Banking Sector Outlook in Vietnam Opportunities and Challenges

‹#›
Banking Sector Outlook in Vietnam:
Opportunities and Challenges
Hanoi, June 23rd, 2022
Le Xuan Dong, CFA
Managing Director, Head of Market Research & Consulting Services, FiinGroup

Financial Information • Business Information • Market Research • Credit Ratings 2
1 About FiinGroup
2 Vietnam Banking Sector Outlook: Opportunities and Challenges
3
Our Track Records in Market Research & Consulting and Credit
Ratings Services
Content

Expanding into Credit Rating Agency (CRA) under license number 02/GPXH/02/BTC by
the Ministry of Finance on 20/03/2020, FiinGroup official offers credit rating service
under the brand “FiinRatings”. FiinRatings received a technical partnership with S&P
Global Ratings with support from ADB on 20 May 2021.
Established in March 2008, FiinGroup has become the market leader in providing
financial data, business information, industry research, credit rating, and other data-driven
analytics services in Vietnam.
In September 2014, our company entered a strategic capital and business alliance with
Nikkei Inc. & QUICK Corp (Japan) under which the Japanese partners hold 35.1% equity
stake in our company and jointly support Japanese investors in Vietnam.
3
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technologies that drive the capital markets.
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160+
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Financial
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Information

1 About FiinGroup
Overview of Vietnam’s Macroeconomics
Performance of Vietnam Banking Sector
Key Development Trends in the Banking Sector
Performance of Vietnam Non-Bank Financial Sectors
Vietnam Banking Sector Outlook
3. Our Track Records in Market Research & Consulting and Credit Ratings Services
Content

40.2
51.7 51.7
54.7
30
35
40
45
50
55
60
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
Jan-22
Feb-22
Mar-22
Apr-22
May-22
OVERVIEW OF VIETNAM’S MACROECONOMICS
Figure 2: PMI strongly bounced back since the last quarter of 2021 as
the economy is reopened
Figure 3: Vietnam enjoyed strong trade growth of 15% in the first 5 months of 2022 compared to same period last year
Figure 1: Vietnam’s GDP growth expected to robustly recover in 2022
Vietnam’s economy is bound for a strong recovery in 2022
Source: FiinResearch from GSO. Note: the forecast is the Government’s target for 2022
Source: FiinResearch from Customs Office of Vietnam
6.8%
7.1% 7.0%
2.9%
2.6%
5.0%
6.0%
2017 2018 2019 2020 2021 1Q2022 2022E
Source: FiinResearch from IHS Markit
28.3 27.7 29.1 27.3 26.7 26.1 30.6 31.6 29.4 25.4
32.7 32.5 32.3
26.2 27.2 27.9 27.2 27.0 28.9 31.9 34.6 30.8
23.4
34.7 33.3 30.3
2.1
0.5
1.2
0.1
0.4
2.7
1.3
3.0
1.4
2.0
2.0
0.8
2.0
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
Jan-22
Feb-22
Mar-22
Apr-22
May-22
US$bn
Import Export Trade Surplus (Deficit)

2.25
4.00
1.10
0
1
2
3
4
2017 2018 2019 2020 2021 5M2022 2022e
CPI (%) Core inflation (%)
-20%
-15%
-10%
-5%
0%
5%
Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 May-22
VND/USD THB/USD SGD/USD MYR/USD IDR/USD PHP/USD
Figure 5: The external position of Vietnam is strong, steadily improving
in the last 5 years.
Figure 6: Backed by the trade surplus and the abundant foreign reserves, the Vietnam currency stayed stable compared to the peer countries
Figure 4: Vietnam inflation is vulnerable to the hike in commodity prices
but expected to be contained by the Government
OVERVIEW OF VIETNAM’S MACROECONOMICS
Inflation under control and stable currency are key factors supporting the resilience of the
economy
Source: FiinResearch from GSO Source: FiinResearch from IMF & SBV
Stable
Vietnamese
curency
Source: FiinResearch from FiinPro
53.0
63.5
79.0
94.8
110.0
3.0
3.2
3.7
4.3
3.8
2017 2018 2019 2020 2021
Foreign Reserves (US$bn) Equivalent of import months

6,512
7,211
8,195
9,193
10,444
9,648
11,253
18.3%
13.9% 13.6%
12.2%
13.6%
15.4%
16.6%
2017 2018 2019 2020 2021 May-21 May-22
VNDtrn Outstanding credit (VNDtrn) YoY credit growth
Figure 8: The YTD growth shows a strong rebound of credit demand in 2022 compared to the last two years
Figure 7: Strong credit growth thanks to the resumption in manufacturing and trade activities as well as consumption demand
PERFORMANCE OF VIETNAM BANKING SECTOR
Credit growth recovered strongly in first 5 months 2022, fueled by rebound of economic
activities and surging capital demand
Source: SBV. Note: The outstanding credit and credit growth for May-22 are interim numbers by SBV as of 25 May 2022.
+5.0% YTD
+7.7% YTD
Credit growth
7.7%
5.0%
2.0%
0%
2%
4%
6%
8%
Jan Feb Mar Apr May
2022 2021 2020
Source: SBV. Note: The credit growth for May-22 are interim numbers by SBV as of 25 May 2022.

