36 slides from Vietnam Technological & Commercial Joint Stock Bank's earnings presentation, Jul 22, 2024
Slide 1: Techcombank 1H24 Analyst Presentation
Techcombank 1H24 Analyst Presentation HCMC, Jul 22 2024
Slide 2: Highlights, Economic Update, Financial Results, FY24 Outlook
Section Section Section 01 Highlights 02 Economic Update 03 Financial Results Section 04 FY24 Outlook 2
Slide 3: Highlights
1H24 Analyst Presentation Section 01 Highlights 3
Slide 4: Another quarter of strong results, continuing momentum since 2H23
Another quarter of strong results, 01 Highlights Improved Declined continuing momentum since 2H23 VND 25.7 Tn ▪ Another quarter with >30% TOI growth YoY TOI ▪ Driven by all key revenue lines (NII: +40%, NFI: +32% and other income: +34% vs. 1H23) + 37.9% YoY VND 15.6 Tn ▪ Strong rebound of PBT agains
Slide 5: Economic Update
1H24 Analyst Presentation Section 02 Economic Update 5
Slide 6: Better than expected GDP growth in 2Q24, FX pressure in line with global USD
02 Economic update Better than expected GDP growth in 2Q24, FX pressure in line with global USD strengthening (although record trade surplus helped) Better than last year Indicators 2Q23 3Q23 4Q23 1Q24 2Q24 2024F GDP growth 6.0 6.5 4.1 5.3 6.7 5.7 6.9 YoY, % Inflation 3.8 2.4 2.9 3.5 3.8 4.4 avg., %
Slide 7: Interbank interest rates bounced back due to FX pressure; 2Q24 credit growth quarter-end loaded
02 Economic update Interbank interest rates bounced back due to FX pressure; 2Q24 credit growth was more quarter-end loaded Banking system's deposit & credit growth Banking system’s CASA ratio Weighted deposit interest rates of G18 %, YTD % % Deposit growth Credit growth 6M 12M 7.9 23 8 9.4 22 6.9 2
Slide 8: Financial Results
1H24 Analyst Presentation Section 03 Financial Results 8
Slide 9: Financial highlights
03 Financial results Financial highlights 2Q23 2Q24 6M23 6M24 2Q23 2Q24 TOI1 growth (YoY) -12.3% 43.7% -8.9% 37.8% Credit growth3 (YTD) 8.5% 11.6% NII growth (YoY) -19.2% 50.6% -19.4% 40.2% NIM (LTM) 4.3% 4.3% NFI2 growth (YoY) -3.1% 35.5% 4.7% 32.0% Loans & Asset NPL 1.10% 1.28% P&L NFI2/TOI1 24.7%
Slide 10: Record-high total operating income generated in a quarter
03 Financial results Record-high total operating income (TOI) generated in a quarter ▪ Strong performance of interest income, fee income and recoveries (>30% YoY growth) drove 2Q24 TOI to VND13.4tn, highest in Bank's history ▪ Robust NII performance was enabled by faster-than-market asset growth and
Slide 11: Higher than sector credit and deposit growth at stable NIM
Higher than sector credit and deposit growth at stable NIM 03 Financial results ▪ On consolidated basis, total interest earning assets expanded 8.8% year-to-date, of which loans and corporate bonds increased 12.9% ▪ Strong retail franchise and funding mix optimisation helped maintain low cost of fun
Slide 12: Retail book posted encouragingly higher QoQ expansion in 2Q
03 Financial results Retail book posted encouragingly higher QoQ expansion in 2Q ▪ Progress in segment diversification, with retail book increasing 7.0% QoQ, compared to 4.3% QoQ for corporate book ▪ Pressure on credit yields, driven by aggressive pricing competition in a context of slow credit grow
Slide 13: Healthier expansion across customer segments and sectors
03 Financial results Healthier expansion across customer segments and sectors ▪ Progress in sector diversification, with real estate exposures increasing a moderate 2.3% QoQ vs. 4.3% QoQ for total corporate book ▪ Progress also for retail books, with the share of mortgages reducing to 73%, with an i
Slide 14: Real estate value-chain: sustained mortgage disbursement momentum 2Q24
Real estate value-chain: sustained mortgage disbursement momentum 03 Financial Results Mortgage Prepayment & Disbursement (VND Bn) ▪ Second highest level of quarterly disbursements since 1Q21, confirming 26,570 healthy recovery of real estate market Prepayment 24,109 21,980 ▪ Stark competition betwe
Slide 15: Term deposits increased again as rates start to increase
03 Financial results Term deposits (TD) increased again as rates start to increase ▪ Pure CASA balances remaining at elevated level of ~VND180 tn for 3 quarters consecutively ▪ Reduction in CASA ratio driven by growth of TD balances in higher interest environment and success of new Auto-earning prop
Slide 16: Robust IB fees recovery enabled 32% YoY growth in NFI
Robust IB fees recovery enabled 32% YoY growth in NFI 03 Financial results ▪ IB fees extended recovery thanks to bonds and stock market, with higher market shares for the Bank's specialised subsidiary TCBS ▪ Banca bounced back from low base in 2Q23, with Techcombank achieving #2 position in terms of
Slide 17: Sub-30% Cost-Income Ratio tracking the Bank's investment plan
Sub-30% Cost-Income Ratio tracking the Bank’s investment plan 03 Financial results ▪ Sub-30% CIR was driven by TOI expansion in the period, while OPEX tracked the Bank's investment plan ▪ Marketing expenses increased in line with the shift to focus on retail customers, especially tiered brand offeri
