Phan Phu cuong cgs00016245 Bui Mai Nguyen anh cgs00016225

I. Introduction about Military Bank (MBB)1. General informationFull name : Military Commercial Joint Stock BankChartered capital : 11.256.250.000.000 VNDChairman : Mr. Le Huu DucStock code : MBBListing date : 01/11/2011Shares outstanding : 1.125.625.000Share price: 13.500 VNDP/E: 6,0Beta: 1,0Tax code: 0100283873Establishment License: 0054/NH-GP (09/14/1994)Business license: 0100283873 (01/31/2013) Main business scope: Payment deposit saving, Valuable bills negotiating, Loans for consumption, family economy development, export bills negotiating; Foreign exchange; Financial advisory 2. Organizational Structure (2011 2015)

(Source: MBB, 2013)3. Establishment and Development historyWith the idea of developing a corporate financial institution and a military enterprise to a Commercial Joint stock Bank, after an active preparation period of 18 months, on 04 November 1994, MBB started its official operation with head office at 28 Dien Bien Phu, Hanoi, with a charter capital of VND 20 billion and 25 employees.In 1994, MBB was established with the initial charter capital of Vnd20 billion and the purpose of providing financial support to military enterprises. Since 2000, MBB developed strongly beyond the scope of a bank and step by step, became a group starting with the establishment of 2 member entities which are Thang Long securities Co., Ltd, currently known as MBB securities Joint stock Company (MBS) and MBB assets Management Company (MBAMC) to diversify its range of services towards a multitask and modern financial institution.In 2003, after 8 years of effective operation, MBB decided to reorganize itself to develop in a faster, stronger and more sustainable manner under the MBB reorganization project. Accordingly, MBB worked with a foreign consulting company to develop the 2004-2008 strategy with a vision towards 2015. In the following year, MBB became the first commercial joint stock bank to offer its shares via public bidding with total par value of VND 20 billion. After that, MBB entered into a three-party agreement with Vietcombank and Viettel group with respect to payment of telecommunication fees for Viettel and a cooperative agreement with Citibank in 2005. This strategic cooperation helps MBB access to a wider range of customers and deliver faster services, in the meantime set a foundation for MBB to develop high- tech products and services, and also access to a wider range of banking management solutions.In 2006, MBB continued its business expansion with the establishment of Hanoi fund Management Company (HFM), which is currently MBB Capital Management Joint stock Company (MBB Capital). MBB successfully implemented the project of information and technology modernization Core Banking T24 of Temenos group (Switzerland). Two years later, MBB started the process of organizational restructuring, improving and implementing the personnel strategy under the organizational model of the period 2008-2012. Viettel group became a strategic shareholder and MBB increased its share capital to VND 3,400 billion. MBB was the first commercial bank to complete and apply the internal credit rating system.In 2009, MBB completed the increase of its chartered capital to VND 5,300 billion. MBB was awarded Labor Medal grade 3, and the ISO 9001:2008 Certificate from Bureau VERITAS Certification (UK). The 247 Customer Center was launched. In 2010, Mr. Le Cong was appointed as the new CEO. He signed and implemented the project on consultation and development of 2011-2015 strategies with visions towards 2020 with McKinsey. The first branch located in a foreign country was launched in Laos. MBB was assessed and rated E+ by Moodys, a worldwide credit rating organization. MBB achieved initial successes in the implementation of the development strategy in the southern region and invested in construction of the database center and the provision center with the total investment capital of USD 10 million.During the year 2011, MBB successfully appointed the new Chairman and transferred its administration and military function to be under the Ministry of national defense and its Party Committee to be directly under the Central Military Commission. Additionally, MBs shares have been successfully listed on Ho Chi Minh City Stock Exchange HSX since 1 November 2011. in 2011, another success of MBB is launching its second international branch in PhnomPenh Cambodia after a fruitful year of its first international branch in Laos. MBB implemented its strategic model for 2011-2015, as well as its business model and deployed strategies for the southern region, the Central Region and the Central Highland. MBB successfully upgraded Core T24 from R5 to R10.In 2012, MBB successfully shifted its organizational model following the development strategy for 2010-2015. With pre- tax profit of VND 3,090 billion, MBB was a leader in commercial banking sector (excluding banks with a dominant stake held by the state) in terms of roe and secured its strong position among the top 5 largest commercial banks in Vietnam. In particular, regarding operation scale, MBB is also enjoying an industry-leading position in Vietnam considering indicators from labor productivity, return on equity to capital mobilization growth, credit growth, profit, etcIn 2013, MBB continued to recognize its remarkable success in the banking and financial market of Vietnam. the business targets were essentially achieved at high levels: total assets reached over Vnd180,000 billion, profits reached VND 3,022 billion, the highest level among the group of banks