BUSINESS PLAN OF THE YEAR Ho Chi Minh City, April 2016

Transcription

1 BUSINESS PLAN OF THE YEAR 2016 Ho Chi Minh City, April 2016 Business plan 2016

2 CONTENTS EXECUTIVE SUMMARY 3 DETAILED PLAN 6 PART 1 MARKET OVERVIEW I. FORECAST ON GLOBAL AND VIETNAM ECONOMY IN II. FORECAST ON VIETNAM FINANCE AND BANKING MARKET IN PART 2 BUSINESS PLAN I. TOP PRIORITIES IN II. FINANCIAL TARGETS 9 III. ACTION PLAN OF THE YEAR A. TARGETS ON CUSTOMER EXTERNAL ACTIVITIES Consumer banking Corporate banking Financial investment and inter-bank activities Network development and marketing activities 18 B. TARGETS ON OPERATION AND ORGANIZATION Credit management Workout activity Risk management Operation management Implementation status of 05 strategic goals IT Management 25 C. TARGETS ON HUMAN RESOURCE TRAINING AND DEVELOPMENT Key targets for HR management Other HR operational activities 27 Business plan 2016

3 EXECUTIVE SUMMARY In the context that global economy in 2016 is expected to continue with its recovery cycle at a slow pace and still contain inherent risks & challenges, etc. The prospects of Viet Nam economy in 2016 is projected to achieve better results on the back of cautious and pro-active development following the global economic integration. Following significant results achieved in 2015, moving into 2016, ABBANK shall put its effort on pushing up retail oriented business activities on the basic of cautiousness, safety and sustainability. In the meantime, the bank continues to give its attention to the enhancement and standardization of operation activities moving forward the international best practices, diversification of products & services, improvement of income structure, and enhancement of activities of risk management, work-out, credit portfolio management and NPL controlling. Therefore, on the back of BOD s orientation, ABBANK s key goals and priorities in 2016 shall include: Maintaining high credit rating on the market Controlling NPL Re-mapping ABBANK s branding on the market Investing in IT, which is an infrastructure to create outstanding products for consumer and SME segment; and enhancing the control of IT risks. Completing all strategic initiatives Deploying new network development in 4 provinces (4 branches and 14 transaction offices) Increasing the weight of service fees income to total operating income from traditional banking services and others such as asset valuation, insurance consultancy and partnership Based on above strategic orientations, the whole ABBANK s system shall focus on three areas: (i) Customer- external, (ii) Operation- organization and (ii) Learning and development in 2016 to achieve financial targets. Details are as follow: 3 Business plan 2016

4 Summary of financial targets of the year 2016 Unit: Vnd bn Item Plan 2016 Actual 2015 Plan 2015 Vs Actual 2015 Vs Plan /- % +/- % Total asset 70,000 64,662 71,104 5, % (1,104) 98% Owner Equity 5,818 5,686 5, % (101) 98% Charter Capital 5,320 4,798 5, % 0 100% Loans 45,632 41,195 43,170 4, % 2, % - Market 1 40,195 30,915 28,570 9, % 11, % - Market 2 5,437 10,280 14,600 (4,842) 53% (9,163) 37% Deposits 58,305 56,977 62,927 1, % (4,622) 93% - Market 1 52,305 47,881 46,500 4, % 5, % - Market 2 6,000 9,096 16,427 (3,096) 66% (10,427) 37% NPL group % (386) 68% - Ratio of NPLs / Total loans 1.78% 1.72% 2.78% 0.06% 103% (1.0%) 64% - Ratio of NPLs/Loans in market % 2.38% 4.20% (0.4%) 85% (2.2%) 48% Earning before Credit Provision Expense % % Credit Provision Expense (31.7) 86% % Provision for VAMC Bonds % % Earnings before tax (109.4) 66% (85.5) 71% Additional Provision for (216.2) VAMC Bonds Earnings before tax % - - Summary of key financial indicators 2016 Item Plan 2016 Actual 2015 Plan 2015 ROaE 3.7% 1.9% 1.1% (*) %/year ROaA 0.3% 0.2% 0.1% (*) %/year EBT/Income 4.7% 2.2% 1.5% % Operating expenses/net income (CIR) 55.5% 57.8% 58.2% % CAR >=9% 16.2% >=9% % Total asset/equity Times Debt/Equity (D/A) Times Equity/Total asset 8.3% 8.9% 8.3% % Unit 4 Business plan 2016

5 Debt/Total asset 91.7% 91.1% 91.7% % Loans (2 markets)/total asset (LAR) 65.2% 63.7% 60.7% % Loans (2 markets)/deposits market 1 (LDR) 87.2% 86.0% 92.8% % EBT/Staff Mil dong Operating expenses/staff Mil dong (*)ROaE, ROaA are calculated based on VAMC 20% provision Details of year 2016 s business plan are specified in the attached file. The plan has been approved by the Shareholder Meeting. An Binh Commercial Joint Stock Bank Chief Executive Officer CÙ ANH TUẤN 5 Business plan 2016

