NATIONAL ECONOMICS UNIVERSITY

ADVANCED EDUCATIONAL PROGRAMS

GROUP REPORT ASSIGNMENT

COMMERCIAL BANKING 1

Topic: Understanding banking services through financial statements of a

Vietnam commercial bank (Techcombank)

Class: 64D Corporate Finance

Group: Group 4

Lecturer: Khuc The Anh

Hanoi, March 2024

 TABLE OF CONTENT

TABLE OF CONTENT.....................................................................................................1
GROUP 4............................................................................................................................2
I. Overview about Techcombank..................................................................................3
1. General information..................................................................................................3
2. Description and competitive positioning..................................................................3
II. Income statement....................................................................................................5
III. Balance sheets..........................................................................................................7
1. Analyze the structure and volatility of assets...........................................................7
2. Analyze the structure and fluctuations of capital resources...................................12
IV. Cash flow Statement.............................................................................................14
1. Cash flow from operation.......................................................................................14
2. Cash flow from investment.....................................................................................16
V. Notes to Financial Statements.................................................................................17
1. Total assets..............................................................................................................17
2. Deposits..................................................................................................................20
3. Interest....................................................................................................................21
4. Owner's Equity.......................................................................................................23
VI. Key Financial Ratios and Performance Metrics................................................24
1. Outstanding results.................................................................................................24
2. Business performance results.................................................................................25
3. Asset quality...........................................................................................................26
VII. Comparative and Trend Analysis........................................................................27
1. CASA (Current Account Savings Account Ratio)..................................................27
2. NIM (Net Interest Margin).....................................................................................28
3. ROE (Return on Equity).........................................................................................29
4. NPL (Non-Performing Loan)..................................................................................30
REFERENCES................................................................................................................32

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 GROUP 4

Name Student code Note

1 Đặng Thùy Dương 11221535 Group leader

2 Hoàng Minh Anh 11220199 Member

3 Vũ Thị Minh Anh 11220689 Member

4 Bùi Anh Đức 11221345 Member

5 Vũ Thái Hà 11222000 Member

6 Đỗ Quỳnh Hương 11222661 Member

7 Lê Ngọc Linh 11223469 Member

8 Nguyễn Thị Mai Linh 11223662 Member

9 Lê Phương Mai 11224033 Member

10 Đỗ Minh Ngọc 11224656 Member

11 Đoàn Thúy Quỳnh 11226617 Member

12 Hoàng Lê Bảo Trân 11226322 Member

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I. Overview about Techcombank
1. General information
 Established in 1993, Techcombank is one of the largest joint stock banks in
Vietnam, providing a wide range of products and services to more than 10.1
million individual and corporate customers. The Bank's mission is to lead
the digitalization journey of the financial industry, creating motivation for
individuals, businesses and organizations to develop sustainably and
successfully breakthrough.
 Techcombank has the highest credit rating among banks in Vietnam with a
Ba3 rating, positive outlook and BB- from S&P, stable outlook. The bank
was honored as "Best Bank in Vietnam" by FinanceAsia Magazine in 2020
and 2021. At the same time, it was honored to receive the "Best Capital
Bank in Asia - Pacific" award from Corporate Magazine. Treasurer.
Techcombank is also the bank that The Asian Banker - Asia's leading
financial rating organization honored "Vietnam's Best Payment Bank",
"Vietnam's Favorite Transaction Bank" and recently " The bank that
provides the best supply chain finance (SCF) solution in Vietnam in 2022.

2. Description and competitive positioning

“Be greater”, as it says in the brand positioning, Techcombank is dedicated
and committed to bringing the best value and offering great experience to
our clients, partners, and team members.
 Vision: “Change banking, change lives. Uplifting everyone to reach their
full potential.” - “Chuyển đổi ngành tài chính, nâng tầm giá trị sống; thúc
đẩy mỗi người khai phá tiềm năng và bản lĩnh hành động cho những điều
vượt trội.”
 Long - term and short - term goals
 Long-term plan is to build on Techcombank’s solid foundations,
looking particularly at digitalisation, data and talent. Our ongoing
embrace of the new digital normal will see us take advantage of the
sector-wide macroeconomic trends that make Vietnam one of the
world’s best performing markets. And we’ll continue providing our
customers with market-leading, digital banking solutions and
services. A big goal will be to help Vietnamese people and
businesses become more comfortable with digital banking. (Annual
Report of Techcombank 2022)
 Short-term plan: By 2025 Techcombank aim to be a USD 20
billion bank (one of the most valuable banks in the region) with:
 A CASA ratio of 55%
 Net fee income/total operating income (NFI/TOI) ratio of
30%
 A targeted return on equity (ROE) of 20%

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 Mission: “Lead the digital transformation of the financial industry,
enabling individuals, businesses, and corporations to progress and thrive
sustainably.” - “Dẫn dắt hành trình số hóa của ngành tài chính, tạo động
lực cho mỗi cá nhân, doanh nghiệp và tổ chức phát triển bền vững và bứt
phá thành công.”
 Core Value:
The value that Techcombank commits to implement in all actions to get
core success include:
 Customer Centricity: Exceed expectations - Techcombank put the
customer at the center of everything they do.
 Innovation and creativeness: Create the next - Techcombank explore
new opportunities to deliver meaningful experiences.
 Collaboration for common objectives: Partner with purpose -
Techcombank are a diverse team, united by shared goals.
 Self-development: Reach for our potential - Techcombank always
strive to advance themselves.
 Work efficiency: Take ownership - Techcombank hold themselves
accountable for their actions.
 Subsidiaries:
 Techcombank Tower Head Office (1): 6 Quang Trung, Tran Hung
Dao, Hoan Kiem, Ha Noi.
 Operations Headquarter (1): 119 Tran Duy Hung, Cau Giay, Ha Noi.
 Techcombank Tower Head Office (1): 23 Le Duan, District 1, Ho
Chi Minh City.
 Branches nationwide (301): In 36 provinces of Vietnam.

