Highest Loan Growth: KLB – Kien Long Bank (+37% y/y)

 Winner: the Beauty from Phu Quoc, Kien Giang – KLB, with the Loan growth of +37% y/y.
 Runner-ups: Ms. International - VIB and Ms. Bưu Điện Liên Việt – LPB.
 System’s loan growth was 21%y/y in 3Q17. Lowest y/y loan growth named Ms. Tiền Giang – TCB
with +1.3%
 If Ms. Agriculture – AGB had joined the Contest, she would have won the Largest Loan title. At
14.3% market share, Ms. AGB’s loan is bigger than that of Ms. Cà Mau – CTG, Ms. Bình Định –
BID, 1.5x. Ms. Foreign Trade – VCB’s, and larger that those of Ms. Military, Ms. Vĩnh Phúc – VPB,
Ms. Sơn Tây – Thường Tín STB, & Ms. Mermaid Maritime MSB combined!!!

Lowest Cost of Fund (R4Q): VCB - Vietcombank (3.09%)

 Winner: Ms. Foreign Trade – VCB, with the CoF of 3.09%, together with a CASA ratio of 28.4%
and very little dependence on interbank & wholesales funding.
 Runner-ups: Ms. Military - MBB and Ms. International – VIB. Despite having slightly higher CoF,
the Judges decided to rank MBB higher than VIB due to MBB’s more stable funding structure
(i.e. less inter-bank & wholesales) and highest CASA ratio in the system.
 System’s CoF was 4.49%. Highest CoF named Ms. Bac Kan - BAB with 6.90%

Highest NIM (R4Q): VPB – Vietnam Prosperity Bank (9.24%)

 Winner: Ms. Vĩnh Phúc – VPB, with the gross NIM of 9.24% and Risk-Adjusted NIM (net
provision) of 5.94%
 Runner-ups: Ms. Military – MBB and the Beauty from Tiền Giang, Ms. TCB. On the risk adjusted
basis, however, Ms. Kiên Giang – KLB and Ms. Bưu Điện Liên Việt – LPB were the number 2 & 3.
 System’s NIM was 3.22%. Lowest NIM named Ms. Soái Ca - STB with 2.13%. Soai Ca M still
needs some more time for make-over.

Highest Non-NII (R4Q): TCB – Techcombank (2.23% Assets & 39.1% Revenue)
 Winner: Ms. Tiền Giang – TCB, with Non-NII accounts for 39.1% Revenue, or roughly 2.23%
Assets. We noted there were several one-offs during the past 4Q. However, even adjusting for
these one-offs, Ms. TCB still has highest across-cycle non-NII ratios during the past decade.
 Runner-ups: Ms. Military – MBB and the Beauty from Vĩnh Phúc, Ms. VPB.
 System’s Non-NII was at 21% Revenue or 0.78% Assets. Lowest Non-NII ratios named Ms. Bưu
Điện Liên Việt – LPB

Best CIR (R4Q): BAB – Bac A Bank (CIR of 45.8% & OPEX % Assets of 0.99%)
 Winner: Ms. Bắc Kan – BAB, with an ant’s waist ratio, CIR, of 45.8 and an OPEX/Assets ratio of
just 0.99%.
 Runner-ups: Ms. Tiền Giang – TCB and the Beauty from Vĩnh Phúc, Ms. VPB. On CIR alone, both
Ms. TCB and VPB have smaller CIRs. However, taking into the account of OPEX/ Assets, both
have much higher numbers vs. that of Ms. BAB. In fact, at 3.51%, Ms. VPB has the highest
OPEX/Assets ratio in the system.
  System’s CIR was 44.8%. Highest CIR named the Beauty from Vinh, Nghe An - NVB, with the CIR
of 81.0. We note, however, this is still the dream waist for men, especially for those like Mister
SAB and Mr. BHN.

Highest NPL Ratio: NVB – National Citizen Bank (27.1%, including VAMC)

 Winner: Ms. Vinh, Nghệ An - NVB, with the reported NPL of 2.4% and a total NPL (including
VAMC) of 27.1%. This lady is in need of finding a strategic partner who could help her re-
capitalize.
 Runner-ups: Ms. Sơn Tây – Thường Tín STB and Ms. Ex-Im EIB with the total NPL ratios of 23% &
8.5% respectively.
 Our contestants’ aggregate total NPL ratio was 4.9%. if taking those of Ms. Agriculture - AGB,
Ms. Occean - OGB & the Mermaid Ms. Maritime - MSB, our beauties are in general still in
financial difficulty.
 Lowest NPL ratio of 1.2% named Ms. Foreign Trade – VCB who appears to be in a good financial
shape, just like her name suggests.

