Vietnam Technological & Commercial Joint Stock Bank · HOSE:TCB
Vietnam Technological & Commercial Joint Stock Bank — Techcombank — H1 2020 Earnings Presentation
45 slides from Vietnam Technological & Commercial Joint Stock Bank's earnings presentation, Aug 5, 2020
Slide 1: 1H20 Techcombank Analyst Presentation
1H20 Techcombank Analyst Presentation Hanoi, 5th August 2020
Slide 2: Executive Summary: 1H20 Highlights
Executive Summary 1H20 Highlights TOI PBT NPL ROA CAR 11.8 VND Tn 6.7 VND Tn 0.9% 2.9% 16.9% 30% YoY 19% YoY 1.3% FY19 2.9% FY19 15.5% FY19 VIETNAM Vietnam has remained resilient during COVID-19 “Low risk – High return” strategy an advantage during COVID-19 with strong Government containment and sup
Slide 3: Agenda
Agenda I Update on Vietnam macro environment 03 II Review of 1H2020 financial results 10 III Business and customer updates 22 IV Update on transformation initiatives 33 3
Slide 4: Vietnam among few countries with positive GDP growth and resilient macro-economy
Vietnam among few countries with positive GDP growth and resilient macro-economy GDP growth in 2Q20 (YoY) Export growth in FY20 (YoY) % % 0.2 3.8 -6.2 -6.7 -6.8 3.2 3.0 -8.3 0.4 0.7 -0.2 -1.8 -20.7 -6.8 Vietnam Vietnam China China Thailand Indonesia Malaysia Philippines Vietnam China Thailand Indone
Slide 5: Vietnam export improving, driven by United States and China markets
Vietnam export improving, driven by United States and China markets Export growth (YoY) % 2019 2020 China US Total YoY 2019 2020 2019 2020 2019 2020 Export growth in 27.2% 14.6% 0.0% 18.2% 7.2% 0.2% 6M By items 47.9 Wooden 28.5% 34.5% 17.5% -9.2% 16.0% 7.5% products 9.2 10.1 9.4 7.0 6.2 7.6 5.4 -2.7
Slide 6: Strong consumer optimism and increasing middle class continue to support growth
Strong consumer optimism and increasing middle class continue to support growth Consumer confidence have remained CCI (Q1-2020) of Vietnam is higher than The middle class in Vietnam is positively amid Covid-19 other countries in the region expected to have a rapid growth Vietnam’s Consumer Confidenc
Slide 7: Tourism industry: Domestic tourism bounced back in June
Tourism industry: Domestic tourism bounced back in June, though uncertainty remains given recent outbreak Number of visitors Real growth of Accommodation and Catering services Million Domestic visitors Foreign visitors 8.9% 45.5 7.0% 5.7% 6.5% 42.8 40.7 32.4 23.0 +133.3% 7.3 7.0 7.9 8.5 5.7 6.2 4.7
Slide 8: Residential market continue to be resilient
Residential market continue to be resilient Robust increase in volume in Hanoi in 2Q20 due to new launches Limited supply drive pricing increase Hanoi HCMC 2Q20 YoY QoQ 2Q20 YoY QoQ Units (39%) 240% (60%) (54%) 5,569 1,644 launched (vs. #9,063) (vs. #1,639) (vs. #4,124) (vs. #3,606) Decline in volum
Slide 9: 2020 Operating environment
2020 Operating environment FY20 FY20 Unit: % 1Q19 2Q19 3Q19 4Q19 FY19 1Q20 2Q20 Base Extended World GDP growth 2.9 -3.0 -6.5 Vietnam GDP 6.9 6.7 7.0 7.0 7.0 3.7 0.4 3.2 1.3 growth State budget/GDP -3.7 -5.0 -6.2 CPI 2.6 2.7 2.2 3.6 2.8 5.6 2.8 3.0 2.5 (YoY, average) Policy rate 4.75 4.75 4.5-4.75 4.
