ANNUAL REPORT 2010
www.techcombank.com.vn Strong Breakthrough ANNUAL REPORT 2010
VIETNAM TECHNOLOGICAL AND COMMERCIAL JOINT STOCK BANK 70-72 Ba Trieu Street, Hoan Kiem District, Hanoi, Vietnam Tel: +84(4) 39446368 Fax: +84(4) 39446362 TABLE OF CONTENTS
Vision, Mission & 5 Core Values 2-3 overview of Techcombank Message from the Chairman 6-7 Message from the Chief Executive Officer 8-9 Organizational Structure 10-11 Strong Breakthrough - Vietnam Technological and Commercial 4 Leadership Team 12-19 Joint Stock Bank, more commonly known as Techcombank, was established in 1993 and headquartered in Hanoi. 10 Highlights in 2010 22-25 Techcombank is currently one of the largest joint stock banks in Vietnam, Awards & Accolades 26-27 consistently posting growth in excess of 30% for both total assets and Operations Review 28-33 annual turnover. By the end of 2010, total assets of Techcombank Banking Services 34-45 Risk Management 46-49 reached over VND 150,000 billion. 20 Corporate Social Responsibilities 50-51 With an extensive network spanning nearly 300 branches / TSO and more than 1,000 ATMs; and a strong workforce of 7,000 professionally trained staff, Techcombank is well-placed to serve more than 50,000 enterprises and 1.3 million individual customers all over the country. Consolidated Financial Statements 54-97
Collaborating with HSBC, our strategic shareholder holding the maximum 52 stake of 20%, and the strategic consulting firm McKinsey, Techcombank has rolled out Program TechcomOne. This is a comprehensive strategic plan for the period 2009-2014, with the aim to transform Techcombank into the best bank and leading business in Vietnam. Branch Network 100 Correspondent Banks 101-104 Program TechcomOne was extensively implemented across the entire organization in 2010, bringing about fundamental changes that set the 98 platform for Techcombank to develop into a modern bank. This puts us in good stead for strong breakthroughs in 2011 and beyond.
Annual Report 2010 1 Vision Techcombank aspires to be the best bank and a leading business in Vietnam.
Mission 5 core values
To be the preferred and most trusted To offer our shareholders superior CUSTOMER FIRST PEOPLE DEVELOPMENT financial partner of our customers, long term returns by executing a We treasure our customers and work We develop our people to achieve providing them with a full range of fast growth strategy while enforcing hard to offer them the products and their best potential and reward financial products and services through rigorous corporate governance and services that best meet their needs. our best performers. a personalized/customer centric risk management best practices. relationship. INNOVATION ACCOUNTABILITY To provide our employees with a great We are good but can always be better When we commit to do working environment where they have therefore we never stop learning and something, we do whatever multiple opportunities to develop, improving. it takes to get things done. contribute and build a successful career. TEAM WORK We can achieve our goals by trusting our colleagues and collaborating to deliver the best to the bank.
Annual Report 2010 2 Annual Report 2010 3 Leveraging sound Foundations to jump-start Breakthrough
OUTSTANDING EXECUTION OF BUSINESS STRATEGIES
Techcombank drives for strong breakthrough in 2011 by focusing on excellence in executing its business strategies in three key categories, namely, Small and Medium sized Enterprise Banking, Transaction Banking and Personal Financial Service, which focuses primarily on Priority Banking.
Annual Report 2010 4 Annual Report 2010 5 MESSAGE FROM THE CHAIRMAN MESSAGE FROM THE CHAIRMAN
2010 continued to be a successful year for Techcombank, It is forecasted that 2011 will continue to be a year of illuminated by the momentous “Best Bank in Vietnam many difficulties as right from the beginning of the year, 2010” award from Euromoney, the world’s leading the already slow recovery of the World’s economy has financial magazine. For the first time, profit after tax of faced big challenges such as political instability in North Techcombank exceeded USD 100 million and, also for Africa and the Middle East, earthquake and tsunami the first time, the Bank moved up to second position in Japan. In Vietnam, probability of high inflation and among commercial joint-stock banks in total assets while the State’s tightened monetary measures indicate the maintaining the top position among banks in terms of local economy will probably not maintain a high growth profitability (ROA and ROE). Benefiting from the strong rate like before. The Board of Directors and the Board support by shareholders, Techcombank successfully of Management of Techcombank have prepared tactical issued VND 3,000 billion worth of convertible bonds at changes to the business plan to ensure that in 2011, the end of 2010, thus improving its financial capacity, Techcombank will continue to overcome macroscopic as evidenced by its high capital adequacy ratio (CAR) difficulties and well achieve the business targets which of 13.11%. Last year, Techcombank also recorded the have been committed with the shareholders. fastest network expansion with nearly 300 branches, and over 1,000 ATMs all over the country. In the long term, in its 5-year development strategy, Techcombank subscribes to the mission to “offer our As a pioneer in strategic transformation, in 2010, with shareholders attractive and superior long term returns by the support from the world’s leading strategic consulting executing a fast growth business strategy while enforcing firm McKinsey & Co., Techcombank made substantial rigorous corporate governance and risk management changes to its business directions and organizational practices by international standards.” To this end, the structure. The Bank developed new SME and PFS Board of Directors of Techcombank commits to using its business strategies. In 2011, Techcombank will make valuable financial resources in effective business activities strong breakthrough by efficiently implementing the while being consistent with and determined about comprehensive SME business strategy, CB business the transformation with a view to becoming the first strategy with transaction banking being the priority Vietnamese bank to reach international standards. and PFS business strategy with Priority Banking being a focus. Techcombank will also cooperate closely with On behalf of the Board of Directors of Techcombank, strategic shareholder HSBC to continue enhancing risk I would like to thank you, our valued shareholders, management capacity, financial planning, and talent partners, and customers for your attention and support development, while continuing the intensive investment for the Bank in the past. I also hope that you will always in the information technology system which has been the support and align yourself with us in the course of Bank’s strength. becoming the best bank and leading enterprise in Vietnam.
