Multinational Corporation And Finance - Shinhan Financial Group.pdf

lOMoARcPSD|38133502 HO CHI MINH CITY UNIVERSITY OF ECONOMIC AND FINANCE FACULTY OF FINANCE AND ACCOUNTING MULTINATIONAL CORPORATION AND FINANCE Company: SHINHAN FINANCIAL GROUP Group 3: Tran Anh Duy – 195080550 Tran Phan Thanh Hieu - 195081832 Nguyen Nguyen Dinh Khai – 205082771 Le Tran Thanh Mai - 195082045 Class: 222.FIN1133E.A05E Lecturer: Dr Nguyen Tien Trung Ho Chi Minh City, March 2023 Downloaded by minhnhat08 nguyen (nminhnhat.731@gmail.com) lOMoARcPSD|38133502 TABLE OF CONTENTS TABLE OF CONTENTS LIST OF FIGURES Company information: The company structure 2.1 International structure 2.2 Financial structure 2.3 Capital structure .9 2.3.1 Equity capitalization .9 2.3.2 Debt capitalization 10 2.3.3 Common and Perfered stock 11 Analyzing how its subsidiaries’ cash flows affect the parent company's cash flow 12 3.1 Factors that affect to the process of remitting subsidiary earnings to the parent 12 3.2 Case study of Shinhan Bank Vietnam 12 3.2.1 Overview of Claris .12 3.2.2 The remittance of Shinhan Bank Vietnam to Shinhan Group 13 Interest rate, inflation, exchange rate, political risks, international business environment affect the corporation' cash flow 14 4.1 Interest rate 15 4.2 Inflation 16 4.3 Exchange rate .17 4.4 Country risks 18 4.5 International business environment .19 Conclusion and Recommedation 20 REFERENCE 22 Downloaded by minhnhat08 nguyen (nminhnhat.731@gmail.com) lOMoARcPSD|38133502 LIST OF FIGURES Figure 1: International structure Figure 2: Shinhan organization today .7 Figure 3: Key financial Figure 4: Shareholders Figure 5: Market cap history of Shinhan financial group .9 Figure 6: End of year market cap 10 Figure 7: Total debt .11 Figure 8: Total debt by year 11 Figure 9: Remitting Subsidiary Earnings to the Parent 12 Figure 10: Exchange rate 14 Figure 11: Shinhan Bank Net Income, Loans and Deposits 16 Figure 12: Shinhan Bank Deliquency Ratio by Sector 17 Figure 13: Vietnam political risk 19 Downloaded by minhnhat08 nguyen (nminhnhat.731@gmail.com) lOMoARcPSD|38133502 Multinational Coporation Finance Lecturer: Dr Nguyen Tien Trung Company information: Shinhan Bank Co., Ltd (Korean: 주식회사 신한은행; RR: Jusik Hoesa Sinan Eunaeng) is a bank headquartered in Seoul, South Korea Historically it was the first bank in Korea, established under the name Hanseong Bank in 1897 The bank was reestablished in 1982 It is part of the Shinhan Financial Group, along with Jeju Bank Chohung Bank merged with Shinhan Bank on April 1, 2006 Shinhan Bank started as a small enterprise with a capital stock of KRW 25.0 billion, 279 employees, and three branches on July 7, 1982 Today, it has transformed itself into a large bank, boasting total assets of KRW 176.9 trillion, equity capital of KRW 9.7 trillion, 10,741 employees, and 1,026 branches as of 2006 As of June 30, 2016, Shinhan Bank had total assets of ₩298.945 trillion (equivalent to ₩304.658 trillion or US$269.507 billion in 2017) , total deposits of ₩221.047 trillion (equivalent to ₩225.271 trillion or US$199.28 billion in 2017) and loans of ₩212.228 trillion (equivalent to ₩216.283 trillion or US$191.329 billion in 2017) Shinhan Bank is the main subsidiary of Shinhan Financial Group (SFG) Abstract: Shinhan Bank is the descendant of Hanseong Bank, the first modern bank in Korea It was established by Kim Jong-Han in 1897, but began operating around 1900 It was originally located in a small house with only two rooms One room was for the president, Yi Jae-Won, and the other room was for the staff The bank operated by borrowing money from Japanese banks at low interest rates and then loaning it out for twice the rate to the Korean market The Bank was successful because despite lending out money at twice the rate it borrowed it at, the bank's interest rates were still far lower than what could be obtained elsewhere in Korea at that time In an anecdotal story the bank's first property to use as collateral on a loan happened to be a donkey The bank staff were challenged to feed and care for their collateral as the loan was out In March 2013, the Financial Services Commission of South Korea said that Shinhan Bank reported that its Internet banking servers had been temporarily blocked The South Korean government asserted a North Korean link in the March cyberattacks, which has been denied by Pyongyang Company Profile: Downloaded by minhnhat08 nguyen (nminhnhat.731@gmail.com) lOMoARcPSD|38133502 Multinational Coporation Finance Lecturer: Dr Nguyen Tien Trung Shinhan Bank, is a bank headquartered in Seoul, South Korea Historically it was the first bank in Korea, established in 1897 Shinhan Bank has been leading financial industry along with 180 networks in 20 countries, including India, United States, Japan, China, Indonesia, Singapore, and Vietnam Shinhan Financial Group ranks No.1 Market Capitalization in South Korea based financial group and also listed in New York Stock Exchange Shinhan Bank sustains financial soundness with attaining the high rate of Aa3 by Moody's, A+ by S&P, and A by Fitch Belonging to Shinhan Financial Group, Shinhan Bank Korea is considered the flagship of the group with headquarters in 20 countries Shinhan Bank Korea was honored by Global Finance Magazine in the Top 50 World's Largest Banks in Emerging Markets (2018) and Top 50 Safest Commercial Banks in the World (2019) Along with a worldwide network of operations, Shinhan Bank Korea's products and services are classified into seven main groups (Retail, Private Banking, Wealth Management, Small and Medium Enterprises, Institutions, etc.) , Investment Banking), in order to meet the diversified financial needs of customers Shinhan Financial Group (SFG) is a leading financial group in Korea, founded on the foundation of Shinhan Bank of Korea, Shinhan Investment Fund and Shinhan Investment Management Company With a network in 21 countries and over 26,000 employees, SFG offers a wide range of financial products and services covering a wide range of industries including Banking, Personal Finance, Insurance, Wealth Management and portfolios other investments SFG is listed on the Korea Stock Exchange (KRX) and the New York Stock Exchange (NYSE) The company structure 2.1 International structure SFG is a global brand, ranked 44th in the Top 500 World's Largest Banking Brands, according to The Banker's 2016 statistics In addition, SFG has always strived to become a Financial Group Korea leads the way with a global presence through 213 branches in 20 countries, in which the focus of investment is the Indonesian market with many affiliated companies Therefore, the management structure of shinha financial group is very tight Downloaded by minhnhat08 nguyen (nminhnhat.731@gmail.com) lOMoARcPSD|38133502 Lecturer: Dr Nguyen Tien Trung Multinational Coporation Finance Figure 1: International structure Source: shinhangroup.com Shinhan’s organization today The following section provides information on Shinhan Financial Group Co Ltd’s senior management, executives, CEO and key decision makers and their roles in the organization Mr Jin Ok-dong, the chairman of shinhanan finance group, who has just taken office in 2022 The people who work under him as well as help him in running the company are Mr Yong Byoung Cho (Chief Executive Officer, Director), Mr Lee Taekyung has been the Deputy President and Chief Financial Officer of the company since 2022 Prior to this, he served as the Chief Executive Officer of Shinhan Bank Vietnam during 2021 to 2022 Previously he Downloaded by minhnhat08 nguyen (nminhnhat.731@gmail.com) lOMoARcPSD|38133502 Multinational Coporation Finance Lecturer: Dr Nguyen Tien Trung served as the Chief Executive Officer of Shinhan Bank Cambodia from 2019 to 2021, Mr Lee Een-Kyoon has been the Chief Operating Officer and Deputy President of the group since 2019 Previously, he served as Head of Management Support Team of the group from 2017 to 2019, Mr Wang Ho-Min has been the Chief Compliance Officer and Deputy President of the group since 2019 Previously, he served as General Manager of Jamsil-nam Branch at Shinnan Bank from 2017 to 2019 Figure 2: Shinhan organization today Source: shinhangroup.com 2.2 Financial structure An optimal capital structure is the best combination of debt and equity financing that increases a company's market value while reducing its cost of capital Reduce the weighted average cost of capital as one way to maximize for the lowest cost mix of financing Downloaded by minhnhat08 nguyen (nminhnhat.731@gmail.com) lOMoARcPSD|38133502 Multinational Coporation Finance Lecturer: Dr Nguyen Tien Trung In the past years from 2019 to 2021, the group's financial statement parameters have continuously increased such as the key index net income of 4,019 (KRW billion) in 2021 as well as group assets of 648.2 (trillion