33 slides from Vietnam Technological & Commercial Joint Stock Bank's earnings presentation, October 2018
Slide 1: Analyst Presentation: Banking Strategy and 9M2018 Business Review
Analyst Presentation: Banking Strategy and 9M2018 Business Review October 2018
Slide 2: Techcombank: #1 because we focus on the customer
Techcombank: #1 because we focus on the customer 1 Mortgage lender1 3.2% 25.4% # Visa – credit and debit cards 2 Bancassurance3 ROAA ROAE Fixed income brokerage house4 S&P (BB-/stable/B)5 Moody’s (Ba3/stable)6 >5.0 million 315 Branches Customers ~9,000 Employees Legacy bad debts written off “Leading
Slide 3: Performance through 9M2018 reflects strong profitability and sustainability
Performance through 9M2018 reflects strong profitability and sustainability … Metrics 9M2018 9M2017 Changes (bps) Commentary ROAE1 25.4% 24.9% 56 Driven by solid profit growth ROAA1 3.2% 2.1% 113 Eliminated “dragging” impact of legacy VAMC bonds NIM 3.7% 3.9% -19 Ongoing shift within loan portfolio
Slide 4: Record of 14 consecutive quarters of YoY profit growth
… and continues a record of 14 consecutive quarters of YoY profit growth Transformation is working, and translating into sustainable top and bottom line growth Revenue YoY growth % 83.0 67.7 27.9 34.0 28.8 34.9 23.7 20.4 26.0 22.2 26.8 16.2 13.1 0.0 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2015 201
Slide 5: Vietnam's economy: fast growing, consumption-led
Vietnam’s economy: fast growing, consumption-led Vietnam is one of the fastest growing economies in Asia (5.9% CAGR, 2007-17), with stable growth projected going forward1 Consumption is leading economic growth, and growing ~ 2x of GDP Household spending is the major driver for consumption, accountin
Slide 6: Rising incomes, spends, and urbanization underpin household consumption
Rising incomes, spends, and urbanization underpin household consumption Significant upward mobility, increasing income levels, and wealth accumulation: Wealth per adult grew from USD1,727 in 2000 to USD4,323 in 2017 1 Affluent and mass affluent households expected to increase from ~3.5% in 2017 to 1
Slide 7: Our focus is on domestic consumption, which is half of the economy
Our focus is on domestic consumption, which is half of the economy Six domestic consumption sectors contribute approximately 48% to the GDP in 2017 These sectors growing more than twice as fast as GDP: 14% vs 5.3% 1 and will dominate the economy in near term Our value chain strategy is designed to s
Slide 8: Our approach is simple – understand, act, improve, repeat
Our approach is simple – understand, act, improve, repeat Act: increase Understand: Improve: customer customer customer needs experience engagement Repeat Segment customers to better Deliver tailored products and Delight anytime, anywhere to understand needs, usage, and services to increase engageme
Slide 9: Serving the customers' needs is at the center of everything we do
Serving the customers’ needs is at the center of everything we do Our strategy consists of: Customer centricity Foundational excellence Performance management Clear and simple for all employees to understand and execute Easy to measure success metrics promote transparency Page 9
Slide 10: Delighting our customers is key to our drive to be #1
Delighting our customers is key to our drive to be #1 Increasing customer engagement and enhancing experience through all channels and services Segment customers, understand needs, provide tailored solutions – from self-service to bespoke protection and investment advisory services for affluent cust
Slide 11: We are the leader across several dimensions of retail banking
As a result, we are the leader across several dimensions of retail banking HOUSING SECTOR TRAVEL/FMCG/RETAIL SECTOR FINANCIAL SECTOR FINANCIAL SECTOR #1 in Mortgages #1 in Card Transactions 2 #1 in Bancassurance 3 #1 in Fixed Income 4 31% market share of new #1 in VISA credit and debit card 21% mark
Slide 12: Our business economics are simple
Our business economics are simple… Increase Decrease Increase engagement Revenue Cost Profits Number of Credit cost customers Products or services Operating cost per customer Revenue/product or service Expected loss Profits Cost/transaction Products or services/customer Transactions/low cost channel
Slide 13: Focus on a few performance drivers
…to optimize – focus on a few performance drivers Increase Decrease Servicing needs and delighting customers create value Covered in this document Long-term needs: Housing and Auto loans: increase loan balances, reduce acquisition and risk costs through value chain approach Security and Investments:
Slide 14: Long-term needs: Serving housing demand through value chain approach
1 Long-term needs: Serving housing demand through value chain approach What we do How it serves customer needs Partner with selected marquee real estate developers to meet housing Full services from corporate bonds to marketing and legal WB needs through tailored business models and product offering
Slide 15: Improves home buying experience, raises loan volumes, lowers risks
1 Improves home buying experience raises loan volumes, lower risks … Strong partnerships drive loan balances – mortgage book growing by ~26% CAGR since 2015 Customized promotions and products to cater to customers’ needs (e.g. competitive interest rates) Greatly improved risk management from value c
Slide 16: Leads to balanced portfolio, and higher profitability
