PHONG
Phỏ phòng Kê toán Giảm Bà Nguyễn Thị Thúy
Tai chính kiêm Kế toán Trưởng Thành phó Hồ Chí Minh, Việt Nam
10 xl XI XV aw Ne eS
Tổng lợi nhuận trước thuế {uiani ti trag trước Rừng) 3.231.123.841.475 2.201.861.405.647
Chỉ phí thuế thu nhập doanh nghiệp hiện hành 33 (648.887.617.117) (440.830.087.065) Chỉ phí thuế thu nhập doanh nghiệp hoãn lại 33 - - Chỉ phí thuế thu nhập doanh nghiệp 33 (648.887.617.117) (440.830.087.065) Lợi nhuận sau thuế 2.582.236.224.358 1.761.031.318.582 Lãi cơ bản trên cỗ phiếu (VND/cỗ phiếu) 34 3.264 2.497
Trương Ngọc Thanh Nguyễn Thị Thú}4,> iguyén Dinh Tung Phó phòng kê toản Giám độc Tài chính kiê Tổng Giảm đốc
Thu nhập lãi và các khoản thu nhập tươngtự — 24 9.638.359.257.256 7.656.988.766 889 Chỉ phí lãi và các chí phí tương tự 24 (5.337.196.484.058) (4.221.019.182.442) Thu nhập lãi thuần 24 4.101.162.773.198 3.435.969.5§84.447
“Thu nhập từ hoạt động dịch vụ 25 617.398.436.213 388.091.382.049 Chỉ phí hoạt động dịch vụ 2 (71.601.213.129) (50.329.023.735) Lãi thuần từ hoạt động địch vụ 25 $45.797.223.084 337.762.358.314 Lãi thuần từ hoạt động kinh doanh ngoại hối 26 114.400.838.022 83.519.035.834
(Lỗ)/lãi thuần từ mua bán chứng khoán kinh doanh 27 (6.424.930.001) 24.317.463.984
Lãi thuần từ mua bán chứng khoán đẳutư 2% 1.093.550.271.643 939.235.020.184 Thu nhập từ hoạt động khác 29 $18.291.639.438 351.339.681.020 Chỉ phí hoạt động khác 29 (54.339.443.314) (186.445.921.279) Lãi thuần từ hoạt động khác 20 764.452.196.124 194.893.759.741 Thu nhập từ góp vốn, mua cổ phần 30 216.000.000 392.700.000 Chỉ phí hoạt động 3l (2.449.236.101.393) (1.869.767.287.781) Lợi nhuận thuần từ hoạt động kinh doanh ức chỉ phí dự phòng rồi ro ín dụng 4.163.918.270.677 3.146.332.634.723
Chỉ phí dự phòng rủi ro tín dụng 32 (932.794.429.202) (944.471.229.076) Tổng lợi nhuận trước thuế
Figure 3: OCB”s income statement (2019) Generally, there are upward trends as well as fluctuations which are understandable due to the Covid-19 pandemic OCB's operating income increased from VND 6,613,154,372,070 (2019) to VND 8,012,866,790,577 (2020) and up to VND 8,919,153,043,091 (2021) This shows that the bank's status is stable even though the pandemic is influencing the financial market It is clear that the operating expense from 2019 to 2021 fluctuates but the changes are not large OCB has also concentrated on accompanying and sharing difficulties with customers and the community, as well as caring for the workforce, in this context, with prompt and accommodating directives from the Board of Directors, the Board of Management implemented several measures to maintain efficient bank operations and attain the goals established by the General Meeting of Shareholders Yet, the only trend of pre-tax profit from 2019 to 2021 is upward (from VND billion 3,232 to VND billion 4,419 and up to VND billion 5,519) As a result, OCB continued to surpass the goals in its business strategy and made great strides toward its objective
2.2 Return on asset Return on assets ( ROA) is an important ratio measuring how efficient a company’s management is at generating earnings from its assets ROA is calculated by using this formula:
In this report, ROA is calculated and compared in three years 2019, 2020, and 2021
Over the past three years, the ROA of OCB has generally not changed considerably By 2020, ROA has risen by 0.21%, from 2,4% to 2,61% But then, by 2021, there was only a small decrease of 0,02, from 2,61% to 2,59% This happened due to net income and total assets
12 slightly increasing in 2021 This rate is considered quite remarkable despite the Covid-19 pandemic being complicated OCB’s return on assets is much higher than several large banks including BIDV
Return on equity ( ROE) is a percentage measure of your company's net income divided by its shareholder equity To put it another way, it demonstrates how much of your net (after-tax) income is principally attributable to shareholder equity It is an excellent approach for determining how well your company can use assets to generate income
The difference between net income and total equity might be used to calculate it:
The table below is results after using the formula to calculate ROE of OCB from 2019 to 2021
