TWENTY YEARS ONE BELIEF

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1 ANNUAL REPORT 2013

2 TWENTY YEARS ONE BELIEF

3 CONTENTS 1 MESSAGE FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS 02 2 BUSINESS PLAN 04 3 PG BANK INTRODUCTION CORPORATE INFORMATION AWARDS, MILESTONES AND SOCIAL ACTIVITIES AWARDS AND RECOGNITION MILESTONES IN THE PAST 20 YEARS CORPORATE SOCIAL RESPONSIBILITY CORPORATE GOVERNANCE SHAREHOLDER INFORMATION 20 4 BUSINESS PERFORMANCE REPORT BUSINESS PERFORMANCE HIGHLIGHTS OPERATIONAL HIGHLIGHTS FUND MOBILIZATION FUND UTILIZATION CREDIT ACTIVITIES TREASURY FOREIGN EXCHANGE TRADING COMMODITY DERIVATIVES BANKING SERVICES CARD SERVICES MONEY TRANSFER SERVICES FLEXIPAY REMITTANCE AND TRADE FINANCE MANAGEMENT AND SUPPORT ACTIVITIES RISK MANAGEMENT HUMAN RESOURCE MANAGEMENT INFORMATION TECHNOLOGY 33 5 FINANCIAL STATEMENTS 34 6 OPERATIONAL NETWORK 94 Annual Report

4 MESSAGE FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS Ladies and Gentlemen, 2013 continued to be a year of slow economic growth, with the annual GDP at 5.42%. Total investment capital of the economy continued to decline. Aggregate demand of the economy has not improved as expected, despite the government's efforts to implement a number of solutions. The financial monetary market in 2013 witnessed many changes and exposed many potential risks. Nonetheless, the effective policy of the State Bank of Vietnam played a significant role in settling the systematic liquidity issue, reducing interest rates, stabilizing exchange rates and increasing foreign exchange reserves. The banking system restructuring process has also been well managed. The establishment of VAMC (Vietnam Assets Management Company) partly supported several banks in trouble, but the overall speed of handling bad loans across the whole banking industry was still slower than expected; signifying that difficulties will continue to persist in the coming years. Against the backdrop of a challenging economy and sector, PG Bank's performance was also advers ely affected. However, we overcame all difficulties with strength; with our first priority on measures to improve risk management and service quality. Therefore, despite a lower profitability ratio, our risk management and bad debt recovery effectiveness were greatly improved, helping to bring NPL down to a safe level of 2.98% at the end of PG Bank has always focused on liquidity management to meet required ratios, thus ensuring the business of the bank to be safe and sustainable. PG Bank has also made many key developments, including the official introduction of PG Bank Visa Credit cards and the launch of PG Bank Flexipay money transfer service at 2,100 Petrolimex service stations and 80 PG Bank offices across the country. These achievements are the testimony of our commitment to relentlessly offering better quality products and services to our customers. In celebration of our 20th anniversary ( ), many initiatives were launched, such as the Competition to improve service quality. These activities were not only to honor departments and individuals of excellence, but also to promote positive continuous improvements to the management and business system of the Bank. Ladies and gentlemen! To date, adhering to the core strategy, PG Bank has gradually asserted its brand in the market and established a unique position in the map of Vietnamese banks; especially with regard to foreign exchange trading, payment cards and derivatives. Now, looking towards 2014, a year full of challenges, and in the spirit of Twenty years one belief, we are fully confident that the unyielding support of our shareholders and customers, the determination and consensus of management and, most importantly, the entire team of dedicated staff will continue to drive PG Bank forward in strength and sustainability. On behalf of the Board of Directors, I would like to extend my sincerest gratitude for the continued trust and support of our customers, partners, shareholders and all of the bank's staff throughout the past 20 years. I wish all of you and your family a happy, healthy and successful year of the Horse! Sincerely, Chairman of the Board of Directors Dr. Bui Ngoc Bao 02 Annual Report

5 Annual Report

6 04 Annual Report 2013 BUSINESS PLAN 2014

7 In 2013, the banking business environment continued to have many difficulties due to the challenging world economic situation, with little hope for a better Banking system restructuring and bad debt recovery remain central to our agenda. Based on the latest actual business performance and economic forecast, with consideration of both existing and potential resources, our objectives for 2014 are: To ensure asset quality and sustainable credit growth; to increase income from services and to reduce operating costs. To refine management systems, internal control and to enhance credit risk control. To further expand the retail banking service, to increase the proportion of assets and income from retail business, and to better utilize the Petrolimex Group's retail network. To strengthen our Foreign Exchange business. To improve overall service quality and operational efficiency of transaction offices. TOTAL ASSETS Unit: billion TOTAL MOBILIZED FUNDS FROM INDIVIDUALS AND ECONOMIC ENTITIES Unit: billion TOTAL OUTSTANDING LOANS Unit: billion 30,000 25,000 20,000 15,000 24,876 23,825 25,000 20,000 15,000 13,861 16,211 20,000 15,000 13,867 14,699 10, , , Annual Report

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9 PG BANK INTRODUCTION Annual Report

10 CORPORATE INFORMATION Registered name Abbreviation : PETROLIMEX GROUP COMMERCIAL JOINT STOCK BANK : PG Bank Establishment License No. 0045/NHGP issued by the State Bank of Vietnam on November 13th, 1993 and Decision No. 3061/QDNHNN issued by the State Bank of Vietnam dated December 30th, 2013 on the amendment of the Establishment License. Head Office 16th, 23rd and 24th Floor, MIPEC Tower, 229 Tay Son Street, Nga Tu So Ward, Dong Da District, Ha Noi, Vietnam. Website Telephone number : (+84) Fax : (+84) Tax code : SWIFT code : PGBLVNVX : : dvkh.pgbank@petrolimex.com.vn 08 Annual Report 2013

11 AWARDS, MILESTONES AND SOCIAL ACTIVITIES AWARDS AND RECOGNITION Grade A Bank in 2007, 2008, 2009, and 2010 (awarded by the State Bank of Vietnam) Vietnam Excellent Brand in 2008, 2009, 2010, 2011, 2012, and 2013 (awarded by The Vietnam Economic News and Trade Promotion Agency) Vietnam Top Trade Services in 2009 and 2013 (awarded by the Ministry of Industry and Trade) Top 100 Vietnamese Trade Services in 2010 (awarded by the Ministry of Industry and Trade) Certificate of Merit for Excellent Performance in 2009 and 2010 (awarded by the Ministry of Industry and Trade) Certificate of Merit in 2011 and 2013 (awarded by the Vietnam Social Insurance) Emulation Flag in 2011 (awarded by the Chairman of Ha Noi People s Committee) Certificate of Merit for Excellent Organization in 2012 (awarded by the State Bank of Vietnam) Top 500 Vietnamese Largest Corporation in 2012 (ranked by Vietnam Report Company) Annual Report

12 AWARDS, MILESTONES AND SOCIAL ACTIVITIES MILESTONES IN THE PAST 20 YEARS 1993 Establishment of Dong Thap Muoi Rural Joint Stock Bank 2005 Participation of Vietnam National Petroleum Group (Petrolimex) and Saigon Securities Incorporation (SSI) as major shareholders 2007 Transformation into an urban joint stock bank Charter capital increase to 500 billion Official name change to Petrolimex Group Commercial Bank (PG Bank) Grand opening of PG Bank Ha Noi the first full service branch Grand opening of PG Bank Sai Gon the first branch in the South Grand opening of PG Bank Da Nang the first branch in the Centre 10 Annual Report 2013

13 AWARDS, MILESTONES AND SOCIAL ACTIVITIES MILESTONES IN THE PAST 20 YEARS 2008 Successful implementation of Flexcube Core Banking Official introduction of international payment and foreign exchange services Charter capital increase to 1,000 billion 2009 License granted to provide commodities derivatives transactions Head Office relocation from Dong Thap to Hanoi Official launch of Flexicard the first fuel card in Vietnam, combining prepaid and debit features 2010 Successful issuance of 1,000 billion of convertible bonds Charter capital increase to 2,000 billion from convertible bonds Annual Report

14 AWARDS, MILESTONES AND SOCIAL ACTIVITIES MILESTONES IN THE PAST 20 YEARS 2011 Official launch of Contact Center with hotline number Grand opening of Head Office in MIPEC Tower 2012 Launch of PG Bank Mobile Banking offering a full range of electronic banking on mobile phones Charter capital increase to 3,000 billion 2013 Official launch of PG Bank Flexipay a convenient money transfer service at all Petrolimex service stations countrywide Official introduction of PG Bank Visa Credit Card Operating license extension to 99 years granted by the State Bank of Vietnam 12 Annual Report 2013

15 AWARDS, MILESTONES AND SOCIAL ACTIVITIES CORPORATE SOCIAL RESPONSIBILITY At PG Bank, we are committed at all times to conducting our business in a responsible way. In 2013, PG Bank Trade Union, PG Bank Youth Union and all of PG Bank's staff actively participated in many social programs and activities to share with the community. For the new academic year, PG Bank's enthusiastic young staff donated over 100 sets of gifts, including books, pens, hats and other stationery, worth tens of millions of dongs to disadvantaged pupils at Chan Son Elementary and Secondary School in Tuyen Quang Province, where 80% of pupils are from the Dao ethnic minority, living deep in the mountains under very difficult conditions. In addition, the Trade Union and the Youth Union organized many charitable activities to donate hundreds of millions of dongs worth of scholarships for the Community College and the Nguyen Sinh Sac's Study Promotion Fund in Dong Thap, and the Da Nang's Study Promotion Fund. We also coordinated with young cadets from the People's Police Academy in public activities; including construction of and wounded soldiers in the region. Especially, through the Building New Rural Area scheme initiated by the government, PG Bank committed to supporting the construction of 4 bridges in Dong Thap Province totaling 700 million dongs in the period of The first bridge, worth 206 million dongs, was put into operation in 2012, and the second one will be completed as planned. In the future, PG Bank will continue to promote more social activities; especially volunteer programs orga public infrastructures, new rural roads, and sanitation of local cultural buildings. In appreciation of the noble gesture of blood donation to save lives, our Youth Union in association with Petrolimex's Youth Union and other member companies organized the 2013 Blood Donation Volunteer campaign. Besides this, PG Bank's Youth Union participated in the Boarding House for Children program by sending donations through text messages. We also visited nearly 200 families of fallen nized in conjunction with subsidiaries of Petrolimex during the Youth months of We are committed to continued sharing and contributing to the community. Annual Report

16 CORPORATE GOVERNANCE ORGANIZATIONAL STRUCTURE GENERAL MEETING OF SHAREHOLDERS BOARD OF SUPERVISORS BOARD OF DIRECTORS INTERNAL AUDIT CHIEF EXECUTIVE OFFICER DEPUTY CEOs TREASURY DIVISION INVESTMENT BANKING DIVISION CORPORATE BANKING DIVISION RETAIL BANKING DIVISION RISK MANAGEMENT DIVISION Money Market Foreign Exchanges Commodity Derivatives Corporate Strategy Investment Research & Analysis Corporate Finance Financial Institutions Credit Policy & Product Transactions Policy & Product Development Corporate Business Development Retail Business Development Payment Services Development Retail Partnership Delivery Channel Development Credit Risk Management Market Risk Management Operational Risk Management Valuation 14 Annual Report 2013

17 BOARD OF DIRECTORS OFFICE HUMAN RESOURCE COMMITTEE RISK MANAGEMENT COMMITTEE CREDIT COMMITTEE ASSET & LIABILITY COMMITTEE ACCOUNTING DIVISION OPERATIONS DIVISION INFORMATION TECHNOLOGY CENTER CARD CENTER FUNCTIONAL DEPARTMENTS Financial Planning Financial Accounting Accounting Supervision Tax & Cost Accounting Trade Services Remittances Treasury Operations Contact Center Operations Support & Product Development Credit Administration Support & Operations Application Development Infrastructure & Deployment System Administration Information Security Card Technology Dispute & Chargeback Operations Management Card Risk Management Human Resources Legal & Compliance Loan Recovery Administration Marketing & Network Development BRANCHES Transaction Offices Corporate Customers Retail Customers Customer Service (Transactions & Cash) Credit Administration Accounting Administration Annual Report

18 BOARD OF DIRECTORS 1. Mr. Bui Ngoc Bao Chairman Mr. Bui Ngoc Bao has a PhD in Economics. At present, he is the Secretary of Party Committee cum Chairman of the Board of Directors of Vietnam National Petroleum Group (Petrolimex) the largest shareholder of PG Bank. For his outstanding professional performance, he was honorably awarded a number of merit certificates by the Prime Minister and Vietnamese General Confederation of Labor. As the Chairman of the Board of Directors of PG Bank, he has made remarkable contributions to creating a vision for PG Bank's development and providing crucial support and guidance in operations Annual Report 2013

19 2. Mr. Tran Long An Member Mr. Tran Long An is the Chairman of the Board of Supervisors of Petrolimex. Mr. An obtained his Diploma of Advanced Political Theory after completing a Bachelor's degree in Accounting. He has held a number of important roles in member companies of Vietnam National Petroleum Group, including, Chief Accountant and Deputy Director of Petrolimex Petrochemical Corporation. He has been awarded with merit certificates by the Prime Minister, the Vietnamese General Confederation of Labor and the Ho Chi Minh Communist Youth Union. 3. Mr. Tran Ngoc Nam Member Mr. Tran Ngoc Nam is currently the Deputy General Director of Petrolimex and has been the Group's spokesperson since His excellent performance has been honorably awarded with a Merit Certificate by the Prime Minister. Holding a Bachelor's degree in Accounting and having more than 20 years' experience in accounting and finance, he has made significant contributions to PG Bank. 4. Mr. Dinh Thanh Nghiep Member Mr. Dinh Thanh Nghiep is one of the founders of Dong Thap Muoi Rural Joint Stock Bank, the former name of PG Bank. After the bank was transformed into an urban joint stock bank, he became a member of the Board of Directors and Deputy CEO. He graduated from the University of Economics in Ho Chi Minh City and the Ho Chi Minh City University of Law. He also holds a Diploma of Advanced Political Theory. 5. Mr. Nguyen Quang Dinh Member Mr. Nguyen Quang Dinh has 20 years of experience in accounting and finance. He holds a Bachelor in Accounting from the Academy of Finance and a Diploma in Management from Henley Business School in the United Kingdom. Through his continuous commitment to PG Bank, dating from the transformational days in the role of Chief Executive Officer, he has made outstanding contributions in leading PG Bank to overcome challenges and achieve great success. With his excellent professional performance, he has been awarded merit certificates by the Ministry of Industry and Trade (MOIT) and the Hanoi People's Committee. 6. Mr. Nguyen Manh Hai Member Mr. Nguyen Manh Hai joined PG Bank in 2007 and is currently a member of the Board of Directors and Head of Investment Banking. He also represents PG Bank in the Board of Representatives of the Vietnam Active Fund (VFA) and the Board of Supervisors of the Petrolimex Aviation Fuel Joint Stock Company. He holds a Bachelor's degree in Business and Management from the University of Reading, United Kingdom, and an International Executive MBA from IE Business School in Madrid, Spain. With 10 years of management experience in finance and banking, he has certainly contributed to the strong development of PG Bank. 7. Mr. Le Minh Quoc Member Mr. Le Minh Quoc holds a PhD in Physical Geology in Russia. Currently, he is the Chairman of the Board of Viet Nang Company, Deputy Director of Military Petrochemical Corporation (MIPEC), and Director of MIPEC Land JSC. With many years of experience in management, he has made a valuable contribution to the development of PG Bank. 8. Mr. Vo Van Hiep Independent Member Mr. Vo Van Hiep is the Director of Vietnam Investments Partners, LLC and member of the Board of Directors of Chitin Vietnam Joint Stock Company. He holds an MBA from Harvard University and a Bachelor's degree from the United States Military Academy, West Point. He has 18 years of management experience in finance and banking in large financial institutes such as Citi Group, VN Partners and Deutsche Bank. He was appointed to be an independent member of the Board of Directors in April Mr. Nguyen Hy To Van Independent Member Mr. Nguyen Hy To Van holds a Bachelor's degree from Belarusian State University and a Master's degree from the University of Paris 8. With many years of experience in management, he has held many important roles including CEO at Asta Int., Nang Viet Co. Ltd., Hoi Vu Jst. Co., Paragon Co., and Head of the Hedging Committee of Petrolimex Group. Currently, he is General Secretary of the Vietnam Petroleum Association. He was appointed to be an independent member of the Board of Directors in April Annual Report

20 BOARD OF SUPERVISORS 1. Mr. Nguyen Quoc Trung Chairman Since graduating from the Vietnam University of Commerce in 1993, Mr. Trung has had more than 18 years of management experience in large organizations, including Chief Accountant of Castrol BP Petco Ltd., Chief Financial Officer of PTN Chemical Co., Ltd. and Schmidt Vietnam & Co., Ltd., and Internal Supervisor of TOTAL Refinery and Marketing in Asia. He was appointed Chairman of the Board of Supervisors in September Ms. Thai Thi Lan Huong Member Ms. Thai Thi Lan Huong completed a Master's degree in Finance and Banking from CFVG (Centre Franco Vietnamien de Formation à la Gestion), and a Bachelor's degree from the Banking Academy of Vietnam. She has more than 16 years of experience in finance and banking. Before joining PG Bank, she worked for Chinfon Bank, Ha Noi branch. In PG Bank, she has held many important roles including Head of Credit Administration in PG Bank Ha Noi, and then Head of Internal Audit in Head Office. In April 2012, she was appointed a member of PG Bank's Board of Supervisors. 3. Mr. Nguyen Quang Nghi Member Holding a Master's degree in Accounting and a Bachelor's degree in Finance, Mr. Nguyen Quang Nghi has more than 10 years of experience in finance and accounting. He had held important roles in Ha Long Fisheries Corporation and Petrolimex Thai Nguyen before joining PG Bank as a member of the Board of Supervisors in Annual Report 2013

