2018 ANNUAL REPORT ANNUAL

VIETNAM TECHNOLOGICAL AND COMMERCIAL JOINT STOCK BANK

Techcombank Building – No. 191 Ba Trieu Street, Le Dai Hanh Ward, ACHIEVING Hai Ba Trung District, Hanoi, Vietnam +84 (24) 3944 6368 +84 (24) 3944 6395 DREAMS www.techcombank.com.vn 2018 ANNUAL REPORT 25 Years of Achievements I “The Honorable legacy” 6 Chairman’s letter 8 About us 10 CEO’s story 18 Vision, mission, core values 20 Corporate structure and network 22 25 Years of Achievements 24 Stories of Customers 28 Stories from Techcomers

Business Performance II "The epic transformation" 36 Development strategy 38 Business model Table of 42 Transformation program 48 Corporate culture Techcombank's mission is to become the best bank in 52 Operating results assessment report in 2018 Vietnam. We are determined to be the trusted financial 62 Significant figures partner of Vietnamese people and businesses on the Contents Corporate Governance path towards their dreams. III "A solid foundation" 66 Chairman’s message on Corporate Governance 67 CEO’s message on Corporate Governance 68 Our Board of Directors 76 Activities of Committees under the Board of Directors 80 The Supervisory Board 84 Our Board of Management 92 Corporate governance model 94 Transactions, remuneration and benefits of the Board of Directors, the Board of Management and the Supervisory Board

Sustainable Development IV “The greater future” 100 People development 101 Investment in technology 102 New products and solutions 104 Corporate social responsibility

Financial Report V 2018 audited financial report

ANNUAL REPORT 2018 ACHIEVING DREAMS 3 25 Years of Achievements “The Honorable legacy”

ANNUAL REPORT 2018 ACHIEVING DREAMS 5 25 YEARS OF ACHIEVEMENTS

Chairman’s letter

Dear valued shareholders, customers, and partners,

marked many important milestones for But success cannot be unilateral! Techcombank. Not only did we celebrate our 201825th anniversary, we also celebrated many other breakthrough Our most important assets are the trust and partnership we achievements this past year. share with our shareholders, clients, and partners. We share a belief in Techcombank's long-term value, and the ambition Techcombank proudly set two major records in 2018. First, to make Techcombank greater everyday, propelling it into our listing on Ho Chi Minh Stock Exchange, completed in becoming a national and regional leading brand. As such, June 2018, was the largest listing in the history of Vietnam's we are confident that we will bring the bank to even greater stock market at the time, and made Techcombank one of the achievements in the next stage of development. top three banks in Vietnam in terms of market capitalization. Second, Techcombank became one of the first two banks And the opportunities ahead are remarkable. in Vietnam to officially join the "VND10 trillion" club, as we recorded 2018 pre-tax profit of VND10,661 trillion. Vietnam is a young economy on the rise. We have seen the explosion of the private sector, as well as increasing Techcombank, as a major player in the Vietnamese financial consumption among the middle class. There will be even system, adheres to the Government's guidelines and the more exciting opportunities in the future as Vietnam becomes direction of the State Bank of Vietnam (SBV) in allocating increasingly integrated in the global economy. its capital and providing services. One of Techcombank's greatest achievements is the business model we built with In 2019 and the coming years, economists predict a period a clear customer-centric strategy. Techcombank strongly of prosperity for Vietnam. As an engine of the economy, believes that every business strategy and plan must not only the financial sector will develop alongside the country on bring value to the Bank, but also deliver outstanding value to that trajectory. As for Techcombank, we believe all of our our customers and to the community. 9,000+ employees will continue to unite, collaborate, and grow by realizing the dreams with which our customers and Therefore, I am confident that Techcombank is primed to shareholders have entrusted us. reach even greater heights ahead, to realize our goal of becoming the bank that enables all Vietnamese citizen to lead I would like to express my sincere gratitude to our customers better financial lives and achieve their dreams. And beyond and shareholders who have remained steadfast with that, it is our goal to make Techcombank one of the region's Techcombank on our journey to achieving dreams. leading banks. Sincerely, I believe in this goal, because Techcombank's business model is built for the future and - with the distinctive characteristics of our corporate culture and the consensus of our more than 9,000 excellent employees - cannot be replicated. Consistently implementing the right business model and strategy has made Mr. Ho Hung Anh Techcombank the leading bank in terms of efficiency and Ho Hung Anh Chairman of the board profitability among Vietnamese credit institutions. Chairman of the board

ANNUAL REPORT 2018 ACHIEVING DREAMS 7 25 YEARS OF ACHIEVEMENTS

145 branches About us in the North 46.18%

Trading name Branch network • In Vietnamese: NGÂN HÀNG THƯƠNG MẠI CỔ As at December 31, 2018 PHẦN KỸ THƯƠNG VIỆT NAM 36 branches in the Central • In English: VIETNAM TECHNOLOGICAL AND Representative Head Office 11.46% COMMERCIAL JOINT STOCK BANK 1 2 offices • Trading name: TECHCOMBANK • Abbreviated name: TECHCOMBANK Transaction points nationwide The Bank is operated under the Banking Operation License 314 No. 0038/GP-NHNN issued by the State Bank of Vietnam on 133 branches March 6, 2018 (renewed for operation license No. 0040/NH- Subsidiaries in the South GP dated August 6, 1993). 3 42.36% Business registration certificate number: 0100230800 TECHCOM SECURITIES JOINT STOCK COMPANY • First registration: September 7, 1993 Operation license: 85/GPDC- UBCK issued by the State • 50th revision: August 10, 2018 Securities Commission on October 16, 2018 Address: 10th + 21st floor, Techcombank Building, 191 Ba Charter capital: VND34,965,921,600,000 Trieu Street, Le Dai Hanh Ward, Hai Ba Trung District, Hanoi • In words: Thirty-four trillion nine hundred sixty-five billion Business lines: Securities brokerage nine hundred twenty-one million six hundred thousand VND. Charter capital: VND1,058,201,050,000 echcombank was established in 1993, amid than 6 million retail and corporate customers in Ownership by Techcombank: 94.50% T the backdrop of a nascent transition from Vietnam through our extensive network of 1 head Address: Techcombank Building – No. 191 Ba Trieu Street, central planning to a more market-oriented office, 2 representative offices and 314 transaction Le Dai Hanh Ward, Hai Ba Trung District, Hanoi, Vietnam. VIETNAM TECHNOLOGICAL AND COMMERCIAL economy. Back then, Vietnam undertook and offices across 45 cities and provinces nationwide, Phone number: (+84) (243) 944 6368 JOINT STOCK BANK – ASSET MANAGEMENT witnessed comprehensive changes in economic satisfying not only traditional banking needs but Fax: (+84) (243) 944 6395 COMPANY LIMITED development, unleashing an explosive level of also security and wealth management needs. In Website: http://www.techcombank.com.vn Operation license: 0102786255 issued by the Hanoi growth that doubled the GDP expansion of the 2018, among the nine largest joint stock banks in Stock code: TCB Department of Planning and Investment on June 18, 2008, previous decade. Vietnam, Techcombank led in terms of non-interest with 22nd revision on November 30, 2018 income ratio, cost-to-income ratio, return on assets, Banking services Address: Techcombank Building, 191 Ba Trieu Street, Le Dai This macro-economic expansion was the first step and total operating income per employee. The Bank's main operations include: Hanh Ward, Hai Ba Trung District, Hanoi towards a more significant shift in the local need for Business lines: Asset management capital as well as the global appetite for investment And we will continue to innovate to meet our Charter capital: VND410,000,000,000 opportunities in Vietnam, and the nation saw a customers’ needs. Whether it is our retail or Ownership by Techcombank: 100% fresh influx of foreign direct investment as well as corporate customers, being served by our Personal the liberalization of the private sector. Financial Services division, Business Banking TECHCOMBANK CAPITAL COMPANY LIMITED division, or Wholesale Banking division, our aim is Mobilizing Providing short, Implementing Implementing cap- Operation license: 57/GP-UBCK issued by the State From modest beginnings 25 years ago with to be the “one-stop shop” for financial solutions. short, medium, medium, and payment and ital contributions, Securities Commission on January 30, 2019 charter capital of a mere VND20 billion, we have and long-term long-term credit treasury opera- share purchases, Address: 10th floor, Techcombank Building, 191 Ba Trieu grown to become the third largest bank in terms of At Techcombank, our vision and our mission are deposits from based on the tions and other bond investments, Street, Le Dai Hanh Ward, Hai Ba Trung District, Hanoi chartered capital in Vietnam. Our success is rooted to become the No. 1 bank in Vietnam, catering organizations nature and banking services and foreign cur- and individuals. capability of the permitted by the rency trading in Business lines: Fund management in the strategy of focusing on our customers and to the everyday needs of the Vietnamese people Bank's capital State Bank of accordance with Charter capital: VND40,000,000,000 meeting their evolving needs. Today, we provide and helping them grow to achieve their own sources. Vietnam (“SBV”). the law. Ownership by Techcombank: 100% a broad range of products and services to more financial dreams.

ANNUAL REPORT 2018 ACHIEVING DREAMS 9 25 YEARS OF ACHIEVEMENTS

CEO’s story

Dear customers, investors, and colleagues,

his year was the most profitable year in Techcombank’s Our customers have transformed, as well. In 1993, it was history, and we closed the books on 2018 reporting profit common for customers to store gold bars in their mattresses; beforeT tax of VND10,661 trillion. It not only represents a 31 today those same customers are processing electronic pay- percent increase compared to 2017, but it also represents the ments on their smartphones. When I traveled across Vietnam first time a private commercial joint stock bank has hit the re- in 1996, three years after the establishment of Techcombank, cord of more than VND10 trillion in profit before tax in Vietnam. there were no credit cards being used in Da Nang, but they are very common now. I was walking in mud to visit Lang Co Additionally, Techcombank’s successful listing on Ho Chi Minh then. Now, there are many luxurious resorts there. At that Stock Exchange (HOSE) in June was the largest listing in time, it was rare for any Vietnamese family to think about Vietnam’s banking history. sending their children to study abroad. Now, after 25 years, many young Vietnamese complete their degrees in top foreign 2018 also marked Techcombank’s 25th anniversary. We universities and come back to work in Vietnam. Many are trace our roots back to 1993, when we were one of the new currently working for Techcombank. commercial banks in Vietnam, established to accelerate the nation’s renewed economic development efforts, and to In the early years of our bank, the development of Vietnam build up the people’s confidence in the banking sector. The was a “many a little makes a mickle” process, and so we economy and the nation were entering a period of transition - anchored that financial growth by enabling savings, man- moving from a focus on central planning, with heavy reliance ufacturing, and exports. During our adolescent years, we on government subsidies, to a market driven economy. The expanded across Vietnam. On the corporate side, we have private sector was just starting up, and the Vietnamese people seen customers grow from small family proprietorships to were starting their new journey, pursuing dreams of prosperity large publicly traded companies with businesses extending and financial security. Not coincidentally, we began to pursue beyond our nation’s borders. We have been there, with our our dream, of enabling the Vietnamese to achieve theirs. As customers throughout their journeys, to enable that develop- Vietnam grew, so did Techcombank. We have transformed to ment, and we will be there as that development continues. be the “Best Bank in Vietnam 2018,” according to Euromoney, Today, we are one of the largest joint stock banks (JSBs) in Mr. Nguyen Le Quoc Anh and Vietnam has transformed into one of the fastest growing Vietnam, and one of the leading banks in Asia. We provide a Chief Executive Officer economies in the world. broad range of banking products and services to more than 6

ANNUAL REPORT 2018 ACHIEVING DREAMS 11 25 YEARS OF ACHIEVEMENTS | CEO’s story million customers with an extensive network of 314 branches Retail and Small and Medium Meeting large corporate capital across Vietnam. Enterprises (“SME”) as growth investment needs Last year, Techcombank was named the “Best Bank in Viet- nam 2018” by Euromoney, the result of the Bank’s outstanding drivers performance across all consideration criteria: sustainable de- In line with the SBV’s direction of growing corporate bonds to velopment, business performance, risk management, informa- 20% of Vietnam’s GDP by 2030, Techcombank advised the tion technology, management quality, and contribution to the Solid growth among SME, being the backbone of the issuance of more than VND60 trillion (equivalent to USD2.6 local financial and banking market. Other criteria of the award economy, reflects the strength of the broader market. billion) of corporate bonds in 2018 to support the funding include total revenues, total assets, profit before tax, and net Techcombank achieved strong growth from corporate SME needs of large corporates, representing 82% growth versus income. The former are things we do to benefit our customers banking customers, with loan balances and revenues growing the prior year. as well as our country, and if we execute them well they will by 49% and 33%, respectively. lead to the latter. Through its 314 branches, Techcombank services the financial This impressive financial performance from our business needs of more than 6 million retail and corporate customers Vietnam continues to enjoy an economic resurgence that banking division is the result of successfully implementing by offering convenient credit card services, zero-fee online began in 2014, with 2018 growing at the fastest rate since a series of transformation initiatives aimed at improving banking transactions, and a range of mortgage products to the global economic crisis 10 years ago. GDP growth for the customer satisfaction, employee training and development, help customers achieve lifelong dreams of homeownership. fourth quarter was 7.3% versus last year, pushing the full-year credit risk, and operations process improvements. growth to 7.08%. Despite concerns over trade wars and rising The financial performance in the fourth quarter of 2018 interest rates, prudent monetary policy from the SBV helped continued the record of 13 consecutive quarters of year- Vietnam achieve high levels of economic growth while main- over-year revenue growth. This steady performance is a key taining low inflation (with the CPI up by only 3.54% in 2018). in building a solid and stable bank to serve the Vietnamese people and business communities. We expect the economy to show robust growth in 2019 and beyond, helped by a strong banking sector and diligent man- agement by the SBV, and driven by the indomitable spirit of the Vietnamese people. Largest listing on Ho Chi Minh Stock Exchange While Techcombank’s strong performance for 2018 can in part be attributed to the robust turnaround in the economy, it in Vietnam’s banking sector was more the result of the efforts undertaken in executing our customer-centric strategy. By dedicating our efforts toward enhancing our services and revenue streams, and building June 4, 2018 was the day of the largest listing in Vietnam’s up a strong team of Techcomers, our bank not only overcame banking history. Techcombank offered 1.16 billion shares at some economic challenges - but we truly began to thrive. the opening price of VND128,000 per share on the bourse, lifting the Bank’s market capitalization to USD6.5 billion. These achievements were driven by growth across all busi- ness divisions in 2018, including bank-wide credit growth of Moreover, Techcombank was the first bank to follow the strict 20%, while asset quality remained healthy with NPLs ending criteria of Rule 144A and Regulation S of the United States in the year at 1.8%. Lower credit costs and disciplined expense its transaction. In listing its shares on the Ho Chi Minh Stock management also contributed to record profits. Mortgage Exchange, Techcombank continued to move forward in the lending grew by 20%, driving retail loans to a 45% share of direction of efficiency, standardization, and transparency. the total lending portfolio. Additionally, retail deposits grew by 17% year-over-year, with a record high CASA ratio of 28.7% Simultaneously, we continued to focus on executing our of total bank deposits. Also in 2018, Techcombank became bank’s strategy in order to achieve sustainable growth, the #1 franchise for Visa credit and debit card transactions in accordance with the Board of Directors’ and our and maintained its #1 position in bancassurance. shareholders’ vision.

ANNUAL REPORT 2018 ACHIEVING DREAMS 13 25 YEARS OF ACHIEVEMENTS | CEO’s story

Making our services more customer-centric

The Bank made significant progress in reorganizing the busi- and contribute greatly to the overall economy. These sectors ness in 2018 to enable a sharper focus on our “customer-cen- include: housing and real estate, auto, financial services, travel tric” approach. This strategy is focused on understanding how and leisure, FMCG, and telecommunications and other utilities. best to serve and protect customers, and on delivering the most convenient access to the Bank’s products and services Techcombank understands that customers expect their every- today, tomorrow, and well into the future. We always strive to day transactions to be free and without complicated proce- understand customers’ needs, and to tailor our products to dures. We agree, and by providing them accordingly we see meet those needs, while also maximizing customer benefit. how our customer-centric approach leads to higher levels of Techcombank accompanies and empowers our customers to customer loyalty and customer satisfaction. Similarly, the prod- achieve their goals and dreams. We accompany our custom- ucts we offer demonstrate how we take care of our customers’ ers throughout their days and throughout their lives, meeting needs, from meeting housing needs through mortgages, to not only daily needs, but also long-term needs for our custom- fulfilling transportation needs via auto loans, and from provid- ers and their families. ing tools for daily living through credit and debit card services, to meeting protection and wealth management needs with As part of our transformation, Techcombank has adopted and bancassurance products and bonds. adapted our “customer-centric” strategy, and paired the value chain model with the ecosystem approach by establishing Techcombank works with all participants in a given value strong partnerships with many leading Vietnamese enterprises chain to create an ecosystem to minimize friction and add across six key economic sectors which account for nearly half value for customers. Any activity inconvenient to customers of Vietnam’s GDP. Techcombank identified these six econom- would be eliminated, any service that bring good values to ic sectors based on its own strategic criteria: the sectors are customers will be boosted. Techcombank has received posi- consumption driven; serving the domestic market to limit ex- tive feedbacks from our customers because we brought them posure to international turmoil; resilient to the economic cycle; higher benefits with lower risk through our transformation. Technology as a key enabler

In the past recent years, Techcombank has become more Individual and corporate customers want to have a more digitized, significantly strengthening our online transaction comprehensive, flexible, secured, real-time electronic financial services. The total amount of money transacted online has management system that allows them to track their savings increased tenfold in the last two years, and we have set and manage their cash flow as well as their upcoming aside $300 million for comprehensively investing in our new payments and transactions. Our technology must meet these technology systems. The hardest part in execution include legitimate demands. Techcombank’s strategy is to provide a preparing internal resources, and adjusting our processes system in which we are helping our customers to automate and operating methods to take advantage of the technology their financial statements and manage cash flows, and to system and improve operational efficiency. This requires maximize customer benefit and financial convenience with a long period of thorough preparation. We will only invest one-stop/one-touch service. in our technology infrastructure when we have our human resource and other resources ready. Our corporate culture Being truly digital involves a massive transformation of the enables alignment in mindset, fostering an environment Bank, from the frontline to the back end. To be successful, where everyone works together to ensure that customers’ we are investing in training our people and in redesigning (internal and external) value and benefits are maximized. The our technology infrastructure. Techcombank is committed Bank benefits as well, for when our customers use electronic to offering the best services to our customers, and we transactions, they don’t need to be in the branches physically, understand that superior technology is the backbone of this. and our staff resources are freed up to work on more demanding tasks like advising customers.

ANNUAL REPORT 2018 ACHIEVING DREAMS 15 25 YEARS OF ACHIEVEMENTS | CEO’s story

Excellence in Human Resources Achieving dreams

Our impressive profit results this year were achieved thanks From day one, our mandate has been to serve the best to the highest professional ethics to best serve our customers, to our focus on developing our human resources. Historically, interests of our customers, employees, and stakeholders. and we are all committed to making tomorrow better than the banking sector in Vietnam was in a “negative circle,” in today, for all of Vietnam. which banks were taking good staff from one another. In the This dedicated mission has, by its nature, seen our growth last three years, Techcombank has built up a “positive circle,” journey mirror the growth story of Vietnam. In 2009, as Our transformation journey has just begun. Virtually every in which the Bank categorizes and provides in-depth training people grew fearful of the global financial crisis sweeping division in the bank is changing: in what can be described for our staff based on the customer segment they are working through Vietnam’s banking sector, Techcombank was the first somewhere between evolution and a revolution, our with. We have recruiters working directly with top universities financial institution in the country to hire globally renowned businesses are adapting - ahead of time - to the ever- to find the best graduates. At the same time, the Bank has management consultants McKinsey & Company to advise changing needs of our customers. The last 25 years have been streamlining the organization to increase staff efficiency us on how we could to improve our structure. One year been an amazing journey. As we look forward, we will and reduce unnecessary posts. later, we were honored with the award for “Best Bank in continue our transformation journey toward building a Vietnam” from EuroMoney. Since then, we have started a stronger Techcombank and writing the next chapter in our Techcombank’s mission was designed to provide our custom- series of transformative initiatives to ensure the most positive success story. ers with a full range of tailored financial products and services. experience for our customers, such as “Cardless” ATM To do so - and by doing so - we provide our employees with a transactions, Zero Fee online transactions and Cashback on I would like to thank the Board, the management team, and superlative, award-winning working environment where they debit card purchases. all our staff for the enormous efforts they continue to make to have wide-ranging opportunities to develop, contribute, and secure Techcombank’s growth and future. build a successful career, as well as offer our shareholders either the people we serve or the people we employ. We do Over the past few years, in concert with an ever-improving superior long-term returns. not view customer-centricity as simply a motto, but rather as standard of living, the Vietnamese people have demanded Finally, I would thank our shareholders for their unceasing a promise to fulfill, and the guiding principle behind what we more sophisticated and better integrated financial solutions support. We are optimistic about the bank’s prospect and will To transform from a product-centric organization to a cus- do and how we do it. We are all on this journey together, and that enable a successful, sustainable financial life. It was continue to strengthen our capabilities, to invest in technology tomer-centric one, we know we cannot succeed alone. Every we will work to make sure that all of us - customers, partners, from identifying this demand, as well as the solutions, that and human resources in order to deliver growth, performance, step in Techcombank’s transformation is driven by the people: employees, and stakeholders - succeed together. Techcombank’s bancassurance partnership with Manulife and value creation. was born. Sincerely, These are just some of the examples of our ongoing effort Nguyen Le Quoc Anh to enable and accompany the growth of our country and our Prudent Risk Management countrymen. People’s lives and needs are changing every day, and we will continue to change to ensure that we can continue to meet those needs, and to enable all Vietnamese This confidence, however, does not mean that we can let citizens as they pursue their own trajectory of growth. down our guard. In a climate such as this, it is even more important for Techcombank to remain an institution of We endeavor to become the number one bank in Vietnam, trust and prudence as we continue serving the needs of as well as a leading player on the international financial Vietnamese citizens as enablers and supporters of their landscape. Economic integration is inevitable, and Vietnam wealth and growth. is becoming an increasingly important link in the ASEAN community. We are happy and excited to welcome a future This year, Techcombank laid the groundwork for early where a broader base of customers is served, and where we adoption of Basel II compliance, and we trust that our are making increasingly meaningful contributions to the story application will be accepted by the SBV soon. Nevertheless, of our nation’s success. Techcombank is already applying the Basel II standards in risk management. Additionally, Techcombank is one of only a To meet that goal, the Bank needs to have a sustainable few banks to have written off all bad debts from VAMC early, foundation, in which technology, human resources, and risk having finished the process in 2017. management are top priorities. Each Techcomer is committed

ANNUAL REPORT 2018 ACHIEVING DREAMS 17 25 YEARS OF ACHIEVEMENTS

Techcombank's vision is Vision, mission, core values To be the best bank and a leading enterprise in Vietnam Mission

To be the most trusted financial partner of our customers, due to our ability to provide a full range of financial products and services based on our “customer-centric” approach.

To create a positive working environment for employees, with massive opportunities to develop personal capabilities, make a valuable contribution, and create a successful career.

To give shareholders long-term, attractive returns by deploying a fast-growing business development strategy, in parallel with implementing corporate governance and risk management practices that meet or exceed international standards.

Core values

Customer Innovate to Effective People Committed centricity be the leader collaboration excellence to action

"Because we only All Techcomers are "Because you "To create a competitive "To overcome succeed when our always ready to lead cannot succeed at advantage and challenges and come customers succeed" the charge for positive Techcombank if you outstanding success out on top" change; to explore work alone" for ourselves and our Techcombank always and learn without organization" At Techcombank, places customers at the fear of failure; and Each Techcomer places commitment is not center of every thought to be innovative in the Bank's benefits With the motto of only presented and action. We protect every action to create above their personal "Empower and through thoughts, but our customers' interests breakthroughs for the interests. They are be empowered", also through taking by always complying benefit of customers. willing to listen to Techcombank the initiative and with the laws and the constructive feedback, creates conditions responsibility to act Bank’s regulations. to offer support when and opportunities for and deliver results. Techcombank facilitates needed, and to work the staff to develop We are disciplined and customers’ long-term together to create and to succeed. In compliant, yet we are successes, in addition the highest value for turn, Techcomers bold and direct when to addressing the short- Techcombank, its also actively learn speaking out against term financial needs. customers, and its to improve their transgressions. shareholders. capabilities and to continually set higher goals for themselves.

ANNUAL REPORT 2018 ACHIEVING DREAMS 19 25 YEARS OF ACHIEVEMENTS Corporate structure and network

Shareholder structure

Outstanding shares

The total number of outstanding shares of Techcombank as at 31 December 2018 was 3,496,592,160 shares (equivalent to the Bank’s charter capital of VND34,965,921,600,000), which consist of:

Shares restricted to transfer 3,496,592,160

637,554,566 18.23% shares

Free-float shares

2,859,037,594 81.77% Changes in equity ownership Shareholder structure On 12 July 2018, Techcombank increased its charter capital from VND11,655,307,200,000 to VND34,965,921,600,000 through issuing shares at a ratio of 1:2.

14.995 % 22.51% Treasury share transactions 43.66% 56.34% In 2018, Techcombank had two treasury Date of Number Average price Buyers 85.005% 77.49% share transactions as follows: implementation of shares (VND/share)

1st tranche Mar 23, 2018 93,242,458 91,000 Investors and employees

Major shareholders * Institutional shareholders Domestic shareholders 2nd tranche May 07, 2018 64,411,157 128,000 Investors 524,315,499 shares 1,526,673,280 shares 2,709,558,224 shares

Other shareholders Individual shareholders Foreign shareholders 2,972,276,661 shares 1,969,918,880 shares 787,033,936 shares As at 31 December 2018, Techcombank did not have any treasury shares.

* According to Article 4.26 of the Law on Credit Institutions issued in 2010, “major shareholders of a joint stock credit ANNUAL REPORT 2018 ACHIEVING DREAMS 21 institution are shareholders directly or indirectly holding 5% or more of the voting shares of the organization”. 2018 2016 Listed on Ho Chi Minh City Stock Exchange under the ticker TCB, with USD6.5 billion market capitalization. Entered a breakthrough period with the launch and 2014 implementation of the 2016-2020 transformation Recognized as one of the Top 3 biggest IPO deals in Southeast strategy to become the primary bank of choice, leading Asia in 2018. Affirmed our status as the the financial lives of the Vietnamese people, and to leader in service quality with 23 Tripled charter capital, increasing it to VND34,965 trillion. 2009 become the No.1 bank in Vietnam. prestigious awards from domestic Became the first private JSC bank in Vietnam to exceed the VND10 trillion Affirmed the leading JSC bank 2011 and foreign organizations such Doubled profit before taxes compared to the previous threshold in profit before taxes. position with VND5.4 trillion as Global Finance, IFC, and year; awarded "Best Bank in Vietnam" by FinanceAsia, Became the leading bank in terms of Visa card transactions (debit and in charter capital; total assets Became Vietnam’s second largest FinanceAsia. "Vietnam’s outstanding bank of the year" by AsiaRisk, reached VND95 trillion; became Vietnamese JSC bank, by assets, and "Best HR Strategy" by Vietnam HR Awards. credit) in Vietnam, recognized by International VISA Card organization. 2001 2006 Became the bank of choice of 3.7 the first Vietnamese bank to work with total assets of VND180 trillion Awarded "Best Bank in Vietnam 2018" by Euromoney. Implemented the Joined the club of banks with the world’s leading strategy and a network of 307 branches million individual customers and international standard core with total assets of above advisor – McKinsey & Co. nationwide. 48,000 corporate customers. Named "Vietnam's Best Trade Finance Bank 2018" by Global Banking & banking system Globus. USD1 billion. Finance Review.

1993 2003 2008 2010 2012 2015 2017 Established Joined the global card Became a founding Awarded "Best Bank Reaffirmed our position at the Became one of the top Became the leading Vietnamese bank in terms of credit with initial system with F@stAccess member of Vietnam’s of Vietnam 2010" by forefront of bringing a sector- 2 banks in Vietnam in rating, earning the "national credit rating ceiling" by S&P. capital of - Connect 24. largest card alliance - EuroMoney; honored leading digital technology terms of Visa payment Maintained double-digit profit growth as profit before VND20 billion. Smartlink; Launched the with many other experience through cardless ATM turnover, with 4.2 million taxes swelled to VND8,036 trillion; ranked second in Techcombank Visa Card. international awards. transaction service to over 2.8 customers. profitability in Vietnam by Asian Banker; number of million customers. customers reached more than 5 million. Became Vietnam’s leading bank in terms of Visa transaction volume. Became the market leader in bancassurance products, forming a long-term, exclusive strategic partnership with Manulife. Led in EES index voted by employees; voted as one of the Top 2 Best Workplaces in Vietnam’s banking and finance sector. Became long-term title sponsors of the iconic community event - HCMC Techcombank International Marathon. 25 YEARS OF ACHIEVEMENTS

Techcombank has two stand out Phat in 2018 at times reached up to offered that. We are also continuously characteristics compared to many other VND2.8 trillion, but the processing being advised of many other products. partners with whom we have worked: procedures at Techcombank were Stories of Customers flexible products and an integrated very fast, careful, and strict, especially Lastly, Techcombank's employees value chain. as environmental issues are tightly are very passionate, and are ready to attached to our business nature. support us even beyond working hours. Techcombank is one of four banks in This culture is very similar to our own Vietnam with commodity derivative Techcombank has been a consistent and is one of the factors that will make Nguyen Phuong Anh products and is responsible for serving partner during the development of Hoa Hoa Phat continue our partnership with PFS customer up to 50% of Hoa Phat's derivative Phat. As our company has expanded, Techcombank in the future. needs. With respect to the value chain, Techcombank has increased our credit I own a small family business and Another plus is that domestic money we recommend each of our new agents limit and the permitted transaction size. have been a Techcombank customer transfers via Techcombank are free open an account at Techcombank. The Among Hoa Phat's domestic joint stock for nearly 20 years. I have personally of charge. I believe that many other fact that Techcombank has provided our bank partners, Techcombank is a key YEARS used many of Techcombank's products, customers feel satisfied with those agents the same credit limit, coupled provider of all the banking products that from savings accounts and overdraft services, as well. with guaranteed quality of service, has we employ. OF ACHIEVEMENTS protection, to bond investments. These increased our operational efficiency products address my personal needs As for investment products, I was tremendously. The staff at Techcombank is very like they were "tailor-made" for me. advised to buy corporate bonds, and responsive to innovation. In 2018, our Techcombank was founded in 1993, just a few years after the reformations of Doi I ended up using my idle money very In addition, Techcombank also excels in company had a syndicated loan, and Moi. Similar to the Vietnamese economy, the Bank has enjoyed 25 years of growth I have seen remarkable progress effectively. I hope Techcombank will service fees and transaction processing Techcombank was quick to offer a and development. Nevertheless, the Vietnamese economy as a whole and the every day at Techcombank. They continue to promote its strength in bond speed. The outstanding loans of Hoa currency swap. No other domestic bank local banking industry are still very young: while our population is vast at around 95 have innovative products such as the brokerage. As many businesses need million people, 70 per cent are still unbanked. Vietnam is growing rapidly, and there magnetic stripe card, the OTP code, access to capital, Techcombank can perform above and beyond what is is even greater potential in the future. e-banking, as well as the f@st mobile be a reliable partner to help them issue necessary. That makes customers application and other mobile apps. bonds as a means of accessing funds. like me very confident in using Nguyen Phuong Thanh For Techcombank, as we lay out our vision for the future, success will be measured These innovations are very convenient Techcombank's services. Deputy General Director - Thien Son Granite & Marble JSC not only at the completion of our transformation, but also by the milestones we for customers, and the assistance Another unique trait that I have noticed achieve along the way. In 2018, we achieved a very important milestone, as the from Techcombank’s staff made it very about Techcombank’s staff is that they I strongly believe in Techcombank's Thien Son Granite & Marble JSC operational scale and development. In We are grateful for Techcombank’s bank completed the listing on Ho Chi Minh Stock Exchange, the largest listing in the easy for me to use these new services. are very proud of the bank, and always commitment to being greater every day. has a 17-year history of producing addition, they provide timely, high quality flexibility and willingness to go above history of Vietnam's banking sector. The investment from our valued international stone materials in Hanoi, providing financial advice. That is the key for us and beyond expectations to help us. At strategic shareholders has solidified our strong position, and we are thankful to them construction materials for many large to work with the bank in the long-term. one point, Techcombank's marketing for their partnership and support as we march toward a brighter and greater future. corporations and projects. However, Furthermore, as we are satisfied with manager even flew from Ho Chi Minh Pham Thi Kim Oanh Thien Son is only at the operational Techcombank’s quality of service, we City to Hanoi to meet with us and give Chief Finance Officer cum Chief Accountant - Hoa Phat Group scale of a small business. Our dream often prioritize Techcombank for our her support. is that Thien Son will continue our projects. Techcombank has been working with Techcombank doesn’t stop at providing sustainable development and become We operate in a niche market, so we Hoa Phat for over a decade. As one regular banking services. Rather, a second home for our employees, In 2018, as a result of Techcombank’s have not gone through many major of the sources of medium-term capital they want to understand corporate helping them to stay with the company support, Thien Son was able to upheavals. However, events such as a for Hoa Phat's Coke Production Plant, customers so that they can fully serve for the long-term. Techcombank has purchase new assets. At the time, loss of certain investment opportunities Techcombank has developed many such customers’ needs. As a result, been assisting us since 2014, and we Techcombank had a new program have changed the company structure. products and services that impress Techcombank has made deliberate hope to continue our partnership on the to provide financing to Vincom’s It is at such times that we need the us. The quality of service and the personnel changes, arranging staff with road ahead. subcontractors, and Thien Son was the responsiveness of a bank partner, professionalism of Techcombank are specialized expertise in each field to work first to get capital under this program. and we appreciate Techcombank in what have made Hoa Phat loyal to directly with customers, to match us with What’s unique about Techcombank is Thanks to that, we were able to acquire this regard. Techcombank’s services throughout the people who better understand the that it has product offerings that are the resources to implement many big the years. sector that Hoa Phat is operating in. highly relevant to our needs in terms of projects.

