MINISTRY OF EDUCATION & TRAINING HOCHIMINH CITY UNIVERSITY OF ECONOMICS - Nguyen Huu Nhan Ho Chi Minh City – December, 2010 MINISTRY OF EDUCATION & TRAINING HOCHIMINH CITY UNIVERSITY OF ECONOMICS - Nguyen Huu Nhan Specialized in Banking & Finance THE RESEARCH ADVISOR: VUONG DUC HOANG QUAN, Ph.D Ho Chi Minh City – December, 2010 First of all, I would like to thank my supervisor Dr Vuong Duc Hoang Quan, whose never-ending optimism and patience encouraged me to continue on my path I appreciate very much the fact that Dr Vuong Duc Hoang Quan took the time to listen, discuss and help me fulfill this research I would like to thank to the Banking Faculty, which support me to finish this thesis My sincere thanks to Mr Vo Xuan Vinh, Mr Dao Trung Kien for their supports during my hard time of study Finally, I would like to say thanks to my family, who always support and motivate me all the life Ho Chi Minh City, Nguyen Huu Nhan The purpose of this study is to classify the Vietnam commercial joint stock banks in cohesive categories on the basis of their financial characteristics revealed by the financial ratios These financial characteristics are total assets, total shareholder’s equity, loans to customers, deposit from customers and the financial ratios such as probability, asset quality, operational efficiency and liquidity ratios A sample of seven large Vietnam commercial joint stock banks total loans to customers comprise of 63% of total outstanding loans of the whole Vietnam commercial joint stock bank were financially analyzed, and simple regression was used to estimate the impact of asset management, operational efficiency, and bank size on the financial performance of these banks The study found that the bank with higher total capital, deposits, credits, or total assets does not always mean that has better profitability performance The regression analysis results showed that financial performance of the bank was not strongly and positively affected by the operational efficiency, the asset management and the bank size ACB : Asia Commercial Joint Stock Bank AFTA : ASEAN Free Trade Area AHP model : Analytical Hierarchy Process ALM : Asset and Liability Management ANOVA : Analysis of variance ASEAN : Association of South East Asian Nations ATM : Automated Transaction (or Teller) machine AVSC : Au Viet Securities Co BDD : Bad and doubtful debt BSC : BIDV Securities Company CAMELS model : Capital, Asset Quality, Management, Earning, Liquidity, Sensitivity to Market Risk CAR : Capital Adequacy Ratio CIC : Credit Information Center EAGLES model : Earning ability, Asset quality, Growth rates, Liquidity, Equity level and capital adequacy, effective managementSRQ Eximbank (EIB) : Vietnam Export Import Commercial Joint Stock Bank GSO : General Statistics Office of Vietnam IOR : Income/Overheads ratio IPO : Initial Public Offering JSCB : Joint Stock Commercial Bank KPMG : KPMG Consulting Inc LDR : Loans to deposits ratio Military Bank (MB) : Military Commercial Joint Stock Bank NIM : Net interest margin POS : Point of sale RAROC : Risk-adjusted return on capital ROA (A) : Return on assets (average) ROE (A) : Return on equity (average) ROSF : Return on Shareholder’s Fund Sacombank (STB) : Sai Gon Thuong Tin Commercial Joint Stock Bank SBV : State Bank of Vietnam SOCB : State-owned Commercial Bank SRQ : Strategic response quotient SWOT : Strengths, Weaknesses, Opportunities, and Threats Techcombank (TCB): Vietnam Technological and Commercial Joint Stock Bank Vietcombank (VCB) : Joint Stock Commercial Bank For Foreign Trade of Vietnam Vietinbank (CTG) : Vietnam Joint Stock Commercial Bank for Industry and Trade VND : The currency of Vietnam WTO : World Trade Organization ACKNOWLEGEMENTS ABSTRACT ABBREVIATIONS CONTENTS LIST OF TABLES LIST OF FIGURES 1.1 Background 1.2 Rationale of the study 1.3 Problem statement 1.4 Overall objective 1.5 Specific objectives 1.6 Scope and limitation 1.7 Structure of the thesis 2.1 Evaluating bank financial performance 2.1.1 Financial performance 2.1.2 Profitability 2.1.3 Capitalization 2.1.4 Asset quality 2.1.5 Operating efficiency 2.1.6 Liquidity 2.1.7 Other financial ratios 2.2 Asset and liability management (ALM) 10 2.3 Some models