ACB 2007 Success and New Vision

MESSAGE FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS ACB in 2007: Great Success New Vision
4 4
HISTORY AND OPERATIONS OF THE BANK 1. Milestones 2. Growth Path 3. Growth Orientations
6 7 9 11
REPORT OF THE BOARD OF DIRECTORS 1. Highlights in 2007 Performance 2. Major Changes in 2007 3. Prospects
12 13 14 14
REPORT OF THE CHIEF EXECUTIVE OFFICER 1. Financial Situation 2. Business Performance 3. Achievements 4. Business Plan
15 16 17 18 19
SUBSIDIARIES AND AFFILIATES 1. Companies Holding over 50% of ACBs Share Capital 2. Companies with over 50% of Share Capital Being Held by ACB 3. Activities of ACBs Wholly-Owned Companies
21 22 22 23
STRUCTURE AND PERSONNEL 1. Organizational Chart 2. The Management 3. Replacement of Chief Executive Officer in 2007 4. Compensation of the Management: Salary, Bonus and Other Benefits 5. Employees and Policies 6. Changes in the Board of Directors, the Management, Supervisory Board and Chief Accountant
27 28 30 34 34 34 36
SHAREHOLDERS AND CORPORATE GOVERNANCE 1. The Board Directors and the Supervisory Board 2. Statistics on Shareholders
37 38 46
FINANCIAL STATEMENTS
47
AWARDS AND SOCIAL RECOGNITIONS
109
HIGHLIGHTS OF THE YEAR 2007
110
CHARITABLE ACTIVITIES OF THE YEAR 2007
112
BRANCH NETWORK
114
MESSAGE FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS
ACB 2007
Great success New vision
uring the year, the world economy witnessed various significant phenomena: the U.S. Federal Reserve System continuously cut the target fed funds rate; USD depreciated strongly against other major currencies; and prices of oil and gold moved up to record levels. Nevertheless, the Vietnam economy was still able to overcome such unfavorable changes and gained positive results. GDP grew at 8.48%, developmental investment continued to grow and exports increased significantly. FDI attraction and ODA reached a record high level. Foreign currency reserves sharply increased to an amount sufficient for 20 weeks of imports at the 2007-end. The foreign exchange market was stabilized; VND, instead of being under pressure of depreciation, fell under pressure of appreciation for the first time. The stock market proved to be an important fund channel in the economy. However, the business environment and banking business in 2007 faced many disadvantages: prominently, the trade deficit was huge and inflation reached its highest level during the past 12 years. The real estate market became unstable and interbank market activities became more complicated. The State Bank of Vietnam introduced several decisions that greatly influenced the banking business such as doubling required reserve ratio in quarter II and setting a cap for outstanding loans for securities. In such a context, thanks to the proper orientation of growth, promptly seizing opportunities in the company and efforts from the Board of Directors, the Management and all staff, ACB successfully accomplished its business plan targets of 2007. Total assets doubled from that of the previous year, holding the highest growth rate during the last seven years, and one of the highest growth rates in total assets since 1994.
Vietnams business environment in 2007 contained advantages,
difficulties and challenges that had

considerable impacts on the banking system in general and ACB in particular.
Outstanding loans were up approximately 84% against last year with the highest growth rate since 1996. However its growth rate was lower than that of total assets, and loans just accounted for 37.44% of total assets at 2007-end. Profit before tax was VND 2,127 billion, increasing three times year on year, maintaining the highest growth rate during the last 12 years. ACBs equity as of 31 December 2007 attained VND 6,258 billion and its growth speed was at a record level. ROE attained 53.8%, reaching its peak since the foundation of ACB. Risk management, especially that of market risk and credit risk, performed better than previous years. Bad debts stood at 0.08% of total outstanding loan, far lower than the 2% of the banking industry. With new achievements in 2007, ACB continued to maintain its strong position as a leading bank among the commercial joint-stock banks of Vietnam1, narrowing considerably the gap of total assets between ACB and state-owned commercial banks. ACBs new success not only helps ACB possess new position and strength, particularly in terms of capital, information technology application and qualified human resource, but also gains important lessons in bank management that shall help ACB develop more rapidly in the next few years. In order to succeed, ACB has to define appropriate growth strategies, at least in its medium term. In such a spirit, ACB created its vision to 2015 which is to become one of the top banking financial groups in Vietnam. As for the period from now to 2010 a milestone when Vietnam completely opens the banking and financial sector to the world in accordance with its commitments with WTO, and especially when ACB reaches its 18th anniversary ACB has set up its operating objectives and plans for each year. ACB anticipates that by 2010 reengineering shall be completed with a structure of ACB Group consisting of two pillars: ACB commercial banking (retail banking), and ACB investment banking, with a workforce of 10,000 employees and 350 branches and sub branches. In 2008, according to forecasts, businesses and especially banks shall enjoy fewer advantages and more difficulties than 2007. However, with its firm position, on its fifteenth anniversary, ACB believes it shall achieve its objectives of robust growth, efficient management, and high profitability. In order to realize the new vision, ACBs activities need to be more professional. The Board of Directors shall be restructured with more members of expertise, and simultaneously in a way to ensure the continuity and tradition; and the Board of Founders who have demonstrated their long-term commitment with the bank shall perform their advisory role to the directors and the management. ACBs Board of Directors strongly believes that with the approval and support of shareholders, customers, partners, and state agencies given to ACB, with endless endeavors of the management and all staff, the business plan for year 2008 and objectives set for period to 2010, vision to 2015 shall be successfully achieved.
Tran Mong Hung Chairman of the Board of Directors
At present, ACB is holding nearly 8% market share of savings in the industry, over 57% market share of international credit card holders, over 55% market share of Western Union money transfer. ACBs total assets accounted for 4.46%; deposits 5.8%; outstanding loans 3%; share capital 2.7%; earnings 7.7% against the banking sector.
History and Operations of the Bank
1. MILESTONES
HISTORY AND OPERATIONS OF THE BANK
1.1 Establishment Asia Commercial Joint-Stock Bank (ACB) was established under the Business License No. 0032/NH-GP dated 24 April 1993 by the State Bank of Vietnam and Establishment Permit No. 533/GP-UB dated 13 May 1993 by the Peoples Committee of Ho Chi Minh City. ACB started operations on 04 June 1993. 1.2 Listing Pursuant to Decision No. 21/QD-TTGDHN dated 31 October 2006, ACB was approved for listing shares on Hanoi Securities Trading Center.
Type of stock Code Par value per share Number of outstanding shares 1.3 Other Events
Common stock ACB VND 10,000 263,005,996 shares
Year 1996: ACB was the first Vietnamese commercial joint-stock bank to issue ACBMasterCard an international credit card. Year 1997: ACB issued ACB-Visa international credit card. ACB began to approach modern banking practices through a two-year training program on banking operations conducted by foreign bankers and banking specialists. From this comprehensive program, ACB gained, in a systematic understanding of operating, principles of a modern bank, standards and best practices in risk management, especially in retail banking, and has managed to translate its knowledge into actions in Vietnams situation.
Annual Report 2007 www.acb.com.vn
Year 1999: ACB launched its IT modernization program, the purpose of which is to set up a wide area network. At 2001-end, the core banking platform named TCBS (The Complete Banking Solution) was officially put into operation, which enables real time transactions, connects all branches together and allows them to share a centralized database. Year 2000: After its preparation started in 1997, ACB reengineered its structure as part of a corporate development strategy within first half of the 2000s (2000 - 2004). The new structure differentiated business activities with support activities. Business divisions consist of consumer banking, commercial banking and treasury. Support divisions include IT, managerial monitoring, business development, resource management, and several departments directly reporting to the President. Head Offices business activities were transferred to the Main Branch of HCMC. The reengineering aimed at ensuring thorough and smooth direction, customer-oriented product management in appropriate customer segments and proper care for business development and risk management. Year 2003: ACB established a quality management system in accordance with ISO 9001:2000 and its ISO quality management system was acknowledged in terms of (i) taking deposits, (ii) short and long-term lending, (iii) trade services, and (iv) providing human resources at the Head Office. Year 2005: Standard Chartered Bank (SCB) signed an agreement with ACB on a comprehensive technical assistance, and became ACBs shareholder. ACB carried out the second phase of IT modernization program, including (i) server upgrading, (ii) replacement of current bankcard transaction processing software by a new one compatible with the core banking platform and (iii) ATM installation. Year 2006: ACB stocks were listed on Hanoi Securities Trading Center. Year 2007: ACB strongly expanded the branch network, with 31 new branches and subbranches and set up ACB Leasing Company. Besides that, ACB strengthened it cooperation with various partners such as a contract with Open Solution (OSI) Thien Nam for upgrading the core banking solution, MOU with Microsoft Group on applying the information technology for operations and management, and agreement with Standard Chartered Bank on issuing bonds. Finally, ACB succeeded in the issuance of 10 million shares worth VND 100 billion par value with proceeds of over VND 1,800 billion.
2. GROWTH PATH
2.1 Business Scope To mobilize short, medium and long term capital in the form of time deposits, demand deposits, certificates of deposits; to receive investment funds, to receive capital from domestic and overseas financial institutions; to grant short, medium, long term loans; to discount commercial paper, bonds and valuable documents; to invest in securities and companies; to provide settlement services to customers; to deal in foreign exchange and gold; to provide international settlement services; to act as agent and provide consultancy services for securities investment, to provide securities deposit services, corporate finance consultancy services, underwriting services, asset management services, leasing and other banking services.
2.2 Operations Situation During the past 15 years, ACB has maintained its stable and strong growth, which is demonstrated through the following:
100.000 80,000 60,000

85,392
90,000 75,000 60,000 45,000

44,650
40,000
24,273
30,000 15,000 0
22,341
20,000 0
15,420
2004
2005
2006
2007
2004
14,354
2005
2006
39,736
2007
TOTAL ASSETS, consolidated (bn)
DEPOSITS, consolidated (bn)
40,000
2,400
2,127
32,000
2,100
31,974
1,800 1,500 1,200
24,000
17,365
16,000
900
687
9,563
8,000
600
282 392
6,760
300 0
2004
2005
2006
2007
2004
2005
2006
2007
OUTSTANDNG LOAN, consolidated (bn)
PRE-TAX PROFIT, consolidated (bn)
74,943
3. GROWTH ORIENTATIONS
Key targets in 2008 Pre-tax profit of Group Total assets Outstanding loans Deposits Fee income New recruits New branches and sub-branches VND 2,500 billion VND 145,000 billion VND 59,000 billion VND 94,500 billion VND 465 billion 3,263 heads 93
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II
Report of the Board of Directors
II
1. HIGHLIGHTS IN PERFORMANCE
REPORT OF THE BOARD OF DIRECTORS
Early in 2007, seeing that ACB could be growing faster, the board of directors conducted discussions with the management to increase the targets in terms of total assets, outstanding loans and profit. Consequently, as of 31 December 2007, ACBs pre-tax profit mounted to VND 2,127 billion which is 3 times larger from 687 billion in 2006. Deposits reached VND 55,283 billion; outstanding loans attained VND 31,974 billion. The Groups total assets remarkably increased by 91.2%, reaching VND 85,392 billion. The board as usual approved the branch network expansion, bankcard and ATM business plans, appointments of officers, the purchase of long-term assets, including technological fixed assets, and regulation for employee stock ownership plan. The board also discussed with the management the investment strategy of ACB Group, issues of investment into state-owned enterprises being equitized. Business model adjustments were approved to enhance company-wide management.
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2. MAJOR CHANGES
The board regularly had discussions with the management on how to balance between growth targets and potential risks arising therein and from the imbalances in the banking industry and macroeconomic environment. The board prepared for the elections of a new board of directors and a new supervisory board for the term of office from 2008 to 2012, the introduction of members of board of founders, which was approved by the stockholders and functions as advisors to the board and the management. The Compensation and Personnel Committee has been set up in replacement of the Compensation Committee and the Personnel Committee, with additional and adjusted roles and responsibilities to meet requirements of a fast growing institution.
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3. PROSPECTS
With a growth rate more than doubling that of the industry, ACB has maintained its leading position in the joint-stock bank sector of Vietnam, reducing the gap in size with state-owned commercial banks. This year 2008, ACB shall continue implementing its strategy of robust growth, efficient management and high profitability, among which growth is the first priority. Growth must be kept under control and only when risk is managed can growth be allowed. Facing the challenges that may take place in 2008 and the years to follow, ACB shall try to turn them into opportunities. Variations in the markets need to be monitored and forecasted for appropriate decisions. ACB needs to continuously find business opportunities in a highly competitive market between domestic banks and foreign banks, given the state-owned banks are occupied with the equitization process and foreign banks are still constrained in business scope, branch network, and insufficiency of human resources. ACB will change the board structure to take into consideration the corporate governance models of world major banks and financial groups, best practices in governance, as well as Vietnamese current rules and regulations. Beginning in 2008 the board structure has changed from an ownership structure to a know-how structure with executive directors in charge of specific areas of banking business and independent directors. The board shall consist of members of management who serve as a linkage between the two organs. This is a process of separation of ownership and governance and management to add more value to stockholders and other stakeholders. Vision 2015 has been introduced. ACB shall strive for being one of the top three leading financial groups in the country. The bank anticipates having equity of about VND 15 trillion, total assets of about VND 315 trillion, and profit of about VND 7 trillion by 2010 or 2011. To implement such a vision requires the bank to set up and revise its growth strategy, possess a professional and ethical workforce, build up procedures and solutions particularly in risk management, and be able to choose the right timing.
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III
Report of the Chief Executive Officer
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REPORT OF THE CHIEF EXECUTIVE OFFICER
1.
FINANCIAL SITUATION
1.1 Financial Ratio Analysis ACBs total assets rapidly increased by 91.2% during 2007, however, a threefold increase in profit allowed ACB to improve its ROA by 1.3% against 2006, making up 3.3%. Accordingly, return on equity (ROE) was 53.8%, which is the highest figure from the day the bank was established.
Table 1. Profitability (%)
Item 2 Pre-tax Profit/ Average equity (ROE) Pre-tax Profit/ Average total assets (ROA)
2007
53.8% 3.3%
2006
46.8% 2.0%
2005
39.3% 2.0%
2004
44.3% 2.1%
2003
35.8% 1.9%
Liquidity is a critical criterion used by the SBV to assess credit institutions. Statistics shows that ACB has always kept its liquidity at a highly safe position and its liquidity has a tendency to increase. Specifically, the annual current ratios are maintained at over 100%; the ratios of short-term funds for medium and long-term loans are much lower than the 40% regulated by the SBV.
Table 2. Liquidity
Item Current ratio (times) Ratio of short-term funds for medium and long-term loans
2007
5.99 0%
2006
3.67 0%
2005
4.76 0%
2004
4.41 0%
2003
2.48 6.96%
Besides, ACB is doing well at credit quality management represented by a decrease of bad loans/ total outstanding loans ratio from 0.20% of 2006-end to 0.08% at the end of 2007. Loans under category 2 to category 5 only made up 0.3% of total loan portfolio. Most loans are secured by commercial properties (68%), and therefore are favorable for the recovery. In 2007, according to Regulation on rating joint-stock banks which applies the CAMEL model, ACB has been continuously recognized with rank A by the SBV.
2 Consolidated figure
1.2 Changes in Share Capital In 2007, ACB constantly raised its equity in order to comply with capital adequacy requirements, enable business activities and finance asset growth. ACBs share capital increased by VND 1,530 billion from three sources: convertible bonds (VND 1,100 billion), reserve funds for capital enrichment (VND 330 billion), and new issues of common shares (VND 100 billion). Consequently, as of 31 December 2007, ACBs capital adequacy ratio was 16.19%, increasing by 5.3% against the end of last year, and there were totally 263,005,996 outstanding shares (100% are common shares).
1.3 Dividends ACBs dividend payout ratio in 2007 is 55% and as approved by shareholders, dividends shall be paid in shares to increase capital in 2008.
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2.
BUSINESS PERFORMANCE
Most business targets of 2007 were outperformed. Accordingly, ACB still maintained its leading position among joint-stock banks in terms of profit, total assets, outstanding loans, and deposits. Spectacularly, profit increased threefold against 2006, which contributed to considerable accumulation of capital and improved ACB Groups financial strength.
Items 3 Profit before tax Total assets Outstanding loans Total deposits Fee income
Planned 2007
1,500 65,000 25,010 51,261 254
Realized 2007
2,127 85,392 31,974 55,283 343
% Realized vs. Planned

