ngân hàng công thương việt nam vietnam bank for industry and trade báo cáo thường niên 2007

Banking Service DevelopmentInternational Banking Activities Social Activities VietinBank and Equitization Process Business Plan for 2008 VietinBank Brand Identity Financial Statements I

Vietnam Bank for Industry and Trade

A N N U A L R E P O R T

BÁO CÁO THƯỜNG NIÊN

Banking Service Development

International Banking Activities

Social Activities

VietinBank and Equitization Process

Business Plan for 2008

VietinBank Brand Identity

Financial Statements

Independent Auditors’ Report

Consolidated Balance Sheet

Consolidated Income Statement

Consolidated Statement of Cash Flows

Interpretation on Financial Reports

Organization Chart

VietinBank Nationwide Network

Major Correspondent Banks

05 06 08

23 24 25 26 28

38 44 53

Improving the Values of Life

Improving the Values of Life

Annual Report

Corporate Profile

Vietnam Bank for Industry and Trade – VietinBank (formerly Industrial and Commercial Bank of Vietnam – Incombank) was established in 1988,

on its separation from the State Bank of Vietnam VietinBank is one of the four largest commercial banks in Vietnam and is ranked as one of the 23 special state-owned corporations.

VietinBank’s Head Office

Total mobilized funds 89,680,881 92,530,427 108,605,615 126,625,018 151,459,336

Deposits from customers 70,079,035 72,258,562 84,387,013 99,684,234 116,364,837

Total equity 3,921,638 4,593,153 4,999,839 5,637,625 10,646,529

After-tax profit 233,666 276,521 423,093 602,800 1,149,442

Return on Average Assets (ROAA) 0.26% 0.29% 0.39% 0.48% 0.76%

Return on Average Equity (ROAE) 6.81% 6.50% 8.82% 11.33% 14.12%

Capital Adequacy Ratio (CAR) 6.08% 6.30% 6.07% 5.18% 11.62%

VietinBank’s extensive network includes 3 Main

Transaction Centers (in Hanoi and Ho Chi Minh City),

138 branches, 185 transaction offices, 428 savings

bureaus, 750 ATMs, a Human Resource Development

and Training Center (in Hanoi) and an Information

Technology Center (in Hanoi)

VietinBank subsidiaries are VietinBank Leasing

Company, VietinBank Securities Limited Company,

VietinBank Asia Insurance Company and VietinBank

Real Estate and Financial Investment Company

VietinBank is a co-founder and major shareholder

of Indovina Bank and Vietnam National Financial

Switching JSC (Banknet)

VietinBank manages correspondent banking

relationships with over 850 banks worldwide and thus

can send authenticated SWIFT messages to more

than 19,000 banks and their branches globally

VietinBank provides a wide range of banking and

financial products and services including deposits

and savings, local and international payments, loans,

guarantees and counter-guarantees, trade finance,

remittances, issuance and payment services for

domestic and international cards, travelers’ checques,

foreign exchange, securities trading, insurance and financial leasing and etc

VietinBank is the full member of:

• The Asian Bankers Association (ABA)

• The ASEAN Bankers Association

• Vietnam Bankers Association (VNBA)

• Society for Worldwide Inter-bank Financial Telecommunication (SWIFT)

• Visa/ Master Services Association

• Vietnam Chamber of Commerce and Industry (VCCI)

