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BANKING SECTOR REPORT 2021
© RESEARCH DEPARTMENT ǀ 10.12.2020
2
2020 UPDATE AND 2021 OUTLOOK
RECOMMENDATIONS
© RESEARCH DEPARTMENT
3
BANKING SECTOR – 2020 UPDATE
© VCBS Research Department
Credit growth is slower than previous years but showing signs of
speeding again:
‐ Credit growth reach 7.93% as of November 24th and is expected to be
less than 10% for the whole 2020. This year credit growth is slower than
2019 level at 13.7%.
‐ 9M.2020: credit growth from corporate bonds contributed 25% of
growth and credit growth from large corporate customers contributed
about 60% of the growth.
SBV has loosened “room” for credit growth for many banks:
‐ With the purpose of stimulating credit growth to support economic
growth, SBV has loosened the credit growth room for banks that meet 2
factors: (1) financial health, (2) capability of growth.
‐ Banks are given higher rooms: TCB, HDB, VPB, TPB, VIB, MBB,…
Credit growth is expected to recover and reach about 11-12% in
2021: it’s more optimistic expectation in many banks compared to the
beginning of the year when the credit demand of individual customers is
increasing. Therefore, we expect credit growth to improve in Q4.2020
and the whole year 2021.
Source: SBV, Banks, VCBS summaries
-11% -1% 9% 19%
EIB
CTG
BID
STB
VCB
TCB
ACB
MBB
LPB
VIB
HDB
VPB
SHB
TPB
9M.2020 Credit growth
Customer loans Corporate bonds
6.09%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
T1 T2 T3 T4 T5 T6 T7 T8 T9 T10T11T12
Credit growth ytd
2015 2016 2017
2018 2019 2020
4
BANKING SECTOR – 2020 UPDATE
© VCBS Research Department
Retail credit was slower in 9M.2020, however, it is still the segment many banks
prioritize:
‐ Slow growth rate of retail loans was the main reason that lead to the low level of the
banking system credit growth. In more detail, retail credit is estimated to increase by
5.2% after 9M.2020 compared to the CAGR growth of 21.7% in the 2016-2019
period.
‐ Retail loan segment is increasingly prioritized by many banks thanks to it’s
advantages: (1) low risk ratio when calculating CAR under Circular 41 (depending
on collateral or 80% if no real estate collaretal); (2) Help to improve loan yield; (3)
Minimize concentration risk.
‐ Potential to increase retail credit proportion remains as Vietnam's proportion of retail
loans is still lower than that of developed countries and people's lifestyles are
changing towards more debt acceptance. However, this segment will face a higher
level of competition as more and more banks switch their focus on.
Source: SBV, Banks, VCBS summaries
22.8%
25.7%
34.7%
39.7%
15%
20%
25%
30%
35%
40%
45%
2012 2013 2014 2015 2016 2017 2018 2019 Q3.2020
Propotion of Retail credit
40% 40%
44%
48%
36%
38%
40%
42%
44%
46%
48%
50%
Viet Nam ASEAN-3 China US
Proportion of retail banking loans in 2019
5
BANKING SECTOR – 2020 UPDATE
© VCBS Research Department
Deposit from customers increased by 6.1% in 8M.2020. The average listed deposit rate has decreased
by 100 - 120 bps from the beginning of 2019 depending on the term.
Banks' cost of funds recorded a rapid decline in Q3.2020.
There has not been enough pressure to make deposit rates rise again:
‐ There has been no liquidity risk coming from bad debt.
‐ Less pressure on indicators: (1) credit growth partly based on corporate bonds reduces the pressure on
LDR as the numerator only takes into account loans to customers; (2) not paying cash dividend according
to SBV’s directive causing CAR to increase; (3) pressure on the ratio of short-term capital for medium and
long-term loans was reduced slightly when SBV delayed the deadline of lowering the ceiling rate.
‐ Liquidity pressure from credit growth is not expected to appear in 2020 and may not appear until the end
of 2021.
Lending rate is adjusted to decrease but at a slower pace than listed deposit interest rate:
‐ Banks balance the impact of lowering deposit rates and lending rates on NIM since the effect of lowering
listed deposit rates on banks’ cost of fund is slower because deposits often have fixed rate.
‐ Corporate customers enjoy more preferences on lending rate reduction and debt structure than individuals.
