contents - acb

AN

NU

AL R

EPORT

2017

ANNUAL REPORT 2017

acb.com.vn

Annual Report 2017

4

CONTENTSANNUAL REPORT 2017

CHAIRMAN’S MESSAGEPage 6

GENERAL INFORMATION01

04

02

03

6

Page 20

Page 38

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THE BOARD OF MANAGEMENT’S REPORT AND ASSESSMENT OF BUSINESS ACTIVITIES

THE BOARD OF DIRECTORS’ ASSESSMENT OF THE BANK’S BUSINESS ACTIVITIES

BUSINESS ACTIVITIES IN 2017

1.1. Name, business registration and history1.2. Business scope and network1.3. Organizational structure 1.4. Development strategy1.5. Financial risk management

2.1. Business performance 2.2. The Management and human resource policies2.3. Review of large investments and the activities of subsidiaries2.4. Financial review 2.5. Shareholding structure and changes in shareholders’ equity2.6. Report on the bank’s responsibilities toward community and

environment

3.1. General assessment of business performance3.2. Comments on key items of the balance sheet and the income

statement3.3. Improvement in organizational structure, policy and managerial

operations3.4. Aspirations (2018 – 2020) 3.5. Management’s explanation of the independent auditor’s opinion3.6. Evaluation of ACB’s responsibilities toward employees, community

and environment

4.1. Overall assessment of the bank’s activities4.2. Assessment of the Management’s performance 4.3. The Board of Directors’ key actions

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OVERVIEW OF VIETNAM’S BANKING ACTIVITIES IN 2017

CORPORATE GOVERNANCE

AWARDS, NOTABLE EVENTS AND CHARITABLE ACTIVITIES IN 20177.1. Awards7.2. Notable events7.2. Charitables activities

BRANCH NETWORK

FINANCIAL STATEMENTS

5.1. The Board of Directors 5.2. The Supervisory Board 5.3. Remuneration and transactions in relation to directors and officers

9.1. Independent auditors’report9.2. Audited financial statements

6.1. Economic context of Vietnam and the world 6.2. Monetary policy and banking activities in Vietnam

Annual Report 2017

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Chairman’s Message

Dear shareholders,

The Vietnamese economy obtained quite a few

positive results in 2017. Gross domestic product

grew 6.81%, and the economic structure moved

in favor of more technology-intensive and higher

value-added industries. The macro-economic

foundation has become more stable as the inflation

rate has been maintained at a low level for the past

four years, the national budget components have

changed in a positive manner, and public debt has

remained within legal limits.

It was also a good year for the performance of the

Vietnamese banking industry. Deposits and loans

grew as much as in 2016, standing at 15% and 18.2%

respectively. Banking liquidity remained stable, non-

performing loans fell to 2%, and banks’ profitability

improved remarkably. Payment and financial

technology (fintech) markets emerged with quite a

few licenses granted to fintech companies.

Given such a context, ACB has performed well.

Total assets hit VND 284,316 billion, up by 22%;

deposits, VND 241,393 billion, up by 17%; and

loans, VND 198,513 billion, up by 20%. ACB

liquidated all VAMC bonds. The NPL ratio dropped

to 0.7%. Consolidated profit before and after cost

of resolution of legacy issues reached VND 4,924

billion and VND 2,656 billion.

2017 was the last year of the current term for the

Board of Directors and the Supervisory Board. I

would like to take this opportunity to review what

was done over the past five years.

ACB has achieved notable successes after

implementation of its previous five year strategy.

The legacy issues that emerged before 2013 have

been successfully resolved. The balance sheet has

been restructured to focus on more stable and larger

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earning assets, and appropriate liquidity in line with

the bank’s risk management framework. Bank equity

has also been enriched by bonus share issuance in

order to support the balance sheet growth and to

meet the requirements of Basel II Accord. ACB has

been persistent in retail banking, strengthened its

position in the household and SME markets, and

maintained the expected interest margin. The core

banking platform has been upgraded to adapt to

the changing technological environment. Many tech

projects designed to support business activities

and technical operations are in progress, with key

components already completed including the loan

management system, a customer relationship

management system, etc.

ACB has been able to provide not just products

and services that meet customer needs, but also

services that increase their banking experience

like the ACB Mobile App, etc. ACB has built up its

customer base but there is still room to address

their needs in terms of doing business, and space

to grow with them. The bank’s customer service

quality ranks top in the industry.

Branches and sub-branches have been re-

arranged into clusters, and groups of clusters

are put under the supervision of a regional head

to create synergy and improve productivity.

Performance of the branch network has

improved considerably. Branch premises have

been renovated with the new corporate identity

symbolizing the philosophy of customer focus.

ACB has also re-positioned its brand, which

is deeply rooted in the core values: Integrity,

Innovation, Prudence, Balance and Efficiency.

Annual Report 2017

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ACB has a strong labor force. Job structures and

career paths have been better designed. Working

procedures have been designed, operated and

monitored up to high standards, and are regularly

reviewed to adapt to changing realities.

In short, the bank’s restructuring journey over the

past few years has been brilliant, and 2017 marks

the end of a period wherein the bank had to operate

business as usual, but also had to drastically resolve

some legacy issues. The bank’s success has truly

been recognized by the market.

Dear shareholders,

Looking towards more sustainable activities and

more efficient performance, the Board of Directors

has to identify the key challenges ahead for the

Vietnamese banking sector in general and for

ACB in particular, and to devise another five-year

business strategy (2019 – 2023), accompanied by

the appropriate action plans.

Short-term challenges certainly include the impact

of technological advances on customer thinking,

behavior, and experience. Banks will face the difficult

task of finding ways to adapt their businesses to suit

the changing needs of customers. The emergence

of fintech companies and the entry of leading

digital conglomerates and social networking service

companies have had an increasing impact on a

broad mix of financial service categories, including

payments, posing a threat to the dominant position

of banks in the financial service markets. Given

that, ACB has to make ready for competition with

those disruptive forces, and invest more in banking

technologies or collaborations with fintechs.

Another challenge is to continue building and

enhancing its competence in customer focus,

serving households and corporates, especially small

and medium-sized companies; to understand and

meet the needs and wants of customers; and to

connect with different aspects of their businesses

through means of digital technology.

ACB will not only continue its traditional banking

business but also seek to go beyond, to have more

meaningful interactions with customers in a broader

environment. The bank also needs to strengthen

innovation activities to revive business activities,

and to focus on succession planning.

Chairman’s Message

ACB will not only continue its traditional banking business but also seek to go beyond, to have more meaningful interactions with customers in a broader environment. The bank also needs to strengthen innovation activities to revive business activities, and to focus on succession planning.

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Tran Hung Huy

Chairman of the Board of Directors

Dear shareholders,

2018 marks the 25th year of growth for the bank.

In the course of this period, ACB has held three

crucial facts to heart: trust of customers in the

bank’s customer service, trust of shareholders in its

sustainable performance, and trust of stakeholders

in its transparency and continued innovation.

Achievements in the past 25 years and the future

success of ACB have been based on integrity,

enthusiasm for work, a spirit of innovation,

and a learning mentality among managers and

employees; and ACB has been an organization of

people connected to one another by the core values

entrenched in their thinking and actions. ACB’s

people are proud to be part of this organization.

On behalf of the Board of Directors, I would like to

extend my sincere gratitude to shareholders for

your trust in and engagement with ACB.

I wish you good health, happiness and success in

the coming year.

Yours faithfully,

Annual Report 2017

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Banking Ecology ACB will not only continue its traditional banking business but also seek to go beyond, to have more meaningful interactions with customers in a broader environment, and to connect with different aspects of their businesses through means of digital technology.

General Information

11

• The bank’s name:

- Full name in Vietnamese: Ngân hàng thương

mại cổ phần Á Châu

- Abbreviated name in Vietnamese: Ngân hàng

Á Châu

- Full name in English: Asia Commercial Joint

Stock Bank

- Abbreviated name in English: ACB

• Business Registration Certificate No.:

0301452948

- Date of first registration: 19 May 1993

- The thirty-one registration: 09 March 2017

1. GENERAL INFORMATION

1.1 Name, business registration and history

1.1.1 Name and business registration

1.1.2.1 Establishment:

1.1.2.2 Listing:

Asia Commercial Joint-Stock Bank (ACB) was

established under the Business License No. 0032/

NH-GP dated 24 April 1993 by the State Bank

of Vietnam (SBV) and Establishment Permit No.

533/GP-UB dated 13 May 1993 by the People’s

Committee of Ho Chi Minh City. ACB started

operations on 04 June 1993.

ACB listed on Hanoi Securities Trading Center

(now re-named as Hanoi Stock Exchange – HNX)

pursuant to Decision No. 21/QĐ-TTGDHN dated

31 October 2006. The first transaction date was 21

November 2006.

1993

21.112006

• Chartered capital:

» VND 10,273,238,960,000 (In words: Ten trillion

two hundred and seventy-three billion two

hundred and thirty-eight million nine hundred

and sixty thousand Vietnam dong.)

• Address: 442 Nguyen Thi Minh Khai Street,

Ward 5, District 3, Ho Chi Minh City, Vietnam.

• Phone number: (+84) (283) 929 0999

• Fax: (+84) (283) 839 9885

• Website: www.acb.com.vn

• Stock code: ACB

1.1.2. History

Hanoi StockExchange

ACB

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1.1.2.3 Development milestones

1993 - 1995

• Embryonic stage of development.

• The founders shared the common business principle of “managing the development of the enterprise in a safe and effective way.”

• Targeted segments included households and private SMEs.

2001 - 2005

• Adopted the ISO 9001:2000 quality management system and registered for recognition of (i) deposit taking, (ii) short- and long-term lending, (iii) trade services, and (iv) human resource processes at the Headquarters.

• Standard Chartered Bank (SCB) signed an agreement to provide ACB with comprehensive technical assistance, and became an ACB shareholder.

• Carried out the second phase of the IT modernization program, including (i) server upgrading, (ii) replacement of the bankcard transaction processing software with one compatible with the core banking platform, and (iii) continued ATM installation.

1996 - 2000

• Became the first private Vietnamese bank to issue the international credit cards (MasterCard and Visa).

• Followed a two-year training program on banking operations conducted by foreign bankers and banking specialists, in order to work towards modern banking practices.

• Launched an IT modernization program: the LAN was replaced by the WAN, with a core banking platform named The Complete Banking Solution (TCBS), which was officially put into operation in 2001.

• Rearranged the organizational structure of Headquarters in order to facilitate business and support activities.

• Established ACB Securities Company (ACBS).

2006 - 2010

• Listed on the Hanoi Stock Exchange.

• Rapid expansion of the branch network: 223 offices were put into operation, a leap from 58 offices in 2005 to 281 offices in 2010.

• Established ACB Leasing (ACBL).

• Issued 10 million shares with par value of VND 100 billion, with the proceeds of more than VND 1,800 billion (2007); and increased its chartered capital to VND 6,355 billion (2008).

• Built a standard data backup center in Dong Nai Province.

• Awarded two Labor Medals by the Government, and recognized by various prestigious financial magazines and organizations as the best bank in Vietnam.

General Information

13

2011 - 2015

• The “Strategic Directions for 2011 to 2015 and the Vision to 2020” was issued. One focus was the transformation of the bank’s corporate governance practices, in compliance with Vietnamese rules and regulations, and the application of international best practices.

• An enterprise module data center was put into operation (the first one in Vietnam built to international construction standards).

• ACB Gold Manufacturing Center was the first business in the industry certified by QMS Australia for its quality management system (meeting the standards of ISO 9001:2008) and also recognized by Accreditation of Vietnam for meeting the standards of ISO/IEC 17025:2005 in testing and calibrating capacity (determining gold content).

• The August incident in 2012 had a serious impact on various bank activities, especially true for gold deposit taking and gold trading activities. The bank took quick action in response to the spike in withdrawals that took place in the last week of August, and was able to recover all of the VND deposits relatively quickly. The bank then

2016 - 2017

• In 2016, ACB completed as per schedule multiple items of technology projects, including the changing of ACBS’s core system; improvement in IT applications such as CLMS, CRM, ACMS, ELM, PASS to support the streamlining of business processes; upgrading ATM system and ACB website to increase utility and customer payment service, etc. Furthermore, ACB continued to complete strategic plan including (i) transaction banking, (ii) privilege banking, (iii) business process re-engineering - ACMS (phase 1), etc. in order to improve competitiveness. And particularly, during the year ACB successfully restructured the organization and operational model, with increased performance of its branches/ sub-branches and more streamlined organization of its Headquarters units.

took drastic measures to cut costs in the second half of the year.

• In 2013, although the business result did not meet expectations, ACB achieved positive growth rates in terms of deposit taking (18%) and lending (15%). Bad debt was kept under 3%. ACB managed to better arrange its personnel and cut headcounts. ACB began implementing the restructuring roadmap (2013 – 2015), as stipulated by the SBV.

• 2014, ACB upgraded the old core banking platform, which had been in use for 14 years, to a new version called the DNA. ACB completed the first phase of its corporate identity transformation, introducing new branding and renovating the facades of branches, sub-branches, and ATMs. A soft launch was conducted on January 05, 2015. ACB developed a risk management framework to fully comply with new regulations regarding prudential ratios. ACB’s branches grew in size and performance improved.

• In 2015, ACB completed its strategic plans including (i) branch/sub-branch restructuring, (ii) establishment of the domestic payment center (the first stage), (iii) completion of key performance indicators for units and staff at Headquarters; implementation of transaction banking, priority banking and customer management system, etc. for competitiveness.

• In 2017, ACB continued to improve policies, procedures, and risk management limits in order to comply with regulations of the State Bank of Vietnam. ACB achieved positive results in terms of operations and customer service quality: staff efficiency improved by 20%; working errors fell by 50%; and customer satisfaction improved. ACB is one of the top banks in terms of customer service quality. ACB continued with the plan of restructuring the branch network, grouping branches and sub-branches into clusters, and clusters into regions. Offices were relocated to further penetrate key markets and to develop new markets with potential. Consequently, performance of the branch network improved remarkably, and more than 94% of branches were profitable. Restructuring of the human resources continued, with a focus on sales forces with high capability and efficiency, and development and nurture of the successors.

Annual Report 2017

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1.1.3 Growth charts (Consolidated figures of the Group)

Total assets (VND billion)

Total deposits (VND billion)

0 50,000 100,000 150,000 200,000 250,000 300,000

284,316

233,681

201,457

179,610

166,599

2016

2017

2015

2014

2013

0 50,000 100,000 150,000 200,000 250,000 300,000

2016

2017

2015

2014

2013

241,393

207,051

174,919

154,614

138,111

0 50,000 100,000 150,000 200,000 250,000 300,000

284,316

233,681

201,457

179,610

166,599

2016

2017

2015

2014

2013

0 50,000 100,000 150,000 200,000 250,000 300,000

2016

2017

2015

2014

2013

241,393

207,051

174,919

154,614

138,111

Total Assets

284,316 VND billion

Total Deposits

241,393 VND billion

General Information

15

Total outstanding loans (VND billion)

Total pre-tax profit (VND billion)

0 500 1,000 1,500 2,000 2,500 3,000

2016

2017

2015

2014

2013

2,656

1,667

1,314

1,215

1,035

198,513

163,401

135,348

116,324

107,190

0 50,000 100,000 150,000 200,000 250,000

2016

2017

2015

2014

2013

0 500 1,000 1,500 2,000 2,500 3,000

2016

2017

2015

2014

2013

2,656

1,667

1,314

1,215

1,035

198,513

163,401

135,348

116,324

107,190

0 50,000 100,000 150,000 200,000 250,000

2016

2017

2015

2014

2013

Total Outstanding Loans

198,513 VND billion

Total pre-tax profit

2,656 VND billion

Annual Report 2017

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1.2 Business scope and network

1.2.1 Business scope

See Section 1.(a) “Establishment and operation” in

the 2017 Consolidated Financial Statements.

1.2.2 Network

Four new offices were set up in 2017. As of 31

December 2017, ACB had 354 branches and sub-

branches in 47 provinces and cities nationwide.

ACB’s credit market share increased by 10 BPS

YOY, standing at 3%, and positively improved in

Ho Chi Minh City and North Central region. Ho Chi

Minh City, Southeast, Northeast and Mekong Delta

remain the Bank’s key markets.

1.3.1 Organizational structure

The key organs of the Bank consist of the General

Meeting of Shareholders, the Board of Directors,

the Supervisory Board, and the Chief Executive

Officer, as stipulated by Article 32.1 of the Law on

Credit Institutions 2010 on the organizational and

managerial structure of credit institutions.

The General Meeting of Shareholders is the

Bank’s highest authority (Article 27.1 of ACB

Charter 2017), and has the right to elect, dismiss

and remove members of the Board of Directors

and the Supervisory Board (Article 29.1.d of ACB

Charter 2017).

The five board committees include the HR

and Remuneration Committee (the Personnel

Committee), the Risk Committee, the Credit

Committee, the Investment Committee, and the

Strategy Committee.

ACB Group includes the Bank and its subsidiaries.

As of 31 December 2017, the Bank was comprised

of nine divisions and 11 separate departments,

centers and offices at the Headquarters and 354

branches and sub-branches in a variety of cities

and provinces. In addition, there are a number

of specialized units including Bankcard Center,

Western Union Department, Telesales Center, and

Call Center 24/7.

1.3 Organizational structure

General Information

17

1.3.3 General information about subsidiaries

This content is mentioned in Item 2.3.2. “Subsidiaries.”

1.3.2 Organizational chart

CONSUMER BANKINGDIVISION

BOARD COMMITTEES

OFFICE OF THE BOARD OF DIRECTORS

• Card Center• 24/7 Call Center• Privilege Banking Department• WU Department• Partner Channel Sales Department• Digital Banking Department• Consumer Credit Analysis Department• ATM Department• Consumer Sales Management Department• Consumer Credit Products Team• Consumer Financial Services & Deposit Products Team

• SME Sales Management Department• Corporation Department• Financial Institutions Credit Analysis Department• International Payment Department• SME Credit Products Team• Corporate Credit Products Team• SME Financial Services Team• Corporate Financial Services Team• Transaction Banking Sales Team• Transaction Banking Solutions Team

COMMERCIALBANKING DIVISION

PROJECT MANAGEMENT OFFICE

GENERAL MANAGEMENTDEPARTMENT

COLLATERAL APPRAISALDEPARTMENT

COMMUNICATION AND BRANDDEPARTMENT

CUSTOMER EXPERIENCEMANAGEMENT DEPARTMENT

SUPERVISORY BOARD INTERNAL AUDIT DEPARTMENT

MANAGEMENT COMMITTEES

INVESTMENT DEPARTMENT

DEBT MANAGEMENT DEPARTMENT

CENTRALIZED CREDITAPPROVAL CENTER

LEGAL DEPARTMENT

INNOVATION LAB

BRANCHES AND SUB-BRANCHES

EXTERNAL RELATIONS DEPARTMENT FINANCIAL MARKETSDIVISION

RISK MANAGEMENTDIVISION

• Money Market Department • FX and Gold Trading Department• Treasury Product Department• Gold Manufacturing Center

• Credit Risk Department• Market Risk Department• Operational Risk Department• Anti Money Laundering Sub-department

OPERATIONS DIVISION

HUMAN RESOURCESDIVISION

PROPERTY MANAGEMENTDIVISION

IT DIVISION

FINANCE DIVISION

• Tellering Operations Suppport Department• Credit Operations and FI Support Department• Banknote Department• Legal Documentation Center• Domestic Payment Department

• Recruitment Department• Service Delivery Department• Compensation and Benefits Department• HR Development Department• Training Center• HR Relationship Managers

• Administrative Department• Basic Construction Department• Technical Department• Purchasing Sub-department

• Financial Supervision Department• Accounting Department• Business Performance Department• Balance Sheet Department

• IT Infrastructure Department• Application Management Department• Enterprise Application Department• IT Services Department• Core Banking and Digital Banking Department• IT Architecture, Security and Policy Department

THE GENERAL MEETING OF SHAREHOLDERS

BOARD OF DIRECTORS

BOARD OFMANAGEMENT

Annual Report 2017

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1.4.2 Medium and long-term strategy (5 years)

Key actions:

• ACB will continue to upgrade technology

systems to support key activities.

• Manage the productivity of employees and

the individual performance of branches, sub-

branches and Headquarters units.

1.4 Development strategy

1.4.1 Financial targets for year 2018

Customer deposit shall increase by

18%

• Improve the business model for branches and

sub-branches to better cater to individuals

and SMEs - ACB’s target customer segments.

To optimize the role of branches and sub-

branches as components of clusters and

regions to improve sales productivity, while

at the same time strengthening the credit

extension process and relevant operating

process.

VND 5,699billion

18%

15% 2%as allowed by the State Bank of Vietnam.

Total assets shall increase by

The Group’s profit before tax shall be in the region of

Outstanding loans shall increase by Non-performing loan ratio shall be under

Development strategy for year 2018

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• Increase capital to support businesss growth

and to meet Basel II requirements.

• Build and upgrade the risk management

frameworks relating to credit extension and

operations, etc.

1.4.3 Implementation of PMO projects in 2017

1.4.3.1 Debt management system project (DMS)

DMS is a solution to manage the debt settlement

process at ACB from the time a loan is disbursed

until it is fully repaid. DMS helps to monitor

and control the evolution of debts of different

categories, overdue debts, and bad debts, helpful

when making plans to prevent the occurrence of

overdue debt or to timely settle the debts.

1.4.3.2 Operational efficiency improvement project

This project has three main objectives: (i)

automation of operational process to increase

productivity and minimize costs, (ii) application

of technology to better control risk, and (iii)

application of technology to faster deliver products

and services to customers and to enhance the

customer experience at ACB. The project’s

deliverables have been put into use on schedule.

1.4.3.3 Business process digitalization project

(Digitalization)

This project started in mid-2016 and is expected

to be complete by December 2018. ACB has been

working with partners to digitize four key business

processes, comprising the payment account

opening process, the debit/prepaid card opening

process, the domestic payment process, and

the international payment process. The first two

processes are expected to put into use in several

branches in April 2018.

1.4.3.4 ACB customer relationship management

system (ACMS)

The ACMS manages customer relationships and

interactions with ACB’s existing customers, as well

as with potential customers. ACMS will help ACB to

(i) develop sales strategies and implement specific

sales orientations; (ii) exploit relevant customer

segments and organize appropriate customer

care campaigns; and (iii) better manage business

activities through automated reporting. In 2018,

ACMS will be deployed bankwide.

1.4.3.5 Go paperless project (Administrative

procedure improvement and paper using reduction)

This project is a digital signature submission

management system that helps to minimize the

use of time and paper for submitting applications.

Go Paperless has the following effects: (i) minimizing

printed paper; (ii) minimizing administrative

procedures, saving time in the approval process,

and creating a smooth and swift process to share

documents between Headquarters units and

branches; (iii) reducing costs relating to materials,

paper, and document preservation & storage; (iv)

enhancing the ability to manage and exploit internal

information, and to ensure confidentiality; and (v)

changing employees’ habits to adopt IT solutions

in ACB’s operations. Go Paperless has two phases.

Phase 1 is expected to be deployed in April 2018.

1.4.4 Sustainable development targets (environment, society and community)

Since its founding, ACB has maintained a strong

corporate social responsibility policy favoring

the environment, society as a whole, and the

communities where it operates. ACB actively

contributes to society by engaging in activities

such as granting scholarships for students studying

banking and finance, funding charity programs for

impoverished Vietnamese families or individuals,

and funding environmental protection programs,

including primate and rare animal conservation

programs within Vietnam.

1.5 Financial risk management

See Item 41 “Financial risk management”, section

Notes to the consolidated financial sements in the

2017 Consolidated Financial Statements.

Annual Report 2017

20

Big DataACB is building a framework for big data

management and analytics to acquire insights of customers and to make more accurate

decisions regarding business tools, products, and utilization of market potential.

Business Activities In 2017

21

2. 2 BUSINESS ACTIVITIES IN 2017

2.1 Business performance

2.1.1 Full year business performance

2017 is the year when ACB regained its position

as the leading bank in Vietnam. The full year

business results are proof of ACB’s spectacular

comeback, after several years spent manage with

old challenges.

Group profit-before-tax was strong, at VND 2,656

billion, increasing by 59% compared to 2016 and

surpassing the full year target by 20%. ACB's

net interest income increased by 23%, with an

improved net interest margin of 3.27% - a 10-point

increase from 2016. Non-interest income also

experienced impressive growth of 70%, accounting

for 26% of total income, in which, service revenues

increased sharply at 26% growth. ACB has gradually

transformed its income structure, diversifying its

profitability, and reduced reliance on credit activities.

In 2017, ACB continued to allocate funds and make

strategic investment in long-term developments,

including upgrading IT infrastructure, increasing

staffing costs and attracting talent, and organizing

many creative contests to drive ACB forward in the

financial “fintech” revolution. In 2017 costs were

tightly controlled and despite increasing by 33%

were actually below plan.

The bank continued vigoruously restructuring the

balance sheet, adhering to SBV regulations and

in line with ACB's continulously-strengthened

risk management policies. This restructuring has

made the bank stronger and more transparent.

Assets increased from VND234 trillion to VND284

trillion, growing by 22%. The credit balance

increased VND35 trillion, equivalent to 20%

growth; mobilization increased by VND34 trillion

or an increase of 17%. In particular, ACB continued

to focus on lending growth in accordance with

the direction of the SBV. During the year, ACB

implemented 13 preferential interest rate programs

with a total limit of VND59 trillion to support

production and business activities for individuals

and enterprises.

Even with such strong growth, ACB maintained high

liquidity, with customer loans to deposits ratio at

82% and the proportion of government bonds over

total assets always over 15%.

As for capital adequacy, ACB is one of the 10 banks

selected to pilot application of Basel II in 2019.

Consequently, ACB has been actively improving its

capital adequacy ratio (CAR) via various measures

such as the issuance of more than 3 trillion Tier 2

bonds, active management of the loan portfolio

from various aspects, such as term and industry

breakdown with the aim of improving the average

risk weight of assets. By 2017, the total CAR and Tier

1 CAR stood at 11.49% and 7.77%, respectively.

Credit provision expenses increased by 12%

compared to 2016. In 2017, ACB achieved a great

deal in overall handling of NPLs as well as special

legacies (resulting from challenges in 2012). During

the year, in addition to continuing to follow the

restructuring plan approved by SBV, ACB actively

accelerated the recovery process and made 100%

provision for all outstanding legacy assets a full

year ahead of the approved schedule. ACB also

actively dealt with bad debts, writing off all debts

sold to VAMC. During the year, ACB fully liquidated

the entire portfolio of VAMC bonds and while at

Annual Report 2017

22

the same time sharply reducing the NPL ratio

from 0.87% to a record low of 0.70%. The ratio of

category 2-5 debt also fell dramatically, from 2.1%

to 0.9%.

Positive business results in 2017 have created a

solid foundation for 2018 and beyond.

2.1.2 Actual vs. budget

In 2017, ACB successfully completed and actually

exceeded its target. Total assets reached VND284

trillion, compared to 2016, an increase of 22%,

compared with the plan of 16% growth. Since the

beginning of the year, the Board of Management

focused on building a strategy to grow credit in a

stable and steady manner throughout the year.

By the end of 2017, the outstanding loan balance

increased by 20%, reaching 199 trillion dong,

exceeding the growth target of 16%. As for

mobilization, in 2017 the competition was fierce.

In that context, ACB still fulfilled its target by

achieving 17% growth in deposits, exceeding the

target of 16%. With strong growth in both lending

and deposit activities, ACB reached a pre-tax

profit of VND2,656 billion, up 59% from 2016 and

surpassing the target of VND2,205 billion by 20%.


23

2.2 The Board of Management and human resource policies

2.2.1 The Board of Management

No. Member Responsibility Shareholding(1)

1 Do Minh Toan

President & CEO

Overall responsibility for the Management’s activities;

Oversight of IT Division, Legal Department, Communication and Brand Department, Customer Experience Management Department, Investment Department, General Management Department, Centralized Credit Approval Center, Innovation Department;

Oversight of ACB’s subsidiaries.

0.01%

2 Bui Tan Tai

First Executive Vice President

In charge during the President’s absence from work;

Oversight of Operation Division, Risk Management Division, Collateral Appraisal Department, Debt Management Department;

Head of the Project Management Office (PMO).

0.00% (*)

3 Nguyen Thanh Toai

Executive Vice President

Authorized information disclosure officer and Spokesman of the bank;

Officer in charge of communication issues relating to the bank’s activities.

0.00% (*)

4 Dam Van Tuan


Oversight of Human Resources Division and Property Management Division;

Head of the Office of the Board of Directors.

0.00% (*)

5 Nguyen Duc Thai Han


Oversight of the Financial Markets Division and ACB Gold Manufacturing Center;

In charge of business activities of branches in South Central Coast region.

0.00% (*)

6 Nguyen Thi Hai


In charge of business activities of branches in Ho Chi Minh City.

None

7 Tu Tien Phat


Oversight of Consumer Banking Division and Commercial Banking Division;

In charge of the implementation of strategic projects relating to retail banking specified by the President.

None

8 Nguyen Thi Tuyet Van


Head of External Relations Department. 0.00% (*)

9 Nguyen Van Hoa


Chief Financial Officer;

Oversight of the Finance Division and accounting activities.

0.00% (*)

10 Nguyen Ngoc Nhu Uyen


Chief Investment Officer;

Head of the Investment Department.

None

(*): “0,00%”: The number of shares is rounded down (two decimal places.)

(1) Data: As of December 31, 2017.

Annual Report 2017

24

2.2.2 Resumes

Mr. Do Minh Toan

President & CEO

Mr. Do Minh Toan was appointed President & CEO in

2012. He earned a bachelor’s degree in economics from

both HCMC Banking University and HCMC University

of Economics, a bachelor’s degree in Law from HCMC

Law University and an MBA from Colombia Southern

University, USA. He has 24 years’ experience in finance

and banking.

Mr. Bui Tan Tai

First Executive Vice President

Mr. Bui Tan Tai was appointed Executive Vice President

in 2007. He graduated from HCMC Banking University

and HCMC University of Economics with bachelor’s

degrees in economics; and from Southern California

University, USA, with an MBA. He has 23 years’

experience in finance and banking.

Mr. Nguyen Thanh Toai


Mr. Nguyen Thanh Toai was appointed Executive Vice

President in 1994. He graduated from the HCMC

University of Economics and taught there from 1978.

He went to the Soviet Union as a post-graduate student

from 1984 to 1990 and received his PhD degree in

economics at Plekhanov University. He has 25 years’

experience in finance and banking.


25

Mr. Nguyen Duc Thai Han


Mr. Nguyen Duc Thai Han was appointed Executive Vice

President in 2008. He gained a bachelor’s degree in physics

at the University of HCMC. He has 24 years’ experience in

finance and banking.

Mr. Dam Van Tuan


Mr. Dam Van Tuan was appointed Executive Vice President

in 2001. He had a master’s degree in comparative

linguistics from HCMC University of Social Sciences and

Humanities, a bachelor’s degree in economics from HCMC

University of Economics, and an Executive MBA in finance

and banking from the University of Applied Sciences

Northwestern Switzerland. He has 24 years’ experience in


Ms. Nguyen Thi Hai


Ms. Nguyen Thi Hai was appointed Executive Vice

President in 2011. She graduated from HCMC University

of Economics with a bachelor’s degree in banking. She

has 25 years’ experience in finance and banking.

Annual Report 2017

26

Mr. Tu Tien PhatExecutive Vice President

Mr. Tu Tien Phat was appointed Executive Vice President

in 2015. He graduated from HCMC University of

Economics with a bachelor’s degree in economics and an

MBA. He has 22 years’ experience in finance and banking.

Ms. Nguyen Thi Tuyet VanExecutive Vice PresidentMs. Nguyen Thi Tuyet Van was appointed Executive Vice

President in 2015. She graduated from HCMC Banking

University with a bachelor’s degree in economics and

from HCMC Law University with a bachelor’s degree in

economic law. She has 28 years’ experience in finance

and banking.

Mr. Nguyen Van HoaExecutive Vice President, Chief Financial Officer (CFO)

Mr. Nguyen Van Hoa has held a position as Chief

Accountant since 2002. He was appointed Chief

Financial Officer in 2015 and Executive Vice President

since January 2017. He graduated from HCMC Banking

University with a bachelor’s degree in economics. He

has 23 years’ experience in finance and banking.


27

Ms. Nguyen Ngoc Nhu UyenExecutive Vice President, Chief Investment Officer

Ms. Nguyen Ngoc Nhu Uyen was appointed Executive

Vice President in January 2018. She joined ACB in April

2015 and has been in charge of Investment Department

since then. At ACB Securities Company (ACBS), she is

a member of the Members’ Council and chairs ACBS

Investment Committee. She graduated from Melbourne

University with an MBA. She has 15 years’ experience in


ACB’s extended management team is strengthened with foreign experts, including Mr. Kollagunta

Sreenivasan Gopalaswamy.

2.2.3 New executive appointment

Ms. Nguyen Ngoc Nhu Uyen, Chief Investment Officer,

was appointed the Board of Directors as an Executive Vice

President on 26 January 2018.

2.2.4 Human resource policies2.2.4.1 Number of employees

Year Total number of employees

(given in consolidated financial statements)

2013 9,131

2014 9,296

2015 9,935

2016 9,822

2017 10,334

Mr. Kollagunta Sreenivasan Gopalaswamy joined ACB in

February 2013 as Head of Financial Markets Division. He

has been Deputy Head of Commercial Banking Division

since April 2017; in charge of Corporate Relationship

Department and Transaction Banking Department.

He graduated from Indian Institute of Management

Ahmedabad and gained a bachelor’s degree in sciences

at Osmania University (Hyderabad, India). He has over

35 years’ experience in finance and banking at financial

institutions in Mumbai, Dhaka, Hong Kong, Singapore,

London, etc.

Annual Report 2017

28

2.2.4.2 Average income in

2015 – 2017

See Item 35 “Employees

remuneration,” section Notes to

the consolidated financial sements

in the 2017 Consolidated Financial

Statements.

2.2.4.3 Compensation policy

ACB’s compensation policy aims

to promote fairness, transparency

and competitiveness to help attract

talent. It is a pay-for-performance

compensation policy and is adjusted

on the basis of surveys regarding

wages in the market.

Benefits include mid-shift meal expenses, a

comprehensive health care program (ACB Care),

affordable rate loan programs, etc.

Bonuses are given on key days: New Years’ Day, Lunar

New Year, International Women’s Day (08 March),

Liberation Day (30 April), International Worker’s Day

(01 May), National Day (02 September), and The

Bank’s Inauguration Day (04 June).

ACB regularly updates its compensation policy

to keep and develop the target talent pool and

managers with high potential by providing incentives

such as transportation allowances, periodic health

checks at high-end clinics, personal and family health

care, overseas holidays for excellent leaders, etc.

All ACB’s employees have the right to benefit from

insurance programs including social insurance,

unemployment insurance, and health insurance.

2.2.4.4 Recruitment

Staff who are recruited to work at ACB have to

meet competency requirements and be oriented

to the career development plan and long-term

commitment with ACB. With this direction, in 2017

ACB launched a huge nation-wide recruitment

drive focusing on two main groups of candidates:

experienced workers and graduates with strong

potential. As a result, 1997 staff (including official

and short-term employees) were recruited to

support business needs and replacement.

Moreover, in order to actively attract high quality

young workers, ACB also broadened its partnerships

with major universities throughout Vietnam,

held career days, launched a talented internship

recruitment program called “The Next Banker

2017,” etc.

2.2.4.5 Training activities

In 2017, ACB’s training activities focused mainly on

the following:

(i) To complete the multi-formated training model,

increase the number of e-learning courses to

186 (up by 133%), utilize tele-training activities

via “video conference”,

(ii) To strengthen collaboration with trusted

training organizations to enhance management

capabilities, such as courses for middle and

senior managers run in cooperation with MIT,

(iii) To implement courses as requested by state

agencies relating to the prevention of fraud and

corruption, and awareness about information

security,

Number of employees over years

2013 2014

2015 2016 2017

9,131 9,2969,935 9,822

10,334

12,000

10,000

8,000

6,000

4,000

2,000

0


29

(iv) To digitalize and automate the training

data management on the ELM (E-Learning

Management), synchronizing with a centralized

HR database (core HR),

(v) To strengthen communication with employees

to increase activities in learning and

development.

The total number of courses and counts of

employees being trained in 2017 was 697 courses,

with 65,241 counts; the average time spent training

was 3.9 days per employee per year.

2.2.4.6 Employee development activities

In 2017, ACB experienced nearly 2,000 cases of

“career development” (including appointment,

reappointment, job transfer and position

change). These activities were strictly, fairly and

transparently conducted based on employees’

capabilities and merit.

In ACB’s employee structure, the proportion of

high performers (those who met their targets

with “satisfactory” or “beyond expectations”

ratings) has consistently been at an appropriate

level. Employees who do not meet expectations

are given chances to improve their performance

through competition programs, coaching, technical

training, experience sharing meetings, etc.

2.3 Review of large investments and the activities of subsidiaries

2.3.1 Large investments and the status of large investment projects

The current guideline is that strategic investments

shall be made by ACB and financial investments shall

be made by ACB’s subsidiaries when necessary.

Annual Report 2017

30

2.3.2 Subsidiaries

Company Name

Address License and Business

Capital (billion VND)

Owned by ACB

(%)

Owned by Subsidiary

(%)

Total Share

holding (%)

ACB Securities Company (ACBS)

41 Mac Dinh Chi, Da Kao Ward, District 1, Ho Chi Minh City.

06/GPHĐKD

Investment

banking

1,500 100 - 100

ACB Asset Management Company (ACBA)

8th Floor, ACB Tower, 444A - 446 Cach Mang Thang Tam, District 3, Ho Chi Minh City.

4104000099

Troubled asset management

340 100 - 100

ACB Leasing Company (ACBL)

131 Chau Van Liem, Ward 14, District 5, Ho Chi Minh City.

4104001359 Asset leasing 300 100 - 100

ACB Capital Company (ACBC)

12th Floor, ACB Tower, 480 Nguyen Thi Minh Khai, Ward 2, District 3, Ho Chi Minh City

41/UBCK-GP Fund management

50 - 100 100

2.3.2.1 Report on ACB Securities Company (ACBS)

The Vietnamese stock market in 2017 had a strong

breakthrough, and experienced the strongest growth

in Asia. The VN-Index at the end of the year reached

984.24 points, up 46.5% over the beginning of the

year, and was one of the five strongest growing stock

indexes worldwide.

With wave of some new big stock listings and strong

growth among bluechips, market capitalization

reached over 3,360 trillion VND, up 73% compared to

2016. The average trading value on the HOSE reached

4,138 billion VND per session, an increase of 71%

compared to 2016.

The stock exchange in 2018 is expected to be

supported by positive macroeconomic factors and a

wave of divestments of a number of state-owned and

newly listed companies.

For ACBS, 2017 was a challenging year, but with great

effort, it achieved some noteworthy successes. Profit

before tax was 163.7 billion VND, up 15.4% over 2016.

Revenue from brokerage services and fees increased

by 30.9% year on year. ACBS actively restructured

its balance sheet by cutting back on ineffective

investments, keeping investment value low with a

carefully selected portfolio, and focusing resources on

the core business. In 2017, ACBS reversed provisions

worth over 44 billion VND.

In 2017, ACBS prioritized the development of securities

brokerage activities, especially individual brokerage.

The branch network was expanded to 132 brokers

in total. In-depth knowledge of securities, analysis,

and investment psychology have been consistently

updated and enhanced for all employees. ACBS also

organized the Trade Pro competition, creating a new

playground for students majoring in finance, as a bridge

between ACBS and universities to attract talented

people. With the above efforts, ACBS took back its

spot as one of the Top 10 companies in terms of

market share on Vietnamese stock exchanges since

Quarter 4 of 2017.

In 2018, ACBS will continue to make individual

customer brokerage the focus, accelerate

institutional brokerage, and make plans for prudent

proprietary trading. A new margin trading policy

will be set with adjusted interest rates to attract

customers and add stability to this product. A

new playground called Top Trader was launched


31

to attract to investors to participate

in the stock market and expand

ACBS customer base. Analysis

activities will be extended to include

new stocks, mid-cap stocks, and

additional industry reports to offer

investors attractive investment

opportunities. The company is also

preparing the information technology

infrastructure, financial, and human

resources to develop and introduce

derivatives to its customers in the

near future.

2.3.2.2 Report on ACB Assets

Management Company (ACBA)

ACBA’s main business is to deal

with overdue debts and bad debts

mandated by ACB and to trade

in assets acquired from debt

resolution activities. In 2017 bad

debts in the banking industry were

trending downwards. However, law

enforcement in the area of disposing

collateralized assets has not been effective for debt

resolution activities.

In 2017, ACBA has achieved the following highlights:

• Revenue from trading assets acquired from

debt resolution activities and interest from

cash at bank were 26,189 billion VND, profit

before tax reached 10,429 billion VND;

• Three of the assets acquired from debt

resolution in previous years were sold.

ACBA’s new strategic direction is to focus on trading

in assets acquired from debt resolution activities.

ACBA’s debt collection function has been shifted to

ACB’s Debt Management Department to unify and

consolidate the debt resolution process. The action

plan for 2018 is to implement this strategy.

2.3.2.3 Report on ACB Leasing Company (ACBL)

In 2017, ACBL focused on strengthening its

organizational structure, keeping its operations

stable and sustainable. Total disbursement amount

reached 369 billion VND, and profit before tax

reached 16.3 billion VND.

With a focus on professionalism and transparency,

ACBL continued to build trust with customers and

partners. Accordingly, in 2017 several facilities and

services were improved to meet the changing

requirements of customers. In addition, ACBL

continued to focus on acquiring customers

with good financial positions in targeted, high-

potential sectors, with demand for leasing assets

of high liquidity.

In 2018, ACBL has continued to co-operate with

trustworthy providers of machinery and equipment,

exploit the potential of existing customers, and offer

consulting solutions on comprehensive technology

innovation to customers.

436

906

25,9

2016 2017

1,000

900

800

700

600

500

400

300

0

100

100

90

80

70

60

50

40

30

20200

10

0

369

16,3

850

25,9

Disbursement Out standing loans Pro�t before tax

billion VND billion VND

Disbursement, out standing loans, pro�t before tax

Annual Report 2017

32

In addition to credit development, ACBL also

regularly organized training courses to improve sales

skills, human resources quality, risk management

capabilities, and business processes.

2.3.2.4 Report on ACB Capital Company (ACBC)

In line with the development of the stock market,

Vietnam's fund management sector recorded a

number of strides in 2017 when the total asset

value under management reached over 155

trillion VND, increasing by 15% compared to the

previous year.

In 2017, ACBC contacted many individual and

institutional investors to understand their needs,

conducted research based thereon, and designed

suitable in-demand products, while also introducing

future potential products such as pension funds,

bond funds, etc.

ACBC continued to improve the quality of human

resources and to focus on compliance with

processes relating to investment, risk management,

and internal controls, etc. not only to comply with

laws and regulations, but also to increase value for

and avoid conflicts of interest with customers. To

develop sustainably, ACBC aims to build trust and

transparency and increase the long-term asset

value for customers.

By the end of 2017, ACBC's performance was

as follows:

• Revenue: 3,478 billion VND

• Profit before tax: 3,225 billion VND

• CAR (31 December 2017): 264%

In the 2018 plan, ACBC will focus on developing

its core business, increasing value of assets under

management, designing new fund products

and new investment portfolios, and improving

operational efficiency. Exploiting the needs of

domestic individual customers is also one primary

target for the year.


33

2.4 Financial review

2.4.1 Balance sheet and income statement highlights

Scale (VND billion) 2016 2017 +/- %

Total assets 233,681 284,316 22

Cash on hand, gold and loans to other credit institutions 8,324 9,095 9

Loans to customers 163,401 198,513 21

Financial investments 47,199 54,595 16

Deposits from customers 207,051 241,393 17

Deposits and borrowings from other credit institutions 2,235 15,454 591

Equity 14,063 16,031 14

Charter capital 9,377 10,273 10

Income (VND billion)

Net interest income 6,892 8,458 23

Non-interest income 2 1,772 3,013 70

Operating expenses 4,678 6,217 33

Provision expenses 3 2,319 2,597 12

Profit before tax 1,667 2,656 59

Profit after tax 1,325 2,118 60

2 Non-interest income from core activities, excluding provisions for G6’s bonds and state corporations’ bonds.

3 Provision expenses including provisions for G6’s bonds and state corporations’ bonds.

Annual Report 2017

34

2.4.2 Key financial indicators

Operating indicators 2016 2017 +/-%

Capital adequacy ratio (%)

CAR 13.19 11.49 -1.70

CAR Tier 1 8.26 7.77 -0.49

Equity/Total assets 6.02 5.64 -0.38

Equity/Total loans and advances to customers 8.61 8.08 -0.53

Liquidity (%)

Outstanding loans/Total assets 69.92 69.82 -0.10

LDR 78.92 82.24 3.32

Asset quality

Bad debts C3-5 (VND billion) 1,421 1,390 -2

Overdue debts C2-5 (VND billion) 3,444 1,839 -47

Bad debts/Total outstanding loans (%) 0.87 0.70 -0.17

Category 5/Total bad debts 74 57 -16.9

Overdue loans/ Total outstanding loans 2.1 0.9 -1.18

Allowance for losses on credit/Total bad debts (%) 126 133 6.26

(Equity + Provision)/Total bad debts (times) 11 13 1.7

Profitability (%)

Return on equity (ROE) 9.9 14.13 4.26

Return on total assets (ROA) 0.6 0.8 0.20

Net interest margin (NIM) 3.17 3.27 0.10

Non-interest income/Total income 20.5 26 5.81

Operating expenses/ Total income 54.0 54.2 0.21

Provision for bad debts/Profit before provision 58.2 49.4 -8.74


35

2.5.1 Shares

The total number of common shares issued by ACB is currently

1,027,323,896 (equivalent to VND 10,273,238,960,000 of charter

capital), where:

• Number of outstanding shares: 985,901,288 shares

• Number of treasury shares: 41,422,608 shares

• Number of unrestricted shares: 990,563,493 shares

• Number of restricted shares: 36,760,403 shares

2.5.2 Shareholding structure

2.5.2.1 Major (*) and minor shareholders

Number Shares owned Shareholding

Major shareholders 3 224,059,341 21.81%

Minor shareholders 24,708 803,264,555 78.19%

Total 24,711 1,027,323,896 100%

[*] Pursuant to Article 4.26 of the Law on Credit Institutions 2010, a “major

shareholder of a shareholding credit institution means any shareholder directly

or indirectly owning five percent or more of the voting shareholding of such

shareholding credit institution.”

