Change to Be Better

Military CoMMerCialJoint StoCk Bank 2008

A n n u a l R e p o r t

Change to Be Better

01 MB to be stable and trustworthy for 15 years03 Vision, mission and core value06 Chairman’s message08 Remarkable events10 Financial highlights12 Board of Directors’s Report16 Board of Management’s Report26 Organization chart28 Board of Management30 Board of Directors32 Supervisory Board34 BOD and Supervisory Board activities35 Statistics of shareholders36 Financial Statements96 Highlights of 200898 Contribution to community99 Notable awards

Content

Vietnam economy has witnessed major changes in the past 15 years. The country has benefited from rapid economic growth as well as has been negatively affected by regional and global financial crises, among which 1997 Asian financial crisis and the recent global one to be named.

In such a volatile environment, MB has taken the right steps in making quick adaptations to the market. 15 years on, the bank has always been ranked in the top 5 commercial joint-stock banks in terms of pretax profitability.

With the motto “Professionalism and enthusiasm” given as top priority, over 2000 staff at MB have always been ready to serve every need of our customers.

Our experienced and specialized team in risk evaluation and financial services offers our customers with integrated and smart financial solutions.

Our nationwide network of 90 transaction offices along with MB247 Customer Service Center, ATMs and POS systems brings our best-in-class banking services to maximize customer’s satisfaction and convenience.

These are the fundamentals why MB, a relatively new player in the industry, at its chartered capital raised up to VND 3,400 billion with just 15 years of operation, has made a familiar name across the country.

Having been successful in business, MB takes up social responsibilities by lending a helping hand to community, government- policy families, etc. in a variety of meaningful charitable activities.

With achievements in business performance and social activities, MB is highly appreciated and ranked A by the State Bank of Vietnam. In particular, MB is honorably granted Prime Minister’s merit certificate for outstanding business performance and “Vietnam Humanitarian Award” for great social contributions and selected as “Vietnam Excellent Brand 2008”.

Toward its 15th anniversary, MB is committed to upholding the objectives of safe and sound business practices, sustainable developments, management competence improvements, high-skilled workforce and staff training and strives for a 15 to 30 percent growth of all set targets.

Backed by a fifteen-year history, MB will remain as a reliable address for our valued customers, partners, shareholders and staffs and actively co-operate with the government on the implementation of its monetary policies for the sustainable development of economy.

MBto Be StaBle

and truStworthy

for 15 yearS

The 4th of November 2009 marks the 15th anniversary of MB

Military CoMMerCial Joint StoCk Bank • Annual report 2008 • 1

nearly 2,500 people at MB full of enthusiasm and initiatives are

working towards common targets.

viSionTo be one of the leading joint-stock commercial bank groups in Vietnam in

our chosen markets in principle urban areas, focusing on:Leveraging on our core corporate business and developing important

economic customer group.Selectively growing the SME market.

Building a strong capability in consumer bankingExpanding our treasury operations.

Developing our investment banking business andGrasping opportunities to extend our activities through related companies

towards a strong banking financial group.

MiSionMB to invest all efforts into building a professional staff whose expertise and dedication to client services will bring cost-effective and satisfactory

banking and financial solutions.

Core valueMB’s value is not defined by its assets, but is inherent in six core values which

are respected and upheld by each and every member of MB, including:Teamwork across the bank

TrustworthyCustomer care

CreativeProfessional

Performance driven


Oil price skyrocketed to USD 147/barrel in July, and plummeted to US$34/barrel thereafter.

Steel billet reached a record peak of USD1,200/ton, then fell to USD255/ton in November.

The U.S financial crisis which began with subprime mortgage credit crunch, especially after the collapse of Washington Mutual, Lehman Brothers and the acquisition of Merrill Lynch and Wachovia, etc.triggered a global economic turmoil.

2008 GloBal and vietnaM eConoMy

Annual GDP growth was only 6.23% compared to 8.48% in 2007.

Inflation made a 10-year record of 22.97%.

Trade balance deficit increased by 20.5%, up to USD 17 billion.

The prime interest rate was raised sharply to 14% per annum as of June 10th and then lowered to 8.5% as of December 22th to accompany with policies to prevent the country from

an economic recession.

The State Bank kept a tight rein on real estate and securities lending and raised the required reserve ratio to 11%.

The stock market experienced the worst development in its history, with the VN-Index losing two thirds of its value from the peak at over 1,100 in Mar 2007 to 315.62.


Ladies and gentlemen,

I am delighted to inform you that despite negative impact of global economic crisis, MB has managed to achieve impressive growth in all aspects, with a chartered capital at VND 3,400 billion, equity capital of VND 4,118.3 billion, total assets at VND 44,346 billion and pretax profits rising to VND 860.88 billion.

Last year, MB pioneered in complying with international risk management standards, with the first internal credit rating system approved by the State Bank of Vietnam Governor.

MB, as a leading commercial bank, played an active role in participating and implementing the Government’s

inflation-restraining measures to stabilize the macro economy and to meet the capital needs for socio-economic development. With such efforts and contributions, MB was honored with Certificate of Merit from the Prime Minister.

These are achievements accumulated from many years of organizational restructuring and the implementation of the five-year development plan initiated since 2004. The Board of Management and Board of Executives have agreed to target safe and sound business developments. Thanks to improvements in systematic management capability, business

forcasting and analysis, the Bank have implemented appropriate measures and reactions to market fluctuations and grasped opportunites.

During the past year, MB continued to foster comprehensive cooperation with large corporations such as Viettel Corporation, Vietnam National Coal-Mineral Industries Group, Vietnam National Petroleum Corporation, Mai Linh Corporation, Military Petroleum Corporation, Saigon New Port Company, Services Flight Corporation etc.

Besides, human resources continue to be one of the most decisive factors in determining MB’s success

Chairman’s

MeSSaGe

in 2008. They are the professional and innovative MB employees nurtured in a business culture filled with solidarity and sympathy.

In addition, compliance with legal stipulations, transparency in operation, and harmonization of the interests of customers, shareholders, workers and society has allowed MB to gain gradual advancements towards sustainable development.

2009, MB shall hold the 15th Anniversary with the message: “15 years stable and trustworthy”. The global economy and Vietnam’s alike is forecasted to continue to be in recession this year, while the financial and banking industry shall continue to pose more challenges. Heading towards the 15th anniversary, given the Bank’s current financial strengths and determination of our staffs, MB shall give priority to comprehensive growth not only for the Bank but also for all subsidiary companies.

Ladies and gentlement,

We would like to extend our special thanks and gratitude to the Ministry of Defence, the State Bank, related Authorities, our valued equity holders and customers whose diligent support drives our development. We are firmly convinced that with the core values in hand, we will always be your solid and trustworthy partner.

Sincerely yours,

TRUONG QUANG KHANHChairman


Remarkable events

MB was established in 1994 under the Decision No. 00374/GP-UB granted by Hanoi People’s Committee. On the 4th of November 2009, the Bank officially came into operation under License No. 0054/NH-GP granted by The State Bank of Vietnam with the term of 50 years.

2004Successfully organizing shares auction: MB was the first bank to organize a shares auction with value of VND 20 billion. Our message was that MB served not only military enterprises but also the public.

Launching Active Plus Card: It was the first time in the market that cardholders were insured up to VND 10 million.

Organization restructuring: Under new business model, MB transformed towards separating management unit and business operations unit with customer focus and completing all the procedures and regulations to improve its efficiency.

Receiving Certificate of Merit from the State Bank Governor for its outstanding performance in 2003.

2005Signing a multilateral agreement with Vietcombank and Viettel Corporation to pay Viettel bills via ATM card.

Signing comprehensive cooperation agreement with Citibank

2006Deploying the project of modernizing the IT system of Temenos Group – Switzerland in order to increase competitiveness and bring the best banking facilities and services to customers.

Launching Mobile Banking and Internet Banking services.

Successfully issuing 5-year convertible bonds worth VND 220 billion.

Sponsoring and promoting the APEC 14th Summit 2006, Vietnam’s biggest event of the year.

Receiving the Vietnam Excellent Brand Award for 2005.

Establishing Hanoi Fund Management Company.

Cooperating with CIDA in strengthening risk management capacity.

2007Implementing successfully IT system modernizing project with the installation of corebanking software provided by Temenos group. Online transactions are supported.

Deploying the internal credit rating project under the consultancy of Earnst & Young Vietnam.

Officially becoming a member of Asian Bankers Association – ABA.

Signing Comprehensive Cooperation Agreement with Vietnam Machinery Erection Corporation (LILAMA), Hanoi Housing Development and Investment Corporaton (Handico), Military Petroleum Company (MPC), PetroVietnam Joint stock Finance Corporation (PVFC)

Signing cooperation agreement with PetroVietnam Securities Company (PVS) and Sacombank, and strategic cooperation agreement with Vietcombank

Successfully holding the 2007 General Shareholder Meeting, whereby the plan for raising chartered capital to VND 7,300 billion by the end of 2010 was approved.

Became the first public bank to be granted the license to offer convertible bonds to the public by the State Securities Commission on 15 June 2007.


50%^

finanCial hiGhliGhtS

58%^total mobilised funds

4,93

3

7,04

6.6 11

,602

.4

23,1

36.4

36.5

29,1

2004 2005 2006 2007 2008

VND

bill

ion

total assets

2004 2005 2006 2007 2008

VND

bill

ion

6,99

5

8,43

2 13,6

11.3

29,6

23.6

44,3

46

36%^ 41%^ 24.48%total outstanding loans

2004 2005 2006 2007 2008

VND

bill

ion

3,92

1

4,47

0

6,16

6.6

11,6

16.6

15,7

40.4

Pre-tax profits

2004 2005 2006 2007 2008

VND

bill

ion

148,

7 269,

6

608,

9

860,

883

roe (Return on Equity)

2004 2005 2006 2007 2008

%

27.5

1

30.1

6

27.7

8

24.7

0

24.4

8

Key tarGetS in 2009

Pre-tax Profits : VND 950 billion

Total Assets : VND 58,500 billion

Outstanding Loans : VND 21,500 billion

Mobilized Funds : VND 45,000 billion

Number of Employees : 2,950 people

Network : 111 branches and transaction offices

105,

4


Board of Directors’s Report

The year of extremes 2008 was over, and MB’s performance remained solid and was marked by a series of distinguished events: raising chartered capital up to 3.400 billion dongs, sucessfully implementing internal credit rating system and receiving prestigious awards for excellent brand.


Highlights of business results

The eventful and challenging 2008 has tested the banking industry’s health, and MB’s sound management capability and widely known brand name have proven its strengths to overcome difficulties and adapt to market changes.

MB’s performance remained stable, highlighted by various events: increasing chartered capital to VND 3,400 billion, achieving good growth in all criteria, successfully deploying internal credit rating systems and being granted with a number of prestigious brand awards.

As of 31st December 2008, pre-tax profit of the Group was VND 860.883 billion (of which VND 770.708 billion came from the Bank), equal to 141% from the result of 2007 and 117% as planned. Mobilized funds reached VND 36,529.1 billion, up 58% compared to 2007. Total assets respectively grew to VND 44,346 billion, 1.5 times higher than earlier in the year. Total outstanding loans stood at VND 15,740 billion, 36% higher compared to late 2007.

Chartered capital increased to VND 3,400 billion following plans approved during General Shareholder’s Meeting on 19th of May 2008 by converting 2006 issued convertible bonds valued at VND220 billion into common shares, delivering stock bonuses to our shareholders and issuing more shares to domestic strategic partners.

Due to positive business results, sufficient liquidity and bright outlook, MB’s share is one of the most the preferred stock in the OTC exchange.

In 2008, Military Bank was honored to receive the Certificate of Merit from the Prime Minister in addition to other prestigious awards such as the Golden Cup for Prestige Securities Brand; The Leading Joint Stock Company of Vietnam; Enterprise with Best Customer Services; Top 100 Vietnam Leading Brand names,etc.

Major changes of the year

Firstly, it was the midterm transfer of the Chairman’s office from Mr. Pham Tuan to Mr. Truong Quang Khanh. Without creating any disorder in the organization and activities of the Board of Management, the transfer brought extremely good outcomes. The former Chairman continues to contribute to the Bank as a senior member of the Consulting Council. The new Chairman took the office and has since performed well, despite his tight schedule as a member of the Central Party Committee.

Second is the implementation of new organizational structure in accordance with 2004 – 2008 strategy, including the setting-up and assignment of functions and mandates to Divisions, establishment of new units under Divisions and Departments, branch upgrading, and preparation for setting up Senior Committees.

Besides, MB also standardized hierachy level for all designations and implemented HR consultancy project including completing personnel strategy, standardizing organizational structure among the Bank, and bringing in line performance management and other policies to achieve substainable human resource development.

With the guideline of continuous enhancement of customers’ benefits, MB pays much attention to improving existing products, researching and launching new products and services. For our corporate clients, MB offers services such as overdraft, trade finance, international factoring, Internet banking, negotiation of export documents, bancassurance.

For medium and small enterprises, MB has specialized products such as installment loans, and loans for equipment purchasing (medium and long term), etc.

For retail customers, MB has fully developed valuable paper mortgage loan, loan for small vendors, craft villages, housing loan, loan

Developing a geographically rich network • with focus on ASEAN countries and setting up representative offices at regional hubs.

Facilitated by advanced technological • infrastructure, maximizing customers’ benefits with the latest and cost-effective products and services. An advanced technology base shall also provide an efficient Management Information System to support banking and business management.

Managing investment portfolio for the group’s • best benefits.

Ensuring employees’ satisfactory income, • balancing and contributing to social development and maximizing shareholders’ interests and values.

for overseas study, household business loan, loan for home construction and renovation, and other products such as overdraft, wealth management, etc.

Outlook and future plan

With the above-average growth rate, MB is making rapid and vigorous strides towards becoming one of Vietnam’s leading banking and financial groups.

In addition, performance quality, efficiency and soundness are placed as top priority. MB is also on its way to make diligent improvements in customer-oriented model and risk management system.

Meanwhile, the Bank is constantly increasing its competitiveness, expanding network and enhancing executive management capacity and risk management.

In the year, MB has also reshuffled our shareholder structure, focusing on the establishment of strategic shareholder group and consolidating the Board of Directors, Board of Management and preparing for IPO in late 2009 or early 2010. MB plans to increase its chartered capital to VND 7,300 billion in 2010.

In the long run, MB’s targets have set forth for the period 2009-2013 as below:

Becoming a first class banker with strong • capital base and excellent brand name.

Having dynamic and qualified Executive • Board and staff with business ethics under the management of a strong Board of Directors.

Operating in diversed market segments: • Large corporates, SMEs and consumers. For each market, we will design a tailored-made strategy to penetrate and exploit effectively.

Providing a wide range of services packages • in form of integrated financial solutions, customized for each client. It includes commercial banking, retail banking, investment banking, private banking (wealth management), insurance companies (life and non-life insurance), consumer lending, real estate lending and leasing.


Board of Management’s Report

“MB is among few banks who have efficient liquidity management and acts as major lender in the interbank market, easing liquidity shortage faced by other credit institutions, which is highly recognized by the State Bank”


Profitability

The 2008 turbulence in the banking industry left its mark on MB’s results, a slight decline in profitability ratios. However, the overall figures remained stable and above-average. Although average equity increased rapidly, pushing returns on equity (ROE) down by 0.2% to 24.5%, it was still high and thus, shareholders’ benefits were protected. Returns on assets (ROA) stood at 2.41%, slightly decreasing from 2.82% of previous year, but it remained higher than the industry average (of about 1-2%).

Solvency

Tough economic conditions in the early months of the year led to liquidity problems for many banks; however, MB managed to maintain sufficient liquidity. With prudent capital utilization, MB’s solvency ratio was always higher than 1, exceeding the mandatory prudent ratio stipulated by the State Bank. MB was among few banks who have efficient liquidity management and acted as major lender in the interbank market, easing liquidity shortage faced by other credit institutions, which was highly recognized by the State Bank. The percentage of Medium and Long-term Loans funded by short term Resources was only 4.57%, much lower than the State Bank’s permitted level at 40%s.