ANNUAL REPORT 2018 ACHIEVING DREAMS 25 25 YEARS OF ACHIEVEMENTS | Stories of Customers

We also appreciate Techcombank for and weekly foreign exchange updates In 2019, we will invest in a new Nguyen Hong Giang its expert and dedicated employees. that brought innovation and insights 2,000-hectare factory in Hung Yen, so PFS customer Throughout nearly 20 years of to our business. With these services, the capital need is large. Amongst the cooperation, although there have we have been able to control our cash factors affecting our investment decision been personnel changes, services flow better, save time and costs, and was Techcombank’s indispensable I am the owner of a confectionery import increase the efficiency of my business continued without interruption because increase business efficiency. support. The financial solutions and and export facility in Hanoi. I have used operations, such as foreign currency the transition process was quick and operational advice they provided helped Techcombank exclusively since my trading contracts to help my company effective. Thanh Binh HTC and Techcombank to make us more confident. Thank you, business was established in 2013. lock in a stable exchange rate. have built a long-term track record of Techcombank. Further, Techcombank provided us with partnership, which has left us a very For me, the most important With respect to personal banking, many products such as online banking good impression. characteristics of banking services Techcombank's products and services are effectiveness and timeliness of meet my daily needs, as well as my transactions. With Techcombank, I am long-term needs such as investment assured that if there is a need, I will be and insurance. Tran Van Huu supported. Chief Accountant - Jetstar Pacific Airlines JSC While Techcombank often rejuvenates In the last 3 years, my company's Even though high frequency, small value its team with new talent, it still performance has been very positive, transactions are part of the nature of ensures professional competence and growing steadily over 20%. In the future, Jetstar Pacific (formerly Pacific Since Techcombank understands its my business, my business transactions enthusiasm. I see many employees with I will need to invest in warehouses to Airlines) and Techcombank have had customers, the Bank has been able through Techcombank are still very long tenures at the bank. This makes ensure stability for my operations which a relationship since the early ’90s, to provide us with solutions tailored to fast and effective. Techcombank's staff me feel secure when cooperating with will require support from Techcombank. when Techcombank was established. our needs. The nature of the aviation also advised me on new products to Techcombank. Throughout this relationship, industry is large-scale retail with many Techcombank has always been a small agents and customers nationwide. trustworthy partner to us. Without technology, it would be more difficult for customers to access aviation Nguyen Trong Nam What we have noticed from working with services, and harder for us to exert General Director - Thanh Binh HTC Vietnam JSC Techcombank is its team’s dedication. greater financial control. Techcombank The team emphasizes customer assisted Jetstar with automatic care, learning about the customers’ payments, collection from agents and for selling electronic tickets. We aim Thanh Binh HTC was established in The steel industry witnessed some needs, and targets comprehensively customers, promotion of cashless to build a digital airline by promoting 1998. We are an SME in the industrial fluctuations in raw material prices in the addressing those needs. Throughout payments, and minimizing intermediate website development and expanding steel sector. Techcombank has last few months of 2018 that directly our partnership, Techcombank has operations in financial management. electronic payment methods to optimize supported us since our early years affected our operations. Although we been very efficient in handling our Other services such as salary payment customer experience. To meet this when we encountered many difficulties did not fully reach our profit target, our transactions: from small tasks like also aim to minimize procedures as well goal, the corresponding technology as a new young business entering results were positive in comparison to processing electronic payments or as save time and costs. solutions for online payment, including the market. other enterprises of the same scale in settling foreign payments, to more card products and collection services, the same industry. complicated aspects such as technology We are also very impressed with play an important role. Therefore, we Professionalism is the outstanding quality integration and credit relations. Techcombank for being a pioneer in hope to continue our partnership with that makes us loyal to Techcombank: We are grateful to Techcombank for Techcombank has also been very promoting investment in technology. Techcombank to increase the proportion listening to and understanding customer supporting us not only financially but responsive and collaborative, ensuring Techcombank's strategy is in line of e-commerce in our operations as well concerns ensures that they can provide also operationally, by providing us confidently manage market fluctuations that we understand each other's with that of Jetstar Pacific, which is as improve our quality of service. us with products and services that best with market information and in-depth and risks so that we could seize development strategy, enabling us to the first airline in Vietnam to apply a fit our needs. seminars. This support enabled us to investment opportunities. quickly solve any emerging issues. comprehensive e-commerce platform

ANNUAL REPORT 2018 ACHIEVING DREAMS 27 25 YEARS OF ACHIEVEMENTS

Stories from I joined Techcombank in July 2017 after more than 11 years in the foreign banking industry. During my time with Techcombank, I have seen three Techcomers major differentiating factors of the Bank: vision, commitment, and outstanding innovation.

Nguyen Tat Khanh

Director of Transaction Banking, Wholesale Banking division

With respect to vision, Techcombank Techcombank unique is its ability to sharing their experiences so that I could aspires to be the No. 1 bank in Vietnam commit to action and execute. Everyone complete this very practical training. and to make an impact on a regional in the organization has embraced that scale. It is very ambitious, but at the spirit, so that we are able to coordinate I have realized that Techcombank's same time very attainable. I trust that smoothly, and demonstrate that success comes from aligning the our leadership and all Techcomers are commitment through our everyday work. commitment of each individual to the on the right track. commitment of the organization, through Techcombank is not only committed to the process of shifting their mindset On a personal level, Techcombank becoming a trusted financial partner for about work and life. has widened my own vision to enable its customers, but it is also committed a personal breakthrough. Through to helping its employees develop Finally, innovation is an outstanding participating in community activities their capabilities and build successful value of Techcombank, stemming from such as the Bank-sponsored marathon, careers. As a new employee who joined its commitment to customer-centricity. I had the opportunity to test my limits the bank less than two years ago, I have For example, we are continuously and overcome challenges that I used personally felt Techcombank's strong working to identify new opportunities to think were impossible. To prepare commitment to helping me grow. I was to connect with new partners in for the marathon, I set a goal for myself assigned to manage the sales and our customers' value chain, and to to run a little further each week. With solution consulting team as part of the improve solutions. In this perspective, the support and camaraderie of my Transaction Banking (TB) division. It is Techcombank aims to be a trusted colleagues, it was not as difficult as a challenging environment, but I enjoy partner that brings the best benefits to I had thought. With every milestone it, as well as the feeling of fulfilment customers, rather than a mere service I achieved, I felt very pleased to from achieving my goal of better serving provider that focuses on competition overcome my own limits. customers. through lower prices and reduced fees.

In terms of commitment, The Board of Management of the Bank Ultimately, the core of operation many organizations talk about a accepted my application to join the at Techcombank is how to solve customer-centric strategy. One TechcomLead training program, and customer problems and bring them the of the characteristics that makes has worked closely with my cohort, highest values.

ANNUAL REPORT 2018 ACHIEVING DREAMS 29 25 YEARS OF ACHIEVEMENTS | Stories from Techcomers

At Techcombank, foundational "Data Excellence" combined with our ongoing investment in technology It is the core values of the bank Techcomers will create many advantages for the Bank. that inspire me.

Pham Quang Canh Nguyen Thi Kim Hue

Director of Portfolio Analytics & Modeling - Risk Management Division Director of Doi Can branch

Risk management is a seemingly new enough, so that the model is error- understand customers, business I have worked at Techcombank since system in 2003, until now, seeing field, but in fact, it is the backbone free and leads to the right decisions. operations, risks and IT systems its early days. I was very honored to be Techcombank become a pioneer in of any bank. My area of expertise, Techcombank has a set of more than has helped to ensure that the risk appointed to register the Bank’s initial technology. after many years of experience in the ten years of historical data, which management models run smoothly. VND20 billion charter capital at the SBV. Singapore market, is in building a risk is relatively complete thanks to the Moreover, the fact that our team is These developments are rooted in our management model based on a big data Bank’s investment in the data platform enthusiastic and eager to learn is a From the very beginning, Techcombank customer-centric approach - we are analysis, supporting timely, objective and to the foresight of building the risk great motivation for me in my work. has consistently grown throughout the constantly innovating to bring customers and even automated decision making. management model based on Basel II years. I have memories of the Bank the best experience and quality of One might think of it as Data Science in standards from an early point in time. Techcombank is the first bank in spanning my entire career, especially service. It is the core values of the bank risk management. The Vietnamese banking industry is Vietnam to successfully apply the about the bank's culture and people. that inspire me. I am therefore very behind the rest of the world in terms of international financial reporting standard The milestones that marked the optimistic about Techcombank's vision to But the biggest challenge is how to put adopting these standards, and there IFRS 9, which requires a high degree development of the bank are also become a leading enterprise in Vietnam, these tools into effective use, for which are many opportunities if we take of transparency. Risk measurement the turning points in my career. I am and to reach out to the rest of the world. the support and long-term commitment advantage of the latest developments models are an important component always grateful to Techcombank and of the Board of Directors is a necessity. and utilize new data sources to of making provisioning based on the Board of Management, who have After studying Techcombank's understand customers better as well expected loss. In addition, the use of greatly supported me and my fellow environment and strategy and receiving as improve their service experience. these models and data analysis has Techcomers in our development. the trust and support of the Board of At Techcombank, foundational "Data helped us to make decisions faster and Management - who not only understand Excellence" combined with our ongoing more accurately, ensuring prudent risk I have held many positions throughout the opportunities and challenges in this investment in technology will create management while reducing operating my career, from treasurer to accountant field, but also have practical experience many advantages for the Bank. costs. Although there is much work to branch manager. From these vantage from international organizations to to be done, we have overcome the points, I have observed Techcombank's draw upon - I was confident in joining In addition, Techcombank's culture of biggest challenges, and I believe that development milestones, from using the the Bank. cooperation and personal development Techcombank has all the advantages to Siba accounting software to successfully is the key to overcoming the "human" become the market leader in terms of deploying the GLOBUS core banking The next challenge is determining challenge in the Data Science field. data science technology. whether the data is large and precise The coordination among teams to

ANNUAL REPORT 2018 ACHIEVING DREAMS 31 25 YEARS OF ACHIEVEMENTS | Stories from Techcomers

At Techcombank, every employee is

encouraged to be creative at work, and to A strategy will only produce Techcomers work to their utmost capacity to achieve good results if you can execute it the highest efficiency. with determination.

Tran Khanh Ngoc Dang Thi Lan Anh

Director of Payment and Trade Finance Business Marketing Director

I started my career at Techcombank programs, has made me confident in a leading Vietnamese enterprise, I joined Techcombank two years ago. At for its customers and the community. I as a trainee in 1997. Over the past doing my daily work. At Techcombank, approaching international standards. that time, Techcombank had just begun believe the Bank's greatest strengths 22 years, I have witnessed every step every employee is encouraged to At Techcombank, every employee its transformation process, and changed is its leadership’s consistent ability to of Techcombank's transformation. be creative at work, and to work to understands this, and is aligned with the its approach from being product-driven execute and align people around a From a newly established bank with a their utmost capacity to achieve the common goals of the organization. to being customer-centric. I saw this common goal. modest number of employees and a highest efficiency. The success of each as an opportunity, and so I decided lot of manual processes, Techcombank individual is tied to the success of the to stop working in a foreign banking In addition, the team of Techcomers is a has consistently invested heavily in organization. environment and, instead, joined diverse mix of young and experienced technology, making operations faster Techcombank. employees, of locals and foreigners, and more accurate. Techcombank Another core value of Techcombank who bring unique and multidimensional is also preparing to launch our new is non-stop innovation - it is a key Techcombank is attractive to me perspectives to work. TB Platform, which promises to be a driver of excitement for each of us at because its modern and effective turning point for the bank and will better work. Throughout the past 25 years, approach is coupled with its employees’ I personally aspire to engage in exciting enable our customers to reach out to the Techcombank and its customers have commitment to working towards the jobs that allow me to learn new things to world market. grown in tandem. While we have common goals of the organization. A foster my own long-term development. established a nationwide network, strategy will only produce good results Techcombank provides me with that. What keeps me stay at Techcombank we have also constantly evolved and if you can execute it with determination, Further, management is often very is the strong foundation of corporate innovated to serve our customers in the and I believe Techcombank has involved in staff projects, sharing their culture, built from scratch. It is a culture best way. succeeded in that. experiences and helping all of us to based on proactivity and collaboration. widen our perspectives. I myself was I have been trusted and empowered in Vietnamese people are often proud The successful implementation of encouraged to participate in many my job and in every assignment I have whenever the country makes it to this strategy has not only helped different projects so that I could not only been given, I have received thoughtful the international level. Techcombank Techcombank gain advantages gain more marketing experience, but guidance from the management. wants to satisfy that pride with our in the market, but also has had a also learn more about other areas of This, along with practical training vision and mission of becoming significant impact on creating value the Bank.

ANNUAL REPORT 2018 ACHIEVING DREAMS 33 Business Performance "The epic transformation"

ANNUAL REPORT 2018 ACHIEVING DREAMS 35 BUSINESS PERFORMANCE

entire value chain from suppliers, to manufacturing enterprises, and IT platforms, to ensure operations run smoothly and to distributors and consumers. efficiently. As a result, the proportion of repeat customers for each product is growing, and customers are increasingly In order to further the Government's direction of developing satisfied, thanks to the convenience and benefits brought by the domestic economy as well as the SME sector, our products and services. Techcombank focuses on serving the value chains of six key economic sectors that meet both short-term, daily needs (e.g., After three years of implementing this strategy, Techcombank electricity, telecommunications, and consumer goods) and was able to reduce risks in our loan portfolio by reducing the long-term needs (e.g., housing, automobiles, and financial total outstanding loans to large corporates, while at the same services) of Vietnamese people and businesses. The core of time creating benefits for the economy, local businesses, this ecosystem approach is to increase the level of interaction and individual consumers. Simultaneously, Techcombank between businesses in a value chain, thereby enabling us to has actively shifted the tenure of outstanding loans to large be more proactive in providing services for SMEs, especially corporates and SME’s from predominantly long-term to mainly in the scope of credit and liquidity risk management. short-term. Another positive result is that Techcombank has increased the proportion of fee income, improving the stability of our revenues. Techcombank has enjoyed 13 consecutive The fact that Techcombank has provided our agents quarters of year-over-year revenue growth and is leading the the same credit limit, coupled with guaranteed quality sector in many retail areas. of service, has increased our operational efficiency tremendously. Ms. Pham Thi Kim Oanh, CFO of Hoa Phat Group.

Techcombank had a new program to provide financing to Vincom’s subcontractors, and Thien Son was the first to get capital under this program. Thanks to that, we were able to acquire the resources to implement many big projects. Mr. Nguyen Phuong Thanh, Development strategy CEO of Thien Son Granite & Marble JSC.

The more we learn about customers, the more we promote he motivation for Techcombank's new long-term develop- Techcombank learned and incorporated an important lesson the customer centric approach. "Techcombank provides ment strategy originated from our situation in the 2000s. from that episode. When laying out the strategy for the next customers with solutions rather than products", and "meeting T period, the 2016-20 transformation, rather than focusing customer needs, not providing customers with what we We have always been pioneers in terms of leveraging on the product, our strategy put the customer at the center have", have become the standard mindset of Techcombank’s technology to serve the financial lives of the Vietnamese of everything we do. Thanks to the appropriate direction business units. Each employee must answer the question, people and businesses. In 2001, Techcombank was the first and our continuous efforts over the past three years to "what does the customer need?", prior to thinking about which bank in Vietnam to deploy a global core banking system turn our strategy into action, Techcombank has achieved products and services they should recommend to customers. from Temenos, thereby linking branches into a network that outstanding results. could effectively serve customers' needs anywhere, instead During the past three years, rather than launching a massive of just at an individual branch. Like many other banks in Although "customer centricity" might be the mantra of many number of new products, Techcombank eliminated some Vietnam at the time, however, Techcombank encountered businesses, what is unique about Techcombank that enables products that were not suitable for the financial needs of the some difficulties in the 2012-14 period when the economy us to deliver truly exceptional results is, first and foremost, target customer segments. Techcombank's product portfolio was suffering from turbulence. We took this as an opportunity there is only one focus: "customer". Techcombank does not has become leaner, but all our products satisfy the needs of to systematically address and attempt to resolve all existing look at customers solely as individual entities, but rather we our key customer segments. At the same time, Techcombank issues and move forward. treat them as members of an ecosystem, consisting of the has made significant investments in our human resources

ANNUAL REPORT 2018 ACHIEVING DREAMS 37 BUSINESS PERFORMANCE

Business model

Our 2016-20 transformation strategy has spawned a comprehensive business model for Techcombank, with seven interlinked components. First and foremost, our customers are at the Customer centricity center. Around them, we identify a complete range of what is needed to serve them, including products, sales and services, risk management, operations and technology, human resources, and Customer centricity is an explicit part of Techcombank understanding, Techcombank has been able to constantly marketing and communications. business model. improve the value propositions to better match the needs of each customer segment. Techcombank has invested massive resources and time to collect comprehensive customer data from all contact Techcombank continually builds and adjusts these value points, and has analyzed this data to gain a deeper propositions to increase engagement and improve customer understanding of customer needs and behavior. Hence, experience. Over the last three years, Techcombank has Techcombank has segmented its customers by business unit, focused on building the capabilities of the frontline team, and further categorized them by economic sector and sub- providing the necessary resources so that they can better segment. Combining customer segmentation and customer serve our customers.

Product development and pricing

At Techcombank, the most important metric is neither the for SME customers in 2018, enabling millions of Techcombank value of each contract signed with customers, nor the revenue customers to save costs on all their online transactions. that customers bring in the month or a year. Rather, it is the customer life-time value (CLV). As a result, Techcombank is Similarly, Techcombank’s portfolio of solutions, coupled with willing to share our revenue with customers to benefit both our strengths in transaction banking and bond brokerage, sides, forging a long-term and sustainable relationship. have also helped to bring sustainable benefits to tens of thousands of enterprises in Vietnam, including the majority Unlike other banks, which usually launch short-term promotion of leading companies in the essential economic sectors. In campaigns, in the last three years, Techcombank has pro- particular, the value chain approach allows Techcombank moted the free and cashback elements as new, fixed features to meet the needs of all businesses and individuals in of many of our products. The "Zero Fee" program was first the ecosystem involving these economic sectors, thereby deployed for individual customers in 2016, and was expanded enhancing the benefits we deliver.

Sales and services

The relationship between Techcombank and its customers Techcombank to improve sales channels to provide not only is built not only on meeting customers’ needs, but also the products and services that customers need, but also to do on the sales and service mechanism deployed by our so in a manner in which customers want these products and dedicated employees. Deep customer understanding allows services delivered.

ANNUAL REPORT 2018 ACHIEVING DREAMS 39 BUSINESS PERFORMANCE | Business model

Product development & pricing Marketing Sales and & Commu- services nication Cus- tomer Risk Human Risk management manage- Marketing and Communication resources ment Over the last three years of our customer-centric "Customer centricity" is not only the keystone of our strategy, Vietnam is in a development period, and the Vietnamese transformation, Techcombank has built a proactive risk Operations but also the culture of Techcombank. With our brand people have quickly seized the opportunities to develop management culture based on the concept that "Bank’s & technology positioning of "Be greater", Techcombank aims to show along with the country. In this context, Techcombank also security is parallel with customers’ security”. Techcombank what we are doing: providing financial services to millions has many opportunities to be an active force to promote this has been a pioneer in applying advanced risk management of individual customers and tens of thousands of business development. With the vision of becoming the number one standards to enhance the Bank's risk management customers, in order to help them lead more successful bank in Vietnam, Techcombank's brand positioning reflects our capabilities. As a result, Techcombank has managed to financial lives. That brand positioning is also true for the Bank differentiation and leading role in guiding customers' financial control low NPLs in recent years, and was one of the first Human resources itself and the employees, who are working hard to "be greater" lives, and helping them achieve their dreams. two banks in Vietnam to eliminate legacy bad debt by writing every day in their work, and to help customers succeed. off all of the VAMC bonds. Additionally, Techcombank is the All of these systems and technologies don’t run themselves, first and only bank in Vietnam to implement IFRS 9 for its and Techcombank understands that people are the most annual financial reports, the same standard employed by the important resource. "People excellence", is therefore identified leading banks in the region. as the first fundamental capability to successfully implement Techcombank's strategy, and we are constantly striving to achieve this goal.

Operations and technology Until recently, the number of Techcombank employees had stayed largely flat, but the Bank’s investments in staff training Techcombank’s strong technology base has contributed and improving the working environment have increased significantly to the effectiveness of the Bank's risk constantly. As a result, Techcombank has created cohesion management system as described above. Techcombank among employees. We have been consistently ranked as one has always been a pioneer when it comes to investing of the leading workplaces in Vietnam, and surpassed many in technology. As a result, Techcombank's system foreign banks in Vietnam to come in second place within the operates seamlessly - even during holidays - despite the industry in this criterion. ever-increasing pressure on the system as the average number of transactions keeps growing as a result of free Currently, Techcombank has an excellent team of senior online banking. and middle management executives, and a spirit of professionalism and mutual respect between those with In the years to come, Techcombank will continue to invest extensive experience in other international and domestic in technology, and has earmarked more than $300 million organizations and those with many years of success at for just that purpose. This is a major investment not only in Techcombank. This team provides a solid foundation for comparison with domestic banks but also relative to leading executing Techcombank's business model, and will lead the banks in the region, which in turn will help Techcombank Bank to greater success not only throughout the rest of our better serve our customers. transformation, but also for many years to come.

ANNUAL REPORT 2018 ACHIEVING DREAMS 41 BUSINESS PERFORMANCE

Transformation program

The transformation began in 2015, and Techcombank is still in the midst of this process. The Bank’s achievements in Risk management 2018 were not happy accidents, but rather they were built up through long-term planning, preparation, and execution. In 2018 and 2019, in addition to managing the traditional risks any bank faces, Techcombank is preparing to deal Human resources with new risks in the financial market such as strategy risk, technology risk, reduction ratio in that ratio in the last model risk, and network security risk. I personally aspire to engage in exciting jobs that allow me to learn new several years. Improved retrenchment things to foster my own long-term development. Techcombank provides me demonstrates the commitment and Presaging the future implementation with that. investment of Techcombank’s Board of of Basel II in Vietnam, Techcombank Dang Thi Lan Anh, Business Marketing Director. Directors in: founded a Basel II project group in September of 2012, led by foreign • Executing effective strategies to attract experts with experience implementing models (such as PD, LGD, EAD, VaR). Techcombank is also one of the first development, Techcombank employs and retain talents (e.g., adjust yearly Basel II in Asia. With consulting support from Ernst banks to implement a comprehensive an “employee-centric” approach basic income, prioritized loan programs & Young, Techcombank became the data connection with the state bank internally. “Quality” and “quantity” of for employees, exceeding reward In March of 2014, when selected first Vietnamese bank to report its credit center (CIC) by the Host-to- our human resources at Techcombank programs in the market) by the SBV for the pilot program to financial statements according to IFRS9, Host method. This focused credit data are developing and improving, as implement Basel II, Techcombank starting with its 2018 fiscal year. This reference system helps enterprises to demonstrated through the following • Investing in talent development began analyzing the impact and report includes the development and proactively verify customer information, metrics: through professional training programs, developed an overall roadmap for completion of probability of default (PD), to provide advanced security for talent framework training, PDP and Basel II implementation. Throughout loss given default (LGD), exposure at users, to minimize operational risk, to - The number of employees at succession plan implementation this process, Techcombank has strictly default (EAD) models - based on Basel optimize use, and to share internal data Techcombank grew 17% from 8,328 adhered to the guidelines from SBV, II requirements. while simultaneously saving costs for in 2017 to 9,757 employees in 2018, - The average employee tenure reached proactively carrying out projects to Techcombank. according to the strategy and business 4.5 years. This is a very positive collect and process data, reviewing and Techcombank also completed the expansion plan, asserting the scale and number, indicating the level of employee updating regulations, internal processes, review, amendment and supplement In 2018 Techcombank began position of Techcombank in the market. commitment to Techcombank is much organizational structure, and completing of internal documents, adjustment of implementing its Business Credit higher than the three year average in the capital adequacy ratio calculation organizational structure, formation of Decision Engine (BCDE) project. This is - The number of employees with the rest of the industry. program as prescribed in Circular new capital management councils, and an integrated platform which supports higher education is rising, as the 41/2016 TT-NHNN. risk council to fulfill the Circular 13/2018/ different requirements of end-to-end Techcombank always cultivates ratio of employees with postgraduate - Techcombank was honored for TT-NHNN pertaining to the internal credit risk management operations “people excellence” - each individual qualifications improved from 5.96% in Excellent Human Resources Strategy, Besides working to comply with Basel II, control system. In 2019, Techcombank for enterprises, including financial at Techcombank works hard every 2017 to 8.7% in 2018. Effective Human Resource Planning per the standard method (Circular 41), will continue risk mitigating projects analysis, credit rating, credit process, day to contribute to the success of and Recruitment, and Effective Techcombank also launched projects including the internal capital adequacy early warning and monitoring credit the organization. Understanding - The job retrenchment ratio in 2018 was Talent Management, and was one of to comply with Basel II according assessment process (ICAAP), endurance conditions. the correlation between human 16.6%, significantly improved from 2017 winningest enterprises at the Vietnam to the advanced method, including checking, and capital planning as we resource development and the Bank’s (reduced 2.93%). This was the largest HR Awards 2018. developing advanced risk measurement approach Basel II standards.

ANNUAL REPORT 2018 ACHIEVING DREAMS 43 BUSINESS PERFORMANCE | Transformation Program

“Techcombank is one of four banks in Vietnam with commodity derivative products and is responsible for serving up to 50% of Hoa Phat's derivative needs. Ms. Pham Thi Kim Oanh, CFO of Hoa Phat Group.

Wholesale Banking Personal financial services

In 2018, the Wholesale Banking Techcombank’s focus is on optimizing the sales and service -- Total volume of credit card payments grew 53% compared division transformed the structure of experience for our retail customers. At the same time, we to 2017. the loan portfolio, shifting medium- + 184% + 135% are developing other service channels, besides the branch and long-term loans to short-term channel, based on understanding our customers’ needs. -- Online deposit grew by 158% in 2018. loans and corporate bonds. Upgrading our Mobile Banking platform is just one example of what Techcombank is executing to enhance customer -- Techcombank maintained nearly 20% market share for In the past, Wholesale Banking experience. Techcombank is working to automate daily bancassurance in 2018. division served companies, or families transaction processes to meet the customer need of making of companies, with annual revenues of banking faster and more convenient. over VND600 billion. However, given 2017 2018 2017 2018 I have seen remarkable progress every day at the complicated financial demands of Additionally, Techcombank delivers short- and long-term Techcombank. They have innovative products such as the these large corporate customers, the Short-term loans Average balance of corporate bonds training programs to our frontline employees to ensure The total average short-term loan balance increased by 135% to VND25.4 trillion while magnetic stripe card, the OTP code, e-banking, as well as focus has shifted towards companies, in Wholesale Banking in 2018 was VND38.6 medium- and long-term loans decreased by 28% they have all the requisite skills and capabilities to support the F@st mobile application and other mobile apps. As for and groups of companies, with annual trillion, an increase of 184% compared to 2017, to VND30.9 trillion. our retail customers. As a result, 2018 saw impressive investment products, I was advised to buy corporate bonds, revenues of over VND2,000 billion. generating VND943 billion of interest income. development in retail banking, resulting in Techcombank and I ended up using my idle money very effectively. maintaining its market leading position in such areas as Visa Nguyen Phuong Anh - Individual customer cards, bancassurance, and home mortgages.

Total income from services:

+ 28%

+ 94% + 93%

2017 2018 2017 2018 2017 2018

Advisory services for corporate Maintain and spur fee income from Total income from foreign bond issuance traditional services, especially exchange trading In 2018, we provided advisory service for the underwriting fee income reached VND216 billion, an increase of 28% issuance of VND65.2 trillion worth of corporate increased 93% to VND97 billion. compared to 2017 on total transaction of almost bonds, generating VND600 billion in fee income USD7 billion, while income from derivative (increased 94% compared to 2017). transactions increased to VND105 billion.

ANNUAL REPORT 2018 ACHIEVING DREAMS 45 BUSINESS PERFORMANCE | Transformation Program

Technology

For the last 25 years, Techcombank has led the way on digitizing financial services and banking products. In 2010, Techcombank was the first bank in Vietnam to provide Internet banking, and in 2014 Techcombank became the first bank to provide Mobile Banking. Today, Techcombank provides customers with the opportunity to conduct transactions such as remittance, payment, deposit, and credit card payments through mobile banking, essentially offering those services 24/7.

In 2018, Techcombank presented its new brand positioning, "Be Greater", showing our commitment to inspire everybody to dare to dream big. This new brand position also demonstrates the desire to enable each Vietnamese citizen to be optimistic and independent to be greater together. Techcombank Business Banking conducted consumer research and confirmed that customers expect greater digital capabilities from their bank. What’s Techcombank promotes a value chain approach within business banking centers in special economic zones, where more, in the era of Technology 4.0, they expect a better online our six targeted economic sectors. This enables us to our customers are located. We also provided specialized experience that ensures the safety and security of their data. attract and serve key customers within those sectors, while training for our Relationship Managers (RMs), and established Techcombank is committed to bringing data safety as part of reducing risk weighted assets, and lowering new customer the practice of matching the right RMs with the right improving customer experience. acquisition costs. customers. In doing so, we are able to provide the most suitable financial solutions to the customers’ needs, which The Business Banking division contributed 11% of total include short-term working capital loans, medium- to long-term revenues in 2018, increasing 33% compared to 2017 result. In loans, current accounts, term deposits, as well as transaction 2018, we continued our transformation of the entire division, banking services like trade finance and remittance. By the end of 2018, more than during which we changed our targeted customer segments and economic sectors, re-designed our end-to-end risk This approach has improved service quality. Our own internal million customers process and continued upgrading technology. investigation of SME customer satisfaction showed that The nature of the aviation industry is large-scale retail 1.5 Techcombank’s service was graded 8.4/10 in terms of service were using digital banking, an increase of with many small agents and customers nationwide. Without The Business Banking division targets customers in the quality, and 7.8/10 on quality of business programs. technology, it would be more difficult for customers to access 90% compared to 2017. USME and SME categories for primary banking relationships, aviation services, and harder for us to exert greater financial driving fee income and interest income. MSME customers By implementing the right people, and the right strategy, at the control. Techcombank assisted Jetstar with automatic are targeted primarily for transaction banking business. right time, we have achieved great results. In order to sustain payments, collection from agents and customers, promotion of Lending grew dramatically in this business banking segment, those achievements throughout the economic cycle, we are cashless payments, and minimizing intermediate operations in growing 49% versus the prior year, while deposits saw a 23% investing in technology, and executing standardized, focused, financial management. Other activities such as salary payment We expect this growth to continue, and are enhancing our increase. and advanced risk management methodologies. Further, we also aim to minimize procedures and save time and costs. capabilities and improving the digital banking experience. are investing in human resources to maintain and develop Nguyen Van Huu, Jetstar’s Chief Accountant This development is funded, in part, by the more than $300 As part of the Business Banking transformation, the division the next generation of leaders, and we will of course continue million we are investing in IT. restructured the sales and service model by establishing deepening our understanding of our customers’ demands.

ANNUAL REPORT 2018 ACHIEVING DREAMS 47 BUSINESS PERFORMANCE

Customer centricity

When applying our “customer centric” approach, we always ask whether we are applying our core corporate values when delivering the solution. Techcombank aims to work with sector leading efficiency, and that can only be achieved when we stay true to our core values when delivering solutions that customers’ needs.

As proof, Techcombank eliminated some products that did not meet the demands of our customers. Our product portfolio has become more streamlined, but all our products meet our customers’ demands.

Customer satisfaction is growing, not only because our Corporate culture products and services are providing greater benefit than ever before, but also because of the dedication and passion with which our team delivers them. Effective collaboration

ince before our transformation even began, Techcombank In order to do that, Techcombank has designed a system to Techcombank values the spirit of cooperation among our team believed that in addition to strong business initiatives, ensure that every initiative contains a component of corporate Innovation and creativity members. In an organization with more than 9,000 employees, Scorporate culture is an important foundation that an culture. We have a Culture Journey program at Techcombank, without collaboration, neither the individual nor the organization organization must have. We consider our organization’s which includes daily activities to increase each Techcomer’s Originating from the core values of our customer centric can succeed. More importantly, without collaboration and culture as the railways for the Techcombank locomotive, and understanding of our core values, and to encourage them to strategy, Techcombank is always working to improve our coordination, customers will not be best served. This is that culture must be solid and effective for the train to roll implement those values. At a higher level, Techcombank has products and services. This constant quest for improvement because one department working alone cannot provide the smoothly. worked with consulting organizations to take strategic actions is reflected in our investment in better technology and more most effective and sufficient solutions for our customers. to implement culture as part of our transformation process. efficient processes. Techcombank’s culture originated from the Bank’s vision In all projects at Techcombank, all team members are and mission and has become part of all Techcomers’ DNA. The impact of core values in Techcombank’s culture is plain This process of improvement is part of the mindset and encouraged to participate to solve problems, even if In other words, Techcombank can maintain a strong cultural to see. You will always have things happen that are outside working method of each individual to transform and innovate that project does not directly relate to their department. foundation thanks to the leadership of the Board of Directors a defined process. If you only rely on the normal process, together. Techcombank has worked with leading corporate Techcombank’s sponsorship of endurance sports, such as who recognize the importance of that foundation and work then you will not be able to resolve the issue. Techcombank’s consulting organizations not only to renovate the technology marathons and triathlons, not only benefits the community, to cultivate it. This creates a positive example and motivates culture has proven that, with everyone’s agreement and infrastructure and the operational processes, but also to but also helps foster a spirit of camaraderie among our the rest of the team to live and work according to that same commitment to a common goal, all problems can be solved create alignment around our strategic changes to ensure the team, enabling our people to better experience the impact of culture every day. more easily. success of the Bank’s transformation process. collaboration.

ANNUAL REPORT 2018 ACHIEVING DREAMS 49 BUSINESS PERFORMANCE | Corporate Culture

Commitment to action

Success doesn’t come easy. Techcombank’s success today has been achieved as a result of the commitment of all Techcomers. This spirit has been demonstrated clearly throughout the transformation process because this process started with a mindset and perspective shift among Techcomers. This transformation is made possible not only by our Techcomers working above and beyond ordinary expectations, but more importantly, because our entire team of more than 9,000 Techcomers understands our vision and our strategy, and they understand the impact of their commitment to take action.

Techcombank’s core values are interconnected. Techcomers People excellence have demonstrated their commitment by stepping out of their comfort zones and their teams to support and coordinate Techcombank is proud to say that our people are our with others, helping the organization achieve its goals, while competitive advantage. Due to a strong corporate culture, simultaneously challenging themselves. The central theme Techcombank can afford to be selective in hiring and is all employees at Techcombank share a common value, retaining only the best performers in the market, who are placing customers at the center of everything we do. aligned with the Bank’s strategic goals. The individual/ organization relationship at Techcombank is a two-way street. Techcombank invests in training to develop the personal capabilities of our employees, and vice versa, our employees associate personal success with organizational success.

Since our transformation began, Techcombank has continuously invested in training and development, with a focus on our frontline team, ensuring that they have the necessary resources to best serve our customers.

Techcombank has also consistently invested in developing the capabilities of middle and senior level managers, with programs that leave lasting impressions such as TechcomLead, and new programs with support from foreign experts such as TechcomHero. Thanks to initiatives such as these, Techcombank has a group of middle and senior managers with superior capabilities, in addition to their track records of success in international and domestic organizations.

In keeping with our spirit of collaboration, our focus on “People Excellence” is a feature of the culture at Techcombank, and helps to create cohesion and cooperation among employees.

