The marketing stratergies of asia commercial bank to be the leading retail bank in vietnam

The Marketing Strategies of ACB to be the leading retail bank in VietnamINTRODUCTION Vietnam has been on its way to industrialization and modernization since the Renovation Policy of our

Upon completing my research, I have worked so hard with seemingly tirelessenergy However, if it had not been for the help and support of my teachers, TheAsia Commercial Bank, friends and family, I could not have achieved my goal.

I would like to express my deep feeling from the bottom of my heart to saythanks to those who had helped me a lot, especially DR TRUONG QUANGTUAN, my advisor, who gave me useful advice and had positive attitude towards

my topic He has spent his precious time considering my graduation paper with allhis heart and enthusiastically given me helpful comments

Second, I would like to say thanks to Mr TRAN QUOC BAa, a teacher in VoVan Tan high school He has helped me a lot in providing me helpful informationregarding ACB

Third, I would like to show my gratitude towards the Asia Commercial Bankthat provided me with very useful information, latest news and updated data bygiving me all necessary conditions and opportunities for me to complete my topicabout the bank Without a doubt, thanks to the enthusiasm and cooperation ofACB's management and employees, I could finish my research

Finally, lowe many thanks to my family and friends for their constant supportand encouragement They're always by my side

Once again, thank you very much for all

THE MARKETING STRATEGIES OF

1 Chapter 1: General conceptions about the theme

e •••••••••••••••••• '••••••••••

* A bank of high sustainability and integrity 22

* Vision and mission •.• 23

l

2.b Highlights of ll-year-history 25

2.d Key Finan.cial Figures • 31

The Marketing Strategies of ACB to be the leading retail bank in Vietnam

INTRODUCTION

Vietnam has been on its way to industrialization and modernization since the

Renovation Policy of our Party and State Our country is changing from the

subsidized economy to the market economy As a result, more and more

entrepreneurs are established and the demand for exchanging among them is

increasing Therefore, banking services, without a doubt, have become an essential

and important part of our life This is the reason why many banks were set up and

the competition among banks is very fierce In the past 11 years, Asia Commercial

Bank (ACB) has achieved good reputation due to its successful marketing

strategies and management and has become the best joint-stock commercial bank

in Vietnam

We all know that banking services are very sensitive; despite the fact that the

market in Vietnam is changing rapidly, more and more state-owned banks,

joint-stock banks as well as foreign banks are established, and they are all giants, ACB

is still the leading retail bank in Vietnam and holds a big market share What

makes that? Definitely ACB has effective strategies that make it outstanding and

successful

In every organization, marketing is the crucial part and that makes the

success However, little research has been done on ACE In my research, I would

like to analyze some of the marketing strategies of ACB to be the leading retail

bank in Vietnam The focus of this research is on how ACB applied successfully

and effectively those strategies and some suggestions on the way to global

integration

This paper consists of 4 chapters: The first chapter of my research is about

some general conceptions, which give us basic understanding about Marketing An

overview of Asia Commercial Bank is mentioned in the next chapter, we will have

a close look into what ACB is about and how ACB was established and developed

1

-1

The Marketing Strategies of ACB to be the leading retail bank in Vietnam

during the past 11 years In the third chapter, the core chapter of all, I would like

to analyze the marketing strategies applied in ACB that play so important a role inthe success of ACB Then comes the last chapter that analyzes some advantagesand disadvantages of ACB, its competitors, social trends and some suggestions tointegration

Data book references and materials concerning this field will be used tosupport my research I will also develop my knowledge about related matters inaddition to what I have learnt from HUFLIT My research about Asia CommercialBank helps me understand more about the market so that I can get moreexperiences and it also enhances my knowledge in Banking Services, Business,Marketing, and Management

Some methods used in doing this paper:

Reading primary data: text books, references, documents

Getting secondary data: magazines, newspaper, CDs, Internet

Collecting data and statistics

Interviewing, using questionnaires

Observing, taking pictures

Analyzing data

Giving conclusion from what have been studied

The Marketing Strategies of ACB to be the leading retail bank in Vietnam

THEME

.

