Table of contents

MESSAGE FROM THE CHAIRMAN GENERAL INFORMATION HISTORY OF THE BANK REPORT OF THE BOARD OF DIRECTORS REPORT OF THE BOARD OF MANAGEMENT ORGANIZATION STRUCTURE, HUMAN RESOURCES AND CORPORATE GOVERNANCE ASSOCIATED COMPANIES FINANCIAL STATEMENTS FOR 2012 4 8 10 20 26 42 62 72

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Message from the Chairman

To our valued customers, partners, and shareholders, In 2012, due to the global economic crisis, all the major economies of the world struggled in the face of slow growth, difficult challenges, widespread unemployment, low purchasing power, and growing public debt. On the domestic front, businesses experienced great difficulty in running their operations, leftover inventories were at alarmingly high levels, the real estate market became increasingly stagnant, and tens of thousands of enterprises went bankrupt. The banking industry, which has been undergoing a restructuring process, was affected as well. Credit growth was low in comparison to the target set by the State Bank of Vietnam, and non-performing loans were on the rise. Despite having to brave such tremendous hardships, VietinBank prevailed and carried out our duties with flying colors. VietinBanks performance results were all favorable and indicative of stellar quality, safety, and effectiveness. We continued to revamp our organizational structure, improve upon our corporate governance and risk management practices, recruit new talents, and invest in our

information technology infrastructure. The year 2012 was a significant one for VietinBank and marked a series of reforms. In line with our tradition, VietinBank confirmed our position as a leading commercial bank of Vietnam that follows the mandates of the Party and the State, adheres to national monetary policies, contributes to the stabilization of the macro economy, and strives to integrate into the global economy. VietinBank was able to maintain secure and effective growth throughout 2012. The following achievements could be observed: total assets reached VND 503.5 trillion (an increase of 9.4% from the previous year); loans increased by 13.6%; mobilized funds increased by 9.3%; profit before tax was over VND 8,168 billion; ROE and ROA were 19.9% and 1.7%, respectively. These figures are indicative of VietinBanks leading position and truly remarkable given the adverse conditions seen throughout the entire banking industry over the past year. 2012 was a successful year for VietinBank. In May 2012, VietinBank became the first Vietnamese bank to issue USD 250 million international bonds and was chosen by FinanceAsia as Best Borrower in Vietnam. In addition, by the end

2012 Annual Report

Message from the Chairman

of the year, VietinBank had opened branches in Vientiane, Laos, and Berlin, Germany. These achievements constitute the pride of not only VietinBank, but also of Vietnams entire financial and banking sector. They also mark VietinBanks effort to soar into the international banking arena. Despite the fact that foreign investors have been wary of engagements in Vietnams market, at year end 2012 VietinBank managed to sign a strategic cooperation agreement with the Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU), the largest bank in Japan and a subsidiary of the Mitsubishi UFJ Financial Group, the worlds third largest financial group. The agreement, which saw 20% of VietinBanks stake, equivalent to USD 750 million, sold to BTMU, is up until now the single largest and most successful transaction of its kind in Vietnam. It is a testament to VietinBanks thriving reputation and position as perceived by investors all around the globe. It was also in 2012 that VietinBank made positive changes and had breakthroughs in modernizing and restructuring our organization. We kicked off two major projects, the Core Banking Replacement (CBR) Project and the Organizational Restructuring and Development of Human Resources Strategies (ORP) Project. The CBR project serves to vastly modernize our information technology system, satisfy customer demands, expand our operations, and

fulfill our long-term growth strategies. The ORP project is aimed at completely revamping our organizational structure and business model, thus allowing us to gain a competitive edge and to adhere to the latest and most accepted international standards and practices. Further, to continuously undergo sustainable development with the help of a solid workforce, VietinBank put into operation VietinBank Human Resource Development and Training School in Van Canh, situated on a 10 hectare plot of land. The school is equipped with state of the art technology and facilities. It is meant to facilitate training and produce a body of staff that is on par with international standards. We anticipate that 2013 will be yet another challenging year for the Vietnams financial and banking sector. Hence, as members of the Boards of Directors and Management, we cautiously set the following targets: increase total assets by 10%; increase mobilized funds by 8%; increase loans and investment by 12%; restrain non-performing loans ratio under 3%; increase profit before tax by 5%; keep capital adequacy ratio above 10%. We also make it our mission to lead the way in carrying out national monetary policies, to modernize the bank, as well as to enhance our financial strength and competitive capacity. Finally, it is imperative that we provide better staff training, improve upon our service and product quality, manage

2012 Annual Report

risk in compliance with Basel II, and curb nonperforming loans. In so doing, VietinBank will have what it takes to undergo secure, effective, and sustainable growth. The coming year is sure to bring about many challenges and opportunities alike. In anticipation of VietinBanks 25th anniversary, the entire bank is committed to building on our achievements, exerting yet more effort, performing duties with steadfast determination, and contributing to the growth of the banking industry as well as that of the whole economy.

Chairman

Dr. Pham Huy Hung

2012 Annual Report

General information

Registered name in Vietnamese: NGN HNG THNG MI C PHN CNG THNG VIT NAM Registered name in English: VIETNAM JOINT STOCK COMMERCIAL BANK FOR INDUSTRY AND TRADE Trade name: VietinBank Headquarter: 108 Tran Hung Dao street, Hoan Kiem district, Hanoi, Vietnam Charter capital: VND 26,218 billion (as at December 31, 2012) Establishment license: No. 142/GP-NHNN dated July 3, 2009 by the State Bank of Vietnam Business registration license: 0100111948 (first issuance dated July 3, 2009 by the Hanoi Department of Planning and Investment, registered for the 7th amendment on July 6, 2012) Tax code: 0100111948 SWIFT code: ICBVVNVX Network: Domestic branches: 147 branches across 63 provinces and cities nationwide Foreign branches: 1 branch in Frankfurt, Germany 1 branch in Berlin, Germany 1 branch in Vientiane, Lao PDR Number of employees: 19,840 (as at December 31, 2012) Foreign shareholder: International Finance Corporation (IFC) Independent auditor: Deloitte Vietnam

2012 Annual Report

Mission
Be the leading financial and banking group in Vietnam with versatile operation, providing products and services according to international standards to improve the values of life.

Vision
To become a leading modern and efficient financial and banking group both at home and abroad.

Core Values
- Customer-oriented; -Dynamic, innovative, professional, devoted, transparent, modern; -Employees are entitled to make their best efforts, to be justly compensated for the effectiveness and results of their contributions, and to pay homage to outstanding employees, best performers.

Business Philosophy
- Secure, effective, sustainable, and in compliance with international standards; -United, cooperative, sharing, and socially responsible; - Client prosperity is VietinBanks success.

2012 Annual Report

History of the Bank

Establishment VietinBank was established on March 26, 1988, upon separation from the State Bank of Vietnam under Decree No.53/HDBT of the Council of Ministers Scope of business VietinBank offers a wide range of retail and wholesale banking products and services both at home and abroad. VietinBank also operates in the following areas: lending, investment, trade finance, guarantee, re-guarantee, forex trading, deposit, payment, money transfer, card services, local and international credit cards, travelers cheques, securities trading, insurance, financial leasing, and many others. ListinG Ho Chi Minh City Stock Exchange (HOSE) since July 16, 2009. Stock type: Common Stock symbol: CTG Par value: VND 10,000 Shares Outstanding: 2,621,754,537 shares (as at December 31, 2012)

Important Milestones April 15, 2008 Change of name from IncomBank to VietinBank. July 31, 2008 VietinBank was granted the ISO 9001 2000 certification for credit, guarantee and payment activities. June 04, 2009 First VietinBank General Shareholders Meeting. July 08, 2009 Pursuant to the Establishment and Operation License No.142/ GP-NHNN issued on July 3, 2009 by the Governor of the State Bank of Vietnam, VietinBank became officially known as a joint stock commercial bank, as reflected by its new name, Vietnam Joint Stock Commercial Bank for Industry and Trade. October 10, 2010 VietinBank and IFC signed investment and cooperation agreements. July 6, 2012 VietinBank was re-granted the enterprise certificate (code 0100111948) with charter capital totaling VND 26,218 billion by Hanois Department of Planning and Investment, replacing the certificate issued on July 3, 2009. December 27, 2012 VietinBank signed an agreement selling 20% of its stake to the Bank of Tokyo-Mitsubishi UFJ, Ltd. - the largest bank of Japan.

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History of the Bank

KEY FINaNcIaL INdIcatoRS

Indicator Total assets Total loans and investments Of which: Loans Mobilized funds Owners equity (1) Of which: Charter capital Profit before tax Profit after tax ROA (2) ROE (3) NPL ratio CAR Dividend payout ratio Unit VND Billion VND Billion VND Billion VND Billion VND Billion VND Billion VND Billion VND Billion % % % % % 12/31/2012(*) 503,530 467,879 333,356 460,082 33,625 26,218 8,168 6,169 1.7% 19.9% 1.46% 10.33% 16% 12/31//2011 460,420 429,932 293,434 420,928 28,491 20,230 8,392 6,259 2.03% 26.74% 0.75% 10.57% 20% 12/31//2010 367,731 349,353 234,205 339,699 18,201 15,172 4,638 3,444 1.5% 22.1% 0.66% 8.02% 13.47% 12/31//2009 243,785 227,958 163,170 220,436 12,572 11,252 3,373 2,583 1.54% 20.6% 0.61% 8.06% 6.83% (H2 2009) 12/31//2008 193,590 181,689 120,752 174,905 12,336 7,717 2,436 1,804 1.35% 15.7% 1.58% 12.02% -

Remarks: (*) From 2012 audited consolidated financial statements. (1) Excluding portion of equity belonging to minority shareholders (2) ROAA (3) ROAE

2012 HIGHLIGHTS
Feb 9, 2012 - Opening of Vientiane Branch Feb 25 - Feb 26, 2012 - Over 11,000 VietinBank staff across 10 cities and provinces signed up for blood donation Feb 28, 2012 - VietinBanks 2012 General Shareholders Meeting May 2012 - Issuance of USD 250 million international bonds May 28, 2012 - Opening of Berlin Branch Sep 25, 2012 - Inauguration of VietinBank Human Resource Development and Training School in Van Canh, Hoai Duc, Hanoi Dec 27, 2012 - VietinBank and the Bank of Tokyo-Mitsubishi UFJ, Ltd. signed an agreement in Hanoi for the sale of 20% of VietinBanks stake to the Bank of Tokyo-Mitsubishi UFJ, Ltd.

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2012 Annual Report

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History of the bank

AWARDS RECEIVED IN 2012

No.

Award received Top 2000 global enterprises Top 500 banking brands Best Borrower in Vietnam Bank Receiving Best Assessment from the Media Forbes Magazine The Banker FinanceAsia

Granted bY

1 2 3 4

Media Tenor (Switzerland), a partner of Vietnam Report

5 6

Leader in POS and initiatives about card payment 2012 National Brands

Visa The Prime Minister of Vietnam

Top 3 tax payers among Vietnamese enterprises and Vietnam Report, Tax Magazine General the number one in banking in the list of top 1000 tax Department of Taxation, and VietnamNet payers among Vietnamese enterprises in 2012. Top 20 Vietnamese largest enterprises Top 50 most effective Vietnamese enterprises in 2012 Top 100 Vietnamese companies in terms of products and services in 2012 Outstanding Retail Bank Award and Outstanding Banking IT system Award for 2012 Top 30 annual reports in 2012 Vietnam Report and VietnamNet Investment Bridge Magazine and Thien Viet Securities Company Vietnam Economic Times Consumers Magazine Vietnam Banking Association and IDG Ho Chi Minh Stock Exchange in association with Securities Investment Magazine and Dragon Capital

8 9 10 11 12

Records:
The first Vietnam bank in the list of Top 2000 enterprises in the world as ranked by Forbes, and the single enterprise with the most number of blood donors
Vietnam Records Association

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2012 Annual Report

2012 FINANCIAL RESULTS

Indicators Unit 12/31/2011 12/31/2012

1. Capital base Charter capital Total assets CAR 2. Business results Deposits Loans disbursement Loans collection Special mentioned loans Non-performing loans Funds utilization ratio + Total loans/ deposits (LDR) + Total loans/ total assets (LAR) Overdue guarantees/total guarantees Special mentioned loans/Total loans Non-performing loans/Total loans 3. Liquidity Immediate liquidity ratio Liquidity ratio % % 15.94% 26% 15.76% 24% % % % % % 69.71% 63.73% 0.01% 2.05% 0.75% 82.99% 66.2% 0.13% 0.42% 1.46% VND Billion VND Billion VND Billion VND Billion VND Billion 2,031,725 887,577 829,684 6,017 2,204 1,748,979 1,088,403 1,016,999 1,412 4,890 VND Billion VND Billion % 20,230 460,420 10.57% 26,218 503,530 10.33%

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History of the bank

Development outlook for 2013

Assets and Funds

Increase total assets; Expedite equitization process to increase owners equity, as well as to ensure growth demands and CAR requirements are met Diversify ownership structure while maintaining State ownership at 51% or above.

Credit and investment

Credit is a critical part of the Banks operations, in which competition is based on market principles, Make necessary adjustments to credit structure to match VietinBanks strengths Minimize credit risks and keep NPL ratio under 3% Diversify credit and investment activities in the financial market, maintain a leading role in the market, enhance the effectiveness of fund utilization and liquidity management

Services
Develop fee-based banking services, identify key service groups to focus on Make use of a modern IT infrastructure to develop services, with the ultimate goal being to satisfy customers

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2012 Annual Report

In 2013, VietinBank makes it a priority to strengthen growth, maintain its dominance in the market, reinforce its key role in the implementation of the Government and the Partys policies. The Bank will spare no effort in comprehensive reform towards a more modern and competitive structure. Moreover, VietinBank will further invest in information technology, standardize operational procedures, enhance products and services, and manage risk in conformance to Basel II. VietinBank will curb non-performing loans and focus on collecting off-balance sheet debts. It is the Banks ongoing quest to ensure sound and sustainable growth and promote VietinBank image domestically and internationally. At VietinBank, we aspire to become an even more modern, effective financial and banking group that plays a key role in the region.

Human resources
Standardize and further invest in training of human resources Revamp and improve upon mechanism of utilizing employees and compensation Build a competent and professional workforce Implement thoroughly internal work regulations and abide by corporate culture.

Technology
Recognize IT as a crucial component that supports all facets of business Build a consistent IT system that is modern, secure, and stable.

Organization and Governance

Develop a clear, appropriate organizational structure Establish subsidiaries to provide a wide array of financial products and services Expand network, open new branches and representative offices Strengthen retail banking operations

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Report
OF THE BOARD OF DIRECTORS

P.20

Report

OF THE BOARD OF MaNAgEmENt

P.26

Report of the Board of Directors

n 2012, adverse economic conditions could be observed in Europe, the United States, Japan, and China. Vietnam too fell victim to the crisis: foreign direct investment was on the decline, the real estate market was stagnant, and GDP growth did not exceed 5.03%, the lowest it had been in 13 years. The banking industry faced challenges as well, given intense competition and growing bad debt figures. In response to such unfavorable conditions, VietinBanks Board of Directors closely followed the directions of the Government and the State Bank of Vietnam, as well as setting guidelines that require VietinBank personnel to adhere to international standards and to take the initiatives in coping with market changes. VietinBank managed to overcome challenges and achieved remarkable results: total assets amounted to VND 503.5 trillion (an increase of 9.4% from 2011),

reinforcing VietinBanks position as the second largest bank in Vietnam in terms of total assets; mobilized funds increased by 9.3%; loans by 13.6%. VietinBank is at the forefront of the banking industry in relation to agricultural lending, exporting, and granting loans to manufacturing enterprises at reasonable interest rates in compliance with the directives of the Party and the Government. Over 2012, asset quality was preserved, and the non-performing loans ratio was kept at 1.46% or lower, which was below the industry average. Profit before tax was at VND 8.168 trillion, equivalent to 109% of the target set forth by the 2012 General Shareholders Meeting. It was thanks to our joint efforts and determination, especially the comprehensive leadership from the Board of Directors that VietinBank was able to achieve the above results.

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2012 Annual Report

Total assets

9.3 %
Indicators Total assets (VND Billion) Charter capital (VND Billion) Mobilized funds (VND Billion)

Mobilized funds
increased by

503.5

VND Trillion

13.6%
Plan1 475,000 26,218 430,000 440,000 <3% 10% 1.5-2% 18% 7,500 13%-15% 0.30% Actual result 12/31/2012 503,530 26,218 460,082 467,879 1.46% 10.33% 1.7% 19.9% 8,168 16% 0.234% Result vs. Plan Surpassed Met Surpassed Surpassed Met Surpassed Met Surpassed Surpassed Surpassed Lower

increased by

Total loans

KEY TARGETS SET BY GENERAL SHAREHOLDERS MEETING AND PERFORMANCE RESULTS

Total loans and investments (VND Billion) NPL ratio CAR ROA ROE Profit before tax (VND Billion) Dividend payout ratio2 Compensation for the Board and Supervisory board members (% of profit after tax)
1: Resolution no. 05/NQ-DHCD dated 2/28/2012 and no. 06/NQ-DHDCD dated 12/28/2012 2: Based on year-end charter capital

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Report of the Board of Directors

Charter Capital Increase and Equitization To bolster its financial strength, VietinBank increased charter capital from VND 20.2 trillion to VND 26.2 trillion through stock dividends and bonus shares to existing shareholders. At year-end, consolidated CAR was 10.33%, well over the State Banks regulated level of 9%. On December 27, 2012, with the approval of the Government and the General Shareholders Meeting, VietinBank and the Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU), the largest bank in Japan and a subsidiary of the Mitsubishi UFJ Financial Group, the worlds third largest financial group, signed an agreement for the sale of 20% of VietinBanks stake to BTMU through private placement of 644,389,811 common shares). It is estimated that by the time the deal is finished, VietinBanks charter capital will amount to VND 32.661 trillion. VietinBanks ownership structure will be such that the Government will own 64.46% of the stake, BTMU will own 19.73%, IFC will own 8.03% (previously 10%), and other shareholders will own an aggregate of 7.78% (previously 9.69%), making VietinBank the number one bank in Vietnam by charter capital. At the close of a rather uneventful year for Vietnams securities market, VietinBank managed to sign a significant agreement

with BTMU, the likes of which had never before been seen in Vietnam. It also marked yet another step in VietinBanks integration into the international banking scene, at the wake of which S&P rated VietinBanks outlook as positive. Investor Relations In light of favorable business performance throughout 2012, VietinBank scheduled a high dividend payouts to investors. Not only keeping an attractive dividend payout ratio, as a premier commercial bank in Vietnam, VietinBank deems it important to keep shareholders well informed. VietinBank continually improves upon its hosting of big events, for it is through such events that the Bank promptly communicates official information to investors and analysts in and outside the country. VietinBank is regarded as having excellent relations with stock market investors. Sound business strategies and solid performance had positive impact upon the value of VietinBanks shares (ticker symbol: CTG). Over the course of 2012, CTG shares rose 51.1% in value, which was the highest growth rate among bank shares on the stock market and 3 times higher than VN-Indexs growth of 17.7%. Trading volume

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2012 Annual Report

of CTG shares also tripled from 2011. Additionally, CTG shares have been garnering more attention from foreign investors. Entrance into International Financial Markets Two significant events in 2012 further established VietinBanks growing presence in foreign markets. They were the issuance of USD 250 million international bonds in May and the sale of shares to BTMU in December. With the global financial market in a state of stagnancy, these two events showed VietinBanks strength and perseverance in times of hardship. Chosen by FinanceAsia as the Best Borrower in Vietnam, VietinBank indeed appears to be a highly promising organization in the eyes of investors. In addition, VietinBank kept on pursuing its international expansion strategy. Two new branches were opened, one in Vientiane, Laos and the other in Berlin, Germany. In total, VietinBank has three foreign branches, with the first one having been opened in Frankfurt in 2011. Admitting that difficulties still lay ahead, VietinBanks oversea branches have achieved encouraging results, promoting VietinBanks brand in the international market. The Bank is also looking to open representative offices and branches in other countries such as England, Poland, and the Czech Republic. Owing to our joint efforts, VietinBank garnered recognition from Brand Finance. The world renowned brand assessment company announced VietinBanks position as the 328th most valuable brand in the world, making VietinBank the only Vietnamese bank among the top 500 global banking brands and the No.1 brand in Vietnam valued USD 271 million and rated A+. Bank Governance VietinBank always strives to establish itself as the leading commercial bank in Vietnam and a key player in the greater region. The Board of Directors places focus on the following issues: Improvement of risk management and bank governance processes: In 2012, VietinBank undertook radical steps to change its organization and business model for the better. The Board recognized that operating in compliance with international standards

and practices requires having solid risk management mechanisms, striking a delicate balance between profits and risk, and minimizing risk. Hence, in January 2013, the risk management Division was born. Its purpose is to manage risk in three independent lines of defense, as required by Basel II, and to usher in a new credit granting model that (i) centralizes appraisal as well as collateral evaluation and management, and (ii) affords greater specialization of departments and better management of risk across the board. From April 2013, the Treasury and Capital Market Division will be formally established to promote sale and become the only contact of the Bank in the market to generate more profit given the challenges in credit activities. In addition, the three dedicated departments with separated functions are designed to better manage investment activities, strengthen risk management and improve performance. The Treasury and Capital Market Division will oversee all investment and treasury activities in the capital market, sell investment banking and treasury products to customers. This is one of two main business pillars and an important premise to promote investment banking in VietinBank to increase the scale and effectiveness of investment banking activities, gradually approaching model of investment banking of the leading banks in the region and the world. VietinBank has formulated sets of procedures, processes, and regulations for its foreign branches. In particular, for German branches, VietinBank follows Germanys MaRisk standards (Basel II), which the Bank plans to apply in Vietnam some time in 2013. Consolidation of senior management team In the past year, the composition of the Board of Directors and Management were further consolidated. Two new members were added to the Board of Directors, Mr. Cat Quang Duong and Ms. Nguyen Thi Bac, replacing Mr. Tran Xuan Chau and Ms. Tran Thi Hong Hanh. Mr. Nguyen Viet Manh, Mr. Nghiem Xuan Thanh, and Mr. Nguyen Van Thanh were replaced by Mr. Pham Huy Thong, Mr. Tran Kien Cuong, and Mr. Nguyen Duc Thanh as Deputy General Directors. VietinBanks top management team were united in carrying out their duties and responsibilities throughout the year, contributed extensively to the business performance of 2012.

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Report of the Board of Directors

VietinBank Human Resource Development and Training School

Upgrades to Information Technology System To pave a foundation for a more modern IT system that conforms to international standards in an effort to better facilitate the management and governance of the Bank, VietinBank implemented the IT strategies for the period from 2011 to 2015 in partnership with IBM. In 2012, the Board commissioned the Core Banking Replacement Project, aimed at allowing VietinBank to expand and to better satisfy the ever changing needs of the clients and the Banks long-term development strategy. The Organizational Restructuring Project was sanctioned in 2012 and officially kicked off in early 2013. The project of applying MX3 system by Murex for the Treasury division which has been implemented since 2011 was officially put into operation from February 2013. In addition, such projects as LOS, credit risk management, enterprise data warehouse, SOA middleware system, etc., continue to be implemented in accordance with the schedules.

IT systems continue to be upgraded to support the development of products and services, increase the application of technology, enhance productivity, reduce business costs, thereby enhance competitiveness and control of operations. Enhancement of infrastructure and customer service: In order to better serve the customers and to enhance the quality of its products and services, VietinBank inaugurated a Contact Center in January 2012. From the very onset, the Contact Center provided professional and high quality services to customers, addressing their concerns and responding to their inquiries. In September of the same year, construction of VietinBank Human Resource Development and Training School came to completion and it officially commenced operations. It is aimed at training new and seasoned VietinBank staff alike, enabling them to acquire new skills and knowledge so as to better serve customers.

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2012 Annual Report

ASSESSMENT OF THE BOARD DIRECTORS PERFORMANCE

OF

By overcoming economic challenges that have been plaguing the entire globe as well as those that are unique to Vietnam, VietinBank successfully fulfilled the objectives assigned by the General Shareholders Meeting. Not only did the Bank manage to grow its operations in a safe and effective manner, VietinBank also took remarkable steps toward gaining a stronger foothold in the global economy. As a leading commercial bank in Vietnam, VietinBank also carried out the policies set forth by the Party, the Government, and the State Bank pertaining to cost and interest rate reduction. VietinBank also held on successfully to the position as the leading bank in lending, investment, payment, trade finance, remittance, card services, etc. The above results, along with the hard work done by all of VietinBank staff, are a testament to the sound direction of the Board of Directors. The Board members took part in monitoring and guiding all of the banks activities. They worked with foreign experts and capitalized on their strengths and knowledge, which benefited the entire

bank on all fronts. The challenges faced by the Bank were dealt with swiftly and flexibly in the best interests of shareholders. VietinBanks Board of Directors fulfilled its role, seized opportunities, and completed the duties to which it had expressed its commitment before the General Shareholders Meeting. 2013 is anticipated to be yet another difficult year for VietinBank in particular and for Vietnamese banks in general. The Board has extensive experience in guiding the bank and is committed to continually finding new ways and scouring for new opportunities to undergo sustainable growth, gain reputation, and become more effective. In so doing, VietinBank believes that it will make it evident to investors that the Bank is worthy of the confidence they place in. To have the best chance of carrying out the Banks plans, VietinBanks Board of Directors hopes to continue benefiting from the guidance of the Party, the State, the Government, and the State Bank, the support of Government agencies, the confidence of the partners, as well as the contributions of the staff. % Growth of 2013 targets vs. 2012 results 10% 8% 12% 12% 5% 55% 42%

Indicators Total assets Mobilized funds Total loans and investments Outstanding loans (*) Profit before tax Owners equity Of which: Charter capital Dividend payout ratio Some financial ratios ROAE ROAA CAR NPL ratio
(*): In accordance with the State Bank of Vietnams regulations

Units VND Billion VND Billion VND Billion VND Billion VND Billion VND Billion VND Billion %

Targets 555,000 495,000 524,000 450,000 8,600 52,000 37,234 12

15-18% 1.5-1.8% >10% <3%

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Report of the Board of Management

2012 IN REvIEw
In 2012, the global financial crisis triggered the deterioration of economies around the world, including Vietnam. Faced with those adverse conditions, VietinBank made great efforts to persevere, all the while closely following the guidance of the Government and the State Bank of Vietnam. By the end of the year, VietinBank had gained great accomplishments, reflected by such indices as follow: Growth in size (VND billion)

Growth: Over 2012, total assets grew by 9.4%, mobilized funds by 9.3%, and total loans by 13.6%.

