annual report 2008 vietinbank vietnam joint stock commercial bank for industry and trade

HEAD OFFICE
108 Tran Hung Dao Street, Hanoi
Tel : 04.3942 1030
Fax : 04.3942 1032
Website : www.vietinbank.vn
ANNUAL REPORT
2008
VIETNAM JOINT STOCK COMMERCIAL BANK FOR INDUSTRY AND TRADE

Content
Message from the Chairman of
the Board of Directors
An Overview of Vietnam Economy in 2008
The Board of Directors
The Board of Management
Milestones of Success in 2008
VietinBank’s Performance in 2008
Fund Mobilization•
02
06
08
10
04
13
28
25
19
30
33
Loans to the Economy•

Investment•
Banking Services•
Risk Management
Business Plan for 2009
VietinBank and Equitization Process
Organization Chart
Independent Auditors’ Report
Message from
the Chairman
of the Board of Directors
2Annual Report 2008 VietinBank 2
Ladies and gentlemen,
TheVietnameseeconomyrstfacedchallengesin
2008astheresultoftheincreasedtradedecitof
USD17billionandaninationrateof22.9%.Later
in the year the global economic turmoil further
strained the economy as we saw dramatic swings in
commodity prices such as steel, oil, gold and foreign
exchange rates. The impact was broad as both
trading volumes and liquidity declined sharply in
the capital and property markets. Hit especially hard
were the small and medium enterprises across the
economic horizon.
In response to these many shocks, the Government
took decisive action on several fronts. Eight solution
packages were introduced that resulted in lower
inationwhileallowingtheeconomytogrowat
6.23%.Industrialproductionincreased14.6%while
export turnover reached VND 62.9 billion. In addition,
forthersttimetotalregisteredForeignDirect

Investment rose to USD 64 billion.
Within the context of these adverse economic times,
Vietnam Joint Stock Commercial Bank for Industry
and Trade (VietinBank) managed to achieve a lot in
2008. We closely managed liquidity throughout the
year while being able to sharply increase fee based
income. Great strides were made in managing risk
and performance ratios improved. The bank was
able to expand our branch network, grow total
assetsby17%andincreaseequitytoVND12,300
billion. These achievements were largely the result
of a conservative and strong management team
remaining focused on prudent banking principles.
The year was also a milestone for the bank in a
number of other aspects. After 20 years the bank
went through a rebranding exercise, launching
a new brand name of VietinBank. Additional
accomplishments included centralization of Trade
Finance processing to reduce risk and improve
efciencies(MainOperationCenterNo.3),
establishment of a Disaster Recovery Data Back-
up Center, inauguration of the Human Resource
Developing and Training School and was awarded
Second-Place Independence Medal presented by
the State. These were all important steps for the
development, modernization and global integration
ofVietinBank.Thenalaccomplishmentforthe
year came about on 25
th
December 2008 when we

becameamongtherstStateownedbankstolaunch
our Initial Public Offering.
With the anticipation of continuing economic
challenges domestically and globally, 2009 will be at
least partly internally focused. While participating in
the Government’s Monetary Policies, VietinBank will
focus on expense management in order to provide
more favorable interest rates and fee structures to
our customers. Industries the bank will continue to
primarily focus on are exporters, the agricultural
sector and small and medium industries. The goals
for2009includea24%increaseinmobilizedfunds,
andloangrowthof29%whilemaintainingnon-
performingloansbelow3%.Projectedearningsfor
the year are estimated to reach over VND 2,500
billion, with fee income contributing VND 800 billion.
Listing on the local stock exchange is also scheduled
in July 2009.
Longer term goals of the bank will focus on
Modernization whereby the bank will be
transformed. Areas of focus include improved
nancialtransparency,standardizationofservices,
implementation of strong corporate governance and
improved human resource development programs.
Theobjectivewillbewhilegrowingandexpanding
acrossallareasofthenancialservicesindustry,
VietinBank plans to build an institution based on
prudentandefcientpoliciesthatwillallowusto
meet international practices and standards.
On this occasion, the Board of Directors, the Board

