La dohoailinh sum

1

PREAMBLE

2
(ii)

Propose brand valuation model for Vietnam’s commercial banks

(iii)

Experiment the proposed brand valuation model on Bank for Investment and

1. Introduction
1.1 The necessity of the subject
In banking business, trust is the key factor for millions of individuals and
organizations to send their savings, satisfy their demand for loans, or for effective

Development of Vietnam (BIDV) to calculate its brand
(iv)

Establish conditions to apply brand valuation model for Vietnam’s brands in
practicality.

1.4 Subject of research: Brand valuation for Vietnam’s commercial banks

financial consultancy. Moreover, together with the development of science and

2. Research methodology and sources of statistics

technology, as well as integration process, the competition in banking is increasingly

2.1 Research methodology

fierce. The deciding factors for customers to choose a bank are not only tangible and

- Inherited method

material elements but also ones related to emotion, perception, trust, etc. Therefore,

- Analytical – comparative method

brand in banking has become an essential factor for the success of commercial banks. So

- Interdisciplinary research method

the question of how to measure a commercial bank’s brand value in a specific

- Case study research method

financial figure, while the economic value of a bank’s brand is widely accepted, is of

- Dialectical materialism method

great concern to managers.

2.2 Sources of statistics

From this above situation, the author has chosen the subject “Brand valuation for
Vietnam’s commercial banks” as dissertation topic.
1.2 Scope of research

There are two approaches that result in very different brand value:
- Calculate brand value by market research (called “Brand evaluation” by the

of Vietnam (49 Ly Thai To Street – Hoan Kiem District – Hanoi), Annual Report
audited in 2010, 2011, 2012 and confidential report named Valuation before IPO of
Bank for Investment and Development of Vietnam (35 Hang Voi Street – Hoan Kiem
District – Hanoi).
3. The contribution of the thesis

author)
- Calculate brand value by financial data (called “Brand valuation” by the

3.1 In terms of academic literature
- Summarize two brand valuation approaches for commercial banks, including: (i)

author)
The purpose of thesis is to propose a brand valuation model for Vietnam’s
commercial banks based on financial data.

Brand valuation for commercial banks is a process with many steps; however,
the thesis will concentrate on researching and proposing brand valuation
model for Vietnam’s commercial banks.
1.3 Purpose of research
(i)

The sources of statistics used in the thesis are from the website of The State Bank

Systemize theories of calculating brand value

Calculate brand value for commercial banks based on market research; (ii) Calculate
brand value for commercial banks based on financial data.

- Select the estimated income based method of the second approach, combining with
analysis on characteristics of commercial banks’ business operation to propose a
brand

valuation

model

for

Vietnam’s

commercial

banks.


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4
• Chapter 1: General research on brand and brand valuation

3.2 In terms of practical application

• Chapter 2: Theory of brand valuation for commercial bank

• Help to confirm that brand is a valuable asset of commercial banks, which has to

• Chapter 3: Current situation of legal system for brand valuation and
Vietnam’s commercial banking system

be reported on the annual bank’s balance sheet.
• Make it easier and more accurate in acquisition, merger or brand franchising plans

• Chapter 4: Developing brand valuation model for Vietnam’s commercial
banks

or transactions.
• Help to complete reports on commercial bank valuation.

CHAPTER 1

• Users: Can be used by all subjects that have demand for brand valuation for

GENERAL RESEARCH ON BRAND AND BRAND VALUATION

commercial bank.
• Time of use: Can be implemented anytime.

1.1 Overview of brand

• Used for all commercial banks.
4.

