(Acb) SFR

Strategic Financial Report
Asia Commercial Bank
2013
Strategic financial Report 2013
OPEN LETTER
For the attention of the Board of Directors of The Asia Commercial Bank. At first, please receive the best wishes from the Treasury Department for good health and prosperity in the New Year. Since the establishment about 20 years ago, the Asia Commercial Bank has continuously developed and remained its position among the top banks in the bank industry of Vietnam. This achievement is due to the non-stop working effort of many generations of employees over the past 20 years. Our first-rate mission now is to inherit and continue to bringing ACB to a new higher level: ACB will no longer be just a national brand name but also an international one. In 2012, the economy has witnessed many difficulties. As a result of that, the bank industry had been suffering from serious problems as well. Especially, there are some unfortunate events has occurred in ACB, bring us more obstacle than ever. However, despite that, ACB is still standing firm on its ground . Succeeding 2012 is 2013 with full of opportunities. In preparation for this year, according to the Chairman of BODs request, we - the Treasury Department, has written this strategic financial report. This report will analyze the external and internal factors that affect the position of ACB in present as well as in the near future. Base on those analyses we offer 2 projects for our bank in 2013. We are looking forward to receive your feedback. With many thanks, Treasury Department Nguyen Thu Hang (manager) Nguyen Huyen Trang Do Thi Cam Van Vu Thi Ninh Nguyen Viet Trinh Nguyen Duy Thanh
INTRODUCTION
In this strategic financial report, we highly appreciate the outside environment such as the macro situation of the world as well as in of our country, Viet Nam; or the real state of affair of banking system, which all have significant importance of our oriented plan of ACB in 2013. After having a general view about Vietnamese macroeconomic situation through non-financial ability, we use the Camels Model, a useful tool to examine the safety and soundness of banks, and help mitigate the potential risks which may lead to bank failures. With the using this CAMELS model, the situation of financial health of Asia Commercial Bank will be analyzed and evaluated in different ways. All of the analysis above is the result of examining SWOT analysis in 4 respects: Strengths, Weaknesses, Opportunities, and Threats of Asia Commercial Bank at that time. Using SWOT Matrix, we make attempt to put forward the strategic plan for Asia Commercial Bank in the future as well as propose and re-evaluate 2 projects in 2013.
Contents
I. 1. 2. Affecting factors External environment analysis Internal environment analysis A. B. C. II. III. IV. V. Financial analysis Non-financial analysis Performance analysis
4 5 9 9 27 33 40 46 55 56
SWOT analysis Development project Conclusion References
Affecting
factors
4 | External Environment Analysis
1. EXTERNAL ENVIRONMENT ANALYSIS

A. World situation
Almost four years have passed since the outbreak of the global financial crisis, but the world economy is still struggling to recover.Europe struggling to find a way out of the debt crisis persists past three years, the Japanese economy and sluggish growth. Emerging economies grow rapidly, such as China, India, Brazil, are to be the previous status
Developing economies
Eurozone:The world economy in 2012 experienced a lot of "bass note" and
lowered growth forecasts several times a year. The United Nations (UN) predicts the global economy will grow 2.2% in 2012, lower than the forecast 2.5% in June / 2012, and continues to grow "below potential" with an increase of 2.4% in 2013 and 3.2% in 2014. In particular, the debt crisis in the euro area (Eurozone) is the biggest risk for the global economy. Eurozone situation in 2012 can be encapsulated in three words "fragile". Europe: Many European economies came into recession and ultimately the Eurozone did not avoid recession back in III/2012 quarter. European Central Bank (ECB) said that the eurozone economy will decline 0.5% in 2012 and 0.3% in 2013 before recovering to 1.2% growth in 2014 American: the world's largest economy had relatively sluggish growth in 2012 and predicted no significant improvement in 2013 and 2014. UN predicts the U.S. economy will only grow by 2.1% in 2012, 1.7% in 2013 and 2.7% in 2014. Japan: The large investments to rebuild areas devastated by the earthquake tsunami in March / 2011 has helped Japan's economic recovery, but this recovery is "shortness of breath" when these expenses go down. Deflation, slow growth of world trade, weak domestic demand and exports decline, especially to China (down to 14.5% in 11/2012), is pushing Japan the risk of the fifth recession in 15 years.
Lastest forecast 2012 3,5 1,4 2,0 -0,3 2,4 5,6 8,0 5,4 2013 3,9 1,9 2,3 0,7 1,5 5,9 8,5 5,8 Compared to the July 2012 forecast 2012 2013 -0,1 -0,2 0,0 -0,2 -0,1 -0,1 0,0 -0,2 0,4 -0,2 -0,1 -0,2 -0,2 -0,3 0,0 -0,3
World Developing economies USA Eurozone Japan Emerging economies China ASEAN

Emerging economies
Export decline is the key reason why developing economies in Asia growth slowed significantly in 2012. Structural challenges, the state of weak investment and excess production has led to the two growth engines of the region-China and India lost the momentum of growth. According to the World Bank (WB), developing East Asia, excluding China, is a rare bright spot in the global economy. Impressive performances of the "shining star" Indonesia, Malaysia, Philippines and Myanmar will boost the region's economic growth to 5.7% in 2013 and 5.8% in 2014..
B. Vietnam situation
2012 was a difficult year for the economy of Vietnam, from the difficult macroeconomic difficulties of enterprises and households. This is in the lowest economic growth for 10 consecutive years. But looking at separately for each quarter of 2012 saw more growth quarter after quarter. This economy shows signs of self-transformation, plus the impact of macro-economic policy.
GDP growth gradually improved but remained lower than expected

GDP rose 5.03%, lower than the 5.89% in 2011. In 2013, GDP expected at 5.0% 5.2%. Latency of tight monetary policy and fiscal 2011 having a less positive impact on GDP growth in the first half of 2012 caused quarter GDP grew by less than 5%. However, the dynamics of loosing fiscal and monetary policies carefully done since the second quarter helped GDP improve steadily in the remaining two quarters of the year with an increase of over 5% / quarter.
Inflation was controlled, but high inflation risks still exist.

Inflation is controlled with an increase of 6.81%, equal to 1/3 compared with an increase of 2011. However, the risk of high inflation persists. Inflation expectations in 2013 increased by 7%. Contributing to low inflation in 2012 was due to the price of the food groups, food is kept relatively stable in the second half of the year and the price of gas is adjusted quite close to the market price.
The foreign exchange market stable.

Besides inflation under control, stable foreign exchange market during the year 2012 is one of the positive elements of the economy. Thanks to the market-controlling measures is implemented by the central bank control consistently since the end of 2011, the average proportion USD / VND is maintained at 20,828 VND / USD exchange rate while in the commercial banking system only the reference level of + / -1%. Exchange rate and the foreign exchange market stability is mainly because foreign currencies tending to decrease in the supply of dollars is still quite abundant.

Enterprise difficulty
The difficulties of the economy since 2011 has caused the number of business bankruptcy, can continue to grow strongly in 2012. In total more than 670,000 enterprises established and operating in the country, with nearly 202,000 corporate dissolution, decommissioned in 2012, an increase of 8.4% compared with 2011 and by 50% of the total number of enterprises leave the market in the past 20 years.
C. Environment in bank
In the last 10 years, Vietnam has shown that a hot growth economy based on credit growth. The main focus in this situation is: bad debts rise while credit growth is too low, interest rates fall, liquidity is stable, profits plummeted, the change in the structure of the sector and issues of gold deposit..
Bad debt soars at a very high threshold

The bad debts mortgaged with existing real estate and the real estate to be formed up in the future account for 70 percent of the total bad debts. In addition, hot credit growth and effective credit management is the cause of high bad debt. Also in 2011 - 2012, the most commercial loans are secured by real estate (market is frozen) accompanied by the difficult situation in the manufacturing business of the enterprise leads to the risk the increased bad debts and bad debt likely continue to increase in 2013.
Credit growth rate lowest in the last 20 years

10 years ago, the whole system credit increases by 29.4% / year; 5 years was 33% / year, while in 2011 only about 12-13%. 2012, credit growth has remained low and do not meet the objectives. The low credit growth rate has been attributed to the poor national economy performance. Specifically, weak economic demand, inventory and discretion of

the Bank is the cause of low credit growth problem that businesses care about is: the purchasing power of the economy (total demand) and release inventory (especially in real estate and building materials).
Interest rates down by 3-8 percent

Relatively stable interest rates in recent years the interest rate and lending has fallen sharply in the direction of the state banks out in the first year to support enterprise but faster than expected reduction schedule, consistent with macroeconomic developments, currency, especially the evolution of inflation. During 2012, interest rates generally remained stable at around 9% for maturities less than 12 months and 11% for maturities over 12 months.
Market liquidity of banking system has improved during 2012