141.8% 131.4% 127.8% 107.8% 134.9%
2006
687 44,650 17,365 29,395 173
% increase against 2006

209.5% 91.2% 84.1% 88.1% 98.1%
3 Consolidated figures
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ACB has had a very stable source of capital to finance future operating and investing activities from issuance of medium and long term bonds valued VND 4,170 billion. With low interest rate and without required reserve for those funds, bonds issuing in 2007 met all requirements of rapid growth and high profit.
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3.
ACHIEVEMENTS
Organizational structure and management: Year 2007 witnessed adjustments in the business model of the bank. ACB successfully developed a proactive selling model at several branches on a trial basis and completed preparatory actions for the organizational reengineering in 2008. Capital structure: As the required reserve ratio increased and competition in attracting deposits became harsh, ACB issued medium and long term bonds to stabilize its source of funds, satisfying both demands in terms of asset growth and profitability. The diversification of sources as well as uses of funds is a step forward in the process of making the banks balance sheet safer and stronger. Product development: Year 2007 witnessed the banks efforts to improve service quality and to diversify its product portfolio. Several new saving and loan products were launched such as weekly savings, savings 5+, 24-hour loan, online borrowing, fixed interest rate term loan. Longer-term mortgage loans were approved. ACB is also the first bank to introduce a new type of trading in Vietnam, i.e. gold trading via exchange. The bank has successfully created the Saigon Gold Exchange and launched the special lending scheme for gold traders at the end of 2007. Regarding payment services, ACB has officially offered electricity bill payment service at the bank outlets and has added a new feature to mobile banking service: checking credited transfer by ID card/passport via SMS. In addition, ACB has introduced a product combining banking and securities in an effort to meet the demand of the investors and securities companies. Human resources: In 2007, in order to assure sufficient manpower for the coming robust expansion, ACB intensively improved its human resource management. Besides
the management trainee program, the bank has put into operation two independent job advertisement websites with user-friendly tools for online job application. Career nights with focus on employment in banking and finance sector organized by ACB earned the participation of more than 5,000 students majored in economics and banking. ACB job recruitment aims to be more professional. ACB was honored to be the first bank in Vietnam in 2007 awarded with The Most Admired ASEAN Enterprises award in employment category by ASEAN Business Advisory Council. Technology: ACB signed contract to upgrade its core banking platform - The Complete Banking Solutions - from version 2000 to version 2007 of which data processing and managing capacity is 5 - 10 times stronger. It is a part of the banks technology enhancement to support the fast and sustainable growth. ACBs position continues to be assured of thanks to those improvements. ACB is accelerating its pace keeping up with state-owned commercial banks, and maintaining the gap with other joint-stock banks in terms of total assets. After two years of listing, its shareholders increased from more than 1,000 to nearly 8,000 at then time of this report. At 2007-end, ACBs market capitalization value was approximately VND 43,054 billion, the highest value among the joint-stock banks, and increased by two and a half times the amount of VND 16,644 billion in the previous year.
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4.
BUSINESS PLAN
Business environment in 2008 shall continue to undergo tortuous fluctuations, which creates both opportunities and challenges for the banking industry. The US economy may face a recession, which shall probably lead to worldwide and regional difficulties in liquidity, have unfavorable impact on Vietnamese exports, make difficult the borrowings from abroad and simultaneously push gold price upwards. In domestic markets, the balancing between GDP growth and inflation control could result in pressures and difficulties to banks. Besides, there shall be more new banks and competition shall become more fierce in terms of taking deposits. The stock market and real estate market shall continue to attract investors.
1
In 2008, ACB shall continue to implement its business strategy with the following five contents: Fast and sustainable growth; Efficient risk control to assure safety; Maintenance of sound capital structure and high profitability; Succession planning; Improvement of corporate culture.
2008 is also a year to pave the way for the realization of 2008 - 2010 Plan of ACB: it is anticipated that in 2010 the total assets and loans outstanding shall increase 3.6 times; share capital 2.5 times and profit before tax 3.0 times in comparison with 2007. In order to execute the plan, ACB has to raise its operating targets for 2008 (including total assets, outstanding loans, deposits and profit) to 1.6 or 2 times higher than that of 2007. Key financial ratios are going to be maintained: ROE at the level of over 30%, net interest income over average total assets at approximately 2.3%, and fee income at double rate. Equity is going to be strengthened. Share capital enrichment shall come from dividends of 2007, conversion of bonds of VND 550 billion, and capital surplus of VND 1,704 billion. Long-term liabilities from additional issue of convertible bonds worth VND 1,350 billion was completed in February 2008. Besides, important programs and projects to be put into operation in 2008 include: (1) the implementation of direct selling model at all branches; (2) the organizational adjustment to separate the sale and operation functions and to improve the banks control and audit system; (3) the introduction of new products in terms of savings, loans and investment; (4) increase geographical reach and number of outlets. In order to overcome the challenges from a fast changing environment, ACB needs to be alert and flexible in establishing short-term action plans in response to market fluctuations, be resolute in the implementation of key projects and be focused on taking chances. ACB staffs mutual efforts shall make 2008 the successful final year of the 5-year plan from 2004 to 2008 and at the same time build the foundation to achieve the ambitious targets of the business plan for the period from 2008 to 2010 under the light of the corporate vision towards 2015.
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Subsidiaries and Affiliates
IV
SUBSIDIARIES AND AFFILIATES
1.
COMPANIES HOLDING OVER 50% OF ACBS SHARE CAPITAL
Currently, no company holds over 50% of ACBs share capital.
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2.
COMPANIES WITH 50% OF SHARE CAPITAL BEING HELD BY ACB
Companies
ACB Securities Company (ACBS) ACB Asset Management Company (ACBA) ACB Leasing Company (ACBL)
Business License Sector No.

06/GP/HKD 4104000099 4104001359 Securities Asset management Leasing
% owned by ACB
100 100 100
% owned by subsidiaries
-
Total
100 100 100
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3.

ACTIVITIES OF ACBS WHOLLY-OWNED COMPANIES
3.1 Report of ACBS Company Market conditions In 2007 the Vietnam stock market experienced several changes which can be divided into two stages as follows: From early 2007 to mid March 2007 stage: Indices at both Hanoi and HCMC exchanges as well as share prices on OTC market rocketed. HoSTC-Index came to a peak of 1170.67, increasing by 56%; and HaSTC- Index 459.36, increasing by 90% against end of 2006. Correction stage commencing in mid-March 2007: Share prices were considered to reach too high a peak and measures to curb the overheating of the market such as the control of source of funds, information about taxation on securities trading gains, etc. brought the Vietnamese stock market to a correction period. During the latter stage from late March to April, indices of both HCMC and Hanoi floors and securities prices on the OTC market dropped dramatically, and fluctuated around 1,000 points for VN-Index and 300 points for HaSTC-Index. Total value of market capitalization reached around USD 13 billion, down 23% in comparison with end of first quarter 2007. Causes accounting for the market corrections during this stage are as follows: Directive No. 03/2007/CT-NHNN on the cap limit for securities loans of 3% of the total outstanding loans of each bank. More than 90% of listed enterprises issued additional shares. The supply of securities proliferated especially coming from large-scale IPOs of equitized companies such as Bao Viet, PVFC, Dam Phu My, Vietcombank, etc. Unfavorable information such as high inflation rate, the high rising of gold price, the decline of world stock exchanges, the imposition of income tax on securities gains (20%) also had negative impact on investors behavior. Even though the market underwent changes with waves of corrections, ACBS still achieved good performance.
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Business Performance Total assets of ACBS reached VND 1,780 billion at 31 December 2007. Profit before tax amounted VND 412 billion, 4.9 times of 2006. Charter capital increased from VND 250 billion to 500 billion and up to 1,000 billion in January 2008. Brokerage activities expanded strongly in 2007. By year-end the company had nearly 27,000 investors, individual and institutional, opened transaction accounts at ACBS including international investment institutions such as Citigroup, JP Morgan, PXP. The number of transaction accounts increased threefold in comparison with 2006. Brokerage fees reached VND 115 billion. Corporate advisory activities grew significantly. According to statistics of the State Securities Commission the corporate advisory service of ACBS ranked second on the market in terms of quantity of advisory contracts, covering 15% market share. Fee earnings (including underwriting fees) reached over VND 6 billion. Balance on term trading of OTC stocks at the end of 2007 was VND 373 billion, with fee earnings of more than VND 25 billion. Proprietary trading and investment activities also grew strongly bringing ACBS an income of nearly VND 370 billion, 12 times that of 2006. In 2007, ACBS consolidated its organization and managerial processes, enhanced its image, brand name and service quality, and continued to build up a professional investment advisory unit. Furthermore, ACBS has also expanded its network to 13 offices which comprise: Head office, branches (Saigon, Thi Nghe, Tan Binh, Ha Noi, Hai Phong), subbranches (Phan Chu Trinh in Hanoi), and agents (Khanh Hoi, Cho Lon in HCMC, Vung Tau, Khanh Hoa, Da Nang, Quang Ninh). Operating Plan of 2008 Perfect the new organizational structure, improve regulations on internal management, technical procedures and especially procedure of risk management; Enhance financial capacity; Build up a strong brand name by service quality enhancement and diversified products; Build up a modern information technology platform; Create a good working environment and compensation scheme to attract talent, and build a culture within the ACBS entity. With results gained in 2007 and the plan for 2008, ACBS aims at the target of fast and sustainable growth in order to gradually become a leading investment bank of Vietnam.
3.2 Report of ACBA
In 2007, ACBA had the following foci: Managing and recovering ACB non-performing loans. Planning and implementing of the construction and uses of properties under ACBAs management Other related businesses (investment, property auction, etc.) Regarding the management and recovery of non-performing and bad debts, ACBA has kept under control 100% non-performing loans, thanks to the application of improved tools such as recovery procedure, standardized forms, IT programs and the proactiveness of the staff. On a case by case basis and depending on customer behavior, collaterals and other legal factors, ACBA would devise appropriate solutions. In 2007, ACBA recovered VND 32.36 billion dong, earned VND 5.7 billion of interest and resolved 127 cases including tough ones, achieving 269.7% of the year target. Apart from debt recovery, ACBA also puts effort in investigation of causes of non-performing loans and gives feedback to ACB for preventive and corrective actions. Regard to the construction and uses of properties under ACBAs management, ACBA cooperated with ACB construction unit in the construction of two office buildings at No. 444A- 446 Cach Mang Thang Tam Street, Ward 11, District 3, HCMC and at No. 10 Phan Chu Trinh Street, Ha Noi. Following ACBs guidelines, ACBAs other businesses also gains satisfactory achievements. In terms of 2007 financial results, ACBA total pre-tax profit from all businesses is VND 348.14 billion, which contributes to the overall success of the group.
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3.3. Summary report on activities of ACB Leasing Company (ACBL)
ACBL was licensed on 22 May 2007 and came into operations on 29 October 2007. During its two months of operation, ACBL has gained leasing customers, import customers. Pre-tax profit reached VND 303 million. Due to the leasing loans just disbursed since the year-end, most of the companys income is from deposit interest of idle share capital. However, it is expected that in 2008 interest of leasing activities and service fee shall increase considerably in line with the growth of leasing balance. ACBL joined The Leasing Association in 2007 with the expectation to benefit from support in terms of legal issues, technical operation as well as to suggest to the state authorities to settle issues related to real estate lease, factory lease, registration of leased properties, etc. Based on the market situation and the planned resources, the company sets the target for 2008 as follows: Leasing balance : VND 300 billion Pre-tax profit: over VND 8.5 billion ROE: 6.15%. This rate of ROE is humble compared with older companies; it however shows the initial efficiency. Besides, ACBL shall focus on improving the staffs skill, expand the network in the North region, apply for a license to offer foreign currency leasing. ACBL shall increase its chartered capital to VND 200 billion when its leasing balance reaches VND 300 billion to be more active in financing, and increase its competitiveness.
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Structure & Personnel
STRUCTURE & PERSONNEL
GENERAL MEETING OF SHAREHOLDERS
1. ORGANIZATIONAL CHART
BOARD OF DIRECTORS
COMMITTEES
PRESIDENT & CEO
STRATEGIC PLANNING DEPARTMENT CREDIT POLICY AND MANAGEMENT DEPARTMENT ISO QUALITY ASSURANCE DEPARTMENT
INVESTMENT DEPARTMENT
CONSUMER BANKING DIVISION
COMMERCIAL BANKING DIVISION
TREASURY DIVISION
BUSINESS DEVELOPMENT DIVISION
Sales Departments Support Departments
Sales Departments Support Departments
Foreign Exchange Department Gold Trading Department
Branch Expansion Department Marketing Department Market Research Department
Technical Departments
Technical Departments
Money Market Department
Product Departments
Product Departments
Main branches,
SUPERVISORY BOARD
OFFICE TO THE BOARD OF DIRECTORS
INTERNAL AUDIT DEPARTMENT
ACCOUNTING DEPARTMENT
EXTERNAL RELATIONS DEPARTMENT
RISK MANAGEMENT DEPARTMENT
OPERATIONS DIVISION
HUMAN RESORCE MANAGEMENT DIVISION
IT CENTER
Credit Support Department
HR Operations Department Administration and Construction Department HR Development Department Training Center
Administration Sub-department Business Analysis Department Database Management Department IT System Operations Department
Operations Department Legal and Compliance Department Banknote Department Collateral Appraisal Department General Management Department
branches and sub-branches
2
2. THE MANAGEMENT
5 4
31
1 2
Mr. HUYNH NGHIA HIEP
Year of birth Academic background Professional background
Mr. LY XUAN HAI

President
1965 University Ph.D. in Mathematics and Physics, Belarusian State University
First Executive Vice President

1953 University HCMC University of Economics (Intake A), Major in Banking
3 4
Mr. LE VU KY
Mr. NGUYEN THANH TOAI

Executive Vice President

1953 University HCMC University of Economics (Intake A), Major in Pricing Science Ph.D. in Economics, Plekhanov State University

1956 University Ph.D. in Mathematics and Physics, Moscow State University
Mr. DO MINH TOAN


1970 i hc B.A. in Economics, HCMC Banking University B.A. in Economics, HCMC University of Economics B.A. in Law, HCMC Law University MBA, Colombia Southern University, USA
6 7
Mr. DAM VAN TUAN
Year of birth Academic background
Mr. HUYNH QUANG TUAN


1958 University Kiev National Economics University, Ukraine Leningrad University of Economics and Finance, former Soviet Union

1951 University B.A. in Economics, HCMC University of Economics M.A. in Comparative Linguistics, HCMC University of Social Science and Humanities
Professional background
8 9
Mr. NGUYEN VAN HOA
Mr. BUI TAN TAI


1973 University B.A. in Economics, HCMC Banking University B.A. in Economics, HCMC University of Economics MBA, Southern California University, USA
Chief Accountant
1969 University B.A. in Economics (HCMC Banking University)
33
3. REPLACEMENT OF CHIEF EXECUTIVE OFFICER IN 2007
There occurred no replacement of CEO in 2007.
4. COMPENSATION OF THE MANAGEMENT: SALARY, BONUS AND OTHER

BENEFITS
ACB has a competitive pay scheme for the Management and senior officers, with bonuses tied with performance and other benefits such as health check at qualified hospitals, accident insurance, health insurance and company cars.
5. EMPLOYEES AND POLICIES