In addition, new loans will have lower interest rates than current outstanding loans.
NIM is expected to remain at 2020 level in 2021.
Source: SBV, Banks, VCBS summaries
3.00
4.00
5.00
6.00
7.00
8.00
Average deposit rates (Unit: %)
D.R (1 month) D.R (3 months)
D.R (6 months) D.R (above 12 months)
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
0%
5%
10%
15%
20%
25%
30%
35%
40%
VC
B
TC
B
MB
B
CT
G
TP
B
VIB
AC
B
BID
ST
B
HD
B
EIB
LP
B
VP
B
SG
B
KL
B
NA
B
VB
B
BV
B
SH
B
NV
B
BA
B
CASA ratio and Cost of funds
CASA 2019 CASA Q3.2020 Cost of fund Q3.2020
6
BANKING SECTOR – 2020 UPDATE
© VCBS Research Department
NPLs and risk assets ratio increased from above 3% at the end of 2019 to 4.5% in Q3.2020 according to SBV data.
Many banks recorded recovery of restructured loans:
‐ Many banks recorded no increase in restructured loans in Q3.2020. In addition, yields recorded on customer loans recovered strongly in some banks with good asset quality.
The main reason comes from the fact that part of the restructured customers now has cash flows to pay interests and even principals.
‐ With many customers recovering their production and business activities, the expected amount of restructured loans turning into bad debts when Circular 01 expires is low.
*: ACB, MBB, HDB, TCB, TPB, VIB, VPB
Source: SBV, Banks, VCBS summaries
7.50%
8.00%
8.50%
9.00%
9.50%
10.00%
10.50%
11.00%
Loans to customers's yield recorded on financial statement
Banking system Banks listed on HOSE and HNX Group of dynamic banks*
NPL ratio 2019 NPL ratio
Q3.2020
Restructured loans
Under Cir.01/
Customer loans
Update time
ACB 0,54% 0,83% 3,20% 2020 Sep
CTG 1,16% 1,87% 0,90% 2020 Sep
EIB 1,17% 2,46% 6,00% 2020 May
HDB 1,36% 1,83% 4,50% 2020 Sep
MBB 1,16% 1,50% 3,20% 2020 Sep
TCB 1,33% 0,60% 3,07% 2020 Sep
TPB 1,29% 1,79% 7,40% 2020 Sep
VCB 0,79% 1,01% 1,34% 2020 Sep
VIB 1,96% 2,14% 0,40% 2020 June
VPB 3,42% 3,65% 10,50% 2020 Sep
Banking system 2,00% T7.2020
Banking system 3,90% 2020 Sep
Note: banks can use different methods of statistic when announcing the amount of restructured loans
7
BANKING SECTOR – 2020 UPDATE
© VCBS Research Department
Free transfers have gradually become the trend among the group of dynamic banks:
Increasing transaction fees can help banks increase their Non interest income, however the
fee exemption combined with other forms of customer experience enhancement helps
banks attract regular customers, thus reducing capital costs as CASA increases and gaining
deposits. In addition, attracting individual customers is also helpful for increasing credit
when this is the target customer group of many banks.
Decree 81/2020/ND-CP affects the bond retail-distribution activities of some banks: In
general, Decree 81 will adjust the corporate bond market in a more sustainable direction
by limiting the distribution of poor quality bonds to unprofessional investors. However,
some banks will be affected since they often used private placement method many times to
distribute the bond to many individuals. Specifically:
‐ Bonds issued by Private placement is locked for 1 year, the number of investors is limited
to be less than 100 and now must be at least 6 months apart between 2 consecutive
issuances under the new rules. Therefore, the bank cannot distribute bonds to more than
100 customers at the time of issuance if they continue to use this method. In addition, open
funds are not allowed to buy bonds issued this way.
‐ Issuing bonds by public offering has higher requirements on issuers and the underwriter
cannot control demand.
