Turning Challenges to Opportunities

Techcombank Annual Report 2012 TURNING CHALLENGES TO OPPORTUNITIES

2 Techcombank Annual Report 2012 Techcombank Annual Report 2012 3 05 Corporate Profile 30 People and Community TURNING 6 Financial Highlights 32 People Development CHALLENGES 7 About Techcombank 34 Awards and Accolades 36 Corporate Social Responsibility TO OPPORTUNITIES

Our values are what make us who we are. Our belief is strong and our capabilities are superior. 08 Operations Review 38 Special Features All challenges carry opportunities within. It just requires a clear vision of the path ahead and an ability 10 Chairman Statement 40 Transaction Banking (TB) to chart a course. 13 Chief Excutive Officer Review 42 Trends in E-Banking We have a dynamic team with great enthusiasm led by 16 Significant Achievements 45 Priority Banking committed leaders with insight and experience. We are set on growth and are driven by our confidence. 18 Key Performance Indicators 46 Risk Management We will be stronger and faster for our customers, and will 22 Personal Financial Service (PFS) 50 Brand Marketing surely be the Best Bank in Vietnam. 26 Commercial Banking (CMB) 28 Wholesale Banking (WB) 52 Corporate Governance 54 Corporate Governance Framework 56 Board of Directors (BOD) 58 Board of Directors Standing Committee 60 Supervisory Board 61 Nomination and Remuneration Committee (NORCO) 62 Audit and Risk Committee (ARCO) 64 Board of Management 69 Board Management Responsibilities

70 Audited Financial Statements 73 Independent Auditors Report 74 Consolidated Balance Sheet 77 Consolidated Statement of Income 78 Consolidated Statement of Cash Flows 80 Notes on Consolidated Financial Statements 142 Shareholder Information 144 Branch Network

4 Techcombank Annual Report 2012 Techcombank Annual Report 2012 5 Financial Highlights About Techcombank

As one of the leading joint stock commercial banks in Vietnam, Techcombank is recognised and respected across the financial services industry. We are a strong brand in Vietnam with over 19 years of operation offering complete financial service solutions to retail, corporate, wholesale, and global market customers across Vietnam. The strength of our management team is comparable to the best across international markets and with strategic support from HSBC, our strategic shareholder. We are an institution with a clear vision of being the best provider of financial services in Vietnam.

Who We Are that being a sensitive, respectful and caring or- ships that add value to our communities. We are ganization to both customers and employees an institutional Brand that remains committed to We are the Vietnam Technological and Commer- sets us apart and gives us a unique distinction that vision. cial Joint Stock Bank, more commonly known and character. as Techcombank, and are one of the leading We are an institution that is constantly looking commercial banks in Vietnam. Since our estab- ahead. Our strategic focus has always been to lishment in 1993, we have experienced strong adopt the very best in business ideals and adapt What We Do growth and market performance. With HSBC as to the demanding needs of the modern con- our strategic shareholder, we also have a strong We serve thousands of enterprises and indi- sumer. We have invested in world class tech- and sound financial base. Our distribution net- vidual customers across the country. Through nologies and delivery systems to facilitate our work of 316 branches and 1,247 ATMs are our three core business strategies of Personal distribution across the country and have also spread across the country and linked to each Finance Services, Small and Medium Enterprise put in place international standard processes other through our state-of-the-art banking tech- Banking and Wholesale, we are able to offer for product development solutions. Our people nology. We have a committed workforce of over financial products and services that address are experienced, international, capable and per- 7,000 professionally trained staff, and are very the needs of different and diverse categories of sonal. Professionalism is the mark of our identity well positioned as a premium financial services customers. We are confident that by continuous and our vision is aimed at being the very best institution in the country. innovation on all aspects of our product and ser- financial solutions provider, an ideal employer, vice delivery, we will able to achieve our ultimate and a strong socially conscious corporate entity goal of becoming the Best Bank in Vietnam. in Vietnam. Our Outlook Our experience of almost two decades and our Towards Tomorrow extensive distribution network spread across 43 provinces and centrally governed cities give us Today, we are a truly modern bank that has the strength and the advantage of being well learnt from its experience and formulated a vi- placed to understand the needs of the Vietnam- sionary view of its future. Our teams are interna- ese consumers across the country. Our vision tional while our heart is local. Our capabilities are is clear and simple. Our first and constant drive world class while our delivery systems are per- is to be the best bank in Vietnam, offering the sonal and we are also a bank that thinks beyond very best solutions for our customers. Simulta- banking. As an institution, we constantly work neously, we also want to be an ideal employer to maintain close ties to the broader spaces in for each and every one of our staff. We believe society through building and sustaining relation-

6 Techcombank Annual Report 2012 Techcombank Annual Report 2012 7 Annual Report 2012 Operations Review

Insightful leadership

Our commitment to excellence is nurtured not just by insightful leadership but also by inspiration. Our clarity of vision and our dedication to development will propel us ahead through every challenge.

8 Techcombank Annual Report 2012 Techcombank Annual Report 2012 9 Chairman Statement

A renewed commitment to our values and leadership.

Capital Adequacy Dear Valued Shareholders and Partners, Ratio Strengthened At the outset, I take this opportunity to wish you This year, we have further strengthened our portant to delivering our mission than our peo- all a very prosperous ‘year of the water snake’ Board with two new members. ple. Our board members, business leaders, by 1.2% to 12.6% and hope that it will bring you much success, frontline staff and our strategic partners bring Mr. Do Tuan Anh has many years of insightful wellbeing and happiness. our values to life every day as they serve cus- governance at Techcombank prior to which he tomers and shareholders. 2012 has been a year of challenges. Not just for gained valuable experience through senior roles the Vietnamese economy, but in the context of at the State Bank of Vietnam. I am proud to be the Chairman and a sharehold- world business in general and the banking sec- er of this bank and I remain very optimistic about Mr. Lee Boon Huat as Independent Director tor in particular. During these times of volatility, what the future holds for us as we look ahead. brings to Techcombank over 30 years of multi- our bank has not been an exception. We have On behalf of the Board of Directors, I express national experience from some of the best finan- endured an exceptionally challenging finan- my sincere thanks to all of you for your loyalty cial services institutions. cial year which has affected our performance. and support for Techcombank over many years. However as a good consequence, the bank has The Bank today is forward looking and driven As we enter our 20th anniversary of incorpora- been able to achieve clarity on focus and direc- by an enthusiasm to make business decisions tion in 2013, I am confident that your trust in us tion looking ahead at what we need to do to re- as close to the customer as possible. This be- is very well placed and will be rewarded. The engineer success. To this end, we have carved a lief is driven by our core values of keeping the Bank has the right focus and the right leaders path ahead that will take us forward towards re- customer first, a desire for continuous improve- looking ahead to transform our business build- gaining lost momentum and getting back on our ment and innovation, a spirit of co-operation ing on our capabilities and experience. I look journey to become the ‘Best Bank in Vietnam’. and teamwork, our focus on developing people forward to working closely with our leadership and skills continually, and the strength of build- While the year has been challenging, 2012 has team and all our stakeholders and partners to ing personal commitment and accountability at also been a year of commitment and planning. build bigger and better for our customers, our all levels across the bank. These will form our The Board of Directors, the CEO, and the man- shareholders, our staff and our communities. core character in building a strong and sustaina- agement team have worked well together on ble foundation of success and creating superior re-shaping the business strategy and translated shareholder value. These values also guide our that into personal achievement objectives for commitment to help our communities live better. the staff at the bank. This has been a key focus all through the year aimed at building long term Looking ahead at 2013, while there may well institutional commitment. be more challenges coming our way, we will be working to turn them into opportunities and It is also important in terms of building the scale Ho Hung Anh break away from being reactionary to craft a and experience to strengthen our asset quality Chairman vision of exemplary leadership. This vision will and our performance ratios. Good corporate be built on a simple outlook of ‘Doing the right governance is good business. We are leverag- things right’. This is a simple process that will ing the knowledge and insights of the bank’s drive our collective vision of becoming a clear leadership team and the Board of Directors who market leader in Vietnam. Nothing is more im- have deep experience in this area.

10 Techcombank Annual Report 2012 Techcombank Annual Report 2012 11 Chief Executive Officer Review

The economic demographics of the country are exciting and present a massive opportunity for value creation.

As CEO of Techcombank, I am privileged to lead As we progressed into the mid-year and be- awards motivate us to try even harder to im- a young and vibrant team who will undoubtedly yond, uncertainties started to have adverse prove our service levels constantly and consist- go on to build great successes for the bank effects on the business outlook. These uncer- ently. in the future. In our world of financial services, tainties then progressed to affect consumer and 1.Best Emerging Market Bank in Asia trust and confidence are of prime importance business sentiment resulting in decreasing con- by Global Finance. and in these challenging times, it is the quality sumer spending levels and financial borrowing of our people, enhanced risk controls and the ultimately leading to market stagnation. 2.Best Cash Management Bank in Vietnam strength of our Brand that generates confidence by Asian Banking & Finance In addition to economic factors, regulation is amongst our customers, our shareholders and also playing a greater part in our business. In- 3.Best Trade Bank in Vietnam by Asian Bank- our community. creased regulation is an inevitable outcome of ing & Finance The bank exists to provide services to its cus- any financial crisis. The most significant areas of 4.Best Bank in Vietnam tomers and nothing could have been achieved reform relate to the amount and quality of capital by Alpha South East Asia without the unwavering support of our custom- adequacy, liquidity requirements, and the quality ers. As a service organisation we will only create of financial instruments and advice. 5.Best FX Bank for Corporates & FIs value if we put, really put, customers at the very by Alpha South East Asia Our management team is committed to deliver- heart of our bank. 111,462 bn VND ing long term, sustainable, value to our share- 6.Best Trade Finance Bank in Vietnam Operating Environment holders. We also realise that our short term by Global Trade Review performance is important to you, particularly our Over the past year, the global economy has 7.Best Bank in Vietnam – by Finance Asia ability to drive high quality profitable growth and Total Deposit Grew continued to feel the effects of the global fi- sustained shareholder value. 8. Best Cash Management Bank in Vietnam nancial crisis and the on-going market volatility by Corporate Treasurer by 26% continues to limit economic growth. This reality Our challenge is to ensure that the Bank adapts has been felt throughout the world and naturally to the significant economic, regulatory and de- 9. Best Trade Finance Bank in Vietnam Vietnam is not immune to this. Consequently, livery challenges in our operating environment, by Corporate Treasurer this past year has been both challenging and by building a growth platform in the short term. 10.Domestic Retail Bank of the Year - Vietnam transitional for Techcombank. It was challenging Acknowledging the strong support of our cus- by Asian Banking & Finance because of market volatility and it was transi- tomers and the quality of our people and their tional because we have taken significant steps 11.Best Domestic Bank in Vietnam professional capabilities, 2012 also saw the to improve our asset quality and maintained by The Asset Bank being recognised in Vietnam and across capital adequacies to position our bank for fu- Asia as one with unique capabilities and funda- ture growth. 12.The Strongest Bank in Vietnam mental strengths. by The Asian Banker 2012 began with some measured optimism Over the course of the year, it was humbling for around the economic scenario in Vietnam and us to be awarded 12 prestigious citations that the outlook for financial institutions in general. cover the breadth of our businesses. These

12 Techcombank Annual Report 2012 Techcombank Annual Report 2012 13 to adopt new policies that will build institutional that Masan Group Corporation, one of our ma- Simplicity strength and help maintain healthy portfolios jor shareholders, is among Vietnam’s leading Our customers are telling us that they want going forward. Key highlights of the risk focus private sector companies. things simpler, so they can have more control plan include loan policy evaluations & refine- of their lives and what they do. We are progres- Segment Growth ments, loan quality and concentration reporting, sively applying new research will enable cus- Sharpening our focus with a clear and practi- risk management reviews, credit analysis pro- tomer insights to play a greater part in product cal vision will drive on-going growth. Our Priority grams, loan portfolio due diligence programs, design. That helps us create more intuitive prod- services under the ‘Personal Financial Services’ documentation reviews, portfolio reviews, stress ucts and services, readily understandable to our umbrella continues to build momentum and has testing and enhanced Risk Governance through customers and more tailored to their individual received strong appreciation across the country. Risk Working Groups at the Board of Manage- needs. This will help us get greater insights into In particular an opportunity exists to broaden ment, operating businesses and support division the economy, and assist us to tailor better prod- our relationship with our Small and Medium En- levels. These initiatives have been put in place ucts for customers and price for risk more ef- terprises customers. We will continue to drive to ensure a robust Enterprise Risk Management fectively. share growth in business and institutional bank- process inclusive of all potential Risks. We have ing, and to continue to build on our superior ca- also initiated work on the Basel-II Project so as Efficiency pabilities in our global markets division. to be well prepared in terms of compliance to Through all economic climates, the Bank needs regulatory requirements. Our strategic direction People to focus on finding better ways of delivering on Risk parameters and our investment in build- We will continue to actively build a culture based products and services to our customers, while ing rigorous lending standards holds a long term on high integrity, collaboration, individual and at the same time improving efficiency. We are view and will certainly serve us well over time. collective accountability, and pride. We will in- devoting considerable management attention to an internal productivity programme, to improve Management vest in our people through enhanced talent pro- the core processes in our businesses. In addi- At this stage it is also timely to highlight the key grammes, though our renewed commitment to tion to making them more customer-friendly and enhancements that we have made to the senior our business growth goals, and by ensuring that lationships that add value to the community, portunities that exist within Vietnam for banks efficient in the long term, this programme will management team or Board of Management. I our people continue to enjoy a safe, supportive particularly in educational Support. The key to that will emerge as winners in the long term. also address our cost management in the short am happy that we have been able to combine and encouraging work environment. strengthening relationships with the community The economic demographics of the country are term. local talent with internationally experienced sen- is not through big brand campaigns or glossy exciting and present a massive opportunity for Customer Focus Building for Growth ior bankers. Highly experienced bankers have reports; rather it is building long term committed value creation. As our country develops it is es- Our efforts to move our business decisions clos- Sustainability Whilst the market economic outlook for 2013 joined the bank in many key roles such as Chief partnerships starting at the grass roots level. The sential that our bank anticipates our business er to our customers are focused on four core Throughout the organization, we embrace the still contains uncertainties, the bank has already Risk Officer, Group Chief Financial Officer to Techcom Brand remains committed to that vision. and retail customers needs to maintain a market themes: Convenience, Simplicity, Efficiency and broader responsibility to the communities in realigned towards a forward looking vision of name just two. Details of our new Board of Man- leading position. Sustainability. In these challenging times our which the Bank operates. My team and I are The Path Ahead success. This is a necessary reality and one that agement are available on our website at www. customers need, and deserve, consistent and committed to building on the proud legacy that As a result of the Global Financial Crisis there The Bank is well positioned for the future and will no doubt shape our future. techcombank.com.vn. high quality service and support from our bank. has built the Techcom Brand. In doing so, we has been increased negative sentiment towards while challenges may well present themselves Risk Approach Partners need to be active and responsible members of financial institutions, even in countries where throughout 2013, I am confident that our Bank We learned through the financial crisis that a Internal initiatives apart, we have also contin- Convenience our broader community. Recent experiences of banks have remained strong. As one of Viet- has the ability to continue to deliver superior strategic and integrated approach to Risk man- ued to receive direct support from HSBC, our Increasingly our customers want to interact with major financial institutions highlight the fragility nam’s leading financial institutions, we need to long term performance for our customers, our agement is critical to long-term sustainability. It strategic partner, through our Technical Ser- us while doing other things at home, at a work- of reputation, and the potential for a single in- acknowledge and respond to these concerns. shareholders, our people and the communities vices Agreement. During 2012 alone, we have cident to undermine years of effort in building in which we operate. is a strategic priority for us to maintain this fo- place, or while on the move. At the same time, The progress we have made in 2012 is a direct hosted twelve different HSBC executives who reputation. Our reputation is our most valuable cus and to strengthen our Risk platforms and of course, many customers still want to visit our result of the commitment of our people, and our Best wishes , were temporarily assigned to roles that ena- asset, and it is the responsibility of all our people Management. This priority impacts our deci- branches. To meet this trend, we need to ensure partners who have continued to provide strong bled them to transfer knowledge and skills. The to preserve and enhance it. The Bank continues sions on balance sheet structure specifically that people can interact with us whenever and support for all of our stakeholders in a challeng- HSBC assignees worked in diverse areas such to be committed to our customers and our com- levels of capital, liquid assets, and customer however they wish, ensuring that their experi- ing environment. It was a year when we faced as Finance, Risk, Human Resource, IT and Op- munity. Apart from local community programs, asset compositions across business segments ence is a real time one of high quality and even and took many difficult decisions in order to erations, Personal Financial Services and Sales our Corporate Social Responsibility platform ini- through clearly defined Risk and Credit Risk Ap- higher service satisfaction ratios. Our superior ensure that the bank has a strong foundation and Distribution. tiatives in 2012 included our continuing educa- petite Frameworks. We will also be looking at technology platform and our continuing invest- for future growth. I am confident that our longer tional support through our ‘Red Scarf’ program. deposit Funding as well as sources and duration Furthermore, our own domestic insights on bet- ment in building a customer centric operational term approach basing our growth on strong This year, we are also delighted to report that of wholesale funding. This focus also requires a ter understanding Vietnamese market needs platform will further strengthen our resolve to foundations, sound and consistent risk practic- the program was also co-supported by HSBC, thorough approach to identifying and mitigating and consumer behaviour to design and develop move our business delivery closer to our cus- es, and superior customer service is a strategy Simon Morris our strategic partner. operational risks in our business through clearer relevant, customer centric products and ser- tomers. that all stakeholders recognise as being right. Chief Executive Officer policies, processes and stricter control mecha- vices have been our focus over the past year The Bank will maintain close ties to the broader We have said little about the unparalleled op- nisms. We have re-calibrated our Risk Strategy and continues to be so. We are also fortunate community through building and sustaining re-

14 Techcombank Annual Report 2012 Techcombank Annual Report 2012 15 Fundamental Achievements New Headquarters and deliver positive impact to every aspect of Aligned with our commitment to reinvesting to the bank. Significant Achievements Convenient Banking Technology better serve our customers, in 2012 we have In 2012, Techcombank established the Whole- Technology has always been the focus of our taken a huge step by relocating our new head- sale Banking Division (WB) in order to better bank and considered as one of the best amongst quarter to one of the most facilitating and mod- serve the requirement of corporate customers local banks. Year 2012 was no exception as we ern buildings in the country, located at down- for more sophisticated banking services. This continued to invest into this field in order to build town of Hanoi - 191 Ba Trieu Street. It is where was a logical step and represented a major our “Convenient Banking Technology” aiming at we believe that we could provide customers the initiative in transformation program of Techcom- the convenience of our customers. One of the highest quality services and in turn an enhanced bank to become a leading Joint Stock Commer- highlights was the enhancement of our F@st i- banking experience with us. This is a step for- cial Bank in Vietnam. Succesful businesses are those that adapt to market changes efficiently bank where customers can pay electricity bills ward built on the trust and love that our custom- issued by 200 nationwide electricity branches, ers have for us. Prestigious International Awards Viettel, MobiFone telephone fee, ADSL FPT fee, and design solutions around customer needs. We have received 12 prestigious awards from AceLife, Prudential Life insurance fee etc. In Leadership Team and Corporate Structure some of the world’s leading and most highly- addition, F@st i- Bank can be used to receive Experts and specialists with strong expertises in regarded financial magazines such as Global Western Union overseas national currency ex- various areas of banking coming from leading Finance, The Asian Banker, Finance Asia and change and to pay air tickets issued by 25 in- multinational financial backgrounds have joined The Asset. The number of awards has been on ternational airlines. Another achievement worth Techcombank leadership team over the course a rising trend since 2010, exceeding the then noting was the introduction of cardless with- of 2012 (for detailed, refer to our Corporate Operational Achievements considered unprecedented number of 10 inter- drawal, where customers can make payment Governance section). With a single purpose of national awards we won in 2011, recognizing a Products the jobs. This unloaded the operational and ac- Risk Management strategy, most notably were and withdraw without cards. helping the bank realize its vision, these rein- year of commitment and guidance. To fulfil our role as a bank that strives everyday counting work from Sales and Distribution team secured lending; a diversified loan book; low forcements will no doubt strengthen our team to serve its customers in the most convenient and freed their time to focus on better servic- real estate exposure; streamlined processes; way, we have introduced the newly developed ing our customers better and enhance the total investment in people and systems; and prudent bundled current accounts that pack in all the banking experience our customers have with risk policies. Sum of these factors has proven features and benefits that traditionally can only every aspect of our banking services. to be effective with Non-Performing Loans be- be acquired from various products. No longer ing lower than last year, standing at 2.7%. Also, Network customers have to visit the bank and sign mul- being prudent in our approach, we have actively Defying the unfavourable conditions and many tiple paperwork. Our customers can now enjoy raised our provisional reserves by 27%, cur- challenges that have forced many banks to face all that they want with our innovative solutions rently standing at VND 1,127 billion. The result a choice of either shrinking down or making specifically tailor-made to their needs. of our exhaustive efforts is that we were rated loss in 2012, we, Techcombank have not only A (the highest score amongst Vietnam based Services maintained our relatively extensive network but banks) by CRV for credit rating. Besides just products, we also aim to bring to managed to increase our number of Branches our customer an enjoyable total banking expe- to 316, and our ATMs to 1,247, remaining one Community Responsibilities rience. We have extended our comprehensive of the largest banking networks in the market. Our flagship program “Techcombank – Red loyalty program from being only offered to indi- Scarf”, which carries the motto “Every child has Customer vidual customers to also cover business clients. the right to a good education”, continues to Keeping customers in a booming economy is Now all our customers, whether they are indi- be a compelling example of our effort in build- a difficult task but achieving the same thing in vidual or business clients, can enjoy the extra ing a better community for everyone. In 2012, such a decelerated and unstable economy like benefits on top of what is already considered the program awarded 1,900 scholarships to ours at the moment is indeed a goal that not one of the best services in the market. underprivileged children. In the same direction many businesses in general and banks in par- of helping the young generation, Techcombank The result has been considerable to both the ticular would set out to accomplish. Yet, our has co-founded the ‘Viet-Seed’ fund in partner- bank and its customers as more than half of our number of individual customers has risen to ship with ‘The People’ newspaper group. The customers now use more than 1 product offered an unprecedented number of 2.8 million from fund saw Techcombank contributed initial capi- by the bank. 2.3 million in 2011, representing an increase of tal of VND 5 billion to support our young talents. 20.5% Operational Excellence Since commenced, 15 students with good track With customer needs being at the heart of eve- Risk Management of records have received the scholarship rything that we do, we have centralized all our Knowing that Risk Management is the back- Operational and Accounting activities to single bone of any bank, Techcombank has under- units instead of relying on various functions for taken a number of measures to ensure a robust

16 Techcombank Annual Report 2012 Techcombank Annual Report 2012 17 Key Performance Indicators

The stagnant property market and low economic quality staff from both local and international mar- 700 per share. Return on Assets (ROA) ratio fell activities resulted in a decline in trade income by kets, and especially in risk management, credit from 1.83% to 0.42%, and Return on Equity VND 289 billion. In addition, the subdued capital approval, compliance, and business development (ROE) ratio from 28.87% to 5.58%. market in 2012 caused the underwriting fees on in the South. Additionally, the Bank continued to Balance Sheet bond issuance to drop by VND 207 billion. invest in IT infrastructure and branch offices. This year, we moved to our new head office building in In 2012 Techcombank continued to focus on Due to continued volatility in the markets the Bank Hanoi - The Techcombank Tower. maintaining a strong balance sheet, which re- incurred a trading loss on foreign exchange, gold, mained both diverse and conservatively struc- and securities of VND 136 billion. It was, howev- Together with selective incremental investment in tured. Despite turbulence in banking industry, the er, a substantial improvement of VND 618 billion our foundation, we also implemented a number Bank managed to grow customer deposit by 26% compared to 2011. of initiatives to boost cost-efficiency, one of which to VND 111,462 billion. While loans to custom- was staff and branch network optimisation. Operating expenses increased by VND 1,195 bil- ers increased by 7.6%, the loan-to-deposit ratio lion, or 57%, from last year. This was mainly due Loan loss provision was reported to rise by 324% improved to 57.5%. Meanwhile, the capital ad- to cost increases by 17% (VND 207 billion) in hu- to VND 1,450 billion due to an overall declining equacy ratio climbed by 1.2% to 12.6% as at 31 man resources, 155% (VND 357 billion) in office economy, the adoption of a conservative ap- December 2012, significantly higher than the 9% rental and asset rental, 56% (VND 211 billion) in proach in assessing NPLs and other balance regulatory minimum stipulated by the State Bank office rental and asset maintenance, and 50% sheet strengthening initiatives. of Vietnam. (VND 268 billion) in other expenses. The higher Profit before tax reached VND 1,018 billion, a de- operating costs represent the bank’s committed crease of 76% of last year. Consequently, earn- investment in its human resources by recruiting ings per share shrank 76% from VND 2,902 to

A strategic focus towards future growth.

Executive Summary As a result of Net Interest Margin (NIM) compres- as at the end of 2012 while the loan-to-deposit The testing economic climate of 2012 was a chal- sion from 3.8% to 3.4% and decrease of net fee ratio was maintained at 57.5%, a decrease from lenging year for banking industry in Vietnam. Driv- income, operating income decreased by VND 65.9% in the previous year. en by the headwinds of past year, Techcombank 901 billion, or 14%, to VND 5,761 billion. Our timely and strategic adjustments minimised shifted its focus from asset growth to strengthen- Meanwhile, operating expenses increased 57% the possible downsize, and once again, proved ing its foundation in risk management, balance to VND 3,294 billion. That reflects the continued that the bank is well prepared to stay strong in sheet, credit quality, and Corporate Governance. investment in infrastructure, quality recruitment the most volatile times, and capable to continue This proved to be an effective adjustment that and South business development. its growth in a sustainable manner. helped the Bank maintain its steadfast moves to sustainable growth and market leadership. In the face of the stuttering economy the man- Bank Performance agement adopted prudent risk management Total bank operating income was VND 5,761 bil- Key performance highlights were: policies and more conservative approach in as- lion, a 13.5% decrease from last year. It shows • Total assets decreased by 0.33%, down to sessing NPLs. As a result, provision expenses a great effort by the Bank to minimise loss in the VND 179,934 billion. increased to VND 1,450 billion. economic downturn. • Total deposits (only customer Deposit, exclud- Techcombank also continued to adopt a con- Due to slight compression of NIM’s from 3.8% to ing other Credit institutions) grew by 26%, servative approach to balance sheet manage- 3.4%, net interest income decreased marginally reaching VND 111,462 billion. ment, with a continued emphasis on liquidity and by 3.5% to VND 5,116 billion. At the same time, • Capital Aquadecy Ratio (CAR) increased by capital management. The capital adequacy ratio net fee income decreased by 51%, equivalent to 1.2% to 12.6%. (CAR) increased from 11.4% to a robust 12.6% VND 565 billion.