1 A WHAT IS MARKETING?

Marketing, more than any other business function, deals with customers

Creating customer value and satisfaction are the heart of modern marketing

thinking and practice The twofold goal of marketing is to attract new customers

by promising superior value and to keep current customers by delivering

satisfaction Sound marketing is critical to the success of any organization- large

or small, for-profit or non-profit, domestic or global Everyday in our life, we use

the term "marketing" very often, but be sure to distinguish between the familiar

word in everyday use and the term as it is used professionally by marketing

managers All of us are daily the targets of massive and sustained marketing

activities in a variety of forms, which range from advertising on television and

radio, in the press, on posters, on bottles of drinks, through direct mails and

promotional literature of all types, and through special offers and price reductions

in retail stores If we pause to think about it, the evidence of marketing activities

surrounds us like the air we breathe

But what does "marketing" actually mean? Many people think of marketing

only as selling and advertising However, selling and advertising are only the tip

of marketing iceberg Today, marketing must be understood in a new sense of

satisfYing customers' needs According to Kotler, Philip & Armstrong,

Gary.(ed.).1996 Principles of marketing 8th edition.New Jersey: Prentice-Hall

International, INC., Marketing is defined as a social and managerial process by

which individuals and groups obtain what they need and want through creating

and exchanging products and value with each other To explain this definition, we

will examine the following:

-3 -,

The Marketing Strategies of ACE to be the leading retail bank in Vietnam

FIGURE 1: The Core marketing concepts

NEEDS: Human needs are states of felt deprivation They include basicphysical needs for food, clothing, warmth, and safety; social needs for belongingand affection; and individual needs for knowledge and self expression Theseneeds are not invented by marketers; they are a basic part of the human makeup.WANTS: Wants are the form taken by human needs as they are shaped byculture and individual personality A hungry person in the United States mightwant a big Mac, French fries, and a Coke A hungry person in Bali might wantmangoes, suckling pig, and beans Wants are described in terms of objects thatwill satisfy needs People have almost unlimited wants but limited resources.Thus, they want to choose products that provide the most value and satisfaction fortheir money

DEMANDS: Human wants that are backed by buying power

PRODUCTS: The concept of products is not limited to physical objects It isanything that can be offered to the market for attention, acquisition, use orconsumption that might satisfy a want or need It includes physical objects,services, persons, places, organizations and ideas

SERVICE: Any activity or benefit that one party can offer to another that isessentially intangible and does not result in the ownership of anything ~

The Marketing Strategies of ACB to be the leading retail bank in Vietnam

CUSTOMER VALUE: The difference between the values the customer gainsfrom owing and using a product and the costs of obtaining the product

CUSTOMER SATISFACTION: The extent to which a product's perceivedperformance matches a buyer's expectations

EXCHANGE: The act of obtaining a desired object from someone by offeringsomething in return

TRANSACTION: A trade between two parties that involves at least twothings of value, agreed-upon conditions, a time of agreement and a place ofagreement

RELATIONSIllP MARKETING: The process of creating, maintaining, andenhancing strong, value-laden relationships with customers and other stakeholders.MARKET: The set of all actual and potential buyers of a product or services

To understand the nature of market, imagine a primitive economy consisting ofonly four people: a fisherman, a hunter, a potter, and a farmer Figure 2 shows thethree different ways in which these three traders could meet their needs

-The Marketing Strategies of ACE to be the leading retail bank in Vietnam

Besides, The American Marketing Association defined marketing as theprocess of planning and executing the conception, price, promotion anddistribution of ideas, goods and services to create exchanges that satisfy individualand organizational objectives

Marketing has changed dramatically since the turn of the century Increasingcompetition, shifts in consumer attitudes, and the growth of mass media have allcontributed to the evolution of marketing Figure 3 depicts that evolution

Sales-oriented marketing

AdvertiseDevelop sales forceTake orders

Shi oods

Mter World War

n to the present day

Total marketing

Find out consumer'sneeds and

preferences (marketresearch)