ANNUAL REPORT 2018 ACHIEVING DREAMS 51 BUSINESS PERFORMANCE Operating results assessment report in 2018 Number 1 private joint stock commercial bank with profit before Stable operating income stems from sustainable growth of tax of VND10.7 Trillion interest income and non-interest income

While there are strong fluctuations in the from core fees contributed to the high, of redefining roles, responsibilities Techcombank’s total operating income the year. This served as the main factor increasing percentage of the operating market, Techcombank again achieved sustainable income for Techcombank in and infrastructure, Techcombank in 2018 reached VND18.4 trillion, an driving net interest income to the highest revenue of Techcombank. This result impressive results with VND18.3 trillion 2018. Several other factors contributed has remained consistent and true increase of 11.5% compared to the growth rate in the last 3 years, and stems from the strategic design of in revenue and VND10.7 trillion in profit to our record profits, including lower to its customer-centric approach. previous year, due to the steady growth contributing 61% of Techcombank’s total Techcombank to continue focusing on before tax, increasing 11.5% and 32.7%, contingency fees - reflecting the Techcombank, therefore, has seen in interest income (24.6%), and non- revenue in 2018. increasing income contribution based respectively, compared to the previous progress in risk management - continuously improving results in return interest income (18.8%). Credit growth on fees to diversify and provide a year. These results stem from the disciplined cost management, and a for its efforts. This is evidenced by allowed by the SBV increased in the The proportion of revenue from service sustainable foundation for revenue - development of all business segments strong focus on writing off legacy the 13 straight quarters of year-over- second half to 20%, based in part on activities in 2018 increased faster than something especially important during through the continuous implementation bad debts. year revenue growth. This result again improved capacity resulting from the the average rate of the four past years, periods of market volatility. of our customer centric strategy. affirms that Techcombank is doing the successful capital raise in the first half of and continues to account for an ever Actual transformation is a very right things in the right way. Credit growth of 20% helped increase difficult and time-consuming process. net interest income and record revenue However, throughout the entire process Structure of operating income 2017- 2018

2018 2017 GROWTH RATIO VND BILLION VND BILLION VND BILLION % 20% Total operating income 18,350 16,458 1,892 11.49% 24% Net interest income • Net interest income 11,127 8,930 2,196 24.59% VND VND 15,012 18,350 Net fee income • Net fee and commission income (1) 3,536 3,926 390 -9.94% Billion 19% Billion 17% 59% 61% Other income • Other non-interest income 3,687 3,601 86 2.38%

Operating expenses 5,843 4,812 1,030 21.40%

(1) Allowance and provision expenses 1,846 3,609 1,763 -48.85% 2017 2018 Profit before tax 10,661 8,036 2,625 32.66%

ANNUAL REPORT 2018 Note: (1) Net fee and commission income 2017 includes agency support fee for bancassurance services of VND1,446 billion. Note: (1) Total operating income 2017 doesn't agency support fee for bancassurance services of VND1,446 billion. ACHIEVING DREAMS 53 BUSINESS PERFORMANCE | Operating results assessment report in 2018

Customer Deposit Composition

201.471 170.971 +18% Credit portfolio continues to grow, and is shifting to retail Effective growth of deposits, customers and small and medium enterprises with CASA ratio reaching 29% 71% Loan to customers composition At the end of 2018, the credit balance of Techcombank The shift in our loan portfolio from medium- and long-term reached VND217.1 trillion, equivalent to the credit growth loans to short-term loans creates downward pressure on 76% rate of 20% allowed by the SBV, based on the higher owner’s NIMs, but this is partially offset by reducing costs of funding. equity after Techcombank completed the capital raise In 2018, Techcombank continued to focus on driving deposit procedures on August 2018 while still maintaining NPL ratio at growth, especially CASA balances, and at year end the 40% 45% a low rate. CASA ratio reached 29%. Retail CASA balances grew 59% compared the end of 2017, accounting for 44% of the total 29% Techcombank continued to shift its loan portfolio from large demand deposit balance. To help drive those impressive 24% corporate customers to individual customers and small figures, the Bank launched “Zero fee banking for businesses” and medium sized enterprises (SMEs). Therefore, the based on the success of the program among retail customers, 13% proportion of loans to large corporate customers decreased as well as “Unlimited 1% cashback” for debit card purchases. 2017 2018 20% significantly from 47% to 35%, giving room to SMEs and Techcombank will continue to invest in initiatives that improve individual retail customers, which accounted for 20% and convenience and customer experience. Term deposits Current accounts 45% of total outstanding loan balance, respectively. This is the result of a strategic shift, and Techcombank still meets the credit demands of large corporate customers by advising 47% 31 DECEMBER 2018 31 DECEMBER 2017 and assisting them to issue corporate bonds to the market. DEPOSITS COMPOSITION BY 35% 2018 was a record year for corporate bond advisory, with CUSTOMER SEGMENT Techcombank advising on the issuance of VND62 trillion in VND BILLION % VND BILLION % bonds. 2018 also witnessed unprecedented growth in SME lending activities, with a growth rate of 49% compared to the previous year, as the tenure of the loans shifted to more short- Term deposits 143,613 100% 129,728 100% 2017 2018 term loan products. More importantly, the bank still controls and maintains strong credit quality and ample liquidity as the Large corporates Retail SMEs strategic shift in our loan portfolio continues. Individual 116,844 81% 105,176 81%

Institutional 26,769 19% 24,551 19%

Current accounts (1) 57,801 100% 41,243 100%

Individual 25,212 44% 15,867 38%

Institutional 32,589 56% 25,376 62%

ANNUAL REPORT 2018 Note: (1) Inclusive of marginal deposits ACHIEVING DREAMS 55 BUSINESS PERFORMANCE | Operating results assessment report in 2018

Core fee income continues to develop, contributing 19% of total Income from guarantee Growth for securities issuance revenue 61,992 79% ore Fee income in 2018 at Techcombank was led by for insurance products among retail customers. The strong corporate bond advisory, and bancassurance which growth in non-interest income in general and fee income in Caccounted for 33% and 20% of core fee income, respectively. particular also contributes to higher returns on assets, as The growth rate of these fees reflect the ongoing credit Techcombank can drive profits while continuing cautious Bond volume demand of corporate customers and the increasing demand management of balance sheet growth. 34,637 1,160 210% Fee income Corporate Bond advisory brought VND1.2 trillion in fee 375 2018 2017 (1) income, three times higher than last year. NET FEE AND COMMISSION INCOME STRUCTURE 2017 2018 VND Billion % VND Billion %

Income from guarantee for Premium income (VND Billion) Growth 1,160 33% 375 15% securities issuance 917 Techcombank maintained its market leadership in Income from bancassurance 722 20% 574 23% 41% bancassurance, and began the transition to a direct sales Annual 649 model in 2018. This will help drive fee income as well as Card services 479 14% 450 18% premium cross-sales opportunities. equivalent (APE) In line with the SBV’s plan to drive more cashless Payment & cash services 748 21% 738 30% transactions, Techcombank implemented a program titled “Unlimited 1% cash back for debit cards” for retail customers, 574 722 26% building on the success of the “Zero fee” online banking Other services 408 12% 343 14% program that was launched in late 2016. As a result, Techcombank became the market leader in Visa credit and Fee income debit card transactions. This is a meaningful milestone, Net fee and commission income 3,536 100% 2,480 100% recognizing Techcombank’s efforts to deliver high quality card products and services to customers.

2017 2018

ANNUAL REPORT 2018 Note: (1) Excluding the bancassurance agency supporting fee of VND1,446 billion ACHIEVING DREAMS 57 BUSINESS PERFORMANCE | Operating results assessment report in 2018

Delivering cost to income ratio (CIR) of 32% 31 DECEMBER 2018 31 DECEMBER 2017 CHANGE UNIT (VND BN) Part of Techcombank’s profit performance in 2018 was due to our customers. Projects related to transformational consulting VND BN % VND BN % VND BN % continued efforts in cost management. and system development were therefore prioritized in 2018, evidenced by a 32.8% increase in expenses in these area In 2018, Techcombank continued to invest in human resources versus the prior year. Salaries and related expenses 3,240 55.45% 2,595 53.92% 645 24.86% and added significant headcount in line with the Bank’s five- year strategy. Accordingly, Techcombank’s total operating In tandem with the internal transformation, Techcombank drove Office and asset rental, tools and costs increased 21.4% compared to 2017. CIR for 2018 was experiential marketing through sponsorships of the Ho Chi equipment expenses. and depreciation of 1,088 18.61% 1,047 21.75% 41 3.88% 31.8%, the lowest rate among joint stock commercial banks Minh City International Marathon and the Vietnam IRONMAN fixed assets in Vietnam. 70.3 Triathlon. In addition to these branding activities, Techcombank also introduced many other marketing and Publication, marketing and promotion 301 5.15% 263 5.47% 38 14.25% Staff costs made up 55% of operating expenses. The Bank promotion programs, and provided ecosystem-based solutions Expenditure on payment of insurance added nearly 1,500 employees in 2018, and the ratio of for customers in the six targeted economic sectors. 194 3.32% 166 3.45% 28 16.62% business employees versus support staff remained largely premium for customers’ deposits unchanged. In line with our HR strategy to develop and retain 2018 also marked the largest listing on HOSE in Vietnam's high quality talent, Techcombank delivered salary increases banking sector. Meeting and networking activities with Per diem expenses 100 1.71% 71 1.48% 28 39.71% at a competitive rate, and drove training activities to improve investors grew compared to 2017, and accounted for 3% of employee capabilities. Accordingly, staff costs increased 24.9% total expenses compared with 2.36% in 2017. Training and education expenses 35 0.60% 29 0.61% 5 18.59% in 2018, and training costs increased 18.6% compared to 2017. Techcombank delivered strong revenues across all business In addition to our efforts to strengthen human resources, units as well as balanced prudent cost management with Conference expenses 76 1.30% 42 0.87% 34 80.39% Techcombank set in motion a number of transformation long term investment, creating impressive profits in 2018 and programs which aim to lead Techcombank to the number one laying a sustainable foundation for the future development of position in the market while delivering meaningful value to the Bank. Consulting expenses 152 2.59% 114 2.37% 37 32.78%

Other operating expenses 658 11.27% 484 10.06% 174 35.98%

Total operating expenses 5,843 100% 4,812 100% 1,030 21.40%

Average number of employees (person) 9,757 8,328 1,429 17.16%

Revenue/employee/year 1.88 1.98 (0.10) -4.83%

Cost/employee/year 0.60 0.58 0.02 3.62%

Cost to Income ratio (CIR) (%) 31,84% 29.24% 2.60%

ANNUAL REPORT 2018 ACHIEVING DREAMS 59 BUSINESS PERFORMANCE | Operating results assessment report in 2018

Balance sheet management and effective liquidity risk management

Balance sheet management Liquidity management

2018 saw effective and managed balance sheet growth. Total assets at the end of 2018 reached VND321 trillion, 19.2% growth Techcombank maintained compliance with the SBV requirements regarding liquidity as prescribed in Circular 36/2014-TT- compared to the prior year, in which credit increased by VND36.8 trillion, and deposits increased by VND26 trillion compared to NHNN, amended by Circular 06/2016/TT-NHNN. 2017. As a result of the successful capital raise in 2018, total equity increased by VND24.9 trillion compared to 2017. In 2018, with the goal of reducing short-term deposits deployed for long-term lending to the SBV-prescribed level of 40% for 2019, Techcombank proactively managed the ratio of short-term deposits to long-term lending down to 31.5% at the end of 2018. UNIT (VND BN) 2018 2017 CHANGE To manage internal liquidity risk, Techcombank follows the management systems, measurements, supervision, and forecasts Total credit 217,138 181,002 36,136 19.97% of liquidity risk supported by the Audit and Risk Committee (ARCO), the department issuing the risk appetite framework for the Bank as a whole, and the Asset and Liability Committee (ALCO), the department implementing and supervising the execution Loans to customers 159,939 160,849 -910 -0.6% and liquidity risk management, assuring the compliance with risk appetite and limit/warning thresholds as prescribed by the ARCO. Corporate bonds 59,656 21,912 37,744 172.3% Furthermore, liquidity stress tests were also carried out in a large market scale scenario, and in a Techcombank-specific Deposits from customers and valuable 214,593 188,611 25,982 13.8% scenario. These liquidity tests are carried out monthly to forecast cash flow over a certain period, with the assumption that the papers issued Bank will face particular stressors, such as an increasing withdrawal rate, or limited access to interbank funds. Techcombank Deposits from customers 201,415 170,971 30,444 17.8% has proactively developed a liquidity conservation plan (LCP) to ensure a timely response to stressful situations, helping prevent liquidity crises from arising. Valuable papers issued 13,178 17,640 -4,462 -25.3%

Capital and reserves 51,783 26,931 24,852 92.3% LIMIT ACTUAL LIMIT ACTUAL LIQUIDITY RATIO 2018 31/12/2018 2017 31/12/2017 Share capital 35,443 9,777 25,666 262.5% Liquid reserve ratio ≥ 10% 16.95% ≥ 10% 15.87% Total reserves 3,868 6,157 -2,289 -37.2%

Retained earnings (accumulated losses) 12,403 10,997 1,406 12.8% 30-day solvency ratio (VND) ≥ 50% 55.89% ≥ 50% 52.58% Minority interest 69 _ 69 NA Loan-to-deposit ratio ≤ 80% 65.45% ≤ 80% 76.62%

Capital management Short-term capital sources used as the medium ≤ 45% 31.50% ≤ 50% 42.98% and long term loans The bank’s capital adequacy ratio at the end of the year was 14.3% according to Vietnamese Accounting Standards, 530 basis points higher than the limit according to SBV regulations.

Profits after tax in 2017 were retained in full to invest and serve the growth of the Bank in the future. Additionally, Techcombank Although there is still much to do, Techcombank delivered outstanding results against the central goals of the first three years completed projects to prepare for early adoption of Basel II standards in compliance with the roadmap of the SBV, and has of implementing our transformation strategy. This has fostered the belief within the Board of Directors and the employees of already submitted its application to the SBV. Techcombank that the Bank’s strategy is being executed successfully, and will continue to bring superior results for years to come.

ANNUAL REPORT 2018 ACHIEVING DREAMS 61 BUSINESS PERFORMANCE

Significant figures

Total Assets Mobilized sources Credit quality Capital adequacy ratio Below % for TRILLION TRILLION 2 VND321.0 VND207.7 non-performing loans Techcombank‘s total assets on December 31, 2018 17.8% compared to 2017 % reached VND321.0 trillion, surpassing the planned rate Credit costs in 2018 were stable compared to 2017, and 14.3 of 2018, growing 19.2% compared to 2017 with a four To maintain an effective LDR, Techcombank non-performing loans were held below 2%, within target. year CAGR of 16.2% from 2014 to 2018. actively adjusts the increase in customer The bank finished writing off legacy bad debts from Capital adequacy ratio (CAR) at December deposits in each period throughout the year. VAMC bonds in 2017. 31, 2018 was 14.3%, much higher than the Deposit balances reached VND207.7 trillion 9% minimum per SBV regulations. including VND6.3 trillion in certificates of deposit at the end of 2018, an increase of 17.8% compared to 2017.

Deposit balances grew significantly in 2018, Owner’s Equity with the ratio of CASA balance growing to 27.8%, which contributed to maintaining the net interest margin (NIM) at 3.74% - higher than the average level of the banking industry. VND51.8 TRILLION Profitability Charter capital: VND35.0 trillion Owner’s equity reached VND51.8 trillion, increasing TRILLION OF PROFIT BEFORE TAX 92.3% compared to 2017, of which charter capital VND10.7 was VND35.0 trillion, and retained earnings increased 32.7% compared to 2017 200% to VND 12.403 billion. In August 2018, Techcombank enacted a plan of increasing chartered Profitability continued to improve in 2018. capital to VND35.0 trillion. The goal of this capital increase was to share benefits with shareholders by Profit before tax in 2018 reached VND10.7 trillion, an increase of 32.7% compared to 2017. Net interest converting owners’ equity into usable capital to invest income increased 24.6% versus 2017. Return on average asset (ROAA) and return on average equity in infrastructure and loans. (ROAE) reached 2.9% and 21.5%, respectively.

ANNUAL REPORT 2018 ACHIEVING DREAMS 63 Corporate Governance "A solid foundation"

ANNUAL REPORT 2018 ACHIEVING DREAMS 65 CORPORATE GOVERNANCE

Chairman’s message CEO’s message on Corporate Governance on Corporate Governance

n June 4, 2018, Techcombank was officially listed on the n 2018, after listing and increasing our charter capital, The refreshed corporate governance structure will be one of Ho Chi Minh Stock Exchange (HOSE). This milestones Techcombank has achieved a record pre-tax profit of more Techcombank's top priorities in order to create an environment Ohas validated our corporate governance’s compliance with not Ithan VND10 trillion. This result has validated the Bank’s right for the management team to demonstrate their outstanding only the Law on Credit Institutions but also Securities Law, approach in meeting customers’ needs and affirmed that we leaderships based on lean and transparent principles. We which was highly appreciated by foreign investors through have been pursuing the right strategy under the right direction will continue to implement and apply the redesigned model their investments in Techcombank shares – marking our deal of the Board of Directors coupled with the highest commitment into reality to foster management excellence, business the second largest listing in Vietnam’s stock market in 2018. and cooperation from the Board of Management. performance as well as resource optimization.

Realizing the importance of a transparent and effective Also in 2018, Vietnam has witnessed significant changes governance structure where there is a clear separation in the legal environments through gradually applying between management and governance so that our international practices of corporate governance and internal shareholders, investors and other stakeholders could control. Some of the most important regulations issued by the secure their investments and give high credits to the SBV in an effort to create necessary buffer steps before banks organization, Techcombank continues to promote the in Vietnam apply Basel II standards in 2020 include: implementation of a new governance model that enables us to pursue an early adoption of Basel II, especially the guidelines Circular no. 13/2018/TT-NHNN effective from 01/01/2019 on Corporate Governance principles for banks (328*) by the Basel Committee and other leading international corporate Circular no. 41/2016/TT-NHNN effective from 01/01/2020 governance practices. This shall allow us to meet the At the governance level, we are committed expectations of both local and international investors. Techcombank has proactively studied and designed a to ensuring prudent management and corporate governance model for the next three years as well accountability within the bank, and fairness to In 2019, Techcombank will implement the separation of the as a roadmap for execution in each year. In 2019, Board of our customers, employees and shareholders. Risk Committee and the Audit Committee and a number of Management will continue with the implementation as per other Committees to ensure conflicts of interests are closely the Board's directions, ensuring absolute compliance with During our transformation period, we remain monitored by different board members. This shall give the the current Vietnamese laws and regulations as well as committed to safeguarding business continuity Board different objective views while examining key aspects international practices. and the highest levels of performance.” of the Bank, especially in the field of risk management, as well as to audit independently, creating distinct lines of defense. At management level, we Techcombank's Board of Directors will continue to enhance the governance quality of the Board through the selection and appointment of the Board members with profound experience from reputable are committed to ensuring the international organizations, and the diversity of expertise and skills to lead the Bank to meet the increasing growth and sustainability of the customers’ demands. In addition, we will continue to strengthen our oversight capacity in all critical areas organization to ensure the Bank’s resilience in the face of market volatility, safeguard values for investors as well as increase the organization’s long-term benefits and sustainable development.

ANNUAL REPORT 2018 * Reference: Guidelines on C.G principles for Bank – July 2015, Basel Committee on banking Supervision – BCSC 328 ACHIEVING DREAMS 67 CORPORATE GOVERNANCE

Mr. Nguyen Dang Quang Our Board First Vice Chairman Age group 29% 28% Age: 56 of Directors Under 50 Elected: 05/2008 Tenure at Board of Directors: 20 years 51 - 60 43% Mr. Nguyen Dang Quang has served as First Vice Chairman 61 - 70 of Techcombank’s Board of Directors since April 2016. 1 Independent Director Previously, he was a member of Techcombank’s Board of Directors from May 2014 to March 2016 and was First Vice 5 Non-executive Directors Chairman of the Bank from May 2008 to April 2014. Before becoming a Director of Techcombank, Mr. Nguyen Dang 1 Executive Director Tenure at Board Quang had more than 20 years of executive experience, including membership on the Board of Directors at Masan and of Directors key management positions at Techcombank since 1995. 14% Under 5 years Mr. Nguyen Dang Quang holds a PhD from the National Academy of Sciences of Belarus and an MBA from the 57% 29% 5-7 years Plekhanov Russian University of Economics.

Above 7 years

Mr. Ho Hung Anh Mr. Nguyen Thieu Quang Chairman Vice Chairman

Age: 49 Age: 60 Elected: 05/2008 Elected: 05/2008 Tenure at Board of Directors: 15 years Tenure at Board of Directors: 20 years

Mr. Ho Hung Anh has been the Chairman of Techcombank’s Mr. Nguyen Thieu Quang has been a member of Board of Directors since May 2008. Prior to his election as Techcombank’s Board of Directors since 1999 and became Chairman, Mr. Ho Hung Anh had served as a member of Vice Chairman of Techcombank’s Board of Directors in May Techcombank’s Board of Directors from 2004. His professional 2008. Mr. Nguyen Thieu Quang has signifcant executive career also includes several years of experience at executive experience including various key positions at Masan, level at large organizations, including Masan. Vinaconex, and Senco.

Mr. Ho Hung Anh holds a degree in electrical engineering from Mr. Nguyen Thieu Quang holds a degree in civil engineering the Kiev Polytechnic Institute in the Ukraine. from Donetsk Polytechnic Institute in the Ukraine (now Donetsk National Technical University).

ANNUAL REPORT 2018 ACHIEVING DREAMS 69 CORPORATE GOVERNANCE | Our Board of Directors

Mr. Nguyen Canh Son Mr. Lee Boon Huat Vice Chairman Non-executive Director

Age: 52 Age: 62 Elected: 04/2009 Elected: 04/2014 Tenure at Board of Directors: 11 years Tenure at Board of Directors: 7 years

Mr. Nguyen Canh Son has served on the Board of Directors Mr. Lee Boon Huat has been a member of Techcombank’s since May 2008 and has been the Vice Chairman of Board of Directors since May 2014, prior to that, he was an Techcombank’s Board of Directors since April 2009. Mr. Independent Director of the Board of Directors from December Nguyen Canh Son has more than 20 years of management 2012 to April 2014. Before joining Techcombank, Mr. Lee Boon experience including positions as the Chairman at Huat worked with several international organizations, including Eurowindow Holding and Board membership at T&M the Monetary Authority of Singapore, HSBC, Canadian Invest Vietnam. Imperial Bank of Commerce, Chemical Bank, and Standard Chartered Bank. He holds a degree in civil engineering from the Moscow Institute of Civil Engineering in Russia (now Moscow State Mr. Lee Boon Huat holds a Bachelor’s degree in Business University of Civil Engineering). Accounting from the Western Australian Institute of Technology (now Curtin University).

Mr. Do Tuan Anh Mr. Nguyen Doan Hung Vice Chairman cum Deputy CEO Independent Director

Age: 46 Age: 66 Elected: 06/2015 Elected: 05/2014 Tenure at Board of Directors: 7 years Tenure at Board of Directors: 5 years

Mr. Do Tuan Anh has been Vice Chairman of the Board of Mr. Nguyen Doan Hung has been an Independent Director of Directors and Deputy CEO of Techcombank since June 2015 the Board of Directors of Techcombank since May 2014. He and served as a member of Techcombank’s Board of Directors has extensive management experience with the State Bank of since December 2012. Prior to his appointment to the Board Vietnam, having held positions including Head of the Capital of Directors, Mr. Do Tuan Anh held various management Market Research and Development Department, Head of positions at the State Bank of Vietnam and Techcombank, the Governor’s Office, and Head of the Foreign Exchange including Deputy Director of the General International Management Department. He also served as the Deputy Cooperation Department and Director of the Banking Executive Director of the World Bank and Vice Chairman of Supervision Agency, Senior Assistant to the Board of Directors the State Securities Commission of Vietnam. and Head of the Strategy and Corporate Development Division. Mr. Nguyen Doan Hung holds a Bachelor’s degree in English language from Hanoi University (Vietnam) and a Master’s He holds a Master’s degree in Wealth Management from degree in Financial Management from the University of Singapore Management University (Singapore). London (England).

ANNUAL REPORT 2018 ACHIEVING DREAMS 71 CORPORATE GOVERNANCE | Our Board of Directors

Techcombank share ownership and positions in other companies Expertise and experience of Board of Directors held by members of the Board of Directors

NUMBER POSITIONS IN OTHER COMPANIES HELD BY NO. FULL NAME POSITIONS % OF SHARES BOD MEMBERS Experience 1 Ho Hung Anh Chairman 39,309,579 1.1242% --None 2 Nguyen Dang Quang First 9,403,176 0.2689% --BOD Chairman cum CEO, Masan Group Vice Chairman --BOD Member, Masan Consumer Management and Leadership --BOD Member, Masan Resources --Chairman of the Member’s Council, Nui Phao Mining Company --BOD Chairman cum CEO, Masan Corporation Banking and Financial Services 3 Nguyen Thieu Quang Vice Chairman 30,256,431 0.8653% --BOD Member, Masan Consumer --BOD Chairman, Saigon Environmental Technology & Construction Corporation --BOD Chairman, Golden Lotus Kim Huynh JSC --BOD Chairman, Golden Lotus Building JSC Expertise 4 Nguyen Canh Son Vice Chairman 17,954,979 0.5135% --BOD Chairman, Eurowindow Holding --BOD Chairman, Melinh Plaza Thanh Hoa Trade Complex Investment JSC --BOD Member, T&M Van Phong Investment & Human Capital and Banking Tourism JSC; Management --BOD Chairman, Incentra JSC --BOD Chairman, Eurowindow JSC

5 Do Tuan Anh Vice Chairman 887,542 0.0254% --Member of the Member’s Council, Techcom Securities Risk Management cum --BOD Chairman, INB Investment JSC Deputy CEO --BOD Chairman, Dai Hung Tinh Investment JSC --BOD Member, Techcom Capital JSC

6 Lee Boon Huat Board Director 0 0.0000% --Independent Director - AfrAsia Bank Limited Mauritius Regulatory, Law and Compliance --Independent Director - Alliance Bank Bhd --BOD Member - Credit Counselling Singapore --Independent Director - British Malayan Holdings Limited Community affairs, Government 7 Nguyen Doan Hung Board 162 0.0000% --Independent Director, Phu Hung Securities JSC Relations, Social Responsibility and Independent Public Policies Director

Operation and technology

Number of Directors 0 1 2 3 4 5 6 7

ANNUAL REPORT 2018 Note: The number and percentage of shareholding as of 31/12/2018 ACHIEVING DREAMS 73 CORPORATE GOVERNANCE | Our Board of Directors

BOD activities Resolutions of the Board of Directors in 2018

The Board of Directors oversees the operations of the CEO/Board of Management (BOM) through the authorization and NO. RESOLUTION NO. ISSUANCE DATE MAIN CONTENT delegation mechanism as well as TCB’s internal regulations issued by the BOD. Activities that are under the authorities and 7 1086/2018/NQ-HĐQT 12/06/2018 --Approval of business results as of 05/2018. decision by the Shareholders' General Assembly and the BOD, shall be reported and submitted to the BOD for approval by --Approval of Supervisory Board’s report as of 05/2018. CEO, upon which the BOD will make decisions promptly or authorizes the CEO/BOM to implement. --Approval of the organization of Extraordinary General Shareholders’ Meeting on 14/6/2018. BOD’s activities in 2018 8 1569/2018/NQ-HĐQT 21/09/2018 --Approval of business results as of 08/2018. --Approval of Supervisory Board’s report as of 08/2018. DAY BECOMING NO. OF A MEMBER OF ATTENDANCE NO. BOD MEMBERS POSITION ATTENDED 9 1905/2017/NQ-HĐQT 14/12/2018 --Approval of business results as of 11/2018. THE BOARD OF RATE MEETINGS --Approval of Supervisory Board’s report as of 11/2018 DIRECTORS --Approval of business plan for 2019. --Approval of report and proposal of restructuring of governance, supervisory 1 Mr Ho Hung Anh Chairman 19/04/2014 7 100% and management of the bank to comply with regulations of Circular No. 2 Mr. Nguyen Dang Quang First Vice Chairman 19/04/2014 7 100% 13/2018/TT-NHNN. 3 Mr. Nguyen Thieu Quang Vice Chairman 19/04/2014 7 100% 4 Mr. Nguyen Canh Son Vice Chairman 19/04/2014 7 100% Activities of Independent Directors 5 Mr. Do Tuan Anh Vice Chairman cum Deputy CEO 19/04/2014 7 100%

6 Mr. Lee Boon Huat Board Director 19/04/2014 7 100% As stipulated in the Techcombank’s Charter passed Neither directly nor indirectly owning or representing 7 Mr. Nguyen Doan Hung Board Independent Director 19/04/2014 7 100% by the General Shareholders’ Meeting on 3rd March ownership of 1% or more of TCB’s chartered capital 2018, in addition to meeting the requirements of civil act or voting shares; together with his/her related persons capacity, professional ethics, qualifications and experience not owning 5% or more of TCB’s charter capital or Resolutions of the Board of Directors in 2018 in accordance with current laws and regulations, an voting shares. independent member of TCB’s Board of Directors must NO. RESOLUTION NO. ISSUANCE DATE MAIN CONTENT also meet the following criteria and conditions: Not being a manager or a member of TCB’s Supervisory Board at any time in the five (05) preceding years. 1 146/2018/NQ-HĐQT 09/02/2018 --Approval of business results in 2017 and as of 01/2018. Neither currently working for TCB or its subsidiaries --Approval of Supervisory Board’s report as of 01/2018. --Approval of the organization of Annual General Shareholders’ Meeting 2018. nor working for TCB or its subsidiaries in three (03) Independent Director of Techcombank has been a member --Approval of transforming the legal form of Techcom Securities Limited preceding years; of the Audit and Risk Committee as assigned by the Board Company (TCBS) to a joint stock company. of Directors. In 2018, Independent Director has fully and --Approval of issues related to selling treasury stocks. Not receiving any remuneration and allowance of actively attended the Board’s and the relevant Committees’ Techcombank other than the standard allowances for BOD meetings. 2 224/2018/NQ-HĐQT 03/03/2018 --Issuing regulations on the issuance and sale of shares under the Employee members under existing regulations; Stock Option Program (ESOP). 3 225/2018/NQ-HĐQT 03/03/2018 --Deploying the sale of shares according to the ESOP using Techcombank's Having no spouse, parent, child, sibling and spouses of treasury stocks. these persons being a major shareholder of TCB, manager 4 226/2018/NQ-HĐQT 03/03/2018 --Approval of the list of employees entitled to the ESOP. or member of Supervisory Board of TCB or its subsidiaries; 5 228/2018/NQ-HĐQT 03/03/2018 --Deploying the sale of treasury stocks to domestic/foreign investors in first tranche. 6 229/2018/NQ-HĐQT 03/03/2018 --Raising the limit on foreign ownership at Techcombank. In 2018, members of Techcombank’s Board of Directors have all participated in various programs on Corporate Governance

ANNUAL REPORT 2018 ACHIEVING DREAMS 75 CORPORATE GOVERNANCE Activities of Committees

under the Board of Directors Audit and Risk Committee (“ARCO”)

Currently, Techcombank has three Committees to assist the Board of Directors, including: Standing Committee of the Board of Directors; Audit and Risk Committee ("ARCO"); Nomination and Remuneration Committee ("NORCO"). The Board of Directors The Audit and Risk Committee organized four plenary meetings in the year with separate agendas for the two areas of issues Statue on Organization and Opeartion for each of Committee. auditing and risk management to fulfill the responsibilities assigned by the Board of Directors related to auditing and risk management. The Committees maintain scheduled and ad-hoc meetings to assist the Board of Directors in improving its operational and management efficiency of the Bank. Risk Management In 2018, ARCO advised the Board in issuing Techcombank risk appetite, including risk appetite statement, direction indicators, risk appetite and risk limits for each critical risk type of Techcombank. In addition, the risk appetite of the Standing Committee of the Board of Directors subsidiary (TCBS) was also reviewed and accepted by ARCO before TCBS approved and applied.

ARCO proactively oversees bank-wide risk management activities on the basis of monitoring the periodic and ad-hoc The Standing Committee of the Board of Directors is the body established by the Board to represent the Board of compliance of the risk management policy and risk appetite. In 2018, market risk limits are reviewed as scheduled and Directors supports Board of Management in making timely decisions on important business activities arising amid the accepted by the Committee, ARCO also approved credit rating models for individual customers, ensuring that the Bank official meetings of the Board. In the past year, the Standing Committee has taken written opinions and issued resolutions fully complies with legal regulations on credit risk management. Regarding operational risks, ARCO has adopted effective under its authorization. risk management practices, including identifying key operational risks, monitoring and providing governance measures, and gave direction and monitored subsequent action plans to address existing issues. The Standing Committee of the BOD assists and advises the Board of Directors in considering and approving internal regulations related issues , conducting evaluation and giving opinions on key finanicial results and business plan of Audit the Bank In 2018, ARCO exercised oversight of the Board of Management and support the Board of Directors in monitoring internal control system and internal audit, enhancing the effectiveness of internal control system and internal audit across The Standing Committee of the BOD also promptly gave directions to the Board of Management in the implementation of Techcombank. the Bank's operations and address difficulties in implementing the business strategy and business plan.

Chairman of Standing Committee of BOD Committee members Chairman of Audit and Risk Committee Committee members

Mr. Ho Hung Anh (Chairman) Mr. Nguyen Dang Quang (First Vice Chairman) Mr. Nguyen Thieu Quang (Vice Chairman) Mr. Ho Hung Anh (Chairman) – Vice Chairman of the Committee

Mr. Nguyen Thieu Quang (Vice Chairman) Mr. Nguyen Dang Quang (First Vice Chairman)

Mr. Nguyen Canh Son (Vice Chairman) Mr. Do Tuan Anh (Vice Chairman cum Deputy CEO)

Mr. Do Tuan Anh (Vice Chairman cum Deputy CEO) Mr. Lee Boon Huat (Board Director)

Mr. Lee Boon Huat (Board Member) Mr. Nguyen Doan Hung (Board Independent Director)

Mr. Le Ba Dung (Deputy CEO cum Chief Risk Officer)

ANNUAL REPORT 2018 ACHIEVING DREAMS 77 CORPORATE GOVERNANCE | Activities of committees under Board of Directors

Nomination and Remuneration Committee (“NORCO”)

In 2018, NORCO held seven plenary meetings, advised the Board of Directors on human resource issues and remuneration policies, resulting in specific Human Resource Strategy and Policy;Techcombank's overall talent attraction, management and retention strategies as part of implementing the “People Excellence” foundation with the “Employee Centricity” approach.

