HANOI UNIVERSITY

FACULTY OF MANAGEMENT AND TOURISM

------------------------------o0o------------------------------

ANALYSIS ON TPBANK
IN THE PERIOD OF 2020-2022

Course : Bank Management

Lecturer : Assoc. Prof. Dao Thi Thanh Binh
Tutor : Mrs. Nguyen Thi Minh Hang
Mrs. Dao Huong
Tutorial class: Tut 1
Students’ name:
Phạm Thị Vân Anh - 1904040009
Nguyễn Minh Hằng - 1904040038
Nguyễn Hoàng Anh - 2004040007

Hanoi, 5 Nov 2023

 PEER EVALUATION FORM

Team Members Student ID Task Given Mark Distribution

Nguyen Hoang Anh 2004040007 Analyze report, create 100%

slides, presenter (100%)

Pham Thi Van Anh 1904040009 Analyze report, create 100%

slides, presenter (100%)

Nguyen Minh Hang 1904040038 Analyze report, create 100%

slides, presenter (100%)
 Table of Contents
1. Introduction............................................................................................................................1
2.1. Overview.........................................................................................................................1
2.2. Organization....................................................................................................................1
2.3. Main services...................................................................................................................3
3. Analysis of bank performance...............................................................................................4
3.1. Income statement.............................................................................................................4
3.2. Return on asset................................................................................................................7
3.3. Return on equity..............................................................................................................7
3.4. Net interest margin..........................................................................................................8
4. Bank risks analysis.................................................................................................................9
4.1. Interest rate risk management..........................................................................................9
4.2. Liquidity risk management............................................................................................12
5. Capital Management............................................................................................................13
5.1. Types of capital in use in TP Bank................................................................................13
5.2. Analysis of Capital Adequacy Ratio (CAR):................................................................14
6. Liquidity and Lending Management....................................................................................16
6.1. Loan portfolio by types of loans....................................................................................16
6.2. Loan portfolio by quality...............................................................................................17
6.3. Loan portfolio by original term.....................................................................................18
7. Conclusion............................................................................................................................19
REFERENCES.........................................................................................................................19
 List of Figures
Figure 1: Logo of TPBank...........................................................................................................1
Figure 2. Organizational structure of TPBank................................................................................2
Figure 3: TP Bank’s Income Statement of 2020.............................................................................5
Figure 4: TP Bank’s Income Statement of 2021.............................................................................6
Figure 5: TP Bank’s Income Statement of 2022.............................................................................6
Figure 6: The Dollar gap chart in 3 years....................................................................................11
 List of Tables
Table 1: ROA ratio.....................................................................................................................7
Table 2: ROE ratio.....................................................................................................................8
Table 3: NIM..............................................................................................................................9
Table 4: The sensitive asset and sensitive liabilities in 3 years...............................................10
Table 5: The Dollar gap of TP Bank over 3 years...................................................................10
Table 6: Liquidity risk..............................................................................................................12
Table 7: TP Bank's Total Risk-Weighted Assets.....................................................................15
Table 8: TP Bank's Capital Adequacy Ratio............................................................................15
Table 9: TP Bank's loan portfolio by types of loans (VND million).......................................16
Table 10: TP Bank’s loan portfolio by quality (VND million)................................................17
Table 11: TP Bank’s loan portfolio by original term (VND million)......................................18
 Abstract
Tien Phong Commercial Joint Stock Bank, or TPBank, is one of the top
four private banks in Vietnam and is regarded as one of the country's
leading youthful and dynamic banks. In this paper, we will provide a
detailed study of TPBank's operations for the three years between 2020 and
2022. The introduction to the TPBank, a study of its performance, an
examination of its risks, an examination of its capital, and an examination
of its loans make up the five main sections of our report. For each
significant moment, our team would provide computation tables and charts
showing the TPBank's performance changes over a three-year period. For
every significant point, we would provide computation tables and charts
that show how the TPBank's performance changed over the course of three
years. Additionally, the purpose of this research is to assess the risks that
TPBank faces, how its resources might be managed, and offer solutions to
mitigate and prevent such risks.
1. Introduction

Figure 1: Logo of TPBank

Tien Phong Commercial Joint Stock Bank, abbreviated as TP Bank,is one of the authorized
banks carrying out legitimate business in Vietnam. It offers all standard banking services.
The strengths of significant shareholders such as the DOJI Jewelry Group, FPT Technology
Group, International Finance Company (IFC), Vietnam Reinsurance Corporation (Vinare),
and SBI Ven Holding Pte. Ltd., Singapore are passed down to TPBank. In order to provide a
thorough analysis of Tien Phong Bank, this study will go into great detail on the bank's
history, financial performance, and management of interest rate risk, loans, and capital.