Produce product toappeal to consumer

Plan advertising andsales methods to

a eal to consumerAdvertise

Develop sales forceTake orders

Shi oods

Today

Competitive marketin

Find out consumer'sneeds and

preferences andanalyze thecom etitionProduce productsthat appeal toconsumers and offer

a competitiveadvanta ePlan advertising andsales methods to

a eal to consumerAdvertise

Develop sales forceTake orders

Shi oods

FIGURE 3: The evolution of marketing

The Marketing Strategies of ACB to be the leading retail bank in Vietnam

1 B THE MARKETING PROCESS

The marketing process is the process of analyzing marketing opportunities;selecting target market; developing the marketing mix; and managing themarketing effort

Marketing's roe and activities in the organization are shown in Figure 4,which summarizes the entire marketing process and the forces influencingcompany marketing strategy

FIGURE 4: Factors influencing company marketing strategy

Target customers

To succeed in today's competitive marketplace, companies must be centered,winning customers from competitors and keeping them by delivering greatervalue But before it can satisfy consumers, a company must first understand theirneeds and wants Thus, sound marketing requires careful analysis of consumers.Companies know that they cannot satisfy all consumers in a given market - at leastnot all consumers in the same way They are too many different kinds of

-

7-The Marketing Strategies of ACE to be the leading retail bank in Vietnam

consumers with too many different kinds of needs, and some companies are in a

better position to serve certain segments of the market Thus, each company must

divide up the total market, choose the best segments, and design strategies for

profitably serving chosen segments better than its competitors do This process

involves three steps: market segmentation, market targeting, and market

positioning

Market segmentation

Consumers can be groped and served in various ways based on geographic, the

demographic, psychographic, and behavioral factors In the process of dividing a

market into distinct groups of buyers on the basis of needs, characteristics, or

behavior that might require a separate product or marketing mixes is called market

segmentation

Market segment

Market segment is a group of consumers who respond in a similar way to a

given set of marketing efforts

Market targeting

Market targeting involves evaluating each market segment's attractiveness and

selecting one or more segments to enter A company should target segments in

which it can generate the greatest customer value and sustain it over time A

company with limited resources might decide to serve only one or a few special

segments This strategy limits sales but can be very profitable Or a company

might choose to serve several related segments- perhaps those with different kinds

of customers but with the same basic wants

Market positioning

Market positioning is arranging for a product to occupy a clear, distinctive and

desirable place relative to competing products in the minds of target consumers

Formulating competitive positioning for a product and a detailed marketing mix

-,

The Marketing Strategies of ACE to be the leading retail bank in Vietnam

Marketing strategies for competitive advantage

To be successful, the company must do a better job than its competitors ofsatisfying target consumers Thus, marketing strategies must be geared to theneeds of consumers and also to the strategies of competitors

Designing competitive marketing strategies begins with thorough competitoranalysis The company constantly compares the value and customer satisfactiondelivered by its products, prices, channels, and promotion with those of its closecompetitors In this way it can discern areas of potential advantage anddisadvantage The company asks: Who are our competitors? What are theirobjectives and strategies? What are their strengths and weaknesses? How will theyreact to different competitive strategies we might use?

1 C THE MARKETING MIX

The company can't achieve its purpose of making a profit unless it identifiesbuyers, finds out what they want or need, and then gets a product to them, to thebenefit of everyone involved in the transaction But just how does the businessaccomplish these tasks? There is no one answer The marketing mix, orcombination of elements involved in marketing, may be manipulated to suit anysituation In most cases, however, the goal is to find the marketing mix thatproduces the greatest profit

The marketing mix is the set of controllable, tactical marketing tools - product,price, place, and promotion- that the firm blends to produce the response it wants

in the target market The marketing mix consists of everything the firm can do toinfluence the demand for its products As Figure 5 shows, a marketer customblends these ingredients- known as the four Ps

-

FIGURE 5: Thefour Ps of the marketing mix

Under each P, there're some marketing tools:

name-Packaging - Sizes - Services - Warrantjes - Returns

PRICE: List Price - Discounts - Allowances - Payment Period - Credit terms

Relations

PLACE: Channels Coverage Assortments Locations Inventory

-Transportation - Logistics

The Marketing Strategies of ACB to be the leading retail bank in Vietnam

PRODUCT

DEFINITION

A product is anything that can be offered to a market for attention, acquisition,use, or consumption that may satisfy a want or need Products include more thanjust tangible goods Broadly defined, products include physical objects, services,persons, places, organizations, ideas, or mixes of these entitles

