BMI Vietnam Commercial Banking Report Q2 2014

8/21/2019 BMI Vietnam Commercial Banking Report Q2 2014

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Q2 2014www.businessmonitor.com

VIETNAMCOMMERCIAL BANKING REPORT

INCLUDES 5-YEAR FORECASTS TO 2018

ISSN 1758-454X Published by:Business Monitor International


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Vietnam Commercial Banking

Report Q2 2014INCLUDES 5-YEAR FORECASTS TO 2018

Part of BMI’s Industry Report & Forecasts Series

Published by: Business Monitor International

Copy deadline: February 2014

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CONTENTS

BMI Industry View ............................................................................................................... 7

Table: Commercial Banking Sector Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Table: Commercial Banking Sector Key Ratios, February 2013 .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

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

Table: Ranking Out Of 71 C ountries Reviewed In 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Table: Commercial Banking Sector Indicators, 2011-2018 .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

SWOT .................................................................................................................................... 9

Commercial Banking .................................................................................................................................. 9

Political ................................................................................................................................................. 10

Economic . .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 11

Business Environment .............................................................................................................................. 12

Industry Forecast .............................................................................................................. 13

Industry Risk Reward Ratings .......................................................................................... 18

Asia Commercial Banking Risk/Reward Ratings .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 18

Table: Asia C ommercial Banking Risk/Reward Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Market Overview ............................................................................................................... 20

Asia Commercial Banking Outlook .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. . 20

Table: Banks' Bond Portfolios, 2012 . . . .. . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . 20

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

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

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

Macroeconomic Forecast .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 22

Table: Vietnam - Economic Activity .. .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . 26

Competitive Landscape .................................................................................................... 27

Market Structure .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. . 27

Protagonist s .......................................................................................................................................... 27

Table: Protagonists In Vietnam's Commercial Banking Sector .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Definition Of The Commercial Banking Universe .. .. ..................................................................................... 27

List Of Banks ... .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 28Table: Financial Institutions In Vietnam . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . 28

Company Profile ................................................................................................................ 30

Bank for For eign Trade of Vietnam (Vietcombank) ........ ........ ........ ........ ........ ......... ........ ........ ........ ......... ...... 30

Table: Stock Market Indicator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Table: Balance Sheet (VNDmn) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Table: Balance Sheet (U S$mn) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Table: Key Ratios (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

VietinBank ............................................................................................................................................. 34

Table: Stock Market Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . 36

Vietnam Commercial Banking Report Q2 2014

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Table: Balance Sheet (US$mn) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Table: Key Ratios (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Agribank . .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. . 38

Table: Balance Sheet (VNDmn) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40Table: Balance Sheet (US$mn) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Table: Key Ratios (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Asia Commercial Bank .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. . 41

Table: Stock Market Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42



Table: Key Ratios (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Eximbank . .. .. .......................................................................................................................................... 44

Table: Stock M arket Indicat ors . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . 46



Table: Key Ratios (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Housing Development Commercial Joint Stock Bank (HDBank) ............ ......... ........ ........ ........ ......... ........ ........ . 48

Sacombank ............................................................................................................................................. 50

Table: Stock M arket Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . 52

Table: Balance Sheet (VNDmn) . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . 52


Table: Key Ratios (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . 53

Regional Overview ............................................................................................................ 54

Asia Commercial Banking Overview ... .... .... .... ... .... .... ... .... .... ...................................................................... 54

Global Industry Overview .................................................................................................. 59Global Commercial Banking Out look .......................................................................................................... 59

Regional Outlooks .................................................................................................................................. 60

Demographic Forecast ..................................................................................................... 64

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

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

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

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

Methodolog y ...................................................................................................................... 68

Industry Forecast Methodology ... .. ... ........................................................................................................ 68

Sector Speci fic Methodology .................................................................................................................... 69

Risk/Reward Ratings Methodology ........ ......... ........ ........ ........ ........ ..... ...................................................... 70

Sector Specific Methodology ........ ........ ......... ........ ........ ........ ........ ......... ........ ........ ........ ......... ........ ........ . 71

Table: Commercial Banking Risk/Reward Rating Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

Weighting ............................................................................................................................................. 72

Table: Weighting Of Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72




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BMI Industry View

Table: Commercial Banking Sector Indicators

DateTotal

assetsClientloans

Bondportfolio Other

Liabilitiesand capital Capital

Clientdeposits Other

February 2012, VNDbn 3,388,150 2,772,420 278,421 337,309 3,388,150 560,003 2,483,817 344,330

February 2013, VNDbn 3,930,528 3,070,100 497,352 363,076 3,930,528 588,974 3,169,132 172,422

% change y-o-y 16.0% 10.7% 78.6% 7.6% 16.0% 5.2% 27.6% -49.9%

February 2012, US$bn 162.6 133.1 13.4 16.2 162.6 26.9 119.2 16.5

February 2013, US$bn 187.6 146.5 23.7 17.3 187.6 28.1 151.2 8.2

% change y-o-y 15.3% 10.1% 77.6% 7.0% 15.3% 4.6% 26.9% -50.2%

Source: BMI; Central banks; Regulators

Table: Commercial Banking Sector Key Ratios, February 2013

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

96.88% 78.11% 92.69% 1,903.4 1,663.0Falling Falling Falling n.a. n.a.