ROE (%)

27.7

8

24.7

24.5

2006 2007 2008

ROA (%)2.

44

2.82

2.41

2006 2007 2008

report on finanCial perforManCe

Solvency ratio (%)

1.79

5.95

1.19

2006 2007 2008

The percentage of Medium and long term loans funded by short term resources (%)

0 0.59

4.57

2006 2007 2008

for impaired loans in line with international standards, realistically and holistically reflecting customers’ credit quality.

Changes in shareholders’ equity

Upon implementing plans for raising chartered capitals to meet the rising needs of the banking business, and in accordance with the Resolutions of MB’s General Shareholders’ Meeting, approved by the State Bank of Vietnam and the State Securities Commission, MB completed to convert convertible bonds issued in 2006 (totalled VND220 billion) into common shares, pay stock bonuses to shareholders and issue stocks to local strategic partners.

As of December 31st 2008, the outstanding stock issued by MB included:

Share

Total par value: VND3,400 billionQuantity: 340,000,000 sharesPar value: VND10,000 per share

Convertible bond

Total par value: VND1,000 billionPar value: VND1 million per convertible bond, including:

* VND420 billion convertible bonds issued in batch 1 of 2007 with the term of 2 years, yield of 8% per year;

* VND580 billion convertible bonds issued in batch 2 of 2007 with the term of 3 years and yield of 8% per year.

Dividend

With the motto “capital preservation and growth together with shareholders’ benefits protection” MB over the past years has exercised a stable dividend policy exceeding 15% per annum. In 2008, MB issued 12.4% bonus shares to its shareholders and delivered 3 times advanced dividends of 18%.

Capital adequacy ratio (%)

15.4

7

14.2

1

12.3

5

2006 2007 2008

Non -performing Loans ratio (%)

2.7

1.01

1.83

2006 2007 2008

report on finanCial perforManCe

Capital Adequacy Ratio (CAR) and Non-performing Loans (NPLs)

As MB strictly follows the principle for cautious use of capital together with allocative efficiency and optimal tradeoff between risks and return, we maintained our CAR at 12.35% throughout 2008, well beyond the minimum of 8% stipulated by the State Bank.

Credit activities exhibited considerable risks stemming from credit risks, legal risks, and exchange rate risks in 2008. Thanks to our appropriate credit policy, strict adherence to banking safety regulations, and administration of our loan portfolio through remote and on-site monitoring, in addition to cautious credit expansion on the basis of restructuring outstanding loans, MB was able to limit risks despite the deteriorating economic environment.

Meanwhile, MB frequently provides direct instructions, to supervise and inspects its branches ensuring system-wide strict compliance with the State Bank’s regulations and policies. This made it possible for MB to keep tight control on overdue debts. As of December 31st, 2008, NPL stood at 1.83% out of total outstanding loans, much lower than the industry average of 3.5%. Our internal credit rating system, approved by the State Bank was officially deployed, facilitating MB to categorize outstanding loans and make provisions


In 2008, MB’s business indicators met its planned targets and performed significantly better than 2007.

Total assets stood at VND 44,346 billion, a 50% increase compared to 2007, meeting the expansion requirements, suitable for the equity growth rate of the Bank.

Despite the liquidity fluctuation and severe competition over the year, capital mobilization of MB remained sound. As of December 31st

2008, total mobilized capital grew 58% y-o-y to VND 36,529.1 billion, achieving 118% of planned targets. This is mainly attributable to economic organizations and inviduals deposits being VND 27,162 billion, 53% higher compared to the previous year.

In 2008, MB followed the State Bank’s policies in tightening credits to restrain inflation. As a result,

its outstanding loans grew by 36% compared to 2007, while total outstanding loans reached VND 15,740 billion. Pertaining to loan structure, short-term debts accounted for 63% of total debts, with the remaining 37% that are composed of medium to long-term loans; out of which, 86% were made out to economic organizations, and 14% to individuals. Non-performing loan from category 3 to 5 accounted for 1.83% of the total outstanding loans, much lower than 3.5% of the industry’s average.

For 2008, MB is proud to have achieved good business results, amid economic downturn. Profit of the Group arrived at VND 861 billion, a 41% increase from 2007, surpassing 17% of its target. Of the total profits, VND 770.7 billion came from the Bank and VND 90.2 billion was contributed by subsidiaries and affiliated companies. With 2008 results, MB ranks amongst the top 5 commercial banks in terms of profitability and ROE.

Services saw positive improvements and developments. Income from this area was VND 262 billion, 28% higher than 2007.

In addition to business growth, MB always fulfills its tax duties with the government.

MB’S iMproveMentS in 2008

Organizational strucuture, policies and management

In 2008, MB undergone restructuring of its functional departments: head office, branch-offices, and transaction offices, in accordance with new modern bank model, and completed hierachy levels for all designations. We have also completely implemented new compensation schemes, bringing higher salary to all positions held, to encourage and motivate staffs.

report on BuSineSS reSultS

Total outstanding loans

Total assetsPre-tax profits

36,5

29

31,0

00

23,1

36

15,7

40

15,6

00

11,6

13

44,3

46

45,0

00

29,6

24

861

735

609

Total mobilised funds

Implementation 2007

Plan 2008

Implementation 2008

Unit: VND billion

Customer care

Striving to make the best possible customer services, MB continues to research into new solutions, providing detailed action plans to implement its findings. Sets of customer services manuals and MB’s trading floor standards were issued to standardize and improve services qualities.

In addition to services quality standards, MB carried out “Mystery Customer programs” to spontaneously investigate on the actual services quality at MB’s transaction offices, as well as ensuring the standards are put into practice. The program was held 4 times across the Bank, which provided an insight on MB’s services quality making it possible to work out new solutions to improve customer services.

Moreover, to further enhance staff’s awareness of services quality, a contest named “Golden Bees” was held for all MB’s tellers, helping them experience various situations with customers, improve their knowledge and communication skills. The contest successfully delivered profound lessons on the importance of customer services quality and the necessity to provide customers with state-of-the-art quality.

Network development

During the year, MB opened 25 new transaction points, expanding its operating network to 90 transaction points as of December 31st, 2008. The new offices were set up based on careful researches of customer demands, and were aligned with the Bank’s scales and development strategies. All transaction offices began operating efficiently and attracted a great number of customers soon after its opening. 99% of them became profitable after 6 months of operation.

Services development

With a clear focus on customer, MB never ceased its researches and deployment of new products to best satisfy our customers’ diverse needs.

MB has established relations with numerous large corporations and economic groups, such as Song Da Corporation, Viettel Corporation, Military Petroleum Corporation, Vinacafe, Mai Linh Group, Vietnam National Coal - Mineral Industries Group, Vietnam Southern Food Corporation, etc. MB will provide these partners with packages of banking and financial services, including lending, international settlements, salary payments via accounts, and unsecured lending for employees, etc.

For small and medium enterprises, MB will make continuous improvements on existing products, including valuable papers mortgage loans, and inventory and/or receivables mortgage loans. In addition, new products such as international factoring and overdraft facilities are being researched and launched.

During the year, MB has completed regulations on investor portfolio management, collection and disbursement services, overseas study loans, household business lending, and house renovation loans. We have researched and launched our asset management services to our VIP customers, overseas remittance services, credit card and debit card services, mobile payments, web payments, and savings deposit with lottery drawing on the MB’s 14th Anniversary.


Human resource development

MB’s human resource has grown significantly with better input.

MB has successfully implemented HR consultancy project including completing personnel strategy, standardizing organizational structure among the Bank, and bringing in line performance management and other policies to achieve substainable human resource development.

In 2008, MB recruited an addition of 585 employees. As of December 31st, 2008, MB’s workforce totaled 2,435 employees, of which 95% have bachelor degrees and above. Average monthly salary at MB in 2008 was VND 8.01 million/capita, significantly higher than the average VND 5.08 million in 2007.

MB pays much attention to staff training. Since its inception, MB’s Training Center has held 146 courses, both local and international with up to 4,489 participants. Self-improvement is highly promoted and encouraged across the bank. Last year, MB successfully organized a competition named “MB’s Got Hipo”, and attracted a large number of employees. It was to facilitate the Bank to seek for and develop new talents and train them to be the future’s leaders.

Technology

After successfully implementing the new software program T24, MB continued to develop additional modules within the T24 project, complete the back-up transmission line, build new system platforms, invest additional hardware equipment, deploy

Card software along with the Way 4 software of Open Way Corporation and bring Contact Center into operation. During the year, MB also started to connect accounts with securities companies such as Dai Viet, VNS, TSC and tested the payment connection with Paynet, VinaPay and Mobivi, etc. in order to launch the payment services through Mobile, POS and electronic payment tools.

Supervisory Activities

MB gave top priorities to risk management in every aspect of the operation. During the course of the year, the Bank diligently performed risk managements and internal supervisions and auditings. Regular and random spot checks were carried out to inspect credit qualities, data management and treasury safety at all units. This enabled timely fault detection and amendment to ensure stable operation and compliance with MB and State Bank regulations.

MB’s internal credit rating system has facilitated the planning and implementation of credits, risk management and customer policies for the safety and efficiency of its operation. This rating system helped to evaluate credit portfolio quality and determine the exact credit losses with regard to product range or economic sector as well as analyze the risks and returns for each product range.

Moreover, debt recovery was also thoroughly carried out, helping reduce NPL ratio to 1.83%, against the industry average of 3.5%.

Community Contribution

Having been successful in business, MB takes up social responsibilities by lending a helping hand to community, government- policy families, etc. in a variety of meaningful charitable activities. Deemed as MB’s responsibility as well as a root of corporate culture, social activities received strong awareness and participation from both the Bank and its staff.

In 2008, MB was honorably received the “Vietnam Humanity” award for its continuous contribution to the community.

Future development plan

The global economy is expected to continue its decline in 2009, and Vietnam economy will less likely escape this climate. The banking industry will face much more difficulties and fluctuations, adding much complexities and risks.

In 2009, MB determines to “Maintain sound and safe business practices, enhance management capabilities, develop high quality personnel, and make full use of cooperation programs amongst MB’s subsidiaries. Meanwhile, MB seizes every opportunity to invest in potential sectors and gaining greater market share, paving the way for further developments in 2010”.

Detailed targets were set forth for the heading 2009 as follows: Total Assets reach VND 58,500 billion, Outstanding Loans amount to VND 21,500 billion, Mobilized Funds rise to VND 45,000 billion, Pretax Profits achieve VND 950 billion whilst NPL will be kept under 2%.

The Bank is weighing two plans to increase chartered capital in 2009.

Option 1: to increase minimum to VND 4,400 billion

Option 2: to increase minimum to VND 5,300 billion

It is considered as a critical step on the path to reach a increase chartered capital of up to VND 7,300 billion by the year 2010 approved by the Shareholders’ Meeting.

To achieve 2009 targets, a number of measures will put emphasis on:

Strategy improvement: Based on the 2004-2008 strategies, the Bank shall complete its strategy and 2013-2015 vision with the aim to be the Vietnam’s leading commercial bank in chosen markets.

Organization reinforcement: MB continues to improve and reinforce organization model from the Head Office to branches, streamline internal relations with specific stipulations on job descriptions. MB also offers the most favorable conditions for consulting agencies of MB’s subsidiaries to use the Bank’s human resources and other resources

effectively. Consolidation will be carried out in all transaction offices together with re-evaluation of business activities. Online sales channels project will be completed.

Personnel and training: MB plans to enhance capabilities of management staffs at all levels, quickly fill up vacant positions for the Bank’s development and improve its professionalism; Personnel policies focus on encouraging staff’s initiatives and attracting high-quality talents (remunerations, bonus-schemes, promotion opportunities, training, career advancements, etc.). At MB we often emphasize the importance of career ethics and focus much attention to our training qualities, grooming talents for further integration.

Project completion: Make the best use of Core-banking systems; develop strong retail banking products, namely e-banking. Continue to invest in management modules, enhance system operation capacities. Implement ISO quality management project and Customer Relation Management (CRM) project.

Continue MB’s brand promotion program. Take the Bank’s 15th Anniversary as an opportunity to promote “MB - 15 years of stability and trustworthiness”. Build media plan based on a consistent, creative and effective brand promotion program. MB shall carry on developing corporate culture with its own identity, strengthen internal and external media activities.

Stringent risk management: To continuously improve risk management infrastructure, especially risk management and supervisory system; Constantly develop procedures to ensure compliance; Operate in conformity with applicable laws and regulations; Ensure safety at transaction sites, warehouses, cash-transportations, cash counting, prevent negative actions and operational risks.

The Board of Executives firmly believe that with a close watch on the economic climate under the direction of the Board of Management and with the contributing efforts of our staffs, MB shall strive to overcome challenges and difficulties to achieve its targets.


related CoMpanieS

Companies which hold over 50% stakes of MB

At present, no companies are holding more than 50% stakes of MB.

Companies which MB holds over 50% stakes

SubsidiaryBusiness

licenseBusiness

scopeTotal

investment

Thang Long Securities Company

License No. 05/GPHĐKD Investing and trading stock

83.33%

Hanoi Fund Management License No. 21/UBCK-GP Fund management 60%

AMC Asset Management Company Ltd

License No. 0104000066 Debt and asset management

100%

MB Land Joint Stock Company

License No. 0103022148 Real Estate trading 65.26%

Summary of operation and financial situation of the companies which MB holds more than 50% stakes

Thang Long Securities Company (TSC)

The stock market experienced much turmoil in 2008. Transaction volume decreased while share prices tumbled by 70 to 80 per cent for most stocks. Majority of investors incurred heavy losses, and securities companies had to scale down their businesses. Under such circumstances, TSC managed to remain in sound business. The Company completed procedures to increase its chartered capital to VND 420 billion as planned, strengthening its organization, recruitment of talents, application for ISO quality management requirements, and implementing its new IT software program. More importantly, 2008 witnessed dramatic improvements of TSC staffs. The Company undergone researches and structured various models for analysis, evaluation and forecast of stock price fluctuations, which were highly praised by our investors.

AMC Asset Management Company (AMC)

During the year, VND 34.342 billion bad loans have been recovered. The Company also designed, constructed and upgraded 40 transaction points and 30 ATM machines for the Bank.

For the real estate business, the Company focused on gaining control and utilizing buildings, continued the sale of loan collaterals, and executed the Bank’s projects as planned.

Hanoi Fund Management (HFM)

HFM’s activities have been geared towards strengthening its organizational structure, completing the drafting, enforcing of business processes and regulations in accordance with the regulations on asset management issued by the Ministry of Finance. In September 2008, HFM signed a strategic cooperation agreement with Saigon Asset Management Corporation (SAM) and Vietnam Equity Holding (VEH) - an USD 80- million- investment fund listed in Germany Stock exchange, according to which HFM shall provide porfolio management services for VEH. This partly reflected HFM’s reputation and capability in the business world. At the end of the fiscal year of 2008, HFM was one of five largest funds in terms of total managed assets.

MB Land Joint Stock Company

In 2008, MBLand has improved its organization structure, issued its Charter and Regulations, built up corporate culture as well as recruited more personnel. At the present, the number of staff reaches 142. Simulteneously, the Company has carried out various feasible and effective investment projects in principal areas.


Human & Organization

orGanizationChart

head offiCe ManaGeMent

riSK ManaGeMent

BuSineSS

Board of direCtorS

Board of ManaGeMent

internal audit r&d

Credit CoMMitteeSenior CoMMitteeS

SuperviSory Board

internal Control

Planning Business Support

Legal & Compliance Admin & Quality management

PR Network & Distribution channel management

Finance & Accouting

IT Centre

Human Resources

Public Unions

MB Representative in Southern area

Corporate & Financial institutional

SME

TREASURY

Personal banking

Investment

ShareholderS

BuSineSS Support


BOARD OF MANAGEMENT

1. Mr. le van BeChief Executive Officer

Mr. Le Van Be holds a Bachelor Degree in Economics; he has taken office as the CEO since 1996. The CEO is responsible for all businesses and operations of the Bank in accordance with the laws and acts as counselor of the Board of Directors in planning major targets. He is assisted by Deputy General Directors, Chief Finance Officer and expert teams.