2.5.2.2 Institutional and individual shareholders


Institutional shareholders

207 455,528,539 44.34%

Individual shareholders

24,504 571,795,357 55.66%

Total 24,711 1,027,323,896 100%

MajorMinor

9%

8%

21.81%

78.19%

Cơ cấu cổ đông chia theo tiêu chí pháp nhân và thể nhân

Individual

Institutional

55.66%44.34 %

2.5 Shareholding structure and changes in shareholders’ equity (as of December 31, 2017)

Annual Report 2017

36

2.5.2.3 Domestic and foreign shareholders

2.5.2.4 Domestic and foreign shareholders breakdown


Domestic shareholders 24,664 719,126,728 70.00%

Foreign shareholders 47 308,197,168 30.00%

Total 24,711 1,027,323,896 100%


Domestic shareholders

- Institutional shareholders

185 147,369,960 14.35%

- Individual shareholders

24,479 571,756,768 55.65%

Sub-total (1) 24,664 719,126,728 70.00%

Foreign shareholders

- Institutional shareholders

22 308,148,579 30.00%

- Individual shareholders

25 38,589 0.00%

Sub-total (2) 47 308,197,168 30.00%

Total (1) & (2) 24,711 1,027,323,896 100%

2.5.2.5 Major foreign shareholders

Major foreign shareholders with more than 5% of shareholding proportion include the following:

No. Name Address Business Shares owned

1 Standard Chartered APR Ltd. (*)

01 Basinghall Avenue London, EC2V 5DD, United Kingdom

Banking 89,863,928 (8.75%)

2 Dragon Financial Holdings Limited

C/O 1901 Me Linh Point Tower, 02 Ngo Duc Ke Street, District 1, HCMC, Vietnam

Investment 69,960,757 (6.81%)

3 Standard Chartered Bank (Hong Kong) Ltd. (*)

32nd Floor 4-4A Des Voeux Road, Central, Hong Kong

Banking 64,234,656 (6.25%)

- Total - - 224,059,341 21.81%

(*) Standard Chartered APR Ltd. and Standard Chartered Bank (Hong Kong) Ltd. were no longer shareholders of ACB since January

09, 2018.

Cơ cấu cổ đông chia theo tiêu chí trong nước và nước ngoài, pháp nhân và thể nhân

0.00%

55.65%30.00%

14.35%

Domestic Institutional

Foreign Institutional

Domestic Individual

Foreign Individual

Cơ cấu cổ đông chia theo tiêu chí trong nước và nước ngoài

70%

30%

Domestic

Foreign


37

2.5.3 Changes in shareholders’ equityAs of 31 December 2017, there is no change in

shareholders’ equity (VND 10,273,238,960,000).

Pursuant to Decision No. 40/QĐ-SGDHN, dated 17

January 2017 of Hanoi Stock Exchange, ACB listed all

of 1,027,323,896 shares which were issued.

2.5.4 Transaction of treasury shares

During 2017, there was no transaction of treasury

shares. As of 31 December 2017, the total

number of current treasury shares of ACB was

41,422,608 shares.

2.5.5 Other securities

Non applicable.

2.6 Report on the bank’s responsibilities toward community and environment

In 2017, ACB allocated over 5 billion VND to

conduct programs supporting education and

social welfare under the common name “I love

the journey of my life.”

Fifty percent of the budget was used for

scholarships for pupils from primary school age

up to university age, contributions to banking

scholarship fund, building schools, sponsoring

career days, etc., in Ho Chi Minh City, Ha Noi,

Tra Vinh, An Giang, Daklak, Tien Giang and

Bac Giang. Through those activities, ACB

encouraged the next generation to engage in

continuous learning and learn to manage their

own personal development for the benefit of

their communities.

The remaining 50% was used for social activities

such as giving provisions to veterans and ethnic

minorities in Daklak and Dak Nong provinces,

sponsoring “Joining hands for the poor” program,

constructing housing for the poor in Tra Vinh

province, supporting people affected by floods in

Binh Dinh province, etc.

Besides, ACB showed its concern about the

protection of natural resources and environment

by carrying out the “Near to O” campaign to bring

people closer to the Earth through practical actions.

This campaign has been held by ACB throughout the

last four years. ACB is proud to be the pioneer bank

in the drive to protect Vietnam’s natural resources

and environment in an organized and sustainable

way. ACB, alongside with other companies, has

helped Fauna and Flora International (FFI) to protect

rare primate species in Vietnam.

From 2014 to now, ACB has implemented

communication activities to encourage its staff

and customers to raise the awareness and take

practical actions in environmental protection

and natural conservation. At present, saving

paper, using environmentally friendly bags, using

ceramic cups instead of plastic ones, maintaining

natural landscapes, etc., have gradually become

habits of ACB staff in work and in daily life. In

addition, ACB has sped up the digitalization of

processes and reduction of paper consumption

in customer services.

In 2017, ACB won the award for “Best bank for

corporate social responsibility” in Vietnam 2017

from Asiamoney Magazine.

Annual Report 2017

38

3. THE BOARD OF MANAGEMENT’S REPORT AND ASSESSMENT OF BUSINESS ACTIVITIES

3.1 General assessment of business performance

In 2017, ACB achieved many successes,

outperforming all targets for the year, thanks to

the following efforts and achievements:

• Persistence in building a strong and sound

balance sheet with good liquidity and healthy

capital adequacy, complying with SBV’s

requirements and helping stabilize the overall

banking system’s liquidity.

• Proactively took provision for and resolved

all legacy issues; and fully collected deposits

from one nationalized bank.

• Drastically resolved bad debts;

almost all major bad debts were

collected, written off, or sold to

VAMC; and all VAMC bonds were

actively dealt with, provisioned

and retired by 2017 year end.

• Further classified customer

segments; various customer

care programs were designed

specifically for targeted retail

segments; large corporate

businesses (MMLC) were also

re-oriented to become one of the main

sources of fee income.

• Strengthened other business activities

such as bancassurance and priority banking,

resulting in improved non-funded income and

boosting revenue growth.

3.2 Comments on key items of the balance sheet and the income statement

3.2.1 Total assets

Total assets reached 284trn, increased by 51trn

(22%) compared with the end of 2016 and reached

105% of the year’s budget. Along with increase in

volume, ACB has been persistent in maintaining a

strong balance sheet with good liquidity throughout

its business network. LDR was at 82%, Tier 1 and

CAR were at 7.77% and 11.49% respectively, slightly

reduced compared to end of 2016, are in line with

Circular 36/2014/TT-NHNN dated 20 November

2014, and are also ready for Basel II requirement

expected to be applied in 2019.

Sharp increase in total assets is even more impressive

given that since 2012 ACB has not needed to call for

capital from shareholders, but also continued to pay

dividends every year; and treasury shares worth of

665bn were redeemed and resolved all legacy issues

through provisioning.

Balance sheet continued to be restructured in the

direction of improving earning assets to 95% of the

total assets at year end, where loans of category 1

accounted for 70% of total assets and non-earning

assets and bad debts accounted for less than 5%;

thus helped improve profitability.

250,000

300,000

200,000

150,000

100,000

50,000

Total assets

2013 2014 2015

284,316

233,681

201,457179,610

166,599

2016 20170

The Board of Management’s Report and Assessment of Business Activities

39

Asset Structure

Debts(category 1)69%

OtherEarning 8%

Govermentbonds18%

NPLs &Non-performingassets5%

Loans Growth (%)

2013

4%

9%

16%

21% 21%

2014 2015 2016 2017

25%

20%

15%

10%

5%

0%

Loans to individuals and SMEs (%)

85%

89%

2016

2017

3.2.2 Credit activities

In 2017, ACB’s credit activities, especially retail

business, has achieved impressive growth thanks

to customer base restructuring and customer care

policies. In the year, ACB continued to grow its loan

book in line with SBV’s orientation and executed 13

interest incentive programes with a volume of 59trn

in order to support customers’ business.

At 2017 end, total outstanding loans reached

199trn, i.e., 105% of the target, increased by 35trn

(+21%) compared with 2016 year end, higher than

that of the market average (18%), but remained in

lending cap set by the SBV.

medium enterprises (SME) also had impressive

growth of 16%. Thanks to that, retail lending

improved from 85% of total lending to 89%.

3.2.3 Funding activities

ACB’s funding has been growing sustainably and

stably to secure the bank’s fund usage and liquidity.

Customer deposits at 2017 end reached 241trn,

increased 34trn (+17%), accounted for 85% of

total assets, completed 100% of the year’s target.

ACB continued to take advantages of the leading

retail bank with strong base of consumer and SME

customers, with consumer deposit accounted for

94% of total customer deposits.

Having achieved those good results,

besides regular introduction of

newly-tailored products with

competitive rates, ACB also

expanded branch network to

further provide banking services

to customers. Priority Banking

Department, created in 2016, has

initially perfomed well with cards,

payrolls and bancasurance services.

In the year, ACB’s non-term deposit

grew 19%, which improved the percentage of

non term deposit to total customer deposit up to

17%. This upward trend is expected to increase

faster in the years to come.

Consumer lending stood at 109trn at year end,

increased 28%, continued to be the driving force

of the bank’s growth. At the same time, small and

Loans Growth (%)

2013

4%

9%

16%

21% 21%

2014 2015 2016 2017

25%

20%

15%

10%

5%

0%

Loans to individuals and SMEs (%)

85%

89%

2016

2017

Annual Report 2017

40

3.2.4 Investment activities

ACB’s investment portfolio continued

to be restructured through divesting

of non-material investments and

making provision at market price

in order to improve capital usage.

Government bonds continued to

be a key efficient investment tool,

accounting for 92% of the portfilio or

18% of total assets.

Unit: bn dong

2013 2014 2015 2016 2017

Investment Portfolio

35,257 41,669 38,988 44,175 53,410

G-Bonds 24,583 28,495 28,270 36,456 49,562

3.2.5 Revenue

ACB’s revenue jumped by 32% in which net interest

income (NII) increased 23%, reached 8,458bn. Net

interest margin (NIM) improved 10bps to 3.27%

thanks to improved business environment along

with better asset quality and asset structure.

Non funded income (NFI), especially fee, was

particularly concentrated in 2017 in order to

improve revenue structure. In 2017, NFI reached

3,013bn, hitting a record of highest increase of

70%, accounting for more than 26% of the revenue.

Such impressive growth was based upon: good fee

growth of 26%, achieving 1,188bn; large income

from investments of 603bn in which 420bn were

from provision reversal; and other income of 891bn

(+213%) thanks to NPL collection of 577bn.

Thu Nhập

Net interest income

Non-interest income

2016

2017

20%

26%

2016Profits

2017Profits

Net-interestincome

Non-interestincome

Operating expenses

Provisionexpenses

1,667

1,566

1,209

(246)

(1,539)

2,656

0 5.000 10.000 15.000

2017

2015

2016

2014

2013

Non-interest income

Provision increased by 12% to 2,597bn, in

line with the budget and strengthened risk

management. ACB took all provision for legacy

assets and VAMC bonds.

Growth of funding activities (%)

12%10%

13%

18%17%

2013 2014 2015 2016 2017

21%

19%

17%

15%

13%

11%

9%

7%

5%


41

Thu Nhập

Net interest income

Non-interest income

2016

2017

20%

26%

2016Profits

2017Profits

Net-interestincome

Non-interestincome

Operating expenses

Provisionexpenses

1,667

1,566

1,209

(246)

(1,539)

2,656

0 5.000 10.000 15.000

2017

2015

2016

2014

2013

Non-interest income

3.2.6 Return on assets, return on equity, and earning per shareTỷ suất sinh lời, thu nhập mỗi cổ phần - cổ tức

2014

2015

2016

2017

6.61%0.50%

7.64%0.55%

8.16%0.54%

9.87%0.61%

14.13%0.81%

2013ROA

ROE

2015 201620142013 2017

2.00

0.87

1.02 1.03

1.29

EPS

Annual Report 2017

42

NPLs

3.0%

2.2%

1.3%

0.9%0.7%

2013 2014 2015 2016 2017

3,500

3,000

2,500

2,000

1,500

1,000

0,500

0,000

% NPLs

3.2.7 Asset quality

2017 was the year ACB resolved all legacy assets

and other major bad debts by collection and

provisioning. At year end, NPL reduced 2% to

1,390bn, NPL ratio was at 0.7%, decreased sharply

from 0.87%, well below generally accepted standard

of 3%, and was the only bank with NPL ratio below

1% in the market. ACB has retired all VAMC bonds

during the year by accelerating collection and making

provision. Loan loss reserve (LLR) was improved,

3.2.8 Capital adequacy

Regarding capital adequacy, ACB is

one of the 10 banks picked by the

SBV to apply Basel II accord expected

to officially start in 2019. The bank

has been proactively improving its

CAR through a set of actions such as

issuance of over 3trn Tier-2 bonds,

monitoring and managing lending

portfolio closely from various aspects,

from terms to economic sectors, in

order to reduce risk-weighted assets.

At the end of 2017, CAR and CAR

Tier 1 stood at 11.49% and 7.77%

respectively, well above the 9%

required by the SBV as stipulated in

Circular 36/2014/TT-NHNN dated 20

November 2014.

breaking 2016’s record at 133%. To achieve such

accomplishments, the Board of Management,

Credit Committee, Risk Management Committee

and Debt Management Department have regularly

adjusted and updated lending policies relating to

loan appraisal and approval, and kept close watch on

the debt collection process and litigation process

for debt recovery to assure that the bank can react

quickly to any negative situation.

2013 2014 2015 2016 2017

Category 3-5 3,243 2,533 1,771 1,421 1,390

Category 3-5/Total loans 3.0% 2.2% 1.3% 0.87% 0.70%

Loan loss reserve 48% 62% 87% 126% 133%

2013 2014 2015 2016 2017

Total CAR 14.66% 14.08% 12.80% 13.19% 11.49%

CAR Tier 1 10.23% 9.76% 9.27% 8.26% 7.77%

Unit: billion dong


43

3.3.1 Organizational structure

In 2017, ACB continued to restructure the

organization and operation of the branch network,

grouping branches and sub-branches into clusters

and regions; relocated offices; orientated the branch

network towards retail business; developed new

markets in order to improve scale and profitability.

As a result, the performance of branches continued

to improve in 2017, with more than 94% of the units

recording a profit.

3.3.2 Operational process

In 2017, with unceasing effort, ACB accomplished

positive results of operational processes and

customer service quality: staff efficiency improved

by 20%; working errors fell by 50%; new automated

processes were applied. Customer satisfaction

improved and ACB is one of the best banks in terms

of customer service.

3.3.3 Network security and risk management

Regarding network security and risk management,

ACB has set up an environment where the

customer database is organized, monitored and

secured in compliance with all relevant laws and

regulations, but also such that the experience of

ACB’s customers is the focus.

Additionally, in 2017 ACB continued to revise

policies, processes, and limits in terms of risk

management to be in line with the SBV’s regulations

and to follow international best practices. The

operational risk management framework has been

introduced and the Operational Risk Committee

has been set up to ensure more effective risk

management. Concerning capital management,

ACB has been working on the roadmap to apply

Basel II Accord under the SBV’s instruction.

3.3 Improvements in organizational structure, policy and process

Annual Report 2017

44

2018 is the last year of a five-year strategic

intent period from 2013-2018, and is also the

year ACB regains a leading position. Given fierce

competition in the traditional banking market and

the rise of fintechs, ACB needs to make plans

to improve in terms of capital, service quality,

profitablity, innovation, renovation of business

model and products, and creating strong customer

experiences in all segments. Thus, ACB is going to:

• Continue to boost the retail banking business;

• Continue to exploit the potential of bancassurance,

bankcard and priority banking markets.

• Clearly define targeted customer segments

and primary economic sectors so as to build

appropriate policies and great customer

experiences.

• Build an ecosystem for breakthrough customer

acquisition.

• Create an innovation culture in order to position

ACB closer to the fintech model, starting with

the upgrade of ACB Mobile App and website,

and the introduction of DigiCard, which aims to

build the digital experience for customers.

• Relocate and rearrange the branch network,

open new offices in new potential markets, and

improve the scale and profitability of branches in

key markets.

• Train and rearrange human resources for

improved productivity, and develop staff

succession planning.

3.4 Aspirations 2018-2020


45

Primary targets from 2018 - 2020

2019 - 2020:

• Total assets shall increase average by 15%;

• Outstanding loans shall increase by 15%;

• Customer deposit shall increase by 18%;

• Non-performing loan ratio shall be under 2%;

• The Group’s profit before tax shall increase

from 15% to 20% per year.

3.5 Management’s explanation of the independent auditor’s opinion

There are no financial statement disclosures that PwC Vietnam finds unacceptable.

3.6 Evaluation of ACB’s responsibility toward employees, community and environment

3.6.2 Evaluation of ACB’s responsibility toward community and environment

See Item 2.6 “Reports on the bank’s responsibilities toward community and environment” and Item 7.3. “Charitable activities.”

3.6.3 Compliance with the environmental law

ACB has a practice not to extend funds for those

projects that are considered non-compliant with

environment law and regulation.

3.6.1 Evaluation of ACB’s responsibility toward employees

ACB has complied with rules and regulations

relating to working condictions, pay, social

insurance, occupational health and safety and

other relevant rights.

The Management has cooperated with ACB Labor

Union to promptly handle matters relating to the

rights and obligations of employees.

ACB has conducted courses and events to improve

employees’ knowledge of their jobs as well as

rules and regulations relating to labor issues; and

has created a favorable and welcoming working

environment for employees.

Year 2018:

• Total assets shall increase by 18%;

• Customer deposit shall increase by 18%;

• Outstanding loans shall increase by 15%;

• Non-performing loan ratio shall be under 2%;

• The Group’s profit before tax shall be in the

region of VND 5,699 billion.

Annual Report 2017

46

Technology ACB has to invest more in banking technologies or collaborations with fintechs; make ready for competition with those disruptive forces, especially in retail payment service; and enhance customers’ experience through digital technology platform.

The Board Of Directors’ Assessment

47

4. THE BOARD OF DIRECTORS’ ASSESSMENT OF THE BANK’S BUSINESS ACTIVITIES

4.1 Overall assessment of the bank’s activities Asia Commercial Bank experienced a year of strong growth, safety and efficiency.

First, the business performance in 2017 grew sharply compared to 2016.

Total assets:

284increased by 22%

VND thousand billion

Outstanding loans:

199increased by 20%VND thousand billion

Customerdeposits:

241 increased by 17%

VND thousand billion

Profit before tax:

2,656increased by 59%

VNDbillion

0.7%Bad debt (NPL) ratio:

Annual Report 2017

48

Second, profitability in 2017 was higher than in 2016.

• Profit before tax after provisions reached

VND 2,656 billion, increased by 59.3%

compared to 2016.

• Return on assets and return on equity

reached 0.81% and 14.13% respectively,

compared to 0.61% and 9.88% in 2016.

• Net interest margin improved, standing at 3.2%.

• Expenses for primary operations were

strictly controlled and in line with the plan,

and grew by 15%.

• Risk provisions were fully made as required.

Third, the bank met all appropriate safety standards.

ACB always complies with all regulations on

prudential ratios as stipulated by Circular No.

36/2014/TT-NHNN dated 20 November 2014,

including capital adequacy, credit limits, solvency,

short-term funding used for medium- and long-

term lending, capital contribution and investment,

and loans to deposits.

4.2 Assessment of the Management’s performance

In 2017, the Management succeeded in increasing

total assets and maintaining a healthy and highly

liquid balance sheet.

The Management also consolidated the

organizational structure and operating network into

regions and clusters. Business areas were adjusted

and redistributed in the direction of improving scale

and profit in key markets. Potential markets were

expanded.

As a result, the operating efficiency of the network

in 2017 was higher than in 2016, with over 94% of

units profitable.

4.3 The Board of Directors’ key actions

• To improve the Board of Directors’

organization and operations for the term of

office 2018 – 2023;

• To develop the business strategy for the next

five years 2019 – 2023;

• To upgrade the risk management framework to

meet Basel II requirements;

• To continue implementing information

technology projects aiming at reduction

of manual work and increasing the level of

automation during business processes to boost

productivity;

• To continue building an environment which

focuses on a culture of creativity, and training

and development of qualified human resources

suitable for the new business strategy.

Corporate Governance

49

5. CORPORATE GOVERNANCE

5.1 The Board of Directors

5.1.1 Composition

The Board of Directors (term of office 2013 – 2017) were elected by the General Meeting of Shareholders

on 26 April 2013. The Board of Directors elected Chairman and Vice Chairman the same day.

The General Meeting of Shareholders elected Mr. Dominic Timothy Charles Scriven as Member of the Board

of Directors (term of office 2013 – 2017) on 22 April 2015.

The General Meeting of Shareholders approved Mr. Julian Fong Loong Choon’s resignation as director (term

of office 2013 – 2017) on 08 April 2016.

On 24 November 2017, ACB Board of Directors issued a decision on the termination of directorship of Mr.

Andrew Colin Vallis in accordance with laws and regulations.

N o. Name Title Shareholding(4)

1 Tran Hung Huy Chairman 3.08%

2 Nguyen Thanh Long Vice Chairman 0.04%

3 Andrew Colin Vallis (*) (as of 23 November 2017)

[Representative of Standard Chartered Bank

Hong Kong Ltd.]

Vice Chairman 6.25%

4 Dominic Timothy Charles Scriven (*)

[Representative of Dragon Financial Holdings Ltd.]

Director 6.81%

5 Dinh Thi Hoa Independent director

0.00% (**)

6 Tran Mong Hung Director 1.77%

7 Tran Trong Kien Director None

8 Dang Thu Thuy Director 1.18%

9 Dam Van Tuan Director 0.00% (**)

(4) Data: As of 31 December 2017.

(*): Mr. Andrew Colin Vallis and Mr. Dominic Timothy Charles Scriven did not own any shares as individual shareholders.

(**): “0.00%”: The number of shares is rounded down (two decimal places.)

Annual Report 2017

50

5.1.1.1 Resumes

Mr. Tran Hung Huy

Chairman

• DBA, Golden Gate University, USA;

• 16 years’ experience in finance and banking;

• Working for ACB since 2002, and served on ACB Board

of Directors since 2005.

Mr. Nguyen Thanh Long

Vice Chairman

• BA in commerce, Van Hanh University, Saigon;

• 43 years’ experience in trade, finance and banking;

• Served on ACB Board of Directors since 2012.

Mr. Andrew Colin Vallis

Vice Chairman

• BA in Law, Nottingham University, UK;


• Served on ACB Board of Directors from 2013 to end-2017.


51

Mr. Dominic Timothy Charles Scriven

Director

• BA in Arts in Social Studies with combined Honours in

Sociology and Law, University of Exeter, UK;


• Served on ACB Board of Directors from 2008 to 2011

and from April 2015.

Ms. Dinh Thi Hoa

Independent director

• MBA, Harvard Business School, USA;

• 30 years’ experience in finance, banking, commerce and

services;

• Served on ACB Supervisory Board from 1998 to 2008

and ACB Board of Directors from 2013.

Mr. Tran Mong Hung

Director

• Bachelor of Economics (Banking), University of

Economics, HCMC;

• 38 years’ experience in finance, banking, commerce

and services

• Working for ACB since 1993; served on ACB Board

of Directors from 1993 to 2008 and from 2012.

Annual Report 2017

52

Mr. Tran Trong Kien

Director

• MBA, University of Hawai’i, USA;

• 23 years’ experience in finance, banking, commerce and

services;

• Served on ACB Board of Directors since 2012.

Ms. Dang Thu Thuy

Director

• Bachelor of Economics, University of Economics, HCMC;




Mr. Dam Van Tuan

Director

• MBA in Finance and Banking, University of Applied

Sciences Northwestern Switzerland; Certificate in DCP

214/2015, Thai IOD;

• 24 years’ experience in finance and banking




53

5.1.1.2 Changes in the composition

Mr. Andrew Colin Vallis’s directorship is terminated

on 24 November 2017 according to Article

35.1.d (automatic loss of status) of Law on Credit

Institutions and Article 38.1.d of the Charter of ACB.

5.1.2 The Board committees

Currently, ACB has five board committees: HR

and Remuneration Committee, Risk Committee,

Credit Committee, Investment Committee and

Strategy Committee.

5.1.3 Activities of the Board of Directors

5.1.3.1 Activities of the Board of Directors

In 2017, the Board of Directors conducted five

regular meetings, made decisions by written

consent 3 times, and issued 36 decisions regarding

directions for the Management in implementing

business plans in line with practical situation and

the Bank’s strategies, ensuring sustainable growth

for the following years. The activities of the Board

of Directors are reported to goverment authorities

semiannually and annually.

5.1.3.2 Activities of the Board committees

5.1.3.2.1 Activities of the HR and Remuneration

Committee (HRC)

The HRC is the advisory body for the Board

of Directors in performing its responsibilities

and authorities regarding the organization and

personnel matters during the process of managing

the Bank. The HRC currently has eight members,

including six directors, the President, and the Head

of Human Resources Division. The Chairman of the

committee is Mr. Tran Hung Huy.

In 2017, the HRC addressed issues regarding

the organizational restructuring of several units

at Headquarters, HR matters (recruitment,

appointment and reappointment of managers

for Headquarters, branches, sub-branches and

subsidiaries) and compensation policies.

The HRC has provided effective support to the

Board of Directors in managing human resources,

contributing to the completion of the Bank’s 2017

business plan.

5.1.3.2.2 Activities of the Board Risk Committee

(BRC)

The BRC assists the Board of Directors in making

decisions on the framework and principles

for managing risks, and in overseeing the risk

management function of the bank. The BRC

consists of five members and is chaired by Mr.

Nguyen Thanh Long, Vice Chairman of the Board

of Directors.

In 2017, the BRC held five meetings on a two-

month regular basis to discuss priority action

programs aimed to strengthen credit risk and

operational risk management.

Regarding credit risk management, BRC has

implemented the following: (i) Creating a roadmap

to meet ACB Credit Risk Management Framework

as required by Basel II; (ii) Strengthening the

coordination process in conducting periodic review

of debts of categories 2 through 5 and making

proposals for better control of the debt portfolio;

(iii) Streamlining the consumer credit process for

small loans with low risk by further automating; (iv)

Implementing economic sector analysis, taking

into account business cycles; (v) Reviewing the

structure of the credit portfolio in compliance

with the minimum capital adequacy ratio (as per

Circular 41/2016/TT-NHNN dated 30 December

2016) and the maximum ratio of short-term funds

used for medium and long term loans which will

continue to decrease from the beginning of 2018

(as per Circular 06/2016/TT-NHNN dated 27 May

2016); (vi) Assessing the impact of fluctuations

in interest rates on the value of large loans; and

Annual Report 2017

54

(vii) Implementing measures to prevent fraud in

credit activities.

Regarding operational risk management, the BRC

has had the following implemented: (i) Establishing

an operational risk management framework; (ii)

Establishing the Operational Risk Management

Council to assist the Management in implementing

operational risk management programs; and (iii)

Upgrading fraud investigation ability.

5.1.3.2.3 Activities of the Board

Credit Committee (BCC)

As of 31 December 2016, the BCC consists of

eighteen members including one chairman, one

standing vice chairman, one vice chairman, six

standing members, and nine ordinary members.

The BCC conducts regular meetings on weekdays

to review credit applications and address other

relevant issues. The BCC focuses on appropriate

adjustment of lending policies, credit products and

risk limits to ensure credit growth in line with market

situations.

In 2017, the BCC held 27 plenary meetings, 90

meetings of the standing BCC, and 243 sub-group

meetings; and approved 9,714 credit applications.

Credit approval rate is 93%, and of the remaining

7%, applications were either refused or additional

information was required for review.

Mr. Do Minh Toan, President & CEO chairs the BCC.

5.1.3.2.4 Activities of the Board Investment

Committee (BIC)

The BIC is in charge of equity investment activities,

including investment strategy, investment and

divestment decisions, monitoring and evaluating

portfolio performance, and proposing solutions to

resolve risks.

As of 31 December 2017, the BIC consists of four

members, including three directors and the CEO.

The BIC is chaired by Mr. Nguyen Thanh Long, Vice

Chairman of the Board. Meetings are conducted as

needed or at the request of its Chairman.

In 2017, the BIC worked on resolving legacy issues

and decided to divest from a number of companies.

The BIC has also managed and provided direction

on investment activities at the bank’s subsidiaries.

In 2018, the BIC will continue monitoring portfolio

management activities, divestment, and will

continue monitoring investment activities of the

bank’s subsidiaries.

5.1.3.2.5 Activities of the Board Strategy

Committee (BSC)

The BSC, on behalf of the Board of Directors,

oversees the planning and execution of ACB’s

long-term business strategy. The strategy is laid

down in ACB’s 5-year business plan for the period

2014-2018. The plan sets out various initiatives

and projects to enable ACB to meet its strategic

intent to become Vietnam’s Leading Bank.

The Project Management Office oversees and

monitors the numerous projects which support

the strategic intent, driving ACB’s development

across Retail Banking, Commercial Banking

and SME segnents. Underlying many of these

initiatives is a fundamential transformation of

ACB’s IT platform, its processes and operations.


55

5.1.4 Activities of independent director(s)

During the year, the independent director attended

all meetings of the Board of Directors and relevant

committees.

5.1.5 The Board of Directors’ participation in corporate governance programs

The directors of ACB are those who have practical

experience in managing financial institutions

and non-bank organizations as directors and/or

senior executives; and have participated in various

seminars on corporate governance.

In 2017, the BSC directed and monitored the

implementation of projects relating to improvement

of risk management capacity, security of technology

systems, etc. The BSC hosted internal workshops

conducted to build the creative culture among

bank employees; and also had other workshops

conducted by foreign consulting firms on a variety

of topics, including banking strategy in a new world,

value creation for ACB, etc.

As of 31 December 2017, the BSC had four

members, chaired by Mr. Dam Van Tuan, Board

director, appointed on 15 December 2017.

Annual Report 2017

56

Members of the Supervisory Board (terms of office 2013 – 2017) were elected by the General Meeting of

Shareholders on 26 April 2013. The Supervisory Board elected its head the same day.

No. Name Title Responsibility Shareholding(5)

1 Huynh Nghia Hiep Head Overall responsibility for the activities of the Supervisory Board; Supervise the Internal Audit Department.

0.02%

2 Nguyen Thi Minh Lan Full-time member

Monitor the compliance of internal regulations with law and regulations of State Bank of Vietnam before issuance; Monitor the implementation of recommendations from state supervision agencies and external auditors, and the updating of major shareholders, directors, members of the Supervisory Board, the Management and their related persons.

None

3 Hoang Ngan Full-time member

Oversee the accounting operation; Audit the bank’s financial statements.

0.00%(*)

4 Phung Thi Tot Full-time member

Oversee the accounting operation; Supervise the compliance with internal expense rules.

0.01%

(*) “0.00%”: The number of shares is rounded down (two decimal numbers.)

(5) Data: As of December 31, 2017.

5.2 The Supervisory Board

5.2.1 Composition

5.2.2 Resumes

Mr. Huynh Nghia Hiep

Head of the Supervisory Board

• Bachelor of Economics (major in banking), University of

Economics, HCMC;


• Working for ACB since 1993, and served on ACB

Supervisory Board since 2008.


57

Ms. Nguyen Thi Minh Lan

Member


Economics, HCMC;


• Served on ACB Supervisory Board since 2013.

Ms. Hoang Ngan

Member


Economics, HCMC;




Ms. Phung Thi Tot

Member


Economics, HCMC;




Annual Report 2017

58

5.2.3 Activities of theSupervisory Board

The Supervisory Board monitors the Board of

Directors and the Management for compliance

with laws, regulations, and the bank’s charter. In

addition, the Supervisory Board is responsible for

internal audits, assessment of the bank’s financial

statements, maintaining the accuracy and validity

of accounting operations, etc. It controls operating

costs by monitoring compliance with internal

expense rules, and verifying whether actualized

costs are within approved limits.

During the year, the Supervisory Board conducted

six meetings, and attended all meetings of the Board

of Directors. It provided opinions on business plans,

compliance with regulations on prudential ratios,

bad debt settlement, operational restructuring,

and implementation of the Banking Supervision

Agency’s recommendations. In addition, the

Supervisory Board also monitored developments in

key areas, including deposit taking, applications of

funds, foreign exchange position, loan quality, etc.

Regarding the supervision of the bank’s activities,

the Supervisory Board directs and uses the

internal audit unit to conduct audits as per annual

audit plan and on request. Audited entities are all

the organizational units, including branches and

sub-branches, divisions, departments, centers at

headquarters, and subsidiaries. In the direction of

promoting risk aware culture, the audits focus on the

implementation of key procedures, the assessment

of the effectiveness of the internal control system

as well as the audited units’ compliance with

regulations of the State Bank of Vietnam and internal

regulations of Asia Commercial Bank. After auditing,

the Supervisory Board makes recommendations on

the enhancement of the effectiveness of internal

control system, corrections of errors and violations,

warning on the potential risks relating to key

products and procedures, and revision of internal

regulations for the sake of compliance.

The Supervisory Board constantly monitors the

operating expenses to ensure the spending is

within the approved budget and complies with the

Bank's internal regulation on expenses.

The Supervisory Board has made assessments

of the bank’s financial statements, separate and

consolidated, for the first half of 2017 and financial

year 2017 which were submitted to the AGM 2018.

5.2.4 Activities of the Internal Audit Department

In 2017, the Internal Audit Department (IAD)

conducted operation audits at 80 branches and

sub-branches; audits of Bank Card Center, Call

Center 24/7, IT Division, ACB Leasing and ACBA;

audits of (i) “Property-related loans” products; (ii)

“Domestic trade financing” products for corporate

customers; (iii) Bank guarantees; (iv) Digital banking

related processes; (v) Domestic payments. The

IAD also conducted audits on various issues at the

request of the Board of Directors, the Supervisory

Board, and the Management.

The IAD conducted many regular and spontaneous

checks of vault cash balances at branches and sub-

branches as well as cash vaults of the Headquarters

in Ho Chi Minh City and Hanoi; and supervised the

destruction of obsolete valuable papers.


59

Counts and volumes of trading ACB shares of the

related persons of directors (one person) and the

Management (one person) were as follows:

5.3.3 Economic contracts or transactions with internal shareholders

None.

5.3.4 Implementation of regulations on corporate governance

ACB makes corporate governance reports every

six months, as per Circular No. 155/2015/TT-BTC

dated 06 October 2015.

Counts Volumes

Buy 14 22,000

Sell 17 47,100

Total 31 69,100

Counts Volumes

Buy 1 49,346

Sell 10 34,774

Total 11 84,120

5.3 Remuneration and transactions in relation to directors and officers

5.3.1 Remuneration of directors, members of the Supervisory Board and the Management

See Item 38 “Significant transactions with related parties” in the 2017 Consolidated Financial Statements.

5.3.2 Trading of ACB shares of internal shareholders and related persons

In 2017, there was no trading of ACB shares by the directors, members of the Supervisory Board, the Chief

Accountant or major shareholders and their related persons.

Counts and volumes of trading ACB shares of the Management (one member) and corporate secretaries

(one person) were as follows:

It also conducted distance monitoring by using a set

of tools to monitor the status of compliance.

After the audits, the IAD made numerous corrective

action requests to offices with errors. It made several

recommendations on the improvement of technical

processes to strengthen internal control system, on

the accountability of the related employees.

The IAD is also the main contact point for

reviewing and providing required documents

to the state supervision agencies and provides

guidance to offices committing errors regarding

corrective action.

Annual Report 2017

60

The world economy grew in a gradually upward and

equal fashion across most areas and most of the

major economies. Global GDP growth, according

to the IMF, may reach 3.6%, of which developed

economies rose 2.2%, 0.5% higher than 2016; the

US economy grew by 2.2% (2016: 1.5%); EU area

increased by 2.1% (2016: 0.4%); Japan increased

by 1.5% (2016: 1.0%). Developing and emerging

economies increased by 4.6% versus 4.3% in 2016,

with China achieving 6.9% growth.

The key driver of global economic growth is the

strong recovery of global trade, from 2.4% in 2016

to 4.2% in 2017, despite concerns and some policies

redirecting more toward trade protectionism or

"breaking away" from multilateral agreements (US)

or from coalition (UK - Brexit).

Although forecasted to be slightly higher than in

2016 (3.5% vs. 2.8%), global inflation generally

stayed under control and lower than target, with

examples being the US, Japan, EU, etc. This is

both a cause and a consequence of the fact that

basic commodities prices, especially oil, although

recovering quickly from the bottom of QI/2016, are

still far lower than forecast and fluctuate irregularly.

FY 2017 energy price is estimated to have increased

by 23.7%; non-energy commodity prices increased

by 4.9% over 2016, of which food prices fell by 0.1%;

other agricultural products decreased by 0.6%; raw

material prices rose 2.4%.

Country and regional central banks have ceased

loosening their monetary policies in a non-

traditional way which has been in place from the

2017 global financial crisis, in order to prevent the

risk of possible macroeconomic instability in the

medium and long term. However, both the roadmap

and the degree of tightening of monetary policy

(raising key interest rates, selling assets to withdraw

money, etc.) did not happen as quickly and strongly

as expected, since inflation was still low and growth

has not reached its potential peak.

Growth efforts by many countries were based

largely on improving the investment environment,

exploiting commercial advantages, cutting taxes,

controlling government spending, limiting budget

deficit, cutting public debt, etc.

The global capital market experienced

breakthroughs. Most of the stock indexes were

constantly rising, many times surpassing the "peak of

all time." The long-term bond yields of governments

tended to fall sharply resulting in capital inflows

into higher-risk assets, or investing in developing

economies with political and social stability.

The exchange rate between major currencies has

fluctuated sharply, contrary to the initial forecast,

in the direction that the USD continues to

decline despite the recovery of the US economy

and despite the fact that FED has increased

rates three times. By the end of 2017, the USD

has fallen by about 10% in the basket of six major

currencies today.

Vietnam's economy although faced with some

difficulties resulting in low growth in QI, has seen

strong breakthrough, especially in the second half

of 2017, thanks to both the positive effects of the

world economy and the internal support of objective

advantages and subjective efforts. Especially, the

investment and business environment improved

6. OVERVIEW OF VIETNAM BANKING ACTIVITIES IN 2017

6.1 Economic context of Vietnam and the world

Overview of Vietnam Banking Activities in 2017

61

significantly, which helped attracting more foreign

direct and indirect investment (newly registered

and increased FDI rose by 53.4%; net purchases

of nearly $ 1 billion in the Vietnam stock market in

2017 by foreign investors), as well as increasing

investment from the local private sector (16.2%

increase compared to 9.2% in 2016), bringing the

total social investment to 33.42% of GDP compared

with 33% in 2016.

According to the World Bank, Vietnam's business

environment moved up 14 places in 2017 compared

to last year's to rank 68 among 190 countries.

Competitiveness also improved 5 places (according

to WEF), innovation index (GII) moved up 12 places.

Strongly grew level of consumption of goods and

services provided by Vietnam, both domestically

and internationally, also contributed significantly

to economic growth in 2017. FY 2017 GDP rose

by 6.81%, higher than both the target of 6.7% and

the forecast by most organizations and individuals

locally and abroad, far exceeding the 6.21% growth

of 2016.

Growth quality, though still a major obstacle

to sustainable development, has seen initial

improvements. Total factor productivity (TFP)

contributed about 30.5% to growth. The

government has also given more directives and

dealt more strictly with violations hurting the

business environment and the living environment.

Vietnam is considered one of the leading countries

in the region in terms of economic reform efforts,

actively and more deeply integrating with the

global economy.

Annual Report 2017

62

6.2 Monetary policy and banking activities in Vietnam

of about $ 7-8 billion due to surplus in both trade

balance and capital balance.

Foreign exchange reserves increased sharply to

approximately the safe level of 12 months of imports.

Vietnam banking activities, thanks to high

economic growth and improved environment,

generally experienced positive changes; better

served the needs of businesses and consumers;

and were safer and more effective than last year.

Of the total mobilized capital, the proportion of

customer deposits and valuable papers increased

from 73.7% in 2016 to 76.9%; interbank mobilization

decreased from 11.1% to 10.8%; and shareholders’

equity increased from 6.2% to 6.7%.

Deposits and lending market share landscape has

not changed significantly. State-owned commercial

banks accounted for 49% and 51.8% respectively

of deposit and loan market shares; joint stock banks

correspondingly accounted for 42.4% and 41.3%

market shares; and the rest belongs to the banks

and branches of foreign banks in Vietnam and other

financial institutions.

Approximately 80% of outstanding loan balances

were concentrated in the production and business

sectors, with key industries and sectors receiving

higher growth than average. Credit for rural area

and agriculture increased by 22.1% compared

to the end of 2016; loans to industrial and

construction sector grew by 21.5%, while credit

for trade and services sector increased by 12.94%.

Credit growth for real estate and securities

investment was kept low, so its share of total credit

was only 6.53% and 0.17%, respectively. Medium

and long-term credit accounted for 53.7%, down

from 55.1% in 2016.

Monetary policy was planned and implemented

proactively and flexibly, giving priority to maintaining

macro stability, controlling inflation and at the

same time supporting growth. Money supply

was managed in accordance with market reality,

ensuring liquidity for the economy (as M2 increased

by 14.91%). Such a policy helped stabilizing the

exchange rate, slightly lowering policy rates by

0.25%, growing credit in consistent with the ability

of companies to absorb capital and at the same

time preventing potential risks in the medium

and long term. Bad debt has been dealt with,

both by creating more favorable legal conditions

(Resolution 42 of the National Assembly on dealing

with bad debts) and by promoting credit institutions

to speed up their restructuring process to become

more financially sound and actively prepare for fuller

compliance with international banking standards,

coming first being Basel II.

FY 2017 CPI inflation was kept at low level of 2.6%,

average inflation was 3.53% (lower than target of

4%), and core inflation was at 1.4%. VND mobilizing

interest rate is relatively stable compared to 2016;

USD mobilization interest rate remains at 0% p.a.

Lending rates in priority industries and sectors were

cut by 0.5% - 1% compared to the beginning of the

year. Credit of the banking sector reached 18.17%

growth, closely following the original target.

The VND/USD exchange rate slightly decreased

compared to the end of 2016 (although the central

exchange rate was raised by the SBV by more than

1.2%, since USD strongly devalued against other

currencies, and the VND devalued accordingly).

Consequently it is more favorable for exports of

Vietnam to most markets in and outside the region

(excluding the US). Export turnover increased 21%

compared to 2016, export surplus reached 3.0

billion USD. Overall balance of payment is in surplus

Overview of Vietnam Banking Activities in 2017

63

Asset quality of the banking sector has improved.

Bad debt on and off balance sheet, including

potential bad debt, by the end of 2017 was

determined by the SBV to be 7.91% compared

to 10.08% at the end of 2016. At the same time,

credit risk provisioning across the banking system

increased sharply, estimated at 24.7% growth

versus 2016.

Business results of credit institutions in 2017 are

largely positive. Operating expenses increased by

17.1% (compared to 14.8% growth in 2016), but

the cost income ratio fell from 49.4% to 44.8%.

NIM, although still lower than the required level, has

improved from 2.74% in 2016 to 2.82%.

Capital adequacy ratio (CAR) of end-2017 is

estimated to be 11.1% (2016: 11.6%). Tier 1

CAR is about 8%. However, there are still 9 out of

118 credit institutions across the sector having

negative equity capital. The need to increase equity

capital, better handle both the new-in and backlog

bad debt, handle weak banks, restructure each

credit institution, change business administration

practices and develop technology in accordance

with Basel II standards with the overall goal for

Vietnam banking sector to be in compliance by

2020, is still a major challenge for the sector in 2018

and the following years.

