Annual Report 2011 Annual Report 2011
Growing Our Core
Customers People Capabilities
Vietnam Technological And Commercial Joint Stock Bank 70-72 Ba Trieu Street Hoan Kiem District Hanoi Vietnam T: +84(4) 3944 6368 F: +84(4) 3944 6362 Swift code: VTCBVNVX www.techcombank.com.vn Contents Growing Our Core l Customer needs are at the heart of everything we do. We believe that our 2 Techcombank’s Highlights brand is about the total banking experience our 3 About Techcombank customers have with every aspect of our banking service from retail, to commercial and to priority 4 Growing Our Business banking. Our aim is to deliver new heights in our customer experience at every level and our ability 6 Chairman’s Statement to do that is driven by exceptional people and 8 CEO’s Review unmatched services. 12 Significant Achievements 14 Key Performance Indicators 2011 Our cover concept uses our brand symbol to express how our people and our capabilities come 20 Growing Our Customer Care together to delight our customers at the core of 22 Personal Financial Service every aspect of our business. This core is the 26 Commercial Banking basis of our continuing growth and future success as the leading Joint Stock Bank in Vietnam. 28 Growing Our People 30 Human Resource Administration 32 Corporate Social Responsibility (CSR) Activities 34 Major Awards 2011
36 Growing Our Capability 38 Transaction Banking 42 E-Banking Growing Our Core 44 Priority Banking 46 Risk Management Customers 50 Techcombank Brand People 52 Growing Strong Management Capabilities 54 Board of Directors 56 The Board of Directors Standing Committee 57 Supervisory Board 58 Nomination & Remuneration Committee (NORCO) 59 Audit & Risk Committee (ARCO) 60 Statement of the Management’s Responsibilities 61 Corporate Governance Framework 62 Board of Management
64 Growing Our Performance Techcombank is reaching new heights through the dedication of our highly trained staff, the strength of our 66 Consolidated Financial Statements comprehensive management system and the sophistication of our enhanced IT infrastructure. We are growing these core capabilities through our total commitment to our customers and the delivery of unmatched banking products, services and an exceptional customer experience. We aim to go beyond expectations to reach new heights in commercial, transaction and personal banking with a focus on priority banking that will drive our growth in the years to come. Techcombank’s Highlights About Techcombank
Total assets (VND billion) Total equity (VND billion) PBT (VND billion)
250,000 15,000 5,000 12,516 4,221 200,000 180,531 12,000 4,000 150,291 9,389 We are one of the largest joint stock commercial bank in 150,000 9,000 3,000 2,744 7,324 2,253 92,582 Vietnam. With the strength of an experienced management team 100,000 6,000 2,000
50,000 3,000 1,000 from leading multinational and professional financial backgrounds
0 0 0 and the support of HSBC as our strategic shareholder, as well 2009 2010 2011 2009 2010 2011 2009 2010 2011 as the strong support of our customers, we are reaching new Operating income (VND billion) Total deposits (VND billion) Total loans (VND billion) heights in 2012 – and beyond. 8,000 150,000 136,781 80,000 6,662 63,451 120,000 108,334 6,000 60,000 52,928 4,719 90,000 3,918 72,693 42,093 4,000 40,000 60,000 Who We Are is supported by a significant financial Reaching New Heights Vietnam Technological and Commercial capability founded on balance sheet strength. We are now over a halfway through 2,000 20,000 30,000 Joint Stock Bank, more commonly known Techcombank is progressively raising the our strategic transformation program, as Techcombank, is one of the leading standards of our services through our TechcomOne*, we have consolidated as 0 0 0 2009 2010 2011 2009 2010 2011 2009 2010 2011 commercial banks in Vietnam. Since our comprehensive TechcomOne* strategy well as strengthened all our fundamental establishment in 1993, we have experienced 2009 – 2014. systems and continued to develop our strong year-on-year growth and outstanding people. The result is that we are now in Financial Non-Financial performance, consistently achieving high What We Do a position where banking operations can annual increases in both total assets In 2011 our total assets reached VND 180,531 serve ever increasing numbers of customers ROA ROE Number of full-time employees Number of individual customers and turnover. billion, while our pre-tax profit was a record smoothly and efficiently. VND 4,221 billion. These figures were With HSBC as our strategic shareholder, achieved while enhancing our top-ranking We have become a truly modern bank which 1.83% 28.87% 8,335 2,328,549 holding the maximum allowed stake of profitability, illustrated through ROA of 1.83% utilizes a deep understanding of the local 2010 : 1.86% 2010 : 24.80% 2010 : 7,481 2010 : 1,767,642 20%, we have a sound financial base. In and ROE of 28.87% – the highest figures in market together with international best 2009 : 2.24% 2009 : 26.86% 2009 : 5,029 2009 : 1,211,200 conjunction with a network of 307 branches the market. practices to provide people and investors and 1,205 ATMs throughout the country, in Vietnam with the best place to bank. As Cost/income ratio CAR Number of corporate customers Number of branches* state-of-the-art banking technology, and a We serve around 66,000 enterprises and we draw from our solid foundation and the committed workforce of 8,335 professionally- 2.3 million individual customers through our momentum inherited from an outstanding trained staffs, we are well positioned three core business strategies: Personal performance in 2011, we are confident that 31.52% 11.43% 66,152 307 to maximize the delivery of values and Financial Service, Small and Medium Techcombank is set to reach new heights 2010 : 33.65% 2010 : 13.11% 2010 : 45,252 2010 : 282 profitability to our stakeholders. Enterprise Banking, and Transaction Banking. in 2012 – and beyond. 2009 : 30.21% 2009 : 9.60% 2009 : 28,000 2009 : 187 Through these strategies, we are able to Our Strategy offer financial products and services which Number of ATMs Techcombank’s strategic direction is to be address the needs of different and diverse * The numbers are prepared in accordance the best place to bank for our customers and categories of customer. We are confident that with Vietnamese Accounting Standards, the best place to work for our employees. by continually improving on all aspect of our * A comprehensive strategic plan for the period 2009 – 2014. 1,205 the Vietnamese Accounting System for It was devised and implemented in collaboration with The combination of local knowledge from product and service delivery, we will be able Credit Institutions stipulated by the State HSBC and the strategic consulting firm McKinsey, 2010 : 1,001 Bank of Vietnam and the relevant statutory operations in 43 provinces and centrally to achieve our ultimate goal of becoming the transforming Techcombank into a modern bank that 2009 : 565 requirements. See the full financial governed cities, and an engaged workforce leading bank in Vietnam. meets and exceeds all international standards. statements starting from page 67.
2 Techcombank Annual Report 2011 Techcombank Annual Report 2011 3 Revenue Growing Our Business PBT Reaching New Heights
> 6,600 bn VND > 4,200 bn VND Our objective is to reach new heights as the leading Joint Stock Commercial bank + 41% + 54% in Vietnam. We have grown our top line and bottom line consistently over the past five year reporting cycle and delivered exceptional returns to our continuing shareholders. We will build on this success to embed our position as a leader and innovator in new products and services, and to deliver enhanced value to our customers and shareholders.
Techcombank Annual Report 2011 5 Chairman’s Statement
In early 2012, Techcombank was recognized by the State Bank of Vietnam for its good asset quality and was assigned to the group of banks which is allowed the highest rate of credit growth for the year. This is another favorable development which will contribute toward our goal of becoming “the best bank and the leading business in Vietnam”.
Dear Valued Shareholders and Partners, boosting the development of its scale and Strategy (2010-2014) of Techcombank. The operating network under various plans. Board of Directors assumes the leading role I am pleased to report that, despite the The Bank is fully aware of its roles and and has directed the Board of Management prevailing uncertain economic environment responsibilities in helping to enhance the to further focus on implementing and in 2011, the Bank has successfully attained stability and soundness of the Vietnamese prioritizing the strategic direction with a view its business targets and goals for the year, banking system and always remains ready to promptly bring about the expected benefits Earning Per Share achieving a resounding success in business to tap opportunities that can increase value to our shareholders, partners and customers efficiency while continuing to make consistent generation for its shareholders. while further strengthening the foundations (EPS) increased by progress in its transformation processes and that uphold the Bank’s leading position. the implementation of its 5-year development Consistent with the vision of becoming strategy. The cumulative benefits accrued “the best bank and a leading business On behalf of the Board of Directors of from our disciplined business strategies in Vietnam” and the first bank in Vietnam Techcombank, I would like to express my will undoubtedly help to cement our strong to fully apply international standards, sincere thanks for your loyalty and support 22% position within the competitive market place. Techcombank continued to strengthen its rendered to Techcombank over the past years foundation by recruiting additional high and I am confident that your trust will be In early 2012, Techcombank was recognized quality senior managers. Our Board of rewarded. We have the right formula in place by the State Bank of Vietnam for its good Management is led by a talented team of which will enable us to further build on our asset quality and was assigned to the highly successful professionals coming from previous successes and we look forward to group of banks which is allowed the highest various educational backgrounds consisting working together with all our stakeholders rate of credit growth for the year. This was of talented young Vietnamese leaders to reach more new heights in 2012. another favorable development which will and experienced and insightful foreign contribute toward our goal of becoming experts with a wealth of knowledge that will “the best bank and the leading business in ensure Techcombank has all the necessary Vietnam”. However, we are aware that this ingredients to further support its successful breakthrough is certainly not only important development over the next 10 years. I am in terms of increasing the Bank’s scale but proud that Techombank has a unique and due to the greater focus that must be given to dynamic working environment where each maintaining and improving the Bank’s asset of us can strive together cohesively towards quality and performance. realizing our goals.
In 2012, Techcombank also considered 2012 will mark another milestone in the Ho Hung Anh revamping its competitive profile by process of delivering the 5-year development Chairman of the Board of Directors
6 Techcombank Annual Report 2011 CEO’s Review
Welcome, Firstly, I must say what an honour and privilege it is to have been given the opportunity to lead Techcombank as the new CEO from January 1st 2012. In following Mr. Nguyen Duc Vinh’s twelve years of outstanding successes, I undoubtedly have large shoes to fill, but I hope to use the achievements of my predecessor not only as a guide, but also an inspiration. I am fortunate that I will benefit from Mr. Nguyen Duc Vinh’s expertise and support as he assumes the role of Vice Chairman.
It has been a breakthrough year for implementation of robust risk management In recognition of this year’s achievements, Techcombank. Record growth, record profits structures and strong nationwide branding the Bank was awarded ten prestigious and the employment of over 8,000 staff means that Techcombank is perfectly placed international financial awards. have seen the Bank reach some truly new to achieve even more, substantially more, These included: heights. To perform this way in the face of an than we already have. • “Best Retail Bank of the Year 2011”, uncertain macroeconomic climate, both in as awarded by Asian Banking and Vietnam and the world as a whole, has been The new financial year began with a certain Finance Magazine; 6,662 bn VND a remarkable achievement. There have, of level of positivity in terms of the domestic • “Best Bank in Vietnam 2011”, course, been many challenges, but we have economy. However, as the year progressed “Best Cash Management Bank in Vietnam Operating income met each of them head on. I am pleased and the level of economic uncertainty grew as 2011” and “Best Trade Bank in Vietnam increased by 41% proud that Techcombank has emerged from domestic business and consumer spending 2011” by Finance Asia Magazine; 2011 bigger, stronger and better prepared for stagnated. Despite this, the Bank remained • “Best Bank in Vietnam 2011”, the year – and decades – ahead. steadfast and was able to end the year having “Best Cash Management Bank in Vietnam attained a number of impressive figures. 2011” and “Best Trade Bank in Vietnam As we move forward into what will be a new These included: 2011” by Alpha South East Asia Magazine; era for Techcombank, I believe we are ideally • An unprecedented profit before tax of • “Best Domestic Bank in Vietnam 2011” positioned, domestically and internationally, to VND 4,221 billion, representing a 53.9% by The Asset Magazine take the Bank even further. There is significant increase on prior years; • “Best FX Provider in Vietnam 2011” financial potential still untapped in Vietnam • Total revenue maintained a steady growth by Asia Money Magazine and as modern banking methods continue of 41% over the previous year; • “Best Vietnamese Bank in Media to replace cash in society, it is the banks • Loans and advances to customer reached Reputation 2011” by Vietnam Report and financial services that have made wise VND 63,451 billion for the year ended and Media Tenor business decisions in the preceding decade 31 December 2011; of growth that will see the greatest returns • Employed 8,335 staff across the country; The multiple awards were an unprecedented on capital investment. With that said, our • Paid VND 1,067 billion in corporate achievement and represented the peak of our positioning in certain market segments, the income tax; performance and maturity to date.
Techcombank Annual Report 2011 9 CEO’s Review
With the support of a highly committed, disciplined and talented team enhanced by leading technology, as well as the strong support of our customers, I am confident that we have right strategy and culture to maintain our prosperous momentum, and provide consistent and sustained value for our shareholders.
These awards were born not only from the McKinsey, Qualitative Credit Assessments management training software and weekly • The Bank raised its charter capital from business model. Once again, we have Finally, I would like to express my gratitude simple success of our financial figures, they (QCA) was implemented to enhance the risk management news. VND 6,932 billion to VND 8,788 billion. demonstrated our determination to stand to our valued customers, employees, partners were the result of the deeper structural credit process and reduce queuing time. This was done through retained earnings by our customers and clients, using our and other stakeholders for their tremendous changes that, inspired by TechcomOne, In addition, Enterprise Content Management To allow for a simple understanding of and reserved funds; capital and liquidity strength to support support. I am looking forward to successful have resulted in the development of every (ECM) and Early Warning System (EWS) were our innumerable divisional successes and • Various investments were made in them in good times and bad. However, relations for many years to come. With them, branch and division within the Bank, successfully initiated and have improved improvements, I would like to highlight some many foundation areas of the Bank. our successes, landmarks and recognitions and the support of a highly committed, through continual innovation. For example, internal corporate governance and risk of the year’s key performance indicators: These included IT, systems supporting are all very well, but if we are to realise disciplined and talented team enhanced by the introduction of Priority Banking has management of the Bank. • Choosing quality assets and using business Units, S&D and HR. The Bank our objective of seeing Techcombank leading technology, I am confident that we allowed us to give VIP customers true VIP a diverse mix of core businesses also implemented its first KPI appraisal established as the ‘best bank and leading have right strategy and culture to maintain treatment. Also, specialised and diverse A significant financial investment of the directly contributed to a 20.1% growth system, so staff performance could be enterprise in Vietnam’ we must build upon our prosperous momentum, and provide product packages and excellent customer Bank came through a complete overhaul of in total assets; awarded accordingly; all that we have achieved. We must focus consistent and sustained value for our care programs have been implemented our technology and operational initiatives. • With solid retail and corporate lending, • Capital adequacy ratio was maintained clearly, coherently and consistently on shareholders. There is no doubt in my mind to consolidate Techcombank’s strategic These changes are designed to create net income increased 66.4% in at 11.43%, exceeding State Bank of not only meeting but also anticipating our that 2012 will see Techcombank reach new positioning to provide “Convenience, greater efficiency across the Bank and comparison to previous years; Vietnam’s’s requirement rates; customers’ and clients’ needs. We must heights in everything we do. Efficiency and Excellent Service”. Elsewhere, included features such as migration to • Stable growth in cash management and • There has been a high demand continue to pursue TechcomOne strategies the creation of a rewards program to Oracle database technology, with the trade finance contributed to an increase for our services within the retail and develop Techcombank into an even Faithfully, acknowledge customer loyalty has had upgrade completion of core banking T24R10 of 23.7% in net fee income; industry. Figures now stand at more more thriving and dynamic organisation. positive results, while social efforts such as phase two; a completed individual credit • Operations were both more effective and than 2.3 million retail customers As we have done in previous years, in the Red Scarf initiative have drawn praise management system, Loan Origination more efficient. This meant cost to income nationwide. Our product range covers 2012 we will aim to achieve double-digit from many corners. System (LOS), to improve the quality of ratio decreased from 33.6% to 31.5% on mobilisation, loans, cards and internet percentage growth in revenue and profit. future retail credit services; the development the previous year; banking with high convenience was This will be based on sound risk management In Corporate Banking, we are continually of online Enterprise Knowledge Platform • With an effective capital management developed to serve the needs of principles to facilitate consistent, high-quality looking for ways to streamline our procedures (EKP) training, with full connection to HR plan, profitability was enhanced by numerous customers. growth. Further emphasis will be placed and processes to deliver faster and safer systems; and an enhancement of cross-Bank establishing excellent rates on return on on improving Bank efficiency and cost services to our customers and the Bank understanding of risk management through asset and return on equity. These figures Our exceptional performance in 2011 control, with the objective of enhancing Simon Morris itself. With the support from consultant an internal communication plan, online risk stood at 1.83% and 28.87% respectively; reflects the continued success of our overall performance. Chief Executive Officer
10 Techcombank Annual Report 2011 Techcombank Annual Report 2011 11 Significant Achievements
Delivering sustainable growth to reach new heights 2011 was a breakthrough year in Techcombank’s performance, building upon eighteen years of strong and steadfast growth. Indeed, the year witnessed Techcombank delivering the strongest performance in its history, despite the unstable and stuttering global economic recovery, and the complicated situation in the domestic economy. Techcombank has proven that it can meet any challenge that may come its way.
Business Achievements Fundamental Achievements
Charter capital Extensive network Profit before tax of ROA of 1.83% Total assets of Raised the charter capital from VND 6,932 The network grew, both in terms of quantity VND 4,221 billion and ROE of 28.87% VND 180,531 billion billion to VND 8,788 billion, an increase of and quality. The Bank expanded to 307 VND 1,856 billion. Of this, VND 1,765 billion branches and transaction outlets in 2011, Reached an unprecedented record profit Remained a leading commercial joint-stock Maintained its position as the second largest was from retained profit and VND 91 billion ranking second among commercial joint- 28.87% before tax of VND 4,221 billion, attaining first bank in terms of profitability, with increasing commercial bank in terms of total assets, was from the reserve for charter capital. stock banks. The Bank now operates 2,657 place among commercial joint-stock banks. ROA of 1.83% and ROE of 28.87%, the highest with VND 180,531 billion. POS in total, 412 POS more than the end of ROE of 28.87%, the in the market. Technology 2010, accounting for 3.4% of the market. Successfully implemented the second phase The current number of ATMs of Techcombank highest in the market of the T24 upgrade project and the first phase is now 1,205, an increase of 204 ATMs 2.3 million Individual Qualitative Credit Gan ket ben lau of data warehouse project. This signalled compared to 2010, representing 8.8% of the total transformation of infrastructure and the market. Launched the first comprehensive customer customers Assessment for application architecture of the core banking care program in the banking and finance Attracted a record number of individual SME customers system (multi-book, multi-servers, browser Won 10 prestigious awards industry in Vietnam. This is applied to customers. With 2.3 million now choosing interface, ARC-Internet Banking infrastructure These came from some of the world’s Implemented the application of QCA model almost every personal financial product of to bank with Techcombank, it represents and Oracle database). In total, we invested leading and most highly-regarded financial for SME and micro SME customers across Techcombank, including savings, accounts an increase of 32% from 1.7 million in 2010. nearly VND 900 billion in new IT systems magazines and included plaudits from the system, with the continuous intention to and international Visa cards. The program Along with this, the total number of cards and updates. FinanceAsia, Asia Money and The Asset. improve the QCA model efficiency to make it offers customers many promotional and now exceeds 1,667,119 units. Impressively, This was an unprecedented phenomenon, an even more effective credit approval tool. preferential deals that help win their 160,046 of these are international credit cards recognizing a year of great performance, hearts and, ultimately, keep them banking and international debit cards. during which Techcombank truly did reach with Techcombank. new heights.
12 Techcombank Annual Report 2011 Techcombank Annual Report 2011 13 Key Performance Indicators 2011
Income Structure (VND billion)
8,000
543 7,000 424 Strategic focus and 6,000 1,150
5,000 527 241 sustainable growth 4,000 178 930 400 3,000 198 641 5,298 Techcombank Group made sustainable growth through 2011. 2,000 3,184 2,500 This is despite the worldwide economic uncertainty and 1,000 turbulence inbanking markets. With a 54% pre-tax profit increase, 0 (163) together with a strong balance sheet, the Bankholds an impressive (754) (1,000) market position and enjoys excellent growth prospects. 2009 2010 2011
Net interest income Net fee income Trading income Investment income Other income
Executive Summary Techcombank continued to adopt a performance in 2011. Continued investment in interest income was compensated by Other income was higher than in 2010 but factors associated in the rise of operational In 2011, Techcombank delivered successive conservative approach to balance sheet both consumer as well as corporate banking the increase of average interest bearing was not significant, with growth rate at 3%, costs, accounting for approximately new records , thus ensuring that the Bank management, with a continued emphasis on means Techcombank is well prepared to assets by 70%. approximately VND 20 billion. VND 100 billion. However, the cost/income maintains its position as one of the leaders liquidity and capital management. Indeed, capture the growth opportunities provided ratio decreased from 33.6% in 2010 to 31.5% in Vietnam’s commercial banking industry. Techcombank was resilient despite significant by its focus markets. Net fee income increased 24%, equivalent Operating expenses increased VND 511 in 2011, reflecting the relatively good cost Some of the highlights were: external market volatility in 2011. The advance to VND 221 billion. Income from cash billion, or 32% compared to last year. This controls of the bank. • Operating income increased by to deposit ratio at 31 December 2011 was Bank Performance remittance and trade financing was was mainly due to recruitment cost with VND 1,943 billion, or 41%, to maintained a relatively low 65.89%, just Total bank operating income was VND 711 billion, a 21% rise that affirms increase of 57% (VND 427 billion). In 2011, Profit before tax reached VND 4,221 billion, VND 6,662 billion; slightly increased from 62.23% in the VND 6,662 billion, an increase of 41%, an the strong position of Techcombank in this the number of staff increased by 11%, rising equivalent to a 54% growth rate year-on- • Profit before tax rose 54% to previous year. increase of VND 1,943 billion. This success service segment. In 2011, the bank focused to 8,335 employees. This was a tactical year. It is an impressive rise, especially in VND 4,221 billion; was achieved due to un-surpassing growth selectively on industries and companies move as Techcombank chose to focus on the context of the difficult financial market • Earnings per share (EPS) increased The bank continued to generate additional of all business activities. with strong financial resources and sound selectively increasing its human resources conditions which existed during the year. by 22% to VND 2,902 per share; equity organically and further strengthened existing banking records to enhance in order to increase its ability to serve its Earnings per share ratio increased 22%, • Total assets grew by 20%, reaching its capital position via a bonus share issue Net Interest income increased continually overall fee income. growing client base. The scarcity of qualified reaching VND 2,902 per share. Return on VND 180,531 billion. in 2011 that increased the bank’s chartered by 66%, reaching VND 5,298 billion in 2011. and experienced personnel in the market Assets ratio (ROA) slightly decreased from capital by 27%, from VND 6,932 billion to This growth was the result of product Trading income on foreign exchange, made it necessary to offer more attractive 1.86% to 1.83% while Return on Equity ratio The cost to income ratio fell to 31.5%, VND 8,788 billion, a VND 1,856 billion rise. diversification and promotion together with gold and securities recorded a loss of salary packages in order to attract quality (ROE) reached as high as 28.87%, up from compared with 33.6% the previous year. Of this amount, VND 1,765 billion was from enhanced cooperation between support VND 754 billion due to the unpredictable and talented personnel. This explains, in 24.8% in 2010. This figure reflects the investment in network retained profit and VND 91 billion from the divisions such as Transaction Banking and changes of the currency and gold markets. part, the additional staffing costs. In addition, expansion, staff resources and overall reserve for supplemental share capital. Sales and Distribution to approach and In contrast, gains on sale of investment system expansion activities, deepening of the infrastructure that began in 2010 and started attract customers. securities increased substantially by distribution channels, investment in the latest to deliver value in 2011. Based on its strong foundations, the bank VND 183 billion to VND 424 billion. equipment and technology, as well as wider has continued to perform consistently Net interest margin ratio was 3.8%, lower marketing activities were all contributing and delivered another record-breaking than that in 2010 (3.9%), however, the net
14 Techcombank Annual Report 2011 Techcombank Annual Report 2011 15 Key Performance Indicators 2011 The bank’s capital Loan by Industry (VND billion) adequacy ratio (CAR) of
70,000 11.43%, significantly higher than the 9% 60,000 minimum required by the 24,465 50,000 State Bank of Vietnam
21,107 40,000 2,114 14,486 5,097 30,000 2,060 1,500 4,665 3,589 11.43% 20,000 22,993 16,169 19,706 10,000
8,783 6,349 5,390 0 2009 2010 2011
Agriculture Trade, Manufacturing Construction industry Warehousing, Transport Other industry and Forestry industry and Communication
Balance Sheet Customer Loans The majority of Techcombank’s lending The Bank continued to focus on maintaining As of the end of 2011, the customer loan consisted of short-term loans, which a strong balance sheet, which remained balance reached VND 63,451 billion, up accounted for 56% of the total,equivalent to both diverse and conservatively structured. 19.8% from 2010 figures. Bucket 3-5 debts VND 35,587 billion. Growth was particularly Despite turbulence in the interbank market accounted for 2.83% of the total. This loan strong in the sectors of Commerce and and the economy, the Bank managed to growth rate is lower than that of 2010 (26%) Manufacturing (up almost VND 3 trillion), and maintain a high liquidity with good levels of and the lowest in the recent years at Agriculture and Forestry (up VND 3 trillion). deposits during 2011. Advances-to-deposits Techcombank. The credit growth in 2011 ratio grew slightly to 65.9%, compared was in-line with the credit growth cap with 62.2% in 2010. The already strong imposed by the State Bank of Vietnam capital position was further strengthened on the banking sector. by increasing capital by 27% to VND 8,788 billion. The bank’s capital adequacy ratio Lending increased across a number of (CAR) at year end was at 11.43%, 2.43% sectors in 2011, with an increased focus on higher than the 9% minimum required by exposure to better-rated counter parties and the State Bank of Vietnam. collateralized transactions. Loans to individual customers grew by VND 3,837 billion to Techcombank has a conservative funding VND 22,234 billion, representing 35% of structure and the Bank continues to be Techcombank’s customer loans. As business disciplined in the management of assets activity levels increased, lending to small through proactive diversification of the loan and medium-sized enterprises (SMEs) and book. Off balance sheet contingent liabilities large corporate shave risen by 19% in total, grew by almost VND 7,000 billion, reaching VND 41,217 billion, representing or 34% year-on-year. 65% of the bank’s total loan portfolio.