Talent attraction, management and retention

NORCO has advised on recruitment, appointment, dismissal, and reassignment of personnel in order to promptly meet both short-term and long-term personnel needs. At the same time, the Committee advised on the succession planning, fulfilling the divisions' needs of both quantity and quality in the context of transformation and development of the Bank. In addition, NORCO also supported in talent management strategic direction of Techcombank, reviewed and accepted vital proposals in talent segmentation, building capacity frameworks and leadership program in accordance with international standards; established an Employee Experience Department to focus on building processes and measuring tools that improve employee experience.

Remuneration, reward and welfare policies

NORCO continued to provide direction and guidance on conducting remuneration market research, thereby benchmarking, adjusting policies to position Techcombank as one of the most competitive compensation scheme within the industry, our compensation policies also encourage employees to “be greater” at work, by associating rewards with employee capacity, potential and performance. At the same time, the Committee continued to review, adjust and promulgate market-leading welfare programs, aiming at comprehensive care for the essential needs of employees, thereby increasing employee engagement and creating higher motivation as well as the pride of Techcombank. One such program is the issuance of employee-loan interest rate policies to support the majority of employees, thereby improving the quality of life in the most practical way for Techcombank's employees.

Chairman of the Nomination and Remuneration Committee Committee members Mr. Ho Hung Anh (Chairman) Mr. Nguyen Dang Quang (First Vice Chairman)

Mr. Nguyen Thieu Quang (Vice Chairman)

Mr. Nguyen Canh Son (Vice Chairman)

Mr. Do Tuan Anh (Vice Chairman cum Deputy CEO)

Mr. Nguyen Le Quoc Anh (Chief Executive Officer)

Ms. Pham Vu Minh Dan (Chief Human Resources Officer)

ANNUAL REPORT 2018 ACHIEVING DREAMS 79 CORPORATE GOVERNANCE The Supervisory Mr. Mag Rer Soc Oec Board Romauch Hannes Member

Mr. Hoang Huy Trung Mr. Mag Rer Soc Oec Romauch Hannes has many years of Head of Supervisory Board cum Full-time member experience in banking finance, and has held many important management positions in financial institutions and large Mr. Hoang Huy Trung has many years of experience in the corporates. He has been a member of the Techcombank banking industry and has held various management positions Supervisory Board since December 2012. at the State Bank of Vietnam and Techcombank. He has been the Head and a full-time member of Techcombank Supervisory Mr. Mag Rer Soc Oec Romauch Hannes holds a Master’s Board since December 2012. degree in Business Administration, majoring in Finance, Banking and Marketing from Klagenfurt University, Austria. Mr. Hoang Huy Trung graduated with a Master’s degree in Economics, specializing in Banking from the National Economics University in Hanoi and a Bachelor in Economics, majoring in banking-finance from the Academy of Finance.

Ms. Nguyen Thu Hien Ms. Bui Thi Hong Mai Full-time member Member

Ms. Nguyen Thu Hien has been active in Techcombank’s Ms Bui Thi Hong Mai has many years of experience in accounting and control activities since 1999. She served as accounting and finance. From April 2010 to December 2012, Head of Supervisory Board cum full-time member from April she was a Member in charge of the Techcombank Supervisory 2010 to December 2012. She has been a full-time member of Board. She has been a member of the Techcombank the Techcombank Supervisory Board since December 2012. Supervisory Board since December 2012.

Ms. Nguyen Thu Hien holds a Bachelor’s degree in Ms. Bui Thi Hong Mai holds a Bachelor’s degree in Accounting Credit Finance. and Finance.

ANNUAL REPORT 2018 ACHIEVING DREAMS 81 CORPORATE GOVERNANCE | The Supervisory Board

Supervisory Board’s Activities in 2018

As of 01/01/2019, Techcombank’s Supervisory Board has four members, including two full-time members and two part-time members. By year end, the number of Supervisory Board members did not change compared to that at the start of the year.

Meeting attendance of the Supervisory Board members in 2018 is as follows:

NO. OF SUPERVISORY DAY BECOMING ATTENDANCE REASON NO. POSITION ATTENDED BOARD MEMBERS A MEMBER RATE FOR ABSENCE MEETINGS

1 Mr. Hoang Huy Trung Head of Supervisory Board 19/04/2014 4 100% cum full-time member

2 Ms. Nguyen Thu Hien Full-time member 19/04/2014 4 100%

3 Ms. Bui Thi Hong Mai Member 19/04/2014 4 100%

4 Mr. Mag Rer Soc Oec Member 19/04/2014 3 75% On business trip Romauch Hannes

Activities of the Supervisory Board Results of the Supervisory Board’s Meetings in 2018 NO. DOCUMENT NO. ISSUED DATE MAIN CONTENT 1 Meeting minutes 08/02/2018 --Evaluate audit plan execution results in quarter 1/2018 (as of the meeting time); Supervision activities of the Supervisory Coordination in activities of the Supervisory Quarter 1/2018 --Update some of the bank’s safety ratios as at 31/12/2017; Board for the Board of Directors, Board of Board, the Board of Directors and Board of --Review and amend Statute on the Operations of Supervisory Board according to the Management and Shareholders Management amended Credit Institution Law; --Review draft reports of the Board of Directors and Supervisory Board at the Annual General Shareholders’ Meeting 2018. Monitor the compliance with legal regulations and TCB’s Based on the internal audit result, the Supervisory Board 2 Meeting minutes 11/06/2018 --Evaluate internal audit plan execution result in quarter 2/2018 (as of the meeting time); Charter in the governance and management activities of and Internal Audit team have timely informed and worked Quarter 2/2018 --Update some of the bank’s safety ratios as at 30/4/2018; the Bank; with the Board of Directors, CEO and other members --Review materials for Etraordinary General Shareholders’ meeting on 14/6/2018; of the Board of Management to make decisions, strictly --Review audit execution plan for the last 6 months of 2018; Perform internal audit function; provide direction, address the divisions/units to prevent, promptly detect and --Discuss some key issues from the newly-promulgated Circular by the SBV which administration and monitor the operation of the Internal resolve issues in operations, contributing to the improved prescribe the internal control system of commercial banks, foreign bank branches (Circular 13). Audit function to review and assess objectively the efficiency, enhanced capacity of the internal control system, internal control system; regulations, processes, risk management and governance 3 Meeting minutes 20/09/2018 --Evaluate internal audit plan execution result in quarter 3/2018 (as of the meeting time); capacity of the organization. Quarter 3/2018 --Update some of the bank’s safety ratios as at 31/8/2018; Appraise the Bank's semi-annual and annual financial --Report on the adjustment of internal audit plan for the last six months of 2018; statements; The Board of Directors and Board of Management have --Review the proposed adjustments in the organizations and additional positions of the Internal Audit team. proactively remediated existing issues as recommended by Perform the inspection and monitoring (if any) at the the Supervisory Board and Internal Audit; while at the same 4 Meeting minutes 13/12/2018 --Evaluate internal audit execution result in quarter 4/2018 (as of the meeting time); request of the State Bank of Vietnam and/or major time provided timely supports to the Supervisory Board Quarter 4/2018 --Report on the issuance of the operational documents of the Internal Audit in Nov 2018; shareholders/group of major shareholders in accordance during the execution of its responsibilities. --Update some of the bank’s safety ratios as at 30/11/2018; with the law and the Bank's Charter. --Consolidated Internal audit report for 2018 and; --Audit plan for 2019.

ANNUAL REPORT 2018 ACHIEVING DREAMS 83 CORPORATE GOVERNANCE

Our Board of Management

The Board of Management holds the ultimate responsibility for the execution of the strategy and the successful business operations of the bank.

Mr. Nguyen Le Quoc Anh Mr. Do Tuan Anh Mr. Trinh Bang Mr. Le Ba Dung Mr. Chester Gorski The average Chief Executive Officer Vice President of Board of Directors Chief Financial Officer Deputy CEO and Chief Risk Officer Chief Technology Operation Officer number of years cum Deputy CEO of experience of the Board of Mr. Nguyen Le Quoc Anh was appointed Mr. Do Tuan Anh has served as a Mr. Trinh Bang was appointed Chief Mr. Le Ba Dung was appointed Chief Mr. Chester Gorski was appointed Management as the Chief Executive Officer of member of the Board of Directors since Financial Officer in January 2018. Risk Officer in September 2015. He has Chief Technology Operation Officer in Techcombank in September 2016. Prior December 2012 and became Vice He has more than 23 years of global more than 20 years of experience in February 2016. He has more than 25 to his appointment, he was the Head of Chairman of the Board of Directors and banking and finance experience finance and banking risk management. years of experience, including senior the Strategy and Corporate Development Deputy CEO of Techcombank in June – including 18 years with Morgan Prior to joining Techcombank, he served leadership roles in banking, insurance One third of Division of Techcombank from May 2015, 2015. He has 22 years of experience in Stanley in New York, Singapore, and in senior executive risk management and financial services firms including the Board of and Deputy Chief Executive Officer from banking. Previously, he was Unit Deputy most recently as Senior Advisor and positions at Asia Commercial Bank Wells Fargo, Wachovia, Aon, as well Management January 2016. He has more than 25 Head of the International Cooperation Managing Director/Country Head for (Vietnam), Standard Chartered Bank as consulting firms including PwC and are women years of experience, including a variety of Department and Department Head Vietnam and the Philippines. (Singapore), and GE Capital Asia- McKinsey & Company. senior management positions in banking, of the Banking Supervision Agency Pacific (Hong Kong, South Korea, and financial services, telecommunication and at the State Bank of Vietnam, Senior He holds a Bachelor’s degree in China). Since January 2019, Mr. Le Ba He holds an MBA from the University of management consulting firms including Assistant to the Board of Directors and Systems Engineering from the Dung was appointed Deputy CEO of Chicago (USA). Wells Fargo, Fortress Investment Group, Head of the Strategy and Corporate University of Virginia (USA). Techcombank Half of the Board T-Mobile, and McKinsey & Company. Development Division. of Management He holds a Master’s degree in are international He hold a Ph.D in Nuclear Engineering He holds a Master’s Degree in International Affairs from Georgetown experts from Purdue University (US) and a Wealth Management from Singapore University (US) and a Master’s degree Master’s Degree in Econometrics from Management University (Singapore). in Electrical Engineering from the State University of California (US). University of New York (US).

ANNUAL REPORT 2018 ACHIEVING DREAMS 85 CORPORATE GOVERNANCE | Our Board of Management

Mr. Nguyen Xuan Minh Mr. Phung Quang Hung Ms. Le Thi Bich Phuong Mr. Vishal Shah Mr. Phan Thanh Son Ms. Nguyen Thi Van Anh Head of Investment Banking Head of Sales and Distribution Head of Personal Financial Services Head of Business Banking Transformation Director of Head of Marketing Transaction Banking

Mr. Nguyen Xuan Minh was appointed Mr. Phung Quang Hung was appointed Ms. Le Thi Bich Phuong was appointed Mr. Vishal Shah was appointed Head of Mr. Phan Thanh Son was appointed Ms. Nguyen Thi Van Anh joined Head of Investment Banking Division – Head of the Sales and Distribution Techcombank’s Head of Personal Business Banking in March 2018. He Transformation Director of Transaction Techcombank in November 2014 and Chairman of the Board of Directors of Division in November 2014. Prior to Financial Services in June 2016. She has more than 20 years of experience at Banking in July 2017. Prior to this, he was appointed Techcombank’s Head of Techcom Securities Company Limited in this, he was Techcombank’s Chief has more than 15 years of experience leading companies with strong expertise was Head of the Treasury and Financial Marketing in June 2016. Prior to joining October 2013. He has more than 20 years Technology and Operations Officer from in banking, holding executive sales and in commercial banking, retail banking Markets Division from January 2011. He Techcombank, she had more than 20 of experience in fund management and September 2010. He has more than 20 distribution positions including Head and financial advisory services. He has more than 20 years of experience years of experience as Head of Brand investment banking, including in previous years of management experience at of Area, Head of Region, and Head of has held key leadership positions at in local financial markets and played and Head of Marketing at major national positions such as CEO of Vietnam Asset international banks, including previous Sales and Distribution. Standard Chartered Bank in Singapore, an important role in developing the and multi-national companies including Management Ltd. (VAM) and Senior positions as Head of IT and Operations India, and the UAE. He has also local fixed income markets. He was Vingroup, British Petroleum, and British Vice President of Franklin Templeton at ABN AMRO(Vietnam) and Business She holds a Bachelor’s degree in held advisory roles at Ernst & Young the Deputy Chief Executive Officer at American Tobacco (BAT). Investments under Mark Mobius in Partner at National Australia Bank Economics and International Business and KPMG. TienPhong Bank. He has held various Singapore. (London). from the Hanoi University of Social and positions in the Global Markets Divisions She holds an MBA from University Human Sciences (Vietnam). Mr. Vishal Shah is a Qualified Chartered at Standard Chartered Bank (Vietnam), of Westminster (UK) and a Master’s He holds a Master’s degree in Applied He holds a Master’s degree in Accountant (ACA) and Cost and Works Citibank (Vietnam), and Citigroup Global degree in Marketing from Swinburne Finance & Investment from Securities International Business from Washington Accountancy (Grad CWA). He holds Markets Ltd. (Hong Kong). University of Technology (Australia). Institute of Australia (FINSIA), and an State University (US). a Bachelor’s degree in Commerce M.S. in Science, Oil & Gas – Mechanical from HR College of Commerce and He holds a Master’s degree in Engineering from Gubkin Russian State Economics, Mumbai University (India). Economics from the National Economics University of Oil and Gas (Russia). He is a University, Hanoi (Vietnam). CFA Charterholder.

ANNUAL REPORT 2018 ACHIEVING DREAMS 87 CORPORATE GOVERNANCE | Our Board of Management

Mr. Pham Quang Thang Mr. Ashish Sharma Ms. Tran Thi Minh Lan Ms. Nguyen Huong Giang Mr. Vu Minh Truong Ms. Phan Thi Thanh Binh Deputy CEO Head of Transformation Office Head of Strategy and Corporate Head of Transaction Banking Head of Treasury and Head of Wholesale Banking and Head of Compliance and Legal Development and Chief of Staff Financial Markets

Mr. Pham Quang Thang was appointed Mr. Ashish Sharma was appointed Ms. Tran Thi Minh Lan was appointed Head Ms. Nguyen Huong Giang joined Mr. Vu Minh Truong was appointed Ms. Phan Thi Thanh Binh was Deputy Chief Executive Officer and Head of Transformation Office in June of Strategy and Corporate Development Techcombank as Head of Transaction Head of Treasury and Financial Markets appointed Head of Wholesale Banking Head of Compliance and Legal in 2017. He has 20 years of experience in August 2017. Before this, she was Banking in July 2017. She has 25 years in January 2017. He has more than in April 2018. Prior to this, she joined January 2014. He has more than in establishing and running business Techcombank’s Head of Transformation of experience working at leading global 20 years of professional experience, Techcombank as Transformation 20 years of experience in banking, banking platforms and banking strategy Program and the Deputy Head of Strategy banks including ANZ and Citibank. She including senior management positions Director of Wholesale Banking in July including several senior positions in leadership roles. He has held Director and Corporate Development from has held senior roles such as Head of in major international banks such as 2017. She has more than 20 years of such as Chief Accountant, Head of and Executive Director positions at large December 2015, responsible for building Client Delivery & Implementation, Head ABN AMRO, HSBC, ANZ and Standard experience with ANZ in various positions Treasury and Transactions Management corporate and financial institutions such and implementing the Bank’s overall of Sales and Product Development of Chartered. In more recent years, he including Head of Markets Vietnam, Center, Deputy Chief Executive Officer as Standard Chartered Bank, McKinsey strategy. She has more than 15 years of the Transaction Banking Division, and worked at VPBank and TPBank as acting CEO of ANZ (Vietnam), Member in charge of Finance, Planning and & Company, The Goldman Sachs experience in banking strategy and risk Director - ASEAN Channel Product. Deputy CEO. of the Board of Directors at ANZ Strategy, Head of the Commercial Group, and INC, among others. management. She has held several senior (Vietnam, Cambodia, and Laos) and Banking Division, and Head of the positions including the Deputy Head of the She holds a Bachelor’s degree in He holds a Bachelor’s degree Chairwoman of ANZ (Laos). Credit Approval Division. He holds an MBA in Finance from New Risk Management Division at Techcombank. Linguistic Education from National in Business Administration from York University (US) and a Master’s University, Hanoi (Vietnam). the Technical University of Berlin She holds a Master’s degree from He holds a Master’s degree in degree in Computer Sciences from Ms. Tran Thi Minh Lan graduated from (Germany). University Libre de Bruxelle (Belgium). International Accounting from Swinburne MIT (USA). the Executive Development Program at Technology University (Australia). the Wharton School, the University of Pennsylvania (US) and holds a Master’s degree in Financial and Accounting Management from the University of Berlin (Germany). ANNUAL REPORT 2018 ACHIEVING DREAMS 89 CORPORATE GOVERNANCE | Our Board of Management

Mr. De Leeuw Van Weenen Ms. Pham Vu Minh Dan Alexander Iwan Paul Mr. Chung Ba Phuong Chief Human Resource Officer Transformation Director of Head of Insurance Human Resource

Ms. Pham Vu Minh Dan (Alexis) was Mr. Iwan was appointed as Transformation Mr. Chung Ba Phuong was appointed appointed Chief Human Resources Director of Human Resource Division Head of Insurance in August 2017. He Officer at Techcombank in January in August 2018, he has 18 years has more than 24 years of experience 2015. Prior to this, she gained more of experience in human resource in developing and growing insurance than 14 years of experience in human management, including 13 years of businesses for renowned insurance resource management at British experience in banking and finance at groups such as Generali (Europe), American Tobacco Group (BAT). General Electric (GE). Before joining Manulife (Canada), American International During her tenure with BAT, she was Techcombank, he held several important Group (USA) and consultant at Towers appointed to various senior HR roles in positions at GE such as National Human Perrin (Willis Towers Watson). Before Vietnam,Malaysia, the United Kingdom Resource Manager (singapore), Senior joining Techcombank, he led Generali and the Asia-Pacific region. Her last role Director of Organization Development and Hong Kong as the CEO and General at BAT was Regional Head of Talent for Talent Development (SIngapore), Senior Manager. the Asia-Pacific region. Director of Organization Development and Talent Development (USA), HRBP Director He holds a Bachelor in Commerce She holds a Bachelor’s degree in (USA), Human Resource Manager (USA), (Honors) from the University of Manitoba Business Management from Nanyang HR Project Team Leader (USA). (Canada), and is a member of many Technological University (Singapore). professional career associations such as Mr. Iwan graduated with a Bachelor’s Canadian Institute of Actuaries (FCIA), Degree in Japanese Language and Society of Actuaries (FSA), American Culture at Leiden University (Netherlands). Academy of Actuaries (MAAA).

ANNUAL REPORT 2018 ACHIEVING DREAMS 91 CORPORATE GOVERNANCE

Corporate General Assembly Governance Model of Shareholders

Our targeted Corporate Governance model Board of Directors Supervisory Board

Internal Audit

Board Risk Committee Board Risk Settlement Committee Board Nomination Committee Board Audit Committee Board Remuneration Committee Board Strategy Committee

Board Risk Committee has the functions Board Risk Settlement Committee functions Board Nomination Committee has the Board Audit Committee advises the BOD Board Remuneration Committee advises Strategy Committee has the following as follows: to assist the BOD in matters related to functions as follows: and provides guidance and oversight of the the BOD on matters related to remuneration functions: -- Advise the BOD in issuing procedures, debt classification, provisioning, use of --Advise the BOD on composition and Board of Management on matters related to policy for BOD members, CEO and other --Advise the BOD in building, and policies related to risk management in provisions to handle credit risks and debt sizing of the Board, Executive positions to forming and monitoring financial statements, senior management positions, evaluates overseeing the implementation of Techcombank’s activities. settlement. align with operating model and strategy of internal control system and independent the efficiency of remuneration system, strategy and development direction -- Review, evaluate the appropriateness, Techcombank. accounting and audit policies. compensation and other reward programs of Techcombank, as well as matters effectiveness of procedures and policies to --Advise the BOD on nomination for Techcombank employees. related to the Transformation program of advise the BOD for approval of any changes. matters during the process of election, Techcombank. -- Analyse and provide warning on appointment, and dismissal in the BOD, --Advise the BOD on approving business Techcombank’s safety against potential risk the Supervisory Board and for executive goals, annual budget and major investment exposure and risk mitigation plans. positions in accordance with local activities of Techcombank. -- Advise the BOD in approvals of investments, regulations and Techcombank Charter, related party transactions, governance policy ensuring the appropriate skills, expertise, and risk remediation within Committee’s and experience is available when required. responsilibities and duty.

Note

Chief Executive Officer Committees under BOD in compliance with regulatory requirements.

Committees under BOD.

Recently Techcombank has been implementing the Risk Management Capital Management Other Committee necessary initiatives to transform the Corporate ALCO Committee Commimttee under CEO Governance model above into a practically applicable actions in the Bank’s governance operation.

ANNUAL REPORT 2018 ACHIEVING DREAMS 93 CORPORATE GOVERNANCE

Transactions, Remuneration and Benefits of the Board of Directors, the Board of Management and the Supervisory Board Salary, rewards, remuneration and other benefits & expenses for each member of the Board of Directors, the Supervisory Board and Information on internal shareholders’ ownership of TCB shares as the CEO of 31/12/2018 Salary, rewards, remuneration and other benefits & expenses for members of the Board of Directors

NUMBER MEMBERS OF THE BOARD OF SALARY/REWARDS/REMUNERATION PERCENTAGE OF NO. POSITION NO. NAME POSITION OF TCB DIRECTORS AND OTHER BENEFITS SHAREHOLDING SHARES 1 Mr. Ho Hung Anh BOD Chairman Board of Directors 2 Mr. Nguyen Dang Quang First Vice Chairman 1 Mr. Ho Hung Anh Chairman 39,309,579 1.1242% 3 Mr. Nguyen Thieu Quang Vice Chairman Refer to the 2018 Consolidated 2 Mr. Nguyen Dang Quang First Vice Chairman 9,403,176 0.2689% 4 Mr. Nguyen Canh Son Vice Chairman Financial Statement - Footnote no. 40 on 3 Mr. Nguyen Thieu Quang Vice Chairman 30,256,431 0.8653% “Transactions with related parties” 5 Mr. Do Tuan Anh Vice Chairman cum Deputy CEO 4 Mr. Nguyen Canh Son Vice Chairman 17,954,979 0.5135% 6 Mr. Lee Boon Huat Board Director 5 Mr. Do Tuan Anh Vice Chairman cum Deputy CEO 887,542 0.0254% 7 Mr. Nguyen Doan Hung Board Independent Director 6 Mr. Lee Boon Huat Board Director 0 0.0000% 7 Mr. Nguyen Doan Hung Board Independent Director 162 0.0000% Salary, rewards, remuneration and other benefits & expenses for members of the Supervisory Board Supervisory Board SALARY, BONUS, REMUNERATION 1 Mr. Hoang Huy Trung Head of Supervisory Board cum full-time member 57,504 0.0016% NO. MEMBERS OF BOC POSITION AND BENEFITS 2 Ms. Nguyen Thu Hien Full-time member 3,041,835 0.0870% 1 Mr. Hoang Huy Trung Head of Supervisory Board cum 3 Ms. Bui Thi Hong Mai Member 48 0.0000% full-time member Refer to the 2018 Consolidated 4 Mr. Mag Rer Soc Oec Member 0 0.0000% 2 Ms. Nguyen Thu Hien Full-time member Financial Statement - Footnote no. 40 on Romauch Hannes 3 Ms. Bui Thi Hong Mai Member “Transactions with related parties” Executive members 4 Mag Rer Soc Oec Romauch Hannes Member 1 Mr. Nguyen Le Quoc Anh CEO 6,100,000 0.1745%

2 Mr. Do Tuan Anh Vice Chairman cum Deputy CEO (as above) (as above) Salary, rewards, remuneration and other benefits & expenses for CEO 3 Mr. Pham Quang Thang Deputy CEO cum Head of Compliance and 775,222 0.0222% Legal Division SALARY, BONUS, REMUNERATION NO. NAME POSITION 4` Mr. Trinh Bang Group CFO 6,000,000 0.1716% AND BENEFITS 4 Ms. Thai Ha Linh Head of Accounting, Financial policy and Tax 976,412 0.0279% 1 Mr. Nguyen Le Quoc Anh CEO Refer to the 2018 Consolidated Financial Statement - Footnote no. 40 on 5 Ms. Bui Thi Khanh Van Chief Accountant 0 0.0000% “Transactions with related parties”

ANNUAL REPORT 2018 Note: Percentage of shareholding is rounded to four decimal places ACHIEVING DREAMS 95 CORPORATE GOVERNANCE | Transactions, Remuneration and Benefits of Board of Directors, Board of Management and Supervisory Board

Share transactions by internal shareholders *

In 2018, the number of transactions and volume of TCB shares traded by internal shareholders are as follows:

TYPE OF TRANSACTION (*) The volume of traded shares does not include: TRANSACTIONS TRANSACTIONS VOLUME -- Increase due to bonus share issuance (1:2 ratio). Buy 0 - -- Increase due to Employee Stock Option Program (ESOP). -- Increase due to shares rewarded to employees with high Sell 3 402,882 performance.

Total 3 402,882 Contracts or transaction with internal shareholders

Share transactions by internal shareholders’ related parties ** Refer to the 2018 Consolidated Financial Statement - Footnote no. 40 on “Transactions with related parties” In 2018, the number of transactions and volume of TCB shares traded by internal shareholders' related parties are as follows:

TYPE OF TRANSACTION (**) The volume of traded shares does not include: TRANSACTION TRANSACTIONS VOLUME -- Increases due to bonus share issuance (1:2 ratio). Buy 8 262,370,775 Application of regulations to Corporate Governance

Sell 32 114,685,368 Techcombank ensures that the Bank’s corporate governance Techcombank will continue to comply with any new legal practice complies fully with the current regulations and regulations and guidance as well as proactively researching Tổng 40 377,056,143 guidance on corporate governance for public and listed regional and international practices on corporate governance, companies as prescribed by the Law on Credit Institutions thereby gradually transforming and applying good practices (amended), Law on Enterprise, Law on Securities, Decree to strengthen the transparency and efficiency of the Bank’s no. 71/2017/NĐ-CP providing guideline on Corporate governance. This is also one of our prioritized tasks which Governance of Public Companies, Circular no. 95/2017/TT- is considered to be an important factor for Techcombank to BTC guiding a number of articles of Decree 71/2017/NĐ-CP. meet international standards on risk governance and internal In addition, Techcombank has also submitted periodic reports control such as Basel II or COSO 2013 on Internal Control in Detailed information on the transactions by internal shareholders and their on corporate governance every 6 months in accordance with the future. related parties are provided on Techcombank’s website. Circular no. 155/2015/TT-BTC guiding information disclosure on securities market and other related regulations.

ANNUAL REPORT 2018 ACHIEVING DREAMS 97 Sustainable Development “The greater future”

ANNUAL REPORT 2018 ACHIEVING DREAMS 99 SUSTAINABLE DEVELOPMENT Investment in People Development technology

lthough Vietnam is in the middle Therefore, to better equip the Bank’s employees to execute To that end, Techcombank offers A of a golden population period, our strategy, Techcombank has fostered a change in its employees every opportunity 2018 saw some volatility in the mindset, working methods, and customer service approach to develop themselves in a domestic human resource market. among Techcomers. The Bank’s employees believe and professional, friendly environment, This was especially noticeable in the support the transformation. This is the most important step in with a clear career development finance and banking industry where executing our strategies. roadmap. Techcombank helps there was a scarcity of talent, even each employee deliver against more so in the area of Industry 4.0. Additionally, Techcombank offers a competitive and expectations, acquire knowledge comprehensive employee value proposition, in line with our and skills through training and talent management strategy, ensuring that we can attract personal development plans and and retain our best talent, with the goal of becoming the succession planning. This ensures “Number one Bank in Vietnam based on efficiency.” that we can maintain our high quality of internal human resources, and helps our employees develop more capabilities.

The employee value proposition During this transformation journey, Techcombank has earmarked more than of Techcombank today is very USD300 million for investment in IT. Not only is this a significant investment, it diversified, meeting not only the also demonstrates Techcombank's commitment to successfully execute its basic demands of our staff (through customer-centric strategy. basic salary and benefits), but also intangible demands such as reward s a part of the Bank’s goal of talent. Since it first conducted business and recognition as well as long-term encouraging and enabling every more than 25 years ago, Techcombank compensation plans. All policies VietnameseA citizen to be optimistic, has always focused on developing from remuneration to benefits independent, and greater everyday, best-in-class human resources and ensure that our compensation the digital products and services we deep customer understanding. This package is higher than the deploy help our customers experience way, technology becomes a tool for average of domestic banks and digital banking right in the palms of Techcombank’s personnel to enable multinational companies in Vietnam. their hands. Further, customers with customers to realize their dreams. Techcombank continues to lead the sophisticated financial needs can market in compensation in order to perform financial tasks everywhere, Techcombank maintains this retain key talent, through programs everyday, safely and conveniently. commitment by investing in new digital such as ESOP (Employee Stock platforms, aiming to bring the best Ownership Plan) and Outstanding Techcombank puts customers at possible experience to more than 2.6 Techcomer awards, creating more the center of everything we do, million e-banking customers in 2019, incentives for employees to commit regardless the technological era. with the expectation that the number of to Techcombank in the long-term. Indeed, Techcombank has been able online customers will double each year to differentiate itself thanks to superior for the next five years.

ANNUAL REPORT 2018 ACHIEVING DREAMS 101 SUSTAINABLE DEVELOPMENT

New products and solutions

ore than just products and Therefore, in addition to traditional banking products, Techcombank will continue M services, Techcombank developing solutions in areas such as insurance (e.g. life insurance, property delivers solutions. Our goal is insurance, integrated insurance), and expanding the corporate bond brokerage to solve customer problems and business, among other areas. facilitate their financial security, not merely to meet their existing needs. Under Techcombank’s business strategy for the 2015-20 period, we aim to serve the entire market, with a focus on customers in the Affluent and Mass Affluent segments.

The products and services offered by Techcombank, such as Zero Fee online banking and electronic savings, are continuously improved to meet the ever- evolving needs of customers, and we have driven revenue growth through many such promotional programs.

For Affluent customers For Mass Affluent customers

Techcombank is focusing on many new initiatives, including Beginning in November 2018, Techcombank launched a loan deploying a direct sales model for bancassurance, improving program for Vincity homebuyers - a breakthrough solution with the mortgage experience for home buyers, and creating new loan tenure of up to 35 years, and various debt repayment asset management products and credit products. options. In addition, we are also focusing on improving customer experience for credit card users and home loans at the onboarding stage as well as on deploying additional online channels.

In 2019, we will pay special attention to business projects that aim to improve customer experience, to drive loyalty and engagement, and to generate trust in our financial solutions.

These include short-term and long-term initiatives such as reducing early repayment fees for homebuyers; expanding research on savings account customers; launching short-term card projects inspired by our "Cashless Payment Strategy"; creating mortgage-backed security products; and changing credit assessment processes in accordance with the appraisal/approval model based on expected losses.

In addition, we will continue to focus on serving the value chains of our strategic partners across our six targeted economic sectors.

ANNUAL REPORT 2018 ACHIEVING DREAMS 103 SUSTAINABLE DEVELOPMENT

Corporate Social Responsibility Schools

echcombank's Corporate Social Responsibility (CSR) programs are more As a financial services provider, Techcombank places a heavy weight T than simply fulfilling the social obligations of a business. To us, our pro- Hospitals grams are the demonstration of the values that bond all Techcomers together on the importance of contributing and lead us towards the Bank’s common goal. Our organization is committed to the sustainable and long-term to helping Vietnamese people realize their dreams in their own ways. development of the community. We consider social activities to be an integral part of the bank’s strategy, now and in the future. Our Board of Directors believes that having a clear and meaningful CSR strategy is crucial Foster homes to creating beneficial value chains for both businesses and the society. To achieve this goal, Techcombank has designed the ‘Partnering CSR’ model, whereby Techcombank personnel is the benefactor who implement Partnering CSR activities and at the same time the beneficiary of these activities. Bridges

In 2018, Techcombank continued to contribute nearly VND50 billion to community support programs, focusing on education, public healthcare and poverty reduction. As a result, many schools and foster homes have been built,and many hospitals and healthcare Techcombus facilities have been upgraded all over trips the country.

ANNUAL REPORT 2018 ACHIEVING DREAMS 105 SUSTAINABLE DEVELOPMENT

Alongside community activities, the finish line, Techcombank donated which translated to VND1,065,557,000 Techcombank is also a long-term more than VND1.2 billion to the ‘For donated to Newborns Vietnam. partner of the Techcombank Ironman the Poor’ charity fund and Ho Chi Minh Techcombank also topped the ranking 70.3 Vietnam and the Ho Chi Minh City Sports Talent Development Fund. for corporate participants. City International Marathon. Both are landmark initiatives of the Partnering Also in 2018, with the goal of Techcombank will continue its CSR strategy. Within two years, promoting the "Be greater together" partnership with Ironman 70.3 Asia from 2017 to 2018, the number of spirit, as well as bringing together the Pacific 2019, Ho Chi Minh City participants in these tournaments saw community through running, more International Marathon 2019, UPRACE impressive growth: increasing more than 2,000 members of Techcombank 2019, and other community-driven than 20% to 1,600 athletes in Ironman, participated in UPRACE 2018, events to deliver the "Be greater and doubling to 10,000 athletes in completing a total of 106,557km, together" message. the Ho Chi Minh City International Marathon.

We are happy to see the tournaments growing, attracting enlarging numbers of participants. Most importantly, we are happy to see the spirit of overcoming oneself to reach greater goals spreading from the tournaments to society. We commit to our partnerships with Ironman 70.3 Vietnam and the Ho Chi Minh City International Marathon to continue creating a positive impact on the community, thus building a brighter future for Vietnam.