21 BOARD OF MANAGEMENT 1. Mr. Nguyen Quang Dinh Chief Executive Officer Mr. Nguyen Quang Dinh has 20 years of experience in accounting and finance. He holds a Bachelor in Accounting from the Academy of Finance and a Diploma in Management from Henley Business School in the United Kingdom. Through his continuous commitment to PG Bank, dating from the transformational days in the role of Chief Executive Officer, he has made outstanding contributions in leading PG Bank to overcome challenges and achieve great success. With his excellent professional performance, he has been awarded merit certificates by the Ministry of Industry and Trade (MOIT) and the Hanoi People's Committee Mr. Nguyen Tien Dzung Deputy CEO In charge of Corporate Banking Mr. Nguyen Tien Dzung holds a Master's degree in Banking and Finance from CFVG (Centre Franco Vietnamien de formation à la Gestion) and the National Economics University of Vietnam. Before joining PG Bank, Mr. Dzung had 11 years of management experience in large banks, including Head of Corporate Banking in Woori Bank, Hanoi Branch, and Deputy Director of Techcombank, Hoan Kiem Branch. In December 2009, he was appointed to be Deputy CEO of PG Bank. 3. Mr. Nguyen Hong Duc Deputy CEO In charge of Financial Institutions, Human Resources & Administration, Legal & Compliance, Loan Recovery, Marketing and Network Development Mr. Nguyen Hong Duc holds a Master's degree in Business Administration from the Asia Institute of Technology (AIT) and a Bachelor's degree from the Foreign Trade University. He has more than 20 years of experience, with important roles including Deputy CEO of Chinfon Bank, Cambodia Branch, Vice President and Head of Financial Institutions in Citibank Vietnam, Deputy CEO of Global Petro Commercial Joint Stock Bank and Tien Phong Commercial Joint Stock Bank. He joined PG Bank as Deputy CEO in Mr. Dinh Thanh Nghiep Deputy CEO In charge of the South business Mr. Dinh Thanh Nghiep is one of the founders of Dong Thap Muoi Rural Joint Stock Bank, the former name of PG Bank. After the bank was transformed into an urban joint stock bank, he became a member of the Board of Directors and Deputy CEO. He graduated from the University of Economics in Ho Chi Minh City and the Ho Chi Minh City University of Law. He also holds a Diploma of Advanced Political Theory. 5. Mr. Nguyen Thanh To Deputy CEO In charge of Treasury Holding a Master's degree in Business Administration from the Southern California University for Professional Studies, and a Bachelor's degree in Economics from the Banking Academy of Vietnam, Mr. To has more than 20 years of experience in finance and banking. Before joining PG Bank, he was Deputy Director of Global Treasury Department of Joint Stock Commercial Bank for Foreign Trade of Vietnam, Deputy Director of Vietnam Finance Company in Hong Kong, and Deputy CEO of Vinaconex Viettel Finance Joint Stock Company. He is an expert in money markets, foreign exchange and financial market products in many countries. He was appointed to be Deputy CEO of PG Bank in September Annual Report

22 SHAREHOLDER INFORMATION (As of 31/12/2013) SHAREHOLDER STRUCTURE Shareholders Number of shareholders Number of shares % Holdings Organizations ,270, % State 1 120,000,000 40% Nonstate 14 46,270, % Foreign 0 0 0% Individuals 4, ,729, % Members of Board of Directors, Board of Management, 9 17,648, % and Board of Supervisors Other domestic individuals 4, ,081, % Total 4, ,000, % 20 Annual Report 2013

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25 BUSINESS PERFORMANCE REPORT 2013 Annual Report

26 BUSINESS PERFORMANCE HIGHLIGHTS Throughout the difficult year of 2013, PG Bank s top agenda was improving risk management, asset quality, and recovering nonperforming loans. We also remained committed to leveraging our core competencies to constantly developing new products and services to meet our growing customers' needs. Fuel Prepaid and Debit Cards are exclusively provided by PG Bank In 2013, PG Bank continued to be the market leader with regard to the number of prepaid card issued and domestic card transaction volume. We have issued a total of 614,029 Flexicards as of 31/12/2013 and processed 3,619 billion in terms of transaction volume, a 20.4% increase compared to that of In addition, the PG Bank Visa Credit Card was successfully introduced, attracting more than 4,500 customers in the introductory promotion period. Flexicard Tailoring for a wider range of customers Following the success of Flexicard, PG Bank launched the branded money transfer service Flexipay at 2,180 Petrolimex service stations nationwide. This unique service offers customers a lowcost, convenient and secure money transfer option, without having to open a bank account. This is especially helpful for those in the countryside and remote areas where financial services are limited. With the addition of Flexipay, PG Bank has taken a significant step towards the vision of catering for all of the different needs of retail customers, with the most comprehensive range of banking products and services on the market. Leading position in foreign exchange trading and commodity brokerage Despite being a boutique in terms of charter capital, PG Bank consistently holds a firm spot in the Vietnam Top 10 foreign exchange market players for both trading volume and performance. In 2013, FX trading volume amounted to almost USD 9 billion, leading to 18.5 billion in profits. Similarly, being one of the most active banks in commodity derivative brokerage, we had significant growth in the business with a total profit of 4.1 billion, more than double the amount of Nonperforming loan is back to a safe level at 2.98% Risk management is the top priority in ensuring the soundness of all activities, especially through enhancing the independence and efficiency of both the credit approval and credit administration processes. The restructure of the Risk Management Division with the establishment of the Valuation Department and the separation of the Credit Administration Department have certainly contributed to more effective risk management. In addition, bad debt recovery measures have been enforced, altogether sharply reducing the NPL ratio to 2.98%. This is a very encouraging result for PG Bank in 2013, which will be carried forward in the coming years. 24 Annual Report 2013

27 OPERATIONAL HIGHLIGHTS Unit: billion Total Assets Equity and Reserves Total Outstanding Loans Loans to Total Assets NonPerforming Loans (NPL) Total Mobilized Funds Operating Profit Profit before Tax Capital Adequacy Ratio (CAR) Number of Employees ,419 1,082 6, % 1.23% 9, % ,378 2,172 10, % 1.42% 13, % 1, ,582 2,591 12, % 2.06% 14,802 1, % 1, ,255 3,171 13, % 8.44% 15,858 1, % 1, ,876 3,210 13, % 2.98% 21, % 1,406 TOTAL ASSETS Unit: billion OPERATING PROFIT Unit: billion 24,876 1,170 1,159 16,378 17,582 19, , TOTAL MOBILIZED FUNDS Unit: billion TOTAL OUTSTANDING LOANS Unit: billion 13,995 14,802 15,858 21,437 10,886 12,112 13,787 13,867 9,092 6, Annual Report

28 FUND MOBILIZATION In 2013, the State Bank of Vietnam continued to lower interest rates, reducing the cap on deposits with maturities of shorter than 6 months at credit institutions from 8% per annum in the beginning of the year down to 7% per annum at the end of the year. Lower rates meant the banking system faced greater difficulties in attracting deposits. Against the backdrop of a challenging economic environment, PG Bank has TOTAL MOBILIZES FUNDS Unit: billion 13,978 10,766 11,044 12,432 6,946 7,458 2,146 3,229 3,758 3, From individuals and economic entities From SBV and other credit institutions actively adjusted the credit growth rate in accordance with fund mobilization to ensure a healthy and effective liquidity management. The bank has launched a number of promotion programs such as Smart Savings, Spring of Prosperity, and Summer Gifts to attract new customers and extend our appreciation to our loyal existing customers. In addition, PG Bank designed and offered more flexible and convenient savings products using new technologies to attract a wider range of customers. Following such strategies and efforts, the bank's funding balance continued to grow significantly in As of 31/12/2013, the total mobilized funds reached 21,437 billion, posting a substantial annual growth rate of 35.2%. Deposits from individuals and economic entities increased by 12.4% compared to that in 2012, adding up to 13,978 billion and accounting for over 65% of total mobilized funds. In terms of currency mix, denominated deposits amounted to 17,272 billion, accounting for 81%, while foreign currency deposits accounted for the remaining 19%, at 4,165 billion equivalent. 26 Annual Report 2013

29 FUND UTILIZATION CREDIT ACTIVITIES The year 2013 saw a number of positive signals for the economy with GDP growing at 5.4% per annum, an uptrend from the 5.25% rate of the previous year, while CPI set a record low in 10 years at 6%. Nonetheless, the economy is still far below potential growth, with aggregate demand and capital absorption capacity of the market remaining moderate, despite a continually lowering interest rate. In this context, PG Bank proactively implemented a prudential credit growth policy with CREDIT GROWTH Unit: billion 16, % 13,787 13, % 14,000 12, % 10, % 12, % 10, % 8,000 6,267 74% 80% 6,000 60% 4,000 40% 2,000 11% 14% 20% 1% 0 0% LOANS BY SECTORS 5% 14% 13% 4% Agriculture, forestry and fishery Mining Processing & Manuafacturing a strong focus on improving asset quality and refining credit rating criteria to ensure more efficient fund utilization and better risk management. 23% 6% MATURITY MIX 34% Construction Trade Logistics Others As of 31/12/2013, total outstanding loans reached 13,867 billion, up slightly from the figure in In particular, local currency denominated loans totalled 10,826 billion, accounting for 78% of the total loan portfolio. Maturity structure remained proficient with shortterm loans accounting for 67% of total loans. 17% 16% Sectors with the largest lending balances include processing and manufacturing, trading, agriculture, forestry and fishery. 67% Short term Long term Medium term Annual Report

30 FUND UTILIZATION TREASURY Despite an overall liquidity excess in the interbank market in 2013, PG Bank still achieved a successful year for the treasury business. We maintained a sizable balance throughout the financial year and exceeded our targets in terms of profits; while at the same time ensured robust liquidity management and capital adequacy ratios. As of 31/12/2013, deposits at and loans to other banks reached 6,451 billion, an increase of 170% compared to the balance at the end of Profits from the treasury amounted to billion, up by 16.5% compared to that of In particular, investment in government bonds (VGB) continued to be a major source of earnings for PG Bank. The 2013 ending balance of government bonds reached 1,784 billion, up by 458 billion or 34.6%, compared to With the right trading strategy, VGB investment activities generated remarkable profits of 23.3 billion, achieving 523% of the planned target, and an increase of 21% yearonyear. GOVERNMENT BONDS Unit: billion 2,000 1,500 1, Value Profit ,122 1,326 1, FOREX TRADING VOLUME Unit: USD billion COMMODITY DERIVATIVES FOREIGN EXCHANGE TRADING 2013 was a difficult year for foreign exchange trading due to a combination of low demand for foreign currencies, caused by slower import activities, and excess supply thanks to high levels of foreign reserves and steady inflows of foreign currencies. The foreign exchange market competition between banks intensified, forcing currency spreads to a multi year low level. For PG Bank, the total foreign currency trading volume in 2013 reached USD 8,960.7 million, generating a profit of 18.5 billion. Despite a lower than expected result, PG Bank still maintained a solid position in the Top 10 banks for foreign exchange trading volume and profitability in Vietnam. Commodity brokerage continued to be a highlighted business line for PG Bank, with encouraging results in Our customer base expanded significantly not only in terms of the number of growing customer accounts, but also in terms of a more diversified mix, with newly attracted accounts building on a stable group of loyal existing customers. To date, we had over 200 active customer accounts. Regarding service quality, PG Bank is committed to constantly improving customer experience by providing free advisory services and more effective monitoring tools for clients. In 2013, operating profits from this activity achieved a record high at 4.1 billion, more than double the amount of The total commodity contract value also increased by 216% yearonyear. In 2014, we will continue to expand our customer base to include individual and household businesses; and offer more commodities such as petroleum, rubber and many others. 28 Annual Report 2013

31 BANKING SERVICES CARD SERVICE In 2013, PG Bank issued a total of 44,200 prepaid cards, 17,000 debit cards, 1,400 dualfeature cards and 4,500 PG Bank Visa cards. PG Bank Flexicard continued to be the leading fuel card in Vietnam, being accepted in over 2,100 Petrolimex branded service stations. Furthermore, the proprietary fleet card, known as PG Bank Fcard, targeted at transpor tation and logistics companies, continued to attract new corporate customers. A total of 1,048 new cards were issued in 2013, raising the number of active Fcards to 1,864. To date, PG Bank has 4,117 POS and 76 ATMs across the country. Together with the growth in the number of cards issued, transaction volume also increased significantly. Total payment via Flexicard reached 3,617 billion in 2013, an in crease of 20% compared to the amount in With that, PG Bank stayed firmly at the No.1 position for domestic card payment. In early June 2013, PG Bank successfully launched the PG Bank Visa credit card, with a total of 4,500 cards issued. The number of purchases by PG Bank Visa credit cards reached 40,000, with a total transaction value of 92 billion. For a new credit card entering such a competitive market, this was an encouraging result for PG Bank. Annual Report

32 BANKING SERVICES MONEY TRANSFER SERVICE FLEXIPAY PG Bank has always been committed to offering innovative products and services using advanced technology. In May 2013, PG Bank proprietary Flexipay money transfer service was launched as a testimony of our relentless commitment to innovation for a better banking experience. Flexipay allows any customer, even in the countryside, highways and remote areas, to make fast, cost efficient and secure money transfers, via a nationwide network of 2,100 Petrolimex service stations and 80 PG Bank offices. Authentication requires double passwords with the latest security system to ensure customers' peace of mind. Most importantly, customers do not need to open a bank account; while also being able to take advantage of longer service hours at the service station. The service was responded positively by customers, especially parents of students and people working in industrial zones distant from their home cities. At the end of 2013, PG Bank successfully processed a total of 22,779 money transfer transactions, signifying a promising start of an innovative banking service in such a conventional, cashbased economy of Vietnam. REMITTANCE AND TRADE FINANCE In 2013, PG Bank successfully processed 271,587 banking transactions, up by 11% from The centralized payment system at Head Office continued to prove its effectiveness and efficiency. Straight through processing (STP) rate for incoming transactions was higher than 90%. Most outgoing payments were also automatically processed. With our STP technology, most transactions after cutoff time can be completed within the day. The successful implementation of bilateral and multilateral payment system between PG Bank, BIDV, and Vietinbank, significantly helped to increase total payment volume to above the 21,000 billion per annum mark. Not only was the payment volume increased, but quality was also greatly enhanced. A verification system between Head Office and branches, based on Reuters, was also developed and implemented in 2013, helping to reduce processing time and minimize errors for payment transactions. PG Bank also completed pilot testing, and most of the preparation steps, for the tax collection service system designed for the State Treasury. The service is expected to be launched in 2014, helping to significantly increase transaction volume for PG Bank. In trade finance, PG Bank issued over 250 L/Cs and 56 import bills for collection. Payment under export bills increased by 16% to reach over USD 10 million. L/C amount issued through other banks also doubled compared to This encouraging result was helped by the constant expansion of correspondent banking relationships. By the end of 2013, PG Bank had established correspondent relationships with more than 301 financial institutions in 54 countries around the world. We are also fully qualified for L/C advising to countries and territories that have trade relations with Vietnam. 30 Annual Report 2013

33 MANAGEMENT AND SUPPORT ACTIVITIES RISK MANAGEMENT As the year 2013 was anticipated to be full of challenges for the banking and financial system, risk management was at the heart of all key priorities of PG Bank. From the beginning of the year, all risk management processes and procedures were under review for changes and additions, in order to enhance the risk management effectiveness of the bank and closely follow new regulations of the State Bank of Vietnam and international standards. We also implemented a number of major organizational changes in the structure of the risk management system, including: transferring the Credit Administration Department from Risk Management Division to the Operations Division; the Loan Recovery Department was separated from the Risk Management Division and now reports directly to the Board of Management; and the establishment of a centralized Valuation Department. With these changes, PG Bank aims to enhance the independence of risk management and the effectiveness of the nonperforming loan recovery process. As a result, we successfully reduced the NPL ratio to 2.98% at the end of The new organizational chart of the Risk Management Division is shown below. The selfassessment procedure was successfully integrated into the operational risk management system, helping to significantly reduce the number of errors and damages caused in banking operations. The centralized valuation process also produced positive results in terms of more accurate and updated asset valuations, which in turn helped to prevent risks in asset quality assessment and management. In 2014, PG Bank plans to further review the credit appraisal, risk analytics, risk monitoring, and early detection systems to better improve the sustainability of our performance and development. Market Risk Management DIRECTOR Credit Risk Management Operational Risk Management Valuation Annual Report

34 MANAGEMENT AND SUPPORT ACTIVITIES HUMAN RESOURCE MANAGEMENT Human resource has always been a key factor for our development. Despite a challenging year from the business side, PG Bank continued to invest in our people through continuous training, teamwork and career development activities. As a result, PG Bank had a very successful year in creating a more productive corporate culture, a rewarding environment, and a professional, dedicated team. Recruitment Throughout 2013, PG Bank continued to recruit more people to meet expansion needs in certain areas. We successfully organized 3 centralized selection rounds, 939 facetoface interviews and specialized tests. As a result, 112 applicants accepted our offers, including 12 in management positions, to bring our total number of employees as at the end of 2013 to 1,406. The retention rate after probation was very high at 96%. Improving employee qualification is also a key concern of our human resource policy. To date, employees with higher education accounted for 87%, of which the number of people with postgraduate degrees increased by 19% from % 7% 8% 80% Training In 2013, PG Bank successfully organized 28 training courses, with 46 classes for 842 trainees, making a total of 478 training hours. The proportion of internal training courses accounted for more than 80%. All of the courses were highly evaluated. In November 2013, PG Bank was honored to receive the Corporate Lecturer of the Year 2013 award, for Mr. Nguyen Manh Hai Member of the Board of Directors and Head of Investment Banking. This is a prestigious award given to only thirty of the best corporate lecturers across the country, nominated by the Ho Chi Minh Communist Youth Union, the Vietnam Youth Association, and Thanh Giong Knowledge Gate together with the TOPICA organization. To date, we have completed career pathways and training requirements for over 125 different positions in the Bank. In addition, a number of quality improvement initiatives have been launched throughout the year including Improving quality of service at transaction offices for all tellers and supervisors; Online assessment for managers of transaction offices and Personal Finance Consultants in branches. We also introduced a number of job enrichment, job rotation, and cross training programs QUALIFICATION At 31/12/2013 Post graduate Bachelor Colleges and Vocational School Others across the Bank to provide more productive working results, and rewarding career development opportunities for all of our employees. With these new initiatives, PG Bank has further shown its commitment to relentlessly improve our service quality, with professionalism and expertise. Remuneration Despite the decline in profitability for the whole banking industry, PG Bank is always committed to maintaining competitive remuneration policies to ensure a sense of security and stability for our people. In addition, PG Bank employees also enjoyed privileged annual health checkups at professional medical centers, lunch and travel allowances, maternity support, and other employee benefits. Our remuneration and employee benefit policies play an important part in ensuring that our employees are always in the best condition to fully dedicate to the demanding jobs of serving our customers and the society. Trade union activities In 2013, PG Bank Trade Union organized many programs for our staff and their families, including the Reward for Talented Pupils, Gift Giving for the International Children's Day, and visiting families of fallen and wounded soldiers across the region. We also held competitions between employees to celebrate PG Bank's 20th anniversary, and other exciting activities including celebrations of the International Women's Day, Vietnamese Women's Day, Football League Championship in Northern Area, and Blood Donation Day. In addition, charitable events were also organized to support deprived pupils and people living in places impacted by natural disasters. These activities have been significant in building our corporate culture and promoting employee loyalty. 32 Annual Report 2013

