Vietnam Technological and Commercial Joint Stock Bank (TCB) Earnings Call Transcript

Good afternoon, ladies and gentlemen. Welcome to Techcombank and Techcom Securities Second Quarter 2026 Financial Results Presentation. Today's session will begin with opening remarks from Jens Lottner, Chief Executive Officer of Techcombank. Alexandre Macaire, Group Chief Financial Officer, will then provide a detailed overview of our financial results and key business updates for Techcombank. Mr. Nguyen Tuan Anh, Deputy CEO of Techcom Securities, will then share detailed insights on TCBS' performance, after which we will conclude with a Q&A session. Our management will present in English and a live Vietnamese translation is available via separate link. As usual, a dedicated Vietnamese call for retail investors will be conducted in a separate session next week. The session is expected to last approximately 90 minutes. With that, I would like to hand it over to Jens to begin the presentation on Techcombank.

Good afternoon, everyone, and thank you for joining. Let me start with the summary of the highlights. I think amidst a very competitive and dynamic environment, we continued to execute very strongly in the second quarter. And PBT stands at around VND 9.7 trillion, which is the strongest quarter 2 results, and we ever showed. Importantly, I think it's done with a very, very good quality earnings and credit growth was at 14%. NPL ratio is at 1.15% actually has reduced. Credit cost is very low. And at the same point in time, our coverage ratio actually has gone up. At the same point in time, also our funding position is very strong and CASA still is industry-leading. As well as our capital adequacy ratio, which stands at 15%, which means we have ample opportunity to continue on a growth trajectory. Probably more importantly than just looking at the quarter, I think it is important to understand that our business model proves the resilience and business model built on 3 key pillars. First is high-quality customers, very, very disciplined risk management. And last but not least, an ever-increasing financial ecosystem well beyond just banking activities. Having said that, let me hand it over to Alex, who will go in detail to explain the numbers for quarter 2. Alex?

Thank you, Jens, and good afternoon, everyone. So I will start, as usual, with a quick overview of the macroeconomic environment. So as you can see, GDP growth for the second quarter reached 8.4%, which was a positive surprise for us. The growth in the FDI disbursement and exports was also quite commendable with a growth of 22.7%, in particular for exports. So overall, the economic environment shows a lot of support for demand. The area we need to watch for is, again, liquidity. So you can see that credit increased by 8.5% across the banking system in the first half of the year, which again outstrips the growth in deposits, 5%. And as a result of that, the interbank rates and term deposits, funding costs in general remain elevated. So what we are seeing is, therefore, an environment which is clearly supportive for the economy and for demand in general, but also liquidity tightness. And then seen against this backdrop, then I would fully agree with Jens that the performance of the bank was very strong. So a record-breaking profit of VND 9.7 trillion for the first -- second quarter of the year, as Jens mentioned, we saw if we look at the first 6 months of the year, then actually the NII grew by 16.3%, helped by credit growth as well as continued asset repricing. NFI expanded by a stellar 37.6%, which shows that our fee generation engine are scaling at a very fast pace. We managed to reduce provision expenses by 24.6%, reflecting our focus on asset quality. So this is a very strong set of numbers, which shows accelerated growth coming from across our ecosystem as well as very disciplined risk management. Looking now at our first noninterest income engine, which is the Wealth Bank. As you can see, this business continued to scale at a very healthy pace. Our TOI grew 16% year-on-year. We had a very significant rebound in investment distribution between the first quarter and the second quarter. The number of affluent customers reached 300,000, which is a 45% increase year-on-year. The volume of AUMs increased almost 2x year-on-year, which is obviously quite impressive. We continue to expand our market share on equity brokerage, reaching 9.4% on the HSX and 9% of HNX. And our bond advisory market share stood at 48%. The result of that, our cost/income ratio continued to improve, reaching 32.4%, which for our Wealth Bank is extremely low and reflects the continued potential for scaling. The same comment about scale and operating leverage can be made on our Digital bank. As you can see, Digital bank TOI increased 28% year-on-year coming from cards, coming from deposits and coming from transaction banking in general. The