Source: SBV, Banks, VCBS summaries
0%
50%
100%
150%
200%
0
200
400
600
800
1,000
1,200
1,400
2016 2017 2018 2019 6T.2020
Mil
lio
n t
ra
nsa
cti
on
s
Number of money transfer transaction
Number of transaction yoy growth
0%
20%
40%
60%
80%
100%
0
20,000
40,000
60,000
80,000
100,000
120,000
2016 2017 2018 2019 6T.2020
VN
D t
rill
ion
Money transfer transaction value
Transaction value yoy growth
8
BANKING SECTOR – 2021 OUTLOOK
© VCBS Research Department
Bank groups:
- Large banks (AGR, VCB, BID, CTG): continue to be under pressure to reduce lending rates
when SBV doesn’t changed their monetary policy. Therefore, the Net interest margin of this
group decreased in 2020 compared to 2019 and cannot fully recover in 2021.
- Dynamic banks (ACB, MBB, TCB, VPB, VIB, TPB): has higher credit growth due to better
sources of capital (higher equity source from retain earning) and smaller scale. In addition, the
pressure to lower deposit rate is lower than the large banks, leading to a positive growth in total
income.
Circular 01 expected to expire in 2021, when Covid-19 pandemic ends since many countries
can mass produce preventive vaccines.
‐ With good signs of recovery in restructured loans, an increase in bad debt coming from
restructured customers is expected to be at 0.5 - 1% of total loan balance and there will be a
strong variation between banks depending on asset quality. In addition, banks that made strong
provisioning in 2020 for potential bad debts coming in the future will be under less pressure to
increase provision expense in 2021.
‐ Impact on provision expense will spread gradually in 2021 and 2022 because outstanding loan
still has a 360-day deferred payment process from the new repayment term to switch from group
1 debt to group 5 debt.
8%
9%
10%
11%
12%
13%
14%
15%
16%
2019 Capital adequacy ratio - CAR 2019
Source: SBV, Banks, VCBS
9.2% 9.2% 9.8% 9.6% 9.5%
10.4% 10.6% 10.7% 10.7% 10.7%
08%
09%
10%
11%
12%
CAR ratio of the group of banks that applies Circular
41 (Basel II)
State owned banks Joint stock commercial Banks
© RESEARCH DEPARTMENT 9
2020 UPDATE AND 2021 OUTLOOK
RECOMMENDATIONS
10
2020 BANKING STOCKS RECOMENDATION
© VCBS Research Department Source: Fiinpro, Banks, VCBS summaries
9T.2020 indicators Total Asset Total Equity EBT NIM ROE NPL LLCR Asset quality Earning outlook Recommendation
Unit VND billion VND billion VND billion % % % %
ACB 418,748 32,919 6,411 3.54% 22.11% 0.83% 117% High Increasing Buy
BAB 112,042 8,194 522.087 1.95% 8.14% 0.81% 124% No rating No forecast No recommendation
BID 1,467,806 81,441 7,062 2.45% 10.68% 1.97% 87% Average Increasing Outperform
BVB 54,561 3,840 138 2.10% 4.46% 2.98% 48% No rating No forecast No recommendation
CTG 1,261,204 83,322 10,364 2.84% 13.70% 1.87% 84% Average Stable Outperform
EIB 151,274 16,597 1103.612 2.20% 5.29% 2.46% 50% Low Stable No recommendation
HDB 273,290 23,885 4,381 5.10% 19.52% 1.83% 64% Average Increasing Outperform
KLB 55,592 3,907 144.573 1.82% -0.12% 6.63% 17% No rating No forecast No recommendation
LPB 211,978 13,765 1741.441 3.18% 12.81% 1.64% 73% No rating Stable Hold
MBB 427,175 48,254 8,134 4.93% 18.44% 1.50% 119% Average Increasing Buy
NAB 119,474 6,113 388 2.46% 11.04% 2.28% 38% No rating No forecast No recommendation
NVB 74,335 4,283 29 2.14% 1.05% 1.80% 65% Low No forecast Underperform
SGB 22,700 3,672 177 3.28% 2.55% 2.14% 40% No rating Stable No recommendation
SHB 401,926 23,876 2607.122 2.64% 12.93% 2.47% 57% Low Increasing Hold
STB 485,213 28,205 2325.693 2.47% 8.65% 2.14% 74% No rating No forecast No recommendation
TCB 401,462 70,608 10,711 4.85% 17.23% 0.60% 148% Average Increasing Outperform
TPB 193,461 15,438 3,024 4.02% 25.26% 1.79% 92% Average Increasing Buy
VBB 82,270 5,303 374 0.99% 7.98% 2.03% 54% No rating No forecast No recommendation
VCB 1,188,572 93,576 15,965 2.99% 19.41% 1.01% 215% High Increasing Outperform
