Vietnam banking sector

26 January 2011

INDUSTRY UPDATE

BANKING
Key indicators
No. of listed banks Total market cap (VND bn) Market cap (USD mn) %/ total market cap Average P/E 2010F (x) Average P/B 2010F (x) ROA (%) ROE (%) 8 157,877 7,518 21.1 9.9 1.8 1.5 18.0

Has the storm passed?

In 2010, the banking sector lost 18% as a consequence of new issuances, dilution issues and new regulatory changes while the VNIndex was down 2%. With new regulations becoming effective, large commercial banks with adequate capital and hence lower cost of capital, better asset-liability management and lower operating cost will see higher growth opportunities and profitability than peers.
Small capital base, high loan-to-deposit (LDR) ratios and possibility of higher non-performing loans (NPL) in the banking system are key investment risks. In 2011, ten small banks still need to raise at least VND12,000 billion (~USD600 million) to meet the minimum capital requirement of VND3,000 billion at year end. High LDR rate with large reliance on borrowings from other credit institution coupled with high credit growth compared to deposit growth lead to imbalances in the source of funds. Besides, loans to big stateowned enterprises such as Vinashin may create higher NPL in the banking system, which can deteriorate the bottom line. New regulations are good catalysts for fundamental improvement in the banking system in long run. Decree 141 on minimum chartered capital of VND3,000 billion and Circular 13 relating to sources of capital mobilisation, capital adequacy ratio, risk-weighted ratio for securities and property loans will lead to many changes in commercial banks operation as they should manage to raise their capital base and restructure their assets. Given the growing recovery pace of the economy, improved personal income and increasing number of small and medium enterprises (SMEs), commercial banks have great potential for retail banking services and financial services for SMEs. We believe it is now a good time to accumulate banking stocks, especially the top-tier commercial banks with good market share and strong capital base. Valuations of banking stocks have become increasingly attractive, currently trading at an average 2010PE of 9.9x and average 1.8x PB, lower than the general market valuations. Compared to regional peers, the Vietnamese banking sector posted high ROE of 18% and ROA of 1.5% cf. 15.8% and 1.3% ROA. We like ACB, STB and EIB as (i) these are the pioneer banks in retail banking services in Vietnam with good brand name (ii) restructuring period will be good opportunities for large banks with strong capital base to obtain distressed assets and gain higher market share in the future (iii) attractive valuation ratios and ability to improve the bottom line. We also see positive catalysts for capital gain in the share prices of VCB and CTG as they are the top two largest banks in Vietnam with sizeable available foreign room.

Key banks
Outstanding shares (mn) Foreign room (%)

ACB
938 30% 2,520 -20% 9.6 1.9 22% 1.2%

EIB
1,056 30% 1,642 28% 9.2 1.1 13% 1.8%

VCB
1,759 2.9% 2,303 -29% 14.9 3.2 23% 1.3%

EPS (VND) EPS growth (%) P/E (x) P/B (x) ROE (%) ROA (%)

Price performance
Absolute % Relative %

3M
13% 3%

6M
3% 3%

12M
-10% -11%

20% 10% 0% -10% -20% -30% Apr-10 Jul-10 Jan-10 Feb-10 Mar-10 Jun-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 May-10 Jan-11

VNINDEX

.VNBANK

Hoa Hoang, Analyst hoa.hoang@vcsc.com.vn T: +84 8 39153588 ext 146

See important disclosure at the end

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Vietnam banking sector update

Why the banking sector?
Maintained good profit growth even during the financial crisis The past two years were challenging time for the global banking sector. However, Vietnam banks have managed to avoid the direct impact of the global financial crisis registering average profit growth of 26% in 2008 and 47% in 2009.
Figure 1: Profit after tax growth (% YoY) 100% 2008 80% 60% 40% 20%
5% 57% 57% 42% 59% 54% 38% 45% 30% 47% 26%

2009

3Q2010

75%

23%

7% 0% -3%

0% VCB -20% -40% Source: VCSC summary CTG EIB

ACB

STB

Average

-32%

During the first 3Q2010, though faced with a number of regulatory changes, the average net income growth of the larger banks remained above 23%.

