Vietnam commercial banking report q2 2015

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 2015 www.bmiresearch.com

VIETNAM

COMMERCIAL BANKING REPORT

INCLUDES 5-YEAR FORECASTS TO 2019

INCLUDES 5-YEAR FORECASTS TO 2019

Part of BMI’s Industry Report & Forecasts Series

Published by: BMI Research

Copy deadline: February 2015

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DISCLAIMER

BMI Industry View 7

Table: Commercial Banking Sector Indicators 7

Table: Commercial Banking Sector Key Ratios, October 2013 7

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

Table: Ranking Out Of 73 Countries Reviewed In 2014 8

Table: Commercial Banking Sector Indicators, 2012-2019 8

SWOT 9

Commercial Banking 9

Political 10

Economic 11

Operational Risk 13

Industry Forecast 15

Economic Analysis 15

Industry Risk Reward Ratings 20

Asia Commercial Banking Risk/Reward Index 20

Table: Asia Commercial Banking Risk/Reward Index 21

Market Overview 22

Asia Commercial Banking Outlook 22

Table: Banks' Bond Portfolios, 2013 22

Table: Comparison of Loan/Deposit & Loan/Asset & Loan/GDP ratios, 2015 22

Table: Comparison of Total Assets & Client Loans & Client Deposits (USDbn) 23

Table: Comparison of USD Per Capita Deposits, 2015 24

Expecting Sustained Growth Momentum In 2015 25

Table: Economic Activity (Vietnam 2009-2018) 29

Competitive Landscape 30

Market Structure 30

Protagonists 30

Table: Protagonists In Vietnam's Commercial Banking Sector 30

Definition Of The Commercial Banking Universe 30

List Of Banks 31

Table: Financial Institutions In Vietnam 31

Company Profile 33

Agribank 33

Table: Balance Sheet (VNDmn) 35

Table: Balance Sheet (USDmn) 35

Table: Key Ratios (%) 35

Bank for Foreign Trade of Vietnam (Vietcombank) 36

Table: Stock Market Indicator 38

Table: Balance Sheet (VNDmn) 38

Table: Balance Sheet (USDmn) 39

Table: Key Ratios (%) 39

Eximbank 40

Table: Stock Market Indicators 42

Table: Balance Sheet (VNDmn) 42

Table: Balance Sheet (USDmn) 42

Table: Key Ratios (%) 43

Sacombank 44

Table: Stock Market Indicators 46

Table: Balance Sheet (VNDmn) 46

Table: Balance Sheet (USDmn) 46

Table: Key Ratios (%) 47

VietinBank 48

Table: Stock Market Indicators 50

Table: Balance Sheet (VNDmn) 50

Table: Balance Sheet (USDmn) 51

Table: Key Ratios (%) 51

Regional Overview 52

Asia Overview 52

Global Industry Overview 56

Global Commercial Banking Outlook 56

EM External Corporate Debt A Potential Risk To Financial Stability 56

Eurozone and US Banking Outlooks 58

Emerging Market Regional Outlooks 58

Demographic Forecast 63

Table: Population Headline Indicators (Vietnam 1990-2025) 64

Table: Key Population Ratios (Vietnam 1990-2025) 64

Table: Urban/Rural Population & Life Expectancy (Vietnam 1990-2025) 65

Table: Population By Age Group (Vietnam 1990-2025) 65

Table: Population By Age Group % (Vietnam 1990-2025) 66

Methodology 68

Industry Forecast Methodology 68

Sector-Specific Methodology 69

Risk/Reward Index Methodology 70

Table: Commercial Banking Risk/Reward Index Indicators 71

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, October 2013

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

Source: BMI; Central banks; Regulators

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

Source: BMI; Central banks; Regulators

Table: Ranking Out Of 73 Countries Reviewed In 2014

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

Source: BMI; Central banks; Regulators

Table: Commercial Banking Sector Indicators, 2012-2019

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 behind international standards and the lack of transparencyentails 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 country remains one of the most underbanked in the region, with significant

potential for adopting cash-free payment systems and new mobile bankingtechnologies

■ 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 ■ 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 6.6% annually between 2000 and 2013

■ The economic boom has lifted many Vietnamese out of poverty, with the officialpoverty rate in the country falling from 58% in 1993 to 17.2% in 2012

