A.

OVERALL PICTURE
I. Macro Economy
1. In 2011 a) Bad points Real economy has been deeply hit by high inflation

2011 has been a tricky year, fast rising prices combined with a global economic downturn impeding Vietnams expansion. Vietnams gross domestic product posted a 5.89% y-o-y growth, far from its initial target of 7-7.5%. Efforts witnessed in stabilizing macro-economy and in keeping the lid on inflation combined with shrinking net imports have contributed to a solid performance of the Vietnamese economy during 2011H2 (+6.2%). Amid high interest rate environment and deleveraging, industrial and construction sectors slowed down, underperforming their 2010 GDP growth contribution by almost 1ppt (2.32pps, 2010: 3.20pps). In the meantime, Services also edged down while, in this specific context, agricultural activities achieved a strong +4% y-o-y growth (2010: +2.78%). On the supply side, the industrial production slackened, only posting a 7.5% growth in 2011. Given the relative weakness of the demand and in front of rising inventories, producers chose to slowdown their output. On the demand side, retail sales, a good proxy for domestic consumption, remained a key growth driver even if it tended to soften in 2011. Retail sales and service revenue totaled VND2trn this year, experiencing a +24.2% y-o-y nominal growth. However, retail sales only rose by 4.7% in real terms as inflation cut into sales volumes, hence impacting negatively the level of domestic demand. Vietnam GDP Growth Rate (yoy) Year/Quarter 2001 2002 2003 2004 2005 1 7.2 6.6 6.8 7 7.4 2 7 6.8 6.6 7 7.8 3 7 6.9 7.1 7.4 8.3 4 6.8 7.1 7.2 7.8 8.5

2006 2007 2008 2009 2010 2011

7.3 7.7 7.4 3.1 5.8 5.4

7.4 7.8 6.5 3.9 6.2 5.7

7.9 8.2 6,5 4.6 6.5 6.1

8.2 8.5 6.2 5.3 6.8 5.89

Inflation Rate Month/Year 1 2 3 4 5 6 7 8 9 10 11 12 2005 9.7 9.1 8.4 8.5 8.1 7.6 7.5 7.3 7.8 8.3 8.5 8.4 2006 8.8 8.4 7.7 7.3 7.5 7.6 7.5 7.5 6.9 6.7 6.9 6.6 2007 7.19 6.5 6.8 7.16 7.31 7.8 8.39 8.57 8.8 9.34 10 12.6 2008 14.1 15.7 19.4 21.4 25.2 26.8 27 28.3 27.9 26.7 24.2 19.9 2009 17.5 14.8 11.3 9.23 5.58 3.94 3.31 1.97 2.42 2.99 4.35 6.52 2010 7.62 8.46 9.46 9.23 9.05 8.69 8.19 8.18 8.92 9.66 11.1 11.8 2011 12.2 12.3 13.9 17.5 19.8 20.8 22.2 23 22.4 21.6 19.8 18.1 2012 17.3 16.44 14.45

<10 (Forecast)

Foreign exchange market: despite deep changes, the lack of confidence in the VND is still striking. After depreciating at an average growth rate of 5.5% over the past 3 years, the Dong lost 10% this year after the SBV decided to devalue the domestic currency by a massive 9.3% in February 2011. The implementation of measures to curb the use of Dollar and Gold in the Vietnamese economy has tackled the ability and/or the attractiveness of using those assets as natural hedges against inflation which has enhanced the functioning of the Forex market and benefited to the Dong. In the meantime, the SBV tried to take back the control of the Forex market by shutting down the so called black market. It was then an essential move as the unofficial market was for many years the main source of speculation, undermining decisions of policy makers. The local currency should also find support in the fact that Vietnam is currently running a positive BoP as well as in the current downward trend in inflation. In the long run, uncertainty still prevails as a big question mark hangs over future USD inflows. Trade deficit also showed a significant decline this year, amounted to US$9.52bn vs. 12.6bn in 2010. The strong performance of the export sector (+33.3% y-o-y growth) did its bit in the 24.5% reduction of the trade deficit.

Financial and monetary market The financial market last year mirrored the overall picture of the economy. Besides the global economic impacts, shortcomings in Vietnams economy were also felt. This was reflected by fluctuations in the financial and monetary market. 49 million dong the record high in the gold markets history The gold price in Vietnam began escalating in early August. At first, the gold price escalated to 42-45 million dong per tael. After that, the gold fever attack boomed on August 23, 2011, when the gold price climbed to its peak of 49 million dong per tael, and people rushed to purchase gold for fear that the price would continue rising.

Nearly 50,000 businesses got bankrupted According to the Ministry of Planning and Investment, by September, nearly 50,000 businesses had stopped operation, stopping paying tax, got dissolved or bankrupted. The figure represents an increase of 11,000 businesses in comparison with the previous year. Public debt climbs to nearly 50 percent of GDP According to the Ministry of Finance, the public debt has reached 1375 trillion dong, equal to 58.7 percent of the 2011s GDP. Meanwhile, the proportions were just 33.8 percent in 2007 and 56.6 percent in 2010. Experts have warned that if the public debt increases to 70 percent, Vietnam may fall into a crisis. Massive drop in real estate market The real estate market witnessed a huge price drop by end October when Petroleum Real Estate Joint Stock Company announced a whopping discount on 85 of its apartments. The price was slashed from VND21.36 million to only 15.5 million per square meter. Three days after this announcement, Saigon Mekong Company offered a 20 percent discount on 516 apartments in the Gold House project, at only VND 14.4 million a square meter.

