Analysis of financial statements of 4 joint stock commercial banks and recommendations

Starting from the above goal, I will analyze the financial statements of 4 joint stock commercial banks including: Vietcombank, Techcombank, BIDV, VPBank from which to make recommendatio

Dissertation submitted in partial fulfillment of the

Requirement for the MSc in Finance

FINANCE DISSERTATION ON ANALYSIS OF FINANCIAL STATEMENTS

OF 4 JOINT STOCK COMMERCIAL BANKS AND RECOMMENDATIONS

Nguyen Viet Dung

ID No: 21071834

Intake 5

Supervisor: Prof Dr Pham Thu Thuy

DECLARATION

This research is written by myself and all information collected from the

questionnaire is permitted to use in the study by all respondents

Ha Noi, September 2022

Nguyễn Việt Dũng

We also want to give our special appreciation to our parents, our family and our friends who always stand by us and give us a lot of love and support

Ha Noi, September 2022

Nguyễn Việt Dũng

1 BIDV Bank for Investment and Development of Vietnam

3 CASA Current Account Savings Account

7 EBIT Earnings Before Interest and Taxes

11 GDP Gross Domestic Production

12 IMF International Monetary Fund

13 M&A Mergers and Acquisitions

16 NIM Net Interest Margin

19 P/E Price to Earnings ratio

20 P/S Price/Sales per Share

23 ROA Return on Total Assets

24 ROAA Return on Average Assets

25 ROAE Return on average equity

LIST OF TABLES

Table 1: Vietcombank's business results from 2017 to 2021 (bil VND) 26

Table 2 Calculation of indicators and analysis for the period 2017 to 2021 (bil VND) 29

Table 3 P/B of some Vietnamese Banks 50

Table 4 TCB's indicators from 2017 to 2021 and forecast to 2023 52

Table 5 RIM for pricing stock TCB 53

Table 6 Recommendation BUY with stock TCB 55

Table 7 Business results of BIDV from 2017 to 2020 (bil VND) 56

Table 8 VPB Loans in 2020 and 2021 63

Table 9 Comparing VPB’s P/B with other banks’ 66

Table 10 VPB's indicators from 2017 to 2021 and forecast to 2024 69

Table 11 RIM model for valuing the VPB’s stock 73

Table 12 VPB’s final target price 74

LIST OF FIGURES

Figure 1 Global growth forecasts for 2021 and 2022 by international organizations