600000 500000 400000 300000 200000 100000 0

2007

2008

2009

2010

2011

2012

Total Assets

Total Loans

Mobilized funds

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2012 Annual Report

600000 500000 400000 300000 200000 Profitability: Despite 100000 2012s challenges, including fluctuating interest rates and exchange rates, VietinBanks profitability remained intact. 0 Profit before tax was at VND 8.168 trillion, equivalent to 109% of the target set. 2007 2008 2009 2010 2011 2012 1529 3373 2436 4638 Profit before tax (VND billion) 8392 8168

2007 2008 2009 2010 2011 2012

ROE (%)
26.74 20.60 14.10 15.70 1.01 22.10 19.90 1.35

ROA (%)
2.03 1.54 1.50 1.70

2007

2008

2009

2010

2011

2012

2007

2008

2009

2010

2011

2012

CAR and NPL: In 2012, VietinBank kept on taking measures to improve credit quality, diversify risks and investment portfolio, enforce credit authority, control and monitor closely each and every step during credit granting process aiming at detecting imminent risks, giving warnings and mitigating risks as well as minimizing non-performing loans. As at December 31, 2012, the NPL ratio was 1.46%, well under the industry average. The Banks CAR was 10.33%, markedly higher than the State Banks regulated level of 9%. NPL (%) 1.46 8.06 0.61 0.66 0.75 8.02 CAR (%) 10.57 10.33

2009

2010

2011

2012

2009

2010

2011

2012

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Report of the Board of Management

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2012 Annual Report

BuSINESS ActIvItIES
Mobilized Funds In 2012, the State Bank of Vietnam repeatedly decreased the cap for deposit interest rate from 14% p.a. at the beginning of the year to 8% p.a. at year-end. On top of that, unfavorable economic conditions and difficulties in banking sector were the challenges facing VietinBank throughout the year. Through relentless determination, VietinBank continued to pool funds from domestic and international sources, thus ensuring liquidity and compliance with the State Bank of Vietnams regulations. As at December 31, 2012, mobilized funds were at VND 460 trillion, an increase of 9.3% and equivalent to 107% of the target set by the General Shareholders Meeting. The growth of funds has now reached a state of stability, with the improvement of long and medium term funding. Eighty-one percent of funds are composed of VND. The market share of VietinBanks fund mobilization is around 12 percent. VietinBank is the leading bank in obtaining funds from foreign sources. The Bank was chosen by FinanceAsia, the leading magazine in Asia on finance and banking, as the Best Borrower in Vietnam. Their assessment was partly based on the May 2012 issuance of VietinBank USD 250 million international bonds (clean, unsecured), an event that is reflective of the confidence investors place in the Bank.
Size and Growth of Mobilized Funds

9.3% 23.9%
460,082 420,928 339,699

2010

2011

2012

Growth (%) Total funds (VND Billion)

Utilization of funds: At year end 2012, total loans and investments reached VND 468 trillion, an increase of 9% from 2011. - Credit activities: Every bank encountered challenges in its credit activities over the past year due to adverse economic conditions. Credit growth for the entire banking industry was negative throughout the first six months of 2012. In the third Quarter of 2012, the economy was picking up. By simultaneously taking a number of remedial measures such as assisting enterprises in difficulty, offering preferential packages and interest rates, and focusing on granting loans to manufacturing enterprises,

VietinBank was able to achieve a total loans figure of VND 333 trillion by December 31, 2012, an increase of 13.6% from the start of the year. This is a remarkable achievement contributing to the fulfillment of the target of credit and economic growth stimulation of the banking sector. VietinBank followed closely the guidelines on credit policy of the State Bank of Vietnam and put forward strict internal regulations to control credit quality. Non-performing loans were controlled at 1.46% of total loans. In 2012, VietinBank successfully completed phase 1 of the credit model change process toward centralization of risk management, aimed at making its operations more conformant to international practices.

Size and Growth of Loans

13.6% 25.3%

293,434 234,204

333,356

2010

2011

2012

Growth (%) Outstanding loans (VND Billion)

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Report of the Board of Management

Loan Composition (by types of enterprises)

1% 15% 3% 4%

10%

15%
States-owned enterprises 100% State-own one-member limited company Other limited companies Joint-stock companies with over 50% state ownership Other Joint-stock companies Private companies Foreign invested enterprises Business households and individuals Others

18% 9%

25%

Loan Composition (by industry)

2% 8% 3%
Manufacturing and processing Wholesale, retail, automobile and motorcycle repair Construction Electricity, petroleum and water Mining Transport, warehouse Agricultural, forestry and aquaculture Real estate business Other industries

5% 31%

8% 7% 7% 29%

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2012 Annual Report

- Investment Enhancement of profitability was set as the target for investment activities of VietinBank. At year end 2012, investment activities made up VND 134.5 trillion, equating to 26.7% of total assets. Aside from traditional investment products, VietinBank launched more modern products over the past year, including interest rate option, interest rate swap, currency swap and other commodity derivatives that aim to assist customers and the bank in managing interest rate and exchange rate risks. - Interbank market: As at December 31, 2012, VietinBanks investments in the interbank market amounted to approximately VND 58 trillion, accounting for 43% of the total investment portfolio. VietinBank continually maintains high liquidity and remains profitable.

2012 Investment Portfolio

1.95% 2.09% 0.39% 17.81% 43.03%

34.73%

2011 Investment Portfolio - Bonds, valuable papers (excluding equity securities): At year end 2012, investment in securities was slightly above VND 73 trillion, an increase of 8.6% from the same time of the previous year. Most of VietinBanks securities investments are Government bonds and corporate bonds which are highly liquid with dominant share in Vietnam bond market. - Capital contribution: As at December 31, 2012, VietinBank invested a total of nearly VND 3 trillion into joint-ventures, affiliates and other long-term investments. Foreign Exchange Trading VietinBanks 2012 transactions in the interbank market were about USD 19 billion in value. In terms of foreign exchange trading, VietinBank was the leading bank in the interbank market with a market share of 20%, and was the second ranked bank in the non-interbank market with revenues of over USD 11 billion. The trading volume tripled from 2011 thanks to improvements made to the system and to increasing direct sales. Fee-based services - Domestic payment services: Owing to the constantly improved quality of payment services, the growth in market share and VietinBanks reputation, total payments reached VND 7,300 trillion and fee revenue were VND 447 billion in total.

4.31% 2.14% 16.93% 0.58% 28.20% 47.84%

Inter-bank Government bonds Equity securities

Debt securities issued by business entities Debt securities issued by credit institutions Capital contribution

- International payment services and trade finance: VietinBanks international payment services and trade finance services have been growing steadily in recent years, with its market share growing slightly as well. In 2012, total import-export payments were in excess of USD 32 billion, an increase of 15% from 2011. VietinBanks share of the countrys import-export market was roughly 14%.

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Report of the Board of Management

- Card services and e-banking Card services: VietinBank resumed the market leader status with a 23% share of the debit card market (11 million cards) and a 9.5% share of the credit card market (nearly 400 thousand cards). VietinBanks POS network is second to none in Vietnam. Electronic banking (e-banking) services: As the Bank further developed its e-banking services, including IPAY, VBH, and SMS banking, to better serve customers, a remarkable surge in customers that registered for e-banking services (about 2.6 million additional registrations for an aggregate of over 5 million) was observed.

Accumulated Debit cards issued

Accumulated Credit cards issued

Millions of cards 11

Thousands of cards 400

7.1 211 5.3 3.2 2.3 1.2 2 2007 2008 2009 2010 2011 2012 2007 4 2008 24 2009 2010 2011 2012 120

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2012 Annual Report

 Risk Management and Internal Auditing - Risk Management Credit risk management: In 2012, VietinBank had the lowest NPL ratio among all commercial banks in Vietnam (1.46%) thanks to the improvement in credit risk management. The Bank followed closely the directives of the Government and the State Bank of Vietnam, and regularly improved upon risk management practices. In adherence to Basel II, VietinBank promulgated regulations on credit risk and completed a credit risk management framework. Research on revamping the credit management mechanism was conducted in tandem with changes to the centralized credit management model. Management of liquidity risk, interest rate risk and market risk: VietinBank has continually enhanced its fund management, liquidity management, and interest rate risk management practices in adherence to international practices by means of advanced software and systems. Operational risk management: VietinBank has made substantial changes to its organizational model and risk

management framework so as to further comply with Basel II. The worlds leading operational risk management system was implemented in 2011 and continues to run stably to date. It greatly supports the Banks management of operational risk. - Internal Audit and Control VietinBank has implemented a new internal audit and control model that promotes independence, quality, to ensure the safety, and effectiveness in the Banks daily business and to fit the new credit appraisal model. Problems that exist at the branch level are quickly dealt with to ensure consistency across the board. Supporting Activities - Human Resources Management and Network Expansion Organizational structure: VietinBank has been implementing the Organizational Restructuring Project. Step by step, VietinBank is revamping its organizational and operational models so as to gain competitive advantage and to further comply with international standards and practices.

2012 Annual Report

33

Report of the Board of Management

Network expansion: VietinBanks ever growing network is the second most expansive in Vietnam. It is comprised of over a thousand domestic locations. Aside from Frankfurt branch, VietinBank now has a Berlin branch and a Vientiane branch, both of which were opened in 2012. The Banks network is indicative of its status as the leading Vietnamese bank with regard to international expansion. Human resources: VietinBank has made appointments to all levels of management. Careful selection of highly competent individuals to join VietinBank has been done during 2012. VietinBank continues to be seen as an attractive employer to candidates of great skills. Remuneration: Despite adverse economic conditions, VietinBank has gone to great lengths to ensure the stability of the payroll fund. More effort has been put into tying compensation with performance. Project on payroll mechanism and employment of KPIs in accordance with international standards has been completed in material respects by year end 2012. - Information Technology and Bank Modernization VietinBank has carried out many information technology strategies and projects. In particular, the Core Banking Project was officially kicked off on December 17, 2012. Upon completion, the new Core Banking system is expected to allow VietinBank to better meet customer demands, further expand its operations and carry out the long term development strategies with greater ease. - Communication and Brand Promotion: Great effort was put into diversifying VietinBanks promotional campaigns. The messages and communication

channels were improved drastically. In anticipation of the 25th anniversary, VietinBank is making preparations for communication programs though a variety of media. - Customer Service: VietinBank officially inaugurated a contact center. It aims to provide customers with modern, professional services and accurate information. Its purpose is also to give advices to customers and take in their feedback, as well as to promote VietinBanks image and reputation. - Investor Relations: In 2012, a new website for investor relations was set up to provide investors with a reservoir of important information. VietinBank is regarded as a leading figure in the securities market. Over the year, CTG shares had a profitability ratio of 51% (triple the growth of the VN-index), which was well above those of other shares on the market. - Capital Construction: VietinBank kicked off many key projects and constructions and completed a number of important projects. Notably, on September 25, 2012, VietinBank Human Resource Development and Training School in Van Canh was opened and began operations. It was instrumental to the fulfillment of VietinBanks training strategies. - Emulation and Awards: At all levels of VietinBanks organization, numerous groups and individuals earned awards: awards for 42 individuals and 41 groups were granted by the Prime Minister; 3rd place labor medal bestowed on 21 individuals; 2nd place labor medal granted to 1 individual and 3 groups. Of particular significance,

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2012 Annual Report

the President of Vietnam signed Decision no. 26/QD-CTN which would see an award for heroic labor conferred upon VietinBank. Charity Work and Social Welfare Pursuant to Resolution 11/CP, Resolution 30a/CP, VietinBank took a number of measures for the greater good of the community and of society, such asreducing operational costs, engaging in charity work, focusing

on curbing poverty, and building infrastructure in rural areas. On February 25 and 26, 2012, VietinBank hosted blood donation days. Over 11 thousand staff and union members donated their blood, which led to over 8000 units of blood being accumulated. As such, VietinBank broke Vietnams record for an enterprise having the largest number of employees donating blood for charity. VietinBank is well regarded not just as a business entity but also as a charitable organization.

2012 Annual Report

35

Report of the Board of Management

Development Plan

BUSINESS OPERATIONS VietinBank continues to promote all sources of funding to meet the demand for credit growth and ensure the prudential ratios: VietinBank continues to promote mobilization of all sources of funding, in both local and foreign currencies domestically and internationally, with particular emphasis on mobilization from individuals and institutions; Issue timely mechanisms, policies, products, managing interest rates which are appropriate and close to the market; Attract and make use of funds from traditional clients with large deposits, long-term international sources to achieve a balance with lending and investment activities; streamline the capital structure by increasing

the proportion of stable long-term capital; Understand the characteristics and movement of markets in each locality of operation to actively implement effectively mobilization products. VietinBanks credit growth is linked to quality, efficiency and sustainability: VietinBank continues to promote the growth of short-term credit to improve credit portfolio, including strengthening of credit growth in key industries and priority areas; regularly follow up with economic forecasts, international and domestic markets, and improve the quality of analysis, evaluation and forecast to have a clear credit orientation for each clientele, each group of industries; diversify credit and banking products services for each

36

2012 Annual Report

customer segmentation; improve the quality of customer evaluation, project appraisal and loan schemes, enhance following-up with customers, regularly monitor, classify and evaluate the business operations, financial capacity of customers; further improve corporate governance capacity, tighten credit discipline, focus more on inspection, control and monitoring credit risk, operational risk, minimize new bad debts; Implement three separate lines of defense according to Basel II standards to control and maintain good credit quality. Foreign exchange trading:

- Card Services: VietinBank continues to maintain leading market position across all card businesses; promote research, plan the deployment of new technological projects, keep up with technology trends in the region and the world; innovate, improve the quality of card products and services to make the difference through quality and value added services. Equitization and increase of charter capital: Equitization and increase of equity are some of the areas of focus under the plan on renovation, restructuring banking operations, expanding business operations and improving risk management in accordance with international standards. The key goal in 2013 of VietinBank is to increase charter capital, thereby enhancing owners equity, through the sale of shares to foreign strategic shareholder and issuance of additional shares to the existing shareholders. In 2013, VietinBanks charter capital is expected to exceed VND 37 trillion and owners equity is expected to be VND 52 trillion, the percentage of ownership of the State, strategic partner BTMU and IFC are expected to be 64.3%, 20% and 8% respectively, bringing VietinBank to be the bank with largest capital base and strongest shareholder structure in Vietnam. RISK MANAGEMENT VietinBank is conducting comprehensive restructuring of the risk management division to strengthen and promote the role of three independent lines of defense according to international practices. VietinBank continues to improve internal audit model, consolidate audit personnel and enhance the provision of consultancy service and recommendations to its branches. At the same time, the Bank keeps strengthening its internal remote monitoring through monitoring programs and system in order to improve the efficiency of the inspection, control and internal audit function. VietinBank continues to comply with the rules, procedures and regulations in its course of business. The development of risk prevention culture, active control and management of risks in all activities are receiving attention and further enhanced, especially for ethical risks and operational risks.

VietinBank will focus on implementing business goals under a long-term vision to continue to improve its market share of foreign exchange; implement comprehensive marketing plan to sell foreign exchange products; expand cooperation with domestic and foreign financial institutions, as well as with export customers to enhance the exploitation of foreign currency to meet the needs of customers; develop new business of investment banking and currency trading such as currency derivatives, interest rate derivatives and exchange rate derivatives in order to maximize investment opportunities and minimize risks. Fee-based services: - Domestic payment operations: VietinBank continues to implement measures to ensure the safe operation of payment; improve mechanism of management monitoring, inspection of payment transactions at Head office and at branches; improve and upgrade user applications, increase automatic processing, etc., to expand domestic payment and make sure of the quality of centralized payment transactions through Head office (bilateral payment, IBPS payment); promote research and development of new payment products, expand customer base, distribution channels and market share of VietinBanks payment services. - International payment and trade finance: VietinBank will restructure its customer base; focus on low-risk sectors, innovate funding mechanisms for trade finance in the direction of modern banking, based on an assessment of the flow of goods and cash flow, free from traditional mindset of credit.

2012 Annual Report

37

Report of the Board of Management

SUPPORTING ACTIVITIES VietinBank continues to restructure and improve its organization structure: In 2013, VietinBank will actively carry out the ORP project to gradually restructure the organizational model; standardize and improve its sets of processes and regulations. The transformation of the organization structure of the Bank to strengthen its operations in wholesale banking, retail banking, investment banking, supporting activities, finance management and risk management, etc., according to international practices will be accelerated to enhance its competitiveness and risk management capacity, contributing to the safe and effective business of the Bank. VietinBank continues to standardize personnel management: The Bank will improve the quality of human resources, especially of those who with limited or weak performance; restructure and plan staff for succession, evaluate and monitor the performance and progress of each staff in succession planning on a monthly basis; continue the succession planning for talented staff in 2013; recruit and provide training to staff to well prepare for foreign branches. The assessment of staffs performance will be innovated and made transparent by employing the balanced scorecard method. VietinBank further reforms the payroll, bonus, and emulation mechanisms: In 2013, VietinBank will implement new payroll mechanism and employ key performance indicators (KPIs) to ensure the transparency and fairness of income policy; continue to do research on and apply new welfare policies, especially insurance policies in order to improve and enhance the remuneration, motivating employees to strive and dedicate wholeheartedly to VietinBank. Emulation and staffing need innovation toward standardizing the staffs assessment, commending and rewarding staff promptly at units to arouse their sense of pride and loyalty, promoting innovations, improving labor productivity. VietinBank reviews to improve network efficiency: In 2013, VietinBank will further

strengthen and consolidate the operation of its units; consider the merger, dissolution or winding up of the local units with poor performance and no growth potential; speed up the upgrading of foreign branches of the Bank into subsidiaries and promptly implement procedures to open branches in Poland, Czech Republic, England... in Quarter III/2013. VietinBank accelerates the implementation of integrated information technology strategy, particularly the Core banking replacement project. The Bank will continue to take measures to ensure the smooth operation and continuity of the IT system as well as the quality and reliability of information used for decision making. VietinBank continues to accelerate investment in infrastructure development and capital construction: key projects such as headquarter construction project - VietinBank Tower in Ciputra, Training Center in Hue, Representative Office at 93-95 Ham Nghi in Ho Chi Minh City, Representative Office in Da Nang, etc., shall be put into operation soon. VietinBank continues to enhance its brand value through communication activities, marketing and brand development: VietinBank continues to develop an overall communication strategy with promotion campaigns and programs for products and services, major events to enhance business efficiency and improve brand reputation. Communication programs are being implemented to celebrate 25 years of construction and development of VietinBank. SOCIAL RESPONSIBILITIES In 2013, VietinBank continues to pursue poverty reduction objectives set by the Party and the Government in an effort to improve the lives of people; implement effectively and monitor closely gratitude and social charity programs to ensure that the funds from VietinBank will be efficiently used for right purposes and right persons and in compliance with procedures and regulations on investment, capital construction and financial management.

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2012 Annual Report

in the List of Forbes Global 2000 leading companies

VietinBank is the first Vietnam bank

ORgaNIZatIoN StRuctuRE, humaN RESouRcES aNd coRpoRatE govERNaNcE

Organization structure, human resources and corporate governance

Committees
Secretariat to the Board

HR and Remuneration Committee Assets and Liabilities Management Committee Risk Management Committee Policy Committee IT Development Strategy Committee

Credit Committee Financial Institutions Committee

Business Division

Treasury & Capital Market Division

Finance Division

Risk Management Division Market Risk Management Department Credit Risk Management Department Operational Risk Management Department

Corporate Banking Department

Sales & Business Development Department

Capital Management & Financial Planning Department

SMEs Banking Department

Treasury Dealing

Financial Accounting Management Department

Retail Banking Department

Capital Market Department

Financial Institutions Department

Legal Department

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2012 Annual Report

General Shareholders Meeting Supervisory Board Board of Directors

Compliance and Performance Auditing Department Operational Monitoring and Auditing Department

Board of Management

Credit Control & Approval Division

Banking Services Division

Supporting Division Business Capital Payment Department Cash & Vault Management Department Procurement Department Capital Construction & Purchasing Department Emulation Department Accounting Policy Department VietinBank Trade Union VietinBank Human Resource Development and Training School

Information Technology Division

Credit Ratings & Credit Lines Approval Department Credit Control & Approval Department Credit Control & Approval Department in HCMC Non-performing Loan Management Department Non-performing Loan Management Department in HCMC Credit & Investment Policy Department

Main Operation Center VND Payment & Accounting Department E-Banking Department

Human Resources Department Labor & Payroll Management Department Back Office

IT Center

Command Center & Help Desk

ISO Management Department Card Center Information & Communication Department Representative Offices VietinBank Party Committee

IT Project Management Office

MIS Department

43

Organization structure, human resources and corporate governance

Board of Directors

1 3

2 4

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2012 Annual Report

Members of the Board of Directors

Mr. PHAM HUY HUNG - Chairman of the Board of Directors Appointed in November 2007, Mr. Pham Huy Hung, born in 1954 in Hanoi, is currently a deputy of the 13th National Assembly, member of the Standing Party Committee of Central Enterprise Division, Secretary of the Party Committee and Chairman of the Board of Directors of Vietnam Joint Stock Commercial Bank for Industry and Trade. He holds a PhD in Economics. He has been with VietinBank since the Banks early days and has contributed to the development of the Bank for the last 25 years. Before that, he worked at the Ministry of Finance and the State Bank of Vietnam. His former positions include: Deputy Chief of the Secretariat, Deputy Head of Credit Department, Head of Currency Department of VietinBank; Deputy Branch Manager, Branch Manager of VietinBank - Ba Dinh Branch; Deputy General Director, Acting General Director, and Member of the Board of Directors and General Director of VietinBank. In 2011, he was elected to the 13th National Assembly. In 2012, he was honored with the prestigious awards of the Party and the State: Certificate of Merit by the Prime Minister for individuals actively involved in charitable activities (2006 - 2012) with the Golden Heart fund; Certificate of Merit by the Minister of Industry and Trade for his contribution in export promotion and import control; etc. 1 3 Ms. PHAM THI HOANG TAM - Board Member Ms. Pham Thi Hoang Tam was born in 1958 in Ben Tre. She graduated from University of Economics (Ho Chi Minh City), and holds a PhD in Economics. She started working at VietinBank from the early days of its establishment. She has held various positions: Head of Credit Department of State Bank in Ben Tre town; Deputy Branch Manager then Branch Manager of VietinBank - Ben Tre province; Deputy General Director of VietinBank; Deputy General Director of Mekong Housing Bank; In September 2006, she was appointed Member of the Board and Head of Supervisory Board of VietinBank. She is currently served as Member of the Board of Directors of VietinBank. Mr. NGUYEN VAN THANG Board Member and General Director Mr. Nguyen Van Thang, was born in 1973 in Hanoi. He holds a PhD in Economics. He started working at VietinBank since 1996 and has contributed to the development of the Bank for 17 years. He has held the following positions: Secretary to General Director and Deputy Chief of Secretariat, Deputy Director of Corporate Banking Department, Director of Corporate Banking Department of VietinBank; Branch Manager of VietinBank - Hanoi Branch; Member of the Board of Directors and Acting General Director of Vietnam Joint Stock Commercial Bank for Industry and Trade. In December 2011, he was appointed as Member of the Board and General Director of VietinBank.

2 4 Ms. Do Thi ThuY - Board Member Ms. Do Thi Thuy was born in 1960 in Thai Nguyen Province. She holds a PhD of Economics, and was a lecturer of the Banking Institute. She has been working at VietinBank since 1997. She has held various positions: Deputy Director, Director of Short-term Credit Department, Director of Corporate Banking Department of VietinBank; Branch Manager of VietinBank - Ba Dinh Branch; In August 2008, she was appointed Member of the Board of VietinBank. She is currently served as Member of the Board of Vietnam Joint Stock Commercial Bank for Industry and Trade.

2012 Annual Report

45

Organization structure, human resources and corporate governance

Members of the Board of Directors

Ms. NGUYEN HONG VAN - Board Member Ms. Nguyen Hong Van was born in 1969 in Hanoi. She holds a Master of Banking and Finance. She started working at VietinBank since 1990. She has held the positions of: Deputy Director of Planning Department, Director of Planning and Investment Department, Director of Planning and ALCO Support Department; In September, 2008, she was appointed Member of the Board of VietinBank. She is currently served as Member of the Board of Vietnam Joint Stock Commercial Bank for Industry and Trade. Mr. Cat QuanG DuonG - Board Member Mr. Cat Quang Duong was born in 1959 in Hanoi. He holds a Master of Banking and Finance. In February 2012, he was appointed Member of the Board of VietinBank. In his career path, he has held various positions: Deputy Manager of Credit Department, Manager of Credit Department, State Bank of Vietnam. Currently he is the Deputy Head of Credit Department of the State Bank of Vietnam and Member of the Board of VietinBank.

5 7 Ms. NGuYen Thi Bac - Board Member Ms. Nguyen Thi Bac was born in 1953 in Bac Ninh. She holds a Master of Law. In February 2012, she was appointed Member of the Board of VietinBank. Over the course of her career, she has held various positions such as: Lecturer in Law Faculty of Vietnam National University; Junior Supervisor, Senior Supervisor, Deputy Director, Director, Member of the Standing Committee of the Supreme Peoples Republic of Vietnam; Deputy Director of Law Committee, Member of the 11th National Assembly; Senior officer of National Assembly Office; She is now a lawyer of Hanoi Bar Association and a Board Member of VietinBank.

6 8 Mr. Michael KniGht Ipson - Board Member Appointed in May 2011, Mr. Michael Knight Ipson, born in 1947 in the United States, is currently Member of the Board of VietinBank. He has held various positions such as: Vice President responsible for correspondent banking and PRC companies in Hong Kong, as well as functioning as assistant to the Regional Manager for China, Hong Kong and Taiwan; Chief Representative for the Peoples Republic of China; General Director of Chemical Bank Hong Kong Branch and Chief Executive, Chemical Asia Limited, the Asia merchant banking arm of Chemical Bank; Member of Chemical Bank - Global Credit Committee; Alternate Chief Executive, Chairman, IBA Credit; Principle Banking Specialist of IFC- Beijing; Country Manager for China and Mongolia (IFC); Consultant on East Asia (IFC Washington, DC).

The number of Independent Board Members: There is one independent member in the Board of Directors
of VietinBank who is Ms. Nguyen Thi Bac.

Activities of the Board of Directors: The Board of Directors is the governing body of the Vietnam Joint
Stock Commercial Bank for Industry and Trade, elected for 5-year term, has full authority to act on behalf of VietinBank to exercise the rights and obligations related to the purpose and benefits of the Bank, except for matters under the jurisdiction of the General Shareholders Meeting. The Board consists of one Chairman and Members responsible to the shareholders for the governance of VietinBank.

Activities of Independent Board Member: Accordance with the provisions of the Banks Charter and the current laws.
46
2012 Annual Report

5 7

6 8

Activities of the Committees under the Board of Directors:

The Board established and maintains the operation of: Human Resources and Remuneration Committee; Risk Management Committee; Policy Committee; Asset Liability Management Committee IT Development Strategy Committee. The Committees assist the Board of Directors, give advices and make proposal to the Board of Directors on

the implementation of the tasks and powers of the Board of Directors and perform a number of tasks assigned by the Board of Directors. The Board of Directors shall specify the working mechanism of its Committees, including, among others, the following issues: The regular meetings of the Committees; The extraordinary meetings of the Committees; The decision making of the Committees; Judgment mechanism of the Board of Directors for the Committees proposals.
2012 Annual Report

47

Organization structure, human resources and corporate governance

Supervisory Board
Supervisory Board members

Ms. Tran Thi Le NGa - Head of the Supervisory Board Appointed in July 2009, Ms. Tran Thi Le Nga, born in 1961 in Hanoi, is currently the Head of the Supervisory Board of Vietnam Joint Stock Commercial Bank for Industry and Trade. She holds a Master of Economics at the National Economic University. She started working at VietinBank from its early years of establishment. She has held various positions: Deputy Head then Head of Business Department, Deputy Branch Manager then Branch Manager of VietinBank - Chuong Duong Branch.

Ms. Phan Thi QuY - Member of the Supervisory Board Appointed in July 2009, Ms. Phan Thi Quy, born in 1954 in Bac Giang, is currently a Member of the Supervisory Board of the Vietnam Joint Stock Commercial Bank for Industry and Trade. She was a teacher at the Banking High School in the mountainous Bac Thai, teacher at Banking High School No. 4. She began working at VietinBank since 1994, and served as auditor in the Internal Control and Inspection Board, Member of the Supervisory Board of VietinBank.

Ms. Pham Thi Thom - Member of the Supervisory Board Appointed in July 2009, Ms. Pham Thi Thom, born in 1969 in Ninh Binh, holds a Masters degree in Banking and Finance. She is currently the Manager of Policy Division of the Accounting and Finance Department of the State Bank of Vietnam and Member of the Supervisory Board of the Vietnam Joint Stock Commercial Bank for Industry and Trade. She has held the following positions: Deputy Head of Accounting Department, Head of Accounting Department of Bank for Agriculture and Rural Development of Vietnam- Hanoi Branch; Deputy Director of Policy Division of Accounting and Finance Department - State Bank of Vietnam.

