PERFORMANCE REPORT

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As of 31st December 2008, MHBs total assets has reached over VND 35.000 billion, an increase of 30% over 2007. This impressive growth far exceeded the objective set by the Banks Board of Directors. In a very unstable and difficult economic environment, MHB continues to be ranked amongst top ten Vietnamese banks by total assets and by network coverage.

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CAPITAL SOURCES Owing to its prudent and sound management approach, MHB has been able, in 2008, a year of difficult domestic and international financial conditions, to continuously attract and mobilize funds to sustain the Bank development. The Banks expanded network and the quality of its service were key factors for success. Total capital sources by December 31st 2008 rose by 7,746 billion, an increase of 28.13% over 2007. Interbank, commercial and retail deposit has an increase of 19.81% in comparison with the same period last year, in which 95.40% are term deposit with 35% having a term over one year. Borrowing from the State Treasury and the State Bank of Vietnam as well as trust fund also recorded an impressive intensification of VND 2,031 billion, a growth rate of 145.38% over last fiscal year. Of which, funds from financial projects of World Bank, AFD, JBIC stood at approximately VND 1,000 billion. MHB would continue to participate in the SMEs Financing Project Phase III sponsored by JBIC and implement the second credit line financed by AFD. MHB ends the year of 2008 with a strong capital adequacy ratio (CAR) of 9.04% which remains comfortably ahead of the minimum 8% safety guidelines.
35,162
2.17% 9.72% 3.17%

27,110

Unit: VND billion

Equity Deposit Loans and trust fund Orther

8,197

12,630

18,734

04

05

06

07

08

84.95%

Capital Growth LOANS AND INVESTMENT

Capital Structure 2008

The world economy in 2008 has suffered a significant downturn and Vietnam is no exception. In the financial sector, to reign-in inflation, in Quarter II 2008, the State Bank of Vietnam had to deploy tightening monetary policy. As a result, successive increase of prime interest rate has caused challenging situation for banks lending and investment activities. However in the wake of the global worsening economic condition and the reversal of the Vietnam inflation rate, towards the end of the year, the State Bank has loosened its grips on the monetary policy. Successive fall of prime interest rate and deflation even put commercial banks in a tougher position. Being a commercial bank with a nationwide branch network, a broad client base-corporate, commercial and retail- and a credit exposure to almost all economic sectors, MHB was also affected by the global crisis. However, through prudent risk management MHB was able to increase lending while still maintaining asset quality, MHBs lending and investment activities still manage to obtain a sound growth. Up to 31 December 2008 its total investment amounted to VND 23,640 billion, an increase of 14.5% against the beginning period of the year. Outstanding loans were VND 16,112 billion, which were 18.43% higher than that of the beginning year. MHB loan portfolio is mostly concentrated on small and medium enterprises (SME), individual and household enterprises.
20.15% 3.83% 16,112 8.91% 35.86% 4.25% 27%

10,013

Unit: VND billion

2,273 6,169 8,469

13,604

98

99

00

01

02

03

04

05

06

07

08

Contruction and Housing Service Agriculture and Forestry Production and Manufacture Trade and Service Warehouse, Transportation and Communication Orther

1,206

3,870

67

254

790

Oustanding Loans 1998 - 2008

Oustanding Loans by Industrial Sectors 2008

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INTERNATIONAL BANKING OPERATIONS Efforts in promoting international banking operations have achieved a gradual growth year over year. 2008s volume of transaction rose 40% compared to 2007. A new cross-border internet payment system was introduced to facilitate commercial transactions settlement between China and Vietnam. Implemented in May 2008 in Mong Cai and Lang Son branches, this new system, after seven months of operation, has settled crossborder transactions amounting to nearly VND 2,000 billion. Overseas inward remittance payment has also achieved good results. Payment turn-over has maintained a sustainable annual growth rate of 15%, thanks to the Banks expanded network throughout Vietnam.
3%