(%) 15

Figure 2 Foreign direct investment capital in the years 2018-2022 (%) 18

Figure 3 Business results of major banks in the world (bil USD) ……… 20

Figure 4 Top 5 banks with highest CASA 37

Figure 5 Profit Before Tax of TCB from 2014 to 2021 (bil.VND) 39

Figure 6 Net Interest Income of TCB from 2014 to 2021 (%) 40

Figure 7 Non-Interest Income of TCB from 2014 to 2022 ……… 41

Figure 8 TCB’s Expense from 2014 to 2021 …….……… 42

Figure 9 Non-Interest Expense of TCB from 2014 to 2021 ……… 43

Figure 10 Dupont ROE of TCB from 2017 to 2021 ……… 43

Figure 11 NIM of TCB from 2017 to 2021 ……… 45

Figure 12 CAR of TCB from 2017 to 2021 ……… 46

Figure 13 Techcombank Porter Five Forces Model ……… 47

Figure 14 BIDV's income structure in 2018 and 2019 respectively ……… 58

Figure 15 BIDV's profit after tax ……… 58

Figure 16 VPB’s CASA, ROE and CAR from 2017 to 2021 ……… 64

TABLE OF CONTENT

DECLARATION ……….….2

ACKNOWLEDGEMENTS ……….….…3

ABBREVIATIONS ……… ……4

LIST OF TABLES ……….6

LIST OF FIGURES……….7

EXECUTIVE SUMMARY……… ……10

Chapter 1: Introduction 1 Background of study ……… 11

2 Area of the study ……… … 12

3 Research objectives ……… 12

4 Methodology ………12

5 Structure of the study……… 12

Chapter 2: Macroeconomic Analysis 1 World economic outlook ……….……14

2 Regional economy ……….……… 15

Chapter 3: Industry Analysis 1 Global industry analysis ……….19

2 Regional industry analysis ……….22

Chapter 4: Company Analysis 4.1 Analysis of Vietcombank ……… 24

4.2 Analysis of Techcombank ……….35

4.3 Analysis of BIDV ……….56

4.4 Analysis of VPBank ………62

Chapter 5: Conclusion And Recommendations REFERENCES ……….77

EXECUTIVE SUMMARY

Analysis of a bank's financial position through financial statements and a number of other documents is very important not only for bankers but also for many other subjects such as investors, banks, other stakeholders, other customers, suppliers, customers and other interested authorities Each object is interested in the financial situation of the bank from different angles

Banks are the most important financial institutions in the economy Banks include many types depending on the development of the economy in general and the financial system in particular, in which commercial banks usually account for the largest proportion in terms of asset size, market share and number of banks As one of the important links of any economy, financial intermediaries are an indispensable figure in the national economy Therefore, the analysis of financial statements is indispensable Starting from the above goal, I will analyze the financial statements of 4 joint stock commercial banks including: Vietcombank, Techcombank, BIDV, VPBank from which to make recommendations The article uses methods of synthesis, statistics and analysis with a system of diagrams and tables to present theoretical and practical contents

Chapter 1: Introduction

1.1 Background of the study

Vietnam is in the process of deeper and broader international economic integration, including the accounting field Along with the development of the Vietnamese accounting system, the financial reporting system has also been constantly innovated and perfected to be in line with the common standards of international accounting, narrowing the differences between accounting and finance Vietnam with common international accounting standards However, due

to the ever-changing socio-economic environment, the financial reporting system

is constantly innovating and perfecting in accordance with international practices and standards to meet the information needs of users Financial statements are not only necessary for business managers but also for the interest of domestic and foreign investors, state management agencies, salaried employees and competitors Even with joint stock companies listing securities on the exchange, the financial reporting system becomes aggregated information with full legal character for those outside the business that need to be analyzed Therefore, the analysis of financial statements is an effective tool to help managers inside as well as those outside the enterprise who have economic and legal relations with the enterprise to make the right and most appropriate decisions

Financial statement analysis plays an especially important and indispensable role for any banks, because for bank administrators, financial statement analysis is the shortest way to get a complete overview of bank's financial situation, see the advantages and disadvantages, causes and solutions

The main purpose of this study is to analyze financial statements at joint stock commercial banks, find out the causes and limitations and then propose solutions to improve financial capacity Good solution of the topic contributes to a better assessment of the actual financial situation of the unit serving many different stakeholders

1.2 Area of the study

The article focuses on researching the financial statements of 4 joint stock commercial banks, including: Vietcombank, Techcombank, BIDV, VPBank in the period from 2017 to 2021

1.3.Research Objectives

The purpose of the study is to provide economic and financial information mainly for the assessment of the situation and performance of the bank, and at the same time to evaluate the financial status of the bank in the research and development period prediction in the future The information of the financial statements is an important basis in making business management decisions

1.4 Methodology

The article uses methods of synthesis, statistics and analysis with a system

of diagrams and tables to present theoretical and practical contents

1.5 Structure of the study

The article consists of 5 chapters:

Chapter 1: Introduction

Chapter 2: Macroeconomic Analysis

Chapter 3: Industry Analysis

Chapter 4: Company Analysis

Chapter 5: Conclusions And Recommendations

Chapter 2: Macroeconomic Analysis

2.1 World Economic Outlook

Fitch Ratings' Global Economic Outlook for March 21, 2022 said that the global economic growth outlook has deteriorated significantly as inflation challenges intensify and the conflict between Russia and Ukraine threatens the global energy supply Accordingly, the world GDP growth in 2022 is adjusted down

by 0.7 percentage points compared to the forecast level in December 2021, reaching only 3.5%

