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CONTENT

Message from the Chairman

4-5

Vision, Mission, Core values

6-7

The Board of Directors

10

The Board of Supervisors

11

The Board of Management

12-13

10 Most Outstanding Events

14-15

Awards and Recognitions

16-17

Banking Activity Report in 2011

18-23

International Payments

24

International Relations and Global Capital Markets

25

Network

26

Postal Savings Business as a Part of LienVietPostBank

27

HR and Training

28-29

Brand Development

30

Information Technology

31

Products and Services

32-34

Risk Management

35-36

Typical Social and Charitable Activities

37

Development Orientation for 2012

38

Financial Statement 2011

39-75

Dear valued shareholders, customers, investors and employees, 2011 has been a turbulent and challeng- ing
Dear valued shareholders, customers, investors and employees, 2011 has been a turbulent and challeng- ing

Dear valued shareholders, customers, investors and employees,

2011 has been a turbulent and challeng- ing year for the economy and the bank- ing sector. Despite the difficulties, Lien- VietPostBank had a very successful year in every area thanks to the flexible and drastic measures and instructions made by the Board of Directors, and the great effort of management team and all em- ployees.

Although LienVietBank was a very young bank founded on 28th March 2008, Lien- VietBank pioneered in re-structuring activities in finance and banking indus- try, responding to the Government’s di- rection by the event that Vietnam Post

Corporation has contributed capital to the bank through the corporate value of its affiliate, the Vietnam Postal Savings Services Company (VPSC) and through cash on 1st July 2011. And as the result, LienVietBank changed its name to Lien- VietPostBank accordingly.

Thanks to this merger, LienVietPostBank has become the Joint-Stock Commercial Bank with the largest transaction net- work with more than 10,000 posts over the country. We consider it as a key fac- tor to reinforce our strategy to become a leading retail bank in Vietnam and “Now everyone can bank” with LienVietPost- Bank.

After more than 03 years of operating,

4

and “Now everyone can bank” with LienVietPost- Bank. After more than 03 years of operating, 4

Annual Report 2011

MESSAGE FROM THE CHAIRMAN "After more than 03 years of operating, LienVietPostBank has successfully restructured

MESSAGE FROM THE CHAIRMAN

"After more than 03 years of operating, LienVietPostBank has successfully restructured its organizational structure and set up its operational process and procedures and fulfilled its main targets at 31st December 2011 with chartered capital of VND 6,460 billion, total assets of nearly VND 60,000 billion, and about VND 1,100 billion for the net profit and improving divi- dend payout rate year on year".

LienVietPostBank has successfully restructured its organizational struc- ture and set up its operational pro- cess and procedures and fulfilled its main targets at 31st December 2011 with chartered capital of VND 6,460 billion, total assets of nearly VND 60,000 billion, and about VND 1,100 billion for the net profit and improv- ing dividend payout rate year on year.

LienVietPostBank achieved its suc- cess thanks to the support of the Communist Party, the Government, the Government agencies and au- thorities, the support and co-opera- tion of Vietnam Posts and Telecom- munications Group and Vietnam

Post Corporation, shareholders’ and customers’ trust and loyalty, and the dedication of all LienVietPostBank leaders and staffs. I strongly believe that with all those supports, in ad- dition to the solid foundation and positive signals from the Vietnam economy, LienVietPostBank will continue to be successful in 2012 in realizing its target of becoming a leading retail bank of Vietnam with- in the next 5 to 10 years.

On behalf of the Board of Directors, I would like to send my sincere grati- tude to leaders of the Communist Party, the Government authorities, ministries; Vietnam Posts and Tele- communications Group and Viet-

nam Post Corporation; sharehold- ers, customers and all leaders and employees of LienVietPostBank for all your continuous supports and contribution to the success of Lien- VietPostBank.

Best regards,

DUONG CONG MINH

and contribution to the success of Lien- VietPostBank. Best regards, DUONG CONG MINH Chairman Annual Report

Chairman

Annual Report 2011

and contribution to the success of Lien- VietPostBank. Best regards, DUONG CONG MINH Chairman Annual Report

5

VISION, MISSION, CORE VALUES Vision To become a leading retail bank in Vietnam- Now Everyone

VISION, MISSION, CORE VALUES

VISION, MISSION, CORE VALUES Vision To become a leading retail bank in Vietnam- Now Everyone can

Vision

To become a leading retail bank in Vietnam- Now Everyone can Bank

Mission

To offer customers and society a wide range of products and services with high quality; To create the maximum benefits for the Bank and the Society.

Core values

Discipline, Creativity and Humanity

In order to realize the full potential of leaders, management team and all staffs of LienVietPostBank for short- term and long- term targets, our executive and senior leaders are fully aware of the importance of building, improving and promoting corporate culture of LienVietPostBank as a foundation and motivation for the continuous, efficient, stable and sustainable development of the Bank.

6

as a foundation and motivation for the continuous, efficient, stable and sustainable development of the Bank.

BUSINESS STRATEGIESBUSINESS STRATEGY To be a Retail and Universal Bank. BUSINESS PHILOSOPHY: Core perception: o No

BUSINESS STRATEGIES BUSINESS STRATEGY To be a Retail and Universal Bank. BUSINESS PHILOSOPHY: Core perception: o
BUSINESS STRATEGIES BUSINESS STRATEGY To be a Retail and Universal Bank. BUSINESS PHILOSOPHY: Core perception: o
BUSINESS STRATEGIES BUSINESS STRATEGY To be a Retail and Universal Bank. BUSINESS PHILOSOPHY: Core perception: o

BUSINESS STRATEGY

To be a Retail and Universal Bank.

BUSINESS PHILOSOPHY:

Core perception:To be a Retail and Universal Bank. BUSINESS PHILOSOPHY: o No man, No project. o No

o

No man, No project.

o

No customer, No bank.

o

No Ethic-Trust- Talent- Vision, No LienVietPostBank.

Shareholders: Are the foundation of the Bank.o No Ethic-Trust- Talent- Vision, No LienVietPostBank. Customers: Are the benefactors of the Bank. Employees: Are

Customers: Are the benefactors of the Bank.Shareholders: Are the foundation of the Bank. Employees: Are the strength of the Bank. Partners: Are

Employees: Are the strength of the Bank.of the Bank. Customers: Are the benefactors of the Bank. Partners: Are companions of the Bank.

Partners: Are companions of the Bank.of the Bank. Employees: Are the strength of the Bank. Products and services: Are continuously revised

Products and services: Are continuously revised to offer what customers want instead of what are available in the Bank.strength of the Bank. Partners: Are companions of the Bank. Business awareness: Fully comply with laws

Business awareness: Fully comply with laws and regulations; Combine corporate social responsibilities into business.Are continuously revised to offer what customers want instead of what are available in the Bank.

Annual Report 2011

Fully comply with laws and regulations; Combine corporate social responsibilities into business. Annual Report 2011 7

7

ORGANIZATION STRUCTURE OF LIENVIETPOSTBANK’S HEADQUARTERS SHAREHOLDER MEETING BOARD OF SUPERVISORS BOARD OF DIRECTORS

ORGANIZATION STRUCTURE OF LIENVIETPOSTBANK’S HEADQUARTERS

SHAREHOLDER MEETING BOARD OF SUPERVISORS BOARD OF DIRECTORS Strategy, Technology & International Relations
SHAREHOLDER MEETING
BOARD OF SUPERVISORS
BOARD OF DIRECTORS
Strategy,
Technology &
International Relations
Business Committee
Committee
Human Resources, Credit &
Cost Management Committee
ALCO, Legislation, Risk Management &
AML Committee
Headquarters Credit
Cost Management
Banking – Postal Services
Co-ordination Council
International
ALCO Council
Strategy Council
Technology Council
HR Council
Business Council
Council
Council
Relations Council
Legislation, Risk Management
& AML Council
Northern Credit
Southern Credit
Council
Council
Branch Credit
Branch Credit
Board
Board
BOARD OF MANAGEMENT
SUPERVISION
BUSINESS DEVELOPMENT SECTION
CONSULTING SECTION
BACK OFFICE SECTION
SECTION
Network
Big Corporate
International
Legislation,
Card &
PTO
Southern
Development
HR
Northern
Treasury
Relations
& Global Capital
Markets Division
Product
Internal Audit
& Private
E-banking
Division
Division
Banking
Division
Division
Risk
Management
& AML Division
Credit Review
Finance
Trade Service
PR & Marketing
Division
Administration
Management
& Organizational
Management
IT Division
Representative
Representative
Division
Division
Division
Division
Division
Management
O
ce
O
ce
Division
Division
Division
Private
Network
Capital
PTO Service &
Financial
Product &
Evaluation
International
Core Banking
Sales Dept.
Global Capital
Legislation
Development &
HR Management
Administration
Banking
Management
PR Dept.
Back up Dept.
Markets Dept.
Dept.
Dept.
Product
Management
Dept.
Accounting
Service Dept.
Basic Construction
Payment Dept.
Dept.
Dept.
Dept.
Dept.
Dept.
Dept.
Dept.
FI &
Northern Credit
Northern
Data Base
Planning &
Periodical
Card Operation
Big Corporate
Capital Trading
Sales Support
Domestic
Risk Management
Statistics &
International
Credit Review
Planning & PTO
Organizational
Training Dept.
Management
Marketing Dept.
Back - up Dept.
Dept.
& Debt
Audit Dept.
Dept.
Banking Dept.
Dept.
Management Dept.
ALM Dept.
Payment Dept.
Relations Dept.
Handling Dept.
Dept.
Network
Development
Dept.
Dept.
Southern Credit
Research &
Southern
Regular
E-banking
Customer
ODA Servicing
Risk Management
Hardware
Development
Credit Review
Supervision
Dept.
& Debt
Services Dept.
Dept.
Dept.
Dept.
Handling Dept.
Dept.
Dept.
Operational Risk,
Network
General Support
Market
PTO Internal
Infrastructure
Dept.
Risk Management
& AML Dept.
Audit Dept.
& Security Dept.
Regional
Research &
Representative
Development
o
ce
Dept.
Technique and
Operational Center
Branches
Postal Savings Branches
A
liates
Support Dept.
PTO
Administration
Customer Service
Credit
Dept.
Dept.
Management Dept.
Accounting
Cash - Management
Dept.
Management
Note:
Dept.

9

Cash - Management Dept. Management Note: Dept. 9 ALCO: Assets-Liabilities Committee ALM: Assets –

ALCO: Assets-Liabilities CommitteeCash - Management Dept. Management Note: Dept. 9 ALM: Assets – Liabilities Management AML: Anti Money

ALM: Assets – Liabilities ManagementNote: Dept. 9 ALCO: Assets-Liabilities Committee AML: Anti Money Laundering Dept.: Department E-Banking:

AML: Anti Money LaunderingCommittee ALM: Assets – Liabilities Management Dept.: Department E-Banking: Electronic Banking FI:

Assets – Liabilities Management AML: Anti Money Laundering Dept.: Department E-Banking: Electronic Banking FI:

Dept.: Department

E-Banking: Electronic BankingManagement AML: Anti Money Laundering Dept.: Department FI: Financial Institutions HR: Human Resources IT:

FI: Financial InstitutionsLaundering Dept.: Department E-Banking: Electronic Banking HR: Human Resources IT: Information Technology ODA: Official

HR: Human ResourcesE-Banking: Electronic Banking FI: Financial Institutions IT: Information Technology ODA: Official Development

IT: Information TechnologyBanking FI: Financial Institutions HR: Human Resources ODA: Official Development Assistance PR: Public Relations

ODA: Official Development AssistanceInstitutions HR: Human Resources IT: Information Technology PR: Public Relations PTO: Post Transaction Offices Annual

Information Technology ODA: Official Development Assistance PR: Public Relations PTO: Post Transaction Offices Annual

PR: Public Relations

PTO: Post Transaction OfficesHuman Resources IT: Information Technology ODA: Official Development Assistance PR: Public Relations Annual Report 2011

Annual Report 2011

MR. DUONG CONG MINH

Chairman of the Board of Directors President of the Strategy, Technology and Business Committee

Bachelor of Economics in Asset Valuation – University of Economic Planning, 1984 (now called National Economics University).