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  Achievements
 Outstanding innovative banking product & service award - Awarded
by: Vietnam Outstanding Banking Awards
 Digital Bank of the Year 2023 - Awarded by: The Asset Triple A
 Celent Model Wealth Manager Award - Awarded by: Cele
 Asia's Leader in Customer Engagement - Awarded by: IDC
 Best Private Retail Bank in Vietnam - Awarded by: The Asian
Banker
 Best Digital Business Model in Vietnam - Awarded by: The Asian
Banker
 Best Cloud Transformation in Vietnam - Awarded by: The Asian
Banke
 Best Retail Bank in Vietnam - Awarded by: The Asian Banker

II. Income statement

- In 2023, net interest income (NII) decreased by 8.6% N/N to 27.7 trillion. Net interest
income returned to growth in the fourth quarter of 2023, up 11.4% N/N after three
quarters of decline. Abundant system liquidity and falling interest rates helped capital
costs improve to 4.2% in the fourth quarter, compared to 4.7% in the third quarter and
5.4% in the second quarter of 2023. However, the impact Positive increase in net interest
margin (12-month NIM slide) is not enough to compensate for the decline in interest rates
banks lend to customers (asset yield in the fourth quarter decreased to 8.0%, compared to
82.4% ) and the temporary impact of higher credit balances at year-end.
- Income from service activities in 2023 increases by 9.5% N/N, to 10.2 trillion. The
fourth quarter alone recorded an increase of 14.2% N/N to 3.1 trillion, the highest in the
Bank's history. Accumulated for the whole year:
 Fee collection from card services reached 2,148 billion VND (up 33.7% N/N):
the growth momentum of the card segment is driven by large transaction volume
(up 28.6% N/N) and installment payment (up 29.4% N/N). In 2023, Techcombank
will have 1.2 million new cards opened, and initiatives including Signature and
Platinum cards designed to suit each customer segment have helped the Bank
affirm its leading position in total revenue. card spending, along with other items
such as e-wallet spending, international cards, credit cards, debit cards, etc., are
recognized by VISA and Mastercard.
 Revenue from letters of credit (LC), cash and payments reached VND 4,509
billion (up 81.5% N/N): The bank continues to benefit from comprehensive
digitalization of the customer journey, including advanced digital-based trade and
supply chain finance services, payment and collection solutions (SmartPOS for
business customers in the F&B, FMCG and electronics sectors; instant digital
signature, QR247 etc.), as well as cash and liquidity management solutions.
 Revenue from foreign exchange (FX) services reached 995.7 billion VND (up
9.2% N/N): In 2023, major fluctuations in the FX market have boosted the need to

5
 hedge exchange rate risks ( increase 18.2% N/N) while the demand for foreign
exchange capital flows continues to be high (increased by 6.3% N/N).
 Revenue from insurance service fees reached 667.3 billion VND (down 61.9%
N/Y): Revenue from insurance fees recovered encouragingly in the fourth quarter
of 2023, up 25.2% Q/Q, contributing to bringing the annual premium (APE) of the
whole year to VND 928.0 billion (down 36.9% N/N). Facing challenges in the
industry, Techcombank has focused on its business principles "need-based
selling", while improving the consulting process and launching breakthrough
products on digital channels. Thanks to that, Techcombank's APE has regained
growth momentum, continuously holding the number 1 position in the industry in
the last 4 months of the year.
 Investment banking service fees reached 1,839 billion (down 29.0% N/N). The
year-on-year decrease was mainly due to challenges in the first half of the year,
while the second half of 2023 saw an encouraging recovery. In the fourth quarter
of 2023, investment banking service fees continued to be stable, reaching VND
632.3 billion, up 135.8% N/N and 4.1% Q/Q. A distinct digital-based brokerage
model, along with attractive proposals, helped Techcom Securities (TCBS)
strongly increase its market share on the Ho Chi Minh Stock Exchange (HOSE) to
7.6% in the quarter. 4, from 6.8% in the third quarter and 5.2% at the end of 2022,
rising to 3rd in the industry.
- The bank recorded VND 1.4 trillion in income from other activities, excluding
provision reversal, compared to VND 372.6 billion in net expenses in 2022, mainly
thanks to income from foreign exchange trading, buying and selling investment securities
and profits from the liquidation of the old headquarters in Hanoi in the first quarter of
2023.
- Collection from debts handled by risk provisions (DPRR) reached 831.8 billion VND,
down 36.6% N/N, of which, the fourth quarter alone recorded 311.9 billion VND.
- In 2023, operating expenses increased slightly to 13.3 trillion, with the Cost/income
ratio (CIR) at 33.1%. Operating expenses in the fourth quarter of 2023 decreased by 7.8%
N/N, showing the Bank's tight cost management capacity.
- Provision expenses increased by 102.5% N/N, reflecting the evolution of bad debt
balances during the year, as forecast by the Bank, and some proactive provisioning.
Credit costs are still well controlled at 0.8%.