used in assessing the performance of bank 11 2.3.1 CAMELS model 11 2.3.2 SBV’s bank assessing framework 12 2.3.3 The EAGLES model 12 2.4 Some previous researches 13 2.5 Summary 15 3.1 Research framework 17 3.1.1 Suggested model in assessing and comparing banks 19 3.1.2 Financial indicators and ratios used in comparing banks 19 3.1.3 Variables 23 3.1.4 Hypothesis 24 3.2 Data for the study 25 3.2.1 Sampling 25 3.2.2 Data gathering 26 3.2.3 Data level of confidence 28 3.2.4 Data analysis 28 4.1 Comparisons of Vietnam leading joint stock commercial banks 30 4.1.1 Total assets 30 4.1.2 Total shareholder’s equity 32 4.1.3 Loans to customers 34 4.1.4 Deposits from customers 37 4.1.5 Return on total assets – ROAA 39 4.1.6 Return on shareholder’s equity – ROEA 41 4.1.7 Efficiency ratio 42 4.1.8 Asset quality 43 4.1.9 Liquidity 45 4.1.10 Ranks of chosen commercial banks 47 4.2 Hypotheses Testing 53 4.2.1 Relationships among the financial performance measured by ROA, and interest income size, and the independent variables (operational efficiency, asset management, bank size) 54 4.2.2 Independent variables impact on financial performance measured by ROA and interest income size 56 5.1 Conclusions 61 5.2 Implications 63 5.3 Recommendations for further study 63 REFERENCES : Selected financial criteria and ratio for the comparison and ranking 20 : Selected variables in testing hypothesis 24 Total outstanding loans 25 Selected commercial banks to compare 26 : Data source to extract and calculate financial ratios 27 : Total assets of commercial banks 30 : Total shareholder’s equity 32 : Loans to customers 36 : Deposits from customers 38 : Return on total assets – ROAA 39 : Return on shareholder’s equity – ROEA 41 : Net interest income/total operating expenses 42 Provisions for loans losses ratio 44 : Loans to deposits 45 : Ranks of chosen commercial banks based on financial indicators 47 : Chosen commercial banks: Key average data (2004-2009) 54 : Correlations results 56 : (ANOVA) independent variables impact on financial performance measured by ROA and interest income size 57 The CAMELS rating system is based upon an evaluation of five critical elements of a credit union's operations: Capital Adequacy, Asset Quality, Management, Earnings and Asset/Liability Management and Sensitivity for market risk This rating system is designed to take into account and reflect all significant financial and operational factors examiners assess in their evaluation of a credit union's performance Credit unions are rated using a combination of financial ratios and examiner judgment Since the composite CAMEL rating is an indicator of the viability of a credit union, it is important that examiners rate credit unions based on their performance in absolute terms rather than against peer averages or predetermined benchmarks The examiner must use professional judgment and consider both qualitative and quantitative factors when analyzing a credit union's performance Since numbers are often lagging indicators of a credit union's condition, the examiner must also conduct a qualitative analysis of current and projected operations when assigning CAMEL ratings Capital Adequacy Asset quality Management Earning Liquidity Sensitivity Risk to Market indicates the operational sustainability of the bank in case of facing temporary financial issues so that the bank would consistently operate in its risk taking capacity Besides, capital would reflect the actual net-worth of the bank in the event of default Therefore, capital-using is an important facility by banking authorities to support for the bank operations The facilities cover capital adequacy ratio (CAR), capital composition, trend of the capital, capital coverage on the risky assets, internal support on capital growth and access to sources of capital including the existing shareholders – the profit or loss of the bank based on the quality of its earning assets The higher the quality of the assets, the higher the bank would have the operational profit in the long run Specifically, the aspects cover general figure of non performing loans, concentrated loan on particular debtors and sectors, credit granting process, and treatment on non performing