1 2

4

3

5

7

6

8 9

2. Mr. le CongDeputy Director General

Mr. Le Cong holds a Bachelor of Eonomics Degree from Finance & Accounting University, and a Bachelor Degree from Hanoi University of Technology. He received his Master of Economics Degree from Army Ordnance Academy of Vietnam. He has been working for MB since its establishment in 1994. Currently he is the Head of SME Division and Chairman of Military Insurance Company (MIC) of which MB is a major shareholder.

3. Mr. do van hungDeputy Director General

Mr. Do Van Hung holds a Bachelor Degree in Banking from the Vietnam National Economic University, and a Bachelor Degree in English from Hanoi Foreign Language University. He has accumulated over 10 years of experience in Banking and Finance. At MB, Mr. Hung is in charge of Operations Division.

4. Mr. le van MinhDeputy Director General

Mr. Le Van Minh graduated from Banking Academy of Vietnam with a Bachelor Degree. After years as the Deputy Manager of Financial Department at Army Zone 3, and Chief Accountant of Song Hong Corporation, he was later appointed as the Deputy Director General of MB in November 2000. He is in charge of MB’s Hanoi Transaction Office.

5. Mr. dang Quoc tienDeputy Director General

Prior to joining MB in June 1996, Mr. Dang Quoc Tien was in charge of Foreign Economic Affairs at Army Zone 7 under control of the Ministry of Defense. Mr. Tien received his Bachelor Degree in Economics from Foreign Trade University in Vietnam, and later received his Master in Economics from the Pacific Western University. He has attended securities specialist training courses at the Banking Academy and business administration specialist courses at Hanoi National University. He is assigned to be in charge of the Southern region.

6. Ms. vu thi hai phuongDeputy Director General

As one of the pioneers of MB since 1994, with excellent achievements, Ms. Vu Thi Hai Phuong was been entrusted to hold several important positions throughout the years: Head of Transaction Office (1998-2004); Deputy Director then Director of Dien Bien Phu Branch (2004-2007). Ms. Phuong holds a Master Degree in Monetary Finance, from the Banking Academy of Vietnam. She is now undertaking Corporate and Financial Institutions Division.

7. Ms. Cao thi thuy ngaDeputy Director General

Ms. Cao Thi Thuy Nga has 11 years of experiences in the credit division at the Bank for Investment and Development of Vietnam, and has more than 12 years of experiences working as the Chief Accountant cum HR Director at VIDPUBLIC Joint Venture Bank. She graduated with a Master Degree from Finance University of Vietnam and participated in International auditing courses held Vietnam Auditing Company. With her significant contribution to building MB’s Brand, Ms. Nga is in charge of Administration, Quality Management, Network Development as well as Public Relations Division.

8. Mr. luu trung thaiDeputy General Director (appointed in April 2008)

Joining MB since 1997, Mr. Luu Trung Thai has been appointed to hold numerous important positions such as: Head of Credit Department of MB at Head Office, Director of Danang Branch also is in charge of Midland region, Personnel Manager, etc.Graduated with a Bachelor Degree from the Banking Academy of Vietnam, B.A of Law and MBA from University of Hawaii – USA; Mr. Thai is considered as the founder for MB’s development in Central Vietnam. Designated as the Deputy Director General in April 2008, he is currently in charge of Human Resource Division, Personal Banking and IT Division.

9. Ms. pham thi tyChief Financial Officer

Ms. Pham Thi Ty graduated from Finance and Accounting University in Vietnam. Previously, she served for almost 10 years as the Chief Accountant in Accounting Department of the State Bank of Vietnam, and Vietinbank Ba Dinh Branch. She first joined MB holding the position as Chief Accountant, and was later promoted to Chief Financial Officer.


BOARD OF DIRECTORS

As elected representatives for the Bank’s shareholders, the Board of Directors is duly authorized by the shareholders to make decisions within its authority.

The Board of Directors appoints a Standing Board that oversees the Bank’s operation and timely handle issues beyond the authority of the Chief

Executive Officer. In 2008, the Board of Director and the Standing Board closely directed the Board of Management to successfully complete

the 2008 plan. They also established procedures and operation regulations to ensure legal compliance and efficiency.

1 2

4

3

5 6

1. Mr. truong Quang KhanhChairman

Appointed as MB’s Chairman in May 2008, Mr. Truong Quang Khanh has oriented the Bank throughout the eventful 2008 towards remarkable results.

Graduating with a Ph.D, and having good command of both Russian and English, Mr. Truong Quang Khanh is currently a member of the 10th Communist Party Central Committee, National Assembly Delegate and Deputy Minister of Defense.

2. Mr. pham viet thichVice Chairman

Mr. Pham Viet Thich has made significant contributions to MB’s development as the Vice Chairman for many successive years. He holds a Bachelor Degree in Economics, and has accumulated many years of experience in finance and business administration. He is currently the Deputy Director of Department of Economics –Ministry of Defense.

3. Mr. le van BeVice Chairman

Mr. Le Van Be is the Vice Chairman cum CEO of MB. He held various positions in finance management at the Ministry of Defense and was directly involved in the establishment of MB. He has demonstrated excellent leadership over the past MB’s 15- year history, and has led the Bank to gain a firm foothold in Vietnam’s financial market. He pays special attention to the MB’s corporate culture and considers it as a key factor in internal solidarity, contributing to the Bank’s success. Currently, Mr. Le Van Be is also the Chairman of Thang Long Securities Company (TSC), Hanoi Fund Management (HFM) and Asset Management Company (AMC).

4. Mr. le van daoMember

Mr. Le Van Dao holds a Master of Economics from the Vietnam Maritime University. He was appointed to many important positions such as Director of Saigon Military Port, Vice Admiral of the Vietnamese Naval Force etc. Mr. Dao brings with him, more than 3 decades of management experience including 6 years in financial and banking industry.

5. Ms. nguyen thi BaoMember

Ms. Nguyen Thi Bao holds a Bachelor Degree in Economics from the Foreign Trade University of Vietnam and a Master Degree from Vietnam -Belgium Program (the cooperation between Université Libre de Bruxelles and Vietnam National University of Economics). Ms. Bao has extensive experiences in the financial and banking industry with more than three decades working at Vietcombank. Prior to her appointment as Deputy Director of Transaction Office, she was the Vice Manager of Investment & Guarantee Department, Head of Credit Department, and Head of Appraisal & Stock Investment Department of Vietcombank.

6. Mr. dau Quang lanhMember

Mr. Dau Quang Lanh holds a Master of Economics from Vietnam National University of Economics. Mr. Lanh held many management positions in finance and business administration. He is now the Director General of Garment 28 Corporation.


The Supervisory Board monitors the Bank’s financing activities, supervises the compliance with auditing and

accounting procedures, in addition to activities of the internal checking and supervising system.

SUPERVISORY BOARD

1 2 3 4

1. Mr. nguyen dinh KhamChief Supervisor

Mr. Nguyen Dinh Kham brings with him 53 years of experiences in the financial & banking industry. Prior to taking the office as Chief Supervisor for MB, Mr. Kham held various positions in the Bureau of Finance under the Ministry of Defense.

2. Mr. nguyen Xuan truongMember

Prior to becoming a member of the Supervisory Board in 2005, Mr. Nguyen Xuan Truong was the Vice Chairman of MB’s Board of Directors from 1994 to 2005, and held important financial management positions in the Ministry of Defense.

3. Mr. nguyen tien hungMember

Graduating from the Academy of Finance, Mr. Hung has years of experiences holding financial auditing positions for enterprises, including foreign joint-venture firms. Since October 2002, Mr. Hung held the position as Chief Accountant and Deputy Director of Tay Ho Company.

4. Ms. le thi duonMember

Graduating from the Academy of Finance, Ms. Le Thi Duon held positions as the Vice Director for the Information Equipment Factory No. 1, Vietnam Data-Communication Company and Management Committee for Hanoi Fiber Optic Cable. She was also a Member of the Supervisory Board for VNPT’s Board of Management, Member for the Board of Management and Director VNPT Insurance Company. In 2005, she officially became MB’s Supervisory Board Member.


Bod and SuperviSory Board aCtivitieS

Activities of the Board of Directors

As elected representatives for the Bank’s shareholders, the Board of Directors is duly authorized by the shareholders to make decisions within its authority. The Board of Directors appoints a Standing Board that oversees the Bank’s operation and timely handle issues beyond the authority of the Chief Executive Officer. In 2008, the Board of Director and the Standing Board closely directed the Board of Executives to successfully complete the 2008 plan. They also established procedures and operation regulations to ensure legal compliance and efficiency.

Activities of the Supervisory Board

The Supervisory Board monitors the Bank’s financing activities, supervises the compliance with auditing and accounting procedures, in addition to activities of the internal checking and supervising system.

Senior Committees under the Board of Directors

Credit and Investment Committee: Reviews, comments and reports on credit and investment issues that are beyond the CEO’s authority to the Standing Board.

Personnel and Compensation Policy Committee: Reviews, comments and submits personnel issues such as appointment, dismissal, transfer and lay-off positions; compensation packages, bonuses and discipline policies; related personnel regulations to the Standing Board

Risk Management Committee: Decides on risk management issues and risk mitigation policies. Reviews and reports directly to the Standing Board to carry out risk process using the Risk Provision Fund.

Financial Committee: Reviews and reports directly to the Standing Board on financial decisions, including fixed assets and equipment purchases that are beyond the CEO’s authority.

Rights of Members of Board of Directors: Members of the Board of Directors are not allowed to engage in any business transactions, whereas their rights or benefits are against direct or indirect those of MB’s.

Repeat voting of at least one third of the Board of Directors and the Supervisory Board

There was no repeat voting of at least one third of Board of Management and Supervisory Board in 2008.

Remuneration of the Members of Board of Directors and of Supervisory Board

Remuneration of the Members of Board of Directors and the Supervisory Board is approved and revised annually by the Shareholder’s Meeting.

Updates on stakes of Board of Directors’ members

Name

Ownership percentageas of

31/12/2007

Ownership percentage as of 31/12/2008

Truong Quang Khanh 0% 0,019%

Pham Viet Thich 0,06% 0,054%

Le Van Be 0,30% 0,229%

Le Van Dao 0,01% 0,012%

Dau Quang Lanh 0,02% 0,017%

Nguyen Thi Bao 0% 0%

StatiStiCS of ShareholderS

Local ShareholdersDetailed information

Detailed information of major shareholdersUp to 31 December 2008, MB has 3 major shareholders (owning 5% or above).

Changes in stake holding by Major Shareholders

Shareholder Number of Shareholders Number of shares Stake

Individual 7,875 167,423,401 49.24%

Institutional 98 172,576,599 50.76%

Total 7,973 340,000,000 100%

Name Address Business ScopeNumber of

sharesPercentage of

Ownership

Flight Service Corporation 172 Truong Chinh Street, Hanoi

Flight Services 40,771,646 11.99%

Viettel Corporation No. 1 Giang Van Minh, Hanoi Telecomunication Services

34,000,000 10%

Vietcombank 198 Tran Quang Khai, Hanoi Banking Services 27,160,058 7.99%

Name Address

Percentage of ownership up to

31/Dec/2007

Percentage of ownership up to

31/Dec/2008

Vietnam Flight Service Corporation 172 Truong Chinh Street, Hanoi 14.21% 11.99%

Viettel Corporation No. 1 Giang Van Minh, Hanoi 0% 10%

Vietcombank 198 Tran Quang Khai, Hanoi 6.31% 7.99%


Financial Statements


ContentS

Page

REPORT OF THE BOARD OF DIRECTORS ............................................................................................................38 - 40

INDEPENDENT AUDITORS’ REPORT .......................................................................................................................... 41

AUDITED CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEET ......................................……………………………………………………42 - 44

CONSOLIDATED INCOME STATEMENT .....................................................................................................................45

CONSOLIDATED STATEMENT OF RETAINED EARNINGS .........................................................................………46

CONSOLIDATED STATEMENT OF CASH FLOWS ...............................................................................................47 - 48

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS …………………………………….....……..49 - 92

The Board of Directors of Military Commercial Joint Stock Bank (“the Bank”) is pleased to present its report and the consolidated financial statements of the Bank for the year ended 31 December 2008.

the BanK

Military Commercial Joint Stock Bank (herein referred to as “the Bank”) is a commercial joint stock bank incorporated and registered in the Socialist Republic of Vietnam.

The Bank was established in accordance with the Business Licence No. 0054/NH-GP of the State Bank of Viet Nam granted on 14th September, 1994 and Decision No. 00374/GP-UB by the Hanoi People’s Committee. The operational duration under the license is fifty (50) years and the Bank operated officially on 4th November 1994.

The Bank has been established to provide banking services including receiving short, medium and long-term deposits from organizations and individuals; making short, medium and long-term loans and advances to organizations and individuals based on the nature and capability of the bank’s sources of capital; also including foreign exchange transactions, international trade financial services, discount of commercial papers, bonds and other valuable papers, and providing other banking services allowed by the State Bank of Vietnam.

The Head Office of Military Commercial Joint Stock Bank is located at No. 3 Lieu Giai Street, Ba Dinh District, Hanoi, Vietnam. As at 31 December 2008, the Bank has one (1) Head Office, one (1) Operation Center, three (3) subsidiaries, thirty four (34) branches and fifty four (54) transaction offices located in cities and provinces all over Vietnam.

ConSolidated reSultS and dividendS

Current yearVNDm

Previous yearVNDm

Net profit for the year 703,368 491,683Dividend paid during the year 763,774 55,136Retained earnings at the end of the year 288,766 537,732

Board of direCtorS

The members of the Board of Directors during the financial year 2008 are as follows:

full name title date of appointment/re-appointmentMr. Truong Quang Khanh Chairman appointed on 26 June 2008Mr. Pham Tuan Chairman resigned on 26 June 2008Mr. Pham Viet Thich Vice Chairman appointed on 16 June 2005Mr. Le Van Be Vice Chairman appointed on 16 June 2005Mr. Le Van Dao Member appointed on 16 June 2005Mr. Dau Quang Lanh Member appointed on 16 June 2005Ms. Nguyen Thi Bao Member appointed on 16 June 2005

report of the Board of direCtorS


audit CoMMittee

The members of the audit committee during the financial year 2008 are as follows:

full name title date of appointment/re-appointmentMr. Nguyen Dinh Kham Chief Appointed on 16 June 2005 Mr. Nguyen Tien Hung Member Appointed on 16 June 2005Mr. Nguyen Xuan Truong Member Appointed on 16 June 2005Ms. Le Thi Duon Member Appointed on 16 June 2005

eventS SinCe the BalanCe Sheet date

There have been no significant events occurring after the balance sheet date which would require adjustments or disclosures to be made in the consolidated financial statements.

auditorS

The auditors, Ernst & Young Vietnam Limited, have expressed their willingness to accept reappointment.

StateMent of the ManaGeMent’S reSponSiBility of the BanK’S in reSpeCt of the ConSolidated finanCial StateMentS

The Board of Management of the Bank is responsible for the consolidated financial statements of year 2008 which give a true and fair view of the state of affairs of the Bank and of its results and cash flows for the year. In preparing those consolidated financial statements, the Board of Management is required to:

select suitable accounting policies and then apply them consistently;►

make judgments and estimates that are reasonable and prudent; ►

state whether applicable accounting standards have been followed, subject to any material departures disclosed ►and explained in the consolidated financial statements; and

prepare the consolidated financial statements on the going concern basis unless it is inappropriate to presume that ►the Bank will continue in business.