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7
III. Balance sheets
1. Analyze the structure and volatility of assets

1.1. Cash Reserve Analysis

- The bank's cash reserves represent the most liquid assets, established to maintain the
ability to meet payment obligations and other requirements of the commercial bank.
Therefore, analyzing cash reserves focuses on assessing the bank's reserve situation,
including several key indicators:
 Deposits at the State Bank of Vietnam (excluding mandatory reserve balance -
MRB):
 At the end of 2023: 27,140,592 - 101,100 = 27,039,492 billion VND.
 At the end of 2022: 11,475,590 - 101,100 = 11,374,490 billion VND.
⇒ It reveals a significant increase from 11,374,490 billion VND in 2022 to
27,039,492 billion VND in 2023. This surge indicates a proactive approach by the
bank to bolster its liquidity position, ensuring it has sufficient funds to meet
regulatory requirements and operational needs
 Level of Reserves Ensuring Payment Ability: Based on the data, the amount of
non-term deposits at other credit institutions is rising from 11,284,337 VND in
2022 to 13,948,561 VND in 2023 and the term deposits are increasing by
8,023,666 VND for

⇒ This diversified funding base enhances the bank's ability to manage liquidity
risks effectively and withstand unforeseen cash outflows. The commercial bank's
ability to meet payment obligations increases.
 The reduction in cash on hand from 4,215,721 to 3,620,695 billion VND signifies
a strategic shift in managing liquidity resources. While the decrease may seem
counterintuitive, it suggests that the bank is deploying excess cash reserves more
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 efficiently, possibly by investing in higher-yielding assets or reducing idle cash
balances.
 Overall, the bank's prudent liquidity management practices, evidenced by the careful
allocation of funds to maintain adequate cash reserves while optimizing returns on idle
cash. By maintaining a robust liquidity position, the bank can mitigate liquidity risks,
enhance depositor confidence, and support sustainable business growth This proactive
approach will ensure the bank remains resilient in the face of uncertainties and maintains
its ability to meet financial obligations promptly.

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 1.2. Credit activity analysis

- The credit item represents the highest proportion at about 70% of total assets (Loan to
customers: 518,641,568 billion VND / 849,482,012 billion VND of total assets). The
analysis employs various metrics:

 Scale and growth rate of credit

 Loan volume during the period: In 2023, the loan volume reached
518,641,568 billion VND, up from 420,523,705 billion VND in 2022. This
significant increase indicates Techcombank's expansion in credit activities
over the past year, marking a positive growth trend in credit operations.
 Debt collection volume during the period: Debt collection volume also
increased from 4,771,449 billion VND (in 2022) to 6,127,896 billion VND
(in 2023), demonstrating enhanced management in debt collection and risk
management capabilities, leading to improvements in the bank's overall risk
profile.
 Total outstanding loans: Total outstanding loans rose from 425,294,256
billion VND (in 2022) to 524,769,669 billion VND (in 2023), reflecting a
positive growth trajectory in credit activities, indicating the expansion and
growth of the bank's credit portfolio.
 Net loans: Net loans (loans - credit loss provisions) also increased,
indicating an improvement in the bank's risk management activities.
 Credit structure
 The proportion of outstanding loans by each lending category/ Total
outstanding loans: Evaluating the importance of each lending category
within the total outstanding loans helps determine the diversification level
of the loan portfolio.

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 Loans to domestic economic organizations and individuals: This proportion
stands at 59.22% of total outstanding loans. It represents a significant
portion of the bank's credit activities, indicating a focus on supporting
domestic economic entities and individuals in their development endeavors.
 Real estate activities: This proportion is 35.22%, a substantial part of the
total outstanding loans. Increasing lending in this sector may reflect the
bank's objective to support real estate sector development and provide
capital for construction projects and infrastructure development.
 Consumer lending: This proportion has decreased to 40.78% compared to
the previous year (52.89%). This may reflect the bank's adjustment of its
lending strategy, focusing on other sectors or implementing stricter risk
control measures for consumer lending.
 Other lending categories: Including sectors such as manufacturing, services,
transportation, education, healthcare, entertainment, etc. Although the
proportions of these sectors may not be significant individually, they
contribute to diversifying the bank's credit structure and reflect the diversity
in financial services offered by the bank.
⇒ The proportion of outstanding loans by each lending category within the
total outstanding loans not only demonstrates diversification but also
reflects the importance of each sector to the bank's credit activities.
Adjusting the credit structure in line with market conditions and specific
risks of each sector will help the bank optimize lending activities while
minimizing potential risks.

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  Credit Quality

 The ratio of overdue loans to total loans: The ratio of overdue loans to total
loans = (2,762,221 / 502,022,401) * 100 ≈ 0.55
⇒ The ratio of overdue loans to total loans is relatively low, indicating the
bank's ability to manage risk in debt management effectively.
 The ratio of non-collectible loans to overdue loans = (1,380,121 /
2,762,221) * 100 ≈ 49.96%
⇒ This ratio is relatively high, and if it increases further in the future, it
may create significant pressure on the bank's debt recovery efforts,
necessitating more effective risk management measures.