35 MANAGEMENT AND SUPPORT ACTIVITIES INFORMATION TECHNOLOGY With our commitment to provide the highest quality products and services, PG Bank continued to invest in information infrastructure and technologies across all aspects of our operations. The objectives are to improve productivity, extend processing capabilities, and provide more effective and efficient tools for users. One of the most highlighted efforts in 2013 was the launching of our Disaster Recovery (DR) center, separated from our main operation center. A number of operations and The PCIDSS authentication and security system for cards, which helps protect our clients from the risk of stolen personal or card information while making payments anywhere in the world. Upgrade of the security management system to enhance security of the remote ATM machines and card system. Implementation of the Single Signon system for centralized and seamless authentication. Development and deployment of the technology infrastructure for the PG Bank Visa credit card system. services have been transferred to function independently, or shared between the two centers, to improve operational efficiency and optimize resource allocation and usage. In addition, PG Bank also successfully implemented a number of important IT projects in 2013 including: In the future, PG Bank will apply cloud computing and virtualization of the working environment to help reduce data processing, as well as transmission time and costs. Our strong investment in information technology capabilities not only improves productivity but also enhances our service quality. Annual Report

36 34 Annual Report 2013

37 FINANCIAL STATEMENTS Annual Report

38 GENERAL INFORMATION THE BANK Petrolimex Group Commercial Joint Stock Bank ( the Bank ), formerly known as Dong Thap Muoi Rural Joint Stock Bank, is incorporated and registered in the Socialist Republic of Vietnam. The Bank was established under Business Licence No. 0045/NHGP dated 13 November 1993 and issued by the State Bank of Vietnam with a registered operating duration of 20 years. According to Decision No.368/QDNHNN dated 08 February 2007 issued by the Governor of the State Bank of Vietnam, the Bank was renamed to Petrolimex Group Commercial Joint Stock Bank. The operating duration was increased to 99 years from 13 November 1993 in accordance with Decision No.3061/QDNHNN issued by Governor of the State Bank of Vietnam on 30 December The principal activities of the Bank are to provide banking services including mobilizing and receiving shortterm, mediumterm, and longterm deposits from organizations and individuals; provide shortterm, mediumterm, and longterm loans to organizations and individuals based on the nature and capability of the Bank s sources of capital; foreign exchange transactions, international trade financial services, discounting of commercial papers, bonds and other valuable papers, and providing other banking services as approved by the State Bank of Vietnam. The Bank s Head Office is located at MIPEC Tower 229 Tay Son, Dong Da District, Hanoi City. As at 31 December 2013, the Bank has one (01) Head Office, sixteen (16) branches, fifty four (54) transactions offices and nine (09) savings funds located in provinces and cities all over the country. BOARD OF DIRECTORS Members of the Board of Directors for the year ended 31 December 2013 and at the date of this report are as follows: Name Mr. Bui Ngoc Bao Mr. Dinh Thanh Nghiep Mr. Tran Long An Mr. Le Minh Quoc Mr. Tran Ngoc Nam Mr. Nguyen Quang Dinh Mr. Nguyen Manh Hai Mr. Vo Van Hiep Mr. Nguyen Hy To Van Mr.Nguyen Trong Hieu Position Chairman Member Member Member Member Member Member Member Member Member Date of appointment/resignation Appointed on 26 April 2011 Appointed on 26 April 2011 Appointed on 26 April 2011 Appointed on 26 April 2011 Appointed on 26 April 2011 Appointed on 26 April 2011 Appointed on 26 April 2011 Appointed on 26 April 2011 Appointed on 25 April 2013 Appointed on 12 April 2012 Resigned on 01 March Annual Report 2013

39 GENERAL INFORMATION (continued) BOARD OF SUPERVISION Members of the Board of Supervision for the year ended 31 December 2013 and at the date of this report are as follows: Name Mr. Nguyen Quoc Trung Mr. Nguyen Quang Nghi Ms. Thai Thi Lan Huong Position Head Member Member Date of appointment Appointed on 22 April 2010 Appointed on 22 April 2010 Appointed on 12 April 2012 BOARD OF MANAGEMENT Members of the Board of Management for the year ended 31 December 2013 and at the date of this report are as follows: Name Mr. Nguyen Quang Dinh Mr. Dinh Thanh Nghiep Mr. Nguyen Tien Dung Mr. Nguyen Thanh To Mr. Nguyen Hong Duc Mr. Nguyen Van Hao Position General Director Deputy General Director Deputy General Director Deputy General Director Deputy General Director Chief Financial Officer and Chief Accountant Date of appointment Appointed on 09 May 2006 Appointed on 01 September 2005 Appointed on 15 December 2009 Appointed on 01 September 2010 Appointed on 04 May 2011 Appointed on 01 August 2007 LEGAL REPRESENTATIVE Legal representative of the Bank for the year ended 31 December 2013 and at the date of this report is Mr. Nguyen Quang Dinh Position: General Director. AUDITOR Ernst & Young Vietnam Limited is the auditor of the Bank. Annual Report

40 REPORT OF MANAGEMENT The Board of Management of Petrolimex Group Commercial Joint Stock Bank ( the Bank ) is pleased to present its report and the financial statements of the Bank for the year ended 31 December MANAGEMENT S RESPONSIBILITY IN RESPECT OF THE FINANCIAL STATEMENTS The Board of Management is responsible for ensuring that the financial statements give a true and fair view of the state of affairs of the Bank and of its results and its cash flows for the fiscal year. In preparing those financial statements, the Board of Management is required to: select suitable accounting policies and then apply them consistently; make judgements and estimates reasonably and prudently; state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Bank will continue its business. The Board of Management is responsible for ensuring that proper accounting records are kept which disclose the Bank s financial position with reasonable accuracy at any time, and for ensuring that those accounting records comply with the registered accounting system. The Board of Management is also responsible for the safeguarding of the Bank s assets, hence for taking reasonable steps for the prevention and detection of frauds and other irregularities. The Board of Management confirmed that it has complied with the above requirements in preparing the accompanying financial statements for the year ended 31 December STATEMENTS OF MANAGEMENT The Board of Management does hereby state that, in its opinion, the accompanying financial statements give a true and fair view of the financial position of the Bank as at 31 December 2013, the results of its operation and its cash flows for the year then ended in accordance with Vietnamese Accounting Standards and Accounting System for Vietnamese Credit Institutions and the regulations stipulated by the State Bank of Vietnam relevant to preparation and presentation of financial statements. For and on behalf of the Board of Management: MR. NGUYEN QUANG DINH General Director Hanoi, Vietnam 14 March Annual Report 2013

41 INDEPENDENT AUDITORS REPORT Reference number: / To: The Shareholders of Petrolimex Group Commercial Joint Stock Bank We have audited the accompanying financial statements of Petrolimex Group Commercial Joint Stock Bank ( the Bank ) as prepared on 14 March 2014 and set out on pages 40 to 93 which comprise the balance sheet as at 31 December 2013, the income statement and the cash flow statement for the year then ended and the notes thereto. The financial statements of the Bank for the year ended 31 December 2012 were audited by another audit firm which expressed an unmodified opinion on these financial statements on 29 March MANAGEMENT S RESPONSIBILITY Management is responsible for the preparation and fair presentation of these financial statements in accordance with Vietnamese Accounting Standards and Accounting System for Vietnamese Credit Institutions and the regulations stipulated by the State Bank of Vietnam relevant to preparation and presentation of financial statements, and for such internal control as management determines is necessary to enable the preparation and presentation of financial statements that are free from material misstatement, whether due to fraud or error. AUDITOR S RESPONSIBILITY Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Vietnamese Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. OPINION In our opinion, the financial statements give a true and fair view, in all material respects, of the financial position of the Bank as at 31 December 2013, and of the results of its operations and its cash flows for the year then ended in accordance with Vietnamese Accounting Standards and Accounting System for Vietnamese Credit Institutions and the regulations stipulated by the State Bank of Vietnam relevant to the preparation and presentation of the financial statements. Ernst & Young Vietnam Limited Nguyen Thuy Duong Deputy General Director Audit Practising Registration Certificate No Hanoi, Vietnam 17 March 2014 Nguyen Chi Cuong Auditor Audit Practising Registration Certificate No Annual Report

42 BALANCE SHEET as at 31 December 2013 B02/TCTD ASSETS Cash, gold and gemstones Balances with the State Bank of Vietnam ( the SBV ) Due from banks Placements with other banks Loans to other banks Provision for loans to other banks Trading securities Trading securities Provision for impairment of trading securities Derivative financial instruments and other financial assets Loans to customers Loans to customers Provision for loans to customers Investment securities Availableforsale securities Heldtomaturity securities Provision for impairment of investment securities Longterm investments Investments in subsidiaries Investments in joint ventures Other longterm investments Provision for longterm investments Fixed assets Tangible fixed assets Cost Accumulated depreciation Intangible fixed assets Cost Accumulated amortization Other assets Receivables Interest and fee receivables Other assets Provision for impairment of other assets Notes /12/ ,879,461, ,541,228, ,571,631, ,571,631,117 1,659,847,206 13,679,633,005,980 13,866,695,714,973 (187,062,708,993) 2,912,205,349,637 2,214,660,869, ,484,651,734 (54,940,171,585) 48,764,222,035 55,542,295,556 (6,778,073,521) 208,191,833, ,257,737, ,607,800,091 (106,350,062,177) 27,934,095,094 64,018,219,495 (36,084,124,401) 811,300,103, ,141,688, ,868,988, ,289,426,169 31/12/ ,123,428, ,124,061,792 2,389,624,369, ,708,369,149 1,618,916,000,000 2,229,058,279 13,469,077,478,041 13,787,372,583,332 (318,295,105,291) 1,923,758,869,604 1,988,586,661,238 (64,827,791,634) 39,815,572,698 63,335,941,996 (23,520,369,298) 259,400,035, ,255,813, ,914,966,754 (108,659,153,068) 33,144,221,721 60,805,442,674 (27,661,220,953) 554,371,918, ,545,297, ,889,563, ,937,056,742 TOTAL ASSETS 24,875,746,682,309 19,255,524,791, Annual Report 2013

43 BALANCE SHEET (continued) as at 31 December 2013 B02/TCTD Notes 31/12/ /12/2012 LIABILITIES Borrowings from the Government and the SBV Due to banks Deposits from other banks Borrowings from other banks Due to customers Other borrowed funds Valuable papers issued Other liabilities Interest and fee payables Other payables Provision for offbalance sheet commitments ,458,358,959,879 7,109,647,759, ,711,200,000 13,861,207,789, ,270,700, ,273,516, ,307,252,713 53,215,569,841 8,750,694,217 3,426,575,908, ,908,496 3,425,952,000,000 12,332,420,759,303 98,775,653, ,926, ,896,728, ,707,659,002 43,886,322,518 18,302,746,883 TOTAL LIABILITIES 21,666,110,966,531 16,084,090,975,580 OWNERS EQUITY Capital and reserves Capital Charter capital Share premium Other capital Reserves Undistributed earnings ,000,000,000,000 3,000,000,000, ,290,904,947 38,344,810,831 3,000,000,000,000 3,000,000,000, ,493,127,278 34,940,688,690 TOTAL OWNERS EQUITY 3,209,635,715,778 3,171,433,815,968 TOTAL LIABILITIES AND OWNERS EQUITY 24,875,746,682,309 19,255,524,791,548 OFFBALANCE SHEET ITEMS Notes 31/12/ /12/2012 Contingent liabilities Credit guarantees Letters of credit Other guarantees Commitments Other commitments 30 1,443,904,168, ,887,813, ,016,354,391 4,115,645,853,804 4,115,645,853,804 1,602,893,579, ,982,457,626 1,018,911,121,914 2,910,726,693,561 2,910,726,693,561 Prepared by: Reviewed by: Approved by: Ms. Nguyen Thi Mai Ly Senior Accountant Hanoi, Vietnam 14 March 2014 Mr. Nguyen Van Hao Chief Financial Officer Mr. Nguyen Quang Dinh General Director Annual Report

44 INCOME STATEMENT for the year ended 31 December 2013 B03/TCTD Notes Reclassified Interest and similar income Interest and similar expenses Net interest and similar income Fees and commission income Fees and commission expenses Net fees and commission income Net gain from foreign currencies trading Net gain from investment securities Dividend income Income from other operating activities Expenses from other operating activities Net gain from other operating activities ,614,122,426,813 (1,071,975,648,290) 542,146,778,523 67,026,786,318 (27,545,876,667) 39,480,909,651 42,587,717,793 41,937,481,681 5,129,647,220 59,752,198,421 (22,663,283,990) 37,088,914,431 2,256,955,432,049 (1,276,234,123,905) 980,721,308,144 63,655,661,665 (35,769,434,838) 27,886,226,827 44,371,598,407 20,155,222,585 5,517,620,400 65,173,183,382 (29,176,615,203) 35,996,568,179 TOTAL OPERATING INCOME Payroll and other staff costs Depreciation and amortization charges Other general operating expenses ,371,449,299 (185,675,087,872) (46,471,600,145) (263,300,854,926) 1,114,648,544,542 (220,828,535,583) (50,072,201,584) (286,142,564,483) TOTAL OPERATING EXPENSES Profit before provision for credit losses Net provisions expenses for loans to customers Net reversal/(expenses) of provision for offbalancesheet commitments 27 (495,447,542,943) 212,923,906,356 (170,728,275,007) 9,552,052,666 (557,043,301,650) 557,605,242,892 (234,359,915,414) (4,277,629,533) PROFIT BEFORE TAX Current corporate income tax Corporate income tax expense ,747,684,015 (13,545,784,205) (13,545,784,205) 318,967,697,945 (78,983,024,364) (78,983,024,364) PROFIT AFTER TAX Earnings per share (/share) ,201,899, ,984,673, Prepared by: Reviewed by: Approved by: Ms. Nguyen Thi Mai Ly Senior Accountant Hanoi, Vietnam 14 March 2014 Mr. Nguyen Van Hao Chief Financial Officer Mr. Nguyen Quang Dinh General Director 42 Annual Report 2013

45 CASH FLOW STATEMENT for the year ended 31 December 2013 B04/TCTD Notes CASH FLOW FROM OPERATING ACTIVITIES Interest and similar income receipts Interest and similar expense payments Fees and commission income receipts Net gain from securities, gold and foreign currencies trading Other operating income Recovery from bad debts previously writtenoff Payments to employees and suppliers Payments of corporate income tax in the year Net cash flow from operating profit before changes in operating assets and working capital Changes in operating assets (Increase)/decrease in due from banks (Increase)/decrease in securities trading (Increase)/decrease in derivative financial instruments and other financial assets (Increase)/decrease in loans to customers (Increase)/decrease in provision for loan losses and provision for impairment of investment securities & longterm investments Other (increases)/decreases in operating assets Changes in operating liabilities Increase/(decrease) in borrowings from the Government and the SBV Increase/(decrease) in due to other banks Increase/(decrease) in due to customers (including State Treasury) Increase/(decrease) in valuable papers issued (except for longterm valuable papers issued disclosed in financing activities) Increase/(decrease) in debts issued and other borrowed funds Increase/(decrease) in other liabilities Utilization of reserves Net cash flows from/(used in) operating activities 19 1,507,143,001,874 (1,068,376,054,576) 39,480,909,651 84,525,199,474 23,947,820,430 13,141,094,001 (351,473,942,081) (4,109,177,296) 244,278,851, ,462,632,595 1,652,916,000,000 (978,558,859,984) 569,211,073 (79,323,131,642) (301,960,671,305) (100,179,915,547) 5,425,292,849,011 4,031,783,051,383 1,528,787,030,078 (421,926,378) 18,495,047,500 (132,181,589,689) (21,168,763,883) 5,863,034,333,083 2,278,082,634,827 (1,233,109,014,468) 27,886,226,827 78,815,725,252 65,792,873,546 (412,088,175,369) (131,550,717,084) 673,829,553,531 (2,680,248,224,304) (1,652,916,000,000) 97,230,509,661 (2,109,343,221) (1,675,335,340,339) 552,881,949, ,767,816,796 (400,000,000,000) 69,004,812,967 1,407,241,713,182 (1,555,475,237) (18,307,997,000) (410,777,860,124) (26,837,376,992) (1,387,650,853,977) Annual Report

46 CASH FLOW STATEMENT (continued) for the year ended 31 December 2013 B04/TCTD CASH FLOW FROM INVESTING ACTIVITIES Purchase of fixed assets Proceeds from disposal of fixed assets Cash outflows from sales, disposal of fixed assets Equity investments in joint ventures, associates and other investments Cash inflows from joint ventures, associates and other investments Dividend receipts from longterm investments Net cash flows used in investing activities Notes 2013 (15,598,764,231) 21,743,636 (61,484,480) 7,793,646,440 5,129,647,220 (2,715,211,415) 2012 (63,085,529,763) 1,309,968,181 (2,098,929,487) 22,323,347,541 5,517,620,400 (36,033,523,128) CASH FLOW FROM FINANCING ACTIVITIES Increase in charter capital and share premium Dividends paid to shareholders Net cash flows (used in)/ from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year 31 (282,659,546) (282,659,546) 5,860,036,462,122 1,353,955,859,232 7,213,992,321,354 1,000,000,000,000 (603,048,874,624) 396,951,125,376 (1,026,733,251,729) 2,380,689,110,961 1,353,955,859,232 Prepared by: Reviewed by: Approved by: Ms. Nguyen Thi Mai Ly Senior Accountant Hanoi, Vietnam 14 March 2014 Mr. Nguyen Van Hao Chief Financial Officer Mr. Nguyen Quang Dinh General Director 44 Annual Report 2013

