Current Status of Lending Scale of Vietnam Technological and Commercial Joint Stock Bank

assets, business efficiency, cost control and risk management. The Bank's total operating income reached VND7,106 billion, up 26% over the previous year. Net interest income increased by 33% to VND5,773 billion, along with regular management of deposit and lending interest rates and achieving an effective balance sheet structure. Net interest margin in 2014 increased from 3.2% to 3.6%. Net fee income increased by over 52.5% to VND1,123 billion, largely due to the contribution from the newly established Investment Banking business segment. Fee income from the Bank's other core products continued to increase and income from the trading and investment segment reached VND203 billion, compared to VND162 billion in 2013. Operating expenses increased slightly by VND75 billion to VND3,431 billion, equivalent to 2% over the previous year. During the year, the Bank continued to focus on cost management through a number of cost-saving initiatives and increased cost awareness and spending discipline across the system. While keeping total costs low, the Bank continued to invest in human resources, with personnel costs increasing by 17% to VND1,627 billion, equivalent to VND241 billion, while the cost-to-income ratio decreased by over 10%, from 59.4% in 2013 to 48.3% in 2014. On the other hand, with a cautious approach to risk mitigation and bad debt management, the Bank’s total credit risk provisions for the year were VND2,258 billion, up 60% over the same period last year.

The Bank continues to be proactive in managing its bad debt portfolio and recovering bad debts. In 2014, the Bank sold a total of VND1,738 billion of bad debts, increasing the total amount of bad debts sold to the Vietnam Asset Management Company (VAMC) to VND3,807 billion. Together with strict and effective risk management measures to control existing bad debts as well as prevent new bad debts, the bad debt ratio at the end of 2014 was at 2.38%, a significant improvement compared to the level of 3.56% at the end of 2013. Pre-tax profit reached VND1,417 billion at the end of 2014, an increase of 61.4% compared to the year before.

before. Accordingly, the earnings per share (EPS) index increased sharply from 742 VND to 1,245 VND per share. The return on total assets (ROA) and return on equity (ROE) improved compared to the previous year and reached 0.63% (compared to 0.39% in 2013) and 7.4% (compared to 4.77% in 2013) respectively.

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* About customer loans

Chart 2.2: Techcombank's lending status

Unit: Billion VND

90000

80000

70000

Personal and other

60000

35388

28996

Transportation

50000

24465

31683

Build

40000

2114

5097

744

8591

2763

12528

30000

5174

874

20000

22993

24141

26620

24607

Trade, production and processing

Agriculture, forestry and fisheries

10000

8783

2011

6390

2012

5324

2013

5022

2014

(Source: Techcombank's annual reports over the years)

By the end of 2012, outstanding loans to customers reached VND68,261 billion, up 7.6% compared to 2011. Total loan portfolio growth was lower than in 2011 (20%) due to efforts to improve credit quality and a more cautious lending policy. Due to continued focus on the retail segment, outstanding loan growth in 2012 was mainly concentrated in the consumer sector and individual customers (up 23.8%).

In 2013, credit growth meanwhile reached 2.35% with outstanding customer loans of VND 69,864 billion. As of September 30, 2013, Techcombank's lending activities increased slightly by 2.5% compared to the beginning of the year to VND 69,952 billion. Although only

As of the first 6 months of the year, the credit balance has exceeded the whole year of 2012. This shows that at Techcombank, the credit balance growth rate tends to increase strongly.

In addition to continuing to improve customer service quality, product types, and expanding the distribution network with 315 branches and 1,231 ATMs, echcombank's outstanding loans and deposits also increased significantly compared to 2013. Customer loans increased by 14.3% to VND80,308 billion and customer deposits increased by 9.8% to VND131,690 billion. The loan-to-deposit ratio increased from 58.6% to 61% in 2014. By the end of 2014, thanks to the gradual recovery of the economy, outstanding customer loans reached VND80,308 billion, up 14.3% compared to 2013.

2014 marked a strong growth in customer loans in key sectors such as warehousing, transportation and construction, reaching increases of 271% and 46% respectively. The proportion of outstanding loans in these two sectors in the total outstanding loans of the entire bank increased from 13% in 2013 to 19% in 2014.

* Customer deposit receiving activities

In 2012, thanks to a strong branch network, total mobilization increased by 26% to VND 111,462 billion. The growth rate was mainly from mobilization of residents accounting for 33.7%, followed by mobilization of enterprises accounting for 10.9%. This strong mobilization base will create a solid foundation for asset growth in the coming time.

Chart 2.3: Techcombank's capital mobilization status

Unit: Billion VND

160000

140000

19471

39170

15225

120000

48133

100000

88336

80000

79005

77056

60000

57636

Other credit institutions Individuals

Business

40000

20000

31012

34406

40973

43354

2011

2012

2013

2014

(Source: Techcombank's annual reports over the years)

In 2013, Techcombank mobilized capital from customers in the first 6 months of the year reaching 111,641 billion VND, a slight increase of 0.16% compared to the end of last year. By the end of September 2013, the Bank's capital mobilization had increased to 117,263 billion VND. This shows that the Bank's capital mobilization trend is increasing and on a good development path.

By September 2013, customer deposits at Techcombank increased by 5.2% compared to the beginning of the year to VND117,236 billion. The Bank's total assets also decreased by 8% to VND165,879 billion. The strong impact on the decrease in the Bank's total assets was due to a sharp decrease in interbank activities. Accordingly, Techcombank's deposits and loans to other credit institutions decreased by 37% to VND24,686 billion.

