Dear Shareholders and stakeholders of HDBank,

Scientists are warning that the Earth is continuing to warm and is approaching a critical tipping point. Climate change, environmental pollution, and natural disasters are becoming increasingly frequent and severe threats around the globe. In addition, war, inequality, human rights abuses, poverty, and other social issues are also demanding action from countries around the world.

At the 28^th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP28), Vietnam officially announced the Plan for Resource Mobilization to Implement the Political Declaration on Establishing the Just Energy Transition Partnership (JETP), reaffirming its commitment to clean energy development and a net-zero emissions target by 2050.

At HDBank, we understand that tomorrow comes from today’s actions and fully support the above commitments and goals. We are fully aware of our role and responsibility in creating value for society, protecting the environment, and contributing to the development of a green economy, promoting human rights, and creating sustainable values for the future.

With this awareness and responsibility, over the years HDBank has not only fully complied with environmental regulations in all its operations but has also been one of the pioneers in participating in the country’s climate change projects.

In 2015, HDBank was selected by the Government to be the bank serving the Climate Change Adaptation Project in the Mekong Delta region in the two provinces of Ben Tre and Tra Vinh, using ODA funds from the International Fund for Agricultural Development (IFAD) under the United Nations. Also in 2015, HDBank was selected by the Government to serve the project on Improving Energy Efficiency in Hanoi and Ho Chi Minh City, using 100 million euros of ODA provided by the German government. Subsequently, HDBank was continuously selected by the State Bank of Vietnam and the Ministry of Finance to serve projects using ODA to develop the clean water supply system, build schools, hospitals, and economic infrastructure.

In recent years, HDBank has expanded its cooperation with many international organizations such as IFC, DEG, and Proparco to disburse hundreds of millions of USD for renewable energy programs, high-tech agriculture, small and medium-sized enterprises (SMEs), and womenowned businesses in Vietnam. In addition, we have been constantly striving to implement specific solutions and actions to reduce greenhouse gas emissions, hazardous waste, and commit to strictly manage emissions in all our activities.

As of end 2023, HDBank’s green finance portfolio exceeded 12 trillion dong and total disbursement amount in 2023 to women-owned businesses exceeded 3.4 trillion dong. At the same time, HD SAISON has disbursed nearly 8 trillion dong of preferential loans to workers at industrial parks and processing zones nationwide to help low-income borrowers improve their living standards.

Recognizing the importance of financial inclusion, HDBank has been promoting strategies, policies, and actions to increase access to financial services for customers in remote and rural areas. Over the past 10 years, HDBank has been committed to the strategy of a universal retail bank, targeting small and medium-sized enterprises, workers, farmers, small traders, and low-income people in second tier cities and rural areas. HDBank and our consumer finance subsidiary HD SAISON currently serve more than 17 million individual and consumer finance customers, with over 50% of outstanding loans for people and businesses in second tier cities and rural areas.

In terms of governance, HDBank is the pioneer bank to upgrade to Basel III in 2023 and is ready to apply from 2024 when approved by the regulatory authorities. The bank has also completed the project of upgrading the risk management framework; issued Policy on Environmental and Social Risk Management in credit extension (ESMS) applied to corporate loans, specifically limiting credit to industries that have a negative impact on the environment.

Throughout many generations of leadership, HDBank has always been an active and responsible bank in implementing social responsibility. HDBank’s CSR activities have always received the consensus of implementation throughout the system, bringing a better life to vulnerable groups in need of support in society.

As we move forward into our 34^th year of operation, we are committed to building HDBank into a model that effectively integrates sustainable development goals into its business strategy, bringing maximum benefits to customers, shareholders, the community and society. The success of this model at HDBank has been recognized and highly appreciated by many domestic and international organizations, with numerous awards for sustainable development in 2023. HDBank was honored by Asiamoney magazine as the Best Bank for CSR in Vietnam. Notably, at the 2023 Listed Companies Awards, HDBank won two important awards: Best Listed Company for Organizing the Annual General Meeting and Best Annual Report. The Vietnam Institute of Directors (VIOD) honored HDBank’s Board of Directors as the Board of the Year, recognizing its top-notch corporate governance. Previously, in 2019, HDBank was the first bank in Vietnam to be honoured by the Asian Development Bank (ADB) with a Green Deal Award.

