39 slides from Vietnam Technological & Commercial Joint Stock Bank's earnings presentation, Apr 27, 2021
Slide 1: 1Q21 Techcombank Analyst Presentation
1Q21 TECHCOMBANK ANALYST PRESENTATION 27 APRIL 2021
Slide 2: Content
SECTION 1 CONTENT HIGHLIGHTS SECTION 2 R E V I E W O F 1 Q 2 1 F I N A N C I A L R E S U LT S SECTION 3 FY21 OUTLOOK SECTION 4 S T R AT E G Y A N D B U S I N E S S U P D AT E S
Slide 3: Section 1: Highlights
TECHCOMBANK <> SECTION 1 HIGHLIGHTS
Slide 4: Strong momentum from year-end 2020 extended into 1Q21
Strong momentum from year-end 2020 extended into 1Q21 VND 8.9 Tn TOI growth came from both NII (+45.5% YoY) and Non-NII (+47.9% YoY) TOI 46.2% YoY Non NII accounted for 31.4% of TOI VND 5.5 Tn Stronger TOI growth than Opex growth led to lower CIR of 28.7% PBT 76.8% YoY Pre-provision operating profit
Slide 5: Section 2: Review of 1Q21 Financial Results
SECTION 2 REVIEW OF 1Q21 F I N A N C I A L R E S U LT S 6
Slide 6: 1Q21 Financial Highlights
1Q21 Financial Highlights P&L 1Q20 2Q20 3Q20 4Q20 1Q21 TOI growth (YoY) 39.0% 24.1% 41.6% 18.7% 46.2% Further improved profitability, efficiency and NII growth (YoY) 22.7% 22.8% 37.5% 40.7% 45.5% asset quality Non-NII growth (YoY) 97.0% 26.8% 51.0% -12.9% 47.9% NFI/TOI 15.4% 20.2% 16.3% 14.9% 14.8%
Slide 7: Financial results driven by core businesses
Financial results driven by core businesses Robust TOI was led by improvements across 3 components: NII (+45% YoY), NoII1 (+34% YoY) and recoveries (+225% YoY) High double digit performance in 1Q21 reflects strength of business model and continued momentum from 4Q20 1Q21 Earnings breakdown Total Ope
Slide 8: NII benefited from lower funding costs and credit mix
NII benefited from lower funding costs and credit mix Loans to customers and corporate bonds accounted for 80% of interest earning assets at 1Q21 (vs. 74% at 1Q20) Customer deposits in 1Q21 was healthy, growing 3.6% YTD (vs. 1.6% growth of 1Q20) Interest earning assets mix Asset yields1 Net interest
Slide 9: Strong loan demand continued into 1Q21
Strong loan demand continued into 1Q21 Credit growth in 1Q21 was driven by WB lending Loan growth further picked up in 1Q21, 6.5% higher vs. 4Q20, led by demand for short-term lending (+9.8% YTD) Credit mix by segment Corporate bond yields VND Tn YoY QoQ % Corporate bonds WB SME Retail 27% 6% 324 34
Slide 10: Loans grew in focused segments
Loans grew in focused segments Attractive growth opportunities remain within targeted real estate value chain but also growing other segments Mortgages remain top priority but other consumer lending growing to meet customer demands Corporate loans by sectors as at 1Q21 Retail loans by products VND T
Slide 11: Lower funding costs, largely led by declines in deposit rates
Lower funding costs, largely led by declines in deposit rates CASA grew 68% YoY, led by a 84% YoY increase in retail CASA and strong contribution from corporate CASA, up 43% YoY Deposit rates declined 40bps QoQ, contributing to lower funding costs Deposit by type VND Tn CASA Term deposits YoY QoQ 28
Slide 12: NFI up 48% YoY driven by banca, wealth management, LC & cash settlement
NFI1 up 48% YoY driven by strong performance in banca, wealth management services, LC & cash settlement Bond underwriting, bond distribution and other wealth management services continue to be largest contributors to NFI Banca has strongly rebounded up 76% YoY, supported by new products (Titanium 1.
