ACKNOWLEDGEMENT Firstly, I would like to express my profound thanks to Dr… Finally, I would like to take this opportunity to extend my great gratitude to my beloved parents, family members and close friends for their support and encouragement not only during the period of this minor thesis but also for my whole life TABLE OF CONTENTS INTRODUCTION The necessary of the topic The purpose of the internship thesis The scope and scale of the internship thesis Research method The structure of the internship thesis CHAPTER 1: THE FUNDAMENTALS OF CREDIT RISK MANAGEMENT IN COMMERCIAL BANKS 1.1 The credit risk 1.1.1 Basic concepts of credit risk 1.1.2 Characteristics of credit risk .2 1.1.3 The main signal to identify credit risk 1.1.4 The cause of credit risk 1.2 The credit risk management 10 1.2.1 Basic Concepts of credit risk management 10 1.2.2 The necessary of credit risk management 11 1.3 The methods to manage credit risk 13 1.3.1 Setting limitation of the loan amount .13 1.3.2 Classification of loans 14 1.3.3 Provision and allowance for credit losses 15 1.4 Model used to evaluate credit risk 15 1.4.1 Qualitative model: 6C 15 1.4.2 Quantitative model: credit scoring 17 CHAPTER 2: THE SITUATION OF CREDIT RISK MANAGEMENT IN VIETINBANK AND VIETINBANK- NAM THANG LONG BRANCH 22 2.1 Basic policies of credit risk management in Vietinbank 22 2.1.1 The lending policy of Vietinbank .22 2.1.2 The policy of credit risk management in Vietinbank 25 2.1.3 Policies on loan classifications and risk provision 28 2.1.4 Organization structure of and operating structure of credit risk management 30 2.1.5 The supervision and inspection of credit risk management in Vietinbank 36 2.2 The summary of different types of credit risk and the causes of these types in Vietinbank .37 2.2.1 The summary of different types of credit risk 37 2.2.2 The causes of the types 38 2.3 Information of Vietinbank- Nam Thang Long branch as an example of good branch in credit risk management 40 2.3.1 The foundation and development of Vietinbank- Nam Thang Long branch 40 2.3.2 The organization structure of Vietinbank- Nam Thang Long branch .43 2.3.3 Overview of the credit activities in Vietinbank- Nam Thang Long branch in five years from 2005 to 2009 .44 CHAPTER 3: THE SOLUTION TO IMPROVE THE CREDIT RISK MANAGEMENT IN VIETINBANK 47 3.1 The general viewpoint of Vietinbank about credit risk management 47 3.2 The solution to improve the credit risk management in Vietinbank and Vietinbank- Nam Thang Long branch 48 3.2.1 The solutions to manage risk in credit activities 49 3.2.2 The solutions to improve the ability and ethics of credit employee 52 3.3 Some recommendations 53 3.3.1 Recommendations to the head-office of Vietinbank 53 3.3.2 Recommendations to the State Bank of Vietnam .54 3.3.3 Recommendations to the Government .55 CONCLUSION 56 ABBREVIATION GDP Gross Domestic Product L/C Letter Credit NPL Non- performing loans SBV State bank of Vietnam Vietinbank Vietnam Joint Stock Commercial Bank For Industry And Trade LIST OF TABLE Table 1.1Scoring criteria for individual customers 18 Table 2.1 Rates of credit risk provisions according to the groups rated by Vietinbank compared to Price Waterhouse Coopers’ consultation 29 Table 2.2 Distribution of credit approval authorization through each period 33 Table 2.3 Authorization verdict for lending and guaranty by groups of brach 34 Table 2.4 Basic data in the nine years 2001-2009 of the branch .41 Table 2.5 Business results in the five years 2005-2009 of the branch .44 INTRODUCTION The necessary of the topic In the period of economic renovation, our economy has made many positive changes GDP growth is maintained at a high rate, people's lives are improved Along with the changes of the country, banking sector has also reformed perceptively with significant improvement in the organization and operation Banking sector and particularly commercial banks play an important role in the achievement of economies day by day In the process of reform and restructuring, along with some traditional services, commercial banks have been gradually changing their activities for example the banks have moved to a variety of products and services, developed new product applications in the business However, the credit activity of the banks is still considered as the key in business operation and takes a high proportion of the profits of every commercial bank Credit operation has contributed a positive role for the development of the banking sector and all the economy, is a tool for financing the economy It also is contributing to industrialization and modernization of the country However, it also reveals the limitations and risks that banks must face today The high- level competition of commercial banks in the market economy makes risks especially credit risk tends to increase more rapidly and more difficultly in controlling Therefore, the issue of improving credit risk management is increasingly needed The author clearly realizes that fact in the period of internship in Vietinbank system in general and Vietinbank- Nam Thang Long branch in particular Therefore, the internship thesis “Solution to improve credit risk management in Vietnam Joint Stock Commercial Bank For Industry And Trade” is researched and written The author hopes that the thesis will contribute reasonable view for Vietinbank as well as banking sector in Vietnam in this