Company Quarterly Earnings Update – TCB VN – 2021 9M

Summary of the 2021 9M results of Techcombank (TCB VN)

9M/2021 results: highlights

  • TCB’s credit and deposit grew by 17.0% YTD and 14.0% YTD, respectively. Asset quality, despite strict lockdown in Q3, did not deteriorate significantly. Non-performing loans (NPLs) were 0.6% by end of Sep while loans that are retained in the current loan group (restructured loans) remained flat. This is thanks to 1) a number of clients resumed their normal payment schedule, and 2) small exposure to retail loans in the South, where COVID-19 hit the most. Going forward, restructured loans and NPL are expected to rise, but the extent will be smaller than before.
  • TCB completed long-term international loan, total $800mn at interest rates of LIBOR+1.35-1.62%, which help NIM stay at high level and diversify funding structure.
  • Pre-provisioning profit increased by 47.3% y/y, driven by robust net interest income and net fee income. Provision expenses declined slightly by 6.9% y/y as TCB made a large provision to write off a bad debt in Q3/2020. Therefore, 9M/2021 net profit rose by 60% y/y. Capital Adequacy Ratio (CAR) remained solid at 15.2%.

2021 & 2022 Outlook

  • TCB will keep digitalization as its long-term strategy. The bank is set to continue investing in IT and human resources to gain customers, maintain its leading position in mortgages, payment and investment products. Thanks to such an active strategy, number of clients still grew by 3.4% q/q and 12.2% y/y despite lockdown in Q3.
  • For Q4 2021, we expect flat earnings growth because we believe provision expenses will increase. However, net profit for FY2021 will likely grow by 42.4% y/y.
  • For 2022, we forecast total operating income to increase by 20.5% y/y thanks to: (1) NIM and credit growth remaining high; and (2) rebound of fee income. Upward trends for operating and provision expenses are expected due to the digitalization strategy and some clients may continue to suffer COVID-19’s impact. Overall, 2022 net profit is projected to increase by 19.9% y/y.

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