Slide 13: Bond and wealth management continue strong performance
Bond and wealth management continue strong performance TCBS continues to maintain its dominant position in domestic capital markets Underwriting and distribution volume increased 48% and 41% YoY, respectively Corporate bond underwriting market share1 Bond underwriting volume advised by TCB VND Tn +4
Slide 14: Maintain leading card franchise in Vietnam
Maintain leading card franchise in Vietnam Maintain market leadership in payment volume with VISA market share of more than 33%1 No. of Visa debit cards No. of Visa credit cards Thousands Thousands 34.6% 38.6% 1,227 1,300 432 402 1,041 1,107 363 966 339 311 1Q20 2Q20 3Q20 4Q20 1Q21 1Q20 2Q20 3Q20 4Q
Slide 15: Banca recovery on track
Banca recovery on track Banca APE increased 81% YoY in 1Q21, outperforming sector1 growth Annual Premium Equivalent (APE) First Year Premium (FYP) VND Bn VND Bn 81% 332 80% 284 244 246 243 219 187 136 151 135 1Q20 2Q20 3Q20 4Q20 1Q21 1Q20 2Q20 3Q20 4Q20 1Q21 16 Note: 1. Total life insurance APE in t
Slide 16: Low CIR provides significant room for continued investments
Low CIR provides significant room for continued investments As recovery continues, investments in technology will increase to support digitalization and drive operational efficiency Operating expenses VND Bn 36.3% CIR ratio 34.0% 30.7% YoY QoQ 28.7% 30.3% 16% 6% 2,579 2,563 2,411 2,216 Staff cost 18
Slide 17: Asset quality metrics continue to improve
Asset quality metrics continue to improve Proactive management and prudent provisioning reduced NPLs to 0.4% 219% coverage ratio provides healthy buffer in an improving but still uncertain environment Credit costs LTM NPL and coverage ratio 1.0% VND Tn 219% 0.9% 2.5 Coverage ratio 0.8% 171% 2.1 148%
Slide 18: Restructured loans declining in line with market recovery
Restructured loans declining in line with market recovery Early identification and proactive support measures taken with our customers through a challenging period Restructured loans further declined to VND6.7 Tn at 1Q21, or 2.3% of total loans, with many customers recovering with economic recovery
Slide 19: Robust capital position supports growth and protects against uncertainty
Robust capital position supports growth and protects against uncertainty CAR remained strong 15.8% even with strong 1Q21 balance sheet growth Capital Adequacy Ratio1 (CAR) 16.6% 16.9% 16.7% 0.4% 16.1% 15.8% Tier 2 0.4% 0.4% 0.4% 0.4% Tier 1 16.3% 16.4% 16.3% 15.7% 15.4% 1Q20 2Q20 3Q20 4Q20 1Q21 Equi
Slide 20: Differentiated operating metrics relative to sector peers
Differentiated operating metrics relative to sector peers TCB Industry average1 CASA CIR2 46.1% 44.2% 44.7% 43.8% 44.0% 44.8% 38.6% 41.3% 40.4% 34.5% 32.2% 34.4% 39.0% 39.7% 28.2% 30.4% 30.0% 36.8% 20.3% 20.6% 22.4% 22.7% 18.6% 18.8% 18.6% 18.1% 19.3% 36.6% 35.3% 36.3% 30.7% 33.5% 33.5% 34.0% 28.7%
Slide 21: Section 3: FY21 Outlook
TECHCOMBANK <> SECTION 3 FY21 OUTLOOK 22
Slide 22: Key indicators support healthy recovery in 2021
Key indicators support healthy recovery in 2021 Indicators 2017 2018 2019 2020 2021(F)1 Strong growth across different sectors of the economy, supported by FDI and infrastructure investments, which GDP growth (%) 6.8 7.1 7.0 2.9 6.5 will broadly be supportive to real estate sector (e.g. commencement
Slide 23: Banking Sector: Ample liquidity and low interest rates expected to continue
Banking Sector: Ample liquidity and low interest rates expected to continue While deposit growth is supported by public investment, credit growth is under close SBV control Deposits & Credit growth in FY21 (YTD) SBV Balance 5-yr and 10-yr VGB given excess market liquidity Deposit growth Credit growt
Slide 24: FY21 Outlook
FY21 Outlook FY19 FY20 FY213 1Q21 Actual Actual Outlook Actual Credit growth1 18.8% 23.3% Per SBV quota 5.7% Cost of funds (%) 4.0% 3.4% 2.4% CASA ratio 34.5% 46.1% 44.2% NIM 4.2% 4.9% 5.2% NII growth (YoY) 25.2% 31.5% 45.5% NFI growth (YoY)2 36.8% 39.1% 40.9% CIR ratio 34.7% 32.8% 28.7% NPL ratio 1
Slide 25: Section 4: Strategy and Business Updates
SECTION 4 S T R AT E G Y A N D B U S I N E S S U P D AT E S 26