In short: At the beginning of the year the foreign exchange market experienced strong upheaval. The gold market was still seeking some balance and international and local prices constantly changed. At the end of the year the pressure on the exchange rate was eased somewhat thanks to the sharp fall in the trade gap. But the pressure will continue to rise in the long term. The stock market also suffered heavily last year and liquidity remained very low. Although the number of newly listed shares continuously increased last year, the sharp slump in prices made the whole market lose around 220 trillion dong or more than $10 billion dong compared with the end of 2010. The banking sector also struggled. Commercial banks had to cope with a number of challenges such as rising bad debts, liquidity difficulties and a capped mobilization rate. These difficulties prevented commercial banks from providing capital to the economy. b) Bright points Despite the difficulties and challenges in 2011, the economy still recorded a number of achievements. This was due to the governments quick response in managing the economy. From the very beginning of the year we detected risks that may create macro-economic instability and Resolution No 11 was timely introduced. The Politburo also released Decision No 02 and the National Assembly issued a resolution on readjusting the economic targets and re-orienting the macro-economic development policies. These changes help bring in positive results. Inflation was gradually contained, the trade deficit was bridged, the exchange rate was stabilized and the State budget deficit was cut. Positive signs for the economy were seen late last year, creating momentum for the financial market to strike a necessary balance. Despite domestic slowdown and global economic uncertainties, external sector will perform as good as last year. Export demands for Vietnams labor-intensive manufacturing goods and agricultural products are likely to hold up through 2011. Stronger exports growth however will keep the import bill high given the large import content of Vietnams exports. 2. The first quarter of 2012 Downtrend prevails in the overall picture of Vietnams economy in the first quarter as the gross domestic product growth rate slowed to 4%, but several optimistic indicators have emerged. The gross domestic product (GDP) growth in the first quarter of 2012 is estimated to reach 4%, a rather low rate compared to 5.57% of the same period last year and 6.1% of last years fourth quarter, reported the planning ministry. The Index of Industrial Production (IIP) picks up a mere 4.1% year-on-year, which is the lowest level in as many years. Trade deficit stands at only US$251 million, or 1.02% of the export turnover. Meanwhile, CPI inches up a slight 0.16% in March against the preceding month. Fuel imports fall by

32.1% year-on-year, while imports of fertilizer, machinery and fabric decline 27.4%, 1.4% and 11.1% respectively. The first quarters exports continue the growth trend, rising 23.6% over the same period in 2011. The State budget revenue has amounted to VND137 trillion as of March 15, equal to 19% of the years estimate. Though exports hit US$24.5 billion in the first quarter, the outlook for export in the coming months is unpromising as most leather-footwear and clothing enterprises have run out of orders. Only a few of the major industry players have orders to export in the second quarter. The low CPI rise due to high inventories results in price discounts, dwindling incomes and higher rate of unemployment, leading to a drop in the total solvent demand and a sluggish growth in the total retail sales. Electronic and cooling appliances witness sales slump, while cement and steel consumptions are alarming due to the frozen property market According to a report of the planning ministry previously submitted to the Government, over 2,200 enterprises have undergone procedures of disbandment and 9,700 others have registered for operation suspension in the early months of 2012. As such, the number of dissolved and suspended businesses has increased 6% against the same period last year. The amount of enterprises that have completed the procedures for dissolution has surged 57%. Stable forex rates, lower interest rates in the monetary market, and other indicators like inflation, trade gap, and the State budget deficit show that the situation is getting stable again.

II. Banking sector.

1. In 2011 Credit growth at an all-time low in the history of the Vietnamese banking sector and plan to merge banks for the first time were outstanding events in 2011. a) Credit growth hit all-time low in the history of banking sector

In a bid to implement the goal of taming inflation 2011 at 7%, the Vietnamese government on February 24 issued a Resolution No 11 asking the State Bank of Vietnam (SBV) to control the credit growth 2011 at below 20%.

However, till the end of August 2011, credit growth of the whole banking system reached only 8.15%. Facing this situation, at the government press conference on September 1, the SBVs governor, Nguyen Van Binh, stressed that the goal for credit growth this year is at 20%, but it is unnecessary to use up. Therefore, according to the Resolution at the cabinet regular meeting in September, the government reduced the credit growth target to 15-17%. But according to the central banks report at the meeting of the entire banking sector (on December 17), this year credit growth was estimated to be at only 12-13%, marking an all-time low in the history of the banking sector. Vietnam Credit growth data YoY % Year 2000 2001 2002 2003 2004 2005 2006 Year 2007 2008 2009 2010 2011 2012 YOY % 38.1 21.4 22.2 28.2 41.5 19.2 21.4 YOY% 51.39 30 37.73 27.65 10.9 15~17 (Forecast)

b) Race to mobilize VND from deposits has pushed interest rates higher in 2011. 2011 has been the scene of a race between commercial banks to mobilize VND. With the rising of minimum capital, local lenders coherently tried to grow their balance sheets. As a consequence, demand for VND surged as banks looked to maintain their loan-to-deposit ratios. Given the fact that deposits are banks number one source of funding, covering up to 60% or 70% of their needs, some financial institutions, especially the smaller ones, did not hesitate to breach the 14% deposit rate cap, offering 18-19% to mobilize VND. This practice has clearly disrupted the functioning of the interbank market, clearly driving the whole interest environment up. Seeing banks relying more on more on interbank funding while there were risings concerns about liquidity positions among small banks has created a great stress in the market, leading to a rapid surge in interbank lending rates. O/N rate averaged 14% in 2011, 1W rate 16% and 1M rate 17.5%. Rates even peaked to 25-30% at some point.

c) Many banks delayed payment for interbank loans Due to many banks repeatedly asked to delay payment although these debts fell due, large banks were forced to require collateral such as gold or foreign currency for interbank loans. Facing the difficulties in liquidity of many banks, the central bank boosted support capital for banks via open market operations (OMO). From October 19, the central bank reopened two-session transaction per day on OMO to flexibly use this regulation measure. d) 20 percent the peak deposit interest rate Though the State Bank stipulated that commercial banks must not pay more than 14 percent per annum in interest rate for deposits, the banks ignored the regulation. Some banks even paid 20 percent per annum for deposits in order to attract depositors. Meanwhile, the lending interest rate was pushed up to 24 or 25 percent, which caused big difficulties for enterprises. The State Bank then had to apply the iron discipline to put everything in order, threatening to dismiss bank directors, if the banks continued breaking the laws and paying high interest rates, which it believed would distort the monetary market.