6 DETAILED PLAN PART 1 MARKET OVERVIEW 2016 I. FORECAST ON GLOBAL AND VIETNAM ECONOMY IN Global economy Global economy in 2016 is projected to get better results than Though decreasing oil price and recovering US s economy are expected to boost global economy, but these are not enough to put the whole train into the right track. Reasons are partly due to the slow pace of China s economic growth, the dropping exports of crude oil exporters like Russia and countries of OPEC. Hence, IMF forecasts global economic growth in 2016 shall only stay at 3.6%. The US economy is still anticipated to be an only bright spot with growth projected at 3% while Eurozone s growth remains stagnant and is forecasted at 1.7%. Prospect for Japan s economy in 2016 remains modest with an estimation of 1.2%, while China s economy continues to face another yeat of slowdown with a projection of only 6.3%, which thus affects the whole Asian economy. 2. Vietnam economy With a high GDP growth of 6.7% in 2015, the highest since 2007, Viet Nam economy in 2016 is expected to grow further and projected at 6.7%. Regarding inflation, CPI in 2016 is expected to be higher but remain controlled below 5% due to slight recovery of global commodities price in combination with the adjustment of local public prices. In general, resolved local enterprises difficulties, higher domestic demands, maintained good exports, and low inflation are strong fundamentals for Viet Nam s economy to grow in medium term. II. FORECAST ON VIETNAM FINANCE AND BANKING MARKET IN Interest rate For USD: SBV has officially cut interest rate on USD deposits to 0%/year (for both individuals deposits and corporates deposits). Significantly, in Y2016, SBV may slash interest on USD deposits to even below zero. In the coming year (Y2016), VND interest rate is expected to increase as a result of pressure from exchange rate and demand of credit growth (forecasted at 18%-20%). However, the increase in interest rate is said to not too tough or sudden to the economy. 6 Business plan 2016

7 - Exchange rate Y2015 is a year of significant volatility in the VND/USD exchange rate. As a result of external factors, SBV had to raise the average interbank exchange rate 3 times, 1% each time on 7 th Jan, 7 May and 19 th Aug. In addition, for the first time after 4 years, SBV has widened the exchange rate band: from +/-1% to +/-2% on 12 th Aug and then increased to +/- 3% on 19 th Aug. In general, for the whole Y2015, the VND/USD exchange rate has increased by + 5% in total compared to that of by end Y2014. Besides this, SBV also sold out USD to stablise the forex market. Notably, on 17 th Dec, FED has hiked interest rates by 0.25% - 0.5% from 0% % for the first time after nearly a decade; and implying four quarter-point rate hikes in Y2016. Such event together with high demand for USD payment by year end makes greenback rates (ask rate) hit ceiling price in most local banks then calmed down right after SBV sold USD on date 25 th Dec. In Y2016, SBV is likely to apply flexible exchange rate policy whereby central rate will change on a daily basic. Yet, the up-trend of the USD against most of other currencies and loose monetary policies in many countries worldwide as well as domestic trade deficit, high possibility of inflation, high public debt would still put high pressure on the VND/USD exchange rate. - Credit growth Thanks to high credit growth contributing to high GDP growth of 6.7% in 2015, this implies the fact that banks credit has been poured into prioritized and manufacturing areas to ensure sustainable growth of the economy. In the context that the economy is expected to grow further in 2016, credit growth is anticipated to remain high and may fall into the range 18-20% to continue its support to local enterprises. - NPL & VAMC Thanks to close coordination between SBV and banks, the system s NPL ratio has drop from more than 17% in Sep 2012 to less than 3%. Hence, after initially concentrating in purchasing bad debts by special bonds (VAMC bonds), VAMC has recently targeted to deal more efficiently with those purchased bad debts (by selling or liquidating assets, etc) and to purchase bad debts following market price, thus limiting the purchase of bad debts by special bonds. In 2016, VAMC plans to formulate legal framework to support dealing with purchased bad debts. 7 Business plan 2016

8 - Banks performance In 2016, brighter picture of local economy and improving enterprises activites are expected to boost banks performance. However, pressure from provisioning for NPLs and bad debts sold to VAMC continues to erode banks profit in 2016 and coming years. Furthermore, the continued restructuring progress of banks helps increase the system transparency and fair competition among banks. In addition, internatinal best practices will soon be implemented by the SBV to ensure banks compliance. PART 2 BUSINESS PLAN 2016 I. TOP PRIORITIES IN Maintaining high credit rating on the market 2015 is the first year that ABBANK was rated by Moody s with high credit rating among joint stock commercial banks in Viet Nam. Hence, following this success, in 2016 ABBANK will continue to maintain its high credit rating, which is expected to bring further positive results and spread its branding over the market, thus contributing to create reputation and attract customers for ABBANK s services. Furthermore, ABBANK also targets to win a reputable retail banking award in Controlling NPL Thanks to close instruction of BOD and BOM in combination with great efforts of the whole system in dealing with bad debts, the NPL ratio has been brought down to less than 3%. On this achievement, ABBANK still puts more focus on work-out by all active and flexible solutions in order to soon recover all bad debts. Furthermore, the bank also needs to enhance monitoring and strengthening credit portfolio to avoid newly occurred NPL and maintain the NPL ratio less than 3% as requested by the SBV. 3. Re-mapping ABBANK s branding on the market Year 2016 will be the first year that ABBANK re-map its branding on the market with strategic goal of being Vietnam s leading commercial bank focusing on retail. Following by, its branding will be closely attached with a friendly and reputable retail bank to create trustworthiness and attention from customers. This thus helps develop the bank s positive images for its products and services. 4. Investing in IT, which is an infrastructure to create outstanding products for consumer and SME segment, and to strengthen the capabilities in controlling technological risk 8 Business plan 2016

