Vietnam commercial banking report q2 2016

19 Table: Asia Commercial Banking Risk/Reward Index.. Declining As VAMC Removes Bad Debts From Banks' Balance SheetVietnam - Non-Performing Loans, % of Total Loans Source: BMI, SBV Near-

Q2 2016 www.bmiresearch.com

VIETNAM

COMMERCIAL BANKING REPORT

INCLUDES 5-YEAR FORECASTS TO 2020

INCLUDES 5-YEAR FORECASTS TO 2020

Part of BMI’s Industry Report & Forecasts Series

Published by: BMI Research

Copy deadline: February 2016

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DISCLAIMER

BMI Industry View 7

Table: Commercial Banking Sector Indicators 7

Table: Commercial Banking Sector Key Ratios, July 2015 7

Table: Annual Growth Rate Projections 2015-2020 (%) 7

Table: Ranking Out Of 75 Countries Reviewed In 2016 8

Table: Commercial Banking Sector Indicators, 2013-2020 8

SWOT 9

Commercial Banking 9

Political 10

Economic 11

Operational Risk 13

Industry Forecast 15

Industry Trend Analysis 15

Commercial Banking Risk/Reward Index 19

Asia Commercial Banking Risk/Reward Index 19

Table: Asia Commercial Banking Risk/Reward Index 20

Market Overview 21

Asia Commercial Banking Outlook 21

Table: Banks' Bond Portfolios, 2014 21

Table: Comparison Of Loan/Deposit & Loan/Asset & Loan/GDP Ratios, 2016 21

Table: Comparison Of Total Assets & Client Loans & Client Deposits (USDbn) 22

Table: Comparison Of USD Per Capita Deposits, 2016 23

Economic Analysis 24

Table: Economic Activity (Vietnam 2010-2019) 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 (%) 33

Bank for Foreign Trade of Vietnam (Vietcombank) 34

Table: Stock Market Indicator 36

Table: Balance Sheet (VNDmn) 37

Table: Balance Sheet (USDmn) 37

Table: Key Ratios (%) 37

Eximbank 38

Table: Stock Market Indicators 40

Table: Balance Sheet (VNDmn) 40

Table: Balance Sheet (USDmn) 40

Table: Key Ratios (%) 41

Sacombank 42

Table: Stock Market Indicators 44

Table: Balance Sheet (VNDmn) 44

Table: Balance Sheet (USDmn) 44

Table: Key Ratios (%) 45

VietinBank 46

Table: Stock Market Indicators 48

Table: Balance Sheet (VNDmn) 48

Table: Balance Sheet (USDmn) 49

Table: Key Ratios (%) 49

Regional Overview 50

Asia Overview 50

Global Industry Overview 56

Global Commercial Banking Overview 56

Regional Outlooks 56

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

July 2014,

VNDbn 4,768,792.0 3,582,140.0 763,184.0 423,468.0 4,768,792.0 651,755.0 4,121,214.0 -4,177.0 July 2015,

Source: BMI; Central banks; Regulators

Table: Commercial Banking Sector Key Ratios, July 2015

na = not available Source: BMI; Central banks; Regulators

Table: Annual Growth Rate Projections 2015-2020 (%)

Source: BMI; Central banks; Regulators

Table: Ranking Out Of 75 Countries Reviewed In 2016

Source: BMI; Central banks; Regulators

Table: Commercial Banking Sector Indicators, 2013-2020

Total assets,

VNDbn 4,498,815.9 5,209,740.0 5,887,006.2 6,593,446.9 7,318,726.1 8,123,786.0 8,963,243.9 9,869,527.4 Total assets,

Client loans,

VNDbn 3,469,680.0 3,949,680.0 4,384,144.8 4,822,559.3 5,256,589.6 5,729,682.7 6,207,156.2 6,710,625.6 Client loans,

Client

deposits,

VNDbn 3,388,500.7 3,693,465.8 3,988,943.0 4,268,169.1 4,524,259.2 4,795,714.8 5,051,486.2 5,309,673.3 Client

deposits,

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 gradually play a lesser role going forward, and the risksassociated with state-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 under-banked 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 coming years The one-partysystem is generally conducive to short-term political stability

■ 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

SWOT Analysis

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

GDP growth averaging 6.5% annually between 2000 and 2014

■ 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

Opportunities ■ WTO membership and the ASEAN economic integration in 2015 should give Vietnam

greater access to both foreign markets and capital, while making Vietnameseenterprises 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

• Growing levels of foreign investment encourage further trade and spin-off industries