Sustainable development is a long-term process that requires perseverance and continuous effort. Therefore, the theme of this year’s annual report, “Green Mindset - Sustainable Growth”, is also the focus of HDBank’s journey to build a green legacy and strive to fully implement the 17 Sustainable Development Goals of the United Nations. The key areas that HDBank will continue to focus on are:

• Enhancing governance and risk management capabilities
• Aligning the Bank’s credit portfolio towards greening and supporting customers in the green transition process
• Further promoting digital transformation to provide comprehensive financial solutions to stakeholders

HDBank, together with its Board of Directors and employees, is committed to continuously creating sustainable value and fulfilling its commitment to bringing the best benefits to all stakeholders. With the utmost determination, we are confident that we will achieve and exceed our business targets for 2024 and reach new heights in sustainable development.

INFORMATION

• The highest-ranking official in charge of putting Sustainable Development policy into action

  Mr. Pham Quoc Thanh - Chief Executive Officer of HDBank

• The person in charge of putting Sustainable Development policy into action

  Mr. Tran Hoai Phuong - Head of the Commercial Banking Division and Chief of the Environmental and Social Council

• Email:

  vphdqt@hdbank.com.vn

• Telephone:

  (028) 62 915 916

• Website:

  www.hdbank.com.vn

• Address:

  HD Tower Building, 25Bis Nguyen Thi Minh Khai, Ben Nghe Ward, District 1, Ho Chi Minh City

Sustainable development, as a global aspiration, is a process that integrates the three key dimensions of development, including economic development, social development and environmental protection, into a harmoniously balanced whole.

When it comes to environmental protection issues, back in 2015, HDBank issued the Policy on Green Credit and Environmental and Social Protection, making it one of the pioneering banks in implementing and promoting green credit development as well as responding to climate change and protecting human health. In 2015, HDBank was selected by the Government to participate in Green projects such as the “Project for Adaption to Climate Change in the Mekong Delta” and “Energy Efficiency Improvement” as well as many other ODA-funded projects related to community and economic infrastructure development to promote the country’s inclusive development.

In recent years, HDBank has been actively attracting funds to support projects in agricultural and rural development, high-tech agriculture, small and medium-sized enterprises (SMEs), renewable energy, women-owned businesses, contributing to promoting a green economy, circular economy and financial inclusion.

In 2023, the Bank officially adopted the Regulations on Environmental, Social and Governance (ESG) Policies to communicate to its employees and stakeholders the standards that the Bank strives for. Governance and supervision mechanisms were also established to help implement the commitments of the Bank’s Board of Directors. On the same note, HDBank has also officially issued the Policy on Environmental and Social Risk Management in credit extension (ESMS) in corporate credit extension, which was formulated in consultation with a reputable international consulting organization and in compliance with the current environmental and social regulations and standards of the International Finance Corporation (IFC). The purpose of it is to ensure the effective implementation of HDBank’s Environmental and Social Policy and proactive assessment and management of Environmental and Social risks and opportunities in credit products/services. Through this regulation, HDBank demonstrates its commitment to excluding financing for activities related to coal, oil exploration and production, as well as infrastructure services related to coal and coal-fired power plants.

To ensure the rights of stakeholders, HDBank is firmly committed to fully and strictly enforcing the provisions of the law and regulations. The Bank has issued an Environmental and Social Policy to integrate specific principles into the Bank’s business operations. HDBank also issued a Grievance Mechanism to establish in detail the procedures for receiving, investigating, resolving and closing complaints regarding the Bank’s operations from stakeholders.

Social and community support and development has been a long-established tradition of HDBank. The Bank maintains a track record in proactively fulfilling its social responsibility effectively to create real and far-reaching impacts. Social security activities are centered around three key dimensions, including education, healthcare, and housing. The Bank also focuses on cultivating the young generation by helping to discover and nurture Vietnamese young talents in sports and chess to rival the world’s best.

