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Company Quarterly Earnings Update – TCB VN – 9M 2024
Summary of 9M/2024 results and outlook of Techcombank (TCB VN)
- Robust credit expansion and optimized costs drove net profit up by 33.8% y/y. In 9M/2024, TCB achieved credit growth at double the market rate, leading to a 25.9% y/y increase in total credit. This growth was complemented by portfolio diversification into industrial manufacturing, trading, and technology sectors. Continuous innovation in customer acquisition and financial solutions drove substantial current account savings accounts (CASA) growth, enhancing net interest margin (NIM) by 40 bps. Net fee income (NFI) growth softened to 5.8% y/y, primarily due to regulatory changes leading to reclassification of fee from Letter of Credit products into interest income. Conversely, investment banking (IB) fees surged by 42.6% y/y as TCBS solidified its position as a market leader in securities brokerage. Efficiency gains were evident by the reduced cost-to-income ratio (CIR) to 28.4% from 33.2% last year, with increased costs focused on technology and marketing, aligning with TCB’s growth objectives. Provisioning cost rose by 73.4% y/y from a low base in 2023, reflecting proactive risk management, while loan loss reserves ratio remained robust at 103.6%.
- Reshaping bancassurance strategy: In October, TCB terminated its bancassurance distribution agreement (DA) with Manulife, citing regulatory shifts and strategic divergence. Simultaneously, TCB announce its investment in a non-life insurance company to pursue full-cycle integration in bancassurance beyond mere distribution, aiming to enhance claims efficiency and customer experience through their superior technological capabilities. Despite recognizing the potential in this market and TCB strong competitive positioning, we have not yet factored in the potential impact of this move due to insufficient details regarding the bank’s execution plan.
- For Q4, we expect a slight reduction of net profit due to impact of an one-off expense, however, FY2024 figure is still expected to increase y/y. We anticipate credit growth to continue accelerating in Q4 while NIM is projected to slightly tighten. TCB will account for a VND 1.8 tn compensation fee from its DA termination as an one-off expense in Q4. Coupled with continued investments in technology and marketing to expand market share, pushing the full-year CIR to increase.
- For 2025, with anticipated economic acceleration, we project TCB to sustain robust credit growth, supported by a gradual rise in lending rates that should help maintain its high NIM. We expect a stronger real estate market recovery to drive asset quality improvements and lower provisioning costs, while the absence of one-off expenses helps reduce CIR.
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Featured image credit: techcombank.com
