively controlled and handled immediately. That is, the human factor determines the effectiveness and success of the risk management system for banks. Credit risks will increase, and losses will be greater for banks if those involved in the credit process, from sales staff, customer appraisal staff, asset appraisal staff, credit support staff, credit controllers, officers with the right to make credit decisions, develop policies, credit management staff... do not have professional capacity, ethics and practical experience. People are the decisive factor for the success of credit risk management. This group of solutions can be applied to the bank's human resource management activities such as recruitment, training, performance evaluation, salary and bonus regime, employee benefits, promotion...
In short , there are many credit risk management solutions and they are divided into many different groups: risk prevention solutions, risk limitation and risk handling solutions. Each solution has its own advantages and disadvantages and is applied when there are suitable conditions depending on time, situation, credit, customer and other conditions... and there are solutions that both prevent risks and handle risks, there are solutions that affect all aspects of the business.
The remaining solution is the solution of human resource quality. In fact, to ensure the goals of credit risk management, it is possible to use a synchronous combination of many different solutions, including solutions for prevention, containment, correction, handling and financing of credit risks so that credit risk management activities achieve the expected results.
CHAPTER 1 SUMMARY
In Chapter 1, the author presents some basic theoretical issues related to credit activities, bank credit activities, classification of bank credit activities, credit risks, causes of credit risks, credit risk management activities and credit risk management solutions. The content in this Chapter has many theoretical issues summarized from the practical activities of the Vietnamese banking industry in recent years and also theoretical issues summarized by Basel II from the activities of many banks in the world; and research by authors in the banking industry. The author systematizes and summarizes some theoretical contents for more completeness but also limits some theoretical contents to suit the research capacity and research purpose of this Thesis.
CHAPTER 2
ANALYSIS OF CURRENT STATUS OF CREDIT ACTIVITIES AND CREDIT RISK MANAGEMENT ACTIVITIES AT ACB QUANG NINH
Main content of chapter 2
Introduction to ACB and ACB Quang Ninh
Current credit activities of ACB and ACB Quang Ninh
Credit risk management at ACB Quang Ninh
2.1. Introduction to ACB
- Vietnamese transaction name: ASIA COMMERCIAL JOINT STOCK BANK
- English transaction name: ASIA COMMERCIAL BANK
- Abbreviation: ACB
- Establishment license: No. 0032/NH-GP issued by the State Bank of Vietnam (SBV) on April 24, 1993 and first Business Registration Certificate: No. 533/GP-UB issued by the People's Committee of Ho Chi Minh City on May 13, 1993
- Head office: 442, Nguyen Thi Minh Khai, District 3, Ho Chi Minh City
- Website: www.acb.com.vn, Phone: 083.9290999, Fax 083. 8399885
- Stock code: ACB, listed at Hanoi Securities Exchange (November 2006)
- Subsidiaries: ACB Securities Company (ACBS), ACB Debt Management and Asset Exploitation Company (ACBA), ACB Fund Management Company (ACBC), ACB Financial Leasing Company (ACBL)
- Major shareholder structure and management structure according to appendix 1 and 2
2.1.1. Development process 14
- ACB formation period (1993-1995) : ACB was established by shareholders who shared the same business principle of "managing the development of the enterprise safely and effectively" with an initial charter capital of 20 billion VND.
- Period 1996 - 2000:In 1997, ACB approached modern banking operations.
modern, operating according to international standards and practices in risk management and in
14 Source: ACB's 2011 annual report
retail banking sector. In 2001, ACB operated the core banking technology system TCBS (Comprehensive Banking Solution) which allowed KPP to transact online on a centralized database. In 2000, ACB restructured its organizational structure towards business and support.
- Period 2001 – 2005:In 2003, ACB built a quality management system according to ISO 9001:2000 standards. In 2005, ACB and Standard Chartered Bank signed a comprehensive technical support agreement; and SCB became a strategic shareholder of ACB.
