NATIONAL ECONOMICS UNIVERSITY

ACADEMY OF ADVANCED EDUCATION PROGRAM AEP

Group Assignment
Bank Management and Financial Services

Topic: Understanding banking services through

financial statements of a Vietnam commercial bank

Advanced Finance 61A

Group 2

Do Vu Hanh Chau Nguyen Thuc Ly Huynh

Dao Thu Huong Nguyen Ha Linh
Tran Duc Thanh Nguyen Anh Quan
Hoang Le Vy Vo Quynh Trang
Trinh Dinh Minh Nguyen Thu Ha
Hua Duy Anh

P a g e 1 | 48
 Table of Contents

Table of Contents ........................................................................................................................ 2

I. OVERVIEW: VIETNAM FINANCIAL - BANKING INDUSTRY .......................................... 3
1.1. Industry overview:................................................................................................................ 3
1.2. General information about Techcombank: ........................................................................... 8
1.3. Business description and competitive positioning: .............................................................. 8
II. ANALYSIS OF BANKING SERVICES ................................................................................. 16
2.1. Deposit services: ................................................................................................................ 16
2.2. Loan services: ..................................................................................................................... 21
2.3. Payment services: ............................................................................................................... 36
2.4. Other services: .................................................................................................................... 38
III. EVALUATION OF BANKING SERVICES AND RECOMMENDATIONS ...................... 43
3.1. The application of technological innovations to banking service: ..................................... 44
3.2. Risk Management & Compliance with regulations ........................................................... 46
IV. REFERENCES ....................................................................................................................... 48

P a g e 2 | 48
 I. OVERVIEW: VIETNAM FINANCIAL - BANKING INDUSTRY

1.1. Industry overview:

1.1.1. Important macroeconomics indicators
a. Inflation rate:

Source: State bank of Vietnam

According to data announced by the General Statistics Office, the average CPI in 2019 increased
by 2.8% compared to 2018 (3.58%). Thus, CPI in 2019 has been successfully controlled,
reaching a lower level than the target set by the National Assembly (under 4%) and also the
lowest increase in the past 3 years.

Vietnam’s consumer price index (CPI) in 2020 rose 3.23% against the previous year. The
increase in CPI was attributed to rises in food prices and medical costs as well as higher tuition
fees, the government’s measures to support businesses and people, such as lowering electricity
prices, also helped with keeping inflation in check.

b) Interest rate:

Interest Rate in Vietnam remained unchanged at 4% in June 2021. The maximum level was 15%
and minimum was 4%.

P a g e 3 | 48
 INTEREST RATES VALUE DOCUMENT NO EFFECTIVE DATE

Discount Rate 2.500% 1728/QĐ-NHNN on 30-09-2020 10-01-2020

Refinancing rate 4.000% 1728/QĐ-NHNN on 30-09-2020 10-01-2020

c) Exchange rate:

Source: State bank of Vietnam

P a g e 4 | 48
2018 reflects the picture of "a stable monetary and financial market" in the context of the
international financial market with many unpredictable fluctuations, due to the difference in
monetary policy of countries around the world, divergent among key economies.

Source: VietstockFinance

The USD/VND exchange rate in 2019 increased steadily but remained stable thanks to the
operating policies of the State Bank (SBV) in the context of the US-China trade war putting great
pressure on the exchange rate.

Source: State bank of Vietnam

P a g e 5 | 48
The report of the State Bank of Vietnam (SBV) also said that from the beginning of 2020,
although some periods were negatively affected by the Covid-19 pandemic and fluctuations in
the international market, it was basically exchange rate and foreign currency market remained
stable, market sentiment remained undisturbed, especially the balance of supply and demand was
still quite favorable, liquidity was smooth.

1.1.2. Business situation and activities of the banking industry in Vietnam

The impact of the Covid-19 pandemic since 2020 has caused many businesses to suffer heavy
damage, even fall into bankruptcy. The fourth outbreak of the Covid-19 epidemic is still
complicated, the disease has not been controlled, by 2022 the economy will be slowed down,
businesses will not recover like the model before the epidemic and reduced ability to repay.
According to the latest report of the State Bank of Vietnam, the bad debt ratio on the balance
sheet increased from 1.69% (at the end of 2020) to 1.78%. Although this is not a worrying
number, in the context of the complicated Covid-19 epidemic, bad debt is likely to be a risk for
banks. Representatives of banks also acknowledged that many businesses have applied for debt
postponement because they cannot afford to pay in difficult times nowadays.

The State Bank of Vietnam has issued a written request to credit institutions to assess the current
status of operations, the impact of the Covid-19 epidemic and develop a plan and roadmap for
dealing with bad debts in the 2021-2022 period. From there, the State Bank will review and
develop scenarios for dealing with bad debts until the end of this year and the end of 2022.
Controlling the bad debt ratio on the balance sheet at less than 2% in the coming time is
considered a challenge.

In fact, banks have continuously increased provisioning over the past time. Bank leaders said that
for each dollar of loan capital, banks set aside 0.75% of general risk provision, not including
specific risk provisions by debt group. Banks with a high ratio of provisioning to cover bad debts
will have reciprocal resources to handle bad debts better. On the other hand, in controlling bad
debts, it is also important to share difficulties with businesses so that businesses can recover
quickly, thereby having conditions to repay bank loans. Most recently, 16 large commercial
banks (accounting for 75% of outstanding loans) have reduced lending interest rates with
existing outstanding loans, estimated at VND 6.8 million billion. The difference of this interest
rate reduction is that more businesses that are facing financial difficulties are supported. The
lending interest rate has decreased by 0.5-2%/year.

1.1.3. Governmental regulations

a. Common published regulations:
 Circular No. 22/2019/TT-NHNN prescribes limits and prudential ratios which banks and
foreign bank branches must constantly maintain in their operations, including:
 Capital adequacy ratio
 Credit extension limits
 Solvency ratio
 Maximum ratio of short-term capital sources for medium / long-term loans
 Government bond or government-guaranteed bond purchase or investment ratio

P a g e 6 | 48
  Capital contribution and share purchases
 Loan-to-deposit ratio.
 Circular No. 01/2020/TT-NHNN directing credit institutions and foreign bank branches
to restructure the repayment periods, waive and reduce the interest and fees, maintain the
debt classification to support the customers affected by COVID-19 pandemic.
 Circular No. 13/2020/TT-NHNN providing guidance on procedures and dossiers for
approval of the provisional personnel list of commercial banks, non-bank credit
institutions and foreign bank branches.
 Circular No. 41/2016/TT-NHNN deals with the capital adequacy ratio for operations of
banks and/or foreign bank branches in Vietnam.
 Circular No. 09/2020/TT-NHNN specifies minimum requirements for assurance of
information system security in baking operations, applies to:
 Credit institutions, branches of foreign banks, and intermediary payment service
providers, credit information companies
 The National Payment Corporation of Vietnam (NAPAS), Vietnam Asset
Management Company (VAMC), National Banknote Printing Plant, Deposit
Insurance of Vietnam
 Institutions which have established and used the information system for one or
more organization’s technical and professional activities
 Circular No. 210/2009/TT-BTC requires disclosure of the fair value method and
information on the fair value of financial assets and liabilities so that fair value and book
value can be compared.
 Decree No. 93/2017/NĐ-CP prescribes the financial regime, applicable to:
 Credit institutions and foreign bank branches
 Financial supervision and assessment of efficiency of state capital investment at
credit institutions with 100% state-owned charter capital and credit institutions
with state capital

b. Related regulations:
 Circular No. 96/2020/TT-BTC prescribes the disclosure of information on the
Vietnamese securities market.
 Law on Credit Institutions No. 47/2010/QH12 provides the establishment, organization,
operation, special control, reorganization and dissolution of credit institutions, foreign
bank branches and representative offices of foreign credit institutions and other foreign
institutions engaged in banking operations.
 Law on Securities No. 54/2019/QH14 provides for securities market activities; rights and
obligations of institutions and individuals in the field of securities; organization of the
securities market; and state management of securities and securities market.
 Law on Enterprises No. 59/2020/QH14 prescribes the establishment, management
organization, reorganization, dissolution, and relevant activities of:
 Enterprises, including limited liability companies
 Joint stock companies, partnerships and sole proprietorships
 Prescribed corporate groups.
 Decree No. 71/2017/NĐ-CP guidelines for the issues in connection with corporate
governance of public companies, including:
 General assembly of shareholders

P a g e 7 | 48
  Board of directors / Board of controllers
 Transactions with related persons
 Reporting and information publishing.