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The mission of Techcombank is to offer our shareholders attractive and superior long-term returns by executing a fast growth HO HUNG ANH business strategy while enforcing Chairman of the Board of Directors rigorous corporate governance and risk management practices by international standards.
Annual Report 2010 6 Annual Report 2010 7 MESSAGE FROM THE MESSAGE FROM THE CHIEF EXECUTIVE OFFICER CHIEF EXECUTIVE OFFICER
DEAR VALUED CUSTOMERS, PARTNERS, training courses for 23,297 trainees; and completed AND SHAREHOLDERS! performance assessment on and corporate title granting to 5,000 employees. Suffice it to say, Techcombank will continue to leverage on staff capabilities and Techcombank once again demonstrated its resilience professionalism as key factors for rapid and sustainable and strength by weathering the turmoil and delivering growth. considerable growth in scale and performance in 2010. Moreover, the successful outcome of strategic initiatives Secondly, we broadened our comprehensive risk that were implemented across the entire organization management framework in 2010 and ensured rigorous enables Techcombank to continue making a “strong oversight in our business. This helped keep the ratio breakthrough”. of non-performing loans (NPLs) at 2.29% as of 31 December 2010. Our risk management policies Techcombank once again The key performance indicators summed up our success and procedures enabled the Bank leadership to demonstrated its resilience stories. Total assets of the Bank grew 62.3% YOY to solidly execute in the face of complicated economic and strength by weathering VND 150,291 billion, ahead of plan by 17% while profit developments, and manage liquidity and interest rate before tax reached VND 2,744 billion, up 21.8% against risks in the money market efficiently. the turmoil and delivering 2009. Total mobilized capital was VND 108,334 considerable growth in scale Thirdly, based on our hi-tech foundation that was billion, up almost 50% against 2009. In particular, and performance in 2010. retail deposits, the most stable source of capital, rose gradually built up over many years, our IT units up 44.4% against the end of 2009. As at 31 December successfully implemented over 30 projects in 2010 2010, total outstanding loans reached VND 52,928 focusing on the development and the deployment of billion, up 25.7% against 2009. By the end of 2010, comprehensive IT management processes and IT risk the Bank’s capital adequacy ratio (CAR) was 13.11%, management. Meanwhile, the Bank continued to be far surpassing the State Bank’s requirement of 9%. a pioneer in e-banking with the robust growth of F@st On 28 December 2010, Techcombank successfully I-bank service and introduction of F@st MobiPay, issued 30 million convertible bonds, an equivalent of a mobile banking service greatly favored by customers. VND 3,000 billion, which both helped raise the CAR To realize the above ambitious financial targets, we will and abroad, evidenced by prestigious awards the and confirmed shareholders’ trust and appreciation Fourthly, in 2010, Techcombank set up an additional constantly strengthen, improve, and develop our core Bank received last year, we have the momentum and of Techcombank in times of difficult access to capital 94 branches and transaction offices, expanding our total activities, by: confidence to make a “strong breakthrough” in 2011, sources. network from 188 to 282 locations nationwide. Besides, thus bringing Techcombank to new heights. we shifted our geographical region-based management • Continuing to implement programs on staff training, Starting in late 2009, Techcombank has been vigorously model to economic zone-based one and introduced talent development and human capital management In the long journey ahead, we hope and believe that transforming and restructuring all function units towards business tactics suitable to specific zones in order to as basis for sustainable development; building the Bank will receive the support from you, our valued professionalization to gear up for future breakthroughs. boost business management efficiency. up practical and competitive salary, bonus and customers, partners, and Techcombank staff. We In 2010, we mobilized our all resources to consolidate other benefit policies to create an attractive and commit that your trust will be rewarded duly through our foundations in order to transform Techcombank With active support from the leading strategic consultant professional working environment. the values that Techcombank always aspires to deliver. firm McKinsey, we achieved encouraging results last into a modern bank, including human resources, risk • Continuing to improve service quality and raise our management, technology, and branch network. year during the initial phase of TechcomOne, a 5-year Together we will work hand-in-hand to welcome new transformation project for the 2009-2014 period. As operations to international standards in order to successes in 2011. effectively tap into the target segments. Firstly, we continued to build up and bring into play the a result, the Bank’s position and status improved by core value of “human resource development”. Last year, leaps and bounds with our core values and brand widely • Strengthening measures to ensure operation safety we implemented a number of HR initiatives to realize recognized in the community through rigorous risk management and governance. Regards, the mission of “creating the best working environment • Continuing to invest in infrastructure, applying for employees”. Under the guidance of the Board of Ushering in 2011, Techcombank sets high expectations advanced technologies in management and business. Directors and the assistance of strategic consultant with aggressive financial targets such as raising total McKinsey, we developed a concrete “personnel policy” assets to VND 188,000 billion, delivering profit before • Accelerating the development of corporate culture with specific and clear-cut principles for each level of tax of VND 4,000 billion, reducing NPL ratio to 2.04%, and establishing a compassionate and united the Bank’s development path. Our workforce in 2010 expanding network to 360 branches, and outperforming Techcombank community. was 6,960, up 38% against 2009. Noteworthy, we the market with superior ROA, ROE, mobilized capital, Leveraging our capabilities and the recognition from conducted a total of 559 internal and 207 external and total outstanding loans among the major commercial NGUYEN DUC VINH joint-stock banks. customers, partners, and organizations at home Chief Executive Offi cer