of Management and all of the VietinBank Staff would
like to express our thanks to customers, local and
foreign partners for your trust and cooperation which
have contributed to VietinBank successes in 2008. We
hope that VietinBank will continue to receive your
kind support and cooperation.
Pham Huy Hung
Chairman of the Board of Directors
Annual Report 2008 VietinBank 3
In 2008, Vietnam’s economic growth tended to slow down and
remained at only 6.2 percent after high growth of over 8 percent in 3
consecutiveyears.Notwithstandingsuchdifcultsituation,Vietnam
export turnover in 2008 attained nearly USD 63 billion, which was an
encouraging result. Export turnover of all commodities experienced
increase against the previous year with crude oil reaching USD 10.4
billion(increasingby23.1%),textiles:USD9.2billion(increasingby
17.5%), coal:USD1.5billion(increasingby44.4%),rice:USD2.8
billion(increasingby94.6%).
In 2008, the banking system of Vietnam also saw unprecedented
movements. The tightened and exible monetary policy
implemented in early 2008 was gradually shifted to prudently loosen
in the second half of the year. In line with this process was the State
Bank of Vietnam’s unprecedented adjustment of management
instruments, which focused mainly on key interest rates, reserve
requirement and exchange rate control.
The year of 2008 saw 3 times of base interest rate increase and 5
times of base interest rate reduction by the State Bank of Vietnam.
Re-nancinginterestrateandrediscountinterestrateexperienced
thesameadjustmentfrequency.Reserverequirementrateincreased
in February and experienced decline for 4 times in the last 3 months

of the year (including 2 times of decline in foreign currency reserve
An Overview of
Vietnam Economy in 2008
In 2008 the economy of Vietnam encountered
complicated and unpredicted movements of the
worldeconomyanddomesticdifculties.
Inthersthalfof2008,Vietnamsufferedtheimpactofoverheatingeconomy,highination,tradedecit,real
estate bubble and declined investment quality. In an effort to stabilize the macro-economy, the Government
adjustedfromhighgrowthtargettoinationcontrolandmaintainingofappropriategrowth.Inthelateof
2008,therisksofsub-primemortgageintheUSinamedtheglobalnancialcrisiswhichbroughtnotonly
developedcountriesbut alsoemergingeconomiesinthenancialtriangleAsia-Europe-UStorecession.
AlthoughVietnamwasnotseverelyimpacted,thecountry’seconomywasfacingnumerousdifcultiesand
challenges as a consequence of such crisis.
GDP
growth rate was
in 2008
6.2%
4Annual Report 2008 VietinBank 4
8.25
2
1/1 1/2 19/5 11/6 21/10 5/11 21/11 5/12 22/12
4
6
8
10
12
14
16
8.75
7.5

6
13
11
12
15
14
13
12
11
9.5
8.5
7.5
10
9
11
10
12
11
13
12
14
13
The movements
ofthemajorinterest
ratesin2008(%)
BaseRateRenancingrateDiscountrate
requirement). Interest rates applicable to reserve requirement saw
5timesofadjustments(including3timesofincreaseand2times
of reduction).
Foreign exchange control mechanism experienced exceptional