1.2. General information about Techcombank:

Techcombank’s general information compression table

Official name: VIETNAM TECHNOLOGICAL AND COMMERCIAL

Name JOINT-STOCK BANK

Trading name: TECHCOMBANK

Stock code TCB VN (HCM City Stock Exchange)

Charter 35,049,062,300,000 VND (2020)

capital

Contact Phone number: +84 (24) 3944 6368

Website: Techcombank.com.vn

Central / Head office: Techcombank Tower – 191 Ba Trieu St., Le Dai Hanh
Ward, Hai Ba Trung Dist., Hanoi, Vietnam

Subsidiaries  Techcom Securities Joint Stock Company (Techcom Securities –

TCBS)
 Techcom Capital Joint Stock Company (Techcom Capital - TCC)
 Vietnam Technological and Commercial Joint Stock Bank – Asset
Management Company Limited (Techcombank AMC)

1.3. Business description and competitive positioning:

Established in 1993, TECHCOMBANK was oriented as a market-accommodated business,

separated from the former development of a centrally-planned economy. Started with charter
capital of only 20 Billion VND, Techcombank has made it way through roughly 30 years to
reach a strong and stable place of 3rd in national-wide banks’ charter capital.

1.3.1. Business Introduction:

a. Scope of activities:
 Providing products and services for over 8 million RETAILED and CORPORATE
customers (Inland and Worldwide).
 8.2 million individual customers
 159,886 corporate customers - 2000 large corporations

P a g e 8 | 48
  Network: 1 head office, 2 representative offices, 309 transaction offices (45 cities +
provinces), 3 subsidiaries, 4 funds
=> Extensive connections to satisfy basic banking requirements, yet furthermore extends
toward a more secured, cutting-edge and professional wealth management.

b. Vision - mission:

The bank is committed to the vision of “CHANGE banking, CHANGE lives. UPLIFTING
everyone to reach their full potential” throughout their development process. Holding the
prominent mission of fully understanding customers insights, as well as providing excellent
values to their main targets of customers, shareholders; Techcombank are presenting an
astonishing performance among other competitors on the whole.

With their mission to harmoniously combine advanced technologies on traditional banking

services and activities, Techcombank has now powerfully thrived and soon expected to be the
leader of Vietnam's digitized financial industry.

1.3.2. Core banking services:

 Grant of Long, Medium and Short-term loans

 Association, Joint-ventures, companies, bonds investments
 Short, Medium, Long-term deposits (Individuals / Organizations)
 Approved settlement, cash and banking services (through the State Bank of Vietnam -
SBV)
 Exchange of foreign currency

1.3.3. Plan - Strategies:

With a sustainable developing path and focused foundations, Techcombank is able to keep up
with changing demands and trends in financial services. Adapt and Innovate have been the key
factors which drive the company to thrive.

a. Foundation key factors:

Digital: Operational + risk excellence

 Further Develop / Maximize digital platforms / tools / dashboards
 Extended database / upgraded capacity
 Maximum convenience / satisfaction - Minimum difficulties / errors
Data: Data excellence
 Deeper customers’ insights capturing methods
 Personalized recommendations based on transaction data clouds
Talent: People excellence
 Humans play a crucial role: Attract, develop and retain best people
 Excellent recruitment with skills and “digital DNA” that match Techcombank’s vision
 Impressive leadership and directions from the Board.

P a g e 9 | 48
b. 2016-2020 strategy:

Recognized as a bold and ambitious aspiration with a clear customer-centricity strategy (D-D-T),
Techcombank has received remarkable transformation from the long journey, with practical
goals:
 Largest market capitalization: IPO market capitalization at USD 6.5 billion
 >10% market share in 2020: >10% market share in affluent segment, mortgage,
bancassurance, card, e-transactions
 30% growth per year: 31% NOII/TOI, 52% PBT growth CAGR from 2016–2020
 4 products / customer: 4 products / affluent customer

c. 2021-2025 strategy:

The success of the Techcombank’s 2016–2020 journey has laid a solid foundation for the next
five-year transformation (2021–2025) of the Bank with its numerous aspirational goals:
 Doubling down:
 CASA ratio ~55%, NFI/TOI ratio ~30%
 Market value: USD 20 billion
 Target ROE ~20%
 Diversification:
 Continue investing in three key enablers (D-D-T) with insurance of core areas
 Diversifying sources of income, capital and risks to ensure future sustainability and
extend future growth areas

1.3.4. Awards & Ceremonial Records:

Although suffering from numerous difficulties in 2020; especially with the wild-fire spread of
COVID-19 pandemic, Techcombank proudly navigated through the storm and gained exquisite
results during the year:

 Successful partnerships with international business like VISA, Manulife,..; new alliance
with One Mount Group (Vietnam’s largest digital ecosystem)
 Rewarded as the 2020 ‘Best Bank in Vietnam’ (Best SME, Payments Bank) by Finance
Asia and ‘The best companies to work for in Asia’ by HR Asia.
 2020 Vietnam Best Places to Work; 2020 Most Attractive Recruiter for Students

Taking advantage of the sector-wide macroeconomic trends with the introduction of new digital
transformations, Techcombank is now on their track to make Vietnam one of the world’s experts
in the financial market.

1.3.5. Overall prominent financial achievements:

(Via the Techcombank Official Financial Statement 2020)

Techcombank affirmed 2020 as an “Unprecedented year”, yet accompanied by “Unprecedented

results”. With the success of the Vietnamese government in the acts against COVID-19, the
financial state has stated significant gains as well as positive records worldwide.

P a g e 10 | 48
A spectacular year has gone by with outstanding financial outcomes from Techcombank. The
following are highlighted indicators specified by Techcombank in their previous year of
2020:

Disclaimer: The data below indicated changes in years of 2016, 2019 and 2020 followed the
5-year strategy of Techcombank (2016-2020), besides support by numbers from the latest
year from 2020 - 2019.

a. Profitability ratio:

 ROA: 3.1% (2020) vs 2.9% (2019) vs 1.5% (2016)

 ROE: 18.3% (2020) vs 17.8% (2019) vs 17.5% (2016)

 CASA ratio / balance: 46.1% / VND 128,038 Billion (2020) vs 34.5% / VND
79,716 Billion (2019) vs 22.7% / VND 39,396 Billion (2016)

P a g e 11 | 48
The increased CASA balances and the remarkable ratio of 46.1% - ranked 1st among
Commercial Banks in Vietnam has partly enhanced the Net income of the Bank as well as
reduced funding costs and driven Techcombank toward a more sustainable development.

Following the financial statement, Techcombank’s customer deposits reached VND 277,459
billion - a 20% YoY growth. The rapid shift to e-banking services (42.9% rise in retail e-
banking customers) has been claimed to partly, and directly boosted the CASA ratio.

P a g e 12 | 48
  NIM: 4.9% (2020) vs 4.2% (2019) vs 4.1% (2016)

The bank has claimed to proactively lower their term deposit in order to lower the overall cost of
funds. Plus, with lower interest rates in 2020, both CASA rates and term deposit rates indicated a
decline, which ended up a surprisingly positive NIM.

b. Operation:

 PBT: VND 15,800 Billion (2020) vs VND 12,838 Billion (2019)

P a g e 13 | 48
  TOI: VND 27 Trillion (2020) vs VND 21 Trillion (2019)

The upgrade of TOI results in a 28.4%YoY growth, indicating a stable and beneficial mix among
interest and non-interest income. The TOI structure of 2019 and 2020 witnessed a slight transfer:
 Net interest income raised 31.5% YoY, claimed by changes from:
‣ Reaching SBV’s 23.3% credit limit
‣ Shift in credit structure
‣ Lower funding costs from declining term deposit rates
‣ Increased CASA balances
 Net fee income grew 28.8% despite drawbacks from COVID 19:
‣ Bond related income contribute the largest portion (51,6%)
‣ Higher bond yields in a declining interest rate environment

c. Capital adequacy ratio:

 CAR: 16.1% (2020) vs 15.5% (2019)

P a g e 14 | 48
A Basel II or Capital adequacy ratio (CAR) hit 16.1%, informed the capitalization ability to
support financial activities of customers as well as enabled a strengthen economic growth in a
rebound post COVID-19. Techcombank was also ranked first among listed banks in CAR.

d. Liquidity:

 LDR: 78.1% (2020) vs 76.3% (2019) vs 71.8% (2016)

e. Credit balance:

VND 318,035 billion (2020) reflects credit growth of 23,3% YoY

 Corporate customers: 50% (2020) vs 43% (2019)
 SMEs: 16% (2020) vs 17% (2019)
 Retail: 34% (2020) vs 40% (2019)

Compared to 2019, the large section of corporate customers continue to reflect a dazzling
strength (43% to 50% since 2019) while retail and SME credit demand was subdued in the first
part of 2020 due to effects from COVID-19. The boosted credit balance helped to maintain the
Bank’s strong capital position and business orientation.

