TCB - Strong credit growth, NIM compresses QoQ

TCB released its 9M 2024 results with TOI of VND37.4tn (USD1.5tn; +28.9% YoY) and PBT of VND22.8tn (USD910mn; +33.5% YoY), fulfilling 75% and 79% of our respective FY2024 forecasts. These results imply that Q3 2024 PBT was VND7.2tn (-7.8% QoQ; +23.5% YoY). Overall, TCB’s 9M 2024 earnings were slightly ahead of our expectations, mostly due to lower-than-expected credit costs and high NII. We see potential upside to our current forecasts, pending a more extensive review.

9M 2024 credit growth was 17.5% (vs H1 credit growth of 12.9%), with gross loans increasing 20.8% while corporate bonds decreasing 21.7%. Q3 2024 loan growth was 5.9% QoQ, with retail loans increasing 6.0% QoQ and corporate loans edging up at a slower pace of 2.9% QoQ.
9M 2024 customer deposit growth was 8.9%. Additionally, the deposit balance in Q3 2024 rose 2.7% QoQ. In Q3 2024, TCB’s CASA ratio decreased 0.8 ppts QoQ but rose 2.5 ppts YoY to 36.5%.
9M 2024 NIM increased 36 bps YoY to 4.42% vs our full-year forecast of 4.23%, which we mainly attribute to a stronger decrease of COF than the IEA yield. However, we see a QoQ contraction in Q3 2024 NIM to 4.22% (-43 bps QoQ). We attribute this mostly to a 36 bps QoQ decrease in IEA yield, reflecting stiff competition in lending among banks, coupled with ongoing support for corporate clients facing persistent challenges, as shared in the bank’s Q2 analyst meeting.
9M 2024 NOII was VND10.5tn, completing 69% of our full-year forecast. TCB’s Q3 2024 NOII decreased 28.3% QoQ due to (1) a 20.9% QoQ decrease in pure NFI that was mainly derived from QoQ declines in fees from bancassurance, securities brokerage, and underwriting business; (2) an 85.2% QoQ decrease in net gain from FX trading activities; and (3) a 39.8% QoQ decrease in net gain from investment securities. These are partly offset by a 62.1% QoQ increase in net other income.
9M 2024 CIR decreased 4.8 ppts YoY to 28.4% vs our full-year forecast of 31.0% due to a 28.9% YoY increase in TOI outweighing a 10.2% YoY increase in OPEX.
Asset quality deteriorated QoQ with the NPL ratio increasing by 6 bps to 1.35% in Q3 2024 vs our full-year forecast of 1.22%. The group 2 loan ratio remained relatively flat QoQ at 0.86%.
The annualized 9M 2024 credit cost was 0.71% (vs 1.23% in 2023). 9M 2024 provision expenses increased 73.4% YoY, completing 69% of our full-year forecast, and tracked behind of our expectation. In addition, TCB’s LLR was 103.5% in Q3 2024 vs 102.1% and 101.1% in 2023 and Q2 2024, respectively.

TCB’s consolidated 9M 2024 results

VND bn	9M 2023	9M 2024	YoY	Q3 2023	Q3 2024	YoY
NII	20,094	26,906	33.9%	7,272	8,929	22.8%
Non-interest income	8,950	10,530	17.7%	3,146	2,826	-10.2%
OPEX	(9,642)	(10,629)	10.2%	(3,631)	(3,431)	-5.5%
PPOP	19,402	26,807	38.2%	6,788	8,323	22.6%
Provision expenses	(2,287)	(3,964)	73.4%	(945)	(1,109)	17.4%
NPAT-MI	13,565	18,152	33.8%	4,613	5,738	24.4%

Loan growth**	13.1%	20.8%	7.7 ppts	1.9%	5.8%	3.8 ppts
Deposit growth**	14.1%	8.9%	-5.3 ppts	7.1%	2.7%	-4.4 ppts

NIM	4.06%	4.42%	36 bps	4.30%	4.22%	-7 bps
Interest-earning asset yield	8.55%	8.09%	-45 bps	8.59%	7.18%	-141 bps
Cost of funds	4.97%	3.66%	-131 bps	4.76%	3.31%	-145 bps
CASA ratio*	33.6%	36.5%	2.9 ppts	33.6%	36.5%	2.9 ppts
CASA ratio plus term deposits in FX	34.4%	37.3%	2.9 ppts	34.4%	37.3%	2.9 ppts
CIR	33.2%	28.4%	-4.8 ppts	34.8%	29.2%	-5.7 ppts

NPLs / Gross loans	1.40%	1.35%	-5 bps	1.40%	1.35%	-5 bps
Group 2 loans / Gross loans	1.29%	0.86%	-43 bps	1.29%	0.86%	-43 bps
Accrued interest / IEAs	1.35%	1.61%	27 bps	1.35%	1.61%	27 bps

Source: TCB, Vietcap — *CASA volume included demand deposits and margin deposits; ** Q3 2023 and Q3 2024 loan and deposit growth is QoQ growth; 9M 2023 and 9M 2024 loan and deposit growth is 9M growth.