Techcombank (TCB) just announced to receive a fully drawn-down $500mn syndicated loan from 24 international financial institutions. The loan is to finance for working capital and diversify the bank’s funding structure. This loan is a 3- year senior unsecured one which offers an interest rate of LIBOR plus a spread of 1.5% (the current 6-month LIBOR is 0.66%). The initial plan was to raise $300mn, but thanks to the overwhelming response from the international market, the loan size was increased to $500mn. In our opinion, this is good news for TCB as the bank can benefit from the current global low interest rate environment and eventually improve its net interest margin. We currently project 2020F net profit of the bank to increase by 4.5% y/y. At the current stock price, it is trading at 2020F P/E and P/B of 6.7x and 1.0x respectively.
On the sector perspective, this facility shows a strong interest in Vietnamese banks from international capital markets despite Moody’s recent cut of the outlook of some Vietnamese banks from neutral to negative, for its worries on the impact of COVID-19 to banks’ earnings. We think while it is true that the pandemic will have an impact on the banking system, the situation is, nevertheless, controlled very well in Vietnam and almost all activities have reopened. The State Bank of Vietnam is also active in supporting the economy by offering loan restructure, interest rate cut, etc. As a result, earnings will only be impacted in the short-term but is expected to recover strongly in 2021.