Update TCB – Outperform

TECHNOLOGICAL COMMERCIAL JS BANK (TCB)

We raise our 1-year target price by 1.6% to VND38,300/share, driven by (1) rolling forward our target price to October 2027 and (2) a 2.6% upgrade to our 2027F EPS forecast, partly offset by a 14.6% decline in TCX’s share price, which lowers the revaluation value of TCB’s investment in TCX. We downgrade our recommendation from BUY to OUTPERFORM as TCB’s share price has risen 19.4% since our previous report.

In 9M26, PBT reached 77.1% of the AGM target and 77.4% of our previous forecast. We raise our 2026F PBT forecast by 3.4% to VND38,596bn (+18.6% y/y) and our 2027F PBT forecast by 4.4% to VND43,661bn (+13.1% y/y).

3Q26 earnings were positive. PBT reached VND10,375bn (+25.8% y/y, +7.3% q/q), driven by solid NII growth (+17.9% y/y, +8.7% q/q) and low provisioning expenses (-38.8% y/y).

Credit growth slowed (+1.3% q/q, +16.7% YTD) as TCB had nearly exhausted its credit growth quota. The bank scaled back its outstanding corporate bonds (-9.0% q/q) and real estate business lending (-3.7% q/q).

NIM continued to recover (+11 bps q/q) to 3.86%, thanks to repricing lending rates and loan mix shifted to higher-yielding products such as unsecured loans, while a high CASA ratio helped limit the impact of higher deposit rates on COF.

NFI was solid (+13.2% y/y) thanks to gains on investment securities and FX. Fee income remained strong (+59.5% y/y, -1.3% q/q), driven by payments and bancassurance, offsetting slower L/C activity. Recoveries from written-off loans stayed weak (-73.6% y/y) due to illiquid real estate market.

Opex rose sharply (+17.9% y/y, +14.6% q/q) due to headcount and IT expansion, pushing CIR up to 31.9% (average CIR of the previous four quarters: 30.8%).

Asset quality deteriorated. NPL ratio rose 19 bps q/q to 1.27% and Group 2 loan ratio rose 21 bps to 0.88%, mainly from retail and SME customers. Overdue loan formation rose to 0.52% per quarter, the highest since 1Q24; NPL coverage ratio fell to 107% (2Q: 126%). We forecast 2027F credit costs at 0.45% (flat vs. 2026F) as new NPL formation slows.

We raise our 2027F PBT forecast by a further 4.4% to VND43,661bn (+13.1% y/y) on an improved NIM of 3.81% and credit costs held at 0.45% (previously 0.6%). We maintain our target P/E of 7.0x on 12-month forward EPS, implying VND31,700/share; adding the revaluation value of TCB’s investment in TCX of VND6,580/share, we arrive at a 1-year target price of VND38,300/share.