1.1.1 Concept of brand

Research model
Basing on research methods used in the thesis, a research model is designed as

“Brand is customer’s perception, emotion and trust in all elements of an enterprise”

1.1.2 Functionality of brand

below:

1.2 Overview of brand valuation
Brand valuation model for Vietnam’s
commercial banks

1.2.1 The process of brand value recognition in the world
1.2.2 Approaches to research on brand valuation

Financial forecast

- Calculate brand value based on market research: the basis of this method is to
Financial
data of
commercial
banks

Brand contribution value

Brand discount rate

Financial
value of
commercial
bank’s brand

conduct investigations/surveys on attitudes, perceptions, emotions, reactions, etc, of

customers and concerned parties towards brand. The results of this method are
qualitative.
- Calculate brand value based on financial data: basing on financial data of

Discounted cashflows generated
by bank’s brand

5. The layout of the thesis
Apart from preamble, conclusion, list of tables, figures and refereces, the thesis is
divided into 4 chapters:

commercial banks (can use historical or future data) to calculate brand value. The results
of this method are quantitative.

CONCLUSION OF CHAPTER 1
Chapter 1 has fulfilled the thesis’ first and second objectives. First, it has used
Susan’s concept of brand as standard definition for the thesis. Second, it has
summarized two approaches of brand valuation theory. For each approach, the thesis


5

6

has summarized the content, advantages and disadvantages of its methods and models

selected as the basis for researching the brand valuation model for Vietnam’s

for brand valuation.

commercial banks.
2.2.1.3 Definition of brand valuation for commercial banks

CHAPTER 2

“Brand valuation for a commercial bank is a set of jobs to calculate financial value

THEORY OF BRAND VALUATION FOR COMMERCIAL BANK

of the commercial bank’s brand.”

2.2.2 Conditions and the necessity of brand valuation for comercial banks
2.1 Overview of commercial bank

2.3 Basic model for brand valuation for commercial banks

2.1.1 Definition of commercial bank

Table 2.1: Comparison of different brand valuation methods of financial data based approach

Method

2.1.2 Basic functionality of commercial bank

Content

Characteristics

The cost based Brand value is calculated by Calculating

2.1.3 Role of commercial bank

approach

brand

value

by

total cost invested to create a brand cost is unreasonable in

2.2 Overview of brand valuation for commercial bank

new or replace an existing both theory and practice.

2.2.1 Theory and concept of brand valuation for bank

brand.

2.2.1.1 Definition of commercial bank’s brand

The

“A bank’s brand is a combination of factors in order to satisfy customers’ financial demand,

based approach

market Brand value is calculated by the Market data about brand are

agree in the brand transaction.

and to gain their perception, trust and emotion towards the bank.”
The
Loyalty

approach

Behavior Customer

Perception

and

disproportioned.

based present value of future earnings calculate => up to now, it is the
generated by the brand over the most suitable method to measure
rest of its useful life.

Bank

limited

estimated Brand value is calculated by the Use bank’s financial data to

income

Communication
behavior,

business
process,
products,
branch network, transaction
office, Logo, slogan, uniform,
Interior-exterior architecture, etc

price at which seller and buyer always

brand value.

In order to propose an approach model for brand valuation for banks, the thesis will
conduct deep research on two models of the estimated income based method, as follows:

Type of ownership, organization
structure, strategy, operational
objective, etc

Emotion

2.3.1 Interbrand’s model
Step 1: Market segmentation
Step 2: Financial analysis

Diagram 2.2: Commercial bank’s brand

2.2.1.2 Theory on brand valuation for commercial bank
The thesis’ objective is measuring brand value for commercial banks in a specific
financial figure, therefore the estimated income based approach of Aswath Damodaran is

Step 3: Demand analysis
Step 4: “Brand strength” and “discount rate” determination
Step 5: Brand’s net present value determination


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8

Example of applying Interbrand’s valuation model is Binh Minh Plastic joint stock

criteria: leadership, stability, market, geography, brand trend, support activities, brand

company with “Binh Minh Plastic” brand which is valuated 349.4 billion VND by the

protection; whereas, Brand Finance’s brand ß scoring template includes 10 criteria: time

University of Economics Ho Chi Minh City’s research group.

in the market, distribution channel, market share, market position, sale growth rate, price

2.3.2 Brand Finance’s model

premium, price elasticity, marketing spend, advertising awareness, brand awareness.
This different step leads to different valuation results of two models. Each table of

The brand valuation process is illustrated by this below diagram:

criteria has advantages and disadvantages, and the status and level of advantages and
Market

data

Financial
data

Demand
drivers

Risk
factors

disadvantages depend on each valued brand.

