41 slides from Vietnam Technological & Commercial Joint Stock Bank's earnings presentation, Oct 21, 2022
Slide 1: Techcombank 9M22 Analyst Presentation
Techcombank 9M22 Analyst Presentation 21 OCTOBER 2022 1
Slide 2: Agenda
Agenda SECTION Highlights SECTION Economic update 01 02 SECTION 9M22 Financial results SECTION FY22 Outlook and business update 03 04 2
Slide 3: Highlights
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Slide 4: Continued positive YoY growth despite increasing headwinds
Continued positive YoY growth despite increasing headwinds Strong contribution from NII (+20.6% YoY) and NFI1 (+32.5% YoY), with banca, cards, FX and LC TOI VND 31.5 Tn & cash settlement fees all growing over 50% YoY 16.9% YoY Excluding recoveries TOI grew +16.5% YoY VND 20.8 Tn PBT Growth in pre-ta
Slide 5: Economic update
Section 02 Economic update 5
Slide 6: Most macro-economic indicators remain strong
Most macro-economic indicators remain strong Better than last year Indicators 2020 2021 1Q22 2Q22 3Q22 2022F GDP growth 2.9 2.6 5.0 7.7 13.7 7.8 YoY, % Inflation 3.2 1.8 3.0 3.3 1.9 3.2 avg., % Retail sales growth1 -3.0 -6.2 1.6 7.9 16.8 17.2 real terms,% FDI 20.0 19.7 4.4 5.7 5.3 21.0 USD Bn, in th
Slide 7: Liquidity becomes tighter, pointing to continued pressure on interest rates
Liquidity becomes tighter, pointing to continued pressure on interest rates Sector Deposit & Credit growth Banking system’s Casa ratio 5-yr and 10-yr VGB yields YTD Deposit growth Credit growth % %, Monthly Average 22.0 10.6 22 5 5 Year 10 Year 10.2 8.7 21 4.0 8.3 20.4 4 7.6 20 3.6 6.2 3 5.5 19 4.9
Slide 8: 9M22 Financial results
Section 03 9M22 Financial results 8
Slide 9: Financial Highlights
Financial Highlights 3Q21 3Q22 9M21 9M22 9M21 9M22 1 TOI growth (YoY) 23.1% 16.8% 39.5% 16.5% Credit growth 14.1% 11.1% NII growth (YoY) 31.3% 12.2% 46.5% 20.6% (YTD)3 NFI growth (YoY)2 11.9% 38.4% 29.0% 32.5% NIM (LTM) 5.6% 5.4% Loans & P&L NFI2/TOI1 20.8% 24.6% 20.0% 22.7% Asset Quality NPL 0.6% 0
Slide 10: Strong performance from core revenue streams
Strong performance from core revenue streams ▪ NII increased 20.6% YoY in 9M22, driven by the expansion of interest earning assets ▪ NFI1 was up 32.5% YoY in 9M22. In 3Q22 NFI further expanded 2.5% QoQ ▪ Provision expenses were down -38.9% YoY. 3Q22 Earnings breakdown (VND Bn) 10,338 34 258 7,565 2,
Slide 11: NII benefited from growing credit balances YTD
NII benefited from growing credit balances YTD ▪ Distribution of corporate bonds in the Bank's portfolio freed up capacity to support customers on their borrowing needs ▪ Rising cost of funds placed pressure on NIM Interest earning assets mix (VND Tn) Asset yields1 (%) Customer loans Gov’t bonds YoY
Slide 12: All credit expansion has been diversified to Retail and SME segments
All credit expansion has been diversified to Retail and SME segments ▪ Shift toward Retail and SME segments results in a more balanced risk profile ▪ Retail book expanded 8.3% QoQ, driven by high customer demand for consumption and investment Credit mix (VND Tn) Loan mix by term (VND Tn) Short-term
Slide 13: Mortgage demand continued to be robust, reflecting high housing demand
Mortgage demand continued to be robust, reflecting high housing demand ▪ Growth of retail loans was driven by strong demand for housing (mortgage +8.2% QoQ) and consumption (credit cards +15.1% QoQ) ▪ Corporate loan balances were kept broadly stable Corporate loans by sectors (VND Tn) Retail loans b
Slide 14: Funding costs under pressure following market and policy rate hikes
Funding costs under pressure following market and policy rate hikes ▪ TD balances increased 5.8% YoY, carrying higher cost of 4.2% (compared with that of 3.8% in 2Q22) ▪ CASA balance decreased further this quarter by 2.9% as tighter money supply led customers to mobilise more of their CASA towards c
Slide 15: Strong NFI growth of 32.5% YoY, driven by diversified business-model