16 Techcombank Annual Report 2011 Key Performance Indicators 2011
Deposit by segment (VND billion)
140,000
120,000
48,133
100,000 27,783
80,000
10,346 60,000 57,636 61,806
40,000 42,804
20,000 31,012 19,543 18,745 0
2009 2010 2011
Economic Entities Individuals From other credit institutions
Investment Securities Valuable paper issued by Techcombank rose Equity Priorities for 2012 The bank’s total Investment securities grew by VND 16,742 significantly by 54% from VND 15,024 billion Equity increased VND 3,127 billion to In order to build on the successes achieved billion, or equivalent to 53%. This increase to VND 23,094 billion, including VND 12,521 VND 12,516 billion when compared with in 2011, Techcombank will remain disciplined Equity increased deposit grew by was largely due to investment in Government billion with maturities less than 12 months, 2010, and was driven by the share issue from in executing its strategy. The focus shall VND 3,127 billion to and corporate bonds. VND 5,116 billion with maturities from 12 2010 retained earnings. There was no cash continue to be on SMEs and retail priority months to five years, VND 2,456 billion with dividend paid in 2011. It was pleasing to see customers, while enhancing the quality of Total equity investments were stable at 0.2% maturities of more than five years and such a strong commitment from shareholders transaction banking services. The bank 28,447 of investment portfolio at VND 77 billion. VND 3,000 billion convertible bonds. to support Techcombank’s long-term will also continue to adopt proactive 12,516 strategy. Furthermore, capital adequacy balance sheet management controls and Deposits and Borrowings Cash and Balances Held at Central Bank ratio was maintained at 11.43%, over 2.4% remain committed to maintaining its capital bn VND Techcombank has continued to maintain a Cash and balances held at the State Bank higher than the 9% required by the State adequacy and liquidity strength. There will bn VND strong and stable deposit base in 2011. The of Vietnam (SBV) increased VND 2.5 trillion Bank of Vietnam. be continued investment in infrastructure bank’s total mobilized deposit funding was compared with 2010. This resulted from a and human resources. There will also be (+26%) VND 136,781 billion, which rose VND 28,447 tightened monetary policy imposed by the a concentration on simplifying the bank’s billion (+26%) compared to the end of 2010. government and the State Bank of Vietnam , processes and improving the quality There was strong growth in mobilisation with the USD reserve requirement rate almost of distribution channels to enhance from economic entities (+65%) and credit doubled from that of the previous year. The cost-efficiency and the quality of institutions (+73%) compared to 2010. Retail remaining increase represented surplus funds customer services. mobilisation dropped 6.7% compared to the held with SBV for better liquidity in the volatile end of 2010 in line with the overall market. 2011 market.
18 Techcombank Annual Report 2011 Techcombank Annual Report 2011 19 > 66,000 Growing Our Customer Care > 2,300,000 Enhancing Customer Satisfaction
Corporate Individual Our strategy is to maximize the satisfaction customers experience with us through the development of our physical and virtual network and our unmatched services. customers customers Our investments in our core banking system is a strong platform on which we grow + 46% + 32% and we aim to focus on developing in the fast expanding southern region to capture this opportunity as it emerges.
Techcombank Annual Report 2011 21 Personal Financial Service
Deposit from individual customers (VND billion) Lending (VND billion) Lending components
70,000 25,000 To become the nation’s Number One in both the mass-affluent 61,806 22,234 57,636 6.3% 0.4% 60,000 6.0% segment among commercial join stock banks and the priority 20,000 18,397 New house 50,000 Consuming loan 42,804 9.6% banking among local banks, Techcombank’s PFS needs to focus Business loan 40,000 15,000 11,269 Over draft on key strategic pillars such as innovative service and products, Others 30,000 10,000 IT development and improved Risk Management system. 20,000 5,000 10,000 77.7%
0 0 2009 2010 2011 2009 2010 2011
Personal Financial Service Highlights Financial performance in 2011 Deposits No. of customers (customer) Techcombank’s PFS Division is committed to Techcombank has maintained a relatively 2,500,000 2,328,549 Business Strategy Highlights improving how it serves its customers and is stable and sustainable deposit base among 2,000,000 Techcombank’s Personal Financial Service • In 2011, profit before tax soared constantly reviewing policies and procedures its personal banking customers. Although 1,767,642 (PFS) sets targets in alignment with the by 255%. in relation to personal financial products and personal deposit value has fallen slightly 255% 1,500,000 transformation program of the Bank. • Fee income ratio rose by 99% service portfolios, such as deposits, loans, by -6.7% compared to 2010, with the total 1,211,200 profit before tax soared As such, the PFS division aims to be the against 2010. credit cards and online banking services. deposit value reaching VND 57,636 billion, 1,000,000 nation’s number one in both the mass-affluent • Compared to 2010, business loan ratio Customer service success is reflected in this is still a relatively positive figure when segment among commercial joint stock increased by 44%. the results of the department. In 2011, PFS put in the context of 2011’s weak currency 500,000 banks, and in the priority banking segment • Number of Visa cards increased has met and exceeded many targets. These market, as well as increasing inflation and 0 among local banks. PFS ended 2011 with by 79%. 99% include a profit before tax increase of 255% an unpredictable macro-economy. Support 2009 2010 2011 figures that showed the results of the • Number of customers rose by 32%. against 2010 and a rise in customer came from customers has contributed to the total fee income ratio rose previous three years of the Bank’s to 32%. Deposit values are stable and deposit value of Techcombank ranking TechcomOne programme. The division Priority business programmes in 2012 sustainable, an impressive achievement second in terms of total deposit among remains responsive to the changing and • Develop products and customer given the high inflation and unstable commercial joint stock banks. challenging market by continually tapping care programmes tailored to middle- macro-economy in the world and Vietnam. potential opportunities for development. and high-income customers. 44% The loan ratio and loan structure ratio are Loan and Loan Structure by Product Customer Number Chart The Bank’s goal is to provide loan services 2011 saw a strong development of the retail • Develop and stabilize the position of business loan ratio increased maintained and are aligned with a prudent Business strategy priority banking service. risk management approach. It should also to customers that meet their individual banking sector. Against 2010 figures, Visa • Focus on serving mass-affluent segment • Develop brand. be noted that net fee income to total net requirements. Results show outstanding cards rose by 79%, customer numbers by and priority customers in key areas. • Finalise important processes and operating income ratio climbed from 9.40% to loans to customers increased by 20.9% 32% and active accounts by 24%. • Develop powerful sales forces with enhance service quality of 11.26%, reflecting the Bank’s overall trend of compared to figures from the previous sales positions focusing on dedicated sales team. 79% sustainable development. year thanks to a product-based loan target customers. number of Visa cards increased structure. Outstanding loans for business • Build business model looking forward purposes increased by 43.7% compared to strategic positioning factors, namely to 2010. The percentage of home loans service and convenience. accounted for 77.7% of total retail loans. • Invest in technology development and pay attention to building and fine-tuning the 32% Risk Management system. number of customers rose
22 Techcombank Annual Report 2011 Techcombank Annual Report 2011 23 Personal Financial Service
Achievements and Highlights Objectives and Direction in 2012
To realise 2011 objectives of service On top of providing diversified product care programs have also been given special New Services and Products in 2012 Investment in Sustainable Growth improvement, product diversification, and an packages, Techcombank PFS also focused attention. The expansion of priority banking to PFS constantly strives to improve the level of To ensure rapid and sustainable growth, Profit before tax soared by increase in products designed for specific on products with high-tech backing – 133 branches and the completion of a priority service provided to customers. To enhance IT development and an improved risk customer segments, Techcombank PFS innovations such as EMV chip cards brought customer care program that will begin in early this, 2012 will witness improvements in management system will continue to be launched a number of strategic products cardholders enhanced safety, security 2012 were significant initiatives begun in 2011. processes such as: deposits, withdrawals, two of the top priorities of Techcombank in that have drawn a positive reaction from and convenience. Becoming a member 2011 also witnessed improvements in relation new accounts, card issuance/ activation, 2012. Throughout 2011, the core banking customers. Of these products, F@st Easy has of Western Union in 2011 was another to diversified ATM/POS system functions ATM network development, and an e-channel system of Techcombank has been the focus 255% been a highlight. With a convenient payment noteworthy step. The number of transactions and Internet banking. The completion of model that will include mobile banking. of investment and constant improvement as function and the ease of internet banking increased 300% after only four months of the personal credit management system, the Bank seeks to support ever-broadening and mobile banking, along with a high-limit operation, with the strong sales anticipated LOS, was another important achievement The enhancement of customer care program business demands and an increasing number card payment facility, it has proved to be in the coming year. in 2011 as the Bank seeks to develop and and the development of products that centre of customers. The Bank has also developed increasingly popular with customers. improve retail credit service quality in the on investment and trading demands of and successfully implemented the use of In addition, 2011 marked the birth of Besides a focus on product development, coming years. mass-affluent and affluent customers, and a Loan Origination System (LOS). It has partnerships with other financial services Techcombank PFS also paid special the development of priority RMs, are also contributed significantly to the management in areas such as insurance, credit cards attention to service quality improvement, PFS’ focuses in 2012. of retail credit service processing and and loans. Agreements with partners that with the aim of achieving a level of customer delivery, as well as credit risk management. included Mercedes Benz, Le Group, satisfaction that would set the Bank apart Vietnam Airlines, Peacesoft and Vincom from its competitors. Training courses for sought to provide diverse and convenient sales staff were regularly held, focusing service packages, appropriate for our on the establishment of a best practice customers’ needs. foundation that would also allow the continual improvement of customer service. Customer
24 Techcombank Annual Report 2011 Techcombank Annual Report 2011 25 Commercial Banking
Techcombank has continued to establish its commercial banking operation as a major part of its business operations and one that sets it apart from other banking competitors.
Commercial Banking Business Industry-Specific Initiatives Number of customers (customer) Achievement & Highlights Looking Forward Operation Review In order to facilitate the development of 70,000 66,152 Commercial banking continues to be a crucial our customers’ business enterprises in this 60,000 Diverse Product Offerings Introduction of Risk Key Objectives for 2012 part of Techcombank’s operational business time of economic difficulty, Techcombank To achieve the results outlined above, Management Measures In order to further improve and make 50,000 success. By developing numerous business implemented a business plan in 2011 that 45,252 Techcombank has made every effort to Along with scale of growth and product its processes more efficient in 2012, activities, products and services throughout focused on a number of industries. This was 40,000 provide more complete and diverse products, offerings for enterprise customers, 2011 also Techcombank has made a considerable effort 2011 that were tailored to corporate done to ensure particular service to each 30,000 28,000 as well as flexible packages for corporate saw Techcombank pay special attention to to fine-tune existing processes. Minimizing
customers, Techcombank has continued to customer segment. Under this business plan, 20,000 customers. In 2011, Techcombank continued risk management. With the implementation of the processing time and increasing the strengthen its commercial banking operation Techcombank made specific investments in gaining positive results through the provision McKinsey’s recommendations, Techcombank efficiency of everyday banking functions such 10,000 as a major part of business operations which those industries determined as focal targets, of diversified, flexible and packaged products has successfully rolled out the following as credit and disbursement processes and 0 sets it apart from banking competitors. enabling the better understanding of each 2009 2010 2011 to its business enterprise customers. These systems: credit application automatic collateral evaluation processes, will ensure industry’s characteristics. When this research products included: packaged finance, circulation (ECM – Enterprise Content the best service for business enterprise Financial Performance was combined with Techcombank’s broader supplier finance, distributors finance and Management); Early Warning System (EWS); customers and continue to enhance the
Customers are the top priority for business knowledge and understanding of Corporate Deposit (VND billion) overdraft facilities. With strong, customer- and Qualitative Customer Assessment (QCA). reputation of Techcombank. Techcombank. By the end of 2011, the existing customers, the bank was able to focused policies and quality service, With the effective support from these systems 35,000 company had served 66,152 enterprises develop specialized products that best served 31,012 enterprise customers have increasingly used and processes, the risk management of Moreover, Techcombank is committed nationwide, with new Small and Medium the needs of each market segment industry. 30,000 Techcombank’s products and services. Techcombank has been substantially to offering unique and diverse products Enterprises (SME) acquisitions accounting 25,000 They are supported with effective cash- improved, creating a sound foundation to its customers. By further simplifying 19,543 for 13,000 of this total. The figures not In addition to complying with Government’s 20,000 18,745 flow management and profit optimization, for sustainable business in the and establishing standard conditions only affirm the confidence that corporate Resolution No. 11 for focal development allowing them to focus on their core business foreseeable future. for all products and services, along with 15,000 customers have in Techcombank, but also of manufacturing industries, with special operations. This has proven to be especially our determination to reduce processing vindicate the business and operational priority for the rural and agriculture sectors, 10,000 true for customers with wide-ranging affiliates times, Techcombank seeks to optimize the decisions that have been made by the Bank Techcombank has developed many 5,000 and distributors and those with an extensive customer’s banking experience and ensure in a year of continued economic uncertainty. special preferential programs for business 0 network of partners. that the maximum convenience is offered. 2009 2010 2011 enterprises operating in the agriculture, In addition to these process improvements, Based on well-established customer trust, forestry and marine sectors. By the end of With these sustained and successful efforts Techcombank will also focus on enhancing the growth rate of corporate customer 2011, these sectors were among the highest Loan growth by segment to improve the products and services of customer service in 2012 as it seeks to deposits reached 65% for the year, rising areas of business growth. Techcombank, 2011 marked an outstanding ensure that the Bank leads the field in 70 63.0% from VND 18,745 billion in early 2011. 60 growth of sales, including letters of credit and customer satisfaction. It should be noted that the deposit growth In the support of Government’s intimating 50 guarantees from corporate customers. of SME customers accounts for 94% of total policy mentioned above, it should also be 40 increased of corporate customer. In addition, noted that Techcombank has proactively 30 Outstanding (VND billion) 2011 2010 Growth 20 16.7% as of late 2011, deposits in terms of VND decreased lending towards those industries 9.3% 10 account for 78% of total mobilization that were considered to contribute less -17.7% 2.6% LC 8,889 5,411 64% 0 from corporate customers. efficiently to the development of -10 Guarantees 8,868 5,595 58% Vietnamese society. -20 Others Warehousing, Construction Trading, Agriculture transportation and manufacturing and comminication and processing forestry
26 Techcombank Annual Report 2011 Techcombank Annual Report 2011 27 > 8,330 Growing Our People > 40 bn VND Our People – Our Success
Staff Investment Our people are at the heart of our success. As a young and dynamic team we are maximizing our potential for growth by investing in our people through training and in training building strong teams that will grow with our organization and become the leaders of the future. We believe it is important to integrate with the community beyond our business role, to support initiatives that create mutual benefit for the wider community and encourage development that is responsible and sustainable.
Techcombank Annual Report 2011 29 Human Resource Administration
A great working place for employees to develop, contribute and build success.
In line with our vision of becoming the Highlights able to design and finalize new salary people, more than 550 staff were promoted of job descriptions and job skills, salary ‘Best Bank and Leading Business in Vietnam’, structure and internal band structure for to managerial positions payment principles, preferential lending we – Techcombank have paid special the entire bank. The revised approach policies to staff, reward and recognition for attention to our human resource development provides a truer reflection of each job position In addition, under the human resource exceptional performance are all highlighted strategy. The focus has been on building the making it easier for Techcombank to pay development plan, Techcombank also paid by the human resource strategy. best working environment for our employees, for performance and attract the right people careful attention to seeking and training future based on three basic elements: 60 500 from the market personnel for the bank. Through the Future Other areas of focus for the implementation • Attracting and retaining talent; Overseas training Future bankers program Banker Program, Techcombank coordinated of new policies and processes across the • Training and development; Numbers of staff Numbers of staff Training and developing staff with partners in both the academic and system include: organizing the compliance • Reward and recognition. capacity across the system professional Human Resources consultancies test, professional test, and band conferment In addition to building a standard system of to hold job fairs at universities, as well as interview, selection of future leaders, planning Accordingly, the roadmap for human resource evaluating job descriptions and job skills, provide opportunities for internship programs KPI evaluation for each staff, and considering strategy implementation (2010-2014) is we also paid attention to developing and and scholarships. the satisfactory levels of job descriptions and divided into three phases: 263 550 enhancing knowledge base and skills sets job skills for appropriate salary adjustment. • Building basic foundations; for our staff members. This was executed Changing our approach towards • Building capacity and changing thinking; External training in country Appointment of staff at management levels through building a career roadmap, with human resource activities Implementation of employee • Fine-tuning and redesign. Numbers of staff Numbers of staff training plans for job titles at specific units. To help Techcombank achieve the engagement survey These included a standardised training benefits of its Human Resources strategy, Through the Hay Group,a leading international In 2011, Techcombank made significant program for new staff that focused on an accelerated Human Resources human resource consultant, Techcombank progress with the implementation of the positions such as RBO, RMSME and teller. Transformation initiative was launched ran an employee effectiveness survey strategies. These included: revised policies, The number of participants amounted to with onsite support from HSBC in the form measuring both employee engagement processes, and systems; building staff 155 4,300 nearly 1,600 staff. The launching of an of one of their HR professionals. The initiative and employee enablement. The achieved capacity; and developing our approach e-learning system also helped to improve will help establish a progressive, professional response rate of 88% showed strong to Human Resources. Training for banking manager position Teambuilding the standard of training offered as well as and leading HR function that will further commitment from staff to further improve Numbers of staff Numbers of staff make it easier for staff to be trained. develop the leadership and people capability the bank. Policies and processes completion; in Techcombank. System establishment, development With the aim to encourage and motivate Following the human resource strategy and improvement staff members, Techcombank conducted Communication and implementation of roadmap, in 2012 Techcombank continues In 2011, Techcombank completed a full library operational test and band conferment new policies, processes and systems to exercise the obligations of Phase 2: of job descriptions and job skills for each title interviews with 600 employees. The In recognition of the important role of each Developing staff capacity under the HR in the Bank. These job descriptions and Job 1,583 40.5 implemented appraisal system was a useful individual in successfully delivering a HR strategy, focusing on finalizing staff capacity Skills were completed with the support of a tool for each business unit to select and Development Strategy the Bank paid special development, and changing the mentality of Dictionary of Competencies. The dictionary Training of Retail banking officer (RBO), Training cost assess staff for potential Future Bankers. attention to communication processes, HR practices. included 34 competencies and 800 job Relationship manager for SME (RMSME), Teller VND billion At the same time, in 2011, to recognize and especially the flow of communication from descriptions. With robust job skills and job Numbers of staff reward the talented people working at the front line managers to staff in conveying new descriptions in place,Techcombank was Bank and Techcombank’s commitment to its policies and processes. The establishment
30 Techcombank Annual Report 2011 Techcombank Annual Report 2011 31 Corporate Social Responsibility (CSR) Activities
Our believe that the local community should thrive and prosper alongside Techcombank has taken deeper root in our culture, our philosophy and in all our activities.
Throughout our eighteen years of operation, Some of our earlier efforts were limited in scholarships, each worth VND 3 million, to on a long-term basis, which allows students Techcombank also focused on supporting attention at this time. By doing this, we we have always believed that a bank, or scale and ad-hoc, which restricted our ability poor studious pupils aged between nine and across the country to demonstrate their flood relief effort to aid affected areas, hope to not only help those in need but to indeed any business, cannot prosper to reach out further and more vigorously. In fourteen years old. The scholarships were computer skills using Microsoft Office reducing poverty, building houses in gratitude ultimately build a better community in which without supporting the community in which it order to overcome this situation, in 2011 we spread across six cities: Hanoi, Hai Phong, applications,. This highlights Techcombank’s and appreciation of Vietnamese patriots’ we all enjoy a higher living standard. operates. This belief that others should thrive centralized all our CSR activities into one Da Nang, Khanh Hoa, Can Tho, and Ho Chi commitment to raising the level of informatics mothers for their life’s devotion towards and prosper alongside our Bank has taken cause with a further defined strategy and Minh City. The budget was taken out of the standard among students in Vietnam, liberating Vietnam. The total budget spent Actively participating in social activities and deeper root every year and we are proud that stepped up our efforts by allocating a larger profits made from savings deposited in the scouting and supporting young talent. on these activities amounted to around demonstrating mutual care is the bank’s it is now a part of our culture, our philosophy, budget of up to VND 16.4 billion, which will bank by customers who joined the program We believe that this program will ultimately VND 8 billion. tradition which has been embraced by and that Techcombank staffs across the allow us to increase our assistance to those in ‘Lets Spread the Happiness’ with the result in greater employment possibilities Techcombank’s employees for many years. country support it wholeheartedly. Being need. The education sector has always been program theme: “Each million dong deposited for today’s young people. In 2012, further affirming our status as a It’s our ethical core value that gives us our a good corporate citizen is essential in our an area of special interest to Techcombank in Techcombank creates another opportunity good corporate citizen and maximizing collective strength as an organization and development strategy, and giving back and in order to contribute to the building for a poor child to go to school”. The Also in the field of education, we sponsored our support to build a better community we are committed to continue to strengthen to the community will continue to be our of Vietnam’s intellectual resources, we scholarship program was the most practical VND 1 billion for the Study Encouragement around us, we intend to step up our efforts and increase our efforts in further developing guiding principle. continue to support initiatives such as way to encourage these children to continue and Young Talents Supporting Fund, which to the next level in terms of scale and this culture in the future, allowing the seed providing school facilities and infrastructures, their dream of obtaining an education, so was founded by the Technical Department depth, and do it with increased focus. of good to grow and grow and reflecting the Many philanthropic activities were encouraging study and sponsoring academic that they can have a brighter future. We hope within the Ministry of Police. We also donated Knowing that the sum is greater than the strong commitment of the Bank to contribute initiated, not only by the Bank itself but achievements as well as emerging new talent. the scholarships brings joy and happiness more than VND 500 million to purchase individual parts, Techcombank will not only to the overall development of society. also spontaneously by our staff, who have to these children that it becomes a popular equipment for fourteen classrooms and one mobilize the participation of staff, but also nurtured our philosophy of doing good The scholarship program ‘Techcombank effort which will spread all over the country. conference room for Minh Thuan Secondary aims to encourage other individuals and deeds for others. From helping the poor, – Red Scarf to School’ was a cornerstone school in U Minh Thuong district in Kien organizations to join us in a collective effort to to sponsoring young talent in various areas, in our efforts and delivered a compelling Another flagship of our effort was our Giang province and gave scholarships to a achieve a greater end result. Areas of priority and supporting disaster victims in times example of how we are supporting the dedication to continue funding the ‘Microsoft number of university students in economics for our philanthropic activities are education, of need, Techcombank and our staff have community and underprivileged children Office World Champion 2011’ competition. departments throughout the country. environment and healthcare, as we see that “answered the call’. in particular. The program awarded 500 We remain committed to this competition Apart from the educational field, these are the critical fields that need special
32 Techcombank Annual Report 2011 Techcombank Annual Report 2011 33 Major Awards 2011
2011 witnessed Techcombank delivering the strongest 2011 – The year of Techcombank’s performance in its history, reaching a whole new level in terms of position and strength. This was recognized in the sixteen strongest performance ever in terms prestigious international and domestic awards the Bank was presented with. It was an unprecedented achievement that of both position and strength. gave a clear affirmation, from some of the world’s most trusted banking and financial organisations, that Techcombank has reached a new level of maturity.
Best Bank in Best Bank Best Cash Management Bank Best Trade Bank Straight Through Processing Vietnam 2011 in Vietnam 2011 in Vietnam 2011 in Vietnam 2011 Award 2011 Finance Asia Alpha Southeast Asia Alpha Southeast Asia Alpha Southeast Asia Bank of New York
Vietnamese Retail Bank of the Year 2011 Asian Banking and finance
VNR 500 – Top 500 Largest Vietnam Gold Star 2011 Inspirational Company Award Best Vietnamese Bank Enterprises in Vietnam Young Business Association in Vietnam 2011 in Media Reputation 2011 Ministry of Information World Confederation Vietnam Report and Media Tenor Best FX Provider and Communication of Businesses in Vietnam 2011 Asiamoney Best Cash Management Bank in Vietnam 2011 Finance Asia
Best Trade Bank in Vietnam 2011 Finance Asia Top 200 Products Award for Community The Vietnam Economic Times Contribution Best Domestic Bank Vietnam’s Trade Magazine in Vietnam 2011 The Asset
34 Techcombank Annual Report 2011 Techcombank Annual Report 2011 35 133 priority Growing Our Capability > 3 million Investing to Grow banking Fund Transfer Our transaction banking system (an essential component of our commercial banking division) is a key to our strong and sustainable future development. centres Transactions The successful integration of our systems into the branch network at every + 43% level of our business has given us a real-time competitive advantage in quality of service and the ability to deliver superior products to our customers. At the Priority Banking level we have rolled out 133 centres in the past year to deliver an unmatched experience to our high-net-worth clients.