9 Amidst the context of stiff competition in retail segment among comercial banks, the diference among those will be their focus in IT to create infrastructure for outstanding, diversified and hi-tech products for consumer and SME segment to meet their highly increasing demands and convenience. This is also a suitable step towards the implemenation of 5 strategic goals of gradually increasing the bank s service fees income contributing to enhance its income sustainability. 5. Completing all strategic initiatives bank-wide The progress of formulating and consolidating foudation for ABBANK s long term and sustainable growth has almost been completed. Particularly, from 2014 to Dec 2015, ABBANK has implemented 20 projects, of which 10 projects have been fully completed while the other two have been finished at phase 1. As expected by middle 2016, the remaining 8 projects will be completed basically. Following by, implemented projects have brought positive results and contributed to build ABBANK s branding in a more efficient, professional and modern way. This is a stepping stone and a key factor that helps lift ABBANK to the new level on Viet Nam s banking market. 6. Starting to expand distribution network at 4 provinces (4 branches and 14 transactional offices) 7. Increase the weight of service fees income to total operating income, including fees from traditional banking services and others like asset evaluation, insurance consultancy and partnership To reduce the reliance on interest income and other trading incomes like currency, bond and position trading. II. FINANCIAL TARGETS Unit: Vnd bil Item Plan 2016 Actual 2015 Plan 2015 Vs Actual 2015 Vs Plan /- % +/- % Total assets 70,000 64,662 71,104 5, % (1,104) 98% Owner Equity 5,818 5,686 5, % (101) 98% Charter capital % 0 100% Loans Loans 40,195 30,915 28,570 9, % 11, % Corporate 25,853 19,682 19,040 6, % 6, % Consumer 14,341 11,233 9,530 3, % 4, % Deposits Deposits 52,305 47,881 46,500 4, % 5, % Corporate 29,305 26,191 26,500 3, % 2, % Consumer 23,000 21,690 20,000 1, % 3, % Interbank Deposits at and Lending 6,333 11,553 18,599 (5,221) 55% 12,266 34% 9 Business plan 2016

10 to other credit institutions Investment NPL Business result Deposits and Borrowing from other credit institutions 6,000 9,096 16,427 (3,096) 66% 10,427 37% Investment Securities 16,802 15,739 16,210 1, % % Trade Securities Long-term Investment (30) 95% % NPL group 2 (Market 1) - Loans % 4 101% - Ratio 1.0% 1.03% 1.39% (0.03%) 97% (0.39%) 72% NPL group 3-5 (Market 1) - Loans , % (386) 68% - Ratio 2.02% 2.38% 4.20% (0.35%) 85% (2.18) 48% Interest income 4, , , % % Interest expense 2, , ,462.5 (140.2) 94% (171.8) 93% Net interest income 1, , , % % Income from services % (58.0) 66% Other income (27.0) 89% % Total income 2, , , % % Total Operating 1, , , % % Expense Profit before Provision % % Provision for credit risk (31.7) 86% % Provision for VAMC Bonds % % Profit before tax (109.4) 66% (85.5) 71% Additional Provision for (216.2) VAMC Bonds Profit before Tax % - - Analysis of business plan in Total assets in 2016 are targeted at Vnd 70,000 bn, which increase nearly Vnd 5,400 bn (8%) y-o-y and decrease about Vnd 1,100 bn (2%) compared with the plan 2015 due to 10 Business plan 2016