5.1 Statistics of the Employees
As of 31 December 2007, the total number of ACBs staff reached 4,600(*), where:
Officers Staff Post-graduates B.A. holders Junior college graduates High-school graduates
Officers and staff 571 4,029
Academic level
82 3,929 431 158
Total
4,600
4,600
(*) 4,009 are regular, 591 are on trial. 5.2 Average Salary Level 2005 2006 2007 5.3 Personnel Policies 5.3.1 Training Policy Training and development has been one of the priorities at ACB. Its training policy aims at building up and fostering a professional work force, technically proficient, ethical, and devoted in customer service. ACB creates oppurtunies for employees to join in financed training courses, both internal and external, to improve their skills. In addition, ACB also sends its officers overseas for training courses under the support of its foreign shareholders. 5.3.2 Reward Policy The reward policy of ACB is linked to business performance and service quality. Currently there are rewards for satisfactory performance, units and employees of the year, technically skilled staff, staff good at customer service, and staff offering useful initiatives. 4,628,000 dong/month 5,763,862 dong/month 8,456,000 dong/month
35
5.3.3 Allowance and social insurance Regular employees are entitled to all allowances of social insurance and health insurance as stipulated in the Labor Code. Furthermore, subject to specific jobs, employees enjoy other types of allowances such as occupational hazards, cash counting risks, expertise, etc. Annually from 2000 to now, ACB receives certificate of merit from the social insurance agency for its personnel policy. 5.3.4 Welfare Besides offering welfare items regulated by laws, ACB offers the employees the following: holiday grants (lunar new year, April 30 [unification day], etc.), grant on the banks anniversary (June 4th), 24/24 accident insurance, annual health check, comprehensive health care program ACB Care, additional payment for health club fee and meal cost, grant of uniforms, helmets, yearly vacations, and staff installment loans.
6. CHANGES IN THE BOARD OF DIRECTORS, BOARD OF MANAGEMENT,
SUPERVISORY BOARD AND CHIEF ACCOUNTANT (AT THE TIME OF THIS ANNUAL REPORT)
There occurred no changes of the above mentioned members in 2007.
36
VI
Shareholders and Corporate Governance
VI
SHAREHOLDERS AND CORPORATE GOVERNANCE
1. THE BOARD OF DIRECTORS AND THE SUPERVISORY BOARD

1.1 Members of the Board of Directors and Supervisory Board 1.1.1 The Board of Directors of ACB includes ten members: one chairman, two vice chairmen, and other seven members.
1 2
Mr. NGUYEN DUC KIEN
Mr. TRAN MONG HUNG

Chairman
Vice Chairman
1964 University ZalkaMat Military Institute, Hungary, Major in Information
3 4
Mr. TRINH KIM QUANG
Mr. PHAM TRUNG CANG

Vice Chairman
1954 University HCMC University of Economics, Major in Commerce
Member
1954 University HCMC University of Economics (Intake A), Major in Commerce
3
10
5 6
Mr. NGUYEN CHI THANH
Mr. TRAN HUNG HUY

Member
1978 University MBA (Major in Finance), Chapman University, USA
Member
1931 University University of Planned Economics
7 8
Mr. TIMOTHY M. KRAUSE
Ms. HUYNH THANH THUY

Member
1957 University Architect, HCMC University of Architecture
Member
1957 University B.B.A., University of Notre Dame; M.A. in International Economics and the U.S. Diplomatic Policy; Advanced Admistration Program, Havard Business School, USA
9 10
Mr. JULIAN FONG LOONG CHOON
Mr. PISIT LEEAHTAM

Member
1951 University Ph.D. in Economics, Erasmus University, Rotterdam, Netherlands
Member
1951 University Bachelor (First Class Hons), Chemical Engineering, University of Loughborough, UK; MBA, Finance-Accounting, McGill University, Quebec, Canada.
41
1.1.2 The Supervisory Board consists of four members: Chief Comptroller and three comptrollers.
1 2
Ms. PHUNG THI TOT
Mr. TRIEU CAO PHONG

Chief Comptroller
1953 University HCMC University of Economics, Major in Business Administration
Comptroller
3 4
Ms.HOANG NGAN
Ms. INH THI HOA

Comptroller
1961 University MBA, Havard Business School, USA
Comptroller
1954 University HCMC University of Economics (Intake A), Major in Accounting-Finance-Banking
43
1.2 Activities of the Board of Directors In 2007, the Board of Directors called five (5) meetings. Directors had discussions on measures to achieve the stretching targets of profit of 2007, the conversion of two thirds of the firsttranche convertible bond issued in 2006, the second-tranche issuance of convertible bonds worth VND 1,350 billion under the initial plan of VND 3,000 billion, and the share issuance of VND100 billion in face value for the capital enrichment as approved by the shareholders. 1.3 The Committees The Personnel Committee acts as the advisor to the Board on strategy of human resource development for optimal efficient utilization of human resources. The Management Credit Committee approves loans, inter-bank deposit limits, measure of loan recovery, reduction or exemption; and adopts policies of lending and credit risk management. The Investment Committee evaluates investment projects and makes recommendations to appropriate authorities for decisions. ALCO manages the structure of the balance sheet, sets up and monitors credit and financial ratios for them to be in line with business strategies. 1.4 Activities of the Supervisory Board The Supervisor Board performs its tasks through combined activities between the Supervisory Board and the directors and the management in controlling and auditing the banks operations. Under guidance from the Supervisory Board, the Internal Audit Department made efforts to conduct more audits on procedure and compliance in order to prevent risks and ensure safety; made timely warnings about potential risks, and recommendations on the correction of errors; this task has helped the assurance of operational safety and compliance. During the year, the Internal Audit Department conducted on-site inspections to 56 units, conducted more than 300 unscheduled checks on cash balances and on the safety of cash vaults; the department recruited and trained 112 more staff for the whole bank. 1.5 Activities to enhance corporate governance In 2007, ACB organized a seminar titled Basel II and operational risk management in order to raise the awareness of ACB managers on regulatory requirements about risk management and to step by step enhance the controlling function of the Board of Directors and the Supervisory Board.
ACB is currently implementing the corporate governance regulations applicable to listed companies at the HCMC Stock Exchange and Hanoi Securities Trading Center (promulgated in conjunction with the Decision No.12 dated 13 March 2007 by the Minister of Finance) to enhance its corporate governance activities. 1.6 Ownership ratio and changes in ownership ratio of Board members There remained no change in the ownership ratio of the Board members from the listing date at Hanoi Securities Trading Center to the holder-of-record date (04 January 2008) for issuing second-tranche convertible bonds. 1.7 Information on transactions of ACB stocks by members of the Board, the Management, Supervisory Board, major shareholders and other transactions by members of the Board, the Management, Supervisory Board and their related persons. Within 2007, the number of transactions and the respective volume of ACB shares of two (2) related persons of the management are as follows
Buying Selling Total
Number of transactions 11 18 29
Volume of shares 55,000 232,000 287,000
45
VI
SHAREHOLDERS AND CORPORATE GOVERNANCE
2. STATISTICS ON SHAREHOLDERS
(AT THE RECORD DATE OF 04 JANUARY 2008)
2.1 Domestic shareholders 2.1.1 Structure of domestic shareholders
Shareholders Institutional Individual Total
Number 124 7,942 8,066

2.1.2 Major shareholders:
Shares owned 40,959,491 143,146,412 184,105,903
Percentage (%) 15.6% 54.4% 70%
There are no domestic shareholders owning 5% of the share capital.
2.2 Foreign shareholders 2.2.1 Structure of foreign shareholders
Shareholders Institutional
Number 4
2.2.2 Major foreign shareholders
Shares owned 78,898,533
Percentage (%) 30%
No.
1 2 3 4
Name
Connaught Investors Ltd
Address
Jardine House, 33-35 Reid St., Hamilton, Bermuda
Line of Business
Investment Investment Banking Investment
Shares owned
19,189,201 18,001,763 23,246,719 18,460,850
Room 1901 Me Linh Point Dragon Financial Holdings Limited Tower, 02 Ngo Duc Ke St., Dist.1, HCMC, Vietnam Standard Chartered APR Ltd. 1 Aldermanbury Square London EC2V 7SB, England
International Finance Corporation 2121 Pennsylvania Avenue, (IFC) Washington, D.C., USA
46
VII
Financial Statements
ASIA COMMERCIAL JOINT STOCK BANK CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
Corporate information Statement by management Auditors report Consolidated balance sheet (Form B02/TCTD-HN) Consolidated income statement (Form B03/TCTD-HN) Consolidated statement of cash flows (Form B04/TCTD-HN) Notes to the consolidated financial statements (Form B05/TCTD-HN) Appendices
49 51 52 54 55 56 58 103
CORPORATE INFORMATION
The Banking Licence No. 0032/NH-GP dated 24 April 1993.
The Banking Licence was issued by the State Bank of Vietnam (the SBV) for a period of 50 years from the date of the licence.
Board of Directors
The following members of the Board of Directors for the period from 2003 to 2008 have been appointed and approved in the minute of shareholders meeting dated 18 January 2003 and additional following members have been approved in the minutes of shareholders meeting 20 January 2006. Mr Tran Mong Hung Chairman Mr Pham Trung Cang Vice-Chairman Mr Nguyen Duc Kien Vice-Chairman Mr Trinh Kim Quang Member Mr Nguyen Chi Thanh Member Ms Huynh Thanh Thuy Member Mr Pisit Leeahtam Member Mr Timothy M. Krause Member Mr Julian Fong Loong Choon Member Mr Tran Hung Huy Member
Management
The following have been members of the Management for the period of these consolidated financial statements and to the date of this report: Mr Ly Xuan Hai Mr Huynh Nghia Hiep Mr Le Vu Ky Mr Nguyen Thanh Toai Mr Huynh Quang Tuan Mr Dam Van Tuan Mr Do Minh Toan Mr Bui Tan Tai President Vice President Vice President Vice President Vice President Vice President Vice President Vice President
4
PRINCIPAL ACTIVITIES
The principal activities of the Asia Commercial Joint Stock Bank (the Bank) and its consolidated subsidiaries (together, the Group) are to mobilise short, medium and long-term capital in the form of time deposits, demand deposits, certificates of deposit; to receive investment funds; to receive capital from local and overseas financial institutions; to grant short, medium and long-term loans; to discount commercial paper, bonds and valuable documents; to invest in securities and companies; to provide settlement services to customers; to deal in foreign exchange, gold; to provide international settlements services; to act as agent and provide consultancy services for securities investment; to provide securities deposit services, corporate finance consultancy services, underwritting services, asset management services, leasing and other banking services.
The Banks registered office The Banks auditors
442 Nguyen Thi Minh Khai Street, District 3, Ho Chi Minh City. PricewaterhouseCoopers (Vietnam) Limited
STATEMENT OF THE RESPONSIBILITY OF THE MANAGEMENT IN RESPECT OF THE CONSOLIDATED FINANCIAL STATEMENTS
The Banks Management is responsible for preparation of the consolidated financial statements which present fairly the financial position of the Group as at 31 December 2007 and of its results of operations and cash flows for the year then ended. In preparing these consolidated financial statements, the Management is required to: select suitable accounting policies and then apply them consistently; make judgments and estimates that are reasonable and prudent; and prepare the consolidated financial statements on a going concern basis based on the actual assessment of the going concern. We, the Banks Management is responsible for ensuring that proper accounting records are kept which disclose, with reasonable accuracy at any time, the financial position of the Group and which enable consolidated financial statements to be prepared which comply with the basis of accounting set out in Note 2 to the consolidated financial statements. The Banks Management is responsible for ensuring compliance with Vietnamese Accounting Standards and prevailing regulations applicable to banks and other credit institutions operating in SR Vietnam. We are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS

We hereby approve the accompanying consolidated financial statements as set out on page 5 to page 54 which give a true and fair view of the financial position of the Group as at 31 December 2007 and of its results of operations and cash flows for the year then ended, in accordance with Vietnamese Accounting Standards and prevailing regulations applicable to banks and other credit institutions operating in SR Vietnam. For and on behalf of the Banks Management
Ly Xuan Hai President Ho Chi Minh City, SR Vietnam 29 February 2008
(*): page 54 -102 of this annual report.

51
INDEPENDENT AUDITORS REPORT TO SHAREHOLDERS OF ASIA COMMERCIAL JOINT STOCK BANK

PricewaterhouseCoopers (Vietnam) Ltd. 4th Floor, Saigon Tower 29 Le Duan Street, District 1 Ho Chi Minh City Vietnam Telephone: (84-8) 823 0796 Facsimile: (84-8) 825 1947
We have audited the accompanying consolidated financial statements of Asia Commercial Joint Stock Bank (the Bank) and its subsidiaries (together, the Group), which comprise the consolidated balance sheet as at 31 December 2007, the consolidated income statement and consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes.
Managements Responsibility for the Consolidated Financial Statements

Management of the Bank is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Vietnamese Accounting Standards and prevailing regulations applicable to banks and other credit institutions operating in SR Vietnam. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditors Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Vietnamese and International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Banks preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Groups internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements give a true and fair view, in all material respects, of the financial position of the Group as of 31 December 2007, and of its financial performance and cash flows for the year then ended in accordance with Vietnamese Accounting Standards and prevailing regulations applicable to banks and other credit institutions operating in SR Vietnam.
John Gavin AC No. N.0293/KTV Authorised signatory
Tran Hong Kien AC No. 0298/KTV
PricewaterhouseCoopers (Vietnam) Limited Ho Chi Minh City, SR Vietnam Audit report number HCM1974 29 February 2008
As indicated in Note 2.1 to the consolidated financial statements, the accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than SR Vietnam, and furthermore their utilisation is not designed for those who are not informed about SR Vietnams accounting principles, procedures and practices.
53
CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2007

Notes ASSETS Cash and precious metals Balances with the State Bank of Vietnam Placements with and loans to other credit institutions Trading securities Trading securities Less: Provision for diminution in value of trading securities Derivatives and other financial assets Loans and advances to customers Loans and advances to customers Less: Provision for losses on loans and advances to customers Investment securities Available-for-sales securities Held-to-maturity securities Investment in other entities and long-term investments Investments in associate companies, JVs Other long-term investments Fixed assets Tangible fixed assets Intangible fixed assets Other assets TOTAL ASSETS LIABILITIES AND SHAREHOLDERS EQUITY Due to Government and borrowings from the State Bank of Vietnam Deposits and borrowings from other credit institutions Deposits from customers Derivatives and other financial liabilities Funds received from Government, international and other institutions Bonds and Certificate of deposits Other liabilities TOTAL LIABILITIES SHAREHOLDERS EQUITY Capital and reserves attributable to equity holders of the Bank Capital Reserves Retained earnings Minority interest TOTAL LIABILITIES AND SHAREHOLDERS EQUITY CONTINGENCIES AND COMMITMENTS 3 4 5 6 6 7 8 9 10,1 10,2 11 12 13 14 15
2007 VND million 4,926,850 5,144,737 29,164,968 504,006 (2,713) 9,973 31,810,857 (134,537) 1,658,481 7,474,348 195,358 567,111 514,109 40,638 3,517,495 85,391,681 654,630 6,994,030 55,283,104 322,512 11,688,796 4,190,760 79,133,832
2006 VND million 2,284,848 1,562,926 16,401,829 641,769 (1,574) 1,057 17,014,419 (56,207) 11,061 4,217,560 130,964 312,494 574,440 17,133 1,537,475 44,650,194 941,286 3,249,941 29,394,703 288,532 5,861,379 3,217,838 42,953,679
16 17 18 7 19 20 21
22 23 23
41
2,630,060 2,192,037 1,435,752 85,391,681 3,899,019
1,100,047 187,727 366,213 42,528 44,650,194 1,366,019
Chairman Tran Mong Hung 29 February 2008
President Ly Xuan Hai
Chief Accountant Nguyen Van Hoa
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2007