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

Assets Loans Deposits

Annual Growth Rate 11 9 6

CAGR 12 10 7

Ranking 22 31 44





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Table: Ranking Out Of 71 Countries Reviewed In 2014

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

19 1 19Local currency asset growth Local currency loan growth Local currency deposit growth

19 23 28


Table: Commercial Banking Sector Indicators, 2011-2018

2011 2012 2013e 2014f 2015f 2016f 2017f 2018fTotal assets, VNDbn 3,437,893 3,917,557 4,466,015 5,091,257 5,753,121 6,443,495 7,152,280 7,939,030

Total assets, US$bn 163.4 188.0 212.7 247.6 283.0 320.6 359.4 403.0

Client loans, VNDbn 2,829,890 3,077,700 3,447,024 3,860,667 4,285,340 4,713,874 5,138,123 5,600,554

Client loans, US$bn 134.5 147.7 164.1 187.7 210.8 234.5 258.2 284.3

Client deposits, VNDbn 2,483,357 3,080,455 3,388,501 3,693,466 3,988,943 4,268,169 4,524,259 4,795,715

Client deposits, US$bn 118.1 147.8 161.4 179.6 196.2 212.3 227.3 243.4

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




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SWOT

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-owned

banks, which will help modernise the industry.

■ State-owned banks will play a lesser role going forward, and the risks associated 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 far behind international standards and the lack of

transparency 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 in

more sophisticated financial products and growth for the local asset management

industry.

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, undermining

confidence in the banking sector.




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Political

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 one-

party system is generally conducive to short-term political stability.

■ Relations with the US have witnessed a marked improvement, and Washington sees

Hanoi 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 tight

control 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 government

policies. This is opening up opportunities for more checks and balances within the

one-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 more

assertive 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.




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Economic

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 official

poverty 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 economyvulnerable to global economic uncertainties. The fiscal deficit is dominated by

substantial spending on social subsidies that could be difficult to withdraw.

■ The heavily-managed and weak currency reduces incentives to improve quality of

exports, 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 Vietnamese

enterprises stronger through increased competition.

■ The government will in spite of the current macroeconomic woes, continue to move

forward with market reforms, including privatisation of state-owned enterprises, and

liberalising the banking sector.

■ Urbanisation will continue to be a long-term growth driver. The UN forecasts the

urban population rising from 29% of the population to more than 50% by the early

2040s.

Threats ■

Inflation and deficit concerns have caused some investors to re-assess their hithertoupbeat view of Vietnam. If the government focuses too much on stimulating growth

and fails to root out inflationary pressure, it risks prolonging macroeconomic

instability, which could lead to a potential crisis.

■ Prolonged macroeconomic instability could prompt the authorities to put reforms on

hold as they struggle to stabilise the economy.




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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, and

beyond.

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 to

Transparency International's 2012 Corruption Perceptions Index, Vietnam ranks 123

out 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-tech

skills and know-how.

■ Vietnam is pressing ahead with the privatisation of state-owned enterprises and the

liberalisation of the banking sector. This should offer foreign investors new entry

points.

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 skills

levels could leave Vietnam a second-rate economy for an indefinite period.




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Industry Forecast

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

enterprises (SOEs), our assessment suggests that the impact of these policies will be highly positive for the

economy. We believe that reducing the role of SOEs should help to stem the rise in bad debts across the

banking sector. Meanwhile, lifting foreign ownership limits on public and private companies should also

enhance market liquidity, spur financial market development, and boost foreign direct investment (FDI).

The Vietnamese government is set to ramp up efforts to privatise more state-owned enterprises (SOEs) and

raise foreign ownership limits and voting rights on publicly listed companies, a move that is being viewed

as a litmus test for investors betting on policymakers to push ahead with free-market reforms over the

coming years. Prime Minister Nguyen Tan Dung is expected to approve a legislative amendment over the

coming weeks that will allow foreigners to own up to 60% equity in publicly listed companies, compared to

the current limit of 49%. Foreign voting rights will also be raised for private companies to match the

existing foreign ownership limit of 49% (we expect limits on private companies to be raised further over the

coming years). Meanwhile, the Ministry of Finance (MoF) appears to be on track to meet its target of

restructuring more than 300 SOEs by 2015 - Ho Chi Minh City officials have unveiled plans to privatise 31

SOEs, and divest or potentially liquidate another 20 SOEs over the next two years.




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A Shrinking Role For SOEs

Vietnam - Contribution To GDP By Ownership, pp

Source: BMI, General Statistics Office

Privatisation And Its Economic Impact

From our perspective, the economic benefits to be gained from speeding up privatisation of SOEs in

Vietnam are threefold. Firstly, we believe that SOEs are at the root of the country's macroeconomic

imbalances over the years. Vietnamese SOEs continue to dominate several industries such as shipping,

banking, and infrastructure, which combined account for an estimated 17% of employment and 50% of

corporate income tax revenue according to a recent report published by the International Monetary Fund

(IMF). Decades of preferential treatment, incentives, and subsidies from the government have not only

failed to foster companies that can compete effectively against foreign enterprises, but they have also

resulted in the rapid build-up of bad debt across the banking sector (SOEs are often given priority access to

loans under the government's directive). Thus, we believe that privatisation efforts could help to reduce the

risks of underperforming loans in the banking sector, which we believe is often the result of state-directed

lending.

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

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




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investment over the years. Consequently, we believe that renewed efforts to reduce the role of SOEs in the

economy should not only help to stem the rise in bad debts across the banking sector, but also free up

resources for investment in more productive areas such as infrastructure and technology.

Positive For Capital Market Development

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

Source: BMI, World Economic Forum

Lifting Ownership Limits Could Enhance Market Liquidity

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

Vietnam could stifle the development of its financial markets. Foreign investment funds are reportedly

facing growing difficulties in managing their portfolios (especially with regards to investing more funds in

large-cap stocks) as most of the 30 largest companies listed on the local bourse have already reached (or are

near) their foreign ownership limits. Thus, raising these limits should have a positive impact in terms of

enhancing liquidity in the stock market. We believe that increased foreign participation in the local bourse

should also help to spur the development of a derivatives market, which is crucial in attracting large

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




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also view this as a potential source of revenue for Vietnamese commercial banks that are looking to expand

into providing investment banking and other financial market services.