11 the drop on market 2, but strong increase on market 1. Charter capital is planned to increase by Vnd 522 bn from Vnd 4,798 bn to Vnd 5,320 bn after getting approval from SBV - Loans and deposits on market 1 in 2016 are expected to grow strongly. In particular, total loans are expected to reach Vnd 40,195 bn, up 30% as compared to end of 2015 and up 41% as compared with the plan 2015; Deposits are planned to reach Vnd 52,305 bn, up 9% compared with 2015, and increase 12% as compared with plan Interbank has a downward trend due to the impact of several factors. Particularly: Circular No. 708 / NHNN-TTGSNH dated 27 th July 2015 about the borrowing and lending between banks: "not perform reciprocal borrowing and lending among banks to increase total assets technically. Interbank market still face with instability due to bank s restructuring progress as several banks were get into special supervision, hence many banks tend to tighten their granted limits and interbank trading for risk prevention. ABBANK also cuts down its interbank trading to mitigate liquidity risk and bad debt. - Investment: grow to balance the income scale and diversify the investment portfolio for risk mitigation. - Overdue loans Group 2, Group 3-5 (NPL) are all expected to drop in 2016 as compared to 2015 while total loans are planned to grow strongly in 2016, which thus leads to significant drop of NPL ratio. - PBT plan in 2016 is estimated at Vnd bn (after doing the provisioning 20% of VAMC of Vnd bn), up Vnd bn as compared with 2015, equivalent to an increase of 99%. As compared to the plan 2015 (additional Provision for 10% VAMC of Vnd bn), it increases by Vnd bn, equivalent to 227% increase In which: Net interest income is planned at Vnd 1,880.5 bn, up Vnd bn, equivalent to an increase of 13% as compared with As compared with plan 2015, it increases by Vnd bn, equivalent to 29%. Net service fees income (excluding Guarantee fee) reached Vnd bn, up Vnd 57.1 bn, equivalent to 107% as compared to result of Compared to the plan 2015, it decreases by Vnd 58 bn (34%), due to the service income of the plan 2015 included the guarantee fee (Vnd 102.7bn). Other incomes are about Vnd 227 bn, down Vnd 27 bn, equivalent to a decrease of 11% as compared to the result of 2015 mainly due to the decrease of investment 11 Business plan 2016

12 activities. Compared to the plan 2015, it increases by Vnd bn (106%) due to the plan 2015 hasn t recorded the income from the sale of bonds (approximately Vnd 94.2 bn). Operating expenses are planned at Vnd 1,300 bn, up Vnd 104 bn, equivalent to 9% compared to 2015, mainly due to increase of salary and expenses following the increase of the bank scale, etc III. ACTION PLAN OF THE YEAR 2016 A. TARGETS ON CUSTOMER EXTERNAL ACTIVITIES 1. Consumer banking 1.1 Strategic aims and objectives in Strategic Aim in 2016 With the ambition to become one of Top 10 VN Retail Banks, in 2016 ABBANK shall continue to push consumer loan growth rate at 28% and focus on group of customers with average loan of 500mil/each. Along with the South Area (which already takes up a large proportion and has impressive growth rates), Consumer Division shall push harder to promote business activities in the Northern Area (which has great potential) and Central Area. Along with consumer loans, consumer service fees shall be another objective to ensure its growth of 30%. Development of services will bring efficiency based on the development of number of customers opening accounts and registration services. In addition to the current distribution system of business units, Consumer Division will also approach and negotiate with partners to implement the sale of bulk services, ensuring rapid and effective increase of customers, as well as service sales and also leverage to sell other products. 1.2 Business targets in 2016 Compared to Compared to Result Plan Items Plan 2016 result 2015 plan (+/-) % (+/-) % Deposits 23,000 21,690 20,000 1, % 3, % Loans 14,341 11,233 9,530 3, % 4, % No. of individual 699, , , , % 164, % customers Card 133,650 58,764 55,132 74, % 78, % Youcard 119,708 51,662 40,824 68, % 78, % Visa Debit 5,942 3,540 5,452 2, % % 12 Business plan 2016

13 Visa Credit 8,000 3,562 8,856 4, % (856) 90% ATM (accumulative) POS (accumulative) % % 1, % % Note: Total Card issued: number of new card issuance incurred yearly. - Total Card issued: number of new card issuance incurred in 2016 should be 133,650. Total accumulated card issuance to 31st Dec 2016 should reach 588,508 of all types of cards including: 531,343 YOUcard, 33,181 Visa Debit and 23,984 Visa Credit 1.3 Business solutions in Products/services Development Develop co-branded cards required by partner developing department and business units. Install transactions paid by credit card project. Payment airplane ticket based on code and available on online banking ABBANK service. Diversify saving products on Online banking. Promulgate some typical packages of loan policies for several branches to increase their competition as well as develop regional market share. Continue to build and expand the scope of collection of utility bills, such as deploying water bill payment with Water Supply Company as: Cho Lon, Long An, Dong Thap, Trung An, Thu Duc. Deployment WAP / Client method for using Mobile Banking - ABBANK BankPlus. With this feature, customers can proactively perform financial transactions by mobile phone via wifi / 3G without a SIM or memory the syntax. Electronic Payment: continue to expand the scope of collecting electricity bills in the province Hanoi and development pay electricity bill payment by online at the EVN website. About Electronic Banking Services: continue to build and develop new electronic banking applications (Mobile Banking, Online Banking) follow modern trends, user-friendly interface and a full range of convenient payment 13 Business plan 2016

