Vietnam commercial banking report q2 2014

BMI Industry ViewTable: Commercial Banking Sector Indicators Date assets Total Client loans portfolio Bond Other and capital Liabilities Capital deposits Client Other Source: BMI; Centr

Q2 2014 www.businessmonitor.com

VIETNAM

COMMERCIAL BANKING REPORT

INCLUDES 5-YEAR FORECASTS TO 2018

Report Q2 2014

INCLUDES 5-YEAR FORECASTS TO 2018

Part of BMI’s Industry Report & Forecasts Series

Published by: Business Monitor International

Copy deadline: February 2014

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DISCLAIMER

BMI Industry View 7

Table: Commercial Banking Sector Indicators 7

Table: Commercial Banking Sector Key Ratios, February 2013 7

Table: Annual Growth Rate Projections 2013-2018 (%) 7

Table: Ranking Out Of 71 Countries Reviewed In 2014 8

Table: Commercial Banking Sector Indicators, 2011-2018 8

SWOT 9

Commercial Banking 9

Political 10

Economic 11

Business Environment 12

Industry Forecast 13

Industry Risk Reward Ratings 18

Asia Commercial Banking Risk/Reward Ratings 18

Table: Asia Commercial Banking Risk/Reward Ratings 19

Market Overview 20

Asia Commercial Banking Outlook 20

Table: Banks' Bond Portfolios, 2012 20

Table: Comparison of Loan/Deposit & Loan/Asset & Loan/GDP ratios, 2014 20

Table: Comparison of Total Assets & Client Loans & Client Deposits (US$bn) 21

Table: Comparison of US$ Per Capita Deposits, 2014 22

Macroeconomic Forecast 22

Table: Vietnam - Economic Activity 26

Competitive Landscape 27

Market Structure 27

Protagonists 27

Table: Protagonists In Vietnam's Commercial Banking Sector 27

Definition Of The Commercial Banking Universe 27

List Of Banks 28

Table: Financial Institutions In Vietnam 28

Company Profile 30

Bank for Foreign Trade of Vietnam (Vietcombank) 30

Table: Stock Market Indicator 32

Table: Balance Sheet (VNDmn) 32

Table: Balance Sheet (US$mn) 33

Table: Key Ratios (%) 33

VietinBank 34

Table: Stock Market Indicators 36

Table: Balance Sheet (VNDmn) 36

Table: Balance Sheet (US$mn) 37

Table: Key Ratios (%) 37

Agribank 38

Table: Balance Sheet (VNDmn) 40

Table: Balance Sheet (US$mn) 40

Table: Key Ratios (%) 40

Asia Commercial Bank 41

Table: Stock Market Indicators 42

Table: Balance Sheet (VNDmn) 43

Table: Balance Sheet (US$mn) 43

Table: Key Ratios (%) 43

Eximbank 44

Table: Stock Market Indicators 46

Table: Balance Sheet (VNDmn) 46

Table: Balance Sheet (US$mn) 46

Table: Key Ratios (%) 47

Housing Development Commercial Joint Stock Bank (HDBank) 48

Sacombank 50

Table: Stock Market Indicators 52

Table: Balance Sheet (VNDmn) 52

Table: Balance Sheet (US$mn) 53

Table: Key Ratios (%) 53

Regional Overview 54

Asia Commercial Banking Overview 54

Global Industry Overview 59

Global Commercial Banking Outlook 59

Regional Outlooks 60

Demographic Forecast 64

Table: Vietnam's Population By Age Group, 1990-2020 ('000) 65

Table: Vietnam's Population By Age Group, 1990-2020 (% of total) 66

Table: Vietnam's Key Population Ratios, 1990-2020 67

Table: Vietnam's Rural And Urban Population, 1990-2020 67

Methodology 68

Industry Forecast Methodology 68

Sector Specific Methodology 69

Risk/Reward Ratings Methodology 70

Sector Specific Methodology 71

Table: Commercial Banking Risk/Reward Rating Indicators 71

Weighting 72

Table: Weighting Of Indicators 72

BMI Industry View

Table: Commercial Banking Sector Indicators

Date assets Total Client loans portfolio Bond Other and capital Liabilities Capital deposits Client Other

Source: BMI; Central banks; Regulators

Table: Commercial Banking Sector Key Ratios, February 2013

Loan/deposit ratio Loan/asset ratio Loan/GDP ratio GDP Per Capita, US$ Deposits per capita, US$

Source: BMI; Central banks; Regulators

Table: Annual Growth Rate Projections 2013-2018 (%)