Notes Interest and similar income Interest and similar expenses Net interest income Fees and commission income Fees and commission expenses Net fee and commission income Net gain from dealing in foreign currencies and gold Net gain from disposal of trading securities Net gain from disposal of investment securities Other incomes Other expenses Net other (expenses)/income Income from investments in other entities General and administrative expenses Operating profit before provision for credit losses Provision for credit losses Profit before tax Business income tax Net profit for the year Minority interest
NET PROFIT ATTRIBUTABLE TO THE EQUITY HOLDERS OF THE BANK DURING THE YEAR
2007 VND million 4,538,134 (3,227,028) 1,311,106 342,592 (71,377) 271,215 155,140 344,990 896,792 90,817 (85,891) 4,926 36,653 (804,650) 2,216,172 (89,357) 2,126,815 (366,807) 1,760,008 (215) 1,759,793 8,095 8,095 5,836
2006 VND million 2,490,616 (1,670,044) 820,572 172,980 (24,645) 148,335 70,320 31,520 65,757 118,964 (103,367) 15,597 38,139 (462,424) 727,816 (40,597) 687,219 (181,643) 505,576 (148) 505,428 4,527 3,475 3,569
25 26 27 28 29 32 33
34 35
37
Earnings per share Basic earnings per share based on weighted average number of ordinary shares and calculated at the date of the preparation of the financial statements. Basic earnings per share recalculated on the assumption that bonus shares issued in 2007 had been issued since 01 January 2006. Diluted earnings per share (calculated based on the assumption that convertible bonds had already converted into ordinary shares in the year. In actuality, the conversion has not happened yet) calculated at the date of the preparation of the financial statements. Diluted earnings per share (calculated based on the assumption that convertible bonds had already converted into ordinary shares in the year. In actuality, the conversion has not happened yet) recalculated on the assumption that bonus shares issued in 2007 had been issued since 01 January 2006 .
24.1 24.1 24.2
24.2
5,836
2,900
55
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2007
(Indirect method)
2007 VND million CASH FLOWS FROM OPERATING ACTIVITIES Net profit before tax Adjustments to reconcile net profit for the year to net cash flows from operating activities: Depreciation and amortisation Provision for credit losses and diminution in value of investments Loss/(gain) on disposal of fixed assets Gains on disposal of investments in other entities and other long-term investments, share of profit from associates and dividend income Other adjustments CASH FLOW FROM OPERATING ACTIVITIES BEFORE CHANGES IN OPERATING ASSETS AND LIABILITIES Changes in operating assets Increase in compulsory reserves with the SBV Increase in placements with and loans to other credit institutions (Increase)/Decrease in trading securities Increase in derivatives and other financial assets Increase in loans and advances to customers Increase in interest receivable Increase in other operating assets Changes in operating liabilities Decrease in borrowings from the Government and SBV Increase in placements and borrowings from other credit institutions Increase in deposits from customers Increase in funds received from Government, international and other institutions Increase in certificate deposits Increase in accrued interest expenses Increase in other operating liabilities NET CASH FLOWS FROM OPERATING ACTIVITIES BEFORE BUSINESS INCOME TAX Business income tax paid Payment from reserves Bad debt recoveries NET CASH FLOWS FROM OPERATING ACTIVITIES 2,126,815 72,655 109,643 213 (617,579) 1,691,747 2006 VND million 687,219 47,509 40,597 (37) (100,306) 674,982
(3,152,244) (7,052,865) (4,748,357) (8,916) (14,797,208) (544,045) (1,197,481) (286,656) 3,744,089 25,882,533 33,980 2,757,463 331,184 440,303 3,093,527 (156,699) (38,116) 2,898,712
(551,619) (3,885,488) 115,414 (1,057) (7,632,902) (430,697) (296,815) (26,026) 2,126,365 13,616,657 23,104 229,964 2,329,378 6,291,260 (171,167) (18,310) 24 6,101,807
2007 VND million CASH FLOWS FROM INVESTING ACTIVITIES Cash decreased due to disposal of subsidiaries Purchase of fixed assets Proceeds from disposal of fixed assets Cash paid for investments in other entities and other long-term investments Proceeds from disposal of investments in other entities and other long-term investments Dividend income NET CASH FLOWS FROM INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Increase in capital Proceeds from issuance of valuable papers and convertible bonds Dividend paid NET CASH FLOWS FROM FINANCING ACTIVITIES NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR Foreign exchange differences adjustment CASH AND CASH EQUIVALENTS AT END OF THE YEAR Cash and cash equivalents are made up of: Cash and precious metals Demand deposits with the State Bank of Vietnam Placements with credit institutions (3,784) (528,286) 75,770 (725,049) 1,080,236 31,321 (69,792) 1,804,150 4,170,000 (22,022) 5,952,148 8,781,068 9,855,369 18,636,437 4,926,850 667,341 13,042,246 18,636,437
2006 VND million (549,978) 37 (448,192) 81,753 34,649 (881,731) 1,650,069 (115,183) 1,534,886 6,754,962 3,100,407 9,855,369 2,284,848 237,774 7,332,747 9,855,369
57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
1 GENERAL INFORMATION
Asia Commercial Joint Stock Bank (herein referred to as the Bank) is a Vietnamese joint-stock bank registered in the Socialist Republic of Vietnam. Banking Licence No. 0032/NH-GP was granted to the Bank by the State Bank of Vietnam (the SBV) effective 24 April 1993. The licence is for a period of 50 years and stipulates a share capital of VND20 billion. The Bank commenced the operation on 4 June 1993. The Banks chartered capital as at 31 December 2007 is VND 2,630,060 million. The Banks Head Office is located at No. 442 Nguyen Thi Minh Khai Street, District 3, Ho Chi Minh City. The Bank has 111 branches and transaction offices nation-wide. As at 31 December 2007, the Bank had the following subsidiaries:
Subsidiary
Operating Licence
Nature of business Securities company Asset Management Leasing
% direct shareholding by the Bank 100 100 100
% indirect shareholding Total % shareholding through by the Group subsidiary 100 100 100
ACB Securities Company (ACBS) ACB Assets Management Company (ACBA) ACB Leasing Company (ACBL)
06/GP/HKD 4104000099 4104001359
As at 31 December 2007, the Bank had 4,009 employees (2006: 2,714 employees).
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted for the preparation of these consolidated financial statements are set out below. 2.1 Basis of preparation of consolidated financial statements
The consolidated financial statements have been prepared in millions of Vietnamese Dong (VND million) using the historical cost convention and in accordance with Vietnamese Accounting Standards and prevailing regulations applicable to banks and other credit institutions operating in SR Vietnam. Accordingly, the consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with jurisdictions other than SR Vietnam. The accounting principles and practices utilised in SR Vietnam may differ from those generally accepted in countries and jurisdictions other than SR Vietnam. 2.2 Fiscal year
The Groups fiscal year is from 1 January to 31 December. 2.3 Foreign currencies
The consolidated financial statements are prepared in million of Vietnamese Dong. Transactions arising in foreign currencies are translated at rates ruling on the transaction dates. Monetary assets and liabilities denominated in foreign currencies at each month end are translated at the rates of exchange ruling at the month end date. Foreign exchange differences from monthly revaluation are recorded in the foreign currency difference reserve in the consolidated balance sheet and transferred to the consolidated income statement at the end of the year. 2.4 Consolidation (i) Subsidiaries Subsidiaries are those companies over which the Group has the power to govern the financial and operating policies. Subsidiaries are consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date on which control ceases.
5
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007 (continued)
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equities instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair value at the acquisition date, irrespective of the extent of the minority interest. The excess of cost of acquisition over the fair value of the Groups share of identifiable assets acquired is recorded as Goodwill. Goodwill is recognised in expenses (if it is of small value) and otherwise amortised in a uniform manner during its estimated useful life (if it is of big value). The useful life of goodwill should be properly estimated as with the time during which sources embodying economic benefits are recovered by the Group. Such useful life is not beyond 10 years from the date of recognition. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the consolidated income statement. Inter-company balances, transactions and unrealised gains on transactions between those companies and the Group are eliminated. Unrealised losses also eliminated unless transaction provides evidence of an impairment of the asset transferred. The accounting policies of subsidiaries have been changed where necessary to ensure the consistency with the policies adopted by the Bank. (ii) Minority interest Minority interest is the portion of the profit or loss and net assets of a subsidiary attributable to equity interest that are not owned, directly or indirectly through subsidiaries, by the parent. (iii) Associates and joint-ventures Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Joint-venture is a contractual arrangement whereby the Group and other parties undertake an economic activity which is subject to joint control. The Group uses equity method for consolidating its investments in associates and joint-ventures. The Groups share of its associates and joint-ventures post acquisition profits or losses is recognised in the consolidated income statement. When the Groups share of losses in an associate and joint-venture equals or exceeds the carrying amount of its investment in the associate and joint-venture, the Group does not recognise further losses in its consolidated financial statements, unless it has obligations to pay on behalf of the associate and joint-venture. Accounting policies of associates and joint-venture have been changed where necessary to ensure consistency with the policies adopted by the Bank.
2.5 Interest income and expenses
The Group records interest income and expense on an accrual basis. Interest income from non-performing loans is not accrued and is recognised on actual collection basis. Interest income is derecognised when a loan becomes
overdue and is recorded in off-balance sheet. Interest income on overdue loan is recognised in the consolidated income statement on receipt.
2.6 Fees and commissions income
Fees and commission income consists of fees received for settlement services, treasury services, guarantees services, securities brokerage services and other services. Fees on guarantees services and securities brokerage services are recognised on an accrual basis. Fees and commissions arising from settlement services, treasury services and other services are recognised on receipt.
2.7 Loans and advances to customers
Short-term loans are those with a repayment date within one year of the date the loan was advanced, medium-term loans are those with a final repayment date between one and five years of the date the loan was advanced and longterm loans are those with a repayment date of more than five years from the date the loan was advanced. Loan classification and provision for losses are made in accordance with Decision No. 493/2005/Q-NHNN dated 22 April 2005 and Decision No. 18/2007/Q-NHNN dated 25 April 2007 of the Governor of the State Bank of Vietnam. These decisions are applied prospectively on the basis that the decisions are considered as guidances to assist the Bank to better estimate its loan loss provision. For the year ended 31 December 2007, loans and advances to customers are classified into five groups based on the payment arrears status and other qualitative factors as follows: Group 1: Current - Undue debts which, according to the Banks assessment, could be fully recovered, both principal and interest, when they fall due; - Debts which are overdue for less than 10 days and according to the Banks assessment, could be fully recovered, both overdue principal and interest in accordance with the remaining payment schedule. Group 2: Special mentioned - Debts which are overdue from 10 days to 90 days; - First-time rescheduled debts which, according to the Banks assessment, could be fully recovered, both principal and interest, within the rescheduled payment term. Group 3: Sub-standard - Debts which are overdue from 91 days to 180 days; - First-time restructured debts, except for debts which are classified in Group 2; - Debts of which interest was waived or reduced because customer was not able to fully repay interest in accordance with the payment schedule.
61
Group 4: Doubtful - Debts which are overdue from 181 days to 360 days; - First-time restructured debts which are overdue for less than 90 days within the restructured payment term; - Second-time restructured debts. Group 5: Bad -Debts which are overdue for more than 360 days; - First-time restructured debts which are overdue for more than 90 days within the rescheduled payment term; - Second-time restructured debts which are overdue within the second-time rescheduled payment term; - Debts which are restructure for 3 times or more; - Frozen debts and debts which are awaiting resolution. Where a customer owes more than one debt to the Bank, and has any of its debts transferred to the group of debts with higher risk, the Bank is obliged to classify the remaining debts of such customer into groups of debts with higher risk corresponding with their level of risk. Where the Bank participates in a syndicated loan not as the lead bank, the Bank reclassifies all loans and debts (including the outstanding syndicated loan) of the customer into group of debt with higher risk decided by the lead bank and by the Bank. The Bank shall actively classify debts into groups of debts with higher risk corresponding with their level of risk in the following situations: - There are indications of adverse impact to the customers business environment and sector; - Customers financial ratios or repayment capability is weakened; - Customer does not accurately, completely and promptly provide the Bank its financial information for the Banks assessment of customers repayment capability. Provision for losses on loans and advances to customers The determination of specific provision for credit risk is calculated using set rates applied to each group of debts as follows:
Provision rates
Group 1 - Current 0% Group 2 - Special mentioned 5% Group 3 - Sub-standard 20% Group 4 - Doubtful 50% Group 5 - Bad 100% The specific provision is calculated based on net credit exposure of each borrower, which equals to loan and advance balance as at 30 November less value of collateral assets. The value of these assets is market value discounted at predetermined percentage for each kind of collateral assets. In accordance with the Decision 493/2005/QD-NHNN dated 22 April 2005, a general provision is also required and should be equal to at least 0.75% of total balance of loans and advances to customers as at 30 November, and excluding the total balance of loans and advances to customers which are classified as bad. This level of the general provision is required to be achieved within 5 years from the effective date of the Decision 493/2005/QD-NHNN. 2.8 Credit commitments
Credit commitments are classified into five groups based on quantitative and qualitative factors as follows: Group 1: Current - Undue commitments which, according to the Banks assessment, could be fully settled when they fall due. Group 2: Special mentioned - Undue commitments which, according to the Banks assessment, could not be fully settled when they fall due. Group 3: Sub-standard - Undue commitments which, according to the Banks assessment, could not be fully settled when they fall due; - Due commitments which are overdue for less than 30 days.
63
Group 4: Doubtful - Undue commitments which, according to the Banks assessment, could not be fully settled when they fall due; - Due commitments and contingencies which are overdue from 30 days to 90 days. Group 5: Bad - Undue commitments which, according to the Banks assessment, could not be fully settled when they fall due; - Due commitments which are overdue for more than 90 days. Provision for losses on credit commitments The determination of specific provision for losses on credit commitments is calculated using set rates applied to each group of credit commitments as follows: Provision rates
Group 1 - Current Group 2 - Special mentioned NGroup 3 - Sub-standard Group 4 - Doubtful Group 5 - Bad
0% 5% 20% 50% 100%
The specific provision is calculated based on net credit exposure of each customer which equals to credit commitment balance as at 30 November less value of collateral assets. The value of these assets is market value discounted at predetermined percentage for each kind of collateral assets. In accordance with the Decision 493/2005/QD-NHNN dated 22 April 2005, a general provision is also required and should be equal to at least 0.75% of total balance as at 30 November of guarantees, loan commitments and settlement acceptances and excluding guarantees and commitments which are classified as bad. This level of provision is required to be achieved within 5 years from the effective date of the Decision. 2.9 Investments
(i) Trading securities Trading securities are securities held for trading and are acquired principally for the purpose of selling in the shortterm or if so designated by the Management.
Listed trading securities are initially stated at cost of acquisition. Subsequently, they are measured at cost less provision. Provision is made where there is a diminution in value of listed trading securities. Unlisted securities are stated at cost of acquisition. Gains or losses from disposal of trading securities are recognised in the consolidated income statement and are reported on a net basis. (ii) Held-to-maturity securities Held-to-maturity debt securities are those securities with fixed or determinable payment and fixed maturities that the Groups management has the positive intention and ability to hold to maturity. (iii) Available-for-sale securities Available-for-sale securities are those intended to be held for an indefinite period of time, which may be sold in response to needs for liquidation or changes in interest rates, exchange rates or equity prices. Held-to-maturity and available-for-sales securities are stated at cost of acquisition. Post-acquisition interest income of debt securities is recognised in the consolidated income statement on an accrual basis. Pre-acquisition interest income of debt securities is deducted against the cost of acquisition. (iv)Investments in other entities Investments in other entities comprise shareholding of less than 20% in unlisted companies. These investments are stated at market value at acquisition date. Difference between market value and acquisition cost is recognised in the consolidated balance sheet as a deferred expense or deferred income. These deferred expenses or incomes are then amortised to the consolidated income statement. Provision is made where there is a diminution in value of these investments. Since fair values for unlisted securities cannot be measured reliably, these investments are recognised at cost of acquisition. Dividends are recognised in the consolidated income statement when the Groups right to receive payment is established. 2.10 Fixed assets
Tangible and intangible fixed assets Fixed assets are stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the fixed assets.
65
Depreciation Fixed assets are depreciated on the straight-line method to write off the cost of the assets over their estimated useful lives. The principal annual rates used are: Annual rates
Buildings 2% - 4% Office equipments 33% Motor vehicles 14% Other assets 20% Computer software 12.5% Gains and losses on disposals are determined by comparing net disposal proceeds with the carrying amount and are recognized as income or expense in the consolidated income statement. The Group is unable to separate the values of land use rights and values of construction in the costs of buildings because these buildings were acquired at the lump sum amounts. Accordingly, the land use rights have been included in costs of buildings and depreciated over the estimated useful lives of these buildings. 2.11 Gold
Gold is revalued at each month end. The differences arising from monthly revaluation are recorded in foreign exchange difference reserve and transferred to the consolidated income statement at the balance sheet date. 2.12 Cash and cash equivalents
For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise cash and precious metals, demand deposit at the State Bank of Vietnam, demand and term deposits at banks with an original maturity of three months or less. 2.13 Derivative financial instruments
Derivatives are recorded in a balance sheet account at contract value on the date which a derivative contract is entered into and revalued subsequently at their fair value. Gains or losses from realization of derivatives are recognized in the consolidated income statement. Unrealized gains or losses are recognized in consolidated balance sheets foreign currency difference reserve and transferred to the consolidated income statement at the balance sheet date.
2.14
Provisions
Provisions are recognized when: the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognized for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligations. The increase in the provision due to passage of time is recognized as interest expense. 2.15 Provision for severance allowances
In accordance with Vietnamese labor laws, employees of the Group are entitled to a severance allowance based on their years of service. This will be paid as a lump sum when the employee leaves the Group. Provision for severance allowance is made in accordance with Decree 39/2003/ND-CP dated 18 April 2003 of the Government and Circular 82/2003/TT-BTC dated 14 August 2003 issued by the Ministry of Finance. 2.16 Taxation
Business income tax expense is recognised in the consolidated income statement based on current income tax and deferred income tax. Current income tax is the amount of business income tax payable or recoverable in respect of the current year taxable profit and the current tax rates. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of occurrence affects neither accounting nor taxable profit or loss. Deferred income tax is determined at the tax rates that are expected to apply to the financial year when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
67
2.17
Related parties
Enterprises and individuals that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with the Bank and its subsidiaries are related parties of the Group. Associates and individuals owning, directly or indirectly, an interest in the voting power of the Bank and its subsidiaries that gives them significant influence over the enterprise, key management personnel, including directors and officers of the Bank and close members of the family of these individuals and companies associated with these individuals also constitute related parties. In considering each possible related party relationship, attention is directed to the substance of the relationship, and not merely the legal form. 2.18 Dividend distribution
Dividend distribution to the Groups shareholders is recognised as a liability in the consolidated financial statements in the period in which the dividends are approved by the Groups shareholders. 2.19 Fiduciary activities
The Group commonly acts as trustees and in other fiduciary capacities that result in the holding or placing of assets on behalf of individuals and other companies. These assets and income arising thereon are excluded from these consolidated financial statements, as they are not assets of the Group.
CASH AND PRECIOUS METALS