Activities of the Supervisory Board

The activities of the Supervisory Board are subject to its own regulations on organization and operations, ensuring basic principles: Supervisory Board is a competent agency operating independently from the Board of Directors and Board of Management. The Supervisory Board acts on behalf of the General Shareholders Meeting in supervising the activities and the compliance with the provisions of law and the Charter by the Board of Directors and the General Director in managing VietinBank. The Supervisory Board takes responsibilities to the law and the General Shareholders Meeting for the implementation of the rights and duties assigned to them. The Supervisory Board which is elected by the General Shareholders Meeting is operating independently and effectively with many improvements in supervision and warning functions.

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2012 Annual Report

Board of Management
Members of the Board of Management

Mr. NGuYen Van ThanG Board Member and General Director Appointed in December 2011, Mr. Nguyen Van Thang, 40 years old, is currently a Member of the Board and General Director of VietinBank. 1 2 Mr. NGuYen Van Du Deputy General Director Appointed in August 2008, Mr. Nguyen Van Du, 51 years old, holds a Master of Economics. He is currently Deputy General Director of the Vietnam Joint Stock Commercial Bank for Industry and Trade. He started working at VietinBank since its establishment and has contributed to the development of the Bank for the past 25 years. He has held the following positions: Deputy Director of Foreign Relations Department, Acting Director of Foreign Capital Raising Department, Director of Correspondent Banking Department, Director of Human Resources Department, VietinBank.

1 3

Ms. Bui Nhu Y Deputy General Director

Appointed in August 2008, Ms. Bui Nhu Y, 51 years old, holds a Master of Economics. She is currently Deputy General Director of the Vietnam Joint Stock Commercial Bank for Industry and Trade. She has been working at VietinBank since 1990. In the past 23 years, she has held the following positions: Deputy Director of Investment Project Management Department, Deputy Director of Project Management and Medium-term Credit Department, Director of Credit Management Department, Director of Credit Policy Department, Director of Corporate Banking Department.
2012 Annual Report

49

Organization structure, human resources and corporate governance

Mr. Pham Anh Tuan Deputy General Director

Appointed in August 2008, Mr. Pham Anh Tuan, 47 years old, holds a Master of Business Administration. He is currently a Deputy General Director of Vietnam Joint Stock Commercial Bank for Industry and Trade. He has been devoting for the Bank since 1990. In the past 23 years, he has held the following positions: Deputy Manager, Manager of IT Department, Director of Main Transaction Center II; Deputy Director of IT Department, Representative Office; Director of VietinBank Information Technology Center.

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2012 Annual Report

Members of the Board of Management

Mr. Vo Minh Tuan Deputy General Director Appointed in April 2010, Mr. Vo Minh Tuan, 46 years old, holds a Master degree in economic development, is currently Deputy General Director of the Vietnam Joint Stock Commercial Bank for Industry and Trade and co-Director of VietinBank - German branch. He has been working at VietinBank since 1990. In the past 23 years, he has held the following positions: Deputy Manager of International Settlement Department, Manager of Financial Accounting Department, Deputy Branch Manager of VietinBank - Ho Chi Minh Branch; Branch Manager of VietinBank - Branch No. 1 in Ho Chi Minh City, Deputy General Director of the Vietnam Joint Stock Commercial Bank for Industry and Trade. 5 Mr. Pham HuY ThonG - Deputy General Director 8 Mr. Le Duc Tho Deputy General Director Appointed in April 2010, Mr. Le Duc Tho, 43 years old, holds a PhD in economics. He is currently the Deputy General Director of the Vietnam Joint Stock Commercial Bank for Industry and Trade. He has been devoting for VietinBank in the past 22 years. He has held the following positions: Head of Evaluation team, Business Department of VietinBank - Vinh Phu Branch; Deputy Manager of Business Department, VietinBank - Phu Tho Branch; Deputy Director of Planning Department, Deputy Director of Planning and Investment Department, Director of Investment Department of VietinBank. 6 Mr. NGuYen Duc Thanh - Deputy General Director 9 Mr. NGuYen HoanG DunG Deputy General Director Appointed in March 2011, Mr. Nguyen Hoang Dung, 51 years old, holds a Master of Economics. He is currently Deputy General Director of Vietnam Joint Stock Commercial Bank for Industry and Trade. He has been working at Vietnam Joint Stock Commercial Bank for Industry and Trade since the beginning of its operation and during the last 25 years, he has held the following positions: Deputy Manager of Supervisory Department, Assistant to Manager, Manager of Personnel Department of VietinBank Minh Hai Branch; Manager of Business Department, Manager of Ho Chi Minh City Transaction Office, Deputy Branch Manager, Branch Manager of VietinBank - Ca Mau Branch; Senior Manager of VietinBank. 7 Mr. Hai HunG NGuYen - Chief Accountant 10

Appointed in August 2012, Mr. Pham Huy Thong, 34 years old, holds a Master of Business Administration. He is currently Deputy General Director of Vietnam Joint Stock Commercial Bank for Industry and Trade. He has been working at VietinBank since 2002. In recent years, he has held the following positions: Manager of Export Payment Department of VietinBank - Que Vo Branch, Deputy Manager of SME Department of VietinBank - Ba Dinh Branch, Deputy Manager, Manager of Customer Department of VietinBank - Hanoi Branch, Deputy Manager, Branch Manager of VietinBank Hanoi Branch.

Appointed in August 2012, Mr. Nguyen Duc Thanh, 43 years old, holds a Master of Economics. He is currently Deputy General Director of Vietnam Joint Stock Commercial Bank for Industry and Trade. He has been working at VietinBank since 2010. In his career path, he has held the following positions: Commercial Attach - Embassy of Vietnam in the Arab Republic of Egypt, Secretary to the Minister of the Ministry of Industry and Trade, Deputy Director of Competition Management Department - Ministry of Industry and Trade, Director of Financial Institution Department of VietinBank.

Appointed in June 2011, Mr. Nguyen Hai Hung, 41 years old, holds a Bachelor of Economics. He is currently the Chief Accountant of the Vietnam Joint Stock Commercial Bank for Industry and Trade. He has been working at VietinBank since 1991 and has devoted to the development of the Bank in the past 22 years. He has held the position of Deputy Director, Director of Accounting and Payment Department of Vietnam Joint Stock Commercial Bank for Industry and Trade. 4 5 8 6 9 7 10

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Organization structure, human resources and corporate governance

Other information related to the Board of Directors, Supervisory Board and Board of Management
Changes in members of the Board of Directors, Supervisory Board and Board of Management
Members of Board of Directors: Full name Ms. Nguyen Thi Bac Mr. Cat Quang Duong Title Member of the Board Member of the Board Date of Appointment / Resignment Date of appointment: February 28, 2012 Date of appointment: February 28, 2012 Date of appointment: July 03, 2009 Resigned since February 28, 2012 for assignment at SBV Date of appointment: July 03, 2009 Resigned since February 28, 2012 for assignment at SBV

Ms. Tran Thi Hong Hanh

Member of the Board

Mr. Tran Xuan Chau

Member of the Board

Members of the Board of Management and Chief Accountant Full name Mr. Pham Huy Thong Mr. Nguyen Duc Thanh Mr. Tran Kien Cuong Title Deputy General Director Deputy General Director Deputy General Director Date of Appointment / Resignment Date of appointment: August 01, 2012 Date of appointment: August 01, 2012 Date of appointment: March 01, 2012 Resigned since March 01, 2013 Date of appointment: April 04, 2010 Resigned since March 01, 2012 for assignment at SBV Date of appointment: January 15, 2012 Resigned since June 15, 2012 for assignment at SBV Date of appointment: July 03, 2009 Resigned since January 16, 2012 for assignment at SBV

Mr. Nguyen Viet Manh

Deputy General Director

Mr. Nghiem Xuan Thanh

Deputy General Director

Mr. Nguyen Van Thanh

Deputy General Director

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2012 Annual Report

 Income, remuneration, other benefits and reimbursement for members of the Board of Directors, Supervisory Board and Board of Management.
The Board of Directors, Supervisory Board, and Board of Management of VietinBank enjoy the benefits, remuneration and other interests under the regulations of VietinBank. Salaries and remuneration paid to members of the Board of Directors, Supervisory Board and Board of Management are performance-based and subject to each undertaken position and role. The Remuneration for the Board of Directors and Supervisory Board which was approved by the General Shareholders Meeting of VietinBank in 2012 is 0.3% of profit after tax. The actual level of remuneration paid to the Board of Directors, Supervisory Board in 2012 was 0.234% of profit after tax.

Number of members of the Board of Directors, Supervisory Board, the Board of Management having a certificate of corporate governance.
All members have received training in corporate governance.

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53

Organization structure, human resources and corporate governance

Personnel and personnel policies

Number of Employees The number of employees of Vietnam Joint Stock Commercial Bank for Industry and Trade as of December 31, 2012 was 19,840, the average number of employees in 2012 was 19,046 (including employees of subsidiaries, administrative units, representative offices). Average income Average salary in 2012 of the employees of VietinBank was VND 19.69 million /person /month. Remuneration policy The remuneration and bonus of the employees of VietinBank vary depending on each position, level of completion of assigned tasks and the level of contribution to the business results of the unit. Insurance scheme Full compliance with the insurance scheme of the Government of Vietnam is made to ensure the rights of employees upon retirement, sickness and maternity. Other benefits Employees competence is assessed promotion, appointment and reward. for

Costs of training to improve knowledge and professional capabilities are borne by the Bank. Employees are entitled to enjoy other welfare benefits: vacation, Trade unions support when in sickness or familys sickness, funerals, weddings. Retired employees are entitled to enjoy social insurance and 03 month salary before retirement, annual health care and other benefits from VietinBank after retirement.

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2012 Annual Report

Shareholders
Statistical data on shareholders
State shareholder Detailed information about the State shareholder: ID / Business Date of license/ issue Transaction Code Percentage of ownership (%) 80.307% 32.12%

No. Name of organization / individual

Address

Number of shares

State Bank of Vietnam Represented by: - Mr. Pham Huy Hung, Chairman of the Board, representing for 40% of the State ownership 15/SL - Mr. Nguyen Van Thang, Board member and General Director representing for 30% of the State ownership - Mr. Cat Quang Duong, Board member, representing for 30% of the State ownership Details of major shareholders ID / Business Date of license/ issue Transaction Code 49 Ly Thai To Street, June 05, Hoan Kiem 1951 District, Hanoi

2,105,442,944 842,177,178

631,632,883

24.09%

631,632,883

24.09%

No.

Name of organization / individual

Address

Number of shares

Percentage of ownership (%) 80.307% 32.12%

State Bank of Vietnam Represented by: - Mr. Pham Huy Hung, Chairman of the Board, representing 40% of the State ownership - Mr. Nguyen Van Thang, Board member and General Director, representing 30% of the State ownership - Mr. Cat Quang Duong, Board member, representing 30% of the State ownership March 04, 2011 2121 Pennsylvania Avenue, NW, Washington. DC 20433 USA 49 Ly Thai To Street, June 05, Hoan Kiem 1951 District, Hanoi

2,105,442,944 842,177,178

15/SL

631,632,883

24.09%

631,632,883

24.09%

IFC Capitalization (Equity) Fund, L.P

CA5074

176,196,847

6.721%

2012 Annual Report

55

Organization structure, human resources and corporate governance

Founding shareholders: None Foreign shareholders No. 1 Name of organization / individual Address IFC Capitalization (Equity) Fund, L.P. 2121 Pennsyl Vania Avenue, NW, Washington, DC 20433 USD 2121 Pennsyl Vania Avenue, NW, Washington, DC 20433 USD Number of shares 176,196,847 Percentage of ownership 6.72%

International Finance Corporation

85,980,341

3.28%

3 Tng

Other foreign shareholders

53,869,002 316,046,190

2.05% 12.05%

List of shareholders with transfer restricted shares ID / Business license/ No. Name of individual / organization Transaction Code State Bank of Vietnam Represented by: - Mr. Pham Huy Hung, Chairman of the Board, representing 40% of the State ownership - Mr. Nguyen Van Thang, Board member and General Director, representing 30% of the State ownership - Mr. Cat Quang Duong, Board member, representing 30% of the State ownership Internal shareholders 2 Board of Directors Supervisory Board 3 4 4.1 4.2 Trade Union of VietinBank Strategic shareholders International Finance Corporation (IFC) IFC Capitalization (Equity) Fund, L.P. CS6041 CA5074 85,980,341 176,196,847 85,980,341 176,196,847 From March 10, 2011 to March 10, 2014 From March 10, 2011 to March 10, 2014 310/ToCCDNH Total number of shares owned 2,105,442,944 842,177,178 15/SL 631,632,883 631,632,883 Number of shares with restricted transfer 2,105,442,944 842,177,178 Under the State provisions

Limited transfer time

631,632,883 296,883 241,690 55,193 47,418,876

631,632,883 296,883 241,690 55,193 26,800,000

During terms of office Sale of share is not allowed

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2012 Annual Report

Shareholders equity
Changes in shareholders equity Indicators 1. Charter capital as at the beginning of 2012 2. Stock dividends in 2011 with a rate of 20% and bonus shares with the rate of 9.6% 3. Charter capital as at 31 December 2012 Percentage 29.6% Amount (VND) 20,229,721,610,000 5,987,823,760,000 26,217,545,370,000

Number of ordinary shares: 2,621,754,537 shares. Number of bonds in circulation by type: Government bonds: VND 19,898,878,200,000 Bonds guaranteed by the Government: VND 25,310,051,000,000 Provincial bonds: VND 918,333,000,000 VEC Bonds: VND 1,848,000,000,000 International bonds: USD 250,000,000 Number of shares outstanding: 2,621,754,537 shares. Number of reserve shares, treasury shares by types: 0 share.

2012 Annual Report

57

Organization structure, human resources and corporate governance

Corporate Governance
Shareholding and changes in shareholding of members of the Board of Directors No. 1 2 3 4 5 6 7 8 Full name Mr. Pham Huy Hung Personal ownership Representative of State ownership Mr. Nguyen Van Thang Personal ownership Representative of State ownership Mr. Cat Quang Duong Personal ownership Representative of State ownership Ms. Pham Thi Hoang Tam Ms. Nguyen Hong Van Ms. Do Thi Thuy Ms. Nguyen Thi Bac Mr. Michael Knight Ipson Total Total number of shares 842,183,465 6,287 842,177,178 631,822,452 189,569 631,632,883 631,632,883 0 631,632,883 26,418 3,553 15,863 0 0 2,105,684,634 Percentage of ownership 32.1229% 0.0002% 32.1227% 24.0992% 0.0072% 24.0920% 24.0920% 0.0000% 24.0920% 0.0010% 0.0001% 0.0006% 0.0000% 0.0000% 80.3159%

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2012 Annual Report

Information about CTG trading and other transactions by members of the Board of Directors, Supervisory Board, Board of Management and related people. Number of shares owned at the beginning of the year Percentage (%) Number of shares owned at the end of the year Number of shares

No.

Relationships Transaction with internal made by stakeholders Number of shares Younger brother of Deputy Nguyen Tran General Hoa Binh Director Nguyen Hoang Dung

The reason for increase Percentage or decrease (%)

1,709

0.000065%

10 (including 01 from stock dividend and bonus shares)

0.0000004%

Sold 1700 shares

Bui Nhu Y

Deputy General Director

25,389

0.000968%

09 (including 1890 from the stock dividend and bonus shares)

Sold 29270 shares and 0.0000003% bought 2000 shares

Nguyen Thi Ngoc Diep

Daughter of Deputy General Director

0%

Bought 1000 shares and 0% sold 1000 shares

Nguyen Cao Khanh

Elder brother of Deputy General Director Nguyen Van Du

837

0.000032%

3,337

0.00013%

Bought 2500 shares

2012 Annual Report

59

Associated
Companies

Associated Companies
VIEtINBaNkS SubSIdIaRIES, AFFILIatES aNd joINt vENtuRES
No. Name of company Percentage of ownership by VietinBank 100% 100% 100% 100% Scope of operation

1 2 3 4

VietinBank Leasing Company Ltd. VietinBank Insurance Company Ltd. VietinBank Debt Management and Asset Exploitation Company Ltd. VietinBank Fund Management Company Ltd.

Finance and Banking Insurance Asset Management Securities investment, fund management, securities portfolio management Manufacture, design, and trade in gold and precious metals and gems Capital market Other monetary intermediation Finance and Banking Insurance

5 6 7 8 9

VietinBank Gold and Jewelry Trading Company Ltd. VietinBank Securities Joint Stock Company VietinBank Global Money Transfer Company Ltd. Indovina Bank VietinBank Aviva Life Insurance Company Ltd.

100% 75,61% 100% 50% 50%

INvEStmENtS IN RELatEd compaNIES

As of December 31, 2012, VietinBank had in total 7 subsidiaries: VietinBank Leasing Company Ltd., VietinBank Insurance Company Ltd., VietinBank Debt Management and Asset Exploitation Company Ltd., VietinBank Fund Management Company Ltd., VietinBank Gold and Jewelry Company Ltd., VietinBank Securities Joint Stock Company and VietinBank Global Money Transfer Company Ltd.; and 2 joint-venture companies: Indovina Bank, VietinBank Aviva Life Insurance Company Ltd. Subsidiaries: In 2012, the total capital contribution by the Bank to its subsidiaries was VND 3,227 billion, an increase of VND 500 billion compared with the end of 2011, including the additional investment in VietinBank Fund Management Company Ltd and Global Money Transfer Company Ltd which were VND 450 billion and VND 50 billion respectively. Joint-venture Companies: In 2012, Indovina Bank maintained its charter capital at USD 165 million and each joint-venture partner held 50% of the charter capital. VietinBank Aviva Life Insurance Company Ltd was founded in 2011 and inaugurated in October 2011 with the charter capital of VND 800 billion, each joint venture partner contributed 50% of the capital. The total amount of investment in joint-ventures was VND 1,792 billion.

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2012 Annual Report

2012 Annual Report

63

Associated Companies

OvERvIEw oF THE pERFoRmaNcE aNd FINaNcIaL StatuS oF aSSocIatEd compaNIES VietinBank Leasing Company Ltd.
Introduction: An independent accounting subsidiary of VietinBank, established under Decision No. 53/1998/ QD-NHNN5 dated January 26, 1998 of the Governor of State Bank of Vietnam; Certificate of Business Registration No. 112446 dated March 28, 1998 issued by Hanoi Planning and Investment Department. From August 2009, the Company got VietinBanks and the State Bank of Vietnams approval to switch to a financial leasing one member Ltd. company model. The charter capital of the Company was VND 800 billion as at December 31, 2012. Head Office: 16 Phan Dinh Phung, Ba Dinh, Hanoi. Business activities: financial leasing to enterprises established under the law of Vietnam; using the leased assets for legitimate business purposes; providing consultancy service and guarantees to customers on the services related to financial leasing, performing other operations as permitted by the State Bank of Vietnam. Performance: By year end 2012, total funds reached VND 653 billion. Total loans and investments as at December 31, 2012 was VND 1.4376 trillion. In particular, outstanding lease exposure amounted to VND 1.3283 trillion and outstanding investment was VND 109.3 billion. The Companys main source of income is interest income from financial leasing. The Company has proactively urged the collection of debts and leasing interest on a timely basis to fulfill its targets. At the same time, the Company actively practices thrift, combats wastefulness, procures only assets and tools needed for the operation of the Company. In 2012, the Companys total income reached VND 263.9 billion, pre-tax profit was 101 billion, an increase of 0.5% from 2011. Given the fact that the domestic economy was affected by the global economic crisis, financial leasing companies in Vietnam have been operating inefficiently with deteriorated reputation. The Company, however, continued to promote investment, financial leasing and at the same time improving the efficiency and capital base. In 2012, the Company signed new leasing contracts worth more than VND 561 billion. VietinBank Leasing Company Ltd. is considered one of the best performing companies by Vietnam Financial Leasing Association. Plan for 2013: The goal set by the Company is to promote the growth and development of products and services of financial leasing, winning the market on the basis of safety, sustainability and efficiency, focus on comprehensive restructure toward a modern company, enhance financial strength and competitiveness, improve the quality of human resources, technological innovation as well as products and services quality, consolidate the collection of bad debts and off-balance sheet debt. The Company will continue to improve the governance and management capacity of its management team both at head office and at branch level and at the same time, improve the professional capacity and business culture of the staff to meet in the new business requirements; continue to strengthen the organizational structure, development of the network, the growth of assets and market share as well as improve the competitiveness of the Company.

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2012 Annual Report

VietinBank Securities Joint Stock Company

Introduction: Established under Decision No. 126/ QD-HDQT-NHCT1 dated September 1, 2000 by the Board of Directors of VietinBank, operating under the Securities Business License No. 107 /UBCK-GP dated July 01, 2009 by the State Securities Commission. Head Office: 306 Ba Trieu, Hai Ba Trung District, Hanoi Key Business Activities: business activities in securities field, including brokerage, proprietary trading, underwriting, investment advisory, financial advisory and securities custody. Performance: By the end of 2012, the Company achieved total revenue of VND 175.7 billion and pre-tax profit of VND 96 billion. With this profit, the Company was in the top 5 profitable companies on the securities market and achieved 111.62% of the plan assigned by the General Shareholders Meeting. Total assets of the company reached VND 1,093 billion. Charter capital remained at VND 789.9 billion. In 2012, despite of the difficulties of the stock market, the Company made necessary adjustments to its strategy, significantly reduced trading of listed securities and managed to ensure the efficiency of the capital. Brokerage activities are oriented toward risk management, strict compliance with the provisions of law. Brokerage fee reached VND 37.5 billion, increased by 63% from 2011, bringing the Company to the top 10 companies with largest share of brokerage market. Corporate advisory fee reached VND 14 billion. Plan for 2013: The Companys goal for 2013 is a 20% growth in revenue and profit compared to 2012.

For brokerage activities, the Company focuses on expanding market share in two directions: on one hand, the Companys networks are developed to boost its market share in the potential markets. On the other hand, the Companys information technology system is further invested to better serve the trading of investors. For corporate financial advisory activities, the Company will provide customers with full package of services from financial advisory, corporate restructuring, capital arrangement to bond issuance. Special focus on M&A advisory service is considered an inevitable trend in the context of the current volatile economy. For proprietary trading, the Company continues to restructure its investment assets, increase the size of the total assets by employing appropriate solutions and strive to increase total assets to around VND 1,200 billion to increase the scale of operation of the Company.

VietinBank Debt Management and Asset Exploitation Company Ltd.

Introduction: The Company originally operated under the Business Registration Certificate No. 4106000331 dated January 17, 2007 by the Department of Planning and Investment of Ho Chi Minh City. On July 20, 2010, the Company was renamed to VietinBank Debt and Asset Management One Member Ltd. Company and operating under the Business Registration Certificate No. 0302077030 by the Department of Planning and Investment of Ho Chi Minh City with the first registration and second registration on June 22, 2012. The Company is a full subsidiary of VietinBank with the charter capital of VND 30 billion. Head Office: 76 Nguyen Van Cu Street, Nguyen Cu Trinh Ward, District I, Ho Chi Minh City.

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65

Associated Companies

Business Activities: Receipt and management of mortgage, pledged assets and valuation of collateral, etc. Performance: As at December 31, 2012, the Companys total assets reached VND 40.665 billion and charter capital was VND 30 billion. Profit for the year of 2012 was VND 661 million, half of the profit in 2011. In 2012, the Company implemented its organizational restructuring and established its Hanoi Branch. A valuation department was set up in the Companys headquarter responsible for making appraisal and evaluation of Vietinbanks collateral and the Companys projects and investment plans. During the year, the Company has signed contracts with VietinBanks branches on asset valuation with the total valuation amount of VND 18,598 billion. In addition, the Company also supported VietinBanks branches in debt disposal and collateral realization. Plans for 2013:

VietinBank Insurance Company Ltd.

Introduction: VietinBank Insurance Company Ltd. was formerly known as the Incombank-Asia Insurance Company (IAI), a joint-venture between VietinBank and Asia Insurance Singapore with capital contribution of 50/50. It was established under the License No. 21/GP/ KDBH dated December 21, 2002. On December 17, 2008, the Ministry of Finance granted adjusted License No. 21/GPDC5/KDBH to allow the change from IncombankAsia Insurance Company to VietinBank Insurance Company Ltd. Together with the change in name, VietinBank acquired the paid-in capital of the foreign partner and became the only owner of the Company. On December 31, 2012, the Companys charter capital was VND 500 billion. Head Office: 141 Le Duan Street, Hoan Kiem District, Hanoi Business Activities: offering non-life insurance products as permitted by the applicable law, providing re-insurance services , operating in funds management, making capital contribution and equity investment, etc. Performance:

The Company continues to push up all business activities, actively supports VietinBanks branches in handling debts and collaterals. In preparation for the second phase of its restructuring process and in realization of the direction of VietinBanks Chairman on the implementation of the Appraisal and Valuation of Collateral in VietinBank system Project, the Company will expand its network, strengthen its organizational structure and human resources to improve the quality of its valuation services and shorten the operation time. The Company will operate in close collaboration with VietinBanks branches and manage to understand the characteristics of each region for the purpose of better valuation of assets. The auction business of the Company is growing with increasing number of property auction contracts. It is expected that the business of auction will be more profitable in 2013.

Total assets reached VND 755 billion, increased by 7.4% from 2011. Its charter capital is VND 500 billion. Total insurance premium reached VND 144.5 billion, decreased by 16% from 2011 and pre-tax profit was at VND 63 billion. Business results of some typical types of insurance: motor vehicle insurance premium reached VND 34.9 billion, accounting for 29.2% and property insurance premium accounted for 25% of the total premium. In 2012, the Company promoted the coordination with VietinBanks branches through the deployment of the model of bancassurance specialists. Under that model, more than 500 bank staff were provided with training in insurance. At the same time, the Company strengthened the coordination with VietinBanks Head Office departments and other subsidiaries in VietinBank system to promote

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2012 Annual Report

cross-selling and support in offering insurance products to customers. In 2012, the Company researched and launched new products for the benefits of retail customers to diversify its range of products offered through retail banking channels at VietinBanks branches, including: multifunctional savingsinsurance product; insurance for private house; accident insurance for S-cards and Visa/ Master card-holders. In addition, the Company launched three other insurance products: satellite insurance, oil and gas insurance and airway insurance to promote sales of insurance. The Company also deployed online distribution channels via iPay: insurance for civil liability of motor vehicle owners, international travel insurance through collaboration with the E-Banking Department and IT Center of VietinBank. In late 2012, the Company issued rubber tree insurance product to target rubber farming and processing companies in the Central and the South of Vietnam. Plan for 2013: Premium revenue is expected to be doubled from 2012 and reach VND 245 billion and profit before tax is expected to reach VND 70.4 billion, an increase of 10.57%. The Company will focus on expanding market share from VietinBank customers and developing new markets; research and develop centralized insurance plans for all assets, people, vehicles, etc of VietinBank system; apply ISO system for quality management; standardize risk management system to control risks and ensure secure operation; enhance training to improve the overall quality of the Companys Head Office staff as well as branches;

VietinBank Fund Management Company Ltd.

Introduction: VietinBank Fund Management Company is a wholly owned subsidiary of VietinBank. It was established under the License No. 26 50/UBCKGP dated October 26, 2010 of the State Securities Commission. The Companys current charter capital is VND 950 billion. Head Office: 6th Floor, 34 Cua Nam Street, Hoan Kiem District, Hanoi. Business Activities: Establishment and management of securities investment funds and securities investment companies, securities portfolio management, etc. Performance: The Companys total revenue in 2012 reached VND 93 billion and pre-tax profit was over VND 63 billion. Its charter capital as at December 31, 2012 was VND 950 billion. During 2012, the departments of the Company have improved its business processes and provided primary products and services to customers. Good progress was observed in corporate bond issuance consultancy service and portfolio management: growth in the number of customers and type of customers (individual, organizations, financial institutions, insurance companies, manufacturing companies, foreign customers, etc); diversification in investment assets (stocks, bonds, fixed income structured products, private equity, projects, etc.). Plan for 2013: To expand customer base and increase trusted funds, the Company plans to continue to maintain and exploit the needs of existing customers, develop new customers, attract institutional customers and high net-worth individuals. For mobilization and fund management, the Company will establish and manage such funds as bond investment fund, stock investment fund, real estate investement fund and others.