2. Structure of TP Bank

2.1. Overview

Tien Phong Commercial Joint Stock Bank (referred to as “TPBank”) was established on May
5, 2008. TPBank has created many breakthrough products such as LiveBank 24/7 automatic
banking model, Savy - Multifunction savings application, QuickPay - payment by QR code,
electronic banking... TPBank has successfully applied virtual assistant T’Aio using artificial
intelligence and Machine Learning technology, customer recognition system by voice and
fingerprint... All of those unique products have helped TPBank become a leading bank. has a
diverse and outstanding digital banking ecosystem in Vietnam.
Throughout corporate history, TP bank has created its vision, mission, and core values.
Regarding vision, the bank has set the ambitious goal of becoming one of the leading banks
in Vietnam with financial products and services based on modern and advanced technology,
contributing to building a rich and strong country. TPBank believes that the bank
accomplishes the mission of providing perfect financial products/services to Customers and

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Partners based on modern, advanced and highly effective technology… TP Bank worked
with 5 core values: Integrity - Creativity - Progression - Synergy - Endurance

2.2. Organization

As a middle-class bank in the Vietnamese banking system, Tien Phong Bank has a rigid
organizational structure model from leaders to departments at all levels of management that is
in line with the present production and commercial structure. is accountable for a specific
aspect of the work and functions, allowing for the achievement of good outcomes.

Figure 2. Organizational structure of TPBank

The organizational structure of TPBank consists of the Annual General Meeting, Board of
Directors, Supervisory Board, and the CEO as specified in Article 32 of the Law on Credit
Institutions in 2010.
- The General Meeting of Shareholders (GMS)
The General Meeting of Shareholders (GMS) is TPBank's highest authority, with all
shareholders with voting rights represented. The General Meeting of Shareholders is in
responsibility of approving the bank's development priorities and making major decisions
such as modifying the charter, issuing additional shares, paying dividends, and so on. Annual

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Shareholders' Meeting at least once a year to approve the Supervisory Board and Board of
Directors' reports on the bank's administration.
- The Board of Directors (BOD)
The Board of Directors, which is elected by the GMS, is the bank's main executive body.
They have full ability to make decisions on behalf of the bank on all topics relating to the
bank's goals, interests, and duties, with the exception of those that come under the authority
of the GMS. It directs and supervises the bank's operations through committees and serves as
the strategic orientation of the annual operating plan. The TPBank Board of Directors is made
up of seven members, with Mr. Do Minh Phu being elected Chairman for the 2018-2023
term.
- The Supervisory Board
Operating independently of the Board of Directors and the General Director, this agency is
chosen by the GMS to supervise how the members of the Board of Directors and the General
Director adhere to the law and the Bank's charter. In addition to overseeing the operation of
the internal audit system and compliance with accounting standards and rules, the
Supervisory Board is responsible for reporting to the general meeting of shareholders on the
correctness and fairness of the annual financial statements. The Supervisory Board holds
extraordinary meetings every three months to address atypical issues. Ms. Nguyen Thi Bao
has been chosen to serve as the Chief of the Supervisory Board for the years 2018–2023.
- General Director
The Executive Board's chief, the General Director, is in charge of running the bank on a day-
to-day basis. The General Director will develop and carry out strategies to further the bank's
expansion and will submit reports on TPBank's operations and financial results to the relevant
authorities, including the GMS, BOD, Supervisory Board, and others. Mr. Nguyen Hung was
appointed as TPBank's Chief Executive Officer (CEO) in June 2012 and was reelected in
September 2017. Mr. Hung has approximately thirty years of experience in the banking and
finance industry.