■ Vietnam has been strengthening its trade and aid ties in a bid to increase exports anddiversify its export sector

Weaknesses ■ Vietnam still suffers from fiscal deficits, leaving the economy vulnerable to global

economic uncertainties The fiscal deficit is dominated by substantial spending onsocial 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 economic integration in 2015 should

give Vietnam greater access to both foreign markets and capital, while makingVietnamese enterprises stronger through increased foreign competition

■ The government has continued to move forward with market reforms, includingprivatisation of state-owned enterprises, addressing the high level of bad loans in thebanking sector as well as liberalising the banking sector

■ Urbanisation will continue to be a long-term growth driver The UN forecasts theurban population rising from 32% of the population in 2013 to more than 50% by theearly 2040s

Threats ■ Although inflation has subsided in 2014, complacency by the State Bank of Vietnam

on this front could result in a decline in investment

■ The potential for an escalation of political tensions with China over sovereign claims

to parts of the South China Sea could have a negative impact on the economy

SWOT Analysis - Continued

■ Market reforms could progress at a much slower pace as the government remainscautious about ceding ownership to foreign investors

Operational Risk

SWOT Analysis

Strengths ■ Vietnam has a high number of university graduates with skilled degrees and a high

literacy rate for its income level

• In addition to a number of regional and international flight options, Vietnam has anextensive inland waterway system

■ Strong contract enforcement capabilities increase security

• Vietnam's rate of violent crime is generally low, and foreigners are unlikely to betargeted

Weaknesses ■ High labour costs increase overall operating costs, and difficulty in hiring foreigners

creates shortages of skilled labour

• Underdeveloped rail capacity overburdens the road network

• One of the worst tax administration systems in Asia

• The police force is under-equipped and under-resourced in many areas

Opportunities ■ Fairly high expenditures in secondary education by regional standards will help close

gaps in access to education

• Vietnam is easily accessible from the main shipping routes, and growth in the number

of port facilities will provide adequate capacity

• Declining trade barriers are making it easier to enter the market

• Increased foreign participation in the banking sector will increase the availability offunds for loans

Threats ■ Unequal access to secondary education will result in a lower-quality workforce in

poorer regions

• Vietnam's reliance on imported oil poses risks in the form of energy and fuelshortages

SWOT Analysis - Continued

• Corruption and inefficiency in the legal system

• Anti-Chinese violence, as seen in May 2014, could be a harbinger of wider politicaland social unrest

Industry Forecast

Economic Analysis

BMI View: While the Vietnamese economy has been strong, falling inflation and below-target credit growth

will spur further interest rate cuts by the State Bank of Vietnam (SBV) We maintain our forecast for the SBV to cut its benchmark interest rate by a total of 50 basis points (bps) to 6.00% in 2015 Meanwhile, we expect Vietnam's banking sector to gradually strengthen over the coming years as the government continues with its reform efforts.

While we expect the Vietnamese economy to continue growing strongly over the coming quarters, on theback of sustained foreign direct investment (FDI) inflows and healthy export sector growth, we neverthelesscontinue to expect the State Bank of Vietnam (SBV) to maintain its dovish monetary stance A combination

of falling inflation and still-slow credit growth suggest that the Vietnamese central bank will look to easepolicy rates As such, we forecast another 50 basis points (bps) rate cut that will take the benchmark

refinancing rate to 6.00%, extending the SBV's monetary easing cycle that began in 2012 to a total of900bps

Steady Recovery

Vietnam - Real GDP Growth, %

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015f

4 5 6 7 8

e/f = BMI estimate/forecast Source: BMI, GSO

Sustained Economic Growth Momentum In 2015

The Vietnamese economy has continued its steady recovery amid ongoing economic reforms and loosemonetary conditions We expect strong growth momentum to remain intact, and are forecasting real GDPexpansion to accelerate to 6.4% in 2015 from 6.0% in 2014 Indeed, Vietnam will attract greater foreigninvestor interest, as it continues to offer foreign firms attractively low wages and generous tax incentives.According to latest data from the General Statistics Office, total foreign registered capital rose 9.6% toUSD15.6bn, with most of it being channelled into the manufacturing sector In addition, given the country'sstrong export orientation to the US, which received roughly 19% of total Vietnamese outbound shipments in

2014, a recovering US economy will help to sustain a healthy rate of growth in Vietnam's export sector