number of digital customers increased 22% year-on-year, reaching 14.3 million. There is also outstanding activity in terms of retail transactions, around 98% of transactions are now performed entirely digitally and our cost/income ratio improved very significantly from 40% to 30% for the second quarter of the year. So this shows that our operating model as far as the digital bank is concerned is built for scale. And this remains obviously a strategic asset for us, supporting customer acquisition, customer engagement, CASA and long-term profitability. I will now turn to one of the usual concern of investors, which is the NIM. So the short-term take of this slide is that our NIM showed particularly resilient in front of the funding pressure. Our asset yields increased from 7.2% in the first quarter to 8.1% in the second quarter of the year. Cost of funds rose to 4.8% in the context of competition for liquidity and deposits, as already mentioned. But then our NIM rebounded to 3.4% on a quarterly basis. And last 12 months NIM reached 3.6%, which is in the 3.6% to 3.7% range that we target for the full year. Funding mobilization also shows good momentum with an 8% increase quarter-on-quarter and a balanced growth across all components, including obviously funding mobilization from customers. So we believe these trends are in line with our balance sheet management philosophy, which is focused on funding discipline and also directing growth towards the sectors and products which offer attractive risk-adjusted returns. Let's look now at our credit growth in a bit more detail. So our credit book reached VND 950 trillion this quarter. This is a 15% year-to-date growth, which shows significant acceleration compared to the prior year. Last year, at the same point of the year, our growth was only 11%. So we benefited this year from the opportunity to participate in the funding of national infrastructure projects, and this gave us an additional VND 20 trillion roughly of disbursements, which did not count toward our credit quota. We can also see a very nice increase in our credit yield from 7.9% in the first quarter to 8.9% in the second quarter, so showing strong asset pricing discipline as well as favorable mix dynamics. You may notice an increase this quarter in our corporate bond holdings from VND 57 trillion at the end of Q1 to VND 102 trillion at the end of Q2. You should look at this as essentially a temporary increase. Most of these bonds are at least significant part of these bonds will be distributed later either to institution or to retail customers through our specialized subsidiary, TCBS. Meanwhile, it's also good to see that the structure of our credit books continues to pivot towards short term, which gives us more flexibility in terms of our balance sheet. So the next slide will focus on sector and product mix. So we continue to see very strong resilient demand from our retail customers. As you can see, Unsecured lending is up 40% year-to-date. SME lending is up 28% year-to-date. We can also see corporate construction sector increasing 56% year-to-date, and this is linked to the investment in infrastructure, which I referred to before. We are seeing also attractive opportunities in the real estate sector, which explains why the ratio of real estate assets to total credit increased a bit this quarter to 32% from 29% in the previous quarter. However, a lot of this exposure will be distributed to retail customers or institutions in the coming quarters. And as a result of that, we maintain our objective to get this ratio of real estate assets to total credit below 30% at the end of the year. For H2, our strategy remains focused on secured lending and also infrastructure momentum as part of originate to distribute business model, which allows us to support and maximize fee generation as well as cross-selling. I know that a lot of you are interested in the situation of the real estate sector. So we will look at housing demand in Vietnam. So the short take is resilient demand, but also more selective homebuyers. So if we look at the new supply, then you can see that it's holding up very well. The absorption of this new supply is also strong, particularly in the South, the prices, both for primary as well as secondary properties are on the rise. So all this points to a favorable environment for the housing market. And if we look longer term, then our macroeconomic research team is -- continues to be very bullish on the residential market due to continued urbanization, with the urbanization rate increasing from 44% in 2025 to 50% roughly at the end of 2030, continued increase in real income and almost doubling in the number of middle-income households from 4.8 million in 2025 to 8.7 million in 2030. This obviously will expand the pool of potential homebuyers. So at the same time, if we look beyond Techcombank, I think there is no denying that the homebuyers