89.2%
25.0%
0% 20% 40% 60% 80% 100%
Hong Kong
Malaysia
South Korea
Singapore
Japan
Taiwan
China
Thailand
Vietnam
India
Philippines
Indonesia
PERFORMANCE OF VIETNAM BANKING SECTOR Credit by segment
Figure 10: Retail loans recovered and posted a high growth in 2021
Figure 9: Retail loans accounted for the largest portion of the outstanding credit of the banking sector
Retail lending continued to be the driving force of credit growth in the economy
Source: FiinResearch from SBV and financial statements of 25 banks accounting for 87% of total credit outstanding.
11.7%
18.0%
12.7%
9.7%
2016 2017 2018 2019 2020 2021
Retail loans Corporate loans
Source: FiinResearch from 25 banks’ financial statements and presentations, accounting for
87% of total credit outstanding. Note: corporate loans include loans to large corporates and
SMEs.
47.4%
31.7%
19.5%
2.6%
10,444
0
2,000
4,000
6,000
8,000
10,000
2019 2020 2021
VNDtrn
Retail loan Loan to large corporates Loan to SMEs Investment in corporate bonds
Figure 11: Consumer lending as a % of GDP in Vietnam (2021)
remained modest compared to regional peers, implying a huge room
for growth
Source: FiinResearch from Euromonitor International

0
100
200
300
400
VCB BID TCB CTG VPB VIB STB OCB MSB
VNDtrn
Homebuyer loans Developer loans
% of
outstanding
loans
71.0%
29.0%
15.6%
1.2%
21.5%
0
600
1,200
1,800
2,400
2019 2020 2021 1Q2021 1Q2022
Credit to real estate
Credit to home buyers (VNDtrn) Credit to developers (VNDtrn) YoY growth
Figure 12: Credit to the real estate sector posted a high growth rate, to which homebuyer loans made a larger contribution
The large portion of loan portfolio are exposed to real estate sector
Source: FiinResearch from SBV. Note: credit to real estate sector includes customer loans and real estate corporate bonds held by commercial banks.
Credit to real estate sector
Figure 13: Loans to real estate-related sectors (i.e real estate development, construction and construction materials) accounted for large portion in
loan books of some commercial banks
Source: FiinResearch from financial statements, investor presentations and press release of some commercial banks and press release. Note: loans to real estate-related sectors do not include
corporate bonds, as corporate bonds by sector is not disclosed in financial statements of commercial banks.
19.9% 19.6% 19.9% 19.4% 20.3%
% of total
outstanding
credit
700 784
10.5%
18.6%
2019 2020 2021 1Q2021 1Q2022
Credit to developers
1,377 1,446
18.4% 23.1%
2019 2020 2021 1Q2021 1Q2022
Credit to homebuyers
35.3% 23.0% 73.1% 17.4% 34.7% 43.7% 22.0% 40.6% 38.1%

Figure 14: Average primary real estate prices in Hanoi (US$/m2)
Figure 16: Real estate absorption rate in Hanoi
The hike in real estate prices and low absorption rates raised a concern of an inflated
demand in the real estate market
Source: FiinResearch from Savills and JLL
Source: FiinResearch from Savills. Note: absorption rate is calculated by sales divided by primary supply including inventory overhang
Figure 17: Real estate absorption rate in HCMC
Figure 15: Average primary real estate prices in HCM (US$/m2)
Source: FiinResearch from JLL
Real estate market performance
Hanoi HCMC
1,400
1,500
1,600
1,700
1,800
2,000
4,000
6,000
8,000
10,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2020 2021 2022
Villa (LHS) Townhouse (LHS) Apartment (RHS)
2400
2500
2600
2700
2800
5000
5500
6000
6500
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2020 2021 2022
Villa/townhouse (LHS) Apartment (RHS)
0%
20%
40%
60%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2020 2021 2022
Apartment Villa/townhouse
0%
20%
40%
60%
80%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2020 2021 2022
Apartment Villa/townhouse