31,12,2007 VND million 1,107,017 3,801,154 18,679 4,926,850 31,12,2006 VND million 540,495 1,663,234 81,119 2,284,848
Cash on hand Gold Valuable documents
BALANCES WITH THE STATE BANK OF VIETNAM (SBV)

31,12,2007 VND million 31,12,2006 VND million 1,325,152 237,774 1,562,926
Obligatory reserves Demand deposits
4,477,396 667,341 5,144,737
An obligatory reserve in Vietnamese dong is required to be deposited with the SBV. The balance is adjusted once per month and is calculated as 10% of the average Vietnamese dong customer deposits with terms within one year and 4% of the average Vietnamese dong customer deposits with terms from above one year to two years, excluding term deposits with terms greater than two years, in the preceding 30 days. For foreign currency deposits excluding term deposits with terms of more than two years, an obligatory reserve in United States dollars is also required to be deposited, calculated by the same method at the rate of 10% for term deposits with terms within one year and 4% for term deposits with terms from above one year to two years. Balances at the SBV also include other deposits for clearing and settlement.
PLACEMENTS WITH AND LOANS TO OTHER CREDIT INSTITUTIONS

31 December 2007
Denominated in foreign currencies and gold VND million 3,014,627 912,870 472,302 4,399,799 13,523 (51) 13,472 4,413,271
Denominated in VND VND million Placements with other credit institutions Term deposit Demand deposits Margin accounts (*) Loans and advances to other credit institutions Short-term loans Medium and long-term loans Less: provision for losses on loans and advances to credit institutions 150,000 (225) 149,775 24,751,697 24,215,500 386,422 24,601,922
Total VND million 27,230,127 1,299,292 472,302 29,001,721 163,523 (276) 163,247 29,164,968
(*) Margin accounts represented margin deposits at counterparties for the activities of overseas gold margin trading (Note 30).
6
31 December 2006
Denominated in VND VND million Placements with other credit institutions Term deposits Demand deposit Margin accounts (*) Loans and advances to other credit institutions Short-term loans Medium and long-term loans Less: provision for losses on loans and advances to credit institutions Denominated in foreign currencies and gold VND million
Total VND million
10,288,000 102,697 10,390,697 220,000 (660) 219,340 10,610,037
2,762,928 851,716 2,047,095 5,661,739 130,444 (391) 130,053 5,791,792
13,050,928 954,413 2,047,095 16,052,436 350,444 (1,051) 349,393 16,401,829
(*) Margin accounts represented margin deposits at counterparties for the activities of overseas gold margin trading (Note 30).
TRADING SECURITIES
31 December 2007 31 December 2006 VND million VND million 163,910 340,096 504,006 (2,713) 501,293 279,904 224,102 504,006 (2,713) 501,293 240,311 401,458 641,769 (1,574) 640,195 198,493 443,276 641,769 (1,574) 640,195
Debt securities Equity securities Equity securities issued by other local credit institutions Equity securities issued by local corporates Other trading securities Less: provision for diminution in value of trading securities Trading securities are categorised into listed and unlisted as follows: Debt securities Equity securities Listed Non-listed Other trading securities Less: provision for diminution in value of trading securities
DERIVATIVES AND OTHER FINANCIAL ASSETS

31 December 2006
Total contract value (at the foreign exchange rate at the contract date) Total contract value (at the foreign exchange rate at 31 December) Assets Liabilities 553 553 553
Derivative currency financial instruments Forward contracts Swap contracts Other derivative financial instruments
1,251,896 2,961,753 4,213,649 4,213,649
10,526 10,526 10,526
31 December 2006
Total contract value (at the foreign exchange rate at the contract date) Derivative currency financial instruments Forward contracts Other derivative financial instruments Total contract value (at the foreign exchange rate at 31 December) Assets 386,785 386,785 1,057 1,057 Liabilities -
LOANS AND ADVANCES TO CUSTOMERS
Loans and advances to customers were analysed as follows: 8.1 Analysis by type of customers
31 December 2007 31 December 2006 VND million VND million Loans to domestic businesses and individuals Financial lease Loans funded by Government, international and other institutions 31,794,041 2,460 14,356 31,810,857 16,986,014 28,405 17,014,419
71
8.2
Analysis by industry
31 December 2007 31 December 2006 VND million VND million 8,012,741 116,274 5,428,273 722,166 14,984,250 763,208 58,545 360,108 354,585 5,620 1,005,087 31,810,857 5,124,972 136,125 3,848,511 429,966 6,621,287 377,576 45,274 150,213 175,542 80,836 24,117 17,014,419
Trading Agriculture and forestry Manufacturing and processing Construction Individual and community services Warehousing, transportation and communication Training and education Estate agents and consultants Hotels and restaurants Financial services Others
8.3
Analysis by group
31 December 2007 31 December 2006 VND million VND million 31,713,333 70,959 9,167 7,078 10,320 31,810,857 16,825,088 155,799 13,041 9,376 11,115 17,014,419
Current Special mentioned Sub-standard Doubtful Bad
8.4
Analysis by maturity
31 December 2007 31 December 2006 VND million VND million
Short-term loans (*) Medium-term loans Long-term loans
17,493,467 6,762,500 7,554,890 31,810,857
9,578,439 4,786,212 2,649,768 17,014,419
(*) Included in the short-term loans are VND372,704 million of shares under the re-purchase contracts by ACB Security Company (ACBS). 8.5 Analysis by currency
31 December 2007 31 December 2006 VND million VND million Denominated in VND Denominated in foreign currencies and gold 21,517,614 10,293,243 31,810,857 12,750,598 4,263,821 17,014,419
8.6 Analysis by geography

Ho Chi Minh City Mekong Delta Central Northern Eastern
31 December 2007 31 December 2006 VND million VND million 23,641,272 12,657,458 1,002,090 468,374 1,172,467 659,017 4,001,509 2,233,331 1,993,519 996,239 31,810,857 17,014,419 31 December 2007 31 December 2006 VND million VND million 2,179,990 12,622,784 518,095 557,972 21,714 15,910,302 31,810,857 1,128,017 6,647,686 247,438 289,643 2,036 8,699,599 17,014,419
8.7 Analysis by types of customers

State-owned companies Joint stock, limited and private companies Joint ventures 100% foreigners companies Cooperatives Individuals Others Total
PROVISION FOR LOSSES ON LOANS AND ADVANCES TO CUSTOMERS

Provision for losses on loans and advances to customers as at 31 December comprises:
Specific provision General provision Total
4,802 129,735 134,537 2007 VND million 5,945 7,072 (770) (7,445) 4,802
5,945 50,262 56,207 2006 VND million 6,891 5,345 (340) (5,951) 5,945
9.1
Specific provision for losses on loans and advances to customers
As at 1 January Charge for the year Utilisation during the year Reversal during the year At 31 December
9.2
General provision for losses on loans and advances to customers
As at 1 January Charge for the year At 31 December
2007 VND million 50,262 79,473 129,735
2006 VND million 13,050 37,212 50,262
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10 INVESTMENT SECURITIES
10.1
Available-for-sale securities
Debt securities Government debt securities Debt securities issued by other local credit institutions Debt securities issued by local corporate Equity securities Equity securities issued by local corporate Less: provision for diminution in value of available-for-sale securities
1,000,000 4,800 1,004,800 673,967 673,967 (20,286) 1,658,481
6,261 4,800 11,061 11,061
10.2
Held-to-maturity securities
31 December 2007 31 December 2006 VND million VND million 2,810,480 2,880,868 1,783,000 7,474,348 7,474,348 1,635,322 1,519,238 1,063,000 4,217,560 4,217,560
Debt securities Government debt securities (*) Debt securities issued by other local credit institutions Debt securities issued by local corporates (**) Less: provision for diminution in value of held-to-maturity securities
(*) Included VND 661,391 million (2006: VND 1,169,258 million) of Government bonds as collaterals for the borrowings from the State Bank of Vietnam. (**) The balance as at 31 December 2007 consists of VND 720,000 million of 11.2% bonds issued by an unlisted corporate. The bonds have the terms of 5 years and are secured partly by shares of a local credit institution.
11
INVESTMENTS IN ASSOCIATES AND JOINT-VENTURES

31 December 2007
At cost VND million
31 December 2006
At cost Carrying value Carrying value VND million VND million VND million 195,358 128,230 130,964
Investment in associates
188,847
11.1
Movement of investments in associates and joint-ventures
2007 2006 VND million VND million 130,964 139,617 113,499 6,533 (1,449) (191,710) (2,096) 195,358 11,713 116,516 2,825 (90) 130,964
At 1 January Reclassified from subsidiaries New purchase and capital contribution Share of net profit in the year Dividend received Disposal Transferred to other investment At 31 December
11.2
The Banks investments in associates and joint-ventures
CThe Banks investments in associates and joint-ventures comprise the following companies:
31 December 2007
Name
ACB Real Estate Company ACB Security Sevices Joint Sock Company ACB-SJC Jewelry Joint Stock Company Pho Noi Infrastructure Development Company Thuy Ta Joint Stock Company Binh Tri Thien Food Joint Stock Company Saigon - Bac Giang Industrial Park Company Saigontourist Import Export Joint Stock Company Hai Phong Plaza Commercial Joint Stock Company
31 December 2006
% share At cost -holding VND million 10 10 10 10 10 10.88 10 10 11 10 2,500 100 1,000 1,067 4,100 2,654 10,000 3,848 2,096 2,000 29,365
Nature of business
Real estate Security guard services Manufacturing, trading gold products Industrial park development Trading Food trading Industrial park development Trading Trading
% share At cost -holding VND million 9 10 10 10 10 10.88 10 10 9 9 5 45,000 100 1,000 3,067 4,100 2,654 20,000 4,368 6,750 459 11,340 98,838
Binh Chanh Manufacturing Trading Service Joint Stock Company Trading Cho Lon Tourist Joint Stock Company Tourism service Viet Long Seafoods Company Asia Investment Company Total Food trading Finance
75
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2007 (continued)
11.3 (a) Subsidiaries investments Investments of ACBS in joint ventures and associates
31 December 2007
Name ACB Real Estate Company Pho Noi Infrastructure Development Company Thuy Ta Joint Stock Company Binh Tri Thien Food Joint Stock Company Saigon - Bac Giang Industrial Park Company Saigontourist Import Export Joint Stock Company Hai Phong Plaza Commercial Joint Stock Company Binh Chanh Manufacturing Trading Service Joint Stock Company Cho Lon Tourist Joint Stock Company Asia Investment Company Total Nature of business Real estate Industrial park development Trading Food trading Industrial park development Trading Trading Trading Tourism service Finance % shareholding 14 15 11.18 15 10 15 15 15 15 At cost VND million 3,750 4,500 4,581 3,659 20,000 6,539 11,250 765 34,965 90,009
31 December 2006
At cost % shareholding VND million 15 15 11.18 10 15 10 3,750 1,601 4,581 10,000 5,759 2,000 27,691
(b) Investments of ACBA in joint ventures and associates

31 December 2007
Name ACB Real Estate Company Binh Tri Thien Food Joint Stock Company Vinh Ha Joint Stock Company Viet Long Seafoods Company Saigontourist Import Export Joint Stock Company Total Nature of business Real estate Food trading Food trading Food trading Trading % shareholding At cost VND million -
31 December 2006
% shareAt cost holding VND million 24 27.71 40.67 24.11 15 6,000 6,759 48,270 4,594 5,551 71,174
12
OTHER LONG-TERM INVESTMENTS
The Groups other long-term investments are investments in other entities with shareholding of less than 20% comprise of the following companies:
31 December 2007 At cost VND million Investment in local credit institution - unlisted Viet A Commercial Joint Stock Bank Vietnam Export Import Commercial Joint Stock Bank Gia Dinh Commercial Joint Stock Bank Viet Nam Thuong Tin Commercial Joint Stock Bank Dai A Commercial Joint Stock Bank Kien Long Commercial Joint Stock Bank Investment in local economic corporations unlisted Total 8,518 1,897 25,000 87,010 71,500 193,925 373,186 567,111 31 December 2006 At cost VND million 866 27,074 1,265 10,000 87,010 44,000 170,215 142,279 312,494
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13
TANGIBLE FIXED ASSETS

Currency: VND million Office equipment 138,900 125,034 (1,068) (3,978) (243) 258,645 Motor vehicles 63,074 33,706 (8,352) (1,492) 86,936 Other Assets 19,380 16,962 (9,627) (157) 26,558 Total
Buildings Historical cost At 1 January 2007 Additions Disposal of subsidiaries Liquidation Reclassification At 31 December 2007 Accumulated depreciation At 1 January 2007 Charge for the year Disposal of subsidiaries Disposals Reclassification At 31 December 2007 Net book value At 1 January 2007 At 31 December 2007 475,812 50,225 (170,654) (59,650) 295,733
697,166 225,927 (189,701) (65,277) (243) 667,872
39,872 11,401 (19,262) 29 32,040
53,212 41,470 (670) (3,982) (531) 89,499
20,751 9,955 (4,508) (671) 1,620 27,147
8,891 2,364 (4,702) (90) (1,386) 5,077
122,726 65,190 (29,142) (4,743) (268) 153,763
435,940 263,693
85,688 169,146
42,323 59,789
10,489 21,481
574,440 514,109
Of which:
Net book value of tangible fixed assets not in use Historical costs of tangible fixed assets fully depreciated and still in use
31 December 31 December 2007 2006 VND million VND million 23,448 30,436 48,979 25,406
14
INTANGIBLE FIXED ASSETS

Currency: VND million Computer software Others 55 30,986 (55) 30,986 Total 32,648 31,025 (55) 63,618
Historical cost At 1 January 2007 Additions Disposal of subsidiaries Reclassification At 31 December 2007 Accumulated depreciation At 1 January 2007 Charge for the year Disposal At 31 December 2007 Net book value At 1 January 2007 At 31 December 2007
32,593 39 32,632
15,515 2,853 18,368
4,612 4,612
15,515 7,465 22,980
17,078 14,264
55 26,374
17,133 40,638
15
OTHER ASSETS
31 December 2007 VND million 661,147 1,244,289 811,138 681,360 88,362 929 948 29,322 3,517,495
Construction in progress and purchase of fixed assets (note 15.1) Accrued interest income Receivables from customers (*) Advances and internal receivables Deferred expenses Bond premiums Golf membership Dividends receivable Other assets
31 December 2006 VND million 405,374 700,244 65,112 157,368 44,988 40,444 929 8,108 114,908 1,537,475
(*) Included in receivables from customers are VND727,661 million of receivables from local and foreign companies for gold margin trading activities (Note 30).
7
15.1
Construction in progress and purchase of fixed assets