The Board of Management of the Bank is responsible for ensuring that proper accounting records are kept which disclose, with reasonable accuracy at any time, the financial position of the Bank and to ensure that the accounting records comply with the registered accounting system. It is also responsible for safeguarding the assets of the Bank and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Board of Management of the Bank has confirmed to the Board of Directors that the Bank has complied with the above requirements in preparing the accompanying consolidated financial statements.

report of the Board of direCtorS (continued)

approval of the ConSolidated finanCial StateMentS

We hereby approve the accompanying consolidated financial statements which give a true and fair view of the financial position of the Bank as at 31 December 2008 and the results of its operations and cash flows for the year then ended in accordance with the Vietnamese Accounting Standards and Accounting System for Credit Institutions and comply with other relevant regulations by State Bank of Vietnam and Ministry of Finance.

On behalf of the Board of Directors

Mr. Le Van BeStanding Vice Chairman

Hanoi, Vietnam31 March 2009

report of the Board of direCtorS (continued)


to: Board of directors and Board of Management of Military Commercial Joint Stock Bank

We have audited the consolidated balance sheet of Military Commercial Joint Stock Bank (“the Bank”) and its subsidiaries as at 31 December 2008, and the consolidated income statement and consolidated statement of cash flows for the year then ended and the notes thereto as set out on pages 5 to 55 (collectively referred to as “the consolidated financial statements”). These consolidated financial statements are the responsibility of the Bank’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. The consolidated financial statements of the Bank for the year ended 31 December 2007 were audited by another auditors whose report dated 15 April 2008 expressed an un-qualified opinion on those consolidated financial statements.

Basis of Opinion

We conducted our audit in accordance with Vietnamese and International Standards on Auditing applicable in Vietnam. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Board of Management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Opinion

In our opinion, the consolidated financial statements, in all material aspects, give a true and fair view of the financial position of the Bank as at 31 December 2008 and of its financial performance and its cash flows for the year then ended in accordance with the Vietnamese Accounting Standards and Accounting System for Credit Institutions and comply with other relevant regulations by State Bank of Vietnam and Ministry of Finance.

Ernst & Young Vietnam Limited

Vo Tan Hoang Van Nguyen Phuong Nga Deputy General Director Auditor in-charge Registered Auditor Registered Auditor Certificate No. 0264/KTV Certificate No. 0763/KTV


independent auditorS’ report Reference: 60755036/13547778

Notes2008

VNDm2007

VNDm

aSSetCash and cash equivalents 3 411,633 352,321Balances with the State Bank of vietnam (“the SBv”) 4 515,139 191,318due from banks 5 16,010,231 14,014,064trading securities 150,175 290,547

Trading securities 6 208,878 297,058 Provision for impairment of trading securities 11 (58,703) (6,511)

loans and advances to customers 15,493,509 11,468,799 Loans and advances to customers 7 15,740,426 11,612,575Provision for loans to customers 8 (246,917) (143,776)

investment securities 9 8,477,960 1,675,726Investment securities - available for sale 9.1 6,053,818 373,101 Investment securities - held to maturity 9.2 2,542,981 1,302,625 Provision for impairment of investment securities 11 (118,839) -

long-term investments 10 1,180,427 811,115Investments in associates 10.1 68,783 4,125 Other long-term investments 10.2 1,362,321 806,990 Provision for impairment of long-term investments 11 (250,677) -

fixed assets 12 629,394 234,445Tangible fixed assets 12.1 256,618 157,179 Cost 368,665 230,912 Accumulated depreciation (112,047) (73,733)Intangible assets 12.2 372,776 77,266 Cost 389,652 86,200 Accumulated amortization (16,876) (8,934)

investment property 13 515,906 114,838Cost 516,071 115,267 Accumulated depreciation (165) (429)

other assets 961,732 470,409 Interest receivables 702,673 190,575 Construction in progress 17,955 10,065 Accounts receivable 14 149,675 131,107 Other assets 91,429 138,662

total aSSetS 44,346,106 29,623,582

ConSolidated BalanCe Sheet as at 31 December 2008

The accompanying notes from 1 to 38 form part of these consolidated financial statements


Notes2008

VNDm2007

VNDm

liaBilitieSBorrowings from the Government and the SBv - 68,547due to banks 15 8,531,866 4,992,934due to customers 16 27,162,881 17,784,837other borrowed funds 17 834,361 290,126valuable papers issued 18 2,137,326 2,020,000other liabilities 1,003,019 917,272

Interest payables 403,425 258,187Tax payables 21 80,989 89,086Other payables 19 401,765 516,434Provision for off-balance sheet commitments 20 116,840 53,565

total liaBilitieS 39,669,453 26,073,716

ownerS’ eQuityCapital and reservesCapital 22 3,939,725 2,815,946

Chartered capital 3,400,000 2,000,000Share premium 30,200 306,421Other capitals 509,525 509,525

Reserves 22 195,573 125,843Retained earnings 22 288,766 537,732Minority interest 22 252,589 70,345

total liaBilitieS, ownerS’ eQuity and Minority intereSt 44,346,106 29,623,582

ConSolidated BalanCe Sheet (continued)as at 31 December 2008


off-BalanCe Sheet iteMS

Notes2008

VNDm2007

VNDm

Financial guarantees 3,726,792 2,788,197 Letters of credit 10,124,777 10,196,649 Undrawn loan commitments 2,523,628 850,403 total off-BalanCe Sheet CoMMitMentS 33 16,375,197 13,835,249

Prepared by Approved by Approved by

Ms. Nguyen Thu HuongDeputy Head of Accounting

Department

Ms. Pham Thi TyChief Finance Officer

Mr. Le Van BeChief Executive Officer


ConSolidated BalanCe Sheet (continued)as at 31 December 2008



Notes2008

VNDm2007

VNDm

Interest and similar income 24 3,679,299 1,581,122 Interest and similar expenses 25 (2,258,587) (947,805)NET INTEREST INCOME 1,420,712 633,317 Fees and commission income 261,986 204,905 Fees and commission expenses (70,778) (13,190)net fees and commission income 26 191,208 191,715 net gain/(loss) from foreign currencies trading 27 101,403 21,124 net gain/(loss) from trading and investment securities 28 (167,710) 83,067 net gain/(loss) from other operating activities 29 289,191 90,842 net share of profit from investments in associates (1,029) - provision for impairment of long-term investments 11 (250,677) - dividend income 54,986 34,367 total operatinG inCoMe 1,638,084 1,054,432

operatinG eXpenSeSPersonnel expenses (234,025) (118,146)Depreciation and amortization of fixed assets 12 (66,247) (39,695)Other operating expenses 30 (255,166) (203,044)total operatinG eXpenSeS (555,438) (360,885)

Profit before provision for credit losses 1,082,646 693,547

Provision for credit losses 8 (158,488) (40,845)Provision for off-balance sheet commitments 20 (63,275) (43,716)profit Before taX 860,883 608,986 Current enterprise income tax 21 (164,678) (116,378)Deferred income tax expense 21 - - profit for the year 696,205 492,608 Minority interest (7,163) 925 net profit for the year 703,368 491,683 Basic earning per share (VND/share price of 10,000 VND each) 22.3 3,173 4,187 Diluted earning per share (VND/share price of 10,000 VND each) 22.3 2,366 3,073



Department




ConSolidated inCoMe StateMentfor the year ended 31 December 2008


Notes2008

VNDm2007

VNDm

RETAINED EARNINGS AT THE BEGINNING OF THE YEAR 22.1 537,732 195,854Net profit for the year 703,368 491,683RETAINED EARNINGS BEFORE APPROPRIATIONS 1,241,100 687,537- Increased share capital (373,579) - - Additional creation of reserves for prior year (140,902) (94,884)- Temporary creation of reserves for current year (28,187) - - Dividend paid in advance for current year (400,014) - - Dividend paid for prior years (7,302) (55,136)- Additional taxes paid as a result of tax assessments (2,350) - - Others - 215 retained earninGS at the end of the year 22.1 288,766 537,732



Department




ConSolidated StateMent of retained earninGSfor the year ended 31 December 2008



Notes2008

VNDm2007

VNDm

operatinG aCtivitieSInterest and similar income receipts 3,167,201 1,475,665 Interest and similar expense payments (2,113,348) (821,113)Fees and commission income receipts 261,987 204,905 Fees and commission expense payments (70,778) (13,190)Receipts from foreign currency trading 101,403 21,124 Receipts from investment securities trading 3,321 89,552 Net gain/(loss) from other operating income 7,992 90,842 Recovery from written-off bad debts 8,364 - Payments to employees (219,715) (118,146)Payments to other operating activities (252,634) (202,987)Enterprise income tax paid in the year 21 (176,687) (50,056)

net cash flows from operating activities before changes in operating assets and liabilities 717,106 676,596

Changes in operating assets(Increase)/decrease in due from banks 4,674,374 (4,595,406)(Increase)/decrease in loans and advances to customers (4,183,198) (5,673,595)((Increase)/decrease in other assets 18,243 (179,603)Changes in operating liabilitiesIncrease/(decrease) in borrowings from the Government and the SBV (68,547) 38,547 Increase/(decrease) in due to banks 3,538,932 3,821,704 Increase/(decrease) in due to customers 9,378,044 7,472,218 Increase/(decrease) in other borrowed funds 544,235 201,558 Increase/(decrease) in other liabilities (237,709) 278,947 Reserves utilized in the year (94,139) (48,249)net cash flows from operating activities 14,287,341 1,992,717 inveStinG aCtivitieS(Increase)/decrease in fixed assets (168,371) (112,676)(Increase)/decrease in long-term investments (618,296) (595,694)(Increase)/decrease in trading securities 88,180 34,332 (Increase)/decrease in investment securities (6,921,073) (1,807,272)Purchase of investment property (400,804) (97,808)Dividend receipts in the year 52,264 34,367 net cash flows from investing activities (7,968,100) (2,544,751)

ConSolidated StateMent of CaSh flowS for the year ended 31 December 2008


Notes2008

VNDm2007

VNDm

finanCinG aCtivityIncrease/(decrease) in chartered capital in cash 22.1 530,200 1,203,625 Increase/(decrease) from issuing bonds 337,326 2,309,525 Shares issued to minority interest 185,000 66,000 Dividends paid to shareholders (318,205) (55,136)Increase/(decrease) of reserves 112 581 net cash flows from financing activities 734,433 3,524,595 net increase/(decrease) in cash and cash equivalents 7,053,674 2,972,561 Cash and cash equivalents at beginning of the year 31 7,913,486 4,940,925 Cash and cash equivalents at the end of the year 31 14,967,160 7,913,486



Department



Hanoi, Vietnam 31 March 2009

ConSolidated StateMent of CaSh flowS (continued)for the year ended 31 December 2008



1. Corporate inforMation

Military Commercial Joint Stock Bank (herein referred to as “the Bank”) is a commercial joint stock bank incorporated and registered in the Socialist Republic of Vietnam.

Establishment and Operations

The Bank was established in accordance with the Business Licence No. 0054/NH-GP of the State Bank of Viet Nam granted on 14th September, 1994 and Decision No. 00374/GP-UB by the Hanoi People’s Committee. The operational duration under the license is fifty (50) years and the Bank operated officially on 4th November 1994.

The Bank has been established to provide banking services including receiving short, medium and long-term deposits from organizations and individuals; making short, medium and long-term loans and advances to organizations and individuals based on the nature and capability of the bank’s sources of capital; also including foreign exchange transactions, international trade financial services, discount of commercial papers, bonds and other valuable papers, and providing other banking services allowed by the State Bank of Vietnam.

Chartered Capital

The original chartered capital of the Bank was VNDm 20,000 in 1994 and subsequently supplemented for each period under the approval of the shareholders. The chartered capital as at 31 December 2008 was VNDm 3,400,000 (2007: VNDm 2,000,000).

Board of Management

The members of the Board of Management during the financial year 2008 are as follows:

name position date of appointment/re-appointmentMr. Le Van Be Chief Executive Officer Appointed on 16 October 1995 Mr. Le Cong Deputy General Director Appointed on 21 April 1997Mr. Dang Quoc Tien Deputy General Director Appointed on 07 May 2002Mr. Le Van Minh Deputy General Director Appointed on 01 October 2002Mr. Do Van Hung Deputy General Director Appointed on 18 October 2005Ms. Cao Thi Thuy Nga Deputy General Director Appointed on 01 January 2006Ms. Vu Thi Hai Phuong Deputy General Director Appointed on 11 June 2007Mr. Luu Trung Thai Deputy General Director Appointed on 15 April 2008Ms. Pham Thi Ty Chief Financial Director Appointed on 14 November 2005

noteS to the ConSolidated finanCial StateMentS as at and for the year ended 31 December 2008

1. Corporate inforMation (continued)

Locations and branch network

The Head Office of Military Commercial Joint Stock Bank is located at No. 3 Lieu Giai Street, Ba Dinh District, Hanoi, Vietnam. As at 31 December 2008, the Bank has one (1) Head Office, one (1) Operation Center, four (4) subsidiaries, two (2) associates, thirty four (34) branches and fifty four (54) transaction offices located in cities and provinces all over Vietnam.

Subsidiaries

As at 31 December 2008, the Bank has three (4) subsidiaries as follows:

no. name license no industry % owned by the Bank

1 MB Asset Management Company Ltd

0104000066 dated 11th September 2002 granted by Hanoi Department of Planning and Investment

Debt recovering

100%

2 Thang Long Securities Joint Stock Company

0104000003 dated 5th June 2000 granted by Hanoi Department of Planning and Investment.

Securities trading

83.33%

3 Hanoi Fund Management Joint Stock Company

0104000473 dated 19th September 2006 granted by Hanoi Department of Planning and Investment.

Fund management

60%

4 Military Bank Land Joint Stock Company

0103022148 dated 25th January 2008 granted by Hanoi Department of Planning and Investment.

Property trading

65.26%

Associates

As at 31 December 2008, the Bank has two (2) associates as follows:

no. name license no industry % owned by the Bank

1 Lang Son Tourism, Investment & Construction Joint Stock Co.

1403000075 dated 13th October 2004 granted by Langson Department of Planning and Investment

Hotel service 33.30%

2 Long Thuan Loc Joint Stock Company

4703000542 dated 19th May 2008 Dongnai Department of Planning and Investment.

Construction 29.37%

Employees Total employees of the Bank as at 31 December 2008 were 2,435 persons (2007: 1,850 persons).

noteS to the ConSolidated finanCial StateMentS (continued) as at and for the year ended 31 December 2008


2. SiGnifiCant aCCountinG poliCieS

2.1 Accounting standards and system

Statement of compliance with Vietnamese Accounting Standards and Accounting System for credit institutions

The Board of Management of the Bank states that accompanying consolidated financial statements have been prepared in compliance with Vietnamese Accounting Standards and Accounting System for Credit Institutions.

Basis of presentation

The consolidated financial statements of the Bank, which are expressed in millions of Vietnamese Dong (“VNDm”), are prepared in accordance with Accounting System for Credit Institutions required under Decision No. 479/2004/QD-NHNN issued on 29 April 2004 by the Governor of the State Bank of Vietnam which was enacted from 1 October 2004; Decision No. 16/2007/QD-NHNN issued on 18 April 2007 by the Governor of the State Bank of Vietnam; Vietnamese Accounting Standards and related regulations issued by the Ministry of Finance as:

Decision No. 149/2001/QD-BTC dated 31 December 2001 on the Issuance and Promulgation of Four ►Vietnamese Standards on Accounting (Series 1);

Decision No. 165/2002/QD-BTC dated 31 December 2002 on the Issuance and Promulgation of Six ►Vietnamese Standards on Accounting (Series 2);

Decision No. 234/2003/QD-BTC dated 30 December 2003 on the Issuance and Promulgation of Six ►Vietnamese Standards on Accounting (Series 3);

Decision No. 12/2005/QD-BTC dated 15 February 2005 on the Issuance and Promulgation of Six Vietnamese ►Standards on Accounting (Series 4); and

Decision No. 100/2005/QD-BTC dated 28 December 2005 on the Issuance and Promulgation of Four ►Vietnamese Standards on Accounting (Series 5).