CONCLUSION OF CHAPTER 2
Chapter 2 has fulfilled the thesis’ first and third objectives. Regarding the first

Brand forecasts

objective, the thesis has given out the definition of a commercial bank’s brand, which is
Economic value added

Brand value
added index

Brand ß
analysis

Brand value added

“a set of factors in order to satisfy customers’ financial demand, and to gain their

perceptions, trust and emotion towards the bank.” Regarding the third objective, from
Aswath Damodaran’s original idea of using financial instruments for brand valuation in
business valuation, the thesis has based on the income approach and used two brand

Discount
rate
Brand
value

Diagram 2.5: David Haugh’s brand valuation model

Step 1: Market segmentation
Step 2: Financial forecast
Step 3: Brand value added (BVA) calculation
Step 4: Discount rate determination
There are differences between Brand Finance’s and Interbrand’s summary reports
on most valuable brands. Although Interbrand and Brand Finance use the same basic
theory for brand valuation, which is discounted cashflow method, to calculate brand
value, the difference between two models is at the calculation step of brand’s
contribution value to businesses. Interbrand use “brand index” scoring template with 7

valuation models of Interbrand and Brand Finance as reference to propose a new model
that can approach to brand valuation for Vietnam’s commercial banks.


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CHAPTER 3

10

chapter to fulfill the forth, fifth and sixth objective of the thesis.

CURRENT SITUATION OF LEGAL SYSTEM FOR BRAND

CHAPTER 4

VALUATION AND VIETNAM’S COMMERCIAL BANKING SYSTEM

DEVELOPING BRAND VALUATION MODEL FOR VIETNAM’ S
COMMERCIAL BANKS

3.1 Legal framework for brand valuation in Vietnam
3.1.1 Legal framework for brand and international integration of brand in Vietnam
- The legal system of regulations primarily derives from section VI of the Civil
Code of the Socialist Republic of Vietnam in 2005.
- The agency that is responsible for granting permission is the National Office of
Intellectual Property of Vietnam.
- The agencies that are responsible for enforcement are Court, Market Surveillance,
Economic Police, Culture and Information Inspector, Science and Technology Inspector,

4.1 Orientation in building brand valuation model for Vietnam’s commercial banks

4.2 Brand valuation model for Vietnam’s commercial banks
The author has combined Interbrand and Brand Finance’s calculation steps with
specific characteristics of Vietnam’s commercial banking system to propose a new
model to approach brand valuation for banks, including 4 following steps:
Step 1: Financial forecast
Collect, analyze and process information to predict a bank’s revenue and expense
in a period of 3 to 5 years – from which calculate its brand’s economic value added in

Deparment of Customs.

the future. This step can be done by the bank itself or inherit annually financial forecast
• Regarding legal framework
• Government’s point of view on brand
• International integration of brand

3.1.2 Legal framework for brand valuation in Vietnam
Up to now, the system of legal documents in Vietnam has no official definition of
brand. These documents mainly stipulate a number of contents related to brand such as
intellectual property, trademark, geographical indication, trade name, but not directly
mention brand in general and brand valuation in particular.
3.2 The current situation of Vietnam’s commercial banking system
3.2.1 Characteristics of Vietnam’s commercial banks
3.2.2 Brand valuation for Vietnam’s commercial banks
CONCLUSION OF CHAPTER 3

results from reputable sources in the world like S&P, Ernst&Young, Moody, etc.
Step 2: Calculate Brand Value Added - BVA
Calculate the proportion of brand contribution to economic value added or use
available figures of position, target customers, growth rate of an equivalent bank, which
are available in the US or UK market, when researching, based on theory 1 – brand
valuation based on research.
The process of taking step 1 and 2 is similar to Interbrand and Brand Finance’s
calculation processs – these are standard process accepted by most researchers and
practice.
Step 3: Calculate brand discount rate
Factors including the time value of money and the risks that may impact must be
taken into account when calculating discount rate.