Services are a form of product that consists of activities, benefits, orsatisfactions offered for sale that are essentially intangible and do not result in theownership of anything

PRODUCT STRATEGIES

1 Acquiring new products

2 Developing "me-too" products

3 Reviving old products

4 Developing a quite new product

NEW PRODUCT DEVELOPMENT PROCESS

1 Idea generation (the systematic search for new product ideas)

2 Idea screening (feasibility study)

3 Concept developing and testing (test if new products have strong consumerappeal)

4 Marketing strategy (designing an initial marketing strategy for a new

product)

5 Business analysis (cost-profit analysis)

6 Product development (make samples)

7 Test marketing (product and marketing program tested in realistic marketsettings)

8 Commercialization ( mass production, introducing a new product into themarket)

11

-The Marketing Strategies of ACB to be the leading retail bank in Vietnam

PRODUCT LIFE CYCLE

It is the course of a product's sales and profits over its lifetime

Sales

and

profit

Maturity Growth

2 Introduction is a period of slow sales growth as the product is introduce tothe market Profits are nonexistent in this stage because of heavy expenses

of product introduction

3 Growthis a period of rapid market acceptance and increasing profits

4 Maturity is a period of slowdown in sales growth because the product hasachieved acceptance by most potential buyers Profits level off or declinebecause of increased marketing outlays to defend the product againstcompetition

5 Decline is the period when sales fall off and profits drop

The Marketing Strategies of ACB to be the leading retail bank in Vietnam

-The Marketing Strategies of ACE to be the leading retail bank in Vietnam

The Marketing Strategies of ACB to be the leading retail bank in Vietnam

PLACE

DEFINITION

Placing or distribution is getting a product from the producer to the customers

or consumers

DISTRIBUTION CHANNELS are the set of firms or individuals that take title

or assist in transferring title to a product as it moves from the producer to theconsumers or industrial users

creating three forms of utility: place utility, time utility, and possession utility Bytransferring products from the producer to the consumer, middlemen ensure thatgoods and services are available at a convenient time and place They alsosimplify the exchange process

A Number of contacts without a distributor

MxC=3x3=9

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14-The Marketing Strategies of ACE to be the leading retail bank in Vietnam

TWO TYPES OF DISTRIBUTION CHANNELS:

1 Conventional distribution channel

rON~TrMF.R~

MANUFACTURER

In this type, producers, wholesalers, and retailers act as a unified system, with

close coordination

Besides this, nowadays, there's another channel in which manufacturers pay

more attention to and close coordination with the market and the customers

RETAILER WHOLESALER

CONSUMERS

MANUFACTURER

The Marketing Strategies of ACE to be the leading retail bank in Vietnam

1 Pull-Strategy is Promotional Strategy that stimulates consumer demand, which

then exerts pressure on wholesalers and retailers to carry a product (usually aconvenience good)

Promotes Aggressively

2 Push-Strategy is Promotional Strategy designed to motivate Wholesalers and

Retailers to push a producer's product to end-users (usually a high-tech product orindustrial good)

17

The Marketing Strategies af A CB ta be the leading retail bank in Vietnam

The above 4 Ps is for a good, but for a service, we added 3 Ps more to form anexpanded marketing mix: People, Process, and Physical evidence These 3 Ps areparticularly useful for a banking service, which is typically a high contact service(the people component), an extended and complex service (the processcomponent) and a service that can only be evaluated by the customers or clients asthey experience the delivery (incorporates the physical evidence component)

A banking transaction, for example, involves extensive interaction between thestaff of a bank and their customers or clients; second, it is also complex from aprocess perspective as it is the totality of the many services that make up asuccessful transaction Third, the bank's management board and staff need sometangibles clues or physical evidence about their products and services so that theircustomers or visitors can feel safe and convinced As a result, there are benefitsaccruing to the bank which pays close attention to the extra P's of the expandedmarketing mix

The Marketing Strategies of ACE to be the leading retail bank in Vietnam

PEOPLE

"People" refers to the selection, training, and support of the staff as a means ofmarketing the organization For example: How do people dress? Are there staffuniforms to be worn? What is the length of the employees' hair? Can they wearjewelry? How are they recruited and trained?

