Group assignment bank management and financial services topic understanding banking services through financial statements of a vietnam commercial bank

NATIONAL ECONOMICS UNIVERSITY ACADEMY OF ADVANCED EDUCATION PROGRAM AEP Group Assignment Bank Management and Financial Services Topic: Understanding banking services through financial statements of a Vietnam commercial bank Advanced Finance 61A Group Do Vu Hanh Chau Dao Thu Huong Tran Duc Thanh Hoang Le Vy Trinh Dinh Minh Hua Duy Anh Nguyen Thuc Ly Huynh Nguyen Ha Linh Nguyen Anh Quan Vo Quynh Trang Nguyen Thu Ha P a g e | 48 Table of Contents Table of Contents I OVERVIEW: VIETNAM FINANCIAL - BANKING INDUSTRY 1.1 Industry overview: 1.2 General information about Techcombank: 1.3 Business description and competitive positioning: II ANALYSIS OF BANKING SERVICES 16 2.1 Deposit services: 16 2.2 Loan services: 21 2.3 Payment services: 36 2.4 Other services: 38 III EVALUATION OF BANKING SERVICES AND RECOMMENDATIONS 43 3.1 The application of technological innovations to banking service: 44 3.2 Risk Management & Compliance with regulations 46 IV REFERENCES 48 P a g e | 48 I OVERVIEW: VIETNAM FINANCIAL - BANKING INDUSTRY 1.1 Industry overview: 1.1.1 Important macroeconomics indicators a Inflation rate: Source: State bank of Vietnam According to data announced by the General Statistics Office, the average CPI in 2019 increased by 2.8% compared to 2018 (3.58%) Thus, CPI in 2019 has been successfully controlled, reaching a lower level than the target set by the National Assembly (under 4%) and also the lowest increase in the past years Vietnam’s consumer price index (CPI) in 2020 rose 3.23% against the previous year The increase in CPI was attributed to rises in food prices and medical costs as well as higher tuition fees, the government’s measures to support businesses and people, such as lowering electricity prices, also helped with keeping inflation in check b) Interest rate: Interest Rate in Vietnam remained unchanged at 4% in June 2021 The maximum level was 15% and minimum was 4% P a g e | 48 INTEREST RATES VALUE DOCUMENT NO EFFECTIVE DATE Discount Rate 2.500% 1728/QĐ-NHNN on 30-09-2020 10-01-2020 Refinancing rate 4.000% 1728/QĐ-NHNN on 30-09-2020 10-01-2020 c) Exchange rate: Source: State bank of Vietnam P a g e | 48 2018 reflects the picture of "a stable monetary and financial market" in the context of the international financial market with many unpredictable fluctuations, due to the difference in monetary policy of countries around the world, divergent among key economies Source: VietstockFinance The USD/VND exchange rate in 2019 increased steadily but remained stable thanks to the operating policies of the State Bank (SBV) in the context of the US-China trade war putting great pressure on the exchange rate Source: State bank of Vietnam P a g e | 48 The report of the State Bank of Vietnam (SBV) also said that from the beginning of 2020, although some periods were negatively affected by the Covid-19 pandemic and fluctuations in the international market, it was basically exchange rate and foreign currency market remained stable, market sentiment remained undisturbed, especially the balance of supply and demand was still quite favorable, liquidity was smooth 1.1.2 Business situation and activities of the banking industry in Vietnam The impact of the Covid-19 pandemic since 2020 has caused many businesses to suffer heavy damage, even fall into bankruptcy The fourth outbreak of the Covid-19 epidemic is still complicated, the disease has not been controlled, by 2022 the economy will be slowed down, businesses will not recover like the model before the epidemic and reduced ability to repay According to the latest report of the State Bank of Vietnam, the bad debt ratio on the balance sheet increased from 1.69% (at the end of 2020) to 1.78% Although this is not a worrying number, in the context of the complicated Covid-19 epidemic, bad debt is likely to be a risk for banks Representatives of banks also acknowledged that many businesses have applied for debt postponement because they cannot afford to pay in difficult times nowadays The State Bank of Vietnam has issued a written request to credit institutions to assess the current status of operations, the impact of the Covid-19 epidemic and develop a plan and roadmap for dealing with bad debts in the 2021-2022 period From there, the State Bank will review and develop scenarios for dealing with bad debts until the end of this year and the end of 2022 Controlling the bad debt ratio on the balance sheet at less than 2% in the coming time is considered a challenge In fact, banks have continuously increased provisioning over the past time Bank leaders said that for each dollar of loan capital, banks set aside 0.75% of general risk provision, not including specific risk provisions by debt group Banks with a high ratio of provisioning to cover bad debts will have reciprocal resources to handle bad debts better On the other hand, in controlling bad debts, it