In particular, in 2018 alone, more than 700 Techcomers joined the Ho Chi Minh City International Marathon, collectively overcoming challenges, reaching the finish line, and spreading the community spirit. Upon reaching

ANNUAL REPORT 2018 ACHIEVING DREAMS 107 Financial Report 2018 audited financial report

ANNUAL REPORT 2018 ACHIEVING DREAMS 109 FINANCIAL REPORT

GENERAL INFORMATION

THE BANK BOARD OF MANAGEMENT Vietnam Technological and Commercial Joint Stock Bank (“the Bank”) is a commercial joint stock bank registered and Members of the Board of Management of the Bank for the year ended 31 December 2018 and as at the date of these consoli- incorporated in the Socialist Republic of Vietnam. dated financial statements are as follows: The Bank was incorporated pursuant to Business License No. 0038/GP-NHNN issued by the Governor of the State Bank of Vietnam (“the SBV”) on 6 March 2018 to replace Business License No. 0040/NH-GP on 6 August 1993 and Business Name Position Registration Certificate No. 0100230800 issued by the Hanoi Department of Planning and Investment on 10August 2018. The operating duration is 99 years since 6 August 1993. Mr. Nguyen Le Quoc Anh Chief Executive Officer The principal activities of the Bank are mobilizing and receiving short, medium and long-term deposit funds from organizations Mr. Do Tuan Anh Deputy Chief Executive Officer and individuals, lending on short, medium and long-term basis up to the nature and ability of the Bank’s capital resources, Mr. Pham Quang Thang Deputy Chief Executive Officer conducting settlement and cash services and other banking services as approved by the SBV, conducting investments in cum Head of Compliance and Legal Division subsidiaries, associates, joint-ventures, bonds and other companies and dealing in foreign exchange in accordance with Mr. Le Ba Dung Deputy Chief Executive Officer (from 7 January 2019) applicable regulations. cum Head of Risk Management Mr. Trinh Bang Group Chief Finance Officer (from 25 January 2018) Ms. Tran Thi Minh Lan Head of Strategy and Corporate Development BOARD OF DIRECTORS Mr. Chester Gorski Head of IT and Operations Mr. Vu Minh Truong Head of Treasury and Financial Markets Members of the Board of Directors of the Bank for the year ended 31 December 2018 and as at the date of these consolidated Ms. Phan Thi Thanh Binh Head of Wholesales Banking (from 23 April 2018) financial statements are as follows: Transformation Director – Wholesales Banking (to 22 April 2018) Ms. Nguyen Huong Giang Head of Transaction Banking Name Position Mr. Vishal Shah Head of Business Banking (from 2 March 2018) Mr. Phung Quang Hung Head of Sales and Distribution Mr. Ho Hung Anh Chairman Ms. Le Thi Bich Phuong Head of Personal Financial Services Mr. Nguyen Dang Quang The first Vice Chairman Ms. Pham Vu Minh Dan Head of Human Resources Mr. Nguyen Thieu Quang Vice Chairman Ms. Nguyen Thi Van Anh Head of Marketing Division Mr. Nguyen Canh Son Vice Chairman Mr. Chung Ba Phuong Head of Insurance Division Mr. Do Tuan Anh Vice Chairman Mr. Ashish Sharma Transformation Director – Transformation Office Mr. Lee Boon Huat Member Mr. Phan Thanh Son Transformation Director – Transaction Banking Mr. Nguyen Doan Hung Independent Member Mr. De Leeuw Van Weenen Alexander Iwan Paul Transformation Director – Human Resources (from 6 August 2018) Mr. Chan Jonathan Chung Ming Transformation Director – Personal Financial Services (to 31 August 2018) BOARD OF SUPERVISION Members of the Board of Supervision of the Bank for the year ended 31 December 2018 and as at the date of these consolidated financial statements are as follows: LEGAL REPRESENTATIVE The legal representative of the Bank for the year ended 31 December 2018 and as at the date of these consolidated financial Name Position statements is Mr. Ho Hung Anh, the Chairman. Mr. Nguyen Le Quoc Anh is authorized by Mr. Ho Hung Anh to sign off operations management related reports and documents Mr. Hoang Huy Trung Head of the Board of Supervision which comprise the accompanying consolidated financial statements for the year ended 31 December 2018 in accordance with cum Member in charge Decision No. 0312/UQ-HDQT dated 25 February 2016. Mr. Mag Rec Soc Oec Romauch Hannes Member Ms. Nguyen Thu Hien Member in charge Ms. Bui Thi Hong Mai Member AUDITORS The auditor of the Bank is Ernst & Young Vietnam Limited.

ANNUAL REPORT 2018 ACHIEVING DREAMS 111 FINANCIAL REPORT

REPORT OF THE BOARD OF MANAGEMENT INDEPENDENT AUDITORS’ REPORT REFERENCE 60899747/20303658-HN

The Board of Management of Vietnam Technological and Commercial Joint Stock Bank (“the Bank”) is pleased to present its To: The Shareholders of report and the consolidated financial statements of the Bank and its subsidiaries for the year ended 31 December 2018. Vietnam Technological and Commercial Joint Stock Bank We have audited the accompanying consolidated financial statements of Vietnam Technological and Commercial Joint Stock Bank (“the Bank”) and its subsidiaries, as prepared on 15 March 2019 and set out on pages 6 to 81 which comprise the MANAGEMENT’S RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTS consolidated balance sheet as at 31 December 2018, the consolidated income statement and the consolidated cash flow The Board of Management of the Bank is responsible for the consolidated financial statements of each financial year which give statement for the year then ended and the notes thereto. a true and fair view of the consolidated financial position of the Bank and its subsidiaries and of the consolidated results of their operations and their consolidated cash flows for the year. In preparing those consolidated financial statements, the Board of Management is required to: MANAGEMENT’S RESPONSIBILITY select suitable accounting policies and then apply them consistently; The Bank’s Board of Management is responsible for the preparation and fair presentation of these consolidated financial make judgments and estimates that are reasonable and prudent; statements in accordance with Vietnamese Accounting Standards, Vietnamese Accounting System for Credit Institutions and statutory requirements relevant to preparation and presentation of consolidated financial statements, and for such internal state whether applicable accounting standards have been followed, subject to any material departures disclosed and control as the Board of Management determines is necessary to enable the preparation and presentation of consolidated explained in the consolidated financial statements; and financial statements that are free from material misstatement, whether due to fraud or error. prepare the consolidated financial statements on the going concern basis unless it is inappropriate to presume that the Bank and its subsidiaries will continue its business. The Board of Management of the Bank is responsible for ensuring that proper accounting records are kept which disclose, AUDITORS’ RESPONSIBILITY with reasonable accuracy at any time, the consolidated financial position of the Bank and ensuring that the accounting records Our responsibility is to express an opinion on these consolidated financial statements based on our audit. eW conducted our comply with the applied accounting system. It is also responsible for safeguarding the assets of the Bank and hence for taking audit in accordance with Vietnamese Standards on Auditing. Those standards require that we comply with ethical requirements reasonable steps for the prevention and detection of fraud and other irregularities. and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. The Board of Management of the Bank confirmed that it has complied with the above requirements in preparing the accompanying consolidated financial statements. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, STATEMENT BY THE BOARD OF MANAGEMENT the auditors consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial The Board of Management does hereby state that, in its opinion, the accompanying consolidated financial statements give statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing a true and fair view of the consolidated financial position of the Bank and its subsidiaries as at 31 December 2018, and of an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of the consolidated results of their operations and their consolidated cash flows for the year then ended in accordance with accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the Vietnamese Accounting Standards, Vietnamese Accounting System for Credit Institutions and statutory requirements relevant to overall presentation of the consolidated financial statements. preparation and presentation of consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Hanoi, Vietnam, 15 March 2019

ANNUAL REPORT 2018 ACHIEVING DREAMS 113 FINANCIAL REPORT

INDEPENDENT AUDITORS’ REPORT (continued) CONSOLIDATED BALANCE SHEET B02/TCTD-HN as at 31 December 2018 OPINION In our opinion, the consolidated financial statements give a true and fair view, in all material respects, of the consolidated ASSETS NOTES 31 DECEMBER 2018 31 DECEMBER 2017 financial position of the Bank and its subsidiaries as at 31 December 2018, and of the consolidated results of their operations VND MILLION VND MILLION and their consolidated cash flows for the year then ended in accordance with ietnameseV Accounting Standards, Vietnamese Cash and gold 5 2,606,467 2,344,362 Accounting System for Credit Institutions and statutory requirements relevant to preparation and presentation of the Balances with the State Bank of Vietnam 6 10,555,483 4,279,431 consolidated financial statements. Balances with and credit granting to other credit institutions 7 35,559,363 30,155,807 Balances with other credit institutions 7.1 24,169,512 16,243,054 Credit granting to other credit institutions 7.2 11,389,851 13,912,753 Securities held-for-trading 8 7,572,229 6,758,094 Securities held-for-trading 7,583,090 6,775,118 Provision for securities held-for-trading (10,861) (17,024) Derivatives and other financial assets 20 - 36,292 Loans to customers 157,554,103 158,964,456 Loans to customers 9 159,939,217 160,849,037 Provision for loans to customers 10 (2,385,114) (1,884,581) Debts purchased 11 - 10,332 Debts purchased 1,682 12,092 Provision for debts purchased (1,682) (1,760) Investment securities 12 86,512,348 51,542,484 Available-for-sale securities 66,625,261 46,018,398 Held-to-maturity securities 20,236,200 5,715,484 Provision for investment securities (349,113) (191,398) Hanoi, Vietnam, 15 March 2019 Long-term investments 13 12,223 9,683 Other long-term investments 12,883 12,084 Provision for long-term investments (660) (2,401) Fixed assets 14 1,718,596 1,511,446 Tangible fixed assets 14.1 788,016 569,789 Cost 1,835,272 1,602,956 Accumulated depreciation (1,047,256) (1,033,167) Intangible fixed assets 14.2 930,580 941,657 Cost 1,540,037 1,449,616 Accumulated amortization (609,457) (507,959) Investment property 15 1,196,324 1,238,030 Cost 1,435,699 1,442,827 Accumulated depreciation (239,375) (204,797) Other assets 16 17,701,805 12,541,963 Receivables 11,322,256 9,417,589 Accrued interest and fees receivables 5,737,907 3,876,528 Deferred tax assets - 1,773 Other assets 717,481 557,642 In which: Goodwill - 19,765 Provision for other assets (75,839) (1,311,569)

TOTAL ASSETS 320,988,941 269,392,380

ANNUAL REPORT 2018 ACHIEVING DREAMS 115 FINANCIAL REPORT

CONSOLIDATED BALANCE SHEET (continued) B02/TCTD-HN as at 31 December 2018

LIABILITIES NOTES 31 DECEMBER 2018 31 DECEMBER 2017 CONSOLIDATED OFF-BALANCE SHEET ITEMS 31 DECEMBER 2018 31 DECEMBER 2017 VND MILLION VND MILLION VND MILLION VND MILLION Due from the Government and the State Bank of Vietnam 17 6,025,027 1,000,000 Contingent liabilities Deposits and borrowings from other financial institutions and Guarantees for borrowings 5,957 8,558 credit institutions 18 36,425,560 46,323,825 Commitments for currencies contracts 160,600,295 232,107,961 Deposits from other financial institutions and credit institutions 18.1 28,973,455 21,274,375 Commitments to buy foreign currencies 3,305,927 2,911,065 Borrowings from other financial institutions and credit institutions 18.2 7,452,105 25,049,450 Commitments to sell foreign currencies 7,472,531 5,440,635 Deposits from customers 19 201,414,532 170,970,833 Commitments to currency swap contracts 149,821,837 223,756,261 Derivatives and other financial liabilities 20 310,313 - Letters of credit 12,163,321 9,366,321 Valuable papers issued 21 13,177,959 17,639,970 Other guarantees 19,043,774 16,001,135 Other liabilities 22 11,852,845 6,527,007 Valuable papers forward commitments 8,059,426 9,638,324 Accrued interest and fee payables 3,424,068 2,764,162 Other commitments (*) 202,008,746 23,045,517 Other liabilities 8,428,777 3,762,845 401,881,519 290,167,816 TOTAL LIABILITIES 269,206,236 242,461,635

(*) The balance as at 31 December 2018 of “Other commitments” additionally includes unused credit limits that the Bank has SHAREHOLDERS’ EQUITY the right to cancel or automatically cancel when customers breach conditions of cancelling or deteriorate their capacity to perform obligations; and unused credit limits of credit cards in accordance with Circular No. 19/2017/TT-NHNN dated 28 Share capital 35,442,539 9,777,116 December 2017 amending and supplementing some articles of Circular No. 36/2014/TT-NHNN dated 20 November 2014 Charter capital 34,965,922 11,655,307 of the Governor of the State Bank of Vietnam regulating the limits and adequacy ratios in operation of credit institutions and Share premium 476,617 2,165,058 foreign bank branches, which has been effective since 12 February 2018. Treasury shares - (4,043,249) Reserves 3,867,846 6,156,928 Retained earnings 12,403,003 10,996,701 Non-controlling interests 69,317 -

TOTAL SHAREHOLDERS’ EQUITY 24 51,782,705 26,930,745 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 320,988,941 269,392,380

Hanoi, Vietnam, 15 March 2019

ANNUAL REPORT 2018 ACHIEVING DREAMS 117 FINANCIAL REPORT

CONSOLIDATED INCOME STATEMENT B03/TCTD-HN CONSOLIDATED CASH FLOW STATEMENT B04/TCTD-HN for the year ended 31 December 2018 for the year ended 31 December 2018

NOTES 2018 2017 CASH FLOWS FROM OPERATING ACTIVITIES NOTES 2018 2017 VND MILLION VND MILLION VND MILLION VND MILLION (RECLASSIFIED) (RECLASSIFIED)

Interest and similar income 25 21,150,222 17,594,504 Interest and similar receipts 20,181,939 17,710,304 Interest and similar expenses 26 (10,023,687) (8,664,092) Interest and similar payments (9,797,235) (8,095,512) Net interest and similar income 11,126,535 8,930,412 Net fees and commission receipts 3,229,966 3,861,336 Fees and commission income 4,451,721 4,519,685 Net receipts/payments from trading activities (foreign currencies and securities) 1,310,321 1,635,194 Fees and commission expenses (915,737) (593,601) Other income receipts 151,294 598,071 Net fees and commission income 27 3,535,984 3,926,084 Recovery of loans previously written-off 31 1,422,895 1,116,820 Net gain from trading foreign currencies 28 233,751 278,585 Payments for employees and other operating expenses (4,432,019) (4,282,290) Net gain from securities yheld-for-trading 29 168,433 396,730 Current income taxation paid for the year 23.1 (2,140,758) (1,034,529) Net gain from investment securities 30 756,585 855,760 Net cash flows from operating activities before changes in operating assets Other income 3,147,169 1,963,425 and liabilities 9,926,403 11,509,394 Other expenses (1,513,392) (248,534) Changes in operating assets Net gain from other operating activities 31 1,633,777 1,714,891 Decrease/(increase) in balances with and credit granting to other credit institutions 2,576,067 (1,202,041) Income from investments in other entities 32 894,703 355,526 Increase in securities held-for-trading (35,935,551) (3,337,613) Total operating income 18,349,768 16,457,988 Decrease/(increase) derivatives instrument and other financial assets 36,292 (36,292) Operating expenses 33 (5,842,507) (4,812,465) Decrease/(increase) in loans to customers 909,820 (18,233,033) Net profit before provision for credit losses 12,507,261 11,645,523 Decrease in use of provision to write off loans, securities, long-term investments, Provision expenses for credit losses 34 (1,846,245) (3,609,226) receivables (2,553,203) (4,779,696) Profit before tax 10,661,016 8,036,297 Increase in other operating assets (3,308,223) (2,472,881) Current corporate income tax expense 23.1 (2,185,246) (1,564,816) Changes in operating liabilities Deferred corporate income tax expense 23.3 (1,773) (25,886) Increase/(decrease) in due from the Government and the State Bank of Vietnam 4,024,907 (447,970) Corporate income tax expense (2,187,019) (1,590,702) (Decrease)/increase in deposits and borrowings from other financial institutions Profit after tax 8,473,997 6,445,595 and credit institutions (9,898,265) 20,850,316 Non-controlling interests (11,222) - Increase/(decrease) in deposits from customers (including State Treasury) 31,443,819 (2,478,096) Basic earnings per share (VND/share) 35 3,816 7,719 (Decrease)/increase in valuable papers issued (excluding valuable papers issued classified into financing activities) (1,762,011) 7,359,251 Increase/(decrease) in derivatives and other financial liabilities 310,313 (67,892) Increase in other liabilities 4,528,623 304,627 Payments from reserves (59) (263) Net cash flows from operating activities 298,932 6,967,811

CASH FLOWS FROM INVESTING ACTIVITIES

Payments for purchases of fixed assets (401,574) (175,815) Proceeds from disposal of fixed assets 6,097 5,795 Payments for disposal of fixed assets (89) (717) Payments for investments in other entities (799) - Proceeds from investments in other entities 915,560 925,780 Dividends received from long-term investments 32 275 334 Net cash flows from investing activities 519,470 755,377 Hanoi, Vietnam, 15 March 2019

ANNUAL REPORT 2018 ACHIEVING DREAMS 119 FINANCIAL REPORT

CONSOLIDATED CASH FLOW STATEMENT (continued) B04/TCTD-HN NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS B05/TCTD-HN for the year ended 31 December 2018 as at 31 December 2018 and for the year then ended

CASH FLOWS FROM FINANCING ACTIVITIES NOTES 2018 2017 1. GENERAL INFORMATION VND MILLION VND MILLION (RECLASSIFIED) Vietnam Technological and Commercial Joint Stock Bank (“the Bank”) is a commercial joint stock bank registered and incorporated in the Socialist Republic of Vietnam. Increase in charter capital from share issuance - 2.099.999 Proceeds from long-term valuable papers issued classified into Establishment and operations 310.000 2.708.164 owners’ equity and other long-term borrowings The Bank was incorporated pursuant to Business License No. 0038/GP-NHNN issued by the Governor of the State Bank of Payments for long-term valuable papers qualified to classify into Vietnam (“the SBV”) on 6 March 2018 to replace Business License No. 0040/NH-GP on 6 August 1993 and Business Registration (3.010.000) - owners’ equity and other long-term borrowings Certificate No. 0100230800 issued by the Hanoi Department of Planning and Investment on 10August 2018. The operating - (4.043.249) Payments for buying treasury shares duration is 99 years since 6 August 1993. Proceeds from selling treasury shares 16.341.177 - Increase in charter capital from capital contribution by The principal activities of the Bank are mobilizing and receiving short, medium and long-term deposit funds from organizations and non-controlling shareholders 58.201 - individuals, lending on short, medium and long-term basis up to the nature and ability of the Bank’s capital resources, conducting Net cash flows from financing activities 13.699.378 764.914 settlement and cash services and other banking services as approved by the SBV, conducting investments in subsidiaries, Net cash flows during the year 14.517.780 8.488.102 associates, joint-ventures, bonds and other companies and dealing in foreign exchange in accordance with applicable regulations. Cash and cash equivalents at the beginning of the year 22.681.199 14.193.097 Charter capital Cash and cash equivalents at the end of the year 36 37.198.979 22.681.199 As at 31 December 2018, the charter capital of the Bank is VND 34,965,921,600,000 (31 December 2017: VND 11,655,307,200,000). SIGNIFICANT NON-CASH TRANSACTIONS DURING THE YEAR Network

Increase in charter capital from owners’ equity 23.310.615 - The Bank’s Head Office is located at 191 Ba Trieu, Hai Ba Trung District, Hanoi. As at 31 December 2018, the Bank has one Increase in charter capital from convertible bonds - 2.077.228 (1) Head Office, two (2) representative offices, three hundred and fourteen (314) transaction offices nationwide and three (3) subsidiaries. Subsidiaries As at 31 December 2018, the Bank has three (3) subsidiaries as follows:

% owned No. Name Business License No. Industry by the Bank

1 Techcom Securities Joint Stock 85/GPDC-UBCK dated 16 October 2018 Securities activities 94.49999% Company granted by the State Securities Commission

2 Vietnam Technological and 0102786255 dated 18 June 2008 granted Debt and asset 100% Commercial Joint Stock Bank – by the Hanoi Department of Planning and management Asset Management Company Investment which was amended for the 22th Limited time on 30 November 2018

3 Techcom Capital Management 40/UBCK-GP dated 21 October 2008 Fund management 100% Company Limited granted by the State Securities Commission Hanoi, Vietnam, 15 March 2019

Employees As at 31 December 2018, the Bank and its subsidiaries have 9,757 employees (31 December 2017: 8,328 employees).

ANNUAL REPORT 2018 ACHIEVING DREAMS 121 FINANCIAL REPORT | Notes to the consolidated financial statements B05/TCTD-HN

2. ACCOUNTING PERIOD AND CURRENCY 3. APPLIED ACCOUNTING STANDARDS AND SYSTEM (continued) 2.1 Accounting period 3.3 Basic of consolidation (continued) The annual accounting period of the Bank starts on 1 January and ends on 31 December. The financial statements of subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting policies. 2.2 Accounting currency All intra-company balances, income and expenses and unrealized gains or losses result from intra-company transactions are Currency used in accounting of the Bank is Vietnam dong (“VND”) and is rounded to the nearest VND million for presentation of eliminated in full. consolidated financial statements. 3.4 Basis of assumptions and uses of estimates 3. APPLIED ACCOUNTING STANDARDS AND SYSTEM The preparation of the consolidated financial statements requires the Board of Management to make estimates and 3.1 Statement of compliance assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities. These estimates and assumptions also affect the income, expenses and the resultant provisions. Therefore, such estimates are necessarily based on The Board of Management of the Bank confirmed that it has complied with ietnameseV Accounting Standards, Vietnamese assumptions involving varying degrees of subjectivity and uncertainty and actual results may differ resulting in future changes in Accounting System for Credit Institutions and statutory requirements relevant to preparation and presentation of consolidated such provision. financial statements. Accordingly, the accompanying consolidated balance sheet, the consolidated income statement, the consolidated cash flow 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES statement and notes to the consolidated financial statements, including their utilization are not designed for those who are not informed about Vietnamese accounting principles, procedures and practices and furthermore are not intended to present 4.1 Changes in accounting policies and disclosures the consolidated financial position of the Bank and its subsidiaries, the consolidated results of their operations and their The accounting policies adopted by the Bank in preparation of the consolidated financial statements are consistent with those consolidated cash flows in accordance with accounting principles and practices generally accepted in countries other than followed in the preparation of the Bank’s consolidated financial statements for the year ended 31 December 2017, except for the Vietnam. following changes in the accounting policies: 3.2 Basis of preparation Circular No. 14/2017/TT-NHNN regulating the methods of calculating interest on depositing and credit extension transactions between credit institutions and customers The consolidated financial statements of the Bank are prepared in accordance with theAccounting System applicable to Credit Institutions required under Decision No. 479/2004/QD-NHNN issued on 29 April 2004, Circular No. 10/2014/TT-NHNN dated On 29 September 2017, the SBV issued Circular No. 14/2017/TT-NHNN regulating methods of calculation of interest in 20 March 2014 and Circular No. 22/2017/TT-NHNN dated 29 December 2017 amending and supplementing Decision No. depositing and credit granting transactions between credit institutions and customers. Accordingly, the interest accruals on credit 479/2004/QD-NHNN; the financial reporting regime applicable to credit institutions required under Decision No. 16/2007/QD- and deposit operation are calculated on the basis that a year is 365 days. The circular has taken effect since 1 January 2018. NHNN dated 18 April 2007 and Circular No. 49/2014/TT-NHNN amending and supplementing a number of articles of Decision Circular No. 19/2017/TT-NHNN amending and supplementing a number of articles of Circular No. 36/2014/TT-NHNN of the No. 16/2007/QD-NHNN and the chart of account system for credit institutions issued in connection with Decision No. 479/2004/ Governor of the SBV dated 20 November 2014 stipulating prudential ratios and limits for the operation of credit institutions and QD-NHNN by the State Bank of Vietnam and Vietnamese Accounting Standards issued by the Ministry of Finance as per: foreign bank branches Decision No.149/2001/QD-BTC dated 31 December 2001 on the Issuance and Promulgation of Four Vietnamese Standards On 28 December 2017, the SBV issued Circular No. 19/2017/TT-NHNN amending and supplementing a number of articles of on Accounting (series 1); Circular No. 36/2014/TT-NHNN dated 20 November 2014 of the Governor of the SBV stipulating prudential ratios and limits for Decision No.165/2002/QD-BTC dated 31 December 2002 on the Issuance and Promulgation of Six Vietnamese Standards the operation of credit institutions and foreign bank branches. Accordingly, “Other commitments” disclosed in "Off-balance sheet on Accounting (series 2); items" include unused credit limits that credit institutions have rights to cancel or automatically cancel when customers breach Decision No. 234/2003/QD-BTC dated 30 December 2003 on the Issuance and Promulgation of Six Vietnamese Standards conditions of canceling or deteriorate the capacity to perform obligations; and unused credit limits of credit cards and other on Accounting (series 3); commitments. The circular has taken effect since 12 February 2018. Decision No.12/2005/QD-BTC dated 15 February 2005 on the Issuance and Promulgation of Six Vietnamese Standards on Circular No. 16/2018/TT-BTC ("Circular 16") guiding a number of articles of the financial regime applicable to credit institutions Accounting (series 4); and and foreign bank branches Decision No.100/2005/QD-BTC dated 28 December 2005 on the Issuance and Promulgation of Four Vietnamese Standards on Accounting (series 5). Changes in Circular 16 are as below: Amending and supplementing the management and utilization method of real estate held for debt resolution; 3.3 Basic of consolidation Amending and supplementing the recognition of revenue from trading of securities (shares exclusive); and The consolidated financial statements comprise the financial statements of the Bank and its subsidiaries for the year then ended Amending and supplementing the recognition of expenses. 31 December 2018. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Bank obtains Circular 16 has taken effect since 26 March 2018 and replaced Circular No. 05/2013/TT-BTC dated 9 January 2013 of the control, and continue to be consolidated until the date that such control ceases. In case the Bank divests its equity interest in a Ministry of Finance providing guidance on the financial regime applicable to credit institutions and foreign bank branches. subsidiary resulting in loss of control over the subsidiary, the Bank only consolidates the financial result of the subsidiary from the beginning of the year up to the date of the divestment without consolidating the net assets of the subsidiary. Furthermore, the Bank makes adjustments of indirect impact of the divestment transactions on the consolidated cash flow statement.

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4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4.1 Changes in accounting policies and disclosures (continued) 4.4 Securities held-for-trading (continued) Circular No. 22/2017/TT-NHNN amending and supplementing a number of articles of the Chart of account system applicable to 4.4.2 Measurement (continued) credit institutions issued in connection with Decision No. 479/2004/QD-NHNN dated 29 April 2004 and the financial reporting regime applicable to credit institutions required under Decision No. 16/2007/QD-NHNN dated 18 April 2007 by the Governor of Provision for credit losses on corporate bonds which are not listed on the stock market or not registered on the unlisted public the SBV ("Circular 22") companies market is made in accordance with Circular 02 and Circular 09 as described in Note 4.6. On 29 December 2017, the SBV issued Circular No. 22/2017/TT-NHNN amending and supplementing a number of articles of Provision for securities held for trading which is mentioned above is reversed when the recoverable amount of securities held for the Chart of account system applicable to credit institutions issued in connection with Decision No. 479/2004/QD-NHNN dated trading increases after making provision as a result of an objective event. Provision is reversed up to the gross value of these 29 April 2004 and the financial reporting regime applicable to credit institutions required under Decision No. 16/2007/QD-NHNN securities before provision. dated 18 April 2007 by the Governor of the SBV. The circular has taken effect since 1 April 2018. Gains or losses from the sales of securities held-for-trading are recognized in the consolidated income statement. The main changes in Circular 22 are as below: 4.4.3 De-recognition Amending and supplementing the guidance on the accounting treatment for foreign exchange and gold transactions; Securities held-for-trading are derecognized when the rights to receive cash flows from these securities are terminated or the Amending a number of accounts in the Chart of account system applicable to credit institutions; Bank transfers substantially all the risks and rewards of ownership of these securities. Amending the guidance on the accounting treatment for some accounts in the Chart of account system applicable to credit institutions; and 4.5 Loans to customers Amending and supplementing the guidance on the Financial reporting regime applicable to credit institutions. Loans to customers are presented at the principal amounts outstanding as at the end of the year less any provision made for The Bank has assessed the effect of Circular 22 on the comparative figures in the consolidated financial statements. loans to customers. Accordingly, the effects due to changes in exchange rate policies are immaterial. As a result, the Bank is not required to restate Short-term loans have maturity of less than or equal to one year from disbursement date. Medium-term loans have maturity from the comparative figures due to changes in exchange rate policies. over one year to five years from disbursement date. Long-term loans have maturity of more than five years from disbursement date. 4.2 Cash and cash equivalents Loan classification and provision for credit losses are made according to Circular 02 and Circular 09 as presented in Note 4.6. Cash and cash equivalents comprise cash, gold, balances with the SBV, treasury bills and other short-term valuable papers 4.6 Asset classification and provisioning rate, risk provisioning method for balances with and credit granting to eligible for rediscount with the SBV; balances with other credit institutions that have maturity of three months or less from the other credit institutions, investments and trusted investments in unlisted corporate bonds, loans to customers and transaction date and securities with recovery or maturity of three months or less from date of purchase. entrustments for credit granting 4.3 Balances with and credit granting to other credit institutions Asset classification for balances with and loans to other credit institutions, investments and trusted investments in unlisted corporate bonds, loans to customers and entrustments for credit granting (here refer as “debts”) is made in compliance with the Balances with and credit granting to other credit institutions are presented at the principal amounts outstanding at the end of the year. quantitative method as prescribed in Article 10 of Circular 02. The credit risk classification of balances with and credit granting to other credit institutions and provision for credit risks thereof Specific provision as at 31 December is made based on the outstanding principal balance less discounted value of collaterals are provided in accordance with Circular No. 02/2013/TT-NHNN dated 21 January 2013 of the SBV on classification of assets, multiplied by provision rates which are determined based on the debt classification as at 30 November. The basis to determine levels and method of making risk provision, and use of provision against credit risks in operation of credit institutions, foreign the value and discounted value for each type of collateral is specified in Circular 02. bank’s branches (“Circular 02”) and Circular No. 09/2014/TT-NHNN dated 18 March 2014 on amending and supplementing a number of article of Circular 02 (“Circular 09”). Accordingly, the Bank makes a specific provision for balances with (except The debt classification and specific provision rates for each group are presented as follows: for current accounts at other local credit institutions or at foreign bank branches in Vietnam) and credit granting to other credit institutions according to the method as described in Note 4.6. Group Description Provision rate

According to Circular 02, the Bank is not required to make a general provision for placements with and credit granting to other 1. Current (a) Current debts that are assessed as fully and timely recoverable for both principals and interests; or 0% credit institutions. (b) Debts which are overdue for a period of less than 10 days and assessed as fully recoverable 4.4 Securities held-for-trading for both overdue principals and interests, and fully and timely recoverable for both remaining principals and interests. 4.4.1 Classification and recognition Securities held-for-trading include debt securities acquired and held for resale. Securities held-for-trading are initially recognized 2. Special (a) Debts which are overdue for a period of between 10 days and 90 days; or 5% at cost. mention (b) Debts which the repayment terms are restructured for the first time.

4.4.2 Measurement 3. Sub-standard (a) Debts which are overdue for a period of between 91 days and 180 days; or 20% Listed debt securities held for trading are recognized at cost less provision for diminution in value of securities, which is based (b) Debts which the repayment terms are extended for the first time; or on the yield quoted on the Hanoi Securities Exchange as at the balance sheet date. (c) Debts which interests are exempted or reduced because customers do not have sufficient capability to repay all interests under credit contracts; or

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4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4.6 Asset classification and provisioning rate, risk provisioning method for balances with and credit granting to 4.7 Investment securities other credit institutions, investments and trusted investments in unlisted corporate bonds, loans to customers and 4.7.1 Classification entrustments for credit granting (continued) Investment securities include available-for-sale investment securities and held-to-maturity investment securities. The Bank Group Description Provision rate initially recognizes investment securities at cost and classifies investment securities into proper groups at purchase date. According to Official Letter No. 2601/NHNN-TCKT dated 14 April 2009 by the SBV, the Bank is allowed to reclassify investment 3. Sub-standard (d) Debts under one of the following cases which have not been recovered in less than 30 days from securities for maximum one time after purchase. (continued) the date of the recovery decision: Debts violating Clause 1, 3, 4, 5, 6 under Article 126 of Law on Credit Institutions; or Held-to-maturity investment securities Debts violating Clause 1, 2, 3, 4 under Article 127 of Law on Credit Institutions; or Held-to-maturity investment securities are debt securities with fixed maturities and fixed or determinable payments, where the Debts violating Clauses 1, 2 and 5 under Article 128 of Law on Credit Institutions. Bank has the positive intention and ability to hold until maturity. (e) Debts required to be recovered under inspection conclusions. Available-for-sale investment securities 4. Doubtful (a) Debts which are overdue for a period of between 181 days and 360 days; or 50% Available-for-sale investment securities are debt or equity securities which are held for an indefinite period and may be sold at (b) Debts which the repayment terms are restructured for the first time but still overdue for a period of any time. less than 90 days under that restructured repayment term; or (c) Debts which the repayment terms are restructured for the second time; or 4.7.2 Recognition (d) Debts which are specified in point (d) of Group 3 overdue for a period of between 30 days and 60 The Bank recognizes investment securities on the date that it acquires substantially all the risks and rewards of owning these days after decisions of recovery have been issued; or securities. (e) Debts required to be recovered under inspection conclusions but still outstanding with an overdue period up to 60 days since the recovery date as required by regulatory inspection conclusions. 4.7.3 Measurement Equity securities (a) Debts which are overdue for a period of more than 360 days; or 5. Loss (b) Debts which the repayment terms are restructured for the first time but still overdue for a period of 100% Listed available-for-sale equity securities are recorded at cost less provision for diminution in value of securities determined 90 days or more under that first restructured repayment term; or based on closing prices of securities on Ho Chi Minh City Stock Exchange and Hanoi Stock Exchange as at the consolidated (c) Debts which the repayment terms are restructured for the second time but still overdue under that balance sheet date. second restructured repayment term; or For unlisted available-for-sale equity securities which are actively traded on the unlisted public company market (“Upcom”), (d) Debts which the repayment terms are restructured for the third time or more, regardless of being provision for diminution in value is determined by the average trading price at the reporting date. overdue or not; or For unlisted available-for-sale equity securities which are not registered on Upcom, provision for diminution in value is calculated (e) Debts which are specified in point (d) of Loan group 3 and overdue for a period of more than 60 based on the average quoted prices of three securities companies with their share capital of above VND 300 billion. In case the days after decisions on recovery have been issued; or quoted prices of three securities companies cannot be obtained, these securities are recorded at cost. (f) Debts required to be recovered under regulatory inspection conclusions but still outstanding with an overdue period of more than 60 days since the recovery date as required by regulatory Debt securities inspection conclusions; or Debt securities are initially stated at cost, including transaction costs and other directly attributable costs. They are subsequently (g) Debts of credit institutions under special control as announced by the SBV, or debts of foreign recognized at amortized cost (affected by premium/discount amortization) less provision for impairment. Premium and discounts bank branches of which capital and assets are blocked. arising from purchases of debt securities are amortized to the consolidated income statement on a straight-line basis from the acquisition date to the maturity date. Where a customer has more than one debt with the Bank and one of the outstanding debts is classified into a higher risk group, Post-acquisition interest income of available-for-sale debt securities and held-to-maturity debt securities is recognized in the the Bank is required to classify the entire remaining debts of such customer into the higher risk group. consolidated income statement on an accrual basis. When participating in a syndicated loan as a participant, the Bank classifies loans (including syndicated loans) of the customer Provision for diminution in value of securities is made when the carrying value is higher than the market value in compliance into the higher risk group between the assessment of the leading banks and its own assessment. with Circular No. 228/2009/TT-BTC issued by the Ministry of Finance on 7 December 2009. In case market prices of securities are not available or cannot be determined reliably, no provision is calculated. Provision is recognized in the “Net gain/(loss) from If a customer is classified by the bank into the risk group which is lower than the risk group provided by CIC, the Bank is investment securities” account of the consolidated income statement. required to adjust the risk group of such customer following the risk group provided by CIC. Provision for credit losses on corporate bonds which are not listed on the stock market or not registered on the unlisted public In accordance with the requirements of Circular 02, General provision as at 31 December is made at 0.75% of total outstanding companies market is made in accordance with Circular 02 and Circular 09 as presented in Note 4.6. debt balances excluding placements with and credit granting to other credit institutions and debts classified as loss (group 5) as at 30 November.