Techcombank Annual Report 2011 37 Transaction Banking
Combining deep local insight and global capability to offer a full International Trade Transaction Volume (transaction) International Trade Transaction Value (USD million) Fund Transfer Transaction Volume (million transaction) 70,000 7,000 3.5 suite of transaction banking solutions through multiple delivery 5,768 2.99 60,000 54,827 56,354 6,000 3.0 channels, Techcombank is one of the leaders in providing 52,152 5,076 50,000 5,000 2.5 Division Division
2.10 40,486 41,203 transaction banking products and services in Vietnam. 40,000 37,431 4,000 2.0 3,292 3,316 3,294 30,000 3,000 1.5 1.24 2,474 Financial Financial
1,974 20,000 2,000 1,761 1.0 14,721 14,341 15,151 TCB TCB 1,318 10,000 1,000 0.5
0 0 Source: 0.0 Source: 2009 2010 2011 2009 2010 2011 2009 2010 2011
Export Import Total Trade Export Import Total International Trade Transaction Value The fund transfer transaction volume kept a steady uptrend with average increase of 40-70% each year from 2009 to 2011, The overall Techcombank international trade transaction value and volume are on the upward trend. Total trade transaction value to achieving 2.99 million transaction of the year 2012. Over 99% record USD 5.8 billion in 2011, increased 75% from 2009 when the Bank started the initiative of Transaction Banking. It is behind the of them are straight-through processed via our correspondent success story of the companies in key export segments of Vietnam, such as agricultural products and seafood. banking network, thus creating utmost customer satisfaction.
Strategic Vision Achievements and Highlights 2011
The Transaction Banking Division is a We aim to develop and deliver solutions Trade Business Transaction Banking Division further Cash management business will provide greater reliability and increased product-focused business unit. It has that are user-friendly and easy to execute In Vietnam this grew rapidly in 2011, with the developed a series of trade-related solutions This also grew in importance during 2011, functionality for clients using Techcombank’s the strategic vision of establishing and monitor, with fast turnaround times and country’s total export value increasing by for Financial Institution clients, including exceeding the 9.3% growth of Vietnam’s M2 F@st E-Bank online services. Techcombank as the number one provider consistent service quality. Solutions are 34% and total import value increasing by 25% LC outsourcing, LC refinancing and risk money supply versus 2010, and the 12% among Vietnamese-based banks of cash developed based on a deep understanding of from 2010. In order to take advantage of this participations, all designed to meet the increase of inward remittances from abroad, Together with Techcombank’s growing management and trade finance solutions each client’s unique business requirements, remarkable growth the Bank introduced, in complex demands of such clients. which rose to USD $9 billion in 2011. branch network, Transaction Banking to business clients. It seeks to utilize the blended with key strengths that include: conjunction with the Commercial Banking and achieved a net increase of 42% in terms most modern technology available to • A wide branch network; Sales Distribution Divisions, a pilot project to In terms of product development, the Division During the year, the Transaction Banking of total transaction banking volume (for achieve the highest possible level of • Advanced technological platforms; install and train a group of dedicated Trade introduced GSM102 import Letter of Credit, Division standardized and introduced more both cash management and trade finance customer satisfaction. • Collaboration with HSBC, the world Sales Managers at selected large branches under the US Department of Agriculture liquidity solutions, including concentration products) over 2010. leader in transaction banking and around the country, with the intention to drive program designed to help Vietnamese accounts and tiered interest rate account It also strives to provide a full suite of Techcombank’s strategic partner. development of trade financing business. The importers access lower-cost funding from structures for corporate clients. This allows Finally, the Division is proud to have played transaction banking solutions through program has been highly successful so far, the US Government. After the first year of them to maximize their return on capital. an important role in contributing toward multiple delivery channels, including Internet These are just some of the factors that with an average 30% increase in transaction implementation, the Division has achieved the Techcombank being announced the “Best banking, branch counters, ATMs and SMS. differentiate Techcombank’s services from volumes achieved in the first five months of utilization rate of over 90% of the approved In addition, the Division implemented Cash Management Bank in Vietnam 2011” It is all designed to ensure the greatest those of its competitors. the program at those branches. limit, accounting for approximately 30% of collection solutions via several different and “Best Trade Bank in Vietnam 2011” number of service options and the utmost Vietnam market share. channels, including Techcombank’s internet by FinanceAsia, as well as the “Best Cash convenience for the Bank’s clients. In addition, the Division established a new banking platforms (F@st E-Bank and F@ Management Bank in Vietnam 2011” and Trade Advisor position to function as the st-I-Bank), ATMs and SMS Banking. We also “Best Trade Bank in Vietnam 2011” by centre of competence for trade transaction commenced implementation of the Arc IB Alpha Southeast Asia. enquiries received from branches. New enhanced internet banking platform. This trade finance tracking mechanisms were is to be fully rolled out in early 2012 and also introduced.
38 Techcombank Annual Report 2011 Techcombank Annual Report 2011 39 Transaction Banking
Key Objectives for 2012
The Transaction Banking Division has set In terms of product development, the Division ambitious goals for 2012, including increasing will continue to improve and simplify existing > 3 million Fund the Division’s fee income by as much as processes and develop additional new 70% from 2011. The Division will continue to products which are more technologically Transfer Transactions work closely with other business divisions advanced and competitive than those in order to further widen corporate and offered by competitors. business client customer base, focusing on core competences to create and implement Widening the implementation of the Trade + 43% customized solutions to meet the increasingly Sales partnership model to include more sophisticated needs of our corporate and branches throughout the country in order to business customers. further increase the Bank’s overall market share of trade financing business will also To accomplish this, there will be further be a focus. strengthening of the client relationship planning process for business clients, in Finally, to ensure that we can achieve these close coordination with the Commercial challenging goals, Transaction Banking Banking and Corporate Banking divisions Division will increase its emphasis on in particular. teamwork and discipline and accelerate its recruitment and training of additional human The Transaction Banking Division will resources. We plan to further build up our continue to work hand-in-hand with the team in the Southern region, which we see branches during customer meetings, as a key market with great potential for future serving and providing comprehensive and growth and development by Techcombank. effective solutions in order to underline the professional and teamwork approach of Techcombank.
40 Techcombank Annual Report 2011 E-banking
To become Vietnam’s leading bank, Techcombank continues 2. Outstanding Achievements 3. Key Targets in 2012 to target at attaining the number one position in e-banking, in 2011 providing premier products and service based on its In order to implement the strategy and as a • Based on the successes of 2011 and for Techcombank customers through follow-on to the achievements of 2010, the long-term development directions, in 2012 public services, bill payment and technological advantages and breakthrough strategy. Bank reviewed all e-banking processes. the Bank will continue investing in the electronic commerce etc., and develop This was to simplify process such actions mobile banking channel and complete comprehensive business cooperation as registration, service use and customer the new Internet banking version to with strategic partner. service. It continued to expand call centre provide a stable, sustainable platform • Communicate strongly about service operations, with a focus on new services for the system. and convenience, with Techcombank that enabled improved process services. • The Bank will aim to standardize e-banking images on marketing channels. Investments in the upgrade of core banking processes on sale, registration and use of Also, cooperate with partners to highlight and Internet banking systems, and the service, and establish customer support the benefits of e-banking and to entice 1. Long-Term Development Direction improved stability of these systems, in traditional, direct channels, electronic customers into using and experiencing ensured the Bank could serve a larger channels, and partner channels. the Bank’s electronic transaction services. Overview encourages customers to use their current competitors and market trends to increase number of customers and process more • Strongly develop and achieve No longer do customers simply access accounts more, thus increasing commitment e-banking demand. In this preparation phase, online transactions. breakthrough performance in customer These targets will result in a stable and their banking needs via traditional channels to their respective banks. the Bank will maintain market share, establish base growth with an automatic e-banking robust infrastructure, standard products such as counters and ATMs. Today, the image, and raise customers’ trust through The Bank also sought to bring PFS products registration feature that will integrate and processes, and improved service convenience and cost saving of accessing Techcombank’s Position service quality. to electronic banking channels: e.g. online e-banking into current accounts and quality and sales capacity. Together with banking through electronic channels means The electronic banking services of saving accounts, online loans and credit establish suitable sale policy. this, the expansion of customer base is for that it is an important component of modern Techcombank have secured a strong position Breakthrough Phase card payments. • Increase connections with strategic preparation of the next phase of the strategic banking. And with figures of technology in the electronic banking market in general, In the breakthrough phase, Techcombank partners to maximize payment services plan: Breakthrough. platforms showing more than 30 million establishing the Bank in the market’s top will focus on maintaining its customer base, 2011 e-banking facilities allowed customers Internet users and more than 150 million three in terms of service and image. There while increasing differentiated services and to connect to strategic payment partners. mobile subscribers, retail banks have become are two phases in the long-term development features in areas such as investment and Bill payments were implemented for Viettel, well aware of the potential of this market to direction that the Bank believes will establish trading, as well as within the e-banking Mobifone, Sfone, Prudential, EVN HCMC, increase customer base, improve customer it as the premier organization in terms of community in order to generate interest Vietnam Airline, Jetstar, and Air Mekong, 7 51,978 convenience, minimize expenses, and image and service, and in the top three for and create new opportunities. This phase as well as large online shopping sites such increase fee income and profit on customers’ e-banking market share. The two phases are will also focus on strengthening the market as: Nganluong.vn, muaban.net, Baokim.vn, Number of new billers and merchants acquired Number of active Internet personal current accounts. the preparation phase (2010-2012) and the through communication and differentiated Tvshopping.vn. Network reach was expanded through e-banking and payment gateway banking users (package) breakthrough phase (2013-2015). services, with an emphasis on the mass- through payment gateways such as VNPAY, Trends affluent, dynamic customer segment. At all Smartlink, OnePay. In the retail markets, there are two main Preparation Phase times, customer needs will be at the centre of trends for competition among banks. Foreign In the ongoing e-banking preparation e-banking. Providing the ability for clients to The year also saw increased communication 9 1,584,136 banks focus on convenience and rely on phase, Techcombank continues to focus on be fully proactive in their business operations about online banking features, services, traditional banking transactions, system stabilising systems and developing channels through Techcombank’s e-banking is how products, and conveniences. This came Number of new product applications on ATM, Number of transactions on stability to win customers’ trust, and simple (such as upgrading Internet banking and the Bank intends to reach its target of being through mass media and cooperation with Internet banking, and mobile banking Internet banking automatic transaction capability, with globally investing in mobile banking), standardizing number one in e-banking, always staying electronic commerce partners in promotion standardized processes. Given system products, improving service processes ahead of competitors in terms of features, of payment service via the Bank’s readiness and local relationships, domestic and quality, and paying special attention to ideas and reliability. e-banking channels. banks have focused on service diversification customer base expansion. The Bank will, at 2.2 tn VND to provide customers with the convenience the same time, maintain the growth rate of Total average transaction amount on of product and service payment. This, in turn, basic payment functions and monitor our Internet banking channel/month
42 Techcombank Annual Report 2011 Techcombank Annual Report 2011 43 Priority Banking
Continuing the success of 2011, with constant improvements, dedicated customer service, product diversification and a focus on quality, Techcombank Priority Banking will set the bar well above competitors, achieving 11% of high net-worth (HNW) market share in 2012.
The past decade has seen rapid growth in the the needs of HNW customers. The result Techcombank Priority doesn’t focus solely number of high net-worth (HNW) individuals, is that seventeen banks in Vietnam now on the main account holder. With customer particularly in the Asia Pacific region. Given have dedicated activities and services for care managers that can help with the needs this trend, the development of financial and HNW customers. of anyone associated with the account, banking services tailored to HNW customers people know that Techcombank gives them is a crucial area of business focus. Despite this competition, Techcombank something extra. It is all done with a target targets becoming number one among local of both acquisition and retention. The former Techcombank Priority is one of the banks in the HNW segment. To achieve is furthered by working alongside strategic most important customer segments of this, Techcombank follows the strategic partners at events such as the Mercedes the Techcombank Personal Financial maxim: “Convenience and effectiveness, Golf Tournament, and with Savills Real Estate 133 Services (PFS) division. By the end of 2011, with services that go above and beyond”. at property seminars. The aim is to bring Techcombank Priority customers numbered Dedicated products such as Techcombank Techcombank Priority ever-closer to potential priority banking centres over 11,000 and this figure continued to rise Priority Care were already offered to HNW customers. at a significant rate. Techcombank Priority customers and have gained a positive contributed nearly 35% of profit to the response, so have our other unique customer Despite the successes, Techcombank business performance of PFS. options. Priority cards that can be used Priority will not rest on its laurels. With with over 100 partners have also proved to constant improvements, updates, product However, competition for HNW customers be popular. Priority service care within our diversification, a focus on quality and is fierce. Since the end of 2010, a series of branches has been rolling out across the dedicated customer service, Techcombank foreign banks with a presence in Vietnam network, and the 133 units already in place believes Techcombank Priority will set the bar and a number of local banks have introduced shall be expanded throughout the next year well above its competitors, and attract even specific service models for this customer to ensure Priority customers are getting a more HNW customers. The aim is to achieve segment. Other banks have not officially level of service that is always above and 11% of HNW market share in 2012. announced the service, but entered the beyond. Another aspect that has proved to market by providing products that focus on be working extremely well is the fact that
44 Techcombank Annual Report 2011 Risk Management
The fundamental Risk Management strategy of Techcombank’s prudent Risk Management practices are Techcombank is to build considered as one of the best in Vietnam’s banking market. a business development- Thanks to our strategic partnership with HSBC and McKinsey, aligned system that will have Techcombank has established a robust Risk Management strict operational guidelines strategy that could be supported in both medium and long term.
Strategic Orientation for Risk Management Outstanding Achievements in 2011 Risk Management (RM) Overview, Now and Next
Understanding that RM is crucial to a To create this RM system, the Bank In 2011 In 2012 With the Bank growing at a significant rate, it which account for large proportions of loan commercial bank’s operations, Techcombank will strengthen the foundation of Risk In alignment with Bank policy of continued By applying even higher standards and was important that 2011 saw the organization balance at Techcombank. has set in place a number of steps to Management Division by building on existing strengthening of credit RM systems, making more substantial IT investment, invest in the latest operating systems and establish a robust RM strategy underpinned established practices and develop it through Techcombank took a number of steps in Techcombank will continue its comprehensive establish best practices. Working alongside New credit rating system by secured lending, a diversified loan book, human resource professionals who are 2011 to enhance RM controls. The most RM development throughout 2012. Models for some of the world’s leading IT, financial and Under a credit RM model development low real estate exposure, streamlined regularly equipped with updated and modern far-reaching of these was to comprehensively determining Probability of Default (LD), Loss advisory firms, Techcombank did just that. project advised by McKinsey, a credit rating processes and prudent policies which can RM knowledge. With the use of the latest apply SME and retail customer rating Given Default (LGD) and Exposure At Default This is how it was done: system for SME and Micro SME customers be supported in both medium- and long-term. tools and the most advanced IT programs systems. This allowed for the development of (EAD) will be developed for credit risks, and was implemented. This was the model for and applications, RM best practices will be a system of portfolio limits based on industry, quantitative risk measurement methods such LOS software retail customer credit rating. The fundamental RM strategy of implemented and rigorously enforced across locality, customer group, loan tenure, and as Value At Risk (VAR) and Present Value of Based on the model created by US firm, Techcombank is to build a business all banking platforms within Techcombank. products. The result was that credit quality an 01 (PV01) will be further improved. In order Experian, the Bank successfully implemented Liquidity alarms development-aligned system that will throughout the system had Non-Performing to standardize the treasury trading system a software application for automating the Risks of liquidity were constantly monitored have strict operational guidelines. It will Loan (NPL) ratio of 2.8%. In addition, liquidity and automate market risk management Loan Origination System (LOS) for individuals. against a system of internal limits that are function proportionally to the level of risk risk was managed closely and Techcombank activities, investment will be made in systems This allows full automation of the process stricter than the State Bank of Vietnam’s that organizations face. Within this, there fully satisfied payment demands in Quarter such as Loan Origination System (LOS) and integrates many of the latest functions, requirements. To ensure the Bank’s will be parallel support structures to ensure 4, 2011. Market and operational risks were for enterprise customers, Asset Liability including fraud detection. compliancy, early warning thresholds appropriate risk prevention for the business administered well within the Bank’s own Management-Funds Transfer Pricing were also established. In addition, stress activities of the respective organization. The limits, and no unexpected risks arose. This (ALM-FTP) and Treasury trading. Updated credit policies tests were conducted in 2011 to ensure RM strategy will be directly linked to the key was in contrast to some small banks, who To reflect market situations, credit policies the soundness of the limits and to develop business activities of the organization and will faced liquidity crunch and late payments were reviewed and updated. Many significant counter measure schemes against crunches. be dynamic enough to adapt quickly to rapid in the interbank market. Techcombank’s documents were improved, including: changes in the risk environment. success in this area can be attributed to Risk Appetites for Enterprise and Retail Credit accuracy RM procedures that were put in place Customers; Credit Policy; Regulation The credit portfolio management function during the year. on Lending; Regulation on Guarantee; developed a method for calculating line Regulation on Credit Approval; and Process of credit per industry, loan tenure, target on Enterprise Credit Extension. In addition, customer, etc. It standardized a borrower some credit directives were also amended code system to provide a full and accurate in order to manage credit risks in industries picture of the Bank’s credit portfolios.
46 Techcombank Annual Report 2011 Techcombank Annual Report 2011 47 Risk Management
Key targets in 2012 Long-term RM development
Risk controls Self-assessment This year has the potential to be a landmark warning of potential volatility. Finalizing ii) The Treasury System will serve jobs from As Techcombank’s RM systems evolve, A comprehensive RM documentation Originally launched in 2009, the operational one for Techcombank. To achieve the Bank’s the limit system, market risk limit, position front-to-back RM. The result will be a the Bank will develop technology platforms, system was completed. Within it, a data risk self-assessment program was further financial and social targets, a fully operational management, and reporting systems for quality improvement for RM activities, to business roles and internal regulations in system relating to Treasury business developed in 2011. The Operational Risk and stringent RM system will be put in place. existing as well as upcoming products, be based on a fully-automated platform, order to apply Basel II standards. The target operations such as FX, gold, securities and Management Department supported These are just some of the ways in which it have an effect. enabling RM human resources to focus is to meet Basel II standard compliance macroscopic information was gradually fourteen units (these include: Treasury and will be done: on analytical work and the continued within the next three to five years. It is a developed. For ease of use and cost Financial Markets Division, PFS Division, OTC research development of additional RM tools. realistic goal and one that is well within the reduction, the reporting system was partly S&D Division, Operations and IT Division, LOS corporate In relation to the over the counter (OTC) reach of Techcombank and the RM division. automated. Risk identification and control Human Resources Management Division, In close cooperation with the Commercial market, extensive research will be done to Managing the unpredictable However, its achievement will not be the tools such as Value at Risk for FX and and Marketing Division) to conduct nineteen Banking Division, a LOS solution provider develop systems to calculate pre-settlement To ensure business continuity (BCP) for end of Techcombank’s development and gold trading were developed to support operational self-assessments. These will be selected for corporate customers. limit risk and settlement limits for the whole of Techcombank, there will improvement of RM systems and protocol. businesses and management at different assessments helped the units proactively Upon deployment across the Bank, this derivative transactions. be a review of the overall RM program. Techcombank in whatever way possible, levels, and to provide them with more identify, assess, and propose measures system will allow fully-automated processes Proactively utilizing the advice of the leading and using all the resources available will seek specific information on the Bank’s for minimizing operational risks and gave for corporate customers – from proposal to In-branch RM consulting company, the Bank will ensure to advance RM operations to a level that is overall market risk. guidance in autonomous RM management. approval of credit amounts and limits. The Bank wants branches across the country the responsiveness to problems caused unsurpassed. RM is just one other example to have greater autonomy so they are able to by unforeseeable natural and objective of Techcombank reaching new heights Insurance Improved collection self-value collaterals, shorten lending time elements such as fire, floods, earthquakes, in banking. In March 2011, a comprehensive bank Creating a clear, complete and consistent and reduce asset risks. To establish this, land epidemics, and terrorism. It will establish insurance contract was signed, the first system will lead to an improved collection tariffs will be completed for provinces and responses to other operational risks such as one in the Vietnamese market. process. Working with other banking cities where bank branches and transaction supply interruption and system breakdown or divisions, the responsibilities of each unit and centres are located. fault. The first testing plan is expected to be Basel II department will be clearly defined and will implemented in Q4/2012. be based on an overall software application New systems
system. This will allow monitoring of the entire Working in collaboration with the Treasury Internal ratings Minimum Supervisory Market process, and the status of each debt and division, the Bank will deploy two important Techcombank will complete its internal rating Capital Review Discipline Requirements Process potential collection. systems to support market risk management: system for the entire customer portfolio as i) The ALM-FTP System will replace Access soon as possible. This will be submitted to Reading risk reporting tools and allow automated bank the State Bank of Vietnam for approval. In Measuring risks by advanced methods interest rate risk management. turn, this will provide a basis for credit risk Pillar 1 Pillar 2 Pillar 3 such as PV01 and Value at Risk will give the provision, as per Article 7, Circular 493. Bank a far better understanding and earlier
48 Techcombank Annual Report 2011 Techcombank Annual Report 2011 49 Techcombank Brand
The aim is to put Techcombank in the hearts and minds of the nation as the best and the first choice bank. By setting the highest professional standards at a level that can be lauded on the world stage, Techcombank has become one of Vietnam’s most recognizable and respected brands.
Vietnam Technological and Commercial The objective is for Techcombank to be is financially secure, with a wide range of Joint Stock Bank, commonly known as rightly perceived as dynamic and modern, services, attractive and well-positioned Techcombank, was founded in 1993 with the yet still approachable bank that positively branches and offices and a professional level simple aim of creating a profitable business engages with the development of the of customer care. that would contribute to Vietnam’s growing Vietnamese economy and community. economy. Today, in 2012, the Bank’s targets are One of the strongest examples of this was Techcombank’s branding strategy for 2012 somewhat more far-reaching – to become the the Bank’s ‘Red Scarf’ campaign, through has a unified direction and a clear business best bank and the leading business in Vietnam. which education scholarships were given goal – to establish Techcombank as the best to some of the country’s poorest children. bank and the leading business in Vietnam. To achieve this, Techcombank is in the With the ultimate aim of penetrating across To achieve this, the bank has launched a ongoing process of creating one of the the whole of Vietnam, Techcombank’s brand Brand Refreshing Campaign as a business strongest brands in the country. With the strategy will seek to launch new initiatives priority. Looking at all aspects of the Bank’s significant achievements in 2011 in credit process, product flexibility and brand, from business strategy to marketing recognised by its receipt of many international customer care. campaigns, it is intended that 2012 is the year and domestic awards, it would seem the Techcombank achieves universal recognition bank is well on the road to achieving its goals. Branding activities throughout 2011 were within Vietnamese society. Through this, The aim is to put Techcombank in the hearts extensive and included an educational the Bank looks forward to exceeding the and minds of the nation. But branding and column named ‘Smart Finance’ on Info TV, expectations of customers, regulators, business strategy are not mutually exclusive. the sponsoring of a number of selective investors and the communities that support Indeed, at the centre of the Bank’s branding workshops and conferences for corporate Techcombank. The branding strategy strategy is the commitment to provide its and SME clients, and CSR campaigns such serves as the guidepost for all associated clients with the attention they deserve and as Red Scarf. Branding and marketing efforts with the Bank, and can be considered as a expect, as well as providing a diverse choice such as those meant Techcombank achieved reflection of Techcombank’s core values. By of banking services and products that make a positive consideration rate of 45%, the setting the most professional standards, at Techcombank stand out in the market. It is highest of any bank in the country. Overall, a level that can be lauded on a world stage, a basic business philosophy, but one which the Bank’s brand equity index jumped from Techcombank has become one of Vietnam’s holds a long-term goal of establishing faith 1.1 to 1.4 in 2011. In short, Techcombank is most recognizable and respected brands. and trust that will turn Techcombank into now largely perceived by the Vietnamese Vietnam’s first-choice bank. people as a market leader, and one that
50 Techcombank Annual Report 2011 Responsibility Growing Strong Management Integrity Enhancing Governance
We have grown a highly capable and experienced management team who work closely with our board and supervisory committees to ensure the highest level of integrity and efficiency across our banking system. Good governance is the over-arching principle to ensure our success and our board plays an active role in guiding the management of our business, bringing their wisdom and experience to every aspect of the bank’s operations.
