LIST OF CHARTS
STT
Number | CONTENT | PAGE | |
1 | Chart 2.1 | Capital mobilization situation at MB Viet Tri Branch | 53 |
2 | Chart 2.2 | Credit structure table at MB Viet Tri Branch | 54 |
3 | Chart 2.3 | Structure and growth rate of service income at MB Chi Viet Tri Branch | 56 |
4 | Chart 2.4 | Service income ratio to total income at MB Viet Tri | 57 |
5 | Chart 2.5 | The relationship between total revenue, total cost and profit pre-tax profit at MB Viet Tri Branch | 58 |
6 | Chart 2.6 | Total bad debt of 14 banks in Phu Tho province. | 63 |
7 | Chart 2.7 | Bad debt ratio over the years 2010, 2011 and 2012. | 64 |
8 | Chart 2.8 | Ratio of income from lending to total income for the years 2010, 2011 and 2012 | 68 |
9 | Chart 2.9 | Mobilized capital and total outstanding debt in 2010, 2011 and 2012 | 70 |
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INTRODUCTION
1. Urgency of the topic:
In a market economy, the banking industry is considered an extremely important "bloodline" industry for the existence and development of the economy. Vietnamese commercial banks can operate in many fields such as: credit activities, investment, capital mobilization, guarantees... In which credit activities are the most basic activities of commercial banks, bringing the main income to the bank and accounting for 70% - 80% of total income, decisive for the development and stability of banks.
Therefore, improving credit quality has been, is and will be the top concern of Banks through constantly introducing and perfecting credit control policies.
Along with the development of Vietnamese commercial banks, Military Commercial Joint Stock Bank continuously increases its growth rate while improving the quality of credit activities.
As a branch in the Military Commercial Joint Stock Bank system, Military Commercial Joint Stock Bank Viet Tri Branch (MB Viet Tri) always strengthens credit management and control, limits and minimizes credit risks, develops along with ensuring safety and quality towards sustainable development.
Realizing the primary importance of credit operations in the operations of commercial banks and through the process of researching, studying, learning and working at the Military Commercial Joint Stock Bank - Viet Tri Branch, I chose the topic: "Some solutions to improve the quality of credit operations at the Military Commercial Joint Stock Bank - Viet Tri Branch" as the content of my Master's thesis research.
2. Research purpose.
Research on credit and credit quality of commercial banks.
Analysis and evaluation of credit activities at MB - Viet Tri.
Proposing solutions to improve credit quality at MB - Viet Tri.
3. Research objects and scope.
The subject and scope of research in the thesis is credit and credit quality of commercial banks. Consider and study specific data of a branch of a commercial bank in the banking industry.
The scope of the thesis is credit and credit quality from the perspective of commercial banks as lenders.
The scope of this thesis is to study credit and credit quality in
MB - Viet Tri.
The time of data collection was in 2010 - 2012 and 6 months
early 2013
4. Research methods.
The thesis uses research methods: statistics, comparison, analysis.
accumulation
- Statistical research method: based on statistics of data and documents
data related to credit situation.
- Comparison method: used to determine trends and levels of fluctuation of indicators.
- Analytical method: used to process and analyze collected data after calculation and comparison.
5. Structure of the thesis.
Introduction
Chapter I: Basic issues on credit quality at commercial banks.
Chapter II: Current status of credit activities at Military Commercial Joint Stock Bank
Viet Tri branch.
Chapter III: Some solutions to improve the quality of credit activities at Military Commercial Joint Stock Bank, Viet Tri Branch.
Conclusion
CHAPTER 1
BASIC ISSUES ON THE QUALITY OF CREDIT ACTIVITIES AT COMMERCIAL BANKS
1.1. Overview of Commercial Banks.
1.1.1. Concept.
Banks are one of the most important financial institutions in the economy. Not only providing capital and accepting deposits, banks also provide customers with a variety of other services such as guarantees, consulting, discounting, payment, etc.
There are many different definitions of banks depending on the laws of each country. According to US law: "Any organization that provides deposit accounts that allow customers to withdraw money on demand and makes loans to business organizations or commercial loans will be considered a bank". According to the law on credit institutions of the Socialist Republic of Vietnam, "Banking activities are monetary business activities and banking services with the regular content of receiving deposits and using this money to grant credit and provide payment services".
Thus, people often define banks according to their functions and tasks, and depending on the laws of each country, there are different understandings. However, it can be understood in the most general way: Banks are financial institutions that provide the most diverse portfolio of financial services - especially credit, savings, payment services and perform the most financial functions compared to any business organization in the economy.
1.1.2. The formation and development process of Commercial Banks.
The formation and development of banks are closely linked to the history of the formation and development of the commodity production process. The economic development process is the condition and requirement for the development of banks, in turn the development of the banking system becomes the driving force to promote the development of the entire economy through the operations it performs.
The early banking profession began with the money-changing or minting business of goldsmiths - The model of Goldsmiths' Bank, or the Bank of Usury, first used their own capital to finance their activities and their customers were mainly wealthy individuals such as mandarins, landlords, etc. for the purpose of serving consumption. Then expanded to lending to kings, to finance part of the spending needs for war.
Later, this type of bank collapsed due to the subjectivity, greed for super profits, and high risk acceptance of the bank owners.