Liquidity problems after the ACB has been timely central bank settlement in the third quarter, before the incident related to Nguyen Duc Kien and ACB, the interbank rate jumped to 8.8% from 8%that due to the temporary loss of liquidity of some banks involved. However, the market has stabilized after the intervention of the central bank (pumping out more than 26,000.
Banks profit down by 40 percent

Compared with 2011, SHB profits, ACB and Sacombank decline to 60%, even 100%. Vietcombank and Military Bank are the two banks rarely have high profit growth in 2012. However, the total profits of the three big banks Vietinbank, Vietcombank and BIDV almost unchanged compared to 2011.
2. INTERNAL ENVIRONMENT ANALYSIS

A. Financial analysis
Using the model analysis CAMELS for financial intermediaries

Capital adequacy ratio represents level of equity capital to support the bank's business activities
1. Capital adequacy
CAR - capital adequacy ratio
Bank as to accept more risk, as requiring more equity capital to support the bank's activities and offset potential losses associated with a higher risk level. By this ratio one can determine the bank's ability to pay its debts with a term and facing other risks such as credit risk, operational risk. Because of the above reasons, the management of the banking sector are clearly defined and supervision of banks to maintain a minimum capital adequacy ratio, in Vietnam in accordance with Circular No. 13/2010/TT- SB on 20.05.2010 this ratio is defined as 9%.
The CAR of ACB over years

18.00% 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% 2007 2008 2009 2010 2011 16.19% 12.44% 9.73% 10.60% 9.24% CAR BASEL
Source: annual report over years
9 | Internal Environment Analysis | Financial Analysis

The CAR of the bank in a period of five years (2007-2011) were 9% above safe levels but tended to decrease in 2007 with 16.19% to 2011, hit 9% is still considered safe compared to many other banks caused by the negative impact of the macro-economic situation in general to the banking system as well as the business activities of bank ACB own.
The formula is Equity / Total Assets
Coefficient of self-financing
This coefficient demonstrates the ability to self-finance and long-term stability of the business. The higher self-financing of enterprises, the ability of self-control of the larger enterprise.
Total assets and chartered capital of ACB

(billion dong) 300,000 250,000 200,000 150,000 100,000 50,000 0 2008 2009 2010 2011 2012 7.37% 6.02% 5.55% 4.26% 7.21% (%) 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% Chartered capital Total assets
Sources: the financial statement of ACB over years Ratio of Chartered equity / Total assets of the bank decreased from 2008 to 2011, the biggest drop in 2011 due to asset size increased to 37% compared to 2010, but in 2012, when chartered equity does not fluctuate much, but Total assets were significantly reduced (as a result of business losses in 2012) makes the coefficient of self-financing surged 7.21%, however, the funding ratio is still low proved that ACB is not capable of self-financing, as well as offset losses if the risk occurs. As for equity, the bank ranked sixth, followed by three state-owned commercial banks and 2 other banks STB and EIB.
Strategic financial Report 2013 The chartered equity of some banks in 2011
Source: the financial statement of ACB in 2011 Regarding the charted equity, the bank ranked sixth after three state-owned commercial banks, BIDV, VCB, CTG and two other commercial banks STB and EIB. The cause of low chartered equity of ACB in the first quarter in 2011 due to the bank make dividend payments in cash 1st, 2011 at 20%.
Ratio of total debt to equity is calculated by dividing total debt to equity is
Financial leverage coefficient (debt ratio)
It tells us that the ratio between the two basic sources of capital (debt and chartered equity) that banks use to pay for their operating activities. These two funds have distinct characteristics and the relationship between them is widely used to assess the financial situation of the bank. If this ratio is too high, the bank could be at risk in the payment of debts however when the rate is too low would show credit activity of banks is not good, not take full advantages of the equity from debts. Since bank is a special type of enterprise with the main function of the Total credit intermediary, the ratio will always be much greater than 1, an average of liabilities/tot 12.5 al charted equity.
Financial leverage ratio

25.00 20.00 15.00 10.00 5.00 0.00 2008 2009 2010 2011 2012 12.56 15.61 17.03 12.87 22.50 Financial leverage ratio Average financial leverage
Source: the financial state of ACB over years

In five years, the debt ratio of the bank is always higher than the average is 12.5, the highest is 2011, up to 22.5, while equity does not change much, suggesting that during this period, the credit activities well developed but the safety is not high, the probability of the bank loan business is not able to pay is high. So banks need to have credit risk management measures to minimize the potential loss of liquidity of the lending business, especially when the economy is difficult at present.
2. Asset quality
Assets structure
In the list of total assets for ACB, lending still accounts for the largest proportion of 37% (2011) of total assets, followed by the inter-bank investment activities being 29% (2011) , investment securities occupied 9% of total assets. Most notable is the proportion of other assets of ACB is at a very high (18%) compared to other banks.
The structure of assets in 2010 and 2011 3%2%

5%2% 29% 17% 9% 1% 24% 18% 9% 37% 42% Loans and advances to customers Investment securities Balances with The State Bank of VietNam Other assests 2% Placements with and loans to other credit institutions Cash and precious metals
The inside circle is 2010, the outside is 2011
Sources: the financial statement in 2010, 2011 In terms of value of total assets compared to other commercial banks having the same scale, ACB ranked fifth after the state-owned commercial banks as AGRB, CTG, BIDV, VCB. In addition, loans and customer deposits balance of the bank also ranked after 4 state-owned commercial banks , left away behind Trading banks, ACB is the only non-state banks raise capital and loans to over 100,000 billion from customers. Therefore , ACB is non-state bank having total assets scale, loans and deposits is greatest.
Strategic financial Report 2013 Growth in total assets

Average growth rate of the total assets of the bank from 2008 to 2012 increased by 68.93%, which from 2008 to 2011 total assets tended to increase over the years but since 2012, total assets has dropped significantly to 37 percent compared with 2011, due to business losses as well as the impact of economic crisis, the banking sector faced many difficulties and challenges such as rising bad debts, liquidity tension in a number of bank, interest rate, exchange rate and gold price fluctuations.
Total assets
300,000 250,000 200,000 150,000 100,000 50,000 0 2008 2009 2010 2011 2012 105,306 167,881 205,103 177,012 Total assets 281,019
Source: the balance sheets over years
Loan to assets ratio (LAR)

LAR of ACB is safe compared to the system, the average lending rate in The formula the last 5 years (as of Q2/2012) is 38.2%, the lowest level in 2008 is 33% and is loan/total the highest is in 2010 with 43%, this is safety compared with the system, while assets ensuring low liquid assets such as loans which not exceed the proportion is too high in total assets.

LAR of ACB over years
43% 37% 33% 37%
41%
2008
2009
2010
2011
Q2/2012
Source: Financial statement and annual report
Compared with a group 1 of commercial banks , LAR of ACB is in the 4th low after MSB, TECH and SHB. Conversely BIDV is the highest rate of LAR with the proportion of loans up to 72% of the value of total assets. In addition, LAR at too high can cause liquidity risk for banks by credits with low liquid. The LAR of some commercial banks in 2011
Source: the report of VCBS
Non-performing loans (NPL)

Credit risk management is one of the strengths of ACB as banks put more resources to analyze the causes and warning the risk of delinquency, as A sum of well as drastically in the urge, withdrawal, debt treatment. ACB is one of the borrowed money upon best asset quality management bank because NPL always put in less than 1% from 2007 to 2011. At the time in 2009, when the government launched

which the debtor has not made his or her scheduled payments for at least 90 days. stimulus packages to support business, bad debt ratio of ACB was 0.41% but more than doubled in 2011 (0.94%). However, in the 1st and 2nd quarter of 2012, the cabinet of NPL of ACB has exceeded 1%, but is still low bad debt in the context of the current banking system. Besides, the quarter 3/2012 the debt ratio has risen to 2.1% and group 2 (debit note) also increased from 0.8% in the second quarter to 1.1% in the third quarter of 2012 Ability to cover bad debts of ACB achieved the highest up to 119% in 2008, but this rate decreased continuously while the NPL ratio tended to increase, which the ACB should be noted, can be set up bad debt reserve which was loosed and not as tight as before.
NPL and Coverage ratio