2007 VND million 2006 VND million 224,128 253,799 (61,870) (10,683) 405,374
At 1 January Additions Transfer to fixed assets Other transfers At 31 December
405,374 447,608 (176,274) (15,561) 661,147
16
DUE TO GOVERNMENT AND BORROWINGS FROM THE STATE BANK OF VIETNAM

31 December 2007 VND million 654,630 654,630 31 December 2006 VND million 904,286 37,000 941,286
Short-term borrowing secured by valuable papers Borrowings by means of discounting, rediscounting valuable papers
Short-term borrowings are secured by the government bonds (Note 10.2).
17
DEPOSITS AND BORROWINGS FROM OTHER CREDIT INSTITUTIONS

31 December 2007
Denominated in VND VND million Denominated in foreign currencies and gold VND million 4,320 16,056 2,490,259 2,510,635 2,510,635 Total VND million 25,275 16,056 6,952,699 6,994,030 6,994,030
Deposits from other credit institutions Demand deposits Marginal deposit (*) Term deposits Borrowings from other credit institutions
20,955 4,462,440 4,483,395 4,483,395
(*) Margin deposits represented the amount that counter-parties deposit at the Bank for the activities of overseas gold margin trading.
31 December 2006
Denominated in VND VND million Deposits from other credit institutions Demand deposits Term deposits 12,102 2,376,153 2,388,255 516,808 2,905,063 Denominated in foreign currencies and gold VND million 5,793 339,085 344,878 344,878 Total VND million 17,895 2,715,238 2,733,133 516,808 3,249,941
Borrowings from other credit institutions
18
18.1
DEPOSITS FROM CUSTOMERS

By type of deposits
31 December 2007 VND million 10,121,064 4,212,542 39,891,744 999,798 57,956 55,283,104 31 December 2006 VND million 4,283,482 1,869,963 22,437,610 637,506 166,142 29,394,703
Current deposits Term deposits Saving deposits Margin deposits Specialized fund deposits
18.2
By currency
Denominated in VND VND million 9,156,425 4,068,538 33,140,098 697,410 53,914 47,116,385 Denominated in foreign currency and gold VND million 964,639 144,004 6,751,646 302,388 4,042 8,166,719
31 December 2007
Total VND million 10,121,064 4,212,542 39,891,744 999,798 57,956 55,283,104
Current deposits Term deposits Saving deposits Margin deposits Specialised fund deposit
31 December 2006
Denominated in VND VND million Current deposits Term deposits Saving deposits Margin deposits Specialised fund deposit 3,679,417 1,829,071 16,609,237 461,377 164,920 22,744,022 Denominated in foreign currency and gold VND million 604,065 40,892 5,828,373 176,129 1,222 6,650,681 Total VND million 4,283,482 1,869,963 22,437,610 637,506 166,142 29,394,703
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18.3 By type of customers
31 December 2007 VND million 529,589 7,387,180 660,934 456,933 9,144 45,610,807 628,517 55,283,104 31 December 2006 VND million 307,453 2,936,019 395,623 229,630 7,417 24,664,453 854,108 29,394,703
State-owned companies Local and private companies Joint ventures Foreign companies Cooperatives Individuals Others Total
19
FUNDS RECEIVED FROM GOVERNMENT, INTERNATIONAL AND OTHER INSTITUTIONS

31 December 2007 VND million 31 December 2006 VND million 52,070 136,462 100,000 288,532
Funds received from SMEDF Funds received from RDF Funds received from JBIC
86,465 143,967 92,080 322,512
Trust investment from Small and Medium Enterprises Development Fund (SMEDF) represents funds received from SMEDF to finance Vietnamese small and medium enterprises. Any loans granted using SMEDF funds must be reviewed and approved by the Project Planning and Monitoring Unit of SMEDF. This trust investment bears interest at a fixed rate of 6.28% p.a (for funds received before 2005) and 6.8% p.a (for funds received from 2005 to 2008) on the outstanding balance of trust deposits. Loans granted using these funds bear interest at the same rate as other commercial loans. Funds received from the Rural Development Fund (RDF) are financed by the World Bank for a term from one to five years at interest rates from 0.68% to 0.69% per month. These funds are lent to borrowers in accordance with the Decision No. 25/QD-NH21 dated 31 January 1997 by the Governor of the SBV. Funds received from JBIC are financed by the Japanese Government via Japan Bank for International Cooperation at the interest rate of 0.53% per month. These funds are lent to small and medium enterprises with the maximum period of 10 years for medium and long-term loans and 1 year for short-term loans in accordance with the Lending Agreement signed between the State Bank of Vietnam and Asia Commercial Joint Stock Bank.
20
BONDS AND CERTIFICATE OF DEPOSITS
31 December 2007 VND million 550,023 4,170,000 6,968,773 11,688,796
Convertible bonds Bonds Certificate of deposits Total
31 December 2006 VND million 1,650,069 4,211,310 5,861,379
20.1
Convertible bonds
On 16 October 2006, the Bank issued 1,650,069 of 8% convertible bonds at the nominal amount of VND 1 million per bond. The initial maturity dates of these bonds are 5 years from the issue date. On 23 January 2007, the Banks Board of Directors approved for 1,100,046 convertible bonds to be converted to ordinary shares in 2007 at the rate of 1:100. The movement of convertible bonds is as bellows:
31 December 2007 VND million 1,650,069 (1,100,046) 550,023 31 December 2006 VND million 1,650,069 1,650,069
Face value of convertible bonds issued Equity conversion component Liability component
20.2
Bonds
On 25 September 2007, the Bank issued 2,250,000 million of 8.6% bonds at the nominal amount of VND1 million per bond to other credit and financial institutions. The initial maturity dates of these bonds are 5 years from the issue date. On 20 December 2007, the Bank issued 1,920,000 million of 8.7% bonds at the nominal amount of VND1 million per bond to other credit and financial institutions. The initial maturity dates of these bonds are 3 years from the issue date. 20.3 Certificate of Deposits
31 December 2007 VND million 5,208,781 1,759,992 6,968,773
Denominated in VND Denominated in foreign currency and gold - Short-term - Medium-term - Long-term
31 December 2006 VND million 3,253,796 957,514 4,211,310
83
21
OTHER LIABILITIES
31 December 2007 VND million 31 December 2006 VND million 463,583 259,430 43,082 40,965 2,043,021 358,549 5,110 4,098 3,217,838
Accrued interest expenses Remittance in transit payable Obligation to the States budget (Note 39) Unearned interest income Payables to counterparties for margin gold trading Other payables (*) Provision for severance allowance General provision for losses on contingencies and commitments (Note 21.1)
794,767 228,639 249,861 106,522 1,140,417 1,650,313 5,110 15,131 4,190,760
(*) Included in the other payables are VND1,180,301 million gold kept under custodianship on behalf of customers (2006: VND208,906 million).
21.1
General provision for losses on credit contingencies and commitments

2007 VND million 2006 VND million 884 3,214 4,098
As at 1 January Charge for the year As at 31 December
4,098 11,033 15,131
22
CAPITAL
31 December 31 December 2007 2006 VND million VND million
Issued and fully paid chartered capital
2,630,060
1,100,047
In accordance with Official Letter No. 479/NHNN-HCM02 dated 5 April 2007 issued by the State Bank of Vietnam Ho Chi Minh City Branch, the Banks Chartered capital was increase to VND2,630,060 million by converting VND1,100,046 million of convertible bonds to charter capital, transferring VND330,014 million of reserve for supplementary chartered capital to chartered capital and issuing VND99,953 million of new shares to local and foreign shareholders.
Total share capital VND million 948,316 151,731 1,100,047 1,804,150 330,014 1,100,046 (1,704,197) 2,630,060
At 1 January 2006 Nominal value of shares issued At 31 December 2006 Nominal value of shares issued Nominal value of bonus shares issued Convertible bonds converted to ordinary shares Transfer share premium to reserve for supplementary chartered capital At 31 December 2007
Ordinary Number of shares shares (*) VND million 94,831,600 948,316 15,173,056 110,004,656 9,995,344 33,001,396 110,004,600 263,005,996 151,731 1,100,047 99,953 330,014 1,100,046 2,630,060
Share premium VND million 1,704,197 (1,704,197) -
(*) Number of shares have been converted to shares with face value of VND 10,000/share.
85
23 RESERVES AND RETAINED EARNINGS
Foreign Reserve for supplementary Financial currency chartered provision difference Retained earnings fund reserve capital undistributed At 1 January 2006 Consolidated net profit for the year Appropriation to reserves Dividends paid Bonus share dividend Transfer to chartered capital Other movements of reserves At 31 December 2006 Consolidated net profit for the year Appropriation to reserves Dividends paid Transferred from share premium Issue bonus shares Utilization of reserves (*) Other movements of reserves At 31 December 2007 195,917 505,428 (83,081) (115,183) (137,075) 207 366,213 1,759,793 (668,155) (22,002) (97) 1,435,752 14,869 24,554 137,075 (151,731) 24,767 388,834 1,704,197 (330,014) (5) 1,787,779 90,541 46,575 24 137,140 166,750 (10) 303,880 Currency: VND million Other reserves 33,563 11,952 (19,695) 25,820 112,571 (38,116) 103 100,378
Total 334,890 505,428 (115,183) (151,731) (19,464) 553,940 1,759,793 (22,002) 1,704,197 (330,014) (38,116) (7) 3,627,789
In accordance with Decree No. 146/2005/ND-CP dated 23 November 2005 issued by the Government, the Bank is required to establish the following reserves: - Reserve for supplementary chartered capital: 5% of the net profit after business income tax each year is allocated until the reserve balance reaches 100% of the current capital. The reserve for supplementary chartered capital will be transferred to chartered capital upon approval from the SBV. - Financial provision fund: 10% of the net profit after business income tax is allocated until the reserve balance reaches 25% of the current capital. Other reserves include fund for basic construction, welfare and bonus fund and other funds. The allocation to welfare and bonus fund are proposed by the Board of Directors of the Bank and approved in the Annual General Meeting. (*) Analysis of the utilisation of other funds for the year ended 31 December 2007 as below:
VND million Payments from bonus and welfare funds directly to employees Transferred to Trade Union for making investments in corporates Transferred to Trade Union for re-lending to selected employees Total 26,516 7,000 4,600 38,116
Dividend During the year, the Bank declared and paid a dividend of 8% in cash and issued bonus shares of VND 330,014 million from the 2006 profit. No dividend for 2007 has been declared.
24
24.1
EARNINGS PER SHARE

Basic earnings per share
Basic earnings per share is calculated by dividing the net profit attributable to the equity holders of the Bank by the weighted average number of ordinary shares in issue during the year.
2007 Profit attributable to the equity holders of the Bank (VND million) Less: appropriation to other reserves (excluding reserves for supplementary chartered capital and financial provision fund) Net profit used to determine basic EPS (VND million) Weighted average number of ordinary shares in issue at the balance sheet date (millions of shares) Basic earning per share based on the weighted average number of ordinary shares in issue and calculated at the date of the preparation of the financial statements (VND per share) Basic earning per share recalculated based on the assumption that the bonus shares issued in 2007 had been issued since 01 January 2006 (VND per share) 1,759,793 (27,397) 1,732,396 214 8,095 8,095 2006 505,428 (11,952) 493,476 109 4,527 3,475
24.2
Diluted earnings per share
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Bank has only one category of dilutive potential ordinary shares: convertible bonds. The convertible bonds are assumed to have been converted into ordinary shares. The net profit is adjusted to eliminate the interest expenses less the tax effect.
87
2007 Profit attributable to equity holders of the Bank (VND million) Interest expenses on convertible bonds (net of tax) Less: appropriation to other reserves (excluding reserves for supplementary chartered capital and financial provision fund) Net profit used to determine diluted EPS (VND million) Weighted average number of ordinary shares in issue at the balance sheet date (millions of shares) Adjustment for convertible bonds (millions of shares) weighted average Weighted average number of ordinary shares for diluted earning per shares (millions of shares) Diluted earnings per share (VND per share) Diluted earnings per share recalculated based on the assumption that the bonus shares issued in 2007 had been issued since 01 January 2006 (VND per share) 1,759,793 65,108 (27,397) 1,797,504 214 94 308 5,836 5,836 2006 505,428 16,920 (11,952) 510,396 109 34 143 3,569 2,900
25
INTEREST AND SIMILAR INCOME

2007 VND million 2006 VND million 1,367,012 805,572 315,111 2,921 2,490,616
On loans and advances to customers On deposits at and loans to other credit institutions On investments On finance lease Other income from credit activities Total
2,592,343 1,532,507 410,454 10 2,820 4,538,134
26
INTEREST AND SIMILAR EXPENSES

2007 VND million 2006 VND million 1,552,871 44,363 72,068 742 1,670,044 2,949,453 81,296 192,624 3,653 3,227,028
On deposits from customers On borrowings from local credit institutions On convertible bonds, bonds and deposit certificates Others Total
27
FEES AND COMMISSION INCOME

2007 VND million 2006 VND million 5,058 120,624 2,150 30,124 15,024 172,980
Guarantees Settlement services Cash services Brokerage services Other services
7,501 177,286 5,011 122,640 30,154 342,592
28
FEES AND COMMISSION EXPENSES
2007 VND million 40,756 30,621 71,377
2006 VND million 24,645 24,645
Settlement and cash services Other services
29
NET GAIN FROM DEALING IN FOREIGN CURRENCIES AND GOLD

2007 VND million 2006 VND million 31,817 (8,303) 53,179 (6,373) 70,320
Gains from dealing in foreign currencies and gold Loss from dealing in foreign currencies and gold Gain from revaluation of foreign currencies and gold Loss from revaluation of foreign currencies and gold
69,482 (40,598) 153,493 (27,237) 155,140
30
MARGIN TRADING IN GOLD
During the year ended 31 December 2007, the Bank signed a number of margin contracts in gold with counterparties. Margin deposits are required for these contracts and are held in the margin trading accounts at the counterparties. The face values of these contracts provide a basis for comparison with instruments recognised on the balance sheet, but they do not necessarily indicate the amount of future cash flows involved or current fair values of the contracts and do not therefore indicate the Banks exposure to credit or market price risks. The contracts become favourable (gain) or unfavourable (loss) as a result of fluctuations in market gold prices relative to their terms. The aggregate contractual amount or face value of these contracts on hand, the extent to which contracts are favourable or unfavourable and, thus the aggregate fair values of these contracts can fluctuate from time to time.
8
31
GOLD TRADING CENTRE
In 2007, the Bank set up a gold trading centre (which is named Saigon Gold Exchange). The Saigon Gold Exchange (the Gold Exchange) is not a separate legal entity but a dependent accounting unit to the Bank. Members of the Gold Exchange are legal entities which have gold trading licences and are prestigious and professional gold traders in Vietnam. At the date of these consolidated financial statements, there are 10 members (including ACB) voluntarily joining the Gold Exchange. The Gold Exchange is managed by an Exchange Management Board which has two functional units: the member management unit and the dealing supervision unit. The Exchange Management Board is an independent unit to the Banks gold trading function (which is the treasury division of the Bank). The Gold Exchange is operating according to regulations issued by the Bank and which are accepted by other members. The Gold Exchange is operating based on the IT infrastructure and credit and settlement services being rendered by the Bank. The Bank is acting as a trading intermediary among the counter-partners, who ensures the settlement capacity and liquidity. Type of trading gold is gold brand SJC measured in taels (each tael equivalents to 1.20556 ounces). The Bank is also planning to allow the trading of other types of golds (.9999 gold bars) in the Gold Exchange in the coming years. The Bank receives commission fee and other services fees. To be a member of the Gold Exchange, legal corporate member must enter into an agreement with the Bank and open a marginal account. Gold buying/selling deals are settled on these marginal accounts. Marginal deposit ratio, transaction fee, and interest rate are regulated by the Bank. If in a case where the member is short of gold or money to settle the successful deals, they have to accept a loan to the Bank at an interest rate decided by the Bank and the loan is secured by the sum of gold or money the member is to receive. The Bank as a member of the Gold Exchange and also as a gold trader is allowed to provide gold trading services to its customers both individuals and corporate. In case the Banks customers submit gold buying/selling deals at prices within the range being offered by the Bank, the deals will be settled directly by the Bank. If the deals prices fall outside the range being offered by the Bank, the deals will be transferred to the Gold Exchange as selling or buying orders under the name of the Bank. The Bank earns transaction fees from customers.
32
NET GAIN FROM DISPOSAL OF TRADING SECURITIES