Assets Loans Deposits

Source: BMI; Central banks; Regulators

Table: Ranking Out Of 71 Countries Reviewed In 2014

Loan/deposit ratio Loan/asset ratio Loan/GDP ratio

Local currency asset growth Local currency loan growth Local currency deposit growth

Source: BMI; Central banks; Regulators

Table: Commercial Banking Sector Indicators, 2011-2018

e/f = estimate/forecast Source: BMI; Central banks; Regulators

Commercial Banking

Vietnam Commercial Banking SWOT

Strengths ■ Untapped market with potential for increased participation of foreign banks

■ Large population with a high savings rate and potential for income growth

■ The Vietnamese government aims to speed up the process of privatising state-ownedbanks, which will help modernise the industry

■ State-owned banks will play a lesser role going forward, and the risks associated withstate-directed lending will decrease over time

Weaknesses ■ Domestic banks continue to lag behind their foreign peers in terms of financial

strength and the technological curve

■ Accounting standards lag far behind international standards and the lack oftransparency entails significant risks for foreign investors

■ Small banks have an overwhelming exposure to real estate and individual loans,resulting in highly skewed and risky loan portfolios

Opportunities ■ The population is still underbanked, with significant potential for adopting cash-free

payment systems and new mobile banking technologies

■ Rising income levels and deepening capital markets could give rise to opportunities inmore sophisticated financial products and growth for the local asset managementindustry

Threats ■ Track record of macroeconomic instability threatens the credibility of the government

and could potentially drive economic policy away from further liberalisation

■ The high level of government debt risks triggering a fiscal crisis, underminingconfidence in the banking sector

SWOT Analysis

Strengths ■ The Communist Party of Vietnam remains committed to market-oriented reforms and

we do not expect major shifts in policy direction over the next five years The party system is generally conducive to short-term political stability

one-■ Relations with the US have witnessed a marked improvement, and Washington seesHanoi as a potential geopolitical ally in South East Asia

Weaknesses ■ Corruption among government officials poses a major threat to the legitimacy of the

ruling Communist Party

■ There is increasing (albeit still limited) public dissatisfaction with the leadership's tightcontrol over political dissent

Opportunities ■ The government recognises the threat corruption poses to its legitimacy, and has

acted to clamp down on graft among party officials

■ Vietnam has allowed legislators to become more vocal in criticising governmentpolicies This is opening up opportunities for more checks and balances within theone-party system

Threats ■ Macroeconomic instabilities continue to weigh on public acceptance of the one-party

system, and street demonstrations to protest economic conditions could develop into

a full-on challenge of undemocractic rule

■ Although strong domestic control will ensure little change to Vietnam's political scene

in the next few years, over the longer term, the one-party-state will probably beunsustainable

■ Relations with China have deteriorated over recent years due to Beijing's moreassertive stance over disputed islands in the South China Sea and domestic criticism

of a large Chinese investment into a bauxite mining project in the central highlands,which could potentially cause wide-scale environmental damage

SWOT Analysis

Strengths ■ Vietnam has been one of the fastest-growing economies in Asia in recent years, with

GDP growth averaging 7.1% annually between 2000 and 2012

■ The economic boom has lifted many Vietnamese out of poverty, with the officialpoverty rate in the country falling from 58% in 1993 to 20.7% in 2012

Weaknesses ■ Vietnam still suffers from substantial trade and fiscal deficits, leaving the economy

vulnerable to global economic uncertainties The fiscal deficit is dominated bysubstantial spending on social subsidies that could be difficult to withdraw

■ The heavily-managed and weak currency reduces incentives to improve quality ofexports, and also keeps import costs high, contributing to inflationary pressures

Opportunities ■ WTO membership and the upcoming ASEAN AEC in 2015 should give Vietnam

greater access to both foreign markets and capital, while making Vietnameseenterprises stronger through increased competition

■ The government will in spite of the current macroeconomic woes, continue to moveforward with market reforms, including privatisation of state-owned enterprises, andliberalising the banking sector

■ Urbanisation will continue to be a long-term growth driver The UN forecasts theurban population rising from 29% of the population to more than 50% by the early2040s

Threats ■ Inflation and deficit concerns have caused some investors to re-assess their hitherto

upbeat view of Vietnam If the government focuses too much on stimulating growthand fails to root out inflationary pressure, it risks prolonging macroeconomicinstability, which could lead to a potential crisis

■ Prolonged macroeconomic instability could prompt the authorities to put reforms onhold as they struggle to stabilise the economy

Business Environment

SWOT Analysis

Strengths ■ Vietnam has a large, skilled and low-cost workforce, which has made the country

attractive to foreign investors

■ Vietnam's location - its proximity to China and South East Asia, and its good sea links