• APEC Financial Institutions dealing with Small and Medium-Sized Enterprises

• Vietnam Association of Small and Medium Enterprises

Annual Report

Message from Chairman of The Board of Directors

Annual Report

One year after WTO entry, Vietnam’s economy

recorded substantial gains in most sectors in 2007, with

GDP growth of 8.48% - the highest growth rate over

the past 10 years The confidence and expectations

of both local and foreign investors in Vietnam’s

economy increased, as shown by the strong growth in

investment capital, while FDI of USD 20.3 billion was

double the amount received in 2006; industrial output

rose by 17.1%; export turnover rose by 22% reaching

USD 48.4 billion; official foreign currency reserves

increased significantly A large number of major and

high-tech projects were signed, creating opportunities

for Vietnam to accelerate national industrialization

and modernization However, in addition to the above

solid achievements, in 2007 Vietnam’s economy had

to deal with a high inflation rate of 12.3%, a large trade

deficit and an unstable real estate market

The Banking industry was considered to have had

a successful year in 2007, contributing strongly

to GDP growth With total loans and investments

to the economy increasing by 38% compared to

2006, commercial banks continued to maintain their

impressive business performance

In 2007, under the strict anti-inflation monetary policy

imposed by the State Bank of Vietnam and in the

context of fierce competition in the banking sector,

Vietnam Bank for Industry and Trade (VietinBank)

continued its sustainable development momentum

thanks to the direction given by the Board of

Directors, and the ongoing efforts of the Board of

Management and all employees Total assets went

up 24%, total capital increased by 19%, asset quality

improved demonstrably, with year end NPLs of 1.02%

(compared to 1.38% at the beginning of the year)

The branch network was strengthened and the focus

was in investments in modern banking technology

Furthermore, banking operations and banking

services recorded good growth rates; risk provision

increased by 47% and total income increased by

85% VietinBank’s good performance contributed

positively to the socio-economic development and

industrialization of the country

With the strategy of becoming a leading bank in the region, VietinBank must transform itself into an efficient universal bank and offer a full products suite to corporate, commercial and retail customers, supported

by the latest technology This will require substantial and ongoing investments in human resources (training programs, including developing management/

leadership skills) However, this can only be achieved with sound financials and sustainable growth, sound principles to which VietinBank’s Management is firmly committed In 2008, VietinBank’s management approved a business plan with the following targets:

total capital to increase by 20%, total loans and investments to increase by 25%, NPLs below 2%, loan loss provision of VND 1,500 billion and fee income of VND 700 billion

The year 2008 will witness many important events among which the most significant will be the 20th

anniversary of Vietnam Bank for Industry and Trade’s establishment, the official introduction of new brand identity “VietinBank” and the new logo The new brand name has already been registered and protected at Vietnam’s National Office of Intellectual Property and will then be registered in 40 countries in the world

Furthermore, VietinBank will launch its IPO in the local market, list on the stock exchanges and offer shares

to strategic foreign investors VietinBank will make all the necessary preparations to become “VietinBank Financial Group” and actively promote its regional and international integration

On this occasion, on behalf of the Board of Directors, Board of Management and VietinBank staffs, we would like to express our sincere thanks for the valued guidance and support of the Government, the State Bank of Vietnam and other relative bodies and authorities and to our distinguished customers, domestic and foreign partners who greatly contributed

to the success of VietinBank in the year 2007 We hope that VietinBank will continue to receive your kind assistance and cooperation