Easing Price Pressures

Vietnam - Headline Inflation, % chg y-o-y

Source: BMI, GSO

Falling Inflation Provides Room For Further Rate Cuts

While economic growth has been strong, headline inflation continues to fall, providing room for continuedmonetary easing Consumer price inflation rose 4.1% on average in 2014, marking a significant declinefrom the 6.6% recorded in 2013 We expect price pressures to remain largely contained over the comingmonths, owing mainly to the slump in global oil prices Consequently, we see inflation averaging just 2.1%

in 2015 Easing price pressures have in turn led to a rise in the real policy rate in recent months Realinterest rates came in at 4.7% in December 2014, suggesting that current monetary policy is not terriblyloose

Rate Cuts Likely To Spur Credit Growth

With room for policy easing, we expect the central bank to cut rates further to spur credit growth in thecountry A total of 67,823 enterprises had either suspended or ceased operations in 2014, representing an11.7% increase versus that in 2013 This negative trend looks to persist, as local banks remain reluctant to

provide financing owing to the high levels of non-performing loans on their books Still-high lending ratesalso played a part in the increasing number of company shut-downs over recent years Consequently, allthese factors combined has resulted in sluggish credit growth, with year-to-date loan expansion coming in at8.8% in October 2014, falling short of the central bank's full-year target for a 12.0-14.0% increase.

Banking Sector Improvement Remains On The Cards

In addition to further rate cuts, we believe ongoing banking reforms by the Vietnamese government willhelp to strengthen the sector and encourage bank lending, although we note that progress on this front willlikely proceed at a gradual pace The government established an entity, known as the Vietnam AssetManagement Company (VAMC), in July 2013 to clean up bad debt from the banking system and allowdomestic banks to undergo much needed restructuring Meanwhile, the government also aims to speed upstate-owned enterprise reform in a bid to improve operational efficiencies and reduce their need to borrow

to finance their losses SOEs currently account for more than half of the sector's sour loans In the

government's latest efforts, the SBV will look to consolidate the banking sector through mergers andacquisitions and seek to dissolve weak financial institutions that have very little chance of a recovery

To Remain Anchored

Vietnam - 2-Year Government Bond Yields

Source: Bloomberg, BMI

Bond Yields To Remain Anchored At Low Levels

Regarding the Vietnamese fixed income market, we expect easing price pressures to keep bond yieldsanchored at current low levels We also see the potential for additional interest rate cuts over the comingmonths to push yields back down to 4.0% That said, further yield compression from there on will likely belimited, owing to sustained solid GDP growth momentum

Industry Risk Reward Ratings

Asia Commercial Banking Risk/Reward Index

Commercial Banking Risk/Reward Index 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 Index (RRI), 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 Indices, 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 index 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 RRIs The first is that the IndustryRewards element is the most heavily weighted of the four elements, accounting for 42% (60% of 70%) ofthe overall Index 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 Index for a given market.

Table: Asia Commercial Banking Risk/Reward Index

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

Market Overview

Asia Commercial Banking Outlook

Table: Banks' Bond Portfolios, 2013

Bond Portfolio, USDbn Bond as % total assets Year-on-year growth %

Source: Central banks, regulators, BMI **Only 2011 data available * Only 2012 data available.

Table: Comparison of Loan/Deposit & Loan/Asset & Loan/GDP ratios, 2015

Loan/Deposit

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

Comparison of Loan/Deposit & Loan/Asset & Loan/GDP ratios, 2015 - 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 (USDbn)

Comparison of Total Assets & Client Loans & Client Deposits (USDbn) - Continued

Source: Central banks, regulators, BMI

Table: Comparison of USD Per Capita Deposits, 2015

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

Expecting Sustained Growth Momentum In 2015

BMI View: We expect solid growth momentum in the Vietnamese economy to be carried over to 2015, on

the back of continued foreign direct investment (FDI) inflows, strong performance in the manufacturing and export sectors, and ongoing efforts by the government to address the high level of bad debts in the banking sector We maintain our forecast for real GDP to grow at 5.7% in 2014, ahead of an acceleration to 6.4%

in 2015.