KRW) in the same year Figure 3: Key financial Source: shinhangroup.com Shinhan shareholders Figure 4: Shareholders Source: Annualreport According to this major shareholders, the number of shares held by foreign shareholders accounted for 66.4%, more than half of that of domestic shareholders at 33.6% This proves that the group has an international development orientation and is increasingly expanding its scale in the international arena Downloaded by minhnhat08 nguyen (nminhnhat.731@gmail.com) lOMoARcPSD|38133502 Multinational Coporation Finance Lecturer: Dr Nguyen Tien Trung 2.3 Capital structure An optimal capital structure is the best combination of debt and equity financing that increases a company's market value while reducing its cost of capital Reduce the weighted average cost of capital as one way to maximize for the lowest cost mix of financing 2.3.1 Equity capitalization The market capitalization sometimes referred as Marketcap, is the value of a publicly listed company In most cases it can be easily calculated by multiplying the share price with the amount of outstanding shares As of December 2021, Shinhan’s total equity was 49,538,422 won This include 2,969,641 won of capital stock, total equity attributable to equity holders of SFG was 47,291,150 won and some more (Total Equity) As of March 2023 Shinhan Financial Group has a market cap of $13.67 Billion This makes Shinhan Financial Group the world's 1140th most valuable company by market cap according to our data The market capitalization, commonly called market cap, is the total market value of a publicly traded company's outstanding shares and is commonly used to measure how much a company is worth (market cap) Figure 5: Market cap history of Shinhan financial group Source: companiesmarketcap.com Downloaded by minhnhat08 nguyen (nminhnhat.731@gmail.com) lOMoARcPSD|38133502 Lecturer: Dr Nguyen Tien Trung Multinational Coporation Finance 2.3.2 Figure 6: End of year market cap Source: companiesmarketcap.com Debt capitalization Shinhan Financial Group Co long term debt from 2010 to 2022 Long term debt can be defined as the sum of all long term debt fields  Shinhan Financial Group Co long term debt for the quarter ending September 30, 2022 was $58.777B, a 5.21% decline year-over-year  Shinhan Financial Group Co long term debt for 2021 was $72.134B, a 20.01% increase from 2020  Shinhan Financial Group Co long term debt for 2020 was $60.108B, a 0.3% decline from 2019  Shinhan Financial Group Co long term debt for 2019 was $60.291B, a 4.79% increase from 2018 According to Shinhan Financial Group's latest financial reports the company's total debt is $88.88 B A company’s total debt is the sum of all current and non-current debts The highest total debt in this company was in December 31th, 2020, it about $97.56B and the lowest within years from 2018 to 2022 is 2018 its about $86.03B Despite continuously increasing total debt over the years, by the end of 2021, total debt has shown signs of decreasing -2,54% compared to 2020 10 Downloaded by minhnhat08 nguyen (nminhnhat.731@gmail.com) lOMoARcPSD|38133502 Lecturer: Dr Nguyen Tien Trung Multinational Coporation Finance Figure 7: Total debt Source: companiesmarketcap.com Figure 8: Total debt by year Source: companiesmarketcap.com 2.3.3 Common and Perfered stock Shinhan Financial Group Co annual/quarterly total common and preferred stock dividends paid history and growth rate from 2010 to 2022 Total common and preferred stock dividends paid can be defined as the cash outflow for all company dividends paid out to preferred and common shareholders  Shinhan Financial Group Co total common and preferred stock dividends paid for the quarter ending September 30, 2022 were $-0.903B, a 7.3% increase year-over-year  Shinhan Financial Group Co total common and preferred stock dividends paid for the twelve months ending September 30, 2022 were $-2.870B, a 18.04% increase year- over-year  Shinhan Financial Group Co annual total common and preferred stock dividends paid for 2021 were $-1.097B, a 41.52% increase from 2020  Shinhan Financial Group Co annual total common and preferred stock dividends paid for 2020 were $-0.775B, a 16.62% increase from 2019 11 Downloaded by minhnhat08 nguyen (nminhnhat.731@gmail.com) lOMoARcPSD|38133502 Multinational Coporation Finance Lecturer: Dr Nguyen Tien Trung  Shinhan Financial Group Co annual total common and preferred stock dividends