 Upon analyzing the credit activities, several key conclusions can be drawn. Firstly, the
bank has demonstrated an impressive expansion in lending activities, as evidenced by the
significant increase in the volume of loans disbursed over the previous year. This
expansion signals a proactive approach towards credit provision, potentially aimed at
supporting economic growth and infrastructure development. However, attention must be
paid to the rising proportion of non-collectible loans relative to overdue loans, indicating
a potential deterioration in asset quality. This trend underscores the importance of
implementing robust risk management strategies to mitigate credit risks and ensure the
bank's financial stability. Additionally, while the ratio of overdue loans to total loans
remains relatively low, suggesting effective debt management practices, vigilance is
required to prevent any escalation in delinquency rates. Overall, while the bank has
demonstrated commendable efforts in expanding its credit portfolio, it must remain
vigilant and proactive in managing credit risks to safeguard its long-term financial health
and sustain its lending activities effectively.

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 1.3. Investment activity analysis
- Liquid securities: 961,034 (In 2022) - 4,432,778 (in 2023)
- Risk and Income from Securities:
 The bank's securities debt balance increased from 961,034 million dong in 2022 to
4,432,778 million dong in 2023. This significant increase indicates a higher level
of investment in securities, possibly implying a higher profit target from this
activity.
⇒ A high ratio may indicate that the bank is pursuing a strategy to enhance liquidity by
investing in rapidly convertible securities, with a focus on strengthening investment
activities and using assets efficiently to generate profits.

2. Analyze the structure and fluctuations of capital resources

2.1. Scale and Growth Rate of Capital

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 The bank's total liabilities and owner's equity increased from 699,032,544 in 2022
to 849,482,012 in 2023.
 Savings deposits increased from 358.403.785 billion dong to 454.660.779
 Total liabilities increased from 585.607.578 billion dong to 717.853.947

2.2. Capital Structure

 The proportion of savings deposits to total mobilized capital is 53,5%, and total
liabilities to total mobilized capital is 84,5%.
 The proportion of equity capital to total capital is 15%.
 The proportion of mobilized capital to equity capital is 5.52.
 The proportion of deposit funds to equity capital is 35.23%.
 The bank is focusing on enhancing capital mobilization through increasing
demand deposits, savings deposits, and loans. Additionally, the bank needs to pay
attention to the capital structure to ensure stability and efficiency in business

14
 operations. Interest rates also play a crucial role in attracting capital and need to be
adjusted flexibly to meet market demands. This will help the bank establish a
sustainable and effective capital strategy in the long run.
 As of December 31, 2023, the bank's total capital reached 849,482,012 billion
dong. Among these, mobilized capital accounted for the highest proportion at
717,853,947 billion dong, representing approximately 84.45% of the total capital.
Customer deposits constitute the primary source of mobilized capital, holding the
largest proportion in the total mobilized capital, providing favorable conditions for
the bank's business operations.
 However, it is worth noting that the proportion of equity capital in the total capital
is only a small part, about 15.55%, equivalent to 131,628,065 billion dong. This
indicates that the bank's financial autonomy is not high, which may increase risks
in business operations.
 In conclusion, among the various sources of mobilized capital, demand deposits
account for the largest proportion, followed by savings deposits and loans. This indicates
that the bank has a strategy to actively mobilize capital from customers and other
financial institutions, while also enhancing the provision of financial services to attract
new sources of capital.The proportion of mobilized capital to equity capital is also high,
indicating the bank's ability to attract capital is good. However, attention should be paid
to ensuring that the proportion of deposit funds does not exceed the allowable limit in the
bank's operating regulations, to avoid risks in capital management. The capital
mobilization activities of Techcombank tend to be stable and diversified. However, to
increase financial autonomy and minimize risks, the bank may need to increase the
mobilization of equity capital and ensure the management of the proportion of deposit
funds within regulations.

IV. Cash flow Statement

1. Cash flow from operation
 Cash flow from operations reflects all cash inflows and outflows directly related to
the business activities of a bank, including:
 Cash inflows:
 Interest income from loans: Money received from borrowers as interest on
loans they have taken out.
 Collections from other receivables: Money received from customers for
goods or services sold on credit.
 Cash outflows:
 Interest expense on deposits: Money paid to customers for interest on their
deposits.
 Salary and social insurance payments for employees: Money paid to
employees for their salaries and social insurance contributions.
 Other expenses: Money paid for office supplies, business trips, and other
operating costs.