Annual Report 2010 8 Annual Report 2010 9 ORGANIZATIONAL STRUCTURE ORGANIZATIONAL STRUCTURE
GENERAL SHAREHOLDERS’ MEETING
SUPERVISORY BOARD EXCO
BOD Standing BOARD OF Committee DIRECTORS
ALCO
BOD Offi ce Audit and Risk Committee Senior Credit AUDIT, CONTROL & Commitee COMPLIANCE Credit Risk & Problem Loans Management Financial Committee Investment Committee
Nomination & CEO/ Remuneration BOARD OF Asset Investment Committee MANAGEMENT Committee
IT Investment Committee Representative Finance & Planning Offi ce in Risk Division Southern Region Division Product Committee Representative Strategy & Corporate Legal & Compliance Offi ce in Development Governance Divisions Central Region Division Division
Treasury Marketing TB Division CB Division FI Division SME Division PFS Division S & D Division Op & IT Division HR Divison Division Division
Business Divisions Supporting Divisions
AS OF 31/03/2011
Annual Report 2010 10 Annual Report 2010 11 THE BOARD OF THE BOARD OF DIRECTORS DIRECTORS
3. Mr. Nguyen Thieu Quang 7. Mr. Madhur Maini Vice Chairman Member Graduated from Civil Engineering Graduated from Pennsylvania in Russia, Mr. Nguyen Thieu State University, United States Quang joined the executive with a Bachelor of Economics management of Techcombank major in Finance and Bachelor and has held different positions of Applied Science in in the Board of Directors since Management and Technology, 1999. He has been Vice Mr. Madhur Maini has years of Chairman of Techcombank BOD management and operational since May 2008. administration experience with large U.S.-based financial 4. Mr. Nguyen Canh Son corporations in Southeast Asia. Vice Chairman He has been a member of the Techcombank BOD since Graduated from Civil Engineering April 2009. in Russia, Mr. Nguyen Canh Son has been a member of the Board 8. Mr. Stephen Colin Moss of Directors from May 2008 to Member Mar 2009. He has been Vice Chairman of Techcombank BOD Graduated from Kent University, since April 2009. U.K. with a Bachelor of Economics and Accounting, 5. Mr. Sumit Dutta and a certified member of Member the Institute of Chartered Accountants in England and Graduated from Institute of Wales, Mr. Stephen Colin Moss Business Administration, Jadavpur has years of management University, India with a Bachelor experience in financial of Business Administration, accounting. He is currently Mr. Sumit Dutta has years of the Chief Executive Officer management experience in the and Head of Mergers and field of banking and finance at Acquisitions Council of HSBC. HSBC. He was Head of Personal He has been a member of the Financial Services Division from Techcombank BOD since 2008 to February 2009. He has April 2009. been a member of Techcombank 1. Mr. Ho Hung Anh 2. Mr. Nguyen Dang Quang 1 2 3 BOD since April 2009. Chairman First Vice Chairman 9. Mr. Nguyen Duc Vinh Member of BOD and Graduated from Electronics Obtained a PhD in Nuclear 6. Mr. Tran Thanh Hien 4 5 6 Chief Executive Officer Engineering in Russia, Mr. Physics and Master’s degree Member Ho Hung Anh joined the in financial management in Received his Master of 7 8 9 With a Master’s degree in executive management of the Russia. Mr. Nguyen Dang Business Administration from Business Administration, Bank in 2004 and has held Quang joined the executive HEC Business Administration Mr. Tran Thanh Hien has various positions in the Board management of Techcombank University, France, and other years of experience in financial of Directors. He has been the and has held various positions degrees in USA Mr. Nguyen Duc management at Vietnam Airlines Chairman of Techcombank BOD since 1999. He has been Vinh has more than 10 years Corporation. He has been since May 2008. the First Vice Chairman of experience as the Bank’s Chief a member of Techcombank Techcombank BOD since Executive Officer (CEO). In April BOD since April 2009. May 2008. 2009, he was also appointed as a member of the BOD.
AS OF 31/03/2011
Annual Report 2010 12 Annual Report 2010 13 SUPERVISORY NOMINATION AND REMUNERATION BOARD COMMITTEE (NORCO)
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3 4 1 2
3 4 1. Ms. Nguyen Thu Hien 3. Mr. Nguyen Quynh Lam 5 6 Head of Supervisory Board and Member of Supervisory Board specialist member Graduated from University of Mining and Received Bachelor’s degree in Credit Geology with a degree in Mining Economics Engineering, Mr. Nguyen Quynh Lam was Finance in Russia, Mrs. Nguyen Thu 1. Mr. Ho Hung Anh * 3. Mr. Nguyen Thieu Quang * 5. Mr. Nguyen Duc Vinh * Hien has joined the department of a specialist member of the Techcombank accounting and supervisory at the Bank Supervisory Board from May 2008 to NORCO Chairman NORCO member NORCO member in 1999. Since April 2010 she has been March 2009. Since April 2009, he has appointed Head and specialist member of been a member of the Techcombank 2. Mr. Nguyen Dang Quang * 4. Mr. Sumit Dutta * 6. Mr. Nguyen Van Tho Techcombank Supervisory Board. Supervisory Board. NORCO member NORCO member NORCO member
4. Mrs. Bui Thi Hong Mai Graduated from the University 2. Mrs. Vu Thi Dung of Hungary, Mr. Nguyen Van Member of Supervisory Board Specialist member of Supervisory Board Tho held the position of Human Graduated from Accounting and Finance With a Bachelor’s degree in Accounting Resources Manager at IBM University with a Bachelor’s degree in and Finance, Nguyen Thi Hong Mai has and Citibank Vietnam for many accounting and finance, Mrs. Vu Thi many years experience in the field of years. Since June 2009, he Dung is an Auditor with many years of accounting and finance. Since April 2010, has been the Head of Human experience in the field of finance and she has been a Specialist Member of the Resources Management Division accounting. Since April 2009 she has Techcombank Supervisory Board. in Techcombank. been a Member of the Techcombank Supervisory Board.