Low cost-to-income ratios Vietnams average cost-to-income ratio is around 40%, substantially lower than the regional peers, and above only China and Singapore. With low cost-to-income ratios, Vietnamese banks have been able to improve their bottom line and increase their profitability ratios.
Figure 2: Vietnams banks maintain a good cost to income ratio Cost to income 70% 60% 50% 40% 30% 20% 10% 0% 2008 2009 3Q2010 Vietnam banks costs are quite low compared to regional peers 100% 80% 60% 40% 20% 0%

Source: VCSC summary, The Asian Banker

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Effective ratios Low capital base and good cost management enable Vietnamese banks to earn higher profit ratios. Except for EIB which increased its charter capital rapidly in 2007, other banks all have double-digit ROEs.
Figure 3: and high efficiency thanks to low capital base ROE 30% 25% 20% 15% 10% 5% 0% CTG VCB ACB STB EIB Average 0.0% VCB ACB STB % yoy 9 8 7 6 5 4 3 2 1 0 EIB Average CTG 1.0% 2.0% 2008 ROE 2009 ROE 3.0% ROA 2008 ROA 2009 ROA

Source: VCSC summary

Capability to improve efficiency ratios thanks to potential development of retail banking services and financial services for SMEs In 2010, Vietnams GDP broke through the USD100billion mark with GDP per capita at nearly USD1,200 doubling over the last 5 years. The countrys young population combined with improved personal income will lead to higher demand for retail banking services. Vietnams demographic should underpin growth in payment services, credit cards and personal financing services.
Figure 4: Vietnam posted a high GDP growth over the past 10 years... GDP per capita is double within 5 years USD 1,400 1,200 1,000 800 600 400 200 Vietnam GDP was over USD100bn in 2010 USD bn 120 100 80 60 40 20 0
Nominal GDP (RHS) GDP growth (LHS)

Source: CEIC, GSO

In addition, the private sector played a key role in the Vietnam economic development during the past 10 years with a CAGR of 24%. In 2008, the private sector investment accounted for c. 41% of the total investment, significantly higher than the state contribution of 29%. Though the government stimulus www.vcsc.com.vn | VCSC<GO>

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following the global financial crisis did increase state sector stimulus in 2009 and 2010, we believe the increasing number of small and medium enterprises (SMEs) will drive the demand for corporate lending, trade financing and international payment services.
Figure 5: ... and rapid growth of the private sector Total investment by sector State
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 18 23 18 23

Private sector posted a CAGR of 24% over the past 10 years VND bn 350,000
26

Private
17 25 16 31 14

Foreign Invested
15 16 16

30

26

300,000 250,000

38

38

38

41 41 39

36

200,000 150,000 100,000

59

60

57

53

48

47

46

43

29

35

38

50,000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: VCSC summary

Attractive valuations As a consequence of new issuances and dilution issues, investors shied away from banking stocks while the sector greatly underperformed the market. In 2010, the banking sector lost 18% while the VNIndex was down 2%. However, the secto r has seen signs of recovery since December 2010 sector gaining 17% during that month.
Figure 6: Banking sector has underperformed in 2010 and only recovered in the last month of 2010 as
20% VNINDEX .VNBANK

10%

0%

-10%

-20%

-30% Jan-10 Jun-10 Aug-10 Sep-10 Nov-10 Dec-10 May-10 Feb-10 Mar-10 Jan-11 Apr-10 Jul-10 Oct-10

Source: Bloomberg, VCSC summary

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Valuations of banking stocks have become increasingly attractive, currently trading at an average 8.9x PER and average 1.6x PB, lower than the market valuations and regional peers. For large commercial banks such as ACB, STB and EIB, these banks have been trading at a large discount compared to their peers in domestic markets as these are highly liquid stocks and no available room for foreign investors (currently at 30% of charter capital).
Figure 7: Banking sector was also underperformed in 2010 in terms of PE and PB PE 14.0 12.0 10.0 8.0 6.0 4.0 2.0 01-10 02-10 03-10 04-10 05-10 06-10 07-10 08-10 09-10 10-10 11-10 12-10
PE - ACB PE - STB PE -VNindex

PB 3.0 2.5 2.0 1.5 1.0 0.5 0.0 04-10 05-10 05-10 06-10 07-10 07-10 08-10 09-10 09-10 10-10 11-10 11-10 12-10
PB-STB PB-EIB PB- VNIndex