250.00%
2.50% 197.11%
200.00%
170.44%
150.00%
2.10%
2.00%
1.20% 0.89% 101.72%
1.56%
1.50%
Tratio l bao ph n xu NPL NPL
Coverage
100.00%
83.13% 80.10% 0.94%
1.00% 72% 0.50%
50.00%
74.06% 0.41% 0.48%
0.00%
0.00% 2008 2009 2010 2011 Q1/2012 Q2/2012 Q3/2012
Sources: the report of VCBS In general, according to the quality of asset management of ACB, this bank is fully able to hedge against the risk of bad debts in the present time. Bank's NPL ratio reached 1.56% , which only higher than STB 1.29% and relatively low compared to the remaining banks. NPL coverage ratio is 80%, the two banks have greater rate are VCB and STB setting up enough reserves to cover bad loans.
3. Earnings
ACB witnessed speedy profit growth in the 20032007 period and started to slow down from 2008, when the financial crisis impact on the banking system. Profitability effect on total assets (ROA) and equity (ROE) is always at a high level compared to the industry average, although the two indices fluctuate from year to year. In 2007, ROA and ROE are at impressive peak rate with 3 per cent and 44 per cent, but in the next year, the index fell and in 2012 are on target respectively 0.52% and 7.19%. One of the causes for the high rate of profitability of the bank was due to the performance of the branches and transaction offices increasingly improved. At the time of 2011, for example, deposits and loans average per employee CN / PGD increased respectively 11% and 28% compared to the end of 2010.
ROA and ROE over years

50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 2007 2008 2009 2010 2011 2012 3.50%
3.00%
44.00%
3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 7.19% 0.00%
2.10%
28.47%
1.31%
21.78% 20.52% 1.14% 1.08%
25.32%
ROE ROA
0.52%

Source: the financial statements over years Quarter 2/2012, with ROAE was 23.62%, the effect on equity profitability of the bank ranked second behind TECH 3 times and the last bank was VIB. However, Return on Total Assets (ROAA) ranked 4 after TECH EIB, SIB.
However, in quarter 3/2012, the bank recorded a loss of 520.7 billion dong, caused by business activities of gold and foreign exchange losses to 1,144 billion. Because the rules of the State Bank of Vietnam (SBV) asked banks to stop raising capital in gold on 25th November,2012 (this deadline has now been pushed back - PV), so banks have to worry about buying gold to settle the loan, resulting in loss. Depending on the future price of gold, the losses can also arise in quarter 4/2012 when a bank boost gold buying high price in the market to offset state to the prescribed limit (calculated the first nine months of this activity loss 1,251.23 billion during the same period last year, a loss of 187.63 billion dong). In addition, business activities such as: trading securities, investment securities and other activities were at a loss. In addition, strong fluctuations of the bank's senior personnel also had no small influence on reputation of the bank, the deposit rate fell sharply with 14% by the end of September, 2012, in comparison with the beginning of the year, in the first nine months of 2012, ACB has reduced interest rate to 41.5%, expected ROAA and ROEA of 2012 decreased, respectively, 0.8% and 14.6%.
Calculated as:
Net interest margin (NIM)

A performance metric that examines how successful a firm's investment decisions are compared to its debt situations. A negative value denotes that the

firm did not make an optimal decision, because interest expenses were greater NIM= (Investment than the amount of returns generated by investments. returns interest NIM expense)/ 4.00% average 3.50% earning 3.00% 3.60% 3.30% 3.30% 2.50% assets
2.00% 1.50% 1.00% 0.50% 0.00% 2008 2.50% 2.70% NIM 2009 2010 2011 9 2012 thng u nm 2012
Source: the financial statement over years According to the evaluation of S&P, the NIM is less than 3% would be considered low, while NIM is greater than 5% is too high. Average 5-year NIM (end of September,2012) was 3.08%, notably in 2008, 2009 which were the highest NIM , is the years that the system in liquidity got difficulties and the small banks must ask for a loan on the interbank market with high interest rate difference.
The structure of incomes

The two biggest sources of income of the business results of ACB are interest income and income from service activities, in 2011 alone, income from two sources accounted for 96% of total operating income of this bank. The variation in the growth of these income components is the main cause leading to disturbances in the total income. Excluding extraordinary income, profitability from the remaining income of the bank tends to decrease after reaching its highest level in 2007. The situation for gold, foreign currency and securities, although still profitable, but there is no sign of improvement in the last 3 years, especially in quarter 3/2012, ACB lost a lot from this activity, growth income primarily from interest and service charges.

The structure of incomes over years
4. Liquidity
The second source is the most highly loosen assets in cash and investment securities decreased by 20% and 46%, while deposits and loans on TT2 increased to 139% in 2011, most likely due to bank navigating interest rate to interbank command to enjoy differences. Specifically, 06/30/2012, ACB mobilized 48,104 billion gold certificate less than 12 months and 74ty gold certificates from 12 months to 5 years, accounting for nearly 90% of total loans outstanding and valuable papers of the Bank. In addition, according to information from the shareholders' meeting in 2012, the bank is planning to issue $ 100 million of international bonds to raise foreign currency funds with long-term stability.
Change in assets and highly liquid debt over the years
While money and investment securities reduced ... ...Debt securities increased quickly though
Analyzing the structure of deposits

Personal deposit proportion is
Not only in the field of lending, personal deposit decreased from 84% in 2006 to 72% in 2011. The dependence of the ACB to mobilize resources from the SME sector (small and medium enterprises) is growing and alternative sources of personal deposits is strongly scattered by the

decreasing, replaced by mobilizing resources from the SME sector
prosperity of the stock market (stock market) or routine people used to hoard gold. With the continuous interest rate ceiling down (to on 6/11/2012 9% / year), ACB personal cash flow expectations are out of the banking system, and thus to predict the proportion of deposits in the private sector also continued to decline.
Correlation between term deposits and loans

Mobilizing structures long and short loans
Structure mobilized short and lending long term risk is not a major concern of the ACB. The proportion of short-term loans is maintained above 50%, while for medium and long-term structural shift: the share increasing medium-term loans and long-term replacement for loans. In contrast, the structure of deposits for a term not much changes when savings deposits accounted for the largest share, followed by term deposits and demand deposits. Although savings up to 70% of total deposits, mostly from the period of one year or less, the savings in the first year accounted for a negligible proportion. By more than 80% of the customer's deposits are concentrated in maturities of less than three months should net liquidity gap of less than 3 months of ACB always negative. However, thanks to the major credit term of 3 months (credits less than 3 months 19%), the difference in net liquidity kyhan than 3 months of positive ACB is reached. With the yield curve being set back, along with the cooling down of interest rates, we expect that in the long term deposits will increase in the future.

The structure of deposits and loans by terms
2007 2008 2009 2010 2011 2nd 2012 0% 55% 46% 57% 50% 52% 52% 20% 40% 21% 21% 17% 23% 27% 21% 60% 24% 33% 26% 27% 21% 27% 80% 100% Short-term loan Medium-term loan Long-term loan
2007 2008 2009
18% 11% 6%
8%
72% 76% 76% 80% 69% 70% 40% 60% 80%
2% 7% Sight deposit 3% 2% 5% 4% 100% Term deposit Savings Collateral
12% 9%
2010 10% 8% 2011 10% 16% 2nd 2012 10% 16% 0% 20%
LDR reflect cautious lending criteria
Rate loan / deposit (LDR) of ACB tend to increase rapidly from 46.9% in 2005 to 81.5% in 2010 before being dropped to 71.2% in 6/30/2012. In our opinion, the tightening of credit growth of SB caused LDR decreases dramatically in the past year. In terms of liquidity, this ratio is quite safe by keeping below the 100% correct with prudent lending criteria of the bank. However, as mentioned above, the Bank also uses a variety of sources to mobilize and use of capital, the bank used LDR chinh1de more accurately reflect the liquidity of the bank. So to LDR adjust are higher than in the year, reaching a peak in 2010 with 93.2% before decreasing to 66.6% in 2011. LDR rate adjustment at 67.1% in our opinion is reasonable, for see ACB resources to finance new loans, not to depend too much on external resources.
Source: FR ACB
Liquidity at a high level compared to the whole system
LDR: 9/10 LDR regulation: 10/10
With cautious lending policy, percentage of LDR of ACB to 30/6/2012 reached 71.2%, the low 2 in comparison NH. If additional amounts raised from the issuance of valuable papers, investment trust and securities investments, LDR adjustment of ACB dropped to 67.1%. Along with the STB, TECH and SHB, ACB is the only 1 in 4 NH LDR adjusted below 100%. The capital adequacy ratio is always higher than the prescribed level. Very healthy financial situation, the minimum capital adequacy ratio CAR of the bank is always higher than the minimum prescribed level of 9% of the central bank. Total capital of ACB mainly to the rich from Tier 1 capital is constantly being added over the years. Tier 2 capital resources almost negligible except in 2007 when the ACB enjoy 1,400 billion through asset revaluation differences.
Abundant Tier 1 capital