Chapter 3 has presented the current situation of commercial banking system and
legal system of brand valuation in Vietnam. These are important bases for the next

Calculate brand ß
index

Discount
rate


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- Calculate brand ß index:
From Brand Finance’s scoring template for brand ß index and Interbrand’s “brand

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customers, from which it can gain its brand awareness. Branch network is proportional
to attribute score.

strength” calculation table, together with particular characteristics of Vietnam’s

The criteria for building scoring template for the attribute of branch network are:

commercial banking system, the scoring template for brand discount rate of commercial

+ The number of branches in 63 cities and provinces and 3 regions (North – Central

banks is researched, adjusted and proposed as below:
Table 4.1: Scoring template for brand discount rate of Commercial banks

Attribute

Score
1. Time in the market
0-15
2. Branch network
0-15
3. New products growth rate
0-15
4. Number of customers growth rate
0-15
5. Proportion of mobilized capital
0-10
6. Proportion of outstanding balance
0-10
7. Non-performing loans ratio
0-10
8. ROA growth rate
0-10
Total
0-100
-Attribute 1 – Time in the market: is a factor that represents a bank’s brand strength
because a bank can be maintained and exist for a long time only when it receives trust
and recognition from customers. Time in the market is proportional to attribute score.
Based on the milestones of Vietnam’s economy, the scoring criteria for this
attribute are proposed as below:
Table 4.2: Scoring criteria for the attribute of time in the market

Criteria
Score
Established parallel to the movement for independence (the 1954 15-12
period)

Established during the economic transformation process (the 1986 12-9
period)
Established after 1986 and before the U.S removed the embargo 9-6
against Vietnam in 1995
Established between 1995 and before joining WTO in 1997
6-3
Established from 2007 to present
3-0
- Attribute 2 – Branch network: is an important factor for a bank to serve its

– South), so smaller criteria for network segmentation are 1/2, 2/3 and total number of
63 cities and provinces.
+Level of international cooperation, measured by: Does a bank open overseas
branches? does it have joint venture with foreign companies? does it act as an agent for a
foreign bank? with levels as follow:
Level 1: Open branches or subsidiaries overseas, act as an agent for a foreign bank,
have international business transactions
Level 2: Open branches or subsidiaries overseas, or act as an agent for a foreign
bank, or have international business transactions
Level 3: Open overseas representative offices
Level 4: Have no form of cooperation
Table 4.3: Scoring template for the attribute of branch network
Criteria
Score
Have branches in 63 cities and provinces, have international cooperation level 1
15
Have branches in 63 cities and provinces, have international cooperation level 2
14
Have branches in 63 cities and provinces, have international cooperation level 3
13

Have branches in 63 cities and provinces, have international cooperation level 4
12
Have branches in 2/3 of 63 cities and provinces, have international cooperation level 1
11
Have branches in 2/3 of 63 cities and provinces, have international cooperation level 2
10
Have branches in 2/3 of 63 cities and provinces, have international cooperation level 3
9
Have branches in 2/3 of 63 cities and provinces, have international cooperation level 4
8
Have branches in 1/3-2/3 of 63 cities and provinces, have international cooperation
7
level 1
Have branches in 1/3-2/3 of 63 cities and provinces, have international cooperation
6
level 2
Have branches in 1/3-2/3 of 63 cities and provinces, have international cooperation
5
level 3
Have branches in 1/3-2/3 of 63 cities and provinces, have international cooperation
4
level 4
Have branches in less than 1/3 of 63 cities and provinces, have international
3
cooperation level 1


13
Have branches in less than 1/3 of 63 cities and provinces, have international
cooperation level 2

Have branches in less than 1/3 of 63 cities and provinces, have international
cooperation level 3
Have branches in less than 1/3 of 63 cities and provinces, have international
cooperation level 4

14
2
1
0

Have new products in 1 group, receive reward, vote level 2
Have new products in 1 group, receive reward, vote level 3
Have new products in 1 group, receive reward, vote level 4
No new product but receive reward or vote
No new product and no reward or vote