According to the Global Economic Outlook report January 2022, the World Bank (WB) forecasts that global economic growth in 2022 will decrease to 4.1%, lower than 5.5% of the previous year 2021, as governments narrow their financial and monetary support programs implemented during the pandemic The World Bank forecasts that the growth rate of developed economies will slow to 3.8% in

2022, lower than 5% in 2021 For developing and emerging economies, The WB forecasts that the growth rate in 2022 will be at 4.6%, lower than the growth rate of 6.3% in 2021

The World Economic Outlook Report January 2022 of the International Monetary Fund (IMF) stated that the Omicron variant is an obstacle for the global economy in 2022, causing the growth rate to slow down especially in the two largest economies, the United States and China The IMF assesses that the global economy enters 2022 in a weaker position than previously expected, when the appearance of the Omicron variant in late November 2021 threatens to set back the economic recovery Meanwhile, rising energy prices coupled with supply

disruptions have caused inflation in many countries to rise more sharply than expected The organization has lowered its forecast for global GDP growth in 2022

to 4.4%, down 0.5 percentage points from the forecast made in October 2021 For advanced economies, the IMF forecasts that the US economy will shrink by 1.2 percentage points from its previous forecast and reach 4% in 2022 In the euro area, supply constraints persist and the disruption of production and business activities due to the Covid-19 pandemic reduced the region's growth forecast by 0.4 percentage points to 3.9% in 2022 China's growth forecast for the year 2022 is adjusted down from 0.8 percentage points compared to the forecast in October

2021, from 5.6% to 4.8% due to disruptions in the housing sector, strict implementation of the strategy “no Covid” strategy and investment in real estate decreased

Figure 1 Global growth forecasts for 2021 and 2022 by international

organizations

Source: WB, IMF, Fitch Ratings

2.2 Regional Economy

2021 is the first year to conduct research, study, mastery and organize the implementation of the Resolution of the 13th National Congress of the Party in the context of rapid changes in the domestic and world situation complicated, unpredictable, especially heavily affected by the COVID-19 pandemic with new strains The world economy recovered but was uneven and unsustainable; rapid increase in inflation; Financial and currency markets fluctuate strongly, with many potential risks Domestically, besides the advantages, our country also has to cope with great difficulties and challenges due to the fourth wave of COVID-19 epidemic with the Delta mutation that has a faster and more dangerous spread, causing more serious problems seriously affect the health and lives of people and all aspects of our country's socio-economic life

Most importantly, Vietnam has made efforts to maintain, recover and promote economic development with many positive highlights Our country's economy continues to be assessed as a stable developing economy, attractive to foreign investors Although economic growth in the third quarter was negative by 6% due to the fourth outbreak of the epidemic, in the fourth quarter, it reached an increase of 5.22%, higher than the same period in 2020 (4.61%), and the whole year

is estimated at 5.22% increased by 2.58% State budget revenue still increased by 16.4%, higher than the growth rate of 11.3% in 2020 The total export and import turnover of goods in 2021 reached a record of 668.5 billion USD, up 22.6% compared to 2020 (making Vietnam one of the 20 leading economies in the world

in terms of trade); the trade balance maintained a trade surplus for the 6th consecutive year, reaching about 4 billion USD Currency and credit markets, exchange rates are stable; the average interest rate decreases; foreign exchange reserves continued to be consolidated, increasing by over 10% Total social

development investment is equivalent to 34.4% of GDP, up 1.2% compared to

2020 Agriculture continues to maintain its role as the backbone of the economy, ensuring national food security family; export of agricultural products reached 48.6 billion USD A number of weak credit institutions, projects and businesses that are behind schedule, inefficient, at a loss, are being handled step by step Construction

of a number of highway works and projects has commenced; continue to promote the implementation of many important national infrastructure projects