Slide 10: Agenda
Agenda I Update on Vietnam macro environment 03 II Review of 1H2020 financial results 10 III Business and customer updates 22 IV Update on transformation initiatives 33 10
Slide 11: We continue to focus on our customer centric strategy
We continue to focus on our customer centric strategy More than ever customers remain at the center of everything we do “Low risk – High return” strategy execution leads to market leading ROA of 2.9% #1 bank in effectiveness, ROA at 2.9% Largest IPO value at USD6.5 billion >10% market share in Afflu
Slide 12: "Low risk – High return" strategy delivers financial strength and resilience
“Low risk – High return” strategy delivers financial strength and resilience Market leading ROA reflects efficient use of balance sheet with opportunities for further uplift in ROE High quality earnings driven by revenue diversification and cost discipline (funding, credit, OPEX) Total assets Total
Slide 13: Credit portfolio remains well balanced
Credit portfolio remains well balanced 1H20 credit growth in SME and retail impacted by COVID-19 More than 90% of our loan book is secured Credit book by customer segment YoY Loan balance by segment VND Tn VND Tn WB SME Retail Corporate bond Loan book 125.9 115.8 111.2 YoY 96.7 31% 77.0 28% 22% 52%
Slide 14: 1H2020 performance had only limited impact from COVID-19
1H2020 performance had only limited impact from COVID-19 Core business continues to drive performance Accelerated write-off of selected bucket 5 loans in 1H20 given COVID-19 situation 1H20 Earnings VND Bn 11,784 262 3,374 3,835 8,148 152 1,059 6,738 NII NoII1 Recoveries TOI OPEX General provisions S
Slide 15: NIM impact from Circular 01 dampened by lower deposit rates
NIM impact from Circular 01 dampened by lower deposit rates 1H2020 NIM continues to reflect strategic focus on where to play and expected to remain healthy and stable in 2020 Credit balance Lending rate Net interest income VND Tn Corporate bonds WB SME Retail % VND Tn 9.7 9.8 9.3 9.1 9.3 10 5 14.3 2
Slide 16: NFI up 47% YoY led by strong performance in bond underwriting
NFI1 up 47% YoY led by strong performance in bond underwriting Bond underwriting fee increased significantly from execution of robust bond pipeline Banca remains a focus area for improvement Fee income and FX sales breakdown by products VND Tn Bond Cards FX sales YoY Banca LC & Cash and settlements
Slide 17: Expenses tightly managed in 1H20 due to COVID-19 uncertainty
Expenses tightly managed in 1H20 due to COVID-19 uncertainty Headcount nearly flat to year end 2019 level. Continue to prioritize investment in technology to support digitalization and drive operational efficiency Operating expenses VND Bn, # Staff cost Depreciation and amortisation Marketing Others
Slide 18: Asset quality remains healthy through 1H20
Asset quality remains healthy through 1H20 Lower NPL balance reflects ongoing write-offs of selected non-performing loans Credit cost LTM Coverage ratio 2.7% 108.6% 2.3% 94.8% 85.1% 66.6% 72.9% 1.1% 0.8% 0.5% Provision expenses NPL balance VND Tn VND Tn 3.7 3.6 3.1 2.8 2.6 2.2 2.1 1.8 1.2 0.9 FY16 F
Slide 19: Well positioned with healthy liquidity and strong capital position
Well positioned to support customers through COVID-19 with healthy liquidity and strong capital position Significant headroom for growth given low leverage of ~6x Capital Adequacy Ratio1 (CAR) Funding structure VND Tn Balance from other Cis & SBV Valuable paper issued Deposits to customers 16.9% 310
Slide 20: Extending track record with Low risk – High return strategy
Extending track record with Low risk – High return strategy 19 consecutive quarters of YoY revenue growth despite challenging operating environment Quarterly revenue1 VND Tn 6.2 5.9 5.6 +29% +17% +24% 5.2 +20% 4.2 4.4 4.3 4.4 3.6 3.7 3.8 3.1 3.2 3.4 3.1 2.7 2.7 2.9 2016 2017 2018 2019 2020 2016 2017
Slide 21: 2020 Financial Drivers