The minimum capital adequacy ratio over the years
Solvency ratio (total assets immediate payment of liabilities) of ACB is always higher than 15% of central bank regulations. Rate in 2011 was 18.47%, down 1.4% compared to 2010. To more accurately reflect the safety of capital, we exclude benefits thethuong texture and intangible assets from total assets and Tier 1 leverage ratio (Tier 1 Leverage ratio). After reaching a high of 7.4% in 2008, this rate continued to fall, and only 4.3% in 2011. According to international practice, the leverage ratio of Tier 1 capital falls below 5% of the signal is to pay attention. However, as of 30/06/2012, the leverage ratio of tier 1 capital of the bank has increased to over 5% (5.3%) after the bank increased its capital in Quarter I/2012 success.
5. Management Management apparatus (M)

With VCB, ACB is considered one of the commercial banks have the best quality of governance today With large shareholders such as Connaught Investors Ltd., Dragon Financial Holdings, Standard Chartered and Standard Charted Bank APR are banks and reputable foreign investment funds, the bank supported a lot of technical and management experience and administration, as well as take advantage of the network of the shareholders on the client. ACB itself establish a governance structure in accordance with the standards of the organization and operation of commercial banks, including the Board of Directors, Executive Committee, Commission for inspection and internal control, credit Committee, the Board of asset management and debt assets; investment and the Council in order to manage their activities effectively. Administrative capacity of the ACB expressed through the ability to control credit quality. ACB is the only bank in the system of commercial banks with bad debt ratio at 1% (until 2011). However, in terms of ability to manage operating expenses, the ratio of operating expenses / operating income remains high, mainly due to increased staff costs. Therefore ACB needs to further improve its effective cost management. Although effective cost management is not high, but generally ACB is still regarded as one of the best banks in Vietnam. The quality of the administrative apparatus of the ACB was also evidently shown by shocks in late 2012, it was the prosecution of senior personnel and losses on foreign exchange and gold markets have caused serious masonry in the

results of operations and business of the bank, but as soon as it happened, ACB was quickly set up new HR system, as well as gold out of debt quickly, timely exposed strategies and objectives for the pivotal year 2013, towards 2014. Only in the first six months of 2010, the bank has received 6 prestigious awards from five prestigious international journals, including the award "the strongest Bank in Vietnam 2010" - "The Strongest Bank in Vietnam 2010 "and the award for" Outstanding Leadership Bank in Vietnam 2010 "-" Leadership Achievement Award 2010 "by The Asian Banker magazine. Both Euro money magazine (2011 and 2012) and Global Finance (2011) awarded ACB the best bank in Vietnam and the best bank localization Vietnam by Asian money awarded.
6. Performance
Cost ratio / Income (CIR)
CIR of the bank tends to increase sharply and has reached over 50% in quarter 2/2012 due to an increase from the cost of paying employees and branch expansion. In difficult economic times, the cost of paying employees increased due to the negative impact from inflation. In particular, staff costs in 2008 increased to 76%, in 2011 was 62% compared with the previous year. Proportion of these expenses account for about 50% of the cost of business management ACB. Investment property expenses also account for quite a large and constantly increasing over the years. The number of branches increased from 100 units in 2007 to 200 units in 2009, more than 300 units in 2011 and are expected to increase nearly 400 units in 2012 if there are no restrictions from the central bank.
CIR over years

60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 2008 2009 2010 CIR 2011 Q1/2012 Q2/2012 37.50% 36.70% 39.30% 40.30% 41.10% 51.10%
Sources: the financial statement over years
CONCLUSION ABOUT FINANCIAL CAPACITY OF ACB

ACB is one of the leading commercial banks in Viet Nam, always leave an impression on the foreign currency market. In the context of the global financial crisis and domestic macro-economic volatility, the bank always have sustainable growth, stable dividend rate to satisfy shareholders and investors. ACB is not only considered as one of the largest banks in Vietnam but also have relationships with many domestic and foreign financial institutions. However in 2012, ACB continues to be affected by economic difficulties make the business in the second quarter was leveled off, followed by ACB has undergone several major shocks with a wide range of management senior prosecution, bank losses as gold, assets decline lead to serious consequences, the first time this bank losses, bad debt has doubled exceeded the safety level of 1%, while provision for risk declined, not only that the losses from the gold market as well as investment securities reduces the total assets of the bank, in addition, banks also have trouble falling capital adequacy ratio. In relation to other banks, solvency and asset quality results and outstanding loans of the bank is compared with the average, however fertility ignore and performance also improved more to increase competition, especially after 2012 when the prestigious banks has declined.
ACB The peoples bank
B.
Non-financial analysis
1.
Retail Banking - Bank of everyone

Towards individual customers
Attaching great importance to the development of the system non-traditional distribution channels
ACB attached great importance to the development of the system nontraditional distribution channels such as e-banking or telephone sales (telesales). ACB is a pioneer in providing retail banking services: the first commercial banks of Vietnam issued MasterCard and Visa credit cards; is one of the first banks in the country offer derivative products for customers like gold options, currency options. In January/ 2012, ACB has been selected MasterCard Worldwide cooperation to introduce the first MasterCard In Control Family service in the world. This is a revolutionary service that helps consumers manage personal finances of the family. The ACB became the first bank in the world to use new and innovative applications on the web platform shows potential development of e-banking services of the bank has reached out to the territory of Vietnam.
SME businesses is the number one priority lending
Small and medium enterprises in the private sector

Oriented lending, SMEs always the number one priority object of ACB. The majority of capital funding and mandate of the ACB is used to finance SMEs as Funds received from the Small and Medium Enterprise Development Fund or the Bank of Japan International Cooperation (JBIC). Oriented lending helps explain part of the reason the bad debt of the bank has always been quite low, by SMEs efficient use of capital and higher responsibility to repay the State corporations.
2.
ACB Startups information technology modernized system early
Information Technology - the powerful weapon of ACB
ACB system boot modernize banking information technology from an early age. This is the first bank access to modern banking in one comprehensive program lasts two years and by the foreign teachers in the banking sector performance. At the end of 2001, the bank official operating system core banking technology is The Complete Banking Solution allows all branches and transaction offices networked together, instant transactions, shared database centralized data. In the next year, ACB constantly upgrades the core banking system, in partnership with Microsoft and PricewaterhouseCoopers on the application of information technology
27 | Internal Environment Analysis| Non-financial Analysis

operations and management. At the present time, the bank uses financial services Reuteurs, including Reuteurs Monitor (provides financial information) and Reuteurs Dealing System (forex tools). Outstanding achievements of the bank are to build a modular data center (enterprise data center module) the first international standard in Vietnam.
Comprehensive assistance in the array of risk management, financial management and human resource management
3.
Standard Chartered Bank (SCB) and the extensive support
In the strategic partnership between Vietnam banks and foreign banks, the bond between the ACB and SCB is one of the sustainable relationships and bring more added value. In 2005, ACB and SCB have signed an agreement comprehensive technical support and SCB officially became a strategic shareholder of the bank. In 2007, SCB supports ACB to issue bonds to raise capital. In particular, since 2008, SCB has sent personnel seconded to the ACB to help banks in the array of risk management, financial management and human resource management.
4.
Construction of a large financial group
With the motto of "faster growth - good management - High efficiency", ACB ambition by 2015 to become one of four banks has the largest scale, safe and efficient operations in Vietnam. ACB has carried out active diversification strategy by establishing three subsidiaries by the ACB direct investment 100% and one company may invest indirectly through subsidiaries. ACB Securities (ACBS): By the end of 2011, the market share of ACBS accounting for 4.76% of the whole market, including the market share in HOSE accounted for 5% and HNX is 4.36%. Customer account number accounting for 5.5% of the market. ACBS strong investment in information technology systems, online transactions account for 65.4% of the total number of transactions. Debt management companies and mining properties ACB (ACBA): ACBA responsible for the management and recovery of overdue ACB system and exploit the assigned assets. Original debt recovery rate improved over the years and reached 34% in 2011. Leasing companies ACB (ACBL): total assets and profits continued to increase sharply over the years; the delinquency rate was maintained at 0%. ACB Fund Management Company (ACBC): In 2011, ACBC successfully mobilized the first public fund scale 240.08 billion. Expected in 2012, ACBC will fund certificate officially listed on the Ho Chi Minh Stock Exchange.