* Refer to the Board of Directors page AS OF 31/03/2011
Annual Report 2010 14 Annual Report 2010 15 AUDIT AND RISK AUDIT AND RISK COMMITTEE (ARCO) COMMITTEE (ARCO)
1. Mr. Ho Hung Anh * 4. Mr. Nguyen Thieu Quang * ARCO Chairman ARCO member
2. Mrs. Nguyen Thi Thien Huong 5. Mr. Hoang Van Dao Standing ARCO member ARCO member Graduated with a Bachelor’s degree in Science, Obtained a PhD in Science and Technology, Mr. and a Bachelor’s degree in Economics, as Hoang Van Dao has years of experience working well as a Masters in Business Administration, at Techcombank management as Deputy General Ms. Nguyen Thi Thien Huong has years of Director and BOD member. He has been an experience working at the Bank in different ARCO member since July 2008. positions such as Head of Projects and Securities Investment department, Head of 6. Mr. Sumit Dutta * HO Credit Department, and Deputy General ARCO member Director. Since July 2009, she has been a standing ARCO member. 7. Mr. Nguyen Duc Vinh * ARCO member 3. Mr. Nguyen Dang Quang * ARCO member
1.1 2
3 4
5 6
7
* Refer to the Board of Directors page AS OF 31/03/2011
Annual Report 2010 16 Annual Report 2010 17 THE BOARD OF MANAGEMENT
7. Mr. Phan Thanh Son 12. Ms. Do Diem Hong Head of Treasury and Financial Markets Head of Financial Institutions With Master’s degree of Economics from the National Completed the Master of Business Administration Economics University, he has held the position of Program at France-Vietnam Management Training Deputy General Director at Tien Phong Bank. He was Center (CFVG), she previously held the following appointed as Head of Treasury and Financial Markets positions: Director of Import-Export Trade Finance Division in January 2011. group of JP Morgan Chase Bank Vietnam; Deputy General Director; and Head of Credit and Credit Risk 8. Mr. Suleman Chhagla Management of Techcombank. She was appointed as Head of Risk Management Head of Financial Institutions Division in April 2010.
Graduated from Commerce School, Karachi 13. Mr. Phung Quang Hung University and held the position of Head of Risk Management at the State Bank of Pakistan. He Head of IT & Operations was appointed to the position of Head of Risk Received a Master in International Commerce from Management in Techcombank in October 2010. University of Washington State, USA, Mr. Phung Quang Hung formerly held the position of IT Business 9. Mr. Anthony Guerrier Director for National Australia Bank in UK and was Head of Finance and Planning Head of IT for Techcombank. In September 2010, Obtained a Master of Finance and Accounting at he was appointed as Head of IT & Operations Division. DESCF and held managerial positions for many years 14. Ms. Dang Tuyet Dung at HSBC France. He was appointed as the Head of Head of Personal Financial Services Finance and Planning in November 2011. 1. Mr. Nguyen Duc Vinh 4. Mr. Nguyen Van Tho Graduated from the National Economics University, Chief Executive Officer Head of Human Resources 10. Mr. Pham Quang Thang she has held the positions of Head of Cash Received his Master of Business Administration from Graduated from the University of Hungary, Head of Small & Medium Enterprise Management & International Payment Product Development at Citibank Vietnam. She was appointed HEC Business Administration University, France, Mr. Nguyen Van Tho held the position of Human Received an MA from Swinburne University of as Head of Personal Financial Services Division in and other degrees in USA Mr. Nguyen Duc Vinh has Resources Manager at IBM and Citibank Vietnam Technology, he has held several management more than 10 years experience as the Bank’s Chief for many years. Since June 2009, he has been the positions such as Head of Treasury & Transaction February 2010. Executive Officer (CEO). In April 2009, he was also Head of Human Resources Management Division in Center, Deputy General Director of Techcombank appointed as a member of the BOD. Techcombank. and was appointed as Head of Small & Medium 15. Ms. To Thuy Trang Enterprise Division in December 2009. Head of Marketing 2. Mr. Le Xuan Vu 5. Mr. Nguyen Thanh Long Graduated from Ho Chi Minh University of Economics Head of Strategy and Corporate Development Head of Legal & Compliance Control 11. Mr. Nguyen Canh Vinh Ms. To Thuy Trang was Product Director, ASEAN Completed the MBA Program from North Central Graduated from Hanoi University of Law, Mr. Nguyen Head of Sales & Distribution region for Kao Consumer Products Southeast Asia. Thanh Long used to be Deputy Head of Legal University, United States, Mr. Le Xuan Vu has Received an MA from Latrobe University, She was appointed Head of Marketing Division in Division of the State Bank of Vietnam, and Deputy held several positions in Techcombank, such as Mr. Nguyen Canh Vinh was previously the Head of November 2009. General Director of Techcombank. He was appointed Head of Techcombank’s Information Technology Business Center, Techcombank HO, and Head of Center, Deputy General Director, Head of Region 2, to the position of Head of Legal and Compliance Region 1. He was appointed as Head of Sales & 9 7 and was appointed Head of Strategy & Corporate Control in November 2009. 11 5 Distribution Division in January 2011. 10 6 Development Division in January 2011. 12 6. Mr. Nguyen Cong Thanh 8
3. Ms. Bach Thuy Ha Head of Corporate Banking 2 3 1 4 Head of Transaction Banking 13 Graduated from HCMC Economics University, Mr. 14 15 Obtained a Master of Business Administration Nguyen Cong Thanh held several key positions at from University of Technology, Sydney and MA in ABN-AMRO Bank (Vietnam), as well as Investment Sociology from Lueven University, Belgium, she Director of Temasek Holdings in Vietnam prior to his previously held the position of Chief Representative appointment as Head of Corporate Banking Division of Hanoi Office for Deutsche Bank AG Vietnam of Techcombank in May 2010. and was appointed to Head of Transaction Banking Division in November 2009.