47 NOTES TO THE FINANCIAL STATEMENTS as at 31 December 2013 and for the year then ended B05/TCTD 1 CORPORATE INFORMATION Petrolimex Group Commercial Joint Stock Bank ( The Bank ), formerly known as Dong Thap Muoi Rural Joint Stock Bank, is incorporated and registered in the Socialist Republic of Vietnam. Establishment and Operations The Bank was established under Business Licence No. 0045/NHGP dated 13 November 1993 and issued by the State Bank of Vietnam with a registered operating duration of 20 years. According to Decision No.368/QDNHNN dated 08 February 2007 issued by the Governor of the State Bank of Vietnam, the Bank was renamed to Petrolimex Group Commercial Joint Stock Bank. The operating duration was increased to 99 years from 13 November 1993 in accordance with Decision No.3061/QDNHNN issued by Governor of the State Bank of Vietnam on 30 December The principal activities of the Bank are to provide banking services including mobilizing and receiving shortterm, mediumterm, and longterm deposits from organizations and individuals; provide shortterm, mediumterm, and longterm loans to organizations and individuals based on the nature and capability of the Bank s sources of capital; foreign exchange transactions, international trade financial services, discounting of commercial papers, bonds and other valuable papers, and providing other banking services as approved by the State Bank of Vietnam. Charter capital The initial charter capital of the Bank on establishment in 1993 was 700,000,000 and has increased periodically at the discretion of the General Meeting of the Shareholders. The actual charter capital as at 31 December 2013 is 3,000,000,000,000 (as at 31 December 2012: 3,000,000,000,000). Operational network The Bank s Head Office is located at MIPEC Tower 229 Tay Son, Dong Da District, Hanoi. As at 31 December 2013, the Bank has one (01) Head Office, sixteen (16) branches, fifty four (54) transactions offices and nine (09) savings funds located in provinces and cities all over the country. Employees The total number of employees of the Bank as at 31 December 2013 was 1,406 people (as at 31 December 2012: 1,441 people) ACCOUNTING PERIOD AND ACCOUNTING CURRENCY Fiscal year The Bank s fiscal year starts on 01 January and ends on 31 December. 2.2 Accounting currency The Bank maintains its accounting records in Vietnamese Dong (). Annual Report

48 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD 3 APPLIED ACCOUNTING STANDARDS AND REGIMES 3.1 Statement of compliance with Vietnamese Accounting Standards and Accounting System for Vietnamese Credit Institutions The Board of Management states that the accompanying financial statements for the year ended 31 December 2013 have been prepared in accordance with Vietnamese Accounting Standards and Accounting System for Vietnamese Credit Institutions. 3.2 Applied accounting standards and regimes The financial statements of the Bank, which are expressed in Vietnamese Dong ( ), are prepared in accordance with the Vietnamese Accounting Standards and Accounting System for Vietnamese Credit Institutions under Decision No. 479/QDNHNN issued on 29 April 2004 by the Governor of State Bank of Vietnam which was enacted from 01 January 2005 and other regulations amending and supplementing to Decision No. 479/QDNHNN, Decision No.16/2007/QDNHNN issued on 18 April 2007 by the Governor of The State Bank of Vietnam; and the Vietnamese Accounting Standards issued by the Ministry of Finance, including: Decision No.149/2001/QDBTC dated 31 December 2001 on the Issuance and Promulgation of Four Vietnamese Standards on Accounting (Series 1); Decision No.165/2002/QDBTC dated 31 December 2002 on the Issuance and Promulgation of Six Vietnamese Standards on Accounting (Series 2); Decision No.234/2003/QDBTC dated 30 December 2003 on the Issuance and Promulgation of Six Vietnamese Standards on Accounting (Series 3); Decision No.12/2005/QDBTC dated 15 February 2005 on the Issuance and Promulgation of Six Vietnamese Standards on Accounting (Series 4); and Decision No.100/2005/QDBTC dated 28 December 2005 on the Issuance and Promulgation of Four Vietnamese Standards on Accounting (Series 5). The accompanying financial statements have been prepared using accounting principles, procedures and reporting practices generally accepted in Vietnam. Accordingly, the balance sheet, the income statement, the cash flow statement and the note thereto and their utilization are not designed for those who are not informed about the Vietnam s accounting principles, procedures and practices and furthermore are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries other than Vietnam. 3.3 Basis of preparation and uses of estimates The preparation of the financial statements requires the Board of Management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities. These estimates and assumptions also affect the income and expenses and the resultant provisions. Such estimates are necessarily based on assumptions involving varying degrees of subjectivity and uncertainty and actual results may differ resulting in future changes in such provision. Going concern The Bank s Board of Management assessed the Bank s ability to continue as a going concern and found that the Bank has sufficient resources to continue its operation in the certain future. Furthermore, the Board of Management didnot notice any material uncertainty which can affect the Bank s ability to continue as a going concern. Therefore, these financial statements are prepared on the going concern basis. 46 Annual Report 2013

49 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD 3 APPLIED ACCOUNTING STANDARDS AND REGIMES (continued) 3.4 Changes in accounting policies The accounting policies were adopted by the Bank in preparation of the financial statements are consistent with those used in the financial year ended 31 December 2012, except for the following changes: (i) On 25 April 2013, the Ministry of Finance issued Circular No.45/2013/TTBTC ( Circular 45 ) providing the guideline for the management, use and calculation of depreciation/amortization of tangible fixed assets and intangible assets. Circular 45 is effective from 10 June According to Circular 45, fixed assets must satisfy all the following criteria: Future economic benefit from the use of such assets is certainly obtained; The useful life is more than one year; and The original cost of the fixed assets should be determined reliably and their value is equal or more than 30 million. As such, for the fixed assets that the Bank had managed and depreciated in accordance with Circular No. 203/2009/TTBTC as at 10 June 2013, the net book value of all fixed assets which do not satisfy all the above criteria was transferred to prepaid expenses and amortized within 3 years. (ii) On 9 January 2013, the Ministry of Finance issued Circular No. 05/2013/TTBTC ( Circular 05 ) providing the guideline of financial regime for credit institutions and foreign bank branches. Circular 05 is effective from 25 February 2013 and applicable for the financial year 2013 onwards. In accordance with this Circular, if an accrued income that has been recognized into profit and loss during the accounting period becomes uncollectible on due date, the accrued income on balance sheet will be reverted, corresponding with a decrease in income if the due date falls in the same accounting periods or an increase in expense if the due date falls in a different accounting period. The accrued income will be monitored offbalance sheet and will be recognized into profit and loss upon actual receipt. (iii) According to Decree 53/2013/NDCP effective on 9 July 2013 on Establishment, organization and operation of the Vietnam Assets Management Company (VAMC), Circular 19/2013/TTNHNN providing Regulation of the purchase, sale and handling of bad debts by Vietnam Asset Management and Letter 8499/NHNNTCKT providing guidance on accounting for bad debts sales and purchases between VAMC and credit institutions, the Bank has sold bad debts to VAMC through two methods either selling based on the book value or the market price. Under the book value method, the selling price is determined by outstanding balance of a bad debt minus its unused specific provision and will be received in form of a special bond issued by VAMC. Upon completion of debt selling procedures, the Bank will write off both the outstanding principal and provision of the sold debt and recognise the face value of the VAMC special bond, which equals to the outstanding balance of the debt less it unused specific provision. When receiving bad debts back from VAMC, the Bank will use the provision which has been made annually for the VAMC special bonds to write off such bad debts. Difference between the provision made for the VAMC bonds and the uncollected outstanding balance of debts/ bonds will be recognised as "Other income" in the income statement. Annual Report

50 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD SIGNIFICANT ACCOUNTING POLICIES Cash and cash equivalents Cash and cash equivalents as referred to cash, current accounts at the SBV, demand deposits and placements with other credit institutions with an original maturity of three months or less from the deposit date. 4.2 Loans to customers Loans to customers are stated at the principal amounts outstanding at the date of financial statements. 4.3 Provision for credit losses Loan classification In accordance with the Law on Credit Institutions No.47/2010/QH12 effective from 01 January 2011, Decision No. 1627/2001/QDNHNN dated 31 December 2001 by the Governor of the State Bank of Vietnam on the issuance of lending regulations for Credit institutions, Decision No. 127/2005/QDNHNN dated 03 February 2005 amending and supplementing to a number of lending regulations under Decision No. 1627/2001/QDNHNN, Decision No. 493/2005/QDNHNN dated 22 April 2005 and Decision No. 18/2007/QDNHNN issued by State Bank of Vietnam on loan classification and appropriation, setting up and use of reserves for handling credit risks, the Bank is required to classify loans and create provisions for credit losses. Accordingly, loans are graded using the following risk classifications: Current, Special Mention, Substandard, Doubtful and Loss based on the payment arrears status and other qualitative factors. Loans classified as Substandard, Doubtful and Loss are defined as nonperfoming loans. In accordance with Decision No. 493/2005/QDNHNN, loan classification is to be made at the end of each quarter for the first three quarters and on 30 November for the last quarter each year. On 23 April 2012, the State Bank of Vietnam issued Decision No. 780/QDNHNN on Loans classification for rescheduled and restructured loans. Accordingly, rescheduled or restructured loans, with assessment of the credit institution as high probability of becoming better and being capable of making regular debts payment after being rescheduled or restructured, are remained at the same group as they were before being rescheduled or restructured. In addition, the Bank classified its loans according to the guiding documents issued by the State Bank of Vietnam on loan classification and provision. In 2013, the Inspection Department of the State Bank of Vietnam has performed the comprehensive inspection on the Bank s operations and issued the Inspection Conclusion No. 437/KL.HANTTGS3 dated 30 October Under this conclusion and the Official Letter No. 2399/HANTTGS5 dated 16 December 2013 on the implementation of the Inspection decision, the Bank was allowed to implement the loan classification and provision as per the inspection result to the extent of 31 March Accordingly, the accompanying financial statements were not included adjustments as per the conclusion of Supervision Inspection as the Bank will implement these adjustments in Annual Report 2013

51 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD SIGNIFICANT ACCOUNTING POLICIES (continued) Provision for credit losses (continued) Specific provision Specific provision is created on the net credit exposure for each individual borrower using the prescribed provision rates as follows: Group General provision Category Current Special Mention Substandard Doubtful Loss Provision rate 0% 5% 20% 50% 100% In accordance with Decision No. 493/2005/QDNHNN, general provision is made for credit losses which are yet to be identified during the loan classification and specific provision making process as well as in case of the Bank s potential financial difficulty due to deterioration in loan quality. Accordingly, the Bank is required to fully create and maintain a general provision at 0.75% of total of loans, guarantees, acceptable settlements and unconditional irrevocable loan commitments with specific period that are classified in groups 1 to 4. Resolution of bad debts The provision are recorded in the income statement as an expense that will be used to write off bad debts. According to Decision No. 493/2005/QDNHNN, the Bank sets up Risk Settlement Committee in order to write off loans if they are classified under Group 5 or if the borrowers have been liquidated or bankrupted, or if individual borrowers are dead or missing. 4.4 Sales of loans to Vietnam Asset Management Company (VAMC) The Bank sold loans to VAMC based on the book value under the Decision No. 53/2013/NDCP which is effective from 9 July 2013 on Establishment, organization and operation of Vietnam Assets Management Company, the Circular 19/2013/TTNHNN providing Regulations of purchase, sale and handling bad debts of Vietnam Assets Management Company and Letter 8499/NHNNTCKT providing guidance on accounting for bad debts sales and purchases between VAMC and credit institutions. Under the book value method, the selling price is determined by outstanding balance of a bad debt minus its unused specific provision and will be received in form of a special bond issued by VAMC. Upon completion of debt selling procedures, the Bank will write off both the outstanding principal and provision of the sold debt and recognise the face value of the VAMC special bond, which equals to the outstanding balance of the debt less it unused specific provision. When receiving bad debts back from VAMC, the Bank will use the provision which has been made annually for the VAMC special bonds to write off such bad debts. Difference between the provision made for the VAMC bonds and the uncollected outstanding balance of debts/bonds will be recognised as "Other income" in the income statement. Annual Report

52 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD SIGNIFICANT ACCOUNTING POLICIES (continued) Investment securities Availableforsale securities Availableforsale investment securities include debt and equity securities that the Bank holds for investment purpose and that are ready for sale. These securities are not frequently traded but could be sold at any time once they are profitable, and the Bank is neither founding shareholder/strategic partner nor capable of controlling, to some extent, the process of initiating and approving financial and operational policies of the investee by aagreement on delegating personnel to take part in the Board of Directors/Board of Management. Equity availableforsale securities are initially recognized at cost and subsequently carried at cost. Debt availableforsale securities are initially recognized at par value as at the transaction date, accumulative interest income before the purchasing date (for debt securities with interest payment in arrears) or interest income received upfront (for debt securities with interest payment in advance) are recorded in a separate account. Any discount or surplus which is the difference between par value and the amount equal to par value plus (+) accumulative interest income before purchasing date (if any) or minus () interest income received upfront waiting for amortization (if any) is also recorded in a separate account.in subsequent periods, debt availableforsale securities are recognized at par value, any discount or surplus (if any) is amortized to the separate income statements using straightline method over the estimated remaining term of securities. Interest payment in arrears is recorded as follows: accumulative interest income before purchasing date is recorded as a decreased value of such securities and the same amount is credited into accrued interest; accumulative interest income after purchasing date is recognized as the Bank s income, based on accumulated method. Interest is accrued and recognized in to income statement using straightline method. Periodically, availableforsale securities are subject to impairment review. Provision for diminution is made when carrying value of the securities is higher than their market valuedetermined in accordance with Circular No. 228/2009/TTBTC. If the market value of securities is undeterminable, there is no provision created. The provision for impairment of availableforsale securities is recorded in the income statement as Net gain/(loss) from securities investment Special bonds issued by VAMC Special bonds issued by VAMC are fixed term valuable paper used to buy bad debts of the Bank. The special bonds are initially recognised at face value and subsequently carried at face value during the holding period. Face value of the bonds equal to the outstanding balance of the sold debt less their unused specific provision. During holding period, the Bank annually calculates and makes specific provision at the rate of within 20% of the face value of the special bonds. The specific provision of special bonds is recorded to the income statement as Operating expenses, and the Bank does not have to make general provision for these special bonds. The special bonds issued by VAMC presented in the balance sheet are bonds received corresponding to the sold debts to VAMC in 2 series with the total value of bonds amounted to 752,484,651,734. The Bank intends to make provision for these bonds in Annual Report 2013

53 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD SIGNIFICANT ACCOUNTING POLICIES (continued) Depreciation and amortization Depreciation and amortization of tangible fixed assets and intangible assets are calculated on a straightline basis over the estimated useful lives of the assets, which are as follows: Buildings and improvements Machines and equipments Motor vehicles Office equipment Other tangible fixed assets Land use rights (*) Computer software Other intangible fixed assets 550 years 57 years 810 years 45 years 45 years over the term 45 years 4 years (*): Land use rights are not amortized if they are granted by the Government of Vietnam with indefinite term. The cost of land use rights with a definite term is amortized over the lease term or the use term Receivables Receivables other than loans to customers of the Bank are initially stated at cost and always carried at cost subsequently. Overdue receivables are subject to impairment provision which is made based on the overdue status or expected loss for the following cases: institutional debtors which have fallen in bankruptcy or have been in the process of dissolution; missing, escaped, prosecuted, dead individual debtors. Provision expense incurred is recorded as general Operating expenses in the income statement during the year. For overdue receivables, the Bank has made the provision for doubtful debts in accordance with Circular No 228/2009/TTBT. Accordingly, the provision rates are applied as follows: Overdue receivables aging From above six (06) months to less than one (01) year From one (01) year to less than two (02) years From two (02) years to less than three (03) years From three (03) years Specific provision rate 30% 50% 70% 100% 4.11 Recognition of income and expense Interest income and expense are recognized in the income statement on an accrual basis. The recognition of interest income from loans to customers is suspended when a loan is classified either from groups 2 to 5 according to Decision No. 493/2005/QDNHNN and Decision No. 18/2007/QDNHNN. Suspended interest income is recorded in offbalance sheet and only recognized in the income statement when the Bank actually received. Fees and commissions are recognized when the services are completed. Dividend received in cash from investment activities is recognized as income when the Bank s entitlement as an investor to receive the dividend is established. Dividend received in shares is not recognized as income of the Bank, but only the number of shares is updated. 52 Annual Report 2013

54 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD SIGNIFICANT ACCOUNTING POLICIES (continued) Depreciation and amortization Depreciation and amortization of tangible fixed assets and intangible assets are calculated on a straightline basis over the estimated useful lives of the assets, which are as follows: Buildings and improvements Machines and equipments Motor vehicles Office equipment Other tangible fixed assets Land use rights (*) Computer software Other intangible fixed assets 550 years 57 years 810 years 45 years 45 years over the term 45 years 4 years (*): Land use rights are not amortized if they are granted by the Government of Vietnam with indefinite term. The cost of land use rights with a definite term is amortized over the lease term or the use term Receivables Receivables other than loans to customers of the Bank are initially stated at cost and always carried at cost subsequently. Overdue receivables are subject to impairment provision which is made based on the overdue status or expected loss for the following cases: institutional debtors which have fallen in bankruptcy or have been in the process of dissolution; missing, escaped, prosecuted, dead individual debtors. Provision expense incurred is recorded as general Operating expenses in the income statement during the year. For overdue receivables, the Bank has made the provision for doubtful debts in accordance with Circular No 228/2009/TTBT. Accordingly, the provision rates are applied as follows: Overdue receivables aging From above six (06) months to less than one (01) year From one (01) year to less than two (02) years From two (02) years to less than three (03) years From three (03) years Specific provision rate 30% 50% 70% 100% 4.11 Recognition of income and expense Interest income and expense are recognized in the income statement on an accrual basis. The recognition of interest income from loans to customers is suspended when a loan is classified either from groups 2 to 5 according to Decision No. 493/2005/QDNHNN and Decision No. 18/2007/QDNHNN. Suspended interest income is recorded in offbalance sheet and only recognized in the income statement when the Bank actually received. Fees and commissions are recognized when the services are completed. Dividend received in cash from investment activities is recognized as income when the Bank s entitlement as an investor to receive the dividend is established. Dividend received in shares is not recognized as income of the Bank, but only the number of shares is updated. 52 Annual Report 2013