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 In short, cash flow from operations shows the net amount of cash generated by a
bank's core business activities.
 In 2023, net interest income (NII) decreased by 8.6% year-on-year (Y/Y) to
VND 27.7 trillion. NII rebounded in Q4 2023, increasing by 11.4% Y/Y after
three quarters of decline. Abundant system liquidity and lower interest rates
helped improve cost of funds to 4.2% in Q4, compared to 4.7% in Q3 and 5.4% in
Q2 2023. However, the positive impact on net interest margin (NIM) on a 12-
month rolling basis was not enough to offset the decline in interest rates charged
by banks to customers (asset yield in Q4 decreased to 8.0%, compared to 82.4%)
and the temporary impact of higher credit balances at the end of the year.
 Service income in 2023 increased by 9.5% year-on-year (Y/Y) to VND 10.2
trillion. In fourth quarter, it increased by 14.2% Y/Y to VND 3.1 trillion, the
highest in the Bank's history. Accumulated for the year:
 Card service fees reached VND 2,148 billion (an increase of 33.7% Y/Y):
The growth momentum of the card segment was driven by a large
transaction volume (an increase of 28.6% Y/Y) and installment volume (an
increase of 29.4% Y/Y). In 2023, Techcombank opened 1.2 million new
cards. At the same time, initiatives including Signature and Platinum cards
designed for different customer segments helped the Bank affirm its leading
position in total card spending turnover, along with other categories such as
e-wallet spending turnover, international cards, credit cards, debit cards,
etc., recognized by VISA and Mastercard.
 Revenue from letters of credit (LC), cash and payments reached VND
4,509 billion (an increase of 81.5% Y/Y): The Bank continued to benefit
from the comprehensive digitalization of the customer journey, including
advanced digital supply chain and trade finance services, payment and
collection solutions (SmartPOS for corporate clients in the F&B, FMCG
and electronics sectors; instant digital signatures, QR247, etc.), as well as
cash and liquidity management solutions.
 Revenue from foreign exchange (FX) services reached VND 995.7
billion (an increase of 9.2% Y/Y): In 2023, significant fluctuations in the
FX market drove demand for hedging exchange rate risks (up 18.2% Y/Y)
while demand for foreign capital flows remained high (up 6.3% Y/Y).
 Revenue from insurance service fees reached VND 667.3 billion (a
decrease of 61.9% Y/Y): Insurance fee revenue recovered encouragingly in
Q4/2023, increasing by 25.2% Q/Q, contributing to the annual insurance
premium (APE) of the whole year reaching VND 928.0 billion (a decrease
of 36.9% Y/Y). Facing challenges in the industry, Techcombank has
focused on the business motto of "selling based on needs", while improving
the consulting process and launching innovative products on digital
channels. As a result, Techcombank's APE has regained its growth
momentum, continuously holding the No. 1 position in the industry in the
last 4 months of the year.
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  Investment banking service fees reached VND 1,839 billion (a decrease
of 29.0% Y/Y). The decrease compared to the same period last year was
mainly due to challenges in the first half of the year, while the second half
of 2023 witnessed an encouraging recovery. In Q4 2023, investment
banking service fees continued to be stable, reaching VND 632.3 billion, an
increase of 135.8% Y/Y and 4.1% Q/Q. The differentiated digital-based
brokerage model, together with attractive offerings, helped Techcom
Securities (TCBS) strongly increase its market share on the Ho Chi Minh
Stock Exchange (HOSE) to 7.6% in Q4, from 6.8% in Q3 and 5.2% at the
end of 2022, ranking 3rd in the industry.
 The bank recorded VND 1.4 trillion in revenue from other activities, excluding
provision reversals, compared to VND 372.6 billion in net expenses in 2022. This
was mainly due to income from foreign exchange trading, buying and selling
investment securities, and the interest income from the liquidation of the old
headquarters in Hanoi in Q1 2023.
 Revenue from non-performing loans (NPLs) resolved with risk provision
reached VND 831.8 billion, a decrease of 36.6% year-on-year (Y/Y), of which Q4
alone recorded VND 311.9 billion.
 In 2023, operating expenses increased slightly to VND 13.3 trillion, with a cost-
to-income ratio (CIR) of 33.1%. Operating expenses in Q4/2023 decreased by
7.8% Y/Y, demonstrating the Bank's tight cost management capability.
 Provision expenses increased by 102.5% Y/Y, reflecting the trend of NPL
balance in the year, as the Bank had predicted, and some proactive provisioning.
Credit costs are still well controlled at 0.8%.

2. Cash flow from investment

 Reflecting all cash flows in and out directly related to the investment activities of
commercial banks, including:
 Investment in technical infrastructure for the bank itself, such as
construction activities, fixed asset purchases
 Investment in other entities in the form of joint ventures, investment in
securities regardless of short-term or long-term investment
 Cash flow from operating activities is calculated as the total of all receipts from
the sale, liquidation of fixed assets, recovery of investments in other entities, etc.,
and expenditures for construction, purchase of fixed assets, and investment
expenditures in other areas.
 Purchase of fixed assets increased by 11% Y/Y (1,110,111 -> 1,232,358)
 Business expansion and replacement of other depreciated fixed assets.
=> TCB expands Business Operations, Leads in Asset Quality
 Investing in exploiting technology and the power of data:
 33 advanced ML model)
 Uplift Underwriting model performance (Gini): increasinh productivity by
22%
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  Launch of Data App Store: ZickOi Translator, Smartie Chatbot, Voice of
Customer Dashboard, Datalake gateway, TCB Data Discovery Center,
Power BI Dasboard
 The world’s No.1 Customer Relationship Management Platform
 Providing financial support to ~6000 businesses for their expansion, and
partnering with ~200 leading brands
 Cash flow from financing activities
 Reflects all cash inflows and outflows directly related to business capital increase
and decrease activities of commercial banks, such as joint venture capital
contributions, borrowing from the public and international financial organizations
such as IMF, WB..., receiving joint venture capital, issuing stocks and bonds,
repaying loans,...
 Consolidated cash flow statement includes all related cash receipts and
disbursements such as: money received from loans, money received from joint
venture capital contributions in cash, from issuing stocks and bonds in cash,
interest income on deposits
 2021 - 2022 was a difficult period for the entire economy, and the stock market
was also severely affected. TCB's stock price fell sharply to VND 20,700 per share
(November 15, 2022) and reached VND 32,200 per share on October 13, 2023.
Currently, TCB's stock price is around VND 44,900 per share.

 TCB's share capital from stock issuance decreased by 16.6% (63,178 -> 52,664).