14 feature now especially focusing the electronic payment service automatically as customer s needs. - Partnership Development Promote business activities through existing channel partners and strengthen development cooperation with potential partners in the market. Focus on implementing diversity policies reward, incentive program for the sales representative to create sales tools to access and leverage customer through sales channels. - Development of other business channels Develop POS business targeting business chains, sales channels. Develop and expand ATM network in line with ABBANK s growing transaction points. Continue to carry out more direct sales programs to increase customer numbers, registration and use of services through ABBANK system. 2. Corporate banking 2.1 Strategic aims and objectives of To complete the project of Enhance of competitivness ability for SME(s) customer to meet strategic initiatives set by BOD. - To deploy successfully the project financing for Vinh Tan 4 thermoelectricity factory (expand) at Binh Thuan province having power 600MW with total investment nearly Vnd 24,000 Bn invested by EVN. - To complete, develop products & services having high-technology (E-banking, Custom tax collection, Trade services...) to create difference and improve customer service quality, contributing to meet the services fees target in Business targets in 2016 Targets Plan 2016 Results 2015 Plan 2015 Compared to Results 2015 Unit: Bil VND Compared to Plan 2015 (+/-) % (+/-) % Loans 25,853 19,682 19,040 6, % 6, % Deposits 29,305 26,191 26,500 3, % 2, % No. of clients 25,455 20,017 21,649 5, % 3, % International payment revenue 1,787 1,335 1, % % 14 Business plan 2016

15 (Mil USD) 2.3 Business solutions of Product & services development To separate and develop product & services in line with each customer segmentation particularly: SMEs, large corporate, strategic customer towards enhancing productivity and market competitiveness. Particularly: For SME customer: develop suitable product & services with Offer letter approved based on project Enhance competitiveness ability for SME. For large corporate: develop products for customers having good cash flow, effective business status on priority industry / segmentation of ABBANK: FDI, Textiles, Real Estate, Infrastructure construction & Engineering, Technology etc. For strategic customer (core customer): develop product and services that are specialized for EVN and deploy thoroughly and effectively for all product applied only to EVN: Package product for EVN contractor, Syndicate loan, Hydroelectricity project re-funding, Investment financing etc. and develop product and services for customers belonging to Petrol & Oil group. To strengthen and optimize cheap capital source from SBV (SME financing by project SMEFP III), from FIs (Import-export financing, UPAS L/C, L/C refinancing etc.) and being priority in these sources for strategic customers to enhance competitiveness effectively. - Partnership development Implement KPIs management according to profit targets from corporate customers contributing to ABBANK, and implement early warning activities of the situation, business results, sales yield of Business Units and Customer relationship officers. Support to access, monitor developments and provide outstanding solutions to help customers with a credit limit of 10 billion or more creditors receive priority, other animal products in Vietnam using the bank. Create new promotions / incentive program. - Partnership development Especially focus on Partnership with strategic shareholders: IFC and Maybank for the purpose of launching new product as well get support from consultation and technology aspects. Strengthen cooperation, exploit and use in priority product & services of other strategic partners who had long-term relationship and having important support in 15 Business plan 2016

16 Trade acitivity such as: WellsFargo, JPMorgan, Deustche Bank, Unicredit etc. in the period that the foreign banks have tendency in being narrow services with local banks. Research and examite the cablity of cooperating with new and potential market where are less exploited by Vietnamese banks such as: Bangladesh, Srilanka, Cuba, Nepal, Middle East countries etc. Establish and strengthen the relationship with Organization and Locals related such as: Commercial office of Embassy of various countries, Regions / Nations (Amcharm, Euro Charm, JICA etc.), Bank Association... to catch up market information and keep up opportunity to approach with organization, foreign corperation, FDI. - Project implementation progress Project Enhance competitiveness ability for SMEs : The project continues focusing on followings: Update and separate customer types into each customer segmentation on T24 system. Develop and apply Real selling value at ABBANK. Apply and amend SME Scorecard for SME segmentation. Develop and do package all product and services to be in line with demands of customer segmentation diversified. Speed up sales & services. Complete risk appetite and Credit Approval policy for SME segmentation. Do project marketing and PR. Project for increasing service fee collection, project for dividing Branches at Ha Noi and Ho Chi Minh (Second review): Implementation as plan approved by the BOD. Project for SME center establishment: build up and make proposal regarding SME center establishment and launch as progress approved by BOD. - About SMEs business performance Unit: Bil VND Compared Compared Plan Plan Targets Results with results with plan (+/-) 2015 % (+/-) 2015 % Lending / Loans 8,970 6,923 6,900 2, % 2, % Depopsits 2,500 2,381 2, % % 16 Business plan 2016

17 No. of clients 24,000 18,632 20,378 5, % 3, % Proportion to total corporate loans (%) Proportion to total corporate deposits (%) (0.2) Financial investment and inter-bank activities 3.1 Business solutions of Liquidity and treasury activities Ensure ABBank s liquidity with reasonable liquid assets to total asset ratio. Pay attention to terms and cash flow balance control, ensure the respect of SBV s regulations in term of safe ratios and GAP limits approved by ALCO. Monitor closely interest rate movements in the interbank market in order to adjust timely FTP rates which ensure the compliance with market rates and with lending/mobilization orientation of ABBank. - Financial Investment activities Seek for potential opportunities to invest additionally Vnd 500 bn in corporate bonds. Besides that, to diversify various types of products of issuance consulting, financial consulting, and other intermediary transactions for trading bonds on secondary markets in order to enhance consulting fees for ABBANK. Strictly monitor and manage operation of companies issued corporate bond held by ABBANK to reduce risks. - Money market activities Ensure liquidity for ABBank specially on Tet Holiday. Continue trading strategy like match tenor trading, GAP trading for both VND and USD from 3 month- 6month tenor and within allowed limits. Co-ordinate with other business divisions to find lending chances on taking advantage of trade loan sources from IFC, Wells Fargo, JP.Chase when having favorable opportunity. Promote repo and swap transactions in order to diversify business types. Establish relationships with new credit institutions which now have limited transactions with ABBank through transactions secured by collaterals. - Bond investment and trading activities 17 Business plan 2016