period The purpose of the internship thesis - Review some theories of credit risk in commercial banks in the market economy - Analysis the real situations of credit risk in Vietinbank and VietinbankNam Thang Long branch Then, the author assesses the limitation and the causes of credit risk - Propose some solutions and make some recommendations to reduce credit risk management The scope and scale of the internship thesis Thesis focuses on studying and evaluating the current situation of credit risk management in Vietinbank Moreover, the author uses data from Vietinbank- Nam Thang Long branch as an example to help the internship thesis be more comprehensive and practical Research focuses on the period from 2000 to 2010 However, because of the financial year 2010 has not ended yet, only the data up to the end of 2009 is used Research method - Combining many research methods such as: synthesis, analysis, statistics… - Exchanging ideas, asking for the advice from those who have experience in credit risk management in Vietinbank- Nam Thang Long branch (the internship place) - Source of data is from the reports of Vietinbank and Vietinbank- Nam Thang Long branch The structure of the internship thesis The internship thesis contains some parts as the following: - Introduction part Chapter 1: The fundamentals of credit risk management in commercial - banks Chapter2: The situation of credit risk management in Vietinbank and - Vietinbank- Nam Thang Long branch Chapter 3: The solution to improve the credit risk management in - Vietinbank Conclusion part CHAPTER 1: THE FUNDAMENTALS OF CREDIT RISK MANAGEMENT IN COMMERCIAL BANKS 1.1 The credit risk of commercial banks 1.1.1 Basic concepts of credit risk of commercial banks Commercial bank is an institution which accepts deposits, makes business loans, and offers related services Commercial banks also allow for a variety of deposit accounts, such as checking, savings, and time deposit These institutions are run to make profit and owned by a group of individuals While commercial banks offer services to individuals, they are primarily concerned with receiving deposits and lending to businesses In the market economy context, the operations of commercial banks are very sensitive to any socio-economic fluctuations, which can cause disturbance to the business of banking For banks, although credit supply is the basic economic function which often provides the main income to the bank, it still has to follow the rule above and always contains risks There are many concepts of credit risk that can be quoted as follows: Saunders and H Lange, two highly regarded consultants in banking and finance defines that: "Credit risk is the potential loss when a bank grants credit to a customer, that is, there is the possibility that the income stream expected from the loan cannot be fulfilled on both the amount and duration." Timmothy W Koch, Professor of Finance at the University of South Carolina defines that: "Credit risk is the potential change of net income and market value of capital coming from the situation in which debt is not paid or paid late." Credit risk as defined by the Basle Committee of Bank for International Settlements: "Credit risk is the possibility that the borrower or counterparty does not perform their obligations under the terms agreements." Under the Decision 493/2005/QĐ- NHNN by the bank governor, credit risk is defined as follows: "credit risk in the banking activities of credit institutions is the possibility of losses in the banking activities of credit institutions as the customers fail to perform or are unable to perform its obligations under the commitment." There can be many different ways to define credit risk, but all concepts of credit risk are converging with one another in nature, which is: Credit risk is the possibility (probability) of economic losses occurring to banks as borrowers not pay debts on time or fully repay the debt (principal and interest) Credit risk may cause financial losses for commercial banks, reducing net income and market value of capital, in severe cases it can lead to losses and at higher levels can lead to bankruptcy Credit risk is associated with credit operation - an important activity of banks, in which the scale of profitable assets which are allocated to loans is the largest Therefore when granting credit, banks often try to analyze the elements of the borrower to ensure the highest level of safety To improve the credit quality, banks need to make operational measures before, during and after lending The task of preventing, restricting and handling risks also includes all measures from executive management, control, professional processes, handling bad debts to provisioning and handling risks Limiting credit risks is the overall of all measures to minimize the damage to banks in credit operations These measures will be presented more clearly in the following sections 1.1.2 Characteristics of credit risk Credit is the most important activity with the largest scale of commercial banks based on the opposite choices between two entities, which are the borrowers and the banks The borrowers are willing to take risks for the use of capital for their business opportunities On the other hand the banks want the maximum safety for their capital This is the expression of asymmetric information between the two 43 2.3.3 Overview of the credit