are starting to be a bit more selective. They are not exiting the market, but they just take more time to ponder the opportunities and also gather the required down payment. You can see that our disbursements for new mortgages slowed down a bit to VND 18.6 trillion in the second quarter from VND 30.6 trillion in the first quarter. However, a large part of this decrease is driven by the absence of blockbuster project this quarter. And we expect, therefore, that the next quarter will see us go back to a level of roughly VND 30 trillion disbursements per quarter. So in other terms, for us, the real estate market is still healthy and continued to provide strong opportunities for sustainable expansion of our mortgage books. With this, I will look -- turn now to funding. So Jens mentioned it, our CASA ratio improved this quarter to 38.3%, which is also driven by 8% quarter-on-quarter increase in CASA balances. A lot of that came actually from corporate segment on the back of very strong activity in our transaction banking business. Customer funding mobilization also increased 8% quarter-on-quarter and deposit rate increased from 3.8% to 4.4% on average. I think it's worth highlighting that a lot of that is actually driven by the continued repricing of our stock of deposits. We do not intend to aggressively compete on rate with the rest of the market. Since April, we have strictly applied the instruction of the Central Bank to reduce quoted rates for 6 months and 12 months TDs by 50 basis points. And as a result of that, the average rate on our new term deposits has stayed broadly stable since April. I would also mention, obviously, that our focus is to build sustainable CASA leadership through embedded finance, through loyalty schemes through integrated transaction banking proposition and through ecosystems from SME and merchants. This is the strategy we have been pushing, and this is what has helped us reach this very high CASA ratio compared to the rest of the market. As funding pressure increases, obviously, fee income generation becomes more important. And you can see here a stellar trajectory and momentum across our ecosystem with quarterly fees reaching VND 4.2 trillion in the second half of the year. There was -- in the second quarter of the year, sorry, there was a very strong rebound in investment banking fees across bond origination and bond distribution. Our insurance fees increased 137% year-on-year on the back of the successful launch of our new insurance manufacturing subsidiary, Techcom Life. Transaction banking, letters of credit and settlement increased 147% year-on-year, reflecting the success of our structured LC products, which cater to a wide range of financing and trade-related needs. So I think this diversified broad-based fee income generation is truly what sets Techcombank apart in the banking system of Vietnam. And it also explains why we are able to generate returns on assets, which are among the highest in the Asia industry. I would briefly cover here a few ways in which we are leveraging technology in order to drive customer engagement and offer differentiated product propositions. T-Shop, our integrated propositions for household merchants and small SMEs offers full onboarding in 2 minutes and 5 years free of charge. Our SME products are able to issue guarantees within 1 hour and credit limits within 1 to 2 hours. Techcom Life, I mentioned earlier, is able to issue policies in 10 minutes, 100% paperless. Ticket size is around 4x the market average. And after only a few months of the operations, our insurance subsidiary reached the #1 position in the banca market with a 21% market share. So these initiatives, this ecosystem is obviously extremely important. It drives customer acquisition. It drives CASA. It drives high-yield lending and fees. This creates huge value for the group and underwrites the high-quality earnings growth that Jens mentioned earlier. Turning now to cost. What I would describe is continued investment -- resolute investment in the expansion of our franchise while also preserving a disciplined efficiency profile. You can see that our cost/income ratio in the second quarter of the year stood at 30.9%. And looking at the first half of the year, then it reached 29.7%, which is obviously quite low. If you look at year-on-year growth of our cost, it reached around 19% for the first half of the year and was really focused on a few areas. First, IT to support the continued scalability of our platform, investment in human capital and also marketing spending to support customer acquisition and customer engagement. Overall, AI adoption should help us continue to improve our efficiency and operating leverage. The initial results that we are seeing, in particular for software development life cycle are extremely impressive indeed. So we'll now turn to a view of the risks in our balance sheet. In short, what you can