ANNUAL REPORT - BIDV

ANNUAL REPORT

ANNUAL REPORT

4 5ANNUAL REPORT 2019 ANNUAL REPORT 2019

M A N A G E M E N T ’ S R E P O R T90. Operating environment and business results in 201992. Financial situation94. Innovation in governance, organizational structure and management policies98. Business orientation for 2020100. Management’s report on responsibilities to environment, society and employees

C O R P O R A T E G O V E R N A N C E104. Operation of the Board of Directors in 2019112. Operation of the Supervisory Board in 2019115. Transactions, remunerations and benefits of the BOD, Board of Management and Supervisory Board

F I N A N C I A L R E P O R T162. Independent auditors’ report164. Consolidated balance sheets 166. Consolidated income statement 167. Consolidated cash flow statement 169. Notes to the financial statements

N E T W O R K178. Branches181. Subsidiaries182. Joint ventures182. Affiliates

S U S T A I N A B L E D E V E L O P M E N T R E P O R T120. Overview of the sustainable development report126. Sustainable economic development130. Investing in people development133. Investor relations137. Customer orientation150. Contributing to environment improvement157. Information disclosure under GRI standards

D I R E C T O R S ’ R E P O R T74. Board of Directors’ evaluation on BIDV’s performance83. Board of Directors’ evaluation on the Management’s performance 84. Orientation of the Board of Directors for 2020

B U S I N E S S O P E R A T I O N 2 0 1 950. Business situation55. Basel II implementation results at BIDV 56. Organization and people60. Investment and project performance70. Financial overview71. Shareholding structure, changes to shareholders’ equity

C O N T E N T S

B I D V O V E R V I E W20. BIDV at a glance 22. Key milestones24. Business lines and location26. Organizational structure28. Board of Directors32. Board of Management37. Supervisory Board39. Development orientation 40. External and internal risks

S P O T L I G H T S8. Chairman’s message10. Key performance metrics 12. KEB Hana Bank becomes BIDV’s strategic shareholder14. Selected awards and recognitions


CHAIRMAN’S MESSAGE

KEY PERFORMANCE METRICS

KEB HANA BANK BECOMES BIDV ’S STRATEGIC

SHAREHOLDER

SELEC TED AWARDS AND RECOGNITIONS

S P O T L I G H T S


Dear shareholders, customers and partners,

The year 2019 ended amid an unstable world, one

in which global economic growth was both lower

than expected and the previous years, mainly due to

the slow growth in developed economies and China

and the slow recovery of emerging countries, along

with escalating US-China trade tensions. Despite

this, Vietnam’s economy remained positive: GDP

growth maintained a high rate of 7.02% thanks to

stable growth in industrial production, consumption

and services; and inflation was well controlled with

the average CPI increasing at a low level over the

past three years. The State Bank of Vietnam (SBV)

actively and flexibly operated monetary policy,

synchronously using various tools and regulating

the money supply and total means of payment

at a reasonable level; while monetary policy was

closely coordinated with both fiscal and price policy,

positively contributing to macroeconomic stability

and currency value.

In 2019 BIDV continued to make breakthroughs,

successfully and comprehensively completing all

business targets. The successful offering of over

603 million shares totalling VND20,295 billion to

strategic investor KEB Hana Bank (Republic of Korea)

marked a new milestone in BIDV’s development and

international integration process and was the largest

deal with a foreign strategic investor in Vietnam’s

banking system to date. The deal was of great

significance to BIDV, giving the bank a huge financial

source that helped increase its charter capital to

VND40,220 billion, the highest among Vietnam’s credit

institutions, while also improving financial capacity,

ensuring capital adequacy ratio, and promoting

growth and sustainable development for the bank.

Along with the successful foreign strategic sale, BIDV

completed its business plan targets. In particular,

profit before tax reached VND10,732 billion, increasing

The success of BIDV is attributed to the solidarity, unanimity and relentless efforts of more than 26,000 employees, and the sharing, cooperation and companionship of financial institutions, businesses, customers and partners, both domestic and international. As a bank that stays true to its commitment of remaining professional, friendly and modern, BIDV has increasingly shone on the path to overcoming challenges and achieving success.

by 14.3% compared to the previous year. BIDV

continued to maintain its position as the largest

commercial bank by total assets and charter capital

with total assets reaching over VND1.49 quadrillion.

The non-performing loans ratio was at a low level of

1.75%, provisions for risks were made according to

regulations, VND8,168 billion was paid into the State

budget, and ROE and ROA ratios were 12.94% and

0.61% respectively.

As one of the 10 commercial banks selected by the

State Bank of Vietnam to implement Basel II, BIDV has

always demonstrated its determination to apply the

Basel standards. On 29 November 2019, the governor

of the State Bank of Vietnam approved BIDV to apply

Basel II with effect from 1 December 2019, ahead

of the effective date of Circular 41/2016/TT-NHNN.

Recognized by SBV for early completion of Basel II,

BIDV continues to affirm its position as one of the

leading banks in Vietnam by total assets, charter capital

and standardized risk management. This lays solid

foundations for BIDV to continue to integrate, develop

and meet international modern banking standards.

Maintaining the position as the leading bank in

applying information technology in the banking

system, in 2019 BIDV completed the formulation of the

digitalization strategy; officially launching its Digital

Banking Center – a creative center, which produces

advanced and modern products for customers and

tests new business models on the digital platform.

In 2019, BIDV continued to assert the social

responsibilities of the leading financial institution in

Vietnam. Hundreds of national works and programs

in the fields of health care, education, housing for the

poor, disaster relief and Tet gifts were implemented

with a total budget of over VND300 billion. BIDV also

left its footprint in 2019 as a humane bank, catching

up with the dynamic development of life through the

running event “Warm Tet for the poor 2020”.

With the outstanding achievements seen over the

year, BIDV took a firm position in the world’s Top 2000

largest public companies for the fifth consecutive

year, was named amongst the Top 400 largest banks

in the world, the leading bank in Vietnam on the

brand strength growth index; “Best retail bank in

C H A I R M A N ’ SM E S S A G E

Vietnam” for the fifth consecutive year; was honoured

with “Best SME deal” as well as receiving the “Digital

Transformation” award.

The success of BIDV is attributed to the solidarity,

unanimity and relentless efforts of more than

26,000 employees, and the sharing, cooperation

and companionship of financial institutions,

businesses, customers and partners, both domestic

and international. As a bank that stays true to its

commitment of remaining professional, friendly and

modern, BIDV has increasingly shone on the path to

overcoming challenges and achieving success.

2020 is the last year of implementation of the plan

for 2016-2020; and the final year of implementing

the scheme on restructuring credit institutions in

association with handling bad debt. With the 2020

action motto of “Discipline – Accountability - Efficiency

- Breakthrough”, BIDV will vigorously implement

uniform solutions and measures to effectively perform

monetary policy, improve operational quality and

business efficiency; facilitate and meet the economy’s

demands for banking products and services, continue

to affirm its position as the leading bank in the banking

system and contribute to building a thriving and

prosperous country.

On behalf of the Board of Directors, I would like to

extend my sincere thanks to the leadership and

more than 26,000 employees for their dedication. In

particular I would like to express my deep gratitude to

the valued customers, shareholders and partners who

have always trusted and accompanied BIDV during the

62 years of development towards a sustainable and

prosperous future.

May I wish you continued development and success.

Sincerely,

ON BEHALF OF THE BOARDCHAIRMAN

Phan Duc Tu


K E Y P E R F O R M A N C E M E T R I C S

OWNERS’ EQUITYUnit: VND billion

1,006,381

1,202,2841,312,866

1,489,957

2016 2017 2018 2019

GROWTHCOMPARED TO 2018

13.5%

TOTAL ASSETS Unit: VND billion

TOTAL OPERATING INCOME Unit: VND billion

7,668

8,665 9,391

10,732

2016 2017 2018 2019


14.3%

PROFIT BEFORE TAX Unit: VND billion

30,399

39,017

44,25648,121

2016 2017 2018 2019

14.33%

14.94%

14.48%

12.94%

2016 2017 2018 2019

2016 2017 2018 2019

77,653

54,49048,834

44,115


43%


12.94%

RETURN ON EQUITY (ROE)Unit: %

0.67%0.63%

0.59%0.61%

2016 2017 2018 2019

IN 2019

0.61%

RETURN ON ASSETS (ROA)Unit: %

8.7%IN 2019


KEB Hana Bank is a member of Hana Financial Group (Republic of Korea) - one of the largest financial groups in Asia, providing comprehensive financial activities. KEB Hana Bank boasts an extensive operating network with 752 branches in Republic of Korea and 176 branches in 24 countries. As of 30 June 2019, the bank’s total assets stood at USD308.2 billion. KEB Hana Bank is the best retail bank, the most preferred brand, and the leading bank in foreign exchange and trade finance in the Republic of Korea.

Mr. Phan Duc Tu, Chairman of BIDV’s Board of Directors (left) and Mr. Ji Sung Kyu, Chief Executive Officer of KEB Hana Bank sign the

strategic cooperation agreement.

From left to right: Mr. Ji Sung Kyu, Chief Executive Officer of KEB Hana Bank, Mr. Phan Duc Tu, Chairman of BIDV’s Board of Directors, Mr. Kim Jung Tai, Chairman of Hana Financial Group, and Mr. Le Ngoc Lam, Senior Executive Vice President in charge of BIDV’s Board of Management join the ceremony on announcing the “BIDV – KEB Hana Bank Education Development Program”.

KEB HANA BANK BECOMES BIDV’S STRATEGIC SHAREHOLDER

On 11 November 2019 in Hanoi, BIDV officially announced KEB Hana Bank as its foreign strategic shareholder with 15% ownership of BIDV’s charter capital. BIDV and KEB Hana Bank also signed a strategic cooperation agreement under the witness of H.E. Mr. Vuong Dinh Hue, Politburo member, Deputy Prime Minister and leaders of Vietnam’s governmental agencies, the South Korean Ambassador to Vietnam, relevant agencies of the Republic of Korea and businesses of the two countries.

Upon the approval of the government and competent authorities of Vietnam and the Republic of Korea, BIDV and KEB Hana Bank completed the procedures and legal documents relating to the deal as regulated by the laws of the two countries, laying foundations for KEB Hana Bank to officially become BIDV’s first foreign strategic shareholder.

Particularly, BIDV issued over 603.3 million shares as a private placement to KEB Hana Bank with a total value of nearly VND20,300 billion. After issuing the shares to KEB Hana Bank, BIDV’s charter capital increased from VND34,187 billion to VND40,220 billion - the highest in the Vietnamese banking system.

This is the biggest M&A deal with a strategic investor in Vietnam’s banking industry history and is a double transaction. KEB Hana Bank has invested capital to own a 15 percent stake in BIDV with a holding period of at least 5 years. At the same time, BIDV receives long-term technical assistance from Hana Financial Group and KEB Hana Bank.

Addressing the event, Mrs. Nguyen Thi Hong, Deputy Governor of the State Bank of Vietnam, affirmed: The cooperation between the two financial institutions not only brings benefits to the two banks but also the business community of Vietnam and Republic of Korea. KEB Hana Bank’s large investment in Vietnam is a clear testament to the optimism and confidence in the stability and development potential of Vietnam’s economy and the finance and banking industry in general and BIDV in particular.

Mr. Park Noh Wan, South Korean Ambassador to Vietnam shared: In recent years, competition between not only countries but also businesses has become extremely fierce. We will not be able to survive and develop if we fail to promote our strengths and tackle weaknesses. With a good start, the strategic partnership between BIDV and KEB Hana Bank will be fruitful and generate a great source of strength for the development of both sides.

According to Mr. Ji Sung Kyu, Chief Executive Officer of KEB Hana Bank, KEB Hana Bank’s investment in BIDV is the first strategic investment project of a Korean bank in Vietnam, which not only boosts the banking efficiency but also synergizes other areas. He expressed his hope that KEB Hana Bank’s becoming BIDV’s strategic investor will help diversify strategic investment projects and enhance cooperation between financial institutions of the two countries in the future.

Mr. Phan Duc Tu, Chairman of BIDV’s Board of Directors, said: The strategic partnership with Hana Financial Group is of great significance to BIDV, marking an important milestone in the bank’s development and international integration. With long-term strategic support from Hana Financial Group and KEB Hana Bank, BIDV will have the opportunity to fundamentally change the governance model, improve management capacity, risk management; develop modern products and services of high technology content, and strengthen competitiveness to better meet the needs of customers and contribute to national development.

Also during the event, senior executives of BIDV and KEB Hana Bank announced “BIDV – KEB Hana Bank Education Development Program” with a budget of USD1 million per year, and contribution ratio of 50-50. The program focuses on education, training cooperation, improving

and exchanging knowledge and languages between Vietnam and Republic of Korea.

The strategic partnership not only marks a new turning point in the history of BIDV - the oldest commercial bank in Vietnam but also an important advance in BIDV and KEB Hana Bank cooperation. It also reaffirms the cooperation of the leading businesses of Vietnam and Republic of Korea in an effort to further promote economic and diplomatic relations between the two countries.

On 11 November 2019 in Hanoi, BIDV officially

announced KEB Hana Bank as its foreign

strategic shareholder with 15% ownership of

BIDV’s charter capital. BIDV and KEB Hana

Bank also signed a strategic cooperation

agreement under the witness of H.E. Mr.

Vuong Dinh Hue, Politburo member, Deputy

Prime Minister and leaders of Vietnam’s

governmental agencies, the South Korean

Ambassador to Vietnam, relevant agencies of

the Republic of Korea and businesses of the

two countries.

15ANNUAL REPORT 2019

S E L E C T E D A W A R D SA N D R E C O G N I T I O N S 2 0 1 9

World’s largest public companies (Forbes).

World’s most valuable banking brands (ranking 279th, up 31

places from 2019 - Brand Finance).

2,000 Top300 Top

Most valuable banking brands in Vietnam (Brand Finance).

3 Top

100Top

Largest public firms in Vietnam (Forbes Vietnam).

I N T E R N A T I O N A L

A W A R D S A N D

R E C O G N I T I O N S

5years in a row (2015-2019)

50Top

Vietnam’s valuable brands(Forbes Vietnam).

14 ANNUAL REPORT 2019

Best SME Bank Vietnam for 2 consecutive years 2018-2019 (Alpha Southeast Asia).

SME Bank of the year, Corporate Client Initiative of the Year, Vietnam Domestic Foreign Exchange Bank of the Year for

2 years in a row (2018-2019) (Asian Banking & Finance).

Best SME deal (Asian Development Bank

- ADB).Best retail bank in Vietnam; Best payment merchant service in Vietnam

(The Asian Banker).


Straight Through Processing (STP) award (JP Morgan Chase, Bank

of New York Mellon, Citibank, and Wells

Fargo).

Best credit card in Vietnam for 4 consecutive years (2016-2019), Best card payment service POS/ATM for the third time (2016, 2017 and 2019), Best Mobile Banking Support award

for BIDV SmartBanking (International Finance).

Leadership in contactless active terminals penetration

2019 (VISA).

And many others.

Best DCM House in Vietnam for 2 years running (2018-2019); Best bond issuance

Vietnam (Global Banking and Finance Review).

Outstanding retail bank for 4 consecutive years (2016-2019),

Outstanding E-bank for the third time (2014, 2015, 2019)

(VNBA and IDG).

Vietnam ICT excellence for 3 products: Applying RPA automation technology

(Robotic Process Automation); Program of overseas remittance payment portal for individual customers; and Managing BIC Insurance revenue through BIDV system

(Bancassurance System Management – BSM) (VINASA).

And many others.

D O M E S T I C

A W A R D S A N D


10 Top

10 Top

10 Top

10 Top

10 Top

Largest enterprises in Vietnam for 3 years in a row (2017-2019) (announced by Vietnam Report and

VietnamNet in Top 500 Vietnam’s largest enterprises – VNR500).

Sustainable businesses for 2 years in a row (2018-2019) (Vietnam

Business Council for Sustainable Development and VCCI).

Vietnam’s Excellent Brands (Vietnam Economic Times).

Vietnam’s Trust & Use award for tuition fee collection service

(Trust & Use organizer).

Vietnam’s commercial banks (Vietnam

Report).

Vietnam Digital Transformation award for BIDV iBank solution

(VDCA).

I N T E R N A T I O N A L

A W A R D S A N D



BIDV AT A GLANCE

KEY MILESTONES

BUSINESS LINES AND LOCATION

ORGANIZATIONAL STRUC TURE

BOARD OF DIREC TORS

BOARD OF MANAGEMENT

SUPERVISORY BOARD

DEVELOPMENT ORIENTATION

EXTERNAL AND INTERNAL RISKS

B I D V O V E R V I E W 2 0 1 9


B I D VA T A G L A N C E

INTERNATIONAL TRADING NAME Joint Stock Commercial Bank

for Investment and Developmentof Vietnam

SWIFT CODE

BIDVVNVX

HEAD OFFICEBIDV Tower, 35 Hang Voi street,

Hoan Kiem district, Hanoi, Vietnam

TELEPHONE+84-24-22205544

FAX+84-24-22200399

BUSINESS REGISTRATION NUMBER0100150619

CHARTER CAPITALVND40,220,180,400,000

PAR VALUEVND10,000

FULL NAMEJoint Stock Commercial Bank

for Investment and Development of Vietnam

TOTAL NUMBER OF SHARES4,022,018,040

CỔ PHẦN

CHAIRMAN OF THE BODMR. PHAN DUC TU

SENIOR EXECUTIVE VICE PRESIDENT IN CHARGE OF BOM:MR. LE NGOC LAM


STOCK TICKERBID

AUDITOR DELOITTE VIETNAM COMPANY LIMITED.

www.bidv.com.vn

ABBREVIATION BIDV

K E Y M I L E S T O N E S


Established as the Bank for

Construction of Vietnam, under the Ministry of

Finance.

Successfully equitized, converted

into Joint Stock Commercial Bank

for Investment and Development of

Vietnam.

Renamed as the Bank for Investment

and Construction of Vietnam, under the State Bank of

Vietnam.

BIDV shares officially listed on Ho Chi Minh City Stock Exchange.

Renamed as the Bank for

Investment and Development of Vietnam (BIDV).

Signing the strategic cooperation

agreement and announcing

KEB Hana Bank (a member of Hana Financial Group) as its foreign strategic

shareholder.

Transformed into a fully commercial

bank.

1957 201226 Apr 01 May

198124 Jun

199014 Nov

199418 Nov

201911 Nov

201424 Jan



MAIN BUSINESS LINES

Credit activities (lending, discount, guarantee,

credit card issuance, etc.);

Fund mobilization (savings, bond, debenture);

Trade finance services;

Payment services

(domestic and international payment);

Account services;

Bank card services;

Other services under the Certificate of

Business Registration, etc.

B U S I N E S S L I N E S A N D L O C A T I O N

BIDV expanded its network both locally and abroad with total transaction points as of 31 December 2019 consisting of:

Wide domestic operating network in all provinces and cities helps BIDV access a large customer base nationwide and vicinities; provide various services for diverse customer segments from individuals, households to different types of organizations and businesses. Branch network by region is as follows:

189 BRANCHES IN VIETNAM; 01 BRANCH IN MYANMAR

SUBSIDIARY UNITS (BIDV TRAINING AND RESEARCH INSTITUTE, INFORMATION

TECHNOLOGY CENTER)

DOMESTIC REPRESENTATIVE OFFICES(HO CHI MINH CITY, DA NANG CITY);

OVERSEAS REPRESENTATIVE OFFICES(CAMBODIA, LAOS, CZECH REPUBLIC,

TAIWAN (CHINA), RUSSIAN FEDERATION)

TRANSACTION OFFICES

190

871

02

02

05

14

15

12

15

Branches in Red River Delta region

Branches in northern highlands region

Branches in northern central region

Branches in central highlands region

Branches in key southern region outside

Ho Chi Minh City

Branches in Mekong Delta region

Branches in southern central region

Branches in Hanoi

Branches in key northern region outside Hanoi

Branches in Ho Chi Minh City

34

36

17

18

06

22

G O V E R N A N C E C H A R T(As at 31 December 2019)

SUPERVISORY BOARD

INTERNAL AUDIT DEPARTMENT

ALCO COUNCIL

CAPITAL MANAGEMENTCOUNCIL

RISK COUNCIL

OTHER COUNCILS

INFORMATION TECHNOLOGYCOMMITTEE

BIDV – KEB HANA BANKSTRATEGIC COOPERATION

COMMITTEE

NOMINATION COMMITTEE

BOD’S SECRETARIATRISK MANAGEMENT

COMMITTEE

STRATEGY AND ORGANIZATION COMMITTEE

GENERAL MEETING OF SHAREHOLDERS

MANAGEMENT TEAM

BOARD OF DIRECTORS

OPERATIONS

INVESTMENT

BUSINESS SUPPORT

SUPERVISION AND COMPLIANCE

WHOLESALE BANKING

IT AND DIGITAL BANKING

RISK MANAGEMENT

RETAIL BANKING

TREASURY

FINANCE & ACCOUNTING

CUSTOMERMANAGEMENT RISK MANAGEMENT

BOARD OF MANAGEMENT

OPERATIONS INTERNAL AFFAIRS SUBSIDIARY UNITS

SUPERVISORY BOARD

INTERNAL AUDIT DEPARTMENT

ALCO COUNCIL

CAPITAL MANAGEMENTCOUNCIL

RISK COUNCIL

OTHER COUNCILS

INFORMATION TECHNOLOGYCOMMITTEE

BIDV – KEB HANA BANKSTRATEGIC COOPERATION

COMMITTEE


BOD’S SECRETARIATRISK MANAGEMENT

COMMITTEE


GENERAL MEETING OF SHAREHOLDERS

MANAGEMENT TEAM

BOARD OF DIRECTORS

OPERATIONS

INVESTMENT

BUSINESS SUPPORT

SUPERVISION AND COMPLIANCE

WHOLESALE BANKING

IT AND DIGITAL BANKING

RISK MANAGEMENT

RETAIL BANKING

TREASURY

FINANCE & ACCOUNTING

CUSTOMERMANAGEMENT RISK MANAGEMENT

BOARD OF MANAGEMENT

OPERATIONS INTERNAL AFFAIRS SUBSIDIARY UNITS

B R A N C H S T R U C T U R E

27ANNUAL REPORT 201926 ANNUAL REPORT 2019

(*) indirect ownership via subsidiaries

ORGANIZATIONAL STRUCTURE

BIDV Asset ManagementCompany Ltd.

BIDVInsurance Corporation

BIDV SecuritiesJoint Stock Company

MHB Securities Company

International Investment and Development

Company Ltd.

Bank for Investmentand Developmentof Cambodia Plc.

Lao-Viet Insurance Joint-Venture Company(*)

BIDV-SuMi TRUSTLeasing Company Ltd.

Lao-Viet Joint Venture Bank

Cambodia - VietnamInsurance Company(*)

Cambodia - VietnamSecurities Company(*)

Branches

SUBSIDIARIES BANKING JOINT VENTURES AFFILIATES

BANK FOR INVESTMENT ANDDEVELOPMENT OF VIETNAM JSC

Departments/Centersat Head O�ce

BIDV MetLife LifeInsurance LimitedLiability Company

Vietnam Aircraft LeasingJoint Stock Company

Cambodia-VietnamFoods Company Ltd.(*)

Vietnam-Russia Joint-Venture Bank

BIDV TowerJoint-Venture CompanyRepresentative O�ces

InformationTechnology Center

BIDV Trainingand Research Institute

Nam Do DebtSettlement Committee

(As at 31 December 2019)


B O A R D O F D I R E C T O R S


The Board of Directors (BOD) is the highest authority, acting in the name of BIDV in terms of making decisions, exercising rights and obligations of BIDV which are out of jurisdiction of the General Meeting of Shareholders. The BOD also has responsibility of defining and developing plans and policies such as business administration policies, business strategies and overall development plans of BIDV.

As at 31 December 2019 the BOD consisted

of the following members:

Mr. Phan Duc TuCHAIRMAN

Mr. Tran Thanh Van MEMBER

Born in 1964.

Bachelor of Economics.

Joined BIDV in 1987.

Elected as Chairman of the BOD since 15 November 2018.

Chairman of Vietnam Banks Association.

Previous posts: BOD member and CEO, BIDV Senior Executive

Vice President, Head of Human Resources, Head of BIDV

Quang Ngai Branch.

Born in 1961.



Elected as BOD member since 26 April 2013.

Member of the Board of Members and CEO of International

Investment Development Two-Member Limited Liability

Company (IID).

Previous posts: BIDV Senior Executive Vice President, Head of

BIDV Da Nang Branch, Deputy Head of BIDV Da Nang Branch,

Deputy Head of Bank for Investment and Construction

- Quang Nam-Da Nang Branch.

Mrs. Nguyen Thi Thu HuongMEMBER

Born in 1967.

Master of Business Administration.

Joined BIDV in April 2019.


Previous posts: Director General of Banking Inspection &

Supervision under the State Bank of Vietnam,

Deputy Director General of Banking Inspection &

Supervision, Head of Division of the State Bank Inspectorate.

30 ANNUAL REPORT 2019 31ANNUAL REPORT 2019

Mr. Yoo Je BongMEMBER

Born in 1962.


Elected as BIDV’s BOD member since 27 December 2019.

Previous posts: Deputy President of Hana Financial Group;

Chief Officer of Global Strategy Group, Hana Financial Group,

Managing Director in charge of Global Business Group,

KEB Hana Bank.

Mr. Le Viet Cuong INDEPENDENT MEMBER

Born in 1950.

Bachelor of Finance and Banking.

Elected as independent BOD member since 22 April 2017.

Previous posts: Chief of Office under the State Bank of

Vietnam, BIDV’s BOD member.

Changes to the Board of Directors in 2019: Mrs. Nguyen Thi Thu Huong has been elected as a BOD member for

the 2017-2022 term since 26 April 2019.

Mr. Bui Quang Tien and Mr. Nguyen Van Loc - BOD members have

retired as per social insurance policy since 1 June 2019.

Mr. Yoo Je Bong has been elected as a BOD member for the

2017-2022 term since 27 December 2019.

Mrs. Phan Thi Chinh MEMBER

Born in 1968.




BOD member of the National Payment Corporation of

Vietnam (NAPAS), and Chairwoman of BIDV Tower Joint

Venture Company.

Previous posts: BIDV Senior Executive Vice President, Head

of Finance Department.

Mr. Ngo Van Dung MEMBER

Born in 1968.

Master of Finance and Banking.


Elected as BOD member since 1 June 2015.

Chairman of the BOD of BIDV Securities Company (BSC)

and BIDV Asset Management Company (BAMC).

Previous posts: Head of Risk Management Department;

Head of BIDV Hanoi Branch.

Mr. Pham Quang Tung MEMBER

Born in 1971.

Economic Engineer, Bachelor of Law.


Chairman of the Board of Members of BIDV-SuMi TRUST

Leasing Co., Ltd (BSL).

Previous posts: Chairman of Vietnam Development Bank (VDB),

BIDV Senior Executive Vice President,

Chairman and CEO of BIDV Insurance Corporation.


B O A R D O F M A N A G E M E N T


The Board of Management (BOM) has the responsibility for day-to-day operations of BIDV, operating under the supervision of the Board of Directors.

The Board of Management consists of councils, including Assets and Liabilities Management, Risk Management, Capital Management,...

Members of the Board of Management

as at 31 December 2019 were as follows:

Born in 1975.

Master of Economics.


Appointed as Senior Executive Vice President in charge

of BOM since 15 November 2018.

Member of Executive Committee of Vietnam Chamber

of Commerce and Industry.

Previous posts: BIDV Senior Executive Vice President,

Head of Credit Risk Management, Head of Corporate

Banking; Deputy Head of BIDV So Giao Dich I Branch.

Mr. Le Ngoc Lam SENIOR EXECUTIVE VICE PRESIDENT IN CHARGE OF BOM

Mr. Tran Xuan Hoang SENIOR EXECUTIVE VICE PRESIDENT

Born in 1965.



Appointed as Senior Executive Vice President since 1 May 2012.

Chairman of Mekong Housing Building and Realty Corporation

(MHBR), Chairman of BIDV Insurance Corporation (BIC).

Previous posts: Head of BIDV Human Resources Department;

Deputy Head of So Giao Dich II Branch,

Deputy Head of BIDV Gia Lai Branch.

Mr. Quach Hung Hiep SENIOR EXECUTIVE VICE PRESIDENT

Born in 1969.

Ph.D. in Economics.


Appointed as Senior Executive Vice President since October 2010.

Chairman of Lao -Viet Joint Venture Bank (LVB).

Previous posts: Head of BIDV So Giao Dich III Branch,

Deputy CEO of Lao- Viet Joint Venture Bank;

Head of BIDV Treasury Department.


Mr. Tran Phuong SENIOR EXECUTIVE VICE PRESIDENT

Born in 1973.

Master of Economics in Banking and Finance.


Appointed as Senior Executive Vice President

since 1 May 2012.

Previous posts: Head of Corporate Planning Department;

Head of BIDV Equitization Project Management

Department.

Mr. Le Kim Hoa SENIOR EXECUTIVE VICE PRESIDENT

Born in 1965.




since 16 September 2013.

Chairman of Bank for Investment and Development

of Cambodia Plc. (BIDC); Head of BIDV Ho Chi Minh City Branch

Previous posts: Head of BIDV Ho Chi Minh City Branch;

Head of Credit Risk Management Department;

Head of BIDV Dak Lak Branch.

Mr. Nguyen Thien Hoang SENIOR EXECUTIVE VICE PRESIDENT

Born in 1973.




since 1 Jun 2016.

Previous posts: Head of BIDV Human Resources

Department; Head of BIDV Quang Binh Branch.

Mr. Le Trung ThanhSENIOR EXECUTIVE VICE PRESIDENT

Born in 1964.




since 15 July 2014.

Chairman of BIDV MetLife Life Insurance Limited Liability

Company.