- Period 2006 - 2010:In 2006, ACB listed on HASTC and accelerated the expansion of its network of operations. In 2007, ACB established ACB Financial Leasing Company. In 2008, ACB established and launched a gold exchange. In 2009, ACB applied a credit scoring system to individual and corporate customers. In 2010, ACB developed a new strategy.
- Phase 2011-2012:In 2011, ACB issued the ACB Development Strategy for the period 2011-2015 and the vision for 2020. In 2012, ACB changed the entire leadership team (after the majority of the leaders resigned) and consolidated the core activities and implemented the proposed long-term development policies and strategies.
2.1.2. ACB's business performance in the years 15
ACB's business performance in recent years is shown through a number of achieved indicators in table 2.2.1 and chart 2.2.1.
Table 2.1.2. ACB's performance indicators over the years
Status
Target | Unit | 2012 | 2011 | Year 2010 | Year 2009 | 2008 | |
1 | Total assets | Billion VND | 177,012 | 281,0190 | 206,103.0 | 167,724.0 | 105,306.0 |
2 | Total capital mobilized | Billion VND | 159,183 | 234,503.0 | 183,132.0 | 134,988.0 | 91,174.0 |
3 | Total outstanding loans | Billion VND | 102,802 | 104,094.0 | 87,271.0 | 62,358.0 | 34,833.0 |
4 | Total profit before tax | Billion VND | 1,202 | 4,203.0 | 3,102.0 | 2,838.0 | 2,561.0 |
5 | Charter capital | Billion VND | 9,377 | 9,377.0 | 9,370.0 | 7,814.0 | 6,356.0 |
6 | ROE | % | 9.90 | 36.0 | 28.9 | 31.8 | 36.7 |
7 | ROA | % | 0.52 | 1.7 | 1.7 | 2.1 | 2.6 |
8 | Bad debt ratio/total outstanding debt | % | 2.5 | 0.89 | 0.34 | 0.41 | 0.9 |
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Company's Business Performance Results for 3 Years (2018-2020) -
![Pre-tax Profit of Bidv Tien Giang in the Period 2011-2015
zt2i3t4l5ee
zt2a3gsnon-credit services, joint stock commercial bank
zt2a3ge
zc2o3n4t5e6n7ts
At that time, the Branch had to set aside a provision for credit risks, which reduced the Branchs income.
Chart 2.2. Pre-tax profit of BIDV Tien Giang in the period 2011-2015
Unit: Billion VND
140
120
100
80
60
40
20
0
63.3
80.34
89.29
110.08
131.99
2011 2012 2013 2014 2015
Profit before tax
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
However, through chart 2.2, it can be seen that BIDV Tien Giangs profit is still increasing continuously, and its operating efficiency is currently leaking. This is a contribution of non-credit services, and this service segment will be increasingly focused on growth by BIDV Tien Giang to ensure the highest profit safety because credit activities have many potential risks. At the same time, focusing on developing non-credit services is consistent with one of the contents of restructuring the financial activities of credit institutions in the project Restructuring the system of credit institutions in the period 2011-2015 approved by the Prime Minister in Decision No. 254/QD-TTg dated March 1, 2012 [14]: Gradually shifting the business model of commercial banks towards reducing dependence on credit activities and increasing income from non-credit services.
2.2. Current status of non-credit service development at BIDV Tien Giang.
2.2.1. BIDV Tien Giang has deployed the development of non-credit services in recent times.
Along with the development of the Head Office, BIDV Tien Giangs products and services are constantly improved and deployed in a diverse manner to ensure provision for many different customer groups in the area: individual customers, corporate customers, and financial institutions. Typical services are as follows: Payment services, treasury services, guarantee services, card services, trade finance, other services: Western Union, insurance commissions, consulting services, foreign exchange derivatives trading, e-banking services,...