adjustmentswithexchangeratebandbeingwidenedfor3times,
averageinterbankexchangeratebeingstronglyadjustedinJune
and late December. The exchange rate in 2008 was characterized
withoppositeuctuations.Inearly2008themarketsawsurplus
of foreign currencies with VND/USD exchange rate falling to
the “bottom level”, equivalent to VND 15,300, while the scarcity
ofUSDsupplyoccurredbothinofcialandfreemarketsfrom
May. Nevertheless, thanks to the State Bank’s intervention and
foreignexchangereservecapacitywhichwasofciallypublicized
forthersttime,theexchangeratewasgraduallystabilizedin
late of the year.
In summary, Vietnam Economy in 2008 coped with major
difculties such asreduced growth rate, increased ination and
imports surplus, unstable securities and real estate markets,
difcultproductionandbusinessactivities.In2009,theeconomy
of Vietnam will certainly face numerous challenges and the danger
ofreducedgrowthrate.However,giventheexiblepoliciesofthe
Government and the great efforts of the whole society, the country
will strongly sustain and create a momentum for sustainable
growth in the following years.
Annual Report 2008 VietinBank 5
Board of
Directors
Dr. PHAM HUY HUNG
Chairman of the Board of Directors
6Annual Report 2008 VietinBank 6
Dr. PHAM THI HOANG TAM
Member
Mrs. NGUYEN HONG VAN
Member

Mr. TRAN XUAN CHAU
Member
Dr. PHAM XUAN LAP
Member, CEO
Dr. DO THI THUY
Member
Annual Report 2008 VietinBank 7
Ban
ĐiềuHành
Dr. PHAM XUAN LAP
Member of Board of Directors - CEO
8Annual Report 2008 VietinBank 8
Mr. NGUYEN VIET MANH
Deputy General Director
Dr. NGUYEN VAN THANH
Deputy General Director
Mr. VO TAN THANH
Deputy General Director
Mrs. NGUYEN PHUONG LY
Deputy General Director
Mr. NGUYEN VAN DU
Deputy General Director
Mr. PHAM ANH TUAN
Deputy General Director
Mrs. BUI NHU Y
Deputy General Director
Mr. NGUYEN VAN CHUNG
Chief Accountant
Annual Report 2008 VietinBank 9
thegoalsof“Reliability,Efciency,ModernityandGrowth”.

The adoption of the new brand name “VietinBank” was a milestone for the bank
in the integration process to the world economy and sustainable development
intoadiversiednancialgroupkeepingleadingpositioninVietnam.Apartfrom
that, VietinBank will actively integrate into the region and the world, becoming a
majorcommercialbankinAsiaandcontributetothesuccessfulimplementationof
industrialization, modernization and international economic integration of Vietnam.
Establishment of VietinBank Main Operation Center (VMOC)
Established on April 1
st
, 2008 VMOC is a centralized processing center for
internationalsettlementsandtradenanceofthewholeVietinBanksystem
including money transfer, letters of credit, guarantees and counter-guarantees,
collection, factoring, transfer of receivables, risk participation, open accounts;
trustreceipts,billdiscounting,renancing,etc,whichareofferedtoallkindsof
customersrangingfromdomesticandforeigncorporates,nancialinstitutions
to individuals. VMOC also offers consultancy services, international settlement
andtradenancesolutionsforallcustomers.Byimplementingresearchand
developmentofnewtradenance-relatedproducts,VMOChascontributed
to improving the competitiveness of VietinBank and satisfying customers’
requirements.
Milestones of
Success in 2008
The launching of new brand name “VietinBank” in replacement of the former
name “Incombank”
On 15
th
April2008,thenewbrandname“VietinBank”wasofciallylaunchedin
order to create a nationally and internationally new and consistent image to meet
1.
2.

10Annual Report 2008 VietinBank 10
Inauguration of VietinBank’s Disaster Recovery Data Back-up Center
On 15
th
December2008VietinBankDataBack-upCenterwasofciallylaunched
in Hoa Lac High Technology Zone, which was well equipped and constructed
in a good location, meeting all requirements of State Bank of Vietnam as well
as international standards for a back-up site, marking an important progress in
ensuringthecontinuousness,safetyandefciencyofthebank’sbusinessoperation.
Successful IPO
On 25
th
December 2008 VietinBank successfully offered 53,600,000 shares to
investors with the average successful bidding price of VND 20,265 VND per share
compared to the starting price of VND 20,000. In the unfavorable turndown of
securities market, the Bank’s IPO was considered as a typical event of Vietnam
securities market in 2008.
VietinBank’s Reception of Second-Place Independence Medal
and Celebration of the 20
th
Anniversary of Incorporation and
Development
On 5
th
August 2008, it is great honor for VietinBank to receive Second-
Place Independence Medal – a high level award of the State on the
occasion of its 20
th
anniversary.