ACB now has developed extensive network of 343 branches and transaction offices in the areas of economic development across the country. The number of branches and transaction offices has increased every year.
Number of Branches and Transaction offices (until 31.12.2011)
5.
Restructure bank management apparatus in 2011 The participation of high-level experts in the organization
Bank governance - towards international practices
"To ensure the capacity of efficient management and operation of a large bank that ACB is ambitious to achieve, the bank is willing to accept the necessary changes to be able to soon offer standards and best international practice applied in the management and administration of the bank "... extract ACB Annual Report
In 2011, the bank has set up a new organizational and adjust, operate a number of committees of the Board of Directors. A special feature in the management of the bank is pretty much the Government's high-level experts are involved in advising and administration of the Bank. This can help the bank get some perks and privileges from the government.
ACB is one of With experience and brand reputation from 20 years of boom, the bank the best banks in kept its position as the strength of the banking sector Bank of Vietnam. ACB Vietnam has received the title of "Best Bank in Vietnam for four years in a row 2009, 2010, 2011, 2012" by the prestigious international magazines: Euromoney, Global Finance, Asiamoney, Finance Asia, The Asset vote Despite struggling in 2012, ACB still trust is the best bank in Vietnam in 2012, awarded by Eurmoney magazine. Especially, ACB also made the top 10, ranking second in the 500 largest private enterprises in Vietnam. Currently, the bank is the 5th largest bank in Vietnam with total assets as of the end of September / 2012 was 214,000 billion.
6.
Position in the industry
7.
Brand strength
According to the evaluation report of Vietcombank Securities Company Limited May / 2012, ACB still is the bank belonging to the first group of brand strength, reflected in the brand strength index BEI is 2.6. In particular, the ACB has the greatest brand strength in Ho Chi Minh City
Brand strength index large banks in Vietnam in 2011 Source: Annual report of the Nielsen Moody's downgraded credit rating of ACB from D-to E + credit rating firm Fitch 4/2/2013 retain long-term issue rating of ACB at B, and bring ACB from negative watch list(Rating Watch Negative).
8. ATM and POS network

Along with AGRB, VCB, CTG, the Bank or TCB, ACB is also located in leading banking group in the number of ATMs and POS.
Number of ATM of some banks
9. Activity cards
Card sales transactions in of ACB increased steadily over the years,

but now the number of card transactions also increased at an average rate. Carefully study the needs and characteristics of each customer; the bank has to its customer strategy. For customers using cards deemed ACB goals in Vietnam today is: customer groups have stable income and the customer is a student group at the 3 key markets, including: Hanoi , Hai Phong and Ho Chi Minh City.
10.
Identify competitors
Sacombank and Eximbank are considered two fierce competitors with most banks in the retail sector today. Sacombank is proved to be more dominant than the banks in the current retail market share increased rapidly, extensive network and process fast. In particular with Eximbank, banks are proved to be weaker than the ACB and Sacombank, but thanks to extensive distribution network will be an opportunity to increase access to banking customers thereby expanding its market share
C.
Performance analysis
1. CAPITAL MOBILIZATION
2012 was a turbulent year for the Vietnam economy in general and the banking sector in Vietnam in particular by the impact of the macroeconomic situation in the world. For ACB, 2012 is a memorable year when the unfortunate incident occurs leadership of the serious economic consequences. With the disadvantages mentioned above, the growth rate of money tend to fall is inevitable. From 2007 to 2012, deposit growth tend to fluctuate sharply. Reaching the highest point in 2007,customer deposit growth hit up to 88.07%. This number varies from year to year, but in 2012, due to facing a number of difficulties, customer deposit growth fell to -12.31% At the same time the government reduced interest rates to curb inflation that money into other investment channels. Deposits, however, has a high proportion of the total resources that mobilization from consumers, who play a leadership role in creating the source for ACB
100.00% 88.07% 80.00% 60.00% 40.00% 20.00% 0.00% -20.00% 35.35% 33.56% 23.03% 16.16% -12.31% 160,000,000 140,000,000 120,000,000 100,000,000 80,000,000 60,000,000 40,000,000 20,000,000 0 The speed of the development of deposits from customers Deposits from customers
Raise capital growth: Customers deposit mobilization always keeps a crucial role in generating funds for ACB"
Structure of funding sources "The rate of deposits of individual customer groups tend to increase."
Mobilize capital structure of banks ACB notable characteristics are deposits no term, savings and capital from individuals quite high. This helps reduce bank deposits from commercial banks and government-owned banks. Personal customers and business customers account for 82% and 18% of total deposits at the end of 2009. By the end of 2010 the proportion of individual deposits more than five times the capital of the enterprises (84% and 16%) due to benefit from the provisions of the ceiling interest rates up to 14%. However in 2011, the capital raised from the business increased 28% due to incentives from the bank. This is an important advantage for the brand of the
33 | Internal Environment Analysis| Performance Analysis

bank, helping to raise more capital from individuals as well as businesses.
Structure of deposits from customers by % type of customers

100 Others Economic entities 0 2007 2008 2009 2010 2011 Individuals
Currency structure, VND deposit accounts for 78.7% of total customer deposits in 2009 and the remaining deposits in foreign currencies and gold. In the period 2007-2012, the percentage of customer deposits in VND fairly evenly. The proportion of foreign currency capital higher than the average customer in the industry thanks to the ACB is the import-export business. Foreign currency deposits and loans ACB pretty balanced so the risk of losing the balance of sources and uses of foreign currency and funded in ACB be underestimated.
Structure of deposits from customers

% 100 80 60 40 20 0
85
82.48
78.69
80.34
86.98
92
Foreign currency VND
2007
2008
2009
2010
2011 Quarter IV/2012
2. CREDIT ACTIVITIES
Credit growth "Credit growth fell sharply from 2007 to present." Growth rate of outstanding loans decreased in 5 years. The difficulties in the process of enterprise business, large inventory, in addition to increasing bad debt ratio are the cause of low credit growth in 2012. From 87% in 2007 fell to -0.62% in the fourth quarter of 2012
Strategic financial Report 2013 The growth rate of loan

100% 50% 0% 2007 -50% 2008 2009 2010 2011 Quarter IV/2012 87% 79.02% 39.83% 9.40% 17.90% -0.62%
Credit structure: short-term lending and business sector accounts for a high proportion of the debt structure.
In 2011, loans grew 17.9%, reaching 102 809 156 million, including corporate loans accounted for 65.13%. Loans to individuals accounted for only 34.87% of total loans, down slightly from the level at the end of 2010 (37.36%). Short-term loans accounted for more than half of total loans (51.9%), the proportion of short-term loans has increased compared to 2010 but still less than in 2009 (57%). This part shows a high long-term interest rates that consumers do not want a long-term loan.
Loan's structure by types of customers
100% 49.99% 46.13% 63.11% 62.63% 65.13% 50% 50.01% 53.87% 36.89% 37.37% 34.87% 0% 2007 2008 2009 2010 2011 Economic Entities Individuals
ACB is the proportion of foreign currency loans is much higher than the industry average.
Ratios of loans to state-owned enterprises remain at a high level although this percentage has decreased from 2009 to 2011. Debt structure has changed a bit in a good way in the period 2009-2011 in which the ACB increase short-term loans and personal loans. This helps reduce maturities imbalance between the lending and deposit. USD loan outstanding was 74%, while foreign currency loans are 26% in the second quarter of 2012. Above rate do not fluctuate more than the previous year, the proportion of foreign currency loans in total loans of high ACB than the industry average (23-24%). ACB always balance their lending and deposit foreign currency bank and is active in financing export and import activities.
Strategic financial Report 2013 Loan's structure by types of currency

Quarter IV/2012 2011 2010 2009 2008 2007 0% 20% 40% 71% 68% 60% 80% 74% 74% 75% 83% 26% 26% 25% 17% 29% 32% 100% Loans in VND Loans in foreign currencies and gold
ACB is a banking system improving the current best risk management
ACB has prescribed very strict loan classification include Current (Group 1), Special Mention (Group 2), Substandard (Group 3), Doubtful (Group 4), loss (Group 5). This debt groups tend to fluctuate from year to year. ACB has continuously improved credit risk management activities, the NPL ratio of the Group for the period from 2007-2011 are maintained below 1% and by the end of 2009 was 0.41% when the government launched stimulus package to support business, continues to be the only bank among the leading joint-stock commercial banks with bad debt ratio of less than 0.5%. But the first quarter and the second quarter of 2012 the bank's NPL ratio in excess of 1% but is still low bad debt in the context of the current banking system. We appreciate the ability to cover the bank's NPL coverage (Coverage ratio) average in 2008 and are now 119%. However, this rate continued to fall is also noteworthy, can bad debt provisioning policy is loose and do as tight as before. ACB is a diversified banking sector lending rate for the highest loan is out of balance. In the future, this will benefit the expansion and raising capital and expanding array of personal credit in a favorable way.
Loan's structure by groups the 4th quarter 2012

Nhm 5 Nhm 4 Nhm 3 Nhm 2 Nhm 1 1.11% 0.66% 0.73% 4.44% 93.06% 20.00% 40.00% 60.00% 80.00% 100.00%
The 4th quarter 2012
0.00%