assets – The quality of the management would bring impact on the bank operations in the long run The assessment of the management quality covers the general management, risk management and compliance General management covers structure and composition of the management, the quality of corporate governance, transparency and effectiveness of the committee Risk management covers supervisory process of the commissioners, policies and procedures, risk management process and comprehensive internal control The bank would also be assessed its compliance to particular regulation such as legal lending limit, and other commitment and specified regulations – The level of earning indicates the competitiveness of the bank in the industry A bank with a high level of efficiency would be expected to be more robust in facing fierce competition by acquiring bigger share in the market as it could sell products with a relatively lower price The assessment also shows how the bank would financially sustainable The aspects cover return on asset, return on equity, net interest margin, operational efficiency, and the trend of operational earnings – The level of liquidity indicates the capability of a bank in optimalizing prudential aspect and profitability at the same time It has been evidence how illiquidity could throw a solvent bank into insolvency since the bank were forced to liquidate its asset far under par value to fulfill its current financial obligation The aspects cover the composition of current asset and liabilities, short term maturity mismatch, cash flow projection and deposits Assessing the capability of an Islamic bank in identifying, measuring, monitoring and controlling the exposure to market risk according to business volume and its complexity The aspects cover the capital accumulations available for covering adverse movement of interest rate, exchange rate, the implementation of market risk management and effectiveness in the implementation of internal control Recent development has also indicated the involvement of qualitative assessment as additional factors to improve the quality of the assessment The assessment report covers both the financial ratios and also the management quality when achieving particular financial objectives The assessment report on operational soundness of the bank is normally used by the banking authority as an internal guidance to set supervisory actions This is conducted in the light of risk based supervision that focuses the activities onto the critical points and adopt the forward looking principle The essence of the system is for the bank rating to be done on the basis of five components reflecting the bank’s performance: capital, assets, management, equity shares and liquidity Although nearly all the components (apart from management) can be quantitatively measured, due to the existence of developed metrics, the CAMEL model assesses them on the scale - 5, in accordance with the expert assessment on the problem identification level This rating is then integrated with a number of other reports published by the aforementioned FDIC agency, the US Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System and the Federal Financial Institutions Examination Council Regretfully, the public cannot directly benefit from this system of bank operations supervision Namely, the CAMEL bank individual rating is confidential information known only to the assessor and the bank management, with the sole purpose of bank supervision Following the achieved rating, the frequency of the bank operations auditing is then determined; the banks with CAMEL 3, and rating need to be audited on an annual basis while those with or rating need to be audited at least once in two years This system is mentioned in this paper merely as an example showing how it is possible to transform normally precisely measurable bank performance data into quality-related, less precise information, subsequently integrated into a complete evaluation (rating list) According to the decision number 06/2008/QD-NHNN issued on March 12th, 2008 by the SBV to rate commercial bank, the SBV built ratings indicators the same as CAMEL model The component of these criteria consists of