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Company Quarterly Earnings Update – TCB VN – 2024
Summary of 2024 results and outlook of Techcombank (TCB VN)
- TCB made remarkable strides in 2024, delivering impressive results across key areas. The bank advanced its strategy to diversify its credit portfolio away from real-estate exposure by expanding into sectors thriving amid strong economic conditions, such as manufacturing, trading, and utilities, facilitating robust credit growth and improving loan book quality. Furthermore, TCB introduced innovative financial solutions and features, strengthening its value proposition and customer appeal, which drove a 1.9 mn increase in its customer base to 15.4 mn and a significant rise in current account savings accounts (CASA) balances, elevating its ratio to a market-leading 40.9%. These positive developments drove the bank’s robust share price performance, with the foreign ownership limit briefly opened as investors realized profits but was rapidly filled again, underscoring renewed investor confidence in the bank’s long-term growth trajectory.
- The bank reported a net profit of VND 21.5tn in 2024, a 19.5% y/y increase, driven by market-leading credit growth of 21.7% y/y and a 21bps improvement in net interest margin (NIM). Meanwhile, net fee income (NFI) declined by 7.7% y/y, mainly due to regulatory changes affecting key products like Letters of Credit and Bancassurance, the latter of which had already faced sector-wide challenges due to weak market sentiment from past overselling issues. Despite this, TCB showcased its ability to diversify fees income streams, with investment banking (IB) fees surging by 88.2% y/y, as its securities arm, TCBS, solidified its leadership position in brokerage services. On the cost side, operating expenses rose 16.0% y/y from investments in technology and branding, while the cost to income ratio (CIR) improved to 32.7% from 33.1% in 2023, reflecting enhanced efficiency. Provisioning costs increased modestly by 4.1% y/y, supported by better asset quality, as the NPL ratio decreased to 1.1% from 1.2%.
- We forecast 2025F net profit to be driven by credit growth. Besides real-estate development, public infrastructure projects and industrial production sector are expected to drive corporate lending, while residential housing is set to gain momentum as bottlenecks ease, supporting robust mortgage growth. NIM is projected to improve slightly thanks to TCB’s efforts to deepen its funding cost advantage. Fee income is expected to rebound, driven primarily by corporate bond underwriting and distribution. Operating expenses are expected to edge up slightly, while provision costs are projected to rise. Looking beyond the near term, we believe TCB is well-positioned for sustained growth. With its visionary strategy and strong execution, the bank continues to stay ahead of industry trends, reinforcing its leadership in Vietnam’s evolving financial landscape.
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Featured image credit: techcombank.com