Dr Pham Huy Hung

Chairman The Board of Directors

Annual Report

Vietinbank’s Performance in 2007

Annual Report

Annual Report

FUND MOBILIZATION

Thanks to the large network countrywide, diversified

deposit products with multi benefits for depositors, the

total mobilized funds increased year by year

In 2007, deposit interest rate increased to a very high

level due to competition by a many newly-established

joint-stock commercial banks anxious to gain market

share and meet liquidity needs This situation had an

overall negative effect on banking business VietinBank

has implemented many measures to maintain the

stability of its deposit base and to increase mobilized

funds, including actively adjusting interest rates and

tenors, enhancing marketing activities, expanding

funding channels, launching flexible funding products

and improving customer service

As of 31st December 2007, total mobilized funds were

VND 151,459 billion, an increase of VND 24,835

billion, or 19.6% up on 2006 and accounted for a

VND 151,459 billiontotal mobilized funds

FY03 FY04 FY05 FY06 FY07

70.1 72.3

84.4 91.5 112.7

Funding Mix developMent

Borrowings & Other liabilities Capital & Reserves Deposits

3.9 19.6

4.6 20.3

6.0 24.2

5.6 26.9

10.6

35.1

The Governor of the State Bank of Vietnam at VietinBank’s 20 th Anniversary

Annual Report

10.5% market share of the whole banking system

Deposits in local currency were VND 127,947 billion,

an increase of VND 26,067 billion, or 25.5% up on

2006 and accounted for 84.5% total mobilized funds

Deposits in foreign currency were VND 23,512 billion

equivalent, a decrease of VND 1,233 billion, or 5%

Deposits from economic entities reached VND 55,083

billion, accounting for 36.4% of total mobilized funds

and increased by 35.5% as compared to 2006, in

which deposits from enterprises were VND 28,836

billion, accounting for 52.3% of total deposits from

economic entities, 38.5% up on 2006 Deposits from

businesses and enterprises increased due to the fact

that state-owned enterprises gained a comparatively

large surplus capital from equitization, which were not

yet invested in business but deposited temporarily in

banks Deposits from state-owned enterprises were

VND 43,802 billion, an increase of VND 8,883 billion

(25.4%) as compared to 2006; deposits from private

enterprises reached VND 8,486 billion, an increase

of VND 4,081 billion (93%) compared to last year;

deposits of foreign-invested enterprises were VND

2,795 billion, up by VND 1,476 billion compared to

2006 Term deposits from enterprises accounted for

about 30%-35% over total mobilized funds

Deposits from residents reached VND 55,060 billion,

accounting for 36.4% of total mobilized funds,

increasing by 4.3% compared to 2006 Stable, long

term savings reached VND 51,388 billion, accounted

for 33.9% of total mobilized funds and increased by

15.2% compared to last year Debt issuance at VND

3,672 billion, accounted for 2.4% of total mobilized

funds, was down 55% compared to 2006

in VND billion

Deposits from customers 116,365 99,683

(i) Deposits from economic entities: 55,083 40,643

Annual Report

Through better liability management, tenor structures

were changed, with the holding of lower cost funds

increasing Demand deposits increased by 20.5%

compared to 2006, time deposits increased by 13.6%,

however, medium and long-term mobilized capital

(more than 1 year), which accounted for 25.5% of

total mobilized funds, decreased by 0.7% compared

to 2006 In 2007, VietinBank was successful in

offering two issuances of long-term certificate of

deposits and notes

With a reasonable growth rate and capital structure,

the diversified mobilization products of VietinBank

proved to be suitable to depositors’ needs and meet

the increasing demands of the market

LOANS TO THE ECONOMY

Loans to the economy as at 31st December 2007

were VND 102.19 billion, rose by VND 22,039 billion,

representing an increase of 27.5% compared to 2006

To-date, VietinBank’s market share accounted for

10.5% of the banking industry Loans in VND made

up 82.5% or VND 84,308 billion of total loans, and

increased by 26% Loans in foreign currencies were

the equivalent of VND 17,883 billion, increased by

VND 4,658 billion or 35.2% Medium and long-term

loans accounted for 38.9% of total loans

in VND billion

Short-term loans 60,529 47,329

In VND 51,466 40,857Medium-long term loans 39,707 31,388

In VND 30,998 24,776Financial Leasing (VND) 613 625Loans to international credit program 938 714