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67

Associated Companies

VietinBank Gold and Jewelry Trading Company Ltd.

Introduction: VietinBank Gold and Jewelry Trading Company Ltd. is a wholly owned subsidiary of VietinBank. It was established under Decision No. 1521/QD-HDQTNHCT1 dated September 15, 2010 of VietinBanks Board of Directors and Business Registration No. 0105011873 dated November 25, 2011 of the Planning and Investment Department of Hanoi. The Companys current charter capital is VND 300 billion. Head Office: 11th floor, Building No. 34 Cua Nam Street, Hoan Kiem District, Hanoi. Key Business Activities: manufacturing, designing, importing and exporting gold and gems; acting as broker agency; trade promotion; operating in such areas pertaining to e-commerce services, technology transfer, real estate. Performance: The Companys total assets reached VND 341 billion and its charter capital amounted to VND 300 billion . Revenues were nearly VND 667 billion and pre-tax profit was in excess of VND 27 billion. In 2012, the Company continued to carry out the trading of gold bars and the trading of gold and silver jewelry and gems. Plan for 2013: The Company revenue in 2013 is expected to reach VND 4,778 billion and pre-tax profit is expected to be VND 70 billion. The Company will continue to expand business of gold bars; expand the retail sale of RISIS products; continue to promote the sale of diamond jewelry, luxury gemstone in the showrooms in 34 Cua Nam building and in the store at Cho Hom market as well as other locations about to be opened by the Company; continue looking for local and overseas partners to provide high-end diamond and precious stones to diversify the Companys products; Open trading floors of the worlds precious and semi-precious gemstones; seek for suppliers offering gold at low price low-cost gold; promote marketing activities.

VietinBank Global Company Ltd.

Money

Transfer

Introduction: In order to professionalize and promote money transfer services, the Board of Directors of VietinBank has approved the Plan on establishement of a specialized money transfer company followed by a Decision to establish VietinBank Global Money Transfer Company Ltd.. On March 01, 2012, VietinBank Global Money Transfer Company Ltd. was officially put into operation. Since then, the Company has been the focal point for the development of remittance services and personal money transfer service for VietinBanks nationwide network. The Company is licensed with the Registration Certificate No. 0105757686. Head Office: 3rd floor, VietinBank building, 126 Doi Can Street, Ba Dinh District, Hanoi. Key business activities: Monetary intermediation. Performance: In its first year of operation, the Company made great efforts to meet its targets. 2012 pre-tax profit was nearly VND 17 billion and ROE was at 25.5%. The fee income from money transfer service was over VND 30 billion with the significant contribution from Western Union services (about 50% of total income). Revenue from financial activities totaled over VND 4.3 billion. In addition to the financial investment from the initial capital, the Company continued to make more use of the accumulated profit in order to maximize the Companys income. Plan for 2013: The Company will boost the money transfer volume by actively developing new remittance channels, new products and services. Sales target for remittance of VietinBank in 2013 is USD 1.3 billion. The Company will promote market research, diversify products and services, develop new services, such as: transfer money for overseas study, domestic express money transfer...

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2012 Annual Report

Indovina Bank
Introduction: Indovina Limited Bank (IVB) is the first joint venture bank in Vietnam which was established on November 21, 1990 under the License No. 135/ GP by the State Committee for Cooperation and Investment and License No. 08/NH-GP dated October 29, 1992 issued by the State Bank of Vietnam. The parties to the joint venture are VietinBank and Cathay United Bank (CUB) in Taiwan (a fully affiliated member of the Cathay Financial Group - the largest financial group in Taiwan). On December 31, 2012, the charter capital of IVB was USD 165 million, in which 50% held by VietinBank. Head Office: 46-48-50 Pham Hong Thai, District 1, Ho Chi Minh City. Business Activities: provide banking products and services such as deposits, loans, card services, L/C, remittance, etc. Performance: As at December 31, 2012, IVBs total assets were about VND 23,003 billion. Net interest income reached VND 602.2 billion, down by 18% compared with 2011. Profit after tax in 2012 reached VND 253.2 billion. NPL ratio as at December 31, 2012 was at 3.3%.

VietinBank Aviva Life Insurance Company Ltd.

Introduction: VietinBank Aviva Life Insurance Company Ltd. is a joint-venture company between VietinBank and Aviva Group. The purpose for operation of the Company is to exploit the life insurance market in Vietnam. It was established under the License of Establishment and Operation No.64/GP/KDBH by the Ministry of Finance. As at December 31, 2012, the Companys charter capital was VND 800 billion, in which VietinBank held 50%, equivalent to VND 400 billion. Head Office: Level 10 Tower B Hadi Resco Building, 521 Kim Ma Street, Ba Dinh District, Hanoi Key Business Activities: Life Insurance. Performance: Total assets as at December 31, 2012 were at VND 886.5 billion. Revenue from premium reached VND 7 billion in 2012. Profit after tax reached VND 34 billion, up 19% from 2011. In 2012, VietinBank Aviva boosted sale channels via VietinBank branch network and VietinBank Leasing Company Ltd. The number of insurance agents increased to 2705 agents. As the result, the number of new insurance policies was 1328. Plan for 2013: Expected revenue in 2013 is VND 50 billion in which revenue from bancassurance channel is VND 40 billion and revenue from independent agents is VND 10 billion. About 85% of insurance policies is expected to be maintained. The Company plans to employ and provide training to additional 1000 new independent agents in 2013 and increase the number of VietinBank officers who have insurance certificates to 3000, thereby increase the number of branches doing insurance business to 80 branches out of 149 branches.

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70

2012 Annual Report

Financial
2012 Annual Report

STATEMENTS
71

Contents

Statement of the Board of Management Independent Auditors report Consolidated Balance sheet Consolidated Income statement Consolidated Cash flow statement Notes to consolidated financial statements

73 75 77 79 80 82

72

2012 Annual Report

STATEMENT OF THE BOARD OF MANAGEMENT

The Board of Management of Vietnam Joint Stock Commercial Bank for Industry and Trade (the Bank) presents this report together with the Banks consolidated financial statements for the year ended 31 December 2012.

BOARDS OF DIRECTORS AND MANAGEMENT

The members of the Boards of Directors and Management of the Bank who held office during the year and at the date of this report are as follows:

Board of Directors
Mr. Pham Huy Hung Mr. Nguyen Van Thang Ms. Pham Thi Hoang Tam Ms. Nguyen Hong Van Ms. Do Thi Thuy Mr. Michael Knight Ipson Mr. Cat Quang Duong Ms. Nguyen Thi Bac Mr. Tran Xuan Chau Ms. Tran Thi Hong Hanh Chairman Member Member Member Member Member Member Member (appointed on 28 February 2012) Member (appointed on 28 February 2012) Member (resigned on 28 February 2012) Member (resigned on 28 February 2012)

Board of Management
Mr. Nguyen Van Thang Mr. Nguyen Van Du Mr. Pham Anh Tuan Ms. Bui Nhu Y Mr. Vo Minh Tuan Mr. Le Duc Tho Mr. Nguyen Hoang Dung Mr. Tran Kien Cuong General Director Deputy General Director Deputy General Director Deputy General Director Deputy General Director Deputy General Director Deputy General Director Deputy General Director (appointed on 01 March 2012, resigned on 01 March 2013) Mr. Pham Huy Thong Mr. Nguyen Duc Thanh Mr. Nghiem Xuan Thanh Deputy General Director (appointed on 01 August 2012) Deputy General Director (appointed on 01 August 2012) Deputy General Director (appointed on 15 January 2012, resigned on 15 June 2012) Mr. Nguyen Viet Manh Mr. Nguyen Van Thanh Mr. Nguyen Hai Hung Deputy General Director (resigned on 01 March 2012) Deputy General Director (resigned on 16 January 2012) Chief Accountant

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73

STATEMENT OF THE BOARD OF MANAGEMENT (continued)

BOARD OF MANAGEMENTS STATEMENT OF RESPONSIBILITY
The Board of Management of the Bank is responsible for preparing the consolidated financial statements of each year, which give a true and fair view of the financial position of the Bank and of its results and cash flows for the year. In preparing these consolidated financial statements, the Board of Management is required to: Select appropriate accounting policies and then applying them consistency; Make judgments and estimates that are reasonable and prudent; State whether applicable accounting principles have been followed, subject to any material departures disclosed and explained in the consolidated financial statements; Prepare the consolidated financial statements on the going concern basis unless it is inappropriate to presume that the Bank will continue in business; and Design and implement an effective internal control system for the purpose of properly preparing and presenting the consolidated financial statements so as to minimise errors and frauds.

The Board of Management of the Bank is responsible for ensuring that proper accounting records are kept, which disclose, with reasonable accuracy at any time, the financial position of the Bank and to ensure that the consolidated financial statements comply with Vietnamese Accounting Standards, Accounting System applicable to credit institutions in Vietnam and prevailing relevant regulations in Vietnam. The Board of Management is also responsible for safeguarding the assets of the Bank and hence for taking reasonable steps for the prevention and detection of frauds and other irregularities. The Board of Management confirms that the Bank has complied with the above requirements in preparing these consolidated financial statements. For and on behalf of the Board of Management, Hanoi, 21 March 2013 General Director

Nguyen Van Thang

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2012 Annual Report

INDEPENDENT AUDITORSREPORT
No: 728/Deloitte/AUDHN-RE

To:
The shareholders The Boards of Directors and Management Vietnam Joint Stock Commercial Bank for Industry and Trade We have audited the accompanying consolidated balance sheet as at 31 December 2012, the related statement of consolidated income and statement of consolidated cash flows for the year then ended, and the notes thereto (collectively referred to as the consolidated financial statements) of Vietnam Joint Stock Commercial Bank for Industry and Trade (the Bank) prepared on 21 March 2013, as set out from page 5 to page 72. The accompanying consolidated financial statements are not intended to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than Vietnam.

Respective Responsibilities of the Board of Management and Auditors

As stated in the Statement of the Board of Management on page 1 and 2, the preparation of these consolidated financial statements is the responsibility of the Banks Board of Management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. The Banks consolidated financial statements for the year ended 31 December 2011 were audited by another independent auditing company whose auditors report dated 22 February 2012 expressed an unqualified opinion with the emphasis paragraph relating to contingent liabilities.

Basis of Opinion
We have conducted our audit in accordance with Vietnamese Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance that the consolidated financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

Opinion
In our opinion, the accompanying consolidated financial statements give a true and fair view of, in all material respects, the financial position of the Bank as at 31 December 2012 and the results of its operations and its cash flows for the year then ended in accordance with Vietnamese Accounting Standards, Accounting System applicable to credit institutions in Vietnam and prevailing relevant regulations in Vietnam.

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75

INDEPENDENT AUDITORSREPORT (continued)

Opinion (continued)
Without qualifying our opinion, we would like to draw attention to Note 52 - Contingent liabilities of the Notes to the consolidated financial statements. Currently, investigation agencies are prosecuting the Banks former employees of Ho Chi Minh City branch and Nha Be branch for alleged misappropriation of assets by means of fraudulence. According to the criminal legislation and criminal procedure code, for cases under prosecution and investigation, the legal responsibilities and obligation of related parties will be determined only when the trial has been completed with an effective judgment. However, based on results of internal reconciliation, review and investigation procedures that have been taken up to the date of this report, the Banks management believes that the Bank neither is jointly liable for nor incurs any financial loss that regards to the illegal action of these individuals.

21 March 2013 Hanoi, S,R ,Vietnam Deputy General Director

Auditor

Truong Anh Hung

PA Certificate No.D.0029/KTV For and on behalf of DELOITTE VIETNAM COMPANY LIMITED

Nguyen Tuan Anh

CPA Certificate No.N.1291/KTV

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2012 Annual Report

CONSOLIDATED BALANCE SHEET

As at 31 December 2012
NO. itEms nOtEs I. Cash, gold and gemstones II. Balances with the State Bank of Vietnam (SBV) III. Placements with and loans to other credit institutions 5 6 7

FORM B 02/TCTD-HN Unit: Million VND 31/12/2012 2,511,105 12,234,145 57,708,302 21,457,717 36,432,503 (181,918) 274,553 284,267 (9,714) 74,451 329,682,838 333,356,092 (3,673,254) 73,417,250 71,081,582 2,450,000 (114,332) 2,816,190 2,444,848 45,057 327,109 (824) 5,276,653 2,971,038 6,676,954 (3,705,916) - 49 (49) 2,305,615 2,643,702 (338,087) 19,534,772 9,454,662 7,943,559 2,146,201 11,798 (9,650) 31/12/2011 3,713,859 12,101,060 65,268,079 61,795,229 3,500,000 (27,150) 542,704 557,358 (14,654) 20,236 290,397,810 293,434,312 (3,036,502) 67,448,881 65,320,966 2,400,000 (272,085) 2,924,485 2,601,041 25,004 298,440 3,746,217 2,548,273 5,541,803 (2,993,530) 587 (587) 1,197,944 1,442,639 (244,695) 14,256,747 5,556,418 6,664,631 2,044,263 13,612 (8,565)

A. ASSETS

1. Placements with other credit institutions 2. Loans to other credit institutions 3. Provision for credit losses of loans to other credit institutions 11 1. Trading securities 2. Provisions for diminution in value of trading securities 8 9 10 12

IV. Trading securities

V. Derivative financial instruments and other financial assets 1. Loans to customers 2. Provisions for credit losses of loans to customers

VI. Loans to customers

VII. Investment securities

1. Available-for-sale investment securities 2. Held-to-maturity investment securities 3. Provisions for diminution in value of investment securities 13 1. Investments in joint-ventures 2. Investments in associates 3. Other long-term investments 4. Provisions for diminution in value of long-term investments 1. Tangible fixed assets a. Cost 14

VIII. Long-term investments

IX. Fixed assets

b. Accumulated depreciation 2. Finance lease assets a. Cost b. Accumulated depreciation 3. Intangible fixed assets 15 a. Cost b. Accumulated amortisation 1. Other receivables 3. her assets - In which: Goodwill 4. Provisions for diminution in value of other assets 16 17 18 17

X. Other assets 2. Interest and fee receivables

TOTAL ASSETS

503,530,259

460,420,078

The note set out from pages 10 to 72 are integral part of these consolidated financial statements

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77

CONSOLIDATED BALANCE SHEET (continued)

As at 31 December 2012NO.
ITEMS NOtEs 31/12/2012 31/12/2011 NOTES 19 20 B. LIABILITIES AND OWNERS EQUITY I. Borrowings from the Government and the SBV II. Deposits and borrowings from other credit institutions

FORM B 02/TCTD-HN Unit: Million VND 31/12/2012 2,785,374 96,814,801 19,983,410 76,831,391 289,105,307 33,226,708 28,669,229 19,088,467 3,615,577 14,982,079 490,811 31/12/2011 27,293,733 74,407,913 58,211,970 16,195,943 257,135,945 36,824,508 11,089,117 24,969,470 4,834,923 19,665,995 468,552

1. Deposits from other credit institutions 2. Borrowings from other credit institutions 21 22 23 24

III. Deposits from customers IV. Grants, trusted funds and borrowings at risk of credit institution V. Valuable papers issued VI. Other liabilities

1. Accrued fee and interest expenses 2. Other payables and liabilities 3. Other provisions

TOTAL LIABILITIES
VII. Capital and reserves 26 1. Capital a. Charter capital b. Share premium 2. Reserves 3. Foreign exchange reserve 4. Retained earnings 26

469,689,886
33,624,531 26,219,755 26,217,545 2,210 2,433,966 302,101 4,668,709 215,842

431,720,686
28,490,896 22,173,891 20,229,722 1,944,169 1,476,203 300,163 4,540,639 208,496

VIII. Minority interests

TOTAL LIABILITIES AND OWNERS EQUITY

503,530,259

460,420,078

OFF BALANCE SHEET ITEMS

NO. ITEMS I. Contingent liabilities NOTES 42 31/12/2012 43,848,065 195,797 27,284,378 16,367,890 11,932,157 11,932,157 31/12/2011 47,837,808 138,008 30,125,189 17,574,611 4,596,987 4,596,987

1. Loan guarantees 2. L/C guarantees 3. Other guarantees 42 1. Other commitments

II. Commitments (*)

(*) Including conditional commitments

Preparer Approver Approver

Ha Quang Vu

Nguyen Hai Hung

Nguyen Van Du

Head of Financial Accounting Chief Accountant Deputy General Director Management Department 21 March 2013
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The note set out from pages 10 to 72 are integral part of these consolidated financial statements

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2012
nO. itEms 1. Interest and similar income 2. Interest and similar expenses NOTES 27 28

FORM B 03/TCTD-HN Unit: Million VND 2011 55,775,244 (35,727,190) 20,048,054 1,923,360 (771,029) 1,152,331 382,562 10,930 (501,144) 1,191,117 (167,014) 1,024,103 257,345 (9,077,909) 13,296,272 (4,904,251) 8,392,021 (2,132,654) (2,132,654) 6,259,367 15,572 6,243,795 2,830

2012 50,660,762 (32,240,738) 18,420,024 1,855,358 (577,135) 1,278,223 361,688 34,156 515,883 1,330,576 (144,977) 1,185,599 165,954 (9,435,673) 12,525,854 (4,357,954) 8,167,900 (1,998,221) (1,998,221) 6,169,679 18,134 6,151,545 2,053

I. Net interest income 3. Income from services 4. Expenses on services 29 30 31 32

II. Net profit from services III. Net gain from trading foreign currencies and gold IV. Net gain/(loss) from trading securities V. Net gain/(loss) from investment securities

5. Other operating income 6. Other operating expenses 33 34 35 36 37 37

VI. Net profit from other activities VII. Income from capital contribution, equity investments VIII. Operating expenses IX. Net profit from operating activities before credit provision expenses X. Provision expenses for credit losses 7. Current corporate income tax expense

XI. Profit before tax XII. Corporate income tax expense

XIII. Profit after corporate income tax XIV. Minority interests XV. Profit attributable to the owners of the Bank XVI. Earnings per share (VND) 38

Preparer

Approver

Approver

Ha Quang Vu Nguyen Hai Hung Nguyen Van Du Head of Financial Accounting Chief Accountant Deputy General Director Management Department 21 March 2013

The note set out from pages 10 to 72 are integral part of these consolidated financial statements

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For the year ended 31 December 2012

CONSOLIDATED CASH FLOW STATEMENT

FORM B 04/TCTD-HN Unit: Million VND NO. ITEMS CASH FLOW FROM OPERATING ACTIVITIES 01. Interest and similar income 02. Interest and similar expenses 03. Income from services 04. Net gain from trading foreign currencies, gold and securities 05. Other income 06. Receipts from debts written-off or paid off by risk fund 07. Payments to employees and for operating management 08. Corporate income tax paid Movement in operating assets 09. (Increase) in deposit at and loans to other credit institutions 49,381,834 (33,460,084) 1,278,223 754,034 (69,822) 1,255,421 (9,922,929) (2,155,454) 7,061,223 (54,838,980) (10,233,733) (1,809,525) (54,215) (39,921,780) (3,597,412) 777,685 38,918,514 (24,508,359) 22,198,608 27,441,108 17,580,112 (3,389,520) (403,206) (229) (8,859,243) (6,111,570) 6,710 (62,529) 13,860 30,502 (6,123,027) (875,461) 53,934,333 (34,452,245) 1,141,704 960,930 (1,350,461) 1,170,498 (8,339,552) (2,164,061) 10,901,146 (74,211,604) (1,339,250) (6,691,466) (994) (59,229,503) (5,270,760) (1,679,631) 80,460,641 (15,926,945) 39,311,187 51,355,003 360,834 12,983,671 (7,619,920) (3,189) 17,150,183 (584,033) 118,444 (429,780) 19,908 2012 2011

Net cash from operating profit before movements in assets and working capital

10. (Increase) in trading securities 11. (Increase) in derivatives and other financial assets 12. (Increase) in loans to customers 13. (Decrease) in provision for losses 14. Decrease/(Increase) in other operating assets Movement in operating liabilities 15. (Decrease) in borrowings from the Government and the State Bank of Vietnam 16. Increase in deposits and borrowings from other credit institutions 17. Increase in deposits from customers (including State Treasury) 18. Increase in issued valuable papers (excluding valuable papers charged to financial activities) 19. (Decrease)/Increase in grants, trusted funds and borrowings at risk of credit institution 20. Increase/(Decrease) in other operating liabilities 21. Cash outflows from reserves of the credit institution

I. Net cash used in operating activities 01. Acquisition of fixed assets 02. Proceeds from sales, disposal of fixed assets 03. Investment in other entities 04. Proceeds from disposal of investments in other entities 05. Dividends and profit received from long-term investments and capital contribution II. Net cash used in investing activities

CASH FLOWS FROM INVESTING ACTIVITIES

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The note set out from pages 10 to 72 are integral part of these consolidated financial statements

CONSOLIDATED CASH FLOW STATEMENT (continued)

For the year ended 31 December 2012 NO. ITEMS 01. Increase in share capital from issuing stocks 02. Dividends paid 03. Payments for buying treasury shares FORM B 04/TCTD-HN Unit: Million VND 2012 - (79) - (79) (14,982,349) 74,294,399 1,938 59,313,988 2011 6,911,822 (2,043,709) (8,989) 4,859,124 21,133,846 53,160,553 74,294,399 CASH FLOWS FROM FINANCING ACTIVITIES

III. Net cash (used in)/from financing activities IV. Net (decrease)/increase in cash V. Cash and cash equivalents at the beginning of the year VI. Effects of changes in foreign exchange rates VII. Cash and cash equivalents at the end of the year (Note 39)

Preparer

Approver

Approver

Ha Quang Vu Nguyen Hai Hung Nguyen Van Du Head of Financial Accounting Chief Accountant Deputy General Director Management Department 21 March 2013

The note set out from pages 10 to 72 are integral part of these consolidated financial statements

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81

Notes to the CONSOLIDATED financial statements

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

1. GENERAL INFORMATION
Vietnam Joint Stock Commercial Bank for Industry and Trade (herein referred to as the Bank or Vietinbank) is a joint stock commercial bank incorporated in the Socialist Republic of Vietnam.

Establishment and operation

The Bank was established from the equitisation of Vietnam Bank for Industry and Trade - a State-owned commercial bank which had been established in accordance with Decision No. 402/CT dated 14 November 1990 by the President of Ministerial Council and subsequently reorganised into state-owned corporation type in accordance with Decision No. 285/QD-NH5 dated 21 September 1996 by the Governor of the State Bank of Vietnam (the SBV). On 25 December 2008, the Vietnam Bank for Industry and Trade successfully undertook its Initial Public Offering. The Bank was equitized and renamed as Vietnam Joint Stock Commercial Bank for Industry and Trade on 03 July 2009 under License of Establishment and Operation No. 142/GP-NHNN dated 03 July 2009, issued by the State Bank of Vietnam and Certificate of Business Registration No. 0103038874 dated 03 July 2009 issued by Hanoi Planning and Investment Department. The Bank successfully raised capital in 2012 and on 13 April 2012, Hanoi Department of Planning and Investment issued the Banks Certificate of Business Registration No. 0100111948. The Banks main activities are to provide banking services including mobilizing and receiving short-term, medium-term, and long-term deposits from organisations and individuals; making short-term, medium-term, and long-term loans to organisations and individuals based on the nature and capability of the Banks sources of capital; conducting foreign exchange transactions, international trade financial services, discounting of commercial papers, bonds and other valuable papers, and providing other banking services allowed by the SBV.

Chartered capital
The Banks chartered capital under the License of Establishment and Operation No. 142/GP-NHNN dated 03 July 2009 is VND 11,252,973 million, of which state-owned capital is VND 10,040,855 million and capital raised from the Initial Public Offering is VND 1,212,118 million. The Banks plan for its first capital increase in 2010 was approved by the SBV under the document No. 3679/NHNN-TTGSNH dated 19 May 2010. On 24 August 2010, the State Securities Commission of Vietnam (SSC) granted Certificate No. 651/UBCK-GCN to the Bank for share public offering registration. On 18 October 2010, the Bank completed its share issuance with 391,931,841 shares additionally issued, of which 76,848,603 shares were issued in form of share dividend payment and 315,083,238 shares were sold to the Banks shareholders. On 10 March 2011, the Bank completed its share issuance to a strategic shareholder with the total number of new issued shares of 168,581,013. On 28 December 2011, the Bank completed its share issuance to existing shareholders with the total number of new issued shares of 337,162,100. On 13 April 2012, the Bank completed its share issuance to existing shareholders with the total number of new issued shares of 598,782,376. Accordingly, as at 31 December 2012, the Banks chartered capital is VND 26,217,545 million.

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NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

1. GENERAL INFORMATION (continued)

Locations and the Branch network
The Head Office of the Bank is located at 108 Tran Hung Dao Street, Hoan Kiem District, Hanoi, Vietnam. As at 31 December 2012, the Bank has one (1) Head Office, one (1) Operation Center, three (3) administrative units, two (2) local representative offices and one hundred and fifty (150) main branches (including three overseas branches - two branches in Germany and one branch in Laos) located in sixty three (63) provinces and cities under central authority all over the country.

Subsidiaries
As at 31 December 2012, the Bank has seven (7) subsidiaries as follows:
Established in accordance NO. 1 Name Vietinbank Leasing Company Ltd. with Decision No. 0101047075/GP dated 10 March 2011 by Hanoi Planning and Investment Department 107/UBCK-GP dated 01 July 2009 by State Securities Commission of Vietnam (SSC) 0302077030/GP dated 20 July 2010 by Department of Planning and Investment of Ho Chi Minh City 21/GPDC6/KDBH dated 21 April 2009 by the Ministry of Finance 0105011873/GP dated 25 November 2010 by Hanoi Planning and Investment Department 50/UBCK-GP dated 26 October 2010 and 05/GPDC-UBCK dated 23 March 2011 by State Securities Commission of Vietnam (SSC) 0105757686 dated 03 January 2012 by Hanoi Planning and Investment Department Business sector Banking and finance

% of ownership held by the Bank 100%

Vietinbank Securities Joint Stock Company

Capital market

76%

Vietinbank Debt Management and Asset Exploitation Company Ltd.

Asset management

100%

4 5

Vietinbank Insurance Company Ltd. Vietinbank Gold and Jewellery Trading Company Ltd.

Non-life insurance Gold and gemstones manufacturing and trading Fund management

100% 100%

Vietinbank Fund Management Company Ltd.

100%

Vietinbank Global Money Transfer Company Ltd.

Money transfer intermediary

100%

Employees
The total number of employees of the Bank as at 31 December 2012 is 19,840 (as at 31 December 2011: 18,622).

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NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

2. ACCOUNTING CONVENTION AND FINANCIAL YEAR

Accounting convention
The accompanying consolidated financial statements, expressed in Vietnam Dong (VND), are prepared under the historical cost convention and in accordance with Vietnamese Accounting Standards, Accounting System applicable to credit institutions in Vietnam and prevailing relevant regulations in Vietnam. However, due to the Banks large scale of operations, for the purpose of preparing these consolidated financial statements, the figures are rounded to and presented in millions of Vietnam Dong (million VND). This presentation does not materially impact on the consolidated financial statements in terms of the financial position, results of operations and the cash flows. With regards to the number of shares and earnings per share, the Bank presented the items in unit as shown in Note 26 and Note 38.

Financial year
The Banks financial year begins on 01 January and ends on 31 December. These consolidated financial statements are prepared for the year ended 31 December 2012.