activities in Vietinbank- Nam Thang Long branch in five years from 2005 to 2009 Table 2.5 Business results in the five years 2005-2009 of the branch Unit: billion VND Criteria 2005 2006 2007 2008 2009 Total mobilized capital 1742 1889 2672 2844 3485 Total outstanding loans 1624 633.5 464.4 709 1205 Bad debt ratio (% / 4.5% 9% 1.7% 0 20.7 25.1 49.3 118.4 57 total outstanding loans) Income after tax (Source: summary report for the years 2005-2009 of Nam Thang Long Branch) Looking at the table of a few basic business indicators of Vietinbank- Nam Thang Long branch in the last years, it can easily be seen that the branch has achieved sustainable development Specifically, the total mobilized capital increases continuously and regularly from 2005 to 2009 If the mobilized capital in 2005 was 1742 billion, by 2009 this figure doubled to 3485 billion This was an impressive figure in 2009, which was the year that was the most severely affected by global economic crisis With good mobilized capital, Vietinbank- Nam Thang Long branch can be fully active in its credit operations or can sell capital to other banks Although total outstanding loans were quite high, bad debt rate was being kept at low level Non-performing loans ratio in 2005 was the highest in years at 2% However, this percentage has been steadily decreased and in recent years 2008 2009 NPL ratio was 0% This result reflects that the credit risk management in Vietinbank-Nam Thang Long branch has been improving, and gradually advancing to the point of perfection Understanding how the branch in particular and the whole system of Vietinbank in general is essential Only from then, we can better complete 44 the measures and policies of credit risk management to be more reasonable, helping Nam Thang Long branch continue maintaining its bad debt ratio at 0% as current After-tax profit of the branch also has an impressive growth Although in 2009 profits declined compared to 2008 mainly caused by the general difficulties of the world economy, it still reached 57 billion, which was 2.5 times higher than in 2005 (only 20,7 billion) Vietinbank-Nam Thang Long branch is one of the best branches to complete the tasks entrusted by Vietinbank-headquarters Policies about credit risk management which are drawn from the lessons of the whole Vietinbank system are reviewed and applied very effectively by the executive board of Vietinbank - Nam Thang Long branch Therefore, learning about the credit risk management policies of Vietinbank- headquarters is also necessary to give us an overview of the credit risk management in Nam Thang Long branch Chapter summary: In this chapter, the author has devoted a significant proportion to analyze the strategic direction of Vietinbank in lending through three period, the result and limitation in developing and implementing policies for loans; the subjective and objective causes of success and failures in risk management; expressing the progress, while indicating the limitations of credit risk policies; evaluating the result and limitations in creating an environment for process control activities Particularly, in section 2.2 of the thesis analyzed the credit portfolio to try to identify the list of credit risk of Vietinbank, form which, realizing that risks focus on groups and a number of high-risk industries should be warned as soon as possible It could be said that the risk management of credit Vietinbank: Nam ThangLong branch in recent years is very bright and it has been shown in the impressive figures of low bad debts However, credit risks are possible at any time 45 in actual circumstances of the bank today In late 2010, when supply of capital in the whole economy was facing many difficulties, commercial banks were struggling to raise savings interest rates to 13 percent, lending interest rates as a result raised as well and credit risk could come up with Vietinbank-Nam Thang Long So this thesis gave out deep analysis of the advancement and the limitation of credit risk management of organizational structure model compared with the requirements of management principles of credit risk With lessons are drawn from throughout the system Vietinbank, Nam Thang Long-Vietinbank can avoid unnecessary mistakes This branch may also acquire, alter organizational structure model that is appropriate to the circumstances of their situations The above analysis is the basis for proposing practical solutions proposed in Chapter 46 CHAPTER 3: THE SOLUTION TO IMPROVE THE CREDIT RISK MANAGEMENT IN VIETINBANK 3.1 The general viewpoint of Vietinbank about credit risk management Vietinbank headquarter has released seven general views on credit risk management for their banking system as following: First, in an increasingly changing business environment and an international economic integration; operating environment becomes more complex, and the level of competition is now more intense posing more risks Vietinbank regards risk management; especially credit risk management in the operation as the center of all activities of executive management and business Second, every decision in business, especially those for credits of Vietinbank must comply with strict guidelines to assess risk and to determine the relationship of risk - returns, to ensure maximized profits on the basis of limited risks that have been approved Third, upon their fields of activity, economic