2.3. Main services

Tien Phong Bank has achieved great things by continuously modernizing and advancing the
banking system and offering a vast array of excellent and special products and services in an
effort to provide customers with the maximum level of convenience.
Digital banking

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In order to provide its young and active clientele with the most effective banking and
financial products and solutions, TPBank is constantly looking for new opportunities. With
the aim of dominating the digital banking market, TPBank has focused on modern
infrastructure, cutting-edge technology, and a wide range of top-notch products. This is done
on the foundation of an advanced technological platform and an in-depth management level.
The first that needs to be noted is LiveBank, a 24/7 automated banking system. The second
item is the Savy - universal saving app. Savy is a savings application created by TPBank that
offers users distinctive experiences.
Loans
To provide the most comprehensive, effective, and pertinent support for each category of
customer, TPBank offers differentiated credit services. TPBank's lending services for
corporate customers can be fairly diverse. The bank supports firms' borrowing needs for
freight or transport business transportation, as well as replenishing operating funds to serve
production and commercial activities. Besides, TPBank presently offers a variety of loans
with reasonable interest rates to individuals dealing with concerns such as business,
investment, entertainment, study, or vacation, among others.
Savings and deposits
Customers can choose from a variety of deposit periods and interest rates at TPBank. People
can open a payment account for free and unlimited deposits and withdrawals whenever they
do direct transactions at counters, ATMs/CDMs, mobile banking, or online banking. Payment
accounts may be used for transfers, payments, non-cash payment activities, check writing, or
the issue of cards. Customers can select the best financial strategy thanks to the variety of
online transactions' tenors.
Besides, TPBank also offers a range of savings deposit programs, including: Bao An Loc
Deposit, Fortune Savings, Bao Loc Savings, Future Savings Kids, Truong An Loc Savings,
Savy Savings, Future Savings, LiveBank Savings, and so on, giving clients greater options.
Cards
Cards are another essential and useful financial service. Customers can choose between
TPBank debit cards and TPBank credit cards, which are the two main types of cards offered
by TPBank. Some examples of practical TPBank credit cards include the Visa international
credit card, Visa Platinum International Credit Card, Visa Gold International Credit Card, and
TPBank Visa International Credit Card Standard. There are many different kinds of TPBank
debit cards available, including the TPBank Visa CashFree International Debit Card, the

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Smart ATM Card 24/7, the TPBank MasterCard eMoney non-physical cards, and the TPBank
Visa Plus international debit card.

3. Analysis of bank performance

3.1. Income statement

An income statement displays the revenues, costs, and profitability of an organization over a
period of time. It is also referred to as a profit-and-loss statement or an earnings statement,
which investors can review to determine the success of the bank. The operating income,
operating expenses, and other factors influencing TP Bank's performance are shown in the
following consolidated financial statements.

Figure 3: TP Bank’s Income Statement of 2020

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Figure 4: TP Bank’s Income Statement of 2021

Figure 5: TP Bank’s Income Statement of 2022

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According to the consolidated financial statement, TP bank’s net interest income increased
from 7,619,057 (2020) to 9,946,049 million VND (2021). In addition, net interest income
has risen to 11,386,597 million VND in 2022, meaning the bank's management is generating
more revenue while controlling expenses, production costs, and overhead during the 3-year
period. Likewise, the profit after tax had risen, from 3,510,189 million VND (2020) up to
6,260,744 million VND (2022). The cause of this growth is that TP bank actively encouraged
debt resolution while lowering the percentage of unsecured loans and risk management is
closely regulated. TPBank's consolidated profit after tax in 2021 reached 4,829,179 million
VND, as a result of optimizing capital flows, cutting costs, strictly limiting risks, and growing
market share. Because the bank aggressively supported the State Bank's strategy to assist
customers experiencing difficulties as a result of the pandemic, we can see that the growth is
quite steady. It is clear that the operating expense from 2020 to 2021 was 4,197,293 million
VND to 4,570,696 million VND. However, in 2022, the operating expense rocketed to
5,945,257 million VND. The rise in operating expenses is not exactly a bad thing due to TP’s
profit after tax throughout the 3-year period is still quite good.

3.2. Return on asset

Return on assets (ROA) refers to a financial ratio that indicates how capable management
has been in converting assets into net earnings. ROA is calculated by using this formula:
ROA = Net Income / Total Asset

In this report, ROA is calculated and compared in three periods 2020, 2021, 2022.