55 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD SIGNIFICANT ACCOUNTING POLICIES (continued) Foreign currency transactions The Bank maintains its accounting system and records all transactions in original currencies. Monetary assets and liabilities denominated in foreign currencies are translated into using average interbank rates at the balance sheet date (see list of exchange rates of applicable foreign currencies against as at 31 December 2013 in Note 38). Income and expenses arising in foreign currencies during the year are converted into at rates ruling on the transaction dates. Foreign exchange differences arising from the translation of monetary assets and liabilities are recognized and recorded in the Foreign exchange differences under Owners equity in balance sheet and only posted to the income statement at the end of the financial year according to the Decision No. 479/2004/QDNHNN dated 29 April 2004 issued by the Governance of State Bank of Vietnam on the chart of accounts for credit institutions Corporate income taxes Current tax Current tax assets and liabilities for the current and prior year are measured at the amount expected to be paid to (or recovered from) the taxation authorities as stipulated in Corporate Income Tax Law and promulgated implementation circulars. Current corporate income tax is charged or credited into income statement, except when it relates to items recognized directly to equity, in which case the current tax is also dealt in the equity account. Current tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and the Bank intends to settle its current tax assets and liabilities on a net basis. The Bank s tax reports are subject to examination by the tax authorities. Because the applicability of tax laws and regulations too many types of transactions and susceptible to various interpretation, amounts reported in the financial statements could be changed at a later date upon final determination by the tax authorities. Deferred tax Deferred tax is provided on temporary differences between the tax base of assets and liabilities and their carrying amount for financial reporting purpose at the reporting date. Deferred tax liabilities are recognized for all taxable temporary differences, except: Where the deferred tax liability arises from the initial recognition of an asset or liability in a transaction which at the time of the transaction affects neither the accounting profit nor taxable profit or loss. Deferred corporate income tax assets are levied on deductable temporary differences, deductable amounts carried over to subsequent year of taxable losses, and unutilized tax advantages when it is likely that the corporate makes earnings in foreseeable future to use deductable temporary differences, taxable losses and tax advantages, except: Where the deferred tax asset arises from the initial recognition of an asset or liability in a transaction which at the time of the transaction affects neither the accounting profit nor taxable profit or loss. Annual Report

56 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD SIGNIFICANT ACCOUNTING POLICIES (continued) Corporate income taxes (continued) Deferred tax (continued) The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Unrecognized deferred income tax assets are reassessed at each balance sheet date and are recognized to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset realized or the liability is settled based on tax rates and tax laws that have been enacted at the balance sheet date. Deferred tax is charged or credited to the income statement, except when it relates to items recognized directly to equity, in which case the deferred tax is also dealt in the equity account. Deferred tax assets and liabilities are offset when there is a legally enforceable right to net off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxable entity and the same taxation authority and the Bank intends to settle its current tax assets and liabilities on a net basis Provision for offbalancesheet commitments According to the Decision No.493/2005/QDNHNN and Decision No.18/2007/QDNHNN, credit institutions must classify and make provision for guarantees, payment acceptances, and noncancelable loan commitments with specific effective date (generally called offbalance sheet commitments) into groups: Current, Special Mention, Substandard, Doubtful and Loss based on the overdue status. Specific and general provision for offbalancesheet commitments is calculated similarly to that for loans to customers as prescribed in Note 4.3. Provision expense is charged into Provision for offbalance sheet commitments in the income statement and provision balance is recorded in the balance sheet as Other liabilities Fiduciary assets Assets held in a fiduciary capacity are not reported in the financial statements as they are not assets of the Bank. 54 Annual Report 2013

57 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD SIGNIFICANT ACCOUNTING POLICIES (continued) Currency derivatives Currency forwards and swaps For currency forwards and swaps, the difference between value in Vietnam Dong of the foreign currencies committed to buy/sell translated at the forward rate and at the spot rate at the effective contract date is initially recognized as an asset Derivatives and other financial assets if the difference is positive and as a liability Derivatives and other financial liabilities if the difference is negative. This difference is subsequently amortized on a straightline basis to Net gain/(loss) from foreign currencies trading over the contract period. Foreign exchange differences arising from the translation of monetary assets and liabilities are recognized to Foreign currency translation reserve in the balance sheet and shall be recognized to the income statement at the end of the fiscal year in accordance with Decision No. 479/2004/QDNHNN dated 29 April 2004 issued by the State Bank of Vietnam. Futures contract The Bank acts as a broker for its customers in entering into the futures commodity contracts, therefore, value of these contracts are not recognized on the balance sheet. Fee from these brokerage services are recognized in Income from other operating activities in the income statement Offsetting Financial assets and liabilities are offset and the net amount reported in the balance sheet if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the asset and settle the liability simultaneously Employee benefits Post employment benefits Post employment benefits are paid to retired employees of the Bank by the Social Insurance Agency which belongs to the Ministry of Labour and Social Affairs. The Bank is required to contribute to the Social Insurance Agency at the rate of 17% of an employee s basic salary on a monthly basis. Besides, the Bank has no further obligation Voluntary resignation benefits Voluntary resignation benefits: The Bank has the obligation, under Section 42 of the Vietnam Labor Code amended on 01 May 2013, to pay allowance that is equivalent to onehalf month s salary for each year of employment plus salary allowances for voluntary resignation of employees (if any) until 31 December From 01 January 2009, the average monthly salary which is used to calculate the voluntary resignation benefits would be based on the average monthly salary of the last six consecutive months. The Bank has made payment for resignation benefits of employees in accordance with regulations of Labour Code and the level of paying resignation benefits in the recent years Unemployment allowance Under Circular No.04/2009/TTBLDTBXH providing guidance on implementation of the Decree No.127/2008/NDCP, which was effective since 01 January 2009, the Bank has the obligation to contribute to the Unemployment Insurance Fund at the amount equal to 1.00% of its insured employees salaries and remunerations and withhold the same amount from the insured employees salaries and remunerations to contribute to the Unemployment Insurance Fund. Annual Report

58 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD 5 CASH, GOLD AND GEMSTONES Cash on hand in Cash on hand in foreign currencies 31/12/ ,819,394,300 45,060,067, ,879,461,894 31/12/ ,013,139,933 62,110,288, ,123,428,291 6 BALANCES WITH THE STATE BANK OF VIETNAM ( THE SBV ) Demand deposits in Demand deposits in foreign currency 31/12/ ,707,758, ,833,469, ,541,228,343 31/12/ ,050,332,302 77,073,729, ,124,061,792 Balances with the State Bank of Vietnam comprise current account and compulsory reserve. During 2013, compulsory reserve in and current deposits in foreign currencies earninterest rate at 1.20% and 0.05% per annum respectively (1.20% and 0.05% per annum in the previous year). Under the regulations of the SBV, the Bank is required to maintain certain cash reserve with the SBV in the form of compulsory reserve, are computed at 3.00% and 8.00% (2012: 3.00% and 8.00%) for customer deposits denominated in and foreign currencies having maturity less than 12 months; and 1.00% and 6.00% (2012: 1.00% and 6.00%) having maturity over 12 months. Accordingly, the total actual average compulsory reserve (in both and foreign currencies) in December 2013 was 413,721,664,000. In 2013, the Bank maintained its compulsory reserve in compliance with the compulsory reserve requirement of the SBV. 7 DUE FROM BANKS Placements with other banks In which: Current accounts with other banks In In foreign currency, gold Term deposits with other banks In In foreign currency, gold Loans to other banks In In foreign currency, gold Provision for loans to other banks 31/12/2013 6,450,571,631, ,923,631,117 28,109,525, ,814,105,998 5,738,648,000,000 5,360,000,000, ,648,000,000 6,450,571,631,117 31/12/ ,708,369, ,708,369, ,362,775, ,345,594,109 34,000,000,000 34,000,000,000 1,618,916,000, ,000,000, ,916,000,000 2,389,624,369, Annual Report 2013

59 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD 7 DUE FROM BANKS (continued) Interest rates of placements with other banks at year end were as follows: Term deposits with other banks in Term deposits with other banks in foreign currencies 31/12/2013 interest rate % per annum 3.80% 5.90% 1.60% 31/12/2012 interest rate % per annum 3.00% 12.00% 1.90% 8 DERIVATIVES FINANCIAL INSTRUMENTS AND OTHER FINANCIAL ASETS Total contractual value (as at exchange rate of the effective date) TOTAL BOOK VALUE (as at exchange rate of balance sheet date) Liabilities Assets As at 31 December 2013 Monetary derivatives instruments Forward contracts Swap contracts As at 31 December 2012 Monetary derivatives instruments Forward contracts Swap contracts 1,659,847,206 1,659,847, ,318 1,659,189,888 2,229,058,279 2,229,058,279 2,229,058,279 1,659,847,206 1,659,847, ,318 1,659,189,888 2,229,058,279 2,229,058,279 2,229,058,279 9 LOANS TO CUSTOMERS 31/12/ /12/2012 Loans to local business entities and individuals Discounted valuable papers Loans financed by funds received from other institutions 13,752,636,400,787 3,525,463, ,533,850,557 13,866,695,714,973 13,684,235,841,339 3,041,609, ,095,132,095 13,787,372,583,332 Interest rates of loans to customers at year end are as follows: Commercial loans in Commercial loans in foreign currencies 2013 interest rate %per annum 11.50% 14.50% 5.50% 8.50% 2012 interest rate %per annum 10.00% 16.00% 6.50% 9.00% Annual Report

60 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD LOANS TO CUSTOMERS (continued) Analysis of loan portfolio by quality Current Special mention Substandard Doubtful Loss 31/12/ ,678,993,996,525 1,774,421,234,735 64,027,209, ,933,850, ,319,423,771 13,866,695,714,973 31/12/ ,967,602,865,795 1,656,494,899, ,519,712, ,923,185, ,831,920,415 13,787,372,583,332 As at 31 December 2013, outstanding loans which maintained the same group prior to restructuring as per Decision No. 780/QDNHNN are as follow: 31/12/2013 Current Special mention Substandard Doubtful 2,582,355,549,178 1,579,316,944,379 37,435,499,138 29,442,196,548 4,228,550,189, Analysis of loan portfolio by original term Shortterm loans Mediumterm loans Longterm loans 31/12/2013 9,288,786,027,453 2,349,649,892,880 2,228,259,794,640 13,866,695,714,973 31/12/2012 9,440,564,135,262 2,840,545,416,309 1,506,263,031,761 13,787,372,583, Annual Report 2013

61 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD LOANS TO CUSTOMERS (continued) Analysis of loans by ownership and type of customers Analysis of loans to customers by ownership and types of customers at 31 December are as follows: 31/12/ /12/2012 % % Wholly stateowned onemember limited liability enterprises Over onemember limited liability enterprises Other limited liability companies Over50%stateowned joint stock enterprises Other jointstock enterprises Private enterprises Foreign invested enterprises Cooperatives, cooperative unions Individuals Others 1,028,578,972,135 88,285,119,580 3,116,778,674, ,657,036,807 6,073,612,749, ,735,141, ,482,887, ,627,405,407 2,016,394,432,972 39,543,296,304 13,866,695,714, ,235,404, ,331,267,266 3,136,050,256, ,833,480,365 5,966,838,590, ,413,669, ,499,515, ,471,313,189 2,688,378,708,309 41,320,376,918 13,787,372,583, Analysis of loans to customers by industrial sectors Analysis of loans to customers by industrial sectors at 31 December are as follows: 31/12/ /12/2012 % % Agriculture and forestry Mining industry Processing industry Electricity, petroleum &water Providing, management and processing of wastes and waste water Construction Wholesale and retail trade; repair of motor vehicles, motor cycles and personal utilities Hospitality and restaurants Transportation and logistics Information and telecommunication Finance, banking and insurance Real estate Science and technology Administrative activities and supporting services Education and training Health care and social work Showbiz, gaming and entertainment Households services Other sectors 1,840,617,799, ,320,209,132 4,740,744,658,982 25,132,482,388 55,400,531, ,744,672,682 3,109,331,262, ,390,460, ,692,092,043 3,909,927, ,515, ,000,000 5,745,000,000 12,022,498,000 13,562,641,365 62,697,605,707 5,988,299, ,264,928,024 1,534,036,130,880 13,866,695,714, ,481,569,343, ,883,313,919 5,008,476,579,558 3,651,992,000 55,460,064, ,928,698,172 2,459,886,552,028 74,197,433,386 1,014,079,686,818 2,136,260, ,795, ,000,000 9,581,546,614 21,768,305,158 2,284,330,643 78,257,000,599 7,683,177, ,715,521,246 2,097,665,982,438 13,787,372,583, Annual Report

62 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD 10 CHANGES IN PROVISION FOR CREDIT LOSSES The Bank classifies loans in compliance with Decision No.493/2005/QDNHNN and Decision No.18/2007/QD NHNN. Accordingly, annual provision for credit losses as at 31 December 2013 is based on the classification of loans and offbalance sheet items as at 30 November Details of provision for credit losses on the balance sheet as at 31 December are as follows: 31/12/ /12/2012 Provision for loans to customers Provision for offbalancesheet commitments 187,062,708,993 8,750,694, ,813,403, ,295,105,291 18,302,746, ,597,852, Provision for loans to customers Changes in provision for credit losses of loans to customers in the current year are as follows: Specific provision General provision Total Opening balance Provision expenses in the year Reversal of provision in the year Provision utilized to write off bad debts from January to November Decrease provision due to sell loans to VAMC Provision balances as at 30 November 2013 Provision utilized to write off bad debts in December Closing balance 204,068,001, ,075,359,514 (39,301,100,576) (82,393,404,592) (143,298,521,634) 169,150,334,315 (76,268,745,079) 92,881,589, ,227,103,688 28,710,181,776 (48,756,165,707) 94,181,119,757 94,181,119, ,295,105, ,260,226,645 (95,531,951,638) (82,393,404,592) (143,298,521,634) 263,331,454,072 (76,268,745,079) 187,062,708, Annual Report 2013

63 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD PROVISION FOR CREDIT LOSSES (continued) Provision for loans to customers (continued) Changes in provision for loans to customers in the previous year were as follows: Specific provision General provision Total provision Opening balance Provision expenses in the year Reversal of provision in the year Provision utilized to writeoff bad debts from January to November Balance as at 30 November 2012 Provision utilized to write off bad debts in December Closing balance 93,753,246, ,357,067,002 (15,173,476,135) (99,868,835,280) 204,068,001, ,068,001,603 90,050,779,141 42,002,701,304 (17,826,376,757) 114,227,103, ,227,103, ,804,025, ,359,768,306 (32,999,852,892) (99,868,835,280) 318,295,105, ,295,105,291 Details of loans classification as at 30 November 2013 and provision for those loans in accordance with Decision No. 493/2005/QDNHNN, Decision No. 18/2007/QDNHNN, Decision No. 780/QDNHNN and with the Bank s policies on loan classification and provision for credit losses are as follows: Classification Loan balance (*) Specific provision General provision Total provision Current Special mention Substandard Doubtful Loss 10,238,249,859,374 1,906,313,461,515 52,501,293, ,418,019, ,004,963,525 13,032,487,597,762 65,651,432,390 3,225,376,277 58,670,596,588 41,602,929, ,150,334,315 76,786,873,946 14,297,350, ,759,702 2,703,135,148 94,181,119,757 76,786,873,946 79,948,783,351 3,619,135,979 61,373,731,736 41,602,929, ,331,454,072 (*) Loan balance as at 30 November Annual Report

64 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD PROVISION FOR CREDIT LOSSES OF LOANS TO CUSTOMERS (continued) Provision for offbalance sheet commitments Provision for offbalancesheet commitments as at 30 November 2013 is as follow: Classification Offbalance sheet credit balance (*) Specific provision General provision Total provision Current Special mention Substandard Doubtful Loss 1,166,759,228,900 1,166,759,228,900 8,750,694,217 8,750,694,217 8,750,694,217 8,750,694,217 (*): Offbalancesheet commitment balance as at 30 November Change in provision for offbalancesheet commitments in the current year are as follow: Specific provision General provision Total Opening balance Provision expenses in the year Reversal of provision during the year Closing balance 5,910,311,435 (5,910,311,435) 12,392,435,448 6,341,703,644 (9,983,444,875) 8,750,694,217 18,302,746,883 6,341,703,644 (15,893,756,310) 8,750,694, Annual Report 2013

65 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD 11 INVESTMENT SECURITIES Details of availableforsale investment securities of the Bank are as follows: 31/12/ /12/2012 Availabletosale securities Debt securities Securities issued by the Government Treasury bills Urban development bonds Debt securities issued by other local credit institutions Debt securities issued by local business entities Equity securities Equity securities issued by other local credit institutions Equity securities issued by local business entities (i) (ii) (iii) (iv) 2,144,081,929,726 1,783,713,326,648 1,639,170,811, ,542,515, ,358,126, ,010,476,189 70,578,939,762 9,190,583,305 61,388,356,457 2,214,660,869,488 1,886,491,314,558 1,325,563,639,571 1,181,021,457, ,542,182,485 80,914,202, ,013,472, ,095,346,680 8,569,643,305 93,525,703,375 1,988,586,661,238 Provision for impairment of availableforsale securities Heldtomaturity invesment securities Debt securities Bonds issued by Vietnam Asset Management Company Provision for impairment of heldtomaturity securities (v) (54,940,171,585) 752,484,651, ,484,651,734 2,912,205,349,637 (64,827,791,634) 1,923,758,869,604 (i) Treasury bills: have term of 3 to 15 years in and bear interest at rates ranging from 7.70% to 12.30% per annum (in 2012: have term of 3 to 15 years and bear interest at rates ranging from 9.50% to 12.30% per annum), interest is paid annually. (ii) Urban development bonds: include bonds which have term of 10 years and 15 years in issued by People s Committee of Ho Chi Minh City with interest rates ranging from 8.80% to 9.55% per annum (in 2012: have term of 10 years and 15 years with interest rates ranging from 8.80% to 9.55% per annum), interest is paid annually. (iii) Debt securities issued by other local credit institutions: include bonds which have term of 10 years with interest rates ranging from 10.20% to 10.50% per annum (in 2012: have term of 3 to 10 years with interest rates ranging from 9.80% to 10.20% per annum), interest is paid annually. (iv) Debt securities issued by local business entities: include bonds which have term of 3 to 10 years with interest rates ranging from 9.4% to 12.25% per annum (in 2012: have term of 3 to 10 years with interest rates ranging from 9.40% to 18.00% per annum), interest is paid annually. (v) Bonds issued by Vietnam Asset Management Company: have term of 5 years. These bonds bear interest at rate of 0% per annum. Book value of the bonds that are used as mortgages for fund mobilisation contracts as at 31 December 2013 is 969,827,209,379 (as at 31 December 2012 was 1,104,545,000). Annual Report