AS OF 31/03/2011
Annual Report 2010 18 Annual Report 2010 19 DELIVERING STELLAR PERFORMANCE We abide by and deliver our commitments to earn the trust of customers, shareholders and employees. Distinguished with one of the highest total assets amongst the commercial banks in Vietnam, we take pride in delivering success to our stakeholders.
Tapping profound Potential to deliver our Commitments
Annual Report 2010 20 Annual Report 2010 21 10 HIGHLIGHTS OF 2010
ACHIEVEMENTS THAT CREATE THE MOMENTUM FOR BREAKTHROUGH
3. Charter capital: In June 2010, Techcombank raised its charter capital from VND 5,400 billion to VND 6,932 billion, an increase of VND 1,532 billion channeled from the retained earnings of 2009 per the financing plan previously approved by the General Shareholders’ Meeting.
4. Successful issue of convertible bonds: On 28 December 2010, In June 2010, Techombank Techcombank issued 30 million convertible bonds, an equivalent of raised its charter capital from VND 3,000 billion. This underlines the shareholders’ endorsement VN 5,400 billion to VND 6,932 of the business development strategy of Techcombank for the period billion, an increase of VND to 2014. It also helped raise the capital adequacy ratio as part of 1,532 billion. the Bank’s long-term development strategy. HIGHLIGHTS OF 5. Organizational restructuring to raise the level of professionalism and adopt international best practices: This project had far-reaching VND impact across the whole organization in 2010. It was first initiated in the middle of 2009, in which specialized divisions with separate 2010 functions and responsibilities were established based on a modern global bank model. A major restructuring was the creation of 6,932 billion In a year of extreme difficulties precipitated by internal and external a specialized Sales and Distribution Division independent of the dislocations, including the roll out of the Techcombank strategic business and support functions. This allows Techcombank to transformation plan and the aftershock of the global financial crisis, develop better insights and thus effectively respond to the banking Techcombank once again proved its strengths and resilience by needs of each customer segment. As the first Vietnamese bank to apply this model, Techcombank has demonstrated its determination overcoming the odds to deliver remarkable growth both in scale and to develop specialization and provide the best and most appropriate performance, with key highlights as follows: products and services to customers.
BUSINESS ACHIEVEMENTS
1. Techcombank maintained the leading position amongst commercial joint-stock banks in terms of business performance with an ROA of 1.9% and ROE of 24.9%.
2. Techcombank leapfrogged to the second position amongst commercial banks in terms of total assets as of 31 December 2010.
Annual Report 2010 22 Annual Report 2010 23 10 HIGHLIGHTS OF 2010 (continued) 10 HIGHLIGHTS OF 2010 (continued)
6. Introduction of HR strategy: staff training and talent management By 31 December 2010, programs, and guidelines on assessment, rewards, compensation and Techcombank opened benefits were officially issued to support the objective of developing a team of professional, robust, engaged, and highly qualified staff. 94 additional branches throughout the country, 7. Heavy investment in technology in 2010 to drive performance and bringing the total number provide differentiated services to customers: of branches to 282 • Core Banking System was upgraded to the latest T24 R10 version. and ATMs to more than This enables integration with new applications that better serve the 1,000, thus providing operational and service requirements of modern banking while highly convenient providing a platform for design and introduction of sophisticated products to meet the diverse needs of customers. services to customers. • Loan Origination System provided by Experian, a leading IT solutions company, was successfully launched. This is an Completion of phase 1 of automated solution for customer loan application processing and Techombank’s strategic approval process. With the Loan Origination System, the Bank is transformation program, able to provide customers with professional, real-time banking, TechcomOne, with the support and credit services on par with international banking standards. and consultation from the world’s leading consulting firm McKinsey. 8. Extensive distribution network: In 2010, Techcombank opened 94 additional branches throughout the country, bringing the total number of branches to 282. The number of ATMs also increased to more than 1,000, thus providing highly convenient services to customers. 282 9. Completion of phase 1 of Techcombank’s strategic transformation program, TECHCOMONE, with the support and consultation from the world’s leading consulting firm McKinsey. The most remarkable Branches achievement in this phase was the development of 3 key business strategies, namely SME Strategy, PFS Strategy, and TB Strategy. more than 1,000 ATMs These strategies are part of an overall strategy to become the Best Bank and Leading Enterprise in Vietnam, 10. THE AWARD “BEST BANK IN VIETNAM 2010”
Winning “Best Bank in Vietnam 2010” award from Euromoney: This recognition by a world leading financial magazine proves Techcombank’s strong position in terms of leadership, quality, and performance.