The accompanying consolidated balance sheet, consolidated income statement, consolidated statement of cash flows and notes to the consolidated financial statements and their utilization are not designed for those who are not informed about the Vietnam’s accounting principles, procedures and practices and furthermore are not intended to present its consolidated financial position, consolidated financial performance and its consolidated cash flows in accordance with accounting principles and practices generally accepted in countries other than Vietnam.

2.2 Fiscal year

The Bank’s fiscal year starts on 1st January and ends on 31st December.

2.3 Comparatives

Certain comparative items are re-classified to be in correspondence with the presentation of the consolidated financial statement for the current year.


2. SiGnifiCant aCCountinG poliCieS (continued)

2.4 Basis of consolidation

The consolidated financial statements comprise of the financial statements of the Bank and its subsidiaries as at and for the year ended 31 December each year. The financial statements of the subsidiaries are prepared for the same reporting year and in accordance with consistent accounting policies as the parent entity.

All inter-group balances, transactions, income and expense and unrealized profits and losses resulting from intra-group transactions are eliminated in full.

The financial statements of subsidiaries (as disclosed in Note 1) and those of the Bank are fully consolidated from the date when control is transferred to the Bank. Control is achieved when the Bank has the power to govern directly or indirectly the financial and operating polices of an entity so as to obtain benefits from its activities. The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the date of acquisition or up to the date of disposal, as appropriate.

Minority interest represents the portion of profit and loss and net assets not owned, directly or indirectly, by the Bank and are presented separately in the consolidated income and within equity in the consolidated balance sheet, separately from the Bank’s equity.

2.5 Loans and advances to customers Loans and advances to customers are presented at the principal amounts outstanding at the end of

financial year.

2.6 Provision for credit losses

2.6.1 Loans to customers of the Bank

Loans and advances to customers are classified and provided for in accordance with the Law on Credit Institutions effective from 1 October 1998; Law on Amendment and Supplementation to a number of articles of the Law on Credit Institutions effective from 1 October 2004; Decision 127/2005/QD-NHNN dated 3 February 2005; Decision 493/2005/QD-NHNN dated 22 April 2005 and Decision 18/2007/QD-NHNN dated 25 April 2007 by the State Bank of Vietnam on loan classification and provision. Accordingly, loans are classified into Current, Special Mention, Substandard, Doubtful and Loss on the basis of payment arrears status and other qualitative factors.

In the year 2008, the Bank registered and obtained the approval from the SBV in the Official Letter No. 8738/NHNN-CNH dated 25 September 2008 for the Bank’s application of the internal credit scoring system for the loan classification in accordance with Clause 7, Decision No. 493/2005/QD-NHNN. Accordingly, the Bank’s loans to customers are assessed and classified based on both qualitative and quantitative factors.




2.6 Provision for credit losses (continued)

2.6.1 Loans to customers of the Bank (continued)

Net loans and advances exposure for each borrower is calculated by subtracting from the loan balance the discounted value of collateral. Decision 493/2005/QD-NHNN and Decision 18/2007/QD-NHNN stipulated specific discount rates for certain accepted collaterals.

Specific provision is created on the net loans and advances exposure of each borrower using a fixed provision rates as follows:

Group Name Specific provision rate1 Current 0%2 Special Mention 5%3 Substandard 20%4 Doubtful 50%5 Loss 100%

Loans in Substandard, Doubtful or Loss group are considered as non-performing loans.

In accordance with Decision 493/2005/QD-NHNN, a general provision is made for credit losses which are yet to be identified during the loan classification and provision process and for the Bank’s potential financial difficulties due to deterioration in loan quality. As such, the Bank is required to fully create and maintain a general provision at 0.75% of total loans and advances to customers; guarantees; irrevocable lending commitments and acceptance for payment which are classified from groups 1 to 4 within 5 years commencing from May 2005.

As at 31 December 2008, the Bank has created a general provision at 0.75% of total loans and advances to customers those are classified from groups 1 to 4 (see Note 8).

The provisions are recorded in the consolidated income statement as an expense and will be used to write off any credit losses incurred. According to Decision 493/2005/QD-NHNN, at the discretion of the Bank’s Bad Debt Resolution Committee, the Bank can write off the loans that are classified in Group 5 and of which the borrower are bankrupted or has been liquidated (for corporate) or are deceased or missing (for individuals).

Details on the loan classification and related provision and the provision amount that are actually booked by the Bank as at 31 December 2008 are presented in Note 8.

2.6.2 Repurchase agreements (“REPO”), financial supports and advances to customers of Thang Long Securities Joint Stock Company (“TSC”)

The Bank and TSC has made provision for REPO, financial supports and advances to customers whose repayment is overdue. Due to lack of the specific stipulation of the Authorities, the Bank and TSC has made provision for these loans on the market value of securities.



2.7 Investment securities

2.7.1 Trading securities

Trading securities include securities that are held for trading and initially recognized at cost at the date of transaction and subsequently carried at the lower of market value and original cost.

Due to lack of the specific stipulation of the Authorities on how to determine the market values of the non-listed shares, for calculating the provision for impairment of these securities, the Bank and its subsidiaries refer to the average quoted price of the securities which have more than 3 of 5 official quoted prices from five securities companies (including FPT Securities, Saigon Securities Incorporation, Thang Long Securities Company, Sacombank Securities and Agribank Securities Company) as at 31 December 2008.

Other securities that having less than 3 official quoted prices from the above 5 companies are carried at cost.

Any provision for impairment is recorded to “Net gain/loss from trading and investment securities” in the consolidated income statement.

2.7.2 Investment securities - held to maturity

Held-to-maturity investments are those which carry fixed or determinable payments and have fixed maturities and which the Bank has the intention and ability to hold to maturity. They are initially recognized at cost any discount/premium, which is the difference between original cost and the amount that includes the par value plus accrued interest income (for debt securities with interest payment in arrears) or minus accrued interest income (for debt securities with interest payment in advance), is amortized on straight-line basis till the maturity date. Interest of these investments is recognized on straight-line basis using nominal interest rate.

Held-to-maturity investments are subject to review for impairment. Allowance for impairment is recorded when carrying value of the securities is higher than its market value. Any impairment losses are recognized in the consolidated income statement under item “Net gain/loss from trading and investment securities”.

2.7.3 Investment securities - available for sale

Available-for-sale investments include debt and equity securities which do not qualify to be classified as trading and held-to-maturity. Equity securities are measured at cost while debt securities are initially recognized at cost and any discount/ premium which is the difference between purchase price and the amount that includes the par value plus accrued interest income (for debt securities with interest payment in arrears) or minus accrued interest income (for debt securities with interest payment in advance), is amortized on straight-line basis over the estimated holding period. Interest of these investments is recognized on straight-line basis using nominal interest rate.

These securities are subject to review for impairment. Provision for impairment is made when the market value of the securities is lower than original cost.




2.7.3 Investment securities - available for sale (continued)

Provision for impairment of non-listed equity securities is made for non-listed equity securities when the market value of the securities is lower than original cost. When the market price is not available, the Bank refers to the average quoted price of the securities which have more than 3 of 5 official quoted prices from five securities companies (including FPT Securities, Saigon Securities Incorporation, Thang Long Securities Company, Sacombank Securities and Agribank Securities Company) as at 31 December 2008.


Provision for impairment is recorded to “Net gain/loss from trading and investment securities” in the consolidated income statement.

2.8 Investments in associates

Investments in associates are accounted for using the equity method of accounting. An associate is an entity in which the Bank has significant influence and which is neither a subsidiary nor a joint venture.

Under the equity method, the investment in an associate is initially recognized at cost and the carrying amount is increased or decreased to recognize the Bank‘s share of the profit or loss of the associate. Losses in excess of the costs of the investment in an associate are recognized when the Bank has incurred obligations on its behalf. The consolidated income statement reflects the Bank’s share of the results of operations of the associates. Profits and losses resulting from transactions between the Bank and associates are eliminated to the extent of the interest in the associate.

The reporting date of the associate and the Bank are identical and the associate’s accounting policies conform to those used by the Bank for like transactions and events in similar circumstances.

Details of investments in associates are presented in Note 10.1.

2.9 Other long-term investments

Other long-term investments are investments in non-listed equity securities of other entities in which the Bank holds less than 20% share and intends to hold them for longer than one (01) year in accordance with Decision No. 29/2006/QD-NHNN issued by SBV dated 10 July 2006 and Official Letter No. 7459/NHNN-KTTC issued by SBV dated 30 August 2006. Other long-term investments are carried at cost less provision for impairment.

Provision for impairment is made for investments in investment fund when the Bank’s proportionate share in net assets of the fund is less than its cost.

Provision for impairment is made for non-listed equity securities when the market value of the securities is lower than original cost. When the market price is not available, the Bank refers to the average quoted price of the securities which have more than 3 out of 5 official quoted prices from 5 securities companies (including FPT Securities, Saigon Securities Incorporation, Thang Long Securities Company, Sacombank Securities and Agribank Securities Company) as at 31 December 2008.



2.9 Other long-term investments (continued)

For other investments in non-listed equity securities, though the Bank can obtain more than 3 out of 5 official quoted prices from the above 5 securities companies, but if the Bank intends to hold them for a longer term and these invested entities are not making loss, the Bank would consider to provide for provision for impairment using other valuation techniques, including analyzing growth in the invested entity’s profit, owner’s equity and earning per share.


Any estimated impairment or loss in these investments is recorded to the income statement.

Details of long-term investments are presented in Note 10.2.

2.10 Repurchase and reverse repurchase agreements Securities sold under agreements to repurchase at a specific date in the future (“repos”) are not derecognized from the consolidated balance sheet. The corresponding cash received is recognized in the consolidated balance sheet as a liability item, reflecting its economic substance as a loan from the Bank. The difference between the sale price and repurchase price is treated as interest expense and is accrued over the life of the agreement using the contractual interest rate.

Conversely, securities purchased under agreements to resell at a specific date in the future (“reverse repos”) are not recognized in consolidated the balance sheet. The corresponding cash paid is recognized in the consolidated balance sheet as an asset item. The difference between the purchase price and resale price is treated as interest income and is accrued over the life of the agreement using the contractual interest rate.

2.11 Fixed assets

Fixed assets are stated at cost less accumulated depreciation. The cost of a fixed asset comprises its purchase price plus any directly attributable costs of bringing the asset to working condition for its intended use. Cost related to additions, improvements and renewals are capitalized while expenditures for maintenance and repairs are charged to the income statement. When assets are sold or liquidated, their cost and accumulated depreciation are deducted from the consolidated balance sheet item and any gains or losses resulting from their disposal are recorded to the consolidated income statement.

2.12 Depreciation and amortization

Depreciation and amortization of tangible fixed assets and intangible assets is calculated on a straight-line basis over the estimated useful life of the assets, which are as follows:




2.12 Depreciation and amortization (continued)

Buildings and building improvements 6 - 25 years Computers 3 yearsMotor vehicles 6 yearsOther tangible fixed assets 4 yearsOffice equipments 4 years Land use rights (*) based on lease termComputer software 3 yearsOther intangible assets (**) (*): The cost of the land use rights is not amortized if it is granted by the Government of Vietnam and has

indefinite term. The cost of land use rights with definite term is amortized over the use term.

(**): Other intangible assets associated with ASEAN International Hotel. At present, the Bank has not been guided any appropriate accounting treatment for recognition and amortization of these assets and thus the Bank has not amortized to the consolidated income statement for the year 2008 (see Note 12).

2.13 Investment property

Investment property is property held by the Bank to earn rentals or for capital appreciation or both. An investment property should be initially measured at its cost. Transaction costs should be included in the initial measurement. After initial recognition, investment property should be measured at cost less accumulated depreciation. Depreciation of investment property is recorded to “Other operating expenses” in the consolidated income statement.

The depreciation method used is the straight-line method during the holding periods of the investment property as follows:

Buildings and building improvements (*) 40 years Lands use right (**) based on lease term

(*): Details of buildings and building improvements are presented in Note 13.

(**): The cost of the land use rights is not amortized if it is granted by the Government of Vietnam and has indefinite term. The cost of land use rights with definite term is amortized over the lease term.



2.14 Investment property

Interest income and expense are recognized in the consolidated income statement on accrual basis using nominal interest rate. The recognition of accrued interest income is suspended when a loan is classified from group 2 to 5 according to Decision 493/2005/QD-NHNN and Decision 18/2007/QD-NHNN. Suspended interest income is recorded in off-balance sheet and only recognized in the consolidated income statement upon actual receipt.

Fees and commissions are recognized on accrual basis.

Dividend income on equity investment is recognized in the consolidated income statement when the Bank’s right to receive the payment is established.

2.15 Foreign currency transactions

The Bank maintains its accounting system and records all transactions in original currencies and translates into VND at the end of each business day. Monetary assets and liabilities denominated in foreign currencies at year-end are translated into VND using exchange rates ruling at the balance sheet date (see list of exchange rates of applicable foreign currencies against VND as at 31 December in Note 38). Income and expenses arising in foreign currencies during the year are converted into VND at rates ruling at the transaction dates. Unrealized foreign exchange differences arising from the translation of monetary assets and liabilities at the balance sheet date are recognized in the consolidated income statement.

2.16 Enterprise income taxes

Current tax

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be paid to (or recovered from) the taxation authorities. The tax rates and tax laws are applied and enacted at the balance sheet date.

The Bank’s tax returns are subject to examination by the tax authorities. Due to the ambiguity associated with the applicability of tax laws and regulations in Vietnam, amounts reported in the consolidated financial statements could be changed at a later date upon final determination by the tax authorities.

Deferred tax

Deferred tax is provided using the balance sheet liability method on temporary differences between the tax base of assets and liabilities and their carrying amount for financial reporting purpose at the balance sheet date.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

Where the deferred tax liability arises from the initial recognition of an asset or liability in a transaction ►which at the time of the transaction affects neither the accounting profit nor taxable profit or loss.




2.16 Enterprise income taxes (continued)

Deferred tax assets are recognized for all deductible temporary differences to the extent that it is probable that future taxable profits will be available against which these differences can be utilized, except:

Where the deferred tax arises from the initial recognition of an asset or liability in a transaction which at ►the time of the transaction affects neither the accounting profit nor taxable profit or loss.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Unrecognized deferred income tax assets are reassessed at each balance sheet date and are recognized to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset realized or the liability is settled based on tax rates and tax laws that have been enacted at the balance sheet date.

Deferred tax is charged or credited to the income statement, except when it relates to items recognized directly to equity, in which case the deferred tax is also dealt with in the equity account.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxable entity and the same taxation authority and the Bank intends to settle its current tax assets and liabilities on a net basis.

2.17 Cash and cash equivalents

Cash and cash equivalents as referred to in the cash flow statement comprises cash, gold, jewellery, gemstones, current accounts with SBV and amounts due from banks on demand or with an original maturity of three months or less.

2.18 Fiduciary assets

Assets held in a fiduciary capacity are not reported in the financial statements as they are not assets of the Bank.

2.19 Provisionforoff-balance-sheetcommitments

According to Article 6 and 7 of Decision 493/2005/QD-NHNN and Decision 18/2007/QD-NHNN by SBV, credit institutions must classify and make provision for guarantees, payment acceptances, and non-cancelable loan commitments with specific effective date (generally called off-balance-sheet commitments) into groups, namely Current, Special Mention, Substandard, Doubtful and Loss based on the overdue status and other qualitative factors.



2.19 Provisionforoff-balance-sheetcommitments(continued)

Specific and general provision for off-balance-sheet commitments is calculated similarly to the provision for loans and advances to customers as described in Note 2.6. Provision expense is recorded as ”Provision for off-balance sheet commitments” in the consolidated income statement and provision balance is recorded in other liabilities in the consolidated balance sheet.

As at 31 December 2008, the Bank has created a general provision at 0.75% of guarantees; irrevocable lending commitments and acceptance for payment those are classified from groups 1 to 4 (see Note 20).

Details of general and specific provision for off-balance sheet commitments are presented in Note 20.