Planning, 1984 (now called National Economics University). THE BOARD OF DIRECTORS MR. NGUYEN DUC HUONG Vice

THE BOARD OF DIRECTORS

National Economics University). THE BOARD OF DIRECTORS MR. NGUYEN DUC HUONG Vice Chairman of the Board

MR. NGUYEN DUC HUONG

Vice Chairman of the Board of Directors President of the ALCO, Legislation, Risk Management and Anti-Money Laundering Committee

PhD in Economics - Finance and Monetary Cash Flow Department - Banking Academy, 2009.

Mr. Nguyen Duc Huong has had 30 year experience in banking and finance.

10

Huong has had 30 year experience in banking and finance. 10 MR. TRAN VIET TRUNG Member

MR. TRAN VIET TRUNG

Member of the Board of Directors President of the International Relations Committee

Bachelor of Mathematics - Budapest University, Hungary, 1981.

Bachelor of Business Administration – Amos Tuck School of Business Administration of Dartmouth University, USA, 1996.

MR. NGUYEN DUC CU

Member of the Board of Directors President of the Human Resources, Credit and Cost Management Committee

Bachelor of Commercial Economics – Vietnam Commercial University, 1978.

MR. NGUYEN VAN HUYNH

Member of the Board of Directors President of the Southern Credit Council

Bachelor of Economics – University of Economics Ho Chi Minh City, 1978.

Mr. Nguyen Van Huynh has had 17 year experience in banking and finance.

MR. NGUYEN DINH THANG

Member of the Board of Directors President of the Technology Committee

Bachelor of Economics in Information Processing - Economic Mathematics Faculty - National Economics University, 1979.

MR. DO NGOC BINH

Member of the Board of Directors President of the Banking-Postal Savings Co-ordination Council

Bachelor of Foreign Language (in French) – the College of Foreign Languages, 1980

Bachelor of Post-Office Exploitation – the University of Information Communication Technology, 1986.

Mr. Do Ngoc Binh became a Board member of Lien Viet Post Joint Stock Commercial Bank after Vietnam Post Corporation had contributed capital to LienVietBank through corporate value of its affiliate – the Vietnam Postal Savings Services Company and through cash.

Annual Report 2011

THE BOARD OF SUPERVISORS MR. PHAM DOAN SON Head of the Board of Supervisors Master

THE BOARD OF SUPERVISORS

MR. PHAM DOAN SON Head of the Board of Supervisors

Master of Business Administration - IMPAC Univer- sity, USA; Bachelor - Hanoi Finance & Accounting University (now known as Academy of Finance).

Mr. Pham Doan Son has had 18 year experience in banking and finance.

Doan Son has had 18 year experience in banking and finance. MR. NGUYEN VAN HUNG CUONG

MR. NGUYEN VAN HUNG CUONG Member of the Board of Supervisors

Member of the Board of Supervisors Bachelor of Economics in Accounting – Ho Chi Minh City Finance & Accounting University (now called University of Economics Ho Chi Minh City).

Mr. Nguyen Van Hung Cuong has had 22 year experience in accounting and finance.

Annual Report 2011

experience in accounting and finance. Annual Report 2011 MR. TRAN THANH TUNG Member of the Board

MR. TRAN THANH TUNG Member of the Board of Supervisors

Bachelor of Economics in Banking and Finance – Banking Academy.

Mr. Tran Thanh Tung has had 20 year experience in banking and finance .

Tung has had 20 year experience in banking and finance . MRS. NGUYEN THI LIEN Member

MRS. NGUYEN THI LIEN Member of the Board of Supervisors

Bachelor of Economics in Banking - Banking University of Ho Chi Minh City.

Mrs. Nguyen Thi Lien has had 44 year experience in banking and finance.

- Banking University of Ho Chi Minh City. Mrs. Nguyen Thi Lien has had 44 year

11

THE BOARD OF MANAGEMENT Mr. Ho Nam Tien Deputy CEO Head of PR & Marketing

THE BOARD OF MANAGEMENT

THE BOARD OF MANAGEMENT Mr. Ho Nam Tien Deputy CEO Head of PR & Marketing Division

Mr. Ho Nam Tien

Deputy CEO Head of PR & Marketing Division

Master in Banking.

Mr. Ho Nam Tien has had 19 year experience in banking and finance.

Nam Tien has had 19 year experience in banking and finance. Mrs. Nguyen Thu Hoa Deputy

Mrs. Nguyen Thu Hoa

Deputy CEO Head of Big Corporate and Private Banking Division

Master of Applied Finance.

Mrs. Nguyen Thu Hoa has had 10 year experience in banking and finance.

Thu Hoa has had 10 year experience in banking and finance. Mr. To Van Chanh Deputy

Mr. To Van Chanh

Deputy CEO in charge of South East Region

Bachelor of Economics; Bachelor of Politics.

Mr. To Van Chanh has had 35 year experience in banking and finance.

Mr. Doan Van Thang Mrs. Nguyen Thi Bich Loc Mr. Nghiem Sy Thang Deputy CEO
Mr. Doan Van Thang Mrs. Nguyen Thi Bich Loc Mr. Nghiem Sy Thang Deputy CEO
Mr. Doan Van Thang Mrs. Nguyen Thi Bich Loc Mr. Nghiem Sy Thang Deputy CEO

Mr. Doan Van Thang

Mrs. Nguyen Thi Bich Loc

Mr. Nghiem Sy Thang

Deputy CEO Head of Legislation, Risk management and Anti-Money Laundering Division

Deputy CEO Head of Network Development and Organizational Management Division Head of HR Management Division

Deputy CEO Head of IT Division

PhD in Finance & Monetary Cash Flow.

Master of Business Administration; Bachelor of Foreign languages: English and Russian; Bachelor of Banking and Finance.

Bachelor of IT.

Mr. Doan Van Thang has had 25 year experience in banking and finance.

Mrs. Nguyen Thi Bich Loc has had 16 year experience in banking and finance.

Mr. Nghiem Sy Thang has had 12 year experience in IT and 8 year experience in banking and finance.

12

Mr. Nghiem Sy Thang has had 12 year experience in IT and 8 year experience in

Annual Report 2011

MR. LE HONG PHONG

CEO

PhD in Economics Bachelor of Laws

Mr. Le Hong Phong has had 26 year experience in banking and finance

Hong Phong has had 26 year experience in banking and finance Mrs. Nguyen Thi Gam Deputy
Hong Phong has had 26 year experience in banking and finance Mrs. Nguyen Thi Gam Deputy

Mrs. Nguyen Thi Gam

Deputy CEO Chief Accountant Head of Finance Division

Mrs. Nguyen Anh Van

Deputy CEO Head of Treasury Division

Master of Financial Control; Bachelor of Economics; Bachelor of Laws.

Mrs. Nguyen Thi Gam has had 19 year experience in banking and finance.

Master in Banking and Finance; Bachelor of Laws specializing in International Laws.

Mrs. Nguyen Anh Van has had 17 year experience in banking and finance.

Anh Van has had 17 year experience in banking and finance. Mr. Nguyen Van Gam Deputy
Anh Van has had 17 year experience in banking and finance. Mr. Nguyen Van Gam Deputy
Anh Van has had 17 year experience in banking and finance. Mr. Nguyen Van Gam Deputy

Mr. Nguyen Van Gam

Deputy CEO Head of Postal Transaction Office Management Division

Ms. Nguyen Thi Thanh Son

Deputy CEO Head of International Relations and Global Capital Markets Division

Mr. Vu Quoc Khanh

Deputy CEO Head of Credit Appraisal Division

Bachelor of Mechanical and Electronic Engineering.

Mr. Nguyen Van Gam was appointed to be the Deputy CEO of Lien Viet Post Joint Stock Commercial Bank after the Vietnam Post Corporation had contributed capital to LienVietBank through corporate value of its affiliate – the Vietnam Postal Savings Services Company and through cash.

Annual Report 2011

Master of Business Administration Bachelor of Economics.

Ms. Nguyen Thi Thanh Son has had 7 year experience in banking and finance.

Bachelor of Business Administration.

Mr. Vu Quoc Khanh has had 10 year experience in banking and finance.

and finance. Bachelor of Business Administration. Mr. Vu Quoc Khanh has had 10 year experience in

13

MOST OUSTANDING EVENTS Received the 2011 Best M&A award as the pioneer in the commercial

MOST OUSTANDING EVENTS

Received the 2011 Best M&A award as the pioneer in the commercial bank restructuring in Vietnam In 2011, The Prime Minister and State Bank Governor approved the capital contribution of Vietnam In 2011, The Prime Minister and State Bank Governor approved the capital contribution of Vietnam Post Corporation (Vietnam Post) to LienVietBank through corporate value of its affiliate - the Vietnam Postal Savings Services Company (VPSC) and through cash. Consequently, we changed our name to Lien Viet Post Joint Stock Commercial Bank (LienVietPostBank). This

is seen as an important event binding 02 big brands:

Vietnam Post Corporation, a 66-year well-established brand and LienVietBank, a 3- year fast growing and highly- recognized brand. It is also considered as the milestone

in the development of LienVietPostBank to become “Now

Everyone can Bank”. The merger between LienVietBank and Vietnam Post Corporation (Vietnam Post) was awarded the Best M&A in Vietnam in 2010-2011 at the 3rd M&A Forum in Vietnam for the Best private equity transaction, organized by the Investment Review and AVM Vietnam Company.

Expanded the network with more than 10,000 transaction officesorganized by the Investment Review and AVM Vietnam Company. A network with more than 10,000 transaction

A network with more than 10,000 transaction points in 63

provinces was created through the capital contribution

of Vietnam Post to LienVietBank. As a result, we became

a commercial bank with the largest network nationwide, similar to Agribank.

Posted net profit in 2011 of VND 1,100 billion and total assets of VND 60,000 billionwith the largest network nationwide, similar to Agribank. After more than 3 years of operation, the

After more than 3 years of operation, the total asset increased by almost 9 times, the chartered capital nearly doubled with accumulative profit over three years of about VND 3,000 billion. Notably, the net profit for 2011 was nearly VND 1,100 billion and the total assets increased to nearly VND 60,000 billion.

Implemented the Government policy for development of agriculture and rural sector by reducing 1% of the lending rate for farmers

We continued to implement preferential lending policies for agriculture businesses, farmers and households by reducing 1% lending rate for agriculture loans (compared to other banks’ offering rates) and increasing proportion of agriculture and rural loans to more than 40% of the total outstanding loans in 2011, contributing to the implementation of agriculture and rural credit expanding policy in agriculture and rural sector of the Government and State Bank of Vietnam (SBV).