Annual Report 2010 24 Annual Report 2010 25 AWARDS & AWARDS & ACCOLADES ACCOLADES
Global Payments Excellence Award 2010 CITIBANK, WACHOVIA BANK & THE BANK OF NEW YORK “Global Payments Excellence Award 2010” from Citibank, Wachovia Bank and Bank of New York.
International Star for Leadership in Quality 2010 BID - BUSINESS INITIATIVE DIRECTIONS “International Star for Leadership in Quality” award by BID – Business Initiative Directions as a result of assessment on leadership capabilities, speed of IT and quality innovation, customer satisfaction, and relationship with internal units, suppliers and related parties.
National Brand 2010 MINISTRY OF INDUSTRY AND TRADE “National Brand 2010” award from Ministry of Industry and Trade to the top 43 Vietnamese enterprises with high growth rate and competitiveness.
The Most Active GTFP Issuing Bank in East Asia 2009 & 2010 Best Bank in IFC - INTERNATIONAL FINANCE CORPORATION “The Most Active GTFP Issuing Bank in East Asia” award from Vietnam 2010 IFC – a member of the World Bank group.
EUROMONEY MAGAZINE “Best Bank in Vietnam 2010” award Vietnam Gold Star by Euromoney Magazine as a result YOUNG BUSINESS ASSOCIATION of an assessment on the Bank’s “Vietnam Gold Star” award from Young Business Association based on the criteria: leadership capability, performance, competitiveness of brands/products, market share, quality management process, and profit. brand and IT management and development, and environmental policies meeting local and international standards.
Vnr500-Top 500 Largest Enterprises in Vietnam Most Favorite Vietnamese Brand 2010 MINISTRY OF INFORMATION AND COMMUNICATION SAIGON LIBERATION NEWSPAPER One of the Top 500 largest enterprises in Vietnam as researched “Most Favorite Vietnamese Brand 2010” award from and recognized by Vietnamnet, Vietnam Report, and Hanoi-Boston Saigon Liberation Newspaper. research team.
Annual Report 2010 26 Annual Report 2010 27 OPERATIONS REVIEW 2010 OPERATIONS REVIEW 2010
For Techcombank, 2010 was a transformational year By the end of 2010, capital adequacy ratio (CAR), as OPERATIONS REVIEW 2010 as the Bank embarked upon an important journey to a result, far exceeded the SBV’s requirement, reaching 2010 was an exceptionally difficult year for the become the best bank and leading enterprise in Vietnam 13.1% versus 9.6% at the end of 2009. by 2014, executed through its strategic transformation banking sector in Vietnam. program counselled by McKinsey. DEPOSITS
Despite the financial instability and transitional Techcombank continued to expand and create a strong As the economy was bottoming out with an encouraging GDP growth dynamics, Techcombank overcame the odds to deliver funding base in 2010. Customer deposits as at 31 of 6.7%, widening trade deficit and runaway inflation inevitably led to yet another strong performance. The Bank realized most December 2010 amounted to VND 80,551 billion, intervention by the Government and the State Bank (SBV). of its business targets and completed the most critical accounting for 53.6% of total balance sheet assets. stage of its reconfiguration of strategies, organizational The figure represented an increase of 29.2% over The regulators responded by enforcing contractionary monetary policies structure and operational policies/procedures. the previous year’s VND 62,374 billion. This helped to curb credit growth and stabilize the market, inter alia, closure of enhance liquidity with a loan-to-deposit ratio of just the gold exchanges, tightening of capital adequacy and lending ratios, 2011 is forecast to be another challenging year, but 65.7% and was in accordance with Techcombank’s and amendments to legislations on credit institutions. These measures Techcombank is now well-positioned for renewed growth prudent policy to maintain the ratio within the range forced the banks to review their business and ensure prudence in their given the diversity of its income streams as well as its of 65-70%. operations, which in turn posed additional challenges to the sector. strategic partnership with HSBC. The increase in customer deposits in the year was EQUITY mainly attributable to Techcombank’s success in mobilizing funds from individuals. Retail deposits of the As at 31 December 2010, Techcombank’s shareholder Bank as at 31 December 2010 reached VND 61,806 equity amounted to VND 9,389 billion, an increase billion, equivalent to an increase of 44.4% compared to of 28.2% against the previous year. Share capital 31 December 2009. Techcombank’s extensive network increased from VND 5,400 billion to VND 6,932 billion expansion, competitive mobilization campaigns and when the Bank decided in June to add VND 1,532 continuous improvement in customer service were the billion from the reserve to supplement capital. main drivers for this growth. In addition to the increase in equity, the successful issue of VND 3,000 billion convertible bonds in December 2010 further consolidated the Bank’s capital strength.