2.2.1.1. Payment services:
In accordance with the Prime Ministers Project to promote non-cash payments in Vietnam [15], banks in Tien Giang province have continuously developed payment services to reduce customers cash usage habits through card services and electronic banking services such as: salary payment through accounts, focusing on developing card acceptance points, developing multi-purpose cards, paying social insurance by transfer, paying bills through banks, etc.
Chart 2.3. Net income from payment services in the period 2011-2015
Unit: Million VND
6000
5000
4000
3000
2000
1000
0
3922 4065
4720 5084 5324
2011 2012 2013 2014 2015
Net income from payment services
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
Along with the technological development of the entire system, BIDV Tien Giang has a payment system with a fairly stable transaction processing speed, bringing many conveniences to customers. The results of observing chart 2.3 show that the income from payment services that the Branch has achieved has grown over the years but the speed is not high and the products are not outstanding compared to other banks. Domestic payment products such as: Online bill payment, electricity bills, water bills, insurance premiums, cable TV bills, telecommunications fees, airline tickets, etc. bring many conveniences to customers. Regarding international payment, this is an indispensable activity for foreign economic activities, BIDV Tien Giang is providing international payment methods for small enterprises producing agriculture, aquatic food and seafood that have credit relationships with banks in industrial parks in Tien Giang province such as: money transfer, collection, L/C payment.
2.2.1.2. Treasury services:
BIDV Tien Giang always focuses on ensuring treasury safety and currency security, always complies with legal regulations, and minimizes risks in operations such as: counting and collecting money from customers, receiving and delivering internal transactions, collecting from the State Bank (SBV) or other credit institutions, receiving ATM funds, bundling money, etc. BIDV Tien Giangs treasury service management department is always fully equipped with modern machinery and equipment such as: money transport vehicles, fire prevention tools, money counters, money detectors, magnifying glasses, etc. to ensure absolute safety in treasury operations, immediately identifying real and fake money and other risks that may affect people and assets of the bank and customers. In addition, implementing regulation 2480/QC dated October 28, 2008 between the State Bank of Tien Giang province and the Provincial Police on coordination in the fight against counterfeit money, in the 3-year review of implementation, BIDV Tien Giang discovered, seized and submitted to the State Bank of Tien Giang province 475 banknotes of various denominations and was commended by the Provincial Police and the State Bank of Tien Giang province [17].
Chart 2.4. Net income from treasury services in the period 2011-2015
Unit: Million VND
350
300
250
200
150
100
50
0
105 122
309 289 279
2011 2012 2013 2014 2015
Net income from treasury services
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
However, as shown in Figure 2.4, income from treasury operations is not high and fluctuates. Specifically, in the period 2011-2013, net income increased and increased most sharply in 2013, then in the period 2013-2015, there was a downward trend. This fluctuation is due to the fact that fees collected from treasury services are often very low and can even be waived to attract customers to use other services.
2.2.1.3. Guarantee and trade finance services:
BIDV Tien Giang, thanks to the advantages of the province and the favorable location of the Branch, has continuously focused on developing income from guarantee services and trade finance.
Chart 2.5. Net income from guarantee and trade finance services in the period 2011-2015
Unit: Million VND
14000
12000
10000
8000
6000
4000
2000
0
5193 5695
2742 3420
8889
3992
11604 12206
5143 5312
2011 2012 2013 2014 2015
Net income from guarantee services Net income from Trade Finance
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
Through chart 2.5, we can see that BIDV Tien Giangs income from guarantee services and trade finance has grown over the years. The reason is: Among BIDV Tien Giangs corporate customers, the construction industry is the industry with the highest proportion of customers after the trading industry, this is a group of customers with potential to develop guarantee services. The second group of customers is corporate customers in the fields of agricultural production, livestock and seafood processing with high import and export turnover in the area.
are the target of trade finance development. In addition, BIDV Tien Giang also focuses on continuously developing these customer groups to increase revenue for many other products and services in the future.
