Vietnam Technological & Commercial Joint Stock Bank · HOSE:TCB
Vietnam Technological & Commercial Joint Stock Bank — Techcombank — 9M 2021 Earnings Presentation
46 slides from Vietnam Technological & Commercial Joint Stock Bank's earnings presentation, Oct 21, 2021
Slide 1: Techcombank Analyst Presentation
TECHCOMBANK ANALYST PRESENTATION 21 OCTOBER 2021 1
Slide 2: Content
SECTION 1 CONTENT HIGHLIGHTS SECTION 2 E C O N O M I C U P D AT E SECTION 3 R E V I E W O F 9 M 2 1 F I N A N C I A L R E S U LT S 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 2
Slide 3: Highlights
TECHCOMBANK @> SECTION 1 HIGHLIGHTS
Slide 4: Resilient financial performance despite COVID wave 4
Resilient financial performance despite COVID wave 4 VND 8.8 Tn TOI 9M21: TOI growth,+37.9%, driven by both NII (+46.5% YoY) and NFI1 (+29.0% YoY) 15.7% YoY VND 5.6 Tn 9M21: PBT: VND17.1 Tn, +59.6% YoY as Opex expanded at slower pace of 18.7% YoY and PBT 40.0% YoY provision expenses declined 9.2% Yo
Slide 5: Economic Update
TECHCOMBANK <> SECTION 2 ECONOMIC UPDATE
Slide 6: Economic recovery expected in line with accelerated vaccinations
Economic recovery expected in line with accelerated vaccinations Key economic and production hubs prioritized for vaccinations. ~80% and 60% adults in HCMC and HN have been fully vaccinated (2 doses), vs. that of 19% nation-wide Vaccination COVID-19 situation 48.2% 100 Daily new cases (7 days av
Slide 7: Key indicators: 2021 forecast revised downwards
Key indicators: 2021 forecast revised downwards Indicators 2017 2018 2019 2020 2021(F)1 GDP growth (%) 6.8 7.1 7.0 2.9 2-3 Consensus GDP growth adjusted down to 2- 3%, impact most severe in manufacturing and Inflation (avg., %) 3.5 3.5 2.8 3.2 <2.5 service sectors. Retail sales growth revised do
Slide 8: Market remains liquid, low interest rates expected to continue
Market remains liquid, low interest rates expected to continue Deposit & Credit growth SBV Balance 5-yr and 10-yr VGB Deposit growth Credit growth VND Tn Excess reserve Required reserve % 15.8% 300 6.0 13.7% 14.5% 2021: Average excess 12.1% 13.0% 5.0 5 Year 10 Year 11.5% 200 VND 148 Tn 4.0 100 2020:
Slide 9: Review of 9M21 Financial Results
SECTION 3 REVIEW OF 9M21 FINANCIAL RESULTS 9
Slide 10: Financial Highlights
Financial Highlights 3Q20 3Q21 9M20 9M21 9M20 9M21 TOI growth (YoY) 39.6% 15.7% 33.4% 37.9% Credit growth 8.3% 14.1% NII growth (YoY) 37.2% 31.7% 28.0% 46.5% (YTD)3 NFI growth (YoY)1 75.1% 11.9% 51.9% 29.0% NIM (LTM) 4.8% 5.6% 2 Loans & P&L NFI/TOI 22.8% 20.8% 21.6% 20.0% Asset Quality NPL 0.6% 0.6%
Slide 11: Financial results driven by core businesses
Financial results driven by core businesses 3Q21: NII continued to perform well while NFI, other income and recoveries were impacted by COVID wave 4 9M21: Resilient overall financial performance despite significant COVID disruptions to economic activity 3Q21 Earnings breakdown (VND Bn) 8,779 98
Slide 12: NII benefited from stable NIM and larger credit balances
NII benefited from stable NIM and larger credit balances Total customer loans & corporate bonds increased 33.0% YoY, or 17.0% higher YTD, as credit demand remained robust Cost of funds remains low given strong deposit franchise and well structured funding mix Interest earning assets mix (VND Tn)
Slide 13: Growth in retail lending balances drove overall credit growth in 3Q21
Growth in retail lending balances drove overall credit growth in 3Q21 Credit growth robust YoY but slowed QoQ due to lockdowns Credit mix by segment (VND Tn) Loan mix by term (VND Tn) Short-term loan Medium and long-term loan 9.4 Credit yield 9.1 9.1 9.0 8.9 YoY QoQ YoY QoQ 33% 4% 321 39% 2% 379 3
Slide 14: Secular demand for housing continues to drive mortgage growth
Secular demand for housing continues to drive mortgage growth Further pick up of retail mortgage expected in 4Q as lock-downs ease FMCG continues to see healthy credit growth while lending to finance sector reduced Corporate loans by sectors as at 3Q21 (VND Tn) Retail loans by products (VND Tn)
Slide 15: Funding costs remained low
Funding costs remained low CASA ratio reached 49.0% as corporate CASA growth benefited from one-off deposits in 3Q21 Low funding rates expected to continue given ample system liquidity Deposit by type and deposit rates (VND Tn, %) CASA by segment (VND Tn) CASA Term deposits Retail Corporate QoQ
Slide 16: Healthy NFI growth of 29% YoY for 9M21