97.05%
2.95%
0
3,000
6,000
9,000
12,000
2019 2020 2021 1Q2022
VNDtrn
Customer loans Corporate bonds
8.0
21.5 19.9
4.7 5.4 0.9
58.9
103.0
94.6
83.3
41.5 45.3
0
30
60
90
120
2022 2023 2024 2025 2026 After 5
years
VNDtrn
Listed Unlisted
Figure 19: Most of the real estate bonds in the market were issued by
unlisted corporates
Figure 20: The weak debt service capability (in term of Net
debt/EBITDA) of unlisted issuers raised the concern of cross
default risk to banks
Figure 18: Half of corporate bonds banks held by banks were issued
by real estate developers
Banks might face risk of cross default resulting from a huge amount of maturing real
estate bonds by unlisted issuers with doubtful debt service capability
Figure 21: The credit risk might be significant as most of the real estate
corporate bonds by unlisted issuers will be maturing within the next 3
years
3.8
8.1
2017 2018 2019 2020 2021
Listed isssuers Unlisted issuers
Source: FiinResearch from SBV
Source: FiinResearch from HNX
Bank-held corporate bonds in real estate
Source: FiinResearch from FiinRatings.. Note: the figures are calculated from 12 listed and 68
unlisted real estate bond issuers operating in the residential real estate area.
Source: FiinResearch from FiinRatings. Note: the figures are calculated from 744
outstanding corporate bonds on HNX as of 31 Dec 2021.
27.0
159.0
2019
2020
2021
VNDtrn
Listed issuers Unlisted issuers
49.2%
50.8
%
Real estate
corporate bonds
Corporate bonds in
other sectors

54.9% 51.3% 48.4% 48.3%
45.1%
48.7% 51.6% 51.7%
12.8%
13.9% 12.9%
8.4%
15.3%
11.5%
2018 2019 2020 2021 Mar-21 Mar-22
0
4,000
8,000
12,000
VNDtrn
Wholesale deposits Retail deposits Total customer deposit YoY growth
4.70%
4.80%
4.90%
5.00%
0%
1%
2%
3%
4%
Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 May-22
Government bond yield fixing (5-year) (LHS) Average Overnight InterBank Interest Rate (LHS) 6-month deposit interest rates (RHS)
Figure 24: Deposit rates, interbank rates and G-bond yields have been rising since the liquidity is not abundant due to increasing credit demand
Figure 22: Customer deposits return to banks thanks to the deposit rate
hikes and the cooling down of other investment channels
Customer deposits have been rebounded supporting for the acceleration of credit growth
Customer deposits and liquidity
Source: FiinResearch from FiinPro, VBMA and bank announcements. The average deposit rates were calculated from 31 commercial banks
Figure 23: Customer deposit’s YTD growth in 2022 exceeds the
previous years’ levels
0.3%
1.3%
3.6% 3.4%
-1%
0%
1%
2%
3%
4%
Jan Feb Mar Apr
2022
2021
2020
Source: FiinResearch from SBV. Note: April-22 deposit growth is the interim number
as of 25 April 2022

The NPL ratios tend to decline thanks to improved credit quality of borrowers after the
reopening of the economy and increasing credit demand under the new normal
Figure 25: The NPL ratios of the banking sector have been declining in 1Q2022
Asset quality
Figure 26: NPL ratio surged in 1Q 2022 as some commercial banks started reclassifying COVID-restructured loans
4.83%
0%
2%
4%
6%
VPB VBB NVB PGB BVB SGB VIB ABB OCB KLB EIB MSB SHB SSB HDB NAB LPB STB CTG TPB MBB BID ACB VCB BAB TCB
2021 1Q2022
Source: FiinResearch from banks’ financial statements
7.31%
5.76%
3.79%
3.41%
1.90%
1.53%
0%
2%
4%
6%
8%
2017 2018 2019 2020 2021 1Q2022
Adjusted NPL ratio (including gross NPLs &
potential NPLs from COVID-restructured loans)
Gross NPL ratio (including on-balance sheet
NPLs, VAMC & potential bad debts)
On-balance sheet NPL ratio

373%
259%
250%
197%
188%
90%
88%
86%
81%
76%
52%
48%
45%
42%
38%
0%
150%
300%
450%
VCB
BID
MBB
CTG
ACB
BAB
TCB
STB
TPB
LPB
NAB
MSB
SSB
SHB
HDB
VPB
EIB
KLB
OCB
BVB
NVB
VIB
ABB
VBB
SGB
PGB
2021 1Q2022
Figure 27: Bad debt coverage have been steadily improved to protect commercial banks against future loss
Source: FiinResearch from financial statements of 26 listed banks accounting for 73% of total credit outstanding.
Source: FiinResearch from 27 banks’ 1H2021 financial statements, accounting for 88% of national loan book.
Figure 28: The disparity in level of provisioning amongst banks positioning them differently in coping with NPL in the future as well as their
profitability
Banks step up provisioning in the wake of NPLs potentially incurring from COVID-restructured
loans
114.4%
150.0%
63.9%
77.6%
0%
50%
100%
150%
1Q2021 1H2021 9M2021 2021 1Q2022
Loan loss coverage ratio Overdue debt coverage ratio
Asset quality