Booming Provinces

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


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

to drive foreign direct investment (FDI) into the country. Multi-national companies (MNCs) are investing

heavily in the government's push for more free-market reforms over the coming years, which are likely to

open up SOE-dominated industries to foreign competition. Indeed, we expect private sector investment

(largely driven by FDI inflows) to play a major role in driving Vietnam's long-term economic growth. We

forecast real GDP growth to average 6.2% over the coming decade. Commercial banks are likely to benefit

significantly from the expansion of banking services to meet the specific needs of foreign companies.




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Private Sector Investment To Lead The Way

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


Deeper Reforms Needed To Improve Accounting Standards And Transparency

Overall, we are optimistic that these structural reforms will help to strengthen the country's macroeconomic

fundamentals and competitiveness going forward. However, government efforts in improving corporate

governance, accounting standards, and transparency, remain inadequate in our view. We caution that the

lack of progress in this area could potentially undermine the government's agenda on privatising SOEs, as

the risk of investing in local companies (hidden debt, inaccurate valuation of assets, lack of timely

accounting information) may prove to be uncomfortable for foreign investors with a lower risk mandate for

their portfolios. On a more positive note, the Vietnamese policymakers are fully aware of these weaknesses,

and we see ample scope for the government to introduce reforms on this front over the coming years.




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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 those

opportunities. 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 for

60% of the score within this category), and elements that relate to that country in general (accounting for

40% of the weighting). These include, but are not limited to, total assets, asset and loan growth, GDP and

taxation. 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 framework

and 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 Industry

Rewards element is the most heavily weighted of the four elements, accounting for 42% (60% of 70%) of

the overall Rating. Second, if the Industry Rewards score is significantly higher than the Country Rewards

score, 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, if

the 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 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 rating for a given market.




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Table: Asia Commercial Banking Risk/Reward Ratings

Limits of Potential Returns Risks to Potential Returns Overall

Market Structure Country Structure Market Risks Country Risks Rating Ranking

Bangladesh 56.7 45.0 43.3 44.0 49.5 53

China 93.3 57.5 63.3 74.0 76.2 14

Hong Kong 80.0 95.0 73.3 78.0 83.0 6

India 83.3 57.5 60.0 54.0 68.0 30

Indonesia 76.7 65.0 80.0 52.0 69.4 26

Japan 46.7 75.0 66.7 80.0 63.0 34

Malaysia 73.3 80.0 83.3 80.0 77.6 10

Pakistan 50.0 50.0 53.3 44.0 49.3 54

Philippines 53.3 62.5 60.0 58.0 57.5 40

Singapore 66.7 95.0 96.7 90.0 82.4 7

Sri Lanka 33.3 55.0 33.3 46.0 41.7 61

South Korea 76.7 85.0 83.3 76.0 79.7 9

Taiwan 76.7 72.5 86.7 76.0 76.6 12

Thailand 66.7 67.5 86.7 74.0 70.6 23

Vietnam 60.0 57.5 36.7 54.0 55.4 43

United States 93.3 85.0 100.0 82.0 89.8 1

Scores out of 100, with 100 the highest. Source: BMI




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Market Overview

Asia Commercial Banking Outlook

Table: Banks' Bond Portfolios, 2012

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

Bangladesh 20.0 22.5 13.9

China 1,873.0 8.7 17.5

Hong Kong 379.3 19.8 8.1

India 352.5 25.8 14.4

Indonesia* 17.3 4.3 17.7

Japan 3,123.6 30.7 3.4

Malaysia 87.4 14.5 24.3

Pakistan 41.5 42.9 33.7

Philippines 42.8 24.4 13.1

Singapore 91.5 12.3 12.6

Sri Lanka 5.1 17.3 25.5

South Korea 295.0 16.7 0.4

Taiwan 115.2 9.0 12.6

Thailand 82.1 17.0 21.4 Vietnam 20.4 10.9 64.4

United States 533.5 4.1 18.4

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

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

Loan/Deposit

ratio % Rank TrendLoan/Asset

ratio % Rank TrendLoan/GDP

ratio % Rank Trend

Bangladesh 89.4 38 Falling 67.1 13 Falling 55.2 44 Rising

China 70.0 63 Falling 52.3 44 Rising 121.1 11 Falling

Hong Kong 68.4 65 Rising 38.2 65 Rising 279.6 2 Rising

India 78.7 50 Falling 67.0 14 Falling 60.3 37 Rising

Indonesia 78.4 52 Falling 61.4 29 Falling 34.2 55 Falling

Japan 69.5 64 Falling 47.8 56 Falling 89.4 20 Falling

Malaysia 78.6 51 Falling 59.2 35 Falling 124.0 10 Rising




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

Loan/Deposit

ratio % Rank TrendLoan/Asset

ratio % Rank TrendLoan/GDP

ratio % Rank Trend

Pakistan 62.3 68 Rising 41.3 63 Falling 21.1 65 Rising

Philippines 77.7 53 Rising 55.0 41 Rising 36.1 54 Rising

Singapore 106.2 17 Rising 64.7 21 Rising 166.7 6 Rising

Sri Lanka 85.2 44 Rising 61.4 30 Falling 32.8 57 Rising

South Korea 112.0 11 Falling 71.4 7 Falling 105.9 13 Falling

Taiwan 81.4 47 Rising 64.1 23 Rising 170.3 5 Rising

Thailand 98.1 29 Falling 66.7 16 Rising 85.0 23 Falling

Vietnam 104.5 19 Rising 75.8 1 Falling 94.4 17 Falling

United States 103.2 20 Rising 72.6 6 Rising 60.3 38 Rising

Source: Central banks, regulators, BMI

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

2014 2013

Total Assets Client Loans Client Deposits Total Assets Client Loans Client Deposits