Vietnam's economy is recovering quite quickly and prospering in many fields, businesses adapt well to the new context, the number of enterprises entering the market continues to increase The number of newly established enterprises in 7 months of 2022 is 89.4 thousand newly registered enterprises and the total number

of registered employees is 621 thousand employees, an increase of 17.9% in the number of enterprises and an increase of 11.8% number of employees compared to the same period last year The number of enterprises participating in the market in the first 7 months of 2022 reached 133.7 thousand enterprises, an increase of 26.8/% over the same period last year; the number of enterprises withdrawing from the market was 94.6 thousand enterprises, an increase of 18.7%

Figure 2 Foreign direct investment capital in the years 2018-2022

Investment capital increased sharply compared to the same period last year

In which, investment capital made from the State budget is estimated to increase by 11.9% Realized foreign direct investment in Vietnam in 7 months of 2022 reached 11.6 billion USD, which is the highest value of 7 months in 2018-2022, creating important new capacity for economic growth in 2022

Bil USD

Chapter 3: Industry Analysis

3.1 Global Industry Analysis

Statistics of 6 major banks in the world including Bank of America, Goldman Sachs, Morgan Stanley, HSBC, JPMorgan and Deutsche Bank in 2020 show that revenue grew by an average of 6.6%, but profit decreased by an average

of 26 6% due to being affected by the pandemic

However, entering 2021, the average revenue of these 6 banks grew by 11.9% and profit increased by 377.8%, all banks had higher profit levels before the pandemic appeared this year 2019 In which, the most impressive growth is Deutsche Bank, which increased by 377.8% from EUR 495 million to EUR 2,365 million; HSBC grew 166.2% from $5,229 million to $13,917 million; Goldman Sachs grew 128.7% from $9,459 million to $21,635 million…

The positive business results of major banks are partly contributed by the investment banking segment thanks to the strong growth of the financial market, especially the boom of mergers and acquisitions activities (M&A) globally This helps banks benefit from advisory fees and hold rising financial assets

In addition, the increase in provisioning in 2020 after the pandemic appeared, reduced the profit in 2020 of the world's major banks However, with central banks continuously launching support packages, reducing interest rates has helped the economy recover in a V-shape, thereby helping banks reduce the pressure of provisioning and reversal in the future 2021, increasing profits

According to analysts of Goldman Sachs, in 2021, it is estimated that 7 major banks in the world, including JPMorgan, Bank of America and some other banks have freed up about $36 billion from bad debt provisions of the total $50 billion set aside last year

Figure 3 Business results of major banks in the world (bil USD)

Source: Goldman Sachs

In addition, the V-shaped economic recovery has also helped consumers, as well as businesses, be willing to spend and borrow capital, contributing to a positive picture of the banking group in 2021

After a sublime 2021 thanks to many supportive factors, 2022 is forecasted

to be a challenging year for the banking industry Currently, some financial experts are concerned that 2021 could be the "peak earnings" year of the banking group

In particular, in the face of high global inflation pressure, the US Federal Reserve (Fed) and many major central banks simultaneously changed monetary policy from expansion to tightening, making the financial market series of strong corrections after the boom in 2021 Statistics of 6 major banks in the world in the first quarter of 2022, the financial picture shows signs of reversal In which, average

revenue decreased by 8% and profit decreased by 22.3% on average Specifically,

in the first quarter of 2022, the biggest drop in profit was that of Goldman Sachs, down 42.4% from $6,836 million to $3,939 million; JPMorgan fell 42.1% from