Techcombank Annual Report 2011 53 Board of Directors
1 2 5 6 7
3 4 8 9
The BOD, the governing body BOD members with majority vote 1. Mr. Ho Hung Anh 3. Mr. Nguyen Thieu Quang 5. Mr. Nguyen Duc Vinh 6. Mr. Madhur Maini Chartered Accountants in 9. Mr. Stephen Charles Banner of Techcombank of which in the form of secret ballot or Chairman Vice Chairman Vice Chairman Member England and Wales, Mr. Member members are elected by the vote. A BOD term shall last Graduated from Electronics Graduated from Civil Engineering Received his Master of Graduated from Pennsylvania Stephen Colin Moss has years Graduated from Sheffield general shareholders meeting, 5 years. Office term of BOD Engineering in Russia, Mr. Ho in Russia, Mr. Nguyen Thieu Business Administration from State University, United States of management experience University with a Bachelor of has full right to be on behalf members shall last no more Hung Anh joined the executive Quang joined the executive HEC Business Administration with a Bachelor of Economics in financial accounting. He is Business Administration, UK of Techcombank to decide, than 5 years. management of the Bank in 2004 management of Techcombank University, France, and other major in Finance and Bachelor of currently the Chief Executive and Associate from Banking exercise rights and obligations and has held various positions in and has held different positions degrees in USA, Mr. Nguyen Applied Science in Management Officer and Head of Mergers and Academy, UK, Mr. Stephen of Techcombank, except those In 2011, there are a number of the Board of Directors. He has been in the Board of Directors Duc Vinh has more than 10 years and Technology, Mr. Madhur Acquisitions Council of HSBC. Charles Banner has years of which belong to authority of the changes in the BOD structure. the Chairman of Techcombank since 1999. He has been experience as the Bank’s Chief Maini has years of management He has been a member of the management experience in General Shareholders Meeting. Mr. Nguyen Duc Vinh is elected BOD since May 2008. Vice Chairman of Techcombank Executive Officer (CEO). In April and operational administration Techcombank BOD since banking accounting at HSBC in as Vice Chairman of the BOD, BOD since May 2008. 2009, he was also appointed experience with large USA- April 2009. various countries. He has been Membership: Mr. Stephen Charles Banner is 2. Mr. Nguyen Dang Quang as a member of the BOD. Since based financial corporations in a member of the Techcombank The BOD consists of 9 members additionally elected as the BOD First Vice Chairman 4. Mr. Nguyen Canh Son December 2011, Mr. Nguyen Duc Southeast Asia. He has been a 8. Mr. Tran Thanh Hien BOD since April 2011. including Chairman of the BOD, member as replacement for Obtained a PhD in Nuclear Vice Chairman Vinh has been relieved from duty member of the Techcombank Member First Vice Chairman, 3 Vice Mr. Sumit Dutta who resigned Physics and Master’s degree in Graduated from Civil Engineering as Chief Executive Officer to be BOD since April 2009. With a Master’s degree in * Refer to the Board of Directors page Chairmen. All the BOD members to take new position at HSBC. financial management in Russia, in Russia, Mr. Nguyen Canh Son the Vice Chairman of the BOD. Business Administration, are non-executive. Chairman and Detailed information about the Mr. Nguyen Dang Quang joined has been a member of the Board 7. Mr. Stephen Colin Moss Mr. Tran Thanh Hien has years Vice Chairmen of the BOD are BOD members is as follows: the executive management of of Directors from May 2008 Member of experience in financial elected or dismissed by the Techcombank and has held to March 2009. He has been Graduated from Kent University, management at Vietnam Airlines various positions since 1995. Vice Chairman of Techcombank UK with a Bachelor of Economics Corporation. He has been a He has been the First Vice BOD since April 2009. and Accounting, and a certified member of Techcombank BOD Chairman of Techcombank member of the Institute of since April 2009. BOD since May 2008.
54 Techcombank Annual Report 2011 Techcombank Annual Report 2011 55 The Board of Directors Standing Committee Supervisory Board
1 2 3 1 2
4 5 6 3 4
The BOD Standing Committee 1. Mr. Ho Hung Anh* The Supervisory Board is a 1. Ms. Nguyen Thu Hien of experience in the field of 4. Mrs. Bui Thi Hong Mai is established to enhance Chairman body supervising operations of Head of Supervisory Board finance and accounting. Since Standing member of interaction and information the Bank in accordance with and standing member April 2009 she has been a Supervisory Board exchange between the BOD 2. Mr. Nguyen Dang Quang* legal regulations and Charter Received Bachelor’s degree in Member of the Techcombank With a Bachelor’s degree and the BOM on operations First Vice Chairman of the Bank. Credit Finance in Russia, Mrs. Supervisory Board. in Accounting and Finance, of Techcombank. It helps the Nguyen Thu Hien has joined the Nguyen Thi Hong Mai has BOD be timely informed of the 3. Mr. Nguyen Thieu Quang* Membership: department of accounting and 3. Mr. Nguyen Quynh Lam many years experience in the business performance of the Vice Chairman The Supervisory Board consists supervisory at the Bank in 1999. Member of Supervisory Board field of accounting and finance. bank, thus giving comments to of 4 members including Head Since April 2010 she has been Graduated from University of Since April 2010, she has support the BOM in terms 4. Mr. Nguyen Canh Son* of the Supervisory Board, appointed Head and specialist Mining and Geology with a been a Specialist Member of direction. Vice Chairman where half of the Board is member of Techcombank degree in Mining Economics of the Techcombank executive members. Supervisory Board. Engineering, Mr. Nguyen Supervisory Board. Membership: 5. Mr. Nguyen Duc Vinh* Quynh Lam was a specialist The BOD standing Committee Vice Chairman 2. Mrs. Vu Thi Dung member of the Techcombank * Refer to the Board of Directors page consists of 6 members including Member of Supervisory Board Supervisory Board from May chairman of the BOD, First Vice 6. Mr. Stephen Charles Banner* Graduated from Accounting 2008 to March 2009. Since Chairman and other members Member and Finance University with a April 2009, he has been a of the BOD. Bachelor’s degree in accounting member of the Techcombank * Refer to the Board of Directors page and finance, Mrs. Vu Thi Dung is Supervisory Board. an Auditor with many years
56 Techcombank Annual Report 2011 Techcombank Annual Report 2011 57 Nomination & Remuneration Committee (NORCO) Audit & Risk Committee (ARCO)
1 2 3 1 2 3 4
4 5 5 6 7
The Nomination & Remuneration 1. Mr. Ho Hung Anh* Audit and Risk Committee 1. Mr. Ho Hung Anh* 4. Mr. Nguyen Dang Quang* Committee (NORCO) was Chairman (ARCO) was established by Chairman First Vice Chairman established by the BOD to the BOD to perform some perform some nomination and 2. Mr. Stephen Charles Banner* nomination and remuneration 2. Mrs. Nguyen Thi Thien Huong 5. Mr. Stephen Charles Banner* remuneration functions and Member functions and duties relating to Standing ARCO Member Member duties which the BOD audit, verification, supervision, Graduated with a Bachelor’s assigns/delegates. 3. Mr. Nguyen Dang Quang* and management of risks of degree in Science, and a 6. Mr. Hoang Van Dao First Vice Chairman banking operations as assigned Bachelor’s degree in Economics, ARCO Member Membership: by/delegated by the BOD. as well as a Masters in Business Obtained a PhD in Science and There are 5 members in NORCO. 4. Mr. Nguyen Thieu Quang* Administration, Ms. Nguyen Technology, Mr. Hoang Van Dao Detailed information on the Vice Chairman Membership: Thi Thien Huong has years of has years of experience working NORCO members is as follows: There are 7 members in ARCO. experience working at the Bank at Techcombank management as 5. Mr. Nguyen Duc Vinh* Detailed information on the in different positions such as Deputy General Director and BOD Vice Chairman ARCO members is as follows: Head of Projects and Securities member. He has been an ARCO Investment department, Head member since July 2008. * Refer to the Board of Directors page of HO Credit Department, and Deputy General Director. Since 7. Mr. Nguyen Duc Vinh* July 2009, she has been a Vice Chairman standing ARCO member. * Refer to the Board of Directors page 3. Mr. Nguyen Thieu Quang* Vice Chairman
58 Techcombank Annual Report 2011 Techcombank Annual Report 2011 59 Statement of the Management’s Responsibilities Corporate Governance Framework
General Shareholders’ Meeting
BOD Standing Board of EXCO Committee Supervisor
Board of Audit & Risk Assets & Liabilities Directors Committee Committee
Internal Audit, Control & Credit Risk & Nomination & Compliance Problem Loan Remuneration Committee Management Committee
CEO Board of Representative Management Senior Credit Office in Southern region Committee
Representative Financial Investment Office in Central region Risk Financial & Planning Committee Division Division
The Board of Management is responsible The Board of Management is responsible business result and cash flows in the financial Strategy & Property Investment Legal for preparing this Annual Report and for keeping adequate accounting records year ending on the above mentioned date in Development Committee Division Division the consolidated financial statements in that are sufficient to explain the bank’s accordance with the Vietnamese Accounting accordance with relevant legal regulations transactions and disclose with reasonable Standards, Vietnamese Accounting System IT Investment applicable to the bank and other credit accuracy at any time the financial position and relevant legal regulations applicable to Committee institutions which are operating in the territory of the bank; and enable them to ensure the bank and other credit institutions which of the Socialist Republic of Vietnam. that its financial statements comply with are operating in the territory of the Socialist Product the Vietnamese Accounting Standards, Republic of Vietnam. Committee Under the regulation, the Board of Vietnamese Accounting System and relevant Management must not approve the financial legal regulations applicable to the bank and On behalf of the Board of Management Personal & Transaction Corporate Financial Commercial Sales & Operation Human Marketing statements unless they give a true and fair other credit institutions which are operating Financial Markets Banking Banking Institutions Banking Distribution & IT Resources and Branding view of the financial position of the bank as in the territory of the Socialist Republic of Services Division Division Division Division Division Division Division Division Division of 31st December 2011. In preparing these Vietnam. The Board of Management has Division consolidated financial statements, the Board general responsibility for safeguarding the of Management is required to: assets of the Bank and taking reasonable Our bank management model is based on: Accordingly: • Select suitable accounting policies and measures to prevent and detect fraud and • Law on Enterprises applicable to • Committees of the Board of Directors • The structure of the Board of then apply them consistently; other irregularities. Vietnamese Law on Credit Institutions are established with a view to enhancing Management is organized by the • Make judgments and estimates that are Cu Anh Tuan • Regulations of the State Bank of Vietnam banking management capacity of the international practices and aligned with reasonable and prudent; Statement of the Management’s Acting Chief Finance Officer applicable to Vietnamese Law on BOD and best promoting diversified TechcomOne development strategy, • State whether they have been prepared Responsibilities 22 Mar 2012 Credit Institutions expertise of the BOD members, thus aiming at dedicating functions, enhancing in accordance with Vietnamese Hereby, we, to the best of our knowledge, • International standards, practices improving efficiency and quality of the bank-wide operating efficiency, aspiring Accounting Standards; and endorse the consolidated financial statements prescribed by the Organization for BOD in exercising its functions and to be the best Bank in Vietnam. • Prepare the consolidated financial presented from page 66 to page 129. These Economic Co-operation and Development duties assigned. statements on the going concern basis consolidated financial statements give a true (OECD), and consultancy from HSBC unless it is inappropriate to presume and fair view of the financial position of the (foreign strategic partner holding 20% that bank will continue in business. Bank as of 31st December 2011 as well as of shares at the Bank) As of 31/03/2012
60 Techcombank Annual Report 2011 Techcombank Annual Report 2011 61 Board of Management
1 2 3 4 9 10 11 12
5 6 7 8 13 14 15
The Board of Management (BOM) 1. Mr. Paul Simon Morris Development Division in 5. Ms. Do Diem Hong 7. Ms. Dang Tuyet Dung from Swinburne University, Officer at Techcombank and was 14. Mr. Phan Thanh Son is responsible for executing the Chief Executive Officer January 2011. Head of Financial Head of Personal Financial Australia, and held the position appointed to the position of Head Head of Treasury and Bank’s development plans and Graduated as Master of Business Institutions Division Services Division of Head of Department/Financial of Legal and Compliance Division Financial Markets Division reporting on the performance Administration from Henley 3. Mr. Phung Quang Hung Graduated as Master of Business Graduated from National Manager at Motorola, Fujitsu in November 2009. Graduated as Master of Economics status for the best interests Business School, United Kingdom, Head of Operations & IT Division Administration from French- Economics University and held Vietnam. He was appointed to the from National Economics of Techcombank. and was the CEO of Standard Graduated as Master of Vietnam Management Education the position of Head of Cashflow position of Acting Head of Finance 12. Mr. Nguyen Cong Thanh University and held the position Chartered Bank in Brunei, Sri International Trade from Centre (CFVG). She held the Management and International and Planning Division in July 2011. Head of Corporate of Deputy Chief Executive Officer In 2011, we made some changes Lanka, the Philippines, and Washington State University, position of Head of Import Export Payment Product Development at Banking Division at TienPhong Bank. He was to the BOM membership, with Mr. Indonesia in 2000-2010. He held United States. He held the position Finance – JPMorgan Bank, Citibank. She was appointed to 10. Ms. Tran Thi Diep Anh Graduated from University of appointed to the position of Head Simon Morris being appointed to the the position of Chief Executive of Business Manager at National Deputy Chief Executive Officer, the position of Head of Personal Head of Human Resources Economics Ho Chi Minh City; he of Treasury and Financial Markets position of Chief Executive Officer in Officer at Khan bank in Mongolia Australia Bank, Head of the Bank’s Head of Credit and Credit Risk Financial Services Division in Management Division. held the position of Head of Trade Division in January 2011. place of Mr. Nguyen Duc Vinh. from August 2010 until he joined IT Division, and was appointed to Management Division and was February 2010. Graduated from Transport and Banking Division at ABN, AMRO Techcombank. He was appointed the position of Head of Operations appointed to the position of Head Communications University Bank in Vietnam, Investment 15. Mr. Truong Gia Tu In addition, Mr. Cu Anh Tuan was to the position of Chief Executive and IT Division in September 2010. of Financial Institutions Division 8. Mr. Nguyen Canh Vinh and Hanoi University of Foreign Manager at Temasek Holdings in Deputy Head of Risk appointed to the position of Acting Officer at Techcombank in in April 2010. Head of Sales and Studies and held the position of Vietnam and was appointed to Management Division Head of Finance and Planning January 2012. 4. Ms. Bach Thuy Ha Distribution Division HR Manager at Cargill Vietnam in the position of Head of Corporate Graduated as Bachelor of Science Division in place of Mr. Anthony Head of Transaction 6. Mr. Pham Quang Thang Graduated as Master at La Trobe many years. She was appointed Banking Division in May 2010. from Hanoi General University Guirier; Ms. Tran Thi Diep Anh was to the position of Head of Human and held the position of Head of appointed to the position of Head 2. Mr. Le Xuan Vu Banking Division Head of Commercial University and held the position of Human Resources Management Head of Strategy and Corporate Graduated as Master of Business Banking Division of Head of HO Business Centre at Resources Management Division in 13. Ms. Le Phuong Phuong Business Cooperation Relationship Division in place of Mr. Nguyen Development Division Administration from Sydney Graduated as Master from Techcombank, Business Manager November 2011. Head of Marketing Division & Project Finance at HSBC Van Tho; Ms. Le Phuong Phuong Graduated as Master of Business Technology University and Swinburne Technology University. of Region 1. He was appointed Graduated as Master of Business Vietnam, Deputy Chief Executive was appointed to the position of Administration from Northcentral Master of Sociology from Lueven He held the position of Head to the position of Head of Sales 11. Mr. Nguyen Thanh Long Administration from Columbia Officer at TienPhong Bank. He was Head of Marketing Division in place University, United States. He held University, Belgum. She held of Treasury and Transactions and Distribution Division in Head of Legal and Southern University (United States) appointed to the position of Deputy of Ms. To Thuy Trang; Mr. Truong the position of Head of IT Centre the position of Head of Hanoi Management Centre, Deputy January 2011. Compliance Division and held the position of Marketing Head of Risk Management Division Gia Tu was appointed to the at Techcombank, Deputy Chief Representative Office of Deutsche Chief Executive Officer at Graduated as Master from Manager at ANZ Vietnam and in December 2010 and was put position of – Deputy Head of Risk Executive Officer at Techcombank, AG Bank and was appointed Techcombank and was appointed 9. Mr. Cu Anh Tuan Hanoi Law University. He held Navigos group in many years. in charge of Risk Management Management Division. Detailed Business Head of Region 2, and to the position of Head of to the position of Head of Acting Head of Finance the position of Deputy Head of She was appointed to the position Division in December 2011. information on the BOM members was appointed to the position of Transaction Banking Division in Commercial Banking Division in and Planning Division Legal Department, State Bank of of Head of Marketing Division in is as follows: Head of Strategy and Corporate November 2009. December 2009. Graduated as Master of Finance Vietnam, Deputy Chief Executive September 2011. * Refer to the Board of Directors page
62 Techcombank Annual Report 2011 Techcombank Annual Report 2011 63 ROA 1.83% Growing Our Performance ROE 28.87% New Heights in Performance
2011 was a breakthrough year for Techcombank, consolidating the developments we have put in place and realising a significant increase in returns across all our operations. This strong performance lays the foundation for further investment in the ongoing development of our business, to consolidate our position in the course of becoming the best bank in Vietnam.
Techcombank Annual Report 2011 65 Consolidated Financial Statements Independent Auditor’s Report For the year ended 31 December 2011
KPMG Limited Telephone + 84 (4) 3946 1600 16th Floor, Pacific Place Fax + 84 (4) 3946 1601 83B Ly Thuong Kiet Street Internet www.kpmg.com Hoan Kiem District, Hanoi The Socialist Republic of Vietnam
To the Shareholders and the Board of Directors Vietnam Technological and Commercial Joint Stock Bank
Scope We have audited the accompanying consolidated balance sheet of Vietnam Technological Commercial Joint Stock Bank (“the Bank”) and its subsidiaries (collectively, “Techcombank”) as of 31 December 2011 and the related consolidated statements of income and cash flows for the year then ended and the explanatory notes thereto which were authorised for issue by the Bank’s management on 22 March 2011. These consolidated financial statements are the responsibility of the Bank’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with Vietnamese Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance that the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
Audit opinion In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of Vietnam Technological and Commercial Joint Stock Bank and its subsidiaries as of 31 December 2011 and of their consolidated results of operations and their consolidated cash flows for the year then ended, in accordance with Vietnamese Accounting Standards, the Vietnamese Accounting System for Credit Institutions stipulated by the State Bank of Vietnam and the relevant statutory requirements.
KPMG Limited Vietnam Investment Certificate No: 011043000345 Contents Audit Report No: 11-02-272/2
67 Independent Auditors’ Report 68 Consolidated Balance Sheet 71 Consolidated Statement of Income 72 Consolidated Statement of Cash Flows 74 Notes to the Consolidated Financial Statements Nguyen Thuy Duong Nguyen Minh Hieu 130 Shareholder Information CPA No. 0893/KTV CPA No. N.1572/KTV 131 Corporate Information Deputy General Director Hanoi, 22 Mar 2012 132 Branch Network
66 Techcombank Annual Report 2011 Techcombank Annual Report 2011 67 Consolidated Balance Sheet Consolidated Balance Sheet (continued) As at 31 December 2011 l Form B02/TCTD-HN As at 31 December 2011 l Form B02/TCTD-HN
Notes 31/12/2011 31/12/2010 Notes 31/12/2011 31/12/2010 (restated) VND million VND million VND million VND million B LIABILITIES AND SHAREHOLDERS’ EQUITY A ASSETS I Cash and gold on hand 3 5,115,002 4,316,209 LIABILITIES II Balances with the State Bank of Vietnam 4 4,465,664 2,752,951 I Amounts due to the Government and the State Bank of Vietnam 16 3,317,602 8,091,316 III Balances with and loans to other credit institutions 5 43,190,766 46,263,196 1 Deposits with other credit institutions 43,190,766 46,261,196 II Deposits and borrowings from other credit institutions 17 48,132,743 27,783,114 2 Loans to other credit institutions – 2,000 1 Deposits from other credit institutions 38,188,455 22,199,978 IV Securities held for trading 6 283,574 488,186 2 Borrowings from other credit institutions 9,944,288 5,583,136 1 Securities held for trading 437,134 566,608 2 Allowance for diminution in the value of securities held for trading (153,560) (78,422) III Deposits from customers 18 88,647,779 80,550,753 V Derivatives and other financial assets 7 54,272 – VI Loans and advances to customers 62,562,406 52,316,862 IV Derivatives and other financial liabilities 7 – 52,888 1 Loans and advances to customers 8 63,451,465 52,927,857 3 Allowance for loans and advances to customers 9 (889,059) (610,995) V Other borrowed and entrusted funds 19 252,398 6,641,090 VII Investment securities 10 48,342,033 31,612,764 1 Available for sale securities 43,847,690 27,133,053 VI Valuable papers issued 20 23,094,145 15,024,217 2 Held to maturity securities 4,519,013 4,491,211 3 Allowance for diminution in the value of investment securities (24,670) (11,500) VII Other liabilities 21 4,570,694 2,758,676 VIII Long-term investments 11 76,905 69,645 1 Accrued interest and fee payables 1,832,106 1,378,833 4 Other long-term investments 76,905 69,645 3 Other liabilities 2,625,814 1,303,439 IX Fixed assets 1,191,224 1,003,907 4 Provision for off-balance sheet commitments 112,774 76,404 1 Tangible fixed assets 12 964,923 831,259 a. Cost 1,293,920 1,041,590 TOTAL LIABILITIES 168,015,361 140,902,054 b. Accumulated depreciation (328,997) (210,331) 3 Intangible fixed assets 13 226,301 172,648 SHAREHOLDERS’ EQUITY a. Cost 299,358 221,176 b. Accumulated amortisation (73,057) (48,528) VIII Capital and reserves 22 12,515,802 9,389,161 X Investment property 14 21,121 – 1 Capital 8,788,450 6,932,555 a. Cost 21,262 – a. Share capital 8,788,079 6,932,184 b. Accumulated amortisation (141) – g. Other capital 371 371 XI Other assets 15 15,228,196 11,467,495 2 Reserves 1,059,195 691,111 1 Receivables 10,301,030 8,747,242 5 Retained earnings 2,668,157 1,765,495 2 Accrued interest and fee receivable 4,471,852 2,219,043 3 Deferred tax assets 35,203 23,922 TOTAL SHAREHOLDERS’ EQUITY 12,515,802 9,389,161 4 Other assets 420,370 477,472 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 180,531,163 150,291,215 5 Allowance for other on-balance sheet assets (259) (184)
TOTAL ASSETS 180,531,163 150,291,215
The accompanying notes are an integral part of the consolidated financial statements The accompanying notes are an integral part of the consolidated financial statements
68 Techcombank Annual Report 2011 Techcombank Annual Report 2011 69 Consolidated Balance Sheet (continued) Consolidated Statement of Income As at 31 December 2011 l Form B02/TCTD-HN For the year ended 31 December 2011 l Form B03/TCTD-HN
Notes 31/12/2011 31/12/2010 Notes 2011 2010 VND million VND million (Restated) VND million VND million OFF-BALANCE SHEET ITEMS 1 Interest and similar income 23 19,948,573 10,934,383 I CONTINGENT LIABILITIES 2 Interest and similar expenses 23 (14,650,198) (7,750,034) 2 Letters of credit 8,888,624 5,410,639 I Net interest income 23 5,298,375 3,184,349 3 Other guarantees 8,867,573 5,594,889 3 Fee and commission income 24 1,520,157 1,186,620 4 Fee and commission expenses 24 (369,803) (256,820) II OTHER COMMITMENTS II Net fee and commission income 24 1,150,354 929,800 1 Undrawn loan commitments 3,456 3,541 2 Unmatured foreign currency contracts 974,950 2,934,601 III Net loss from trading of foreign currencies and gold 25 (698,913) (91,383) IV Net loss from trading of securities held for trading 26 (55,333) (71,418) V Net gain from investment securities 27 416,257 160,335 Approved by 5 Other income 28 707,115 696,116 6 Other expenses (163,741) (169,525) VI Net other income 543,374 526,591
VII Income from investments in other entities 8,061 80,747
VIII Operating expenses 29 (2,099,198) (1,587,749)
Thai Ha Linh Cu Anh Tuan Simon Morris IX Operating profit before allowance and provision expenses 4,562,977 3,131,272 Chief Accountant Acting Chief Finance Officer Chief Executive Officer X Allowance and provision expenses 30 (341,864) (387,645)
XI Profit before tax 4,221,113 2,743,627
7 Income tax expense – current 31 (1,077,016) (672,852) 8 Income tax expense – deferred 31 9,669 1,980 XII Total income tax expense (1,067,347) (670,872)
XIII Net profit after tax 3,153,766 2,072,755
XV Basic earnings per share (VND/share) 32 2,902 2,375
XVI Diluted earnings per share (VND/share) 32 2,886 2,359
Approved by
Thai Ha Linh Cu Anh Tuan Simon Morris Chief Accountant Acting Chief Finance Officer Chief Executive Officer The accompanying notes are an integral part of the consolidated financial statements The accompanying notes are an integral part of the consolidated financial statements
70 Techcombank Annual Report 2011 Techcombank Annual Report 2011 71 Consolidated Statement of Cash Flows Consolidated Statement of Cash Flows (continued) For the year ended 31 December 2011 l Form B04/TCTD-HN For the year ended 31 December 2011 l Form B04/TCTD-HN
Notes 2011 2010 Notes 2011 2010 VND million VND million VND million VND million
CASH FLOWS FROM OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES
01 Interest and similar income received 17,695,764 9,828,146 01 Payments for purchases of fixed assets (630,134) (401,210) 02 Interest and similar expenses paid (14,196,925) (7,209,858) 02 Proceeds from disposal of fixed assets 251 705 03 Fee and commission income received 1,150,354 929,800 07 Payments for investments in other entities (7,260) (3,977) 04 Net receipts from foreign currencies, gold and securities trading activities (249,681) 87,452 09 Dividends received from long-term investments 8,061 80,747 05 Other income received 482,415 287,534 06 Proceeds from loans previously written off 60,959 240,067 II NET CASH OUTFLOWS FROM INVESTING ACTIVITIES (629,082) (323,735) 07 Operating and salary expenses payments (1,678,094) (1,490,250) 08 Income tax paid (657,186) (550,979) CASH FLOWS FROM FINANCING ACTIVITIES
Net cash inflows from operating activities before 02 Proceeds from issuance of valuable papers – 2,917,215 changes in operating assets and liabilities 2,607,606 2,121,912 III NET CASH INTFLOWS FROM FINANCING ACTIVITIES – 2,917,215 Changes in operating assets 09 Balance with and loans to credit institutions (5,879,900) (3,117,811) IV NET (DECREASE)/INCREASE IN CASH FLOWS FOR THE YEAR (6,440,824) 19,781,730 10 Securities held for trading and investment securities (16,612,965) (17,619,054) 11 Derivatives and other financial assets (54,272) 46,512 V CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 40,739,436 20,957,706 12 Loans and advances to customers (10,550,155) (11,129,070) 14 Other assets (1,507,892) (5,166,564) VI CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 33 34,298,612 40,739,436 Changes in operating liabilities 15 Amounts due to the Government and SBV (4,773,714) 4,158,968 16 Deposits and borrowings from other credit institutions 20,349,629 17,437,028 17 Deposits from customers 8,097,026 18,203,353 Approved by 18 Valuable papers issued 8,069,928 7,070,437 19 Other borrowed and entrusted funds (6,388,692) 5,008,264 20 Derivatives and other financial liabilities (52,888) 52,888 21 Other liabilities 912,214 129,814 22 Utilisations of reserves (27,667) (8,427)
Thai Ha Linh Cu Anh Tuan Simon Morris I NET CASH (OUTFLOWS) /INFLOWS FROM OPERATING ACTIVITIES (5,811,742) 17,188,250 Chief Accountant Acting Chief Finance Officer Chief Executive Officer
The accompanying notes are an integral part of the consolidated financial statements The accompanying notes are an integral part of the consolidated financial statements
72 Techcombank Annual Report 2011 Techcombank Annual Report 2011 73 Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements (continued) For the year ended 31 December 2011 l Form B05/TCTD-HN For the year ended 31 December 2011 l Form B05/TCTD-HN
These notes form an integral part of, and should be read in conjunction with, the accompanying consolidated financial statements. 2. Summary of significant accounting policies The following significant accounting policies have been adopted by Techcombank in the preparation of these consolidated 1. Reporting entity financial statements. Vietnam Technological and Commercial Joint Stock Bank (herein referred to as “the Bank”) is a joint stock bank incorporated and registered in the Socialist Republic of Vietnam. (a) Basis of consolidated financial statement preparation (i) General basis of accounting The Bank was established pursuant to Banking Licence No, 0040/NH-GP dated 6 August 1993 issued by the State Bank of Vietnam The consolidated financial statements, expressed in Vietnam Dong (“VND”), rounded to the nearest million, have been prepared in (“the SBV”) and Business Registration Certificate No.055697 dated 7 September 1993 issued by Hanoi Department of Planning and accordance with Vietnamese Accounting Standards, the Vietnamese Accounting System for Credit Institutions stipulated by the State Investment. Its operation period was extended to 99 years under Decision No.330/QD-NH5 dated 8 October 1997 by the SBV. Bank of Vietnam, and the relevant statutory requirements. These accounting policies may differ in some material respects from the generally accepted accounting principles and standards of other countries. Accordingly, the accompanying consolidated financial The principal activities of the Bank are mobilising and receiving short, medium and long-term deposit funds from organisations and statements are not intended to present the consolidated financial position and consolidated results of operations and cash flows in individuals; granting loans on short, medium and long-term basis up to the nature and ability of the Bank’s capital resources; conducting accordance with generally accepted accounting principles and practices in countries or jurisdictions other than Vietnam. Furthermore, settlement and cash services and other banking services as approved by the SBV; conducting investments in associate, joint-ventures their utilisation is not designed for those who are not informed about Vietnam’s accounting principles, procedures and practices. and other companies; investment in bonds and deal in foreign exchange in accordance with applicable regulations. The consolidated financial statements are prepared on the accruals basis using the historical cost concept. The consolidated statement of As at 31 December 2011, the Bank’s share capital is VND 8,788,078,710,000. Face value per share is VND10,000. cash flows is prepared using the direct method. The accounting policies have been consistent with those used in the previous years.