1 … leads to balanced portfolio, and higher profitability WB loan growth is moderately slowed – replaced by Corp. Bond issuance for distribution BB loan book grow aggressively after Business Model refresh in 2016 PFS loan book continue to grow with mortgage and auto loan PFS Book BB Book WB Book VND
Slide 17: While maintaining ~20% CAGR loan book growth
1 While maintaining ~20% CAGR loan book growth Techcombank total assets VND Tn 311.8 +19% 269.4 235.4 Loans to customers 166.9 192.0 Interbank 160.8 142.6 Government bonds 112.2 43.7 Corporate bonds 21.6 30.2 14.0 20.3 14.8 21.9 17.4 38.5 +34% Others assets 12.1 14.4 21.7 32.6 34.9 39.3 48.6 YoY 201
Slide 18: Bancassurance for protection and financial security
2 Long-term needs: Bancassurance for protection and financial security #1 market share of ~21%1 and poised to deliver future growth by leveraging exceptional distribution capabilities Life insurance market in Vietnam is growing fast, and is still the most underpenetrated market among the ASEAN-5 cou
Slide 19: Fixed income bonds as retail investment products
2 Fixed income bonds as retail investment products… Techcom Securities (TCBS) is the #1 in bond brokerage on the Ho Chi Minh Stock Exchange (HOSE) with 77% market share1 TCBS is the pioneer and leads corporate bond issuance advisory and retail distribution Introduced TCInvest and TCWealth, the first
Slide 20: Backed by a robust bond issuance pipeline
2 … backed by a robust bond issuance pipeline Corporate Bond issuance addresses long-term capital investment needs of corporates clients Repositions our wholesale banking balance sheet away from large long-term loans Drives fee income from Debt Capital Market (DCM) advisory services Corporate bond i
Slide 21: Daily needs: convenient and secure transactions with cards
3 Daily needs: convenient and secure transactions with cards… #1 in total transaction volume – Visa credit and debit cards Customer analytic driven marketing campaigns and promotions increase monthly spend per card Increasing trend of e-commerce: channel revenue in Vietnam is greater than US$5 Bn1 a
Slide 22: Electronic payment solutions
3 … and electronic payment solutions Sept. 2016, launched Big Zero Fee for retail customers – waive e-banking transaction fees July 2018, launched Big Zero Fee for business banking customers after upgrading corp. ebanking platform Results: 87% increase in number of customers, 43% increase in transac
Slide 23: Low cost deposits are a key benefit for being the primary bank
Low cost deposits are a key benefit for being the primary bank CASA increased to 25% of total deposit – second among all banks in low cost demand deposit Deposit growth is driven primarily by retail segment, in line with strategy and continues to be a strategic priority in 2019 and beyond Deposit gr
Slide 24: Growth driven by equity and customer deposits, especially CASA
Growth driven by equity and customer deposits, especially CASA 19% vs. 10% CAGR of CASA versus total deposit growth is key to achieving low cost-of-fund Optimize Loan-Deposit Ratio by maintaining slower deposits than loan growth (10% vs. 20%) Techcombank total liabilities VND Tn CAGR +19% 311.8 (201
Slide 25: Building a diversified revenue base
Altogether, we’ve building a diversified revenue base … Fee Feeincome breakdown income breakdown Revenue base remains diversified as VND Bn +25% non-interest income makes up ~39% of 2,113 total revenue 404 +20% Non-interest income increased 23% YoY 1,690 Of which, fee income grew 25% YoY Card fees 3
Slide 26: Total fee income grew rapidly over the past three years
… as total fee income grew rapidly over the past three years Corporate bond issuance advisory and distribution leads all fee income Bancassurance grew from almost nothing in 2015 to ~ VND949 Bn in revenues in three years Credit cards contribute significantly while bad fees (i.e. late payments, mortg
Slide 27: Highest 9M revenue and PBT in bank history
Leading to highest 9M revenue and PBT in bank history Improvement in all core business activities led to 25% YoY growth in total revenue Provision expenses decreased 30% YoY after fully writing off bad debts 9M2018 Earnings VND Bn 13,294 1,787 1,948 More than 75% of our 1,065 3,734 2018 PBT Target 2
Slide 28: Highest equity among joint stock banks in Vietnam
Highest equity among joint stock banks in Vietnam Techcombank’s equity reached VND 49.5 Tn, triple that of 2015, to become the highest among private JSBs 1 Robust capital position supports future growth opportunities; Basel II CAR of 12.44% Lowest leverage ratio and balance sheet strength are two ke
Slide 29: Enables significant credit growth in the near future
… that enables us to deliver significant credit growth in the near future Balanced and thoughtful loan growth – through careful selection of partners and customers across the value chains of our six key economic sectors Repositioned balance sheet by meeting credit needs of large corporate clients th
Slide 30: Glossary
Glossary APE : Annual Premium Equivalent NIM : Net Interest Margin BB : Business Banking NOII : Non-interest Income CAR : Capital Adequacy Ratio NPL : Non-performing Loans CASA : Current Accounts and Saving Accounts PAT : Profit After Tax CIR : Cost to Income Ratio PBT : Profit Before Tax EOP : End
Slide 31: 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 32: Thank you
Thank you
Slide 33: Robust and very diversified revenue growth
Robust and very diversified revenue growth Techcombank total revenues by segment VND Tn +32% 16.3 CAGR (2015-17) 13.3 11.8 6.8 PFS 9.3 4.2 +38% 4.6 1.5 1.4 BB +4% 3.6 1.5 2.9 2.7 WB +12% 1.4 2.7 2.3 +25% Others 5.2 4.9 +57% 2.1 3.0 YoY 2015 2016 2017 9M2018 Techcombank total revenues by type VND Tn