TCB released consolidated results for H1 2022 with PPOP and NPAT-MI of VND14.7tn (USD641mn; +13.5% YoY) and VND11.3tn (USD492mn; +24.1% YoY), which achieved 48.3% and 50.7% of our full-year forecasts, respectively. The increase in the bottom line was driven by (1) 25.2% YoY and 39.1% YoY increases in NII and pure NFI, respectively, as well as (2) a 56.1% YoY decrease in provision expenses. These factors were partly offset by (1) a VND1bn gain from FX trading vs VND166bn in H1 2021 and (2) VND127bn gain from trading and investment securities vs VND1.4tn in H1 2021. On a QoQ basis, Q2 2022 NPAT-MI was VND5.8tn (+5.4% QoQ). We see no material change to our earnings forecast for TCB, pending a fuller review.

Loan growth was strong in Q2 2022, which was backed by a drop in corporate bonds amid a tight initial credit quota. TCB recorded a 0.3% QoQ drop in its credit balance in Q2 2022, in which gross loans increased 7.1% QoQ while the corporate bond book decreased 35.7% QoQ. 6M 2022 credit growth was 7.56% vs the bank’s initial credit quota of around 9%.

Q2 2022 NIM weakens QoQ. TCB reported that H1 2022 NII increased by 25.2% YoY thanks to (1) a 1-bp YoY increase in NIM to 5.82%, which was mainly derived from a 7-bp YoY increase in the IEA yield that outweighed a 4-bp YoY increase in COF, and (2) an increase in regulated LDR from 76.6% in Q2 2021 to 78.8%. On a QoQ basis, our estimation suggests that Q2 2022 NIM dropped 44-bp QoQ with the IEA yield decreasing by 37-bp QoQ and COF increasing by 7-bp QoQ. We attribute the former partly to a QoQ decrease in the high-yield corporate bond balance, while the latter could have been driven by a 3-ppt QoQ drop in the CASA ratio to 47.5% as well as TCB’s actions to increase deposit rates in the last six months, per our observation.