66 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD INVESTMENT SECURITIES (continued) Provision for impairment of investment securities Changes in provision for impairment of investment securities in the current year are as follows: Opening balance Provision expenses Reversal of provision in the year Writtenoff in the year Closing balance ,827,791,634 15,070,795,800 (24,958,415,849) 54,940,171, ,319,975,139 31,665,487,000 (30,157,670,505) 64,827,791, OTHER LONGTERM INVESTMENTS Details of other longterm investments as at 31 December 2013 and 31 December 2012 are as follows: 31/12/ /12/2012 Cost Provision Cost Provision Investments in local business entities SSI Vision Investment Fund Fund Certificates VF4 VietFund Active (VFA) PTN Chemicals Co., Ltd. 44,904,486,698 10,150,000, ,808,858 55,542,295,556 (3,861,053,521) (2,917,020,000) (6,778,073,521) 7,793,646,440 44,904,486,698 10,150,000, ,808,858 63,335,941,996 (7,793,646,440) (12,720,722,858) (3,006,000,000) (23,520,369,298) 64 Annual Report 2013

67 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD FIXED ASSETS Tangible fixed assets Movements of tangible fixed assets for the year ended 31 December 2013 are as follows: Buildings & improvements Machines & equipment Motor vehicles Office equipment Others Total Cost: Opening balance Purchase in the year Utilization in the year Other increases Disposals in the year Reclassification Other decreases (*) 163,338,982, ,760, ,676,931 (98,715,820) (29,033,197,388) 11,239,201,573 1,872,350,000 79,400,000 (4,075,944,039) 59,529,476,307 3,967,095,800 (14,000,000) (13,692,663,689) (1,458,422,420) 100,435,247,094 6,227,297,815 3,995,936,708 (880,547,180) 13,692,663,689 (29,064,047,686) 372,059,000 (167,810,000) 334,914,966,754 12,299,504,231 4,075,336, ,676,931 (993,263,000) (63,799,421,533) Closing balance 134,550,507,119 9,115,007,534 48,331,485,998 94,406,550, ,249, ,607,800,091 Accumulated depreciation: Opening balance Charges for the year Disposals in the year Reclassification Other decreases (*) 21,223,240,064 7,453,616,751 (80,826,467) (16,589,999,086) 4,214,283,674 1,739,806,801 (1,016,441,170) 23,123,210,655 8,440,001,618 (14,000,000) (8,589,694,239) (905,362,955) 59,985,583,651 20,285,810,779 (842,780,888) 8,589,694,239 (20,781,419,725) 112,835,024 66,942,820 (64,439,369) 108,659,153,068 37,986,178,769 (937,607,355) (39,357,662,305) Closing balance 12,006,031,262 4,937,649,305 22,054,155,079 67,236,888, ,338, ,350,062,177 Net book value: At the beginning of the year At the end of the year 142,115,742, ,544,475,857 7,024,917,899 4,177,358,229 36,406,265,652 26,277,330,919 40,449,663,443 27,169,662, ,223,976 88,910, ,255,813, ,257,737,914 (*): According to the Circular 45/2013/TTBTC dated 25 April 2013 about guidance on the management, usage and depreciation of fixed assets, from 10 June 2013, the Bank has suspended to depreciate fixed assets which have the cost from 10,000,000 to 30,000,000 and allocated the net book value of these assets to the expenses over the remaining useful lives in the extent of 3 years from 10 June Annual Report

68 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD FIXED ASSETS (continued) Tangible fixed assets (continued) Movements of tangible fixed assets for the year ended 31 December 2012 were as follows: Buildings & improvements Machines & equipment Motor vehicles Cost: Opening balance Purchase in the year Other increases Disposals in the year Other decreases 144,039,354,892 24,375,916,977 1,132,420,927 (6,208,710,016) 9,162,815,850 2,193,215,585 54,136,364 (91,566,226) (79,400,000) 47,600,829,977 14,716,219, ,035,181 (3,010,388,139) (75,219,812) Closing balance 163,338,982,780 11,239,201,573 59,529,476,307 Accumulated depreciation: Opening balance Increases in the year Decreases in the year 16,202,719,633 10,654,009,656 (5,633,489,225) 2,424,047,887 1,880,079,044 (89,843,257) 16,822,546,383 8,133,920,706 (1,833,256,434) Closing balance 21,223,240,064 4,214,283,674 23,123,210,655 Net book value: At the beginning of the year At the end of the year 127,836,635, ,115,742,716 6,738,767,963 7,024,917,899 30,778,283,594 36,406,265,652 Office equipment 105,674,702,508 16,466,657,725 3,100,380 (1,411,239,763) (20,297,973,756) 100,435,247,094 40,770,914,111 20,339,957,917 (1,125,288,377) 59,985,583,651 64,903,788,397 40,449,663,443 Others 213,021, ,038, ,059,000 53,495,487 59,339, ,835, ,525, ,223,976 Total 306,690,724,227 57,911,047,387 1,487,692,852 (10,721,904,144) (20,452,593,568) 334,914,966,754 76,273,723,501 41,067,306,860 (8,681,877,293) 108,659,153, ,417,000, ,255,813, Annual Report 2013

69 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD FIXED ASSETS (continued) Intangible fixed assets Movements of intangible fixed assets for the year ended 31 December 2013 are as follows: Land use rights Computer software Other intangible assets Total Cost: Opening balance Purchase in the year Disposals in the year Other decrease (*) 19,955,321,750 40,614,090,828 3,287,260,000 (86,483,179) 236,030,096 12,000,000 60,805,442,674 3,299,260,000 (86,483,179) Closing balance 19,955,321,750 43,814,867, ,030,096 64,018,219,495 Accumulated amortization: Opening balance Amortize for the year Other decreases (*) 27,577,382,816 8,432,913,852 (62,517,928) 83,838,137 52,507,524 27,661,220,953 8,485,421,376 (62,517,928) Closing balance 35,947,778, ,345,661 36,084,124,401 Net book value: At the beginning of the year At the end of the year 19,955,321,750 19,955,321,750 13,036,708,012 7,867,088, ,191, ,684,435 33,144,221,721 27,934,095,094 (*): According to the Circular 45/2013/TTBTC dated 25 April 2013 about guidance on the management, usage and depreciation of fixed assets, from 10 June 2013, the Bank has suspended to depreciate fixed assets which have the cost from 10,000,000 to 30,000,000 and allocated the net book value of these assets to the expenses over the remaining useful lives in the extent of 3 years from 10 June Movements of intangible fixed assets for the year ended 31 December 2012 were as follows: Land use rights Computer software Other intangible assets Total Cost: Opening balance Purchase in the year 16,080,041,750 3,875,280,000 39,467,918,548 1,146,172,280 83,000, ,030,096 55,630,960,298 5,174,482,376 Closing balance 19,955,321,750 40,614,090, ,030,096 60,805,442,674 Accumulated amortization: Opening balance Charges for the year 18,516,777,282 9,060,605,534 47,000,000 36,838,137 18,563,777,282 9,097,443,671 Closing balance 27,577,382,816 83,838,137 27,661,220,953 Net book value: At the beginning of the year At the end of the year 16,080,041,750 19,955,321,750 20,951,141,266 13,036,708,012 36,000, ,191,959 37,067,183,016 33,144,221,721 Annual Report

70 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD 14 OTHER ASSETS 31/12/ /12/2012 Receivables (Note 14.1) Interest and fee receivables Other assets (Note 14.2) Provision for impairment of other assets 156,141,688, ,868,988, ,289,426, ,300,103, ,545,297, ,889,563, ,937,056, ,371,918, Receivables 31/12/ /12/2012 Receivables from internal activities Receivables from external activities Deposits, mortgage Corporate income tax receivable (Note19.1) Deposit for securities brokerage contract Payment of interest subsidy Receivables from services Other receivables Acquisition of fixed assets 28,113,501, ,104,984,330 75,937,562,229 4,727,510,283 2,009,766,609 1,799,854,071 40,630,291,138 2,923,202, ,141,688,265 28,535,206, ,086,888,742 50,447,668,756 14,346,313,654 82,780,000,000 5,807,271,164 2,291,177,465 54,414,457,703 2,923,202, ,545,297, Other assets 31/12/ /12/2012 Foreclosed assets(*) Unallocated expenses Other assets 259,810,000,000 51,134,883,162 26,344,543, ,289,426,169 47,810,000,000 22,265,267,930 31,861,788, ,937,056,742 (*) Foreclosed assets represent the value of the land use rights transferred by the customers to the Bank and approved by the Board of Directors, the Bank and customers signed contracts to transfer the land use rights to the Bank. The Bank has assessed and believed that there is no legal risk as well as the value in the liquidation of assets to recover debts. 68 Annual Report 2013

71 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD 15 DUE TO OTHER BANKS Demand deposits from other banks In Term deposits from other banks In In gold and foreign currencies Borrowings from other banks In In gold and foreign currencies 31/12/ ,759, ,759,879 7,109,052,000,000 5,910,000,000,000 1,199,052,000, ,711,200,000 50,000,000, ,711,200,000 7,458,358,959,879 31/12/ ,908, ,908,496 3,425,952,000, ,000,000,000 2,790,952,000,000 3,426,575,908,496 Interest rates of deposits and borrowings from other banks at the end of the year are as follow: 31/12/2013 %per annum 31/12/2012 %per annum Term deposits from other banks in Term deposits from other banks in foreign currencies Borrowing from other banks in Borrowing from other banks in foreign currencies 3.30% 5.90% 0.70% 0.78% 6.60% 3.30% 6.00% 9.00% 0.10% 3.80% CUSTOMER DEPOSITS Balances by types of deposits Demand deposits Demand deposits in Demand savings deposits in Demand deposits in foreign currencies Demand saving deposits in foreign currencies Term deposits Term deposits in Term savings deposits in Term deposits in foreign currencies Term saving deposits in foreign currencies Deposits for specific purpose Deposits for specific purpose in Deposits for specific purpose in foreign currencies Margin deposits Margin deposits in Margin deposits in foreign currencies 31/12/2013 1,708,322,032,012 1,422,339,162,228 18,836,151, ,141,844,995 4,873,714 12,001,816,772,604 2,023,736,802,707 7,664,864,990,777 41,332,454,635 2,271,882,524, ,576,769 84,074,425 34,502, ,950,407,996 64,116,467,252 86,833,940,744 13,861,207,789,381 31/12/2012 1,285,769,803,274 1,039,447,250,982 21,247,547, ,070,177,987 4,826,939 10,911,263,435,668 2,171,896,753,784 7,255,671,898,122 51,856,668,361 1,431,838,115,401 65,596,970 52,745,049 12,851, ,321,923,391 56,158,763,517 79,163,159,874 12,332,420,759,303 Annual Report

72 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD CUSTOMER DEPOSITS (continued) Analysis of customer deposit by types of customers Deposits from business entities Deposits from individuals 31/12/2013 3,616,911,519,467 10,244,296,269,914 13,861,207,789,381 31/12/2012 3,485,832,949,406 8,846,587,809,897 12,332,420,759,303 Interest rate of customer deposits at the year end are as follows: Demand deposits in Demand saving deposits in Demand deposits in foreign currencies Demand saving deposits in foreign currencies Term deposits in Term saving deposits in Term deposits in foreign currencies Term saving deposits in foreign currencies 2013 % per annum 1.00% 1.20% 0.50% 0.50% 1.00% 8.00% 1.20% 9.50% 0.50% 0.8% 2.00% 2012 % per annum 2.00% 2.00% 0.49% 0.50% 0.50% 2.00% 10.00% 2.00% 11.00% 0.49% 0.50% 0.50% 2.00% With regards to term saving deposits, in case customers withdraw earlier than due date, interest rate is applied as per the Bank s policies for each period, in compliance with the SBV s regulations. 17 OTHER BORROWED FUNDS 31/12/2013 Funds received in 117,270,700, ,270,700,500 31/12/ ,775,653,000 98,775,653,000 Funds received in is loans from Japanese ODA fund and Japan Bank for International Cooperation (JBIC) through the State Bank of Vietnam under the project of financing for small and medium enterprises. The framework agreement was signed on 17 March The borrowed funds have medium and long term and bear interest at rate of 6.50% per annum for the first repayment period, then will be revised quarterly during the term of the borrowed funds. Accordingly, the interest rate for the period from 01 January 2013 to 31 March 2013 was 7.44% per annum, for the period from 01 April 2013 to 30 June 2013 was 6.48% per annum, for the period from 01 July 2013 to 30 September 2013 was 6.00% per annum, for the period from 01 October 2013 to 31 December 2013 was 5.88% per annum. 70 Annual Report 2013

73 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD 18 OTHER LIABILITIES 31/12/ /12/2012 Dividend payables Internal payables Bonus and welfare funds Other internal payables External payables Payable for constructions, purchases of fixed assets Payables to periodically interestpayment saving accounts Payables for Banknet settlements Pending items for transfers Payables for petrol cards Obligations to the State budget Other payables 5,656,581,158 1,579,001,342 1,430,436, ,565,178 45,979,987, ,614,876 29,387,797,119 1,538,877,625 3,765,728,131 2,392,448,319 8,065,521,271 53,215,569,841 6,048,240,704 22,835,858,685 22,599,200, ,658,638 15,002,223, ,568,617 46,616,896 2,896,885, ,239,215 3,180,479,115 3,316,159,777 4,387,274,009 43,886,322, OBLIGATIONS TO THE STATE BUDGET Movement during the year Unit: Openning balance Payable Paid Closing balance Corporate Income tax Value Added tax Other taxes (14,346,313,654) 2,296,016,619 1,020,143,158 (11,030,153,877) 13,727,980,667 13,074,888,230 10,800,308,017 37,603,176,914 (4,109,177,296) (13,444,124,924) (11,354,782,781) (28,908,085,001) (4,727,510,283) 1,926,779, ,668,394 (2,335,061,964) 19.1 Current Corporate Income Tax The Bank has the obligation to pay Corporate Income Tax ("CIT") at the rate of 25% of taxable profits (2012: 25%).The current corporate income tax payables of the Bank is calculated as follow: Profit before tax Less: Dividend income exempt from CIT Income excluded for calculating CIT Plus: Non deductible expenses Taxable income Current CIT at tax rate of 25% CIT payable in the year CIT (receivable)/payable at the beginning of the year Adjustment for CIT for the previous year CIT paid in the year CIT receivable at the end of the year 51,747,684,015 (5,129,647,220) 7,565,100,024 54,183,136,819 13,545,784,205 13,545,784,205 (14,346,313,654) 182,196,462 (4,109,177,296) (4,727,510,283) 318,967,697,945 (5,517,620,400) (5,738,883,571) 8,220,903, ,932,097,455 78,983,024,364 78,983,024,364 36,628,374,277 1,593,004,789 (131,550,717,084) (14,346,313,654) 19.2 Deferred corporate income tax There is no material deferred tax recorded in the year since there is no significant temporary difference between the carrying value and tax base of assets and liabilities in the financial statements. Annual Report

74 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD OWNERS EQUITY AND RESERVES Changes in owners equity and reserves Details of changes in the Bank s capital and reserves for the year that ended at 31 December 2013 are as follow: Items Charter capital Financial reserve Capital Supplementary reserve Other reserves (including Business & Development fund) Undistributed earnings Balance as at 01 January 2012 Increase in the year Increase capital in the year Net profit for the year Appropriation to reserves 2,000,000,000,000 1,000,000,000,000 1,000,000,000,000 49,362,343,784 42,394,202,965 42,394,202,965 21,773,842,126 22,312,738,403 22,312,738,403 10,294,811,217 39,791,765,822 39,791,765, ,422,722, ,485,966, ,984,673,581 (104,498,707,190) Decrease in the year Utilization in the year Dividend paid out for 2011 Dividend paid out for 2012 Other decrease (*) (49,436,577,039) (26,837,376,992) (22,599,200,047) (604,968,000,000) (360,000,000,000) (244,968,000,000) Balance as at 31 December ,000,000,000,000 91,756,546,749 44,086,580, ,000,000 34,940,688,690 Increase in the year Net profit for the year Appropriation to reserves in accordance with Resolution No. 06/2013/NQĐHCĐPGB Decrease in the year 22,798,543,990 22,798,543,990 11,999,233,679 11,999,233,679 3,404,122,141 38,201,899,810 (34,797,777,669) Balance as at 31 December ,000,000,000, ,555,090,739 56,085,814, ,000,000 38,344,810,831 (*): Bonus and welfare fund is classified from equity to other payables in accordance with Circular No. 244/2009/TTBTC. Unit: Total 2,585,853,719,426 1,239,984,673,581 1,000,000,000, ,984,673,581 (654,404,577,039) (26,837,376,992) (360,000,000,000) (244,968,000,000) (22,599,200,047) 3,171,433,815,968 38,201,899,810 38,201,899,810 3,209,635,715, Annual Report 2013

75 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD OWNERS EQUITY AND RESERVES (continued) Changes in owners equity and reserves (continued) Details of the charter capital of the Bank are as follow: Unit: Shareholders capital Premium shares Total 3,000,000,000,000 3,000,000,000,000 31/12/2013 Ordinary shares 3,000,000,000,000 3,000,000,000,000 Preference shares Total 3,000,000,000,000 3,000,000,000,000 31/12/2012 Ordinary shares 3,000,000,000,000 3,000,000,000,000 Preference shares Details of the Bank s charter capital as at 31 December 2013 are as follow: Vietnam Petrolimex Group Other shareholders Total Charter capital as at 31 December ,200,000,000,000 1,800,000,000,000 3,000,000,000,000 % Ownership Statutory reserves of the Bank According to Decree No. 57/2012/NDCP which was effective from 20 July 2012, commercial joint stock banks are required to make appropriation of profit after tax to the following reserves: Capital supplementary reserve Financial reserve % profit after tax 5% of profit after tax 10% of profit after tax Maximum balance 100% charter capital 25% charter capital The appropriation of other reserves is upon the Bank s discretion. The Bank appropriates reserves for the year 2013 based on its operational results for the year 2013 after the Decision made at Annual Shareholers Meeting Earnings per share Net profit after tax Weighted average number of ordinary shares in circulation (unit) Earnings per share (/share) 38,201,899, ,000, ,984,673, ,322, Annual Report