3. NEW GUIDANCE ON MAKING PROVISION IN ISSUE NOT YET ADOPTED

On 21 January 2013, the State Bank of Vietnam (SBV) issued Circular No. 02/2013/TT-NHNN stipulating classification of assets, levels and method of setting up of risk provisions, and use of provisions against credit risks in the banking activity of credit institutions and branches of foreign banks. The Circular replaces Directive No. 05/2005/CT-NHNN dated 26 April 2005 of the Governor of State Bank of Vietnam on implementation of classification of debts and setting up of provisions against credit risks according to Decision No. 493/2005/QD-NHNN dated 22 April 2005 of the Governor of State Bank of Vietnam, Decision No. 780/QD-NHNN dated 23 April 2012 of the Governor of State Bank of Vietnam on classification of debts respect to re-structured loans, Decision No. 493/2005/QDNHNN dated 22 April 2005 of the Governor of State Bank of Vietnam on promulgating regulation on classification of debts, setting up of provisions against credit risks in the banking activity of credit institutions, Decision No. 18/2007/QD-NHNN dated 25 April 2007 of the Governor of State Bank of Vietnam on amending and supplementing a number of articles of regulation on classification of debts, setting up and use of provisions against credit risks in the banking activity of credit institutions promulgated together with the Decision No. 493/2005/QD-NHNN dated 22 April 2005. Circular No. 02/2013/TT-NHNN will take effect from 01 June 2013. The Board of Management of the Bank is considering the extent of impact of adopting the Circular on the Banks consolidated financial statements for future accounting periods.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies, which have been adopted by the Bank in the preparation of these consolidated financial statements, are as follows:

Estimates
The preparation of the consolidated financial statements in conformity with Vietnamese Accounting Standards, Accounting System applicable to credit institutions in Vietnam and prevailing relevant regulations in Vietnam requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the financial year. Although these accounting estimates are based on the managements best knowledge, actual results could differ from those estimates.

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NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Bank and enterprises controlled by the Bank (its subsidiaries) up to 31 December 2012. Control is achieved where the Bank has the power to govern the financial and operating policies of an investee enterprise so as to obtain benefits from its activities. The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those used by the Bank. All internal transactions and balances between group enterprises are eliminated on consolidation. Minority interests in the net assets of consolidated subsidiaries are identified separately from the Banks equity therein. Minority interests consist of the amount of those interests at the date of the original business combination and the minoritys share of changes in equity since the date of the combination. Losses applicable to the minority in excess of the minority interests in the subsidiarys equity are allocated against the interests of the Bank except to the extent that the minority has a binding obligation and is able to make an additional investment to cover the losses.

Business combinations
The assets, liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the fair values of the identifiable net assets acquired is credited to profit and loss in the period of acquisition. The interest of minority shareholders is initially measured at the minoritys proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.

Investments in associates
An associate is an entity over which the Bank has significant influence and that is neither a subsidiary nor an interest in joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but not control or joint control over those policies. The business operations results, assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method of accounting. Interests in associates are carried in the consolidated balance sheet at cost as adjusted by postacquisition changes in the Banks share of the net assets of the associate. Losses of an associate in excess of the Banks interest in that associate (which includes any long-term interests that, in substance, form part of the Banks net investment in the associate) are not recognised. Where a group entity transacts with an associate of the Bank, unrealised profits or losses are eliminated to the extent of the Banks interest in the relevant associate.

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NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Interests in joint ventures
A joint venture is contractual arrangement whereby the Bank and other parties undertake an economic activity that is subject to joint control, i.e., the strategic financial and operating policy decisions relating to the activities require the unanimous consent of the parties sharing control. Joint venture arrangements that involve the establishment of a separate entity in which each venturer has an interest are referred to as jointly controlled entities. The Bank reports its interests in jointly controlled entities using the equity method of accounting. According to equity method of accounting, invesments in joint ventures are initially stated at cost. Subsequently, interests in joint ventures are adjusted by post-acquisition changes in the Banks share of the net assets of the joint ventures.

Goodwill
Goodwill represents the excess of the cost of acquisition over the Banks interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of a subsidiary, associate or jointly controlled entity at the date of acquisition. Goodwill is recognised as an asset and is amortised on the straight-line basis over its estimated period of benefit of 10 years. Goodwill arising on the acquisition of associates and jointly controlled entities is included within the carrying amount of the associate and jointly controlled entities. Goodwill arising on the acquisition of subsidiaries is presented separately as an intangible asset in the consolidated balance sheet. On disposal of a subsidiary, associate or jointly controlled entity, the remaining amount of unamortised goodwill is included in the determination of the profit or loss on disposal.

Cash and cash equivalents

Cash and cash equivalents comprise cash and cash equivalents on hand, demand deposits, highly-liquid term deposits and investments with terms of less than 3 months that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Loans to customers
Loans to customers are disclosed at their principal amounts outstanding at the end of the accounting year.

Provision for credit losses

In accordance with Law on Credit Institutions No. 47/2010/QH12 effective from 01 January 2011, Decision No. 1627/2001/QD-NHNN dated 31 December 2001 of the Governor of State Bank on lending regulations of credit institutions, Decision No. 127/2005/QDNHNN dated 03 February 2005 amending and supplementing a number of lending regulations under Decision No. 1627/2001/QDNHNN, Decision No. 493/2005/QD-NHNN (Decision 493) dated 22 April 2005 and Decision No. 18/2007/QD-NHNN dated 25 April 2007 (Decision 18) issued by the State Bank of Vietnam on loan classification and appropriation, setting up and use of reserves for handling credit risks, and Decision No. 780/QD-NHNN dated 23 April 2012 (Decision 780) of the Governor of State Bank of Vietnam on classification of debts respect to re-structured loans, the Bank is required to classify loans and make provisions for credit losses. Accordingly, loans are graded using the following risk classifications: Current, Special-mentioned, Sub-standard, Doubtful and Loss based on the overdue status and other qualitative factors.

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NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Provision for credit losses (Continued)
Credit risk exposure of loans to customers is calculated by subtracting from the loan balance the related determined value of collateral which is subject to certain accepted discount rates in accordance with Decision 493 and Decision 18. Specific provision is established based on the net loan exposure for each individual customer using the prescribed provision rates applicable to that loan classification as follows: GROUP 1 2 3 4 5 CAtEgORY PROvisiOn RAtE Current Special-mentioned Sub-standard Doubtful Loss 0% 5% 20% 50% 100%

In accordance with Decision 493, loan classification is to be made at the end of each quarter for the first three quarters and on 30 November for the last quarter of each year. In accordance with Decision 493, general provision is made for credit losses which are yet to be identified during the loan classification and specific provision making process as well as in case of the Banks potential financial difficulty due to deterioration in loan quality. Accordingly, the Bank is required to make and maintain a general provision at 0.75% of total of loans that are classified in groups 1 to 4. These provisions are recorded in the consolidated income statement as an expense that will be used to write off any credit losses incurred. According to Decision 493, the Bank sets up Risk Settlement Committee in order to write off loans if they are classified under Group 5 or if the borrowers are legal entities that are liquidated or go bankrupt, or if borrowers are individuals who pass away or are missing.

Provision for off-balance-sheet commitments

Pursuant to Decision 493 and Decision 18 issued by the SBV, credit institutions classify guarantees, acceptances of payment and unconditional, irrevocable loan commitments with specific effective date (collectively referred to as off balance sheet commitments) as stipulated in Articles 6 and 7 of Decision 493. Accordingly, off-balance-sheet commitments are classified into groups from Group 1 to Group 5 with corresponding risk levels as: Current, Special-mentioned, Sub-standard, Doubtful and Loss based on overdue status and other qualitative factors. General provision is made at 0.75% of total of guarantees, acceptances of payment and unconditional, irrevocable loan commitments which are classified in groups from Group 1 to Group 4 on 30 November 2012. Specific provision for off balance sheet commitments is calculated using the same method for loans to customers as prescribed above. Provision expense is charged into Provision expense for credit losses in the consolidated income statement and provision balance is recorded as Other liabilities in the consolidated balance sheet.

Investments
Trading securities Trading securities include debt securities, equity securities and other kinds of securities that the Bank and/or its subsidiaries fully purchased and intended to sell in short term in order to gain profits from price fluctuation. Trading securities are initially recognised at cost and subsequently carried at cost.

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NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Investments (Continued)
Trading securities (Continued) Interest and dividends received while holding trading securities is recorded in the consolidated income statement on cash basis. Trading securities are subsequently subject to impairment review as at the balance sheet date. Provision for impairment is made when carrying value of the securities is higher than their market value determined in accordance with Circular No. 228/2009/TT-BTC dated 07 December 2009. If the market value of securities is undeterminable, the Bank obtains other reliable financial information to determine fair value for provision purpose. Provision for decline in value is recorded in Net gain/loss from securities trading in the consolidated income statement. Investment securities Held-to-maturity securities Held-to-maturity investment securities are debt securities that the Bank purchases for investment purpose in order to gain interest and the Bank has intention and ability to hold the securities until maturity. Held-to-maturity securities have fixed or determinable payments and fixed maturities. In case the securities are sold before maturity, the remaining portfolio will be reclassified to trading or available-for-sale securities. Held-to-maturity investment securities are initially recognised at par value as at the transaction date, accumulative interest income before the purchasing date (for debt securities with interest payment in arrears) or interest income received upfront (for debt securities with interest payment in advance) is recorded in a separate account. Any discount or surplus which is the difference between par value and the amount equal to par value plus (+) accumulative interest income before purchasing date (if any) or minus (-) interest income received upfront waiting for amortisation (if any) is also recorded in a separate account. In subsequent period, held-to-maturity investment securities are recognised at par value, any discount or premium (if any) is amortised in the consolidated income statement using straight-line method over the estimated remaining term of securities. Interest payment in arrears is recorded as follows: accumulative interest income before purchasing date is recorded as a decrease in value of such securities and the same amount is credited into accrued interest; accumulative interest income after purchasing date is recognised as the Banks income, based on the accumulated method. Interest received upfront is recognised and amortised in to consolidated income statement using the straight-line method over investment period. Periodically, held-to-maturity securities are subject to impairment review. Provision for diminution in value is made when carrying value of the securities is higher than their market value determined in accordance with Circular No. 228/2009/TT-BTC dated 07 December 2009 issued by Ministry of Finance. If the market value of securities is undeterminable, the Bank obtains other reliable financial information as reference to determine fair value for provision purpose. Provision for decline in value is recorded in Net gain/ loss from trading investment securities in the consolidated income statement. Available-for-sale securities Available-for-sale investments include debt and equity securities that the Bank holds for investment purpose and that are ready for sale. These securities are not frequently traded but could be sold at any time once they are profitable, and the Bank and/or its subsidiaries is neither founding shareholder/strategic partner nor capable of controlling, to some extent, the process of initiating and approving financial and operational policies of the investee by a written agreement on delegating personnel to take part in the Board of Directors/Board of Management.

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2012 Annual Report

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Investments (Continued)
Investment securities (Continued) Available-for-sale securities (Continued) Available-for-sale equity securities are initially recognised at cost as at the transaction date and subsequently carried at cost. Available-for-sale debt securities are initially recognised at par value as at the transaction date. Accrued interest income before the purchasing date (for debt securities with interest payment in arrears) or interest income received upfront (for debt securities with interest payment in advance) is recorded in a separate account. Any discount or premium which is the difference between par value and the amount equal to par value plus (+) accumulative interest income before the purchasing date or minus (-) interest income received upfront awaiting for amortisation is also recorded in a separate account. Subsequently, available-for-sale debt securities are recorded at par value less/plus remaining discount/premium after amortising into the consolidated income statement using the straight-line method over the remaining term of securities. Interest payment in arrears is recorded as follows: accumulative interest income before the purchasing date is recorded as a decrease in the value of such securities and the same amount is credited into the accrued interest income; accumulative interest income after the purchasing date is recognised in the Banks income on an accrual basis. Interest received upfront is amortised into the consolidated income statement using the straight-line method over the investment period. Periodically, available-for-sale securities are subject to impairment review. Provision for impairment is made when carrying value of the securities is higher than their market value determined in accordance with Circular No. 228/2009/TT-BTC dated 07 December 2009 issued by Ministry of Finance. Accordingly, for listed equity securities, the Bank determined the value of the investments using closing prices at the balance sheet date; for unlisted and liquid equity securities, the Bank collected direct quotations from three securities companies, of which charter capital is VND 300 billion or more each at the end of the accounting year to determine the value of the investments. If the market value of securities is undeterminable, the Bank obtains other reliable financial information as reference to determine fair value for provision purpose. For the bonds of business entities, at the end of the accounting period, the Bank assesses the recoverability of these bonds to determine the level of provision therefor and recognises it in the consolidated income statement. The Bank makes these estimates based on financial ability of the partners and the recoverable value of collateral assets, if any. These estimates are based on assumptions about some factors which have different levels, leading to certain future adjustments in some accounts. The provision for impairment of available-for-sale securities is recorded in the consolidated income statement as Net gain/loss from trading investment securities. When market price increases, profit will be offset against, but not exceeding the provision made previously. The difference is not recorded as income until the securities are sold. General provisions for debt securities issued by local business entities General provisions are made at 0.75% of the total balance of debt securities issued by local business entities (excluding investments for which provisions have been made 100%) at the reporting date accordance with Circular 28/2011/TT-NHNN dated 01 September 2011 by State Bank of Vietnam. Provision expense is charged into Gain/(loss) from trading investment securities in the consolidated income statement and provision balance is recorded as Provisions for diminution in value of trading/investment securities in the consolidated balance sheet.

2012 Annual Report

89

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Investments (Continued)
Other long-term investments Other long-term investments represent the investments into other entities in which the Bank holds less than 20% of the voting right and is the founding shareholder; or strategic partner; or has the power to govern the financial and operating policies of the investee by a written agreement on delegating personnel to take part in the Board of Directors/Board of Management. The long-term investments are recognised at cost less provision (if any). Provision for diminution in value of long-term investments is made when the investees make losses (except that such losses were intended in the entities original business plans) in accordance with Circular No. 228/2009/TT-BTC dated 07 December 2009 issued by the Ministry of Finance. Accordingly, provision to be made is the difference between the Banks actual contributed capital and Banks share of the owners equity of the investee. The provision is recorded as an operating expense in the Banks consolidated income statement. Recognition The Bank records investment securities and other investments at the date when contracts are signed and effective (transaction-date based policy). Investment securities and other investments are recorded at cost. After initial recording, investment securities and other investments are recorded under the above accounting policies. Derecognition Investments in securities are derecognised when the rights to receive cash flows from the investments are ended or when the Bank has transferred significant risks and benefits attached to the ownership of the investments.

Repurchase and Reverse Repurchase Agreements

Securities sold under agreements to repurchase at a specific date in the future (repos) are recorded in the consolidated financial statements. The corresponding cash received is recognised in the consolidated balance sheet as a liability. The difference between the sale price and repurchase price is amortised to the consolidated income statement over the agreement validity period using the straight-line method based on the contractual interest rate. Conversely, securities purchased under agreements to resell at a specific date in the future (reverse repos) are not recognised in the consolidated financial statements. The corresponding cash payment is recognised in the consolidated balance sheet as an asset. The difference between the purchasing price and resale price is amortised to the consolidated income statement over the agreement validity period using the straight-line method based on the contractual interest rate.

Trust activities and trusted funds

The Banks trust activities include discretionary investment trusts and client-directed investment trusts. The value of investment trust and trusted funds received are recorded when the trust contracts have been signed and trusted funds have been realized. Rights and obligations of the trustor and trustee relating to profit and profit sharing, trust fee, other rights and obligations are in compliance with the terms of the contracts. The assets that are held under custody services are not assets of the Bank and therefore, they are not included in the Banks consolidated financial statements.

90

2012 Annual Report

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Tangible fixed assets and depreciation
Tangible fixed assets are stated at cost less accumulated depreciation. The cost of purchased tangible fixed assets comprises their purchase prices and any directly attributable costs of bringing the assets to their working condition and location for their intended use. Expenditure incurred after the tangible fixed assets have been put into operation such as repairs, maintenance and overhaul costs is normally charged to the consolidated income statement as incurred. In situations where it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of an item of tangible fixed assets beyond its originally assessed standard of performance, the expenditure is capitalised as an additional cost of tangible fixed assets. Tangible fixed assets are depreciated using the straight-line method over the following estimated useful lives: AssEts EstimAtEd UsEFUL LivEs (YEARs) Buildings and structures Machinery and equipment Motor vehicles Others 05 - 40 03 - 07 06 - 07 04

Loss or gain resulting from sales and disposals of tangible fixed assets is the difference between proceeds from sales or disposals of assets and their residual values and is recognised in the consolidated income statement.

Intangible fixed assets and amortisation

Intangible fixed assets comprise of land use rights, computer software and other intangible fixed assets which are stated at cost less accumulated amortisation. Land use rights granted with indefinite term are not amortised; computer software is amortised using the straight-line method over the period of 05 years; other intangible fixed assets are amortised using the straight-line method from 03 years to 05 years. Land use rights granted with definite term are amortised over land use periods. Loss or gain resulting from sales and disposals of intangible fixed assets is the difference between proceeds from sales or disposals of assets and their residual values and is recognised in the consolidated income statement.

Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. The Bank as lessor Amounts due from lessees under finance leases are recorded as receivables at the amount of the Banks net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Banks net investment outstanding in respect of the leases. Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred for obtaining the income from the operating lease are recognised as expenses in the year or allocated to expenses over the lease term in accordance with rental income recognition.

2012 Annual Report

91

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Leasing (Continued)
The Bank as lessee Leases where substantially all the rewards and risks of ownership of assets remain with the lessor are accounted for as operating leases. Rentals payable under operating leases are charged to the consolidated income statement on a straight-line basis over the term of the relevant lease.

Prepayments
Prepayments comprise of prepaid expenses for office rental and other prepaid expenses. Office rental expense represents the amount which has been prepaid to lease the office. Prepaid expense for office rental is amortised in the consolidated income statement using the straight-line method over the rental period. Other long-term prepayments include repair, maintenance cost for assets, tools and supplies issued for consumption, and are considered to bring future economic benefits to the Bank. These expenses are capitalised as prepayments and are charged to the consolidated income statement, using the straight-line method over the period of more than one year but not exceeding three years in accordance with prevailing accounting regulations.

Receivables
Receivables apart from receivables from credit activities in the Banks operations are initially recognised at cost and subsequently carried at cost. Other receivables are subject to review for impairment provision which is made based on the overdue status or based on the expected loss for the following cases: institutional debtors which have fallen into bankruptcy or have been in the process of dissolution; or individual debtors who are missing, escaping, prosecuted, on trial or passing away even though loans are not overdue. Provision expense incurred is recorded as Operating expenses in the consolidated income statement during the year. The Bank makes provision for overdue receivables in accordance with Circular No. 228/2009/TT-BTC dated 07 December 2009 by Ministry of Finance. Accordingly, provisions for overdue receivables at year end are made based on the following provision rates applied to receivables as at the closing date of the accounting year after deducting the value of evaluated collaterals. OvERdUE stAtUs From 6 months to below 1 year From 1 year to below 2 years From 2 years to below 3 years From 3 years and above RAtE OF PROvisiOn 30% 50% 70% 100%

Capital and reserves

Common stocks Common stocks are classified as owners equity. Incurred expenses that directly relate to the issuance of common stocks are recognised as a decrease in owners equity.

92

2012 Annual Report

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Capital and reserves (Continued)
Share premium When capital is received from shareholders, the difference between selling price and par value is recorded as share premium in owners equity. Treasury shares When issued stocks are repurchased, the aggregate amount paid, including expenses that directly relate to the repurchase of stocks, after deducting taxes, is recorded as treasury shares and are stated as a decrease in the owners equity. Reserves Reserves are used for specific purposes and are appropriated from the Banks profit after tax based on the following regulated ratios: Charter capital supplementary reserves: 5% of profit after tax, not exceeding the Banks charter capital; Financial reserve fund: 10% of profit after tax but not exceeding 25% of the Banks charter capital; Bonus fund for the Board of Management, bonus and welfare funds are established in accordance with the Decisions approved in the Annual General Shareholders meetings. These reserves funds are appropriated at the closing date of each financial year.s

Revenue and expenses

Interest income Income from interest is recorded on the accrual basis for the loans which are identified as being able to claim both principals and interests on time and the Bank shall not appropriate provisions according to prevailing regulations. The interest amounts which have been recorded as income, in the event that the customer could not pay both principal and interest on the maturity date, would be charged to operating expenses and the Bank shall track as off-balance sheet items to urge the collection of those loans. When collected, interests are recorded as income from operating activities. The accrued interest income arising from the loans that are classified from group 2 to group 5 according to the criteria set out in Decision 493, Decision 18 and Decision 780 is not recognised in the consolidated income statement for the year. Accrued interest income of impaired loans is recorded as off-balance sheet item and is only recognised in the consolidated income statement when it is actually received. Borrowing costs Borrowing costs are recorded in the consolidated income statement on the accrual basis. Revenue from sales of goods Revenue from the sale of goods is recognised when all five (5) following conditions are satisfied: (a) the Bank has transferred to the buyer the significant risks and rewards of ownership of the goods; (b) the Bank retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; (c) the amount of revenue can be measured reliably; (d) it is probable that the economic benefits associated with the transaction will flow to the Bank; and (e) the costs incurred or to be incurred in respect of the transaction can be measured reliably.

2012 Annual Report

93

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenue and expenses(continued)
Revenue from insurance services Revenue from insurance services is recognised at the time when both of the following conditions are met: (a) the insurance contract has been entered into by the insurer and the insured; (b) the premium has been paid by the insured or there is an agreement between the insurer and the insured for delayed payment of insurance premium (in gross written premium) or the amount is incurred on the reinsurance notice from the cedants to the Bank/the Banks subsidiaries (for reinsurance premium) with the followings adjustments: (Increase)/decrease inunearnedpremium which is made under Circular No, 125/2012/TT-BTC issued by the Ministry of Finance dated 30 July 2012; Deduct the reinsurance premium recorded based on the amount of premium payable to the reinsurer, corresponding to the gross written premium recognised in the year; and Add reinsurance commission recognised in line with the recognition of respective reinsurance premium.

Dividend recognition Cash dividends received from investment activities are recorded into the consolidated income statement when the Banks right to receive dividends has been established. Stock dividends, which are distributed from profits of joint-stock companies, are not recognised in the consolidated financial statements according to Circular No. 244/2009/TT-BTC dated 31 December 2009 issued by the Ministry of Finance. Claim settlements expenses of insurance activities Claim settlements expenses are recorded when claim files are completed and approved by competent people. In case the Bank assures that insurance responsibilities belong to the Bank and the Bank has advanced to client under clients request but the claim amount has not been determined reliably, the settled amount was recorded to claim settlements expenses. Claim expenses which have not been approved at the end of financial year are considered as deferred expense and accounted in claim reserve. Commission expense of insurance activities Commission expenses are recorded when incurred. Commission expenses are calculated by percentage of premium from direct insurance and recorded to the consolidated income statement. Commission of each insurance product is calculated at certain percentage in accordance with Circular No. 124/2012/TT-BTC dated 30 July 2012 issued by the Ministry of Finance. Income and expense from other services Income and expense from other services are recognised on cash basis.

94

2012 Annual Report

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Foreign currencies
According to the Banks accounting system, all transactions are recorded in original currency. Monetary assets and liabilities denominated in foreign currencies at year-end are translated into VND using exchange rate ruling at balance sheets date (see list of exchange rate of applicable foreign currencies against VND as at 31 December 2012 in Note 53). Income and expense arising in foreign currency during the year are translated into VND at the rates ruling at the transaction dates. Unrealised foreign exchange differences arising from the translation of monetary assets and liabilities nominated in foreign currencies at the balance sheet date are recognised in the consolidated financial statement. For the purpose of preparing consolidated financial statements, assets and liabilities of subsidiaries and associates of which financial statements are prepared in currencies other than VND (including comparative figures) are translated into VND at the exchange rate at the end of accounting year. Income and expenses are translated at the average exchange rate during the year, in circumstances of significant fluctuation; those are translated at the exchange rates at the transaction dates. All resulting exchange differences, if any, are classified as equity and recorded as Foreign exchange reserve. Foreign exchange reserve is recognised into the consolidated income statement when investments in subsidiaries or associates are disposed.

Provisions
Provisions are recognised when the Bank has a present obligation as a result of a past event, and it is probable that the Bank will be required to settle that obligation. Provisions are measured at the managements best estimate of the expenditure required to settle the obligation at the closing date.

Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the consolidated income statement because it excludes items of income or expense that are taxable or deductible in other periods (including loss carried forward, if any) and it further excludes items that are never taxable or deductible. Deferred tax is recognised on significant differences between carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all temporary differences except that deferred tax liabilities arise from the initial recognition of an asset or a liability of a transaction which does not affect the accounting profit or taxable profit (or loss) at the transaction date. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilised. Deferred tax is calculated at the tax rates that are expected to apply in the year when the liability is settled or the asset realised. Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

2012 Annual Report

95

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Taxation (Continued)
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same tax authority and the Bank intends to settle its current tax assets and liabilities on a net basis. The determination of the tax currently payable and deferred tax is based on the current interpretation of tax regulations. However, these regulations are subject to periodic variation and their ultimate determination depends on the results of the tax authorities examinations. Other taxes are paid in accordance with the prevailing tax laws in Vietnam.

Employee benefits
Post-employment benefits When retiring, employees of the Bank are entitled to receive post-employment benefits from the Social Insurance and a 3-monthcurrent-salary paid by the Bank (allocated from the Banks provision for salary). Employees who are forced to early retire as a part of employment rearrangement are entitled to receive a half of the basic monthly salary and allowance (if any) for each year of employment and a quarter of the current salary for each month of being forced to retire (maximum of 12 months). The amounts are recorded in the Banks provision for severance allowance Resignation allowance Resigned employees of the Bank are entitled to receive one-half months salary and allowances (if any) for each year of employment until 31 December 2008. Unemployment allowance In accordance with Circular No. 04/2009/TT-BLDTBXH dated 22 January 2009 providing guidance for implementation of Decree No. 127/2008/ND-CP dated 12 December 2008 on Unemployment Insurance, since 01 January 2009, the Bank has contributed to the Unemployment Insurance Fund an amount equal to 1% of their employees salaries. Moreover, the Bank has to withhold the same amount from their employees salaries to contribute to the fund.

Derivatives
Forward and swap contracts For currency forward, future and swap contracts, the difference of VND amounts equivalent to the foreign currencies committed for trading between forward exchange rate and spot exchange rate as at effective date of the contract is recognised as Derivative instruments and other financial assets when it is positive, or as Derivatives instruments and other financial liabilities when it is negative. The difference is subsequently amortised in the consolidated income statement as Net gain/(loss) from trading foreign currencies using the straight-line method over the term of the contracts. As at the balance sheet date, commitments of currency forward, future and swap contracts are re-measured using the official inter-bank exchange rate announced by the State Bank of Vietnam. Gain or loss from revaluation is recorded in Net gain/loss from trading foreign currencies.

96

2012 Annual Report

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Derivatives (Continued)
Currency option contracts Commitment amount for the currency option contracts is not recognised in the consolidated balance sheet. The option premium paid or received is recorded as receivable or payable from/to derivative transactions, and is amortised to income or expense using the straight-line method over the period of the contracts. As at the balance sheet date, unrealised gain or loss arising from selling/ buying option contracts are determined based on market price, cost of the contract, sales volume and maturity of the contract, and recorded in the consolidated income statement in Net gain/loss from trading foreign currencies.

Related parties
The parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making decisions on financial and operating policies. A party is considered as a related party with the Bank if: (a) Directly or indirectly through one or more intermediaries, the party: - Has capability to control the Bank or is controlled by the Bank (including the holding company and subsidiaries); - Has contributed capital to the Bank that accordingly, gives it significant influence over the Bank; - Has joint control over the Bank; (b) The party is a joint venture in which the Bank is a venturer; (c) The party is a close member of the Board of Directors, Board of Supervisors and Board of Management of the Bank; (d) The party is a close member of the family of any individual referred to in (a) or (c); (e) The party is a Bank that is controlled, jointly controlled or significantly influenced by, or of which, significant voting power in such Bank resides with, directly or indirectly, any individual referred to in (c) or (d).