Became the first joint-stock commercial bank to be selected as an ODA loan servicing bank

We were the first commercial bank to be chosen to service Official Development Assistance (ODA) loans by fulfilling strict requirements of 2 main sponsors – the World Bank and the Asian Development Bank (ADB) in addition to the required procedures of the SBV.

World Bank and the Asian Development Bank (ADB) in addition to the required procedures of the
World Bank and the Asian Development Bank (ADB) in addition to the required procedures of the

14

World Bank and the Asian Development Bank (ADB) in addition to the required procedures of the

Annual Report 2011

Participated in the Global Trade Finance Program (GTFP) of the IFC We participated in the
Participated in the Global Trade Finance Program (GTFP) of the IFC We participated in the

Participated in the Global Trade Finance Program (GTFP) of the IFC

We participated in the Global Trade Finance Program (GTFP) of the International Finance Corporation (IFC), a member of the World Bank Group. As a result, we had the opportunity to co-operate with more than 400 big banks in the region and over the world and to improve our ability to finance importers and exporters.

to improve our ability to finance importers and exporters. system are now integrated into the Smartlink

system are now integrated into the Smartlink ATM network. Through the connection to the widest switching system of e-card in Vietnam, our customers will promptly and easily withdraw money, check account balances, and print account statements, etc. There are more than 16,600 ATMs of alliance members, which accounts for 98% of the total ATMs in Vietnam.

Founded scholarship funds to encourage education in cities and provinceswhich accounts for 98% of the total ATMs in Vietnam. In 2011, we established and sponsored

In 2011, we established and sponsored the Study Encouragement Funds in some cities and provinces hoping to help country’s talents to shine. The first Study Encouragement Funds have been set up in some provinces, such as: Pham Van Tra Study Encouragement Fund in Bac Ninh, Ancestral land Study Encouragement Fund in Phu Tho, Luong The Vinh Study Encouragement Fund in Nam Dinh, Chu Van An Study Encouragement Fund in Ha Noi and Nguyen Dan Que Study Encouragement Fund in Thanh Hoa.

By 31/12/2011, we had donated around VND 16 billion.

Ranked 87th in VNR500’s a list of top 500 largest Vietnamese private enterprisesHoa. By 31/12/2011, we had donated around VND 16 billion. We ranked the 87th in the

We ranked the 87th in the List of Top 500 Vietnamese largest private enterprises prepared by the Vietnam Report Joint-stock Company and the Vietnamnet e-newspaper. This is the fifth annual report that objectively ranks and reports the performance of the largest private enterprises in Vietnam. The paper recognizes and honors the contribution of Vietnamese business community. It was a milestone in the development of VNR500 table league accompanied closely enterprises.

of VNR500 table league accompanied closely enterprises. Received “The Best International Payment

Received

“The

Best

International

Payment

Service

Provider 2011” Award

We are honored to receive “The Best International Payment Service Provider 2011” award from Wells Fargo, the third biggest bank in US. This award recognizes the professionalism in International payment and remittance characterized by highly automatic system which helps to save time and costs for customers.

alliance

card - partnership and

development.

We officially became the 31st member of the Smartlink Alliance on 30th September 2011. As a result, our ATM

the 31st member of the Smartlink Alliance on 30th September 2011. As a result, our ATM

Smartlink

the 31st member of the Smartlink Alliance on 30th September 2011. As a result, our ATM
the 31st member of the Smartlink Alliance on 30th September 2011. As a result, our ATM
the 31st member of the Smartlink Alliance on 30th September 2011. As a result, our ATM
the 31st member of the Smartlink Alliance on 30th September 2011. As a result, our ATM

Annual Report 2011

the 31st member of the Smartlink Alliance on 30th September 2011. As a result, our ATM

15

AWARDS AND RECOGNITIONS 16 Annual Report 2011

AWARDS AND RECOGNITIONS

AWARDS AND RECOGNITIONS 16 Annual Report 2011
AWARDS AND RECOGNITIONS 16 Annual Report 2011
AWARDS AND RECOGNITIONS 16 Annual Report 2011
AWARDS AND RECOGNITIONS 16 Annual Report 2011

16

AWARDS AND RECOGNITIONS 16 Annual Report 2011

Annual Report 2011

Certificate of being “The Best International Payment Service Provider in 2011” awarded by Wells Fargo.Certificate and cup for the Best Private Equity Transaction in Vietnam 2010-2011 for the transaction

Certificate and cup for the Best Private Equity Transaction in Vietnam 2010-2011 for the transaction between Lien Viet Bank and Vietnam Postal Corporation.Payment Service Provider in 2011” awarded by Wells Fargo. Certificate for being in the top 500

Certificate for being in the top 500 largest enterprises in Vietnam.between Lien Viet Bank and Vietnam Postal Corporation. Certificate of Merit for outstanding achievement in the

Certificate of Merit for outstanding achievement in the implementation of Poverty and Unemployment Reduction Policy in Ha Giang Province in the period between 2006 and 2010.for being in the top 500 largest enterprises in Vietnam. Certificate of Achievement in Investment –

Certificate of Achievement in Investment – Health Career Socialization – Culture – Education in Cam Khe province, Phu Tho District.in Ha Giang Province in the period between 2006 and 2010. Certificate of Merit for outstanding

Certificate of Merit for outstanding achievement in supporting education career development in Kon Tum province.Culture – Education in Cam Khe province, Phu Tho District. Certificate for accompanying Vietnamese Sport Federation

Certificate for accompanying Vietnamese Sport Federation to the 26th SEA Games.of Merit for outstanding achievement in supporting education career development in Kon Tum province. Annual Report

in Kon Tum province. Certificate for accompanying Vietnamese Sport Federation to the 26th SEA Games. Annual

Annual Report 2011

in Kon Tum province. Certificate for accompanying Vietnamese Sport Federation to the 26th SEA Games. Annual
in Kon Tum province. Certificate for accompanying Vietnamese Sport Federation to the 26th SEA Games. Annual

17

BANKING ACTIVITY REPORT IN 2011 The capital contribution of Vietnam Post Corporation (Vietnam Post) to

BANKING ACTIVITY REPORT IN 2011

The capital contribution of Vietnam Post Corporation (Vietnam Post) to LienVietBank, was one of the most significant events happened to our bank in 2011 which had a comprehensive impact to the bank.

18

in 2011 which had a comprehensive impact to the bank. 18 On March 28th 2010, the

On March 28th 2010, the proposal of Vietnam Post Corporation (Vietnam Post - a member of Vietnam Post and Telecommunications Group - VNPT) to contribute capital to LienVietBank through the value of the Vietnam Postal Savings Service Company (VPSC) and through cash was passed at the shareholders’ meeting in Da Nang City.

On 21st February 2011, the Prime Minister of the Socialist Republic of Vietnam signed the Official Letter Number 244/ TTg-DMDN approving the capital contribution from Vietnam Post to LienVietBank through the value of VPSC and through cash. The Official Letter also allowed us to change our name to Lien Viet Post Joint Stock Commercial Bank.

By the third quarter of 2011, we completed the merger process and started to receive capital contribution from Vietnam Post leading to important changes to our bank. The changes are as followed:

1. Rename event: We changed our name to LienVietPostBank, marking the birth of the first post bank model in Vietnam. The

Annual Report 2011

name change carries the leaders’ vision of "two brands, million values". The combination of two
name change carries the leaders’ vision of "two brands, million values". The combination of two

name change carries the leaders’ vision of "two brands, million values". The combination of two well-reputable brands, Vietnam Post and LienVietBank created massive impact to all customers.

2. Increase in chartered capital: As a result of Vietnam

Post’s capital contribution through the value of Vietnam Postal Savings Service Company (VPSC) and through cash, the Bank’s chartered capital increased from VND

5,650 billion to VND 6,460 billion as of 6th January 2012. Vietnam Post also became one of the main shareholders of the bank (besides Him Lam Corporation, Saigon Trading Group and Southern Airports Services Company).

3. Increase in total assets: The postal savings network of

VPSC contributed VND 7,000 billion to our total deposit, as a result, our total assets increased to VND 56,132 billion as of 31st December 2011. We took over all the VPSC’s staffs and assets as well as the rights and obligations to more than 400,000 customers.

4.

the Vietnam

Operational

orientation:

capital

The

legal

Post’s

contribution

foundation

is

the

of

master

strategic cooperation agreement between VNPT and LienVietBank and the 50-year-co-operational contract between LienVietBank and Vietnam Post. According to these agreements, LienVietPostBank acts as an exclusive bank in providing financial and banking services using the distribution channels of Vietnam Post. Our goal is to become a leading retail bank in Vietnam and “Now everyone can bank” with LienVietPostBank .

5. Network expansion: With the merger, LienVietPostBank has the right to use VPSC’s network which has been developed for more than 10 years to offer banking and financial services and products. With the postal network of more than 10,000 PTOs in 63 cities/ provinces and over 10,000 wards in Vietnam, LienVietPostBank became the bank with the largest network in Vietnam along side with Agribank.

From 2012 onwards, we will co-operate with Vietnam Post in multi-sectors in order to enhance the benefits for both parties.

Annual Report 2011

co-operate with Vietnam Post in multi-sectors in order to enhance the benefits for both parties. Annual

19

PERFORMANCE HIGHTLIGHTS AND KEY FINANCIAL RATIOS

Unit: VND billion

A.

PERFORMANCE HIGHLIGHTS

2008

2009

2010

2011

Total Assets

7,453

17,367

34,985

56,132

Shareholders’ Equity

3,447

3,828

4,105

6,594

Chartered Capital

3,300

3,650

3,650

6,010

Total deposits

3,801

13,399

30,421

48,148

Total loans and advances

2,674

5,983

10,114

12,757

Net operating income before provisions and impairment charges on loans

449

569

816

1,161

Profit before tax

444

540

759

1,086

Profit after tax

444

540

682

977

 

Unit: %

B.

KEY FINANCIAL RATIOS

2008

2009

2010

2011

Returns on average assets (ROAA)

5.96

4.35

2.61

2.14

Returns on average equity (ROAE)

12.88

14.85

17.22

18.26

Non-performing loans (NPL)

0.00

0.28

0.42

2.14

Dividend payout (%/year)

9.00

13.00

15.00

15.00

TOTAL ASSETS

As of 31st December 2011, our total assets had reached VND 56,132 billion, increased 60% or VND 22,147 billion compared to the previous year. After 4 years of operation, we have increased significantly in total assets, joining the group with fast total asset development and paving the way to become one of top 10 leading commercial banks in Vietnam.

TOTAL EQUITY

The bank was established in 2008 with the total equity of VND 3,447 billion. In 2011, after four- year- operation, we witnessed a significant increase in total equity to VND 6,594 billion, equivalent to 1.6 times of that of 2010 thanks to the capital contribution of our strategic shareholder VPSC. The impressive growth of equity and total assets are results of our sustainable efforts.