Loans Real estate accounts for only small proportion ACB's main lending lines of Commerce and personal service with outstanding loans accounted about 70% of Bank total loans, while proportion trade tends to increase slightly. Two areas related to real estate Construction and Real Estate Consulting business accounts for only small proportion of 46% so the risk potential bad debts from Real Estate sector is not major concern.
Loan's Structure by industry Trading Agriculture, forestry and aquaculture Processing and manufacturing Construction Individual & Community Service Transportation, logistics and communication Training and Education Real estate Hotels and Restaurants Financial services Others 2007 25% 0% 17% 2% 47% 2% 0% 1% 1% 0% 3% 2008 23% 1% 13% 3% 51% 2% 0% 2% 1% 0% 4% 2009 32% 0% 18% 4% 37% 3% 0% 1% 2% 1% 3% 2010 32% 0% 16% 4% 38% 3% 0% 1% 2% 1% 3% 2011 36% 0% 15% 5% 34% 3% 0% 1% 2% 1% 3%
3. INVESTING ACTIVITIES
In recent years, from 2009 to 2012, total investment tends to decrease. In "Total investment fell sharply in five 2007, due to the explosion of stock market investing and stock trading this year has brought ACB a major source of income is 1241 billion. Cash flows years" from investing activities in 2009 were 327.877 million. However 2010, growth from investment activities decreased, even negative as 2011 2,275,468 million. Total investment fell sharply as stock market plummeted so the investments securities decreased. "portfolio Portfolio of bank in 2011 decreased 42% compared to 2010 mainly decreased due to reduced investment securities. Including investment securities primarily due to available for sale decreased by 85% by 1647 billion government bills that the reduced investment bank in 2010 to term. Investment securities held-to maturity investment decreased by 44% by ACB reduced investment in securities issued by credit securities" institutions in other countries (62%) and economic organizations in country of issue (33%), at the same time invest 1326 billion of government bonds to

carry out open market operations.
Structure of the investment portfolio by securities

20% Government bonds 34% Other credit institutions 46% Other local credit institutions
Rising concerns of debt securities issued by other banks
By the end of quarter 2/2012, the portfolio of the bank increased by 12% compared to 2011, including securities trading down 31%, investment securities increased by 15%, long-term investment, no significant reduction0.5%. The main reason of trading securities decreased due to the difficult economy, the dismal stock market, interest rates plummeted nen banks tend willing to sell increased dramatically, from 269 billion to 3558 billion contract. These debt securities are mainly government bonds as a liquidity cushion for banks.
Structure of the investment portfolio Currency : VND billion 2010 2011 Q2/2012 Planned target 978 850 583 1.Trading securities 5 5 5 Debt securities 1.163 1.044 606 Equity securities 190 198 27 Allowances 48.202 26.089 29.897 2. Investment securities 2.033 294 3.587 Available-for-sale investment securities 1.912 269 3.558 Debt securities 241 60 56 Equity securities 120 35 27 Allowances 46.169 25.795 26.310 Held-to-maturity investment securities 7.738 9.064 Government bonds Debt securities issued by other credit 30.593 11.516 institutions Debt securities issued by other local 7.838 5.215

credit institutions Equity securities 3.Long term capital contributions Total investment portfolio
3.004 3.554 3.572 52.185 30.494 34.052
4. FOREIGN CURRENCY TRADING

"The foreign exchange market and the bank's gold ACB is more volatile, especially in 2012" According to the consolidated financial statements of the year, from 2007 to 2011, foreign currency and gold trading revenue of ACB pretty big difference. Typically in 2008 due to the implementation of policies to diversify product range and implementing various solutions to exploit the foreign currency in order to comply with the payment commitments, ensure exchange for import customers essential commodities for the economy, foreign currency and gold trading revenues significantly increased to 678.852 million, a 3-fold increase compared to 2007. But since the world economic crisis of 2009 - 2010 caused net income from foreign exchange operations of the bank fell sharply to 161,512 in 2011 and in the fourth quarter of 2012, the bank had a loss of 1863 billion dong business activities in foreign currencies and gold. Explain the heavy losses from dealing in foreign exchange and gold in 2012, the ACB said: According to Circular 12-2012 of the State Bank of Vietnam takes effect from the date 30-4-2012, credit institutions not to mobilize capital in gold, except for shortterm certificate issued by gold to pay at the request of the customer when the credit institution is not enough gold to pay.
5. TECHNOLOGY OPERATIONS AND DEVELOPMENT SERVICES

ACB has a good technology platform and constantly improve the technological innovation in banking System of activities to strengthen the information technology (IT), the bank is the first bank to approach modern banking in a comprehensive program lasts two years and by the foreign teachers in the field bank implementation. In the period 2007-2012, ACB continuously upgrades the core banking system, cooperation with Microsoft and Pricewaterhouse Coopers for the application of information technology operations and management. At the present time, the bank uses financial services Reuters Dealing System (forex tools). Outstanding achievements of the bank are to build the data center as a module (module enterprise data center) the first international standard in Vietnam. Several other projects are in the stage of finishing, testing software projects equipped for treasury activities, MIS project. The project to upgrade the core banking system (core banking) is also being undertaken to meet the development needs of the ACB the next stage.
SWOT Analysis
STRENGTHS
1. Strong and reliable banking brand ACB brand is trusted the best bank in Vietnam 2012 2. Belong to the top joint-stock commercial banks In terms of total assets, and loans ACB is now one of the leading commercial banks of Vietnam, and is a member of the G12 (G12 is group of 12 leading banks in Vietnam and now account for 85% market share)
3. Supported from the government and state banks 4. Stable and efficient operation
Although the last time, the economy face with a lot of difficult, but business activities of the bank is quite good, the years are profitable and have positive growth , if compared to the other items are listed on the HOSE and HNX, ACB is the most efficient banking operations, ROE and EPS respectively reached 29%; 2900 dong
5. There is extensive support of Standard Chartered Bank (SCB) 6. Effective business management
A special feature in the management of ACB is having pretty much Government's high-level experts involving in advising and operating Bank
7. Good technology platform

This is the first bank accessing to modern banking in one comprehensive program lasts two years and by the foreign teachers in the banking sector performance. Outstanding achievements of ACB is to build a enterprise data center module according to the first international standard in Vietnam.
8. Providing Service, network and service quality

The service provided of ACB is quite diverse, especially ACB is always appreciate the problems of the quality of services provided ,so its always be regarded as one of the best bank on the level of customer satisfaction.
9. Scale capital
ACB is the bank's total assets stood 5th in the Vietnamese banking system, accounting for 10% market share of the country's savings mobilization, more
41 | SWOT Analysis

than 57% of all the international credit card, and the majority of the Western Union money transferred market in Vietnam
10. Low NPL ratio

NPL ratio of ACB is lower than the others in Bank industry, debt ratio of Group 3 to Group 5-accounted for only 1.1% (3.11%), in 2010 was 0.34% compared to the industry being 2.5%
11. High dividend payout ratio

Compared to the currently listed bank, ACB pay high dividends, in 2011 the first phase is 20% in advance. Compared with 7 banks listed on the HOSE and HNX, ACB are highly evaluation, price of ACB shares is currently the highest in the industry
12. Competitive lending rates 13. High profitability 14. Easy payment operation
In addition to cash withdrawals at more than 11,000 ATMs and pay for goods at the POS unit iconed Banknetvn / Smartlink / VNBC nationwide, now with ACB local debit card, you can make payments for goods and services online at the website of the card-accepting unit (CAU) connected with the online payment system of the bank and / or the partner of ACB
15. Qualified personnel system

Personnel qualified undergraduate and graduate education accounted for 93%, are trained regularly professionally in private training centers of ACB
42 | SWOT Analysis
WEAKNESSES
1. Network
Its thin when compared to banks in the block and does not cover the whole country
2. The quality of service

Some has not meet customer needs, waste of potential market exploitation: using ATM , payment cards in the country ....
3. Main Business areas

Finance leasing, delinquency get so much risk
4. Promotional marketing programs

Not efficiency, have not reach the "research-dislike" characteristic of Vietnamese people, especially the rural and low educational level ones.
5. No clear differences in the provision of products and services 6. Credit activities of banks
Focus much on Ho Chi Minh city, while demand for credit from other regions is not trivial.
7. Market share of deposits and loans of the bank