18 Techcombank Annual Report 2012 Techcombank Annual Report 2012 19 Customer Loans As of the end of 2012, the customer loan balance reached VND 68,261 billion, up 7.6% from 2011. Total loan portfolio growth rate was lower than that of 2011 (20%) as a result of our efforts on improving credit quality and a more prudent lending policy. With our continued focus on the retail segment, loan growth in 2012 was seen to come mainly from the consumer industry and retail customers (up 23.8%). Investment Securities Investment securities reduced marginally by 3.6% to VND 46,654 billion. While government bonds decreased by VND 6,112 billion to 7,608 billion, corporate bond portfolio increased by VND 6,552 billion to VND 26,946 billion. Customer Deposits As a result of our strong franchise, the total deposit grew significantly by 26% to VND 111,462 billion. The growth mainly came from retail deposit of 33.7%, followed by corporate deposit of 10.9%. This strong deposit base will set good foundations for our growing assets base in the years to come.

Capital and Reserves In 2012 capital and reserves gained VND 778 billion, reaching VND 13,290 billion. Profits gen- erated in the year have been re-invested in the business, reflecting a strong commitment from shareholders to support the long-term growth strategy of Techcombank. Furthermore, capital adequacy ratio increased to at 12.6%, higher than last year by 1.2%.

20 Techcombank Annual Report 2012 Techcombank Annual Report 2012 21 Personal Financial Services (PFS)

Business Strategy • Strengthen priority banking value propositions tainable growth. Loan Structure by Product PFS Customers PFS continued to focus on the mass affluent • Enhance credit quality, improve product pro- Deposits The goal is to provide loan services that meet the need of its customers within the risk management Year 2012 showed a strong development of retail segment and priority customers, and remained cesses, and shorten the approval time. Techcombank has maintained a relatively stable framework. Records showed outstanding loans to customers grew by 23.8% over the same period last banking sector. Compared to 2011, the number adeptly responsive to the changing and challeng- and sustainable deposit base among its PFS year as the result of product-based loan structure. Percentage share of home loans in total retail loans of Visa cards rose significantly by 202.5%, from Financial Performance in 2012 ing market by tapping potential opportunities for customers. For the year 2012, its total retail sharply fell to 57% from 77.7% in the previous year. It reflects a shift in customers’ interest from real 126,571 to 382,930, and the number of retail PFS committed to improving how it serves their development. customer deposit gained 34%, reaching VND estate to production and service activities. customers grew 20.5% to 2,806,534. customers. We are constantly reviewing poli- 77,056 billion, an impressive figure considering Strategy focuses on specific areas: cies and procedures related to personal financial the significant fluctuations of the financial market products and service portfolios such as deposits, • Serve the urban mass affluent segment and last year. This figure ranks second among those loans, credit cards and online banking services. affluent segments, which is likely to account for of all commercial joint-stock bank in Vietnam. 55% of households by 2014 as GDP per capita Successful customer services permitted PFS to rises. meet and exceed the target the year. In 2012, PFS met and exceeded many targets. The num- • Innovate and enhance service processes to im- ber of customers rose by 20.5%. Total deposit prove convenience in its service quality. value strongly increased by 34% from that of • Simplify operational processes and diversifica- 2011, showing an impressive achievement in the tion of many products and services. time of high inflation and unstable economic climates of both the world and Vietnam. • Apply advanced technologies to service and product sales programs. The loan ratio and loan structure ratio were well aligned with a prudent risk management ap- Priority business programmes in 2013: proach. Notably, net fee income to total operat- • Fee income driven product focus: Current and ing income ratio climbed from 11.26% in 2011 to Saving Account, Card Services, and Remittance. 17.94% in 2012, indicating the overall focus on fee generating business and a tendency of sus-

22 Techcombank Annual Report 2012 Techcombank Annual Report 2012 23 Achievements and Highlights During 2012, to realise the objectives of service During 2012, PFS continued to enhance relation- step in 2011. In 2012, TCB launched the online cess, credit process, and end-to-end card ser- improvement, product diversification, and in- ship and cooperation with other corporations overseas national currency exchange product, vice process, card utilization activities across key creased products designed for specific customer such as Mercedes Benz, Le Group, Vietnam Air- resulting in an increase of 34% on the transaction The number of ATM/POS grew products, and “one-stop service” practice in ban- segments, PFS launched a number of strategic lines, Peacesoft and Vincom. A new partnership time number, compared to 2011 year-end. from 1,205 to 1,247, and from cassurance business. Its aim is for Techcombank products that drew a positive reaction from cus- was established with AIG in a tourism insurance to become the fastest growing in retail banking Besides focus on product development, PFS 2,101 to 2,149 respectively tomers, of which F@st i-Bank was a highlight. program for Platinum Visacard holders. Agree- in Vietnam. paid special attention to service quality improve- compared to last year. With a convenient payment function and Inter- ments were signed with the previously mentioned ment, aiming to achieve a higher level of cus- In order to enhance the customer experience in net and mobile banking made easy, F@st i-Bank partneships to provide diverse and convenient tomer satisfaction. Training courses for sales staff gold and foreign exchange (FX) products, PFS allowed customers to settle their bills with 200 service packages that better cater the needs of were regularly held, and focused on the estab- has improved the gold product diversification, the nationwide electricity providers, the two major the customers. lishment of a best practice foundation that would Care and Thank You events that appealed to its souvenir gold and custody service, FX counter mobile network providers Viettel and MobiFone, PFS also focused on products with high-tech in- also allow the continual improvement of custom- customers of different regions, genders, and age agency, FX trading and multi-currency remittance ADSL service provider FPT as well as two key novations that brought cardholders better safety, er service. groups. Furthermore, by developing and re-seg- services. The desired competitive advantages insurance companies AceLife and Prudential. security and convenience. Among them were menting priority customer portfolio, we improved are quick processing, competitive price and Furthermore, F@st i- Bank enabled reception of Customer care programs were another significant EMV chip cards, VbV (Verified by Visa) func- the way to manage customers and enhanced packaged benefits. PFS will closely work with overseas national currency exchange through effort. While expanding priority banking to 133 tion and cardless money transfer. Becoming a portfolio efficiency. Risk and Asset Management Company to review Western Union and payment for air tickets with branches by the end of 2012, the Bank deployed member of Western Union was a noteworthy and upgrade retail credit policies, segmentation, 25 international airlines. its priority customer care program with Priority The year witnessed continuous improvements in scorecard, and risk appetite management. diversifying ATM/POS system functions and In- ternet banking. The number of ATM/POS grew Customer care programs, of which the Loyalty from 1,205 to 1,247, and from 2,101 to 2,149 Program “Gan ket ben lau” is considered to be respectively compared to those of the same time a core strategic program, will continue to be a last year. The introduction of Loan Origination priority. Another is to strengthen priority banking System (LOS) was another important achieve- value propositions under the approved strategy: ment in 2012 as the Bank could now speed up exclusivity and convenience. And lastly, develop- the approval process of retail credit documents, ment of priority Relationship Managers will also improving turnaround time and saving cost. be a key focus area. Objectives and Direction in 2013 PFS constantly endeavours to improve service convenience for its customers. Year 2013, therefore, will continue to see improvements in products and processes such as simplified account opening processes, diversification of e-banking transaction service types, enhanced counter pro-

24 Techcombank Annual Report 2012 Techcombank Annual Report 2012 25 Commercial Banking (CMB)

Overview As a crucial part of the success of the Bank, CMB held, and received strong support and positive panded and systematically applied credit-warn- continued to develop products and services to response from customers. This formed a primary ing triggers to each product in the SME segment. support its small and medium enterprises (SMEs) step for a long-term loyalty program between Modules integrated to EWS system provided our and loyal customers in the face of economic Techcombank and its customers in the field of sales forces with tools to track customer activi- challenges. Some of its initiatives were: enterprise management and training. ties in an automated and timely manner. This was recorded as a major advance in managing cen- • Reducing interest rates for total 3,830 enter- CMB continued to be the pioneer in optimizing tralized portfolio. prises in priority groups such as SMEs, export processes, typically those of credit approval, dis- enterprises, and enterprises in support indus- bursement, and collateral management. Specifi- tries in line with the policy of the State Bank cally, we cut down the number of operations and Objectives and Direction in 2013 of Vietnam. processing points, showing exceptional perfor- • Launching tailor-made products that give mance and thereby bringing further valuable time Given difficult macroeconomic outlook in 2013, corporate customers access to stable capi- to customers. Improvements in these processes the target of CMB focuses on three fundamental tals. For example, with the 12-month working pave the way for further advancement of other objectives. capital loan product, customers have the flex- operational procedures in the system. To support its own business development and ibility of choosing principal repayment sched- In 2012, CMB delivered a development strategy risk management, the Division will continue to ule up to 1 year. VND loan with USD interest for the southern market, in which specialized build and strengthen the system fundamentals payment product is another highlight that was teams were set up in the South to carry out busi- (relationship managers capacity, risk manage- well received by our customers. ness development, and product research and ment policy system, IT system, and management • Increasing facilities for priority production in- development for SME segment. To add to the information system - MIS). These are going to be Action Plans for 2013 dustries in line with the direction of the Gov- products developed in 2011 for key sectors in the effective tools that created a sound founda- ernment, essential commodities, commercial the South, some of which were lending products tion for sustainable growth of the Division in 2013 In line with its strategic direction for 2013, CMB • Continue process simplification in multiple • Continue to build and strengthen sales system products, chemicals, fertilizers, health care, to rice, coffee, cashew, and rubber industries, and the following years. will pursue the following action plans: services (credit, deposit, payment, etc.) to im- capacity, and improve productivity and sales etc. CMB proposed and employed many initiatives prove service quality and shorten turnaround performance of each Relationship Managers Meanwhile, as a core of its strategic approach, • Improve the quality of key asset portfolios and new approaches in product development time. Process simplification shall be consistent through (i) improving, finalizing, and standard- the Division will stay abreast of its ever-evolving through customer growth and development and sales stimulation. The new products not only and systematic at all levels of management, in izing sales training topics in accordance with needs of the customers. Market research will be of food, beverage, essential consumer goods, Achievements and Highlights timely catered to the needs of the branches, but internal activities, and in services provided to required standards of professional conducts; further enhanced to capture business models pharmaceutical goods, education, chemicals, also well responded to the characteristics and external parties; (ii) effectively applying the sales management Following the successful implementation of and demands from customers. Accordingly, cur- fertilizer and export sectors. customer conditions of such potential markets system, productivity measurement and moni- phase 1 of “Loyal Corporate Customer Program” rent products will be improved, and new financial • Enhance the Supply Chain Finance (SCF) and • Further research and develop non-financial as South East and West Regions. For the next toring; (iii) strengthening the capabilities of the in 2011, a uniform service quality for corporate solutions created to cater to the needs of each Distributor Finance (DF) programs which aim services for loyal customers such as manage- few years, Techcombank will continue to invest in sales force in agreement with international clients was set across the Bank. Each compo- market geographical area. at supplying stable funding source and maxi- ment training for leaders in SMEs, and bank- infrastructure and human resources for the South standards. nent of the program was upgraded both in quality mizing the benefits of cash flow management ing operation and product training for enter- market, and expect significant breakthroughs in Committed to realize its market share domina- and content. This practice resulted in a positive for sellers and buyers. prise staffs; • Automate the Management Information Sys- terms of market share. tion strategy in the SME segment, the Division feeling from customers about the outstanding • Refine the Qualitative Credit Assessments tem (MIS). Develop data models and analysis will also develop and improve sale process, and • Review and finalize customer policies, includ- financial and non-financial values that the Bank Over the previous two years corporate credit risk system (QCA) for SME and USME segments, methods to improve understanding of cus- introduce new sale channels as shortcuts to its ing service quality, credit, and collateral man- provided. management had witnessed significant changes laying foundation for customer quantitative tomer needs, habits and behaviors. goal. agement policies, to build a sustainable rela- namely Early Warning System (EWS), and Quali- Additionally, several well-designed workshops on tionship with customers. filtering process and designing appropriate crisis management and tax management were tative Credit Assessments system (QCA) for credit policy for each customer segment; Micro SME customers. Entering 2012, CMB ex-

26 Techcombank Annual Report 2012 Techcombank Annual Report 2012 27 Wholesale Banking (WB)

be able to provide a consistent and excellent product development and delivery capability, TCB subsequently decided to incorporate the existing Transaction Banking Division (TB) and Financial Institutions Division (FI) under the recently created WB. Market Division, while separate from WB, will continue to work closely with WB to ensure that its clients can access the entire range of products offered by the Markets Division.

Geographically, Large Corporates team will operate out of the Head Of- fice in Hanoi and Regional Representative Office in Ho Chi Minh City. Meanwhile, Middle Market team will be managed as a starting point through 7 key branches (3 in the North, 3 in the South, and 1 in the Central Region), Other hubs will be established in the future as necessary. For remote clients, services and daily transactions will continue to In 2012, Techcombank established the Wholesale Banking Division (WB) be carried through our extensive local branch network, but with central in order to better serve corporate customers with more sophisticated management by Middle Market team. banking services. This was a logical step and represented a major initiative in the transformation initiatives to become the leading Joint Stock Commercial Bank in Vietnam. The main pillars supporting the WB strategy are based on: i) Clear understanding of the needs of Corporate Clients, ii) Improving the banking- products suite, and iii) Implementing a solid risk appetite management. In order to achieve this objective, the Bank decided to segment all cor- All of these pillars are closely linked to a more efficient credit approval and porate clients, existing as well as potential, into three distinct market seg- portfolio management process. ments according to their annual turnovers and chartered capitals. Those segments are: i) Large Corporates, ii) Middle Market Corporates, and iii) Small and Medium Sized Corporates. The first two are positioned under As Techcombank enters 2013, WB is now running at full speed and is the umbrella of WB and the last under CMB. The following step was to expected to accomplish full strategy implementation by mid-year. For the clearly differentiate services and products required for each segment to coming year WB has adopted ambitious targets and expects to contrib- determine an organizational structure that will ensure delivery of the op- ute with higher revenues to the Bank. timal customer value proposition to all clients in each target segment. To

28 Techcombank Annual Report 2012 Techcombank Annual Report 2012 29 Ours is a personal vision

Strong organizations are committed to their people within, as well as the communities that surround them. We are a bank with this belief and it is a constant driving force behind our initiatives every day of every year. Annual Report 2012 People and Community

30 Techcombank Annual Report 2012 Techcombank Annual Report 2012 31 People Development

People remain the foundation of our success. Our vision is one of Personal Development, Leadership Building and the nurturing of a Collaborative Spirit at every level.

Positioning for Growth We are now halfway through the roadmap for our were tasked with working closely with business technical and soft skills. room for improvement in certain areas. That is if The economic environment of 2012 has once Human Resource (HR) strategy (2010-2014) im- departments on people-related matters. In ad- we wish to see even better performance and re- We also made great efforts in upgrading our again validated the importance of having the plementation and we are starting the final phase, dition, HR Specialist Teams were established to main the institution that talented people preferred We made great efforts in upgrading leadership capabilities by bringing a number of right people performing to their highest potential. as followed: take charge of talent, performance management, to work for. our leadership capability by seasoned international banking professionals on Customers now have a greater choice, and to reward, and HR service delivery to support the • Phase 1: Building basic foundations board our leadership cadre and initiating an in- In response to the feedback of employees in bringing a number of seasoned meet their increasing expectations we must have Bank with the needed expertise in critical areas. • Phase 2: Building capability and changed novative Leadership Capability Development pro- the 2011 Employee Effectiveness Survey, Tech- international banking professionals the right people in both customer facing roles The new model also reinforced our focus on Peo- thinking gram for middle and senior managers. We also combank implemented the “We Care” and “We and support functions. Our focus in 2012 was ple-related risk issues under the new HR Strat- on board and initiating an innovative introduced further international best practices Share” initiatives under the Techcombank Lead therefore to continue to bring many of our people • Phase 3: Fine-tuning and redesign egy and Management center. The HR team in the Leadership Development program into the Performance Management process. Key Banner. These measures introduced flexible practices up to more internationally recognized South was upgraded with a new Head so this The 2012, the strategy implementation continued among these changes was the move to include working hours. for middle and senior managers. standards in order to meet and exceed these increasingly important and growing part of our to make significant progress despite the chal- interactions with customers and colleagues as evolving expectations. We also re-evaluated our business would gain more tailored and smarter lenging environment. Notable milestones in 2012 part of the annual individual performance assess- banking structure and the required staffing levels HR solutions relevant to its unique demands. included the successful launch of an international ment. As a result, the values got more interwoven needed for sustainable success. The design and implementation of the model has standard operating model for HR division, further in the performance management assessment been conducted with an on-site support from Meritocratic Working Environment enhancements to our learning and development procedures. HSBC, our strategic partner. Techcombank continued to invest in its human capability, as well as our first Employee Effec- Employee Engagement and Enablement resource development strategy. The focus re- tiveness Survey. Development and Learning Capability In 2012, the second round of the Employee Ef- mained on building the best working environment Operating Model Last year brought significant progress in the shift fectiveness Survey from Hay Group, which meas- for people based on three key elements: HR adopted an enhanced operating model, of Techcombank towards becoming a more pro- ured engagement and enablement. The results • Attracting and Retaining Talent which was designed to allow the HR profession- ficient learning organization. Firstly, two new state showed that although we have a highly com- als to better support leaders in Techcombank. of the art Learning Centers were opened in Hanoi • Training and Development mitted workforce who strongly cared about the Implementation of the revised model saw the and Ho Chi Minh City, which have significantly fa- • Reward and Recognition continued success of the organization, there was successful launch of HR Business Partners who cilitated the improvements of our employees in

32 Techcombank Annual Report 2012 Techcombank Annual Report 2012 33 Awards and Accolades

Best Emerging Market Bank Best Trade Finance Bank in Asia 2012 in Vietnam

Best Cash Management Bank Best Cash Management Bank in Vietnam in Vietnam Best Trade Finance Bank Best Trade Bank in Vietnam in Vietnam Domestic Retail Bank of the Year Vietnam

Best Bank in Vietnam Strongest Bank in Vietnam

Best FX Bank for Corporates & FIs Best Domestic Bank in Vietnam Best Bank in Vietnam

34 Techcombank Annual Report 2012 Techcombank Annual Report 2012 35 Corporate Social Resposibility

The success of economic development a national level happens faster and stronger with the collective participation of corporations across the nation. We are an institution committed to this reality. During 2012 we streamlined our efforts to bring together a clear strategy for approach to our social responsibilities and disbursed over VND 75 billion of funding support through the year. As a bank that looks beyond just business, we look to grow our engagement programs year after year and our community contribution is built around three principle areas - Education, Envi- ronment and Healthcare.

Education On the education front, our flagship program ‘Techcombank–Red Scarf’ continues to receive widespread appreciation in its second year running. The program which carried the motto ‘every child has the right to a good education’ remains a compelling example of community support scholarships and we remain convinced that this Healthcare through educational scholarships for underprivi- initiative will gather momentum and induct part- Personal health is community health at a singu- leged children. In 2012, the ‘Red Scarf’ school ners and capital in the years to come. lar level. As a caring corporation, Techcombank support program also welcomed the partnership has adopted this reality and continues to remain of HSBC and through this project, Techcom- Partnering with the Department of Education, committed to health support and medical care bank awarded 1,900 scholarships poor students 2012 also saw a significant contribution of VND programs across the country. In 2012 alone, the between the ages of 9 and 14 years who had 43 billion from Techcombank towards enhanc- bank has sponsored VND 5 billion towards the great potential to go further. These scholarships ing the provincial education system in the Quang purchase of much needed medical equipment in were spread across 44 cities nationwide mak- Ninh province. The Bank also sponsored VND the poorest districts of Quang Ninh province and ing it more meaningful in terms of distribution. 5 billion towards the construction of a primary specifically in Co To and Ba Che. Furthermore, the participation of our employees school in the remote province of Cao Bang. played an active and significant role in the pro- We understand the importance of our social re- gram. Our branch and regional staff engaged Environment sponsibilities and remain steadfast in our resolve with their neighbourhood communities and spent A cleaner world leads to better lives for all. As a to grow and enhance our entrenchment in the significant personal time and effort to making it a collective group of committed individuals across years to come. What is also refreshing to note is big success. the country, our staff have conducted a number the active participation of all our employees. At of community engagement programs throughout a national level, our effort is to make a difference The key to strengthening relationships with communities is not through Year 2012 Techcombank co-founded the ‘Viet- the year. These included ‘clean’ days, ‘festival’ through sincere and engaged participation. We Seed’ fund in partnership with ‘The People’ programs, and also medical support camps for will continue to do this not just through monetary big brand campaigns or glossy reports; rather it is through building long newspaper group. The bank put forward seed the elders. Techcombank also made a contribu- support but through voluntary commitments of term committed partnerships starting at grass roots levels. capital of VND 5 billion towards the fund which tion of VND 1 billion towards the International time and effort by all of us at Techcombank. now functions to award annual scholarships for World Environment Day events organized at a deserving students. The first batch of 15 stu- province level. The Techcom Brand remains committed to this vision. dents through this fund have already received

36 Techcombank Annual Report 2012 Techcombank Annual Report 2012 37 Product and Service Delivery

Our approach to business is built on a platform of simplicity, convenience and accessibility. We design our services around our customers and our success is measured by their statisfaction. Annual Report 2012 Special Features

38 Techcombank Annual Report 2012 Techcombank Annual Report 2012 39 Transaction Banking (TB)

Strategic Vision The TB Division is a product-focused business unit. It has the strategic vision of establishing Techcombank as the number one service provider among Vietnam-based banks of cash management and trade finance solutions to business clients. It seeks to utilize the most modern technology available to achieve the highest possible level of customer satisfaction. It also strives to provide a full suite of transaction banking solutions through multiple delivery channels, including Internet Banking, branch counters, ATMs and SMS to ensure the greatest Due to the difficult economic and business condi- continued to grow in importance during 2012. and continue to create and cater customized number of service options and the utmost con- tions in 2012, the overall international trade trans- Domestic funds transfers handled by Techcom- solutions to the increasingly sophisticated needs venience for clients. action value of Techcombank declined by 13.5% bank increased by 23% of the prior year to nearly of our clientele. As a part of the new Wholesale We aim to develop and deliver solutions that are to USD 4.995 billion while the total number of in- 3.7 million transactions, nearly tripled since the Banking Division, which is dedicated to serving user-friendly and easy to execute and monitor, ternational trade transactions slightly decreased Transaction Banking Division first started in 2009. the needs of Large Corporate and Middle Mar- with fast turnaround time and consistent, reliable by 1.6% to 55,457. Nevertheless, we are proud Over 99% of funds transfers were processed ket Corporate customers, we will actively partici- service quality. to play an important role in the success stories of “straight-through” without manual intervention via pate in the strengthening of the client relationship ume in 2012 increased by 23% to 3.7 million we further expanded the project, which started thousands of companies in key export segments our correspondent banking network, thus creat- planning process for top corporate clients, and in Our strategy focuses on: transactions. in 2011, to install and train a group of dedicated of Vietnam, including agricultural products and ing the most possible customer satisfaction. close coordination with the Financial Institutions Trade Sales Managers at selected key branches • Leverage our extensive product expertise, • Expanded Trade Sales Model from 6 Branch- seafood. Division, which handles relations with numerous around the country. In view of the program suc- During the year, the Division introduced more in- advanced technological platforms and wide es to 16 Branches. correspondent banking partners of Techcom- cess, the number of participating branches ex- In 2012, the Division introduced several new novative cash management solutions including branch network to provide unique and reliable • Introduced new trade products including Us- bank. panded from the original six at the end of 2011 products including: Usance Letters of Credit Pay- our F@st Customs, which allows importers and financing solutions to business clients. ance letter of Credit Payable at Sight, Export to 16 in 2012. Transaction volumes achieved in able at Sight (UPAS), which gives importers an exporters to verify the amount of duties payable The Division will continue to work closely with the • Strengthen our collaboration with HSBC, the Bills Factoring and Domestic Factoring. 2012 at the first six branches increased by an av- access to cheaper financing in foreign currency to the General Customs Department online and branches, and provide comprehensive and effec- world-leader in transaction banking. • Introduced new cash management products erage of 15% from the prior year, which proves via correspondent bank partners of Techcom- to make payment or obtain a bank guarantee im- tive solutions to underline Techcombank profes- • Continuously improve internal processes and including F@st Customs payment/bank guar- the program effectiveness. bank; Export Bills Factoring (for USA and Canada mediately, thus allowing the customers to signifi- sional and teamwork approach. It will also con- provide training to Techcombank staff for the antee. markets), whereby exporters can enjoy protec- cantly speed up clearance of their import/export tinuously improve and simplify existing processes A deep insight of the local market, a professional most efficient and highest quality service. • Implemented online bill collection services for tion against non-payment by offshore importers shipments at the port. In addition, our cash man- and develop new products of great competitive- and experienced management team and robust • Invest in state-of-the art transaction banking major electricity and telephone companies. on export transactions made on Open-Account/ agement team implemented Internet and branch ness and technological sophistication. technology formed the leverage of Techcombank platforms to build the best delivery capability TT remittance basis; and Domestic Factoring collection services for customers of some major • Implemented the refined ARC-Internet bank- to create customised solutions for its clients. To ensure achieving our challenging goals, TB Di- among local banks. whereby sellers in the local market can obtain electricity and telephone companies and coming platform. Moreover, the Bank has extensive correspond- vision will further place its emphasis on teamwork financing and payment assurance on domestic pleted implementation of the enhanced Internet Performance and Achievements in 2012 ent banking relationships and a centralised trans- and discipline, and accelerate its recruitment and Trade Business shipments made on invoice/open account basis. banking platform ARC-iB, which provides online Following are the Key Highlights for the year action processing facility to assure quality, limit training of additional human resources. In line with In line with slower economic growth in Vietnam in These innovative financing products have been services of reliability and increased functionality 2012: risks and reduce costs. With these, the Bank is the “South Strategy”, we plan to further build up 2012, its international trade also dwindled, with increasingly popular with business clients and to F@st E-Bank users. a proven leader trade financing business in Viet- our team in the southern regions, which we see • International trade transaction value declined the national total export value increased by 18% demonstrate the commitment to more and better nam with a unique capability to provide a full suite Objectives and Direction in 2013 as a key market with great potentials for future to USD 4.995 billion, while total volume of and total import value by just 7% (versus 34% value-added services for its clientele. transactions declined slightly to 55,457. and 25% respectively in 2011). of transaction banking products and services. The TB Division has set ambitious goals for 2013 growth. Together with a growing client base and custom- and will continue to work closely with other busi- • Domestic and international funds transfer vol- In order to capture a larger share of this business, er confidence, the cash management business ness divisions to further enlarge customer base,

40 Techcombank Annual Report 2012 Techcombank Annual Report 2012 41 Trends in E-Banking

In a fast moving world of today, convenience and technology are interconnected. It is our knowledge of this reality that drives our innovative development platform.

