Completing credit rating work for corporate customers at Vietnam Maritime Commercial Joint Stock Bank

MINISTRY OF EDUCATION AND TRAINING THANG LONG UNIVERSITY

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DANG SY HIEP

COMPLETING THE WORK OF CREDIT RATING FOR CORPORATE CUSTOMERS

AT VIETNAM MARITIME COMMERCIAL JOINT STOCK BANK

MASTER'S THESIS IN BUSINESS AND MANAGEMENT

Hanoi – 2015

MINISTRY OF EDUCATION AND TRAINING THANG LONG UNIVERSITY

---------------------------------------

DANG SY HIEP

COMPLETING THE WORK OF CREDIT RATING FOR CORPORATE CUSTOMERS

AT VIETNAM MARITIME COMMERCIAL JOINT STOCK BANK

MASTER'S THESIS IN BUSINESS AND MANAGEMENT

MAJORITY: BANKING AND FINANCE CODE: 60340201

SCIENTIFIC INSTRUCTOR:

Associate Professor - PhD: Luu Thi Huong

Hanoi – 2015

COMMITMENT

INDEX

LIST OF ABBREVIATIONS IN THE THESIS LIST OF TABLES

LIST OF CHARTS LIST OF CHARTS

INTRODUCTION 1

1. URGENCY OF THE RESEARCH TOPIC 1

2. RESEARCH PURPOSE 1

3. SUBJECTS AND SCOPE OF RESEARCH 1

4. RESEARCH METHODS 2

5. STRUCTURE OF TOPIC 2

CHAPTER 1: THEORETICAL ISSUES ON CREDIT RATING OF CORPORATE CUSTOMERS OF COMMERCIAL BANKS 3

1.1. CREDIT ACTIVITIES FOR CORPORATE CUSTOMERS AT COMMERCIAL BANKS 3

1.1.1.Overview of Commercial Banks 3

1.1.2. Credit activities for corporate customers at Commercial Banks 9

1.2. CREDIT RATING WORK OF CORPORATE CUSTOMERS OF COMMERCIAL BANKS 15

1.2.1. Concept of credit rating of corporate customers at Commercial Banks 15

1.2.2. Contents of credit rating work for corporate customers 17

1.2.3.Method of credit rating of corporate customers 18

1.2.4. Criteria for evaluating the level of completion of credit rating work for corporate customers at Commercial Banks 31

1.3. FACTORS AFFECTING CREDIT RATING OF CORPORATE CUSTOMERS AT COMMERCIAL BANKS 32

1.3.1.Subjective factors 32

1.3.2.Objective factors 34

1.4. EXPERIENCE IN IMPROVING CREDIT RATING WORK FOR CORPORATE CUSTOMERS OF SOME COMMERCIAL BANKS IN VIETNAM 35

1.4.1. BIDV's credit rating system 35

1.4.2.E&Y's credit rating system 36

CHAPTER 1 CONCLUSION 37

CHAPTER 2: CURRENT STATUS OF CREDIT RATING FOR CORPORATE CUSTOMERS AT VIETNAM MARITIME JOINT STOCK COMMERCIAL BANK

................................................................................................................................................ 38

2.1. OVERVIEW OF VIETNAM MARITIME COMMERCIAL JOINT STOCK BANK

................................................................................................38

2.1.1. History of formation and development of Vietnam Maritime Commercial Joint Stock Bank 38

2.1.2. Organizational structure of Vietnam Maritime Commercial Joint Stock Bank 40

2.1.3.Main activities of Vietnam Maritime Commercial Joint Stock Bank 41

2.2. CURRENT STATUS OF CREDIT RATING FOR CORPORATE CUSTOMERS AT VIETNAM MARITIME COMMERCIAL JOINT STOCK BANK 45

2.2.1.Current status of credit activities at Vietnam Maritime Commercial Joint Stock Bank... 45

2.2.2.Current status of credit rating of corporate customers at Vietnam Maritime Commercial Joint Stock Bank. 50

2.2.3. Credit rating results of corporate customers at Maritime Bank in 2012

– 2014……………………………………………………………………….64

2.2.4.A case study of actual credit rating at Vietnam Maritime Commercial Joint Stock Bank 65