Employees: the staff of an organization can be sub-divided into front-linemembers with visitor contact and non-contact employees who provide support.Any third party organizations who supply different services to the principalprovider will also be represented by front-line and support staff

Visitors - Employees Interaction:

Staff are the organization in the eye of the consumer Hoffman and Bateson(1997) refer to front-line personnel as the 'public face' of the service firm Theirphysical appearance, behavior, knowledge and attitude have a powerful impact onthe customers' perception Logically, one can conclude that employee satisfaction

is a prerequisite for obtaining long-term consistent customer satisfaction Happyemployees give better and more responsive service that, in return, triggers happyconsumers

Contact employees who have to reconcile the internal operational requirements

of an organization with the expectations and demands of customers are required toshow empathy with visitors while obeying the regulations of the organization thatemploys them Dealing with conflicts between customers or between customersand the staff is often stressful It requires good training and the development ofstrong interpersonal skills of employees

-

19-The Marketing Strategies of ACB to be the leading retail bank in Vietnam

Another example is with the bank We can have a banking transaction donesmoothly only when the process of the bank is good enough Bank tellers must betrained and equipped with latest banking knowledge and a sharp mind to deal withcustomers The bank also needs to have modem equipment and state-of-the-artfacilities concerning banking functions

Process management is making sure that all this happens effectively andefficiently Process involves flow of activities, number of steps, levels of customerinvolvement

PHYSICAL EVIDENCE

The third component of the services marketing mix is that of physical evidence,rooted in the five senses of sight, sound, scent, touch and taste It refers to theenvironment of where a service is provided, for example a layout of a shop, thecolor and decorations, so on Physical evidence acts in lieu of the use of'packaging' for products based on physical goods It communicates messagesabout quality, positioning, and differentiation, and it helps both to set and meetvisitor expectations Physical evidence can be used to facilitate the servicedelivery process through By creating particular ambiences, physical evidence canhelp socialize customers and employees, and facilitate desired emotional states or

The Marketing Strategies of ACE to be the leading retail bank in Vietnam

The power that the external and internal design of buildings influences overcustomers and employees is increasingly recognized in all sectors of servicesfirms Its use in communicating, corporate, brand and product values is becomingmore important Design features can influence the beliefs that a customer or anemployee holds about an organization (the cognitive element), the emotionsaroused in customers or employees (the affective element), the behavior andactions of customers or employees (the behavioral element) and the physicalcomfort or other wise of both parties ( the physiological element) Yet the use ofphysical evidence can be quite subtle, creating the designed effect without alertingthe individual to the objective of the service provider Ensuring consistency andco-ordination between the different tools of design is an inherent part of planningthe physical evidence 'mix'

Most service organizations spend a considerable amount of money ensuringthat the above P's meet the needs of their customers

21

-The Marketing Strategies of A CB to be the leading retail bank in Vietnam

ESTABLISHMENT

Asia Commercial Bank (ACB) was founded and started operation on June 4th

1993 in line with the "Doi Moi" (Renovation) policy and the issuance of the Ordinance on commercial banks, credit co-operatives and finance companies.

At the beginning, the bank's chartered capital was only 20 billion VND In the following year, 1994, the chartered capital increased to 70 billion VND In 1996, the increase of charter capital to 341 billion VND was undertaken with publicizing ACB, and, as the first in Vietnam, ACB was permitted to issue shares to foreign shareholders By that time, Connaught Investors Ltd (Jardine Matheson Group), Dragon Financial Holdings Ltd, and LG Investment & Securities Co., Ltd (LG Group) and Vietnam Fund owned a stake of30% In January 2003, the chartered capital increased to 424 billion VND and now has increased to 481 billion VND Established at the time Vietnam started opening its door to the world and the banking sector shifted from the centralized planning economy to market oriented economy, ACB including its members of the Board of Directors, the Management and all staffhave together built a strong and stable ACB.

ACB has also realized many challenges ahead and the need for speeding up the restructuring process both in broad and deep senses, toward the international

standards and common practices, in order to improve its competitiveness and help

it well-prepared for the regional integration The restructuring program aims to help ACB well-prepared for integrating to the regional and global money and financial markets.

