Company Quarterly Earnings Update – TCB VN – 2020

Summary of the 2020 results of Techcombank (TCB VN)

2020 results highlights:
  • TCB’s credit and deposit growth in 2020 was 24.0% y/y and 20.0% y/y, respectively, one of the strongest in the banking sector. Notably, the Current Account & Savings Account (CASA) continued to grow strongly to 46.1%, thanks to good customer service and diversified products offering. Asset quality remained healthy with 0.5% non-performing loan (NPL) by year-end. Loans to clients impacted by COVID-19 are still allowed to retain in the current loan group (called restructured loans, not NPL). This group made up 2.8% of TCB’s loan book.
  • Pre-provisioning profit increased by 34.4% y/y, driven by robust net interest income and net fee income. However, net profit only increased by 22.3% y/y as TCB took advantage of the good earnings to improve its loan loss provision ratio to 163.9% from 148.0% in Q3/2020. Capital Adequacy Ratio (CAR) stayed high at 16.1%.
  • In the last five years, TCB has built itself as a one-for-all bank, where it provides all essential financial services (banking, investment, insurance, corporate finance) coupled with an attractive offering and good customer service. As a result, the bank has grown rapidly, and its customer base has extended from 4.5mn by 2016 to 8.4mn customers by 2020. For the next five years, TCB’s two main strategies are: (1) maintain a leading position in existing segments; and (2) digitalization to extend business. TCB has been strongly investing in human, IT, and data to pursue this ambitious plan. Although the investment will be costly, building up customer base and increasing cross selling products will benefit TCB in the long-term.
  • For 2021, we expect TCB’s total operating income to grow by 14.0% y/y driven by: (1) strong credit growth coupled with slight extension in NIM; and (2) rebound of major fee income streams. Operating expenses are expected to keep growing to serve its digitalization plan, and provision expense is likely to increase to utilize good income growth. Overall, we project 2021F net profit to increase by 11.8% y/y.
  • For 2022, we forecast net profit to increase by 15.9% y/y thanks to less provisioning pressure while total operating income maintains solid growth.

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