e) Bad debts and weak liquidity The hot credit growth, plus the bad credit management are the two reasons behind the increases of the bad debts. According to the World Bank and the State Bank of Vietnam, the bad debt ratio of the whole banking system by August 2011 had reached 3.1 percent, higher than 2.16 percent by the end of 2010, while the figure may reach five percent by the end of 2011. The noteworthy thing is that the credit growth rate is much higher than the capital mobilization and GDP growth rates, which leads to the higher liquidity risks. The outstanding loans increased by 32 percent in 2000-2010, while the mobilized capital increased by 29 percent, while GDP grew only by 7.15 percent during that period. Some commercial banks which are holding big amounts of gold, have proposed to allow them to export gold in order to improve the liquidity. f) Vietnams overall payment balance enjoyed a surplus after two years of deficits According to the Ministry of Planning and Investment, in 2011, the countrys overall balance of payment may enjoy a surplus of $3.1 billion, after suffering a deficit of up to $8.8 billion in 2009 and deficit of $3.07 billion in 2010. The surplus of overall payment balance in 2011 was thanks to the countrys trade deficit in 2011 at only nearly $10 billion, the lowest level in the past five years. In addition, the inward remittances sent to Vietnam in 2011 also hit a record of $9 billion, contributing significantly to the national foreign currency reserve. The big surplus of overall payment balance was also backbone for the central bank to stabilize the forex rate. g) The central bank published plan to merge banks for the first time In November 2011, three banks namely De Nhat (First) Commercial Joint Stock Bank (Ficombank), Vietnam Tin Nghia Commercial Joint Stock Bank (Vietnam Tin Nghia Bank) and Saigon Commercial Joint Stock Bank (SCB) suffered lack of liquidity due to using short term capital for long term lending. To avoid the instability in three banks, which may negatively impact the whole banking system, the central bank on December 6 approved these three banks to merge together with the name of Saigon Commercial Joint Stock Bank (SCB). This is the first restructuring plan for banks after the central bank announced the policy to comprehensively restructure the banking system in October. According to the roadmap of restructuring, till the end of 2012, the central bank will fully deal with all ailing banks and not let any credit institution collapse. In 2014-2015 period, the central bank targets to form at least 1-2 banks of regional stature with total assets of about $50 billion.

2. The first quarter of 2012

VND liquidity of the banking sector was basically ensured and gradually improved; credit structure was shifted towards focusing on priority areas and gradually reducing loan outstanding for the discouraged sectors; the interest rates were reduced in accordance with macro-economic condition and the money market; the forex market was relatively stable and foreign currency liquidity was remarkably improved; and banking operations were basically safe and sound. VND mobilizing interest rates were relatively stable in the first two months. As of March 12, credit institutions reduced mobilizing rates to 3 4% p.a for demand deposits, 4- 5% for all the time deposits of less-than-one-month maturity, and 11.5-13% p.a for over 1 month deposits. In early 2012, VND lending interest rates decreased by 1 3 percentage points p.a for agricultural and rural development, exporters, small and medium enterprises, productive and business. a) M&A in banking sector expected to boom in 2012 The number of joint-stock commercial banks will fall to below 30 with trends of merger and acquisition (M&A) that is expected to occur significantly in 2012. The event the first merged bank of Vietnam came into operation from January 01, 2012 without causing any disturbance which has paved the way for the route of restructuring banks in Vietnam. Earlier, the Governor of the State Bank of Vietnam (SBV) Nguyen Van Binh said the central bank will deal with all weak banks in 2012 (the number of weak banks make up about 5% of the total joint-stock commercial banks ). Thus, it is not difficult to predict that in 2012, M&A activities of the banking market will be more exciting than in 2011. b) Lending rate will not fall until Q3 Despite the central bank's move to reduce the deposit rate to 12 percent last week, most experts forecast the lending rate will only fall from the third quarter, with the average rate expected at some 15.5 percent. Banks are currently trying to secure margin profits with lending rates set based on real capital demand from enterprises. c) Deposit rate was reduced by 2% from 14%. Vietnam cut its interest rates for the second time in less than a month on April 12. The refinancing rate was reduced by 1 percentage point to 13 percent, and the discount rate by the same amount to 11 percent. The total deposits of the entire banking system decreased 0.62 percent from the end of 2011 and the credit growth was negative 2.51 percent. The total money supply (M2) as of February 20 also declined 0.11 percent over the end of 2011. In short: Vietnam Commercial Banking SWOT

Strengths
Rapid growth. Untapped potential.

Weaknesses
Domestic banks lack capital and technology to sustain high credit growth. The financial accounts of many banks are still opaque.

Opportunities

Threats

Macroeconomic instabilities threaten the credibility of Population still under-banked. Income levels likely to rise strongly over the the government and could potentially economic policy away from further liberalization. medium term.

How these factors affect on STB share price?

In 2011, 2011 was a difficult year for Vietnam stock market because of impacts from tightening policies and concerning of high inflation. High inflation high interest rate (Interest rates play a major role in determining stock market trends) low stock prices stock market was frozen. The VN-index and HNX-index fell 27.46% and 48.6% respectively. Blue chips failed to sustain the market as they were submerged under sell pressures. STB share price was also in that cycle. In 2012, Positive signs have been seen on the Vietnamese stock market in early 2012. The support for investor confidence is a better economic performance, with inflation to be gradually controlled. The index increased significantly. Many investors have turned towards bank stocks, which are now cheap, on expectation that profits of banks will remain high and the banking sector as a whole will improve. Bank stocks continue to attract interest as the sector has outperformed the market this year. The rumors of lower interest rates have also been fuelling investor interest in the sector. STB increased gradually.

III. Sacombank
STB - (HOSE: SAIGON THUONG TIN COMMERCIAL JOINT STOCK BANK) Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) (STB) is a Vietnam-based commercial bank. It was establish in 1991 by a merging of four credit organizations in HCMC. Its initial charter capital was 3 billion VND. In 2002, Sacombanks charter capital increased when the International Financial Corporation (IFC) an arm of the World Bank invested 10% and became the second major foreign shareholder, after Dragon Financial Holdings (UK). On August 8, 2005, ANZ bank signed an official contract, investing 10% charter capital and became the third major shareholder of Sacombank. By 2007, its charter capital was 4448.814 billion VND. Engaged in corporate and personal banking, Sacombank offers basic and value-added services to its clientele, such as deposits, loans, card issues, treasury and clearing, trade financing, and investment. As of December 31, 2006, net interest income and brokerage fees accounted for 67.12% and 14.51% of

total revenue respectively. Headquartered in Ho Chi Minh City, Sacombank has 47 branches and 99 point-of-sales in Vietnam, as well as four subsidiaries, which are engaged in assets management, leasing, real estate, brokerage and foreign exchange services, and a fund management joint venture. Financial Summary Capital Currency: Market Cap: Par Value: Equity: Listing Volume: Listed Date: Initial Listed Price: VND 2,089,412,810,000 100,000 0 208,941,281 07-12-2006 78,000

Ownership structure Government 0.01% Foreigners 13.29% Others 86.70%

1. SWOT

STRENGTHS One of the largest commercial bank in Viet Nam with strong financial power. Widespread branch system Popular bank with domestic customers and some Asian countries Various products and services Low bad debt rate Young and plentiful human resource

WEAKNESS Deposits take a large part of asset Capital scale and management ability dont meet requirement of market Marketing is not effective and doesnt make outstanding differences Market share is not really big Capital withdrawals of many big shareholders

 Emerged from the global financial crisis in a strong position. By not recycling the rapid growth of deposits into new loans, the bank has reduced its loan-to-deposit ratio to less than 100%. OPPORTUNITIES

Potential direct and indirect problems from the bursting of the asset price bubble.