P a g e 15 | 48
 II. ANALYSIS OF BANKING SERVICES

2.1. Deposit services:

2.1.1. Deposit categorized by type of customers:

31/12/2018 31/12/2019 31/12/2020

VND VND VND

% % %
million million million

Individual customers 142,056,460 70.53 167,211,978 72.29 195,639,720 70.51

Other joint stock 39,532,016 14.25
23,263,620 11.55 28,612,952 12.37
companies
Other limited liability 30,606,797 11.03
25,735,319 12.78 22,375,849 9.67
companies
Foreign invested 4,249,447 1.53
2,898,416 1.44 3,746,288 1.62
enterprises
...
277,458,651 231,296,761 201,414,532 100
TOTAL 100 100
Source: Notes to the financial statement – Techcombank (2018-2020)

Deposit services can be classified by type of customers as well as type of account. These two main
categorizations will give us a brief look about deposits activities of Techcombank from 2018 to
2020.
We only chose to investigate Deposit types that accounted for a large portion which included
individual customers, other joint stock companies, other limited liability companies and foreign
invested enterprises. Take a first look at Individual customers, deposits from this customers’ type
has always been responsible for around 70.51% to 72.29 % in the period of 3 years from 2018 to
2020. Mobilized capital from individuals usually contributed for a large portion in the capital of
commercial banks, especially Techcombank. Witnessing the upward trend, deposits from other
joint stock companies increased 2.7 % from 2018 to 2020 (from 11.55% to 14.25%). The main
reason for deposit from individual ownership and other joint stock companies ownership to
maintain this high is due to Current Account Savings Accounts (CASA) that combining the
features of savings and checking accounts, it pays very low or no interest on the current
account and an above-average return on the savings portion. Especially in 2019, when the bank
witnessed the rising demand of customers to involve in digital platform, it had constantly improved
and enhanced the quality of digital trading channels, which led to 83% growth rate in CASA of
individual customers. On the other hand, deposits from other limited liability companies
fluctuated, from 12.78% in 2018 dropped down to 9.67% and then increased back to 11.03%.
Covid-19 pandemic has affected the activities of many companies in Vietnam, which require them
to keep cash on hand more than usual. Moreover, Decision number 2415/QĐ-NHNN by The State

P a g e 16 | 48
Bank of Vietnam in 18/11/2019 reduced the interest rate of term deposit, which decreased the
deposits of other limited liability companies as it had been less attractive and profitable. However,
with the recovery of the economy in 2020 plus the current account policy of Techcombank has
encouraged companies to keep more money in the bank.
2.1.2. Deposit categorized by type of account:

31 December 31 December 31 December

2018 2019 2020

VND million VND million VND million

Current accounts 54,612,613 76,053,396 122,972,489

Current accounts in VND 48,125,562 70,297,064 116,113,684

Current accounts in foreign 6,858,805
6,487,051 5,756,332
currencies
Term deposits 143,613,379 151,581,145 149,420,224

Term deposits in VND 136,635,672 145,641,213 144,128,288

Term deposits in foreign 5,291,936
6,977,707 5,939,932
currencies
Marginal deposits 3,188,540 3,662,220 5,065,938

Marginal deposits in VND 3,080,503 3,510,647 4,987,448

Marginal deposits in foreign 78,490
108,037 151,573
currencies
201,414,532 231,296,761 277,458,651
Source: Notes to the financial statement – Techcombank (2018-2020)

The period of 2018 to 2020 witnessed a significantly strong development and rise of deposit
services as seen from the table. All deposit accounts share the same upward trend, including current
accounts, term deposits, and marginal deposits.
Perhaps the most noteworthy and enormous increase is from current accounts. From 2018 to 2020,
the money deposited at the accounts has risen from 54,612,613 VND million to 122,972,489 VND
million, equal to a surge of 55.59%. Had been stated from the previous paragraph, digitalization
strategy has helped Techcombank to fasten digital banking system and improve the portion of
CASA from 28,7% (2018) to 34.5% (2019) and 55% (2020) in the structure of deposit accounts to
become the number one in the market of CASA. On the other hand, Term deposits interest rate
was affected by Decision number 2415/QĐ-NHNN by The State Bank of Vietnam in 18/11/2019
has made a slight decrease in the term deposits account by 2,160,921 VND million overall from
2019 to 2020. The same descending trend in the smaller account of term deposits in VND and in
foreign currencies. Marginal deposits only accounted for the smallest percentage of deposit
P a g e 17 | 48
accounts; however, from 2018 to 2020 witnessed 58% increase in the marginal accounts, especially
increase in VND accounts. In contrast, marginal deposits in foreign currencies decreased 29,547
million VND.

2.1.3. Interest rate for deposit:

2018 2019 2020

Term deposit (VND) 0.30% - 7.60% 0.03% - 7.60% 0.20% - 7.10%

Demand deposit (VND) 0.00 - 0.80% 0.00% - 0.80% 0.00 - 0.30%

Compared to 2018, term deposit has lower limited payments on deposits in 2019. This is due to
the fact that The State Bank of Vietnam issued documents to reduce interest rates effective from
November 19, 2019. Decision No. 2415/QD-NHNN dated November 18, 2019 on the maximum
interest rate for deposits in VND of organizations and individuals at credit institutions as
prescribed in Circular No. 07/2014/TT-NHNN dated March 17, 2014. Accordingly, the
maximum interest rate applies to demand deposits with terms of less than 1 month reduced from
1.0%/year to 0.8%/year; the maximum interest rate applicable to deposits with a term from 1
month to less than 6 months will be reduced from 5.5%/year to 5.0%/year.

Due to the impact of the Covid-19 pandemic, Techcombank reduced their term deposit interest
rates and demand deposit between 2019 and 2020. The State Bank has directed credit institutions
to actively balance their financial capacity to apply reasonable lending interest rates; thoroughly
reduce operating costs, concentrate all resources to reduce deposit and lending rates to support
and accompany businesses and people to overcome difficulties. Responding to the Government's
management and complying with the regulations of the State Bank (SBV), in 2020, the joint
stock commercial bank will adjust the deposit interest rate (both term deposit and demand
deposit) to match the fluctuations of the economy and contribute to stability by a percentage of
the market. As the result of interest rates lower in 2020, both CASA rates and term deposit rates
declined, helping the bank to further boost NIM.

2.1.4. Interest expenses for deposit:

Directly related to the percentage of customers depositing money in the bank. When the number
of customers depositing money in the bank increases, the interest expense also increases. The
percentage of customers using e-banking services increased from 56% to 76% compared to 2018.

P a g e 18 | 48
 Source: Notes to the financial statement – Techcombank (2018-2020)

Brand is one of the factors that affect the behavior of customers depositing money in the bank,
which in turn leads to increased interest costs. Techcombank received the prestigious award
“Best Bank in Vietnam 2018” from Euromoney. In 2019, Techcombank was the only bank in the
Top 3 most profitable private enterprises in 2019, after VinGroup and Vinamilk. This creates
imagination as well as motivates more and more customers to deposit money in the bank.