In line with our positive outlook for the Vietnamese economy, Vietnam's real GDP growth accelerated to6.2% year-on-year (y-o-y) in Q314 from the revised 5.4% print in the previous quarter Notably, thismarked the fastest pace of expansion since Q411, bringing real GDP growth to 5.6% y-o-y in the first ninemonths of 2014, exceeding the Bloomberg consensus estimate of 5.4% for the same period

Fastest Economic Expansion Since Q411

Vietnam - Real GDP, % chg y-o-y

Source: BMI, GSO

The strong headline figure largely owes to a robust performance in the manufacturing and export sectors.Indeed, the manufacturing sector grew by 8.6% y-o-y in September, the fastest pace since February, while

exports rose by 14.1% y-o-y for the first nine months of 2014 versus the same period in 2013 Stronggrowth in these sectors has more than offset sluggish domestic demand in the country, owing to slowerlending by banks The slowdown in credit growth has largely been the result of the high level of bad debts

in Vietnam's banking sector, which has reduced the willingness of banks to lend

Picking Up Speed

Vietnam - Industrial Production, % chg y-o-y

Source: Bloomberg, BMI

While the large amount of non-performing loans continues to pose a risk to the Vietnamese economy, wenevertheless maintain a constructive growth outlook for the country, and are forecasting real GDP growth of5.7% in 2014, followed by a stronger expansion to 6.4% in 2015 Efforts by the government to tacklestructural issues in the banking sector, strong foreign direct investment (FDI) inflows to the country, and acontinued expansion in the manufacturing and export sectors should sustain solid growth momentum goinginto 2015

Taking Positive Steps To Reduce Banks' Non-Performing Loans

The Vietnamese government has already taken steps to address the high level of sour loans in the bankingsector, which constituted 4.2% of total loans as of end-June according to the State Bank of Vietnam While

we expect progress on this front to be gradual, strengthening of the banking sector is a step in the rightdirection by the government to secure the country's long-term growth prospects In July 2013, the

government established the Vietnam Asset Management Company (VAMC) to take bad debts off banks'books, allowing time for banks to undergo restructuring and strengthening of their credit assessmentmechanisms Meanwhile, the government has continued to reform its state-owned enterprises (SOEs),which accounted for more than half of the bad debts in the banking sector While SOE reform has

progressed at a very slow pace over recent years, it should gain some momentum over the coming quarters,

as the government plans to privatise 432 state companies by end-2015

Manufacturing Sector To Sustain Strong Growth

The Vietnamese economy will also ride on a stronger manufacturing performance over the coming quarters.The Purchasing Managers' Index (PMI), a leading health indicator of the manufacturing sector, points tohigher production activity The index came in at 50.3 in August, marking the 12th straight month of

expansion in the manufacturing sector Additionally, given that Vietnam remains a low-cost manufacturingbase for foreign firms, the country has continued to attract fervent foreign investment interest The

manufacturing sector received 68.4% of total registered capital, amounting to USD7.0bn in the first eightmonths of 2014

Exports To Ride On A Recovering US Economy

Continued strong export growth will also be another driver of strong economic growth Given the country'sexport orientation to the US, which received 17.3% of total Vietnamese outbound shipments in 2013, arecovering US economy will lend strength to Vietnam's exports

Robust Export Performance

Vietnam - Exports, % chg y-o-y (3mma)

Source: BMI, GSO

Risk To Outlook

The largest risk to our constructive outlook for the Vietnamese economy comes from the potential for anescalation of the country's ongoing maritime dispute with China in the South China Sea, which wouldfurther strain political relations between both countries This could spur an economic backlash by China,posing significant downside risks to our real GDP growth forecast Indeed, China contributed a significant21.3% of foreign investment to Vietnam in 2013, while accounting for 11.6% of Vietnamese exports

Table: Economic Activity (Vietnam 2009-2018)

2009 2010 2011 2012 2013e 2014f 2015f 2016f 2017f 2018f

f = BMI forecast Source: National Sources/BMI

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/en/home

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 54 members, including 39 commercial banks, 2 joint-venture banks,

