“Internal Credit Rating Helps Boost Business Performance”

Over the past recent years, the domestic banking system has made remarkable achievements and has become a key factor for the country’s socio-economic development thanks to its efforts to improve technology and develop human resources. This was comment of Cao Thi Thuy Nga, Deputy General Director of Military Commercial Joint Stock Bank (MB).

 

During a 20-year development period, the Vietnamese financial and banking sector has made great breakthroughs and played a key role the national economic development.

State-owned, commercial and joint stock banks in Vietnam have made a considerable contribution to raising the effectives of capital flow use.

 

In addition, financial and legal regulations have been gradually issued and completed to ensure an equal and transparent business environment for investors. Tightening control over financial and monetary policies is the outstanding strength of the sector. 

 

However, being a developing country, Vietnam’s financial and banking sector still shows certain weaknesses. Financial tools are quite simple and corporation administration mechanisms are not strong enough.

 

Meanwhile, awareness of market participants has been improved and has caused difficulties for managers. Knowledge of the community and enterprises about financial tools and banking services remains limited, affecting the effects of capital use.

 

The sector’s labour productivity is still low due to limited investment in technology and personnel administration. The services quality is a matter of concern while its ability to adapt to the world economy’s change remains slow.

 

The technology infrastructure and human resources are two important internal factors contributing to the Vietnamese banks’ development. Currently, local banks are still weak at these factors against regional countries; however, they have been trying to improve the situation.

 

For the MB, we have built a contingent of qualified staffs and also developed technology systems on management information system (MIS), data warehouses and back-up system to boost the wholesale and retail activities.

 

Notably, the year of 2007 marked the MB’s successes in changing Ibank software into corebankingT24 of Temenos with many different modules to serve benefits of the banks and its customers also.

 

Basically, the Vietnamese laws have created legal foundations for credit organisations’ activities in general and the banking sector in particular. But, Vietnam has not yet issued legal documents for banking activities, leading difficulties for banks to launch new services and products.

 

Under the legal documents, the banking sector has to closely manage commerial banks to ensure the whole system’s safety and is also required to offer open conditions for commercial banks.

Therefore, along with the development of the national economy and the banking sector, the legal documents should be revised suitably. Thus, Sate Bank of Vietnam is revising the Law on Credit Organisations in line with the situation.

 

Vietnamese banks are trying to facilitate technology and improve administration capacity, particularly risk, human resource and business development administration.

 

The MB has step by step enhanced its administration capacity to meet the world standards. The banks have strived to promote its fame and attract customers as well as applied international practices, especially BASEL I and II standards and risk management.

 

MB considers the enhancement of risk management as a key for its development. It has also actively applied high technology in risk management   to deal with macro-economic and financial changes.

 

We are also the first joint stock bank in Vietnam that have built and applied the internal credit rating technology, an effective tool in client management to apply suitable credit policies on different customers and restructure the structure by customer classification.