TCB – Strong credit growth & NIM expansion support strong earnings – Earnings Flash
  • 2024-04-22T00:00:00
  • Company Research

TCB released its Q1 2024 results with TOI of VND12.3tn (USD490mn; 31.9% YoY) and bottom-line net profit of VND6.3tn (USD249mn; 38.3% YoY), fulfilling 26% and 30.5% of our respective FY2024 forecasts. The strong increase in the bottom line was driven by (i) 30.2% and 35.7% YoY respective increases in NII and NFI (including FX trading) and (ii) 7.3 ppts YoY improvement in the CIR, which were partly offset by a 126% YoY increase in provision expenses. We see upside to our earning forecasts for TCB, pending a more extensive review. 

  • Q1 2024 consolidated credit growth was 7.1% (vs our full-year forecast of ~20%). Q1 2024 credit growth was mainly due to high loan growth while the corporate bond balance dropped 1.3% QoQ. 
  • High Q1 2024 loan growth was mainly due to the corporate segment (+12.4% QoQ) with real estate (+10% QoQ), manufacturing & processing (+8% QoQ), banking, financial, and insurance (~3x QoQ from a low base), and science and technology (~ 20x QoQ from a low base), contributing as the key growth drivers. Meanwhile, loans to individuals ticked up 0.24% QoQ.
  • Q1 2024 customer deposits grew 0.74% QoQ. In Q1 2024, TCB’s CASA ratio increased to 40.5% (+ 55 bps QoQ; +8.5 ppts YoY) vs our forecast of around 42% this year.  
  • Q1 2024 NIM increased 23 bps YoY to 4.35%, which was mainly driven by a faster YoY decrease of COF than IEY yield. We attribute the lower Q1 2024 COF relative to Q1 2023 to (1) a higher CASA ratio and (2) TCB’s funding was adjusted to lower costs under lower deposit rates. 
  • Q1 2024 NOII was VND 3.7tn (+35.7% YoY), completing 27% of our full-year forecast. 
  • Q1 2024 CIR improved 7.3 ppts YoY to 26.5% vs our full-year forecast of 33.0% due to a 31.9% YoY increase in TOI that outweighed a 3.4% YoY increase in OPEX. 
  • Asset quality remained intact QoQ with the NPL ratio at 1.17% in Q1 2024 (vs our full-year forecast of 1.10%). The Q1 2024 Group 2 loan ratio slightly increased by 24 bps QoQ to 1.13%. TCB wrote off VND964bn in Q1 2024— equivalent to a write-off rate over gross loans of 0.18%.
  • Q1 2024 credit cost was 0.87% (vs 0.76% in 2023). In addition, TCB’s LLR was 106% in Q1 2024 (+ 4 ppts QoQ; -27 ppts YoY).

TCB’s consolidated Q1 2024 results

VND bn

Q1 2023

Q1 2024

YoY

NII

6,527

8,500

30.2%

Non-interest income

2,773

3,762

35.7%

OPEX

(3,142)

(3,249)

3.4%

PPOP

6,158

9,013

46.4%

Provision expenses

(535)

(1,211)

126.5%

NPAT-MI

4,497

6,221

38.3%

 

 

 

 

Loan growth**

10.7%

7.8%

-2.9 ppts

Deposit growth**

8.1%

0.7%

-7.4 ppts

 

 

 

 

NIM

4.12%

4.35%

23 bps

Interest-earning asset yield

8.67%

7.43%

-124 bps

Cost of funds

5.03%

3.39%

-164 bps

CASA ratio*

32.0%

40.5%

8.5 ppts

CASA ratio plus term deposits in FX

32.9%

41.3%

8.4 ppts

CIR

33.8%

26.5%

-7.3 ppts

 

 

 

 

NPLs / Gross loans

0.87%

1.17%

30 bps

Group 2 loans / Gross loans

1.96%

1.13%

-83 bps

Accrued interest / IEAs

1.29%

1.45%

16 bps

Source: TCB, Vietcap — *CASA volume included demand deposits and margin deposits; ** Q1 2023 and Q1 2024 loan and deposit growth is QoQ growth.

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