The Bank’s Head Office is located at 70-72 Ba Trieu, Hanoi. As at 31 December 2011, the Bank has one (1) Head Office, two (2) (ii) Basis of consolidation representative office, one (1) transaction centre, sixty one (61) branches, two hundred and forty five (245) transaction offices nationwide Subsidiaries and three (3) subsidiaries. Subsidiaries are those companies over which Techcombank has the power to govern the financial and operating policies, Subsidiaries are fully consolidated from the date on which control is transferred to Techcombank. They are de-consolidated from the date on which The consolidated financial statements of the Bank as at and for the year ended 31 December 2010 comprise the Bank and its subsidiaries control ceases. (together referred to as “Techcombank”). Techcombank uses the purchase method of accounting to account for the acquisition of subsidiaries. The cost of an acquisition is As at 31 December 2011, the Bank had three (3) subsidiaries as follows: measured as the fair value of the assets given, equities instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities assumed in a business combination are Subsidiaries Operating licence Nature of % owned by measured initially at their fair value at the acquisition date, irrespective of the extent of the minority interest. Business Techcombank Transactions eliminated on consolidation Techcom Securities Company Limited 98/UBCK-GP, dated 18 September 2008 granted Securities 100% by State Securities Commission. activities Inter-company balances, transactions and unrealised gains on transactions between those subsidiaries and Techcombank are eliminated. Unrealised losses also eliminated unless transactions provide evidence of an impairment of the asset transferred. The accounting policies of subsidiaries have been changed when necessary to ensure the consistency with the policies adopted by Techcombank. Vietnam Technological and 0104003519 dated 18 June 2008 granted by Asset 100% Commercial Joint Stock Bank – Hanoi Department of Planning and Investment. management Asset Management Company Limited (b) Fiscal year The fiscal year of the Techcombank is from 1 January to 31 December. Techcom Capital Management 40/UBCK-GP, dated 21 October 2008 granted Fund 100% Company Limited by State Securities Commission. management (c) Changes of accounting and disclosing policies Circular No.210/2009/TT-BTC guides the application of International Accounting Standards on presentation As at 31 December 2011, Techcombank had 8,335 employees (31 December 2010: 7,481 employees). and disclosures of financial instruments in Vietnam. On 6 November 2009, the Ministry of Finance issued Circular No. 210/2009/TT-BTC guiding on the application of International Accounting Standards on presentation and disclosures of financial instruments (“Circular 210”) with effect from the fiscal year which started on or after 1 January 2011.
74 Techcombank Annual Report 2011 Techcombank Annual Report 2011 75 Notes to the Consolidated Financial Statements (continued) Notes to the Consolidated Financial Statements (continued) For the year ended 31 December 2011 l Form B05/TCTD-HN For the year ended 31 December 2011 l Form B05/TCTD-HN
2. Summary of significant accounting policies (continued) 2. Summary of significant accounting policies (continued) (c) Changes of accounting and disclosing policies (continued) (e) Financial instruments (continued) Techcombank adopts Circular 210 and presents notes which are in accordance with the requirements of Circular 210 in the separate (ii) De-recognition financial statements for the year ended 31 December 2011. Techcombank derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or when it transfers the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are (d) Foreign currency transactions transferred or in which Techcombank neither transfers nor retains substantially all the risks and rewards of ownership and it does not Monetary assets and liabilities denominated in currencies other than VND are translated into VND at the rates of exchange ruling at the retain control of the financial asset. balance sheet date. Non-monetary foreign currency assets and liabilities are reported using the exchange rates effective at the dates of the transactions. Translation adjustments arising from dealing activities as at the balance sheet date are taken to the consolidated Techcombank derecognises a financial liability when its contractual obligations are discharged, cancelled or expired. statement of income. Income/expense transactions incurred in foreign currencies are recognised in the consolidated statement of income in VND using the exchange rates ruling on the dates of the transactions. (f) Cash and cash equivalents Cash and cash equivalents include cash on hand, gold on hand, balances with the SBV, Government promissory notes and other valuable (e) Financial instruments papers which are eligible for discount, balances with other credit institutions with original terms to maturity not exceeding three months In its business operation, Techcombank regularly enters into contracts which give rise to financial assets, financial liabilities and and investment securities with terms from the date of purchase to maturity not exceeding three months. equity instruments. Gold is revalued at the balance sheet date and the differences arising on revaluation are recorded in the consolidated statement Financial assets of Techcombank mainly include: of income.
• Cash and gold in hand; (g) Investment securities • Balances with the State Bank of Vietnam and other credit institutions; Investment securities are classified into three categories: i) securities held for trading, ii) available for sale investment securities and iii) • Loans and advances to customers; held to maturity investment securities, Techcombank classifies investment securities at the purchase date. • Securities held for trading; • Investment securities; (i) Securities held for trading • Long-term investments; Securities held for trading are debt or equity securities, which are acquired for selling in the short-term in order to realise profit gained • Derivative financial assets; and from price differences. Securities held for trading are initially recognised at cost at date of the transaction. They are subsequently • Other financial assets. measured at the lower of cost and market value. Gains or losses from the disposal of securities held for trading are recognised in the consolidated statement of income. Financial liabilities of Techcombank mainly include: (ii) Available-for-sale investment securities • Amounts due to the Government and the State Bank of Vietnam; Available-for-sale investment securities are debt securities or equity securities, which are acquired for an indefinite period and may be • Deposits and borrowings from other credit institutions; sold at any time. Available-for-sale investment securities are stated at the cost of acquisition. They are subsequently measured at the • Deposit from customers and entrusted funds; lower of cost and market value. Premiums and discounts arising from purchases of debt securities are amortised to the consolidated • Valuable papers issued; statement of income using straight-line method over the period from the acquisition dates to maturity dates. • Derivative financial liabilities; and • Other financial liabilities. (iii) Held-to-maturity investment securities Held-to-maturity investment securities are debt securities with fixed or determinable payment and fixed maturities where Techcombank’s (i) Recognition management have the positive intention and ability to hold until maturity. Held-to-maturity investment securities are stated at cost. They Techcombank initially recognises financial assets and liabilities on the trade date at which Techcombank becomes a party to the are subsequently measured at the lower of cost and market value if there is indication of long-term diminution in value. Premiums and contractual provisions of the instruments. discounts arising from purchases of held-to-maturity securities are amortised to the consolidated statement of income using straight-line method over the period from the acquisition dates to maturity dates. A financial asset or financial liability is measured initially at fair value plus transaction costs that are directly attributable to its acquisition or issue.
76 Techcombank Annual Report 2011 Techcombank Annual Report 2011 77 Notes to the Consolidated Financial Statements (continued) Notes to the Consolidated Financial Statements (continued) For the year ended 31 December 2011 l Form B05/TCTD-HN For the year ended 31 December 2011 l Form B05/TCTD-HN
2. Summary of significant accounting policies (continued) 2. Summary of significant accounting policies (continued) (h) Long-term investments (j) Loans and advances to customers (continued) (i) Other long-term investments The specific allowance required by Decision No. 493 and Decision No. 18 is determined utilising the following allowance rates against Other long term investments are investments in the equity of companies of less than 11% of the voting rights. These investments principal outstanding as at 30 November 2011 less allowed value of collaterals. are initially stated at cost of acquisition. Allowance for diminution in value is required for other long term investments when investee companies suffer losses, except when the loss was anticipated in their business plan before the date of investment (Note 2(g)). Group Overdue status Allowance rate (i) Allowance for diminution in the value of investment securities and long-term investments 1 Current • Current loans or overdue loans less than 10 days. 0% In accordance with Circular 228/2009/TT-BTC issued by the Ministry of Finance (“MoF”) on 07 December 2009, credit institutions are required to make an allowance for long-term investments (including allowance for investment securities) in accordance with regulations 2 Special • Loans being overdue between 10 days to 90 days; or 5% applicable to enterprises. mention • Loans having revised terms of repayments for the first time (if customers are assessed as being capable of repaying both principal and interest according to the first revised terms of repayments for the case of In accordance with Official Letter 7459/NHNN-KTTC issued by the SBV on 30 August 2006, allowance is required for held-to-maturity enterprises and organisational customers). investment securities when there is indication of long-term diminution in the value of investments. 3 Sub • Loans being overdue between 91 days and 180 days; 20% Allowances for diminution in the value of investments in economic entities (such as limited liability companies, joint stock companies, standard • Loans having rescheduled terms of repayments for the first time except for the loans with revised terms partnerships, joint ventures and other long-term investments), are required if the economic entities suffer losses (except when the loss of repayments classified into the above mentioned Group 2; or • Loans having exempt or reduced interest because customers are not able to pay the interest according was anticipated in their business plan before the date of investment). to contracts.
(j) Loans and advances to customers 4 Doubtful • Loans being overdue between 181 days and 360 days; 50% Loans and advances to customers are stated at the amount of the principal outstanding less any allowance for loans and advances to • Loans having rescheduled terms of repayments for the first time and being overdue less than 90 days customers. according to the first rescheduled terms of repayments; or • Loans having rescheduled terms of repayments for the second time. Short-term loans are those with a repayment date within one year of the loan disbursement date. Medium-term loans are those with a repayment date between one to five years of the loan disbursement date. Long-term loans are those with a repayment date of more than 5 Loss • Loans being overdue more than 360 days; 100% five years from the date the loan disbursement date. • Loans having rescheduled terms of repayments for the first time and being overdue from 90 days or more according to the first rescheduled terms of repayments; • Loans having rescheduled terms of repayments for the second time and being overdue according to the Decision No. 493/2005/QD-NHNN dated 22 April 2005 issued by State Bank of Vietnam (“Decision No. 493”), which was amended and second reschedule terms of repayments; supplemented by Decision No. 18/2007/ QD-NHNN dated 25 April 2007 issued by State Bank of Vietnam (“Decision No. 18”), requires • Loans having rescheduled terms of repayments for the third time; or specific allowance to be made for loans and advances on a quarterly basis based on loan groups. • Blocked loans, or loans awaiting for settlements.
The specific allowance disclosed at the balance sheet date (31 December 2011) is determined at the specific allowance amount required The basis to determine the value and discounted value for each type of collateral is specified in Decision No. 493 and Decision No. 18. by Decision No. 493 and Decision No. 18 less any specific provision amount for loans and advances that had been subsequently collected during December 2011. Techcombank is also required to make a general allowance of 0.75% of outstanding loans and advances to customers that are classified from Group 1 to Group 4 as at the balance sheet date. Such general allowance is required to be made in full within 5 years from the effective date of Decision No. 493. As at 31 December 2011, Techcombank provided a general allowance of 0.75% of the above balances as at 30 November 2011 (31 December 2010: 0.75% of the above balances as at 30 November 2010).
In accordance with the requirements of Decision No. 493, loans and advances are written off against the allowance when loans and advances have been classified to Group 5 or when borrowers have declared bankruptcy or dissolved (for borrowers being organisations, enterprises) or borrowers have been dead or missing (for borrowers being individuals).
78 Techcombank Annual Report 2011 Techcombank Annual Report 2011 79 Notes to the Consolidated Financial Statements (continued) Notes to the Consolidated Financial Statements (continued) For the year ended 31 December 2011 l Form B05/TCTD-HN For the year ended 31 December 2011 l Form B05/TCTD-HN
2. Summary of significant accounting policies (continued) 2. Summary of significant accounting policies (continued) (k) Allowance for loans to other credit institutions (o) Intangible fixed assets Allowance for loans to other credit institutions are calculated in accordance with Decision No.493 and Decision No 18. (i) Software The cost of acquiring new software, which is not an integral part of the related hardware, is capitalised and treated as an intangible asset. (l) Provision for off-balance sheet commitments Software costs are amortised on a straight-line basis over 8 years. In accordance with Decision No. 18, Techcombank is also required to classify guarantees, acceptances, loan commitments which are irrevocable and unconditional into relevant groups and make specific allowances accordingly. The specific allowance rates for the above (ii) Land use rights balances are the same as those for loans and advances to customers. Leasehold land use rights Leasehold land use rights are stated at cost less accumulated amortization. The initial cost of a land use right comprises its purchase Techcombank is also required to make a general provision of 0.75% of total irrevocable outstanding letters of guarantee, letters of credit, price and any directly attributable costs incurred in conjunction with securing the land use right. Amortisation is computed on a straight- and loan commitments which are irrevocable and unconditional as at the balance sheet date. Such general provision is required to be made line basis over 25-50 years. in full within 5 years from the effective date of Decision No. 493. As at 31 December 2011, Techcombank provided a general provision of Freehold land use rights 0.75% of the above balances as at 30 November 2011 (31 December 2010: 0.75% of the above balances as at 30 November 2010). Freehold land use rights are stated at cost and are not amortised. The initial cost of a land use right comprises its purchase price and any directly attributable costs incurred in conjunction with securing the land use right. (m) Derivative financial instruments Derivatives are recorded in a balance sheet account at contract value on the date which a derivative contract is entered into and revalued (iii) Other intangible fixed assets subsequently at exchange rate of each period end. Gains or losses from realisation of derivatives are recognised in the consolidated Other intangible fixed assets are stated at cost less accumulated amortisation. Amortisation is computed on a straight line basis over 4-8 years. statement of income. Unrealised gains or losses are recognised in balance sheet foreign currency difference reserve and transferred to the consolidated statement of income at the balance sheet date. (p) Investment property (i) Cost Derivative financial instruments classified as derivative financial assets if the value recorded is possitive and classified as derivative Investment property is stated at cost less accumulated depreciation. The initial cost of an investment property comprises its purchase financial liabilities if the value recorded is negative. Financial assests and liabilities are excluded when the transactions are made for the price, cost of land use rights and any directly attributable expenditures of bringing the property to the condition necessary for it to be same partner, the same legal right, and each partner intends to make payment based on net value of cash flow. capable of operating in the manner intended by management. Expenditure incurred after investment property has been put into operation, such as repairs and maintenance, is charged to the statement of income in the year in which the expenditure is incurred. In situations (n) Tangible fixed assets where it can be clearly demonstrated that the expenditure has resulted in future economic benefits in excess of the originally assessed (i) Cost standard of performance of the existing investment property, the expenditure is capitalised as an additional cost of investment property. Tangible fixed assets are stated at cost less accumulated depreciation. The initial cost of a tangible fixed asset comprises its purchase price, including import duties and non-refundable purchase taxes and any directly attributable costs of bringing the asset to its working (ii) Depreciation condition and location for its intended use, and the cost of dismantling and removing the asset and restoring the site on which they are Depreciation is computed on a straight-line basis over the estimated useful lives of investment property. The estimated useful lives are located. Expenditure incurred after the tangible fixed assets have been put into operation, such as repairs and maintenance and overhaul as follows: costs, is normally charged to the statement of income in the period in which the costs are incurred. In situations where it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of an • buildings 10 years item of tangible fixed assets beyond its originally assessed standard of performance, the expenditure is capitalised as an additional cost (q) Provision of tangible fixed assets. A provision other than those described in Notes 2(i), 2(j), 2(k) and 2(l) is recognised if, as a result of a past event, Techcombank has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be (ii) Depreciation required to settle the obligation. Provision is determined by overdue days as guidance by Circular 228/2009/TT-BTC issued by Ministry Depreciation is computed on a straight-line basis over the estimated useful lives of items of tangible fixed assets. The estimated useful of Finance on 7 December 2009 as follow: lives are as follows: Overdue days Provision rate • buildings and building improvements 20 – 50 years • From 6 months up to 1 year 30% • office equipment 4 – 8 years • From 1 year up to 2 years 50% • vehicles 7 – 10 years • From 2 years up to 3 years 70% • other assets 4 – 5 years • More than 3 years 100%
80 Techcombank Annual Report 2011 Techcombank Annual Report 2011 81 Notes to the Consolidated Financial Statements (continued) Notes to the Consolidated Financial Statements (continued) For the year ended 31 December 2011 l Form B05/TCTD-HN For the year ended 31 December 2011 l Form B05/TCTD-HN
2. Summary of significant accounting policies (continued) 2. Summary of significant accounting policies (continued) (r) Provision for severance allowance (u) Reserves and funds (continued) Under the Vietnamese Labour Code, when employees who have worked for 12 months or more (“eligible employees”) voluntarily The subsidiaries terminates their labour contract, the employer is required to pay the eligible employees severance allowance calculated based on Vietnam Technological and Commercial Joint Stock Bank – Asset Management Company Limited years of service and employees’ compensation at termination. Provision for severance allowance has been provided based on employees’ years of service and their current salary level. According to Circular 27/2002/TT-BTC dated 22 March 2002 issued by the Ministry of Finance, the allocations to reserves before distribution of profits are required to be made the same as that of the Bank. Pursuant to Law on Social Insurance, effective from 1 January 2009, Techcombank and its employees are required to contribute to an unemployment insurance fund managed by the Vietnam Social Insurance Agency. The contribution to be paid by each party is calculated Techcom Securities Company Limited at 1% of the lower of the employees’ basic salary and 20 times the general minimum salary level as specified by the Government from According to Circular 27/2007/QD-BTC dated 24 April 2007 issued by the Ministry of Finance, securities companies are required to make time to time. With the implementation of the unemployment insurance scheme, Techcombank is no longer required to provide severance the following allocation from profit after tax before distribution of profits: allowance for the service period after 1 January 2009. However, severance allowance to be paid to existing eligible employees as of 31 December 2010 will be determined based on the eligible employees’ years of service as of 31 December 2008 and their average Annual allocation Maximum balance salary for the six-month period prior to the termination date. Reserve to supplement chartered capital 5% of profit after tax 100% of chartered capital (s) Other payables Financial reserve 5% of profit after tax 10% of chartered capital Other payables are stated at their cost. The purpose of the financial reserve is to cover losses incurred during the normal course of business. This reserve together with the (t) Share capital reserve to supplement chartered capital is non-distributable. (i) Ordinary shares Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a (v) Revenue recognition deduction from equity. (i) Interest income Interest income is recognised in the consolidated statement of income on an accruals basis, except for interest on loans classified in (ii) Share premium Group 2 to Group 5 as defined in Note 2(j) which is recognised upon receipt. On receipt of capital from shareholders, the difference between the issue price and the par value of the shares is credited to share premium account in equity. (ii) Fee and commission income Fees and commissions are recognised in the consolidated statement of income on an accruals basis. (u) Reserves and funds The Bank (iii) Dividend income According to Decree 146/2005/ND-CP dated 23 November 2005 issued by the Government of Vietnam, the Bank is required to make the Dividends receivable in cash are recognised in the consolidated statement of income when Techcombank’s right to receive payment following allocations before distribution of profits: is established.
In accordance with Circular No. 244/TT-BTC dated 31 December 2009 issued by the Ministry of Finance, dividends received in the form Annual allocation Maximum balance of shares, bonus shares and rights to purchase shares of the existing shareholders, dividends received by Techcombank in form of shares Reserve to supplement share capital: 5% of profit after tax Share capital distributed from retained earnings are not recognised as an increase in the value of the investment and income is not recognised in the Financial reserve: 10% of remaining profit after tax 25% share capital consolidated statement of income. Techcombank records the number of shares increased in the notes to financial statements.
Bonus and welfare funds are allocated from profit after tax at decision by the shareholders in the Annual General Meeting and are used (w) Interest expenses primarily to make payments to the Bank’s employees. These funds are not required by law and are fully distributable. Interest expenses are recognised in the consolidated statement of income on an accruals basis.
Other equity funds are allocated from profit after tax. The allocation from profit after tax and the utilisation of the other equity funds are (x) Operating lease payments approved by the shareholders in the Annual General Meeting. These funds are not required by law and are fully distributable. Payments made under operating leases are recognised in the consolidated statement of income on a straight-line basis over the term of the lease. Lease incentives received are recognised in the consolidated statement of income as an integral part of the total lease expense.
82 Techcombank Annual Report 2011 Techcombank Annual Report 2011 83 Notes to the Consolidated Financial Statements (continued) Notes to the Consolidated Financial Statements (continued) For the year ended 31 December 2011 l Form B05/TCTD-HN For the year ended 31 December 2011 l Form B05/TCTD-HN
2. Summary of significant accounting policies (continued) 2. Summary of significant accounting policies (continued) (y) Taxation (ac) Classification of financial assets and financial liabilities for disclosure purpose Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the consolidated statement (i) Classification of financial assets and financial liabilities of income. In accordance with Circular 210, financial assets are classified into the following categories for disclosure purpose in the consolidated financial statements: Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous year. • Financial assets recognised at fair value through profit and loss statements Financial assets at fair value through profit and loss include financial asset held for trading and derivatives. A financial asset is Deferred tax is provided using the balance sheet method, providing for temporary differences between the carrying amounts of assets classified as held for trading if: and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is – It is purchased or created mainly for the purpose of resale/redemption in a short term; or based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities using tax rates enacted or – There is evidence that such instrument is traded for the purpose of gaining short-term profits. substantively enacted at the balance sheet date. • Held-to-maturity investments: A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset Held-to-maturity investments are non-derivative financial assets with fixed or identifiable payments and fixed maturity periods which can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Techcombank has the intent and ability to hold until the date of maturity, with the exceptions of: – Financial assets that, upon initial recognition, were categorized as such recognized at fair value through profit or loss statements; (z) Earnings per share – Financial assets already categorized as available for sale; Techcombank presents its basic earnings per share (“EPS”) for its ordinary shares. Basic EPS is calculated by dividing the profit or loss – Financial assets that meet the definitions of loans and receivables. attributable to the ordinary shareholders of the Bank by the weighted average number of ordinary shares outstanding during the year. • Loans and receivables: Diluted EPS is determined by adjusting the profit and loss attributable to the ordinary shareholders of the Bank and the weighted average Loans and receivables are non-derivative financial assets with fixed or identifiable payments and not listed on the market, with the number of ordinary shares outstanding during the year for the effect of all diluted instruments, which comprise convertible bonds. exceptions of: – The amounts Techcombank has the intent to immediately sell or will sell in a near future which are classified as assets held for (aa) Related parties trading, and like those which, upon initial recognition, Techcombank categorised as such recognised at fair, value through profit Parties are considered to be related if one party has the ability, directly or indirectly, to control another party or exercise significant or loss statements; influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subjected – The amounts categorised by Techcombank as available for sale upon initial recognition; or, to common control or common significant influence. – The amounts whose holders cannot recover most of the initial investment value not due to credit quality impairment and which are categorised as available for sale. (ab) Segment reporting A segment is a distinguishable component of Techcombank that is engaged either in providing related products or services (business • Available-for-sale investments: segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to Available-for-sale assets are non-derivative financial assets that are designated as available for sale or are not classified as: risks and rewards that are different from those of other segments. Techcombank’s primary format for segment reporting is based on – Loans and receivables; geographical segments. – Held-to-maturity investments; – Financial assets at fair value through profit or loss.