VietinBank’s Corporate Customer - Vietnam Petroleum Group

Annual Report

Loans to corporates accounted for 37.9%, loans to

SMEs accounted for 41.8% and loans to individuals

and households accounted for 20.3%

VietinBank offered syndicated loans, with 10%

of total loans to 84 key projects of importance to

national economy In 2007, VietinBank acted as

the arranger for two hydroelectricity projects: Song

Tranh 2 project and Da Dang project with the amount

of VND 1,860 billion (of which VND 850 billion was

lent by VietinBank) VietinBank also signed the loan

agreement committing the bank to lend VND 5,000

billion to Son La hydroelectricity project

VietinBank focused on financing major projects in the

fields of oil and gas, coal, real estate, steel and mining

to diversify the medium and long term loan portfolio

Being a state-owned bank that traditionally served

large corporations and groups, VietinBank has

signed cooperation agreements with eight partners

including Vietnam Cement Industry Corporation, Binh

Minh Import-Export Production and Trade Company,

Vietnam Coal and Mineral Corporation, Vietnam Posts

and Telecommunication Group, Vietnam Petroleum

Group, Vietnam Steel Corporation, Vietnam Northern

Food Corporation, Vietnam Petrolimex Corporation

In 2007, VietinBank paid special attention to expanding

its market share of retail and SME banking Three new

credit programs to small and medium enterprises were

implemented, which are JIBIC – Phase 2, loans and

guarantees to effective energy savings projects, and

micro loans entrusted by the U.S Save the Children

Total loans to SMEs from foreign organizations

amounted to VND 1,000 billion These types of loans

not only provide financing but also non-financial

services including training, consistency in project

preparation, providing information, and audit services

These are good bases to attract more customers as

well as create strong linkages for good customers with

VietinBank

Regarding individual customers, in 2007 VietinBank

developed a wide range of products such as advances

against proceeds from the sale of securities on

official stock exchanges, house loans and car loans

VietinBank also signed agent contract with American

International Assurance (AIA) to provide a

credit-insurance combined product

Annual Report

Credit quality has been improved and restructured

to maintain effective and secure CAR (Capital

Adequacy Ratio):

- Ratio of Non-performing loans (group 3,4 and 5): 1.02% (against plan of less than 3%)

- Ratio of loans with collateral: 72.67%

(against plan of less than 75%)

- Ratio of medium-long term loans:

38.9% (against plan of less than 40%)

With the determination to enhance credit quality,

VietinBank has applied tight credit policies to reduce

loans categorized as group 2 and recover

non-performing loans VietinBank classifies the loans

portfolio in accordance with the regulation of the State

Bank of Vietnam Due to enhanced risk management,

robust internal controls and effective resolution of

bad debts over the past several years, VietinBank’s

financial stiuation improved substantially, with gained

a healthy status, thereby creating resources for better

business performance

VND 12,841 billionInvestments in the inter-bank market

INVESTMENTS

As a leading financial institution, VietinBank has taken an active part in the government bonds market, supporting the liquidity of commercial banking system and maintaining stable solvency of VietinBank in particular and the banking industry in general Internal procedure for investment activities was updated, supplemented and adjusted to be in conformity with the model of a modern commercial bank The investment portfolio in the money market and capital market which amounted to VND 51,669 billion, increased by 15% as compared to 2006 and accounted for 31.1% of total assets with the following structure:

Vinasat I – a Project financed by VietinBank

• Investment in securities were VND 38,144 billion, or a double the amount invested in 2006, mainly driven by increases in government bonds and bonds issued by other credit organizations.

VietinBank continued to support the payment needs

of other commercial banks and at the same time fullly satisfied payment needs of the whole economy By 31 December 2007, short-term investment in the inter-bank market amounted VND 12,841 billion, including VND 1,566 billion deposited with Vietnam Bank for Social Policy, in compliance with the regulations of the Government for the on-lending to customers under social policy programs aimed at hungder eradication and poverty alleviation initiated by the Government

VietinBank also actively participated in open market operations together with the State Bank of Vietnam, and contributed significantly to the implementation of national monetary policy targets

Investment in securities saw a high growth rate in

2007, with investments being mainly in government bonds, treasury bills, and commercial bonds issued

by reputable financial institutions All securities held

by VietinBank have high liquidity and are easily convertible to cash, or serve as borrowing collateral when nessesary Investment securities was a key instrument in managing the Bank’s liquidity position

The strong growth rate of investments in securities reflected a shifting asset management strategy oriented to profitable asset portfolio diversification, increasing in risk free to low risk security investment, decreasing dependency on traditional credit activities, improving the efficent use of fund and supplementing secondary asset reserve for the liquidity purpose

As of 31st December 2007, the outstanding balance reached VND 38,144 billion accounting for 73.8% of total investments The securities portfolio has been diversified, details of which are as follow:

- Marketable securities valued at VND 32,353 billion, accounting for 84.8% of total investment in securities, increased by 2.7 times against 2006, and included government bonds, treasury bills, municipal bonds, VDB bonds, EVN bonds, bonds issued by other major corporation and enterprises in Vietnam

