Banking Industry Overview

Financial Projection and

Performance analysis
FIN 319 - INTERMEDIATE FINANCIAL MANAGEMENT
FIN 319 - INTERMEDIATE FINANCIAL MANAGEMENT
Lecturer:Bui
LECTURER: Ms. Phuong Ms. Phuong Bui
 GROUP MEMBER

NGUYEN ANH QUOC 1832300156

DANG NGUYEN BAO 1832300349

LE THI YEN NHI 1832300524

TRAN DINH TU ANH 1832300051

 CONTENTS
TABLE OF
01 Banking industry overview

02 Company comparison

03 Company overview

04 Environmental, Social and

Corporate Governance

05
Conclusion and
Recommendations
01. Banking Industry
overview
Political Factors
Become middle income
Benefit from FDI, FTA
country in 2025

● Become a developing nation with ● Vietnam benefits from FTAs, stable

modern industrial and surpassing low FDI inflows, technology (digital
middle income in 2025. transformation), and the domestic
market will lead the economic
● Allocate more capital from its budget to recovery progress
help it create more loans for addressing
unemployment and sustainable poverty
reduction
Economic Factors
Current world market
● Banking will continue to rise until the end of
2022 and 2023.
● Today's most prevalent trend in the financial
services industry is the shift to digital
● This digital transformation has led to increased
competition from tech startups
Vietnam current market
● 11 Vietnamese banks, including two new
faces compared to 2021: HD Bank and
SHB. The nine banks that continue to be in
the rankings are Vietcombank, BIDV,
VietinBank, VPBank, etc
● Continuous growth in their balance sheets
and income statements, with both
deposits and loans issued growing.
Social Factors
Monetary
policy
Monetary policy is managed
flexibly and proactively by the
State Bank of Vietnam,
contributing to maintaining
stability, controlling inflation, and
supporting businesses and
people.
Pandemic effects
Reduce loan interest rates
Individual customers : 0.5 - 1%
Corporate customers : 1 - 2%
Credit program
Support interest rates 2 - 3%
(20 - 30 trillion VND)
to help businesses overcome
the Covid-19 epidemic a
component of the program's
recovery and socio-economic
development
Technology Factors

Digital transformation is an inevitable trend

59% of Vietnamese have a bank account

67% use the internet
70% use a smartphone
Technology Factors

Digital transformation is an inevitable trend

94% of Vietnamese commercial banks have invested

in digital transformation.

40% of banks have put digital transformation into a

strategic vision in the next 5-10 years.
Technology Factors

Context 2025: Revenue shifted

It is expected that a third of traditional

banking revenue will be managed by new
models:
● Payment by e-wallet
● P2P/ account to account
● Robo Advisory and digitized brokerage
● New credit scoring models
(MB Securities, 2021)
Legal Factors

The banking industry need to follows strict laws regarding privacy, consumer laws,
and trade structures to confirm frameworks within the industry

The general legal environment in Vietnam is regarded by investors as complicated.

Investors report that the Vietnamese legal framework is ‘severely deficient in
transparency, consistency and dependability’

-> Unpredictable and unstable legal environment

Environmental Factors

With the use of technology — particularly with mobile banking apps — the
use for paper is being reduced. Additionally, the need to drive directly to a
branch to handle affairs is minimized as well.

Many issues are taken care of through mobile apps and online banking services.
Consumers can apply for credit cards online, buy cheques online, and have many
of their banking questions answered online or by phone.

-> Reducing individual environmental footprints.

02. Banking company
overview
 Name Position
Stock exchange Mr. Phan Duc Tu Chairman

HOSE: BID Mrs. Nguyen Thi Thu Huong Member

Mr. Tran Thanh Van Member

Sector
Mr. Ngo Van Dung Member
Finance and Insurance
Credit Intermediation and
Related Activities Mr. Pham Quang Tung Member
Depository Credit
Intermediation Mr. Tran Xuan Hoang Member

Market share (Q1, Mr. Le Kim Hoa Member

2022)
Mr. Yoo Je Bong Member
10.7%
Mr. Le Viet Cuong Member
 Name Position

Mr. Pham Quang Dung Chairman

Stock exchange
Mr. Do Viet Hung Member of BOD
HOSE: VCB

Sector Mr. Nguyen Manh Hung Member of BOD

Finance and Insurance Mr. Nguyen My Hao Member of BOD

Credit Intermediation and
Related Activities
Depository Credit
Mr. Pham Anh Tuan Member of BOD
Intermediation
Mr. Hong Quang Member of BOD
Market share (Q1,
2022) Mr. Truong Gia Binh Independent member of BOD