2.2.1.4. Card and POS services:
As a service that BIDV Tien Giang has recently developed strongly, it can be said that this is a very potential market and has the ability to develop even more strongly in the future. Card services with outstanding advantages such as fast payment time, wide payment range, quite safe, effective and suitable for the integration trend and the Project to promote non-cash payments in Vietnam. Cards have become a modern and popular payment tool. BIDV Tien Giang early identified that developing card services is to expand the market to people in society, create capital mobilized from card-opened accounts, contribute to diversifying banking activities, enhance the image of the bank, bring the BIDV Tien Giang brand to people as quickly and easily as possible. BIDV Tien Giang is currently providing card types such as: credit cards (BIDV MasterCard Platinum, BIDV Visa Gold Precious, BIDV Visa Manchester United, BIDV Visa Classic), international debit cards (BIDV Ready Card, BIDV Manu Debit Card), domestic debit cards (BIDV Harmony Card, BIDV eTrans Card, BIDV Moving Card, BIDV-Lingo Co-branded Card, BIDV-Co.opmart Co-branded Card). These cards can be paid via POS/EDC or on the ATM system. In addition, with debit cards, customers can not only withdraw money via ATMs but also perform utilities such as mobile top-up, online payment, money transfer,... through electronic banking services.
In order to attract customers with card services, BIDV Tien Giang has continuously increased the installation of ATMs. As of December 31, 2015, BIDV Tien Giang has 23 ATMs combined with 7 ATMs in the same system of BIDV My Tho, so the number of ATMs is quite large, especially in the center of My Tho City, but is not yet fully present in the districts. Basic services on ATMs such as withdrawing money, checking balances, printing short statements,... BIDV ATMs accept cards from banks in the system.
Banknetvn and Smartlink, cards branded by international card organizations Union Pay (CUP), VISA, MasterCard and cards of banks in the Asian Payment Network. From here, cardholders can make bill payments for themselves or others at ATMs, by simply entering the subscriber number or customer code, booking code that service providers notify and make bill payments.
Chart 2.6. Net income from card services in the period 2011-2015
Unit: Million VND
3500
3000
2500
2000
1500
1000
500
0
687
1023
1547
2267
3104
2011 2012 2013 2014 2015
Net income from card services
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
Through chart 2.6, it can be seen that BIDV Tien Giangs card service income is constantly growing because the Branch focuses on developing businesses operating in industrial parks, which are the source of customers for salary payment products, ATMs, BSMS. Specifically, there are companies such as Freeview, Quang Viet, Dai Thanh, which are businesses with a large number of card openings at the Branch, contributing to the increase in card service fees [25].
Table 2.6. Number of ATMs and POS machines in 2015 of some banks in Tien Giang area.
Unit: Machine
STT
Bank name
Number of ATMs
Cumulative number of ATM cards
POS machine
1
BIDV Tien Giang
23
97,095
22
2
BIDV My Tho
7
21,325
0
3
Agribank Tien Giang
29
115,743
77
4
Vietinbank Tien Giang
16
100,052
54
5
Dong A Tien Giang
26
97,536
11
6
Sacombank Tien Giang
24
88,513
27
7
Vietcombank Tien Giang
15
61,607
96
8
Vietinbank - Tay Tien Giang Branch
6
46,042
38
(Source: 2015 Banking Activity Data Report of the General and Internal Control Department of the Provincial State Bank [21])
Through table 2.6, the author finds that the number of ATMs of BIDV Tien Giang is not much, ranking fourth after Agribank Tien Giang, Dong A Tien Giang, Sacombank Tien Giang. The number of POS machines of BIDV Tien Giang is very small, only higher than Dong A Tien Giang and BIDV My Tho in the initial stages of merging the BIDV system. Besides, BIDV Tien Giang has a high number of cards increasing over the years (table 2.7) but the cumulative number of cards issued up to December 31, 2015 is still relatively low compared to Agribank, Vietcombank, Dong A (table 2.6).