Annual Report 2017

64

7. AWARDS, NOTABLE EVENTS AND CHARITABLE ACTIVITIES IN 2017

7.1 Awards

“BEST EMPLOYEE ENGAGEMENT INITIATIVE” “DEPOSIT PRODUCT OF THE YEAR”

“BEST BANK FOR CORPORATE

SOCIAL RESPONSIBILITY IN

VIETNAM 2017”

(Ngân hàng tốt nhất về Trách nhiệm xã hội 2017)

Organization:Asiamoney

“BEST INNOVATION IN RETAIL

BANKING IN VIETNAM 2017”

(Ngân hàng có hoạt động bán lẻ cách tân nhất Việt Nam 2017)

Organization:International Banker (UK)

“BEST DOMESTIC BANK IN VIETNAM 2017"

(Ngân hàng có sáng kiến Gắn kết nhân viên tốt nhất)

Organization:The Asian Banker

(Ngân hàng có sản phẩm huy động tốt nhất Việt Nam)

Organization:The Asian Banker

(Ngân hàng tốt nhất Việt Nam 2017)

Organization:Asiamoney

Awards, Notable Events and Charitable Activities in 2017

65

TOP 50 PERFORMING COMPANIES IN VIETNAM

TOP 50 LISTED COMPANIES IN VIETNAM

TOP 10 ANNUAL REPORTS IN VIETNAM

“BEST COMMERCIAL BANK OF THE

YEAR IN VIETNAM 2017”


Organization:International Finance Magazine

“BEST BANK IN VIETNAM 2017”


Organization:Global Financial Market Review

Organization:HOSE, HNX and Vietnam Investment Review

Organization:Investment Bridge Magazine

Organization:Vietnam ForbesMagazine

(Top 50 công ty niêm yết tốt nhất Việt Nam)

(Top 10 Báo cáo thường niêntốt nhất Việt Nam)

(Top 50 công ty kinh doanhhiệu quả)

Annual Report 2017

66

06.1 Inauguration of Bao Loc Sub-branch’s new office (Lam Dong Province)

18.1 Inauguration of Minh Chau Sub-branch’s new office (Ho Chi Minh City)

21.2 Inauguration of Cho Khu Sau Sub-branch’s new office (Quy Nhon City)

21.2 Inauguration of Quan Bau Sub-branch’s new office (Nghe An Province)

22.2 Inauguration of Tam Ha Sub-branch’s new office (Ho Chi Minh City)

09.3 Inauguration of Truong Cong Dinh Sub-branch’s new office (Ba Ria-Vung Tau Province)

16.3 Inauguration of Bien Hoa Sub-branch’s new office (Dong Nai Province)

17.3 Inauguration of Chau Duc Sub-branch’s new office (Ba Ria-Vung Tau Province)

28.3 Inauguration of Quang Trung Sub-branch’s new office (Thanh Hoa Province)

26.4 Banking Institute Career Day (Ha Noi)

26.5 Inauguration of Nguyen Son Sub-branch’s new office (Ho Chi Minh City)

27.5 Banking University Carrer Day 2017 (Ho Chi Minh City)

26.6 Inauguration of Minh Phung Sub-branch’s new office (Ho Chi Minh City)

28.6 Inauguration of Phu Hoi Sub-branch’s new office (Thua Thien Hue Province)

17.7 Inauguration of Nguyen Trai Sub-branch’s new office (Ho Chi Minh City)

22.7 Launched ACB Prepaid Card

31.7 Inauguration of Tay Do Sub-branch’s new office (Can Tho Province)

17.8 Inauguration of Thach Da Sub-branch’s new office (Ho Chi Minh City)

25.8 ACB Investor Conference 2017

29.8 Inauguration of Thanh Nam Sub-branch’s new office (Nam Dinh Province)

29.8 Inauguration of Le Van Khuong Sub-branch’s new office (Ho Chi Minh City)

7.2 Notable events


67

20.9 Inauguration of Bach Dang Sub-branch’s new office (Ho Chi Minh City)

27.9 Inauguration of Ben Luc Sub-branch’s new office (Long An Province)

27.9 Inauguration of Thu Duc Branch’s new office (Ho Chi Minh City)

05.10 Inauguration of Ninh Hai Sub-branch (Ninh Thuan Province)

06.10 Inauguration of Van Giang Sub-branch’s new office (Hung Yen Province)

06.10 Inauguration of Binh Minh Sub-branch (Vinh Long Province)

13.10 Inauguration of KCN Song Than Sub-branch’s new office (Binh Duong Province)

23.10 Inauguration of Privelege Banking – Nam Sai Gon Branch (Ho Chi Minh City)

24.10 Inauguration of Privelege Banking – Sai Gon Branch (Ho Chi Minh City)

25.10 Inauguration of Privelege Banking – Thang Long Branch (Ha Noi)

06.11 Inauguration of Truong Chinh Sub-branch’s new office (Ho Chi Minh City)

09.11 Inauguration of Khanh Hoi Sub-branch’s new office (Ho Chi Minh City)

09.11 Inauguration of Thong Nhat Sub-branch’s new office (Ho Chi Minh City)

09.11 Inauguration of Phuong Son Sub-branch’s new office (Khanh Hoa Province)

09.11 Inauguration of Go Cong Sub-branch’s new office (Tien Giang Province)

21.11 Inauguration of Binh Long Sub-branch’s new office (Binh Phuoc Province)

21.11 Inauguration of Ngo Quyen Sub-branch’s new office (Hai Phong Province)

23.11 Inauguration of An Nhon Sub-branch’s new office (Binh Dinh Province)

07.12 Inauguration of Tran Hung Dao Sub-branch’s new office (Ho Chi Minh City)

07.12 Inauguration of An Suong Sub-branch’s new office (Ho Chi Minh City)

07.12 Inauguration of Tan Chanh Hiep Branch’s new office (Ho Chi Minh City)

11.12 Inauguration of Lagi Sub-branch’s new office (Binh Thuan Province)

18.12 Inauguration of Binh Tri Dong Sub-branch’s new office (Ho Chi Minh City)

20.12 Inauguration of Quang Ngai Branch’s new office (Quang Ngai Province)

28.12 Inauguration of Ba Don Sub-branch’s new office (Quang Binh Province)

28.12 Inauguration of Pho Yen Sub-branch’s new office (Thai Nguyen Province)

28.12 Inauguration of Thanh Loc Sub-branch’s new office (Ho Chi Minh City)

28.12 Inauguration of Nguyen Anh Thu Sub-branch’s new office (Ho Chi Minh City)

21.2 Inauguration of Cho Khu Sau Sub-branch’s new office (Quy Nhon City)

21.2 Inauguration of Quan Bau Sub-branch’s new office (Nghe An Province)

22.2 Inauguration of Tam Ha Sub-branch’s new office (Ho Chi Minh City)

09.3 Inauguration of Truong Cong Dinh Sub-branch’s new office (Ba Ria-Vung Tau Province)

16.3 Inauguration of Bien Hoa Sub-branch’s new office (Dong Nai Province)

17.3 Inauguration of Chau Duc Sub-branch’s new office (Ba Ria-Vung Tau Province)

28.3 Inauguration of Quang Trung Sub-branch’s new office (Thanh Hoa Province)

Annual Report 2017

68

7.3 Charitable activities

No. Activities Amount (VND)

I. Financing educational programs (1) 1,246,619,000

1 Scholarships for pupils in Nui Sap Town, Thoai Son District, An Giang Province 150,000,000

2 Scholarships for pupils in Tra Vinh Province 100,000,000

3Donation to pupils of Dut ethnic group (Daklak Province) on the occasion of school year 2017 – 2018

22,500,000

4 Scholarships for students of Foreign Trade University of school year 2017 – 2018 70,000,000

5 Contribution to Education Fund of Hoa Ninh Ward(Di Linh District, Lam Dong Province) 10,000,000

6 Contribution to Banking Scholarship Fund 2017 70,000,000

7 Sponsored BUH Career Day (Ho Chi Minh City Banking University) 100,000,000

8 Sponsored Career Day “Convince the Employers” 2017 60,000,000

9 Sponsored Career Fair 2017 50,000,000

10Scholarships for six secondary schools in Tien Giang Province (Hoa Khanh, My Duc Tay, Hoa Hung, An Thai Trung, My Luong, An Huu)

250,000,000

11Financing the issuance of “Handbook for senior students of school year 2017 – 2018” by Ho Chi Minh City Banking University

50,000,000

12 Contribution to Education Fund of Bac Giang Province 100,000,000

13 Financing the program “Thanh Niên Newspapers for Students” 18,500,000

14 Contribution to People's Police Academy on crime prevention. 55,000,000

15 Sponsored ceremony of honoring Phu Yen Province excellent students 140,619,000


69

No. Activities Amount (VND)

II. Care for the poor (2) 1,999,061,000

1 Contribution to “Kind Hearts” program on Mid-Autumn Festival 50,000,000

2 Financing the construction of houses of gratitude in Tra Vinh Province 500,000,000

3Financing “2017 Mid-Autumn Festival” program for Hoa Ninh Village People’s Committee (Daklak Province)

10,000,000

4 Financing “Extend hands to the needy” program 1,000,000,000

5 Donation to the poor on Tet Holiday in Nghe An Province 20,000,000

6Donation to the poor on Tet Holiday 2017 in Tan Loi Thanh Ward, Giong Trom District, Ben Tre Province

49,725,000

7 Contribution to “Tet for Everybody 2017” program in Bac Giang Province 9,000,000

8 Donation to the poor on Tet Holiday in Binh Duong and Tien Giang provinces 57,750,000

9 Donation to the poor on Tet Holiday in Ho Chi Minh City 37,586,000

10Contribution to Sponsoring Association for the Disabled People and Orphans of Da Nang City

50,000,000

11 Sponsored “Kindness in District 3” program 200,000,000

12 Donation to the poor in Phuoc Long District, Bac Lieu Province in 2017 15,000,000

III. Other financing (3) 1,899,386,000

1 Financing the purchse of communication machines for Khanh Hoa Province 700,000,000

2 Contribution to Quang Binh Province Cave Festival 2017 550,000,000

3 Donation to veterans and ethnic minorities in Dak Lak and Dak Nong provinces. 451,000,000

4 Donation to people affected by flood in Binh Dinh Province. 198,386,000

Total (1)+(2)+(3) 5,145,066,000

In 2017 ACB spent

VND 5,145,066,000

on community activities.

Báo cáo thường niên 2017

72

8. BRANCH NETWORK

Branch Network

73

As of 31 December 2017, ACB has 354 branches and sub-branches, located in 47 cities

and provinces in Vietnam.

Red River Delta: Ha Noi, Vinh Phuc, Bac Ninh, Hai Duong, Hai Phong, Hung Yen, Ha Nam, Nam Dinh, Quang Ninh;

Northeast: Thai Nguyen, Bac Giang;

North Central: Thanh Hoa, Nghe An, Ha Tinh, Quang Binh;

Highlands: Kon Tum, Gia Lai, Daklak, Lam Dong;

Southeast: Binh Phuoc, Tay Ninh, Binh Duong, Dong Nai, Vung Tau, HCMC;

South Central Coast:

Hue, Da Nang, Quang Nam, Quang Ngai, Binh Dinh, Phu Yen, Khanh Hoa, Ninh Thuan, Binh Thuan;

Mekong Delta: Long An, Tien Giang, Ben Tre, Tra Vinh, Vinh Long, Dong Thap, An Giang, Kien Giang, Can Tho, Hau Giang, Soc Trang, Bac Lieu, Ca Mau.

Note:

Number of branches and sub-branches over years Number of branches and sub-branches in 2017

Sub-branchesBranches

273

81

Number of branches and sub-branches by region

Red River DeltaNortheastNorth CentralHighlands SoutheastSouth Central Coast Mekong Delta

172 33

31

84

15 16

3

310 320 330 340 350 360

350

354

350

346

346

342

326

2016

2017

2015

2014

2013

2012

2011

Báo cáo thường niên 2017

74

9. FINANCIAL STATEMENTS 2017

9.1 Independent Auditors’ ReportSee the Independent Auditor’s Report to the shareholders of Asia Commercial Bank by PwC Vietnam in 2017 Consolidated Financial Statements dated 28 February 2018.

9.2 AuditedfinancialstatementsSee 2017 Financial Statements in the attachment.

Annual Report 2017

76

CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 december 2017

Bank information 77

Statement of the Board of Management 78-79

Independent auditor’s report 80-81

Consolidated balance sheet 82-84(Form B02/TCTD-HN issued in accordance with Circular No. 49/2014/TT-NHNN dated 31 December 2014) (“Form B02/TCTD-HN”))

Consolidated income statement 85Consolidated income statement (Form B03/TCTD-HN issued in accordance with Circular No. 49/2014/TT-NHNN dated 31 December 2014 (“Form B03/TCTD-HN”))

Consolidated cash flows statement 86-87(Form B04/TCTD-HN issued in accordance with Circular No. 49/2014/TT-NHNN dated 31 December 2014 (“Form B04/TCTD-HN”))

Notes to the consolidated financial statements 88-166(Form B05/TCTD-HN issued in accordance with Circular No. 49/2014/TT-NHNN dated 31 December 2014 (“Form B05/TCTD-HN”))

Consolidated financial statements

77

BANK INFORMATION

Operation Licence No. No. 0032/NH-GP dated 24 April 1993

The Operation Licence was issued by the State Bank of Vietnam and is

valid for 50 years from the licence date.

Business Registration No. 0301452948 dated 19 May 1993

Certificate No. The Business Registration Certificate has been amended several

times with the most recent certificate dated 9 March 2017. The

Business Registration Certificate was issued by the Department of

Planning and Investment of Ho Chi Minh City.

Board of Directors Mr. Tran Hung Huy Chairman

Mr. Nguyen Thanh Long Vice Chairman

Mr. Andrew Colin Vallis Vice Chairman

(to 23 November 2017)

Ms. Dinh Thi Hoa Independent Member

Ms. Dang Thu Thuy Member

Mr. Tran Mong Hung Member

Mr. Dam Van Tuan Member

Mr. Tran Trong Kien Member

Mr. Dominic Timothy Charles Scriven Member

Board of Management Mr. Do Minh Toan General Director

Mr. Nguyen Thanh Toai Deputy General Director

Mr. Dam Van Tuan Deputy General Director

Mr. Bui Tan Tai Deputy General Director

Mr. Nguyen Duc Thai Han Deputy General Director

Ms. Nguyen Thi Hai Deputy General Director

Mr. Tu Tien Phat Deputy General Director

Ms. Nguyen Thi Tuyet Van Deputy General Director

Mr. Nguyen Van Hoa Deputy General Director

(from 12 January 2017)

Ms. Nguyen Ngoc Nhu Uyen Deputy General Director


Supervisory Board Mr. Huynh Nghia Hiep Head of Supervisory Board

Ms. Hoang Ngan Member

Ms. Phung Thi Tot Member

Ms. Nguyen Thi Minh Lan Member

Legal representative Mr. Do Minh Toan General Director

Registered head office 442 Nguyen Thi Minh Khai St., Ward 5, District 3, HCMC Vietnam

Auditor PwC (Vietnam) Limited

Annual Report 2017

78

The Board of Management of Asia Commercial Joint Stock Bank (“the Bank”) is responsible for preparing

the consolidated financial statements which give a true and fair view of the consolidated financial position

of the Bank and its subsidiaries (collectively referred to as “the Group”) as at 31 December 2017 and the

consolidated results of its operations and consolidated cash flows for the year then ended. In preparing

these consolidated financial statements, the Board of Management is required to:

• select suitable accounting policies and then apply them consistently;

• make judgments and estimates that are reasonable and prudent; and

• prepare the consolidated financial statements on a going concern basis unless it is inappropriate to

presume that the Group will continue in business.

The Board of Management is responsible for ensuring that proper accounting records are maintained

which disclose, with reasonable accuracy at any time, the consolidated financial position of the Group and

which enable consolidated financial statements to be prepared which comply with the basis of accounting

set out in Note 2 to the consolidated financial statements. The Board of Management is also responsible

for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and

detection of fraud and other irregularities.

STATEMENT OF THE BOARD OF MANAGEMENT’S RESPONSIBILITY IN RESPECT OF THE CONSOLIDATED FINANCIAL STATEMENTS


79

I, Do Minh Toan, being General Director and on behalf of the Board of Management, hereby approve the

accompanying consolidated financial statements as set out on pages 5 to 90(*) which give a true and fair view

of the consolidated financial position of the Group as at 31 December 2017 and of the consolidated results

of its operations and of consolidated cash flows for the year then ended in accordance with Vietnamese

Accounting Standards, the Vietnamese Accounting System and the relevant statutory requirements on

preparation and presentation of financial statements applicable to credit institutions operating in Vietnam.

On behalf of the Board of Management

DoMinhToan

General Director

Ho Chi Minh City, Vietnam

28 February 2018

APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS

(*) Page 82 through 166 of this Annual Report

Annual Report 2017

80

INDEPENDENT AUDITOR’S REPORT

TO THE SHAREHOLDERS

OF ASIA COMMERCIAL JOINT STOCK BANK

We have audited the accompanying consolidated financial statements of Asia Commercial Joint Stock Bank

(“the Bank”) and its subsidiaries (collectively referred to as “the Group”) for the year ended 31 December

2017 approved by the Board of Management on 28 February 2018. These consolidated financial statements

include the consolidated balance sheet as at 31 December 2017, the consolidated income statement, the

consolidated cash flows statement for the year then ended and explanatory notes to these consolidated

financial statements including significant accounting policies as set out on pages 5 to 90(*).

THE BOARD OF MANAGEMENT’S RESPONSIBILITY

The Board of Management of the Bank is responsible for the preparation and the true and fair presentation

of these consolidated financial statements in accordance with Vietnamese Accounting Standards,

the Vietnamese Accounting System and the relevant statutory requirements on the preparation and

presentation of financial statements applicable to credit institutions operating in Vietnam, and for such

internal control which the Board of Management determines is necessary to enable the preparation and fair

presentation of the consolidated financial statements that are free from material misstatement, whether

due to fraud or error.

AUDITOR’S RESPONSIBILITY

Our responsibility is to express an opinion on the consolidated financial statements based on our audit.

We conducted our audit in accordance with Vietnamese Standards on Auditing. Those standards require

that we comply with ethical standards and requirements and plan and perform the audit in order to

obtain reasonable assurance as to whether the consolidated financial statements are free from material

misstatement.

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 auditor’s judgment, including an

assessment of the risks of material misstatement of the consolidated financial statements, whether due to

fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Group’s

preparation and true and fair presentation of the consolidated financial statements in order to design audit

procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on

the effectiveness of the Group’s internal control. An audit also includes evaluating the appropriateness of

accounting policies used and the reasonableness of accounting estimates made by the Board of Management,

as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our

audit opinion.



81

AUDITOR’S OPINION

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated

financial position of the Group as at 31 December 2017, its consolidated financial performance and

consolidated cash flows for the year then ended in accordance with Vietnamese Accounting Standards,


presentation of financial statements applicable to credit institutions operating in Vietnam.

OTHER MATTERS

The consolidated financial statements of the Group for the year ended 31 December 2016 were audited by

another auditor whose audit report dated 28 February 2017 expressed an unqualified opinion.

The independent auditor’s report is prepared in Vietnamese and English. Should there be any conflict

between the Vietnamese and English copies, the Vietnamese copy shall take precedence.

ForandonbehalfofPwC(Vietnam)Limited

As indicated in Note 2(a) to the consolidated financial statements, the accompanying consolidated financial statements

are not intended to present the financial position, results of operations and cash flows in accordance with accounting

principles and practices generally accepted in countries and jurisdictions other than Vietnam, and furthermore their

utilisation is not designed for those who are not informed about Vietnam’s accounting principles, procedures and practices.

NguyenHoangNam

Audit Practising Licence No.: 0849-2018-006-1

Authorised signatory

Report reference number: HCM6590

Ho Chi Minh City, 1 March 2018

LeQuangDao


Annual Report 2017

82

As at

Note31.12.2017VND million

31.12.2016VND million

A ASSETS

I Cashonhand,goldandgemstones 4 4,851,710 3,541,388

II BalanceswiththeStateBankofVietnam 5 8,314,574 5,119,306

III Depositswithandloanstoothercreditinstitutions 6 8,941,727 8,152,027

1 Deposits with other credit institutions 6.1 5,932,369 6,443,182

2 Loans to other credit institutions 6.1 3,163,119 1,880,7253 Allowance for losses on deposits with and loans to other credit

institutions 6.3 (153,761) (171,880)

IV Held-for-tradingsecurities 7 1,236,555 1,183,306

1 Held-for-trading securities 7.1 1,239,991 1,211,314

2 Allowance for losses on held-for-trading securities 7.2 (3,436) (28,008)

V Derivativesandotherfinancialassets 8 - 16,065

VI Loanstocustomers 196,668,756 161,604,426

1 Loans to customers 9 198,513,394 163,401,221

2 Allowance for losses on loans to customers 9.7 (1,844,638) (1,796,795)

VIII Investmentsecurities 10 52,718,405 42,801,465

1 Available-for-sale securities 10.1 8,007,491 10,962,613

2 Held-to-maturity securities 10.1 45,151,482 34,824,159

3 Allowance for losses on investment securities 10.3 (440,568) (2,985,307)

IX Long-terminvestments 11 190,042 190,194

2 Investments in joint-ventures 11.2 1,280 1,280

3 Investments in associates 11.2 388 346

4 Other long-term investments 11.3 193,927 199,537

5 Allowance for diminution in the value of long-term investments 11.4 (5,553) (10,969)

X Fixedassets 12 3,007,618 2,850,558

1 Tangible fixed assets 12(a) 2,474,830 2,338,722

a Cost 4,048,359 3,682,372

b Accumulated depreciation (1,573,529) (1,343,650)

3 Intangible fixed assets 12(b) 532,788 511,836

a Cost 790,433 722,821

b Accumulated amortisation (257,645) (210,985)

XI Investmentproperties 13 256,132 211,872

CONSOLIDATED BALANCE SHEET Form B02/TCTD-HN


The notes on pages 88 to 166 are an integral part of these consolidated financial statements.

83

As at



a Cost 257,855 212,954

b Accumulated depreciation (1,723) (1,082)

XII Otherassets 14 8,130,604 8,010,270

1 Receivables 14.1 5,326,279 4,620,331

2 Accrued interest and fees receivable 3,567,819 3,241,224

3 Deferred tax assets 17,603 -

4 Other assets 14.2 690,994 666,881

5 Allowance for losses on other assets 14.3 (1,472,091) (518,166)

TOTAL ASSETS 284,316,123 233,680,877

B LIABILITIES AND EQUITY

II Depositsandborrowingsfromothercreditinstitutions 15 15,453,746 2,235,115

1 Deposits from other credit institutions 12,130,254 1,735,365

2 Borrowings from other credit institutions 3,323,492 499,750

III Depositsfromcustomers 16 241,392,932 207,051,269

IV Derivativesandotherfinancialliabilities 8 10,491 -V Fundsandentrustedinvestmentsreceivedfromthe

Government,internationalandothercreditinstitutions 17 136,466 122,697

VI Valuablepapersissued 18 6,761,000 6,615,000

VII Otherliabilities 4,530,641 3,594,080

1 Accrued interest and fees payable 2,815,502 2,281,452

2 Deferred tax liabilities - 462

3 Other liabilities 19 1,715,139 1,312,166

TOTAL LIABILITIES 268,285,276 219,618,161

Annual Report 2017

84

As at



VIII OWNERS’ EQUITY 16,030,847 14,062,716

1 Capital 20 9,607,514 8,711,240

a Charter capital 10,273,239 9,376,965

d Treasury shares (665,725) (665,725)

2 Reserves 20.1 2,913,780 2,590,181

5 Retained profits 20.1 3,509,553 2,761,295

a Net profit for the year 1,788,105 1,109,317

b Retained profits of prior years 1,721,448 1,651,978

TOTAL EQUITY 16,030,847 14,062,716

TOTAL LIABILITIES AND EQUITY 284,316,123 233,680,877

OFF-BALANCESHEETITEMS

1 Borrowing guarantees 38.1 47,071 60,862

2 Commitments on foreign exchange transactions 38.1 37,957,544 15,210,577

• Commitments on purchases of foreign currency 3,400,580 2,555,935

• Commitments on sales of foreign currency 3,688,006 2,493,758

• Commitments on swap transactions 30,868,958 10,160,884

4 Letters of credit commitments 38.1 4,119,474 4,443,845

5 Other guarantees 38.1 6,150,365 5,552,727

CONSOLIDATED BALANCE SHEET (Cont.)Form B02/TCTD-HN

NguyenVanHoa

Chief Accountant

DoMinhToan

General Director

Legal Representative

TranHungHuy

Chairman

28 February 2018



85

For the year ended 31 December

Note2017

VND million2016

VND million

1 Interest and similar income 21 20,319,639 16,448,249

2 Interest and similar expenses 22 (11,861,885) (9,556,360)

I Netinterestincome 8,457,754 6,891,889

3 Fee and commission income 23 1,574,668 1,274,131

4 Fee and commission expenses 24 (386,337) (329,749)

II Netfeeandcommissionincome 1,188,331 944,382

III Netgainfromtradingofforeigncurrenciesandgold 25 236,729 230,096

IV Netgainfromtradingofheld-for-tradingsecurities 26 25,305 72,083

V Netgain/(loss)fromtradingofinvestmentsecurities 27 603,079 (885,963)

5 Other income 952,439 296,285

6 Other expenses (60,797) (11,081)

VI Netotherincome 28 891,642 285,204

VII Incomefrominvestmentsinotherentities 29 36,069 24,811

VIII Operatingexpenses 30 (6,217,359) (4,677,889)

IX Operatingprofitbeforeallowanceexpensesforcreditlosses 5,221,550 2,884,613

X Allowanceexpensesforcreditlosses 31 (2,565,343) (1,217,587)

XI Profitbeforetax 2,656,207 1,667,026

7 Corporate income tax - current (556,141) (338,590)

8 Corporate income tax - deferred 18,065 (3,262)

XII Corporateincometax 32 (538,076) (341,852)

XIII Profitaftertax 2,118,131 1,325,174

XV Basisearningspershare(VND/share) 33 1,996 1,293

CONSOLIDATED INCOME STATEMENTForm B03/TCTD-HN

NguyenVanHoa

Chief Accountant

DoMinhToan

General Director


TranHungHuy

Chairman

28 February 2018

Annual Report 2017

86

Note


2017VND million

2016VND million

CASHFLOWSFROMOPERATINGACTIVITIES

01 Interest and similar income received 19,993,283 16,096,594

02 Interest and similar expenses paid (11,327,835) (8,961,266)

03 Net fee and commission income received 1,188,331 944,38204 Net receipts from trading activities

(foreign currencies, gold and securities) 532,644 524,755

05 Other income received 521,423 200,509

06 Collection of bad debts previously written off 369,312 79,185

07 Salaries and operating expenses paid (4,920,839) (4,297,586)

08 Income tax paid during the year (557,841) (360,194)CASHFLOWSFROMOPERATINGACTIVITIESBEFORE CHANGES IN OPERATING ASSETS AND LIABILITIES 5,798,478 4,226,379

Changesinoperatingassets09 (Increase)/decrease in deposits with and loans to other

credit institutions (1,157,395) 3,141,00410 Increase in held-for-trading securities and

investment securities (7,512,729) (6,132,295)

11 Decrease in derivatives and other financial assets 16,065 31,538

12 Increase in loans to customers (35,112,173) (28,052,950)

13 Utilisation of allowance for losses (4,660,790) (1,329,800)

14 (Increase)/decrease in other operating assets (545,622) 624,073

Changesinoperatingliabilities15 Decrease in borrowings from the Government and the

State Bank of Vietnam - (5,178,981)16 Increase/(decrease) in deposits and borrowings from

other credit institutions 13,218,631 (198,215)

17 Increase in deposits from customers 34,341,663 32,132,272

18 Increase in valuable papers issued 146,000 486,00019 Increase/(decrease) in funds and entrusted

investments re-ceived from the Government, international and other credit institutions 13,769 (38,981)

20 Increase in derivatives and other financial liabilities 10,491 -

21 Increase in other operating liabilities 334,163 97,036

22 Utilisation of reserves (5,030) (5,038)

CONSOLIDATED CASH FLOWS STATEMENT (Direct method)Form B04/TCTD-HN



87


Note2017

VND million2016

VND million

I NETCASHFLOWSFROMOPERATINGACTIVITIES 4,885,521 (197,958)

CASHFLOWSFROMINVESTINGACTIVITIES

01 Payment for purchases of fixed assets (713,293) (584,690)

02 Proceeds from disposals of fixed assets 25,174 1,578

04 Payment for purchases of investment properties - (181,284)

05 Proceeds from disposals of investment properties 14,605 38,368

08 Collection on other long-term investments 5,610 224,20409 Receipts of dividends and distributions of profits

from long-term investments 32,159 34,278

II NETCASHFLOWSFROMINVESTINGACTIVITIES (635,745) (467,546)

CASHFLOWSFROMFINANCINGACTIVITIES02 Receipts of issuance of long-term valuable papers

which are eligible for regulatory capital and other long-term borrowings - 3,054,000

04 Profit distributed 20.1 (130,000) -

III NETCASHFLOWSFROMFINANCINGACTIVITIES (130,000) 3,054,000

IV NET CASH FLOWS FOR THE YEAR 4,119,776 2,388,496V CASHANDCASHEQUIVALENTSATTHE

BEGINNING OF THE YEAR 14,578,877 12,190,381VII CASHANDCASHEQUIVALENTSATTHEENDOF

THE YEAR 34 18,698,653 14,578,877

NguyenVanHoa

Chief Accountant

DoMinhToan

General Director


TranHungHuy

Chairman

28 February 2018

Annual Report 2017

88

1. REPORTING ENTITY

(a) EstablishmentandoperationAsia Commercial Joint Stock Bank (“the Bank”) is a commercial joint stock bank incorporated in the

Socialist Republic of Vietnam.

The Bank was established under the Operation Licence No. 0032/NH-GP issued by the State Bank

of Vietnam (“the SBV”) on 24 April 1993 for a period of 50 years from the licence date. The Bank’s

shares are listed on the Hanoi Stock Exchange.

The principal activities of the Bank and its subsidiaries (collectively referred to as “the Group”) are

to mobilise short, medium and long-term funds in the form of term deposits, demand deposits;

to receive entrusted investment and development funds from domestic credit institutions; to

borrow from other financial institutions; to grant short, medium and long-term loans; to discount

commercial papers, bonds and other valuable papers; to contribute capital and to invest in joint-

ventures in accordance with laws and regulations; to provide settlement services to customers;

to trade foreign currencies, gold; to provide trade finance services; to mobilise overseas funds and

to perform other type of services when dealing with overseas counterparties in accordance with

the approval of the SBV; to conduct debt factoring activities; to trade bonds; trusted activities and

fiduciary activities; insurance agent services; to provide finance leasing; to trade securities; to provide

consultancy services for securities investment; to provide securities deposit services, corporate

finance consultancy services and securities underwriting services; to provide investment fund and

asset management services, and to provide other banking services.

(b) ChartercapitalAs at 31 December 2017, the Bank’s charter capital was VND10,273,238,960,000 (31.12.2016:

VND9,376,965,060,000). The Bank has issued 1,027,323,896 ordinary shares with a par value of

VND10,000 per share.

(c) LocationandoperationalnetworkThe Bank’s Head Office is located at 442 Nguyen Thi Minh Khai Street, Ward 5, District 3, Ho Chi

Minh City, Vietnam. As at 31 December 2017, the Bank had 1 head office, 354 branches and sub-

branches nation-wide (31.12.2016: 1 head office, 349 branches and sub-branches).

(d) GroupstructureThe consolidated financial statements for the year ended 31 December 2017 included the financial

statements of the Bank and its subsidiaries.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 31 December 2017

Form B05/TCTD-HN


89

As at 31 December 2017 and 31 December 2016, the Group had following subsidiaries:

SubsidiaryOperationLicence

Nature ofbusiness

Percentage of equity owned and voting rights

31.12.2017 31.12.2016ACB Securities Company Limited (“ACBS”) 06/GPHĐKD

18/GPĐC-UBCK

Securities 100% 100%

ACB Asset Management Company Limited (“ACBA”)

0303539425 Asset Management

100% 100%

Asia Commercial Bank Leasing Company Limited (“ACBL”)

06/GP-NHNN Finance Leasing

100% 100%

ACB Capital Management Company Limited (“ACBC”) (*)

41/UBCK-GP30/GPĐC-UBCK

FundManagment

100% 100%

(*) ACBC is a wholly owned subsidiary of ACBS.

All of the subsidiaries were established in Vietnam.

As at 31 December 2017 and 31 December 2016, the Group had following associate:

AssociateOperationLicence

Nature ofbusiness Percentage of equity owned

31.12.2017 31.12.2016Asia Commercial Bank Security Services Joint Stock Company (“ACBD”)

0303832198 Security services

10% 10%

The Group classified the investment in ACBD as an investment in an associate although the Group

only owns 10% of its charter capital because the Group:

• has representatives in the Board of Directors or equivalent management level of this company;

• has the right to take part in its policy making process; and

• has significant influence over its financial and operating policies.

As at 31 December 2017 and 31 December 2016, the Group had following joint venture:

Joint ventureOperationLicence

Nature ofbusiness Percentage of equity owned

31.12.2017 31.12.2016Saigon Gold & Silver ACB-SJC Joint Stock Company (“ACB-SJC”)

0303831067 Jewelry production and trading

10% 10%

The Group classified the investment in ACB-SJC as an investment in a joint venture company

because the Group signed a joint control contract with the other venturer and all strategic decisions

about finance and operations must have the consent of the Group and the other venturer.

(e) NumberofemployeesAs at 31 December 2017, the Group had 10,334 employees (31.12.2016: 9,822 employees).

Annual Report 2017

90

2. BASIS OF PREPARATION

(a) StatementofcomplianceThe consolidated financial statements have been prepared in accordance with Vietnamese Accounting

Standards, the Vietnamese Accounting System and the relevant statutory requirements on preparation

and presentation of financial statements applicable to credit institutions operating in Vietnam. These

standards and statutory requirements may differ in some material respects from International Financial

Reporting Standards and the generally accepted accounting principles and standards in other countries.

Accordingly, the accompanying consolidated financial statements are not intended to present the

consolidated financial position and consolidated results of operations and consolidated cash flows in

accordance with generally accepted accounting principles and practices in countries or jurisdictions

other than Vietnam. Furthermore, their utilisation is not designed for those who are not informed about

Vietnam’s accounting principles, procedures and practices applicable to credit institutions.

(b) BasisofmeasurementThe consolidated financial statements, except for the consolidated statement of cash flows, are

prepared on the accrual basis using the historical cost concept. The consolidated statement of cash

flows is prepared using the direct method.

(c) Annualaccountingperiod The annual accounting period of the Group is from 1 January to 31 December.

(d) AccountingandpresentationcurrencyThe Group’s accounting currency is Vietnam Dong (“VND”). The consolidated financial statements

are prepared and presented in VND rounded to the nearest million (“VND million”).

(e) FormofrecordsappliedThe Group uses accounting software to record its transactions.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following significant accounting policies have been adopted by the Group in the preparation of

these consolidated financial statements.

The accounting policies that have been adopted by the Group in the preparation of these

consolidated financial statements are consistent with those adopted in the preparation of the most

recent consolidated annual financial statements.

(a) Basisofconsolidation

(i) SubsidiariesSubsidiaries are entities controlled by the Group. Control exists when the Group has the power to

govern the financial and operating policies of an entity in order to obtain economic benefits from

its activities. The financial statements of a subsidiary are included in the consolidated financial

statements from the date that control commences until the date that control ceases.


91

Where the accounting policies of subsidiaries are different from those adopted by the Bank,

adjustments have been made where necessary to ensure consistency of accounting policies for

consolidated financial statements purpose.

(ii) Associates and joint-venturesAssociates are those entities in which the Group has significant influence, but not control, over the

financial and operating policies.

Joint-ventures are those entities over whose activities the Group has joint control, established

by contractual agreement and requiring unanimous consent for strategic financial and operating

decisions.

Associates and joint-ventures are accounted for using the equity method (collectively referred to as

“equity accounted investees”). Under equity method, investments in associates and joint-ventures

are initially recognised at cost and adjusted thereafter for the post-acquisition change in the Group’s

share of the investees’ net assets.

The consolidated financial statements include the Group’s share of the income and expenses of

the equity accounted investees from the date that significant influence or joint control commences

until the date that significant influence or joint control ceases. When the Group’s share of losses

exceeds its interest in an equity accounted investee, the carrying amount of that interest is reduced

to nil and the recognition of further losses is discontinued except to the extent that the Group has

an obligation or has made payments on behalf of the investee.

Where the accounting policies of associates and joint-ventures are different from those adopted

by the Bank, adjustments have been made where necessary to ensure consistency of accounting

policies for consolidated financial statements purpose.

(iii) Transactions eliminated on consolidationIntra-group balances, and any unrealised income and expenses arising from intra-group transactions,

are eliminated in preparing the consolidated financial statements.

Unrealised gains and losses arising from transactions with equity accounted investees are eliminated

against the investments to the extent of the Group’s interests in the investees.

(b) ForeigncurrencytransactionsAll transactions are recorded in original currencies. Monetary assets and liabilities denominated in

currencies other than VND are translated into VND at rates of exchange ruling at the reporting date.

Transactions in currencies other than VND during the year have been translated into VND at rates

ruling on transaction dates.

Foreign exchange differences arising from monthly revaluation are recognised in the foreign exchange

revaluation reserve on the consolidated balance sheet at each month-end and are transferred to the

consolidated income statement at the year-end.

Annual Report 2017

92

(c) InterestincomeandexpensesInterest income and expense are recognised on an accrual basis. Interest income is derecognised

and recorded into off-balance sheet items when a loan becomes overdue or has not been classified

as Current loans as described in Note 3(f), 3(h), 3(i) and 3(o). Interest income from these loans is

recognised in the consolidated income statement upon receipt.

(d) Feesandcommissionincomeandexpenses

(i) Fees and commission incomeFees and commission income consist of fees received from settlement services, treasury services

and other services. Fees and commissions arising from settlement services, treasury services and

other services are recognised in the consolidated income statement upon receipt.

(ii) Revenue from securities brokerageRevenue from securities brokerage activities is recognised in the consolidated income statement

when the securities transaction of the customer has been completed.

(iii) Fees and commission expenses Fees and commission expenses are recognised in the consolidated income statement when they

are incurred.

(e) DividendincomeCash dividends are recognised in the consolidated income statement when the Group’s right to

receive payment is established.

Share dividends and bonus shares are not recognised as an increase in the investments corresponding

with income in the consolidated income statement. The Group only keeps record of the increase in

the number of shares.

Dividends received which are attributable to the period before investment acquisition date are

deducted from the carrying amount of the investment.

(f) LoanstocustomersThe accounting policies represented in this note from (i) to (v) do not apply to loans from margin

trading activities arising from securities trading services.

(i) Measurement and recognition of loans to customersShort-term loans are those with repayment term within one year from the loan disbursement

date; medium-term loans are those with repayment term over one year to five years from the loan

disbursement date and long-term loans are those with repayment term of more than five years from

the loan disbursement date.

Loans to customers are stated at the amount of principal outstanding less allowance for credit

losses.


93

(ii) Classification of loans to customersLoan classification and allowance for credit losses are made in accordance with Circular No. 02/2013/

TT-NHNN dated 21 January 2013 issued by the SBV regulating the classification of assets, credit loss

allowance level, allowance method and utilisation of allowance in operations of credit institutions and

foreign banks’ branches (“Circular 02”) and Circular No. 09/2014/TT-NHNN dated 18 March 2014

issued by the SBV on amendments and supplementation to certain articles of Circular 02 (“Circular

09”). The Group has obtained approval of the SBV to classify loans to customers in accordance with

a qualitative method as permitted in Official letter No. 6524/NHNN-TTGSNH dated 27 August 2010.

In accordance with Article 11, Point 6 of Circular 02, the Group is required to classify loans to

customers in accordance with a quantitative method as stipulated in Article 10 of Circular 02 in

parallel. In case where there are differences between the result of loan group classified in accordance

with Article 10 and Article 11 of Circular 02 then such loans to customers are required to be classified

into loan group with higher risk. The minimum period to classify loans in accordance with both Article

10 and Article 11 of this circular is three years from the effective date of Circular 02.

Loan classification in accordance with Article 11 of Circular 02

Loans to customers are classified into five loan groups based on the internal rating system of the

Group as below:

Classification per the Group’s internal rating system Classification per Circular 02

AAA, AA, A credit rating Group 1 - Current loans

BBB, BB, B credit rating Group 2 - Special mentioned loans

CCC, CC credit rating Group 3 - Sub-standard loans

C credit rating Group 4 - Doubtful loans

D credit rating Group 5 - Loss loans

Loan classification in accordance with Article 10 of Circular 02 and Circular 09

Loans to customers are classified into five loan groups in accordance with the quantitative method

as stipulated in Circular 02 and Circular 09 as below:

Group Overdue status

1 Current loans (a) Current loans being assessed as fully and timely recoverable, both principals and interests; or

(b) Loans being overdue less than 10 days and being assessed as fully recoverable, both overdue principals and interests, and fully and timely recoverable, both remaining principals and interests.

2 Special mentioned loans

(a) Loans being overdue between 10 days and 90 days; or(b) Loans having terms of repayments rescheduled for the first time.

Annual Report 2017

94


3 Sub-standard loans

(a) Loans being overdue between 91 days and 180 days; or(b) Loans having terms of repayments extended for the first time; or(c) Loans having interests exempted or reduced because customers are not able to pay

the interests according to credit contracts; or(d) Loans falling in one of the following cases and not yet collected less than 30 days after

the issuance date of recovery decision: • Loans having violated regulations specified in Points 1, 3, 4, 5, 6 of Article 126 of Law

on credit institutions; or • Loans having violated regulations specified in Points 1, 2, 3, 4 of Article 127 of Law on

credit institutions; or • Loans having violated regulations specified in Points 1, 2, 5 of Article 128 of Law on

credit institutions.(e) Loans in the collection process under inspection conclusions.

4 Doubtful loans (a) Loans being overdue between 181 days and 360 days; or(b) Loans having terms of repayments restructured for the first time and being overdue

less than 90 days according to the first restructured terms of repayments; or (c) Loans having terms of repayments restructured for the second time; or(d) Loans specified in point (d) of Sub-standard loans not yet collected between 30 days

and 60 days after the issuance date of recovery decision; or (e) Loans in the collection process under inspection conclusions but being overdue up to

60 days according to recovery term.5 Loss loans (a) Loans being overdue more than 360 days; or

(b) Loans having terms of repayments restructured for the first time and being overdue from 90 days and above according to the first restructured terms of repayments; or

(c) Loans having terms of repayments restructured for the second time and being overdue according to the second restructured terms of repayments; or

(d) Loans having terms of repayments restructured for the third time or more, regardless whether the loans are overdue or not; or

(e) Loans specified in point (d) of Sub-standard loans not yet collected more than 60 days after the issuance date of recovery decision; or

(f) Loans in the collection process under inspection conclusions but being overdue for more than 60 days according to recovery term; or

(g) Loans to other credit institutions being announced under special control status by the SBV, or to foreign banks’ branches of which capital and assets are blockaded.

Debts shall be classified in a group with lower risks (including Group 1) in the following cases:

• Customers have made full repayment of the overdue principal and the interest (including interests

on overdue principals) and the principals and interest of the following payment periods for at

least 3 (three) months in respect of long and medium-term debts and 1 (one) month in respect

of short-term debts since the date the overdue principals and interest are fully repaid; and

• The Group has sufficient basis of information and documents to assess and conclude that

customers are capable of fully repaying the principals and the interest in a timely manner.

Debts shall be classified in a group with higher risks in the following cases:

• Changes in environment and business field, which negatively impact the capability of customers

to pay debt (natural calamities, epidemics, war, economic environment);

• Norms on profitability, solvency, ratio of debts to capital, cash flows, capability of customers to pay

debts deteriorating continuously or significantly adversely fluctuated after 3 (three) consecutive

times of assessment and debt classification;

• Customers fail to supply fully, timely and truly financial information at the request of the Group for

an assessment regarding the capability of customers to pay their debts;

• Debts which have been classified in Group 2, Group 3, Group 4 for 1 (one) year or longer but not

qualified to classify in a group with lower risks.


95

Non-performing loans are loans classified into Group 3, 4 and 5.

The Group is required to use the results of loan classification as provided by the Credit Information

Center of the SBV (“the CIC”) to classify its debts into higher risk group as determined by the Group

and provided by the CIC.

Where a customer owes more than one debt to the Group, and has any debt classified into a higher

risk group of debts, the Group classifies the remaining debts of such customer into the group of

debts with higher risk corresponding with their level of risk.

Where the Group participates in a syndicated loan, the Group reclassifies all debts (including the

outstanding syndicated loan) of the customer into the highest risk group as determined by the lenders.

(iii) Allowance for losses on loans to customersAllowance for losses on loans to customers included specific allowance and general allowance.

Specific allowance for losses on loans to customers is calculated using set rates applied to each loan

group as follows:

Allowance rates

Group 1 - Current loans 0%

Group 2 - Special mentioned loans 5%

Group 3 - Sub-standard loans 20%

Group 4 - Doubtful loans 50%

Group 5 - Loss loans 100%

The specific allowance is calculated based on the net credit exposure of each borrower, i.e. based on

the borrower’s loan balance on the last working day of each quarter (for quarter 4, specific allowance

is calculated based on the borrower’s loan balance on the last working day of November) less the

discounted value of collateral assets. The discounted value of collateral assets is determined in

accordance with Circular 02.

Collateral assets with value of VND50 billion or more against loans and advances to the Group’s related

parties or other parties as prescribed in Article 127 of the Law on Credit Institutions and collateral

assets with value of VND200 billion or more which are movable assets, real estate or others, excluding

gold billets, Government bonds listed on the Stock Exchange, securities issued by enterprises or other

credit institutions must be valued by a licensed asset valuation organisation. Other than these cases,

collateral assets are valued in accordance with the Group’s internal policy and process.

Annual Report 2017

96

Maximum discounted ratio of collateral assets is determined as follows:

Type of collateral assetsMaximum

discounted ratio

(a) Customer deposits in VND 100%

(b) Gold billets, except for the types of gold specified in (i); customer deposits in foreign currencies 95%

(c) Government bonds, transferable instruments, valuable papers issued by the Group, savings, certificates of deposit, bills and notes issued by other credit institutions or foreign banks’ branches:

• With a remaining term of less than 1 year • With a remaining term of between 1 year to 5 years • With a remaining term of over 5 years

95%85%80%

(d) Securities issued by other credit institutions and listed on a stock exchange 70%

(e) Securities issued by enterprises and listed on a stock exchange 65%

(f) Unlisted securities and valuable papers, except for the types of securities specified in (c), issued by other credit institutions registered for listing on a stock exchange; 50%

Unlisted securities and valuable papers, except for the types of securities specified in (c), issued by other credit institutions not registered for listing on a stock exchange 30%

(g) Unlisted securities and valuable papers issued by enterprises registered for listing on a stock exchange;

Unlisted securities and valuable papers issued by enterprises not registered for listing on a stock exchange

30%

10%

(h) Real estates 50%

(i) Gold billets not having quoted price, other types of gold and other collateral assets 30%

Collateral assets that do not satisfy the conditions as specified in Article 12, Point 3 of Circular 02 are

deemed to have zero value.

In accordance with Circular 02, a general allowance is made at 0.75% of the outstanding balance of

loans to customers on the last working day of each quarter (for quarter 4, a general allowance is made

at 0.75% of the outstanding balance of loans to customers on the last working day of November),

excluding the total balance of loans to customers which are classified as loss loans.

(iv) Writing off loans to customers classified as bad debtsLoans are written off at the discretion of the Bank’s Risk Resolution Committee when they consider

that all reasonable efforts for recovery of bad debts, including legal actions, have been exhausted.

In accordance with Circular 02 and Circular 09, loans to customers are written off against allowance

when loans to customers have been classified to Group 5 or when borrowers have been declared

bankrupt or dissolved (for borrowers being enterprises) or borrowers are deceased or missing (for

borrowers being individuals).

Loans written off against allowance are recorded as off-balance sheet items for following up and

collection. The amount collected from previously written-off loans, including the amount from sales

of collaterals against those loans, is recognised in the consolidated income statement upon receipt.


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(v) Loans sold to Vietnam Asset Management Company (“VAMC”)Loans sold to VAMC in accordance with Decree No. 53/2013/ND-CP dated 18 May 2013 issued by

the Government (“Decree 53”), Decree No. 34/2015/ND-CP dated 31 March 2015 issued by the

Government on amendment and supplementation to several articles of Decree 53 (“Decree 34”),

Circular No. 19/2013/TT-NHNN dated 6 September 2013 issued by the SBV (“Circular 19”) and

Circular No. 14/2015/TT-NHNN dated 28 August 2015 issued by the SBV on amendment and

supplementation to several articles of Circular 19 (“Circular 14”), Decree No.61/2017/ND-CP dated

16 May 2017 are derecognised from the balance sheet in accordance with the guidance in Official

letter No. 8499/NHNN-TCKT dated 14 November 2013 issued by the SBV (“Official letter 8499”) and

Official letter No. 925/NHNN-TCKT dated 19 February 2014 issued by the SBV (“Official letter 925”).

Special bond issued by VAMC as consideration for loan sold by the Group is recognised as held-to-

maturity securities in the consolidated balance sheet (Note 3(i)(iii)).

Upon completing the debt sales transactions, the Group also utilises the corresponding specific

allowance made but not yet utilised to write down the book values of the bad debts, and writes off

interest receivables recorded in the off-balance sheet account.

(vi) Loans from margin trading activitiesMeasurement and recognition of loans from margin trading activities

Loans from margin trading activities are recognised at the principle amount less associated allowances.

Allowance for losses on loans from margin trading activities

Allowance is made when impairments identified in recoverable value of loans from margin trading activies.

Allowance is calculated based on the variance between the value of collateral assets and the

borrower’s loan balance at the date of the consolidated financial statements.

(g) Off-balancesheetcommitmentsOff-balance sheet commitments consist of guarantees, settlement acceptances, and unconditional

and irrevocable commitments with specific time for settlement.

Off-balance sheet commitments are classified into five groups as follows:

Group Definition

1 Current commitments • Commitments which, according to the Group’s assessment, could be fully settled when they fall due.

2 Special mentioned com-mitments • Commitments which, according to the Group’s assessment, could be fully settled when they fall due but there are indicators of declining capability to settle the commitments.

3 Sub-standard commitments • Commitments which, according to the Group’s assessment, could not be fully settled when they fall due.

4 Doubtful commitments • Commitments which, according to the Group’s assessment, are not highly probably settled by customers.

5 Loss commitments • Commitments which, according to the Group’s assessment, could not be settled.

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98

The classification of off-balance sheet commitments is conducted solely for risk management,

credit quality supervision of credit granting activities. No provision is made for off-balance sheet

commitments, except where the Group has been required to make payment under the guarantee

contract, in which case the payment on behalf is classified and allowance is made in accordance with

accounting policy as described in Note 3(f).

(h) Held-for-tradingsecuritiesClassification

Held-for-trading securities are debt securities or equity securities acquired principally for the

purpose of selling in the short-term, not over one year, for the purpose of short-term profit-taking.

Recognition

The Group recognises held-for-trading securities on the date it becomes a party to the contractual

provisions of these securities (trade date accounting).

Measurement

Held-for-trading unlisted bonds issued by enterprises are stated at cost less allowance for credit

losses. Credit risk classification of unlisted bonds issued by enterprises and allowance thereof is

made in accordance with the same accounting policy applied for loans to customers as described

in Note 3(f).

Other held-for-trading securities are stated at cost less allowance for diminution in value. Allowance

for diminution in value is made when the market value is lower than the book value.

For listed held-for-trading equity securities, the market price is the closing price of securities obtained

from the Ho Chi Minh City Stock Exchange or from the Hanoi Stock Exchange at the reporting date.

For unlisted held-for-trading equity securities that have been registered on the unlisted public

company market (“the UPCom market”), the market price is the closing prices obtained from the

UPCom market at the reporting date.