Source: Bloomberg, VCSC summary

Compared to regional peers, the Vietnamese banking sector posted higher ROE of 18% and ROA of 1.5% cf. 15.7% ROE and 1.3% ROA.
Figure 8: Vietnams banks are quite small compared to regional peers but have better efficiency ratios Total Assets (USD mn)

Country

Market cap (USD mn)

P/E (x)

P/B (x)

ROE LF (%)

ROA LF (%)

China (5 securities) Thailand (10 securities) Malaysia (10 securities) Indonesia (18 securities) India (36 securities) Philippines (12 securities) Vietnam (8 securities) Pakistan (14 securities) Sri Lanka (6 securities) Average
Source: Bloomberg, 26 January 2011

7,572 4,765 4,164 4,256 2,062 1,358 1,145 587 453 2,929

83,981 31,726 26,634 12,351 23,012 7,603 7,775 4,546 1,590 22,135

10.62 18.00 12.43 22.06 12.39 12.35 8.89 11.56 23.21 14.61

1.91 1.79 1.81 2.87 1.59 1.60 1.61 1.29 2.88 1.93

19.71 13.44 16.08 17.80 16.17 13.45 18.01 13.12 14.13 15.77

1.05 1.24 1.16 1.78 0.91 1.73 1.56 1.11 1.45 1.33

We believe it is now a good time to accumulate banking stocks, especially the large bank with good market share and strong capital base. We like ACB, STB and EIB as (i) these are the pioneer banks in retail banking services in Vietnam with good brand name (ii) restructuring period will be good opportunities for large banks with strong capital base to obtain distressed assets and gain higher www.vcsc.com.vn | VCSC<GO>

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market share in the future (iii) attractive valuation ratios and ability to improve the bottom line. We also see good catalyst for capital gain in the share prices of VCB and CTG as they are the two largest banks in Vietnam with sizeable available foreign room.

Figure 10: Comparison between listed banks Unit: VND bn VCB CTG ACB STB EIB SHB

Current Outstanding Shares (mn) Share Price as 26/1/2011 (VND000) Charter Capital 2010 Increase in 2010 charter cap Current Market Capitalization Current Free float (%) Current Foreign ownership (%) EPS 2010F EPS growth ROE 2010F ROA 2010F PB 2010F PE 2010F
Source: VCSC summary, 26 Jan 2011

1,759 34.3 17,588 45% 60,325 9.3% 2.9% 2,303 -29% 23% 1.3% 3.2 14.9

1,517 23.5 15,172 35% 35,655 10.8% 1.0% 2,224 -3% 23% 0.9% 2.2 10.6

938 24.4 9,377 20% 22,879 100% 30% 2,520 -11% 22% 1.2% 2.0 9.7

918 15.8 9,179 37% 14,503 100% 30% 1,990 -20% 16% 1.3% 1.1 7.9

1,056 15.2 10,560 20% 16,051 100% 30% 1,642 28% 13% 1.8% 1.1 9.3

349 11.2 3,493 75% 3,912 100% 1.5% 1,402 -10% 18% 1.2% 1.3 8.0

Structural changes improve long-term fundamentals of the sector

The State Bank of Vietnam implemented a number of new rules in 2010 that will affect the operations of commercial banks going forward.
Figure 9: New banking regulations applicable to commercial banks in 2010 No. Legal document Content Effective date

1 2

Decree No. 141/2006/ND-CP dated 22 November 2006 Circular No. 15/2009/TT-NHNN dated 10 August 2009 Letter No. 369/TB-VPCP dated 30 December 2009 Circular No. 07/2010/TT-NHNN dated 26 February 2010 and

Minimum chartered capital of VND3,000bn (~USD150mn) by end of 2010 Requires commercial banks to use up to 30%, instead of 40%, of the short-term deposit for medium and long-term loans Bans banks from trading gold Allows commercial banks to negotiate lending rates on short-term and long-term 1 Jan 2010

3 4

31 Mar 2010 14 Apr 2010

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No. Legal document Content Effective date