- makes it a good base for foreign companies to export to the rest of Asia, andbeyond

Weaknesses ■ Vietnam's infrastructure is still weak Roads, railways and ports are inadequate to

cope with the country's economic growth and links with the outside world

■ Vietnam remains one of the world's most corrupt countries According toTransparency International's 2012 Corruption Perceptions Index, Vietnam ranks 123out of 176 countries

Opportunities ■ Vietnam is increasingly attracting investment from key Asian economies, such as

Japan, South Korea and Taiwan This offers the possibility of the transfer of high-techskills and know-how

■ Vietnam is pressing ahead with the privatisation of state-owned enterprises and theliberalisation of the banking sector This should offer foreign investors new entrypoints

Threats ■ Ongoing trade disputes with the US, and the general threat of American

protectionism, which will remain a concern

■ Labour unrest remains a lingering threat A failure by the authorities to boost skillslevels could leave Vietnam a second-rate economy for an indefinite period

Industry Forecast

BMI View: As the Vietnamese government looks to ramp up its agenda on privatising state-owned

enterprises (SOEs), our assessment suggests that the impact of these policies will be highly positive for the economy We believe that reducing the role of SOEs should help to stem the rise in bad debts across the banking sector Meanwhile, lifting foreign ownership limits on public and private companies should also enhance market liquidity, spur financial market development, and boost foreign direct investment (FDI).

The Vietnamese government is set to ramp up efforts to privatise more state-owned enterprises (SOEs) andraise foreign ownership limits and voting rights on publicly listed companies, a move that is being viewed

as a litmus test for investors betting on policymakers to push ahead with free-market reforms over thecoming years Prime Minister Nguyen Tan Dung is expected to approve a legislative amendment over thecoming weeks that will allow foreigners to own up to 60% equity in publicly listed companies, compared tothe current limit of 49% Foreign voting rights will also be raised for private companies to match theexisting foreign ownership limit of 49% (we expect limits on private companies to be raised further over thecoming years) Meanwhile, the Ministry of Finance (MoF) appears to be on track to meet its target ofrestructuring more than 300 SOEs by 2015 - Ho Chi Minh City officials have unveiled plans to privatise 31SOEs, and divest or potentially liquidate another 20 SOEs over the next two years

A Shrinking Role For SOEs

Vietnam - Contribution To GDP By Ownership, pp

Source: BMI, General Statistics Office

Privatisation And Its Economic Impact

From our perspective, the economic benefits to be gained from speeding up privatisation of SOEs inVietnam are threefold Firstly, we believe that SOEs are at the root of the country's macroeconomic

imbalances over the years Vietnamese SOEs continue to dominate several industries such as shipping,banking, and infrastructure, which combined account for an estimated 17% of employment and 50% ofcorporate income tax revenue according to a recent report published by the International Monetary Fund(IMF) Decades of preferential treatment, incentives, and subsidies from the government have not onlyfailed to foster companies that can compete effectively against foreign enterprises, but they have alsoresulted in the rapid build-up of bad debt across the banking sector (SOEs are often given priority access toloans under the government's directive) Thus, we believe that privatisation efforts could help to reduce therisks of underperforming loans in the banking sector, which we believe is often the result of state-directedlending

Public spending on subsidies and wages for SOEs has also burdened the country's finances, causing the

government to run persistent budget deficits and failing to keep up with much-needed infrastructure

investment over the years Consequently, we believe that renewed efforts to reduce the role of SOEs in theeconomy should not only help to stem the rise in bad debts across the banking sector, but also free upresources for investment in more productive areas such as infrastructure and technology.

Positive For Capital Market Development

Vietnam - Components Of Financial Market Development Index (2012-2013)

Source: BMI, World Economic Forum

Lifting Ownership Limits Could Enhance Market Liquidity

Secondly, we believe that foreign ownership limits on both private and publicly listed companies in

Vietnam could stifle the development of its financial markets Foreign investment funds are reportedlyfacing growing difficulties in managing their portfolios (especially with regards to investing more funds inlarge-cap stocks) as most of the 30 largest companies listed on the local bourse have already reached (or arenear) their foreign ownership limits Thus, raising these limits should have a positive impact in terms ofenhancing liquidity in the stock market We believe that increased foreign participation in the local bourseshould also help to spur the development of a derivatives market, which is crucial in attracting large

institutional investors (who often need to hedge against various foreign exchange and market risks) We

also view this as a potential source of revenue for Vietnamese commercial banks that are looking to expandinto providing investment banking and other financial market services.