For unlisted held-for-trading equity securities that have not been registered on the UPCom market

and are actively traded on the OTC market, the market price is the average of the transaction prices

quoted by three securities companies at the reporting date.

For listed held-for-trading debt securities, the market price is determined based on yield curve listed

on the Hanoi Stock Exchange at the reporting date.

For securities not actively traded on the market or where the market price of those securities cannot

be determined reliably, with the exception of unlisted bonds issued by enterprises being classified

into credit risk group and allowance thereof is made in accordance with the same accounting policy

applied for loans to customers as described in Note 3(f), no allowance is made and such securities

are stated at cost.

Interest income during the holding period of trading securities is recognised in the consolidated

income statement on an accrual basis.


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The allowance for credit losses on held-for-trading unlisted bonds issued by enterprises and allowance

for diminution in the value of other held-for-trading securities as described above are reversed if the

recoverable amount of the securities subsequently increases after the allowance was recognised. An

allowance 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 allowance had been recognised.

Derecognition

Held-for-trading securities are derecognised when the rights to receive cash flows from the

investments have expired or the Group has transferred substantially all risks and rewards of

ownership.

(i) Investmentsecurities

(i) Available-for-sale securitiesClassification

Available-for-sale securities are debt securities or equity securities which are intended to be held for

an indefinite period and may be sold at any time.

Recognition

The Group recognises available-for-sale securities on the date it becomes a party to the contractual


Measurement

Available-for-sale unlisted bonds issued by enterprises are stated at cost less allowance for credit


made in accordance with the same accounting policy applied for loans to customers as described

in Note 3(f).

Other available-for-sale securities are stated at cost less allowance for diminution in value. Allowance


For listed available-for-sale equity securities, the market price is the closing price of securities

obtained from the Ho Chi Minh City Stock Exchange or from the Hanoi Stock Exchange at the

reporting date.

For unlisted available-for-sale equity securities that have been registered on the UPCom market, the

market price is the closing prices obtained from the UPCom market at the reporting date.

For unlisted available-for-sale equity securities that have not been registered on the UPCom market



For listed available-for-sale debt securities, the market price is determined based on yield curve

listed on the Hanoi Stock Exchange at the reporting date.

Annual Report 2017

100




applied for loans to customers as described in Note 3(f), no allowance is made and such securities

are stated at cost.

Premiums and discounts arising from purchases of available-for-sale debt securities are amortised

to the consolidated income statement using the straight line method over the period from the

acquisition date to the maturity date, in cases these available-for-sale securities would be sold

before their maturity dates, the unamortised premiums and discounts are recognised fully in the

consolidated income statement at the sale date.

Post-acquisition interest income of available-for-sale securities is recognised in the consolidated

income statement on an accrual basis. Interest income received which are attributable to the period

before acquisition date of available-for-sale securities are deducted from the carrying amount of

available-for-sale securities.

The allowance for credit losses on available-for-sale unlisted bonds issued by enterprises and allowance

for diminution in value of other available-for-sale securities as described above are reversed if the




Derecognition

Available-for-sale securities are derecognised when the rights to receive cash flows from the

investments have expired or the Group has transferred substantially all risks and rewards of

ownership.

(ii) Held-to-maturity securitiesClassification

Held-to-maturity securities are debt securities with fixed or determinable payments and fixed

maturities where the Group’s management has the positive intention and ability to hold until maturity.

Recognition

The Group recognises held-to-maturity securities on the date it becomes a party to the contractual


Measurement

Held-to-maturity unlisted bonds issued by enterprises are stated at cost less allowance for credit

losses. Credit risk classification of unlisted bonds issued by enterprises and allowance thereof is made

in accordance with the same accounting policy applied for loans to customers as described in Note 3(f).

Other held-to-maturity securities are stated at cost less allowance for diminution in value. Allowance

for diminution in value is made when there is an indicator of long-term devaluation according to the

Board of Management’s assessment.


101

Premiums and discounts arising from purchases of held-to-maturity securities are amortised to the

consolidated income statement using the straight line method over the period from the acquisition

date to the maturity date.

Post-acquisition interest income of held-to-maturity securities is recognised in the consolidated


before acquisition date of held-to-maturity securities are deducted from the carrying amount of

held-to-maturity securities.

The allowance for credit losses on held-to-maturity unlisted bonds issued by enterprises and the

allowance for diminution in the value of other held-to-maturity securities as described above are

reversed if the recoverable amount of the securities subsequently increases after the allowance was

recognised. An allowance 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 allowance had been recognised.

Derecognition

Held-to-maturity securities are derecognised when the rights to receive cash flows from the

investments have expired or the Group has transferred substantially all risks and rewards of ownership.

(iii) Special bonds issued by VAMCSpecial bonds issued by VAMC are valuable papers issued by VAMC to purchase the Group’s bad debts.

The Group accounts for bad debts sold in exchange for special bonds issued by VAMC in accordance

with the guidance of Official letter 8499 and Official letter 925. These special bonds are classified as

held-to-maturity securities, measured initially at par value at transaction date and subsequently at

par value less allowance for losses.

In exchange for every bad debt sold to VAMC, the Group receives a corresponding special bond

issued by VAMC. Par value of the special bond is equal to the carrying value of bad debts sold net of

specific allowance which was made but not yet utilised.

Specific allowance for losses on special bonds issued by VAMC is calculated and made in accordance

with Circular 19 and Circular 14. Accordingly, the Group makes specific allowance for each special

bond monthly so that the minimum specific allowance of each special bond is made annually at 20%

of its par value within 5 working days prior to the corresponding date to the maturity date. General

allowance is not required to be made for these special bonds.

When receiving loans previously sold to VAMC, the Group uses specific allowance for losses on

special bonds to write off bad debts and recognises the difference between allowance for losses on

special bonds and the uncollectable loan balance in the consolidated income statement.

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102

( j) Otherlong-terminvestmentsClassification

Other long-term investments are investments in equity instruments of unlisted entities where the

Group has no control or significant influence. These investments must have a period of holding,

recovering or paying off more than one year with the purpose of gaining benefits in the following cases:

• The Bank or/and its subsidiaries is a founding shareholder;

• The Bank or/and its subsidiaries is a strategic partner; or

• The Bank or/and its subsidiaries has a certain influence on the process of establishment, approval

of financial and operating policies through written agreements about having the Bank’s or its

subsidiaries’ personnel joining the investee’s Board of Directors/Board of Management.

Recognition

The Group recognises other long-term investments on the date it becomes a party to the contractual

provisions of these investments (trade date accounting).

Measurement

These long-term investments are stated at cost less allowance for diminution in value. Allowance

for diminution in value is made if the total actual contributed capital exceeds the owner’s equity of

the investee in accordance with Circular No. 228/2009/TT-BTC dated 7 December 2009 issued

by the Ministry of Finance (“Circular 228”) and Circular No. 89/2013/TT-BTC dated 28 June 2013

issued by the Ministry of Finance. Accordingly, the allowance is equal to the difference between the

total contributed capital and the owner’s equity multiplied (x) by the proportion of the Group’s actual

contributed capital to the total contributed capital of the investors. The allowance is reversed if the

investee subsequently made a profit that offsets the previous loss for which the allowance had been

made. An allowance is reversed only to the extent that the investment’s carrying amount does not


Derecognition

Other long-term investments are derecognised when the rights to receive cash flows from these

investments have expired or the Group has transferred substantially all risks and rewards of ownership.

(k) Derivativefinancialinstruments

Currency forward and currency swap contracts

Currency forward and currency swap contracts are recorded at contract value in the consolidated

financial statements. Differences between the currency amounts which are committed to buy/sell at

the contractual exchange rate and the buy/sell committed currency amounts translated at the spot

exchange rate at the effective dates of the currency forward contracts and currency swap contracts

are amortised to the consolidated income statement on a straight-line basis over the terms of the

contracts.

Currency forward contracts are revalued at the spot exchange rate at month-end. Any unrealised

gains/losses are recognised in the foreign exchange revaluation reserve on the consolidated balance

sheet at each month-end and are transferred to the consolidated income statement at the year-end.


103

Cross currency swap contracts

For cross currency swap of parties to exchange interest payments and principals denominated in two

different currencies which are exchanged at the effective date, the contract value is recognised on

the consolidated balance sheet in accordance with the same accounting policy applied to currency

swap contracts. Income earned and expenses incurred are recognised in the consolidated income

statement on an accrual basis.

Currency option contracts

The committed value in currency option contracts is not recognised in the consolidated balance sheet.

Any paid or received option premium is recognised as deferred expense or revenue and amortised to

the consolidated income statement on a straight-line basis over the terms of the contracts.

Currency option contracts are revalued at the spot exchange rate at month-end. Any unrealised gains/

losses are recognised in the foreign exchange revaluation reserve on the consolidated balance sheet

at each month-end and are transferred into the consolidated income statement at the year-end.

(l) RepurchaseandReverseRepurchaseAgreementsSecurities sold under agreements to repurchase at a specific date in the future are recorded in the

consolidated balance sheet. The proceeds from these agreements are recognised as a liability on the

consolidated balance sheet and the difference between selling price and the committed repurchase

price is amortised to the consolidated income statement using the straight line method over the

contractual term.

Securities purchased under agreements to resell at a specific date in the future are not recognised

in the consolidated balance sheet. The cash payment under the agreements is recognised as a loan

on the consolidated balance sheet and the difference between the purchase price and committed

reselling price is amortised to the consolidated income statement using the straight line method

over the contractual term.

(m) GoldGold is revalued monthly at the spot exchange rate at each month-end. Differences from the

monthly revaluation are recognised in the foreign exchange revaluation reserve on the consolidated

balance sheet at each month-end and are transferred to the consolidated income statement at the

year-end.

(n) CashandcashequivalentsFor the presentation of consolidated statement of cash flows, cash and cash equivalents comprise

cash, gold, precious metals and gemstones, demand deposits at the SBV; treasury bills and other

short-term valuable papers qualified to be discounted at the SBV; securities which have maturities

date within three months from purchase date; and demand and term deposits at other credit

institutions with original maturity of three months or less.

(o) Depositswithandloanstoothercreditinstitutions

(i) Deposits with other credit institutionsDeposits with other credit institutions include demand deposits and term deposits.

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104

Demand deposits with other credit institutions are stated at the amount of principal outstanding.

Term deposits with other credit institutions are stated at the amount of principal outstanding less

specific allowance.

In accordance with Circular No. 21/2012/TT-NHNN dated 18 June 2012 issued by the SBV, effective

from 1 September 2012 (“Circular 21”) and Circular No. 01/2013/TT-NHNN dated 7 January 2013

issued by the SBV to amend and supplement Circular 21 (“Circular 01”), credit institutions are only

allowed to undertake deposits for which the maximum term is three months with other credit

institutions and foreign banks’ branches. New deposits with over three months term after the

effective date of these circulars are classified as loans to other credit institutions.

Credit risk classification of term deposits with other credit institutions and allowance thereof is made

in accordance with Circular 02 and Circular 09 being similar to those policies on loans to other credit

institutions as described in Note 3(o)(ii).

(ii) Loans to other credit institutionsLoans to other credit institutions are loans with original term to maturity of less than one year.

Loans to other credit institutions are stated at the amount of principal outstanding less specific

allowance.

The specific allowance is calculated based on the net credit exposure of each other credit institution,

i.e. based on each other credit institution’s loan balance on the last working day of each quarter (for

quarter 4, specific allowance is calculated based on each other credit institution’s loan balance on

the last working day of November) less the discounted value of collateral assets. The discounted

value of collateral assets is determined in accordance with the principles as set out in Circular 02 as

described in Note 3(f)(iii).

The Group has classified loans to other credit institutions in accordance with a quantitative method as

permitted in Article 10 of Circular 02. Loan classification and specific allowance for losses on loans to

other credit institutions is determined in accordance with the same accounting policy applied to loans

to customers as set out in Circular 02 and Circular 09 as described in Note 3(f)(ii) and Note 3(f)(iii).

The Group is required to use the results of loan classification as provided by the CIC to classify its debts

in accordance with the same accounting policy applied to loans to customers as described in Note 3(f).

(p) ReceivablesReceivables are stated at cost less allowance for losses.

Allowance for doubtful receivables is made based on the anticipated possible loss or the overdue

status of receivables according to Circular 228 at the following rates:


105

Overdue status Allowance rates

Over 6 months to below 1 year 30%

From 1 to below 2 years 50%


From 3 years and above 100%

Allowance for losses on other assets is recognised as operating expenses in the consolidated

income statement when incurred.

(q) ClassificationoffinancialinstrumentsSolely for the purpose of providing disclosures about the significance of financial instruments to the

Group’s financial position and results of operations and the nature and extent of risk arising from

financial instruments, the Group classifies its financial instruments as follows:

(i) Financial assetsFinancial assets 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:

It is classified by the Group as held for trading. A financial asset is classified as held for trading if:

• it is acquired principally for the purpose of selling it in the near term;

• there is evidence of a recent pattern of short-term profit-taking; or

• it is 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 Group as a financial asset at fair value through profit or loss.

Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable

payments and fixed maturity that the Group has the positive intention and ability to hold to maturity,

other than:

• those that the Group, upon initial recognition, designates as financial assets at fair value through

profit or loss;

• those that the Group designates as available-for-sale; and

• those that meet the definition of loans and receivables.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that

are not quoted in an active market, other than those:

• that the Group intends to sell immediately or in the near term, which are classified as held for trading

and those that the Group, on initial recognition, designates as financial assets at fair value through

profit or loss;

• that the Group, upon initial recognition, designates as available-for-sale; or

• for which the Group may not recover substantially all of its initial investment, other than because

of credit deterioration, which are classified as available-for-sale.

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106

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are designated as available

for sale or those are not classified as:

• loans and receivables;

• held-to-maturity investments; or

• financial assets at fair value through profit or loss.

(ii) Financial liabilitiesFinancial liabilities at fair value through profit or loss

A financial liability at fair value through profit or loss is a financial liability that meets either of the


It is considered by the Group as held for trading. A financial liability is classified as held for trading if:

• 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

• it is a derivative (except for a derivative that is financial guarantee contract or a designated and


Upon initial recognition, it is designated by the Group as a financial liability at fair value through profit

or loss.

Financial liabilities carried at amortised cost

Financial liabilities which are not classified as financial liabilities at fair value through profit or loss are

classified as financial liabilities carried at amortised cost.

The above described classification of financial assets and financial liabilities is solely for presentation

and disclosure purposes and is not intended to be a description of how the financial instruments

are measured. Accounting policies for measurement of financial assets and financial liabilities are

disclosed in other relevant notes.

(r) Tangiblefixedassets

(i) CostTangible fixed assets are stated at cost less accumulated depreciation. The initial cost of a tangible

fixed asset comprises of its purchase price, import duties, non-refundable purchase taxes and any

directly attributable costs of bringing the asset to its working condition and location for its intended

use. Expenditure incurred after the tangible fixed assets have been put into operation, such as

repairs and maintenance and overhaul costs, is charged to the consolidated income statement in

the period in which the costs are incurred. In situations where it can be clearly demonstrated that

the expenditure has resulted in an increase in the future economic benefits expected to be obtained

from the use of tangible fixed assets beyond its originally assessed standard of performance, the

expenditure is capitalised as an additional cost of tangible fixed assets.


107

(ii) DepreciationDepreciation is computed on a straight-line basis over the estimated useful lives of tangible fixed

assets. The estimated useful lives are as follows:

• Buildings and structures 25-40 years

• Office equipment 3-5 years

• Motor vehicles 6-10 years

• Others 3-5 years

(iii) DisposalsGains and losses on disposals of tangible fixed assets are determined by comparing net disposal

proceeds with the carrying amounts. The disposal proceeds are recognised as income in the

consolidated income statement. Expenses on disposal of assets and the carrying amounts are

recognised as expenses in the consolidated income statement.

(s) Intangiblefixedassets

(i) Land use rightsLand use rights comprise those acquired in a legitimate transfer and indefinite land use rights. Indefinite

land use rights are stated at cost and without amortisation. Initial cost of a land use right comprises its

purchase price and any directly attributable costs incurred in conjunction with securing the land use right.

(ii) SoftwareCost of acquiring new software, which is not an integral part of the related hardware, is capitalised and

treated as an intangible asset. Software costs are amortised on a straight-line basis over 3 to 8 years.

(iii) DisposalsGains and losses on disposals of intangible fixed assets are determined by comparing net disposal

proceeds with the carrying amounts. The disposal proceeds are recognised as income in the

consolidated income statement. Expenses on disposal of assets and the carrying amounts are

recognised as expenses in the consolidated income statement.

(t) Investmentproperty

(i) Investment property held to earn rentalCost

Investment property held to earn rental is stated at cost less accumulated depreciation. The initial

cost of an investment property held to earn rental comprises its purchase price, cost of land use

rights and any directly attributable expenditures of bringing the property to the condition necessary

for it to be capable of operating in the manner intended by the Group. Expenditure incurred after the

investment property held to earn rental has been put into operation, such as repairs and maintenance,

is charged to the consolidated income statement in the period in which the expenditure is incurred.

In situations where it can be clearly demonstrated that the expenditure has resulted in future

economic benefits in excess of the originally assessed standard of performance of the existing

investment property held to earn rental, the expenditure is capitalised as an additional cost of the

investment property.

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108

Depreciation

Depreciation is computed on a straight-line basis over the estimated useful lives of investment

property. The estimated useful lives are as follows:

• Buildings 25 year

Disposals

Gains and losses on disposal of investment property held to earn rental are determined by comparing

net proceeds from disposals with the carrying amount of investment property held to earn rental.

The disposal proceeds are recognised as income in the consolidated income statement. Expenses

on disposal of assets and the carrying amounts are recognised as expenses in the consolidated

income statement.

(ii) Investment property held for capital appreciationInvestment property held for capital appreciation is stated at cost less any devaluation in market

price. The carrying amount of an investment property item held for capital appreciation is reduced

when there is evidence that its market price falls below its carrying amount and the loss can be

measured reliably. Any reduction in value of investment property held for capital appreciation is

recognised as other expenses in the consolidated income statement.

(u) ProvisionsA provision, except for provisions presented in Notes 3(f), 3(h), 3(i), 3( j), 3(o) và 3(p), is recognised

if, as a result of a past event, the Group has a present legal or constructive obligation that can be

estimated reliably, and it is probable that an outflow of economic benefits will be required to settle

the obligation. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required

in settlement is determined by considering the class of obligations as a whole. A provision is

recognised even if the likelihood of an outflow with respect to any one item included in the same

class of obligations may be small.

Provisions are determined by discounting the expected future cash flows at a pre-tax rate that

reflects current market assessments of the time value of money and the risks specific to the liability.

(v) SeveranceallowanceUnder the Vietnamese Labour Code, when an employee who has worked for 12 months or more

(“the eligible employee”) voluntarily terminates his/her labour contract, the employer is required to

pay the eligible employee severance allowance.

On 9 August 2013, the Ministry of Finance issued Official letter No. 10441/BTC-TCDN guiding the

Bank on accounting for severance allowance. According to this official letter, the Ministry of Finance

does not allow the Bank to make provision for severance allowance to employees. Accordingly, the

Bank has discontinued making any provision for severance allowance since 2013.


109

Pursuant to Law on Social Insurance, effective from 1 January 2009, the Group and its employees

are required to contribute to the unemployment insurance fund managed by the Vietnam Social

Insurance Agency. With the implementation of the unemployment insurance scheme, the Group

is no longer required to pay severance allowance for the service period from 1 January 2009.

Accordingly, severance allowance to be paid to eligible employees will be determined based on

eligible employees’ years of service until 31 December 2008 and their average salary for the six-

month period prior to the termination date.

(w) Taxation Income tax on the consolidated income statement for the year comprises current and deferred tax.

Income tax is recognised in the consolidated income statement except for the extent that it relates

to items recognised directly to equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted

at the reporting date, and any adjustment to tax payable in respect of previous period.

Deferred tax is provided using the balance sheet method, providing for temporary differences

between the carrying amounts of assets and liabilities for financial reporting purposes and the

amounts used for taxation purposes. The amount of deferred tax provided is based on the expected

manner of realisation or settlement of the carrying amount of assets and liabilities using tax rates

enacted or substantively enacted at the reporting date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will

be available against which the asset can be utilised. Deferred tax assets are reduced to the extent

that it is no longer probable that the related tax benefit will be realised.

(x) Capital

(i) Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of

ordinary shares are recognised as a deduction from equity.

(ii) Share premium On receipt of capital from shareholders, the difference between issue price and par value of issued

shares is credited/debited to the share premium account in equity.

(iii) Treasury shares When the Bank repurchases its ordinary shares (“treasury shares”), the amount of consideration

paid, which includes directly attributable costs, is recognised as a deduction from equity.

When treasury shares are sold or reissued subsequently, the amount received is recognised as an

increase in equity, and the resulting surplus or deficit on the transactions is transferred to/from

share premium.

Annual Report 2017

110

(y) Reserves

(i) The Bank According to Decree No. 93/2017/ND-CP dated 7 August 2017 issued by the Government, the

Bank is required to make the following allocations before distribution of profits:

Percentage of annual allocation Maximum balance

Reserve to supplement charter capital 5% of profit after tax 100% of charter capital

Financial reserve 10% of profit after tax Not specific

The purpose of the financial reserve is to offset residual asset losses and damage occurring in the

course of business after such losses have been offset with compensation paid by the organisations,

individuals who caused them, indemnity paid by insurers and with the allowance set up and accounted

for in expenses, and shall be used for other purposes in accordance with the law.

The reserves are used for specific purposes and are appropriated from profit after tax of the Bank

according to the proportion prescribed below:

• Reserve to supplement charter capital;

• Financial reserve;

• Other reserves: appropriated according to the resolution of the General Meeting of Shareholders.

The appropriation rates of these reserves are determined by the General Meeting of Shareholders

in accordance with the law.

The remaining profit after the appropriation of the above reserves, bonus and welfare fund and

distribution of dividends to the shareholders is recorded as retained profit of the Bank. The Bank only

appropriates the reserve to supplement charter capital and the financial reserve at the year-end.

(ii) Asia Commercial Bank Leasing Company Limited (“ACBL”)According to Decree No. 93/2017/ND-CP dated 7 August 2017 issued by the Government, ACBL is

required to make the following allocations before distribution of profits:




ACBL is required to make the reserve to supplement charter capital and the financial reserve annually.

ACBL only appropriates the above reserves at the year-end. Reserve to supplement charter capital

and financial reserve of ACBL are recorded into other reserves in the consolidated balance sheet.

(iii) ACB Securities Company Limited (“ACBS”) According to Circular No. 146/2014/TT-BTC dated 6 October 2014 issued by the Ministry of Finance,

ACBS is required to appropriate the following reserves:


111



Financial reserve 5% of profit after tax 10% of charter capital

ACBS is required to make the reserve to supplement charter capital and the financial reserve annually.

ACBS only appropriates the above reserves at the year-end. Reserve to supplement charter capital

and financial reserve of ACBS are recorded into other reserves in the consolidated balance sheet.

(iv) Asia Commercial Bank Asset Management Company Limited (“ACBA”) According to Circular No. 27/2002/TT-BTC dated 22 March 2002 issued by the Ministry of Finance,

ACBA is required to appropriate the following reserves:




ACBA is required to make the reserve to supplement charter capital and the financial reserve annually.

ACBA only appropriates the above reserves at the year-end. Reserve to supplement charter capital

and financial reserve of ACBA are recorded into other reserves in the consolidated balance sheet.

(v) ACB Capital Management Company Limited (“ACBC”) According to Circular No. 146/2014/TT-BTC dated 6 October 2014 issued by the Ministry of Finance,

ACBC is required to appropriate the following reserves:



Financial reserve 5% of profit after tax 10% of charter capital

ACBC is required to make the reserve to supplement charter capital and the financial reserve annually.

ACBC only appropriates the above reserves at the year-end. Reserve to supplement charter capital

and financial reserve of ACBC are recorded into other reserves in the consolidated balance sheet.

(z) Bonusandwelfarefund Bonus and welfare fund is established by appropriating from profit after tax as approved at the

General Meeting of Shareholders. This fund is not required by legal regulation and is distributed in

accordance to the decision of the Bank’s or its subsidiaries’ management. Bonus and welfare fund is

recognised in the Group’s other liabilities.

Annual Report 2017

112

(aa) RelatedpartiesRelated parties include enterprises and individuals that directly or indirectly through one or more

intermediaries, control, or are controlled by, or are under common control with the Group. The

enterprises in which the Group has significant influence, enterprises and individuals owning, directly

or indirectly, an interest in the voting power of the Group that gives them significant influence over the

Group, key management personnel, including members of Board of Directors, members of Board of

Management, members of Board of Supervisors, Chief Financial Officer, Chief Accountant and close

members of the family of these individuals and companies which these individuals directly or indirectly

hold significant voting right or have significant influence over also constitute related parties.

In considering each possible related party relationship, the Group pays attention to the substance of

the relationship, and not merely the legal form.

(bb) FiduciaryactivitiesThe Group acts as trustee and in other fiduciary capacities that result in the holding or placing of

assets, loans on behalf of individuals, corporates and other credit institutions.

The value of investment trusts and trust funds received are recognised when the trust contracts

have been signed and trust funds have been realised. Rights and obligations of the truster and

trustee relating to profit and profit sharing, trust fee, other rights and obligations are in compliance

with the terms of the contracts.

Based on the terms of the contracts, fiduciary activities of the Group comprise:

Fiduciary activities at no risk

The Group acts as trustee and in other fiduciary capacities that result in holding assets on behalf

of customers, entrusted investments and loans to customers in which entrusters bear all risks of

fiduciary activities. These assets are excluded from these consolidated financial statements as

they are not assets of the Group. Entrusted funds received from trustees but not yet disbursed are

recognised as other liabilities on the consolidated balance sheet. After the disbursement, the Group

recognised entrusted funds as off balance sheet items in accordance with Circular No. 30/2014/TT-

NHNN dated 6 November 2014 issued by the SBV.

Fiduciary activities at risk

The Group acts as trustee receiving the funds from the Government, international and other credit

institutions to make loans to customers. The Group recognises the received fund as an entrustred fund

and recognises loans to customers financed by these funds as its loans to customers. The accounting

policies of these loans to customers are in accordance with the regulations issued by the SBV (Note 3(f)).

(cc) DividenddistributionDividend distribution to the Bank’s shareholders is recognised as a liability in the consolidated financial

statements when the dividends are approved in accordance with regulations of the Bank’s Charter.


113

(dd) EarningspershareThe Group presents basic and diluted earnings per share (EPS) for its ordinary shares. Basic EPS is

calculated by dividing the profit or loss attributable to the ordinary shareholders of the Bank, after

deducting the bonus and welfare funds made during the year, by the weighted average number of

ordinary shares outstanding during the year. Diluted EPS is determined by adjusting the profit or

loss attributable to the ordinary shareholders and the weighted average number of ordinary shares

outstanding for the effect of all dilutive potential ordinary shares.

(ee) SegmentreportingA segment is a distinguishable component of the Group that is engaged either in providing related

products or services (business segment), or in providing products or services within a particular

economic environment (geographical segment), which is subject to risks and rewards that are

different from those of other segments. The Group’s primary format for segment reporting is

based on business segment. The Group’s secondary format for segment reporting is based on

geographical segment.

(ff) NilbalanceItems or balances required by Circular No. 49/2014/TT-NHNN dated 31 December 2014 issued by

the SBV that are not shown in these consolidated financial statements indicate nil balances.

4. CASH, GOLD AND GEMSTONES



Cash in VND 3,780,024 2,730,759

Cash in foreign currencies 1,039,491 767,102

Valuable papers 457 452

Gold 31,738 43,075

4,851,710 3,541,388

5. BALANCES WITH THE STATE BANK OF VIETNAM



Current deposits at the SBV

- In VND 7,530,960 4,343,739

- In foreign currencies 783,614 775,567

8,314,574 5,119,306

These balances are current deposits at the SBV.

Annual Report 2017

114

Under the SBV’s regulations relating to the compulsory reserve, banks are required to maintain a

compulsory reserve requirement (“CRR”) in current deposits at the SBV. The monthly average

balance of current deposits at the SBV must not be less than relevant CRR rates multiplied by the

preceding month’s average balances of deposits in scope as follows:

Preceding month’s average balances of:31.12.2017

%31.12.2016

%

Deposits from customers:

• Deposits in foreign currencies with term of less than 12 months 8.00 8.00

• Deposits in foreign currencies with term of 12 months and above 6.00 6.00

• Deposits in VND with term of less than 12 months 3.00 3.00

• Deposits in VND with term of 12 months and above 1.00 1.00

Deposits from foreign credit institutions

• Deposits in foreign currencies 1.00 1.00

6. DEPOSITS WITH AND LOANS TO OTHER CREDIT INSTITUTIONS

6.1 Deposits with and loans to other credit institutions

31.12.2017 VND million


Deposits with other credit institutions

Current deposits

- In VND 161,167 94,569

- In foreign currencies 2,086,202 2,253,613

2,247,369 2,348,182

Term deposits

- In VND 3,685,000 4,095,000

- Allowance for losses on deposits with other credit institutions (153,761) (171,880)

3,531,239 3,923,120

5,778,608 6,271,302

Loans to other credit institutions

In VND 3,163,119 1,880,725

In which:

- Discount, rediscount 3,163,119 1,880,725

Allowance for losses on loans to other credit institutions - -

3,163,119 1,880,725

8,941,727 8,152,027


115

6.2 Analysis of quality of deposits with and loans to other credit institutions



Group 1 - Current 6,448,119 5,450,725

Group 2 - Special mentioned - -

Group 3 - Sub-standard - 125,000

Group 4 - Doubtful - -

Group 5 - Loss (i) 400,000 400,000

6,848,119 5,975,725

(i) The term deposit with a local commercial joint stock bank of which the associated interest receivable has been overdue. The total allowance made for this term deposit as at 31 December 2017 was VND153,761 million (31.12.2016: VND165,630 million). As at 31 January 2015, the SBV announced a mandatory acquisition for all stakes of this bank at a price of VND0. On 25 December 2015, the Bank submitted Official letter 7261/CV-TH.15 for the SBV’s approval to extend the collection term of the deposit and associated interest receivable. On 29 December 2015, the SBV issued Official letter 10005/NHNN-TTGSNH which approved the Bank’s proposal. Accordingly, this deposit will be collected annually based on a defined plan until 30 September 2020.

6.3 Allowance for losses on deposits with and loans to other credit institutions

Specific allowanceVND million

As at 1 January 2016 200,141

Reversal during the year (Note 31) (28,261)

As at 31 December 2016 171,880



7. HELD-FOR-TRADING SECURITIES

7.1 Held-for-trading securities



Debt securities

Government securities 1,036,829 720,577

Equity securities

Equity securities issued by other credit institutions 27,771 69,934

Equity securities issued by domestic economic entities (i) 175,391 420,803

1,239,991 1,211,314

Allowance for diminution in value (3,436) (28,008)

1,236,555 1,183,306

Annual Report 2017

116

Categorising held-for-trading securities into listed and unlisted:



Debt securities

Listed 1,036,829 720,577

Equity securities

Listed 78,150 232,523

Unlisted 125,012 258,214

Total held-for-trading securities 1,239,991 1,211,314

(i) Included in the held-for-trading securities balance as at 31 December 2017 was VND83,900 million (31.12.2016: VND57,104 million) equity securities held by ACBS as collateral assets for issuance of valuable papers (Note 18) and borrowings from other credit institutions (Note 15).

7.2 Allowance for losses on held-for-trading securities

Allowance for losses

VND million

As at 1 January 2016 2,577

Allowance made during the year (Note 26) 25,431


Allowance reversed during the year (Note 26) (24,572)


8. DERIVATIVES AND OTHER FINANCIAL ASSETS/LIABILITIES

31 December 2017Total contract value

(at foreign exchange rate at the contract

date)

Total carrying value(at foreign exchange rate as at 31 December 2017)

VND millionAssets

VND millionLiabilities

VND million

Currency derivatives

- Forward contracts 4,176,256 18,588 -

- Currency swap contracts 15,171,142 - 29,079

- Currency options purchased

• Call options purchased 704,463 - 29,408

• Put options purchased - - -

- Currency options written

• Call options written 473,718 27,685 -

• Put options written - - -


117

31 December 2016Total contract value

(at foreign exchange rate at the contract

date)

Total carrying value(at foreign exchange rate as at 31 December 2017)

VND millionAssets

VND millionLiabilities

VND million


- Forward contracts 281,513 - 128

- Currency swap contracts 4,929,851 16,193 -


• Call options purchased 631,574 28,986 -

• Put options purchased 443,180 - 33,075


• Call options written 689,721 - 2,382

• Put options written 450,818 15,563 -

9. LOANS TO CUSTOMERS

9.1 By type of loans



Loans to domestic economic entities and individuals 195,356,806 160,922,813

Discounted negotiable instruments and valuable papers 132,551 98,853

Finance leases 849,663 905,950

Payments on behalf of customers 499 300Loans funded by the Government, international and other credit institutions 16,587 28,209

Loans from margin trading activities 2,157,288 1,445,096

198,513,394 163,401,221

9.2 By type of customers



State owned companies 1,767,475 1,909,009

Joint stock companies, limited liability companies and private enterprises 82,866,438 72,951,189

Joint-venture companies 1,403,850 1,157,317

100% foreign owned companies 1,232,939 872,367

Co-operatives 107,873 83,268

Individuals and others 111,134,819 86,428,071

198,513,394 163,401,221

Annual Report 2017

118

9.3 By loan group



Group 1 - Current loans 194,516,919 158,512,250

Group 2 - Special mentioned loans 449,568 2,023,328

Group 3 - Sub-standard loans 325,864 193,836

Group 4 - Doubtful loans 275,371 180,518

Group 5 - Loss loans 788,384 1,046,193

Loans from margin trading activities 2,157,288 1,445,096

198,513,394 163,401,221

9.4 By term



Short-term loans 98,989,236 76,446,864

Medium-term loans 19,234,602 21,320,449

Long-term loans 80,289,556 65,633,908

198,513,394 163,401,221

9.5 By currency



Denominated in VND 189,662,730 154,426,322

Denominated in foreign currencies and gold 8,850,664 8,974,899

198,513,394 163,401,221

9.6 By business sector of customers



Trading 38,967,133 34,441,784

Agriculture and forestry 881,926 881,687

Manufacturing and processing 24,233,388 21,218,248

Construction 8,516,388 6,922,641

Individual and community services 3,455,588 2,583,919

Warehousing, transportation and communication 2,592,809 3,071,674

Education and training 374,516 241,580

Real estate 4,077,591 3,610,697

Hotels and restaurants 2,506,603 2,469,500


119

Financial services 25,046 31,801

Other sectors and lending to individuals 112,882,406 87,927,690

198,513,394 163,401,221

9.7 Allowance for losses on loans to customers

General allowanceVND million


Allowance for losses on loans for margin

trading activititesVND million

TotalVND million

As at 1 January 2016 978,043 562,774 - 1,540,817Allowance made during the year (Note 31) 236,661 554,976 1,979 793,616Allowance utilised during the year - (537,638) - (537,638)

As at 31 December 2016 1,214,704 580,112 1,979 1,796,795Allowance made during the year (Note 31) 221,864 1,338,756 86,028 1,646,648Allowance utilised during the year - (1,598,805) - (1,598,805)

As at 31 December 2017 1,436,568 320,063 88,007 1,844,638

9.8 Credit exposure of Group of six companies

The Group of six companies is a group of entities related to an individual who was either the

former Chairman or a former member of Board of Directors of these companies (“the Group of six

companies”). The credit exposure of the Group of six companies comprises of loans to customers,

held-to-maturity securities - bonds (“bonds”) and other receivables. Details of the balances and the

associated allowances of the Group of six companies are as follows:

2017 2016Balance

31.12.2017VND Million (iii)

Balance30.11.2017VND Million

Loan group 30.11.2017

(ii)

Balance31.12.2016VND Million


(i)

Balances

Loans to customers - 1,048,697 5 1,427,566 2Held-to-maturity securities -bonds - 1,718,807 5 1,837,319 2

Other receivables 616,318 626,952 648,500

Total balances 616,318 3,394,456 3,913,385

Allowances

Loans to customers - (1,048,697) (205,445)Held-to-maturity securities -bonds - (1,718,807) (1,853,424)

Other receivables (616,318) (553,846) (353,846)

Total allowances (616,318) (3,321,350) (2,412,715)

- 73,106 1,500,670

Annual Report 2017

120

(i) As at 31 December 2016, the credit risk classification and the associated allowances were approved by the SBV. In which:

- The allowances for losses on loans and bonds balances were made in accordance with Circular

02 as disclosed in Note 3(f) together with an additional allowance for the amount not yet

collected against the repayment schedule approved by the SBV.

- The allowance for other receivables was made at 30% of total receivables from the Group of six

companies as at 31 December 2013 as per SBV’s approval.

(ii) As at 30 November 2017, the Bank classified the loans to and bonds issued by the Group of six companies as Group 5 – Loss loans in accordance with the requirements of Circular 02 disclosed in Note 3(f). In addition, the Bank made full allowances for losses on loans to and bonds issued by the Group of six companies.

(iii) As at 31 December 2017, the loans and bonds balances were written off against allowances and recorded as off-balance sheet items for following up and collection according to the approval of the Bank’s Risk Resolution Committee. In addition, the Bank also made full allowance for other receivables from the Group of six companies.

The collection amount from the Group of six companies in the year ended 31 December 2017

was VND818,928 million (2016: VND1,853,906 million). Included in the collection amount was the

amount of VND289,366 million collected after the written-off date which was recorded as an other

income (Note 28).

Details of collateral assets, other guarantees which are held by the Bank against the balances with

the Group of six companies and other sources of repayment together with key assumptions used in

evaluating them were as follows:

Estimated value (i)31.12.2017VND million


Sharesofothercreditinstitutions

Listed

+ Latest transaction price (ii) 1,237,436 1,961,423

Unlisted

+ Latest transaction price (iii) 919,790 1,386,125

2,157,226 3,347,548

Sharesofjointstockcompanies

Listed

+ Market value 20,915 39,940

Unlisted

+ Net book value 487,895 459,509

+ Internal valuation model 39,189 111,033


121

+ Market value of land owned by the companies or over which the companies have rights for property development 36,792 42,777

584,791 653,259

Othercollateralassets

Capital contributions - Internal valuation model - 59,692

Receivables - carrying value - 101,195

Guarantee letters issued by other bank - Guaranteed amount 300,000 300,000

300,000 460,887

3,042,017 4,461,694

Othersourcesofrepayment

Deposits at the Bank - Carrying value 9,472 17,987

3,051,489 4,479,681

(i) These values are estimated for the purpose of assessment of sources of repayment of the Group of six companies. The Bank has reasonably and prudently evaluated the collateral assets, the actual liquidation amounts could be different from these estimated values.

(ii) Based on the latest transaction price to transfer these listed shares from the Group of six companies to third parties. Included in this estimated value is the deposits from third parties amounting to VND415,666 million (31.12.2016: VND1,139,653 million). These deposits were used to settle the Group of six companies’ obligations to the Bank.

(iii) Based on the latest transaction price to transfer these unlisted shares from the Group of six companies to third parties.

10. INVESTMENT SECURITIES

10.1 Details of investment securities



Available-for-salesecurities

Debtsecurities

Government securities 7,058,817 8,950,088

Debt securities issued by other domestic credit institutions 203,166 1,137,434

Equitysecurities

Equity securities issued by other domestic credit institutions - 4,222

Equity securities issued by domestic economic entities (i) 745,508 870,869

Total available-for-sale securities 8,007,491 10,962,613

Allowanceforlossesonavailable-for-salesecurities

Allowancefordiminutioninvalue (425,467) (517,919)

Annual Report 2017

122

7,582,024 10,444,694

Held-to-maturitysecurities(excludingspecialbondsissuedbyVAMC)

Debtsecurities

Government securities (ii) 41,466,355 26,785,331

Debt securities issued by other domestic credit institutions 3,644,754 3,796,014

Debt securities issued by domestic economic entities (Note 10.2) - 2,756,181Total held-to-maturity securities (excluding special bonds issued by VAMC) 45,111,109 33,337,526

Allowanceforlossesonheld-to-maturitysecurities

General allowance (3,845) (28,690)

Specific allowance - (2,021,259)

(3,845) (2,049,949)

45,107,264 31,287,577

SpecialbondsissuedbyVAMC

Par value of special bonds 40,373 1,486,633

Allowance for losses on special bonds (11,256) (417,439)

29,117 1,069,194

Totalinvestmentsecurities 52,718,405 42,801,465

(i) Included in equity securities issued by other domestic economic entities as at 31 December 2017 was VND0 (31.12.2016: VND101,556 million) of securities which were pledged as collateral assets for borrowings from other credit institutions (Note 37).

(ii) Included in the held-to-maturity Government securities as at 31 December 2017 was VND4,053,041 million (31.12.2016: nil) of securities which were pledged for borrowings from other credit institutions with the amount of VND2,471,170 million (31.12.2016: nil) (Note 15 and Note 37).

10.2 Analysis of quality of securities classified as credit-risk bearing assets



Group 1 - Current loans - 529,984

Group 2 - Special mentioned loans - 1,837,319

Group 3 - Sub-standard loans - -

Group 4 - Doubtful loan - 388,878

Group 5 - Loss loans - -

- 2,756,181


123

10.3 Allowance for losses on investment securities

Allowance for diminution in value of

available-for-sale securities

VND million

General allowance for

investment securities

(i)VND million

Specific allowance

for held-to-maturity

securities (i)

VND million

Specific allowance

for losses on special bonds

issued by VAMC

VND millionTotal

VND million

As at 1 January 2016 518,934 30,710 1,151,856 382,113 2,083,613Allowance made/(reversed) during the year (Note 27 and Note 31) (1,015) (2,020) 1,101,430 452,232 1,550,627

Allowance utilised during the year - - (232,027) (416,906) (648,933)

As at 31 December 2016 517,919 28,690 2,021,259 417,439 2,985,307Allowance made/(reversed) during the year (Note 27 and Note 31) (92,452) (24,845) (302,451) 936,814 517,066

Allowance utilised during the year - - (1,718,808) (1,342,997) (3,061,805)

As at 31 December 2017 425,467 3,845 - 11,256 440,568

(i) Excluded the specific allowance for losses on special bonds issued by VAMC.

11. LONG-TERM INVESTMENTS

11.1 By types of investments



Investments in a joint-venture 11.2 1,280 1,280

Investments in an associate 11.2 388 346

Other long term investments 11.3 193,927 199,537Allowance for diminution in value of long term investments 11.4 (5,553) (10,969)

190,042 190,194

11.2 Investments in a joint venture and an associate

31.12.2017 31.12.2016Cost

VND millionCarrying value

VND millionCost

VND millionCarrying value

VND million

Saigon Gold & Silver ACB-SJC Joint Stock Company 1,000 1,280 1,000 1,280Asia Commercial Bank Security Services Joint Stock Company 200 388 200 346

1,200 1,668 1,200 1,626

Annual Report 2017

124

11.3 Other long-term investments



Investments in domestic economic entities – Unlisted (i) 193,927 199,537

Allowance for diminution in the value of other long-term investments (5,553) (10,969)

188,374 188,568

(i) Movements in investments in unlisted domestic economic entities were as follows:

VND million

As at 1 January 2016 217,204

Disposal during the year (17,667)




11.4 Allowance for diminution in the value of other long-term investments

VND million


Allowance made during the year (Note 30) 391




12. FIXED ASSETS

(a) Tangiblefixedassets

Buildings and structures

Office equipment

Motor vehicles Others Total

VND million VND million VND million VND million VND million

Historicalcost

As at 1 January 2017 2,145,262 1,067,693 291,838 177,579 3,682,372

Additions 2,523 224,907 26,043 4,780 258,253

Transfer from construction in progress 140,968 1,347 5,950 56 148,321

Disposals (30,626) (3,906) (2,664) (3,391) (40,587)

As at 31 December 2017 2,258,127 1,290,041 321,167 179,024 4,048,359

Accumulateddepreciation


125

As at 1 January 2017 318,714 721,361 173,985 129,590 1,343,650

Charge for the year 59,413 139,680 26,060 19,837 244,990

Disposals (5,659) (3,850) (2,642) (2,960) (15,111)

Reclassification 1 (27) 3 23 -

As at 31 December 2017 372,469 857,164 197,406 146,490 1,573,529

Netbookvalue

As at 1 January 2017 1,826,548 346,332 117,853 47,989 2,338,722

As at 31 December 2017 1,885,658 432,877 123,761 32,534 2,474,830

Other information about tangible fixed assets was as follows:31.12.2017VND million


Carrying amount of tangible fixed assets which were pledged as collaterals for borrowings 38,689 41,187

Carrying amount of temporarily idle tangible fixed assets 4,500 3,748

Cost of tangible fixed assets which were fully depreciated but still in use 719,549 523,719

(b) Intangiblefixedassets

Land use rights Software TotalVND million VND million VND million

Historicalcost

As at 1 January 2017 294,716 428,105 722,821

Additions - 17,941 17,941

Transfer from construction in progress 48,158 1,513 49,671

As at 31 December 2017 342,874 447,559 790,433

Accumulatedamortisation

As at 1 January 2017 - 210,985 210,985

Charge for the year - 46,660 46,660

As at 31 December 2017 - 257,645 257,645

Netbookvalue

As at 1 January 2017 294,716 217,120 511,836

As at 31 December 2017 342,874 189,914 532,788

Other information about intangible fixed assets was as follows:31.12.2017VND million


Cost of intangible fixed assets which were fully amortised but still in use 134,377 123,131

Annual Report 2017

126

13. INVESTMENT PROPERTY

VND million

Historicalcost

As at 1 January 2017 212,954

Transfer from construction in progress 62,000

Transfer from other assets 3,232

Disposals (13,396)

Reclassification (6,935)




Charge for the year 641


Netbookvalue

As at 1 January 2017 211,872


14. OTHER ASSETS

14.1 Other receivables



Construction in progress (i) 667,965 521,862

Receivables from customers (ii) 4,255,338 3,893,849

Receivables from the SBV 7,107 7,107

Advances and internal receivables 392,001 197,513

Dividend receivables 3,868 -

5,326,279 4,620,331

(i) Movements of construction in progress during the year:2017

VND million2016

VND million

Beginning of the year 521,862 642,523

Additions 437,099 316,600

Transfer to tangible fixed assets (Note 12(a)) (148,321) (272,139)

Transfer to intangible fixed assets (Note 12(b)) (49,671) (81,243)

Transfer to investment properties (Note 13) (62,000) -

Transfer to other assets (2,066) (61,193)

Disposals (28,938) (22,686)

End of the year 667,965 521,862


127

Major constructions in progress were as follows:31.12.2017 VND million


Office buildings 595,120 521,862

(ii) Included in receivables from customers as at 31 December 2017 were receivables from the Group of six companies of VND616,318 million (31.12.2016: VND648,500 million). The allowance for losses on these receivables as at 31 December 2017 was VND616,318 million (31.12.2016: VND353,846 million) (Note 9.8).

