COMPANY ANALYSIS REPORT
Tien Phong Commercial Joint Stock Bank (TPBank) is a private joint-stock commercial bank with a medium scale. TPBank inherits modern technological advantages, market experience, and financial strength from its strategic shareholders, including DOJI Group and FPT Group. TPBank focuses on the individual customer segment, with outstanding loans accounting for over 50%, primarily for housing loans, car loans, and consumer loans.
INVESTMENT THESIS
- Credit growth has been maintained at a high level. TPBank has consistently been one of the banks allowed to grow credit at a rate higher than the industry average in recent years. With the goal of promoting credit in 2025, it is expected that TPBank will continue to be allocated a credit growth target of over 20% this year. Additionally, the forecast that the real estate and personal consumption sectors will continue to recover will help TPBank achieve this growth target.
- NIM is expected to remain stable in 2025. Although the recovery of the consumer credit sector may help improve asset yields, with (1) maintaining low interest rates to support customers according to the direction of the State Bank (2) capital costs may increase due to pressure from tight liquidity and fundraising costs may increase slightly, we believe that the bank's NIM will remain equivalent to the level of 2024 (3.5%).
- Asset quality continues to improve. Asset quality will improve slightly in 2025 due to (1) the continuous decline in Group 2 debt ratio in the past 6 quarters, reducing the pressure on increasing bad debt; (2) improvements in business operations and consumer demand in 2025; and (3) continued consolidation of the balance sheet through debt write-offs and provisioning. The NPL ratio in 2025 is expected to reach 1.46%.
- Non-interest income is promising. We believe that service income, investment income, and revenue from bad debt resolution will continue to perform well in 2025, with NOII reach VND5,611 billion(+9% yoy).
- 2025 Financial forecast: NII reach VND15,488 billion, total operating income reach VND21,098 billion, and pre-tax income reach VND9,120 billion (+20% yoy).
2024 BUSINESS UPDATE
TPB recorded impressive pre-tax income growth of VND2.14 trillion in Q4/2024, an increase of 239% yoy (+23.5% compared to the previous quarter), driven by non-interest income from fees, investments, and bad debt recovery. For the entire year of 2024, pre-tax income reached VND 7.6 trillion (+36% year-on-year).
- Credit grew strongly by 20.2%, reaching VND261.5 trillion, supported by recovery in retail, trade, real estate, and construction sectors.
- Asset quality improved with the ratio of bad debt and Group 2 debt decreasing by 29.2% and 14.8% qoq, respectively. The bad debt ratio decreased to 1.52%-the lowest level since Q1/2023. The bad debt coverage ratio increased to 81.5% thanks to TPB promoting the write-off of VND1.2 trillion of bad debt and provisioning of VND1.2 trillion in 4/2024.
- Total deposits increased sharply in Q4/2024 and increased by 20.2% to VND279.4 trillion, causing COF to increase by 42 basis points compared to Q3. However, due to rapid credit growth in late Q4/2024, which contributed little to interest income, NIM decreased by 44 basis points compared to the previous quarter to 3.26% in Q4/2024.
RECOMMENDATION
OUTPERFORM recommendation with a 1-year target price of VND 20,500/share and an upside potential of 21%.
VALUATION
- With a projected P/B ratio of nearly 1.0 and ROE=16%, ROA=1.52%, TPBank's valuation remains attractive. With a cautious outlook, we believe TPBank could be valued at a P/B = 1.2—its average P/B over the past three years—equating to a one-year target price of VND20,500.
- Risks: (1) Consumer credit recovers more slowly than expected; (2) Bad debt increases, provisioning costs are higher and bad debt handling is more difficult; (3) Interest rates remain lower than expected.
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