E-banking facilities in Techcombank were The Bank continued to improve its collection Objectives and Direction of 2013 E-Banking Long-Term Development Direction Bank will maintain the growth rate of the basic followed up on our achievements in 2011. All e- strengthened to comprehensively connect with and payment services via e-channels. At present To build on its success in the past year, in 2013 Non-cash payments in general and banking via payment functions, and together with competi- banking processes were reviewed for simplicity in Vietnam leading strategic payment gateways and Techcombank customers can use F@st i-Bank the Bank will continue to invest in the mobile e-channels in particular are getting increasingly tors and governmental bodies, train customers registration, service use, customer support, and portals, including Bảo Kim, Ngân Lượng, OnePay, to pay electricity bills to 200 nationwide electric- banking channel and complete its new Internet popular with modern-day consumers. and push demand for e-banking. In this phase the likes. A strong investment was made in up- Vban, and Smartlink, through which customers ity providers, Internet bills to Viettel, MobiFone, banking version for a stable, sustainable platform. Techcombank will maintain the market share, im- grading e-banking system; a more stable version Foreseeing this trend, from very early on, Tech- are allowed to take online purchasing and pay- ADSL FPT, and premium to AceLife, and Pruden- prove its look and feel, and increase customer now facilitated the Bank to serve a larger number The deployment of SMS Token usage authentica- combank drew up an e-banking strategic plan, ments on more than 3,000 websites and hun- tial Life. trust through service quality and stability. of customers and process a greater number of tion will be an effective move to promote Internet which defined e-banking as one vital pillar of the dreds of online shops. online transactions. Techcombank was one of a few pioneers who of- banking services. development of modern retail segment. Entering the breakthrough phase, Techcombank fered Western Union remittance service, and ena- will focus on maintaining its customer base. With Accenture consultancy, internet banking In 2013 the Bank will set to process standardi- With this strategy, Techcombank continued to bled air ticket purchase via F@st i-Bank with 25 Meanwhile, it will also increase differentiated ser- platform was upgraded to a professional and zation in sales, registration, and use of service, target at the leading position in e-banking for Techcombank was one of a few airlines worldwide. vices and features in e-banking and other areas user-friendly look and feel, bringing an absolutely as well as customer support in traditional direct the best service quality and convenience, and a pioneers who offered Western such as investment and trading to generate inter- new experience to Techcombank e-banking us- Online money transfer, and mobile top-up service channel and partner channel. place among the top three market share holders est and create new opportunities. Another focus ers. Union remittance services, and were another two other pioneering steps that in Vietnam. It also plans to reinforce and develop its customer of this phase is to strengthen the market through enabled air ticket purchases made Techcombank the No.1 e-banking service In 2012, the Information and Communication base by integrating e-banking products into cur- During the recent years of ongoing preparation communications and differentiated services with provider. Technologies Association (ICT) awarded PFS as via F@st i-Banki with 25 airlines rent account package, and employing flexible sale phase, Techcombank E-banking has focused on an emphasis on the mass affluent, and dynamic the “Most Outstanding Provider of Online Pay- More communication was also seen in 2012 policies. system stabilization, channel development (such customer segment. worldwide. ment Services”. about online banking features and services of the as upgrading internet banking, and investing in Achievements in 2012 Online money transfers, and mo- Bank. The highlight was the launch of “Conveni- mobile banking), product standardization, service The year 2012 witnessed impressive develop- ence Every Minute, Promotion Every Day”, which process and quality improvement, and, especial- bile top-up services were an- ment in the e-banking sector. We went into im- effectively raised awareness of Techcombank In- ly, customer base expansion. In the future, the other two other pioneering plementation of our action plan and strategy, and ternet banking. steps that made Techcombank the No.1 e-banking service provider. Number of Active Internet Banking Number of Transactions on Total Amount Transacted Users (Full Package) Internet Banking through Internet Banking 66,000 2.01mn 28,000 bn VND

42 Techcombank Annual Report 2012 Techcombank Annual Report 2012 43 Priority Banking

Uniquely positioned in the affluent segment, Techcombank Priority Banking builds further on the business proposition of the Bank to be the leading Premium Banking service provider in Vietnam.

Uniquely positioned in the affluent segment, • Continue to focus on a differential customer Looking Ahead Techcombank Priority Banking builds further on experience. In addition to Priority Banking coun- In 2013, we aim to make better offers on invest- the Bank’s business proposition to be the leading ters at the branches we now have 22 exclusive ment and structure products, help customers Priority Banking service provider in Vietnam. Priority Lounges at key locations and over 104 grow their wealth, and design financial advisory- dedicated Priority Relationship Managers across The financial and banking industry in Vietnam based offers. the network. faced many challenges in 2012. The downward We look forward to strengthening our sales force movement on interest rates created a significant • Help customers facing the downward spiral of of dedicated Priority relationship managers and impact on Priority Segment business models of interest rates, the Bank provided financial plan- Wealth Managers to build customer loyalty by most banks that had largely cultivated a price- ning and new investment products that could way of better customer experience at their place based relationship with customers. By then Tech- maximise returns in accordance with the risk pro- of choice. combank Priority Banking relied on a compre- files of customers. Dual Currency Deposit and a hensive customer proposition (across deposit, complete range of insurance products exclusively In this year our objective is to consolidate the cur- saving, lending, card and investment products), designed for Priority segment were well received rent customer base by offering need-based solu- which introduced a complete range of solutions by our customers. We also created the position tions and thereby improve the Product Holding in and facilitated the Bank in significantly growing of Wealth Managers who act as financial advisers Priority customer base. the customer and deposit base in 2012. to customers on Investment Products. Achievements and Highlights • Introduction of Priority Banking e-Newsletter Following was the key highlights of Priority Bank- and a Priority Banking Magazine were introduced ing business in 2012: as new additions to our customer care offers. • These initiatives helped Techcombank improve • Redefine customer categorization and benefits and reinforce its position in the market. The num- based on three distinct customer tiers: Platinum, ber of customers, as a result, grew from 11,000 Gold and Silver. This involves determining criteria to over 31,700 with a higher profit contribution for customer selection and acquisition across a growth in 2012. . wide range of products, including deposits, assets under management, lending value, savings, • Significantly, deposits grew from VND 23 to 45 card relationships, and investment products. trillion from Priority Banking segment.

44 Techcombank Annual Report 2012 Techcombank Annual Report 2012 45 Risk Management Risk Management Overview In 2012 Aligned with the strategy and policies to continue strengthening credit RM systems, in 2012, Techcombank took a number of steps to enhance RM controls. As a result, the The Bank has continued to develop a robust Risk Management strategy that Non-Performing Loan (NPL) ratio improved would build both medium and long term efficiencies. slightly to 2.7% despite challenges facing the entire banking industry. That reflected an increased focus on credit quality, and de-risking activities to ensure a strong balance sheet. In addition, liquidity risk was closely managed throughout the year, and although there were some particularly testing periods for the whole banking industry, Techcombank managed to maintain healthy liquidity positions. Market risks were well administered within the limits from Techcombank with more forward-looking risk measurements combined with more quantitative techniques such as Present Value of a basis point (PV01) and Value at Risk (VaR). As for Operational Risk, no significant unexpected risks keep the risk professionals forward-looking and • Restructuring Operational Risk Framework arose, and exposures were managed within the prepared for the future, while an improved Risk To align with its three Lines of Defense principle risk appetite and tolerance parameters of the Appetite Framework will guarantee successful in managing, monitoring and mitigating risks, Bank. With a Capital Adequacy Ratio (CAR) business performance within the risk tolerance the Bank restructured its Operational Risk of 12.6%, the bank remained adequately of the Bank. Management, Compliance and Legal divisions. capitalized and significantly above minimum Under the guidance of RWG, the Bank has been requirements set by SBV. The success of Achievements and Highlights in the process of re-engineering its Operational Techcombank in these areas was attributable to Against the disadvantageous external Risk Framework to create a governance body the continued development and enhancement environment of 2012, Techcombank continued to dedicated to Operational Risk, which is in line of RM procedures throughout the year. enhance and develop its RM framework, and take with best practice and the Sound Management control of the conditions by investing in people, In 2013 principles outlined in Basel Committee guidelines. processes, and operating systems. Working Techcombank will continue to invest in its alongside some of the leading IT, financial and • Risk Appetite Framework RM people, processes, and systems in 2013 advisory firms in the world, and with support from In 2012, Techcombank designed a new Risk by revisiting and refreshing its risk strategy, its strategic partners, the Bank proceeded with a Appetite Framework, which encapsulates both and practicing a culture of continuous self- number of key initiatives, including: the positive (upside) and negative (downside) improvements. By enhancing the Risk Working function proportionally to the level of risk facing through human resource professionals who are aspects of risk, and supports selective and Strategic Orientation for Risk Group (RWG) and Operational Risk Frameworks, • Enhanced Governance Framework organizations. Within this, there will be parallel regularly equipped with updated and modern rational risk-taking. At the same time, it determines Management (RM) Techcombank will continue to strengthen During 2012 the Bank enhanced its Risk support structures to ensure appropriate risk RM knowledge. With the use of the latest the risk tolerance thresholds to provide risk- its corporate governance and improve Governance Framework by introducing a Techcombank has set in place a number of steps prevention, mitigation, and controls for business tools and the most advanced IT programs monitoring and accountability-driving means transparency in risk and business activities. new senior management committee, the Risk to establish a robust RM strategy underpinned activities. The RM strategy will be directly linked and applications, RM best practices will be for risk management. Aligned with the Vision, More system implementations, such as that Working Group (RWG), who provided a single by: secured lending, a diversified loan book, to the key activities and will be dynamic enough implemented and rigorously enforced across all Mission and Core Values of Techcombank, it with the new ALM system, will further ensure senior management forum to holistically oversee streamlined processes, investment in people to adapt quickly to rapid changes in the risk banking platforms within the Bank. facilitates a strong customer deposit-driven that the bank has the tools to effectively manage all risks within the Bank. With representation from and systems, and prudent policies which can environment. balance sheet, prudent capital management, its risks. Meanwhile, continued development each business, support, and risk department, be supported in both medium and long term. conservative liquidity management, and risks To create this RM system, the Bank continues in such areas as loan classification system and attendance from internal audit division, the commensurate with returns. The fundamental RM strategy of the bank to strengthen the foundation of its Risk will guarantee that the Bank advances its risk group constituted a key part of the three Lines of is to build a business development-aligned Management Framework by building on management sophistication. A new risk training Defense principle that was introduced during the system with strict operational guidelines that existing established practices and development and development program will be deployed to year in Techcombank.

46 Techcombank Annual Report 2012 Techcombank Annual Report 2012 47 tolerance of the Bank. Key themes in the risk a more granular assessment of the credit practices. The goal is to meet Basel II standards strategy will include: worthiness of each client. This move makes the within the next three to five years. A project pre-cursor of more advanced credit models such management team was set up in the second • Governance and Risk Management Framework as Probability of Default (PD), Loss Given Default half of 2012 to develop a roadmap for successful Techcombank will continue to enhance its (LGD) and Exposure at Default (EAD) modeling to implementation. Ambitious yet realistic, this goal Governance and Risk Management Framework. later comply with Basel II regulations. is well within the reach of Techcombank and the For 2013 this will include enhancing the scope RM division. and activities of the Risk Working Group • Investment in Risk Infrastructure (RWG) and developing the Operational Risk Techcombank will continue to invest in innovations Management Framework. In Q1 of 2013 a new and technology to support its RM practices. The dedicated Operational Risk Committee will also new Asset and Liability (ALM) system will come be put into service and will continue to develop online in the first half of 2013, and together and build on the previous operational risk self- with the recently implemented FTP system, will The implementation of FTP assessment programs. significantly increase the liquidity and market risk management capabilities of the Bank. The next and ALM systems in 2012 and • Further Embedding Risk Culture step will be to identify a core credit calculation 2013, combined with plans to Techcombank has made good progress in and reporting system. This, when leveraged with implementing a robust Risk Management identify a core credit calculation the Data Warehouse initiatives, will enhance the Framework. As part of the 2013 Risk Strategy, and reporting system, and the credit risk measurement and modeling activities the Bank aims to embed a deeper culture of while providing a core platform for our longer development in operational risk awareness and management throughout its term RM strategy and later compliance with risks, will leave Techcombank organization. This will include education, training, Basel II initiatives. and human development to ensure that the three well positioned to address the Lines of Defense principle is expanded throughout • People Development core capital liquidity, market, of the Bank. Accordingly, all departments, from As one of our core values, People Development credit and operational risks Frontline, Support to Internal Audit, should work is at the heart of our RM practices. Throughout together to align risk management practices 2013 we will continue to invest in the Risk of Basel II, and in the future with superior client service and profit generation, Division employees, seeking opportunities to Basel III. Our Risk Department which will successfully balance risk and return. up skill talents wherever we foresee needs and is aware that risk management opportunities. For 2013 we have engaged a • Enhancements to Portfolio Management and best practices and regulations • New Systems SME, SME and MSME business banking. This • Managing the Unpredictable global leader in risk skill development, training, Risk Identification The successful implementation of a Fund Transfer enabled the Bank to focus better on the client As part of the overall RM program, in 2012 and education to develop a RM training program, continue to evolve, and as such In the coming year the Bank will continue to Pricing (FTP) System replaced more manual needs in this sector, provide superior customer we engaged the service of an experienced and to invest in the career development of our the Risk Management solutions develop and improve its portfolio management reporting tools. Significant progress was also service, and supported better management of risk professional in developing our Business risk professionals. that the Bank is implementing made in implementing a related Asset and Liability the risks inherent in the nature of this segment. Continuity Plan (BCP). This included training of and risk identification practices. As part of this, Management (ALM) system. Combined together, a Business Continuity team, and a detailed BCP improvements will be made to the Early Warning • Risk Appetite and Risk Strategy today remain forward looking in • Independent Credit Acceptance Division (CAD) these implementations significantly increased the plan that ensured that Techcombank was well System (EWS) to ensure that potential client In 2013 we will complete the first wave of our nature. As part of our culture of During the year the Bank re-engineered capabilities of the Bank in managing liquidity and prepared for problems caused by unforeseeable credit issues are identified at an earlier stage so Risk Appetite Framework initiatives. This will its governance structure and assessment continuous risk improvement, market risks, while ensuring that risk and return natural and objective elements such as fire, the Bank can promptly respond with effective better align our Risk Strategy to support Board- process of credit approvals. The result was a metrics are more accurately reflected in each floods, earthquakes, epidemics, and terrorism. solutions. Further work will also be put to creating approved risk limits, appetite, and tolerances, the Bank is applying solutions more streamlined credit process with clearer business unit. The Bank also established responses to other a Data Warehouse of better integrity and quality. which can be tracked holistically through the that will provide the foundations segregation of duties, and a Credit Acceptance operational risks such as supply interruption, and This will incorporate key credit data, providing a RWG to ensure appropriate portfolio views of • Enhancement of Existing Lending Policies and Division (CAD) with improved independence of a robust, dynamic and system breakdown or faults. Several tests were more robust platform to build more advanced risk, governance, policies, and operating models. Controls between business units and credit approval evolutionary risk framework for successfully carried out in fourth quarter 2012 to credit modeling and monitoring techniques. As the sophistication in risk measurement In 2012, Techcombank reviewed its lending functions. simulate and evaluate our BCP responses. and monitoring increases, Techcombank will the future. policies to improve internal controls. It also • Loan Classification and Credit Modeling • Risk Controls continually introduce more advanced metrics in undertook significant measures on collateral Objectives and Direction in 2013 To ensure that its credit risk assessments Building on the previous implementation and its Risk Tolerance and Appetite statements. management during upgrading policies and With 2013 likely to continue presenting challenges are more sensitive to potential defaults of increased usage of metrics such as Value at procedures to enhance its loan management. to the global and domestic economies, the Bank counterparties, the Bank will continue to develop • Long-Term RM Development Risk (VaR) and Present Value of a Basis point adopted a cautiously optimistic approach to the internal loan classification and rating systems. As RM systems evolve, the Bank will continue • Improved Customer Risk Focus (PV01), the Bank introduced Settlement and future. While exploring the growth strategy in This includes redevelopment of credit models for to develop technological platforms, business Techcombank re-segmented its business Pre-Settlement limits and monitoring, which selective markets, Techcombank will ensure that the newly re-segmented Upper SME, SME and roles, and internal regulations to conform to structure by creating a Middle Market segment reinforced its control over markets and trading execution of this strategy remains within the risk MSME segments so that the Bank can produce Basel II standards and other international best under Wholesale Banking to focus on Upper activities.

48 Techcombank Annual Report 2012 Techcombank Annual Report 2012 49 Brand Marketing

Great Brands do not just do more for customers, They free their customers to do more for themselves.

Looking out at our world today, it is easy to see customer relationship and this approach will con- a confident corporation that continues to keep This truly reflects a brand that thinks and inno- innovative enhancement to our 2012 F@st I-Bank partners, HSBC, who were also co-sponsors of why our brand is more important now than ever tinue to be our lead philosophy. the customer at the centre of everything we do. vates to simplify lives. version. This is a unique offering is a ‘card less’ the program. Following this success, our partner- before. Markets have challenges, Brands outlive The communication campaign was very well re- access feature that allows customers to make ship with ‘The People’ news group helped set up Over the past twelve months, we have had con- Continual Loyalty them. Products have life cycles, Brands outlive ceived by our customers, the general public and payments and withdraw cash at ATM machines a ‘Viet-Seed’ fund to support young talent across siderable learnings in the importance of focus, A strong brand generates strong loyalty. The chal- them. A strong brand is absolutely invaluable as also the banking fraternity. without having to carry any cards. the country. clarity and consistency. People do not have rela- lenge however is to keep up the engagement and the battle for customers intensifies day by day. tionships with products, they are loyal to brands. Integrated Product Access reward those relationships. Building on the suc- Strengthening the South A critical differentiating factor of a caring brand is Our world is fast changing. Over the past year, And as the financial market faced many a chal- Great Brands do not do more for customers. cess of our comprehensive loyalty programs for The South is critical and vital to our success. The ‘personal’ engagement. This commitment came to we have started to re-align our Brand strategy to lenge, it is our Brand strength that kept our mar- What they do is free their customers to do more individual customers. In 2012 we have extended test of a true brand is about a uniform image and life strongly in 2012 wherein a large number of our infuse dynamism and to move it as close to our ket trust strong. Our customers rewarded us with for themselves. We believe that our brand is all our program to cover business clients as well. an integrated service delivery. Ho Chi Minh City staff at all levels of the organization willingly volun- customers as we possibly can. It is a movement their continued loyalty and for that we remain about the total banking experience our custom- This integrated program has had a great response has long been a focus of ours in terms of cus- teered to engage in community support programs strategy as opposed to simply a brand building humbled and thankful to each one of them. ers have with every aspect of our offering. We live across our relationships and strengthens our per- tomer sales and distribution. However, in 2012, through the year. These efforts strengthened our approach and we are confident that this will fur- in an era where technology and business cannot ception as a caring and appreciative brand. we made a conscious decision to build our brand community communication and further enhanced ther accelerate our path to leadership. Hanoi Headquarters exist without being interconnected. The basis of better in the south and strengthen our image as our image as a sensitive and caring brand. Year 2012 was a year of strong brand activity for Brand 24/7 Our continued investment in research and market our approach is that a need at one end drives an a corporation with deep roots nationwide. An in- our bank across Vietnam. The relocation of our In our fast paced world, customers across the International Recognition insight extraction is critical to our Brand approach idea at the other and hence innovation is a cor- novative media campaign was developed over Hanoi headquarters to an iconic landmark build- world need to be served 24/7. The simple learning A good brand is only as strong as its reputa- and our future.This is the foundational core of our nerstone of our brand. In an increasingly complex the year which educated the south audiences on ing in the city was a strong campaign that was is that our delivery needs to match lifestyles. This tion and 2012 was a great year for the Techcom marketing communication and one we cannot be world of multiple choices, customers look for in- key aspects of our convenience, accessibility and very successful in strengthening our brand as an expectation is here to stay and it also means that brand. Despite the market challenges through without. It is our belief that the strength of our tegrated solutions that offer them ease of access integrated approaches to product and service de- institution with a visionary outlook towards build- we also need to fulfil the ‘whenever’ and ‘wher- the year, we are proud to have achieved a 360 brand resides within the hearts and minds of our to multiple touch points through a single point livery. ing accessibility and convenience, for our staff ever’ requirements of our customers. As a brand degree brand performance across Vietnam and customers, our partners, and our market pros- of contact. This reality was the driver behind our and our customers. At our new headquarters at known for its superior tech capabilities, our invest- A Caring Brand our recognition is validation of this success. Dur- pects. It is the sum total of their experiences and strategy to engineer bundled product packages Techcombank Tower in Hanoi, our customers, ment into state of the art Internet banking services Engaged corporate citizenship and a deep rooted ing 2012, we were awarded 12 individual pres- perceptions, some of which we can influence, that deliver multiple features and benefits that our partners and our prospects can easily ac- have always played a critical role in the success of commitment to our community is a demonstrat- tigious awards by some of the leading financial and others that we can learn from. Hence inte- could previously only be acquired by customers cess any department or division within the bank our brand experience. In 2012, we enhanced and ed strength of our brand. Over the past year, our magazines including Global Finance, The Asian grating our brand strategy and our marketing ap- having to buy them individually. Our customers or even conduct their banking at our in-house refined our F@st-ibank service delivery to make resolve to strengthen our engagement platforms Banker, Finance Asia, The Asset, and many more. proach is our method of communication conver- no longer need to sign up multiple times for multi- branch located on the ground floor. With this bold it fast and reliable in processing efficiencies and have reflected very positively on our brand. Our These awards speak for excellence in every as- gence at every point of contact. We have always ple products. A single signature agreement gives move during a challenging year for the financial also more intuitive on the user interface. Building communication campaign on the ‘Techcombank– pect of our brand in 2012 and will encourage us believed that a strong Brand needs to convey a them complete access to different bundled offer- services industry, our brand demonstrated a on our earlier successes and looking ahead into RedScarf’ educational scholarships received to cement our leading position as one of the best uniform experience of quality, credibility for every ings that can be tailor made to suit their needs. strong commitment to our vision of the future as the future, our brand truly came to shine with our great appreciation from our audiences and our financial services brands in Vietnam.

50 Techcombank Annual Report 2012 Techcombank Annual Report 2012 51 Annual Report 2012 Corporate Governance

Strengthening a strategic and sustainable direction

Great leadership is one that combines courage with prudence and opportunities with practicality.

52 Techcombank Annual Report 2012 Techcombank Annual Report 2012 53 Corporate Governance Framework

Membership Corporate governance is one of the keys to our suc- its roles and responsibilities in representing Techcom- cess, from how we structure and run the organization bank. It provides leadership through oversight, review, to the people who lead and deliver values to share- and by giving guidance while setting the strategic di- holders, customers and employees. rection.

Our corporate governance framework is collectively The Board of Directors established Committees to based on: effectively deliver its assigned missions. Committees • Law on Enterprises applicable to Vietnamese Law on are organized to enhance capacity of the Board of Di- Credit Institutions; rectors, and to best promote diversified expertise of the senior leaders in the Bank. • Regulations of the State Bank of Vietnam applicable to Vietnamese Law on Credit Institutions; During 2012 we focused on reviewing and improv- • International standards, best practices and consul- ing the way the Board of Management worked, as we tancy from HSBC, our strategic partner as well as a believe it is a cornerstone for unlocking potential and diversified leadership team that represents a unique realising the aspirations of Techcombank. We contin- combination of local and foreign banking experts. ued to better structure the organization to put the right people in the right places, to achieve synergies and ef- The Board of Directors is accountable, as author- ficiencies, and leverage local insights and international ized by General Shareholders’ Meeting, for performing practices.

54 Techcombank Annual Report 2012 Techcombank Annual Report 2012 55 Board of Directors (BOD)

The Board of Directors, the Governing body of Techcom- bank of which members are elected by the general shareholders meeting, has the full right on behalf of Techcom- bank to decide, and exercise rights and obligations of Mr Ho Hung Anh Mr Nguyen Dang Quang Mr Nguyen Thieu Quang Mr Nguyen Canh Son Techcombank, except those which belong to authority of Chairman First Vice Chairman Vice Chairman Vice Chairman the General Shareholders Meeting. Graduated in Electronics Engineering Awarded a PhD in Nuclear Physics and a After graduating in Civil Engineering in Graduated in Civil Engineering in Russia. in Russia. Mr. Ho Hung Anh joined the Masters degree in financial management in Russia, Mr. Nguyen Thieu Quang joined Mr. Nguyen Canh Son has been a mem- executive management of the Bank in Russia, Mr. Nguyen Dang Quang joined the the executive management of Techcom- ber of the Board of Directors from May 2004 and has held various positions in executive management of Techcombank bank and has held different positions in 2008 to Mar 2009. He has been Vice the Board of Directors. He has been the and has held various positions since 1995. the Board of Directors since 1999. He Chairman of Techcombank BOD since Chairman of Techcombank BOD since He has been the First Vice Chairman of has been Vice Chairman of Techcom- April 2009. Membership May 2008. Techcombank BOD since May 2008. bank BOD since May 2008. The BOD consists of 8 members including Chairman, First Vice Chairman and 2 Vice Chairmen. All the BOD members are non-executive and by the most updated structure, we have 1 independent member. Chairman and Vice Chairmen of the BOD are elected or dismissed by the BOD members with a majority vote in the form of secret ballot or vote. Office term of BOD members shall last no more than 5 years.

