Specifically, at the end of the third quarter, TCB recorded stable business results, in line with the forecast plan. Total operating income (TOI) improved well, reaching VND 10,418 billion, reaching the highest level since the third quarter of 2022. Mr. Jens Lottner - General Director of Techcombank said - this trend is quite consistent with the forecast and reflects the bank's sustainable financial health.
NIM recovers strongly
According to JP Morgan's assessment of Techcombank's Q3/2023 business results, net interest income (NIM) increased by 16% q/q, reversing the downward trend of the last 3 quarters, thanks to asset growth and improved capital expenditure. Non-interest income increased by 4% compared to the previous quarter, thanks to income from trading activities (investment securities and foreign exchange trading), and income from service activities.
Sharing the same assessment, UBS said that TCB's profit was in line with its forecast, with Q3 reaching VND5.8 trillion, but higher than the average market forecast by about 17%. According to UBS, NIM recovered strongly, increasing by more than 40 basis points in Q3, compared to the previous quarter. This assessment coincides with Maybank's assessment that Techcombank's annual NIM, calculated in the first 9 months of 2023, increased to 4.19%, compared to 4.08% in the first 6 months of the year, thanks to stable lending rates at 8.8%, and funding costs falling to the equivalent of 4.96%.
According to analysts at Maybank, TCB’s business results have shown positive signs of recovery. Year-on-year ROE stood at 15.2%, while in terms of ROA, TCB remained at the industry’s leading level of 2.4%. In addition, Techcombank’s CASA structure remained at a good level of 33.6%, thanks to steady growth in CASA balances, as the bank actively promoted new customer attraction.
Maybank said that Techcombank's asset quality remained at a good level, with absolute bad debt balance increasing by 29% quarter-on-quarter and 113% year-on-year to VND6.5 trillion, corresponding to a bad debt ratio of 1.36%. The bad debt coverage ratio stood at 93%. Meanwhile, group 2 outstanding loans (debts requiring attention) decreased by 35% quarter-on-quarter and 32% year-on-year, accounting for 1.3% of total outstanding loans. CIR was maintained at 33.2%, despite the bank continuing to invest in fixed assets (such as new office buildings) and technology, the organization said. "Techcombank's asset quality indicators appear to be much better than other joint stock commercial banks and previous market concerns," Maybank said.
TCB stock is a top pick in the banking basket
With Techcombank's positive business results, JP Morgan analysts maintain their Overweight recommendation with a target price of VND40,000/share, 33% higher than the current stock price (closing on October 31 at VND27,700/share).
According to Maybank, TCB is trading at a P/B of 0.85x and has a buy recommendation with a target price of VND48,700/share. "At this price, TCB, along with STB and MBB, is our top pick among Vietnamese banks," Maybank said. Maybank estimates TCB's pre-tax profit in 2023 will reach VND23 trillion.
A domestic financial institution, Ho Chi Minh City Securities Corporation (HSC), also noted many signs of recovery in TCB after the third quarter results, and maintained its buy recommendation with a target price of VND40,000/share. Techcombank's market price/book value (P/B) is currently only at 0.8x, about 19% lower than the average bank stock.
On the bank's side, Mr. Jens Lottner - CEO of Techcombank commented: "Techcombank recorded stable business results in the third quarter, closely following our forecast, in the context of the economy showing signs of recovery. The bank continued to promote, attracting 2.2 million new customers in the first 9 months of the year. Income from investment banking services and insurance services achieved significant growth in the third quarter, thereby helping us maintain the growth momentum of income from service activities.
Demand deposits (CASA) grew for two consecutive quarters, reinforcing the bank's CASA growth momentum. Credit growth and deposit growth were higher than the industry average in the first 9 months of 2023. With the results achieved in the third quarter, the Bank is confident that it will achieve its profit and asset quality targets for the whole year."
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