For as long as the ROE ratio is mainly in line with or significantly over the peer relations average, it can be utilized to estimate dividend growth rates and sustainable growth rates Even with some drawbacks, ROE might still be a good place to start when trying to anticipate how quickly a stock will rise and how quickly its dividends will expand As stated in the annual reports of OCB, the only major trend of ROE is downward (from 26,1% in 2019 to 24,42% in 2020 and down to 22% in 2021) Despite the stability of ROA, ROE seems to plummet throughout the 3-year period However, if we compare OCB’s ROE in 2021 with the average ROE of Vietnam's banking industry, it is understandable to say that OCB's profitability on capital is much higher than some other banks
According to VnEconomy, from 2016 to 2020, OCB is recognized as one of the most effective management groups in the banking business in 2021, with a substantial growth rate and outstanding ROA, ROE ratio
2.4 Net interest margin and net non-interest margin:
A financial institution's net interest margin (NIM) compares the net interest income it receives from credit products like loans and mortgages to the interest it pays holders of savings accounts and certificates of deposit (CDs) The NIM, which is a profitability metric expressed as a percentage, provides an approximation of the likelihood that a bank or financial firm would prosper over the long term By offering insight into the profitability of their interest revenue vs their interest expenses, this indicator aids potential investors in making an informed decision about whether or not to invest Simply speaking, a positive net interest margin denotes a profitable business, whereas a negative value denotes inefficient investment In the latter case, a firm might take corrective action by using funds to pay off the debt that is still owed or by moving those assets to more lucrative investments
Net interest margin may be calculated by the following formula:
Net interest margin The table below is the results after using the formula to calculate NIM of OCB from 2019 to 2021
Figure 6: Net interest margin of OCB over 3 years As stated in the financial reports for 2019, 2020, and 2021 of OCB, the only trend of net interest income is upward The figures in the net interest margin ratio, however, are likely to decrease and stabilize in the years 2019-2020 The global economy is being negatively impacted by COVID-19, which may be the cause of this stability in NIM Additionally, the demand for loans is not rising as a result of the failure and closure of numerous small businesses and factories, as well as the forced temporary suspension of operations due to the lockdown
Bank Interest Rate Risk Management analysis 1 Interest-Sensitive Gap management as a risk
Interest-sensitive gap management is one of the most popular interest rate hedging strategies in use today This technique requires management to perform an analysis of the maturities and repricing opportunities associated with interest-bearing liabilities When management feels its institution is excessively exposed to interest rate risk, it will try to match as closely as possible the volume of assets that can be repriced as interest rates change with the volume of liabilities whose rates can also be modified based on market circumstances over the same time period as nearly as feasible
There is clearly a mismatch between these interest-sensitive assets (ISA) and interest-sensitive liabilities (ISL) The gap is the component of the balance sheet that is vulnerable to interest rate risk: interest-sensitive gap = Interest-sensitive assets - Interest- sensitive liabilities ( = ISA - ISL )
If the volume of interest-sensitive assets exceeds the volume of interest-sensitive liabilities subject to repricing in each planning period (day, week, month, etc.), the financial business is said to have a positive gap, and to be asset sensitive, meaning that assets are more valuable than liabilities In this situation, a drop in interest rates should reduce or eliminate the net interest rate spread in the short term, because assets are converted at lower rates before liabilities The net interest gap should expand as interest rates climb