Booming Provinces

Vietnam - Foreign Direct Investment By Province (2012), US$bn

Source: BMI, General Statistics Office

Lastly, we believe that privatisation efforts by the Vietnamese government will play a major role in helping

to drive foreign direct investment (FDI) into the country Multi-national companies (MNCs) are investingheavily in the government's push for more free-market reforms over the coming years, which are likely toopen up SOE-dominated industries to foreign competition Indeed, we expect private sector investment(largely driven by FDI inflows) to play a major role in driving Vietnam's long-term economic growth Weforecast real GDP growth to average 6.2% over the coming decade Commercial banks are likely to benefitsignificantly from the expansion of banking services to meet the specific needs of foreign companies

Private Sector Investment To Lead The Way

Vietnam - Real GDP Growth, % (LHS) & GFCF, % of GDP (RHS)

Source: BMI, General Statistics Office

Deeper Reforms Needed To Improve Accounting Standards And Transparency

Overall, we are optimistic that these structural reforms will help to strengthen the country's macroeconomicfundamentals and competitiveness going forward However, government efforts in improving corporategovernance, accounting standards, and transparency, remain inadequate in our view We caution that thelack of progress in this area could potentially undermine the government's agenda on privatising SOEs, asthe risk of investing in local companies (hidden debt, inaccurate valuation of assets, lack of timely

accounting information) may prove to be uncomfortable for foreign investors with a lower risk mandate fortheir portfolios On a more positive note, the Vietnamese policymakers are fully aware of these weaknesses,and we see ample scope for the government to introduce reforms on this front over the coming years

Industry Risk Reward Ratings

Asia Commercial Banking Risk/Reward Ratings

Commercial Banking Risk/Reward Rating Methodology

Since Q108, we have described numerically the banking business environment for each of the countries

analysed by BMI We do this through our Commercial Banking Industry Risk/Reward Rating (IRR), a

measure that ensures we capture the latest quantitative information available It also ensures consistency

across all countries Like all of BMI's Industry Risk/Reward Ratings, its takes into account the Rewards on

offer within the banking sector in a given country, but also the Risks to investors being able to realise thoseopportunities The overall Rating is weighted 70% towards Rewards and 30% towards Risks

Within the Rewards category, we look at factors that are specific to the banking industry (accounting for60% of the score within this category), and elements that relate to that country in general (accounting for40% of the weighting) These include, but are not limited to, total assets, asset and loan growth, GDP andtaxation Likewise on the Risks side, we look at industry-specific Risks (weighted 40% of the Risks total)and country-specific Risks (weighted 60%) These include, but are not limited to, the regulatory frameworkand environment, the competitive environment, financial risk, legal risk and policy continuity

In general three aspects need to be borne in mind when interpreting the IRRs The first is that the IndustryRewards element is the most heavily weighted of the four elements, accounting for 42% (60% of 70%) ofthe overall Rating Second, if the Industry Rewards score is significantly higher than the Country Rewardsscore, within the Rewards category, it usually implies that the banking sector is (very) large and/or

developed relative to the general wealth, stability and financial infrastructure in the country Conversely, ifthe industry score is significantly lower, it usually means that the banking sector is small and/or

underdeveloped relative to the general wealth, stability and financial infrastructure in the country Third,within the Risks category, the industry-specific elements (i.e how regulations affect the development of thesector, how regulations affect competition within it, and Moody's Investor Services' ratings for local

currency deposits) can be markedly different from BMI's long-term Country Risk rating for a given market.

Table: Asia Commercial Banking Risk/Reward Ratings

Limits of Potential Returns Risks to Potential Returns Overall Market Structure Country Structure Market Risks Country Risks Rating Ranking

Market Overview

Asia Commercial Banking Outlook

Table: Banks' Bond Portfolios, 2012

Bond Portfolio, US$bn Bond as % total assets Year-on-year growth %

Source: Central banks, regulators, BMI *Only 2011 data available

Table: Comparison of Loan/Deposit & Loan/Asset & Loan/GDP ratios, 2014

Loan/Deposit

ratio % Rank Trend Loan/Asset ratio % Rank Trend Loan/GDP ratio % Rank Trend

Comparison of Loan/Deposit & Loan/Asset & Loan/GDP ratios, 2014 - Continued

Loan/Deposit

ratio % Rank Trend Loan/Asset ratio % Rank Trend Loan/GDP ratio % Rank Trend

Source: Central banks, regulators, BMI

Table: Comparison of Total Assets & Client Loans & Client Deposits (US$bn)