Opening of VietinBank Human Resource Development and
Training School
On 30
th
 September 2008 VietinBank ofcially opened its Human
Resource Development and Training School. This is considered as the
right direction as well as a comprehensive and long-term solution in
human resource development strategy of VietinBank.
3.
4.
5.
6.
Annual Report 2008 VietinBank 11
VietinBank’s
PERFORMANCE
in 2008
Fund Mobilization
Total mobilized funds
were VND
174,905
billion
increased by 15.6%
In 2008 deposits from individuals to VietinBank kept on increasing,
regardlessofthedifcultiesfacedbybankingsysteminfundraising.
46,841
1
1. Deposits from business entities
2. Deposits from individuals
3. Deposits from others

67,670
2
31/12/200731/12/2008
CUSTOMER DEPOSITS
BY TYPES OF CUSTOMERS
in VND billion
7,123
3
55,082
1
54,591
2
2,752
3
29,08725,714
11
1. Demand deposits
2. Term deposits
3. Deposits for specic purpose
4. Money transfer payables
5. Other amounts due to customers
6. Margin deposits
79,628
92,359
22
31/12/200731/12/2008
CUSTOMER DEPOSITS BY
TYPES OF DEPOSITS
in VND billion
362382

33
13499
44
614255
55
2,6002,825
66
Thankstothelargenetworkspreadingoverthecountryanddiversied
depositproductsofferingavarietyofbenetstodepositors,thebank’
sources of funds have been increasing from year to year. Despite
ercecompetitionamongcommercialbanksforliquidity,VietinBank’
sources of funds kept on increasing in 2008.
Deposits from customers amounted to VND 121,634 billion, accounting
for69.5%oftotalmobilizedfunds.Oftotaldepositsfromeconomic
entities, deposits from state-owned enterprises were VND 35,528
billion,accountingfor75.8%,deposits fromprivateenterprises and
othersmadeup17%oftotaldepositsfromeconomicentities;deposits
fromforeigninvestedenterpriseswereupby20.2%,accountingfor
7.2%oftotaldepositsfromeconomicentities.
Given the advantage of an extensive network and good reputation,
in 2008 deposits from individuals to VietinBank kept on increasing,
regardlessofthedifcultiesfacedbybankingsysteminfundraising.
As of 31
st
December 2008, deposits from individuals reached VND
67,670billion,increasingby24%comparedto2007.
14Annual Report 2008 VietinBank 14
Loans to
the Economy
9.49% Transport; storage and communications

9.54% Electricity, Petroleum and Water
18.74%Wholesale and retail trade; repair of motor vehicles, motor cycles and personal goods
11.23% Construction
7.19% Community, social and personal service activities
28.24% Mining and quarrying
4.24% Agriculture, Forestry and Aquaculture
11.33% Other activities
Loans to the Economy
Given the tightened monetary policy of the State Bank of Vietnam in therst three
quarters of 2008 and the huge demand for credit, VietinBank was prudent in selecting
efcientborrowersandkeyproductionindustriesforloandisbursement.Fromtheend
ofthethirdquarterwhenthemonetarypolicywasloosenedandbecamemoreexible
andsignicantinterestratedecreasewhichenabledenterprisestohaveaccesstofunds
from banks, VietinBank’s credit orientation was enhancement of lending to enterprises in
alleconomicsectors,whileensuringsafety,efciencyincreditactivitiesandmaintaining
market share.
Loans to the economy as at 31st December 2008 were VND 120,752 billion, rose by
VND 18,561 billion representing an increase of 18.2%. Medium and long-term loans
accounted for 41.9%; loans to state owned enterprisesaccounted for 19.9% of total
loans. The proportion of non-collateralized loans have been reduced in recent years,
gettingtothelowestlevelof22.7%oftotalloansin2008,a3%decreaseagainstthat
of the beginning of the year. Thanks to the strict controlling policy from the beginning
of the year, VietinBank has eliminated risks arising from lending for real estate and
securitiesinvestment.Loanstocorporates,SMEsandindividualswere45.4%,36%and
18.6%respectively.
In 2008, VietinBank continued to sign strategic cooperation
agreementswith4majornationalcorporationsincluding
Vietnam National Coal-Mineral Industries Group, Vietnam
National Shipping Lines Corporation, Vietnam National
Petroleum Corporation and Vietnam Expressway Corporation.