In accordance with Circular 210, financial liabilities are classified into the following categories for disclosure purpose in the financial statements:
• Financial liabilities at fair value through profit and loss: Financial liabilities recognised at fair value through profit and loss statements include derivative financial liabilities.
84 Techcombank Annual Report 2011 Techcombank Annual Report 2011 85 Notes to the Consolidated Financial Statements (continued) Notes to the Consolidated Financial Statements (continued) For the year ended 31 December 2011 l Form B05/TCTD-HN For the year ended 31 December 2011 l Form B05/TCTD-HN
2. Summary of significant accounting policies (continued) 3. Cash and gold on hand (ac) Classification of financial assets and financial liabilities for disclosure purpose (continued) (i) Classification of financial assets and financial liabilities (continued) 31/12/2011 31/12/2010 • Financial liabilities carried at amortised cost: VND million VND million Financial liabilities which are not recognised at fair value through profit and loss statements are classified in to financial liabilities at Cash on hand in VND 1,544,219 1,257,998 amortised cost. Cash on hand in foreign currencies 481,730 295,318 Gold on hand 3,089,053 2,762,893 The classification of financial assets and financial liabilities as mentioned above is only for the disclosure purpose in the financial statements. This classification does not impact the recognition, measurement or classification in Techcombank’s balance sheet. 5,115,002 4,316,209
(ii) Measurement and disclosures of fair value In accordance with Circular 210, Techcombank disclosures fair value of financial assets and financial liabilities to compare with the 4. Balances with the State Bank of Vietnam carrying value of those financial assets and financial liabilities as in Notes 41. These consist of a compulsory reserve for liquidity and a current account,
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s Under the State Bank of Vietnam’s regulations relating to the compulsory reserve, banks are permitted to maintain a floating balance for length transaction on the measurement date. the compulsory reserve requirement (“CRR”). The monthly average balance of the reserves must not be less than CRR rates multiply with preceding month’s average balances of deposits in scope as follows: When available, Techcombank measures the fair value of an instrument using quoted prices in an active market for that instrument. A market is regarded as active if quoted prices are readily and regularly available and represent actual and regularly occurring market Deposits in scope CRR rates transactions on an arm’s length basis. 31/12/2011 31/12/2010
The best evidence of the fair value of a financial instrument at initial recognition is the transaction price, i.e., the fair value of the Preceding month’s average balances of: consideration given or received, unless the fair value of that instrument is evidenced by comparison with other observable current market • Deposits in foreign currencies with term of less than 12 months 8.00% 4.00% transactions in the same instrument (i.e., without modification or repackaging) or based on a valuation technique whose variables include • Deposits in foreign currencies with term of and more than 12 months 6.00% 2.00% only data from observable markets. When transaction price provides the best evidence of fair value at initial recognition, the financial • Deposits in VND with term of less than 12 months 3.00% 3.00% instrument is initially measured at the transaction price and any difference between this price and the value initially obtained from a • Deposits in VND with term of and more than 12 months 1.00% 1.00% valuation model is subsequently recognised in profit or loss on an appropriate basis over the life of the instrument but not later than when the valuation is supported wholly by observable market data or the transaction is closed out. 31/12/2011 31/12/2010 VND million VND million If a market for a financial instrument is not active, Techcombank establishes fair value using valuation techniques. Valuation techniques Current account and compulsory reserve 4,465,664 2,752,951 include using recent arm’s length transactions between knowledgeable, willing parties (if available), reference to the current fair value of other instruments that are substantially the same and by discounted cash flow analyses. The chosen valuation technique makes Effective year-end annual interest rates were as follows: maximum use of market inputs, relies as little as possible on estimates specific to Techcombank, incorporates all factors that market participants would consider in setting a price, and is consistent with accepted economic methodologies for pricing financial instruments. 31/12/2011 31/12/2010 Inputs to valuation techniques reasonably represent market expectations and measures of the risk-return factors inherent in the financial instrument. Techcombank calibrates valuation techniques and tests them for validity using prices from observable current market Deposits in VND transactions in the same instrument or based on other available observable market data. Within the compulsory reserve requirement 1.20% 1.20% Exceeding the compulsory reserve requirement 0.00% 0.00% When using valuation techniques results in significant variability in a range of reasonable fair value estimates of the financial instruments that do not have a quoted market price and the profitability of the various estimates cannot be reasonably assessed, it is considered that Deposits in USD fair value of the instrument cannot be reliably measured and therefore not disclosed. Within the compulsory reserve requirement 0.00% 0.00% Exceeding the compulsory reserve requirement 0.05% 0.10%
86 Techcombank Annual Report 2011 Techcombank Annual Report 2011 87 Notes to the Consolidated Financial Statements (continued) Notes to the Consolidated Financial Statements (continued) For the year ended 31 December 2011 l Form B05/TCTD-HN For the year ended 31 December 2011 l Form B05/TCTD-HN
5. Balances with and loans to other credit institutions 6. Securities held for trading (continued) (i) Movements in allowance for diminution in the value of securities held for trading were as follows: 31/12/2011 31/12/2010 (restated) 2011 2010 VND million VND million VND million VND million
Current accounts Balance at 1 January 2011 78,422 4 Current accounts in VND 5,768,075 3,938,370 Allowance made in the year (refer to note 25) 99,905 78,418 Current accounts in foreign currencies 8,790,178 5,675,663 Utilization during the year (16,599) – Reversal of allowance in the year (8,168) – Term deposits Term deposits in VND 21,188,020 29,395,354 Balance at 31 December 2011 153,560 78,422 Term deposits in foreign currencies 7,444,493 7,251,809 Listing status of securities held for trading was as follows: Loans Loans in VND – 2,000 31/12/2011 31/12/2010 VND million VND million 43,190,766 46,263,196 Equity securities Effective year-end annual interest rates were as follows: • Listed 437,134 562,114 • Unlisted – 4,494 31/12/2011 31/12/2010 437,134 566,608
Current accounts in VND 0% – 1.5% 0.25% – 2.00% Current accounts in foreign currencies 0.05% – 0.1% 0% – 0.27% 7. Derivatives and other financial assets/(liabilities) Term deposits in VND 9.6% – 21% 9.8% – 14.5% Term deposits in foreign currencies 4%% – 9.88% 0.1% – 8.5% 31/12/2011 31/12/2010 Loans in VND – 6.5% – 12.46% Total contract Total carrying Total contract Total carrying nominal value value (at foreign nominal value value (at foreign (at foreign exchange rate (at foreign exchange rate 6. Securities held for trading exchange rate at balance exchange rate at balance at contract date) sheet date) at contract date) sheet date) 31/12/2011 31/12/2010 Assets/(liabilities) Assets/(liabilities) VND million VND million VND million VND million VND million VND million
Equity securities Foreign exchange forward contracts 4,309,048 58,324 2,868,925 (13,664) • Shares issued by local credit institutions 123,391 215,765 Foreign exchange swap contracts 978,992 (4,043) 2,919,076 (39,224) • Shares issued by local economic entities 313,743 350,843 Gold future contracts – (9) – – 437,134 566,608 5,288,040 54,272 5,788,001 (52,888) Allowance for diminution in the value of securities held for trading (i) (153,560) (78,422) 283,574 488,186
88 Techcombank Annual Report 2011 Techcombank Annual Report 2011 89 Notes to the Consolidated Financial Statements (continued) Notes to the Consolidated Financial Statements (continued) For the year ended 31 December 2011 l Form B05/TCTD-HN For the year ended 31 December 2011 l Form B05/TCTD-HN
8. Loans and advances to customers 8. Loans and advances to customers (continued) Loan portfolio by industry sectors was as follows: 31/12/2011 31/12/2010 VND million VND million 31/12/2011 % 31/12/2010 % (restated) Loans to local economic entities and individuals 63,179,306 52,471,320 VND million VND million Discounted bills 139,100 219,596 Loans financed by trusted funds 133,059 236,941 Agriculture and forestry 8,783,216 13.84% 5,389,548 10.18% Trading, manufacturing and processing 22,992,710 36.24% 19,706,317 37.23% 63,451,465 52,927,857 Construction 5,096,607 8.03% 4,664,748 8.81% Warehousing, transportation and communication 2,114,334 3.33% 2,060,369 3.89% Loan portfolio by loan group was as follows: Individuals and others 24,464,598 38.56% 21,106,875 39.88%
31/12/2011 % 31/12/2010 % 63,451,465 100% 52,927,857 100% VND million VND million Loan portfolio by type of borrowers was as follows: Current 57,104,413 90.00% 50,096,997 94.65% Special mention 4,553,396 7.18% 1,619,793 3.06% 31/12/2011 % 31/12/2010 % Substandard 927,476 1.46% 718,812 1.36% (restated) Doubtful 623,731 0.98% 320,284 0.61% VND million VND million Loss 242,449 0.38% 171,971 0.32% State owned enterprises 2,939,365 4.63% 2,930,267 5.54% 63,451,465 100% 52,927,857 100% Limited liability companies 18,838,640 29.69% 15,823,427 29.90% Joint stock companies 16,789,830 26.46% 12,921,669 24.41% Loans and advances to Vinashin Ocean Shipping Company (Vinashin Vien Duong) amounting to VND 246,485 million and Bach Dang Foreign invested companies 719,780 1.13% 545,069 1.03% Shipbuilding Industry Corporation (Vinashin Bach Dang) amounting to VND 67,121 million were classified as special mention (Group 2) Private businesses 1,499,470 2.36% 1,530,244 2.89% following guidance from the Government of Vietnam. Individuals and others 22,664,380 35.72% 19,177,181 36.23%
63,451,465 100% 52,927,857 100% Loan portfolio by term was as follows:
Effective year-end annual interest rates were as follows: 31/12/2011 % 31/12/2010 % VND million VND million 31/12/2011 31/12/2010 Short term 35,586,745 56.08% 30,076,441 56.82% Medium term 10,619,444 16.74% 10,468,073 19.78% Loans and advances in VND 13.6% – 22% 15.4% – 17.2% Long term 17,245,276 27.18% 12,383,343 23.40% Loans and advances in USD 0.55% – 9.3% 5.5% – 6.7% 63,451,465 100% 52,927,857 100%
90 Techcombank Annual Report 2011 Techcombank Annual Report 2011 91 Notes to the Consolidated Financial Statements (continued) Notes to the Consolidated Financial Statements (continued) For the year ended 31 December 2011 l Form B05/TCTD-HN For the year ended 31 December 2011 l Form B05/TCTD-HN
9. Allowance for loans and advances to customers 10. Investment securities Allowance for loans and advances to customers consists of: 31/12/2011 31/12/2010 31/12/2011 31/12/2010 (restated) VND million VND million VND million VND million
General allowance 461,399 384,860 Available for sale securities Specific allowance 427,660 226,135 Debt securities • Government bonds 13,373,214 7,205,705 889,059 610,995 • Bonds issued by local economic entities 18,514,572 6,134,452 • Bonds issued by local credit institutions 11,931,994 13,765,004 Movements in general allowance for loans and advances to customers were as follows: Equity securities 2011 2010 • Shares issued by local economic entities 27,800 27,800 VND million VND million • Shares issued by local credit institutions 110 92 Balance as at 1 January 2011 384,860 315,081 43,847,690 27,133,053 Allowance made in the year 76,539 69,779 Allowance for diminution in the value of available for sale securities (24,670) (11,500) 43,823,020 27,121,553 Balance as at 31 December 2011 461,399 384,860 Held to maturity securities Debt securities Movements in specific allowance for loans and advances to customers were as follows: • Government bonds 347,933 60,179 • Treasury bills by the State Bank of Vietnam – 368,060 2011 2010 • Bonds issued by local economic entities 1,880,000 2,430,000 VND million VND million • Bonds issued by local credit institutions 1,666,240 1,065,012 Balance at 1 January 2011 226,135 197,316 3,894,173 3,923,251 Allowance made in the year 686,293 654,439 Reversal of allowance in the year (457,338) (331,642) Entrusted investment 624,840 567,960 Utilisation of allowance in the year (27,430) (293,978) 4,519,013 4,491,211 Balance at 31 December 2011 427,660 226,135 48,342,033 31,612,764
The terms and annual interest rate of debt investment securities as at year-end were as follows:
31/12/2011 31/12/2010 Term Interest rate Term Interest rate
Available for sale securities 9 months – 15 years 3.50% – 30.0% 6 months – 15 years 4.00% – 17.50% Held to maturity securities 12 months – 15 years 0.52% – 16.50% 6 years – 15 years 0.4% – 15.00%
As at 31 December 2011, Techcombank pledged securities amounting to VND 10,201,763 millions at par (31 December 2010: VND 7,913,511 millions) at the State Bank of Vietnam as collaterals for borrowings from the State Bank of Vietnam (refer to Note 16).
92 Techcombank Annual Report 2011 Techcombank Annual Report 2011 93 Notes to the Consolidated Financial Statements (continued) Notes to the Consolidated Financial Statements (continued) For the year ended 31 December 2011 l Form B05/TCTD-HN For the year ended 31 December 2011 l Form B05/TCTD-HN
10. Investment securities (continued) 12. Tangible fixed assets (i) Movements in allowance for diminution in the value of investment securities were as follows: Buildings Office Vehicles Other Total 2011 2010 and building equipment assets VND million VND million improvements VND million VND million VND million VND million VND million Balance at 1 January 2011 11,500 – Allowance made in the year (Refer to Note 26) 13,170 11,500 Cost Balance at 1 January 2011 262,105 646,116 110,920 22,449 1,041,590 Balance at 31 December 2011 24,670 11,500 Additions 53 521,209 19,836 8,949 550,047 Disposals – (1,619) (380) (259) (2,258) Written off (184) (268,799) (2,901) (4,218) (276,102) 11. Long-term investments Reclassification (19,357) – – – (19,357) Balance at 31 December 2011 242,617 896,907 127,475 26,921 1,293,920 31/12/2011 31/12/2010 VND million VND million Accumulated depreciation Other long-term investments – cost (i) 76,905 69,645 Balance at 1 January 2011 19,673 146,885 39,375 4,398 210,331 Charge for the year 4,625 98,712 13,857 3,647 120,841 Disposals – (1,448) (364) (195) (2,007) (i) Long-term investments comprise of: Written off (155) – (14,396) – (14,551) Reclassification – 10,988 – 3,395 14,383 31/12/2011 31/12/2010 Balance at 31 December 2011 24,143 255,137 38,472 11,245 328,997 Share Investment Share Investment holding at cost holding at cost Net book value % VND million % VND million Balance at 1 January 2011 242,432 499,231 71,545 18,051 831,259 Balance at 31 December 2011 218,474 641,770 89,003 15,676 964,923 Investments in credit and similar institutions Vietnam Chemical Finance JSC 10.00% 60,000 10.00% 60,000
Investments in other economic entities TCO Vietnam Investment JSC 11.00% 3,300 11.00% 3,300 Smartlink Card JSC 2.00% 1,000 2.00% 1,000 Banking Training and Consultancy JSC 9.59% 1,040 5.51% 561 PCB Investment JSC 7.96% 7,962 6.36% 3,181 S.W.I.F.T SCRL 0.09% 283 0.09% 283 Vietnam Real Estate Exchange JSC 10.00% 660 10.00% 660 TECHCOMDEVELOPER 11.00% 660 11.00% 660 Hanoi North Urban development JSC 7.00% 1,400 – TIC Joint stock company 10.00% 600 – 76,905 69,645
94 Techcombank Annual Report 2011 Techcombank Annual Report 2011 95 Notes to the Consolidated Financial Statements (continued) Notes to the Consolidated Financial Statements (continued) For the year ended 31 December 2011 l Form B05/TCTD-HN For the year ended 31 December 2011 l Form B05/TCTD-HN
13. Intangible fixed assets 15. Other assets
Software Land use rights Others Total 31/12/2011 31/12/2010 VND million VND million VND million VND million VND million VND million
Cost Receivables Balance at 1 January 2011 170,537 47,426 3,213 221,176 • Internal receivables 124,104 174,352 Additions 74,287 – 3,895 78,182 • Deposits and advances for office rental 596,883 192,160 Balance at 31 December 2011 244,824 47,426 7,108 299,358 • Receivables from SBV relating to Interest Subsidy Program 35,925 47,507 • Advances for contracts 171,242 181,021 Accumulated amortisation • Advance to purchase securities (i) 3,133,000 7,869,982 Balance at 1 January 2011 46,772 325 1,431 48,528 • Advances and interest receivables relating to Deposits for office rental at 56 Nguyen Chi Thanh (ii) 2,353,625 – Charge for the year 23,925 124 480 24,529 • Deposits for gold, commodity and foreign currencies trading in futures markets 258,604 17,771 Reclassification 931 – (931) – • Other external receivables (iii) 2,914,327 264,449 Balance at 31 December 2011 71,628 449 980 73,057 • Receivables on gold transactions 713,320 – 10,301,030 8,747,242 Net book value Accrued interest and fee receivables 4,471,852 2,219,043 Balance at 1 January 2011 123,765 47,101 1,782 172,648 Other assets Balance at 31 December 2011 173,196 46,977 6,128 226,301 • Construction in progress 39,672 8,036 • Materials 49,236 65,694 • Prepayments 274,823 202,318 14. Investment property • Others 56,639 201,424 420,370 477,472 Land use rights Buildings Total VND million VND million VND million Deferred tax assets (iv) 35,203 23,922 Allowance for other on-balance sheet assets (259) (184) Cost 15,228,196 11,467,495 Balance at 1 January 2011 – – – Additions – 1,905 1,905 (i) These are short-term advances in VND to securities companies for the purpose of purchasing securities on behalf of Techcombank. As at Reclassification 19,357 – 19,357 31 December 2011, no securities have been bought by the securities companies (31 December 2010: Nil). The securities companies paid Balance at 31 December 2011 19,357 1,905 21,262 annual interest rates ranging from 12% – 15% (2010: 11% – 15.5%) to Techcombank from the date of advance to the date of purchasing securities during the year. Accumulated amortisation Balance at 1 January 2011 – – – (ii) This is advance for office rental at No. 56 Nguyen Chi Thanh and its interest receivable up to 31 December 2011. Charge for the year – 141 141 Balance at 31 December 2011 – 141 141 (iii) Other external receivables include a receivable of VND 1,726,952 million from Thao Dien Investment Limited Company in a sale contract of Techcombank’s loans contract amounting to VND 2,026,952 million. Net book value Balance at 1 January 2011 – – – (iv) Deferred tax assets are attributable to the unearned revenue. Balance at 31 December 2011 19,357 1,764 21,121
96 Techcombank Annual Report 2011 Techcombank Annual Report 2011 97 Notes to the Consolidated Financial Statements (continued) Notes to the Consolidated Financial Statements (continued) For the year ended 31 December 2011 l Form B05/TCTD-HN For the year ended 31 December 2011 l Form B05/TCTD-HN
16. Amounts due to the Government and the State Bank of Vietnam 18. Deposits from customers
31/12/2011 31/12/2010 31/12/2011 31/12/2010 VND million VND million VND million VND million
Demand deposits Current accounts Borrowings on credit file 700,000 – Current accounts in VND 9,879,665 8,437,188 Other borrowings from SBV (i) 2,617,602 8,091,316 Current accounts in foreign currencies 1,560,644 1,661,068 3,317,602 8,091,316 Term deposits Term deposits in VND 61,383,625 56,025,427 (i) This represents borrowings from the State Bank of Vietnam under repurchase agreements of the Government bonds Term deposits in foreign currencies 13,891,912 13,081,268 (Refer to Note 10). These borrowings have original terms from 15 to 93 days (2010: 7 days) and bear annual interest rate of 14% – 15% (31 December 2010: 10%). Margin deposits Margin deposits in VND 551,531 704,805 17. Deposits and borrowings from other credit institutions Margin deposits in foreign currencies 1,380,402 640,997 88,647,779 80,550,753 31/12/2011 31/12/2010 VND million VND million Deposits from customers by type of customers were as follows: Demand deposits Demand deposits in VND 5,908,655 3,453,561 31/12/2011 31/12/2010 VND million VND million Demand deposits in foreign currencies 5,529,583 3,445,992 Economic entities 31,011,867 18,744,743 Term deposits Individuals 57,635,912 61,806,010 Term deposits in VND 21,460,863 10,590,340 88,647,779 80,550,753 Term deposits in foreign currencies 5,289,354 4,710,085 38,188,455 22,199,978 Effective year-end annual interest rates were as follows: Borrowings Borrowings in VND 672,464 240,000 31/12/2011 31/12/2010 Borrowings in foreign currencies 9,271,824 5,343,136 9,944,288 5,583,136 Current accounts in VND 2.4% 2.40% 48,132,743 27,783,114 Current accounts in foreign currencies 0.20% 0.00% – 1.50% Term deposits in VND 1.5% – 14% 1.50% – 18.00% Effective year-end annual interest rates were as follows: Term deposits in foreign currencies 1.00% – 4.33% 1.00% – 4.30%
31/12/2011 31/12/2010 19. Other borrowed and entrusted funds Term deposits in VND 6.0% – 17.5% 7.7% – 14.5% These balances comprise entrusted funds from various entrustors, which bear annual interest rates ranging from 7.5% to 13.92% Term deposits in foreign currencies 1.0% – 5.22% 0.1% – 2.7% (2010: 3.0% to 13.5%) during the year. Borrowings in VND 15% – 16% 12.6% Borrowings in foreign currencies 0.75% – 5.05% 1.86% – 5.05%
98 Techcombank Annual Report 2011 Techcombank Annual Report 2011 99 Notes to the Consolidated Financial Statements (continued) Notes to the Consolidated Financial Statements (continued) For the year ended 31 December 2011 l Form B05/TCTD-HN For the year ended 31 December 2011 l Form B05/TCTD-HN
20. Valuable papers issued 21. Other liabilities Valuable papers issued – categorised by term 31/12/2011 31/12/2010 31/12/2011 31/12/2010 VND million VND million VND million VND million Accrued interest and fee payables 1,832,106 1,378,833 Up to 12 months (i) 12,521,225 2,370,035 Other liabilities From 12 months up to 5 years (ii) 5,116,638 7,403,559 • Remittance payables 211,581 42,916 More than 5 years (iii) 2,456,282 2,250,623 • Payable to employees 182,353 58,841 Convertible bonds issued (iv) 3,000,000 3,000,000 • Severance allowance 3,644 3,674 • Settlement on behalf of other credit institutions 168,263 70,415 23,094,145 15,024,217 • Payable to suppliers 241,555 5 • Provision for taxation (i) 844,846 444,414 (i) These valuable papers were certificates of deposits that bore interest rates ranging from 0.01% to 14% (2010: 4.5% to 13.5%) • Deferred income 57,694 151,896 per annum. • Internal payables - 4,993 (ii) These valuable papers were bonds and deposit certificates that bore interest rates ranging from 0.01% to 13.5% • Advance from customers 321,110 53,643 (2010: 4.5% to 12.0%) per annum. • Other payables 594,768 472,642 2,625,814 1,303,439 (iii) These valuable papers were bonds and deposit certificates that bore interest rates ranging from 0.01% to 10.5% (2010: 8.6% to 10.5%) per annum. Provision for off-balance-sheet commitments (ii) 112,774 76,404 4,570,694 2,758,676 (iv) These valuable papers were convertible bonds issued to current shareholders of Techcombank with term of 10 years. Interest rate is 0% per annum for the first 5 years. From the 6th year, interest rate applied is the lower of 15% per annum or ceiling interest rate applied for (i) Provision for taxation equivalent bonds. Bond-holders can convert these bonds to ordinary shares of Techcombank after 5 years. Conversion rate is 17,188.33 bond value for one ordinary share (par value VND10,000). 31/12/2011 31/12/2010 VND million VND million
