34 slides from Vietnam Technological & Commercial Joint Stock Bank's earnings presentation, Apr 26, 2023
Slide 1: Techcombank 1Q23 Analyst Presentation
Techcombank 1Q23 Analyst Presentation 26 April 2023 1
Slide 2: Agenda
Agenda SECTION Highlights SECTION Economic update 01 02 SECTION 1Q23 Financial results SECTION FY23 Outlook and business update 03 04 2
Slide 3: Highlights
Section 01 Highlights 3
Slide 4: 2022 headwinds continued in 1Q23, as expected
2022 headwinds continued in 1Q23, as expected Carry-over impact from NIM compression driving 19.5% YoY decline in NII VND 9.3 Tn TOI Other income back to positive territory (including VND 731 billion gain on sale of Ba Trieu office -7.1% YoY building) VND 5.6 Tn PBT declined more than TOI due to (1)
Slide 5: Economic update
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Slide 6: Healthy macroeconomic indicators but signs of economic slowdown
Healthy macroeconomic indicators but signs of economic slowdown Better than last year Indicators 1Q22 2Q22 3Q22 4Q22 1Q23 2023F GDP growth 5.1 7.8 13.7 5.9 3.3 5-6 YoY, % Inflation 1.9 3.0 3.3 4.4 4.2 3.7 avg., % Retail sales growth1 1.6 7.9 16.8 15.6 10.3 real terms, % Disbursed FDI 4.4 5.6 5.3 7.0
Slide 7: Improved liquidity with interest rates trending down
Improved liquidity with interest rates trending down Deposit & Credit growth Banking system’s Casa ratio 5-yr and 10-yr VGB yields YTD Deposit growth Credit growth % LDR %, Monthly Average 4.0 94 CASA (RHS) 4.9 22 5 5Y 10Y 93.4 21 4.7 4.0 92 4 20 90 3 3.6 2.2 19 1.7 1.9 1.6 18 2 1.5 88 18.3 17 1 0.8
Slide 8: Apartment ASP increased but volume remained low; corporate bond issuance signals pick-up
Apartment ASP increased but volume remained low; signals of pick-up in issuance volume of corp. bonds Hanoi: Apartments sold and Average selling price (ASP) Corporate bond origination: 1Q23 vs previous years Sold Units (1000 units) Unit: VND Tn Average selling price (1000USD/m2 - RHS) 2.0 10 1.9 1.9
Slide 9: Tangible measures from regulators to develop bond, real estate markets
Tangible measures from regulators to develop bond, real estate markets and stimulate economic activities Regulation No. Status Key measures Cir. No. 26/2022/TT- In effect from 1. Revises the calculation of LDR, allowing banks gradually include a part of term deposit from state treasury in NHNN 31/12
Slide 10: 1Q23 Financial results
Section 03 1Q23 Financial results 10
Slide 11: Financial Highlights
Financial Highlights 1Q22 1Q23 1Q22 1Q23 1 TOI growth (YoY) 15.7% -5.2% Credit growth 7.9% 9.3% NII growth (YoY) 32.5% -19.5% (YTD)3 NFI growth (YoY)2 26.9% 14.2% NIM (LTM) 5.6% 4.6% Loans & P&L NFI2/TOI1 19.6% 23.7% Asset Quality NPL 0.67% 0.85% CIR 30.0% 33.8% Coverage ratio 160.8% 133.8% PPoP gro
Slide 12: Lower NII was partially offset by positive fee and other income
Lower NII was partially offset by positive fee and other income ▪ Decline in NII was caused by lower NIM, in-line with our expectation shared at last AP ▪ Income from other activities (than NII and NFI) posted VND482 billion, vs. a loss of VND 254 billion in 1Q22. Recoveries stood at VND 119 billion
Slide 13: Shifts in credit mix and funding mix continued into 2023
Shifts in credit mix and funding mix continued into 2023 ▪ Credit mix: corporate bonds further lowered to VND 38 trillion by the end of 1Q23 ▪ Increase in total sources of funds was mostly thanks to customer deposits, reflecting strong Techcombank franchise Interest earning assets mix (VND Tn) Asset