In 2012, there have been a number of changes in the BOD structure. Mr. Do Tuan Anh, and Mr. Timothy Mark Francis Kennedy have been elected as members of the Board, and Mr. Lee Boon Huat has been additionally elected as an independent member of the Board. Mr Nguyen Duc Vinh has resigned from the position of Vice Chairman of the Board. Mr Madhur Maini, Mr Stephen Colin Moss and Mr. Tran Thanh Hien have also resigned from their positions as members of the Board. Complete information about the current BOD members is detailed here:

Mr. Stephen Charles Banner Mr Timothy Mark Francis Kennedy Mr Do Tuan Anh Mr Lee Boon Huat Member Member Member Member

Graduated from Sheffield University with a Graduated with a Bachelor of Art degree Graduated with a Masters Degree in Asset Graduated with a Bachelors Degree in Bachelors Degree in Business Administration, in History from Bristol University, UK. management at Singapore Management Business Accounting, from the Western and Associate Certification from the Banking Mr Timothy Mark Francis Kennedy has University and a Bachelor of languages Australian Institute of Technology (now Curtin Academy, UK, Mr. Stephen Charles Banner many years of management experience in Hanoi University. Mr. Do Tuan Anh has University). Mr Lee Boon Huat has had many has years of management experience in bank- in banking and held many important had many years experience working in the years experience in the banking industry in- ing accounting at HSBC in various countries. management positions at HSBC. He has banking industry and held many manage- cluding The Monetary Authority of Singapore He has been a member of the Techcombank been a member of the Techcombank ment positions at State Bank of Vietnam, and the HSBC, Canadian Imperial Bank of BOD since April 2011. BOD since April 2012. Techcombank and other organizations. He Commerce, Chemical Bank, and Standard has been a member of the Techcombank Chartered Bank. He has been an independ- BOD since December 2012. ent member of the Techcombank BOD since December 2012.

56 Techcombank Annual Report 2012 Techcombank Annual Report 2012 57 BOD Standing Committee

The BOD Standing Committee has been established to enhance interaction and information exchange between the BOD and the BOM on the operations of Techcom- bank. It helps the BOD to be accurately informed of the Mr. Ho Hung Anh Mr. Nguyen Dang Quang Mr. Nguyen Thieu Quang Mr. Nguyen Canh Son business performance of the bank, thus being able to Chairman First Vice Chairman Vice Chairman Vice Chairman comment to support the BOM in terms of management Graduated in Electronics Engineering Awarded a PhD in Nuclear Physics and After graduating in Civil Engineering Graduated in Civil Engineering in Russia. in Russia. Mr. Ho Hung Anh joined the a Masters degree in financial manage- in Russia, Mr. Nguyen Thieu Quang Mr. Nguyen Canh Son has been a mem- direction. executive management of the Bank in ment in Russia, Mr. Nguyen Dang Quang joined the executive management of ber of the Board of Directors from May 2004 and has held various positions in joined the executive management of Techcombank and has held different 2008 to Mar 2009. He has been Vice the Board of Directors. He has been the Techcombank and has held various posi- positions in the Board of Directors since Chairman of Techcombank BOD since Membership Chairman of Techcombank BOD since tions since 1995. He has been the First 1999. He has been Vice Chairman of April 2009. May 2008. Vice Chairman of Techcombank BOD Techcombank BOD since May 2008. The BOD Standing Committee works on a collective principle on the basis since May 2008. of coordination and cooperation between the Chairman and members of the BOD Standing Committee.

Members of the BOD Standing Committee shall be responsible for their assigned tasks and are jointly responsible to the Chairman of the BOD Stand- ing Committee and the BOD panel.

Mr. Stephen Charles Banner Mr. Do Tuan Anh Mr. Lee Boon Huat Member Member Member

Graduated from Sheffield University with a Graduated with a Masters Degree in Asset Graduated with a Bachelors Degree in Bachelors Degree in Business Administra- management at Singapore Management Business Accounting, from the Western tion, UK and Associate Certification from University and a Bachelor of languages Australian Institute of Technology (now the Banking Academy, UK, Mr. Stephen in Hanoi University. Mr. Do Tuan Anh has Curtin University). Mr Lee Boon Huat has Charles Banner has years of manage- had many years experience working in the had many years experience in the banking ment experience in banking accounting at banking industry and held many manage- industry including The Monetary Authority HSBC in various countries. He has been a ment positions at State Bank of Vietnam, of Singapore and the HSBC, Canadian member of the Techcombank BOD since Techcombank and other organizations. He Imperial Bank of Commerce, Chemical April 2011. has been a member of the Techcombank Bank, and Standard Chartered Bank. He BOD since December 2012. has been an independent member of the Techcombank BOD since December 2012.

58 Techcombank Annual Report 2012 Techcombank Annual Report 2012 59 Supervisory Board Nomination and Remuneration Committee (NORCO)

The Nomination & The Supervisory Board is a body supervising operations Remuneration Committee of the Bank in accordance with legal regulations and (NORCO) was established Charter of the Bank. by the BOD to perform nomination and remuneration functions and duties which the

Membership Mr. Hoang Huy Trung BOD assigns and delegates. Mr. Ho Hung Anh Mr. Stephen Charles Banner The Supervisory Board consists of 4 members including Head of the Supervisory Board, where Head of Supervisory Board and President of NORCO Member of NORCO standing member half of the Board is executive members. In 2012, Mr. Hoang Huy Trung was elected as Head Graduated in Electronics Engineering Graduated from Sheffield University with a of supervisory board and Specialist member in place of Ms. Nguyen Thu Hien who is now a Graduated as a Master of economics, in Russia. Mr. Ho Hung Anh joined the Bachelors Degree in Business Administra- member of the board. In addition, Mr. Mag Rer Soc Oec Romauch Hannes was elected as a specialisating in banking at the National Membership executive management of the Bank in tion, UK and Associate Certification from Economics University and a Bachelor of 2004 and has held various positions in the Banking Academy, UK, Mr. Stephen member of the Board. Mrs. Vu Thi Dung and Mr. Nguyen Quynh Lam resigned as members economics, majoring in banking-finance, In 2012, Mr. Do Tuan Anh was elected in the Board of Directors. He has been the Charles Banner has years of manage- of the board from the Academy of Finance. Mr. Hoang place of Mr. Nguyen Duc Vinh as a member of Chairman of Techcombank BOD since ment experience in banking accounting at Huy Trung has had many years experience the Committee. There are 5 members in the May 2008. HSBC in various countries. He has been a in the banking industry and has held various NORCO. member of the Techcombank BOD since Detailed information about the members of the Supervisory Board is as follows: management positions at the State Bank of April 2011. Vietnam and Techcombank. He has been Detailed information on the NORCO members Head of Supervisory Board and standing member of the Techcombank Supervisory is as follows: Board since December 2012.

Mr. Mag Rer Soc Oec Romauch Hannes Ms. Nguyen Thu Hien Ms. Bui Thi Hong Mai Mr. Nguyen Dang Quang Mr. Nguyen Thieu Quang Mr. Do Tuan Anh Member of Supervisory Board Member of Supervisory Board Member of Supervisory Board Member of NORCO Member of NORCO Member of NORCO

Graduated with a Master Degree in Business After her Bachelor’s degree in Credit After graduating with a Bachelors degree in Awarded a PhD in Nuclear Physics and a After graduating in Civil Engineering in Russia, Graduated with a Masters Degree Administration, majoring in Finance, Banking Finance in Russia, Mrs. Nguyen Thu Hien Accounting and Finance, Nguyen Thi Hong Master’s degree in financial management Mr. Nguyen Thieu Quang joined the executive in Asset management at Singapore and Marketing from Klagenfurt University. Mr joined the department of accounting and Mai has many years experience in the field in Russia, Mr. Nguyen Dang Quang joined management of Techcombank and has held Management University and a Bachelor Mag Rer Soc Oec Romauch Hannes has many supervisory at the Bank in 1999. From April of accounting and finance. Since April 2010, the executive management of Techcom- different positions in the Board of Directors of languages in Hanoi University. Mr. Do years experience in the field of banking finance 2010 – December 2012 she has served she has been a Specialist Member of the bank and has held various positions since since 1999. He has been Vice Chairman of Tuan Anh has had many years experi- and held many important management positions as Head and specialist member of the Techcombank Supervisory Board. 1995. He has been the First Vice Chairman Techcombank BOD since May 2008. ence working in the banking industry such as: Corporate Banking Unit – Carinthia Techcombank Supervisory Board. Since of Techcombank BOD since May 2008. and held many management positions State Bank; Risk Administration Unit at Carinthia December 2012, has been a member of at State Bank of Vietnam, Techcombank and Styria Bank; Risk analysis/management/ Supervisory Board. and other organizations. He has been a consulting at Carinthia and Styria Bank; Market- member of the Techcombank BOD since ing Director at Vietnam T&M limited company, December 2012. and Deputy Director of CB Richard Ellis Hanoi – Asset Management. He has been member of the Techcombank Supervisory Board since December 2012.

60 Techcombank Annual Report 2012 Techcombank Annual Report 2012 61 Audit and Risk Committee (ARCO)

Audit and Risk Committee (ARCO) was established by the BOD to perform some nomination and remuneration functions and duties relating to audit, verification, supervision, and management of risks of banking operations as assigned Mr. Nguyen Thieu Quang Mr. Ho Hung Anh Ms. Nguyen Thien Huong Mr. Nguyen Dang Quang by/delegated by the BOD. President of ARCO Vice President of ARCO Standing ARCO Member Member of ARCO After graduating in Civil Engineering in Graduated in Electronics Engineering Graduated with a Bachelors Degree Obtained a PhD in Nuclear Physics and Russia. Mr. Nguyen Thieu Quang joined in Russia. Mr. Ho Hung Anh joined the in Science, and a Bachelors Degree Masters degree in financial manage- the executive management of Techcom- executive management of the Bank in in Economics, as well as a Masters in ment in Russia, Mr. Nguyen Dang Quang Membership bank and has held different positions in 2004 and has held various positions in Business Administration, Ms. Nguyen joined the executive management of In 2012, Mr. Lee Boon Huat was elected as a member of the Committee while the Board of Directors since 1999. He the Board of Directors. He has been the Thi Thien Huong has years of experience Techcombank and has held various posi- has been Vice Chairman of Techcom- Chairman of Techcombank BOD since working at the Bank in different positions tions since 1995. He has been the First Mr. Nguyen Duc Vinh resigned from his position as a member of the committee. bank BOD since May 2008. May 2008. such as Head of Projects and Securities Vice Chairman of Techcombank BOD Investment department, Head of HO since May 2008. There are 7 members in ARCO. Detailed information on the ARCO members is Credit Department, and Deputy General as follows: Director. Since July 2009, she has been a standing ARCO member.

Mr. Stephen Charles Banner Mr. Hoang Van Dao Mr Lee Boon Huat Member of ARCO Member of ARCO Member of ARCO

Graduated from Sheffield University with a After a PhD in Science and Technology, Mr. Graduated with a Bachelors Degree in Bachelors Degree in Business Administra- Hoang Van Dao had years of experience Business Accounting, from the Western tion, UK and Associate Certification from working with Techcombank management as Australian Institute of Technology (now Curtin the Banking Academy, UK, Mr. Stephen Deputy General Director and BOD member. University). Mr Lee Boon Huat has had many Charles Banner has years of manage- He has been an ARCO member since July years experience in the banking industry in- ment experience in banking accounting at 2008. cluding The Monetary Authority of Singapore HSBC in various countries. He has been a and the HSBC, Canadian Imperial Bank of member of the Techcombank ARCO since Commerce, Chemical Bank, and Standard April 2011. Chartered Bank. He has been an independent member of the Techcombank BOD since December 2012.

62 Techcombank Annual Report 2012 Techcombank Annual Report 2012 63 The Board of Management is responsible for executing the The Board of Management (BOM) development plans of the Bank and reporting on the performance status of Techcombank.

64 Techcombank Annual Report 2012 Techcombank Annual Report 2012 65 Board of Management

Membership Year 2012 saw a number of important changes Mr. Nguyen Dang Thanh was appointed as made to the structure of the Board of Manage- Business Director South – a new position cre- ment. Some new members were appointed and ated to directly manage the business activities some structural reforms were put into effect: Mr. in the Southern area; Mr. K.Balasingam was Mr. Paul Simon Morris Mr. Phung Quang Hung Mr. Vikesh Mirani Mr. Vinod Kumar Mr Nguyen Dang Thanh Pham Quang Thang resigned from the position appointed to the position of Head of Wholesale Chief Executive Officer Head of Operations & IT Division Group Chief Financial Officer Chief Marketing Officer Business Director – South of Head of The Small & Medium Enterprise divi- Banking. Mr. Anil Kumar Parimoo was appoint- Graduated with a Masters Degree in Graduated with a Masters Degree in Graduated as Bachelor of Commerce Graduated with a BA in English Literature Graduated from the University of sion and was appointed as Chief Credit Officer; ed as Chief Risk Officer in replacement of Mr. Business Administration from Henley International Trade from Washington State (Honors) from Maharishi Dayanand from Loyola College and an MBA in Mar- Economics Ho Chi Minh City; and Mr. Le Xuan Vu resigned from the position of Truong Gia Tu. Business School, United Kingdom, and University, United States. He held the Saraswati University in India, a Chartered keting from The International University of has held various managerial positions was the CEO of Standard Chartered Bank position of Business Manager at National Accountant from the Institute of Chartered Missouri. He is also an alumni of the at Sacombank including Head of Head of Strategy and Corporate Development Detailed information on the Board of Manage- in Brunei, Sri Lanka, the Philippines, and Australia Bank, and Head of the Bank’s IT Accountants of India and holding other Advanced Management program at the Marketing Department, Head of Division; Mr. Vikesh Mirani was appointed to the ment members is as follows: Indonesia between 2000-2010. He held Division. He was appointed to the position international certification such as Post INSEAD in France. He has over 20 years Human Resource Department, and position of Group Chief Financial Officer and the position of Chief Executive Officer at of Head of Operations and IT Division at Graduate Honors in “End User Computing” of extensive experience in Marketing and Deputy CEO. He was appointed to the Head of Strategy in replacement of Mr. Cu Anh Khan bank in Mongolia from August 2010 Techcombank in September 2010. and Diploma in Business Leadership. He Brand Management, having held a number position of Business Director – South until he joined Techcombank. He was ap- has over 18 years of experience spanning of senior roles at The Standard Chartered in October 2012. Tuan; Mr. Vinod Kumar was appointed to the pointed to the position of Chief Executive across several large banks, including Emir- Group and Visa International. Most position of Chief Marketing Officer in replace- Officer at Techcombank in January 2012. ates NBD, Emirates Bank International, recently, he was Chief Marketing Officer ment of Ms. Le Phuong Phuong. HSBC, Standard Chartered and ABN at The Saudi American Bank. Vinod was AMRO. He joined Techcombank as Group appointed CMO at Techcombank in July Chief Financial Officer in November 2012. 2012.

Mr. Pham Quang Thang Ms. Dang Tuyet Dung Mr. Nguyen Canh Vinh Mr. K.Balasingam Mr. Anil Kumar Parimoo Ms. Tran Thi Diep Anh Mr. Nguyen Thanh Long Mr. Phan Thanh Son Chief Credit Officer Head of Personal Financial Head of Sales and Distribution Division Head of Wholesale Banking Division Chief Risk Officer Head of Human Resources Head of CORM and Legal Division Head of Treasury and Financial Services Division Management Division Markets Division Graduated with a Masters Degree from Graduated with a Masters Degree from La Graduated as a Masters of Bussiness Graduated with a Bachelor in Science Graduated as a Master of Law from Hanoi Swinburne Technology University. He held Graduated from the National Economics Trobe University and held the position of Administration in Banking and Finance Degree from the University of Kashmir, Graduated from the Transport and Com- Law University. He held the position of Graduated with a Masters Degree in the positions of Head of Treasury and University and held the position of Head of Head of HO Business Centre at Techcom- from The University of Hull. He has held and holds other Certifications such munications University and Hanoi Univer- Deputy Head of Legal Department, State Economics from National Economics Transaction Management Centre, Deputy Cashflow Management and International bank, and Business Manager of Region a number of managerial roles in several as Bank Indonesia Risk Management sity of Foreign Studies. She has held the Bank of Vietnam, Deputy Chief Executive University and held the position of Deputy Chief Executive Officer at Techcombank Payment Product Development at Citi- 1. He was appointed to the position of banks including Standard Chartered Certification approved by GARP, and a position of HR Manager at Cargill Vietnam Officer at Techcombank and was ap- Chief Executive Officer at TienPhong and also Head of Commercial Banking bank. She was appointed to the position Head of Sales and Distribution Division in Bank; Danajamin Nasional Malaysia Certified Associateship from Indian In- for many years. She was appointed to the pointed to the position of Head of Legal Bank. He was appointed to the position Division. He was appointed to the position of Head of Personal Financial Services Di- January 2011. Berhad and Khan Bank. He was most re- stituion of Banking and Finance. He has position of Head of Human Resources and Compliance Division in November of Head of Treasury and Financial Markets of Chief Credit Officer in February 2013. vision at Techcombank in February 2010. cently Wholesale Banking advisor at Khan 21 years of experience in the Banking Management Division at Techcombank in 2009. Division in January 2011. Bank. He joined Techcombank as Head of sector spanning many large Banks such November 2011. Wholesale Banking in June 2012. as State Bank of India, ABN AMRO, Bank Danamon. He was appointed as Chief Risk Officer in June 2012.

66 Techcombank Annual Report 2012 Techcombank Annual Report 2012 67 Board Management Responsibilities

The Management is responsible for the preparation and presentation of the consolidated financial statements in accordance with Vietnamese Accounting Standards and the Vietnamese Accounting System for Credit Institutions as stipulated by the State Bank of Vietnam and the relevant statutory requirements.

In the opinion of the Board of Management:

a) The consolidated financial statements set out on pages 70 to 81 are prepared and presented to give a true and fair view of the consolidated financial position of Vietnam Technological and Commercial Joint Stock Bank and its subsidiaries (“Techcombank”) as at 31 December 2012, and of their consolidated results of operations, and the consolidated cash flows of Techcombank for the year then ended in accordance with Vietnamese Accounting Standards, Vietnamese Accounting System, and Vietnamese Accounting System for Credit Institutions stipulated by the State Bank of Vietnam and the relevant statutory requirements; and

b) At the date of this statement, there are no reasons to believe that Techcombank will not be able to pay its debts as and when they fall due.

The Management has, on the date of this statement, authorized these consolidated financial statements for issue.

On behalf of the Management,

Simon Morris Chief Executive Officer

Hanoi, 18 March 2013

68 Techcombank Annual Report 2012 Techcombank Annual Report 2012 69 Annual Report 2012 Audited Financial Statement Charting a course for growth

The Bank is well positioned for the future. We have confidence in our abilities to deliver superior long term performance.

70 Techcombank Annual Report 2012 Techcombank Annual Report 2012 71 INDEPENDENT AUDITORS’ REPORT

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 2012 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 Techcombank’s management on 20 March 2013, as set out on page 5 to 72. These consolidated financial statements are the responsibility of Techcombank’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 consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. 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 Com- mercial Joint Stock Bank and its subsidiaries as of 31 December 2012 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 Audited financial statements Vietnam Independent auditors Report Investment Certificate No: 011043000345 Consolidated Balance Sheet Audit Report No: 11-02-249/5 Consolidated Statement of Income Consolidated Statement of Cash Flows

Tran Anh Quan Tran Dinh Vinh CPA No. 0306/KTV CPA No. 0339/KTV Deputy General Director Hanoi, 20 March 2013

72 Techcombank Annual Report 2012 Techcombank Annual Report 2012 73 Vietnam Technological and Commercial Joint Stock Bank Vietnam Technological and Commercial Joint Stock Bank (continued) Consolidated balance sheet as at 31 December 2012 I Form B02/TCTD-HN Consolidated balance sheet as at 31 December 2012 I Form B02/TCTD-HN

Notes 31/12/2012 31/12/2011 Notes 31/12/2012 31/12/2011 VND million VND million VND million VND million B LIABILITIES AND SHAREHOLDERS’ EQUITY A ASSETS I Cash and gold on hand 4 4,529,185 5,115,002 LIABILITIES II Balances with the State Bank of Vietnam 5 5,576,747 4,465,664 III Balances with and loans to other credit institutions 6 31,299,956 43,190,766 Amounts due to the Government and the State Bank of Vietnam 1. Balances with other credit institutions 21,159,534 43,190,766 I 17 - 3,317,602 2. Loans to other credit institutions 10,196,333 - 3. Allowance for loans to other credit institutions (55,911) - II Deposits and borrowings from other credit institutions 18 39,170,405 48,132,743 IV Securities held for trading 7 768,958 283,574 1. Deposits from other credit institutions 14,920,718 38,188,455 1. Securities held for trading 800,370 437,134 2. Borrowings from other credit institutions 24,249,687 9,944,288 2. Allowance for diminution in the value of securities held for trading (31,412) (153,560) V Derivatives and other financial assets 8 40,868 54,272 III Deposits from customers 19 111,462,288 88,647,779 VI Loans and advances to customers 67,136,307 62,562,406 1. Loans and advances to customers 9 68,261,442 63,451,465 IV Other borrowed and entrusted funds 20 127,953 252,398 2. Allowance for loans and advances to customers 10 (1,125,135) (889,059) VII Investment securities 11 46,654,293 48,342,033 V Valuable papers issued 21 10,450,843 23,094,145 1. Available for sale securities 43,895,517 43,847,690 2. Held to maturity securities 3,092,452 4,519,013 VI Other liabilities 22 5,432,533 4,574,761 3. Allowance for diminution in the value of investment securities (333,676) (24,670) 1. Accrued interest and fee payables 2,069,183 1,832,106 VIII Long-term investments 12 92,825 76,905 2. Other liabilities 3,247,288 2,629,881 92,825 76,905 Other long-term investments 3. Provisions for off-balance sheet commitments 116,062 112,774 IX Fixed assets 1,146,424 1,191,224 1. Tangible fixed assets 13 819,766 964,923 TOTAL LIABILITIES 166,644,022 168,019,428 a. Cost 1,271,647 1,293,920 b. Accumulated depreciation (451,881) (328,997) 2. Intangible fixed assets 14 326,658 226,301 SHAREHOLDERS’ EQUITY a. Cost 444,629 299,358 b. Accumulated amortisation (117,971) (73,057) VII Capital and reserves 23 13,289,576 12,511,735 X Investment property 15 1,329,393 21,121 1. Capital 8,848,079 8,788,450 a. Cost 1,354,461 21,262 a. Share capital 8,848,079 8,788,079 b. Accumulated amortisation (25,068) (141) b. Other capital - 371 XI Other assets 16 21,358,642 15,228,196 2. Reserves 3,475,744 1,055,128 1. Receivables 15,173,649 10,340,702 3. Retained earnings 965,753 2,668,157 2. Accrued interest and fee receivable 5,895,197 4,471,852 3. Deferred tax assets 34,765 35,203 TOTAL SHAREHOLDERS’ EQUITY 13,289,576 12,511,735 4. Other assets 297,964 380,698 5. Allowance for other assets (42,933) (259) TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 179,933,598 180,531,163 TOTAL ASSETS 179,933,598 180,531,163

The accompanying notes are an integral part of the consolidated financial statements The accompanying notes are an integral part of the consolidated financial statements

74 Techcombank Annual Report 2012 Techcombank Annual Report 2012 75 Vietnam Technological and Commercial Joint Stock Bank (continued) Vietnam Technological and Commercial Joint Stock Bank Consolidated balance sheet as at 31 December 2012 I Form B02/TCTD-HN Consolidated statement of income for the year ended 31 December 2012 I Form B03/TCTD-HN

31/12/2012 31/12/2011 Notes 31/12/2012 31/12/2011 VND million VND million VND million VND million OFF-BALANCE SHEET ITEMS 1. Interest and similar income 24 17,622,864 19,948,573 2. Interest and similar expenses 24 (12,507,291) (14,650,198) I CONTINGENT LIABILITIES I Net interest income 24 5,115,573 5,298,375 1. Letters of credit 7,240,069 8,888,624 3. Fee and commission income 25 1,051,286 1,520,157 2. Other guarantees 7,426,416 8,867,573 4. Fee and commission expenses 25 (485,883) (369,803) II Net fee and commission income 25 565,403 1,150,354 II OTHER COMMITMENTS III Net loss from trading of foreign currencies and gold 26 (138,863) (698,913) 1. Undrawn loan commitments 476 3,456 IV 2. Unmatured foreign currency contracts 7,521,530 974,950 Net gain/(loss) from trading of securities held for trading 27 2,701 (55,333) V Net (loss)/gain from investment securities 28 (175,043) 416,257 5. Other income 29 617,848 707,115 6. Other expenses (256,233) (163,741) VI Net other income 361,615 543,374 VII Income from investments in other entities 29,992 8,061 Approved by VIII Operating expenses 30 (3,294,041) (2,099,198) IX Operating profit before allowance and provision expenses 2,467,337 4,562,977 X Allowance and provision expenses 31 (1,449,481) (341,864) XI Profit before tax 1,017,856 4,221,113 7. Income tax expense – current 32 (253,344) (1,077,016) 8. Income tax expense – deferred 32 1,174 9,669 Bui Thi Khanh Van Cu Anh Tuan Simon Morris Acting Chief Accountant Head of Financial Accounting Division Chief Executive Officer XII Total income tax expense (252,170) (1,067,347) XIII Net profit after tax 765,686 3,153,766 XIV Basic earnings per share (VND/share) 33 700 2,902 XV Diluted earnings per share (VND/share) 33 696 2,886

Approved by

Bui Thi Khanh Van Cu Anh Tuan Simon Morris Acting Chief Accountant Head of Financial Accounting Division 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

76 Techcombank Annual Report 2012 Techcombank Annual Report 2012 77 Vietnam Technological and Commercial Joint Stock Bank Vietnam Technological and Commercial Joint Stock Bank (continued) Consolidated statement of cash flows for the year ended 31 December 2012 I Form B04/TCTD-HN Consolidated statement of cash flows for the year ended 31 December 2012 I Form B04/TCTD-HN

31/12/2012 31/12/2011 2012 2011 VND million VND million VND million VND million CASH FLOWS FROM OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES

1 Interest and similar income received 16,199,519 17,695,764 01 Payments for purchases of fixed assets (1,743,677) (630,134) 2 Interest and similar expenses paid (12,270,214) (14,196,925) 02 Proceeds from disposals of fixed assets 431,276 251 3 Fee and commission income received 565,403 1,150,354 07 Payments for investments in other entities (15,920) (7,260) 4 Net payment for foreign currencies, gold and securities trading activities (124,347) (249,681) 5 Other income received 153,288 482,415 09 Dividends received from long-term investments 29,992 8,061 6 Proceeds from loans previously written off 52,908 60,959 7 Operating and salary expenses payments (3,089,693) (1,678,094) II NET CASH OUTFLOWS FROM INVESTING ACTIVITIES (1,298,329) (629,082) 8 Income tax paid (1,267,872) (657,186)

III NET CASH FLOWS FOR THE YEAR (11,676,643) (6,440,824) Net cash inflow from operating activities before 218,992 2,607,606 changes in operating assets and liabilities IV CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 34,298,612 40,739,436

Changes in operating assets 9 Balance with and loans to credit institutions (1,867,010) (5,879,900) V CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR (Note 34) 22,621,969 34,298,621 10 Securities held for trading and investment securities 2,515,498 (16,612,965) 11 Derivatives and other financial assets 13,404 (54,272) 12 Loans and advances to customers (5,964,183) (10,550,155) 13 Other assets (4,687,257) (1,507,892) Approved by Changes in operating liabilities 14 Amounts due to the Government and SBV (3,317,602) (4,773,714) 15 Deposits and borrowings from other credit institutions (8,962,338) 20,349,629 16 Deposits from customers 22,814,509 8,097,026 17 Valuable papers issued (12,643,302) 8,069,928 18 Other borrowed and entrusted funds (124,445) (6,388,692) Bui Thi Khanh Van Cu Anh Tuan Simon Morris Acting Chief Accountant Head of Financial Accounting Division Chief Executive Officer 19 Derivatives and other financial liabilities - (52,888) 20 Other liabilities 1,628,787 885,304 22 Utilisations of reserves (3,367) (757)

I NET CASH OUTFLOWS FROM OPERATING ACTIVITIES (10,378,314) (5,811,742)

The accompanying notes are an integral part of the consolidated financial statements The accompanying notes are an integral part of the consolidated financial statements

78 Techcombank Annual Report 2012 Techcombank Annual Report 2012 79 Vietnam Technological and Commercial Joint Stock Bank Vietnam Technological and Commercial Joint Stock Bank (continued) Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN

These notes form an integral part of, and should be read in conjunction with, the accompanying consolidated financial statements. 2. BASIS OF PREPARATION

1. REPORTING ENTITY (a) Statement of compliance Vietnam Technological and Commercial Joint Stock Bank (herein referred to as “the Bank”) is a joint stock bank incorporated and registered in the The consolidated financial statements have been prepared in accordance with Vietnamese Accounting Standards, the Vietnamese Accounting System Socialist Republic of Vietnam. for Credit Institutions stipulated by the State Bank of Vietnam, and the relevant statutory requirements. These standards and statutory requirements may differ in some material respects from the generally accepted accounting principles and standards of other countries. Accordingly, the accompanying The Bank was established pursuant to Banking Licence No. 0040/NH-GP dated 6 August 1993 issued by the State Bank of Vietnam (“the SBV”) and consolidated financial statements are not intended to present the consolidated financial position and consolidated results of operations and cash flows Business Registration Certificate No. 055697 dated 7 September 1993 issued by Hanoi Department of Planning and Investment, Its operation period in accordance with generally accepted accounting principles and practices in countries or jurisdictions other than Vietnam. Furthermore, their utilisation was extended to 99 years under Decision No. 330/QD-NH5 dated 8 October 1997 by the SBV. is not designed for those who are not informed about Vietnam’s accounting principles, procedures and practices.