Source: Vietnam Profit – Most profitable corporations in Vietnam award 2020

In 2020, we saw a clear change in interest expense for deposits due to the impact of COVID-19.
The decrease in deposits means people's income reduces because of negative effects of
COVID-19. In addition, interest rates are not attractive enough for a part of people to transfer
their idle money to other channels such as real estate, securities, and gold. …

P a g e 19 | 48
2.1.5. CASA:

Source: Notes to the financial statement – Techcombank (2018-2020)

In recent years, Techcombank has focused on collecting demand deposits to reduce capital costs
and focusing on promoting quantitative solutions to bring benefits to customers and banks. In
2018, CASA is not significant as it expected, roughly 27%. In 2020, demand deposits (CASA)
reached VND 128 trillion, up 60.6% compared to the end of 2019. Meanwhile, term deposits
reached VND 149.4 trillion, down 1.4% compared to the end of 2019, reflecting the bank's focus
on optimizing the cost of capital. As a result, the CASA ratio at the end of 2020 reached 46.1%,
higher than the 34.5% at the end of 2019. The 46% CASA ratio is an achievement achieved from
the strategy of shifting the mobilization structure to available capital sources, low deposit cost
(term deposit).

The 46,1% CASA ratio will be a competitive advantage for Techcombank to continue to develop
sustainably in the long term. In 2020, Techcombank has provided and launched a wide range of
products on digital banking, ranging from daily payment utilities to pre-approved credit cards,
financial management and investment products. A 42.9% rise in retail e-banking customers
reflects the rapid shift to e-banking, with transaction volume and value up 108.8% and 84.2%
YoY, respectively. These were the main factors contributing to the continuous growth and a
record CASA ratio of 46.1% at the year

P a g e 20 | 48
2.2. Loan services:

2.2.1. Interest income from loans:

Since the customers usually send their deposits in order to maintain the cash inflow, the banks
need to find a way to evaluate that money for getting the interest income, so the banks can continue
to be on the market, and one of those is loan activities. Loan activities of the banks are one of the
types which have highest revenue during the year compared to other services of the banks, such as
getting the deposits or real estate investments. According to the Techcombank’s Balance Sheets
from 2018 to 2020, the loans and leases sectors took part in the proportions extremely high in the
total bank’s assets, which is similar to most of the banks in general, from 50% to 60% or even
more depending on the finance situation each year. At the end of 2018, Techcombank evaluated
the loans and leases total value up to VND 157,554,103 million, which accounted for
approximately 49.1% of the total assets. With the total assets’ value of VND 320,988,941 million,
other sectors in the total assets of Techcombank only took the percentage or even other assets are
only around 5% to 10%.

Source: Notes to the financial statement – Techcombank (2018-2020)

Additionally, the loan activities during 2019 skyrocketed up to 70% compared to the value in 2018,
but it slowed down at the end of 2020 by increasing only 20.8%. Although the loans and leases
value slowed down, the percentage of those activities increased and accounted for 59.4% in 2019
and 62.6% in 2020, which still became the majority of the total assets in Techcombank. With the
interest rate from loan activities is around 0% to 11.29% depend on the period types and purpose
of loan activities, the interest income from loans activities from 2018 to 2020 respectively is
15,460,433, 16,727,930 and finally VND 21,590,084 million. As we can see, although the loans
and leases sector did fall back from 2019 to the end of 2020, the interest income from that type of
services still increased up to 29.1% during that time.

P a g e 21 | 48
 Source: Notes to the financial statement – Techcombank (2018-2020)

Moreover, the percentage of the loan activities interest income in the total interest income segment
before minus the interest income expense fluctuates throughout from 2018 to 2020. During 2018,
that proportion was 72.2% then went down more than 5% to only 66.8% in the next year, and
finished by increasing to the peak point of 74.4% in 2020.

With the data which has such unpredictable trends, here are some reasons in order to explain the
points. First of all, the value in the total assets, which is the loans from customers did increase
extremely high from 2018 to the end of 2019 because the bank changed the policy of long term
loan activities for the individual loan and also the loan without mortgages program at the end of
2018. This policy did become successful and persuade more and more customers to loan the money
from Techcombank. From 2018 to the end of 2019, the value of individual loans increased 45.4%
compared to the beginning of 2018, however it slowed down to only 5% in 2020. We can see there
is a huge gap between the year of the new policy and the next year. However, the increase rate
dropped not only because of the new policy since the first year. In 2020, the COVID-19 pandemic
had a huge impact on the financial condition in Vietnam and also the whole world. The
unemployment rate escalated and it is still happening today, which created a negative financial
situation for many individuals in Vietnam. This leads to the risk when deciding to get a loan from
the bank, since it may become group 4 or group 5 loan accounts and cannot pay back to the bank,
which is pessimistic for the future cash flow. In contrast, during the pandemic, the organization
and corporation can still take the risk in order to maintain or improve their work and moreover,
they can control and minimize the risk from loan activities of the banks.

P a g e 22 | 48
a. Year-ends annual interest rates : Loans in VND
According to the National Bank of Vietnam, the deposit and loan interest rates of credit
institutions have been stable for several months. At the end of September 2019, the VND deposit
interest rate remained relatively stable within 12 months, and the deposit interest rate over 12
months increased slightly.
At present, the annual interest rate of demand deposits is 1-2%; the maturity date is less than
2%/year in January; 8.8-9%/year for 1 month to less than 12 months, and 10-13%/year for more
than 12 months.
In terms of loan interest rates, the VND loan interest rate remained stable. At present, the
interest rates of popular loans for agriculture, rural areas, exports, small and medium-sized
enterprises and supporting industries are between 10% and 13% per year; loans are provided to
other production and commercial sectors at interest rates of 12-15% per year.
In 2nd quarter of 2021:
The TCB increased the short-term capital ratio of the head office's medium and long-term loans
from 25.5% last year to 39.1%. The bank has actively increased medium and long-term credit,
which has grown by +16.9% YTD (compared to short-term credit, which has only grown by
+5.1% YTD).
Due to the transition to long-term loans, loan interest rates have increased by 43 bps from the
previous year.
The National and International Monetary and Financial Situation Monthly Report, the Industry
and Trade Information Center of the Ministry of Industry and Trade also emphasized the stability
of interest rates, despite the negative impact on the banking industry.
However, due to the strong impact of the Covid-19 epidemic, domestic and foreign companies
are facing severe economic recession. This is why Techcombank and other commercial banks
such as VietinBank, BIDV, Agribank, ACB, Sacombank, Techcombank, VPBank, TPBank,
HDBank, MB, VIB, SeABank, etc. have very high loan interest rate cuts, up to 3%. In addition
to lowering the interest rate of existing loans, Techcombank also provides credit incentives for
new loans.
This table chart below demonstrates the figure for annual loan interest rate at the end of the year
by VND from 2019 to 2020:

Date 31/12/2020 31/12/2019

Interest rates by VND 0,00 - 11,29 % 0,00 – 19,55%

P a g e 23 | 48
 Source: Notes to the financial statement – Techcombank (2019-2020)

b. Year-ends annual interest rates : Loans in Foreign currencies

In order to maintain the stability of currencies and currency markets, the State Bank of Vietnam
has issued a number of deposit and dollar loan regulations in the past two years, and there is a
trend of strengthening them in terms of time, theme, and interest rates. On the other hand, strict
gold market management measures will also help stabilize free market interest rates in 2019 and
2020. On the other hand, the VND interest rate has been falling for more than a year. This also
makes the need to borrow dollars to take advantage of interest rate differentials become popular.
In terms of USD transactions, the average interest rates for 1-day, 2-week, 2-month, and 12-
month maturities have a slight downward trend; compared with the previous week, the average
interest rates for other maturities tend to rise. Under the item, decrease from 0.04% to 0.34% per
year; the condition is reduced from 0.02% to 0.30%.
At present, the USD loan interest rate announced by the National Bank in the latest weekly
report is 4-7% per year; among them, state-owned commercial banks’ short-term rates are 4-5%
per year, medium- and long-term rates are 6-7% per year; commercial banks’ shares, short-term
5 -6% per year, mid-to-long term 6.5-7% per year.
According to the advanced analysis, Vietnam's 12-month trade balance has also improved
significantly, with a deficit of only 500 million U.S. dollars, compared with a 2010 deficit of 15
billion USD. It is estimated that funds sent from abroad in 2013 will exceed 13 billion USD.
According to the World Bank's forecast, Vietnam has recently been among the top ten transfer
recipient countries in the world. The forecast for 2013 is approximately US$11 billion. In
addition, the attractiveness of FDI income in the past 10 months has also reached $1. Registered
capital of 20 billion USD. In addition, the Ministry of Planning and Investment also announced
that the ODA funds promised in 2013 were as high as 7 billion USD.