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

Weaknesses ■ High number of incidences of industrial action

• Underdeveloped rail capacity overburdens the road network

• An underdeveloped banking sector decreases the options for keeping money in thestate

• Vietnam's military forces are only a quarter the size of China's, meaning that Beijingwould probably prevail in any naval battle over maritime disputes in the South ChinaSea

Opportunities ■ Explosive growth in demand for tertiary education will increase the number of highly

skilled graduates in the medium term

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

of port facilities will provide adequate capacity

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

Threats ■ Dysfunctional labour-management relations increase the risk of disruption and strike

action

SWOT Analysis - Continued

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

• 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

Industry Trend Analysis

BMI View: Ongoing reforms by Vietnamese policymakers against a backdrop of robust economic growth

will lead to gradual improvements in the banking sector stability and loan growth over the near-term However, the monetary authority will require a more comprehensive plan to address long-standing

structural issues, such as unprofitable lending practices (particularly to SOEs), in order to ensure financial stability over the longer term.

Since the global financial crisis, the Vietnamese banking sector has been saddled by poor asset quality withunofficial estimates of the non-performing loan (NPL) ratio standing above 15.0% in 2014 Recognising thesystemic and economic risks that could arise from a banking crisis, Vietnamese policymakers have

introduced several reform measures in recent years to shore up the domestic banking system Notably, thegovernment has been trying to reform the industry by pushing for mergers of smaller and weaker banks, andtaking non-performing loans (NPLs) off banks' balance sheets by setting up the Vietnam Asset ManagementCompany (VAMC), thereby affording domestic lenders sufficient time to work off their bad loans

Although these policies are steps in the right direction, we believe that the roots of Vietnam's bad debtproblems have not been properly addressed, and the government appears to be kicking the can down theroad

Declining As VAMC Removes Bad Debts From Banks' Balance Sheet

Vietnam - Non-Performing Loans, % of Total Loans

Source: BMI, SBV

Near-Term Improvements In NPLs

Vietnam's banking sector has begun to show signs of improvement in its asset quality, with the performing loan ratio on a broad declining trend based on official data Over the short-to-medium term, webelieve that the government's effort to buy time for banks to build up sufficient loan loss provisions and toimprove liquidity in the debt market will likely be positive for financial stability On the back of a directiveissued by the State Bank of Vietnam(SBV) for all financial institutions to reduce their non-perform loans(NPL) ratio to below the target of 3.0% by end-September 2015, banks have successfully handed over theirbad debts to the VAMC The latest available official data which showed that the NPL ratio had declined to2.9% in September 2015 (from 3.7% in June 2015) is a positive sign in this regard

non-The VAMC was set up in 2013 with the objective of swapping NPLs (valued at cost) from banks for aspecial type of bond issued by the VAMC These bonds can then be used as collateral by the commercialbanks to borrow from the central bank; but the institutions still own those bad loans and have to redeemthem back after five years The operation will essentially provide temporary liquidity to financial

institutions and remove the NPL from their balance sheet for a period of time, thereby buying some time forbanks to increase their loan loss provisions.

In 2015, the operation of the VAMC was further expanded, and banks are now allowed a 10-year bufferbefore they are required to redeem back their bad debts In addition to the existing scheme, the VAMC hasalso been allowed to issue 'ordinary bonds' in exchange for non-performing loans at market value ratherthan at cost This will allow for greater liquidity in the debt market as these bonds can potentially be tradedamong financial institutions, not just between the commercial banks and the central bank

Larger Capital Bases To Provide Stronger Buffers

We also expect the Vietnamese banking sector to continue to strengthen over the near-term on the back ofongoing efforts by domestic banks to increase their charter capital bases Indeed, domestic banks are eitherseeking to raise more funds, or join in the ongoing wave of bank mergers in the country that may lead to alarger capital base in the merged entity As of November, 2015, the sector's total charter capital rose 5.6%y-o-y to VND459.9trn (USD20.6bn) based on the latest official data, while the capital adequacy ratio of theoverall sector stood at a robust 13.0%, underscoring adequate capitalisation of Vietnam's banking system

Picking Up Again

Vietnam - Domestic Credit Growth, %

Source: BMI, SBV

Kicking The Can Down The Road

Despite all the positive developments in the banking sector, we believe that there are two underlying issuessurrounding Vietnam's bad debt problems that have not been adequately addressed These problems couldresurface over time and pose downside risk to financial stability over the longer term Firstly, the decliningofficial NPL figure largely reflects the shuffling of bad debts from the banks' balance sheets to VAMC,while policymakers continue to set high credit growth targets with little regard for prudence Secondly, bankmergers can only solve the short-term problems of insolvent banks The long-term viability of the bankingsector will largely depend on the quality and profitability of its customers In Vietnam's case, these

customers are largely state-owned enterprises (SOEs), and attempts to reform and privatise these

conglomerates (to improve efficiency and profitability) have not been particularly successful