capital account for (15%), the asset quality (35%), management (15%), earnings (20%) and liquidity (15%) on total (100) points The ratings indicators are as follows Capital Adequacy 15%/100 points Asset quality 35%/100 points Management 15%/100 points Earning 20%/100 points Liquidity 15%/100 points – to achieve the maximum points, the capital of the bank must satisfy elements: a) charter capital is not lower than legal capital, b) ensuring the capital adequacy ratio more than 8%, and c) guaranteeing the efficiency increasing-capital stimulation by the SBV is assessed by the quality of outstanding loans, investments, the structure of the assets and the quality of commitments off-balance sheet The quality of outstanding loans is measure by bad debt ratio less than or equal percent and comply the debt classification regulation Investment item’s quality is depend on the price-reduction ratio not more than percent The structure of the assets is measured by the earnings assets, which is not less than 75 percent on total assets And the quality of commitments off-balance sheet is measured by commitments-quality-reflect ratio is not more than percent – commercial bank have to guarantee the number of board of directors, board of supervisors; issuing and standardizing internal policies; internal controlling, auditing system cope with bank size and operate efficiency, ensuring major risk continually identified, measured and controlled; complying the shareholder, stock ruled by the SBV – the earnings is assessed depend on the return on average shareholder’s equity (ROEA) The return is the income before tax The bank has ROEA equal or more than 18%, will achieve the maximum points – The liquidity is measured by the current paying ability It is calculated by dividing current assets by current liabilities Commercial bank has to guarantee the paying-ability ratio according to the SBV’s regulation Commercial banks satisfy the criteria can get the maximum points for each indicator If the bank not satisfy, it will be deducted the points The points based on the performing of the bank and instructed in the ratings regulation According to John Vong (the leadershipcorp.com website)-discussion about why CAMEL failed to recognize the weakness of banks?, he stated that many analysts or bank inspectors use the CAMEL for analyzing banks and not knowing the disadvantages of the model In order to overcome the disadvantages of the CAMEL model, he discover a new model, which is EAGLES This approach has been pioneered by the writer and has gained creditability among the banking community and fund management industry in Asia, for competitor analysis and investment planning respectively It also predicted the Asian financial crisis in the 1980s when the writer was “banned” from data collection in many countries The EAGLES is able to measure and compare banks performance in a more determinate, objective and consistent manner The name is derived from the key success factors confronting banks today, i.e Earnings ability, Asset quality, Growth, Liquidity, Equity and Strategy Earning Asset quality Growth rates Liquidity Equity level and Capital Adequacy Strategic response quotient is shown by three noteworthy indicators – Return on Assets (ROA), Return on Shareholders’ Fund (ROSF) and Income/Overheads ratio (IOR) The importance of the IOR is usually not well understood The main point lies in that Income depends on external market forces, while Overheads is highly influenced by internal staffing So the bank must know how to adjust the staffing according to market demand for its products and services is best assessed by on-site inspection of the bank’s loan portfolio If this is not possible, the asset quality can be measured by the level of bad debt provisions, that is, bad and doubtful debts (BDD) as a percentage of total loans A conservative approach will dictate that the quantum of provision to err on the high side rather low of loans and core deposits are the most important indicators of a how a bank wants to position itself in the marketplace A high growth loan book without a corresponding growth in deposit base signifies an intention to increase interest margins A higher deposit growth