Vietinbank Branch No.11 in Ho Chi Minh City

Annual Report

- Held-to-maturity securities valued at VND 5,052 billion, decreased by 2.4% against last year as

debt securities issued by other financial institutions

became due These securities included treasury

bills, government special bonds, educational bonds,

municipal bonds, notes and certificates of deposits

issued by other financial institutions, bonds of irrigation

work, Petro Vietnam bonds and bonds issued by

major corporations and enterprises in Vietnam

VietinBank is a major commercial bank with substantial

investments in money and capital markets and has

maintained its role as market maker, contributed

actively in terms of liquidity support for the market

and enhanced the development of the bond market

in Viet Nam Investment in valuable papers is an

important option for re-arranging the Bank’s asset mix,

enhancing both liquidity management and portfolio

diversification Simultaneously, through investment

in securities, and in particular government securities,

VietinBank has contributed to the State’s plans for the

development of socio-economic industries

JOINT-VENTURE AND CAPITAL

CONTRIBUTION ACTIVITIES

VietinBank joint-venture and capital contributions

increased by VND 174 billion resulting in total

capital contribution and share purchasing of VND

684 billion, an increase of 34.1% as compared to

2006 Due to credit institutions’ need to increase

chartered capital to meet anticipated 2007 customer

loan demands, VietinBank contributed to the capital

increase of Indovina joint venture bank, Saigon Bank

and Gia Dinh Joint-Stock Bank On the other hand

VietinBank decided to divest its holdings in the

joint-venture Vietnam International Leasing Company

(VILC) Additionally, VietinBank made strategic

investments in equitized enterprises such as Ha Tien

Cement Company, Phuoc Hoa Rubber Company and

participated in the establishment of UDIC, Vietnam

VND 5,052 billion Held-to-maturity securities value

VietinBank’s Corporate Customer - Vietnam National Shipping Lines (Vinalines)

Annual Report

VND 684 billion

total capital contribution and share purchasing

Private Credit Information Company, Vietnam Health Care Financial Investment Joint-stock Company

VietinBank initiated planning on projects on financial consultancy, fund management, debt sales, real-estate, gold investment and trading, etc

SUBSIDIARIES

VietinBank Securities Company

VietinBank Securities Company is limited company, wholly owned by VietinBank with equity of VND 300 billion The company’s main services are brokerage, trading, underwriting, portfolio management and securities investment consultancy In 2007, the Company completed the necessary conditions for equitization The Company also maintained good performance and high growth in its business activities

In 2007, there were 10,117 new accounts opened, increasing the total number of investor accounts

to 26,000, accounting for 8.5% of total investor accounts in the market VietinBank Securities Company established more than 10 agencies in various provinces Income from brokerage increased sharply as compared with 2006 and amounted

to VND 39,849 billion and gained market share of 2.44% of total brokerage activities

In 2007, the Company continued its focus on consultancy service for equitization of companies such as: Electricity Company No 3, Tay Ninh Electricity Company, Hai Duong Electricity Company and etc., supported the public offering of the government’s stake of Pha Lai Thermal Power Company, Ninh Binh Thermal Power Company The total value of consultancy contracts in 2007 amounted to VND 4.2 billion Financial consultancy services for public offerings, private placements, corporate valuations and securities auctions were well received and appreciated by large corporates such as Vietnam Electricity Corporation, Vigracera Corporation and Vietnam Livestock Breeding Company