Strong NFI1 growth of 32.5% YoY, driven by diversified business-model ▪ Impressive growth in 9M22 NFI from LC, cash & settlements fees (+110.2% YoY), FX (+70.4% YoY) and cards (+69.5% YoY) reflected launch of innovative and value-added propositions and offers ▪ Bancassurance extended strong recovery
Slide 16: The Bank continued to invest in IT, Digital and Data
The Bank continued to invest in IT, Digital and Data ▪ Strong revenue momentum helped maintain CIR below 30%, despite the intensity of the Bank’s investment effort ▪ Lower staff cost in 3Q22 was driven by carry-forward impact of attrition in previous quarter, as well as releases of provisions held f
Slide 17: Healthy asset quality metrics continued
Healthy asset quality metrics continued ▪ Credit cost (LTM) dropped to 0.3% (from 0.4% for LTM ending 2Q22) ▪ Non-performing loan ratio remained at the low level of 0.6% Provision expenses and LTM credit costs (VND Tn) NPL and coverage ratio (VND Tn) 0.7% 0.7% 184% 0.6% 172% Credit cost 163% 161% 16
Slide 18: Rescheduled loans balance continued to decline as economy recovers
Rescheduled loans balance continued to decline as economy recovers ▪ Rescheduled loans further declined to VND 0.4 Tn, equivalent to only 0.1% of outstanding balances, as more customers paid down previously rescheduled loans or exited the COVID-support program as their finances recovered ▪ No impact
Slide 19: Capital and liquidity positions remained robust
Capital and liquidity positions remained robust ▪ CAR remained broadly stable at 15.7% ▪ Diversified funding mix helped maintain liquidity ratios well within regulatory limits Capital Adequacy Ratio1 (CAR) Funding mix (VND Tn) Customer deposits Non-customer funding 15.8% 15.7% 541 15.2% 15.0% 15.1%
Slide 20: 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% 46.1% 44.2% 46.1% 46.5% 39.4% 39.6% 38.6% 36.3% 35.0% 35.0% 34.8% 35.0% 17.0% 16.9% 18.5% 19.1% 18.4% 18.7% 17.7% 14.5% 34.0% 30.7% 33.4% 29.2% 28.7% 29.9% 30.7% 29.8% 28.1% 3Q20 4Q
Slide 21: FY22 Outlook and business update
Section 04 FY22 Outlook and business update
Slide 22: Vietnam's 2022 GDP growth expected in the 7.5% - 8.0% range
Vietnam’s 2022 GDP growth expected in the 7.5% - 8.0% range 2022 Real GDP growth ▪ Techcombank forecasts FY22 GDP to be in Real GDP Vietnam & World GDP forecasts for Vietnam the 7.5 - 8.0% range: Real GDP growth indexed to 100% in 2019 Percent; 2022 • Manageable CPI of ~3.5% p.a. • Domestic consumpt
Slide 23: FY22 Outlook
FY22 Outlook FY20 FY21 FY22 9M22 Actual Actual Outlook3 Actual Credit growth1 23.3% 22.1% Per SBV quota 11.1% Cost of funds (%) 3.4% 2.2% 2.5% CASA ratio 46.1% 50.5% 46.5% NIM 4.9% 5.6% 5.4% NII growth (YoY) 31.5% 42.4% 20.6% NFI growth (YoY)2 31.5% 42.4% 32.5% CIR ratio 32.8% 30.1% 29.9% NPL ratio
Slide 24: We are rebranding our propositions, driving acquisition
We are rebranding our propositions, driving acquisition, enabled by partners, digital app, benefits and risk models Rebranding and sharpening of our propositions Enabled by Bespoke insights and advisory Ecosystem partnerships with Primary Dedicated wealth advisor mortgages an developers Elevated ban
Slide 25: Driving significant impact
… Driving significant impact Number of lending customers ‘000 Superior risk- 52% 638 420 diversification 3Q21 3Q22 Risk weight ratio (RWR) 2Q2022,% αspire -34.5% Optimization of risk- 110 weighted assets 72 WB RBG Marginal CIR 1H 2022, % 41% Optimization of CIR 19% 18% Priority Inspire Consumer 25
Slide 26: Appendix
TECHCOMBANK Appendix
Slide 27: 3Q22 Financial Highlights (1/3)
3Q22 Financial Highlights (1/3) 9M22 vs. 3Q22 vs. 3Q22 vs. Balance sheet (VND Bn) 3Q21 4Q21 1Q22 2Q22 3Q22 9M21 9M22 9M21 2Q22 3Q21 Total assets 541,635 568,729 615,270 623,739 671,354 541,635 671,354 23.9% 7.6% 23.9% Deposits from customers 316,376 314,753 328,914 321,634 318,919 316,376 318,919 0.