The principal activities of the Bank are mobilising and receiving short, medium and long-term deposit funds from organisations and individuals; granting (b) Basis of measurement loans on short, medium and long-term basis up to the nature and ability of the Bank’s capital resources; conducting settlement and cash services and The consolidated financial statements, except for the consolidated statement of cash flows, are prepared on the accrual basis using the historical cost other banking services as approved by the SBV; conducting investments in associate, joint-ventures and other companies; investment in bonds and deal concept. The consolidated statement of cash flows is prepared using the direct method. in foreign exchange in accordance with applicable regulations. (c) Annual accounting period As at 31 December 2012, the Bank’s share capital was VND8,848,078,710,000. There were 884,807,871 ordinary shares in issue with face value per The annual accounting period of Techcombank is from 1 January to 31 December. share of VND10,000. (d) Accounting currency The Bank’s Head Office is located at 191 Ba Trieu, Hanoi, As at 31 December 2012, the Bank had one (1) Head Office, two (2) representative offices, one The consolidated financial statements are prepared and presented in Vietnam Dong (“VND”), rounded to the nearest million (“VND million”). (1) transaction centre, sixty two (62) branches, two hundred and fifty three (253) transaction offices nationwide and three (3) subsidiaries. The consolidated financial statements of the Bank as at and for the year ended 31 December 2012 comprise the Bank and its subsidiaries (together 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES referred to as “Techcombank”). The following significant accounting policies have been adopted by Techcombank in the preparation of these consolidated financial statements.

As at 31 December 2012, the Bank had three (3) subsidiaries as follows: (a) Basis of consolidation financial statement preparation (i) Subsidiaries Subsidiaries are those companies over which the Bank has the power to govern the financial and operating policies. Subsidiaries are fully consolidated Subsidiaries Operating licence Nature of Business % owned by the Bank from the date on which control is transferred to the Bank. They are de-consolidated from the date on which control ceases.

Techcom Securities Company Limited 98/UBCK-GP, dated 18 September 2008 Securities activities 100% The Bank uses the purchase method of accounting to account for the acquisition of subsidiaries. The cost of an acquisition is measured as the fair granted by State Securities Commission. 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 measured initially at their fair value at the acquisition date, Vietnam Technological and Commercial 0104003519 dated 18 June 2008 Asset management 100% irrespective of the extent of the minority interest. Joint Stock Bank - Asset Management granted by Hanoi Department of Planning Company Limited and Investment. (ii) Transactions eliminated on consolidation Inter-company balances, transactions and unrealised gains on transactions between those subsidiaries and the Bank are eliminated. Unrealised losses Techcom Capital Management 40/UBCK-GP, dated 21 October 2008 Fund management 100% also eliminated unless transactions provide evidence of an impairment of the asset transferred. The accounting policies of subsidiaries have been Company Limited granted by State Securities Commission. changed when necessary to ensure the consistency with the policies adopted by the Bank.

As at 31 December 2012, Techcombank had 7,168 employees (31 December 2011: 8,335 employees).

80 Techcombank Annual Report 2012 Techcombank Annual Report 2012 81 Vietnam Technological and Commercial Joint Stock Bank (continued) Vietnam Technological and Commercial Joint Stock Bank (continued) Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN

(b) Foreign currency transactions (d) Cash and cash equivalents Monetary assets and liabilities denominated in currencies other than VND are translated into VND at the rates of exchange ruling at the balance sheet Cash and cash equivalents include cash on hand, gold on hand, balances with the SBV, Government promissory notes and other valuable papers which date, Non-monetary foreign currency assets and liabilities are reported using the exchange rates effective at the date of the transactions. Translation are eligible for discount, balances with other credit institutions with original terms to maturity not exceeding three months and investment securities with adjustments arising from dealing activities as at the balance sheet date are taken to the consolidated statement of income. Income/expense transactions terms from the date of purchase to maturity not exceeding three months. incurred in foreign currencies are recognised in the consolidated statement of income in VND using the exchange rates ruling on the dates of the Gold is revalued at the balance sheet date and the differences arising on revaluation are recorded in the consolidated statement of income. transactions. (e) Securities held for trading (c) Financial instruments (i) Classification and Recognition In its business operation. Techcombank regularly enters into contracts which give rise to financial assets, financial liabilities and equity instruments. Securities held for trading are debt or equity securities, which are acquired for trading purpose, Securities held for trading are initially recognised at cost.

Financial assets of Techcombank mainly include: (ii) Measurement • Cash and gold on hand; Listed trading securities are stated at cost less allowance for diminution in value by reference to closing prices of securities from the Ho Chi Minh City • Balances with the State Bank of Vietnam and other credit institutions; Stock Exchange and average prices from the Hanoi Stock Exchange at reporting date. • Loans and advances to customers; Unlisted trading securities which are actively traded on over-the-counter market (“OTC market”) are stated at cost less allowance for diminution in value • Securities held for trading; which is determined by reference to the average price of the transaction price quotes from three securities companies having charter capital above • Investment securities; VND300 billion. Unlisted trading securities which are not actively traded on the OTC market are stated at cost, less any allowance for diminution in value • Long-term investments; considered necessary by the management. The management determines the allowance for diminution in value after giving consideration to cost, market • Derivative financial assets; and conditions, current operating performance and expected cash flows. • Other financial assets. 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: (f) Investment securities • Amounts due to the Government and the State Bank of Vietnam; (i) Classification and Recognition • Deposits and borrowings from other credit institutions; Investment securities are classified into available for sale investment securities and held to maturity investment securities. Techcombank initially recognised • Deposit from customers and entrusted funds; investment securities at cost. • Valuable papers issued; • Derivative financial liabilities; and (ii) Measurement • Other financial liabilities. Listed available-for-sale equity securities are stated at cost less allowance for diminution in value which is determined by reference to closing prices of securities from the Ho Chi Minh City Stock Exchange and average prices from the Hanoi Stock Exchange at reporting date. (i) Recognition Unlisted available-for-sale equity securities which are actively traded on over-the-counter market (“OTC market”) are stated at cost less allowance for Techcombank initially recognises financial assets and liabilities on the trade date at which Techcombank becomes a party to the contractual provisions diminution in value which is determined by reference to the average price of the transaction price quotes from three securities companies having charter of the instruments. capital above VND300 billion. Unlisted available-for-sale equity securities which are not actively traded on the OTC market are stated at cost, less any Financial assets and liabilities are measured at costs that are directly attributable to their acquisition or issue. allowance for diminution in value considered necessary by the management. The management determines the allowance for diminution in value after giving consideration to cost, market conditions, current operating performance and expected cash flows. (ii) De-recognition Techcombank derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or when it transfers the financial Available-for-sale debt securities and held-to-maturity securities are measured at cost less allowance for diminution in value which is determined by reference asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred or in which Techcombank neither to the market value. In case that market price of these securities is not available or cannot be determined reliably, these securities are stated at cost. transfers nor retains substantially all the risks and rewards of ownership and it does not retain control of the financial asset. Premiums and discounts arising from purchases of available-for-sale debt securities and held-to-maturity securities are amortised to the consolidated Techcombank derecognises a financial liability when its contractual obligations are discharged, cancelled or expired. statement of income using straight line method over the period from the acquisition dates to maturity dates. Post-acquisition interest income of available-for-sale debt securities and held-to maturity securities is recognised in the consolidated statement of income on an accrual basis.

82 Techcombank Annual Report 2012 Techcombank Annual Report 2012 83 Vietnam Technological and Commercial Joint Stock Bank (continued) Vietnam Technological and Commercial Joint Stock Bank (continued) Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN

(g) Long-term investments Other long term investments are investments in the equity of companies without control or significant influence over the investees. These investments are Group Overdue status Allowance rate initially stated at cost. Allowance for diminution in value is required for other long term investments when investee companies suffer losses, except when 1 Current • Current loans or overdue loans less than 10 days. 0% the loss was anticipated in their business plan before the date of investment (Note 3(h)). 2 Special mention • Loans being overdue between 10 days to 90 days; or 5% (h) Allowance for diminution in the value of investment securities and long-term investments • Loans having revised terms of repayments for the first time (if customers are assessed In accordance with Official Letter No. 7459/NHNN-KTTC issued by the SBV on 30 August 2006, allowance for investment securities is required if the as being capable of repaying both principal and interest according to the first revised market value of investment securities is lower than their book value or there is indication of long-term diminution in the value of investment securities. terms of repayments for the case of enterprises and organisational customers). Allowances for diminution in the value of other long-term equity investments in economic entities are required if the economic entities suffer losses (except when the loss was anticipated in their business plan before the date of investment). 3 Sub standard • Loans being overdue between 91 days and 180 days; 20% • Loans having rescheduled terms of repayments for the first time except for the loans Allowance for diminution in the value of overdue investment debt securities is determined by overdue days as follow: with revised terms 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 to contracts. Overdue days Provision rate • From 6 months up to 1 year 30% 4 Doubtful • Loans being overdue between 181 days and 360 days; 50% • From 1 year up to 2 years 50% • Loans having rescheduled terms of repayments for the first time and being overdue • From 2 years up to 3 years 70% less than 90 days according to the first rescheduled terms of repayments; or • More than 3 years 100% • Loans having rescheduled terms of repayments for the second time.

(i) Loans and advances to customers 5 Loss • Loans being overdue more than 360 days; 100% Loans and advances to customers are stated at the amount of the principal outstanding less any allowance for loans and advances to customers. • 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; 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 • Loans having rescheduled terms of repayments for the second time and being between one to five years of the loan disbursement date, Long-term loans are those with a repayment date of more than five years from the date the overdue according to the second reschedule terms of repayments; • Loans having rescheduled terms of repayments for the third time; or loan disbursement date. • Blocked loans, or loans awaiting for settlements.

Decision No. 493/2005/QD-NHNN dated 22 April 2005 issued by State Bank of Vietnam (“Decision No. 493”), which was amended and supplemented by Decision No. 18/2007/ QD-NHNN dated 25 April 2007 issued by State Bank of Vietnam (“Decision No. 18”), requires specific allowance to be made Effective from 23 April 2012. Techcombank adopted Decision No. 780/QD-NHNN dated 23 April 2012 issued by State Bank of Vietnam (“Decision 780”) for loans and advances on a quarterly basis based on loan groups. regarding the classification of loans being rescheduled or having the repayment terms extended under which such loans are classified in the same loan groups as before rescheduling or having the repayment terms extended if the borrower are assessed as having positive business potential and ability to The specific allowance disclosed at the balance sheet date (31 December 2012) is determined at the specific allowance amount required by Decision repay well these loans. No. 493 and Decision No. 18. Techcombank applied this new accounting policy prospectively. The impact of this change in accounting policy is mentioned in Note 9. The specific allowance required by Decision No. 493 and Decision No. 18 is determined utilising the following allowance rates against principal outstanding The basis to determine the value and discounted value for each type of collateral is specified in Decision No. 493 and Decision No. 18. as at 30 November 2012 less allowed value of collaterals. 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.

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).

84 Techcombank Annual Report 2012 Techcombank Annual Report 2012 85 Vietnam Technological and Commercial Joint Stock Bank (continued) Vietnam Technological and Commercial Joint Stock Bank (continued) Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN

(j) Allowance for loans to other credit institutions (n) Intangible fixed assets In accordance to Circular No. 21/2012/TT-NHNN issued by State Bank of Vietnam dated 18 June 2012 on regulation on operation of lending, borrowing, (i) Software term purchase and sale of valuable papers with term among foreign credit institutions and bank branches, allowances for loans to other credit institutions The cost of acquiring new software, which is not an integral part of the related hardware, is capitalised and treated as an intangible asset. Software costs are calculated in accordance with Decision No, 493 and Decision No. 18, The allowance policy for loans to other credit institutions is consistent with that are amortised on a straight-line basis over 8 years. for loans and advances to customers as described in Note 3(i). (ii) Land use rights (k) Provision for off-balance sheet commitments Termed land use rights In accordance with Decision No. 18, Techcombank is also required to classify guarantees, acceptances, loan commitments which are irrevocable and Termed land use rights are stated at cost less accumulated amortization. The initial cost of a termed land use right comprises its purchase price and any unconditional into relevant groups and make specific allowances accordingly. The specific allowance rates for the above balances are the same as those directly attributable costs incurred in conjunction with securing the land use right. Amortisation is computed on a straight-line basis over 25-50 years. for loans and advances to customers. Land use rights with indefinite term Techcombank is also required to make a general provision of 0,75% of total irrevocable outstanding letters of guarantee, letters of credit, and loan Land use rights with indefinite term are stated at cost and are not amortised. The initial cost of a land use right with indefinite term comprises its purchase commitments which are irrevocable and unconditional as at the balance sheet date. price and any directly attributable costs incurred in conjunction with securing the land use right.

(l) Derivative financial instrument (iii) Other intangible fixed assets Derivatives are recorded in a balance sheet account at contract value on the date which a derivative contract is entered into and revalued subsequently Other intangible fixed assets are stated at cost less accumulated amortisation. Amortisation is computed on a straight line basis over 4-8 years. at the period-end. Gains or losses arising from derivatives are recognised in the consolidated statement of income. (o) Investment property Derivative financial instruments classified as derivative financial assets if the value recorded is positive and classified as derivative financial liabilities if the (i) Cost value recorded is negative. Investment property is stated at cost less accumulated depreciation. The initial cost of an investment property comprises its purchase price, cost of land use rights and any directly attributable expenditures of bringing the property to the condition necessary for it to be capable of operating in the manner (m) Tangible fixed assets intended by management. Expenditure incurred after investment property has been put into operation, such as repairs and maintenance, is charged (i) Cost to the statement of income in the year in which the expenditure is incurred. In situations where it can be clearly demonstrated that the expenditure has Tangible fixed assets are stated at cost less accumulated depreciation. The initial cost of a tangible fixed asset comprises its purchase price, including resulted in future economic benefits in excess of the originally assessed standard of performance of the existing investment property, the expenditure is import duties and non-refundable purchase taxes and any directly attributable costs of bringing the asset to its working condition and location for its capitalised as an additional cost of investment property. intended use, and the cost of dismantling and removing the asset and restoring the site on which they are located. Expenditure incurred after the tangible fixed assets have been put into operation, such as repairs and maintenance and overhaul costs, is normally charged to the statement of income in the (ii) Depreciation 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 Depreciation is computed on a straight-line basis over the estimated useful lives of investment property. The estimated useful lives are as follows: economic benefits expected to be obtained from the use of an item of tangible fixed assets beyond its originally assessed standard of performance, the • building 10 - 40 years expenditure is capitalised as an additional cost of tangible fixed assets. (p) Provision (ii) Depreciation A provision is recognised if, as a result of a past event. Techcombank has a present legal or constructive obligation that can be estimated reliably, and Depreciation is computed on a straight-line basis over the estimated useful lives of items of tangible fixed assets. The estimated useful lives are as follows: it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. • buildings and building improvements 20 - 50 years • office equipment 4 - 8 years • vehicles 7 - 10 years • other assets 4 - 5 years

86 Techcombank Annual Report 2012 Techcombank Annual Report 2012 87 Vietnam Technological and Commercial Joint Stock Bank (continued) Vietnam Technological and Commercial Joint Stock Bank (continued) Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN

(q) Provision for severance allowance The subsidiaries Under the Vietnamese Labour Code, when employees who have worked for 12 months or more (“eligible employees”) voluntarily terminates their labour Vietnam Technological and Commercial Joint Stock Bank - Asset Management Company Limited contract, the employer is required to pay the eligible employees severance allowance calculated based on years of service and employees’ compensation According to Circular 27/2002/TT-BTC dated 22 March 2002 issued by the Ministry of Finance, the reserves as allocation requirements for Vietnam at termination. Provision for severance allowance has been provided based on employees’ years of service and their current salary level. Technological and Commercial Joint Stock Bank - Asset Management Company Limited are the same as those of the Bank Techcom Securities Pursuant to Law on Social Insurance, effective from 1 January 2009. Techcombank and its employees are required to contribute to an unemployment Company Limite insurance fund managed by the Vietnam Social Insurance Agency. The contribution to be paid by each party is calculated at 1% of the lower of the employees’ basic salary and 20 times the general minimum salary level as specified by the Government from time to time. With the implementation of According to Decision 27/2007/QD-BTC dated 24 April 2007 issued by the Ministry of Finance, securities companies are required to make the following the unemployment insurance scheme. Techcombank is no longer required to provide severance allowance for the service period after 1 January 2009. reserve allocation from profit after tax before distribution of profits: However, severance allowance to be paid to existing eligible employees will be determined based on the eligible employees’ years of service as of 31 December 2008 and their average salary for the six-month period prior to the termination date. Annual allocation Maximum balance

Reserve to supplement share capital 5% of profit after tax 100% of chartered capital (r) Convertible bonds Financial reserve 10% of profit after tax 10% of chartered capital Convertible bonds issued by Techcombank entitle bondholders to convert their bonds into a fixed number of shares of Techcombank at the time of issuance. Accordingly, any subsequent issuances of bonus shares or dividend after the issuance date will affect the conversion price and number of The purpose of the financial reserve is to cover losses incurred during the normal course of business. This reserve together with the reserve to supplement shares to be converted at the date of their maturity due to anti-dilution term of the bonds. chartered capital are non-distributable. Techcombank classifies convertible bonds issued as financial liabilities. There are two types of convertible bonds, (1) mandatory convertible bonds where the bondholders signed agreements to convert the bonds to shares at maturity and (2) normal convertible bonds where the bondholders have the option Techcom Capital Management Company Limited (“the Company”) to convert at maturity. Both types of convertible bonds are classified as financial liabilities in the consolidated balance sheet. There was no requirement for allocation of reserves applied to the Company. Accordingly, no reserve was allocated from the profit after tax before distribution to the Bank. (s) Other payables Other payables are stated at their cost. (v) Revenue recognition (i) Interest income (t) Share capital Interest income is recognised in the consolidated statement of income on an accrual basis, except for interest on loans classified in Group 2 to Group 5 (i) Ordinary shares as defined in Note 3(i) which is recognised upon receipt. Ordinary shares are classified as equity, Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity.

(ii) Fee and commission income (ii) Share premium Fees and commissions are recognised in the consolidated statement of income on an accrual basis. 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.

(iii) Dividend income (u) Reserves and funds Dividends receivable in cash are recognised in the consolidated statement of income when Techcombank’s right to receive payment is established. The Bank In accordance with Circular No. 244/TT-BTC dated 31 December 2009 issued by the Ministry of Finance, dividends received in the form of shares, According to Decree No. 57/2012/ND-CP dated 20 July 2012 issued by the Government of Vietnam, replacing Decree No. 146/2005/ND-CP dated 23 bonus shares and rights to purchase shares of the existing shareholders, dividends received by Techcombank in form of shares distributed from retained November 2005, the Bank is required to make the following allocations before distribution of profits: earnings are not recognised as an increase in the value of the investment and income is not recognised in the consolidated statement of income.

Annual allocation Maximum balance (w) Interest expenses Reserve to supplement share capital 5% of profit after tax Share capital Interest expenses are recognised in the consolidated statement of income on an accrual basis. Financial reserve 10% of profit after tax 25% share capital (x) Operating lease payments Other equity funds are allocated from profit after tax. The allocation from profit after tax and the utilisation of the other equity funds are approved by the 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 shareholders in the Annual General Meeting. These funds are not required by law and are fully distributable. incentives received are recognised in the consolidated statement of income as an integral part of the total lease expense.

88 Techcombank Annual Report 2012 Techcombank Annual Report 2012 89 Vietnam Technological and Commercial Joint Stock Bank (continued) Vietnam Technological and Commercial Joint Stock Bank (continued) Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN

(y) Taxation Loans and receivables: Income tax on the profit or loss for the year comprises current and deferred tax, Income tax is recognised in the consolidated statement of income. • Loans and receivables are non-derivative financial assets with fixed or identifiable payments and not listed on the market, with the exceptions of: 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, - The amounts Techcombank has the intent to immediately sell or will sell in a near future which are classified as assets held for trading, and like and any adjustment to tax payable in respect of previous year. those which, upon initial recognition. Techcombank categorised as such recognised at fair, value through profit or loss; Deferred tax is provided using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for - The amounts categorised by Techcombank as available for sale upon initial recognition; or. financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of - The amounts whose holders cannot recover most of the initial investment value not due to credit quality impairment and which are categorised realisation or settlement of the carrying amount of assets and liabilities using tax rates enacted or substantively enacted at the balance sheet date. as available for sale. 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 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. Available-for-sale investments: • Available-for-sale assets are non-derivative financial assets that are designated as available for sale or are not classified as: (z) Earnings per share - Loans and receivables; Techcombank presents its basic earnings per share (“EPS”) for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to the - Held-to-maturity investments; ordinary shareholders of the Bank by the weighted average number of ordinary shares outstanding during the year. - Financial assets at fair value through profit or loss. Diluted EPS is determined by adjusting the profit or loss attributable to the ordinary shareholders of the Bank and the weighted average number of In accordance with Circular 210/2009/TT-BTC, financial liabilities are classified into the following categories for disclosure purpose in the financial statements: ordinary shares outstanding during the year for the effect of all dilutive instruments. The weighted average number of shares outstanding during the year takes into account the effect of mandatory convertible bonds in issue and the Financial liabilities at fair value through profit or loss: change in conversion rate due to bonus shares issuance or dividend in shares during the year (see Note 33). • Financial liabilities recognised at fair value through profit or loss include derivative financial liabilities.

(aa) Segment reporting Financial liabilities carried at amortised cost: A segment is a distinguishable component of Techcombank that is engaged either in providing related products or services (business segment), or in • Financial liabilities which are not classified as fair value through profit or loss statements are classified in to financial liabilities at amortised cost. providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different The classification of financial assets and financial liabilities as mentioned above is only for the disclosure purpose in the financial statements. from those of other segments. Techcombank’s primary format for segment reporting is based on geographical segments. This classification does not impact the recognition, measurement or classification in Techcombank’s balance sheet.

(ab) Classification of financial assets and financial liabilities for disclosure purpose (ii) Measurement and disclosures of fair value (i) Classification of financial assets and financial liabilities In accordance with Circular 210/2009/TT-BTC. Techcombank discloses fair value of financial assets and financial liabilities to compare with the carrying In accordance with Circular 210/2009/TT-BTC, financial assets are classified into the following categories for disclosure purpose in the consolidated value of those financial assets and financial liabilities as in Note 42. financial statements: Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction on the measurement date. Financial assets recognised at fair value through profit or loss When available. Techcombank measures the fair value of an instrument using quoted prices in an active market for that instrument. A market is regarded • Financial assets at fair value through profit or loss include financial asset held for trading and derivatives. A financial asset is classified as held for as active if quoted prices are readily and regularly available and represent actual and regularly occurring market transactions on an arm’s length basis. trading if: - It is purchased mainly for the purpose of resale in a short term; or - There is evidence that such instrument is traded for the purpose of gaining short-term profits.