Annual Report

VND 18.3 billion

Pre-tax profit

The Company successful met the financial targets

set by the Board of Management Income before

tax was VND 98 billion, up 204.5% on 2007’s plan

ROAE was 23%

Vietinbank Leasing Company

VietinBank Leasing Company was established as a

Leasing Company with a separate legal status and

independent accounting under Decision No 53/1998/

QĐ-NHNN5 issued by the Governor of the State

Bank of Vietnam dated 26th January 1998 In 2007,

VietinBank increased the company’s chartered capital

from VND 105 billion to VND 300 billion Total assets

as at 31st December 2007 reached VND 839 billion,

were up 20.5% in comparison with 2006

Up to 31st December 2007, total working capital was

VND 839 billion This was 105% against plan and

up 21% compared to the previous year Total loans

and investments of VND 841 billion, again was 105%

against plan and an increase of 21% as compared with

2006 Due to strong internal controls, non-performing

loans decreased and accounted for 4.9% of total loans

and investments at year end 2007

As at 31st December 2007, the leasing balance to

non-state owned SMEs was VND 760 billion, and made

up 90.3% of the total Total finished financial leasing

contracts were 220, 49 more than in 2006 Total value

of liquidated leasing assets was over VND 328 billion,

an increase of VND 61.8 billion over 2006

Pre-tax profit which reached VND 18.3 billion,

was up 43% year on year and equivalent to 102%

against plan Interest income from financial leasing

accounted for 99% of total income Year end 2007

provisions were VND 15.5 billion of which general

provisions were VND 2.3 billion VietinBank Leasing

Company is required by law, contributed VND 5.1

billion to the state budget

General Secretary Nong Duc Manh visits VietinBank

Annual Report

Dr Pham Huy Hung at the Vietnam Top Entrepreneurs Award Ceremony

BANKING SERVICE DEVELOPMENT

1 Domestic Money Transfer

With the advantage of a nationwide network, domestic money transfers continued to maintain high growth

The payment volume doubled as compared to 2006, amounting to 4.8 million transactions totaling VND 2,117 trillion Bilateral payments with other financial institutions were 1.1 million transactions with a volume

of VND 234,000 billion, up 37% against 2006 Interbank e-payment created 1.2 million transactions totaling VND 1.1 million, an increase of 28.3% against 2006

By year-end of 2007, VietinBank signed an agreement with the State Treasury on the implementation of tax collection through VietinBank’s network and ATMs, which will increase the effectiveness of tax collection and generate funding for VietinBank

2 Import-Export Payment

In a fiercely competitive environment, VietinBank maintained its number two position among Vietnamese commercial banks in terms of trade finance volume, accounting for 7.9% of the country’s import-export turnover The total trade finance volume amounted to more than USD 7.1 billion, an increase of 35% against

2006 Overseas guarantee issuance increased by 149%, confirming VietinBank’s international reputation

as a major trade bank Cross-border payments with Chinese banks grew rapidly, increasing by 58%

against 2006 and totaled RMB 700 million VietinBank was the first bank to apply e-banking in cross-border payments In 2007, VietinBank installed the technology and trained the personnel to establish Vietinbank Main Operation Center III with the aim of centralizing all trade finance transactions

Annual Report

3 Card Service and E-banking

Card issuance turnover continued to increase By

the end of the year, the total number of issued cards

was 1.2 million ATMs cards and 5,000 credit cards

New functionalities and services were added to

VietinBank cards like savings accounts from ATM,

mobile phone payment VNPay, S-phone payment,

electric bill payment to EVN, train ticket payment for

Vietnam Railway Corporation (VNR) through Banknet

system, VietinBank ATM can be used in other banks’