$14,300 million to $8,282 million; HSBC dropped 24.2% from $4,341 million to

$3,291 million

According to the banks' notes, the decrease in profit was mainly due to the fact that fees collected from investment banking services showed signs of sharp decline over the same period In contrast, profit from lending and banking services still maintained positive growth At Goldman Sachs, the investment banking sector

in the first quarter of 2022 recorded revenue of $2.41 billion, down 36% year In particular, underwriting alone recorded low revenue due to the widespread decline in issuance and capital mobilization activities At Bank of America, in the first quarter of 2022, non-interest income reached $11.7 billion, down 8% year-on-year In which, mainly because investment banking fees remained low compared to the same period in 2021

year-on-At JPMorgan, in the first quarter of 2022, gross profit from investment banking was $729 million, down 35% year-on-year During the period, the Bank said that investment banking service fees were low, and stock investment activities lost profits over the same period In general, the business results picture of the first quarter of 2022 of major banks in the world began to show signs of reversal, mainly due to the reduction of investment banking fees, which was negatively affected by investment activities investing in the stock market compared to 2021 is profitable thanks to the booming financial market Since the beginning of 2022, the focus of central banks on controlling inflation instead of promoting economic growth is

forecasted to be a significant challenge for the global economy in the coming period thereby negatively affecting the profit picture of banks

3.2 Regional Industry Analysis

In 2021, the State Bank of Vietnam will continue to maintain a tight but flexible monetary policy Although there were no cuts in operating interest rates, maintaining liquidity and having reasonable instructions on credit limits, the ratio

of using short-term mobilized capital in long-term loans, and debt, reducing loan interest rates, the problem of transferring debt groups and flexibility in provisioning, etc along with other incentives have helped credit institutions to reduce costs, reduce lending interest rates to support production, business and life

It can be said that the banking industry plays a big role in the economic efforts of all sectors and levels that Vietnam has implemented in 2021 The bank plays a decisive role in keeping inflation low; stable value for money; reasonable increase in foreign exchange reserves Total means of payment increased by approximately 9% compared to the beginning of the year; Total outstanding loans 13.53%, meeting the needs of businesses and residents with the average lending interest rate reduced by 0.81%

Credit institutions have restructured repayment terms for 775,000 customers with a total outstanding balance of VND607,000 billion; exempted and reduced interest rates for two million customers with outstanding loans of VND 3.87 million billion with a total interest reduction of VND 20.6 trillion Despite facing many difficulties due to the epidemic, slow economic recovery, reduced revenue and income for businesses and residents, and limited debt repayment capacity, credit institutions have made breakthroughs in management and effectively use mobilized

capital as well as loans, actively use low-cost capital mobilization channels such as demand deposits (CASA), issue bonds with low interest rates, promote digital transformation in banking credit activities, better exploiting other business segments besides main activities such as insurance and securities

As a result, banking business in Vietnam in 2021 is generally efficient and safe According to a preliminary survey of 81 of the State Bank of Vietnam, up to 78.8% of credit institutions have positive profit before tax compared to 2020 As for the business results through the financial statements of 22 listed domestic banks, only two banks' pre-tax profits decreased, the remaining 20 banks increased from the lowest level of 3%, to the highest level of 102% compared to 2020 Some banks made profits did not grow at a high rate, but that was because sufficient provision had been made for bad debts, which as a rule was spread out over three years; some banks have a bad debt coverage ratio of up to 3-4 times; The income of bank employees is largely increased compared to 2020

The biggest problem of the Vietnamese banking system is that the bad debt ratio is still high (bad debt and potential bad debt in the whole system is approximately 8% by the end of 2021); credit quality is still low; own capital is still thin and technological progress is still slow compared to the requirements of regional and international competition Bank governance has not kept pace with the requirements of the restructuring program set out until 2025 Traditional socio-political pressures still lead to marketability and business autonomy and self-responsibility of financial institutions of credit institutions do not comply with international standards A few weak commercial banks still do not have a good solution to ensure system safety

Chapter 4: Company Analysis

4.1 Vietcombank

Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank)

is a joint stock commercial bank with more than 50 years of tradition but is currently facing fierce competition in the market The analysis of financial statements helps

us understand the development of the bank over time, the position of the Bank in the region to serve as a management tool and business orientation