2
1
1
1
0

- Attribute 4 – Number of customers growth rate: Banks are institutes that serve
Attribute 3 – New products growth rate:
Developing new products is required for continuous growth and prosperity for a
bank. The new products growth rate shows the capability of creating and maintaining
the development of the bank’s brand. It is based on two criteria:
+ The creation of new financial products based on four orgininal banking products

all types of customers whenever they have financial needs. Therefore, commercial banks

have more diverse and abundant customers than any other organization in the economy.
The attribute of number of customers growth rate clearly reflects customers’ preference
and trust in a bank. This attribute is calculated by a bank’s number of customers

including saving, loan, payment and financial consultancy is an important factor for

including household and organization in 4 groups of products in the calculated year

maintaining brand in the market.

compared with that of the previous year, and is proportional to attribute score.

+ Rewards or votes for a bank or its products, with levels as follow:
Level 1: Receive international reward and domestic vote for product or bank
Level 2: Receive international reward
Level 3: Receive domestic vote for product or bank

Table 4.5: Symbols for the calculation of the attribute of number of customers growth rate

Customer

Symbol

Product

Symbol

Household

H (Household)

Saving

S (Saving)

Organization

O (Organization)

Loan

L (Loan)

Payment

P (Payment)

Financial consultancy

FC (Financial Consultancy)

Level 4: Receive no reward or vote
New products growth rate is measured by the number of banking products in the
researched year compared with that of the previous year. This rate is proportional to
attribute score.
Table 4.4: Scoring template for the attribute of new products growth rate
Criteria
Score
Have new products in 4 groups, receive reward, vote level 1
15

Have new products in 4 groups, receive reward, vote level 2
14
Have new products in 4 groups, receive reward, vote level 3
13
Have new products in 4 groups, receive reward, vote level 4
12
Have new products in 3 groups, receive reward, vote level 1
11
Have new products in 3 groups, receive reward, vote level 2
10
Have new products in 3 groups, receive reward, vote level 3
9
Have new products in 3 groups, receive reward, vote level 4
8
Have new products in 2 groups, receive reward, vote level 1
7
Have new products in 2 groups, receive reward, vote level 2
6
Have new products in 2 groups, receive reward, vote level 3
5
Have new products in 2 groups, receive reward, vote level 4
4
Have new products in 1 group, receive reward, vote level 1
3

Combined with analyses of the attributes of proportion of mobilized captital,
proportion of outstanding balance and new products growth rate, this attribute is
measured by the combination between household and organization customers growth
rate (or 1 out of 2 types of customers) with products with from high to low
importance: Saving (S) hoặc Loan (L), Payment (P) and Financial Consultancy (FC).

There are many combinations between customer growth rate and products, in which
the more important criterion is customer growth rate because there is already an
attribute for product growth rate. Therefore, the scoring template for the attribute of
number of customers growth rate is as follow:


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Table 4.6: Scoring template for the attribute of number of customers growth rate

Criteria

Total mobilized capital of the economy in the year before
calculated year

Score

Increase H, O with (S, L, P, FC)

15

Increase H, O with (S, L, P), or Increase H, O with (S, L, FC)

14

Increase H, O with (S, L)

13

Increase H, O with (S, P, FC), or Increase H, O with (L, P, FC)

12

Increase H, O with (S, P), or Increase H, O with (L, P)

11

Increase H, O with (S, FC), or Increase H, O with (L, FC)

10

Increase H, O with S or L

9

Increase H, O with (P, FC)

8

Increase H, O with P

7

Increase H, O with FC

6

Increase H or O with 4 groups of products

5

Increase H or O with (S, L, P) or Increase H or O with (S, L, FC)

4

Increase H or O with (S, L), or Increase H or O with (S, P, FC), hay

3

A

=
Total number of banks in the year before calculated year

+ The attribute score of 10 is for the credit institution having highest mobilized
capital in the year before calculated year.
+ The bank having highest mobilized capital has maximum score of 10. The gap
between maximum score of 10 and average score of 5 is 5 points, so each higher-thanaverage point is calculated by: preceding attribute score + B, with:
Mobilized capital of the commercial bank having highest mobilized capital in
the year before calculated year – A
B