Bangladesh 125.8 84.4 94.4 107.1 71.8 79.4

China 23,321.8 12,194.2 17,415.4 22,717.9 11,654.4 16,488.9

Hong Kong 2,189.3 836.0 1,222.4 2,046.1 774.1 1,142.4

India 1,879.7 1,259.6 1,601.3 1,500.1 1,005.2 1,256.6

Indonesia 507.1 311.2 397.1 437.2 273.1 328.0

Japan 9,236.9 4,410.7 6,348.6 9,055.7 4,345.6 6,224.2

Malaysia 751.8 444.8 565.6 666.2 395.9 501.2

Pakistan 122.1 50.4 80.9 107.4 44.3 70.1

Philippines 199.8 110.0 141.6 179.8 95.9 128.0

Singapore 821.4 531.5 500.6 778.4 463.2 450.4

Sri Lanka 39.9 24.5 28.8 33.8 20.7 24.7

South Korea 1,868.0 1,332.9 1,189.9 1,755.6 1,252.7 1,099.4

Taiwan 1,430.3 917.4 1,126.9 1,327.9 830.1 1,046.2

Thailand 535.6 357.2 364.3 497.2 330.0 336.5

Vietnam 247.6 187.7 179.6 212.7 164.1 161.4




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

2014 2013

United States 15,001.6 10,897.2 10,558.9 14,020.2 10,136.9 9,868.2


Table: Comparison of US$ Per Capita Deposits, 2014

GDP Per CapitaClient Deposits, per

capitaRich 20% Client

Deposits, per capitaPoor 80% Client

Deposits, per capita

Bangladesh 964 596 2,383 149

China 7,269 12,495 49,980 3,124

Hong Kong 41,191 168,385 673,540 42,096

India 1,607 1,263 5,054 316

Indonesia 3,572 1,571 6,284 393

Japan 38,864 49,989 199,957 12,497

Malaysia 11,779 18,736 74,942 4,684

Pakistan 1,308 437 1,748 109

Philippines 3,011 1,414 5,657 354

Singapore 57,799 90,745 362,980 22,686

Sri Lanka 3,491 1,341 5,363 335

South Korea 25,420 24,033 96,134 6,008

Taiwan 22,375 48,099 192,395 12,025

Thailand 6,174 5,419 21,675 1,355

Vietnam 2,148 1,941 7,762 485

United States 56,067 32,732 130,930 8,183


Macroeconomic Forecast

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

Q413, we are beginning to see potential for upside surprises to domestic demand over the coming quarters.

Recent data on foreign direct investment inflows, remittances, passenger car sales, and property market

launches, suggests to us that domestic demand is on a nascent recovery, setting the stage for stronger 2014

growth.




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The general consensus is expecting the Vietnamese economy to suffer yet another quarter of sub-par growth

mainly due to subdued external demand and the lack of progress on banking sector reforms. This is closely

in line with our view that real GDP growth will come in at just 5.3% in 2013, a slight improvement from

5.2% in 2012. Looking ahead to 2014, however, evidence of improving macroeconomic fundamentals in

Vietnam (especially with regards to the outlook for domestic demand) suggests to us the balance of risks to

our growth forecast of 6.0% is gradually tilting towards the upside.

Robust Remittances Could Boost Domestic Demand

Vietnam - Unrequited Transfers, US$mn

Source: BMI, Asian Development Bank

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

record a bumper year for remittance inflows. The country is expected to receive US$10.6bn in remittances

from Vietnamese citizens working abroad, a robust 6.5% increase from 2012. Crucially, we believe that

remittance inflows will remain strong over the coming quarters as macroeconomic conditions in Vietnam

continue to improve. Growing confidence in the stability of the Vietnamese dong should also help to

encourage Vietnamese workers abroad, to a certain extent, to remit a larger share of their earnings back

home. We believe that this will help to boost domestic demand while providing support for the currency.




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

government's full-year target of US$13bn, after data released by the Ministry of Planning and Investment

showed that inflows surged by 19.5% year-on-year (y-o-y) growth over the first eight months of the year.

The strong reading chimes with our view that the country's solid long-term growth story should continue to

attract foreign investors over the coming years.

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

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

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

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

Long Term', October 14 2013).

Developers Eyeing Property Market Rebound

Vietnam - Real Estate Index

Source: BMI, Bloomberg

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

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

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




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launches surged by 12% y-o-y in Q313. Anecdotal evidence from the local media suggests to us that

demand for real estate following the sharp decline in prices since 2011 may be recovering. To be sure, we

maintain our view that we are unlikely to see a property market boom given the healthy pipeline of new

units that will come online in 2014. Nonetheless, we acknowledge that consumer confidence is recovering

and we could potentially see some upside surprises to domestic demand in 2014.

Expenditure Breakdown

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

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

widespread job losses, especially in export-driven sectors. Uncertainties over the outlook for employment

could, in turn, prompt households to cut back on spending.

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

led by increased foreign direct investment inflows. We believe lending rates will gradually ease over the

coming months as the effect of recent rate cuts by the SBV begins to kick in. We are also seeing evidence

that credit conditions are improving. Accordingly, we expect gross fixed capital formation growth to

accelerate slightly from 4.1% in 2013 to 4.8% in 2014.

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

respectable pace of 6.1%. However, there is limited room for the government to increase spending further

owing to concerns over the need to finance a potential bailout of ailing state-owned commercial banks.

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

although we expect external demand to pick up in 2014. Vietnam's trade account has fallen back into

deficits in recent months, but we see the case for a substantial pickup in external demand on the back of a

rebound in regional growth over the coming quarters. Accordingly, we still expect exports to expand at a

moderate pace of 5.9% in 2014.