is also important to share difficulties with businesses so that businesses can recover quickly, thereby having conditions to repay bank loans Most recently, 16 large commercial banks (accounting for 75% of outstanding loans) have reduced lending interest rates with existing outstanding loans, estimated at VND 6.8 million billion The difference of this interest rate reduction is that more businesses that are facing financial difficulties are supported The lending interest rate has decreased by 0.5-2%/year 1.1.3 Governmental regulations a Common published regulations:  Circular No 22/2019/TT-NHNN prescribes limits and prudential ratios which banks and foreign bank branches must constantly maintain in their operations, including:  Capital adequacy ratio  Credit extension limits  Solvency ratio  Maximum ratio of short-term capital sources for medium / long-term loans  Government bond or government-guaranteed bond purchase or investment ratio P a g e | 48         Capital contribution and share purchases Loan-to-deposit ratio Circular No 01/2020/TT-NHNN directing credit institutions and foreign bank branches to restructure the repayment periods, waive and reduce the interest and fees, maintain the debt classification to support the customers affected by COVID-19 pandemic Circular No 13/2020/TT-NHNN providing guidance on procedures and dossiers for approval of the provisional personnel list of commercial banks, non-bank credit institutions and foreign bank branches Circular No 41/2016/TT-NHNN deals with the capital adequacy ratio for operations of banks and/or foreign bank branches in Vietnam Circular No 09/2020/TT-NHNN specifies minimum requirements for assurance of information system security in baking operations, applies to:  Credit institutions, branches of foreign banks, and intermediary payment service providers, credit information companies  The National Payment Corporation of Vietnam (NAPAS), Vietnam Asset Management Company (VAMC), National Banknote Printing Plant, Deposit Insurance of Vietnam  Institutions which have established and used the information system for one or more organization’s technical and professional activities Circular No 210/2009/TT-BTC requires disclosure of the fair value method and information on the fair value of financial assets and liabilities so that fair value and book value can be compared Decree No 93/2017/NĐ-CP prescribes the financial regime, applicable to:  Credit institutions and foreign bank branches  Financial supervision and assessment of efficiency of state capital investment at credit institutions with 100% state-owned charter capital and credit institutions with state capital b Related regulations:  Circular No 96/2020/TT-BTC prescribes the disclosure of information on the Vietnamese securities market  Law on Credit Institutions No 47/2010/QH12 provides the establishment, organization, operation, special control, reorganization and dissolution of credit institutions, foreign bank branches and representative offices of foreign credit institutions and other foreign institutions engaged in banking operations  Law on Securities No 54/2019/QH14 provides for securities market activities; rights and obligations of institutions and individuals in the field of securities; organization of the securities market; and state management of securities and securities market  Law on Enterprises No 59/2020/QH14 prescribes the establishment, management organization, reorganization, dissolution, and relevant activities of:  Enterprises, including limited liability companies  Joint stock companies, partnerships and sole proprietorships  Prescribed corporate groups  Decree No 71/2017/NĐ-CP guidelines for the issues in connection with corporate governance of public companies, including:  General assembly of shareholders P a g e | 48    Board of directors / Board of controllers Transactions with related persons Reporting and information publishing 1.2 General information about Techcombank: Techcombank’s general information compression table Name Official name: VIETNAM TECHNOLOGICAL AND COMMERCIAL JOINT-STOCK BANK Trading name: TECHCOMBANK Stock code TCB VN (HCM City Stock Exchange) Charter capital 35,049,062,300,000 VND (2020) Contact Phone number: +84 (24) 3944 6368 Website: Techcombank.com.vn Central / Head office: Techcombank Tower – 191 Ba Trieu St., Le Dai Hanh Ward, Hai Ba Trung Dist., Hanoi, Vietnam Subsidiaries    Techcom Securities Joint Stock Company (Techcom Securities – TCBS) Techcom Capital Joint Stock Company (Techcom Capital - TCC) Vietnam Technological and Commercial Joint Stock Bank – Asset Management Company Limited (Techcombank AMC) 1.3 Business description and competitive positioning: Established in 1993, TECHCOMBANK was oriented as a market-accommodated business, separated from the former development of a centrally-planned economy Started with charter capital of only 20 Billion VND, Techcombank has made it way through roughly 30 years to reach a strong and stable place of 3rd in national-wide banks’ charter capital 1.3.1 Business Introduction: a Scope of activities:  Providing products and services for over million RETAILED and CORPORATE customers (Inland and Worldwide)  8.2 million individual customers  159,886 corporate customers - 2000 large corporations P a g e | 48  Network: head office, representative offices, 309 transaction offices (45 cities + provinces), subsidiaries, funds => Extensive connections to satisfy basic banking requirements, yet furthermore extends toward a more secured, cutting-edge and professional wealth management b Vision - mission: The bank is committed to the vision of “CHANGE banking, CHANGE lives UPLIFTING everyone to reach their full potential” throughout their development process Holding the prominent mission of fully understanding customers insights, as well as providing excellent values to their main targets of customers, shareholders; Techcombank are presenting an astonishing performance among other competitors on the whole With their mission to harmoniously combine advanced technologies on traditional banking services and activities, Techcombank has now powerfully thrived and soon expected to be the leader of Vietnam's digitized financial industry 1.3.2 Core banking services:      Grant of Long, Medium and Short-term loans Association, Joint-ventures, companies, bonds investments Short, Medium, Long-term deposits (Individuals / Organizations) Approved settlement, cash and banking services (through the State Bank of Vietnam SBV) Exchange of foreign currency 1.3.3 Plan - Strategies: With a sustainable developing path and focused foundations, Techcombank is able to keep up with changing demands and trends in financial services Adapt and Innovate have been the key factors which drive the company to thrive a Foundation key factors: Digital: Operational + risk excellence  Further Develop / Maximize digital platforms / tools / dashboards  Extended database / upgraded capacity  Maximum convenience / satisfaction - Minimum difficulties / errors Data: Data excellence  Deeper customers’ insights capturing methods  Personalized recommendations based on transaction data clouds Talent: People excellence  Humans play a crucial role: Attract, develop and retain best people  Excellent recruitment with skills and “digital DNA” that match Techcombank’s vision  Impressive leadership and directions from the Board P a g e | 48 b 2016-2020 strategy: Recognized as a bold and ambitious aspiration with a clear customer-centricity strategy (D-D-T), Techcombank has received remarkable transformation from the long journey, with practical goals:  Largest market capitalization: IPO market capitalization at USD 6.5 billion  >10% market share in 2020: >10% market share in affluent segment, mortgage, bancassurance, card, e-transactions  30% growth per year: 31% NOII/TOI, 52% PBT growth CAGR from 2016–2020  products / customer: products / affluent customer c 2021-2025 strategy: The success of the Techcombank’s 2016–2020 journey has laid a solid foundation for the next five-year transformation (2021–2025) of the Bank with its numerous aspirational goals:  Doubling down:  CASA ratio ~55%, NFI/TOI ratio ~30%  Market value: USD 20 billion  Target ROE ~20%  Diversification:  Continue investing in three key enablers (D-D-T) with insurance of core areas  Diversifying sources of income, capital and risks to ensure future sustainability and extend future growth areas 1.3.4 Awards & Ceremonial Records: Although suffering from numerous difficulties in 2020; especially with the wild-fire spread of COVID-19 pandemic, Techcombank proudly navigated through the storm and gained exquisite results during the year:    Successful partnerships with international business like VISA, Manulife, ; new alliance with One Mount Group (Vietnam’s largest digital ecosystem) Rewarded as the 2020 ‘Best Bank in Vietnam’ (Best SME, Payments Bank) by Finance Asia and ‘The best companies to work for in Asia’ by HR Asia 2020 Vietnam Best Places to Work; 2020 Most Attractive Recruiter for Students Taking advantage of the sector-wide macroeconomic trends with the introduction of new digital transformations, Techcombank is now on their track to make Vietnam one of the world’s experts in the financial market 1.3.5 Overall prominent financial achievements: (Via the Techcombank Official Financial Statement 2020) Techcombank affirmed 2020 as an “Unprecedented year”, yet accompanied by “Unprecedented results” With the success of the Vietnamese government in the acts against COVID-19, the financial state has stated significant gains as well as positive records worldwide P a g e 10 | 48 doubtful type declined to an extremely low number, which was from VND 862,510 million to only 305,230 million, which was nearly triplet divided compared to 2018 However, the number got back to VND 533,944 million when it came to 2020, which accounted for 0.19% in total Although the proportion did go up at the end of 2020, it still did not get back to the peak of 0.54% when it was in 2018 e