20

and total assets are results of our sustainable efforts. 20 VND billion   60,000   56,132

VND billion

 
 

60,000

60,000   56,132
 

56,132

50,000

50,000
50,000

40,000

40,000   34,985
 

34,985

30,000

30,000
30,000

20,000

20,000   17,367
 

17,367

10,000

7,453
7,453
10,000 7,453
10,000 7,453

VND billion

 

2008

2009

2010

2011

7,453 VND billion   2008 2009 2010 2011 9,000 7,500   6,594 6,000 4,500   3,447

9,000

9,000

7,500

7,500   6,594
 

6,594

6,000

4,500

6,000 4,500   3,447 3,828 4 , 1 0 5
6,000 4,500   3,447 3,828 4 , 1 0 5
 

3,447

3,828

4,105

4 , 1 0 5
6,000 4,500   3,447 3,828 4 , 1 0 5

3,000

3,000
3,000
3,000

1,500

1,500  
 
   
   
 

2008 2009

2010

2011

Annual Report 2011

1.3. PROFIT

VND billion

VND billion  
 
 
 

1,200

  1,200
   

1,086

 

1,000

  1,000
  1,000

800

800   759
 

759

600

600   540  
 

540

600   540  
 
   

444

    444
 

400

  400  
  400  
 

200

200
 

2008

2009

2010

2011

   

ROAA

 

%

 
2009 2010 2011     ROAA   %     7.00     5.95   6.00
2009 2010 2011     ROAA   %     7.00     5.95   6.00
 

7.00

 
    5.95
 

5.95

 

6.00

  6.00  
  6.00  
 

5.00

4.35

4.00

4.00  
4.00  
 

3.00

3.00   2.61 2.14
 

2.61

2.14

2.00

2.00  
2.00  
 
2.00  
2.00  

1.00

  3.00   2.61 2.14 2.00   1.00 PROFIT BEFORE TAX At the end of 2011,

PROFIT BEFORE TAX

At the end of 2011, profit before tax stood at VND 1,086 billion or an increase of 43.08% in comparison with 2010. The accumulated profit from 2008 to 2011 was VND 2,829 billion which in our view is a

solid foundation for our development and growth in the future. It is a remarkable achievement taking in consideration the difficult business environment in

2011

ROAE

20.00

15.00

10.00

5.00

%

business environment in 2011 ROAE 20.00 15.00 10.00 5.00 % 12.87 14.85 17.21 18.26 2008 2009

12.87

12.87 14.85 17.21 18.26

14.85

12.87 14.85 17.21 18.26

17.21

18.26

12.87 14.85 17.21 18.26

2008

2009

2010

2011

VND billion

2008

2009

2010

2011

TOTAL DEPOSITS

 

70,000

70,000
TOTAL DEPOSITS   70,000 DEPOSITS BY MARKETS  

DEPOSITS BY MARKETS

 
 

60,000

60,000
 
 

48,148

50,000

50,000
 

30,421

  30,421   40,000    
 

40,000

40,000
   
30,000    

30,000

30,000
   
 

13,399

 

20,000

20,000
 
 

3,081

3,081   10,000      
 

10,000

10,000
     
 
   
 
   

2008

2009

2010

2011

2008

2009

2010

2011

 
Deposits from Interbank
Deposits from
Interbank

953

5,084

14,982

21,485

Deposits from Customers
Deposits from
Customers

2,848

8,315

15,439

26,663

2. CAPITAL MOBILIZATION

VND billion

 
 
 

70,000

70,000

60,000

60,000

50,000

50,000

40,000

40,000

30,000

30,000

20,000

20,000

10,000

Annual Report 2011

VND billion   70,000 60,000 50,000 40,000 30,000 20,000 10,000 Annual Report 2011 21

21

TYPE OF CAPITAL MOBILIZATION

VND billion

30,000 25,000 20,000 15,000 10,000 5,000 2008 2009 2010 2011 Amount due to the State
30,000
25,000
20,000
15,000
10,000
5,000
2008
2009
2010
2011
Amount due to the State Bank
of Vietnam
953 2,848
1,276
3,808
7,303
1,012
2,601
12,381
12,314
3,125
1,000
20,485
25,658
1,005

Borrowings from Credit Institutions2,601 12,381 12,314 3,125 1,000 20,485 25,658 1,005 Deposits of Customers Other borrowings & entrusted funds

Deposits of Customers20,485 25,658 1,005 Borrowings from Credit Institutions Other borrowings & entrusted funds and valuable papers

Other borrowings & entrusted funds and valuable papers issuedBorrowings from Credit Institutions Deposits of Customers TOTAL DEPOSITS BY SEGMENTS VND billion 20,000 15,000

TOTAL DEPOSITS BY SEGMENTS VND billion 20,000 15,000 10,000 5,000 2008 2009 2010 2011 2,190
TOTAL DEPOSITS BY SEGMENTS
VND billion
20,000
15,000
10,000
5,000
2008
2009
2010
2011
2,190
657
5,958
1,344
10,648
1,666
16,034
9,624

Corporates2011 2,190 657 5,958 1,344 10,648 1,666 16,034 9,624 Individuals TYPES OF CAPITAL MOBILIZATION TOTAL DEPOSITS

Individuals657 5,958 1,344 10,648 1,666 16,034 9,624 Corporates TYPES OF CAPITAL MOBILIZATION TOTAL DEPOSITS BY SEGMENTS

TYPES OF CAPITAL MOBILIZATION

TOTAL DEPOSITS BY SEGMENTS

53.29 % 2.09 % 2.08 % 42.54 %
53.29
%
2.09
%
2.08
%
42.54
%

22

DEPOSITS BY SEGMENTS 53.29 % 2.09 % 2.08 % 42.54 % 22 37.51 % 62.49 %
DEPOSITS BY SEGMENTS 53.29 % 2.09 % 2.08 % 42.54 % 22 37.51 % 62.49 %

37.51 %

62.49 %

Amount due to the State Bank of Vietnam

Borrowings from Credit Institutions

Deposits of Customers

Corporates

Individuals

Other borrowings & entrusted funds and valuable papers issued

As of 31st December 2011, total mobilized capital reached VND 48,148 billion or an increase of 58% from 2010, which is an equivalent of VND 17,727 billion. Deposits from corporate and individual customers were VND 26,663 billion accounting for 55.38% of total mobilized capital and deposits from credit institutions were VND 21,485 billion, or approximately 44.62%.

Annual Report 2011

3. LOANS AND ADVANCES

Regarding to the credit activities as of 31st December 2011, loans and advances were VND 12,757 billion as a result of great efforts of all LienVietPostBank’s staffs and the confidence of SBV in the operation of the Bank.

Due to our good business policies for agricultural and rural production in 2012, we were allowed to reduce required reserve rate to 1/5 of normal rate creating more favorable conditions to provide capital for development.

VND billion

 
 

20,000

20,000
20,000

16,000

12,000

12,000

8,000

8,000

4,000

4,000

TOTAL LOANS AND ADVANCES

2,674

TOTAL LOANS AND ADVANCES 2,674 5,983 10,114 12,757

5,983

TOTAL LOANS AND ADVANCES 2,674 5,983 10,114 12,757

10,114

TOTAL LOANS AND ADVANCES 2,674 5,983 10,114 12,757

12,757

TOTAL LOANS AND ADVANCES 2,674 5,983 10,114 12,757
TOTAL LOANS AND ADVANCES 2,674 5,983 10,114 12,757 2008 2009 2010 2011 LOANS AND ADVANCES BY

2008

2009

2010

2011

LOANS AND ADVANCES BY MATURITIES IN 2011

LOANS AND ADVANCES BY MATURITIES

4.01% 14.41% 81.58% Short - term
4.01%
14.41%
81.58%
Short - term
ADVANCES BY MATURITIES 4.01% 14.41% 81.58% Short - term VND billion 12,000 10,000 8,000 6,000

VND billion

12,000

10,000

8,000

6,000

4,000

2,000

2008 2009 2010 2011 2,232 164 19 4,058 1,305 60 7,977 1,491 366 10,408 1,838
2008
2009
2010
2011
2,232
164
19
4,058
1,305
60
7,977
1,491
366
10,408
1,838
511

Short - term19 4,058 1,305 60 7,977 1,491 366 10,408 1,838 511 Medium - term Long - term

Medium - term1,305 60 7,977 1,491 366 10,408 1,838 511 Short - term Long - term Medium -

Long - term60 7,977 1,491 366 10,408 1,838 511 Short - term Medium - term Medium - term

Medium - term1,305 60 7,977 1,491 366 10,408 1,838 511 Short - term Medium - term Long -

Long - term60 7,977 1,491 366 10,408 1,838 511 Short - term Medium - term Long - term

Annual Report 2011

1,491 366 10,408 1,838 511 Short - term Medium - term Long - term Medium -

23

International Payments

2011 was a year of dramatic economic turbulence causing the decrease in trade flows both domestically and globally. Vietnam was not an exception, with the country’s export and import activities suffering from international financial crisis and economic downturn. Nevertheless, LienVietPostBank witnessed the significant increases in international payments with import revenue at USD 551.84 million, a 146% increase from 2010 and export revenue at USD 120.62 million, a growth of 43% in comparison to the previous year. International payment activities contributed a large portion of revenue coming from services.

Thanks to the modern information technology system, wide correspondent network worldwide and the professional and qualified staffs, international payment transactions were carried out effectively, promptly, accurately and safely. In 2011, we received the Best International Payment Bank Award by Wells Fargo (the third largest bank in the U.S).

In addition, since joining IFC’s Global Trade Finance

Programme, we have been able to expand its trade-

financing activities to small and medium import-export

enterprises, particularly in Mekong Delta region. With this,

we were able to prove our important role in providing

stable capital supply to help enterprises to maintain

import and export activities in the context of the global

liquidity crunch.

In 2012, we will focus on launching packages of highly

competitive, technology - intensive export and import

products and provide added-values to customers

through the combination of high quality services with

close supervision to ensure efficiency and safety for the

transactions.

USD million 600 500 400 300 200 100 2010 2011 224.4 84.63 551.84 120.62
USD million
600
500
400
300
200
100
2010
2011
224.4
84.63
551.84
120.62

International Payment Revenues in 2010 and 2011

24

84.63 551.84 120.62 International Payment Revenues in 2010 and 2011 24 Import Revenue Export Revenue Annual

Import Revenue2011 224.4 84.63 551.84 120.62 International Payment Revenues in 2010 and 2011 24 Export Revenue Annual

Export Revenue2011 224.4 84.63 551.84 120.62 International Payment Revenues in 2010 and 2011 24 Import Revenue Annual

84.63 551.84 120.62 International Payment Revenues in 2010 and 2011 24 Import Revenue Export Revenue Annual

Annual Report 2011

Continuing the focused strategy from 2010 with professional approach, in 2011, LienVietPostBank achieved some important success in doing business and building relationships with international organizations, and foreign financial institutions.

In 2011, we continued expanding our investment portfolio in global markets which brought considerable revenue. Besides our traditional partners, we also actively approached and negotiated with potential foreign partners to explore new business opportunities, particularly in raising funds from international market. We effectively used the mobilized capital to provide competitive lending rates to our customers.

In May 2011, we officially formed a relationship with the International Finance Corporation (IFC) through the participation in the Global Trade Finance Program (GTFP). Initially, IFC provided us USD 5 million guaranteed limit. By the time this report was finalized, this limit has been quadrupled to

USD 20 million. As a result, we are now in the list of the 200 issuing banks who participate in GTFP in over 90 developing countries with the purpose of expanding the available capital that finances trade for small and medium businesses in Vietnam.This co-operation opened up many opportunities for further business activities with IFC as well as other big banks in the region and over the world.

In July 2011, we officially became a member of the World Savings Banks Institute (WSBI) – an institution that represents more than 110 savings and retail banks from 89 countries around the world. WSBI works closely with international financial institutions and represents the benefits of its members on an international level. In order to be an official member of WSBI, besides complying with the provisions on institution and governance, particularly the principles on corporate governance issued by Organization for Cooperation and Economic Development’s (OECD) in 2004, WSBI members must satisfy 3 following criteria:

- Main activities are in retail area providing financial services to individuals, residents, small and medium enterprises.