Value added tax 7,807 25,268 Corporate income tax 816,704 396,874 Other taxes 20,335 22,272 844,846 444,414
(ii) Provision for off-balance sheet commitments Movements in general provision for off-balance sheet commitments were as follows:
2011 2010 VND million VND million
Balance at 1 January 2011 76,404 72,045 Provision made during the year 36,370 4,359
Balance at 31 December 2011 112,774 76,404
100 Techcombank Annual Report 2011 Techcombank Annual Report 2011 101 Notes to the Consolidated Financial Statements (continued) Notes to the Consolidated Financial Statements (continued) For the year ended 31 December 2011 l Form B05/TCTD-HN For the year ended 31 December 2011 l Form B05/TCTD-HN
22. Capital and reserves 22. Capital and reserves (continued) Consolidated statement of changes in equity Share capital
Share Other Reserve to Financial Other Total Retained Total 31/12/2011 31/12/2010 Capital capital supplement reserve reserves reserves profits Number of VND million Number of VND million capital shares shares VND million VND million VND million VND million VND million VND million VND million VND million Authorised share capital 878,807,871 8,788,078 693,218,371 6,932,184 Balance at 1 January 2010 5,400,417 371 86,918 382,530 2,762 472,210 1,450,829 7,323,827 Issued share capital Transfers to share capital 1,531,767 – (1,531,767) – – (1,531,767) – – Ordinary shares 878,807,871 8,788,078 693,218,371 6,932,184 Net profit for the year – – – – – – 2,072,755 2,072,755 Appropriations to Shares in circulation equity funds – – 1,555,590 200,479 5,912 1,761,981 (1,761,981) – Ordinary shares 878,807,871 8,788,078 693,218,371 6,932,184 Utilisations of reserves – – – (3,565) (4,862) (8,427) – (8,427) Other movements – – (2,886) – – (2,886) 3,892 1,006 Nominal value of Techcombank’s ordinary share is VND10,000. Each share is entitled to one vote at meetings of Techcombank. Shareholders are entitled to receive dividend as declared from time to time. All ordinary shares are ranked equally with regard to the Balance at Techcombank’s residual assets. 1 January 2011 6,932,184 371 107,855 579,444 3,812 691,111 1,765,495 9,389,161
Transfers to 23. Net interest income share capital 1,855,895 – (90,500) – – (90,500) (1,765,395) – Net profit for the year – – – – – 3,153,766 3,153,766 2011 2010 Appropriations to VND million VND million equity funds – – 172,588 296,311 26,623 495,522 (495,522) – Utilisations of reserves – – (757) (26,910) (27,667) – (27,667) Interest and similar income from Other movements – – 1,891 (11,704) 542 (9,271) 9,813 542 Balances with and loans to other credit institutions 6,400,067 3,375,282 Loans and advances to customers 9,569,685 5,594,413 Balance at Investments in debt securities 3,978,821 1,964,688 31 December 2011 8,788,079 371 191,834 863,294 4,067 1,059,195 2,668,157 12,515,802 19,948,573 10,934,383 Interest and similar expenses for Deposits from customers (11,703,319) (6,193,981) Borrowings from the SBV and other credit institutions (1,344,255) (1,012,822) Valuable papers issued (1,602,624) (543,231) (14,650,198) (7,750,034)
Net interest income 5,298,375 3,184,349
102 Techcombank Annual Report 2011 Techcombank Annual Report 2011 103 Notes to the Consolidated Financial Statements (continued) Notes to the Consolidated Financial Statements (continued) For the year ended 31 December 2011 l Form B05/TCTD-HN For the year ended 31 December 2011 l Form B05/TCTD-HN
24. Net fee and commission income 26. Net loss from trading of securities held for trading
2011 2010 2011 2010 VND million VND million VND million VND million Gain from trading of securities held for trading 66,444 19,593 Fee and commission income from Loss from trading of securities held for trading (30,040) (12,593) Guarantee services 143,190 159,776 Allowance for diminution in the value of securities held for trading (Note 6) (99,905) (78,418) Settlement and cash services 835,419 690,557 Reversal of allowance for diminution in the value of securities held for trading (Note 6) 8,168 – Trustee and agency services 1,883 2,506 Consulting services 105,841 130,816 (55,333) (71,418) Other services 433,824 202,965 1,520,157 1,186,620 27. Net gain from investment securities Fee and commission expenses for Settlement and cash services (124,329) (104,821) 2011 2010 VND million VND million Communication charges (45,462) (27,912) Consulting services (99,697) (103,162) Gain from trading of investment securities 429,427 171,835 Brokerage services (852) (6,980) Allowance for diminution in the value of investment securities (Refer to Note 10) (13,170) (11,500) Other services (99,463) (13,945) 416,257 160,335 (369,803) (256,820)
Net fee and commission income 1,150,354 929,800 28. Other income
2011 2010 25. Net loss from trading of foreign currencies and gold trading VND million VND million Recovery of bad debts previously written off 60,959 240,067 2011 2010 Others 646,156 456,049 VND million VND million 707,115 696,116 Gain from trading of foreign currencies and gold trading Foreign exchange trading 355,571 161,808 29. Operating expenses Gold trading 165,760 82,742 Financial derivatives 143,671 81,248 2011 2010 665,002 325,798 VND million VND million Loss from trading of foreign currencies and gold trading Salaries and related expenses 1,181,254 754,516 FX trading (1,149,832) (216,959) Publication, marketing and promotion 147,641 49,113 Gold trading (102,325) (85,061) Office and asset rental 376,402 298,390 Financial derivatives (111,758) (115,161) Depreciation of tangible fixed assets 145,370 96,132 (1,363,915) (417,181) Tax, duties and fees 72,326 72,069 (698,913) (91,383) Tools and equipment expenses 41,592 112,060 Telecommunication expenses 40,315 29,821 Expenses for maintenance and repair of assets 90,123 49,095 Other operating expenses 4,175 126,553 2,099,198 1,587,749
104 Techcombank Annual Report 2011 Techcombank Annual Report 2011 105 Notes to the Consolidated Financial Statements (continued) Notes to the Consolidated Financial Statements (continued) For the year ended 31 December 2011 l Form B05/TCTD-HN For the year ended 31 December 2011 l Form B05/TCTD-HN
30. Allowance and provision expenses 31. Income tax expense (continued) (c) Applicable tax rate Note 2011 2010 Techcombank has an obligation to pay the government CIT at the rate of 25% of taxable profit. The CIT computation is subject to the VND million VND million review and approval by local tax authorities. Reversal of allowance for loans to other credit institutions – (9,290) General allowance for loans and advances to customers 9 76,539 69,779 Specific allowance for loans and advances to customers 9 686,293 654,439 32. Earnings per share Reversal of allowance for loans and advances to customers 9 (457,338) (331,642) The calculation of basic earnings per share for the year ended 31 December 2011 was based on the profit after tax of Provision for off-balance-sheet commitments 21 36,370 4,359 VND3,153,766 million (2010: VND2,072,755 million) and a weighted average number of ordinary shares outstanding of 1,086,571,576 (2010 restated: 872,560,194 shares) calculated as follows: 341,864 387,645 (a) Basic earnings per share (i) Net profit after tax 31. Income tax expense (a) Recognised in the statement of income 2011 2010 2011 2010 VND million VND million VND million VND million Net profit after tax 3,153,766 2,072,755 Current tax expense Current year 1,064,768 672,852 (ii) Weighted average number of ordinary shares Under provision in prior years 12,248 – 1,077,016 672,852 2011 2010 Deferred tax income (Restated) Origination of temporary difference (9,669) (1,980) Issued ordinary shares at the beginning of the year 693,218,371 540,041,671 Income tax expense 1,067,347 670,872 Effect of bonus shares issued in 2010 – 153,176,700 Effect of convertible bonds 169,720,183 1,394,960 (b) Reconciliation of effective tax rate Weighted average number of ordinary shares as at 31 December 2011 862,938,554 694,613,331 Effect of shares issued in 2011 223,633,022 177,946,863 2011 2010 VND million VND million Weighted average number of ordinary shares for the year ended 31 December 1,086,571,576 872,560,194
Profit before tax 4,221,113 2,743,627 The weighted average number of ordinary share for the year end 31 December 2010 was restated because Techcombank paid dividend in Adjustments for shares to existing shareholders in 2011. – Tax exempt income (10,641) (65,159) – Non-deductible expenses 28,598 – (iii) Basic earnings per share Taxable income 4,239,070 2,678,468 2011 2010 2010 Tax at Techcombank’s tax rate (25%) 1,059,767 669,616 (restated) (previously reported) Tax losses utilised (4,668) – VND VND VND Deferred tax assets not recognised – 1,256 Basic earnings per share 2,902 2,375 2,990 Under provision in prior years 12,248 –
Total income tax expense 1,067,347 670,872
106 Techcombank Annual Report 2011 Techcombank Annual Report 2011 107 Notes to the Consolidated Financial Statements (continued) Notes to the Consolidated Financial Statements (continued) For the year ended 31 December 2011 l Form B05/TCTD-HN For the year ended 31 December 2011 l Form B05/TCTD-HN
32. Earnings per share (continued) 34. Significant transactions with related parties (b) Diluted EPS In the normal course of banking business, Techcombank carries out transactions with related parties (shareholders, investee companies (i) Net profit after tax (diluted) of Techcombank, directors and officers of Techcombank, their families and companies of which they are principal owners) who were customers of Techcombank during the year. The terms of these transactions are approved by the Techcombank’s management. 2011 2010 As at the year-end and during the year, there were the following significant balances and transactions with related parties: VND million VND million Balances Net profit after tax (basic) 3,153,766 2,072,755 31/12/2011 31/12/2010 Net profit after tax (diluted) 3,153,766 2,072,755 (restated) VND million VND million (ii) Weighted average number of ordinary shares (diluted) Balances with related parties 2011 2010 HSBC Bank (Vietnam) Ltd – 3,393 (restated) Entrusted investment Weighted average number of ordinary shares (basic) 1,086,571,576 872,560,194 The Hongkong and Shanghai Banking Corporation 624,840 567,960 Effect of convertible bonds 6,050,190 6,050,190 Loans to Weighted average number of ordinary shares (diluted) 1,092,621,766 878,610,384 Vietnam Airlines Corporation 795,566 591,852 The European Plastics Window Joint Stock Company 375,230 285,457 (iii) Diluted earnings per share Deposits from HSBC Bank (Vietnam) Ltd 650,839 246,852 2011 2010 2010 Vietnam Airlines Corporation 583,364 447,495 (Restated) (Previously reported) Central Area Airport Complex 78,820 86,007 VND VND VND Southern Airports Services Company 77,078 – General Aviation Import Export Company 5,373 – Diluted earnings per share 2,886 2,359 2,389 Tan Son Nhat Airport Aviation Service Company – 31,963 Airlines Import and Export Company – 16,639 Masan Consumer Corporation (formerly called: Masan Food Corporation) 260,352 570,160 33. Cash and cash equivalents Masan Corporation 9,246 2,337 Masan Group Corporation 1,510,042 650,217 31/12/2011 31/12/2010 Euro Finance Joint Stock Company 19 1 VND million VND million T&M Vietnam Investment Joint Stock Company 44 43 Cash on hand 2,025,949 1,553,316 Melinh Plaza Thanh Hoa Trading Complex Investment JSC 6 – Gold on hand 3,089,053 2,762,893 Vinh Trade Centre Investment Joint Stock Company 218 219 Balances with the SBV 4,465,664 2,752,951 The European Plastic Window JSC 8,412 28,031 Balances with credit institutions with original terms of not exceeding three months 24,717,946 33,670,276 Hanoi-Moscow Trade Centre Investment Joint Stock Company 5 1 Eurolands – Eurowindow Holdings branch 1,137 57 34,298,612 40,739,436 Entrusted funds from Included in cash and cash equivalents are cash and cash equivalents in currencies other than VND amounting to VND 14,459,807 million Masan Consumer Corporation(formerly called: Ma San Food Corporation) – 986,000 (31 December 2010: VND 10,762,266 million). Masan Group Corporation – 50,000
Valuable papers issued to HSBC Bank (Vietnam) Ltd 140,000 140,000
108 Techcombank Annual Report 2011 Techcombank Annual Report 2011 109 Notes to the Consolidated Financial Statements (continued) Notes to the Consolidated Financial Statements (continued) For the year ended 31 December 2011 l Form B05/TCTD-HN For the year ended 31 December 2011 l Form B05/TCTD-HN
34. Significant transactions with related parties (continued) 36. Obligations to the State Budget (refer to Note 21)
Transactions 31/12/2010 Incurred Paid 31/12/2011 2011 2010 VND million VND million VND million VND million (Restated) VND million VND million Value added tax 25,268 121,781 (139,242) 7,807 Corporate income tax 396,874 1,077,016 (657,186) 816,704 Interest income from Other taxes 22,272 90,306 (92,243) 20,335 Vietnam Airlines Corporation 30,790 23,313 444,414 1,289,103 (888,671) 844,846 HSBC Bank (Vietnam) Ltd 6,178 – The Hongkong and Shanghai Banking Corporation 10,971 – General Aviation Import Export Company 245 – 37. Segment reporting The European Plastic Window JSC 40,394 33,078 Geographical segments Interest expense for Techcombank has tracked segment information by main regions in Vietnam as follows: HSBC Bank (Vietnam) Ltd 25,231 26,600 Vietnam Airlines Corporation 22,736 26,737 The North The Central The South Total Central Area Airport Complex 3,938 5,322 VND million 31/12/2011 31/12/2010 31/12/2011 31/12/2010 31/12/2011 1/12/2010 31/12/2011 31/12/2010 Tan Son Nhat Airport Aviation Service Company – 337 Masan Consumer Corporation (formerly called: Masan Food Corporation) 213,646 58,491 Assets 137,354,823 117,114,217 3,073,002 2,580,843 40,103,338 30,596,155 180,531,163 150,291,215 Masan Corporation 3,629 429 Liabilities 125,756,679 107,955,152 2,954,793 2,519,138 39,303,889 30,427,764 168,015,361 140,902,054 Masan Group Corporation 134,903 83,722 Fixed assets 1,137,578 953,084 10,558 11,753 43,088 39,070 1,191,224 1,003,907 General Aviation Import Export Company 662 – Southern Airport Services Company 3,037 – The North The Central The South Total The European Plastic Window JSC 213 180 VND million 2011 2010 2011 2010 2011 2010 2011 2010 Vinh Trade Centre Investment JSC 4 2 Eurolands – Eurowindow Holdings branch 11 15 Revenue 19,102,946 10,291,076 373,049 266,159 4,133,965 3,379,779 23,609,960 13,937,014 Expenses (13,764,202) (7,777,547) (387,364) (204,455) (5,237,281) (3,211,385) (19,388,847) (11,193,387) Profit/(loss) before tax 5,338,744 2,513,529 (14,315) 61,704 (1,103,316) 168,394 4,221,113 2,743,627 35. Employee benefits
2011 2010
Total employees as at 31 December (employees) 8,335 7,481 Average number of employees in the year (employees) 7,908 6,515
Employees’ income 1. Basic salaries (VND million) 985,350 639,430 2. Bonuses and other income (VND million) 195,904 115,086 1,181,254 754,516
Average annual salary (VND million) 125 98 Average annual income (VND million) 149 116
110 Techcombank Annual Report 2011 Techcombank Annual Report 2011 111 Notes to the Consolidated Financial Statements (continued) Notes to the Consolidated Financial Statements (continued) For the year ended 31 December 2011 l Form B05/TCTD-HN For the year ended 31 December 2011 l Form B05/TCTD-HN
37. Segment reporting (continued) 38. Risk management disclosure Business segments This section provides details of Techcombank’s exposure to risk and describes the methods used by management to control risk. Techcombank operates in the retail banking, assets management, securities trading and fund management segments. The most important types of financial risk to which Techcombank is exposed are credit risk, liquidity risk and market risk.
Retail Banking Asset management Securities trading (i) Financial risk management framework VND million 31/12/2011 31/12/2010 31/12/2011 31/12/2010 31/12/2011 31/12/2010 The Board of Directors has overall responsibility for the establishment and oversight of Techcombank’s financial risk management framework to facilitate its business activities to thrive safely and sustainably. Assets 178,190,978 149,502,579 4,185,424 3,468,494 325,692 361,390 Liabilities 166,077,109 140,469,366 3,710,506 3,050,003 1,211 39,996 Having taken that responsibility, the Board of Directors appropriately promulgates risk management policies and strategies, establish Fixed assets 1,173,866 968,176 14,901 32,719 2,396 2,998 business limit, approve high-value business transactions in accordance with both legal and internal requirements, and determine organizational structure and key managing directors. Fund management Elimination Total VND million 31/12/2011 31/12/2010 31/12/2011 31/12/2010 31/12/2011 31/12/2010 Risk management strategies and policies are adhered to the Bank’s charter and General Shareholders’ Meeting resolution.
Assets 1,299,109 604,803 (3,470,040) (3,646,051) 180,531,163 150,291,215 The Risk Management Committee was established to support the Board of Directors in monitoring all risks that may arise from Liabilities 1,256,575 548,740 (3,030,040) (3,206,051) 1 68,015,361 140,902,054 Techcombank’s day-to-day business. Fixed assets 61 14 – – 1,191,224 1,003,907 The General Director has established and himself chaired Asset and Liability Credit and Operational Risk Committee (ALCO).
ALCO members are key directors of Techcombank being in-charged of risk management. Retail Banking Asset management Securities trading VND million 31/12/2011 31/12/2010 31/12/2011 31/12/2010 31/12/2011 31/12/2010 ALCO is responsible for comprehensively monitoring assets and liabilities in the separate and consolidated balance sheet of Revenue 23,240,183 13,440,504 758,821 502,950 30,438 30,344 Techcombank in order to maximize profit while minimizing losses arisen from negative market trends, manage liquidity risk and appropriately direct interest and foreign exchange rate schemes. Expenses (19,172,871) (11,057,082) (329,631) (124,445) (8,682) (35,366) Profit/(loss) before tax 4,067,312 2,383,422 429,190 378,505 21,756 (5,022) ALCO has right to make decision relating to risk management.
Fund management Elimination Total (ii) Credit risk VND million 31/12/2011 31/12/2010 31/12/2011 31/12/2010 31/12/2011 31/12/2010 Techcombank is subject to credit risk through its lending and investing activities and in cases where it acts as an intermediary on behalf of customers or other third parties or issues guarantees. The risk that counterparties might default on their obligations is monitored on Revenue 11,347 20,487 (430,828) (57,271) 23,609,961 13,937,014 an ongoing basis. To manage the level of credit risk, Techcombank attempts to deal with counterparties of good credit standing, and, Expenses (7,968) (3,765) 130,304 27,271 (19,388,848) (11,193,387) when appropriate, obtains collateral. Techcombank’s primary exposure to credit risk arises through its loans and advances. The amount Profit/(loss) of credit exposure in this regard is represented by the carrying amounts of the assets on the balance sheet. In addition, Techcombank is before tax 3,379 16,722 (300,524) (30,000) 4,221,113 2,743,627 exposed to off balance sheet credit risk through commitments to extend credit and guarantees issued.
In measuring credit risk of loan and advances to customers and to other credit institutions, Techcombank adopts guidance provided in Decision No. 493/2005/QĐ-NHNN dated 22 April 2005 and Decision No. 18/2007/QĐ-NHNN dated 25 April 2007 of the Governor of the State Bank of Vietnam as described in Note 2(j), 2(k) and 2(l) to the financial statements.
Techcombank manages credit risk by using various tools: development and issuance of internal policies and regulations on credit risk management; development of credit procedures; regular review of credit risk; development of a credit rating system and loan classification; setting up authorisation levels within the credit approval process.
Risk concentrations: maximum exposure to credit risk without taking account of any collateral and other credit enhancements.
112 Techcombank Annual Report 2011 Techcombank Annual Report 2011 113 Notes to the Consolidated Financial Statements (continued) Notes to the Consolidated Financial Statements (continued) For the year ended 31 December 2011 l Form B05/TCTD-HN For the year ended 31 December 2011 l Form B05/TCTD-HN
38. Risk management disclosure (continued) 38. Risk management disclosure (continued) (ii) Credit risk (continued) (ii) Credit risk (continued) The following table presents the maximum exposure to credit risk from balance sheet and off-balance sheet financial instruments, before (i) Available – for – sale securities exclude investments in equity securities. taking account of any collateral held or other credit enhancements (unless such credit enhancements meet offsetting requirements). Past due but not impaired: VND million
Deposit at other credit institutions – gross 43,190,766 10 – 90 day 90 – 180 day 180 – 365 day More than Total overdue overdue overdue 365 day overdue Deposit 43,190,766 VND million VND million VND million VND million VND million Loans and advances – Deposits and loans to other credit Derivatives assets 54,272 institutions – gross – – – – – Deposits at other credit institutions – – – – – Loans and advances to customers – gross 63,451,465 Loans to other credit institutions – – – – –
Investment securities – gross 48,338,793 Derivative and other financial assets – – – – – Available for sale (i) 43,819,780 Held to maturity 4,519,013 Loan and advance to customers – gross 1,010,549 163,210 63,392 46,627 1,283,778 Others assets 15,228,455 Investment securities – gross – – – – – 170,263,751 Available for sale – – – – – Held to maturity – – – – – (i) Available – for – sale securities exclude investments in equity securities: Others assets – – – – – Neither past due nor impaired: VND million 1,010,549 163,210 63,392 46,627 1,283,778
Neither past due principal nor interests
Deposit and balance to other credit institutions – gross 43,190,766 Deposit 43,190,766 Loans and advances –
Derivatives 54,272
Loan and advance to customers – gross 57,104,413
Investment securities – gross 48,338,793 Available for sale (i) 43,819,780 Held to maturity 4,519,013
Others assets 15,228,455
163,916,699
114 Techcombank Annual Report 2011 Techcombank Annual Report 2011 115 Notes to the Consolidated Financial Statements (continued) Notes to the Consolidated Financial Statements (continued) For the year ended 31 December 2011 l Form B05/TCTD-HN For the year ended 31 December 2011 l Form B05/TCTD-HN
38. Risk management disclosure (continued) 38. Risk management disclosure (continued) (ii) Credit risk (continued) (iii) Liquidity risk (continued) The following table provides an analysis of the monetary assets and liabilities of Techcombank into relevant maturity groupings based on Past due and impaired: the remaining period from the balance sheet date to repayment date. In practice, the actual maturity of monetary assets or liabilities may differ from contractual terms based on both verbal agreements between the parties and addenda to the contracts which may exist.