Annual Report 2010 28 Annual Report 2010 29 OPERATIONS REVIEW 2010 (continued) OPERATIONS TCB AR10 Cover EN_130411 REVIEW 2010 (continued)
3,500 By the end of 2010, deposits by and borrowings from INTERNATIONAL PAYMENT PROFITABILITY 60,000 3,000 other credit institutions soared by 168.5% year-on-year Enterprise Lending 6 500 3,184 70,000 In the reporting period, the Bank maintained its In 2010, Techcombank achieved net revenue of 61,806 to VND 27,783 billion, presenting an important source 480 3,891 5.52 2,500 50,000 52,928 3,337 5 leading position in trade finance amongst joint stock400 VND 4,719 billion, representing a 20.5% year-on-year VND billion 60,000 of funding for the Bank, of which VND 1,745 billion 773 VND billion
1,210 banks in Vietnam. In particular, the bank’s total increase. Net interest income increased by 27.3% 2,500 VND billion equivalent were long-term borrowings from international 2,000 Net interest income 4 USD billion VND billion
50,000 TCB AR10VND Cover billion EN_130411 volume of international payment in 2010 increased to year-on-year,333 reaching VND 3,184 billion. Net fee organizations.40,000 5,389 300 Net fee income
Manufacturing 3.84 42,804 42,093 Credit institutions approximately USD 5.52 billion, representing a sharp and commission income even grew faster by 45.0% 1,500
Agriculture 3 1,761
40,000 Enterprises 3.37 The capital raised from the issue of commercial Loan outstanding 929 30,000 Services growth of 43.9% in comparison to USD 3.84 billion200 in to around VND 930 billion, in which bank guarantee
Individual 641 valuable papers also increased sharply by 198.3%Bad debts from Construction 2 2009. service contributed VND 160 billion, almost double the1,000 27,783 TCB AR10 Cover EN_130411
30,000 Valuable papers TCB AR10 Cover EN_130411 176 483 VND 5,036 billion to VND 15,024 billion, including 19,706 Property trading level achieved in 2009.
20,000 26,343 100
19,544 500 18,745 VND 5,251 billion with tenure of more than 5 years, Other industries 1 20,000 15,024 3,500
and VND 7,404 billion with tenor from 1,211 12 months to 5 International payment volume 10,346 0 0 10,000 1,048 0 10,000 5,037 60,000 2008 2009 2010 2008 2009 2010 2008 3,0002009 2010 years. 6 500 Income 3,184 70,000 665 3,500 3,500 61,806 480 0 0 3,891 5.52 2,500 Deposit 50,000 52,928 3,337 5 VND billion 60,000 2009 2010 2008 2009 2010 400 60,000 60,000 773 VND billion 3,000 3,000 500 3,184 500 6 3,184 70,000 6 1,210 2,500 70,000 VND billion USD billion 2,000 Net interest income
61,806 4 While slowing down credit growth in 2010, Techcombank 480
5.52 VND billion 61,806 480 50,000 VND billion 333 40,000 TCB AR10 Cover EN_1304115.52 3,891 2,500 3,891 50,000 5,389 52,928 3,337 5 3002,500 Net fee income VND billion 3.84 52,928 3,337 Manufacturing 400
42,804 60,000 5 50,000 42,093 closely watched non-performing loans (NPLs) and 773 VND billion 60,000 Credit institutions 773 400 VND billion
VND billion 1,210 1,500 2,500
VND billion Agriculture 3 1,761 1,210 managed to reduce the gross NPL ratio to 2.29% from 2,500 2,000 Net interest income VND billion40,000 Enterprises 3.37 4 USD billion VND billion
Loan outstanding 929 50,000 VND billion 2,000 Net interest income333 30,000 40,000 4 Services5,389USD billion VND billion 200 300 Net fee income 3.84 VND billion 333 Manufacturing
50,000 42,804 2.49% as at the end of 2010.42,093 Most NPLs belong to the 40,000 Individual 641 5,389 Credit institutions Bad debts 300 Net fee income 1,000 Manufacturing 3.84 2
42,804 Construction 42,093
27,783 1,500
Agriculture 3 1,761
Credit institutions30,000 176 Valuable papers SME sector. 3.37 40,000 Enterprises 1,500 483
Loan outstanding 929 Agriculture 3 1,761 30,000 Property trading Services 40,000 Enterprises 3.37 19,706 200 929 Loan outstanding Individual 641 20,000 26,343 100
19,544 Services Bad debts 500 1,000 30,000 18,745 1 Construction 2 27,783 Other industries 200 3,500 641 176 Individual 15,024 30,000 Valuable papers 20,000 483 Bad debts Construction 2 1,000 27,783 Loan outstanding Property trading
30,000 Valuable papers 19,706 176 26,343 20,000 483 100 1,211 19,544 500
18,745 1 10,346 Property trading60,000 0 Other industries 0
1,048 0
15,024 3,000 10,000 3,184 5,037 20,000 19,706 6 500 20,000 26,343 100
19,544 10,000 2008 2009 2010 500 2008 2009 2010 2008 2009 2010 18,745 70,000 Other industries 1 665 1,211 20,000 15,024 10,346 0 0 61,806 480 1,048 0
10,000 5.52 10,000 5,037 3,891 2008 2009 2010 2008 2009 2010 2008 2,5002009 2010 52,928 1,211 50,000 3,337 5 VND billion 665 10,346 0 60,000 0 0 400 10,000 1,048 0 0 773
5,037 VND billion 10,000 2009 2010 2008 2008 2009 2010 2008 2009 2010 2008 2009 2010 2009 2010 1,210 2,500 665 0 VND billion The increase in international payment volume was mainly 0 4 USD billion 2,000 Net interest income 2009 2010 2008 2009 2010 VND billion 50,000 VND billion 333 40,000 5,389 attributed to the Bank’s strong focus on fee-based products 300 Net fee income
Manufacturing 3.84
0 42,804 0 42,093 2009 2010 2008 2009 2010 Credit institutions and services. To achieve this target, Techcombank 1,500
Agriculture 3 1,761
40,000 Enterprises 3.37 Net gains from trading of foreign currency, gold
Loan outstanding 929 TCB AR10 CoverCREDITS EN_130411 30,000 strengthened collaborationServices with its partners through 200
Individual and security declined, and net gains from security 641 Bad debts Construction 2 1,000 27,783 its extensive correspondent network, so as to diversify
30,000 Valuable papers 176 In line with the Government’s objective to maintain low investments was considerably lower than 2009 because 483 19,706services and broaden itsProperty funding trading base. The total fee
20,000 26,343 100