Loss loan: + Loans overdue for more than 360 days; or + Loans with a repayment period of the first reorganization, but the loans are still 90 days or more overdue than the repayment period of the first reorganization; or + Loans whose repayment period is still past due during the second reorganization with the repayment period; or + Loans which are reorganized for the third time or more with a repayment period, which overdue or not overdue; or + The loans specified in point of Group loans cannot be recovered more than 60 days after the issuance of the recovery decision; or + Loans that must be recovered according to the inspection results, but still not repaid more than 60 days after the due date; or + Loans from customers of credit institutions that SBV has declared to be under special control, or customers of foreign bank branches whose capital and assets have been frozen ● Analyze from 2018 to 2020: + The loss type of loan group is another one which usually gets the top three highest value and also percentage in total in the loan portfolio From 2018 to 2019, both the value and percentage of this group increased normally by more than VND 800,000 million in the value and slightly 0.05% in the proportion However, this group suddenly fell down to the bottom value in 2020 When it came to 2020, the value of the loss loan declined extremely high by VND 2,210,162 million or 7.42 times compared to 2019, and it only accounted for 0.13% in total during 2020, which is lower nearly 10 times when it is 2019 P a g e 34 | 48 Source: Notes to the financial statement – Techcombank (2018-2020) Source: Notes to the financial statement – Techcombank (2018-2020) P a g e 35 | 48 2.3 Payment services: 2.3.1 Net fee and commission income: Source: Notes to the financial statement – Techcombank (2018-2020) 2018 2019 2020 Fee and commission income from Settlement and cash 1,763,054 2,338,815 2,914,167 Fee and commission income 4,188,317 4,853,846 6,048,443 Net fee and commission income/ fee and commission 42.09% 49.21% 48.18% *This is the newest classified sheet from Techcombank (Net fee = 46.49%) a Reasons for changing in Techcombank: In 2020, annual report of Techcombank has identified that there was a slightly increase in fee and settlement service in 2020 when compared to its in 2019 The reason for this is because of the fee and settlement in 2020 increase in comparison to 2019 In 2020, Techcombank launched “Smart OTP”, an international remittance platform for corporate customers through F@ST E-BANK, which supported over 25,000 international remittance transactions online By constantly optimizing and upgrading this new feature, we increased our transaction volume by 4% and value by 20% year on year The rise in online experiments and transactions is one of the benefits of COVID-19 for the bank Businesses that had already begun their digital transformation journeys P a g e 36 | 48 benefited from an immediate competitive advantage With a solid digital foundation, Techcombank was able to capitalize on this trend, as evidenced by the impressive 39.7 percent growth in credit and debit card usage (in terms of transaction volume and value) However, the net fee is decreasing slightly in 2020 when compared to its in 2019 at 1.03% because besides settlement and cash service accounts for about 40%, Techcombank also has securities issuance, income from bancassurance, card services, payment & cash services and other services There is a significant difference between 2018 and 2019 when 2018 fees and services seem to account for half of 2019 The reason for this is because F@ST mobile first appeared in 2014, however, from 16/2/2019, Techcombank deployed a Smart OTP transaction authentication solution with world-leading security technology This will help customers who are using SMS OTP/Token Key can switch to the new solution on the F@ST Mobile application to be more private and can be more protected than the old one Until April 2019 a safer & more secure SMART OTP authentication method has been available for customers and it has completely replaced SMS OTP and OTP Token Since then people have started to trust and used more money transfers, electricity, and water payment, phone recharge by using Fast mobile Back in 2018, the application did not have any such as these services because in 2018, Tech did not have any convenient services such as pay money, card online and there is no privacy and only uses SMS for verifying; thus, this causes inconvenient and is not yet modern; therefore, little use from customers b Data comparison for years: There is an increase in the ratio of fee and commission from settlement and cash income to fee and commission income from 2018 to 2020 As we can see that settlement service, cash and fee and commission income in 2020 is on the 1st rank when compared to 2018 and 2019 The lowest fee and commission income and settlement service belong to the year of 2018 at approximately 4,200,000 million VND and 1,800,000 respectively However, the ratio is