KEY POINTS

• 1H2021 business result were relatively outstanding compared to peers with a comprehensive improvement in all business activities. It is worth to note that impressive profit growth comes from income improvement rather than cutting costs. In details: (i) PBT in 1H2021 reached VND 11,500 billion, + 71.2%yoy, (ii) Total credit reached VND 252,700 billion, +11.2%ytd (+16%ytd in individuals and +11%ytd in corporates loan). Real estate loans is the key driver, especially from Vinhomes projects. (iii) The bank’s NIM continued to improve to 5.6%-record high. Interest income rose 56%, service revenues +31.5%, while other activities (securities investments, guarantees) +18.4%yoy. Operating costs and provision expenses recorded an increase of 29.6% and 19.6% yoy (iv) CASA is still at a sector-highest level of 46.1% and we expect CASA ratio to remain high thanks to TCB’s digital and technological advantages. (v) Asset quality improved with NPL ratio down to 0.36% at the end of Q2 and it is recorded a steadily decrease in all loan groups 3-5. The bad debt coverage rate is at the sector-second high, behind VCB (259%).

• The plan to open 1,800 transaction points integrating in Winmart chain this year will pose some cost pressure for the bank. Meanwhile, the roadmap would be slowdown due to the impact of the epidemic in the short term. However, we believe the potential of this strategy which once succeed will make a milestone for TCB as bringing a huge customer base and certain benefits in the long term.

RECOMMENDATIONS

• We evaluate TCB shares at 50,400VND/share and recommend “Neutral” for this stock.