Comparison of Total Assets & Client Loans & Client Deposits (US$bn) - Continued

Source: Central banks, regulators, BMI

Table: Comparison of US$ Per Capita Deposits, 2014

GDP Per Capita Client Deposits, per capita Deposits, per capita Rich 20% Client Deposits, per capita Poor 80% Client

BMI View: Although we expect the Vietnamese economy to record yet another quarter of sub-par growth in

Q413, we are beginning to see potential for upside surprises to domestic demand over the coming quarters Recent data on foreign direct investment inflows, remittances, passenger car sales, and property market launches, suggests to us that domestic demand is on a nascent recovery, setting the stage for stronger 2014 growth

The general consensus is expecting the Vietnamese economy to suffer yet another quarter of sub-par growthmainly due to subdued external demand and the lack of progress on banking sector reforms This is closely

in line with our view that real GDP growth will come in at just 5.3% in 2013, a slight improvement from5.2% in 2012 Looking ahead to 2014, however, evidence of improving macroeconomic fundamentals inVietnam (especially with regards to the outlook for domestic demand) suggests to us the balance of risks toour growth forecast of 6.0% is gradually tilting towards the upside

Robust Remittances Could Boost Domestic Demand

Vietnam - Unrequited Transfers, US$mn

Source: BMI, Asian Development Bank

Remittances: According to estimates published by the World Bank, the Vietnamese economy is on track to

record a bumper year for remittance inflows The country is expected to receive US$10.6bn in remittancesfrom Vietnamese citizens working abroad, a robust 6.5% increase from 2012 Crucially, we believe thatremittance inflows will remain strong over the coming quarters as macroeconomic conditions in Vietnamcontinue to improve Growing confidence in the stability of the Vietnamese dong should also help toencourage Vietnamese workers abroad, to a certain extent, to remit a larger share of their earnings backhome We believe that this will help to boost domestic demand while providing support for the currency

Foreign Direct Investment: Total foreign direct investment (FDI) inflows are also set to surpass the

government's full-year target of US$13bn, after data released by the Ministry of Planning and Investmentshowed that inflows surged by 19.5% year-on-year (y-o-y) growth over the first eight months of the year.The strong reading chimes with our view that the country's solid long-term growth story should continue toattract foreign investors over the coming years

Automobile Sales: We are witnessing signs of a robust recovery in automobile sales, a sign that pent-up

domestic demand is beginning to rebound According to the Vietnam Automobile Manufacturers

Association (VAMA), September vehicle sales of its members surged by 20.6% year-on-year (y-o-y),

exceeding our already bullish forecast of 12.5% for the year (see 'Bullish On CV Sales In The Medium To

Long Term', October 14 2013).

Developers Eyeing Property Market Rebound

Vietnam - Real Estate Index

Source: BMI, Bloomberg

Property Market: Meanwhile, we see increasing evidence that the Vietnamese property market may have

bottomed out (see 'Early Signs Of A Recovery, But No Property Market Boom In Sight', August 14 2013).

According to a quarterly report published by real estate agency CBRE Vietnam, the number of new

launches surged by 12% y-o-y in Q313 Anecdotal evidence from the local media suggests to us thatdemand for real estate following the sharp decline in prices since 2011 may be recovering To be sure, wemaintain our view that we are unlikely to see a property market boom given the healthy pipeline of newunits that will come online in 2014 Nonetheless, we acknowledge that consumer confidence is recoveringand we could potentially see some upside surprises to domestic demand in 2014.

Expenditure Breakdown

Private Consumption: We expect private consumption to grow at a relatively resilient pace of 5.0% in

2014 However, we note that the risk of further bankruptcies among SMEs could potentially lead to

widespread job losses, especially in export-driven sectors Uncertainties over the outlook for employmentcould, in turn, prompt households to cut back on spending

Gross Fixed Capital Formation: We foresee a pickup in private sector investment growth in 2014, partly

led by increased foreign direct investment inflows We believe lending rates will gradually ease over thecoming months as the effect of recent rate cuts by the SBV begins to kick in We are also seeing evidencethat credit conditions are improving Accordingly, we expect gross fixed capital formation growth toaccelerate slightly from 4.1% in 2013 to 4.8% in 2014

Public Spending: We expect total public spending to remain relatively resilient in 2014, expanding at a

respectable pace of 6.1% However, there is limited room for the government to increase spending furtherowing to concerns over the need to finance a potential bailout of ailing state-owned commercial banks