3.59%
3.47%
3.0%
3.2%
3.4%
3.6%
3.8%
2018 2019 2020 2021 1Q2022
Figure 30: NIM improved in 2021 but slightly declined since the beginning
of 2022
Figure 29: Banks have posted a strong total operating income growth in recent years
Banks enjoyed high interest margin in 2021 but might face NIM declining in 2022
Figure 31: The strong NIM is mainly supported by the low-cost CASA
deposits
Source: FiinResearch from financial statements of 28 banks, whose outstanding credit
accounted for 77% of total outstanding credit in the economy.
Earnings quality
Source: FiinResearch from banks’ financial statements
75.7%
12.0%
12.3%
0
100
200
300
400
500
2018 2019 2020 2021
VNDtrn
Net Interest Income Net Fee & Commission Income Other Operating Income
Source: FiinResearch from listed banks’ financial statements, whose outstanding credit accounted for 74% of total outstanding credit in the economy
50.4%
44.7%
38.3%
36.3%
10%
20%
30%
40%
50%
TCB MBB MSB VCB ACB KLB STB VPB BID CTG
2021 1Q2022

31%
Income from Insurance business
Income from Settement services
Income from Agency services
Income from Treasury activities
Others
Figure 33: Commercial banks earned large income from either revenue of their subsidiary insurance companies and/or commission from their
exclusive distribution contracts with external life/non-life insurers
Figure 32: Fee & commission income posted a healthy growth rate over the past years with a significant contribution of income from bancassurance
Fee and commission income emerged as a stable source of income for commercial banks
in recent years
Earnings quality
0
20
40
60
2018 2019 2020 2021
VNDtrn
Source: FiinResearch from listed banks’ financial statements, whose outstanding credit accounted for 74% of total outstanding credit in the economy
% of the bank’
total fee income 68.1% 27.1% 34.3% 21.6% 31.5% 18.9% 15.6% 61.9% 34.0% 42.3%
8,386
0
2,000
4,000
6,000
8,000
10,000
MBB CTG VPB BID STB TCB AGRB HDB VIB TPB
VNDbn
Source: FiinResearch from banks’ financial statements.

15.0%
14.3% 14.3%
9.3% 9.1% 9.0%
0%
4%
8%
12%
16%
TCB HDB VPB TPB OCB VIB SSB MSB LPB ACB MBB BVB VBB NAB VCB CTG BID
11.3%
0%
5%
10%
15%
20%
Thailand Malaysia Philippines South Korea China Vietnam
9.1%
11.7%
18.7%
SOCBs
JSCBs
Foreign banks
11.47%
11.0%
11.4%
11.8%
12.2%
12.6%
Figure 36: Some large state-owned commercial banks barely met the Basel II capital adequacy requirements (2021)
Capital adequacy of Vietnamese banks stays modest compared to the regional peers
Source: FiinResearch calculaitions from SBV disclosures.
Source: FiinResearch from banks' CAR announcements and investor presentations.
Figure 34: Capital adequacy ratio (CAR) of Vietnamese credit
institutions remained modest
PERFORMANCE OF VIETNAM BANKING SECTOR Capital adequacy
Figure 35: Vietnamese commercial banks lagged APAC peers in terms
of capital adequacy
Source: FiinResearch from the countries' central banks. Note: CAR for Thailand, South
Korea and Vietnam is as of Mar-22. Meanwhile, CAR for Malaysia and Philippines is as of
Aug-21 and Dec-21, respectively, due to unavailability of the latest data.

39.3%
0%
10%
20%
30%
40%
VPB LPB MBB VIB ACB VCB SHB HDB TCB MSB
ROE (LHS) ROA (RHS)
6.4%
0%
2%
4%
6%
8%
10%
46.1% 44.4%
41.6% 40.0%
32.5%
30.1%
2017 2018 2019 2020 2021 1Q2022
Figure 39: Profitability of bank sector enhanced thanks to improved
earnings and effective cost management
Figure 37: The cost-to-income ratio (CIR) of the banking system has
been gradually improved over years
Operational efficiency has been improving consistently thanks to bank’s aggressive
adoption of digital transformation
Operational efficiency and profitability
22.7%
1.7%
0%
1%
2%
0%
8%
16%
24%
2017 2018 2019 2020 2021 1Q2022
ROA
ROE
ROE ROA
Source: FiinResearch from 29 banks' financial statements. Note: 1Q2022 are annualized data
Source: FiinResearch from 29 banks' financial statements.
27.2%
26.9%
26.6%
21.2%
16.4%
10%
20%
30%
40%
MBB MSB TCB SCB SSB CTG VCB BID SHB VPB
2021 1Q2022
Figure 38: Most of the banks with the lowest CIR are large ones
that actively engaged in digital transformation
Figure 40: Most of best performing banks in term of ROE and ROA are
JSCBs, rather than SOCBs
Source: FiinResearch from banks' financial statements.
Source: FiinResearch from banks' financial statements.

