39 slides from Vietnam Technological & Commercial Joint Stock Bank's earnings presentation, Jan 23, 2024
Slide 1: Techcombank 4Q23 Analyst Presentation
Techcombank 4Q23 Analyst Presentation Hanoi, Jan 23 2024
Slide 2: Agenda
Section Section Section 01 Highlights 02 Economic Update 03 Financial Results Section Section 04 FY24 Outlook 05 Special Updates 2
Slide 3: Highlights
4Q23 Analyst Presentation Section 01 Highlights 3
Slide 4: PBT exceeded guidance, well-positioned into 2024
PBT exceeded guidance, well-positioned into 2024 Improved Declined 01 Highlights Improving trend of positive YoY growth since 3Q23 continued in 4Q23 (+18% YoY3), bringing FY23 VND 40.1 Tn TOI to almost the same as FY22 TOI TOI NFI expanded nearly 10% YoY thanks to cards and LC, LG & other settle
Slide 5: Economic Update
4Q23 Analyst Presentation Section 02 Economic Update 5
Slide 6: Building momentum for stronger growth in 2024
02 Economic update Building momentum for stronger growth in 2024 Better than last year Indicators 4Q22 1Q23 2Q23 3Q23 4Q23 2023 2024F GDP growth 6.0 5.9 3.3 4.1 5.3 6.7 5.1 YoY, % Inflation 3.8 4.4 4.2 2.4 2.9 3.5 3.3 avg., % Retail sales growth1 15.6 10.3 8.4 7.3 7.1 7.1 real terms, % Disbursed FDI
Slide 7: Ample liquidity, credit demand expected to improve
02 Economic update Ample liquidity, credit demand expected to improve Deposit & Credit growth Banking system’s CASA ratio 5-yr and 10-yr VGB yields YTD % %, Monthly Average Deposit growth Credit growth CASA 5Y 10Y 23 4.9 15.4 14.9 14.2 22 5 13.6 13.6 13.2 13.7 12.2 21 20.3 4.7 4 10.3 20 8.3 3 19 18
Slide 8: Key Legal Updates: Highlights
Key Legal Updates: Highlights 02 Economic update Revised Law on Credit Institutions (CIs) Revised Land Law Passed on 18 Jan 24 Passed on 18 Jan 24 o New rules on corporate governance: specifically Improve regulations related to the determination of land lower ownership (%) of 01 investor and relat
Slide 9: Financial Results
4Q23 Analyst Presentation Section 03 Financial Results 9
Slide 10: Financial highlights
Financial highlights 03 Financial results 4Q22 4Q23 FY22 FY23 4Q22 4Q23 TOI1 growth (YoY) -6.4% 17.1% 10.6% 0.0% Credit growth3 (YTD) 14.5% 19.2% NII growth (YoY) -5.9% 11.4% 13.5% -8.6% NIM (LTM) 5.1% 3.9% NFI2 growth (YoY) 11.3% 14.2% 28.0% 9.5% Loans & Asset NPL 0.74% 1.19% P&L NFI2/TOI1 29.4% 28
Slide 11: Both NII, NFI expanded YoY in 4Q23, supported by CASA rebound
Both NII, NFI expanded YoY in 4Q23, supported by CASA rebound to 40% level 03 Financial results Positive YoY growth reported for both TOI, +17% YoY2 and PBT, +22% YoY in 4Q23 NFI was driven by Cards, LC and FX business. IB and Banca’s extended recovery since 3Q23 albeit still slow Rigorous OPE
Slide 12: Extension of asset yield moderation, offsetting lower cost of funds
Extension of asset yield moderation, offsetting lower cost of funds 03 Financial results Total IEA and total funding recorded healthy expansion of 23-24% YoY, in line with 19.2% credit quota granted CoF trended down further. Favorable impacts on NIM were however offset by softened asset yields a
Slide 13: Robust credit asset growth, continuing to outpace the industry
Robust credit asset growth, continuing to outpace the industry 03 Financial results Overall credit demand was still led by large corporate customers SME and Retail lending’s upticks started to gain pace, +10% and +5% QoQ respectively Credit mix (VND Tn) Loan mix by term (VND Tn) 9.9% 9.7% Short-
Slide 14: Healthier expansion across customer segments and sectors
Healthier expansion across customer segments and sectors 03 Financial results 8% QoQ credit growth for business customers in 4Q were driven by FMCG (+8%) and other sectors (+21%) – Travel and Leisure to be more specific Mortgage balances increased 4% QoQ, ending 3 quarters of declines, with cont
Slide 15: Fortified CASA momentum