Building on a strong foundation of achievements and values, in 2024, HDBank will further promote its sustainable development strategy, focusing on the three pillars including Environmental - Social - Governance (ESG) through the following programs:

• Develop bank-wide ESG strategy and management framework; Report and publish ESG-related information;
• ESG risk management: Strengthen internal training and control of ESG risks in operations and business;
• Further enhance the green credit framework and develop sustainable financial products;
• Promote and expand cooperation with international organizations, financial institutions, and domestic ministries and departments to promote green credit, sustainable finance, etc. and pave the way for achieving Net Zero Bank.

With the aim of ensuring the sustainable growth of the economy, HDBank is among the first commercial banks to lead the way in promoting policies on green credit and social and environmental protection; in addition to organizing comprehensive training programs for its staff to evaluate environmental and social risks throughout the approval process, while also improving consultancy services and customer support.

Outstanding achievements in sustainable development practices under the Environmental - Social - Governance pillars in 2023

• GOVERNANCE
• ENVIRONMENTAL
• SOCIAL

1

Achieved a 24.2%

return on equity (ROE), placing HDBank among market leaders

2

25%

rate of dividends in cash and shares received by HDBank shareholders in 2023

3

12.6%

of the capital adequacy ratio (CAR) (according to Basel II standards)

4

Issued the Regulations on Environmental and Social Management System for Risks in Credit Extension Operations to identify, evaluate and manage environmental and social risks in credit extension operations for commercial customers

5

Over VND 8.7 trillion of green credit balance disbursed for business and production initiatives aimed at safeguarding the environment and addressing climate change in 2021, 2022 and 2023

6

Policy on Environmental and Social Risk Management in credit extension (ESMS)

is officially issued by the Board of Directors

7

Established the Environmental and Social Council

to help monitor the implementation of Environmental & Social policies and commitments

8

132%

growth in the number of financial transactions on the e-banking channel

9

86%

growth in the number of customers engaging in transactions on the e-banking channel

1

Increase by 24%

of the solar energy consumption compared to 2022

2

Decrease by 8.6% and 7% respectively

in terms of paper and ink consumption rate per employee compared to 2022

3

Decrease by 12.4%

of the plastic consumption per profit before tax compared to 2022

1

Increase by 249.4%

of the total expenses for staff training activities compared to 2022

2

20 million

shares issued in 2023 under the employee stock ownership plan (ESOP) for managers

3

Over 55%

employees are female

4

4.86/5

the average customer satisfaction score across 3 survey channels (over the counter, traditional communications channels and online application)

5

Over 52%

of the total loan portfolio directed to customers in secondary urban areas and rural areas

HDBank recognizes that the support and collaboration of our stakeholders are crucial for our success on the sustainable development journey. HDBank identifies our key stakeholders as those who either influence our development strategy or are directly impacted by our operations. HDBank also identifies potential concerns, chooses appropriate communication channels, and proposes a specific action plan to ensure we meet the expectations of all stakeholders.

HDBank wishes to engage with our key stakeholders, including shareholders, investors, customers, employees, regulators, media outlets, suppliers, and local communities on the upcoming journey. The needs and expectations of the stakeholders will be the driving force to help HDBank conquer new milestones, while shaping HDBank’s sustainable business strategy.

Committed to sustainable development to ensure the best benefits for stakeholders, HDBank has identified 13 key focus areas impacting its operations and its stakeholders. HDBank evaluates key focus areas based on their impact on both its operations and stakeholders.

HDBank identifies Environmental - Social - Governance (ESG) as its three core pillars for sustainable development. Within these pillars, HDBank defines 13 detailed key focus areas to guide its sustainable development activities. HDBank will conduct an annual review and update of its key focus areas and their corresponding impact, which ensures alignment with evolving stakeholder concerns and the strategic direction of HDBank’s business activities.

Governance

• 1
  Economic values
• 2
  Sustainable Risk Management
• 3
  Sustainable finance
• 4
  Legal compliance
• 5
  Digital transformation and data security

Environmental

• 1
  Resources optimization
• 2
  Environmental impacts Reduction

Social

• 8
  Human resources enhancement
• 9
  Employee’s welfare and compensation
• 10
  Diversity, equality and human rights
• 11
  Customer values
• 12
  Financial inclusion
• 13
  Community and society Companion