P a g e 24 | 48
At the moment, the usual USD transfer rate for domestic deposits is 2% per year, and economic
organization deposits are 0.5%-1% per year. The USD loan interest rate has remained stable
since last week, with interest rates ranging from 5-7% per year in the short-term and 6-8% per
year in the medium- and long-term.
This table chart below demonstrates the figure for annual loan interest rate at the end of the year
by USD from 2019 to 2020:

Date 31/12/2020 31/12/2019

Interest rates by USD 1,50- 7,41 % 2,50– 8,69%

Source: Notes to the financial statement – Techcombank (2019-2020)

c. Allowance for loans and advances to customers

As mentioned above, when the Covid-19 pandemic spread widely, the market economy was hit
hard. Therefore, domestic and foreign enterprises face many difficulties. Because of this, they
need support from the government, especially from large commercial banks like Techcombank.
In terms of TCB, there are 5 groups that will be supported by an allowance for loans.

P a g e 25 | 48
First, current loans including current loans that being assessed as fully and timely recoverable,
both principals and interests; or loans which are overdue for a period of less than 10 days and
being assessed as fully recoverable, both overdue principals and interests, and fully and timely
recoverable, both remaining principals and interests will be not supported any allowance ratio.
Next, special mention loans consist of loans which are overdue for a period of between 10 days
and 90 days and loans which are restructured repayment term for the first time will receive a 5%
allowance rate.
According to substandard loans, this group is about 5 different items, and will be supported up to
20% allowance percentage.
Fourth, there are five different categories in which a doubtful group will receive approximately a
50% allowance proportion.
Finally, the loss group will be supported by the maximum percentage of allowance loans, which
is almost 100%.
With advances to customers, Customer loans and advances are listed in the main balance sheet,
minus customer loans and advances. Short-term loans refer to loans with a repayment period of
no more than one year from the date of repayment. Mid-term loans refer to loans that are more
than one year to five years from the date of payment. Long-term loans refer to loans with a
maturity of more than 5 years from the date of payment.
The Bank terminates the loan when the contractual rights related to the cash flow of the loan
expire or the major risks and benefits related to the ownership of the loan are transferred.

Source: Notes to the financial statement – Techcombank (2019-2020)

P a g e 26 | 48
2.2.2. Loan portfolio by industry sectors and term of loans
The loan portfolio of Techcombank is diverse and can also be categorized by terms, type of
customers, and industry sectors. In general, the structure of its loan portfolio can largely be
ascribed to the strategy of customer segmentation and its concentration on some specific industry
sectors.
The loan portfolio of Techcombank mainly consists of long-term loans, which accounts for
approximately 35-40% of the whole portfolio.

The loan portfolio of Techcombank from 2018 to 2020, categorized by loan terms

Source: Notes to the financial statement – Techcombank (2018-2020)

This can be attributable to the fact that Techcombank has been focusing on wholesale businesses
in the automobile, motorcycle and the real estate sectors, and individual loans for housing and
automobiles, which usually require a considerable bulk of capital in the long run. In fact, real estate
loans have always maintained the lion’s share in the loan portfolio of Techcombank, accounting
for 8.47% in 2018 and soared to above 20% and 30% in 2019 and 2020, respectively.

P a g e 27 | 48
 The proportion of real estate loans in the loan portfolio of Techcombank

Source: Notes to the financial statement – Techcombank (2018-2020)

The loan portfolio of Techcombank in 2020, categorized by industry sector

Source: Notes to the financial statement – Techcombank (2018-2020)

This can be explained by the continual increase in credit balance of the real estate sector in 2019
and 2020. According to information disclosure from the Ministry of Construction, credit balance
of the real estate sector has witnessed remarkable increase during the 2018-2020, with the figure
P a g e 28 | 48
of annual increase being 12.82% in 2019. The figure continually increased by approximately 1-
3% after every quarter of 2020.

The total credit balance of real estate business in Vietnam in billions VND

Source: Notes to the financial statement – Techcombank (2018-2020)

In order to limit the flow of credit into this sector, the State Bank of Vietnam issued Circular
22/2019, increasing the risk weight of real estate loans from 150% to 200%, and limited the ratio
of short-term funding used for medium and long-term lending. As a result, many real estate firms
started to issue corporate bonds with attractive interest rates in order to satisfy their demand for
capital. However, since the corporate bond market in Vietnam remains risky, especially because
of the lack of issuers’ information, bank loans still remain the major source of funding for the real
estate sector. This sector is one of the targets of Techcombank, therefore, it is reasonable that the
proportion of real estate loans of Techcombank increased in accordance with the increase in the
credit balance of the sector.
Another interesting point to note is that in 2020, the proportion of long-term loans witnessed a
sharp decline from 42.36% to 35.98%. In addition, the proportion of short-term capital used for
medium and long-term lending experienced a significant decrease from 38.4% to 33.9%.

P a g e 29 | 48
 The proportion of short-term funding used for medium and long-term lending of
Techcombank from 2018 to 2020

Source: Notes to the financial statement – Techcombank (2018-2020)

This is mainly due to the regulations of the State Bank of Vietnam, since Circular 22/2019 and
Circular 08/2020 required banks to limit the ratio of short-term funding used for medium and long-
term lending. The proportion of long-term loans and the proportion of short-term capital used for
medium and long-term lending of Techcombank remains relatively low compared to its peers in
the banking industry. The sharp decrease in these proportions is a signal of a safer capital structure
and liquidity, allowing the bank to be exposed to less liquidity risk and credit risk.

Requirements of the proportion of short-term capital used for

medium and long-term lending in Vietnam

P a g e 30 | 48
In addition, the proportion of individual loans remained at above 40%. The main contributors to
this figure are the individual loans for housing and automobiles. This can be explained by the
strategy of customer segmentation of Techcombank. Beside engaging in the retail banking sector,
which is the general trend of the banking industry in Vietnam, Techcombank is also known for
tying its services to the supply chain of large retail businesses such as Vingroup. In 2019,
Techcombank first launched its automobile loan services, which is expected to target customers of
Vinfast automobile brand of the Vingroup ecosystem. In addition, Techcombank placed an
emphasis on its housing loans, providing special offers of housing loans for customers willing to
buy houses in Vinhomes, with a variety of loan packages where the total borrowed capital amounts
to 70% of the total value of apartment and the instalment period amounts to 35 years.

2.2.3. Loan portfolio by loan group:

Lastly, the main reason for the increase trend of the interest income from loan activities throughout
years is changes of the value for each loan group. Before the pandemic, in 2018, the doubtful and
the loss group only accounted for approximately 1% and did not change in 2019. However, the
value of loss accounts increased 47.6% in 2016. During the pandemic or at the end of 2020, the
loss percentage decreased rapidly down to only 0.13% of the total interest income loan group, and
that value declined from VND 2,554,518 to 344,356 million which led to the increase of the safer
loan group income, moreover, other groups with normal to high risk of unpayable loan only shrink
slightly. Therefore, these value change trends led to the increase of the interest income from loan
activities compared to previous years.

According to Techcombank Banking System, there are 5 groups in the loan portfolio.

31/12/2020 31/12/2019 31/12/2018

Millions Millions Millions

% % %
VND VND VND

Group 1 - Current Loan 274,432,557 98.88 225,601,458 97.75 154,548,122 96.63

Group 2 - Special
1,805,866 0.65 2,122,693 0.92 2,587,646 1.62
mention Loan

Group 3 - Substandard
416,892 0.15 218,128 0.09 237,758 0.15
Loan

P a g e 31 | 48
 Group 4 - Doubtful
533,944 0.19 305,230 0.13 862,510 0.54
Loan

Group 5 - Loss Loan 344,356 0.13 2,554,518 1.11 1,703,181 1.06

277,533,615 100 230,802,027 100 159,939,217 100

Source: Notes to the financial statement – Techcombank (2018-2020)

a. Current loan:
+ The current loan that has been assessed to be fully recoverable in time, including principal and
interest; or
+ Loan that has been assessed as fully recoverable, includes overdue principal and interest, and
the remaining principal and interest that can be recovered in full and in time, with a short term In
10 days.
● Analyze from 2018 to 2020:
+ During 2018, the current loan group had the value of VND 154,548,122 million and took the
proportion of 96.63% in total. In the next two years, both the value and the percentage account of
the current loan group increased in different ways. The percentage of the current loan group
compared to the total increased slightly for 1.12% in 2019 and 1.13% in 2020. However, the value
increased rapidly from 2018 to 2019 as mentioned before, but slowed down to only increase VND
48,822,099 million in the next year.
b. Special mention loan:
+ Loans that have been late for 10 to 90 days; or
+ Loans that have had their repayment conditions modified for the first time.
● Analyze from 2018 to 2020:
+ The special mention group usually is in the top three highest values in the loan portfolio group.
From 2018 to 2020, the special mention loan in Techcombank had a downward trend in general.
In 2018, this type of group got the value of VND 2,587,646 million and took the percentage of
1.62% in total, however, this proportion slightly decreased to 0.92% in 2019 and down to only
0.65% in 2020. Additionally, the value took the same trend as the percentage, which declined for
approximately VND 400,000 million each year.

