Buzz
1. TCB Has Never Paid Dividends to Shareholders
Explaining the decision not to pay dividends, Mr. Hồ Hùng Anh, Chairman of Techcombank, stated that the bank prefers to retain profits to strengthen its capital base, meet the State Bank of Vietnam's capital requirements like Basel II, and increase competitiveness in the market.
He also emphasized that investors seeking short-term gains should not invest in Techcombank. Instead, long-term investors with a 3-5 year horizon should consider this opportunity. Notably, this marks the 8th consecutive year the bank has chosen not to distribute dividends.
Opting not to pay dividends is undoubtedly a factor that has contributed to the rising value of TCB's stock over time.
2. TCB Stocks Are Gradually Recovering Post-Covid-19 Pandemic
TCB shares hit their daily ceiling for the second consecutive session, becoming one of the strongest rebound stocks since the March lows. It is also among the stocks closest to reaching pre-Covid-19 levels. Compared to the low point on March 30, TCB has surged nearly 35.6%, and it is now only 16.5% away from its price on January 22, before the pandemic's impact was fully reflected in the market.
Currently, the pace of TCB's stock growth has slowed, as retail investors begin to lock in profits. While the stock value may shift slightly, the overall change will likely remain minimal.
3. Competitive Advantage
TCB has several distinct competitive advantages that serve as a strong foundation for continued growth in the years ahead. For example, the bank maintains strong partnerships with major corporate clients such as Vingroup, Masan, and Vietnam Airlines, as well as in the telecom, food, and beverage sectors. These businesses have a large customer base that TCB can leverage. In addition to providing home loans, contractor loans, and distribution loans within the ecosystems of these major clients, TCB also has the ability to offer cross-sell products like credit cards and car loans to these customers.
Furthermore, Techcom Securities (TCBS) is a leading securities company in Vietnam, specializing in advisory and brokerage services for the corporate bond market, which has substantial growth potential. Most of the bond issues are distributed to clients within TCB's ecosystem, helping the bank reduce risks while maintaining stable income from underwriting and bond distribution fees.
Additionally, TCB is known for its proactive approach in building a robust technological platform, with plans to invest $324 million in technology by 2021. This investment positions the bank for significant advantage in the context of the ongoing 4.0 industrial revolution.
4. Strong Business Performance
In terms of business performance, Techcombank has shown impressive growth across various key metrics. By the end of Q1 2020, the bank’s revenue reached VND 6,030 billion, a 37.3% increase compared to Q1 2019. Net profit after tax was VND 2,506 billion, up 19.8% year-on-year. These results have attracted significant investor attention.
Specifically, net interest income totaled VND 4,212 billion, an increase of 22.8% compared to Q1 2019. Service income reached VND 862 billion, a 73.1% rise year-on-year, contributing 14.3% to total revenue, compared to 11.3% in Q1 2019, with significant contributions from bond issuance guarantees.
Operating costs in Q1 2020 were VND 2,138 billion, with a cost-to-income ratio of 35.4%, improving from 36.6% in the same period last year and 35.3% in Q4 2019. The bank's provisioning costs for Q1 2020 rose to VND 772 billion, compared to VND 167 billion in Q1 2019, reflecting the bank's cautious approach in building provisions to handle bad debts.
As of March 31, 2020, total assets reached VND 391.8 trillion, up 20.1% year-on-year and 2.1% from the end of 2019. Total outstanding loans for customers reached VND 265.4 trillion, a 22.5% increase compared to the same period last year and 2.9% from the end of 2019.
The bank maintains strong liquidity with a loan-to-deposit ratio of 76.8%, and a short-term to medium-long term loan ratio of 30.7%, improving from 38.4% at the end of 2019. TCB also holds a strong capital position with a Basel II capital adequacy ratio (CAR) of 16.6%, more than double the minimum requirement of 8%, and higher than 15.5% at the end of 2019.
As of March 31, 2020, the bank's non-performing loan (NPL) ratio stood at 1.1%, lower than 1.3% at the end of 2019 and 1.8% at the end of Q1 2019. The bank's coverage ratio for NPLs was 117.9%.
In terms of operational efficiency, the bank has consistently maintained stable profit growth each quarter. Compared to other top banks, TCB has been a leader for several years, with impressive profitability metrics such as NIM (Net Interest Margin) and ROE (Return on Equity).