VIB 213,086 16,552 4,025 3.95% 27.93% 2.14% 48% High Increasing Hold
VPB 413,892 49,726 9,398 8.57% 21.81% 3.65% 48% Low Stable Hold
11
ASIA COMMERCIAL BANK (ACB) – OVERVIEW
© VCBS Research Department Source: SBV, ACB, VCBS summaries
7% 6%
4%
5%
5%
3%
7% 63%
Share holder structure
Dragon Financial Holdings Limited
Vietnam Enterprise Investments Limited
First Burns Investments Limited
Sather Gate Investments Limited
Whistler Investments Limited
Asia Reach Investments Limited
Tran Hung Huy and familiy members
Others
7,563
11,439
14,033
16,097
12,966
1,667 2,656
6,389 7,516
6,411
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
2016 2017 2018 2019 Q3.2020
VN
D b
illi
on
TOI and EBT
TOI EBT
Subsidiary Sector Charter capital
Ownership 2019 EBT
(VND billion) (VND billion)
ACBS Securities 1500 100% Na
ACBA Asset management 340 100% 7
ACBL Finance lease 300 100% 12
ACBC Fund management 50 100% 1
Main business activities:
ACB is a joint stock commercial bank with a dynamic business model and high risk
management capabilities. The bank focuses most of its business activities in the retail
customer segment, with real estate collateral for loans mainly. ACB's asset quality is well
controlled with low NPLs ratio.
Shareholder structure:
Including 30% owned by foreign funds, 7% owned by Tran Hung Huy (Chairman of the
Board of Directors) and family members, the rest are other shareholders.
Business results:
In 9M.2020, ACB recorded EBT of VND 6,411 billion (+15.3% yoy). Positive growth rate
was achieved thanks to good growth in net interest income as well as non-interest income.
12
ASIA COMMERCIAL BANK (ACB)
© VCBS Research Department
Credit growth of 10.7% after 9M.2020: in 2019 ACB has CAR of 11.7%, belonging to the group with optimal capital adequacy ratio to keep balance between credit growth
and target profit. We expect ACB will continue to be assigned a higher credit growth target than the industry average in the coming years.
Potential for good growth in non-interest income:
⁃ ACB owns a portfolio of government bonds of VND 61,632 billion, bond yield recorded at 5.0% in Q3.2020. The recorded yield was much higher than the government bond
interest rate in the market at 1-2%. Thus, ACB can record an abnormal profit from investment securities if the bank sells some of these government bonds.
⁃ According to the bank's expectation, ACB could sign an exclusive Bancassurance contract in 2020. With its position as one of the banks with the highest insurance sales in the
system and the negotiation process took place very thoroughly, we expect that ACB could get a higher upfront fee than peer average.
INVESTMENT THESIS
Source: SBV, ACB, VCBS summaries
0
50
100
150
200
250
300
350
400
2017 2018 2019 Q3.2020
VN
D t
rill
ion
Loans and deposit
Net loan Customer deposit & valuable paper
3.6% 3.6% 3.6% 3.8% 3.7% 3.3%
3.7%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
NIM
NIM Int earning asset yield Cost of fund
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Q1.2019 Q3.2019 Q1.2020 Q3.2020
VN
D b
illi
on
ACB's government bond outstanding
Government bond outstanding Yield recorded
13
ASIA COMMERCIAL BANK (ACB)
© VCBS Research Department
Good asset quality with high quality assets:
⁃ ACB focuses on lending to high-income individual customers. The bank recorded the lowest Credit
cost/Outstanding balance ratio in the industry.
⁃ The collaterals for ACB's loans are mainly real estate with clear legal status and stable market value in the long
term. In case customers cannot pay their debts, the debt recovery process of ACB is relatively favorable with
recovery rate among the highest in the industry.
Stable profitability helps BVPS continue to grow at an expected rate of 25% in 2020 and 26% in 2021.
High possibility of entering the VN-30 index basket in the restructuring period of July 2021 after listing
in HOSE.