environment in Vietnam, and the competitive environment of financial markets, Vietinbank establishes risk limits in credit activities that are consistent with financial and managerial capacity of itself Once credit limits are set up, the whole Vietinbank system at all levels from senior leadership to operational staff, from headquarters to branches or transaction centers must comply to continuously control risk limits and this is required for Vietinkbank to achieve goals, and to maintain the viability and financial transparency Fourth, monitoring and supervising credit risk management in Vietinbank must proceed on the independent principle from the operation of offices for credits, in which risks are created 47 Fifth, the decentralization of the management of risk limits between all levels must comply with clearly defined rules of each level: strategic management level, regional management level and general level, where risks arise Sixth, educating all staffs about the codes of professional ethics in business, training and retraining staffs periodically to ensure that each staff understands potential risks to help them identify and detect the first-line risk control Seventh, studies to apply risk management principles of Basel and best international practices are needed, to set out quick moves and in accordance with the conditions of risk management activities in Vietinbank 3.2 The solution to improve the credit risk management in Vietinbank and Vietinbank- branch Nam Thang Long From the seven general viewpoints given out from Vietinbank headquarters, Vietinbank Nam Thang Long has tried to comply with the most basic, but still two points are not satisfied -The fourth point: independent management and oversight from to the credit operation - The seventh point: apply risk management principles of Basel and best international practices are needed, to set out quick moves and in accordance with the conditions of risk management activities in Vietinbank The main reason leading to the failure of Long-Vietinbank to carry out two points of risk management is that risk management work is quite new in Vietnam and banks not have chance to contact and learn from international standards risk management officer are mostly credit officers in the past This fact offers an advantage that the risk officers can capture accurately about loans, types of customers, whether the lending process having potential risks, however, it also 48 brings difficulties because risk management does not work independently from credits activities 3.2.1 The solutions to manage risk in credit activities 3.2.1.1 Identify and manage the existing credit risk in different credit activities Strengthening monitoring the use of the loans and cash flows of the customers Loans: In loan approval process, the check before lending is a necessary condition, but however after a loan is made, it is necessary to examine the use of the loan, whether customers use the loan on correct purposes Without checking, the customer can use the loan for improper purposes leading to potential risks for banks Give restrictions on cash loans, only lend mandatory provisions such as wages, for main materials such as steel, cement, etc., and request borrowers to transfer or pay directly to beneficiaries Payment: In addition to checking credit loans, credit officers should also care about source of payment from customers, and request customers, investors, and buyers when making payment transference to customer accounts in the bank to repay the loan, not to withdraw cash Credit officers should control the customer's deposits and expenditures from a deposit account should have the consent of the banks to avoid the fact that the customer does not pay for loans but other uses, then debts cannot be collected Enhance the role of inspection and internal control Inspection, internal control in credit operations is an extremely important tool Through the control activities, mistakes can be detected, prevented and corrected during the performance of credit application Besides, the control activities also detect and prevent moral hazard caused by loan officers 49 3.2.1.2 Improve the process to deal with bad debt This is the last resort in order to minimize the losses occurred The handling of overdue debts needs specific measures such as: - Analyzing reasons of overdue debts of each customer then arrive at measures to remove them For customers who have temporary overdue debts and normal production and business operations, banks need to consider the possibility of repaying debts and future business for lending decisions For lending to ensure the return of capitals, to help customers overcome difficulties and have ability of paying back debts, following measures may apply: + Defining the structure of debt: Based on production and business plans of customers, customers prove the ability to repay due debt after restructuring debts, the bank will restructure the debts To implement the debt restructuring for customers bank is required to closely monitor the debts and customer’s activities after the structure + For customers in financial troubles with business losses, difficulties to repay, and overdue debts without source of payment, the bank needs to closely manage the loans and clients as following: For collateralized loans Find other customers who can receive debts of troubled customers so