- Have a widespread network with friendly and accessible banking services.

- Act responsibly for the benefit of the society (CSR).

Being a member of WSBI brought LienVietPostBank many opportunities and benefits. We not only have our interests represented by a prestigious organization but also have established close link with other members. Through such cooperation members can share experiences and use reliable information which is helpful for business

and use reliable information which is helpful for business international relations and global capital markets

international relations and global capital markets

forecasting and planning. Moreover, LienVietPostBank also receives training courses and consultation from international experts.

In September 2011, after passing a test in financial health, corporate governance and capacity for the SMEs’ investment and loan growth, LienVietPostBank officially participated in the third stage of the project that finances SMEs via JICA loans (the Japan International Cooperation Agency). As a result, we have been able to enhance our capacity to provide loans for Vietnam SMEs’ projects by long-term capital with preferential condition from JICA.

In November 2011, we successfully called for the support from WSBI and IFC to consult us on microfinance development strategy and competitiveness improvement. Accordingly, WSBI together with the Bill & Melinda Gates Foundation (B & MGF) will support capital and technology in developing and improving cashless payment products, including Vi Viet (or Viet Wallet). Our ambition is to turn Vi Viet into the most popular payment method in Vietnam in order to bring financial services and products to the poor or people in remote areas, who have limited access to banking and financial services. WSBI had successfully assisted us in implementing the project: "Doubling the number of savings accounts of the poor".

IFC initially agreed to support LienVietPostBank in capital and technical assistant in order to fully utilize the potentials of a widespread postal network. The consulting fields embraced: business model, corporate governance, information system management, loan- granting methods, risk management, financial systems, and distribution network management.

Annual Report 2011

loan- granting methods, risk management, financial systems, and distribution network management. Annual Report 2011 25

25

Network of more than 10,000 transaction points Since 1st July 2011, LienVietPostBank has officially utilized
Network of more than 10,000 transaction points Since 1st July 2011, LienVietPostBank has officially utilized

Network of more than

10,000

Network of more than 10,000 transaction points Since 1st July 2011, LienVietPostBank has officially utilized the
Network of more than 10,000 transaction points Since 1st July 2011, LienVietPostBank has officially utilized the

transaction points

Network of more than 10,000 transaction points Since 1st July 2011, LienVietPostBank has officially utilized the

Since 1st July 2011, LienVietPostBank has officially utilized the system of more than 10,000 transaction points , after Vietnam Post Corporation has contributed capital to the bank through the corporate value of its affiliate, the Vietnam Postal Savings Services Company (VPSC) and through cash.

Withthewidenetworkspreadingover63provinces/citiesandmorethan10,000wardsnationwide,LienVietPostBank

is proud to be able to bring modern banking products and services to all customers, including those who are living in remote areas.

26

banking products and services to all customers, including those who are living in remote areas. 26

Annual Report 2011

POSTAL SAVINGS BUSINESS AS A PART OF LIENVIETPOSTBANK

Pursuant to Decision No. 215/1998/QD-TTg and Decision No. 270/2005/QD-TTg issued by the Prime Minister on 4th November 1998 and on 31st October 2005 respectively, Vietnam Post Corporation has offered postal savings services through the postal system nationwide. Since July 2011, LienVietPostBank has officially started to provide limited banking services on this postal savings system.

Targeting residents with limited access to traditional banking products and services, postal savings products and services are designed to meet the demand of people living in rural and remote areas. For example, products were designed with low transaction limit, i.e. VND 50,000 per transaction, or with simple design and easy - to - understand products and services. Realizing demand for small savings from low income customers, installed savings was introduced allowing customers to make periodical small deposits with simple procedure while enjoying term depository interest rates. We also introduced personal savings account which combined card services with collecting and paying services. Currently, we have more than 100,000 customers using card payment services. This product is popular among small businesses, people who have to travel regularly, workers working in industrial zones and coal mines as well as many other businesses with big number of employees using this product to pay salaries via employees’ personal savings accounts.

The capital contribution ofVietnam Post to LienVietBank bythevalueofVietnamPostalSavingsServicesCompany (VPSC), an affiliate of Vietnam Post Corporation and cash was approved by the Government is considered as an innovative approach in providing modern banking products to agricultural and rural sector. The deal has brought many advantages to us especially in the retail banking sector thanks to the following factors:

1. Large network – A network that consists of over 10,000 points of transactions (POTs) around the country, among which 3,000 points have been connected to the internet, and can provide main banking services to the population in the radius of approximately 2.37 km. Gradually, this network will meet all residents’ needs for financial and banking services.

2.

has

the potential to become one of the most competitive commercial banks in the following aspects:

Strong

network

foundation

-

LienVietPostBank

Annual Report 2011

network foundation - LienVietPostBank Annual Report 2011 a. Strong and fast expanding network coverage with the

a. Strong and fast expanding network coverage with the

lowest initial investment cost up to 10,000 transaction

points.

b. Low operating fee and maintaining cost thanks to the

existing organizational structure and physical network of Vietnam Post.

3. Brand name – The combination of Vietnam Post

Brand and LienVietBank create the image of reliability, friendliness, trustworthy among our customers, especially people living in rural areas.

4. Friendly and accessible - According to research, in

many rural areas, people are still not comfortable going to shiny banks in big and glassy buildings, to deposit their small amount of monthly savings. We have changed

that by bringing the bank to locations where people feel comfortable with – post offices.

5. Source of new capital - Throughout the years post

offices have provided service of transferring money to the population in both cities and rural areas. This is a great opportunity for our bank to access that capital.

6. Human Resource - Post officers traditionally have

established a strong and close relationship with local authorities and local people. They are also the people who will play a very important role in offering the banking services and products directly to our clients in friendly and

effective manner.

important role in offering the banking services and products directly to our clients in friendly and

27

HR and Training

Human Resource

2011 was characterized with tough economic environ- ment in both domestic and global markets. Despite the difficulties, the Bank posted an impressive increase in both profit and total asset. This success is attributed to the improvement of our business model and the ef- fort of our staff. By 31st December 2011 we had 1,972 employees.

Number of

Employees

2,500

2,000

1,500

1,000

500

employees. Number of Employees 2,500 2,000 1,500 1,000 500 Employment situation for 2010 and 2011 1,972
employees. Number of Employees 2,500 2,000 1,500 1,000 500 Employment situation for 2010 and 2011 1,972
employees. Number of Employees 2,500 2,000 1,500 1,000 500 Employment situation for 2010 and 2011 1,972
employees. Number of Employees 2,500 2,000 1,500 1,000 500 Employment situation for 2010 and 2011 1,972
employees. Number of Employees 2,500 2,000 1,500 1,000 500 Employment situation for 2010 and 2011 1,972
employees. Number of Employees 2,500 2,000 1,500 1,000 500 Employment situation for 2010 and 2011 1,972

Employment situation

for 2010 and 2011

1,972

1,393

1,000 500 Employment situation for 2010 and 2011 1,972 1,393 750 799 2010 2011 Total employees

750

500 Employment situation for 2010 and 2011 1,972 1,393 750 799 2010 2011 Total employees New

799

Employment situation for 2010 and 2011 1,972 1,393 750 799 2010 2011 Total employees New comers
Employment situation for 2010 and 2011 1,972 1,393 750 799 2010 2011 Total employees New comers

2010

2011

Total employeessituation for 2010 and 2011 1,972 1,393 750 799 2010 2011 New comers Organizational Development Along

New comers2010 and 2011 1,972 1,393 750 799 2010 2011 Total employees Organizational Development Along with the

Organizational Development

Along with the improvements in HR, we also focus on

the development of the organization as a whole. In 2011,

we completed to take over and re-allocate all staffs from

VPSC ensuring all the rights of the new members.

We regularly revise and improve our HR policies to dis-

cover capable employees, who are the drivers for the

bank development. LienVietPostBank has designed

specific program for these employees in term of training

and development, payrolls, performance management,

compensations and benefits.

28

performance management, compensations and benefits. 28 More than 90% of our employees have Bachelor de- grees,

More than 90% of our employees have Bachelor de- grees, 7% of which hold Master degrees and PhD de- grees. That reflects our effort in selecting employees in order to deliver a high quality of work.

Employee's Education Breakdown

5.59%

4.38%

0.22%

work. Employee's Education Breakdown 5.59% 4.38% 0.22% 6.57% 83.24% Ph.D Master Degree Bachelor Degree College
work. Employee's Education Breakdown 5.59% 4.38% 0.22% 6.57% 83.24% Ph.D Master Degree Bachelor Degree College
6.57%
6.57%

83.24%

Ph.DEducation Breakdown 5.59% 4.38% 0.22% 6.57% 83.24% Master Degree Bachelor Degree College Degree Vocational

Master DegreeEducation Breakdown 5.59% 4.38% 0.22% 6.57% 83.24% Ph.D Bachelor Degree College Degree Vocational School

Bachelor DegreeBreakdown 5.59% 4.38% 0.22% 6.57% 83.24% Ph.D Master Degree College Degree Vocational School Remuneration Policy Guided

College Degree4.38% 0.22% 6.57% 83.24% Ph.D Master Degree Bachelor Degree Vocational School Remuneration Policy Guided by the

Vocational School83.24% Ph.D Master Degree Bachelor Degree College Degree Remuneration Policy Guided by the motto “Living on

Remuneration Policy

Guided by the motto “Living on salary, Getting rich on bonus”, we offer a competitive salary and compensation program that reward employees according to their contribution and performance.

Apart from salary, we also provide many benefits to our employees such as paid vacations, health care, insurance, and other miscellaneous offerings such as disability coverage. All government regulations and policies regarding employees’ rights are strictly complied with. We also promote a special program that rewards employees, without prior notification, on their performance. This program is part of the reward policy that is at the heart of stimulating the high quality of work and services that is provided at LienVietPostBank.

Annual Report 2011

Training activities In 2011, we organised multiple training programs for more than 1,700 employees which
Training activities In 2011, we organised multiple training programs for more than 1,700 employees which

Training activities

In 2011, we organised multiple training programs for more than 1,700 employees which marked a great improvement in the effort to educate and train our employees to promote a higher quality business standard. All employees in our bank are equipped with the necessary skills and professional knowledge to efficiently perform their duties at work and contribute to the success and growth of LienVietPostBank.

The educational program in 2011 was marked by the introduction of a benchmark testing system and the development of internal trainers which improved the training activities at LienVietPostBank in term of training quality, training awareness and self-study spirits. The program will standardize management, training and development activities in HR management responding to guidance given by our Board of Directors, Chairman of HR, Credit and Cost Management Committee in early 2011 during the orientation session for HR strategy at LienVietPostBank in the Conference for 2011 Implementing Business Operation.

Marketing Public Relation quan tri thuong hieu brand dinh vi thuong hieu brand name branding
Marketing
Public Relation
quan tri thuong hieu
brand
dinh vi thuong hieu
brand
name
branding image
Marketing
name
brand
tiep thi
identity
name
quan he cong
chung
marketing
product Marketing
management
quan tri thuong hieu
name
loyalty
marketing
quan tri thuong hieu
Public Relation
name
Marketing
PR

tiep thi

name

dinh vi thuong hieu

positioning

name

tiep thi name dinh vi thuong hieu positioning name

Brand Development

2011 marked a key step in our brand development in terms of changes in brand identity and brand repositioning. Familiar “Post” brand combined with brand of a bank to create the first Postal Bank in Vietnam.