18 Credit Institutions Bonds In 2016, ABBANK continues to invest (both replacement and new investment) in bonds of Credit Institutions with an amount of Vnd 400 bn face value in order to enhance profits for the bank. Government bond trading activities Monitor closely the market situation in order to make timely purchasing decisions and bring profits for the bank. - FX trading activities Supporting branches and establishing currency exchange supporters at Treasury and Investment Division to boost up turnover with customers. Raising interbank trading and stepping up USD position trading to expand turnover and make profit, with target volume from 5.2 to USD 5.6 bn turnover (Spot, Forward, Swap) and Vnd 50 bn profit. Coordinating with other Departments to provide competitive prices to attract and develop new customers, reaching customer sales by USD 1.8 bn. Reinforcing supervision and currency exchange management activities of all branches in Treasury and Investment Division. Coordinating with FI to review and re-examine interbank partners which don t have transaction limit to expand interbank activities. - Other Activities In 2015, FTP system has been implemented and stabilize operated in T24 Core Banking system. In the next year 2016 Treasury will continue to coordinate with related divisions to implement FTP system and check FTP reports in web based, complete 100% as the 2016 plan and close the project. 4. Network development and marketing activities 4.1 Network development plan Network development plan 2016: ABBANK pays attention to projects such as: Strongly focus on network development following orientation of retail banking, increasing the coverage and recognition in provinces/cities. Increase the quality in renovating facilities of transaction points, contributing to improve the quality of customer service and strengthen the brand identity of ABBANK. Implement and complete the plan of constructing branches office buildings. 18 Business plan 2016

19 Ensure to meet the progress in activities like extension or adjustment of renting contracts. Based on that, in 2016, ABBANK makes plan to open 18 new transaction points (including 4 branches and 14 transaction offices), to upgrade 15 saving funds to transaction offices, to construct 4 office buildings and implement more than other 100 items of projects. Expected as at 31 st Dec 2016, ABBANK s network shall have 164 transaction points covering 33 provices/cities, including 34 branches and 130 transaction offices. - Network development activities implemented in 2016 Item New opening Upgrading saving fund into transaction office Changing location Building, renovating purchased house Renovating, upgrading existing renting house Renting house extension Periodical adjustment of renting contract Support to build, renovate Remark Start to establish branches and transaction offices that will be licenced by the SBV Start to establish transaction offices that will be upgraded from existing saving funds Relocate offices to new renting locations Invest and build offices of purchased houses Renovate exising renting houses, to ensure the working facilities Extend the renting contracts that expire in 2016 Negotiate with house owners to adjust renting prices and other renting conditions Build ATM booths to open or relocate ATM, and to renovate the Plan 2016 Result 2015 Compared to result 2015 (+/-) * ** Business plan 2016

20 Item Remark Plan 2016 Result 2015 Compared to result 2015 (+/-) ATM booths booths (*) including 05 transaction points that have been started in 2015 and be continued in early 2016 (**) excluding 10 standby transaction points - Others (project, process, supporting activities,.) Coordinate to make annual survey to evaluate the facilities and images of transaction points. Update processes and regulations relating to network development and finish the application to manage network database. 4.2 Branding and marketing activities - Overview 2016 plan of marketing focuses on brand development activities. In particular, in order to create something new, Marketing Planning Division adjust the brand identity towards modernization, in line with the trend, showing their transition towards development ABBANK become leading banks Vietnam, focusing on the retail sector. In addition, regarding brand development and strengthening the positioning of Friendly retail bank as the main focus for marketing activities of ABBANK in 2016, new marketing campaigns have been planned. The investment in marketing and brand development in 2016 is also increased compared to The budget wil be funded into the most critical marketing activities including branding, branches support, product and service promotion which highlight ABBANK s retail banking products and services to individual consumers and the SMEs. - Concentrate on brand development Consult and renovate ABBANK s current corporate identity at transaction points; pilot newly-designed signs at 05 transaction point s in Hanoi and Ho Chi Minh city Increase local brand awareness by new billboards throughout the country, especially in Hanoi, Da Nang and Ho Chi Minh city. Increase brand exposure by event/charity sponsorships on television including Tet An Binh charity which will be held in December 2016; the ads campaign to position the image of Friendly retail bank towards consumers with the support of online advertising, social media, events, conferences, social security sponsorships throughout the year. 20 Business plan 2016