Year 2020 2021 2022

ROA 1.89% 1.94% 2%

Table 1: ROA ratio

Generally, throughout 2020 and 2021, the ROA of TP Bank has not changed considerably.
This happened because TP's net income and total assets both slightly increased in 2021,
namely, net income increased from 3,510,189 million VND to 4,829,179 million VND.
Besides, total assets also increased mildly from 206,315 billion VND to 292,827 billion
VND. Another reason is that COVID-19 still takes place in 2020 and 2021, so the bank's
ROA is not very high yet TP Bank still managed to keep the ratio from decreasing.

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Moreover, at the end of 2022, ROA has risen by 0.6 percent, from 1.89 percent to 2 percent.
By the end of 2022, TPBank's business experienced growth as a result of the strong economic
recovery. Thanks to strong growth in revenue, namely operating income, net interest income
increased and good control of costs, the bank's after-tax profit has increased impressively. All
in all, despite the global pandemic, TP Bank’s performance on ROA is quite good.

3.3. Return on equity

Return on equity (ROE) measures the rate of return flowing to shareholders. ROE is a gauge
of a corporation's profitability and how efficiently it generates those profits. The higher the
ROE, the better a bank is at converting its equity financing into profits. It can be calculated
by the difference between net income and total equity.

ROE = Net Income / Total Equity

The table below shows the results after using the formula to calculate the ROE of TP bank
from 2020 to 2022.

Year 2020 2021 2022

ROE 23.54% 22.60% 21.51%

Table 2: ROE ratio

For as long as the ROE ratio is mainly in line with or significantly over the peer relations
average, it can be utilized to estimate dividend growth rates and sustainable growth rates.
Even with some drawbacks, ROE might still be a good place to start when trying to anticipate
how quickly a stock will rise and how quickly its dividends will expand. It is clear that
declining ROE suggests the company is becoming less efficient at creating profits and
increasing shareholder value. As stated in the annual reports of TP Bank, the only major trend
of ROE is downward (from 23.54% in 2020 to 22.60% in 2021 and down to 21.51% in
2022). Despite the stability of ROA, ROE seems to plummet throughout the 3-year period.

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3.4. Net interest margin

The net interest margin (NIM) of a financial institution is calculated by dividing the interest it
pays holders of certificates of deposit (CDs) and savings accounts by the net interest revenue
it earns from credit products such as loans and mortgages. A measure of a bank's or financial
company's probability of long-term success is approximated by the NIM, a profitability
statistic given as a percentage. This indicator helps prospective investors decide whether or
not to invest by providing information about the profitability of their interest revenue relative
to their interest expenses. To put it simply, a positive net interest margin indicates a
profitable company, while a negative number indicates inefficient spending. In the latter
scenario, a company may decide to take corrective action, such as transferring those assets to
more profitable ventures or utilizing the proceeds to settle the outstanding debt. Net interest
margin may be calculated by the following formula:

Net interest margin = (Interest Income – Interest Expense) / Total Earning Asset

The table below is the results after using the formula to calculate NIM of TP Bank from 2020
to 2022.

Year 2020 2021 2022

NIM 4.5% 4.3% 4.2%

Table 3: NIM

As stated in the financial reports for 2020, 2021, and 2022 of TP Bank, the only trend of net
interest income is upward. The figures in the net interest margin ratio, however, are likely to
decrease and stabilize in the years 2021–2022. The global economy was negatively impacted
by COVID-19, which may be the cause of this decrease in NIM. Additionally, the demand for
loans is not rising as a result of the failure and closure of numerous small businesses and
factories, as well as the forced temporary suspension of operations due to the lockdown.

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4. Bank risks analysis

4.1. Interest rate risk management

Interest rate risk – One of the most challenging and outright dangerous types of risk that all
financial institutions must deal with and no financial manager can totally avoid. Interest rate
risk refers to the possibility of changes in interest rates (in the United States or other
international markets). An interest-bearing asset, such as a loan or debt, is subject to interest
rate risk because there is a possibility that the asset's terms will change, changing the value of
the interest rate. The management of interest rate risk has expanded dramatically, and
numerous instruments have been developed to reduce interest rate risk. Therefore, dollar gap
management is a method for problem-solving:

Dollar gap = Rate sensitive assets – Rate sensitive liabilities

Or

Dollar gap = Interest-sensitive assets – Interest-sensitive liabilities

(Dollar gap = RSA-RSL)

The issue with interest rates is that, even though they are crucial to the majority of financial
institutions, their managers are unable to control the level or the direction of market rates of
interest. In the short- term, the interest rates can change the amount of net interest income the
bank earns. When interest-earning assets surpass interest-bearing liabilities by a
predetermined or cumulative maturity, the spread is positive or asset-sensitive, meaning the
asset is worth more than the liability. Since assets are changed at a slower rate than liabilities
in this situation, dropping interest rates will diminish or eliminate the net interest disparity in
the short term. The net interest rate differential will widen as interest rates rise.