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Table: Vietnam - Economic Activity

2010 2011 2012 2013f 2014f 2015f 2016f 2017f

Nominal GDP, VNDbn 3 2,157,829 2,779,880 3,245,419 3,657,621 4,117,487 4,631,499 5,203,774 5,841,949

Nominal GDP,US$bn 3 112.9 134.6 155.5 175.0 200.2 227.8 257.4 291.4

Real GDP growth,% change y-o-y 3 6.4 6.2 5.2 5.3 6.0 6.9 7.0 7.0

GDP per capita,US$ 3 1,267 1,497 1,712 1,909 2,163 2,439 2,733 3,068

Population, mn 4 89.0 89.9 90.8 91.7 92.5 93.4 94.2 95.0

Industrialproduction index,% y-o-y, ave 1,5 14.1 10.9 7.0 7.6 8.7 9.6 9.9 9.8

Unemployment,% of labour force,eop 2,6 4.3 3.6 3.2 3.7 3.5 3.5 3.6 3.5

Notes: f BMI forecasts. 1 at 1994 prices; 2 Urban Area Only. Sources: 3 Asian Development Bank, General StatisticsOffice; 4 World Bank/UN/BMI; 5 General Statistics Office; 6 General Statistics Office/BMI.




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Competitive Landscape

Market Structure

Protagonists

Table: Protagonists In Vietnam's Commercial Banking Sector

Central bank: State Bank of Vietnam (SBV)

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

The SBV is the successor to the Vietnam National Bank, which was established by the government of North Vietnam in1951. 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, BIDV, Incombank and Vietcombank. This period also included theestablishment 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 theonly bank authorised to issues bank notes; and acts as the bank to the banks and the state. The central bank organisesthe 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 theauthorities, 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.




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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)




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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




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Company ProfileBank for Foreign Trade of Vietnam (Vietcombank)

SWOT Analysis

Strengths ■ Minority owner Mizuho has boosted bank's profile.

■ Largest correspondent network among Vietnamese banks.

■ Clear competence in external trade.

■ Strong market position.

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

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

■ Lack of transparency.

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

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

■ Pre-tax profit increased in 2012.

■ Rise in loans and deposits during 2012 full-year.

■ Improving capital position.

Threats ■ Tighter monetary policy to tame economic growth.

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

the country.

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

capital of VND3,955bn. It is the oldest commercial bank for external affairs in Vietnam

and was the first bank in the country to have a centralised capital management

structure. It describes itself as an 'interbank forex payment centre for over 100

domestic banks and foreign banks' branches operating in Vietnam', and was the first

commercial 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/




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representative office/ affiliates both in Vietnam and abroad, including Head Office in

Hanoi, 1 Operation Center, 1 Training Center, 78 branches, over 300 transaction offices

all over the country, 3 subsidiaries in Vietnam, 2 subsidiaries in other countries, 1

representative office in Singapore and 5 joint ventures. In addition, Vietcombank has

also developed an Autobank system with 1,835 ATMs and 32,178 Points of Sale

nationwide. Bank's operations are supported by a network of more than 1,300

correspondent 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 a

number of other financial institutions, including Vietnam Export Import CJSB, Saigon

Industrial and Commercial CJSB, Gia Dinh CJSB, Military CJSB, International

Commercial CJSB, Oriental CJSB, Chohungvina Bank, Petroleum Insurance Company

and Golden Insurance Company.

Japan's Mizuho Corporate Bank acquired a 15% stake in Vietcombank for a total of

VND11.8trn (US$559.04mn) in January 2012, some months after the deal was revealed.

The acquisition, which advantageously gives Vietcombank a stronger foreign partner,

involved the sale of 347.61mn shares.

Corporate

Highlights

The bank's total assets climbed to VND414,475bn in 2012, up by 13% y-o-y from

VND366,722bn a year earlier. During the same period, profit before tax reached

VND4,427bn, compared with VND4,217bn in 2011.

In 2012 gross loans rose to VND241,163bn, up by 15.2% from VND209,418bn as of

December 31 2011. Deposits reached VND303,942bn, up 25.8% compared to 2011,

and 106.6% of the bank's target for the period. The NPL ratio came in at 2.4% as of

December 31 2012, lower than the estimated 2.8% and the average NPL ratio of the

system. That said, it was still up from 2.03% at the end of 2011.

Standard & Poor's, encouraged by the acquisition, argued that Mizuho Corporate

Bank's involvement strengthened Vietcombank's capital position. The agency upgraded

its outlook on the bank's long-term rating to 'stable' from 'negative' in January 2012.

Company Address Vietcombank (Bank For Foreign Trade of Vietnam)

198 Tran Quang Khai

Hanoi

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




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Email: [email protected]

Website: http://www.vietcombank.com.vn

Table: Stock Market Indicator

2008 2009 2010 2011 2012 2013 19-Feb-2014

Market Capitalisation VND n.a. 56,874,045 57,159,506 42,941,737 63,033,742 62,106,775 66,741,612

Market Capitalisation US$ n.a. 3,078 2,932 2,042 3,028 2,946 3,162

Share Price VND n.a. 32,384 29,018 21,800 27,200 26,800 28,800

Share Price US$ n.a. 1.75 1.49 1.04 1.31 1.27 1.36

Share Price US$, % change(eop) n.a. n.a. -15.1 -30.4 26.0 -2.7 n.a.

Change, year-to-date n.a. n.a. n.a. n.a. n.a. n.a. 7.3

Shares Outstanding (mn) 1,756 1,756 1,481 1,970 2,317 n.a. n.a.