21 - Enforce public relation Reinforce relationships with media institutes supporting brand building activities Increase public relation to promote products and services Enhance public-relation crisis management - Invest in product and service promotion Continue to collaborate with the Consumer Banking Division and the Corporate Banking Division to promote ABBANK s products and services focusing on the categories for individual consumers and SMEs following the Friendly retail bank orientation. The center of products promotion activities in 2016 are campaigns for mobilizing savings in Q1 and Q4; personal loans and services in Q2 and Q4; product package for SME in Q1, Q2 and Q3 - Business support for branches Support brand development and branches business development with marketing plan in each quarter, especially during the critical business seasons in Q2, Q3 and Q4. - Market research Execute market research on consumer s brand awareness, brand health, product and service in order to obtain critical market insights that support ABBANK s divisions s business development. - Internal activities Enhance internal communication that builds ABBANK s friendly and collaborative business culture. Continue to support other units with other internal activities on news, events, and competitions. Ensure instantaneous communication, interaction and engagement with employees. Maintain monthly events/competitions quarterly to improve ABBANK s employee s team spirit. B. TARGETS ON OPERATION AND ORGANIZATION 1. Credit management 1.1 Vision and strategic objectives of credit management in Increasing collateral appraisal charges. - Approving distribution line for each customer segment and deployment approved experts. 21 Business plan 2016

22 - Developing project evaluation capacity building and loan management. - Focusing on developing human resources for credit monitoring, managing and improving credit quality. - Successful implementation of the monitoring and managing credit. 1.2 Main activities in Approval To continue to implement and complete the project: revolving and dealing with credit documentation To coordinate with related units for the formulation of credit approval specialists To formulate the project of building credit approval center To coordinate with business units to strengthen customers evaluation activities - Collateral appraisal activity To valuate collateral on time. To review the property valuation all system. To publicize/edit/supply the abbank's pricing basis in regions following approval. To submit the changes of provisions on valuating assets. Amount of the folders in 12 months of 2016: 25,000 assets within the law and market price. - Credit management activity To classify debts and Reports on credit data. To report statistical regimes on credit to SBV. Report on internal to BOM and provide credit data to divisions as request. To classify debts according to groups and markets. To review, build and adjust guidelines on credit activities, credit management which is conformable with policies and business activities at ABBANK. To support and guide the problems of the branches on the documents, provision related to credit activities what CM was built. To coordinate with divisions to normalize T24 data. - Credit monitoring activity Direct Monitoring: Carry out the field works at 16 branches according to the approved plan. The Monitoring from distance: strengthen the implementation of remote monitoring, perform periodic reviews of high-risk products, continue to develop criteria to identify and review the problem debts from early stage. 22 Business plan 2016

23 2. Workout activity To ensure NPL over total loans of market 1 under 3%. To enhance reviewing to amend, replace documents related to dealing with bad debt. 3. Risk management 3.1 Credit risk management - To continue the formulation and review of credit policies, i.e, Credit Handbook, Regulation on collateral such as future properties, goods, rotation inventories, receivalbles, debt claims and others; Regulation on interest waiver; Regulation on lending; Regulation on the handle and management of problem debts; Regulation on syndicate loans. In addition, to continue the review of policies on exceptions approving and resolotion of recommendations by Internal Audit. - To continue the implementation of periodic reports submitted to BOD, BOM, Supervisory Board, RMC, ERC, IFC, Maybank; conduct Industry Prospects research. - To monitor and control Credit portfolio in line with Credit Orientation, Credit Risk thresholds; IFC Financial covenants; Credit Portfolio in compliance with Circular No.36 of SBV. To review the indicators in ERD report to be in line with Credit risk thresholds To manage Operation, analysis and review of data in Credit rating system; coordinate with IFC expert to periodically review SME Credit scoring program; to continue enhancing and improving Credit rating system and support Business Unit in scoring customers. - To coordinate with IT Division to implement the second phase of project on the management of customers related groups; Credit Modelling; Basel II. 3.2 Market risk management - To continue to conduct periodic reports (liquidity risk reports, market risk reports) and follow market movement for appropriate recommendation to respective authorities. - To continue the collaboration with ALM unit to speed up the issuance of ALM Framework. After that, to proceed the formulation of documents on Liquidity risk management procedure, Interest rate risk management procedures and Liquidity stress test procedures and market risk management procedures. - To set up interest rate risk on banking book report; calculation of Earning at risk (based on NII collected from Financial accouting Division) and Economic Value at risk. - To collaborate with ALM and Treasury Division in setting up and management details of trading book and banking book securities on T24 system. 23 Business plan 2016

24 - To review applicable risk management limits in accordance with the business plan of Treasury Division and risk appetite 2016 of ABBANK. 4. Operation management 4.1. Credit supporting center - To conduct training program for all internal credit admin staffs/officers. - To improve productivity at least by 10%. - To set up software in support of searching guarantee-related information from ABBANK s. - To develop 05 T24 utilities for Limit, Collateral, LD Loans & Guarantee. - To frequently review and update procedures for credit admin centralizing Payment center - 95% transactions will reach SLA. - Centralize payment for Branches that join interbank payment channel.. - Upgrade interbank payment system annually under instruction of SBV International payment center - Transaction safety rate is 98%, STP rate is 95%, 95% of transactions reach SLA in term of processing time, there is no transaction being complained. - Cooperate with Internal Audit to examine compliance at Branches. - Develop and apply Internal circulation system for trade transactions Card supporting and operating center - Co-operate with IT Division to implement the project of upgrading Card system in DC 36 Hoang Cau. - Co-operate with IT Division to implement the PCI DSS project. - Review and modify internal procedures to improve service quality in card operation and risk management. 5. Implementation status of 05 strategic goals No Item Plan 2016 Result 31/12/ Total assets ROE (after tax) - Total assets: Vnd 70,000 bn - ROE: 3% - Total assets: Vnd 64,662 bn - ROE: 1.5% 24 Business plan 2016

