TPBank Stock Outlook: Digitalization, CASA and Valuation Highlights

According to a report from Mirae Asset, in the first quarter of 2025, Tien Phong Commercial Joint Stock Bank (TPBank, code: TPB) recorded a 15.3% increase in pre-tax profit over the same period, reaching VND 2,109 billion, mainly due to a sharp decrease in provision expenses.

TPBank achieved total operating income (TOI) of VND 4,482 billion, down 4.3% over the same period last year. Net interest income remained almost flat at VND 3,384 billion as net interest margin (NIM) decreased to 4.4% (compared to 5.2% in the first quarter of 2024). Non-interest income decreased by 65% to VND 189 billion, mainly due to losses from gold and foreign currency trading activities as well as a sharp decrease in securities investment profits.

In contrast, fee income increased by 27.2% to VND910 billion thanks to the main contribution from payment services, helping to limit the decline in total non-interest income. Pre-tax profit reached VND2,109 billion, up 15.3% mainly due to a 59% decrease in credit risk provision expenses to VND490 billion.

Credit growth in the quarter reached 3.9% compared to the beginning of the year, while deposit mobilization decreased by 4%. TPBank continued to reduce the size of its corporate bond portfolio, bringing the proportion of corporate bonds/total assets to 2.15%, a lower level than many banks in the same industry.

Asset picture and indicators

TPBank's non-performing loan (NPL) ratio increased to 2.27%, the highest level since the end of 2023 and almost reaching the industry average (2.5%). The non-performing loan coverage ratio (LLR) decreased sharply to 57.1% (compared to 81.3% at the end of 2024), reflecting the pressure on provisions in the coming time. The largest loan was to Novaland (NVL) with an outstanding balance of VND 3,100 billion, accounting for 1% of the total credit portfolio. This loan is secured by the Grand Manhattan project in Ho Chi Minh City, but still needs to be monitored due to the general risk of the unstable real estate market.

The credit structure in the first quarter of 2025 has shifted positively, with lending to manufacturing enterprises increasing by 20%, construction increasing by 65%, and transportation increasing by 58%. Meanwhile, personal lending only grew by 2.1%. Continuing to narrow the corporate bond portfolio is in line with the risk control orientation set out in the context of many fluctuations in the asset market.

Mirae Asset's report recommends "BUY" TPB shares with a target price of VND 17,300/share, with a potential increase of 17% compared to the present, and a projected P/B valuation in 2025 at 1.25x - 15-20% lower than the average of the private banking group.

TPBank stands out thanks to its digital advantages, successfully building the LiveBank ecosystem, Mobile Banking, integrated solutions to help 98% of transactions be conducted via digital channels. The CASA ratio reached 21.8%, among the highest in the industry (industry average: 15.1%). Projected ROE in 2025 reached 17%, capital adequacy ratio CAR around 12.4%. Dividend yield in 2025 is expected to be over 7% with 10% in cash and 5% in bonus shares paid in the first quarter of 2025.

TPBank customers have up to 3 channels to update biometrics. With a single update on the app, at the counter or at LiveBank 24/7 points, customers can quickly perform subsequent transactions at any channel with their registered facial recognition.

Mr. Nguyen Hung - General Director of TPBank shared: “With the motto of understanding and focusing on customers, TPBank always starts from the core to focus on solving needs and modernizing customer experiences. Currently, our internal UI/UX design team can easily and confidently build processes, products or develop features 5-6 times faster than before, significantly improving operational efficiency and service flexibility, synchronizing across all channels of the bank”.

In the private banking group, TPBank has a prominent shareholder structure: DOJI holds 5.93%, FPT 6.8% and large domestic and foreign organizations. Although the operating cost (CIR) in the first quarter of 2025 increased slightly, the digitalization strategy is still helping the bank control costs well compared to the system average and maintain long-term competitiveness.