INTRODUCTION

1.      Rationale

Risks are an inevitable issue in any business in which the more profit a business can bring out, the more risky it is. In the banking sector in which money is the key goods, if risks, in general, or credit risks, in specific, occur, it is believed to be such diversified forms and far - reaching scale that it can distort and adverse the business achievements. Therefore, there has been great concern about credit risk management nowadays.

In the early 1990s, the collapse of the credit collective societies and the bankruptcy of banking based loan enterprises is a proof for the incompetent credit system that was not nimble enough with the transitional economy. In another word, policy - driven lending practice throughout 1990s and limited credit assessment skills in the wake of rapid credit growth, led to the accumulation of non - performing loans. To address this concern, the Vietnam government embarked on an important overhaul of the banking system through a multi - year restructuring and recapitalization program. Although a host of adjustments has been implemented, a credit risk is a tricky issue for the banks to deal with. Nowadays, given the current global financial crisis that brings many financial institutions to its knee and ravages every economic sector, Vietnam cannot step outside the overwhelming trend.

A commercial Military bank, though newly founded, achieved great success in its short life span. Yet, credit risk continues to be the leading source of problems. As the result, I chose “Current situation of credit activity and solutions to the credit crisis at the Military commercial bank the period of 2005 - 2007” as the title for my thesis.

2.      Scope of the study

Due to the restriction of knowledge as well as the late release of annual report 2008, in this thesis, the author only concentrates on the situation of credit and the management of credit risk of MB during 2004 - 2007