Held-to-maturity investments: • Held-to-maturity investments are non-derivative financial assets with fixed or identifiable payments and fixed maturity periods which 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; - Financial assets already categorized as available for sale; - Financial assets that meet the definitions of loans and receivables.

90 Techcombank Annual Report 2012 Techcombank Annual Report 2012 91 Vietnam Technological and Commercial Joint Stock Bank (continued) Vietnam Technological and Commercial Joint Stock Bank (continued) Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN

4. CASH AND GOLD ON HAND 6. BALANCES WITH AND LOANS TO OTHER CREDIT INSTITUTIONS 31/12/2012 31/12/2011 31/12/2012 31/12/2011 VND million VND million VND million VND million Cash on hand in VND 1,725,872 1,544,219 Current accounts Cash on hand in foreign currencies 575,073 481,730 Current accounts in VND 2,425,620 5,768,075 Gold on hand 2,228,240 3,089,053 Current accounts in foreign currencies 8,591,309 8,790,178

4,529,185 5,115,002 Term deposits Term deposits in VND 7,330,825 21,188,020 5. BALANCES WITH THE STATE BANK OF VIETNAM Term deposits in foreign currencies 2,811,780 7,444,493 These consist of a compulsory reserve for liquidity and a current account. Under the State Bank of Vietnam’s regulations relating to the compulsory reserve, banks are permitted to maintain a floating balance for the compulsory Loans reserve requirement (“CRR”). The monthly average balance of the reserves must not be less than CRR rates multiply with preceding month’s average Loans in VND 3,358,500 - balances of deposits in scope as follows: Loans in foreign currencies 6,837,833 -

Deposits in scope CRR rates Allowance for loans to other credit institutions (i) (55,911) - 31/12/2012 31/12/2011

Preceding month’s average balances of: 31,299,956 43,190,766 • Deposits in foreign currencies with term of less than 12 months 8.00% 8.00% • Deposits in foreign currencies with term of and more than 12 months 6.00% 6.00% (i) Allowance for loans to other credit institutions consist of: • Deposits in VND with term of less than 12 months 3.00% 3.00% 31/12/2012 31/12/2011 • Deposits in VND with term of and more than 12 months 1.00% 1.00% VND million VND million General allowance 53,611 - 31/12/2012 31/12/2011 Specific allowance 2,300 - VND million VND million

Current account and compulsory reserve 5,576,747 4,465,664 55,911 -

Year-end annual interest rates were as follows: Movements in general allowance for loans to other credit institutions were as follows: 31/12/2012 31/12/2011 2012 2011 VND million VND million Deposits in VND Balance as at 1 January - - Within the compulsory reserve requirement 1.20% 1.20% Allowance made in the year (Note 31) 53,611 - Exceeding the compulsory reserve requirement 0.00% 0.00%

Deposits in USD Balance as at 31 December 53,611 - Within the compulsory reserve requirement 0.00% 0.00% Exceeding the compulsory reserve requirement 0.05% 0.05%

92 Techcombank Annual Report 2012 Techcombank Annual Report 2012 93 Vietnam Technological and Commercial Joint Stock Bank (continued) Vietnam Technological and Commercial Joint Stock Bank (continued) Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN

Movements in specific allowance for loans other credit institutions were as follows: (i) Movements in allowance for diminution in the value of securities held for trading were as follows: 2012 2011 2012 2011 VND million VND million VND million VND million Balance as at 1 January - - Balance at 1 January 153,560 78,422 Allowance made in the year ( Note 31) 2,300 - Allowance made in the year (Note 27) 28,823 99,905 Utilization during the year (11,544) (16,599) Balance as at 31 December 2,300 - Reversal of allowance in the year (Note 27) (46,524) (8,168) Reclassified to of investment securities (Note 11) (92,903) - Balance at 31 December Year-end annual interest rates were as follows: 31,412 153,560 31/12/2012 31/12/2011 Current accounts in VND 0% - 2.4% 0% - 1.5% Listing status of securities held for trading was as follows: Current accounts in foreign currencies 0% - 0.1% 0.05% - 0.1% 2012 2011 Term deposits in VND 9% - 15.5% 9.6% - 21.0% VND million VND million Term deposits in foreign currencies 2.3% - 4% 4% - 9.88% Debt securities Loans in VND 3.8% - 12% - • Listed 599,121 - Loans in foreign currencies 0.4% - 3.1% - Equity securities • Listed 201,249 437,134 7. SECURITIES HELD FOR TRADING 31/12/2012 31/12/2011 800,370 437,134 VND million VND million

Debt securities 8. DERIVATIVES AND OTHER FINANCIAL ASSETS • Bonds issued by local credit institutions 599,121 - 31/12/2012 31/12/2011

Total contract Total Total contract Total Equity securities nominal value carrying value nominal value carrying value • Shares issued by local credit institutions 72,244 123,391 Assets/(liabilities) Assets/(liabilities) • Shares issued by local economic entities 129,005 313,743 VND million VND million VND million VND million Foreign exchange forward contracts 5,367,405 (27,460) 4,309,048 58,324 800,370 437,134 Foreign exchange swap contracts 7,663,939 68,328 978,992 (4,043) Gold future contracts - - - (9) Allowance for diminution in the value of securities held for trading (i) (31,412) (153,560)

13,031,344 40,868 5,288,040 54,272 768,958 283,574

94 Techcombank Annual Report 2012 Techcombank Annual Report 2012 95 Vietnam Technological and Commercial Joint Stock Bank (continued) Vietnam Technological and Commercial Joint Stock Bank (continued) Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN

9. LOANS AND ADVANCES TO CUSTOMERS Loan portfolio by term was as follows: 31/12/2012 31/12/2011 VND million VND million 31/12/2012 31/12/2011 VND million % VND million % Loans to local economic entities and individuals 67,959,488 63,179,306 Short term 36,446,276 53.39% 35,586,745 56.08% Discounted bills 297,327 139,100 Medium term 16,425,411 24.06% 10,619,444 16.74% Loans financed by trusted funds 4,627 133,059 Long term 15,389,755 22.55% 17,245,276 27.18%

68,261,442 63,451,465 68,261,442 100% 63,451,465 100%

Loan portfolio by loan group was as follows: Loan portfolio by industry sectors was as follows: 31/12/2012 31/12/2011 VND million % VND million % 31/12/2012 31/12/2011 VND million % VND million % Group 1 - Current 64,415,288 94.37% 57,104,413 90.00% Agriculture and forestry 6,390,450 9.36% 8,783,216 13.84% Group 2 - Special mention 2,005,682 2.94% 4,553,396 7.18% Trading, manufacturing and processing 24,140,768 35.37% 22,992,710 36.24% Group 3 - Substandard 108,330 0.16% 927,476 1.46% Construction 5,173,547 7.58% 5,096,607 8.03% Group 4 - Doubtful 848,623 1.24% 623,731 0.98% Warehousing, transportation and communication 874,100 1.28% 2,114,334 3.33% Group 5 - Loss 883,519 1.29% 242,449 0.38% Individuals and others 31,682,577 46.41% 24,464,598 38.56%

68,261,442 100% 63,451,465 100% 68,261,442 100% 63,451,465 100%

The above classification of loan portfolio is made in accordance with Decision No. 493 and Decision No. 18 except for those loans which have been rescheduled or have the repayment terms extended. Such loans are classified in the same loan groups as before rescheduling or having the repayment Loan portfolio by type of borrowers was as follows: terms extended as permitted by Decision 780 (see Note 3(i)) if the borrower are assessed as having positive business potential and ability to repay well 31/12/2012 31/12/2011 VND million % VND million % these loans. State owned enterprises 3,362,776 4.93% 2,939,365 4.63% Below is the summary of loans remained in the same loan group as before rescheduling or having the repayment terms extended: Limited liability companies 19,536,824 28.62% 18,838,640 29.69% Joint stock companies 16,401,844 24.03% 16,789,830 26.46% 31/12/2012 VND million Foreign invested companies 591,643 0.87% 719,780 1.13% Private businesses 619,971 0.90% 1,499,470 2.36% Loans remained in Group 1 6,657,353 Individuals and others 27,748,384 40.65% 22,664,380 35.73% Loans remained in Group 2 235,033

68,261,442 100% 63,451,465 100% 6,892,386

96 Techcombank Annual Report 2012 Techcombank Annual Report 2012 97 Vietnam Technological and Commercial Joint Stock Bank (continued) Vietnam Technological and Commercial Joint Stock Bank (continued) Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN

Year-end annual interest rates were as follows: 11. INVESTMENT SECURITIES 31/12/2012 31/12/2011 31/12/2012 31/12/2011 VND million VND million Loans and advances in VND 6% - 21% 13.6% - 22% Available for sale securities Loans and advances in USD 0.51% - 8.5% 0.55% - 9.3% Debt securities • Government bonds 7,608,928 13,373,214 10. ALLOWANCE FOR LOANS AND ADVANCES TO CUSTOMERS • Bonds issued by local economic entities 24,142,334 18,514,572 • Bonds issued by local credit institutions 11,822,327 11,931,994 Allowance for loans and advances to customers consists of: Equity securities 2012 2011 • Shares issued by local economic entities 197,605 27,800 VND million VND million • Shares issued by local credit institutions 124,323 110 General allowance 470,951 461,399 Specific allowance 654,184 427,660 43,895,517 43,847,690

Allowance for diminution in the value of available for sale securities (i) (333,676) (24,670) 1,125,135 889,059 43,561,841 43,823,020

Movements in general allowance for loans and advances to customers were as follows: Held to maturity securities 2012 2011 Debt securities VND million VND million • Government bonds - 347,933 Balance as at 1 January 461,399 384,860 • Bonds issued by local economic entities 2,804,304 1,880,000 Allowance made in the year (Note 31) 9,552 76,539 • Bonds issued by local credit institutions 288,148 1,666,240

3,092,452 3,894,173 Balance as at 31 December 470,951 461,399 Entrusted investment - 624,840

Movements in specific allowance for loans and advances to customers were as follows: 3,092,452 4,519,013 2012 2011 VND million VND million 46,654,293 48,342,033 Balance at 1 January 427,660 226,135 Allowance made in the year (Note 31) 1,873,708 686,293 (i) Movements in allowance for diminution in the value of investment securities were as follows: Reversal of allowance in the year (Note 31) (492,978) (457,338) 2012 2011 Utilisation of allowance in the year (1,154,206) (27,430) VND million VND million Balance at 1 January 24,670 11,500 Balance at 31 December 654,184 427,660 Allowance made in the year (Note 28) 285,597 13,170 Reclassified from trading securities (Note 7) 92,903 - Reversal of allowance in the year (Note 28) (69,494) -

Balance at 31 December 333,676 24,670

98 Techcombank Annual Report 2012 Techcombank Annual Report 2012 99 Vietnam Technological and Commercial Joint Stock Bank (continued) Vietnam Technological and Commercial Joint Stock Bank (continued) Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN

The terms and annual interest rate of debt investment securities as at year-end were as follows: 13. TANGIBLE FIXED ASSETS

31/12/2012 31/12/2011 For the year ended 31 December 2012 Buildings and building Office Vehicles Other assets Total Term Interest rate Term Interest rate improvements equipment VND million VND million VND million VND million VND million Available for sale securities 11 months - 15 years 7.04% - 30.0% 9 months - 15 years 3.5% - 30.0% Cost Held to maturity securities 5 years - 15 years 9% - 15.0% 1 years - 15 years 4.8 % - 16.5% Balance at 1 January 2012 242,617 896,907 127,475 26,921 1,293,920 Additions 2,427 192,613 20,091 22,643 237,774 12. LONG-TERM INVESTMENTS 31/12/2012 31/12/2011 Transfer from construction in progress 2,362 16,953 - - 19,315 VND million VND million Disposals (197,020) (55,312) (8,355) (18,675) (279,362)

Other long-term investments – cost (i) 92,825 76,905 Reclassification - (67) 92 (25) -

Balance at 31 December 2012 50,386 1,051,094 139,303 30,864 1,271,647 (i) Other long-term investments comprise of:

31/12/2012 31/12/2011 Accumulated depreciation

Share Investment Share Investment Balance at 1 January 2012 24,143 255,137 38,472 11,245 328,997 holding at cost holding at cost Charge for the year 3,823 115,891 29,001 3,460 152,175 % VND million % VND million Disposals (21,739) (2,206) (4,613) (536) (29,094) Investments in credit and similar institutions Reclassification 2,680 15,594 (15,276) (3,195) (197) Vietnam Chemical Finance JSC 10.00% 60,000 10.00% 60,000 Investments in other economic entities Balance at 31 December 2012 8,907 384,416 47,584 10,974 451,881 TCO Vietnam Investment JSC 11.00% 16,500 11.00% 3,300 Smartlink Card JSC 2.00% 1,000 2.00% 1,000 Net book value Banking Training and Consultancy JSC 9.87% 1,040 9.59% 1,040 PCB Investment JSC 9.95% 7,962 7.96% 7,962 Balance at 1 January 2012 218,474 641,770 89,003 15,676 964,923 The Society for Worldwide Interbank Balance at 31 December 2012 41,479 666,678 91,719 19,890 819,766 Financial Telecommunication 0.00% 1,005 0.09% 283 Vietnam Real Estate Exchange JSC 1.00% 660 1.00% 660 During the year 2012, Techcombank disposed its former Head office at No. 70-72 Ba Trieu Street with cost of VND196,790 million and accumulated Ky An Security Joint Stock Company 11.00% 748 - depreciation of VND21,739 million and intangible fixed asset of VND25,489 million (total net book value of VND200,540 million) for a price of Investment and Logistics A+ Joint Stock Company 10.00% 600 - VND354,450 million. Techcombank recognised a gain from disposal amounting to VND153,910 million in the consolidated statement of income for Mercury Investment and Trading Joint Stock Company 10.00% 600 - Hue Real Estate Trading and Investment Company Limited 0.50% 50 - the year ended 31 December 2012 (Note 29). TIC Company Limited 10.00% 600 10.00% 600 Hanoi North Urban development JSC 7.00% 1,400 7.00% 1,400 Techcom Developer Project Developing JSC 11.00% 660 11.00% 660

92,825 76,905

100 Techcombank Annual Report 2012 Techcombank Annual Report 2012 101 Vietnam Technological and Commercial Joint Stock Bank (continued) Vietnam Technological and Commercial Joint Stock Bank (continued) Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN

For the year ended 31 December 2011 14. INTANGIBLE FIXED ASSETS Buildings and building Office Vehicles Other assets Total improvements equipment For the year ended 31 December 2012 VND million VND million VND million VND million VND million Software Land use rights Others Total VND million VND million VND million VND million Cost Cost Balance at 1 January 2011 262,105 646,116 110,920 22,449 1,041,590 Balance at 1 January 2012 244,824 47,426 7,108 299,358 Additions 53 521,209 19,836 8,949 550,047 Additions 158,203 - 14,501 172,704 Disposal (138) - - (138) Disposals - (1,619) (380) (259) (2,258) Written off (1,068) (25,489) (738) (27,295) Written off (184) (268,799) (2,901) (4,218) (276,102) Reclassification (19,357) - - - (19,357) Balance at 31 December 2012 401,821 21,937 20,871 444,629 Accumulated amortisation Balance at 31 December 2011 242,617 896,907 127,475 26,921 1,293,920 Balance at 1 January 2012 71,628 449 980 73,057 Charge for the year 42,465 47 2,493 45,005 Reclassification 1,071 (76) (1,048) (53) Accumulated depreciation Disposals (38) - - (38) Balance at 1 January 2011 19,673 146,885 39,375 4,398 210,331 Balance at 31 December 2012 115,126 420 2,425 117,971 Charge for the year 4,625 98,712 13,857 3,647 120,841 Disposals - (1,448) (364) (195) (2,007) Net book value Balance at 1 January 2012 173,196 46,977 6,128 226,301 Written off (155) - (14,396) - (14,551) Balance at 31 December 2012 286,695 21,517 18,446 326,658 Reclassification - 10,988 - 3,395 14,383

Balance at 31 December 2011 24,143 255,137 38,472 11,245 328,997 For the year ended 31 December 2011 Software Land use rights Others Total VND million VND million VND million VND million Net book value Balance at 1 January 2011 242,432 499,231 71,545 18,051 831,259 Cost Balance at 1 January 2011 170,537 47,426 3,213 221,176 Balance at 31 December 2011 218,474 641,770 89,003 15,676 964,923 Additions 74,287 - 3,895 78,182

Balance at 31 December 2011 244,824 47,426 7,108 299,358

Accumulated amortisation Balance at 1 January 2011 46,772 325 1,431 48,528 Charge for the year 23,925 124 480 24,529 Reclassification 931 - (931) -

Balance at 31 December 2011 71,628 449 980 73,057

Net book value Balance at 1 January 2011 123,765 47,101 1,782 172,648 Balance at 31 December 2011 173,196 46,977 6,128 226,301

102 Techcombank Annual Report 2012 Techcombank Annual Report 2012 103 Vietnam Technological and Commercial Joint Stock Bank (continued) Vietnam Technological and Commercial Joint Stock Bank (continued) Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN

15. INVESTMENT PROPERTY 16. OTHER ASSETS 31/12/2012 31/12/2011 For the year ended 31 December 2012 (Reclassified) Land use rights Buildings Total VND million VND million VND million VND million VND million Receivables Cost • Internal receivables 181,695 124,104 Balance at 1 January 2012 19,357 1,905 21,262 • Corporate income tax overpaid 200,849 - Additions - 1,333,199 1,333,199 • Deposits and advances for office rental 332,187 596,883 • Receivables from SBV relating to Interest Subsidy Program 29,208 35,925 Balance at 31 December 2012 19,357 1,335,104 1,354,461 • Advances for contracts 334,314 171,242 • Advance to purchase securities (i) 1,473,000 3,133,000 Accumulated amortisation • Advances and interest receivables relating to deposits for office rental (ii) 2,211,317 2,353,625 Balance at 1 January 2012 - 141 141 • Deposits for gold, commodity and foreign currencies trading in futures markets 199,447 258,604 Charge for the year - 24,927 24,927 • Loans purchased from assets management companies of domestic commercial joint stock banks 845,209 - • Receivables from sales of loans to customers (iii) 8,937,196 1,726,952 Balance at 31 December 2012 - 25,068 25,068 • Receivables on gold transactions - 713,320 • Construction in progress, advance to purchase fixed assets 94,818 39,672 Net book value • Other external receivables 334,409 1,187,375 Balance at 1 January 2012 19,357 1,764 21,121 Balance at 31 December 2012 19,357 1,310,036 1,329,393 15,173,649 10,340,702

Accrued interest and fee receivables 5,895,197 4,471,852 Other assets For the year ended 31 December 2011 Land use rights Buildings Total • Materials 62,114 49,236 VND million VND million VND million • Prepayments 223,322 274,823 • Others 12,528 56,639 Cost Balance at 1 January 2011 - - - 297,964 380,698 Additions - 1,905 1,905 Reclassification 19,357 - 19,357 Deferred tax assets (iv) 34,765 35,203 Allowance for other assets (42,933) (259) Balance at 31 December 2011 19,357 1,905 21,262 21,358,642 15,228,196 Accumulated amortisation Balance at 1 January 2011 - - - Charge for the year - 141 141 (i) These are advances in VND to securities companies for the purpose of purchasing securities on behalf of Techcombank. As at 31 December 2012, no securities have been bought by the securities companies (31 December 2011: Nil). The securities companies paid annual interest rates Balance at 31 December 2011 - 141 141 ranging from 10,5% to 12,5% (2011: 12% - 15% per annum) to Techcombank from the date of advance to the date of purchasing securities Net book value during the year or the expiry date of the contracts. As at 31 December 2012, none of the advances was overdue. Balance at 1 January 2011 - - - Balance at 31 December 2011 19,357 1,764 21,121

104 Techcombank Annual Report 2012 Techcombank Annual Report 2012 105 Vietnam Technological and Commercial Joint Stock Bank (continued) Vietnam Technological and Commercial Joint Stock Bank (continued) Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN

Details of the advances were as follows: 17. AMOUNTS DUE TO THE GOVERNMENT AND THE STATE BANK OF VIETNAM 31/12/2012 31/12/2011 31/12/2012 31/12/2011 VND million VND million VND million VND million

Ocean Securities Joint Stock Company 200,000 200,000 Borrowings VPBank Securities Company Limited 250,000 1,848,000 Borrowings on credit file - 700,000 VMS Securities Joint Stock - 1,000,000 Other borrowings from SBV - 2,617,602 Agribank Securities Joint Stock Company include: 1,023,000 85,000 Fund 1 200,000 85,000 - 3,317,602 Fund 2 300,000 - Fund 3 200,000 - Fund 4 300,000 - 18. DEPOSITS AND BORROWINGS FROM OTHER CREDIT INSTITUTIONS Fund 5 23,000 - 31/12/2012 31/12/2011 VND million VND million 1,473,000 3,133,000 Demand deposits Demand deposits in VND 2,205,477 5,908,655 Demand deposits in foreign currencies 4,933,161 5,529,583 (ii) These were advances and interest receivables for office rental purpose that Techcombank advanced to local economic entities to construct the office buildings that Techcombank will have priority in renting the office once the buildings complete and go into operations which consist of: Term deposits Term deposits in VND 4,970,300 21,460,863 2012 2011 Term deposits in foreign currencies 2,811,780 5,289,354 VND million VND million

Receivable from the advance contract and accrued interest for office rental 14,920,718 38,188,455 at No, 56 Nguyen Chi Thanh Street – Hanoi (*) 2,061,321 2,353,625 Receivable from the advance contract and accrued interest for Lim Tower rental Borrowings at No, 6-11 Ton Duc Thang Street – Ho Chi Minh City 149,996 - Borrowings in VND 6,196,438 672,464 Borrowings in foreign currencies 18,053,249 9,271,824 2,211,317 2,353,625 24,249,687 9,944,288 (*) This advance had original term of three years (from 25 July 2011 to 25 July 2014) and earned interest of 12% per annum. 39,170,405 48,132,743

(iii) These are receivables from the sales of Techcombank’s loans to customers having payment term from 6 months to 1 year: Year-end annual interest rates were as follows: 2012 2011 31/12/2012 31/12/2011 VND million VND million Term deposits in VND 8.3% - 13.5% 6.0% - 17.5% Sales contract to licensed economic entities 7,500,458 1,726,952 Term deposits in foreign currencies 2.39% - 4% 1.0% - 5.22% Sales contract to asset management companies of domestic commercial joint stock banks 1,436,738 - Borrowings in VND 2.5% - 12.25% 15% - 16% 8,937,196 1,726,952 Borrowings in foreign currencies 0.45% - 5.05% 0.75% - 5.05%

106 Techcombank Annual Report 2012 Techcombank Annual Report 2012 107 Vietnam Technological and Commercial Joint Stock Bank (continued) Vietnam Technological and Commercial Joint Stock Bank (continued) Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN

19. DEPOSITS FROM CUSTOMERS 20. OTHER BORROWED AND ENTRUSTED FUNDS 31/12/2012 31/12/2011 These balances comprise entrusted funds from various entrustors, which bear annual interest rates ranging from 7,68% to 10,00% VND million VND million (2011: 7,50% to 13,92%) during the year. Current accounts Current accounts in VND 11,940,997 9,879,665 21. VALUABLE PAPERS ISSUED Current accounts in foreign currencies 1,059,730 1,560,644 Valuable papers issued - categorised by term 31/12/2012 31/12/2011 VND million VND million Term deposits Term deposits in VND 85,823,346 61,383,625 Up to 12 months (i) 4,777,194 12,521,225 Term deposits in foreign currencies 11,381,419 13,891,912 From 12 months up to 5 years (ii) 2,500,000 5,116,638 More than 5 years (iii) 173,649 2,456,282 Margin deposits Convertible bonds issued (iv) 3,000,000 3,000,000 Margin deposits in VND 429,949 551,531 Margin deposits in foreign currencies 826,847 1,380,402 10,450,843 23,094,145 111,462,288 88,647,779 (i) These valuable papers were certificates of deposits that bore interest rates ranging from 0% to 11% (2011: 0,01% to 14%) per annum. Deposits from customers by type of customers were as follows: 31/12/2012 31/12/2011 (ii) These valuable papers were bonds and deposit certificates that bore interest rates being 10,5% (2011: 0,01% to 13,5%) per annum. VND million VND million

Economic entities 34,405,790 31,011,867 (iii) These valuable papers were bonds and deposit certificates that bore interest rates ranging from 0,01% to 9,00% (2011: 0,01% to 10,5%) per annum. Individuals 77,056,498 57,635,912

(iv) These valuable papers were convertible bonds issued to shareholders of Techcombank with term of 10 years. The bonds were issued in 2010 and 111,462,288 88,647,779 had an interest rate of 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 equivalent bonds. Bond-holders can convert these bonds to ordinary shares of Techcombank after 5 years. The initial conversion Year-end annual interest rates were as follows: 31/12/2012 31/12/2011 rate is VND17,188,38 bond value for one ordinary share (par value VND10,000) at the date of issue. Following the issue of bonus shares in 2011, the conversion rate was changed to VND13,683,04 bond value per share due to anti-dilution term of the bonds. Current accounts in VND 1.00% 2.40% Current accounts in foreign currencies 0.10% 0.20% Term deposits in VND 1% - 18.5% 1.5% - 14% Term deposits in foreign currencies 0.1% - 9.2% 1.00% - 4.33%

108 Techcombank Annual Report 2012 Techcombank Annual Report 2012 109 Vietnam Technological and Commercial Joint Stock Bank (continued) Vietnam Technological and Commercial Joint Stock Bank (continued) Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN

22. OTHER LIABILITIES 23. CAPITAL AND RESERVES 31/12/2012 31/12/2011 Consolidated statement of changes in equity (Reclassified) VND million VND million Share Other Reserve to Financial Other Total Retained Total Accrued interest and fee payables 2,069,183 1,832,106 Capital capital supplement reserve reserves reserves profits Other liabilities VND VND capital VND VND VND VND VND • Remittance payables 3 211,581 million million VND million million million million million million • Payable to employees 135,165 182,353 • Settlement on behalf of other credit institutions 125,049 168,263 As previously stated at 6,932,184 371 107,855 579,444 3,812 691,111 1,765,495 9,389,161 • Payable for loans purchased from asset management company 1 January 2011 of domestic commercial joint stock banks (i) 765,209 - • Payable to suppliers 127,775 241,555 Restatement (*) - - - - (3,812) (3,812) - (3,812) • Provision for taxation (ii) 45,896 844,846 • Deferred income 158,845 57,694 Restated balance at • Advances from credit institution for L/C settlement 208,280 - 6,932,184 371 107,855 579,444 - 687,299 1,765,495 9,385,349 • Advance from customers 7,969 321,110 1 January 2011 • Accrued expenses 231,203 3,088 • Payables relating to marketing and promotion activities 205,189 18,725 • Other payables (iii) 1,236,705 580,666 Conversion to share capital 1,855,895 - (90,500) - - (90,500) (1,765,395) - Net profit for the year - - - - - 3,153,766 3,153,766 3,247,288 2,629,881 Appropriations to equity funds - - 172,588 296,311 - 468,899 (495,522) (26,623) Provision for off-balance-sheet commitments (iv) 116,062 112,774 Utilisations of reserves - - (757) - (757) - (757) Other movements - - 1,891 (11,704) - (9,813) 9,813 - 5,432,533 4,574,761

Balance at 31 December (i) This payable had payment term of 1 year from 26 December 2012. 8,788,079 371 191,834 863,294 - 1,055,128 2,668,157 12,511,735 2011 (restated) (ii) Provision for taxation 31/12/2012 31/12/2011 VND million VND million

Value added tax (*) 22,841 7,807 Conversion to share capital 60,000 - - - - - (60,000) - Corporate income tax (*) 6,173 816,704 Net profit for the year ------765,686 765,686 Other taxes (*) 16,882 20,335 Appropriations to equity funds - (371) 2,324,451 98,944 - 2,423,395 (2,423,024) - 45,896 844,846 Utilisations of reserves - - - (3,367) - (3,367) - (3,367) Other movements - - 588 - - 588 14,934 15,522 (*) Refer to Note 37 for movements of provision for taxation. (iii) Other payables include an amount of VND637,337 million relating to the borrowing from CitiBank New York. The terms of the borrowings are from Balance at 31 December 8,848,079 - 2,516,873 958,871 - 3,475,744 965,753 13,289,576 3 to 6 months with interest rates of Libor plus 0,7% per annum. 2012 (iv) Movements in general provision for off-balance sheet commitments were as follows: 2012 2011 VND million VND million (*) The restatement relates to welfare fund being reclassified to liabilities in accordance with Circular 244/2009/TT-BTC dated 31 December 2009 issued by Balance at 1 January 112,774 76,404 Provision made during the year (Note 31) 3,288 36,370 Ministry of Finance.