76 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD 21 INTEREST AND SIMILAR INCOME Interest income from deposits Interest income from loans to customers Interest income from investment securities Other income from credit activities 58,278,345,130 1,302,739,521, ,886,173,516 32,218,386,406 1,614,122,426, ,956,423,844 1,760,108,520, ,397,781, ,492,705,721 2,256,955,432, INTEREST AND SIMILAR EXPENSES Interest expense from customer deposits Interest expense from borrowings Interest expense for valuable papers issued Other expense from credit activities ,311,468,709 51,440,907,474 2,529,333 33,220,742,774 1,071,975,648, ,206,744,136,999 63,214,571,837 34,382,218 6,241,032,851 1,276,234,123, NET FEE AND COMMISSION INCOME Fees and commission income Settlement services Treasury activities Trusted and agency activities Advisory activities Insurance services Other services Fees and commission expense Settlement services Telecommunication services Expense on shipping and handling services Expense on cash count, classification and packing services Expense on the safeguard services Trusted and agency activities Advisory activities Expense on brokerage commission Other services Net fee and commission income ,026,786,318 12,478,079,088 18,917,052,128 3,942,748, ,355,338 31,220,551,588 (27,545,876,667) (5,366,898,099) (8,672,431,170) (3,966,506,547) (299,823,046) (1,370,139,070) (1,438,022,091) (25,596,000) (6,406,460,644) 39,480,909, ,655,661,665 11,867,207,028 18,111,857,950 4,826,950,587 1,562,723,920 1,950,540 27,284,971,640 (35,769,434,838) (4,365,262,109) (8,699,338,490) (3,441,664,725) (361,649,212) (1,184,736,794) (1,929,444,458) (771,985,500) (22,958,402) (14,992,395,148) 27,886,226, Annual Report 2013

77 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD 24 NET GAIN FROM FOREIGN CURRENCIES TRADING Income from foreign currencies trading Income from trading foreign currencies at spot exchange rate Income from currency in derivative financial instruments ,679,300,201 15,788,930,677 32,890,369, ,554,978,957 14,621 49,554,964,336 Expense for foreign currencies trading Expense from trading in foreign currencies at spot exchange rate Expense from currency derivative financial instruments Net gain from foreign currencies trading (6,091,582,408) (622,521) (6,090,959,887) 42,587,717,793 (5,183,380,550) (15,753) (5,183,364,797) 44,371,598, NET GAIN FROM INVESTMENT SECURITIES Income from availableforsale securities Expenses from availableforsale securities Reversal/(provision for impairment) of availableforsale securities Net gain from availableforsale securities 39,968,360,659 (7,918,499,027) 9,887,620,049 41,937,481,681 22,114,094,340 (451,055,260) (1,507,816,495) 20,155,222, NET GAIN FROM OTHER OPERATING ACTIVITIES Income from other derivative instruments Other operating income Recovery of bad debts written off Revenue from Petrolimex s operating lease of equipments and card systems Income from disposals of fixed assets Other income Income from reversal of provision for longterm investments 26,349,832,025 22,378,721,315 13,141,094,001 9,237,627,314 21,743,636 2,053,252,108 8,948,649,337 29,133,096,947 17,579,928,752 7,967,000,000 9,612,928,752 1,309,968,181 2,861,285,241 14,288,904,261 Other operating income Expense from other derivative instruments Expense from disposals of fixed assets Other expenses Other operating expenses 59,752,198,421 (20,791,323,368) (61,484,480) (1,810,476,142) (22,663,283,990) 37,088,914,431 65,173,183,382 (25,631,262,687) (3,545,352,516) (29,176,615,203) 35,996,568,179 Annual Report

78 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD 27 OPERATING EXPENSES Taxes and fees Expense for employees Salaries and allowances Contributions under salaries Expense for uniform Allowances Expense for fixed assets Depreciation and amortization expenses Asset repairs and maintenance Operating leases Expense on tools and equipment Insurance for assets Expense for operating management Business trip expenses Expense for social acitivities of the Bank Advertisement and promotion expenses Other management expenses Insurance for customer deposits Other provison expense 12,284,845, ,675,087, ,290,324,671 14,751,961, ,302, ,498, ,324,374,558 46,471,600,145 20,483,533,623 47,889,454,855 5,315,747,668 1,164,038, ,798,854,209 3,665,175,385 2,400,000 21,251,364, ,879,914,014 10,364,380, ,447,542,943 16,193,999, ,828,535, ,179,644,853 18,783,824,215 2,638,514,251 1,226,552, ,647,701,834 50,072,201,584 14,210,709,625 44,727,903,408 3,655,114, ,772, ,259,639,786 4,122,140,596 16,560,417, ,577,081,243 7,319,778,180 7,793,646, ,043,301, EMPLOYEES REMUNERATIONS I. TOTAL AVERAGE NUMBER OF EMPLOYEES (persons) 1,427 1,410 II. EMPLOYEES REMUNERATIONS() 1. Total salary fund 2. Bonus 3. Total income (1+2) 4. Average monthly salary 5. Average monthly income 169,290,324,671 17,524,813, ,815,138,555 9,886,144 10,909, ,324,748,011 34,854,896, ,179,644,853 9,652,763 11,712, Annual Report 2013

79 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD 29 COLLATERALS AND MORTAGES Book value () 31/12/ /12/2012 Real estates Valuable papers Machines and equipment Other assets 9,660,492,013,724 1,851,523,573,859 7,260,667,657,937 3,255,909,235,874 22,028,592,481,393 10,877,888,077,488 2,699,692,147,440 10,525,704,708,351 4,223,518,081,340 28,326,803,014, CONTINGENT LIABILITIES AND COMMITMENTS In normal course of business, the Bank is a party to financial instruments which are recorded as offbalancesheet items. These financial instruments mainly comprise of financial guarantees and commercial letters of credit. These instruments involve elements of credit risk other than those recognized in the balance sheet. Credit risk for offbalancesheet financial instruments is defined as the possibility of sustaining a loss because any other party to a financial instrument fails to perform in accordance with the terms of the contract. Financial guarantees are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party including guarantee for borrowings, settlement, performing contracts and bidding. The credit risk involved in issuing guarantees is essentially the same as that involved in extending facilities to customers. Commercial at sight letters of credit represent a financing transaction by the Bank to its customer where the customer is usually the buyer/importer of goods and the beneficiary is typically the seller/exporter. Credit risk is limited as the merchandise shipped serves as collateral for the transaction. Deferred payment letters of credit represent the amounts at risk should the contract be fully drawn upon and the client defaults in repayment to the beneficiary. Deferred letters of credit that were default by clients are recognized by the Bank as compulsory loans with corresponding liabilities representing the financial obligations of the Bank to the beneficiaries and to fulfill the guarantor obligations. The Bank requires margin deposits to support creditrelated financial instruments when it is deemed necessary. The deposit margins required vary from 0% to 100% of the value of a commitment granted, depending on the credit worthiness of clients as assessed by the Bank. Details of contigent liabilities and commitments are as follow: Contract implementation guarantees Bidding guarantees Settlement guarantees Other guarantees Letters of credit 31/12/ ,741,951,336 18,647,372, ,021,993,847 92,605,037, ,887,813,975 1,443,904,168,366 31/12/ ,102,465,891 32,357,937, ,079,311,045 68,371,407, ,982,457,626 1,602,893,579,540 Annual Report

80 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD 31 CASH AND CASH EQUIVALENTS Cash and cash equivalents included in the cash flow statement comprise the followings: Cash and cash equivalents on hand Balances with the State Bank of Vietnam Demand deposits with other banks Term deposits under 90 days 31/12/ ,879,461, ,541,228, ,923,631,117 5,738,648,000,000 7,213,992,321,354 31/12/ ,123,428, ,124,061, ,708,369,149 1,353,955,859, RELATED PARTY TRANSACTIONS Related party transactions include all transactions undertaken with other parties to which the Bank is related. A party is related to the Bank if: (a) directly, or indirectly through one or more intermediaries, the party: controls, is controlled by, or is under common control with, the Bank (this includes parents, subsidiaries and fellow subsidiaries); has an interest in the Bank that gives it significant influence over the Bank; or has joint control over the Bank; (b) the party is a joint venture in which the Bank is a venturer (Refer to VAS No. 8 Financial information of joint venture); (c) the party is a member of the key management personnel of the Bank or its parent; (d) the party is a close member of the family of any individual referred to in (a) or (c); (e) the party is a Bank that is controlled, jointly controlled or significantly influenced by, or of which, significant voting power in such Bank resides with, directly or indirectly, any individual referred to in (c) or (d). 78 Annual Report 2013

81 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD 32 RELATED PARTY TRANSACTIONS (continued) List of related parties to PG Bank which have significant transactions during the year ended 31 December 2013 are as follows: COMPANY S NAME Vietnam National Petroleum Group PTN Chemicals Corporation Limited Petrolimex Gas Corporation JSC Petrolimex Petrochemical Corporation Petrolimex Aviation Fuel JSC PG Tanker Corporation Petrolimex Land Holding JSC Petrolimex International Trading JSC Petrolimex Saigon Transportation and Service JSC Petrolimex Nghe Tinh Transportation and Service JSC Petrolimex Hanoi Transportation and Service JSC Petrolimex Information Technology and Telecommunication JSC Petrolimex Insurance Corporation Van Phong Bonded Petroleum Terminal Joint Venture Company Limited Petrolimex Construction JSC 1 Petrolimex Da nang Transportation and Service JSC RELATIONSHIP Major shareholder Unit of the same major shareholder Unit of the same major shareholder Unit of the same major shareholder Unit of the same major shareholder Unit of the same major shareholder Unit of the same major shareholder Unit of the same major shareholder Unit of the same major shareholder Unit of the same major shareholder Unit of the same major shareholder Unit of the same major shareholder Unit of the same major shareholder Unit of the same major shareholder Unit of the same major shareholder Unit of the same major shareholder Significant balances with related parties as at 31 December 2013 are as follows: Unit: COMPANY S NAME Vietnam National Petrolium Group RELATIONSHIP Major shareholder TRANSACTION Demand deposits Term deposits Loans Accrued interest receivables Accrued interest payables Other receivables Demand deposits Term deposits Loans Accrued interest receivables Accrued interest payables AMOUNT 630,874,290, ,710,742,801 18,072,640,200 3,797,972,711 1,456,900,833 18,520,141, ,674,257,834 1,530,305,416, ,175,080,225 55,809,826,134 4,355,177,466 Subsidiaries and associate companies in Petrolimex Group Units of the same major shareholder Significant transactions with related parties during the year 2013 are as follows: Unit: COMPANY S NAME Vietnam National Petrolium Corporation RELATIONSHIP Major shareholder TRANSACTION Interest expenses Interest income Money transfer fees Forex trading fees Other fees Interest expenses Interest income Money transfer fees Letter credit fees Other fees AMOUNT 77,843,011,595 1,494,189,986 3,065,545,004 5,250,000,000 12,432,153,896 27,836,564,224 39,382,856, ,702,848 10,760,430 1,512,559,260 Subsidiaries and associate companies in Petrolimex Group Units of the same major shareholder Annual Report

82 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD 32 RELATED PARTY TRANSACTIONS (continued) Details of due from and to related parties as at 31 December 2012 were as follows: Related party Relationship Transactions Receivable Unit: Payable Vietnam National Petrolium Corporation and subsidiaries Major shareholder Demand and term deposits Loans 543,060,691, ,965,286,640 Remuneration of the Board of Management are as follows: Salaries and bonus 9,803,875,800 11,124,860, RISK MANAGEMENT POLICIES The Bank s business goal is to be a multipurpose financial group. Accordingly, the utilisation of financial instruments including customers deposits (customers deposits and valuable papers issued) and investments in highly profitable financial assets is the key to achieve the premium interest difference for the Bank. In terms of risk management, the Bank is required to maintain a healthy structure for its assets. liabilities and equity (including both balance sheet and offbalance sheets items) for safety and risk minimization purpose in the Bank s opreations. In addition, the Bank has used some of its working capital to invest in securities or loans to other banks. Foreign currency risk and interest rate risk are controlled by limitations to avoid overconcentration and the Bank also involves in diversifying activities with risk balancing effect in order to minimize the risks. The ownership of highly profitable financial instruments helps smoothing the structure of the balance sheet and reducing liquidity risk. Moreover, the Bank engages in hedging activities like currency swaps for interest rate risk management. While managing the credit risks, the Bank has made good use of the credit manuals which entails the policies, procedures and guidance to standardize the credit activities of the Bank. Liquidity risk is reduced thanks to cash and cash equivalents on hand in forms of Nostro accounts, termdeposits at SBV and other credit institutions. Ratios which take risk into account are also used to keep control of liquidity risks. The Bank evaluates interest rates on a regular basis, compares local interest rates with international ones for timing adjustments. In addition, internal audit has become more efficient because of the Centralized Capital Management System and Centralized Payment System which enables all treasury activities and payments to be conducted by the Head Office. This gives the Bank closer supervision on the changes in capital to reduce errors and unnecessary procedures. 80 Annual Report 2013

83 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD RISK MANAGEMENT POLICIES (continued) Credit risk Credit risk is inherent risk in the business activities of the Bank. Credit risk is the risk that the Bank will incur a loss because its customers or counterparties fail to discharge their contractual obligations. The Bank has maintained an appropriate risk management policy to ensure these following basic principles: Establish appropriate risk managing environment; Operate under healthy credit granting procedure; Maintain appropriate credit managing, measuring, supervising procedure; and Ensure adequate control on credit risk. The Bank conducts approval procedure through many levels to ensure that a loan is reviewed independently, concurrently, loan approval is based on credit limits delegated to competent authorities. Besides, the model of credit approval with the participation of Credit Committee to ensure the credit approval activity is centred with the highest quality Financial assets not past due or not impaired Bank s financial assets which are not past due or not impaired include loans which are classified as Current loan under Decision 493/2005/QDNHNN and Decision 18/2007/QDNHNN; securities, receivables and other financial assets which are not past due and no provision is required under Decision 228/QDBTC. The Bank believes that the Bank has the ability to collect adequately and timely these financial assets in the future Financial assets overdue but not impaired The agings of such financial assets which over due but not impaired as at 31 December 2013 are presented below: Overdue Below 90 days days days Over 360 days ASSETS Due from banks Placements with other banks Loans to other banks Trading securities Loans to customers Investment securities Availableforsale securities Heldtomaturity securities Other assets Interest and fee receivables Receivables Other assets Total 55,900,144,324 55,900,144,324 25,159,311,095 25,159,311,095 10,215,881,852 10,215,881,852 80,284,623,535 80,284,623,535 Annual Report

84 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD RISK MANAGEMENT POLICIES (continued) Credit risk (continued) Financial assets overdue but not impaired (continued) Financial assets overdue but not impaired because the Bank is currently holding sufficient collaterals to offset credit risk in accordance with the SBV s regulations. The Bank is currently holding collaterals in the forms of real estates, movable assets, valuable papers and other types for the above financial assets. However, the Bank has not been able to determine the fair value of such assets due to the inadequacy of specific guidance from the State Bank of Vietnam and other authorities nor necessary market information Market risk Interest rate risk The effective interest rate repricing term of the assets and liabilities is the remaining period from the date of financial statements as at 31 December 2013 to the nearest interest rate repricing date. The following assumptions and conditions have been adopted in the analysis of effective interest rate repricing term of the Bank s assets and liabilities: Cash and cash equivalents on hand, longterm investment and other assets (fixed assets and other assets) are classified as noninterest bearing items; Deposits at the SBV are considered settlement deposits, thus the effective interest repricing term is assumed to be within one month; The effective interest repricing term of investment securities is determined based on the maturity date from the balance sheet date as at 31 December 2013 of each securities; The effective interest repricing term of deposits from other banks and loans to other banks; loans to customers; borrowings from the Government and the SBV; placements with other banks and borrowings from other banks; customer deposits are determined as follows: Items with fixed interest rate during the contractual term: the effective interest repricing term is determined based on the maturity date from the balance sheet date as at 31 December Items with floating interest rate: the effective interest repricing term is determined based on the time to the nearest interest rate repricing date from the balance sheet date as at 31 December The effective interest repricing term of valuable papers issued is determined based on the time to maturity from the balance sheet date of each valuable paper; The effective interest repricing term of other borrowed funds that the Bank bears risks is arranged based on the maturity date from the balance sheet date as at 31 Decenber 2013 of each fund; The effective interest repricing term of others payables is arranged based on the maturity date from the balance sheet date of each item. 82 Annual Report 2013

85 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD RISK MANAGEMENT POLICIES (continued) Market risk (continued) Interest rate risk (continued) Classification of assets and liabilities based on repricing term as at 31 December 2013 is as follows: Interest rate is repriced within Over due Non repricing Up to 1 month From 1 3 months From 3 6 months From 6 12 months Assets Cash, gold and gemstones Balances with the SBV Due from banks(*) Derivatives and other financial assets Loans to customers (*) Investments securities (*) Long term investments (*) Fixed assets Other assets Total assets Liabilities Due to banks Due to customers Other borrowed funds Other liabilities (*) Total liabilities Net exposure 2,187,701,718,448 2,187,701,718,448 2,187,701,718, ,879,461,894 1,659,847, ,063,591,496 55,542,295, ,191,833, ,300,103,089 2,075,637,132, ,522,822, ,522,822,554 1,855,114,309, ,541,228,343 5,571,923,631, ,343,131,444 6,900,807,990,904 5,245,099,759,879 6,973,569,533,266 12,218,669,293,145 (5,317,861,302,241) 878,648,000,000 2,282,365,587,204 3,161,013,587,204 1,864,548,000,000 3,272,386,411,229 5,136,934,411,229 (1,975,920,824,025) 2,488,079,087,453 50,000,000,000 2,538,079,087,453 50,000,000,000 1,410,284,673, ,270,700,500 1,577,555,373, ,523,713,907 1,484,215,482,351 40,000,000,000 1,524,215,482, ,711,200,000 2,097,220,941,675 2,395,932,141,675 (871,716,659,324) (*): Balances of these items do not include provisions. From 1 5 years 2,976,711,474,625 1,934,529,753,567 4,911,241,228, ,746,230, ,746,230,165 4,803,494,998,027 Over 5 years 1,706,279,233, ,552,176,159 1,825,831,409,607 1,825,831,409,607 Unit: Total 175,879,461, ,541,228,343 6,450,571,631,117 1,659,847,206 13,866,695,714,973 2,967,145,521,222 55,542,295, ,191,833, ,300,103,089 25,124,527,636,408 7,458,358,959,879 13,861,207,789, ,270,700, ,522,822,554 21,657,360,272,314 3,467,167,364,094 Annual Report