Slide 26: Our focus
Our focus Building foundation Delivered solid performance ▪ Growth across all key areas ▪ People excellence ▪ Robust capital, outstanding ▪ Enhanced risk funding and liquidity position management practices ▪ Accelerated digitization ▪ Healthy asset quality journey ▪ Strong profitability ▪ Building u
Slide 27: Increasing share of new E-banking customers & digital transactions
Increasing share of new E-banking customers & digital transactions E-banking channel continues to increase share of transactions, supported by 38% jump in retail e-banking customers Robust technology infrastructure ensures operational resiliency to support ongoing shift to digital Number of Retail E
Slide 28: Banca Highlights in 1Q21
Banca Highlights in 1Q21 Digital Digital- Launching Digital Sales tool (iTCBlife) Data - Propensity Model Customer CVP Talent – Refresh Sales Model & Coaching structure Data Talent 29
Slide 29: Launch of iTCBlife – Positive initial results
Launch of iTCBlife – Positive initial results iTCBlife: Digital advisory tool to enable guided banca conversations to identify customer needs and recommend suitable products Results of Pilot Phase 1 New tool launched in 3 months working with Fintech partner Simple & easy to use - Friendly design; vi
Slide 30: Propensity model helps to maximize decision making efficiency
Propensity model helps to to maximize decision making efficiency Conversion Rate1 Conversion Rate1 BEFORE AFTER Enhanced model with Approx. 100 features (e.g., GCM meeting info, digital click stream (app), product holding, transaction behavior) 10x conversion rate1 vs old model Note: 1. Conversion r
Slide 31: Refresh Sales Model and Coaching structure
Refresh Sales Model and Coaching structure New sales model since 1st Jan 2021 >3700 frontline employees with bancassurance license Referral model Affluent Salesforces Productivity Improvement Mass Affluent APE +80% Direct model In 1Q21 Mass Activation rate: 58% As at March 2021 32
Slide 32: Appendix
TECHCOMBANK <> APPENDIX 33
Slide 33: TCB share price has outperformed key indices in 2021
TCB share price has outperformed key indices in 2021 LTM indexed share price performance 1 Price change (%) TCB Bank index (EW) Vn index Vn 30 190.00 180.00 68.6% 170.00 160.00 60.2% 150.00 140.00 39.7% 130.00 27.8% 120.00 110.00 Covid breakout & national lockdown 100.00 90.00 80.00 70.00 60.00 31/1
Slide 34: 1Q21 Financial Highlights (1/2)
1Q21 Financial Highlights (1/2) Balance sheet (VND Bn) 1Q20 2Q20 3Q20 4Q20 1Q21 YoY QoQ Total assets 391,808 395,861 401,462 439,603 462,823 18% 5% Total Risk Weighted Assets (Basel II) 394,639 408,155 430,065 472,551 509,902 29% 8% Deposits from customers 235,099 249,857 252,572 277,459 287,446 22%
Slide 35: 1Q21 Financial Highlights (2/2)
1Q21 Financial Highlights (2/2) Segmentation - Balance sheet (VND Bn) 1Q20 2Q20 3Q20 4Q20 1Q21 YoY QoQ Loans to customers 232,021 231,666 230,716 277,525 296,290 28% 7% Retail 101,910 103,184 102,091 111,139 115,128 13% 4% SME 44,189 41,407 41,724 51,855 53,641 21% 3% WB 85,922 87,075 86,900 114,530
Slide 36: 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 37: Financial metrics formulae
Financial metrics formulae Indicator Formula Note NPL coverage ratio 𝑃𝑟𝑜𝑣𝑖𝑠𝑖𝑜𝑛 𝑟𝑒𝑠𝑒𝑟𝑣𝑒𝑠 𝑓𝑜𝑟 𝑙𝑜𝑎𝑛𝑠 𝑡𝑜 𝑐𝑢𝑠𝑡𝑜𝑚𝑒𝑟𝑠 𝑁𝑃𝐿 𝑏𝑎𝑙𝑎𝑛𝑐𝑒 CASA ratio 𝑇𝑒𝑟𝑚 𝑑𝑒𝑝𝑜𝑠𝑖𝑡𝑠 + 𝑀𝑎𝑟𝑔𝑖𝑛 𝑑𝑒𝑝𝑜𝑠𝑖𝑡𝑠 𝑇𝑜𝑡𝑎𝑙 𝑑𝑒𝑝𝑜𝑠𝑖𝑡𝑠 𝑓𝑟𝑜𝑚 𝑐𝑢𝑠𝑡𝑜𝑚𝑒𝑟𝑠 ROA…
Slide 38: Financial metrics formulae
Financial metrics formulae Indicator Formula Note Asset yield 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑖𝑛𝑐𝑜𝑚𝑒 𝑓𝑜𝑟 𝑡ℎ𝑒 𝑞𝑢𝑎𝑟𝑡𝑒𝑟 ∗ 4 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑑𝑎𝑖𝑙𝑦 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑎𝑟𝑛𝑖𝑛𝑔 𝑎𝑠𝑠𝑒𝑡𝑠 Interest earning assets include: Balance with SBV, Balance at credit institutions, loans to customers…
Slide 39: Glossary
Glossary ASEAN : Association of Southeast Asian Nations PBT : Profit before tax AUM : Assets under management PIL : Personal instalment loan CAGR : Compounded Annual Growth Rate PMI : Purchasing Managers' Index CAR : Capital Adequacy Ratio POS : Point of sale CASA : Current Accounts and Saving Accou