A negative or liability-sensitive difference takes place when interest-bearing liabilities are

greater than interest-bearing assets for a given period or accruing, which causes many of the
liabilities to fluctuate in value more than assets. Considering that deposits are decided to trade
at lower interest rates than comparable assets in this situation, a decrease in interest rates will
shorten the duration of the net interest rate differential. On the other side, increasing interest
rates will cause net interest income to decline or disappear, which will lower earnings.

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 Year 2020 2021 2022

Sensitive assets 191,168,523 269,620,404 301,297,003

Sensitive liabilities 185,608,815 263,026,812 289,484,395

Table 4: The sensitive asset and sensitive liabilities in 3 years

Year 2020 2021 2022

Dollar gap (= RSA - RSL) 5,559,708 6,593,592 11,812,608

Table 5: The Dollar gap of TP Bank over 3 years

Figure 6: The Dollar gap chart in 3 years

The table indicates that TP Bank has been able to sustain a positive dollar gap over time, with
a notable growth from 5,559,708 million VND in 2020 to 11,812,608 million VND in 2022 –
the years following the complex Covid-19 pandemic, when the economy began to stabilize.
It can indicate that short-term loans made up the bulk of the bank's lending portfolio. A bank
needs to raise capital and make loans with the same maturities in order to reveal the dollar

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gap. To lower interest rate risk, banks do not necessarily need to have a dollar difference of
zero; rather, interest rate risk will drop as the gap expands. In the event that the difference is
positive, the bank has a number of options for closing it: using derivatives, selling short-term
bonds to purchase longer-term bonds, or raising short-term borrowing. The optimal course of
action for TP Bank to reduce interest rate risk would be to increase interest-sensitive debt
value (ISL) and decrease interest-sensitive asset value (ISA) in order to narrow the
differential in this term. In order to reduce the loss of value of the bank's assets and liabilities
when market interest rates rise, TP Bank has also created and managed the implementation of
debt gap limits and interest-sensitive assets with terms like less than one month, 1-3 months,
3-6 months, 6-12 months, 1-5 years, and more than 5 years. Using the interest rate sensitivity
gap calculation, the bank can adjust interest rates based on estimates about how market
interest rates will move.

4.2. Liquidity risk management

Each bank is also susceptible to the liquidity risk. The danger that a bank will not have
enough capital or operational capital to satisfy its customers' payment and lending demands
as well as the economy's investment needs is known as liquidity risk. When commercial
banks experience liquidity risk, they are in a condition of liquidity deficit (NLP < 0), which
results in missed investment opportunities and has a negative impact on the bank's
operational performance. Increasing cash assets, government securities is a common method
to lower the liquidity risk of financial institutions.

Liquidity risk 2020 2021 2022

Cash assets and Government 10.98% 7.31% 8.09%

securities/ TA

Current ratio 1.51x 1.55x 1.27x

Table 6: Liquidity risk

It is clear from the table that the ratios fluctuate throughout the 3 years. We can see that the
cash assets and government securities over the total asset ratio peaked in 2020 at 10.98%.

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However, there is a plummet in 2021 from 10.98% to 7.31%. This significant drop might be
the result of the COVID-19 pandemic affecting the world, being the contributing factor to the
downfall of the economy. After that, in 2022, there is only a slight increase, which is from
7.31% to 8.09%. TP Bank has reduced its liquidity risk and maintained its liquidity provision
by increasing cash assets, and government securities in 2022 as an attempt to recover from
the Covid-19 incident. About the current ratio, the industry in which the company operates
and its past performance will determine what constitutes a solid current ratio. Generally
speaking, current ratios of 1.50 or higher would suggest plenty of liquidity. As stated in the
table, the ratio was on the rise from 1.51x in 2020 to 1.55x in 2021. However, in 2022, this
ratio plummeted to 1.27x. An increase in the current liabilities of TP Bank caused this ratio to
decrease, therefore, it is safe to conclude that the bank experienced a shortage in liquidity in
2022. The above table also shows TP Bank is on the right track improving its liquidity by
increasing cash assets and government securities. However, the bank needs to establish plans
and take active measures to improve its current ratio.