as to continue to efficiently exploit collateral for better repayment capacity Bank reviews collateralized assets, property status, and legal documents to have to debts recovered on sale of collateralized assets Bank coordinates with other ministries, departments and branches to carry out the liquidation - the sale of collateralized assets 50 In case the sale of assets is not sufficient to recover capital, customers are forced to pay the rest through other sales of assets; otherwise banks may declare that the customers are bankrupt For cases where assigned loans, if the sale of assets not enough to recover the loan, the bank completed the procedures of thehandling to the Government For uncollaterized loans In this case, tight control of customer financing is needed: accounts receivable, payments of capital projects through the annual reports for construction sector, collection of money for other areas, and requests for payment commitments on transfer of customer accounts at the bank Advising clients to sell their inefficienct properties that not need to use to repay the loan For personal customers: work with their companies and families to manage loan payments Measures to file lawsuits: In the current economic relationships, lawsuits are uncommon everyone, we need to get familiar with the settlement courts The initiation of lawsuits will work for customers who have no intent of debt repayment 3.2.1.3 Collect off-balance sheet debts and frozen loans Off-balance sheet debts and frozen liabilities are non-profit debts, usually transferred to off-balance sheet or not interest-counted Those debts have a strong influence on the business performance of all banks, due to the fact that for-risks reserves are offset If off-balance sheet debts increase, the bank can not have interests when having to deduct from reserves, so the off-balance sheet debt and frozen debts recovery is to contributie to purge financial situation of banks Here are some ways to recover those debts 51 * For customers in effect Continuing to adhere to customers, evaluating the business activities of customers, convincing them to be willing to repay bank loans, and simultaneously constructing for them a couple of specific repayment plans plans in the future Bank needs to coordinate with agencies such as the managing unit of the customer, police, the auction center to take measures to recover debts in line with each object, such as the sale of collateralized assets and the urge to make the loans repayment to the bank The processing of reserves for risks is the internal affairs of the bank that must not be discloseed to customers to avoid the stubbornness of customers 3.2.2 The solutions to improve the ability and ethics of credit employee 3.2.2.1 Improve the abiltity of employee In banking, bank officials are those who directly supply products and services to customers, and who have direct relationships with customers So the relationship between bank staffs and customers will decide the quality of products and services provided Due to the fact that credit activities are related to various fields, while credit staffs are trained mainly in economic field, thus, experience in the fields related to engineering is certainly limited Bank would require credit officers to constantly improve their qualifications, learn other fields also to serve other credit activities To improve the quality of credit officers, right from the selection of loan officers, bank only pick those who are with ethics, professional qualifications, and are trained, knowledgeable about economic, technical and social areas 52 3.2.2.2 Improve the ethics of employees To limit credit risks, the responsibilities loan officers needs to be raised by gluing their interests with thier responsibilities Bonus and punishment should have a clear degree, it needs special salary policy to encourage credit officers to avoid moral hazard Regularly communicate and disseminate the ideas of codes of for credit officers so that they understand and abide correct processes Standardizing credit officers: Credit officer has a key role in bank's activities So to limit risks in the credit activities, right from the recruitment, those cadres should be met - Must be trained in correct majors in the prestigious university - Able to use foreign languages, information technology - the prequisite for researching, transacting and using computer in the evaluation of projects - Be moral and ethical: this is the important criteria for credit officers, determining to moral hazard issues in business ethics - Understanding of society and having communication skills: factors that help bank and clients understand each other better, and make customers stick to the bank With good communication skill, credit officers could learn more about customer in handling credit requests 3.3 Some recommendations 3.3.1 Recommendations to the head-office of Vietinbank Vietinbank has to restructure organizational structure, under which risk management department in general and credit risk management department in particular must be independent from the customer relations department And credit risk management model should be centralized headquarter 53 - Vietinbank needs to issue risk management guidelines in general, including the content of credit risk management - Complete lending policies according to the direction that adhere to commercial