ATMs such as BIDV, Sacombank, Agribank, ACB,

Dong A Bank and etc

VietinBank’s website has seen substantial

improvements With more updated information

available, there are more than 3,000 visitors to the

web site daily and the website is considered as the 2nd

most visited webpage among Vietnamese banks

General Secretary Nong Duc Manh visits VietinBank

Import Export

3,436 4,324

1,907

3,354 3,371

iMpoRt - expoRt vAlue tHRougH vietinBAnK FRoM 2003 -2007

Annual Report

4 Overseas Remittance and

Traveler’s Cheque

During 2007, VietinBank overseas remittance gained

considerable achievements The overseas remittance

payment network has been implemented in almost

every transaction office, transaction point and

saving bureaus Overseas remittance transactions

are processed centrally in VietinBank Head Office,

customer’s accounts are credited as soon as Head

Office receives and processes the transaction

Non-account holders can receive their money at any

branch or transaction point that is most convenient

The volume of overseas remittances in 2007 reached

USD750 million, a 67% increase over 2006, giving

the Bank a 15% market share of the official overseas

remittance market in Vietnam The application of a

new software solution for overseas remittance service

has created potential for cooperation with wide range

of foreign partners such as correspondent banks and

remittance companies

Traveler’s cheques payments in 2007 continued

to deliver positive results and contributed to the

diversification of the services provided to international

tourists In 2007, the volume of cheque collection

reached USD 2.9 million, up 26% against 2006

VietinBank implemented three operations for cheque

collection, blank cheque selling and travelers’ cheque

encashing The implementation of travelers’ cheque

authorization online for branches that have high

revenues from cheques collection and which will

authorize cheque 100%, contributed to the lower risks

in cheque payment In 2007, VietinBank opened a new

EUR cheque collection service for branches in the

network, which contributed to service diversification

and has the potential to be developed as a good fee

income stream

Annual Report INTERNATIONAL BANKING

ACTIVITIES

- The year 2007 is considered a milestone as

it marked the 15th anniversary of the start of international banking activities In 2007, VietinBank continued to expand the correspondent banking network and now has more than 850 banks in

80 countries and terrritories Cooperation with foreign banks has been developed across wide geographies, with very many long standing ‘in depth’ relationships

- VietinBank continues to actively explore foreign markets to meet growing customers’ demands; evaluates the financial, reputation, domestic and international reach, service quality and competitive advantages of foreign banks both to better serve our Vietnamese customers and to facilitate international entities in their business with Vietnam

- VietinBank has always been active with correspondent banks in information exchange on markets and customers, so that reliable sources of information on foreign customers and partners can help to avoid risks and protect the interests of both customers and banks

- In the end of 2007, VietinBank considered it a special honor to be the sponsor of and thereby contributed

to the success of the 37th Asean Banking Association Council Conference in Hanoi hosted by Vietinbank Banks Association (VNBA) Participating at this prestigious conference were 130 delegates from the ten Asean Banking Associations VietinBank made great efforts to ensure the success of the conference aimed at enhancing cooperation and development of member banks of Asean nations The success of the conference will be measured

by the heightened position of ABA, the favorable impression made on visiting delegates by Vietnam – the country, the people, the banking sector, the VNBA and VietinBank

Annual ReportStrong growth, prestige and efficiency in VietinBank

business performance have been affirmed by public

polls; in 2007 VietinBank was awarded five honorable

prizes: Top Ten Vietnam Brand, Vietnam Golden Star,

ISO Golden Cup, Brand Golden Cup, and Business

Star Prize

On November 2007, VietinBank successfully held

“Respecting ceremony for VietinBank typical women”

receiving 120 typical women delegates in the banking

system and was honored to welcome Vietnamese

Deputy President, Mrs Nguyen Thi Doan Many

sporting events and other activities were hosted with

customers and institutions to promote friendship and

build relationships

Social Activities

VietinBank charitable activities have a very special meaning and include the continuing support to 160 Vietnamese Heroic mothers; constructing more than

1000 charity houses, in which 100 charity houses were built in 2007; supporting the construction and establishment of Quang Tri Ancient Wall bell-tower and the upgrade to Quang Tri Cemetery; building

33 kindergartens; present 600 wheel chairs and 600 scholarships in 20 Northern provinces, via Children Protection Fund to help the fees for cardiac operation, building and running a recovery center for children of difficult situations, and etc

VietinBank actively contributes to the public development, fully implements social works and returns to the community gifts of human culture and real social meaning

Music Festival to Celebrate VietinBank’s 20 th Anniversary

Annual Report

Under the direct leadership from the Government, VietinBank set up an “Equitization Board” to prepare for the implementation of equitization The Board consists of senior leaders from VietinBank and representatives from the Ministry of Finance, State Bank of Vietnam, Ministry of Jurisdiction, Ministry of Planning and Investment and Investment Bureau

From the bidding process, VietinBank has selected one of the leading investment banks as financial consultant for the equitization process

