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TCB – The bottom line witnessed a YoY negative growth rate in 4Q22

• In Q4, TCB’s PBT reached VND7 tn (or USD 199 mn), -23% YoY and -33% QoQ, dragged down by (1) Decreasing of TOI and (2) the rising of both operating and provision expense.
• Credit and deposit growth reached5% YTD and 12.6% YTD, respectively. The ratios of CASA and term deposits have changed sharply since 4Q, in which, the former dropped and the latter rose, making NIM decrease by 42bps to 5.29% in 2022.
• In 2023, we expect credit and deposit to grow 13.2 % and 12.2%, respectively. Funding cost will keep high in the early quarters, so its NIM will not improve until Q3 2023. Given the headwinds in the current corporate bond market, TCB's underwriting and bond issuance-related fees will be under downward pressure until the bond market shows signs of improvement in new issuance. Nevertheless, NFI might sustainably grow thanks to L/C and settlement activities. Therefore, we expect TOI and PBT to growth 6% and 3% YoY. NPATMI is forecasted at VND 21 Tn (or USD890 bn, 3%) and correspondent EPS is VND 5,852.
• Our current target price is VND 33,000, offering an upside of 19% compared to the closing price of Feb 09^th, 2023. However, TCB’s advantages in the past, such as low funding cost or bond market-maker role, have been on the challenging period and would result a slowdown in its income in 2023. Therefore, market sentiment to the stock is temporary less positive than it was. We believe that as soon as the mentioned bottlenecks are released, TCB with extensive experience in retail banking will quickly recover. Investors should closely observe to see positive developments in relevant events to make investment decisions.