Healthy NFI1 growth of 29% YoY for 9M21 Secular trends behind key fee income drivers unchanged despite recent disruptions in 3Q21 Banca and FX sales growth logged positive growth QoQ led by digitally enabled solutions 3Q21 vs 9M21 vs Fee income breakdown by products1 (VND Bn) 3Q20 9M20 5,213 12%
Slide 17: IT and marketing related investment continue
IT and marketing related investment continue Depreciation & amortization increasing in line with investments in foundational and strategic IT investments Marketing expenses increased due to volume-linked cashback expenses and campaigns to drive NTB customers 3Q21 vs 9M21 vs Operating expenses (V
Slide 18: Asset quality metrics remain healthy
Asset quality metrics remain healthy ▪ Specific provisions for bad debts, incl. provision made under Cir. 03/Cir. 14, reflects proactive management of balance sheet ▪ Non-performing loans ratio increased to 0.6% from record-low 0.4%, but still within expected levels Provision expenses and LTM credit
Slide 19: Stable restructured loan balance despite worst COVID wave in 3Q21
Stable restructured loan balance despite worst COVID wave in 3Q21 SBV introduced additional mechanisms (Cir. 14) for banks to support COVID impacted customers High quality customer base and robust asset management has minimized impact in 3Q21 Circular 14 vs. Circular 03: Rescheduled loans under
Slide 20: Capital and liquidity position remains robust
Capital and liquidity position remains robust Strong CAR and funding franchise able to support additional credit growth quota from SBV Recently completed USD 800 Mn international syndicated loan reduces ST funding used for MLT loans Capital Adequacy Ratio1 (CAR) Funding mix (VND Tn) Customer dep
Slide 21: Differentiated operating metrics relative to sector peers
Differentiated operating metrics relative to sector peers TCB Industry average1 CASA CIR2 46.1% 46.1% 49.1% 44.0% 44.8% 44.2% 38.6% 41.3% 40.4% 34.5% 32.2% 34.4% 39.0% 39.7% 30.0% 36.8% 20.3% 20.6% 22.4% 22.7% 22.2% 34.4% 18.6% 18.1% 19.3% 35.3% 36.3% 30.7% 29.9% 33.5% 34.0% 28.7% 28.1% 30.3% 3Q19 4
Slide 22: FY21 Outlook
FY21 Outlook FY19 FY20 FY21 Outlook 9M21 Actual Actual Update Actual Credit growth1 18.8% 23.3% Per SBV quota 14.1% Cost of funds (%) 4.0% 3.4% 2.3% CASA ratio 34.5% 46.1% 49.0% NIM 4.2% 4.9% 5.6% NII growth (YoY) 25.2% 31.5% 46.5% NFI growth (YoY)2 47.6% 23.7% 29.0% CIR ratio 35.5% 32.8% 28.9% NPL
Slide 23: TCB share price has outperformed key indices in 2021
TCB share price has outperformed key indices in 2021 Price change LTM indexed share price performance 1 COVID breakout & Positive 1Q21, extending resilience 265.00 TCB national lockdown 4th and most severe COVID wave throughout the pandemic 255.00 Bank index (EW) 245.00 235.00 Vn index 133% 225.00 V
Slide 24: Strategy and Business Update
SECTION 4 STRATEGY AND BUSINESS UPDATE 24
Slide 25: Digital platform continued to be dominating channel
Digital platform continued to be dominating channel Share of e-banking tnx edged up further to 83.4% in 9M21 (from 82.3% in 1H21) thanks to superior technology infrastructure and extended support during lock-down Number of Retail E-banking customers1 (Mn, EoP) Share of retail transactions by chann
Slide 26: USD 800 Mn offshore syndicated loan
USD 800 Mn offshore syndicated loan bolsters capacity to meet medium- and long-term customer funding needs Transaction upsized to USD 800 Mn from original deal size of USD 500 Mn given strong USD 600 Mn - 3Y tranche demand Record size and landmark structure USD amongst Vietnamese banks 5-year
Slide 27: 3Q21 Banca highlights
3Q21 Banca highlights Digital Digital- Leading Digital Solutions Data Customer CVP Talent – Expanded communication and increased training Data Talent 27
Slide 28: Propensity model helps to maximize decision making efficiency
Propensity model helps to maximize decision making efficiency Recall from 1Q21 AP 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 28 N
Slide 29: Leading digital solutions differentiate customer experience during lock-down
Leading digital solutions differentiate customer experience during the lock-down Non face-to-face solutions iTCBlife conversations in 3Q21 iTCBlife conversations/ Banca meet iTCBlife: Digital advisory tool to enable guided banca conversations to identify > 40,000 ~50% customer needs and ~4x vs 2Q21
Slide 30: Expanded communication and increased training