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

Table: Balance Sheet (VNDmn)

2006 2007 2008 2009 2010 2011 2012

Total Assets 166,952,016 198,457,113 221,950,448 255,495,883 307,621,338 366,722,279 414,475,073Loans & Mortgages 67,742,520 97,531,864 108,528,764 136,996,006 171,241,318 204,089,479 235,869,977

Total Deposits 119,778,872 143,401,576 157,067,019 169,427,776 204,755,949 227,016,854 284,414,568

TotalShareholders'Equity

11,202,342 14,684,963 13,893,437 16,819,641 20,856,761 28,781,930 41,704,978

Earnings pershare (VND) n.a. n.a. 672 2,233 1,879 1,789 1,912





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Table: Balance Sheet (US$mn)

2006 2007 2008 2009 2010 2011 2012

Total Assets 10,398 12,390 12,695 13,826 15,777 17,436 19,893

Loans & Mortgages 4,219 6,089 6,208 7,414 8,783 9,703 11,321

Total Deposits 7,460 8,953 8,984 9,169 10,501 10,793 13,651

Total Shareholders' Equity 698 917 795 910 1,070 1,368 2,002

Earnings per share (US$) n.a. n.a. 0.04 0.13 0.10 0.09 0.09


Table: Key Ratios (%)

2006 2007 2008 2009 2010 2011 2012

Return on Assets 1.9 1.3 1.2 1.6 1.5 1.2 1.1

Return on Equities 29.4 18.6 17.8 25.7 22.9 17.0 12.5

Loan Deposit Ratio 56.6 68.0 71.8 83.6 86.4 92.2 84.8

Loan Asset Ratio 40.6 49.1 50.8 55.4 57.5 57.1 58.2

Equity Asset Ratio 6.7 7.4 6.2 6.5 6.7 7.8 10.0

Total Risk Based Capital Ratio n.a. n.a. n.a. n.a. 9.0 11.1 14.8





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VietinBank

SWOT Analysis

Strengths ■ Vietnam's largest partly private lender by assets.

■ 10% owned by the International Finance Corporation.

■ Strong branch network.

■ Total assets rose 9.4% in 2012.

■ 2011 profit exceeded predictions.

Weaknesses ■

Possible exposure to the effects of the bursting of the asset price bubble.

■ NPL ratio rose during 2012 full-year.

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

be ignored.

■ Possible listing in the long term.

■ Loans and investment increased 13.6% in 2012.

Threats ■

Possible exposure to downturn in global trade.

■ Decline in pre-tax profit during 2012.

■ Predicted growth limited by state credit limits.

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

country.

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

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

1993. As one of the four largest state-owned commercial banks in the country,

VietinBank's total assets account for over 20% of the market share of the whole

Vietnamese banking system. VietinBank's capital resources have continued to increase

over the years and have been rising substantially since 1996, with annual average

growth of 20%.




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VietinBank has developed a retail and administration network across the country. The

bank's network operates in 56 provinces and cities, with a focus on large cities such as

Hanoi (12 branches; two transaction centres), Ho Chi Minh City (17 branches; one

transaction centre); industrial zones; trading and economic parks; and densely

populated areas. VietinBank is an investor in other institutions such as Saigonbank,

Indovina Bank, Vietnam International Leasing Company and the VietinBank-Asia

Insurance Company.

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

$307mn in the lender in 2011. This was the first strategic investment by a foreign

organisation in a Vietnamese state-owned bank. Discussions over selling a 15% stake

to the Canada-based Bank of Nova Scotia are still ongoing as of January 2012, despite

plans to conclude the deal by the end of 2011.

In December 2012, Japanese commercial bank Bank of Tokyo Mitsubishi UFJ

announced that it has acquired a 20% stake in VietinBank. The deal was valued at US

$742mn. The acquisition will enable Bank of Tokyo Mitsubishi UFJ to help Japanese

companies operating in Vietnam, as well as expanding its commercial operations in

South East Asia. Bank of Tokyo Mitsubishi UFJ will also appoint two directors onto the

board of VietinBank.

Corporate

Highlights

As of the end of 2012, VietinBank had total assets of VND503,530bn, representing an

increase of 9.4% y-o-y from VND460,420bn in 2011. During the same time period, loans

and investments came out at VND467,879bn, up by 13.6% from VND429,932bn as of

December 31 2011. Profit before tax finished 2012 at VND8,168bn, down from VND8,392bn at the previous year-end. During the 2012 full-year, the bank's NPL ratio

climbed from 0.75% to 1.46% as of December 31.

In May 2012, VietinBank became the first Vietnamese bank to issue US$250mn

international bonds. NPL 1.46 from 0.75

Company Data ■ Website: www.vietinbank.vn• Status: State-Owned Commercial Bank




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

108 Tran Hung Dao

Hanoi Vietnam

Fax: (84) 439428693

Website: http://www.vietinbank.vn

Table: Stock Market Indicators

2009 2010 2011 2012 2013 19-Feb-2014

Market Capitalisation VND 33,196,269 34,896,270 35,806,607 54,270,316 60,319,154 62,553,197

Market Capitalisation US$ 1,796 1,790 1,702 2,607 2,861 2,964

Share Price VND 16,147 15,146 12,840 19,462 16,200 16,800

Share Price US$ 0.87 0.78 0.61 0.93 0.77 0.80

Share Price US$, % change (eop) n.a. -11.1 -21.4 53.1 -17.8 n.a.

Change, year-to-date n.a. n.a. n.a. n.a. n.a. 3.6

Shares Outstanding (mn) 2,056 2,304 2,789 2,789 n.a. n.a.