without a corresponding growth in loans means that the bank suffers from low interest margins For some banks lower interest margins could hamper overall profitability can be described as the ability of a bank to have sufficient funds to meet cash demands for loans deposit withdrawals and operating expenses For this reason, a balance should be found between the amount of deposits garnered and the quantum of loans extended The indicator is the deposit-to-loan ratio have profound impact upon the bank Not only is there an international guideline (Basle II) that stipulates a bank must have a minimum capital equivalent to 8% of risk adjusted asset Many banks are restricted to open additional branches unless they meet minimum capital requirements strategy is indicated by the strategic response quotient (SRQ) It is an intriguing ratio because it assesses management’s ability to lend, to garner deposits, obtain fee-based income and to manage the operating cost As to what is an appropriate balance of the three core banking activities will depend on the bank’s strategy The SRQ is obtained by dividing the interest margin by net operating cost (that is, total operating cost less fee income) The higher figure the better combined with excellent risk controls APPENDIX 4: BANK'S FIGURES Vietcombank Bank Year Items Total assets Total shareholder's equity Loans to customers Deposit from customers Provisions for loan losses ROA ROE Net interest income total operating expense Operational income Interest income 2004 120,006 7,181 53,605 88,503 828.8 N/A N/A 1,897 883 1,498.6 4,337.1 2005 136,721 8,416 61,044 109,637 1,342.7 N/A N/A 3,311 968 1,759.9 6,345.2 2006 166,952 11,127 67,743 119,779 1,490.5 1.71% 25.46% 3,884 1,214 3,893.7 9,156.9 197,408 13,552 97,532 141,589 2,102.2 1.21% 17.60% 4,100 1,628 3,192.1 11,389.1 2008 219,910 13,316 111,643 157,494 4,206.3 1.14% 18.28% 3,592 1,500 1,618.7 10,834.6 2009 2004 255,496 16,710 136,996 169,072 0.0 1.64% 25.58% 6,499 3,494 5,004.4 15,293.6 93,271 4,909 64,160 64,702 N/A N/A N/A 2,712 1,362 253.0 6,678.3 2005 116,373 5,072 75,886 78,791 182.9 N/A N/A 3,526 2,135 514.9 8,334.6 ACB Bank Year Items Total assets Total shareholder's equity Loans to customers Deposit from customers Provisions for loan losses ROA ROE 2007 Vietinbank 2004 15,417 706 6,698 13,046 26.0 N/A N/A 2006 135,363 5,607 80,152 99,683 61.2 0.66% 15.61% 3,557 2,147 777.8 10,128.1 2007 166,113 10,647 102,191 112,693 1,708.4 1.01% 18.78% 4,683 2,766 1,529.1 12,769.3 2008 193,590 12,336 120,752 121,634 2,150.4 1.35% 21.20% 7,190 4,958 2,436.4 21,062.9 2009 243,785 12,572 161,619 148,530 0.95% 1.54% 20.60% 4,451 3,164 5,930.3 18,908.6 Sacombank 2005 2006 2007 2008 2009 2004 2005 2006 2007 2008 2009 24,247 1,272 9,384 19,996 20.8 N/A N/A 44,645 1,654 17,014 33,606 60.3 2.00% 46.80% 85,392 6,258 31,811 55,283 134.5 3.30% 53.80% 105,306 7,767 34,833 64,217 228.6 2.70% 36.50% 167,881 10,106 62,358 86,919 0.81% 2.10% 31.80% 10,395 965 5,986 7,795 28.0 N/A N/A 14,456 1,882 8,425 10,479 45.9 N/A N/A 24,776 2,870 14,394 17,512 81.4 2.08% 17.41% 64,573 7,350 35,378 44,232 177.6 2.91% 25.64% 68,439 7,759 35,009 46,129 251.8 1.49% 13.14% 104,019 10,547 59,657 60,516 0.86% 1.79% 16.56% Net interest income total operating expense Operational income Interest income 350 182 282.1 855.7 514 291 391.6 1,355.0 2004 Items Total assets Total shareholder's equity Loans to customers Deposit from customers 2,728 1,591 2,560.6 10,497.8 2,801 1,809 2,838.2 9,613.9 286 183 198.0 699.9 435 251 306.1 1,032.9 8,267 532 5,017 6,297 N/A N/A 129 88 382.8 2006 2007 2008 2009 11,369 835 6,433 8,352 5.5 N/A N/A 216 117 28.6 657.7 18,324 1,947 10,207 13,141 46.1 1.74% 27.00% 352 187 358.6 983.4 33,710 6,295 18,452 22,906 73.5 1.78% 27.00% 685 354 628.8 1,753.7 48,248 12,884 21,232 30,877 376.3 1.74% 7.43% 1,320 603 969.2 4,196.6 65,448 13,354 38,382 38,766 0.99% 1.99% 8.65% 1,975 907 1,532.8 4,344.2 2009 Military Bank 2004 6,509 482 3,480 5,521 2005 8,215 637 4,300 6,070 664 409 611.3 1,647.8 1,152 741 1,582.0 3,383.0 1,147 1,270 1,109.9 7,161.1 2,303 1,639 2,174.9 7,137.8 Techcombank 2005 Bank Year 1,311 805 2,126.8 4,538.1 Eximbank Bank Year Items Total assets Total shareholder's equity Loans to