paid for 2019 were $-0.665B, a 2.19% increase from 2018 Analyzing how its subsidiaries’ cash flows affect the parent company's cash flow 3.1 Factors that affect to the process of remitting subsidiary earnings to the parent The process from the subsidiary making a profit to the parent company receiving the remitted funds is shown in Figure 10, and the amount of the final money transfer to the parent company may vary from year to year depending on the circumstances In particular, corporation taxes paid to the host country initially reduce the income of the subsidiary The franchisee then retains a portion of the profits (at its discretion or in accordance with host government rule) and pays the remainder The host government may impose a withholding tax on funds transferred The money is then converted into the parents' currency and given to them Figure 9: Remitting Subsidiary Earnings to the Parent Source: Madura Jeff International Financial Management, 2020 3.2 Case study of Shinhan Bank Vietnam 12 Downloaded by minhnhat08 nguyen (nminhnhat.731@gmail.com) lOMoARcPSD|38133502 Multinational Coporation Finance Lecturer: Dr Nguyen Tien Trung 3.2.1 Overview of Claris Shinhan Bank Vietnam One Member Limited is a bank under Shinhan Bank of Korea - a member of Shinhan Financial Group Since 1993, Shinhan Bank Vietnam has had a commercial representative in Vietnam in the form of the first representative office in Ho Chi Minh City Ho Chi Minh With 30 years of establishment and development, Shinhan Bank Vietnam has expanded its network of operations throughout the North, Central and South Today, we provide a diverse portfolio of products and superior financial solutions to both individual and corporate clients.Shinhan Bank Vietnam was awarded by International Business Magazine the Best Foreign Retail Bank in Vietnam (2020) and the Best Foreign Bank in Vietnam (2021 and 2022) and the Bank was also honored to receive the award Best place to work in Asia for three consecutive years (2020 to 2022), awarded by HR Asia magazine 3.2.2 The remittance of Shinhan Bank Vietnam to Shinhan Group Tax laws Businesses operating in Vietnam must pay corporate tax on any profits accrued Accordingly, the tax rate of 17% will be applied to people's credit funds and microfinance institutions, microfinance institutions licensed by the State Bank to be established before January 1, 2014 in accordance with regulations of the State Bank of Vietnam Law on Credit Institutions No 47/2010/QH12 but are not eligible to apply corporate income tax incentives under the category of newly established enterprises from investment projects in geographical areas with favorable economic conditions - especially difficult society according to the provisions of Decree No 124/2008/ND-CP dated December 11, 2008 detailing and guiding the implementation of a number of articles of the Law on Corporate Income Tax.The Circular stipulates that the corporate income tax rate of 20% throughout the operation period shall be applied to the income derived from the implementation of microfinance activities From January 1, 2016, the corporate income tax rate specified in this Clause will be changed to 17% Remitted fund Regarding the percentage of net cash flow paid by Shinhan Vietnam to the parent company and since there is no data or information about it Therefore, the team expects that Shinhan Vietnam will return all net cash flows received to Shinhan Group at the end of each year In addition, under Vietnamese law, a company may be required to withhold taxes at source 13 Downloaded by minhnhat08 nguyen (nminhnhat.731@gmail.com) lOMoARcPSD|38133502 Multinational Coporation Finance Lecturer: Dr Nguyen Tien Trung Non-resident companies in particular are generally subject to a withholding tax of 5% without any deductions (Gov.vn, 2013) As a result, Shinhan Vietnam is subject to a 5% tax levied by the Vietnamese government on all funds sent to Shinhan Group in Korea Exchange rate Figure 10: Exchange rate Source: student research The increase or decrease in cash flow from subsidiary to parent company is partly due to the fact that tax rates and regulations vary widely from country to country, even in different parts of the same country Therefore, the countries in which the subsidiaries operate are also an important factor in the parent company's cash flow as income tax or withholding tax is regulated differently by the government in