Vietnam commercial banking report q4 2014

Table: Ranking Out Of 73 Countries Reviewed In 2014Source: BMI; Central banks; Regulators Table: Commercial Banking Sector Indicators, 2011-2018 e/f = estimate/forecast.. In addition,

Q4 2014 www.businessmonitor.com

VIETNAM

COMMERCIAL BANKING REPORT

INCLUDES 5-YEAR FORECASTS TO 2018

Report Q4 2014

INCLUDES 5-YEAR FORECASTS TO 2018

Part of BMI’s Industry Report & Forecasts Series

Published by: Business Monitor International

Copy deadline: August 2014

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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, 2011-2018 8

SWOT 9

Commercial Banking 9

Political 10

Economic 11

Business Environment 12

Industry Forecast 13

Ramping Up Reform Efforts 14

Accelerating Bad Debt Sales 15

Privatisation Drive To Reduce Bank Borrowing By SOEs 15

Strengthening Credit Assessment Mechanism 16

Risks To Outlook 16

Industry Risk Reward Ratings 17

Asia Commercial Banking Risk/Reward Ratings 17

Table: Asia Commercial Banking Risk/Reward Ratings 18

Market Overview 19

Asia Commercial Banking Outlook 19

Table: Banks' Bond Portfolios, 2013 19

Table: Comparison of Loan/Deposit & Loan/Asset & Loan/GDP ratios, 2014 19

Table: Comparison of Total Assets & Client Loans & Client Deposits (USDbn) 20

Table: Comparison of USD Per Capita Deposits, 2014 21

Macroeconomic Forecasts 22

Table: Foreign Direct Investment By Country Of Origin (Top Five) 26

Table: Vietnam - Economic Activity 27

Competitive Landscape 28

Market Structure 28

Protagonists 28

Table: Protagonists In Vietnam's Commercial Banking Sector 28

Definition Of The Commercial Banking Universe 28

List Of Banks 29

Table: Financial Institutions In Vietnam 29

Company Profile 31

Agribank 31

Table: Balance Sheet (VNDmn) 33

Table: Balance Sheet (USDmn) 33

Table: Key Ratios (%) 34

Bank for Foreign Trade of Vietnam (Vietcombank) 35

Table: Stock Market Indicator 37

Table: Balance Sheet (VNDmn) 37

Table: Balance Sheet (USDmn) 38

Table: Key Ratios (%) 38

Eximbank 39

Table: Stock Market Indicators 41

Table: Balance Sheet (VNDmn) 41

Table: Balance Sheet (USDmn) 42

Table: Key Ratios (%) 42

Sacombank 43

Table: Stock Market Indicators 45

Table: Balance Sheet (VNDmn) 45

Table: Balance Sheet (USDmn) 45

Table: Key Ratios (%) 46

VietinBank 47

Table: Stock Market Indicators 49

Table: Balance Sheet (VNDmn) 49

Table: Balance Sheet (USDmn) 50

Table: Key Ratios (%) 50

Regional Overview 51

Asia Overview 51

Global Industry Overview 55

Global Commercial Banking Outlook 55

Demographic Forecast 67

Table: Vietnam's Population By Age Group, 1990-2020 ('000) 68

Table: Vietnam's Population By Age Group, 1990-2020 (% of total) 69

Table: Vietnam's Key Population Ratios, 1990-2020 70

Table: Vietnam's Rural And Urban Population, 1990-2020 70

Methodology 71

Industry Forecast Methodology 71

Sector-Specific Methodology 72

Risk/Reward Ratings Methodology 73

Table: Commercial Banking Risk/Reward Rating Indicators 74

Table: Weighting Of Indicators 75

BMI Industry View

Table: Commercial Banking Sector Indicators

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

October 2012, VNDbn 3,688,076 2,938,250 355,697 394,129 3,688,076 583,666 2,861,204 243,206 October 2013, VNDbn 4,257,985 3,309,020 502,944 446,021 4,257,985 636,710 3,580,465 40,810

Source: BMI; Central banks; Regulators

Table: Commercial Banking Sector Key Ratios, October 2013

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

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: Vietnamese banks will continue to grapple with structural weakness, impeding them from

tapping into regional growth over the coming years, as reform efforts by the government have seen little progress thus far That said, we are optimistic that recent efforts by the government to accelerate the pace

of reform will likely place the banking sector on a path of gradual recovery.