Off balance sheet commitments and guarantees

At any time during the course of business, the Bank always has outstanding commitments. These commitments are in the form of approved loans and overdraft facilities. The Bank also provides financial guarantee services to guarantee the contract performance of customers to third parties. These transactions are recorded in the consolidated financial statements when performed or when related expenses are incurred or received.

2012 Annual Report

97

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

5. CASH, GOLD AND GEMSTONES

Cash in VND Cash in foriegn currencies Valuable papers in foreign currencies Other precious metal and gemstones 31/12/2012 31/12/2011 MiLLiOn VND 1,987,760 516,662 970 5,713 MILLION VND 2,969,148 724,714 2,129 17,868

2,511,105

3,713,859

6. BALANCES WITH THE STATE BANK OF VIETNAM

Current account at the State Bank of Vietnam in VND Current account at the State Bank of Vietnam in foreign currencies 31/12/2012 31/12/2011 MILLION VND 10,046,469 2,187,676 MILLION VND 9,716,681 2,384,379

12,234,145

12,101,060

Deposit at the State Bank of Vietnam consists of compulsory reserves for deposits and current accounts. Pursuant to regulations by the State Bank of Vietnam on compulsory reserve, part of the banks compulsory reserve can be floating balance. In details, according to Decision No. 379/QD-NHNN dated 24 February 2009, Decision No. 1209/QD-NHNN dated 01 June 2011, Decision No. 1925/QDNHNN dated 26 August 2011 and Decision No. 1972/QD-NHNN dated 31 August 2011:

Compulsory reserve balances for VND deposits applicable to credit institutions as at 31 December 2012 are as follows:
Compulsory reserve balance is 3% (31 December 2011: 3%) of the preceding months average balance for demand deposits and term deposits in VND with terms of less than 12 months; Compulsory reserve balance is 1% (31 December 2011: 1%) of the preceding months average balance for deposits in VND with terms of more than 12 months.

Compulsory reserve balances for deposits in foreign currencies applicable to credit institutions as at 31 December 2012 are as follows:
Compulsory reserve balance is 8% (31 December 2011: 8%) of the preceding months average balance for demand deposits and term deposits in foreign currencies with terms of less than 12 months; Compulsory reserve balance is 6% (31 December 2011: 6%) of the preceding months average balance for deposits in foreign currencies with terms of more than 12 months; Compulsory reserve balance is 1% (31 December 2011: 1%) of the balance for deposits in foreign currencies from overseas credit institutions.

98

2012 Annual Report

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

7. PLACEMENTS WITH AND LOANS TO OTHER CREDIT INSTITUTIONS

Demand deposits - In VND - In foreign currencies Term deposits - In VND - In foreign currencies 31/12/2012 31/12/2011 MILLION VND 14,475,763 4,668,015 9,807,748 6,981,954 4,952,900 2,029,054 MILLION VND 4,754,104 41,033 4,713,071 57,041,125 44,549,844 12,491,281

Placement with other credit institutions

Loans in VND Provision for credit losses of loans to credits institutions

21,457,717
36,432,503 (181,918)

61,795,229
3,500,000 (27,150)

Loan to other credit institutions

36,250,585 57,708,302

3,472,850 65,268,079

8. DERIVATIVE FINANCIAL INSTRUMENTS AND OTHER FINANCIAL ASSETS

Net book value ( at the exchange rate as of the reporting date)

AssEts LIABILITIES Currency derivative financial instruments Foward contracts Swap contracts Currency derivative financial instruments Foward contracts Swap contracts MiLLOn VND 74,451 60,108 14,343 20,236 650 19,586 MiLLiOn VND As at 31/12/2012

As at 31/12/2011

9. LOANS TO CUSTOMERS
Loans to local busines entities and individuals Discounting promissory notes and valuable papers Finance leases Payments made on behalf of customers Loans by grants, investment trusts Loans to foreign organisations and individuals Frozen loans and loans pending for resolution 31/12/2012 31/12/2011 MiLLiOn VND 329,440,108 310,324 1,328,324 55,999 1,636,760 584,576 1 MiLLiOn VND 289,730,503 292,741 1,540,216 4,701 1,866,150 1

333,356,092

293,434,312

2012 Annual Report

99

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

9. LOANS TO CUSTOMERS (Continued)

Analysis of loan balances by quality

Current loans Special-mentioned loans Sub-standard loans Doubtful loans Loss loans 31/12/2012 31/12/2011 MILLION VND 327,054,358 1,411,738 994,983 1,789,074 2,105,939 MILLION VND 285,213,117 6,017,024 1,071,421 220,213 912,537

Analysis of loan balances by terms

Short-term loans Medium-term loans Long-term loans

333,356,092

293,434,312

31/12/2012 31/12/2011 MILLION VND 200,455,255 34,078,369 98,822,468 MILLION VND 176,912,428 30,533,167 85,988,717

333,356,092

293,434,312

Short-term, medium-term and long-term loans have initial terms of less than 1 year, from 1 year to 5 years and more than 5 years, respectively.

Analysis of loan balances by type of business entity

State-owned enterprises State-owned one-member limited enterprises Two or more member limited liability enterprises with more than 50% of the States share holding Other limited companies Joint stock companies with more than 50% of the States share-holding Other joint stock companies Partnership companies Private companies Foreign invested enterprises Cooperatives, cooperative unions Household businesses, individuals Administrative units, Party, unions and associations Others 2,291,578 61,496,519 28,542,233 85,012,500 8,566 12,163,761 8,571,598 1,626,349 49,819,646 369,239 67,041 1,773,716 54,833,999 26,530,323 74,520,924 42,490 11,346,941 6,252,150 1,388,656 52,646,781 1,856,463 140,896 31/12/2012 31/12/2011 MILLION VND MILLION VND (*) 34,376,546 49,010,516 35,255,446 26,845,527

333,356,092

293,434,312

(*) The figures in the analysis of loan balances by type of business entity presented in the consolidated financial statements for the year ended 31 December 2011 were reclassified to ensure the consistency and comparability of the figures.
100
2012 Annual Report

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

9. LOANS TO CUSTOMERS (Continued)

Analysis of loan balances by industry
Agricultural, forestry and aquaculture Mining and quarrying Manufacturing and processing Electricity, petroleum & hot water Water supplying, garbage and sewage treatment and management Construction Wholesale and retail trade; repair of motor vehicles, motor cycles Transport, warehouse Hospitality services Information and communications Financial, banking and insurance activities Real estate Science and technology Administrative activities and supporting service Education and training Health care and social work Other service activities Households International organisations and bodies Others 31/12/2012 31/12/2011 MILLION VND MILLION VND (*) 8,301,832 25,501,052 105,156,710 22,763,351 514,328 22,774,338 97,095,238 9,780,579 2,291,814 1,755,920 479 26,068,597 109,854 318,824 968,304 2,089,555 4,590,629 3,073,666 32,616 168,406 7,035,035 15,640,601 94,149,158 12,823,715 374,191 20,005,680 85,374,331 11,031,572 3,171,639 2,425,070 1,300 21,945,422 123,630 297,538 930,639 2,090,863 10,623,883 5,202,708 46,490 140,847

333,356,092

293,434,312

(*) During the year, the Bank made analysis of loan balances by industry based on the purpose of loans under Circular No. 21/2010/TT-NHNN dated 08 October 2010 issued by the State Bank of Vietnam. The reclassification is applied for the balances as at 31 December 2011.

10. PROVISIONS FOR CREDIT LOSSES OF LOANS TO CUSTOMERS AND OFF-BALANCE SHEET COMMITMENTS
Provisions for credit losses of loans to customers Provision for off-balance sheet commitments (Note 24) 31/12/2012 MILLION VND 3,673,254 409,833

10.1 Details of provision for credit losses of loans to customers and off-balance sheet commitments:
31/12/2011 MILLION VND 3,036,502 435,811

4,083,087

3,472,313

2012 Annual Report

101

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

10. PROVISIONS FOR CREDIT LOSSES OF LOANS TO CUSTOMERS AND OFF-BALANCE SHEET COMMITMENTS (Continued)
10.2 Movement in provision for credit losses of loans to customers during the year:
As at 01/01/2012 Provision charged for the year (Note 36) Provision utilised for the year As at 31/12/2012 GEnERAL PROvisiOn SPEciFic PROvisiOn MILLION VND 2,065,280 234,339 - 2,299,619 MILLION VND 971,222 3,994,833 (3,592,420) 1,373,635 TOtAL MILLION VND 3,036,502 4,229,172 (3,592,420) 3,673,254

The Bank classifies the loans under Article 6 of Decision 493 and Decision 18 and Decision 780 of the SBV and the Banks policy on classifying loans and making credit losses provision. Provision for credit losses as at 31 December 2012 is made based on the loan classification result as at 30 November 2012. Movement of provision for credit losses for the year ended 31 December 2011: As at 01/01/2012 Provision charged for the year (Note 36) Provision utilised for the year As at 31/12/2012 GEnERAL PROvisiOn SPEciFic PROvisiOn MILLION VND 1,648,608 416,672 - 2,065,280 MILLION VND 1,122,147 4,624,835 (4,775,760) 971,222 TOTAL MILLION VND 2,770,755 5,041,507 (4,775,760) 3,036,502

Provision for credit losses of loans at oversea branches is made in accordance with prevailing regulations in their local jurisdictions.

10.3 Movement in provision for off-balance sheet commitments during the year
As at 01/01/2012 Provision (reversed)/charged for the year (note 36) As at 31/12/2012 GEnERAL PROvisiOn SPEciFic PROvisiOn MILLION VND 367,512 (36,069) 331,443 MILLION VND 68,299 10,091 78,390 TOtAL MILLION VND 435,811 (25,978) 409,833

The Bank classifies the loans under Article 6 of Decision 493, Decision 18 and Decision 780 of the SBV and the Banks policy on classifying loans and making credit losses provision. Provision for off-balance-sheet commitments as at 31 December 2012 is made based on the classification of off-balance sheet commitments as at 30 November 2012.

102

2012 Annual Report

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

10. PROVISIONS FOR CREDIT LOSSES OF LOANS TO CUSTOMERS AND OFF-BALANCE SHEET COMMITMENTS (Continued)
10.3 Movement in provision for off-balance sheet commitments during the year (Continued)
Movement of provision for off-balance sheet commitment for the year ended 31 December 2011 as follows: As at 01/01/2011 Provision (reversed)/charged for the year (Note 36) As at 31/12/2011 GEnERAL PROvisiOn SPEciFic PROvisiOn MILLION VND 267,220 100,292 367,512 MILLION VND 323,622 (255,323) 68,299 TOtAL MILLION VND 590,842 (155,031) 435,811

Provision for off-balance sheet commitments at oversea branches is made in accordance with prevailing regulations in their local jurisdictions.

11. TRADING SECURITIES

Debt securities - Government bonds - Debt securities issued by other local credit institutions Equity securities - Equity securities issued by other local credit institutions - Equity securities issued by local business entities 31/12/2012 31/12/2011 MILLION VND - - - 284,267 48 284,219 MILLION VND 263,195 29,611 233,584 294,163 17,901 276,262

Provisions for diminution in value of trading securities

284,267
(9,714)

557,358
(14,654)

274,553

542,704

2012 Annual Report

103

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

11. TRADING SECURITIES (continued)

Listing status of trading securities
Debt securities - Government bonds - Listed - Unlisted Debt securities issued by local business entities - Listed - Unlisted Equity securities Equity securities issued by other local credit institutions - Listed - Unlisted Equity securities issued by local business entities - Listed - Unlisted 26,456 257,763 48 - 35,779 258,385 - - - - 29,610 233,584 31/12/2012 31/12/2011 MILLION VND MILLION VND

284,267 557,358

12. INVESTMENT SECURITIES

Available-for-sale investment securities
Debt securities - Government bonds - Debt securities issued by other local credit institutions - Debt securities issued by local business entities Equity securities - Equity securities issued by other local credit institutions - Equity securities issued by local business entities 31/12/2012 31/12/2011 MILLION VND 70,847,671 44,522,304 2,618,287 23,707,080 233,911 16,888 217,023 MILLION VND 65,087,055 36,298,723 5,883,658 22,904,674 233,911 16,888 217,023

71,081,582
(114,332)

65,320,966
(270,585)

Provisions for diminution in value of available-for-sale investment securities

70,967,250

65,050,381

104

2012 Annual Report

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

12. INVESTMENT SECURITIES (Continued)

Held-to-maturity investment securities
Government bonds Debt securities issued by local business entities 31/12/2012 31/12/2011 MILLION VND 2,200,000 250,000 MILLION VND 2,200,000 200,000

Debt securities

Provisions for diminution in value of held-to-maturity investment securities

2,450,000
-

2,400,000
(1,500)

Listing status of investment securities:

2,450,000

2,398,500

31/12/2012 31/12/2011 MILLION VND MILLION VND

Available-for-sale investment securities Debt securities Government bonds - Listed - Unlisted - Listed - Unlisted - Listed - Unlisted 44,344,034 178,270 1,707,553 910,734 2,011,091 21,695,989 35,977,403 321,320 387,805 5,495,853 1,448,000 21,456,674

Debt securities issued by other local credit institutions

Debt securities issued by local business entities

Equity securities Equity securities issued by other local credit institutions - Listed - Unlisted - Listed - Unlisted - 16,888 44,023 173,000 16,888 44,023 173,000

Equity securities issued by local business entities

Held-to-maturity investment securities Government bonds - Listed - Unlisted - Listed - Unlisted - 2,200,000 - 250,000 2,200,000 200,000

Debt securities issued by local business entities

73,531,582

67,720,966
105

2012 Annual Report

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

12. INVESTMENT SECURITIES (Continued)

Movement of provision for diminution of investment securities as follows:
As at 01/01/2012 Provision (reversed) in the year Utilised for the year As at 31/12/2012 Provision for Provision for held available for sale securities MILLION VND 270,585 (151,253) (5,000) 114,332 -to-maturity securities MILLION VND 1,500 (1,500) - - Total MILLION VND 272,085 (152,753) (5,000) 114,332

13. LONG-TERM INVESTMENTS

Investments in joint ventures Investments in associates Other long-term investments Provisions for diminution in value of long-term investments 31/12/2012 31/12/2011 MILLION VND 2,444,848 45,057 327,109 (824) MILLION VND 2,601,041 25,004 298,440 -

2,816,190

2,924,485

106

2012 Annual Report

13. LONG-TERM INVESTMENTS (continued)

13.1 Investments in joint ventures

Details of investments in joint ventures as at the reporting date are as follows:

31/12/2012 31/12/2011

Proportion Proportion Net value of Net value of of of investment investment Cost in original Cost Cost in original Cost ownership ownership using equity using equity interest interest currency equivalent Currency equivalent method method USD Million VND Million VND % USD Million VND Million VND %

Indovina Bank Ltd. 82,500,000 1,392,058 2,013,514 400,000 431,334 50 Non-applicable 400,000

50 82,500,000 1,392,058 2,186,763 414,278

50 50

Viettin Bank Aviva Life Insurance Company Limited Non-applicable

1,792,058 2,444,848 1,792,058 2,601,041

Consolidated financial statements for the year ended 31 December 2012

Indovina Bank Ltd. was established in Vietnam with the head office located in Ho Chi Minh City; its principal activity is providing banking services. Indovina Bank Ltd. is a joint venture between the Bank and a Taiwanese bank, Cathay United Bank. Indovina Bank Ltd. received Operation License No. 08/NH-GP dated 29 October 1992 issued by the SBV for the operating period of 20 years with the initial charter capital of USD 10,000,000.

Since its establishment, the charter capital of Indovina Bank Ltd. has been increased several times under the approval of the SBV, while the proportions of ownership interest of the joint venture partners remains unchanged. As at 31 December 2012, Indovina Bank Ltd.s charter capital was USD 165,000,000.

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Vietinbank Aviva Life Insurance Company Limited was established in Vietnam. This company is the joint venture between the Bank and a company incorporated in the United Kingdom - Aviva International Holdings Limited. The joint venture received the Establishment and Operation License No. 64 GP/KDBH dated 29 July 2011 issued by the Ministry of Finance for the operating period of 50 years with the initial charter capital of VND 800 billion.

2012 Annual Report

Form B 05/TCTD-HN

107

13. LONG-TERM INVESTMENTS (Continued)

108
USD Million VND Million VND % USD Million VND Million VND %

13.2 Investment in associate

Details of investment in associate at the reporting date are as follows:

31/12/2012 31/12/2011

Consolidated financial statements for the year ended 31 December 2012

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

2012 Annual Report

Proportion Net value of Proportion Net value of of investment of investment Cost in original Cost Cost in original Cost ownership using equity ownership using equity interest method interest method currency equivalent currency equivalent

Cng ty CP u t v Pht trin Khu th

South Quang Ngai Urban Investment and Nam Qung Ngi Non-applicable 25,000 25,057 Development JSC.

50 Non-applicable 25,000 25,004

50 -

My Dinh Real Estate Investment JSC. Non-applicable 20,000 20,000 20 Non-applicable - - 45,000 45,057 25,000 25,004

Investment in South Quang Ngai Urban Investment and Development JSC., and My Dinh Real Estate JSC., are made through the Banks subsidiary - Vietinbank Fund Management Company Ltd.

Form B 05/TCTD-HN

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

14. TANGIBLE FIXED ASSETS

The movements of tangible fixed assets for the year ended 31 December 2012 are as follows:

Buildings, Machinery,
MILLION VND MILLION VND

structures equipment

Motor vehicles
MILLION VND

Others
MILLION VND

Total MILLION VND

Cost As at 01/01/2012 Acquisitions for the year Transfer from construction in progress Other additions Disposals Reclassification Other decreases As at 31/12/2012 192,825 1,237 (7,773) (12,773) (14,135) 1,950,223 51,756 197,490 (56,590) 168,503 (1,453) 3,830,342 2,688 10,518 (13,725) 23 (969) 738,073 451 15,978 (5,206) (166,171) (3,843) 158,316 247,720 225,223 (83,294) (10,418) (20,400) 6,676,954 1,295,577 495,265 3,284,371 186,265 668,299 71,239 293,556 23,551 5,541,803 776,320

Accumulated depreciation As at 01/01/2012 466,199 2,008,509 339,974 178,848 2,993,530 Charge for the year Other additions Disposals Reclassification Other decreases As at 31/12/2012 103,273 21,546 (2,332) 367 (20,079) 568,974 544,906 29,942 (18,468) 78,240 (6,783) 2,636,346 91,452 1,707 (3,439) (580) (23,255) 405,859 34,651 240 (3,513) (79,986) (35,503) 94,737 774,282 53,435 (27,752) (1,959) (85,620) 3,705,916

Net book value As at 31/12/2012 1,381,249 1,193,996 332,214 63,579 2,971,038 As at 31/12/2011 829,378 1,275,862 328,325 114,708 2,548,273

2012 Annual Report

109

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

14. TANGIBLE FIXED ASSETS (continued)

The movements of tangible fixed assets for year ended 31 December 2011 are as follows:
Buildings, Machinery, Motor structures equipment MILLION VND MILLION VND

vehicles
MILLION VND

Others
MILLION VND

Total MILLION VND

Cost As at 01/01/2011 935,147 2,823,953 174,511 2,981 316,428 (60,608) (457) 27,563 3,284,371 560,530 79,739 - 54,842 (15,319) (1,276) (10,217) 668,299 276,413 32,331 4,119 8,568 (7,844) (2,848) (17,183) 293,556 4,596,043 436,515 147,518 463,129 (96,126) (5,276) 5,541,803

Acquisitions during the period 149,934 Transfer from construction in progress 140,418 Other additions Disposals Other decreases Reclassification As at 31/12/2011 83,291 (12,355) (695) (163) 1,295,577

Accumulated depreciation As at 01/01/2011 Charge for the year Disposals Other decreases Reclassification As at 31/12/2011 393,511 86,820 (14,159) - 27 466,199 1,557,481 485,551 (47,788) - 13,265 2,008,509 280,850 78,668 (16,375) - (3,169) 339,974 157,855 42,172 (10,781) (275) (10,123) 178,848 2,389,697 693,211 (89,103) (275) 2,993,530

Net book value As at 31/12/2011 As at 31/12/2010 829,378 541,636 1,275,862 1,266,472 328,325 279,680 114,708 118,558 2,548,273 2,206,346

110

2012 Annual Report

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

15. INTANGIBLE FIXED ASSETS

The movements of intangible fixed assets for the year ended 31 December 2012 are as follows:
Land use Computer Total Others rights software MILLION VND MILLION VND MILLION VND MILLION VND

Cost As at 01/01/2012 Acquisitions during the year Other additions Disposals Reclassification Other decreases 1,115,042 1,089,387 12,695 - 1,456 (1,412) 316,378 84,592 37,273 (441) 21,353 (32,679) 426,476 11,219 1,230 - - (12,391) - 58 1,442,639 1,175,209 49,968 (441) 10,418 (34,091) 2,643,702

As at 31/12/2012 2,217,168

Accumulated amortisation As at 01/01/2012 62,419 Charge for the year Other additions Disposals Reclassification Other decreases 28,934 618 - 79 (28,709) 178,736 80,983 27,066 (73) 8,662 (20,646) 274,728 3,540 3,260 - - (6,782) - 18 244,695 113,177 27,684 (73) 1,959 (49,355) 338,087

As at 31/12/2012 63,341

Net book value As at 31/12/2012 As at 31/12/2011 2,153,827 1,052,623 151,748 137,642 40 7,679 2,305,615 1,197,944

2012 Annual Report

111

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN The movements of intangible fixed assets for the year ended 31 December 2011 are as follows:

Land use Computer

MILLION VND MILLION VND MILLION VND MILLION VND

Total Others rights software

Cost As at 01/01/2011 Acquisitions during the year Disposals Reclassification As at 31/12/2011 953,066 170,559 (9,994) 1,411 1,115,042 319,939 94,479 (96,629) (1,411) 316,378 11,219 - - - 11,219 1,284,224 265,038 (106,623) 1,442,639

Accumulated amortisation As at 01/01/2011 49,133 Charge for the year Other decreases Reclassification 12,297 (467) 1,456 135,551 45,223 (582) (1,456) 178,736 3,540 - - - 3,540 188,224 57,520 (1,049) 244,695

As at 31/12/2011 62,419

Net book value As at 31/12/2011 As at 31/12/2010 1,052,623 903,933 137,642 184,388 7,679 7,679 1,197,944 1,096,000

112

2012 Annual Report

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

16. OTHER RECEIVABLES

Construction in progress Purchases and major repair of fixed assets External receivables Internal receivables 31/12/2012 31/12/2011
MILLION VND MILLION VND

2,265,979 4,547,287 2,520,764 120,632

1,531,005 1,745,892 2,102,652 176,869

Construction in progress
Constructions in the Northern area Constructions in the Central area Constructions in the South area

9,454,662

5,556,418

31/12/2012

31/12/2011

MILLION VND MILLION VND

1,641,185 191,226 433,568

1,016,639 278,493 235,873

2,265,979

1,531,005

17. OTHER ASSETS

Investment in finance lease assets Materials and tools Prepaid expenses (*) Goodwill (Note 18) Other assets 31/12/2012
MILLION VND

31/12/2011
MILLION VND

109,252 85,724 1,917,173 11,798 22,254

96,147 63,991 1,859,870 13,612 10,643

(*)Mainly comprises the prepaid expenses of the office rental of the Bank.

2,146,201

2,044,263

2012 Annual Report

113

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

18. GOODWILL
Goodwill represents business goodwill resulted from the business valuation for equitisation of a subsidiary of the Bank - Vietinbank Securities Company (currently known as Vietinbank Securities Joint Stock Company). Total goodwill Amortisation year Accumulated amortised goodwill as at the beginning of the year Goodwill not yet amortised as at the beginning of the year Goodwill increased during the year Goodwill decreased during the year - Amortised for the year 2012 MILLION VND 18,149 10 years (4,537) 13,612 - (1,814) (1,814) 2011 MILLION VND 18,149 10 years (2,722) 15,427 (1,815) (1,815)

Total goodwill not yet amortised as at the end of the year

11,798

13,612

19. BORROWINGS FROM THE GOVERNMENT AND THE STATE BANK OF VIETNAM
Borrowings for grants to SOEs Discounting and rediscounting valuable papers Borrowings for re-financing activities Other borrowings Current accounts held by the State Treasury 31/12/2012 31/12/2011 MILLION VND 12,472 2,570,924 - 34,606 167,372 MILLION VND 12,518 2,826,607 24,000,000 44,493 410,115

2,785,374

27,293,733

114

2012 Annual Report

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

20. DEPOSITS AND BORROWINGS FROM OTHER CREDIT INSTITUTIONS

Demand deposits, gold from other credit institutions - In VND - In gold and foreign currencies 31/12/2012 31/12/2011 MILLION VND 9,086,345 1,089,704 7,996,641 10,897,065 9,261,157 1,635,908 76,831,391 38,865,000 37,966,391 MILLION VND 2,971,022 1,380,606 1,590,416 55,240,948 41,701,974 13,538,974 16,195,943 16,195,943

Term deposits, gold from other credit institutions - In VND - In gold and foreign currencies

Borrowings from other credit institutions - In VND - In gold and foreign currencies

96,814,801

74,407,913

2012 Annual Report

115

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

21. DEPOSITS FROM CUSTOMERS

Analysis by type of deposits
Demand deposits, gold - Demand deposits in VND - Demand deposits in gold, foreign currencies 31/12/2012 31/12/2011 MILLION VND 53,518,068 44,501,999 9,016,069 225,849,936 207,093,002 18,756,934 2,066,913 719,104 1,347,809 7,670,390 6,278,737 1,391,653 MILLION VND 46,598,614 37,647,847 8,950,767 201,115,715 179,753,190 21,362,525 1,816,439 451,469 1,364,970 7,605,177 5,124,371 2,480,806

Term deposits, gold - Term deposits in VND - Term deposits in gold, foreign currencies

Deposits for specific purpose - Deposits for specific purpose in VND - Deposits for specific purpose in foreign currencies

Margin deposits - Margin deposits in VND - Margin deposits in gold, foreign currencies

289,105,307

257,135,945

116

2012 Annual Report

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

21. DEPOSITS FROM CUSTOMERS (continued)

Analysis by type of customers and type of business entity

State-owned enterprises State-owned one-member limited enterprises Two or more member limited liability enterprises with more than 50% of the States share-holding Other limited companies Joint stock companies with more than 50% of the States share-holding Other joint stock companies Partnership companies Private companies Foreign invested enterprises Cooperatives, cooperative unions Household businesses, individuals Administrative units, Party, unions and associations Others 31/12/2012 MILLION VND 39,433,699 31,902,696 681,347 9,230,877 16,169,829 12,387,444 1,042,527 928,642 7,982,250 309,645 149,658,736 5,553,577 13,824,038 31/12/2011 (*) MILLION VND 39,909,650 25,375,595 696,209 7,845,564 15,089,364 11,029,407 804,570 710,786 7,391,148 294,129 131,303,286 2,321,972 14,364,265

289,105,307

257,135,945

(*) The Bank made reclassification of the opening balance (see Note 55 - Comparative figures).

2012 Annual Report

117

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

22.GRANTS, TRUSTED FUNDS AND BORROWINGS AT RISK OF CREDIT INSTITUTION

Fund received from other organisations and individuals in VND Fund received from other organisations and individuals in foreign currencies Funds received from international organisations in VND Funds received from international organisations in foreign currencies 31/12/2012 31/12/2011 MILLION VND 26,729,924 1,768,421 1,121,151 3,607,212 MILLION VND 29,526,671 2,791,295 1,391,147 3,115,395

33,226,708

36,824,508

23. VALUABLE PAPERS

Valuable papers in VND Valuable papers in foreign currencies 31/12/2012 31/12/2011 MILLION VND 22,586,070 6,083,159 MILLION VND 9,525,010 1,564,107

28,669,229

11,089,117

During the year, the Bank issued USD 250 million of unsecured bonds with terms of 5 years, fixed interest rate of 8% p.a., interest to be paid twice a year on interest payment dates.