Commercial Banking Risk/Reward Index

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 RRIs, 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 those opportunities Theoverall 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 (ie, how regulations affect the development of the

sector, 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

Market Overview

Asia Commercial Banking Outlook

Table: Banks' Bond Portfolios, 2014

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

Table: Comparison Of Loan/Deposit & Loan/Asset & Loan/GDP Ratios, 2016

Loan/Deposit

Comparison Of Loan/Deposit & Loan/Asset & Loan/GDP Ratios, 2016 - 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, 2016

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

Economic Analysis

BMI View: The Vietnamese economy will remain a regional outperformer over the coming years on the

back of strong foreign direct investment (FDI) inflows and export resilience As such, we forecast Vietnam's real GDP growth to accelerate to 6.6% in 2016, from an estimated 6.4% in 2015.

Our long-held bullish outlook for the Vietnamese economy has continued to play out well According to thelatest data from the General Statistics Office, Vietnam's real GDP growth for the first three quarters of 2015came in at an impressive 6.5% y-o-y, beating the Bloomberg consensus estimate of 6.4% Continued exportresilience despite cooling regional demand, sustained foreign capital inflows to the country, and a recentstrong pick-up in domestic credit growth are some of the key drivers that will keep the economy on a stronggrowth path We therefore expect Vietnam to remain a regional outperformer Accordingly, we are

maintaining our forecast for the country's real GDP to grow by 6.4% in 2015, before accelerating to 6.6% in2016

US And EU Markets Provide A Buffer For Exports Amid Regional Headwinds

The strong economic showing is due in part to a resilient export performance Despite facing a challengingregional environment, Vietnamese exports managed to expand at a respectable clip of 9.6% y-o-y for thefirst nine months of 2015, which marked only a slight moderation from previous year's double-digit growthperformance This owes to Vietnam's high exposure to the US and EU markets, which has provided acushion against dwindling regional demand Both the US and EU markets account for around 40% ofVietnamese exports

Vietnam Remains Attractive To Foreign Firms

Vietnam has also remained an attractive investment destination for foreign firms, and its ability to continueluring capital inflows will contribute greatly to its ongoing economic development Based on the latestofficial data, estimated realised foreign direct investment (FDI) inflows came in at USD8.5bn for the firsteight months of 2015, representing a 7.6% y-o-y increase over the same period in 2014 In particular, weexpect the bulk of foreign capital to continue flowing into the manufacturing sector, given the relatively lowwage rates and generous tax incentives that Vietnam has to offer, which will greatly reduce the cost ofproduction for foreign manufacturers Moreover, the relatively low political risk in the country is alsogenerally conducive for businesses, although we note that corruption remains an issue, as with most

emerging countries in the region With foreign firms like South Korean giant Samsung making rapid

inroads to the country in recent years, we expect many more to follow suit There is thus the potential for astrong investment pipeline in Vietnam.

Entry Of Foreign Firms To Sustain Output Growth

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

Source: Bloomberg, BMI

Sustained Output Growth On The Cards

High frequency economic indicators are also pointing to sustained production growth over the comingquarters Industrial production expanded by 10.1% y-o-y in September, reflecting the underlying

fundamental strength of the manufacturing sector Meanwhile, the purchasing managers' index (PMI) came

in at 51.3 in August, marking 24 consecutive months of expansion A PMI reading of more than 50

indicates an expansion in manufacturing output

Easing Of Foreign Property Ownership Rule Will Bring In More Investment Inflows

In addition, the real estate market is also set to perform well on the back of the government's relaxation ofthe foreign property ownership rule in July 1, 2015 Several real estate developers such as Singapore-based

CapitaLand and Mapletree are already expanding their operations into the Vietnamese market in a bid to

tap on rising property investment and development opportunities

Credit Uptick Reflects Robust Domestic Demand Conditions

Vietnam - Credit Growth, % chg y-o-y

Source: BMI,SBV

Strong Credit Uptick Reflects Robust Private Domestic Demand

Further informing our positive outlook for the Vietnamese economy is the recent strong pick-up in domesticcredit Credit growth accelerated to 18.7% y-o-y in June, from 18.3% in the previous month, reflectingstrong underlying private consumption and investment demand Meanwhile, the retail sales growth figurefor the first nine months of 2015 came in at a healthy clip of 9.8% y-o-y

Table: Economic Activity (Vietnam 2010-2019)

GDP per capita, USD 1,267 1,496 1,712 1,859 2,007 2,038 2,121 2,358 2,635 2,940

e/f = BMI estimate/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)

www.sbv.gov.vn/en/home

The State Bank of Vietnam (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 'two-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, the Joint Stock Commercial Bank for Investment and Development of Vietnam, 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.