THREATS Foreign competitors Difficulties in reaching skilled human resource Higher demand from customers Volatile money market Weak stock market Policies of SBV often changes Unstable exchange rate Trend towards non-deposit products of customers to avoid risks Vulnerability to direct or indirect impact from the downturn in global trade If M &A happens, there will be very important changes in management structure Information about M & A causes public concerns

Most Vietnamese residents have not use many banking products and services Potential for continuing growth from a low base. Many small business companies havent completely taken advantage of bank capitals Many opportunities to co-operate with foreign banks Developments of exporting activities will give the bank chances to attract foreign capitals. Expansion into southern China and countries in the Association of Southeast Asian Nations. Sacombank has become more and more famous with domestic and foreign customers - Banking field have showed optimistic recovery

a) Strengths a.1.One of the largest commercial banks in Viet Nam At the end of 2011, the total asset of Sacombank was 141468717 million VND, more 45 times as that of 2001( 3.134 billion) with average 54.7% increase every year, in which 75.092.252 million belonged to deposit activities. Requirement capital of Sacombank increased 17% to 10739699.24 million in 2011 compared with 9179230.13 million in 2010. In 2011, profit before tax reached 2.740 billion VND with the lowest bad debt rate (0.56% equal to nearly 460 billion VND) in banking field compared 1.4% of ACB and 1.5% of Vietinbank. The bank owns 5 subsidiary companies: SBS stock company, SBL finance leasing company, SBR Remittance Company, SBA management asset, SBJ Jewellery Company. According to HSX, Sacombank receives good comments about operating in Vietnam banking system. In 2006,

Sacombank was ranked at 26 in 600 big Vietnamese companies according to research by United Nations development programs. The bank is also regarded one of the main and largest commercial banks by SBV. In 2011, the bank earned over 5.842 trillion dong net interest income, rising 50% year on year and total loss from securities trading, investments, capital contribution and stake purchase was over 439 billion dong. a.2. Widespread branch system At the end of 2011, Sacombank was the banking which had the largest branch system, covering the West, East South and Middle areas with over 380 points in 45/63 provinces. Sacombank added more 56 PGD (1 PGD in Campuchia) and had relations with 10.339 agencies of 305 banks in 81 countries and areas over the world. Sacombank set up adding 124 ATMs to increase 657 machines. At this moment, Sacombank online system is connected to the 2 largest card cooperations, Banknetvn and Smartlink. a.3. Popular bank with domestic customers and some Asian countries 13/10/2008: Sacombank received the prize Best bank in Viet nam 2008 which was voted by Global Finance. The bank also got the prize The Vietnamese bank with best operating in 2007 by Global Finance in 2008. These prizes were based on criteria: stable development ability, value of label, strategic view, risk management, potential growth in the future, stability of income, ability of product creation and investment policy in human resource. The strategies to develop system of Sacombank have showed positive signs that: effective operation of agencies which let Sacombank take advantage of invade market shares and expand market to create advantages in competitions. Up to now, Sacombank has established representatives in China, Laos and Campuchia. This bank is getting more and more popular with domestic and foreign customers. a.4. Various products and services Phone Banking Sacombank service helps customers to find information and payment card services meet the various customer needs. Sacombank also co-operate with ANZ bank to issue card allowing customers to withdraw money from ATMs as well as make payments in store having relations with 2 banks. Sacombank is the first bank in Vietnam to issue the card letting customers make before payments, Sacombank Lucky Gift Card. a.5. Young and plentiful human Sacombank applies many policies to attract good human resource. This bank also builds friendly and professional environment in which every employee have chance to promote their abilities. At present, education level of staff in Sacombank: 1.9% upper university, 68.2% university, 20.4% college and 9.5% other level. b) Weaknesses b.1. Deposits take a large part of asset Deposits of customers and other financial institutions in 2011 was 87915.841 million that took up over 62% on the total asset while deposits of 2010 was 93745.042 million VND equal to about 61%.

b.2. Capital scale and management ability dont meet requirement of market Not only Sacombank but also most of commercial banks in Viet Nam have the same situation. Although commercial banks in our country have been improved considerably but they actually need more innovation and developments to be able to catch up with the growth of the economy as well as more requirements of domestic and foreign customers. b.3. Marketing is not effective and doesnt make outstanding differences Although Sacombank has made much effort to improve their activities and diversify products and services and it also is one of the first bank to update advances in technology and expand branch system, its profit mainly comes from credit products. That means Sacombanks various products and services but its marketing is not good enough to attract customers. c) Opportunities c.1. Most Vietnamese residents have not use many banking products and services Viet Nam is a developing country with improving economy, starting innovation for a short time. Retail banking services have just begun and public are not really familiar with using products and services of baking system. Density of banking services in Viet Nam is lower than other Asian countries. At this moment, average density of using banking service of Viet Nam is about 8-9% in big cities that is around 24% while this figure in Thai land stands nearly 80%.

c.2. Many opportunities to co-operate with foreign banks After taking part in WTO, economy of Viet Nam has opened more with the global economy. Foreign business firms, banks and customers will have more chances to join in our economy. This creates many chances for Vietnamese commercial banks including Sacombank to cooperate with overseas banks as well as receive modern technology and experiences.

c.3. Developments of exporting activities will give the bank chances to attract foreign capitals Exporting activities of Vietnamese companies have developed during for long time and will continue this trend in the future. This means demand for banking products and services will increase. As a matter of fact that Sacombank specializes in foreign trade transactions with one of the most famous position in this field of banking system, so there will more and more customers demand for the banks services in the future.