Source: SBV, ACB, VCBS summaries
23.2%
45.5%
46.7%
49.4%
0% 20% 40% 60% 80% 100%
2017
2018
2019
9T.2020
Total income structure
Operating expense Provision expense EBT
0.7% 0.7% 0.7% 0.5%
0.7% 0.7%
0.8%
0.3%
0.5%
0.7%
0.9%
1.1%
1.3%
NPL
Net NPL ratio Overdue loan ratio
52 148 79
369
1,765
1,428
0
500
1,000
1,500
2,000
2014 2015 2016 2017 2018 2019
VN
D b
illi
on
Recovery of loans previously written-off
Bad debt write off Recovery of loans previously written-off
2%
52%
102%
152%
202%
0
500
1000
1500
2000
2500
3000
2016 2017 2018 2019 9T.2020
VN
D b
illi
on
Provision expense
Provision expense LLCR
INVESTMENT THESIS
14
ASIA COMMERCIAL BANK (ACB)
© VCBS Research Department
P/B Multiple 29.393
Residual Income 32.658
VALUATION
Source: SBV, ACB, VCBS
FORECAST
31,022 VND
TARGET PRICE
+15% UPSIDE
Estimated profit in 2021 includes VND 2,000 billion Upfront fee from exclusive Bancassurance contract
VND Billion 2019 2020F 2021F
Total operating income 16,097 18,207 21,805
+/- yoy (%) 14.7% 13.1% 19.8%
Earning before tax 7,516 8,817 11,173
+/- % 17.6% 17.3% 26.7%
BVPS (VND/share) 16,699 16,043 19,595
10,00012,00014,00016,00018,00020,00022,00024,00026,00028,000
STOCK PRICE
ACB Relative VN-Index
15
MILITARY COMMERCIAL JOINT STOCK BANK (MBB) - OVERVIEW
© VCBS Research Department
Main business activities
MBB is a joint stock commercial bank with a dynamic business model, including many subsidiaries
operating in the banking and finance sector. MBB has special advantages thanks to standing in the
Army group.
Shareholder structure
Including 14% owned by Viettel, 9% owned by SCIC, 23% foreign owned, the rest are other
shareholders.
Business results
In 9M.2020, MBB recorded EBT of VND 8,134 billion (+ 6.8% yoy). The Bank recorded positive
growth in total income and has made a conservative provision for outstanding loans affected by
Covid-19 since Q1.2020.
Source: SBV, MBB, VCBS summaries
14%
9%
7%
7%
4% 3%
54%
Share holder structure
Viettel
SCIC
Vietnam Helicopter Corporation
Saigon New Port
Vietcombank
Maritime Bank
Others
4%
36%
11%
48%
Share holder structure
M-Credit
Individual
State owned companies
Other companies and institution
13,867
19,537
24,650
19,648
4,616
7,767 10,036
8,134
0
5,000
10,000
15,000
20,000
25,000
30,000
2017 2018 2019 Q3.2020
VN
D b
illi
on
TOI and EBT
TOI EBT
16
MILITARY COMMERCIAL JOINT STOCK BANK (MBB)
© VCBS Research Department
Credit growth of 11.8% in 9M.2020: CAR in 2019 reached 10.68%, belonging to the group of banks with optimal capital adequacy ratio to balance the target of credit
growth. We expect MBB will continue to be assigned a higher credit growth target than the industry average in the coming years.
CASA is more sustainable thanks to the individual customer base: after the decline in Q1.2020 due to the group of corporate customers affected by Covid-19, in Q3.2020
CASA grew again to 33.5% thanks to individual customer groups. The proportion of deposits of individual customers increased to about 30% as the bank applied free money
transfer program and launched many programs to attract customers.
Source: SBV, MBB, VCBS summaries
0
50
100
150
200
250
300
350
2017 2018 2019 Q3.2020
VN
D t
rill
ion
Loans and deposit
Net loan Customer deposit & valuable paper
4.7% 4.8% 4.9% 5.1%
4.9% 4.8% 5.2%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
NIM
NIM Int generating asset yield Cost of fund
2.0%
7.0%
12.0%
17.0%
22.0%
27.0%
32.0%
37.0%
42.0%
47.0%
0
2,000
4,000
6,000
8,000
10,000
12,000
2017 2018 2019 9T.2020
Operating expense
Operating expense CIR
INVESTMENT THESIS
17
MILITARY COMMERCIAL JOINT STOCK BANK (MBB)
© VCBS Research Department
Good asset quality: MBB's NPL ratio increased from 1.16% to 1.50% in Q3.2020 and the bank made high provisions from Q1.2020 for NPL which may rise due to Covid-
19. Therefore, we expect MBB to incur less increased provisioning expenses in the post-pandemic phase.
Maintaining a good profitability index helps book value continue to grow: MBB's ROE is forecast to reach 22.5% for 2020 and 19% for 2021, BVPS forward 2021 at
VND 19,884/share and P/B forward is at 0.97 times.