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4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4.8 Repurchase and reverse repurchase agreements 4.10 Tangible fixed assets (continued) Securities sold under agreements to repurchase at a specific date in the future are not derecognized from the consolidated 4.10.2 Depreciation financial statements. The corresponding cash received is recognized as a borrowing in the consolidated balance sheet. The difference between the sale price and repurchase price is recognized in the consolidated income statement based on the interest Depreciation of fixed assets is computed on a straight-line basis over the estimated useful lives of tangible fixed assets which rate stipulated in the contract. are as follows: Conversely, securities purchased under agreements to resell at a specific date in the future are not recognized in the buildings and building improvements....8 - 50 years consolidated financial statements. The corresponding cash payment is recognized as an investment in the consolidated balance machines and equipment...... 3 - 10 years sheet and the difference between the purchase price and resale price is recognized in the consolidated income statement based vehicles...... 6 - 10 years on the interest rate stipulated in the contract. other fixed assets...... 4 - 10 years 4.9 Long-term investments 4.11 Intangible fixed assets 4.9.1 Other long-term investments 4.11.1 Computer software Other long-term investments represent investments in other entities in which the Bank holds less than or equal to 11% of voting rights. These investments are initially recorded at cost at the investment date. The cost of acquiring new software, which is not an integral part of the related hardware, is capitalized and treated as an intangible asset. Software costs are amortized on a straight-line basis for the period from 4 to 8 years. 4.9.2 Provision for impairment of long-term investments 4.11.2 Land use rights For listed securities or unlisted but registered for trading securities on unlisted public company market (UPCoM), provision for diminution in value is made when their listed/registered price for trading is lower than the carrying value of the securities at year end. Definite land use rights In other cases, provision for diminution in the value of other long-term investment is made when the investee suffers loss, except Definite land use rights are stated at cost less accumulated amortization.The initial cost of a land use right comprises its that such loss had been forecasted in the investee’s business plan before the investment. Provision for impairment is determined purchase price in conjunction with securing the land use right and expenses for compensation for site clearance, ground leveling as the total actual contributed capital of parties to the investee company (par value) less (-) the actual owner’s equity multiplied and registration fees. Amortization is computed on a straight-line basis over the leasing period. (x) by the Bank’s ownership percentage (par value) in the investee company. Provision is reserved when the recoverable amount Indefinite land use rights of the investments increases after the provision is made. A provision is reversed only to the extent that the investment’s carrying amount does not exceed the carrying amount that would have been determined if no provision had been recognized. Indefinite land use rights are stated at cost and are not amortized. The initial cost of land use rights comprises its purchase price in conjunction with securing the land right and expenses for compensation for site clearance, ground leveling and registration fees. 4.10 Tangible fixed assets 4.11.3 Other intangible fixed assets 4.10.1 Cost Other intangible fixed assets are stated at cost less accumulated amortization.Amortization is computed on a straight-line basis Tangible fixed assets are stated at cost less accumulated depreciation. The initial cost of a tangible fixed asset comprises for the period from 4 to 8 years. its purchase price, including import duties and non-refundable purchase taxes and any directly attributable costs of bringing the asset to its working condition and location for its intended use, and the cost of dismantling and removing the asset and 4.12 Investment property restoring the site on which they are located. Expenditure incurred after the tangible fixed assets have been put into operation, 4.12.1 Cost such as repairs and maintenance and overhaul costs, is normally charged to the consolidated income statement for the period in which the costs are incurred. Where it can be clearly demonstrated that the expenditure has resulted in an increase in the Investment property is stated at cost less accumulated depreciation. The initial cost of an investment property comprises future economic benefits expected to be obtained from the use of an item of tangible fixed assets beyond its originally assessed its purchase price, cost of land use rights and any directly attributable expenditures of bringing the property to the condition standard of performance, the expenditure is capitalized as an additional cost of tangible fixed assets. necessary for it to be capable of operating. Expenditure incurred after investment property has been put into operation, such as repairs and maintenance, is charged to the consolidated income statement for the year in which the expenditure is incurred. In In case the rental period accounts for more than 90% of the assets’ useful life, the Bank is allowed to record the total rental situations where it can be clearly demonstrated that the expenditure has resulted in future economic benefits in excess of the expense as fixed assets if all of the following conditions are simultaneously satisfied: originally assessed standard of performance of the existing investment property, the expenditure is capitalized as an additional The lessee is not entitled to cancel the lease contract and the lessor has no obligation to repay the amount received in cost of investment property. advance under any circumstances and forms; 4.12.2 Depreciation The amount prepaid to the lessor is not less than 90% of the total value of rental contract and the lessee must make payment for the remaining amount within 12 months from the beginning of the lease; Depreciation of investment property is computed on a straight-line basis over the estimated useful life of investment property which is as follows: Almost all the risks and benefits associated with ownership of the leased asset are transferred to the lessee; and building...... 10 - 40 years The lessor must estimate the relatively full cost of the lease.

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4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4.13 Operating lease payments 4.16 Share capital (continued) Payments made under operating leases are recognized in the consolidated income statement on a straight-line basis over the 4.16.2 Share premium term of the lease. Lease incentives received are recognized in the consolidated income statement as an integral part of the total lease expense. On receipt of capital from shareholders, the difference between the issue price and the par value of the shares is recorded as share premium in equity. 4.14 Other receivables 4.16.3 Treasury shares Accounts receivable other than receivables from credit activities of the Bank are initially recognized at cost and subsequently presented at cost less provision. Own equity instruments which are reacquired (treasury shares) are recognized at cost and deducted from equity. No gain or loss is recognized in profit or loss upon purchase, sale, issue or cancellation of the Bank’s own equity instruments. Receivables are subject to review for impairment based on the number of overdue months from the original maturity date of receivables or expected loss of current debts in case the debts are not due for payment yet but the corporate debtors have 4.16.4 Reserves and funds fallen into bankruptcy or are in the process of dissolution, or of individual debtors who are missing, escaped, prosecuted, on trial Reserves and funds of the Bank or deceased. Provision expense incurred is recorded in “Other operating expenses” of the consolidated income statement in the year The Bank is required to make the following reserves before distribution of profits in accordance with Law on Credit Institutions No. 47/2010/QH12 and Decree No. 93/2017/ND-CP and Charter of the Bank: For overdue receivables, the Bank uses provision rates based on the overdue months in accordance with Circular No. 228/2009/ TT-BTC dated 7 December 2009 and Circular No. 89/2013/TT-BTC dated 28 June 2013 as below: Percentage of profit after tax Maximum balance Status of aging Provision rate Capital supplementary reserve 5% of profit after tax 100% charter capital From six (06) months up to under one (01) year 30% Financial reserve 10% of profit after tax Not regulated From one (01) year up to under two (02) years 50% From two (02) years up to under three (03) years 70% Other funds are appropriated from profit after tax. The allocation from profit after tax and utilization of the other equity funds are From three (03) years and above 100% approved by the shareholders in the Annual General Meeting. These funds are not required by law and are fully distributable. Reserves and funds of subsidiaries Classification and provisioning for debts which have been sold but not yet collected Vietnam Technological and Commercial Joint Stock Bank - Asset Management Company Limited: The Bank reclassifies and makes provision for the debts which have been sold but not yet collected based on the debt According to Circular No. 27/2002/TT-BTC dated 22 March 2002 issued by the Ministry of Finance, the appropriation to reserves classification results and collateral value right before the debts were sold in accordance with Circular 02 and Circular 09. is made in a similar way to the Bank. Techcom Securities Joint Stock Company and Techcom Capital Management Company Limited: 4.15 Business combination and goodwill According to Circular No. 146/2014/TT-BTC issued by the Ministry of Finance issued on 6 October 2014 guiding the financial Business combinations are accounted for using the purchase method. The cost of a business combination is measured as regime for securities and fund management companies, realized profit of the Company shall be distributed as follows: the fair value of assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange plus any costs directly attributable to the business combination. Identifiable assets and liabilities and contingent liabilities assumed in a business combination are measured initially at fair values at the date of business combination. Percentage of profit after tax Maximum balance Goodwill acquired in a business combination is initially measured at cost being the excess of the cost the business combination over the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities. If the cost Capital supplementary reserve 5% of profit after tax 10% charter capital of a business combination is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized Financial reserve 5% of profit after tax 10% charter capital directly in the consolidated income statement. After initial recognition, goodwill is measured at cost less any accumulated amortization. Goodwill is amortized over five-year period on a straight-line basis. 4.16 Share capital Financial reserve is used to compensate the damages incurred in business activities. These statutory reserves are made at year-end, non-distributable and considered as equity of the Bank. 4.16.1 Ordinary shares Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognized as a deduction from equity.

ANNUAL REPORT 2018 ACHIEVING DREAMS 131 FINANCIAL REPORT | Notes to the consolidated financial statements B05/TCTD-HN

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

4.17 Revenue and expense recognition 4.18 Foreign currency transactions The Bank maintains its accounting system and records all transactions in original currencies. Monetary assets and liabilities 4.17.1 Interest income denominated in foreign currencies are translated into VND using exchange rates ruling at the consolidated balance sheet date. Interest income is recognized in the consolidated income statement on an accrual basis, except for interest of debts which are Non-monetary items arising in foreign currencies during the year are converted into VND at rates ruling on the transaction dates. classified in groups 2 to 5 which is recognized upon receipt. Foreign exchange differences arising from the translation of monetary assets and liabilities into VND in the year are recognized and followed in the “Differences in foreign exchange” under “Shareholders’ equity” in the consolidated balance sheet and will be 4.17.2 Fees and commission income transferred to the consolidated income statement at year-end. Fees and commissions are recognized in the consolidated income statement on an accrual basis. 4.19 Taxation 4.17.3 Dividend income Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognized in the consolidated Dividends receivable in cash are recognized in the consolidated income statement when the Bank’s right to receive dividends is income statement. established. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at In accordance with Circular No. 244/2009/TT-BTC dated 31 December 2009 issued by the Ministry of Finance, dividends the balance sheet date, and any adjustment to tax payable in respect of previous years. received in the form of shares, bonus shares and rights to purchase shares of the existing shareholders, shares distributed Deferred tax is provided using the balance sheet method, providing for temporary differences between the carrying amounts of from retained earnings are not recognized as an increase in the value of the investment and income is not recognized in the assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.The amount of deferred tax consolidated income statement. Instead only changes in number of shares held by the Bank are updated and monitored. provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities using tax rates enacted or substantively enacted at the balance sheet date. 4.17.4 Income and expenses from the sale of debts A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which Income and expenses from the sale of debts are recognized in accordance with Decision No. 59/2006/QD-NHNN issued by the asset can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit the SBV promulgating regulations on sale and purchase of debts by credit institutions. From 1 September 2015, income and will be realized. expenses arising from purchase and sale of debts are recognized following Circular No. 09/2015/TT-NHNN providing guidance on the sale of debts of credit institutions and foreign bank branches. 4.20 Fiduciary assets According to Decision No. 59/2006/QD-NHNN and Circular No. 09/2015/TT-NHNN, the difference between the prices of debts Assets held in a fiduciary capacity are not reported in the consolidated financial statements as they are not assets of the Bank. purchased or sold and their book value are recorded as follows: For debts recorded in the consolidated balance sheet: 4.21 Commitments and contingent liabilities -- If the sale price is higher than the book value of the debt, the difference shall be recorded as income of the Bank in the year. At any time, the Bank has outstanding commitments to extend credit. These commitments take the form of approved loans and -- If the sale price is lower than the book value of the debt, the difference shall be used to offset against the indemnity paid by overdraft facilities. The Bank also provides financial guarantees and letters of credit to guarantee the performance of customers an individual or guarantor (in case such individual or guarantor is determined to be responsible for the damage and obliged to third parties. Many of the contingent liabilities and commitments will expire without being advanced in whole or in part. to make indemnity under prevailing regulations), or the compensation paid by the insurer, or use of outstanding provision Therefore the amounts do not represent firm commitment of future cash flows. recognized as expense previously. The remaining balance (if any) shall be recognized as an operating expense of the Bank Off-balance sheet commitments include guarantees, payment acceptances and irrevocable unconditional loan commitments in the year. with specific implementing time. For debts written-off and monitored off-balance sheet, the proceeds from sale of debts shall be recognized as other income The classification of off-balance sheet commitments is made only for the purpose of managing and monitoring the credit quality of the Bank. under the policy applied to debt classification as described in Note 4.6. Book value of debts purchased or sold is the book value of the principal, interest and related financial obligations (if any) of In accordance with Circular 02, no provision is required for off-balance sheet commitments. debts recorded in the consolidated balance sheet or off-balance sheet at the date of debts purchased or sold; or the book value at the date of writing-off of debts; or the book value of debts written-off previously at the date of debts purchased or sold. 4.22 Derivative financial instruments The purchasing or selling price is the sum of consideration to be paid by a debt buyer to a debt seller under a debt purchase or sale contract. 4.22.1 Foreign exchange contracts The Bank involves in currency forward contracts and currency swap contracts to facilitate customers to transfer, modify or 4.17.5 Interest expenses minimize foreign exchange risk or other market risks, and also for the business purpose of the Bank. Interest expenses are recognized in the consolidated income statement on an accrual basis. The currency forward contracts are commitments to settle in cash on a pre-determined future date based on the difference between pre-determined exchange rates, calculated on the notional amount. The currency forward contracts are recognized at nominal value at the transaction date and are revalued for the reporting purpose at the exchange rate at the reporting date. Gains or losses realized or unrealized are recognized in the consolidated income statement.

ANNUAL REPORT 2018 ACHIEVING DREAMS 133 FINANCIAL REPORT | Notes to the consolidated financial statements B05/TCTD-HN

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

4.22 Derivative financial instruments (continued) 4.25 Financial instruments Solely for the purpose of providing disclosures about the significance of financial instruments to the consolidated financial 4.22.1 Foreign exchange contracts (continued) position, consolidated results of operations and the nature and extent of risk arising from financial instruments in compliance The currency swap contracts are commitments to settle in cash on a pre-determined future date based on the difference with Circular No. 210/2009/TT-BTC, the Bank classifies its financial instruments as follows: between pre-determined exchange rates, calculated on the notional principal amount. The discount or premium arising from difference between spot exchange rate at the effective date of the contract and the forward rate is recognized at the effective 4.25.1 Financial assets date of the contract as an asset if positive or a liability if negative in the consolidated balance sheet. This difference will be amortized on a straight-line basis to the consolidated income statement over the term on the contract. Financial assets recognized at fair value through profit or loss A financial asset at fair value through profit or loss is a financial asset that meets either of the following conditions: 4.22.2 Interest rate swap contracts It is considered by management as held-for-trading. A financial asset is considered as held-for-trading if: Commitment value in interest rate swap contracts is not recognized in the consolidated balance sheet. Differences in interest - it is acquired principally for the purpose of selling it in the near term; rate swaps are recognized in the consolidated income statement on an accrual basis. - there is evidence of a recent pattern of short-term profit-taking; or 4.22.3 Commodity futures contracts - a derivative (except for a derivative that is financial guarantee contract or a designated and effective hedging instrument). The Bank provides brokerage services for clients enter into the commodity future contracts, and accordingly the value of those Upon initial recognition, it is designated by the Bank as at fair value through profit or loss. contracts is not recognized in the consolidated balance sheet. Income arising from the brokerage transactions is recognized in the consolidated income statement. Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and a fixed maturity that 4.23 Offsetting the Bank has the positive intention and ability to hold to maturity, other than: Financial assets and financial liabilities are offset and the net amount reported in the consolidated balance sheet if, and only financial assets that, upon initial recognition, were categorized as such recognized at fair value through profit or loss if, there is a currently enforceable legal right to offset financial assets against financial liabilities or vice-versa, and there is an statements; intention to settle on a net basis, or to realize the asset and settle the liability simultaneously. financial assets already categorized as available-for-sale; 4.24 Employee benefits financial assets that meet the definitions of loans and receivables. 4.24.1 Post-employment benefits Loans and receivables Post-employment benefits are paid to retired employees of the Bank by the Social InsuranceAgency which belongs to the Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active Ministry of Labor, Invalids and Social Affairs. The Bank is required to contribute to these post-employment benefits by paying market, other than those: social insurance premium to the Social Insurance Agency at the rate of 17.5% of employees’ basic salary plus other allowances. that the Bank intends to sell immediately or in the near term, which are classified as held-for-trading, and those that the The Bank has no further obligation. entity on initial recognition designates as at fair value through profit or loss; 4.24.2 Voluntary resignation that the Bank, upon initial recognition, designates as available-for-sale; or The Bank has the obligation, under Article 48 of the Vietnam Labor Code No. 10/2012/QH13 effective from 1 May 2013, to pay for which the Bank may not recover substantially all of its initial investment, other than because of credit deterioration, which allowance arising from voluntary resignation of employees, equal to a half of monthly salary for each year of employment up to are classified as available-for-sale. 31 December 2008 plus salary allowances (if any). From 1 January 2009, the average monthly salary used in this calculation is Available-for-sale investments the average monthly salary of the latest six-month period up to the resignation date. Available-for-sale assets are non-derivative financial assets that are designated as available-for-sale or are not classified as: 4.24.3 Unemployment allowance financial assets at fair value through profit or loss; According to Circular No. 28/2015/TT-BLDTBXH on guidelines for Article 52 of the Law on Employment and Decree No. held-to-maturity investments; or 28/2015/ND-CP dated 12 March 2015 of the Government providing guidelines for the Law on Employment in term of unemployment insurance, the Bank is required to contribute to the unemployment insurance at the rate of 1% of salary and loans and receivables. wage fund of unemployment insurance joiners and deduct 1% of monthly salary and wage of each employee to contribute to the unemployment insurance.

ANNUAL REPORT 2018 ACHIEVING DREAMS 135 FINANCIAL REPORT | Notes to the consolidated financial statements B05/TCTD-HN

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 5. CASH AND GOLD

4.25 Financial instruments (continued) 31 DECEMBER 2018 31 DECEMBER 2017 VND MILLION VND MILLION 4.25.2 Financial liabilities Cash on hand in VND 2,121,147 1,948,066 Financial liabilities at fair value through profit or loss Cash on hand in foreign currencies 472,445 374,120 A financial liability at fair value through profit or loss is a financial liability that meets either of the following conditions: Gold on hand 12,875 22,176 It is considered by management as held-for-trading. A financial liability is considered as held-for-trading if: 2,606,467 2,344,362 - it is incurred principally for the purpose of repurchasing it in the near term; - there is evidence of a recent pattern of short-term profit-taking; or - a derivative (except for a derivative that is financial guarantee contract or a designated and effective hedging instrument). Upon initial recognition, it is designated by the Bank as at fair value through profit or loss. 6. BALANCES WITH THE STATE BANK OF VIETNAM Financial liabilities carried at amortized cost Financial liabilities which are not classified as financial liabilities at fair value through profit or loss are classified as financial 31 DECEMBER 2018 31 DECEMBER 2017 liabilities carried at amortized cost. VND MILLION VND MILLION The above described classification of financial instruments is solely for presentation and disclosure purpose and is not intended Balances with the SBV to be a description of how the instruments are measured. Accounting policies for measurement of financial instruments are - In VND 10,554,041 4,277,877 disclosed in other relevant notes. - In foreign currencies 1,442 1,554

4.26 Items which have no balance 10,555,483 4,279,431 Items or balances required by Decision No. 16/2007/QD-NHNN dated 18 April 2007 and Circular No. 49/2014/TT-NHNN dated 31 December 2014 issued by the SBV stipulating the financial reporting mechanism for credit institutions that are not shown in these consolidated financial statements indicate nil balance. Balances with the SBV include settlement and compulsory deposits. 4.27 Segment reports Under the SBV’s regulations on compulsory reserve, banks are permitted to maintain a floating balance for the compulsory A segment is a component determined separately by the Bank which is engaged in providing related products or services reserve requirement (“CRR”). The monthly average balance of the reserve must not be less than the preceding month’s average (business segment) or providing products or services in a particular economic environment (geographical segment), that is balances of deposits in scope multiplied by the CRR rates as follows: subject to risks and returns that are different from those of other segments. CRR RATES For management purpose, the Bank and its subsidiaries have established their operation into the following business segments: Banking activities: Products and services provided to customers include: 31 DECEMBER 2018 31 DECEMBER 2017 - Mobilizing deposits; - Providing credit; Deposits in foreign currencies with term of less than 12 months 8.00% 8.00% - Providing settlement and card services; and Deposits in foreign currencies with term of 12 months and above 6.00% 6.00% - Providing other banking services. Deposits in VND with term of less than 12 months 3.00% 3.00% Asset management activities; Deposits in VND with term of 12 months and above 1.00% 1.00% Securities trading activities; Fund management activities; and Other finance activities. The Bank and its subsidiaries’ principal activities are mainly conducted within Vietnam territory. Therefore, the Bank and its subsidiaries’ risks and returns are not impacted by the Bank’s operations that are taken place in different locations. Hence, the Bank’s management is of the view that the Bank has only one geographical segment. Accordingly, the presentation of geographical segment information is not required.

ANNUAL REPORT 2018 ACHIEVING DREAMS 137 FINANCIAL REPORT | Notes to the consolidated financial statements B05/TCTD-HN

6. BALANCES WITH THE STATE BANK OF VIETNAM (continued) 7. BALANCES WITH AND CREDIT GRANTING TO OTHER CREDIT INSTITUTIONS (continued) Interest rates per annum at the reporting date are as follows: 7.2 Credit granting to other credit institutions

31 DECEMBER 2018 31 DECEMBER 2017 31 DECEMBER 2018 31 DECEMBER 2017 VND MILLION VND MILLION Deposits in VND In VND 9,589,218 11,146,941 Compulsory deposits 1.20% 1.20% In foreign currencies 1,800,633 2,765,812 Amount over compulsory deposits 0.00% 0.00% 11,389,851 13,912,753 Deposits in foreign currencies Compulsory deposits 0.00% 0.00% Amount over compulsory deposits 0.05% 0.05% Interest rates per annum of credit granting to other credit institutions at the reporting date are as follows:

31 DECEMBER 2018 31 DECEMBER 2017

7. BALANCES WITH AND CREDIT GRANTING TO OTHER CREDIT INSTITUTIONS In VND 3.00% - 7.60% 3.20% - 5.40% 7.1 Balances with other credit institutions In foreign currencies 2.70% - 4.18% 2.40% - 3.40%

31 DECEMBER 2018 31 DECEMBER 2017 VND MILLION VND MILLION Current accounts 8,956,056 7,108,306 7.3 Credit quality for balances with and credit granting to other credit institutions - In VND 5,042,183 1,359,152 - In foreign currencies 3,913,873 5,749,154 Analysis of credit quality for balances (excluding current accounts) with and credit granting to other credit institutions at the reporting date are as follows: Term deposits 15,213,456 9,134,748 - In VND 6,258,483 7,071,648 31 DECEMBER 2018 31 DECEMBER 2017 VND MILLION VND MILLION - In foreign currencies 8,954,973 2,063,100 Current 26,603,307 23,047,501 24,169,512 16,243,054

Interest rates per annum of balances with other credit institutions at the reporting date are as follows: 8. SECURITIES HELD-FOR-TRADING

31 DECEMBER 2018 31 DECEMBER 2017 31 DECEMBER 2018 31 DECEMBER 2017 VND MILLION VND MILLION Current accounts Debt securities 7,583,090 6,775,118 - In VND 0.00% - 0.20% 0.30% Government bonds 3,723,271 3,822,161 - In foreign currencies 0.00% 0.00% Bonds issued by local credit institutions 2,724,819 116,614 In which: Bonds guaranteed by the Government for settlement 1,711,904 116,614 Term deposits Bonds issued by local economic entities 1,135,000 2,836,343 - In VND 4.40% - 9.60% 1.60% - 9.60% - In foreign currencies 2.00% - 3.40% 1.55% - 2.10% Provision for securities held-for-trading (10,861) (17,024) Provision for credit risk of unlisted corporate bonds (10,544) (14,246) Provision for diminution of securities held-for-trading (317) (2,778)

7,572,229 6,758,094

ANNUAL REPORT 2018 ACHIEVING DREAMS 139 FINANCIAL REPORT | Notes to the consolidated financial statements B05/TCTD-HN

8. SECURITIES HELD-FOR-TRADING (continued) 9. LOANS TO CUSTOMERS (continued) Movements in provision for securities held-for-trading for year ended 31 December 2018 are as follows: Interest rates per annum of loans to customers at the reporting date are as follows:

GENERAL PROVISION FOR 31 DECEMBER 2018 31 DECEMBER 2017 PROVISION DIMINUTION TOTAL VND MILLION VND MILLION VND MILLION Loans to customers in VND 0.00% - 19.45% 0.00% - 19.35% As at 1 January 2018 14,246 2,778 17,024 Loans to customers in foreign currencies 2.23% - 6.59% 1.70% - 6.75% Provision reversed for the year (Note 29) (3,702) (2,461) (6,163)

Balance as at 31 December 2018 10,544 317 10,861 9.1 Loan portfolio by quality

31 DECEMBER 2018 31 DECEMBER 2017 Movements in provision for securities held-for-trading for year ended 31 December 2017 are as follows: VND MILLION % VND MILLION % GENERAL PROVISION FOR Current 154,548,122 96.63 155,931,825 96.94 PROVISION DIMINUTION TOTAL Special mention 2,587,646 1.62 2,333,286 1.45 VND MILLION VND MILLION VND MILLION Substandard 237,758 0.15 575,397 0.36 As at 1 January 2017 11,285 - 11,285 Doubtful 862,510 0.54 455,567 0.28 Provision made for the year (Note 29) 2,961 2,778 5,739 Loss 1,703,181 1.06 1,552,962 0.97

Balance as at 31 December 2017 14,246 2,778 17,024 159,939,217 100.00 160,849,037 100.00

In accordance with the Bank's report to the SBV as at 31 December 2018, the outstanding restructured loans which are The listing status of securities held-for-trading is as follows: maintained in the same group as before the restructuring in accordance with Clause 3a, Article 10 of Circular 02/2013/TT-NHNN and Decision 780/QD-NHNN are as follows: 31 DECEMBER 2018 31 DECEMBER 2017 VND MILLION VND MILLION 31 DECEMBER 2018 31 DECEMBER 2017 Debt securities VND MILLION VND MILLION - Listed 5,435,175 4,176,174 Rescheduled or extended portions of loans maintained - Unlisted 2,147,915 2,598,944 in Group 1 (Current) 18,305 75,724 Rescheduled or extended portions of loans maintained 7,583,090 6,775,118 in Group 2 (Special mention) 582 649

18,887 76,373 9. LOANS TO CUSTOMERS

31 DECEMBER 2018 31 DECEMBER 2017 9.2 Loan portfolio by term VND MILLION VND MILLION Loans to local economic entities and individuals 158,971,627 158,497,737 31 DECEMBER 2018 31 DECEMBER 2017 Discounted bills and valuable papers 361,280 1,983,527 VND MILLION % VND MILLION % Loans financed by trusted funds 472,609 358,449 Payments on behalf of customers 94,473 2,166 Short term 60,381,950 37.76 63,412,628 39.42 Loans to foreign economic entities and individuals 39,228 7,158 Medium term 36,774,904 22.99 42,896,541 26.67 Long term 62,782,363 39.25 54,539,868 33.91 159,939,217 160,849,037 159,939,217 100.00 160,849,037 100.00

ANNUAL REPORT 2018 ACHIEVING DREAMS 141 FINANCIAL REPORT | Notes to the consolidated financial statements B05/TCTD-HN

9. LOANS TO CUSTOMERS (continued) 10. PROVISION FOR LOANS TO CUSTOMERS 9.3 Loan portfolio by industrial sectors Provision for loans to customers are as follows:

31 DECEMBER 2018 31 DECEMBER 2017 31 DECEMBER 2018 31 DECEMBER 2017 VND MILLION VND MILLION

VND MILLION % VND MILLION % General provision 1,225,265 1,061,081 Loans to economic entities 87,555,538 54.74 96,071,606 59.73 Specific provision 1,159,849 823,500 Agriculture, forestry and aquaculture 260,998 0.16 301,494 0.19 Mining and quarrying 1,590,134 0.99 1,271,854 0.79 2,385,114 1,884,581 Manufacturing and processing 19,076,386 11.94 20,070,075 12.48 Electricity, petroleum and hot water manufacturing and distributing 2,409,681 1.51 1,858,933 1.16 Movements in provision for loans to customers for the year ended 31 December 2018 are as follows: Water supply; waste and wastewater management and processing 23,526 0.01 88,955 0.06 Construction 8,095,573 5.06 6,100,546 3.79 SPECIFIC PROVISION GENERAL PROVISION TOTAL Wholesale and retail trade; repair of motor vehicles, motorcycles 21,171,980 13.24 14,726,910 9.16 VND MILLION VND MILLION VND MILLION Transportation and warehousing 2,853,511 1.78 3,257,263 2.03 As at 1 January 2018 823,500 1,061,081 1,884,581 Accommodation and foods services 927,745 0.58 5,571,892 3.46 Provision made for the year (Note 34) 2,889,508 164,184 3,053,692 Information and communication 147,061 0.09 1,081,104 0.67 Use of provision (2,553,159) - (2,553,159) Banking, finance and insurance 9,468,647 5.92 9,304,078 5.78 Real estates 13,554,781 8.47 20,326,233 12.64 As at 31 December 2018 1,159,849 1,225,265 2,385,114 Science and technology 791,378 0.49 767,880 0.48 Administration activities and supportive services 201,007 0.13 1,868,575 1.16 Movements in provision for loans to customers for the year ended 31 December 2017 are as follows: Education and training 154,973 0.10 71,687 0.04 Health care and social work 37,304 0.02 84,188 0.05 SPECIFIC PROVISION GENERAL PROVISION TOTAL Arts and entertainment 127,065 0.08 15,818 0.01 VND MILLION VND MILLION VND MILLION Other services 6,568,616 4.11 9,267,660 5.76 As at 1 January 2017 494,120 1,001,355 1,495,475 Household businesses 95,172 0.06 36,461 0.02 Provision made for the year (Note 34) 2,077,770 59,726 2,137,496 Loans to individuals 72,383,679 45.26 64,777,431 40.27 Use of provision (1,748,390) - (1,748,390) 159,939,217 100.00 160,849,037 100.00 As at 31 December 2017 823,500 1,061,081 1,884,581

9.4 Loan portfolio by ownership 11. DEBTS PURCHASED 31 DECEMBER 2018 31 DECEMBER 2017 (RECLASSIFIED) ( ) * 31 DECEMBER 2018 31 DECEMBER 2017 VND MILLION % VND MILLION % VND MILLION VND MILLION Loans to economic entities 87,555,538 54.74 96,071,606 59.73 Debts purchased in VND 1,682 12,092 State-owned limited companies 6,902,256 4.32 8,817,905 5.49 Provision for debts purchased (1,682) (1,760) Other limited companies 34,575,025 21.62 32,494,895 20.20 Joint-stock state-owned companies 76,316 0.05 63,292 0.04 - 10,332 Other joint-stock companies 43,234,058 27.01 51,326,364 31.91 Private companies and partnership companies 322,237 0.20 401,537 0.25 Breakdown of principals and interest of debts purchased is as follows: Foreign-invested companies 2,039,895 1.28 2,076,046 1.29 Cooperatives and cooperative unions 25,637 0.02 70,592 0.04 31 DECEMBER 2018 31 DECEMBER 2017 Administration units, Party, unions, associations 380,055 0.24 820,739 0.51 VND MILLION VND MILLION Others 59 0.00 236 0.00 Debts purchased in VND - 49,516 Loans to individuals 72,383,679 45.26 64,777,431 40.27 Provision for debts purchased 1,682 23,619

159,939,217 100.00 160,849,037 100.00 1,682 73,135

ANNUAL REPORT 2018 (*) Reclassifying some loans to the appropriate type of ownership ACHIEVING DREAMS 143 FINANCIAL REPORT | Notes to the consolidated financial statements B05/TCTD-HN

11. DEBTS PURCHASED (continued) 12. INVESTMENT SECURITIES (continued) Movements in provision for debts purchased are as follows: 12.2 Held-to-maturity securities 2018 2017 VND MILLION VND MILLION 31 DECEMBER 2018 31 DECEMBER 2017 VND MILLION VND MILLION Opening balance 1,760 973 Debt securities 20,236,200 5,715,484 Provision (reversed)/made for the year (Note 34) (78) 787 Government bonds - 569,283 Bonds issued by other local credit institutions 30,000 2,030,001 Closing balance 1,682 1,760 In which: Bonds guaranteed by the Government for settlement 30,000 30,001 Bonds issued by local economic entities 20,206,200 3,116,200 Provision for held-to-maturity securities (159,422) (34,547) 12. INVESTMENT SECURITIES Provision for credit risk of unlisted corporate bonds (159,422) (34,547) Investment securities at the reporting date include: 20,076,778 5,680,937 31 DECEMBER 2018 31 DECEMBER 2017 VND MILLION VND MILLION Available-for-sale securities 66,625,261 46,018,398 12.3 Analysis of credit quality - Debt securities 66,625,257 45,798,398 Analysis of credit quality for securities which are classified as credit risk bearing assets is as follows: - Equity securities 4 220,000 Held-to-maturity securities 20,236,200 5,715,484 31 DECEMBER 2018 31 DECEMBER 2017 - Debt securities 20,236,200 5,715,484 VND MILLION VND MILLION Provision for investment securities (349,113) (191,398) Current 61,052,464 24,110,635 - Provision for available-for-sale securities (189,691) (156,851) - Provision for held-to-maturity securities (159,422) (34,547) 12.4 Provision for investment securities 86,512,348 51,542,484 31 DECEMBER 2018 31 DECEMBER 2017 VND MILLION VND MILLION 12.1 Available-for-sale securities Provision for credit risk of unlisted corporate bonds 345,316 175,582 Provision for diminution of investment Securities 3,797 15,816 31 DECEMBER 2018 31 DECEMBER 2017 VND MILLION VND MILLION 349,113 191,398 Debt securities 66,625,257 45,798,398 Government bonds 8,793,593 13,048,507 Bonds issued by other local credit institutions 19,516,788 17,010,279 In which: Bonds guaranteed by the Government for settlement 11,114,162 12,459,709 Movements in provision for investment securities for the year ended 31 December 2018 are as follows: Bonds issued by local economic entities 38,314,876 15,739,612 Equity securities 4 220,000 GENERAL PROVISION FOR Equity security issued by local economic entities 4 220,000 PROVISION DIMINUTION TOTAL Provision for available-for-sale securities (189,691) (156,851) VND MILLION VND MILLION VND MILLION Provision for credit risk of unlisted corporate bonds (185,894) (141,035) As at 1 January 2018 175,582 15,816 191,398 Provision for diminution of available-for-sale securities (3,797) (15,816) Provision made/(reversed) for the year (Note 30) 169,734 (12,019) 157,715