Vietnamese banks have been implementing digital transformation, for both front and back
end, to improve operational efficiency, service quality as well as expand customer base
KEY DEVELOPMENT TRENDS IN THE BANKING SECTOR
Shift to digital technologies within specific
single activities or processes.
Combination of various aspects of digital
activities to form something consistent.
Replication of offline services online.
Application of technologies to create
entirely new services like never before.
Digitization Digital transformation Digital reinvention
Source: FiinResearch from International Business Machines (IBM)
Figure 42: Notable initiatives of digital transformation in Vietnam banking sector
Digital banking
A range of banking
services (payment, loan
application, opening of
transaction & saving
accounts, application for
credit cards, etc.) could
be done online quickly
Virtual interaction
Customers get
help from robots
and virtual
assistants
SeaBank deploys FPT
AI’s Virtual Call Agent to
remind payment
schedule and extend
cards.
Digitalization of
back-end
processes
TCB uses AWS’s cloud services to have
unlimited data storage, automate data
processing and enhance data security.
Digitalization of
physical branches:
Kiosk banking
TPB’s LiveBank
provides almost all
services that a
traditional physical
branch does.
Source: FiinResearch
Figure 41: The Vietnamese banking system is going through the second phase: traditional banking services are now delivered through online
platforms comprehensively, some completely without human involvement
Digital transformation

2022 is going to witness restructuring of some “zero-dollar banks” supported by large
commercial banks and some private placements to raise capital from foreign investors
M&A in banking
Mandatory transfer of “zero-dollar banks” into the large commercial banks
Decision 689/QD-TTg in June 2022 by Prime Minister on
“Restructuring of credit institutions and bad debt settlement
for 2021 - 2025” Scheme
▪ Encouraging M&A amongst credit institutions to
reduce number of players and improve their financial
health.
▪ Credit institutions required to continue raising capital
to improve capital adequacy ratio (CAR) according
to Basel II requirements
▪ Aiming to reduce gross NPL (including on balance
sheet NPL, VAMC and potential bad debts) down to
below 3% by 2025
Local banks’ planned private placements to attract more foreign
capital
Name Expected % of
charter capital
15.0%
32.5%
6.5%
10.0%
“Zero-dollar banks” Large banks
Expected
proceeds
(US$bn)
0.13
0.51
0.26
0.06

Some foreign strategic investors have showed their interests in acquiring FCCOM
Local finance companies continued to be attractive M&A targets for local and foreign
strategic investors thanks to the sector’s significant growth potential
Recent M&A transactions in 2021
Potential targets for M&A in the coming time
The restructuring of HAFIC has taken place since 2021 with the support of TPBank who aims to take over the
finance company in the time to come.
Grab Holdings Ltd (Grab) and three mega Japanese lenders namely Mitsubishi UFJ Financial Group Inc (MUFG), Mizuho
Financial Group Inc (Mizuho), and Sumitomo Mitsui Financial Group Inc (SMFG) are either showing interests towards Home
Credit’s entire businesses or its assets in Southeast Asia (Vietnam, Indonesia and Philippines) and India. Home Credit
business in SEA (including Home Credit Vietnam) and India is expected to be worth between US$2bn and US$2.5bn.
Deal value: US$1.37bn
% stake: 49%
Deal value: US$156mn
% stake: 100% ~ US$156mn (under two phases;
i.e., 50% in the first phase and 50% in the next 3
years).
M&A in consumer finance

148.3
9.3%
2017 2018 2019 2020 2021
VNDtrn
Active FinCos' CF YoY Growth
2,103.7
13.1%
2017 2018 2019 2020 2021
VNDtrn
Total Outstanding CF Loans (Excluding Inactive FinCos) YoY Growth
Following the recovery in 2021, Vietnam consumer finance market is expected to continue
bouncing back in 2022
PERFORMANCE OF NON-BANK FINANCIAL SECTORS
Figure 43: The consumer finance market showed sign of rebound with banks’ CF being the primary growth drivers
Source: FiinResearch from banks and FinCos’ financial statements.
Source: FiinResearch from banks and FinCos’ financial statements.
Consumer finance
Figure 44: Loan books of Fincos recovered in 2021, especially in the
4th quarter following reopening of the economy
Source: FiinResearch. Data covering consumer finance of retail banks and active licensed
FinCos.
67.1%
13.7%
11.6%
7.6%
Personal Loans/ Cash Loans &
Others
Vehicle Loans (two and four-
wheeler)
Consumer Durables
Credit Card
2021
2020
2019
Figure 45: Fincos continue diversified their product portfolio to
reduce the portion of cash loans to comply with current regulations
Note: FinCos offer 4 main products: Consumer Durables (Consumer electronics & Home
appliances), Vehicle Loans, Credit Card, and Personal Loans/ Cash Loans and Others.
CAGR (2017 – 2021) = 15.1%
92.9%
7.1%
Banks' CF
Active
FinCos' CF