14.2 Other assets



Prepaid expenses 577,010 523,356Foreclosed assets of which ownership transferred to the Bank and awaiting for settlement (i) 66,907 102,579

Other assets 47,077 40,946

690,994 666,881

(i) Foreclosed assets of which ownership transferred to the Bank and awaiting for settlement



Real estates 66,907 102,579

14.3 Allowance for losses on other assets

VND million

As at 1 January 2016 563,292


Allowance utilised during the year (143,229)



Allowance utilised during the year (180)

As at 31 December 2017 1,472,091

15. DEPOSITS AND BORROWINGS FROM OTHER CREDIT INSTITUTIONS



Depositsfromothercreditinstitutions

Demand deposits

- In VND 112,320 103,469


Annual Report 2017

128

Term deposits

- In VND 9,155,054 470,000


12,130,254 1,735,365

Borrowingsfromothercreditinstitutions

In VND 2,650,742 123,047

In which:

- Discounted, rediscounted borrowings (Note 10.1) (i) 2,471,170 -

- Secured borrowings (i) 100,000 -

In foreign currencies 672,750 376,703

3,323,492 499,750

15,453,746 2,235,115

These borrowings were secured by following assets:31.12.2017 VND million


Held-for-trading securities (Note 7.1) 31,867 -

Available-for-sale securities (Note 10.1) - 101,556

Held-to-maturity securities (Note 10.1) 4,053,041 -

Fixed assets (Note 12(a)) 38,689 41,187

4,123,597 142,743

16. DEPOSITS FROM CUSTOMERS

16.1 By currency



Current deposits

- In VND 34,463,954 28,334,588


Term deposits

- In VND 28,090,991 23,160,035


Saving deposits

- In VND 166,739,256 143,657,609


Margin deposits

- In VND 1,622,529 1,636,080


Specialised capital deposits


129

- In VND 116,039 76,206


241,392,932 207,051,269




State owned companies 949,406 837,789


Joint-venture companies 1,477,797 795,053

100% foreign owned companies 3,040,179 2,602,778


Individuals 197,294,210 169,741,821

Others 3,283,494 2,704,559

241,392,932 207,051,269

17. FUNDS AND ENTRUSTED INVESTMENTS RECEIVED FROM THE GOVERNMENT, INTERNATIONAL AND OTHER CREDIT INSTITUTIONS



Funds received from Japan Bank for International Cooperation in VND (i) 106,621 91,953Funds received from Japan Bank for International Cooperation in foreign currencies (ii) 29,845 30,744

136,466 122,697

Funds received from Japan Bank of Internation Co-operation (“JBIC”) are financed by the Japanese

Government via JBIC. These funds are granted to small and medium entities with the maximum

period of 10 years for the medium and long-term loans and with the maximum period of 1 year for

the short-term loans in accordance with the agreement signed between the SBV and the Bank.

(i) Outstanding balances of funds received from JBIC in VND born annual interest rate at 4.92% in 2017 (2016: ranging from 4.80% to 4.92%)

(ii) Outstanding balances of funds received from JBIC in foreign currencies born annual interest rate at 1.91% in 2017 (2016: 1.91%).

Annual Report 2017

130

18. VALUABLE PAPERS ISSUED



Bonds• One-year bonds issued by ACBS (par value of VND1,000,000,000/bond) (i) 707,000 561,000• Five-year and one-day bonds issued by the Bank (par value of VND100,000,000/bond) 2,000,000 2,000,000• Ten-year and one-day bonds issued by the Bank (par value of VND1,000,000,000/bond) 4,054,000 4,054,000

6,761,000 6,615,000

(i) Included in one-year bonds issued by ACBS as at 31 December 2017 was VND100,000 million bonds secured by VND52,033 million of equity securities of ACBS (31.12.2016: VND100,000 million bonds secured by VND57,104 million of equity securities of ACBS) (Note 7.1).

19. OTHER LIABILITIES



Internal payables 847,093 620,221

Other external payables

• Remittances in transits 214,782 383,952

• Taxes payable to the State Treasury (Note 36) 37,818 36,190

• Cash held on behalf and awaiting for settlement 128,190 85,055

• Amount awaiting settlement 396,907 65,730

• Other payables 12,498 46,734

Unearned revenue 17,190 28,593

Bonus and welfare fund 60,661 45,691

1,715,139 1,312,166

20. OWNERS’ EQUITY

20.1 Statement of changes in equity

Charter capital

Treasury shares

Reserve to supple-

ment charter capital

Financial reserve

Other reserves

(i)Retained

profits Total

VND million VND million VND million VND million VND million VND million VND million

Balance at 1 January 2016 9,376,965 (665,725) 449,635 1,641,434 283,109 1,702,124 12,787,542

Net profit for the year - - - - - 1,325,174 1,325,174Appropriation to reserves - - 65,399 130,799 19,805 (216,003) -


131

Appropriation to bonus and welfare fund - - - - - (50,000) (50,000)Balance at 31 December 2016 9,376,965 (665,725) 515,034 1,772,233 302,914 2,761,295 14,062,716

Net profit for the year - - - - - 2,118,131 2,118,131Appropriation to reserves - - 104,453 208,905 16,668 (330,026) -Appropriation to bonus and welfare fund - - - - - (20,000) (20,000)

Share dividends 896,274 - - - - (896,274) -Purchase of shares for employee bonus (ii) - - - - - (130,000) (130,000)Other reserves adjustments - - - - (6,427) 6,427 -Balance at 31 December 2017 10,273,239 (665,725) 619,487 1,981,138 313,155 3,509,553 16,030,847

(i) Other reserves comprised of capital expenditure fund and reserves of subsidiaries.

(ii) Purchase of shares for employee bonus in the ESOP program was approved by the General Meeting of Shareholders of the Bank on 10 April 2017.

20.2 Shares

(a) Numberofshares

31.12.2017 31.12.2016

Number of sharesCarrying value

VND million Number of sharesCarrying value

VND million

Authorised share capital 1,027,323,896 10,273,239 937,696,506 9,376,965

Treasury shares (41,422,608) (665,725) (41,422,608) (665,725)Ordinary shares in circulation 985,901,288 9,607,514 896,273,898 8,711,240

(b) Movementsofowner’sequity

Number of shares Ordinary shares

VND million

As at 1 January 2016 937,696,506 9,376,965

New shares issued - -

As at 31 December 2016 937,696,506 9,376,965

New shares issued 89,627,390 896,274

As at 31 December 2017 1,027,323,896 10,273,239

All ordinary shares have a par value of VND10,000. Each share is entitled to one vote at meetings of

shareholders of the Bank. Shareholders are entitled to receive dividends as declared from time to

time. All ordinary shares are ranked equally with regard to the Bank’s residual assets. In respect of

shares bought back by the Bank, all rights are suspended until those shares are reissued.

Annual Report 2017

132

20.3 Dividend

The General Meeting of Shareholders of the Bank on 8 April 2016 resolved to distribute share

dividends at a rate of 1 share for every 10 ordinary shares in circulation from VND896,274 million of

retained profits of 2015 and previous years. On 9 January 2017, the Bank had completed procedures

to amend the Business Registration Certificate for the issuance of shares for dividends.

The General Meeting of Shareholders of the Bank on 10 April 2017, resolved to distribute share

dividends at a rate of 1 share for every 10 ordinary shares in circulation from VND985,901 million of

retained profits of 2016 and previous years. Up to the date of issuance of these consolidated financial

statements, the Bank has not yet completed process for the issuance of shares for dividends.

21. INTEREST AND SIMILAR INCOME

2017VND million

2016VND million

Interest income from deposits 221,508 180,904

Interest income from loans 16,526,002 13,550,012

Interest income from debt securities: 3,292,563 2,411,394

- Interest income from held-for-trading securities 15,150 20,000

- Interest income from investment securities 3,277,413 2,391,394

Income from guarantee activities 196,681 207,398

Interest income from finance leasing 76,927 78,991

Other income from credit activities 5,958 19,550

20,319,639 16,448,249

22. INTEREST AND SIMILAR EXPENSES

2017VND million

2016VND million

Interest expense on deposits 11,013,305 8,794,102

Interest expense on borrowings 77,571 130,120

Interest expense on bonds 699,732 535,894

Other expenses on credit activities 71,277 96,244

11,861,885 9,556,360

23. FEE AND COMMISSION INCOME

2017VND million

2016VND million

Settlement services 916,381 796,171

Treasury services 36,753 34,110

Securities trading services 162,964 131,115


133

Other services 458,570 312,735

1,574,668 1,274,131

24. FEE AND COMMISSION EXPENSES

2017VND million

2016VND million

Settlement and treasury services 257,944 217,984

Securities trading services 52,922 38,593


386,337 329,749

25. NET GAIN FROM TRADING OF FOREIGN CURRENCIES

2017VND million

2016VND million

Gains from trading of foreign currencies

- Currency spots 380,362 214,291

- Gold trading 3,348 39,687

- Other derivatives 216,218 243,643

Losses on trading of foreign currencies

- Currency spots (130,755) (2,194)

- Gold trading (1,544) (1)

- Other derivatives (230,900) (265,330)

236,729 230,096

26. NET GAIN FROM TRADING OF HELD-FOR-TRADING SECURITIES

2017VND million

2016VND million

Gains from held-for-trading securities 135,595 113,083

Losses from held-for-trading securities (134,862) (15,569)Reversal of/(additional to) allowance for losses on held-for-trading securities (Note 7.2) 24,572 (25,431)

25,305 72,083

27. NET GAIN/(LOSS) FROM TRADING OF INVESTMENT SECURITIES

2017VND million

2016VND million

Gains from trading of investment securities 203,200 203,609

Gains from disposals of other long-term investments 2,244 52,787

Losses on trading of investment securities (22,113) (6,464)

Losses on disposals of other long-term investments - (37,500)

Annual Report 2017

134

Reversal of allowance for diminution in value of available-for-sale securities (Note 10.3) 92,452 1,015Reversal of general allowance for losses on investment securities (Note 10.3) 24,845 2,020Reversal of/(addition to) specific allowance for losses on investment securities (Note 10.3) 302,451 (1,101,430)

603,079 (885,963)

28. NET OTHER INCOME

2017VND million

2016VND million

Otherincome

Income from bad debts collection previously written off (i) 369,312 79,185

Income from other trading activities 4,732 1,800

Other income 578,395 215,300

952,439 296,285

Other expenses

Expenses on other trading activities (3,037) (284)

Other expenses (57,760) (10,797)

(60,797) (11,081)

891,642 285,204

(i) Included in this item was VND289,266 million (2016: nil) of income from bad debts collection from the Group of six companies previously written off (Note 9.8).

29. INCOME FROM INVESTMENTS IN OTHER ENTITIES

2017VND million

2016VND million

Dividend income during the year

- Held-for-trading equity securities 15,084 432

- Available-for-sale equity securities 15,250 19,816

- Long-term investments 5,693 4,530Share of profit from an associate and a joint venture using equity accounting 42 33

36,069 24,811

30. OPERATING EXPENSES

2017VND million

2016VND million

Tax, duties and fees 10,552 13,540


135

Salaries and related expenses: 2,668,747 2,309,184

- Salaries and allowances 730,816 708,128

- Salary related contributions 159,439 147,590

- Subsidies 3,412 2,628

- Others 1,775,080 1,450,838

Expenses on assets 1,038,298 952,575

• Depreciation and amortisation expenses 292,291 249,805

• Others 746,007 702,770

Administration expenses 1,288,998 1,090,706

Insurance for deposits from customers 262,075 213,390

Allowance expenses (i) 948,689 98,494

6,217,359 4,677,889

(i) Details of the allowance expenses were as follows: 2017

VND million2016

VND million

(Reversal of)/addition to allowance for diminution in the value of other long-term investments (Note 11.4) (5,416) 391

Additional to allowance for losses on other assets (Note 14.3) 954,105 98,103

948,689 98,494

31. ALLOWANCE EXPENSES FOR CREDIT LOSSES

2017VND million

2016VND million

Reversal of specific allowance for losses on deposits with and loans to other credit institutions (Note 6.3) (18,119) (28,261)Addition to general allowance for losses on loans to customers (Note 9.7) 221,864 236,661Addition to specific allowance for losses on loans to customers (Note 9.7) 1,338,756 554,976Addition to allowance for losses on loans for margin trading activities (Note 9.7) 86,028 1,979

Addition to allowance for special bonds issued by VAMC (Note10.3) 936,814 452,232

2,565,343 1,217,587

32. CORPORATE INCOME TAX

The tax on the Group’s profit before tax differs from theoretical amount that would arise using the

applicable tax rate as follows: 2017

VND million2016

VND million

Net accounting profit before tax 2,656,207 1,667,026

Tax calculated at a rate of 20% 531,241 333,405

Effect of:

Annual Report 2017

136

Income not subject to tax (7,308) (4,926)

Expenses not deductible for tax purposes 14,737 10,646

Underprovision in previous year 108 1,553

Change in tax rate - 254Temporary tax differences for which no deferred income tax asset was recognised 158 920

Utilisation of previously unrecognised tax losses (860) -

Corporate income tax charge 538,076 341,852

Charged to income statement

Corporate income tax – current 556,141 338,590

Corporate income tax – deferred (18,065) 3,262

538,076 341,852

The corporate income tax charge for the year is based on taxable income and is subject to review

and possible adjustment by the tax authorities.

33. EARNINGS PER SHARE

33.1 Basic earnings per share

The basic earnings per share was based on net profit attributable to ordinary shareholders and a

weighted average number of ordinary shares outstanding during the year.

2017 2016

Net profit for the year (VND million) 2,118,131 1,325,174

Less: Appropriation to bonus and welfare fund (VND million) (20,000) (50,000)

Less: Bonus shares for employees (Note 20.1) (130,000) -

Profit used for calculation of earning per share (VND million) 1,968,131 1,275,174Weighted average of ordinary shares outstading as at the reporting date (share) 985,901,288 985,901,288Earnings per share by weighted average of ordinary shares outstanding as at the reporting date (VND/share) 1,996 1,293

33.2 Diluted earnings per share

In the year, the Group did not have any dilutive potential ordinary shares. Accordingly, the requirement

for presentation the diluted earnings per share was not applicable.

34. CASH AND CASH EQUIVALENTS



Cash on hand, gold and gemstones 4,851,710 3,541,388

Balances with the SBV 8,314,574 5,119,306Deposits with other credit institutions with original terms of three months or less 5,532,369 5,918,183

18,698,653 14,578,877


137

35. EMPLOYEES REMUNERATION

2017VND million

2016VND million

Number of employees (person) 10,334 9,822

Emloyees remuneration 2,381,537 2,085,160

Total salary 730,816 708,128

Other remuneration 1,650,721 1,377,032

Average salary per employee per year 71 72

Average income per employee per year 230 212

36. OBLIGATIONS TO THE STATE’S BUDGET

Movements in the year

1.1.2017 Payable Paid 31.12.2017

VND million VND million VND million VND million

Value added tax 11,795 129,383 (133,304) 7,874

Corporate income tax 4,195 556,141 (557,841) 2,495

Other taxes 20,200 168,280 (161,031) 27,449

36,190 853,804 (852,176) 37,818

37. ASSETS, VALUABLE PAPERS MORTGAGED, PLEDGED, DISCOUNTED AND REDISCOUNTED

(a) Assets, valuable papersmortgaged, pledged, discounted and rediscounted atthe Group



Assets,valuablepapersofcustomersmortgaged,pledgedanddiscounted

Land and property 317,223,763 259,422,000

Inventories 2,117,118 1,831,621

Machinery and equipment 5,729,059 9,055,193

Valuable papers 24,017,335 31,896,937

In which:

- Valuable papers issued by enterprises (i) 24,017,335 31,896,937

Other assets 16,058,463 22,935,259

365,145,738 325,141,010Assets,valuablepapersofothercreditinstitutionsmortgaged,pledged,discountedandrediscounted

Land and property 492,479 468,740

Annual Report 2017

138

Valuable papers (i) 3,263,119 1,900,000

Others 1,000,000 -

4,755,598 2,368,740

369,901,336 327,509,750

(i) These represented the book value of valuable papers as at 31 December 2017 and 31 December 2016. The par value of valuable papers were as follows:



Assets,valuablepapersofcustomersmortgaged,pledgedanddiscounted

Valuable papers issued by enterprises 25,051,589 42,256,763Assets,valuablepapersofothercreditinstitutionsmortgaged,pledged,discountedandrediscounted

Valuable papers 3,218,000 1,900,000

(b) The Group’s assets, valuable papers mortgaged, pledged, discounted andrediscounted



Trading securities (Note 7.1) 83,900 57,104

Available-for-sale securities (Note 10.1) - 101,556


Fixed assets (Note 12(a)) 38,689 41,187

4,175,630 199,847

38. CONTINGENT LIABILITIES AND COMMITMENTS

38.1 Off-balance sheet commitments

As at 31 December 2017Denominated

in VNDVND million

Denominatedin foreign currencies

VND millionTotal

VND million

Borrowing guarantees 47,071 - 47,071

Commitments on foreign exchange transactions 13,059,662 24,897,882 37,957,544

Letters of credit at sight 116,729 2,712,779 2,829,508

Deferred letters of credit 5,902 1,284,064 1,289,966

Payment guarantees 1,836,516 65,617 1,902,133

Performance guarantees 1,697,806 17,240 1,715,046


139

Bidding guarantees 304,891 - 304,891

Other guarantees 2,098,599 129,696 2,228,295

19,167,176 29,107,278 48,274,454

As at 31 December 2016Denominated

in VNDVND million

Denominatedin foreign currencies

VND millionTotal

VND million



Letters of credit at sight - 2,744,367 2,744,367




Bidding guarantees 258,175 162 258,337


10,457,081 14,810,930 25,268,011

38.2 Operating lease commitments

The future minimum lease payments under non-cancellable operating leases were:



Within 1 year 211,124 175,284

Over 1 to 5 years 776,160 633,301

More than 5 years 681,880 430,472

1,669,164 1,239,057

38.3 Capital expenditures

The capital commitments that have been approved but not yet provided for in the consolidated

financial statements as of 31 December 2017 amounted to VND275,966 million (31.12.2016:

VND17,275 million).

Annual Report 2017

140

39. CONCENTRATION OF ASSETS, LIABILITIES AND OFF-BALANCE SHEET COMMITMENTS BY GEOGRAPHICAL AREA

As at 31 December 2017

Deposits with and loans to

other credit institutions

Loans to customers

Deposits and

borrowings from other

credit institutions

Deposits from

customers

Credit commit-

mentsDerivatives

(i)

Held-for-trading and investment

securities


Domestic 7,400,593 198,513,394 15,004,989 241,392,932 6,030,700 18,098,382 54,398,964

Oversea 1,694,895 - 448,757 - 4,286,210 2,427,197 -

9,095,488 198,513,394 15,453,746 241,392,932 10,316,910 20,525,579 54,398,964




Loans to customers

Deposits and

borrowings from other

credit institutions

Deposits from

customers

Credit commit-

mentsDerivatives

(i)


securities


Domestic 6,352,621 163,401,221 1,968,952 207,051,269 5,342,155 5,191,714 46,998,086

Oversea 1,971,286 - 266,163 - 4,715,279 2,234,943 -

8,323,907 163,401,221 2,235,115 207,051,269 10,057,434 7,426,657 46,998,086

(i) Represented the total contract value at foreign exchange rate at the contract date.

40. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES

(a) TransactionsincurredduringtheyearIn the year, there were the following transactions with related parties:

2017VND million

2017VND million

Interest income from loans to other related parties (i) 6,274 12,386

Interest expense on deposits from a joint venture and an associate 887 681

Interest expense on deposits from other related parties (i) 40,978 16,683

Fees paid to an associate 201,361 166,656

Dividend income from other related parties (i) 17,709 22,800

Remuneration – Members of the Board of Management 25,924 19,708

Remuneration – Members of the Board of Directors 7,695 7,078

Remuneration – Members of the Supervisory Board 3,625 3,466


141

(b) Balancesattheyear-end



Loans to other related parties (i) 84,680 19,932

Deposits from a joint venture and an associate 31,103 16,651

Deposits from other related parties (i) 546,827 351,001

Interest receivables from loans to other related parties (i) 2,925 491

Interest payables from deposits from a joint venture and an associate 93 59

Interest payables from deposits from other related parties (i) 13,047 2,677

Entrusted investments received from other related parties (i) 9,500 9,500

(i) Other related parties comprise key management personnel including members of Board of Directors, members of Board of Management, members of Board of Supervisors, Chief Financial Officer, Chief Accountant and close members of the family of these individuals and companies which these individuals directly or indirectly hold significant voting right or have significant influence over.

41. FINANCIAL RISK MANAGEMENT

The Group’s business involves taking risks in a targeted manner and managing them professionally. The

core functions of the Group’s risk management are to identify all key risks of the Group, measure these

risks, manage the risk positions and determine capital allocations. The Group regularly reviews its risk

management policies and systems to reflect changes in markets, products and best market practice.

The Group’s aim is to achieve an appropriate balance between risk and return and to minimise

potential adverse effects on the Group’s financial performance.

The Group defines risks as the possibility of losses or profit foregone, which may be caused by

internal or external factors.

Risk management is carried out by the Risk Management Division under the policies approved by

the Board of Directors. The Risk Management Division identifies, evaluates and hedges financial

risks in close co-operation with the Group’s operating units. The Board of Directors approves

written principles for overall risk management, as well as written policies covering specific areas,

such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments

and non-derivative financial instruments. In addition, the Internal Audit Committee is responsible

for the independent review of risk management and the control environment. All regulations,

policies, processes of risk management are established, maintained, carried out and controlled in

the consistence with statutes of internal control system issued and applied for the Group.

The financial risks arising from financial instruments which the Group is exposed to include credit

risk, liquidity risk, market risk and operational risk.

Annual Report 2017

142

(a) CreditriskCredit risk is the risk of financial loss to the Group if a customer or counterparty to a financial

instrument fails to meet its contractual obligations. Credit risk mainly arises from lending activities

and guarantees.

The Group is also exposed to other credit risks arising from investments in debt securities and other

exposures arising from its trading activities, including non-equity trading portfolio assets, derivatives

and settlement balances with counterparties. See Notes 5,6,7,8,9,10 and 14 for specified matters

related to credit risk.

Credit risk is the largest risk for the Group’s business; management therefore carefully manages

its exposure to credit risk. The credit risk management and control are centralised in a credit risk

management team, which regularly reports to the Board of Management, Credit Committee and

Risk Committee.

Management of credit risk for the assessment of impairment and provision

(i) Loans and guaranteesThe estimation of credit exposure is carried out before and during the year of lending.

The Group has developed models to support the quantification of the credit risk. These rating and

scoring models are in use for all key credit portfolios and form the basis for measuring default risks

before and during the year of lending.

Where there is an indication of a changing risk profile of large exposure customers which may have

significant negative impact on the loan portfolio of the Group, the management considers and

establishes a separate working group to assess the risk involved, monitor, control and minimise the

exposures on an ongoing basis.

In measuring these credit risks, the Group considers to classify loans and guarantees and make

allowance in accordance with policies as disclosed in Note 3(f), 3(g) và 3(o).

(ii) Debt securitiesThe Group’s investments in debt securities are those issued by the Government, domestic credit

institutions and economic organisations. Credit risk is measured on a case-by-case basis when

the Group reassesses that the risk profile of the counterparty has changed. Investments in these

securities are viewed as a way to gain a better credit quality mapping and maintain a readily available

source to meet the funding requirements at the same time.


143

Credit risk control and mitigation policies

The Group manages credit risk by placing limits on exposures (for both on and off-balance sheet

exposures) in relation to each borrower, or group of borrowers in accordance with regulations of the

SBV. In addition, exposure to credit risk is also managed through regularly reviewing the classes of

collateral and analysing the ability of borrowers and potential borrowers to meet interest and capital

repayment obligations.

The Group employs a range of policies and practices to mitigate credit risk. The most traditional

practice is the taking of collateral for loans and advances, which is a common practice. The principal

collateral types for loans and advances are:

- Mortgages over residential properties, land use rights;

- Charges over business assets such as premises, machinery equipment, inventory and account

receivables; and

- Charges over financial instruments such as debt securities and equity securities.

For secured loans, collaterals are valued by a department independent from the business department

of the Group or by independent organisations that have the appraisal function as described in Note

3(f)(iii). The Group applies specific discount rates to determine the maximum amount of loans

that can be granted which are stipulated by the Group’s internal policies. When the market value of

collaterals is reduced, the Group will require borrowers to provide additional collaterals to maintain

the security over loan exposure.

Commitments having credit risk mainly include letters of credit and financial guarantees contracts

which carry the same credit risk as loans. Documentary and commercial letters of credit which are

written by the Group on behalf of a customer to authorise a third party to draw drafts on the Group

up to a stipulated amount under specific terms and conditions are collateralised by the underlying

shipments of goods to which they relate and therefore carry less risk than a direct loan. Issuance

of financial guarantee contracts and letters of credit are subject to the same credit assessment

and approval process as those for loans to customers, unless the customer places 100% margin

deposits for the related commitments.

Maximum exposure to credit risk before collateral held or other credit enhancements

The maximum exposure to credit risk is the carrying amounts on the consolidated balance sheet

as well as off-balance sheet of financial instruments, without taking into account any collateral held

or other credit enhancements. For contingent liabilities, the maximum exposure to credit risk is the

maximum amount that the Group would have to pay if the obligations of the instruments issued are

called upon. For credit commitments, the maximum exposure to credit risk is the full amount of the

undrawn credit facilities granted to customers. The table below shows the maximum exposure to

credit risk of the Group:

Annual Report 2017

144

Maximum exposure to credit risk31.12.2017 VND million


Creditriskexposuresrelatingtoonbalancesheetassets:

Balances with the State Bank of Vietnam 8,314,574 5,119,306

Deposits with and loans to other credit institutions 9,095,488 8,323,907

Held-for-trading securities – debt securities 1,036,829 720,577

Loans to customers 198,513,394 163,401,221

Derivatives and other financial assets - 16,065

Investment securities:

- Debt securities – Available-for-sales securities 7,261,983 10,087,522

- Debt securities – Held-to-maturity securities 45,151,482 34,824,159

Other financial assets 8,219,026 7,332,586

277,592,776 229,825,343

Creditriskexposuresrelatingtooff-balancesheetassets

Credit commitments 10,316,910 10,057,434

The above table represents the worst case with the maximum level of loss of the Group as at 31

December 2017 and 31 December 2016, not taking into account any collateral held or other credit

enhancements. Details of collateral held as at 31 December 2017 and 31 December 2016 were

described in Note 37(a).

Credit quality

Financial assets exposed to credit risk are summarised as follows:


Balances with the

SBV



Held-for-trading

securitiesLoans to

customersInvestment

securities

Other financial

assets Total


Balances neither past due nor impaired 8,314,574 8,695,488 1,036,829 196,250,658 52,373,092 6,068,119 272,738,760 Balances past due but not impaired - - - 247,809 - - 247,809Balances impaired - 400,000 - 2,014,927 40,373 2,150,907 4,606,207Less: Allowance - (153,761) (1,068) (1,844,638) (15,101) (1,472,091) (3,486,659)

Netamount 8,314,574 8,941,727 1,035,761 196,668,756 52,398,364 6,746,935 274,106,117

AllowanceSpecific allowance - (153,761) - (320,063) - - (473,824)


145

General allowance - - - (1,436,568) (3,845) - (1,440,413)Other allowance - - (1,068) (88,007) (11,256) (1,472,091) (1,572,422)


Balances with the

SBV


other credit in-

stitutions Derivatives

Held-for-trading

securitiesLoans to

customersInvestment

securities

Other financial

assets TotalVND

millionVND

millionVND

millionVND

millionVND

millionVND

millionVND

millionVND

million

Balances neither past due nor impaired 5,119,306 7,798,907 16,065 720,577 159,809,874 41,198,851 6,240,924 220,904,504Balances past due but not impaired - - - - 145,545 - 47,990 193,535Balances impaired - 525,000 - - 3,445,802 3,712,830 1,043,672 8,727,304Less: Allowance - (171,880) - - (1,796,795) (2,467,388) (518,166) (4,954,229)Net amount 5,119,306 8,152,027 16,065 720,577 161,604,426 42,444,293 6,814,420 224,871,114

AllowanceSpecific allowance - (171,880) - - (580,112) (2,438,698) - (3,190,690)General allowance - - - - (1,214,704) (28,690) - (1,243,394)Other allowance - - - - (1,979) - (518,166) (520,145)

(b) MarketriskMarket risks are the risks that the fair value or future cash flows of a financial instrument will fluctuate

because of changes in market prices. Market risks arise from open positions in interest rate, currency

and equity instruments, all of which are exposed to general and specific market movements and

changes in the level of volatility of market rates or prices such as interest rates, foreign exchange

rates and share prices.

(i) Interest rate riskCash flow interest rate risk is the risk that future cash flows of financial instruments will fluctuate

because of changes in the market interest rate. Fair value interest rate risk is the risk that the value

of a financial instrument will fluctuate because of changes in the market interest rate. The Group

manages interest rate risk by periodically monitoring the level of mismatch of interest rate by terms.

Management of interest rate risk

The following table show the Group’s assets, liabilities and off-balance sheet items categorise by the

repricing period at the reporting date.

Annual Report 2017

146

OverdueNon-interest

bearing Under 1 monthFrom

1 to 3 monthsFrom over



1 to 5 years Over 5 years Total

Asat31December2017

Assets

Cash on hand, gold and gemstones - 4,851,710 - - - - - - 4,851,710

Balances with the SBV - 8,314,574 - - - - - - 8,314,574

Deposits with and loans to other credit institutions (i) 400,000 - 2,807,369 4,476,151 1,411,968 - - - 9,095,488

Held-for-trading securities (i) - 203,162 - - - - 491,727 545,102 1,239,991

Loans to customers (i) 1,821,434 - 4,013,091 176,181,533 11,501,154 4,343,620 551,669 100,893 198,513,394

Investment securities (i) - 785,881 - - - - 33,458,936 18,914,156 53,158,973

Long-term investments (i) - 195,595 - - - - - - 195,595

Fixed assets - 3,007,618 - - - - - - 3,007,618

Investment properties - 256,132 - - - - - - 256,132

Other assets (i) 659,069 6,869,191 - - - 2,074,435 - - 9,602,695

Totalassets 2,880,503 24,483,863 6,820,460 180,657,684 12,913,122 6,418,055 34,502,332 19,560,151 288,236,170

LiabilitiesDeposits and borrowings from other credit institutions - - 6,196,674 8,584,322 560,625 112,125 - - 15,453,746

Deposits from customers - 580 48,385,611 93,802,476 39,954,127 15,850,116 43,400,022 - 241,392,932

Derivatives and other financial liabilities - 10,491 - - - - - - 10,491Funds and entrusted investments received from the Government, international and other credit institutions - - - 106,621 - - - 29,845 136,466

Valuable papers issued - - - - 140,000 3,621,000 - 3,000,000 6,761,000

Other liabilities - 4,530,641 - - - - - - 4,530,641

Totalliabilities - 4,541,712 54,582,285 102,493,419 40,654,752 19,583,241 43,400,022 3,029,845 268,285,276

Interestsensitivitygapofbalancesheetitems 2,880,503 19,942,151 (47,761,825) 78,164,265 (27,741,630) (13,165,186) (8,897,690) 16,530,306 19,950,894

Interestsensitivitygapofoff-balancesheetitems - (10,316,910) - - - - - - (10,316,910)

Totalsensitivityinterestgap 2,880,503 9,625,241 (47,761,825) 78,164,265 (27,741,630) (13,165,186) (8,897,690) 16,530,306 9,633,984

(i) These items do not include allowances.


147

OverdueNon-interest






Asat31December2017

Assets



Deposits with and loans to other credit institutions (i) 400,000 - 2,807,369 4,476,151 1,411,968 - - - 9,095,488

Held-for-trading securities (i) - 203,162 - - - - 491,727 545,102 1,239,991




Fixed assets - 3,007,618 - - - - - - 3,007,618


Other assets (i) 659,069 6,869,191 - - - 2,074,435 - - 9,602,695

Totalassets 2,880,503 24,483,863 6,820,460 180,657,684 12,913,122 6,418,055 34,502,332 19,560,151 288,236,170

LiabilitiesDeposits and borrowings from other credit institutions - - 6,196,674 8,584,322 560,625 112,125 - - 15,453,746

Deposits from customers - 580 48,385,611 93,802,476 39,954,127 15,850,116 43,400,022 - 241,392,932

Derivatives and other financial liabilities - 10,491 - - - - - - 10,491Funds and entrusted investments received from the Government, international and other credit institutions - - - 106,621 - - - 29,845 136,466

Valuable papers issued - - - - 140,000 3,621,000 - 3,000,000 6,761,000







Unit: VND million

Annual Report 2017

148

Unit: VND million

OverdueNon-interest






Asat31December2016

Assets



Deposits with and loans to other credit institutions (i) 525,000 - 5,015,489 1,843,973 939,445 - - - 8,323,907

Held-for-trading securities (i) - 490,737 - - - - 720,577 - 1,211,314

Derivatives and other financial assets - 16,065 - - - - - - 16,065

Loans to customers (i) 3,194,158 2,000 1,541,470 146,503,711 7,233,372 4,112,860 737,021 76,629 163,401,221

Investment securities (i) - 2,361,723 - - 529,984 - 33,995,090 8,899,975 45,786,772


Fixed assets - 2,850,558 - - - - - - 2,850,558


Other assets (i) 1,091,661 5,713,286 - - - 1,723,489 - - 8,528,436

Totalassets 4,810,819 20,508,098 6,556,959 148,347,684 8,702,801 5,836,349 35,452,688 8,976,604 239,192,002

LiabilitiesDeposits and borrowings from other credit institutions - - 1,386,822 471,590 376,703 - - - 2,235,115

Deposits from customers - 65,584 39,169,059 81,789,358 31,305,210 25,280,358 29,441,660 40 207,051,269Funds and entrusted investments received from the Government, international and other credit institutions - - - 91,953 - - - 30,744 122,697

Valuable papers issued - - - - - 3,615,000 - 3,000,000 6,615,000



Interestsensitivitygapofbalancesheetitems 4,810,819 16,848,434 (33,998,922) 65,994,783 (22,979,112) (23,059,009) 6,011,028 5,945,820 19,573,841


Totalsensitivityinterestgap 4,810,819 6,791,000 (33,998,922) 65,994,783 (22,979,112) (23,059,009) 6,011,028 5,945,820 9,516,407



149

Unit: VND million

OverdueNon-interest






Asat31December2016

Assets



Deposits with and loans to other credit institutions (i) 525,000 - 5,015,489 1,843,973 939,445 - - - 8,323,907

Held-for-trading securities (i) - 490,737 - - - - 720,577 - 1,211,314





Fixed assets - 2,850,558 - - - - - - 2,850,558


Other assets (i) 1,091,661 5,713,286 - - - 1,723,489 - - 8,528,436

Totalassets 4,810,819 20,508,098 6,556,959 148,347,684 8,702,801 5,836,349 35,452,688 8,976,604 239,192,002

LiabilitiesDeposits and borrowings from other credit institutions - - 1,386,822 471,590 376,703 - - - 2,235,115

Deposits from customers - 65,584 39,169,059 81,789,358 31,305,210 25,280,358 29,441,660 40 207,051,269Funds and entrusted investments received from the Government, international and other credit institutions - - - 91,953 - - - 30,744 122,697








Annual Report 2017

150

Interest rates of monetary items at the year-end were as follows:

As at 31 December 2017 Under 1 month From 1 to 3 months From over 3 to 6 months From over 6 to 12 months From over 1 to 5 years Over 5 years

Assets

Deposits with and loans to other credit institutions

• VND 0.1% - 2.1% 2.1% - 6.95% 4.3% - 4.5% (*) (*) (*)

• Foreign currencies (*) 2.55% (*) (*) (*) (*)

Held-for-trading securities

• VND (*) (*) (*) (*) 5% - 6.6% 4.8% - 11.5%

Loans to customers

• VND 4.8% - 14% 1.1% - 23.64% 2.8% - 20.57% 4.5% - 22.15% 5.47% - 25.04% 4.91% - 22%

• Foreign currencies 3.2% 2.2% - 8.5% 2% - 5.5% 4.48% - 7.5% (*) (*)

Investment securities

• VND (*) (*) (*) (*) 4.9% - 9.4% 5.1% - 13.25%

Other assets

• VND (*) (*) (*) 7.2% - 8.1% (*) (*)

Otherliabilities

Deposits and borrowings from other credit institutions

• VND 0.9% - 2.2% 3.8% - 7.8% (*) (*) (*) (*)

• Foreign currencies 1.55% - 2.3% 1.6% - 2.2% 2.11% - 2.29% 2.15% (*) (*)

Deposits from customers

• VND 0% - 2.4% 0% - 5.6% 0% - 6.95% 0% - 7.5% 0% - 7.7% (*)

• Foreign currencies 0% 0% - 0.1% 0% 0% 0% - 0.75% (*)Funds and entrusted investments received from the Government, international and other credit institutions

• VND (*) 4.92% (*) (*) (*) (*)

• Foreign currencies (*) (*) (*) (*) (*) 1.91%

Valuable papers issued

• VND (*) (*) 9.5% 7.5%-10% (*) 13.25%

(*) Balances of these items as at the year-end were nil.


151



Assets


• VND 0.1% - 2.1% 2.1% - 6.95% 4.3% - 4.5% (*) (*) (*)



• VND (*) (*) (*) (*) 5% - 6.6% 4.8% - 11.5%

Loans to customers

• VND 4.8% - 14% 1.1% - 23.64% 2.8% - 20.57% 4.5% - 22.15% 5.47% - 25.04% 4.91% - 22%

• Foreign currencies 3.2% 2.2% - 8.5% 2% - 5.5% 4.48% - 7.5% (*) (*)


• VND (*) (*) (*) (*) 4.9% - 9.4% 5.1% - 13.25%

Other assets

• VND (*) (*) (*) 7.2% - 8.1% (*) (*)

Otherliabilities


• VND 0.9% - 2.2% 3.8% - 7.8% (*) (*) (*) (*)



• VND 0% - 2.4% 0% - 5.6% 0% - 6.95% 0% - 7.5% 0% - 7.7% (*)

• Foreign currencies 0% 0% - 0.1% 0% 0% 0% - 0.75% (*)Funds and entrusted investments received from the Government, international and other credit institutions

• VND (*) 4.92% (*) (*) (*) (*)



• VND (*) (*) 9.5% 7.5%-10% (*) 13.25%

Annual Report 2017

152


Assets


• VND 0.00% - 4.90% 4.65% - 5.3% 4.00% - 5.00% (*) (*) (*)

• Foreign currencies (*) (*) (*) (*) (*) (*)


• VND (*) (*) (*) (*) 5.30% - 7.10% (*)

Loans to customers

• VND 3.70% - 13.44% 0.59% - 23.65% 0.88% - 17.00% 1.20% - 22.00% 1.20% - 24.00% 4.91% - 17.00%

• Foreign currencies 3.00%-4.50% 1.40% - 10.20% 1.40% - 5.50% 1.80% - 7.50% (*) (*)


• VND (*) (*) 9.68% (*) 5.00% - 12.20% 6.10% - 13.25%

Other assets

• VND (*) (*) (*) 7.20% - 8.10% (*) (*)

Otherliabilities


• VND 0.00% - 5.88% 4.30% - 4.60% (*) (*) (*) (*)

• Foreign currencies 0.00% - 0.95% 1.45% - 1.80% 1.65% - 2.30% (*) (*) (*)


• VND 0.00% - 7.00% 0.00% - 6.20% 0.00% - 6.84% 0.00% - 8.50% 0.00% - 8.50% 7.08%

• Foreign currencies 0.00% - 0.03% 0.00% 0.00% 0.00% 0.00% - 1.25% (*)Funds and entrusted investments received from the Government, international and other credit institutions

• VND (*) 4.92% (*) (*) (*) (*)



• VND (*) (*) (*) 8.00%-9.00% (*) 13.25%


(ii) Currency riskCurrency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign

exchange rates. The Group was established and operates in Vietnam and the accounting currency is

VND. Major transactions of the Group are also in VND. The Group’s loans to customers were mainly

denominated in VND and USD. However, some other assets of the Group are denominated in foreign

currencies other than USD. The Board of Management sets limits on the level of exposure by each

currency, including gold. The currency position is monitored daily and the Group takes risk mitigation

actions to ensure that the currency position is within the set limit.

Management of currency risk

The following table show the Group’s assets, liabilities and equity categorised by currencies are

translated into VND at the reporting date.


153


Assets


• VND 0.00% - 4.90% 4.65% - 5.3% 4.00% - 5.00% (*) (*) (*)

• Foreign currencies (*) (*) (*) (*) (*) (*)


• VND (*) (*) (*) (*) 5.30% - 7.10% (*)

Loans to customers

• VND 3.70% - 13.44% 0.59% - 23.65% 0.88% - 17.00% 1.20% - 22.00% 1.20% - 24.00% 4.91% - 17.00%

• Foreign currencies 3.00%-4.50% 1.40% - 10.20% 1.40% - 5.50% 1.80% - 7.50% (*) (*)


• VND (*) (*) 9.68% (*) 5.00% - 12.20% 6.10% - 13.25%

Other assets

• VND (*) (*) (*) 7.20% - 8.10% (*) (*)

Otherliabilities


• VND 0.00% - 5.88% 4.30% - 4.60% (*) (*) (*) (*)



• VND 0.00% - 7.00% 0.00% - 6.20% 0.00% - 6.84% 0.00% - 8.50% 0.00% - 8.50% 7.08%

• Foreign currencies 0.00% - 0.03% 0.00% 0.00% 0.00% 0.00% - 1.25% (*)Funds and entrusted investments received from the Government, international and other credit institutions

• VND (*) 4.92% (*) (*) (*) (*)



• VND (*) (*) (*) 8.00%-9.00% (*) 13.25%



exchange rates. The Group was established and operates in Vietnam and the accounting currency is

VND. Major transactions of the Group are also in VND. The Group’s loans to customers were mainly

denominated in VND and USD. However, some other assets of the Group are denominated in foreign


currency, including gold. The currency position is monitored daily and the Group takes risk mitigation



The following table show the Group’s assets, liabilities and equity categorised by currencies are


Annual Report 2017

154

Unit: VND million

VND USD Gold EUR JPY AUD CAD Others Total

Asat31December2017

Assets

Cash on hand, gold and gemstones 3,780,024 990,872 31,738 8,690 8,169 14,930 9,878 7,409 4,851,710

Balances with the SBV 7,530,960 783,614 - - - - - - 8,314,574Deposits with and loans to other credit institutions (i) 7,009,286 1,849,699 - 101,902 89,604 12,930 6,193 25,874 9,095,488

Held-for-trading securities (i) 1,239,991 - - - - - - - 1,239,991

Loans to customers (i) 189,662,730 8,668,706 180,638 1,320 - - - - 198,513,394

Investment securities (i) 53,158,973 - - - - - - - 53,158,973

Long-term investments (i) 195,595 - - - - - - - 195,595

Fixed assets 3,007,618 - - - - - - - 3,007,618

Investment properties 256,132 - - - - - - - 256,132

Other assets (i) 8,864,073 735,661 2,914 2 - - 9 36 9,602,695

Totalassets 274,705,382 13,028,552 215,290 111,914 97,773 27,860 16,080 33,319 288,236,170

LiabilitiesandequityDeposits and borrowings from other credit institutions 11,918,116 3,535,630 - - - - - - 15,453,746

Deposits from customers 231,032,769 10,142,434 - 94,435 94,000 17,799 2,064 9,431 241,392,932

Derivatives and other financial liabilities 1,216,316 (1,219,890) - - - 2,636 8,060 3,369 10,491 Funds and entrusted investments received from the Government, international and other credit institutions 106,621 - - - 29,845 - - - 136,466

Valuable papers issued 6,761,000 - - - - - - - 6,761,000

Other liabilities 3,939,004 206,849 - 12,237 354,791 5,732 4,771 7,257 4,530,641

Owner’s equity 16,030,847 - - - - - - - 16,030,847

Totalliabilitiesandequity 271,004,673 12,665,023 - 106,672 478,636 26,167 14,895 20,057 284,316,123

FXpositionon-balancesheet 3,700,709 363,529 215,290 5,242 (380,863) 1,693 1,185 13,262 3,920,047

FXpositionoff-balancesheet (5,834,957) (3,918,747) - (171,302) (288,881) 527 (1,612) (100,594) (10,315,566)

FXpositiononandoff-balancesheet (2,134,248) (3,555,218) 215,290 (166,060) (669,744) 2,220 (427) (87,332) (6,395,519)



155

Unit: VND million


Asat31December2017

Assets







Fixed assets 3,007,618 - - - - - - - 3,007,618


Other assets (i) 8,864,073 735,661 2,914 2 - - 9 36 9,602,695

Totalassets 274,705,382 13,028,552 215,290 111,914 97,773 27,860 16,080 33,319 288,236,170

LiabilitiesandequityDeposits and borrowings from other credit institutions 11,918,116 3,535,630 - - - - - - 15,453,746


Derivatives and other financial liabilities 1,216,316 (1,219,890) - - - 2,636 8,060 3,369 10,491 Funds and entrusted investments received from the Government, international and other credit institutions 106,621 - - - 29,845 - - - 136,466



Owner’s equity 16,030,847 - - - - - - - 16,030,847






Annual Report 2017

156


Asat31December2016

Assets




Derivatives and other financial assets 455,154 (424,975) - - - (3,241) (10,873) - 16,065




Fixed assets 2,850,558 - - - - - - - 2,850,558


Other assets (i) 8,323,023 202,250 3,151 3 - - 9 - 8,528,436

Totalassets 226,610,970 11,908,302 322,119 121,113 156,693 23,629 2,561 46,615 239,192,002

LiabilitiesandequityDeposits and borrowings from other credit institutions 696,516 1,538,490 - 13 23 73 - - 2,235,115

Deposits from customers 196,864,518 9,920,589 - 103,284 105,481 21,309 1,344 34,744 207,051,269Funds and entrusted investments received from the Government, international and other credit institutions 91,953 - - - 30,744 - - - 122,697



Owner’s equity 14,062,716 - - - - - - - 14,062,716


FXpositionon-balancesheet 4,938,177 232,278 322,119 6,186 17,920 (11,150) (1,009) 6,604 5,511,125

FXpositionoff-balancesheet (5,261,282) (4,594,665) - (121,633) (78,874) 11,556 703 (11,823) (10,056,018)

FXpositiononandoff-balancesheet (323,105) (4,362,387) 322,119 (115,447) (60,954) 406 (306) (5,219) (4,544,893)


(iii) Equity price riskThe Group is exposed to equity price risk. The price risk relating to held-for-trading equity securities is

managed through the analysis of the market movement and investment decision is made based on the

purpose of gaining profit in the short term. Investments in available-for-sale equity investments are made

based on business purpose of the Group, taking into account the diversification in the investment portfolio.


157


Asat31December2016

Assets








Fixed assets 2,850,558 - - - - - - - 2,850,558


Other assets (i) 8,323,023 202,250 3,151 3 - - 9 - 8,528,436

Totalassets 226,610,970 11,908,302 322,119 121,113 156,693 23,629 2,561 46,615 239,192,002

LiabilitiesandequityDeposits and borrowings from other credit institutions 696,516 1,538,490 - 13 23 73 - - 2,235,115

Deposits from customers 196,864,518 9,920,589 - 103,284 105,481 21,309 1,344 34,744 207,051,269Funds and entrusted investments received from the Government, international and other credit institutions 91,953 - - - 30,744 - - - 122,697



Owner’s equity 14,062,716 - - - - - - - 14,062,716






(iii) Equity price riskThe Group is exposed to equity price risk. The price risk relating to held-for-trading equity securities is

managed through the analysis of the market movement and investment decision is made based on the

purpose of gaining profit in the short term. Investments in available-for-sale equity investments are made

based on business purpose of the Group, taking into account the diversification in the investment portfolio.