Circular 12/2010/TT-NHNN dated 14 April 2010 5 6 Circular No. 13/2010/TT-NHNN dated 20 May 2010 Circular No. 19/2010/TT-NHNN dated 27 September 2010 Circular No. 22/2010/TT-NHNN dated 29 October 2010 Law No. 47/2010/QH12 on credit institutions

loans Stipulates prudential ratios in operations for credit institutions Adjusts some articles in Circular 13, especially the components of total deposits Restricts gold lending to specific goldrelated entities Regulates institutions the operations of credit 1 Oct 2010 1 Oct 2010

7 8

29 Oct 2010 1 Jan 2011

Source: VCSC summary

Circular 13 and the 2010 Law on Credit Institutions will bring about fundamental improvements as commercial banks will have to make appropriate changes in their operations and development strategies.

Effects of Decree 141

Decree No. 141/2006/ND-CP, issued on 22 November 2006, required all commercial banks to have a minimum chartered capital of VND3,000bn (c. USD150mn) by the end of 2010. At the beginning of 2010, there were 22 commercial banks with a chartered capital below the VND3,000bn threshold and the sector, as whole, would need at least VND33,000bn to meet the minimum capital requirement. Concurrently, the larger commercial banks had plans to increase their capital base to meet the new CAR requirements. As a result, fear of oversupply of bank stocks led to a sluggish performance in the sector for the whole of 2010. Until December 2010, there were 10 small commercial banks that were unable to raise the charter capital to VND3,000 billion. During 2010, these banks can only attract VND3,507 billion, approximately one fourth of total capital demand. As such, these banks will need to raise at least VND12,000 billion (~USD600 million) in 2011 to meet the minimum capital requirement of VND3,000 billion at the end of 2011. However, on 14 December 2010, the SBV extended the deadline until the end of 2011. The deferment has lessened the immediate capital need allowing the sector to recover to attractive levels, laying the foundation for a successful capital raise in 2011.
Figure 11: Banks with charter capital of less than VND3,000 billion at the end of 2010 Charter capital @ 31/12/2009 Charter capital @ 31/12/2010 Increase during 2010 Unable to raise capital in 2010

Bank name

1 2 3 4

OCB Western Bank Nam A Viet A

2,000 2,000 2,000 1,515

2,635 2,000 2,000 2,087

635 572

465 1,000 1,000 913

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Bank name

Charter capital @ 31/12/2009

Charter capital @ 31/12/2010

Increase during 2010

Unable to raise capital in 2010

5 6 7 8 9 10

Kien Long Gia Dinh SG Cong thuong Bao Viet VN Thuong tin Petrolimex Total

1,000 1,000 1,500 1,500 1,000 1,000 14,515

2,000 2,000 1,800 1,500 1,000 1,000 18,022

1,000 1,000 300 3,507

1,000 1,000 1,200 1,500 2,000 2,000 12,078

Source: Banks website, SBV, VCSC summary

Impact of Circular 13
Circular 13 implements a set of important obligations for the banking sector: The CAR is raised from 8% to 9%. The loans-to-total-deposits ratio is not allowed to exceed 80%. The risk weight ratio for securities and property loans is 250% (previously 100%). Investments in other credit institutions and subsidiaries in the form of capital contribution or purchase of shares are excluded from Tier 1 capital. Total investment in subsidiaries and affiliates must not exceed 25% of the credit institutions charter capital and reserve funds. Total capital contribution and financial investments in all enterprises, investment funds, investment projects or other credit institutions and in affiliated companies must not exceed 40% of credit institutions charter capital and reserve funds. Credit institutions are banned from lending to affiliated securities trading businesses or from providing unsecured loans for securities investment and trading. Total outstanding loans for securities investments and trading must not exceed 20% of the banks charter capital.

With these requirements, many of the commercial banks will have to restructure their assets and operations, which may lead to higher cost of fund and lower net interest margin. Enhancing financial capability Currently, among the 40 commercial banks, only ten have a charter capital of over VND5,000 billion, of which only VCB, CTG and EIB have a charter capital above VND10,000 billion (excluding the two largest state-owned commercial banks BIDV and Agribank). The average chartered capital of the Vietnam banking system is VND3,666 billion (~USD183 million), much lower than those of regional peers. As the average capital base of the banking system is still low, the capital raising story of the banking system not only created a great pressure on the local market in 2010 but may last through 2-3 years afterwards. For 10 small banks with chartered capital below VND3,000 billion, they will need to fulfil their capital raising plan in 2011. Also, such large bank as CTG also has plan to increase its chartered capital from VND15,172 billion to c. VND30,000 billion in 2011.