2020 Financial Drivers FY19 1H20 FY20 CONSOLIDATED OBSERVATIONS ACTUAL ACTUAL TREND Credit growth 18.8% 2.7% • Growth dependent on Covid-19 containment (YoY) Net interest margin (NIM) 4.2% 4.5% • Impact from lower lending rates to support impacted customers should continue to be offset by lower fund
Slide 22: Agenda
Agenda I Update on Vietnam macro environment 03 II Review of 1H2020 financial results 10 III Business and customer updates 22 IV Update on transformation initiatives 33 22
Slide 23: Primary mortgages continue to be a key focus for retail lending
Primary mortgages continue to be a key focus for retail lending Credit quality of retail mortgage portfolio remains healthy Retail Product Loan Mix Retail mortgage book by customer segment VND Tn VND Tn Affluent Mass Affluent Mass Mortgage Home equity Credit card Others Auto loan Household PIL 85.0
Slide 24: Steady progress in ReCoM value chain with well-managed risk exposure
Steady progress in ReCoM value chain with well-managed risk exposure Large developers continue to witness steady demand for housing ReCoM portfolio outstanding balance1 (1H20) ReCoM portfolio outstanding balance1 (FY19) VND Tn WB Retail RWR VND Tn WB Retail RWR 128% 140% 47.3 179.5 50.9 171.6 7.9 6.
Slide 25: Corporate bonds continue to be an important solution for large corporate and affluent retail customers
Corporate bonds continue to be an important solution for large corporate and affluent retail customers Volume and distribution remained robust in 1H2020 Maintain leading position in domestic corporate bond market Corporate bond brokerage market share on HOSE TCB bond issuance volume VND Tn TCBS Secu
Slide 26: Update on COVID-19 support measures provided to individuals & corporates
Update on COVID-19 support measures provided to individuals & corporates Early identification and proactive support measures taken to our customers through this challenging period Loan book rescheduled under Circular 01 as at 30 June 2020 COVID-19 Support Package in line with Circular 01 VND Tn Resc
Slide 27: COVID-19 impact to asset quality well managed
COVID-19 impact to asset quality well managed Loan book exposure to hard-hit industries at ~10%. Highly secured portfolio including medium and long term loans secured by high quality collateral Closely monitor loan portfolio with prudent risk management and continue to focus on quality with a cautio
Slide 28: Strong and resilient deposit franchise has bounced back post-COVID lock-down
Strong and resilient deposit franchise has bounced back post-COVID lock-down CASA continues upward trajectory once adjusted for seasonality and partial lockdown in April 2020 Retail CASA has grown 3.5x since 2016 with CASA level per retail customer continues to grow Expanding CASA per retail custome
Slide 29: Digital growth continues strong growth post relaxation of social distancing
Digital growth continues strong growth post relaxation of social distancing Retail E-banking transaction volume and value increased 130% and 91% YoY, respectively Adoption of digital channel accelerated during period of social distancing and trend continues Robust technology infrastructure ensured o
Slide 30: Adoption of enhanced retail digital capabilities continues to accelerate
Adoption of enhanced retail digital capabilities continues to accelerate Credit Cards Term Deposit Share of transactions by channel New card Average balance FY19 28% 60% 11% FY19 75% 25% PFS 1H20 23% 39% 38% 1H20 56% 44% FY19 1H20 6% FY19 61% 33% 6% FY19 76% 24% 9% AFF 12% 1H20 72% 17% 1H20 60% 40%
Slide 31: Enabling corporate/SME customers to ensure operational resiliency and efficiency
Enabling corporate/SME customers to ensure operational resiliency and efficiency Digital payment 5.3 times increase in 5.3 times increase in Digital active customers transaction ~73% of payment transaction value total transactions over the digital channel Total payment transaction value Number of ac
Slide 32: BusinessOne: First of its kind digital bundle for SMEs