In 2014, customer mobilization increased by 9.8% to VND 131,690 billion; of which individual customer mobilization increased by 11.8% and corporate customer mobilization increased by over 5.8%.

2.2. CURRENT SITUATION OF PERSONAL CUSTOMER LOANS

VIETNAM TECHNOLOGY AND COMMERCIAL JOINT STOCK BANK

2.2.1. Current status of lending scale of Vietnam Technological and Commercial Joint Stock Bank

2.2.1.1 Growth in personal credit balance

Chart 2.4: Current status of outstanding loans for science and technology of Techcombank

Unit: Billion VND

25500

25000

24500

24000

23500

23000

22500

22000

21500

21000

20500

25.0%

24824

20.9%

20.0%

15.0%

22851

22234

10.0%

8.63%

5.0%

2.78%

0.0%

2012

2013

Outstanding loans to individual customers

2014

Growth in outstanding personal loans

(Source: Techcombank's annual reports over the years)

Table 2.4 shows that outstanding credit for individual customers at Techcombank has grown quite impressively in recent years. Specifically: In 2012, outstanding loans reached VND 27,532 billion, an increase of 23.83% compared to 2011; in 2013, outstanding loans reached VND 22,851 billion, an increase of 2.78% (equivalent to VND 617 billion) compared to 2012; in 2014, outstanding loans reached VND 24,824 billion, an increase of 8.63% compared to the end of 2013 (equivalent to VND 1,973 billion). 2014 was a rather difficult year for the banking industry in Vietnam. Although the domestic economy recovered well with an encouraging GDP growth rate of 5.98%, the trade deficit and high inflation forced the Government and the State Bank of Vietnam (SBV) to restrain credit growth. Implementing the Government's policy of maintaining credit growth rate

Techcombank's low lending rate has cut its loan growth rate from 59.8% last year to 25.7%.

Thus, it can be seen that the outstanding loans of the credit institutions had a relatively impressive growth in 2012, although the credit activities of most Vietnamese commercial banks in this period encountered many difficulties and huge credit risks. In 2012, the world economy continued to suffer the consequences of the financial crisis and economic recession since 2013. In Vietnam, besides internal problems, the economy also suffered negative impacts from world developments, causing low economic growth, export difficulties, and significantly reduced production, business and domestic consumption activities...

However, from 2013 onwards, the growth rate of outstanding loans to individual customers tended to decrease because Techcombank faced strong competition from all commercial banks, including leading commercial banks, due to the increasingly stronger trend of shifting to retail banking (RBB) business.

This result is due to the efforts of all staff in the bank, especially the personal financial services sector, in fulfilling the commitment to improve the quality of customer service, constantly reviewing policies and procedures related to the portfolio of personal financial products and services such as mobilization, lending, credit cards and online banking services... In addition, Techcombank is a commercial bank with a long history of operation from 1993 to present ~ 22 years. Techcombank has become one of the leading joint stock commercial banks in Vietnam with a strategic shareholder being HSBC Bank with 20% of shares. HSBC is a large bank with high prestige in the world. The Techcombank brand has been recognized by society through a series of large and small awards that the bank has achieved over its years of operation.

2013: Best Internet Bank Vietnam by Global Banking & Finance Review, Best Trade Finance Bank by Global Banking & Finance Review, Best Employer of Asia 2013, Golden Star of Vietnam - Young Vietnamese Enterprises, Best Foreign Exchange Service Provider for Enterprises and Financial Institutions in Vietnam; Best Bank of Vietnam 2013; Retail Bank of the Year; Best International Payment and Trade Finance Bank in Vietnam; Best International Payment and Trade Finance Bank in Vietnam.

In previous years, Techcombank also received many large and small awards, both domestically and internationally.

The Bank is currently a member of: Vietnam Banking Association; Asian Banking Association; Swift Global Payment Organization; Visa International Card Organization; Master Card International Card Organization...

2.2.2.2 Number of individual customers

Maintaining focus with a clear and agile vision is the driving force for sustainable growth. Techcombank’s priority banking services, under the Personal Financial Services Division, continue to gain momentum and are widely accepted across the country, providing opportunities to expand cooperation with small and medium-sized enterprise customers. Techcombank will continue to accelerate market share growth while enhancing its capabilities to achieve its market leadership goals.

2012 witnessed strong growth in the retail banking sector. Compared to 2011, the number of Visa cards issued increased by 202.5%, from 126,571 to 382,930 cards, and the number of retail customers also increased by 20.5% to 2,806,534 customers.

In September 2013, Techcombank's individual customers exceeded the

3,000,000 customers. Following the current development trend, the number of individual customers at Techcombank continues to increase. By the end of 2013, the number of individual customers increased by 50% to more than 3.3 million customers.

Chart 2.5: Chart of number of individual customers at Techcombank

Unit: customer

3,876,091

4,000,000

3,300,123

3,500,000

3,000,000

2,500,000

2,000,000

2,806,534

1,500,000

1,000,000

500,000

2012

2013

2014

(Source: Techcombank Annual Report)

In 2014, the number of Techcombank's individual customers continued to grow quite well. This year, the total number of newly developed individual customers was 575,968 customers. Bringing the number of Techcombank's individual customers to 3,876,091 customers this year.

Over the years, the Bank has also strived to simplify loan procedures, speed up the processing of customer applications to reach more customers. Customers contact the nearest Bank Branch/Transaction Office to be guided on procedures and submit loan applications. After receiving complete loan applications, within 03 working days (for short-term loan applications) and 10 working days (for medium-term loan applications), the Bank will work directly with customers on related issues such as loan usage plans,

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