Net Exports: Net exports remain the biggest downside risk to our outlook for the Vietnamese economy,

although we expect external demand to pick up in 2014 Vietnam's trade account has fallen back intodeficits in recent months, but we see the case for a substantial pickup in external demand on the back of arebound in regional growth over the coming quarters Accordingly, we still expect exports to expand at amoderate pace of 5.9% in 2014

Table: Vietnam - Economic Activity

Competitive Landscape

Market Structure

Protagonists

Table: Protagonists In Vietnam's Commercial Banking Sector

Central bank: State Bank of Vietnam (SBV)

http://www.sbv.gov.vn/portal/faces/en/enm/enpages_home?_adf.ctrl-state=ol2ltq2of_144&_afrLoop=3313177173575300

The SBV is the successor to the Vietnam National Bank, which was established by the government of North Vietnam in

1951 From 1975 to May 1990, the SBV was the banking system of Vietnam The government then established the tier' system that is still in place The financial liberalisation at the beginning of the 1990s lead to the establishment of four large state-owned commercial banks: Agribank, BIDV, Incombank and Vietcombank This period also included the establishment of commercial joint-stock banks, joint-venture banks, branches or representative offices of foreign banks, credit cooperatives, people's credit funds and finance companies.

'two-The SBV implements the state management of currency trading, credit, payment, foreign exchange and banking; is the only bank authorised to issues bank notes; and acts as the bank to the banks and the state The central bank organises the management of monetary policy and ensuring a stable currency value is its main objective.

Principal banking regulator: State Bank of Vietnam (SBV)

www.sbv.gov.vn/en/home

Among its other functions, the SBV is the regulator of the banking system.

Banking trade association: Vietnam Bankers Association (VNBA)

www.vnbaorg.vn/en/

The VNBA was founded in 1994 and became a part of the ASEAN Bankers Association the following year, after

Vietnam's accession to association The functions of the VNBA are: to act as a link between the banks and the

authorities, including dissemination of 'the policies, mechanisms and laws on banking operations' to its members; protecting the interests of the members; training and research; and expansion of international cooperation.

Definition Of The Commercial Banking Universe

Within Vietnam, VNBA currently has 53 members, including 39 commercial banks, 2 joint-venture banks,and 11 finance companies

List Of Banks

Table: Financial Institutions In Vietnam

COMMERCIAL BANKS

Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank)

Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank)

Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV)

Vietnam Bank for Agriculture and Rural Development (Agribank)

Mekong Housing Bank (MHB)

JOINT STOCK BANKS

Asia Commercial Bank (ACB)

An Binh Commercial Joint-Stock Bank (ABBank)

Bao Viet Joint Stock Commercial Bank (BAOVIET Bank)

North Asia Commercial Joint-Stock Bank (BacA Bank)

Vietnam Prosperity Bank (VPBank)

Global Petro Commercial Joint-Stock Bank (GP Bank)

Great Asia Commercial Joint-Stock Bank (Dai A Bank)

Great Trust Bank (TrustBank)

Ocean Commercial Joint-Stock Bank (Ocean Bank)

DongA Commercial Joint-Stock Bank (DongA Bank)

South East Asia Bank (SeABank)

Viet Capital Commercial Joint-Stock Bank (Viet Capital Bank)

Maritime Commercial Joint-Stock Bank (Maritime Bank)

Technical and Commercial Joint-Stock Bank of Vietnam (Techcombank)

Kien Long Commercial Joint-Stock Bank (Kienlongbank)

Nam A Commercial Joint-Stock Bank (NamA Bank)

Nam Viet Commercial Joint-Stock Bank (Navibank)

Western Commercial Joint-Stock Bank (Western Bank)

Mekong Development Join-Stock Commercial Bank (MDBank)

Orient Commercial Joint-Stock Bank (OCB)

Southern Commercial Joint-Stock Bank (Southern Bank)

Hanoi Building Commercial Joint-Stock Bank (Habubank)

Ho Chi Minh City House Development Commercial Joint Stock Bank (HDBank)

Military Commercial Joint-Stock Bank (MB)

Vietnam International Commercial Joint-Stock Bank (VIB)

Sai Gon Commercial Joint-Stock Bank (SCB)

Financial Institutions In Vietnam - Continued

Saigon Bank for Industry and Trade (Saigonbank)

Sai Gon-Hanoi Commercial Joint-Stock Bank (SHB)

Sai Gon Thuong Tin Bank (Sacombank)

Vietnam-Asia Commercial Joint-Stock Bank (VietABank)

Petrolimex Commercial Joint-Stock Bank (PG Bank)

Vietnam Export-Import Commercial Joint-Stock Bank (Eximbank)

Tienphong Joint - Stock Commercial Bank (TienphongBank)