ACB IS A BANK OF IDGH SUSTAINABILITY AND INTEGRITY,,'

Since the date of establishment, especially during the period of 1998 to 2002, ACB has acted as a bank of high sustainability and integrity as demonstrated in the following:

The Marketing Strategies of ACE to be the leading retail bank in Vietnam

• ACB always complies strictly with the Government and Party's policies,

banking law and other regulations In spite of significant fund raised of

more than 9,000 billion VND, total loan of more than 4,000 billion VND,more than 160,000 customers, more than 1,000 employees, ACB has neverhad any violation by the organization or any employee which couldseriously affect the bank assets

• ACB has had a Communist Party Cell of 14 members since 1995 In the

two consecutive years 2001 and 2002, ACB Party Cell has been evaluated

as the strong unit by the Communist Party Committee of the State Bank ofVietnam, HCMC Two party members have been proposed to be awarded

at the city level No party member has been disciplined, even at the lowestlevel of warning

• The Youth Union and Trade Union's activities have developed favorablyunder the leading of ACB Party Cell and the support of the Management inrelation to expenditures, time and human resources for social activities.Therefore, ACB has developed many social activities inside as well asoutside the organization

• Taking care of employees' life has been always ACB's first priority ACBhas set up a kitchen to serve breakfast and dinner for employees to providethem the best conditions for health

• Training is also crucial factor to help the company to achieve technicalexcellence and strong spirit All new staff has to attend basic training courses

to help understand ACB background, products and culture

VISION AND MISSION

Asia Commercial Bank (ACB) continues to drive itself so as to sustain andfurther develop its leading retail corpmercial banking function in Vietnam This isbeing achieved through its substantial, widespread distribution network anddiversified product portfolio and also through the continuous improvement in the

23

-The Marketing Strategies of ACE to be the leading retail bank in Vietnam

quality of its services As a result, the bank is able to meet the increasing demands

of its clients for banking and financial services with the help of its highlyprofessional, skillful, pro-active, client-focused employees and the optimization ofall its available resources

STRATEGY

During the past ten years, ACB has pursued a simple-rule growth strategy ofseizing opportunities and quick responses to changes At the moment, the bank'scompetitive strategy is that of differentiation, which differentiate the bank fromothers by continuous innovation and excellent management on customerrelationship

• In terms of customers, ACB targets to individual customers of stableincomes, small and medium enterprises, especially those in manufacturingsector

• In terms of network expansion, ACB will target large cities, key economicareas and diversify its distribution channels: main branches, branches, sub-branches, transaction offices, kiosk bank, e-banking channels, and call-centers

• In terms of products, ACB will focus on the development of its productsthrough the use of information technology

• For employees, ACB will focus on the continuous improvement ofemployees' educational, technical skills and will implement a developmentplan for its managers to obtain post-graduate degrees in specializeddisciplines

The three-year strategy for 2003 - 2005 has been developed to reinforce theorganization's strengths as well as to maximize the organization's advantages, lay astrong foundation for the subsequent three-year strategy so as to comprehensivelyraise the level of the bank's competitiveness required for survival and growth

The Marketing Strategies of ACB to be the leading retail bank in Vietnam

during Vietnam's increasing regional and global integration The first step isalways important in the sense of setting-up the foundation for furtherdevelopment Today, ACB has passed the first step and starts new period ofdevelopment With strong spirit and decisiveness, the Board of Directors, theManagement, employees, customer's trust, the support of government authorities,ACB strongly believes it can achieve higher success in the new period than thepast 10 years

OPERATING PRINCIPLES

One unique ACB; Continuous renovation; Stakeholders' interests harmonized

April 27th 1996 International ACB-MasterCard was launched.

-October 25th 1996 The Visa Intemationallnc. granted ACB a official membership for

both issuance and acquiring of international Visa cards.

25

-The Marketing Strategies of ACB to be the leading retail bank in Vietnam

IDecember 5th 1996 JThU Ducsub-Br~~ch (HCMC) started.o~ration.

1997

January 8th 1997 Da Nang Branch started operation

April 29th 1997 Le Loi Sub-Branch (HCMC) started operation.