Vietnam's banking sector will face stiff competition from other stronger regional banks, such as those fromSingapore, Malaysia and Thailand, amid ongoing economic integration within ASEAN to create a singlefree market over the coming years Indeed, owing to years of pervasive weakness in the quality of bankingassets and a slowdown in domestic demand, Vietnam's banking sector growth has decelerated in recentyears As shown in the accompanying chart, total banking assets as a share of GDP have retreated steadily

since peaking at 136.9% in December 2010 In addition, Joint Stock Commercial Bank for Foreign

Trade of Vietnam, the heaviest weighted bank (6.6%) in the Vietnam Ho Chi Minh Index (VNINDEX),

has seen its earnings on a multi-year downtrend The banking sector's capital base has also suffered fromsignificant bad debts, thereby placing banks in a very vulnerable position to negative shocks in the

economy While the Vietnamese government has implemented financial reforms over recent years tostrengthen the banking sector, progress has been rather slow The sector will therefore likely continue tograpple with structural weakness, impeding it from tapping into stronger regional growth over the comingyears More time will be required for the government to improve banking governance, loan supervision andbanks' debt recovery mechanism

Slowdown In Banking Sector Growth

Vietnam - Total Banking Assets, VNDtrn (LHS) & % Of GDP

Source: BMI, IMF

Ramping Up Reform Efforts

The pressing issue for the government is to resolve the high level of bad debts in the banking sector Recentefforts by the government to ramp up the pace of reform suggest that continued strengthening of the

banking sector remains very much on the cards We are optimistic that this will help banks to recovergradually over the coming years, and are maintaining our forecast for the banking sector (as measured bytotal assets) to grow at an annual average growth rate of 12.2% between the period from 2013 to 2018,which will see its total assets as a share of GDP rise from 124.6% in 2013 to 126.8% in 2018

Asset Growth To Moderate

Vietnam - Total Banking Assets, VNDtrn (LHS) & % chg y-o-y

e/f = BMI estimate/forecast Sources: BMI, IMF

Accelerating Bad Debt Sales

The Vietnam Asset Management Company (VAMC), a vehicle created by the government in 2013 to takesour loans off banks' balance sheets, has planned to increase its purchase of bad debts by about

VND20-50trn by end-2014, after having reportedly bought VND50trn (USD2.4bn) worth of debts thus far

For the VAMC to take on more bad debts from the banking system, it is crucial that the company is able tosell these debts thereafter However, the VAMC has so far managed to sell only less than 2.0% of debts that

it has bought In order to accelerate bad debt sales, the Vietnamese government is seeking to changeexisting rules to allow the VAMC to take on losses by selling those bad debts at a low price so as to attractgreater foreign interest Positive developments on this front will help to further relieve the burden of baddebts on banks, opening up more room for them to undergo restructuring In addition, the government raisedthe foreign bank ownership cap for strategic investors from 15% to 20%

Privatisation Drive To Reduce Bank Borrowing By SOEs

The government has also remained committed to privatising state-owned enterprises (SOEs) in a bid toimprove operational efficiency and their bottom lines This would reduce their reliance on bank borrowing

to finance losses and alleviate the banking sector from sustaining high level of bad debts Indeed, the SOEsmake up about 60% of bank loans and are responsible for more than half of the country's non-performingloans, according to Deputy Finance Minister Truong Chi Trung We believe that ongoing efforts by thegovernment to revamp the SOEs will likely gain traction over the coming quarters Indeed, the governmenthas planned to let these state companies divest their investment in non-core businesses at a loss by allowingthem to sell their stakes below book values It has also aimed to privatise 432 SOEs by end-2015.