barely different There is a sharp increase in net fee and commission income from 2018 to 2019 at about 7.12% Moreover, it is can be seen that between 2019 and 2020, the percentage has slightly declined to 1.03% (from 49.21% decrease to 48.18%) Among all of the banks that actively apply technology, Techcombank has been a pioneer in the market to invest in many new features on Internet banking and mobile banking “With Internet banking, I can make transactions at any time, from money transfers, online savings, bill payments or online purchases Techcombank's interface is clear, making it easily for users to operate, so I see this as a convenient, fast and safe way," said Thuy Linh - a Techcombank customer Besides, Techcombank has also known for its associations with many creative innovations such as Mobile Banking, JCB Card & Mobile POS, etc Moreover, it also has the system integration of payment features into the online trading platform, such as Internet Banking service that allows P a g e 37 | 48 customers to give a command of automatic payment to perform from phone recharge to pay service bills on time Furthermore, customers can go to any Techcombank transaction post to make direct bill payments including: electricity bill, postpaid mobile subscription bill, prepaid mobile bill, FPT internet bill, airfare payment, premium payment, payment of living expenses for Vinhomes residents If not, customer can this transaction through Internet banking - Fast mobile app First time appeared only for customers who use Samsung - Samsung Pay - Samsung's smartphonespecific mobile app This is a modern payment method that helps customers integrate their Techcombank card information into their smartphones and pay quickly and securely at most retail points around the globe by tapping the smartphone on a POS machine instead of using the card 2.4 Other services: 2.4.1 Foreign exchange trading services  Net gain from trading of foreign currencies Even facing a 2020 full of volatility, GTS block is still struggling the force to complete well and exceed the plans the set plan, specifically: compared to the year 2019, net revenue from operations service activity (NFI) reached 106%, block amount of conversion transactions in countries reached 102%, foreign exchange transactions (FX) put 113%, total LC value reaches 119% This success is the result of the technology digitization strategy and services, systematizing the solution Solve needs from simple to customer's complexity, copper time to optimize processes, solve existing law of Techcombank Source: 2020 Annual Reports – Techcombank P a g e 38 | 48 In 2020, with the recognition of the management agency – Ministry of Finance, proprietary trading segment of GTS Division continues to affirm Techcombank's leading position in the financial market Vietnam, including: trading government bonds, trading derivatives and Forex As one of the most active market makers, owning large network of partners both at home and abroad, GTS Division in particular and Techcombank in particular general confidence in their ability to arrange foreign exchange transactions, structured transactions and transactions major derivatives to customers Source: 2020 Annual Reports – Techcombank 2.4.2 Securities brokerage services  Net gain from trading securities Income from securities sales is recognized in consolidated income statement when receive the order matching notice from the Save Center Sign Securities (listed securities) and complete agreement to transfer assets (stocks not yet listed) and is determined based on the spread difference between the selling price and the cost price of the securities sold P a g e 39 | 48 Source: 2020 Annual Reports – Techcombank  Income and expenses from Securities brokerage services Net fee income from identified service activities determination is one of the key goals to maintain the sustainable growth of the whole Bank customers, contributing to boosting the profit margin on the account assets (ROA), through which the Bank has ensured its target growth and balance sheet management one cautious way In 2020, operating income Service activities of the whole Bank increased by 28.8% with the substantial increase came from the issuance advisory fee, bond distribution agency and other related services related to bonds lead to weight changes significantly between products Source: 2020 Annual Reports – Techcombank P a g e 40 | 48  Income from Securities insurance guarantee services Vietnam's life insurance market still has plenty of room to grow when the proportion of the population with life insurance has only reached 11% by the end of 2020 Therefore, income from insurance distribution commissions will increasingly contribute greatly to the income from the service It is the increased revenue from the insurance business along with income from interest and services that contributed positively to Techcombank's pre-tax profit of VND 11,5 billion in the first six months of this year Techcombank surpassed VietinBank to become