V. Notes to Financial Statements

1. Total assets
- Total assets include tangible fixed assets and intangible fixed assets.

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 Tangible fixed assets are the main means of labor with a physical form that meets
the standards of tangible fixed assets, participating in many business cycles. Fixed
assets are expressed in their original physical form such as houses, architectural
objects, machinery, equipment, means of transport, etc.

 Intangible fixed assets are assets that have no physical form and represent an
invested value that meets the standards of intangible fixed assets, participating in
many business cycles. Some costs are directly related to land use, costs such as
publishing rights, patents, inventions or copyrights.

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 Other assets: include bank’s receivables.
Accounts receivable is a type of company asset calculated based on all debts that
need to be collected, unpaid transactions or any monetary obligations that debtors
or customers have not yet paid to the company.
 Internal receivables
 External receivables

 Cash and cash equivalents:

1. Cash, gold.
2. Deposits at the state bank
3. Securities with a maturity date of no more than 3 months from the date of
purchase
4. Deposits at other credit institutions with original terms not exceeding 3
months

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 Other assets and documents
1. Precious metals and gemstones are kept for safekeeping
2. Other assets kept in household
3. Collateral is received as a substitute for the performance of the guarantor's
obligations pending settlement
4. Other valuable documents are being preserved

2. Deposits
2.1. Customer deposits
 Term deposits
 Non-term deposits
 Security deposits

2.2. Valuable papers

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3. Interest
3.1. Interest and other similar incomes
 Income from deposit interest
 Income from loan interest
 Earn interest from investing in debt securities
 Fees from guarantee operations
 Earn interest from debt buying operations
 Other revenues from credit activities

3.2. Net profit from service activities

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23
3.3. Net profit/loss from foreign exchange trading activities

3.4. Profit/loss from buying and selling business securities

3.5. Profit/loss from buying and selling investment securities

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 3.6. Net profit from other activities

4. Owner's Equity
Owner's Equity is one of the factors that form a business's capital source and represents
the total value of assets that the business owner owns or co-owns with shareholders and
members.
In financial reports, equity is analyzed over a certain period of time to clearly see growth

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VI. Key Financial Ratios and Performance Metrics
1. Outstanding results
 Profit before tax (PBT) reached 5.8 trillion - an increase of 21.6% N/N. For
the whole year 2023, EBT will reach 22.9 trillion VND, exceeding the plan
of 22 trillion VND EBT submitted to shareholders in April.
 Total operating income (TOI) reached 11.0 trillion - an increase of 17.8%
N/N. For the whole year 2023, TOI will reach 40.1 trillion - down 1.2%
N/N
 The demand deposit ratio (CASA) reached 39.9%, a sharp increase
compared to 33.6% at the end of the third quarter, exceeding 37.0% at the
end of 2022. CASA balance grew by 37.0% compared to the begin of the
year
 The capital adequacy ratio (CAR) according to Basel II and the return on
total assets (ROA) continue to maintain their leading positions in the
industry, reaching 14.4% and 2.4%, respectively.

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 (Source: Công bố KQKD Q4 và năm 2023)

2. Business performance results

a. Net interest income and operating income grew well

(Source: TECHCOMBANK - KẾT QUẢ KINH DOANH QUÝ 4 NĂM 2023 Kết quả khả
quan tạo tiền đề tích cực cho năm 2024)

(Source: Financial highlights | Techcombank)

 TCB's net interest income in the fourth quarter of 2023 reached VND 7,597
billion, an increase of 11.4% over the same period and the highest level of
the year. In addition to high interest income, the significant decrease in
deposit interest rates and the strong recovery of CASA ratio, helping to
significantly reduce deposit costs, are factors that help TCB's net interest
income recover positively.
 Besides the credit segment, income from service activities also increased
steadily over the quarters, reaching VND 3,420 billion. Other key segments

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 such as cards, foreign exchange, investment securities, and insurance also
grew well, contributing to an impressive increase in income, reaching VND
11,107 billion.

b. NIM net profit margin recovered slightly

 TCB's TTM cost of capital (COF) tends to increase gradually from the third
quarter of 2022 and reach 4.7% in the third quarter of 2023 because the
bank mobilized a large amount of capital in the first quarter of 2023 when
interest rates were still high. This has caused TCB's net interest income
(NIM) ratio to come under significant downward pressure in the recent
period. However, the continuous decrease in deposit interest rates and the
increase in demand deposits (CASA) to an impressive level (39.9%) have
helped reduce interest costs, thereby helping Q4 NIM (TTM) recover.
recovered slightly to 3.9%.

c. Increased risk provision costs affect profits

 TCB's operating expenses in the fourth quarter of 2023 reached 3,610
billion, equivalent to the previous third quarter and higher than the first two
quarters of this year. Thanks to high operating income, the CIR ratio (cost-
to-income ratio) has dropped sharply to 32.8%.
 Net operating profit before credit risk provision was VND 7,407 billion, a
sharp increase compared to the previous period. However, in the quarter,
credit risk provision costs were: 1,634 billion VND (very high compared to
previous quarters, an increase of 72% in the context that "bad debt" is still a
painful problem throughout the banking industry).
=> In general, TCB's business results in the fourth quarter have recovered with positive
results. Techcombank's 2023 business results also demonstrate the bank's ability to grasp
the situation and closely forecast market developments, along with its ability to properly
implement the proposed plan.