Detail of valuable papers by term

Term under 12 months Term from 12 months to under 5 years Term of 5 years and over Term under 12 months Term under 12 months Term from 12 months to under 5 years Term of 5 years and over Term under 12 months 31/12/2012 31/12/2011 MILLION VND 9,622,900 13,727,281 - 2,968 - 5,161,280 - 154,800 MILLION VND 1,732,638 1,593,589 50 617,567 7,095,250 50,023

Certificate of deposit

Bills Bonds

Other valuable papers

28,669,229

11,089,117

118

2012 Annual Report

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

24. OTHER LIABILITIES

Interest and fee payables Internal payables External payables Provision for commitments (Note 10) Other provisions 31/12/2012 MILLION VND 3,615,577 3,081,923 11,900,156 409,833 80,978 31/12/2011 (*) MILLION VND 4,834,923 3,085,021 16,580,974 435,811 32,741

24.1 Details of internal payables

Payables to employees Payables relating to bonus and welfare funds Others

19,088,467

24,969,470

(*) The Bank made reclassification of the opening balances (see Note 55 - Comparative figures). 31/12/2012 MILLION VND 1,810,073 1,078,347 193,503 31/12/2011 (*) MILLION VND 1,194,271 1,638,501 252,249

24.2 Details of external payables

Payments/receipts on behalf of other organisations Amount due to customers and deferred payment Corporate income tax payables Other pending payments Payables to the SBV in clearing settlement Margin deposits of securities investors Other tax payables Payables for insurance of deposit Payables to the SBV from recovery of written-off bad debts Payables relating to trade finance activities Money transfer payables Other payables

3,081,923
31/12/2012 MILLION VND 9,481,078 614,799 544,304 754,650 - 138,126 73,229 58,958 44,814 11,382 32,221 146,595

3,085,021
31/12/2011 (*) MILLION VND 14,176,726 137,764 700,916 432,713 104,531 577,279 73,964 48,933 35,408 50,327 242,413

(*) The Bank made reclassification of the opening balance (see Note 55 - Comparative figures).

11,900,156

16,580,974

2012 Annual Report

119

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

25. THE BANKS OBLIGATIONS TO THE STATE BUDGET

Opening balance Million VND Movement during the year Payables Million VND Paid Million VND Closing Balance Million VND

Value Added Tax Corporate Income Tax Other taxes

(87,838) 700,916 73,964

114,422 1,998,842 433,934

111,328 2,155,454 449,161

(84,744) 544,304 58,737

687,042

2,547,198

2,715,943

518,297

120

2012 Annual Report

26. CAPITAL AND RESERVES

The movement of major items in owners capital

Financial Total
MILLION VND
supple mentary

financial

Difference from Capital

reserve Charter Share statements

Retained

Minority

fund capital premium translation

MILLION VND MILLION VND MILLION VND MILLION VND MILLION VND MILLION VND MILLION VND

reserve 28,699,392 6,169,679

earnings

interest

As at 01/01/2012 1,941,959 4,045,864 - - - - - - 26,217,545 2,210 302,101 1,683,091 750,875 - - (229) - - - 625,980 312,990 - - - - (79) (1,938,970) (13,017) 4,668,709 - - 26,919 (7,897) (25,545) - 1,938 - - - - - - - 6,151,545 18,134 - - (10,788) - - 215,842 - - - - (4,045,864) - (1,941,959) - - - - -

20,229,722

1,944,169

300,163

1,030,421

445,782

4,540,639

208,496

Increase capital from share premium

Increase capital from dividends distribution

Profit for the period

Increase from financial statements 1,938 (6,523) (10,867) (1,000,000) (13,246) 33,840,373

translation for consolidation purpose

Adjustment of appropriation to reserves for previous year

Dividend payment of 2011

Appropriation to reserves

Others

Consolidated financial statements for the year ended 31 December 2012

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

As at 31/01/2012

2012 Annual Report

Form B 05/TCTD-HN

121

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

26. CAPITAL AND RESERVES ( continued)

On 21 March 2012, the State Bank of Vietnam issued Document No. 1633/NHNN-TTGSNH approving the Bank to increase its charter capital in 2012 from VND 20,229,721,610,000 to VND 26,217,545,370,000 by stock dividends (20%) and bonus stocks (9.6%) from share premium for existing shareholders. On 13 April 2012, the Bank completed the issuance of shares to existing shareholders with the total number of 598,782,376 shares. In 2011, the Bank temporarily distributed profit based on the Banks 2011 results of operations. On 28 February 2012, the General Shareholders Meeting approved the appropriation to reserves and profit distribution for the year 2011. The appropriated amounts approved by the General Shareholders Meeting were adjusted in the consolidated financial statements for the year ended 31 December 2012. In 2012, the Bank temporarily distributed profit based on the operating result in 2012. The final approval is under the authority of General Shareholders Meeting.

Details of investment capital into the Bank are as follows:

31/12/2012
Total shares Ordinary shares

31/12/2012
Total shares Ordinary shares (MILLION VND)

units (MILLION VND) units

Capital of the Government

2,105,442,944 516,311,593

21,054,429 5,163,116

1,624,570,174 398,401,987

16,245,701 3,984,021

Contributed capital (shareholders, members) Share premium

non-applicable

2,210

non-applicable

1,944,169

2,621,754,537

26,219,755 2,022,972,161
31/12/2012 Unit

22,173,891
31/12/2011 Unit

Details of the Banks shares are as follows:

Number of registered shares for issue Number of shares offered to public - Ordinary shares - Preferred shares

2,621,754,537 598,782,376 598,782,376 - 2,621,754,537 2,621,754,537 - 10,000

2,022,972,161 168,581,013 168,581,013 2,022,972,161 2,022,972,161 10,000

Number of shares in circulation

- Ordinary shares - Preferred shares

Par value of shares (VND)

122

2012 Annual Report

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

27. INTEREST AND SIMILAR INCOME

Interest from deposits Interest from loans to customers Interest from debt securities Interest income from finance leases Other income from credit activities 2012 MILLION VND 1,974,401 39,663,003 8,789,448 229,078 4,832 2011 MILLION VND 4,181,419 42,903,387 8,410,196 268,152 12,090

50,660,762

55,775,244

28. INTEREST AND SIMILAR EXPENSES

Interest expense on deposits Interest expense on borrowings Interest expense on valuable papers issued Expense on other credit activities 2012 MILLION VND 24,717,048 5,931,336 1,574,784 17,570 2011 MILLION VND 25,735,254 7,698,445 2,182,815 110,676

32,240,738

35,727,190

2012 Annual Report

123

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

29. NET GAIN FROM SERVICE ACTIVITIES

Income from services - Income from remittance services - Income from guarantee services - Income from trust and agency services - Others 2012 MILLION VND 1,855,358 860,051 359,079 15,640 620,588 577,135 103,337 151,750 322,048 2011 MILLION VND 1,923,360 733,387 391,028 181,560 617,385 771,029 69,902 123,901 577,226

Expense on services - Expense on remittance services - Expense on treasury - Others

Net profit from services

1,278,223

1,152,331

30. NET GAIN FROM TRADING FOREIGN CURRENCIES AND GOLD

Income from trading foreign currencies and gold - Income from spot trading foreign currencies - Income from trading gold - Income from trading derivative financial instruments Expense from trading foreign currencies and gold - Expenses from spot trading foreign currencies - Expense from trading gold - Expense from trading derivative financial instruments 2012 MILLION VND 1,259,955 367,980 652,568 239,407 898,267 157,943 641,837 98,487 2011 MILLION VND 701,690 531,202 44,676 125,812 319,128 196,862 122,266

Net gain from trading in foreign currencies and gold

361,688

382,562

124

2012 Annual Report

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

31. NET PROFIT FROM TRADING SECURITIES HELD FOR TRADING

Income from trading securities held for trading Expense from trading securities held for trading Provision reversed/(charged) for impairment of securities held for trading 2012 MILLION VND 42,453 (13,237) 4,940 2011 MILLION VND 37,322 (18,347) (8,045)

Net gain/(loss) from securities held for trading

34,156

10,930

32. NET PROFIT FROM TRADING INVESTMENT SECURITIES

Income from trading investment securities Expense from trading investment securities Provision reversed/(expense) for impairment of investment securities (Note 12) 2012 MILLION VND 363,813 (683) 152,753 2011 MILLION VND 289 (16) (501,417)

Net gain/(loss) from investment securities

515,883

(501,144)

2012 Annual Report

125

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

33. NET PROFIT FROM OTHER ACTIVITIES

2012 2011

miLLiOn VND miLLiOn VND Other operating income Income from recovery of bad debts Income from disposals of assets Other income Expenses on other activities 1,330,576 1,255,421 6,710 68,445 144,977 1,191,117 1,170,498 5,847 14,772 167,014

Net profit from other activities

1,185,599

1,024,103

34. INCOME FROM CAPITAL CONTRIBUTION, EQUITY INVESTMENTS

2012 2011

miLLiOn VND miLLiOn VND Dividend in cash from capital contribution, equity investments - from equity securities held for trading - from equity investment securities - from other long-term investments 2,494 8,949 10,820 143,691 18,243 1,661 237,441

Share from net profit / loss under equity method of investments in joint ventures / associates

165,954

257,345

126

2012 Annual Report

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

35. OPERATING EXPENSES

2012 2011

miLLiOn VND miLLiOn VND Taxes, fees and charge 77,425 100,788

Staff cost - Salaries and allowances - Salary-based expenses - Other benefits - Social activities expenses - Other expenses 4,501,000 226,649 43,241 1,524 216,470 4,501,418 190,828 39,511 1,368 241,962

Expenses for fixed assets - Depreciation and amortisation expenses - Others 887,459 808,353 750,731 715,240

Expenses for operating management - Per diem - Expense for union activities - Others 135,753 10,215 1,578,687 216,397 (17,069) 749,569 110,921 8,958 1,352,988 169,332 893,864

Insurance premium for customers deposit (Reversal of)/Provision expense for other assets Other operating expenses

9,435,673

9,077,909

2012 Annual Report

127

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

36. PROVISION EXPENSES FOR CREDIT LOSSES

Provision expenses for credit losses of loans to credit institutions Provision expenses for credit losses of loans to customers (Note 10) Provision expenses for off-balance sheet commitments (Note 10) 2012 154,760 4,229,172 (25,978) 2011 17,775 5,041,507 (155,031)

miLLiOn VND miLLiOn VND

4,357,954

4,904,251

37. CORPORATE INCOME TAX EXPENSE

2012 2011

miLLiOn VND miLLiOn VND Profit before tax 8,167,900 8,392,021

Adjustments for: - Dividend income exempted from current income tax - Profit before tax of subsidiaries - Income from increase of interest in joint ventures/associates - Changes in general provision for loans granted to the Banks subsidiaries - (Reversal of )/Provision charge for debt securities - Others 5,102 (125,124) 102,821 7,622,535 1,905,634 592 91,995 1,998,221 (1,280) 394,944 8,179,052 2,044,764 87,890 2,132,654 (22,318) (362,210) (143,636) (12,461) (356,735) (237,437)

Taxable income of the holding Bank Local current income expense of the Bank at tax rate 25% Overseas current income expense of the Bank Current income expense of the subsidiaries CIT expense based on taxable income

128

2012 Annual Report

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

38. BASIC EARNINGS PER SHARE

Profit attributable to the Banks shareholders (million VND) Less: Profit distributed to bonus and welfare funds (million VND) Profit to calculate basic earnings per share (million VND) Weighted average number of ordinary shares to calculate basic earnings per share (share) Basic earnings per share (VND) 2,053 2,830 2012 6,151,545 1,000,000 5,151,545 2,508,692,014 2011 6,243,795 1,001,000 5,242,795 1,852,294,084

Retrospective adjustment of the weighted average number of shares and basic earnings per share:
WEigHtEd AvERAgE nUmbER EARning PER sHARE VND 3,162 ShaRes 1,658,098,187

OF ORdinARY sHAREs As per consolidated financial statements for the financial year ended 31 December 2011 Impacts of share issuance from share premium on 13 April 2012 Adjusted figures

194,195,897 1,852,294,084

(331) 2,830

2012 Annual Report

129

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

39. CASH AND CASH EQUIVALENTS

Cash and cash equivalents presented in the consolidated cash flow statement include the following balance sheet items: 31/12/2012 31/12/2011 miLLiOn VND miLLiOn VND Cash, gold and gemstones (*) Balances with the State Bank of Vietnam (*) Current deposit at other credit institutions (*) Deposits at and loans to other credit institutions with term of less than 3 months 3,728,000 2,511,105 12,234,145 14,475,763 26,364,975 3,713,859 12,101,060 4,754,104 53,725,376

Securities which fall due within 3 months from purchasing date

59,313,988 74,294,399

(*) Balance of cash, gold and gemstones, balances with the State Bank of Vietnam and balance of current deposit at other credit institutions are presented in Note 5, Note 6 and Note 7.

130

2012 Annual Report

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

40. COLLATERALS AND MORTGAGES

40.1 Type and value of collaterals and mortgages
CARRYing vALUE (miLLiOn VND) Real estate Movable assets Valuable papers Other assets 31/12/2012 31/12/2011 379,347,644 30,897,047 32,691,212 154,480,824 309,839,088 133,831,206 38,090,284 18,794,587

597,416,727

500,555,165

40.2 Collaterals held by the Bank which are permitted to sell or re-pledge for a third party in the absence of default by the owner of the collateral
As at 31 December 2012, the Bank did not hold any collateral which the Bank is permitted to sell or re-pledge for a third party in the absence of default by the owner of the collateral.

41. EMPLOYEES REMUNERATIONS

2012 2011 Total number of employees (person) 1.Total salary fund 2.Bonus 3.Other allowances 4.Total income (1+2+3) 5. Average monthly salary 6. Average monthly income 19,046 4,501,000 - 120,874 4,621,874 19.69 20.22 18,040 4,501,418 164,727 4,666,145 20.79 21.55 Employees income (million VND)

2012 Annual Report

131

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

42. CONTINGENT LIABILITIES AND COMMITMENTS

In normal course of business, the Bank uses financial instruments which are related to off-balance sheet items. These financial instruments mainly comprise financial guarantees and commercial letters of credit. These instruments involve elements of credit risk apart from those recognised in the consolidated balance sheet. Credit risk for off-balance sheet financial instruments is defined as the possibility of the Banks sustaining a loss because any other party to a financial instrument fails to perform in accordance with the terms of the contract. Financial guarantees are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party including guarantee for borrowings, settlement, contract performance and bidding, etc. The credit risk associated with issuing guarantees is essentially the same as that associated with extending facilities to customers; other guarantees have risk concentration at lower level. Letter of credit (L/C) transaction is a transaction where the Bank issues a financial guarantee to its customers (buyer or importer) in which the seller or the exporter is the beneficiary. There are 2 types of L/C by term: L/C at sight and usance L/C. Credit risk of L/C is limited if the Bank can manage the receipt of goods. Usance L/C represents higher risk than L/C at sight. If the Bank makes payment to the beneficiary under L/C or financial guarantees but the Banks customer does not reimburse to the Bank, the Bank has the right to record a loan to the customer under their agreement before issuing L/C or financial guarantees. The Bank requires margin deposits to support credit-related financial instruments when it is deemed necessary. The margin deposit required varies from nil to 100% of the value of a commitment granted, depending on the creditworthiness of clients as assessed by the Bank. In addition, the Bank engages conditional commitments, in forms of commitments in interest swap contracts, commitments in valuable paper trading contracts and other commitments.

Detail of contingent liabilities and commitments as at 31 December 2012:

Contingent liabilities Financial guarantees Letter of Credit at sight Usance Letter of Credit Commitments Commitments in currency swap contracts Commitments in valuable paper trading contracts Other commitments 31/12/2012 miLLiOn VND 43,848,065 16,563,687 19,485,195 7,799,183 11,932,157 6,957,407 2,570,924 2,403,826 31/12/2011 miLLiOn VND 47,837,808 17,712,619 20,300,939 9,824,250 4,596,987 4,596,987

132

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NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

43. RISK-FREE TRUST AND AGENCY ACTIVITIES

Trusted fund from orgnisations 31/12/2012 miLLiOn VND 4,081,891 31/12/2011(*) miLLiOn VND 2,029,742

4,081,891

2,029,742

(*) Including balance of the risk-free trusted fund at Vietinbank Fund Company Ltd. as at 31 December 2011.

44. RELATED PARTY TRANSACTIONS AND BALANCES

During the course of operations, the Bank had deposits, borrowings and other transactions with its related parties.

List of related parties:

RELAtEd PARtiEs RELAtiOnsHiP The State Bank of Vietnam Indovina Bank Ltd. Vietinbank Aviva Life Insurance Company Limited Southern Quang Ngai Urban Township Investment and Development JSC. My Dinh Real Estate Investment JSC. Direct ownership Joint Venture Joint Venture Associate Subsidiarys associate

Significant transactions with related parties during the year:

RELAtEd PARtiEs The State Bank of Vietnam The State Bank of Vietnam Indovina Bank Ltd Indovina Bank Ltd Vietinbank Aviva Life Insurance Company Limited TRAnsActiOns 2012 (MILLION VND) (24,265,616) 133,085 (800,000) 616,560 (471,367) Decrease in borrowings from the SBV Decrease in deposits with the SBV Decrease in deposits with related party Decrease in deposits and loans from related party Decrease in deposits from related party

Significant balances with related parties as at the balance sheet date are as follows:
RELAtEd PARtiEs The State Bank of Vietnam The State Bank of Vietnam Indovina Bank Ltd. Indovina Bank Ltd. Vietinbank Aviva Life Insurance Company Limited TRAnsActiOns REcEivAbLEs PAYAbLEs miLLiOn VND miLLiOn VND 12,234,145 - 2,000,000 - 2,618,002 4,557,960 368,332 Demand deposits and compulsory reserves Borrowings Deposits Deposits

Dividend for year 2010 and 2011 291,592

2012 Annual Report

133

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

45. GEOGRAPHICAL STRUCTURE OF ASSETS, LIABILITIES AND OFF BALANCE SHEET ITEMS
As at 31 December 2012:
Securities trading Total Total and investment Derivatives (Total Total loan placements borrowings (Difference between transaction value balance and loans and deposits Credit in contracts) debit - credit) commitments (assets) (liabilities) Overseas million VND 584,576 million VND 61,762,205 8,362,160 70,124,365 million VND 458,949,550 446,299 459,395,849 million VND 14,630,555 29,217,510 43,848,065 million VND 74,451 - 74,451 million VND 73,815,849 73,815,849 Domestic 332,771,516 333,356,092

46. FINANCIAL INSTRUMENTS

On 06 November 2009, the Ministry of Finance issued Circular No. 210/2009/TT-BTC (Circular 210) guiding the application of International Financial Reporting Standards on presentation of financial statements and disclosures of financial instruments, which is effective for the fiscal year began on or after 01 January 2011. Circular 210 provides the definition of financial instruments, including financial assets, financial liabilities, derivative financial instruments and equity instruments and requirements on classification, presentation and disclosures of these financial instruments. As Circular 210 only regulates the presentation and disclosure of financial instruments, the following terms under Circular 210 are adopted for Note 46 of the consolidated financial statements. Assets and liabilities of the Bank are recognised in accordance with Vietnamese Accounting Standards and Vietnamese Accounting System applicable to credit institutions and prevailing relevant regulations set forth by the State Bank of Vietnam.

Financial assets
Under Circular 210, the Banks financial assets includes cash, gold, gemstones, balances with the State Bank of Vietnam, placements with and loans to other credit institutions, loans to customers, investment securities, other long-term investments, receivables and assets under currency derivative contracts. Financial assets within the scope of Circular 210 are classified, for disclosures in the consolidated financial statements, into either of the followings: Financial assets at fair value through profit and loss: Financial asset at fair value though profit and loss is a financial asset that meets either of the following conditions: a. It is classified as held for trading. A financial asset is classified as held for trading if: It is acquired or incurred principally for the purpose of selling or repurchasing in the near term; There is evidence of a recent actual pattern of short-term profit-taking; or It is a derivative (except for the derivative that is a financial guarantee contract or effective hedging instrument).

134

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NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

46. FINANCIAL INSTRUMENTS (Continued)

Financial assets (Continued)
b. Upon initial recognition, it is designated by the Bank as at fair value through profit or loss. Held-to-maturity investments: Held-to-maturity investments are non-derivative financial assets with determinable payments and fixed maturity that the Bank has the positive intention and ability to hold to maturity except for: a. Those that the Bank designates at fair value through profit or loss upon initial recognition; b. Those that the Bank designates as available for sale; and c. Those that meet the definition of loans and receivables. Loans and receivables: Loans and receivables are non-derivative financial assets with fixed or determinable payments and not quoted in an active market except for: a. Those that the Bank intends to sell immediately or in the near term, which shall be classified as held for trading, and those that the Bank designates as at fair value through profit and loss upon initial recognition; b. Those that the Bank designates as available for sale upon initial recognition; or c. Those for which the holder may not recover substantially all of its initial investment, other than because of credit deterioration, which shall be classified as available for sale. Available-for-sale financial assets: Available-for-sale financial assets are non-derivative financial assets that are designated as available for sale or are not classified as: a. Loans and receivables; b. Held-to-maturity investments or; c. Financial assets designated as at fair value through profit or loss.

2012 Annual Report

135

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

46. FINANCIAL INSTRUMENTS (Continued)

Financial liabilities
According to Circular 210, the Banks financial liabilities include borrowings from the Government and SBV, deposits and borrowings from other credit institutions, customer deposits, bonds, grants, trusted funds and borrowings at risk of credit institution, valuable papers, other payables and payables under currency derivative contracts. Financial liabilities within the scope of Circular 210 are classified, for disclosures in the consolidated financial statements, into either of the followings: Financial liabilities at fair value through profit or loss: a. A financial liability must meet either of the following conditions: It is acquired or incurred principally for the purpose of selling or repurchasing in the near term; There is evidence of a recent actual pattern of short-term profit-taking; or It is a derivative (except for the derivative that is a financial guarantee contract or effective hedging instrument). b. Upon initial recognition, it is designated by the Bank as at fair value through profit or loss. Financial liabilities at amortised cost:

Financial liabilities that are not classified as at fair value through profit or loss are classified as at amortised cost.

Offsetting of financial assets and financial liabilities

Financial assets and financial liabilities are offset and the net amount reported in the consolidated balance sheet if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

The risk management policy related to financial instruments

Under the guidance of the State Bank on enhancing the role of risk management in credit institutions, the Bank continues implementing risk management policies for its entire business. Business relating to financial instruments including spot contract, forward contract, loan contract, etc. are diversified and tightly controlled by risk management tools. All businesses are operating under risk assessment in both qualitative and quantitative risk measurement. Model of risk management related to financial instruments is associated with the modern risk management model of the Bank. This model based on the 3 stages of control includes: (i) the business units in Round 1 acts as a unit directly and fully responsible for risk identification, assessment, control and mitigation; (ii) Round 2 is the Risk Management Department with responsibility to establish the policies, principles, rules, control limit and independently supervise the risk management; (iii) Round 3 is the Internal Audit Department with the responsibility to ensure the rationality and effectiveness of the risk management at Round 1 and Round 2. All financial instruments are reviewed, assessed for all related risks before implementation, to ensure that the Bank can effectively control risks related to financial instruments.

136

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NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

46. FINANCIAL INSTRUMENTS (Continued)

The risk management policy related to financial instruments (Continued)
The specialised departments operate under the regulations prescribed by the Board of Directors and comply with the principles and procedures promulgated by the General Director, manage risk at all levels of employees and on the overall business. Details for specific department involved in risk management of financial instruments are as followings: For credit and investment risk: In 2012, the Financial Institution Department is the main division responsible for analysing and recommending credit limits for each financial institution partner. Credit and Investment Risk Management Department reviews the scoring of each financial institution. In the near future, due to changes in the risk management model, Department of Credit ratings and Credit limit Approval will do assessment, rating and approve the credit limit for enterprises and the transaction limit for financial institutions. For the liquidity risk, market risk, operation risk: Market Risk Management Department is responsible for regularly monitoring and evaluating: (i) the differences in maturity term of assets and liabilities management activities to identify, measure, analyse and report about the liquidity and interest risks (ii) market risk (exchange rate, gold price, etc.) of the system. Specific Regulations and procedures related to foreign currency investment and trading are established to manage risks associated with financial instruments, ensuring the principle of decentralization, control and operation risk management during the using of financial instruments at Front Office, Middle Office and Back Office. Since February 2013, the Bank has officially operated the Treasury MX.3 system to ensure strict and timely management of market risk related to the Banks operations. The Operation Risk Management Department regularly monitors, assesses, analyses and reports operational risk and market risk in the business processes relating to financial instruments. For legal risk: The Legal Department is responsible for the management of legality of all activities to minimise the risks in the activities relating to derivative instruments. The Compliance Audit Department inspects the operations of all departments to ensure compliance with the current regulations of the Bank. Along with setting up the departments in charge of risk management and risk management policies relating to financial instruments, the Bank also coordinates with partners in the information technology and telecommunication sector to build an integrated system of risk management tools to support the risk management operation in protecting customers, suppliers and therefore, to enhance the sustainable development of the Bank. The policies on currency risk, interest rate risk, credit risk and liquidity risk are analysed in details in Notes 47, 48, 49 and 50.

Determination of fair value of financial instruments

The Bank uses the method and assumptions to estimate fair value as following: Fair value of cash and short-term deposits is measured at book value of the items because these are short-term instruments. The Banks financial instruments are detailed as follows:

2012 Annual Report

137

46. FINANCIAL INSTRUMENTS (Continued)

31/12/2012 31/12/2011 31/12/2012 31/12/2011

138 2,511,105 12,234,145 57,890,220 26,504 257,763 - 74,451 333,356,092 145,023 88,888 73,297,671 327,109 621,309 7,943,559 6,664,631 1,110,851 298,440 67,487,055 16,888 217,023 293,434,312 20,236 263,194 (*) (*) (*) 75,511 (*) (*) (*) (*) (*) 258,385 (*) 35,779 16,790 65,295,229 (*) 12,101,060 12,234,145 12,101,060 (*) 35,779 (*) (*) (*) (*) 47,882 (*) (*) (*) (*) (*) (*) 3,713,859 2,511,105 3,713,859 96,814,801 289,105,307 33,226,708 28,669,229 3,615,577 2,785,374 27,293,733 74,407,913 257,135,945 36,824,508 11,089,117 4,834,923 (*) (*) (*) (*) (*) (*) (*) (*) (*) (*) (*) (*)

BooK value(Excluding provisions) Fair value

million VND million VND million VND million VND

Consolidated financial statements for the year ended 31 December 2012

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

2012 Annual Report

Financial assets

Cash, gold and gemstones

Balances with the State Bank of Vietnam

Placements with and loans to other credit institutions

Trading securities - Equity securities with market price reference

Trading securities - Equity securities without market price reference

Trading securities - Debt securities

Derivative financial instruments and other financial assets

Loans to customers

Investment securities - Equity securities with market price reference

Investment securities - Equity securities without market price reference

Investment securities - Debt securities

Other long-term investments

Other receivables

Interest and fee receivables

Other assets

143,304 174,443 (*) 488,917,143 451,091,385

Financial liabilities

Borrowings from the Government and the SBV

Deposits and borrowing from other credit institution s

Deposits from customers

Grants, trusted funds and borrowings at risk of credit institution

Valuable papers issued

Accrued fee and interest expenses

Other payables and liabilities 11,223,665 15,757,161 (*) (*) 465,440,661 427,343,300

Form B 05/TCTD-HN

(*) The Bank has not determined fair value of financial assets and financial liabilities as at the balance sheet date because Vietnamese Accounting Standards as well as prevailing regulations have not had specific guidance on fair value determination of such items.