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Pre-tax Profit of Bidv Tien Giang in the Period 2011-2015
zt2i3t4l5ee
zt2a3gsnon-credit services, joint stock commercial bank
zt2a3ge
zc2o3n4t5e6n7ts
At that time, the Branch had to set aside a provision for credit risks, which reduced the Branch's income.
Chart 2.2. Pre-tax profit of BIDV Tien Giang in the period 2011-2015
Unit: Billion VND
140
120
100
80
60
40
20
0
63.3
80.34
89.29
110.08
131.99
2011 2012 2013 2014 2015
Profit before tax
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
However, through chart 2.2, it can be seen that BIDV Tien Giang's profit is still increasing continuously, and its operating efficiency is currently leaking. This is a contribution of non-credit services, and this service segment will be increasingly focused on growth by BIDV Tien Giang to ensure the highest profit safety because credit activities have many potential risks. At the same time, focusing on developing non-credit services is consistent with one of the contents of restructuring the financial activities of credit institutions in the project "Restructuring the system of credit institutions in the period 2011-2015" approved by the Prime Minister in Decision No. 254/QD-TTg dated March 1, 2012 [14]: "Gradually shifting the business model of commercial banks towards reducing dependence on credit activities and increasing income from non-credit services".
2.2. Current status of non-credit service development at BIDV Tien Giang.
2.2.1. BIDV Tien Giang has deployed the development of non-credit services in recent times.
Along with the development of the Head Office, BIDV Tien Giang's products and services are constantly improved and deployed in a diverse manner to ensure provision for many different customer groups in the area: individual customers, corporate customers, and financial institutions. Typical services are as follows: Payment services, treasury services, guarantee services, card services, trade finance, other services: Western Union, insurance commissions, consulting services, foreign exchange derivatives trading, e-banking services,...
2.2.1.1. Payment services:
In accordance with the Prime Minister's Project to promote non-cash payments in Vietnam [15], banks in Tien Giang province have continuously developed payment services to reduce customers' cash usage habits through card services and electronic banking services such as: salary payment through accounts, focusing on developing card acceptance points, developing multi-purpose cards, paying social insurance by transfer, paying bills through banks, etc.
Chart 2.3. Net income from payment services in the period 2011-2015
Unit: Million VND
6000
5000
4000
3000
2000
1000
0
3922 4065
4720 5084 5324
2011 2012 2013 2014 2015
Net income from payment services
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
Along with the technological development of the entire system, BIDV Tien Giang has a payment system with a fairly stable transaction processing speed, bringing many conveniences to customers. The results of observing chart 2.3 show that the income from payment services that the Branch has achieved has grown over the years but the speed is not high and the products are not outstanding compared to other banks. Domestic payment products such as: Online bill payment, electricity bills, water bills, insurance premiums, cable TV bills, telecommunications fees, airline tickets, etc. bring many conveniences to customers. Regarding international payment, this is an indispensable activity for foreign economic activities, BIDV Tien Giang is providing international payment methods for small enterprises producing agriculture, aquatic food and seafood that have credit relationships with banks in industrial parks in Tien Giang province such as: money transfer, collection, L/C payment.
2.2.1.2. Treasury services:
BIDV Tien Giang always focuses on ensuring treasury safety and currency security, always complies with legal regulations, and minimizes risks in operations such as: counting and collecting money from customers, receiving and delivering internal transactions, collecting from the State Bank (SBV) or other credit institutions, receiving ATM funds, bundling money, etc. BIDV Tien Giang's treasury service management department is always fully equipped with modern machinery and equipment such as: money transport vehicles, fire prevention tools, money counters, money detectors, magnifying glasses, etc. to ensure absolute safety in treasury operations, immediately identifying real and fake money and other risks that may affect people and assets of the bank and customers. In addition, implementing regulation 2480/QC dated October 28, 2008 between the State Bank of Tien Giang province and the Provincial Police on coordination in the fight against counterfeit money, in the 3-year review of implementation, BIDV Tien Giang discovered, seized and submitted to the State Bank of Tien Giang province 475 banknotes of various denominations and was commended by the Provincial Police and the State Bank of Tien Giang province [17].