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Expanding sources of capital mobilisation Prior to Circular 22, banks were allowed to convert gold deposits into Vietnam Dong equivalent for lending. However, as this regulation was removed, banks have to attract more VND deposits, mainly short-term deposits to ensure the balance between deposits and loans. We should continue to see banks divesting their positions in other credit institutions and non-core businesses to enhance their owners equity because these are excluded from Tier 1s capital. VCB recently sold a portion of its ownership in EIB and PVD. Issuing long-term bonds As banks are allowed to include bonds of over 5-year term into their Tier 2 capital, many banks plan to issue longer-term bonds with or without conversion terms. This should allow banks to enhance their asset-liability management, reducing their liquidity risk. Both ACB and Techcombank issued VND3,000bn 10-year bonds to enhance their capital base. Reducing loans to securities and real estate sectors and increasing focus on consumer lending Banks normally charge higher interest rates for securities and real estate lending. However, these loans now have a higher risk weight ratio of 250%, which will impact the cost of funding and lower the interest income. Expanding sources of capital mobilisation will raise banks cost of capital. Meanwhile, reducing loans to fields that can afford high lending interest rate such as securities, real estate loans lessen banks interest income. Consequently, we believe banks will increase their focus on consumer loans, which can charge higher interest rates and are subject to a lower risk weight ratio.

The 2010 law on credit institutions

The law on credit institutions stipulates that commercial banks must establish or acquire subsidiaries/ associates to carry out the following business operations: underwriting, securities brokerage, financial leasing and insurance. Meanwhile, under Circular 13, investments in other credit institutions and affiliated companies in the form of capital contribution or purchase of shares are excluded from Tier 1 capital. Under the new law, only commercial banks are allowed to provide such banking services as capital mobilisation, lending and settlement services for organizations and individuals. Non-banking institutions, such as financial leasing companies, are prohibited from receiving deposits from individuals and provide payment services via clients bank accounts. Accordingly, finance companies such as PVF will face difficulties in expanding their operations as they can only serve organizations and not extend to retail clients. We believe the retail segment will become increasingly important for commercial banks. Credit institutions are banned from lending: to securities brokers that the credit institutions hold control. if secured assets are stocks of the credit institution or its subsidiaries. to make capital contributions to another credit institution if secured assets are stocks of the credit institution receiving the contributed capital.

In addition, under the new banking law, banks must comply with the following requirements: Total outstanding loans to a subsidiary/associate that the credit institution holds control are not allowed to exceed 10% of the credit institutions equity and 20% of the credit institutions equity is the limit for total outstanding loans to all subsidiaries and associates.
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Total outstanding loans to a client are not allowed to exceed 15% of the credit institutions equity and total outstanding loans to a client and related person should not exceed 25% of the credit institutions equity.

Key investment risks

Many banks in Vietnam have a small capital base compared to total assets At the end of 2009, according to The Asian Banker, average total assets of the top 10 largest banks in Vietnam was USD8,363 million or USD6,694 million if the state-owned bank - Agribank is excluded. The small size of Vietnam banks puts individual banks under pressure to increase their capital base and ensure comfortable capital adequacy ratios. As the CAR is not available and vary from countries to countries, we use equity/asset ratio to compare between banks in Vietnam and in the region.
Figure 12: Top 10 largest banks in Vietnam in term of assets and its regional peers Unit: USD mn Assets Net profit Equity ROE (%) Equity/Asset (%)

Agribank Vietcombank (*) Vietinbank (*) ACB (*) STB (*) Military Bank EIB (*) TCB Maritime bank VIB Average top 10 banks in: Vietnam Philippines Indonesia Thailand Malaysia India China
Source: The Asian Banker

23,384 15,050 13,193 9,085 5,629 3,734 3,542 3,495 3,457 3,065 8,363 9,039 17,878 25,936 35,923 83,289 749,372