Assume that an interest-sensitive bank's liabilities are greater than its interest-sensitive assets, this bank then has a negative gap and is said to be liability sensitive, indicating that liabilities affect prices more than assets In this situation, lower interest rates should reduce the net interest rate spread in the short term since deposits are rolled over at lower rates before corresponding assets An increase in interest rates, on
15 the other hand, reduces or eliminates net interest income, lowering earnings
Figure 7: The sensitive asset and sensitive liabilities in 3 years
Figure 8: The Doilar gap of OCB over 3 years
Figure 9: Bar chart of Dollar gap in 3 years
The chart above shows that throughout the 3 years, OCB always has positive dollar gap From 2019 to 2020, we can see it had experienced a great surge of about 718,321 million VND, then decrease to about 2,385 billion VND in 2021, this might imply that short-term loans were the majority of the bank's lending portfolio Therefore in this situation, net
16 interest income and net income will rise as interest rates rise and fall as interest rates fall Whether it is a positive or negative gap, it cannot be removed in practice, but it can be reduced in theory when financing and lending are totally equal That is, a bank must obtain cash and lend money with the same maturity date in order to reveal the dollar difference However, banks do not have to have a zero-dollar gap in order to reduce interest rate risk; interest rate risk will be reduced as the dollar gap shrinks In the case of a positive gap, the bank can close it by issuing more short-term debt, selling bonds with short maturities to acquire bonds with longer maturities, or employing derivatives Furthermore, in order to reduce the OCB's possible interest rate risk, it is advised that the difference in this period be reduced by decreasing the ISA (interest- sensitive asset value) and raising the ISL (interest-sensitive debt value)
In term of interest rate, the complex evolution of the Covid-19 outbreak has had an impact on many parts of the economy, forcing market interest rates to fall in these 3 years For that reason, OCB had raised the volume of the derivatives by about 60 billion VND in 2021
Furthermore, in order to prevent the loss of value of the bank's assets and liabilities when market interest rates alter, OCB created and implemented debt gap limitations and interest-sensitive assets with maturities Based on the assessment of the interest rate sensitivity gap, the bank can modify interest rates in response to market interest rate fluctuations.
Definition and role of bank’s capital Bank capital, which is the difference between a bank's assets and
Cash, government bonds, and loans with an interest component make up the asset element of a bank's capital (e.g., mortgages, letters of credit, and inter-bank loans) Loan-loss reserves and any outstanding debt are included in a bank's liabilities component of its capital The capital of a bank can be viewed as the amount by which creditors would still be paid if the bank were to liquidate its assets
Capital has a significant impact on a bank's management and services First, because there are so many uncertainties in the banking sector that might put banks in financial trouble, the loss-absorbing function is one of the most crucial functions of a bank's capital To protect against unforeseen risks and losses, capital functions as a_ barrier
Furthermore, a bank's liabilities can be completely covered by its assets as long as its total losses don't deplete its capital Second, bank capital serves as a means for financing for banks In order to maintain their independence and survival in the event of unexpected losses, banks must have a minimum required capital of at least 8% of their risk-weighted assets Since of this, capital is required because it can supply the finances to finance an investment if deposits are not used for that purpose
Additionally, it is advised that some of the capital of the bank be added to its producing assets In this way, the bank can become self-financed and avoid paying interest on borrowed money when it generates profits Third, the confidence role of capital assists the bank in gaining the confidence of its creditors and depositors by demonstrating to them the security of the bank's assets and deposits Customers tend to flock to banks with higher capital values, a sign that the bank can meet its obligations Capital can also be viewed as a limiting point This function's primary goal is to stop banks from taking on excessive risks By comparing capital to risk- weighted assets, this function established the capital adequacy ratio as the safe zone