Unit: VND million

(iv) Sensitivity analysisChanges in market risks can result in increase/decrease of the profit which the Group has recognised.

The sensitivity assessment of market risk can be made based on changes to main risk factors such

as interest rate, currency exchange rate and share prices while other factors are kept constant.

The Group will analyse and present the sensitivity analysis of its market risks when it has detailed

guidance from the regulators.

Annual Report 2017

158

(c) LiquidityriskLiquidity risk is the risk that the Group is unable to meet the payment obligations associated with its

financial liabilities when they fall due and to replace funds when they are withdrawn. The consequence

may be the failure to meet obligations to repay depositors, payables and fulfil credit commitments.

The main management processes include:

• Monitor day-to-day mobilisation and lending activities;

• Maintain a portfolio of securities that can be easily converted into cash; and

• Monitor the balance sheet liquidity ratios against the regulatory requirements of the SBV.

Management of liquidity risk

The following table show the Group’s assets and liabilities categorised by the remaining contractual

maturities at the reporting date.

Overdue Current

Over 3 months Up to 3 months Up to 1 monthFrom over

1 to 3 months From over



Asat31December2017

Assets

Cash on hand, gold and gemstones - - 4,851,710 - - - - 4,851,710

Balances with the SBV - - 8,314,574 - - - - 8,314,574

Deposits with and loans to other credit institutions (i) 400,000 - 5,441,723 2,758,023 495,742 - - 9,095,488

Held-for-trading securities (i) - - 1,239,991 - - - - 1,239,991

Loans to customers (i) 1,255,266 566,168 12,981,215 24,610,964 61,835,874 25,819,858 71,444,049 198,513,394

Investment securities (i) - - 985,587 1,495,375 1,072,858 34,879,871 14,725,282 53,158,973

Long-term investments (i) - - - - - - 195,595 195,595

Fixed assets - - - - - - 3,007,618 3,007,618

Investment properties - - - - - - 256,132 256,132

Other assets (i) 659,069 - 6,860,441 342,948 248,399 519,980 971,858 9,602,695

Totalassets 2,314,335 566,168 40,675,241 29,207,310 63,652,873 61,219,709 90,600,534 288,236,170

Liabilities

Deposits and borrowings from other credit institutions - - 7,616,128 7,647,261 134,895 48,522 6,940 15,453,746

Deposits from customers - - 90,583,632 39,448,711 69,340,792 41,826,915 192,882 241,392,932

Derivatives and other financial liabilities - - 10,491 - - - - 10,491Funds and entrusted investments received from the Government, international and other credit institutions - - - 8,899 23,430 68,910 35,227 136,466

Valuable papers issued - - - - 707,000 5,000,000 1,054,000 6,761,000

Other liabilities - - 4,530,641 - - - - 4,530,641

Totalliabilities - - 102,740,892 47,104,871 70,206,117 46,944,347 1,289,049 268,285,276

Netliquiditygap 2,314,335 566,168 (62,065,651) (17,897,561) (6,553,244) 14,275,362 89,311,485 19,950,894



159

(c) LiquidityriskLiquidity risk is the risk that the Group is unable to meet the payment obligations associated with its




• Monitor day-to-day mobilisation and lending activities;

• Maintain a portfolio of securities that can be easily converted into cash; and

• Monitor the balance sheet liquidity ratios against the regulatory requirements of the SBV.


The following table show the Group’s assets and liabilities categorised by the remaining contractual


Overdue Current





Asat31December2017

Assets








Fixed assets - - - - - - 3,007,618 3,007,618


Other assets (i) 659,069 - 6,860,441 342,948 248,399 519,980 971,858 9,602,695

Totalassets 2,314,335 566,168 40,675,241 29,207,310 63,652,873 61,219,709 90,600,534 288,236,170

Liabilities



Derivatives and other financial liabilities - - 10,491 - - - - 10,491Funds and entrusted investments received from the Government, international and other credit institutions - - - 8,899 23,430 68,910 35,227 136,466

Valuable papers issued - - - - 707,000 5,000,000 1,054,000 6,761,000





Unit: VND million

Annual Report 2017

160

Overdue Current





Asat31December2016

Assets





Derivatives and other financial assets - - 16,065 - - - - 16,065


Investment securities (i) - - 1,239,705 1,517,491 1,056,239 36,892,683 5,080,654 45,786,772


Fixed assets - - - - - - 2,850,558 2,850,558


Other assets (i) 996,052 95,609 5,704,297 7,448 520,048 1,204,982 - 8,528,436

Totalassets 4,296,406 514,413 31,227,278 19,293,749 53,926,099 64,490,689 65,443,368 239,192,002

Liabilities

Deposits and borrowings from other credit institutions - - 1,625,579 230,176 304,029 67,121 8,210 2,235,115

Deposits from customers - - 70,062,809 35,911,362 61,588,195 39,229,541 259,362 207,051,269Funds and entrusted investments received from the Government, international and other credit institutions - - 56 10,127 27,609 58,283 26,622 122,697

Valuable papers issued - - - 105,000 456,000 5,000,000 1,054,000 6,615,000




(i) These items do not include allowance.

(d) FairvalueoffinancialassetsandfinancialliabilitiesCircular No. 210/2009/TT-BTC dated 6 November 2009 issued by the Ministry of Finance requires

the Group to disclose the measurement method and related information about fair value of financial

assets and financial liabilities for the purpose of comparing their book values and fair values of these

financial instruments.

The Group has not determined fair values of these financial instruments for disclosure in these

consolidated financial statements because there is currently no guidance on determination of

fair value using valuation techniques under Vietnamese Accounting Standards, the Vietnamese

Accounting System and the relevant statutory requirements on preparation and presentation of

financial statements applicable to credit institutions. The fair values of these financial instruments

may differ from their carrying amounts.


161

Overdue Current





Asat31December2016

Assets









Fixed assets - - - - - - 2,850,558 2,850,558


Other assets (i) 996,052 95,609 5,704,297 7,448 520,048 1,204,982 - 8,528,436

Totalassets 4,296,406 514,413 31,227,278 19,293,749 53,926,099 64,490,689 65,443,368 239,192,002

Liabilities


Deposits from customers - - 70,062,809 35,911,362 61,588,195 39,229,541 259,362 207,051,269Funds and entrusted investments received from the Government, international and other credit institutions - - 56 10,127 27,609 58,283 26,622 122,697

Valuable papers issued - - - 105,000 456,000 5,000,000 1,054,000 6,615,000




(i) These items do not include allowance.

(d) FairvalueoffinancialassetsandfinancialliabilitiesCircular No. 210/2009/TT-BTC dated 6 November 2009 issued by the Ministry of Finance requires

the Group to disclose the measurement method and related information about fair value of financial



The Group has not determined fair values of these financial instruments for disclosure in these

consolidated financial statements because there is currently no guidance on determination of

fair value using valuation techniques under Vietnamese Accounting Standards, the Vietnamese

Accounting System and the relevant statutory requirements on preparation and presentation of

financial statements applicable to credit institutions. The fair values of these financial instruments

may differ from their carrying amounts.

Unit: VND million

Annual Report 2017

162

42. SEGMENT REPORTING

42.1 BUSINESS SEGMENTS

The Group has activities in banking, securities trading, asset management, finance leasing and fund

management.

Banking Securities trading Asset

management Finance leasing Fund management Elimination Total

As at 31 December 2017 VND million VND million VND million VND million VND million VND million VND million

Income

Interest and similar income 20,076,241 194,998 8,295 77,029 3,478 (40,402) 20,319,639

+ External interest and similar income 20,050,890 189,416 2,406 76,927 - - 20,319,639

+ Internal interest and similar income 25,351 5,582 5,889 102 3,478 (40,402) -

Fee and commission income 1,413,351 163,054 1,150 - - (2,887) 1,574,668

Other income 1,884,967 57,322 16,744 11,764 1,817 (722,072) 1,250,542

Expenses

Interest and similar expenses (11,827,834) (47,165) - (28,438) - 41,552 (11,861,885)

+ External interest and similar expenses (11,814,203) (45,745) - (1,937) - - (11,861,885)

+ Internal interest and similar expenses (13,631) (1,420) - (26,501) - 41,552 -

Depreciation and amortisation expenses (276,989) (14,471) (653) (178) - - (292,291)

Other expenses (6,197,403) (169,818) (15,107) (30,832) (2,070) 646,107 (5,769,123)Operatingprofitbeforeallowanceexpensesforcreditlosses 5,072,333 183,920 10,429 29,345 3,225 (77,702) 5,221,550

Allowance expense for credit losses (2,466,286) (86,028) - (13,029) - - (2,565,343)

Profitbeforetax 2,606,047 97,892 10,429 16,316 3,225 (77,702) 2,656,207

Banking Securities tradingAsset



Assets

Cash on hand, gold and gemstones 4,851,704 - 3 - 3 - 4,851,710

Fixed assets 2,937,115 69,320 26 1,157 - - 3,007,618

Other assets 275,608,363 2,681,879 400,261 899,494 52,672 (3,185,874) 276,456,795

283,397,182 2,751,199 400,290 900,651 52,675 (3,185,874) 284,316,123

Liabilities

External liabilities 266,781,584 885,772 1,856 562,370 200 (871,451) 267,360,332

Internal liabilities 838,066 7,347 108 1,286 286 - 847,093

Other liabilities 77,790 - 61 - - - 77,851

267,697,440 893,119 2,026 563,656 486 (871,451) 268,285,276


163


42.1 BUSINESS SEGMENTS

The Group has activities in banking, securities trading, asset management, finance leasing and fund

management.




Income




Fee and commission income 1,413,351 163,054 1,150 - - (2,887) 1,574,668

Other income 1,884,967 57,322 16,744 11,764 1,817 (722,072) 1,250,542

Expenses





Other expenses (6,197,403) (169,818) (15,107) (30,832) (2,070) 646,107 (5,769,123)Operatingprofitbeforeallowanceexpensesforcreditlosses 5,072,333 183,920 10,429 29,345 3,225 (77,702) 5,221,550

Allowance expense for credit losses (2,466,286) (86,028) - (13,029) - - (2,565,343)

Profitbeforetax 2,606,047 97,892 10,429 16,316 3,225 (77,702) 2,656,207




Assets


Fixed assets 2,937,115 69,320 26 1,157 - - 3,007,618

Other assets 275,608,363 2,681,879 400,261 899,494 52,672 (3,185,874) 276,456,795

283,397,182 2,751,199 400,290 900,651 52,675 (3,185,874) 284,316,123

Liabilities

External liabilities 266,781,584 885,772 1,856 562,370 200 (871,451) 267,360,332

Internal liabilities 838,066 7,347 108 1,286 286 - 847,093

Other liabilities 77,790 - 61 - - - 77,851

267,697,440 893,119 2,026 563,656 486 (871,451) 268,285,276

Annual Report 2017

164




Income




Fee and commission income 1,142,409 131,117 - - 808 (203) 1,274,131

Other income 700,679 89,554 5,053 5,469 1 (177,481) 623,275

Expenses





Other expenses (5,483,316) (133,314) (25,181) (18,886) (6,298) 12,118 (5,654,877)Operatingprofitbeforeallowanceexpensesforcreditlosses 2,807,976 208,679 (2) 35,506 (1,980) (165,566) 2,884,613

Allowance expense for credit losses (1,207,198) (1,979) 1,191 (9,601) - - (1,217,587)

Profitbeforetax 1,600,778 206,700 1,189 25,905 (1,980) (165,566) 1,667,026




Assets


Fixed assets 2,769,593 79,591 38 1,336 - - 2,850,558

Other assets 226,748,955 2,432,787 393,262 970,053 49,542 (3,305,668) 227,288,931

233,059,896 2,512,378 393,330 971,389 49,552 (3,305,668) 233,680,877

Liabilities

External liabilities 218,183,138 567,037 - 122,399 - (21,314) 218,851,260

Internal liabilities 1,042,180 11,931 2,010 492,345 247 (928,490) 620,223

Other liabilities 73,887 67,429 1,862 21,608 93 (18,201) 146,678

219,299,205 646,397 3,872 636,352 340 (968,005) 219,618,161


165




Income




Fee and commission income 1,142,409 131,117 - - 808 (203) 1,274,131

Other income 700,679 89,554 5,053 5,469 1 (177,481) 623,275

Expenses





Other expenses (5,483,316) (133,314) (25,181) (18,886) (6,298) 12,118 (5,654,877)Operatingprofitbeforeallowanceexpensesforcreditlosses 2,807,976 208,679 (2) 35,506 (1,980) (165,566) 2,884,613

Allowance expense for credit losses (1,207,198) (1,979) 1,191 (9,601) - - (1,217,587)

Profitbeforetax 1,600,778 206,700 1,189 25,905 (1,980) (165,566) 1,667,026




Assets


Fixed assets 2,769,593 79,591 38 1,336 - - 2,850,558

Other assets 226,748,955 2,432,787 393,262 970,053 49,542 (3,305,668) 227,288,931

233,059,896 2,512,378 393,330 971,389 49,552 (3,305,668) 233,680,877

Liabilities

External liabilities 218,183,138 567,037 - 122,399 - (21,314) 218,851,260

Internal liabilities 1,042,180 11,931 2,010 492,345 247 (928,490) 620,223

Other liabilities 73,887 67,429 1,862 21,608 93 (18,201) 146,678

219,299,205 646,397 3,872 636,352 340 (968,005) 219,618,161

Annual Report 2017

166

NguyenVanHoa

Chief Accountant

DoMinhToan

General Director


TranHungHuy

Chairman

28 February 2018

42.2 Geographical segments

The Group reports segment information by main regions in Vietnam as follows:The

Northern regionThe

Central regionThe

Southern region Elimination Total


31 December 2017

Assets 45,873,578 29,844,428 304,023,909 (95,425,792) 284,316,123

Liabilities 45,603,761 29,486,196 286,306,688 (93,111,369) 268,285,276

Profit before tax 269,817 358,232 2,105,860 (77,702) 2,656,207

The Northern region

The Central region

The Southern region Elimination Total


31 Decemner 2016

Assets 40,339,440 22,868,692 257,630,717 (87,157,972) 233,680,877

Liabilities 39,999,186 22,652,950 241,786,334 (84,820,309) 219,618,161

Profit before tax 340,254 215,741 1,276,597 (165,566) 1,667,026


167

Annual Report 2017

168

SEPARATE FINANCIAL STATEMENTS

For the year ended 31 december 2017

Bank information 169

Statement of the Board of Management 170-171

Independent auditor’s report 172-173

Separate balance sheet 174-176(Form B02/TCTD issued in accordance with Circular No. 49/2014/TT-NHNN dated 31 December 2014 (“Form B02/TCTD”))

Separate income statement 177(Form B03/TCTD issued in accordance with Circular No. 49/2014/TT-NHNN dated 31 December 2014 (“Form B03/TCTD”))

Separate cash flows statement 178-179(Form B04/TCTD issued in accordance with Circular No. 49/2014/TT-NHNN dated 31 December 2014 (“Form B04/TCTD”))

Notes to the separate financial statements 180-252(Form B05/TCTD issued in accordance with Circular No. 49/2014/TT-NHNN dated 31 December 2014 (“Form B05/TCTD”))

169

Separate financial statements

BANK INFORMATION

Operation Licence No. No. 0032/NH-GP dated 24 April 1993

The Operation Licence was issued by the State Bank of Vietnam and is

valid for 50 years from the licence date.

Business Registration No. 0301452948 dated 19 May 1993

Certificate No. The Business Registration Certificate has been amended several

times with the most recent certificate dated 9 March 2017. The

Business Registration Certificate was issued by the Department of

Planning and Investment of Ho Chi Minh City.

Board of Directors Mr. Tran Hung Huy Chairman

Mr. Nguyen Thanh Long Vice Chairman

Mr. Andrew Colin Vallis Vice Chairman

(to 23 November 2017)

Ms. Dinh Thi Hoa Independent Member

Ms. Dang Thu Thuy Member

Mr. Tran Mong Hung Member

Mr. Dam Van Tuan Member

Mr. Tran Trong Kien Member

Mr. Dominic Timothy Charles Scriven Member

Board of Management Mr. Do Minh Toan General Director

Mr. Nguyen Thanh Toai Deputy General Director

Mr. Dam Van Tuan Deputy General Director

Mr. Bui Tan Tai Deputy General Director

Mr. Nguyen Duc Thai Han Deputy General Director

Ms. Nguyen Thi Hai Deputy General Director

Mr. Tu Tien Phat Deputy General Director

Ms. Nguyen Thi Tuyet Van Deputy General Director

Mr. Nguyen Van Hoa Deputy General Director


Ms. Nguyen Ngoc Nhu Uyen Deputy General Director


Supervisory Board Mr. Huynh Nghia Hiep Head of Supervisory Board

Ms. Hoang Ngan Member

Ms. Phung Thi Tot Member

Ms. Nguyen Thi Minh Lan Member

Legal representative Mr. Do Minh Toan General Director

Registered head office 442 Nguyen Thi Minh Khai St., Ward 5, District 3, HCMC Vietnam

Auditor PwC (Vietnam) Limited

Annual Report 2017

170

STATEMENT OF THE BOARD OF MANAGEMENT’S RESPONSIBILITY IN RESPECT OF THE SEPARATE FINANCIAL STATEMENTS

The Board of Management of Asia Commercial Joint Stock Bank (“the Bank”) is responsible for preparing the

separate financial statements which give a true and fair view of the separate financial position of the Bank as

at 31 December 2017 and the separate results of its operations and separate cash flows for the year then

ended. In preparing these separate financial statements, the Board of Management is required to:

• select suitable accounting policies and then apply them consistently;

• make judgments and estimates that are reasonable and prudent; and

• prepare the separate financial statements on the going concern basis unless it is inappropriate to

assume that the Bank will continue in business.

The Board of Management is responsible for ensuring that proper accounting records are maintained which

disclose, with reasonable accuracy at any time, the separate financial position of the Bank and which enable

separate financial statements to be prepared which comply with the basis of accounting set out in Note 2

to the separate financial statements. The Board of Management is also responsible for safeguarding the

assets of the Bank and hence for taking reasonable steps for the prevention and detection of fraud and other

irregularities.

171


APPROVAL OF THE SEPARATE FINANCIAL STATEMENTS

I, Do Minh Toan, being General Director and on behalf of the Board of Management, hereby approve the

accompanying separate financial statements as set out on pages 5 to 89(*) which give a true and fair view

of the separate financial position of the Bank as at 31 December 2017 and of the separate results of its

operations and of separate cash flows for the year then ended in accordance with Vietnamese Accounting

Standards, the Vietnamese Accounting System and the relevant statutory requirements on preparation

and presentation of financial statements applicable to credit institutions operating in Vietnam.

Users of the separate financial statements of the Bank should read them together with the consolidated

financial statements of the Bank and its subsidiaries (“the Group”) for the year ended 31 December 2017

in order to obtain full information of the financial position and results of operations and cash flows of the

Group as a whole.

On behalf of the Board of Management

DoMinhToan

General Director

Ho Chi Minh City, Vietnam

28 February 2018


Annual Report 2017

172

INDEPENDENCE AUDITOR’S REPORT

TO THE SHAREHOLDERS

OF ASIA COMMERCIAL JOINT STOCK BANK

We have audited the accompanying separate financial statements of Asia Commercial Joint Stock Bank

(“the Bank”) for the year ended 31 December 2017 approved by the Board of Management on 28 February

2018. These separate financial statements comprise the separate balance sheet as at 31 December

2017, the separate income statement, the separate cash flows statement for the year then ended and

explanatory notes to these separate financial statements including significant accounting policies, as set

out on pages 5 to 89(*).

THE BOARD OF MANAGEMENT’S RESPONSIBILITY

The Board of Management of the Bank is responsible for the preparation and the true and fair presentation

of these separate financial statements in accordance with Vietnamese Accounting Standards, the

Vietnamese Accounting System and the relevant statutory requirements on the preparation and

presentation of financial statements applicable to credit institutions operating in Vietnam, and for such

internal control which the Board of Management determines is necessary to enable the preparation and fair

presentation of the separate financial statements that are free from material misstatement, whether due

to fraud or error.

AUDITOR’S RESPONSIBILITY

Our responsibility is to express an opinion on these separate financial statements based on our audit.

We conducted our audit in accordance with Vietnamese Standards on Auditing. Those standards require

that we comply with ethical standards and requirements and plan and perform the audit in order to obtain

reasonable assurance as to whether the separate financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in

the separate financial statements. The procedures selected depend on the auditor’s judgement, including

an assessment of the risks of material misstatement of the separate financial statements, whether due to

fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Bank’s

preparation and true and fair presentation of the separate financial statements in order to design audit

procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion

on the effectiveness of the Bank’s internal control. An audit also includes evaluating the appropriateness

of accounting policies used and the reasonableness of accounting estimates made by the Bank’s Board of

Management, as well as evaluating the overall presentation of the separate financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our

audit opinion.


173


AUDITOR’S OPINION

In our opinion, the separate financial statements present fairly, in all material respects, the unconsolidated

financial position of the Bank as at 31 December 2017, its unconsolidated financial performance and

unconsolidated cash flows for the year then ended in accordance with Vietnamese Accounting Standards,


presentation of financial statements applicable to credit institutions operating in Vietnam.

OTHER MATTER

The separate financial statements of the Bank for the year ended 31 December 2016 were audited by

another auditor whose audit report dated 28 February 2017 expressed an unqualified opinion.

The independent auditor’s report is prepared in Vietnamese and English. Should there be any conflict

between the Vietnamese and English copies, the Vietnamese copy shall take precedence.

ForandonbehalfofPwC(Vietnam)Limited

As indicated in Note 2(a) to the separate financial statements, the accompanying separate financial statements are not

intended to present the financial position, results of operations and cash flows in accordance with accounting principles

and practices generally accepted in countries and jurisdictions other than Vietnam, and furthermore their utilisation is

not designed for those who are not informed about Vietnam’s accounting principles, procedures and practices.

NguyenHoangNam

Audit Practising Licence No. 0849-2018-006-1

Authorised signatory

Report reference number: HCM6589

HCMC, 1 March 2018

LeQuangDao


Annual Report 2017

174

SEPARATE BALANCE SHEETForm B02/TCTD

As at



A ASSETS

I Cashonhand,goldandgemstones 4 4,851,704 3,541,348

II BalanceswiththeStateBankofVietnam 5 8,314,574 5,119,306

III Depositswithandloanstoothercreditinstitutions 6 9,295,856 8,593,981

1 Deposits with other credit institutions 6.1 5,867,220 6,423,210

2 Loans to other credit institutions 6.1 3,582,397 2,342,6513 Allowance for losses on deposits with and loans to other credit

institutions 6.3 (153,761) (171,880)

IV Held-for-tradingsecurities 7 1,035,761 720,577

1 Held-for-trading securities 1,036,829 720,577

2 Allowance for losses on held-for-trading securities (1,068) -

V Derivativesandotherfinancialassets 8 - 16,065

VI Loanstocustomers 193,762,433 159,258,785

1 Loans to customers 9 195,506,443 161,029,238

2 Allowance for losses on loans to customers 9.7 (1,744,010) (1,770,453)

VIII Investmentsecurities 10 52,689,288 42,672,094

1 Available-for-sale securities 10.1 8,007,491 10,838,702

2 Held-to-maturity securities 10.1 45,111,109 34,775,806

3 Allowance for losses on investment securities 10.3 (429,312) (2,942,414)

IX Long-terminvestments 11 2,329,574 2,329,768

1 Investments in subsidiaries 11.2 2,140,000 2,140,000

2 Investments in joint-ventures 11.3 1,000 1,000

3 Investments in associates 11.3 200 200

4 Other long-term investments 11.4 193,927 199,537

5 Allowance for diminution in the value of long-term investments 11.5 (5,553) (10,969)

X Fixedassets 12 2,937,115 2,769,593

1 Tangible fixed assets 12(a) 2,425,869 2,283,144

a Cost 3,945,636 3,580,267

b Accumulated depreciation (1,519,767) (1,297,123)

3 Intangible fixed assets 12(b) 511,246 486,449

a Cost 756,242 691,121

175


The notes on pages 180 to 252 are an integral part of these separate financial statements.

As at



b Accumulated depreciation (244,996) (204,672)

XII Otherassets 13 8,180,877 8,038,379

1 Receivables 13.1 5,407,176 4,664,440

2 Accrued interest and fees receivable 3,564,121 3,237,520

4 Other assets 13.2 680,427 653,326

5 Allowance for losses on other assets 13.3 (1,470,847) (516,907)

TOTAL ASSETS 283,397,182 233,059,896

B LIABILITIES AND EQUITY

II Depositsandborrowingsfromothercreditinstitutions 14 15,380,066 2,253,847

1 Deposits from other credit institutions 12,156,574 1,754,097

2 Borrowings from other credit institutions 3,223,492 499,750

III Depositsfromcustomers 15 241,617,508 207,347,013

IV Derivativesandotherfinancialliabilities 8 10,491 -V Fundsandentrustedinvestmentsreceivedfromthe

Government,internationalandothercreditinstitutions 16 136,466 122,697

VI Valuablepapersissued 17 6,054,000 6,054,000

VII Otherliabilities 4,498,909 3,521,648

1 Accrued interest and fees payable 2,809,752 2,275,898

3 Other liabilities 18 1,689,157 1,245,750

TOTAL LIABILITIES 267,697,440 219,299,205

Annual Report 2017

176

SEPARATE BALANCE SHEET (Cont.)Form B02/TCTD

As at



VIII OWNERS’ EQUITY 15,699,742 13,760,691

1 Capital 19 9,607,514 8,711,240

a Charter capital 10,273,239 9,376,965

d Treasury shares (665,725) (665,725)

2 Reserves 19.1 2,600,746 2,287,388

5 Retained profits 19.1 3,491,482 2,762,063

a Net profit for the year 1,775,693 1,111,794

b Retained profits of prior years 1,715,789 1,650,269

TOTAL EQUITY 15,699,742 13,760,691

TOTAL LIABILITIES AND EQUITY 283,397,182 233,059,896

OFF-BALANCESHEETITEMS

1 Borrowing guarantees 36.1 47,071 60,862

2 Commitments on foreign exchange transactions 36.1 37,957,544 15,210,577

• Commitments on purchases of foreign currency 3,400,580 2,555,935

• Commitments on sales of foreign currency 3,688,006 2,493,758

• Commitments on swap transactions 30,868,958 10,160,884

4 Letters of credit commitments 36.1 4,119,474 4,443,845

5 Other guarantees 36.1 6,150,365 5,552,727

NguyenVanHoa

Chief Accountant

DoMinhToan

General Director


TranHungHuy

Chairman

28 February 2018

177



SEPARATE INCOME STATEMENTForm B03/TCTD


Note2017

VND million2016

VND million

1 Interest and similar income 20 20,076,241 16,211,810

2 Interest and similar expenses 21 (11,827,834) (9,524,601)

I Netinterestincome 8,248,407 6,687,209

3 Fee and commission income 22 1,413,351 1,142,409

4 Fee and commission expenses 23 (333,409) (290,999)

II Netfeeandcommissionincome 1,079,942 851,410

III Netgainfromtradingofforeigncurrencies 24 236,410 229,777

IV Netgainfromtradingofheld-for-tradingsecurities 25 40,333 3,638

V Netgain/(loss)fromtradingofinvestmentsecurities 26 564,093 (892,902)

5 Other income 947,062 277,497

6 Other expenses (60,415) (10,971)

VI Netotherincome 27 886,647 266,526

VII Incomefrominvestmentsinotherentities 28 97,004 189,767

VIII Operatingexpenses 29 (6,080,503) (4,527,449)

IX Operatingprofitbeforeallowanceexpensesforcreditlosses 5,072,333 2,807,976

X Allowanceexpensesforcreditlosses 30 (2,466,286) (1,207,198)

XI Profitbeforetax 2,606,047 1,600,778

7 Corporate income tax - current (516,996) (289,986)

8 Corporate income tax - deferred - (2,800)

XII Totalcorporateincometax 31 (516,996) (292,786)

XIII Profitaftertax 2,089,051 1,307,992

NguyenVanHoa

Chief Accountant

DoMinhToan

General Director


TranHungHuy

Chairman

28 February 2018

Annual Report 2017

178

SEPARATE CASH FLOWS STATEMENTForm B04/TCTD (Direct method)

For the year ended31 December

Note2017

VND million2016

VND million

CASHFLOWSFROMOPERATINGACTIVITIES

01 Interest and similar income received 19,749,879 15,847,899

02 Interest and similar expenses paid (11,293,980) (8,935,651)

03 Net fee and commission income received 1,079,942 851,41004 Net receipts from trading activities (foreign currencies, gold

and securities) 461,056 430,560

05 Other income received 517,637 186,776

06 Collection of bad debts previously written off 369,312 79,185

07 Salaries and operating expenses paid (4,792,789) (4,157,014)

08 Income tax paid during the year (514,954) (333,620)CASHFLOWSFROMOPERATINGACTIVITIESBEFORECHANGES IN OPERATING ASSETS AND LIABILITIES 5,576,103 3,969,545

Changesinoperatingassets09 (Increase)/decrease in deposits with and loans to other

credit institutions (1,110,027) 3,117,958

10 Increase in held-for-trading securities and investment securities (7,820,344) (5,842,557)

11 Decrease in derivatives and other financial assets 16,065 31,538

12 Increase in loans to customers (34,477,205) (27,913,910)

13 Utilisation of allowance for losses (4,643,282) (1,323,014)

14 (Increase)/decrease in other operating assets (560,653) 609,748

Changesinoperatingliabilities15 Decrease in borrowings from the Government and the State

Bank of Vietnam - (5,178,981)16 Increase/(decrease) in deposits and borrowings from other credit

institutions 13,126,219 (106,568)

17 Increase in deposits from customers 34,270,495 31,952,01119 Increase/(decrease) in funds and entrusted investments

received from the Government, international and other credit institutions 13,769 (38,981)

20 Increase in derivatives and other financial liabilities 10,491 -

21 Increase in other operating liabilities 366,386 149,389

22 Utilisation of reserves (5,000) (5,038)

179




Note2017

VND million2016

VND million

I NETCASHFLOWSFROMOPERATINGACTIVITIES 4,763,017 (578,860)

CASHFLOWSFROMINVESTINGACTIVITIES

01 Payment for purchases of fixed assets (709,094) (495,594)

02 Proceeds from disposals of fixed assets 25,174 1,578

08 Collection on other long-term investments 5,610 224,20409 Receipts of dividends and distributions of profits from long-

term investments 124,646 146,209

II NETCASHFLOWSFROMINVESTINGACTIVITIES (553,664) (123,603)

CASHFLOWSFROMFINANCINGACTIVITIES02 Receipts of issuance of long-term valuable papers which are

eligible for regulatory capital and other long-term borrowings - 3,054,000

04 Profit distributed 19.1 (130,000) -

III NETCASHFLOWSFROMFINANCINGACTIVITIES (130,000) 3,054,000

IV NET CASH FLOWS FOR THE YEAR 4,079,353 2,351,537V CASHANDCASHEQUIVALENTSATTHEBEGINNINGOF

THE YEAR 14,531,720 12,180,183

VII CASHANDCASHEQUIVALENTSATTHEENDOFTHEYEAR 32 18,611,073 14,531,720

NguyenVanHoa

Chief Accountant

DoMinhToan

General Director


TranHungHuy

Chairman

28 February 2018

Annual Report 2017

180

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

For the year ended 31 December 2017

Form B05/TCTD

1. REPORTING ENTITY

(a) Establishmentandoperation Asia Commercial Joint Stock Bank (“the Bank”) is a commercial joint stock bank incorporated in the

Socialist Republic of Vietnam.

The Bank was established under the Operation Licence No. 0032/NH-GP issued by the State Bank

of Vietnam (“the SBV”) on 24 April 1993 for a period of 50 years from the licence date. The Bank’s

shares are listed on the Hanoi Stock Exchange.

The principal activities of the Bank are to mobilise short, medium and long-term funds in the form

of term deposits, demand deposits; to receive entrusted investment and development funds from

domestic credit institutions; to borrow from other financial institutions; to grant short, medium and

long-term loans; to discount commercial papers, bonds and other valuable papers; to contribute

capital and to invest in joint-ventures in accordance with laws and regulations; to provide settlement

services to customers; to trade foreign currencies, gold; to provide trade finance services; to mobilise

overseas funds and to perform other type of services when dealing with overseas counterparties in

accordance with the approval of the SBV; to conduct debt factoring activities; to trade bonds; trusted

activities and fiduciary activities; insurance agent services; and to provide other banking services.

(b) ChartercapitalAs at 31 December 2017, the Bank’s charter capital was VND10,273,238,960,000 (31.12.2016:

VND9,376,965,060,000). The Bank has issued 1,027,323,896 ordinary shares with a par value of

VND10,000 per share.

(c) LocationandoperationalnetworkThe Bank’s Head Office is located at 442 Nguyen Thi Minh Khai Street, Ward 5, District 3, Ho Chi

Minh City, Vietnam. As at 31 December 2017, the Bank had 1 head office, 354 branches and sub-

branches nation-wide (31.12.2016: 1 head office, 349 branches and sub-branches).

(d) Subsidiaries,associatesandjointventuresAs at 31 December 2017 and 31 December 2016, the Bank had following subsidiaries:

181


Percentage of equity owned and voting rights

SubsidiaryOperation

LicenceNature ofbusiness 31.12.2017 31.12.2016

ACB Securities Company Limited (“ACBS”) 06/GPHĐKD18/GPĐC-UBCK

Securities 100% 100%

ACB Assets Management Company Limited (“ACBA”)

0303539425 Asset Management

100% 100%

Asia Commercial Bank Leasing Company Limited (“ACBL”)

06/GP-NHNN Finance Leasing 100% 100%

ACB Capital Management Company Limited (“ACBC”) (*)

41/UBCK-GP30/GPĐC-UBCK

Fund Management

100% 100%

(*) ACBC is a wholly owned subsidiary of ACBS

All of the subsidiaries are established in Vietnam.

As at 31 December 2017 and 31 December 2016, the Bank had following associate:

AssociateOperation

LicenceNature ofbusiness

Percentage of equity owned

31.12.2017 31.12.2016

Asia Commercial Bank Security Services Joint Stock Company (“ACBD”) 0303832198

Security services 10% 10%

The Bank classified the investment in ACBD as an investment in an associate although the Bank only

owns 10% of its charter capital because the Bank:

- has representatives in the Board of Directors or equivalent management level of this company;

- has the right to take part in its policy making process; and

- has significant influence over its financial and operating policies.

As at 31 December 2017 and 31 December 2016, the Bank had following joint venture:

Joint ventureOperation

LicenceNature ofbusiness

Percentage of equity owned

31.12.2017 31.12.2016

Saigon Gold & Silver ACB-SJC Joint Stock Company (“ACB-SJC”) 0303831067

Jewelry production and trading 10% 10%

The Bank classified the investment in ACB-SJC as an investment in a joint venture company because

the Bank signed a joint control contract with the other venturer and all strategic decisions about

finance and operations must have the consent of the Bank and the other venturer.

(e) NumberofemployeesAs at 31 December 2017, the Bank had 10,004 employees (31.12.2016: 9,443 employees).

Annual Report 2017

182

2. BASIS OF PREPARATION

(a) StatementofcomplianceThe separate financial statements have been prepared in accordance with Vietnamese Accounting

Standards, the Vietnamese Accounting System and the relevant statutory requirements on the

preparation and presentation of financial statements applicable to credit institutions operating in

Vietnam. These standards and statutory requirements may differ in some material respects from

International Financial Reporting Standards and the generally accepted accounting principles and

standards in other countries. Accordingly, the accompanying separate financial statements are not

intended to present the separate financial position and separate results of operations and separate

cash flows in accordance with generally accepted accounting principles and practices in countries

or jurisdictions other than Vietnam. Furthermore, their utilisation is not designed for those who are

not informed about Vietnam’s accounting principles, procedures and practices applicable to credit

institutions.

The Bank has also prepared consolidated financial statements of the Bank and its subsidiaries (“the

Group”) in accordance with Vietnamese Accounting Standards, the Vietnamese Accounting System

and the relevant statutory requirements on the preparation and presentation of financial statements

applicable to credit institutions operating in Vietnam. These separate financial statements should

be read in conjunction with the Group’s consolidated financial statements as at and for the year

ended 31 December 2017 in order to obtain full information on the consolidated financial position

and the consolidated financial performance of the Group as a whole.

(b) BasicofmeasurementThe separate financial statements, except for the separate statement of cash flows, are prepared

on the accrual basis using the historical cost concept. The separate statement of cash flows is

prepared using the direct method.

(c) Annualaccountingperiod The annual accounting period of the Bank is from 1 January to 31 December.

(d) AccountingandpresentationcurrencyThe Bank’s accounting currency is Vietnam Dong (“VND”). The separate financial statements are

prepared and presented in VND rounded to the nearest million (“VND million”).

(e) FormofrecordsappliedThe Bank uses accounting software to record its transactions.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following significant accounting policies have been adopted by the Bank in the preparation of

these separate financial statements.

The accounting policies that have been adopted by the Bank in the preparation of these separate

financial statements are consistent with those adopted in the preparation of the most recent

separate annual financial statements.

183


(a) ForeigncurrencytransactionsAll transactions are recorded in original currencies. Monetary assets and liabilities denominated in

currencies other than VND are translated into VND at rates of exchange ruling at the reporting date.

Transactions in currencies other than VND during the year have been translated into VND at rates

ruling on transaction dates.

Foreign exchange differences arising from monthly revaluation are recognised in the foreign

exchange revaluation reserve on the separate balance sheet at each month-end and are transferred

to the separate income statement at the year-end.

(b) InterestincomeandexpensesInterest income and expense are recognised on an accrual basis. Interest income is derecognised

and recorded into off-balance sheet items when a loan becomes overdue or has not been classified

as Current loans as described in Note 3(e), 3(g), 3(h) and 3(o). Interest income from these loans is

recognised in the separate income statement upon receipt.

(c) Feesandcommissionincomeandexpenses

(i) Fees and commission income Fees and commission income consist of fees received from settlement services, treasury services

and other services. Fees and commissions arising from settlement services, treasury services and

other services are recognised in the separate income statement upon receipt.

(ii) Fees and commission expensesFees and commission expenses are recognised in the separate income statement when they are

incurred.

(d) DividendincomeCash dividends are recognised in the separate income statement when the Bank’s right to receive

payment is established.

Share dividends and bonus shares are not recognised as an increase in the investments corresponding

with income in the separate income statement. The Bank only keeps record of the increase in the

number of shares.

Dividends received which are attributable to the period before investment acquisition date are

deducted from the carrying amount of the investment.

(e) Loanstocustomers

(i) Measurement and recognition of loans to customers Short-term loans are those with repayment term within one year from the loan disbursement

date; medium-term loans are those with repayment term over one year to five years from the loan

disbursement date and long-term loans are those with repayment term of more than five years from

the loan disbursement date.

Annual Report 2017

184

Loans to customers are stated at the amount of principal outstanding less allowance for credit losses.

(ii) Classification of loans to customers Loan classification and allowance for credit losses are made in accordance with Circular No. 02/2013/

TT-NHNN dated 21 January 2013 issued by the SBV regulating the classification of assets, credit loss

allowance level, allowance method and utilisation of allowance in operations of credit institutions and

foreign banks’ branches (“Circular 02”) and Circular No. 09/2014/TT-NHNN dated 18 March 2014

issued by the SBV on amendments and supplementation to certain articles of Circular 02 (“Circular

09”). The Bank has obtained approval of the SBV to classify loans to customers in accordance with a

qualitative method as permitted in Official letter No. 6524/NHNN-TTGSNH dated 27 August 2010.

In accordance with Article 11, Point 6 of Circular 02, the Bank is required to classify loans to customers

in accordance with a quantitative method as stipulated in Article 10 of Circular 02 in parallel. In case

where there are differences between the result of loan group classified in accordance with Article

10 and Article 11 of Circular 02 then such loans to customers are required to be classified into loan

group with higher risk. The minimum period to classify loans in accordance with both Article 10 and

Article 11 of this circular is three years from the effective date of Circular 02.

Loan classification in accordance with Article 11 of Circular 02

Loans to customers are classified into five loan groups based on the internal rating system of the

Bank as below:

Classification per the Bank’s internal rating system Classification per Circular 02

AAA, AA, A credit rating Group 1 - Current loansBBB, BB, B credit rating Group 2 - Special mentioned loansCCC, CC credit rating Group 3 - Sub-standard loansC credit rating Group 4 - Doubtful loansD credit rating Group 5 - Loss loans

Loan classification in accordance with Article 10 of Circular 02 and Circular 09

Loans to customers are classified into five loan groups in accordance with the quantitative method

as stipulated in Circular 02 and Circular 09 as below:


1 Current loans (a) Current loans being assessed as fully and timely recoverable, both principals and interests; or

(b) Loans being overdue less than 10 days and being assessed as fully recoverable, both overdue principals and interests, and fully and timely recoverable, both remaining principals and interests.

2 Special mentioned loans (a) Loans being overdue between 10 days and 90 days; or(b) Loans having terms of repayments rescheduled for the first time.

185



3 Sub-standard loans (a) Loans being overdue between 91 days and 180 days; or(b) Loans having terms of repayments extended for the first time; or(c) Loans having interests exempted or reduced because customers are not able

to pay the interests according to credit contracts; or(d) Loans falling in one of the following cases and not yet collected less than 30

days after the issuance date of recovery decision: • Loans having violated regulations specified in Points 1, 3, 4, 5, 6 of Article 126

of Law on credit institutions; or • Loans having violated regulations specified in Points 1, 2, 3, 4 of Article 127 of

Law on credit institutions; or • Loans having violated regulations specified in Points 1, 2, 5 of Article 128 of

Law on credit institutions.(e) Loans in the collection process under inspection conclusions.

4 Doubtful loans (a) Loans being overdue between 181 days and 360 days; or(b) Loans having terms of repayments restructured for the first time and being

overdue less than 90 days according to the first restructured terms of repay ments; or

(c) Loans having terms of repayments restructured for the second time; or(d) Loans specified in point (d) of Sub-standard loans not yet collected between 30

days and 60 days after the issuance date of recovery decision; or (e) Loans in the collection process under inspection conclusions but being overdue up to 60 days according to recovery term.

5 Loss loans (a) Loans being overdue more than 360 days; or(b) Loans having terms of repayments restructured for the first time and being

overdue from 90 days and above according to the first restructured terms of repayments; or

(c) Loans having terms of repayments restructured for the second time and being overdue according to the second restructured terms of repayments; or

(d) Loans having terms of repayments restructured for the third time or more, regardless whether the loans are overdue or not; or

(e) Loans specified in point (d) of Sub-standard loans not yet collected more than 60 days after the issuance date of recovery decision; or

(f) Loans in the collection process under inspection conclusions but being overdue for more than 60 days according to recovery term; or

(g) Loans to other credit institutions being announced under special control status by the SBV, or to foreign banks’ branches of which capital and assets are blockaded.

Debts shall be classified in a group with lower risks (including Group 1) in the following cases:

- Customers have made full repayment of the overdue principal and the interest (including interests

on overdue principals) and the principals and interest of the following payment periods for at least

3 (three) months in respect of long and medium-term debts and 1 (one) month in respect of

short-term debts since the date the overdue principals and interest are fully repaid; and

- The Bank has sufficient basis of information and documents to assess and conclude that

customers are capable of fully repaying the principals and the interest in a timely manner.

Debts shall be classified in a group with higher risks in the following cases:

- Changes in environment and business field, which negatively impact the capability of customers

to pay debt (natural calamities, epidemics, war, economic environment);

- Norms on profitability, solvency, ratio of debts to capital, cash flows, capability of customers

to pay debts deteriorating continuously or significantly adversely fluctuated after 3 (three)

consecutive times of assessment and debt classification;

Annual Report 2017

186

- Customers fail to supply fully, timely and truly financial information at the request of the Bank for

an assessment regarding the capability of customers to pay their debts;

- Debts which have been classified in Group 2, Group 3, Group 4 for 1 (one) year or longer but not

qualified to classify in a group with lower risks.

Non-performing loans are loans classified into Group 3, 4 and 5.

The Bank is required to use the results of loan classification as provided by the Credit Information

Center of the SBV (“the CIC”) to classify its debts into higher risk group as determined by the Bank

and provided by the CIC.

Where a customer owes more than one debt to the Bank, and has any debt classified into a higher

risk group of debts, the Bank classifies the remaining debts of such customer into the group of debts

with higher risk corresponding with their level of risk.

Where the Bank participates in a syndicated loan, the Bank reclassifies all debts (including the

outstanding syndicated loan) of the customer into the highest risk group as determined by the

lenders.

(iii) Allowance for losses on loans to customers Allowance for losses on loans to customers included specific allowance and general allowance.

Specific allowance for losses on loans to customers is calculated using set rates applied to each loan

group as follows:

Allowance rates

Group 1 - Current loans 0%

Group 2 - Special mentioned loans 5%

Group 3 - Sub-standard loans 20%

Group 4 - Doubtful loans 50%

Group 5 - Loss loans 100%

The specific allowance is calculated based on the net credit exposure of each borrower, i.e. based on

the borrower’s loan balance on the last working day of each quarter (for quarter 4, specific allowance

is calculated based on the borrower’s loan balance on the last working day of November) less the

discounted value of collateral assets. The discounted value of collateral assets is determined in

accordance with Circular 02.

Collateral assets with value of VND50 billion or more against loans and advances to the Bank’s related

parties or other parties as prescribed in Article 127 of the Law on Credit Institutions and collateral

assets with value of VND200 billion or more which are movable assets, real estate or others, excluding

gold billets, Government bonds listed on the Stock Exchange, securities issued by enterprises or

other credit institutions must be valued by a licensed asset valuation organisation. Other than these

cases, collateral assets are valued in accordance with the Bank’s internal policy and process.

187


Maximum discounted ratio of collateral assets is determined as follows:

Type of collateral assets

Maximum discounted

ratio

(a) Customer deposits in VND 100%

(b) Gold billets, except for the types of gold specified in (i); customer deposits in foreign currencies 95% (c) Government bonds, transferable instruments, valuable papers issued by the Bank, savings, certificates of deposit, bills and notes issued by other credit institutions or foreign banks’ branches:• With a remaining term of less than 1 year• With a remaining term of between 1 year to 5 years• With a remaining term of over 5 years

95%85%80%

(d) Securities issued by other credit institutions and listed on a stock exchange 70%

(e) Securities issued by enterprises and listed on a stock exchange 65%(f) Unlisted securities and valuable papers, except for the types of securities specified in (c), issued

by other credit institutions registered for listing on a stock exchange;

Unlisted securities and valuable papers, except for the types of securities specified in (c), issued by other credit institutions not registered for listing on a stock exchange

50%

30%(g) Unlisted securities and valuable papers issued by enterprises registered for listing on a stock

exchange;

Unlisted securities and valuable papers issued by enterprises not registered for listing on a stock exchange

30%

10%

(h) Real estates 50%

(i) Gold billets not having quoted price, other types of gold and other collateral assets 30%

Collateral assets that do not satisfy the conditions as specified in Article 12, Point 3 of Circular 02 are

deemed to have zero value.

In accordance with Circular 02, a general allowance is made at 0.75% of the outstanding balance of

loans to customers on the last working day of each quarter (for quarter 4, a general allowance is made

at 0.75% of the outstanding balance of loans to customers on the last working day of November),

excluding the total balance of loans to customers which are classified as loss loans.

