TCB - Q4-2024 Financial results exceed expectations due to significant reduction in credit cost following unexpected improvement in asset quality
• Consolidated PBT for Q4-2024 reached VND 4.7 trillion (-19% YoY), primarily due to the recognition of VND 1.8 trillion in expenses from ending the partnership with Manulife in distributing bancassurance products, as previously announcement. This period’s performance exceeded expectations due to the reversal of credit cost following an unexpected improvement in asset quality. For the full year 2024, consolidated PBT amounted to VND 27.5 trillion (+20% YoY), achieving the full-year target and exceeding projections by 3%.• NIM for Q4-2024 continued to decline sharply, dropping nearly 30bps QoQ to 3.9%, after a 50bps reduction in the previous quarter. This was due to a 40bps drop in asset yields to 6.8%, driven by competitive pressures in the market and the maintenance of flexible pricing policies to support real estate developers, while the CoF remained unchanged from the previous quarter at 3.4%.
• Credit provision expense was VND 118 billion, down 93% YoY, corresponding to a credit cost ratio of only 0.03%, thanks to the reversal of provisions after recovering Bucket 2 loans and NPLs, in line with the managers's previous expectations that bad debt and Bucket 2 loans peaked in Q3-2024. The credit cost ratio for the entire year was 0.7%.
• Outlook for 2025: About TCB targets, NII growth of over 20%, driven by credit growth of 20-25% and NFI growth of 10%-20%, while keeping credit cost ratio under 1%.
• Overall, TCB's Q4-2024 financial results were positive in terms of strong CASA growth, asset quality control, and credit cost management, except for the significant decline in NIM. We are in the process of updating our 2025 projections and will provide a more detailed evaluation in the upcoming report.
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