10 – 90 day 90 – 180 day 180 – 365 day More than Total As at 31 December 2011 Overdue Overdue Up to From From From Over Total overdue overdue overdue 365 day overdue less than more than 1 month 1 to 3 3 to 12 1 year to 5 years VND million VND million VND million VND million VND million (VND million) 3 months 3 months months months 5 years
Deposit and balance to other Assets credit institutes – gross – – – – – Cash and gold on hand – – 5,115,002 – – – – 5,115,002 Deposit – – – – – Balances with the SBV – – 4,465,664 – – – – 4,465,664 Loans and advances – – – – – Balances with and loans to other Derivatives – – – – – credit institutions – – 20,491,965 11,424,920 8,370,296 2,661,947 241,638 43,190,766 Derivatives – – 437,134 – – 437,134 Loan and advance to Securities held for customers – gross 3,542,847 764,266 560,340 195,821 5,063,274 trading – gross – – 61,696 (5,830) (1,594) – – 54,272 Loans and advances to Investment securities – gross – – – – – customers – gross 1,777,159 4,323,409 6,611,609 14,029,611 15,774,110 8,221,267 12,714,300 63,451,465 Available for sale – – – – – Investment securities – gross – 1,248,071 2,844,840 13,270,920 27,647,779 3,355,093 48,366,703 Held to maturity – – – – – Long term investments – cost – – 76,905 – – – – 76,905 Others assets – – – – – Fixed assets and 3,542,847 764,266 560,340 195,821 5,063,274 investment properties – cost – – – – – – 1,614,540 1,614,540
Other assets – – 10,611,952 560,000 2,329,550 1,726,953 – 15,228,455 Details of financial and non-financial assets obtained by Techcombank during the period by taking possession of collateral held as 1,777,159 4,323,409 49,119,998 28,853,541 39,743,282 40,257,946 17,925,571 182,000,906 security against loans and advances as well as calls made on credit enhancements and held at the period/year ended are shown below: Liabilities 31/12/2011 31/12/2010 Amounts due to the VND million VND million Government and the SBV – – 2,617,602 700,000 – – – 3,317,602 Real estate 87,810,510 60,946,949 Deposits and Equipment and machinery 50,440,043 53,810,924 borrowings from Valuable papers 11,720,772 10,873,169 other credit Other collaterals 17,195,980 15,542,215 institutions – – 18,585,342 12,146,724 14,453,796 2,410,658 536,223 48,132,743 Deposits from 167,167,305 141,173,257 customers – – 68,333,496 15,897,530 3,532,264 872,183 12,306 88,647,779 Other borrowed and (iii) Liquidity risk entrusted funds – – 5,003 14,412 127,848 101,291 3,844 252,398 Liquidity risk arises in the general funding of Techcombank’s activities and in the management of positions. It includes both the risk of Valuable papers issued – – 3,843,892 3,157,744 9,148,255 6,500,006 444,248 23,094,145 being unable to fund assets at appropriate maturities and rates and the risk of being unable to liquidate an asset at a reasonable price Other liabilities – – 3,286,876 342,118 711,956 228,913 831 4,570,694 and in an appropriate time frame. – – 96,672,211 32,258,528 27,974,119 10,113,051 997,452 168,015,361 Net liquidity gap 1,777,159 4,323,409 (47,552,213) (3,404,987) 11,769,163 30,144,895 16,928,119 13,985,545
116 Techcombank Annual Report 2011 Techcombank Annual Report 2011 117 Notes to the Consolidated Financial Statements (continued) Notes to the Consolidated Financial Statements (continued) For the year ended 31 December 2011 l Form B05/TCTD-HN For the year ended 31 December 2011 l Form B05/TCTD-HN
38. Risk management disclosure (continued) 38. Risk management disclosure (continued) (iii) Liquidity risk (continued) (iv) Market risks Interest rate risk As at 31 December 2010 Overdue Overdue Up to From From From Over Total Techcombank’s operations are subject to the risk of interest rate fluctuations to the extent that interest-earning assets and interest- less than more than 1 month 1 to 3 3 to 12 1 year to 5 years bearing liabilities mature at different times or in differing amounts. Some assets have indefinite maturities or interest rate sensitivities and (VND million) 3 months 3 months months months 5 years are not readily matched with specific liabilities. Assets Cash and gold on hand – – 4,316,209 – – – – 4,316,209 The following tables show Techcombank’s assets and liabilities categorised by the contractual re-pricing or maturity date and the effective interest rates at the balance sheet date. Balances with the SBV – – 2,752,951 – – – – 2,752,951 Balances with and loans to other Average VND interest rates credit institutions – – 31,065,969 5,759,057 8,489,859 948,311 – 46,263,196 Securities held for As at 31 December 2011 Up to From 1 to From 3 to From 6 to Over trading – gross – – 258,994 – 307,614 – – 566,608 one month 3 months 6 months 12 months 1 year Loans and advances to % % % % % customers – gross 1,230,406 1,398,388 6,396,894 11,291,873 15,431,072 8,075,315 9,103,909 52,927,857 Assets Investment securities – gross – – 457,063 777,380 9,589,860 17,581,961 3,218,000 31,624,264 Balance with and loans to other credit institutions 14.57 16.00 15.29 13.28 14.50 Long term investments – – 660 – – – 68,985 69,645 Investment securities 19.89 20.69 18.55 17.61 21.15 Fixed assets and Loans and advances to customers 13.44 13.08 13.66 15.21 14.00 investment property – cost (restated) – – – – – – 1,262,766 1,262,766 Liabilities Other assets – – 3,552,912 4,077,000 3,837,767 – – 11,467,679 Debts from government and SBV 14.00 15.00 – – – 1,230,406 1,398,388 48,801,652 21,905,310 37,656,172 26,605,587 13,653,660 151,251,175 Deposits and borrowings from other Liabilities credit institutions 13.67 14.66 13.89 13.88 13.50 Amounts due to the Deposits from customers 13.42 13.96 13.96 13.88 12.56 Government and Other borrowed and entrusted funds 7.50 11.45 13.00 13.92 the SBV – – 8,091,316 – – – – 8,091,316 Valuable papers issued 0.00 14.00 14.00 11.71 – Deposits and borrowings from other credit Average USD and other foreign currencies interest rates institutions – – 14,730,998 4,101,947 7,186,399 954,160 809,610 27,783,114 Deposits from As at 31 December 2011 Up to From 1 to From 3 to From 6 to Over customers – – 50,507,192 17,854,894 9,442,145 2,686,608 59,914 80,550,753 one month 3 months 6 months 12 months 1 year Derivatives and other % % % % % financial liabilities – – 49,692 3,754 (558) – – 52,888 Assets Other borrowed and entrusted funds – – 2,153,536 2,264,485 1,170,172 1,048,667 4,230 6,641,090 Balance with and loans to other credit institutions 5.56 4.43 6.79 7.40 3.70 Valuable papers issued – – 855,034 1,038,496 4,777,651 8,352,404 632 15,024,217 Investment securities 7.33 6.05 4.57 6.75 – Other liabilities 532,314 722,451 1,455,345 47,844 722 2,758,676 Loans and advances to customers – 5.00 3.50 4.93 4.47 – – 76,920,082 25,986,027 24,031,154 13,089,683 875,108 140,902,054 Liabilities Net liquidity gap 1,230,406 1,398,388 (28,118,430) (4,080,717) 13,625,018 13,515,904 12,778,552 10,349,121 Deposits and borrowings from other credit institutions 2.55 3.42 2.84 2.51 4.44 Deposits from customers 1.82 1.53 2.39 2.02 3.32
118 Techcombank Annual Report 2011 Techcombank Annual Report 2011 119 Notes to the Consolidated Financial Statements (continued) Notes to the Consolidated Financial Statements (continued) For the year ended 31 December 2011 l Form B05/TCTD-HN For the year ended 31 December 2011 l Form B05/TCTD-HN
38. Risk management disclosure (continued) 38. Risk management disclosure (continued) (iv) Market risks (continued) (iv) Market risks (continued) Average USD and other foreign currencies interest rates (continued) Average VND interest rates
As at 31 December 2011 Overdue Free of Up to From 1 to From 3 to From 6 to Over Total As at 31 December 2010 Up to From 1 to From 3 to From 6 to Over (VND million) interest 1 month 3 months 6 months 12 months 1 year one month 3 months 6 months 12 months 1 year % % % % % Assets Cash and gold on hand – 5,115,002 – – – – – 5,115,002 Assets Balances with the SBV – 4,465,664 – – – – – 4,465,664 Balance with and loans to other credit institutions 11.58 12.79 11.86 12.47 12.08 Balances with and Investment securities 8.00 10.73 11.89 13.17 11.31 loans to other credit institutions – 14,567,386 7,467,034 10,690,517 5,581,195 4,434,634 450,000 43,190,766 Loans and advances to customers 14.66 15.94 15.61 16.04 15.28 Securities held for trading – gross – 437,134 – – – – 437,134 Liabilities Derivatives – – 61,696 (5,830) (194) (1,400) – 54,272 Borrowings from the Government and SBV 8.00 – – – – Loans and advances to Deposits and borrowings from customers – gross 6,251,731 – 52,516,375 2,138,716 1,070,642 170,682 1,303,319 63,451,465 other credit institutions 9.25 13.19 10.47 12.09 10.50 Investment securities – 958,072 1,177,839 3,144,840 10,724,840 17,756,240 14,604,872 48,366,703 Deposits from customers 13.27 13.15 11.78 11.83 11.06 Long term investments – 76,905 – – – – – 76,905 Other borrowed and entrusted funds 11.97 12.06 12.34 11.60 9.05 Fixed assets and Valuable papers issued 8.60 8.60 8.60 10.38 8.60 investment property – cost – 1,614,540 – – – – – 1,614,540 Other assets – 10,236,656 375,296 1,110,000 1,254,550 2,051,953 200,000 15,228,455 Average USD and other foreign currencies interest rates 6,251,731 37,471,359 61,598,240 17,078,243 18,631,033 24,412,109 16,558,191 182,000,906 Liabilities As at 31 December 2010 Up to From 1 to From 3 to From 6 to Over Amounts due to the one month 3 months 6 months 12 months 1 year Government and % % % % % the SBV – – 2,617,602 700,000 – – – 3,317,602 Deposits and Assets borrowings from Balance with and loans to other credit institutions 1.82 1.74 2.61 3.69 – other credit institutions 11,438,238 7,888,799 12,507,902 7,156,456 8,641,348 500,000 48,132,743 Loans and advances to customers 4.50 5.40 5.70 6.50 7.16 Deposits from customers – 11,364,043 56,945,048 16,009,547 2,590,613 1,628,207 110,321 88,647,779 Liabilities Other borrowed and Deposits and borrowings from SBV entrusted funds – – 5,003 235,122 11,790 – 483 252,398 and other credit institutions 1.49 1.83 2.45 3.78 – Valuable papers issued – – 4,288,104 3,157,744 2,630,864 10,017,391 3,000,042 23,094,145 Deposits from customers 1.51 3.65 3.93 3.96 4.95 Other liabilities – 4,098,117 – 472,577 – – – 4,570,694 – 26,900,398 71,744,556 33,082,892 12,389,723 20,286,946 3,610,846 168,015,361 Interest sensitivity gap of balance sheet items 6,251,731 10,570,961 (10,146,316) (16,004,649) 6,241,310 4,125,163 12,947,345 13,985,545 Interest sensitivity gap of off-balance sheet items – – – – – – – – Total interest sensitivity gap 6,251,731 10,570,961 (10,146,316) (16,004,649) 6,241,310 4,125,163 12,947,345 13,985,545
120 Techcombank Annual Report 2011 Techcombank Annual Report 2011 121 Notes to the Consolidated Financial Statements (continued) Notes to the Consolidated Financial Statements (continued) For the year ended 31 December 2011 l Form B05/TCTD-HN For the year ended 31 December 2011 l Form B05/TCTD-HN
38. Risk management disclosure (continued) 38. Risk management disclosure (continued) (iv) Market risks (continued) (iv) Market risks (continued) Average USD and other foreign currencies interest rates (continued) Average USD and other foreign currencies interest rates (continued) The following table estimates the sensitivity of profit or loss for the year ended 31 December 2011 and equity as at 31 December 2011 of As at 31 December 2010 Overdue Free of Up to From 1 to From 3 to From 6 to Over Total Techcombank from the assumed increase in lending and funding interest. The result is reversed from the assumed decrease in lending (restated) interest 1 month 3 months 6 months 12 months 1 year and funding interest. (VND million)
Assets Currency Increase in interest rate Sensitivity of profit or loss Sensitivity of equity Cash and gold on hand – 4,316,209 – – – – – 4,316,209 2011 2011 2011 Balances with the SBV – 2,752,951 – – – – – 2,752,951 (VND million) (VND million) Balances with and loans to other credit VND 3.0% 313,937 235,453 institutions (restated) – – 26,231,383 9,425,931 6,946,196 3,659,686 – 46,263,196 USD 1.5% (53,263) (39,947) Securities held for trading – gross – 379,954 – – – 186,654 – 566,608 Currency risk Loans and advances to Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Techcombank customers – gross 1,030,033 – 39,423,140 7,116,044 2,977,314 2,089,160 292,166 52,927,857 was incorporated and operates in Vietnam, with VND as its reporting currency. The major currency in which Techcombank transacts Investment securities – gross – – 829,460 1,077,380 3,395,505 13,414,919 12,907,000 31,624,264 is VND. Techcombank’s loans and advances were mainly denominated in VND with the remainder mainly in USD. However, some of Long term investments – 69,645 – – – – – 69,645 Techcombank’s other assets are in currencies other than the reporting currency and USD. Techcombank’s management has set limits Fixed assets and on positions by currency. Positions are monitored on a daily basis and hedging strategies used to ensure positions are maintained within investment property established limits. – Cost (Restated) – 1,262,766 – – – – – 1,262,766 Other assets – 618,336 8,995,212 410,126 1,228,980 215,025 – 11,467,679 1,030,033 9,399,861 75,479,195 18,029,481 14,547,995 19,565,444 13,199,166 151,251,175 Liabilities Amounts due to the Government and the SBV – – 8,091,316 – – – – 8,091,316 Deposits and borrowings from other credit institutions – – 20,564,859 1,314,970 2,348,462 2,562,186 992,637 27,783,114 Deposits from customers – – 56,501,005 15,657,865 4,667,202 3,724,681 – 80,550,753 Derivatives and other financial liabilities – 52,888 – – – – – 52,888 Other borrowed and entrusted funds – – 2,153,536 2,264,485 1,170,172 139,241 913,656 6,641,090 Valuable papers issued – – 855,034 1,038,496 4,777,651 3,852,403 4,500,633 15,024,217 Other liabilities – 2,605,914 – – – – 152,762 2,758,676 – 2,658,802 88,165,750 20,275,816 12,963,487 10,278,511 6,559,688 140,902,054 Interest sensitivity gap of balance sheet items 1,030,033 6,741,059 (12,686,555) (2,246,335) 1,584,508 9,286,933 6,639,478 10,349,121 Interest sensitivity gap of off-balance sheet items – – – – – – – – Total interest sensitivity gap 1,030,033 6,741,059 (12,686,555) (2,246,335) 1,584,508 9,286,933 6,639,478 10,349,121
122 Techcombank Annual Report 2011 Techcombank Annual Report 2011 123 Notes to the Consolidated Financial Statements (continued) Notes to the Consolidated Financial Statements (continued) For the year ended 31 December 2011 l Form B05/TCTD-HN For the year ended 31 December 2011 l Form B05/TCTD-HN
38. Risk management disclosure (continued) 38. Risk management disclosure (continued) (iv) Market risks (continued) (iv) Market risks (continued) Currency risk (continued) Currency risk (continued)
As at 31 December 2011 VND USD EUR Gold Other Total As at 31 December 2010 VND USD EUR Gold Other Total (VND million) currencies (VND million) currencies
Assets Assets Cash and gold on hand 1,544,221 401,472 67,538 3,089,053 12,718 5,115,002 Cash and gold on hand 1,257,998 233,759 54,600 2,762,893 6,959 4,316,209 Balances with the SBV 3,003,291 1,462,373 – – – 4,465,664 Balances with the SBV 2,131,347 621,604 – – – 2,752,951 Balances with and loans to other Balances with and loans to other credit institutions 26,708,959 16,065,455 253,864 – 162,488 43,190,766 credit institutions 33,335,723 11,709,452 1,134,668 – 83,353 46,263,196 Securities held for trading – gross 437,134 – – – – 437,134 Securities held for trading – gross 566,608 – – – – 566,608 Derivatives (598,715) (1,306,124) 18,890 1,964,791 (24,570) 54,272 Loans and advances to Loans and advances to customers – gross 41,015,338 11,350,600 417,606 – 144,313 52,927,857 customers – gross 47,204,807 15,753,721 421,980 – 70,957 63,451,465 Investment securities – gross 28,879,124 2,745,140 – – – 31,624,264 Investment securities – gross 44,825,943 3,540,760 – – – 48,366,703 Long – term investment 69,645 – – – – 69,645 Long-term investment 76,905 – – – – 76,905 Fixed assets and investment Fixed assets and investment properties – cost (restated) 1,262,766 – – – – 1,262,766 properties – cost 1,614,540 – – – – 1,614,540 Other assets 11,304,603 159,757 1,818 1,501 11,467,679 Other assets 14,032,837 478,397 1,598 713,135 2,488 15,228,455 119,823,152 26,820,312 1,608,692 2,762,893 236,126 151,251,175 138,849,922 36,396,054 763,870 5,766,979 224,081 182,000,906 Liabilities Liabilities Amounts due to the Government Amounts due to the Government and the SBV 8,091,316 – – – – 8,091,316 and the SBV 3,317,602 – – – – 3,317,602 Deposits and borrowings from Deposits and borrowings from other credit institutions 14,283,902 12,069,170 850,269 516,672 63,101 27,783,114 other credit institutions 28,041,982 19,804,307 218,097 – 68,357 48,132,743 Deposits from customers 65,167,420 14,398,308 910,956 7 74,062 80,550,753 Deposits from customers 71,814,822 15,362,857 874,545 511,912 83,643 88,647,779 Derivatives and other Other borrowed and financial liabilities 560,195 (364,151) (143,156) – – 52,888 entrusted funds 252,398 – – – – 252,398 Other borrowed and Valuable papers issued 14,850,048 2,915,920 – 5,328,177 – 23,094,145 entrusted funds 5,756,161 884,929 – – – 6,641,090 Other liabilities 4,130,621 420,312 9,982 8,861 918 4,570,694 Valuable papers issued 11,049,377 1,798,540 – 2,176,300 – 15,024,217 122,407,473 38,503,396 1,102,624 5,848,950 152,918 168,015,361 Other liabilities 2,628,366 122,387 2,982 3,385 1,556 2,758,676 FX position on balance sheet 16,442,449 (2,107,342) (338,754) (81,971) 71,163 13,985,545 107,536,737 28,909,183 1,621,051 2,696,364 138,719 140,902,054 FX position off-balance sheet (374,572) 732,291 (353,676) – – 4,043 FX position on balance sheet 12,286,415 (2,088,871) (12,359) 66,529 97,407 10,349,121 Total FX position on and FX position off-balance sheet (1,472,395) 1,427,330 36,080 – (30,240) (39,225) off-balance sheet 16,067,877 (1,375,051) (692,430) (81,971) 71,163 13,989,588 Total FX position on and off-balance sheet 10,814,020 (661,541) 23,721 66,529 67,167 10,309,896
124 Techcombank Annual Report 2011 Techcombank Annual Report 2011 125 Notes to the Consolidated Financial Statements (continued) Notes to the Consolidated Financial Statements (continued) For the year ended 31 December 2011 l Form B05/TCTD-HN For the year ended 31 December 2011 l Form B05/TCTD-HN
38. Risk management disclosure (continued) 39. Future commodity contracts (continued) (iv) Market risks (continued) As at 31 December 2010 Currency risk (continued) The following table estimates the sensitivity of the profit or loss for the year ended 31 December 2011 and the equity as at 31 December Nominal value by markets Buying Selling Net 2011 of Techcombank with the assumption that all other variables, in particular interest rates, remain constant in the cases: VND million VND million VND million
Chicago Board of Exchange 1,352 127,171 (125,819) 5% strengthening 5% weakening of London Metal Exchange – 1,568,898 (1,568,898) of VND against USD, VND against USD, Currency EUR and Gold EUR and Gold London International Financial Futures and Options Exchange 151,668 240,328 (88,660) VND million VND million New York Board of Trade 20,789 207,384 (186,595) London Metal Exchange 1,566,546 – 1,566,546 USD 100,350 (110,913) Commodity Exchange. Inc – 83,538 (83,538) Euro 16,131 (17,829) Tocom Japan 22,768 6,823 15,945 Gold 3,903 (4,314) 1,763,123 2,234,142 (471,019) 120,384 (113,056)
40. Commitments 39. Future commodity contracts (i) Capital expenditure Techcombank acts as a broker for its customers in entering into the futures commodity contracts. As at 31 December 2011, Techcombank had no outstanding capital commitments.
As at 31 December 2011 (ii) Leases The minimum lease payments under operating leases commitments are as follows: Nominal value by markets Buying Selling Net VND million VND million VND million 31/12/2011 31/12/2010 Chicago Board of Exchange 160,050 314,016 153,966 VND million VND million Bursa Malaysia 9,278 33,817 24,539 Within 1 year 75,003 1,980 London International Financial Futures and Options Exchange 297,138 3,027 (294,111) Within 2 and 5 years 66,946 164,668 New York Board of Trade 9,162 10,574 1,412 Over 5 years 292,627 266,197 London Metal Exchange 649,893 441,491 (208,402) Tocom Japan 65,437 12,312 (53,125) 434,576 432,845 1,190,958 815,237 (375,721)
126 Techcombank Annual Report 2011 Techcombank Annual Report 2011 127 Notes to the Consolidated Financial Statements (continued) Notes to the Consolidated Financial Statements (continued) For the year ended 31 December 2011 l Form B05/TCTD-HN For the year ended 31 December 2011 l Form B05/TCTD-HN
41. Disclosure on financial instruments 42. Prior year corresponding figures (a) Disclosure of fair value Techcombank has restated the balances as at 31 December 2010 as follows: Circular 210 requires Techcombank to disclose fair value of each class of financial assets and financial liabilities in a way that permits it to be compared with its carrying amount for the purpose of comparing the book value and fair value of these financial instruments. Note 31/12/2010 31/12/2010 31/12/2010 (as previously (Adjustments) (Restated) The following table presents book value and fair value of Techcombank’s financial assets and liabilities as at 31 December 2011: stated) VND million VND million VND million Book value Fair value Balance sheet At fair value Held- to Loans Available- Financial Total of through maturity and for- sale liabilities book value Deposits with other credit institutions 5 46,829,156 (567,960) 46,261,196 profit and receivables determined loss at amortised Investment securities – Held to maturity securities 10 3,923,251 567,960 4,491,211 cost VND million VND million VND million VND million VND million VND million VND million
Financial assets Approved by Cash, gold, silver, gemstones on hand 5,115,002 – – – – 5,115,002 5,115,002 Balances with the State Bank of Vietnam 4,465,664 – – – – 4,465,664 4,465,664 Balances with and loans to other credit institutions – gross – – 43,190,766 – – 43,190,766 (*) Trading securities – gross 437,134 – – – – 437,134 (*) Derivatives and other financial assets 54,272 – – – – 54,272 (*) Loans and advances to Thai Ha Linh Cu Anh Tuan Simon Morris customers – gross – – 63,451,465 – – 63,451,465 (*) Chief Accountant Acting Chief Finance Officer Chief Executive Officer Investment securities – gross – 4,519,013 – 43,847,690 – 48,366,703 (*) Other long-term investments – gross – 76,905 – – – 76,905 (*) Other financial assets – gross – – 15,228,455 – – 15,228,455 (*)
10,072,072 4,595,918 121,870,686 43,847,690 – 180,386,366
Financial liabilities Amount due to the Government and the State Bank of Vietnam and other credit institutions – – – – 51,450,345 51,450,345 (*) Deposits from customers – – – – 88,647,779 88,647,779 (*) Valuable papers issued – – – – 23,094,145 23,094,145 (*) Other financial liabilities – – – – 4,570,694 4,570,694 (*)
– – – – 167,762,963 167,762,963
(*) Techcombank has not determined fair value of these balance because there is no guidance on measurement of fair value under Vietnamese Accounting standards and no available information.
128 Techcombank Annual Report 2011 Techcombank Annual Report 2011 129 Shareholder Information Corporate Information
Change in Equity 2011 Shareholder Categories Banking Licence No. 0040/NH – GP 6 August 1993 In 2011, Techcombank increased its chartered capital from VND 6,932 billion (six thousand, nine hundred and thirty two billion dong) to VND 8,788 billion (eight thousand, seven hundred The banking licence was issued by the State Bank of Vietnam and was valid for 20 years from the date of the and eighty eight billion dong), as approved at the 2011 Shareholders’ Annual Meeting on 33.3% banking licence. The operation period was extended to 99 years under Decision No. 330/QD-NH5 issued by the State Bank of Vietnam dated 8 October 1997. 23 April 2011. Business Registration 055697 7 September 1993 Accordingly, Techcombank increased its chartered capital by VND 1,855 billion Certificate No (one thousand, eight hundred and fifty five billion Dong) from retained profit (VND 1,765 billion 66.7% Individual Shareholders The initial Business Registration Certificate and updates were issued by Hanoi Department of Planning and (one thousand, seven hundred and sixty five billion Dong)) and the reserve for charter capital Institutional Shareholders Investment, of which the most updated was issued on 16 Sep 2011. (VND 90 billion) through issuing 185,589,500 additional shares. These were distributed as follows: Board of Directors Mr. Ho Hung Anh Chairman Number of Shares (2007-2011) (Million shares) Mr. Nguyen Dang Quang First Vice Chairman Existing shareholders Mr. Nguyen Thieu Quang Vice Chairman 1,000 Total volume of 177,589,500 shares (equivalent to VND 1,775 billion) was issued to existing 878.81 Mr. Nguyen Canh Son Vice Chairman Mr. Nguyen Duc Vinh Vice Chairman shareholders at the ratio of 25.6%. 800 693.22 Mr. Stephen Charles Banner Member
600 540.04 Mr. Tran Thanh Hien Member Key personnel Mr. Madhur Maini Member Total volume of 8,000,000 shares (equivalent to VND 80 billion) were issued as stock bonuses 400 364.20 Mr. Stephen Colin Moss Member to high-performing staff or those offering a significant contribution to the Bank’s development. 252.13 200 Board of Management Mr. Nguyen Duc Vinh Chief Executive Officer (to 31/12/2011) The increased chartered capital was used as follows: Mr. Simon Morris Chief Executive Officer (from 01/01/2012) 0 • Investment into head office assets, network equipment: 2.8% 2007 2008 2009 2010 2011 Mr. Pham Quang Thang Head of Small and Medium Enterprise • Investment into IT systems: 47.1% Mr. Le Xuan Vu Head of Strategy and Corporate Development • Supplemental capital for business: 50.1% Ms. Dang Tuyet Dung Head of Personal Financial Service Ms. Bach Thuy Ha Head of Transaction Banking Mr. Phan Thanh Son Head of Treasury & Financial Market Shareholder structure on 31 December 2011 Mr. Nguyen Cong Thanh Head of Corporate Banking Mr. Nguyen Canh Vinh Head of Sales & Distributions No. Shareholder Structure Number of Shares Proportion Mr. Anthony Guerrier Head of Finance and Planning (to 30/06/2011) Mr. Cu Anh Tuan Acting Head of Finance and Planning (from 01/07/2011) I INDIVIDUAL SHAREHOLDERS 292,692,024 33.3% Ms. Do Diem Hong Head of Financial Institutions 1 Board of Directors, Board of Management, Inspection Committee 27,477,803 3.1% Mr. Phung Quang Hung Head of IT & Operations 2 Shareholders holding over 5% 0 0.0% Mr. Nguyen Thanh Long Head of Legal and Compliance Control 3 Other individuals 265,214,221 30.2% Mr. Nguyen Van Tho Head of Human Resources (to 31/10/2011) II INSTITUTIONAL SHAREHOLDERS 586,115,847 66.7% Ms. Tran Thi Diep Anh Head of Human Resources (from 01/11/2011) 1 Vietnam National Textile and Garment Corporation 153,343 0.0% Ms. To Thuy Trang Head of Marketing (to 30/05/2011) 2 Vietnam Airlines Company Limited 24,033,426 2.7% Ms. Le Phuong Phuong Head of Marketing (from 08/09/2011) 3 The Hong Kong and Shanghai Banking Corporation Limited 172,353,345 19.6% Mr. Suleman Chhagla Head of Risk Management (to 30/11/2011) Mr. Truong Gia Tu Acting Head of Risk Management (from 01/12/2011) 4 Masan Corporation 1 0.0% 5 Masan Group Corporation 173,156,468 19.7% Legal representative Mr. Ho Hung Anh Chairman 6 Others 216,419,264 24.6% Registered office 70-72 Ba Trieu Street TOTAL 878,807,871 100.0% Hoan Kiem District, Hanoi, Vietnam
Auditors KPMG Limited Vietnam
130 Techcombank Annual Report 2011 Techcombank Annual Report 2011 131 Branch Network
No Province/City Number of branch 25 1 An Giang 3 44 24 2 Bac Giang 2 38 42 3 Bac Ninh 5 2 31 3 34 4 Binh Dinh 1 Hanoi 15 17 5 Binh Duong 4 18 20 6 Binh Phuoc 1 37 7 Binh Thuan 1 27 29 8 Ca Mau 1 39 9 Can Tho 5 10 Da Nang 10 28 11 Daklak 2 12 Dong Nai 6 13 Dong Thap 1 16 14 Gia Lai 1 15 Hanoi 97 16 Ha Tinh 3 17 Hai Duong 3 18 Hai Phong 9 19 Hue 3 20 Hung Yen 3 19 21 Khanh Hoa 4 10 22 Kien Giang 1 32 23 Lam Dong 1 33 24 Lang Son 4 25 Lao Cai 3 26 Long An 1 4 27 Nam Dinh 2 14 28 Nghe An 4 29 Ninh Binh 1 30 HCMC 92 31 Phu Tho 3 32 Quang Nam 2 11 33 Quang Ngai 2 34 Quang Ninh 4 23 Online information 21 35 Soc Trang 1 6 36 Tay Ninh 1 36 37 Thai Binh 1 Up-to-date investor information: 5 12 7 38 Thai Nguyen 4 https://www.techcombank.com.vn/Desktop.aspx/ 30 Ho Chi Minh City 13 26 39 Thanh Hoa 2 Investors/Shareholder_Notice/Shareholder_Notice 40 43 1 41 40 Tien Giang 1 9 41 Vinh Long 1 22 Visit our investor website for the online version 42 Vinh Phuc 4 of our Annual Report and the latest information 35 43 Vung Tau 6 on our corporate governance practices and 44 Yen Bai 1 recent announcements. 8 TOTAL 307
132 Techcombank Annual Report 2011