Annual Report 2008 VietinBank 15
Investment
Inthersthalfof2008,availablecapital
was mainly used for assuring liquidity
of the bank. From the third quarter of
2008, VietinBank continued investing
in the interbank market and valuable
papers market. The Bank also continued
to restructure its investment and capital
contribution to its afliates and joint
ventures and complete the buy back
of the paid-in capital of the foreign
partner in the joint venture insurance
company (IAI), which has resulted in IAI
being100%ownedbyVietinBank.
As at 31
st
December 2008, investment in
the interbank market were VND 18,274
billion,increasingby42.3%compared
to 2007, of which term deposits and
loans to other credit institutions totaled
VND 12,235 billion, demand deposits
and loans to other credit institutions
were VND 6,039 billion.
As of 31
st
December 2008, total exposure to securities for investment
and trading purposes doubled that of 2006, reaching VND 41,714
billion,anincreaseof9.4%against2007.SecuritiesheldbyVietinBank

are of high liquidity and low risks.
Available for sale investment securities, which include treasury bills,
central bank’s bonds, municipal bonds, bills and bonds issued by
reputablecreditinstitutionsandcorporations,accountedfor88.8%
of total investment in securities and reached VND 37,039 billion,
increasingbynearly14.5%ascomparedtolastyear.
Held to maturity securities, which include government bonds,
educationbonds,transportationandirrigationproject-supporting
bonds, treasury bonds, debt securities issued by other credit
institutions and corporations, were VND 3,920 billion, decreasing
by22.4%ascomparedtothepreviousyear.
Investment in the
interbank market
increased by
42.3%
as compared to 2007
16Annual Report 2008 VietinBank 16
International Banking
In 2008, VietinBank continued to expand the
correspondent banking network and now has more
than 850 banks in more than 80 countries and
territories. Cooperation with foreign banks has been
developed across wide geographies, with many long
standing ‘in depth’ relationships.
Import payment volume in 2008 was USD 7.02 billion,
up by 44.68% against2007,accounting for 8.46%
of import payment volume of the whole country.
Export payment volume amounted to USD 4.25
billion, increasing by 48.8% as compared to 2007
andaccountingfor8%ofexportpaymentvolume

of the country. Cross-border payments maintained
its growing impetus represented by an increase of
50%incomparisonwith2007.
Card Service and E- Banking Service
By the end of the year 2008, VietinBank has had 2.3
million customers using debit cards with 900,000
new customers. VietinBank accounts for 17% of
the total card market share. The card holders can
make transactions at 1042 ATMs of VietinBank and
4,000ATMsofotherbanksjoining2cardalliances-
Banknet and Smartlink.
There were 3,905 credit cards issued by VietinBank
in 2008, increasing by 94% as compared to 2007.
Card payment volume rose up to VND 626 billion
representing an increaseof 40% against 2007. Up
to now, VietinBank has established 1,700 POS for
VietinBank’s international credit cards and 20,000
POSforcardsissuedbyBanknetjoiners.FromMay
2008, SMS banking service has attracted more than
35,000 customers.
Banking Services
Payment and Remittance Services
By the end of 2008, VietinBank has 3 Main transaction
centers, 141 branches and more than 700 transaction
ofces and saving ofces. With the advantage of
the bank’s nationwide network, domestic money
transfer continued its growing impetus in 2008.
Number of payment transactions increased by
29.4% and reached 6.2 million. Total payment
volumewasVND2,800billion,upby29.1%against