c.4. Sacombank has become more and more famous with domestic and foreign customers In many successive years, Sacombank has achieved remarkable developments and gained many noticeable prizes: In 2007: + Excellent Payment Bank 2007 by Bank of America + Vietnam Retail Bank of year by Asian Banking and Finance + Golden prize for strong label In 2008: + Vietnam Retail Bank of year by Asian Banking and Finance

+ Best Domestic Bank in Vietnam 2008 by The Asset + Outstanding Quality in Payment Formatting and Straight Through Rate by Standard and Chartered

c.5 Banking field have showed optimistic recovery In 2011, banking system of Vietnam had experienced a hard year with the strong decrease in stock market, difficulties in real estate market and tightens money policies of the government and Sacombank was not the exception. However, from the beginning of 2012 the banking operations have showed considerable improvement especially in the stock market.

d. Threats (see the table above)

2. How it affect on STB share price?

In early July 2011, rumor spread out that Sacombank would be swallowed by a group of shareholders. In the period from June 27 to July 8, 2011, 26.34 million Sacombanks shares were traded (4 million shares per trading session) at the floor prices. At the trading session on July 8, 2011, there was the offer to purchase four million Sacombanks shares, but there was no seller. In fact, the collection of Sacombanks shares began in April 2010 already, when Sacombanks share price dropped to 22,000 dong. The more the price went down, the more shares the collectors purchased. The share price then dropped to the 52-week low of 11,600 dong, and hovered around 12,000 dong per share the next days. Previously, transactions of tens of millions of STB shares conducted by companies related to Sacombank chair Dang Van Thanh's family was reported since July 2011 when STB share prices dropped to the record low of 11,600 dong. STB registered to buy as many as 100 million shares, equivalent to 1,300 billion dong from 16 November to 16 December 2011. Thanh affirmed further purchasing until the price reflected the real value (more than 20,000 dong). Meanwhile, a series of big shareholders of Sacombank announced the sale of Sacombanks shares. Dragon Capital, a foreign strategic shareholder, sold all the 61 million shares it had (6.66 percent). Several months later, on January 6, 2012, REE sold 42 million Sacombanks shares (3.92 percent). On January 9, 2012, ANZ, the biggest foreign shareholder of Sacombank sold 103 million Sacombanks shares, or 9.61 percent of total stakes. The buyer was Eximbank, which now reportedly holds 9.73 percent of Sacombanks stakes. The rumor which has been spreading for the last few months about a plan of Eximbank to swallow Sacombank causes the share price increased slowly in January. Sacombank bought back 100 million shares for treasury stocks, a defensive action, even thought this was a very difficult task due to the overly big scale of the bank. The campaign then helped Sacombanks share price increase by 21 percent. STB share value has increased around 30 percent since December 1, hovering around VND19,000. However, the move still cannot prevent the takeover intention of the group of shareholders, headed by Eximbank. Eximbank (EIB), which owns 9.7 percent of Sacombank (STB) after buying a stake from ANZ in January, claims that it represents shareholders with a combined 51 percent of Sacombank stock. The shareholders represented by Eximbank are also asking Sacombank to raise its 2012 profit target by at least 15 percent to VND4.025 trillion (US$193 million). Eximbank Chairman Le Hung Dung said that their group of shareholders is holding 51 percent so they ask for five members on the

management board. This move shows EIBs deeper involvement in STB and confirms rumors we had been hearing in the market of various parties vying for power at STB. Impacts of the race for controlling rights on Sacombank's share price have been evident since 21 February as the market price jumped 64pct from the record low of 11,600 dong. Soon after Vietnam Commercial Joint Stock Export Import Bank (Eximbank) asked Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) to re-elect its board of directors, stocks of both banks plummeted, while other banks stocks went up. While the matter has not yet been settled and must be discussed further, on February 21 trading sessions, share prices of Sacombank fell 3 points and Eximbank sank 1 point, while Vietinbanks CTG and Vietcombanks VCB rose. Sacombank Chairman Dang Van Thanh said nothing is official yet as his bank has not finalized the list of its shareholders for the upcoming annual meeting. He said Sacombank is still attractive to investors thanks to its wide network, a recent capital increase, a large asset base and a strong liquidity position. State Bank of Vietnam in Februarys report listed Sacombank in Group 1 when it comes to credit growth limits for 2012. This group is offered the highest credit growth cap of 17 per cent for their best health. However, the fight continues to affect STB share prices. STB bottomed out for four consecutive sessions recently, recovering for two sessions before declining again. It closed off 1.6 per cent to 18,700 dong ($0.90) per share on February 23. Investors once thought that the Sacombank share price increase wave had stopped, after Eximbank announced it had had 51 percent of Sacombank shares. However, the shares once again saw the prices surging to 19,600 dong per dollar on February 24. The war to hold controlling power over Sacombank is escalating. This matter will be clear in April when the Sacombank Annual General Meeting is convened. This battle is also translated into STB share prices which rose from VND11,600 to over VND20,000.

B. SECURITIES ANALYSIS
I. Technical Analysis
Buy Signal Sell Signal

Note:

Resistance Support

As can be seen in MACD chart: Buy: when MACD crosses up through EMA line Sell: when MACD crosses down through EMA line

The MFI is falling but the stock prices are making new highs, the volume pressure has slackened allowing the share price to fall.

There is a great probability of a price turn. You should consider

getting out of the stock at this time.

As can be seen in RSI chart, there are two sell signals generated over the period when crossing the overbought level of 80.