Slide 28: 3Q22 Financial Highlights (2/3)
3Q22 Financial Highlights (2/3) 9M22 vs. 3Q22 vs. 3Q22 vs. Segmentation - Balance sheet (VND Bn) 3Q21 4Q21 1Q22 2Q22 3Q22 9M21 9M22 9M21 2Q22 3Q21 Loans to customers 321,042 347,341 365,743 391,824 410,546 321,042 410,546 27.9% 4.8% 27.9% Retail 137,952 161,657 171,623 205,381 222,377 137,952 222,37
Slide 29: 3Q22 Financial Highlights (3/3)
3Q22 Financial Highlights (3/3) Segmentation – NFI breakdown 9M22 vs. 3Q22 vs. 3Q22 vs. 3Q21 4Q21 1Q22 2Q22 3Q22 9M21 9M22 (VND Bn) 9M21 2Q22 3Q21 IB fees 931 983 1,054 703 566 2,620 2,323 -11.3% -19.5% -39.2% Bond underwriting 282 159 424 152 14 702 590 -15.9% -90.6% -94.9% Bond distribution 169 27
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 85.6% in 9M22 (from 83.4% in 6M21) 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: Banking at your fingertip: best-in-class digital banking solutions
Banking at your fingertip: Techcombank provides best-in-class digital banking solutions to serve our customers across tiers… Making customer interactions HUMAN – SIMPLE - EASY Smart money Payments on the go management & ▪ Fastest clicks to transfers Digital-first service Instant origination ▪ Pay/ R
Slide 32: Recognized both by customers and external agencies
… which has been recognized both by customers and external agencies Successfully engaged customer on digital channels …and externally recognized Mobile app rating on Apple store 3.5 4.7 Best digital bank in 4.0 Vietnam 4Q21 3Q22 Industry Average1 Share of digital in total transactions % +810 bps Fin
Slide 33: Market leading solutions: Cards
Market leading solutions: Cards solution have grown from strength to strength Solution Performance Rewards Credit Cards in force ‘000 1.3x #1 in cards usage in Vietnam 1 733 561 ▪ Instant credit card digital journey ▪ Usage based rewards FY21 3Q22 8 awards received from ▪ Easy installments Credit ca
Slide 34: Market leading solutions: Innovative solutions to deliver customer needs
Market leading solutions: Innovative solutions to deliver customer needs Housing Housing Protection Investment Mortgage Banca CD Bao Loc - ICAP • Best developers and solutions • Strong solutions & careful • Flexible investment solution advice • Dedicated journey • Instant liquidity • Cashback benefi
Slide 35: Working with ecosystem partners
Working with ecosystem partners: Improving propositions, solutions and delivery Payment partners Business partners To build digital/ cashless solutions, To build customer solutions drive rewards and promotions and provide installment Payment rails E-Wallets Technology and data partners Other partner
Slide 36: WinLife, an innovative all-in-1 services touch point with Masan
WinLife, an innovative "all-in-1" services touch point designed in partnership with Masan More convenient Integrated “All-in-1 services touch point” providing: than cash, New business model ▪ Financial: Cash deposit/ withdraw/ transfer - more benefits and services “electronic home safe” at WIN store
Slide 37: 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 38: 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 39: 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 40: 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 41: Thank you for watching
Thank you for watching 42