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 Vietnam Bankers Association (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

The Vietnamese banking association currently has 53 members, including 39 commercial banks, two jointventure 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 (February 2016), 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

■ Bringing down bad debts

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 indeveloping 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

In 2015, the bank's operating network in Vietnam consists of 2,252 branches andtransaction offices nationwide, staffed by a personnel team of nearly 40,000 It hasaround 10mn households and 33,000 enterprises as customers Agribank alsomaintains foreign partners, and has 1,034 correspondent banks in 95 countries andterritories around the world The bank has nine subsidiaries, specialising in businessactivities such as leasing, trading and tourism, securities, and bank insurance It isextended its reach to Cambodia in 2010 by opening its first overseas branch in thekingdom

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

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 senior

employees at Agribank's leasing arm were sentenced to death, and another four givenlife in prison for embezzlement and corruption In January 2016, 13 ex-bank officials,including Pham Thanh Tan, were given prison sentences for corruption

In 2014, Agribank began to implement a restructuring plan in order to eliminate badpractices, which have led to high levels of bad debt, and by the end of 2015 claimed tohave slashed the amount of toxic debt on its books

Corporate

Highlights

As of the end of 2012 (latest available data) the bank's total loan portfolio wasVND480trn, increasing by 8.2% year-on-year; loans to agriculture and rural sectorincreased by more than 13% and accounted for almost 70% of the total loan portfolio.Total assets climbed 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 It affirmed this rating in June 2015.

■ Status: State-Owned Commercial Bank

Table: Balance Sheet (VNDmn)

Source: Vietnam Bank for Agriculture and Rural Development (Agribank), Bloomberg, BMI Note: Data from 2008-2009 sourced from Bloomberg.

Table: Balance Sheet (USDmn)

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

Table: Key Ratios (%)

na = not available 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

■ Strong rise in total loans in 2015

Weaknesses ■ 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 amid banking sector consolidated

■ Profit growth ahead of target in 2015

■ Falling NPL ratio in 2015

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 2014

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' branchesoperating in Vietnam', and was the first commercial bank in the country to deal inforeign currencies

After more than half a century in operation, the bank has almost 14,000 employees,more than 400 branches/transaction offices/representative office/affiliates both inVietnam and abroad, including Head Office in Hanoi, one operation centre, one trainingcentre, 89 branches, and over 350 transaction offices all over the country The bankalso has three subsidiaries in Vietnam, two subsidiaries in other countries, onerepresentative office in Singapore and six joint ventures.

In addition, Vietcombank has also developed an Autobank system with 2,100 ATMs and49,500 Points of Sale nationwide The bank's operations are supported by a network ofmore than 1,800 correspondent banks in 155 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

In January 2015, the governor of the State Bank of Vietnam (SBV) said thatVietcombank would merge with Saigonbank as part of a restructuring in the sector.However, this has not yet materialised

Corporate

Highlights

Vietcombank posted preliminary gross profit of VND6.6trn in 2015, up 12% on 2014and above its own targets, according to a statement released by the bank in January2016

The bank said its loan portfolio grew by 24% y-o-y to reach VND400trn by end-2015.Meanwhile, its NPL ratio ended 2015 at 1.8%, down from 2.3% a year earlier

The bank's capital adequacy ratio at end-2014 (latest available data), stood at 11.6%,down from 13.1% a year earlier

Standard & Poor's, encouraged by the acquisition in 2012, argued that MizuhoCorporate Bank's involvement strengthened Vietcombank's capital position Theagency upgraded its outlook on the bank's long-term rating of 'B+' to 'stable' from'negative' in January 2012

In November 2015, Fitch published its long-term rating of 'B+' for Vietcombank, with astable outlook

198 Tran Quang KhaiHanoi

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: www.vietcombank.com.vn

Table: Stock Market Indicator

Market

Capitalisation

VND 57,159,506 42,941,737 63,033,742 62,106,775 85,014,146 116,994,390 106,867,313Market