Mr. Shojiro Mizoguchi Member of BOD, BOM

23.0%
 Name Position

Mr. Trần Minh Bình Chairman

Stock exchange Mr. Lê Thanh Tùng Member

HOSE: CTG Mr. Trần Văn Tần Member
Sector
Mrs. Trần Thu Huyền Member
Finance and Insurance
Credit Intermediation and Mr. Nguyễn Thế Huân Member
Related Activities
Depository Credit Mrs. Phạm Thị Thanh Hoài Member
Intermediation
Mr. Masahiko Oki Member
Market share (Q1,
Mr. Masashige Nakazono Member
2022)
Mr. Nguyễn Đức Thành Member
8.1%
Mrs. Nguyễn Thị Bắc Member
 Stock exchange
Name Position

HOSE: VPB Mr Ngo Chi Dung Chairman of BOD

Sector Mr Bui Hai Quan Vice Chairman of BOD

Finance and Insurance Mr Lo Bang Giang Vice Chairman of BOD

Credit Intermediation and
Related Activities
Depository Credit Mr Nguyen Duc Vinh CEO/Member of BOD
Intermediation
Mr Nguyen Van Phuc Member of BOD
Market share
(Q1, 2022) Mrs. Luu Thi Thao Member of BOD

8.6%
03. Company Review
 Business Performance
Charter Capital Market Shares

BID

61,000,000,000,000 VND

VCB

50,400,000,000,000 VND

CTG

48,058,000,000,000 VND

VPB

79,300,000,000,000 VND
 Forecasted Revenue Growth rate

2021-2022 F 2022-2023 F 2023-2024 F 2024-2025 F 2025-2026F After 2026

BIDV 14.06% 15.65% 15.65% 15.65% 15.65% 15.65%

VCB 19.33% 19.33% 19.33% 19.33% 19.33% 18.57%

CTG 6.86% 6.86% 6.86% 6.86% 6.86% 6.86%

VPB
14.35% 10.57% 11.21% 11.21% 11.21% 11.21%
 Intrinsic Value

BIDV VCB CTG VPB

INTRINSIC STOCK PRICE

57,717 VND 53,062 VND 53,770 VND 18,375 VND
PER SHARE

MARKET PRICE (30/5/2022) 37,100 VND 78,000 VND 28,000 VND 18,055 VND

Undervalued or overvalued Under Over Under Under

Recommendation Buy Sell Buy Hold

Optimal Capital Structure
Optimal Capital Structure
Optimal Capital Structure
Optimal Capital Structure
 Dividend Policy