Chart 2.4. Net income from treasury services in the period 2011-2015
Unit: Million VND
350
300
250
200
150
100
50
0
105 122
309 289 279
2011 2012 2013 2014 2015
Net income from treasury services
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
However, as shown in Figure 2.4, income from treasury operations is not high and fluctuates. Specifically, in the period 2011-2013, net income increased and increased most sharply in 2013, then in the period 2013-2015, there was a downward trend. This fluctuation is due to the fact that fees collected from treasury services are often very low and can even be waived to attract customers to use other services.
2.2.1.3. Guarantee and trade finance services:
BIDV Tien Giang, thanks to the advantages of the province and the favorable location of the Branch, has continuously focused on developing income from guarantee services and trade finance.
Chart 2.5. Net income from guarantee and trade finance services in the period 2011-2015
Unit: Million VND
14000
12000
10000
8000
6000
4000
2000
0
5193 5695
2742 3420
8889
3992
11604 12206
5143 5312
2011 2012 2013 2014 2015
Net income from guarantee services Net income from Trade Finance
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
Through chart 2.5, we can see that BIDV Tien Giang's income from guarantee services and trade finance has grown over the years. The reason is: Among BIDV Tien Giang's corporate customers, the construction industry is the industry with the highest proportion of customers after the trading industry, this is a group of customers with potential to develop guarantee services. The second group of customers is corporate customers in the fields of agricultural production, livestock and seafood processing with high import and export turnover in the area.
are the target of trade finance development. In addition, BIDV Tien Giang also focuses on continuously developing these customer groups to increase revenue for many other products and services in the future.
2.2.1.4. Card and POS services:
As a service that BIDV Tien Giang has recently developed strongly, it can be said that this is a very potential market and has the ability to develop even more strongly in the future. Card services with outstanding advantages such as fast payment time, wide payment range, quite safe, effective and suitable for the integration trend and the Project to promote non-cash payments in Vietnam. Cards have become a modern and popular payment tool. BIDV Tien Giang early identified that developing card services is to expand the market to people in society, create capital mobilized from card-opened accounts, contribute to diversifying banking activities, enhance the image of the bank, bring the BIDV Tien Giang brand to people as quickly and easily as possible. BIDV Tien Giang is currently providing card types such as: credit cards (BIDV MasterCard Platinum, BIDV Visa Gold Precious, BIDV Visa Manchester United, BIDV Visa Classic), international debit cards (BIDV Ready Card, BIDV Manu Debit Card), domestic debit cards (BIDV Harmony Card, BIDV eTrans Card, BIDV Moving Card, BIDV-Lingo Co-branded Card, BIDV-Co.opmart Co-branded Card). These cards can be paid via POS/EDC or on the ATM system. In addition, with debit cards, customers can not only withdraw money via ATMs but also perform utilities such as mobile top-up, online payment, money transfer,... through electronic banking services.
In order to attract customers with card services, BIDV Tien Giang has continuously increased the installation of ATMs. As of December 31, 2015, BIDV Tien Giang has 23 ATMs combined with 7 ATMs in the same system of BIDV My Tho, so the number of ATMs is quite large, especially in the center of My Tho City, but is not yet fully present in the districts. Basic services on ATMs such as withdrawing money, checking balances, printing short statements,... BIDV ATMs accept cards from banks in the system.
Banknetvn and Smartlink, cards branded by international card organizations Union Pay (CUP), VISA, MasterCard and cards of banks in the Asian Payment Network. From here, cardholders can make bill payments for themselves or others at ATMs, by simply entering the subscriber number or customer code, booking code that service providers notify and make bill payments.