2007 VND million 354,660 (9,670) 344,990 2006 VND million 31,520 31,520
Gain on disposal of trading securities (*) Loss on disposal of trading securities Less: Provision for diminution in value of trading securities
(*) Included in gain on disposal of trading securities is the unrealized profit from transactions between the Group and associates (Note 42).
33
NET GAIN FROM DISPOSAL OF INVESTMENT SECURITIES

2007 VND million 917,078 (20,286) 896,792 2006 VND million 65,757 65,757
Gain on disposal of investment securities (*) Less: Provision for diminution in value of investment securities
(*) Included in gain on disposal of investment securities is the unrealized profit from transactions between the Group and associates (Note 42).
34
INCOME FROM INVESTMENTS IN OTHER ENTITIES
2007 VND million 9,799 8,954 12,568 5,332 36,653
2006 VND million 27,227 7,422 3,490 38,139
From trading equity securities From investment equity securities From investments in other entities Share of profit/loss of associates Other income
35
GENERAL AND ADMINISTRATIVE EXPENSES
2007 VND million 5,865 347,462 18,664 1,739 24,197 72,655 86,659 211,399 36,010 804,650
2006 VND million 3,515 189,243 6,005 900 1,063 47,509 58,660 136,622 18,907 462,424
Tax and fee expenses Staff costs - Salary and allowance - Salary related contribution - Other allowances - Others Expenses on fixed assets - Depreciation and amortisation - Other expenses on fixed assets Admin expenditures Insurance fee
1
36 VALUE ADDED TAX
Earned fees and commissions are subject to value added tax at the rate of 10% under the deduction method, foreign currency and gold operations are subject to value added tax at the rate of 10% under the direct method. All other banking activities of the Bank are exempt from value added tax.
37
BUSINESS INCOME TAX (BIT)
Current income tax Deferred income tax
2007 VND million 366,807 366,807
2006 VND million 181,643 181,643
Business income tax charge at the rate of 14% for the year is based on the estimated taxable income and is subject to the review and possible adjustment by the tax authorities.
2007 VND million Net profit before tax Tax (at rate of 28%) Effect of: Tax on income not subject to tax Favorable tax treatment on income Under provision in previous year Over provision in previous year 2,126,815 564,519 (10,263) (187,427) (22) 366,807 2006 VND million 687,219 198,366 (19,959) 3,236 181,643
The Bank and its subsidiaries tax returns are subject to periodic examination and possible adjustment by the Tax Authority. The tax assessments for the year 2007 have not yet been finalised by the Tax Authority.
38
EMPLOYEES REMUNERATION
2007 VND million 4,280 341,275 14,187 14 355,477 80 83
2006 VND million 2,808 171,755 11,527 183,282 61 65
Number of employees Employees remuneration Total salary fund Bonus Other income Total income Average salary Average income
39
Items
OBLIGATIONS TO THE STATES BUDGET

Movements during the year 1 January 2007 VND million 2,339 97 39,634 1,012 43,082 Payable VND million 18,516 (97) 365,255 843 43 9,336 393,896 Payments VND million (20,817) (156,699) (843) (43) (8,715) (187,117) 31 December 2007 VND million 38 248,190 1,633 249,861
VAT Excise taxes BIT Import export duties Land and Housing taxes Other taxes Total
40
CUSTOMERS ASSETS HELD AS COLLATERAL

2007 VND million 14,030,868 261,958 4,621,630 53,703,883 6,974,148 79,592,487 2006 VND million 9,584,580 68,141 2,216,823 34,980,735 3,458,198 50,308,477
Valuable papers Inventories Machinery and equipment Real estate Other assets
41
CONTINGENCIES AND COMMITMENTS
The aggregate amounts of outstanding guarantees, letters of credit and other commitments at the end of the year were:
31 December 2007
Denominated in VND VND million Letters of credit at sight Deferred letters of credit Payment guarantees Performance guarantees Bidding guarantees Other guarantees 707 114,026 112,004 44,045 159,382 430,164 Denominated in foreign currencies VND million 2,635,196 360,584 77,477 23,050 1,760 370,789 3,468,856 Total VND million 2,635,903 360,584 191,502 135,054 45,805 530,171 3,899,019
3
31 December 2006
Denominated in VND VND million 78,375 62,133 34,648 93,184 268,340 Denominated in foreign currencies VND million 853,014 139,488 59,335 19,611 4,548 21,683 1,097,679 Total VND million 853,014 139,488 137,710 81,744 39,196 114,867 1,366,019
Letters of credit at sight Deferred letters of credit Payment guarantees Performance guarantees Bidding guarantees Other guarantees
In the normal course of business, the Bank makes various commitments and incurs certain contingent liabilities that are presented in the off balance sheet. The commitments and contingent liabilities include guarantees and letters of credit. The Bank does not anticipate any significant losses as a result of these transactions
42
RELATED PARTY TRANSACTIONS AND BALANCES

2007 VND million 2006 VND million 4,326 698 1,476 90 34,597 443,566 477,247 -
During the year, the Group had the following transactions with related parties:
Compensation of Board of Directors Interest income from JV and associates Interest income from other related parties Interest expenses paid to JVs and associates Interest expenses paid to other related parties Dividends received from JVs and associates Payment to associates in return for services rendered Receipt from related parties for trust investments Receipt for disposal of subsidiaries and associates to associates(*) Receipt for disposal of other investments to associates Gain on disposal of investments to associates (**) Gold sold to JVs and associates Gold sold to other related parties Gold purchased from JVs and associates Gold purchased from other related parties
5,945 8,962 3,527 6,582 340 1,449 22,443 140,308 181,089 992,471 347,134 3,309,883 1,104,682 3,339,043 1,325,428
(*) During the year, the Group sold various equity securities to ACB Real Estate JS Company which is an associate of the Bank. These equity securities had the carrying value of VND174,157 million and the Group made profit of VND6,932 million. The Groups management are of opinion that the disposals were transacted at fair value. (**) Included in the gain on disposal of investments to associates in 2007 was an amount of VND 78,817 million which represents the unrealised profit earned by the Group from selling its securities to associates. This unrealised profit is calculated to the extent of the Groups interest to the associates on the total gains on transactions between the Group and the associates. The unrealised profit is not eliminated in these consolidated financial statements because it is not required under the Vietnamese Accounting Standards.
At the year end, the balances with related parties are as below:
Deposits from JVs and associates Deposits from other related parties Loans to JVs and associates Loans to other related parties Advances to and receivables from associates Payables to JVs
31 December 2007 VND million 61,301 72,531 147,989 357,000 751,566 94,115
31 December 2006 VND million 35,608 995 -
43 CONCENTRATIONS OF ASSETS AND LIABILITIES BY GEOGRAPHICAL AREA

Loans and advances to customers and other credit institutions 31,974,380 Deposits and borrowings from customers and other credit institutions 62,261,077 16,056 Derivatives financial instruments (total contract value) 3,091,995 1,121,654
Credit commitments 818,313 3,080,706
Domestic Overseas
Net trading and investment securities 9,657,121 -
44
44.1
FINANCIAL RISK MANAGEMENT

Credit risk
The Group takes on exposure to credit risk, which is the risk that counterparty will cause a financial loss for the Group by failing to discharge an obligation. Credit exposures arise principally in lending activities that lead to loans and advances, and investment activities that bring debt securities. There is also credit risk in off-balance sheet financial instruments, such as loan commitments. The credit risk management and control are done centrally by ALCO with representatives from the Board of Directors and Management. In measuring credit risk of loan and advances to customers and to banks, the Group adopts guidance provided in Decision No. 493/2005/Q-NHNN dated 22 April 2005 and Decision No. 18/2007/Q-NHNN dated 25 April 2007 of the Governor of the State Bank of Vietnam as described in Note 2.7 to the consolidated financial statements. The Group manages credit risk by placing limits on exposures in relation to one borrower, or groups of borrowers in accordance with regulations of the State Bank of Vietnam. In addition, exposure to credit risk is managed through regularly reviewing on the acceptable classes of collaterals and analysing the ability of borrowers and potential borrowers to meet interest and capital repayment obligations.
5
44
44.2
FINANCIAL RISK MANAGEMENT (continued)

Market risk
a. Interest rate risk Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group manages interest rate risk by monitoring the level of mismatch of interest rate by terms on a monthly basis. The table below summaries the Groups exposure to interest rate risk.
As at 31 December 2007 Assets Cash and precious metals Balances with the State Bank of Vietnam Placements with and loans to other credit institutions(*) Trading securities(*) Derivatives and other financial assets Loans and advances to customers(*) Investment securities(*) Investment in other entities and long-term investments Fixed assets Other assets(*) TOTAL ASSETS Liabilities Due to Government and borrowings from the State Bank of Vietnam Deposits and borrowings from other credit institutions Funds received from Government, international and other institutions Deposits from customers Bonds and deposits certificates Other liabilities TOTAL LIABILITIES Interest gap of balance sheet items Interest gap of commitments and contingencies TOTAL INTEREST GAP Overdue 35,153 35,153 Non-interest bearing Up to 1 month 4,926,850 656,098 504,006 9,973 101,365 762,469 554,747 3,501,632 11,017,140 4,488,640 7,195,272 389,272 1,673,967 15,863 13,763,014
35,153 35,153
16,056 3,050,341 3,066,397 7,950,743 3,899,019 11,849,762
654,630 6,764,104 17,253,462 1,140,419 25,812,615 (12,049,601) (12,049,601)
(*) these items did not include the provisions
Currency: VND million 1-3 months 5,946,974 1,318,871 7,265,845 3-6 months 3,926,379 9,115,592 13,041,971 6-12 months 5,998,768 6,123,393 661,141 12,783,302 1-5 years 6,097,850 7,127,909 6,481,420 19,707,179 Over 5 years 7,599,302 336,588 7,935,890 Total 4,926,850 5,144,737 29,165,244 504,006 9,973 31,810,857 9,153,115 762,469 554,747 3,517,495 85,549,493
21,758,925 3,831,580 25,590,505 (18,324,660) (18,324,660)
124,370 7,912 7,862,224 1,282,588 9,277,094 3,764,877 3,764,877
89,500 32,768 5,793,253 1,244,211 7,159,732 5,623,570 5,623,570
184,543 2,613,818 5,330,417 8,128,778 11,578,401 11,578,401
97,289 1,422 98,711 7,837,179 7,837,179
654,630 6,994,030 322,512 55,283,104 11,688,796 4,190,760 79,133,832 6,415,661 3,899,019 10,314,680
7
44
44.2 b.

Market risk (continued) Currency risk
The Bank takes on exposure to effects of fluctuations in the prevailing foreign currency exchange rates on its financial position and cash flows. The Banks Management sets limits on the level of exposure by currency and in total for both overnight and intra-day positions, which are monitored daily. The table below summarises the Groups exposure to currency risk at 31 December 2007. Included in the table are the Groups assets and liabilities at carrying amounts, categorised by currency.
As at 31 December 2007 Assets Cash and precious metals Balances with the State Bank of Vietnam Placements with other credit institutions (*) Trading securities (*) Derivatives and other financial assets Loans and advances to customers (*) Investment in securities (*) Investment in other entities and long-term investments Fixed assets Other assets (*) TOTAL ASSETS Liabilities and shareholders equity Due to Government and borrowings from the State Bank of Vietnam Deposits and borrowings from other credit institutions Funds received from Government, international and other institutions Deposits from customers Bonds and deposits certificates Other liabilities Capital and reserves TOTAL LIABILITIES AND SHAREHOLDERS EQUITY Net on-balance sheet position (including minority interest) Off-balance sheet commitment position Total position VND 694,710 4,482,148 24,751,922 504,006 9,973 21,517,615 8,494,272 762,469 554,747 2,703,111 64,474,973 USD 210,655 662,589 3,425,232 7,234,830 658,843 88,943 12,281,092 GOLD 3,801,076 738,447 3,035,752 721,776 8,297,051
654,630 4,483,395 322,512 47,116,385 4,720,023 1,625,639 6,257,849 65,180,433 (705,460) 430,164 (275,296)
2,494,576 7,924,159 1,318,470 11,737,205 543,887 3,027,139 3,571,026
16,056 6,968,773 1,208,122 8,192,951 104,100 104,100
(*) these items did not include the provisions.
Currency: VND million EUR 79,983 199,890 22,660 724 303,257 JPY 4,059 4,375 8,434 AUD 91,240 14,924 102 106,266 CAD 42,511 5,687 2,839 51,037 Others 2,616 24,767 27,383 Total 4,926,850 5,144,737 29,165,244 504,006 9,973 31,810,857 9,153,115 762,469 554,747 3,517,495 85,549,493
3 223,482 6,956 230,440 72,816 409,415 482,231
8,456 1,560 10,016 (1,582) 27,177 25,595
4,097 5,579 9,676 96,590 410 97,000
2,734 1,435 4,169 46,868 46,868
3,791 22,999 26,790 593 4,714 5,307
654,630 6,994,030 322,512 55,283,104 11,688,796 4,190,760 6,257,849 85,391,681 157,812 3,899,019 4,056,831

44
44.2 c.

Market risk (continued) Liquidity risk
The Bank is exposed to daily calls on its available cash resources from overnight deposits, current accounts, maturing deposits, loan draw downs, guarantees and from margin and other calls on cash settled derivatives. The Bank does not maintain cash resources to meet all of these needs as experience shows that a minimum level of reinvestment of maturing funds can be predicted with a high level of certainty. The Banks Management sets limits on the minimum proportion of maturing funds available to meet such calls and on the minimum level of inter-bank and other borrowing facilities that should be in place to cover withdrawals at unexpected levels of demand. The table below analysed the Groups assets and liabilities into relevant maturity grouping based on the remaining period at the balance sheet date to the contractual maturity date.
Overdue As at 31 December 2007 Assets Cash and precious metals Balances with the State Bank of Vietnam Placements with and loans to other credit institutions (*) Trading securities (*) Derivatives and other financial assets Loans and advances to customers (*) Investment securities (*) Investment in other entities and long-term investments Fixed assets Other assets (*) TOTAL ASSETS Liabilities Due to Government and borrowings from the State Bank of Vietnam Deposits and borrowings from other credit institutions Funds received from Government, international and other institutions Deposits from customers Bonds and deposits certificates Other liabilities TOTAL LIABILITIES Net liquidity gap Over 3 months 18,056 18,056 Up to 3 months 17,097 17,097
18,056
17,097
(*) these items did not include the provisions.
Current Up to 1 month 4,926,850 5,144,737 8,538,658 504,006 9,973 1,708,982 1,673,967 762,469 554,747 3,510,563 27,334,952 1-3 months 8,245,300 3,065,793 11,311,093 3-12 months 9,659,006 12,137,361 1,531,964 6,932 23,335,263 1-5 years 2,722,280 7,266,603 5,947,184 15,936,067
Currency: VND million Over 5 years 7,596,965 7,596,965 Total 4,926,850 5,144,737 29,165,244 504,006 9,973 31,810,857 9,153,115 762,469 554,747 3,517,495 85,549,493
654,630 6,790,160 4,912 23,977,933 4,190,760 35,618,395 (8,283,443)
114,320 12,468 9,764,479 3,831,580 13,722,847 (2,411,754)
89,550 40,601 21,033,392 2,526,799 23,690,342 (355,079)
172,137 422,355 5,330,417 5,924,909 10,011,158
92,394 84,945 177,339 7,419,626
654,630 6,994,030 322,512 55,283,104 11,688,796 4,190,760 79,133,832 6,415,661
101
45
COMPARATIVE FIGURES
Certain comparative figures have been represented to conform to this years presentation under the Decision 16/2007/ QD-NHNN issued on 18 April 2007 by the State Bank of Vietnam.
The consolidated financial statements are approved by the Banks Management on 29 February 2008.
Chairman Tran Mong Hung
BALANCE SHEET AS AT 31 DECEMBER 2007
APPENDIX I
2007 VND million A I II III IV V VI 1 2 VII 1 2 VIII 1 2 IX 1 2 X ASSETS Cash and precious metals Balances with the State Bank of Vietnam Placements with and loans to other credit institutions Trading securities Derivatives and other financial assets Loans and advances to customers Loans and advances to customers Less: Provision for losses on loans and advances to customers Investment securities Available-for-sales securities Held-to-maturity securities Investment in other entities and long-term investments Investments in subsidiaries Investments in other entities Fixed assets Tangible fixed assets Intangible fixed assets Other assets TOTAL ASSETS 4,926,816 5,144,737 29,083,994 9,973 2,283,118 1,562,926 16,395,262 1,057 2006 VND million
31,435,693 (134,537)
16,765,339 (56,207)
1,653,681 7,474,348
4,197,560
940,000 283,327
598,640 149,398
499,285 40,601 4,062,839 85,420,757
358,762 17,078 2,078,834 44,351,767
103
BALANCE SHEET AS AT 31 DECEMBER 2007 (continued) APPENDIX I (continued)