TP Bank has issued regulations and procedures on liquidity management, including

regulations on managing liquidity gaps through maturity, liquidity risk ratios, stress test
scenarios, and backup plans to proactively take measures when facing market volatility. To
minimize liquidity risk, TP Bank plans to diversify its funding sources, develop a fund
management report system to calculate liquidity position daily, as well as prepare analysis
and forecast reports on future liquidity positions regularly, setting liquidity risk appetite and
capacity. In addition, TP Bank also maintains a list of secondary liquid assets such as
Government bonds, which may be sold or under repurchase contracts with the State Bank of
Vietnam, it is not only a secondary reserve in liquidity stress circumstances (if any) but also a
profitable investment, contributing capital to key national projects.

5. Capital Management

5.1. Types of capital in use in TP Bank

Capital is necessary for any business since it represents the net value. In general, banks use
numerous types of capital to reduce capital risk, such as: common stock, preferred stock,
surplus, subordinated debentures, capital reserves, undivided profits, equity commitment
notes, etc. TP Bank has been using 6 types of capital, which are: charter capital, share
premium, treasury shares, financial reserve, capital supplementally reserve and retained

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earnings (undivided profits), except for treasury shares, which has not been used since 2020.
TP Bank's charter capital (VND 15,817,555 million) takes the largest portion of TP Bank's
total capital, followed by retained earnings (VND 11,747,206 million) in 2022.
The Basel Requirement is defined as a series of three subsequent banking regulatory
agreements that developed capital requirements and risk assessments based on the Basel
Committee on Bank Supervision's (BCBS) international standards for global banks. The
requirement is intended to ensure that financial institutions' capital since it is enough to
satisfy their responsibilities as well as deal with unexpected losses. The Basel Requirement
attempts to build a strong basis of capital-adequacy criteria, proper banking supervision, and
market rules. The Basel Agreement on International Capital Standards is critical for banks
because the government requires all banks to strictly comply with the capital requirements
originally imposed by the government. Therefore, the amount of the bank's capital will be
assessed by the government.
There are now a total of three sets of regulations, particularly Basel I, II, and III. Basel I is the
initial set of laws and the first Basel capital standard in the sets of three international banking
regulations. Basel I aimed to improve the overall stability of the worldwide banking system
while also developing a unified and equal international banking system to prevent unfair
competition among international banks. Over time, Basel I revealed significant limitations,
especially the exclusion of operational risk, which led to the development of the Basel II
standard. The purpose of Basel II is to concentrate more on internal data, statistics, and
models. And finally, in Basel III, the major changes include capital weight and quality
increase, risk capture improvement, the leverage ratio modification, and problematic assets
identification.
At the moment, the implementation of Basel II standards is an absolute obligation for
Vietnamese banks in order to protect their business operations from the unexpected instability
of the financial market. TP Bank is also among the first two credit institutions in the market
to fulfill all three Basel II pillars. Soon after, it went a step further, declaring the completion
of Basel III implementation, making it the system's first bank to meet all of the Basel III
standards. TPBank has been involved in Basel III implementation and execution, notably
through self-research and intrinsic use of several of the Basel III standard's financial risk
management criteria, including liquidity, net stable capital, and leverage ratio. Since the end
of 2020, TPBank has kept up with all of the other components of Basel III and is now
completely compliant with this benchmark's regulations. As a consequence, after

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implementing Basel II effectively in early 2020, TPBank was able to satisfy all of the Basel
III criteria in a short time.

5.2. Analysis of Capital Adequacy Ratio (CAR):

In this study, we calculated TP Bank's Total Risk-Weighted Assets (RWA) following the
Basel I framework. Banks and other financial institutions can decrease credit risk by
calculating the minimum amount of capital that banks must maintain, in order to avoid
insolvency. To determine the total RWA, we first calculated the On-Balance-Sheet Credit
RWA and afterwards, plus the Off-Balance-Sheet Credit RWA.