25 No Item Plan 2016 Result 31/12/ % retail outstanding loans (individuals and SME)/ total loans on Market % Net service (include Guarantee fee) based income in total operating income. 4 Friendly and professional work culture and environment turnover ratio) 5 Corporate governance and risk management - Retail loans: Vnd 23,311 bn (in which, consumer: Vnd 14,341 bn and SME: Vnd 8,970 bn) - Total loans of market 1: Vnd 40,195 bn - Retail loans proportion: 58% - Net service income Vnd 227 bn. - Total income: Vnd 2,217.8 bn - Proportion: 10.2% - Retail loans: Vnd 18,156 bn (in which, consumer: Vnd 11,232 bn and SME: Vnd 6,923 bn) - Total loans of market 1: Vnd 30,915 bn - Retail proportion: 58.7% - Net service income: Vnd bn - Total income: Vnd 1,966.6 bn - Proportion: 7.86% N/A Turnover ratio: 11.9% Continue building risk management framework phase 2 - NPL ratio (group 3-5)/total loans: 1.78% - NPL ratio (group 3-5)/total loans of market 1: 2.02% Implemented building of risk management framework phase 1, gradually applied BASEL II in accordance with SBV s regulation - NPL ratio (group 3-5)/total loans: 1.72% - NPL ratio (group 3-5)/total loans of market 1: 2.38% 6. IT Management 6.1 IT infrastructure management and support centre Applying the modern technology into productions, services in order to meet needs, maximize flexibility and reduce transaction cost for customers. Focusing on strengthening the security system in IT operation to ensure secure information and continuous operation of IT systems supporting business activities; Coordinating to build data warehouses (DWH) and management information systems, internal reporting (MIS, BI) for providing analysis, evaluation, and forecast, for decision making. Improving IT service qualification, and monitoring service qualification and procedure towards international IT services standard - ITIL. 6.2 Application development and management centre (Corebanking) 25 Business plan 2016

26 Enhance personnel for CDAM Improve system processes/procedures and regulations in the field of Information Technology and Core Banking Working closely with other units to implement projects Invest in Core Banking System and IT applications keeping line with, the bank s orientated strategy C. TARGETS ON HUMAN RESOURCE TRAINING AND DEVELOPMENT 1. Key targets for HR management - Objective 1: Attract and retain key and potentials personnel s Effectively manage the Talent Pool Program 2016: Organize suitable training program to develop members of Talent Pool as well as recognize their contributions to the bank; To develop sources for recruitment and specialists: Continue to implement the Management Trainee; Internships Nurturing talents and start the pilot program to select and recruit specialist of credit appraisals; Continue to organize leadership development program based on competency approach, in which focuses on training the newly appointed and potential managers; Continue to design more modern HR management tools: For example to issue the new bank title list with their requirements and standards; Continue to standardize the position based training program for relationship managers; head of sales. Issue the career path to Branch manager and other key leadership positions; Continue to apply the personal development plan, focusing on the key managers of the branches; Start the HR partnership model: To improve the HR management capability Design and get approved the key successors in succession planning: CEO, Deputy CEO, Head of Division, Big Branch Managers - Objective 2: Improve the productivity Continue to complete the design and apply KPIs: Manage performance of HR Division by KPIs Apply 360 Degree performance review for key managers; Continue to control the classification of RMs and pay by performance 26 Business plan 2016

27 Start to apply E HR: Circulation HR requests by HR Software and striving towards HR digital management - Objective 3: Build up the constructive and engaging working environment Organize training courses to improve the professional skills, communication effectiveness and customer service Design and organize programs to build up professional ABBANKers, to improve the internal engagement and promote innovation to transform the bank, namely: Proud of being ABBANkers, ABBANK innovation; Green Office, Miss Áo dài.. Coordinate with Business Units to start the campaign on promoting the sale capacity: Sales solders. Start developing the learning community and knowledge sharing: Hr counseling. Implement for the 1st time in ABBANK: ABBANK CARE for staff and their families. Continue the HR counseling channel to set up the dialogue channel for HR issues and leadership development. 2. Other HR operational activities Design and deploy the performance targets for individuals and units for 2016; Implement the performance review for units and individuals first 6 months of 2016 and year end Set up the relationships with economic universities to prepare sources for potential candidates; Draft and issue the procedures for management trainee. Implement the pilot program for mobile branch managers. Operates all the HR services based on SLA. 27 Business plan 2016