Techcombank, trading under the ticker TCB on the Ho Chi Minh Stock Exchange, is a leading commercial bank in Vietnam. Established in 1993, Techcombank offers a wide range of financial services, including commercial, retail, and investment banking.
The Vietnamese financial market experienced significant turbulence in late 2022, primarily driven by persistent high inflation and a widespread slowdown in the real estate sector. In response to this challenge, Techcombank shifted its credit portfolio from large corporations to individuals.
As a result, consumer credit witnessed an increase of approximately 51 percent, while corporate bonds experienced a decline of 4.5 percent in value compared to 2021. In 2022 the company recorded a slight increase in both pre-tax profit and total operating income year-over-year.
The stock price, however, experienced a 60 percent fall from February to November, 2022. This decline was primarily attributed to a downturn in the real estate market and tied to broader challenge facing the Ho Chi Minh City Stock Exchange. Of note, the VN-Index, experienced a fall of 38 percent from April to November 2022.
In 2023, pre-tax profit and total operating income went on to decline by 10.5 percent and 1.2 percent year-over-year, respectively, mostly due to rising interest costs on deposits outpacing income from lending. This was common among many banks that had aggressively mobilized capital at high interest rates in late 2022 but subsequently struggled to lend after the housing bubble bursting in October of that year. That said, 2023 was a better year, with the stock price rising 45 percent from November 2022 to December 2023.
Furthermore, in the first half of 2024, a more stable macroeconomic environment coupled with rebounding credit demand created better conditions for the banking sector. The bank‘s pre-tax profit surged by 38.6 percent, while total operating income increased by 37.9 percent year-over-year.
In the second half of 2024, credit growth is expected to accelerate with deposit interest rates unlikely to decrease further, according to Tuan Doan, Head of Research & Investment of FIDT, an investment consulting and asset management firm. Credit growth will be driven by factors such as public investment, a recovery in retail credit due to increased home loan activity, and a sustained low-interest rate environment.
Disclosure: The author does not have any financial interest in TCB stock.