2011 marked a key step in our brand development in terms of changes in brand identity and reposition brand. Familiar “Post” brand combined with brand of a bank to create the first Postal Bank in Vietnam. Additionally, in 2011, we changed our business strategy from “Investment, Services, Wholesale and Retail banking” to “a Leader in Retail Banking for the mass in Vietnam,” and “Now Everyone can Bank” with LienVietPostBank. Along with the repositioning of our brand, we changed our brand identity in order to fit with the new name and new strategy. The new brand was strongly communicated over the system.

We strongly focused on our PR and we kept all our clients and the public informed about all changes the bank went through. We communicated about

30

all changes the bank went through. We communicated about 30 the Bank via TV, Radio, Newspapers,

the Bank via TV, Radio, Newspapers, and the internet. We published hundreds of articles in an effort to familiarize the public with the new brand name and we achieved great success in that aspect.

According to brand rating companies in Vietnam, our new brand name was well recognized in 2011 not only in big cities but also in rural areas while our old brand was recognized in big cities only where we had transaction points. We believe that brand repositioning and business strategy are vital elements in the process of transforming our bank into a friendly, strong and reliable financial institution that can provide highest quality of services to our customers and prioritize benefits of customers, shareholders and investors.

Annual Report 2011

Information Technology After the merger with VPSC, we faced the challenge of modernizing and integrating

Information

Technology

After the merger with VPSC, we faced the challenge of modernizing and integrating the old Vietnam Post network system into our core banking system to achieve higher efficiency and to utilize the large postal network all around the country.

These challenges required the Management to find a comprehensive solution for integration of all the database and also update and modernize the outdated postal software system in an effort to meet the needs of the newly formed Postal Bank.

The goal of the solution is to maximize the efficiency of the postal network in order to provide retail banking products and services throughout the country.

This is a big challenge for the Bank because the Bank itself has been implementing various technology- related projects such as card project, data center and internet banking. Our board of management decided to set up a project team consisting of high-skilled and knowledgeable members in banking and IT to study the postal savings technology system in order

Annual Report 2011

to propose the best solution. In September 2011, with the support of Vietnam Post, this group produced two applications: “Daily reports” and “Post Office Transactions” softwares. They are supplemental to each other and connect to our Core banking system. Those applications are designed to run in complex network of our and Vietnam Post’s systems and can be modified to run on the internet. The “Daily reports” application has been used in 63 provinces around the country to ensure prompt update on cash flows and transactions in postal transaction offices, timely recognize problems and shortcomings in order to support management activities in our bank and Vietnam Post.

It is also a preparatory step to implement a more complex application package for transactions at post

- offices which has been tested for official release. The new application will be deployed simultaneously on the postal savings system to ensure that 1,300 transaction points can be accessed online by June

2012.

on the postal savings system to ensure that 1,300 transaction points can be accessed online by

31

Products and Services

Capital Mobilization products

Year of economic difficulties – LienVietPostBank:

“Move forward, not backward”

2011 marked a difficult year for the banking industry, especially in capital mobilization because of high competition among banks and tough financial regulations such as deposit interest rate cap, regulations on rate of under 1 month deposits and early withdrawals. Despite all these challenges, we had a strong confidence in our potential and we determined to move forward, not backward. We managed to mobilize our capital by strictly complying with SBV’s regulations and by successfully competing against other financial institutions. It is our priority to constantly improve our products and services in order to meet all the financial needs of our customers, as well as, to maintain a competitive position in the industry.

Diverse range of products and services meeting the needs of every client

The “Automatic Investment” is one of many products that our corporate customers choose. It is considered as a financial solution to our corporate clients because the product effectively utilizes the capital in short term and at the same time provides great flexibility for our customers. Additionally, the product helps our customers manage their fund among multiple accounts and provide them with the flexibility to use their money just like a regular current account.

32

to use their money just like a regular current account. 32 The transfer between accounts is

The transfer between accounts is automatic and the interest rate applied is extremely competitive.

Besides the “Automatic Investment” product, we also offered other attractive products such as the high interest account, which provides the client with the flexibility to withdraw the principle of their fund at any time, while still keeping the high interest rate compounded daily.

We strongly focused on promotional and reward programs as one of our core elements in mobilizing capital and retaining our customers and bringing substantial benefits to customers.

Postal Savings Services – “Now Everyone can Bank”

Postal Savings Services are being offered at postal systems in 63 provinces nationwide. Since July 2011, we have researched, developed and provided many new savings products with flexible tenors and competitive interest rates through selected post offices, such as: bullet term savings, term savings with flexible principle withdrawal, periodical interest withdrawal savings, installment savings, salary payment through bank accounts, collection and payment services. In 2011, LienVietPostBank offered new tenors for 01 month and 02 month savings with attractive interest rate at 14% annually which was the highest rate in the market for the short-term savings at that time. Moreover, after the merger, customers of postal savings services will have access to various banking products and services such as outward remittance, commercial payment services, e-banking services, etc…

Annual Report 2011

2012- Developing capital mobilization products remains one of our top priorities

Developing new products and improving existing products and services continue being the top priorities of the Bank in 2012 in order to meet various needs from our customers.

Savings products, term deposits with flexible characteristics and added values to meet certain needs of customers are currently under final stage of development and will be launched in the near future. Other new products that we will provide including

short-term and long-term savings products, traditional savings products combined with e-banking products

and services, etc

besides traditional services, our customers will also be able to enjoy competitive interest rates offering in the market in addition to modern banking products and services which were not available in the previous postal savings services, such as: term- savings, personal savings, money transfer, e-banking services, etc.,. Our new products will be developed not only to meet various needs of customers and strictly comply with authorities’ regulations but also provide benefits to our customers and mobilize funds for the Bank. We hope that by continuously providing new products we will be able to attract new customers and able to sell more crossing products later on.

By using postal savings services,

Agricultural and rural lending

Agricultural and rural lending: the link between LienVietPostBank and farmers

Responding to the Resolution No. 26-NQ/TW issued by the 10th tenure Central Committee of the Communist Party in the 7th Conference on agriculture and rural development; Decree No. 41/2010/ND-CP issued on 12th April 2010 by the Government of Vietnam concerning credit policy on agricultural and rural development, in early 2010, our Board of Directors passed the project proposal on "Credit for agricultural and rural development in Mekong Delta in 2010 and orientation to 2013". This project focuses on the connection among enterprises, farmers, producers, manufacturers and exporters in order to help farmers escape poverty and to eliminate usury in rural areas.

Annual Report 2011

After some successful pilot programs in several provinces and cities in the Mekong Delta in 2011, we expanded the project throughout the country and achieved much more success. Outstanding loans of the project on 31st December 2011 were VND 5,586.7 billion, among which, the outstanding loans for individuals and households were VND 732.4 billion; the outstanding loans for corporate customers were VND 4,863.3 billion. Outstanding loans for the agricultural and rural sector accounted for 40.58% of the total loans.

Below is the list of the outstanding characteristics of our agricultural and rural credit products compared to other banks:

- Lend up to 80% of total project cost;

- Fast processing procedure, i.e. All documents is prepared by our staffs and signed by customers.

-

repayment

conditions and seasonable factors of production

plans to reduce payment pressure.

We approached new customers to provide agricultural and rural credit through the reference from Veteran Association, Women Association, Farmer Association. Approaching customer by the introduction of Veteran Association is an innovative method of LienVietPostBank.

Thanks to the success in 2011, this project continues expanding to all provinces in the Mekong Delta region. Expected loans for agricultural and rural sector will be around VND 7,000 to 10,000 billion, among which loans to households will be around VND 2,000 billion.

Flexible

loan

tenors

depending

on

around VND 2,000 billion. Flexible loan tenors depending on The positive results gained after 2 year

The positive results gained after 2 year pilot project in Hau Giang encouraged us to greatly respond to the direction given by the Prime Minister Nguyen Tan Dung on his visit to our bank on 28th November 2009, which is: Connecting with farmers through credit relationships.

Dung on his visit to our bank on 28th November 2009, which is: Connecting with farmers

33

E - Banking

The top e-wallet of Vietnam

Vi Viet is an e-wallet service launched in 2011 and

unlike other electronic banking services available in the market, it provides the customers with the flexibility to do all banking transactions via text messages or on internet with a mobile phone and without the need to open the bank account.

Services provided by Vi Viet include top-up, money transfers, cash withdrawal, bill payment services (shopping, food & beverage, utility and cable TV bills, etc…) and salary receipts and payments.

In 2011, Vi Viet technology system was connected to

the core banking system, SMS banking channels and VV Top up system. VV technology system is standardized

in order to fit the systems of our e-commerce partners.

LienVietPostBank has signed business co-operation agreements with 8 partners, including VNPT ePay who providesTopup services,Viettel-BankPlus with payment services, NetNam with distribution and automatic account opening services, PTI with purchasing online insurance products, Loto365 with payment service, Vietnam Post with deposit and withdrawal services, M-pay and Van Phuong with staff salary payment service. We are currently paying salaries for our staffs across 13 branches using Vi Viet, developing and supporting 2,000 regular subscribers.

In December 2011, we decided to establish Vi Viet

Joint Stock Company in order to separate the risk of Vi Viet from the Bank and to raise equity for the project.

Currently, the preparatory committee of Vi Viet Joint Stock Company is completing the procedures for the company’s establishment and looking for investors. Vi Viet expects to have USD 50 million in capital within 2 years of operation. Vi Viet Joint Stock Company will operate under cooperative business agreement with LienVietPostBank for 50 years with the priority to transform Vi Viet into a top payment instrument- a cash equivalents in Vietnam, and actively participating in implementing the Government’s and the state bank’s policy on the development of non-cash payment.

34

bank’s policy on the development of non-cash payment. 34 Card products With the mission of becoming
bank’s policy on the development of non-cash payment. 34 Card products With the mission of becoming

Card products

With the mission of becoming “a retail bank for the mass market” – and “Now Everyone can bank” with LienVietPostBank, we continuously put effort in developing and providing modern banking products and services and offering more values and benefits for customers. In 2011, after introducing modern banking services, such as Internet Banking, SMS Banking, we officially released our first card product - Domestic debit card with the brand “United we develop”.

The most outstanding achievement in 2011 for card business is that LienVietPostBank succeeded in connecting ATM system with three largest switching systems in Vietnam - Smartlink, BanknetVN and VNBC. As a member of the card alliance, we have a network of more than 16,600 ATMs, accounting for 98% of the total number of ATMs in Vietnam. With such large network spreading nationwide, our customers can access the service fast, easily and everywhere.

Based on the existing ATM payment system and nationwide network of Vietnam Post, in 2012 we will continue to utilize POS system over 600 post offices and install selectively ATM machines at our branches and transaction points. We will also focus on expanding our cooperation with e-commerce partners in order to provide more convenient services to our customers.

In 2012, in addition to continuously developing card product and electronic banking systems to serve the needs of our existing customers, we will also strengthen our ties with partners, especially through the network of more than 10,000 points of Vietnam Post to provide customers packages of modern banking products combined with traditional banking products.

Annual Report 2011

RISK MANAGEMENT

The importance of risk management has been strengthened after the collapse of many banks that occurred after series of financial crises.

Since the beginning, we have always focused on the development of risk management system. In 2011, we significantly improved our risk management activities which contributed to our overall development.

