INVESTMENT THESIS

• Maintain impressive growth in profitability. TCB maintained high credit growth at 14.1%ytd to the end of Q3/2021. Net interest income and PBT witnessed an upward trend compared to first 2 quarters. NIM was stable at 5.6% while CASA continued to climb to 49%, at sector-highest level.
• The syndicated loan scaled USD800 million contributes to strengthen bank’s capital buffer and low COF. Therefore, bank’s NIM and profitability trend will be supported well in short-medium term.
• The bank has made efforts to bring its NPL ratio below 1%, becoming one of best banks in terms of asset quality. The bank’s NPL ratio at the end of Q3/2021 is 0.6%.

INVESTMENT RISKS
• Although having known to focus on mass affluent and affluent customers who are less suffered by Covid, we concern that the restructured loan balance may not fully reflect the impact of the 4th Covid wave on bank’s asset quality. In addition, despite climbing NPL and restructuring loans, the bank’s provision expenses were only flat compared to the second quarter. Thereby, the total provision balance by the end of the third quarter was VND3,373 billion, that makes bank’s loan loss coverage ratio (LLCR) to down to 184% from the peak of 259% recorded in the second quarter.

RECOMMENDATION

We maintained the “HOLD” recommendation for TCB, but raised the long-term target price (6-18 month investment term) to 55,000VND/share, +9.1% compared to last target price at VND50,400VND/cp due to the adjustment to increase the profit growth expectations for the period of 2021-2023 as the bank still maintains low COF, especially after successfully mobilizing a $800 million syndicated loan announced in mid-October.