Source: SBV, MBB, VCBS summaries
1.41% 1.26% 1.54%
1.16%
1.62% 1.37% 1.50%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
NPL
Net NPL ratio Overdue loan ratio
0% 20% 40% 60% 80% 100%
2017
2018
2019
9T.2020
Total operating expense structure
Operating expense Provision expense EBT
2%
22%
42%
62%
82%
102%
122%
142%
0
1000
2000
3000
4000
5000
6000
2016 2017 2018 2019 9T.2020
VN
D b
illi
on
Provision expense
Provision expense LLCR
INVESTMENT THESIS
18
MILITARY COMMERCIAL JOINT STOCK BANK (MBB)
© VCBS Research Department
P/B Multiple 26,608
Residual Income 22,713
FORECAST
24,660 VND
TARGET PRICE
+21% UPSIDE
VALUATION
Source: SBV, MBB, VCBS
10,000
12,000
14,000
16,000
18,000
20,000
22,000
STOCK PRICE
MBB Relative VN-Index
VND Billion 2019 2020F 2021F
Total operating income 24,650 26,624 29,326
+/- yoy (%) 26.2% 8.0% 10.1%
Earning before tax 10,036 10,702 11,339
+/- % 29.2% 6.6% 6.0%
BVPS (VND/share) 16,014 16,989 19,884
19
TIENPHONG COMMERCIAL JOINT STOCK BANK (TPB) - OVERVIEW
© VCBS Research Department
Main business activities:
TPB is a bank with rapid growth in asset size and profitability on a smaller scale. The bank also
focuses on digital development to increase customer experience.
Shareholder’s structure:
Including 18% owned by Do Minh Phu, family and related entities; 10% belongs to FPT and
former FPT's Vice Chairman Le Quang Tien; 4% of the national reinsurance corporation, 30%
foreign ownership, the rest are other domestic shareholders.
Business results:
In 9M.2020, TPB recorded EBT of VND 3,024 billion (+ 25.8% yoy). Positive growth comes
from both net interest income and non-interest income.
Source: SBV, TPB, VCBS summaries
2,309
3,610
5,627
8,469
7,094
707 1,206
2,258
3,868
3,024
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2016 2017 2018 2019 9T.2020
VN
D b
illi
on
TOI and EBT
TOI EBT
18%
6%
4%
5%
30%
37%
Share holder structure
Do Minh Phu, Families and Related
copanies
FPT
Le Quang Tien
Vinare
Foreign ownership
Other
9%
37%
22%
18%
14%
Loan structure
Big Corp
SME
Individual - Mortgage
Individual - Car loan
Individual - Other
20
TIENPHONG COMMERCIAL JOINT STOCK BANK (TPB)
© VCBS Research Department
Gradually improving cost of fund: The customer base increases rapidly as TPB is one of the pioneering banks that apply technology to improve customer experience and
launch marketing campaign including reducing service fee. In 9M.2020, TPB's CASA increased by 21% and the ratio reach 16%. In addition, TPB maintains a high rate of
mobilization from the interbank market with net borrowing equivalent to 22.5% of customer deposits. With current abundant liquidity environment, raising more from the
interbank market is less risky and helps TPB reduce cost of fund.
Credit growth reached 23% after 9M.2020 and high growth rates can be maintained in the future: with the advantage of small-sized bank, good data source and rapidly
increasing individual customer base thanks to effective marketing campaign, TPB has the highest credit growth in the industry. We expect TPB will be given higher credit room
than the industry average in the coming years when the bank has abundant capital from retained earnings
Car loans: although car loans incur more NPLs than home loans, the profit earned is still high when the bank requires higher lending rates to offset incurred provision expense.
Cars as collaterals are also easily to recall and sell when customers need the bank's confirmation for annual registration.