Most Ready Balance Sheet: MBB | VPB | EIB Co-Winners

 Co-Winners: Ms. Military – MBB, Ms. Vinh Phuc – VPB, and Ms. Ex-Im EIB. These ladies have E/A
(proxy for Tier-1) ratios of 9.7%, 10%, and 10.9% respectively, which are highest in the system.
At the same time, the LDRs (ex- CDs & Borrows) are relatively low for MBB and EIB at 83 & 84%
respectively.
 System’s E/A was 6.3% while system’s LDR was roughly 91.2% as of 3Q17.
 Lowest E/A of 4.1% named Ms. Binh Dinh – BID who is in a big need of equity call or finding a
foreign strategic partner.

And now, as the Autumn has come, storm is passing away, and the APEC is coming very soon, the
Judges have sent us the Top 3 of the 1st Ever Financial Beauty Contest of Vietnamese Commercial
Banks.

The Winners Are: VCB - Vietcombank | VPB – Vietnam Prosperity Bank | MBB – Military Bank

 Vietcombank - VCB: is regarded as the most premium bank in Vietnam. As a flagship SOE bank
in the Social Republic of Vietnam, there is zero risk of default. Its financial ratios also appear to
say so. Valuation wise and from PB perspective, after adjusting for ROE, Capital base, regulatory
framework, it is probably the most expensive bank not just in Vietnam but also in the region.
However, in everycountry, there exists a bank like that, for which, valuation is just clearly above
peers. The kind of bank simply represents the whole country’s story and is favored
by both domestic and foreign investors. VCB’s share price has been moving sideways for the
past 3 years by now. At VND 39K / share, PE multiple, while still high, has dropped to a more
acceptable level of 16.5x for 2018. In term of catalyst, any returning talks of foreign strategic
partners (and hence strengthening capital base) and/or FOL lift will be positive. Together with
VNM, VCB is set to benefit the most if MSCI-EM inclusion of Vietnam happens in 2019. Besides,
 capital gains from divestment in MBB, if happens, would also be a catalyst. Risks include
financial impacts of divestments in EIB and other weaker JVs, Mandated lending and/or
government’s intervention.

 Vietnam Prosperity Bank – VPB: is the largest private bank in term of profit, the first mover in
very potential consumer credit market, the most efficient bank in term of ROE & NIM, and a
strengthening & ready balance sheet post the recent IPO placement. Management quality is
regarded top-notch while long-term potential could be from expanding the SME segment and/or
non-interest income base. At the price of VND 40K / share, or PB of 2.4x and PE of 7.5x for
FY2018 on an ROE of 29% (2.5x the system’s) and a most ready Balance sheet (E/A 1.5x
system’s) and an earnings growth of 40 – 50%y/y in 12 – 18m, the bank appears attractive. Risks
are the unavoidable normalization of ROE in medium-term, rising competition, sustainability of
the high lending yields, and under-provisioned NPL. Now is clearly NOT that time, but in the
early phase of an economic downturn, we feel VPB might be among the first names to dis-own.

 Military Bank – MBB: a non-SOE bank that has highest CASA (higher than that of VCB & LPB),
lowest CoF, top ROA, superior advantages in several niche and/or unrivaled/able market
segments, and a ready balance sheet for above industry loan growth. MBB, with the new CEO,
has been finally showing a big turn-around in all fronts during the past few quarters. In less than
a year view, the high growth momentum should be able to continue with the existing drivers. In
medium- to longer terms, up-side risks come from divestments in subsidiaries, bancassurance,
and/or consumer finance.Valuation multiples, while having been re-rated, are still acceptable
while the financial and political downside risks are most limited among all banks.

Ending Remarks:
 For an Index-based investor, we think a combination of VCB & VPB would make it.
 For an absolute return investor, we prefer the combination of VPB & MBB both of which offer a
decent amount of Alpha while their sets of risks, to many extents, just almost neutralize one
another.
 As for any other Beauty Contest, we are certain that you have your own picks. Beauty is
priceless and depends on difference tastes,
 We wish in a near future, Ms. Agriculture – AGB, Ms. Occean – OGB, and the Mermaid Maritime
Bank – MSB would join us.
 We struggled to leave Ms. Lien Viet Post Bank - LPB out of the Top 3 despite its outstanding
financial indicators. However, ranking Top 3 for a bank that has NOT fully disclosed financial
notes is like putting the Crown to the Beauty that refused to join the Bikini session. Risk might
be high.
 Last but not least, we hope you enjoyed the show. We thank you for letting us to have the
opportunities to take the first looks and very close looks to all of our Beauties.
 Let us know what you think and if you need any re-plays of those you missed their walks.

For more details, please do not hesitate to contact us. This report was prepared exclusively for Anh Tâm,
at babaiu14233@student.hcmiu.edu.vn. Re-distribution is strictly Prohibited.