19,544 500 credit growth for the entire18,745 banking sector, Techcombank Other industries 1 of volatile FX rates, tightened control over gold trading,
20,000 15,024 income from international payment in 2010 was VND curtailed its lending growth to 25.7% from 59.8% of and the sharp decline of the stock market. However,
1,211 480 billion, representing a 44.1% year-on-year increase. 10,346 0 0 10,000 1,048 0 5,037 such losses were compensated by income from the 10,000 last year. Loans and advances to customers as at 31 2008 2009 2010 2008 2009 2010 2008 2009 2010 December 2010 totaled VND 52,928 billion, of which 665 investments3,500 in other businesses and other revenues, Fee Income from International Payment Services 0 56.8% was short-term. Retail lending soared the most 0 both of which increased nearly threefold in 2010. 60,000 2009 2010 3,000 2008 6 2009 2010 500 3,184 70,000 dramatically, by 63.3% year-on-year to VND 18,397
61,806 The Bank’s operation costs in 2010 were VND 1,588 480 billion, with housing loans increasing by3,891 155% over the 5.52 2,500 50,000 52,928 3,337 5 VND billion 60,000 773 400 billion as compared with VND 1,184 billion in 2009. same period of last year to VND 12,196 billion. VND billion 1,210 By the end of 2010, loan loss provisions were VND The 34.1% increase was mainly2,500 attributable to its VND billion 2,000 Net interest income 4 USD billion VND billion
50,000 VND billion 611 billion, up 19.3% compared to VND 512 billion 333 40,000 SME lending increased5,389 26.7% year-on-year to VND 300 aggressive network expansion and increase in the Net fee income
Manufacturing 3.84 42,804 42,093 Credit institutions a year earlier, hence, the net NPL rate was just 1.13%. workforce.1,500 Expenses for office and asset rental, tool
31,256 billion while corporate lending decreased by Agriculture 3 1,761
40,000 Enterprises 3.37
Loan outstanding Significantly, as these loans are all secured, the Bank 929 30,000 50.6% to VND 3,051 billion. Amongst all business Services 200 and equipment, and asset maintenance and renovation
Individual 641 Bad debts Constructionremains optimistic about2 a high recovery rate. 1,000 27,783 customers, those operating in the manufacturing increased by 63.3%, equivalent to VND 459 billion. 30,000 Valuable papers 176 483 industry were the largest borrowers,19,706 with most of them Property trading An enlarged staff required to operate expanded operations
20,000 26,343 100
19,544 500 18,745 Other industries 1
20,000 15,024 utilizing credit facilities for production expansion. Loan as well as salary and bonus increases led to an increase
1,211 in manpower cost of 27.0%, equivalent to VND 755
10,346 outstanding of this segment accounted for 57.1% of total 0 0 10,000 1,048 0 10,000 5,037 2008 2009 2010 2008 2009 2010 billion. 2008 2009 2010
665 SME and corporate lending.
0 0 2009 2010 2008 2009 2010
Annual Report 2010 30 Annual Report 2010 31 OPERATIONS REVIEW 2010 (continued) OPERATIONS REVIEW 2010 (continued)
In May 2010, the IFC (a World Bank member) and Techcombank signed an agreement to set up a USD 50 million energy efficiency fund. The IFC In December 2010, finances USD 24 million, plus an addition of USD 1 million from its Global Earth Fund, and Techcombank commits to covering the rest of Techcombank the fund. The fund aims to provide medium and long term financing to successfully signed help enterprises replace inefficient equipment and upgrade technology to the second long-term improve productivity while cutting down on energy cost and emission. loan agreement worth In July 2010, Techcombank was selected by the Ministry of Industry and USD 15 million with Trade to be one of the five banks participating in the Renewable Energy Proparco. Development Project. The 20-year project aims to increase the low-cost electricity supply for the rural areas by providing credit to commercial banks to re-finance eligible renewable energy projects. The cost of the project is estimated at USD 230 million, of which USD 152 million will be raised by In May 2010, the IFC the International Development Association of the World Bank. (a World Bank member) and Techcombank signed an In December 2010, Techcombank successfully signed the second long-term agreement to set up a USD 50 loan agreement worth USD 15 million with Proparco, a subsidiary of the millon energy efficiency fund. French Development Agency (AFD). Techcombank will leverage this facility to support eligible SME customers in Vietnam.
Other medium and long term loan agreements with other international and multilateral financial institutions were also implemented effectively during USD 50 the past year. million
In 2010, Techcombank Aggregating the respective incomes and costs, the Bank posted a achieved net revenue profit before tax of VND 2,744 billion for the financial year ended 31 of VND 4,719 billion, December 2010, an increase of 21.8% against last year. representing a 20.5% The cost to income ratio of the Bank in 2010 was maintained at 35%. year-on-year increase. Other profitability indicators, namely ROE and ROA, were maintained at healthy levels of 24.9% and 1.9%, respectively.
COOPERATION WITH INTERNATIONAL AND MULTILATERAL FINANCIAL INSTITUTIONS Techcombank continues to leverage credit products to One of the objectives of Techcombank is to cooperate with international support eligible SME customers and multilateral financial institutions, not only for the purpose of in Vietnam. mobilizing capital and reducing asset liability mismatch for the Bank, but also for supporting some industries under certain programs of the Vietnam Government. Currently, we are maintaining relationships with international and multilateral financial institutions such as WB, IFC, ADB, JICA, FMO, Proparco, SECO, etc.
Annual Report 2010 32 Annual Report 2010 33