3. Asset quality
a. CASA achieved impressive levels
 TCB's demand deposits increased for 4 consecutive quarters, reaching more
than 172.7 trillion VND, helping the CASA ratio improve to an impressive
39.9%, the highest in the commercial banking system. The growth shows
TCB's leading transaction banking capacity, demonstrated by the globally
leading growth rate of transaction volume on digital channels and monthly
application traffic.
 Term deposits in the fourth quarter of 2023 recorded VND 273.3 trillion
and were relatively stable quarter-on-quarter, as yields started to become

28
 less attractive when compared to investment rates and the potential of the
real estate market. real estate, bonds and stock markets.

b. Efforts to control bad debt

 TCB's non-performing loan (NPL) ratio fell to 1.19% from a high of 1.4%
in the previous third quarter.
 TCB's bad debt in the fourth quarter recorded 6,004 billion VND, down 8%
compared to the second quarter. Of which, bad debt with the possibility of
capital loss decreased to 1,859 billion VND.
 In general, TCB's potential bad debt mainly comes from two main factors:
real estate loans and corporate bond related industries.
 In the fourth quarter, TCB also boosted credit risk provisioning to VND
1,600 billion, nearly double that of the third quarter, contributing to helping
the bad debt coverage ratio (LLR) reach 102.15% at the end of the year.

c. Credit quality and impact from the real estate market

 TCB's total loan balance as of December 31, 2023 is 518.6 trillion VND, of
which loans for real estate business activities are up to 178.6 trillion VND
(accounting for 34.5% ).
 Besides, the bank also has many other loans related to real estate such as
construction, home loans... It can be seen that TCB's credit risk is highly
concentrated in this industry group.
 In 2023, the real estate market is still a rather gloomy picture when market
demand is low and businesses in the industry face many difficulties.
Although there has been legal and policy support and some positive signals
from the mid-range housing and apartment segments by the end of 2023,
the real estate market's evolution in 2024 will still continue. is an important
factor to monitor.

VII. Comparative and Trend Analysis

1. CASA (Current Account Savings Account Ratio)
 This type of bank deposit, made by customers for the purpose of payments
rather than savings, plays a crucial role for banks as attracting high rates of
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 non-term deposits provides a cheap source of funds. A high CASA ratio
reflects the bank's foundation in developing products and services, offering
numerous value-added products and services linked to the customer's
transaction deposit accounts.

Techcombank and Vietcombank CASA

2021 2022 2023
Techcombank 46.98% 34.34% 38.00%
Vietcombank 32.34% 32.34% 33.05%
 Overall, Vietcombank's CASA ratio has shown stable growth in recent
years, while Techcombank's CASA ratio exhibited a decline in 2021-2022
and then an increase in 2023. However, Techcombank's CASA ratio
remains significantly higher than that of other banks. Since 2016,
Techcombank has pioneered the "zero fee" policy - waiving transaction fees
for customers. This policy has helped the bank attract a large amount of
non-term deposits, making Techcombank the "CASA king" among
Vietnamese banks for many years. The peak came in 2020, when the
Covid-19 pandemic prompted a shift from traditional transaction methods
to digital transaction, helping Techcombank to ascend to the leading
position in the CASA race.
 What the CASE ratio means to Techcombank services.
 The high CASA ratio demonstrates the trust and large potential
customer base of Techcombank. As a result, the bank can offer
various products to its customers, such as loans, guarantees,
insurance, etc., creating added value for the bank and long-term
business prospects.
 A high CASA ratio proves that Techcombank has developed
effective customer service and implemented modern technology to
enhance the customer experience, thereby attracting a large user
base.
 Additionally, a high CASA ratio helps the bank save on capital
raising costs and improve profitability. With a large amount of non-
term deposits, the bank only has to pay very low interest rates for
these accounts, which can then be used as a source of funds for
lending. This helps the bank improve its Net Interest Margin (NIM)
and gain a competitive advantage in the market in terms of loan
interest rates.

2. NIM (Net Interest Margin)

 NIM stands for Net Interest Margin, which represents the net profit margin
from interest. This index is calculated by dividing net interest income by

30
 total interest-earning assets. NIM reflects a bank's ability to generate net
interest income from its loans and investments.

Techcombank and BIDV NIM

2021 2022 2023

Techcomban
k 5.70% 5.29% 4.01%

BIDV 2.90% 2.92% 2.57%

 BIDV showed a relatively stable NIM with a slight dip in 2023, indicating a
different strategic or market position compared to Techcombank. The
significantly lower NIM compared to Techcombank suggests a different
business model or customer base, possibly focusing on segments with lower
margins.
 Techcombank's NIM decreased over the years, which could indicate a
tightening of the interest margin. This could be due to several factors,
including increased funding costs, competitive pressure leading to higher
interest paid on deposits, or lower interest received from loans. The
decreasing trend in NIM suggests that Techcombank might be facing
increasing cost pressures or competitive challenges that are affecting its
profitability from core banking operations. Techcombank recently
announced its consolidated financial report for 2023, showing a pre-tax
profit of 22.888 trillion VND, a decrease of 10% compared to the previous
year. This marks the first year that Techcombank's profit has declined since
2014. There are two main factors that led to the decrease in Techcombank's
profits in 2023. First, the bank's primary income from credit activities
decreased by 9% to 27.691 trillion VND, due to the cost of paying interest
on deposits increasing faster than income from lending. This situation is
common among many banks after a period of racing to raise funds with
high interest rates from late 2022 but then finding it difficult to lend
afterwards. Additionally, facing the pressure of rising bad debts,
Techcombank's provision for credit risk doubled to 3.920 trillion VND
compared to 2022. In this context, the bank sought to reduce costs by
slightly lowering operating expenses compared to the previous year.