with no state-owned controlling shares, fund mobilization increased by 16%, outstanding loans increased by 18% (1,5% times higher than the market average). Meantime, non-performance loans were still controlled below the rate of 2.5% as planned. This was the year when MBB received valuable prizes granted by the Communist Party, the state, the Ministry of Defense, and local and international organizations.II. Credit risks and Liquidity risks at commercial banks1. Credit riskCredit risk is the rst of all risks in terms of importance which refers to a risk of loss arising from the inability of the bank's customer to meet their obligations and collateral not securing the bank's receivables. The loss from the customers failure to comply with their obligations to service debt is called default risk, a major source of loss in credit risk. Default triggers a total or partial loss of any amount lent to the counterparty. Credit risk also includes country risks and settlement risks, the former representing a credit risk associated with foreign receivables by country and the latter relating to the clearing and settlement process involving the risk of losing a receivable being settled (Pohjola, 2014). In banking portfolio, Credit risk plays a critical role because the default of a small number of important customers can generate large losses, potentially leading to insolvency. There are various default issues: delay in payment obligations; restructuring of debt obligations due to a major deterioration of the credit standing of the borrower; bankruptcies. Simple delinquencies, or payment delays, do not turn out as plain defaults, with a tough inability of lenders to face debt obligations. Many are resolved within less than 3 months. Restructuring is very close to default because it results from the view that the borrower will not face payment obligations unless its funding structure changes. Plain defaults imply that the non-payment will be permanent. Bankruptcies, possibly liquidation of the rm or merging with an acquiring rm, are possible outcomes (Pohjola, 2014). According to Pohjola (2014), there are some basic measures that can be used for measuring and managing credit risks in commercial banks:Firstly, setting clear and tough Credit risk policy. The risk policy and guidelines define principles governing the diversification and customer selection in respect of total exposure, as well as the use of collateral and covenants, with a view of ensuring a suitably diversified loan portfolio in order to avoid too much risk concentrations by country, customer sector, industry, credit rating, group of connected clients or time period.Secondly, setting Credit risk limits. The exposure limit is a maximum amount on customer-specific exposure and uncovered exposure and is annually confirmed for at least corporate and institutional customers and credit institution. An exposure limit may also include restrictions in terms of maturity or product.Thirdly, establishing proper Credit process. The regular credit process plays an important role in credit risk management. From the risk management perspective, its key stages include credit standing assessment (credit rating), credit approval and execution, which are separate processes. 2. Liquidity riskIn finance, the term "liquidity" is used in many different ranges. From the perspective of assets, liquidity is the ability to convert assets into cash easily and quickly with a reasonable cost. Under the general business perspective, the amount of liquidity and cash equivalents owned enterprises. However, this term is used when the angle of bank management would mean "the bank's ability to seek and use the funds to meet the payment requirements, payment or credit to customers during each period."Liquidity at the time of determination can be assessed through indicators of the status of net liquidity (NLP) or liquidity gap, based on the input (the total supply of liquidity) and output (aggregate liquidation ) of the cash flows at that time.Liquidity at the time of determination can be assessed through indicators of the status of net liquidity (NLP) or liquidity gap, based on the input (the total supply of liquidity) and output (aggregate liquidation ) of the cash flows at that time. Supply is the amount of liquidity available or may have in the short term for bank use. This cash flow to be created from the following sources: Deposits from customers will receive. Revenue from the provision of services. The credit will be earned. Asset sales are sales and use. Borrowing from money market. Issue of shares on the market.In the supply of liquidity, cash flows earned from capital raising deposit accounts and large volume supply of liquidity for the commercial bank. Liquidity demand is the source of money that banks will have to spend in a short time. This flow of money is made from the following sources: Customer Deposits draw Disbursement of credit contracts Payment of loans and payment of interest Buying back shares The cost of providing the service and interest cost Payment of dividends to shareholdersIn the liquidity demand that Commercial Banks face on, the amount of money require to disburse the large amount for the credit contracts accounted. Net liquidity status (NLP) is calculated by the following formula:NLP = Liquidity Supply Liquidity DemandSuch a state is a net liquidity gap between aggregate supply and aggregate demand liquidity at a time. At that point, if NLP> 0, i.e. the provision of excess liquidity to meet liquidity requirements, the bank liquidity surplus or excess cash without interest; whereas if NLP