196 232 140 119 90 64 61 69 42 25 104 84 312 265 338 726 6,925

751 903 711 502 517 342 735 280 152 147 504 902 1,580 2,389 2,850 5,058 35,122

26.1 25.7 19.7 23.7 17.4 18.7 8.3 24.6 27.6 17.0 20.9 10.8 17.2 9.9 14.1 17.0 20.4

3.2 6.0 5.4 5.5 9.2 9.2 20.7 8.0 4.4 4.8 7.6 10.0 8.6 9.4 7.5 5.9 4.6
(*) listed banks in Vietnam

Even large banks such as VCB or CTG had an equity-to-total-asset ratio of less than 8% in 3Q2010. As such, the minimum CAR of 9% as required by Circular 13 from 1 October 2010, may be difficult to attain for many of the banks in the country.

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Figure 13: 3Q2010 Equity/Total asset (%)

16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% VCB CTG EIB ACB STB CAR=9%

Source: VCSC summary

High LDR ratios At the end of the third quarter of 2010, four of the five banks in our coverage list had loans-to-deposits ratios of over 80%. Circular 19 expands the total deposit base when calculating LDR ratios, leaving some buffer for the banking system. Sources of capital that banks can use for lending include: Non-term and term deposits from individuals. Term deposits from organizations including those from other credit institutions. 25% of non-term deposits from economic institutions (excluding those from credit institutions). This means the larger banks will benefit from the large balance of non-term deposits of Vietnams State Treasury of c. VND52,000 billion, in which c. VND20,000 billion are at the four largest banks Agribank, BIDV, VCB and CTG. Loans from domestic organizations and other credit institutions with terms of three months or more. Capital mobilized through issuing valuable papers.

Figure 14: High loan to deposit ratio with large reliance on borrowings from other credit institutions LDR Borrowings from other credit institutions/Total deposits

150% 100% 50% 0% VCB

2008

2009

3Q2010

30% 20% 10% 0%

2008

2009

3Q2010

CTG

EIB

ACB

STB

VCB

CTG

EIB

ACB

STB

Source: VCSC summary

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Higher liquidity risks Credit growth in Vietnam has historically been much higher than customer deposits growth, extending the spread between short-term deposits for longer-term loans. For the whole banking system, since 2007 credit growth has remained above deposit growth.
Figure 15: Credit growth is always much higher than deposit growth The whole banking system 2009 deposit and credit growth of selected banks

Deposit growth
60% 50% 40% 30% 20% 10% 0% 42%

Credit growth 100%

54%

Deposit growth 80%

Credit growth

37% 48%
25%

32%

25%

40% 29%

60% 40% 20% 0% VCB CTG EIB ACB STB

23%

27%

2004 2005 2006 2007 2008 2009 2010

Source: SBV, VCSC summary

Possibility of higher NPL ratios Although, average NPL remained at c. 2.5% in 2010, actual NPL in the banking system may be higher as some banks may not make full provisions for big state-owned enterprises (SOEs) loans. Vinashin is now in restructuring total outstanding loans of VND86,000 billion, of which c. VND26,000bn is in the banking system. These loans have not been included in the current NPL of the banking system. According to SBVs estimate, NPL could rise to 3.2% if they take into account Vinashins debt.

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Appendix 1: Comparison of listed banks