As can be seen in Stochastic chart Buy: when %K (or %D) is below the 20 line and is starting to move up with increased volume or when %K is above %D line Sell: when %K (or %D) is above the 80 line and is starting to move down with reduced volume or when %K is below %D line How to calculate: * Stochastic rate: (time zone: 21/10 -19/4) %K= (25.2-24.0)*100 / (26.5-24.0) = 80% Where: Highest Price: 26.5 (at 12/4) Lowest Price: 24.0 (at 6/4) Closed Price: 25.2 (at 19/4) The closed price at April 19 is at 80% its price ranger over 14 days. * Relative Strength Index RSI = 100 - [100/(1 + RS)] Where: RS = (Average of n-day up closes)/(Average of n-day down closes) n= n days At 21/10 RSI (14) = 23.12 At 19/4

RSI (14) = 61.30 Increase * Money flow At 21/10 Average Price = (Day High + Day Low + Close)/3 = (13.4 + 13.1 + 13.1)/3= 13.2 Money Flow = Average Price x Day's Volume= 13.2 * 695,820= 9,184,824.00 At 19/4 Average Price = (Day High + Day Low + Close)/3 = (25.5 + 24.7 + 25.2)/3= 25.13 Money Flow = Average Price x Day's Volume= 25.13 * 895,450 = 67,516,980 Increase Conclusion: Major trend Up trend Stochastic Increase Trend-line Raising Relative Strength Increase Support zone 18 - 19 Money Flow Increase Resistance zone 22 24.5 Volume Increase Moving average Increase On Balance Volume Increase

We think the current bull cycle will expand further Recommendations:

There was an uptrend that began Oct 2011 with average volume increasing slightly. There are nice increase in volume in the first 15 days of Mar 2012 SBV share price is in increasing trend with highest price at 26,000 VND (13/4). The recent resistance: 22 24.5 The recent support: 18 19 From the end of March until now, OBV is reducing slightly. Its in the zone between overbought and oversold.

Classic investment strategy: should buy at support level and sell at resistance level. Short term investors should not buy STB at this time

II. Fundamental Analysis

1. Financial situation analysis of Sacombank. Sacombank performance in period 2009-2011 Sacombanks pillar of strength, the Board of Directors drew their wisdom from their 20-year experience and from past adversities, to implement the actions in2011:Applied its four-pronged approach, which included: Increasing its financial capacity rapidly; Expanding the branch network; Enhancing human resource capacity; Modernizing banking technology ensuring stable operations, effective management and sustainable development in line with State Bank Vietnams regulations and Sacombanks expectations. In parallel, Sacombank tried to improve its adaptability and competitiveness through process reengineering of the systems, resource reallocation and culture. The bank-undertaken project relating to workforce productivity, work performance, business performance, management capacity and customer service delivery. All these projects were re-aligned with IT systems to build stronger operations there by improving its standardization and integration capability. The bank's profit from services in Q4 2011 decreased 39 percent from Q4 2010, however, for the whole year, its profit from services still reached over 935 billion dong, rising slightly on year. STB gained over 120 billion dong profit from forex trading activities in 2011, of which, its loss from securities investments was over 233 billion dong.

In 2011, STB spent 376 billion dong on its standby fund, rising nearly 55 percent from 2010 and pre tax profit was 592 billion dong in Q4, up 19 percent on year and the pre tax profit for the whole year was 2.74 trillion dong, rising 13 percent on year. The lender's after tax profit in Q4 was 440 billion dong, up 49.5 percent and the accumulated after tax profit in 2011 was 2.033 trillion dong, a year-on-

year rise of 13 percent. Sacombank's total outstanding loans by the end of 2011 were 78.449 trillion dong, credit growth was only 1.4 percent, the bad debts ratio was 0.56 percent, of which, and irrecoverable debts were 158 billion dong, down 50 percent from the end of 2010. The total deposits as of the end of 2011 reached 74.8 trillion dong, down over four trillion dong from early 2011, of which, it was mainly term savings in gold and foreign currency. a) Total assets- Total Equity analysis a.1.Total assets It will be noticed that the total asset of the bank increased, but not stable. In 2009, total asset of Sacombank is VND 98,474 billion. The following year, it rose sharply to VND 141,799 billion, with an overall increase of VND 43,325 billion. In 2011, total asset fell slightly VND 140,137 billion, showing a 1.17% decrease when compare with 2010. With that sum of asset, Sacombank is still one of the biggest banks in Vietnam. As mentioned above, the decline is not great if you know last year was a difficult year for Vietnam's economy. This demonstrates that the bank had the right policy to cope with these difficulties

As of December 31, 2011, the bank posted total assets of 141.532 trillion dong, down 7% from early 2011, total deposits of customers at over 75.092 trillion dong, down 4% from early 2011 and total outstanding loans at over 80.539 trillion dong, down 2% from January 1, 2011. Its bad debts ratio was 0.57% till the end of 2011, a.2. Total funding

Sacombank has developed and stabilized the capital funding from its customers. In addition, Bank has been building a strong brand reputation as an international financial institution. Sacombank has diversified and increased its funding sources through secondary markets. On 31 December 2011, its total funding decreased by 13.32% from late 2010and achieved VND 109,384 billion. Of this

amount, funds raised from enterprises and retail customers residents was VND103,285 billion, decreased by 0.5%,constituting 94.42% of the total funding. Sacombanks equity has increased continuously during the period 2006- 2011 with the average growth rate at around 50%. At the end of 2011, Equity capital of the bank reached 14544993 million VND a.3. Liabilities Total liabilities of Sacombank in 2006-2010 periods stayed at the quite high level with average 58%. In the total liabilities in 2011 (126921834 million), customers deposits took up over 59%, next was valuable papers (20%) flowing deposits and loans from other financial institutions at 13%. Credit debts of Sacombank in 2010 achieved 81700 billion VND, increasing by 38% compared with that of 2009 and being higher than average banking field rate (27%). Ending 2011, loans for customers of Sacombank reached 83539487 million VND. b) Income, Costs and Profits

b.1. Income * Interest income * Non interest income b.2. Cost * Interest cost Ability to pay interest for lenders = EIBT/Cost of borrowings Year Figure * Operating cost b.3. Profit 2. Other financial factors analysis a) Loans 2006 58% 2007 68% 2008 18.5% 2009 45% 2010 33.54% 2011 23.42%