Balance at 31 December 116,062 112,774

110 Techcombank Annual Report 2012 Techcombank Annual Report 2012 111 Vietnam Technological and Commercial Joint Stock Bank (continued) Vietnam Technological and Commercial Joint Stock Bank (continued) Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN

SHARE CAPITAL 25. NET FEE AND COMMISSION INCOME 2012 2011 31/12/2012 31/12/2011 VND million VND million

Number of shares VND million Number of shares VND million Fee and commission income from Guarantee services 106,185 143,190 Authorised share capital 884,807,871 8,848,079 878,807,871 8,788,078 Settlement and cash services 623,751 835,419 Trustee and agency services 1,370 1,883 Issued share capital Consulting services 93,437 105,841 Prepaying and overdue payment service 94,162 135,495 Ordinary shares 884,807,871 8,848,079 878,807,871 8,788,078 Foreign currency exchange services 33,871 54,597 Brokerage service 33,067 42,217 Shares in circulation Overdraft account management fee 29,795 12,129 Ordinary shares 884,807,871 8,848,079 878,807,871 8,788,078 Other services 35,648 189,386

1,051,286 1,520,157 Nominal value of Techcombank’s ordinary share is VND10,000. Each share is entitled to one vote at meetings of Techcombank. Shareholders are entitled Fee and commission expenses for to receive dividend as declared from time to time. All ordinary shares are ranked equally with regard to the Techcombank’s residual assets. Settlement and cash services (113,382) (124,329) Communication charges (47,684) (45,462) As mentioned in Note 3(r) and Note 21, mandatory convertible bonds also ranked equally to ordinary shares with regard to the Bank’s residual assets. Consulting services (156,475) (99,697) Brokerage services (549) (852) Other services (167,793) (99,463) 24. NET INTEREST INCOME 2012 2011 (485,883) (369,803) VND million VND million

Interest and similar income from Net fee and commission income 565,403 1,150,354 Balances with and loans to other credit institutions 3,235,370 6,400,067 Loans and advances to customers 8,525,583 9,569,685 26. NET LOSS FROM TRADING OF FOREIGN CURRENCIES AND GOLD 2012 2011 Investments in debt securities 5,861,911 3,978,821 VND million VND million

Income from trading of foreign currencies and gold trading 17,622,864 19,948,573 Foreign exchange trading 344,327 355,571 Interest and similar expenses for Gold trading 630,914 165,760 Deposits from customers (10,350,909) (11,703,319) Financial derivatives 202,368 143,671

Borrowings from the SBV and other credit institutions (816,013) (1,344,255) 1,177,609 665,002 Valuable papers issued (1,340,369) (1,602,624) Expense for trading of foreign currencies and gold trading Foreign exchange trading (607,607) (1,149,832) Gold trading (531,679) (102,325) (12,507,291) (14,650,198) Financial derivatives (177,186) (111,758)

Net interest income 5,115,573 5,298,375 (1,316,472) (1,363,915)

Net loss from trading of foreign currencies and gold (138,863) (698,913)

112 Techcombank Annual Report 2012 Techcombank Annual Report 2012 113 Vietnam Technological and Commercial Joint Stock Bank (continued) Vietnam Technological and Commercial Joint Stock Bank (continued) Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN

27. NET GAIN/(LOSS) FROM TRADING OF SECURITIES HELD FOR TRADING 30. OPERATING EXPENSES 2012 2011 2012 2011 VND million VND million VND million VND million

Income from trading of securities held for trading - 66,444 Salaries and related expenses 1,388,235 1,181,254 Expense for trading of securities held for trading (15,000) (30,040) Publication, marketing and promotion 509,562 147,641 Allowance for diminution in the value of securities held for trading (Note 7) (28,823) (99,905) Office and asset rental 587,276 230,223 Depreciation of tangible fixed assets 197,180 145,370 Reversal of allowance for diminution in the value of securities held for trading (Note 7) 46,524 8,168 Tax, duties and fees 123,435 72,326 Tools and equipment expenses 59,930 41,592 2,701 (55,333) Telecommunication expenses 39,448 40,315 Expenses for maintenance and repair of assets 207,372 90,123 Expenditure on payment of insurance premium for customers’ deposits 79,498 76,364 28. NET (LOSS)/GAIN FROM INVESTMENT SECURITIES Utilities expenses 51,149 43,546 2012 2011 Per diem expenses 29,965 25,765 VND million VND million Other operating expenses 20,991 4,679

Income from trading of investment securities 65,213 429,427 3,294,041 2,099,198 Expense for trading of investment securities (24,153) - Allowance for diminution in the value of investment securities (Note 11) (285,597) (13,170) 31. ALLOWANCE AND PROVISION EXPENSES Reversal of allowance for diminution in the value of investment securities (Note 11) 69,494 - 2012 2011 Note VND million VND million (175,043) 416,257 General allowance for loans to other credit institutions 6 53,611 - Specific allowance for loans to other credit institutions 6 2,300 - 29. OTHER INCOME General allowance for loans and advances to customers 10 9,552 76,539 2012 2011 Specific allowance for loans and advances to customers 10 1,873,708 686,293 VND million VND million Reversal of allowance for loans and advances to customers 10 (492,978) (457,338) Provision for off-balance-sheet commitments 22 3,288 36,370 Recovery of bad debts previously written off 52,908 60,959 Income from asset disposals (i) 155,419 - 1,449,481 341,864 Income from advances for office rental (ii) 223,344 282,305 Others 186,177 363,851 32. INCOME TAX EXPENSE (a) Recognised in the statement of income 617,848 707,115 2012 2011 VND million VND million

(i) This income included a gain from disposal of Techcombank’s former Head Office at No, 70-72 Ba Trieu Street amounting to VND153,910 million. Current tax expense Current year 253,344 1,064,768 (ii) Refer to Note 16 (ii) for details of advances for office rental. Under provision in prior years - 12,248 253,344 1,077,016

Deferred tax income Origination of temporary difference (1,174) (9,669)

Income tax expense 252,170 1,067,347

114 Techcombank Annual Report 2012 Techcombank Annual Report 2012 115 Vietnam Technological and Commercial Joint Stock Bank (continued) Vietnam Technological and Commercial Joint Stock Bank (continued) Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN

(b) Reconciliation of effective tax rate (iii) Basic earnings per share 2012 2011 2012 2011 VND million VND million VND VND

Profit before tax 1,017,856 4,221,113 Basic earnings per share 700 2,902

Tax at Techcombank’s tax rate (25%) 254,465 1,055,277 (b) Diluted EPS The calculation of diluted earnings per share for the year ended 31 December 2012 was based on the profit after tax of VND765,686 million (2011: Non-deductible expenses 5,203 7,150 Tax exempt income (7,498) (2,660) VND3,153,766 million) and a weighted average number of ordinary shares outstanding of 1,099,980,670 (2011: 1,092,621,766 shares) calculated Tax losses utilised - (4,668) as follows: Under provision in prior years - 12,248 (i) Net profit after tax (diluted) 2012 2011 Total income tax expense 252,170 1,067,347 VND million VND million

Net profit after tax (basic) 765,686 3,153,766 (c) Applicable tax rate Net profit after tax (diluted) 765,686 3,153,766 The Bank and its subsidiaries have obligation to pay the government corporate income tax at the rate of 25% of taxable profit. The corporate income tax computation is subject to the review and approval by local tax authorities. (ii) Weighted average number of ordinary shares (diluted) 2012 2011 33. EARNINGS PER SHARE VND million VND million

(a) Basic earnings per share Weighted average number of ordinary shares (basic) 1,093,930,480 1,086,571,576 The calculation of basic earnings per share for the year ended 31 December 2012 was based on the profit after tax of VND765,686 million (2011: Effect of convertible bonds 6,050,190 6,050,190 VND3,153,766 million) and a weighted average number of ordinary shares outstanding of 1,093,930,480 (2011: 1,086,571,576 shares) calculated as follows: Weighted average number of ordinary shares (diluted) 1,099,980,670 1,092,621,766

(i) Net profit after tax 2012 2011 (iii) Diluted earnings per share VND million VND million 2012 2011 VND VND Net profit after tax 765,686 3,153,766 Diluted earnings per share 696 2,886

(ii) Weighted average number of ordinary shares 2012 2011

Issued ordinary shares at the beginning of the year 878,807,871 693,218,371 Effect of bonus shares issued in 2011 - 223,633,022 Effect of convertible bonds 213,199,321 169,720,183 Effect of shares issued to employees in 2012 1,923,288 -

Weighted average number of ordinary shares for the year ended 31 December 1,093,930,480 1,086,571,576

116 Techcombank Annual Report 2012 Techcombank Annual Report 2012 117 Vietnam Technological and Commercial Joint Stock Bank (continued) Vietnam Technological and Commercial Joint Stock Bank (continued) Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN

34. CASH AND CASH EQUIVALENTS 35. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES 31/12/2012 31/12/2011 In the normal course of banking business, Techcombank carries out transactions with related parties. The terms of these transactions are approved by VND million VND million the Techcombank’s management. Cash on hand 2,300,945 2,025,949 Gold on hand 2,228,240 3,089,053 As at the year-end and during the year, there were the following significant balances and transactions with related parties: Balances with the SBV 5,576,747 4,465,664 Balances Balances Investment in SBV bills with original terms of not exceeding three months 1,500,000 - 31/12/2012 31/12/2011 Balances with credit institutions with original terms of not exceeding three months 11,016,037 24,717,946 VND million VND million

22,621,969 34,298,612 Balances with related parties Entrusted investment The Hongkong and Shanghai Banking Corporation Limited - 624,840 Included in cash and cash equivalents are cash and cash equivalents in currencies other than VND amounting to VND12,181,127 million (31 December 2011: VND14,459,807 million). Loans to Vietnam Airlines Corporation 758,225 795,566 The European Plastics Window Joint Stock Company 407,828 375,230

Deposits from HSBC Bank (Vietnam) Ltd 502,563 650,839 Vietnam Airlines Corporation 177,451 583,364 Central Area Airport Complex 16,873 78,820 Southern Airports Services Company 60,533 77,078 General Aviation Import Export Company - 5,373 Tan Son Nhat Airport Aviation Service Company 22,584 - Airlines Import and Export Company 11,596 - Masan Consumer Corporation (formerly called: Masan Food Corporation) 1,109,662 260,352 Masan Corporation 1,295 9,246 Masan Group Corporation 836,365 1,510,042 Euro Finance Joint Stock Company 8 19 T&M Vietnam Investment Joint Stock Company 45 44 Melinh Plaza Thanh Hoa Trading Complex Investment JSC 4 6 Vinh Trade Centre Investment Joint Stock Company 17 218 The European Plastic Window JSC 5,211 8,412 Hanoi-Moscow Trade Centre Investment Joint Stock Company 4 5 Eurolands - Eurowindow Holdings branch 137 1,137

Valuable papers issued to HSBC Bank (Vietnam) Ltd - 140,000

118 Techcombank Annual Report 2012 Techcombank Annual Report 2012 119 Vietnam Technological and Commercial Joint Stock Bank (continued) Vietnam Technological and Commercial Joint Stock Bank (continued) Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN

Transactions Transactions 37. OBLIGATIONS TO THE STATE BUDGET (NOTES 16 AND 22) 2012 2011 VND million VND million For the year ended 31 December 2012 31/12/2011 Incurred Paid 31/12/2012 Interest income from VND million VND million VND million VND million Vietnam Airlines Corporation 45,452 30,790 HSBC Bank (Vietnam) Ltd 15,574 6,178 Value added tax 7,807 92,041 77,007 22,841 The Hongkong and Shanghai Banking Corporation Limited - 10,971 Corporate income tax 816,704 256,492 1,267,872 (194,676) General Aviation Import Export Company - 245 Other taxes 20,335 121,387 124,840 16,882 The European Plastic Window JSC 47,730 40,394

844,846 469,920 1,469,719 (154,953) Interest expense for HSBC Bank (Vietnam) Ltd - 25,231 Vietnam Airlines Corporation 5,223 22,736 For the year ended 31 December 2011 Central Area Airport Complex 1,203 3,938 31/12/2010 Incurred Paid 31/12/2011 Tan Son Nhat Airport Aviation Service Company 5,210 - VND million VND million VND million VND million Masan Consumer Corporation (formerly called: Masan Food Corporation) 65,706 213,646 Value added tax 25,268 121,781 139,242 7,807 Masan Corporation 102 3,629 Corporate income tax 396,874 1,077,016 657,186 816,704 Masan Group Corporation 188,179 134,903 Other taxes 22,272 90,306 92,243 20,335 General Aviation Import Export Company - 662 Southern Airport Services Company 1,291 3,037 Vinh Trade Centre Investment JSC 79 213 444,414 1,289,103 888,671 844,846 Eurolands - Eurowindow Holdings branch 2 4 The European Plastic Window JSC - 11 T&M Vietnam Investment JSC 1 - Airlines Import and Export Company 106 - The Hongkong and Shanghai Banking Corporation Limited 22,742 - Eurolands 6 -

36. EMPLOYEE BENEFITS 2012 2011

Total employees as at 31 December (employees) 7,168 8,335 Average number of employees in the year (employees) 7,752 7,908 Employees’ remuneration 1. Basic salaries (VND million) 1,146,809 985,350 2. Allowance (VND million) 241,426 195,904

1,388,235 1,181,254

Average annual salary (VND million) 148 125 Average annual remuneration (VND million) 179 149

120 Techcombank Annual Report 2012 Techcombank Annual Report 2012 121 Vietnam Technological and Commercial Joint Stock Bank (continued) Vietnam Technological and Commercial Joint Stock Bank (continued) Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN

38. SEGMENT REPORTING Business segments Geographical segments Techcombank operates in the banking, assets management, securities trading and fund management segments. Techcombank reports segment information by main regions in Vietnam as follows: Banking Asset management Securities trading Fund management Elimination Total The North The Central The South Total VND million 31/12/2012 31/12/2011 31/12/2012 31/12/2011 31/12/2012 31/12/2011 31/12/2012 31/12/2011 31/12/2012 31/12/2011 31/12/2012 31/12/2011

VND million 31/12/2012 31/12/2011 31/12/2012 31/12/2011 31/12/2012 31/12/2011 31/12/2012 31/12/2011 Assets 177,935,663 178,190,978 3,839,377 4,185,424 418,808 325,692 44,297 1,299,109 (2,304,547) (3,470,040) 179,933,598 180,531,163 Assets 149,603,049 137,354,823 3,011,155 3,073,002 27,319,394 40,103,338 179,933,598 180,531,163 Liabilities 164,833,838 166,081,176 3,349,004 3,710,506 13,974 1,211 1,753 1,256,575 (1,554,547) (3,030,040) 166,644,022 168,019,428

Liabilities 136,773,144 125,760,746 3,013,458 2,954,793 26,857,420 39,303,889 166,644,022 168,019,428 Fixed assets 1,111,909 1,173,866 32,741 14,901 1,714 2,396 60 61 - - 1,146,424 1,191,224

Fixed assets 1,060,245 1,137,578 17,796 10,558 68,383 43,088 1,146,424 1,191,224

Banking Asset management Securities trading Fund management Elimination Total The North The Central The South Total VND million 31/12/2012 31/12/2011 31/12/2012 31/12/2011 31/12/2012 31/12/2011 31/12/2012 31/12/2011 31/12/2012 31/12/2011 31/12/2012 31/12/2011 VND million 31/12/2012 31/12/2011 31/12/2012 31/12/2011 31/12/2012 31/12/2011 31/12/2012 31/12/2011 Revenue 19,206,432 23,240,183 489,928 758,821 118,419 30,438 7,346 11,347 (419,911) (430,828) 19,402,214 23,609,961

Revenue 13,215,627 19,102,946 842,103 373,049 5,344,484 4,133,965 19,402,214 23,609,960 Expenses (17,984,746) (19,172,871) (489,005) (329,631) (13,186) (8,682) (7,332) (7,968) 109,911 130,304 (18,384,358) (19,388,848)

Expenses (*) (12,657,443) (13,764,202) (844,405) (387,364) (4,882,510) (5,237,281) (18,384,358) (19,388,847) Gross profit 1,221,686 4,067,312 923 429,190 105,233 21,756 14 3,379 (310,000) (300,524) 1,017,856 4,221,113

Gross profit 558,184 5,338,744 (2,302) (14,315) 461,974 (1,103,316) 1,017,856 4,221,113

(*) These are direct expenses and do not include allocation of Head Office’s costs.

122 Techcombank Annual Report 2012 Techcombank Annual Report 2012 123 Vietnam Technological and Commercial Joint Stock Bank (continued) Vietnam Technological and Commercial Joint Stock Bank (continued) Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN

39. RISK MANAGEMENT DISCLOSURE The following table presents the maximum exposure to credit risk from balance sheet and off-balance sheet financial instruments, before taking This section provides details of Techcombank’s exposure to risk and describes the methods used by management to control risk. The most important account of any collateral held or other credit enhancements. types of financial risk to which Techcombank is exposed are credit risk, liquidity risk and market risk. 31/12/2012 31/12/2011 VND million VND million (i) Financial risk management policy Deposit at other credit institutions – gross 31,355,867 43,190,766 The Board of Directors has overall responsibility for the establishment and oversight of Techcombank’s financial risk management policy to facilitate Deposit 21,159,534 43,190,766 its business activities to thrive safely and sustainably. Loans and advances 10,196,333 -

Having taken that responsibility, the Board of Directors appropriately promulgates risk management policies and strategies, establish business limit, Securities held for trading (i) 599,121 - approve high-value business transactions in accordance with both legal and internal requirements, and determine organizational structure and key Derivatives assets 40,868 54,272 managing directors. Loans and advances to customers – gross 68,261,442 63,451,465 Risk management strategies and policies are adhered to the Bank’s charter and General Shareholders’ Meeting resolution. Investment securities – gross 46,666,041 48,338,793 Available for sale (i) 43,573,589 43,819,780 The Audit and Risk Committee (“ARCO”) was established to support the Board of Directors in monitoring all operational and strategic risks that may Held to maturity 3,092,452 4,519,013 arise from Techcombank’s business. Others assets 21,401,575 15,228,455 ARCO members are members of Boards of Directors and key management being in-charge of risk management. 168,324,914 170,263,751 ARCO is responsible for comprehensively monitoring assets, liabilities and risks related 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. (i) Securities held for trading and available-for-sale securities exclude investments in equity securities:

Neither past due nor impaired: (ii) Credit risk 31/12/2012 31/12/2011 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 VND million VND million or other third parties or issues guarantees. The risk that counterparties might default on their obligations is monitored on an ongoing basis. To manage the level of credit risk, Techcombank attempts to deal with counterparties of good credit standing, and, when appropriate, obtains collateral. Neither past due principal nor interests Techcombank’s primary exposure to credit risk arises through its loans and advances. The amount of credit exposure in this regard is represented by Deposit and balance to other credit institutions - gross 31,309,867 43,190,766 Deposit 21,159,534 43,190,766 the carrying amounts of the assets on the balance sheet. In addition, Techcombank is exposed to off balance sheet credit risk through commitments Loans and advances 10,150,333 - to extend credit and guarantees issued. Securities held for trading (i) 599,121 - In measuring credit risk of loan and advances to customers and to other credit institutions, Techcombank adopts guidance provided in Decision No. Derivatives 40,868 54,272 493/2005/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 3(i), 3(j) and 3(k) to the financial statements. Loan and advance to customers – gross 64,415,287 57,104,413

Investment securities – gross 46,141,041 48,338,793 Techcombank manages credit risk by using various tools: development and issuance of internal policies and regulations on credit risk management; Available for sale (i) 43,048,589 43,819,780 development of credit procedures; regular review of credit risk; development of a credit rating system and loan classification; setting up authorisation Held to maturity 3,092,452 4,519,013 levels within the credit approval process. Others assets 21,238,517 15,228,455

Risk concentrations: maximum exposure to credit risk without taking account of any collaterals and other credit enhancements. 163,744,701 163,916,699

(i) Securities held for trading and available for sale securities exclude investments in equity securities.