Previous posts: Head of BIDV Nam Ky Khoi Nghia Branch;

Deputy Head of BIDV An Giang Branch.

Mr. Sung Ki JungBOM MEMBER

Born in 1967.



Appointed as a member of BIDV’s Board of Management

since 1 January 2020.

Previous posts: Head of Global Strategy Department,

KEB Hana Bank; Head of BIDV-KEB Hana Synergy Creation

Group, KEB Hana Bank.

Mr. Tu Quoc Hoc HEAD OF SUPERVISION AND COMPLIANCE GROUP

Born in 1963.

Bachelor of Finance and Banking.


Appointed as Head of Supervision and Compliance Group

since 1 May 2019

Previous posts: Head of Supervision and Compliance

Department, Head of BIDV Hoa Binh Branch.

36 ANNUAL REPORT 201936 ANNUAL REPORT 2019

Changes to the Board of Management in 2019:Mr. Tu Quoc Hoc was appointed as Head of Supervision and Compliance Group.

Mr. Phan Thanh Hai was appointed as Head of Wholesale Banking Group.

Mr. Sung Ki Jung has been appointed as a member of BIDV’s Board of Management since 1 January 2020.

Mr. Phan Thanh Hai HEAD OF WHOLESALE BANKING GROUP

Born in 1977.

Master of Finance and Banking.


Appointed as Head of Wholesale Banking Group

since 1 May 2019

Previous posts: Head of Corporate Banking

Department; Head of Strategy and Planning

Department; Head of BIDV Vinh Long Branch.

Mrs. Ta Thi Hanh CHIEF ACCOUNTANT

Born in 1972.



Appointed as Chief Accountant since 1 May 2012.

Head of BIDV Accounting Department

Previous posts: Head of Customer Services Center;

Deputy Head of BIDV So Giao Dich I Branch.

S U P E R V I S O R Y B O A R D

The Supervisory Board is an agency elected by the General Meeting of Shareholders, carries out internal audit, controls and evaluates the compliance with the provisions of law, internal regulations, Charter, Resolutions and Decisions of the General Meeting of Shareholders, Board of Directors.



Born in 1967.



Elected as the Head of the Supervisory Board

since 17 April 2015.

Previous posts: Head of BIDV Investment Management

Department, Chairwoman of VID Public Bank; BOD member

of BIDV-Vietnam Partners Investment Management Joint

Venture Company; Head of Investment Division;

Deputy Head in charge of BIDV Treasury Division.

Mrs. Vo Bich HaHEAD OF SUPERVISORY BOARD

Mr. Cao Cu TriMEMBER

Born in 1966



Elected as a member of the Supervisory Board

since 1 May 2012.

Previous posts: Deputy Head, Supervisory Department,

Deputy Head of BIDV So Giao Dich III Branch.

Mrs. Nguyen Thi TamMEMBER

Born in 1965



Elected as a member of the Supervisory

Board since 1 May 2012.

Previous post: Division manager,

Supervisory Department.

D E V E L O P M E N T O R I E N T A T I O N

SOCIAL AND COMMUNITY OBJECTIVESAs a major financial institution, in addition to key tasks of implementing monetary policies and business efficiently and securely, BIDV always carries out the responsibilities to the society and community and considers them one of its important tasks.

In the coming time, BIDV will continue to ensure loans are safely managed and provided to eligible and efficient borrowers. At the same time, BIDV continues to offer preferential credit packages to support customers in the priority areas set by the Government, actively promoting investment in provinces and cities across the country to help unlock their potential. In addition, BIDV will continue to implement community activities in national priority areas such as health care, education, disaster relief, sustainable poverty reduction; building new rural areas; social security to create snowball effects in the banking system and community as a whole.

PRIORITY OBJECTIVESContinuing to be the leading commercial bank by scale, market share, and ability to regulate the market.

Improving financial capacity, diversifying ownership structure, complying with capital adequacy ratio in accordance with the regulations of the State Bank of Vietnam and Basel II standards.

Improving credit quality, taking aggressive measures to collect bad debts, off-balance sheet debts, and those sold to VAMC.

Diversifying the customer base as well as products and services, promoting retail banking, developing small and medium businesses, FDI enterprises; Increasing the proportion of retail loans to total outstanding loans, credit market share of SME and FDI enterprises; Diversifying and restructuring the main income sources, striving to increase the proportion of income from non-credit services to total income.

Organizing business administration according to the international standards and practices in modern banking, ensuring transparency and efficiency, with priority given to the development of a comprehensive digital banking strategy on all aspects of business operations.

Developing high quality human resources; fostering BIDV’s corporate culture and developing BIDV brand to become a strong and valuable one with wide recognition in both domestic and international markets.


E X T E R N A L A N D I N T E R N A L R I S K S

BIDV would like to notice the following risk factors that may affect its business performance.

ECONOMIC RISKThe world economy: Firstly, the trade tension between the U.S. and China, though temporarily eased after reaching initial results, is forecast to be still complicated and unforeseeable.

Secondly, the economic growth of big countries such as China, the U.S., Euro area, Japan, etc. slowed down as trade protectionism and geopolitical instability increased.

Thirdly, geopolitical risks, climate change and epidemics were unpredictable; especially the Covid-19 disease has become one of the major risks to the Chinese economy and the world in 2020. The external risks, particularly the Covid-19 outbreak and the prolonged U.S. - China trade tension will reduce demand for Vietnam’s export goods (due to the decline in global trade demand), affecting the confidence of foreign investors (declining growth prospect), and creating pressure on the exchange rate and inflation as domestic production, and the supply of goods and foreign currencies is narrowed, thereby negatively affecting Vietnam’s macroeconomic growth and stability.

Domestic economy: Firstly, the process of restructuring of key economic areas is still slow and faces obstacles that restrain the growth potential.

Secondly, the economy’s shock absorption capacity is

limited in the context of a highly open economy which is vulnerable to negative external impacts, and ability to respond to technological changes is not at high level.

Thirdly, risks caused by natural disasters, epidemics (particularly Covid-19) and global climate change continued to significantly impact the production and business activities of enterprises and consumption in Vietnam, BIDV’s customers (such as disrupting commercial activities due to temporary closure of border gates with China, disturbing production chains due to shortage of input materials, lack of suppliers, decline in tourism activities, and domestic retail services).

Fourthly, institutional reforms were still slow and did not meet the market requirements, causing difficulty for businesses in expanding operations, or developing new business models, reducing the confidence of investors in business environment.

Fifthly, some markets (real estate, corporate bonds) showed signs of risks that may affect customers and activities of BIDV in related areas (real estate market saw gap between supply and demand in some segments that made prices increase unreasonably, Condotel segment continued to face difficulties when supply exceeded demand in some areas, and legal regulations were delayed; Corporate bond market showed signs of distortion, intransparency, and interest rates of some businesses threated to break the market rates).


CREDIT RISKRecognizing the importance of credit risk management in business activities towards safety, efficiency and sustainability, BIDV has always been proactive and pioneered in applying the best international practices to credit risk management. To date, BIDV’s risk management model has met the principles of independence and centralization as recommended by the Basel Committee. The organizational structure of the whole BIDV system, from the head office to branches, is appropriately established, clearly defining the functions, duties and powers of related units/individuals according to risk management objectives.

FOREIGN EXCHANGE RISKForeign exchange risk arises from adverse developments in exchange rates, resulting in a drop in the value of the organization’s foreign currency position. BIDV’s forex trading, capital contribution for joint venture and offshore investment were directly affected by market exchange rate fluctuations. In order to manage the foreign exchange risk, BIDV fully issued documents including internal policies, regulations and handbooks; developed risk measuring and controlling instruments in accordance with international practices, such as Position, Value at risk (VaR), Stop loss limit, Minimum capital requirements, Backtest, Stresstest, etc; established and monitored forex risk limits on a day-to-day basis.

In 2019, BIDV completed a project on improving market risk management instrument system, laying solid foundations for BIDV to comply with the regulations of the State Bank of Vietnam as well as the world’s advanced risk management standards.

LIQUIDITY RISKLiquidity risk arises when a bank is incapable of performing repayment obligations when due or is capable of performing repayment when due but has to pay at costs which are higher than the market average. BIDV has strictly controlled its liquidity risk in compliance with SBV’s regulations and internal documents. In 2019, BIDV’s liquidity was assured at all times, payment obligations to customers were fulfilled in a timely manner. BIDV closely followed the market fluctuations and customers’ demand, planning adverse scenarios to be ready for capital balance.

As well as ensuring the liquidity ratios as required by the SBV, BIDV set up a set of internal liquidity risk management criteria, early warning indicators, customer behavior model… Liquidity stresstest has also been implemented periodically in order to test the bank’s ability to cope with liquidity crunch, thereby taking appropriate back-up measures.

INTEREST RATE RISKInterest rate risk includes Business Book and Bank Book interest rate risks. This is one of the material risks, arising due to unfavorable fluctuations in interest rates, affecting income, values of assets, liabilities, off-balance sheet commitments (bank book interest rate risk) and value of valuable papers, interest-bearing financial instruments, interest derivative products on business book (business book interest rate risk).

In order to manage the interest rate risk, BIDV has fully issued documents including policies, regulations, handbooks as well as identifying, measuring, monitoring, controlling and reporting risk in accordance with the regulations of State Bank of Vietnam and internal management requirements. BIDV also applied a full range of interest rate risk measuring instruments according to standards. For bank book interest rate risk, main instruments used include Interest sensitive asset gap (Repricing gap), Change in net income from interest (∆NII), Duration gap, Change in economic value of owners’ equity (∆EVE). For business book interest rate risk, the interest risk is currently evaluated by Position, Basic point value (BPV), Value at risk (VaR), Stop loss limits, Minimum capital requirements, backtest, stresstest. Based on measurement results from the above instruments, the limit system has been calculated and monitored daily to ensure the bank’s risks are controlled.

BIDV finalized regulations and documents related to credit extension and credit risk management, bankwide risk management policy to meet the requirements of the State Bank’s Circular 13/2018/TT-NHNN.

BIDV has met the requirements for capital adequacy ratio and a series of Basel standards, has been recognized by the SBV to meet the requirements of Circular 41/2016/TT-NHNN starting 1 December 2019, ahead of the effective date of the Circular.



LEGAL RISK

Currently, Vietnam has been integrating into the global economy, especially in the field of banking - finance, thus, Vietnam’s legal system has been constantly developed to put international treaties’ commitments into domestic laws, aiming to accomplish a new comprehensive and more stringent legal framework for credit institutions in Vietnam, including joint stock commercial banks like BIDV.

Legal system, economic policies have been developed uniformly, basically suitable with market mechanism, and meeting the need of market economy development and international integration. In recent years, the National Assembly of Vietnam has passed important laws aiming at improving the legal framework for the business environment and operation of credit institutions in Vietnam, including:

Business Law No.68/2014/QH13; Law on Investment No.67/2014/QH13; Land Law No.45/2013/QH13; Housing Law No.65/2014/QH13; Construction Law No.50/2014/QH13; Law on Real Estate Trading No.66/2014/QH13; Law No.17/2017/QH14 amending a number of articles of Law on Credit Institutions 2010; Securities Law No.54/2019/QH14; Law No.55/2019/QH14 amending a number of articles of Law on State Audit.

On the handling of bad debts, the National Assembly issued Resolution 42/2017/QH14 regarding piloting the handling of bad debts of credit institutions (Resolution 42) with guidance in Resolution 03/2018/NQ-HDTP by the Council of Judges of the Supreme People’s Court (Resolution 03). The promulgation of Resolution 42 and Resolution 03 is considered as a key to remove difficulties and obstacles of legal documents in the handling of bad debts and security assets of credit institutions, thus speeding up the handling of bad debts of the banking system, ensuring the operational safety of the banking system in particular and the economy in general.

On the resolution of criminal cases, in 2019, the Council of Judges of the Supreme People’s Court issued Resolution 03/2019/NQ-HDTP guiding the application of Article 324 of the Criminal Code on money laundering. The Resolution has realized the plan on implementation of the 2015 Criminal Code and Resolution 41 of the National Assembly in the People’s Court, while meeting the requirements of money laundering prevention and fighting; overcoming inadequacies and limitations in judicial practice, contributing to the fight against corruption, ensuring transparency in assets and income; strictly implementing Vietnam’s commitments to the international community in combating money laundering and terrorism financing.

In addition, the Government and State Bank of Vietnam issued a number of important Decrees and

role of high-rank managers in internal audit, setting requirements on internal controls, risk management and internal audits for credit institutions. The circular created a legal basis to improve the central bank’s management, inspection, and supervision efficiency on governance, risk management, internal control and internal audit on commercial banks and foreign bank branches.

In 2019, the SBV issued Circular 22/2019/TT-NHNN on limits and prudential ratios in banking operation. The Circular stipulates the maximum reduction in the ratio of short-term capital used for medium and long-term loans under a roadmap that allows banks to have more time to reasonably adjust their structure of mobilized capital and credit portfolios, thereby contributing to promoting the sustainable development of the banking system. In addition, the increase in the risk coefficient contributes to help banks be more prudent and strictly control personal installment loans which were used for real estate business purpose. Thereby, it minimized risks for the property market, helping the market operate healthier and more stably.

As a developing economy which has strongly integrated into the international economy, although Vietnam issued many legal documents in the field of banking and finance, the country’s legal document system on banking is still in the process of finalization to meet the international standards. Therefore, the Government and the State Bank of Vietnam will continue to promulgate and/or change legal regulations relating to the operation of commercial banks in general and BIDV in particular. Impacts of the changes in policies and laws are unpredictable and beyond the control of BIDV. This can be considered one of the potential risks for investors relating to the changes in legal regulations by competent regulators.

Circulars aimed at guiding the implementation of legal regulations in the field of finance and banking, including:

In 2018, the Government issued Decree 117/2018/ND-CP on protection of confidentiality and provision of customer information of credit institutions and foreign bank branches. The Decree created a legal basis for the protection of confidentiality and provision of customer information is implemented in a uniform, clear, and transparent manner, ensuring the privacy of customers; At the same time, it removed difficulties and obstacles encountered by credit institutions and foreign bank branches in providing customer information, as well as assisting regulatory agencies in performing the task of collecting information, documents and evidence in a timely manner; ensuring consistency and compliance with the provisions of law.

In 2019, the Government issued Decree 88/2019/ND-CP on administrative sanctions in the monetary and banking sectors, specifying administrative sanctions, additional penalties, fine levels, power, and remedial measures for administrative violations in the monetary and banking sectors. The Decree also stipulates that administrative violations in the field of monetary and banking sector which occurred before the effective date of this Decree but were found within the statute of limitations for administrative sanctions or are still in the process of consideration and settlement, will be subject to provisions which are more favourable for violators.

In 2018, State Bank of Vietnam issued Circular 13/2018/TT-NHNN on internal control system for commercial banks and foreign bank branches in order to provide instruction on implementing Law on Credit Institutions; applying the system of internal controls, risk management, internal auditing in accordance with Basel Committee’s principles and standards. The circular stipulates issues such as enhancing supervision

OPERATIONAL RISKOperational risk may stem from insufficient or defected internal regulations, human factors, system errors or external factors.

Operational risk may arise from all banking operations and is unforeseeable. To manage and control operational risk, in 2019 BIDV uniformly implemented tasks such as: Setting up organizational structure and risk management under the 3-lines-of-defense model from Headquarters to branches; Developing document systems; implementing operational risk management tools such as RCSA (Risk and Control Self-Assessment), KRI (Key Risk Indicator), LDC (Loss Data Collection), BCP (Business Continuity Plan), while managing operational risk for outsourcing activities, new products/new markets and IT applications; Implementing the reporting regime on operational risk management in compliance with the requirements of the State Bank of Vietnam under Circular 13/2018/TT-NHNN.

In addition, BIDV has increased its IT readiness at BIDV to cope with the increasing threat of security risks and adverse externalities, as well as meeting strict compliance requirements such as: Establishing a special task force to deal with cyber-security situations; Setting up a SOC center to monitor, early detect, analyze and handle security issues; Cooperating/signing cooperation agreements with CMC, VNCert on BIDV’s IT system security assessment. Closely coordinating with the SBV, Vietnam Information Security Association (VNISA), Ministry of Public Security (C50, PC50) to implement network security alert and supervision. At the same time, in order to improve the processing capacity of the IT infrastructure, BIDV is in the process of building a new data center to meet the growing demand and international technology standards, enhancing IT system readiness and continuity, meeting BIDV’s business and governance requirements. It will be completed and launched in 2020.


IT RISKIT system may contain certain risks for banking activities. The risks may arise from BIDV using software, technological support service, transmission line, and systems which are provided by different suppliers; they may also arise from malfunction, non-compliance with control and supervision process, system security, or natural disasters, fire, cyber-attacks (hackers), etc.

To prevent and restrain IT risk, in recent years, along with developing appropriate IT human resources, BIDV has continuously invested in equipment, developing a complete IT system: Upgrading firewall system, state-of-the-art IPS/IDS system for WAN/LAN; buying licensed anti-virus system which has been updated regularly for bank-wide use; Equipping NPS system to control LAN access cross the system in order to enhance system security; Building a disaster recovery center in accordance with international standards; Storage area network (SAN), as well as policies on system security and safety to minimize IT risks. BIDV is also one of the first banks in Vietnam to establish a Backup center that uses backup main server system and storage technology with the most advanced solutions to secure the bank’s business continuity even in case of natural disasters and other catastrophes. BIDV has been awarded the ISO/IEC 27001:2013 - international standard certification for the new version of the Information Security Management System since 2015.

BIDV’s IT system management and operation were paid great attention, strictly monitored and controlled around the clock in accordance with processes and regulations, which are periodically reviewed and updated. Scenarios for handling risks in case of IT incidents have also been devised and rehearsed periodically while timely responding to external security incidents, information safety, ensuring backup systems operate continuously to help IT system operate stably and safely; BIDV’s IT system has been internationally appreciated.

In 2019, BIDV utilized resources to implement a project on advanced operational risk management tool development according to standards in order to enhance efficiency of the existing operational risk management tools, reaching to the world’s operational risk management practice.

In addition, BIDV proactively studied the method of calculating the required capital for operational risk under the guidance of the State Bank of Vietnam in Circular 41/2016/TT-NHNN dated 30 December 2016. The bank also continued to develop and upgrade software programs to support the collection and processing of operational risk data. Required capital for operational risk was automatically calculated on software programs. Operational risk management culture was also enhanced through training and communication workshops on operational risk management.



BUSINESS SITUATION

BASEL II IMPLEMENTATION RESULTS AT BIDV

ORGANIZATION AND PEOPLE

INVESTMENT AND PROJEC T PERFORMANCE

FINANCIAL OVERVIEW

SHAREHOLDING STRUC TURE, CHANGES TO SHAREHOLDERS’ EQUIT Y

B U S I N E S S O P E R A T I O N 2 0 1 9

1st

B U S I N E S S S I T U A T I O N

BIDV’S RANKINGS IN VIETNAM’S BANKING SYSTEM IN 2019 WERE AS FOLLOWS:

In 2019, BIDV continued to comprehensively restructure its business operation towards sustainability with a focus on handling bad debts, fine-tuning institution, strengthening administrative reform, finalizing human resources, improving management effectiveness and efficiency, creating solid foundations for the delivery of the restructuring plan for the period 2016-2020; ensuring the benefits of shareholders and employees; contributing positively to the state budget; preserving and growing the state capital at BIDV.

Market capitalization

Owners’ equity

Net forex income

Network of branches and transaction offices

Charter capital

Total assets

Outstanding loans

Customer deposits

Difference in revenue and expenditure

Net service income (including guarantee fee)

Total assets reached VND1,489,957 billion, increasing by 13.5% from 2018, continuing to be the largest commercial bank by assets in Vietnam. Asset structure was stable with the proportion of profitable assets to total assets reaching 95.6%, up 1.14% compared to 2018.

Loans and deposits continued to lead commercial banks, seeing good growth:

Loans to the economy grew in accordance with the direction of the State Bank, focusing on business production, supporting national economic development and in line with the capital absorption capacity of the economy. Outstanding loans to the economy grew 12.2% in association with structure shifting and credit quality improvement.

Mobilized capital continued to lead the commercial banking system given the increasingly strong competition, growing by 12.6% compared to 2018, a testament to the bank’s prestige, brand as well as the trust of customers in BIDV.

Difference in revenue and expenditure reached the highest level ever at VND30,864 billion, an increase of 9.3% from 2018. Consolidated pre-tax profit reached VND10,732 billion, fulfilling 104% of the target set by the Annual Meeting of Shareholders and surpassing the 2019 target as set in the Restructuring Plan; ROA and ROE reached 0.61% and 12.94%, respectively. BIDV fulfilled its tax payment obligations, paying VND8,168 billion to the State budget, ensuring the interests of shareholders, paying cash dividends of two years 2017 and 2018 totalling VND4,560 billion, dividend payout ratio was 7%/year.

Performing uniform measures to handle and control credit quality, settle non-performing loans under the

OVERALL ASSESSMENT OF SCALE, QUALITY AND EFFICIENCY


National Assembly’s Resolution 42/NQ-QH and the BIDV restructuring plan for the period 2016-2020. By 31 December 2019, BIDV’s NPL ratio was 1.75%; Group 2 debt ratio was 2.2% under the bank’s control.

Safety ratios were ensured in accordance with regulations of the State Bank of Vietnam.

Other performance indicators also achieved impressive results:

Customer base development: (i) individual customers reached nearly 10.4 million, increasing by 15% from 2018, accounting for 11% of Vietnam’s population. BIDV strived to increase benefits and products for customers while boosting connection with Fintech companies (22/32 companies); (ii) Nearly 2,400 large corporations and enterprises; (iii) Around 295,000 SME and FDI customers; (iv) Maintaining correspondent relationships with more than 1,100 banks, multilateral financial organizations and non-bank financial institutions in 95 countries and territories; Providing comprehensive services for 2,700 financial institutions both local and international.

BID share market price: Increasing by 42.5% from the start of 2019. With the positive news on the finalization of the deal on issuing 15% of stock to the strategic investor KEB Hana Bank, BID stock continued to increase strongly in the second half of 2019. In 2019, 1.1 million BID shares were traded per session on average. Foreign investors’ ownership in BIDV as of 31 December 2019 was 18.03%, of which KEB Hana Bank owned 15%, accounting for 75% of BIDV’s freely-transferable shares.

BIDV’s market capitalization hit VND186,000 billion in 2019 – the second largest among commercial banks in Vietnam.


2nd 3rd

SPECIFIC ASSESSMENT:

DEPOSITS:

Total deposits from organizations and individuals reached VND1,187,093 billion, an increase of 12.6% compared to 2018, meeting the demand for capital; increasing BIDV’s total mobilized capital to VND1,374,765 billion, up 12.1% from 2018.

Of which, customer deposits hit VND1,114,163 billion, up 12.6% from 2018, accounting for 12.8% of customer deposits of the whole banking sector.

LOANS:

Total outstanding loans and investments reached VND1,325,737 billion, of which outstanding loans to organizations, individuals and corporate bonds reached VND1,134,503 billion, up 12.2% and accounted for 13.8% of the total loans of the whole sector.

SERVICES:

Net service income (including guarantee fee) reached VND6,038 billion, an increase of 14.2% compared to 2018. BIDV continued to be the bank with the highest net service income in the banking system, in which: Net service income (excluding guarantee fee) hitting VND4,266 billion, up 20%.

2017

859,985

989,671

1,114,163

2018 2019

C U S T O M E R D E P O S I T S

Unit: VND billion

2017

2,966

3,551

4,284

2018 2019

N E T S E R V I C E I N C O M E Unit: VND billion

2017

895,404

1,010,993

1,134,503

2018 2019

L O A N S T O C U S T O M E R S

Unit: VND billion

The positive results reflected BIDV’s position in the market, the trust and loyalty of 300,000 business customers and nearly 10.4 million individual customers in BIDV given the strong competition among banks.

In 2019, BIDV successfully implemented the issuance of bonds either to the public or as private placements to financial investors, raising more than VND19,000 billion which was calculated in tier 2 capital.

Apart from the capital raised from residents and economic organizations, BIDV also made good use of capital from market 2, from the Government and the State Bank to support the liquidity of the system.

Deposit structure continued to shift towards increasing the proportion of stable low-cost deposits, suitable for the capital demand: (i) VND deposits continued to increase by 12.8% from 2018, accounting for 94.7% of total customer deposits; (ii) Demand deposits grew 10.2%, accounting for 16%; (iii) Retail deposits increased 9.7% compared to 2018, representing nearly 55.5% of total deposits.

By segment: Target customer segments all achieved good growth:

Retail banking: continuing to lead the market by market share, growing 21.5% from 2018, accounting for 34.5% of total outstanding loans.

Wholesale banking: Growing 8.3% from the start of the year, of which outstanding loans to SMEs grew well by 21%, higher than the average credit growth rate.

By term: Short-term loans continued to grow well, up 15.2% from the start of the year in accordance with the directions; Medium and long-term loans were extended appropriately to retail, FDI and SME segments; Key projects and programs were implemented effectively. The proportion of medium and long-term loans to total outstanding loans was 37.9%, much lower than the control target.

By currency: Outstanding loans grew in accordance with the directions, in which VND-denominated loans increased by 14% from the start of the year; Foreign currency loans were controlled, down 10% from the beginning of the year in line with the policy of the Government and the State Bank’s direction, shifting from foreign currency borrowing to trading, reducing pressure on foreign currency balance.

Service income structure in 2019 shifted positively with good growth in retail and modern services (retail service income increased by over 34.6%, accounting for 36% of total net service income, up 5% compared to 2018). Some services achieved remarkable results, particularly:

(i) Card service income grew well thanks to the card digitization with 12 new card products launched, 22 new features and 27 upgraded features, meeting the increasing needs of customers such as e-commerce payment portal, Visa Cashback Contactless card, issuing over 2 million new cards. BIDV was also the first bank in Vietnam to successfully deploy the acceptance of Russia’s MIR card payment on BIDV’s POS system.

((ii) Payment service grew quickly, leading in providing uniform payment solutions for customers. BIDV was the bank that established most connection with Fintech companies (22/32 companies) to implement payment intermediary services such as online payment, e-wallets, collection service while bolstering security for customers. Total net payment service income increased by 14% compared to the previous year, reaching VND2,720 billion.

Trade finance service continued to grow with IT solutions related to robotics being further applied to deal processing. Total trade finance service fees reached VND937.67 billion, import-export payment sales hit USD31.83 billion, making up 6.15% of the country’s total import-export turnover.

(iii) E-banking payment developed strongly with nearly 12 million turns of customers using e-banking services (including 1.4 million new IBMB registrations), the number of transactions reached nearly 150 million (up 82% from the previous year). BIDV ranked third by transaction volume and value, accounting for 12% of total transactions via NAPAS in the market.

Treasury activities continued to see strong and effective development with a total net income reaching VND1,495 billion, the highest ever, up 44% from the previous year. BIDV continued to be among Top 3 banks with the largest market share in foreign currency trading.


INVESTMENTS: were diversified on the basis of tapping market opportunities to increase profits while controlling and managing liquidity and interest rate risks. Total investment securities and trading securities portfolio (excluding corporate bonds) reached VND137,867 billion, accounting for 9.3% of the system’s total assets.

THE ABOVE POSITIVE OPERATING RESULTS WERE REFLECTED THROUGH THE SUSTAINABLE BUSINESS GROWTH:

Total net operating income grew well thanks to the strategic shifting of income structure:

Total net income in 2019 reached VND48,121 billion, increasing 8.7% from the last year, the highest among commercial banks, thanks to the strategic shifting of income structure, with positive results in non-interest segments: Net interest income reached VND35,978 billion, an increase of 3.6% from the previous year); Net service income (excluding guarantee fee) hit VND4.266

2.4%

Net income from investment securitiesOther net income

Net incomefrom trading

securities

Net forex income

1.5%0.5%

Net interest income

2018

78.9%

8.7%

8.1%Net service income

Net interest income

Net forex income 3.1%

Other net income

Net income from investment securitiesNet income

from trading securities0.7%

1.0%

2019

75.1%

8.9%

11.2%

Net service income

billion, up 20%; Net treasury income reached VND1,495 billion, up 44% over the previous year; Off-balance sheet collection reached VND5,779 billion, growing 29% from the previous year.

Effective management of operating costs:

In 2019, BIDV innovated its financial management, effectively using costs, ensuring sufficient salary payment to employees, fulfilling all obligations to the State budget. The operating cost to income ratio was controlled effectively at low level of 36%.

Provisions for risks were fully made in accordance with regulations applicable to standard loans as well as debts sold to VAMC, ensuring early settlement of bonds is made in 2020.

Consolidated pre-tax profit reached VND10,732 billion, fulfilling 104% of the target assigned by the Annual Meeting of Shareholders and surpassing the 2019 target as set in the Restructuring Plan.

On 29 November 2019, the governor of the State Bank of Vietnam issued Decision 2505/QD-NHNN approving the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) to apply Circular 41/2016/TT-NHNN starting from 1 December 2019 (before the effective date of the Circular).

As of end-2019, BIDV has completed the Pillar 1 (standardized approach) and Pillar 3 of Basel II, and is in the process of finalizing and meeting Pillar 2 on schedule as requested by the SBV (1 January 2021).

In addition, BIDV proactively implemented and completed projects to be well-prepared for compliance with the foundation internal ratings-based approach (FIRB) upon State competent authority’s request.

As one of the leading commercial banks in Vietnam, BIDV took early steps as required by the State Bank of Vietnam to prepare for application of capital adequacy ratios set by Basel Committee in order to enhance safety, soundness, risk management capacity and competitive capacity. In late 2014, BIDV proactively established an organizational structure for Basel standard implementation, implementing project on gap analysis and Basel implementation master plan at BIDV (GAP&MP project).