Source: SBV, TPB, VCBS summaries
9.0%
9.5%
10.0%
10.5%
11.0%
11.5%
0
20,000
40,000
60,000
80,000
100,000
120,000Loans to customers
Loans to customers Yield on customer loans
4.1% 4.3% 4.2% 4.2% 4.4% 4.3% 3.9%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
NIM
NIM Int earning asset yield Cost of fund
2%
12%
22%
32%
42%
52%
62%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2016 2017 2018 2019 9T.2020
Operating expense
Operating expenses CIR
INVESTMENT THESIS
21
TIENPHONG COMMERCIAL JOINT STOCK BANK (TPB)
© VCBS Research Department
The rebound in recorded yield of customer loan portfolio is a sign showing that restructured customers are recovering well:
- TPB has VND 8,000 billion restructured loans (7.4% of customer loans), of which about VND 5,000 billion have principal repayment extended and 3,000 VND billion have both
interest and principal repayment extended.
- The yield recorded on customer loan portfolio was 10.9% in Q3.2020, going up from Q2 and not much lower than the yield of 11.0% in Q1.2020 as a large portion of
restructuring customers returned to pay interest as normal.
High growth rate of interest earning assets coupled with efficient operations help sustain growth in profits and equity in the long run.
Source: SBV, TPB, VCBS summaries
0% 20% 40% 60% 80% 100%
2017
2018
2019
9T.2020
Total income structure
Operating expense Provision expense EBT
2%
22%
42%
62%
82%
102%
122%
142%
0
200
400
600
800
1000
1200
1400
2016 2017 2018 2019 9T.2020
VN
D b
illi
on
Provision expense
Provision expense LLCR
2.84% 2.59%
2.10%
1.29%
1.79%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
NPL
Gross NPL ratio Overdue loan ratio
INVESTMENT THESIS
22
TIENPHONG COMMERCIAL JOINT STOCK BANK (TPB)
© VCBS Research Department
P/B Multiple 27,813
Residual Income 25,984
FORCAST
VALUATION
Source: SBV, TPB, VCBS
10,000
12,000
14,000
16,000
18,000
20,000
22,000
01/0
2/2
019
02/0
2/2
019
03/0
2/2
019
04/0
2/2
019
05/0
2/2
019
06/0
2/2
019
07/0
2/2
019
08/0
2/2
019
09/0
2/2
019
10/0
2/2
019
11/0
2/2
019
12/0
2/2
019
01/0
2/2
020
02/0
2/2
020
03/0
2/2
020
04/0
2/2
020
05/0
2/2
020
06/0
2/2
020
07/0
2/2
020
08/0
2/2
020
09/0
2/2
020
10/0
2/2
020
11/0
2/2
020
STOCK PRICE
TPB Relative VN-Index
26,898 VND
TARGET PRICE
+21% UPSIDE
VND Billion 2019 2020F 2021F
Total operating income 8,469 9,529 10,866
+/- yoy (%) 50.5% 12.5% 14.0%
Earning before tax 3,868 4,056 4,688
+/- % 71.3% 4.8% 15.6%
BVPS (VND/share) 15,264 18,881 23,062
23
DISCLAMER
© VCBS Research Department
This report is designed to provide updated information on the fixed-income, including bonds, interest rates, some other related. The VCBS analysts exert their best efforts to obtain
the most accurate and timely information available from various sources, including information pertaining to market prices, yields and rates. All information stated in the report has
been collected and assessed as carefully as possible.
It must be stressed that all opinions, judgments, estimations and projections in this report represent independent views of the analyst at the date of publication. Therefore, this report
should be best considered a reference and indicative only. It is not an offer or advice to buy or sell or any actions related to any assets. VCBS and/or Departments of VCBS as well as
any affiliate of VCBS or affiliate that VCBS belongs to or is related to (thereafter, VCBS), provide no warranty or undertaking of any kind in respect to the information and materials
found on, or linked to the report and no obligation to update the information after the report was released. VCBS does not bear any responsibility for the accuracy of the material
posted or the information contained therein, or for any consequences arising from its use, and does not invite or accept reliance being placed on any materials or information so
provided.
This report may not be copied, reproduced, published or redistributed for any purpose without the written permission of an authorized representative of VCBS. Please cite sources
when quoting. Copyright 2012 Vietcombank Securities Company. All rights reserved
CONTACT INFORMATION:
Tran Minh Hoang Mac Dinh Tuan Luong Van Hoan
Head of Research
Head of Equity team
Equity Analyst