P a g e 32 | 48
c. Substandard loan:
+ Loans that are delayed for 91 to 180 days; or
+ Loans that extend the repayment period for the first time; or
+ Loans that are waived or reduced because the customer does not have the financial resources
to pay all the interest under the credit agreement.
+ Loans in one of the following situations have not been recovered within 30 days of period,
from the date of the recovery decision:
‣ Loans in breach of clauses 1, 3, 4, 5 or 6 of Article 126 of the Law on CIs;
‣ Loans in breach of clauses 1, 2, 3 or 4 of Article 127 of the Law on CIs;
‣ Loans in breach of clauses 1, 2 or 5 of Article 128 of the Law on CIs; or
+ Loans recovered based on inspection results.
● Analyze from 2018 to 2020:
+ The substandard loan is the type of group which usually gets the least value accounts in the
loan portfolio group. Unlike the first two types of loan mentioned above, the substandard group
got the fluctuation trend in both 2018, 2019 and 2020. The value of substandard loan in 2018 was
VND 237,758 million, but decreased slightly to VND 218,128 million in the next year. Moreover,
the proportion of this group got the same situation as the value, its percentage declined slowly by
0.06% compared to 2019’s percentage. However, from 2019 to the end of 2020, both the value
and proportion got the contrast trend to the previous year. While the value almost doubled
compared to 2019, the proportion of this group in 2020 got back to 0.15%, which is equal to 2018’s
percentage.
d. Doubtful loan:
+ Loans past due from 181 to 360 days; or
+ Loans whose repayment period for the first reorganization is less than 90 days past due within
the repayment period after the reorganization; or
+ Loans with repayment periods of reorganizations; or
+ Loans in Group 3, which is the loan specified in cannot be recovered within 30 days to 60 days
after issues the recovery decision; or
+ Loans which must be recovered according to the conclusion of the inspection, but has not been
repaid is past due even though the recovery period has expired 60 days ago.
● Analyze from 2018 to 2020:
+ The doubtful type of loan group also had the same trend as the substandard group, however, the
value and proportion fluctuated in a wider range. From 2018 to the end of 2019, the value of the

P a g e 33 | 48
doubtful type declined to an extremely low number, which was from VND 862,510 million to only
305,230 million, which was nearly triplet divided compared to 2018. However, the number got
back to VND 533,944 million when it came to 2020, which accounted for 0.19% in total. Although
the proportion did go up at the end of 2020, it still did not get back to the peak of 0.54% when it
was in 2018.
e. Loss loan:
+ Loans overdue for more than 360 days; or
+ Loans with a repayment period of the first reorganization, but the loans are still 90 days or more
overdue than the repayment period of the first reorganization; or
+ Loans whose repayment period is still past due during the second reorganization with the
repayment period; or
+ Loans which are reorganized for the third time or more with a repayment period, which overdue
or not overdue; or
+ The loans specified in point 4 of Group 3 loans cannot be recovered more than 60 days after the
issuance of the recovery decision; or
+ Loans that must be recovered according to the inspection results, but still not repaid more than
60 days after the due date; or
+ Loans from customers of credit institutions that SBV has declared to be under special control,
or customers of foreign bank branches whose capital and assets have been frozen.
● Analyze from 2018 to 2020:
+ The loss type of loan group is another one which usually gets the top three highest value and
also percentage in total in the loan portfolio. From 2018 to 2019, both the value and percentage of
this group increased normally by more than VND 800,000 million in the value and slightly 0.05%
in the proportion. However, this group suddenly fell down to the bottom value in 2020. When it
came to 2020, the value of the loss loan declined extremely high by VND 2,210,162 million or
7.42 times compared to 2019, and it only accounted for 0.13% in total during 2020, which is lower
nearly 10 times when it is 2019.

P a g e 34 | 48
Source: Notes to the financial statement – Techcombank (2018-2020)

Source: Notes to the financial statement – Techcombank (2018-2020)

P a g e 35 | 48
2.3. Payment services:

2.3.1. Net fee and commission income:

Source: Notes to the financial statement – Techcombank (2018-2020)

2018 2019 2020

Fee and commission income from 1,763,054 2,338,815 2,914,167

Settlement and cash

Fee and commission income 4,188,317 4,853,846 6,048,443

Net fee and commission income/ fee and commission 42.09% 49.21% 48.18%

*This is the newest classified sheet from Techcombank (Net fee = 46.49%)

a. Reasons for changing in Techcombank:

In 2020, annual report of Techcombank has identified that there was a slightly increase in fee and
settlement service in 2020 when compared to its in 2019. The reason for this is because of the fee
and settlement in 2020 increase in comparison to 2019. In 2020, Techcombank launched “Smart
OTP”, an international remittance platform for corporate customers through F@ST E-BANK,
which supported over 25,000 international remittance transactions online. By constantly
optimizing and upgrading this new feature, we increased our transaction volume by 4% and value
by 20% year on year. The rise in online experiments and transactions is one of the benefits of
COVID-19 for the bank. Businesses that had already begun their digital transformation journeys
P a g e 36 | 48
benefited from an immediate competitive advantage. With a solid digital foundation,
Techcombank was able to capitalize on this trend, as evidenced by the impressive 39.7 percent
growth in credit and debit card usage (in terms of transaction volume and value). However, the net
fee is decreasing slightly in 2020 when compared to its in 2019 at 1.03% because besides
settlement and cash service accounts for about 40%, Techcombank also has securities issuance,
income from bancassurance, card services, payment & cash services and other services.

There is a significant difference between 2018 and 2019 when 2018 fees and services seem to
account for half of 2019. The reason for this is because F@ST mobile first appeared in 2014,
however, from 16/2/2019, Techcombank deployed a Smart OTP transaction authentication
solution with world-leading security technology. This will help customers who are using SMS
OTP/Token Key can switch to the new solution on the F@ST Mobile application to be more
private and can be more protected than the old one. Until April 2019 a safer & more secure
SMART OTP authentication method has been available for customers and it has completely
replaced SMS OTP and OTP Token. Since then people have started to trust and used more money
transfers, electricity, and water payment, phone recharge by using Fast mobile. Back in 2018, the
application did not have any such as these services because in 2018, Tech did not have any
convenient services such as pay money, card online and there is no privacy and only uses SMS for
verifying; thus, this causes inconvenient and is not yet modern; therefore, little use from
customers.

b. Data comparison for 3 years:

There is an increase in the ratio of fee and commission from settlement and cash income to fee and
commission income from 2018 to 2020. As we can see that settlement service, cash and fee and
commission income in 2020 is on the 1st rank when compared to 2018 and 2019. The lowest fee
and commission income and settlement service belong to the year of 2018 at approximately
4,200,000 million VND and 1,800,000 respectively.

However, the ratio is barely different. There is a sharp increase in net fee and commission income
from 2018 to 2019 at about 7.12%. Moreover, it is can be seen that between 2019 and 2020, the
percentage has slightly declined to 1.03% (from 49.21% decrease to 48.18%)

Among all of the banks that actively apply technology, Techcombank has been a pioneer in the
market to invest in many new features on Internet banking and mobile banking.
“With Internet banking, I can make transactions at any time, from money transfers, online savings,
bill payments or online purchases... Techcombank's interface is clear, making it easily for users to
operate, so I see this as a convenient, fast and safe way," said Thuy Linh - a Techcombank
customer.
Besides, Techcombank has also known for its associations with many creative innovations such as
Mobile Banking, JCB Card & Mobile POS, etc. Moreover, it also has the system integration of
payment features into the online trading platform, such as Internet Banking service that allows

P a g e 37 | 48
customers to give a command of automatic payment to perform from phone recharge to pay service
bills on time.
Furthermore, customers can go to any Techcombank transaction post to make direct bill payments
including: electricity bill, postpaid mobile subscription bill, prepaid mobile bill, FPT internet bill,
airfare payment, premium payment, payment of living expenses for Vinhomes residents. If not,
customer can do this transaction through Internet banking - Fast mobile app.
First time appeared only for customers who use Samsung - Samsung Pay - Samsung's smartphone-
specific mobile app. This is a modern payment method that helps customers integrate their
Techcombank card information into their smartphones and pay quickly and securely at most retail
points around the globe by tapping the smartphone on a POS machine instead of using the card.

