Efficient and transparent business, Moody's rated Ba3 credit, stable outlook for TPBank

With effective business performance indicators in the first half of 2022 and a strategy of revenue diversification, Moody's expects TPBank's profitability to improve in the next 12-18 months.

Continuously receiving good news from Moody's

Moody's Investors Service (Moody's) has just upgraded the credit rating of Tien Phong Commercial Joint Stock Bank (TPBank) to Ba3, stable outlook. This is a high rating from Moody's and only a few banks in Vietnam have been upgraded in this assessment.

This move was made after Vietnam's long-term national credit rating was raised from Ba3 to Ba2. Accordingly, TPBank is one of the 9 banks to raise the level of long-term domestic and foreign currency deposits to Ba3, up 1 place compared to the previous rating. The bank's counterparty risk rating was left unchanged at Ba3 and the outlook was changed to stable to reflect a balance of risk factors that could impact the rating.

Moody's representative said, this rating is evaluated based on 5 important criteria groups including liquidity, profit, bad debt ratio, equity and tangible asset financing. In which, 4/5 of TPBank's target groups are at a high level, in the top of the banking system.

Thus, in less than 1 month, TPBank has continuously received good news from Moody's when it was rated as high as 2 times. This reflects Moody's recognition of positive macroeconomic indicators, along with improvements in asset quality, good risk control and profitability of TPBank over the past time.

Outstanding growth momentum

TPBank is currently one of the banks with the best profitability and risk management ratios. In 2022, the bank sets a profit before tax target of VND 8,200 billion, an increase of 36% over the same period, demonstrating the confidence and high determination of the Bank's Board of Directors.

Overcoming many fluctuations in the international financial market and escalating inflation in many countries, the limitation of credit room and the initial recovery after the pandemic, by the end of the first half of 2022, TPBank reached the top 12. banks have the best growth in profit with 6 months' accumulated profit of 3,788 billion dong, up 26% over the same period. TPBank's total assets reached more than 310 trillion VND, completing nearly 89% of the target plan. Asset quality remained stable with a bad debt ratio of 0.85% and a bad debt coverage ratio of 162% at the end of the second quarter.

According to Moody's, TPBank's profitability has improved significantly since 2016, mainly driven by strong growth in the bank's core income before stabilizing in 2021 and first quarter of this year. Moody's also expects TPBank's asset quality to remain stable and profitability will improve in the next 12-18 months.

In the 5-year period from 2017 to 2021, TPBank's capitalization has been significantly improved thanks to the form of stock dividend payment. The bank has increased its charter capital by VND5.1 trillion from private placement and share issuance in 2021. Previously, the bank also increased capital in 2018 and 2020 from new and existing shareholders, showing the trust of shareholders to the bank. By the end of June 2022, TPBank's ROE ratio reached over 22% and is expected to continue to increase in the fourth quarter.

Business strategy sensitive to market movements

During the period when many banks were limited by the credit room, TPBank came up with a quick business strategy to promptly adapt to the new situation such as actively collecting debts and selecting loan customers. The bank has diversified its revenue structure and reduced its dependence on interest income by increasing fees through insurance revenues. In the financial statement for the first half of 2022, the bank's insurance income reached VND 494 billion, up 11.15% over the same period.

In addition, the bank has chosen to reduce a large amount of corporate bond balance to create more room for new loans of individuals and businesses. This is considered a wise and quick strategy to market movements.

Along with strategies to boost profits, TPBank also constantly improves its ability to cope with risks, affirming its commitment to transparency and sustainable development. Although the State Bank of Vietnam has not yet issued a mandatory regulation to comply with Basel III, TPBank has completely met all the strict regulations of this set of standards. Specifically, as of July 31, 2022, TPBank's tier 1 capital ratio according to Basel III was 11.4%, while the capital adequacy ratio (CAR) was 12.49%, much higher than the current level requires at least 8% of the State Bank.

Recently, the Business Analysis Department - Vietstock Consulting Department has made positive comments about TPB stock: "With an equivalent weight between Market Multiple Models (P/E and P/B) with the same revenue model. With surplus income (RIM), we calculate TPB's fair valuation at VND37,628. Thus, if the market price is still below 30,000 VND (about 20% discount from the valuation value), investors can completely buy in for long-term investment goals.”

TPBank has just been recognized by Forbes as one of the 50 best listed companies in 2022 and among the top 7 listed banks in Vietnam. To achieve this result, TPBank has built a solid buffer of internal resources, established a sustainable growth momentum, strong growth in capital scale, and maintained safety and performance indicators among the group market leader.