2.3. EVALUATION OF CREDIT RATING WORK FOR CORPORATE CUSTOMERS AT VIETNAM MARITIME JOINT STOCK COMMERCIAL BANK 68

2.3.1.Result 68

2.3.2.Limitations 70

2.3.3.Causes of limitations 71

CHAPTER 2 CONCLUSION 73

CHAPTER 3: SOLUTIONS TO IMPROVE CREDIT RATING FOR CORPORATE CUSTOMERS AT VIETNAM MARITIME JOINT STOCK COMMERCIAL BANK 74

3.1. ORIENTATION OF CREDIT ACTIVITIES FOR CORPORATE CUSTOMERS AT VIETNAM MARITIME JOINT STOCK COMMERCIAL BANK 74

3.1.1. General operational orientation at Vietnam Maritime Commercial Joint Stock Bank 74

3.1.2. Credit orientation for corporate customers at Vietnam Maritime Commercial Joint Stock Bank 75

3.1.3. Solution to improve credit rating of corporate customers at Vietnam Maritime Commercial Joint Stock Bank. 77

3.2. PROPOSAL 83

3.2.1. Recommendations to the government and relevant ministries 83

3.2.2.Recommendations to the State Bank of Vietnam 84

CONCLUSION CHAPTER III 86

III. CONCLUSION 87

LIST OF REFERENCES 89

APPENDIX 01: DETERMINING SCORES FOR GROUPS OF NON-FINANCIAL INDICATORS OF ENTERPRISES P

APPENDIX 02: GUIDELINES FOR DETERMINING NON-FINANCIAL INDICATORS OF VIETNAM MARITIME COMMERCIAL JOINT STOCK BANK

COMMITMENT

I hereby declare that this is my personal research work. The information and content presented in the topic are based on actual research and are completely true to the cited source.

Students

Dang Sy Hiep

ABBREVIATIONS IN THE THESIS

Commercial Bank

Commercial Bank
Maritime Bank	Vietnam Maritime Commercial Joint Stock Bank
S&P/Moody's/Fitch	America's Leading Rating Organization
KHDN	Corporate Clients
XHTD	Credit Rating
RRTD	Credit risk
CBTD	Credit Officer
TT 02	Circular No. 02/2013/TT-NHNN dated January 21, 2013
Basel 2	Basel 2 Capital Accord
PD	Probability of default
LGD	Estimated loss ratio in case of customer default
EAD	Outstanding balance at the time the customer defaults
M	Validity period
CIC	Credit information center
State Bank of Vietnam	State Bank
SHB	Saigon - Hanoi Commercial Joint Stock Bank
BIDV	Joint Stock Commercial Bank for Investment and Development of Vietnam
EBITDA	Earnings before taxes, interest and depreciation
EBITDA	Earnings before interest, taxes, depreciation, amortization, and restructuring or lease costs
CSH	Owner

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LIST OF TABLES

Table name

Content	Page number
Table 1.1	Comparison table between adjusted Z-score and S&P classification.	28
Table 2.1	Maritime Bank's revenue structure from 2012 - 2014	45
Table 2.2	Basic information about Vietnam Maritime Commercial Joint Stock Bank	48
Table 2.3	Outstanding loans to corporate customers.	49
Table 2.4	Corporate customer debt by time.	49
Table 2.5	Loan classification table according to Maritime Bank's assessment	52
Table 2.6	Proportion of non-financial indicators by type of enterprise old and new of Maritime Bank	56
Table 2.7	Method of determining financial indicators of Maritime Bank	57
Table 2.8	Determine the weights for customers who have established a credit relationship. Maritime Bank's application	60
Table 2.9	Determine weights for unrelated customers Maritime Bank credit	60
Table 2.10	Weighting for financial and non-financial indicators	60
Table 2.11	Maritime Bank customer classification table	61
Table 2.12	Maritime Bank's 2012-2014 XHTD results	63
Table 2.13	Table of customer groups and customer bad debt ratio	65
Table 2.14	Financial group score determination table for enterprise P	66
Table 2.15	Scorecard for non-financial indicators for business P industry	67
Table 3.1	Table of some key indicators for the period 2014-2015	75

Completing credit rating work for corporate customers at Vietnam Maritime Commercial Joint Stock Bank - 1

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