TPB_1H21 Analyst Meeting_Key Takeaways

TPB held an analyst meeting on Aug 4 to report its business results. 2Q21 PATMI was VND1.3 tn (+12% QoQ/+55% YoY). The YoY increase was largely driven by improved net interest income, net fee income, and trading gains. 1H21 PATMI was VND2.4 tn (+48% YoY).

Details

Credit growth was 10.0% YTD (vs. the initial quota of 11.5%) as at 2Q21. The SBV granted an additional of 5.9% credit quota for TPB in July. The bank reported 1H21 NIM of 4.74% (+44bps YoY).

Total retail loans were VND68 tn (51% of the total loans) as at 2Q21. Of which, real estate loans were VND33 tn (48% of the total retail loans), and auto loans were VND17 tn (26% of the total retail loans). TPB has about 3.8 mn individual clients as at 2Q21.

The bank reported NPL ratio for real estate loans was very low, with only 0.35%, while NPL ratio for auto loans is about 1.2%.

Total deposits growth was 12.1% YTD as at 2Q21. The bank reported CASA/total deposits was 15% (+2ppt YoY).

Net fee income was VND413 bn in 2Q21 (+46% QoQ/+159% YoY), driven largely by bancassurance sales.  Income from trading gains was VND279 bn in 2Q21 (+4% QoQ/60% YoY).

Operating expense was VND1.2 tn in 2Q21 (+26% for both QoQ and YoY). The bank reported CIR of 36% (-7ppt YoY) in 1H21.

2Q21 provisioning cost was VND612 bn (+57% QoQ/+39% YoY). Total 2Q21 restructured loans were VND1.3 tn (1.0% of total loans). TPB will make provision according to the Circular 03/2021/TT-NHNN, of which, TPB made ~VND400bn provision for restructured loans in 2021.

NPL ratio was 1.14% as at 2Q21 (-5bps QoQ/-33bps YoY). LLR ratio was 145% (+11ppt QoQ/+32ppt YoY). The management said ST funding for MLT lending was about 25%, below the SBV’s cap of 40.0%.

Our view

Similar to other banks, TPB’s lending yield will reduce to support clients in 2H21; however, funding cost will remain low given the SBV’s continued easing policy. Net-net, we expect TPB’s NIM to maintain at the current level.

Fee income (i.e. banca sales) will be the bank’s key earnings driver.

Asset quality remains strong with low NPL ratio and high LLR ratio, but keep an eye on potential rising NPL especially in auto loans segment.

We don’t cover TPB and have no recommendation on the stock. TPB trades at 1.7x 2021E P/B, which is lower than the sector of 1.9x, while the bank’s 2021E ROE is 22% vs. the sector of 20% (source: Bloomberg).

For the complete report, please access here: TPB_1H21 Analyst Meeting

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