Fortified CASA momentum 03 Financial results Third consecutive quarter of increases in CASA balances, thanks to strong core CASA CASA ratio of c.40% was partially supported by year-end effects, and tracks well to further improve throughout 2024 Deposit rate and deposit by type (VND Tn) CASA by s
Slide 16: Steady NFI expansion throughout 2023
Steady NFI expansion throughout 2023 03 Financial results Cards and LC, Cash & Settlement maintained double-digit growth momentum in 4Q, bringing total FY23 growth to 34% and 82% YoY respectively Both IB and Banca continued positive recovery, up 4% and 26% QoQ respectively. Encouragingly, Banca
Slide 17: Continued investment in Digital, shifting OPEX structure
Continued investment in Digital, shifting OPEX structure 03 Financial results Rigorous OPEX management upheld in the last quarter of 2023, with continued investment in digital and data and tight management of other costs (e.g., staff costs, marketing costs etc.) OPEX increase for FY23 limited to
Slide 18: Asset quality remained well under control
Asset quality remained well under control 03 Financial results NPL ratio lowered to 1.2% (vs. 1.4% at 3Q23), supported by larger credit base. NPL for loans and bonds was 1.1% NPL of Real estate related assets continued to outperform other customer segments Credit cost at 0.8% pre-recoveries (L
Slide 19: Credit cost deep-dive
FY24 Outlook Credit cost deep-dive 04 Deep-dive ~45% of specific provision in 4Q23 was additional pro-active, largely B2 CIC impacts one-off items (e.g., for 100% of Cir. 02 loans; write-offs, etc.) 125 Own book Most of them were not Real estate customers 93 (984) 2,212 Favorable effects from
Slide 20: 4Q23 – Asset book health
4Q23 – Asset book health1 03 Financial results Average LTV (%) Credit structure by CI rate (%) 58% 58% 54% 53% 55% 100% CI rate >10% 21% 38% 31% 39% 43% 44% CI rate 8->10% 44% 31% 23% 33% 21% 20% CI rate <8% 35% 39% 36% 36% 38% 28% 4Q22 1Q23 2Q23 3Q23 4Q23 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 Receivables/I
Slide 21: Capital and liquidity positions remained robust
Capital and liquidity positions remained robust 03 Financial results CAR lowered to 14.4%, being driven by credit book expansion at year-end and still among the highest in the industry Well-diversified mix of funding with total funding from customers contributing ~74% at the end of 4Q23, vs. ~67
Slide 22: Differentiated operating metrics relative to sector peers
Differentiated operating metrics relative to sector peers TCB 03 Financial results Industry median1 CASA CIR2 49.0% 50.5% 50.4% 47.5% 46.5% 42.2% 39.9% 36.3% 39.6% 34.8% 35.0% 36.6% 34.2% 35.3% 34.0% 37.0% 32.0% 34.9% 33.6% 41.9% 32.6% 30.0% 29.2% 33.8% 30.8% 34.8% 32.8% 19.1% 18.4% 18.7% 17.7% 17.5
Slide 23: FY24 Outlook
4Q23 Analyst Presentation Section 04 FY24 Outlook 23
Slide 24: Various catalysts to help drive GDP growth forecast of 6% for FY24
04 FY23 Outlook Various catalysts to help drive GDP growth forecast of 6% for FY24 Real Vietnam & World GDP (Real GDP growth indexed to 100% in 2019, YoY growth each year) Catalysts for growth in 2024: Vietnam Continued inflows of FDI disbursement 6.0% Recovery in tourism and linked sectors 5.1%
Slide 25: 2024 Key Focus areas & Must-Win Battles
FY24 Outlook 2024 Key Focus areas & Must-Win Battles 04 MWBs CASA Diversification of Main Operating credit portfolio Account New innovative offerings to Diversify TCB credit portfolio: Compelling Loyalty & Reward program further build on CASA momentum o Smart credit – Digital platform for Excl
Slide 26: FY24 Outlook: broadly aligned to stronger economic growth
FY24 Outlook: broadly aligned to stronger economic growth 04 FY23 outlook FY21 FY22 FY23 FY24 Improved Unchanged Declined Indicators Actual Actual Actual Outlook Comments Credit growth1 Expect to be granted high quota by the SBV, reflecting the Bank’s 22.1 14.5 19.2 Quota % strength including capabi
Slide 27: Thank you.