Slide 14: Stronger-than-market credit demand, +9.0% YTD
Stronger-than-market credit demand, +9.0%1 YTD ▪ Business customers, including large corporates and SMEs, started to expand their credit demand ahead of expected economic recovery in 1H23 ▪ In terms of loan mix, MLT loans increased ~15% to meet customer demand. Credit mix (VND Tn) Loan mix by term (
Slide 15: High interest rate environment negatively affected borrowing decisions
High interest rate environment negatively affected borrowing decisions, especially by retail customers ▪ Retail customers however were more cautious with short-term debt servicing pressure, i.e. interest payments, and thus pro-actively reduced their borrowing incl. mortgage, credit cards and margin
Slide 16: Higher funding costs in 1Q23 as interest rates stayed elevated
Higher funding costs in 1Q23 as interest rates stayed at elevated levels for most of the quarter ▪ Interest rates stayed at uplifted level for most of 1Q23, driving up cost of funding ▪ CASA balanced continued to decline, but at much lower pace Deposit by type and deposit rates (VND Tn, %) CASA by s
Slide 17: Resilient NFI growth of 14.2% YoY supported by diversified fee income
Resilient NFI1 growth of 14.2% YoY supported by diversified fee income based ▪ Modest IB fees reflected muted recovery in the bond market and stock market ▪ Lower banca fee also reflected slow economic activities in the quarter, compared to sharp rebound in 1Q22 post COVID ▪ LC and Cash and settleme
Slide 18: Digital strategy remains unchanged, reflected in Opex mix
Digital strategy remains unchanged, reflected in Opex mix • Accelerated investments in digital, reflecting in 47% growth in depreciation and amortisation as several systems go live in late 2022 and in increase in IT tools and licenses, which in turn drove 13% expense increment in premise and equipme
Slide 19: Strong asset quality metrics
Strong asset quality metrics ▪ Credit cost (LTM) remained stable, marginally edging up to 0.4% pre-recoveries (or 0.1% net recoveries) ▪ Non-performing loans moderately rose to 0.85%, reflecting continued headwinds observed in most of 1Q23 Provision expenses and LTM credit costs (VND Tn) NPL and cov
Slide 20: 1Q23 – Asset book health
1Q23 – Asset book health Average LTV Credit structure by customer interest (CI) rates 100% 64% 62% 16% 60% 60% 60% CI rate >10% 21% 21% 39% 38% 45% CI rate 8->10% 45% 44% 23% 33% CI rate <8% 34% 39% 35% 39% 28% 1Q/22 2Q/22 3Q/22 4Q/22 1Q/23 1Q/22 2Q/22 3Q/22 4Q/22 1Q/23 Receivables Average customer
Slide 21: Robust capital and liquidity positions
Robust capital and liquidity positions ▪ CAR slightly decreased to 15.0%, as credit book expanded nearly 9% YTD ▪ Share of customer deposits in Bank's funding continued its progression Capital Adequacy Ratio1 (CAR) Funding mix (VND Tn) Customer deposits Non-customer funding 15.8% 15.7% 15.2% 585 15.
Slide 22: Differentiated operating metrics relative to sector peers
Differentiated operating metrics relative to sector peers TCB Industry median1 CASA CIR2 49.0% 50.5% 50.4% 47.5% 41.4% 42.2% 46.1% 44.2% 46.1% 46.5% 42.3% 39.6% 37.0% 36.6% 32.0% 35.0% 36.3% 35.0% 35.0% 34.8% 17.0% 16.9% 18.5% 19.1% 18.4% 18.7% 17.7% 17.5% 16.0% 33.8% 30.7% 33.4% 29.2% 28.7% 29.9% 3