13% 33%

Export L/C 51% Import L/C Collection T/T

Interntional Payment Structure 2008

In order to offer import-export enterprise with efficient, convenient, timely international payment services, we maintain correspondent banking relationship with over 300 financial institutions in 50 different countries. MHB will continue to seek mutual beneficial relationship with foreign banks to further enhance our products offering. MHB will strengthen the International Payment in all branches and specially focus in targeted province of export. VietnamChina cross-border payment settlement would also be enhanced in branches of Lang Son, Mong Cai and Lao Cai. Vietnam-Cambodia cross-border payment settlement would be realized in the coming year. With all these efforts MHB is confident that it will be able to offer customers nationwide with better International Payment services. NETWORK The expansion of the branch network and distribution channels are of vital importance to MHB as it is one of the competitive advantage of the Bank. It further facilitates customers access to MHB financial products. Even though MHB is a more recent entrant to Vietnams financial market, it had rapidly developed a viable network. Although the State Bank of Vietnam is now applying stricter regulations to limit the number of new branches and sub-branches to ensure the overall Vietnam banking efficiency, MHB had been granted permit to open seven new branches in targeted economic zones. Particularly in 2008, MHB opened 02 new branches, upgraded 05 sub-branches to branches and added 12 sub-branches. MHB year-end 2008 network was 162. MHB nationwide network stretching from Lang Son province to Phu Quoc Island is a solid foundation for MHB to expand and broaden its customer base and allow easier and quicker customer access to growing range of products and services. The current network and the expected development in the coming years is an important impetus for MHB to provide better accessibility to our customers, to increase its share of retail and commercial banking business. In 2009, MHB plans to open 36 branches and sub-branches, locate mainly in major cities and provinces or in the targeted economic zones.

98

99

00

01

16

28

02

70

03

90

04

110

05

124

06

148
07

Network 1998 - 2008

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162
08

10 162 36

Years of operation (8/4/1998-8/4/2008)

Branches and sub-branches nationwide

New branches and sub-branches in 2009

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CARD SERVICE The year of 2008 marked the successful participation of MHB Card in Vietnams major card payment alliances Banknetvn. Through Banknetvn and VNBC system, MHBs card-holders now have access to more than 3,500 ATM machines and 11,000 Points of Sale (POS). MHB has become an official member of the Visa organization. Online card registration, co-branding cards with securities companies and etc have been implemented. Additionally, MHB has researched and successfully tested ATM services such as transferring money from current account to saving account or purchasing pre-paid cards and will deploy in 2009. Approximate 60,000 cards were issued in 2008, a growth rate of 200% compared with 2007 and bringing the total number of MHB issued cards up to around 100,000. ATMs are located so as to facilitate customer access and to maximize MHB brand exposure. In 2009 MHB will put a special focus in developing accessibility services and value added services such as bill payment of utility bill, telephone bill (land lines), Internet, cable television; insurance fee; airline tickets, train tickets, taxi fare and etc to diversify the Bank lines of retail products. MHB planned to be a Visa card acquirer by June and a Visa card issuer by the end of 2009. HUMAN RESOURCES Within a rapid and complex changing financial environment, MHB always strive to improve the competence and skills of its workforce. During 2008, 515 staffs have attended 23 training courses and seminars which covered a wide range of banking subjects such as lending, treasury, international payment, auditing, human resources, etc. The Bank is constantly seeking for ethical professionals who possess lots of experience in banking and finance. A special attention is also given to recruitment program of excellent university graduates who excel in informatics and foreign languages. At the end of 2008, the Bank workforce reached 2,848 of which 71% are graduates and post graduates. In a near future, MHB will set up its own training center to deliver ongoing professional development program which aim at updating the skills and competence of its management team and personnel.

2,843 2,580 2,338 2,057 1,815 1,584

Unit: employee
824 285 525

95

164

98

99

00

01

02

03

04

05

06

07

08

Human Resources Development (1998 - 2008)

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BUSINESS PLAN FOR 2009

In 2009 MHB will focus on the following objectives: To implement Government counter-cyclical policies to stimulate the economic activity and stabilize social welfare, all necessary to maintain SMEs and household enterprises lending. MHB will also review current and potential customers, and select potential clients with a demonstrated record of profitable operations, with no compromise for substandard lending. To strengthen lending for consumption purposes, as well as financing new real estate projects for the residential, commercial, hospitality and tourism sectors. To fully leverage the Banks strength to enhance institutional funding and maximize investment return. To expand and develop the network, particularly in major cities. To materialize the customer-oriented strategy and corporate culture, focusing on transparency and accountability. To tighten centralized control of operations at MHBs branches and key departments. The purpose is to provide not only guidance for banking operations but also direction, supervision, support and guidance for the implementation of the banks policy to improve the standards of all activities within MHB system for better risk management Overall targets are: Total asset growth rate: 30%. Total investment growth rate: 30%. Bad debts ratio under 3%. Deposit mobilization growth rate: 30%. Revenue from international banking settlement to increase by 30%. Issuance up to 200.000 ATM cards. Open 36 new branches and sub-branches, mainly in major cities. Summary: The financial results and performance achieved in 2008 demonstrated the strength and flexibility of MHB management and business units to navigate successfully through difficult and challenging time. We endeavor to deliver and continuously work on improving services offering to meet our increasing customer needs. Our ambitious 2009 business plan attest to the vitality of the Bank and the trust that our customers have given us over the year.

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