2.4. Other services:

2.4.1. Foreign exchange trading services
 Net gain from trading of foreign currencies
Even facing a 2020 full of volatility, GTS block is still struggling the force to complete well and
exceed the plans the set plan, specifically: compared to the year 2019, net revenue from operations
service activity (NFI) reached 106%, block amount of conversion transactions in countries reached
102%, foreign exchange transactions (FX) put 113%, total LC value reaches 119%. This success
is the result of the technology digitization strategy and services, systematizing the solution Solve
needs from simple to customer's complexity, copper time to optimize processes, solve existing law
of Techcombank.

Source: 2020 Annual Reports – Techcombank

P a g e 38 | 48
In 2020, with the recognition of the management agency – Ministry of Finance, proprietary trading
segment of GTS Division continues to affirm Techcombank's leading position in the financial
market Vietnam, including: trading government bonds, trading derivatives and Forex. As one of
the most active market makers, owning large network of partners both at home and abroad, GTS
Division in particular and Techcombank in particular general confidence in their ability to arrange
foreign exchange transactions, structured transactions and transactions major derivatives to
customers.

Source: 2020 Annual Reports – Techcombank

2.4.2. Securities brokerage services

 Net gain from trading securities
Income from securities sales is recognized in consolidated income statement when receive the
order matching notice from the Save Center Sign Securities (listed securities) and complete
agreement to transfer assets (stocks not yet listed) and is determined based on the spread difference
between the selling price and the cost price of the securities sold.

P a g e 39 | 48
 Source: 2020 Annual Reports – Techcombank

 Income and expenses from Securities brokerage services

Net fee income from identified service activities determination is one of the key goals to maintain
the sustainable growth of the whole Bank customers, contributing to boosting the profit margin on
the account assets (ROA), through which the Bank has ensured its target growth and balance sheet
management one cautious way. In 2020, operating income Service activities of the whole Bank
increased by 28.8% with the substantial increase came from the issuance advisory fee, bond
distribution agency and other related services related to bonds lead to weight changes significantly
between products.

Source: 2020 Annual Reports – Techcombank

P a g e 40 | 48
 Income from Securities insurance guarantee services
Vietnam's life insurance market still has plenty of room to grow when the proportion of the
population with life insurance has only reached 11% by the end of 2020. Therefore, income from
insurance distribution commissions will increasingly contribute greatly to the income from the
service.
It is the increased revenue from the insurance business along with income from interest and
services that contributed positively to Techcombank's pre-tax profit of VND 11,5 billion in the
first six months of this year.
Techcombank surpassed VietinBank to become the third most profitable bank in the system, with
a profit of VND 1,325 billion. Meanwhile, VietinBank recorded profit from service activities of
VND 1,283 billion.
Techcombank's financial statements show that the income from Techcombank's service activities
mainly comes from payment and cash services (accounting for nearly half), insurance cooperation
services, and securities guarantee services.

2.4.3 Income and expenses from consulting services

Insurance services grew 601% in new mining revenue (APE). Premiums increased by 48% over
the same period. Income from Fee of fund management established in 2008, Techcom Capital
Fund Management Joint Stock Company (“Techcom Capital”) is a subsidiary belonging to
Techcombank. TCC's goal is to provide investment management and corporate financial advisory
services
The business includes: Consulting on corporate restructuring, Consulting on capital mobilization
and Consulting on M&A.
In 2020, TCC recorded revenue and profit before tax of TCC reached VND 330 billion and VND
234 billion, respectively billion dong, up 50% and 26% respectively over the same period 2019.
Total assets increased by 69% to 488 billion VND, pre-tax profit margin is still high at 71%. Billion
return on equity (ROE) reached 53%.

P a g e 41 | 48
 Source: 2020 Annual Reports – Techcombank

2.4.4. Bank Insurance services

Due to the effect of the time of implementing social distancing Association for prevention of
COVID-19 pandemic, commission fee insurance cooperation had a slight decrease of 11.2%
compared to same period reached VND 827 billion in 2020. However
Along with the recovery of the economy, Techcombank worked closely with Manulife to improve
tissue operating model, product offering and selling capacity to serve customers better. The
product has achieved very positive initial signals in Mandarin. New Mining Revenue (APE)
Growth In the fourth quarter of 2020, there was a marked improvement in energy efficiency higher
selling rate than in previous quarters. Through promoting the digitization of the customer journey
and selling tools can search Techcombank themselves achieving the plan will regain the leading
position in the field of insurance business in the near future.

P a g e 42 | 48
 Source: 2020 Annual Reports – Techcombank

III. EVALUATION OF BANKING SERVICES AND RECOMMENDATIONS

Technology investment plan

Source: 2020 Annual Reports – Techcombank

P a g e 43 | 48
 3.1. The application of technological innovations to banking service:
Business model like selling financial services predominantly online has not yet proven itself
consistently viable for the long run, though some Internet providers continue to do fairly well. It
can lead to the overwhelm of the bank’s profits and the capital contributed by its owners by loan-
related losses, weak internal controls. Still, many customers seem to prefer financial firms that
offer both Internet services and full-service physical facilities conveniently located, particularly
when problems surface with their accounts and Techcombank did a great job in both internet
services and full-service physical facilities.

Net banks typically have to offer more to compensate customers for this preference, which tends
to lower the institution’s profitability, other factors held equal but Techcombank has created and
is developing a lot of extremely convenient online services for customers to increase the positive
customer experience. Techcombank is a complete combination between Net-oriented institutions
and conventional service providers.

Techcombank provided Vietnam’s first core banking system and Techcombank was first to market
with online and mobile banking. Techcombank’s new features and capabilities for banking,
investing and financial management improved customers’ lives throughout the year : The mobile
banking app now integrates with all utility providers, so paying a bill is as easy as tapping a phone.
The bank’s investments in more scalable, resilient, high-availability infrastructure and
architecture, continue to deliver the best-in-class service levels expected of a leading 24/7 bank.

2019:
Investment in technologies:
 In 2019, customer needs continued to shape priorities, as Techcombank sought to ease their
borrowing journey by further digitalising card services and modernising key workflows.
 Techcombank’s market leading digital platforms give customers the freedom to bank 24/7,
from wherever they choose, and Techcombank's big investment in resilient and accessible
infrastructure and architecture ensures the platforms’ stability.
 Techcombank added many exciting new features and capabilities to both the retail and
commercial digital platforms, so customers could do more banking and investing, and improve
their financial management.
 2019 Techcombank significantly strengthens cyber security. In a world of daily cyber threats,
customers need to know they can trust Techcombank with their finances and that their privacy
is respected and protected. Techcombank again allocated significant amounts to recruiting the
best people, cyber security technology, and training.
 Techcombank ensures that every customer’s data and transactions are safeguarded, with
international-standard security methods and protocols.
=> Over 1 million new customers; A 151% surge in use for the convenient and effective digital
platforms (including ATMs, mobile banking, internet banking), and Techcombank’s serviced
transaction value rose by 143% YoY
Digital banking highlight:
 Customer focused improvements to the bank’s UX/UI, making things even more convenient
 New digital banking features including integration with Mortgage+, I-bonds, insurance
products and card system
 Added integrated bill pay for over 40 major utilities and other service provider companies

P a g e 44 | 48
  Bolstered customer security – Techcombank is the first bank in Vietnam to roll out Smart OTP
for all online transactions
 Continuing to build electronic transaction solutions based on maximizing customer experience
=> Signed up over 1 million new customers, growing e-banking transaction value by 191% YoY.
Currently, 85% of customer activity is purely digital