The preparation process was taken with prompt action

in 2007 with guidance from the Government and the State Bank of Vietnam Overall, as the roadmap for VietinBank equitization was built, nearly VND 4,000 billion was injected by the Government to VietinBank’s chartered capital Through the bidding process, JP Morgan Securities (Asia) was selected as financial consultancy for the equitization The Equitization Plan was prepared for the Government’s approval and the necessary steps were taken to equitized subsidiaries together with a plan to look for strategic partners to set

up new subsidiaries in banking and finance under the form of joint-stock company or joint venture

(%)

100 75

60 51 51 51

goveRnMent owneRsHip liKelY tRend oveR tHe next 5 YeARs

SMS Banking Service Launching Ceremony Signing Ceremony of Financial Advisory Contract for Equitization between VietinBank

and JP Morgan Securities Asia Pacific Limited

In 2008, VietinBank set up major business targets for the year as follows:

1 Business targets for the year 2008

Total mobilized funds: from 15% to 20%

Total loans and investments: from 15% to 20%

Non-performing loans (Group 3,4 and 5): under 5%/total loans

Medium and long term loans: max 40%/total loans

Loans to state-owned enterprises: 32%/Total loans

Provisioning in accordance with clause 7, Regulation 493/2005/QD-NHNN dated 22 April 2005 from

State Bank of Vietnam

Non-interest income: VND 450 billion

2 Orientation

Continuing to restructure overall banking operation and the processes of modernization, equitization,

standardization of business procedures, management and human resources, ensuring the transparency and

soundness of financial conditions;

Strong growth in terms of equity, loans and investments, fund mobilization and market share on the basis of

prudence, efficiency and sustainability;

Enhancing the organizational structure, branch network, market and customers development; Ensuring financial

prudence and safety in daily operations; Improving customer service, enhancing corporate culture, consolidating

brand identity to benefit the whole network and VietinBank clients

Business Plan

for 2008

“The Asian Bankers” Magazine visits VietinBank

Annual Report

«VietinBank» to replace its former brandname Incombank

Annual Report

and a symbol of a rising Earth embracing an ancient coin The

Heaven and Earth, Yin and Yang (two complementary principles

of Chinese philosophy) as a stable and perfect composition The overall image of the symbol expresses a brightening new dawn with a rising sun and orbit movement, representing the motions and harmonized continuation of Heaven and Earth in the universe Vietinbank also brings to mind implications relating to “Tin”, which means “trust” in Vietnamese, one of the most important factors in banking and finance business

The brand positioning phrase “Improving the Values of Life” was developed to place emphasis on Efficiency, which is one of

assure customers of success as well as our efforts to build up a beautiful and meaningful life

VietinBank’s New Brand Identity Lauching Ceremony

Annual Report

Financial Statements

Annual Report

Annual Report

INDEPENDENT AUDITORS’ REPORT

on the consolidated financial statements of Vietnam Bank for Industry and Trade and its subsidiaries

as at and for the year ended 31 December 2007 To: The Board of Directors and Board of Management of Vietnam Bank for Industry and Trade

We have audited the accompanying consolidated balance sheet of Vietnam Bank for Industry and Trade and its subsidiaries (“the Bank”) as at 31 December 2007, the related consolidated income statement, consolidated statement of retained earnings, and consolidated statement of cash flows for the year then ended and the notes thereto (“the consolidated financial statements”), as set out on pages 2 to 68 These consolidated financial statements are the responsibility of the Bank’s management Our responsibility is to express an opinion on these consolidated financial statements based on our audit

Basis of Opinion

We conducted our audit in accordance with the Vietnamese and International Standards on Auditing applicable

in Vietnam These standards require that we plan and perform the audit to obtain reasonable assurance to determine whether the consolidated financial statements are free of material misstatement An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements We believe that our audit provides a reasonable basis for our opinion

Deputy General Director Auditor in-charge

Certificate No 0629/KTV Certificate No 0815/KTV

Hanoi, Vietnam 14 April 2008

Independent

Auditors’ Report