2007 VND million B I II III IV V VI VII LIABILITIES AND SHAREHOLDERS EQUITY Due to Government and borrowings from the State Bank of Vietnam Deposits and borrowings from other credit institutions Deposits from customers Derivatives and other financial liabilities Funds received from Government, international and other institutions Bonds and Certificate of deposits Other liabilities TOTAL LIABILITIES VIII 1 2 3 SHAREHOLDERS EQUITY Capital and reserves attributable to equity holders of the Bank Capital Reserves Retained earnings TOTAL LIABILITIES AND SHAREHOLDERS EQUITY CONTINGENCIES AND COMMITMENTS 654,630 7,010,700 55,855,179 322,512 11,688,796 3,746,934 79,278,751 941,286 3,049,941 29,407,193 288,532 5,861,379 3,173,030 42,721,361 2006 VND million
2,630,060 2,087,284 1,424,662 85,420,757 3,899,019
1,100,047 168,530 361,829 44,351,767 1,366,019
INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2007 APPENDIX II

2007 VND million 1 2 I 3 4 II III IV V 5 6 VI VII Interest and similar income Interest and similar expenses Net interest income Fees and commission income Fees and commission expenses Net fee and commission income Net gain from dealing in foreign currencies and gold Net gain from disposal of trading securities Net gain from disposal of investment securities Other incomes Other expenses Net other (expenses)/income Income from investments in other entities 4,516,009 (3,200,415) 1,315,594 219,952 (40,756) 179,196 155,140 534,446 9,091 (9,443) (352) 516,148 (755,906) 1,944,266 (89,357) 1,854,909 (187,405) 1,667,504 2006 VND million 2,471,053 (1,661,487) 809,566 140,971 (24,645) 116,326 70,320 62,167 6,800 6,800 71,182 (436,951) 699,410 (40,597) 658,813 (167,745) 491,068
VIII General and administrative expenses IX X XI XII Operating profit before provision for credit losses Provision for credit losses Profit before tax Business income tax
XIII Net profit for the year
105
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2007 (Indirect method) APPENDIX III
2007 VND million 01 CASH FLOWS FROM OPERATING ACTIVITIES Net profit before tax Adjustments to reconcile net profit for the year to net cash flows from operating activities: Depreciation and amortisation Provision for credit losses and diminution in value of investments Gain on disposal of fixed assets Gains on disposal of investments in other entities and other long-term investments, share of profit from associates and dividend income 1,854,909 2006 VND million 658,813
02 03 04 05
69,171 109,643 (50) (749,279) -
42,796 40,597 (37) (133,349) -
06 Other adjustments CASH FLOW FROM OPERATING ACTIVITIES BEFORE CHANGES IN OPERATING ASSETS AND LIABILITIES Changes in operating assets 07 Increase in compulsory reserves with the SBV 08 Increase in placements with and loans to other credit institutions 09 (Increase)/Decrease in trading securities 10 Increase in derivatives and other financial assets 11 Increase in loans and advances to customers 12 Increase in interest receivable 13 Increase in other operating assets Changes in operating liabilities 14 Decrease in borrowings from the State and SBV 15 Increase in placements and borrowings from other credit institutions 16 Increase in deposits from customers 17 Increase in funds received from Government, international and other institutions 18 Increase in deposit certificates 19 Increase in interest payables 20 Increase in other operating liabilities NET CASH FLOWS FROM OPERATING ACTIVITIES BEFORE BUSINESS INCOME TAX 21 Business income tax paid 22 Payment from reserves 23 Bad debt recoveries I NET CASH FLOWS FROM OPERATING ACTIVITIES
1,284,394 (3,152,244) (7,004,595) (4,912,381) (8,916) (14,671,124) (528,859) (1,199,233) (286,656) 3,960,759 26,447,986 33,980 2,757,463 325,905 177,231 3,223,710 (127,670) (38,098) 3,057,942
608,820 (551,619) (3,885,488) 606,207 (1,057) (7,381,722) (431,653) (1,045,388) (26,026) 1,946,365 13,622,716 23,104 229,966 2,288,197 6,002,422 (159,077) (18,315) 24 5,825,054
2007 VND million 01 02 03 04 05 II 01 02 03 III IV V VI VII CASH FLOWS FROM INVESTING ACTIVITIES Purchase of fixed assets Proceeds from disposal of fixed assets Cash paid for investments in other entities and other long-term investments Proceeds from disposal of investments in other entities and other longterm investments Dividend income NET CASH FLOWS FROM INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Increase in capital Proceeds from issuance of valuable papers and convertible bonds Dividend paid NET CASH FLOWS FROM FINANCING ACTIVITIES NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR Foreign exchange differences adjustment CASH AND CASH EQUIVALENTS AT END OF THE YEAR Cash and cash equivalents are made up of: - Cash and precious metals - Demand deposits with the State Bank of Vietnam - Placements with credit institutions (514,236) 25,056 (565,131) 284,700 516,148 (253,463) 1,804,150 4,170,000 (22,002) 5,952,148 8,756,627 9,848,802 18,605,429 4,926,816 667,341 13,011,272 18,605,429
2006 VND million (212,255) 37 (551,742) 81,753 71,182 (611,025) 1,650,069 (115,183) 1,534,886 6,748,915 3,099,887 9,848,802 2,283,118 237,774 7,327,910 9,848,802
107
VIII
Awards and Social Recognitions in 2007
Cup
25/3/2007
The Asian Banker
The Leadership Achievement Award for the Financial Services Industry in Vietnam in 2006.
Certificate of Merit
Decision No. 1435/ Q-UBND 05/4/2007
HCMC Peoples Committee
Good compliance with tax regulation in 2006.
Decision No. 1728/Q-UBND 17/4/2007
HCMC Peoples Committee
Achievements in business performance in 2006.
Certificate of Merit & Cup
2541/Q/ BGD&T 21/5/2007
Ministry of Education and Training
Contributions to the education and training career of the country.
Award
25/5/2007
JP Morgan Chase
Quality recognition award (for international settlement).
Decision No. 2064/Q-NHNN dated 10/9/2007
State Bank of Vietnam
Contributions to competition movement on the occasion of 15th anniversary of Credit Information Center (1992 - 2007).
Cup
18/11/2007
ASEAN Business Advisory Council
Most Admired Enterprises of ASEAN under employment category
12/2007
SMEDF, VNM/AIDCO/ 2000/2469
Best SME Lending Bank Vietnam in 2007.
10
IX
Highlights of the year 2007
15/01/2007 09/03/2007 14/03/2007 27/04/2007 14/05/2007 25/05/2007 25/05/2007 06/06/2007 06/06/2007 07/06/2007 10/06/2007 20/06/2007 29/06/2007 29/06/2007 29/06/2007 02/07/2007 25/07/2007 06/09/2007 25/09/2007 25/09/2007
Inauguration of ACB - Quang Ninh Branch. Annual General Meeting of Shareholders. Inauguration of ACB - Hai Phong Main Branch. Inauguration of ACB - Cho Dam Sub-branch, Nha Trang (Khanh Hoa). Inauguration of ACB - Ninh Kieu Sub-branch (Can Tho). Share capital increase from VND 1,100,046,560,000 to VND 2,530,106,520,000. Inauguration of Saigon Gold Trading Floor (HCMC). Inauguration of ACB - Ha Noi Main Branch. Inauguration of ACBS - Tan Binh Branch. Agreement between ACB and Open Solutions (OSI) - Thien Nam on upgrading core banking platform (The Complete Banking Solution). Fourteenth Anniversary: Sponsoring One Common Heart Fund (HTV) and HCMC Sponsoring Association for Poor Patients. Inauguration of ACB - An Lac Sub-branch (HCMC). Inauguration of ACB - Le Hong Phong Sub-branch (Vung Tau). Inauguration of ACB - Le Dai Hanh Sub-branch (HCMC). Inauguration of ACB - Tran Duy Hung Sub-branch (Ha Noi). Inauguration of ACB - Nguyen Chi Thanh Sub-branch (HCMC). Inauguration of ACB - Khanh Hoi Branch (HCMC). Inauguration of ACB - Dien Bien Phu Sub-branch (HCMC). Inauguration of ACB - Truong Chinh Branch (HCMC). Inauguration of ACB - Binh Phu Sub-branch (HCMC).
25/09/2007 28/09/2007 01/10/2007 01/10/2007 05/10/2007 08/10/2007 18/10/2007 18/10/2007 19/10/2007 19/10/2007 29/10/2007 29/10/2007 29/10/2007 05/11/2007 14/11/2007 18/11/2007 26/11/2007 27/11/2007 28/11/2007 28/11/2007 07/12/2007 12/12/2007 17/12/2007 19/12/2007 20/12/2007 21/12/2007 21/12/2007 28/12/2007
Inauguration of ACB - Kim Dong Sub-branch (Ha Noi). MOU between Microsoft Group and ACB to improve and expand business relationship. Agreement between Standard Chartered Bank and ACB on issuing bonds worth VND 2,250 billion. Inauguration ACBS - Sai Gon Branch. Inauguration ACBS - Thi Nghe Branch. Inauguration of ACB - Ngo Gia Tu Branch (HCMC). Inauguration of ACB - Nguyen Trai Sub-branch (HCMC). Inauguration of ACB - Nguyen Cong Tru Sub-branch (HCMC). Inauguration of ACB - Thot Not Sub branch (Can Tho). Inauguration of ACB - Thuy Nguyen Branch (Hai Phong). Inauguration of ACB - Ben Thanh Branch (HCMC). Inauguration of ACB - ACB Leasing Company (ACBL). Inauguration of ACB - Da Kao Sub-branch (HCMC). Inauguration of ACB - Nguyen Thai Son Sub-branch (HCMC). MOU between AIG and ACB to expand business relationship. Most Admired Enterprises of ASEAN Award under employment category granted in Singapore. Inauguration of ACB - Phan Dinh Phung Branch (HCMC). Basel 2 and operation risk management seminar jointly-hosted by JLT and ACB. Inauguration of ACB - Nga Bay Sai Gon Sub-branch (HCMC). Inauguration of ACB - Ba Thang Hai Sub-branch (HCMC). Inauguration of ACB - Le Quang Dinh Sub-branch (HCMC). Share capital increase from VND 2,530,106,520,000 to VND 2,630,059, 960,000. Inauguration of ACB - Tan Son Nhat Sub-branch (HCMC). Inauguration of ACB - Nguyen An Ninh Sub-branch (Vung Tau). Inauguration of ACB - My Dinh Sub-branch (Ha Noi).
Inauguration of ACB - Ha Dong Sub-branch (Ha Tay). Inauguration of ACB - Thu Dau Mot Sub-branch (Binh Duong). Inauguration of ACB - Dong Xuan Sub-branch (Ha Noi).
111
Charitable activities of the year 2007
Granting VND 6 billion to National Fund for Vietnamese Children: Financing 10 heart operation cases through HCMC Red Cross (VND 400,000,000); Financing eyes operation program for blind people though HCMC Sponsoring Association for Poor Patients (VND 350,000,000). Granting Saigon Times Fund an amount of VND 500,000,000 for scholarships for poor and good students during academic year of 2007 - 2008. Granting VND 1,132,500,000 for the building of Tan Dien Secondary School (6 classrooms) in Go Cong Dong Town, Tien Giang Province. Granting VND 1 billion for building Xuan Lam elementary school, Nam Dan Town, Nghe An Province. Granting VND 1,5 billion to flood victims of Da Nang City, Quang Nam, Thua Thien-Hue and Binh Dinh Provinces. Granting scholarships to poor and good students of Banking University of HCMC. Granting scholarships to 69 poor and good students in Hoai Nhon Town, Binh Dinh Province. Granting scholarships to Nguyen Thi Minh Khai Scholarship Fund (HCMC).
Granting encouraging scholarships to poor students in mountainous region (Villages of Hoa Lien, Hoa Bac, Hoa Son in Hoa Vang Town, Da Nang City). Organizing Spring Trees entertainment program for poor and disabled children in HCMC. Sponsoring Benevolent firework program on the eve of lunar new year 2007. Sponsoring One Common Heart Fund (HTV) and HCMC Sponsoring Association for Poor Patients. Visiting and giving gifts to victims of Storm No. 2 in CuMgar and Krong Nang Town, Daklak Province. Granting 10 charity houses for U Minh Town, Ca Mau Province. Visiting and giving gift to families of victims of Can Tho bridge collapse. Granting 10 charity houses for poor households in Da Nang, Thua Thien-Hue, Hoi An and Dai Loc (Quang Nam Province). Financing the building of medical aid station in Tri Lu Village, Thoi Binh Town, Ca Mau Province. Financing Graffiti in Art School (GAS) Project with the topic on dragon for the Hue College of Art in the Hue Traditional Trade Festival.
113
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ACB 2007 Success and New Vision

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ACB 2007 Success and New Vision

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MESSAGE FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS ACB in 2007: Great Success New Vision

AWARDS AND SOCIAL RECOGNITIONS

HIGHLIGHTS OF THE YEAR 2007

CHARITABLE ACTIVITIES OF THE YEAR 2007

MESSAGE FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS

Vietnams business environment in 2007 contained advantages,

difficulties and challenges that had

Tran Mong Hung Chairman of the Board of Directors

History and Operations of the Bank

HISTORY AND OPERATIONS OF THE BANK

Common stock ACB VND 10,000 263,005,996 shares

Annual Report 2007 www.acb.com.vn

HISTORY AND OPERATIONS OF THE BANK

Annual Report 2007 www.acb.com.vn

100.000 80,000 60,000

90,000 75,000 60,000 45,000

TOTAL ASSETS, consolidated (bn)

DEPOSITS, consolidated (bn)

1,800 1,500 1,200

OUTSTANDNG LOAN, consolidated (bn)

PRE-TAX PROFIT, consolidated (bn)

HISTORY AND OPERATIONS OF THE BANK

Annual Report 2007 www.acb.com.vn

Report of the Board of Directors

REPORT OF THE BOARD OF DIRECTORS

REPORT OF THE BOARD OF DIRECTORS

Annual Report 2007 www.acb.com.vn

REPORT OF THE BOARD OF DIRECTORS

Annual Report 2007 www.acb.com.vn

Report of the Chief Executive Officer

REPORT OF THE CHIEF EXECUTIVE OFFICER

REPORT OF THE CHIEF EXECUTIVE OFFICER

% Realized vs. Planned

% increase against 2006

Annual Report 2007 www.acb.com.vn

REPORT OF THE CHIEF EXECUTIVE OFFICER

REPORT OF THE CHIEF EXECUTIVE OFFICER

Annual Report 2007 www.acb.com.vn

Annual Report 2007 www.acb.com.vn

Subsidiaries and Affiliates

SUBSIDIARIES AND AFFILIATES

COMPANIES HOLDING OVER 50% OF ACBS SHARE CAPITAL

Currently, no company holds over 50% of ACBs share capital.

SUBSIDIARIES AND AFFILIATES

COMPANIES WITH 50% OF SHARE CAPITAL BEING HELD BY ACB

Business License Sector No.

SUBSIDIARIES AND AFFILIATES

3.2 Report of ACBA

Annual Report 2007 www.acb.com.vn

3.3. Summary report on activities of ACB Leasing Company (ACBL)

Annual Report 2007 www.acb.com.vn

Structure & Personnel

STRUCTURE & PERSONNEL

GENERAL MEETING OF SHAREHOLDERS

PRESIDENT & CEO

CONSUMER BANKING DIVISION

COMMERCIAL BANKING DIVISION

BUSINESS DEVELOPMENT DIVISION

Sales Departments Support Departments

Sales Departments Support Departments

Foreign Exchange Department Gold Trading Department

Branch Expansion Department Marketing Department Market Research Department