BANKING SECTOR REPORT 2021 - VCBS

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



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.


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



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.


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



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


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



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.


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


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)


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



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



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


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%


Viettel

SCIC

Vietnam Helicopter Corporation

Saigon New Port

Vietcombank

Maritime Bank

Others

4%

36%

11%

48%


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)


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.


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



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.


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


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


INVESTMENT THESIS

18



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



+/- yoy (%) 26.2% 8.0% 10.1%


+/- % 29.2% 6.6% 6.0%

BVPS (VND/share) 16,014 16,989 19,884

19

TIENPHONG COMMERCIAL JOINT STOCK BANK (TPB) - OVERVIEW


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%


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)


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.


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



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.


0% 20% 40% 60% 80% 100%

2017

2018

2019

9T.2020

Total income structure


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


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



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



+/- yoy (%) 50.5% 12.5% 14.0%


+/- % 71.3% 4.8% 15.6%

BVPS (VND/share) 15,264 18,881 23,062

23

DISCLAMER


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

[email protected]

Head of Equity team

[email protected]

Equity Analyst

[email protected]

BANKING SECTOR REPORT 2021 - VCBS

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