June 21st 1997 ACB-Bong Lua 999.9 ingots was first introduced to the market.

.

July 1997 'The Best Bank In Vietnam" named by the Euromoney Magazine

December 11th 1997 Selected by the State Bank of Vietnam to conduct the Rural

Development Fund Program sponsored by the World Bank

July 13th 1998 Selected to participate in the Small-Medium Enterprise

Development Fund (SMEDF) sponsored by EU.

- _-_ -_ .November 26th 1998 Daklak Branch started operation.

June 29th 2000 ACB Securities Company (ACBS) was established.

July 28th, 2000 Selected to implement the Small and Medium Enterprise Funding

Project (SMEFP) sponsored by JBIC.

The Marketing Strategies of ACB to be the leading retail bank in Vietnam

December 12th 2000 Cua Nam Branch (Ha Noi) started operation.

-October 1st 2001 The Complete Banking Solution (TCBS) was firstly implemented

at Chau Van Liem Branch.

- - - - - - -

_-2002

- - _ - - January 2nd 2002 The Complete Banking Solution was implemented at the Head

-Office.

-April 19th 2002 Starting Prudential's bancassurance service.

-April 26th 2002 Corporate Agency Agreement in Bancassurance with AlA.

June 4th 2002 Press conference was held for the introduction of ACB e card.

- September 9th 2002 Press conference was held to introduce the program "Financial

._ -Support for Students Studying Overseas."

review process Press release on IFC Board of Directors' approval

of an equity investment of USD 5.5 million in ACB.

December 18th 2002 Granted Vietnam Quality Award by the National Assessment

Committee on Vietnam Quality Award.

The Marketing Strategies of ACB to be the leading retail bank in Vietnam

Obtained the ISO 9001 :2000 Certificate in funds raising, January 6th, 2003 term and medium-term lending, trade finance and human resource

short-management at the Head Office

April 21st 2003 Phu Lam Branch (HCMC) started operation.

May 12th 2003 Maximart Cong Hoa Sub-Branch (HCMC) started operation.

May 14th 2003 Technical assistance from International Finance Company (IFC);

total budget of USD 625,000.

May 19th 2003 Bat Dan Sub-Branch (Ha Noi) started operation.

May 21st 2003 HCMC People's Committee granted Certificate of Merit for the

bank staffs excellent performance in the past few years

The Marketing Strategies of ACB to be the leading retail bank in Vietnam

RECOGNITION AND AWARDS

2000 Letter of Strict observance of regulations in the Labour District 3 People'scommendation Law between 1995-2000 Committee, HCMC

- - - - _

-2001 List ACB is one of 500 leading banks in Asia Asiaweek

._ 2001 Letter of Achievement in carrying out social security HCMC Social

2001 Certificate of Achievement in contribution to the 2000 city HCMC People's

For operation quality, business stability,

2002 Certificate of enhancement of service quality over many Prime Minister

merit years and obtaining Vietnam Quality Award in

2002

-Suitable quality management system ISO

2002 Certificate 9001 :2000 in the fields of "fund raising, short SGS, UKAS (U.K)

and long-term lending, trade finance and ANSI-RAB (USA)

29-The Marketing Strategies of ACB to be the leading retail bank in Vietnam

2003 Certificate of Excellent performance of the bank's staff over HCMC People's

2003 Certificate of The bank has made outstanding achievements Prime Minister

merit in the period 2000-2002

The Marketing Strategies of ACE to be the leading retail bank in Vietnam

KEY FINANCIAL FIGURES (1994 - 2003)

-The Marketing Strategies of ACB to be the leading retail bank in Vietnam

164.7

107.7I

85 ~I

74.1

73.848.5

The Marketing Strategies of ACE to be the leading retail bank in Vietnam

ACB FROM "CAMEL" PERSPECTIVE

Commercial joint-stock banks in Vietnam are rated (under regulations pursuant

to State Bank Governor's Decision No 292/1998/QD-NHNN5 dated August 27th1998) using a system called CAMEL This acronym stands for Capital adequacy,Asset quality, Management competency, Earnings and Profitability, and Liquidityand funding

