Financial Statement

Financial Statement - FINANCIAL STATEMENTS ANNUAL REPORT...

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FINANCIAL STATEMENTS ANNUAL REPORT 2003 87
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ANNUAL REPORT 2003 88 The Bank’s financial statements are prepared under the current regulations of the State Bank of Vietnam and Ministry of Finance. The financial year is from January 1 st to December 31 st , 2003. State- ments are expressed in Vietnamese Dong (VND) under the Law on Credit Institutions and Accounting System of Vietnam Credit Institutions. Foreign currencies are originally accounted and converted into VND at the average exchange rate in the Inter-bank market announced by the State Bank of Vietnam on the date of financial statements (i.e. 15,608VND/USD). Credits: the outstanding credit balance is calculated based on the principal value at the end of the financial year including non- performing loans, loans against defaults under the Bank’s guarantees and loans for leasing. Provisions for credit risks are set aside on the basis of the Bank’s performance results within the financial year in accordance with Decision No 488/QD-NHNN5 signed by the Governor of the State Bank of Vietnam. Fixed assets are calculated at original price minus accumulated depreciation. The rate of depreciation is based on the straight-line method and calculated pursuant to regulations of the Ministry of Finance; The Bank’s fixed assets included offices, premises, equipment, software, and other machineries. Fixed assets are depreciated on the linear basis over their estimated useful life as follows: - Building: 25 years - IT equipment: 3 years - Transportation vehicles: 6 years - Office furniture and fixtures: 4-5 years - Other assets: 4 years BASIS FOR PRESENTATION
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ANNUAL REPORT 2003 89 Equity investments are calculated in the original currency of the amount invested at their acquisition cost and are held for long-term investment purposes. In accordance with the regulations of the State Bank, provisions for the permanent diminution in the value of equity investment and the subsequent revaluation of investment in association with the investor’s share of invested net profits are not required. Investment securities held to maturity mainly comprise of treasury bills and bonds issued by the Ministry of Finance, debt securities issued by other Vietnamese state-owned commercial banks and investment portfolios managed by selected international banks. Those securities are recognized at historical cost, interest is accrued using the effective interest method and recorded in accrued interest income account Income and expenses from deposits, loans and leasing are calculated on the accrued basis (IAS). Interest income is calculated based on the outstanding amount of performing loans and the interest rate applicable. The recognition of interest income is suspended when loans become impaired and repayments are overdue by more than 90 days. Interest and expenses from inter-branch balances are not eliminated due
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Financial Statement - FINANCIAL STATEMENTS ANNUAL REPORT...

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