VCB's business results 2017 2018 2019 2020 2021 Loans to customers 535.321 621.573 724.290 820,545 934,774

Total capital

mobilization

(Total trading securities,

investment and capital

and State Banks

Capital and reserves 52,558 62,179 80,883 93,673 103,474

Net interest income 21,938 28,409 34,577 36,285 42,399

Profit before tax 11,341 18,269 23,122 23,049 27,388

Net income from 5,378 7,022 9,003 10,588 11,286

service activities

Table 1: Vietcombank's business results from 2017 to 2021 (bil VND)

Source: Vietcombank

 Regarding the structure of assets:

Total assets of VCB increased through 2017 to 2021 As of 31/12/2021, total assets were 1,414,672 billion VND, increasing by 1,265 billion VND (equivalent 87.7 %) versus 31/12/2017 This increase is mainly in current (or long-term) assets

Below are some accounts which are much fluctuated in recent years:

- Net outstanding loans to customers (reduced provision for risks) as of 31/12/2021 reached VND 934,774 billion, an increase of 13.9211% compared to 31/12/2020 (VND 621,573 billion in 2018) and an increase of 74.6193% compared

to the previous year 2017 (2017 reached VND 535.321 billion)

Net income from 2,042 2,266 3,378 3,906 4,374

forex trading

Income from other

activities

Net profit from 17,540 25,667 29,913 33,204 39,149

operating activities before

provision expenses

Profit after tax 9,111 14,622 18,526 18,472 21,939

- The total items of trading securities, investment securities and capital contribution, long-term investment in 2021 reached VND 194,956 billion, an increase of 5.5682% compared to 2020 (reaching VND 184,673 billion in 2020) and growth 36.1671% compared to 2017 (in 2017 it was 143,174)

 About capital structure

- Customer deposits in 2021 reached VND 1,135,323 billion, accounting for 75.9333% of total capital, an increase of 10% compared to 2020 (VND 1,032,113 billion in 2020) and an increase of 60.2386% compared to 2017 ( in 2017 is 708,520 billion dong)

- Issuance of valuable papers in 2021 reached VND 17,387 billion, down VND 3,853 billion compared to 2020 (21,240 billion VND), accounting for 1.7489% of total capital and an increase of VND 3,169 billion (up 17.3977%) compared to 2017

- Debts to the Government and the State Bank (including deposits with the State Treasury, deposits from the Ministry of Finance, loans to the State Bank) in

2021 reached VND 9,468 billion, accounting for 7.5541% of total capital, a net decrease of VND 31,708 billion compared to 2020 and a decrease of VND 161,917 billion compared to 2017

- Capital and funds reached VND 103,474 billion in 2021, accounting for 6.615% of total capital, a net increase of VND 9,801 billion compared to 2020 and

a net increase of VND 50,916 billion compared to 2017

 The structure of income has gradually shifted towards increasing the proportion of non-interest income, specifically:

- Net interest income in 2021 reached VND 42,399 billion, an increase of

- Net income from service activities in 2021 reached VND 11,286 billion, an increase of 6.59% compared to 2020 and an increase of 109.85% compared to

1000 billion compared to 2017 (up 47.61%)

- Net profit from business activities before provision expenses in 2021 reached VND 39,149 billion, a net increase of VND 5,945 billion compared to

2020 and a net increase of VND 21,609 billion compared to 2017

- Profit before tax of the whole system in 2021 reached VND 21,939 billion,

an increase of 18.77% compared to 2020 and an increase of 140.8% compared to

2017

- ROAA and ROAE indexes in 2021 are 1.85% and 29.45% respectively, in

2020 ROAA and ROAE are 1.74% and 28.72% respectively Therefore, 2021 increased compared to 2020 Meanwhile, ROAA and ROAE indexes in 2017 were 1% and 18.06% respectively

 Business results of Subsidiaries and joint ventures

- 9 subsidiaries and joint ventures operated effectively with a total pre-tax profit of VND 554.87 billion In which, 6 companies completed over 100% of the profit plan, 3 companies completed over 80%