each country For example, in this case, Shinhan Bank operates in Vietnam, so the corporate income tax is 17%, which is considered the average corporate income tax However, if the company operates in Indonesia where the corporate tax rate is 22%, the parent company filing will change Because of this, the amount received from the parent company will be affected by the current exchange rate and would not be recoverable from the parent company if the currency of the subsidiary were to depreciate significantly over time Interest rate, inflation, exchange rate, political risks, international business environment affect the corporation' cash flow Along with a worldwide network of operations, Shinhan Bank products and services are classified into seven main groups (Retail, Private Banking, Wealth Management, Small and Medium Enterprises, Institutions, etc, Investment Banking), in order to meet the diversified financial needs of customers 14 Downloaded by minhnhat08 nguyen (nminhnhat.731@gmail.com) lOMoARcPSD|38133502 Multinational Coporation Finance Lecturer: Dr Nguyen Tien Trung And are a reputed company, the effect on the cash flows can be both adverse or favorable it all depends what the country where the company is in operation is doing As of now, there are war-like situations, in such a case 4.1 Interest rate Shinhan Bank is a successful bank and honored to be in the Top 50 safest commercial banks in the world in the 21st century From a small start in 1982 to a leading commercial bank with total assets (including Trust Accounts) of $466.1 billion Shinhan Bank’s net income rose by 20.0% year-on-year in 2021 to KRW 2,494.4 billion, mainly attributable to the strong interest income growth of 6.3% year-on-year on the back of growth in KRW loans and a wider net interest margin However, non-interest income fell by 24.1% owing to lower bancassurance fees and reduced income from securities and derivatives Provisioning for credit losses fell by 49.8% year-on-year due to a base effect of major COVID19-related provisions set aside in 2020 Loans in KRW at the year-end increased by 9.0% in 2021 to KRW 271.1 trillion – retail loans increased by 7.4% and corporate loans rose by 10.6%, contributing to the strong overall growth In addition, the net interest margin for the year improved by 4bp, thanks to base rate hikes in 2021 Within the fees and commissions income, trust fees and fund fees rose, but bancassurance fees fell by 0.9% yearon-year Gains on valuations of securities fell by 24.6% owing to a decrease in bond-related income G&A expenses rose by 4.9% year-on-year, mainly attributable to the large-scale early retirement program, but remain within the planned range Looking into the years ahead, and the digital transformation at Shinhan is expected to enable more efficient management of G&A expenses Shinhan Bank’s cost-to-income ratio (CIR) stood at 46.1% as a result of improvements in efficiency and higher pre-provision operating income, attesting that our productivity is on the rise The credit cost ratio was stable at 11bp, thanks to qualitative asset growth and prudent credit risk management, despite increases in provisions caused by the increased economic volatility 15 Downloaded by minhnhat08 nguyen (nminhnhat.731@gmail.com) lOMoARcPSD|38133502 Lecturer: Dr Nguyen Tien Trung Multinational Coporation Finance Figure 11: Shinhan Bank Net Income, Loans and Deposits (Source: Annual report SFG) 4.2 Inflation One of the biggest financial risk factors for Shinhan in 2022 is the potential for increased volatility to cause normalization of US monetary policy They have considered the spillover effects of Fed normalization its financial policies and assess the risks involved and impact on the Group In addition, based on many risk scenario, we have selected some risk factors for our diverse business segments to be managed and supervision at the Group level In the context of interest rates continue to be high, exchange rates fluctuate and inflation in Korea, at the Group level, they have Expand the scope of risk monitoring by identification different paths of financial contagion, and consolidation analyze their risk scenarios to set priorities countermeasures To prepare for increased volatility in financial markets, they analyzed the impact not only of absolute interest rates, but also the impact of the yield curve scenarios, and combine their analysis to make portfolio management