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


2006 2007 2008 2009 2010 2011 2012

Total Assets 135,363,026 166,112,976 193,590,357 243,785,208 367,730,655 460,420,078 503,530,259

Loans & Mortgages 80,091,149 100,482,232 118,601,677 161,619,376 234,565,218 290,397,810 329,682,838

Total Deposits 99,683,408 112,692,816 121,634,466 148,530,242 205,918,705 257,135,945 289,105,307


5,607,022 10,646,529 12,336,159 12,777,313 18,402,459 28,699,392 33,840,373

Earnings pershare (VND) n.a. n.a. n.a. 659 1,707 2,621 2,346





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2006 2007 2008 2009 2010 2011 2012

Total Assets 8,431 10,371 11,073 13,193 18,860 21,890 24,168

Loans & Mortgages 4,988 6,273 6,784 8,746 12,030 13,807 15,824

Total Deposits 6,208 7,036 6,957 8,038 10,561 12,225 13,876

Total Shareholders' Equity 349 665 706 691 944 1,364 1,624

Earnings per share (US$) n.a. n.a. n.a. 0.04 0.09 0.13 0.11



2006 2007 2008 2009 2010 2011 2012

Return on Assets 0.5 0.8 1.0 0.6 1.1 1.5 1.3


Loan Deposit Ratio 80.4 n.a. n.a. 109.9 115.3 114.1 115.3

Loan Asset Ratio 59.2 n.a. n.a. 66.9 64.5 63.7 66.2


Total Risk Based Capital Ratio n.a. n.a. n.a. n.a. 8.0 10.6 10.3





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Agribank

SWOT Analysis

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

■ Massive branch network, especially in rural Vietnam.

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

■ Jump in NPL ratio 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.

■ Total assets increased during 2011.

■ Undergoing three-year restructuring programme with the Vietnamese government.

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.


country.

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 Vietnamese

economy. At the end of the 2011 full-year, Agribank had 2,400 branches and

transaction offices nationwide and abroad, a customer base of over 30,000 enterprises,

millions of households, and thousands of domestic and foreign partners, maintaining

correspondent relationships with 1,033 banks in 92 countries and territories in the

world. It is currently the country's largest bank by assets and extended its reach to

Cambodia in 2010 by opening its first overseas branch in the kingdom.




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Agribank has completed a long-term financing agreement with the state oil company

Petrovietnam to provide financing at lower interest rates for the company to develop

Vietnamese oil resources. This could help Agribank establish more long-term

relationships with major businesses.

Corporate

Highlights

Agribank continued to grow at a stable pace in 2011 (latest available data). The total

assets of the bank reached VND560trn as of December 31, increasing by 6.5%

compared with 2010. The total outstanding loans reached VND443,476bn as of the

same date, increasing by 6.9% compared with 2010, in which the outstanding loans to

agriculture and rural sector increased by 15% and accounted for almost 70% of the

total loan portfolio. At the end of the 2011 full-year, the bank's NPL ratio was at 6.1%,

up from 3.75% a year earlier.

Chairman Nguyen Ngoc Bao said in early-February 2012 that the bank had agreed anextended restructuring plan with the Vietnamese government to be implemented over a

period of three to four years. As part of the revised strategy, Agribank will remain state-

owned but play a more prominent social policy role in support of the country's rural and

agricultural communities. Central bank governor Nguyen Van Binh stipulated that

between 75% and 80% of Agribank's annual lending should go to Vietnamese farmers

in support of the country's key export crops, coffee and rice. Bao also confirmed that

the bank's capital adequacy ratio (CAR) rose from 6.4% in 2010 to 8% in 2011 and

estimated that the Agribank's CAR could reach 9% in 2012 with the aid of a capital

injection from the State 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 ratio

could drop to as little as 3% between 2015 and 2020, depending on the bank achieving

strong credit growth.

In January 2013, Vietnamese federal police said they had arrested former general

director of the state-owned Agribank, Pham Thanh Tan, for "irresponsibility causing

serious consequences." The news comes on the back of a series discoveries of

massive embezzlements by senior employees, mostly to finance gambling habits. In

November 2012, the Ho Chi Minh City police arrested three senior executives for

stealing US$960,000 from the bank, while city prosecutors charged four others in a US$5.33mn scam. Another executive was arrested in the city in October for allegedly

stealing US$1mn. In addition, in July 2012 a court in Binh Dinh Province handed a life

sentence to a teller for stealing nearly US$1mn.

Company Data ■ Website: www.agribank.com.vn■ Status: State-Owned Commercial Bank




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2006 2007 2008 2009

Total Assets 238,495,024 321,444,128 400,485,183 480,937,045

Loans & Mortgages 181,252,960 246,188,336 288,940,827 361,739,747

Total Deposits 160,396,528 233,638,848 299,954,030 331,893,865

Total Shareholders' Equity 2,565,545 10,627,676 17,798,086 19,860,526

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


2006 2007 2008 2009

Total Assets 14,854 20,069 22,907 26,026

Loans & Mortgages 11,289 15,370 16,527 19,576

Total Deposits 9,990 14,587 17,157 17,961

Total Shareholders' Equity 160 664 1,018 1,075



2006 2007 2008 2009

Return on Assets 0.5 1.6 0.6 0.4

Return on Equities 66.2 69.4 15.1 9.6

Equity Asset Ratio 1.1 3.3 4.4 4.0





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Asia Commercial Bank

SWOT Analysis

Strengths ■

Strong CAR.

■ Launched US$2mn IBM datacentre to support expansion in 2011.

Weaknesses ■ Lack of transparency.

■ Total assets fell by 37% y-o-y in 2012.

■ NPL ration increased during 2012 full-year.

Opportunities ■ Stronger expansion to compete with state lenders.

■ Marginal increase in loans in 2012.

Threats ■ Tighter monetary policy to tame economic growth.

■ Sharp decline in profit before tax and net profit for 2012.

■ Scandals involving bank executives have damaged the bank's reputation.


country.

Company Overview Ho Chi Minh City-based Asia Commercial Bank (ABC) was founded in 1993 and

expects its branches to expand three-fold to about 900 by 2015. The bank has

ambitions to enter Vietnam's 'big four' banking circle in the next few years, which would

make it the first non-state lender to do so. The bank said in late 2011 that it aims to rival

the country's dominant state lenders by 2015, with assets jumping three-fold to

VND900trn (US$42.9bn) from VND255trn.