Basing upon those criteria, ACB has been rated a good and sound bank duringthe past ten years For the latest five years, the bank has always achieved highscores to be rated with grade A

-The Marketing Strategies of ACE to be the leading retail bank in Vietnam

RISK MANAGEMENT SYSTEM

Asia Commercial Bank's risk management system, which consists of several units,each with various levels and relationships, aims to monitor and reduce the manyrisks that face the bank The units of the system include Branch Credit Committee(BCC), Executive Credit Committee (BCC), the Management Credit Committee(MCC), Assets and Liabilities Management Committee (ALCO), TreasuryManagement Committee, Risk Management Department, and Internal AuditDepartment

CREDIT RISK MANAGEMENT

Risk Management Function

Credit risk management consists of the following: collateral appraisal,customer analysis, loan review, defining principles of and basis for creditapproval, and setting up credit policies for corporate and individual customers

Credit Approval Levels

There are two levels of loan review: branch level and Head Office level Eachbranch has a BCC which is authorized to grant credit within a certain limit decided

by the MCC, based upon the branch's size and capacity Credit proposalsexceeding each branch's authority limit are submitted to the ECC or, when beyondthe ECC's authority, to the MCC

Principle of Credit Approval

Credit can only be granted when all members present approve the proposalunanimously

Credit Scoring and Rating System

ACB has designed a credit rating system of six ratings for corporate clients and,depending on the outcome, executes its credit policy

Credit Line

ACB sets credit lines for its corporate clients and periodically revaluates the

The Marketing Strategies of ACB to be the leading retail bank in Vietnam

LIQUIDITY RISK MANAGEMENT

For liquidity risk management, ACB always monitors the following items:

• Obligatory reserves required by the State Bank of Vietnam

• Liquidity ratio per day ~ 1

• Liquidity limit set by the Chairman of ALCO for each business line

• Proportion of short-term funding source used for medium and long-termloans: :s30%

• Liquidity plan for emergency situations

• Depositor's trend and borrower's demand

The ALCO, Treasury Management Committee and Risk ManagementDepartment are responsible for the evaluation of the bank's liquidity profile,building the framework for liquidity risk management and monitoring liquidityrisk

INTEREST RATE RISK MANAGEMENT

At ACB, the interest rate risk is measured by the interest rate gap report inwhich the on-balance sheet and off-balance sheet items (for instance, the forexforward agreements) are allocated into different time bands Monthly reports areseparately produced for three types of currency of VND, USD and gold Themonthly meeting of the ALCO monitors these gaps and takes a view on marketinterest rate trends The ALCO then discusses and sets desirable gaps for varioustime bands which act as a guideline for the bank's credit extension activities andmoney market operations in the period going forward

FOREIGN EXCHANGE RISK MANAGEMENT

In managing foreign exchange risk, beside having to comply with the StateBank of Vietnam's rules on the net long or short positions (which is not allowed toexceed the equivalent of 30% of the bank's equity), the ALCO imposes and

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-The Marketing Strategies of ACB to be the leading retail bank in Vietnam

regularly reviews the relevant limits in dealing operations, including counter partylimits, net open positions and stop-loss limits to dealers

OPERATIONAL RISK MANAGEMENT

Operational risk is the risk of direct or indirect loss resulting from inadequate

or failed internal processes, people and systems or from external events In order

to control such risks, a wide of variety of measures have been developed:

• Strictly applying the processes for account services, credit services, tradefinance services and human resource and administrative operations;

• Segregation of duties and delegation of authority within business units;

• Implementing a system of loss prevention and backing up of data andinformation

• To ensure the bank's activities by insurance policies required by laws andregulations

INTERNAL AUDIT DEPARTMENT

The department's function is to do inspection, verification, and assessment Itinspects the compliance of laws and governmental regulations as well as thebank's internal regulations, the efficiency of operations and the authenticity offinancial accounting data It verifies the authenticity and reasonableness of data inthe financial statements and accounting reports It assesses the effectiveness ofregulations, processes and procedures, management and control systems, andoffences

The system with those units has functioned well as a tool to prevent andminimize risks, making contributions to the effectiveness of the bank andconsequently enhancing the shareholders' value