=
5
+ The bank having lowest mobilized capital has minumum score of 1. The gap

between minimum score of 1 and average score of 5 is 4 points, so each lower-thanaverage point is calculated by: preceding attribute score – C, with:
A- Mobilized capital of the commercial bank having lowest mobilized

Increase H or O with (L, P, FC)
Increase H hoặc O with S or L, hay Increase H or O with (P, FC)

2

Increase H hoặc O with P, or Increase H hoặc O with FC

1

No customer growth rate

0

- Attribute 5 – Proportion of Mobilized capital: Customers’ deposit is the
deciding factor for a bank’s capital. There are several factors that affect the amount of
deposit on a bank, among which the bank’s reputation and customers’ trust in it is the
main one. The proportion of a bank’s mobilized capital in total mobilized capital of the
economy is proportional to attribute score, which is calculated as below:
+ Attribute score is 5 = Average mobilized capital for a commercial bank (A)

capital in the year before calculated year

C
=

4

Table 4.7: Scoring template for the attribute of proportion of mobilized capital

Criteria
Mobilized capital is in the range of (A + 4B; the highest mobilized capital)

Score
10

Mobilized capital is in the range of (A + 3B; A + 4B)
Mobilized capital is in the range of (A + 2B; A + 3B)
Mobilized capital is in the range of (A; A + 2B)
Mobilized capital is in the range of A + B
Average mobilized capital A
Mobilized capital is in the range of (A – C; A)

9
8
7
6
5
4

Mobilized capital is in the range of (A – 2C; A – C)
Mobilized capital is in the range of (A – 3C; A – 2C)
Mobilized capital is in the range of (the lowest mobilized capital; A – 3C)

3
2
1

For example, the calculated year is 2013, total amount of mobilized capital of 48

17

18

commercial banks in 2012 is 3.2 million billion VND, in which Max commercial bank

Mobilized capital is in the range of (53,625; 66,500) billion VND

4

has the highest amount of mobilized capital of 540,000 billion VND, Min commercial

Mobilized capital is in the range of (40,750; 53,625) billion VND

3

bank has the lowest amount of 15,000 billion VND. So the calculation of attribute 3 is:

Mobilized capital is in the range of (27,875; 40,750) billion VND

2

Mobilized capital is in the range of (15,000; 27,875) billion VND

1

Total mobilized capital of the
economy in the year before
calculated year

3.2 million
billion VND
= 66,500 billion
VND

A =
Total number of banks in the year
before calculated year
Mobilized capital of the
commercial bank having
highest mobilized capital in
the year before calculated year
–A
B

=

48

540,000 – 66,500

= 94,700 billion
VND

=
5

5

A- Mobilized capital of the
commercial bank having lowest
mobilized capital in the year before
calculated year
C

66,500 –
15,000
= 12,875
billion VND

=

=
4

4

Table 4.8: Scoring template for the attribute of proportion of mobilized capital

Critera

Score

Mobilized capital is in the range of (445,300; 540,000) billion VND

10

Mobilized capital is in the range of (350,600; 445,300) billion VND

9

Mobilized capital is in the range of (255,900; 350,600) billion VND

8

Mobilized capital is in the range of (161,200; 255,900) billion VND

7

Mobilized capital is in the range of (66,500; 161,200) billion VND

6

Mobilized capital = 66,500 billion VND

5


19

20

- Attribute 6 – Proportion of outstanding balance:
To commercial banks, credit is a traditional and basic business, accounting for high
proportion in asset structure and revenue structure. However, it is also a complex and
risky business. The proportion of a bank’s outstanding balance in total outstanding
balance of the economy is proportional to attribute score. The basis for calculating score
for the attribute of proportion of outstanding balance is similar to the that of mobilized
capital, as follow:

+ Attribute score of 5 = Average outstanding balance for a commercial bank
Total outstanding balance of the economy in the year before calculated
year
D