COMPARABLE (VND bn) Current Outstanding Shares (mn) Share Price 26/01/2011 (VND000) Charter Capital 2009 Charter Capital 2010 Increase in 2010 charter cap Current Market Capitalization Current Free float (%) Current Foreign ownership (%) Profit before tax 2009 A 2010 F 2010 earnings growth F Profit after tax (PAT) 2009 A 2010 F Total loans (before provision) 2009 A 2010 F Total Deposit (*) 2009 A 2010 F Total assets 2009 A 2010 F Credit growth (%) 2009 A 2010 F Deposit growth (%) 2009 A 2010 F Asset growth (%) 2009 A 2010 F Loan/Deposit rate (%) 2009 A 2010 F Equity/Total asset (%) 2009 A 2010 F EPS 2010F EPS growth ROA 2010F ROE 2010F PB 2010F PE 2010F 7% 6% 2,303 -29% 1.3% 23% 3.2 14.9 5% 5% 2,224 -3% 0.9% 23% 2.2 10.6 6% 6% 2,520 -11% 1.2% 22% 2.0 9.7 10% 9% 1,990 -20% 1.3% 16% 1.1 7.9 20% 15% 1,642 28% 1.8% 13% 1.1 9.3 9% 7% 1,402 -10% 1.2% 18% 1.3 8.0 68% 66% 92% 91% 57% 59% 70% 67% 93% 91% 52% 52% 15% 20% 24% 51% 63% 20% 44% 32% 37% 45% 90% 46% 32% 25% 27% 45% 35% 50% 37% 40% 26% 43% 34% 30% 27% 21% 35% 43% 81% 54% 70% 34% 81% 58% 49% 30% 256,053 307,264 243,785 368,115 167,881 201,457 104,019 137,305 65,488 94,958 27,439 40,000 207,542 259,428 177,034 256,699 108,992 163,488 85,632 119,885 41,294 67,000 24,615 32,000 141,621 171,361 163,170 233,333 62,358 96,000 59,657 80,000 38,381 60,642 12,829 16,677 3,945 4,050 2,573 3,375 2,201 2,363 1,671 1,827 1,132 1,734 311 490 5,004 5,400 8% 3,373 4,500 33% 2,838 3,150 11% 2,175 2,436 12% 1,533 2,312 51% 415 653 57% VCB 1,759 34.3 12,100 17,588 45% 60,325 9.3% 2.9% CTG 1,517 23.5 11,252 15,172 35% 35,655 10.8% 1.0% ACB 938 24.4 7,814 9,377 20% 22,879 100% 30% STB 918 15.8 6,700 9,179 37% 14,503 100% 30% EIB 1,056 15.2 8,800 10,560 20% 16,051 100% 30% SHB 349 11.2 2,000 3,493 75% 3,912 100% 1.5%

* Total deposit includes customer deposit and other credit institutions deposit.

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Vietnam banking sector update

Appendix 2: Charter capital increase of commercial banks in Vietnam

Charter capital (VND bn) Bank name 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 VCB CTG EIB ACB STB SHB NVB HBB Total listed banks TCB MB Dong Nam A Maritime Bank Dong A SCB VIB ABB Lien Viet Tin Nghia VP Bank Southern Bank Ocean Bank Dai tin Tien Phong Bac A GP Bank HDB Mekong housing Dai A De Nhat Gia Dinh OCB Western Bank Viet A Kien Long Nam A Saigon Cong thuong Bao Viet VN thuong tin Petrolimex Total OTC banks Total Banks OTC OTC OTC OTC OTC OTC OTC OTC OTC OTC OTC OTC OTC OTC OTC OTC OTC OTC OTC OTC OTC OTC OTC OTC OTC OTC OTC OTC OTC OTC OTC HOSE HOSE HOSE HNX HOSE HNX HNX HNX 12/31/2009 13,224 11,253 8,800 7,814 6,700 2,000 1,000 3,000 20,514 5,400 5,300 5,068 3,000 3,400 3,653 3,000 3,482 3,650 3,399 2,117 2,568 2,000 2,000 2,000 2,120 2,000 1,550 1,000 1,000 1,000 1,000 2,000 2,000 1,515 1,000 2,000 1,500 1,500 1,000 1,000 73,222 93,737 12/31/2010 17,588 15,172 10,560 9,377 9,179 3,498 3,304 3,000 28,357 6,932 6,700 5,334 5,000 4,500 4,185 4,000 3,830 3,650 3,399 4,000 3,049 3,500 3,000 3,000 3,000 3,018 3,000 3,000 3,100 3,000 2,000 2,635 2,000 2,087 2,000 2,000 1,800 1,500 1,000 1,000 100,219 128,576 Increase 4,364 3,919 1,760 1,563 2,479 1,498 2,304 7,843 1,532 1,400 266 2,000 1,100 532 1,000 348 1,883 481 1,500 1,000 1,000 880 1,018 1,450 2,000 2,100 2,000 1,000 635 572 1,000 300 26,997 34,840 1,000 1,200 1,500 2,000 2,000 465 1,000 913 1,500 1,510 1,050 Not yet issued in 2010

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