46. FINANCIAL INSTRUMENTS (Continued)

Financial assets Held-for- trading million VND million VND million VND million VND million VND -maturity receivables sale amortised cost Total Held-to Loans and Available-for- measured at

Classification of financial assets as at 31 December 2012:

Other assets

million VND

Cash, gold and gemstones Balance with the State Bank of Vietnam (SBV) Placements with and loans to other credit institutions Trading securities Derivative financial instruments and other financial assets Loans to customers Investment securities Other long-term investments Other receivables Interest and fee receivables Other assets 358,718 2,450,000 412,045,325 71,408,691 2,654,409 488,917,143

- - - 284,267 74,451 - - - - - -

- - - - - - 2,450,000 - - - -

- 12,234,145 57,890,220 - - 333,356,092 - - 621,309 7,943,559 -

- - - - - - 71,081,582 327,109 - - -

2,511,105 - - - - - - - - - 143,304

2,511,105 12,234,145 57,890,220 284,267 74,451 333,356,092 73,531,582 327,109 621,309 7,943,559 143,304

Consolidated financial statements for the year ended 31 December 2012

Classification of financial liabilities as at 31 December 2012:

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

All the financial liabilities of the Bank as at 31 December 2012 are classified as financial liabilities measured at amortised cost.

2012 Annual Report

Form B 05/TCTD-HN

139

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

47. CURRENCY RISKS

Currency risk is the risk that values of financial instruments fluctuate due to changes in foreign exchange rate. The Bank was incorporated and operates in Vietnam and its reporting currency is Vietnam dong (VND), while part of the Banks assetequity is in foreign currencies (USD, EUR, etc.). Thus, currency risk may arise. The Bank is exposed to the following risks: Currency risks in foreign currency trading Currency risks in fund mobilisation and lending Currency risks in investments

The economic situation and macroeconomic policies during the year which had significant effects on the Banks operations:
In 2012, to stabilise the exchange rates, the State Bank of Vietnam took a number of measures such as putting restrictions on the types of entities eligible to borrow in foreign currencies, requesting state-owned corporations to sell USD to banks and regulating the ceiling interest rate of USD deposits at 0.50% per annum for enterprises and 2% per annum for individuals. Thanks to the SBVs positive measures, the foreign exchange market in 2012 was kept stable. In 2012, foreign currency credit growth is not high compared to that at the end of 2011, due to the fact that interest rate increased and the Bank enhanced its control over foreign currency loan balances. In addition, the Bank actively utilised USD foreign currency funds from international markets through international refinancing and capital raising channels. Particularly, in 2012, the Bank succesfully issued USD 250 million of international bonds. The Bank has used these funds to finance many projects/production and business plans in Vietnam, contributing to the economys growth.

To prevent the risk of exchange rate fluctuations, the Bank has applied the following synchronous measures:
Based on actual data, the growth demand of affiliates and business orientation, Capital and Financial Planning Management Department analyses and projects cash inflows and outflows and proposes fund planning projection for each currency unit (including VND, USD, and EUR equivalent) to the Banks Board of Management based on actual cash flows and business orientation to ensure safety and effectiveness of the whole system. All foreign currency loans are financed through mobilised funds in the same currency, thus no currency risk arises in lending and mobilisation activities.

For investment activities:

The Bank faces currency risk with regards to its investment in Indovina Bank Ltd. and the investment in the establishment of branches in Germany and Laos. Currency risk for these investments is closely monitored by the Bank through analysis and forecast of changes in exchange rates of these currencies against VND. The Bank is currently considering plans to use derivatives to hedge currency risks for the three investments.

For foreign currency trading activities:

Regulations on currency position for each currency unit are developed by the Market Risk Management Department and approved by the General Director, which are within the Banks risk tolerance. The currency position limit is controlled and executed by the FX Department at the Head Office and independently supervised by the Market Risk Management Department. The currency position is managed on a daily basis and hedging strategies are used to ensure that the currency position is maintained within established limits.

140

2012 Annual Report

47. CURRENCY RISKS (Continued)

Total million VND

Carrying amounts of assets and liabilities denominated in foreign currencies as at 31 December 2012 are as follows:
million VND million VND million VND

ITEM EUR equivalent USD equivalent Gold equivalent Other currencies equivalent

million VND

Assets 378,247 2,187,676 11,492,344 - 74,451 64,669,400 - 1,392,058 - 5,276,653 1,424,956 73,531,582 266,743,483 - - - - - - 284,267 - 46,053,418 166,353 10,046,469 - 12,234,145 57,890,220 284,267 74,451 333,356,092 73,531,582 2,817,014 5,276,653 1,987,760 39,122 2,511,105 -

Cash, gold and gemstones

105,976

Balance with the State Bank of Vietnam

Placements with and loans to - - - - -

178,105

other credit institutions (*)

Trading securities (*)

Derivative financial instruments

and other financial assets

Loans to customers (*)

1,943,209

Investment securities (*)

Long-term investments (*)

Fixed assets

Consolidated financial statements for the year ended 31 December 2012

Other assets (*) 715,512 1,418,366 17,410,544 - 19,544,422 Total assets 2,942,802 81,612,542 422,759,132 205,475 507,519,951 Liabilities and owners equity - 47,186,535 25,432,255 5,023,936 6,008,084 802,675 - 34,606 2,750,768 49,215,861 258,592,842 27,851,075 22,586,070 17,539,732 33,624,531 - - 37,227 - - - - 2,785,374 96,814,801 289,105,307 33,226,708 28,669,229 18,597,656 33,624,531 37,227 502,823,606 168,248 4,696,345 13,973,679 24,663,694 24,571,932 134,353 302,601 43,848,065 48,544,410

Borrowings from the Government

and the SBV

Deposits and borrowings from

412,405

other credit institutions

Deposits from customers

5,042,983

Grants, trusted funds and borrowings

351,697

at risk of credit institution

Valuable papers issued -

75,075

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Other liabilities (*)

255,249

2012 Annual Report

Capital and reserves Total liabilities and owners equity Balance sheet currency position

6,137,409 (3,194,607)

84,488,091 412,160,879 (2,875,549) 10,598,253 27,539,243

Off-balance sheet currency position

2,200,790

Form B 05/TCTD-HN

Total currency position

(993,817)

141

(*) Excluding risk provision

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

48. INTEREST RATE RISK

Interest rate risk is the possibility of the Banks income or asset value being affected when market interest rate fluctuates. Interest rate risk to the Bank possibly derives from investment activities and fund mobilisation and lending activities. The effective interest rate re-pricing term of the assets and liabilities is the remaining period from the date of consolidated financial statements to the nearest interest rate re-pricing date. The following assumptions and conditions have been adopted in the analysis of effective interest rate re-pricing term of the Bank asset and liabilities: Cash, gold and gemstones long-term investment and other assets (fixed assets, investment properties and other assets) are classified as non interest-bearing items; Balance at the SBV are considered settlement deposit, thus the effective interest rate re-pricing term is assumed to be within one month; The effective interest rate re-pricing term of investment securities and trading securities is determined based on the time to maturity from the balance sheet date of each securities; The effective interest rate re-pricing term of placements with and loans to other credit institutions; loans to customers; borrowings from the Government and the SBV; deposits and borrowing from other credit institutions; deposits from customers are determined as follows: Items with fixed interest rate during the contractual period: the effective interest rate re-pricing term is determined based on the time to maturity from the balance sheet date; Items with floating interest rate: the effective interest re-pricing term is determined based on the time to the nearest interest rate re-pricing date from the balance sheet date; The effective interest rate re-pricing term of valuable papers is determined based on the time to maturity from the balance sheet date of each valuable paper issued; The effective interest rate re-pricing term of grants, trusted funds and borrowings at risk of credit institution is determined based on their time to maturity from the balance sheet date to the transactions which have fixed interest rates.

The Banks interest rate risk policies are as follows:

Inter-bank lending (short-term): investment interest rate is based on the fluctuation of the market and the Banks funding cost. The inter-bank loans usually have short terms (less than 3 months). The Bank forecasts fluctuation of the market interest rate and its fund balancing ability in order to make appropriate investment decisions. In case that the interest rate is forecasted to decline, the Bank will focus on long-term investments to increase profitability. Conversely, if interest rates are forecast to have increasing trend, the Bank will increase short-term investments. Fund mobilisation: interest rate for fund mobilisation is determined based on market price, business orientation of the Bank management, the Banks fund balance and regulations of the State Bank of Vietnam. Fund is mobilized mainly with short interest rate re-pricing term.

142

2012 Annual Report

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

48. INTEREST RATE RISK (Continued)

The Banks interest rate risk policies are as follows (Continued):
Lending activities: The Bank determines lending interest rate based on the funding cost, management expenses, risk consideration, collateral value and market interest rate to ensure competitiveness as well as efficiency. The Head Office regulates the floor lending interest rate for each period; branches can themselves decide lending interest rates for each period based on credit risk analysis and assessment provided that the rates are not less than the regulated floor rate and budgeted profit is assured. Besides, due to the fact that capital structure focuses on the funds with short interest rate re-pricing term, the Bank requires that all loans must be at floating interest rate, adjusted every one to three months.

Interest rate risk management:

The Bank manages interest rate risk at 2 levels: transaction level and portfolio level, of which the former is more focused: Interest rate risk management at portfolio level The Bank has been implementing the completed systems of the rules, regulations and procedures of interest rate management in the Bank in accordance with international rules and Basel II regulations; implementing interest rate management under 3 control stages rule. In 2012, the Bank has completed the construction of software system of Assets-Liabilities Management (ALM), which runs to the transaction level under international practices, automatically providing reports of term differences, revaluation under nominal term and behaviour, interest rate increase/decrease analysis reports etc. in order to facilitate the Banks interest rate management activities. ALM system is currently in the test phase and expected to be officially launched in 2013. Re-pricing terms of all loans are required to be adjusted based on the re-pricing terms of funds mobilised. The interest rate re-pricing gaps are controlled within established limits. Interest Rate Management at transaction level All credit contracts are required to include terms relating to interest rate risk prevention to ensure that the Bank can hold initiative in coping with fluctuations of the market, lending interest rate must reflect the Banks actual funding cost; Management through the Fund Transfer Pricing (FTP) system: Since 02 April 2011, the Bank has implemented the internal fund transfer pricing system - FTP following term-matching principle for every single transaction in line with international practices. Depending on the orientation of the Bank and the market movements, the Head Office can change the fund price for each type of customers or products, etc. to give signals for the business units to determine their lending/fund mobilisation rates. With the experience and sensitivity in managing, the Bank has been cautiously, flexibly in managing the deposit and loan interest rate mechanism to ensure the safety and effectiveness of the business operation. As shown in the interest rate re-pricing gap report, the majority of interest bearing assets of the Bank has re-pricing term within 6 months, which is in line with the re-pricing structure of the mobilised funds that have short interest rate re-pricing term.

Interest rate sensitivity

Since Circular 210 does not provide specific guidance on implementation of interest rate sensitivity analysis, the Bank has not disclosed such information herein.

2012 Annual Report

143

48. INTEREST RATE RISK (Continued)

Overdue Total Current

144
VND

VND

Tri Over 3 Within 3 Within 1 From 1 to From From From 1to Over 5 months months month 3 months 3 to 6 6 to 12 5 years years interest Assets months months bearing MILLION MILLION MILLION MILLION MILLION MILLION MILLION MILLION MILLION Cash, gold and gemstones 2,511,105 - 2,511,105 - - - - -

Triu VND

Triu VND

Triu VND Non-

Assets
284,267

Balance with the State Bank of Vietnam

VND

- -

VND

- - - 40,894,678 284,267

12,234,145

VND

VND

- 13,695,737 - - 253,272

VND

VND

- - -

VND

- - - - 29,434,892 4,457,457

VND

MILLION 2,511,105

12,234,145

VND

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

2012 Annual Report

Cash, gold and gemstones - 1,411,738 - - 26,164,349 636,750 - 91,575,220 1,003,600 134,092,287 9,593,134 - - - 74,451 - 45,787,610 57,840,641 4,889,996

Placements with and loans to other credit institutions (*)

Balance with the State Bank of Vietnam - -

Trading securities (*)

2,511,105 40,894,678 --
-

12,234,145 3,046,533 74,451 -

- -

13,624,950 324,059 -

2,817,014 5,276,653

3,046,533

57,890,220

Derivative financial instruments

12,234,145

284,267

2,511,105

Placements with and loans to other and other financial assets credit institutions (*) 2,817,014 4,889,996 19,544,422 30,667,372 - 4,889,996
5,267,653 233,911

57,890,220

74,451

Trading securities (*) - - 1,411,738 -

-

Loans to customers (*)

Derivative instruments and Long-termfinancial investments (*) other financial assets 227,757,074 -
- -

Investment securities (*)

284,267 - -
-

333,356,092

73,531,582

284,267

74,451 2,817,014

Loans to customers (*) Other assets (*)

Fixed assets

5,276,653

Investment securities (*) 233,911 Total assets

55,599,241 35,975,979 3,899,078 3,028,091 794,895 333,356,092 1,628,702 3,257,404 14,658,316 - - 19,544,422 3,604,333 8,173,735 5,597,362 7,159,522 45,193,842 3,568,877 73,531,582 1,411,738 84,353,996 98,882,757 172,113,925 103,881,523 41,986,016 507,519,951 2,817,014
-- 17,346,381 - 15,512,890 2,785,374 - 4,363,772 -

Long-term investments (*) 2,817,014 - -

- 59,654,490 - 4,889,996 - - - 167,681,078 - 1,411,738

Fixed assets 5,276,653 Liabilities - - - - --

- 50,289,302 26,760,402 10,705,573 3,860,569 284,490,230 66,819,509 55,272,742 11,382,659 48,221,933

5,276,653

Borrowings Other assets from (*) the Government and the SBV 19,544,422

2,785,374 19,544,422

Deposits and borrowings from other credit institutions Total assets 30,667,372

96,814,801 507,519,951 289,105,307

Deposits from customers Liabilities

Grants, trusted funds and borrowings Borrowings from the Government and the SBV

- - -
- - 167,681,078 1,744,448

- - - - -
- 4,889,996 - 50,289,302

1,545,938

19,071,613 6,307,230

2,785,374
- - -

2,785,374

at risk of and credit institution Deposits borrowings from other

6,250,253 14,133,210 6,592,991 2,822,881 3,307,573 26,760,402 10,705,573 3,860,569 5,198,955 2,317,268 4,249,083 9,254,850 2,776,455 59,654,490 17,346,318 15,512,890 28,910,531

33,226,708 96,814,801

Valuable papers issued credit institutions

28,669,229

Other liabilities (*) Deposits from customers

- -

18,597,656 289,105,307 469,199,075 33,226,708 38,320,876

at risk of credit institution (*) Excluding risk provision. Valuable papers issued 4,889,996 4,889,996 1,411,738 1,411,738 2,580,231

Total liabilities - Grants, trusted funds and borrowings Net liquidity difference 12,069,716

- 99,513,353 124,854,153 196,701,649 42,032,386 6,097,534 6,250,253 14,133,210 6,592,991 2,822,881 3,427,373 1,411,738 (15,159,357) (25,971,396) (24,587,724) 61,849,137 35,888,482

2,006,846 102,554,948

969,484 35,614,366 -35,735,439 19,658,376 -

15,921,349 38,117,689 -26,735,030 -

7,191,319 44,728,178 3,493,755 -

2,785,374 1,578,398 -

28,669,229

Other liabilities (*)

18,597,656

18,597,656

Total liabilities

18,597,656

226,800,864 57,689,366

469,199,075 38,320,876 57,689,366 (35,735,439) 19,658,376 (26,735,030) 3,493,755 35,888,482

Balance sheet net interest gap

12,069,716

Off-balance sheet commitments affecting to sensitivity with assets and liabilities' interest rate

Total net interest rate gap

12,069,716

38,320,876

(*) Excluding risk provision

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

49. CREDIT RISK

Credit risk is the risk that results in the Banks loss because its customer or counterparties default on their contractual obligations or fail to fulfil their committed obligations. Tools that the Bank uses to manage credit risk include: For credit activities: The Bank manages and controls credit risk by setting limits for each counterparty and geographical and industrial concentration, and by monitoring exposures in relation to such limits. The Bank has established a credit quality review process to provide early identification of possible changes in the financial position as well as solvency of counterparties based on the qualitative and quantitative factors. Credit limits are established for each counterparty based on its risk rating assigned by the credit rating system. Risk rating is subject to regular assessment. For investment activities/interbank lending activities: The Bank controls and manages risks by setting the interbank and investment limit for each specific counterparty based on the analysis and assessment of the counterpartys risks. These limits are set by the Financial Institution Committee and executed by Investment Department. Financial assets overdue but not impaired The Banks overdue financial assets that are not impaired include overdue loans with no provision required under Vietnamese Accounting Standards, Vietnamese Accounting System and other prevailing regulations applicable to credit institutions in Vietnam (VAS). The aging of such financial assets is presented below:
Overdue
Under 90 days 91-180 days 181-360 days Over 360 days million VND million VND million VND million VND

Loans to customers

7,485

25,148

12,177

671,247

The Bank is currently holding collaterals in the forms of real estate, movable assets, valuable papers and others in kind for the above financial assets. However, the Bank has not been able to determine the fair value of such assets due to the lack of specific guidance and necessary market information. For the purpose of determining whether the assets are impaired and any provision is needed, these assets values are measured in accordance with Decision 493 and Decision 18.

2012 Annual Report

145

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

50. LIQUIDITY RISK

Liquidity risk is defined as the risk that results in the Banks difficulty in meeting obligations associated with its financial liabilities. Liquidity risk arises because the Bank might be unable to meet its payment obligations when they fall due under both normal and stressed circumstances or when the Bank has to mobilize funds at a higher cost. The Bank had issued regulations on the liquidity management which establishes rules of preparing net liquidity gap, designs stress test scenarios and build backup plan to proactively handle measures in facing with the market volatility. To minimise this risk, management plans to diversify its funding sources. The Bank also develops fund management report system to calculate liquidity position on a daily basis as well as prepares analysis and forecast reports on future liquidity position on a regular basis. On a monthly basis, at ALCO Committed meeting, fund balance and liquidity of the Bank is one of the key content to be discussed. Based on analysis and evaluation, ALCO Committee makes recommendations to the Board of Directors and Board of Management to maintain the ability to balance liquidity of the Bank. In addition, the Bank also maintain a list of secondary liquid assets such as government bonds, which may be sold under repurchased contracts with the State Bank in serious liquidity circumstances if any. The maturity of assets and liabilities represents the remaining time to the contractual maturity date from the balance sheet date. The following assumptions and conditions have been adopted in the analysis of the Banks maturity relating to its assets and liabilities: Balance with the State Bank of Vietnam is considered current including the compulsory reserve, which is determined upon the composition and maturity of the Banks customer deposits. The maturity of trading securities and investment securities is based on contractual maturity dates. The maturity of amounts due from other credit institutions and loans to customers is based on the contractual maturity date. The actual maturity sometimes varies from contractual term when the contract is extended. In addition, the loans to customers are represented by the residual value after deducting risk provision. The maturity of equity investment is considered to be over five years as equity investments have indefinite maturity. The deposits, loans from other credit institutions and deposits from customers are determined on the nature of these amounts or maturity dates. For demand deposits from business entities and the grants, trusted funds and borrowings at risk of credit institution, there is an assumption that a certain volume is maintained in the next term. Vostro accounts and current accounts paid upon customers demand are considered to be current. The maturity of term borrowings and deposits is based on their contractual maturity dates. In practice, such items may be rolled over and maintained for longer periods. The maturity of fixed assets is determined based on their remaining useful lives. Based on the approved annual business plan of the management, Capital and Financial Planning Management Department does analysis and makes forecasts of cash inflows and outflows of the system according to the approved plans; and also based on the actual daily fluctuations of fund mobilisation and utilisation, the Bank makes decisions on the management of capital adequacy.

146

2012 Annual Report

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

50. LIQUIDITY RISK (Continued)

Based on the projection of capital adequacy, Investment Department creates the Banks liquidity buffer through purchasing highly liquid valuable papers, which could be converted into cash through secondary market. The Investment Department may decide to sell valuable papers to SBV in open market, or to borrow to replenish working capitals deficiency to ensure liquidity position of the whole system. Based on the SBVs regulations, Capital and Financial Planning Management Department in cooperation with the Investment Department proposes available fund management plan in order to assure the actual average balance of deposits in VND and foreign currencies at the SBV is not less than the required level of compulsory reserve. Besides, the Investment Department also establishes credit limit with other banks for mutual support when needed. The process of capital adequacy of the Bank is performed in the INCAS, the interbank payment program CITAD. On the basis of centralized payment at the Head Office, the Bank actively performs liquidity risk management on a daily basis. Currently, the Bank is promptly implementing and developing software for upgrading and improving the process of risk management in accordance with international standards. The date in the Liquidity Risk Report as at 31 December 2012 shows that the Bank funds are fairly plentiful with ranging from 1 to 12 months, the longer-term funds are quite limited; however, they have been improved significantly compared to 2011. This is a common situation of commercial banks in Vietnam. In fact, the Bank still maintains an appropriate rate of short-term funds utilisation for medium and long-term loans within the limit set by the State Bank. The Banks liquidity risk management activities are monitored closely in compliance with the regulations of the State Bank and the Banks criteria for internal liquidity management for each of major currency unit (such as VND, USD, EUR) on deposits and loans portfolios.

2012 Annual Report

147

50. LIQUIDITY RISK (Continued)

148
Within 3 years million VND million VND years Total million VND million VND million VND million VND million VND Within 1 From 1 to 3 From 3 to 12 From 1 to 5 Over 05 million VND

Overdue Current

Over 3

months months month months months

Consolidated financial statements for the year ended 31 December 2012

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

2012 Annual Report

31/12/2012

Assets - - - - - 4,889,996 - - - - 4,889,996 - - - - - - - - - - - 636,750 1,003,600 9,593,134 57,840,641 1,411,738 26,164,349 91,575,220 134,092,287 45,787,610 - - - 74,451 - - 29,434,892 4,457,457 2,817,014 5,276,653 - 284,267 - - - - - 40,894,678 3,046,533 13,695,737 253,272 - - 12,234,145 - - - - - 2,511,105 - - - - 2,511,105 12,234,145 57,890,220 284,267 74,451 333,356,092 73,531,582 2,817,014 5,276,653

Cash, gold and gemstones

Balance with the State Bank of Vietnam

Placements with and loans to other credit institutions (*)

Trading securities (*)

Derivative financial instruments

and other financial assets

Loans to customers (*)

Investment securities (*)

Long-term investments (*)

Fixed assets

Other assets (*) Total assets

- 1,628,702 3,257,404 14,648,316 - - 19,544,422 1,411,738 84,353,996 98,882,757 172,113,925 103,881,523 41,986,016 507,519,951

- - - - - - - 4,889,996 - 1,744,448 - 6,561,993 - 80,949,486 72,276,327 14,072,103 1,545,938 - 7,940,158 32,710,702 - - - - 53,496,465 106,968,964 7,909,757 19,071,613 - 2,662,889 28,910,530 1,375,282 6,307,230 2,785,374 4,587 - 3,307,573 - 2,785,374 96,814,801 289,105,307 33,226,708 28,669,229

Liabilities

Borrowings from the Government and the SBV

Deposits and borrowings from other credit institutions

Deposits from customers

Grants, trusted funds and borrowings

at risk of credit institution

Valuable papers issued

Other liabilities (*) Total liabilities Net liquidity difference

- 2,317,268 4,249,083 9,254,850 2,776,455 - 18,597,656 - 99,513,353 124,854,153 196,701,649 42,032,386 6,097,534 469,199,075 1,411,738 (15,159,357) (25,971,396) (24,587,724) 61,849,137 35,888,482 38,320,876

Form B 05/TCTD-HN

(*) Excluding risk provision

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

51. CAPITAL AND OPERATING LEASE COMMITMENTS

Capital commitments: premises construction, and equipment acquisition Capital commitments: equity investments Irrevocable operating lease commitments Due within one year Due from two to five years Due after five years 31/12/2012 849,206 - 908,051 191,054 313,957 403,040 31/12/2011 999,809 1,032,519 154,292 414,007 464,220 miLLiOn VND miLLiOn VND

Of which:

52. CONTINGENT LIABILITIES

Currently, investigation agencies are prosecuting former employees of Ho Chi Minh City branch and Nha Be branch of the Bank for alleged misappropriation of assets by means of fraudulence. According to the criminal legislation and criminal procedure code, for cases under prosecution and investigation, the legal responsibilities and obligation of related parties will be determined only when the trial has been completed with an effective judgment. However, based on results of internal reconciliation, review and investigation procedures that have been taken up to the date of these consolidated financial statements, the Banks management believes that the Bank neither is jointly liable for nor incurs any financial loss that regards to the illegal actions of these individuals.

53. EXCHANGE RATES OF SOME FOREIGN CURRENCIES AT THE END OF THE YEAR
USD EUR GBP CHF JPY SGD CAD AUD NZD THB SEK NOK DKK HKD CNY KRW LAK 31/12/2012 20,828 26,736 33,621 22,137 267.01 16,952 21,160 21,580 17,243 675,11 3,170 3,638 3,588 2,682 3,293 18.62 2.58 31/12/2011 VND 20,828 27,374 32,813 22,536 275.20 16,304 20,693 21,578 16,414 670,37 3,068 3,533 3,676 2,721 3,358 16.74 Non-applicable VND

2012 Annual Report

149

NOTES TO THE CONSOLIDATED Financial STaTEMEnTS (continued)

Consolidated financial statements for the year ended 31 December 2012 Form B 05/TCTD-HN

54. SUBSEQUENT EVENT

As at 27 December 2012, the Bank joined in the strategic investment contract and comprehensive cooperation contract with Bank of Tokyo-Mitsubishi (BTMU). Accordingly, the Bank shall obtain license to sell 20% of its shares to BTMU through issuing 644,389,811 ordinary shares and increase chartered capital to 32,661 billion VND. As at the date of these consolidated financial statements, the Bank and strategic partner are completing legal procedure for capital increase. On 26 February 2013, shareholders of the Bank passed Resolution No. 06/NQ-DHCD to approve the plan regarding additional shares issuance for BTMU.

55. COMPARATIVE FIGURES

Comparative figures in the consolidated financial statements are those in the consolidated financial statements for the year ended 31 December 2011 which were audited by another independent auditing company. Some figures in the consolidated balance sheet have been reclassified as follows:
Consolidated Consolidated Items financial statement for the year ended million VND million VND financial statement for the year ended million VND

Note 31/12/2011 Difference 31/12/2012

Deposits from customers Other payables and liabilities Other provisions Placements with other credit institutions

(i) (i)&(ii)&(iii) (ii) (iii)

257,273,708 19,744,820 435,811 61,979,076

(137,763) (78,825) 32,741 (183,847)

257,135,945 19,665,995 468,552 61,795,229

(i) The reclassified amount represents the amount due to customers and deferred payment which are presented as Deposits from customers in the consolidated financial statements for the year ended 31 December 2011. In accordance with Decision No. 16/2007/ QD-NHNN issued by the SBV on 18 April 2007, such amounts should be presented in the Other payables and liabilities. (ii) The reclassified amount represents the claim provisions and catastrophe reserves of Vietinbank Insurance Company Ltd. (iii) The reclassified amount on the financial statements of Vietinbank Fund Management Company Ltd. Accordingly, this is the first year that Vietinbank Fund Management Company Ltd prepares financial statements in accordance with Circular No. 125/2011/TT-BTC dated 05 September 2011 issued by the Ministry of Finance, providing guidance on accounting for fund management companies. Figures on the consolidated balance sheet, the consolidated income statement, the consolidated statement of cashflows and related notes are prepared in the new guidance.

Preparer

Approver

Approver

Ha Quang Vu

Nguyen Hai Hung Chief Accountant

Nguyen Van Du Deputy General Director

Head of Financial Accounting Management Department 21 March 2013

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2012 Annual Report