Slide 18: Asset quality remained within risk appetite
03 Financial results Asset quality remained within risk appetite ▪ Credit cost net of recoveries slightly edged up to 0.9%, in line with NPL formation ▪ Loan loss coverage ratio remained healthy, above 100% Provision expenses and LTM credit costs (VND Tn) NPL and coverage ratio (VND Tn) 116% 106% 93
Slide 19: Credit cost deep-dive
04 Financial results Credit cost deep-dive B2 CIC impacts ▪ Lower Special mention loans (B2) reflected successful work out of customers going back to current (i.e. B1 loans) as well 64 Own book as slower new formation in the quarter 2,793 58 (846) 811 6 (548) (178) 1,982 (1,394) ▪ Non-performing loa
Slide 20: 2Q24 – Asset book health
03 Financial results 2Q24 – Asset book health1 ▪ Asset structure reflected change in interest rate environment and remained in line with expectations (more details on guidance below) Average LTV (%) Credit structure2 by customer interest rate (%) 54% 53% 55% 53% 51% 28% 23% 31% CI rate >10% 38% 43%
Slide 21: Capital and liquidity positions remained robust
03 Financial results Capital and liquidity positions remained robust ▪ CAR improved to 14.5%, despite the payment of ~VND 5.0 trillion in cash dividend ▪ Funding from customers further increased to over 73% at the end of 2Q24 Capital Adequacy Ratio1 (CAR) Funding mix (VND Tn) Customer deposits 15.1%
Slide 22: Differentiated operating metrics relative to sector peers
TCB 03 Financial results Differentiated operating metrics relative to sector peers Industry median1 CASA CIR2 50.5% 50.4% 47.5% 46.5% 39.6% 42.2% 39.9% 40.5% 37.4% 34.8% 35.0% 36.6% 34.2% 35.3% 34.0% 36.0% 33.6% 37.0% 32.0% 34.9% 33.6% 41.9% 32.6% 30.0% 29.2% 33.8% 30.8% 34.8% 32.8% 18.4% 18.7% 17.7
Slide 23: FY24 Outlook
1H24 Analyst Presentation Section 04 FY24 Outlook 23
Slide 24: Various catalysts will help drive GDP growth forecast of 6.5% for FY24
04 FY24 Outlook Various catalysts will help drive GDP growth forecast of 6.5% for FY24 Real Vietnam & World GDP (Real GDP growth indexed to 100% in 2019, YoY growth each year) Catalysts for GDP growth in the remaining Vietnam months of 2024: 6.5% ▪ Accelerated public investment: ~95% of the plan exp
Slide 25: Macroeconomic environment and mid-year check in on forward-looking guidance
04 FY24 Outlook Macroeconomic environment and mid-year check in on forward-looking guidance Total Operating Income Macroeconomic environment ▪ Moderate increases in TD rates and broadly stable CoF Economic momentum supports healthy ▪ We may adjust flexible pricing policy to reflect the credit expans
Slide 26: FY24 Outlook: robust 1H24 results imply FY PBT exceeding guidance
04 FY24 Outlook FY24 Outlook: robust 1H24 results imply FY PBT exceeding guidance FY22 FY23 6M24 FY24 Improved Unchanged Declined Indicators Actual Actual Actual Outlook3 2H24 Commentary Credit growth1 Possibility of a higher quota from SBV, reflecting the Bank’s 14.5 19.2 11.6 Quota strength includ
Slide 27: Thank you.
1H24 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: Appendix
1H24 Analyst Presentation Appendix 28
Slide 29: 2Q24 Financial Highlights (1/3)
00 Appendix 2Q24 Financial Highlights (1/3) 6M24 vs 2Q24 vs 2Q24 vs Balance Sheet Unit: 2Q23 3Q23 4Q23 1Q24 2Q24 6M23 6M24 6M23 1Q24 2Q23 Total assets VND bn 732,470 781,279 849,482 885,653 908,307 732,470 908,307 24.0% 2.6% 24.0% Deposits from customers VND bn 381,947 409,045 454,661 458,041 481,86
Slide 30: 2Q24 Financial Highlights (2/3)
00 Appendix 2Q24 Financial Highlights (2/3) 6M24 vs 2Q24 vs 2Q24 vs Balance Sheet - Segmentation Unit: 2Q23 3Q23 4Q23 1Q24 2Q24 6M23 6M24 6M23 1Q24 2Q23 Loans to customers VND bn 466,546 475,606 518,642 559,277 592,083 466,546 592,083 26.9% 5.9% 26.9% Retail VND bn 197,546 197,176 204,861 213,435 22
Slide 31: 2Q24 Financial Highlights (3/3)
00 Appendix 2Q24 Financial Highlights (3/3) 6M24 vs 2Q24 vs 2Q24 vs NFI - Segmentation Unit: 2Q23 3Q23 4Q23 1Q24 2Q24 6M23 6M24 6M23 1Q24 2Q23 Bond business Bond issuance volume VND bn 2,600 30,440 12,000 14,871 10,090 27,795 24,961 -10.2% -32.1% 288.1% Bond distribution volume VND bn 12,832 17,031
Slide 32: Digital platform continues to be dominant channel
00 Appendix Digital platform continues to be dominant channel ▪ Share of e-banking transaction continued to be at high level (>90%) Number of Retail E-banking customers1 (Mn, EOP) Share of retail transactions by channel Retail term deposits by channel +26.0% E-banking POS Online Offline 9.4 Branch A
Slide 33: Financial metrics formula
00 Appendix Financial metrics formula 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 34: Financial metrics formula
00 Appendix Financial metrics formula 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 35: Glossary
00 Appendix Glossary 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 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