see is that the health of our credit books remains extremely solid. Our NPL stood broadly flat at 1.15%. We maintained a high coverage ratio of 125%, providing ample buffer and loss absorption. Our credit cost net of recoveries stood at 0.4%, well below the industry average. And overall, our proportion of secured loans was maintained at 89%, which obviously provides strong collateral protection. So this high-growth, high-quality business model, which is our characteristics remain, therefore, completely intact. And we will now turn to our risk formation. So I think it's relatively clear, as you can see in the bridges here that loan upgrades and loan collections more or less offset the new formation of bucket 2 and NPL. And as a result of that, the bucket 2 and NPL balances remained broadly stable during the quarter. In short, we are not seeing any signals of stress at this stage in terms of our risk formation in the credit books. The same can be said of our capital and liquidity. Jens mentioned it, capital adequacy ratio of 15% despite the payment of around VND 5 trillion in cash dividend, which is one of the highest payout in the market. Our LDR improved to 80.1% and our short-term to medium long-term loans ratio stood at 27.8%, well below on the SBV requirement. So this strength of our balance sheet clearly didn't happen by chance, but by design, it's an important strategic asset for the bank, which gives us flexibility in spite of the challenges in the environment. And this is also clearly visible on these charts, where you see very significant differentiation between Techcombank and the rest of the industry in terms of risk, in terms of efficiency and in terms of funding. For investors, I think this once again reinforces the message that we are not deviating from our objective of high-quality earnings. Moving on to the now 2026 outlook and starting with the macro environment. At the macro level, I mentioned that the performance GDP growth for the second quarter of the year surprised us on the positive side. As a result of that, we are revising our forecast for the full year to 7.9% for Vietnam. This is supported by a number of factors. First, enhanced fiscal policy and a very strong rebound, in particular, public investments as a key leadership position have been appointed. So the growth in public investment disbursement reached 208% quarter-on-quarter in Q2, and we hope this momentum to continue. Exports, I mentioned it, also very resilient, driven by also a shift towards more electronic products and also strengthened demand for AI-related technologies. And meanwhile, FDI inflows remain stable and very high, supported by macro political stability and the fact that Vietnam is more than ever a kind of poster child in Asia. With that, our forecast for the year remain bullish and aligned to the guidance we gave in AGM in April. Our credit growth should be in the same ballpark as in 2025, supported by the financing off-quota national project that was the case in the second quarter of the year already. Cost of funds will increase clearly, and there's nothing we can do about that. It's driven by the heightened deposit competition in the market. CASA ratio, we still hope to reach broadly same level as last year, which is 40%, and we have a lot of initiatives to get us there. NIM will moderate from 3.8 level -- 3.8% level in 2025, but we will manage to keep it in the 3.6% to 3.7% range I mentioned earlier. As a result of that, NII growth, obviously, will be very significant because it will be supported by NIM protection compared to 2025, where we had a significant NIM contraction. NFI growth will be very strong, supported by cross-selling from across our ecosystem. Cost/income ratio, NPL and credit cost will remain in the same ballpark as last year and towards the top of the industry. So in short, the take -- my take for the first half of the year is strong earnings quality and also disciplined growth. We are expanding the branch of the bank at a very fast pace. But at the same time, we are also protecting the returns -- protecting returns through revenue diversification through strong cost discipline as well as asset repricing. We are preserving our fortress balance sheet, and this is clearly visible in the strength of our capital, liquidity and our asset quality. And importantly, we are fully focused on execution, being CASA rebuild, credit diversification, fee scaling and productivity. And when I look at the emerging trends in Vietnam and beyond, then what I can see, as Jens mentioned, is an enormous runway, probably larger than ever with very strong reinvestment, very strong cash flow coming from the bank and very strong reinvestment capacity from just the breadth and volume of opportunities in the market. So that brings my presentation to the end. I thank you for your attention, and I'm now handing over to Tuan Anh for a presentation of TCBS results.