JOINT VENTURE BANKS

Vietnam-Russia Joint Venture Bank (VRB)

Viet-Thai Joint Venture Bank (Vinasiam Bank)

FINANCE COMPANY

Post and Telecommunication Finance Company (PTF)

Rubber Finance Company (RFC)

Vietnam Shipbuilding Finance Company (Vinashin Finance)

Textile Finance Company (TFC)

Handico Finance Joint-Stock Company (HAFIC)

Vietnam National Coal, Mineral Finance Company Limited (CMF)

Song Da Finance Joint-Stock Company ( SDFC)

PetroVietnam Finance Joint-Stock Corporation (PVFC)

Cement Finance Company (CFC)

Vinaconex - Viettel Finance Company (VVF)

Vietnam Chemical Finance Joint Stock Company (VCFC)

OTHER FINANCIAL INSTITUTIONS

Deposit Insurance of Vietnam (DIV)

Vietnam Development Bank (VDB)

Source: VNBA (January 2014), BMI

Company Profile

Bank for Foreign Trade of Vietnam (Vietcombank)

SWOT Analysis

Strengths ■ Minority owner Mizuho has boosted bank's profile

■ Largest correspondent network among Vietnamese banks

■ Clear competence in external trade

■ Strong market position

■ 13% y-o-y rise in total assets during 2012

Weaknesses ■ NPL ratio increase to 2.4% during 2012 ful-year

■ Lack of transparency

Opportunities ■ Stronger expansion to outpace growth at smaller, non-state rivals

■ 15% stake acquisition by Japan's Mizuho Corporate Bank

■ Pre-tax profit increased in 2012

■ Rise in loans and deposits during 2012 full-year

■ Improving capital position

Threats ■ Tighter monetary policy to tame economic growth

■ Vietnam will now permit international investors to acquire larger stakes in lenders inthe country

Company Overview Established in 1963 as a state-owned commercial bank, Vietcombank has paid-up

capital of VND3,955bn It is the oldest commercial bank for external affairs in Vietnamand was the first bank in the country to have a centralised capital managementstructure It describes itself as an 'interbank forex payment centre for over 100domestic banks and foreign banks' branches operating in Vietnam', and was the firstcommercial bank in the country to deal in foreign currencies As of the 2013 year-end,the bank has 13,560 employees, around 400 branches/ transaction offices/

representative office/ affiliates both in Vietnam and abroad, including Head Office inHanoi, 1 Operation Center, 1 Training Center, 78 branches, over 300 transaction officesall over the country, 3 subsidiaries in Vietnam, 2 subsidiaries in other countries, 1representative office in Singapore and 5 joint ventures In addition, Vietcombank hasalso developed an Autobank system with 1,835 ATMs and 32,178 Points of Salenationwide Bank's operations are supported by a network of more than 1,300correspondent banks in 100 countries and territories.

Vietcombank has expanded from its original role as North Vietnam's foreign trade bank

to become one of the country's largest universal banks It is also an investor in anumber of other financial institutions, including Vietnam Export Import CJSB, SaigonIndustrial and Commercial CJSB, Gia Dinh CJSB, Military CJSB, InternationalCommercial CJSB, Oriental CJSB, Chohungvina Bank, Petroleum Insurance Companyand Golden Insurance Company

Japan's Mizuho Corporate Bank acquired a 15% stake in Vietcombank for a total ofVND11.8trn (US$559.04mn) in January 2012, some months after the deal was revealed.The acquisition, which advantageously gives Vietcombank a stronger foreign partner,involved the sale of 347.61mn shares

Corporate

Highlights

The bank's total assets climbed to VND414,475bn in 2012, up by 13% y-o-y fromVND366,722bn a year earlier During the same period, profit before tax reachedVND4,427bn, compared with VND4,217bn in 2011

In 2012 gross loans rose to VND241,163bn, up by 15.2% from VND209,418bn as ofDecember 31 2011 Deposits reached VND303,942bn, up 25.8% compared to 2011,and 106.6% of the bank's target for the period The NPL ratio came in at 2.4% as ofDecember 31 2012, lower than the estimated 2.8% and the average NPL ratio of thesystem That said, it was still up from 2.03% at the end of 2011

Standard & Poor's, encouraged by the acquisition, argued that Mizuho CorporateBank's involvement strengthened Vietcombank's capital position The agency upgradedits outlook on the bank's long-term rating to 'stable' from 'negative' in January 2012

Company Address Vietcombank (Bank For Foreign Trade of Vietnam)