the third most profitable bank in the system, with a profit of VND 1,325 billion Meanwhile, VietinBank recorded profit from service activities of VND 1,283 billion Techcombank's financial statements show that the income from Techcombank's service activities mainly comes from payment and cash services (accounting for nearly half), insurance cooperation services, and securities guarantee services 2.4.3 Income and expenses from consulting services Insurance services grew 601% in new mining revenue (APE) Premiums increased by 48% over the same period Income from Fee of fund management established in 2008, Techcom Capital Fund Management Joint Stock Company (“Techcom Capital”) is a subsidiary belonging to Techcombank TCC's goal is to provide investment management and corporate financial advisory services The business includes: Consulting on corporate restructuring, Consulting on capital mobilization and Consulting on M&A In 2020, TCC recorded revenue and profit before tax of TCC reached VND 330 billion and VND 234 billion, respectively billion dong, up 50% and 26% respectively over the same period 2019 Total assets increased by 69% to 488 billion VND, pre-tax profit margin is still high at 71% Billion return on equity (ROE) reached 53% P a g e 41 | 48 Source: 2020 Annual Reports – Techcombank 2.4.4 Bank Insurance services Due to the effect of the time of implementing social distancing Association for prevention of COVID-19 pandemic, commission fee insurance cooperation had a slight decrease of 11.2% compared to same period reached VND 827 billion in 2020 However Along with the recovery of the economy, Techcombank worked closely with Manulife to improve tissue operating model, product offering and selling capacity to serve customers better The product has achieved very positive initial signals in Mandarin New Mining Revenue (APE) Growth In the fourth quarter of 2020, there was a marked improvement in energy efficiency higher selling rate than in previous quarters Through promoting the digitization of the customer journey and selling tools can search Techcombank themselves achieving the plan will regain the leading position in the field of insurance business in the near future P a g e 42 | 48 Source: 2020 Annual Reports – Techcombank III EVALUATION OF BANKING SERVICES AND RECOMMENDATIONS Technology investment plan Source: 2020 Annual Reports – Techcombank P a g e 43 | 48 3.1 The application of technological innovations to banking service: Business model like selling financial services predominantly online has not yet proven itself consistently viable for the long run, though some Internet providers continue to fairly well It can lead to the overwhelm of the bank’s profits and the capital contributed by its owners by loanrelated losses, weak internal controls Still, many customers seem to prefer financial firms that offer both Internet services and full-service physical facilities conveniently located, particularly when problems surface with their accounts and Techcombank did a great job in both internet services and full-service physical facilities Net banks typically have to offer more to compensate customers for this preference, which tends to lower the institution’s profitability, other factors held equal but Techcombank has created and is developing a lot of extremely convenient online services for customers to increase the positive customer experience Techcombank is a complete combination between Net-oriented institutions and conventional service providers Techcombank provided Vietnam’s first core banking system and Techcombank was first to market with online and mobile banking Techcombank’s new features and capabilities for banking, investing and financial management improved customers’ lives throughout the year : The mobile banking app now integrates with all utility providers, so paying a bill is as easy as tapping a phone The bank’s investments in more scalable, resilient, high-availability infrastructure and architecture, continue to deliver the best-in-class service levels expected of a leading 24/7 bank 2019: Investment in technologies:  In 2019, customer needs continued to shape priorities, as Techcombank sought to ease their borrowing journey by further digitalising card services and modernising key workflows  Techcombank’s market leading digital platforms give customers the freedom to bank 24/7, from wherever they choose, and Techcombank's big investment in resilient and accessible infrastructure and architecture ensures the platforms’ stability  Techcombank added many exciting new features and capabilities to both the retail and commercial digital platforms, so customers could more banking and investing, and improve their financial management  2019 Techcombank significantly strengthens cyber security In a world of daily cyber threats, customers need to know they can trust Techcombank with their finances and that their privacy is respected and protected Techcombank again allocated significant amounts to recruiting the best