2.20 Derivatives

Derivatives are initially recorded in the consolidated balance sheet at cost and subsequently measured at fair value. Derivatives are recorded as assets when their fair value is positive and as liabilities when their fair value is negative. Changes in the fair value of derivatives are included in “Net gain/(loss) from foreign currencies trading”.

2.21 Offsetting

Financial assets and financial liabilities are offset and the net amount reported in the consolidated balance sheet if, and only if, there is a currently enforceable legal right to offset financial assets against financial liabilities or vice-versa, and there is an intention to settle on a net basis, or to realize the asset and settle the liability simultaneously.

2.22 Use of estimates

The preparation of the consolidated financial statements requires the Board of Management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities. These estimates and assumptions also affect the income and expenses and the resultant provisions.

2.23 Employeebenefits

Post employment benefits

Post employment benefits are paid to retired employees of the Bank by the Social Insurance Agency which belongs to the Ministry of Labor, Invalids and Social Affairs. The Bank is required to contribute to these post employment benefits by paying social insurance premium to the Social Insurance Agency at the rate of 15.00% of an employee’s basic salary on a monthly basis. The Bank has no further obligation to fund the post employment benefits of its employees, other than the liability to pay Social Insurance Agency on a monthly basis.

Voluntary resignation and retrenchment benefits

Voluntary resignation benefits: the Bank has the obligation, under Section 42 of the Vietnam Labor Code amended on 2 April 2002, to pay allowance arising from voluntary resignation of employees, equal to one-half month’s salary for each year of employment plus salary allowances (if any).




2.23 Employeebenefits(continued)

Retrenchment benefits: the Bank has the obligation, under Section 17 of the Vietnam Labor Code, to pay allowance to employees who are retrenched as a result of organizational restructuring or technological changes. In such case, the Bank shall pay to employees an allowance for loss of work equivalent to the aggregate amount of one month’s salary for each year of employment, but no less than two months’ salary.

While the obligations under Sections 17 and 42 are compulsory, the implementation of these Sections is subject to detailed guidance issued by the Ministry of Finance in implementing circulars. In accordance with Circular 64/1999/TT-BTC dated 7 June 1999 and Circular 82/2003/TT-BTC dated 14 August 2003 by the Ministry of Finance which superseded Circular 64/1999/TT-BTC, banks are required to calculate retrenchment allowance equal from 1 - 3% per annum on the basic salary of the employees; and the outstanding balance of employee termination reserve which was previously created at 5% from the profit after tax and after appropriation of supplementary capital reserve in accordance with the guidance of Circular 64/1999/TT-BTC should be transferred to retrenchment allowance as provided under Circular 82.

In 2008, the Bank accrued for retrenchment allowance equal to 3% of the basic salary of the employees.

3. CaSh and CaSh eQuivalentS

2008VNDm

2007VNDm

Cash on hand in VND 332,609 281,504Cash on hand in foreign currencies (“FC”) 79,024 70,817

411,633 352,321

4. BalanCeS with the State BanK of vietnaM (“the SBv”)

2008VNDm

2007VNDm

Current account in VND 440,638 110,544Other deposits in foreign currencies 74,501 80,774

515,139 191,318

Balances with the State Bank of Vietnam include settlement and compulsory deposits. Compulsory deposits are calculated at the beginning of every month and then monthly amended on average balances of demand and term customer deposits of prior month with compulsory deposits which are computed at 5.00% and 1.00% (as at 31 December 2008) of customer deposits in VND having original maturities of less than 12 months and from 12 months respectively; and at 7.00% and 3.00% of customer deposits in USD having original maturities of less than 12 months and from 12 months respectively. Accordingly, total average compulsory deposits (in both VND and foreign currencies) in December 2008 were VNDm 1,164,575.

During the year, the Bank has maintained its compulsory deposits in compliance with the requirements of the SBV.


5. due froM BanKS

2008VNDm

2007VNDm

Current accounts 993,671 967,304Placements with other banks 15,016,560 13,046,760

16,010,231 14,014,064

Interest rates at the year end applied for placements with other banks are as follows:

2008interest rate

% per annum

2007interest rate

% per annumPlacements with other banks in VND 6.20% - 21.00% 7.00% -11.40%Placements with other banks in foreign currencies 3.00% - 5.80% 4.00% - 5.50%

6. tradinG SeCuritieS

Trading securities as at 31 December 2008 are as follows:

2008VNDm

2007VNDm

debt securitiesListed - - Non-listed (*) 64,632 5,748 equity securitiesListed 129,651 82,643 Non-listed 14,595 208,667

208,878 297,058

provision for impairment of trading securities (See note 11.1) (58,703) (6,511)

150,175 290,547

(*) Including convertible bonds issued by credit institutions with the term from 2 to 4 years, bear interest by 8.00% per annum.



7. loanS and advanCeS to CuStoMerS

2008VNDm

2007VNDm

loans to customers by the BankLoans to domestic business organizations, individuals 14,692,669 9,938,533Discounted bills and valuable papers loans 286,740 436,103Trusted loans 15,504 6,693

14,994,913 10,381,329REPO contracts, financial supports and advances to customers by TSC 745,513 1,231,246

15,740,426 11,612,575

2008interest rate

% per annum

2007interest rate

% per annumCommercial loans in VND 10.50% -21.00% 10.50% - 13.20%Commercial loans in foreign currencies 7.00% - 12.50% 7.00% - 7.50%

7.1. Analysis of loans by quality

2008VNDm

2007VNDm

loans to customers by the BankCurrent 13,651,589 9,948,255 Special mention 1,055,266 315,476 Substandard 199,341 42,783 Doubtful 44,899 16,430 Loss 43,818 58,385


15,740,426 11,612,575

7.2. Analysis of loans by original terms

2008VNDm

2007VNDm

loans to customers by the BankShort-term loans 9,186,357 6,792,810 Medium-term loans 4,143,854 2,611,504Long-term loans 1,664,702 977,015


15,740,426 11,612,575


7. loanS and advanCeS to CuStoMerS (continued)

7.3. Analysis of loans by ownership

The details of the Bank’s loan portfolio by type of business entity as at year end are as follows:

2008VNDm

2007VNDm

loans to customers by the BankCorporate loans 12,853,540 7,979,970Central state-owned enterprises 2,879,268 1,508,991 Provincial state-owned enterprises 185,642 109,795 State limited liability companies 1,065,204 1,493,144 Private limited liability companies 2,222,821 1,142,375 State joint-stock companies 704,328 345,697 Other joint-stock companies 5,608,121 3,295,009 Private companies 178,772 38,070Other 9,384 46,889 Individual loans 2,141,373 2,401,359


15,740,426 11,612,575

7.4. Analysis of loans by sectors

The Bank’s loan portfolio at year-end comprises loans to entities in the following industrial sectors:

2008VNDm

2007VNDm

loans to customers by the BankAgriculture and Forestry 1,078,106 465,158 Mining 412,842 57,455 Processing 3,186,249 1,547,419 Electricity, Petroleum & Water 145,523 156,906 Construction 1,007,327 1,012,029

Wholesale and retail trade; repair of motor vehicles, motor cycles and personal goods 5,975,174 5,758,165

Hotel and Hospitality 216,357 99,110 Transportation and communications 1,494,151 521,762 Advisory, Real estate development & property investment 1,016,644 589,410 Community, social and personal service activities 293,035 18,403 Other activities 169,505 155,512


15,740,426 11,612,575



8. proviSion for loanS to CuStoMerS

Changes in the provision for credit losses in 2008 are summarized below:

Specific provision

VNDm

General provision

VNDm Total

VNDm

Balance as at 1 January 2008 107,041 36,735 143,776 Provision expense in the year 88,712 68,943 157,655 Balance as at 31 November 2008 195,753 105,678 301,431 Provision charged in December by TSC 833 - 833Bad debts written-off in December 2008 (55,347) - (55,347)Balance as at 31 december 2008 141,239 105,678 246,917

Changes in the provision for credit losses in 2007 were summarized below:

Specific provision

VNDm

General provision

VNDm Total

VNDm

Balance as at 1 January 2007 150,978 12,038 163,016 Provision expense in the year 16,148 24,697 40,845 Balance as at 30 November 2007 167,126 36,735 203,861 Bad debts written-off in December 2007 (60,085) - (60,085)Balance as at 31 december 2008 107,041 36,735 143,776

The breakdown of loan classification and provision in accordance with Clause 7, Decision 493/2005/QD-NHNN, Decision 18/2007/QD-NHNN is as follows:

Classification Loan balance (*)VNDm

Specific provision

VNDm

General provision (**)

VNDmTotal

VNDm

Current 12,495,456 - 93,717 93,717 Special mention 1,326,181 46,175 9,946 56,121 Substandard 221,732 31,403 1,663 33,066 Doubtful 46,957 8,155 352 8,507 Loss 112,138 110,020 - 110,020

14,202,464 195,753 105,678 301,431

(*): Balance as at 30 November 2008 for the Bank only. (**): The rate of general provision is 0.75 % for groups from 1 to 4.


9. inveStMent SeCuritieS

9.1. Investment securities - available for sale

Details of investments in available-for-sale securities held by the Bank as at 31 December are as follows:

2008VNDm

2007VNDm

debt securitiesDebt securities issued by the Government of Vietnam (i) 5,374,857 120,000 Debt securities issued by other credit institutions 100,000 180,201 Debt securities issued by local business entities (ii) 285,675 52,715 Other bonds - 20,185 equity securitiesEquity securities issued by other credit institutions 56,036 -Equity securities issued by local business entities 237,250 -

6,053,818 373,101

provision for impairment of investments in available-for-sale securities (see note 11.2) (118,839) -

5,934,979 373,101

Debt securities issued by the Government (i) are government bonds have terms of from 1 to 5 years and bear interest at rates varying from 6.80% to 17.50% per annum (2007: from 7.50% to 7.75% per annum). Interest is payable annually or on maturity date;

Debt securities issued by local business entities (ii) are bonds have terms of from 3 to 5 years and bear interest at rates varying from 8.60% to 9.60% per annum (2007: from 8.00% to 9.60% per annum). Interest is payable on annual anniversary date.



9. inveStMentS in SeCuritieS (continued)

9.2. Investment securities - held to maturity

2008VNDm

2007VNDm

investments in held-to-maturity securitiesGovernment bonds (i) 1,020,776 829,118Education Government bonds (ii) 16,205 16,836Debt securities issued by other financial institutions (iii) 430,000 327,435Debt securities issued by local business entities (iv) 1,071,000 124,236Municipal development bonds (v) 5,000 5,000provision for impairment of investments in held-to-maturity securities - -

2,542,981 1,302,625

Government bonds (i) have term of from 2 to 10 years and bear interest at rates varying from 7.95% to 11.90% per annum (2007: from 7.50% to 7.55% per annum). Interest is payable annually or on maturity date;

Education Government bonds (ii) have term of 5 years and bear interest at rates varying from 8.00% to 8.20% per annum. Interest is payable on maturity date;

Debt securities issued by other financial institutions (iii) have term of from 2 to 5 years and bear interest at rates varying from 8.60% to 12.75% per annum (2007: from 8.60% to 9.36% per annum). Interest is payable on annual anniversary date;

(iv) Debt securities issued by local business entities (iv) are convertible bonds have term of 3 years and bear interest at rate of 8.00% per annum, interest is payable on annual anniversary date; and bonds have term of from 1 to 10 years in VND and bear interest at rates varying from 8.60% to 10.30% per annum. (2007: from 9.00% to 10.15% per annum). Interest is payable on annual anniversary date;

Municipal development bonds (v) issued by People’s Committee of Hanoi City have term of 5 years and bear interest at rate of 9.10% per annum. (2007: 9.10% per annum), interest is payable on annual anniversary date.


10. lonG-terM inveStMentS2008

VNDm2007

VNDm

Investment in associates 68,783 4,125Other long-term investments 1,362,321 806,990

1,431,104 811,115

provision of impairment (See Note 11.3) (250.677) -

1,180,427 811,115

10.1. Investment in associates

Details of investments in associates as at 31 December are as follow:

% owned by the Bank

2008

CostCarrying value

per equity method

VNDm VNDm

Lang Son Tourism, Investment & Construction Joint Stock Company 33.30% 3,000 1,652

Long Thuan Loc Joint Stock company 29.37% 67,131 67,131 70,131 68,783

10.2. Other long-term investments

Details of long-term investments as at 31 December are as follow:

2008VNDm

Investments in business entities 666,976 Investments in financial institutions 381,741 Investments in equity investment funds 303,638 Investments in long-term projects 9,966

1,362,321

11. proviSion for iMpairMent of inveStMent SeCuritieS

Details of provision for impairment of investments in securities as at 31 December are as follow:

2008VNDm

2007VNDm

Trading securities (Note 11.1) 58,703 6,511Available-for sale equity securities (Note 11.2) 118,839 -Long-term investments (Note 11.3) 250,677 -

428,219 6,511



11. proviSion for iMpairMent of inveStMent SeCuritieS (continued)

11.1. Provision for impairment of trading securities

2008VNDm

trading securitiesListed securities(i) 49,788Non-listed securities(ii) 8,915

58,703

(i) Provision for impairment for listed shares was fully created as at 31 December 2008.

(ii) Non-listed shares were carried at cost less impairment losses. (see Note 2.7.1 - accounting policy on provision for impairment of trading securities).

11.2. Provision for impairment of investments in available-for-sale equity securities

2008VNDm

available-for-sale equity securitiesListed shares issued by local banks and business entities (i) 91,513Non-listed shares issued by local banks and business entities (ii) 27,326

118,839

(i) Provision for impairment for listed shares was fully created as at 31 December 2008.

(ii) As at 31 December 2008, non-listed shares were carried at cost less impairment losses. (see Note 2.7.3 - accounting policy on provision for impairment of available-for-sale securities).

11.3. Provision for impairment of long-term investments

2008VNDm

long-term investmentInvestments in equity investment funds 82,005 Non-listed shares issued by local financial institutions and business entities 168,672

250,677

The policy on provision for impairment of investments in funds and non-listed shares is presented in Note 2.9.


12. fiXed aSSetS

12.1. Tangiblefixedassets

Movements of tangible fixed assets during the year ended 31 December 2008 are as follows:

Buildings & building

improvements VNDm

Machine & equipment and office

suppliesVNDm

Motor vehicles

VNDmOther

VNDm Total

VNDmCost:Opening balance 74,604 113,047 35,963 7,298 230,912 Increase in the year 30,396 97,168 44,676 13,591 185,831 Decrease in the year (33,661) (9,191) (564) (4,662) (48,078)Closing balance 71,339 201,024 80,075 16,227 368,665 accumulated depreciation:Openning balance 12,022 44,734 13,034 3,943 73,733 Charge of the year 3,583 42,704 9,361 2,480 58,128 Decrease in the year (8,684) (7,190) (598) (3,342) (19,814)Closing balance 6,921 80,248 21,797 3,081 112,047 net book value:Opening balance 62,582 68,313 22,929 3,355 157,179 Closing balance 64,418 120,776 58,278 13,146 256,618



12. fiXed aSSetS (continued)

12.2. Intangible assets

Movements in intangible assets during the year ended 31 December 2008 are as follows:

Land use rightsVNDm

Computer software

VNDm

Other intangible

assets VNDm

TotalVNDm

Cost:Opening balance 67,147 19,053 - 86,200 Increase in the year - 58,705 277,311 336,016 Decrease in the year (31,683) (881) - (32,564)Closing balance 35,464 76,877 277,311 389,652

accumulated depreciation:Openning balance 2,356 6,578 - 8,934 Charge of the year 390 7,729 - 8,119 Decrease - (177) - (177)Closing balance 2,746 14,130 - 16,876

net book value:Opening balance 64,791 12,475 - 77,266 Closing balance 32,718 62,747 277,311 372,776


13. inveStMent property

Movement of investment in property during the year is as follows

Buildings & building

improvements (*) VNDm

Land use rights

VNDmTotal

VNDm

Cost:Opening balance 115,267 - 115,267 Increase in the year - 513,870 513,870 Decrease in the year (113,066) - (113,066)Closing balance 2,201 513,870 516,071

depreciation:Opening balance 429 - 429Charge of the year 365 - 365Decrease (629) - (629)Closing balance 165 - 165

net book value:Opening balance 114,838 - 114,838 Closing balance 2,036 513,870 515,906

(*): Accounting policy for amortization of buildings ad building improvements is presented in Note 2.13.

