{"id":55302,"date":"2020-04-17T10:42:39","date_gmt":"2020-04-17T03:42:39","guid":{"rendered":"https:\/\/yuanta.com.vn\/?post_type=phan-tich&#038;p=55302"},"modified":"2020-06-26T15:33:02","modified_gmt":"2020-06-26T08:33:02","slug":"tcb_management-dicusses-covid-19-impact","status":"publish","type":"phan-tich","link":"https:\/\/yuanta-uat.ysvn.com.vn\/en\/analysis\/tcb_management-dicusses-covid-19-impact","title":{"rendered":"TCB_Management dicusses Covid-19 impact"},"content":{"rendered":"<p><strong><span style=\"font-size: 14pt\">Management dicusses Covid-19 impact<\/span><\/strong><\/p>\n<p>TCB held a meeting on Apr 16 to discuss the business impact of Covid-19. Management emphasized the bank\u2019s strong balance sheet and liquidity position. However, TCB provided few new details beyond a discussion of what we already knew from their 4Q19 results.<\/p>\n<p><strong><span style=\"font-size: 14pt\">Key Takeaways<\/span><\/strong><\/p>\n<p><strong>TCB\u2019 emphasized its strong balance sheet and liquidity position<\/strong>, which will allow it to weather the impact of the pandemic vs. peers.<\/p>\n<p><strong>Strongest capital<\/strong> <strong>level and lowest leverage<\/strong>. TCB is well-capitalized with CAR (Basel II) of 15.5% in 2019 (+90bps YoY). Management emphasized that this is the highest capital level among banks in Vietnam (but we knew this already, as discussed in the <a href=\"http:\/\/yuanta-uat.ysvn.com.vn\/wp-content\/uploads\/2020\/02\/TCB_Analyst-Meeting-Takeaways_26.02.20.pdf\">4Q19 analyst meeting<\/a>). TCB also has the lowest leverage ratio (6.2x in 2019) among banks in Vietnam.<\/p>\n<p><strong>Manageable exposure to hard-hit sectors.<\/strong> TCB stated that its loan exposure to highly-affected sectors (i.e., hospitality, travel, and construction) was only 10% of the total loan book at 2019, and lending to SMEs accounted for 19% of the total loan book in 2019.<\/p>\n<p><strong><span style=\"font-size: 14pt\">Our view<\/span><\/strong><\/p>\n<p><strong>We believe that impact of the pandemic and recent <\/strong><a href=\"http:\/\/yuanta-uat.ysvn.com.vn\/wp-content\/uploads\/2020\/04\/Banks-to-cut-service-fee-and-delay-cash-dividend_Express-Note.pdf\"><strong>SBV\u2019s policies<\/strong><\/a><strong> will hit hard across the bank sector.<\/strong> Credit growth, NIM, and fee income are all under pressure, while provisoning and NPLs are likely to jump.<\/p>\n<p><strong>Thus, we suggest that investors focus on quality <\/strong>in terms of balance sheet and liquidity strength. TCB persistently ranks highly in our CAMEL rating (see <a href=\"http:\/\/yuanta-uat.ysvn.com.vn\/wp-content\/uploads\/2020\/02\/Banks_CAMEL_07.02-2019_Updated.pdf\">4Q19 CAMEL <\/a>note for details).<\/p>\n<p><strong>Strong funding franchise. <\/strong>TCB\u2019s CASA deposit ratio was 34.5% (+5.8ppt YoY) vs. peers\u2019 median of 14.1% at end-2019, which was just behind <a href=\"http:\/\/yuanta-uat.ysvn.com.vn\/wp-content\/uploads\/2020\/04\/MBB_Company-Update_14.04.2020.pdf\">MBB (BUY<\/a>) and the 2<sup>nd<\/sup> highest in the sector. A high level of CASA deposits may help to cushion profitability.<\/p>\n<p><strong>Robust liquidity<\/strong>. Short-term funding used for medium-to long-term loans was 38.4%, complying with the 2019 required minimum of 40.0%. LDR ratio was 76.3%, well below the SBV\u2019s requirement of 85%.<\/p>\n<p><strong>Valuation is low despite low leverage and high profitability<\/strong>. Based on Bloomberg consensus for 2020E, TCB trades at 0.8x P\/BV vs the sector median of 0.9x. Its 2019 ROAE of 17% was below the sector\u2019s 18%, but ROE is constrained by low balance sheet leverage and therefore ROA may be a better indicator of its profitability relative to peers. TCB\u2019s 2019 ROA was 2.86%, well above the sector\u2019s 1.23%.<\/p>\n<p><strong>We don\u2019t cover TCB and have no recommendation on the stock<\/strong>. However, we believe this is the time for investors to focus on quality. Our top pick in the sector remains <a href=\"http:\/\/yuanta-uat.ysvn.com.vn\/wp-content\/uploads\/2020\/03\/VCB_Company-Update_03.27.2020.pdf\">VCB (BUY)<\/a>.<\/p>\n<p>Please access here for the full report: <a href=\"http:\/\/yuanta-uat.ysvn.com.vn\/wp-content\/uploads\/2020\/04\/TCB_Express-Note_17.04.20.pdf\">TCB_Express Note_17.04.20<\/a><\/p>\n<p><strong>Analyst: Tanh Tran,<\/strong>\u00a0<em>tanh.tran@yuanta.com.vn<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Management dicusses Covid-19 impact TCB held a meeting on Apr 16 to discuss the business impact of Covid-19. Management emphasized the bank\u2019s strong balance sheet and liquidity position. However, TCB provided few new details beyond a discussion of what we already knew from their 4Q19 results. Key Takeaways TCB\u2019 emphasized its strong balance sheet and&#8230;<\/p>\n","protected":false},"author":10,"featured_media":0,"template":"","class_list":["post-55302","phan-tich","type-phan-tich","status-publish","hentry"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.3 (Yoast SEO v23.4) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>TCB_Management dicusses Covid-19 impact | Yuanta Vietnam<\/title>\n<meta name=\"description\" content=\"Management dicusses Covid-19 impact TCB held a meeting on Apr 16 to discuss the business impact of Covid-19. 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