2007. Bilateral payments amounted to VND 311,000
billion, increasing by 32.6% against the previous
year with 1.3 million transactions representing an
increase of 16.2%. Interbank e-payment volume
increased by 27.9% to VND 1,300 billion with 1.1
million transactions.
In 2008, VietinBank deployed many payment –
related products and services such as conversion
of card transactions into INCAS (VietinBank core
banking system), deployment of Home Banking
service to corporate customers. In 2008 VietinBank
also signed a bilateral payment agreement with
Vietnam Development Bank and cooperated with
State Treasury, General Department of Taxation,
General Customs of Vietnam to start up the State
budget collection through VietinBank.
OVERSEAS REMITTANCE VOLUME
(USD million)
108
2003
230
2004
404
2005
450
2006
750
2007
900
2008

Annual Report 2008 VietinBank 17
Risk
MANAGEMENT
Risk Management
VietinBank has developed a strategy on risk management in which the Board of
Directors is responsible for reviewing and approving VietinBank’s risk management
strategies and policies while the Board of Management takes responsibility for
implementing and developing those approved strategies and policies.
Risk Management at VietinBank is currently functioned by the Risk Management
Group (RMG). RMG is separated from sales divisions. It reports directly to the Board
of Management and consists of 5 Departments each responsible for managing
different kinds of risk, including credit risk, market risk, liquidity risk, and operational
risk. These 5 Department members are: Department of Credit and Investment Risk
Management (CIRM), Department of Credit and Investment Policy, Department of
Market and Operational Risk Management, Department of Non-Performing Loans
Management, and the Board of Internal Controllers.
In addition, the Department of Planning and ALCO Supporting is responsible
for managing liquidity risk, interest rate risk, and foreign exchange risk. Legal
Department is in charge of managing legal risks.
20Annual Report 2008 VietinBank 20
Credit Risk Management
Since 2005, VietinBank has developed
credit strategies fully setting out targeted
clients, markets and sectors. The Bank’s
targetedclientsarelargehealthynancial
and highly capable corporations while
potential clients are small and medium
enterprises and individuals. Our targeted
markets are those of large cities, potential

economic zones, and developing
municipal and industrial areas. And the
targeted sectors are those of industry,
trading and service.
VietinBank published policies on credit
risk management in late 2004. The
principles of these policies include
investment portfolio diversication,
multi-level process of authorization and
approval, regular monitoring procedures
and credit limit control. Depending
on VietinBank’s targeted markets and
overall credit strategies as well as past
performance of credit operations, markets
uctuations, and projectedcapital needs,
the Department of Credit and Investment
Risk Management proposes levels of credit
growth for VietinBank, and levels of credit
limits for the whole system based on types
of products, currency, sectors, industries,
ownership, clients, client groups, etc.
These proposals are then submitted to the
General Director and then to the Board of
Directors for approvals.
VietinBank’sdailyriskmanagementisjointly
functioned by the Department of Credit
and Investment Policy, the Department of
Credit and Investment Risk Management,
the Department of Non-Performing
Loans Management, and the Department

of Planning and ALCO Supporting. In
addition, the Board of Internal Controllers
evaluates VietinBank’s credit operations both periodically
and unexpectedly to ensure compliance with VietinBank’s
Credit Manual and legal regulation.
Collateral valuations are currently undertaken by the
customer departments and risks management departments
at VietinBank’s branches at the time of making loans
and conducting reappraisals according to VietinBank’s
Guidelines.
The loan to collateral value ratio is capped by a certain
percentage of the total value of each type of collateral asset.
Collaterals are re-evaluated at least once a year (depending
on which type of collateral) or unexpectedly.
VietinBank is in
the process of
developing internal
credit rating system
in accordance
with international
standards
Annual Report 2008 VietinBank 21