Year 2020 2021 2022

Total Risk-Weighted Assets (RWA) 203,295,575 273,472,390 280,437,995

Table 7: TP Bank's Total Risk-Weighted Assets

The above table shows that Total Risk-Weighted Assets of TP Bank increased slightly in the
period of three years from VND 203,295,575 million in 2020 to VND 280,437,995 million in
2022. This indicates that TP Bank is experiencing more credit risk, therefore, TP Bank should
develop appropriate strategies for monitoring and reducing internal RWA. However, the
amount of TP Bank's total RWA is not high, compared to other banks like MB Bank, VP
Bank, etc., so it is not necessary for it to immediately increase the amount of holding capital
to hedge the credit risk.

2020 2021 2022

Tier 1 CAR (= Tier 1 Capital / RWA) 8.16% 9.38% 11.29%

CAR (= Total Capital / RWA) 8.24% 9.50% 11.50%

Ratio (= Tier 2 Capital / Tier 1 Capital) 0.0098 0.0132 0.0183

Table 8: TP Bank's Capital Adequacy Ratio

According to table 5.2, TP Bank's core capital ratio appears to gradually increase, all of
which exceed the minimum ratio required by Basel of 6% under Basel II and 8.5% under
Basel III, except for CAR in 2020. This illustrates that, as of 2021, the bank had enough
capital to sustain losses or stay liquid, which seems it was backed with sufficient equity rather

15
than debt. Not only that, the ratio of Tier 2 Capital to Tier 1 Capital also remains far less than
1, which satisfies Basel requirements for the ratio to be under 1. Tier 1 capital is a bank's
major source of funding. It is made up of shareholder equity and retained earnings. Tier 2
capital, including assets such as revaluation reserves, hybrid capital instruments, and
unreported reserves is less liquid and more difficult to measure precisely. TP Bank has
definitely kept the ratio constant and set a safety cushion against liquidity crises by securing
itself and its depositors. From 2022, the bank remains committed to the State Bank's
regulations on capital adequacy ratios and strictly satisfies Basel II requirements with a
capital adequacy ratio of above 10%, even though it did not meet the Basel requỉrements two
years before (8.24% in 2020 and 9.50% in 2021). TP Bank has been able to pay off the bank's
term loans and deal with those specific risks quickly thanks to a high capital adequacy ratio
and excellent business strategies. The bank is viewed as secure and likely to meet its financial
obligations. In order to reach this ratio in 2022, TPBank was twice permitted by the State
Bank of Vietnam to raise charter capital, increasing the bank's total reserves to more than
VND 15,818 billion through share private placement and dividend issuance, as well as its
equity capital and quality mobilized capital. Obviously, TP Bank appears to have increased
its financial capacity and performed activity more effectively.
In short, while the world and Vietnam's economies were being affected by the Covid-19
pandemic, Tien Phong Bank had a strategy to invest an amount of money to fulfill the
requirements of Basel III. This indicates that the leaders are persistent in implementing
standards with goals for transparency, competitive position, and, most importantly, boost the
economy's resilience.

6. Liquidity and Lending Management

6.1. Loan portfolio by types of loans

Year 2022 2021 2020

Loans to local economic entities and

individuals 159,318,228 139,073,396 117,673,901

Discounted bills and valuable papers 1,045,831 1,469,273 979,040

Payments on behalf of customers 20,807 - -

Loans financed by entrusted funds 6,959 24,712 55,834

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Loans to foreign economic entities and
individuals 601,138 660,476 1,282,216

Total 160,992,963 141,227,857 119,990,991

Table 9: TP Bank's loan portfolio by types of loans (VND million)