plans more flexible consistent with the bond's interest rate sensitivity 16 Downloaded by minhnhat08 nguyen (nminhnhat.731@gmail.com) lOMoARcPSD|38133502 Multinational Coporation Finance Lecturer: Dr Nguyen Tien Trung To better prepare for a liquidity crisis, they have diversified the Group's funding and each subsidiary of the Group, in terms of maturity, structure, and more They also enhance funding plan liquidity emergency by operating their ALM portfolio under different scenarios more flexibly They have increased monitoring of vulnerable borrowers groups, especially those most sensitive to interest rates rise and liquidity falls, and they are now focus on selective growth centered around high quality property To get ready for a potential crisis in emerging markets, we have improved the liquidity management system at our overseas subsidiaries and strengthen risk management at the Group level, in order to in reducing financial risk For non-financial risk, they are looking at risk factors such as accelerating digital transformation and increasing demand for ESG management, as well as Risks may arise from some expected trends appeared after the pandemic subsided, such as virtual assets, intangible assets, generation gaps and stratification, and organization change As a way to prepare yourself The future ahead we have created a list of risk factors and strengthened our management around them Figure 12: Shinhan Bank Deliquency Ratio by Sector (Source: Annual report SFG) 4.3 Exchange rate When investing in a bond in a different currency denomination than the investor's home country, exchange rate risk is the danger of losing money in native currency The company's foreign exchange exposure is mostly derived from its engagement in global operations via international commerce Measuring and limiting exchange rate risk exposure is crucial for reducing a company's vulnerability to significant currency rate movements, which may hurt profit margins and asset value Companies may be vulnerable to this risk in a variety of ways A change in the exchange rate will influence the value of the firm's overseas revenues if the company sells or buys in foreign currencies In an open economy, exchange rate volatility is a 17 Downloaded by minhnhat08 nguyen (nminhnhat.731@gmail.com) lOMoARcPSD|38133502 Multinational Coporation Finance Lecturer: Dr Nguyen Tien Trung major source of macroeconomic uncertainty for businesses Exchange rate fluctuations have an impact on operating cash flows and corporate value due to the translation, transaction, and economic consequences of currency risk exposure As a result, the exchange rate is related to the final value 4.4 Country risks S&P is one of the three largest and most reputable credit rating agencies in the world The evaluation and ranking process aims at transparency and development orientation according to the standards of international practices At S&P, credit rating is an indicator of views on credit risk According to S&P's assessment, Shinhan Bank Vietnam plays an indispensable role in the business expansion goal of Shinhan Financial Group (Shinhan Financial Group - SFG) in Southeast Asia, and at the same time holds a strategic position important strategy for SFG In addition, Shinhan Bank Vietnam also leads SFG's expansion strategy in Vietnam by collaborating with member organizations non-bank members in this market, in order to increase product cross-selling opportunities Shinhan Bank Vietnam is the largest source of foreign profits for the parent bank in Korea and is a key player in SFG According to the latest updated data, in 2021, 10% of the parent bank's total net income in Korea will be generated from overseas business activities and about 50% of this income will be contributed by the Bank Shinhan Vietnam Thereby, S&P believes that SFG has demonstrated its long-term commitment to Shinhan Bank Vietnam as well as the Vietnamese market S&P expects Shinhan Bank Vietnam to maintain a balance between the corporate and retail segments of its lending portfolio, with each segment accounting for about half of total customer loans Also according to S&P's expectation, SFG will continue to support and promote the capitalization process of Shinhan Bank Vietnam Over the past decades, Shinhan Bank Vietnam has not paid any dividends but used it to continue reinvesting to develop business in Vietnam S&P hopes to create favorable conditions for