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 4 JOINT STOCK COMMERCIAL

BANKS AND RECOMMENDATIONS

Nguyen Viet Dung

ID No: 21071834

Intake 5

Supervisor: Prof. Dr. Pham Thu Thuy

September 2022

2

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

3

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

4

ABBREVIATIONS

1 BIDV Bank for Investment and Development of Vietnam

2 CAR Capital Adequacy Ratio

3 CASA Current Account Savings Account

4 CIR Cost to Income Ratio

5 CIT Corporate Income Tax

6 EAT Earning after Tax

7 EBIT Earnings Before Interest and Taxes

8 EBT Earnings Before Tax

9 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

5

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

6

LIST OF TABLES

Table 1: Vietcombank's business results from 2017 to 2021 (bil. VND) ............................. 26

Table 2. Calculation of indicators and analysis for the period 2017 to 2021 (bil. VND)....... 29

Table 3. P/B of some Vietnamese Banks ............................................................................... 50

Table 4. TCB's indicators from 2017 to 2021 and forecast to 2023........................................ 52

Table 5. RIM for pricing stock TCB ....................................................................................... 53

Table 6. Recommendation BUY with stock TCB .................................................................. 55

Table 7. Business results of BIDV from 2017 to 2020 (bil. VND)......................................... 56

Table 8. VPB Loans in 2020 and 2021 ................................................................................... 63

Table 9. 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

7

LIST OF FIGURES

Figure 1. Global growth forecasts for 2021 and 2022 by international organizations

(%) ................................................................................................................... 15

Figure 2. Foreign direct investment capital in the years 2018-2022 (%)............... 18

Figure 3. Business results of major banks in the world (bil. USD) ……………… 20

Figure 4. Top 5 banks with highest CASA ............................................................. 37

Figure 5. Profit Before Tax of TCB from 2014 to 2021 (bil.VND) .......................... 39

Figure 6. Net Interest Income of TCB from 2014 to 2021 (%) ............................... 40

Figure 7. Non-Interest Income of TCB from 2014 to 2022 ……………………….. 41

Figure 8. TCB’s Expense from 2014 to 2021 …….……………………………….. 42

Figure 9. 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