people, cyber security technology, and training  Techcombank ensures that every customer’s data and transactions are safeguarded, with international-standard security methods and protocols => Over million new customers; A 151% surge in use for the convenient and effective digital platforms (including ATMs, mobile banking, internet banking), and Techcombank’s serviced transaction value rose by 143% YoY Digital banking highlight:  Customer focused improvements to the bank’s UX/UI, making things even more convenient  New digital banking features including integration with Mortgage+, I-bonds, insurance products and card system  Added integrated bill pay for over 40 major utilities and other service provider companies P a g e 44 | 48 Bolstered customer security – Techcombank is the first bank in Vietnam to roll out Smart OTP for all online transactions  Continuing to build electronic transaction solutions based on maximizing customer experience => Signed up over million new customers, growing e-banking transaction value by 191% YoY Currently, 85% of customer activity is purely digital  2020: Techcombank e-banking  Many innovative developments like: ‣ Upgraded T24 system ‣ Improved card system ‣ Upgraded mobile platform ‣ Server technology changes ‣ Rolling out the eKYC solution for better access to core customer segments  Developing more service features for core affluent customers: features that first appeared on the market – Bao Loc, transfer certificates of deposit on F@ST Mobile – to serve investment needs and increasing assets of customers, such as new non-financial service experience, including: booking airline tickets and hotels, to meet the increasing demands of customers  Continuing to improve the process of digitalization home loans, reducing the time it takes for customers to learn Techcombank's decision to only 1.6 days, while reducing the processing time of online credit by 30% (now 335 minutes) compared to normal processes  Customers using bill payment services went from 19% in 2019 to 54% in 2020 by connecting to more service providers and engineering a better bill payment experience with faster and automatic payments  Increasing F@ST Mobile revenue by issuing preapproved credit payment cards, contributing to the outstanding growth of CASA, which reached VND 76.1 trillion, reducing the cost of serving customers at the counter though the transfer of card support services for both credit cards and payment cards, counter to online, helping save more than VND 67 billion in SMS costs Information technology  For customers: Techcombank has a history of being a first adapter of technology, providing superior customer experience Retail e-banking transactions volume rose 108.8% from 2019 2020 added over one million new customers, thanks to Techcombank's ongoing investment in digital platforms, digitalizing E2E customer journeys, improving underwriting capabilities and risk management  Stability and resilience: A main priority of Techcombank’s technology investment is maintaining system stability and resilience, so customers can bank anytime, anywhere It will improve performance, stability, cost and importantly, the speed with which the bank introduces new products and services, by leveraging ecosystem partners It’ll also allow faster release of tailor-made products and services  Cybersecurity: With COVID-19 speeding up the digitalization of everything, privacy and security have become a top priority for any digital operation The bank significantly invested in recruiting top security experts and implementing international security standards and protocols so customers feel secure P a g e 45 | 48 3.2 Risk Management & Compliance with regulations 2019  Managing credit risk Techcombank has gained in-depth insights into customers and their ecosystem; and Techcombank's credit policy, and business strategy are focused on customer segments The bank have gradually applied risk assessment models to Techcombank's end-to-end credit process, shortening turn-around-times and improving customer experience, as Techcombank provide optimal financial solutions  Managing market risk Techcombank has measured and assessed market risks according to Basel II requirements by: • Computing value at risk (VaR) and expected shortfall for portfolios for the trading book • Conducting backtesting of VaR for each trading portfolio • Simultaneously launching a project to validate models so functional and business units can make well-informed decisions  Managing liquidity risk As per SBV requirements, the bank’s regulations and processes on liquidity risk management fully comply with Circular 13/2018/TT-NHNN on corporate governance The bank’s new governance structure and model, policies, processes, regulations and limits will identify, measure, monitor and report risk triggers; in compliance with SBV’s banking regulations on liquidity and solvency ratios  Managing operational risk Protecting the Bank, shareholders and customers from operational losses is a priority