Slide 23: FY23 Outlook and business update
Section 04 FY23 Outlook and business update
Slide 24: Vietnam's GDP expected to grow 5-6.5% in 2023; short-term headwinds continue
Vietnam’s GDP expected to grow 5 - 6.5% in 2023; short-term headwinds continue Real GDP Vietnam & World GDP (Real GDP growth indexed to 100% in 2019) 5-6.5% forecasted GDP growth, with still some headwinds ▪ Global inflationary pressure Vietnam 6.5% ▪ Muted growth in advanced economies with some pre
Slide 25: FY23 Outlook: Expected improvements from 2H
FY23 Outlook: Expected improvements from 2H FY20 FY21 FY22 FY23 Comments Actual Actual Actual Outlook Credit growth1 23.3% 22.1% 14.5% Per SBV quota 15% or higher, subject to SBV approval Cost of funds (%) 3.4% 2.2% 2.9% Significantly higher in 1H23 but expect trend down in 2H23 While challenges may
Slide 26: Appendix
TECHCOMBANK <> > APPENDIX
Slide 27: 1Q23 Financial Highlights (1/3)
1Q23 Financial Highlights (1/3) 3M23 vs. 1Q23 vs. 1Q23 vs. Balance sheet (VND Bn) 1Q22 2Q22 3Q22 4Q22 1Q23 3M22 3M23 3M22 4Q22 1Q22 Total assets 615,270 623,739 671,354 699,033 723,518 615,270 723,518 17.6% 3.5% 17.6% Deposits from customers 328,914 321,634 318,919 358,404 387,298 328,914 387,298 17
Slide 28: 1Q23 Financial Highlights (2/3)
1Q23 Financial Highlights (2/3) Segment Reporting – 3M23 vs. 1Q23 vs. 1Q23 vs. 1Q22 2Q22 3Q22 4Q22 1Q23 3M22 3M23 (VND Bn) 3M22 4Q22 1Q22 Loans to customers 442,526 441,169 454,047 461,539 503,219 442,526 503,219 13.7% 9.0% 13.7% Retail 172,660 206,441 223,398 226,807 222,531 172,660 222,531 28.9% -
Slide 29: 1Q23 Financial Highlights (3/3)
1Q23 Financial Highlights (3/3) Segmentation – NFI 3M23 vs. 1Q23 vs. 1Q23 vs. 1Q22 2Q22 3Q22 4Q22 1Q23 3M22 3M23 breakdown (VND Bn) 3M22 4Q22 1Q22 IB fees 1,058 700 566 268 284 1,058 284 -73.1% 6.0% -73.1% Bond underwriting 424 152 14 8 91 424 91 -78.5% 1055.7% -78.5% Bond distribution 46 128 127 (6
Slide 30: Digital platform continued to be dominating channel
Digital platform continued to be dominating channel ▪ Share of e-banking transaction edged up further to 91.1% in 1Q23 (from 89.2% in 1Q22) thanks to superior technology infrastructure Number of Retail E-banking customers1 (Mn, EoP) Share of retail transactions by channel Retail term deposits by cha
Slide 31: Financial metrics formula
Financial metrics formula Indicator Formula Note NPL coverage ratio 𝑃𝑟𝑜𝑣𝑖𝑠𝑖𝑜𝑛 𝑟𝑒𝑠𝑒𝑟𝑣𝑒𝑠 𝑓𝑜𝑟 𝑙𝑜𝑎𝑛𝑠 𝑡𝑜 𝑐𝑢𝑠𝑡𝑜𝑚𝑒𝑟𝑠 𝑁𝑃𝐿 𝑏𝑎𝑙𝑎𝑛𝑐𝑒 CASA ratio 𝐷𝑒𝑚𝑎𝑛𝑑 𝑑𝑒𝑝𝑜𝑠𝑖𝑡𝑠 + 𝑀𝑎𝑟𝑔𝑖𝑛 𝑑𝑒𝑝𝑜𝑠𝑖𝑡𝑠 𝑇𝑜𝑡𝑎𝑙 𝑑𝑒𝑝𝑜𝑠𝑖𝑡𝑠 𝑓𝑟𝑜𝑚 𝑐𝑢𝑠𝑡𝑜𝑚𝑒𝑟𝑠…
Slide 32: Financial metrics formula
Financial metrics formula Indicator Formula Note Asset yield 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑖𝑛𝑐𝑜𝑚𝑒 𝑓𝑜𝑟 𝑡ℎ𝑒 𝑞𝑢𝑎𝑟𝑡𝑒𝑟 ∗ 4 Interest earning assets comprise: Balance with SBV, Balance at credit 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑑𝑎𝑖𝑙𝑦 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑎𝑟𝑛𝑖𝑛𝑔 𝑎𝑠𝑠𝑒𝑡𝑠 institutions, loans to customers…
Slide 33: Glossary
Glossary AUM : Assets under management PAT : Profit after tax CAGR : Compounded Annual Growth Rate PBT : Profit before tax CAR : Capital Adequacy Ratio PMI : Purchasing Managers' Index CASA : Current Accounts and Saving Accounts PPOP : Pre-provision operating profit CIs : Credit institutions QoQ : Q
Slide 34: 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