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Company Quarterly Earnings Update – TCB VN – Q1 2025
Summary of Q1/2025 results and outlook of Techcombank (TCB VN)
- The bank maintained robust credit growth and solid asset quality, however net profit declined by 4.2% y/y as lending yields softened under competitive pressure. Total credit expanded by 18.3% y/y, bolstered by the ongoing recovery of the real estate market, particularly in the southern region, as well as robust margin lending growth. The net interest margin (NIM) contracted notably by 90bps, mainly due to pressure on lending yields amid fierce market competition and government directives to maintain a stimulative low-rate environment. Net fee income (NFI) fell by 15.8% y/y, primarily due to reclassification of letter of credit product into interest income as well as weak revenue from trade financing solutions. Despite this, investment banking (IB) fees surged 68.8% y/y, becoming the largest fee income contributor, as the securities arm, TCBS, further strengthened its wealth banking ecosystem. Bancassurance also regained growth momentum, rising 26.7% y/y, marking early positive signs following its business model transformation. These results highlight TCB’s ability to diversify its fee income streams.
- On the cost side, operating expenses rose modestly by 1.1% y/y, resulting in a healthy cost-to-income ratio (CIR) of 28.3%. Notably, resources were directed toward investments in technology infrastructure and branding, while further savings were achieved in staff costs. On the asset quality front, the NPL ratio remained stable at 1.2%, supporting a 10.0% y/y decline in provisioning costs. Furthermore, a 101.0% y/y increase in bad debt recoveries contributed to a reduction in net credit costs to 0.5%.
- In March 2025, TCB took major steps to accelerate its bancassurance transformation with the launch of Techcom Life Insurance JSC and the acquisition of a controlling stake in Techcom Non-Life Insurance JSC. These moves strengthen TCB’s role in shaping a strategic platform for life and non-life offerings tailored to Vietnam’s market. Backed by advanced data capabilities, robust digital platforms, and a proven track record of innovation and market leadership, TCB is well positioned to capture the country’s growing insurance opportunity and drive fee-based income growth.
- For the remaining nine months of 2025, we anticipate a gradual recovery in NIM, supported by (1) a stronger focus on retail lending, which should enhance yields, and (2) declining deposit rates since late Q1. Nevertheless, our 2025 net profit forecast is lowered, mainly reflecting more conservative full-year NIM assumptions, as the low-interest rate environment is expected to persist amid global trade tensions, raising the need for supportive monetary policy. Fee income, however, is projected to resume growth, driven by solid contributions from corporate bond underwriting and distribution, as well as a resurgence in bancassurance.
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