=
Total number of banks in the year before calculated year
+ The attribute score of 10 is for the credit institution having highest outstanding

balance in the year before calculated year.
+ The bank having highest outstanding balance has maximum score of 10, the one
having lowest outstanding balance has minumum score of 1.
+ The gap between maximum score of 10 and average score of 5 is 5 points, so
each higher-than-average point is calculated by: preceding attribute score + E, with:
Outstanding balance of the commercial bank having highest outstanding
balance in the year before calculated year – D
E

=
5
+ The gap between minimum score of 1 and average score of 5 is 4 points so each

lower-than-average point is calculated by: preceding attribute score - F, with:
D- Outstanding balance of the commercial bank having lowest outstanding
balance in the year before calculated year
F

=

4

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Table 4.9: Scoring template for the attribute of proportion of outstanding balance

Criteria

Table 4.10: Scoring template for the attribute of NPLs ratio

Score

Criteria

Score

Outstanding balance is in the range of (D + 4E; the highest outstanding balance)

10

NPL = 0%

10

Outstanding balance is in the range of (D+3E; D + 4E)

9

NPL is in the range of (0.6%; 0%)

9

Outstanding balance is in the range of (D+2E; D + 3E)

8

Outstanding balance is in the range of (D+E; D + 2E)

7

NPL is in the range of (1.2%; 1.8%)

8

NPL is in the range of (1.8%; 2.4%)

7

Outstanding balance is in the range of (D; D + E)

6

Outstanding balance = D

5

NPL is in the range of (2.4%; 3%)

6

Outstanding balance is in the range of (D – F; D)

4

NPL = 3%

5

Outstanding balance is in the range of (D – 2F; D - F)

3

NPL is in the range of (3%; 4.75%)

4

Outstanding balance is in the range of (D – 3F; D - 2F)

2

NPL is in the range of (4.75%; 6.5%)

3

Outstanding balance is in the range of (the lowest outstanding balance; D – 3F)

1

NPL is in the range of (6.5%; 8.25%)

2

- Attribute 7 – Non-performing loans ratio:

NPL is in the range of (8.25%; 10%)

1

If non-performing loans (NPLs) are not strictly controlled, they will directly affect a

NPL = 10%

0

bank’s profit as well as its liquidity. NPLs ratio is inversely proportional to brand value,
high NPLs ratio can even delete brand from the market (this is clearly illustrated in fact).

- Attribute 8 – ROA (return on equity) growth rate:
ROA growth rate is propotional to the attribute score.

NPLs ratio is measured by outstanding balance of group 3,4,5 divided by total outstanding

The base to calculate attribute 8 is similar to that of mobilized capital and

balance, NPLs ratio is inversely proportional to attribute score. Specifically, NPLs attribute
score is calculated as below:

outstanding balance growth rate attributes, specifically:

+ Attribute score is equal to 5 = average ROA for a commercial bank

+ The State Bank of Vietnam stipulated standard score for this content is 3%, so,

Total ROA (+) of the economy of the year before calculated year

the attribute score of 5 is equivalent to NPLs ratio of 3%.
G

+ According to Circular No. 08 of the State Bank special control towards

Total number of banks having ROA (+) before calculated year

Commercial Banks, all commercial banks having NPLs ratio of 10% and above will be
subject to special control of the state bank, therefore, attribute score of 1 will be
equivalent to NPs ratio of 10%. The gap between minimum score of 1 and average score
of 5 is 4 points, so each lower-than-average point is calculated by: (10% - 3%)/4 =

+ Attribute score of 10 is the score for the credit institution achieving the highest
ROA in the year before calculated year. Attribute score of 0 is for banks that do not have
ROA (+)
+ The gap between the maximum score of 10 and the average score of 5 is 5 points,

1.75%
+ A bank having no NPL will get maximum attribute score of 10. The gap between

so each higher-than-average point is calculated by: preceding attribute score + K, with:
ROA (+) max of the year before calculated year – G

maximum score of 10 and average score of 5 is 5 points, so each higher-than-average

point is calculated by: 3%/5 = 0.6%

=

K

=
5


23

24

+ The gap between minimum score of 0 and average score of 5 is 5 points, so each

formula.