(iv) Writing off loans to customers classified as bad debts Loans are written off at the discretion of the Bank’s Risk Resolution Committee when they consider

that all reasonable efforts for recovery of bad debts, including legal actions, have been exhausted.

In accordance with Circular 02 and Circular 09, loans to customers are written off against allowance

when loans to customers have been classified to Group 5 or when borrowers have been declared

bankrupt or dissolved (for borrowers being enterprises) or borrowers are deceased or missing (for

borrowers being individuals).

Loans written off against allowance are recorded as off-balance sheet items for following up and

collection. The amount collected from previously written-off loans, including the amount from sales

of collaterals against those loans, is recognised in the separate income statement upon receipt.

Annual Report 2017

188

(v) Loans sold to Vietnam Asset Management Company (“VAMC”)Loans sold to VAMC in accordance with Decree No. 53/2013/ND-CP dated 18 May 2013 issued by

the Government (“Decree 53”), Decree No. 34/2015/ND-CP dated 31 March 2015 issued by the

Government on amendment and supplementation to several articles of Decree 53 (“Decree 34”),

Circular No. 19/2013/TT-NHNN dated 6 September 2013 issued by the SBV (“Circular 19”) and

Circular No. 14/2015/TT-NHNN dated 28 August 2015 issued by the SBV on amendment and

supplementation to several articles of Circular 19 (“Circular 14”), Decree No. 61/2017/NĐ-CP dated

16 May 2017 are derecognised from the balance sheet in accordance with the guidance in Official

letter No. 8499/NHNN-TCKT dated 14 November 2013 issued by the SBV (“Official letter 8499”) and

Official letter No. 925/NHNN-TCKT dated 19 February 2014 issued by the SBV (“Official letter 925”).

Special bond issued by VAMC as consideration for loan sold by the Bank is recognised as held-to-

maturity securities in the separate balance sheet (Note 3(h)(iii)).

Upon completing the debt sales transactions, the Bank also utilises the corresponding specific

allowance made but not yet utilised to write down the book values of the bad debts, and writes off

interest receivables recorded in the off-balance sheet account.

(f) Off-balancesheetcommitmentsOff-balance sheet commitments consist of guarantees, settlement acceptances, and unconditional

and irrevocable commitments with specific time for settlement.

Off-balance sheet commitments are classified into five groups as follows:

Group Definition

1 Current commitments Commitments which, according to the Bank’s assessment, could be fully settled when they fall due.

2 Special mentioned commitments

Commitments which, according to the Bank’s assessment, could be fully settled when they fall due but there are indicators of declining capability to settle the commitments.

3 Sub-standard commitments Commitments which, according to the Bank’s assessment, could not be fully settled when they fall due.

4 Doubtful commitments Commitments which, according to the Bank’s assessment, are not highly probably settled by customers.

5 Loss commitments Commitments which, according to the Bank’s assessment, could not be settled.

The classification of off-balance sheet commitments is conducted solely for risk management,

credit quality supervision of credit granting activities. No provision is made for off-balance sheet

commitments, except where the Bank has been required to make payment under the guarantee

contract, in which case the payment on behalf is classified and allowance is made in accordance with

accounting policy as described in Note 3(e).

189


(g) Held-for-tradingsecurities

Classification

Held-for-trading securities are debt securities or equity securities acquired principally for the

purpose of selling in the short-term, not over one year, for the purpose of short-term profit-taking.

Recognition

The Bank recognises held-for-trading securities on the date it becomes a party to the contractual


Measurement

Held-for-trading unlisted bonds issued by enterprises are stated at cost less allowance for credit


made in accordance with the same accounting policy applied for loans to customers as described in

Note 3(e).

Other held-for-trading securities are stated at cost less allowance for diminution in value. Allowance


For listed held-for-trading equity securities, the market price is the closing price of securities obtained

from the Ho Chi Minh City Stock Exchange or from the Hanoi Stock Exchange at the reporting date.

For unlisted held-for-trading equity securities that have been registered on the unlisted public

company market (“the UPCom market”), the market price is the closing prices obtained from the

UPCom market at the reporting date.

For unlisted held-for-trading equity securities that have not been registered on the UPCom market



For listed held-for-trading debt securities, the market price is determined based on yield curve listed

on the Hanoi Stock Exchange at the reporting date.




applied for loans to customers as described in Note 3(e), no allowance is made and such securities

are stated at cost.

Interest income during the holding period of trading securities is recognised in the separate income

statement on an accrual basis.

Annual Report 2017

190

The allowance for credit losses on held-for-trading unlisted bonds issued by enterprises and allowance

for diminution in the value of other held-for-trading securities as described above are reversed if the




Derecognition

Held-for-trading securities are derecognised when the rights to receive cash flows from the

investments have expired or the Bank has transferred substantially all risks and rewards of ownership.

(h) Investmentsecurities

(i) Available-for-sale securitiesClassification

Available-for-sale securities are debt securities or equity securities which are intended to be held for

an indefinite period and may be sold at any time.

Recognition

The Bank recognises available-for-sale securities on the date it becomes a party to the contractual


Measurement

Available-for-sale unlisted bonds issued by enterprises are stated at cost less allowance for credit



Note 3(e).

Other available-for-sale securities are stated at cost less allowance for diminution in value. Allowance


For listed available-for-sale equity securities, the market price is the closing price of securities

obtained from the Ho Chi Minh City Stock Exchange or from the Hanoi Stock Exchange at the

reporting date.

For unlisted available-for-sale equity securities that have been registered on the UPCom market, the

market price is the closing prices obtained from the UPCom market at the reporting date.

For unlisted available-for-sale equity securities that have not been registered on the UPCom market



For listed available-for-sale debt securities, the market price is determined based on yield curve

listed on the Hanoi Stock Exchange at the reporting date.

191





applied for loans to customers as described in Note 3(e), no allowance is made and such securities

are stated at cost.

Premiums and discounts arising from purchases of available-for-sale debt securities are amortised

to the separate income statement using the straight line method over the period from the acquisition

date to the maturity date, in cases these available-for-sale securities would be sold before their

maturity dates, the unamortised premiums and discounts are recognised fully in the separate

income statement at the sale date.

Post-acquisition interest income of available-for-sale securities is recognised in the separate


before acquisition date of available-for-sale securities are deducted from the carrying amount of

available-for-sale securities.

The allowance for credit losses on available-for-sale unlisted bonds issued by enterprises and allowance

for diminution in value of other available-for-sale securities as described above are reversed if the




Derecognition

Available-for-sale securities are derecognised when the rights to receive cash flows from the


(ii) Held-to-maturity securitiesClassification

Held-to-maturity securities are debt securities with fixed or determinable payments and fixed

maturities where the Bank’s management has the positive intention and ability to hold until maturity.

Recognition

The Bank recognises held-to-maturity securities on the date it becomes a party to the contractual


Measurement

Held-to-maturity unlisted bonds issued by enterprises are stated at cost less allowance for credit



Note 3(e).

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192

Other held-to-maturity securities are stated at cost less allowance for diminution in value. Allowance

for diminution in value is made when there is an indicator of long-term devaluation according to the

Board of Management’s assessment.

Premiums and discounts arising from purchases of held-to-maturity securities are amortised to the

separate income statement using the straight line method over the period from the acquisition date

to the maturity date.

Post-acquisition interest income of held-to-maturity securities is recognised in the separate income

statement on an accrual basis. Interest income received which are attributable to the period before

acquisition date of held-to-maturity securities are deducted from the carrying amount of held-to-

maturity securities.

The allowance for credit losses on held-to-maturity unlisted bonds issued by enterprises and the

allowance for diminution in the value of other held-to-maturity securities as described above are

reversed if the recoverable amount of the securities subsequently increases after the allowance was

recognised. An allowance is reversed only to the extent that the investment’s carrying amount does not


Derecognition

Held-to-maturity securities are derecognised when the rights to receive cash flows from the


(iii) Special bonds issued by VAMCSpecial bonds issued by VAMC are valuable papers issued by VAMC to purchase the Bank’s bad debts.

The Bank accounts for bad debts sold in exchange for special bonds issued by VAMC in accordance

with the guidance of Official letter 8499 and Official letter 925. These special bonds are classified as

held-to-maturity securities, measured initially at par value at transaction date and subsequently at

par value less allowance for losses.

In exchange for every bad debt sold to VAMC, the Bank receives a corresponding special bond issued

by VAMC. Par value of the special bond is equal to the carrying value of bad debts sold net of specific

allowance which was made but not yet utilised.

Specific allowance for losses on special bonds issued by VAMC is calculated and made in accordance

with Circular 19 and Circular 14. Accordingly, the Bank makes specific allowance for each special

bond monthly so that the minimum specific allowance of each special bond is made annually at 20%

of its par value within 5 working days prior to the corresponding date to the maturity date. General

allowance is not required to be made for these special bonds.

When receiving loans previously sold to VAMC, the Bank uses specific allowance for losses on special

bonds to write off bad debts and recognises the difference between allowance for losses on special

bonds and the uncollectable loan balance in the separate income statement.

193


(i) Investmentsinsubsidiaries,associatesandjoint-ventures

Subsidiaries are entities controlled by the Bank. Associates are those entities in which the Bank has

significant influence, but not control, over the financial and operating policies. Joint-ventures are

those entities over whose activities the Bank has joint control, established by contractual agreement

and requiring unanimous consent for strategic financial and operating decisions.

Investments in subsidiaries, associates and joint-ventures are stated at cost less allowance for

diminution in value in the separate financial statements of the Bank. Allowance for diminution in

value is made if the total actual contributed capital exceeds the owner’s equity of the investee in

accordance with Circular No. 228/2009/TT-BTC dated 7 December 2009 issued by the Ministry

of Finance (“Circular 228”) and Circular No. 89/2013/TT-BTC dated 28 June 2013 issued by the

Ministry of Finance (“Circular 89”). Accordingly, the allowance is equal to the difference between the

total contributed capital and the owner’s equity multiplied (x) by the proportion of the Bank’s actual

contributed capital to the total contributed capital of the investors. The allowance is reversed if the

investee subsequently made a profit that offsets the previous loss for which the allowance had been

made. An allowance is reversed only to the extent that the investment’s carrying amount does not


( j) Otherlong-terminvestmentsClassification

Other long-term investments are investments in equity instruments of unlisted entities where the Bank

has no control or significant influence. These investments must have a period of holding, recovering or

paying off more than one year with the purpose of gaining benefits in the following cases:

- The Bank is a founding shareholder;

- The Bank is a strategic partner; or

- The Bank has a certain influence on the process of establishment, approval of financial and

operating policies through written agreements about having the Bank’s personnel joining the

investee’s Board of Directors/Board of Management.

Recognition

The Bank recognises other long-term investments on the date it becomes a party to the contractual

provisions of these investments (trade date accounting).

Measurement

These long-term investments are stated at cost less allowance for diminution in value. Allowance

for diminution in value is made if the total actual contributed capital exceeds the owner’s equity of

the investee in accordance with Circular 228 and Circular 89 as described in Note 3(i). An allowance

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 allowance had been recognised.

Derecognition

Other long-term investments are derecognised when the rights to receive cash flows from these


Annual Report 2017

194

(k) Derivativefinancialinstruments

Currency forward and currency swap contracts

Currency forward and currency swap contracts are recorded at contract value in the separate

financial statements. Differences between the currency amounts which are committed to buy/

sell at the contractual exchange rate and the buy/sell committed currency amounts translated at

the spot exchange rate at the effective dates of the currency forward contracts and currency swap

contracts are amortised to the separate income statement on a straight-line basis over the terms

of the contracts.

Currency forward contracts are revalued at the spot exchange rate at month-end. Any unrealised

gains/losses are recognised in the foreign exchange revaluation reserve on the separate balance

sheet at each month-end and are transferred to the separate income statement at the year-end.

Cross currency swap contracts

For cross currency swap of parties to exchange interest payments and principals denominated in two

different currencies which are exchanged at the effective date, the contract value is recognised on

the separate balance sheet in accordance with the same accounting policy applied to currency swap

contracts. Income earned and expenses incurred are recognised in the separate income statement

on an accrual basis.

Currency option contracts

The committed value in currency option contracts is not recognised in the separate balance sheet.

Any paid or received option premium is recognised as deferred expense or revenue and amortised to

the separate income statement on a straight-line basis over the terms of the contracts.

Currency option contracts are revalued at the spot exchange rate at month-end. Any unrealised

gains/losses are recognised in the foreign exchange revaluation reserve on the separate balance

sheet at each month-end and are transferred into the separate income statement at the year-end.

(l) RepurchaseandReverseRepurchaseAgreementsSecurities sold under agreements to repurchase at a specific date in the future are recorded in the

separate balance sheet. The proceeds from these agreements are recognised as a liability on the

separate balance sheet and the difference between selling price and the committed repurchase

price is amortised to the separate income statement using the straight line method over the

contractual term.

Securities purchased under agreements to resell at a specific date in the future are not recognised

in the separate balance sheet. The cash payment under the agreements is recognised as a loan

on the separate balance sheet and the difference between the purchase price and committed

reselling price is amortised to the separate income statement using the straight line method over

the contractual term.

195


(m) GoldGold is revalued monthly at the spot exchange rate at each month-end. Differences from the

monthly revaluation are recognised in the foreign exchange revaluation reserve on the separate

balance sheet at each month-end and are transferred to the separate income statement at the

year-end.

(n) CashandcashequivalentsFor the presentation of separate statement of cash flows, cash and cash equivalents comprise cash,

gold, precious metals and gemstones, demand deposits at the SBV; treasury bills and other short-

term valuable papers qualified to be discounted at the SBV; securities which have maturities date

within three months from purchase date; and demand and term deposits at other credit institutions

with original maturity of three months or less.

(o) Depositswithandloanstoothercreditinstitutions

(i) Deposits with other credit institutionsDeposits with other credit institutions include demand deposits and term deposits.

Demand deposits with other credit institutions are stated at the amount of principal outstanding.

Term deposits with other credit institutions are stated at the amount of principal outstanding less

specific allowance.

In accordance with Circular No. 21/2012/TT-NHNN dated 18 June 2012 issued by the SBV, effective

from 1 September 2012 (“Circular 21”) and Circular No. 01/2013/TT-NHNN dated 7 January 2013

issued by the SBV to amend and supplement Circular 21 (“Circular 01”), credit institutions are only

allowed to undertake deposits for which the maximum term is three months with other credit

institutions and foreign banks’ branches. New deposits with over three months term after the

effective date of these circulars are classified as loans to other credit institutions.

Credit risk classification of term deposits with other credit institutions and allowance thereof is made

in accordance with Circular 02 and Circular 09 being similar to those policies on loans to other credit

institutions as described in Note 3(o)(ii).

(ii) Loans to other credit institutionsLoans to other credit institutions are loans with original term to maturity of less than one year.

Original term of loans to finance leasing company that is a subsidiary of the Bank can be more than

or equal to one year.

Loans to other credit institutions are stated at the amount of principal outstanding less specific

allowance.

Annual Report 2017

196

The specific allowance is calculated based on the net credit exposure of each other credit institution,

i.e. based on each other credit institution’s loan balance on the last working day of each quarter (for

quarter 4, specific allowance is calculated based on each other credit institution’s loan balance on

the last working day of November) less the discounted value of collateral assets. The discounted

value of collateral assets is determined in accordance with the principles as set out in Circular 02 as

described in Note 3(e)(iii).

The Bank has classified loans to other credit institutions in accordance with a quantitative method as

permitted in Article 10 of Circular 02. Loan classification and specific allowance for losses on loans to

other credit institutions is determined in accordance with the same accounting policy applied to loans

to customers as set out in Circular 02 and Circular 09 as described in Note 3(e)(ii) and Note 3(e)(iii).

The Bank is required to use the results of loan classification as provided by the CIC to classify its

debts in accordance with the same accounting policy applied to loans to customers as described in

Note 3(e)(ii).

(p) ReceivablesReceivables are stated at cost less allowance for losses.

Allowance for doubtful receivables is made based on the anticipated possible loss or the overdue

status of receivables according to Circular 228 at the following rates:

Overdue status Allowance rates

Over 6 months to below 1 year 30%



From 3 years and above 100%

Allowance for losses on other assets is recognised as operating expenses in the separate income

statement when incurred.

(q) ClassificationoffinancialinstrumentsSolely for the purpose of providing disclosures about the significance of financial instruments to

the Bank’s financial position and results of operations and the nature and extent of risk arising from

financial instruments, the Bank classifies its financial instruments as follows:

(i) Financial assets

Financial assets 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


• It is classified by the Bank as held for trading. A financial asset is classified as held for trading if:

- it is acquired principally for the purpose of selling it in the near term;

- there is evidence of a recent pattern of short-term profit-taking; or

- it is a derivative (except for a derivative that is financial guarantee contract or a designated and


197


• Upon initial recognition, it is designated by the Bank as a financial asset at fair value through profit

or loss.

Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable

payments and fixed maturity that the Bank has the positive intention and ability to hold to maturity,

other than:

• those that the Bank, upon initial recognition, designates as financial assets at fair value through

profit or loss;

• those that the Bank designates as available-for-sale; and

• those that meet the definition of loans and receivables.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that

are not quoted in an active market, other than those:

• that the Bank intends to sell immediately or in the near term, which are classified as held for trading

and those that the Bank, on initial recognition, designates as financial assets at fair value through

profit or loss;

• that the Bank, upon initial recognition, designates as available-for-sale; or

• for which the Bank may not recover substantially all of its initial investment, other than because of

credit deterioration, which are classified as available-for-sale.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are designated as available

for sale or those are not classified as:

• loans and receivables;

• held-to-maturity investments; or

• financial assets at fair value through profit or loss.

(ii) Financial liabilities

Financial liabilities at fair value through profit or loss

A financial liability at fair value through profit or loss is a financial liability that meets either of the


• It is considered by the Bank as held for trading. A financial liability is classified as held for trading if:

- 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

- it is a derivative (except for a derivative that is financial guarantee contract or a designated and


• Upon initial recognition, it is designated by the Bank as a financial liability at fair value through

profit or loss.

Annual Report 2017

198

Financial liabilities carried at amortised cost

Financial liabilities which are not classified as financial liabilities at fair value through profit or loss are

classified as financial liabilities carried at amortised cost.

The above described classification of financial assets and financial liabilities is solely for presentation

and disclosure purposes and is not intended to be a description of how the financial instruments

are measured. Accounting policies for measurement of financial assets and financial liabilities are

disclosed in other relevant notes.

(r) Tangiblefixedassets

(i) CostTangible fixed assets are stated at cost less accumulated depreciation. The initial cost of a tangible

fixed asset comprises of its purchase price, import duties, non-refundable purchase taxes and any

directly attributable costs of bringing the asset to its working condition and location for its intended

use. Expenditure incurred after the tangible fixed assets have been put into operation, such as

repairs and maintenance and overhaul costs, is charged to the separate income statement in the

period in which the costs are incurred. In situations where it can be clearly demonstrated that the

expenditure has resulted in an increase in the future economic benefits expected to be obtained

from the use of tangible fixed assets beyond its originally assessed standard of performance, the

expenditure is capitalised as an additional cost of tangible fixed assets.

(ii) DepreciationDepreciation is computed on a straight-line basis over the estimated useful lives of tangible fixed

assets. The estimated useful lives are as follows:

Buildings and structures 40 years

Office equipment 3 - 5 years

Motor vehicles 10 years

Others 5 years

(iii) DisposalsGains and losses on disposals of tangible fixed assets are determined by comparing net disposal

proceeds with the carrying amounts. The disposal proceeds are recognised as income in the separate

income statement. Expenses on disposal of assets and the carrying amounts are recognised as

expenses in the separate income statement.

(s) Intangiblefixedassets

(i) Land use rightsLand use rights comprise those acquired in a legitimate transfer and indefinite land use rights. Indefinite

land use rights are stated at cost and without amortisation. Initial cost of a land use right comprises its

purchase price and any directly attributable costs incurred in conjunction with securing the land use right.

199


(ii) SoftwareCost of acquiring new software, which is not an integral part of the related hardware, is capitalised and

treated as an intangible asset. Software costs are amortised on a straight-line basis over 3 to 8 years.

(iii) DisposalsGains and losses on disposals of intangible fixed assets are determined by comparing net disposal

proceeds with the carrying amounts. The disposal proceeds are recognised as income in the separate

income statement. Expenses on disposal of assets and the carrying amounts are recognised as

expenses in the separate income statement.

(t) ProvisionsA provision except for provision described in Note 3(e), 3(g), 3(h), 3(i), 3( j), 3(o) and 3(p) is recognised

if, as a result of a past event, the Bank has a present legal or constructive obligation that can be

estimated reliably, and it is probable that an outflow of economic benefits will be required to settle

the obligation. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required

in settlement is determined by considering the class of obligations as a whole. A provision is

recognised even if the likelihood of an outflow with respect to any one item included in the same

class of obligations may be small.

Provisions are determined by discounting the expected future cash flows at a pre-tax rate that

reflects current market assessments of the time value of money and the risks specific to the liability.

(u) Severanceallowance TUnder the Vietnamese Labour Code, when an employee who has worked for 12 months or more

(“the eligible employee”) voluntarily terminates his/her labour contract, the employer is required to

pay the eligible employee severance allowance.

On 9 August 2013, the Ministry of Finance issued Official letter No. 10441/BTC-TCDN guiding the

Bank on accounting for severance allowance. According to this official letter, the Ministry of Finance

does not allow the Bank to make provision for severance allowance to employees. Accordingly, the

Bank has discontinued making any provision for severance allowance since 2013.

Pursuant to Law on Social Insurance, effective from 1 January 2009, the Bank and its employees

are required to contribute to the unemployment insurance fund managed by the Vietnam Social

Insurance Agency. With the implementation of the unemployment insurance scheme, the Bank is no

longer required to pay severance allowance for the service period from 1 January 2009. Accordingly,

severance allowance to be paid to eligible employees will be determined based on eligible employees

years of service until 31 December 2008 and their average salary for the six-month period prior to

the termination date.

(v) Taxation Income tax on the separate income statement for the year comprises current and deferred tax.

Income tax is recognised in the separate income statement except for the extent that it relates to

items recognised directly to equity, in which case it is recognised in equity.

Annual Report 2017

200

Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted

at the reporting date, and any adjustment to tax payable in respect of previous period.

Deferred tax is provided using the balance sheet method, providing for temporary differences

between the carrying amounts of assets and liabilities for financial reporting purposes and the

amounts used for taxation purposes. The amount of deferred tax provided is based on the expected

manner of realisation or settlement of the carrying amount of assets and liabilities using tax rates

enacted or substantively enacted at the reporting date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will

be available against which the asset can be utilised. Deferred tax assets are reduced to the extent

that it is no longer probable that the related tax benefit will be realised.

(w) Capital

(i) Share capitalOrdinary shares are classified as equity. Incremental costs directly attributable to the issue of

ordinary shares are recognised as a deduction from equity.

(ii) Share premiumOn receipt of capital from shareholders, the difference between issue price and par value of issued

shares is credited/debited to the share premium account in equity.

(iii) Treasury sharesWhen the Bank repurchases its ordinary shares (“treasury shares”), the amount of consideration

paid, which includes directly attributable costs, is recognised as a deduction from equity.

When treasury shares are sold or reissued subsequently, the amount received is recognised as an

increase in equity, and the resulting surplus or deficit on the transactions is transferred to/from

share premium.

(x) Reserves According to Decree No. 93/2017/ND-CP dated 7 August 2017 issued by the Government, the

Bank is required to make the following allocations before distribution of profits:



Financial reserve 10% of profit after tax Not specified

The purpose of the financial reserve is to offset residual asset losses and damage occurring in the

course of business after such losses have been offset with compensation paid by the organisations,

individuals who caused them, indemnity paid by insurers and with the allowance set up and accounted

for in expenses, and shall be used for other purposes in accordance with the law.

201


The reserves are used for specific purposes and are appropriated from profit after tax of the Bank

according to the proportion prescribed below:

- Reserve to supplement charter capital;

- Financial reserve;

- Other reserves: appropriated according to the resolution of the General Meeting of

Shareholders. The appropriation rates of these reserves are determined by the General Meeting

of Shareholders in accordance with the law.

The remaining profit after the appropriation of the above reserves, bonus and welfare fund and

distribution of dividends to the shareholders is recorded as retained profit of the Bank.

The Bank only appropriates the reserve to supplement charter capital and the financial reserve at

the year-end.

(y) Bonusandwelfarefund Bonus and welfare fund is established by appropriating from profit after tax as approved at the

General Meeting of Shareholders. This fund is not required by legal regulation and is distributed in

accordance to the decision of the Bank’s management. Bonus and welfare fund is recognised in the

Bank’s other liabilities.

(z) RelatedpartiesRelated parties include enterprises and individuals that directly or indirectly through one or more

intermediaries, control, or are controlled by, or are under common control with the Bank. The

enterprises in which the Bank has significant influence, enterprises and individuals owning, directly

or indirectly, an interest in the voting power of the Bank that gives them significant influence over

the Bank, key management personnel, including members of Board of Directors, members of Board

of Management, members of Board of Supervisors, Chief Financial Officer, Chief Accountant and

close members of the family of these individuals and companies which these individuals directly or

indirectly hold significant voting right or have significant influence over also constitute related parties.

In considering each possible related party relationship, the Bank pays attention to the substance of

the relationship, and not merely the legal form.

(aa) FiduciaryactivitiesThe Bank acts as trustee and in other fiduciary capacities that result in the holding or placing of

assets, loans on behalf of individuals, corporates and other credit institutions.

The value of investment trusts and trust funds received are recognised when the trust contracts

have been signed and trust funds have been realised. Rights and obligations of the truster and

trustee relating to profit and profit sharing, trust fee, other rights and obligations are in compliance

with the terms of the contracts.

Based on the terms of the contracts, fiduciary activities of the Bank comprise:

Annual Report 2017

202

Fiduciary activities at no risk

The Bank acts as trustee and in other fiduciary capacities that result in holding assets on behalf

of customers, entrusted investments and loans to customers in which entrusters bear all risks of

fiduciary activities. These assets are excluded from these separate financial statements as they are

not assets of the Bank. Entrusted funds received from trustees but not yet disbursed are recognised

as other liabilities on the separate balance sheet. After the disbursement, the Bank recognised

entrusted funds as off balance sheet items in accordance with Circular No. 30/2014/TT-NHNN

dated 6 November 2014 issued by the SBV.

Fiduciary activities at risk

The Bank acts as trustee receiving the funds from the Government, international and other

institutions to make loans to customers. The Bank recognises the received fund as an entrustred

fund and recognises loans to customers financed by these funds as its loans to customers. The

accounting policies of these loans to customers are in accordance with the regulations issued by the

SBV (Note 3(e)).

(bb) DividenddistributionDividend distribution to the Bank’s shareholders is recognised as a liability in the separate financial

statements when the dividends are approved in accordance with regulations of the Bank’s Charter.

(cc) SegmentreportingA segment is a distinguishable component of the Bank that is engaged either in providing related

products or services (business segment), or in providing products or services within a particular

economic environment (geographical segment), which is subject to risks and rewards that are

different from those of other segments. The Bank’s primary format for segment reporting is based

on geographical segment. The Bank’s secondary format for segment reporting is based on business

segment. Currently, the Bank operates in one business segment which is financial services.

(dd) NilbalanceItems or balances required by Circular No. 49/2014/TT-NHNN dated 31 December 2014 issued by

the SBV that are not shown in these separate financial statements indicate nil balances.

4. CASH ON HAND, GOLD AND GEMSTONES



Cash in VND 3,780,018 2,730,719

Cash in foreign currencies 1,039,491 767,102

Valuable papers 457 452

Gold 31,738 43,075

4,851,704 3,541,348

203


5. BALANCES WITH THE STATE BANK OF VIETNAM



Current deposits at the SBV

- In VND 7,530,960 4,343,739


8,314,574 5,119,306

These balances are current deposits at the SBV.

Under the SBV’s regulations relating to the compulsory reserve, banks are required to maintain a

compulsory reserve requirement (“CRR”) in current deposits at the SBV. The monthly average

balance of current deposits at the SBV must not be less than relevant CRR rates multiplied by the

preceding month’s average balances of deposits in scope as follows:

Preceding month’s average balances of31.12.2017

%31.12.2016

%

Deposit from customers:

- Deposits in foreign currencies with term of less than 12 months 8.00 8.00

- Deposits in foreign currencies with term of 12 months and above 6.00 6.00

- Deposits in VND with term of less than 12 months 3.00 3.00

- Deposits in VND with term of 12 months and above 1.00 1.00

Deposits from foreign credit institutions:

- Deposits in foreign currencies 1.00 1.00

6. DEPOSITS WITH AND LOANS TO OTHER CREDIT INSTITUTIONS

6.1 Deposits with and loans to other credit institutions



Depositswithothercreditinstitutions

Current deposits

- In VND 73,593 47,452


2,159,795 2,301,065

Term deposits

- In VND 3,685,000 4,095,000


- Allowance for losses on deposits with other credit institutions (153,761) (171,880)

3,553,664 3,950,265

5,713,459 6,251,330

Annual Report 2017

204

Loanstoothercreditinstitutions

- In VND 3,516,019 2,259,825

In which:

Discount, rediscount 3,163,119 1,880,725


Allowance for losses on loans to other credit institutions - -

3,582,397 2,342,651

9,295,856 8,593,981

6.2 Analysis of quality of deposits with and loans to other credit institutions



Group 1 – Current loans 6,889,822 5,939,796

Group 2 – Special mentioned loans - -

Group 3 – Sub-standard loans - 125,000

Group 4 – Doubtful loans - -

Group 5 – Loss loans (i) 400,000 400,000

7,289,822 6,464,796

(i) The term deposit with a local commercial joint stock bank of which the associated interest receivable has been overdue. The total allowance made for this term deposit as at 31 December 2017 was VND153,761 million (31.12.2016: VND165,630 million). As at 31 January 2015, the SBV announced a mandatory acquisition for all stakes of this bank at a price of VND0. On 25 December 2015, the Bank submitted Official letter 7261/CV-TH.15 for the SBV’s approval to extend the collection term of the deposit and associated interest receivable. On 29 December 2015, the SBV issued Official letter 10005/NHNN-TTGSNH which approved the Bank’s proposal. Accordingly, this deposit will be collected annually based on a defined plan until 30 September 2020.

6.3 Allowance for losses on deposits with loans to other credit institutions


As at 1 January 2016 200,141





205


7. HELD-FOR-TRADING SECURITIES



Government securities - listed 1,036,829 720,577

Allowance for losses on held-for-trading securities (1,068) -

1,035,761 720,577

8. DERIVATIVES AND OTHER FINANCIAL ASSETS

31 December 2017Total contract

value (at foreign exchange rate at

the contract date)

Total carrying value(at foreign exchange rateas at 31 December 2017)

Assets Liabilities

VND million VND million VND million


- Forward contracts 4,176,256 18,588 -

- Currency swap contracts 15,171,142 - 29,079


• Call options purchased 704,463 - 29,408

• Put options purchased - - -


• Call options written 473,718 27,685 -

• Put options written - - -

31 December 2016Total contract

value (at foreign exchange rate at

the contract date)

Total carrying value(at foreign exchange rateas at 31 December 2016)

Assets Liabilities



- Forward contracts 281,513 - 128

- Currency swap contracts 4,929,851 16,193 -


• Call options purchased 631,574 28,986 -

• Put options purchased 443,180 - 33,075


• Call options written 689,721 - 2,382

• Put options written 450,818 15,563 -

Annual Report 2017

206

9. LOANS TO CUSTOMERS

9.1 By type of loans



Loans to domestic economic entities and individuals 195,356,806 160,901,876

Discounted negotiable instruments and valuable papers 132,551 98,853

Payments on behalf of customers 499 300

Loans funded by the Government, international and other institutions 16,587 28,209

195,506,443 161,029,238




State owned companies 1,766,522 1,906,784Joint stock companies, limited liability companies and private enterprises 81,954,082 71,874,605

Joint-venture companies 1,403,850 1,157,317

100% foreign owned companies 1,232,939 872,367


Individuals and others 109,041,178 85,134,897

195,506,443 161,029,238

9.3 By loan group



Group 1 - Current loans 193,706,807 157,607,965

Group 2 - Special mentioned loans 427,353 2,021,662

Group 3 - Sub-standard loans 314,038 193,836

Group 4 - Doubtful loans 275,371 180,518

Group 5 - Loss loans 782,874 1,025,257

195,506,443 161,029,238

9.4 By term



Short-term loans 96,831,948 75,001,768

Medium-term loans 18,603,440 20,725,995

Long-term loans 80,071,055 65,301,475

195,506,443 161,029,238

207


9.5 By currency



Denominated in VND 186,775,614 152,190,444

Denominated in foreign currencies and gold 8,730,829 8,838,794

195,506,443 161,029,238

9.6 By business sector of customers



Trading 38,587,871 34,078,720

Agriculture and forestry 878,870 870,707

Manufacturing and processing 24,036,979 20,967,988

Construction 8,436,770 6,851,970

Individual and community services 3,455,588 2,583,919

Warehousing, transportation and communication 2,540,324 2,982,299

Training and education 374,516 241,580

Real estate 4,065,394 3,590,465

Hotels and restaurants 2,506,603 2,469,439

Financial services 21,650 25,950

Other business sectors and individuals 110,601,878 86,366,201

195,506,443 161,029,238

9.7 Allowance for losses on loans to customers

Specific allowance General allowance Total


As at 1 January 2016 542,768 971,337 1,514,105

Allowance made during the year (Note 30) 550,628 236,572 787,200

Allowance utilised during the year (530,852) - (530,852)

As at 31 December 2016 562,544 1,207,909 1,770,453

Allowance made during the year (Note 30) 1,332,526 222,328 1,554,854

Allowance utilised during the year (1,581,297) - (1,581,297)

As at 31 December 2017 313,773 1,430,237 1,744,010

9.8 Credit exposure of Group of six companies

The Group of six companies is a group of entities related to an individual who was either the

former Chairman or a former member of Board of Directors of these companies (“the Group of six

companies”). The credit exposure of the Group of six companies comprises of loans to customers,

held-to-maturity securities - bonds (“bonds”) and other receivables. Details of the balances and the

associated allowances of the Group of six companies are as follows:

Annual Report 2017

208

2017 2016Balance

31.12.2017Balance

30.11.2017Loan group 30.11.2017

Balance31.12.2016


VND Million (iii) VND Million (ii) VND Million (i)

Balances

Loans to customers - 1,048,697 5 1,427,566 2Held-to-maturity securities - bonds - 1,718,807 5 1,837,319 2

Other receivables 616,318 626,952 648,500

Total balances 616,318 3,394,456 3,913,385

Allowances

Loans to customers - (1,048,697) (205,445)Held-to-maturity securities - bonds - (1,718,807) (1,853,424)

Other receivables (616,318) (553,846) (353,846)

Total allowances (616,318) (3,321,350) (2,412,715)

- 73,106 1,500,670

(i) As at 31 December 2016, the credit risk classification and the associated allowances were approved by the SBV. In which:

- The allowances for losses on loans and bonds were made in accordance with Circular 02 as

disclosed in Note 3(e) together with an additional allowance for the amount not yet collected

against the repayment schedule approved by the SBV.

- The allowance for other receivables was made at 30% of receivables as at 31 December 2013

as per SBV’s approval.

(ii) As at 30 November 2017, the Bank classified the loans to and bonds issued by the Group of six companies as Group 5 – loss loans in accordance with the requirements of Circular 02 disclosed in Note 3(e). In addition, the Bank made full allowances for losses on loans to and bonds issued by the Group of six companies.

(iii) As at 31 December 2017, the loans and bonds balances were written off against allowances and recorded as off-balance sheet items for following up and collection according to the approval of the Bank’s Risk Resolution Committee. In addition, the Bank also made full allowance for other receivables from the Group of six companies.

The collection amount from the Group of six companies during the year ended 31 December 2017 was

VND818,928 million (2016: VND1,853,906 million). Included in the collection amount was the amount

of VND289,366 million collected after the written-off date which was recorded as an other income.

Details of collateral assets, other guarantees which are held by the Bank against the balances with

the Group of six companies and other sources of repayment together with key assumptions used in

evaluating them were as follows:

209


Estimated value (i)31.12.2017VND million


Shares of other credit institutions

Listed

+ Latest transaction price (ii) 1,237,436 1,961,423

Unlisted

+ Latest transaction price (iii) 919,790 1,386,125

2,157,226 3,347,548

Shares of joint stock companies

Listed

+ Market value 20,915 39,940

Unlisted

+ Net book value 487,895 459,509

+ Internal valuation model 39,189 111,033+ Market value of land owned by the companies or over which the compa-nies have rights for property development 36,792 42,777

584,791 653,259

Other collateral assets

Capital contributions - Internal valuation model - 59,692

Receivables - carrying value - 101,195

Guarantee letters issued by other bank - Guaranteed amount 300,000 300,000

300,000 460,887

3,042,017 4,461,694

Other sources of repayment

Deposits at the Bank - Carrying value 9,472 17,987

3,051,489 4,479,681

(i) These values are estimated for the purpose of assessment of sources of repayment of the Group of six companies. The Bank has reasonably and prudently evaluated the collateral assets, the actual liquidation amounts could be different from these estimated values.

(ii) Based on the latest transaction price to transfer these listed shares from the Group of six companies to third parties. Included in this estimated value is the deposits from third parties amounting to VND415,666 million (31.12.2016: VND1,139,653 million). These deposits were used to settle the Group of six companies’ obligations to the Bank.

(iii) Based on the latest transaction price to transfer these unlisted shares from the Group of six companies to third parties.

Annual Report 2017

210

10. INVESTMENT SECURITIES

10.1 Detail of investment securities



Available-for-salesecurities

Debtsecurities

Government securities 7,058,817 8,950,088

Debt securities issued by other domestic credit institutions 203,166 1,137,434

Equitysecurities

Equity securities issued by other domestic credit institutions - 4,222

Equity securities issued by domestic economic entities 745,508 746,958

Total available-for-sale securities 8,007,491 10,838,702

Allowanceforlossesonavailable-for-salesecurities

Allowance for diminution in value (425,467) (479,019)

(425,467) (479,019)

7,582,024 10,359,683Held-to-maturitysecurities(excludingspecialbondsissuedbyVAMC)

Debtsecurities

Government securities (i) 41,466,355 26,785,331

Debt securities issued by other domestic credit institutions 3,644,754 3,796,014

Debt securities issued by domestic economic entities (Note 10.2) - 2,756,181Total held-to-maturity securities (excluding special bonds issued by VAMC) 45,111,109 33,337,526

Allowanceforlossesonheld-to-maturitysecurities

Generalallowance (3,845) (28,690)

Specificallowance - (2,021,259)

(3,845) (2,049,949)

45,107,264 31,287,577

SpecialbondsissuedbyVAMC

Parvalueofspecialbonds - 1,438,280

Allowanceforlossesonspecialbonds - (413,446)

- 1,024,834

Total investment securities 52,689,288 42,672,094

(i) Included in held-to-maturity Government securities as at 31 December 2017 was VND4,053,041 million (31.12.2016: nil) of securities which were pledged for borrowings from other credit institutions with the amount of VND2,471,170 million (31.12.2016: nil) (Note 35).

211


10.2 Analysis of quality of securities classified as credit-risk bearing assets



Group 1 - Current - 529,984

Group 2 - Special mentioned - 1,837,319

Group 3 - Sub-standard - -

Group 4 - Doubtful - 388,878

Group 5 - Loss - -

- 2,756,181

10.3 Allowance for losses on invesetment securities

Allowance for diminution in value of

available-for-sale securities

General allowance

for losses on investment

securities (i)

Specific allowance for

losses on held-to-maturity securities (i)

Specific allowance for losses on special

bonds issued by

VAMC Total


As at 1 January 2016 473,095 30,710 1,151,856 382,093 2,037,754Allowance made/(reversed) during the year (Note 26 and 30) 5,924 (2,020) 1,101,430 448,259 1,553,593

Allowance utilised during the year - - (232,027) (416,906) (648,933)

As at 31 December 2016 479,019 28,690 2,021,259 413,446 2,942,414Allowance made/(reversed) during the year (Note 26 and 30) (53,552) (24,845) (302,451) 929,551 548,703

Allowance utilised during the year - - (1,718,808) (1,342,997) (3,061,805)

As at 31 December 2017 425,467 3,845 - - 429,312

(i) Excluded the specific allowance for losses special bonds issued by VAMC.

11. LONG-TERM INVESTMENTS

11.1 By types of investments



Investments in subsidiaries 11.2 2,140,000 2,140,000

Investments in a joint venture 11.3 1,000 1,000

Investments in an associate 11.3 200 200

Other long-term investments 11.4 193,927 199,537Allowance for diminution in the value of long-term investments 11.5 (5,553) (10,969)

2,329,574 2,329,768

Annual Report 2017

212

11.2 Investments in wholly owned subsidiaries



ACB Securities Company Limited 1,500,000 1,500,000

ACB Assets Management Company Limited 340,000 340,000

Asia Commercial Bank Leasing Company Limited 300,000 300,000

2,140,000 2,140,000

11.3 Investments in a joint venture and an associate

Historical cost31.12.2017VND million


Saigon Gold & Silver ACB-SJC Joint Stock Company 1,000 1,000

Asia Commercial Bank Security Services Joint Stock Company 200 200

1,200 1,200

11.4 Other long-term investments

Other long-term investments where the Bank has an equity interest of less than or equal to 11% of

charter capital or less than or equal to 11% of share capital with voting rights:



Investments in domestic economic entities

- Unlisted (i) 193,927 199,537

Allowance for diminution in the value of other long-term investments (5,553) (10,969)

188,374 188,568

(i) Movements in investments in unlisted domestic economic entities were as follows:VND million

As at 1 January 2016 217,204





213


11.5 Allowance for diminution in the value of other long-term investments

VND million


Allowance made during the year (Note 29) 391




12. FIXED ASSETS

(a) Tangiblefixedassets

Buildings and

structuresOffice

equipmentMotor

vehicles Others Total


Historicalcost

As at 1 January 2017 2,082,816 1,037,056 285,615 174,780 3,580,267

Additions 2,523 224,176 25,066 4,780 256,545

Transfer from construction in progress 140,968 1,347 5,950 56 148,321

Disposals (30,626) (3,783) (1,697) (3,391) (39,497)

As at 31 December 2017 2,195,681 1,258,796 314,934 176,225 3,945,636


As at 1 January 2017 297,455 702,322 170,275 127,071 1,297,123

Charge for the year 56,915 134,430 25,560 19,760 236,665

Disposals (5,659) (3,728) (1,674) (2,960) (14,021)

Other movements 1 (27) 3 23 -

As at 31 December 2017 348,712 832,997 194,164 143,894 1,519,767

Netbookvalue

Asat1January2017 1,785,361 334,734 115,340 47,709 2,283,144

Asat31December2017 1,846,969 425,799 120,770 32,331 2,425,869

Other information about tangible fixed assets was as follows:31.12.2017VND million


Carrying amount of temporarily idle tangible fixed assets 4,500 3,748

Cost of tangible fixed assets which were fully depreciated but still in use 699,256 508,166

Annual Report 2017

214

(b) Intangiblefixedassets

Land use rights Software TotalVND million VND million VND million

Historicalcost

As at 1 January 2017 294,716 396,405 691,121

Additions - 15,450 15,450

Transfer from construction in progress 48,158 1,513 49,671

As at 31 December 2017 342,874 413,368 756,242

Accumulatedamortisation

As at 1 January 2017 - 204,672 204,672

Charge for the year - 40,324 40,324

As at 31 December 2017 - 244,996 244,996

Netbookvalue

As at 1 January 2017 294,716 191,733 486,449

As at 31 December 2017 342,874 168,372 511,246

Other information about intangible fixed assets was as follows:31.12.2017VND million


Cost of intangible fixed assets which were fully amortised but still in use 131,293 120,671

13. OTHER ASSETS

13.1 Receivables



Construction in progress (i) 667,965 459,862

Receivables from customers (ii) 4,182,839 3,813,640

Receivables from the SBV 7,107 7,107

Advances and internal receivables 391,104 195,986

Dividend receivables 138,890 166,532

Income tax receivable (Note 34) 19,271 21,313

5,407,176 4,664,440

(i) Movements of construction in progress were as follows: VND million

As at 1 January 2016 630,543

Additions 240,686

Transfer to tangible fixed assets (Note 12(a)) (272,139)

Transfer to intangible fixed assets (Note 12(a)) (55,349)

Transfer to other assets (61,193)

Disposals (22,686)

215



Additions 437,099

Transfer to tangible fixed assets (Note 12 (a)) (148,321)

Transfer to intangible fixed assets (Note 12 (a)) (49,671)

Transfer to other assets (2,066)

Disposals (28,938)


Major constructions in progress were as follows:



Office buildings 595,120 459,862

(ii) Included in receivables from customers as at 31 December 2017 were receivables from three companies within the Group of six companies of VND616,318 million (31.12.2016: VND648,500 million). The allowance for losses on these receivables as at 31 December 2017 was VND616,318 million (31.12.2016: VND353,846 million) (Note 9.8).

13.2 Other assets



Prepaid expense 567,068 510,229Foreclosed assets of which ownership was transferred to the Bank and awaiting for settlement (i) 66,907 102,579

Other assets 46,452 40,518

680,427 653,326

(i) Foreclosed assets of which ownership was transferred to the Bank and awaiting for settlement



Real estates 66,907 102,579

13.3 Allowance for losses on other assets

VND million

As at 1 January 2016 562,058


Allowance utilised during the year (143,229)



Allowance utilised during the year (180)

As at 31 December 2017 1,470,847

Annual Report 2017

216

14. DEPOSITS AND BORROWINGS FROM OTHER CREDIT INSTITUTIONS



Depositsfromothercreditinstitutions

Demand deposits

- In VND 132,180 114,143


Term deposits

- In VND 9,155,054 470,000


12,156,574 1,754,097

Borrowingsfromothercreditinstitutions

- In VND 2,550,742 123,047

In which:

Discount, rediscount (Note 10.1) 2,471,170 -


3,223,492 499,750

Totaldepositsandborrowingsfromothercreditinstitutions 15,380,066 2,253,847

15. DEPOSITS FROM CUSTOMERS

15.1 By currency



Current deposits

- In VND 34,589,037 28,572,870


Term deposits

- In VND 28,295,791 23,337,835


Saving deposits

- In VND 166,739,256 143,657,609


Margin deposits

- In VND 1,524,509 1,522,944


Specialised capital deposits

- In VND 116,039 76,206


241,617,508 207,347,013

217





State-owned companies 948,473 836,855


Joint ventures companies 1,477,797 795,053

100% foreign owned companies 3,040,179 2,602,778

Cooperatives 42,021 47,794

Individuals 197,294,110 169,741,650

Others 3,282,667 2,702,183

241,617,508 207,347,013

16. FUNDS AND ENTRUSTED INVESTMENTS RECEIVED FROM THE GOVERNMENT, INTERNATIONAL AND OTHER CREDIT INSTITUTIONS



Funds received from Japan Bank for International Cooperation in VND (i) 106,621 91,953Funds received from Japan Bank for International Cooperation in foreign currencies (ii) 29,845 30,744

136,466 122,697

Funds received from Japan Bank of International Co-operation (“JBIC”) are financed by the Japanese

Government via JBIC. These funds are granted to small and medium enterprises with maximum

period of 10 years for medium and long-term loans and with the maximum period of 1 year for short-

term loans in accordance with the Lending arrangement signed between the SBV and the Bank.