Thank you very much, Alex and Jens. Now I'd like to move on to the TCBS portion of the call. Today, I'll walk you through our key highlights. What's happening in the macro environment as well as the capital markets, how our business actually performed in Q2 and finally, what we expect for the rest of 2026. So let's get started. Let me start with the headline number for this quarter. Our total revenue was over VND 3.75 trillion, up 41% year-on-year. Our profit before tax is almost VND 2.1 trillion. This is our record high quarter, up 21% year-on-year. A couple of things to highlight. In bond issuance and advisory, we maintained #1 market share at 48%. We issued over almost VND 61 trillion in volume, which is up 138% year-on-year. On the stock front, we reached 9.4% record-high market share on the Ho Chi Minh Stock Exchange. This is the highest level we've ever achieved, and we maintain #3 market share. On margin lending balance, we've increased our balance to VND 51.5 trillion, which is up 17% year-to-date and up 52% year-on-year. This quarter, we welcomed 35,000 new customers, up 19% year-on-year, bringing our total customers to 1.3 million. And our stock TCX has been included in the VN30, which gives us more visibility as well as liquidity. So overall, a very strong quarter across all parts of the business. Now let's zoom out to see the environment that we're operating in. I know Alex already spoke about the macro environment, so I won't touch on to the numbers. But safe to say, we have both headwinds as well as tailwinds. In tailwinds, very strong GDP growth, a CPI that's easing off the peak, strong credit growth and very strong registered FDI. And on the headwind front, you can see that we are in a higher for longer interest rate environment with deposit rates creeping up since mid-2025. On the capital markets, the VN-index stayed strong, up 4% year-to-date. However, this is the number as of June, and the picture has changed quite a bit now. On the volume, it's VND 24 trillion per day, which is down 1% year-on-year. On the -- we saw 769,000 new security accounts opened in the quarter, which is up 32% year-on-year, bringing the total accounts in Vietnam up to 13 million. And bond issuance is the bright spot, more than doubled, increasing 113% year-on-year. There's also a market upgrade path, which by now, I'm sure most of you are familiar with. FTSE has confirmed our upgrade and the first tranche will happen in September 21 of this year and with the full inflow expected in September 2027. Looking further out, we have the CCP, which is the Central Counterparty clearing system expected to be fully operational in Q1 of 2027. And as you know, this is one of the key step towards a further upgrade from MSCI. And altogether, this is expected to bring about $1.7 billion of passive inflow into the Vietnamese market. Now let's look at how our business performed precisely in Q2. Firstly, our second quarter profit before tax rose 21% year-on-year and 44% quarter-on-quarter. Breaking down where this came from, you can see investment banking contributed about VND 837 billion. Treasury and bond distribution contributed VND 964 billion. So this one picking up speed after a slower start in the first quarter. And margin lending contributed VND 1.4 trillion and brokerage and custody, VND 69 billion. So that brings our operating income to VND 3.25 trillion. After operating expenses of VND 140 billion and financial expenses of VND 1.1 trillion, we arrived at a profit before tax of VND 2.1 trillion. Now looking at the mix, you can see that margin lending remains our core contributor at 42% bond distribution at 30% and investment banking, 26% and with the rest in brokerage, about 2%. So margin lending remains our biggest contributor. However, the whole business has become more diversified compared to 1 year ago. For the first half of the year as a whole, our profit before tax reached VND 3.5 trillion, which is up 17% year-on-year. And that's 47% of our full year guidance, which we achieved in 6 months despite market volatility and interest rate uncertainty. We are very confident that we will hit our full year target. Historically, the second half has always been stronger than the first half for us, and we expect the same to happen this year. We've maintained our #1 position in market -- in bond issuance and advisory with roughly 48% market share in the second quarter and bond issuance volume has surged to VND 61 trillion, which is up 138% year-on-year and up 115% quarter-on-quarter, and this is driven by very strong demand for bond products from our retail customers. Our total wealth distribution