Credit growth is higher than industry average, HSC is optimistic about TPBank's prospects

According to the latest report of HSC, in the face of general difficulties, TPBank's credit growth is still higher than the industry average thanks to the support from the high CAR ratio and well-balanced loan structure.

HSC Securities Company has just released the latest report on Tien Phong Commercial Joint Stock Bank (TPBank; MCK: TPB). After reviewing the bank's first-quarter business results, along with recent changes in regulations and interest rate cuts, HSC's experts have made new forecasts for the 3-year business situation. to TPBank.

Accordingly, HSC kept TPBank's 2025 profit forecast, while slightly reducing its credit growth and NIM in the period of 2023 - 2024 in the face of macro difficulties. TPBank's credit growth is forecast by HSC at 16% this year, lower than the initial forecast of 18%. However, 16% is still higher than the industry average (the State Bank assigned credit growth of the whole system at 14%). TPBank's NIM may decrease slightly to 3.98% in 2023, but then recover to 4.13% (2024) and 4.3% (2025).

In fact, according to the General Statistics Office, as of June 20, 2023, credit growth of the whole banking system only reached 3.13%, much lower than the rate of 8.51% in the same period last year. last year. Credit demand remains low and is forecasted to continue in the second half of this year. Meanwhile, the cost of capital mobilization remained at a high level due to the high deposit interest rate at the end of 2022.

HSC said that thanks to a solid capital buffer, TPBank still recorded positive growth results. “TPBank's credit growth is higher than the industry average thanks to its high CAR (13%) and well-balanced loan structure (Enterprise: 11%, SME: 30%, Retail: 59%)”, the HSC report stated.

It is known that TPBank's capital adequacy ratio (CAR) reached 12.65%, much higher than Basel II's minimum requirement of 8%, among the highest in the industry. The high CAR ratio also allows TPBank to be one of the first banks to deploy a cash dividend earlier this year, at a rate of 25%. Because even after paying dividends, the bank's CAR is still more than enough to meet the requirements of regulations, and continues to aim at the leading group.

TPBank is also predicted by HSC to have significant recovery steps in the financial year 2024-2025. Average annual return (CAGR) 2024-2025 is forecast to reach about 20.5%, ROE will maintain at 20-21% in the period 2023-2025. From next year, TPB's main businesses will recover. In particular, the period 2024-2025 will see an improvement in income and asset quality.

Previously, in 2022, TPBank's ROE ratio reached 21.5%, higher than the industry average (including 14 banks in HSC's observation list). This ratio may drop to 19.8% in 2023 due to market fluctuations, but will rebound to 21.3% in 2024.

In fact, from the beginning of the year until now, responding to the Government's call, TPBank has proactively sacrificed profits, made many consecutive interest rate cuts along with many special interest rate incentive packages for those who have not been able to pay their bills. new and old loans of both individual and corporate customers. Deposit interest rates were also adjusted down to pre-COVID-19 levels.

HSC believes that TPBank's net fee income can still grow strongly, helping the bank to limit the impact of the contraction in total operating income. Specifically, HSC forecasts TPBank's fee income to grow by 26.8% in 2023 and 24.4% in 2024, up 0.2 percentage points from the previous forecast.
According to HSC's estimates, TPBank will cut credit costs from 1.40% to 1.19% in 2023 and continue to cut about 0.3% annually in the next two years due to Decree 08 and Circular No. 02 allows troubled borrowers to refinance or extend the term and reduces the risk of provision/bad debt for banks. In addition, the real estate market also began to show positive signs thanks to the Government's shift with more supportive policies.

On the stock exchange, HSC experts said that TPB is still quite attractive. “From the beginning of the year until now, TPB has always shown positive signals. TPB's share price increased by 22% compared to the beginning of the year, higher than the average increase of 20% of other commercial joint stock banks on the floor. TPB's 1-year P/B is currently 1.04 times, 10% higher than the average of joint stock commercial banks of 0.95 times (this difference has not changed over the past 12 months). This TPB result reflects a broad industry-wide recovery.”
In today's session (July 18), TPB matched orders at a record high, 4 times the 15-day average volume, helping the price temporarily increase by 3.56%.

In the latest report, HSC raised its target price for TPB by 6% and forecast TPB's 2023 P/B at 1.24x. TPBank's earnings per share (EPS Growth rate) is also forecasted to increase sharply by nearly four times next year.