RISK MANAGEMENT FRAMEWORK

Risk management framework has been developed according to international standards to ensure the "independence and objectivity" of the risk management division. The ALCO, Legislation, Risk Management & ALM Committee is a unit under the control of the Board of Directors. It has the highest responsibility to advise the Board of Directors and assist them in managing and supervising comprehensively asset- liability management activities, risk management and anti money laundering in our banking business. Risk management tasks carried out mainly by Legislation, Risk Management & ALM division to ensure regular, review and control the risks of the whole bank, including but not limited to credit risks, liquidity risks, market risks, operational risks and anti- money laundering. Our risk management activities are centralized, however, every division still needs to monitor its risks itself. After the merge with VPSC, we experienced some significant changes in organizational structure and size. As a result, LienVietPostBank has changed the policies and risk management strategy to ensure that appropriate risk management is done comprehensively, independently and effectively aiming to match international standards.

MANAGEMENT OF MAJOR RISKS

1. Credit risk management

2011 was considered as an unfavorable year for the credit development because of the strict credit control policies of the SBV and the increasing credit risks as a result of the slowdown of the global and domestic economy causing the difficulties for stock market, real estate and businesses.

Nevertheless, LienVietPostBank has timely responded to the changes of macro-environment in terms of adjusting the credit risk management policy.

a)

credit

Flexible

credit

policy:

the

orientation

of

development

and

credit

policy

was

reviewed

and

updated

according

to

market

conditions.

Annual Report 2011

We promptly made appropriate adjustments and issued the instruction to limit credit or halt lending to high risk sectors before the market becomes too volatile.

b)

Law compliance: In 2011, we offered solutions to fulfill the Board of Directors’ plan as well as comply with the regulations of the SBV on safety credit operations that includes:

-

Controlling credit growth according to the direction of the SBV.

-

Controlling the proportion of loans to non- manufacturing sector in total loans and advances:

Less than 22% as of 30th June 2011 and less than 16% as of 31st December 2011.

c)

Customer policies with priority to preferential customers based on the Government policy:

prioritized loans for traditional customers, those in the manufacturing sector and those who qualify for rural and agricultural loan programs.

d)

Strict control and enhanced supervision on credit quality to ensure the loan repayment and collection of bad debts and over-due debts.

e)

Standardized internal credit rating systems: We have built and implemented an internal credit rating system since early 2010. To date, the internal credit rating system has been developed for the following clients: corporate, financial institutions and individual clients.

Having the awareness of the importance of the internal credit rating system, we went on a search for a consulting company and chose Ernst&Young Vietnam to help us to establish our internal rating system.

f)

Diversification of credit structure: Based on the analysis of the economic sector and industry as well as the market conditions, the orientation of credit development was built with multi-sector criteria, emphasizing on credit for which match with economic and social development policies.

2.Market

and

liquidity

risk

management

a) Market and liquidity risk management – We follow prudent, proactive and flexible principles such as:

- Managing interest rate and exchange rate risks at many levels;

- Regularly monitoring market movements and applying flexible policies accordingly;

- Maintaining reasonable asset- liability duration gap and resonable net foreign curency gap;

policies accordingly; - Maintaining reasonable asset- liability duration gap and resonable net foreign curency gap; 35

35

- Flexibly and effectively utilizing hedging tools to prevent interest rate and exchange rate risks;
- Flexibly and effectively utilizing hedging tools to prevent interest rate and exchange rate risks;

- Flexibly and effectively utilizing hedging tools to prevent interest rate and exchange rate risks;

- Focusing on research and development of effective interest rate and exchange rate risk management methods and models which are suitable with our business model;

- Actively looking for stable, cost effective funds that are less volatile with market fluctuations.

b) Establish and supervise closely on FXs trading

We established limit systems such as MM lines, FX lines, transaction lines and the regulations on ceiling/ floor exchange rates to control our foreign exchange and currency trading. …

These lines are set up and controlled by transaction as a single deal to the whole bank by independent risk management department as a part of Legislation, Risk Management & ALM Division.

3. Operational risk management

We paid special attention on the development of operational risk management system in 2011. We built and implemented comprehensive programs on operational risk management.

Operational risk management team gets involved directly in assessing risk factors in new procedures or products before being introduced to the market.

Besides this, the team is also responsible for checking, reviewing new operational risks in various aspects and proposing appropriate solutions.

4. Anti - money laundering

a) We revised the regulation on anti-money laundering in association with our new business model and regulations issued by relevant government agencies.

b) To control the operation of money laundering, we simultaneously implemented multiple solutions which include:

- Improving anti - money laundering activities at the business unit level in order to manage money laundering for the whole system. By the end of 2011, all branches and transaction points had prevention and anti money laundering teams.

- Managing Anti - money laundering reports as required by the SBV.

- Developing and updating daily customer black- list to the system in order to help business units in researching and reviewing customers.

36

black- list to the system in order to help business units in researching and reviewing customers.

Annual Report 2011

TYPICAL SOCIAL AND CHARITABLE ACTIVITIES

TYPICAL SOCIAL AND CHARITABLE ACTIVITIES A stable society is the foundation for the development of enterprises.

A stable society is the foundation for the development of enterprises. In an effort to contribute to a more sustainable and stable society, we focus not only on building our business but also on helping communities through charity and humanitarian activities.

In 2011, our Board of Director established various funds that provides scholarship for students, especially the ones who have talents, throughout the country. The funds were established with the intention to take care, support, and help talented students excel. These funds also reward local teachers, including those who are in charge of preparing students for international and national Olympic competitions. Among those who received rewards and recognitions were also the ones with exceptionally outstanding academic achievements and contribution to the renovation.

Since early 2011, five Funds have been set up. They are: the Pham Van Tra Study Encouragement Fund (Bac Ninh), the Dat To (or Ancestral Land) Study and Talent Encouragement Fund (Phu Tho), the Luong The Vinh Study Encouragement Fund (Nam Dinh), the Chu Van An Study Encouragement Fund (Hanoi), the Nguyen Dan Que Study and Talent Encouragement Fund (Thanh Hoa).

By 31st December 2011, LienVietPostBank and Him Lam JSC had contributed nearly VND 16 billion to Encouragement Funds. Despite being launched only for a year, the program has contributed significantly to encouraging and nurturing talents around the country.

Encouragement Fund (Bac

Pham Van Tra Ninh)

On 1st August 2011, the Pham Van Tra Study Encouragement Fund was established in Bac Ninh which was the first destination in the “Nurturing Dreams” program. After just more than one year of operation, the Pham Van Tra Study Encouragement Fund has raised around VND 15 billion to serve the study encouragement activities in Bac Ninh.

Study

Annual Report 2011

Dat To (or Ancestral land) Study and Talent Encouragement Fund (Phu Tho)

On 30th September 2011, at Phu Tho, on the 15th anniversary of Vietnam Study Encouragement Association, LienVietPostBank, Him Lam JSC and other related organizations launched the Dat To Study and Talent Encouragement Fund. The fund received donations from many banks and businesses with the amount of more than VND 10 billion. The funds were collected as follow: VND 3 billion from LienVietPostBank; VND 3 billion from Him Lam JSC:

VND 1 billion from Thang Long Mineral resources and Metallurgy JSC; VND 1 billion from VietinBank; VND 1 billion from Agribank and VND 1 billion from BIDV, etc.,….

Chu Van An Study Encouragement Fund (Hanoi)

On the 15th anniversary of the establishment of Vietnam Study Encouragement Association (2nd October 1996- 2nd October 2011), we donated VND 3 billion to Study Encouragement Fund of Thanh Tri district, Hanoi.

Luong The Vinh Study Encouragement Fund (Nam Dinh)

On the Teachers’ Day, LienVietPostBank and Him Lam JSC launched Luong The Vinh Study Encouragement Fund (Nam Dinh) and honored those students with outstanding achievements in the school year of 2010 - 2011 in Nam Dinh province. On the launching day, Luong The Vinh Study Encouragement Fund received more than VND 11 billion donation.

Nguyen Dan Que Study and Talent Encouragement Fund (Thanh Hoa)

In December 2011, Mr. Nguyen Dinh Thang - Chairman cum CEO of Hong Co Group, a board member of LienVietPostBank, gave 150 scholarships from the Nguyen Dan Que Study Encouragement Fund to poor

but talented students in Hau Loc, Nong Cong and Trieu Son provinces. LienVietPostBank and Him Lam JSC expect to sponsor VND 3 billion each to the Fund in

2012.

and Trieu Son provinces. LienVietPostBank and Him Lam JSC expect to sponsor VND 3 billion each

37

DEVELOPMENT ORIENTATION FOR 2012 1. Key Financial Targets Key financial Targets VND billion Total assets

DEVELOPMENT ORIENTATION FOR 2012

1.

Key Financial Targets

Key financial Targets

VND billion

Total assets72,000

72,000

Loans and advances to customers23,500

23,500

Deposits from customers40,500

40,500

Profit before tax1,325-1,500

1,325-1,500

Dividend Payout (%)13-15

13-15

Chartered capital6,520.1

6,520.1

General targets:

Improve the efficiency and performance of LienVietPostBank through the restructuring of organizational structure, focusing on reviewing and revising operating procedures and regulations, choosing the right person for the right position. By accomplishing this, LienVietPostBank will solve remaining short-comings and will achieve a safe and sustainable development while complying strictly with Laws and Regulations.

2. Orientation

Guided by the long-term strategy, LienVietPostBank will strive to become a leading retail and universal bank with the motto: “Now Everyone can Bank.”

2012 is forecasted to be a difficult year forVietnam’s economy and banks in Vietnam will face various complex obstacles. Nevertheless, it is also a year of many opportunities especially for those who act fast and have good vision. In 2012, LienVietPostBank will continue:

To be transparent in book keeping.have good vision. In 2012, LienVietPostBank will continue: To introduce new services, new offices with high

To introduce new services, new offices with high quality for individual customers.will continue: To be transparent in book keeping. 38 To mobilize capital for high profitable businesses.

38

new offices with high quality for individual customers. 38 To mobilize capital for high profitable businesses.

To mobilize capital for high profitable businesses.new offices with high quality for individual customers. 38 To increase the number of highly qualified

To increase the number of highly qualified staffs in order to strengthen the bank’s system.38 To mobilize capital for high profitable businesses. 3. Solutions Improve and solve all “short-comings” left

3. Solutions

Improve and solve all “short-comings” left from previous years in order to improve the efficiency of this year’s development.in order to strengthen the bank’s system. 3. Solutions Focus on mobilizing capital with reasonable cost,

Focus on mobilizing capital with reasonable cost, and on efficiently and safely expanding loans and advances to take advantage of the trend of interest rate decrease into improve the efficiency of this year’s development. 2012. Strengthen human resources according to the motto

2012.

Strengthen human resources according to the motto “All done by man and All for man”; Focus on training and building young committed team with high efficiency and productivity.advantage of the trend of interest rate decrease in 2012. Focus on following activities: • Recruitment

Focus on following activities:

• Recruitment

• Training and re-training.

• Performance evaluation

• Reward and Remuneration Policy

• Promoting disciplines, creativity and humanity.