The resignation of a chairman and two executives at ACB in November 2012 fuelled

fears that the beleaguered bank's crisis may indicate wider trouble in the country's

banking system. Chairman Tran Xuan Gia and two deputies resigned on the back of

company deposits being placed with another bank and approved by them. The news

also added to mounting fears over the health of Vietnam's banking industry, first

sparked by the arrest of one of ACB's founders.

Police in Vietnam have confirmed that they are pushing ahead with charges brought

against multimillionaire banking tycoon Nguyen Duc Kien, one of the founders of ACB.




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Kien was arrested on August 20 2012, charged with 'illegal business activities' and has

been now accused of 'deliberate wrongdoing causing serious consequences' and fraud.

The bank said in January 2011 that it was to build a new data centre in Ho Chi Minh

City. The centre carried a cost of over US$2mn and is to help the bank better manageinformation and customer records. IBM is helping ACB create an IT plan and will play a

role in all facets of the new centre, along with Vietnamese-firm AICT.

Corporate

Highlights

As of the end of the 2012 full-year, the bank's total assets stood at VND176,307bn,

down by 37% y-o-y from VND281,109bn. This came despite an increase in net interest

income from VND6,607bn in 2011 to VND6,870bn a year later. Profit before tax fell

significantly from VND4,202bn as of the end of 2011 to VND1,042bn a year later,

however. As a result, net profit tallied just VND784,040mn as at December 31 2012,

down from VND3,207,841mn a year earlier.

During 2012 total deposits reached VND159,500bn, down 24% y-o-y from

VND234,503bn in 2011. On a more positive note, total outstanding loans closed 2012

with a marginal increase, climbing from VND102,809bn in 2011 to VND102,815bn a

year later.

The bank's CAR was at 13.2% at the close of the 2012 full-year. As of the same date,

the bank's NPL ratio came in at 2.5%, higher than the 0.89% for 2011.

Table: Stock Market Indicators

2008 2009 2010 2011 2012 2013 19-Feb-2014

Market Capitalisation VND 17,637,415 29,067,752 24,473,174 20,348,013 15,471,992 14,375,640 14,836,398

Market Capitalisation US$ 1,009 1,573 1,255 967 743 682 703

Share Price VND 24,886 33,650 26,100 21,700 16,500 15,600 16,100

Share Price US$ 1.42 1.82 1.34 1.03 0.79 0.74 0.76

Share Price US$, % change(eop) -67.0 27.9 -26.5 -22.9 -23.2 -6.6 n.a.

Change, year-to-date n.a. n.a. n.a. n.a. n.a. n.a. 3.1

Shares Outstanding (mn) 709 864 938 938 938 n.a. n.a.

Source: Asia Commercial Bank (ABC), Bloomberg




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2006 2007 2008 2009 2010 2011 2012

Total Assets 44,645,040 85,391,681 105,306,130 167,881,047 205,102,950 281,019,319 176,307,607

Loans & Mortgages

16,954,114 31,676,320 34,604,077 61,855,984 86,478,408 101,822,720 101,312,766

Total Deposits 33,606,012 55,283,104 64,216,949 86,919,196 106,936,611 142,218,091 125,233,595


1,696,515 6,257,849 7,766,468 10,106,287 11,376,757 11,959,092 12,624,452

Earnings pershare (VND) 1,467 3,738 3,473 2,653 2,861 3,419 666



2006 2007 2008 2009 2010 2011 2012

Total Assets 2,781 5,331 6,023 9,085 10,519 13,361 8,462

Loans & Mortgages 1,056 1,978 1,979 3,347 4,435 4,841 4,863

Total Deposits 2,093 3,452 3,673 4,704 5,484 6,762 6,011

Total Shareholders' Equity 106 391 444 547 583 569 606

Earnings per share (US$) 0.09 0.23 0.21 0.15 0.15 0.17 0.03



2006 2007 2008 2009 2010 2011 2012

Return on Assets 1.5 2.7 2.3 1.6 1.3 1.3 0.3


Loan Deposit Ratio 50.6 57.5 54.2 71.7 81.5 72.3 82.1

Loan Asset Ratio 38.1 37.3 33.1 37.1 42.5 36.6 58.3


Total Risk Based Capital Ratio n.a. n.a. n.a. n.a. n.a. 9.3 13.5





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Eximbank

SWOT Analysis

Strengths ■ Valued by the major international banks that deal with it.

■ Emerged from the global financial crisis in a strong position.

■ Has reduced its loan-to-deposit ratio to well below 100% and is less dependent on

borrowing from other financial institutions.

■ Reducing its vulnerability to a lack of liquidity within the banking system.

■ Credit quality of the bank is well controlled.

■ Stable ratings outlook from S&P's.

Weaknesses ■ Lack of scale. Eximbank is a fairly large bank in Vietnam but a small institution by

international standards.

■ Potential for problems in the wake of the bursting of the asset price bubble.

■ Total assets declined 7% y-o-y in 2012.

Opportunities ■ Potential for continuing growth from a low base.

■ Now in third year of five-year growth plan.

■ Acquisition of minority holding in Sacombank.

■ Deposits rose by 18% in 2012.

Threats ■ Vulnerability to direct or indirect impact from the downturn in global trade.

■ Profit growth is particularly threatened by government loan policy.


country.

Company Overview Vietnam Export-Import Bank (Eximbank), established in 1989, is one of country's the

largest commercial joint stock banks in terms of owner's equity. It has a nationwide




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network of 183 branches and transaction offices. Its head office is in Ho Chi Minh City.

The bank's total number of employees stood at 5,800 as of the end of 2012, up from

5,430 a year earlier.

The bank's growth is threatened by government concerns over the credit supply. Thegovernment limited credit supply growth to 25% in FY10. This has put the brakes on

bank's growth, which for Eximbank is largely fuelled by an

Documents

BMI Vietnam Commercial Banking Report Q2 2014