lower-than-average point is calculated by: preceding attribute score - M, with:

4.3 Experiment the brand valuation model to evaluate brand value of Bank for

G- ROA min of the year before calculated year
M

earnings generated by the brand to the net present value, as in the discounted cashflow

=

Investment and Development of Vietnam (BIDV)

5

4.3.1 Reasons to select (BIDV) to experiment

[[

Table 4.11: Scoring template for the attribute of ROA growth rate
Criteria

4.3.2 BIDV brand valuation

Score

Table 4.21: BIDV’s brand value in 2013 (unit: million VND)

ROA is in the range of (G+ 4K; G + 5K)

10

ROA is in the range of (G+3K; G + 4K)

9

1

After tax earnings

ROA is in the range of (G+2K; G + 3K)

8

2

BVA (23%)

ROA is in the range of (G+K; G + 2K)

7

3

ROA is in the range of (G; G + K)

6

ROA is equal to G

2013

2014

2015

2016

2017

2018

5,312,133

6,740,538

8,517,784

2,593,618

12,141,189

14,035,303

Earnings generated
by the brand

1,221,790.6

1,550,323.7

1,959,090.3

596,532.13

2,792,473.48

3,228,119.65

4

Brand strength index

81

5

5

Brand discount rate

12.0405%

ROA is in the range of (G – M; G)

4

6

Discount

1,383,717.23

1,560,645.91

424,139.505

1,772,102.77

1,828,413.55

ROA is in the range of (G – 2M; G – M)

3

7

ROA is in the range of (G – 3M; G – 2M)

2

8

ROA is in the range of (G – 4M; G – 3M)
No ROA (+)

1

No

9

Criteria

NPV of the brand
after the first 5 years
Brand growth rate in
the long term
NPV of the brand
from 6th year

0

attributes. After measuring total score of brand ß index, brand discount index will be
calculated by the linear equation proposed by Interbrand
Y=axX+b
The bases to calculate a and b coefficients are government bond interest rates

1%
9,473,967
17,664,776.64

10

Total score of brand discount ß index is calculated based on total score of 8 brand

8,190,809.56

NPV of the brand

So BIDV’s brand value in 2013 is 17,664,776.64 million VND.

4.4

Conditions to apply the model in practice
• Build and complete legal framework for brand as well as brand valuation
• Complete macro and micro forecasts

of the same term and profit expectation of stock investors in the researched year that

• Ensure the transparency and health of commercial banks’ financial reports

is most profitable.

• Develop information support department for brand valuation

Step 4: A bank’s brand value is measured by discounted cashflow from future


25

26

Conclusion of chapter 4

THE AUTHOR’S RESEARCH RELATED TO THE THESIS

Chapter 4 has accomplished three final targets of the thesis which are: proposing
brand valuation model for Vietnam’s commercial banks; applying proposed model to
evaluate Bank for Investment and Development of Vietnam (BIDV)’s brand; and
establishing conditions to apply valuation model for Vietnam’s brands in practice.

CONCLUSION
Brand valuation for Vietnam’s commercial banks is an important content in
both research and management practice. The research of theories and methods to
develop a brand valuation model for commercial banks is essential for such
important issues as merger and acquisition, brand franchising, or report on the
balance sheet, etc. In the research process, the thesis has selected the estimated
income based method of the second approach – brand valuation based on financial
data, to develop the brand valuation model for Vietnam’s commercial banks,
including 4 steps:

Financial

forecast

Brand
contribution
value

Brand
discount rate

Discounted
cashflow from
bank’s brand

The thesis also fulfilled research objectives set forth both in theory and
practice.

1. ðỗ Hoài Linh (2010), “The development of brand awareness and the
recognition of brand valuation in practice”, Banking Review.
2. ðỗ Hoài Linh (2012), “Theory on brand valuation based on market research”,
Banking Review.