2020:
Techcombank e-banking
 Many innovative developments like:
‣ Upgraded T24 system
‣ Improved card system
‣ Upgraded mobile platform
‣ Server technology changes
‣ Rolling out the eKYC solution for better access to core customer segments.
 Developing more service features for core affluent customers: features that first appeared on
the market – Bao Loc, transfer certificates of deposit on F@ST Mobile – to serve investment
needs and increasing assets of customers, such as new non-financial service experience,
including: booking airline tickets and hotels, to meet the increasing demands of customers.
 Continuing to improve the process of digitalization home loans, reducing the time it takes for
customers to learn Techcombank's decision to only 1.6 days, while reducing the processing time
of online credit by 30% (now 335 minutes) compared to normal processes.
 Customers using bill payment services went from 19% in 2019 to 54% in 2020 by connecting
to more service providers and engineering a better bill payment experience with faster and
automatic payments.
 Increasing F@ST Mobile revenue by issuing preapproved credit payment cards, contributing to
the outstanding growth of CASA, which reached VND 76.1 trillion, reducing the cost of serving
customers at the counter though the transfer of card support services for both credit cards and
payment cards, counter to online, helping save more than VND 67 billion in SMS costs.
Information technology
 For customers: Techcombank has a history of being a first adapter of technology, providing
superior customer experience. Retail e-banking transactions volume rose 108.8% from 2019.
2020 added over one million new customers, thanks to Techcombank's ongoing investment in
digital platforms, digitalizing E2E customer journeys, improving underwriting capabilities and
risk management.
 Stability and resilience: A main priority of Techcombank’s technology investment is
maintaining system stability and resilience, so customers can bank anytime, anywhere. It will
improve performance, stability, cost and importantly, the speed with which the bank introduces
new products and services, by leveraging ecosystem partners. It’ll also allow faster release of
tailor-made products and services.
 Cybersecurity: With COVID-19 speeding up the digitalization of everything, privacy and
security have become a top priority for any digital operation. The bank significantly invested
in recruiting top security experts and implementing international security standards and
protocols so customers feel secure.

P a g e 45 | 48
3.2. Risk Management & Compliance with regulations

2019
 Managing credit risk
Techcombank has gained in-depth insights into customers and their ecosystem; and
Techcombank's credit policy, and business strategy are focused on customer segments. The bank
have gradually applied risk assessment models to Techcombank's end-to-end credit process,
shortening turn-around-times and improving customer experience, as Techcombank provide
optimal financial solutions.
 Managing market risk
Techcombank has measured and assessed market risks according to Basel II requirements by:
• Computing value at risk (VaR) and expected shortfall for portfolios for the trading book
• Conducting backtesting of VaR for each trading portfolio
• Simultaneously launching a project to validate models so functional and business units can make
well-informed decisions.
 Managing liquidity risk
As per SBV requirements, the bank’s regulations and processes on liquidity risk management fully
comply with Circular 13/2018/TT-NHNN on corporate governance. The bank’s new governance
structure and model, policies, processes, regulations and limits will identify, measure, monitor and
report risk triggers; in compliance with SBV’s banking regulations on liquidity and solvency
ratios.
 Managing operational risk
Protecting the Bank, shareholders and customers from operational losses is a priority. Operational
Risk Management sub-committee identifies, and evaluates operational risks and handles them
quickly and consistently in compliance with the Bank’s risk management policy and regulatory
requirements.
Additionally, Techcombank has been transferring operational risks via insurance. Techcombank’s
insurance needs are managed by the Operational Risk Insurance Management team.

2020
Risk Management Vietnam's economy was not immune to 2020’s global recession and
international bankruptcies. The suspension of flights, tourism and service industries significantly
impacted Techcombank's targets. To overcome this, Techcombank implemented a series of
solutions and initiatives, in risk management, focused on technology and digital, which contributed
to greater growth.
 Internal capital adequacy assessment process (ICAAP)
Following 2019’s SBV approval for early application of the CAR standard, according to Circular
41/2016/TTNHNN, in 2020, Techcombank continued implementing and completing the ICAAP
as per Circular 13/2018/TTNHNN. This completed the implementation of all three pillars of
Basel II.
 The risk data aggregations and analytics platform (RDAAP)
It continues to improve both the bank’s risk management models and risk reporting standards.
 Credit risk management
The bank aims to provide suitable financial products for customers' business cycles and capital
needs, and specific financial solution packages for each customer segment, streamlining the
process and optimising processing time. Techcombank assessed the pandemic’s impact on

P a g e 46 | 48
customers and responded by reducing interest rates and restructuring loan repayment schedules.
In retail, technologies like digital analytics platforms, improved decision-making on retail credit
risk portfolio management, and synchronized personal customer data in credit activities on digital
channels helped the bank navigate the fallout from COVID-19.
 Business credit decision engine (BCDE) – enabling the commercial digital journey
The aim of BCDE is to fully digitalized and streamline corporate loan origination, the nucleus of
which lies in credit risk decisions. BCDE will be a crucial driver of non-retail growth. It’s highly
scalable, and can capture and centralize customer data, leading to better commercial lending
decisions and improved operational efficiency.

P a g e 47 | 48
 IV. REFERENCES

 https://www.gso.gov.vn/du-lieu-va-so-lieu-thong-ke/2021/01/kiem-soat-thanh-cong-lam-phat-nam-
2020-dat-muc-tieu-quoc-hoi-de-ra-duoi-4/
 https://www.sbv.gov.vn/webcenter/portal/m/menu/trangchu/ttsk/ttsk_chitiet?leftWidth=0%25&show
Footer=false&showHeader=false&dDocName=SBV403509&rightWidth=0%25&centerWidth=100%
25&_afrLoop=7267423255131506#%40%3F_afrLoop%3D7267423255131506%26centerWidth%3D
100%2525%26dDocName%3DSBV403509%26leftWidth%3D0%2525%26rightWidth%3D0%2525
%26showFooter%3Dfalse%26showHeader%3Dfalse%26_adf.ctrl-state%3D192loobayb_9
 https://vietstock.vn/2020/01/ty-gia-8211-1-nam-nhin-lai-757-722884.htm
 https://vietstock.vn/2020/12/ty-gia-mot-nam-nhin-lai-757-815658.htm
 http://baokiemtoannhanuoc.vn/kinh-te---xa-hoi/nhung-thach-thuc-lon-dang-hien-huu-doi-voi-nganh-
ngan-hang-149511
 https://hanoimoi.com.vn/tin-tuc/Tai-chinh/1009112/cac-ngan-hang-thuong-mai-chia-se-kho-khan-
cung-doanh-nghiep
 https://dangcongsan.vn/kinh-te/kho-khan-keo-dai-ngan-hang-cung-doanh-nghiep-deu-phai-can-trong-
585786.html
 https://nhandan.vn/tin-tuc-kinh-te/ngan-hang-nha-nuoc-dieu-chinh-giam-lai-suat-tu-ngay-19-11-
377297/
 https://www.techcombank.com.vn/khach-hang-ca-nhan/tiet-kiem
 https://tygia.vn/tin-tuc/u-huong-tang-lai-suat-ngan-hang-trong-nam-2019-411
 https://theleader.vn/hang-loat-ngan-hang-trung-uong-cat-giam-lai-suat-do-covid-19-
1583294860236.htm
 https://tapchitaichinh.vn/ngan-hang/phat-trien-dich-vu-ngan-hang-ban-le-tai-viet-nam-332971.html
 https://www.techcombank.com.vn/khach-hang-uu-tien/tin-tuc/thi-truong/ty-gia-usd-cuoi-nam-se-on-
dinh
 https://www.techcombank.com.vn/khach-hang-ca-nhan/the/the-tin-dung/the-ung-von-techcombank-
visa-vinshop/lai-suat-va-bieu-phi
 https://www.techcombank.com.vn/khach-hang-uu-tien/tin-tuc/thi-truong/lai-suat-cuoi-nam-binh-yen-
doi-song
 https://www.techcombank.com.vn/khach-hang-ca-nhan/ngan-hang-dien-tu/du-lich-giai-tri
 https://www.techcombank.com.vn/gioi-thieu/goc-bao-chi/bao-chi-noi-ve-techcombank/techcombank-
uu-tien-dau-tu-ung-dung-cong-nghe-tai-chinh
 https://www.techcombank.com.vn/nha-dau-tu/bao-cao-thuong-nien

P a g e 48 | 48