14.1%
6.6%
0% 8% 16%
FE Credit
Viet Credit
Shinhan Finance
JACCS
SHB Finance
HD Saison
Mirae Asset
Mcredit
Home Credit
Toyota Financial
Services
NPL ratio
2021 2020
Sector avg. = 9.6%
(2021)
FinCos’ asset quality with the loan portfolio concentrated on low-income borrowers were hit
hard in 2021
Figure 47: Despite the surge in NPLs, the loan loss coverage ratios of
Fincos remained modest
Figure 46: The negative impact of the pandemic on FinCos’s NPL
Source: FiinResearch. Average NPL of 14 active FinCos in 2021.
144.2%
0% 100% 200%
Growth in NPLs
(2021 vs 2020)
Figure 48: NPL ratios of selected FinCos
Consumer finance
48.3%
0% 50% 100%
Loan loss coverage
ratio, 2021
5.5%
9.6%
4%
5%
6%
7%
8%
9%
10%
2017 2018 2019 2020 2021
FinCo 2019 2020 2021 1Q2022E Trend
FE Credit 6.0% 6.6% 14.1% 14.8%
Mcredit 6.5% 6.4% 6.2% 6.5%
HD Saison 5.4% 5.8% 7.3% 7.3%
PTFinance 0.0% 3.0% 2.1% 2.7%
Easy Credit 3.5% 2.5% 2.6% 1.9%
FCCOM 3.2% 8.8% 22.8% 21.8%

Figure 50: Penetration rate of corporate bonds in Vietnam is low
compared to regional peers, implying more room for growth in the future
Source: FiinRatings, HNX
Note: Foreign currency bond not included
0
200
400
600
800
2017 2018 2019 2020 2021 5M2022
VNDtrn
Private placement Public offering
PO = 5,3%
PO = 9%
56.8%
37.1%
25.0%
14.8%
7.6%
2.6%
-20%
0%
20%
40%
60%
0
50
100
150
200
Malaysia Singapore Thailand Vietnam Philippines Indonesia
US$bn
Dư nợ TPDN % so với GDP
Source: FiinRatings, ADB
Note: Vietnam market size as of December 31, 2021, size of regional markets based on ADB's
report as of 31 December 2021.
Outstanding
value
% to GDP
Vietnam corporate bonds market have enjoyed double digit growth in the last 5 years and
shown more room to continue growing in the time to come
Source: FiinRatings
Note: The value of VND 421 trillion in new
medium and long-term loans of commercial
banks is based on the financial statements
of 29 banks whose customer loans
accounted for 83% of total outstanding
credit in 2021.
Figure 51: Capital raised from corporate bonds exceeds those via stock market and banking system in 2021
Figure 49: Corporate bond issuance has enjoyed a robust growth over
the past 5 years
Corporate bond
421.0
100.6
0
200
400
600
800
Raising capital from
corporate bonds
Growth of new medium and
long-term loans of
commercial banks
Equity raised via stock
market
VND
trillion
Listed non-bank bond Unlisted non-bank bond Bank bond
709.2

Figure 55: The longest tenor belongs to the energy sector
4.2%
6.7%
9.6%
9.7%
10.4%
Banks
Securities
Real Estate
Energy
Construction
Source: FiinRatings
Note: Local currency bonds only
Figure 54: Interest rates dropped in 2021 with 3 sectors around the ten
percent levels
30%
38%
5%
37%
34%
5%
35%
33%
2%
Real estates
Bank
Financial Services
Manufacturing
Energy
Other
Source: FiinRatings.
Note: The figures were estimated based on issuance value, except bank bonds. Banks and
credit institutions are not included in the Domestic institutions.
The investor and issuer bases are mainly driven by banks and real estate developers
2020
2021
5M2022
6.7
4.0 3.7
3.4
2.1
Energy Banks Construction Real Estate Securities
Figure 53: Securities and banks are major investors
Figure 52: Real estate developers and banks are major issuers
Source: FiinRatings
1.5%
47.1%
20.2%
30.8%
30.5%
16.4%
Securities companies
Banks
Domestic institutions
Individual investors
Foreign investors
Others
2020
2021
Corporate bond
Source: FiinRatings
Note: Local currency bonds only

39.6
47.8
26.1
0
30
60
90
120
1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5
2020 2021 2022
VND
Trillions
Circular 16
took effect in
January 2022
The
cancellation
of 9 THM
bond
issuances
Source: FiinRatings
Issuance activities are less active due to recent tightening measures by local regulators
Figure 56: Corporate bond issuance value in the first 5 months of 2022 has decreased by 28% over the same period
Corporate bond
The market is gradually
getting used to the new
regulations in Decree
153/2020/ND-CP and
155/2020/ND-CP – coming in
to force on January 1, 2021.