14. aCCountS reCeivaBle

2008VNDm

Internal receivables 46,782External receivables 102,893

149,675



15. due to BanKS

2008VNDm

2007VNDm

Demand deposits 26,663 9,011in VND 21,829 816in foreign currencies and gold 4,834 8,195

Term deposits 8,505,203 4,578,024in VND 7,675,983 3,688,745in foreign currencies and gold 829,220 889,279

Loan from other banks - 405,899in VND - 331,775in foreign currencies and gold - 74,124

8,531,866 4,992,934

Interest rates applied for term deposits from other banks as at 31 December 2008 are as follows:

2008interest p.a

2007interest p.a

Term deposits from other local banks in VND 4.50% - 18.50% 7.00% - 9.00% Term deposits from other local banks in FC 1.20% - 5.50% 3.50% - 5.50%

16. due to CuStoMerS

16.1. Analysis by products

2008VNDm

2007VNDm

Demand deposits 8,986,691 7,467,631Demand deposits in VND 7,189,239 5,400,078 Demand saving deposits in VND 1,785,257 75,698 Demand deposits in FC - 1,979,942 Demand saving deposits in FC 12,195 11,913 Term deposits 16,266,101 9,640,276Term deposits in VND 4,833,752 2,159,531 Term saving deposits in VND 1,825,232 5,778,550 Term deposits in FC 7,567,510 441,752 Term saving deposits in FC 2,039,607 1,260,443 Deposits for specific purposes 28,613 15,893Margin deposits 1,881,476 661,037Margin deposits in VND 241,146 661,037Margin deposits in FC 1,640,330 -

27,162,881 17,784,837


16. due to CuStoMerS (continued)

16.2. Analysis by customers2008

VNDm2007

VNDm

Deposits from business entities 17,112,360 10,283,448Deposits from individuals 10,050,521 7,501,389

27,162,881 17,784,837

2008interest p.a

2007interest p.a

Demand deposits in VND 2.40% - 3.60% 2.40%Demand saving deposits in VND 2.40% - 3.60% 2.40%Demand deposits in FC 1.00% - 1.50% 1.25%Demand saving deposits in FC 1.00% - 1.50% 1.25%

Term deposits in VND 8.00% - 18.00% 7.08% - 9.72%Term saving deposits in VND 8.00% - 18.00% 7.08% - 9.72% Term deposits in FC 3.02% - 7.10% 3.40% - 5.50%Term saving deposits in FC 3.02% - 7.10% 3.40% - 5.20%

When customers withdraw term saving deposits earlier than maturity, interest earned depends on the Bank’s policy over each period.

17. other Borrowed fundS

2008VNDm

2007VNDm

Vietnam Insurance Corporation - 48,342Bank for Investment and Development of Vietnam 28,163 27,494Payable to investors 806,198 214,290

834,361 290,126

Funds received from Bank for Investment and Development of Vietnam represents the funds financed by World Bank (via International Development Association) to facilitate Rural Development Finance Project Phase II according to a Loan Agreement signed on 9 September 2002 between World Bank and Ministry of Finance of which Bank for Investment and Development of Vietnam (“BIDV”) is appointed as fund manager. The Bank initially signed a sub-contract with BIDV on 10 May 2004 and subsequently amended on 16 July 2005. Total credit limit granted by BIDV is VND 50 billions and will be revised annually subject to repayment schedule and maturities of specific or connected loans under particular contracts. Interest is payable at 6 month LIBOR rate plus a margin. Interest will be revised on half year basis.

Payable to investors represents trust funds and interest payables regarding to contracts with other banks those are managed by Hanoi Fund Management Joint stock company. Accordingly, Hanoi Fund Management Joint stock company is entitled to charge management fee of from 0.10% to 0.70% per annum based on the funds and the actual investing duration.



18. valuaBle paperS iSSued

2008VNDm

2007VNDm

Convertible bonds issued in 2006 - 220,000Convertible bonds issued in 2007 1,000,000 1,000,000Other valuable papers issued 7,326 -Bonds issued by Thang Long Securities Joint Stock Company 1,130,000 800,000

2,137,326 2,020,000

Details for convertible bonds issued by the Bank in 2007 are as follows:

Issued date Currency TermInterest rate

(% p.a.) Conversion rate31 December 2008

VNDm

20-Jun- 2007 VND 2 years 8.00% p.a. 1 bonds: 100 shares 420,00010-Nov-2007 VND 2 years 8.00% p.a. 1 bonds: 100 shares 580,000

1,000,000

Details for bonds issued by TSC are as follows:

Issued date Currency TermInterest rate

(% p.a.)31 December 2008

VNDm

24-Sep- 2007 VND 2 years 9.00%/p.a. 200,00022-Oct-2007 VND 2 years 9.00%/p.a. 100,00026-Feb-2008 VND 1 year 10.90%/p.a. 200,00002-Jun-2008 VND 2 years 16.50%/p.a. 200,00005-Dec-2008 VND 1 year 10.00%/p.a. 360,00029-Dec-2008 VND 1 year 9.75%/p.a. 70,000

1,130,000

19. other liaBilitieS

2008VNDm

Internal payables 46,304Payables to other parties 355,461

401,765


20. proviSion for off-BalanCe Sheet CoMMitMentS

Changes in the provision for off-balance sheet commitments in 2008 are as follows:

Specific provision

VNDm

General provision(*)

VNDmTotal

VNDm

Balance as at 1 January 2008 - 53,565 53,565Provision charged for the year - 63,275 63,275Balance as at 31 december 2008 - 116,840 116,840

(*): The rate for general provision is 0.75% of total value of guarantee commitments, letters of credit and irrevocable un-drawn loan commitments which have been classified from group 1 to group 4.

Changes in the provision for off-balance sheet commitments in 2007 were as follows:

Specific provision

VNDm

General provision

VNDmTotal

VNDm

Balance as at 1 January 2007 - 9,849 9,849Increase in the year - 43,716 43,716Balance as at 1 december 2007 - 53,565 53,565

The breakdown of classification and provision for off-balance sheet commitments in accordance with Decision 493/2005/QD-NHNN, Decision 18/2007/QD-NHNN is as follows:

Classification

Balance of off-balance sheet

commitments (*)VNDm

Specific provision

VNDm

General provision (**)

VNDmTotal

VNDm

Current 15,578,667 - 116,840 116,840Special mention - - - -Substandard - - - -Doubtful - - - -Loss - - - -

15,578,667 - 116,840 116,840

(*): Balance as at 30 November 2008.

(**): The rate of general provision is 0.75 % for groups from 1 to 4.



21. taX payaBleS

Opening balanceVNDm

Increase in the year Closing balanceVNDm

PayableVNDm

PaidVNDm

Value added tax (203) 17,890 18,363 (676)Enterprise income tax (“EIT”) 82,306 165,003 175,554 71,755

Additional EIT paid as result of tax assessment - 1,133 1,133 -

Land used tax - 900 900 - Other taxes 6,983 21,402 18,490 9,895

Other fees - 177 162 15

89,086 206,505 214,602 80,989

The Bank’s tax returns are subject to examination by the tax authorities. Due to the ambiguity associated with the applicability of tax laws and regulations in Vietnam, amounts reported in the consolidated financial statements could be changed at a later date upon final determination by the tax authorities.


21. taX payaBleS (continued)

Current enterprise income tax the Bank has the obligation to pay enterprise income tax based on 28% of taxable profit.

2008VNDm

2007VNDm

Consolidated profit before tax 860,883 608,986 In which:(*) Profit before tax of the Bank 770,708 451,136

Income, exempt from EIT (dividend and interest income from education bonds) (194,305) (122,604)

Interest income from trust funds, at tax rate of 20% (6,904) - Taxable income of the Bank at rate of 28% 569,499 328,532 Enterprise income tax expense at rate of 28% 159,460 91,989 Enterprise income tax expense from trust funds at rate of 20% 1,376 - EIT expense of the Bank (i) 160,836 91,989

(*) Profit before tax of subsidiaries 90,175 157,850 EIT of subsidiaries expense (ii) 3,842 24,389

Consolidated eit expense (i) + (ii) 164,678 116,378 EIT paid in addition as a result of tax assessment 1,133 - Others 325 -

enterprise income tax incurred in the year 166,136 116,378 enterprise income tax payable at beginning of the year 82,306 15,735

EIT paid in the year (176,687) (49,807)enterprise income tax payable at the end of the year 71,755 82,306

Deferred Income tax

No deferred income tax was recognized in the year since there is no significant temporary difference between carrying value and tax base of assets and liabilities in the consolidated financial statements.



22.

ow

ner

S’ e

Qu

ity

an

d r

eSer

veS

22.1

. St

atem

ent o

f cha

nges

in o

wne

rs’ e

quit

y

Stat

emen

t of c

hang

es in

ow

ners

’ equ

ity o

f the

Ban

k in

200

8 is

as

follo

ws:

Uni

t: VN

Dm

Chỉ

tiêu

Char

tere

d ca

pita

lSh

are

prem

ium

Fina

ncia

l ris

k re

serv

e

Cap

ital

supp

le-

men

tary

re

serv

eO

ther

re

serv

esRe

tain

ed

earn

ings

Oth

er

owne

rs’

equi

tyM

inor

ity

inte

rest

Tota

l

ope

ning

bal

ance

2,00

0,00

0 30

6,42

1 67

,951

39

,161

18

,731

53

7,73

2 50

9,52

5 70

,345

3,

549,

866

incr

ease

in th

e ye

ar

1,40

0,00

0 (2

76,2

21)

42,5

36

20,3

42

106,

323

160,

700

- 17

7,83

7 1,

631,

517

Net

pro

fit in

the

year

- -

- -

- 70

3,36

8 -

(7,1

63)

696,

205

Incr

ease

cha

rter

ed c

apita

l fro

m

reta

ined

ear

ning

s37

3,57

9 -

- -

- (3

73,5

79)

- -

-

Shar

e is

sued

to s

trat

egic

sh

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rs50

0,00

0 -

- -

- -

- -

500,

000

Incr

ease

cha

rter

ed c

apita

l fro

m

shar

e pr

emiu

m30

6,42

1 (3

06,4

21)

- -

- -

- -

-

Con

vers

ion

of b

onds

issu

ed in

200

622

0,00

0 -

- -

- -

- -

220,

000

Cre

atio

n of

rese

rves

for 2

007

- -

42,4

66

20,3

42

78,0

94

(140

,902

)-

- -

Tem

pora

ry cr

eatio

n of

rese

rves

for 2

008

- -

- -

28,1

87

(28,

187)

- -

-

Incr

ease

sha

re p

rem

ium

from

is

suin

g sh

ares

- 30

,200

-

- -

- -

- 30

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Shar

es Is

sued

to m

inor

ity in

tere

st-

- -

- -

- -

185,

000

185,

000

Oth

ers

- -

70

- 42

-

- 11

2 d

ecre

ase

in th

e ye

ar-

- (1

,922

)(1

,294

)(9

6,25

5)(4

09,6

66)

- 4,

407

(504

,730

)U

tiliz

atio

n in

the

year

- -

(155

)-

(93,

984)

- -

- (9

4,13

9)D

ivid

ends

pai

d in

adv

ance

for 2

008

- -

- -

- (4

00,0

14)

- -

(400

,014

)D

ivid

end

paid

for p

revi

ous

year

s-

- -

- -

(7,3

02)

- -

(7,3

02)

Tax

paid

in a

dditi

on a

s a

resu

lt of

ta

x as

sess

men

ts-

- -

- -

(2,3

50)

- -

(2,3

50)

Incr

ease

rese

rves

for m

inor

ity in

tere

st-

- (1

,767

)(1

,294

)(2

,271

)-

- 5,

332

- O

ther

s-

- -

- -

- -

(925

)(9

25)

Clo

sing

bal

ance

3,40

0,00

0 30

,200

10

8,56

5 58

,209

28

,799

28

8,76

6 50

9,52

5 25

2,58

9 4,

676,

653


22.

ow

ner

S’ e

Qu

ity

an

d r

eSer

veS

(c

ontin

ued)

22.1

. St

atem

ent o

f cha

nges

in o

wne

rs’ e

quit

y (c

ontin

ued)

Stat

emen

t of c

hang

es in

ow

ners

’ equ

ity o

f the

Ban

k in

200

7 w

as a

s fo

llow

s:

Uni

t: VN

Dm

Char

tere

d ca

pita

lSh

are

prem

ium

Fina

ncia

l ris

k re

serv

e

Cap

ital

supp

le-

men

tary

re

serv

e

Oth

er

rese

rves

Reta

ined

ea

rnin

gs

Oth

er

owne

rs’

equi

tyM

inor

ity

inte

rest

Tota

l

ope

ning

bal

ance

1,04

5,20

057

,596

44,9

1425

,546

11,8

0219

5,85

4-

-1,

380,

912

incr

ease

in th

e ye

ar

954,

800

248,

825

24,2

0714

,685

8,10

939

7,01

450

9,52

566

,925

2,22

4,09

0N

et p

rofit

in th

e ye

ar-

--

--

491,

683

-92

549

2,60

8In

crea

se c

hart

ered

cap

ital

954,

800

248,

825

--

--

509,

525

-1,

713,

150

Cre

atio

n of

rese

rves

-

-24

,199

14,6

8556

,000

(94,

884)

--

-U

tiliz

atio

n of

rese

rves

--

(92)

-(4

8,15

7)-

--

(48,

249)

Shar

es Is

sued

to m

inor

ity in

tere

st-

--

--

--

66,0

0066

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ers

--

100

-26

621

5-

-58

1d

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ase

in th

e ye

ar-

-(1

,170

)(1

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)(1

,180

)(5

5,13

6)-

3,42

0(5

5,13

6)D

ivid

ends

pai

d -

--

--

(55,

136)

--

(55,

136)

Incr

ease

rese

rve f

or m

inor

ity in

teres

t-

-(1

,170

)(1

,070

)(1

,180

)-

-3,

420

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losi

ng b

alan

ce2,

000,

000

306,

421

67,9

5139

,161

18,7

3153

7,73

250

9,52

570

,345

3,54

9,86

6



22. ownerS’ eQuity and reServeS (continued)

22.1. Statement of changes in owners’ equity (continued)

Breakdown of share capital of the Bank is as follows:

Unit: VNDm2008 2007

TotalOrdinary

sharesPreference

share TotalOrdinary

sharesPreference

share

Chartered capital 3,400,000 3,400,000 - 2,000,000 2,000,000 -Share premium 30,200 30,200 - 306,421 306,421 -

3,430,200 3,430,200 - 2,306,421 2,306,421 -

22.2. Statutory reserves of the Bank

On 23 November 2005, the Government issued Decree No. 146/2005/ND-CP regarding the financial management regulations for credit institutions which was effective from 16 December 2005. Accordingly, commercial banks are required to make appropriation of profit after tax to the following reserves:

Percentage of profit after tax Maximum balance Capital supplementary reserve 5% of profit after tax Chartered capitalFinancial risk reserve 10% of remaining profit after tax 25% chartered capital

Creation of reserves from appropriation of profit after tax for the year 2008 is made in the following year upon the approval of the Board of Directors.

Statutory reserves of subsidiaries:

Statutory reserves of Thang Long Securities Joint Stock Company

According to the Circular 11/2000/TT- BTC issued by Ministry of Finance on 1 February 2000, securities companies are required to make appropriation of profit after tax to the following reserves:

Percentage of profit after tax Maximum balance Capital supplementary reserve 5% of profit after tax 10% chartered capitalFinancial risk reserve 5% of remaining profit after tax 10% chartered capital

Other reserves are created under Decisions made at General Shareholder Meeting.