Account for relatively small ratios in commercial banking system: 4.39% and 2.43%. This does not help ACB more effective on economy of scale
8. Technology
Still not enough to meet the needs of customer transactions, especially on gold trading.
43 | SWOT Analysis
OPPORTUNITIES
1. Vietnam's economic - integration and development
a. In the context of the Vietnamese economy is entering the stage of industrialization and integration, the country will witness the rapid economic transformation in all three aspects: agriculture, industrial and service sector, in particular service growth, accounting for superiority; labor structure will also have a corresponding shift; non-state economy has condition to develop rapidly. b. Law and political environmental: the political environment of Vietnam facilitates the formation and development banks, the stable political situation, especially with reputable banks and major brands such as ACB
2. Vietnam's banking sector - now and in the future:

a. We believe that the process of monetization of the economy is about to take place deeper. We can expect the Vietnamese banking industry will maintain the growth rate of 22% / year as the current in the next five years. b. Annual amount of new loans also are expected to continue at a high level c. Annual net credit growth was increasing from 10% of GDP in 2000 up to 16% nam2005 and continuing at 16% - 17% of GDP in the next five years, d. The new stage will be a continuing shift in market share between the bank groups, including the group's market share of commercial banks will grow. Along with the equitization of state-owned banks, this trend will continue at a faster pace until 2010 and the following years. e. Competition: Requiring banks work more efficient, advancing technology and modernizing quality of service f. Central bank is more tighten regulations on credit quality, quality banking services to further ensure the safety of the financial system. Smaller banks will be difficult in many issues making opportunity for big banks to promote their advantages in terms of capital, brand .
3. Opportunities for cooperation: SCB-ACB

Since becoming a shareholder and strategic partner of ACB since 2005, Standard Chartered Bank (SCB) is constantly working closely with its partner banks. SCB has implemented technical assistance program for ACB in key areas including corporate banking, personal banking services and other functional departments to support banking operations
44 | SWOT Analysis
THREATS
1. Competitive pressure
Severe pressure on domestic banks and foreign banks The opening of the financial markets will increase the number of banks, which have strong financial resources, technology, management skills, quality service and the result is increasing in competitive pressure. The foreign bank branches operating in Vietnam are famous brand in world financial markets.
2. Risks from the banking system

a. Under the management of the bank capital contribution b. Integration increases the transactions, which cause to increase the risk when management mechanism and information system of banking supervision is not effective. c. The commitments to eliminate tariff barriers lead to financial difficulties and increased delinquency.
3. Markets real estate market fell into difficulties

Real estate market is turnaround nature and actual demand is much smaller than the market supply -> Difficulties in the long run risk loans, especially when the ACB is the bank that loan structure with the non-manufacturing sector is at a high level
4. State banks tighten regulations on credit growth at 20%

and the lending limit for the non-manufacturing sector in less than the 18% of the total loan funds of credit institutions, while ACB structured loans to nonmanufacturing sector is very high, especially in the field of estate
5. The impact of macroeconomic factors 6. Reinforce the customers belief in 2012

Experiencing the last serious crisis, in 2013, attracting customers, regain their trust is the first major challenge to ACB to increase deposits.
7. Fully open economy (not protected) in 2015

foreign banks in particular and financial institutions providing general will be a huge potential danger for the bank because of the size of capital , and modern advanced quality of service.
45 | SWOT Analysis
oples bank
Development projects
In this Strategic Financial Reporting, we will evaluate the current external environment like: the national and international macro situation, the real state of affairs in the banking sector at present. After having an overall view of the macro situation, we will evaluate ACBs internal situation through the non-financial ability, operations and financial health. Specially in the financial analysis, we use the CAMELS model- a famous model used to evaluate financial intermediation. With the CAMELS, the financial health situation of ACB will be analyzed under different ankles. The result of all analysis above will be summarized in the SWOT analysis about: Strengths, weaknesses, opportunities and threats of ACB. Using the SWOT matrix, we would like to offer the developed direction for ACB in the near future and at the same time recommend two projects for 2013.
47 | Development Projects
Project 1: Expand the network of rural trading
I.
Project Evaluation:
We suggest this project for the network that of ACB is thin compared with the bank in the block and doesnt have nationwide coverage Based on non-financial analysis, we can see the network of branches and transaction offices of the new ACB is concentrated in the areas of economic development, the largest city, while the cash needs in the areas rural areas is increasing (especially the families members who send their children to the city), so, we need to shift money between rural and urban areas. Moreover, according to the statistics, 10 consecutive years of growth in agricultural production Svetlana was maintained at 4.8% / year, recent years was stable at 3.5% / year, this is a relatively high growth rate, it has the potential and attract domestic and foreign credit institutions, financial control is convenient for rural development. In addition, the views of the macroeconomic situation in the world, we can see many rural financial markets of countries in the world, especially countries in Asia with the agricultural and rural economy as Vietnam, such as Thailand, Indonesia, China, has been very successful. Therefore, in addition to concentrate in the major cities, the bank should expand its activities on the Vietnamese rural and fully potential land.
II.
Type of the project:
Construction of transaction potential in rural areas. In the first implementation of this project, we selected four provinces in the North East for the application: Ninh Binh, Thai Binh, Bac Ninh, Hai Duong. These are the provinces that rural agriculture is quite characteristic. You can choose locations for branches and transaction offices in which attract many people (shopping centers, contact centers, etc.), there, ACB can easily reach customers. Moreover, with psychological farmers, we should apply the deposit program incentives, gifts or combined with the insurance company applies for customers and employees will entice more people to take family. At the same time, due to the access to rural financial system in Vietnam is not high, so we need to invest in quality deals staff to advise the people here, to help them understand and reducing risk.

III. Subjects directed to: All the people in the branch area. IV. Risk Assessment
Although rural situation growing up and the financial system in rural Vietnam has not been extended, so the investment in this area is indeed a lot of potential. However, we will have to compete with a strong rival AgriBank. According to the report of the State Bank, at present, the total outstanding loans to the agricultural sector, rural Vietnam is about 293 trillion, including Agribank about 70% of the total outstanding loans of the banking sector, Agribank is banks have more outlets in rural areas. Besides, there are also has social policy banks and a lot of other commercial banks
V.
Potential assessment
Based on the psychology of saving of Vietnamese and education situation is on respect, we believe that project is likely to succeed
VI. Capital budget and profit

This project requires the construction of many facilities, infrastructure, it will take major cost for this account.
Initial Investment Revenues in year 1 Lifetime of the investment Var. Expenses as % of Rev Growth rate of Revenues Growth rate of Fixed Expenses 10260 millions 20000 millions 10 years 50% 10% per year 10% per year
We are planning to open one more branch and two transactions in each of the provinces so the initial cost is very high, estimated to take about 10 260 millions. While consuming a high cost, but because in these provinces, the bank has not been widely promote the image and prestige for the people, the number of customers is limited, leading to turnover can not be high (about 20 000 millions). Revenue growth maintained at an average of 10%. We use excel to calculate the NPV of this project will be -599. So after review and recalculate, we found this project is very hard to success.
Project 2: Investment Banking

I. Evaluation
Along with the vision throughout the strategy formulation process of the bank is to become "the leading retail bank in Vietnam", one of the long-term goals of the bank is "to diversify and gradually become a comprehensive financial services provider."So we are thinking of implementing the investment banking services (Investment Bank - IB). IB is a relatively new concept in Vietnam. In addition to a number of small banks: Vietcombank, Sacombank, this service has been developed in some stock companies (Saigon Securities, FPT, etc.). However, the operation of these companies only stop at developing product services; their knowledge and experience remains limited. Based on these circumstances and with the potential field of IB in Vietnam post-WTO era to now is being evaluated as very huge, we think the continuing development of IB professional services in Vietnam is essential, for the following reasons: 1. Requirement for Initial Public Offering (IPO): when corporations want to issue securities to the international market, they require underwriting from foreign investment banks like: Barclays Capital, Citibank, Deutsche Bank, and the cost for this is not small, therefore if Vietnam has its own investment banks, the cost will be limited. 2. Securities underwriting Consulting: Human Resource of these stock companies is limited due to the less friction with international experts, the birth of investment banks in Vietnam will have to pay more attention to this issue. 3. The need to raise capital on the international market: in present there is not many enterprises wanting to raise capital on the international market, but in the future then this is definitely the necessities. 4. Sector of research, analysis: The securities companies in Vietnam only provide summary report of one day or information is not especially focus on the securities of the enterprises so our services will be more completed in that sector. 5. Provide specialized financial services: There are not many specially derivative products, the securitization is little, this is detrimental to investors because there is so few risk prevention tools. Based on the assessment and the analysis of the operation of ACB, with the advantages of diversity and abundance in bank service product portfolio in the commercial banking system in Vietnam, we found that the expansion of another service, in particular IB services, is a necessary and proper strategy. After experiencing many changes, credit and deposit activities of ACB tends to decrease. However the credit

structure of enterprises still accounts for a large proportion. As a result, in present we would like to pay more attention to enterprise. Macro-economic analysis also shows that businesses are facing many difficulties, so they will need restructuring advisory from investment bank,, especially raising capital in the form of issuing stocks and bonds, in order to maintain and further expand business scale. Therefore, with the strong and reliable banking brand, good service network and technology platform, ACB will develop investment banking network. Investment banking concept is quite new, so this is also an opportunity for ACB to develop their full potential in order to attract customers, confirm the brand and regain the trust of customers. Object oriented: the main customers of investment banking service are organizations, companies and government.
II.
The form of the project :