66,435,570 45,861,547 As at 31 December 2018 345,316 3,797 349,113

ANNUAL REPORT 2018 ACHIEVING DREAMS 145 FINANCIAL REPORT | Notes to the consolidated financial statements B05/TCTD-HN

12. INVESTMENT SECURITIES (continued) 13. LONG-TERM INVESTMENTS (continued)

12.4 Provision for investment securities (continued) 13.2 Provision for long-term investments Movements in provision for investment securities for the year ended 31 December 2017 are as follows: 2018 2017 VND MILLION VND MILLION GENERAL PROVISION FOR PROVISION DIMINUTION TOTAL Opening balance 2,401 4,926 VND MILLION VND MILLION VND MILLION Provision reversed for the year (Note 33) (1,741) (2,525) As at 1 January 2017 93,018 - 93,018 Provision made for the year (Note 30) 82,564 15,816 98,380 Closing balance 660 2,401

As at 31 December 2017 175,582 15,816 191,398 14. FIXED ASSETS

Movements in provision for VAMC bonds are as follows: 14.1 Tangible fixed assets Movements in tangible fixed assets for the year ended 31 December 2018 are as follows: VND million 2018 2017 VND MILLION VND MILLION BUILDINGS MACHINES Opening balance - 1,367,540 & BUILDING AND Provision made for the year (Note 34) - 1,663,766 IMPROVEMENTS EQUIPMENT VEHICLES OTHERS TOTAL Use of provision - (3,031,306) Cost Closing balance - - As at 1 January 2018 336,742 1,115,220 148,850 2,144 1,602,956 Addition 117,122 198,398 10,795 - 326,315 Transfer from advances for 13. LONG-TERM INVESTMENTS construction in progress 102,790 3,711 6,920 - 113,421 Other increases 5,681 - - - 5,681 Disposals (106,289) (98,623) - (402) (205,314) 31 DECEMBER 2018 31 DECEMBER 2017 VND MILLION VND MILLION Other decreases (4,643) (905) (2,102) (137) (7,787) Other long-term investments - cost 12,883 12,084 Provision for long-term investments (660) (2,401) As at 31 December 2018 451,403 1,217,801 164,463 1,605 1,835,272

12,223 9,683 Accumulated depreciation As at 1 January 2018 32,940 907,879 90,571 1,777 1,033,167 Charge for the year 13,557 93,492 13,939 156 121,144 13.1 Other long-term investments Other increases 1,338 - - - 1,338 Disposals (10,719) (94,142) - (396) (105,257) 31 DECEMBER 2018 31 DECEMBER 2017 Other decreases (10) (887) (2,102) (137) (3,136)

OWNERSHIP AT COST OWNERSHIP AT COST As at 31 December 2018 37,106 906,342 102,408 1,400 1,047,256 % VND MILLION % VND MILLION Vietnam Airlines Corporation 0.00 417 0.00 417 Net book value Vietnam Real Estate Exchange JSC 11.00 660 11.00 660 As at 1 January 2018 303,802 207,341 58,279 367 569,789 PCB Investment JSC 6.64 7,962 6.64 7,962 As at 31 December 2018 414,297 311,459 62,055 205 788,016 Society for Worldwide Interbank Financial Telecommunication 0.00 1,804 0.00 1,005 Banking Operations Training and Advisory JSC 10.93 1,040 9.88 1,040 Vietnam National Financial Switching JSC 0.42 1,000 0.42 1,000

12,883 12,084

ANNUAL REPORT 2018 ACHIEVING DREAMS 147 FINANCIAL REPORT | Notes to the consolidated financial statements B05/TCTD-HN

14. FIXED ASSETS (continued) 14. FIXED ASSETS (continued)

14.1 Tangible fixed assets (continued) 14.2 Intangible fixed assets Movements in tangible fixed assets for the year ended 31 December 2017 are as follows: VND million Movements in intangible fixed assets for the year ended 31 December 2018 are as follows: VND million

BUILDINGS MACHINES DEFINITE & BUILDING AND COMPUTER LAND USE IMPROVEMENTS EQUIPMENT VEHICLES OTHERS TOTAL SOFTWARE RIGHTS OTHERS TOTAL

Cost Cost As at 1 January 2017 241,190 1,121,608 153,345 2,144 1,518,287 As at 1 January 2018 828,990 616,223 4,403 1,449,616 Addition 95,552 29,521 8,879 - 133,952 Addition 52,335 22,924 - 75,259 Disposals - (33,091) (13,374) - (46,465) Transfer from advances for construction in progress 7,888 4,050 - 11,938 Other decreases - (2,818) - - (2,818) Other increases - 4,629 - 4,629 Disposals (339) - (42) (381) As at 31 December 2017 336,742 1,115,220 148,850 2,144 1,602,956 Other decreases (1,024) - - (1,024)

Accumulated depreciation As at 31 December 2018 887,850 647,826 4,361 1,540,037 As at 1 January 2017 21,860 833,454 84,546 1,591 941,451 Charge for the year 10,673 108,885 19,228 186 138,972 Accumulated amortization Disposals - (32,246) (13,374) - (45,620) As at 1 January 2018 487,127 18,447 2,385 507,959 Other movements 407 (2,214) 171 - (1,636) Charge for the year 90,345 12,120 78 102,543 Disposals (243) - (42) (285) As at 31 December 2017 32,940 907,879 90,571 1,777 1,033,167 Other decreases (760) - - (760)

Net book value As at 31 December 2018 576,469 30,567 2,421 609,457 As at 1 January 2017 219,330 288,154 68,799 553 576,836 As at 31 December 2017 303,802 207,341 58,279 367 569,789 Net book value As at 1 January 2018 341,863 597,776 2,018 941,657 As at 31 December 2018 311,381 617,259 1,940 930,580

Additional information of tangible fixed assets:

31 DECEMBER 2018 31 DECEMBER 2017 VND MILLION VND MILLION Cost of tangible fixed assets which have been fully depreciated but still in active use 700,900 401,835

ANNUAL REPORT 2018 ACHIEVING DREAMS 149 FINANCIAL REPORT | Notes to the consolidated financial statements B05/TCTD-HN

14. FIXED ASSETS (continued) 15. INVESTMENT PROPERTY Movements in investment properties for the year ended in 31 December 2018 are as follows: 14.2 Intangible fixed assets (continued) BUILDING Movements in intangible fixed assets for the year ended 31 December 2017 are as follows: VND million VND MILLION Cost DEFINITE As at 1 January 2018 1,442,827 COMPUTER LAND USE Other decreases (7,128) SOFTWARE RIGHTS OTHERS TOTAL As at 31 December 2018 1,435,699 Cost As at 1 January 2017 802,879 615,768 4,403 1,423,050 Accumulated depreciation Addition 41,408 455 - 41,863 As at 1 January 2018 204,797 Disposals (15,297) - - (15,297) Charge for the year 35,916 Other decreases (1,338) As at 31 December 2017 828,990 616,223 4,403 1,449,616 As at 31 December 2018 239,375 Accumulated amortization As at 1 January 2017 408,309 6,548 2,307 417,164 Net book value Charge for the year 94,115 11,899 78 106,092 As at 1 January 2018 1,238,030 Disposals (15,297) - - (15,297) As at 31 December 2018 1,196,324

As at 31 December 2017 487,127 18,447 2,385 507,959 Movements in investment properties for the year ended 31 December 2017 are as follows: Net book value BUILDING As at 1 January 2017 394,570 609,220 2,096 1,005,886 VND MILLION As at 31 December 2017 341,863 597,776 2,018 941,657 Cost As at 1 January 2017 1,447,256 Disposals (4,429) Additional information on intangible fixed assets: As at 31 December 2017 1,442,827 31 DECEMBER 2018 31 DECEMBER 2017 VND MILLION VND MILLION Accumulated depreciation Cost of intangible fixed assets which have been fully amortized As at 1 January 2017 168,720 but still in active use 203,520 175,684 Charge for the year 36,077

As at 31 December 2017 204,797

Net book value As at 1 January 2017 1,278,536 As at 31 December 2017 1,238,030

Investment property mainly includes Techcombank Building with cost and accumulated depreciation amounting to VND 1,435,699 million and VND 239,375 million respectively, as at 31 December 2018. The Bank does not present its investment property at fair value for the following reason: The building is mostly used as the Bank and its subsidiaries’ office, and the subsidiary’s rental revenue and the Bank’s rental expense related to the building have been eliminated in the consolidated financial statements. With the building being utilized internally, the Bank is more concerned about the building’s historical cost and its useful life (presented in the consolidated financial statements) rather than the building’s fair value.

ANNUAL REPORT 2018 ACHIEVING DREAMS 151 FINANCIAL REPORT | Notes to the consolidated financial statements B05/TCTD-HN

16. OTHER ASSETS 16. OTHER ASSETS (continued) (vii) Goodwill of the Bank was derived from the acquisition of Technological and Commercial Finance Company Limited (“TCF”) 31 DECEMBER 2018 31 DECEMBER 2017 VND MILLION VND MILLION in 2015. Changes in goodwill for the year are presented as follows:

Other receivables 11,322,256 9,417,589 2018 2017 Internal receivables 76,332 25,774 VND MILLION VND MILLION 11,245,924 9,391,815 External receivables Total goodwill 49,411 49,411 - Deposits for office rental (i) 106,861 395,207 377,467 2,352,839 - Deposit for purchase of office (ii) Amortization periods 5 years 5 years - Receivables related to Interest Subsidy Program 20,006 21,148 - Opening balance of unamortized goodwill 19,765 29,647 - Prepaid to suppliers 90,734 55,040 - Deposits for gold, commodity and foreign currencies trading in future markets 77,349 45,586 Goodwill decrease for the year - Advances for fixed asset purchase and construction in progress (iii) 3,459,747 946,456 - Amortization for the year (Note 33) - (9,882) - Receivables from loans sold contract (iv) - 1,862,038 - Goodwill decrease due to disposal of the subsidiary (19,765) - - Receivables from deferred letters of credit (v) 4,240,462 2,789,982 2,259,597 71,266 - Receivables from other credit institutions Total closing balance of unamortized goodwill - 19,765 - Receivables from bond principal and interest due on holiday 231,486 368,300 - Other external receivables 382,215 483,953

Interest and fee receivables 5,737,907 3,876,528 (viii) Provision for other assets, comprising of provision for inventories, overdue receivables, receivables from deferred letters of credit, receivables from loans sold and other credit risk bearing assets, is as follows: Deferred corporate income tax (vi) - 1,773 31 DECEMBER 2018 31 DECEMBER 2017 Other assets 717,481 557,642 VND MILLION VND MILLION - Materials 10,735 24,475 Provision for credit risk 34,950 1,242,318 - Prepaid expenses 706,746 513,402 - General provision 34,906 22,127 - Goodwill (vii) - 19,765 - Specific provision 44 1,220,191 Other provision 40,889 69,251 Provision for other assets (viii) (75,839) (1,311,569) 75,839 1,311,569 17,701,805 12,541,963

(i) These are deposits for office rental of the Bank’s headquarter and branches. Movements in provision for other assets during the year are as follows: (ii) These are deposits to purchase the Bank’s offices in Hanoi and Ho Chi Minh City. 2018 2017 (iii) These are payments to purchase fixed assets and construct the Bank’s offices. In which, there is an advance to purchase VND MILLION VND MILLION a real-estate at Ho Chi Minh City. On 16 January 2019, the Bank completed the transfer of ownership and recorded a new Opening balance 1,311,569 1,504,323 fixed asset. Provision reversed for outstanding receivables from loans sold (Note 34) (1,220,903) (193,809) (iv) Receivables from loans sold are outstanding receivables from licensed debts purchasing companies. General provision made for receivables from deferred letters of credit (Note 34) 12,675 986 (v) Receivables from deferred letters of credit are receivables from importers who are the Bank’s customers for usance payable Provision made for other assets bearing credit risk (Note 34) 859 - at sight imported letter of credit. Accordingly, the Bank or counterparty bank made payment to the beneficiaries (exporters) Provision made for other assets (Note 33) 44 317 of these letters of credit prior to their matured dates and earned fees for advanced settlement services. Use of provision (44) - (vi) Movement of deferred income tax assets during the year is as follows: VND million Provision reversed for inventories (Note 33) (1,498) (248) Effects of consolidation (26,863) - OPENING BALANCE REVERSAL CLOSING BALANCE Closing balance 75,839 1,311,569 Deferred income tax assets related to temporary tax differences 1,773 (1,773) -

ANNUAL REPORT 2018 ACHIEVING DREAMS 153 FINANCIAL REPORT | Notes to the consolidated financial statements B05/TCTD-HN

17. DUE FROM THE GOVERNMENT AND THE STATE BANK OF VIETNAM 19. DEPOSITS FROM CUSTOMERS

31 DECEMBER 2018 31 DECEMBER 2017 19.1 Analysis by category of deposits VND MILLION VND MILLION Deposits from the State Treasury of Vietnam 2,000,120 1,000,000 31 DECEMBER 2018 31 DECEMBER 2017 Borrowings from the State Bank of Vietnam 4,024,907 - VND MILLION VND MILLION Current accounts 54,612,613 38,234,560 6,025,027 1,000,000 Current accounts in VND 48,125,562 34,061,915 Current accounts in foreign currencies 6,487,051 4,172,645 The deposits from the State Treasury of Vietnam as at 31 December 2018 have terms of two months and interest rate per annum of 4.40%. The borrowings from the State Bank of Vietnam at 31 December 2018 have terms from 1 week to 2 weeks and Term deposits 143,613,379 129,727,778 interest rate per annum of 4.75%. Term deposits in VND 136,635,672 121,993,210 Term deposits in foreign currencies 6,977,707 7,734,568 18. DEPOSITS AND BORROWINGS FROM OTHER FINANCIAL INSTITUTIONS AND CREDIT INSTITUTIONS Marginal deposits 3,188,540 3,008,495 18.1 Deposits from other financial institutions and credit institutions Marginal deposits in VND 3,080,503 2,843,993 Marginal deposits in foreign currencies 108,037 164,502 31 DECEMBER 2018 31 DECEMBER 2017 VND MILLION VND MILLION 201,414,532 170,970,833 Demand deposits 5,037,660 1,032,265 - In VND 5,036,111 1,031,740 Interest rates per annum of deposits from customers at the reporting date are as follows: - In foreign currencies 1,549 525 Term deposits 23,935,795 20,242,110 31 DECEMBER 2018 31 DECEMBER 2017 - In VND 22,057,000 15,999,300 - In foreign currencies 1,878,795 4,242,810 Demand deposits in VND 0.00% - 0.80% 0.00% - 0.80% Demand deposits in foreign currencies 0.00% - 0.10% 0.00% - 0.10% 28,973,455 21,274,375 Term deposits in VND 0.30% - 7.60% 0.30% - 11.94% Term deposits in foreign currencies 0.00% - 0.60% 0.00% - 0.75% Interest rates per annum of deposits from other financial institutions and credit institutions at the reporting date are as follows:

31 DECEMBER 2018 31 DECEMBER 2017 19.2 Analysis of deposits portfolio by ownership In VND 3.50% - 5.50% 1.00% - 7.00% In foreign currencies 2.42% - 3.40% 1.60% - 2.20% 31 DECEMBER 2018 31 DECEMBER 2017

VND MILLION % VND MILLION % 18.2 Borrowings from other financial institutions and credit institutions Deposits from organizations 59,358,072 29.47 49,926,989 29.20 State-owned limited companies 3,720,237 1.85 2,658,251 1.55 31 DECEMBER 2018 31 DECEMBER 2017 Other limited companies 25,735,319 12.78 19,461,912 11.38 VND MILLION VND MILLION Joint-stock state-owned companies 126,038 0.06 132,206 0.08 In VND 1,839,199 19,321,553 Other joint-stock companies 23,263,620 11.55 23,100,099 13.51 In foreign currencies 5,612,906 5,727,897 Private enterprises and partnership companies 54,135 0.03 99,386 0.06 Foreign-invested enterprises 2,898,416 1.44 2,683,171 1.57 7,452,105 25,049,450 Cooperatives and cooperative unions 6,269 0.00 3,010 0.00 Administration units, Party, unions, associations 1,882,692 0.93 1,227,830 0.72 Interest rates per annum of borrowings from other financial institutions and credit institutions at the reporting date are as follows: Others 1,671,346 0.83 561,124 0.33

31 DECEMBER 2018 31 DECEMBER 2017 Deposits from individuals 142,056,460 70.53 121,043,844 70.80 In VND 3.50% - 8.00% 3.50% - 6.50% In foreign currencies 0.70% - 4.17% 0.75% - 5.40% 201,414,532 100.00 170,970,833 100.00

ANNUAL REPORT 2018 ACHIEVING DREAMS 155 FINANCIAL REPORT | Notes to the consolidated financial statements B05/TCTD-HN

20. DERIVATIVES AND OTHER FINANCIAL ASSETS/(LIABILITIES) VND million 22. OTHER LIABILITIES

31 DECEMBER 2018 31 DECEMBER 2017 31 DECEMBER 2018 31 DECEMBER 2017 VND MILLION VND MILLION TOTAL CONTRACT TOTAL TOTAL CONTRACT TOTAL Accrued interest and fee payables 3,424,068 2,764,162 NOMINAL VALUE CARRYING VALUE NOMINAL VALUE CARRYING VALUE Other liabilities 8,428,777 3,762,845 Foreign exchange Internal payables 12,582 13,465 forward contracts 64,416,164 (64,693) 26,744,367 144,445 External payables 8,416,195 3,749,380 Foreign exchange - Remittance payables 5,059,137 927,230 currency swap contracts 75,166,996 (191,614) 103,970,254 (173,684) - Payables to employees 686,126 615,387 Foreign exchange - Taxes payable (i) 980,062 928,393 interest rate swap contracts 11,386,132 (54,006) 5,148,488 65,531 - Deferred income 119,832 9,141 - Advance from customers 1,798 52,595 150,969,292 (310,313) 135,863,109 36,292 - Other accrued expenses 401,467 237,113 - Salary accrued expenses 441,414 368,949 - Payables relating to marketing and promotion 1,965 20,135 Total contract nominal value is translated at the contractual exchange rates. - Bonus and welfare funds 7,062 2,680 - Disbursements awaiting settlement 19,577 6,990 Total net carrying value is translated at the foreign exchange rates as at the reporting date. - Amount awaiting settlement 137,805 176,308 - Deferred proceeds from the sale of collaterals 83,833 156,580 - Deposits of customers awaiting settlement 85,103 105,583 21. VALUABLE PAPERS ISSUED - Other payables 391,014 142,296 Valuable papers issued categorized by terms are as follows: 11,852,845 6,527,007 31 DECEMBER 2018 31 DECEMBER 2017 (i) Taxes payable VND MILLION VND MILLION Up to 12 months (i) 6 6 31 DECEMBER 2018 31 DECEMBER 2017 From 12 months to 5 years (ii) 9,277,953 11,039,964 VND MILLION VND MILLION Over 5 years (iii) 3,900,000 6,600,000 Value added tax (“VAT”) 16,080 10,406 Corporate income tax (“CIT”) 915,054 866,900 13,177,959 17,639,970 Other taxes 48,928 51,087

980,062 928,393 Refer to Note 23 for details of tax payables. (i) These certificates of deposits bear interest rate of 0.00% per annum (2017: 0.00%). (ii) These bonds and certificates of deposits bear interest rates ranging from 5.50% to 8.20% per annum (2017: 5.60% to 8.20%). (iii) These bonds bear interest rates ranging from 8.20% to 8.80% per annum (2017: 7.73% to 8.80%). 23. OBLIGATIONS TO THE STATE BUDGET VND million

INCURRED DURING THE YEAR OPENING CLOSING BALANCE PAYABLES ADJUSTMENT PAID BALANCE

Value added tax 10,406 179,588 2 (173,916) 16,080 Corporate income tax 866,900 2,185,246 3,666 (2,140,758) 915,054 Other taxes 51,087 546,669 (344) (548,484) 48,928

Taxes payable 928,393 2,911,503 3,324 (2,863,158) 980,062

ANNUAL REPORT 2018 ACHIEVING DREAMS 157 FINANCIAL REPORT | Notes to the consolidated financial statements B05/TCTD-HN

23. OBLIGATIONS TO THE STATE BUDGET (continued) 24. CAPITAL AND RESERVES

23.1 Current corporate income tax 24.1 Statement of changes in equity Current corporate income tax payables are determined based on taxable income of the current year. Taxable income may be For the year ended 31 December 2018: VND million different from the amount reported in the consolidated income statement since taxable income excludes income which are eligible for tax or expenses which are subtracted in prior years due to the differences between the Bank’s accounting policies CHARTER and the current tax policies, and also excludes tax-exempted income and non-deductible expenses. The current corporate CAPITAL SUPPLE- NON-CON- income tax payable of the Bank is calculated based on the statutory tax rates applicable at the end of the year. CHARTER SHARES TREASURY MENTARY FINANCIAL OTHER TOTAL RETAINED TROLLING The tax returns filed by the Bank are subject to examination by the tax authorities.As the application of tax laws and regulations CAPITAL PREMIUM SHARES RESERVE RESERVE RESERVES RESERVES EARNINGS INTERESTS TOTAL is susceptible to varying interpretations, the amounts reported in the consolidated financial statements could change at a later date upon final determination by the tax authorities. As at 1 January 2018 11,655,307 2,165,058 (4,043,249) 3,983,752 2,172,702 474 6,156,928 10,996,701 - 26,930,745 Capital increase 23,310,615 (13,986,369) - (3,496,592) - - (3,496,592) (5,827,654) 58,201 58,201 Provision for current corporate income tax for the year ended 31 December 2018 is computed as follows: Net profit for the year ------8,462,775 11,222 8,473,997 Sale of treasury shares - 12,297,928 4,043,249 ------16,341,177 2018 2017 Appropriation to reserves - - - 408,270 808,721 - 1,216,991 (1,216,885) (106) - VND MILLION VND MILLION Appropriation to bonus Profit before tax 10,661,016 8,036,297 and welfare fund ------(20,000) - (20,000) Minus: Utilization of reserves - - - - (59) - (59) - - (59) - Non-taxable dividend income (275) (334) Other movements - - - (3,141) (6,281) - (9,422) 8,066 - (1,356) - Income transferred from previous year (144,636) - - Other non-taxable income - (682) As at 31 December 2018 34,965,922 476,617 - 892,289 2,975,083 474 3,867,846 12,403,003 69,317 51,782,705 - Temporary differences arising from the previous year - (129,430) - Prior year non-deductible expense reverted or deductible this year (190,213) (268,418) Add: For the year ended 31 December 2017: VND million - Non-deductible expenses 548,123 239,978 - Adjustment to profit for consolidation purpose 12,304 27,833 RESERVE TO SUP- Taxable corporate income 10,886,319 7,905,244 CHARTER SHARES TREASURY PLEMENT FINANCIAL OTHER TOTAL RETAINED - Corporate income tax expense calculated on taxable income of current year 2,177,264 1,581,049 CAPITAL PREMIUM SHARES CAPITAL RESERVE RESERVES RESERVES EARNINGS TOTAL - Adjustment for under provision of corporate income tax expense in prior year 7,982 (16,233) As at 1 January 2017 8,878,079 - - 3,658,696 1,560,012 474 5,219,182 5,489,215 19,586,476 Current corporate income tax expense for the year 2,185,246 1,564,816 New shares issuance 700,000 1,399,999 ------2,099,999 Capital increase from convertible bonds 2,077,228 765,059 ------2,842,287 Opening corporate income tax payable 866,900 336,613 Net profit for the year ------6,445,595 6,445,595 Corporate income tax adjusted for prior years 3,666 - Buy treasury shares - - (4,043,249) - - - - - (4,043,249) Corporate income tax paid for the year (2,140,758) (1,034,529) Appropriation to reserves - - - 325,056 612,953 - 938,009 (938,009) - Utilization of reserves - - - - (263) - (263) - (263) Closing corporate income tax payable 915,054 866,900 Other movements ------(100) (100)

As at 31 December 2017 11,655,307 2,165,058 (4,043,249) 3,983,752 2,172,702 474 6,156,928 10,996,701 26,930,745 23.2 Applicable tax rate The Bank’s income tax rate for this year is 20% (2017: 20%).

23.3 Deferred corporate income tax

2018 2017 VND MILLION VND MILLION Deferred corporate income tax expense arising from: - Deductible temporary tax differences (1,773) (25,886)

ANNUAL REPORT 2018 ACHIEVING DREAMS 159 FINANCIAL REPORT | Notes to the consolidated financial statements B05/TCTD-HN

24. CAPITAL AND RESERVES (continued) 25. INTEREST AND SIMILAR INCOME 24.2 Share capital 2018 2017 Breakdown of share capital at the reporting date: VND MILLION VND MILLION Interest income from deposits 606,159 332,772 31 DECEMBER 2018 31 DECEMBER 2017 VND MILLION VND MILLION Interest income from loans 15,460,433 13,366,312 Income from debt investment securities 4,140,607 3,532,332 Charter capital 34,965,922 11,655,307 Income from guarantee services 312,998 280,709 Share premium 476,617 2,165,058 Other income from credit activities 630,025 82,379 Treasury shares - (4,043,249) 21,150,222 17,594,504 35,442,539 9,777,116

Number of shares at the reporting date: 26. INTEREST AND SIMILAR EXPENSES

31 DECEMBER 2018 31 DECEMBER 2017 2018 2017 VND MILLION VND MILLION Registered share capital 3,496,592,160 1,165,530,720 Interest expenses for deposits 8,233,723 7,645,664 Issued share capital Interest expenses for borrowings 436,842 317,362 Ordinary shares 3,496,592,160 1,165,530,720 Interest expenses for valuable papers issued 1,353,122 701,066

10,023,687 8,664,092 Movement of number of shares in the year:

2018 2017 27. NET FEES AND COMMISSION INCOME Shares in circulation Ordinary shares at 1 January 993,177,375 887,807,871 2018 2017 VND MILLION VND MILLION Ordinary shares issued in the year 2,331,061,440 70,000,000 (RECLASSIFIED) Convertible bond converted in the year - 207,722,849 Fees and commission income from 4,451,721 4,519,685 Buy treasury share in the year - (172,353,345) Settlement and cash services 1,763,054 1,465,532 Sell treasury share in the year 172,353,345 - Cashiering services 2,523 1,355 Trustee and agency services 212,520 1,543,389 Ordinary shares at 3031 December 3,496,592,160 993,177,375 Consulting services 35,469 3,537 Bancassurance services 722,481 512,882 Nominal value of the Bank’s ordinary share is VND 10,000. Each share is entitled to one vote at General Shareholders Meetings Securities issuance guarantee services 1,160,413 374,551 of the Bank. All shareholders are entitled to receive dividends as declared from time to time. All ordinary shares are ranked Brokerage services 118,572 50,676 equally with regard to the Bank’s residual assets. Other services 436,689 567,763 During the year, the Bank sold 14,699,730 treasury shares to their employees under Employee Stock Ownership Plan program Fees and commission expenses for (915,737) (593,601) and 157,653,615 treasury shares to foreign investors. Settlement and cash services (517,780) (277,686) The Bank increased its charter capital from VND 11,655,307 million to VND 34,965,921 million by way of issuing ordinary Cashiering services (58,102) (53,905) shares using owner’s equity pursuant to Decision No. 1624/QD-NHNN dated 10 August 2018 granted by the SBV, Official Letter Brokerage services (30,526) (11,247) No. 4331/UBCK-QLCB dated 12 July 2018 issued by the State Securities Commission and Business Registration Certificate Other services (309,329) (250,763) with business code No. 0100230800 amended for the 50th time on 10 August 2018 by Hanoi Department of Planning and Development. 3,535,984 3,926,084

24.3 Dividends Dividends payout shall be decided at Annual General Shareholders Meeting.

ANNUAL REPORT 2018 ACHIEVING DREAMS 161 FINANCIAL REPORT | Notes to the consolidated financial statements B05/TCTD-HN

28. NET GAIN FROM TRADING FOREIGN CURRENCIES 2018 2017 32. INCOME FROM INVESTMENTS IN OTHER ENTITIES VND MILLION VND MILLION 2018 2017 Income from trading of foreign currencies 1,879,317 1,105,028 VND MILLION VND MILLION Income from foreign exchange trading 1,030,351 193,142 Dividends received for the year from other long-term investment 275 334 Income from currency derivatives 848,966 911,886 Proceeds from the liquidation of the subsidiary (*) 894,428 - Proceeds from the liquidation of other long-term investments - 355,192 Expenses for trading of foreign currencies (1,645,566) (826,443) Expenses for foreign exchange trading (154,420) (244,100) 894,703 355,526 Expenses for currency derivatives (1,491,146) (582,343) (*) This is the income from the divestment of the Bank’s entire capital in Techcom Finance Limited One Member Company. 233,751 278,585

29. NET GAIN FROM SECURITIES HELD-FOR-TRADING 2018 2017 33. OPERATING EXPENSES NOTES 2018 2017 VND MILLION VND MILLION VND MILLION VND MILLION Income from trading of securities held-for-trading 350,135 539,888 (RECLASSIFIED) Expenses for trading of securities held-for-trading (187,865) (137,419) Salaries and related expenses 3,239,958 2,594,878 Provision reversed/(made) for credit risk of unlisted corporate bonds (Note 8) 3,702 (2,961) Publication, marketing and promotion 300,951 263,412 Provision reversed/(made) for diminution in value of securities held-for-trading Office and asset rental 461,748 441,778 (Note 8) 2,461 (2,778) Depreciation and amortization of fixed assets 259,603 281,141 Tax, duties and fees 102,603 77,426 168,433 396,730 Tools and equipment expenses 87,907 51,593 Telecommunication expenses 39,694 35,469 Expenses for maintenance and repair of assets 210,795 218,704 30. NET GAIN FROM INVESTMENT SECURITIES 2018 2017 Utilities expenses 67,513 53,710 VND MILLION VND MILLION Expenditure on payment of insurance premium for customers’ deposits 193,813 166,187 Income from trading of investment securities 1,303,955 1,165,121 Per diem expenses 99,747 71,397 Expenses for trading of investment securities (389,655) (210,981) Provision reversed for long-term investments 13.2 (1,741) (2,525) Provision made for credit risk of unlisted corporate bonds (Note 12.4) (169,734) (82,564) Goodwill amortization expenses 16 - 9,882 Provision reversed/(made) for diminution in value of investment securities Provision made for other assets (1,454) 69 (Note 12.4) 12,019 (15,816) - Provision reversed for diminution of inventories 16 (1,498) (248) - Provision made for other assets 16 44 317 756,585 855,760 Consultancy expenses 151,611 114,182 Training and education expenses 34,930 29,455 Conference expenses 75,687 41,958 31. NET GAIN FROM OTHER OPERATING ACTIVITIES 2018 2017 Other operating expenses 519,142 363,749 VND MILLION VND MILLION Other operating income 3,147,169 1,963,425 5,842,507 4,812,465 Income from other derivatives 1,544,089 193,008 Recovery of loans previously written-off 1,422,895 1,116,820 Income from entrusted debt collection 25,826 71,659 Income from settlement of VAMC special bonds - 424,134 Other income 154,359 157,804

Other operating expenses (1,513,392) (248,534) Expenses for other derivatives (1,228,491) (128,764) Other expenses (284,901) (119,770)

1,633,777 1,714,891

ANNUAL REPORT 2018 ACHIEVING DREAMS 163 FINANCIAL REPORT | Notes to the consolidated financial statements B05/TCTD-HN

34. PROVISION EXPENSES FOR CREDIT LOSSES 36. CASH AND CASH EQUIVALENTS

NOTES 2018 2017 31 DECEMBER 2018 31 DECEMBER 2017 VND MILLION VND MILLION VND MILLION VND MILLION General provision made for loans to customers 10 164,184 59,726 Cash and gold 2,606,467 2,344,362 Specific provision made for loans to customers 10 2,889,508 2,077,770 Balances with the State Bank of Vietnam 10,555,483 4,279,431 Provision (reversed)/made for loan purchases 11 (78) 787 Balances with other credit institutions with Provision made for VAMC special bonds 12.4 - 1,663,766 original terms of three months or less 24,037,029 16,057,406 Provision reserved for receivables from loans sold contract 16 (1,220,903) (193,809) Provision made for receivables from deferred letters of credit 16 12,675 986 37,198,979 22,681,199 Provision made for other assets bearing credit risk 16 859 -

1,846,245 3,609,226 37. NEW PURCHASES AND LIQUIDATION OF SUBSIDIARIES

DATA RELATING TO NEW PURCHASES AS PRESENTED IN THE CONSOLIDATED 35. EARNINGS PER SHARE AND LIQUIDATION OF SUBSIDIARIES FINANCIAL STATEMENTS Basic earnings per share are calculated by dividing the profit or loss after tax which is attributable to shareholders holding ordinary shares of the Bank (after adjusting for appropriation to bonus and welfare fund) by the weighted average of the number CURRENT YEAR PREVIOUS YEAR CURRENT YEAR (*) PREVIOUS YEAR of common shares outstanding for the year. VND MILLION VND MILLION VND MILLION VND MILLION Total value of acquisition or disposals (1) 1,750,000 - 1,750,000 - Diluted earnings per share are calculated by dividing the profit or loss after tax which is attributable to shareholders holding Portion of acquisition or disposals paid in ordinary shares of the Bank (after adjusting for the dividends of convertible preferred shares) by the total of weighted average cash and cash equivalents 1,750,000 - 1,750,000 - number of ordinary shares outstanding for the year and the weighted average number of ordinary shares which are issued in Cash and cash equivalents in case all potential ordinary shares which have a diluting impact are converted into ordinary shares. subsidiaries or other business entities The Bank uses the following information to calculate basic earnings per share: acquired or disposed (2) 743,190 - 743,190 - Value of assets and liabilities which are 2018 2017 not cash and cash equivalents in subsidiaries or other business entities Profit after tax attributable to ordinary shareholders (VND million) 8,462,775 6,445,595 acquired or disposed during the year (3) 1,368 - - - Adjusted for appropriation to bonus and welfare fund (20,000) - - Fixed assets 283 - - - Profit after tax attributable to ordinary shares shareholders for calculating - Other assets 4,585 - - - basic earnings per share (VND million) 8,442,775 6,445,595 - Other liabilities (3,500) - - -

Adjusted profit after tax attributable to ordinary shareholders for Total ((1)-(2)-(3)) 1,005,442 - 1,006,810 - calculation of diluted earnings per share (VND million) 8,442,775 6,445,595