After completing the GAP&MP project in 2015, BIDV was proactive to develop and implement Basel roadmap in order to comply with the State Bank’s regulations, including Circulars 41/2016/TT-NHNN and 13/2018/TT-NHNN, as well as meeting the best practices in risk management.

On 6 November 2019, upon approval by the governments and competent authorities of Vietnam and the Republic of Korea, KEB Hana Bank officially became the first foreign strategic shareholder of BIDV. The deal marks a historic milestone in BIDV’s operations; making the Vietnamese lender the bank with the highest charter capital in Vietnam’s banking system. BIDV has also met the capital adequacy ratio requirements according to Circular 41/2016/TT-NHNN.

Approved by the SBV to apply Basel II standards before the deadline, BIDV continues to be one of the leading banks in Vietnam by total assets, charter capital and risk management according to international practice. This lays solid foundations for the bank to further integrate, develop and meet the requirements of an internationally standardized modern bank.


BASEL II IMPLEMENTATION RESULTS BIDV IS RECOGNIZED TO MEET BASEL II STANDARDS AHEAD OF DEADLINE

A GLANCE AT HUMAN RESOURCES AND MANAGEMENT POLICIES

Of which those with master’s degree accounting for 22.4%, bachelor’s degree of 69.1%, associate degree of 2.4% and high-school diploma of 6.1%. BIDV perceives that human resources are the most important factor for the success and development of an organization. Therefore, one of the most important objectives of BIDV is to build, foster and develop sufficient quantity and quality of human resources to successfully deliver the business targets and strategies of the system.

O R G A N I Z A T I O N A N D P E O P L E

0.10%

2019

70.5%

3.8%

25.6%

26,135 people

As of 31 December 2019BIDV had employed

2019

91.5%

2.40% 6.10%

2019

17.9%

30.4%

4.3%

47.4%

Leadership

Unit heads

Division managers

Officers

Bachelor’s degree or higher

Associate degree

High school diploma

Age ≤ 30

Age 31 to 40

Age 41 to 50

Age over 50

SUMMARY OF HUMAN RESOURCES POLICIES AND CHANGES

Continuing to apply policies on labor streamlining, improving the quality of human resources to improve labour capacity.

Reforming recruitment with conditions, standards, procedures tailored to each position and job, ensuring qualified workforce is recruited to meet the work requirements.

Organizing training courses for new employees to help them capture and integrate quickly in the work environment and culture at BIDV. Developing annual and periodical training plans with professional training courses for employees to improve their knowledge, professional skills, foreign languages, and soft skills...

Developing and issuing the Regulation on employee evaluation and KPIs with specific quantified criteria for each job position to evaluate employees periodically as the basis for implementing remuneration and benefit policies for employees.

Studying to develop a regulation on staff planning, promotion and rotation in order to motivate employees to strive for career development.

Developing, issuing regulations on salary, remuneration and implementing benefit policies based on job position, level of contribution and performance of employees in line with salary trend in the labour market.

Complying and strictly implementing policies applicable to employees in accordance with provisions of law.



Recruitment: In 2019, BIDV continued the centralized recruitment for the entire system. BIDV applied a recruitment software and technology to some key steps of the recruitment process, expressing the publicity, transparency, and consistency across the system, ensuring applicants’ quality in line with requirements of each operating location. Thereby, BIDV attracted high-quality candidates from all regions across the country, creating good impression on the public in general and candidates in particular, contributing to promote and enhance BIDV’s brand and image in the market.

Training: In 2019, BIDV organized 408 training courses for 38.464 turns of trainees with a focus on knowledge training, management skills, working skills for leaders at all levels and employees across the system, aiming at enhancing the quality of human resources to meet the international standards to provide the best products and services to customers. Quality of the training courses has been improved, especially the practicality and course organization.

Besides internal training, BIDV also organized working trips to foreign financial institutions for survey and learning from experience. Up to now, such training courses have helped the bank’s officers improve their professional capacity, skills and know how to effectively apply to the work.

Staff planning and promotion: The staff planning was conducted professionally in compliance with the provisions of the Party and the State on the principle of centralized democracy; the open and active staff planning was still maintained. List of the planned staff was supplemented, adjusted on the basis of the development of employees. Those who had poor performance will be removed from and potential ones will be added to the list.

PERSONNEL ORGANIZATION RESULTS IN 2019

Staff rotation and evaluation: In 2019, the staff rotation and evaluation was conducted uniformly with many reforms in contents and methodologies:

Staff rotation between headquarters and branches was speeded up in order to foster their skills, contributing to enhancing professional human resources for branches.

Rotation within branches to meet the requirements of management and internal control was also implemented regularly; creating common practices and positive habits for officers and staffs.

Staff examination was carried out regularly and periodically throughout the system. Management capacity and professional competence tests were organized professionally, seriously and objectively. In the year, BIDV organized two batches of management capacity tests for 1,612 officers at departmental level and 38 batches of professional capacity tests for 1,286 officers. The test results will be used for staff planning and promotion.

Schemes and policies for employees: In 2019, BIDV issued a Regulation on salary in order to improve its remuneration policy comprehensively to create motivation for each position. The schemes and policies were timely implemented by authorities and unions; ensuring the rights and benefits of employees such as social insurance, healthcare insurance, unemployment insurance, BIC insurance, MetLife insurance, BIDV-MetLife voluntary pension insurance, sickness, pregnancy, retirement, vacation, birthday.

Emulation and rewards: BIDV made positive and remarkable changes to maintaining and promoting emulation activities which were closely linked to professional operations, creating a driving force for units to boost their business activities. Rewards were implemented timely and fairly, helping to maximize the capabilities and creativity of all employees, contributing to the overall success of the entire BIDV system.

Regarding staff promotion, in 2019, BIDV continued to finalize its senior management team, ensuring compliance with the provisions of the Law on Credit Institutions and guidance documents on organization and operation of joint stock commercial banks. The promotion of leaders at all levels was conducted in accordance with regulations and procedures, enhancing both quality and quantity of the key management team at the headquarters and the entire system.


PERFORMANCE OF SUBSIDIARIES

BSL was formed through the legal conversion from BIDV Financial Leasing Co., Ltd, based on the cooperation between BIDV, Sumitomo Mitsui Trust Bank (SMTB) and Sun Group JSC. BSL was officially launched in May 2017 with the charter capital of VND896 billion. BSL is headquartered in Hanoi and has three branches in Hanoi, Ho Chi Minh City and Da Nang City – the key economic hubs in Vietnam.

INVESTMENTAND PROJECT PERFORMANCE

Abbreviation: B S LOperating license:

Business sector:

Charter capital (31 December 2019):

BIDV’s ownership ratio:

No.0100777569 issued by Ho Chi Minh City Authority for Planning and Investment, 13th amendment on 19 May 2017.

Financial leasing

VND895.6 billion

50%

In 2019, the company saw good growth in scale and quality (outstanding loans doubled, profit hit VND13.1 billion, surpassing 30% of the plan); Debt quality was good, mainly standard loans (~97% of total loans); Non-performing loan and group 2 debt ratios were stable, kept a relatively low level within the limit set by the State Bank of Vietn am.

BIDV-SUMI TRUST LEASING CO., LTD.

BIC officially operated in January 2006 after BIDV repurchased the shares of QBE at Viet – Australia Insurance Joint-Venture Company. The company mainly operates in the non-life insurance field. BIC successfully implemented IPO and has transformed into a joint stock company since 01 October 2010, was listed on Ho Chi Minh City Stock Exchange in 2011 and sold strategic shares to Fairfax Asia Limited, a subsidiary of Fairfax Financial Holdings - the world’s leading financial insurance group in 2015. As of 31 December 2019, BIC had charter capital of VND1,172.7 billion in which BIDV owns 51%.

BIDV INSURANCE CORPORATION

In 2019, BIC achieved optimistic results with strong growth in efficiency and quality: Direct premiums reached VND2,015.4 billion, an increase of 13.3% from 2018. Direct insurance market share accounted for about 3.9%, ranking 8th out of 29 non-life insurance companies in Vietnam. Consolidated profit after tax was VND270.2 billion, growing 33.3% compared to 2018. In 2019, BIC’s financial strength was affirmed at B++ by A.M. Best - the highest rating in Vietnam’s insurance market. BIC has been among Top 10 most prestigious non-life insurance companies in Vietnam for the fourth consecutive year as announced by Vietnam Report, ranking 6th (up 1 place from 2018).

Abbreviation: B I COperating license:

Business sector:



No.11/GPDC16/KDBH dated 06 January 2016 by the Ministry of Finance

Non-life insurance

VND1,172.7 billion

51%


BIDV SECURITIES JOINT STOCK COMPANY

BSC was established on 18 November 1999 and was one of the two first securities companies to be licensed for operation in the Vietnam’s stock market. BSC provides sufficient services in Vietnam, including brokerage, proprietary trading, issue guarantee and investment advisory. In 2010, BSC was successfully equitized and officially transformed into a joint stock company on 1 January 2011 with BIDV owning 88.12% of the charter capital.

In 2019, BSC continued to develop sustainable factors, improving competitive capacity. The company’s stock and fund certificate brokerage market share reached 3.11%, up 2% compared to 3.04% of 2018. In Q4-2019, BSC was among Top 10 securities companies with the largest brokerage market share on Ho Chi Minh City Stock Exchange. BSC’s profit before tax in 2019 reached VND136.5 billion, capital adequacy ratio of 627% - among good companies according to the regulation of the State Securities Commission of Vietnam. BSC paid dividends of 2018 at the payout rate of 18%, of which 10% paid in shares and 8% in cash.

Abbreviation: B S COperating license:

Business sector:



No.111/GP-UBCK dated 31 December 2010 by State Securities Commission of Vietnam

Securities and related operations

VND1,220.7 billion

79.94%

LAO-VIET JOINT VENTURE BANK

LVB, the first Vietnamese bank to be established in Laos in 1999, is the joint-venture between BIDV and Banque Pour Le Commerce Exterieur Lao (BCEL), aimed at implementing the Agreement on Culture, Science and Technology Cooperation between Vietnam and Laos P.D.R to promote and support economic activities between the two countries.

After 20 years of development, LaoVietBank has made strong strides, becoming one of the leading commercial banks in Laos, playing an active role in connecting payment activities, contributing to boosting the trade and investment relations between Vietnam and Laos.

In 2019, LVB continued to be one of the leading commercial banks by scale and efficiency in Laos. Total assets reached about USD1.15 billion (ranking 3rd in the market). Customer deposits reached over USD1 billion, of which deposits from residents and economic organizations reached USD714 million, increasing by 12.3% from 2018 (ranking 2nd in the market); Total outstanding loans reached USD809 million (ranking 3rd in the market); Profit before tax reached USD6.3 million. The number of employees reached 405 and their living conditions have constantly been improved. LVB has 01 headquarters, 07 branches and 25 transaction offices/points in 08/18 provinces and key economic hubs in Laos including Vientiane, Attapeu, Champasak, Savanakhet, Khammouane, Xiengkhouang, Luang Prabang and Udomxay.

Abbreviation: LaoVietBank/LVBOperating license:

Business sector:



Foreign Investment License No.985-326 dated 10 June 1999, latest amendment No.004-15/KH-DT.4 dated 24 August 2015 by the Ministry of Planning and Investment, Laos P.D.R

Banking

LAK 791,357.56 million

65%


LAO-VIET INSURANCE JOINT VENTURE COMPANY

LVI, established and officially launched in June 2008 in Laos, is a joint venture between BIDV Insurance Joint Stock Corporation and Banque Pour Le Commerce Exterieur Lao and Lao-Viet Joint Venture Bank.

The company’s main business lines include non-life insurance, reinsurance and financial investment services. As of 31 December 2019, total assets of the company hit USD16 million, total premiums were USD13.8 million, and profit before tax was USD0.3 million. LVI continued to rank second by direct premiums in Laos’ non-life insurance market.

Abbreviation: L V IOperating license:

Business sector:



077-08/DT dated 19 June 2008 by the Ministry of Planning and Investment of the Laos P.D.R and Certificate of Offshore Investment No.146/BKH/DTRNN dated 19 June 2008 by Vietnam Ministry of Planning and Investment

Finance

USD3 million

33.15%Established in 2001, BAMC’s main business focuses on receiving and settling BIDV’s debts incurred before 31 December 2000. Just after 7 years since launched, BAMC basically completed the settlement of the non-performing loans of BIDV according to the Prime Minister’s Decision 149/2001/QD-TTg, thereby contributing to improving BIDV’s debt structure and enhancing financial capacity. In 2009, BAMC completely restructured its operation towards maintaining its legal status and scaling down its business and personnel.

BIDV ASSET MANAGEMENT COMPANY

Upon approval of the State Bank in the Document 40/NHNN-TTGSNH dated 03 January 2018 regarding the restructuring of BAMC, the Board of Directors of BIDV issued Decision 189/NQ-BIDV dated 12 April 2018 on increasing BAMC’s charter capital to VND100 billion to support the company to implement the scheme on business restructuring. The company’s total assets as of 31 December 2019 were VND111.3 billion; Income from entrusted debt collection was VND9.9 billion; Profit before tax was nearly VND2.2 billion.

Abbreviation: B A M COperating license:

Business sector:



No.0101196750 dated 14 May 2018 by Hanoi Authority for Planning and Investment

Loan workout and asset management

VND100 billion

100%


PERFORMANCE OF JOINT-VENTURES AND AFFILIATES

VRB, the joint venture between BIDV and Russia’s Foreign Trade Bank - VTB, was established in 2006, taking the role of connecting the banking systems, promoting the economic and trade cooperation between Vietnam and the Russian Federation.

2019 marked the 13th year of VRB’s development with positive spotlights: Business indicators grew well, fulfilling the plan, delivering the key goals of improving financial capacity and risk management. In particular, total assets reached VND19,521 billion, up 11% from 2018; Deposits from economic organizations and residents reached VND11,065 billion, increasing by

Abbreviation: V R BOperating license:

Business sector:



No.0102028839 dated 9 November 2006 by Hanoi Authority for Planning and Investment, 12th amendment on 13 December 2018.

Banking

VND3,008 billion.

50%

35%; Total outstanding loans hit VND12,285 billion, growing 10%, NPL ratio of 1.65%; Profit before tax hit VND181 billion. Also in 2019, VRB opened 3 more transaction offices in Ho Chi Minh City, Da Nang and Hai Phong City, making the bank’s total transaction points to 19 including 01 headquarters, 06 branches and 13 transaction offices in big cities across Vietnam. Especially, VRB successfully deployed the KFT payment channel that helped promote direct bilateral payment between Vietnam and the Russian Federation. Thanks to that, VRB won the award “Outstanding Innovative Product/Service 2019” from Vietnam Banks Association and International Data Group.

BIDV Tower Joint Venture Company, established in late 2005, is a joint venture between BIDV and Bloomhills Holdings Pte Ltd. (Singapore). From 2006 to 2009, the main business activity of the company was to construct BIDV Tower at 35 Hang Voi, Hanoi. In early 2010, the construction was completed and BIDV Tower was put into operation.

In 2019, office for lease market in Hanoi was vigorous as both occupancy rate and rent of the whole market, especially the city central area, increased strongly

BIDV TOWER JOINT VENTURE COMPANY

compared to the previous year. Against that backdrop, the company operated stably and achieved positive business results: occupancy rate at 99%, higher than that of the market and at higher rent compared to the market average.

The company successfully surpassed its business targets of 2019: Revenue from office leasing reached VND216.1 billion (up 2% against the business plan); pre-tax profit reached VND99.6 billion (up 12% against the plan).

Abbreviation: BIDV TOWEROperating license:

Business sector:



No.2523/GP dated 02 November 2005 by the Ministry of Planning and Investment

BIDV Tower management and operation at 35 Hang Voi, Hanoi

VND209 billion

55%

VIETNAM - RUSSIA JOINT VENTURE BANK


With a view to contributing to the development of the aviation sector of Vietnam, upon the approval of the Prime Minister, Vietnam Aircraft Leasing Company (VALC) was officially put into operation in October 2007.

After over 12 years of operation, VALC has affirmed its position in the local and international aircraft leasing market, successfully implementing two big aircraft purchase and lease projects (5 ATR 72-500 aircrafts and 10

VIETNAM AIRCRAFT LEASING JOINT STOCK COMPANY

Airbus A321-200 aircrafts). In addition, in order to develop the commercial fleet and diversify its business activities, VALC has been researching and developing a number of business cooperation projects on trading and leasing business aircraft, helicopters, leasing engines and other aviation equipment.

In 2019, VALC’s profit before tax reached USD22 million, with the after-tax profit to charter capital ratio at 27.82%.

Abbreviation: V A L COperating license:

Business sector:



0102384108, first registration on 8 October 2007 at Hanoi Authority for Planning and Investment, 15th amendment on 5 September 2019

Aircraft purchase and leasing

VND1,318 billion

18.52%

BIDV MetLife is a joint venture between MetLife Inc., BIDV and BIDV Insurance Corporation (BIC), in. The company officially launched in November 2014.

In 2019, the company continued to grow in scale, offering a comprehensive portfolio tailored to the increasingly

Abbreviation: BIDV METLIFEOperating license:

Business sector:



72/GPDC3-KDBH dated 13 September 2019

Life insurance

VND1,094 billion

31.99%

BIDV-METLIFE LIFE INSURANCE LIMITED LIABILITY COMPANY

diverse needs of customers, bringing them premier benefits. Total direct premiums in 2019 reached VND1,033 billion, increasing by 20% from 2018, same as the growth rate of the market.

INVESTMENT AND PROJECT PERFORMANCE

In 2019, BIDV completed the divestment from Dong Thap Housing and Industrial Zone Development Investment JSC, and the procedures on closing BIDV International Co., Ltd (in Hong Kong)


No. Financial situation 2017 2018 2019 Change

1 Total assets 1,202,284 1,312,866 1,489,957 13.5%

2 Total operating income 39,017 44,256 48,121 8.7%

3 Tax and other payables 2,850 3,151 3,608 15%

4 Profit before tax 8,665 9,391 10,732 14.3%

5 Profit after tax 6,946 7,480 8,548 14.3%

No. Indicators 2017 2018 2019 Change

1 Total loans 1,406,113 1,726,322 2,041,775 18.27%

2 Debt collection 1,262,925 1,604,469 1,913,515 19.26%

3 Loans to customers 866,885 988,739 1,116,998 12.97%

4

Non-performing loan (excluding corporate bonds)

Absolute number 14,063 18,802 19,496

Ratio 1.62% 1.90% 1.75%

5 Group No 3,4,5 guarantees to total guarantees ratio 0.38% 1.06% 1.11%

No Indicators Requirement 31 Dec 2018 31 Dec 2019

1 Liquidity coverage within the next 30 days

1.1 VND ≥ 50% 77.39% 104.40%

1.2 Foreign currency ≥ 10% 105.08% 146.80%

2 Liquidity Reserve Ratio ≥ 10% 15.42% 18.39%

3 Outstanding loans to deposits ratio ≤ 90% 86% 87.95%

4 Short-term funding for medium and long-term loans

2018: ≤ 45%2019: ≤ 40% 31.05% 26.54%

No. Capital scale 2017 2018 2019 Change

1 Charter capital 34,187 34,187 40,220 18%

2 Total assets 1,202,284 1,312,866 1,489,957 13.5%

3 Capital adequacy ratio (CAR)Meeting

requirementsMeeting

requirementsMeeting

requirementsMeeting

requirements

F I N A N C I A L O V E R V I E WFINANCIAL HIGHLIGHTS Unit: VND billion/%

Unit: VND billion/%KEY FINANCIAL METRICS CAPITAL SCALE

OTHER KEY FINANCIAL METRICS

BUSINESS RESULTS

Note: Reported to the State Bank according to the Circular 36/2014/TT-NHNN dated 20 November 2014 and amended Circulars.

S H A R E H O L D I N G S T R U C T U R E , C H A N G E S T O S H A R E H O L D E R S ’ E Q U I T Y

Total shares Type of shares Number of transferable shares

Number of restricted shares

4,022,018,040 Ordinary 161,261,914 3,860,756,126

Shareholders’ name Number of shares Number of restricted shares

Transfer restriction duration

State Bank of Vietnam (representing State capital) 3,257,324,161 3,257,324,161 Subject to State regulations

KEB Hana Bank 603,302,706 603,302,706According to the commitment between the two parties and

regulations

Internal shareholders 254,524 129,259

Board of Directors 117,124 117,124 During terms of office

Board of Management 125,265

Supervisory Board 12,135 12,135 During terms of office

Shareholders’ name Number of shares Ownership Percentage Number of shareholders

State Bank of Vietnam (representing State Capital) 3,257,324,161 80.99% 1

KEB Hana Bank 603,302,706 15% 1

Other shareholders 161,391,173 4.01% 22,473

- Domestic shareholders 39,765,093 0.89% 21,902

+ Organizations 15,572,174 0.29% 170

+ Individuals 24,192,919 0.6% 21,732

- Foreign shareholders 121,626,080 3.02% 571

+ Organizations 120,371,517 2.99% 97

+ Individuals 1,254,563 0.03% 474

SHARE STRUCTURE

SHAREHOLDING STRUCTURE

As at 31 December 2019

Changes to the owners’ equity include capital increases through public offerings, private placements, bond conversions, warrant conversions, issuance of bonus shares, share dividend: In 2019, BIDV successfully issued 603,302,706 shares (equivalent to 15%) to KEB Hana Bank (Republic of Korea)Treasury shares transaction: None.Shares transaction in foreign countries: None.Other securities: None.


DIRECTORS’ REPORT

BOARD OF DIREC TORS’ EVALUATION

ON BIDV ’S PERFORMANCE

BOARD OF DIREC TORS’ EVALUATION

ON THE MANAGEMENT ’S PERFORMANCE

ORIENTATION OF THE BOARD OF DIREC TORS FOR 2020


B O A R D O F D I R E C T O R S ’ E V A L U A T I O N O N B I D V ’ S P E R F O R M A N C E

Mr. Phan Duc Tu, Chairman of the Board of Directors, BIDV


In 2019, the world economy evolved complicatedly. Global economic growth was only at 2.9-3.0% (lower than that of 3.6% in 2018). However, Vietnam’s macro-economy in 2019 continued to achieve positive and comprehensive results in many fields, fulfilling and exceeding all 12/12 socio-economic indicators set by the National Assembly, such as: GDP growth reached 7.02%; Average consumer price index stood at 2.79%; Total import-export turnover reached USD517 billion; Export grew by 8.1%; Registered FDI capital increased by 7.2% and FDI disbursement increased by 6.7% compared to 2018.

Fiscal and monetary policies continued to be operated proactively and flexibly. The SBV issued many documents and instructions on credit growth, interest rates and increased safety and efficiency of commercial banks. Thanks to those policies, the

domestic financial and banking market operated safely, stably and smoothly: Credit growth of the whole industry reached 13.7% compared to 2018; on-balance-sheet NPL ratio of the whole system was about 1.8%. Interest rate slightly decreased. The exchange rate was stable. By the end of 2019, 18 commercial banks had been recognized by the SBV to be eligible to apply Basel II standards ahead of the deadline.

For BIDV, the bank’s activities were safe and efficient in 2019. BIDV comprehensively and synchronously completed the set business targets which laid solid foundations for successful implementation of objectives in the BIDV restructuring plan for the period 2016-2020, ensuring the rights of shareholders, employees, actively contributing to the community and fulfilling obligations to the State Budget.

FULFILLING THE DUTIES ASSIGNED BY THE AGM

Business performance: BIDV successfully completed the 2019 business plan as approved by the General Meeting of Shareholders in Resolution 395/2019/NQ-DHDCD, particularly:

Total assets reached VND1,489,957 billion, an increase of 13.5% compared to 2018, continuing to be the largest joint stock commercial bank in Vietnam by assets. Assets were continued to be restructured towards increasing the proportion of profitable assets which hit 95.6%, an increase of 1.14% compared to the previous year.

Outstanding loans grew by 12.2%, in line with the plan assigned by the General Meeting of Shareholders (12%) and in compliance with the plan assigned by the State Bank of Vietnam from time to time. Total outstanding loans and investments as of 31 December

2019 reached VND1,325,737 billion, of which credit balance was VND1,134,503 billion.

Deposits grew by 12.1%, 1% higher than the level approved by the General Meeting of Shareholders (11%), meeting the demand for using capital at a reasonable cost. Total deposits as of 31 December 2019 hit VND1,374,765 billion, of which deposits from market 1 were VND1,187,093 billion. Liquidity ratios complied with the SBV’s limit, with the loan-to-deposit ratio (LDR) at 88%.

NPL ratio to economic organizations and individuals was 1.75%, meeting the target approved by the General Meeting of Shareholders (<2%). Credit growth was associated with credit quality and risk control.

Consolidated profit before tax reached VND10,732 billion, up 14.3% compared to 2018, exceeding the target set by the General Meeting of Shareholders (VND10,300 billion). Consolidated ROA was 0.61%, ROE reached 12.94%, fulfilling the financial plan assigned by the State Bank of Vietnam.


Successful private placement to strategic investor:

Given the market difficulties and regulators’ procedure requirements, BIDV, with great determination, successfully increased its charter capital through private placement to KEB Hana Bank. Upon the approval of the State Bank of Vietnam and the State Securities Commission of Vietnam, KEB Hana Bank has officially become a strategic shareholder of BIDV since 6 November 2019, owning 15% the bank’s charter capital with a lock-up period of 5 years. With a total value of VND20,300 billion, this was the biggest M&A deal with a strategic investor in Vietnam’s banking industry, which helps both enhance BIDV’s financial capacity and provide technical support to BIDV in all aspects, opening up development opportunities for BIDV in the new period.

Along with that, BIDV came up with measures and solutions to improve its financial capacity: (i) Successfully implementing the public issuance and private placement of subordinated bonds, which were eligible to be calculated into tier 2 capital, with total

offering of over VND19,000 billion; (ii) Continuing to maintain contact with investment funds, fund management companies and securities companies in Vietnam to seek opportunities to increase charter capital through private placements; (iii) Studying procedures and conditions for making a plan to list BIDV’s shares on prestigious international stock markets.

Components of public offering and/or private placement and issuing shares from the retained earnings continued to be implemented.

Component of convertible bond issuance has been studied and will be implemented in accordance with the actual market developments.

Dividend payment from the retained earnings for 2017 and 2018:

Regarding dividend payment from the retained earnings for 2017 and 2018: Pursuant to the SBV’s guidance in Document 6629/NHNN-TTGSNH dated 23 August 2019 on the dividend payment plan for 2017 and 2018, BIDV paid dividends of 2017 and 2018 in cash. The ex-dividend date was 8 November 2019 and the total dividend payout ratio for the 2 years was 14%.


GOVERNANCE

Formulating medium and long-term development strategies as a basis for the governance, management, business operation and supervision of BIDV’s strategy implementation:

BIDV’s development strategy for the period of 2020 - 2025 and vision to 2030: BIDV organized seminars to collect comments from all units across the system, conducted research, exchanged and discussed carefully in each group about each topic of the strategy, innovating the formulation of the development strategy for the period 2020-2025 and vision to 2030.

Implementation of retail banking in the period of 2019 – 2021: With the goal of maintaining BIDV’s

In 2019, BIDV successfully implemented important contents on digital banking transformation, medium and long-term development strategies, system restructuring, organizational model fine-tuning, risk management system upgrading, etc. to create a foundation for the system to operate stably, sustainably and effectively. Some key contents were as follows:

Completing the internal control system, improving

the quality, efficiency and effectiveness of the

inspection and supervision; Completing and

upgrading risk management system in accordance

with Basel II standards; Approved by the SBV to

implement Circular 41/2016/TT-NHNN from 1

December 2019.

Supervision in 2019 was paid attention and implemented synchronously and drastically: BIDV carried out comprehensive inspection of units according to plan together with irregular inspection and remote monitoring. Inspection and monitoring functions were specified in all 3 lines of control from frontline units to departments/centers at Head office.

Enhancing the credit risk, operational risk, market risk and liquidity risk management capacity, meeting the

Strong digital banking transformation and information technology system modernization:

Strongly implementing the orientation on digital banking development in accordance with Resolution 1210/NQ-BIDV of the Board of Directors, BIDV has been working with the Consultant to develop the Digital Banking Strategy in BIDV’s master development strategy for the period of 2020-2025 and vision to 2030. In March 2019 BIDV established a digital banking center to accelerate the digitization process.

Some outstanding achievements: BIDV built and developed modern distribution channels for digital transformation such as Internet banking, Mobile banking, Web Chat, Facebook, YouTube, etc. Manual processes at the counter were automated. Robotic technology for the check payment operation was officially implemented. BIDV cooperated with partners to implement a number of innovative products such as Samsung pay, QR Pay, Chat-bot, ATM withdrawals on mobile phones via QR codes, blockchain applications, new robotic technologies and artificial intelligence in operations. Big data models were built and analytically applied to evaluate customer lifecycle value, marketing, cross-selling products, etc.

requirements of Circular 13/2018/TT-NHNN, Circular 41/2016/TT-NHNN, Circular 36/2014/TT-NHNN and amended documents, ensuring compliance with applicable laws and SBV’s regulations on anti-money laundering/counter-terrorism.

Completing and upgrading the risk management system in accordance with Basel II standards: (i) 18/45 projects were completed before and on schedule, including some key projects such as Internal ratings-based (IRB), debt recovery program (phase 1), risk weighted pricing, internal credit rating system upgrading with criteria tailored to each customer segment; risk-weighted assets calculation software program by the standard method; (ii) 14/45 projects have been implemented on schedule (iii) 13 projects are expected to be implemented in 2020.

Actively implementing key IT projects within the framework of strategic IT projects/solutions to 2020, including projects on Core banking System Transformation, on Credit Origination Management System (CROMS), on digitalization implementation and development consultancy at BIDV, on new Trade Finance system, and on Enterprise Content Management (ECM) system, etc.


position as the Best Retail Bank in Vietnam, BIDV issued Resolution 777/NQ-BIDV dated 31 July 2019 on the implementation of retail banking for the period of 2019 – 2020, determining business efficiency and sustainable development as the top goals, developing retail banking activities through the digitization process with a focus on mas affluent customers and high-income customers in big urban areas, establishing modern sales channels such as Internet, Mobile, ATM, Contact Center, etc. while increasing operational efficiency of the transaction offices.