customers Deposit from customers Provisions for loan losses ROA ROE Net interest income total operating expense Operational income Interest income 821 566 687.2 2,490.6 2006 2007 2008 13,529 1,366 5,906 10,440 29,624 3,550 11,613 17,785 44,346 4,677 15,740 27,163 69,008 6,888 29,141 39,978 2004 7,505 420 3,466 4,600 95.4 N/A N/A 177 90 107.0 442.3 2005 2006 2007 2008 2009 10,626 967 5,380 6,195 87.0 N/A N/A 351 155 286.1 790.2 17,326 1,762 8,811 9,566 114.2 1.89% 26.76% 457 224 356.5 1,207.5 39,542 3,573 20,486 24,477 N/A 1.99% 22.98% 925 425 709.7 2,326.0 59,361 5,616 26,019 39,931 N/A 2.28% 25.87% 1,744 904 1,600.3 6,213.7 92,582 7,324 41,580 62,347 1.22% 2.24% 26.26% 2,500 1,184 2,252.9 6,882.4 Provisions for loan losses ROA ROE Net interest income total operating expense Operational income Interest income 24.8 N/A N/A 142 49 104.0 301.8 82.3 N/A N/A 240 75 148.6 476.5 Source: Annual reports of sample commercial Banks 163.0 2.44% 27.78% 390 134 252.9 885.7 143.8 2.82% 24.70% 633 361 609.0 1,581.1 246.9 2.41% 24.50% 1,421 555 860.9 3,679.3 1.51% 2.66% 26.60% 1,838 784 1,505.1 4,050.4 APPENDIX 5: BANK'S FIGURES Table 1: Total Assets Year 2004 2005 2006 2007 2008 2009 Growth Rate 120,006 93,271 15,417 10,395 8,267 7,505 6,509 261,370 136,721 116,373 24,247 14,456 11,369 10,626 8,215 322,007 166,952 135,363 44,645 24,776 18,324 17,326 13,529 420,916 197,408 166,113 85,392 64,573 33,710 39,542 29,624 616,362 219,910 193,590 105,306 68,439 48,248 59,361 44,346 739,200 255,496 243,785 167,881 104,019 65,448 92,582 69,008 998,219 83.2% 107.6% 583.1% 558.4% 483.6% 690.9% 581.3% 3088.1% 2005 2006 2007 2008 2009 Growth Rate Bank Vietcombank Vietinbank ACB Sacombank Eximbank Techcombank Military Bank Total Average 182,749 158,083 73,815 47,776 30,894 37,824 28,539 559,679 Table 2: Total Shareholder's equity Year 2004 Bank Vietcombank Vietinbank ACB Sacombank Eximbank Techcombank Military Bank Total 7,181 4,909 706 965 532 420 482 15,194 8,416 5,072 1,272 1,882 835 967 637 19,081 11,127 5,607 1,654 2,870 1,947 1,762 1,366 26,333 13,552 10,647 6,258 7,350 6,295 3,573 3,550 51,224 13,316 12,336 7,767 7,759 12,884 5,616 4,677 64,354 16,710 12,572 10,106 10,547 13,354 7,324 6,888 77,501 85.4% 151.3% 1000.6% 704.1% 2323.6% 1236.4% 870.8% 6372.2% Average 11,717 8,524 4,627 5,229 5,974 3,277 2,933 42,281 Table 3: Loans to customers Year Bank Vietcombank Vietinbank ACB Sacombank Eximbank Techcombank Military Bank Total 2004 2005 2006 2007 2008 2009 Growth Rate 53,605 64,160 6,698 5,986 5,017 3,466 3,480 142,411 61,044 75,886 9,384 8,425 6,433 5,380 4,300 170,852 67,743 80,152 17,014 14,394 10,207 8,811 5,906 204,228 97,532 102,191 31,811 35,378 18,452 20,486 11,613 317,462 111,643 120,752 34,833 35,009 21,232 26,019 15,740 365,228 136,996 161,619 62,358 59,657 38,382 41,580 29,141 529,733 108.3% 88.2% 420.0% 484.8% 323.2% 650.8% 352.3% 2427.6% Average 88,094 100,793 27,016 26,475 16,621 17,624 11,697 288,319 Table 4: Deposits from customers Year Bank 2004 2005 2006 2007 2008 2009 Growth Rate Vietcombank Vietinbank ACB Sacombank Eximbank Techcombank Military Bank Total 88,503 64,702 13,046 7,795 6,297 4,600 5,521 190,463 109,637 78,791 19,996 10,479 8,352 6,195 6,070 239,520 119,779 99,683 33,606 17,512 13,141 9,566 10,440 303,727 141,589 112,693 55,283 44,232 22,906 24,477 17,785 418,964 157,494 121,634 64,217 46,129 30,877 39,931 27,163 487,445 169,072 148,530 86,919 60,516 38,766 62,347 39,978 606,130 78.0% 88.0% 392.2% 491.8% 390.3% 768.0% 392.0% 2600.4% Average 131,012 104,339 45,511 31,110 20,057 24,519 17,826 374,375 Table 5: Return on total assets Year Bank 2004 Vietcombank (*) Vietinbank (*) ACB Sacombank Eximbank (*) Techcombank Military Bank 2005 0.92% 0.22% 2.10% 1.71% 1.70% 1.16% 0.95% 0.38% 2.00% 1.89% 0.00 2.60% 1.48% Table 6: Return on Shareholder's equity Year 2004 2005 Bank Vietcombank Vietinbank ACB Sacombank Eximbank Techcombank Military Bank N/A N/A N/A N/A 44.30% 39.30% 18.78% 16.47% N/A N/A 31.71% 45.19% N/A N/A 2006 1.71% 0.66% 2.00% 2.08% 1.74% 1.89% 2.44% 2006 25.46% 15.61% 46.80% 17.41% 27.00% 26.76% 27.78% 2007 1.21% 1.01% 3.30% 2.91% 1.78% 1.99% 2.82% 2007 17.60% 18.78% 53.80% 25.64% 27.00% 22.98% 24.70% 2008 1.14% 1.35% 2.70% 1.49% 1.74% 