came to VND 32 trillion in the second quarter, which is up 5% year-on-year. And bond distribution to retail investors improved both in volume as well as in spread. This is helped by higher-yielding new issuance. And the retail bond distribution reached VND 22.4 trillion, which is up 23% on the year and 21% on the quarter. Fund distribution has softened mainly in our bond fund, and this is the product that competes the most with bank deposits, and this is the product that felt the most pressure in Q2 as deposit rates stayed quite attractive. But that said, our fund market performance kept strong engagement with about 11,500 monthly investors, which is up 25% year-on-year. On the trading side, we maintained the top 3 brokerage position in wholesale with a record high 9.4% market share, which is up 1.9% year-on-year. And we also maintained #2 position in Hanoi Stock Exchange at 9% market share. As you can see, margin lending remain our key earnings driver and the balance reached VND 51.5 trillion, which is up 52% year-on-year. And this business alone contributed 42% to our operating income this quarter. Average daily trading value was VND 4.4 trillion, which is up 19% year-on-year. However, it's down 28% from Q1, which is a very strong quarter. Now turning to cost. Our cost-to-income ratio came down to 10.1% this quarter from 14.8% in the first quarter. Now I want to be very clear that, that 10.1% is not the new normal. It is driven by a one-off accrual reversal, which happened this quarter. A more realistic run rate to look at is 13%, which is where our normalized first half cost-to-income ratio actually sits. Our underlying cost discipline is intact, but investors should model the 13% handle, not the 10%. Our continued investments in AI and technology is helping productivity massively here. As you can see, profit per tax per employee reached VND 13.7 billion on a trailing 12-month basis, up from VND 13.2 billion in 2025. And we currently have 556 employees, which is actually slightly down in the year. Meanwhile, operating expenses per customer has stayed flat at VND 560,000 per customer. So now we serve about 1.3 million customers, of which about 21% are affluent, which is consistent with our strategy of targeting the affluent and the business owners. Our balance sheet has expanded meaningfully with total assets reaching VND 101 trillion, which is up 25% year-to-date and 13% quarter-on-quarter. This growth was anchored by an expanded funding base and particularly leaning on the longer tenure and offshore borrowings, which strengthens our balance sheet during a period of tight domestic liquidity. Our total funding base has now reached VND 53 trillion, which is up 54% year-to-date, and that is split roughly 49% onshore, 45% offshore and 6% in bonds. Our return on equity is 14.7%, which is slightly down 0.5% year-on-year, and return on assets stayed flat at 7.3% year-on-year. Now both of these numbers stayed flat or moderated somewhat following our IPO, which, as you remember, had to happen at the end of last year, which is when our equity base expanded. Our debt-to-equity ratio stood at 1.15x and margin lending to equity ratio stood at 1.13x. So both reflects a very conservative approach to leverage even as we've grown our balance sheet significantly. Now I'd like to spend a moment to talk about how AI is showing up across our organization because it's becoming very central to how we scale. As you can see, our customer base has grown 16% year-on-year now to close to 1.3 million, while our headcount actually decreased by 1% year-on-year. So in other words, we are serving significantly more customers without growing our team at the same pace and this is helped by significant AI adoption. A few concrete points on this. First, we've trained 100% of all our employees on core AI skills, things like effective prompt engineering, how to work with agents to automate the workflows and working with IT to build cross-platform automation with MCPs. Second, we've built our proprietary AI platform, which we call xStudio. And on this platform, we've launched more than 300 AI agents and chatbots. And recently, we've updated it with autonomous capabilities internally referred to as DA Agent and Tesla Agent, along with a knowledge base that is optimized for AI use. And third and finally, on the engineering side, we've adopted KIRO, which is an AI coding tool built by AWS that can write software directly from plain language instructions. And this is across 100% of all our developers' workflow. And most interestingly, this has also enabled our business users to automate a lot of their business