Development of Assets - Liabilities Management Strategy: In order to ensure the active management, safety and efficiency goals, BIDV developed an Assets - Liabilities Management Plan for the period of 2019 - 2020 (Resolution 812/NQ-BIDV dated 23 August 2019), formulating the Assets - Liabilities Management Strategy for the period of 2020-2025 in line with BIDV’s general development strategy.

Development of FDI and SME Customer Development Strategies: Together with the Project on Developing Service Activities to 2025, the Project on Developing Retail Banking Activities, BIDV built FDI and SME customer development strategies; as such BIDV has an overall strategy and specific ones for each customer segment.


Uniformly and effectively implementing the Restructuring plan of credit institutions in association with dealing with bad debts for the 2016-2020 period:

BIDV continued to closely follow and implement the restructuring plan associated with dealing with bad debts for the 2016-2020 period (approved by the SBV in Decision 04/QD-NHNN.m dated 8 January 2018 and by BIDV’s Board of Directors in Resolution 08/NQ-BIDV dated 8 January 2018). Accordingly, BIDV came up with uniform restructuring solutions, including strengthening financial capacity, improving asset quality, especially credit quality, diversifying methods of capital mobilization, improving investment efficiency, structuring and developing the network, gradually transforming the credit intensive business model to a multi-service business one, improving management capacity and operational transparency, improving the efficiency and effectiveness of internal inspection, supervision and audit, strictly implementing recommendations on violations, outstanding problems and potential risks in operations, which were stated in the inspection, examination and audit reports.

For credit operations, BIDV reduced the level of credit concentration, requiring to review risky customers to ensure control of credit scale, focusing on implementing measures to recover bad debts, off-balance sheet debts and debts sold to VAMC according to the roadmap set out in the restructuring plan. BIDV utilized resources to speed up the provision setting to cover VAMC debts, reviewed and promulgated policies, processes and organizational models to improve credit risk management capacity, building a program of enriching customer information through a variety of methods to build a data warehouse to serve the management and control of risk assets in accordance with the SBV’s Circular 41/2016/TT-NHNN, deploying and operating security systems to ensure maintaining business continuity and timely security alerts.

Promoting non-interest income sources, transforming business model towards multi-service business and effective cost management

In 2019, BIDV continued to implement the Service Development Scheme to promote cross-selling of non-credit products to customers, gradually transforming the business model from dependence on credit operations to a multi-service business model. The ratio of non-interest income to total income in 2019 was 12%.

BIDV continued to implement of the Scheme on Effective Cost Management by assigning the saving targets to each unit, allocating resources on the basis of evaluating their business efficiency. BIDV conducted multi-dimensional business assessments to identify and properly allocate available resources and maximize the bank’s profits. BIDV continued restructuring the organization model to focus human resources on the core business operation, reducing wasteful investment, using assets effectively, managing administration expenses and operating expenses effectively and economically. As a result, BIDV well controlled the growth rate of operating expenses (7.7%), lower than the income growth rate (8.7%).

Strengthening the organizational model and document system, improving the quality of human resources and standardizing human resources

Improving the organizational model by issuing Resolution 216/NQ-BIDV on the organization structure of business groups at Head Office, establishing IT and Digital Banking group, Supervision and Compliance group, adjusting functions and duties of some units to comply with risk management regulations under Basel II. The Strategic Cooperation Committee and Cooperation Coordination Office between BIDV and KEB Hana Bank were established to implement the cooperation. BIDV completed the election of additional members to the Board of Directors, completing procedures for appointment of senior executive vice president, and senior officers from KEB Hana Bank.

Applying advanced domestic and international market practice, BIDV implemented a comprehensive renovation of the salary mechanism, issuing a set of BSC indicators at branch level, sets of KPIs and job description for each position at the Head Office, deploying the overall human resource management software system, etc.

Regarding staff training, BIDV regularly updated knowledge and improved the quality of human resources.

Proposing changes to BIDV brand identity system and building a culture of learning and creativity:

In 2019, BIDV restarted the project on changing brand identity elements, completed the report to the SBV about the plan to change BIDV’s brand identity elements, promulgated regulatory processes, supervision and inspection of branches; standardized and innovated images and marketing message.

BIDV’s brand strength index in 2019 (assessed by Brand Finance) increased by 22% compared to 2018. The brand was valued at USD450 million. BIDV continued to be honored in the Top 10 most valuable brands in Vietnam for the second time in a row and continued to be ranked in the list of 2,000 largest public companies as published by Forbes.

Strongly deploying the Scheme on building a Culture of Learning and Creativity, all BIDV employees implemented creative ideas, innovations and improvements in the spirit of “Desire to learn - Passion for creativity - Ready for change - Achieving success”.

In 2019, BIDV hosted 108 training courses, with around 403 classes for over 38,496 turns of attendees (except for individual training courses organized by branches). Some typical training programs included the 8th Future Banking Leadership Training Program for intended-appointment staff of director/deputy director positions from branches/departments/centers/member units, annual updated knowledge program for the directors/deputy directors of the units, the training program for transaction office directors, appraisal of investment projects, financial analysis and fraud detection in financial reports, application of Agile in project implementation, etc.

BIDV continuously standardized the document system with 108/108 documents issued on schedule, following the administrative reform under the direction of the State agencies. The system of decentralization and authorization documents met the requirements of BIDV’s day-to-day business management and operation.


ENVIRONMENTAL AND SOCIAL RESPONSIBILITIES

In order to support the economic development, in 2019, BIDV had reduced the lending interest rate ceiling for three times, especially in priority areas according to the orientation of the Government and the State Bank of Vietnam, thereby demonstrating the role and responsibility in the implementation of the policies of the Government, and the State Bank of Vietnam for the national development.

BIDV also fulfilled its obligations to the State Budget and ensured maximum benefits of shareholders. In 2019, BIDV paid VND8,168 billion to the State Budget, being among the Top 10 largest taxpayers in Vietnam. BIDV also made cash dividends for 2017 and 2018 to shareholders with a total value nearly VND4,800 billion, equivalent to a payout ratio of 7% p.a.

Moreover, in 2019, BIDV organized many social security activities in regions across the country with more than 90 programs with a total budget of VND300 billion, such as Accompanying the Red Journey 2019; supporting the flood victims’ families in the North Central and Highlands, organizing the “Warm Tet for the Poor” running event, attracting the participation of more than 36,000 athletes running a total distance of over 1.8 million km, contributing nearly VND6 billion as Tet gifts for the poor nationwide.

This was the 12th consecutive year that BIDV had implemented this meaningful Tet gifts for the poor program, providing a total of 650 thousand gifts, worth of nearly VND180 billion. The “Tet Gifts for the Poor” with priority subjects being people in remote areas, areas hit by natural disasters, severe floods, colds and drought,

low-income workers and employees, patients, lonely elderly people, homeless children. At the ceremony on announcing Tet gifts for the poor in 2020, BIDV directly presented VND1 billion the Golden Heart Fund under Vietnam General Confederation of Labor as Tet gifts for low-income workers in 63 provinces and cities. BIDV also cooperated with Vietnam Journalists Association, Tien Phong Newspaper, People’s Police Newspaper, etc. to give Tet gifts in many provinces and cities across the country.

B O A R D O F D I R E C T O R S ’ E V A L U A T I O N O N T H E M A N A G E M E N T ’ S P E R F O R M A N C E

In 2019, the Board of Directors issued Resolutions to direct business activities, assigned specific tasks to each board member, and supervised the Board of Management to organize the implementation in compliance with the Bank’s Charter, Regulations on Organization and Operation of the Board of Directors, Internal Corporate Governance Regulation and relevant regulations of BIDV.

Grasping the positive changes of the domestic economy, based on the orientations of the Board of Directors, as well as sticking to the medium, long-term strategic targets and specific goals of 2019 assigned by the General Meeting of Shareholders and the Board of Directors, the Board of Management promptly and seriously built and implemented specific tasks from time to time to each member of the Board of Management, each Group/Department. The directions of the Board of Directors were always defined by the Board of Management and units as the central and urgent tasks to focus on implementation.

The members of the Board of Directors and the Board of Management always put the interests of shareholders, the State and the Bank as the top operational objectives, well performed their direction and management tasks and accomplished their responsibilities and tasks assigned.


O R I E N T A T I O N O F T H E B O A R D O F D I R E C T O R S F O R 2 0 2 0

The global economy in 2020 is expected to be unpredictable with the probability of maintaining the growth rate of 2019, but not excluding the threat of slowing down. In this context, with stable macro-economic foundation, the Vietnamese government continued to set positive targets in Resolution 01/NQ-CP with GDP growth rate of 6.8%, CPI controlled below 4%, total export turnover increasing by 8%-10%, the ratio of trade deficit to the total export turnover below 2%, total social development investment capital accounting for 34% of GDP.

With the motto of “Discipline - Accountability - Efficiency - Breakthrough”, BIDV has developed an Action Plan with the determination to well implement the mission and business plan in 2020, creating solid foundations for a successful restructuring plan associated with handling bad debts in the 2016-2020 period with the following objectives and orientations:

Thoroughly grasping the Government’s policy in Resolution 01/NQ-CP dated 1 January 2020 on major tasks and solutions for implementing the socio-economic development plan, the State Budget estimation in 2020 and Resolution 02/NQ-CP dated 1 January 2020 on continuing to carry out the main tasks and solutions to improve the business environment, enhance national competitiveness in 2020 and orientations to 2021, operating orientations of the State Bank of Vietnam in 2020, in which total payment means increase 13%, credit increases 14%.

Directing to focus resources, efforts on flexibly deploying business plan in 2020, striving for major targets as follows: Credit growth in accordance with the limit assigned by the State Bank of Vietnam (currently 9%); Deposit growth according to capital use demand (about 9%); NPL controlled under 1.7%; Consolidated profit before tax at VND12,500 billion.

Comprehensively restructuring investment activities to preserve capital and comply with regulations on safety in investment activities: (i) Focusing on restructuring the investments that BIDV has a large and/or dominating percentage of ownership; (ii) Divesting ineffective investments; (iii) Continuing to review the operation of inefficient foreign representative offices and those in markets with no orientation/condition for expansion.

Continuing to implement solutions to ease difficulties encountered by customers according to regulations; Effectively implementing the banking-enterprise connection program; Concentrating loans on production sectors and priority areas under the policies of the Government and the State Bank of Vietnam; Strictly controlling credit for potential risk sectors and large customers; Strengthening risk management for consumer credit, lending for living demands; Drastically implementing measures to improve credit risk management capacity; Strengthening the application of information technology in credit risk management; Fully implementing risk management contents as required by Basel II; Completing BIDV restructuring plan, focusing all resources to handle bad debts, enhancing off-balance sheet debt recovery and settling all debts which had been sold to VAMC.

Continuing to promote the implementation of the Service Development Scheme to increase revenue sources, focusing on implementing product and customer solutions to strongly shift the income structure in the

DIRECTING, SUPERVISING 2020 BUSINESS PLAN AND TARGETS

PROMOTING THE DEVELOPMENT AND DIVERSIFICATION OF PRODUCTS - SERVICES, DIVERSIFYING CUSTOMER BASE, CONTRIBUTING TO THE RESTRUCTURING OF INCOME TOWARDS SUSTAINABILITY

AGGRESSIVELY IMPLEMENTING EFFECTIVE, SUSTAINABLE CREDIT GROWTH SOLUTIONS ALONG WITH CONTROLLING AND IMPROVING CREDIT QUALITY AND RISK MANAGEMENT CAPACITY, BALANCING CAPITAL SOURCES, USING CAPITAL SAFELY AND EFFECTIVELY.

direction of rapidly increasing the proportion of non-interest income, gradually reducing the dependence on credit activities.

Consistently defining insurance business as a pillar of BIDV’s development strategy; accelerating the increase in service income from insurance commissions; Maximizing cross-selling of banking and insurance products, creating and developing end-to-end banking products and services; Researching and deploying products and services to customers with little/no access to banking services with focus on groups of customers in rural and remote areas with appropriate products and services at reasonable cost.

PROMOTING THE APPLICATION OF TECHNOLOGY AND IMPLEMENTING DIGITAL BANKING DEVELOPMENT STRATEGY, ENSURING THE IT SYSTEM OPERATES SMOOTHLY AND STABLY, TIMELY COMPLETING KEY IT PROJECTS IN 2020

Continuing to maintain contact with investment funds, fund management companies and securities companies in Vietnam to capture the level of interest of the investment community to prepare for the plan to increase capital through private placement following the success of the issuance to the strategic investor. Opening non-deal road shows to explore the level of interest of investors and propose a plan for listing stock on foreign stock markets at an appropriate time.

Increasing the proportion of demand deposits to reduce funding costs along with focusing on individual customers, SMEs and existing customer base: Continuing to deploy and spread the effective cost management scheme, focusing on reasonable increase in cost-effective items, strengthening the monitoring of the implementation of spending norms; assigning cost-saving targets to each unit; Controlling investment, using assets economically and effectively to focus capital for business activities; Implementing a new salary mechanism associated with the BSC/KPI on task assignment and performance evaluation, ensuring market benchmark, attaching income to efficiency, in order to promote proactiveness and increase labor productivity.

Drastically implementing the Digital Banking Development Strategy for the period 2020-2025 on all business activities, processes, products, distribution channels in accordance with the Industry 4.0; Strengthening solutions to ensure the safety and security of the information technology system; Promoting distribution channel shift towards centralization and increasing the efficiency of traditional channels, aggressively deploying modern channels; Strengthening the application of high-digitized technology, deploying digital products and applications to support business activities; Speeding up the implementation of BIDV’s key IT projects such as the transformation of Corebanking system, ECM, CROMS, etc., ensuring the completion on schedule, contributing to improving BIDV’s IT capacity.

CONTINUING IMPROVING FINANCIAL CAPACITY, MANAGING COSTS EFFECTIVELY, MAXIMIZING REVENUE SOURCES, AND IMPROVING THE BUSINESS EFFICIENCY OF THE WHOLE SYSTEM IMPLEMENTING A BRAND

DEVELOPMENT STRATEGY IN ASSOCIATION WITH FOSTERING CORPORATE CULTURE, CREATIVE LEARNING MOVEMENT ACROSS THE SYSTEM

ENHANCING MANAGEMENT AND GOVERNANCE CAPACITY, INCREASING BANK-WIDE OPERATIONAL EFFICIENCY THROUGH EFFECTIVE EXPLOITATION OF STRENGTHS AND SUPPORT FROM THE STRATEGIC SHAREHOLDER KEB HANA BANK ON 6 AREAS OF COOPERATION

Completing and implementing the Project on changing brand identity elements; Researching and proposing programs to raise awareness and improve the quality of standardizing brand image at transaction points; Continuing to aggressively implement the culture of learning and creativity, organizing the conference on “Praising good and creative employees” at the branch level and the 5th Conference on “Typical Employees” to praise typical individuals and collectives with great contributions to the system.

Bank development strategy: Proactively coordinating with KEB Hana Bank for experience sharing and technology transfer to complete and launch the BIDV’s Development Strategy to 2025, and vision to 2030.

IT systems and digital banking: Developing operating models of IT systems and digital banking based on the experience sharing from KEB Hana Bank and current situation of IT and digital banking at BIDV and technological support.

Retail banking development: Developing strategies and incentive schemes for retail banking activities; Optimizing retail operating model at head office and branches; Developing a retail marketing strategy; Deploying private banking model and products.

Diversifying the portfolio of profitable assets: Focusing on increasing service and foreign exchange income; Developing distribution channels; Increasing investment efficiency and cross-selling between units across the system.

Risk management: Fully and seriously applying risk management system according to Basel II standards from 1 December 2019, continuing to implement the internal capital adequacy assessment process (ICAAP) and researching to implement the recommendations of Basel Committee based on consultation, learning, experience sharing, management skills as well as Basel tools and governance models implemented at KEB Hana Bank.

Human resources training and development: Promoting human resources training on the basis of coordinating with and receiving support from KEB Hana Bank: Comprehensively improving the quality of human resources in association with developing and delivering the Human Resources Development Strategy to 2025 and vision to 2030.



M A N A G E M E N T ’ S R E P O R T

OPERATING ENVIRONMENT

AND BUSINESS RESULTS IN 2019

FINANCIAL SITUATION

INNOVATION IN GOVERNANCE,

ORGANIZATIONAL BUSINESS ORIENTATION FOR 2020

BUSINESS ORIENTATION FOR 2020

MANAGEMENT ’S REPORT

ON RESPONSIBILITIES TO ENVIRONMENT,

SOCIET Y AND EMPLOYEES


O P E R A T I N G E N V I R O N M E N T A N D B U S I N E S S R E S U L T S I N 2 0 1 9

Mr. Le Ngoc Lam, Senior Executive Vice President in charge of the Board of Management, BIDV

In 2019, the Government continued to direct and come up with aggressive solutions to successfully accomplish tasks of socio-economic development, macro-economic stability, improving growth quality improvement and national competitiveness. Vietnam’s economy achieved positive and comprehensive results in many areas, fulfilling and exceeding all 12 socio-economic indicators set by the National Assembly, particularly: GDP reached 7.02%, higher than the target set by the National Assembly (6.6-6.8%); average CPI was 2.79%, lowest in the last 3 years; total export turnover reached USD517 billion for the first time; exports grew 8.1% and trade surplus hit nearly USD10 billion. The State Bank of Vietnam proactively adopted flexible monetary policies in close coordination with fiscal policies, supporting economic growth, ensuring the liquidity, and maintaining stable monetary and foreign exchange markets. The exchange rate and interest rate were basically stable, banking system operated safely, effectively and stably. Total means of payment increased by 14.78% and credit growth grew 13.7%.

For BIDV, the whole system comprehensively accomplished the business plan, improving financial capacity, asset quality, institutional reform and development, looking forward to successfully

implementing the 2016-2020 restructuring plan, fulfilling obligations to the State budget, ensuring the interests of shareholders and employees, significantly contributing to the community and society. BIDV completed the strategic deal with KEB Hana Bank – the largest deal in Vietnam’s banking sector history. The deal contributed to enhancing the bank’s financial capacity, meeting Basel II standards, making BIDV become the commercial bank with highest charter capital in Vietnam. This laid solid foundations for BIDV to make fundamental changes to its governance model, improving governance and management capacity on par with international practice, looking forward to becoming a modern financial and banking group in the region.

BIDV’s brand and position continued to be strengthened in international market. Credit rating firms continued to recognize BIDV as having a stable outlook and among the banks with highest ratings in Vietnam. BIDV was honored in the Top 10 most valuable brands in Vietnam for two years in a row, among Top 2,000 world’s largest public companies as published by Forbes. In addition, BIDV continued to receive many awards: Best Retail Bank in Vietnam for 5 consecutive years by The Asian Banker, Best SME Bank in Vietnam for 02 straight years by Asian Banking & Finance and many other prestigious awards.



BIDV’s business performance in 2019 saw effective, sustainable, and safe growth in line with the restructuring goal, ensuring the benefits of shareholders and employees. Difference between revenues and expenses reached VND30,864 billion, growing by 9.3% compared to 2018, highest among commercial banks. Consolidated profit before tax hit VND10,732 billion, up 14.3% from 2018, fulfilling 104% of the target assigned by the General Meeting of Shareholders, ROA and ROE were 0.61% and 12.94%.

Total assets hit VND1,489,957 billion, up 13.5% compared to 2018, continuing to be largest commercial bank in Vietnam by assets.

Total outstanding loans and investments as of 31 December 2019 reached VND1,325,737 billion, of which loans to organizations, individuals and corporate bonds stood at VND1,134,503 billion, an increase of 12.2%, within the limit assigned by the State Bank. BIDV’s credit market share accounted for 13.8% of the whole industry, continuing to be the commercial bank with the largest credit scale.

Credit quality was strictly controlled, stable and safe. Credit growth was associated with risk control, increasing short-term credit and controlling medium and long-term credit. The ratio of medium and long

term loans to total loans was 37.9%, meeting the control target. Credit structure by sector was strictly controlled with a focus on priority economic areas such as: retail customers, agriculture, export financing, SMEs. Loans to areas prioritized by the Government and the State Bank of Vietnam accounted for 57% of total loans.

Asset structure shifted towards increasing high-quality assets. BIDV adopted a Resolution on assets and liabilities management plan for the period 2019-2020, continuing to structure the assets towards increasing the proportion of profitable assets which reached 95.6% by the end of 2019 (up 1.14 percentage points from the previous year); the ratio of non-performing loans to organizations and individuals was 1.75%, in line with the regulations of the State Bank and BIDV’s target.

BUSINESS PERFORMANCE

CREDIT SIZE AND ASSET QUALITY

F I N A N C I A L S I T U A T I O N

DEPOSITS

Total deposits as of 31 December 2019 reached VND1,374,765 billion, growing 12.1% compared to the beginning of the year. In which, deposits from organizations and individuals hit VND1,187,093 billion, up 12.6% compared to 2018, exceeding the year plan. Especially in 2019 BIDV successfully issued bonds to raise capital worth VND19,000 billion, making a significant contribution to enhancing financial capacity.

OWNERS’ EQUITY

After the successful strategic deal with KEB Hana Bank, BIDV’s equity increased to VND77,653 billion, an increase of 42.5% from 2018 and charter capital hit VND40,220 billion.

Deposit structure continued to shift towards increasing the proportion of stable and low-cost deposits in line with the capital use demand: (i) VND deposits continued to grow well (up 13% compared to 2018), accounting for 94.7% of total customer deposits; (ii) Demand deposits increased by 10.2%; the proportion of demand deposits to total deposits was 16%; (iii) Retail deposits grew by 9.7% compared to 2018, accounting for nearly 55.5% of total customer deposits.



I N N O V A T I O N I N G O V E R N A N C E , O R G A N I Z A T I O N A L S T R U C T U R E A N D M A N A G E M E N T P O L I C I E S

For banking operations, BIDV always strictly complied with the instructions on interest rates, exchange rates, credit limits assigned by the State Bank, as well as proactively enhancing its comprehensive management capacity, innovating organizational model, taking the lead in applying modern banking technology and international integration.

EXCELLENTLY COMPLETING THE SCHEME ON SELLING STOCK TO STRATEGIC INVESTOR, CONTRIBUTING TO STRENGTHENING FINANCIAL AND GOVERNANCE CAPACITY ON PAR WITH INTERNATIONAL MODERN BANKING STANDARDS.

IMPROVING BUSINESS EFFICIENCY TOWARDS PROMOTING SERVICE ACTIVITY AND EFFECTIVE COST MANAGEMENT

BIDV completed the sale of stock to the strategic investor KEB Hana Bank with total deal value reaching nearly VND20,300 billion, raising the charter capital to VND40,220 billion - this was the largest capital contribution deal in Vietnam’s banking sector. Accordingly, BIDV and KEB Hana Bank will initially cooperate in 6 areas: (i) Banking development strategy governance; (ii) IT system and digital banking management; (iii) Retail banking development; (iv) Diversifying the portfolio of profitable assets; (v) Risk management; and (vi) Human resources training and development; thereby fundamentally innovating the corporate governance system, strengthening risk management, enhancing the application of information technology and digital banking, diversifying profit portfolio; Expanding high-quality human resources training and development.

BIDV was recognized by the SBV as one of the commercial banks qualified to apply Circular 41 early (from 1 December 2019); Meeting the Pillar 1 (standard method) and Pillar 3 of Basel II, completing the preparation and ready to meet Basel II standards.

Continuing to promote the implementation of the Service development scheme, focusing on improving service quality with the 2019 theme being “BIDV Smile - Thoughtful, Professional, Quality”. Particularly: (i) Translating the 2019 Service scheme into action programs implemented throughout the bank’s system; (ii) Organizing the contest “Replicating service initiatives”; Successfully organizing the BIDV Smile run; (iii) Deploying incentive programs to increase revenue, accordingly, average daily net service income in the last 6 months reached VND12.46 billion, up 18.5% compared to the average of the first half of the year (VND10.52 billion).

Managing costs effectively through assigning saving rate targets to each unit, allocating resources based on business efficiency evaluation. Strengthening the reasonable use of asset costs, implementing property arrangement plans according to regulations, developing the system’s land use plan. Regularly reviewing the use of assets, timely transferring and disposing of assets to improve asset use efficiency.


BIDV utilized resources to drastically, comprehensively and effectively implement the Project on digitizing banking activities in all areas: (i) Officially launching the BIDV Digital Banking Center - the first bank in Vietnam to own a Digital Banking Center; (ii) Uniformly building and developing modern distribution channels such as Internet Banking, Mobile Banking, SMS Banking, Web Chat, Facebook, YouTube, etc.; Developing self-service channels (e-Zone) at transaction offices; (iii) Transforming manual operations into automated ones for bank transfer,

AGGRESSIVELY IMPLEMENTING DIGITAL BANKING SCHEME AND APPLYING MODERN TECHNOLOGY TO BUSINESS OPERATIONS

CONTINUING TO BOOST RETAIL BANKING BY SCALE, EFFICIENCY AND QUALITY

Building on Resolution 727/NQ-HDQT dated 19 March 2015, BIDV implemented a project on “Retail banking development for the period 2019–2021” to further improve competitiveness and the retail banking’s sustainable and effective contribution to the overall results of the entire bank. BIDV’s retail size (deposits, loans, services) continued to lead commercial banks; Net retail income has played an increasingly important role in the overall income of the entire system; Credit quality was always well controlled; individual customer base and labor productivity saw high growth.

Fine-tuning the organizational model through issuance of Resolution 216/NQ-BIDV on the organizational model of groups at the Head Office, unifying the organizational model of units under the General Meeting of Shareholders, the Board of Directors and 10 groups under the Board of Management; Establishing the IT and Digital Banking Group, the Supervision and Compliance Group, forming the Training and Research Institute through merging the Research Center into the BIDV Training School. Establishing the Investment and

Considering human resources as a core factor, BIDV has always invested in consolidating the human resources and regularly innovated the human resources management, particularly:

Senior personnel work was consolidated, ensuring publicity, transparency and compliance with State’s regulations. Completing the additional election of members to the Board of Directors at the extraordinary General Meeting of Shareholders in December 2019, completing the procedures for appointment of a representative from the strategic shareholder KEB Hana Bank to BIDV’s Board of Management. Besides, BIDV effectively implemented staff rotation, appointment and re-appointment; Completing 02 centralized recruitment batches; Completing the arrangement of key personnel from KEB Hana Bank to work at the

Kicking off the project on changing the entire brand identity, completing documents for reporting to the SBV about implementation plan. Continuing to standardize and renew image and brand message in the bank’s advertising publications, products and services.

Thoroughly grasping Directive 07/CT-NHNN dated 11 October 2017 by the Governor of the SBV on ensuring security and safety of the banking system, BIDV continued to attach great importance to inspection, compliance supervision. Some highlights included: (i) Organizing an online conference on inspection and

FINE-TUNING ORGANIZATIONAL MODEL AND DOCUMENT SYSTEM

CONSOLIDATING AND STANDARDIZING PERSONNEL WORK

KICKING OFF REBRANDING PROJECT IN ASSOCIATION WITH FOSTERING CORPORATE AND LEARNING CULTURE

CONTINUING TO IMPROVE THE QUALITY OF INSPECTION AND SUPERVISION WORK

bank’s Head Office units, thereby materializing the strategic cooperation with KEB Hana Bank.

Progressively standardizing employee assessment in accordance with international practice, particularly: (i) Officially putting into operation 3 modules of Phase 1 - new staff management system according to international standards; (ii) Completing sets of documents on professional processes, developing and testing the salary module; (iii) Initially applying a new salary mechanism, issuing sets of department-level balanced scorecard (BSC) at branches, and KPIs for positions for work performance evaluation at the head office; (iv) Regularly updating knowledge and improving the quality of human resources through organizing 408 centralized training and E-learning courses for 38,464 turns of trainees, offering intensive training programs and competency framework training for trainees; (v) Organizing 44 batches of testing professional and managerial competency for 3,690 turns of operational staff and division-level managers.

Aggressively deploying the project “Building and practicing the learning and creative culture at BIDV”, all BIDV employees introduced creative ideas and initiatives for improvements with the spirit of “Desire to learn - Passion for creativity - Ready for change – Making success”.

Successfully organizing the first Innovation and Dialogue Day in July 2019 with the theme “Inspiring – Making success” which received 247 ideas and initiatives of which 12 feasible and disruptive ideas and initiatives were awarded and aggressively applied throughout the system.

compliance supervision which connected 59 locations and 3,000 officers across the system to disseminate the SBV’s direction on supervision and inspection work; (ii) Comprehensively inspecting operation of 104 units as well as the working style and transaction space at 300 transaction points across the bank’s system; (iii) Conducting regular remote monitoring and ad-hoc inspection at units to proactively detect signs of violations early and prevent violations; (iv) Issuing a handbook for preventing violations in banking operations, raising awareness of legal compliance and sense of inspection and supervision for employees.

Shifting the operational structure to the modern bank model with retail banking being put at the center: (i) Defining business efficiency and sustainable development as the top goal; (ii) Developing retail banking activities through digitalization; (iii) Putting customers at the heart of business to bring the best experiences to customers and improve the quality of products and services.

payment, loan repayment, online deposit, credit card management and repayment; (iv) Cooperating with partners to launch innovative products such as Samsung Pay, QR Pay, Chat-bot on Mobile banking, Swift GPI, ATM withdrawals via mobile phones; Developing BIDV Home app; Applying Blockchain, new technology in Robotics and artificial intelligence to business operations.