From the figure, we can clearly see that the Loans to local economic entities and individuals
appear to make up the majority of TPBank's lending portfolio. During the previous three
years, this loan has risen to VND 159,318 billion by the end of 2022. These are crucial loans
since they meet the needs of both customers and financial institutions for a wide range of
applications. In the context of Covid-19 epidemic, which increases customer loan
requirements, TPBank has instantly met the immediate demands of customers such as
schooling, business operations, mortgage, etc. with this amount of loans. Consequently, it is
obvious that the bank is an effective helpful intermediary for improving community and
individual use, thereby providing benefits for the economic state and supporting its long-term
development.
The Discounted bills and valuable papers also fluctuated from VND 979,040 million to over
VND 1 trillion two years later. On the contrary, other components such as Loans financed by
entrusted funds and Loans to foreign economic entities and individuals fell dramatically
throughout this period. It is probably because of the Covid-19 that aggravated the economy's
downfall from the beginning of 2020 to 2022, especially the Loans financed by entrusted
funds. Aside from that, it is noticeable that TP Bank did not make payments on behalf of
clients until 2022. From 2020 to 2021, this statistic vanishes from the bank's Financial
Statement. This means that these loans are becoming less important in the composition of TP
Bank's loans, since it has provided acceptable suppliers and good quality of care for people to
decide on from. Besides Loans to local economic entities and individuals, the rest of the
figures are barely noticeable, each contributing to less than 1% of TP Bank's total loans,
therefore, TP Bank should mainly focus on the Loans to local economic entities and
individuals.

6.2. Loan portfolio by quality

Recently, banks, customers, and financial businesses have been dealing with substandard,
doubtful, and loss loans for loan portfolios by quality. In particular, substandard loans are 30
to 90 days past due, doubtful debts are 90 to 180 days past due, and loss loans are 180 days or

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more, which have the potential to lose capital. Unpaid credit will have an impact on TP
Bank's financial resources, profitability, and risk provisions. As a result, TP Bank will
separate loans into appropriate debt groups according to customers' ability to pay off their
debt and refuse to approve loans for customers with bad debts.
Year 2022 2021 2020

Substandard 385,026 510,516 661,225

Doubtful 467,003 348,890 330,799

Loss 505,421 297,430 428,425

Table 10: TP Bank’s loan portfolio by quality (VND million)

As can be seen from the figure above, there was a significant decrease in the level of
substandard loans of TP Bank from 2020 to 2022, in which substandard loans in 2022 was
nearly equal to half of which in 2020. Meanwhile, doubtful loans gradually increased from
VND 330,799 million to VND 467,003 million and loss loans decreased from VND 428,425
million in 2020 to VND 297,430 million in 2021 and rose by VND 505,421 million in 2022,
even higher than the amount of loss in 2020. This is a sign that TP Bank should carefully
check out on their customers’ background and creditworthiness, and make sure that the loan
is given to the right individual or organization. The increase in doubtful and loss loans might
also be because of the Covid-19 pandemic that lasted for a long period. The impacts of the
Covid-19 outbreak on business operations and output, along with companies’ financial
situations in general, have forced TP Bank's bad debt ratio to be heading drastically upward.
Therefore, after the pandemic is over, TP Bank can maintain the stability of the good quality
loan amount to be high back again.

6.3. Loan portfolio by original term

Year 2022 2021 2020

Short-term 42,359,769 36,990,602 35,328,320

Medium-term 29,000,877 29,931,933 29,601,337

Long-term 89,632,317 74,305,322 55,061,334

Total 160,992,963 141,227,857 119,990,991

Table 11: TP Bank’s loan portfolio by original term (VND million)

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According to their original maturity, the loans can be divided into three categories: short-
term, medium-term, and long-term loans, with the latter making up about half of all loans.
Loans of a short or medium duration often have steady growth rates and little fluctuation in
their length. They aid in limiting credit and interest rate risks and guaranteeing TPBank's
viability. Furthermore, the quantity of long-term loans offered by TPBank has consistently
grown over time; for instance, the growth rate for 2022 is 40%, compared to 35% for 2022.
This illustrates how well TPBank is doing in terms of financing manufacturing companies
and individuals to enable them to develop in technology and produce a wide range of new
commodities that may be used to promote economic growth, quality of life, and exporting.

7. Conclusion

In summary, over the previous three years, TPBank has been creating fintech to offer
premium services that satisfy a wide range of client needs. To manage cash flow, borrowing,
equity, and interest rate risk, TPBank must have battled hard, even in the face of setbacks in
asset and capital allocation and some declining returns. Tien Phong Bank has remained strong
despite the pandemic's impact because to smart management choices and calculated moves.
This may indicate that TPBank is headed toward reaching its maximum potential in the
current period and may develop even more in the years to come.

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