4.1 Risk-weighted assets (RWA) In capital management, which establishes the minimum amount of capital that banks must retain to safeguard their ability to absorb unforeseen risks, risk-weighted assets play a significant role As a result, as a bank takes on more risk, its RWA ratio rises and it requires more capital The total risk-weighted assets of OCB must include both on- balance sheet and off-balance sheet categories in order to be calculated
Banks multiply the exposure amount by the appropriate risk weighted for a given type of loan or asset after the categorization procedure is
18 complete Banks then repeat this process for all of their loans and assets before summing the results to determine the total risk-weighted assets
This was the total risk-weighted assets (in VND) of OCB in 2019, 2020 and
[Risk 2021 2020 2019 Ân ma RWA 2021 RWA 2020 RWA 2019
Cash, gold and —_|713.556.130 ]932.451.084|712.715.793.| gemstones 605 828 026 nh 0 0
Placements with 22.594.488.1 |16.383.840 |17.493.631.5 and loans to other | 74 ieee reals) 20.00% |4.518.897.622.749 |3276.768.140297 |3.498.726302.366 credit institutions a : :
On Balance |!@dingsecurtes | |4.565.000.02 |929.409.500 |496.5$1.000 ae 2 ca 20.00% |013.000.004.000 |I35.$881900000 — 99.316.200.000
" 2.905.246.55 |2.905.246.5 |4.838.475.81 pontribution, ong- [oF tị |100.00% P.905246.550 2 905.246.550 4.838.475.818 term securities
Fixed assets Tae area ne 100.00% |554.723.909.013 [545.543.991.339 — |595.402.569.540 oe 42.600.030.8 |38.300.974 |85.085.432.1
— Balance | 0580 Ẵâ20408J Ni ô0e Di) 08 = ôchange }94.030.596.3 |56.035.266 |47.966.481.8 Lục 0 00-ệèb0/00% _|18.806.119.268.081 }11.207.053.369.526 |9.593.296.365.446
Sheet commitments 40.407 847.629 27.232 etiers Of credi 3 ee ".= ae Pen 100.00% |7.179.506.465.072 |2.770.646.675.242 _|1.867.433.114.624
4.2 Basel I The first capital standard, known as Basel |, established guidelines for banks to follow in order to reduce risks Although Basel I's current scope restrictions are too severe, it cannot be denied that Basel | set the stage for the subsequent Basel Accords In Basel I, there are two types of capital: Tier 1 capital (core) and Tier 2 capital (supplementary) Tier 1 capital (core) refers to a bank's core equity and assets, while Tier 2 capital
(supplementary) refers to a portion of a bank's reserve that includes things like hybrid capital instruments, subordinated debt capital instruments, and revaluation reserves It is thought that Tier 2 capital is less secure than Tier 1 capital since it is harder to regulate the liquidity of Tier 2 capital Basel I's principal goal is to categorize a bank's assets according to their level of risk and mandate that banks set aside emergency capital in accordance with that categorization The data in the table below will help you determine whether OCB has enough capital to comply with Basel I
Figure 10: Core capital, Supplement capital, Deduction, Total regulatory capital, and RWA Firstly, the Tier 1 ratio can be calculated by using the following formula:
Figure 11: Tier 1 ratio Secondly, CAR ratio can be calculated by using the following formula:
2021 2020 2019 CAR 52.4% 15.2% 12.5%
Analysis of bank loan 1 Overview
In term of analyzing the bank loan, firstly, lending is the process should be focused on It is the temporary loan of money to others with the anticipation that it would be returned with interest In the case of OCB, lending is the economic association that exists between a bank (the lenders) and its borrowers It illustrates both client trust and OCB's status
22 in the banking industry The following table shows the amount of money lent by OCB between 2019 and 2021:
Lending amount Figure 14 : Lending amount of OCB over 3 years 14,774,389,557,785 |18,147,145,094.431 |12,812,846,872,301
The table above depicts that the overall amount lent by OCB has a significant increase in 2020, reaching a peak of about 18,147 Billion VND, compared to the 2019 lending amount (14,774 Billion VND) Then, the figure drops to 12,812 Billion VND in 2021 due to the Covid-19 pandemic resulting in unstable economic status