IB
Front office
Middle Office
Back Ofice
Investment Bank Investment Management Commercial banks Market Research Strategic Consulting
Risk Management Financial Management Legal advice
Operations
The main activities of investment bank is exchange, purchase and sale of financial products. Specifically, the investment bank is an institution acting as a financial intermediary to perform a range of financial services, such as underwriting: an intermediary between the issuer of securities and the investment, acting as an advisory: consult to help settle the M&A and restructuring activities or as a broker-dealer: an agency in the act as the client's issuance of securities. ACB will expand the network in the form of setting up the Investment Banking team, which has a wealthy knowledge and experience in the stock market as well as monetary finance to advise and implement monetary raise funds on the capital market for the customers. This service will be

deployed through ACB Securities Company - ACBS. At first, we propose the IB model with three main departments: Front office, Middle Office, Back Office It is expected that the bank will go into the array of these services: Issuance advisory: Analyze and propose solutions of effectively mobilizing funds from the stock exchange to customers in accordance with their operating conditions. Underwriting: Undertake to repurchase part or whole of the issued securities of customers.. M&A advisory: Play the role of an advisor for the buyers and sellers and provide analyses and consultation for securities issuance, corporate acquisition, projects and other forms of investment. Listing/Securities trading registration advisory: Work with customers to prepare conditions, develop a reasonable roadmap, give advice to and coordinate with customers to conduct necessary tasks so as for their securities to be centrally traded on the Vietnamese and foreign stock exchanges. Equitization and corporate conversion advisory: The equitization advisory service includes: determining corporate value, developing equitization plan, auction, and holding the initial general meeting of shareholders. Financial restructuring advisory: Help clients understanding their financial position and developing and implementing restructuring solutions in correspondence with customers conditions. Investors' relation advisory: give support to customers during their popularization of image to the public, investors as well as other partners. Through which, contribute to strengthen customers reputation and brand name in the stock market. Management of shareholder's books/list of bond bearers: Help customers both to save costs related to the monitoring and confirmation of transfer, execution of rights for securities owners, and to increase liquidity and facilitate their securities assignment. Other corporate financial advisory services.
III. - Financial Risk Assessment:

We believe that the risk project is relatively low because of the convenience it gives to users and in all cases, success or failure of the transactions, the investment bank will take a certain fee. However, this is still a fairly new array so the approach to customers is also quite difficult. On the other hand, 2012 was a year of loss and dissolution of many organizations, businesses, therefore the risk of scarcity of customers in short-term is likely to happen.
IV. Potential assessment:

Information technology, financial innovation and the diverse needs of customers (business, government, etc.) is growing; equitization process in particular and capital

market in general is creating opportunities for IB. Therefore, we evaluated this project has a very high likelihood of success.
V.
Budget
This is a project funding requirements are not too high. Initial Investment= Revenues in year 1= Lifetime of the investment Var. Expenses as % of Rev= Revenues growth Bil. VND 3,3 Bil. VND 5 10 50% From the second year to the 5th year: 15% each year
From the 6th year to the 10th year: 0% each year because of competitiveness. 15% each year Fixed Expenses The initial investment, which includes money for staff training costs and the installation cost of equipment and marketing at the beginning is 3,3 billion dong. The lifetime of the investment will be about 10 years and depreciation method is double declining balance method If we deposit the amount of money used for initial investment of 3,3 billion dong in another commercial bank with the average expected interest rate for the next 10 years is 10.8% per year, the opportunity cost is calculated as follow 3,3 (1 + 0,108) = 9,2 billion dong. The tax credit is 10%. The net working capital is estimated at 55 million dong. The working capital as percentage of revenue is 25%. The salvageable fraction at the end is 100%. Revenue in the first year will be approximately 5 billion dong. The variable expense as percentage of revenue is 50%. Fixed expense in the first year is 0 billion VND. The tax rate on net income is 25%, according to law of enterprises income of Vietnam 2013. The discount rate expected in this project is 10% After carefully assess, we have the NPV and internal rate of return as follow: = 4,49 Billion VND and = 15,20%
In conclusion, it is worth to invest in this project.

CONCLUSION
2012 marked a fluctuated year to Vietnam economy. Along with the ongoing global crisis, the dark side of the financial and banking sector made 2012 an unforgettable year of instability and dissolution of firms, companies, operationsProblems like losses, high amount of NPL, has been the reasons for losing faith in banks and they are now waiting to be solved with urgent solutions. Facing up all of those general challenges, with the threats from internal events, ACB is still standing firm as a prestigious brand name for all customers. Our operation reports at the end of 2012 has shown that ACB has been gradually overcoming the difficulties, restoring the development in the past step by step. This is partly thanks to the efforts of the whole bank, including employers directions and employees awareness and professionals. From 2013, on the basis of research, evaluation of macro and micro environment, and SWOT analysis, we would like to offer two potential projects with the hope that ACB will always grow stably and steadily, worthy with the title one of the top banks in Vietnam. We are now looking forward to your recommendations and feedbacks.
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REFERENCES
1. Lectures of MBS. Nguyen Thi Hong Nguyen: Slides and sample problems solutions. 2. Bodie, Z & Merton, R (2000), Finance, Prentice Hall Inc. 3. Bagley, N., slides on Finance, Copyright Prentice Hall Inc.1999 4. The official website of Asia Commercial Bank http://www.acb.com.vn/ and all the financial statements from 2007 to 2012. 5. Some official websites on securities analysis that information of Asia Commercial Bank http://finance.vietstock.vn/ACB-ngan-hang-tmcp-a-chau.htm http://www.vinacorp.vn/stock/hnx-acb/ngan-hang-thuong-mai-co-phan-a-chau http://ebank.vnexpress.net/gl/ebank/ http://vneconomy.vn/p0c6/tai-chinh.htm http://www.stockbiz.vn/Stocks/ACB/CompanyReports.aspx http://www.cophieu68.com/incomestatementq.php?view=bs&id=acb&year=2012 6. Introduction to Project Finance, 2005, Andrew Fight.
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Strategic Financial Report

Asia Commercial Bank

Strategic financial Report 2013

Strategic financial Report 2013

SWOT analysis Development project Conclusion References

Strategic financial Report 2013

Strategic financial Report 2013

1. EXTERNAL ENVIRONMENT ANALYSIS

5 | External Environment Analysis

Strategic financial Report 2013

GDP growth gradually improved but remained lower than expected

Inflation was controlled, but high inflation risks still exist.

The foreign exchange market stable.

6 | External Environment Analysis

Strategic financial Report 2013

Bad debt soars at a very high threshold

Credit growth rate lowest in the last 20 years

7 | External Environment Analysis

Strategic financial Report 2013

Interest rates down by 3-8 percent

Market liquidity of banking system has improved during 2012

Banks profit down by 40 percent

8 | External Environment Analysis

Strategic financial Report 2013

2. INTERNAL ENVIRONMENT ANALYSIS

Using the model analysis CAMELS for financial intermediaries

The CAR of ACB over years

Source: annual report over years

9 | Internal Environment Analysis | Financial Analysis

Strategic financial Report 2013

The formula is Equity / Total Assets

Total assets and chartered capital of ACB

10 | Internal Environment Analysis | Financial Analysis

Ratio of total debt to equity is calculated by dividing total debt to equity is

Financial leverage coefficient (debt ratio)

Financial leverage ratio

Source: the financial state of ACB over years

11 | Internal Environment Analysis | Financial Analysis

Strategic financial Report 2013

The structure of assets in 2010 and 2011 3%2%

The inside circle is 2010, the outside is 2011

12 | Internal Environment Analysis | Financial Analysis

Strategic financial Report 2013 Growth in total assets

Source: the balance sheets over years

Loan to assets ratio (LAR)

13 | Internal Environment Analysis | Financial Analysis

Strategic financial Report 2013

43% 37% 33% 37%

Source: Financial statement and annual report

Source: the report of VCBS

Non-performing loans (NPL)

Strategic financial Report 2013

NPL and Coverage ratio

1.20% 0.89% 101.72%

Tratio l bao ph n xu NPL NPL

83.13% 80.10% 0.94%

1.00% 72% 0.50%

74.06% 0.41% 0.48%

0.00% 2008 2009 2010 2011 Q1/2012 Q2/2012 Q3/2012

15 | Internal Environment Analysis | Financial Analysis

Strategic financial Report 2013

ROA and ROE over years