Expanded communication and increased training Superlink (Titanium 2.0): Celebrating 8-year of Investment-linked banca partnership with Manulife New product products Cashback up to 20% and campaigns launched Bundled Lending Banca Enhanced trainings and sales ~ 3,000 bankers trained Webinars organized
Slide 31: Appendix
TECHCOMBANK <> > APPENDIX 31
Slide 32: 3Q21 Financial Highlights (1/3)
3Q21 Financial Highlights (1/3) 9M21 vs. 3Q21 vs. 3Q21 vs. Balance sheet (VND Bn) 3Q20 4Q20 1Q21 2Q21 3Q21 9M20 9M21 9M20 2Q21 3Q20 Total assets 401,462 439,603 462,823 504,304 541,635 401,462 541,635 34.9% 7.4% 34.9% Deposits from customers 252,572 277,459 287,446 289,335 316,376 252,572 316,376 25
Slide 33: 3Q21 Financial Highlights (2/3)
3Q21 Financial Highlights (2/3) 9M21 vs. 3Q21 vs. 3Q21 vs. Segmentation - Balance sheet (VND Bn) 3Q20 4Q20 1Q21 2Q21 3Q21 9M20 9M21 9M20 2Q21 3Q20 Loans to customers 230,716 277,525 296,290 313,514 321,042 230,716 321,042 39.2% 2.4% 39.2% Retail 102,091 111,139 115,128 128,874 137,952 102,091 137,95
Slide 34: 3Q21 Financial Highlights (3/3)
3Q21 Financial Highlights (3/3) Segmentation – NFI breakdown 9M21 vs. 3Q21 vs. 3Q21 vs. 3Q20 4Q20 1Q21 2Q21 3Q21 9M20 9M21 (VND Bn) 9M20 2Q21 3Q20 Bond business Bond issuance value 17,099 19,544 14,625 16,092 27,925 52,220 58,642 12.3% 73.5% 63.3% Bond distribution value 23,140 22,483 20,736 24,719
Slide 35: 28 Years of key Milestones and Achievements
28 Years of key Milestones and Achievements Officially complied Another record with Basel II USD800 m Bought back Received 7 international HSBC’s awards from VISA syndicated loan shareholding organization Best Bank in Signed 15-year Awarded “Vietnam Vietnam, 2021 by Opened new Head e
Slide 36: Recognized by prestigious organizations
Recognized by prestigious organizations “Best Bank in Vietnam” “Best company to “Employers of the Year” “Leading Partner Bank work for in Asia” in Vietnam” “Best Payments Bank in Vietnam” Highest credit ratings in Vietnam “Most Recommended Transaction Bank in Vietnam” “Best Mortgage Product in Vietn
Slide 37: Strategy to deliver 2025 targets
Strategy to deliver 2025 targets Focus on our biggest profit pools, e.g., Enabled by Double mortgages, CASA, wealth management Leverage our areas of strength, e.g., Affluent, Down ReCoM, payments Talent Secure access to future growth in core areas Participate in highest future growth areas, Data e.g
Slide 38: Delivering the right solutions to the right segments
Delivering the right solutions to the right segments C U S TOME R C E N TR IC ITY - C V P, C LV AN D C V M Individual Institutional Expertise Customized Solution Large Affluent Value Creation Corp Mass Affluent MM/USME Convenience Micro Segment Mass SME and MSME Product Bundle Best Price Anytime, An
Slide 39: 3-phase execution
3-phase execution Expand Engage Enable 2023 onwards Become bigger, 2022 - 2023 e.g., monetize Establish a solutions, do 2021 - 2022 meaningful business at scale Activate, Make contact or things operational, connection with e.g., build our customers e.g., foundations through loyalty program, data, te
Slide 40: Data, Digital and Talent are core enablers
DATA, DIGITAL AND TALENT are core enablers 40
Slide 41: Growth will also be enabled through strategic partnerships
Growth will also be enabled through strategic partnerships Creating a broad digital ecosystem with partners in order to accelerate transformation agenda and out-perform the market 41
Slide 42: Financial metrics formula
Financial metrics formula Indicator Formula Note NPL coverage ratio CASA ratio + ROA LTM ℎ 4 ( 5 ) ROE LTM ℎ 4 . ( 5 ) NIM LTM ℎ 4 Interest earning assets include: Balance with SBV, Balance at ( 5 ) credit institutions, loans to customers, and investment securities Credit cost ℎ 4 ( 5 ) 42
Slide 43: Financial metrics formula
Financial metrics formula Indicator Formula Note Asset yield ℎ ∗4 Interest earning assets include: Balance with SBV, Balance at credit institutions, loans to customers, and investment securities Loan yield ℎ ∗4 Cost of funds ℎ ∗4 Deposit yield ℎ ∗4 43
Slide 44: Glossary
Glossary AUM : Assets under management PBT : Profit before tax CAGR : Compounded Annual Growth Rate PMI : Purchasing Managers' Index CAR : Capital Adequacy Ratio POS : Point of sale CASA : Current Accounts and Saving Accounts PPOP : Pre-provision operating profit CIs : Credit institutions QoQ : Quar
Slide 45: 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
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