Non-Performing Loans Management Strategy Of Vietnam’s Commercial Banking System

As the 150th member of the World Trade Organization (WTO), the Vietnamese economy to speed up further integration and globalization process. The rapid development of Vietnam trade and financial liberalization has been deep impact to VietNam’s Commercial Banks system and all commercial banks. This means not only the Vietnamese commercial banks have to face more intense competition at domestic and overseas market, also contributed to each commercial bank must have deeper reforms. Also, to support and meet the needs of economic development in Vietnam, Vietnam’s Commercial Banks, especially State-owned Commercial Banks must expand business scope, scale expansion of credit and non-credit business. Because the credit business in the current and future is still the commercial banks’s main source of income for commercial banks so the credit quality control is the key to commercial banks management. To reduce the occurrence of non-performing loans (NPLs) in commercial banks, the NPL ratio of the level of control in a reasonable range of all commercial bank management strategy priority. In Vietnam, the recent years’ NPLs in commercial banks only get attention by bank managers and decision-making authorities, high NPLs ratio of commercial banks to become a burden, a serious impediment to the reform and development of the commercial banking system in Vietnam. Therefore NPLs management are appreciated by the Vietnam’s Government and Vietnam’s Commercial Banks, especially The State-owned Commercial Banks.NPLs of Vietnam increased due the impact of the financial crisis and global recession of 2008, and now, Vietnam’s economy was affected negatively and Vietnam’s macroeconomic was affected unfavorable factors. Business activities of enterprises are facing many difficulties with the weakness of the Vietnam’s financial system. In which NPLs of Vietnam mainly from the following causes:The Legal Environment in Banking, Vietnam’s Commercial Bank credit risk management is still weak, banking technology in Vietnam is underdeveloped and from the ethics of some bank officials and customers.In this article the authors will study in depth the currently NPLs situation in Vietnam, the NPLs management method that Vietnam’s Commercial Banks were applied, then find out the problem that Vietnam’s Commercial Banks are facing in NPLs management. Besides the authors also study NPLs management experience of developed countries such as the United States, a country has been facing financial crisis in 2008 and was the most successful in the NPLs treatment and some Asia countries NPLs management experience then find the appropriate measures to improve and enhance the performance NPLs management of Vietnam’s Commercial Banks.This article is divided into five chapters. The first chapter "Introduction" describes the the reasons of selecting topic, actual situation of studying NPLs management of domestic and abroad commercial banks, method of study and study steps and definitions of the terms related. The second chapter concentrates on theory as well as sequence of NPLs management. The third chapter is about analysis of NPLs of Vietnam’s Commercial Banks form 2009 to 2014 situation and NPLs management status of Vietnam’s Commercial Banks; this part also shows the remaining problems in NPLs management of Vietnam’s Commercial Banks. The fourth chapter introduces about the experiences of NPLs management in American and asia countries Malaisia, Korea, China. And the last one offers suggestions to NPLs management with referring to existing problems in NPLs management of Vietnam’s Commercial Banks and experiences from developed countries.