Regulations are being revised to protect investors and enhance the market transparency
• Invest in corporate bonds if
their NPL ratio exceeds 3%
Buy bonds to finance:
• restructuring debts
• contributing capital or buying
shares in other enterprises
• increasing working capital.
• Buy bonds issued by a company
that has incurred bad debts within
the last 12 month.
• Sell bonds to their subsidiaries,
except for cases of mandatory
transfer from other credit
institutions
Circular 16 Draft Decree Amending 153
Purpose of bond issuance
• To execute investment projects
• To increase capital for operation
• To restructure corporate funding.
• Not allowed to issue bonds to contribute
capital to or lend to another enterprises.
Investor requirements
Individual professional investors can only buy
privately-placed bonds of public companies with
collateral or payment guarantee.
Bond Trustee
The bond trustee is responsible for
• monitoring the use of raised funds
• taking and managing collaterals
• supervising the fulfillment of the issuer’s
commitment.
Enhance
transparency;
Reduce credit
risk to bond
investors
Ensures the
quality and
safety of the
corporate
bond
investments
by credit
institutions
Figure 57: Key highlights of Circular 16/2021/TT-NHNN and the draft amendments of Decree 153/2020/ND-CP
Corporate bond
Credit institutions are not allowed
to:

29
Applying credit ratings: improve information transparency; support credit risk control;
and manage cross-default risks
Source: FiinRatings
Important Note: Except for issuers with names and logo shown on the Exhibit, this is not the final results of FiinRatings. To carry out
rating actions, we would need to perform qualitative analysis, including interviews with the companies’ management, due diligence
and assess characteristics of each particular business model.
1
3
9
7
12 12
9
2
1
0
2
4
6
8
10
12
14
 The promotion of credit rating will help not only bond investors but also
commercial banks in selecting, evaluating and lending credit in line with
risk appetite and the State Bank’s directives: strictly control real estate
credit risks.
 Help "synchronize" information on bond credit quality and bank credit,
thereby supporting monitoring of cross-default risk in the credit market in
general.
Credit
quality
Description
Business
Risk
Profile
Financial
Risk Profile
[a] • Large and clean land bank in
several cities and central areas,
with diversified products and
sources of income.
• Strong reputation and proven
project implementation capability.
• Good funding capability and low
financial leverage.
Strong
and above
Intermediate
to Modest
[bbb] • Above average scale with central
city land bank. The implementation
capability and feasibility is proven.
• Below average financial leverage.
Adequate
to Strong
Intermediate
to Modest
[bb] • Land bank in cities, vicinity or
others.
• Higher financial leverage.
Moderate
to
Adequate
Significant to
Aggressive
[b] • Small to average size.
• Higher risks regarding the
implementation capability.
• Higher financial leverage.
Below
Moderate
Aggressive
to Highly
Leverage
Figure 59: Meaning of credit rating scales for real estate
developers
Source: FiinRatings
Figure 58: Relative ranking of listed Real Estate companies and FiinRatings’
official ratings of several issuers
G-bonds in
domestic
rating scale
Corporate bond

VIETNAM BANKING SECTOR OUTLOOK
• Credit growth is forecasted to achieve 13% - 14% in 2022 thanks to strong recovery of economic
activities as well as increasing credit demand.
• On-balance sheet NPL might increase to around 2% - 3% by the end of this year mainly due to
full reclassification of COVID-restructured loans. However, NPL would be well contained and
addressed by local banks thanks to improved credit quality of borrowers after the reopening of
economy and local banks’ strong loan loss coverage to absorb the future loss.
• NIM would witness decline due to hikes in deposit rates as the liquidity is not abundant in the
context of increasing credit demand and SBV direction to contain inflation risks. Fee and
commission (especially those from bancassurance) continue to be a stable and non-risk income
for banks in coming years.
• Digital transformation continues to be the backbone of most local banks’ long-term strategies to
increase their target customer base, improve the customer experience, and optimize their end-to-
end business operations
• Consolidation in the banking and consumer finance sectors is expected to keep occurring in
2022 – 2025 thanks to mandatory transfer/restructuring of “zero-dollar banks” supported by SBV
and large banks; acquisitions of local finance companies by leading local and foreign strategic
buyers. Private placement opportunities would also be available from local credit institutions to
raise equity and debt capital for strengthening their capital buffers as required by current local
regulations as well as to support their long-term business growth.
• Rating service would become an essential one in the time to come to support corporate bond
market development, lending business and for credit institutions themselves when they join
capital market to raise debt capital in forms of bonds, loans or other debt instruments.