198 Tran Quang KhaiHanoi

Vietnam

Description of Business: Leading commercial bank specialising project finance, trade

finance, treasury, financial market and international banking services

Phone: +84 (4) 825 1322 Fax: +84 (4) 826 9067

Email: webmaster@vietcombank.com.vn Website: http://www.vietcombank.com.vn

Table: Stock Market Indicator

2008 2009 2010 2011 2012 2013 19-Feb-2014

Share Price US$, % change

Source: Bank of Foreign Trade of Vietnam (Vietcombank), Bloomberg

Table: Balance Sheet (VNDmn)

Source: Bank of Foreign Trade of Vietnam (Vietcombank), Bloomberg

Table: Balance Sheet (US$mn)

2006 2007 2008 2009 2010 2011 2012

Source: Bank of Foreign Trade of Vietnam (Vietcombank), Bloomberg

Table: Key Ratios (%)

2006 2007 2008 2009 2010 2011 2012

Source: Bank of Foreign Trade of Vietnam (Vietcombank), Bloomberg

SWOT Analysis

Strengths ■ Vietnam's largest partly private lender by assets

■ 10% owned by the International Finance Corporation

■ Strong branch network

■ Total assets rose 9.4% in 2012

■ 2011 profit exceeded predictions

Weaknesses ■ Possible exposure to the effects of the bursting of the asset price bubble

■ NPL ratio rose during 2012 full-year

Opportunities ■ VietinBank has a 20% market share in Vietnam in terms of total assets is too large to

be ignored

■ Possible listing in the long term

■ Loans and investment increased 13.6% in 2012

Threats ■ Possible exposure to downturn in global trade

■ Decline in pre-tax profit during 2012

■ Predicted growth limited by state credit limits

■ Vietnam now permits international investors to acquire larger stakes in lenders in thecountry

Company Overview The Bank for Industry and Trade (VietinBank) was established in 1988 when it was

separated from the State Bank of Vietnam It became a state-owned corporation in

1993 As one of the four largest state-owned commercial banks in the country,VietinBank's total assets account for over 20% of the market share of the wholeVietnamese banking system VietinBank's capital resources have continued to increaseover the years and have been rising substantially since 1996, with annual averagegrowth of 20%

VietinBank has developed a retail and administration network across the country Thebank's network operates in 56 provinces and cities, with a focus on large cities such asHanoi (12 branches; two transaction centres), Ho Chi Minh City (17 branches; onetransaction centre); industrial zones; trading and economic parks; and denselypopulated areas VietinBank is an investor in other institutions such as Saigonbank,Indovina Bank, Vietnam International Leasing Company and the VietinBank-AsiaInsurance Company.

VietinBank is 10% owned by the International Finance Corporation, which invested US

$307mn in the lender in 2011 This was the first strategic investment by a foreignorganisation in a Vietnamese state-owned bank Discussions over selling a 15% stake

to the Canada-based Bank of Nova Scotia are still ongoing as of January 2012, despiteplans to conclude the deal by the end of 2011

In December 2012, Japanese commercial bank Bank of Tokyo Mitsubishi UFJannounced that it has acquired a 20% stake in VietinBank The deal was valued at US

$742mn The acquisition will enable Bank of Tokyo Mitsubishi UFJ to help Japanesecompanies operating in Vietnam, as well as expanding its commercial operations inSouth East Asia Bank of Tokyo Mitsubishi UFJ will also appoint two directors onto theboard of VietinBank

Corporate

Highlights

As of the end of 2012, VietinBank had total assets of VND503,530bn, representing anincrease of 9.4% y-o-y from VND460,420bn in 2011 During the same time period, loansand investments came out at VND467,879bn, up by 13.6% from VND429,932bn as ofDecember 31 2011 Profit before tax finished 2012 at VND8,168bn, down fromVND8,392bn at the previous year-end During the 2012 full-year, the bank's NPL ratioclimbed from 0.75% to 1.46% as of December 31

In May 2012, VietinBank became the first Vietnamese bank to issue US$250mninternational bonds NPL 1.46 from 0.75

Company Data ■ Website: www.vietinbank.vn

• Status: State-Owned Commercial Bank

Company Address VietinBank - Vietnam Joint Stock Commercial Bank for Industry and Trade

108 Tran Hung DaoHanoi

Vietnam

Fax: (84) 439428693 Website: http://www.vietinbank.vn

Table: Stock Market Indicators

2009 2010 2011 2012 2013 19-Feb-2014

Source: Vietnam Bank for Industry and Trade (Vietinbank), Bloomberg

Table: Balance Sheet (VNDmn)

Source: Vietnam Bank for Industry and Trade (Vietinbank), Bloomberg