Chart 2.6. Net income from card services in the period 2011-2015
Unit: Million VND
3500
3000
2500
2000
1500
1000
500
0
687
1023
1547
2267
3104
2011 2012 2013 2014 2015
Net income from card services
(Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24])
Through chart 2.6, it can be seen that BIDV Tien Giang's card service income is constantly growing because the Branch focuses on developing businesses operating in industrial parks, which are the source of customers for salary payment products, ATMs, BSMS. Specifically, there are companies such as Freeview, Quang Viet, Dai Thanh, which are businesses with a large number of card openings at the Branch, contributing to the increase in card service fees [25].
Table 2.6. Number of ATMs and POS machines in 2015 of some banks in Tien Giang area.
Unit: Machine
STT
Bank name
Number of ATMs
Cumulative number of ATM cards
POS machine
1
BIDV Tien Giang
23
97,095
22
2
BIDV My Tho
7
21,325
0
3
Agribank Tien Giang
29
115,743
77
4
Vietinbank Tien Giang
16
100,052
54
5
Dong A Tien Giang
26
97,536
11
6
Sacombank Tien Giang
24
88,513
27
7
Vietcombank Tien Giang
15
61,607
96
8
Vietinbank - Tay Tien Giang Branch
6
46,042
38
(Source: 2015 Banking Activity Data Report of the General and Internal Control Department of the Provincial State Bank [21])
Through table 2.6, the author finds that the number of ATMs of BIDV Tien Giang is not much, ranking fourth after Agribank Tien Giang, Dong A Tien Giang, Sacombank Tien Giang. The number of POS machines of BIDV Tien Giang is very small, only higher than Dong A Tien Giang and BIDV My Tho in the initial stages of merging the BIDV system. Besides, BIDV Tien Giang has a high number of cards increasing over the years (table 2.7) but the cumulative number of cards issued up to December 31, 2015 is still relatively low compared to Agribank, Vietcombank, Dong A (table 2.6).
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Business Performance Results of Agribank Bac Ninh in the Period 2015 - 2019 -
Business Performance Results Over 3 Years 2011-2013 -
The Company's Business Performance in the Last 3 Years (2006-2008)
15 All data summarized by the author in the audited financial statements of the above banks are publicly announced on the websites of these banks.
Chart 2.1.2 ACB's performance indicators over the years
Comment: In the period before 2012, ACB was a large bank in Vietnam with a large scale (ranked 3rd in the comparison group and ranked 5th in Vietnam) and quite effective in the long term. In 2012, ACB encountered many difficulties, total mobilized assets and profits both decreased compared to 2011. Although total outstanding loans did not decrease much, bad debts and overdue debts increased rapidly. For details on the comparison of ACB's scale and operating efficiency with 06 large banks in Vietnam listed on HASTC, please see Appendix 3.
2.2. Analysis of ACB's credit activities and credit risk management activities
2.2.1. Analysis of ACB's credit activities
2.2.1.1. Total outstanding debt and commitments
ACB is one of the banks with a fairly diverse credit product system that meets the diverse needs of different customer groups. For a long time, diversifying products has been ACB's development strategy. ACB is a pioneer in developing products and creating a difference from other banks, and this is also ACB's strength compared to competitors, especially in the retail sector. . ACB always develops credit on the principle of caution and conservatism to achieve the goal of safe credit. Credit activities over the years are shown as follows:
Chart 2.2.1.1 Total outstanding loans, commitments and contingent liabilities
Table 2.2.1.1 Shows the total outstanding loans and balances of other risky credit activities (potential debts, domestic and foreign guarantee commitments) over the years and is an indicator reflecting the overall scale of credit activities as well as the scale of credit risk.