11 finance companies, and two other financial institutions

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 (February 2015), BMI

Company Profile

Agribank

SWOT Analysis

Strengths ■ Established as one of the largest state-owned commercial banks

■ Massive branch network, especially in rural Vietnam

■ Improved rating from Fitch in November 2014

■ Strong relationships with overseas lenders

■ State support

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

■ Series of scandals affects the bank's reputation

Opportunities ■ Attractive partner for any other financial institutions looking to cross-sell products to

the mass market in Vietnam

■ Expanded footprint into Cambodia

■ Posted a rise in net profit after tax and operating profit in 2012

■ Undergoing restructuring programme with the Vietnamese government

■ Government-backed IPO planned

■ Lending activity up by 8.2% in 2012

Threats ■ Perceived exposure to the downturn in global trade

■ Credit rationing by state will limit growth

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

Company Overview Established in 1988, the Vietnam Bank for Agriculture and Rural Development (Agribank)

is a leading commercial bank and plays a decisive role in capital investment in

developing the agricultural and rural economy, as well as other fields of the Vietnameseeconomy In 2011, the bank became a limited company, 100% owned by the state In

2014, Agribank was the only bank to feature in the top 10 largest enterprises inVietnam

As of December 2013, the bank's operating network in Vietnam consists of 2,300branches and transaction offices nationwide, staff by a personnel team of 40,000.Agribank also maintains foreign partners, and has 1,026 correspondent banks in

92 countries and territories around the world The bank has eight domestic subsidiaries,specialising in business activities such as leasing, trading and tourism, securities, andbank insurance It is extended its reach to Cambodia in 2010 by opening its firstoverseas branch in the kingdom

Agribank has completed a long-term financing agreement with the state oil companyPetrovietnam to provide financing at lower interest rates for the company to developVietnamese oil resources This could help Agribank establish more long-termrelationships with major businesses As part of a revised strategy agreed in 2012,Agribank will remain state-owned but play a more prominent social policy role insupport of the country's rural and agricultural communities Central bank governorNguyen Van Binh stipulated that between 75% and 80% of Agribank's annual lendingshould go to Vietnamese farmers in support of the country's key export crops, coffeeand rice

The bank has been plagued by a series of high-profile embezzlement scandals in recentyears In the latest case, a former Agribank chairman was arrested in September 2014over an alleged USD4.4mn scam In January 2013, Vietnamese federal police said theyhad arrested former general director of the state-owned Agribank, Pham Thanh Tan, for

"irresponsibility causing serious consequences." In another case, three senioremployees at Agribank's Leasing arm were sentenced to death, and another four givenlife in prison for embezzlement and corruption

In 2014, Agribank began to implement a restructuring plan in order to eliminate badpractices, which have led to high levels of bad debt

Corporate

Highlights

As of the end of 2012 (latest available data) the bank's total loan portfolio wasVND480trn, increasing by 8.2% y-o-y; loans to agriculture and rural sector increased bymore than 13% and accounted for almost 70% of the total loan portfolio Total assetsclimbed to 617.9trn at end-2013, up 10% from VND560.0trn a year earlier

As of the end of 2012, the bank's net profit after tax was at VND2,479,398mn, up fromVND2,279,872mn in 2011 During the same time period, operating profit climbed fromVND3,308,670mn at the end of 2011 to VND3,378,927mn by December 31 2012

The NPL ratio stood at 5.8% at end-2012, down slightly from 6.1% a year earlier

In November 2014, Fitch raised Agribank's long-term IDR to 'B+', from 'B', following animprovement in Vietnam's sovereign rating.

Company Data ■ Website: www.agribank.com.vn

■ Status: State-Owned Commercial Bank

Table: Balance Sheet (VNDmn)

Source: Vietnam bank for Agriculture and Rural Development (Agribank), Bloomberg

Table: Key Ratios (%)

Source: Vietnam bank for Agriculture and Rural Development (Agribank), Bloomberg

Bank for Foreign Trade of Vietnam (Vietcombank)

SWOT Analysis

Strengths ■ Largest correspondent network among Vietnamese banks

■ Clear competence in external trade

■ Strong market position and continuing to grow

■ Adequate capital ratios

■ Rise in total loans in 2014

Weaknesses ■ Market capitalisation of the bank decreased during 2013 full-year

■ Lack of transparency

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

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

in 2012

■ Possible merger with Saigonbank in 2015

■ Profit growth ahead of target in 2014

■ Falling NPL ration in 2014

Threats ■ Tighter monetary policy to tame economic growth

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

■ Fall in CAR in 2013

Company Overview Established in 1963 as a state-owned commercial bank, Vietcombank is the oldest

commercial bank for external affairs in Vietnam and was the first bank in the country tohave a centralised capital management structure It describes itself as an 'interbankforex payment centre for over 100 domestic banks and foreign banks' branches