principles, constantly update standards for credit approval, in which formula determining lending rates to business priorities is subject to annual financial auditing - Develop a quick warning system for credit risk - Build a training strategy to have a team of experts in credit evaluation and associated with concrete bonus and punishment, and build analysts team in headquarters and representative offices as proposed in the organizational model 3.3.2 Recommendations to the State Bank of Vietnam - Revising regulations of treating risks with bad loans towards the trend of allowing commercial banks to transfer them to off balance sheet activities when required criteria are met, the portion of recovered loans will be counted as stringent income instead of double regulations as in Decision 493 - Issuing accounting standards for commercial banks under international practice, allowing for accounting of outstanding commitments and guaranties to balance sheet activities, simultaneously making provisions for losses of outstanding commitments as outstanding loans Standardization of discrimination of economic lines better statisticcal working and accounting are also needed - Conversing CIC Center of commercial banks into a credit rating joint stock company, in which commercial banks are large shareholders, and send experts to participate in administration team Expert's salary here is equivalent to the average salary of banks to attracte talents 54 3.3.3 Recommendations to the Government - Adopt policies to encourage the activities of the independent audit company, to create a transparent environment for all financial business - Adopt policies for private participation in the field of statistics and information disclosure, and Government constructes credit rating joint stock companies for individuals and organizations 55 CONCLUSION Credit risk is a very important issue in management and business operations of each individual commercial bank Credit expansion must go hand in hand with managing credit quality, with limited credit risk However, each commercial bank such as Vietinbank and its branches need to prevent and limit credit risk for themselves, right after the start of the lending decision Therefore, after the internship period in Vietinbank- Nam Thang Long branch, the author has chosen the theme "Solution to improve credit risk management in Vietnam Joint Stock Commercial Bank For Industry and Trade" The author can get more knowledge in the field of risk management in real life This thesis has presented some important findings and given considerable recommendations as below: - There are many causes of credit risks: objective causes, subjective causes by customers and subjective causes by the commercial banks Among three main causes, if subjective causes by the commercial banks are managed well, the consequences of the other causes can be reduced reasonably To solve the problem come from the causes by the banks, the author has given recommendation that Vietinbank has to restructure organizational structure, under which risk management department in general and credit risk management department in particular must be independent from the customer relations department And credit risk management model should be centralized headquarter - Vietinbank- Nam Thang Long branch is one of the best branches in credit risk management However, the success of Nam Thang Long branch almost comes from the high level of dealing with bad debts This branch has successfully used two main methods to deal with bad debt: collecting debts directly and selling debts to other financial institutions The process of risk prediction in this branch is not really good and it should be improved in some years 56 - For the credit risk management becomes more useful, the government should adopt policies to encourage the activities of the independent audit company, to create a transparent environment for all financial business This issue is very important because when these policies become more reality, all financial institutions can have a standard to follow in credit risk management 57 REFERENCES Vietnamese: Phan Thị Thu Hà (2007) Ngân hàng thương mại Nhà xuất Đại học Kinh tế quốc dân Phan Thị Thu Hà & Nguyễn Thị Thu Thảo (2002) Ngân hàng thương mạiQuản trị nghiệp vụ Nhà xuất Thống kê Nguyễn Văn Tiến (2002) Đánh giá phòng ngừa rủi ro kinh doanh ngân hàng Nhà xuất Thống kê English: Peter S Rose & Sylvia C Hudgins (Eighth Edition) Bank management & Financial Services Peter S Rose (2001) Commercial Bank Management, Financial Publisher Other documentaries - Tài liệu Dự án cấu lại ngân hàng công thương Việt Nam- phối hợp Price Water House Coopers (2002) - Sổ tay tín dụng Ngân hàng công thương Việt Nam (2004) Website: - http://sbv.org.vn/ - http://www.vietinbank.vn - http://cafef.vn/ ... SITUATION OF CREDIT RISK MANAGEMENT IN VIETINBANK AND VIETINBANK- NAM THANG LONG BRANCH 22 2.1 Basic policies of credit risk management in Vietinbank 22 2.1.1 The lending policy of Vietinbank. .. in five years from 2005 to 2009 .44 CHAPTER 3: THE SOLUTION TO IMPROVE THE CREDIT RISK MANAGEMENT IN VIETINBANK 47 3.1 The general viewpoint of Vietinbank about credit risk management. .. solution to improve the credit risk management in Vietinbank and Vietinbank- Nam Thang Long branch 48 3.2.1 The solutions to manage risk in credit activities 49 3.2.2 The solutions to improve