TPB - Earnings rebound from low base in 2024 - AGM Note
  • 2024-04-23T00:00:00
  • Company Research
  • We attended TPB’s AGM on April 23. The main agenda of the meeting was to (1) review 2023 results, (2) approve 2024 business guidance, and (3) approve profit distribution plans of paying a 5% cash dividend and a 20% stock dividend within this year. 
  • The Q&A section focused on (1) TPB’s strong earnings guidance in 2024, (2) future dividend policy, and (3) the bank’s assets quality, including exposure to Novaland (HOSE: NVL) and Hung Thinh Corporation.
  • 2024 targets include (1) credit growth of 15.8% YoY vs our full-year forecast of 15.2% YoY, (2) funding growth of 3.3% YoY (including customer deposits, valuable papers, and interbank funding) vs our full-year forecast of 13% YoY, (3) NPL ratio to be kept below 2.5% vs our full-year forecast of 1.4%, and (4) profit before tax (PBT) of VND7.5tn (+34.2% YoY) vs our full-year forecast of VND7.3tn (+30.1% YoY). 
  • TPB’s preliminary Q1 2024 PBT was VND1.8tn (+3.6% YoY and + 190% QoQ), along with a QoQ improvement in NPLs. These results are in line with our expectations and complete 25% of our full-year forecast.
  • The bank aims for 15 million customers in 2024 (+25% YoY) and we note that TPB is one of the most outstanding banks in terms of new customer acquisitions. 
  • We currently have an OUTPERFORM rating for TPB with a target price of VND21,700/share.

TPB is confident to achieve strong PBT growth at 34% YoY in 2024. According to TPB, the most difficult period for the bank has passed since it has strongly booked provisions for all of its unsecured bad debts and the factors that pressure NIM, including support interest rates for customers and high funding costs, have nearly ended. TPB wrote off bad debts aggressively last year. This resulted in TPB’s NPL ratio trending down over the past three quarters. Additionally, TPB reduced VND1.9tn of interest payments (equivalent to 15.3% of total NII in 2023) to support customers. 

We believe TPB’s earnings in 2023 were a low base and we expect a positive outlook for the bank in 2024. We currently forecast 2024F NIM to improve by 22 bps YoY and provision expenses to decrease 22.2% YoY. 

TPB expects to pay cash dividends annually from 2023 onward. At the 2024 AGM, shareholders approved for TPB to pay a VND500/share cash dividend (2.9% dividend yield) and a 20% stock dividend in 2024. The dividend payout ratio in the following years will be decided annually depending on the bank's business results and development plans. We note that in 2023, TPB paid a cash dividend of VND2,500/share.

TPB has reduced exposure to Hung Thinh Land. According to the bank’s management, an institution has bought the big loans of Hung Thinh at TPB. We cannot confirm the total exposure of TPB to Hung Thinh Group, however, the financial statements of Hung Thinh Incons (a subsidiary of Hung Thinh Group) showed the debts at TPB reduced from VND6.6tn in Q2 2023 to only VND128bn in Q4 2023.

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