Year 2017 2018 2019 2020 2021 FIGURES

- EBIT (Earnings Before Interest and Taxes) is profit before interest and before CIT or profit before tax expressed through profit earned from business activities

- Vietcombank's EBIT gradually increased over the years EBIT in 2021 grew by 14.68% compared to 2020 and increased by 104.93% compared to 2017

- EBIT is used to assess a company's ability to make a profit, whether the company is profitable or not, has the ability to pay off its debt burden as well as maintain and grow for the company future plans or not

 EBT = EBIT - I (Loan Interest)

- If businesses want to strive to be able to meet the requirements when they want to borrow capital Then the lender side (financial company, bank) will have to check and review See how much profit the business brings, is it eligible for a loan

or not? If the EBT index of the business is lower, the probability of being approved

is very low That means that this business is not viable Financial situation is not guaranteed and may not repay the loan in full

- If there is any risk in the business, the business will be in danger of facing bankruptcy Especially when the EBT index is low, the business's situation is in an

"alarming" state, which can be dissolved

- Low EBT also reflects the development ability of the current business And the ability to reinvest in the business for the next years will not be very feasible

 EAT

EAT = EBT - Corporate Income Tax

= 27,388,580- 5,477,716*20% = VND 26,293,036 million

- EAT (Earning after Tax) means profit after interest and after CIT

- Vietcombank's profit after tax also increased gradually from 2017-2021, compared to 2020 EAT in 2021 increased a net 3,882,521 million dong and a net increase of 9,424.813 million dong compared to 2017

- Profit after tax increases each year, showing that Vietcombank's operation

is increasingly stable, this number also shows that a part of Vietcombank is controlling its expenses very reasonably

- Return on Equity (ROE): is the most important ratio for shareholders, this index is an accurate measure to evaluate a dollar of capital spent and accumulate how much profit, showing efficient use of capital

- Vietcombank's ROE has grown over the past 5 years: in 2017 it was 18.02%, and in 2021 it was 27.85% In 5 years from 2017-2021, we see that ROE is almost over 10%, which shows that Vietcombank has quite strong competitiveness At the same time, stocks with high ROE are often favored by investors

- The higher the ROE ratio, the more effective Vietcombank uses shareholders' capital, which means that the bank has harmoniously balanced between shareholders' capital and borrowed capital to exploit its competitive advantage in the process capital raising, scale expansion Therefore, the higher the ROE ratio, the more attractive the stocks are to investors

- ROA provides investors with information about the profits generated from the amount of capital invested (or the amount of assets) A bank's assets are formed from deposits and equity Both of these funds are used to finance the bank's operations

- The efficiency of converting investment capital into profit is shown by ROA Vietcombank's ROA has increased over the years as the bank is earning more money on less investment

- ROI (Return on Investment) is the ratio of net profit to total investment cost

- Vietcombank's ROI of 1.1695 is a positive number, which indicates that total revenue is greater than total costs

- ROI is useful for business goals when it comes to something specific and measurable Analyzing investments in terms of monetary costs is the most popular method because it is the easiest to quantify, although ROI can also be calculated using time as an investment

- EPS evaluates the profitability of a project or company Typically, companies will use EPS as a metric to divide the profits among the shares that are

in circulation Therefore, EPS is calculated by dividing the total return/earnings of common stockholders by the weighted average number of common shares outstanding for the same period to yield basic earnings per share

- Vietcombank's ROS has increased sharply over the years: in 2017 it was 30.85%, in 2018 it was 37.21% and in 2021 it was 40.45% This shows that Vietcombank uses cost effectively, including costs generated from assets of the business

- Vietcombank's ROS in 2021 increased compared to the previous period, showing that revenue profitability increased or in other words, one dollar of revenue this year generates more profit than last year

- Oscillating at 2.44 It proves that VCB is very attractive in a stable and highly appreciated industry market

