Business performance plummets, red warning from EPS and ROE indexes
TPBank used to be proud of its stable EPS (earnings per share) of over VND4,000 in 2020. But by 2023, this figure had dropped by nearly 45% to only VND2,315. By the third quarter of 2024, EPS continued to fall to VND2,205, marking a deep and prolonged decline.
Not only stopping at EPS, ROE (return on equity) - an important indicator reflecting the bank's profitability - also decreased sharply from 23.54% (2020) to 13.74% (2023) and continued to decrease to 3.85% in the third quarter of 2024.
These figures not only raise questions about TPBank's capital efficiency, but also make investors wonder about the bank's growth strategy.
Bad debt increases
TPBank's non-performing loan (NPL) ratio in 2023 increased to 1.56%, nearly double that of 0.84% in 2022. In particular, the NPL coverage ratio decreased to 83.7%, showing that the bank is facing a major challenge in handling credit risks.
While credit growth is expected to reach nearly 28% in 2023, credit quality is an issue that needs to be urgently addressed. The increase in credit risk provisions from VND1,843 billion (2022) to VND3,946 billion (2023) shows that this pressure is increasing.
Revealing weaknesses in the structure of mobilized capital
TPBank's capital structure revealed weaknesses when demand deposits (CASA) decreased from 16.6% (in 2022) to 15.6% in 2023. By the end of the third quarter of 2024, the CASA ratio continued to decrease to 14.8%, showing strong competition in attracting low-cost capital.
The decline in CASA reflects the growing reliance on high-interest term deposits, which increases funding costs and directly impacts profit margins.
Stock Investing: A Double-Edged Sword
TPBank's securities investment activities in recent years have shown both opportunities and challenges. In 2023, net profit from securities investment reached VND855 billion, double the VND426 billion in 2022. However, increasing risk provisions for this investment portfolio has created additional financial pressure for the bank.
Total securities investment assets decreased from VND 74,376 billion (2022) to VND 65,335 billion (2023), and continued to decrease slightly to VND 61,527 billion in the third quarter of 2024. This shows that TPBank tends to reduce the proportion of securities investment in total assets, in order to better manage risks in the context of volatile financial markets.
Although the return on equity investment has grown positively, the long-term performance of this portfolio remains an unknown. This is especially important when the stock market has many unpredictable fluctuations, requiring TPBank to optimize its investment portfolio and have a reasonable contingency strategy to maintain financial stability.
For investors, this is a time to consider carefully before making decisions.
First, special attention should be paid to credit risk when the bad debt ratio increases while the bad debt coverage ratio is low, indicating that the bank's ability to cope with risks is limited.
In addition, the hot growth strategy with rapid asset growth without sustainable efficiency also has many potential risks. This requires investors to have a more comprehensive assessment of TPBank's financial indicators as well as business strategies to ensure appropriate and safe investment decisions.