(*) As after the disposal, Techcom Finance Limited One Member Company (Techcom Finance) is no longer a subsidiary of the Weighted average number of ordinary shares used for calculation of basic Bank. Therefore, the assets and liabilities of Techcom Finance are not presented in the consolidated financial statements of earnings per share 2,212,707,968 835,039,242 the Bank as at 31 December 2018. Effect of upcoming shares issuance - -

Weighted average number of ordinary shares used for calculation of diluted earnings per share 2,212,707,968 835,039,242

Earnings per share (VND) Basic earnings per share 3,816 7,719

ANNUAL REPORT 2018 ACHIEVING DREAMS 165 FINANCIAL REPORT | Notes to the consolidated financial statements B05/TCTD-HN

38. EMPLOYEE BENEFITS 40. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES 2018 2017 Related party transactions are transactions undertaken with other entities to which the Bank is related. A party is considered to VND MILLION VND MILLION be related to the Bank if: RESTATED I. Average number of employees for the year (person) 9,043 8,058 (a) Enterprises that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with, the reporting Bank (including holding companies, subsidiaries and fellow subsidiaries); II. Employees’ remuneration (b) Associates (see Vietnamese Accounting Standards No. 07 “Accounting for Investments in Associates”); 1. Basic salaries 2,710,518 2,069,106 (c) Individuals owning, directly or indirectly, an interest in the voting power of the reporting Bank that gives them significant 2. Allowances and other income 529,440 525,772 influence over the Bank, and close members of the family of any such individual. Close members of the family of an 3. Total (1+2) 3,239,958 2,594,878 individual are those that may be expected to influence, or be influenced ,by that person in their dealings with the Bank, for 4. Average salary/month 25 21 examples: parent, spouse, progeny, siblings, etc; 5. Average remuneration/month 30 27 (d) Key management personnel having authority and responsibility for planning, directing and controlling the activities of the reporting Bank, including directors and officers of the Bank and close members of the families of such individuals (e) Enterprises in which a substantial interest in the voting power is owned, directly or indirectly, by any person described in 39. ASSETS, VALUABLE PAPERS, MORTGAGED, PLEDGED, DISCOUNTED AND REDISCOUNTED (c) or (d) or over which such person is able to exercise significant influence.This includes enterprises owned by directors or major shareholders of the reporting Bank and enterprises that have a member of key management in common with the 39.1 Assets, valuable papers, mortgaged, pledged, discounted and rediscounted to the Bank reporting Bank. 31 DECEMBER 2018 31 DECEMBER 2017 VND MILLION VND MILLION Bond transactions VND million From customers 524,374,576 406,535,584 Real estate 222,246,316 182,200,811 2018 2017 Movable assets 52,218,872 52,230,799 Valuable papers 122,795,518 72,913,916 OPENING CLOSING OPENING CLOSING Other collaterals 127,113,870 99,190,058 RELATED PARTY RELATIONSHIP BALANCE INCREASE DECREASE BALANCE BALANCE INCREASE DECREASE BALANCE

From other credit institutions 4,282,349 1,733,143 Masan Group Corporation Valuable papers 4,273,905 1,724,979 Joint Stock Company (i) Other collaterals 8,444 8,164 Face value 274,155 913,109 (1,148,772) 38,492 94,000 3,562,434 (3,382,279) 274,155 Interest receivables 2,864 8,294 (10,784) 374 21 18,527 (15,684) 2,864 528,656,925 408,268,727 Masan Corporation Joint Stock Company (ii) Face value 6,012 2,847,892 (2,853,904) - - 1,735,000 (1,728,988) 6,012 39.2 Assets, valuable papers, mortgaged, pledged, discounted and rediscounted by the Bank Interest receivables 16 3,225 (3,241) - - 27 (11) 16

31 DECEMBER 2018 31 DECEMBER 2017 Nui Phao Mining VND MILLION VND MILLION Company Limited (ii) Investment securities 2,010,000 17,662,700 Face value - 1,725,319 (1,178,021) 547,298 - - - - Other assets - 1,930,000 Interest receivables - 20,439 (798) 19,641 - - - -

2,010,000 19,592,700 Masan Resources Joint Stock Company (ii) Face value - 1,346,161 (1,064,071) 282,090 - - - - Interest receivables - 1,636 (472) 1,164 - - - -

ANNUAL REPORT 2018 ACHIEVING DREAMS 167 FINANCIAL REPORT | Notes to the consolidated financial statements B05/TCTD-HN

40. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES (continued) 40. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES (continued)

Loans to customers VND million Demand deposits from customers VND million

2018 2017 RELATED PARTY RELATIONSHIP 31 DECEMBER 2018 31 DECEMBER 2017

OPENING CLOSING OPENING CLOSING The European Plastic Window Joint Stock Company (ii) 10,670 23,793 RELATED PARTY RELATIONSHIP BALANCE INCREASE DECREASE BALANCE BALANCE INCREASE DECREASE BALANCE Masan Group Corporation Joint Stock Company and a group of related companies (iv) 67,984 64,877 The European Plastic Members of the Board of Directors, Supervision,

Window Joint Stock Management and other related individuals (i), (iii) 200,648 172,702 Company (ii) Loans to customers 394,097 652,705 (559,466) 487,336 407,606 285,092 (298,601) 394,097 Interest receivables 1,978 41,343 (41,192) 2,129 1,225 32,075 (31,322) 1,978 Remuneration of Board of Directors, Supervision and Management VND million Nui Phao Mining Company Limited (ii) AMOUNT Loans to customers 890,802 1,648,913 (1,381,555) 1,158,160 681,982 1,192,178 (983,358) 890,802 Interest receivables 696 47,421 (47,258) 859 430 38,461 (38,195) 696 RELATED PARTY 2018 2017

Vietnam Investment T&M Remuneration of Board of Directors, Supervision and Management Joint Stock Company (iii) Remuneration of Board of Directors and Supervision 31,099 28,903 Loans to customers 590,000 - - 590,000 - 590,000 - 590,000 Remuneration of Board of Management 154,886 65,511 Interest receivables 3,278 61,314 (61,694) 2,898 - 3,278 - 3,278 (i) Shareholder has its representative in the Board of Directors of the Bank (ii) Related party has its representative in the Board of Directors of the Bank Term deposits from customers VND million (iii) Related party has its representative related to members of the Board of Directors, or Board of Management or Board of Supervision of the Bank 2018 2017 (iv) Masan Group Corporation Joint Stock Company and a group of related companies of Masan Group Corporation Joint Stock OPENING CLOSING OPENING CLOSING Company have its representative in the Board of Directors of the Bank or its representative related to members of the Board RELATED PARTY RELATIONSHIP BALANCE INCREASE DECREASE BALANCE BALANCE INCREASE DECREASE BALANCE of Directors, or Board of Management or Board of Supervision of the Bank

Masan Group Corporation Joint Stock Company and a 41. GEOGRAPHICAL DISPERSION OF ASSETS, LIABILITIES AND OFF-BALANCE SHEET ITEMS group of related companies (iv) Term deposits from customers 2,231,676 16,999,304 (18,578,058) 652,922 3,972,472 14,499,276 (16,240,072) 2,231,676 Concentration of assets, liabilities and off-balance sheet items by geographical region of the Bank’s partners as at 31 December Interest payables 4,058 98,283 (100,151) 2,190 11,965 91,318 (99,225) 4,058 2018 are as follows:

Members of the Board of TRADING AND Directors, Supervision, TOTAL CONTINGENT INVESTMENT Management and other TOTAL LOANS DEPOSITS LIABILITIES DERIVATIVES (*) SECURITIES related individuals (i), (iii) VND MILLION VND MILLION VND MILLION VND MILLION VND MILLION Term deposits from customers 396,937 6,148,743 (5,499,570) 1,046,110 297,706 5,958,388 (5,859,157) 396,937 Domestic 171,289,840 229,646,106 108,612,258 150,969,292 94,444,551 Interest payables 8,259 68,329 (64,520) 12,068 2,772 30,474 (24,987) 8,259 Overseas 39,228 741,881 - - -

171,329,068 230,387,987 108,612,258 150,969,292 94,444,551

(*) Nominal contract value

ANNUAL REPORT 2018 ACHIEVING DREAMS 169 FINANCIAL REPORT | Notes to the consolidated financial statements B05/TCTD-HN

42. RISK MANAGEMENT DISCLOSURE 43. CREDIT RISK (continued) This section provides details of the Bank’s exposure to risks and describes the policies, the methods used by management to control risks. The most important types of financial risks to which the Bank is exposed are credit risk, liquidity risk and market risk. 43.1 Financial assets that are neither past due nor impaired The Board of Directors has overall responsibility for the establishment and oversight of the Bank’s financial risk management Information about credit quality of financial assets that are neither past due nor impaired is as follows: framework to facilitate its business activities to thrive safely and sustainably. 31 DECEMBER 2018 31 DECEMBER 2017 Having taken that responsibility, the Board of Directors appropriately promulgates risk management policies and strategies, VND MILLION VND MILLION establishes business limit, directly approves high-value business transactions in accordance with both legal and internal Balances with and credit granting to other credit institutions – gross 35,559,363 30,155,807 requirement, and determine organizational structure and key managing directors. Securities held-for trading – gross 7,434,265 6,668,223 Risk management strategies and policies are adhered to the Bank’s Charter and General Shareholders’ Meeting resolution. Loans to customers – gross 154,548,122 155,931,825 Investment securities – gross 86,260,036 50,531,801 Audit and Risk Committee (“ARCO”) is established by the Board of Directors for the purpose of undertaking a number of Others financial assets – gross 12,785,103 7,732,565 functions and tasks related to the audit, supervising and monitoring risk management of the Bank’s operation which are assigned/ authorized by the Board of Directors. 296,586,889 251,020,221 ARCO is responsible for promulgating and monitoring risk management framework, risk appetites and risk management policies in the Bank’s operation activities and approving market risk limit, credit risk limit for each industry, business line and other general The Bank’s financial assets, which are neither past due nor impaired, include loans in Group 1 (current); securities, receivables risk limits of the Bank. and other financial assets which are not overdue. The Bank believes that those financial assets can be fully and timely recovered in the future. 43. CREDIT RISK The Bank is subject to credit risk through its lending, investing activities and in cases where it acts as an intermediary on behalf of 43.2 Financial assets that are past due but not impaired customers or other third parties or issues guarantees. The risk that counterparties might default on their obligations is monitored Information about financial assets that are past due but not impaired as at 31 December 2018 is as follows: on an ongoing basis. To manage the level of credit risk, the Bank attempts to deal with counterparties with good credit standing, VND million and, when appropriate, obtains collateral. The Bank’s primary exposure to credit risk arises through its loans. The amount of credit exposure in this regard is represented by the carrying amounts of the assets on the consolidated balance sheet. In addition, OVERDUE the Bank is exposed to off-balance sheet credit risk through commitments to extend credit and guarantees issued. UNDER FROM 91- FROM 181- OVER The Bank manages credit risk by using various tools: development and issuance of internal policies and regulations on credit risk 90 DAYS 180 DAYS 360 DAYS 360 DAYS TOTAL management; development of credit procedures and manuals; regular review of credit risk; development of a credit rating system and loan classification; setting up authorization levels within the credit approval process. Loans to customers 341,517 46,305 57,952 366,114 811,888 The following table presents the maximum exposure to credit risk from balance sheet, before taking account of any collaterals Investment securities 62,709 - 125,419 62,709 250,837 held or other credit risk enhancements: Other financial assets - - - 211,054 211,054

31 DECEMBER 2018 31 DECEMBER 2017 404,226 46,305 183,371 639,877 1,273,779 VND MILLION VND MILLION Balances with and credit granting to other credit institutions – gross 35,559,363 30,155,807 These past-due loans are not impaired due to they are secured by adequate collateral assets. Securities held-for-trading – gross 7,583,090 6,775,118 Loans to customers – gross 159,939,217 160,849,037 Debts purchased – gross 1,682 12,092 Investment securities – gross (*) 86,861,457 51,513,882 Others financial assets – gross 13,035,877 9,892,860

302,980,686 259,198,796

(*) Excluding equity securities

ANNUAL REPORT 2018 ACHIEVING DREAMS 171 FINANCIAL REPORT | Notes to the consolidated financial statements B05/TCTD-HN

43. CREDIT RISK (continued) 44. MARKET RISK

43.2 Financial assets that are past due but not impaired (continued) 44.1 Interest rate risk Interest rate risk arises when there is a difference of term in repricing of interest rate between assets and liabilities. All loan Information about financial assets that are past due but not impaired as at 31 December 2017 is as follows: activities, mobilization activities, investment activities of the Banks create interest rate risk. VND million On the basis of the state of “interest rate sensitivity” according to periodic changes in interest rates, the items which are assets, OVERDUE equity and off-balance sheet assets are classified by terms into the table “interest gap” of the whole Bank. UNDER FROM 91- FROM 181- OVER Interest rate repricing terms for items with fixed interest rates are the remaining period until maturity date of assets, as for 90 DAYS 180 DAYS 360 DAYS 360 DAYS TOTAL floating interest rates are the remaining period until the nearest repricing date. The followings assumptions and conditions are applied when constructing “interest gap” table: Loans to customers 383,681 61,811 91,820 396,460 933,772 Investment securities 62,709 - 62,709 - 125,418 Cash and gold, capital contribution, long-term investments, fixed assets, other receivables and other liabilities are classified Other financial assets - 19,450 - 211,054 230,504 as non-interest bearing items; Balances with the State Bank of Vietnam, demand balances with other credit institutions, demand deposits are classified as 446,390 81,261 154,529 607,514 1,289,694 non-interest bearing items; Interest rate repricing terms of securities held-for-trading and investment securities are based on the actual maturity date at the reporting date if such securities have a fixed interest rate or based on the nearest repricing date if such securities have a 43.3 Financial assets that are impaired floating interest rate; Information about financial assets which are impaired as at 31 December 2018 is as follows: Interest rate repricing of balances with and credit granting to other credit institutions; loans to customers; deposits and VND million borrowings from the Government and the State Bank of Vietnam; deposits and borrowings from other financial institutions OVERDUE and credit institutions, deposits from customers are identified as follows: - Items with fixed interest rates for the duration of contract: interest rate repricing terms based on actual maturity date since NOT PAST UNDER FROM 91- FROM 181- OVER reporting date of the consolidated financial statements; DUE YET 90 DAYS 180 DAYS 360 DAYS 360 DAYS TOTAL - Items with floating interest rates: interest rate repricing terms based on the nearest repricing date since the reporting date of the consolidated financial statements; Loans to customers - 2,246,129 191,453 804,558 1,337,067 4,579,207 Debts purchased - - - - 1,682 1,682 Interest rate repricing of valuable papers issued based on the actual maturity date of each type of valuable papers if there is Other financial assets - - - - 39,720 39,720 a fixed interest rate or the nearest repricing date if there is a floating interest rate; Interest rate repricing of other borrowed and entrusted funds are based on actual maturity date at the reporting date of - 2,246,129 191,453 804,558 1,378,469 4,620,609 consolidated financial statement of each other borrowed and entrusted funds if the interest rate is fixed or based on the nearest repricing date if the interest rate is floating.

Interest rate sensitivity Assuming that all other variables remain constant, the effects of fluctuation in interest rates of the items with floating interest Information about financial assets which are impaired as at 31 December 2017 is as follows: rates on profit before tax and shareholders’ equity of the Bank is as follows: VND million OVERDUE EFFECT ON

NOT PAST UNDER FROM 91- FROM 181- OVER INCREASE IN PROFIT DUE YET 90 DAYS 180 DAYS 360 DAYS 360 DAYS TOTAL INTEREST RATE BEFORE TAX EQUITY VND MILLION VND MILLION Loans to customers - 1,949,605 513,586 363,747 1,156,502 3,983,440 As at 31 December 2018 Debts purchased - - 10,410 - 1,682 12,092 USD 1.50% 61,170 48,936 Other financial assets 1,862,038 - - - 67,753 1,929,791 VND 3.00% 2,357,113 1,885,690

1,862,038 1,949,605 523,996 363,747 1,225,937 5,925,323 The table in the next page presents the assets and liabilities of the Bank based on “interest gap” at the reporting date.

ANNUAL REPORT 2018 ACHIEVING DREAMS 173 FINANCIAL REPORT | Notes to the consolidated financial statements B05/TCTD-HN

44. MARKET RISK (continued) 44. MARKET RISK (continued) 44.1 Interest rate risk (continued) VND million 44.2 Currency risk (continued) INTEREST RE-PRICING FOR THE YEAR Exchange rate sensitivity NON- Assuming that all variables remain constant, the following table shows the effects on profit before tax and equity of the Bank due INTEREST UP TO FROM 1 TO FROM 3 TO FROM 6 TO OVER 1 TO OVER OVERDUE BEARING 1 MONTH 3 MONTHS 6 MONTHS 12 MONTHS 5 YEARS 5 YEARS TOTAL to possible changes in exchange rates. Risk due to changes of exchange rates to other currencies of the Bank is not significant. Assets Cash and gold - 2,606,467 ------2,606,467 EFFECTS ON Balances with the SBV - 10,555,483 ------10,555,483 Balances with and credit granting to LEVEL OF PROFIT other credit institutions (*) - 8,956,048 13,987,497 8,325,791 2,466,686 1,823,341 - - 35,559,363 INCREASE BEFORE TAX EQUITY Securities held-for-trading (*) - - - 1,357,800 585,000 205,115 2,153,431 3,281,744 7,583,090 VND MILLION VND MILLION In which: Government bonds and bonds As at 31 December 2018 guaranteed by the Government for USD 1.00% 3,338 2,670 settlement ------2,153,431 3,281,744 5,435,175 EUR 1.00% (8) (6) Loans to customers (*) 5,391,095 - 67,973,058 25,037,221 23,564,142 14,310,803 20,795,241 2,867,657 159,939,217 Gold 3.00% 386 309 Debts purchased (*) 1,682 ------1,682 Investment securities (*) 250,837 671,104 13,027,067 31,194,711 17,706,548 6,114,646 12,438,991 5,457,557 86,861,461 In which: The following table shows the analysis of assets and liabilities in foreign currencies translated into VND at 31 December 2018. Government bonds and bonds guaranteed by the Government for settlement 250,837 668,061 1,988,667 1,599,500 1,157,709 710,296 8,333,327 5,309,557 20,017,954 OTHER Long-term investments (*) - 12,883 ------12,883 USD EUR GOLD CURRENCIES Fixed assets and investment property - 2,914,920 ------2,914,920 EQUIVALENT EQUIVALENT EQUIVALENT EQUIVALENT TOTAL Other assets (*) 250,774 17,526,870 ------17,777,644 VND MILLION VND MILLION VND MILLION VND MILLION VND MILLION Assets Total assets 5,894,388 43,243,775 94,987,622 65,915,523 44,322,376 22,453,905 35,387,663 11,606,958 323,812,210 Cash and gold 317,505 55,879 12,875 99,061 485,320 Balances with the SBV 1,442 - - - 1,442 Liabilities Due from the Government and the SBV - - 5,025,027 1,000,000 - - - - 6,025,027 Balances with and credit granting to other Deposits and borrowings from other credit institutions (*) 13,725,401 455,883 - 488,195 14,669,479 financial institutions and credit institutions - 5,037,660 24,432,957 3,058,810 1,606,533 1,419,123 866,976 3,501 36,425,560 Loans to customers (*) 9,338,756 13,974 - - 9,352,730 Deposits from customers - 58,778,812 52,794,532 33,525,858 26,465,838 25,277,518 4,554,077 17,897 201,414,532 Other assets (*) 3,776,750 754,002 - 36,752 4,567,504 Derivatives and financial liabilities - - 15,308,314 7,491,852 (1,605,644) (3,826,665) (17,057,544) - 310,313 Valuable papers issued - - 2,220,953 2,740,200 1,595,500 5,628,677 992,629 - 13,177,959 Total assets 27,159,854 1,279,738 12,875 624,008 29,076,475 Other liabilities - 11,852,845 ------11,852,845

Total liabilities - 75,669,317 99,781,783 47,816,720 28,062,227 28,498,653 (10,643,862) 21,398 269,206,236 Liabilities Deposits and borrowings from other financial Interest sensitivity gap 5,894,388 (32,425,542) (4,794,161) 18,098,803 16,260,149 (6,044,748) 46,031,525 11,585,560 54,605,974 institutions and credit institutions 6,713,214 754,005 - 26,031 7,493,250 Deposits from customers 12,538,067 494,912 - 539,816 13,572,795 (*) These amounts exclude provisions Derivatives and other financial liabilities 2,749,867 22,572 - 19,734 2,792,173 Other liabilities 662,829 9,000 - 13,438 685,267 44.2 Currency risk Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates.The Bank Total liabilities 22,663,977 1,280,489 - 599,019 24,543,485 was incorporated and operates in Vietnam with VND as its reporting currency. The major currency in which the Bank transacts is VND. The Bank’s asset - liabilities structure included different types of currencies (such as USD, EUR, AUD, ect), which is the FX position on balance sheet 4,495,877 (751) 12,875 24,989 4,532,990 main cause of currency risk. The Bank has set limits on positions by currency based on internal risk assessment process and FX position off-balance sheet (4,162,093) - - (4,511) (4,166,604) regulations of the SBV. Currency positions are monitored on a daily basis and hedging strategies used to ensure positions are maintained within established limits. Total FX position on and off-balance sheet 333,784 (751) 12,875 20,478 366,386

(*) These amounts exclude provisions

ANNUAL REPORT 2018 ACHIEVING DREAMS 175 FINANCIAL REPORT | Notes to the consolidated financial statements B05/TCTD-HN

44. MARKET RISK (continued) 44. MARKET RISK (continued) 44.3 Liquidity risk 44.3 Liquidity risk (continued) VND million Liquidity risk arises in the general funding of the Bank’s activities and in the management of positions. It includes both the risk of being unable to fund assets at appropriate maturities and interest rates and the risk of being unable to liquidate an asset at a OVERDUE CURRENT reasonable price and in an appropriate time frame. UP TO 3 OVER 3 UP TO FROM 1 TO FROM 3 TO FROM 1 TO OVER 5 The maturity term of assets and liabilities represents the remaining period from the date of the consolidated financial statements MONTHS MONTHS 1 MONTH 3 MONTHS 12 MONTHS 5 YEARS YEARS TOTAL to the contractual maturity date of assets and liabilities. Assets Cash and gold - - 2,606,467 - - - - 2,606,467 The following assumptions and conditions are applied in the analysis of overdue status of the Bank’s assets and liabilities: Balances with the SBV - - 10,555,483 - - - - 10,555,483 Balances with the State Bank of Vietnam are classified as demand deposits which include compulsory deposits. The Balances with and credit granting to other balance of compulsory deposits depends on the proportion and terms of the Bank’s deposits from customers; credit institutions (*) - - 22,943,545 8,325,791 4,290,027 - - 35,559,363 Securities held-for-trading (*) - - - 807,800 1,340,115 2,153,431 3,281,744 7,583,090 The maturity term of investment securities is calculated based on the maturity date of each category of securities. In which, In which: securities issued/guaranteed by the Government, despite the classification based on residual maturity, they are considered Government bonds and bonds guaranteed as liquid assets in the market that are readily convertible to known amounts of cash and subject to an insignificant risk of by the Government for settlement - - - - - 2,153,431 3,281,744 5,435,175 change in value; Loans to customers (*) 2,587,646 2,803,449 13,898,815 15,262,212 33,027,027 35,123,215 57,236,853 159,939,217 Debts purchased (*) - 1,682 - - - - - 1,682 The maturity term of balances with and credit granting to other credit institutions; and loans to customers is determined Investment securities (*) 62,709 188,128 2,029,330 1,741,340 39,509,525 32,453,561 10,876,868 86,861,461 on the maturity date as stipulated in contracts. The actual maturity term may be altered because loan contracts may be In which: extended/prepaid; Government bonds and bonds guaranteed by the Government for settlement 62,709 188,128 1,990,930 1,606,574 1,830,496 8,874,571 5,464,546 20,017,954 The maturity term of equity investments is considered as more than five years because these investments do not have Long-term investments (*) ------12,883 12,883 specific maturity date; Fixed assets and investment property - - 95,239 1,143 14,642 337,039 2,466,857 2,914,920 Other assets (*) - 250,774 8,783,680 2,368,617 2,721,770 3,325,051 327,752 17,777,644 The maturity term of deposits and borrowings from financial institutions and credit institutions and deposits from customers is determined based on features of these items or the maturity date as stipulated in contracts. Demand deposits are Total assets 2,650,355 3,244,033 60,912,559 28,506,903 80,903,106 73,392,297 74,202,957 323,812,210 transacted as required by customers and therefore being classified as current accounts, however, a large proportion of these deposit types of customers remain stable at the Bank over one year. The maturity term of borrowings and term deposits is Liabilities determined based on the maturity date in contracts. In fact, these amounts may be rotated and therefore they last beyond Due from the Government and the SBV - - 5,025,027 1,000,000 - - - 6,025,027 the original maturity date; Deposits and borrowings from other financial and credit institutions - - 29,470,618 3,058,810 3,025,655 866,976 3,501 36,425,560 The maturity term of fixed assets is determined on the remaining useful life of assets; Deposits from customers - - 109,949,648 33,207,610 52,163,432 6,028,430 65,412 201,414,532 The maturity term of valuable papers issued is calculated based on the maturity date of each category of valuable papers; In which: Current accounts and marginal deposits - - 57,801,153 - - - - 57,801,153 The maturity term of other borrowed and entrusted funds is determined on the maturity date as stipulated in contracts as at Derivatives and other financial liabilities - - 34,406 (17,530) 165,418 128,019 - 310,313 the reporting date of each contract; Valuable papers issued - - 300,147 - 2,428,677 7,251,135 3,198,000 13,177,959 Other liabilities - - 8,866,885 869,593 1,444,217 663,706 8,444 11,852,845 The maturity term of other liabilities is determined on the actual maturity date of each liability. The table in the next page shows the analysis of assets and liabilities of the Bank according to their maturities as at 31 Total liabilities - - 153,646,731 38,118,483 59,227,399 14,938,266 3,275,357 269,206,236 December 2018. Net liquidity gap 2,650,355 3,244,033 (92,734,172) (9,611,580) 21,675,707 58,454,031 70,927,600 54,605,974

(*) These amounts exclude provisions

ANNUAL REPORT 2018 ACHIEVING DREAMS 177 FINANCIAL REPORT | Notes to the consolidated financial statements B05/TCTD-HN

44. MARKET RISK (continued) 46. SEGMENT REPORT Segment report by operating activities for the year ended 31 December 2018: 44.4 Other market price risk Securities held by the Bank are affected by market price risk arising from the uncertainty of future value of investment securities. VND million Information about securities diminution at the reporting date as follows: ASSETS TRADING FUND FINANCE ELIMINATION CRITERIA BANK MANAGEMENT SECURITIES MANAGEMENT (**) (*) TOTAL 31 DECEMBER 2018 31 DECEMBER 2017 VND MILLION VND MILLION I. Revenue 57,501,843 256,190 1,871,886 71,841 4,489 (1,054,380) 58,651,869 Securities held-for-trading – gross 148,825 106,895 1. Interest revenue 46,503,789 8,618 148,746 7,816 4,489 (48,590) 46,624,868 Investment securities – gross 350,584 856,663 Interest income from external 21,029,143 8,618 148,746 7,816 4,489 (48,590) 21,150,222 Interest income from internal 25,474,646 - - - - - 25,474,646 2. Operating revenue 3,020,828 - 1,369,491 64,025 - (2,623) 4,451,721 499,409 963,558 3. Other revenue 7,977,226 247,572 353,649 - - (1,003,167) 7,575,280

II. Expense (45,802,600) (234,874) (339,699) (21,634) (1,091) 255,290 (46,144,608) 1. Interest expense (35,480,409) (46,396) (34,797) - - 63,269 (35,498,333) 45. FINANCIAL ASSETS AND LIABILITIES Interest expenses to external (10,005,763) (46,396) (34,797) - - 63,269 (10,023,687) Book value and fair value of financial assets of the Bank and its subsidiaries as at 31 December 2018 are as follows: Interest expenses to internal (25,474,646) - - - - - (25,474,646) 2. Depreciation and amortization VND million expenses (216,594) (39,075) (3,845) (47) (33) (9) (259,603) 3. Operating expenses (10,105,597) (149,403) (301,057) (21,587) (1,058) 192,030 (10,386,672) BOOK VALUE Profit before provision expenses FAIR VALUE OTHER FINAN- THROUGH CIAL ASSETS/ for credit losses 11,699,243 21,316 1,532,187 50,207 3,398 (799,090) 12,507,261 PROFIT (LIABILITIES) Provision expenses for credit losses (1,843,873) 498 - - 1,047 (3,917) (1,846,245) & LOSS HELD-TO- LOANS AND AVAILABLE- AT AMOR- TOTAL BOOK STATEMENT MATURITY RECEIVABLES FOR-SALE TIZED COST VALUE FAIR VALUE Segment profit 9,855,370 21,814 1,532,187 50,207 4,445 (803,007) 10,661,016

Cash and gold - - 2,606,467 - - 2,606,467 2,606,467 III. Assets 318,620,217 1,425,218 4,351,052 119,921 - (3,527,467) 320,988,941 Balances with the SBV - - 10,555,483 - - 10,555,483 (*) 1. Cash and gold 2,606,467 - - - - - 2,606,467 Balances with and credit granting to other 2. Fixed assets 1,671,944 5,156 37,112 51 - 4,333 1,718,596 credit institutions - - 35,559,363 - - 35,559,363 (*) 3. Other assets 314,341,806 1,420,062 4,313,940 119,870 - (3,531,800) 316,663,878 Securities held-for-trading 7,583,090 - - - - 7,583,090 (*) Loans to customers - - 159,939,217 - - 159,939,217 (*) IV. Liabilities 269,330,154 676,225 1,244,385 11,363 - (2,055,891) 269,206,236 Debts purchased - - 1,682 - - 1,682 1. External liabilities 269,317,572 676,225 1,244,385 11,363 - (2,055,891) 269,193,654 Available-for-sale securities - - - 66,625,261 - 66,625,261 (*) 2. Internal liabilities 12,582 - - - - - 12,582 Held-to-maturity securities - 20,236,200 - - - 20,236,200 (*) Long-term investments - 12,883 - - - 12,883 (*) Other financial assets - - 13,035,877 - - 13,035,877 (*) (*) Elimination of internal transactions

7,583,090 20,249,083 221,698,089 66,625,261 - 316,155,523 (**) On 12 March 2018, the Bank divested its entire capital in Techcom Finance Limited One Member Company. Hence, Techcom Finance's assets and liabilities are no longer part of the Bank's assets and liabilities as at 31 December 2018. Due from the Government and the SBV - - - - 6,025,027 6,025,027 (*) Deposits and borrowings from other financial institutions and credit institutions - - - - 36,425,560 36,425,560 (*) Deposits from customers - - - - 201,414,532 201,414,532 (*) Derivatives and other financial liabilities 310,313 - - - - 310,313 (*) Valuable paper issued - - - - 13,177,959 13,177,959 (*) Other financial liabilities - - - - 9,127,529 9,127,529 (*)

310,313 - - - 266,170,607 266,480,920

(*) The Bank has not determined the fair value of these items due to insufficient information and lack of detailed guidance on fair value under Vietnamese Accounting Standards and Vietnamese Accounting System for Credit Institutions.

ANNUAL REPORT 2018 ACHIEVING DREAMS 179 FINANCIAL REPORT | Notes to the consolidated financial statements B05/TCTD-HN

47. CORRESPONDING FIGURES 50. EVENTS AFTER THE CONSOLIDATED BALANCE SHEET DATE Certain corresponding figures reported in the prior year have been reclassified to conform to the current year’s presentation: On 30 January 2019, Techcom Capital Management Company Limited has successfully transformed its legal form from a limited company to a joint stock company under Establishment and Operating Licence No. 57/GP-UBCK issued by the State Security 2017 RECLASSIFICATION 2017 Commission of Vietnam dated 30 January 2019, replacing Establishment and Operating Licence No. 40/UBCK-GP issued by VND MILLION VND MILLION VND MILLION (AS PREVIOUSLY REPORTED) (RECLASSIFIED) the State Security Commission of Vietnam on 21 October 2008. There is no difference in term of permitted operating activities between these 2 official documents. Accordingly, the Company’s name is changed to Techcom Capital Management Joint Stock CONSOLIDATED INCOME STATEMENT Fees and commission expenses (*) (707,783) 114,182 (593,601) Company. Operating expenses (*) (4,698,283) (114,182) (4,812,465) There is no other matter or circumstance that has arisen since the consolidated balance sheet date that has affected or may significantly affect the operations of the Bank, the results of those operations or the state of affairs of the Bank that requires CONSOLIDATED CASH FLOW disclosure in consolidated financial statements. STATEMENT Net fees and commission receipts (*) 3,747,154 114,182 3,861,336 Operating and salary expenses payments (*) (4,168,108) (114,182) (4,282,290) 51. EXCHANGE RATES OF APPLICABLE FOREIGN CURRENCIES AGAINST VIETNAM DONG

31 DECEMBER 2018 31 DECEMBER 2017 (*) Reclassify “Operating expenses” from “Fees and commission expenses”. VND VND AUD 16,378 17,718 CAD 17,039 18,053 48. CHANGE IN PROFIT BEFORE TAX FOR THE YEAR CHF 23,553 23,306 The consolidated profit before tax for the year ended 31 December 2018 of the Bank and its subsidiaries increases by CNY 3,372 3,490 VND2,624,719 million compared to that for the year ended 31 December 2017, equivalent to 32.66% due to the following reasons: DKK 3,553 3,660 EUR 26,529 27,246 PROFIT BEFORE TAX GBP 29,548 30,691 VND MILLION HKD 2,962 2,907 Profit increase/(decrease) due to: JPY 211 202 Increase in net interest and similar income 2,196,123 NOK 2,669 2,766 Decrease in net fees and commission income (390,100) SEK 2,593 2,768 Decrease in net gain from trading of foreign currencies (44,834) SGD 17,025 16,979 Decrease in net gain from securities held for trading (228,297) THB 716 697 Decrease in net gain from investment securities (99,175) USD 23,195 22,425 Decrease in net gain from other operating activities (81,114) XAU 3,641,000 3,648,000 Increase in income from investments in other entities 539,177 Increase in operating expenses (1,030,042) Decrease in provision expenses for credit losses 1,762,981

Profit before tax increased by: 2,624,719

49. SIGNIFICANT EVENTS DURING THE YEAR On 12 March 2018, the Bank transferred its entire capital in Techcom Finance Limited One Member Company. On 4 June 2018, the Bank’s shares were officially listed on Ho Chi Minh City Stock Exchange. On 30 May 2018, Techcom Securities Company Limited has successfully transformed its legal form from a limited company to a joint stock company under Establishment and Operating License No. 125/GP-UBCK issued by the State Security Commission of Vietnam dated 30 May 2018. The Company’s new name has been changed to Techcom Securities Joint Stock Company.

Hanoi, Vietnam, 15 March 2019

ANNUAL REPORT 2018 ACHIEVING DREAMS 181