Creation of statutory reserves for others subsidiaries:

Other subsidiaries create reserves in accordance with instructions of the Bank. The percentages used to create reserves for other subsidiaries are normally consistent with those applied for credit institutions in accordance with Decree No. 146/2005/ND-CP issued on 23 November 2005.


22. ownerS’ eQuity and reServeS (continued)

22.3. Earning per share

Basic earning per share

Earning per shares is calculated by net profit attributable to equity shareholders of the Bank divided to weighted average number of ordinary shares in the year. Details of basic earning per share of the Bank are as follows:

2008VNDm

2007VNDm

Net profit for the year 703,368 491,683Weighted average number of ordinary shares (shares) 221,651,541 117,434,740Basic earning per share (VND/share) 3,173 4,187

Diluted earning per share

Diluted earning per shares is calculated by net profit attributable to equity holders of the Bank (added back interest on convertible bonds, net of tax) divided to weighted average number of ordinary shares in the year plus weighted average number of shares issuable from conversions of those bonds. Details of diluted earning per share of the Bank are as follows:

2008

VNDm2007

VNDm

Net profit to calculate basic earning per share 703,368 491,683Interest on convertible bonds, net of tax 57,600 30,333dilluted earnings 760,968 522,016Weighted average number of ordinary shares in the year 221,651,541 117,434,740

Weighted average number of ordinary shares issuable from the conversion of bonds 100,000,000 52,427,297

weighted average number of ordinary shares to calculate diluted earning per share (shares) 321,651,541 169,862,037

Diluted earning per share (VND/share) 2,366 3,073



23. dividend payMentS

Details of dividend paid in the year are as follows:

2008VNDm

2007VNDm

Dividend paid for 2007 363,760 55,136Dividend paid in advance for current year 400,014 -

763,774 55,136

Dividend paid in advance for 2008 to shareholders is in cash and in 3 series. Detail is as follows:

Series Percentage Total VNDm

Series 1 7% of shareholding 140,000Series 2 7% of shareholding 165,464Series 3 4% of shareholding 94,550

400,014

24. intereSt and SiMilar inCoMe

2008VNDm

2007VNDm

Interest income from deposits 970,746 516,345Interest income from loans to customers 2,311,728 960,776Interest income from securities investments 375,979 104,001Other interest income 20,846 -

3,679,299 1,581,122

25. intereSt and SiMilar eXpenSeS

2008VNDm

2007VNDm

Interest expense for customer deposits 1,845,833 795,292Interest expense for borrowings 165,931 109,891Interest expense for valuable papers 241,343 42,129Other interest expense 5,480 493

2,258,587 947,805


26. net fee and CoMMiSSion inCoMe

2008VNDm

2007VNDm

fees and commission incomeGuarantee activities 76,191 46,073Settlement services 58,316 33,907Securities services 38,748 74,874Fund management Activities 21,050 41,020Revenue from Hotel business activities 31,251 -Income from sale, recovery, and assessment of assets 14,763 -Management fee from leasing services 7,944 -Other services 13,723 9,031

261,986 204,905fees and commission expensesSettlement services 14,511 10,447Expenses for Hotel business activities 21,549 -Expense from sale, recovery, and assessment of assets 12,050 -Expense from lease management services 4,699 -Other services 17,969 2,743

70,778 13,190net fees and commission income 191,208 191,715

27. net Gain/(loSS) froM foreiGn CurrenCieS tradinG

2008VNDm

2007VNDm

income from foreign currencies tradingIncome from spot contracts 153,933 25,941Income from derivatives 66,146 4,659

220,079 30,600expense for foreign currencies tradingExpense from spot contracts 82,968 9,111Expense from derivatives 35,708 365

118,676 9,476net gain/(loss) from foreign currencies trading 101,403 21,124

28. net Gain/(loSS) froM tradinG and inveStMent SeCuritieS

2008VNDm

2007VNDm

Income from securities trading 72,901 108,897 Expense from securities trading (69,580) (19,345)Provision for impairment of trading and investment securities (171,031) (6,485)net gain/(loss) from trading and investment securities (167,710) 83,067



29. net Gain/(loSS) froM other operatinG aCtivitieS

2008VNDm

Gain from revaluation of assets 272,835Recovery of loans written off 8,364Income from leasing activities 4,611Other Income 3,381

289,191

30. other operatinG eXpenSeS

2008VNDm

2007VNDm

Other taxes and fees 11,894 4,779General administration expenses 11,720 6,592Asset repairs and maintenance expenses 31,067 13,272Insurance for customer deposits 10,585 7,123Other expenses 189,900 171,278

255,166 203,044

31. CaSh and CaSh eQuivalent

Cash and cash equivalents included in the consolidated statement of cash flows comprise the following balances of the consolidated balance sheet:

2008VNDm

2007VNDm

Cash and cash equivalents 411,633 352,321Balances with the State Bank of Vietnam 515,139 191,318Demand deposits with other banks 993,671 967,304Term deposits with and loans to other banks under 90 days 13,046,717 6,402,543

14,967,160 7,913,486

32. CollateralS and MortaGeS

Value at the reporting date (VNDm)

2008 2007Real estate properties 10,347,194 7,797,037Movable assets 5,112,640 1,775,135Valuable papers 900,310 1,199,218Other assets 10,366,689 4,365,001

26,726,833 15,136,391


33. ContinGent liaBilitieS and CoMMitMentS

In the normal course of business, the Bank is a party to financial instruments which are recorded as consolidated off-balance sheet items. These financial instruments mainly comprise financial guarantees and commercial letters of credit. These instruments involve elements of credit risk in excess of the amounts recognized in the consolidated balance sheet.

Credit risk for off-balance sheet financial instruments is defined as the possibility of sustaining a loss because any other party to a financial instrument fails to perform in accordance with the terms of the contract.

Financial guarantees are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party including guarantee for borrowings, settlement, performing contracts and bidding, The credit risk involved in issuing guarantees is essentially the same as that involved in extending facilities to other customers.

Commercial at sight letters of credit represent a financing transaction by the Bank to its customer where the customer is usually the buyer/importer of goods and the beneficiary is typically the seller/exporter. Credit risk is limited as the merchandise shipped serves as collateral for the transaction.

Deferred payment letters of credits represent the amounts at risk should the contract be fully drawn upon and the client defaults in repayment to the beneficiary. Deferred payment letters of credit that were defaulted by clients are recognized by the Bank as granting of a compulsory loan with a corresponding liability representing the financial obligation of the Bank to pay the beneficiaries and to fulfill the guarantor obligation.

The Bank requires margin deposits to support credit-related financial instruments when it is deemed necessary. The margin deposit required varies from nil to 100% of the value of a commitment granted depending on the creditworthiness of clients as assessed by the Bank.

The outstanding commitments and contingent liabilities as at 31 December are as follows:

2008VNDm

2007VNDm

Financial guarantees 1,074,295 1,133,742Borrowing guarantees 630,447 -Bid bonds 299,613 370,285Settlement guarantees 283,582 283,177Other guarantees 1,438,855 1,000,993Letters of credit 10,124,777 10,196,649Unwithdrawn loan commitments 2,523,628 850,403

16,375,197 13,835,249



34. related party tranSaCtionS

Related party transactions include all transactions undertaken with other entities to which the Bank is related, a party is deemed a related party to the Bank if:

(a) directly, or indirectly through one or more intermediaries, the party:

controls, is controlled by, or is under common control with, the Bank (this includes parents and ►subsidiaries);

has an interest in the Bank that gives it significant influence over the Bank; ►

has joint control over the Bank; ►

(b) the party is a joint venture in which the Bank is a venturer (see VAS 8 “Interests in Joint Ventures”);

(c) the party is a member of the key management personnel of the Bank or its parent;

(d) the party is a close member of the family of any individual referred to in (a) or (c);

(e) the party is an Bank that is controlled, jointly controlled or significantly influenced by, or for which significant voting power in such Bank resides with, directly or indirectly, any individual referred to in (c) or (d).

Total due from and due to a couple of major shareholders (owned greater than or equal to 5% of the Bank’s chartered capital) as at 31 December 2008 are as follows:

Transactions ReceivableVNDm

(Payable)VNDm

Deposits 914,557 (819,000)Lending to major shareholders 431,559 -


35.

Ma

rK

et r

iSK

35.1

. In

tere

st ra

te ri

sk

U

nit:

VND

m

Non

re

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cing

Up

to 1

m

onth

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ve 5

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nces

with

the

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--

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515,

139

Due

from

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9,73

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579,

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o cu

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465,

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654,

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Trad

ing

Secu

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s (*

)-

208,

878

--

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t sec

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0,76

119

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509

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6

(*):

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ance

s of t

hese

item

s do

not i

nclu

de p

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sions



35.

Ma

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et r

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(con

tinue

d)

35.2

. C

urre

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risk

Cla

ssifi

catio

n of

ass

ets

and

liabi

litie

s of

whi

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e tr

ansl

ated

into

VN

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t 31

Dec

embe

r 200

8 as

follo

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as

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35.

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(con

tinue

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risk

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t: VN

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Befo

re d

ue d

ate

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ver d

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p to

1

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th 1

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mon

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mon

th 1

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s

ass

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d ca

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ts-

411,

633

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nces

with

the

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anks

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721,

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721,

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(*):

Bal

ance

s of t

hese

item

s do

not i

nclu

de p

rovi

sions

.



35. MarKet riSK (continued)

35.3. Liquidity risk (continued)

The maturity term of assets and liabilities represents the remaining period of assets and liabilities as calculated from the balance sheet date to the point of settlements as stipulated in contracts or in issuance terms and conditions.

The following assumptions and conditions are applied in the analysis of overdue status of the Bank’s assets and liabilities:

Deposits at the SBV are classified as demand deposits which include compulsory deposits. The balance of ►compulsory deposits depends on the proportion and terms of the Bank’s customer deposits.

The maturity term of investment securities is calculated based on the maturity date of each kind of securities.►

The maturity term of placements with and loans to other banks; and loans to customers is determined ►on the maturity date as stipulated in contracts. The actual maturity term may be altered because loan contracts may be extended.

The maturity term of equity investments is considered as more than one year because these investments ►do not have specific maturity date.

The maturity term of deposits and borrowings from other banks; and customer’s deposits is determined ►based on features of these items or the maturity date as stipulated in contracts. Demand deposits are transacted as required by customers, and therefore, being classified as current accounts. The maturity term of borrowings and term deposits is determined based on the maturity date in contracts. In fact, these amounts may be rotated, and therefore, they last beyond the original maturity date.

The maturity term of fixed assets is determined on the remaining useful life of assets.►

36. Capital and operatinG leaSe CoMMitMentS

2008VNDm

2007VNDm

Non-cancelable operating lease commitments 447,120 93,442In which:- due within one year 84,729 4,037- due from two to five years 213,928 23,697- due after five years 148,463 65,708

37. eventS SinCe the BalanCe Sheet date

There have been no significant events occurring after the balance sheet date which would require adjustments or disclosures to be made in the financial statements.



38. eXChanGe rateS of appliCaBle foreiGn CurrenCieS aGainSt vietnaMeSe donG at year-end

2008VND

2007VND

USD 16,977 16,114EUR 24,430 24,429GBP 24,954 31,713CHF 16,310 14,122JPY 191 141SGD 12,059 10,999CAD 14,233 16,213AUD 11,866 13,980



Department




Highlights of 2008

Having been successful in business, MB takes up social responsibilities by lending a helping hand to community, government- policy families, etc. in a variety of meaningful charitable activities. With achievements in business performance and social activities, MB is highly appreciated and ranked A by the State Bank of Vietnam.


HIGHLIGHTS OF 2008

Expanding partnership

Signing Cooperation Agreement and Credit Line Contract worth VND 2.000 billion with Vietnam Coal and Mineral Industries Group (TKV).

Signing Cooperation Agreement with Mai Linh Group, with Tay Nguyen Coffee Import-Export JSC Company (VINACFBMT), Viet Nam Small-and Middle-scale Enterprises Association (VINASME), Dong Nai Agriculture Service Cooperative Alliance (Dona Co-op) and An Phu Long Company.

Financing more than EUR13 million for Shipbuilding project for Export of Hong Ha Company.

Organization and personnel

Restructuring the organization and setting up Operations Division, Risk management Division, Quality Control Division and senior committees. Setting up Training Center and conducting series of training courses to staff.

Products and Services

Launching “MB savings, getting BMW” program and organizing 13 presentation ceremonies for winners. Continuously launching the promotion of “Savings with MB, winning lucky money in billion” program

Being one of the first two banks whose internal credit ratings system was approved by the State Bank of Vietnam.

Increasing chartered capital to VND 3.4 billion as planned. Successfully issuing bonds value of VND 3000 billion.

Opening more than 25 transaction points which constitutes a network of 90 offices

Setting up Customer Services Center named “MB247”.

Extracurricular activities

Organizing successfully “MB’s got Hipo” contest to seek for and develop MB’s talents

Organizing successfully “Golden Bees” contest with the purpose of improving MB’s service quality

Other extracurricular activities such as “Mr.MB in the kitchen” contest on the occasion of Vietnam Women’s day, holiday tours for staff,etc.

Celebrating the 14th anniversary of operation

Holding “MB’s Family day” program which appealed to thousands of staff and their family.

Other events

On-site visit and meeting of the Governor of the State Bank of Vietnam

Meeting and discussion of Professor John Quelch, Deputy Principal of Havard School of Business with MB’s directors

Jointly organized Seminar “Vietnam’s Day” in France

Sponsoring and participating in the seminar “Inflation from corporate governance’s perspective”

Launching new website.


CONTRIBUTION TO COMMUNITY

Get-togethers and gift giving to orphan children in Hacau Centre.

Participating in the Terry Fox Run for the Cancer Research Fund.

Donating for 10 charity houses which the Ministry of Defense called for.

Visiting and giving gifts to poor students in Phu Tho, Quang Ninh and Nghe An.

Making donation to Vietnam Women’s Union to build 10 charity houses for disabled and disadvantaged women.

Sponsoring “Songs and Poems in Harmony” and granting scholarships for students in hardship, who are the offspring of veterans and soldiers in Hochiminh city.

Coordinating with Vietnam Red cross to provide free-of-charge medical examination for policy beneficiary people who are in financial hardship in Thai Nguyen, Nghe An, Ha Tinh and Quang Ngai.

Coordinating with Vietnam Red cross to provide free-of-charge medical examination for policy beneficiary people who are in financial hardship in Thai Nguyen, Nghe An, Ha Tinh and Quang Ngai.

Visiting and donating to victims of methane blast in Khe Cham Coal company.

Giving gifts to 148 people experiencing severe hardship on the occasion of Lunar New Year 2008.

Donating to 20 charity houses for people facing difficulties and

martyr’s families in Ha Noi, Hai Phong, Hochiminh, Hue,

Vinh Phuc, Thai Nguyen, Ha Tinh, etc.

Coordinating with Vietnam Red cross to provide free-of-charge medical examination for policy

beneficiary people who are in financial hardship in Thai Nguyen,

Nghe An, Ha Tinh and Quang Ngai.


NOTABLE AWARDS

Certificate of Merit by Governor *

of State Bank of Vietnam for

distinguished performance in

2006-2007.

Assigned A rating by State Bank *

of Vietnam.

Certificate of Merit by the Prime *

Minister on an unscheduled basis

for outstanding performance.

“Best customer services Award”. *

One of 100 leading enterprises of *

Vietnam.

“Golden Globe Award”. * “ Vietnam Intellectual Award”.* “Prestigious Securities Award” and “Vietnam leading * joint stock company award”.“Vietnam Excellent Brand Award”.* Excellence in International settlement 2007 award * recognized by HSBC.

Head Office

3 Lieu Giai Street, Ba Dinh District, Hanoi, VietnamTel : 84-4-6266.1088Fax : 84-4-6266.1080

www.mbbank.com.vn

Change to Be Better

Documents

Transcript of Change to Be Better