(i) Outstanding balances of funds received from JBIC in VND born annual interest rates of 4.92% per annum in 2017 (2016: from 4.80% to 4.92%).

(ii) Outstanding balances of funds received from JBIC in foreign currencies born annual interest rates of 1.91% per annum in 2017 (2016: 1.91% per annum).

17. VALUABLE PAPERS ISSUED



Bonds-Five-year and one-day bonds issued by the Bank (par value of VND100,000,000/bond) 2,000,000 2,000,000- Ten-year and one-day bonds issued by the Bank(par value of VND1,000,000,000/bond) 4,054,000 4,054,000

6,054,000 6,054,000

Annual Report 2017

218

18. OTHER LIABILITIES



Internal payables 838,066 604,822

External payables

- Remittances in transit 214,782 383,952

- Taxes payable to the State Treasury (Note 34) 32,695 29,492

- Cash held on behalf and awaiting for settlement 128,190 85,055

- Amount awaiting settlement 396,907 65,730

- Other payables 727 2,813

Unearned revenue 17,190 28,286

Bonus and welfare fund 60,600 45,600

1,689,157 1,245,750

19. OWNER’S EQUITY

19.1 Statement of changes in equity

Charter capital

Treasury shares

Reserve to supplement

charter capital

Financial Reserve

Other reserves (i)

Retainedprofits Total


As at 1 January 2016 9,376,965 (665,725) 449,635 1,641,434 121 1,700,269 12,502,699Net profit for the year - - - - - 1,307,992 1,307,992Appropriation to reserves - - 65,399 130,799 - (196,198) -Appropriation to bonus and welfare fund - - - - - (50,000) (50,000)As at 31 December 2016 9,376,965 (665,725) 515,034 1,772,233 121 2,762,063 13,760,691Net profit for the year - - - - - 2,089,051 2,089,051Appropriation to reserves - - 104,453 208,905 - (313,358) -Appropriation to bonus and welfare fund - - - - - (20,000) (20,000)Share dividends 896,274 - - - - (896,274) -Purchase of shares for employee bonus (ii) - - - - - (130,000) (130,000)As at 31 December 2017 10,273,239 (665,725) 619,487 1,981,138 121 3,491,482 15,699,742

219


(i) Other reserves comprised of capital expenditure fund.

(ii) Purchase of shares for employee bonus in the ESOP program was approved by the General Meeting of Shareholders of the Bank on 10 April 2017.

19.2 Shares

(a) Numberofshares

31.12.2017 31.12.2016

Carrying value Carrying value

Number of shares VND million Number of shares VND million

Authorised share capital 1,027,323,896 10,273,239 937,696,506 9,376,965

Treasury shares (41,422,608) (665,725) (41,422,608) (665,725)Ordinary shares in circulation 985,901,288 9,607,514 896,273,898 8,711,240

(b) Movementofthechartercapital

Number of shares Ordinary shares

VND million

As at 1 January 2016 937,696,506 9,376,965

New shares issued - -

As at 31 December 2016 937,696,506 9,376,965

New shares issued 89,627,390 896,274

As at 31 December 2017 1,027,323,896 10,273,239

All ordinary shares have a par value of VND10,000. Each share is entitled to one vote at meetings of

shareholders of the Bank. Shareholders are entitled to receive dividends as declared from time to

time. All ordinary shares are ranked equally with regard to the Bank’s residual assets. In respect of

shares bought back by the Bank, all rights are suspended until those shares are reissued.

19.3 Dividends

The General Meeting of Shareholders of the Bank on 8 April 2016 resolved to distribute share dividends

at a rate of 1 share for every 10 ordinary shares in circulation from VND896,274 million of retained profits

of 2015 and previous years. As at 9 January 2017, the Bank completed process to amend the Business

Registration Certificate for the issuance of the share for dividends.

The General Meeting of Shareholders of the Bank on 10 April 2017 resolved to distribute share dividends

at a rate of 1 share for every 10 ordinary shares in circulation from VND985,901 million of retained profits

of 2016 and previous years. Up to the date of issuance of these separate financial statements, the Bank

has not yet completed process for the issuance of shares for dividends.

Annual Report 2017

220

20. INTEREST AND SIMILAR INCOME

2017VND million

2016VND million

Interestincomefromdeposits 220,849 180,293

Interestincomefromloans 16,360,190 13,397,238

Interestincomefromdebtsecurities

- Interest income from held-for-trading securities 15,150 20,000

- Interest income from investment securities 3,277,413 2,387,331

Income from guarantee services 196,681 207,398

Other incomes from credit activities 5,958 19,550

20,076,241 16,211,810

21. INTEREST AND SIMILAR EXPENSES

2017VND million

2016VND million

Interest expense on deposits 11,025,134 8,813,282

Interest expense on borrowings 72,570 124,855

Interest expense on bonds 659,432 491,153

Other expenses on credit activities 70,698 95,311

11,827,834 9,524,601

22. FEE AND COMMISSION INCOME

2017VND million

2016VND million

Settlement services 916,621 796,371

Treasury services 36,753 34,110


1,413,351 1,142,409

23. FEE AND COMMISSION EXPENSES

2017VND million

2016VND million

Settlement and treasury services 257,944 217,984


333,409 290,999

221


24. NET GAIN FROM TRADING OF FOREIGN CURRENCIES

2017VND million

2016VND million

Gains from trading of foreign currencies

- Currency spots 380,029 213,972

- Gold trading 3,348 39,687

- Other derivatives 216,218 243,643

Losses on trading of foreign currencies

- Currency spots (130,741) (2,194)

- Gold trading (1,544) (1)

- Other derivatives (230,900) (265,330)

236,410 229,777

25. NET GAIN FROM TRADING OF HELD-FOR-TRADING SECURITIES

2017VND million

2016VND million

Gains from trading of held-for-trading securities 52.237 19.129

Losses on trading of held-for-trading securities (10.836) (15.491)

Addition to allowance for losses on held-for-trading securities (Note 7) (1.068) -

40.333 3.638

26. NET GAIN/(LOSS) FROM TRADING OF INVESTMENT SECURITIES

2017VND million

2016VND million

Gains from trading of investment securities 203.200 203.609

Gains from disposals of other long-term investments 2.244 52.787

Losses on trading of investment securities (22.199) (6.464)

Losses on disposals of other long-term investments - (37.500)Reversal of/(addition to) allowance for diminution in value of available-for-sale securities (Note 10.3) 53.552 (5.924)Reversal of general allowance for losses on investment securities (Note 10.3) 24.845 2.020Reversal of/(addition to) specific allowance for losses on investment securities (Note 10.3) 302.451 (1.101.430)

564.093 (892.902)

Annual Report 2017

222

27. NET OTHER INCOME

2017VND million

2016VND million

Otherincome

Income from bad debts collection previously written-off (i) 369,312 79,185

Income from other trading activities 4,732 1,800

Other income 573,018 196,512

947,062 277,497

Other expenses

Expenses on other trading activities (3,037) (284)

Other expenses (57,378) (10,687)

(60,415) (10,971)

886,647 266,526

(i) Included in this item was VND289,266 million (2016: nil) of income from bad debts collection from the Group of six companies previously written off (Note 9.8).

28. INCOME FROM INVESTMENTS IN OTHER ENTITIES

2017VND million

2016VND million

Dividend income during the year:

- From available-for-sale equity securities 15,250 18,851

- From long-term investments 81,754 170,916

97,004 189,767

29. OPERATING EXPENSES

2017VND million

2016VND million

Tax, duties and fees 10,286 13,219

Salaries and relates expenses 2,587,521 2,215,729

- Salaries and allowances 657,257 622,957

- Salary related contributions 154,367 141,662

- Subsidies 3,352 2,505

- Others 1,772,545 1,448,605

Expenses on assets 1,021,182 938,912

- Depreciation and amortisation expense 276,989 239,005

- Others 744,193 699,907

Administrative expenses 1,250,735 1,047,730

Insurance for deposits from customers 262,075 213,390

223


Allowance expenses (i) 948,704 98,469

6,080,503 4,527,449

(i) Details of allowance expenses were as follows:

2017VND million

2016VND million

(Reversal of)/addition to allowance for diminution in the value of other long-term investments (Note 11.5) (5,416) 391

Addition to allowance for losses on other assets (Note 13.3) 954,120 98,078

948,704 98,469

30. ALLOWANCE EXPENSES FOR CREDIT LOSSES

2017VND million

2016VND million

Reversal of specific allowance for losses on deposits with and loans to other credit institutions (Note 6.3) (18,119) (28,261)

Addition to general allowance for losses on loans to customers (Note 9.7) 222,328 236,572

Addition to specific allowance for losses on loans to customers (Note 9.7) 1,332,526 550,628

Addition to allowance for special bonds issued by VAMC (Note 10.3) 929,551 448,259

2,466,286 1,207,198

31. CORPORATE INCOME TAX

The tax on the Bank’s profit before tax differs from theoretical amount that would arise using the

applicable tax rate as follows:2017

VND million2016

VND million

Net accounting profit before tax 2,606,047 1,600,778

Tax calculated at a rate of 20%: 521,209 320,156

Effect of:

Income not subject to tax (19,433) (37,953)

Expenses not deductible for tax purposes 15,574 9,712

Change in tax rate - 254

Adjustment for prior years (354) 617

Corporate income tax charge 516,996 292,786

Charged to income statement:

Corporate income tax – current 516,996 289,986

Corporate income tax – deferred - 2,800

516,996 292,786

The corporate income tax charge for the year is based on taxable income and is subject to review

and possible adjustment by the tax authorities.

Annual Report 2017

224

32. CASH AND CASH EQUIVALENTS



Cash on hand, gold and gemstones 4,851,704 3,541,348

Balances with the SBV 8,314,574 5,119,306Deposits with other credit institutions with original terms of three months or less 5,444,795 5,871,066

18,611,073 14,531,720

33. EMPLOYEES REMUNERATION

2017VND million

2016VND million

Numberofemployees(person) 10,004 9,443

Emloyeesremuneration

Total salary 657,257 622,957

Other remuneration 1,650,441 1,376,242

2,307,698 1,999,199

Average salary per employee per year 66 66

Average income per employee per year 231 212

34. OBLIGATIONS TO THE STATE’S BUDGET

Movement during the year

1.1.2017 Payable Payments 31.12.2017

VND million VND million VND million VND million

Value added tax 12,014 132,510 (132,527) 11,997

Corporate income tax (21,313) 516,996 (514,954) (19,271)

Other taxes 17,478 118,787 (115,567) 20,698

8,179 768,293 (763,048) 13,424

35. ASSETS, VALUABLE PAPERS MORTGAGED, PLEDGED, DISCOUNTED AND REDISCOUNTED

(a) Assets, valuable papersmortgaged, pledged, discounted and rediscounted attheBank

225




Assets, valuable papers of customers mortgaged, pledged and discounted at the Bank

Land and property 317,223,763 259,419,330

Inventories 2,117,118 1,831,621

Machinery and equipment 5,729,059 9,055,193

Valuable papers 24,017,335 31,876,001

Included:

- Valuable papers issued by enterprises (i) 24,017,335 31,876,001

Other assets 16,058,463 22,935,259

365,145,738 325,117,404Assets, valuable papers of other credit institutions mortgaged, pledged, discounted and rediscounted at the Bank

Land and property 492,479 468,740

Valuable papers (i) 3,263,119 1,900,000

Other assets 1,534,336 564,944

5,289,934 2,933,684

Total 370,435,672 328,051,088

(i) These represented the book value of valuable papers as at 31 December 2017 and 31 December 2016. The par value of valuable papers were as follows:



Assets,valuablepapersofcustomersmortgaged,pledgedanddiscountedattheBank

Valuable papers issued by enterprises 25,051,589 42,201,763Assets,valuablepapersofothercreditinstitutionsmortgaged,pledged,discountedandrediscountedattheBank

Valuable papers 3,218,000 1,900,000

(b) The Bank’s assets, valuable papers mortgaged, pledged, discounted andrediscounted




Annual Report 2017

226

36. CONTINGENT LIABILITIES AND COMMITMENTS

36.1 Off balance sheet commitments


Denominated in VND

VND million

Denominatedin foreign

currenciesVND million

TotalVND million



Letters of credit at sight 116,729 2,712,779 2,829,508




Bidding guarantees 304,891 - 304,891


19,167,176 29,107,278 48,274,454


Denominated in VND

VND million

Denominatedin foreign

currenciesVND million

TotalVND million



Letters of credit at sight - 2,744,367 2,744,367




Bidding guarantees 258,175 162 258,337


10,457,081 14,810,930 25,268,011

36.2 Operating lease commitments

The future minimum lease payments under non-cancellable operating leases were:

227




Within 1 year 203,775 167,937

From 1 to 5 years 754,544 608,415

Over 5 years 676,119 420,645

1,634,438 1,196,997

36.3 Capital expenditures

The capital commitments that have been approved but not yet provided for in the separate

financial statements as of 31 December 2017 amounted to VND275,966 million (31.12.2016:

VND17,275 million).

37. CONCENTRATION OF ASSETS, LIABILITIES AND OFF-BALANCE SHEET COMMITMENTS BY GEOGRAPHICAL AREA

As at 31 December 2017Deposits with and loans to

other credit

institu-tions

Loans to customers

Deposits and borrowings from other

credit institutions

Deposits from

customersCredit com-

mitments Derivatives (i)


securities


Domestic 7,754,722 195,506,443 14,931,309 241,617,508 6,030,700 18,098,382 54,155,429

Overseas 1,694,895 - 448,757 - 4,286,210 2,427,197 -

9,449,617 195,506,443 15,380,066 241,617,508 10,316,910 20,525,579 54,155,429

As at 31 December 2016Deposits with and loans to

other credit

institu-tions

Loans to customers

Deposits and borrowings from other

credit institutions

Deposits from

customersCredit com-

mitments Derivatives (i)


securities


Domestic 6,794,575 161,029,238 1,987,684 207,347,013 5,342,155 5,191,714 46,335,085

Overseas 1,971,286 - 266,163 - 4,715,279 2,234,943 -

8,765,861 161,029,238 2,253,847 207,347,013 10,057,434 7,426,657 46,335,085

(i) Represented the total contract value at foreign exchange rate at the contract date.

Annual Report 2017

228

38. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES

(a) Transactionsincurredduringtheyear

Duringtheyear,therewerethefollowingtransactionswithrelatedparties:

2017VND million

2016VND million

Interest income from deposits with a subsidiary 520 608

Interest income from loans to a subsidiary 25,909 27,409

Interest income from loans to other related parties (i) 6,274 12,386

Interest expense on deposits from subsidiaries 13,903 23,577

Interest expense on deposits from a joint venture and an associate 887 681

Interest expense on deposits from other related parties (i) 40,978 16,683

Fee earned from subsidiaries 267 204

Fee paid to subsidiaries 2,076 6,508

Fees paid to an associate 201,361 165,627

Distribution of profits from subsidiaries 76,061 166,532

Dividend income from other related parties (i) 17,709 22,800

Remuneration – Members of the Board of Management 25,924 19,708

Remuneration – Members of the Board of Directors 7,695 7,078

Remuneration – Members of the Supervisory Board 3,625 3,466

(b) Balancesattheyear-end



Deposits with a subsidiary 22,425 27,145

Loans to a subsidiary 419,278 461,926

Loans to other related parties (i) 84,680 19,932

Deposits from subsidiairies 356,783 436,655

Deposits from a joint venture and an associate 31,103 16,651

Deposits from other related parties (i) 546,827 351,001

Interest receivables from deposits with a subsidiary 89 72

Interest receivables from loans to a subsidiary 1,773 1,991

Interest receivables from loans to other related parties (i) 2,925 491

Interest payables from deposits from subsidiaries 621 783

Interest payables from deposits from a joint venture and an associate 93 59

Interest payables from deposits from other related parties (i) 13,047 2,677

Receivables from subsidiaries 5,761 9,827

Entrusted investments received from other related parties (i) 9,500 9,500

229


Distribution of profits from subsidiaries 135,090 166,532

(i) Other related parties comprise key management personnel including members of Board of Directors, members of Board of Management, members of Board of Supervisors, Chief Financial Officer, Chief Accountant and close members of the family of these individuals and companies which these individuals directly or indirectly hold significant voting right or have significant influence over.

39. FINANCIAL RISK MANAGEMENT

The Bank’s business involves taking risks in a targeted manner and managing them professionally. The

core functions of the Bank’s risk management are to identify all key risks of the Bank, measure these

risks, manage the risk positions and determine capital allocations. The Bank regularly reviews its risk

management policies and systems to reflect changes in markets, products and best market practice.

The Bank’s aim is to achieve an appropriate balance between risk and return and to minimise potential

adverse effects on the Bank’s financial performance.

The Bank defines risks as the possibility of losses or profit foregone, which may be caused by internal

or external factors.

Risk management is carried out by the Risk Management Division under the policies approved by

the Board of Directors. The Risk Management Division identifies, evaluates and hedges financial

risks in close co-operation with the Bank’s operating units. The Board of Directors approves written

principles for overall risk management, as well as written policies covering specific areas, such as

foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-

derivative financial instruments. In addition, the Internal Audit Committee is responsible for the

independent review of risk management and the control environment. All regulations, policies,

processes of risk management are established, maintained, carried out and controlled in the

consistence with statutes of internal control system issued and applied for the Bank.

The financial risks arising from financial instruments which the Bank is exposed to include credit risk,

liquidity risk, market risk and operational risk.

(a) CreditriskCredit risk is the risk of financial loss to the Bank if a customer or counterparty to a financial instrument

fails to meet its contractual obligations. Credit risk mainly arises from lending activities and guarantees.

The Bank is also exposed to other credit risks arising from investments in debt securities and other

exposures arising from its trading activities, including non-equity trading portfolio assets, derivatives

and settlement balances with counterparties. See Notes 5, 6, 7, 8, 9, 10 and 13 for specified matters

related to credit risk.

Credit risk is the largest risk for the Bank’s business; management therefore carefully manages

its exposure to credit risk. The credit risk management and control are centralised in a credit risk

management team, which regularly reports to the Board of Management, Credit Committee and

Risk Committee.

Annual Report 2017

230

Management of credit risk for the assessment of impairment and provision

(i) Loans and guaranteesThe estimation of credit exposure is carried out before and during the year of lending.

The Bank has developed models to support the quantification of the credit risk. These rating and

scoring models are in use for all key credit portfolios and form the basis for measuring default risks

before and during the year of lending.

Where there is an indication of a changing risk profile of large exposure customers which may

have significant negative impact on the loan portfolio of the Bank, the management considers and

establishes a separate working group to assess the risk involved, monitor, control and minimise the

exposures on an ongoing basis.

In measuring these credit risks, the Bank considers to classify loans and guarantees and make

allowance in accordance with policies as disclosed in Note 3(e), 3(f) and 3(o).

(ii) Debt securitiesThe Bank’s investments in debt securities are those issued by the Government, domestic credit

institutions and economic organisations. Credit risk is measured on a case-by-case basis when

the Bank reassesses that the risk profile of the counterparty has changed. Investments in these

securities are viewed as a way to gain a better credit quality mapping and maintain a readily available

source to meet the funding requirements at the same time.

Credit risk control and mitigation policies

The Bank manages credit risk by placing limits on exposures (for both on and off-balance sheet exposures)

in relation to each borrower, or group of borrowers in accordance with regulations of the SBV. In addition,

exposure to credit risk is also managed through regularly reviewing the classes of collateral and analysing

the ability of borrowers and potential borrowers to meet interest and capital repayment obligations.

The Bank employs a range of policies and practices to mitigate credit risk. The most traditional

practice is the taking of collateral for loans and advances, which is a common practice. The principal

collateral types for loans and advances are:

- Mortgages over residential properties, land use rights;

- Charges over business assets such as premises, machinery equipment, inventory and account

receivable; and

- Charges over financial instruments such as debt securities and equity securities.

For secured loans, collaterals are valued by a department independent from the business department of

the Bank or by independent organisations that have the appraisal function as described in Note 3(e)(iii).

The Bank applies specific discount rates to determine the maximum amount of loans that can be granted

which are stipulated by the Bank’s internal policies. When the market value of collateral is reduced, the

Bank will require borrowers to provide additional collateral to maintain the security over loan exposure.

231


Commitments having credit risk mainly include letters of credit and financial guarantees contracts

which carry the same credit risk as loans. Documentary and commercial letters of credit which are

written by the Bank on behalf of a customer to authorise a third party to draw drafts on the Bank

up to a stipulated amount under specific terms and conditions are collateralised by the underlying

shipments of goods to which they relate and therefore carry less risk than a direct loan. Issuance

of financial guarantee contracts and letters of credit are subject to the same credit assessment

and approval process as those for loans to customers, unless the customer places 100% margin

deposits for the related commitments.

Maximum exposure to credit risk before collateral held or other credit enhancements

The maximum exposure to credit risk is the carrying amounts on the balance sheet as well as off-

balance sheet of financial instruments, without taking into account any collateral held or other credit

enhancements. For contingent liabilities, the maximum exposure to credit risk is the maximum amount

that the Bank would have to pay if the obligations of the instruments issued are called upon. For credit

commitments, the maximum exposure to credit risk is the full amount of the undrawn credit facilities

granted to customers. The table below shows the maximum exposure to credit risk of the Bank:

Maximum exposure to credit risk31.12.2017VND million


Creditriskexposuresrelatingtoonbalancesheetassets:

Balances with the State Bank of Vietnam 8,314,574 5,119,306

Deposits with and loans to other credit institutions 9,449,617 8,765,861

Held-for-trading securities – debt securities 1,036,829 720,577

Loans to customers 195,506,443 161,029,238

Derivatives and other financial assets - 16,065

Investment securities:

- Debt securities – Available-for-sales securities 7,261,983 10,087,522

- Debt securities – Held-to-maturity securities 45,111,109 34,775,806

Other financial assets 8,276,954 7,413,678

274,957,509 227,928,053

Creditriskexposuresrelatingtooff-balancesheetassets:

Credit commitments 10,316,910 10,057,434

The above table represents the worst case with the maximum level of loss of the Bank as at 31

December 2017 and 31 December 2016, not taking into account any collateral held or other credit

enhancements. Details of collateral held as at 31 December 2017 and 31 December 2016 were

described in Note 35(a).

Annual Report 2017

232

Credit quality

Financial assets exposed to credit risk are summarised as follows:


Balances with the

SBV


other credit in-

stitutions

Held-for- trading

securitiesLoans to

customersInvestment

securities

Other financial

assets TotalVND

millionVND

millionVND

millionVND

millionVND

millionVND

millionVND

million

Balances neither past due nor impaired 8,314,574 9,049,617 1,036,829 193,458,998 52,373,092 6,127,314 270,360,424Balances past due but not impaired - - - 247,809 - 247,809

Balances impaired - 400,000 - 1,799,636 - 2,149,640 4,349,276

Allowance - (153,761) (1,068) (1,744,010) (3,845) (1,470,847) (3,373,531)

Netamount 8,314,574 9,295,856 1,035,761 193,762,433 52,369,247 6,806,107 271,583,978

Allowance

Specific allowance - (153,761) - (313,773) - - (467,534)

General allowance - - - (1,430,237) (3,845) - (1,434,082)

Other allowance - - (1,068) - - (1,470,847) (1,471,915)


Balances with the

SBV


other credit in-

stitutionsDeriva-

tives

Held-for- trading

securitiesLoans to

customersInvestment

securities

Other financial

assets TotalVND

millionVND

millionVND

millionVND

millionVND

millionVND

millionVND

millionVND

million

Balances neither past due nor impaired 5,119,306 8,240,861 16,065 720,577 157,462,420 41,198,851 6,323,335 219,081,415Balances past due but not impaired - - - - 145,545 - 47,990 193,535Balances impaired - 525,000 - - 3,421,273 3,664,477 1,042,353 8,653,103

Allowance - (171,880) - - (1,770,453) (2,463,395) (516,907) (4,922,635)

Netamount 5,119,306 8,593,981 16,065 720,577 159,258,785 42,399,933 6,896,771 223,005,418

AllowanceSpecific allowance - (171,880) - - (562,544) (2,434,705) - (3,169,129)General allowance - - - - (1,207,909) (28,690) - (1,236,599)Other allowance - - - - - - (516,907) (516,907)

233


(b) Marketrisk

Market risks are the risks that the fair value or future cash flows of a financial instrument will fluctuate

because of changes in market prices. Market risks arise from open positions in interest rate, currency

and equity instruments, all of which are exposed to general and specific market movements and

changes in the level of volatility of market rates or prices such as interest rates, foreign exchange

rates and share prices.

(i) Interest rate risk

Cash flow interest rate risk is the risk that future cash flows of financial instruments will fluctuate

because of changes in the market interest rate. Fair value interest rate risk is the risk that the value

of a financial instrument will fluctuate because of changes in the market interest rate. The Bank

manages interest rate risk by periodically monitoring the level of mismatch of interest rate by terms.

Management of interest rate risk

The following table show the Bank’s assets, liabilities and off-balance sheet items categorised by the

repricing period at the reporting date.

Annual Report 2017

234

Unit: VND million

OverdueNon-interest






Asat31December2017

Assets



Deposits with and loans to other credit institutions (i) 400,000 - 2,719,795 4,856,854 1,411,968 - - 61,000 9,449,617

Held-for-trading securities (i) - - - - - - 491,727 545,102 1,036,829



Long-term investments (i) - 2,335,127 - - - - - - 2,335,127

Fixed assets - 2,937,115 - - - - - - 2,937,115

Other assets (i) 657,803 6,919,486 - - - 2,074,435 - - 9,651,724

Totalassets 2,874,520 26,103,514 4,575,598 180,193,441 12,913,122 6,418,055 34,502,332 19,621,151 287,201,733

Liabilities

Deposits and borrowings from other credit institutions - - 6,222,994 8,484,322 560,625 112,125 - - 15,380,066

Deposits from customers - - 48,405,967 93,965,276 39,964,127 15,862,116 43,420,022 - 241,617,508

Derivatives and other financial liabilities - 10,491 - - - - - - 10,491Funds and entrusted investment from the Government, international and other credit institutions - - - 106,621 - - - 29,845 136,466







(i) These items do not include the allowances.

235


Unit: VND million

OverdueNon-interest






Asat31December2017

Assets



Deposits with and loans to other credit institutions (i) 400,000 - 2,719,795 4,856,854 1,411,968 - - 61,000 9,449,617

Held-for-trading securities (i) - - - - - - 491,727 545,102 1,036,829




Fixed assets - 2,937,115 - - - - - - 2,937,115

Other assets (i) 657,803 6,919,486 - - - 2,074,435 - - 9,651,724

Totalassets 2,874,520 26,103,514 4,575,598 180,193,441 12,913,122 6,418,055 34,502,332 19,621,151 287,201,733

Liabilities

Deposits and borrowings from other credit institutions - - 6,222,994 8,484,322 560,625 112,125 - - 15,380,066

Deposits from customers - - 48,405,967 93,965,276 39,964,127 15,862,116 43,420,022 - 241,617,508

Derivatives and other financial liabilities - 10,491 - - - - - - 10,491Funds and entrusted investment from the Government, international and other credit institutions - - - 106,621 - - - 29,845 136,466








Annual Report 2017

236

Unit: VND million

OverdueNon-interest






Asat31December2016

Assets



Deposits with and loans to other credit institutions (i) 525,000 - 4,968,373 2,281,043 939,445 - - 52,000 8,765,861

Held-for-trading securities (i) - - - - - - 720,577 - 720,577





Fixed assets - 2,769,593 - - - - - - 2,769,593

Other assets (i) 1,090,343 5,741,454 - - - 1,723,489 - - 8,555,286

Totalassets 4,788,265 21,719,962 6,509,843 146,434,007 8,702,801 5,836,349 35,452,688 9,028,604 238,472,519

Liabilities

Deposits and borrowings from other credit institutions - - 1,405,554 471,590 376,703 - - - 2,253,847

Deposits from customers - 63,743 39,288,844 81,905,158 31,305,210 25,322,358 29,461,660 40 207,347,013Funds and entrusted investment from the Government, international and other credit institutions - - - 91,953 - - - 30,744 122,697







(i) These item do not include the allowances.

237


Unit: VND million

OverdueNon-interest






Asat31December2016

Assets



Deposits with and loans to other credit institutions (i) 525,000 - 4,968,373 2,281,043 939,445 - - 52,000 8,765,861

Held-for-trading securities (i) - - - - - - 720,577 - 720,577





Fixed assets - 2,769,593 - - - - - - 2,769,593

Other assets (i) 1,090,343 5,741,454 - - - 1,723,489 - - 8,555,286

Totalassets 4,788,265 21,719,962 6,509,843 146,434,007 8,702,801 5,836,349 35,452,688 9,028,604 238,472,519

Liabilities

Deposits and borrowings from other credit institutions - - 1,405,554 471,590 376,703 - - - 2,253,847

Deposits from customers - 63,743 39,288,844 81,905,158 31,305,210 25,322,358 29,461,660 40 207,347,013Funds and entrusted investment from the Government, international and other credit institutions - - - 91,953 - - - 30,744 122,697







(i) These item do not include the allowances.

Annual Report 2017

238


As at 31 December 2017 Up to 1 month From 1 to 3 months From over 3 to 6 months From over 6 to 12 months From over 1 to 5 years Over 5 years

Assets


• VND 0.90% - 2.10% 2.10% - 6.95% 4.30 - 4.50% (*) (*) 5.10% - 5.50%



• VND (*) (*) (*) (*) 5.00% - 6.60% 4.80% - 11.50%

Loans to customers

• VND 4.80% - 13.44% 1.10% - 23.64% 2.80% - 20.57% 4.50% - 22.15% 5.47% - 25.04% 4.91% - 22.00%

• Foreign currencies 3.20% 2.20% - 8.50% 2.00% - 5.5% 4.48% - 7.50% (*) (*)


• VND (*) (*) (*) (*) 4.90% - 9.40% 5.10% - 13.25%

Other assets

• VND (*) (*) (*) 7.20% - 8.10% (*) (*)

Liabilities


• VND 0.90% - 2.20% 3.80% - 5.93% (*) (*) (*) (*)



• VND 0.00% - 2.40% 0.00% - 5.60% 0.00% - 6.95% 0.00% - 7.50% 0.00% - 7.70% (*)

• Foreign currencies 0.00% 0.00% - 0.10% (*) (*) 0.00% - 0.75% (*)Funds and entrusted investment from the Government, international and other credit institutions

• VND (*) 4.92% (*) (*) (*) (*)



• VND (*) (*) (*) 8.55% (*) 13.25%

(*) Balances of these terms at the year-end were nil.

239




Assets


• VND 0.90% - 2.10% 2.10% - 6.95% 4.30 - 4.50% (*) (*) 5.10% - 5.50%



• VND (*) (*) (*) (*) 5.00% - 6.60% 4.80% - 11.50%

Loans to customers

• VND 4.80% - 13.44% 1.10% - 23.64% 2.80% - 20.57% 4.50% - 22.15% 5.47% - 25.04% 4.91% - 22.00%



• VND (*) (*) (*) (*) 4.90% - 9.40% 5.10% - 13.25%

Other assets

• VND (*) (*) (*) 7.20% - 8.10% (*) (*)

Liabilities


• VND 0.90% - 2.20% 3.80% - 5.93% (*) (*) (*) (*)



• VND 0.00% - 2.40% 0.00% - 5.60% 0.00% - 6.95% 0.00% - 7.50% 0.00% - 7.70% (*)

• Foreign currencies 0.00% 0.00% - 0.10% (*) (*) 0.00% - 0.75% (*)Funds and entrusted investment from the Government, international and other credit institutions

• VND (*) 4.92% (*) (*) (*) (*)



• VND (*) (*) (*) 8.55% (*) 13.25%


Annual Report 2017

240


Assets


• VND 0.00% - 4.90% 4.65% - 6.65% 4.00% - 5.00% (*) (*) 5.10%



• VND (*) (*) (*) (*) 5.30% - 7.10% (*)

Loans and advances to customers

• VND 5.50% - 13.44% 0.59% - 23.65% 0.88% - 17.00% 1.20% - 22.00% 1.20% - 24.00% 4.91% - 17.00%



• VND (*) (*) 9.68% (*) 5.00% - 12.20% 6.10% - 13.25%

Other assets

• VND (*) (*) (*) 7.20% - 8.10% (*) (*)

Liabilities


• VND 0.00% - 5.88% 4.30% - 4.60% (*) (*) (*) (*)



• VND 0.00% - 7.00% 0.00% - 6.20% 0.00% - 6.84% 0.00% - 8.50% 0.00% - 8.50% 7.08%

• Foreign currencies 0.00% - 0.03% 0.00% 0.00% 0.00% 0.00% - 1.25% (*) Funds and entrusted investment from the Government, international and other credit institutions

• VND (*) 4.92% (*) (*) (*) (*)



• VND (*) (*) (*) 8.50% (*) 13.25%



exchange rates. The Bank was established and operates in Vietnam and the accounting currency is

VND. Major transactions of the Bank are also in VND. The Bank’s loans to customers were mainly

denominated in VND and USD. However, some other assets of the Bank are denominated in foreign


currency, including gold. The currency position is monitored daily and the Bank takes risk mitigation


241



Assets


• VND 0.00% - 4.90% 4.65% - 6.65% 4.00% - 5.00% (*) (*) 5.10%



• VND (*) (*) (*) (*) 5.30% - 7.10% (*)

Loans and advances to customers

• VND 5.50% - 13.44% 0.59% - 23.65% 0.88% - 17.00% 1.20% - 22.00% 1.20% - 24.00% 4.91% - 17.00%



• VND (*) (*) 9.68% (*) 5.00% - 12.20% 6.10% - 13.25%

Other assets

• VND (*) (*) (*) 7.20% - 8.10% (*) (*)

Liabilities


• VND 0.00% - 5.88% 4.30% - 4.60% (*) (*) (*) (*)



• VND 0.00% - 7.00% 0.00% - 6.20% 0.00% - 6.84% 0.00% - 8.50% 0.00% - 8.50% 7.08%

• Foreign currencies 0.00% - 0.03% 0.00% 0.00% 0.00% 0.00% - 1.25% (*) Funds and entrusted investment from the Government, international and other credit institutions

• VND (*) 4.92% (*) (*) (*) (*)



• VND (*) (*) (*) 8.50% (*) 13.25%


The following table show the Bank’s assets, liabilities and equity categorised by currencies are


Annual Report 2017

242

Unit: VND million


Asat31December2017

Assets


Balances with the SBV 7,530,960 783,614 - - - - - - 8,314,574

Deposits with and loans to other credit institutions (i) 7,274,612 1,938,502 - 101,902 89,604 12,930 6,193 25,874 9,449,617




Long-term investments (i) 2,335,127 - - - - - - - 2,335,127

Fixed assets 2,937,115 - - - - - - - 2,937,115

Other assets (i) 8,912,998 735,765 2,914 2 - - 9 36 9,651,724

Totalassets 273,701,873 12,997,624 215,290 111,914 97,773 27,860 16,080 33,319 287,201,733

Liabilitiesandequity

Deposits and borrowings from other credit institutions 11,837,976 3,542,090 - - - - - - 15,380,066


Derivatives and other financial liabilities 1,216,316 (1,219,890) - - - 2,636 8,060 3,369 10,491Funds and entrusted investment from the Government, international and other credit institutions 106,621 - - - 29,845 - - - 136,466



Owners’ equity 15,699,742 - - - - - - - 15,699,742






243


Unit: VND million


Asat31December2017

Assets








Fixed assets 2,937,115 - - - - - - - 2,937,115

Other assets (i) 8,912,998 735,765 2,914 2 - - 9 36 9,651,724

Totalassets 273,701,873 12,997,624 215,290 111,914 97,773 27,860 16,080 33,319 287,201,733


Deposits and borrowings from other credit institutions 11,837,976 3,542,090 - - - - - - 15,380,066


Derivatives and other financial liabilities 1,216,316 (1,219,890) - - - 2,636 8,060 3,369 10,491Funds and entrusted investment from the Government, international and other credit institutions 106,621 - - - 29,845 - - - 136,466



Owners’ equity 15,699,742 - - - - - - - 15,699,742





Annual Report 2017

244

Unit: VND million


Asat31December2016

Assets




Held-for-trading securities (i) 720,577 - - - - - - - 720,577





Fixed assets 2,769,593 - - - - - - - 2,769,593

Other assets (i) 8,349,862 202,261 3,151 3 - - 9 - 8,555,286

Totalassets 225,917,610 11,882,179 322,119 121,113 156,693 23,629 2,561 46,615 238,472,519


Deposits and borrowings from other credit institutions 707,190 1,546,548 - 13 23 73 - - 2,253,847

Deposits from customers 197,167,464 9,913,387 - 103,284 105,481 21,309 1,344 34,744 207,347,013Funds and entrusted investment from the Government, international and other credit institutions 91,953 - - - 30,744 - - - 122,697



Owners’ equity 13,760,691 - - - - - - - 13,760,691

TotalLiabilitiesandequity 221,050,956 11,676,880 - 114,927 138,773 34,779 3,570 40,011 233,059,896





(iii) Equity price riskThe Bank is exposed to equity price risk. The price risk relating to held-for-trading equity securities is

managed through the analysis of the market movement and investment decision is made based on

the purpose of gaining profit in the short term. Investments in available-for-sale equity investments

are made based on business purpose of the Bank, taking into account the diversification in the

investment portfolio.

(iv) Sensitive analysisChanges in market risks can result in increase/decrease of the profit which the Bank has recognised.

The sensitivity assessment of market risk can be made based on changes to main risk factors such

as interest rate, currency exchange rate and share prices while other factors are kept constant.

245


Unit: VND million


Asat31December2016

Assets




Held-for-trading securities (i) 720,577 - - - - - - - 720,577





Fixed assets 2,769,593 - - - - - - - 2,769,593

Other assets (i) 8,349,862 202,261 3,151 3 - - 9 - 8,555,286

Totalassets 225,917,610 11,882,179 322,119 121,113 156,693 23,629 2,561 46,615 238,472,519


Deposits and borrowings from other credit institutions 707,190 1,546,548 - 13 23 73 - - 2,253,847

Deposits from customers 197,167,464 9,913,387 - 103,284 105,481 21,309 1,344 34,744 207,347,013Funds and entrusted investment from the Government, international and other credit institutions 91,953 - - - 30,744 - - - 122,697



Owners’ equity 13,760,691 - - - - - - - 13,760,691

TotalLiabilitiesandequity 221,050,956 11,676,880 - 114,927 138,773 34,779 3,570 40,011 233,059,896




The Bank will analyse and present the sensitivity analysis of its market risks when it has detailed

guidance from the regulators.

(c) Liquidationrisk

Liquidity risk is the risk that the Bank is unable to meet the payment obligations associated with its




- Monitor day-to-day mobilisation and lending activities;

- Maintain a portfolio of securities that can be easily converted into cash; and

- Monitor the balance sheet liquidity ratios against the regulatory requirements of the SBV.

Annual Report 2017

246


The following table show the Bank’s assets and liabilities categorised by the remaining contractual


Overdue Current

Over 3 months Up to 3 months Up to 1 monthFrom over 1 to 3 months

From over 3 to 12 months

From over 1 to 5 years Over 5 years Total

Asat31December2017

Assets



Deposits with and loans to other credit institutions (i) 400,000 - 5,354,149 2,758,023 539,642 336,803 61,000 9,449,617




Long-term investments (i) - - - - - - 2,335,127 2,335,127

Fixed assets - - - - - - 2,937,115 2,937,115

Other assets (i) 657,803 - 6,910,736 342,948 248,399 519,980 971,858 9,651,724

Totalassets 2,313,069 561,451 38,691,979 28,791,641 63,655,430 60,772,801 92,415,362 287,201,733

Liabilities



Derivatives and other financial liabilities - - 10,491 - - - - 10,491Funds and entrusted investment from the Government, international and other credit institutions - - - 8,899 23,430 68,910 35,227 136,466

Valuable papers issued - - - - - 5,000,000 1,054,000 6,054,000





247



The following table show the Bank’s assets and liabilities categorised by the remaining contractual


Overdue Current




Asat31December2017

Assets








Fixed assets - - - - - - 2,937,115 2,937,115

Other assets (i) 657,803 - 6,910,736 342,948 248,399 519,980 971,858 9,651,724

Totalassets 2,313,069 561,451 38,691,979 28,791,641 63,655,430 60,772,801 92,415,362 287,201,733

Liabilities



Derivatives and other financial liabilities - - 10,491 - - - - 10,491Funds and entrusted investment from the Government, international and other credit institutions - - - 8,899 23,430 68,910 35,227 136,466






Unit: VND million

Annual Report 2017

248

Overdue Current




Asat31December2016

Assets




Held-for-trading securities (i) - - 720,577 - - - - 720,577





Fixed assets - - - - - - 2,769,593 2,769,593

Other assets (i) 994,734 95,609 5,732,465 7,448 520,048 1,204,982 - 8,555,286

Totalassets 4,274,152 514,113 29,148,085 19,307,961 53,965,164 64,038,398 67,224,646 238,472,519

Liabilities


Deposits from customers - - 70,411,929 35,922,679 61,623,415 39,131,901 257,089 207,347,013Funds and entrusted investment from the Government, international and other credit institutions - - 56 10,127 27,609 58,283 26,622 122,697






(d) Fairvalueoffinancialassetsandfinancialliabilities

Circular No. 210/2009/TT-BTC dated 6 November 2009 issued by the Ministry of Finance requires

the Bank to disclose the measurement method and related information about fair value of financial



The Bank has not determined fair values of these financial instruments for disclosure in these

separate financial statements because there is currently no guidance on determination of fair value

using valuation techniques under Vietnamese Accounting Standards, the Vietnamese Accounting

System and the relevant statutory requirements on preparation and presentation of financial

statements applicable to credit institutions. The fair values of these financial instruments may differ

from their carrying amounts.

249


Overdue Current




Asat31December2016

Assets




Held-for-trading securities (i) - - 720,577 - - - - 720,577





Fixed assets - - - - - - 2,769,593 2,769,593

Other assets (i) 994,734 95,609 5,732,465 7,448 520,048 1,204,982 - 8,555,286

Totalassets 4,274,152 514,113 29,148,085 19,307,961 53,965,164 64,038,398 67,224,646 238,472,519

Liabilities


Deposits from customers - - 70,411,929 35,922,679 61,623,415 39,131,901 257,089 207,347,013Funds and entrusted investment from the Government, international and other credit institutions - - 56 10,127 27,609 58,283 26,622 122,697






(d) Fairvalueoffinancialassetsandfinancialliabilities

Circular No. 210/2009/TT-BTC dated 6 November 2009 issued by the Ministry of Finance requires

the Bank to disclose the measurement method and related information about fair value of financial



The Bank has not determined fair values of these financial instruments for disclosure in these

separate financial statements because there is currently no guidance on determination of fair value

using valuation techniques under Vietnamese Accounting Standards, the Vietnamese Accounting

System and the relevant statutory requirements on preparation and presentation of financial

statements applicable to credit institutions. The fair values of these financial instruments may differ

from their carrying amounts.

Unit: VND million

Annual Report 2017

250


Geographical segments

The Bank reports segment information by main regions in Vietnam as follows:

For the year ended 31 December 2017The Northern

regionThe Central

regionThe Southern

region Elimination TotalVND million VND million VND million VND million VND million

Income1. Interest and similar

income 5,362,670 3,241,193 41,172,630 (29,700,252) 20,076,241External interest and similar income 2,813,380 2,340,829 14,922,032 - 20,076,241Internal interest and similar income 2,549,290 900,364 26,250,598 (29,700,252) -

2. Fee and commission income 147,641 84,620 1,181,090 - 1,413,351

3. Other income 32,768 21,647 1,830,552 - 1,884,967

Expenses1. Interest and similar

expenses (4,149,969) (2,402,918) (34,975,199) 29,700,252 (11,827,834)External interest and similar expenses (1,935,513) (704,401) (9,187,920) - (11,827,834)Internal interest and similar expenses (2,214,456) (1,698,517) (25,787,279) 29,700,252 -

2. Depreciation and amortisation expenses (12,423) (17,891) (246,675) - (276,989)

3. Other expenses (682,417) (512,435) (5,002,551) - (6,197,403)Operatingprofitbeforeallowanceexpensesforcreditlosses 698,270 414,216 3,959,847 - 5,072,333Allowanceexpensesforcreditlosses (428,453) (55,984) (1,981,849) - (2,466,286)

Profitbeforetax 269,817 358,232 1,977,998 - 2,606,047

For the year ended 31 December 2016The Northern

regionThe Central

regionThe Southern


Income1. Interest and similar

income 4,353,399 2,458,993 32,393,490 (22,994,072) 16,211,810External interest and similar income 2,425,870 1,817,361 11,968,579 - 16,211,810Internal interest and similar income 1,927,529 641,632 20,424,911 (22,994,072) -

2. Fee and commission income 124,891 71,639 945,879 - 1,142,409

3. Other income 262,434 62,598 375,647 - 700,679

251


Expenses1. Interest and similar

expenses (3,344,238) (1,832,658) (27,341,777) 22,994,072 (9,524,601)External interest and similar expenses (1,425,346) (493,895) (7,605,360) - (9,524,601)Internal interest and similar expenses (1,918,892) (1,338,763) (19,736,417) 22,994,072 -

2. Depreciation and amortisation expenses (11,169) (18,546) (209,290) - (239,005)

3. Other expenses (603,500) (419,789) (4,460,027) - (5,483,316)Operatingprofitbeforeallowanceexpensesforcreditlosses 781,817 322,237 1,703,922 - 2,807,976Allowanceexpensesforcreditlosses (441,563) (106,496) (659,139) - (1,207,198)

Profitbeforetax 340,254 215,741 1,044,783 - 1,600,778

As at 31 December 2017The Northern

regionThe Central

regionThe Southern


Assets1. Cash on hand, gold

and gemstones 572,646 414,967 3,864,091 - 4,851,704

2. Fixed assets 167,589 397,157 2,372,369 - 2,937,115

3. Other assets 45,133,343 29,032,304 293,682,634 (92,239,918) 275,608,363

45,873,578 29,844,428 299,919,094 (92,239,918) 283,397,182

Liabilities

1. External liabilities 40,391,452 14,775,707 211,614,425 - 266,781,584

2. Internal liabilities 5,212,274 14,709,952 73,155,758 (92,239,918) 838,066

3. Other liabilities 35 537 77,218 - 77,790

45,603,761 29,486,196 284,847,401 (92,239,918) 267,697,440


regionThe Central

regionThe Southern


Assets1. Cash on hand, gold

and gemstones 495,381 284,237 2,761,730 - 3,541,348

2. Fixed assets 135,545 368,609 2,265,439 - 2,769,593

3. Other assets 39,708,514 22,215,846 248,676,899 (83,852,304) 226,748,955

40,339,440 22,868,692 253,704,068 (83,852,304) 233,059,896

Annual Report 2017

252

NguyenVanHoa

Chief Accountant

DoMinhToan

General Director

Legal representative

TranHungHuy

Chairman


regionThe Central

regionThe Southern


Liabilities

1. External liabilities 34,678,401 11,156,920 172,785,174 - 218,620,495

2. Internal liabilities 5,320,785 11,496,030 67,640,312 (83,852,304) 604,823

3. Other liabilities - - 73,887 - 73,887

39,999,186 22,652,950 240,499,373 (83,852,304) 219,299,205

The separate financial statements were approved by the Board of Management on 28 February 2018.

253


Annual Report 2017

254

255

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ANNUAL REPORT 2017

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