Strengthening Credit Assessment Mechanism

In addition, the government has sought to improve banks' ability to conduct proper credit assessments ofprospective borrowers This is a step in the right direction in ensuring that non-performing loans will bekept in check At present, the government is putting in place procedures for banks to extract credit

information of prospective borrowers from official institutions such as the Vietnam National Credit

Information Centre and other credit rating agencies Meanwhile, it continues to strengthen existing

internal credit rating systems in the banking sector

Risks To Outlook

While we are optimistic that reform efforts by the government will place the banking sector on a path ofgradual recovery over the coming years, we highlight two key risks to our outlook The implementation ofstricter debt classification standards, which has been delayed from June 2014 to April 2015, could result in aspike in non-performing loans, weighing on banking sector growth and profitability The long-standingmaritime dispute between China and Vietnam over their sovereign claims to parts of the South China Sea,which has intensified over recent months, also poses downside risks to Vietnam's economy over the comingyears

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

Market Overview

Asia Commercial Banking Outlook

Table: Banks' Bond Portfolios, 2013

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

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

Loan/Deposit

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

Loan/Deposit

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, 2014

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

Macroeconomic Forecasts

BMI View: Latest GDP figures show that the Vietnamese economy grew by 5.0% y-o-y in Q114, and we

believe that our 2014 real GDP growth forecast of 5.9% remains in sight Indeed, we believe that increased macroeconomic stability, combined with pro-growth policies will help the economy accelerate from 2013 levels Key downside risks to this view include a faster-than-anticipated slowdown in China as well as the stalling of the country's reform drive.

Latest data released by the General Statistics office of Vietnam (GSO) showed that real GDP accelerated by5.0% year-on-year (y-o-y) in Q114, slightly faster than the 4.9% print registered in the Q113 Although itshowed a deceleration from 6.0% recorded in Q413, we believe that the economy is still on track to hit our

2014 growth forecast of 5.9% in 2014 This would mark a slight acceleration from the 5.4% registered in

2013, and is above estimates by the Asian Development Bank, which forecasts real GDP to reach 5.6% in

2014 We believe that the economy will be driven by a strengthening of private consumption, continuedforeign direct investment into key areas of the economy, a more robust external sector, and a rebound inmanufacturing activity over the coming quarters That said, trend growth for the Vietnamese economy willaverage a slower 6.2% over the next decade, compared to 6.5% recorded in the past 10 years

Still-Strong Growth

Vietnam - Real GDP Growth, (% chg y-o-y)

Source: GSO, BMI

A breakdown of the data show that all sectors of the economy witnessed an acceleration in growth over thequarter: agriculture, forestry and fisheries, which accounts for approximately 13% of GDP grew by 2.4% y-o-y in Q114, while the industrial and construction sectors, which account for 40% of GDP expanded by4.7% y-o-y Importantly, the services sector which accounts for the lion's share of the economy at 47% ofGDP, accelerated by a stellar 6.0% in Q114, contributing a whopping 2.8 percentage points of the overallgrowth figure Going forward, we expect that the manufacturing, construction and service sectors willcontinue to do well on the back of policy driven efforts to stimulate growth

Services Taking The Lead

Vietnam - Breakdown of GDP By Component (% chg y-o-y) & Share % (RHS)

Source: GSO, BMI

Government Policy To Ensure Growth Remains Strong

We believe that government policies aimed at promoting balanced economic growth, improving the stability

of the banking system, diversifying exports, attracting foreign investment and attracting investment ininfrastructure bode well for the economic outlook In terms of promoting balanced growth, we note that theState Bank of Vietnam (SBV) has continued to rein in inflation, which, at 4.8% y-o-y in the first quarter,remains near record lows and well below the central bank's target of around 7.0% The slight deceleration ineconomic activity in Q114, combined with the weak inflation data over the period prompted the SBV to cut

its refinancing rate from 7.0% to 6.5% in March Although we do not expect further cuts this year (see:

Downside Risks To Interest Rate Forecast, March 21), the central bank has adopted a dovish tone, and

could step in again should it feel that the economy needs more stimulus With regard to banking sectorreform, the SBV continues to push forward with reforms aimed at improving the stability of the sector andincreasing credit to the economy Two key policies are the reduction in non-performing loans, which

according to Moody's, stands at approximately 15%, as well as offloading bad debt off of bank's balance

sheets and on to the newly created Vietnam Asset Management Company (VAMC) By the end of 2013 theVAMC had purchased approximately US$1.9bn worth of bad debt, and it aims to increase the pace ofpurchases over the coming months Combined, these policies should help stimulate credit growth over thecoming quarters, which will help underpin broader economic activity

External Sector To Boost Growth

Vietnam - Trade Balance (US$mn) & Three-Month Moving Average

Source: GSO, BMI

External Sector To Provide Tailwind

We expect the external sector (exports and foreign investment) to provide a tailwind to economic activity inthe coming quarters From a trade perspective, exports rose by 14.1% y-o-y in the first quarter, whichhelped bring the trade surplus to US1.0$bn for the first three months of the year and we expect this trend toremain in place Indeed, the Vietnamese government has been making substantial efforts to promote tradeand investment ties with other countries, and we believe it will help underpin exports over the comingmonths A case in point was the fourth round of negotiations between Vietnam and South Korea for abilateral free-trade agreement which took place in March, and officials are looking to conclude negotiations

by the end of 2014 Moreover, Vietnam has been forging very strong trade and investment ties with Japan inorder to attract funding and expertise to invest and develop the country's infrastructure and manufacturingsectors

Table: Foreign Direct Investment By Country Of Origin (Top Five)

Risks To Outlook

Although we believe that the Vietnamese economy is on track to hit our 5.9% growth target, we see

downside risks to this view First, we still forecast an impending slowdown in China, which would weigh

on regional growth in general Second, public sector capital investment and spending was flat y-o-y in Q114and capital investment of the state budget actually contracted by 2.3% y-o-y over the period While we donot see this as a large risk, if public spending were to lag, it could act as a drag on headline growth Lastly,

we highlight that the pace of reforms will be crucial to sustaining economic growth in 2014 and beyond.Failure by the government to restructure SOE's and provide a framework for foreign investors to participate

in the equitisation of these companies in a timely manner could weigh on investment and growth

Table: Vietnam - Economic Activity

Nominal

GDP,

VNDbn 3 1,809,149 2,157,829 2,779,880 3,245,419 3,584,261 4,012,848 4,494,845 5,033,220 5,616,366 6,269,265 Nominal

Notes: e BMI estimates f BMI forecasts 1 at 1994 prices; 2 Urban Area Only Sources: 3 Asian Development Bank,

General Statistics Office; 4 World Bank/UN/BMI; 5 General Statistics Office; 6 General Statistics Office/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 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

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

■ Strong relationships with overseas lenders

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

■ NPL ratio continued on a downward trend (albeit under more control than in 2011)

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

the mass market in Vietnam

■ Expanding footprint into Cambodia

■ Possible listing in the long term

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

■ Undergoing three-year restructuring programme with the Vietnamese government

■ Government-backed IPO planned for before the end of 2015

■ Lending activity up by 8.2% in 2012

Threats ■ Perceived exposure to the downturn in global trade

■ Credit rationing by state will limit growth

■ Series of embezzlement scandals have damaged the bank's reputation

■ 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 indeveloping the agricultural and rural economy, as well as other fields of the Vietnameseeconomy As of October 2013, the leading role of Agribank was confirmed by totalassets of VND671,846bn, total fund resource of VND593,648bn, and total equity ofVND29,605bn As of the same date, total outstanding loans stood at VND523,088bn.The bank's operating network in Vietnam consists of 2,400 branches and transactionoffices nationwide, staff by a personnel team of 40,000 Agribank also maintains foreignpartners, and has relationships with 1,033 banks in 92 countries and territories in theworld It is currently the country's largest bank by assets and extended its reach toCambodia in 2010 by opening its first overseas branch in the kingdom Agribank hascompleted a long-term financing agreement with the state oil company Petrovietnam toprovide financing at lower interest rates for the company to develop Vietnamese oilresources This could help Agribank establish more long-term relationships with majorbusinesses