As a result, digitization-linked main indicators had a disruptive increase compared to the previous year, particularly: (i) The number of digital banking transactions reached nearly 140 million, 1.7 times higher than that of 2018 and 7 times higher than 2016, helping BIDV save operating costs and optimize human resources of branches; (ii) The number of digital banking users hit over 5 million, bringing the online transaction rate to 38% from 9% in 2015, showing BIDV’s initial success in its digitization and automation journey.

Credit Approval Center; Making adjustments to functions and duties of the Credit Management Department, the Management Information System and ALCO Department, ensuring compliance with the SBV’s regulation on risk management under Basel II.

BIDV’s document system continued to be standardized with 108/108 documents issued on schedule in accordance with changes in the organizational, governance and management structure as well as streamlining processes. So far, processes of providing products and services to customers have basically been improved, applying technology to improve labor productivity and customer service quality.


Key indicators:

Thoroughly grasping the Government’s Resolutions 01/NQ-CP and 02/NQ-CP dated 1 January 2020 and the SBV’s Directive 01/CT-NHNN dated 3 January 2020 on implementation of key banking tasks in 2020; with the action motto for 2020 “Discipline - Accountability - Efficiency - Breakthrough”, BIDV is determined to successfully accomplish the Business plan 2020 and the Scheme on restructuring associated with handling bad debts for 2016 -2020.

B U S I N E S S D I R E C T I O N S F O R 2 0 2 0

Indicators Plan for 2020

Credit growth As assigned by the State Bank of Vietnam (currently 9%)

Deposit growth In line with capital demand, expected at 9%

Consolidated profit before tax VND12,500 billion (on condition that the Covid-19 pandemic is contained soon)

Non-performing loan ratio (*) <1.7%

Dividend payout ratio Expected at 7%


BUSINESS ORIENTATION FOR 2020

Promoting the development and diversification of products and services, rendering efforts to diversify income sources, contributing to shift towards sustainable income structure. Developing and diversifying banking products and services, particularly non-credit products; Uniformly implementing solutions to diversifying income sources such as increasing service income from non-credit customers; Promoting insurance and telesales, increasing service income through launching new high-tech products.

Aggressively implementing effective financial management solutions. Strengthening the monitoring of the implementation of spending norms; Assigning cost-saving targets to each unit taking into account of the responsibility of unit heads. Controlling economical and effective investment in assets. Implementing a new salary mechanism, linking income to each individual performance; and implementing a new staff evaluation mechanism based on KPI, attitude and qualification.

Boosting brand development strategy in association with fostering corporate culture and learning and innovative movements throughout the system. Completing and implementing a project on brand identity change. Implementing strong and effective brand communication activities.

Continuing to foster the learning and creative culture, timely issuing appropriate incentive mechanisms to encourage and commend initiatives, innovations, applicable research results and learning culture in all activities of BIDV.

Strengthening governance and management capacity, improving the operational efficiency of the whole system through effectively exploiting the strengths and support of the strategic shareholder KEB Hana Bank in 6 areas of cooperation.

Successfully accomplishing business targets, ensuring safe, quality and efficient business operation. Clearly defining the mission, vision and closely following plans and strategies approved by the General Meeting of Shareholders and the Board of Directors, delivering the best values to shareholders and employees.

Successfully completing the BIDV restructuring plan for the 2016-2020 period, utilizing all resources to handle bad debts, boost off-balance sheet debt collection and settle all debts previously sold to VAMC. Classifying debts and making risk provisions according to regulation. Strictly controlling customers’ loan use purposes, minimizing the increase in non-performing loans.

Fine-tuning and implementing BIDV Development Strategy to 2025 and vision to 2030; In particular, aggressively, comprehensively and effectively implementing the Digital Banking Development Strategy for the period 2020-2025 in all business areas, processes, products and distribution channels in accordance with the Industry 4.0 trend. Strengthening the application of highly digitized technology, launching modern digital products and applications. Speeding up the implementation of BIDV’s key IT projects.

Striving to improve credit quality and credit risk management capacity. Deploying credit products, packages with a focus on good customer groups and priority areas. Shifting credit towards increasing loans with low credit risk coefficient. Strictly controlling credit for latent risk areas and large loans.

Taking measures to improve financial capacity, ensuring the capital adequacy ratio according to regulation. Striving to implement capital increase plans through stock dividend; continuing to promote capital increase through issuing shares to foreign investors and new financial investors while implementing other measures to raise capital as planned.

Note: (*) The non-performing loan ratio is calculated on total outstanding loans to economic organizations and residents and corporate bonds (excluding financial institution bonds and deposits (except current accounts) at other credit institutions).


MANAGEMENT’S REPORT ON RESPONSIBIL IT IES TO ENVIRONMENT, SOCIETY AND EMPLOYEES

VỀ TRÁCH NHIỆM VỚI MÔI TRƯỜNG

BIDV always attaches great importance to the development of human resources. With the goal of creating an optimal working environment to encourage employees’ dedication, BIDV gradually improves and increases the income of the employees, creating opportunities for the employees to maximize their capability, visioning clear development paths while ensuring legitimate and legal benefits of employees.

All employees are covered by benefits according to the provisions of law, are entitled to join trade unions, are paid in commensurate with their contribution and qualification. In addition, BIDV ensures benefits and incentives for employees such as vacation leave, annual health check, teambuilding activities for employees, etc.

RESPONSIBILITIES TO EMPLOYEESENVIRONMENTAL RESPONSIBILITIES

BIDV has always pioneered in social security activities. In 2019, BIDV sponsored over 90 social security programs nationwide with a total budget of nearly VND300 billion such as: “Red Journey 2019”; helping flood victims in the North Central and Highlands regions; successfully organizing “Warm New Year for the poor” running event which attracted participation of more than 36,000 athletes running a total distance of over 1.8 million km, contributing close to VND6 billion as Tet gifts for the poor on the occasion of Vietnam’s new year 2020; effectively supporting policy beneficiaries such as disadvantaged families, Agent Orange victims, Vietnamese heroic mothers.

SOCIAL RESPONSIBILITIES

BIDV strictly followed the Government’s Decision 403/QD-TTg dated 20 March 2014 on National Action Plan on Green Growth until 2020, Directive 03/CT-NHNN dated 24 March 2015 by the Governor of the State Bank of Vietnam on promoting green credit and environmental and social risk management as well as other decisions by central and local authorities on environmental protection.

As the country’s leading financial institution, BIDV thoroughly understood its responsibility for keeping and protecting a green environment for the next generations. BIDV comprehensively evaluated environmental risks when appraising projects, requiring customers to strictly comply with the provisions of law on environmental protection. In project implementation, BIDV regularly supervised the environmental and social risk management during the disbursement, ensuring to minimize negative impacts on environment from projects financed by BIDV. Besides, BIDV disseminated the environment protection measures to the employees to shape a green lifestyle such as saving energy, limiting material printing, using public transportation, etc., gaining consensus from employees.

In 2019, the Green Office project was implemented at BIDV head office and will be replicated throughout the system in the coming time.


C O R P O R A T E G O V E R N A N C E

OPERATION OF THE BOARD OF DIREC TORS IN 2019

OPERATION OF THE SUPERVISORY BOARD IN 2019

TRANSAC TIONS, REMUNERATIONS AND BENEFITS

OF THE BOD, BOARD OF MANAGEMENT

AND SUPERVISORY BOARD


OPERATION OF THE BOARD OF DIRECTORS IN 2019

PERFORMANCE OF THE BOD MEMBERS

The BOD members fully exercised their rights and duties in accordance with the Bank’s Charter and the General Meeting of Shareholders’ authorization, particularly:

Exercising honestly the BOD’s tasks and rights in accordance with the Regulation on Organization and Operation of the BOD and the BOD chairman’s assignment for the interests of BIDV and shareholders;

Giving constructive inputs and voting for approval of

strategies, business policies and medium and long-term development plans, annual business plans of BIDV;

Voting to approve and directing the successful implementation of increase in charter capital through issuing shares to the strategic foreign investor;

Directing the implementation of setting up funds, distributing profits and paying dividends according to the contents approved by the General Meeting of Shareholders;

Reviewing, giving comments and voting for approval of the plan on capital allocation and other resources as a basis for the Board of Management to carry out the business plan assigned by the Board of Directors, including: plans on capital mobilization, credit, finance, property procurement and construction, information technology, labor and people development;

Studying, commenting on the formulation and voting to issue regulations, decisions on decentralization, authorization and powers for the Board of

Management to operate capital mobilization, credit and other economic activities;

Supervising effectively and efficiently the establishment and maintenance of internal control activities;

Voting for approval of the audited financial statements of BIDV;

Attending meetings of the BOD; discussing and voting

or giving written comments on all issues under the authority of the BOD; being personally responsible before law, the General Meeting of Shareholders and the BOD for his/her decision.

Implementing resolutions and decisions of the General Meeting of Shareholders and the BOD in line with the bank’s Charter and applicable laws.

Requesting the Senior Executive Vice President (SEVP) in charge of the BOM, SEVPs and directors of

subsidiary units under BIDV to provide information and documents on financial situation and business operations of BIDV and/or its subsidiary units for exercising his/her duties;

Being personally responsible to the General Meeting of Shareholders and the BOD for his/her activities, as well as disclosing all related benefits according to applicable laws.

In 2019, the Board of Directors (BOD) of BIDV organized plenary meetings and

permanently collected written opinions on issues within the authority of the

BOD to ensure a comprehensive view of all business operations, making timely decisions on key issues of the bank, as well as overseeing the operations of

the Board of Management. Performance of the BOD in 2019 is presented in the

Directors’ Report.


MEETINGS OF THE MEMBERS OF THE BOARD OF DIRECTORS IN 2019

In 2019, BIDV’s BOD held 04 regular and 02 extraordinary meetings, particularly:

In addition to the regular and extraordinary meetings, the Board of Directors also organized thematic working sessions to discuss, clarify and unify direction for the operation of the whole bank.

No. BOD Member Position

Starting/ending date

of being BOD member

No. of meetings attended

Attendance rate

Reasons for absence

1 Mr. Phan Duc Tu Chairman 6/6 100%

2 Mr. Bui Quang Tien Member 1 June 2019 3/6 50% Retired from 1 June 2019

3 Mr. Tran Thanh Van Member 5/6 83%

Absent for the 4th quarter BOD’s meeting in 2019

due to business trip

4 Mrs. Phan Thi Chinh Member 6/6 100%

5 Mr. Ngo Van Dung Member 6/6 100%

6 Mr. Nguyen Van Loc Member 1 June 2019 3/6 50% Retired from 1 June 2019

7 Mrs. Nguyen Thị Thu Huong Member 26 April 2019 3/6 50%

Elected as BOD member at BIDV’s Annual GMS on 26

April 2019

8 Mr. Pham Quang Tung Member 5/6 83%

Absent for the 1st quarter BOD’s meeting in 2019, written power of attorney to BOD

member Ngo Van Dung

9 Mr. Yoo Je Bong Member 27 December 2019 0/6 0%

Elected as BOD member at BIDV

Extraordinary Meeting of

Shareholders on 27 December 2019

10 Mr. Le Viet CuongIndependent

Member6/6 100%

CORPORATE GOVERNANCE TRAINING COURSES ATTENDED BY MEMBERS OF THE BOD, SUPERVISORY BOARD, CHIEF EXECUTIVE OFFICER, BOARD OF MANAGEMENT AND SECRETARIAT IN 2019 WERE AS FOLLOWS:

No. Training courses Participants

1Training course on updated risk management and internal control ac-

cording to Coso standard for banks.Time: 15 March 2019

3 members of the Supervisory Board

2Workshop on updating the internal audit regulations and experience in

organizing effective internal audit functions at listed companiesTime: 15 March 2019

3 members of the Supervisory Board

3Workshop on “The role of the company secretary in modern corporate

governance.”Time: 11 June 2019

1 member of BOD’s Secretariat

4Project kick-off: “Enhancing capacity in improving the equity and trans-

parency of Vietnam’s stock market”Time: 20 June 2019

1 member of BOD’s Secretariat

5 Workshop on Risk management in the digital eraTime: 4 October 2019 1 member of the Supervisory Board

6 Future bank leader courseTime: 20 May – November 2019 1 member of BOD’s Secretariat

7 Training course on Modern commercial bank managementTime: 2019 1 member of BOD’s Secretariat

ACTIVITIES OF INDEPENDENT NON-EXECUTIVE BOARD MEMBER

During the operation, the BOD’s independent member fully participated in the BOD’s activities in accordance with the law and BIDV’s internal regulation, specifically:

Participating in all BOD’s meetings in accordance with regulations.

Voting for issuance of internal regulations on organization, human resources, governance, operations of BIDV and other issues under the jurisdiction of the BOD.

Voting for issuance of policies and strategies under the authority of the BOD; participating in supervising the implementation of such policies and strategies as assigned by the BOD.

Participating in reviewing financial reports prepared by an independent auditor.

Voting the BOD’s programs and action plans; programs, contents and documents of the General Meeting of Shareholders; convening the GMS or collecting shareholders’ written opinions.

Participating in Risk Management Committee under the BOD as a member of credit risk and critical risk management groups, actively giving inputs on the development of risk management policies and procedures.

With the independence of the BOD member, the role of the independent member in BIDV’s Board of Directors has contributed positively to improving the objectivity, transparency, efficiency and quality of decisions made by the BOD.


OPERATIONS OF THE BOD’S COMMITTEES

practices, particularly:

(1) Advising the BOD on the bank-wide risk management issues at BIDV according to practice, and SBV’s regulations, including:

Advising the BOD to implement the internal control model, compliance control, policy of three lines of defense and control conflicts of interests in managing material risks (credit, market, liquidity, operation, bank book interest rates).

Advising the BOD to build a culture of control and risk culture at BIDV.

Advising the BOD to approve the issuance of policies and strategies for managing material risks, including: policies on credit risk management, bank book interest rate risk management, market risk management; centralized risk management in proprietary trading, methods for determining credit risk limit and application at BIDV.

Advising the BOD on reviewing, assessing bank-wide risk management policies and mechanisms: Assessment report on risk management framework, bank-wide risk management policies and recommendations to complete the overall risk management framework to meet the SBV’s Circular 13; Advising on credit limits by industries and sectors in the period 2019-2021; Evaluation report and proposal on system credit risk management measures in 2019.

Advising on implementing projects on applying risk management in accordance with Basel II standards at BIDV: Project on comprehensive risk assessment,

BIDV has four committees under the BOD, including: Risk Management Committee, Nomination Committee, Strategy and Organization Committee; and Information Technology Committee. The BOD issued separate organizational and operational regulations for each committee.

In 2019, the Committees fully and promptly implemented their functions and tasks as stipulated in their respective organizational and operational regulation.

The structures of the BOD’s committees were as follows:

RISK MANAGEMENT COMMITTEE

In order to improve the system management capacity of the BOD, Risk Management Committee was established as a unit under the BOD with the function of advising, consulting and assisting the Board to handle issues related to BIDV’s bank-wide risk management.

In 2019, the Risk Management Committee implemented the following tasks:

In 2019, implementing the BOD’s direction on enhancing and improving the institutional development, enhancing the risk management capacity in accordance with the best practices, on the basis of following the SBV’s regulations in Circular 13/2019/TT-NHNN dated 18 May 2019 on internal control system of commercial banks, the Risk Management Committee implemented functions and duties according to the Regulation on organization and operation of the Risk Management Committee in accordance with the SBV’s regulations and common


The Nomination Committee is the advisory body, advising and assisting the BOD in implementing its duties and powers on issues related to governance, people development, rewards, remunerations, etc. and other issues related to personnel.

In 2019, the Nomination Committee advised the BOD on the following issues:

Giving opinions on the organizational model of all departments at the Headquarters.

Advising on the process of appointing Head of the business groups.

Giving opinions on the plan on the appointment of the position of Head of BIDC Hanoi Branch.

Giving opinions on the plan of merging the Research Center into BIDV Training School.

Giving opinions on the staff planning for the position of Head of BIDV Representative Office in Da Nang City.

Giving opinions on staff planning for the position of Head of Da Nang Branch.

Assessing the value of work and making proposals for renewing the salary scheme.

Advising the Regulation on retirement benefits for officers.

Giving opinions on the establishment of the Core Banking system transformation Project Management Unit at BIDV and the benefit policy for officers participating in the Project Management Unit.

Committee members:

enhancing risk appetite and implementing the internal capital adequacy assessment process (ICAAP); credit target operating model (CTOM).

(2) Advising the Board of Directors on supervising the system risk management:

Advising and supervising the handling of and overcoming shortcomings and limitations on risk management upon requirements and recommendations by the State Bank, independent auditing firms, internal audit and other functional agencies.

Conducting quarterly bank-wide risk management reports: Comprehensive assessment of the implementation of the master risk management framework at BIDV; Reviewing mechanisms and policies on material risk management and the implementation of targets and limits on bank-wide risk management. Thereby, the Risk Management Committee issued warnings and recommendations, proposing solutions to the BOD to limit and prevent risks.

In 2019 the Risk Management Committee complied with the functions and tasks according to the Regulation on Risk Management Committee, accomplishing the planned tasks and meeting the risk management requirements in banking.

Committee members:

Chairman: Mr. Phan Duc Tu – Chairman of the BOD

Members:

Mr. Tran Thanh Van - BOD Member.

Mrs. Nguyen Thi Thu Huong - BOD Member

Mrs. Phan Thi Chinh – BOD Member.

Mr. Pham Quang Tung - BOD Member.

Mr. Le Ngoc Lam – Senior Executive Vice President in charge of the BOM.

Mr. Nguyen Thien Hoang - Senior Executive Vice President.

Mr. Tran Xuan Hoang - Senior Executive Vice President.

Head of Finance Dept.

Member cum Secretary: Head of Human Resources Dept.

Chairman: Mr. Ngo Van Dung – BOD Member.

Members:

Mr. Le Viet Cuong – BOD Member.

Mr. Pham Quang Tung - BOD Member.

Mr. Le Kim Hoa – Senior Executive Vice President.

Mr. Can Van Luc – Chief Economist, Head of Training and Research Institute.

Head of Credit Management Dept.

Head of Market and Operational Risk Management Dept.

Head of Legal Affairs.

Mrs. Nguyen Thi Minh Hang - Head of Assistant Division, Risk Management Committee.

Full-time, standing member: Mr. Le Ngoc Quy - Risk Management Committee.



The Strategy and Organization Committee was established by the BOD to advise and assist the Board on issues relating to strategic management and organizational model of the Bank.

In 2019, in accordance with the change to senior personnel of BIDV, the Strategy and Organization Committee submitted to the Board of Directors for approval of the Committee’s personnel. Up to now, the Strategy and Organization Committee is composed of 9 members (including the Chairman; 8 members of which 1 member cum secretary).

In 2019 the Strategy and Organization Committee advised the BOD on the following issues:

Successfully fulfilling its mission of advising the BOD on issues of strategic management, development strategy, business plan, organizational structure and governance model of the whole system, particularly:

Continuing to closely follow and direct related units to urgently complete: (i) the bank’s amended restructuring plan associated with handling bad debts in the period of 2016-2020 according to the direction of the State Bank of Vietnam; (ii) Drafting BIDV Development Strategy to 2025, and vision to 2030 before submission to the Board of Directors for approval.

Committee members:

Chairman: Mr. Pham Quang Tung – BOD Member.

Members:

Mrs. Nguyen Thi Thu Huong - BOD Member.

Mr. Ngo Van Dung - BOD Member.

Mr. Le Viet Cuong - BOD Member.

Mr. Le Ngoc Lam – Senior Executive Vice President in charge of the BOM.

Mr. Nguyen Thien Hoang – Senior Executive Vice President.

Mr. Can Van Luc – Chief Economist, Head of Training and Research Institute.

Head of Human Resources Dept.

Member cum secretary: Head of Strategy and Corporate Planning Dept.

INFORMATION TECHNOLOGY COMMITTEE

The IT Committee was established under the direction the BOD and has the authority to decide on IT-related issues as authorized by the Board of Directors.

In 2019, the IT Committee advised and assisted the BOD on directing all IT activities at BIDV. In 2019, the IT Committee fulfilled the set targets and requirements.

In 2019, the Information Technology Committee advised the BOD on the following issues:

In 2019, the IT Committee held 03 meetings and advised the Board of Directors on 17 issues under the BOD’s decision-making authority relating to BIDV’s IT activities such as: Directing the development and submission of IT Plan 2019, 2020; Directing the implementation of key projects: New Core banking transformation project, Procurement and implementation of trade finance system software at BIDV, projects and software to serve Basel II, the project on building and deploying Data marts and RMS reports, equipping ALM system solution, meeting the requirements of Circular 13...; Approving procurement projects/plans under the approval authority of the Board of Directors.

Committee members:

Chairwoman: Mrs. Phan Thi Chinh – BOD Member in charge of IT

Members:

Senior Executive Vice President in charge of IT Dept.

Senior Executive Vice President in charge of IT Center.

Head of Technology Department.

Head of IT Center.

Head of Finance Department.

Head of Premises and Facility Management.

Independent member.


Direct discussion on reviewing the organizational model and a number of proposals to improve the effectiveness of supervision and inspection in the coming time.

Giving written comments on: (i) Report on review of no-division department model at BIDV; (ii) Recommendation report on the model of ICAAP project consultant related to overall risk assessment component.


O P E R A T I O N O F T H E S U P E R V I S O R Y B O A R D I N 2 0 1 9Monitoring the operation and compliance with provisions of law, Bank’s Charter and Resolutions, Decisions of the General Meeting of Shareholders by the Board of Directors, Chief Executive Officer and other managers in managing and administering BIDV, the coordination between the Supervisory Board and the Board of Directors, the CEO and shareholders; supervising high-level managers according to Circular 13/2018/TT-NHNN for internal audit activities; Monitoring the results on implementing BIDV’s Restructuring plan in association with handling bad debts in the period of 2016-2020 in accordance with the documents approved by the State Bank of Vietnam.

Directing the Internal Audit to comprehensively complete the internal audit plan in 2019 with expanded audit scope and increased number of audited units compared to 2018; Developing an audit program and performing an audit of capital adequacy ratio in accordance with Circular 41/2016/TT-NHNN on regulations of safety ratios for banks and foreign bank branches.

Continuing to direct the strengthening of internal audit capacity. Directing the implementation for components of internal audit software project, outsourced IT audit projects for partner management activities connected to BIDV’s system.

Approving the proposal of the Internal Audit unit regarding personnel organization, salary, emulation, remuneration, planning and appointment of the Internal Audit unit.

Directing the development and approval of the audit plan for 2020. Setting orientation for internal audit of risk management and IT activities in the period of 2020-2022.

Appraising financial statements 2018 and semi-annual financial statements 2019.

Reviewing, updating and completing the internal document system of the Supervisory Board, proposing

amendments to the documents in compliance with current regulations, meeting the requirements and actual operation of BIDV, the Supervisory Board, and Internal Audit, etc.

Supervising and directing the implementation of selection of an independent audit firm for year 2020-2021 according to the Resolution of the General Meeting of Shareholders.

Regularly monitoring and updating the lists of related persons of the BOD members, Supervisory Board, CEO, and shareholders owning at least 5% of BIDV’s voting shares while supervising the information disclosure of these changes.

Strengthening coordination and information exchange between the Supervisory Board and the Board of Directors, CEO, the first line of defense, the second line of defense according to the current regulations.

MEETINGS OF THE SUPERVISORY BOARD

In 2019, the Supervisory Board organized 04 quarterly meetings fully attended by the 03 Supervisory Board’s members, at the same time regularly collecting written opinions, organizing consultations to discuss and approve contents within the functions and tasks assigned in accordance with law.

No Member Position

Starting date of being

member

No of meetings attended

Attendance rate

Reason for

absence

1 Mrs. Vo Bich HaHead of

Supervisory Board

17 April 2015 04/04 100%

2 Mr. Cao Cu Tri Member 1 May 2012 04/04 100%

3 Mrs. Nguyen Thi Tam Member 1 May 2012 04/04 100%

In 2019, the Supervisory Board carried out

and fulfilled duties as stipulated in the Bank’s Charter, Regulation on

organization and operation of the Supervisory Board,

particularly:


Based on the functions and tasks prescribed in BIDV’S Charter and the Regulation on organization and operation of the Supervisory Board, personnel situation of the Internal Audit and 2020 Business Plan, the key tasks of the Supervisory Board for 2020 are as follows:

Performing supervisory duties in accordance with law, the State Bank’s regulation and BIDV’s Regulation on organization and operation.

Directing the implementation of internal audit plan for 2020, developing internal audit plan for 2021.

Appraising periodical financial statements according to regulations; reviewing BIDV’s important financial and accounting policies and reports when necessary.

KEY TASKS IN 2020

Continuing to direct, deploy the project/outsourcing of Internal Audit.

Reviewing, supplementing and amending the internal document system to serve the operation of the Supervisory Board and Internal Audit.

Preparing, storing and updating the lists of related persons of the members of the BOD, Supervisory Board, CEO, and shareholders owning at least 5% of BIDV’s voting shares.

Fully holding periodical meetings; reviewing and approving issues under the functions and duties of the Supervisory Board.

T R A N S A C T I O N S , R E M U N E R A T I O N S A N D B E N E F I T S O F T H E B O D , B O A R D O F M A N A G E M E N T A N D S U P E R V I S O R Y B O A R DSALARIES, BONUSES, REMUNERATIONS AND BENEFITS

INTERNAL SHAREHOLDER TRANSACTIONS: none

The BOD, Board of Management and the Supervisory Board are entitled to salary, remuneration and other benefits in accordance with BIDV’s current regulation. Accordingly, the salary, remuneration of the members of the BOD, Board of Management and Supervisory

CONTRACTS OR TRANSACTIONS WITH INTERNAL SHAREHOLDERS

Stakeholders BalanceReceivables (Payables)

(VND million) (VND million)

State regulators

Deposits of BIDV at regulators 132,327,499 -

Deposits of regulators at BIDV - (98,314,832)

Loans from regulators - (9,761,582)

Strategic shareholder

Deposits of strategic shareholder at BIDV (50,096)

Deposits of BIDV at the strategic shareholder 67,631 -

Loan from strategic shareholder (231,700)

Joint ventures

Deposits of Joint ventures - (2,112,253)

Deposits of BIDV at joint ventures 2,151,280 -

Loans from BIDV to joint ventures 97,724 -

AssociatesDeposits of associated companies at BIDV - (973,297)

Loans from BIDV to associated companies 641,423 -

Board were within general budget of the bank and paid depending on their position and performance.

In 2019, actual remuneration for members of the BOD and the Supervisory Board was ensured at 0.41% at the maximum of the consolidated profit after tax.


INTERNAL SHAREHOLDERS’ NUMBER OF SHARESAS AT 31 DECEMBER 2019

No Full name Position at BIDVClosing

number of shares

Ownership percentage

I Members of the Board of Directors

1 Mr. Phan Duc Tu Chairman 43,513 0.00127%

2 Mrs. Nguyen Thị Thu Huong BOD Member 0 0%

3 Mr. Tran Thanh Van BOD Member 43,645 0.001281%

4 Mrs. Phan Thi Chinh BOD Member 29,186 0.000859%

5 Mr. Ngo Van Dung BOD Member 780 0.000023%

6 Mr. Pham Quang Tung BOD Member 1 0…1%

7 Mr. Yoo Je Bong BOD Member 0 0%

8 Mr. Le Viet Cuong Independent BOD member 0 0%

II Members of the Supervisory Board

1 Mrs. Vo Bich Ha Head of Supervisory Board 9 0…1%

2 Mrs. Nguyen Thi Tam Member 8,545 0.00025%

3 Mr. Cao Cu Tri Member 3,581 0.0001%

III Members of the Board of Management

1 Mr. Le Ngoc LamSenior Executive Vice President

in charge of BOM723 0.00002%

2 Mr. Quach Hung Hiep Senior Executive Vice President 35,078 0.00103%

3 Mr. Tran Xuan Hoang Senior Executive Vice President 23,081 0.000681%

4 Mr. Tran Phuong Senior Executive Vice President 21,147 0.000612%

5 Mr. Le Kim Hoa Senior Executive Vice President 42,983 0.001266%

6 Mr. Le Trung Thanh Senior Executive Vice President 2,252 0.00007%

7 Mr. Nguyen Thien Hoang Senior Executive Vice President 0 0%

8 Mrs. Ta Thi Hanh Chief Accountant 2,253 0.00007%

IMPLEMENTATION OF CORPORATE GOVERNANCE REGULATIONS

BIDV’s corporate governance complies with provisions of law on corporate governance applicable to large-scale and listed public companies such as the Law on Enterprises, Law on Credit Institutions, Securities Law, Government’s Decree 71/2017/ND-CP on corporate governance applicable to public companies, Circular 155/2015/TT-BTC guiding the disclosure of information in the stock market and other relevant regulations.

In 2019, BIDV’s General Meeting of Shareholders approved some amendments and supplements to the Bank’s Charter, the Regulation on the organization and operation of the Board of Directors, issuing new Regulation on BIDV governance, and adjusted related governance documents to ensure conformity with law and actual operation. Continuing to fine-tune the internal control system, improving the quality, efficiency, effectiveness of the inspection and supervision; finalizing and upgrading the risk management system in line with Basel II principles and standards. BIDV was approved by the SBV to implement the SBV’s Circular 41/2016/TT-NHNN from 1 December 2019, ahead of the deadline.

In the upcoming time, BIDV will continue to research and standardize the governance in accordance with good international practice for sustainable development, timely meeting market demands and practical operating requirements of BIDV; significantly contributing to bringing BIDV to become a modern bank with high business efficiency, meeting the development requirements and deeply integrating into the regional and global financial and banking systems.



SUSTAINABLE DEVELOPMENT REPORT

OVERVIEW OF THE SUSTAINABLE DEVELOPMENT REPORT

SUSTAINABLE ECONOMIC DEVELOPMENT

INVESTING IN PEOPLE DEVELOPMENT

INVESTOR RELATIONS

CUSTOMER ORIENTATION

CONTRIBUTING TO ENVIRONMENT IMPROVEMENT

INFORMATION DISCLOSURE UNDER GRI STANDARDS


OVERVIEW OF THE SUSTAINABLE DEVELOPMENT REPORT

Banking contributes significantly to the sustainable development and has indirect impact on its large customer base

Recently, Vietnam’s economy has maintained a high growth rate, however the economic model depends much on resources, with low technological level compared to the world average which leads to air and water pollution; mineral resources and forests have been increasingly depleted. The indispensable trend for Vietnam in the coming time is sustainable development, environmental protection, energy efficiency, and efficient use of water and other natural resources.

Banking is a smokeless industry, which in principle has little or no direct impact on the environment. However, in fact it contributes significantly to the sustainable development and has indirect impact on its large customer base.

Over 63 years of development, BIDV has become one of the largest commercial banks in Vietnam, with total assets reaching over VND1.49 quadrillion, individual customers accounting for 11% of the country’s population, and SME customers making up 40% of total SMEs nationwide. To grow the business scale and customer base, BIDV has been looking for solutions to linking business activities to customers’ interests. Firstly, in its business strategy and vision to 2030, BIDV has clearly defined the goal of bringing the best benefits and convenience to customers, shareholders, employees and society. Over the past years, BIDV has implemented many solutions to deliver sustainable values to the community as well as businesses, including:

These efforts have brought about economic benefits and long-term reputation for BIDV, particularly:

1

1

3 4

BIDV publicly demonstrated its responsibility for sustainable development. In its annual report, BIDV always announces the sustainable development report which is conducted according to GRI standards, stating its responsibilities to the environment, society and employees.

Sustainable development, in a broad sense, consists of the sustainability of capital structure - assets, customer base, and financial soundness, which is the basis for BIDV to meet BASEL II standards, successfully implementing the business strategy and vision to 2030, with specific goals of being among the Top 20 largest banks in Southeast Asia, Top 100 largest banks in Asia Pacific and Top 300 largest banks in the world by total assets.

BIDV is always pioneering and active in social security activities. The bank’s social security programs target the right people and are implemented timely, creating positive effects which are recognized by the community.

BIDV determines that building, maintaining and fostering human resources in terms of both quantity and quality are the core task in the bank’s business strategy. Staffing 26,000 employees with female being in the majority, BIDV always gives priority to people development.

2

2

BIDV always focuses on and professionalizes the environmental and social risk management through the credit extension process. BIDV carefully evaluates environmental risks when appraising projects, requiring customers to strictly comply with the law on environmental protection. During the implementation of projects, BIDV regularly monitors and manages environmental and social risks in association with the disbursement process, ensuring the projects funded by BIDV have minimal negative impact on the environment.

Sustainable development helps BIDV not only minimize credit risks, but also enhance its reputation, gaining recognition and trust from the international community. Particularly, in 2018, building on the experience gained during the actual implementation of the Environment and Social Affairs Department, BIDV studied and successfully developed the Environmental and Social Risk Management System (ESMS) in compliance with international practice and Vietnamese laws. The Asian Development Bank (ADB) agreed to provide BIDV with USD300 million of medium and long-term credit facility to support SMEs in Vietnam.


3Sustainable development builds a positive image of BIDV on society, shareholders and employees. By seriously implementing the sustainable development strategy, in 2019, BIDV was honored in Top 10 Sustainable Enterprises in the field of commercial services by the Vietnam Chamber of Commerce and Industry in collaboration with relevant ministries and agencies. BIDV gains the loyalty of employees and customers in their work as well as products and services.

The report records the important activities of BIDV related to sustainable development issues in 2019. This report consists of standard information disclosure based on the GRI Sustainability Reporting Standards of Global Reporting Initiative.

The Sustainable Development Report 2019 was informed to the shareholders and stakeholders of BIDV.

The selection of key topics was implemented through reference to the GRI Standards and considering other stakeholders that had direct effect on BIDV, assessing the significance of topics in the context of sustainability of the business, the country and the region.

This report is conducted on an annual basis and included in the Annual Report. The information and data in the report were updated between 01 January 2019 and 31 December 2019 along with several indicators with historical data to show the growth/development compared to the past.

Key topics in the report include:

2019 was the fourth consecutive year that BIDV has implemented the Sustainable Development Report under a comprehensive plan in accordance with the GRI Standards. The main contents of the report include:

CONTENTS

SCOPE

KEY TOPICS

Universal standards

Economic standards

Environmental standards

Social standards

GRI100

GRI200

GRI300

GRI400

STAKEHOLDER ENGAGEMENT

We identified stakeholders based on possible effects of BIDV’s activities on them or on individuals/organizations, which have interest in and influence on BIDV’s current activities. We approach stakeholders through different sources of information in an appropriate manner in order to listen to the opinions and concerns of each party about BIDV’s operation; particularly the corporate governance, human resources development, economic growth, and social and environmental contribution.

The dialogues with parties also helped BIDV proactively identify contemporary issues as well as objectively evaluating the policies, reports and public disclosure of information that we have made.

Shareholders, investors Employees RegulatorsCustomers

Community Media Partners and suppliers

Identifying key stakeholders

Organizations and individuals are considered stakeholders include shareholders, investors, customers, employees, regulators, community, media agencies, partners, and suppliers. We actively consulted the stakeholders and cooperated to ensure the harmony of interests among the parties.


Direct interview

Contact center and 24/7 hotline

Satisfaction survey

Social media and social listening newsletter

Customers

Quarterly

24/7

Quarterly

Daily

Satisfaction survey

Annual employees conference

Internal channels: Intranet, internal newsletters

Communication with Trade Union

Connecting and educational environment

Employees

Annually via anonymous survey

Annually

Daily

Monthly

Daily

Methods of interaction with stakeholders Frequency of interaction with stakeholders

Methods of interaction with stakeholders Frequency of interaction with stakeholders

Shareholders meeting

Regular information update through IR website, direct, phone, email

Meeting up with analysts

Shareholders/Investors

Annual or extraordinary

Monthly or when incurred

Frequently after quarterly financial figures are released


Identifying key issues

BIDV regularly works with stakeholders and consults experts to identify key issues through activities such as:

Participating in workshops on Vietnam market research and evaluation to update market trends, competitors and developments in the world’s market which may impact Vietnam’s market in order to identify key issues in the fields BIDV is operating in.

Referring to the information from various sources of stakeholders, experts’ opinions on sustainable

development (GRI, CSR, ACGS, ADB, IMF, and PWC) to identify a list of environmental, social and governance topics.

Regularly working, interacting, consulting, conducting surveys to collect opinions from employees, departments and units at BIDV, shareholders, investors, customers and partners to gather feedbacks on the environmental, social, and governance topics. BIDV also referred to the reports and assessments of stakeholders, documents of rating organizations for a broader view of the topics of interest.


Methods and frequency of interaction with stakeholders

For each group, BIDV applied a different method to approach. We carefully considered all the feedbacks of the stakeholders, studying and taking into account to apply to our bank’s policies and activities.

Maintaining regular dialogue mechanism

Meeting up for discussion at forums

BIDV Training and Research Institute provides macroeconomic and thematic reports

Contributing inputs to drafts and policies

Regulators

Monthly

When incurred

Monthly, quarterly depending on topics

When requested

Press conference

Press releases/periodical business reports

Experts providing information to the press

Media agencies

Quarterly

Quarterly

When requested

Direct meeting, supplemented in the procurement regulations, cooperation with suppliers

Maintaining competitiveness

Ensuring transparency in bidding offers

Quality service, clear origin of goods

Suppliers

When incurred

Frequently in the process



Community

Coordinating with local authorities

Meeting to understand the expectation of local people.

Social security programs, joining hands with local authorities.

Annually

Annually

Quarterly


S U S T A I N A B L E E C O N O M I C D E V E L O P M E N T

SIGNIFICANT CONTRIBUTION TO THE STATE BUDGET

ENSURING THE INTERESTS OF SHAREHOLDERS

BIDV has been among largest taxpayers in the country for years. For three years 2017-2019, BIDV had paid VND14,169 billion to the State budget, of which VND8,168 billion was for 2019. High net income and profit, boosted service activities, and improved employee income are key factors to increase BIDV’s tax payments to the State budget.

BIDV defines that the sustainable development goal can only be attained when the economic goals are ensured (see more at section on Business results on page 90). The comprehensive accomplishment of business targets over the years has laid solid foundations for BIDV to fulfill its social responsibility through contributions to the State budget, delivering sustainable financial benefits to shareholders and employees. Developing economic sectors, local economies, supporting small and medium enterprises (SMEs), making significant contributions to hunger elimination and poverty reduction, and improving living conditions.

BIDV paid dividends totalling VND4,560 billion in cash for 2 years 2017 and 2018 to shareholders at the dividend payout ratio of 7% p.a.

DEVELOPMENT OF INDUSTRIES AND LOCAL ECONOMIES

BIDV accompanied enterprises across the country through connecting banks and enterprises; facilitating their access to bank credits; supporting businesses in areas and industries according to the long-term development orientation of the Government and the State Bank of Vietnam, contributing to supporting the long-term economic development goal. Implementing

No. Indicators 31 Dec 2018 31 Dec 2019 Growth

Total outstanding loans 988,739 1,116,998 12.22%

Total loans to priority areas 571,703 684,754 19.77%

1 Export financing 44,203 52,839 19.54%

2 Small and medium enterprises 240,794 288,241 19.70%

3 Agriculture and rural development 234,432 278,819 18.93%

4 Supporting industries 46,741 57,806 23.67%

5 High-tech businesses 5,533 7,049 27.40%

BIDV’s loans to priority areas:Unit: VND billion

solutions, mechanisms and policies for enterprises to facilitate access to banking loans and services such as simplifying credit extension process; administrative reform, providing large-scale credit programs and packages with preferential interest rates, with priority given to small and medium enterprises, export financing and high-tech businesses.


SUPPORTING SMALL AND MEDIUM-SIZED ENTERPRISES

In 2019, BIDV continued to allocate resources for supporting Small and Medium-sized Enterprises (SMEs), particularly:

Diversifying product portfolios for SME customers towards increasing products of high-tech content and utilities for businesses such as launching “Online borrowing for business” via BIDV’s website and cashless payment. In 2019, 14 products were newly launched, upgraded, modified and officially deployed by BIDV (07 credit products, 03 specialized deposit products and 04 payment products), meeting the diverse needs of businesses.

To date, BIDV is the first and only bank to be selected by Vietnam Ministry of Planning and Investment to sign a master agreement on implementing indirect loans from SME Development Fund.

Providing over VND100,000 billion of preferential loans through credit packages and programs to support SMEs with development potential, micro-businesses and start-up enterprises who were new businesses/enterprises transformed from business households according to the direction of the Government and the State Bank. The credit packages were tailored to each customer group by region and business line, with priority given to areas that need support.

FOREIGN ENTRUSTED FUND OPERATION

BIDV was the first bank in the banking system to mobilize and manage foreign entrusted programs/projects in Vietnam. With strength and experience in investment credit and a wide network of branches and transaction offices across the country, BIDV has mobilized and managed more than 200 foreign entrusted capital programs/projects with total capital committed by donors reaching more than USD17.8 billion from the Government of Germany, Switzerland, Russia, France and international financial organizations such as WB, ADB, JBIC, NIB, EIB, etc.

Some outstanding major projects managed and implemented by BIDV included: Power Transmission Improvement Project (USD500 million); Northern power transmission project and greater northern power transmission project valued at USD480 funded by ADB; Power sector reform policy development program – Phase 1 (USD312 million); Sustainable Agriculture Transformation Project (USD238 million), Integrated Rural Development Project to Improve Adaptation to Climate Change in the Mekong Delta (USD310 million). In addition, BIDV was also active in deploying and disbursing large foreign entrusted capital programs in sustainable economic development areas and local economic development such as: Supporting SMEs funded by JICA; Developing renewable energy funded by WB; Energy efficiency funded by WB; Supporting housing development funded by AFD; Housing finance funded by ADB…, contributing to helping SMEs, private businesses and individuals to access preferential medium and long-term capital from international donors.

Recognizing the importance of the management and use of foreign entrusted capital, BIDV has been constantly improving its operational quality and strengthening the application of information technology in management to ensure prompt and professional project servicing as prescribed by donors and ministries, standardizing processes, formulating mechanisms for management, control and promotion of effective disbursement of funds. Entrusted lending was strengthened with a focus on enhancing the quality of risk management in order to ensure the growth of outstanding entrusted loans was associated with safety to maintain trust with donors, well performing tasks authorized by the Ministry of Finance and the State Bank of Vietnam regarding on-lending programs/projects.

In 2019, in the context of many changes in the Government’s entrusted fund management mechanism, BIDV successfully mobilized capital for large projects such as “Skills and knowledge program for inclusive economic growth worth USD75 million from ADB and “Integrated dynamic urban area development” worth USD141 million from WB. As of 31 December 2019, outstanding loans from the foreign entrusted fund to programs/projects on-lent by BIDV reached VND50,600 billion, which affirmed BIDV’s prestige and position in the foreign entrusted fund operation for donors, ministries, agencies and customers.

With the results achieved, BIDV was an effective bridge for the foreign borrowing by the Government, becoming a role model for implementing foreign entrusted funds, contributing positively to the hunger elimination, poverty reduction and the improvement of living conditions, and was acknowledged and appreciated by donors, ministries and agencies.


BIDV has built up good quality human resources in comparison with other commercial banks in Vietnam. Employees with bachelor’s degrees or higher accounted for 91.5%, and were loyal to the bank’s development. This reflected BIDV’s talent attraction and retention policy was given priority and consistent over a long period of time through professional and prestigious recruitment in the labor market. The incentive policy was commensurate with the level of contribution of employees through a competitive salary and compensation system, and career development opportunities. Professional coaching, management and governance, foreign languages and soft skills training were increasingly strengthened in terms of both width and depth. Corporate culture was consistent, and working environment was modern and professional.


I N V E S T I N G I N P E O P L E D E V E L O P M E N T

HUMAN RESOURCES QUALITY IMPROVEMENT STRATEGY COMPREHENSIVE EMPLOYEE

DEVELOPMENT

1

4

2

5

3

Attracting and tapping high quality human resources, forming a team of experts in key areas.

Promoting the application of IT to work, thereby increasing productivity and labor efficiency.

Issuing a capacity framework, developing a set of key performance indicators (KPIs) for individuals as a basis for personnel organization.

Officially applying the Training program framework as per job position associated with the competency framework and job description for each position/job group, improving the effectiveness of international cooperation on human resources training, thereby making the best use of financial support, training contents, lecturers and teaching methods.

Improving processes and regulations on personnel organization in association with the general competency framework, Management framework and Professional framework for each position.

BIDV has been implementing the human resources quality improvement strategy to meet the requirements of international economic integration, with a focus on the following:

BIDV always takes care of the comprehensive employee development, fully delivering the material and spiritual interests of the employees based on their contribution and dedication to BIDV’s development in compliance with the provisions of the current law. BIDV is committed to ensure the following benefits for employees:

Secured jobs and career promotion opportunities, assigned to jobs that suit qualification, capabilities and work experience.

Salary raising and sufficient salary payment according to BIDV’s regulations, provisions of law, competitive salary in the labor market.

Social insurance, health insurance, unemployment insurance and insurance schemes as prescribed by the State; allowance schemes when retired or quitting jobs.

Working and rest time regime (annual leave, weekends, holidays, Tet holiday, private leave, overtime, etc.).

Being considered for rewards at different levels based on annual work performance or extraordinary achievements.

91.5% of employees have bachelor’s degrees

or higher

Being considered for participation in domestic and overseas coaching, training courses, surveys, and workshops according to job requirements in order to improve business administration skills, professional qualification, foreign languages, political arguments, and soft skills, etc.

Participation in unions at BIDV: Youth Union, Trade Union, female staff union, etc.

Provided with business uniforms and necessary working equipment.

Being taken care of material and spiritual life: periodical health check; vacation, convalescence, sickness and wedding visits, etc.

Being considered and facilitated for accessing loans.

Other benefits: buying stock, participating in BIDV’s property projects.

Supported by grassroots party cells to be admitted to the Party (if wished).

TRAINING ACTIVITIESFOR EMPLOYEES

In 2019, BIDV provided training courses for 49,590 trainees at all levels: BIDV (with the Training and Research Institute being the focal point) organized 408 training classes (fulfilling 116% of plan) for 38,464 trainees (meeting 184% of the plan). Branches self-organized training courses for 10,872 trainees, and 254 employees trained themselves. Training costs in 2019 reached VND17,869,392,557. The average training time in 2019 was 2.24 days per trainee. Programs on skill development and continuous learning were organized to support employees to secure employment and career development with 349 courses organized for 24,723 trainees. The training programs covered all the basic knowledge, mechanisms, policies, professional processes, operational software, professional skills, and ethics as per job position. Training components were prioritized for: Senior and mid-level managers (including future bank leaders); Professional knowledge and skills for the retail banking; Professional training and operational skills for branches; Intensive training and expert training in specific specialized fields; Providing training to improve the quality of transaction offices as well as training to new recruits.


WELFARE POLICY

MEASURING EMPLOYEE SATISFACTION

PROMOTING DEMOCRACY

BIDV always ensures employees are entitled to full legal and legitimate rights in accordance with the labor law such as: social insurance, health insurance, unemployment insurance, annual leave, compensatory leave, periodical health check, etc. In addition, BIDV supported its employees to buy BIDV-Care voluntary retirement insurance, BIC-Care health and accident insurance.

The bank’s Trade Union well performed internal social security, timely visiting and assisting employees living with difficulties or serious diseases. In 2019, BIDV visited and supported 3,916 union members and employees with a total amount of nearly VND4.6 billion; well implementing the Study Encouragement Regulation for BIDV employees’ children, considering and proposing to praise 7,016 children who had high academic performance in the 2018-2019 academic year.

Employees’ “satisfaction” is a multidimensional evaluation measure that helps BIDV consider to make appropriate and timely adjustments to its management, governance and personnel policies, thereby motivating employees’ dedication. In addition to measuring customer satisfaction, BIDV also conducts regular employee satisfaction surveys, focusing on 7 groups of motivational factors, specifically: Job details, job support, job feedback, result recognition, training and development, unit leadership and corporate culture. The program attracted the participation and received feedbacks of a large number of employees across the system. The result was that most of the employees expressed their satisfaction and desire to continue working at BIDV in the next 05 years. In addition, employees also gave precious feedbacks on salary regime and incentive mechanism for employees, career development opportunities, unit leadership, working environment... The employees’ feedbacks were recognized and properly evaluated by BIDV for further improvements.

BIDV’s grassroots trade unions built and issued schedules and internal rules on receiving union members and laborers, recognizing and recording letters of complaints and denunciations. On a weekly basis, the Executive Committees of the grassroots trade unions assigned staff to receive and solve laborers’ problems and petitions on issues related to trade union and professional activities.

Coordinating to organize vacations, especially cultural activities, sports, social security linked to the service theme in 2019 “BIDV Smile - Thoughtful, Professional, Quality”, particularly:

Organizing the running event “BIDV Smile” in Hanoi City and Binh Duong province, attracting the participation of more than 2,500 union members, contributing to promoting the service development movement, raising the awareness of union members in improving the quality of customer service.

Organizing the running event “BIDV Smile – A warm New Year for the poor” with the message of “A warm New Year for the poor: Million hearts share one running pace” which created a unique playing field, spreading the spirit of love for the community and promoting the physical training movement to improve personal health. The race attracted nearly 36,500 participants (including union members, customers and society) who ran 1,979,084 km, contributing more than VND5.8 billion as gifts for the poor on the occasion of Vietnam’s lunar New Year.

In 2019, besides complying with regulations to ensure the rights of shareholders, BIDV drastically implemented recommendations from PwC (Vietnam) Ltd. on corporate governance information disclosure in order to apply the best practices of Information Disclosure and Transparency, Equal Treatment to Shareholders, Shareholder Rights Protection in alignment with international standards. With a significant number of nearly 22,500 shareholders as of 31 December 2019, BIDV has been continuously improving the quality of Investor Relations towards professional standards and effectiveness.


INVESTOR RELATIONSTOWARDS PROFESSIONAL STANDARDS AND EFFECTIVENESS

The Annual General Meeting of Shareholders (AGM) is one channel among others that maintains interaction between BIDV and the investor community while ensuring the interests of investors. Meeting preparation works about timing, venue, shareholder list closing, invitation and documents were carried out in accordance with relevant regulations and the best practices of corporate governance. At the Meeting, shareholders had the right to discuss, vote on important issues related to BIDV’s activities and to directly raise questions and propose to the BIDV Leadership team. After the Meeting, BIDV promptly finalized the documents approved by the AGM and published them on the investor’s website at the address www.bidv.com.vn to ensure all shareholders, especially shareholders who did not attend the meeting get to access the key contents of the AGM.

In 2019, besides the Annual General Meeting of Shareholders held in April 2019, BIDV conducted an Extraordinary General Meeting of Shareholders on 27 December 2019 to elect an additional BOD member from the strategic partner KEB Hana Bank and approve

MAINTAINING MULTI-CHANNEL INTERACTION, ENSURING INVESTOR INTEREST

on relevant contents of the Charter and internal Regulations.

Through frequent contacts and meetings, BIDV has established and maintained a good relationship with a large number of professional institutional investors both foreign and domestic. With their extensive operation and experience, the investors provided feedback, recommendations and useful suggestions that were of practical value for BIDV’s performance. In 2019, BIDV had more than 40 meetings, working with investment funds, fund managers and securities companies from many countries to learn about BIDV’s business as well as the future potential investment in BIDV. At the same time, BIDV also attended the investment promotion events in Singapore and Tokyo (August 2019) organized by Ho Chi Minh City Stock Exchange (HOSE) and Daiwa Securities to actively introduce BIDV to international investors.

In addition, to ensure the interests of investors, especially given the large diversified number of shareholders, BIDV focused on the management of shareholders. The Investor Relations team has actively supported and answered inquiries and requests from investors, especially individual investors through interactive channels such as telephone, email and chatbot on the new website.

BIDV always attaches great importance to transparency, accuracy and timeliness in information disclosure. This was reflected in the fact that BIDV has developed a strict regulation on information disclosure not only in compliance with the requirements of the law (i.e. Circular No.155/2015/TT-BTC by the Ministry of Finance) but also meeting the diversified demand of investors, thus building and maintaining the trust of investors.

In 2019, BIDV made periodical, extraordinary and by-request disclosures of more than 60 contents in a timely and adequate manner, including information on financial statements, annual reports, sustainable development reports, corporate governance reports, AGM invitation, general shareholders meeting by collecting opinions in written forms, changes in senior management… Information was also disclosed in English on the bank’s website.

ENHANCING TRANSPARENCY, BOLSTERING INVESTORS’ CONFIDENCE

In addition, BIDV has diversified and improved information exchange channels. BIDV’s current information channels include: Information provided directly to shareholders at the AGM; Information exchanged at meetings with analysts, investors; Information published on BIDV website (IR subpage); Information disclosed on terminals of the Stock Exchange and the State Securities Committee; Publications of Annual Reports, Sustainable Development Reports, Periodical Newsletters to investors and other information press releases.

Noticeably, based on approval of the regulatory authorities, in 2019 BIDV disclosed information and completed full dividend payment of 2017, 2018 in cash at 7% p.a.



INVESTOR RELATIONS ORIENTATION IN 2020

With the foreign strategic shareholder’s participation, increasing interest from investor community and preparation to apply the new regulations of the 2019 amended Securities Law, BIDV plans to carry out the following key activities in 2020:

Continuing to effectively conduct meetings, update information with investor community in general and potential investors who wish to become BIDV’s financial investors in particular, in order to enhance financial capacity and comprehensively support the development of BIDV.

Following AGM’s approval, BIDV shall carry out necessary procedures to pay out dividend to existing shareholders, issue new shares in compliance with current regulations and ensure interest of shareholders.

Continuing to implement the consultant’s recommendations on investor relations activities; Continuing to improve the content and form of media publications, considering adding channels to convey information through webcasts; further diversifying and improving the quality of information provided on the BIDV website.

Extending and facilitating investors and analysts to participate in analytical conferences through video conference, conference call.

Further increasing the efficiency of information disclosure through timely and proactive provision of information in both Vietnamese and English; complying with new regulations of the 2019 Securities Law towards international practices and standards.

For investor relations, please contact:

In charge of Information Disclosure In charge of Investor Relations

Mr. Quach Hung HiepSenior Executive Vice President, Person authorized to disclose informationEmail: [email protected]: (+84) 24.2220 5544Website: www.bidv.com.vn

Mr. Dang Xuan ThangManager, Board of Directors SecretariatEmail: [email protected]: (+84) 24.2220 1099Website: www.bidv.com.vn


IMPROVING QUALITY OF PRODUCTS AND SERVICES

Customer base was expanded while quality of products and services as well as responsibilities to customers was strengthened, particularly:

Continuing to meet the needs of customers and strengthening customer experience: Besides a diverse portfolio of over 100 products and services, BIDV constantly launched flexible products and packages with new, friendly and modern features in order to bring the best products and services to each customer group by location, age, occupation... The establishment of the Digital Banking Center on 15 March 2019 was a key activity that helped BIDV make further breakthroughs in its retail banking activities, with a focus on pioneer and modern technological products and services in the market.

In 2019, BIDV was the only bank in Vietnam to acquire 1.45 million new individual customers, making the total number of individual customers to reach 12 million, up 12% from 2018.

12 MILLIONINDIVIDUAL CUSTOMERS

Ensuring the quality of products and services, meeting the increasing banking needs of customers: Particularly 2019 saw the strong growth in the number of e-banking transactions with nearly 150 million transactions, an increase of 82% compared to 2018.

Proactively providing sufficient and honest information to customers: Besides continuously enriching and securing customer information, BIDV was always proactive in providing transparent information about products and services, preferential and promotion programs to customers via news channels such as website, news releases, email... and at more than 1,000 transaction points nationwide.

C U S T O M E R O R I E N T A T I O N


Putting customers at the heart of business and bringing the best satisfaction to them, BIDV always focuses on customer support and care through activities at BIDV Contact Center (BCC).

In 2019, the quality of customer support service at BCC was always ensured and boosted proactively and efficiently, providing support and consultancy to nearly 2 million customers through all channels (phone, email, chat, social media and IVR), an increase of 25% compared to 2018. Customer satisfaction score in 2019 was 8.8 points (up 0.1 point compared to 2018), demonstrating the improvement in support quality and meeting the needs of customers.

Building on the successes of the previous years, in 2019, BCC strengthened and implemented active in-depth customer care programs which were well received by

CUSTOMER CARE

customers, helping bolster their loyalty. 2019 was also the first year BCC launched a comprehensive customer survey campaign on service quality at all BIDV branches. The survey results revealed valuable information, giving a big picture of customer service quality at BIDV, foundations for BIDV to develop and deploy more specific, uniform and disruptive solutions, contributing to improving the customer service quality.

In addition, BCC continued to strengthen marketing and selling activities through online channels, selling actively with products directly sold growing sharply (up 30% compared to 2018) to existing customers who were using BIDV’s products and services. The above channels contributed to connecting customers with the bank, increasing their loyalty, and offering them superior utilities when they registered and used the products and services at BIDV.

In 2019, BIDV’s communication on branding, products and services via digital channels continued to be strengthened, acting as a bridge to connect customers and the bank. Social media activities and website were expanded, strengthening communication on BIDV brand and community activities.

IMPROVING CUSTOMER EXPERIENCE ON DIGITAL COMMUNICATION CHANNELS

CUSTOMER CARE:

DATA LISTENING AND ANALYSIS:

reportsanalyzing online news and customer feedbacks

online discussions 268,000

about BIDV monitored(up 37.5% from 2018)

BIDV’S SOCIAL MEDIA ACTIVITIESIN 2019

Banks with the most fans (up 30% from 2018)

As many as the average number of ENGAGEMENTS in 2018(~17,150 ENGAGEMENTS/post )

MARKETING

BIDV WORKPLACE:

biggest (up 30% from 2018)

TWICE Support requests

came from BIDV’sFacebook Page

6,000 times

Supporting customersvia social media

(on a monthly basis)

Active accounts hit17,000

(equivalent to 66% of total employees)

Live stream hit a record of nearly 15,000 followers

Up23%

Year-on-year

Social listening

The handling of customers’ opinions and feedbacks on social media was effectively coordinated between professional units, forming an end-to-end process from information detection to processing, handling of operational errors, and service attitude, contributing to improving customer experience when using BIDV’s products and services.

Data collection and listening to customers’ opinions on social media daily through the social listening tool was the basis for BIDV to make improvements to products,


services and customer care to suit their tastes. Media content was focused on the community, bringing more benefits to customers.

At the end of 2019, BIDV’s Fanpage had had a natural increase of 38% compared to 2018; the number of likes and followers of BIDV’s Fanpage continued to increase and was greatly appreciated in the banking sector. The bank’s communication activities on social media and other channels were uniform and consistent regarding images and messages. Many outstanding viral marketing campaigns combined with BIDV’s big events generated positive effects such as: BIDV Smile Run; Warm New Year for the poor.

Officially launched on 1 January 2019, BIDV’s new website with a modern, friendly and more compatible interface has become an effective communication channel, bringing customers closer to the bank’s products and services.

According to webportal’s analytic results (based on Google Analytics) between 1 January 2019 and 31 December 2019, the webportal’s data was as follows:

The bank’s new website made a signification contribution to improving user experience, improving BIDV’s marketing and communication efficiency. The bank’s website rating on Google for keywords related to the bank’s products and service improved over quarters, moving from the second page to the first page of Google, many keywords were among Top 3 on Google search ranking.

Catching up with modern communication trends

BIDV always attached great importance to research and development (R&D), given the constant developments of digital communication channels in Vietnam and around the world. In 2019, Vietnam’s social networks boomed with some names such as Lotus, Gapo... BIDV paid special attention to the development of these channels and issued analytical reports on the potential, benefits, opportunities as well as challenges for the bank.

With the goal of serving customers anywhere, BIDV will continue to closely follow the overall development of the digital communication channels in Vietnam to timely bolster its presence to comprehensively meet the needs of customers for communication.

Sep 2014 Feb 2016 Oct 2018

Dec 2019

The project team

developed e-bankingchannels

The task force studied the applicationof bankingon smartdevices

The projectteam

developeddigital banking

Study toursto SCB,

Kasikon, CCB,RHB (July 2018),

CCB

Launching DigitalBanking Center

Oct 2015

Jul 2017 Mar 2019

Resolution1210/NQ-BIDV

on digitalbanking

development

Decision onestablishing

Digital BankingCenter

In response to the financial inclusion and digital transformation orientation by the Government and the State Bank of Vietnam, BIDV proactively implemented the digitalization strategy, evidenced

BIDV’s development milestones towards Digital Banking

On 6 December 2019, BIDV officially launched its Digital Banking Center

BOOSTING DIGITAL BANKING


by the establishment of Digital Banking Center (DBC) in March 2019, which acts as a focal point and pioneer in BIDV’s digital transformation strategy.

New users

5,207,499

Total sessions

15,731,743

Number of sessions per user

3.07

Total pageviews

29,624,881

Pages/session

1.88

Average session duration

2.27 minutes (quite high according to Google analytics)

Customer satisfaction for products and services is always the top goal of any organization operating in the market economy in general and financial institutions in particular. Customer satisfaction research will help BIDV best understand customers’ needs in order to make appropriate improvements to business strategies from time to time to meet their increasing needs and enhance their trust in, loyalty to BIDV. In 2019, BIDV regularly and proactively measured customer satisfaction in various forms, approaching to more modern measurement forms, such as opinion surveys, mail boxes, comment books and telephone... The findings showed that most customers were satisfied with BIDV, with money transfer products and staff service receiving highest satisfaction. In addition, most attention was paid to criteria on level of competition on fees/interest rates and transaction space, which affected the frequency of transactions and customer loyalty. BIDV took good note of customers’ comments and feedbacks and made appropriate improvements.

MEASURING CUSTOMER SATISFACTION


Transaction channels and digital products and services:

The Digital Banking took the lead in working with relevant units to develop 29 more new features and services on 9 different systems to serve customers’ increasing demands for transactions, particularly:

BIDV paygate, 24/7 money transfer;

Digital platforms for businesses (iBank) and

1

for individuals (SmartBanking, BIDV Mobile);

Request reception and customer verification via online registration service and eZone at branches, allowing customers to open current accounts and digital banking services online;

Security features and advanced transaction authentication ensure the highest level of security for customers such as Smart OTP, card security and fraud protection methods.

Growth in digital banking users:

The number of financial transactions and new customers grew well at 76% and 39%, respectively over the same period in 2018. Cumulative transaction value and number of customers increased by 26% and 58%, respectively.

In 2019, the number of transactions on digital channels continued to increase. There was a shift from transactions over counters, ATMs, POS to digital banking channels (internet banking, mobile banking). The proportion of digital transactions to total transactions reached 39%.

Mobile SmartBanking platforms for individual customers grew sharply, accounting for 72% of all digital banking transactions.

Fee income from digital banking services reached VND510 billion, accounting for 26% of the total retail service income, and making up 12.4% of the bankwide service income (excluding guarantee income).

2

IBMB

2017 2018 2019

20%

27%

53%

30%

23%

47%

39%

19%

42%

ATM-POS

The Digital Banking Center’s outstanding results in 2019

Branches


Launching initiatives, fostering digital transformation:

Expanding ecosystem and partnership with Fintech

For the first time in the market, BIDV integrated a banking application in a smart watch device (Apple watch), creating a set of SmartBanking app on smart phones and smart watches.

Applying artificial intelligence (AI) to SmartBanking app to help customers conduct transactions orders via voice.

Being the first bank in Vietnam to deploy Swift GPI on internet banking for customers (iBank). Accordingly, customers could actively monitor the status and information related to international remittance messages from the time of sending to crediting to beneficiary’s account (processing time, exchange rate, applicable fee at each bank,…).

Other features that helped users diversify options when making transactions on BIDV’s digital banking such as: Smart keyboard on SmartBanking; point redemption and reward; International credit card management; Automatic notice of periodic payment transactions; Notice of new promotions/services; integration of Smart OTP into SmartBanking app...

Partnering with 4 new Fintech companies, increasing the total number of Fintech partners to 22, namely: Vingroup’s VinID e-wallet; FPT wallet company’s Senpay e-wallet; Viettel’s Viettel Pay; PayTech’s VitaPay e-wallet.

Deploying bill payment services with more than 352 suppliers (adding more than 374 new services) in areas such as water supply, electricity, aviation, industrial parks, universities, e-wallets, increasing the total number of service providers to 580 and number of services to 1,230, adding social insurance payment service to digital banking channels.

3

4

BIDV’s IT and digital banking objectives and directions

- Sustaining the No.1 position in Vietnam in terms of readiness for IT application (according to the criteria of the Ministry of Information and Communications);

- Leading in digital transformation in Vietnam, and being on par with other banks in the regions.

With commitments to quality, transparency, attractive offers and the highest benefits to individual customers, BIDV’s retail banking has been creating a strong impression on and firm position in the heart of customers and partners. In 2019, BIDV was honored to be the first and only bank to win the Best Retail Bank in Vietnam award for 5 consecutive years (from 2015 to 2019) as voted by The Asian Banker; and Outstanding Retail Banking Award for 4 consecutive years (from 2016 to 2019) as voted by Vietnam Banks Association (VNBA) and International Data Group (IDG).

As voted by The Asian Banker


C O M M U N I T Y F O O T P R I N T 2 0 1 9

BIDV has made a public statement about its core values which lay solid foundations for the bank’s development, particularly: “Customer Orientation – Social Responsibility - Creation & Professionalism – Innovation”, in which, social responsibility is one of the four core values that BIDV is continuing to build through professional activities (lending, providing banking products and services towards the community development goals) and direct charitable activities. With that in mind, in 2019 BIDV

continued to spend resources on and render efforts for charitable activities, contributing to community development.

Following the social security activities which have been implemented in recent years, in 2019 BIDV continued to focus on areas including education, healthcare, building solidarity houses, disaster relief, Tet gifts for the poor, building roads and bridges.

In addition, BIDV also implemented many other social activities, contributing to preserving and restoring historical and cultural relics, educating patriotic tradition of younger generations as well as promoting economic and tourism development.

BIDV funded 40 programs with a total commitment value of VND95.3 billion for construction of 12 school buildings; 26 classroom facilities and boarding houses; nearly 1,500 scholarships and hundreds of teaching and learning equipment, training management software for educational institutions throughout the country. The sponsorship of BIDV contributed positively and effectively to supporting localities to upgrade educational facilities and improve teaching and learning conditions for teachers and students in disadvantaged regions.

BIDV implemented 15 programs worth VND37.4 billion for construction of gratitude/solidarity houses for the poor, and beneficiaries of social welfare policy nationwide. The bank’s funding helped to build 770 new houses for the poor across the country, giving them a safe place for settling down.

Continuing the annual charity program of giving Tet gifts to the poor which has been implemented since 2009, BIDV presented 40,000 sets of gifts worth VND20 billion, joining local authorities to take care of the poor people’s lives.

BIDV implemented 15 programs with a total value of VND58.8 billion. The bank funded the construction of 03 clinics, and granted 02 ambulances, hundreds of medical equipment such as ultrasound machines, and artificial dialysis machines, etc., contributing to equip/upgrade medical facilities and equipment for hospitals, clinics, medical examination and treatment facilities in localities, helping to improve local people’s health examination and living conditions.

Given the natural disasters such as flash flooding, storms, high tides, and saltwater intrusion, in regions namely Northern highlands, coastal central, and Mekong Delta, BIDV timely provided support to the localities and poor people in the affected areas to recover, and quickly stabilize their lives and production with realized value totalling VND1.3 billion.

Education

Building houses for the poor

Tet gifts for the poor

Health care

Disaster relief

Funding 84 social security programs with a total value of nearly VND225 billion, providing 19 school buildings, classrooms, 03 health clinics/facilities, 770 new houses for the poor, tens of thousands of Tet gifts, hundreds of scholarships, educational equipment, medical equipment, medical examination and treatment packages for the poor, and timely disaster relief activities are proof for BIDV’s footprint in the community development in 2019.


Effects of BIDV’s programs

Building on the results achieved in the previous years, BIDV’s social security programs in 2019 achieved positive effects on community as well as BIDV’s operation, particularly:

Through the social security activities, BIDV continued to affirm that it is not only the leading financial institution regarding business operation but also a pioneer for the sustainable development for the community and society. BIDV’s social security programs have been highly appreciated and positively received by regulators, local authorities, social organizations and beneficiaries, evidenced

For disadvantaged, difficult and remote areas: BIDV’s social security activities contributed to building and upgrading many educational and health facilities, shortening the gap in medical and educational conditions between regions; Directly funding or mobilizing resources from society to support disadvantaged people to build houses. The bank’s social charity activities significantly contributed to promoting the social and economic stability of impoverished and remote areas.

For developed areas: BIDV contributed to upgrading, modernizing educational equipment for school facilities (computers, projectors, etc.); funding the purchase of medical examination and treatment equipment and vehicles for central and local health centers, etc. (medical equipment, ambulances), thereby contributing to improving the living conditions, socio-economic development, and international integration.

For regulators: BIDV demonstrated its responsibility and interest in major policies of the Party and Government on sustainable poverty reduction, economic, cultural and social development and national target programs on: Education, health care, houses for the poor, improving the living conditions for people.

For BIDV’s operation: Through the social charity activities, BIDV has shown its responsibility to the community as a public enterprise, contributing to bolstering its reputation and brand; and accompanying the community on the development of the country.

by awards and accolades such as Enterprise for the Community, Enterprise for the Cause of Hunger Elimination and Poverty Reduction; Enterprise for the Cause of Education; Enterprise for the Development of Ethnic Minorities in Vietnam, and many merit certificates from the Government, ministries, provinces and cities.


C O N T R I B U T I N G T O E N V I R O N M E N T I M P R O V E M E N T

MANAGING ENVIRONMENTAL AND SOCIAL RISKS IN CREDIT EXTENSION

BIDV always attaches importance to environmental and social risk management for credit extension. According to the current process on providing credit to institutional customers, BIDV has implemented environmental and social risk assessments on each credit facility, ensuring the financed project is compliant with the law on environment, taking measures to prevent risks and regularly and periodically supervising the financed projects.

In February 2019, BIDV issued Environmental and Social Risk Management System (ESMS)


IMPLEMENTING SAVING MEASURES

In 2019 BIDV strictly implemented the Government and State Bank’s action programs on thrift practice and waste combat through propagation, direction, supervision and implementation of thrift practice and waste combat across its system and achieved positive results, particularly:

a. Propagation, dissemination of thrift practice and waste combat

Continuing to organize the propagation and dissemination of the Law on thrift practice and waste combat, the Government’s action program on thrift practice and waste combat (Government’s Decision No.213/QD-TTg dated 21 February 2019 on thrift practice and waste combat; and the 2019 action plan of the banking sector on thrift practice and waste combat (State Bank’s Decision No.460a/QD-NHNN dated 18 March 2019).

Required credit documents include those related to social environment (such as License of exploiting natural resources for enterprises operating in this field; Decision on approving reports on environmental impact assessment, fire prevention, waste water treatment (for required projects); Registration certificate/Commitment on environmental protection of competent authorities).

Following the State Bank of Vietnam’s Directive 03/CT-NHNN regarding promoting green credit growth and managing environmental and social risks in credit extension; recommendations of the Asian Development Bank (ADB) as well as BIDV’s commitments to sustainable development goal, in February 2019, BIDV issued the Environmental and Social Risk Management System (ESMS) compulsory for projects which are funded by ADB. The ESMS stipulates a process for environmental and social risk assessment, including the following contents: (i) Screening and classifying environmental and social risks; (ii) Detailed assessment of environmental and social risks in accordance with the general and specific regulations of 10 specific industry groups; (iii) Corrective action plans as well as environmental and social monitoring and reporting after disbursement.

The propagation and dissemination of thrift practice and waste combat was implemented via internal newsportal, emailing and training courses on the Party’s Resolutions, thereby unit leaders would continue to cascade to their staff. Some movements can be named such as “Studying and following the President Ho Chi Minh’s moral example”, the emulation movement “Eight effective working hours”.

b. Directing the formulation and implementation of thrift practice and waste combat program

In 2019, BIDV issued 05 documents related to thrift practice and waste combat, including 03 financial management regulations related to efficiency and cost savings, 01 directive on effective cost management based on BIDV’s operating objectives as well as market characteristics and conditions in the year.

The guidance and implementation on thrift practice and waste combat was specific in terms of work scope, progress, objectives, monitoring and supervision and reporting on implementation results.

In 2019 BIDV continued to strictly control operating costs through the Cost/Income Ratio (CIR) in formulating and assigning business plans.

c. Results of thrift practice and waste combat in specific areas:

* Issuing, applying norms, standards and regimes

In 2019, BIDV issued a number of documents regarding decentralization in financial management, cost norms, procurement procedures to ensure the economical and efficient use of costs, particularly:

Regarding norms: BIDV issued new cost norms. The cost norms were based on operating size, business performance of each unit, while ensuring the reasonability between costs and realized profits.

Regarding goods and service procurement: Issuing new regulation on goods and service procurement procedures, ensuring the consistency of the process, functions and duties of individual units and effective control of costs.



* Specific cost saving results: fulfilling and surpassing the targets set for cost saving, particularly:

Practicing thrift and combating wastefulness in public service expenses:

+ In 2019, BIDV continued to boost the implementation of the Scheme on effective cost management in order to further promote the system’s income generating activities, while ensuring the rate of cost increase was lower than that of income increase.

+ Total public service costs in 2019 were controlled according to the set target. There was a reasonable shift in costs towards reducing material and paper costs (95% against the budget), postage, phone charges (96% against the budget), increasing more effective costs such as training.

Practicing thrift and combating wastefulness in construction investment; management, use of assets, office buildings, housing and public welfare facilities. BIDV saved 7% in asset costs compared to the budget. Procurement of assets and working instruments was based on essential needs, meeting technical and professional requirements

Practicing thrift and combating wastefulness in organizational structure, employment and working time. In 2019, BIDV continued to evaluate, classify and assign employees to appropriate jobs; improving working process; allocating headcounts closely to business performance, labor productivity and staff costs of units.

CREATING A MODERN AND ENVIRONMENT-FRIENDLY WORKPLACE

In 2019, BIDV Trade Union launched a movement for “Green – Clean and Beautiful” working space; and another movement on Saying No to plastic wastes in order to create a professional and friendly working environment, building a good working style. The movements were well received by the Trade Union members and employees who actively participated in cleansing their offices, putting more trees at the workplace; arranging documents and paper tidily and scientifically; using glass and paper cups in replacement for plastic ones; saving water, electricity, limiting use of nylon bags and one-time plastic stuffs.

Investing in the construction and implementation of environment-friendly IT systems (using green technology, saving energy, reducing the emission of harmful fumes, replacing old systems with modern ones to save space and energy, etc.).

Investing in the construction and implementation of Electronic office system; issuing the Regulation on the management and handling of work in the form of electronic mails; issuing the Regulation on management and use of email system to circulate documents throughout the BIDV system via the intranet system, which helps save printing, paper and postage expenses.

BIDV focused on investing in and developing modern, environment-friendly and energy-efficient IT systems to increase labor productivity and competitiveness to meet the business and management requirements, particularly:

Investing in the construction and implementation of the Video Conference system and E-learning system, etc. to quickly and conveniently organize and hold meetings across the whole system, helping reduce time as well as travel and accommodation costs.

Investing in developing e-banking systems/channels (Internet Banking, Mobile Banking, Smart Banking, BSMS, HomeBanking, ATM, CDM, STM, POS, etc.); Electronic payment/collection services (payment for electricity, water, telecommunications, television; collection service for the State Treasury and the General Department of Taxation, etc.), helping customers to use banking services anywhere, anytime without visiting brick and mortar transaction points.

In addition, BIDV is currently researching and applying technological solutions for transformation into digital banking model, particularly: deploying enterprise content management infrastructure (ECM) - digitalizing bank records and documents, minimizing paperwork, storage space, and rotation; Customer relationship management system (CRM), researching and implementing Business Process Management (BPM).


COMPLYING WITH SUSTAINABLE DEVELOPMENT GOAL

Since 2015 BIDV has been selected by the World Bank and the Government of Vietnam as the wholesale bank for Vietnam Sustainable Agriculture Transformation project (VnSAT).

The objective of the VnSAT project is to support the Government of Vietnam in promoting the “Agricultural Restructuring Project” through strengthening the institutional capacity of the agricultural sector; innovating the farming practice towards sustainability; continuously improving the value chain of the two product lines: rice and coffee in two key commodity production areas in Vietnam namely Mekong Delta (including 8 provinces: Kien Giang, An Giang, Hau Giang, Tien Giang, Long An, Dong Thap, Can Tho, and Soc Trang) and the Central Highlands (including 5 provinces: Lam Dong, Dak Lak, Dak Nong, Gia Lai and Kon Tum). Total IDA loans for the project were USD237 million, of which non-credit capital was USD132 million (accounting for 55.7%) and loan was USD105 million (accounting for 44.3%).

As of 31 December 2019, BIDV had disbursed approximately VND439.9 billion to 9 rice subprojects and VND1,185.7 billion as loans for coffee replanting.

VNSAT PROJECT DISBURSEMENT

In order to achieve the objective of sustainable agriculture transformation, beside improving the productivity and quality of rice and coffee products, all activities must be directed towards to environmental sustainability. This is a challenge not only for the entire VnSAT project in general, but also for BIDV in particular regarding the management of on-lending component.

One of the important achievements BIDV has gained since the project implementation is: (i) BIDV proactively coordinated with Vietnam Ministry of Agriculture and Rural Development (the governing body of the VnSAT project) to research, develop and issue the “Environmental and Social Management Framework (ESMF)” which includes two books: The first book is for environmental and social management activities implemented by the Ministry of Agriculture and Rural Development and the second one is for environmental and social management activities carried out by BIDV. (ii) Based on the “Environmental and Social Management Framework (ESMF)” (Book 2) issued by the Minister of Agriculture and Rural Development in July 2015, BIDV actively translated the environmental and social management requirements into its “Project operational manual” - Volume 2 – Guidance on implementation of loans (POM2).


On 4 February 2016, the Chief Executive Officer of BIDV signed Decision 740/QD-BIDV regarding the issuance of the Credit Handbook applicable to the World Bank-funded Vietnam Sustainable Agriculture Transformation Project. In particular, BIDV specified steps of implementation of the entire credit component and details of environmental and social management procedures and processes according to regulations.

Over 4 years of implementing the VnSAT project (2016-2019), as a wholesale bank taking main responsibility for implementing the Environmental and Social Management Framework (ESMF), BIDV monitored, provided guidance to participating financial institutions (PFIs) to follow regulations on environmental and social safeguards according to provisions in the ESMF and POM2.

In 2019, BIDV reviewed and amended POM2, revising provisions on environmental and social safeguards to match the actual implementation. As of 31 December 2019, BIDV had provided guidance to PFIs and a total of 9 owners of rice processing subprojects (two subprojects made early payment in 2019) to complete environmental procedures in accordance with regulations (i.e. 100% subprojects receiving approval of the Report on environmental impact assessment/Environmental management plan from Vietnam’s competent authorities) with total cumulative disbursements for the 9 subprojects reaching approximately VND439.9 billion. For the coffee component alone, as of 31 December 2019 BIDV had disbursed through 10 PFIs for 3,479 coffee replanting loans with total cumulative disbursements reaching VND1,185.7 billion. As reported by PFIs, borrowers and PFIs entered into an “Environmental Protection Agreement” for 100% coffee replanting loans which satisfy all terms and conditions for environmental protection as specified in the ESMF and POM2.

Especially, in 2019 BIDV worked with the Central Project Management Unit (CPMU) - VnSAT Project under Vietnam’s Ministry of Agriculture and Rural Development (MARD)to organize a workshop on “Sharing experience in implementing environmental and social safeguards - VnSAT Project” for the rice component in Can Tho City for 7/11 PFIs. This was the first workshop dedicated for environmental and social safeguards for PFIs. At the workshop, CPMU and BIDV shared their experience in implementing environmental and social safeguards in the VNSAT project ranging from components implemented by MARD to credit components managed by BIDV. They also disseminated Vietnam’s new regulations on environment to the participants.

In addition, the monitoring and supervision of PFIs’ compliance with environmental and social safeguards was carried out on a periodical and/or ad-hoc basis. During the monitoring and supervision, beside checking the compliance of PFI branches, BIDV reinstructed new credit officers of the PFIs and new PFIs on regulations related to environmental and social safeguards of the projects as well as of BIDV and PFIs.

I N F O R M A T I O N D I S C L O S U R E U N D E R G R I S T A N D A R D S

No. GRI Information Disclosure Detailed Content

GRI102 General Disclosure

I Organizational Profile

102-1 Name of the organization

Section BIDV at a glance (Page 20)102-2 Activities, brands, products, and services

102-3 Location of headquarters

102-4 Location of operations Network distribution (Page 25)

102-5 Ownership and legal form Development milestones (Page 22)

102-6 Markets served BIDV overview

102-7 Scale of the organization BIDV’s profile through key financial indicators and non-financial indicators

102-8 Information on employees and other workers

Employees are classified by position, education, age (Refer to Section Organization and human resources – Page 56)

102-9 Supply chain Business lines and location (Page 24)

102-10 Significant changes to the organization and its supply chain

BIDV overview: organizational structure, Board of Directors, Supervisory Board, Board of Management (Page 26)

102-11 Precautionary principle or approach Risks (Page 40)

102-12

External initiatives: Listing of economic, environmental and social rules and articles developed outside the organization or otherinitiatives that the organization agrees on/supports.

The Vietnam Sustainable Agriculture Trans-formation Project (VnSAT) (Page 154)



II Strategy

102-14 Statement from senior decision-maker

Chairman’s message (Page 10), Directors’ Report (Page 74), Management’s Report, Overview of Sustainable Development Report

102-15 Key impacts, risks, and opportunities Risks (Page 40)Overview of Sustainable Development Report

III Governance

102-18 Governance structure Operation of BOD and Committees (Page 104)

102-21 Consulting stakeholders on economic, envi-ronmental and social topics Stakeholder engagement (Page 123)

102-22 Composition of the highest governance body and its committees

Introduction of the Board of Directors, the Board of Management and the Supervisory Board (Page 28)

102-23 Chair of the highest governance body Description of the Board of Directors, com-mittees under the BOD (Page 104)

102-27 Collective knowledge of highest governance body

Participation in corporate governance training courses (List of BOD members participating in corporate governance programs during the year). Committees under the Board of Directors, functional units/departments proposing measures for risk management. Training and Research Institute and some professional departments provide macroeconomic newsletters, legal newsletters, Market and operational risk newsletter.

102-28 Evaluating the highest governance body’s performance

Operation of the Board of Directors in 2019 and orientation for 2020 in the Directors’ report

102-29 Identifying and managing economic, envi-ronmental, and social impacts

The Board of Directors sets up Risk Man-agement Committee to advise and assist on risk identification and management, and assessment of the effectiveness of the risk management process. The committee’s meetings are held quarterly or an ad-hoc basic as needed.

102-30 Effectiveness of risk management processes

102-31 Review of economic, environmental, and social topics

102-32 Highest governance body’s role in sustain-ability reporting

Branding and Communication department and BOD's secretariat review and submit to the Board of Management for approval

102-35 Remuneration policies Salaries, remunerations and benefits (Page 115)


III Stakeholder Engagement

102-40 List of stakeholder groups

CustomersEmployeesShareholders, investorsSuppliersGovernment and regulatorsMedia agenciesCommunity

102-42 Identifying and selecting stakeholders Stakeholder engagement (Page 123)Measuring customer satisfaction (Page 140)Measuring employees’ satisfaction (Page 131)

102-43 Approach to stakeholder engagement

102-44 Key topics and concerns raised

IV Reporting Practice

102-45 Entities included in the consolidated financial statements

Performance of subsidiaries, joint-ventures and affiliates (P.48)

102-46 Defining report content and topic Boundaries Overview of the Sustainable

Development Report 102-47 List of material topics

102-50 Reporting period Report for the period from 1 January 2019 to 31 December 2019

102-52 Reporting cycle Annual

102-53 Contact point for questions regarding the report

Email: [email protected]: 024 22201099

102-54 Claims of reporting in accordance with the GRI Standards

Overview of the Sustainable Development Report (Page 120)

102-55 GRI content index Information disclosure under GRI Standards (P157)

GRI 200 Economic Standards

201 Direct economic value generated and distributed Business Results (Page 90)

203 Significant indirect economic impacts Efforts for sustainable economic development (Page 126)

GRI 300 Environmental Standards

302-4 Reduction of energy consumptionImplementation of saving measures (Page 151)Building a modern, environmentally friendly working space (Page 152)

GRI400 Social Standards

401-2Benefits provided to full-time employees that are not provided to temporary or part-time employees

Employees' benefits (Page 132)

404 Training and education Employees' training (Page 131)

413 Local communities Social Security (Page 146)

417 Marketing and labelling Customer Orientation (Page 137)



F I N A N C I A LR E P O R T

INDEPENDENT AUDITORS’ REPORT

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED CASH FLOW STATEMENT

NOTES TO THE FINANCIAL STATEMENTS


I N D E P E N D E N T A U D I T O R S ’ R E P O R T


CONSOLIDATED BALANCE SHEET As at 31 December 2019

Form B 02/TCTD-HN Unit: VND million

No. ITEMS Notes Closing balance

Opening balance

A ASSETS I. Cash, gold and gemstones 5 14,116,720 10,507,558

II. Balances with the State Bank of Vietnam (SBV) 6 135,255,429 50,185,159

III. Placements with and loans to other credit institutions 7 54,290,180 104,113,340

1. Placements with other credit institutions 7.1 43,718,603 81,792,629

2. Loans to other credit institutions 7.2 10,717,769 22,430,353

3. Provision for credit losses on placements with and loans to other credit institutions 7.3 (146,192) (109,642)

IV. Trading securities 8 6,346,190 673,639

1. Trading securities 6,380,379 790,210

2. Provision for impairment of trading securities (34,189) (116,571)

V. Derivatives and other financial assets 9 92,130 79.755

VI. Loans to customers 1,102,365,849 976,334,971

1. Loans to customers 10 1,116,997,985 988,738,780

2. Provision for credit losses on loans to customers 11 (14,632,136) (12,404,309)

VII. Investment securities 12 138,284,421 133,188,297

1. Available-for-sale investment securities 12.1 121,819,089 111,419,195

2. Held-to-maturity investment securities 12.2 23,262,431 29,847,625

3. Provision for impairment of investment securities 12.5 (6,797,099) (8,078,523)

VIII. Long-term investments 13 2.737.661 2.612.189

1. Investments in joint-ventures 13.1 2,020,226 1,938,687

2. Investments in associates 13.2 605,550 584,148

3. Other long-term investments 214,679 213,320

4. Provision for impairment of long-term investments 13.3 (102,794) (123,966)

IX. Fixed assets 10,604,686 10,728,979

1. Tangible assets 14.1 6,294,519 6,414,518

a. Cost 12,784,828 12,160,408

b. Accumulated depreciation (6,490,309) (5,745,890)

2. Intangible assets 14.2 4,310,167 4,314,461

a. Cost 5,866,116 5,671,933

b. Accumulated amortization (1,555,949) (1,357,472)

X. Other assets 15 25,864,027 24,442,862

1. Receivables 9,159,704 8,853,740

2. Interest and fee receivables 12,846,132 11,673,017

3. Deferred tax assets 38,579 34,472

4. Other assets 4,460,435 4,533,448

5. Provisions for impairment of other assets 15.3 (640,823) (651,815)

TOTAL ASSETS 1,489,957,293 1,312,866,249

B. LIABILITIES AND OWNERS' EQUITY

I. Borrowings from the Government and the Central Bank 16 108,760,008 105,297,399

II. Deposits and borrowings from other credit institutions 17 76,683,179 79,198,149

1. Deposits from other credit institutions 28,904,853 22,064,492

2. Borrowings from other credit institutions 47,778,326 57,133,657

III. Deposits from customers 18 1,114,162,624 989,671,155

IV. Grants, trusted funds and borrowings at risk of the credit institution 19 12,386,421 12,296,196

V. Valuable papers issued 20 62,772,362 39,991,361

VI. Derivatives and other financial liabilities

VII. Other liabilities 37,539,718 31,922,333

1. Interest and fee payables 24,695,986 20,726,439

2. Other payables and liabilities 12,731,797 11,105,141

3. Deferred corporate income tax payable 21 111,935 90,753

TOTAL LIABILITIES 1,412,304,312 1,258,376,593

VIII. Capital and reserves

1. The Bank's capital 54,780,413 34,396,605

a. Charter capital 40,220,180 34,187,153

b. Share premium 14,292,382 30,306

c. Other capital 267,851 179,146

2. The Bank's reserves 5,755,410 4,617,990

3. Foreign exchange reserve 129,783 156,581

4. Retained earnings 13,856,938 12,270,771

5. Non-controlling interests 3,130,437 3,047,709

TOTAL OWNERS' EQUITY 77,652,981 54,489,656

TOTAL LIABILITIES AND OWNERS' EQUITY 1.489.957.293 1,312,866,249

Full audited 2019 financial report is available on BIDV’s website: www.bidv.com.vn


OFF-BALANCE-SHEET ITEMSAs at 31 December 2019

Unit: VND million

Unit: VND million Unit: VND million

No. ITEMS Notes Closing balance Opening balance

1. Credit guarantees 5,353,955 4,712,259

2. Foreign exchange commitments 3,274,646 6,000,257

a. Foreign currency purchase commitments 1,647,813 2,628,996

b. Foreign currency sale commitments 1,626,833 3,371,261

3. Letter of credit (L/C) commitments 68,683,562 61,876,656

4. Other guarantees 145,684,887 145,891,703

5. Other commitments 8,771,607 7,935,991

No. ITEMS Notes Current year Prior year

1. Interest and similar income 24 100,747,225 89,839,125

2. Interest and similar expenses 25 (64,769,417) (55,118,277)

I Net interest income 35,977,808 34,720,848

3. Income from services 26 7,871,837 6,788,718

4 Expenses on services 26 (3,605,506) (3,233,616)

II Net profit from services 26 4,266,331 3,555,102

III Net gain from trading gold and foreign currencies 27 1,494,696 1,039,685

IV Net gain from trading securities 28.1 325,524 645,456

V Net gain from investment securities 28.2 481,222 234,827

5. Other operating income 29 6,517,869 5,337,309

6. Other operating expenses 29 (1,156,695) (1,519,277)

Vl Net profit from other activities 29 5.361.174 3.818.032

VII Income from capital contribution, equity investments 30 214.485 242.006

Total operating income 48,121,240 44,483,062

ITEMS Notes Current year Prior year

CASH FLOW FROM OPERATING ACTIVITIES

Interest and similar income received 100,233,777 88,053,639

Interest and similar expenses paid (60,799,870) (51,446,906)

Income received from services 4,266,331 3,555,102

Net cash from dealing in foreign currencies, gold and trading securities 2,689,112 1,919,031

Other expenses (409,071) (668,809)

Cash recovered from bad debts written off or compensated by provision for credit losses 5,777,810 4,478,587

Payments to employees and for operating management (15,665,395) (15,414,260)

Income tax paid for the year 33 (1,871,349) (1,743,510)

Net cash flow from operating activities before movements in operating assets and liabilities 34,221,345 28,732,874

Movement in operating assets

Decrease/(Increase) in placements with and loans to other credit institutions 9,972,481 13,485,935

7. Staff cost 31 (9,722,449) (8,777,978)

8. Depreciation and amortization expenses 31 (1,023,773) (978,589)

9. Other operating expenses (6,510,893) (6,259,517)

VIII Total operating expenses 31 (17,257,115) (16,016,084)

IX Net profit from operating activities before provision for credit losses 30,864,125 28,239,872

X Provision for credit losses (20,131,916) (18,848,455)

XI Profit before tax 10,732,209 9,391,417

10. 10.Current corporate income tax expense 33 (2,162,657) (1,907,345)

11. 11. Deferred corporate income tax income (21,795) (4,044)

XII Corporate income tax expense (2,184,452) (1,911,389)

XIII Profit after tax 8,547,757 7,480,028

Net profit attributable to non-controlling interests (179,266) (192,814)

Net profit attributable to the equity holders of the Bank 8,368,491 7,287,214

Basic earnings per share (VND/share) 2,163 1,613

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 December 2019 For the year ended 31 December 2019


Unit: VND million

ITEMS Notes Current year Prior year

Decrease/(Increase) in trading securities (10,064,536) 22,027,125

Decrease/(Increase) in derivatives and other financial assets (12,375) 113,948

Increase in loans to customers (128,259,205) (121,853,473)

Increase in provisions for bad debts, securities, long-term investments and other receivables (19,686,295) (19,649,357)

Other increase in operating assets (711,579) (1,001,400)

Movement in operating liabilities

Increase in borrowings from the Government and the State Bank of Vietnam (14,945,095) 16,813,500

Decrease in deposits and borrowings from other credit institutions (2,514,970) (12,780,711)

Increase in deposits from customers (including the State Treasury) 142,899,173 140,634,484

(Decrease)/Increase in valuable paper issuance (excluding valuable papers charged into financial activities) 22,781,001 (43,747,068)

Increase in grants, trusted funds and borrowings at risk of the credit institution 90,225 573,469

(Decrease)/ Increase in other liabilities (24,928) (1,880,740)

Payment from the credit institution's reserves (379) (515)

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of fixed assets (432,570) (902,706)

Proceeds from sales, disposal of fixed assets 5,299 13,415

Expenses on sales, disposal of fixed assets (12,864) (5,161)

Cash recovered from investments in other entities (sale, disposal of subsidiaries, joint ventures, other long-term investments) (1,359) 56,220

Dividends and profit received from long-term investments and capital contribution 111,061 128,194

Net cash generated by/(used in) investing activities (330,433) (710,038)

CASH FLOWS FROM FINANCING ACTIVITIES

Increase in share capital from capital contribution and/or share issuance 20,295,103 -

Dividends paid to shareholders (4,844,230) (92,612)

Net cash from financial activities 15,450,873 (92,612)

Net increase in cash for the year 48,865,303 20,665,421

Cash and cash equivalents at the beginning of the year 121,407,099 100,741,678

Cash and cash equivalents received from consolidation of subsidiaries 35 170,272,402 121,407,099

CONSOLIDATED CASH FLOW STATEMENT (CONT.)

ACCOUNTING CONVENTION

NOTES TO THE FINANCIAL STATEMENTS

BASIS OF CONSOLIDATION

For the year ended 31 December 2019

The accompanying consolidated financial statements, expressed in Vietnam Dong (VND), are prepared under the historical cost convention and in accordance with accounting standards, accounting regime applicable to credit institutions in Vietnam and legal regulations relating to consolidated financial reporting. However, due to the Bank’s large scale of operations, for the purpose of preparing these consolidated financial statements, the figures are rounded to and presented in millions of Vietnam Dong (VND million). This presentation does not materially impact the consolidated financial statements in terms of the

The consolidated financial statements incorporate the financial statements of the Bank and enterprises controlled by the Bank (its subsidiaries). The control is achieved where the Bank has the power to govern the financial and operating policies of investee enterprises so as to obtain benefits from the activities.

The business results of subsidiaries acquired or disposed of during the year are included in the consolidated

consolidated financial position, the consolidated results of operations and the consolidated cash flows of the Bank and its subsidiaries. With regard to the number of shares and basic earnings per share, the Bank presented the items in unit.

The accompanying consolidated financial statements are not intended to present the consolidated financial position, consolidated results of operations and consolidated cash flows in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than Vietnam.

income statement from the effective date of acquisition and up to the effective date of disposal. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those used by the Bank. All internal transactions and balances between the Bank and its subsidiaries and among subsidiaries are eliminated on consolidation.


Factoring;

Credit facilities in the form of credit card issuance;

Payments on behalf under off-balance sheet commitments;

Amounts for purchase and entrustment of purchase of corporate bonds unlisted on the stock market or unregistered to be traded in the Unlisted Public Company Market (UPCoM) (hereinafter referred to as unlisted bonds), excluding entrusted capital sources for purchase of unlisted bonds whereby the entrusting parties bear risks;

In accordance with Circular 02, a general provision is made for credit losses which are yet to be identified during the loan classification and specific provision process as well as in case of the Bank’s potential financial difficulty due to the deterioration in loan quality. Accordingly, the Bank is required to fully make and maintain a general provision at 0.75% of total loans which are classified in groups 1 to 4 excluding deposits and loans, repurchase and reverse repurchase agreements of valuable papers with credit institutions, branches of foreign banks in Vietnam and deposits at foreign credit institutions.

The Bank and its subsidiaries remain the loan group for certain loans under the regulations at:

Group Category Provisioning rate

1 Pass 0%

2 Special mention 5%

3 Sub-standard 20%

4 Doubtful 50%

5 Loss 100%

The provision is recorded in the consolidated income statement as an expense and will be used to write off bad debts. The Bank must set up Risk Settlement Committee to write off bad debts if they are classified

The Bank should classify guarantees, acceptances of payment and unconditional, irrevocable loan commitments with specific effective date (collectively referred to as “off-balance-sheet commitments”) as stipulated in Articles 10 or 11 in Circular 02.

USE OF PROVISIONS

CLASSIFICATION OF OFF-BALANCE-SHEET COMMITMENTS

Accordingly, off-balance-sheet commitments are classified by risk levels as follows: Pass, Special mention, Substandard, Doubtful and Loss, based on overdue status and other qualitative indicators.

Accordingly, customers’ loans are in the more risky group when being classified under Article 10 and Article 11 of Circular 02 and customers’ debt group provided at the time of loan classification by the Credit Information Center (“CIC”) of the State Bank of Vietnam.

Loans are classified by risk level into: Pass, Special mention, Substandard, Doubtful and Loss. Loans classified as Substandard, Doubtful or Loss are considered as bad debts. Loan classification will be made at the end of each quarter for the first three quarters and on 30 November for the fourth quarter of the financial year.

Net loan exposure for each customer is calculated by subtracting from the loan balance the discounted value of collateral which is subject to discount rates in accordance with Circular 02. Specific provision is made based on the net loan exposure of each customer using the prescribed provision rates as follows:

State Bank’s Circular 10/2015/TT-NHNN dated 22 July 2015 guiding the implementation of the Government’s Decree 55/2015/ND-CP dated 9 June 2015 on credit policies serving agricultural and rural development, State Bank’s Circular 09/2014/TT-NHNN dated 18 March 2014 and the central bank’s documents on loan classification and risk provisioning.

Notice No.172/BOL dated 15 May 2017 by the Governor of the Bank of the Lao PDR and Document No.“Thor 7-018-544 Chor.Tor” dated 19 June 2018 by the National Bank of Cambodia on loan classification for a number of customers.

into Group 5 or if the borrowing legal entities are liquidated or bankrupted, or if individual borrowers have deceased or are missing.

PROVISION FOR CREDIT LOSSES

CLASSIFICATION OF LOANS AND PROVISION FOR CREDIT LOSSES

In accordance with Circular 02 and Circular 09, credit institutions should implement loan classification and credit loss provisioning. Loan classification and credit risk provisioning in compliance with Circular 02 and Circular 09 are applied to Assets (hereinafter referred to as “debts”) including:

Loans;

Financial leases;

Discounts, rediscounts of negotiable instruments and other valuable papers;

Credit extension entrustment;

Deposits (excluding current accounts) at domestic credit institutions, foreign banks’ branches in Vietnam as prescribed by law and deposits at foreign credit institutions.


Interest income and expense Income from interest and interest expense is recognized in the income statement on an accrual basis. According to the State Bank’s Circular 02/2013/TT-NHNN dated 21 January 2013 (“Circular 02”) regarding regulation on assets classification, provision rate, provisioning method and the use of risk provisions in the operation of credit institutions, foreign banks’ branches issued by the Governor of the State Bank of Vietnam and SBV’s Circular 09/2014/TT-NHNN dated 18 March 2014 (“Circular 09”) amending Circular 02, the accrued interest income arising from the loans that are classified from group 2 to group 5 is not recognized in the income statement. Accrued interest on such loans is recorded as off-balance-sheet item and is recognized in the income statement when it is actually received.

Income and expenses from interest on investments in securities are recorded on the accrual basis. Accrued interest income of overdue securities is not recognized

REVENUES AND EXPENSES

EMPLOYEE BENEFITS

in the income statement for the financial year and is recorded as off-balance sheet item and is only recognized in the income statement when it is actually received.

Service fees and commissions are accounted on an accrual basis. Collection of fees from guarantee activities, letters of credit activities, investment activities (bonds, etc.) is accounted on the basis of accruals and allocations.

Dividends and profits received Cash dividends received from investment activities are recorded as income when the Bank’s right to receive dividends has been established.

Dividends received in shares, bonus shares and right to buy shares for existing shareholders, shares received from the unrealized profits are not recognized as an increase in the investment value and are not recognized as income of the bank but only number of shares is recorded.

Post-employment benefits Post-employment benefits are paid to retired employees of the Bank and its subsidiaries by the Social Insurance Agency under the Ministry of Labour, Invalids and Social Affairs. The Bank and its subsidiaries are required to contribute to these post-employment benefits by paying social insurance premium to the Social Insurance Agency at the rate of 17.5% of the employee’s basic salary on a monthly basis for their working period. In addition, the Bank also uses its Welfare Fund to pay one-time retirement benefits to employees under the Bank or its subsidiaries’ regulations.

Severance allowance According to Article 48 of the Labour Code dated 18 June 2012, the Bank is responsible to pay severance allowance for employees who have worked regularly for 12 months or more, half-month salary allowance for each working year before 1 January 2019. The working period used for calculation of severance allowance excludes the period that employees benefits from unemployment insurance and the working period

that employees receive severance allowance from employers.

Retrenchment compensation According to Article 49 of the Labour Code dated 18 June 2012, the Bank is responsible to pay retrenchment benefits for employees who have worked regularly for 12 months or more but are retrenched from their jobs as a result of organizational restructuring, technological changes, economic reasons, merger, consolidation and splitting. For each year of employment, the employee is entitled to one-month salary but equal to at least two months’ salary as the average sum of the six months preceding the retrenchment date for the working period before 1 January 2019. The working period used for calculation of retrenchment benefits excludes the period that employees benefit from unemployment insurance and the working period that employees receive retrenchment allowance from employers.

Unemployment insurance According to the Law on Employment No.38/2013/QH13 dated 16 November 2013, the Bank has the obligation to contribute to the Unemployment Insurance Fund with an amount equal to 1% of their employees’ insured salaries and wages.

Unit: VND million

Unit: VND million

Unit: VND million

ITEMS Closing balance Opening balance

Debt securities 5,667,929 154,664

Securities issued by the Government 5,667,929 104,331

Securities issued by local economic entities - 50,333

Equity securities 712,450 635,546

Equity securities issued by local credit institutions 149,497 77,106

Equity securities issued by local economic entities 562,430 557,949

Equity securities issued by foreign credit institutions 523 491

Provision for impairment of trading securities (34,189) (116,571)

Total 6,346,190 673,639


Loans to local economic entities and individuals 1,076,979,856 951,427,266

Discounted commercial bills and valuable papers 10,000 -

Receivables from finance leases 1,418,497 717,237

Amounts paid on behalf of customers 533,940 36,822

Loans to foreign entities and individuals 38,055,692 36,557,455

Total 1,116,997,985 988,738,780

ITEMSClosing balance Opening balance

VND million % VND million %

Pass 1,072,557,727 96.02 946,905,941 95.76

Special mention 24,943,852 2.23 23,030,423 2.33

Substandard 3,835,155 0.34 5,449,978 0.55

Doubtful 4,305,007 0.39 6,182,268 0.63

Loss 11,356,244 1.02 7,170,170 0.73

Total 1,116,997,985 100 988,738,780 100

TRADING SECURITIES

LOANS TO CUSTOMERS

ANALYSIS OF LOAN PORTFOLIO BY QUALITY


Unit: VND million

Unit: VND million

Unit: VND million


Investments in joint ventures 2,020,226 1,938,687

Investments in associates 605,550 584,148

Other long-term investments 214,679 213,320

Provision for impairment of other long-term investments (102,794) (123,966)

Total 2,737,661 2,613,521


Demand deposits 178,383,601 161,859,416

Demand deposits in VND 158,065,981 144,113,810

Demand deposits in foreign currencies 20,317,620 17,745,606

Term deposits 923,233,263 820,032,450

Term deposits in VND 893,918,238 787,378,554

Term deposits in foreign currencies 29,315,025 32,653,896

Deposits for specific purposes 12,545,760 7,779,289

Deposits for specific purposes in VND 3,419,939 3,891,948

Deposits for specific purposes in foreign currencies 9,125,821 3,887,341

Total 1,114,162,624 989,671,155

ITEMS Specific provision

General provision Total

Opening balance 5,288,042 7,116,267 12,404,309

Provision made during the year 17,265,867 913,686 18,179,553

Bad debts written off from provision during the year (16,019,008) - (16,019,008)

Other increase 67,359 (79) 67,280

Closing balance 6,602,261 8,029,875 14,632,136

LONG-TERM INVESTMENTS

DEPOSITS FROM CUSTOMERS

MOVEMENTS IN PROVISION FOR CREDIT LOSSES ON LOANS TO CUSTOMERS FOR THE YEAR ENDED 31 DECEMBER 2019 WERE AS FOLLOWS:

(By types of deposits)

Unit: VND million

Unit: VND million

DEPOSITS FROM CUSTOMERS

VALUABLE PAPERS ISSUED

(By types of customers and types of businesses)

ITEMSClosing balance Opening balance

VND million % VND million %

State-owned companies 47,720,474 4.28 47,033,577 4.75

One member limited companies with 100% state-owned equity 70,282,718 6.31 55,520,988 5.61

Two-or-more-member limited companies with more than 50% state-owned equity or subject to the State's dominant power

301,324 0.03 155,817 0.02

Other limited liability companies 53,396,770 4.79 88,260,516 8.92

Joint-stock companies with more than 50% State-owned equity or voting rights

or controlled by the State according to the company's Charter

59,026,313 5.3 48,775,978 4.93

Other joint stock companies 83,347,921 7.48 68,538,674 6.93

Partnerships 187,908 0.02 58,506 0.01

Private enterprises 5,279,517 0.47 4,693,807 0.47

Foreign-invested companies 43,485,846 3.9 32,877,609 3.32

Cooperatives and cooperative unions 559,590 0.05 492,208 0.05

Household businesses and individuals 618,067,553 55.48 572,320,166 57.83

State administration units, parties, unions and associations 33,023,753 2.96 28,102,817 2.84

Others 99,482,937 8.93 42,840,492 4.33

Total 1,114,162,624 100 989,671,155 100


Certificates of deposits 25,156,996 10,880,315

Terms less than 12 months 2,345,333 1,831,517

From 12 months to less than 05 years 21,809,323 8,046,456

From 05 years and more 1,002,340 1,002,342

Bills 620 620

Terms less than 12 months 297 297

From 12 months to less than 05 years 323 323

Bonds 4,550,364 7,750,364

Terms from 12 months to less than 5 years 2,550,061 5,750,061

From 05 years and more 2,000,303 2,000,303

Bonds for capital increase 33,064,382 21,360,062

Total 62,772,362 39,991,361


Unit: VND million

Unit: VND million

Unit: VND million

INTEREST AND SIMILAR INCOME

INTEREST AND SIMILAR EXPENSES

NET PROFIT FROM SERVICES

ITEMS Current year Prior year

Interest income from deposits 3,722,367 2,500,295

Interest income from loans to customers 85,798,186 75,218,477

Interest income from debt securities 8,722,086 9,830,253

Interest income from trading securities 25,750 343,783

Interest income from investment securities 8,696,336 9,486,470

Guarantee income 1,771,238 1,733,008

Interest income from finance leasing 88,495 28,210

Other income from credit activities 644,853 528,882

Total 100,747,225 89,839,125


Deposit interest expenses 58,016,356 47,358,997

Loan interest expenses 2,918,669 3,232,678

Interest expenses for issuance of valuable papers 3,422,689 4,261,350

Expenses for other credit activities 411,703 265,252

Total 64,769,417 55,118,277


Income from services 7,871,837 6,788,718

Settlement services 3,343,859 2,963,793

Treasury activities 87,376 100,101

Agent services 111,939 120,514

Insurance services 1,694,062 1,461,745

Other services 2,634,601 2,142,565

Expenses for services (3,605,506) (3,233,616)

Settlement services (623,759) (579,399)

Treasury activities (253,389) (222,044)

Post and telecommunications (140,540) (133,910)

Agent services (855) (874)

Insurance activities (1,222,557) (1,133,619)

Other services (1,364,406) (1,163,770)

Net profit from services 4,266,331 3,555,102

Unit: VND million

Unit: VND million

Unit: VND million

NET GAIN FROM TRADING GOLD AND FOREIGN CURRENCIES

NET GAIN FROM TRADING SECURITIES

NET GAIN FROM INVESTMENT SECURITIES


Income from trading gold and foreign currencies 4,051,700 3,006,737

Income from foreign exchange spot transactions 3,543,237 2,542,089

Income from derivative financial instruments 508,463 464,648

Expenses for trading gold and foreign currencies (2,557,004) (1,967,052)

Expenses for foreign exchange spot transactions (2,108,322) (1,305,542)

Expenses for derivative financial instruments (448,682) (661,510)

Net gain from trading gold and foreign currencies 1,494,696 1,039,685


Income from trading securities 388,385 1,033,608

Expenses for trading securities (145,243) (366,063)

Reversal of provision of trading securities 82,382 (22,089)

Total 325,524 645,456


Income from investment securities 1,022,180 294,932

Expenses for investment securities (18,444) (39,329)

Provisions for investment securities (522,514) (20,776)

Total 481,222 234,827


N E T W O R KBRANCHES

HANOI REGION

So Giao Dich 1 Branch

Hong Ha Branch

Hoan Kiem Branch

Hai Ba Trung Branch

Quang Trung Branch

Ba Dinh Branch

Ha Noi Branch

Dong Da Branch

Tay Ho Branch

Nam Ha Noi Branch

Dong Ha Noi Branch

Thang Long Branch

My Dinh Branch

Long Bien Ha Noi Branch

Thanh Do Branch

Ha Thanh Branch

Trang An Branch

Thanh Xuan Branch

Dong Do Branch

Cau Giay Branch

Chuong Duong Branch


Tu Liem Branch

Quang Minh Branch

Ha Tay Branch

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17NORTHERN CENTRAL REGION

Thanh Hoa Branch

Bim Son Branch

Lam Son Branch

Nghe An Branch

Phu Quy Branch

Phu Dien Branch

Thanh Vinh Branch

Ha Tinh Branch

Quang Binh Branch

Bac Quang Binh Branch

Quang Tri Branch

Thua Thien Hue Branch

Phu Xuan Branch

Ky Anh Branch

KEY NORTHERN REGION

Vinh Phuc Branch

Phuc Yen Branch

Bac Ninh Branch

Tu Son Branch

Kinh Bac Branch

Hai Duong Branch

Bac Hai Duong Branch

Thanh Dong Branch

Bac Hung Yen Branch

Hung Yen Branch

Hai Phong Branch

Dong Hai Phong Branch

For more information about BIDV network, please access the map app at the address: https://www.bidv.com.vn/en/atm-chi-nhanh

HO CHI MINH CITY REGION


Nam Sai Gon Branch

Gia Dinh Branch

Ben Thanh Branch

Ho Chi Minh City Branch

Phu Nhuan Branch

Bac Sai Gon Branch

Tan Binh Branch

Dong Sai Gon Branch

Nam Ky Khoi Nghia Branch

Sai Gon Branch

Ba Thang Hai Branch

Cho Lon Branch

Tay Sai Gon Branch

Ben Nghe Branch

Binh Chanh Branch

Hoc Mon Branch

Phu My Hung Branch

Cu Chi Branch

Ky Hoa Branch

Truong Son Branch

Ham Nghi Branch

Ba Chieu Branch

Binh Hung Branch

Nha Be Branch

Thong Nhat Branch

Ba Muoi Thang Tu Branch

MEKONG DELTA REGION

Long An Branch

Moc Hoa Branch

Tien Giang Branch

My Tho Branch

An Giang Branch

Bac An Giang Branch

Bac Lieu Branch

Ben Tre Branch

Dong Khoi Branch

Ca Mau Branch

Dat Mui Branch

Can Tho Branch

Dong Bang Song Cuu Long Branch

Tay Do Branch

Dong Thap Branch

Sa Dec Branch

Hau Giang Branch

Kien Giang Branch

Phu Quoc Branch

Soc Trang Branch

Tra Vinh Branch

Vinh Long Branch

OVERSEAS

Yangon Branch (Myanmar)

CENTRAL HIGHLANDS REGION

Kon Tum Branch

Lam Dong Branch

Bao Loc Branch

Da Lat Branch

Dak Lak Branch

Dong Dak Lak Branch

Bac Dak Lak Branch

Ban Me Branch

Dak Nong Branch

Gia Lai Branch

Nam Gia Lai Branch

Pho Nui Branch

District 7 Sai Gon Branch

Binh Thanh Branch

Binh Dien Sai Gon Branch

Chau Thanh Sai Gon Branch

District 9 Sai Gon Branch

Binh Tan Branch

Thu Duc Branch

Binh Tay Sai Gon Branch

Thu Thiem Branch

KEY SOUTHERN REGION

Ba Ria - Vung Tau Branch

Ba Ria Branch

Phu My Branch

Vung Tau - Con Dao Branch

Binh Duong Branch

Binh Phuoc Branch

Thu Dau Mot Branch

My Phuoc Branch

Nam Binh Duong Branch

Di An - Binh Duong Branch

Dong Nai Branch

Nam Dong Nai Branch

Dong Dong Nai Branch

Bien Hoa Branch

Tay Ninh Branch

36

37

38

39

40

41

42

43

44

45

46

47

48

49

50

51

52

53

54

55

56

57

58

59

60

707172737475

105

106

107

108

109

110

111

112

113

114

115

116

117

118

119

120

121

122

123

124

125

126

127

128

129

130

131

132

133

134

135

136

137

138

139

140

141

142

143

173

174

175

176

177

178

179

180

181

182

183

184

185

186

187

188

189

190

144

145

146

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148

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158

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160

161

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163

164

165

166167

76

77

78

79

80

81

82

83

84

85

86

87

88

89

NORTHERN HIGHLANDS REGION

Bac Giang Branch

Cao Bang Branch

Dien Bien Branch

Ha Giang Branch

Hoa Binh Branch

Lai Chau Branch

Lang Son Branch

Lao Cai Branch

Sa Pa Branch

Phu Tho Branch

Hung Vuong Branch

Son La Branch

Bac Kan Branch

Thai Nguyen Branch

Nam Thai Nguyen Branch

Tuyen Quang Branch

Yen Bai Branch

18

19

20

21

22

23

24

25

26

27

28

29

Lach Tray Branch

Quang Ninh Branch

Tay Nam Quang Ninh Branch

Mong Cai Branch

Cam Pha Branch

Ha Long Branch

30

31

32

33

34

35

Son Tay Branch

Thach That Branch

Dai La Branch

Thai Ha Branch

Gia Lam Branch

Hoang Mai Ha Noi Branch

Hoai Duc Branch

Ngoc Khanh Ha Noi Branch

Bac Ha Branch

616263646566676869

RED RIVER DELTA REGION

Thai Binh Branch

Ha Nam Branch

Nam Dinh Branch

Thanh Nam Branch

Ninh Binh Branch

Tam Diep Branch

SOUTHERN CENTRAL REGION

Da Nang Branch

Hai Van Branch

Song Han Branch

Quang Nam Branch

Hoi An Branch

Quang Ngai Branch

Binh Dinh Branch

Phu Tai Branch

Quy Nhon Branch

Phu Yen Branch

Khanh Hoa Branch

Nha Trang Branch

Ninh Thuan Branch

Binh Thuan Branch

Dung Quat Branch

90

91

92

93

94

95

96

97

98

99

100

101

102

103

104

153

154

155

156

157

168

169

170

171

172

(*): Indirect ownership via subsidiaries

180 BÁO CÁO THƯỜNG NIÊN 2019 181ANNUAL REPORT 2019

At 31 December 2019

Company name Address

BIDV Asset Management Company Ltd. (BAMC)

12th Floor, No.263 Cau Giay street, Hanoi

BIDV Insurance Corporation (BIC) 16th Floor, Vincom Tower A, 191 Ba Trieu, Hanoi.

BIDV Securities Joint Stock Company (BSC) 10th Floor, BIDV Tower, 35 Hang Voi, Hanoi

MHB Securities Company (MHBS) 153 Hai Ba Trung, Ward 6, District 3, Ho Chi Minh City

International Investment Development Company Ltd. (IIDC)

20th Floor, Vincom Tower A, 191 Ba Trieu, Hanoi

Bank for Investment and Development of Cambodia Plc. (BIDC) (*)

No.370, Preah Monivong Blvd., Boeng Keng Kang I, Khan Thmey 2, Daun Penh, Phnom Penh, Cambodia

Lao-Viet Insurance Joint Venture Company (LVI)(*)3rd Floor LVB Tower, No 44 Lanexang Avenue, Vientiane,

Lao P.D.R.

BIDV-SuMi TRUST Financial Leasing Co., Ltd (BSL)


Lao-Viet Joint Venture Bank (LVB) LVB Tower, No 44 Lane Xang Blvd, Vientiane, Lao P.D.R.

Cambodia – Vietnam Insurance Company (*)8th Floor, No. 398, Monivong, Beungkeng Kang I,

Charnkar Mon, PhnomPenh, Cambodia

Cambodia - Vietnam Securities Company (CVS) (*)No. 370, Preah Monivong Blvd., Boeng Keng Kang I, Khan Thmey 2, Daun Penh, PhnomPenh, Cambodia

SUBSIDIARIES

At 31 December 2019


Vietnam Aircraft Leasing Joint Stock Company (VALC) 18 Ly Thuong Kiet, Hoan Kiem, Hanoi

Cambodia – Vietnam Foods Co., Ltd (Cavifood) (*)

National Route 5, Spean Khpus Village, Sangkat Kilomet 6, Khan Russey Keo District, PhnomPenh, Cambodia

(*): Indirect ownership via subsidiaries

AFFILIATES

At 31 December 2019


Vietnam-Russia Joint Venture Bank (VRB) 1 Yet Kieu, Hoan Kiem, Hanoi

BIDV Tower Joint Venture Company (BIDV Tower) 13th Floor, BIDV Tower, 35 Hang Voi, Hanoi

BIDV MetLife Life Insurance Limited Liability Company (BML)


JOINT VENTURES


BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM JSC

Head o�ce:Address: BIDV Tower, 35 Hang Voi str., Hoan Kiem dist., Hanoi, VietnamTel: (+84) 24 2220 5544Fax: (+84) 24 2220 0399

Hotline: 19009247

To download the report, please visit the website: https://www.bidv.com.vn/en/quan-he-nha-dau-tu/ or scan the QR code:

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ANNUAL REPORT - BIDV