124 Techcombank Annual Report 2012 Techcombank Annual Report 2012 125 Vietnam Technological and Commercial Joint Stock Bank (continued) Vietnam Technological and Commercial Joint Stock Bank (continued) Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN

Past due but not impaired: As at 31 December 2011 10 – 90 day 90 – 180 day 180 – 365 day More than Total As at 31 December 2012 VND million overdue overdue overdue 365 day overdue 10 – 90 day 90 – 180 day 180 – 365 day More than Total VND million overdue overdue overdue 365 day overdue Loans and advances to customers – gross 3,542,847 764,266 560,340 195,821 5,063,274 Loan and advance to customers – gross 724,323 54,519 166,097 61,640 1,006,579 3,542,847 764,266 560,340 195,821 5,063,274 Others assets 70,445 28,930 - - 99,375

794,768 83,449 166,097 61,640 1,105,954 Details of collateral assets held by Techcombank as at 31 December as follows: 31/12/2012 31/12/2011 VND million VND million

As at 31 December 2011 Real estate 89,407,354 87,810,510 10 – 90 day 90 – 180 day 180 – 365 day More than Total Equipment and machinery 41,318,409 50,440,043 VND million overdue overdue overdue 365 day overdue Valuable papers 38,265,118 11,720,772 Loan and advance to customers – gross 1,010,549 163,210 63,392 46,627 1,283,778 Other collaterals 50,115,402 17,195,980

1,010,549 163,210 63,392 46,627 1,283,778 219,106,283 167,167,305

Past due and impaired: (iii) Liquidity risk Liquidity risk arises in the general funding of Techcombank’s activities and in the management of positions. It includes both the risk of being unable to As at 31 December 2012 fund assets at appropriate maturities and rates and the risk of being unable to liquidate an asset at a reasonable price and in an appropriate time frame. 10 – 90 day 90 – 180 day 180 – 365 day More than Total VND million overdue overdue overdue 365 day overdue The following table provides an analysis of the monetary assets and liabilities of Techcombank into relevant maturity groupings based on the remaining Balances with and loans to other credit period from the balance sheet date to repayment date. In practice, the actual maturity of monetary assets or liabilities may differ from contractual terms institutions - gross 46,000 - - - 46,000 based on both verbal agreements between the parties and addenda to the contracts which may exist. Loans to other CIS 46,000 - - - 46,000

Loans and advances to customers – gross 1,281,360 53,811 682,526 821,879 2,839,576

Investment securities – gross - - - 525,000 525,000 Available for sale - - - 525,000 525,000

Others assets - - 24,985 38,698 63,683

1,327,360 53,811 707,511 1,385,577 3,474,259

126 Techcombank Annual Report 2012 Techcombank Annual Report 2012 127 Vietnam Technological and Commercial Joint Stock Bank (continued) Vietnam Technological and Commercial Joint Stock Bank (continued) Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN

As at 31 December 2012 As at 31 December 2011

Overdue Overdue From Overdue Overdue From less than more than Up to From 1 to From 3 to 1 year to Over less than more than Up to From 1 to From 3 to 1 year to Over VND million 3 months 3 months 1 month 3 months 12 months 5 years 5 years Total VND million 3 months 3 months 1 month 3 months 12 months 5 years 5 years Total Assets Assets Cash and gold on hand - - 4,529,185 - - - - 4,529,185 Cash and gold on hand - - 5,115,002 - - - - 5,115,002 Balances with the SBV - - 5,576,747 - - - - 5,576,747 Balances with the SBV - - 4,465,664 - - - - 4,465,664 Balances with and loans to Balances with and loans to other credit institutions - gross 46,000 - 17,210,180 5,412,945 3,830,104 4,615,000 241,638 31,355,867 other credit institutions - gross - - 20,491,965 11,424,920 8,370,296 2,661,947 241,638 43,190,766 Securities held for trading - gross - - 595,643 95,079 109,648 - - 800,370 Securities held for trading - gross - - 437,134 - - - - 437,134 Derivative and other Derivative and other financial assets - - 97,928 (32,163) (24,897) - - 40,868 financial assets - - 61,696 (5,830) (1,594) - - 54,272 Loans and advances to Loans and advances to customers - gross 2,185,120 1,414,548 5,458,137 8,941,544 20,359,714 16,583,109 13,319,270 68,261,442 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 Investment securities - gross - 525,000 2,447,957 1,377,142 10,659,000 29,700,486 2,278,384 46,987,969 Investment securities - gross - - 1,248,071 2,844,840 13,270,920 27,647,779 3,355,093 48,366,703 Long term investments - cost - - 89,567 - - - 3,258 92,825 Long term investments - cost - - 76,905 - - - - 76,905 Fixed assets and investment Fixed assets and investment properties - cost - - 1,671,250 - - 41,403 1,358,084 3,070,737 properties - cost ------1,614,540 1,614,540 Other assets - gross 70,445 46,612 13,701,970 1,610,752 3,279,198 2,692,598 - 21,401,575 Other assets - gross - - 10,611,952 560,000 2,329,550 1,726,953 - 15,228,455

2,301,565 1,986,160 51,378,564 17,405,299 38,212,767 53,632,596 17,200,634 182,117,585 1,777,159 4,323,409 49,119,998 28,853,541 39,743,282 40,257,946 17,925,571 182,000,906

Liabilities Liabilities Deposits and borrowings from Amounts due to the Government other credit institutions - - 19,007,356 7,120,559 9,746,258 3,290,730 5,502 39,170,405 and the SBV - - 2,617,602 700,000 - - - 3,317,602 Deposits from customers - - 62,891,439 19,409,670 28,386,329 723,887 50,963 111,462,288 Deposits and borrowings from 14,453,796 2,410,658 536,223 48,132,743 Other borrowed and other credit institutions - - 18,585,342 12,146,724 entrusted funds - - 4,267 12,432 12,940 93,381 4,933 127,953 Deposits from customers - - 68,333,496 15,897,530 3,532,264 872,183 12,306 88,647,779 Valuable papers issued - - 3,085,978 480,630 1,218,028 510,735 5,155,472 10,450,843 Other borrowed and Other liabilities - 10,870 2,706,175 1,239,738 915,718 558,696 1,336 5,432,533 entrusted funds - - 5,003 14,412 127,848 101,291 3,844 252,398 Valuable papers issued - - 3,843,892 3,157,744 9,148,255 6,500,006 444,248 23,094,145 - 10,870 87,695,215 28,263,029 40,379,273 5,177,429 5,218,206 166,644,022 Other liabilities - - 3,290,943 342,118 711,956 228,913 831 4,574,761

Net liquidity gap 2,301,565 1,975,290 (36,316,651) (10,857,730) (2,066,506) 48,455,167 11,982,428 15,473,563 - - 96,676,278 32,258,528 27,974,119 10,113,051 997,452 168,019,428

Net liquidity gap 1,777,159 4,323,409 (47,556,280) (3,404,987) 11,769,163 30,144,895 16,928,119 13,981,478

128 Techcombank Annual Report 2012 Techcombank Annual Report 2012 129 Vietnam Technological and Commercial Joint Stock Bank (continued) Vietnam Technological and Commercial Joint Stock Bank (continued) Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN

(iv) Market risks As at 31 December 2012 Interest rate risk From Techcombank’s operations are subject to the risk of interest rate fluctuations to the extent that interest-earning assets and interest-bearing liabilities Overdue Free of Up to From 1 to From 3 to From 6 to 1 year to Total mature at different times or in differing amounts, Some assets have indefinite maturities or interest rate sensitivities and are not readily matched with VND million interest 1 month 3 months 6 months 12 months 5 years specific liabilities. Assets The following tables show Techcombank’s assets and liabilities categorised by the contractual re-pricing or maturity date and the effective interest Cash and gold on hand - 4,529,185 - - - - - 4,529,185 rates at the balance sheet date. Balances with the SBV - 5,576,747 - - - - - 5,576,747 Average VND interest rates Balances with and loans to other credit institutions - gross 46,000 11,016,037 8,260,903 5,590,067 2,393,500 2,499,360 1,550,000 31,355,867 As at 31 December 2012 Up to From 1 to From 3 to From 6 to Over Securities held for trading - gross - 201,249 599,121 - - - - 800,370 one month 3 months 6 months 12 months 1 year Derivatives and other financial assets - - 97,928 (32,163) (16,432) (8,465) - 40,868 % % % % % Loans and advances to customers - gross 5,158,060 68,261,442 Assets 3,599,668 - 41,439,137 7,701,904 7,685,203 2,677,470 Investment securities 525,000 671,487 3,039,470 2,927,142 9,736,000 14,354,000 15,734,870 46,987,969 Balance with and loans to other credit institutions 11.10 10.53 9.61 - - Long term investments - 92,825 - - - - - 92,825 Investment securities 10.33 14.76 12.70 13.56 13.21 Fixed assets and investment property Loans and advances to customers 14.43 12.90 13.09 13.49 9.13 - cost - 3,070,737 - - - - - 3,070,737 Other assets - gross 800,000 21,401,575 Liabilities 163,057 19,162,569 52,949 1,000,000 - 223,000 Deposits and borrowings from other 4,333,725 44,320,836 53,489,508 17,186,950 19,798,271 19,745,365 23,242,930 182,117,585 credit institutions 7.27 8.56 7.04 12.40 - Deposits from customers 8.79 9.14 10.43 11.25 11.14 Liabilities Other borrowed and entrusted funds 7.75 9.48 10.00 - - Deposits and borrowings from other Valuable papers issued 2.92 9.72 10.35 9.47 1.00 credit institutions - 7,138,641 12,806,400 7,328,838 5,824,132 6,072,394 - 39,170,405 Deposits from customers - 14,819,118 56,959,381 20,383,929 8,215,005 10,674,720 410,135 111,462,288 Average USD and other foreign currencies interest rates Other borrowed and entrusted funds - - 76,068 49,737 2,148 - - 127,953 Valuable papers issued - 10,705 6,085,978 480,630 114,458 3,603,570 155,502 10,450,843 As at 31 December 2012 Up to From 1 to From 3 to From 6 to Over Other liabilities 10,870 5,314,262 - 107,401 - - - 5,432,533 one month 3 months 6 months 12 months 1 year % % % % % 10,870 27,282,726 75,927,827 28,350,535 14,155,743 20,350,684 565,637 166,644,022 Assets Balance with and loans to other credit institutions 1.62 2.91 - 3.75 2.30 Interest sensitivity gap of balance Loans and advances to customers 6.32 6.19 6.25 5.39 - sheet items 4,322,855 17,038,110 (22,438,319) (11,163,585) 5,642,528 (605,319) 22,677,293 15,473,563 Interest sensitivity gap of Liabilities off-balance sheet items ------Deposits and borrowings from other credit institutions 2.03 2.29 2.32 3.74 - Total interest sensitivity gap 4,322,855 17,038,110 (22,438,319) (11,163,585) 5,642,528 (605,319) 22,677,293 15,473,563 Deposits from customers 1.69 1.90 1.91 1.98 2.34 Valuable papers 2.00 2.00 - - -

130 Techcombank Annual Report 2012 Techcombank Annual Report 2012 131 Vietnam Technological and Commercial Joint Stock Bank (continued) Vietnam Technological and Commercial Joint Stock Bank (continued) Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN

Average VND interest rates As at 31 December 2011

As at 31 December 2011 From Up to From 1 to From 3 to From 6 to Over Overdue Free of Up to From 1 to From 3 to From 6 to 1 year to Total one month 3 months 6 months 12 months 1 year VND million interest 1 month 3 months 6 months 12 months 5 years % % % % % Assets Assets Cash and gold on hand - 5,115,002 - - - - - 5,115,002 Balance with and loans to other credit institutions 14,57 16,00 15,29 13,28 14,50 Balances with the SBV - 4,465,664 - - - - - 4,465,664 Investment securities 19,89 20,69 18,55 17,61 21,15 Balances with and loans to other Loans and advances to customers 13,44 13,08 13,66 15,21 14,00 credit institutions - gross - 14,567,386 7,467,034 10,690,517 5,581,195 4,434,634 450,000 43,190,766 Securities held for trading - gross - 437,134 - - - - - 437,134 Liabilities Derivatives and other financial assets - - 61,696 (5,830) (194) (1,400) - 54,272 Borrowings from the Government and SBV 14,00 15,00 - - - Loans and advances to customers Deposits and borrowings from other - gross 6,251,731 - 52,516,375 2,138,716 1,070,642 170,682 1,303,319 63,451,465 credit institutions 13,67 14,66 13,89 13,88 13,50 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 13,42 13,96 13,96 13,88 12,56 Long term investments - 76,905 - - - - - 76,905 Other borrowed and entrusted funds 7,5 11,45 13,00 - 13,92 Fixed assets and investment property Valuable papers issued - 14,00 14,00 11,71 - - cost - 1,614,540 - - - - - 1,614,540 Other assets - gross - 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 As at 31 December 2011 Up to From 1 to From 3 to From 6 to Over one month 3 months 6 months 12 months 1 year Liabilities % % % % % Amounts due to the Government Assets and the SBV - - 2,617,602 700,000 - - - 3,317,602 Deposits and borrowings from Balance with and loans to other credit institutions 5,56 4,43 6,79 7,40 3,70 other credit institutions Investment securities 7,33 6,05 4,57 6,75 - - 11,438,238 7,888,799 12,507,902 7,156,456 8,641,348 500,000 48,132,743 Deposits from customers Loans and advances to customers - 5,00 3,50 4,93 4,47 - 11,364,043 56,945,048 16,009,547 2,590,613 1,628,207 110,321 88,647,779 Other borrowed and entrusted funds - - 5,003 235,122 11,790 - 483 252,398 Liabilities Valuable papers issued - - 4,288,104 3,157,744 2,630,864 10,017,391 3,000,042 23,094,145 Deposits and borrowings from SBV Other liabilities - 4,102,184 - 472,577 - - - 4,574,761 and 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 - 26,904,465 71,744,556 33,082,892 12,389,723 20,286,946 3,610,846 168,019,428

Interest sensitivity gap of balance sheet items 6,251,731 10,566,894 (10,146,316) (16,004,649) 6,241,310 4,125,163 12,947,345 13,981,478 Interest sensitivity gap of off-balance sheet items ------

Total interest sensitivity gap 6,251,731 10,566,894 (10,146,316) (16,004,649) 6,241,310 4,125,163 12,947,345 13,981,478

132 Techcombank Annual Report 2012 Techcombank Annual Report 2012 133 Vietnam Technological and Commercial Joint Stock Bank (continued) Vietnam Technological and Commercial Joint Stock Bank (continued) Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN

The following table estimates the sensitivity of profit or loss for the year ended 31 December 2012 and equity as at 31 December 2012 of As at 31 December 2012 Other Techcombank from the assumed increase in lending and funding interest. The result is reversed from the assumed decrease in lending and (VND million) VND USD EUR Gold Currencies Total funding interest. Assets Cash and gold on hand 1,725,872 393,876 77,499 2,228,240 103,698 4,529,185 Increase Sensitivity of profit Sensitivity in interest rate or loss before tax of equity Balances with the SBV 4,790,242 786,505 - - - 5,576,747 Currency 2012 2012 2012 Balances with and loans to other credit (VND million) (VND million) institutions - gross 13,114,945 17,644,359 354,891 - 241,672 31,355,867 VND 3,0% 108,441 81,331 Securities held for trading - gross 800,370 - - - - 800,370 USD 1,5% (48,079) (36,059) Derivatives and other financial assets (3,313,908) 3,069,090 (55,204) 444,802 (103,912) 40,868 Loans and advances to customers - gross 54,705,310 13,229,885 220,515 - 105,732 68,261,442 Investment securities - gross 46,043,665 944,304 - - - 46,987,969 Long - term investment 92,825 - - - - 92,825 As at 31 December 2011 Fixed assets and investment properties - cost 3,070,737 - - - - 3,070,737 Increase Sensitivity of profit Sensitivity Other assets - gross 21,017,531 382,960 1,084 - - 21,401,575 in interest rate or loss before tax of equity Currency 2011 2011 2011 (VND million) (VND million) 142,047,589 36,450,979 598,785 2,673,042 347,190 182,117,585 VND 3,0% 313.937 235,453 Liabilities USD 1,5% (53.263) (39,947) Amounts due to the Government and the SBV ------Deposits and borrowings from other 13,372,216 25,715,853 82,227 - 109 39,170,405 Currency risk credit institutions Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Techcombank was incorporated Deposits from customers 98,194,290 12,627,642 492,995 - 147,361 111,462,288 and operates in Vietnam, with VND as its reporting currency. The major currency in which Techcombank transacts is VND. Techcombank’s loans and Other borrowed and entrusted funds 127,953 - - - - 127,953 advances were mainly denominated in VND with the remainder mainly in USD. However, some of Techcombank’s other assets are in currencies other Valuable papers issued 7,846,901 132,358 - 2,471,584 - 10,450,843 than the reporting currency and USD. Techcombank’s management has set limits on positions by currency. Positions are monitored on a daily basis Other liabilities 4,218,559 1,005,445 5,154 198,682 4,693 5,432,533 and hedging strategies used to ensure positions are maintained within established limits. 123,759,919 39,481,298 580,376 2,670,266 152,163 166,644,022

FX position on balance sheet 18,287,670 (3,030,319) 18,409 2,776 195,027 15,473,563

FX position off-balance sheet (1,124,492) 1,302,101 (18,166) - (90,654) 68,789

Total FX position on and off-balance sheet 17,163,178 (1,728,218) 243 2,776 104,373 15,542,352

134 Techcombank Annual Report 2012 Techcombank Annual Report 2012 135 Vietnam Technological and Commercial Joint Stock Bank (continued) Vietnam Technological and Commercial Joint Stock Bank (continued) Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN

As at 31 December 2011 The following table estimates the sensitivity of the profit or loss for the year ended and the equity as at balance sheet date of Techcombank with Other the assumption that all other variables, in particular interest rates, remain constant in the cases: (VND million) VND USD EUR Gold Currencies Total Assets As at 31 December 2012 Cash and gold on hand 1,544,221 401,472 67,538 3,089,053 12,718 5,115,002 5% strengthening of VND 5% weakening of VND against Balances with the SBV 3,003,291 1,462,373 - - - 4,465,664 Currency against USD, EUR and Gold USD, EUR and Gold Balances with and loans to other credit VND million VND million institutions - gross 26,708,959 16,065,455 253,864 - 162,488 43,190,766 USD 144,301 (159,490) Securities held for trading - gross 437,134 - - - - 437,134 Eiro (877) 969 Derivatives and other financial assets (598,715) (1,306,124) 18,890 1,964,791 (24,570) 54,272 Gold (132) 146 Loans and advances to customers - gross 47,204,807 15,753,721 421,980 - 70,957 63,451,465 Investment securities - gross 44,825,943 3,540,760 - - - 48,366,703 143,292 (158,375) Long - term investment 76,905 - - - - 76,905 Fixed assets and investment properties - cost 1,614,540 - - - - 1,614,540 As at 31 December 2011 Other assets - gross 14,032,837 478,397 1,598 713,135 2,488 15,228,455 5% strengthening of VND 5% weakening of VND against Currency against USD, EUR and Gold USD, EUR and Gold 138,849,922 36,396,054 763,870 5,766,979 224,081 182,000,906 VND million VND million USD 100,350 (110,913) Liabilities Eiro 16,131 (17,829) Amounts due to the Government Gold 3,903 (4,314) and the SBV 3,317,602 - - - - 3,317,602 Deposits and borrowings from other 120,384 (133,056) credit institutions 28,041,982 19,804,307 218,097 - 68,357 48,132,743 Deposits from customers 71,814,822 15,362,857 874,545 511,912 83,643 88,647,779 40. FUTURE COMMODITY CONTRACTS Other borrowed and entrusted funds 252,398 - - - - 252,398 Techcombank acts as a broker for its customers in entering into the futures commodity contracts. Valuable papers issued 14,850,048 2,915,920 - 5,328,177 - 23,094,145 Other liabilities 4,134,688 420,312 9,982 8,861 918 4,574,761 As at 31 December 2012

Buying Selling Net 122,411,540 1,102,624 5,848,950 152,918 168,019,428 38,503,396 Nominal value by markets VND million VND million VND million Chicago Board of Exchange 26,253 398,195 371,942 FX position on balance sheet 16,438,382 (2,107,342) (338,754) (81,971) 71,163 13,981,478 London International Financial Futures and Options Exchange 157,844 21,065 (136,779) New York Board of Trade 106,506 - (106,506) FX position off-balance sheet (374,572) 732,291 (353,676) - - 4,043 London Metal Exchange 382,039 344,112 (37,927) Tocom Japan 4,244 58,082 53,838 Total FX position on and New York Mercantile Exchange 1,952 10,221 8,269 off-balance sheet 16,063,810 (1,375,051) (692,430) (81,971) 71,163 13,985,521 678,838 831,675 152,837

136 Techcombank Annual Report 2012 Techcombank Annual Report 2012 137 Vietnam Technological and Commercial Joint Stock Bank (continued) Vietnam Technological and Commercial Joint Stock Bank (continued) Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN

As at 31 December 2011 As at 31 December 2012

Buying Selling Net Carrying value Nominal value by markets VND million VND million VND million Financial Chicago Board of Exchange 160,050 314,016 153,966 At fair liabilities value through Held - to Loans and Available determined at Total of Bursa Malaysia 9,278 33,817 24,539 profit or loss maturity receivables for - sale amortised cost book value London International Financial Futures and Options Exchange 297,138 3,027 (294,111) VND million VND million VND million VND million VND million VND million VND million New York Board of Trade 9,162 10,574 1,412 Financial assets London Metal Exchange 649,893 441,491 (208,402) I Cash, gold, silver, gemstones on hand 4,529,185 - - - - 4,529,185 4,529,185 Tocom Japan 65,437 12,312 (53,125) II Balances with the State Bank of Vietnam 5,576,747 - - - - 5,576,747 5,576,747

1,190,958 815,237 (375,721) III Balances with and loans to other credit institutions - gross - - 31,355,867 - - 31,355,867 (*)

41. COMMITMENTS IV Trading securities- gross 800,370 - - - - 800,370 (*) (i) Capital expenditure V Derivatives and other financial assets 40,868 - - - - 40,868 (*) As at 31 December 2012, Techcombank had no outstanding capital commitments. VI Loans and advances to customers (ii) Leases - gross - - 68,261,442 - - 68,261,442 (*) The minimum lease payments under operating leases commitments are as follows: VII Investment securities - gross - 3,092,452 - 43,895,517 - 46,987,969 (*) VIII Other long-term investments - gross - 92,825 - - - 92,825 (*)

31/12/2012 31/12/2011 X Other financial assets - gross - - 20,785,707 - - 20,785,707 (*) VND million VND million Within 1 year 16,040 75,003 10,947,170 3,185,277 120,403,016 43,895,517 - 178,430,980 Within 2 and 5 years - 66,946 Over 5 years - 292,627 Financial liabilities I Amount due to the Government and 16,040 434,576 the State Bank of Vietnam and other credit institutions - - - - 39,170,405 39,170,405 (*) 42. DISCLOSURE OF FINANCIAL INSTRUMENTS II Deposits from customers - - - - 111,462,288 111,462,288 (*) (a) Disclosure of fair value III Valuable papers issued - - - - 10,450,843 10,450,843 (*) 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 IV Other financial liabilities - - - - 4,904,207 4,904,207 (*) compared with its carrying amount.

- - - - 165,987,743 165,987,743

(*) Techcombank has not determined fair value of these balances because there is not sufficient guidance on measurement of fair value under Vietnamese Accounting Standards. Fair value of these instruments may be materially different from their carrying amounts.

138 Techcombank Annual Report 2012 Techcombank Annual Report 2012 139 Vietnam Technological and Commercial Joint Stock Bank (continued) Vietnam Technological and Commercial Joint Stock Bank (continued) Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN Notes to the consolidated financial statements for the year ended 31 December 2012 I Form B05/TCTD-HN

As at 31 December 2011 43. PRIOR YEAR CORRESPONDING FIGURES Techcombank has reclassified the balances as at 31 December 2011 as follows: Carrying value

Financial Note 31/12/2011 31/12/2011 31/12/2011 At fair liabilities value through Held - to Loans and Available determined at Total of (as previously stated) (Reclassification) (Reclassified) profit or loss maturity receivables for - sale amortised cost book value VND million VND million VND million VND million VND million VND million VND million VND million VND million VND million BALANCE SHEET Financial assets ASSETS I Cash, gold, silver, gemstones on hand 5,115,002 - - - - 5,115,002 5,115,002 Receivables 16 10,301,030 39,672 10,340,702 II Balances with the State Bank of Vietnam 4,465,664 - - - - 4,465,664 4,465,664 Other assets 16 420,370 (39,672) 380,698 III Balances with and loans to other LIABILITIES credit institutions - gross - - 43,190,766 - - 43,190,766 (*) Other liabilities 22 2,625,814 4,067 2,628,269 IV Trading securities- gross 437,134 - - - - 437,134 (*) V Derivatives and other financial assets 54,272 - - - - 54,272 (*) EQUITY VI Loans and advances to customers Reserves 23 1,059,195 (4,067) 1,055,128 - gross - - 63,451,465 - - 63,451,465 (*)

VII Investment securities - gross - 4,519,013 - 43,847,690 - 48,366,703 (*) VIII Other long-term investments - gross - 76,905 - - - 76,905 (*) X Other financial assets - gross (restated) - - 14,829,521 - - 14,829,521 (*) Approved by

10,072,072 4,595,918 121,471,752 43,847,690 - 179,987,432

Financial liabilities I Amount due to the Government and

the State Bank of Vietnam and other Bui Thi Khanh Van Cu Anh Tuan Simon Morris credit institutions - - - - 51,450,345 51,450,345 (*) Acting Chief Accountant Head of Financial Accounting Division Chief Executive Officer II Deposits from customers - - - - 88,647,779 88,647,779 (*) III Valuable papers issued - - - - 23,094,145 23,094,145 (*) IV Other financial liabilities (restated) - - - - 3,431,700 3,431,700 (*)

- - - - 166,623,969 166,623,969

140 Techcombank Annual Report 2012 Techcombank Annual Report 2012 141 Corporate Information

Shareholder Information Banking Licence No. 0040/NH - GP 6 August 1993 The banking licence was issued by the State Bank of Vietnam and was initially valid for 20 years from the date of the 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.

Change in Equity 2012 Business Registration 055697 7 September 1993 In 2012, Techcombank increased its chartered capital from VND 8,788 billion (eight thousand, seven hundred and eighty eight billion Vietnamese Dong) Certificate No. The Bank’s Business Registration Certificate has been amended 44 times, the most recent of which is by Business Registration to VND 8,848 billion (eight thousand, eight hundred and forty eight billion Vietnamese Dong), as approved at the Shareholders’ Annual Meeting on April 12th 2012. Certificate No. 0100230800 issued by Hanoi Department of Planning and Investment, dated 20 September 2012.

Accordingly, Techcombank increased its chartered capital by VND 60 billion (sixty billion Vietnamese Dong) from retained profit through the issuance of Board of Directors Mr. Ho Hung Anh Chairman 6,000,000 additional shares. Mr. Nguyen Dang Quang First Vice Chairman Mr. Nguyen Thieu Quang Vice Chairman Mr. Nguyen Canh Son Vice Chairman Mr. Stephen Charles Banner Member Mr. Timothy Mark Francis Kennedy Member (from 28/4/2012) Mr. Do Tuan Anh Member (from 21/12/2012) Mr. Lee Boon Huat Member (from 21/12/2012) Mr. Nguyen Duc Vinh Member (until 1/7/2012) Mr. Tran Thanh Hien Member (until 24/08/2012) Mr. Madhur Maini Member (until 21/12/2012)

Board of Management Mr. Simon Morris Chief Executive Officer Mr. Pham Quang Thang Head of Small & Medium Enterprises Mr. Nguyen Canh Vinh Head of Sales & Distribution Ms. Dang Tuyet Dung Head of Personal Financial Services NO SHAREHOLDER STRUCTURE NUMBER OF SHARES PROPOTION Mr. Phan Thanh Son Head of Treasury & Financial Markets Mr. Nguyen Dang Thanh Head of Southern Business (from 14/05/2012) I INDIVIDUAL SHAREHOLDERS 299,730,345 33.9% Mr. Nguyen Cong Thanh Head of Corporate Banking (until 30/06/2012) 1 Board of Directors, Board of Management, Inspection Committee 30,747,432 3.5% Mr. K.Balasingam Head of Wholesale Banking (from 04/06/2012) 2 Shareholders holding over 5% 0.0% Ms. Do Diem Hong Head of Financial Institutions (until 04/06/2012) 3 Other Individuals 268,982,913 30.4% Ms. Bach Thuy Ha Head of Transaction Banking (until 21/10/2012)

II INSTITUTIONAL SHAREHOLDERS 585,077,526 66.1% Ms. Le Phuong Phuong Head of Marketing (until15/06/2012) 1 Vietnam National Textile And Garment Corporation 153,343 0.0% Mr.Vinod Kumar Chief Marketing Officer (from 24/07/2012) 2 Vietnam Airlines Company Limited 24,033,426 2.7% Mr. Nguyen Thanh Long Head of CORM and Legal 3 The Hongkong and Shanghai Banking Corporation Limited 172,353,345 19.5% Mr. Anil Kumar Parimo Chief Risk Officer (from 01/06/12) 4 Masan Group Corporation 173,156,468 19.6% Mr. Cu Anh Tuan Head of Finance (until 12/11/2012) 5 Others 215,380,944 24.3% Mr. Vikesh Mirani Group Chief Financial Officer (from 12/11/2012) Mr. Phung Quang Hung Head of IT & Operations TOTAL 884,807,871 100% Ms. Tran Thi Diep Anh Head of Human Resources Mr. Le Xuan Vu Head of Strategy (until 12/11/2012)

142 Techcombank Annual Report 2012 Techcombank Annual Report 2012 143 Branches Network

144 Techcombank Annual Report 2012 Techcombank Annual Report 2012 145