5.2 Individual loan While corporate loans only account for a very small percentage, individual loans account for a very large proportion of the total number of loans that OCB offers
Figure 15 : Individual loans of OCB in 3 years
As indicated in the table above, customer loans make for the great majority of OCB's overall loan volume Individual loans, in other words, constitute the majority of OCB lending Overall, individual loan amounts have an downward trend over three years, except for that in 2020 with the highest value of approximately 17,934 Billion VND While in term of percentage of total loans, the value of individual loan decreased slightly from 98.92% in 2019 to 98.61% in 2020 We can see that this is not a significant problem for the bank since the volumn of personal loan in OCB is relatively substantial and consistent
Furthermore, OCB offers a range of personal loans for certain reasons, each with its own interest rate and maturity date Loan interest rates are determined on a regular basis, and several interest rate packages are available Individual loans such as house loans, automobile loans, study abroad loans, mortgage loans, and so on are available For example, OCB’s personal loan have various interest rates such as 5.9% for 6-month, 7.3% from the 183th day of deposit, and so on Moreover, there is an interest rate calculation tool on OCB's official website that users may use to calculate the appropriate period and amount borrowed from the bank.
Liquidity management Liquidity risk is the risk to a bank's profits and capital caused by its
24 unacceptable losses The bank provides its corporate clients with liquidity risk management services in order to optimize the interest on their checking and current accounts and pool cash from several accounts As a consequence, bank corporate clients may successfully manage their firms’ daily liquidity When an institution has adequate assets, such as reserves, government securities, or cash, for the period when those funds must be taken, it is said to have high liquidity Insufficient liquidity can cause issues for banks There are, however, alternative options for dealing with a liquidity crisis, such as borrowing from the Fed, the central bank, or even selling stocks and calling loans back to replenish reserves The loan-to- deposit ratio (LDR) ratio can be used to analyze a bank's liquidity:
LDR = Total Loans/ Total Deposits
The rate reflects a bank's ability to manage credit risk and consumer deposits If the ratio is excessively high, the system is deemed to lack the adequate liquidity to cover any emergency fund requirements If the ratio is too low, the bank appears to have a high degree of liquidity as well, but given the small loan quantity, it is unlikely to generate much money
Figure 16 : Loan-to-deposits ratio
The capital mobilization actions of OCB are constantly balancing capital demands and ensuring the system's secure liquidity The Loan-to-deposit ratio ( LDR) will reach 99.35% in 2020 and 90.79% in 2021 achieving 90% compliance with the rules of the State Bank Overall, OCB’s LDR has increased throughout the period The number jumped significantly from 59.42% in 2019 to 99.35% in 2020, then fall to 90.79% in 2021 due to the Covid-19 context OCB has thoroughly implemented and regulated liquidity risk in accordance with current State Bank of Vietnam criteria, and has used inventive perspectives To maintain and improve liquidity ratios as mandated by the SBV, OCB has developed its own set of liquidity
25 risk management indicators, liquidity crisis indicators, and customer behavior models Despite the effects of COVID-19, OCB's financial condition is still improving The OCB also regularly monitors market trends, client payment demands, and negative events in order to provide the best possible capital balance management scenarios.
Conclusion
In conclusion, all theories of the bank management course have been applied to examine the performance, risks, and management of the Orient Commercial Joint Stock Bank According to the findings, OCB has been making successful attempts to provide better services and satisfy its clients Despite a significant number of challenges, OCB maintains its position as one of the top 25 leading financial brands in Vietnam, as voted by Forbes OCB has numerous opportunities to strengthen and broaden its influence in the future