2.28% 2.41% 2008 18.28% 21.20% 36.50% 13.14% 7.43% 25.87% 24.50% 2009 1.64% 1.54% 2.10% 1.79% 1.99% 2.24% 2.66% 2009 25.58% 20.60% 31.80% 16.56% 8.65% 26.26% 26.60% Average 06-08 1.43% 1.14% 2.53% 2.07% 1.81% 2.10% 2.58% Average 21.73% 19.05% 42.23% 18.19% 17.52% 25.47% 25.90% Table 7: Net interest income / total operating expenses Year 2004 2005 2006 Bank 2007 2008 2009 Average Vietcombank Vietinbank ACB Sacombank Eximbank Techcombank Military Bank 214.83% 199.16% 192.50% 156.49% 1.46 197.33% 289.70% 342.08% 165.16% 176.53% 172.86% 1.84 226.86% 320.28% 320.08% 165.67% 145.03% 162.24% 187.73% 204.05% 291.56% 251.88% 169.32% 162.94% 155.40% 193.60% 217.52% 175.52% 239.36% 145.02% 171.49% 90.29% 218.98% 192.95% 255.78% 186.00% 140.69% 154.77% 140.53% 217.76% 211.17% 234.43% 259.04% 164.17% 167.21% 146.30% 191.43% 208.32% 261.21% Table 8: Provision/loans Year Bank 2004 2005 2006 2007 2008 2009 Average Vietcombank Vietinbank ACB Sacombank Eximbank Techcombank Military Bank 1.55% 0.39% 0.47% 5.49% 0.71% Table 9: Loans to Deposits Year 2004 Bank Vietcombank Vietinbank ACB Sacombank Eximbank Techcombank Military Bank 2.20% 0.24% 0.22% 0.23% 0.00 1.62% 1.91% N/A 60.57% 99.16% 51.34% 76.80% 0.80 75.34% 63.04% 2005 55.68% 96.31% 46.93% 80.40% 0.77 86.84% 70.85% Source: Author's calculation from appendix 2.20% 0.08% 0.35% 0.57% 0.45% 1.30% 2.76% 2006 56.56% 80.41% 50.63% 82.20% 77.67% 92.11% 56.57% 2.16% 1.67% 0.42% 0.50% 0.40% 0.45% 1.24% 2007 68.88% 90.68% 57.54% 79.98% 80.56% 83.70% 65.29% 3.77% 1.78% 0.66% 0.72% 1.77% 0.60% 1.57% 2008 70.89% 99.27% 54.24% 75.89% 68.76% 65.16% 57.95% 3.01% 0.95% 0.81% 0.86% 0.99% 1.22% 1.51% 2009 81.03% 108.81% 71.74% 98.58% 99.01% 66.69% 72.89% 2.48% 0.94% 0.47% 0.56% 0.62% 1.78% 1.62% Average 65.60% 95.77% 55.40% 82.31% 80.45% 78.31% 64.43% APPENDIX 6: TOTAL OUTSTANDING LOANS OF CREDIT INSTITUTIONS figure at end of December 2009 unit in million VND, 1USD No A B 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 C D E Name of Bank State-owned Commercial Bank Joint-Stock Commercial Bank Vietinbank Vietcombank Maritime Bank Eximbank Sacombank SeAbank SCB Dong A Tienphong Bank HDB HCM HDB Ha Noi VIB Phuong Dong Gia Dinh Nam A Vietnam Tin Nghia Sai gon Cong Thuong De Nhat Phuong Nam Techcombank ACB VP Bank Bac A Military Bank Dai Tin Dai Duong (Ocean) Bao Viet My Xuyen An Binh Vietnam Thuong Tin Dai A Dau toan cau (GP) Viet A Petrolimex Sai gon - Ha Noi Nam Viet Kien Long Lien Viet Mien Tay (Western) Joint-Venture Bank Foreign Bank Other credit institutions Total loans of the systems Outstanding loans in VND 580,236,057 699,691,094 141,542,899 95,056,425 20,178,746 29,475,579 47,391,069 6,713,621 30,260,716 24,381,107 1,987,188 6,716,538 11,752,937 25,137,746 8,491,882 2,207,619 4,635,816 8,276,443 9,416,379 1,120,482 13,238,833 37,202,472 49,349,111 15,771,799 8,323,992 24,314,999 5,044,680 7,329,460 2,275,668 2,464,245 7,496,968 2,454,378 4,113,351 5,090,893 8,445,695 3,362,464 10,447,296 6,906,311 4,518,894 5,190,537 1,605,856 16,681,237 38,649,990 41,215,391 1,376,473,769 Outstanding loans in USD 3,904,936,855 7,591,712,747 1,159,638,772 2,464,343,272 246,867,602 481,308,018 428,338,260 134,281,272 44,485,749 293,414,967 54,947,551 49,921,510 123,809,176 248,796,652 13,721,703 4,700,310 18,243,519 92,132 17,840,389 177,511,168 427,087,080 520,587,199 24,061,702 3,068,458 218,958,916 423,068 89,760,955 12,375,979 7,536,367 8,400,600 5,508,136 32,863,145 121,970,953 21,722,781 89,800,631 33,179,605 4,813,878 6,490,632 840,640 526,742,282 5,119,331,306 687,099,531 17,829,822,721 Source: CIC, No.04/2010 APPENDIX 7: Total Vietnam Credit Institutions No A B 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 Name of Bank State-owned Commercial Bank Agribank BIDV MHB Chinh Sach Xa Hoi Joint-Stock Commercial Bank Vietinbank Vietcombank Maritime Bank Eximbank Sacombank SeAbank SCB Dong A Tienphong Bank HDB HCM HDB Ha Noi VIB Phuong Dong Gia Dinh Nam A Vietnam Tin Nghia Sai gon Cong Thuong De Nhat Phuong Nam Techcombank ACB VP Bank Bac A Military Bank Dai Tin Dai Duong (Ocean) Bao Viet My Xuyen An Binh No 34 35 36 37 38 39 40 41 42 43 C 44 45 46 47 48 49 D 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 Name of Bank