Cash dividend Payout Ratio

YEAR
BIDV VCB CTG VPB BIDV VCB CTG VPB

2017 2,546 2,967 6,728 0 36.66% 32.64% 24.15% 0%

2018 92 2,967 0 4,577 1.23% 20.31% 0% 62.22%

2019 4,844 2,967 0 0 56.65% 16.03% 0% 0%

2020 2,606 4,450 2,403 0 36.08% 24.12% 13.09% 0%

2021 1,303 4,450 3,845 1,975 12.49% 20.31% 12.67% 17.21%

Unit: billion VND

 Dividend Policy in 2021
BIDV VCB CTG VPB

Weight of Equity 18.74% 29% 14% 20.35%

Net Income 10,841B 21,918B 14,215B 10,419B

Distribution 1,353B 4,450B 1,801 2,311B

N.o Outstanding shares 5B 3.7 B 4B 4.4B

Market Price (31/12/2021) 37,100 VND 78,000 VND 33,900 VND 35,800 VND

POR 12.49% 20.31% 12.67% 17.21%

Dividend share 267.62 VND 1,200 VND 375 VND 520 VND

Dividend Yield 0.72% 1,54% 1.34% 1.45%

 Special Ratio of Banking Industry

Ratio BIDV VCB CTG VPB Industry

Casa 20% 31% 20% 22.6% 30%

Net interest margin 3.06% 3.11% 2.71% 5.3% 3,70%

With an almost zero cost of capital, demand deposits are an important component of
commercial banks' capital mobilization. The larger the CASA ratio, the more
opportunities a bank has to improve its net interest income (NIM) ratio
04. Environmental
Social Corporate
Governance
Environmental
BIDV also participated in a variety of social
activities in 2021
“Every transaction a giving”, “Fresh Water
for a Green life”.
BIDV employees contributed more than
VND 50 billion to support programs and
funds to combat Covid-19.
Score based on ASEAN scorecard: GOOD
Social
Restructure the repayment term,
exempt, reduce interest, fees, and keep
the same loan group to support
customers affected by Covid-19
Continued to organize “Ve nguon”
program, sending gifts to BIDV staff
who are invalid soldiers, relatives of
martyrs,
Governance
All 10 executives are experienced
and expert in various fields and
they have been with the company
since the early day
BID has developed sustainably and
become one of the most reputable
banking companies in Vietnam.
Environmental
VietinBank implements measures for thrift
practice, including saving on energy
consumed, equipment management cost
and labor optimization.
VietinBank has taken actions in
sustainable fields:
Over 2 billion USD outstanding loans for
sustainable development
Score based on ASEAN scorecard: GOOD
Social
Vietinbank implemented its social welfare
program with the aim for improvement of
people’s life in for whose with difficult
economic conditions. Total budget has
spent up to now is 8000 billion VND.
6 In recent years, 209 billion VND was
donated to control and prevention of
Covid-19
VietinBank's largescale “Charity Rice Bank”
program was organized to share a part of
difficulties with the poor during the
COVID-19 pandemic
Governance
Transformation from the
credit-driven business model to
multi-service business model
TOP 10 ENTERPRISES IN
VIETNAM’S 2021 BUSINESS
CULTURE STANDARDS
TOP 300 MOST VALUABLE BANK
BRANDS WORLDWIDE
The fastest growing bank in Brand
Value in Vietnam (up 56%).
Environmental
Comply laws on waste management, the
priority of saving, and circulating solutions
Apply internal regulations, promotion of
hygiene at work, an eco-friendly mindset,
and a 5S system (Sort, Set in Order Shine,
Standardize, Sustain).
In 2021, VPBank supported 422 customers
investing in greenfield with a total green
loan balance of 4,066 billion VND
Score based on ASEAN scorecard: GOOD
Social
Implement social security programs to
support local authorities and people with a
total budget of more than 500 billion VND
Reduce the lending rate worth 1.2 trillion
VND for over 4000000 customers.
Launching many impactful social programs
and activities such as “Cheer up Vietnam” ,
“For A Prosperous Vietnam” program, or
VPBank Hanoi Marathon ASEAN 2020 under
the slogan “Meet sunrise – Welcome new
normal”.
Governance
Appreciate highly in Investor Relations:
● Top 20 Sustainable Development
Index (VNSI) in HOSE
● Top 15 listed companies with the best
IR activities by Vietstock.
● In 2021, the only financial institution in
Vietnam honored with “Best Investor
Relations Bank Vietnam 2021” award.
During a pandemic, VPBank still actively
exchanged information with investors. Build a
specialized website for investors where the
event schedule, video records meetings,
quarterly earning call documents are posted
with updated bilingually.
Environmental
Vietcombank always focuses
environmental protection, towards a
green banking model and creates a
friendly working space for employees.
Besides, Vietcombank always upholds
building a green corporate culture,
focusing on:
● Saving electricity, water, paper and
office materials.
● Reducing emissions.
● Classifying wastes
Score based on ASEAN scorecard: EXCELLENT
Social
Vietcombank’s social activities are
on
increasingly promoted with many practical
and meaningful programs.
In 2020, the total amount of funding for
Vietcombank’s social security activities
was 386 billion VND, that of 2021 was 662
billion VND. In particular, 381 billion
VND was spent to support to eliminating
the effects of COVID-19,
VCB used around 136 billion VND for
building houses for the poor/solidarity
houses.
Governance
In 2020, the Board of Directors of
Vietcombank organized 71 meeting
sessions, and 36 collections of written
opinions for the purpose of directing
Vietcombank’s operation periodically.
Vietcombank’s investor relations activities in
2021 had also evolved, keeping up with the
general trend in the context of the pandemic
and achieved the recognition of
shareholders, investment funds, securities
companies as well as most of domestic and
international investors.
5. Conclusion and Recommendations

Banks’ financial performance is highly sensitive to policies.

All banks can lower the WACC by reducing their Weight of Debt. However, they have
to balance this due to the capital mobilization is the main operation of the banks.

Corporate Governance is improved compared to previous years, however, there are

still many flaws in Responsibilities of the Board and Roles of Stakeholders.
 Recommendation
BIDV VCB CTG VPB

Intrinsic stock
57,717 VND 53,062 VND 53,770 VND 18,375 VND
price per share

Market price
37,100 VND 78,000 VND 33,900 VND 18,055 VND
(31/12/2021)

Undervalued or
Under Over Under Under
overvalued

% difference 55.57% 47% 58.61% 1.77%

Recommendation Buy Sell Buy Hold

THANK YOU
REFERENCES

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Vietnamnews. (2022). Vietnam Bank for Social Policies helps people overcome financial difficulties after social distancing period.
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https://www.vpbank.com.vn/-/media/2c9460782318453d90583ff620fb8e11.ashx

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Bad Debt Ratio of Vietnam banking industry 2020-2021