BIDV Review 25

A Newsletter of Bank for Investment and Development of Vietnam JSC • Issue No.25 | Mar 2017

Best Retail Bank 3 Years running

Can Tho Bridge, Vietnam ABOUT BIDV Established in 1957, BIDV has grown to become one of the leading commercial banks in Vietnam. The bank boasts subsidiaries in finance, banking, securities and insurance. BIDV has expanded its business to the international markets including Lao PDR, Cambodia, Myanmar, Czech Republic, Russia Federation and Taiwan (China). BIDV stock (BID) is listed on the Ho Chi Minh City Stock Exchange (HOSE). For more information, please visit www.bidv.com.vn

EXECUTIVE PRODUCER Bank for Investment and Development of Vietnam JSC

QUACH HUNG HIEP Senior Executive Vice President EDITORIAL BOARD BRANDING AND PUBLIC RELATIONS DEPARTMENT HEAD OFFICE: BIDV Tower, 35 Hang Voi str., Hoan Kiem dist., Hanoi, Vietnam Tel: (+84) 4 22205544 Fax: (+84) 4 22225316 Contact center: 19009247

Cover photo: Mr. Le Trung Thanh, BIDV Senior EVP (2nd, R-L) and leaders of Retail Banking receive the Best Retail Bank award from The Asian Banker

Email: bidvreview@bidv.com.vn BIDVbankvietnam License No.12/GP-XBBT dated 8 February 2017 by the Ministry of Information and Communications Printed at Vietnam Book Printing Joint Stock Company

Editor’s Letter

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Dear readers, his March BIDV is preparing for its 60th anniversary, a milestone in the bank’s establishment and development history. The whole BIDV system remains focused on its task of supporting the development of the country in general. As such, this month sees the active participation of the bank in the investment promotion in provinces across the country.

BIDV is working with Quang Nam province in preparing for a conference to call for investment. It is expected to attract the attention of around 500 ministry representatives, central agencies, international organisations, economic experts and giant domestic groups, as well as current and potential investors in the province.

in trade financing market.

To meet the demands of high-tech agricultural production of individual customers and microbusinesses in the Central Highlands and the Mekong Delta, BIDV has launched a VND10trillion (USD444.4 million) package, aiming to help customers balance financial sources against their business plan.

In this publication, BIDV Review introduces a detailed report on its trade financing sales.

Though not currently holding the largest market share, the bank is leading in terms of growth earning it the title Best Domestic Trade Finance Provider in Vietnam for 2017 by Euromoney.

Meanwhile, at the fourth conference on Investment Promotion in the Central Highlands held in early March, BIDV and its peers signed credit contracts to the value of USD1.27 billion for 36 investment projects in the fields of hydropower, high-tech agriculture and agricultural product processing.

Readers are presented with a broad overview of Vietnam’s macro-economy and those markets that BIDV has commercial representatives.

Of particular note is the expectation that the Central Bank of Myanmar may allow foreign banks to launch trading services. This would be of great significance for importers and exporters, as well as BIDV’s Myanmar branch.

For the third consecutive year BIDV has been named the Best Retail Bank in Vietnam - one of the most sought-after awards of the year in the field of retail banking and finance - by The Asian Banker. What is more, Euromoney named BIDV as Best Domestic Trade Finance Provider in Vietnam for 2017 for its impressive growth

Finally, we bring two contrasting pictures of beauty and nature in Vietnam, from the yearround sunshine and romantic scenery of Phan Thiet in the south to the special beauty of the sua flower, which appears briefly in the north during the fleeting weather change from spring to summer.

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contents

BIDV HIGHLIGHTS 4. Promoting investment in Quang Nam

13. LVI sets to boost direct premiums 14. Financial support for seafood exporter PRODUCTS & SERVICES 15. Loans for hi-tech agriculture 16. Rewards for purchasing foreign currency

6. Best Domestic Trade Finance Provider

17. LaoVietBank rewards savings customers

8. BIDV bags a hat-trick of Best Retail Bank awards 10. Central Highlands calls for investment 11. Voluntary pension scheme set in motion MARKET MOVEMENTS 18. New points in State Bank’s Circular 39

PARTNERS 12. BIC targets sustainable growth

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contents

20. Influential Fed rate hike 22. CBM may liberalise trade financing for foreign banks

29. Investment call for Asian infrastructure 30. Analysing Circular 41 and Basel II LIFESTYLE 32. March in bloom

23. Russian banks' outlook upgraded to stable

34. Phan Thiet in snapshots

24. Czech economy sees steady growth 25. FDI to Vietnam remains upward

36. International Women’s Day around the world CSR 38. New school, new hopes

26. Boosting European investment in Vietnam 27. Huge capital to stock market

28. For sustainable agricultural development

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BIDV Highlights

Vi et Dung

Promoting investment in Quang Nam representatives, central agencies, international organisations, economic experts, domestic giant groups, current and potential investors to the province.

A meeting between Quang Nam province and investors

Quang Nam province and BIDV held a seminar to prepare for a conference on investment promotion in the province.

Coastal development The Hanoi-based conference was

attended by Mr. Le Tri Thanh, vice chairman of Quang Nam province, representatives of the province’s agencies, domestic and international investors, and enterprises.

The conference will officially take place on March 25 in Tam Ky city, Quang Nam province. It is expected to attract the attention of around 500 ministry

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It will introduce the potential, strengths and investment opportunities of Quang Nam, as well as the development plan that has been put in place to attract projects into Quang Nam and other coastal central provinces, creating momentum for socio-economic development and regional linkage.

Successful investors will also share their experience of investing in Quang Nam. At the coming conference Quang Nam province will grant certificates of investment registration, investment decisions, investment memorandums and financing agreements for several projects.

Mr. Phan Duc Tu, CEO of BIDV - the conference sponsor - expressed the hope that at the coming investment promotion conference, investors will conduct surveys and implement effective investment projects, contributing to fast and sustainable socio-economic development aligned

BIDV Highlights

Chu Lai Open Economic Zone

with the province’s potentials and advantages.

Untapped opportunities Quang Nam is a province of the central key economic region with total area of 10,438 km2 and a population of 1.5 million people. The province has abundant natural resources and a favourable geographical location for connecting with other provinces and regions in Vietnam.

Quang Nam is famous for having the two world heritage sites of Hoi An Ancient Town and My Son Sanctuary.

Cu Lao Cham Biosphere Reserve and several other natural attractions are also in the province.

The province is also home to Chu Lai Open Economic Zone, Vietnam’s first coastal economic zone, featuring diversified sectors and operating based

on international principles. It also has the Dien Nam – Dien Ngoc Industrial Park – one of the foremost industrial parks in the central region.

The province’s budget revenue increased to VND19,450 billion (USD864 million), up 40.5 percent from the year-plan. Gross Regional Domestic Product (GRDP) saw the highest growth within the last ten years, of 14.73 percent, surpassing the targeted figure.

Economic structure shifted positively, with non-agriculture weight at 88.1 percent, and agriculture, forestry and fisheries weight at 11.9 percent.

GRDP per capita reached over VND53 million (USD2,355), up VND6.7 million (USD300) compared to 2015.

In 2016, Quang Ngai province licensed 30 domestic projects with total registered capital of VND3,405 billion (USD151 million). The province also licensed 17 new FDI projects with

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registered capital hitting USD122.8 billion, raising total FDI projects of the province to 135.

During the year 1,050 new enterprises were registered, an increase of 20 percent year-on-year. The province revoked the business licenses of 250 enterprises, a decrease of 43 percent year-on-year, and the number of dissolved companies also reduced.

The current focus within Quang Nam is the implementation of three strategic breakthroughs, namely synchronous infrastructure construction; human resources development and investment environment improvement. The province has attracted domestic and foreign enterprises for long-term investment such as Truong Hai Auto, Suntory – Pepsico, Vietnam Brewery Limited Company, Inax, Groz-Beckert, Montgomerie Links, Victoria, Golden Sand and Palm Garden.

BIDV Highlights

Hai Au

The number of customers making import-export payments through BIDV accelerated

Best Domestic Trade Finance Provider UK-based financial magazine Euromoney named BIDV as Best Domestic Trade Finance Provider in Vietnam for 2017.

Sharp growth Overtaking many major players to earn the highest award demonstrates the strong reputation of the bank’s trade finance quality amongst import-export enterprises.

The award recognised BIDV’s excellence in trade finance services, its

deep product expertise and consistent efforts in providing customers with better quality of services.

Vietnam’s big four banks BIDV, Vietcombank, Vietinbank and Agribank are currently the four biggest banks in the trade financing market, with BIDV leading in terms of growth. In 2016, trade finance growth of Vietcombank, Vietinbank and Agribank stood at around 10 percent, while BIDV’s hit a record USD24.62 billion, up 26.9 percent compared to 2015, or 2.7 times higher than that of its peers.

The bank’s market share in 2016 also

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reached more than twice the average growth over the last four years. BIDV continues to be among Top 3 in trade financing market share. These are impressive figure given that Vietnam's total import-export turnover increased only 6.5 percent (failing to meet the target of 10 percent).

The number of customers making import-export payments through BIDV also accelerated to 9,137 - an increase of 3,353 customers compared to 2015.

Of this, large customers accounted for 56 percent of total import-export payment volume. The proportion of

BIDV Highlights

customers accessing trade finance products was 42 percent.

With Vietnam's total import-export turnover per year reaching USD300350 billion, many banks are aiming to break into the trade finance sector.

Customer care focus Importers and exporters are potential customers for banks. The improvement in trade finance market share depends greatly on the customer policy of each bank.

million) package for FDI enterprises; and a USD100-million package for importers/exporters applied at the year-end. BIDV has also increased its market share by designing products tailored to the needs of specific customers.

In 2017, the preferential credit package for importers and exporters remains the key customer policy of BIDV. The bank sets to continue to introduce new trade finance products, targeting particular customer segments to provide better customer care and more

suitable product designs. The bank said it would offer greater support to customers to access potential markets that it has its foot in such as Russia, Myanmar and Taiwan (China). These solutions are expected to help the bank gain a greater market share in this sector.

BIDV has set targets for 2017 to reach 10 percent of the market share and for its import-export payment volume to hit USD40 billion, equivalent to what would be record growth of 85 percent year-on-year.

In 2016, BIDV offered preferential policies for customers in this sector, with the key offering being a VND20trillion package (USD889 million). By the end of 2016, 147 customers had signed up for this package, borrowing a total of VND21,915 billion (USD974 million) of which large enterprises accounted for outstanding loans of VND17,429 billion (USD774.6 million), or 80 percent of total customers.

As well as these preferential policies, the bank is offering stimulus policies for group customers or customers from other markets such as a VND3 trillion (USD133 million) package for Vietnam-Russia bilateral payment; VND1 trillion (USD44.4 million) package for importers/exporters to Myanmar; VND5 trillion (USD222.2

Cai Lan international container terminal

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BIDV Highlights

Ha i Nam

BIDV bags a hat-trick of Best Retail Bank awards For the past three consecutive years BIDV has received the prestigious Best Retail Bank of 2017 award from The Asian Banker magazine, marking a spectacular trio of awards for the bank.

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he awards programme, administered by The Asian Banker and refereed by prominent global bankers, consultants and academics, is the most prestigious of its kind. These are the most soughtafter awards of the year in the field of retail banking and finance presented

by The Asian Banker magazine for the purpose of monitoring, evaluating and recognising the best retail banks in the region as well as countries in AsiaPacific, Central Asia, Middle East and Africa.

The Best Retail Bank awards are given to banks who have shown the greatest efforts and achievements in providing products and services for individual customers and who hold a strong position in the financial and banking markets, showing impressive retail business strategies and performance

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BIDV Highlights

throughout the year.

The Asian Banker awards have been recognised as some of the most prestigious in Vietnam and Asia Pacific due to the strict evaluation criteria and the participation of reputable banks. The award programme has been running since 2002 and has earned a solid reputation in that time, particularly in terms of its transparency. The Asian Banker conducts a comprehensive evaluation of over 250 banks across 42 countries.

Each year, many reputable banks participate in the prestigious awards including Standard Chartered, HSBC, OCBC, ANZ and DBS. At the Asian Banker Summit which took place in January 2017 in Hanoi, seven banks were honoured in categories such as best mortgage product and best credit card product.

Amongst these, BIDV received awards in two categories, “Best Mortgage Product in Vietnam 2017” and “Best Retail Bank in Vietnam 2017”.

BIDV was the leading bank among Vietnamese commercial banks in terms

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of retail deposits and retail credits with average growth rate in the period 2013-2016 reaching approximately 30 percent and 50 percent per year respectively. Featuring a network of more than 1,000 transaction points, including standardised and modern retail outlets, more than 32,000 ATM/ POS connected with over 1,000 agents worldwide, and bilateral agreements signed with large banks in countries and territories including Russia, the Czech Republic, Taiwan (China), South Korea, Malaysia, Cambodia, Japan, Laos, and Myanmar, BIDV not only holds the position of the leading bank in Vietnam, but also continues to expand internationally.

Over the past few years, BIDV has been honoured with numerous prestigious international awards including: Outstanding Retail Bank 2016 and outstanding e-bank for two consecutive years (2014 and 2015) from the Vietnam Banks Association and IDG; My E-Bank award from the VnExpress e-newspaper; as well as the most recent awards from The Asian Banker.

BIDV Highlights

Ngu y en Quang

Central Highlands calls for investment The fourth conference on Investment Promotion in the Central Highlands region took place in March in Buon Ma Thuot city, Dak Lak province, with the attendance of Prime Minister Nguyen Xuan Phuc and more than 500 investors and enterprises, both local and foreign.

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he Central Highlands, comprising the provinces of Dak Lak, Kon Tum, Gia Lai, Dak Nong and Lam Dong, is home to nearly two million hectares of basalt soil, or 60 percent of the total in Vietnam, creating favourable conditions for coffee and pepper farming.

The Prime Minister has urged the Central Highlands region to harness its potential to attract investment, especially in the fields of high-tech agriculture, tourism, forestry and renewable energy.

Between 2011 and 2015, the region’s development investment reached nearly USD12 billion - double that of the previous period from 2006-2010.

Average investment growth of the whole period hit 11.3 percent.

Investment in agriculture, forestry and fishery increased by an average of 14.89 percent. Investment into industry and construction rose by 2.39 percent and into the service sector by 12.13 percent per year.

The fourth conference on investment promotion in the Central Highlands region

However, foreign investment in the Central Highlands region remains modest. Currently, 140 FDI projects worth a total of USD800 million are being implemented in the province.

So far, the region’s foreign investment accounts for only 0.65 percent in terms of projects and 0.25 percent in terms of registered capital of Vietnam’s total foreign investment.

Shinya Ezima, vice president of the Japan International Cooperation Agency, which has invested in a number of projects in the Central Highlands over the past few years, said he believes that the Central Highlands holds great potential. He confirmed

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that JICA will increase its investment in the region in the near future.

Branches of commercial banks in the Central Highlands including BIDV, LienVietPostBank, Agribank and Vietinbank signed credit contracts for a total of 36 investment projects in the fields of hydropower, hi-tech agriculture and agricultural product processing at the conference. Total capital from these reached more than VND29 trillion billion (USD1.27 billion). Further, the Central Highlands provinces granted investment certificates to ten projects with total investment capital of more than VND100 trillion (USD4.4 billion).

BIDV Highlights

Na m Minh

Voluntary pension scheme set in motion BIDV, Vietnam Securities Depository (VSD) and VietFund Management (VFM) signed a memorandum of understanding in February on developing and providing a personal account management service and supervision for a new voluntary pension fund.

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he parties will cooperate to develop software for managing personal accounts for people involved in the new voluntary pension fund at VSD as well as an informationsharing mechanism for BIDV to provide a supervisory service for the fund.

The first voluntary pension fund is expected to be introduced in 2018, marking an important milestone in the formation of a new pillar in Vietnam’s social security system according to the government’s policy on diversifying social security pillars.

The programme will be implemented under the legal framework of the government Decree No.88/2016/ND-CP. Under the decree, voluntary pension funds will be set up to provide a new form of contribution and investment for employees. By participating in the scheme, employees can increase their retirement funds, receiving both the private pension and social insurance.

The voluntary pension fund is a financial product in which applicants contribute money and receive payments from the fund during their retirement. The pension amount paid to each person depends on the total

Representatives of BIDV, VSD and VFM shake hands after signing a MoU in Hanoi

amount contributed by each person and the investment effectiveness of the fund. The signing of the memorandum showed the joint efforts of the parties in preparing infrastructure for launching the voluntary pension fund.

since 2006. This service provided by BIDV to the voluntary pension fund contributes to diversifying products and services for Vietnam’s stock market, improving its competitiveness.

In the strategy for stock market development until 2020, the development of professional institutional investors such as insurance funds and voluntary pension funds to act as key investors in the stock market is an important solution to finalising and developing the capital market. The signing laid a solid foundation for introducing a new product to Vietnam’s financial market, joining to boost the stock market.

VietFund Management is the first domestic fund management company in Vietnam to provide diversified products and services for domestic and international clients via their funds and portfolio management service.

BIDV has provided a supervisory service

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Vietnam Securities Depository officially began operating in 2006, offering the functions of implementing registration, depositories, clearing, securities payment and provision of services to support the completion of stock transactions.

partners

Viet Dung

Leaders of BIDV and BIC press the button to start BIC’s business plan

BIC targets

sustainable growth BIDV Insurance Corporation (BIC) held a conference to review 2016 and discuss its business plan for 2017.

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r. Tran Hoai An, CEO of BIC, reported that BIC continued to work effectively towards its operation goals in 2016, which stipulate strict risk management.

The corporation carefully controlled services such as health insurance and motor vehicle insurance amid fierce market competition. BIC reaped positive business results, with insurance premiums totalling VND1,671 billion (USD74.3 million), up 13 percent year-on-year. Direct premiums hit VND1,476 billion (USD65.6 million), an increase of 15 percent and higher than the industry average growth of 12.5 percent. BIC’s pre-tax profit accelerated 19 percent, to VND137.8 billion (USD6.1 million).

BIC also achieved other outstanding

results. A.M. Best revised the outlook of BIC to positive from stable and affirmed the financial strength rating of B+ (Good) and the issuer credit rating of “bbb-”. The corporation developed its network, raising the number of member companies to 26 and total trading desks to 140. BIC ranked fifth in the list of ten most prestigious non-insurance companies in Vietnam. The corporation also remained amongst the Top 1000 taxpayers in Vietnam for the seventh consecutive year and top 100 brands in Vietnam. BIC is one of the few companies to be recognised by Vietnam’s Ministry of Finance for having expertise in reserve and solvency calculation.

According to its 2017 plan, BIC will focus on solutions to effective, safe and sustainable growth, increasing its market share and raising its position in Vietnam’s non-insurance market.

To reach the insurance premium of

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VND1,900 billion (USD84.4 million) and consolidated pre-tax profit of VND186 billion (USD8.25 million), BIC will continue to enhance its business effectiveness and management quality as well as product, post- and after-sale services.

To prepare for the challenging business year ahead BIC held training programmes for its employees to enhance their expertise in bancassurance, examining compensation, financial accounting and reinsurance.

Based on forecasts from insurance experts, in 2017 insurance companies are expected to maintain stable growth of 20 percent. In the coming years, the insurance industry is set to gain as much as VND100,000 billion (USD4.4 billion) in insurance premiums (excluding revenue from investment).

partners

An Na

LVI sets to boost

direct premiums Lao-Viet Insurance Company (LVI) held its twentieth Board of Directors meeting in Vientiane, Lao PDR in March, setting 50 percent in direct premium growth and pre-tax profit of USD1.6 million

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lthough the Laos economy is still facing difficulties, LVI maintained second position in terms of market share and first place in terms of return on equity. The company earned direct premiums and pre-tax profit of USD8.7 million and USD1.25 million, respectively.

According to a report from the LVI board of directors, bancassurance grew well at 25 percent, thanks to a focus on resource investment. LVI’s new branches including Southern Branch and Capital Branch operated smoothly. The Southern Branch has already begun to see profit from direct insurance premiums.

In 2017, LVI is prioritising enhancing its effectiveness. Direct insurance premiums are set to grow 50 percent year-on-year and pre-tax profit to hit USD1.6 million. To achieve the targets, LVI will take its existing advantages such as widespread bancassurance and the support of Banque Pour Le Commerce Exterieur Laos (BCEL) and other traditional partners including LaoVietBank and Agricultural Promotion Bank. The company will also invest in its information technology system, risk management and professional development of its employees.

Laos was expected to have been one of the strongest performers in Southeast Asia last year, likely maintaining the strong pace of economic growth

LVI Tower

recorded in previous years. The hydropower sector has played a pivotal role in the country’s economic ascent as energy exports account for around a third of all exports. The government plans to further increase Laos’s total installed energy capacity by 31 percent by 2020, according to the United Nations Framework Convention on Climate Change. The Laos Ministry of Finance and the World Bank signed a USD25 million agreement in early February to further improve road maintenance systems and enhance

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road connectivity.

In 2016 the Lao economy grew at a rate of only 6.9 percent, falling short of the government’s target of 7.5 percent.

However this growth rate is still high compared to other countries in the region. The economic growth target has been revised to 7 percent for 2017 and 2018, with a slight increase to 7.3 percent in 2019, rising further to 7.5 percent in 2020. Laos’s insurance market is also expected to develop accordingly.

partners

Tue Minh

Financial support for seafood exporter quickly, rising to be amongst the top five exporters in the Ca Mau – Bac Lieu region. The company currently employs over 350 staff - a significant increase from the number at its inception, at just 19. The corporation’s annual export turnover now reaches USD25 million.

BIDV staff work with Hoa Trung Seafood Corporation representatives

Receiving support and capital from BIDV Ca Mau, Hoa Trung Seafood Corporation was able to develop steadily to become a top choice for seafood importers in Asia.

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oa Trung Seafood Corporation was established in 2006, before the world financial crisis of 2008 hit. The crisis severely affected the purchasing power of consumers as well as import power of importers, particularly in the seafood sector. The seafood industry at that time held potential risks of concern to banks, who were reluctant to provide capital.

Hoa Trung Seafood Corporation’s management team worked closely with employees to help the company

overcome difficulties. By offering good benefit policies, the company attracted a large number of workers.

Production capacity in the early days was only around 20 tons, yet the products offered were high quality, earning the company a good reputation with its customers. The company was therefore able to expand its production factory, hire more workers and secure an increasing number of contracts.

Having insufficient capital for the requirements, the company approached BIDV Ca Mau and reached an agreement for an initial credit limit of VND60 billion (USD2.6 million), later increasing to VND300 billion (13.3 million). This credit from BIDV Ca Mau enabled the company to develop

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Commenting on the company’s success, Mr. Nguyen Minh Hai, company general director, expressed his gratitude to BIDV Ca Mau for their effective support. Mr. Hai said, “BIDV Ca Mau has accompanied us from the outset, supporting us through a difficult beginning in accessing credit that has enabled us to do business and offering us preferential policies and rates.”

“BIDV has an experienced and dedicated team who provide great support to us. Thanks to them, we have a better understanding of banking products and services and can make the right decisions in payment methods to our partners,” Mr. Hai said.

Hoa Trung Seafood Corporation is headquartered in Hoa Trung hamlet, Luong The Tran commune, Cai Nuoc district, Ca Mau province. The company specialises in trading, producing and exporting seafood products to markets in China, Japan, Hong Kong and South Korea.

products & services

Anh Tuan

Loans for

hi-tech agriculture M

any commercial banks are currently tailoring products to facilitate high-tech and clean agriculture. To meet the demands of high-tech agricultural production of individual customers and microbusinesses in the Central Highlands and the Mekong Delta, BIDV has launched a VND10-trillion (USD444.4 million) package with attractive rates.

Customers can choose from flexible options offering lending rates of 6.5 percent per year for maximum half of the loan term (applicable to less than 12-month loan) or 7.5 percent per year for maximum half of the loan term (applicable to loans over 13-months).

Actual interest rates will be applied by individual BIDV branches.

The package aims to help customers balance financial sources against their business plan. With favourable rates and system-wide rollout, the VND10-trillion package is evidence of BIDV’s commitment to accompanying and providing practical support for individual customers and microbusinesses, particularly in meeting their need for short-term working capital and machinery investment.

The package is available from now until the end of the year, or until it is fully disbursed.

Other banks such as Vietcombank and LienVietPostBank also initiated a VND10-trillion package for this sector.

Small banks such as VietABank also

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prioritised VND500 billion for hightech agriculture. To date, commercial banks have poured VND85 trillion into this priority industry, including the VND50 trillion-package from Agribank beginning at the end of 2016.

products & services

Rewards for purchasing foreign currency From March 1 to April 28 BIDV is running a promotion programme titled “More gifts, more fun” to encourage the purchase of foreign currencies for overseas study.

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ndividual customers making transactions of minimum USD5,000 (or the equivalent amount in other foreign currencies) are eligible for the programme. Participants will have the chance to win exciting prizes.

Customers can register to buy foreign currency online or purchase direct at a BIDV transaction counter.

Smaller prizes are announced every Wednesday on BIDV’s official website www.bidv.com.vn. The main prize will be awarded on May 15, 2017.

​Prize structure: Category

Condition

Prize

Cash reward (in place of material prize at customer’s request)

First prize

Highest value transaction made during the promotion period

1 Samsung Galaxy S7 Edge 32Gb worth VND17 million

1 debit card + VND15 million transferred into customer’s account

Two second prizes

Second and third highest value transactions made during the promotion period

1 Apple Watch Sport Series 42mm worth VND12 million per winning customer

1 debit card + VND10 million transferred into customer’s account

Three third prizes

Third, fourth and fifth highest value transactions made during the promotion period

1 Canon Selphy Printer CP1200 including printing paper and ink worth VND5 million per winning customer

1 debit card + VND3 million transferred into customer’s account

40 consolation prizes

Customers with the following transaction numbers: 1, 10, 20, 30, 40, 60, 80, 100, 120, 140, 150, 160, 180, 200, 220, 240, 250, 260, 280, 300, 320, 340, 350, 360, 380, 40, 410, 420, 440, 450, 460, 480, 490, 500, 520, 540, 550, 560, 580, 600

1 Power Bank - Anker Power Core worth VND2.5 million per winning customer

1 debit card + VND2 million transferred into customer’s account

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products & services

LaoVietBank rewards savings customers

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n 28 February LaoVietBank announced the winners of the ‘Savings programme 2016 – phase 2”. The programme offered 39 prizes worth a total of LAK730 million (roughly USD89,000).

First prize was a new Toyota Fortuner car worth more than LAK400 million (roughly USD49,000) , awarded to Mr. Axang Fou. Three second prizes of Honda Click motorbikes worth LAK17.6 million (about USD2000) were given to Mr. Sanety Sengdara, Ms. Davone Sengsoulyphon and Ms. Daonoy Soneboutta.

Additionally, smaller prizes were given to lucky customers including five third prizes of 55 inches TVs worth

LAK7.7 million each (approx. USD900), ten fourth prizes of Iphone 7 worth LAK7 million (about USD850) and 20 fifth prizes of savings books of LAK3 million (USD366).

LaoVietBank will continue its ‘Savings programme – phase 1’, expected to launch at the end of March this year.

LaoVietBank was founded in 1999 by BIDV and Banque Pour Le Commerce Extérieur Lao Public (BCEL). In 2016, LaoVietBank received the double awards of Laos Domestic Technology & Operations Bank of the Year and Core Banking System Initiative of the Year – Laos from the Asian Banking and Finance (ABF) magazine.

Mr. Nguyen Van Binh (second, R-L), CEO of LaoVietBank awards the first prize (a Toyota Fortuner car) to Mr. Axang Fou

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market movements

Duy Nguye n

New points

in State Bank’s Circular 39 Circular 39 issued by the State Bank of Vietnam on 30 December 2016 and effective on 15 March 2017 regulating the lending by credit institutions and foreign bank branches provides some new points which may significantly affect the operation and management activities of credit institutions.

Borrowers Clause 3, Article 2 of the Circular stipulates that borrowers at a credit institution must be legal entities and individuals. Thus, in principle, non-legal entities (such as households, cooperative groups, other organizations without legal personality) are not the subject eligible for borrowing loans at credit institutions.

Loan purposes The Circular does not limit the borrowing purposes as previously stipulated, but classifies the demand for loans into two groups: Loans for living expenses; and loans for doing business and other activities except those prohibited by laws.

Credit institutions may not provide loans for the following activities: first, carrying out investment in activities prohibited by laws; second, paying costs, meeting the financial needs of transactions or acts prohibited by laws; third, purchasing and using goods and services from industries prohibited by laws; fourth, buying gold bullions; fifth, repaying the credit

facility granted by the very lending credit institution, except the case in which the loan is used to pay interests incurred from the construction of works where the loan interest costs are included in the total construction costs as approved by competent authorities in accordance with laws; and sixth, repaying a credit facility borrowed

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from other credit institutions and repaying foreign loans, except the loans for early repaying debts which meet certain conditions.

Interest rates Article 13 in Circular 39 states that credit institutions and customers

market movements

late payment days. Circular 39 also stipulates that if a loan is classified as overdue, the customer must pay interest on the overdue debt principal corresponding to the delayed period of time at an applicable rate not exceeding 150 percent of the interest rate at the time of classification (Clause 4, Article 13).

Loan term Circular 39 stipulates that the loan term shall start from the following day of the date on which a credit institution disburses the loan to the customer until the time when he or she has fully repaid the loan principal and interest as agreed upon by the credit institution and him or her. In case the last day of the loan term falls on public holidays or weekly holidays, it shall be moved to the next working day. For the loan term of less than one day, the provisions in the Civil Code 2015 regarding the starting time shall be applied (Clause 8, Article 2).

Lending methods

shall agree on lending interest rates according to market demand and supply, needs for loans and the level of customer’s creditworthiness. For shortterm loans denominated in Vietnamese dong, the agreed interest rate may not exceed the maximum lending rate approved by the Governor of the State Bank of Vietnam from time to time.

The Circular supplements a provision on interest incurred on late payment.

In particular, in case a customer fails to pay interest on time, he or she must pay late interest at the rate agreed by the credit institution and him or her, but not exceeding 10 percent per annum, and calculated on the late interest amount corresponding to

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Circular 39 supplements a number of lending methods to suit the actual credit operations (such as revolving loans, rollover loans). A number of lending methods are strictly regulated and conditionally applied, such as revolving loans which only apply to short-term loans and customers without bad debts.

The Circular also amends the provision on lending methods to suit the state management such as overdraft which does not permit cash withdrawal from current accounts.

market movements

Q u ang Dung

Influential

Fed rate hike The Fed plans an additional rate increase of 0.75 percent in 2017 and 2018, which means two rate hikes in 2017 and three in 2018. The expected average interest rate at the end of 2017 and 2018 is around 1.4 percent and 2.1 percent, respectively.

In the Federal Open Market Committee meeting on March 14-15, the Fed decided to raise benchmark interest rate by 0.25 percent to 0.75-1 percent. This is the second rate hike in three months. In response, BIDV’s Research Centre issued a report assessing the impact of this decision on both the international and domestic market.

Forecast rate hike The decision to raise the rate was made based on the positive signs of the US market over previous months, including an employment rise of

230,000 in both February and January.

Consumer confidence has also risen and inflation has been under control.

In addition, Fed policymakers are pleased by an improving global economic outlook, with Eurozone growth up and China looking more stable than a year ago.

This rate hike was predicted in February when US economic statistics were released. According to the Fed’s projection for economic performance, the job market will be more positive and the unemployment rate will fall slightly from 4.8 percent to 4.7 percent while the inflation rate may end at 1.9 percent in 2017. GDP growth is projected to hit 2.1 percent in 2017, 2.1 percent and 1.9 percent in 2018 and 2019, respectively.

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market movements

Impact on international markets After the Fed announced an interest rate rise, world markets saw gains.

The Dow Jones, S&P500 and Nasdaq advanced 0.5 percent, 0.8 percent and

0.6 percent, respectively and growth was seen in European and Asian stock markets.

Meanwhile, almost all the exchange rates of other strong currencies against the USD increased.

On the monetary market, the U.S. Dollar Index (DXY) dropped by 0.94 percent, from 101.7 to 100.74.

Vietnam’s response From February 2 to March 15, the exchange rate of USD-VND saw an upward trend, from VND22,590 to VND22,825 per dollar - an increase of 1.04 percent. The central rate listed by the State Bank of Vietnam also increased from VND22,198 to VND22,262 per dollar, up 0.28 percent.

The acceleration was driven by the expectation of the Fed’s rate hike and the trade deficit in the first two months of the year. However, on March 16, after the Fed officially announced the increase in the rate, both the central rate and the listed rate by commercial banks decreased slightly.

In the coming period, the domestic forex market will be more influenced by customer demand and market supply.

From the beginning of this year, the VN-Index has maintained an upward trend, accelerating to 720 points perhaps indicating that Vietnam’s stock market is not influenced by the Fed’s rate hike.

BIDV Research predicts that due to the cautious interest rate hike plan for the 2017-2018 period, the world economy and the forex and stock market of Vietnam will remain stable and will not be significantly impacted.

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market movements

CBM may liberalise trade financing for foreign banks According to the Myanmar Times, the Central Bank of Myanmar may allow foreign banks to launch trading services if local banks are unable to facilitate trade financing for importers and exporters.

“T

he Central Bank has already allowed local private banks to engage in trade financing.

If they [local private banks] cannot fulfil the matter of trade financing, we plan to allow foreign bank branches in Myanmar to serve importers and exporters with trade only accounts, however these branches will not be permitted to open other types of account,� a Central Bank director general said.

There are currently 13 international financial institutions licensed by the Central Bank to open branches in Myanmar. These foreign bank branches are only authorised to open accounts

as joint ventures with local banks. The new plan means that joint ventures are no longer a prerequisite and that foreign banks are free to open trading accounts on their own.

However, according to exporters and importers, the director general said that the Central Bank will allow foreign banks to offer trading account services for them only if local private banks cannot provide adequate resources for trade financing ventures.

Since businesses have repeatedly encountered difficulties in securing funds from local banks, the situation was addressed during a meeting with the Ministry of Planning and Finance, the Central Bank and the Ministry of Commerce, where the authorities were lobbied to allow foreign banks to complement the financial supply.

While some private banks offer trade financing, the amount is very small - just USD4 to 5 million. They cannot grant the

full amount required by the businesses.

Currently, nine banks among 24 local banks are involved in trade financing, supporting traders with pre- and postshipment financing.

Local farmers and exporters rely on trade finance instruments because the banks can pre-pay them before the goods reach their destination.

Currently, local banks offer this service but the level of financing is inadequate.

According to the central bank official, the Central Bank is committed to liberalising the financial sector gradually, with a framework in place for foreign banks to join the sector step by step, while giving time for local banks to develop and catch up.

BIDV was the first Vietnamese bank to establish a branch in Yangon, Myanmar, forming an expanded arm of BIDV serving Vietnamese enterprises doing business in the country.

The Central Bank of Myanmar

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market movements

Russian banks’ outlook upgraded to stable

A

ccording to RT.com, Moody's rating agency has revised its outlook on 14 Russian banks from “negative” to “stable”. The move followed the upgrade of the Russian sovereign debt rating from negative to Ba1.

The list of lenders includes Sberbank, VTB, Bank of Moscow, Russian Agricultural Bank and Gazprombank.

The agency upgraded the baseline credit assessment and adjusted credit assessment (BCA) of Sberbank to Ba1 from Ba2, while the lender’s long-term and short-term counterparty risk assessments were improved to Baa3 from Ba1.

“The upgrade of Sberbank's BCA and adjusted BCA to ba1 from ba2 reflects the bank's resilience to banking crises in Russia, as reflected in its ability to continue without government support during these times,” the release reads.

Sberbank enjoys a dominant position in all key segments of the Russian banking sector and has an unrivaled countrywide branch network, according to the agency.

“Thanks to its entrenched market position, the bank generated strong recurring earnings, with return-onaverage equity of around 20 percent in 2016. Its core customer funding profile has remained strong, with the majority of funding comprising stable and granular individual deposits and the bank displaying low dependence on market funding, which currently stands at around 10 percent of the bank's total liabilities,” said Moody’s.

Sberbank

The agency also confirmed that Sberbank’s asset quality metrics are better than the Russian banking sector average, though weaker than those of global peers.

“Problem loans stood at 9.5 percent of total loans as at 1 October 2016 and 73 percent were covered by loan loss reserves. Moody’s believes that Sberbank’s problem loan ratio has passed its peak and that its asset quality metrics will gradually improve over the course of 2017 thanks to the bank's disciplined risk management practices,” Moody's remarked.

In a report recently released by Brand Finance, one of the world’s leading brand valuation and consultancy

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agencies, Sberbank was revealed to have seen a 33 percent increase in brand value, moving up to 24th place in the global rankings and re-entering the top 10 European brands ranking.

According to the report, Sberbank is currently Russia’s most valuable banking brand, with its brand value reaching USD9.1 billion.

VTB Bank is one of Russia’s leading universal banks, offering a wide range of banking services and products within the country as well as in Europe, Asia, Africa and the US. In 2006, VTB and BIDV collaborated to form a joint venture bank, VietnamRussia Bank, with headquarters in Hanoi, Vietnam.

market movements

Q u ang Die u

Czech economy sees

steady growth T

he Czech economy experienced a slight acceleration in growth in 2016, supported mainly by increasing household consumption and external demand.

This acceleration followed a disappointing Q3 for the country.

According to a refined estimate from the Czech Statistics Office released in March, GDP in the fourth quarter of 2016 increased by 1.9 percent year-onyear. GDP growth for the entire year was 2.3 percent.

The contribution of household consumption to GDP growth was 1.1 percentage points and that of external demand was 1.2 percentage points. In contrast, investment activity including inventories had a slight negative influence on GDP growth.

Final consumption expenditure of households increased by 2.9 percent year-on-year, thanks to growing purchases of durables such as cars.

Expenditure in other categories also grew. External trade balance increased at current prices by CZK67.4 billion year-on-year to CZK347.2 billion - the highest annual increment in the history of the Czech Republic. Gross capital formation for the whole of 2016 was 1.3 percent, lower than in 2015.

The Czech National Bank forecasts the economy to expand 2.8 percent in both 2017 and 2018

Gross value added (GVA) in 2016 increased by 2.1 percent compared to the previous year. Economic growth, with the exception of construction, has been reported across the entire Czech economy, while the contribution of manufacturing (1.3 p.p.) was over half of total GVA growth.

Total employment increased by 1.8 percent year-on-year to 5,273,000 persons. The total number of hours

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worked was 2.6 percent more than in 2015.

The Czech National Bank forecasts the economy to expand 2.8 percent in both 2017 and 2018. FocusEconomics Consensus Forecast panelists expect the economy to expand 2.6 percent in 2017, a figure unchanged from last month’s projection. For 2018, the panel also predicts GDP to increase 2.6 percent.

market movements

Ha i Au

FDI to Vietnam remains upward

A

ccording to the Foreign Investment Agency’s latest statistics, foreign direct investment (FDI) to Vietnam is on an upward trend, reaching USD3.4 billion in the first two months of the year - an increase of 21.5 percent compared to the same period last year.

By February 20, 313 new foreigninvested projects were licensed with total registered capital of over USD2 billion, up 6.5 percent year-onyear. Another 137 existing projects registered to raise capital by USD760 million, equivalent to 84.5 percent of the same period in 2016.

Disbursed FDI showed a slight increase of 3.3 percent compared to the same period last year.

In the first two months of the year, foreign investors channelled a total of USD619 million to raise capital or purchase stakes in local businesses, four times higher than figures of the same period last year.

FDI capital was poured into 18 industries and sectors during these two months. The manufacturing and processing industry remained the most attractive area to foreign investors, seeing investments amounting to USD2.5 billion, accounting for 73.4 percent of total registered capital in two months. The industry is followed by real estate (10.1 percent), wholesale, and retail sales (6.5 percent).

In the first two months alone,

Workers in a garment factory at the Vietnam-Singapore Industrial Park. Photo: Bloomberg

Singapore surpassed other countries to become Vietnam’s leading investor, owning FDI of USD881.6 million. China and the Republic of Korea ranked second and third with USD722 million and USD637 million respectively.

Among large-scale foreign-invested projects established during the period were the USD285 million VietnamSingapore Industrial Park 3, being developed in Binh Duong, and a China-invested polyester and fiber manufacturing plant in Tay Ninh province worth USD220 million.

There are currently 116 countries and

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territories investing in Vietnam. The Republic of Korea leads the group with FDI of USD50.98 billion, followed by Japan and then Singapore.

62 provinces and cities nation-wide received FDI. Ho Chi Minh City is proving to be the most attractive destination, attracting USD45 billion.

Binh Duong province took second position with USD28.1 billion and Ba Ria – Vung Tau ranked third with USD27.1 billion. Hanoi - the capital of Vietnam - received FDI of USD26 billion.

market movements

Tr inh Dung

Boosting European investment in Vietnam largest investor in Vietnam with total committed FDI of USD1.3 billion. The country’s key export products included textiles and garments, footwear, coffee, seafood and electronic items. Products imported from the EU were mainly pharmaceuticals, machinery and vehicles.

Chairman of EuroCham Michael Behrens expects that the EU-Vietnam FTA could become a benchmark free trade deal in Vietnam’s globalisation in the context of the uncertain future of the Trans Pacific Partnership agreement (TPP).

Seafood - one of Vietnam's key exports to Europe

The recent publication White Book 2017 of the European Chamber of Commerce in Vietnam (EuroCham) stated that Vietnam is currently attracting the attention of investors from the European business community.

T

he White Book 2017 reported that Vietnam has made practical changes that are helping to attract more investors. These include changes to the legal systems related to investment and the government welcoming FDI in manufacturing and production activities.

The European business community also cites the significance of Vietnam’s continual improvements to its domestic business environment.

Other factors include Vietnam’s demographics. Twenty five percent of the country’s population of 90 million are aged 10 to 24. GDP per capita is rising and the country has the fastest growing number of middle-income earners in Southeast Asia.

The White Book also discussed existing drawbacks that need addressing. Top of the list is the unclear project licensing process.

Vietnam’s administrative system is still cumbersome. There are often delays in tax declaration, customs clearance, business registration and other administrative procedures, causing costs for enterprises.

According to the White Book, in 2015 the European Union (EU) was the third

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The EU committed to support Vietnam in its progress into the world economy in terms of modernisation and integration. Based on the socioeconomic development of Vietnam until 2010, assistance from the EU to Vietnam increased 30 percent to reach €400 million through the Multiannual Indicative Programme (2014 - 2020), with the focus being green energy development.

Chairman of Vietnam Chamber of Commerce and Industry Vu Tien Loc said that one chapter of the book was designated to analysing the impact of the EU Vietnam Free Trade Agreement on local businesses. “The EU-Vietnam FTA is a major opportunity for Vietnamese goods to enter a market of 28 member states, leveraging domestic institutional reform through high standard regulations on cross border trade. Further institutional reform is required to realise commitments stated in the document," he said.

market movements

An Nhie n

Huge capital to stock market

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n the first months of 2017 foreign investment continued flowing into Vietnam’s stock market, with its total portfolio value reaching over USD18.4 billion - the highest to date. Total foreign investment hit approximately USD20 billion, including money from indirect accounts.

According to Vu Bang, chairman of the State Securities Commission, total capitalisation value of the stock market reached over VND2,260 trillion (USD98.9 billion), equivalent to 50.3 percent of GDP and an increase of 16 percent compared to the end of 2016.

This is the highest figure reached since the establishment of the Vietnamese stock market.

On March 6, VnIndex closed at 716.29 points – the highest over the last ten years and up 7.7 percent compared to the end of 2016. HNX Index closed at 86.55 on the same day, up 8 percent.

By the end of February there were 708 stocks and fund certificates listed on the two bourses and 485 stocks registered to be traded on UPCoM. Their total listed value hit VND778 trillion (USD34.6 billion), up 7 percent compared to the end of 2016.

The market’s liquidity is continuously improving, with the average transaction value per session hitting VND7,365 billion (USD327 million), up 49 percent against the average of 2016. Of this, government bond transactions grew 7 percent and stock transactions extended 6 percent compared to last year’s average.

In the first two months, capital mobilisation on the stock market reached VND40.7 trillion (USD1.8 billlion), a reduction of 27 percent against the beginning of 2016. However, mobilisation in February increased 79 percent compared to January.

According to Vu Bang, at the end of 2016, the expectation that the United States will raise interest rates as well as the appreciation of USD resulted in investment funds worldwide beginning to switch capital out of emerging markets, including Vietnam.

However, from the year-beginning, foreign investors continued to net-buy on both the stock and bond markets.

VND1,545 billion (USD68 million) of stocks and fund certificates and VND5,960 billion (USD264 million) of bonds were bought by foreign investors.

Banking stocks saw positive growth in March. BIDV’s stock (HOSE: BID) became one of the market pillars beside its peers including CTG and VCB. BID increased 14 percent compared to the end of last year, contributing to VNIndex’s growth.

Banking stocks saw positive growth in March

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market movements

Viet Anh

For sustainable agricultural development Sustainable Rice-Based Systems).

Mr. Sergiy Zorya and Mr. Cao Thanh Binh, co-chairs of the project, were in attendance. Leaders of Agriculture and Rural Development Departments, VnSAT Project managers of eight Mekong Delta provinces including An Giang, Can Tho, Dong Thap, Hau Giang, Kien Giang, Long An, Soc Trang and Tien Giang, representatives from Mekong River delta manufacturing and production enterprises, and representatives from the Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV) also attended.

The conference outlined the lending mechanisms in place for the project, introducing the PFI partners who include BIDV, Agribank, VPBank and Techcombank.

One year on from the implementation of the Vietnam Sustainable Agriculture Transformation (VnSAT) project, farmers and enterprises in the rice and coffee production industry are seeing good results.

T

he project is the first of its kind supporting rice and coffee production. It is being financed by the World Bank with capital of USD301 million, focusing directly on farmers and exporters.

The overall objectives of the project are to contribute to the restructuring of the agricultural sector, introduce innovate sustainable farming practices, and enhance the value of the rice industry in the Mekong Delta and the coffee industry in the Central Highlands.

Under the close guidance of Vietnam Ministry of Agriculture and Rural Development the documental guideline system was completed within just six months, facilitating the smooth operation and synchronisation of the whole project.

There are currently 25,000 farmers in the Mekong River Delta farming agricultural land adding up to 50,000 hectares. Through the project, these farmers will receive training on advanced agricultural methods 3G3T and 1P5G. A further 10,000 households planting coffee in the Central Highlands with total cultivation areas of 10,000 hectares will undertake training programmes on sustainable coffee production.

On March 2 VnSAT held a conference in Ho Chi Minh City to accelerate the credit flow in Component B (Supporting

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According to Mr. Sergiy Zorya, senior agriculture economic expert at the World Bank, in 2017, the World Bank will continue to support VNSAT’s project management board to effectively implement the general operation of the project, particularly the establishment of a farmers organisation and the disbursement of capital to farming households in the Central Highlands and the Mekong River Delta region.

In 2015, BIDV was chosen by the government to manage and onlend a credit worth USD105 million from the project. BIDV will disburse this loan for the chosen banks to assist businesses in renovating technology and rice processing equipment in the Mekong Delta and coffee in the Central Highlands.

market movements

Son Nguyen

Investment call for

Asian infrastructure The Asian Development Bank (ADB) has recently highlighted the need for increased investment in infrastructure within Asia.

T

his capital is required in order for the region to maintain its growth momentum, eradicate poverty, and respond to climate change. Without climate change mitigation and adaptation costs, the figure required would be closer to USD22.6 trillion or USD1.5 trillion per year (baseline estimate).

Of the total climate-adjusted investment needs over the period 2016–2030, USD14.7 trillion will be allocated for power and USD8.4 trillion for transport. Investments in telecommunications will reach USD2.3 trillion, with water and sanitation costs at USD800 billion over the duration.

East Asia will account for 61 percent of climate-adjusted investment needs through 2030. The Pacific leads all other sub-regions as a percentage of gross domestic product (GDP), requiring investments valued at 9.1 percent of GDP. This is followed by South Asia at 8.8 percent, Central Asia at 7.8 percent, Southeast Asia at 5.7 percent, and East Asia at 5.2 percent of GDP.

Hanoi Metropolitan Railway

Vietnam is one of the countries in need of infrastructure investment.

In the latest report on infrastructure spending in the Southeast Asian region, HSBC said Vietnam’s spending in the past ten years had consistently accounted for 5 percent of GDP. The country will need to invest 10-12 percent of its GDP to boost infrastructure over the coming years.

This includes investment into the newly approved North-South highway project at an estimated cost of VND230 trillion (USD10.2 billion) or 5 percent of GDP.

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According to ADB, regulatory and institutional reforms are needed to make infrastructure more attractive to private investors and generate a pipeline of bankable projects for public-private partnerships (PPPs).

Countries should implement PPPrelated reforms such as enacting PPP laws, streamlining PPP procurement and bidding processes, introducing dispute resolution mechanisms, and establishing independent PPP government units. Deepening of capital markets is also needed to help channel the region’s substantial savings into productive infrastructure investment.

market movements

Phuong Linh

Analysing Circular 41 and Basel II The State Bank of Vietnam (SBV) has issued Circular 41 in 2016 stipulating the required capital adequacy ratio (CAR) for local banks and foreign bank branches in order to apply Basel II standards in Vietnam. Circular 41 will take effect from 1 January 2020.

T

he Circular 41 and the Basel II Accord’s requirements in terms of key risks, especially related to capital measurement and valuation methodologies, are outlined below.

Capital measurement The capital measurement of Circular 41 and Basel II appear to be the same in formula. The valuation of capital for market risk is the total of capital for interest rate risk - with the exception of options (KIRR) in the trading book, capital for equity risk-except options (KER) in the trading book, capital for foreign exchange rate risk-except options (KFXR) throughout the bank, capital for commodity risk-except options (KCMR) throughout the bank and capital for options (KOPT).

The interest rate risk is expressed in terms of two separately calculated charges. The first applies to specific

risk of each security in which it is the total of short and long positions without netting the different financial items. The second applies to the general risk in the portfolio where the long and short positions in different securities or instruments can be offset.

The capital for equity risk is also expressed in terms of two separately calculated charges, including specific risk and general risk. Specific risk is defined as the bank’s gross equity positions (i.e. the sum of all long and short equity positions) and general market risk as the difference between the sum of the long positions and the sum of the short positions (i.e. the overall net position in an equity market). Both charges will be 8 percent, except equity indices by markets in general risk will be 10 percent.

The capital for foreign exchange rate risk is designed to cover the risk of holding or taking position in foreign currencies, including gold. It is calculated at 8 percent of whichever is greater - the sum of the net short or long positions of each currency, plus 8 percent of the net position of gold.

The capital for commodity risk includes directional risk charges, at 15 percent of the net position of each commodity in the trading book. Other risks charges

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are set at 3 percent of the bank’s gross position (long plus short) by value.

The capital for options is a special term as the valuation of options depends on many different factors which are difficult to forecast. As such, it is separated as an individual risk and its underlying assets are financial instruments which have interest rate risk, equity risk, foreign exchange risk and commodity risk.

BIDV calculates its valuation of capital for market risk according to three factors - interest rate risk, equity risk and foreign exchange risk, since the bank doesn’t currently offer supplementary commodity risks and options. However, the formula applied

by BIDV is basically the same as that of Circular 41 and Basel II. According to Circular 41, capital requirement for commodity risk applies to instruments in the trading book. However, BIDV now calculates this valuation with all its financial instruments, resulting in a change in the value of capital requirement for

market movements

commodity risk now and after BIDV completes its classification of all financial items into the banking and trading books.

Valuation methodologies The methodologies selected for valuation in Circular 41 and Basel II are mark-tomarket and mark-to-model methods.

Mark-to-market involves daily valuation of positions of prices, sourced independently with Basel II and sourced from the official market with Circular 41. Difficulties with this valuation may arise because Vietnam’s official market is not yet developed enough for some items. However, both instruments state that banks must employ mark-to-market as much as possible. The more prudent side of bid/offer must be used unless the institution is a significant market maker in a particular position and it can close at mid-market. In cases where the mark-to-market method is not possible, banks may employ mark-to-model where this can be demonstrated to be prudent. Mark-to-

model is defined as any valuation that has to be benchmarked or otherwise calculated using market input.

Therefore, the results of the mark-tomodel method cannot be as close to the actual prices as the results from the mark-to-market model.

Currently, BIDV uses mid-prices to evaluate positions in the trading book. Regarding short positions, like FX transactions, the current practice of using the mid-price is not prudent enough. Moreover, BIDV has not developed and applied rules or instructions relating to the process of controlling changes in valuation models, or replicating and saving the models for regular auditing purposes.

Furthermore, the bank has yet to build and apply periodic reviews of the valuation models to ensure the accuracy and adequacy of valuations.

Banking book and trading book Both Circular 41 and Basel II refer to the classification of financial instruments/items into either the

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trading book or banking book as an important step to calculate precisely the market risk capital requirement.

Banks should issue suitable policies, processes and criteria and establish functions which ensure the clear separation of the two books and meet the requirements of the SBV and Basel II accords. A standardised data system is required for banking transactions to clarify which transactions belong to the trading or banking books.

BIDV currently uses three kinds of book - trading book, banking book and commercial book. The bank has issued some policies relating to the trading and banking books such as Regulation No.4598 and Regulation on Monitoring Internal Capital No.1630. However, those regulations don’t set out in detail clear guidelines to separate the trading and banking books.

The bank is focusing on developing regulations on clarifying the banking and trading books and managing books for risk management with transparent rules, policies, processes and responsibilities of related functions. This important document is expected to be issued and applied within this year to support Basel implementation in BIDV for market risk management as well as liquidity and interest rate risk management.

lifestyle

An Chi

March in bloom

With March comes the blossoming of sua trees, their delicate white flowers lending a natural beauty to the capital city.

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hough lacking the brilliance of the phoenix flower or the vibrancy of the inthanin flower, these pristine white flowers are fresh and pure.

March in Hanoi brings drizzle and fog unappealing for tourists but providing the perfect conditions for the sua flower to blossom.

The flower is very beautiful but sadly its blooming time is rather short.

On every street corner, a splash of white from the blossoms is like an unexpected gift. The pure white color stands out against the vivid green of the tender leaves. Some trees are so bursting with blossoms that the leaves are all but hidden by the white petals.

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The sua trees paint a wonderful picture for Hanoi residents and visitors to enjoy briefly, before they disappear with the wind, leaving space for new leaves to grow and covering the streets in a white carpet. The sua flowers can be likened to a young girl who one day suddenly matures and shows off her beauty and youth. Nevertheless, she is still very fragile, like the blossoms that are swept away after a strong wind on an early summer night.

No one knows when the blossom trees first appeared in Hanoi. We only know that they are tall and muscular, standing silently on the streets without meriting a second glance from passerbys. It is not until March, when the white flowers blossom, that people

lifestyle

suddenly notice them.

Sua trees are tall, therefore don’t offer the same photo opportunities as flowers such as lotus, daisy or roses, that many Hanoians love to pose next to. The trees are so tall that the flowers reach the roofs of buildings. When the winds come, the petals fall down like snowy rain. This gives sua flowers a special place in the heart of Hanoians and tourists who visit Hanoi during this season.

The sua tree is scientifically named as dalbergia tonkinensis prain. It can be seen along the streets of Thanh Nien, Tran Hung Dao, Phan Dinh Phung, Hoang Dieu, as well as on some streets in the old quarters.

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lifestyle

Pha Le

Phan Thiet in snapshots Blessed with year-round sunshine and romantic scenery, Phan Thiet province - especially the beach town of Mui Ne - is the perfect dream destination for tourists. BIDV Review lists some of the province’s highlights.

Renting a motorcycle With vast sand dunes, beaches lapped by clear emerald water, and peaceful fishing villages picturesque in the sunset, Phan Thiet is a fascinating place to explore on two wheels.

Renting a motorbike will afford you the flexibility of exploring offbeat places in the area, discovering hidden beaches and local markets.

Sand-sliding Mui Ne’s sand dunes attract countless tourists. After every strong wind, the dunes change shape and colour, appearing sometimes yellow, white, gray or dark red, with the colours mottling together to create a beautiful picture. Sandboarding on the dunes is a unique experience that shouldn’t be missed.

Kite surfing Mui Ne and Phan Thiet boast a number of windy beaches that are perfect for kite surfing. In fact, the area is one of Asia’s

Suoi Tien with orange limestone cliffs

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most popular sites for the sport. There are a number of kite surfing schools in the area that offer courses for amateurs and beginners at extremely competitive prices and no shortage of wide, sandy beaches to practice on.

lifestyle

Fishing boats at Mui Ne

Visiting the early morning fish market Mui Ne’s chaotic early morning market provides a fascinating peek into the lives of local Vietnamese fishermen.

Every morning the fishermen are out on the water early before bringing their catch to shore. The whole family mucks in, sorting out the catch and selling it to local traders, restaurant owners, and street food vendors on the spot.

Expect to find fishing nets teeming with seafood, buckets overflowing with fish, shells strewn all around, raucous conversation, and plenty of photo opportunities.

Sunrise and sunset To see Mui Ne at its most beautiful, sit and admire the view at sunrise or sunset - and preferably both. Dozens of brightly coloured boats float atop the turquoise waters and everything is bathed in a luminescent light.

Discovering Suoi Tien Vast sand dunes in Bau Trang

Bau Trang Bau Trang (White Lake), also called Bau Sen (Lotus Lake), is a freshwater lake situated in the immense white sand dunes of Mui Ne. In a vast area of white desert-like sand, Bau Trang appears as an oasis of water sparkling under the sunshine and the fresh green of lotus leaves.

Bau Trang is ideal for a relaxing getaway. Small boats can be hired from local fishermen to row on the lake and collect lotus blossoms. Visitors can go fishing, rest in hammocks hung under casuarinas trees, swim in fresh clean water or just enjoy the beautiful scenery at sunset. Popular activities on the sand dunes include sand-surfing or driving around by jeep.

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Suoi Tien, or Fairy stream, is one of the famous sights in Mui Ne. Streaks of red and white sand dunes fall across orange limestone cliffs into the water of Suoi Tien, offering a fabulous spectacle at Mui Ne Beach, some 18km from Phan Thiet. Set against clear blue skies, the hill above the stream lined with palm trees provides the magical backdrop for scenery that earns the place its name.

lifestyle

Q u ang Huy

International Women’s Day around the world International Women's Day is celebrated on March 8 every year. It commemorates the movement for women's rights and many countries have their own way of celebrating the day.

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he day is marked around the world with art performances, talks, rallies, networking events, conferences and marches.

Vietnamese people also love to wear traditional “ao dai� to show their feminist and their beauty

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This year, Italy upped the ante by giving all women free admission to museums and cultural sites

lifestyle

Italy gives all women free admission to museums and cultural sites throughout the country on March 8

throughout the country, from famous landmarks to ancient historical sites.

A number of special events, talks and exhibitions took place at cultural heritage sites across the country on March 8. Some focused on specific periods, authors, or regions, while others looked more generally at the representation of women in art.

London saw a host of free and ticketed events taking place across the city, including talks, workshops and film screenings. Audiences heard from inspirational women such as awardwinning filmmaker Gurinder Chadha

and leading female business figures who discussed women's appearance in the workplace.

Spurred on by their success in January, the organisers of the Women's March on Washington launched a new campaign: A Day Without Women.

They encouraged women in the U.S and worldwide to strike from work on March 8 in protest of economic inequality, prejudice and insecurity faced by women in the workplace.

They also suggested women wear red to show their solidarity with the movement.

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march 20 17

According to the United Nations, International Women’s Day is a time to reflect on progress made, to call for change and to celebrate acts of courage and determination by ordinary women who have played an extraordinary role in the history of their countries and communities.

In Vietnam, special activities including conferences, talks and parties are held. Many Vietnamese women also choose to wear the traditional ao dai for the occasion. Vietnamese men may give flowers and other gifts to their women.

CSR

Phuong Thao

New school, new hopes The new school features three blocks of learning facilities constructed on an area of 5,000m2. The total construction costs ran to VND18 billion (USD800,000), of which VND15 billion was funded by BIDV. The school also provides dining rooms and rest rooms for students. The roof of the previous school building was made of tree leaves and the learning conditions were very poor, resulting in a low attendance rate. The vice president of the school confirmed that thanks to the new facilities and the financial support from BIDV, the school has seen a marked improvement in attendance and local parents are very happy seeing their children learning in such a modern school.

Local pupils are learning in a new classroom

With the opening of the new BIDV-funded school in Ca Mau’s Tan Trung commune, students from underprivileged backgrounds have increased learning opportunities and can look forward to a brighter future.

W

e visited the school in March this year, eight months after construction was completed.

Travelling on a small winding road lined with trees, the school stood out as a pillar of hope against the difficult living conditions of the commune. Through the classroom windows we could see students engaged in study, cooled by overhead fans and with curtains providing shade from the harsh sunlight.

BIDV has provided funding for social security activities in Ca Mau province totaling over VND35 billion (USD1.6 million). To date, this has enabled the construction of 15 bridges, 750 houses for the poor and three schools, financed 22 savings books for disadvantaged people, one ambulance and medical equipment for local hospitals as well as providing Tet gifts for low-income families. The financial support from BIDV helps raise the living standards of local communities.

Tan Trung Primary School in Ca Mau province, funded by BIDV

38

B id v R e v ie w

Pr eferential rate From 9 February To 30 June 2017

15,000 billion

VND

for business and production

ING 2015, NN 20 RU

& 16

2017

3 YEA RS

(Or until the package is fully disbursed)

Credit package

BEST RETAIL BANK IN VIETNAM

19009247

bidv.com.vn

BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM JSC

INTRODUCTORY RATE

CREDIT PACKAGE

VND

10 trillion

FOR HI-TECH AGRICULTURE

APPLICABLE TO CENTRAL HIGHLANDS AND MEKONG DELTA REGION EFFECTIVE 3 MAR – 31 DEC 2017

BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM JSC