1 About FiinGroup
3
Our Track Records in Market Research & Consulting and Credit
Ratings Services
Content

Market Research & Consulting Services
Service Offerings & Sector Coverage
• Industry Report
• Customized Market Research
• Commercial Due Diligence
• Market Entry Advisory
Service Offerings
A selection of sectors we cover:
▪ Banking
▪ Consumer Finance
▪ Payment Services
▪ Leasing
▪ Insurance
Food & Beverages
▪ Food Processing
▪ Food Services
▪ Beverage
Consumer Retail
▪ ICT Retail
▪ Fashion Retail
▪ Convenience Store
▪ Health & Beauty Store
Utilities
▪ Water Supply
▪ Energy
▪ Cement
▪ Additives and Concrete
▪ Admixtures
▪ Steel & Other Metals
▪ Construction
Industrial Goods
▪ Hospital and Clinics
▪ Medical Equipment
▪ Pharmaceuticals
Information & Communication Technology
Automobiles & Auto Parts
Construction & Construction Materials
Financial Services
▪ Containers & Packaging
▪ Flexible Packaging
Logistics
Healthcare
▪ Warehouse (incl. cold chain logistics)
▪ Port Operation
Client Portfolio
Japanese
Korean
Local
International
5

Market Research & Consulting Services
Our track records in financial sector
Request
➢ In-depth understanding of
intermediary payment services
(IPS) in Vietnam & potential M&A
target sourcing for market
penetration purpose.
FiinGroup’s solution
✓ Comprehensive study on IPS
market in Vietnam
✓ Deal sourcing, review and develop
investment recommendations on
available M&A investment
opportunities in the market.
Result
✓ In early 2021, KB Financial Group
(Korea), the parent company of KB
Kookmin Card, has completed a
Series A investment in Gpay, the
intermediate payment service arm of
G-Group (Vietnam).
Request
➢ In-depth understanding of the
credit card market in Vietnam to
support a decision to launch a
credit card business in here
Name of service
✓ Comprehensive study on Vietnam
credit card market, including the
products offering and features,
competitive landscaping amongst
key market players and their
strategies, key market trends etc.
✓ Review of current legal
regulations for credit card
business.
Result
✓ A comprehensive and in-depth
analysis of the credit card market in
Vietnam that supports the client’s
decision to expand their card
business in Vietnam
Leading foreign financial
group
Request
➢ Semi-annual comprehensive
analysis reports on Vietnam
financial sectors.
➢ Identification of early warnings
and risks that have a pervasive
impacts on the safety of Vietnam
financial system
Name of service
▪ Customized Study
✓ In-depth analysis of selected
notable significant macro and
financial sector movements and/or
trends.
✓ Updates on macroeconomics,
performance of the banking and
non-bank sectors and significant
regulations that have an impact on
the economy and financial sectors.
Request
➢ In-depth analysis of potential
synergies between a commercial
bank, a consumer finance
company and a financial leasing
company in a group scenario
Name of service
✓ Comprehensive analysis of the
financial and operational
performance of the three credit
institutions.
✓ Evaluation on potential business
synergies amongst the three
companies and projections
Result
✓ A comprehensive analysis report
of the three companies and
evaluation of potential synergies
that support the client to make
informed decisions.
Leading foreign credit card
company
Leading multilateral
development bank
Name of service
▪ Investment target screening
Result
✓ Periodic comprehensive
surveillance reports supporting
the client to closely monitor
Vietnam financial sector.

FiinRatings supports capital market development
Partners
The second licensed credit rating agency
in Vietnam
Main service offerings:
• Issuer Credit Ratings
• Issue Credit Ratings
• Credit Assessment
• Independent Credit Evaluation
About FiinRatings
6
Credit Ratings
In March 2022, FiinGroup was
authorized by the Climate Bonds
Initiative (CBI) as the first approved
verifier in Vietnam in verifying green
bonds, loans and other debt instruments
raised by Vietnamese businesses
New initiatives
In May 2022, FiinRatings officially
announced the successful application
for ADB’s rating subsidy program. The
program can now offer up to a
US$20,000 fee reduction for first-time
issuer ratings upon rating results
announced to the public.
BBB-/ Stable
Issuer Credit Rating
19/05/2021
BB/ Positive
16/08/2021
12/10/2021
BBB-/ Stable
BBB-/ Stable
29/03/2022
BBB+/ Stable
04/04/2022
BB+/ Stable
20/04/2022
A-/ Stable
25/04/2022
Our Rating Actions

‹#›
Contact us
Ho Chi Minh City Branch
Level 46, Bitexco Financial Tower, 2 Hai Trieu Street, Ben
Nghe Ward, District 1, Ho Chi Minh City
T: +84 28 3933 3586 (ext. 85)
E: info@fiingroup.vn
Head Office
Level 10, Peakview Tower, 36 Hoang Cau Street, O Cho Dua Ward,
Dong Da District, Hanoi, Vietnam
T: +84 24 3562 6962
E: info@fiingroup.vn
W: https://fiingroup.vn
Dong Le, CFA
Managing Director, Head of Market Research and
Consulting Services
T: +84 24 3562 6962 (ext. 110)
E: dong.le@fiingroup.vn
Yen Nguyen
Client Advisor, Market Research and Consulting
Services
T: +84 24 3562 6962 (ext. 105)
E: yen.nguyen@fiingroup.vn
Hue Ba
Senior Client Advisor, FiinRatings Credit Rating
Services
M: +84 971 390 935
T: +84 24 3562 6962
E: hue.ba@fiingroup.vn

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