2.2.1.2. Total outstanding loans
- In the period before 2010, credit growth was quite good compared to the industry's growth rate thanks to the product system, KPP as well as the diverse lending currencies. However, starting in 2011, ACB's credit growth rate slowed down significantly due to many difficulties as mentioned above. In 2012, outstanding loans decreased absolutely compared to 2011. Total outstanding loans in 2012 decreased by -0.95% compared to 2011, equivalent to 1,292 billion VND. Meanwhile, in 2011 and 2010, the growth rate of outstanding loans was 18% and 40% respectively. For details, please see table 2.2.1.2
Loan origination
120,000
102,809
100,000
101,832
87,011
80,000
62,358
60,000
40,000
20,000
0
2012
2011
2010
2009
Auto
Chart 2.2.1.2 Total outstanding loans over the years
2.2.1.3. Total commitments and contingent liabilities
Commitments on financial obligations for customers of the bank to third parties such as domestic and foreign guarantees, commitments to buy back securities ... also create risks, because they can arise in the future when ACB has to fulfill the obligation to pay on behalf of customers through compulsory lending to customers, and therefore, ACB has recorded them as loans. At ACB, commitments and potential debts are also quite large with a scale that increases every year and increases more than the growth rate of outstanding loans, especially in 2001 and 2012.
For details on credit commitments and contingent liabilities, please see Table 2.2.1.3
Table 2.2.1.3 Details of commitments and contingent liabilities
Unit: million VND
Commitments and contingent liabilities
2012 | 2011 | Year 2010 | Year 2009 | |
Letter of Credit at Sight | 1,461,200 | 1,767,452 | 2,028,589 | 1,465,543 |
Deferred payment letter of credit | 1,451,686 | 1,264,843 | 357,060 | 164,314 |
Payment Guarantee | 2,238,359 | 1,296,615 | 482,698 | 316,941 |
Contract performance guarantee | 596.113 | 659,167 | 453,791 | 279,437 |
Bid security | 165,701 | 158,613 | 101,783 | 84,478 |
Other guarantees | 1,358,129 | 814,904 | 638,966 | 699,818 |
Total | 7,271,188 | 5,961,594 | 4,062,887 | 3,010,531 |
2.2.1.4. Provision for credit risk
For details on credit risk reserve fund, please see table 2.2.1.4
Table 2.2.1.4 CREDIT RISK RESERVE FUND
Unit: million VND
Target
2012 | 2011 | Year 2010 | Year 2009 | |
Preventive | 1,478,896 | 986,436 | 716,697 | 500,698 |
Specific reserve | 733,342 | 237,407 | 73,662 | 63,853 |
General reserve | 745,554 | 749,029 | 643,035 | 436,845 |
Risk Provision Ratio/(Outstanding Loans and Commitments) | 1.45% | 0.96% | 0.82% | 0.80% |
Provision/bad debt | 58.54% | 107.46% | 244.77% | 196.60% |
ACB classified debts and set aside provisions according to Decision 493. As of December 31, 2012, ACB's total credit risk reserve fund was VND1,479 billion, an increase of nearly 50% compared to 2011 due to a sharp increase in specific provisions for loans increasingly transferred to high debt groups and a sharp increase in the bad debt ratio in 2012. Therefore, the provision/bad debt ratio in 2012 decreased sharply and was only 58.54%, instead of 107.46% in 2011; 244.77% in 2010 and 196.60% in 2009. ACB's ability to handle credit risks has been decreasing and is no longer at a safe level as in previous years, when the provision/bad debt ratio was always greater than 100%.
2.2.2. Analysis of ACB's risk management activities
Currently, ACB is applying a centralized credit risk management model, in which ACB separates three functions quite independently: business, operations and risk management at both the Head Office and KPP levels. Credit risk management is also clearly separated in the steps from credit appraisal (customer appraisal and collateral appraisal), credit decision, credit logistics (legal documents, monitoring, urging, debt collection and debt collection), bad debt handling (lawsuit, debt management and asset exploitation ...). Separating functions allows to minimize risks; maximize the bank's resources; in accordance with international practices; in accordance with the legal framework, people, and market in Vietnam; and in accordance with the model recommended by the Basel Committee. According to this model, ACB's credit risk management activities are as follows: