Vbi annual report 2014

ANNUAL REPORT

2014 SUSTAINABLE GROWTH

TABLE OF CONTENTS OVERVIEW CHAIRWOMAN’S STATEMENT GENERAL INFORMATION CORPORATE GOVERNANCE STRUCTURE HIGHLIGHTS OF THE YEAR FINANCIAL INDICATORS OF THE YEAR

PERFORMANCE REPORT MARKET OVERVIEW BUSINESS PERFORMANCE IN 2014 STRATEGIC ORIENTATION IN 2015

FINANCIAL REPORT INTEGRATED FINANCIAL REPORT NOTES TO INTEGRATED FINANCIAL REPORT

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VBI Annual Report 2014

CHAIRWOMAN’S STATEMENT “As our highest priorities are sustainable development, long-term business strategy and focus on the improvement of customer care service quality, I strongly believe that VBI will create breakthrough successes in providing complete and flexible products of insurance and financial services as well as complete the organizational structure transformation strategy to improve its business performance and bring more added values to our customers.”.”

Dear Customers and Partners, This time last year I wrote about VBI's determination in becoming the leading insurance company in Vietnam to provide professional Bancassurance services. It is my pleasure to inform you that 2014 was an outstanding year for VBI as we achieved impressive results towards our objective: total revenue of VND 310.17bn, increasing 80%; profit of VND 63.22bn, increasing 31%; ROE of 8.72%, increasing 34% compared to 2013; ROE of 7.26%, increasing 28% compared to 2013; underwriting gain of VND 6,1 billion; and loss ratio of 29.24%, remaining at the safe level.

MS. NGUYEN HONG VAN CHAIRWOMAN

These results should be seen in the context of a year when the whole market faced difficulties such as slow economic recovery, low competitiveness, slow increase in insurance needs, unpredictable disasters and epidemics, increase in fire incidents, explosions and traffic accidents, especially the incidents at Ha Tinh, Binh Duong and Dong Nai provinces which caused great damages to the insurance market. However, with high determination and a clear development strategy, VBI has effectively adopted a set of synchronized measures: First, VBI has successfully implemented the conversion towards centralized administration, applied modern technology into the management of sales and enhanced risk management measures.

Accordingly, practices such as insurance policy issuance, reinsurance arrangements and claim investigation are performed in a centralized manner with the help of modern management software, ensuring efficiency and safety of the management task.

Second, VBI continued to expand its sales network and improve the quality of its sales team. In 2014, VBI recruited 81 new employees and established 17 new Regional Business Offices. The Company now has 8 Branches and 35 Regional Business Offices, 310 staff members and approximately 2,000 agents to promote sales activities and customer care services. Throughout the year, VBI organized numerous domestic and international training courses on insurance practices and products as well as sales skills.

It is expected that in 2015 VBI will continue to expand its network to meet the development needs of VietinBank network.

Third, VBI has professionally and effectively developed the Bancassurance model to the highest level of integrating insurance - banking products. We can name a range of successful integrated products such as: VietinCare personal insurance, VietinCar automobile insurance, credit card insurance, child accumulated savings

VBI Annual Report 2014

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insurance, etc. Product integration has facilitated banking officials in product selling and brought ease to the customers for being provided with professional and inclusive services, and thereby resulted in sales growth.

Fourth, in the past year, VBI also focused on improving investment efficiency by ensuring investment safety and focusing on key investment areas: deposits, corporate bonds, especially those of large enterprises in the energy industry such as electricity, coal, etc. to balance risk and profit.

Moreover, VBI also improved its investment plans and money flow handling.

VBI's outstanding success in 2014 was marked by various prestigious awards that the Company was honoured with, such as: "The Vietnamese Excellent Brands Awards 2014" co-organized by Vietnam Economic Times and Vietnam Trade Promotion Agency (Ministry of Industry and Trade); "Top 1000 Corporate Income Tax Payers in Vietnam" published by Vietnam Report; and Certificate of Merit from VietinBank for 5 years of operation. Furthermore, our leader also had the honour to receive great awards such as "Top 100 Young Entrepreneurs" at the Red Star Award 2014, and "Top 100 Typical Executive in the New Era in 2014" at the event organized by Institute of Legal Policies and State Management.

These awards speak for the superior

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quality and services that VBI brings to its customers.

2015 is the year when VBI continues its efforts to create new breakthroughs in terms of size and market share growth.

With a target of boosting premium revenue by 50% compared to the previous year, VBI will focus on the following key tasks: Shift of Organizational Structure towards Equitization Development of Network and Qualified Human Resources

On behalf of VBI Executive Board, I would like to send my gratitude to our Customers, Partners, management bodies and all VBI staff for trusting, accompanying and supporting us during all this time.

Sincerely,

Development of Products ·Based on Targeted Customer

Segments Classification of Customers and Improvement of Customer Care Services Enhancement of Information Technology System Modernization Strategy Enhancement of Risk Management and Quality Improvement of Indemnity Promotion of Brand Name and Corporate Culture

· ·

CHAIRWOMAN

· ·

Ms. NGUYEN HONG VAN

As our highest priorities are sustainable development, long-term business strategy and focus on the improvement of customer care service quality, I strongly believe that VBI will create breakthrough successes in providing complete and flexible products of insurance and financial services as well as complete the organizational structure transformation strategy to improve its business performance and bring more added values to our customers.

VBI Annual Report 2014

OVERVIEW

VBI GENERAL INFORMATION CORPORATE ORGANIZATION HIGHLIGHTS OF THE YEAR FINANCIAL INDICATORS

VBI Annual Report 2014

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GENERAL INFORMATION THÔNG TIN CHUNG COMPANY HISTORY & DEVELOPMENT

Insurance Company Limited Bank of Industry and Trade of Vietnam (transaction name VietinBank Insurance, abbreviated name VBI) was formerly a joint venture between Vietnam Joint Stock Commercial Bank for Industry and Trade and Singapore's Asia Insurance Company.

On December 17, 2008 VBI received License from the Ministry of Finance to transform into VietinBank Insurance One Member Limited Company on the basis of buying out all shares of the foreign partner to become a subsidiary company wholly belonging to Vietnam Joint Stock Commercial Bank for Industry and Trade.

Currently, VBI has successfully built its Bancassurance model

FIELDS OF OPERATION

which sells insurance products through banks with a network of more than 150 Branches and over 7,000 VietinBank sales staff, and provides customers with one-door financial service: banking – insurance inclusive services.

With the slogan "Preserving the Values of Life", VBI commits to offer satisfactory compensation to all customers. VBI's insurance and financial capacities are firmly guaranteed by world leading reinsurers such as Swiss Re, Novae Re, Lloyd’s Syndicate, etc.

Determined to become Vietnam's leading professional non-life insurance company, VBI continuously improves its service quality and develops appropriate insurance products that meet the customers' demand.

• Non-life insurance: property insurance, engineering insurance, casualty insurance, endowment insurance, motor vehicle insurance, marine insurance, cargo insurance, personal insurance

• Reinsurance • Financial investment

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VBI Annual Report 2014

“PRESERVING THE VALUES OF LIFE.”

VBI aims to be the leader in the retail segment of Vietnam's non-life insurance market.

SLOGAN

VISION:

CORE VALUES

• • • • • • •

Customer-oriention Perfection-oriention Dynamics, creativeness, professionalism, modernity Honesty, righteousness, transparency, professional ethics Respect Brand name protection and promotion Sustainable development, and community and social responsibility

VBI Annual Report 2014

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CORPORATE GOVERNANCE STRUCTURE

MS. NGUYEN HONG VAN CHAIRWOMAN

Ms. Nguyen Hong Van graduated with a Master’s degree in Finance and Banking. She began working at Vietnam Bank for Industry and Trade in 1990. She previously assumed the following positions: Head of Department of Planning and Investment; Head of Department of Planning and ALCO Supporting. Currently she is serving as a Member of the Bank’s Board of Directors.

MR. LE TUAN DUNG

CHIEF EXECUTIVE OFFICER

Mr. Le Tuan Dung graduated with a Bachelor's degree in Insurance and a Master's degree in Business Administration at Vietnam National Economics University. He has 19 years of experience in the insurance industry and has assumed important positions such as business process management, reinsurance and direct sales at many insurance companies, including Military Insurance Corporation, Post and Telecommunications Insurance Joint Stock Corporation, and Petro Vietnam Insurance Joint Stock Corporation.

MR. NGUYEN HONG PHONG

DEPUTY CHIEF EXECUTIVE OFFICER Mr. Nguyen Hong Phong graduated with a Bachelor’s degree in Economics at Vietnam University of Commerce and a Master’s degree in Business Administration at Vietnam National Economics University.

Prior to his assignment as VBI’s Deputy CEO in July 2013, he assumed the roles of business supervisor and professional manager at VietinBank Insurance Co., Ltd., Agriculture Bank Insurance Joint Stock Corporation, and PetroVietnam Insurance Joint Stock Corporation – Northwest Branch.

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VBI Annual Report 2014

HIGHLIGHTS OF THE YEAR

VBI HONOURED WITH “THE VIETNAMESE EXCELLENT BRANDS AWARDS 2014” "The Vietnamese Excellent Brands Awards 2014" is a prestigious title awarded at an annual event co-organized by Vietnam Economic Times and Vietnam Trade Promotion Agency (Ministry of Industry and Trade) to honour the enterprises that have outstanding achievements in business, production and services, fully comply with tax obligations, ensure employees' best interest, and actively participate in social activities, especially those who contributed to the national economy's sustainable development and enhanced Vietnamese brand's competitive position on the international market. Being one of the 95 corporations having the honour to be regarded as " The Vietnamese Excellent Brands Awards 2014", VietinBank Insurance (VBI) has proved its reputation and created its position on Vietnam insurance market.

VBI Annual Report 2014

SUCCESSFUL UPGRADE OF CORE SOFTWARE ON BUSINESS PROCESS AND SUCCESSFUL MIGRATION OF BUSINESS OPERATION DATABASE In 2014 VBI completed developing and put into operation the insurance software which helped to link all tasks including original insurance policy issuance, reinsurance, accounting and compensation. In addition to the insurance core software, other supporting software were also introduced, such as: Bancassurance software; claim investigation app on smartphone; document management software.

VBI HONOURED AS TYPICAL CORPORATE INCOME TAX PAYER On June 17, 2014 VBI is one of the names praised by Hanoi Tax Department at the Conference to honor organizations and individuals with good business performance and tax obligations compliance. VietinBank Insurance's revenue in 2013 was over 171 billion VND, resulting in a profit before tax of 48 billion VND and contributing to the state budget a total of 25 billion VND.

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VBI’S CEO AWARDED WITH “TOP 100 YOUNG ENTREPRENEURS” TITLE AT THE RED STAR AWARD

The "Top 100 Young Entrepreneurs - Red Star Award" is a prestigious title awarded by Vietnam Central Youth Federation and Vietnam Young Entrepreneurs Association to outstanding young entrepreneurs who contributed to the country's social and econo-

mic development. Award judging criteria include sustainable development, social responsibility, business ethics, and especially innovativeness and creativeness.

Mr. Le Tuan Dung - VBI's CEO is considered as a young leader with remarkable initiatives and

achievements in management such as restructuring by developing qualified resources, promoting strategic partnerships, as well as introducing new products to promote business and provide customers with various convenient services.

LAUNCHING OF VBI’S NEW WEBSITE On August 28, 2014 VBI officially launched its new website at the link:http://vbi.vietinbank.vn.

With this new website, VBI aims to provide customers, investors and partners a more modern design and user-friendly interface with premium features and utilities. The new website is VBI's official communication channel about the Company's activities where customers can easily search, find information and use VBI's products, services and promotions.

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VBI Annual Report 2014

FINANCIAL INDICATORS OF THE YEAR EQUITY

TOTAL ASSET

(unit : billion vnd)

(unit : billion vnd)

2010

2010

329,313

2011 2012 2013

2011

550,583

699,693

2012

559,177

839,187

2013

555,306

2014

538,033

573,871

873,551

2014

929,202

REVENUE

PROFIT BEFORE TAX

(unit : billion vnd)

(unit : billion vnd)

2010 2011 2012 2013

2010

141,463

2011

169,907

310,175

48,053 63,221

(unit : %) 2010

7,85

2011

9,89

2012

VBI Annual Report 2014

2014

63,029

ROE

(unit : %)

2014

2013

171,763

ROA

2013

60,034

2012

144,643

2014

2010

33,181

8,19 5,64 7,26

7,56

2011

10,33

2012 2013 2014

8,47 6,47 8,72

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BUSINESS PERFORMANCE

MARKET OVERVIEW BUSINESS PERFORMANCE 2014 STRATEGIC ORIENTATION IN 2015

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VBI Annual Report 2014

MARKET OVERVIEW According to preliminary figures from Insurance Supervisory Authority (Ministry of Finance), non-life insurance premium revenue in 2014 was estimated at 27,307bn VND, increasing 11.36% compared to 2013

2014 MARKET OVERVIEW Vietnam's economy in 2014 was overall stable where GDP growth was recorded at 5.98%, inflation was under control and economic recovery began to take place.

However, weak elements still existed such as unstable business landscape, low economic competitiveness, low credit growth, and slow handling of non-performing loans.

2015 ECONOMIC PROSPECTS Vietnam's economy in 2015 is forecasted to recover and have better growth compared to 2014, specific figures being GDP growth of 6.2% and inflation rate maintained at about 7%. Also in this year, Vietnam will soon fulfill the commitments made under recently signed agreements: bilateral Free Trade Agreement between Vietnam and South Korea, Free Trade Agreement between Vietnam and Eurasian Customs Union. At the same time, Vietnam will continue with the negotiation of Vietnam - EU Free Trade Agreement, Trans-Pacific Partnership (TPP) and participate in ASEAN Economic Community, thereby creating favorable conditions to promote economic growth in 2015.

VBI Annual Report 2014

2014 NON-LIFE INSURANCE MARKET AT A GLANCE In addition to the overall economic growth, 2014 also witnessed the issuance of various policies and mechanism in the insurance sector which brought about development opportunities for the non-life insurance market.

According to preliminary figures from Insurance Supervisory Authority (Ministry of Finance), non-life insurance premium revenue in 2014 was estimated at 27,307bn VND, increasing 11.36% compared to 2013.

Various positive changes took place in the non-life insurance market including accelerated corporate restructuring, enhanced cooperation among enterprises in the sector, controlled business operations, and prevented insurance frauds.

therefore profits from insurance services declined in the context of low investment profitability.

Insurers still allowed customers to owe premium while previous years' premium debts have yet to be recovered. Many branches and affiliates of insurance companies did not strictly comply with the law on insurance business.

Although there were many difficulties and challenges, the achievements of the non-life insurance market in 2014 will be the premise for growth potential of 2015 and coming years.

Despite the above optimistic figures and facts, the non-life insurance market still faced difficulties and challenges. Insurance needs increased slowly and individual customer's purchasing power did not improve significantly. Competitive pressures in the non-life insurance market became more and more severe where players continued to lower premium to win customers,

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MARKET OVERVIEW

2015 NON-LIFE INSURANCE MARKET OUTLOOK finance and banking industry, contribute to the handling of bottlenecks and have positive impacts on the insurance market.

The stock market is also forecasted to be driving to better prosperity in 2015, which is an opportunity for insurance companies to diversify their portfolio and improve profitability.

Clearer signs of economic recovery in 2015 allow for expectations in a successful year for the non-life insurance market with high projected growth rate.

According to Insurance Supervisory Authority's estimation, the insurance industry in 2015 is expected to have a growth of 12%. Market participants are confident that the industry will maintain its double-digit growth rate. Besides its belief in a satisfactory increase of premium revenue, the market also expects to witness positive changes in corporate governance and financial capabilities, customer service, risk management, etc. of the enterprises.

In particular, insurers will continue to focus on the retail segment with the development of typical products for individual customers such as personal insurance and motor vehicle insurance, etc. The corporate segment will gradually be improved as large projects will receive disbursements, and along with a growing number of foreign investment projects they will help to stabilize the industrial insurance market.

The signing of the Trans-Pacific Partnership (TPP) in the near future will create a boost for the

Non-life insurance companies in 2015 will be affected by many new legal documents such as Circular 194/2014/TT-BTC which amends and suppliments some articles of Circular 124 and Circular 125 on insurance regulations. Once the new rules take effect, non-life insurers will have to upgrade and complete their insurance database systems for customer exploitation and management, managing insured beneficiaries and insurance agents as well as claim investigation, etc.

Having clearly identified the market's development trend as well as insurers' opportunities and challenges, VBI has developed a business strategy for 2015 and subsequent years to achieve sustainable development on Vietnamese insurance market.

27.307 25

22.777

23.968

24.454

20

17.070 15 10 5 2010

2011

2012

2013

2014 est.

Revenue from Non-life Insurance Premiums

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VBI Annual Report 2014

REPORT ON BUSINESS PERFORMANCE 2014 was an outstanding year for personal insurance's development which grew 522% compared to 2013 and become the second best revenue generating insurance line of VBI.

•

Total revenue reached 310 billion VND, increasing 80% compared to 2013.

•

Total revenue of original insurance policy reached 263 billion VND, increasing 83% compared to 2013.

•

Total inwards reinsurance premium revenue reached 46,7 billion VND, increasing 65% compared to 2013.

•

Profit reached 63.22 billion VND, increasing 31% compared to 2013.

•

ROE ratio reached 8.72%, increasing 34% compared to 2013.

•

ROA ratio reached 7.26%, increasing 28% compared to 2013.

•

Total technical reserve reached 217.42 billion VND, increasing 21% compared to 2013.

REVENUE BREAKDOWN BY LINES OF INSURANCE

Revenue

310,17 Billion VND Grow 80%

Profit

63,22

VBI

Billion VND Grow 31%

ROE

8,72% Grow 34%

ROA

7,26% Motor vehicle insurance

31,21%

Personal insurance

20,29%

Property insurance

19,73%

Engineering insurance

14,10%

Marine insurance

9,16%

Liability insurance

1,31%

VBI Annual Report 2014

Grow 28%

Total technical reserve

217,42 Billion VND Grow 21%

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REPORT ON BUSINESS PERFORMANCE

PERSONAL INSURANCE This is the flagship product targeting individual customers which had an impressive growth of 522% in revenue compared to 2013, namely 53.4bn VND, accounting for 20.2% of VBI's insurance market and became VBI's second best line of insurance in terms of premium revenue. VBI's indemnity payment in 2014 was 4.6bn VND with a loss ratio of 8.69% which is significantly lower than the market's average figure of 20.97%.

inclusive products for customers applying for loans such as VietinCare personal loan with total revenue of over 10bn VND; or products for customers paying deposits such as Personal Safety Insurance and Child Accumulated Savings Insurance which brought VBI approximately 5,000 new clients. Moreover, VBI successfully applied the comprehensive health insurance product - VBI Care - to over 20,000 VietinBank staff and relatives.

Fully aware that personal insurance products had huge potential for great revenue, VBI paid high attention to simultaneously provide various types of insurance products targeting individual customers. Here we can name

In 2015 VBI will introduce and apply retail health insurance products to VietinBank's individual customers, a resource with large number of clients and huge potential. In addition, VBI will integrate VietinCare personal

insurance, international travel insurance, accumulated savings insurance, etc. with banking products. Furthermore, products such as travel insurance, student insurance and individual accident insurance will also be promoted

by VBI towards both retail and corporate customers.

REVENUE (bn VND) 2013

8,5

2014

55,2

INDEMNITY (bn VND) 2013 2014

3,1 4,6

MOTOR VEHICLE INSURANCE Revenue from motor vehicle insurance in 2014 was 82.2bn VND, grew 77.7% in comparison with 2013 and was VBI's largest revenue generating business line (accounting for 30.21% of total revenue). 81.2%, equivalent to 66.7bn VND, of motor vehicle insurance gross revenue was made up by motor vehicle physical damage insurance while the remaining 18.8%, equivalent to 15.4bn VND, was brought in by other insurance lines related to motor vehicles.

VBI's motor vehicle insurance indemnity payment was 35.9bn VND, accounting for 43.78% of total revenue. In order to reduce

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loss ratio and prevent insurance frauds, in 2014 VBI built a system of motor vehicle physical damage appraisal centers in Northern, Central and Southern provinces.

The centers have been put into stable operation and fully performed various tasks such as risk management, insurance fraud prevention, intensified field inspection of motor vehicle damage, and centralized monitoring of motor vehicle damage appraisal work across the system.

automobile insurance products with VietinBank's car loans products to provide customers with an inclusive service. Furthermore, VBI will apply mechanisms and solutions to promote insurance renewal and maintain high insurance renewal rate.

Automobile insurance will continue to be VBI's key line of business in 2015 with the largest propotion in gross revenue by insurance lines. VBI will integrate

INDEMNITY (bn VND)

REVENUE (bn VND) 2013

46,2

2014

2013 2014

82,2

26,7 35,9

VBI Annual Report 2014

REPORT ON BUSINESS PERFORMANCE

ENGINEERING INSURANCE The engineering insurance line includes the following products: construction/installation insurance, contractor's plant and machinery insurance, electronic equipment insurance, machinery breakdown insurance, boiler insurance, civil engineering completed risks insurance, and deterioration of stock in cold storage insurance.

In 2014 this line of business brought in about 37.1bn VND revenue with a growth rate of 77.7%, making up 14.1% of total revenue by insurance lines, and had a loss ratio of 44.03%, equivalent to 16.3bn VND. With the advantage of being an affiliate wholly owned by VietinBank, VBI closely cooperated with Vietin-

Bank branches in 2014 to provide inclusive insurance services to projects getting disbursement through VietinBank. During the year VBI has signed large construction and installation insurance contracts such as: Ca pass road tunnel construction project, Cam Thuy 1 hydropower plant project, Thu Thiem resettlement residential area project, Minh Loc waste plant project, etc.

For large projects VBI established Project Teams with members mobilized from specialty, business, finance and accounting as well as reinsurance departments to achieve the best performance.

In 2015 VBI will continue to focus on VietinBank's construction and

installation projects along with projects funded by the Bank, and will limit the exploitation of high-risk subjects such as hydropower plants at Northwest and Central Vietnam regions or machinery operated at areas of complex topography, etc.

REVENUE (bn VND) 2013

20,8

2014

37,1

INDEMNITY (bn VND) 2013 2014

5 14.1

PROPERTY INSURANCE Property insurance accounts for a high percentage in VBI's insurance revenue structure. Products in this line of insurance include: mandatory fire insurance, standard fire and special perils insurance, property all risks insurance, industrial all risks insurance, and business interruption insurance. The 2014 figures for this line of insurance are 51.9bn VND revenue, 43.4% growth compared to previous year and 19.7% of Company's total revenue by line of business.

VBI's business units intensified the co-operation with VietinBank branches in 2014 to provide coverage for properties mortgaged at the Bank, especially the

VBI Annual Report 2014

disbursement of plants, factories, warehouses, etc.

Property insurance loss ratio in 2014 was 29.6%, which is considered as a safe level. This result was built on VBI's continuous effort in controlling risks from the input, especially with subjects in highly risky sectors as wood manufacturing, leather and footwear, textile, etc. The Company did not suffer significant loss in above sectors, but mainly in industries with medium-level risk such as the incidents of Southern Steel Sheet Company, Mega Step Electronics Company Limited, etc. VBI's focus in 2015 is providing property insurance products to VietinBank's small and medium

scale clients. Besides, VBI will also promote private residence fire insurance for customers applying for loans at VietinBank.

REVENUE (bn VND) 2013

36,2

2014

51,9

INDEMNITY (bn VND) 2013 2014

32,3 15,4

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REPORT ON BUSINESS PERFORMANCE

CASUALTY INSURANCE Casualty insurance includes various products, such as: professional liability insurance, product liability insurance, public liability insurance, money insurance, burglary insurance, ďŹ delity insurance.

VBI's revenue from casualty insurance premium in 2014 was 14.48bn VND, increasing 14% compared to 2013 and accounting for 5.20% of the Company's gross revenue. Total indemnity payment was recorded at 759 million VND with a loss ratio of 5.24%.

For this line of insurance, in 2015 VBI will focus on providing centralized money insurance for the whole VietinBank system. In addition, VBI will also prioritize professional liability insurance such as architects and designers professional liability, attorneys professional liability, and notary professional liability. Particularly, professional liability insurance for medical establishments and attorneys are mandatory types of professional liability insurance in 2015.

REVENUE (bn VND) 2013

12,6

2014

14,4

INDEMNITY (bn VND) 2013 2014

0,05 0,7

CARGO INSURANCE By the end of 2014, cargo insurance rose 30.6% compared to 2013 and created a total revenue of 20.6bn VND. VBI's loss ratio in the year was 17.54% with indemnity payment of 3.6bn VND. In the past year, VBI concentrated in cargo insurance for containers and inland freight as well as tightly controlled insurance applied for bulk and packaged cargoes.

Marine insurance generated 3.4bn VND income, representing a very small proportion in revenue structure. This is due to the fact that this line of business has a

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history of very high loss in the market, thus VBI did not encourage the investment in and development of this type of insurance in the current period.

VBI will promote the following products in 2015: inland cargo insurance, air cargo insurance, and cargo insurance for imported and exported goods placed in containers. Regarding target customers, VBI will focus on clients who opened a Letter of Credit or consigned payment via VietinBank or other banks.

REVENUE (bn VND) 2013

15,8

2014

20,6

INDEMNITY (bn VND) 2013 2014

5,9 3,6

VBI Annual Report 2014

REPORT ON BUSINESS PERFORMANCE

REINSURANCE VBI's reinsurance revenue in 2014 reached 46.7bn VND, increasing 65.4% compared to 2013 and comprising: 16.4bn VND revenue of inwards facultative reinsurance and 30.3bn VND revenue of inwards treaty insurance. Total inwards reinsurance premium revenue in 2014 soared, especially the personal and satellites insurance lines. This growth is the result of expanding partnership with international insurance market. In 2014 VBI won large

contracts such as personal insurance contract with Korea and satellite insurance contract with Russia.

Also during 2014, VBI reviewed and timely collected 28.8bn VND indemnity payment from reinsurance which included large-scale loss cases such as HungCa Company, Cong Thanh Cement Plant, etc. In addition, VBI also developed and arranged reinsurance for large contracts with Viet

Trung Steel Jsc., He Duong Cement Jsc., Phap Van Cau Gie BOT package, etc. Particularly, VBI has been successful in applying reinsurance software for both inwards and outwards reinsurance activities.

Reinsurance Revenue

46,7 (Bn VND)

65%

INDEMNITY 2014 witnessed significant changes in VBI's indemnity payment. Loss ratio of original lines of insurance in the year was recorded at a relatively good figure, decreasing to the highly safe level of 29.24%, while loss ratio in 2013 was 32.72%. By the end of 2014, indemnity payment under retained liability of VBI was 51.3bn VND, equivalent to an acceptable rate of 28.48%.

In 2014 VBI made indemnity payments to some large-scale loss cases such as the damages at Cong Thanh Cement Plant, factory damages of HungCa Company, damages at PNP Chemical Plant, damages at electronic goods warehouse of VHC Company, goods damages at Vissai Cement Plant, damages of Quang Anh ship, and damages caused by typhoon no. 10 and 11 in 2013.

VBI Annual Report 2014

Three heavily invested factors in last year's indemnity performance were organizational structure, personnel qualification and technology modernization. With the goal of attracting talented personnel specialized in indemnity, in 2014 VBI recruited an additional of 10 highly qualified employees, thereby increasing the Company's total number of indemnity handling officers to 29.

The organizational structure was arranged based on groups of highly specialized lines of insurance indemnity, such as: motor vehicle insurance, health insurance, marine insurance, property insurance, and engineering insurance. Staff of each business division was assigned with specific tasks and responsibilities to monitor VBI's branches and localities.

Indemnity payment in 2014 had a major breakthrough with the adoption of centralized management model for motor vehicle indemnity by applying the remote claim investigation software and establishing three motor vehicle physical damage appraisal centers in Northern, Central and Southern provinces, starting in June 2014. VBI is the first insurer in the market to adopt modern software supporting the centralized damage appraisal of motor vehicles, ensuring safety, efficiency and operational cost saving.

Loss ratio

29,24 % 22%

IdemnityPayment

86,2

Bn VND

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STRATEGIC ORIENTATION IN 2015

SHIFT OF ORGANIZATIONAL STRUCTURE TOWARDS EQUITIZATION To ensure comprehensive organizational structure transformation, better financial capability and efficient use of capital and assets, in 2015 VBI will actively carry out the institutional conversion, accelerate company equitization process, and contribute to VietinBank's development towards a powerful financial group.

The equitization will help VBI in the search and selection of strategic shareholders among world's largest insurers and reinsurers. On that basis the Company will be able to carry out technological innovation, learn and adopt advanced business and management methods, improve and expand relationship with global leading reinsurers, take advantage of market trends, and improve competitiveness once Vietnam participates in international economic integration.

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Moreover, equitization will also support VBI in attracting plentiful capital to invest and develop, expanding operation network to boost revenue and profit, as well as achieving sustainable development. In addition, equitization will enhance the ownership of shareholders, firmly attach staff and shareholders' responsibilities to their benefits, motivate administration work, ensure efficient business management, improve income level of the employees and shareholders, and contribute to revenue growth.

After equitization, VBI will continue to improve organizational structure towards professionalism and high efficiency by establishing specific divisions: Business process division: the core of VBI. Includes Business

Process Management, Indemnity and Reinsurance Departments.

Customer division: the focal point that promotes sales through traditional and new distribution channels such as Bancassurance.

Includes (individual and corporate) Customers and Marketing Departments.

Operating division: supports the management of the whole system. Includes Administrative Organization, Finance and Accounting, Information Technology, General Planning, Internal Monitoring, and Agent Management.

Sales & marketing division: in charge of direct sales and sales management through distribution channels such as individual and institutional agents, brokers, or Bancassurance including VBI branches all over the country.

VBI Annual Report 2014

STRATEGIC ORIENTATION IN 2015

DEVELOPMENT OF NETWORK AND QUALIFIED HUMAN RESOURCES With the intention of expanding the network to promote retail activities, in 2014, VBI established 17 new Regional Business Offices. The Company now has 8 Branches and 35 Regional Business Offices to promote sales activities and customer care services. In addition, compared to 2013, a significant breakthrough was also recorded in the agents operation. This year witnessed the training and certification of 1,447 agents, including 1,291 VietinBank officers and 156 other individual agents.

Along with network expansion, VBI continued to attract and develop qualified human resources. In 2014 VBI recruited 81 new employees, resulting in a total number of 310 staff in the whole system. Throughout the year, VBI organized training courses on business process related to domestic and international products for more than 80 officers:

VBI Annual Report 2014

professional training on property insurance and loss in Malaysia; East Asian insurance conference in Taipei, etc. VBI staff also received training in business process, legal and litigation knowledge, such as: legislation training, procedures and documentation for collecting claim from third party, meditation skills to resolve disputes arising in business and international trade, etc.

Following VietinBank's orientation for retail activities, in 2015 VBI will continue with network expansion to meet the demand of retailing. Tentatively, VBI will open an additional of 5 Branches and 15 Regional Business Offices, adding up to a total of 13 Branches and 50 Regional Business Offices.

VietinBank's individual agents to promote sales activities at the Bank.

As VBI's orientation is human resources development along with recruitment and training, VBI prepares and strictly follows the annual recruitment plan.

Training courses are classified for specific officers to suit the business strategy in each phase, develop strategic human resources, and especially build a new class of succeeding and replacing officers in case of personnel changes.

Individual agents will also be promoted with a target of 2,000 new individual agents including

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STRATEGIC ORIENTATION IN 2015

DEVELOPMENT OF PRODUCTS BASED ON TARGETED CUSTOMER SEGMENTS In 2014, VBI focused on developing personal insurance products associated with VietinBank's products/services: VietinCare personal insurance associated with loans, card reissuance cost insurance associated with ATM cards, child accumulated savings insurance associated with accumulated savings products, international travel insurance associated with Visa Platinum VietinBank international credit card, etc. Researches have been conducted so that these products accommodate the Bank's characteristics. They proved their effectiveness in terms of revenue, thus creating good premises for future combination between inclusive insurance products with banking products.

For individual customers (including individual customers and very small firms): products that will be developed and promoted in 2015 include: health insurance, personal insurance, automobile insurance, private house insurance, international travel insurance and groups of accumulated savings insurance towards integrating with VietinBank's lending products.

Insurance products for corporate customers were also improved through collaboratin programs with VietinBank's key partners such as Thai Son Company, Nissan Vietnam, etc.

Small and medium enterprises: In 2015 VBI will focus on exploiting this targeted strategic customer group by developing packaged products and promotions for two key product lines: cargo insurance and property insurance (including fire and explosion compulsory insurance) in combination with VietinBank's business loan product and import & export financing product.

Driven by the organizational structure shift following VietinBank's strategy, in 2015 VBI will develop products based on targeted customer segments, details as follows:

21/

Particularly, in 2015 VBI will coordinate with VietinBank to exploit products associated with customers who use the Bank's deposit products, an abundant customer resource untapped in recent years.

Large enterprises: This is an important customer group and represents a large proportion of the customer structure. Therefore, VBI will introduce products with highly distinctive characteristics such as property all risks insurance for plants and factories, general liability insurance for business activities, import/export cargo insurance, inland transit insurance, construction and installation insurance for renovation, upgrading or building new production facilities projects, or BT/BOT projects, etc.

For corporate customers:

VBI Annual Report 2014

STRATEGIC ORIENTATION IN 2015

CLASSIFICATION OF CUSTOMERS AND IMPROVEMENT OF CUSTOMER CARE SERVICES In 2015 VBI will classify customers based on their scale (individuals, small and medium enterprises, large enterprises) and their priority level (diamond, gold, silver, etc. class) to provide the most suitable customer care policies for each audience.

Together with customer classiďŹ cation, the Company will also do research and apply CRM (custom-

VBI Annual Report 2014

er relationship management) software to monitor and understand customer behavior as well as come up with timely and appropriate solutions, products and services. This is considered as one of VBI's key objectives in 2015.

the Company's service quality, especially in products oering and indemnity practices, thereby coming up with solutions to improve service and indemnity quality.

VBI will continuously conduct surveys with the customers on

22/

STRATEGIC ORIENTATION IN 2015

ENHANCEMENT OF INFORMATION TECHNOLOGY SYSTEM MODERNIZATION STRATEGY Information technology has always been considered as a distinctive factor in VBI's development compared to competitors on the market. In 2014 VBI successfully implemented core software on business process, indemnity and bancassurance which provided great support in sales management and order issuance. The remote risk assessment and damage investigation software via smartphone has been widely used since mid 2014, making the investigation task become more professional, convenient, efficient and safer.

proved its stable operation and created positive impacts on retail activities conducted through banks.

In 2015 VBI will complete and further improve the software to support sales, data management and collation, and reporting. In particular, developing the CRM software to manage customer information efficiently and professionally is one of the Company's key missions.

The business process core software was completed and implemented in 2014, helping to connect different tasks from original insurance policy and reinsurance contract issuance to accounting, and as a result, information management became convenient and synchronized. In addition, information technology management procedures and regulations were also issued by VBI to enhance the system's security.

After being upgraded, the Bancassurance software has been performing well with new features that supported VietinBank staff in direct policy issuance and in updating information and knowledge on products and programs. After nearly 1 year of operation, the software has

23/

VBI Annual Report 2014

STRATEGIC ORIENTATION IN 2015

ENHANCEMENT OF RISK MANAGEMENT AND QUALITY IMPROVEMENT OF INDEMNITY Risk management and assessment are implemented following a centralized management model at the Head Office and then decentralized to business units based on their scale and management capacity. With this model risk assessment became more centralized, professional and provided better risk control. This model still allows for flexibility in the business units' exploitation of services within their capability.

In addition, VBI also paid high attention to promote business process training, improve professional knowledge, systemize

procedures, provide guidance on investigation and indemnity, improve service quality and expand underwritten garage system. Currently VBI has over 194 credible underwritten garages covering all provinces in the country to ensure the timely provision of rescue and repair services at competitive price and high quality.

use technology in risk management by pursuing centralized management from risk management to claim investigation.

In 2015 VBI will enhance risk management practices, find out the outstanding issues and come up with solutions to help its operation become safer and cleaner.

In addition, VBI will also actively

$

VBI Annual Report 2014

24/

STRATEGIC ORIENTATION IN 2015

PROMOTION OF BRAND NAME AND CORPORATE CULTURE Brand positioning strategy as the basis of a higher stage of development has become one of VBI's new and sustainable targets in 2014. VBI launched "The New Brand Identity System 2014" in June 2014 following VietinBank's ISO standards. This change was totally active, positive and inevitable in the development process, aiming for distinctive differences to bring the best interests to customers. The brand repositioning strategy was considered as the foundation for promoting VBI's business strategy.

existing intrinsic value but also the values that VBI is still building and improving to bring the best interests to customers, partners, employees and the whole society.

With the Brand Identity System 2014 as the basis, in August 2014 VBI successfully launched its new website. This website was thoroughly invested in with modern and user-friendly design and premium features that facilitated customers in searching and looking up information about VBI's products, services and promotions.

The strategy used by VBI was not simply changing the identity system or carrying out a new communication and promotion program, it was a consistent brand strategy positioned based on market segments and long-term development targets with a sustainable brand structure system and the image of a customer-oriented insurance company. VBI's new brand identity system reflects not only the

In 2015 VBI will enhance brand promotion on mass media to bring the VietinBank Insurance brand name closer to the clients.

More over, VBI will also invest in

25/

its sign system in Vietnam's 63 provinces in addition to the brand of its parent company - VietinBank.

In recent years, corporate culture has always been a focus and promoted by VBI. In order to improve employees' mental life, VBI regularly organized sports and cultural events such as VietinBank sports festival, VietinBank culture contest, teambuilding activities, vacation programs, etc. Voluntary work has been and will continue to be promoted by VBI in the future, including: Blood Donation Day, "Porridge of Love" event at Vietnam National Children Hospital, etc. These activities helped to connect all staff throughout the Company and created the power of solidarity and motivation for VBI's future stronger development.

VBI Annual Report 2014

FINANCIAL REPORT

INTEGRATED FINANCIAL REPORT NOTES TO INTEGRATED FINANCIAL REPORT

VBI Annual Report 2014

26/

STATEMENT OF THE BOARD OF GENERAL DIRECTORS The Board of General Directors of Vietinbank Insurance Company Limited (the “Company”) presents this report together with the Company’s financial statements for the year ended 31 December 2014.

THE CHAIRWOMAN AND THE BOARD OF GENERAL DIRECTORS The Chairwoman and the members of the Board of General Directors of the Company who held office during the year and to the date of this report are as follows: The Chairwoman Ms. Nguyen Hong Van

Chairwoman

Board of General Directors Mr. Le Tuan Dung

General Director

Mr. Chu Van Hao

Deputy General Director (appointed on 11 July 2014) (resigned on 22 January 2015)

Ms. Tran Thi Kim Yen

Deputy General Director (resigned on 01 September 2014)

Ms. Dao Thi Chinh Deputy

General Director (resigned on 15 June 2014)

Mr. Nguyen Hong Phong

Deputy General Director

BOARD OF GENERAL DIRECTORS’ STATEMENT OF RESPONSIBILITY The Board of General Directors of the Company is responsible for preparing the financial statements, which give a true and fair view of the financial position of the Company and of its results and cash flows for the year in accordance with Vietnamese accounting standards, accounting regime for insurance enterprises in Vietnam and legal regulations relating to financial reporting. In preparing these financial statements, the Board of General Directors is required to: • • • • •

Select suitable accounting policies and then apply them consistently; Make judgments and estimates that are reasonable and prudent; State whether applicable accounting principles have been followed, subject to any material departures disclosed and explained in the financial statements; Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; and Design and implement an effective internal control system for the purpose of properly preparing and presenting the financial statements so as to minimize errors and frauds.

The Board of General Directors of the Company is responsible for ensuring that proper accounting records are kept, which disclose, with reasonable accuracy at any time, the financial position of the Company and that the financial statements comply with Vietnamese accounting standards, accounting regime for insurance enterprises in Vietnam and legal regulations relating to financial reporting. The Board of General Directors is also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of frauds and other irregularities.

The Board of General Directors confirms that the Company has complied with the above requirements in preparing these financial statements.

For and on behalf of the Board of General Directors,

LE TUAN DUNG GENERAL DIRECTOR HANOI, 20 MARCH 2015

27/

VBI Annual Report 2014

1044/VN1A-HN-BC

INDEPENDENT AUDITORS’ REPORT To:

The Chairwoman and the Board of General Directors of Vietinbank Insurance Company Limited

We have audited the accompanying financial statements of Vietinbank Insurance Company Limited (the “Company”), prepared on 20 March 2015 as set out from page 03 to page 30, which comprise the balance sheet as at 31 December 2014, and the statement of income and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information (collectively referred to as the “financial statements”).

Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Vietnamese Accounting Standards, accounting regime for insurance enterprises in Vietnam and legal regulations relating to financial reporting and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Vietnamese Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.

The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the accompanying financial statements give a true and fair view of, in all material respects, the financial position of the Company as at 31 December 2014, and its financial performance and its cash flows for the year then ended in accordance with Vietnamese accounting standards, accounting regime for insurance enterprises in Vietnam and legal regulations relating to financial reporting.

Truong Anh Hung Deputy General Director Audit Practising Registration Certificate No. 0029-2013-001-1

Tran Quang Huy Auditor Audit Practising Registration Certificate No. 1675-2013-001-1

For and on behalf of DELOITTE VIETNAM COMPANY LIMITED 20 March 2015 Hanoi, S.R. Vietnam

VBI Annual Report 2014

28/

BALANCE SHEET As at 31 December 2014

ASSETS

FORM B01a-DNPNT

CODES

NOTE

31.12.2014

31.12.2013

342,881,861,247

747,258,261,546

78,682,951,985

92,677,627,302 18,569,127,302

A.

CURRENT ASSETS (100=110+120+130+140+150+190)

100

I.

CASH AND CASH EQUIVALENTS

110

1.

Cash

111

17,682,951,985

2.

Cash equivalents

112

61,000,000,000

74,108,500,000

II.

SHORT-TERM FINANCIAL INVESTMENTS

120

64,800,100,000

414,271,540,807

1.

Short-term investments

121

64,800,132,617

414,289,183,357

2.

Provision for impairment of short-term investments

129

(32,617)

(17,642,550)

III.

SHORT-TERM RECEIVABLES

130

103,224,866,195

129,491,214,147

1.

Trade accounts receivable

131

94,222,469,419

123,219,898,691

86,467,288,399

99,484,259,837

7,755,181,020

23,735,638,854

6

7

1.1. Receivables of insurance contracts

131.1

1.2. Other trade accounts receivables

131.2

2.

Advances to suppliers

132

-

1,613,681,386

3.

Other receivables

135

9,408,029,117

10,180,824,547

4.

Provision for short-term doubtful debts

139

(405,632,341)

(5,523,190,477)

IV.

INVENTORIES

140

703,297,149

771,240,273

1.

Inventories

141

703,297,149

771,240,273

V.

OTHER CURRENT ASSETS

150

15,678,678,616

2,149,350,115

1.

Short-term prepaid expenses

151

12,339,258,188

158,544,229

8

9

1.1. Unallocated commission expenses

151.1

12,159,480,483

-

1.2. Other short-term prepaid expenses

151.2

179,777,705

158,544,229

2.

VAT deductibles

152

2,604,864,666

838,047,596

3.

Other short-term assets

158

734,555,762

1,152,758,290

VI.

REINSURANCE ASSETS

190

79,791,967,302

107,897,288,902

1.

Unearned premium reserve for outward reinsurance

191

43,071,112,262

34,364,073,585

2.

Claim reserve for outward reinsurance

192

36,720,855,040

73,533,215,317 126,292,455,835

10

B.

NON-CURRENT ASSETS (200=210+220+250+260)

200

586,319,789,933

I.

LONG-TERM RECEIVABLES

210

6,176,607,560

6,126,607,560

1.

Other long-term receivables

218

6,176,607,560

6,126,607,560

1.1. Insurance deposit

218.1

6,000,000,000

6,000,000,000

1.2. Other deposits and collateral

218.2

II.

FIXED ASSETS

220

1.

Tangible ďŹ xed assets

221

2.

11

176,607,560

126,607,560

10,465,598,019

8,472,779,144

8,110,110,182

6,774,212,342 10,050,038,345

- Cost

222

12,766,509,708

- Accumulated depreciation

223

(4,656,399,526)

(3,275,826,003)

Intangible assets

227

2,355,487,837

1,698,566,802

- Cost

228

3,130,400,000

1,831,400,000 (132,833,198)

12

- Accumulated amortization

229

(774,912,163)

III.

LONG-TERM FINANCIAL INVESTMENTS

250

566,285,800,000

107,000,000,000

1.

Other long-term investments

258

566,285,800,000

107,000,000,000

IV.

OTHER NON-CURRENT ASSETS

260

3,391,784,354

4,693,069,131

2,723,546,885

3,906,691,238

1.

Long-term prepaid expenses

261

2.

Deferred tax assets

262

TOTAL ASSETS (270=100+200)

270

29/

13

14

668,237,469

786,377,893

929,201,651,180

873,550,717,381

VBI Annual Report 2014

BALANCE SHEET (Continue)

FORM B01a-DNPNT

As at 31 December 2014

RESOURCES

CODES

NOTE

31.12.2014

31.12.2013

A. LIABILITIES (300=310+330)

300

355,330,289,060

318,244,916,782

I. CURRENT LIABILITIES

310

355,300,289,060

318,229,916,782

1. Trade accounts payable

312

106,788,091,888

121,989,363,964

1.1. Payables of insurance contracts

312.1

106,788,091,888

121,989,363,964

2. Advances from customers

313

3. Taxes and amounts payable to the State budget

314

4. Payables to employees

15

-

69,003,763

7,299,091,066

9,416,724,379

315

6,379,633,906

1,031,592,738

5. Accrued expenses

316

474,500,000

-

6. Other current payables

319

17

4,903,822,953

4,906,842,865

7. Unearned commission income

319.1

17

10,943,292,518

-

8. Unearned revenue

319.2

612,082,617

-

9. Bonus and welfare funds

323

475,855,178

415,816,080

10. Underwriting reserves

329

217,423,918,934

180,400,572,993

10.1. Unearned premium reserve for direct insurance and inward reinsurance

329.1

149,705,895,465

81,475,754,296

10.2. Claim reserve for direct insurance and inward reinsurance

329.2

59,419,071,652

92,840,152,740

10.3. Catastrophe reserve

329.3

8,298,951,817

6,084,665,957

II. LONG-TERM LIABLILITIES

330

30,000,000

15,000,000

1. Other long-term payables

333

30,000,000

15,000,000

B. EQUITY (400=410)

400

573,871,362,120

555,305,800,599

I. OWNERS' EQUITY 1. Owners' contributed capital

410

573,871,362,120

555,305,800,599

411

500,000,000,000

500,000,000,000

2. Financial reserve fund

418

14,584,685,979

10,978,696,024

3. Compulsory reserve fund

419

12,214,739,531

9,753,965,721

4. Retained earnings

421

47,071,936,610

34,573,138,854

TOTAL RESOURCES (440 = 300+ 400)

440

929,201,651,180

873,550,717,381

16

18

19

OFF-BALANCE SHEET ITEMS ITEMS

UNIT

31.12.2014

31.12.2013

1.

Direct insurance contract of which the responsibility is not yet incurred

VND

46,516,657,982

2,828,810,212

2.

Bad debts written off

VND

5,863,942,513

7,805,133,147

3.

Foreign currencies

USD

20,218.96

409,748.84

EUR

384.30

383.97

United States Dollar

Quach Van Ha Preparer 20 March 2015

VBI Annual Report 2014

Nguyen Van Hung Chief Accountant

Le Tuan Dung General Director

30/

INCOME STATEMENT As at 31 December 2014 TFORM B02a - DNBH

PART I: GENERAL INCOME STATEMENT ITEMS

CODES

2014

2013

1.

Net revenue from insurance activities

10

173,534,860,645

90,593,582,079

2.

Financial income

12

60,296,145,776

61,423,291,483

3.

Other income

13

292,236,525

13,253,535

4.

Total expenses for insurance activities

20

129,625,031,953

79,338,946,987

5.

Financial expenses

22

3,432,482,606

324,290,818

6.

General and administration expenses

23

37,767,948,119

24,268,281,243

7.

Other expenses

24

76,700,996

45,896,393

8.

Total accounting proďŹ t before tax (50 = 10+12+13-20-22-23-24)

50

63,221,079,272

48,052,711,656

9.

Current corporate income tax expense

51

13,886,462,656

12,256,404,396

12.

Deferred tax expense

52

118,140,424

(263,592,290)

10.

Net proďŹ t after corporate income tax (60 = 50-51)

60

49,216,476,192

36,059,899,550

PART II: INCOME STATEMENT BY ACTIVITIES ITEMS 1.

CODES NOTE

2014

2013

Insurance premium (01=01.1+01.2-01.3)

01

241,945,316,489

144,880,569,568

- Direct insurance premium

01.1

263,401,480,678

143,499,066,643

- Inward reinsurance premium

01.2

46,773,946,980

- Increase in unearned premium reserves for direct insurance and inward reinsurance

01.3

68,230,111,169

28,264,428,798 26,882,925,873

Outward reinsurance premium (02=02.1-02.2)

02

80,039,803,012

71,022,771,327

- Total outward reinsurance premium

02.1

88,746,841,689

71,022,771,327

- Increase in unearned premium reserve for outward reinsurance

02.2

8,707,038,677

-

3.

Net insurance premium (03= 01 - 02)

03

161,905,513,477

73,857,798,241

4.

Commission income from outward reinsurance and other income from insurance activities (04 = 04.1 + 04.2)

04

11,629,347,168

16,735,783,838

- Commission income from outward reinsurance

04.1

11,100,729,017

16,691,764,422

- Other income from insurance activities

04.2

528,618,151

44,019,416

5.

Net revenue from insurance activities (10 = 03 + 04)

10

173,534,860,645

90,593,582,079

6.

Claim settlement expenses (11= 11.1 - 11.2)

11

86,200,187,088

77,878,294,772

- Total claim settlement expenses

11.1

86,200,187,088

78,108,785,571

77,015,698,170

46,840,124,290

9,184,488,918

31,268,661,281

-

230,490,799

+ Receipt of claim from third party

-

191,731,800

+ Receipt of 100% claim from goods

-

38,758,999

2.

20

21

+ Claim settlement of direct policies + Claim settlement of assumed policies - Deductions (Receipt of claim form third party, receipt of 100% claim for goods)

11.2

7.

Claims receipts from ceded policies

12

25,355,300,838

46,541,067,627

8.

Increase (decrease) in claim reserves for direct insurance and outward reinsurance

13

40,112,164,229

4,933,463,013

9.

Increase in claim reserve for outward reinsurance

14

36,720,855,040

10.

Total insurance claim settlement expenses (15 = 11 - 12 + 13 - 14)

15

36,270,690,158

31/

22

64,236,195,439

VBI Annual Report 2014

INCOME STATEMENT (continue)

FORM B02a - DNBH

As at 31 December 2014

ITEMS

CODES NOTE

2014

2013

2,214,285,860 -

(1,594,401,736) 2,600,000,000

11.

(Decrease)/ Increase in catastrophe reserve Including: Claim settlement from catastrophe reserve

16

12.

Other expenses for insurance activities (17 = 17.1 + 17.2)

17

63,174,550,654

44,662,658,565

- Insurance commission expense

17.1

13,226,512,203

18,562,845,112

2,552,135,657

10,925,522,772

10,674,376,546

7,637,322,340

-

-

49,948,038,451

26,099,813,453

1,884,116,251

2,662,557,614

761,781,574

103,397,811

33,700,867

-

20

+ Commission expense from direct insurance + Commission expense from reinsurance inward

21

+ Commission expense from outward reinsurance - Other expenses for insurance activities

17.2

+ Other expenses from direct insurance activities + Other expenses from reinsurance inward activities + Other expenses from reinsurance outward activities + Other expenses

47,268,439,759

23,333,858,028

13. Total expenses for insurance activities (18 = 15 + 16 + 17)

18

129,625,031,953

79,338,946,987

14. Gross profit from insurance activities (19 = 10 - 18)

19

43,909,828,692

11,254,635,092

15. Financial income

23

60,296,145,776

61,423,291,483

16. Financial expenses

24

3,432,482,606

324,290,818

17. Gross profit from financial activities (25 = 23- 24)

25

56,863,663,170

61,099,000,665

18. General and administration expenses

26

37,767,948,119

24,268,281,243

19. Net profit from operating activities (30 = 19 + 25 - 26)

30

63,005,543,743

48,085,354,514

20. Other incomes

31

292,236,525

13,253,535

21. Other expenses

32

76,700,996

45,896,393

22. Other (loss)/profits (40 = 31 - 32)

40

215,535,529

(32,642,858)

23. Accounting profit before tax (50 = 30 + 40)

50

63,221,079,272

48,052,711,656

24. Current corporate income tax expenses

51

13,886,462,656

12,256,404,396

25. Deferred tax expense

52

118,140,424

(263,592,290)

25. Net profit after corporate income tax (60 = 50 - 51 - 52)

60

49,216,476,192

36,059,899,550

Quach Van Ha Preparer 20 March 2015

VBI Annual Report 2014

Nguyen Van Hung Chief Accountant

22

Le Tuan Dung General Director

32/

CASH FLOW STATEMENT As at 31 December 2014

ITEMS

FORM B 03-DN

CODES

2014

2013

I.

CASH FLOWS FROM OPERATING ACTIVITIES

1.

Receipt from insurance premium and commissions

01

338,605,040,967

179,747,805,407

2.

Receipt from deducted expenses

03

31,476,593,767

13,008,782,270

3.

Receipt from other operating activities

04

15,000,000

15,000,000

4.

Payment for claim settlements

05

(92,626,422,257)

(42,795,149,137)

5.

Payment for commissions and other insurance activities

06

(58,217,551,471)

(72,431,673,745)

6.

Payment to suppliers for goods and services

07

(86,749,412,945)

(10,661,336,392)

7.

Payment to employees

08

(35,103,565,586)

(28,754,162,809)

8.

Payment for taxes and obligations to the State budget

09

(41,904,412,792)

(29,394,683,491)

9.

Payment for other payables

10

(3,045,400,000)

(3,662,551,945)

10.

Advances for employees and suppliers

11

(5,971,557,621)

(9,881,686,496)

Net cash from operating activities

20

46,478,312,062

(4,809,656,338)

II.

CASH FLOWS FROM INVESTING ACTIVITIES

1.

Receipt from investments in other entities

21

768,116,640,807

583,424,035,560

2.

Receipt from interest on other investments

22

70,877,783,896

63,713,503,281

3.

Investments in other entities

24

(865,307,278,845)

(538,112,916,667)

4.

Acquisition of fixed assets

25

(3,575,971,363)

(5,253,276,122)

Net cash from/(used in) investing activities

30

(29,888,825,505)

103,771,346,052

III.

CASH FLOWS FROM FINANCING ACTIVITIES

1.

Proceeds from borrowings

31

253,700,000,000

98,000,000,000

2.

Repayment of borrowings

34

(253,700,000,000)

(98,000,000,000)

3.

Recovery of capital to parent company

35

(30,650,914,671)

(37,338,149,221)

Net cash from/(used in) financing activities

40

(30,650,914,671)

(37,338,149,221)

Net increase in cash (50=20+30+40)

50

(14,061,428,114)

61,623,540,493

Cash and cash equivalents at the beginning of the period

60

92,677,627,302

30,918,872,222

Effect of changes in foreign exchange rates

61

66,752,797

135,214,587

Cash and cash equivalents at the end of the period (70=50+60+61)

70

78,682,951,985

92,677,627,302

Quach Van Ha Preparer 20 March 2015

33/

Nguyen Van Hung Chief Accountant

Le Tuan Dung General Director

VBI Annual Report 2014

NOTES TO INTEGRATED FINANCIAL REPORT 1.GENERAL INFORMATION Structure of ownership VietinBank Insurance Company Limited (the “Company”) is a one member limited liability company which is wholly owned by Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank). The Company is established in Vietnam pursuant to the first Establishment and Operation Licence No. 21 GP/KDBH granted by the Ministry of Finance dated 12 December 2002 and the amended Licences. The number of employees of the Company as at 31 December 2014 was 220 (as at 31 December 2013: 174).

Operating industry and principal activities The Company’s principal activities are to provide services of non-life insurance, reinsurance, prevention and limitation of loss, loss survey and inspection, loss survey and inspection agents, claim settlement, third-party claim, fund management, capital investment and other business operations that are in line with prevailing laws and regulations.

2.ACCOUNTING CONVENTION AND FINANCIAL YEAR Accounting convention The accompanying financial statements, expressed in Vietnam Dong (VND), are prepared under the historical cost convention and in accordance with Vietnamese accounting standards, accounting regime for insurance enterprises in Vietnam and legal regulations relating to financial reporting. The accompanying financial statements are not intended to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than Vietnam.

Financial year The Company’s financial year begins on 01 January and ends on 31 December.

3.ADOPTION OF NEW ACCOUNTING GUIDANCE On 28 December 2012, the Ministry of Finance issued Circular No.232/2012/TT-BTC (“Circular 232”) providing guidance on accounting regime applicable to non-life insurers, reinsurers and branches of foreign non-life insurers. Circular 232 requires the disclosure of the information relating to insurance contract, reinsurance contract, claim status and many other significant information. This Circular will be effective from 01 Jannuary 2014 and applicable from financial year 2014. According to the Board of General Directors’ assessment, Circular 232 has a material effect on the Company’s financial statements for the year ended 31 December 2014.

As at 31 December 2014

B 09-DNPNT

Circular 232/2012/TT-BTC VND

Decision 150/2001/QD-BTC VND

Effects VND

12,159,480,483

-

12,159,480,483

179,777,705

179,777,705

-

2.1. Unearned premium reserve for outward reinsurance

43,071,112,262

-

43,071,112,262

2.2. Claim reserve for outward reinsurance

36,720,855,040

-

36,720,855,040

10,943,292,518

-

10,943,292,518

4.1. Unearned premium reserves for direct insurance and inward reinsurance

149,705,895,465

106,634,783,203

43,071,112,262

4.2. Claim reserves for direct insurance and inward reinsurance

59,419,071,652

22,698,216,612

36,720,855,040

1. Short-term prepaid expenses 1.1. Unallocated commission expenses 1.2. Other short-term prepaid expenses 2. Reinsurance assets

3. Other current payables 3.1. Unearned commission income 4. Underwriting reserves

VBI Annual Report 2014

34/

NOTES TO INTEGRATED FINANCIAL REPORT (continue)

The following are details of items in the balance sheet as at 31 December 2014 that have been affected by the adoption of Circular No. 232/2012/TT-BTC replacing Decision No. 150/2001/QD-BTC dated 31 December 2001 issued by the Ministry of Finance: 2014

Circular Decision 232/2012/TT-BTC 150/2001/QD-BTC

Effects

1.

Increase in unearned premium reserves for direct insurance and inward reinsurance

2.

Increase in unearned premium reserve for outward reinsurance

3.

Commission income from outward reinsurance

11,100,729,017

22,044,021,535 (10,943,292,518)

4.

Increase in claim reserves for direct insurance and inward reinsurance

40,112,164,229

3,391,309,189 36,720,855,040

5.

Increase in claim reserve for outward reinsurance

36,720,855,040

- 36,720,855,040

6.

Commission expense

13,226,512,203

25,385,992,686 (12,159,480,483)

7.

Other expenses from insurance activities

49,948,038,451

2,679,598,692 47,268,439,759

- Other expenses from direct, inward and outward insurance activities

2,679,598,692

- Other expenses

68,230,111,169

59,523,072,492

8,707,038,677

8,707,038,677

-

8,707,038,677

2,679,598,692

-

47,268,439,759

- 47,268,439,759

-

47,268,439,759 (47,268,439,759)

8. General and administration expenses

4.NEW ACCOUNTING GUIDANCE IN ISSUE NOT YET ADOPTED

On 17 December 2014, the Ministry of Finance issued Circular No. 194/2014/TT-BTC (“Circular 194”) amending and supplementing a number of articles of Circular No. 124/2012/TT-BTC dated 30 July 2012 of the Ministry of Finance guiding the implementation of a number of articles of Decree No. 45/2007/ND-CP dated 27 March 2007 of the Government specifying details of the implementation of a number of articles of the Law on insurance business and Decree No. 123/2011/ND-CP dated 28 December 2011 of the Government specifying details of the implementation of a number of articles of the Law amending and supplementing a number of articles of the Law on Insurance Business and Circular No. 125/2012/TT-BTC dated 30 July 2012 of the Ministry of Finance guiding the financial regulations for insurance enterprises, re-insurance enterprises, insurance brokerage enterprises and branches of foreign non-life insurance enterprises. Circular 194 is effective from 01 February 2015 and is applied from financial year 2015 onwards. The Board of General Directors is considering the extent of impact of the adoption on the Company’s financial statements for future accounting periods.

5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Estimates The preparation of financial statements in conformity with Vietnamese Accounting Standards, accounting regime for insurance enterprises in Vietnam and legal regulations relating to financial reporting requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the financial year. Although these accounting estimates are based on the management’s best knowledge, actual results may differ from those estimates.

Initial recognition Financial assets At the date of initial recognition, financial assets are recognized at cost plus transaction costs that are directly attributable to the acquisition of the financial assets.

Financial assets of the Company comprise cash and cash equivalents, trade receivables, other receivables, investments , claim reserve for outward reinsurance and other financial assets.

35/

VBI Annual Report 2014

NOTES TO INTEGRATED FINANCIAL REPORT (continue)

Financial liabilities At the date of initial recognition, financial liabilities are recognized at cost plus transaction costs that are directly attributable to the issue of the financial liabilities. Financial liabilities of the Company comprise trade payables, other payables claim reserves for direct insurance and inward reinsurance and other financial liabilities.

Subsequent measurement after initial recognition Currently, there are no requirements for the subsequent measurement of the financial instruments after initial recognition.

Cash and cash equivalents Cash and cash equivalents comprise cash on hand, demand deposits and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Provision for doubtful debts Provision for doubtful debts is made for receivables that are overdue for six months or more, or when the debtor is in dissolution, in bankruptcy, or is experiencing similar difficulties and so may be unable to repay the debt. The Board of General Directors believes that receivables have been fully provided for and in line with the Company’s business operation.

Tangible fixed assets and depreciation Tangible fixed assets are stated at cost less accumulated depreciation. The costs of purchased tangible fixed assets comprise their purchase prices and any directly attributable costs of bringing the assets to their working condition and location for their intended use. Tangible fixed assets are depreciated using the straight-line method over their estimated useful lives as follows: Years Office equipment Motor vehicles

3-7 8

Intangible assets and amortisation Intangible assets are stated at cost less accumulated amortisation. Intangible assets represent accounting software which is amortized using the straight-line method over the estimated useful life of 2 – 5 years.

Investments Investments including deposits (short-term and long-term), investments in listed shares and investments in bonds are initially measured at cost including purchase cost and directly attributable transaction costs, such as: transaction costs, communication costs, taxes and bank charges.Investments in securities are recognised on a trade date basis and are initially measured at cost including directly attributable transaction costs. At the subsequent reporting dates, investments in securities are measured at cost, less the amount of impairment of investments in securities (if any).Provision for impairment of investments in securities is made in accordance with current prevailing accounting regulations which allow provision to be made for freely traded securities whose carrying values are higher than market prices as at the balance sheet date.

Foreign currencies The Company applies the method of recording foreign exchange differences in accordance with Vietnamese Accounting Standard No. 10 (VAS 10) “Effects of changes in foreign exchange rates” and Circular No. 179/2012/TT-BTC dated 24 October 2012 by the Ministry of Finance providing guidance on recognition, measurement and treatment of foreign exchange differences in enterprises. Accordingly, transactions arising in foreign currencies are translated at exchange rates ruling at the transaction date. The balance of monetary items denominated in foreign currencies as at the balance sheet date is retranslated at the exchange rates on the same date. Exchange differences arising from the translation of these accounts are recognised in the income statement. Unrealised exchange gains at the balance sheet date are not treated as part of distributable profit to the owner.

Revenue recognition Direct insurance premium: Direct insurance premium is recognised when the insurance policy is provided for clients comes into effect. The premium is recorded under each due date as per contract if the term of insurance policy lasts for several years.

Re-insurance premium: Premium from re-insurance inward activities is recorded when incurred at the amount stated on the reinsurers’ statement sent to the Company and confirmed by the Company. As at the reporting date, reinsurance inward premium under reinsurance arrangements but for which the statement of settlement has not been sent by cedants is estimated based on historical data and the Company’s estimate. Reinsurance outward premium is recorded at the amount transferred to the reinsurers, corresponding to the revenue of direct premium recorded in the year. Commission income and other incomes from reinsurance activities are recorded on accrual basis. In the year, the entire outward reinsurance premium under outward reinsurance contracts signed in accordance with regulations of the financial regime is presented in the item “Commission income from outward reinsurance”. At the year end of the reporting period, the Company should determine unearned commission income from outward reinsurance corresponding to outward reinsurance premium not yet recognized in this year so as to allocate such commission income to the subsequent accounting years under 25% rate method for cargo insurance and 50% rate method for other kinds of insurance.

VBI Annual Report 2014

36/

NOTES TO INTEGRATED FINANCIAL REPORT (continue)

Other revenues: Revenues from interest from bank deposits and bonds are recognized based on accrual basis; revenue from dividends are recognized based on announcement; other revenues are recorded when incurred.

Expenditures Claim settlement expenses of direct insurance are recorded as incurred, that is, when the Company accepts to settle the insured’s claims following respective settlement notice. Claim settlements of reinsurance inward activities are recorded as incurred following the statement of accounts the reinsurers sent to the Company and the claim is accepted by the Company.

Claim recoverable from the reinsurers is recognized based on the receivable amount incurred corresponding to the claim settlement expenses recorded in the year and the ceded ratios. Commission expenses for direct insurance and inward reinsurance are recognized corresponding to the direct insurance and inward reinsurance premium. In the year, the entire commission expenses from direct insurance and inward insurance are presented in the items “Commission expenses for direct insurance” and “Commission expenses for inward reinsurance”. At the end of the repording period, the Company should determine commission expenses for direct insurance and inward reinsurance which have not yet been recognized as expenses for the year corresponding to unearned direct premium and inward reinsurance premium so as to allocate such commission expenses to the subsequent accounting years at the rate of 25% regarding all types of cargo insurance and 50% for insurance service of other types.Other expenses are recognized when incurred.

Taxation Income tax expense represents the sum of the current tax payable and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years (including loss carried forward, if yes) and it further excludes items that are never taxable or deductible.Deferred tax is recognized on significant differences between carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using balance sheet liability method. Deferred tax liabilities are generally recognized for all temporary differences and deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilized. Deferred tax is calculated at the tax rates that are expected to apply in the year when the liability is settled or the asset realised. Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same tax authority and the Company intends to settle its current tax assets and liabilities on a net basis.The determination of the current tax expense payable is based on the current interpretation of tax regulations. However, these regulations are subject to periodic variation and their ultimate determination depends on the results of the tax authorities’ examinations.Other taxes are paid in accordance with the prevailing tax laws in Vietnam.

Provisions Provisions are recognised when the Company has a present obligation as a result of a past event, and it is probable that the Company will be required to settle that obligation. Provisions are measured at the management’s best estimate of the expenditure required to settle the obligation at the balance sheet date.

Insurance deposits The Company is obliged to pay a deposit equal to 2% of the legal capital or at the minimum of VND 6 billion. The deposit shall bear interest in accordance with the agreement reached with the deposit bank and may be withdrawn upon the termination of operation. Insurance deposit is only used to meet undertakings with purchasers of insurance when its solvency is inadequate and upon written approval of the Ministry of Finance.

Underwriting reserves The Company makes underwriting reserves as regulated in Article No. 96 of the Law on Insurance Business, Decree No. 46/2007/ND-CP dated 27 March 2007 by the Government, Circular No. 156/2007/TT-BTC dated 20 December 2007 issued by the Ministry of Finance (amended and supplemented by Circular No. 125/2012/TT-BTC issued by the Ministry of Finance dated 30 July 2012), accordingly: Unearned premium reserve: The reserve is provided for at the rate of 25% of the premium retained for the year for all types of cargo insurance and at 50% of the premium retained for insurance services of other types.

Claim reserve: The reserve is provided for losses that incurred and reported including direct insurance and inward reinsurance, but not yet settled, using each claim dossier method based on the Company’s retention liabilities and the amount claim reinsurers for each estimated loss.

For the incurred but not reported (IBNR) losses, claim reserve is provided for based on statistical rate of the three consecutive years. The Board of General Directors believes that IBNR losses are carefully assessed and fully recorded. Catastrophe reserve: In accordance with Vietnamese Accounting Standard No. 19 “Insurance Contract”, reserve to cover the losses in the future of which the claims did not appear at the balance sheet date (including catastrophe reserve) is deemed not necessary. However, following regulations of Circular No.156/2007/TT-BTC dated 20 December 2007 issued by the Ministry of Finance (amended and supplemented by Circular No.125/2012/TT-BTC dated 30 July 2012). According to Official Letter No. 17924 dated 26

37/

VBI Annual Report 2014

NOTES TO INTEGRATED FINANCIAL REPORT (continue)

December 2012 issued by the insurance supervisory authority of the Ministry of Finance, the Company is allowed to make catastrophe reserve of 1% retained premium during the year for all types of insurance, the reserve will be appropriated until it reaches 100% of retained earnings for the year.

Enterprise funds and reserves Charter capital is contributed by Vietnam Joint Stock Commercial Bank for Industry and Trade and stated in the Company's charter.

In the course of operation, the Company maintained its contributed charter capital no less than the legal capital as prescribed by law.

When there is a change in charter capital, the Company will publicly announced its new charter capital.

31/12/2014 VND

31/12/2013 VND

Cash on hand

1,333,475,879

726,569,639

Cash in bank

16,349,476,106

17,842,557,663

-

-

Cash equivalents (i)

61,000,000,000

74,108,500,000

Total:

78,682,951,985

92,677,627,302

Cash in transit

(i) Cash equivalents represent term deposits at domestic commercial banks which will fall due within three months.

7.SHORT-TERM FINANCIAL INVESTMENTS 31/12/2014 VND

31/12/2013 VND

Term deposits at credit institutions (i)

34,800,132,617

323,971,416,667

Corporate bonds (ii)

30,000,000,000

90,049,095,890

- Vietnam Expressway Corporation

-

20,049,095,890

- Vietnam Electricity

-

20,000,000,000

- Kinh Bac City Development Holding Corporation

-

50,000,000,000

30,000,000,000

-

- Song Da Corporation Listed shares Provision for impairment of short-term investments Total:

268,670,800 (32,617)

(17,642,550)

64,800,100,000

414,271,540,807

(i)

Represents time deposits in VND or USD at banks and credit institutions with term of over 3 months which will mature within 01 year.

(ii)

Represents bonds of Song Da Corporation with par value of VND 1 billion. The bonds bear the oating interest rate which is paid in arrears every year.

The bond will mature on 20 April 2015 and are reclassiďŹ ed from other long-term investments as at 31 December 2014 (Note 13).

8.RECEIVABLES OF INSURANCE CONTRACTS 31/12/2014 VND

31/12/2013 VND

Receivables regarding direct insurance premium

16,851,774,746

21,159,699,316

Receivables regarding inward reinsurance

27,284,980,529

29,872,734,468

Receivables regarding outward reinsurance

42,330,533,124

48,451,826,053

Total receivables of insurance contracts

86,467,288,399

99,484,259,837

VBI Annual Report 2014

38/

NOTES TO INTEGRATED FINANCIAL REPORT (continue)

9.SHORT - TERM PREPAYMENTS 31/12/2014 VND

31/12/2013 VND

-

-

25,385,992,686

-

(13,226,512,203)

-

12,159,480,483

-

- Balance as at 01/01

158,544,229

145,406,269

- Other short-term prepaid expenses incurred in the year

195,278,853

380,572,695

- Other short-term prepaid expenses allocated in the year

(174,045,377)

(367,434,735)

179,777,705

158,544,229

12,339,258,188

158,544,229

31/12/2014

31/12/2013

Unearned premium reserve for outward reinsurance

43,071,112,262

34,364,073,585

Claim reserve for outward reinsurance

36,720,855,040

73,533,215,317

Total:

79,791,967,302

107,897,288,902

MOTOR VEHICLES

OFFICE EQUIPMENT

TOTAL

As at 01/01/2014

7,791,935,073

2,258,103,272

10,050,038,345

New purchases

2,635,410,909

81,060,454

2,716,471,363

Other increases

-

-

-

Disposals

-

-

-

Other Decreases

-

-

-

10,427,345,982

2,339,163,726

12,766,509,708

As at 01/01/2014

2,113,750,546

1,162,075,457

3,275,826,003

Charge for the period

1,096,845,646

283,727,877

1,380,573,523

1. Unallocated commission expenses - Balance as at 01/01 - Unallocated commission expenses incurred in the year - Commission expenses allocated in the year - Balance as at 31/12 2. Other short-term prepaid expenses

- Balance as at 31/12 Total:

10.REINSURANCE ASSETS

11.TANGIBLE FIXED ASSETS

COST

As at 31/12/2014 ACCUMULATED DEPRECIATION

39/

VBI Annual Report 2014

NOTES TO INTEGRATED FINANCIAL REPORT (continue)

MOTOR VEHICLES

OFFICE EQUIPMENT

TOTAL

Other increases

-

-

-

Disposals

-

-

-

Other decreases

-

-

-

3,210,596,192

1,445,803,334

4,656,399,526

As at 31/12/2014

7,216,749,790

893,360,392

8,110,110,182

As at 31/12/2013

5,678,184,527

1,096,027,815

6,774,212,342

As at 31/12/2014 NET BOOK VALUE

12.INTANGIBLE ASSETS COMPUTER SOFTWARE VND COST As at 01/01/2014

1,831,400,000

New purchase

1,299,000,000

As at 31/12/2014

3,130,400,000

ACCUMULATED AMORTISATION As at 01/01/2014

132,833,198

Charge for the period

642,078,965

As at 31/12/2014

774,912,163

NET BOOK VALUE As at 31/12/2014

2,355,487,837

As at 31/12/2013

1,698,566,802

13.OTHER LONG-TERM INVESTMENTS 31/12/2014

31/12/2013

200,000,000,000

-

39,285,800,000

-

-

30,000,000,000

27,000,000,000

27,000,000,000

250,000,000,000

50,000,000,000

50,000,000,000

-

566,285,800,000

107,000,000,000

Investments in securities - National Power Transmission Corporation (i) - Kinh Bac City Development Holding Corporation (ii) - Song Da Corporation - Bitexco Group (iii) - Vietnam national coal - mineral industries holding corporation limited (iv) - HAGL Group (v) Total of other long-term investments (i)

Represents bonds of National Power Transmisssion Corporation with par value of VND 1 billion, term of 5 years, issued on 20 November 2014. Coupon

rate for the first period is fixed at 9% per annum. For next periods, the interest rate is determined by the average interest rate on savings VND applied to 12 - month period applicable at the date of the interest margin of 2.3% per annum. Interest payments are deferred and every 3 months. The bonds will mature on 20 November 2019. (ii)

Represents bonds of Kinh Bac City Development Holding Corporation with par value of VND 100 thousands, term of 8 year, issued on 8 May 2009 and

nits floating rate, adjustable every 6 months on 8 May and 8 November every year. Interest payments are paid in arrears every 6 months. The bonds will mature on 8

VBI Annual Report 2014

40/

NOTES TO INTEGRATED FINANCIAL REPORT (continue)

May 2017. This is guaranteed payment and not convertible bonds. (iii)

Represents bonds of Bitexco Group with par value of VND 1 billion nits biannual floating interest rates (or under the interest rate adjustment of the State

Bank) which is determined by the basic rate plus margin of 6.5 % per annum, Interest payments are paid in arrears every 3 months. The bonds will mature on 15 September 2016. (iv)

Represents bonds of Vietnam National Coal - Mineral Industries Group, including:

- The bonds amounting to VND 50 billion with par value of VND 1 billion and biannual interest rates which is determined by the basic rate plus a margin of 3.3 % per annum. Interest payments are paid in arrears every 6 months. The bonds will mature on 26 September 2018.

14.DEFERRED TAX ASSETS

As at 01 January 2014 Transfer to profit for the year As at 31 December 2014

ACCRUALS

FOREIGN EXCHANGE DIFFERENCES

TOTAL

820,279,040

(33,901,147)

786,377,893

(159,168,879)

41,028,455

(118,140,424)

661,110,161

7,127,308

668,237,469

15.PAYABLES ON INSURANCE CONTRACTS 31/12/2014

31/12/2013

67,899,797,598

84,553,780,441

9,858,650,965

-

21,811,709,089

27,956,063,879

Commission payables

6,199,801,167

7,710,609,192

Other payables

1,018,133,069

1,768,910,452

106,788,091,888

121,989,363,964

Payables regarding outward reinsurance premium Payables for co-insurers Payables regarding claim compensation

Total:

16.TAXES AND AMOUNTS PAYABLE TO THE STAGE BUDGET AMOUNT PAYABLE AS 01/01/2014

IN YEAR Payable

Paid

AMOUNT PAYABLE AS 31/12/2014

Value added tax on goods and services

2,821,550,488

23,469,129,649

23,325,535,321

2,965,144,816

Corporate income tax

4,973,610,257

13,886,462,656

16,159,923,168

2,700,149,745

Other taxes and charges payable

1,621,563,634

2,431,187,174

2,418,954,303

1,633,796,505

Total:

9,416,724,379

39,786,779,479

41,904,412,792

7,299,091,066

17.OTHER CURRENT PAYABLES 2014

NĂM 2013

-

-

- Unearned commission income incurred in the year

22,044,021,535

-

- Commission income allocated in the year

11,100,729,017

-

- Balance as at 31/12

10,943,292,518

-

1. Unearned commission income - Balance as at 01/01

41/

VBI Annual Report 2014

NOTES TO INTEGRATED FINANCIAL REPORT (continue)

31/12/2014

31/12/2013

(25,550,812)

14,078,228

(450,645)

7,220,061

69,350,102

22,584,900

290,361

1,815,090

Other payables

4,860,183,947

4,861,144,586

Total:

4,903,822,953

4,906,842,865

2. Other current payables Social insurance Health insurance Union fee Unemployment insurance

18.UNDER-WRITING RESERVES As 31/12/2014

Claim reserve and unearned premium reserve :

DIRECT INSURANCE AND INWARD REINSURANCE

OUTWARD REINSURANCE

NET RESERVE

1. Claim reserve Including:

59,419,071,652

(36,720,855,040)

22,698,216,612

- Reserve for loss incurred and reported

56,681,390,254

(36,720,855,040)

19,960,535,214

2,737,681,398

-

2,737,681,398

2. Unearned premium reserve

149,705,895,465

(43,071,112,262)

106,634,783,203

Total:

209,124,967,117

(79,791,967,302)

129,332,999,815

- Reserve for loss incurred but not reported (IBNR)

Detailed:

2014 DIRECT INSURANCE AND INWARD REINSURANCE

OUTWARD REINSURANCE

NET CLAIM RESERVE

Openning balance

19,306,907,423

-

19,306,907,423

Provided/(reversed) in the year

40,112,164,229

(36,720,855,040)

3,391,309,189

Closing balance

59,419,071,652

(36,720,855,040)

22,698,216,612

DIRECT INSURANCE AND INWARD REINSURANCE

OUTWARD REINSURANCE

NET UNEARNED PREMIUM RESERVE

Openning balance

81,475,784,296

(34,364,073,585)

47,111,710,711

Provided/(reversed) in the year

68,230,111,169

(8,707,038,677)

59,523,072,492

149,705,895,465

(43,071,112,262)

106,634,783,203

: 1. Claim reserve

2. Uneared premium reserve

Closing balance

2014

2013

Balance as at 01/01

6,084,665,957

7,679,067,693

Provided in the period

2,214,285,860

1,005,598,264

-

(2,600,000,000)

8,298,951,817

6,084,665,957

Used in the period Balance as at 31/12

VBI Annual Report 2014

42/

NOTES TO INTEGRATED FINANCIAL REPORT (continue)

19.CAPITALS AND RESERVES CHARTER CAPITAL

FINANCIAL COMPULSORY RESERVE RESERVE FUND FUND

RETAINED EARNINGS

TOTAL

As at 01/01/2013

500,000,000,000

6,280,909,783

7,950,970,743

44,945,203,573

559,177,084,099

Profit for the year

-

-

-

36,059,899,550

36,059,899,550

Allocation to compulsory reserve funds

-

-

1,802,994,978

(1,802,994,978)

-

Transferred to Bonus and Welfare funds

-

-

-

(2,593,033,829)

(2,593,033,829)

Allocation to financial reserve fund

-

4,697,786,241

-

(4,697,786,241)

-

Allocation to the parent company

-

-

-

(37,338,149,221)

(37,338,149,221)

500,000,000,000

10,978,696,024

9,753,965,721

34,573,138,854

555,305,800,599

Profit for the period

-

-

-

49,216,476,192

49,216,476,192

Allocation to compulsory reserve funds

-

-

2,460,773,810

(2,460,773,810)

-

Allocation to financial reserve fund (i)

-

3,605,989,955

-

(3,605,989,955)

-

Allocation to the parent company (i)

-

-

(30,650,914,671)

(30,650,914,671)

500,000,000,000

14,584,685,979

47,071,936,610

573,871,362,120

As at 01/01/2014

As at 31/12/2014

12,214,739,531

(i) According to Official letter No. 939/TGD-NHCT11 dated 30 June 2014 of the parent company - Vietnam Joint Stock Commercial Bank for Industry and Trade, the Company allocated from retained earnings of 2013 of 10% to the financial reserve fund. The remaining profit will be allocated to the parent company - Vietnam Joint Stock Commercial Bank for Industry and Trade.

20.INSURANCE PREMIUM 2014 VND

2013 VND

275,992,721,310

146,094,657,826

72,270,027,861

39,260,609,959

3,628,782,466

2,657,819,572

Cargo insurance

22,183,983,874

16,337,162,766

Health and Personal accident insurance

55,212,107,195

8,728,559,292

Motor vehicle insurance

83,613,903,866

46,614,394,810

Fire insurance

38,256,798,203

29,113,884,426

827,117,845

3,382,227,001

Direct insurance premium Property insurance Hull and P&I insurance

Liability insurance Deduction of direct premium

(12,591,240,632)

(2,595,591,183)

Inward reinsurance premium

47,598,762,126

28,264,428,798

Energy insurance

24,146,398,105

14,305,743,698

1,499,312,658

2,028,830,997

856,562,832

1,797,050,606

Engineering insurance Property insurance Hull and P&I insurance Cargo insurance Health and personal accident insurance Motor vehicle insurance

13,374,578,561 425,558,591

319,551,792

7,121,816,117

9,124,998,396

174,535,262

688,253,309

(824,815,146)

-

Liability insurance

(68,230,111,169)

(26,882,925,873)

Deduction of inward reinsurance premium

241,945,316,489

144,880,569,568

Fire insurance

(Increase) in unearned premium reserves for direct insurance

43/

VBI Annual Report 2014

NOTES TO INTEGRATED FINANCIAL REPORT (continue)

21.OUTWARD REINSURANCE PREMIUM

Total outward reinsurance premium

2014 VND

2013 VND

88,746,841,689

71,022,771,327

46,718,753,062

47,255,177,544

610,515,303

1,555,522,769

5,209,234,331

4,951,043,807

428,477,864

392,588,617

Energy insurance Engineering insurance Property insurance Hull and P&I insurance Cargo insurance Health and personal accident insurance Motor vehicle insurance

1,390,105,177

1,343,618,319

33,568,713,989

15,121,324,814

821,041,963

403,495,457

(Increase) in unearned premium reserve for outward reinsurance

(8,707,038,677)

-

Total:

80,039,803,012

71,022,771,327

Fire insurance Liability insurance

22.TOTAL INSURANCE CLAIM SETTLEMENT EXPENSES 2014 VND

2013 VND

Total claim settlement

86,200,187,088

78,108,785,571

Property insurance

25,122,088,378

21,626,704,383

Hull and P&I insurance

1,146,158,819

22,015,527,587

Cargo insurance

3,804,766,007

2,956,516,989

Health and personal accident insurance

7,439,014,315

3,084,877,803

Motor vehicle insurance

36,074,537,065

16,839,339,691

Fire insurance

12,280,087,011

9,834,494,893

333,535,493

1,751,324,225

Liability insurance Deduction to expenses Claims receipt from ceded policies Increase/(decrease) in claim reserves for direct insurance Increase in claim reserve for outward reinsurance Total

-

(230,490,799)

(25,355,300,838)

(46,541,067,627)

40,112,164,229

4,933,463,013

(36,720,855,040)

-

64,236,195,439

36,270,690,158

2014 VND

2013 VND

13,226,512,203

18,562,845,112

-

-

23.OTHER EXPENSES FOR INSURANCE ACTIVITIES

Commission expense Agents service expense Expense of insured risk assessment

830,330,505

1,069,150

Agents management expense

660,874,058

513,573,511

Expense of risk limitation

251,841,719

154,624,107

Others

48,204,992,169

25,430,546,685

Total:

63,174,550,654

44,662,658,565

VBI Annual Report 2014

44/

NOTES TO INTEGRATED FINANCIAL REPORT (continue)

24.FINANCIAL INCOME 2014 VND

2013 VND

Bank and loan interest

22,155,775,119

39,680,039,987

Bond interests

36,376,077,256

19,588,142,462

450,753,855

-

-

195,930,800

Foreign exchange gain

1,313,539,546

724,018,384

Other financial income

-

1,235,159,850

60,296,145,776

61,423,291,483

2014 VND

2013 VND

Interest expense

2,208,088,322

251,212,500

Foreign exchange loss

1,148,519,693

1,184,968

75,874,591

71,893,350

3,432,482,606

324,290,818

2014 VND

2013 VND

27,756,517,475

10,370,365,562

Office equipment expense

3,059,371,539

2,466,517,783

Depreciation and amortisation

1,021,155,111

794,133,173

Gain on securities trading Dividends and profits received

Total:

25.FINANCIAL EXPENSES

Other financial expenses Total:

26.GENERAL AND ADMINISTRATION EXPENSES

Labour

Taxes, fees and charges

211,453,187

166,237,094

Provisions

1,280,775,481

3,706,128,535

Out-sourced services

3,440,444,622

1,657,131,658

Other monetary expenses Total:

998,230,704

5,107,767,438

37,767,948,119

24,268,281,243

2014 VND

2013 VND

102,106,297,983

99,437,586,108

27.PRODUCTION COST BY NATURE

Cost of insurance activities Raw materials and consumables Labour

7,053,979,789

4,258,425,925

40,451,606,754

20,943,804,325

Depreciation and amortisation

2,022,652,488

1,063,353,609

Out-sourced services

6,859,507,955

17,389,224,020

Other monetary expenses Total:

45/

28,648,640,892

3,947,331,392

187,142,685,861

147,039,725,379

VBI Annual Report 2014

NOTES TO INTEGRATED FINANCIAL REPORT (continue)

28.CORPORATE INCOME TAX NĂM 2014 VND

NĂM 2013 VND

63,221,079,272

48,052,711,656

3,534,050,786

2,388,033,368

1,823,200

195,930,800

- Unrealized foreign exchange gain

251,111,426

135,604,587

- Unpaid accruals of the prior year

3,281,116,160

2,056,497,981

Add back: non-deductible expenses

3,433,256,313

3,360,939,294

Profit before tax Adjustments for taxable income Less: non-assessable income - Dividends received

- Unrealized foreign exchange loss - Unpaid acrruals - Others Assessable income Normal tax rate Corporate income tax

282,371,601

-

3,005,046,187

3,281,116,160

145,838,525

79,823,134

63,120,284,799

49,025,617,582

22%

25%

13,886,462,656

12,256,404,396

29.SEGMENT REPORT

The Company's business activities are mainly insurance business and investment from the capital of the insurance operation.

Investment activity is a step in the insurance business cycle and the investments in other business areas are not significant. In addition, the Company operates in the same geographic area as well as the same economic environment. Therefore, the Board of General Directors of the Company has assessed and believed that not preparing the segment report is consistent with the current business of the Company.

30.FINANCIAL INSTRUMENTS Capital risk management The Company manages its capital to ensure that the Company will be able to continue as a going concern while maximising the return to the owner through the optimisation of the debt and equity balance.

The capital structure of the Company consists of owner’s equity (comprising capital, reserves and retained earnings).

Significant accounting policies Details of the significant accounting policies and methods adopted (including the criteria for recognition, the bases of measurement, and the bases for recognition of income and expenses) for each class of financial asset, financial liability and equity instruments are disclosed in Note 5.

Categories of financial instruments

FINANCIAL ASSETS Cash and cash equivalents

31/12/2014 VND

31/12/2013 VND

78,682,951,985

92,677,627,302

103,224,866,195

127,877,532,761

Short-term investments

64,800,100,000

414,271,540,807

Long-term investments

566,285,800,000

107,000,000,000

36,720,855,040

73,533,215,317

Trade and other receivables

Claim reserve for outward reinsurance Other financial assets Total

FINANCIAL LIABILITIES Trade and other payables Claim reserves for direct insurance and inward reinsurance Other financial liabilities Total

VBI Annual Report 2014

6,251,763,882

6,238,733,882

855,966,337,102

821,598,650,069

31/12/2014 VND

31/12/2013 VND

111,721,914,841

126,852,323,640

59,419,071,652

92,840,152,740

30,000,000

15,000,000

171,170,986,493

219,707,476,380

46/

NOTES TO INTEGRATED FINANCIAL REPORT (continue)

The Company has not assessed fair value of its financial assets and liabilities as at the balance sheet date since there is no comprehensive guidance under Circular No. 210/2009/TT-BTC issued by Ministry of Finance on 06 November 2009 (“Circular 201) and other relevant prevailing regulations to determine fair value of these financial assets and liabilities. While Circular 210 refers to the application of International Financial Reporting Standards (“IFRS”) on presentation and disclosures of financial instruments, it did not adopt the equivalent guidance for the recognition and measurement of financial instruments, including application of fair value, in accordance with IFRS. Financial risk management objectives The Company has set up risk management system to identify and assess the risks exposed by the Company and designed control policies and procedures to manage those risks at an acceptable level. Risk management system is reviewed on a regular basis to reflect changes in market conditions and the Company’s operations.

Financial risks include market risk (including foreign currency risk and price risk), credit risk and liquidity risk.

Market risk The Company’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and prices. The Company does not hedge these risk exposures due to the lack of any market to purchase financial instruments.

Foreign currency risk management The Company undertakes certain transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations.

The carrying amounts of the Company’s monetary assets and monetary liabilities denominated in foreign currencies at year end are as follows:

LIABILITIES UNITED STATE DOLLAR (USD) KOREAN WON (KRW)

31/12/2014 VND

31/12/2013 VND

5,518,393,583

19,959,746,170

1,741,707,530

911,261,405

ASSETS

31/12/2014 VND

31/12/2013 VND

UNITED STATE DOLLAR (USD)

19,755,766,800

37,843,266,258

3,279,839,728

2,416,996,177

KOREAN WON (KRW)

The Company is mainly exposed to United States Dollar.

If the exchange rate of United States Dollar against Vietnamese Dong increase/decrease by 10%, profit before tax in the year of the Company will increase/decrease by about VND 1.42 billion. 10% sensitivity rate is used by the Board of General Directors in foreign currency sensitivity analysis and represents the assessment of the Board of General Directors about the change in exchange rate. The sensitivity analysis includes only outstanding foreign currency denominated monetary items at year-end and adjusts their translation for a 10% change in foreign currency rates.

Share price risk management Shares held by the Company are affected by market risks arising from the uncertainty about future prices of such shares. The Company manages this risk exposure by setting up investment limits. The Company’s Board of General Director also assesses and approves decisions on share investments such as operating industry, investees, etc. The Company assesses the share price risk to be immaterial.

Credit risk Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. The Company does not have any significant credit risk exposure to any counterparty because receivables consist of a large number of customers, spread across diverse industries and geographical areas.

Liquidity risk management The purpose of liquidity risk management is to ensure the availability of funds to meet present and future financial obligations. Liquidity is also managed by ensuring that the excess of maturing liabilities over maturing assets in any period is kept to manageable levels relative to the amount of funds that the Company believes can generate within that period. The Company’s policy is to regularly monitor current and expected liquidity requirements to ensure that the Company maintains sufficient reserves of cash, borrowings and adequate committed funding from its owner to meet its liquidity requirements in the short and longer term.

The following table details the Company’s remaining contractual maturity for its non-derivative financial assets and financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial assets and undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The inclusion of information on non-derivative financial assets is necessary in order to understand the Company’s liquidity risk management as the liquidity is managed on a net asset and liability basis.

47/

VBI Annual Report 2014

NOTES TO INTEGRATED FINANCIAL REPORT (continue)

31/12/2014 Cash and cash equivalents Trade and other receivables Short-term investments

LESS THAN 1 YEAR

FROM 1 - 5 YEARS

AFTER 5 YEARS

78,718,518,652

-

-

78,718,518,652

103,224,866,195

-

-

103,224,866,195

67,653,213,108

-

-

67,653,213,108

Long-term invesments Claim reserve for outward reinsurance Other financial assets Total

31/12/2014 Trade and other payables Claim reserves for direct insurance and inward reinsurance Other financial liabilities

TOTAL

-

576,551,120,959

-

576,551,120,959

36,720,855,040

-

-

36,720,855,040

75,156,322

6,176,607,560

-

6,251,763,882

286,392,609,317

582,727,728,519

-

869,120,337,836

LESS THAN 1 YEAR

FROM 1 - 5 YEARS

AFTER 5 YEARS

TOTAL

111,691,914,841

30,000,000

-

111,721,914,841

59,419,071,652

-

-

59,419,071,652

30,000,000

-

-

30,000,000

Total

171,140,986,493

30,000,000

-

171,170,986,493

Net liquidity gap

115,251,622,824

582,697,728,519

-

697,949,351,343

LESS THAN 1 YEAR

FROM 1 - 5 YEARS

AFTER 5 YEARS

TOTAL

31/12/2013 Cash and cash equivalents Trade and other receivables Claim reserve for outward reinsurance Short-term investments

92,853,600,355

-

-

92,853,600,355

127,877,532,761

-

-

127,877,532,761

-

432,466,495,452

73,533,215,317

-

432,466,495,452

-

-

115,195,562,842

112,126,322

6,126,607,560

726,842,970,207

Long-term invesments Other financial assets

-

73,533,215,317 115,195,562,842 6,238,733,882

121,322,170,402

-

848,165,140,609

LESS THAN 1 YEAR

FROM 1 - 5 YEARS

AFTER 5 YEARS

TOTAL

126,852,323,640

-

-

126,852,323,640

92,840,152,740

-

-

92,840,152,740

-

15,000,000

-

15,000,000

Total

219,692,476,380

15,000,000

-

219,707,476,380

Net liquidity gap

507,150,493,827

121,307,170,402

-

628,457,664,229

Total

31/12/2013 Trade and other payables Claim reserves for direct insurance and inward reinsurance Other financial liabilities

The management assessed the liquidity risk at low level. The management believes that the Company will be able to generate sufficient funds to meet its financial obligations as and when they fall due.

31.RELATED PARTY TRANSACTIONS AND BALANCES List of related parties: Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank)

Owner

Vietinbank Leasing Co., Ltd.

The same owner

Vietinbank Union Trading - Service - Investment Co., Ltd.

The same owner

Vietinbank Securities JSC

The same owner

Vietinbank Fund Management Co., Ltd.

The same owner

In 2014, the Company entered into the following transactions with its related parties:

VBI Annual Report 2014

48/

NOTES TO INTEGRATED FINANCIAL REPORT (continue)

31/12/2014

31/12/2013

- Premium revenue

52,504,101,891

27,730,435,403

- Interest expense

2,208,088,322

251,212,500

- Deposit interest income

9,916,158,618

29,184,742,919

- Profit transfer to Owner

30,650,914,671

37,338,149,221

- Premium revenue

416,903,120

929,173,844

- Deposit interest income

295,555,556

973,222,148

1,148,273,723

348,659,326

273,462,200

37,918,909

Vietinbank

Vietinbank Leasing Co., Ltd

Vietinbank Union Trading Service - Investment Co., Ltd - Premium revenue Vietinbank Securities JSC - Premium revenue Vietinbank Fund Management Co., Ltd - Premium revenue

105,592,100

76,515,636

- Deposit interest income

589,569,444

7,046,694,442

2014

2013

3,692,411,056

3,148,695,542

31/12/2014

31/12/2013

500,000,000,000

500,000,000,000

BOARD OF GENERAL DIRECTORS' REMUNERATION Salary and bonus

Vietinbank - Contributed capital - Demand deposits

16,339,514,740

17,783,790,087

- Term deposits

74,800,000,000

239,079,916,667

- Accrued interest

507,186,111

4,686,311,811

1,470,938,167

2,196,889,259

- Term deposits

-

10,000,000,000

- Accrued interest

-

476,666,584

- Premium receivable

-

8,665,580

- Term deposits

-

13,000,000,000

- Accrued interest

-

357,624,998

14,853,960

188,000

7,830,801

18,583,300

- Premium receivable Vietinbank Leasing Co., Ltd

Vietinbank Fund Management Co., Ltd

Vietinbank Union Trading - Service - Investment Co., Ltd - Premium receivable Vietinbank Securities JSC - Deposit for securities investments

32. SỐ LIỆU SO SÁNH Số liệu so sánh là số liệu trên báo cáo tài chính đã được kiểm toán cho năm tài chính kết thúc ngày 31 tháng 12 năm 2013.

Quach Van Ha Preparer 20 March 2015

49/

Nguyen Van Hung Chief Accountant

Le Tuan Dung General Director

VBI Annual Report 2014

OPERATION NETWORK 10 BRANCH & 50 LOCAL BUSINESS OFFICE Head Office 10th-11th Floor, VietinBank Building No. 126 Doi Can Street, Ba Dinh District, Hanoi Telephone: 04 3942 5650

VBI Tay Bac 1rd Floor, 2256 Hung Vuong Avenue, Van Co, Viet Tri city, Phu Tho Telephone: 0210 3915 915

Thang Long Branch 18 Phan Dinh Phung, Ba Dinh District, Hanoi Telephone: 04 3628 6158

Hanoi Branch 14th Floor, No. 34 Cua Nam Street, Hoan Kiem District, Hanoi Telephone: 04 3795 5541

Hai Phong Branch 189 Hai Ba Trung Street, Cat Dai Ward, Le Chan District, Hai Phong Telephone: 031 365 1368

Thanh Hoa Branch 3rd Floor, No. 255 Truong Thi Street, Truong Thi Ward, Thanh Hoa Telephone: 037 371 4678

Da Nang Branch 172 Nguyen Van Linh Street, Thanh Khe District, Danang Telephone: 0511 222 5333

Tay Nguyen Branch 3rd Floor, 253 Le Hong Phong, Buon Ma Thuot City, Dac Lac Telephone: 0500 375 5666

Hochiminh City Branch 4th-5th Floor, No. 354-356 Nguyen Thi Minh Khai Street, Ward 5, District 3, Hochiminh City Telephone: 08 3832 9861

Saigon Branch 9th Floor, Pico Building, No. 20 Cong Hoa Road, Tan Binh District, Hochiminh City Telephone: 08 3948 2255

VBI Dong Nai 6th Floor, VietinBank Building, Amata quarter, Long Binh, Bien Hoa city, Dong Nai Telephone: 061 8899 732

vbi.vietinbank.com.vn