Digital Transformation And Diversification Will Shape Banking Future

Key Takeaways

• Rapid digital transformation, diversification, and Vietnam's economic growth position Techcombank for sustained retail and corporate expansion, improved margins, and greater earnings stability.
  
• Regulatory modernization and sector liberalization enable the bank to efficiently capture market share, boost profitability, and strengthen its leadership through innovation and capital deployment.
  
• Rising competition, regulatory pressures, credit risks, sector concentration, and external macro volatility threaten revenue stability, profitability, and long-term growth prospects.

Catalysts

Provides personal and corporate banking products and services in Vietnam and internationally.

• Vietnam's ongoing economic growth, rapid urbanization, and the emergence of a larger middle class are accelerating demand for housing, consumer finance, and banking services, enabling Techcombank to capture robust retail loan growth and cross-sell to a fast-expanding affluent customer base-supporting future revenue and net margin expansion.
  
• Accelerating digital transformation and high adoption of Techcombank's best-in-class digital platforms (e.g., Auto-earning 2.0, digital transaction volume growth of 28% YoY, and continued leadership in CASA and transaction banking) position the bank to further lower its cost-to-income ratio and increase fee-based income, directly benefiting net margins and long-term earnings growth.
  
• Sustained inflows of foreign direct investment (FDI), Vietnam's integration into global supply chains, and rising business activities are expanding demand for corporate banking, trade finance, FX, and investment banking services, with Techcombank set to grow high-margin fee and interest income-fueling future top-line growth.
  
• Ongoing diversification across retail (27% YoY loan growth), SME, and wealth management (with AUM up 48% and affluent customers up 73% YoY) aligns the bank with high-growth segments, reduces concentration risk (e.g., in real estate), and enhances revenue stability and earnings quality over the long term.
  
• As Vietnam continues to modernize its regulatory environment and promotes financial sector liberalization, innovative and well-capitalized banks like Techcombank are positioned to gain market share, efficiently deploy capital, and benefit from improved profitability and higher return on equity.

Vietnam Technological and Commercial Bank Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Vietnam Technological and Commercial Bank's revenue will grow by 28.2% annually over the next 3 years.
• Analysts assume that profit margins will shrink from 50.2% today to 46.2% in 3 years time.
• Analysts expect earnings to reach ₫41225.9 billion (and earnings per share of ₫5278.0) by about August 2028, up from ₫21267.9 billion today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 9.3x on those 2028 earnings, down from 13.0x today. This future PE is lower than the current PE for the VN Banks industry at 10.0x.
• Analysts expect the number of shares outstanding to grow by 0.28% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 12.45%, as per the Simply Wall St company report.

Vietnam Technological and Commercial Bank Future Earnings Per Share Growth

Risks

• Intense competition in Vietnam's banking market is driving persistent net interest margin (NIM) compression, with management guiding that NIM is now likely to remain below 4% and under ongoing pressure due to pricing competition; this could structurally limit revenue and net margin expansion over the long term.
  
• High and increasing reliance on retail lending, with retail loan growth of 27% year-on-year and significant expansion in higher-margin segments like personal installment and SME/merchant loans (+76% YoY), exposes the bank to higher credit risk and potential spikes in non-performing loans (NPLs) during economic downturns, which could increase credit losses and lower net earnings.
  
• Techcombank maintains substantial exposure to the real estate sector (currently 59% of the corporate book), and although the market in the North remains strong, ongoing muted conditions in South (Ho Chi Minh City), very high property prices, and limited affordable housing could restrict growth and elevate asset quality risk, potentially leading to earnings volatility from provisioning spikes.
  
• Structural regulatory and accounting changes are directly impacting key fee businesses (e.g., L/C Upas, CAR business, cards revenue recognition), and further regulatory tightening in the sector (e.g., on capital adequacy, consumer protection, and sector concentration) could materially increase compliance costs, constrain leverage, and weigh on overall return on equity and profitability.
  
• Persistent FX volatility and external macro risks-including U.S.–Vietnam trade tariff policy uncertainty, continued USD strength due to global interest rate differentials, reliance on FDI, and high domestic leverage-could create long-term funding or liquidity challenges and expose the bank to sector-wide asset quality deterioration, thereby affecting revenue stability and profit growth.

Valuation

• The analysts have a consensus price target of ₫38007.429 for Vietnam Technological and Commercial Bank based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of ₫50000.0, and the most bearish reporting a price target of just ₫29100.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be ₫89262.8 billion, earnings will come to ₫41225.9 billion, and it would be trading on a PE ratio of 9.3x, assuming you use a discount rate of 12.4%.
  
• Given the current share price of ₫39000.0, the analyst price target of ₫38007.43 is 2.6% lower. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.