Right after the revision in the Vietnam sovereign rating on January 23 2014, FitchRatings continued to make the same move with Agribank As announced on 24January, Fitch has affirmed the Long-Term Issuer Default Ratings (IDRs) on Agribank at

B with improved rating outlook from "stable" to "positive" Earlier, Fitch maintained a Brating with a stable outlook for Agribank in July 2013

Corporate

Highlights

As of the end of 2012 (latest available data) the bank's total loan portfolio was overVND480trn, 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 The businesssafety ratios were guaranteed, NPL ratio was put under control on a downward trendduring 2012 too

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

Nguyen Ngoc Bao said in early-February 2012 that the bank had agreed an extendedrestructuring plan with the Vietnamese government to be implemented over a period ofthree to four years As part of the revised strategy, Agribank will remain state-owned butplay a more prominent social policy role in support of the country's rural and agriculturalcommunities Central bank governor Nguyen Van Binh stipulated that between 75%and 80% of Agribank's annual lending should go to Vietnamese farmers in support ofthe country's key export crops, coffee and rice Bao also confirmed that the bank'scapital adequacy ratio (CAR) rose from 6.4% in 2010 to 8% in 2011 and estimated thatthe Agribank's CAR could reach 9% in 2012 with the aid of a capital injection from theState Bank of Vietnam to boost its charter capital by VND30trn

Meanwhile in December 2012, the bank announced that its bad debt ratio had reduced

to around 4% from 6.1% at the beginning of the year Bao has suggested that this ratiocould drop to as little as 3% between 2015 and 2020, depending on the bank achievingstrong credit growth

In January 2013, Vietnamese federal police said they had arrested former generaldirector of the state-owned Agribank, Pham Thanh Tan, for "irresponsibility causingserious consequences." The news comes on the back of a series discoveries ofmassive embezzlements by senior employees, mostly to finance gambling habits InNovember 2012, the Ho Chi Minh City police arrested three senior executives forstealing USD960,000 from the bank, while city prosecutors charged four others in aUSD5.33mn scam Another executive was arrested in the city in October for allegedlystealing USD1mn In addition, in July 2012 a court in Binh Dinh Province handed a lifesentence to a teller for stealing nearly USD1mn

■ Status: State-Owned Commercial Bank

Table: Balance Sheet (VNDmn)

Total Assets 238,495,024 321,444,128 400,485,183 480,937,045 n.a 556,269,883 614,946,541 Loans & Mortgages 181,252,960 246,188,336 288,940,827 361,739,747 n.a n.a n.a Total Deposits 160,396,528 233,638,848 299,954,030 331,893,865 n.a 406,677,306 502,012,284 Total Shareholders'

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 ■ Minority owner Mizuho has boosted bank's profile

■ Largest correspondent network among Vietnamese banks

■ Clear competence in external trade

■ Strong market position

■ Adequate capital ratios

■ Rise in both total loans and deposits during 2013

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

■ 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

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, 1

representative 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 (USD559.04mn) 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

VND267,863,4040 Similarly, total deposits rose to VND332,245,598mn fromVND285,381,722mn

The total risk based capital ratio of the bank stood at 14.8% as of the close of 2012(latest available data)

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

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

Share Price USD, %

Change,

Shares Outstanding

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

Table: Balance Sheet (VNDmn)

Total Assets 221,950,448 255,495,883 307,621,338 366,722,279 414,488,317 468,994,032 Loans & Mortgages 108,528,764 136,996,006 171,241,318 204,089,479 235,889,060 267,863,404 Total Deposits 157,067,019 169,427,776 204,755,949 227,016,854 285,381,722 332,245,598 Total Shareholders' Equity 13,893,437 16,819,641 20,856,761 28,781,930 41,698,765 42,535,692

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

Table: Balance Sheet (USDmn)

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

Table: Key Ratios (%)

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