This collapse caused great difficulties in payment activities, adversely affecting trading activities. Moreover, the interest rates of loans were too high, so the cost of using this source of capital also increased. In that situation, a number of traders grouped together to form a Bank to serve themselves and some other familiar traders and called it a Commercial Bank. Thus, Commercial Banks were formed from Commercial Capital and their activities were closely linked to the development process of Commercial Capital.
Commercial Banks at this time had relatively large differences compared to the Goldsmiths' Bank, safer because the lending form of Commercial Banks was mainly discounting commercial bills, a type of valuable paper, ensuring the ability to repay the loan, not the form of overdraft like the Goldsmiths' Bank, although the loan term only stopped at short-term loans based on the circulation of goods. Then, along with the ups and downs of development, the collapse combined with the development of science and technology economy, the activities of Banks had developed very quickly. First of all, it was the separation of the Central Bank and Commercial Banks, the diversification of types of Banks and Banking activities: types of lending funding, methods of capital mobilization were increasingly diversified, meeting better and better the diverse needs of the economy. Not only that, when science and technology become an important factor of social production forces, a series of new services are born: ATM services, electronic banking services, at home...
This development process not only increases the number but also increases the size of each Bank. The process of capital accumulation and concentration has created extremely large Banks, accompanied by success in performing operations that the Bank itself does not directly perform according to the provisions of law. This development process has been creating increasingly tight ties and increasing interdependence between Banks. Cross-border and multinational banking activities have been creating links between Banks in the same country and between countries, creating basic advantages in terms of common or compatible policies for control.
The development history of the Bank has not been without ups and downs, crises in each country, region and the world, causing not small losses to the economy, major fluctuations in political activities, but after all that the Bank has done for the development of human history, this existence increasingly occupies an important position in the economy of each country and the whole world is something that no one has to doubt.
1.1.3. Functions of Commercial Banks
1.1.3.1. Financial intermediary.
Banks are financial intermediaries whose main activity is to convert savings into investment, requiring contact with two types of individuals and organizations in the economy: individuals and organizations that are temporarily in deficit spending, that is, spending on consumption and investment exceeds income, so they are the ones who need additional capital; the second type of individuals and organizations are organizations and individuals with surplus spending: that is, their current income is greater than spending on goods and services, so they have money to save and if there were no banks and other financial intermediaries, it would be very difficult and costly to give those who need capital a good investment opportunity and those who have capital but do not have a good investment opportunity, and it would be difficult to create a suitable scale and loan term, which could lead to the possibility of both borrowers and lenders missing out on good investment opportunities. Banks and other financial intermediaries have appeared, making it difficult to create a suitable scale and loan term, which could lead to the possibility of both borrowers and lenders missing out on good investment opportunities.
increase income for savers. Thereby encouraging savings while reducing credit costs for investors to encourage investment. Therefore, the above difficulties have been solved. Moreover, the Bank also has a team of highly qualified staff, with leading science and technology. Due to the specific requirements of the Banking industry, the Bank's ability to collect and process information has a great advantage, this is also a factor contributing to increasing the indispensable role of the Bank in the operation of the whole economy.
1.1.3.2. Create payment method.
In the modern view, monetary quantity consists of many parts. The first is paper money in circulation (Mo). The second is the balance on the transaction deposit accounts of customers at the Bank. The third is deposits on accounts, savings deposits, and time deposits. Therefore, it is not like the Bank of the goldsmiths.
- create means of payment through the issuance of promissory notes to customers or printing metal money. Today's banks, when payment conditions through banks develop more and more rapidly, banks and customers realize that if customers have a balance in their payment deposit accounts, they can pay to get goods and services as required. And when the bank lends, the balance in the customer's payment deposit account increases. Therefore, by lending, the bank has created means of payment (participated in creating M1).
Likewise the entire Banking system can create money.
multiply deposits (create means of payment) through lending activities.
1.1.3.3 Payment intermediary.
In most countries today, banks have become the largest payment intermediary. Through payment services such as payment by check, payment order, collection order, cards, etc., banks will pay for goods and services on behalf of customers.
1.2. Commercial Bank Credit
1.2.1. Concept.
Bank credit is a borrowing relationship between the bank and all
individuals, organizations and other enterprises in society. It is not a direct capital transfer relationship from a place with temporary surplus to a place with temporary shortage, but an indirect capital transfer relationship through an intermediary organization, which is the bank. Bank credit also has the general nature of a credit relationship, which is a borrowing relationship with repayment of both principal and interest after a certain period of time, a temporary transfer of the right to use capital and an equal relationship for both parties to benefit.
In a market economy, many types of credit relationships coexist such as commercial credit, bank credit, state credit, hire purchase credit, consumer credit, international credit. Of which, bank credit can be considered the most important and popular credit relationship in the economy and is often studied.
Bank credit is understood as the credit relationship between a commercial bank, an organization specializing in monetary business, and other economic entities. However, the common concept of bank credit is the lending of commercial banks to economic entities.
It can be understood that credit granting is an agreement for an organization or individual to use a sum of money or a commitment to allow the use of a sum of money on the principle of repayment through lending, discounting, financial leasing, factoring, bank guarantees and other credit granting operations.
1.2.2. Characteristics.
- Term credit: Originates from the temporary nature of the process of transferring the right to use capital, originating from the nature of capital mobilization activities. Credit is always associated with the process of circulating capital from value form to physical form and vice versa, with the production and business cycle of customers.
- Repayable credit: Due to the influence of the term and capital source, the borrowing bank itself must also repay according to specific regulations, and the bank's lending activities must also have certain constraints on