BusinessOne: First of its kind digital bundle for SMEs 3,597 customers on BusinessOne since launch 1,013 customers on BusinessOne plus 17x growth in number of customer registered since launch CUSTOMER VALUE PROPOSITION CUSTOMER REGISTRATION Beyond zero fee... Save Cost – Grow Your Business 2,052 Unl
Slide 33: Agenda
Agenda I Update on Vietnam macro environment 03 II Review of 1H2020 financial results 10 III Business and customer updates 22 IV Update on transformation initiatives 33 33
Slide 34: Next phase of transformation: Competitive advantage through digitalization and data excellence
Next phase of transformation: Competitive advantage through digitalization and data excellence Achievements in the last 4 years thanks to our 1st phase of transformation of our business model focusing on fundamental capabilities We are completing phase 2 to build up foundation and infrastructure to
Slide 35: Big digitalization aspirations
Big digitalization aspirations The Bank will continue migrating sales, transaction and service activities out of our physical channels into digital channels Customers will benefit from improved accessibility of the Bank to meet their basic banking needs 2019 (Actual) 2025 (Aspiration) Examples of Di
Slide 36: Accelerate digitalization by operationalizing Transformation Office (TO)
Accelerate digitalization by operationalizing Transformation Office (TO) TO is set up to digitalize customer journeys and pilot Agile methodology Implementation with full-fledged support from leading global experts Agile Delivery Unit Retail OMNI Channel Corporate OMNI Channel Segment Retail Corpora
Slide 37: 1H20 Focused on setting up Foundations for Operationalization
1H20 Focused on setting up Foundations for Operationalization Followed disciplined framework to operationalize the TO across Structure, People, Process, Technology TO has 6 Customer Journey Tribes setup with Mortgage and Retail OMNI Channel delivering customer results Operationalization Framework Ro
Slide 38: Tangible Results from Agile way of work in TO
Tangible Results from Agile way of work in TO The Bank is seeing clear benefits of digitalization across basic (e.g, Credit Card) and complicated (e.g., Mortgage) products Digital Card Experience Digital Mortgage Experience 1-in-3 new cards are issued end-to-end Sales productivity increased by 1
Slide 39: Clear roadmap of additional digital capabilities in 2H20
Clear roadmap of additional digital capabilities in 2H20 Customize and embed frameworks across Data, Technology, Risk and Innovation to align with new TO way of work Scale up Agile to all design, build and run activities within TO and rest of Bank Examples of Capabilities being built Single-source
Slide 40: 1H20 Financial highlights (1/2)
1H20 Financial highlights (1/2) Balance sheet (VND Bn) 2Q20 1Q20 FY19 QoQ chg/gwth YTD/YoY Total assets 395,861 391,808 383,699 1.0% 3.2% Total Risk Weighted Assets (Basel II) 408,155 394,639 407,330 3.4% 0.2% Deposits from customers 249,857 235,099 231,297 6.3% 8.0% 1 Credit growth 2.7% 2.9% 18.8%
Slide 41: 1H20 Financial highlights (2/2)
1H20 Financial highlights (2/2) Segmentation - Balance sheet (VND Bn) 2Q20 1Q20 FY19 QoQ YTD Loans to customers 231,666 232,021 230,802 (0.2%) 0.4% Retail 103,184 101,910 105,247 1.2% (2.0%) SME 41,407 44,189 44,921 (6.3%) (7.8%) WB 87,075 85,922 80,634 1.3% 8.0% Deposits from customers 249,857 235,
Slide 42: Disclaimer
Disclaimer The information in this presentation is being provided as a historical, reference source only and is not being used for, and nothing in this presentation constitutes an offer, invitation or recommendation to sell or issue, or any solicitation of any offer to purchase or subscribe for, sec
Slide 43: Glossary
Glossary ASEAN : Association of Southeast Asian Nations OTC : Over-the-counter CAGR : Compounded Annual Growth Rate P/B : Price-to-book ratio CAR : Capital Adequacy Ratio PAT : Profit after tax CASA : Current Accounts and Saving Accounts PBT : Profit before tax CIR : Cost-to-income ratio PIL : Perso
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