According to statistics of Vietnam Technological and Commercial Joint Stock Bank (TCB), by the end of September 2019, the total outstanding home loans of the bank reached 81 trillion dong, up by 52 percent over the beginning of the year and up by 67 percent over the same period of last year. Meanwhile, the average growth in the period of 2015 2018 was 24%.
Techcombank’s interest income from home loan customers in nine months was 4.435 trillion dong, up by 38 percent over the same period of last year. The value of home loan disbursement in nine months was 52.9%, up by 221 percent compared to the same period of 2018.
In the recent report, analysis team of Saigon Securities Incorporation (SSI Research) estimated that about 36 trillion dong, equivalent to 68 percent of the home loans disbursed of Techcombank in the first nine months of the year were used to expand newly launched property projects of Vingroup, such as Ocean Part and Smart City in Hanoi and Grand Park in HCM City.
SSI also stated that Techcombank’s promotion of personal home loans has raised the average Net Interest Margin (NIM) of personal loans from 6.3 percent to 6.9%. Meanwhile, the average NIM of loans to small and medium-sized enterprises (SMEs) declined from 5.23 percent to 4.76%.
With three Vincity projects including Ocean Part and Smart City in Hanoi (opened for sale in the fourth quarter of 2018) and Grand Park in HCM City (opened for sale in June 2019), SSI Research estimated that the demand for home loans of Techcombank would fluctuate from 80 trillion to 120 trillion dong in the period of 2019 2020. In particular, TCB has many opportunities to expand loans to buy properties of projects.
According to SSI’s estimates, the proportion of personal loans of total outstanding loans will increase to 45 percent and 48 percent in the next two years, raising the NIM from 4.02 percent in 2018 to 4.48 percent in both 2019 and 2020. The Net Interest Income (NII) is estimated to rise by 30.2%/ 15.2 percent year-on-year.
Regarding non-interest income, SSI believed that the net income from fees may increase by 1.1%/15 percent year-on-year. This growth is lower in 2019 due to the lower base in 2018, especially when the fee income from bond guarantee services increase with a large amount of corporate bonds guaranteed as mentioned in the previous report.
The fee income from bancassurance is estimated to continue growing strongly by 36 percent in the next two years compared to 2018.
SSI Research also expected the Cost Income Ratio (CIR) to remain stable at 33.5 percent in 2019 and 2020, equivalent to the previous comparison in 2018.
Techcombank’s bad debt ratio is estimated to be unchanged at 1.75 percent in 2019 and 2020. The increase of credit expenses is estimated to decline from 1.15 percent in 2018 to 1.03 percent in 2019 and 0.93 percent in 2020, partly thanks to the prudent credit management of the bank.
Thereby, SSI Research estimated Techcombank’s pre-tax profit in 2019 2020 period to respectively reach 12 trillion dong (up by 12.7 percent over 2018, or up by 23 percent if excluding the 894 billion dong from TechcomFinance) and 14.080 trillion dong (up by 17.3 percent compared to 2019).