4Q23 Analyst Presentation Thank you. C o n t acts Techcombank Hanoi Head Office 06 Quang Trung str., Hoan Kiem Dist., Hanoi ir@techcombank.com.vn 27
Slide 28: Special Updates
4Q23 Analyst Presentation Section 05 Special Updates 28
Slide 29: Real Estate Book: Flexible Pricing Scheme
Real Estate Book 05 Special updates Flexible Pricing Scheme Flexible Pricing Scheme Key updates Commercial agreements in which TCB is The book is performing in line with other corporate allowed retroactively step-up interest rates on banking exposures from a credit risk perspective not completio
Slide 30: Apartment market expected to recover strongly in coming years
Apartment market expected to recover strongly in coming years 05 Special updates Policy support in the 2011-2015 period Policy support in the 2022-2026 period Rate cuts - 2011-2015 average refinancing rate at 8.8% Rate cuts - 2022-2023 Average refinancing rate at 5% - Allowing conversion of commerci
Slide 31: Appendix
4Q23 Analyst Presentation Appendix 31
Slide 32: 4Q23 Financial Highlights (1/3)
4Q23 Financial Highlights (1/3) 00 Appendix FY23 vs 4Q23 vs 4Q23 vs Balance Sheet Unit: 4Q22 1Q23 2Q23 3Q23 4Q23 FY22 FY23 FY22 3Q23 4Q22 Total assets VND bn 699,033 723,518 732,470 781,279 849,482 699,033 849,482 21.5% 8.7% 21.5% Deposits from customers VND bn 358,404 387,298 381,947 409,045 454,66
Slide 33: 4Q23 Financial Highlights (2/3)
4Q23 Financial Highlights (2/3) 00 Appendix FY23 vs 4Q23 vs 4Q23 vs Balance Sheet - Segmentation Unit: 4Q22 1Q23 2Q23 3Q23 4Q23 FY22 FY23 FY22 3Q23 4Q22 Loans to customers VND bn 420,524 465,425 466,546 475,606 518,642 420,524 518,642 23.3% 9.0% 23.3% Retail VND bn 217,452 213,028 197,546 197,176 20
Slide 34: 4Q23 Financial Highlights (3/3)
4Q23 Financial Highlights (3/3) 00 Appendix FY23 vs 4Q23 vs 4Q23 vs NFI - Segmentation Unit: 4Q22 1Q23 2Q23 3Q23 4Q23 FY22 FY23 FY22 3Q23 4Q22 Bond business Bond issuance volume VND bn 210 25,195 2,600 30,440 12,000 29,380 70,235 139.1% -60.6% 5614.2% Bond distribution volume VND bn 17,146 7,851 12,
Slide 35: Digital platform continued to be dominating channel
Digital platform continued to be dominating channel 00 Appendix Share of e-banking transaction edged up further to 93.9% in 4Q23 (from 91.7% in 2022) thanks to superior technology infrastructure Number of Retail E-banking customers1 (Mn, EOP) Share of retail transactions by channel Retail term dep
Slide 36: Financial metrics formula
Financial metrics formula 00 Appendix Indicators Formula 𝑃𝑟𝑜𝑣𝑖𝑠𝑖𝑜𝑛 𝑟𝑒𝑠𝑒𝑟𝑣𝑒𝑠 𝑓𝑜𝑟 𝑙𝑜𝑎𝑛𝑠 𝑡𝑜 𝑐𝑢𝑠𝑡𝑜𝑚𝑒𝑟𝑠 Excluding provision reserves for margin lending NPL coverage ratio 𝑁𝑃𝐿 𝑏𝑎𝑙𝑎𝑛𝑐𝑒 NPL balance excludes margin lending 𝐷𝑒𝑚𝑎𝑛𝑑 𝑑𝑒𝑝𝑜𝑠𝑖𝑡𝑠 +…
Slide 37: Financial metrics formula
Financial metrics formula 00 Appendix Indicators Formula 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑖𝑛𝑐𝑜𝑚𝑒 𝑓𝑜𝑟 𝑡ℎ𝑒 𝑞𝑢𝑎𝑟𝑡𝑒𝑟 ∗ 4 Interest earning assets comprise: Balance Asset yield with SBV, Balance at credit institutions, loans 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑑𝑎𝑖𝑙𝑦 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑎𝑟𝑛𝑖𝑛𝑔 𝑎𝑠𝑠𝑒𝑡𝑠 to…
Slide 38: Glossary
Glossary 00 Appendix AUM : Assets under management OTT : Overseas telegraphic transfer CAGR : Compounded Annual Growth Rate PAT : Profit after tax CAR : Capital Adequacy Ratio PBT : Profit before tax CASA : Current Accounts and Saving Accounts PMI : Purchasing Managers' Index CIs : Credit institutio
Slide 39: 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