- The P/S ratio only shows the market's view of the enterprise's revenue target

4.2 Techcombank

The Vietnam Technological and Commercial Joint-Stock Bank is one of the most famous banks in Vietnam, with a culture of creating sustainable development and competitive advantage As at 31 December 2021, Techcombank had one head office, two representative offices, and three hundred and seven transaction offices nationwide, plus three subsidiaries operating in 46/63 provinces and cities across the country In 2021, its CASA was the highest ratio of all banks It has been known

as the most modern bank because of its technology and experienced staff

Company position:

 Market leading distribution system:

Techcombank has established a wide, modern, and efficient distribution network to provide banking products and services to customers, including branch models and e-banking systems As of March 31, 2018, Techcombank's distribution network is the third largest network among joint-stock commercial banks in Vietnam, with 1 head office, 2 representative offices, and 315 transaction points across the country

 Scale:

In 2017, Techcombank's total assets reached VND 269,392 billion Compared to listed or registered banks, Techcombank belongs to the group of joint-stock commercial banks with a high asset scale As of March 31, 2018,

Techcombank had equity of VND 37,615 billion and total assets of VND 273,153 billion Besides, in terms of equity size, at the end of 2017, Techcombank ranked seventh among joint-stock commercial banks that are listed or registered for

results in business with a consolidated profit before tax of VND 8,036 billion, nearly 2 times higher than in 2016 The ratio of profit after tax to average equity increased sharply and reached 27.7%—the highest among banks operating in Vietnam In addition, Techcombank is also a leader in product quality, effective credit and financial risk management, a leader in information technology, and has

a dedicated and experienced management team

 Partner:

Techcombank has an extremely good and sustainable cooperative relationship with its partners Some typical partners of the bank can be mentioned, such as: NORFUND, Manulife, Vingroup, VNPT, PVI In particular, on July 1,

2021, Techcombank cooperates with CoverGo Insurtech to launch iTCBLife, a digital insurance platform that allows customers to discuss with Techcombank's consultants to find the right life insurance product fit the needs and participate in using the product easily

The Current Account Savings Account (CASA) of Techcombank has the greatest growth rate and size in the banking industry The focus on completely fulfilling the financial requirements of the target client categories, as well as altering the retail strategy to attract and keep customers based on a digital platform, was disclosed by Techcombank's leadership as the reason for the increase

Figure 4 Top 5 banks with highest CASA

Source: World Bank

Techcombank is still the "champion" in terms of demand deposits from

2020 - 2021 According to the financial statements, demand deposits and margin deposits at Techcombank on March 31, 2022 were VND 165,745 billion, up 4.3% compared to the beginning of the year Accordingly, the demand deposit ratio (CASA) reached 50.4%, almost unchanged compared to the end of 2021 It is known that the driving force for CASA growth in the first quarter of the year of Techcombank came from individual customers, who contributed VND 107.8 trillion, up 24.8% The title "champion" of CASA has been maintained by Techcombank continuously for the past 3 years Not stopping at more than 50%, Techcombank is targeting that by 2025, the bank's CASA ratio will reach 55%

Financial analysis

Revenue analysis

Despite the negative effects of COVID-19 and the prolonged lockdowns in Hanoi and Ho Chi Minh City in 2021, TCB could still make use of their digital platform to help its clients Strong headline results for the year were a direct outcome of the momentum that was established at this time:

 Profit Before Tax (PBT) up 47.1% YoY to VND 23.2 trillion or USD 1 billion, a new record for a non-state owned commercial bank in Vietnam

 Total Operating Income (TOI) up 35.4% YoY to VND 37.1 trillion, with balanced growth from diversified income streams

● CASA ratio of 50.5%, the highest among Vietnamese banks

● ROE of 21.7% and ROA of 3.7%, improving further from the levels reached in FY20

● NPL of 0.7% and CAR of 15.0%, in line with the Bank’s prudent approach to risk-management