Increase quality of management through management capability improvements. Amend and supplement regulations on each professional sector, and clearly define functions, tasks and responsibilities of management levels. Enhance risk management activities. Speed up and improve quality of problem solving.Policy • Promoting disciplines, creativity and humanity. Modernize to catch up with development requirements,

Modernize to catch up with development requirements, especially the integration of postal savings network to the corebanking. We will centralize, digitalize and run scenario testing for all business activities with detailed requirements about professionalism and transparency.management levels. Enhance risk management activities. Speed up and improve quality of problem solving. Annual Report

Annual Report 2011

LienViet Post Joint Stock Commercial Bank (previously known as LienViet Commercial Joint Stock Bank) Summarised
LienViet Post Joint Stock Commercial Bank (previously known as LienViet Commercial Joint Stock Bank) Summarised

LienViet Post Joint Stock Commercial Bank

(previously known as LienViet Commercial Joint Stock Bank)

Summarised financial statements for the year ended 31 st December 2011

LienViet Post Joint Stock Commercial Bank Corporate Information

Banking Licence No. 91/GP-NHNN 28th March 2008

The banking licence was issued by the State Bank of Vietnam and is valid for 99 years from the banking licence date.

Board of Directors

Mr. Duong Cong Minh

Chairman

Mr. Nguyen Duc Huong

Vice Chairman

Mr. Tran Viet Trung

Member

Mr. Nguyen Duc Cu

Member

Mr. Nguyen Dinh Thang

Member

Mr. Do Ngoc Binh

Member (from 29/7/2011)

Mr. Nguyen Van Huynh

Member (from 29/7/2011)

Mr. Tran Van Tinh

Member (until 29/7/2011)

Ms. Vo Thi Kim Hoang

Member (until 29/7/2011)

Mr. Do Viet Hung

Member (until 29/7/2011)

Board of Management

Mr. Le Hong Phong

General Director

Mr. Ho Nam Tien

Deputy General Director

Ms. Nguyen Thu Hoa

Deputy General Director

Mr. To Van Chanh

Deputy General Director

Mr. Doan Van Thang

Deputy General Director

Ms. Nguyen Thi Bich Loc

Deputy General Director

Mr. Nghiem Sy Thang

Deputy General Director

Ms. Nguyen Thi Gam

Deputy General Director

Ms. Nguyen Anh Van

Deputy General Director

Mr. Nguyen Van Gam

Deputy General Director (from 1/7/2011)

Ms. Nguyen Thi Thanh Son

Deputy General Director (from 20/4/2011)

Mr. Vu Quoc Khanh

Deputy General Director (from 23/9/2011)

Mr. Nguyen Minh Tri

Deputy General Director

Mr. Pham Anh Dung

Deputy General Director (from 18/5/2011)

Registered office 32 Nguyen Cong Tru Street Ward 1, Vi Thanh City Hau Giang Province, Vietnam

40

Auditors KPMG Limited Vietnam
Auditors
KPMG Limited
Vietnam

Annual Report 2011

KMPG Limited 16th Floor, Pacific Place 83B Ly Thuong Kiet Street Hoan Kiem District, Hanoi

KMPG Limited

16th Floor, Pacific Place 83B Ly Thuong Kiet Street Hoan Kiem District, Hanoi The Socialist Republic of Vietnam

Telephone:

Fax:

Internet:

+84.4.3946 1600 +84.4. 3946 1601 www.kpmg.com

INDEPENDENT AUDITORS’ REPORT ON SUMMARISED FINANCIAL STATEMENTS

To the Shareholders LienViet Post Joint Stock Commercial Bank

We have audited the financial statements of LienViet Post Joint Stock Commercial Bank (“the Bank”) for the year ended 31st December 2011, from which the accompanying summarised financial statements were derived, in accordance with Vietnamese Standards on Auditing. In our report dated 26th March 2012, we expressed an unqualified opinion on the financial statements from which the summarised financial statements were derived.

In our opinion, the accompanying summarised financial statements are consistent, in all material respects, with the financial statements from which they were derived.

For a better understanding of the Bank’s financial position, the results of its operations and cash flow for the year ended 31st December 2011 and of the scope of our audit, the summarised financial statements should be read in conjunction with the financial statements from which the summarised financial statements were derived and our audit report thereon.

KPMG Limited Vietnam Investment Certificate No: 011043000345 Audit Report No: 11-02-052/A

Nguyen Thuy Duong CPA No. 0893/KTV Deputy General Director Hanoi,
Nguyen Thuy Duong
CPA No. 0893/KTV
Deputy General Director
Hanoi,
Duong CPA No. 0893/KTV Deputy General Director Hanoi, Nguyen Minh Hieu CPA No. N.1572/KTV KPMG Limited,

Nguyen Minh Hieu

CPA No. N.1572/KTV

KPMG Limited, a Vietnamese limited liability company and a member firm of KPMG network of independent firm affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

Annual Report 2011

KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. Annual Report 2011 41

41

LienViet Post Joint Stock Commercial Bank 32 Nguyen Cong Tru, Vi Thanh, Hau Giang Summarised balance sheet as at 31st December 2011

Form B02/TCTD (Issued in accordance with Decision No.16/2007/QD-NHNN dated 18th April 2007 of the Governor of the State Bank of Vietnam)

 

BALANCE SHEET

Note

31/12/2011

31/12/2010

VND million

VND million

A

ASSETS

 

I

Cash on hand

4

164,049

88,943

II

Balances with the State Bank of Vietnam

5

1,390,298

400,319

III

Balances with and loans to credit institutions

6

19,838,675

5,542,829

1

Deposits

 

19,838,675

5,264,830

2

Loans

 

280,100

3

Allowance for loans to credit institutions

 

(2,101)

IV

Securities held for trading

 

1

1

1

Securities held for trading

 

1

1

V

Derivatives and other financial assets

 

38,840

-

VI

Loans and advances to customers

 

12,639,981

9,755,415

1

Loans and advances to customers

7

12,757,139

9,833,703

2

Allowance for loans and advances to customers

8

(117,158)

(78,288)

VII

Investment securities

9

16,819,516

15,971,148

1

Available for sale securities

 

16,819,516

15,971,148

VIII

Long-term investments

10

24,731

24,731

4

Other long-term investments

 

24,731

24,731

IX

Fixed assets

 

601,242

355,924

1

Tangible fixed assets

11

323,148

200,807

a

Cost

 

427,899

242,364

b

Accumulated depreciation

 

(104,751)

(41,557)

3

Intangible fixed assets

12

278,094

155,117

a

Cost

 

298,427

165,253

b

Accumulated amortisation

 

(20,333)

(10,136)

XI

Other assets

13

4,615,003

2,845,412

1

Receivables

 

2,918,912

2,441,323

2

Accrued interest and fee receivable

 

866,202

360,266

4

Other assets

 

829,889

43,823

 

Included: Goodwill

 

738,929

-

 

TOTAL ASSETS

 

56,132,336

34,984,722

The accompanying notes are an integral part of these summarised financial statements

42

34,984,722 The accompanying notes are an integral part of these summarised financial statements 42 Annual Report

Annual Report 2011

LienViet Post Joint Stock Commercial Bank 32 Nguyen Cong Tru, Vi Thanh, Hau Giang Summarised balance sheet as at 31st December 2011(Continued)

Form B02/TCTD (Issued in accordance with Decision No.16/2007/QD-NHNN dated 18th April 2007 of the Governor of the State Bank of Vietnam)

 

Note

 

31/12/2011

31/12/2010

VND million

VND million

B

LIABILITIES AND OWNERS’ EQUITY

   
 

LIABILITIES

   

I

Amounts due to the Government and the State Bank

   

of Vietnam

14 1,000,000

 

2,601,385

II

Deposits and borrowings from credit institutions

 

15 20,485,120

 

12,381,256

1

Deposits

   

16,942,320

10,488,056

2

Borrowings

   

3,542,800

1,893,200

III

Deposits from customers

 

16 25,657,567

 

12,314,125

IV

Derivatives and other financial liabilities

   

-

23,165

V

Other borrowed and entrusted funds

   

-

40,000

VI

Valuable papers issued

 

17 1,004,813

 

3,084,578

VII

Other liabilities

 

18 1,390,835

 

435,561

1

Accrued interest and fee payables

   

582,087

334,247

3

Other liabilities

   

798,298

94,070

4

Provision for off-balance sheet commitments

   

10,450

7,244

 

TOTAL LIABILITIES

   

49,538,335

30,880,070

 

OWNERS’ EQUITY

   

VIII

Capital and reserves

 

19 6,594,001

 

4,104,652

1

Share capital

   

6,073,331

3,713,331

a

Chartered capital

   

6,010,000

3,650,000

b

Share premium

   

63,331

-

g

Other capital

   

-

63,331

2

Reserves

   

387,111

245,442

5

Retained profits

   

133,559

145,879

 

TOTAL LIABILITIES AND OWNERS’ EQUITY

   

56,132,336

34,984,722

The accompanying notes are an integral part of these summarised financial statements

Annual Report 2011

34,984,722 The accompanying notes are an integral part of these summarised financial statements Annual Report 2011

43

LienViet Post Joint Stock Commercial Bank 32 Nguyen Cong Tru, Vi Thanh, Hau Giang Summarised balance sheet as at 31st December 2011 (Continued)

Form B02/TCTD (Issued in accordance with Decision No.16/2007/QD-NHNN dated 18th April 2007 of the Governor of the State Bank of Vietnam)

 

OFF-BALANCE SHEET ITEMS

 

31/12/2011

31/12/2010

Note

VND million

VND million

I

CONTINGENT LIABILITIES

     

1

Guarantees

 

532,026

674,257

2

Letters of credit

 

909,655

208,482

II

OTHER COMMITMENTS

     

1

Swap foreign exchange contracts

 

3,816,585

949,919

2

Unmatured foreign currency purchase contracts

 

13,147

4,950

Approved by:

purchase contracts   13,147 4,950 Approved by: Ms. Nguyen Thi Gam Chief Accountant Mr. Le Hong

Ms. Nguyen Thi Gam Chief Accountant

4,950 Approved by: Ms. Nguyen Thi Gam Chief Accountant Mr. Le Hong Phong General Director The

Mr. Le Hong Phong General Director

Gam Chief Accountant Mr. Le Hong Phong General Director The accompanying notes are an integral part

The accompanying notes are an integral part of these summarised financial statements

44

Director The accompanying notes are an integral part of these summarised financial statements 44 Annual Report

Annual Report 2011

LienViet Post Joint Stock Commercial Bank 32 Nguyen Cong Tru, Vi Thanh, Hau Giang Summarised statement of income for the year ended 31st December 2011

Form B03/TCTD (Issued in accordance with Decision No.16/2007/QD-NHNN dated 18th April 2007 of the Governor of the State Bank of Vietnam)

 

INCOME STATEMENT

 

2011

2010

Note

VND million

VND million

1

Interest and similar income

20

5,193,132

2,489,081

2

Interest and similar expenses

20

(3,135,463)

(1,264,774)

I

Net interest income

20

2,057,669

1,224,307

3

Fee and commission income

21

39,314

43,381

4

Fee and commission expenses

21

(79,763)

(10,646)

II

Net fee and commission (expenses)/income

21

(40,449)

32,735

III

Net gain from trading of foreign currencies

22

103,318

49,513

IV

Net loss from trading of securities held for trading

 

-

(222)

V

Net (loss)/gain from investment securities

23

(23,155)

17,239

5

Other income

 

43,458

4,391

6

Other expenses

 

(39,827)

(447)

VI

Other income – net

 

3,631

3,944

VIII

Operating expenses

24

(939,539)

(511,106)

IX

Profit before allowance and provision expenses

 

1,161,475

816,410

X

Allowance and provision expenses

25

(75,194)

(57,510)

XI

Profit before tax

 

1,086,281

758,900

7

Income tax expense – current

26

(109,253)

(76,000)

XII

Total income tax expenses

26

(109,253)

(76,000)

XIII

Net profit after tax

 

977,028