The range of Sacombanks loans services improved remarkably. By providing diverse choices that satisfy increasing consumer demands for each market niche, the bank now taps the full potential of the market. It also contributes to socio-economic development of the areas where the bank is represented. By 31 December 2011, the total outstanding loans of Sacombank reachedVND79,429 billion, representing an increase of VND1,943 billion (or 2.5%) year-on year. Sacombanks market share in 2011 continued to grow compared to the previous year, accounting for 3.29% of the total outstanding loans of the banking industry. b) Services The bank formulated a stable income structure by improving import and export financing, accelerating guarantee services, revising current remittance products using advanced core banking technology and leveraging on its domestic and overseas network. Concurrently, e-banking products with new features were launched and the Customer Service Center was upgraded. The International Payment Center has also revised its business model to streamline administrative procedures and strengthened its advisory payment services. c) Solvency and Profitability In 2010, Sacombank re-shaped the Asset Liability structure and gradually improved the imbalance of tenor between the two by increasing the medium and long-term funds, raising funds from residents, especially increasing trust funds and issuing bonds. Sacombank focuses on investments in physical facilities. Such investments were made in accordance within planned budget and to balance short-term cost to long-term benefits. The abovementioned measures improved profitability, stabilized liquidity and ensured solvency as evidenced by: Ratio of earning assets to total assets was 85.00%; Average return on equity (ROE) ratio reached 19.3%; and Return on assets (ROA) ratio was 2.0%. 3. Some main financial figures of Sacombank a) CAR Sacombank has keep its CAR standing at higher requirement rate by SBV (9%). This indicates that Sacombank has owned the large and stable capital to deal with risk in operating process. However, this figure has been lower than average rate of other commercial bank as well as the world standard, Basel II. Year CAR b) Lending activities 2006 11.82% 2007 11.07% 2008 12.16% 2009 11.41% 2010 9.97% 2011 11.66%

With the aim to develop as a retail bank, Sacombank gives priority to len medium and small companies, private entities with the weight of 54% and 36% respectively. In 2010, percentage of fund for medium and short term loans was 23.45% and decreased down to 21.18% in 2011. The bad rate of Sacombank has remained under 1% for successive 3 years especially 0.6% while average rate of banking field was 2.1% in 2011. c) Ability to earn profits Year ROA ROE 2006 2.91% 25.64% 2007 2.08% 17.41% 2008 1.49% 13.14% 2009 1.79% 16.56% 2010 1.5% 15.04% 2011 1.41% 13.72%

ROA of Sacombank declined strongly from 1.79% in 2009 to 1.5% in 2011 and this trend continued in 2011 (1.41%). ROE also decreased nearly a half from 25.64% down to 13.72% during the period 2006-2011. It can be seen that efficiency of operating activities has caught up with the expanding scale in operating of the bank. 5. Devaluation stock 5.1. Assumptions a) Assumption of Credit growth In 2012, SBV announced to limit credit growth of commercial banks to range 15-17%. Sacombank also has been allowed to remain the credit growth at 17%. However, because of information of M&A and positive signs on stock market we suppose Sacombanks credit growth will stay at 16%. b) Assumption of Return from services In 2010, Sacombank gained 1,142,758 million VND from offering services but this reduced down to 1041395 million in 2011. Board of Sacombank intended to increase non-interest profit up to 20% but with total asset circle showed downward trend in 2011 and negative effects as well as unofficial information from changes in stock market and M&A activities. We suppose carefully that the growth from earnings of service be around 17% Total assets circle = Net sales/Average total assets Year Figure 2006 2.2% 2007 2.3% 2008 26.7% 2009 23.9% 2010 18.9% 2011 14.7%

Calculate based on Financial Reports of Sacombank.

c) Stock Investments In 2010, Sacombank lost 151 billion VND from investing in stocks and added 150 billion from trade securities and over 1.5 billion from investment securities at the end of 2011. With optimistic signs of stock market from the early 2012 especially in banking field, we suppose Sacombank will lose but at less serious level. d) Result of operating

Sacombank has planned to raise its earnings before tax by 28% compared with 2770674 million in 2011 that means its earnings before will about 3.5 billion. However, we suppose that it will around 3.4 billion (98%) e) Forward EPS EPS = Earnings for common stocks/ the number of Outstanding shares Year EPS (VND/share) 2006 2226 2007 3983 2008 1869 2009 2771 2010 2422 2011 2241

Source: Financial reports of Sacombank

On 21/4/2012, the current EPS of STB was 2350. From the changes through some recent years, in addition, the reason for increase in stock price of STB mainly comes from the information of M&A so we suppose EPS of Sacombank in 2012 will around 2310. 5.2. Forecast for price Ticker EIB ACB VCB CTG SHB HBB Average Amount of outstanding stocks 1.235.522.904 937.696.506 2.317.417.076 2.621.754.537 481.083.361 405.000.000 Price 17.5000 25.4000 28.7000 27.2000 10.9000 6.7000 P/E 7.4 7.4 12 8.3 6.3 9.6 8.5 P/B 1.4 2.0 2.3 1.6 0.9 0.6 1.46

Source: Financial Reports of commercial banks

On 21/4/2012, P/E of Sacombank stood at 10.9. From the forecast that the forward EPS will be 2310 and average P/E of some banks with quite similar situation to Sacombank is 8.5, we suppose that the price of STB will keep at around 20000 VND. 5.3. Devaluation To devaluate Sacombanks stock in the future we will apply Gordon model D1 = D0 x (1+g) VE = D1/(RE g) a) Annual dividend growth rate (g) Annual dividend rate of Sacombanks stock from 2006 -2011 Year Annual dividend rate ROE b(1- dividend rate) g( ROE x b) 2006 12% 25.64% 88% 22.5% 2007 15% 17.41% 85% 14.8% 2008 14% 13.14% 86% 11.3% 2009 15% 16.56% 85% 14.1% 2010 15% 15.04% 85% 12.8% 2011 15% 13.72% 85% 11.7%

Source: Financial Reports of Sacombank

From the changes of g from 2006-2011, we suppose that g of Sacombank in 2012 will receive the value of 11.7% b) Required rate of return on ordinary shares Return on Equity (ROE) of STB from 2006-2011 Year ROE 2006 25.64% 2007 17.41% 2008 13.14% 2009 16.56% 2010 15.04% 2011 13.72%

Source: Financial Reports of Sacombank

On 24/4/2012, Sacombank paid 1500 VND for one share, so we suppose D0 = 1500. From all information above we may devaluate STB D1 = 1500 x (1+ 11.7%) = 1675.5 VE = 1515/ (13.72% - 11.7%) = 82945 Based on all information and prediction above, we can conclude that STB is being under-valued. In the future the price of STB may decrease from the present price, around 25000 VND to around 20000 VND. We suggest that if investors who are holding STB with long investment purpose should keep it while those with opposite side may sell STB to earn profit.