Operational Risk Management sub-committee identifies, and evaluates operational risks and handles them quickly and consistently in compliance with the Bank’s risk management policy and regulatory requirements Additionally, Techcombank has been transferring operational risks via insurance Techcombank’s insurance needs are managed by the Operational Risk Insurance Management team 2020 Risk Management Vietnam's economy was not immune to 2020’s global recession and international bankruptcies The suspension of flights, tourism and service industries significantly impacted Techcombank's targets To overcome this, Techcombank implemented a series of solutions and initiatives, in risk management, focused on technology and digital, which contributed to greater growth  Internal capital adequacy assessment process (ICAAP) Following 2019’s SBV approval for early application of the CAR standard, according to Circular 41/2016/TTNHNN, in 2020, Techcombank continued implementing and completing the ICAAP as per Circular 13/2018/TTNHNN This completed the implementation of all three pillars of Basel II  The risk data aggregations and analytics platform (RDAAP) It continues to improve both the bank’s risk management models and risk reporting standards  Credit risk management The bank aims to provide suitable financial products for customers' business cycles and capital needs, and specific financial solution packages for each customer segment, streamlining the process and optimising processing time Techcombank assessed the pandemic’s impact on P a g e 46 | 48 customers and responded by reducing interest rates and restructuring loan repayment schedules In retail, technologies like digital analytics platforms, improved decision-making on retail credit risk portfolio management, and synchronized personal customer data in credit activities on digital channels helped the bank navigate the fallout from COVID-19  Business credit decision engine (BCDE) – enabling the commercial digital journey The aim of BCDE is to fully digitalized and streamline corporate loan origination, the nucleus of which lies in credit risk decisions BCDE will be a crucial driver of non-retail growth It’s highly scalable, and can capture and centralize customer data, leading to better commercial lending decisions and improved operational efficiency P a g e 47 | 48 IV REFERENCES                   https://www.gso.gov.vn/du-lieu-va-so-lieu-thong-ke/2021/01/kiem-soat-thanh-cong-lam-phat-nam2020-dat-muc-tieu-quoc-hoi-de-ra-duoi-4/ https://www.sbv.gov.vn/webcenter/portal/m/menu/trangchu/ttsk/ttsk_chitiet?leftWidth=0%25&show Footer=false&showHeader=false&dDocName=SBV403509&rightWidth=0%25¢erWidth=100% 25&_afrLoop=7267423255131506#%40%3F_afrLoop%3D7267423255131506%26centerWidth%3D 100%2525%26dDocName%3DSBV403509%26leftWidth%3D0%2525%26rightWidth%3D0%2525 %26showFooter%3Dfalse%26showHeader%3Dfalse%26_adf.ctrl-state%3D192loobayb_9 https://vietstock.vn/2020/01/ty-gia-8211-1-nam-nhin-lai-757-722884.htm https://vietstock.vn/2020/12/ty-gia-mot-nam-nhin-lai-757-815658.htm http://baokiemtoannhanuoc.vn/kinh-te -xa-hoi/nhung-thach-thuc-lon-dang-hien-huu-doi-voi-nganhngan-hang-149511 https://hanoimoi.com.vn/tin-tuc/Tai-chinh/1009112/cac-ngan-hang-thuong-mai-chia-se-kho-khancung-doanh-nghiep https://dangcongsan.vn/kinh-te/kho-khan-keo-dai-ngan-hang-cung-doanh-nghiep-deu-phai-can-trong585786.html https://nhandan.vn/tin-tuc-kinh-te/ngan-hang-nha-nuoc-dieu-chinh-giam-lai-suat-tu-ngay-19-11377297/ https://www.techcombank.com.vn/khach-hang-ca-nhan/tiet-kiem https://tygia.vn/tin-tuc/u-huong-tang-lai-suat-ngan-hang-trong-nam-2019-411 https://theleader.vn/hang-loat-ngan-hang-trung-uong-cat-giam-lai-suat-do-covid-191583294860236.htm https://tapchitaichinh.vn/ngan-hang/phat-trien-dich-vu-ngan-hang-ban-le-tai-viet-nam-332971.html https://www.techcombank.com.vn/khach-hang-uu-tien/tin-tuc/thi-truong/ty-gia-usd-cuoi-nam-se-ondinh https://www.techcombank.com.vn/khach-hang-ca-nhan/the/the-tin-dung/the-ung-von-techcombankvisa-vinshop/lai-suat-va-bieu-phi https://www.techcombank.com.vn/khach-hang-uu-tien/tin-tuc/thi-truong/lai-suat-cuoi-nam-binh-yendoi-song https://www.techcombank.com.vn/khach-hang-ca-nhan/ngan-hang-dien-tu/du-lich-giai-tri https://www.techcombank.com.vn/gioi-thieu/goc-bao-chi/bao-chi-noi-ve-techcombank/techcombankuu-tien-dau-tu-ung-dung-cong-nghe-tai-chinh https://www.techcombank.com.vn/nha-dau-tu/bao-cao-thuong-nien P a g e 48 | 48 ... National Payment Corporation of Vietnam (NAPAS), Vietnam Asset Management Company (VAMC), National Banknote Printing Plant, Deposit Insurance of Vietnam  Institutions which have established and. .. online and mobile banking Techcombank’s new features and capabilities for banking, investing and financial management improved customers’ lives throughout the year : The mobile banking app now... Techcombank has provided and launched a wide range of products on digital banking, ranging from daily payment utilities to pre-approved credit cards, financial management and investment products A