86 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD RISK MANAGEMENT POLICIES (continued) Market risk (continued) Currency risk Currency risk is the risk that the value of a financial instrument fluctuates due to changes in foreign exchange rates. As the Bank was incorporated and operates in Vietnam, with as its reporting currency, the major currency in which the Bank transacts is. The Bank s loans to customers were mainly denominated mainly in and USD. However, some of the Bank s other assets are in USD, partly EUR and other currencies. The Bank s management has set limits on position of all currencies. Position is monitored on a daily basis and hedging strategies are used to ensure positions are maintained within established limit. Classification of assets and liabilities in foreign currencies which are converted into as at 31 December 2013 is as follows: Unit: USD as converted EUR as converted Other foreign currencies as converted Total Assets Cash, gold and gemstones Balances with the SBV Due from banks (*) Derivatives and other financial assets Loans to customers (*) Investment securities (*) Longterm investment (*) Fixed assets Other assets (*) Total assets Liabilities Due to banks Due to customers Derivatives and other financial liabilities Other borrowed funds Other liabilities (*) Total liabilities FX position onbalance sheet FX position offbalance sheet FX position on and offbalance sheet 42,077,006, ,833,469,902 1,006,665,887,508 3,040,984,826, ,896,258,985 4,415,457,449,781 1,497,763,200,000 2,586,976,323, ,800,693,916 5,621,444,895 4,440,161,662,360 (24,704,212,579) 1,781,917,696,046 1,757,213,483,467 2,983,061,026 48,631,082,777 23,895,470,352 1,150,951,000 76,660,565,155 76,233,410,234 49,233,022 76,282,643, ,921,899 (16,878,941,466) (16,501,019,567) 3,156,345,896 3,156,345,896 1,165,859, ,165,860,102 1,990,485, ,740,000 2,490,225,794 45,060,067, ,833,469,902 1,058,453,316,181 23,895,470,352 3,040,984,826, ,047,209,985 4,495,274,360,832 1,497,763,200,000 2,664,375,593, ,800,693,916 5,670,678,481 4,517,610,165,718 (22,335,804,886) 1,765,538,494,580 1,743,202,689,694 (*): Balances of these items do not include provisions. 84 Annual Report 2013

87 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD RISK MANAGEMENT POLICIES (continued) Market risk (continued) Liquidity risk The maturity term of assets and liabilities represents the remaining period of assets and liabilities as calculated from the balance sheet date as at 31 December 2013 to the settlement date as stipulated in contracts or in issuance terms and conditions. The following assumptions and conditions are applied in the analysis of overdue status of the Bank s assets and liabilities: Deposits at the SBV are classified as demand deposits which include compulsory deposits. The balance of compulsory deposits depends on the proportion and terms of the Bank s customer deposits. The maturity term of investment debt securities is calculated based on the maturity date of each kind of securities. The maturities of amounts due from other banks and loans to customers are based on the contractual maturity date. The actual maturity sometimes varies from contractual term when the contract is extended. The maturity term of equity investments is considered as more than five (05) years because these investments do not have specific maturity date. The maturity term of deposits and borrowings from other banks; and customer s deposits is determined based on features of these items or the maturity date as stipulated in contracts. Vostro account and demand deposits are transacted as required by customers, and therefore, being classified as current accounts. The maturity term of borrowings and deposits is determined based on the maturity date in contracts. In fact, these amounts may be rotated, and therefore, they last beyond the original maturity date. The maturity term of fixed assets is determined on the remaining useful life of assets. The maturity term of valuable papers issued is determined based on the maturity date from the balance sheet date of each valuable paper. The maturity term of other borrowed funds that the Bank bears risks is arranged based on the time to maturity from the balance sheet date as at 31 December 2013 of each fund. The maturity term of other liabilities is arranged based on the maturity date from the balance sheet date of each item. Annual Report

88 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD 33 RISK MANAGEMENT POLICIES (continued) 33.2 Market risk (continued) Liquidity risk (continued) Classification of assets and liabilities based on the maturity as at 31 December 2013 is as follows: Over due Trong hạn Over 3 months Within 3 months Within 1 month 1 3 months 3 12 months 1 5 years 1,774,421,234,735 1,774,421,234,735 1,774,421,234, ,280,483, ,280,483, ,280,483, ,879,461, ,541,228,343 5,571,923,631,117 1,659,847, ,343,131,444 70,578,939,762 20,213,236, ,165,219,927 7,929,304,695,813 5,245,099,759,879 6,973,569,533,266 11,166,250, ,522,822,554 12,450,358,365,699 (4,521,053,669,886) 878,648,000,000 2,282,365,587,204 Assets Cash, gold and gemstones Balances with the SBV Due from banks (*) Derivatives and other financial assets Loans to customers (*) Investment securities (*) Long term investments (*) Fixed assets Other assets (*) Total assets Liabilities Due to banks Due to customers Other borrowed funds Other liabilities(*) Total liabilities Net liquidity difference 16,406,552 3,161,029,993,756 1,864,548,000,000 3,272,386,411,229 23,240,860,000 5,160,175,271,229 (1,999,145,277,473) 3,972,294,569,804 90,000,000,000 4,119,334,893 51,134,883,162 4,117,548,787, ,711,200,000 3,507,505,614,721 36,872,937,500 3,893,089,752, ,459,035,638 2,976,711,474,625 2,387,599,346,556 55,256,588,988 5,419,567,410, ,746,230,165 45,990,653, ,736,883,165 5,265,830,527,004 (*): Balances of these items do not include provisions. 1,706,279,233, ,967,234,904 55,542,295, ,586,266,455 2,309,375,030,363 2,309,375,030,363 Unit: Over 5 years Total 175,879,461, ,541,228,343 6,450,571,631,117 1,659,847,206 13,866,695,714,973 2,967,145,521,222 55,542,295, ,191,833, ,300,103,089 25,124,527,636,408 7,458,358,959,879 13,861,207,789, ,270,700, ,522,822,554 21,657,360,272,314 3,467,167,364, Annual Report 2013

89 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD 34 GEOGRAPHIC STRUCTURE OF ASSETS, LIABLITIES AND OFFBALANCE SHEET ITEMS Total loan balances and deposits at other banks Total deposits of customers and from other banks, loans from other banks Credit commitments Trading and investment in securities (Debit minus Credit) Domestic Overseas 20,904,808,574,433 21,319,566,749,260 1,443,904,168,366 2,967,145,521, SUPPLEMENTAL DISCLOSURE ON FINANCIAL ASSETS AND FINANCIAL LIABILITIES IN ACCORDANCE WITH CIRCULAR 210/2009/TTBTC On 06 November 2009, the Ministry of Finance issued Circular No. 210/2009/TTBTC providing guidance for the adoption of the International Financial Reporting Standards on presentation and disclosures of financial instruments ( Circular 210 ) with effectiveness from financial years beginning on or after 01 January The Bank has adopted Circular 210 and presented supplemental disclosures in the financial statements as at 31 December 2013 in accordance with the requirements of the Circular. As Circular 210 only regulates the presentation of financial statements and disclosures financial instruments, therefore, the definitions of financial assets, financial liabilities and other relating definitions presented on Note 35 are applied solely for the preparation of such Note. The Bank s assets liabilities and equity are still recognized and recorded in accordance with Vietnamese Accounting Standards and Accounting System for Vietnamese Credit Institutions and the regulations stipulated by the State Bank of Vietnam relevant to preparation and presentation of financial statements. Financial assets Under Circular No. 210/2009/TTBTC, financial assets of the Bank includes cash, gold, gemstones, balances with the SBV and other banks, loans to customers and other banks, trading securities, investment securities, receivables and currency derivative contracts. Financial assets within the scope of Circular 210 are classified, for disclosures in the notes to the financial statements as at 31 December 2013, are classified into either of the followings: Financial asset at fair value through profit or loss: Financial asset at fair value through profit and loss is a financial asset that meets either of the following conditions: a) It is classified as held for trading. A financial asset is classified as held for trading if: it is acquired or incurred principally for the purpose of selling or repurchasing it in the near term; there is evidence of a recent actual pattern of shortterm profittaking; or it is a derivative (except derivative that is a financial guarantee contract or effective hedging instrument). b) Upon initial recognition, it is designated by the entity as at fair value through profit or loss. Annual Report

90 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD 35 SUPPLEMENTAL DISCLOSURE ON FINANCIAL ASSETS AND FINANCIAL LIABILITIES IN ACCORDANCE WITH CIRCULAR 210/2009/TTBTC (continued) Financial assets (continued) Heldtomaturity investments: Heldtomaturity investments are nonderivative financial assets with determinable payments and fixed maturity that an entity has the positive intention and ability to hold to maturity other than: a) those that the entity upon initial recognition designates as at fair value through profit or loss; b) those that the entity designates as available for sale; c) those meet the definition of loans and receivables. Loans and receivables: Loans and receivables are nonderivative financial assets with fixed or determinable payments that are not quoted in an active market other than: a) those that the entity intends to sell immediately or in the near term, which shall be classified as held for trading, and those that the entity upon initial recognition designates as at fair value through profit or loss; b) those that the entity upon initial recognition designates as available for sale; or c) those for which the holder may not recover substantially all of its initial investment, other than because of credit deterioration, which shall be classified as available for sale. Availableforsale financial assets: Availableforsale financial assets are those nonderivative financial assets that are designated as available for sale or are not classified as: a) loans and receivables; b) heldtomaturity investments; c) financial assets at fair value through profit or loss. 88 Annual Report 2013

91 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD 35 SUPPLEMENTAL DISCLOSURE ON FINANCIAL ASSETS AND FINANCIAL LIABILITIES IN ACCORDANCE WITH CIRCULAR 210/2009/TTBTC (continued) Financial liabilities According to Circular No. 210/2009/TTBTC, financial liabilities of the Banks includes borrowings from the Goverment and the SBV, deposits and borrowings from other banks, customer deposits, valuable papers issued and other borrowed funds, payables and payables under currency derivative contracts. Financial liabilities within the scope of Circular 210 are classified, for disclosures in the notes to the financial statements, are classified into either of the followings: Financial liability at fair value through profit or loss Financial liability at fair value through profit and loss is a financial liability that meets either of the following conditions: a) It is classified as held for trading. A financial liability is classified as held for trading if: it is acquired or incurred principally for the purpose of selling or repurchasing it in the near term; there is evidence of a recent actual pattern of shortterm profittaking; or it is a derivative (except derivative that is a financial guarantee contract or effective hedging instrument). b) Upon initial recognition, it is designated by the entity as at fair value through profit or loss. Financial liabilities at amortized cost Financial liabilities that are not classified as at fair value through profit or loss are classified as at amortized cost. Annual Report

92 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD SUPPLEMENTAL DISCLOSURE ON FINANCIAL ASSETS AND FINANCIAL LIABILITIES IN ACCORDANCE WITH CIRCULAR 210/2009/TTBTC (continued) Carrying value and fair value of financial assets and liabilities The carrying value and fair value of the Bank s financial assets are presented at 31 December 2013 as below: Unit: Giá trị ghi sổ Through profit and loss Held to maturity Loan and receivables Available for sale At amortized cost Total Fair value Cash, gold and gemstones Balances with the State Bank of Vietnam Due from banks Derivatives and other financial assets Loans to customers Availableforsale securities Heldtomaturity securities Other financial assets 1,659,847,206 1,659,847, ,484,651, ,484,651, ,214,660,869,488 2,214,660,869, ,879,461, ,541,228,343 6,450,571,631,117 51,134,883,163 7,265,127,204, ,879,461, ,541,228,343 6,450,571,631,117 1,659,847,206 13,866,695,714,973 2,214,660,869, ,484,651, ,300,103,089 24,860,793,507, ,879,461,894 (*) (*) (*) (*) (*) (*) (*) (*) (*): Fair value of financial assets is not available because there is no specific guidance and regulations of the State Bank and other authorities regarding the determination of fair value of financial instruments. 90 Annual Report 2013

93 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD SUPPLEMENTAL DISCLOSURE ON FINANCIAL ASSETS AND FINANCIAL LIABILITIES IN ACCORDANCE WITH CIRCULAR 210/2009/TTBTC (continued) Carrying value and fair value of financial assets and liabilities (continued) The carrying value and fair value of the Bank s financial liabilities are presented at 31 December 2013 as below: Giá trị ghi sổ Unit: Through profit and loss Held to maturity Borrowing and payables Available for sale At amortized cost Total Fair value Due to banks Due to customers Derivative financial instruments Other borrowed funds Other financial liabilities 7,458,358,959,879 13,861,207,789, ,270,700, ,522,822,554 21,657,360,272,314 7,458,358,959,879 13,861,207,789, ,270,700, ,522,822,554 21,657,360,272,314 (*) (*) (*) (*) (*) (*) (*): Fair value of financial assets is not available because there is no specific guidance and regulations of the State Bank and other authorities regarding the determination of fair value of financial instruments. Annual Report

94 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD 36 RECLASSIFICATION OF CORRESPONDING FIGURES Some comparative items and information have been reclassified to ensure the consistency of the presentation of the current year s financial statements. Excerpt from the income statement for the year ended 31 December Reported Reclassification 2012 Reclassified Note Net gain from investment securities Effect on the income statement Income from other operating activities Effect on the income statement Provision expense for credit losses Effect on the income statement 34,444,126,845 94,969,488,749 (282,722,754,574) (14,288,904,260) (29,796,305,367) 44,085,209,627 20,155,222,585 65,173,183,382 (238,637,544,947) (i) (iii) (ii) Description and rationale of the adjustments (i) Reclassification of the "reversal of provision for longterm investments" from "net gain from investing activities" to "income from other operating activities", amounted to 14,288,904,260. (ii) Offsetting income from the revesal of provision for credit losses, which was presented in "Income from other activities" to "Expense of provision for credit losses", amounted to 44,085,209,627. (iii) Net impact of (i) and (ii). 37 EVENTS AFTER THE BALANCE SHEET DATE There has not been any other matter or circumstance that has arisen since the balance date that has affected or may significantly affect the operations of the Bank, the results of those operations or the state of affairs of the Bank in subsequent periods. 92 Annual Report 2013

95 NOTES TO THE FINANCIAL STATEMENTS (continued) as at 31 December 2013 and for the year then ended B05/TCTD 38 EXCHANGE RATES OF APPLICABLE FOREIGN CURRENCIES AGAINST VIETNAMESE DONG AT YEAR END 31/12/ /12/2012 USD EUR GBP CHF JPY SGD CAD AUD 21,036 29,138 34,806 23, ,658 19,819 18,811 20,828 27,485 33,540 22, ,046 20,935 21,634 Prepared by: Reviewed by: Approved by: Ms. Nguyen Thi Mai Ly Senior Accountant Hanoi, Vietnam 14 March 2014 Mr. Nguyen Van Hao Chief Financial Officer Mr. Nguyen Quang Dinh General Director Annual Report

96 OPERATIONAL NETWORK HA NOI Head Office 16th, 23rd and 24th floor, Mipec Tower, No. 229 Tay Son st., Nga Tu So ward, Dong Da dist., Ha Noi city Tel : Fax : Website : dvkh.pgbank@petrolimex.com.vn 94 Annual Report 2013

97 Hanoi Branch No. 11 Tran Hung Dao, Phan Chu Trinh ward, Hoan Kiem dist., Ha Noi city. Tel: Ba Trieu Transaction office No. 79 Ba Trieu, Nguyen Du ward, Hai Ba Trung dist., Ha Noi city. Tel: / Nguyen Cong Hoan Transaction office No. 84/9 Ngoc Khanh st., Giang Vo ward, Ba Dinh dist., Ha Noi city Tel: Bach Khoa Transaction office No. 27 Ta Quang Buu st., Bach Khoa ward, Hai Ba Trung dist., Ha Noi city Tel: Trung Hoa Transaction office 18T118T2 Trung Hoa Nhan Chinh, Le Van Luong st., Nhan Chinh ward, Thanh Xuan dist., Ha Noi city Tel: Thai Thinh Transaction office No. 192 Thai Thinh st., Lang Ha ward, Dong Da dist., Ha Noi city Tel: Nguyen Ngoc Nai Transaction office No. 227 Nguyen Ngoc Nai st., Khuong Mai ward, Thanh Xuan dist., Ha Noi city Tel: Truong Dinh Transaction office No Truong Dinh st., Tuong Mai ward, Hoang Mai dist., Ha Noi city Tel: Hoang Cau Transaction office No. 1 Vo Van Dung, O Cho Dua ward, Dong Da dist., Ha Noi city Tel: Kim Lien Transaction office No. 101A, C5, Kim Lien Dormitory,Kim Lien ward, Dong Da dist., Ha Noi city Tel: Trung Kinh Transaction office No. 47 Trung Kinh st., Trung Hoa ward, Cau Giay dist., Ha Noi city Tel: Ha Dong Transaction office No. 12 Tran Phu st., Van Mo ward, Ha Dong dist., Ha Noi city Tel: Vo Thi Sau Transaction office No Vo Thi Sau st., Thanh Nhan ward, Hai Ba Trung dist., Ha Noi city Tel: Hoang Mai Transaction office Box 7, Lotte 7 Den Lu 2, Hoang Van Thu ward, Hoang Mai dist., Ha Noi city Tel: Tay Do Transaction office No.729 Quang Trung st., Phu La ward, Ha Dong dist., Ha Noi city Annual Report