Brand valuation for Vietnam’s commercial banks

If non-performing loans (NPLs) are not strictly controlled, they will directly affect a bank’s profit as well as its liquidity. NPLs ratio is inversely proportional to brand value, high NPLs ratio can even delete brand from the market (this is clearly illustrated in fact). NPLs ratio is measured by outstanding balance of group 3,4,5 divided by total outstanding balance, NPLs ratio is inversely proportional to attribute score. Specifically, NPLs attribute score is calculated as below: + The State Bank of Vietnam stipulated standard score for this content is 3%, so, the attribute score of 5 is equivalent to NPLs ratio of 3%. + According to Circular No. 08 of the State Bank special control towards Commercial Banks, all commercial banks having NPLs ratio of 10% and above will be subject to special control of the state bank, therefore, attribute score of 1 will be equivalent to NPs ratio of 10%. The gap between minimum score of 1 and average score of 5 is 4 points, so each lower-than-average point is calculated by: (10% - 3%)/4 = 1.75% + A bank having no NPL will get maximum attribute score of 10. The gap between maximum score of 10 and average score of 5 is 5 points, so each higher-than-average point is calculated by: 3%/5 = 0.6%



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