Analysis of financial statements of 4 joint stock commercial banks and recommendations

Dissertation submitted in partial fulfillment of the Requirement for the MSc in Finance FINANCE DISSERTATION ON ANALYSIS OF FINANCIAL STATEMENTS OF JOINT STOCK COMMERCIAL BANKS AND RECOMMENDATIONS Nguyen Viet Dung ID No: 21071834 Intake Supervisor: Prof Dr Pham Thu Thuy September 2022 Tai ngay!!! Ban co the xoa dong chu nay!!! 17014125835211000000 DECLARATION This research is written by myself and all information collected from the questionnaire is permitted to use in the study by all respondents Ha Noi, September 2022 Nguyễn Việt Dũng ACKNOWLEDGEMENTS The completion of this research requires a lot of guidance and support from many people, and we are very fortunate to get this during our project work We would like to express my deep gratitude for my supervisor, Dr Pham Thu Thuy for her guidance, supervision and support through this research Without her enthusiastic instruction, we could not complete our research We also want to give our special appreciation to our parents, our family and our friends who always stand by us and give us a lot of love and support Ha Noi, September 2022 Nguyễn Việt Dũng ABBREVIATIONS BIDV Bank for Investment and Development of Vietnam CAR Capital Adequacy Ratio CASA Current Account Savings Account CIR Cost to Income Ratio CIT Corporate Income Tax EAT Earning after Tax EBIT Earnings Before Interest and Taxes EBT Earnings Before Tax EPS Earnings per Share 10 FED US Federal Reserve 11 GDP Gross Domestic Production 12 IMF International Monetary Fund 13 M&A Mergers and Acquisitions 14 NFI Net Fee Income 15 NII Net Interest Income 16 NIM Net Interest Margin 17 NPL Non-Performing Loan 18 P/B Price-to-Book ratio 19 P/E Price to Earnings ratio 20 P/S Price/Sales per Share 21 PTB Profit Before Tax 22 RIM Residual Income Model 23 ROA Return on Total Assets 24 ROAA Return on Average Assets 25 ROAE Return on average equity 26 ROE Return on Equity 27 ROI Return on Investment 28 ROS Return On Sales 29 TCB Techcombank 30 TOI Total Operating Income 31 US United States 32 USD US Dollar 33 VCB Vietcombank 34 VND Vietnam Dong 35 WB World Bank LIST OF TABLES Table 1: Vietcombank's business results from 2017 to 2021 (bil VND) 26 Table Calculation of indicators and analysis for the period 2017 to 2021 (bil VND) 29 Table P/B of some Vietnamese Banks 50 Table TCB's indicators from 2017 to 2021 and forecast to 2023 52 Table RIM for pricing stock TCB 53 Table Recommendation BUY with stock TCB 55 Table Business results of BIDV from 2017 to 2020 (bil VND) 56 Table VPB Loans in 2020 and 2021 63 Table Comparing VPB’s P/B with other banks’ 66 Table 10 VPB's indicators from 2017 to 2021 and forecast to 2024 69 Table 11 RIM model for valuing the VPB’s stock 73 Table 12 VPB’s final target price 74 LIST OF FIGURES Figure Global growth forecasts for 2021 and 2022 by international organizations (%) 15 Figure Foreign direct investment capital in the years 2018-2022 (%) 18 Figure Business results of major banks in the world (bil USD) ……………… 20 Figure Top banks with highest CASA 37 Figure Profit Before Tax of TCB from 2014 to 2021 (bil.VND) 39 Figure Net Interest Income of TCB from 2014 to 2021 (%) 40 Figure Non-Interest Income of TCB from 2014 to 2022 ……………………… 41 Figure TCB’s Expense from 2014 to 2021 …….……………………………… 42 Figure Non-Interest Expense of TCB from 2014 to 2021 ……………………… 43 Figure 10 Dupont ROE of TCB from 2017 to 2021 ……………………………… 43 Figure 11 NIM of TCB from 2017 to 2021 ………………………………………… 45 Figure 12 CAR of TCB from 2017 to 2021 ………………………………………… 46 Figure 13 Techcombank Porter Five Forces Model ……………………………… 47 Figure 14 BIDV's income structure in 2018 and 2019 respectively ……………… 58 Figure 15 BIDV's profit after tax ………………………………………………… 58 Figure 16 VPB’s CASA, ROE and CAR from 2017 to 2021 ……………………… 64 TABLE OF CONTENT DECLARATION …………………………………………………………….….2 ACKNOWLEDGEMENTS ……………………………………………….….…3 ABBREVIATIONS ……………………………………………………… ……4 LIST OF TABLES ……………………………………………………………….6 LIST OF FIGURES……………………………………………………………….7 EXECUTIVE SUMMARY……………………………………………… ……10 Chapter 1: Introduction Background of study ……………………………………………………… 11 Area of the study ……………………………………………………… … 12 Research objectives ………………………………………………………… 12 Methodology …………………………………………………………………12 Structure of the study……………………………………………………… 12 Chapter 2: Macroeconomic Analysis World economic outlook ……………………………………………….……14 Regional economy ………………………………………………….……… 15 Chapter 3: Industry Analysis Global industry analysis …………………………………………………….19 Regional industry analysis ………………………………………………….22 Chapter 4: Company Analysis 4.1 Analysis of Vietcombank ………………………………………………… 24 4.2 Analysis of Techcombank ………………………………………………….35 4.3 Analysis of BIDV ………………………………………………………….56 4.4 Analysis of VPBank ………………………………………………………62 Chapter 5: Conclusion And Recommendations REFERENCES ………………………………………………………………….77 EXECUTIVE SUMMARY Analysis of a bank's financial position through financial statements and a number of other documents is very important not only for bankers but also for many other subjects such as investors, banks, other stakeholders, other customers, suppliers, customers and other interested authorities Each object is interested in the financial situation of the bank from different angles Banks are the most important financial institutions in the economy Banks include many types depending on the development of the economy in general and the financial system in particular, in which commercial banks usually account for the largest proportion in terms of asset size, market share and number of banks As one of the important links of any economy, financial intermediaries are an indispensable figure in the national economy Therefore, the analysis of financial statements is indispensable Starting from the above goal, I will analyze the financial statements of joint stock commercial banks including: Vietcombank, Techcombank, BIDV, VPBank from which to make recommendations The article uses methods of synthesis, statistics and analysis with a system of diagrams and tables to present theoretical and practical contents 10