C. SACOMBANK OUTLOOK 2012

I. TEXT-S&P assigns 'B+/B' rating to Sacombank; Outlook is stable
Sacombank has a "strong" business position, "weak" capital and earnings, "adequate" risk position, "above-average" funding, and "adequate" liquidity. They are assigning our 'B+/B' counterparty credit rating to the Vietnam-based bank. They assess the bank's stand-alone credit profile to be 'b+'. The stable outlook reflects our view that Sacombank will maintain its financial profile amid challenging conditions and high inflation.

The bank has an established franchise in the consumer and small and midsize enterprise segments. They consider Sacombank's management to be progressive, with a focused retail strategy. They assess Sacombank's diversity to be generally adequate; like most of its peers, it is domestically focused and the bulk of its revenues come from lending. Given the challenging operating environment, they believe Sacombank will moderate loans growth and attempt to grow fee income by cross-selling to existing customers. They expect the bank's risk-adjusted capital ratio before diversification adjustments to remain about 4% in the next 12-18 months. Their view is also based on our expectation that Sacombank will maintain its dividend policy of paying entirely in stocks. Sacombank's relatively straightforward business model supports their view that the bank's risk position is "adequate".

The bulk of the bank's revenues come from plain-vanilla lending products. They also expect Sacombank to continue to be prudent in and improve its risk management and underwriting standards. Sacombank's ratio of loans to customer deposits is 76% as of Sept. 30, 2011, better than the industry and good in comparison with larger banks that have a bigger branch network. This strength reflects Sacombank's deposit-taking efforts and effective use of its network to tap retail deposits. The bank's holdings of liquid assets (consisting of cash, interbank lending and government bonds) are also sufficient to cover short-term wholesale borrowings.

II. An overview of Sacombanks strategy

Moving forward to 2012, Sacombank will continue with the goals of efficiency and sustainability. Action plans are deployed at each region, branch, transaction office as well as Head Office to reach the targets. Deposits: ensuring to meet capital business and expansion activities (18-20% increase); Credit: growing in line with orientation of SBV (15-17% increase); Fee income and net income from FX trading: gradually increasing the proportion of noninterest income (over 20%); Past due loans: under 1.5%, in which NPLs is below 1%; Profit before tax: ensuring to pay dividend and expanding operations (up 28%); The evaluation will be based on key performance indicators (KPI) and the average growth of each unit. In particular, the planned targets of loans to deposit ratio, operational expense/profit before tax rate, the average growth/monthwill be driven depend on niche markets, performance data in the past and actual growth rate of units in its locality. In addition, Sacombank has also improved its compensation policy based not only on the performance of the unit but also staff productivity. Therefore, the unit that achieves excellence performance is required to exceed the planned business targets and comply with regulations. The improvement in compensation policy would encourage every unit to consider every dollar it spend as well as the factors that increase productivity and efficiency. Together with innovation in planning and improvement in staff compensation, Sacombank continues to support its units and subsidiaries by developing international best practice in products and services, IT systems, capital capacity and training programs. Moving forward to 2012, both management and staff of Sacombank are determined not only to attain the annual targets but also to flexibly adapt to the uncertainties of the market economy. With modern management approaches, Sacombank has succeeded in encouraging every unit and ensuring the fairness, transparency in its staff compensation policy. Accordingly, Sacombank in the next decade will encourage innovation, creativity and motivation of each staff to lay the foundations for accelerating sustainable growth. Based on its vision of becoming the leading Retail Bank in the Region, Sacombank has developed several objectives, each with specific solutions and roadmaps: 1. Human resources strategy

The Bank plans to have 13,000 employees in 2015. Therefore, it will: Increase the employment of staff with appropriate capacity; Identify and groom current staff in preparation for promotion and succession; Prepare recruitment and training policies to stabilize the number of staff employees and maintain the attrition rate below 10% per year. 2. Banking technology strategy IT plays a significant role in expanding operations. Based on the development pathway of a modern Bank, Sacombank shall implement a strong IT strategy over the next 10 years, in order to: Improve workforce productivity and provide a range of product and services of international standards, through the use of advanced technology (that is, continuous improvement and upgrading of the T24 core banking system); Improve the banks competitiveness and management capacity by implementing the remaining features of the core banking system and data warehouse, and continuous development of other technology projects (excluding the T24 System). The MIS shall be improved to support decision-making and implementation of the growth strategy as well as to scale up organizational performance. 3. Financial strategy In the next 10 years, Sacombank shall: Enlarge the capital base. Accordingly, the Basel T1 shall be increased by 15%-20% per annum and T2 capital shall be applied to seek growth; Increase total assets by an average of 15%-20% per annum; Grow Profit before tax by an average of 17%-20%; Increase ROE (Proft after tax/Average Shareholders Equity) to 15%-17%; Increase ROA (Profit after tax/Average total assets) to 1.5%-1.7%. Innovation and improvement - of Sacombank mandate period 2012-2015 CATEGORIES GDP Inflation Export Import Government deficit Public Debt OBJECTIVE 2012 6% <10% Increase by 12-13% compared to 2011 11,5-12% Total export <4,8 % GDP Total export 4,5% GDP 60-65% GDP

Period of 2012 - 2015 6,5-7% 5-75

4. Channel strategy

Sacombank aims to extend its branch network to 600 transaction points nationwide by 2020. Apart from Laos and Cambodia, the bank will also consider expanding to Malaysia, Singapore, the United States of America, Australia, Europe and other Southeast Asian countries. 5. Business strategy (funding and lending) Business approach in the next 10 years: Total funding shall grow by an average of 15%-18% per annum in 2011-2020. Domestic funding Shall represent 65%-85% of the total fund raised; Total loans shall grow by an average of 18%-20% per annum during 20112020. 6. Product and service strategy Focusing on retail banking product and services, with a gradual increase in fee based income. The ratio of total fee and commission income to total income shall reach an average of 12%18% per annum within 2011-2020; Satisfying customers needs in retail banking and provide the market with reasonably priced Financial product packages by cross-selling with partners and member companies of the Sacombank Group; Maximizing customers satisfaction by assuring product and service quality at home and abroad; Developing unique products and services to bring in operational effectiveness and improved Competitiveness; Developing new services such as derivative products, structured products, debt instrument products among others. 7. Management strategy Improving Corporate Governance by using an advanced management model; Steadily developing the organization, human resources structure and operational model; Integrating Headquarters and transaction points for an effective forecasting system; Developing an advanced and professional Risk management system in accordance with International standards; Improving internal audit process in accordance with international standards.