Vietnam Thuong Tin Dai A Dau toan cau (GP) Viet A Petrolimex Sai gon - Ha Noi Nam Viet Kien Long Lien Viet Mien Tay (Western) Joint-Venture Bank Lao Viet VID Public INDOVINA SHINHANVINA VINASIAM Viet Nga Foreign Bank Korea Exechange Bank NATEXIS BANK ANZ VIETNAM Standard Chartered VN CHIFON BANK Calyon Bank BNP BANK Oversea Chinese Banking Corporation BANKOK BANK CITI BANK ABN-AMRO BANK MAY BANK UNITED OVERSEAS BANK DEUSTHCHE BANK HSBC VN Shinhan VN BANK OF CHINA No 67 68 69 70 71 72 73 74 75 76 77 78 79 E 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 Name of Bank Mizuho Corporate Bank Bank of Tokyo-Mitsuibishi UFJ Mega International Commercial Bank WOORI BANK China Trust Commercial Bank First Commercial Bank FAR EAST NATIONAL BANK CATHAY UNITED BANK Sumitomo Mitsui Banking HUA NAN COMMERCIAL BANK COMMONWEALTH BANK OF AUSTRALIA Taipei Fubon Commercial Bank Industrial Bank of Korea Other credit institutions Quy tin dung nhan dan TW Cty TC dau Cty TC Tau thuy Cty TC Cao Su Cty Cho thue TC quoc te VN Cty TC Buu dien Cty TC Det may Cty CT TC KEXIM Cty TC ANZ - V.Tracs Cty TC CP Dien luc Cty TC CP Song Da Cty CT TC quoc te Chailease Cty TC HANDICO Cty TC Than - Khoang san VN Cty TC Viet - SG Cty TC PRUDENTIAL VIETNAM Quy bao ve Moi truong Viet Nam Quy Dau tu phat trien thi Cty TC Toyota VN-TFSVn Cty TC CP Xi mang Cty TC PPF Viet Nam Source: CIC, No.04/2010 Software used: SPSS 17.0 Correlations V1 V1 Pearson Correlation V2 V2 Pearson Correlation Sig (2-tailed) N V4 V5 -.806* 095 695 -.763* 029 839 083 046 7 7 -.806* -.101 -.674 940** 830 097 002 Sig (2-tailed) N V3 029 7 7 Pearson Correlation 095 -.101 062 120 Sig (2-tailed) 839 830 895 797 7 7 Pearson Correlation 695 -.674 062 -.608 Sig (2-tailed) V3 083 097 895 7 7 -.763* 940** 120 -.608 046 002 797 147 7 7 N V4 N V5 Pearson Correlation Sig (2-tailed) N * Correlation is significant at the 0.05 level (2-tailed) ** Correlation is significant at the 0.01 level (2-tailed) .147 Software used: SPSS 17.0 Dependent variable: ROAA (V1) Independent variable: operational efficiency (V3), asset utilization (V4) Bank size (V5) Variables Entered/Removed Variables Entered Model Variables Removed Method V5, V3, V4a Enter a All requested variables entered Model Summary Adjusted R Model R Square Estimate R Square 828a Std Error of the 686 372 0042384 a Predictors: (Constant), V5, V3, V4 ANOVAb Model Sum of Squares df Mean Square Regression 000 000 Residual 000 000 Sig 2.187 268a 000 Total F a Predictors: (Constant), V5, V3, V4 b Dependent Variable: V1 Coefficientsa Standardized Unstandardized Coefficients Model B Std Error (Constant) 014 002 004 V4 348 V5 -4.810E-8 Beta t 011 V3 Coefficients a Dependent Variable: V1 Sig 1.236 304 144 435 693 428 336 813 476 000 -.575 -1.384 260 Dependent variable: Interest income size (V2) Independent variable: operational efficiency (V3), asset utilization (V4) Bank size (V5) Variables Entered/Removed Variables Entered Model Variables Removed Method V5, V3, V4a Enter a All requested variables entered Model Summary Adjusted R Model R Square Estimate R Square 969a Std Error of the 938 876 1.4953556E3 a Predictors: (Constant), V5, V3, V4 ANOVAb Model Sum of Squares Regression df Mean Square 1.017E8 3.390E7 6708264.816 Sig Total 15.161 026a 2236088.272 1.084E8 Residual F a Predictors: (Constant), V5, V3, V4 b Dependent Variable: V2 Coefficientsa Standardized Unstandardized Coefficients Model B (Constant) Std Error 6119.788 -1862.700 1361.256 V4 -97704.435 V5 059 Beta t 3944.519 V3 Coefficients a Dependent Variable: V2 Sig 1.551 219 -.201 -1.368 265 150895.684 -.119 -.647 563 012 892 4.829 017 ... gap, at least partially The study looks at financial performance in the banking sector in Vietnam Bank managers can understand its major banking activities that may increase the bank ranking and... framework for making comparison among seven leading joint stock commercial banks in Vietnam To gain better understanding the financial performance of seven leading joint stock commercial banks base... assess their financial performance Financial indicators and financial ratios are constructed from the bank financial reports to evaluate the performance of a commercial bank The study took into account