Company Report - TCB: ACCELERATING GROWTH ON SOLID FOUNDATIONS
We rate TCB as a leading retail bank focusing on providing convenient, advanced and quick financial solutions and services to Affluent and Mass Affluent customers. TCB has comparative advantages in mortgages, retail deposits, payments, card and investment banking services.
With a solid capital buffer and competitive lending rates based on low funding costs, TCB has high credit growth potential. Combined with the ability to stabilize an efficient NIM and sustain good efficiency, these are robust foundations for the 2021-2025 growth strategy. The balance sheet is expected to grow at a CAGR of 23% over the same period, aided by the economic recovery and supportive policies. In the worse case scenario which could affect the industry through a bad debt cycle, we still appreciate TCB’s good provision buffer, its moderate risk exposure compared to peers, and headroom for absorbing surging credit costs.
In the short term, diversified income sources and high-end customer segments are the growth engines. TCB is currently trading at a 2021 forward P/B of 1.9x, 13% lower than the industry. Its 2021 forward ROE is 12% higher than average (before welfare and bonus fund).
We estimate TCB's fair value at VND 71,000 per share, equivalent to a 2021 forward P/B of 2.7x and a 1-year forward P/B of 2.4x with expectation of stable and low interest rates. This implies an expected return of 40% compared to the closing price as of October 08, 2021. Therefore, we have a BUY recommendation.
Vietnam Technological and Commercial Joint Stock Bank (Techcombank) is a Vietnam-based corporate bank. It is engaged in the provision of corporate banking services include customized account packages; fixed and non-fixed deposits; supply chain financing; trade finance services for import, export and domestic; international fund transfer; commodity brokerage services; foreign exchange services, such as foreign exchange swaps and foreign exchange derivatives, among others; as well as working capital loans. The Bank also offers personal banking products and services, such as credit and debit cards; individual loans of various types, including study, mortgage, household business, among others; personal banking accounts and services, including current accounts, payroll accounts and international transfer; Automated Teller Machine (ATM) and Point Of Service (POS) customer service support; and Internet and mobile banking.
Viet Dragon Securities belongs to top 20 biggest securities companies in terms of chartered capital in Vietnam. With a qualified, dedicated and professional team, a widespread network, advanced technology, diversified products and services, and good relationship with local and foreign institutions, we provide a wide range of services and products to our clients both individuals and institutions, both local and foreign. We commit to provide our clients with promising investment opportunities and a comprehensive and professional financial investment services.
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