3. ROE (Return on Equity)

 ROE stands for Return on Equity, which is the profitability ratio over
equity. ROE = Net profit after tax and minority interests (Return) / Average
equity (Equity). Here, the average equity is calculated as the mean of the
equity value of this period and the immediately preceding period. The ROE
metric indicates the effectiveness of a business's use of its equity capital, as
31
 shown by how much net profit after tax is produced per unit of equity
capital. The higher this metric, the better. This figure can vary by industry
and the financial leverage ratio (A/E) employed by the business, but a rate
of 12-15% is often used as a benchmark. Investors looking for opportunities
should pay attention to companies with an ROE higher than the industry
average. The average for the financial services sector is 5.9%.
Techcombank and Agribank ROE ratio
TCB Agribank
2021 21,7 17,2
2022 19,7 5,9
2023 14,8 5,9

 The decrease in Techcombank ROE from 21.7% in 2021 to 14.8% in 2023

suggests a reduction in profitability relative to its equity. This might indicate
increased competition, higher operational costs, or less efficient use of equity.
Despite this, Techcombank consistently outperformed Agribank in terms of ROE,
showcasing stronger returns on equity investment. However the higher ROE of
TCB compared to the industry average demonstrates the company's efficient use
of shareholder capital. This means the company balances equity and borrowed
capital harmoniously (since excessive borrowing would increase interest expenses,
thereby reducing profit) to leverage its competitive advantage in the market to
increase revenue and profit.

4. NPL (Non-Performing Loan)

 NPL stands for Non-Performing Loan, which refers to debts that borrowers
are unable or unwilling to repay to banks or financial institutions within the
specified timeframe.
 Financial Health Measurement: The NPL ratio indicates whether a
financial institution can recover its loans. A high ratio suggests
difficulties in loan recovery and potential financial risks, impacting
the institution's operational capability, profitability, and stability.
 Credit Risk: When an institution has many non-performing loans, it
risks not collecting the interest and principal on those loans, leading
to financial losses and reduced lending capacity to potential
customers.
 Credit Management Efficiency: A low NPL ratio often indicates
that the institution has strict processes for credit risk assessment,
debt recovery, and loan management. Conversely, a high NPL ratio
may point to deficiencies in credit management and signal potential
future losses.

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  Reputation Enhancement: Fewer non-performing loans mean a
financial institution is safer and more stable. This can attract investor
interest and facilitate capital raising and business expansion.
 Less than 1%: Loans are of relatively good quality, with a
high likelihood of debt recovery.
 More than 2.5%: The bank has many bad debts,
necessitating high provisioning costs to manage these loans,
affecting post-tax profits (the banking industry average is
around 2%).

Techcombank and Viettinbank NPL

TCB Viettinbank
2021 0,7 1,3
2022 0,7 1,2
2023 1,2 1,1

 Techcombank's low NPL Ratio reflects that it is a business with high-quality

loans and superior credit management capabilities. This success stems from
effective risk management and maintaining a strong balance sheet, especially
as Techcombank was the first bank in Vietnam to apply the international
accounting standard IFRS9. However, the bank's bad debt doubled in 2023 due
to its expanded lending policy towards the real estate sector. Techcombank's
real estate loans exceeded Vietnam's four state-owned banks, with over 160,000
billion VND lent by the end of Q3/2023, accounting for nearly 35% of the total
outstanding loans. Due to favoring real estate enterprises, Techcombank has to
bear significant risks.
 Given the recent financial trends and the external market factors impacting
Techcombank, it is anticipated that the bank may face challenges in sustaining its high
growth rate in the short term. The tightening NIM and the increased NPL ratio suggest
potential pressure on profitability. However, Techcombank's strong CASA ratio and
efficient use of equity indicate a resilient business model capable of overcoming these
challenges.

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 REFERENCES

1. Techcombank General Infomation. Techcombank. (n.d.-d).

https://www.techcombankjobs.com/content/Who-We-Are/?locale=en_GB
2. About Us. Techcombank. (n.d.-a).
https://techcombank.com/en/about-us
3. Annual Report 2020. (n.d.).
https://media.techcombank.com/uploads/Annual_Report_2020_a99851d6c3.pdf
4. Our branch network and subsidiaries: Techcombank Annual Report 2021.
Techcombank. (n.d.-e).
https://techcombank.com/en/investors/annual-report/2021/our-branch-network-
subsidiaries
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7. Kết quả Kinh Doanh Năm 2023. Techcombank. (n.d.-c).
https://techcombank.com/thong-tin/thong-bao/infographic-2023
8. ThS., NCS. H. T. T. H.-H. viện T. chính. (2018, March 2). Về Phân tích Báo Cáo
Lưu chuyển tiền tệ Của Ngân Hàng thương mại. Tạp chí Tài chính.
https://tapchitaichinh.vn/ve-phan-tich-bao-cao-luu-chuyen-tien-te-cua-ngan-
hang-thuong-mai.html
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2023 Của Ngân Hàng Techcombank . YouTube.
https://www.youtube.com/watch?v=gIvKRM-91ag

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