TCB_1H21 Analyst Meeting

TCB held an analyst meeting on Jul 21 to report business result in 1H21.

2Q21 net interest income was VND6.6 tn (+8% QoQ/+67% YoY). 1H21 net interest income was VND12.7 tn (+56% YoY), largely driven by low funding cost and high CASA ratio.

2Q21 net fee income was VND1.5 tn (+10% QoQ/+24% YoY). 1H21 net fee income was VND2.8 tn (+31% YoY).

2Q21 opex was VND2.6 tn (+1% QoQ/+47% YoY). 1H21 opex was VND5.2 tn (+30% YoY) due to IT investments. CIR was 28.1% (-60bps QoQ/-2.1ppt YoY), which is among the lowest in the sector.

2Q21 provisioning was VND598 bn (-30% QoQ/+36% YoY). 1H21 provisioning was VND1.4 tn (+20% YoY). NPL ratio was only 0.36% as at 2Q21 (-3bps QoQ/-55bps YoY), which we believe is the lowest in the sector. 2Q21 LLR ratio was 259% (+40ppt QoQ/+150ppt YoY).

PATMI reached VND4.7 tn in 2Q21 (+7% QoQ/+67% YoY). 1H21 PATMI reached VND9.1 tn (+73% YoY), mostly driven by low funding cost, improved fee income and other non-interest incomes.

Total restructured loans reduced to VND2.7 tn as at 2Q21 (0.8% of 2Q21 loans) from VND6.7 tn in 1Q21 (2.3% of 1Q21 loans).

Strong deposit franchise. CASA increased 55% YoY to reach VND133 tn. CASA ratio was 46.1% as at 2Q21 (+1.9ppt QoQ/+11.7ppt YoY), which is the highest in the sector.

Management view

Managements expect cost of funds to continue to decline; however they expect NIM to remain flat for the 2H21 as the bank will continue to support clients due to the impact of the pandemic. The bank plans to reduce its loan yields by 1.0-1.5ppt  for existing and new loans.

Bancassurance sales continues to improve. Banca annual premium equivalent (APE) increased +7% QoQ/+44% YoY to reach VND264 bn in 2Q21.

Our view

TCB appears to be a relatively strong bank fundamentally and has always ranked high in our CAMEL rankings due to its strong capital ratios, low leverage, and solid funding position. CAR was 15.2% in 2Q21, and CASA was 46.1%, which are the highest in the sector.

Asset quality remains strong, which NPL ratio is lowest in the sector.

ST funding to MLT loans was 39.1% as at 2Q21, which is still below the SBV’s current cap of 40%. However, we believe TCB needs to reduce this ratio as the SBV will cap it at 37% starting from Oct 1^st, 2021

We don’t cover TCB, so we don’t have a official view on this stock. TCB currently trades at 2.0x PB vs. the sector median of 1.9x.

For the complete report, please access here: TCB_1H21 Analyst meeting_Takeaways

Analyst: Tanh Tran, tanh.tran@yuanta.com.vn