banks In general, as well as Shinhan Bank Vietnam in particular, can develop stably Vietnam's economic growth will recover to 6.9% in 2022 and 7.2% in 2023 from 2.5% in 2021 as predicted by S&P Therefore, S&P assesses that the risk profile of Shinhan Bank Vietnam will be maintained at a stable level In addition, S&P also commented that the bank's corporate lending segment tends to be more 18 Downloaded by minhnhat08 nguyen (nminhnhat.731@gmail.com) lOMoARcPSD|38133502 Multinational Coporation Finance Lecturer: Dr Nguyen Tien Trung export-oriented than the sectors negatively affected by the pandemic such as construction, transportation and Tourism S&P estimates Shinhan Bank Vietnam's exposure to COVID-19- structured loans at around 3% of total loans at the end of 2021, equivalent to the average average of domestic banks assessed by S&P In the recent credit rating report of S&P also mentioned, Shinhan Bank Vietnam will maintain a sustainable capitalization process based on the bank's superior profitability compared to peers in the same industry Vietnam with the bank's prescribed Tier capital ratio at 17.8% as of September 30, 2021, S&P It is expected that the return on average assets (ROAA) of Shinhan Bank Vietnam will maintain sustainable stability in the next years thanks to the stability of net profit margin and credit costs In 2021, the bank's ROAA will reach 1.8% compared to an average of about 1% for most domestic banks Shinhan Bank Vietnam has also officially announced the application of LCR (Liquidity Reserve Ratio) and NSFR (Net Stable Capital Ratio) in liquidity risk management according to Basel III standards from April 20, 2022 Political risk in Vietnam is moderate The political and security environment have a track record of stability Figure 13: Vietnam political risk (Source: Annual report SFG) 4.5 International business environment 19 Downloaded by minhnhat08 nguyen (nminhnhat.731@gmail.com) lOMoARcPSD|38133502 Multinational Coporation Finance Lecturer: Dr Nguyen Tien Trung As a result, the judges of the "Best Company to Work for in Asia" award acknowledgedShinhan Bank for its efforts to create an ideal working environment based on threeprimary criteria: Independent information acquired in the media, press, and industry experts' viewpoints; Employee survey results - measure the employee's level of engagement with the working environment and BOD direct interviews - analyze thesuccess of the company's sustainable human resource policies and plans In addition to these criteria, the judges praised the bank for its capacity to adapt flexibly to the barriers and intricate developments of the COVID-19 outbreak, particularly during the peak period in 2021 The bank rapidly developed a Business Continuity Plan with senior personnel, utilizing digital transformation technology to ensure business and operational continuity Simultaneously, the bank implemented realistic procedures to assist employees, such as a remote work policy and COVID-19 compensation In 2022, Shinhan Bank intends to develop in accordance with the "Friendly Bank" model, with the goal of creating an ideal working environment and expanding opportunities for personal development and promotion for employees Since March 2022, the bank has been using the OKR (Object Key Result) approach with the purpose of developing a stable connection between members to achieve development goals in the most effective way Shinhan Bank is the first international bank of Shinhan Financial Group's (SFG) to apply the OKR approach Mr Kang GewWon, Chief Executive Officer of Shinhan Bank Vietnam, remarked: "We are very pleased and honored to earn this distinguished award for the fourth year in a row The award is a great tribute to all Shinhan collectives' efforts over the years We understand that human resources are an invaluable asset and a core value for the success and sustainable development of the business, therefore, attracting and retaining talent is a top priority in our strategy Our bank always strives to create the most professional and effective customer services by creating an ideal working environment and providing possibilities for personal growth for each employee” Conclusion and Recommedation Shinhan Financial Group achieved its best performance ever since its establishment thanks to the united efforts of all our employees despite the many 20 Downloaded by minhnhat08 nguyen (nminhnhat.731@gmail.com)