processes. So it's not just the IT people, but also business departments. Now some updates on a few of our newer initiatives. On the institutional client business, we've completed the framework and the operational infrastructure for non-prefunding. We now support more than VND 1 trillion of trading limits across more than 50 single stocks. On the ECM side, we are acting as co-distributing agents through our TCInvest platform for 2 IPOs. One is DMX, which took place in June and F88, whose follow-on public offering takes place in July. On the crypto exchange, we've passed round 1 of the crypto exchange licensing process, and we're now moving on to round 2, which involves documentation, which covers capital, infrastructure and system security requirements. And on the International Financial Center in Ho Chi Minh City, we are fully engaged with the regulators on the framework and positioning to establish a subsidiary inside the VIFC, which would allow us to target international capital market opportunities down the line. Finally, just a couple of recognition worth mentioning. We won the most innovative use of technology among the Nonbank financial institutions at the Financial Asia Awards of 2026, and we were named the top 10 reputable security companies in 2026 by Vietnam Report. Now I'd like to close with the outlook for the rest of the year. First of all, we'd like to reaffirm our full year 2026 guidance with a revenue target of more than VND 13 trillion, which is up 26% compared to 2025, excluding a one-off item recognized in Q4 of 2025. Our profit before tax target is VND 7.5 trillion, which is up 18% on the same basis. As mentioned before, we've met 47% of the PBT plan, and we are very confident that we will hit it in the full year, given that historically, H2 is much stronger for us. And given what we've seen in Q2 over Q1 momentum, it only brings us more confidence. Now of the particular segments, this is what we expect. Investment Banking should keep up strong momentum in the second half with our expanding equity capital market capabilities, complementing our DCM business, which is already very strong and dominant in the market. On wealth distribution, this is going to stay flat. Despite some pressure on the spreads, we are seeing very strong demand. So this should offset the NIM compression a bit. On the margin lending, our margin lending to equity ratio is still very low, which should give us plenty of room to grow our margin lending balance. And as you can see, we are seeing very strong demand in Q2, and we expect this to continue for the rest of the year. On brokerage, we expect it to stay broadly flat, reflecting the continued softness in fund distribution, especially in the bond fund. Financial expenses, we expect to rise, reflecting the higher borrowing balances to support our business growth and also the elevated interest rate environment. And we are proactively diversifying into the offshore lending to help manage with our liquidity as we expand our businesses. And finally, on technology, we're continuing to move towards what we call AI Native enterprise, lean teams with AI capabilities embedded across all functions to improve scalability, operational efficiency as well as service quality. That brings it to the end of the presentation, and I'd like to open up for Q&A now. Thank you very much for joining.

Thank you, Jens, Alex and Tuan Anh. Before we move on to the Q&A session, I would like to highlight a few notes. Based on feedback and to keep the sessions flowing smoothly, we'll skip questions related to financial guidance or request for detailed financial metrics that have already been covered in the presentations. We kindly ask you that you refer to those presentations, which will be available online shortly after today's event. The IR team will, of course, be available to answer any further detailed questions once you have reviewed those materials. And so with that, let us begin the Q&A session. So the first question we have is for Jens on the macro backdrop. In an environment where the U.S. Federal Reserve remains hawkish, will the State Bank of Vietnam prioritize supporting growth or maintaining foreign exchange stability? And is the risk of VND depreciation over the next 12 to 18 months a concern, particularly if the U.S. dollar stays strong?

Thank you for the question. I think it's relatively clear where the guidance is for the economy as such, but therefore, also, I think, for SBV. I think nobody wants to risk macroeconomic stability. And I think that's probably on nobody's minds. I think there were concerns that the 10% GDP growth is actually too aggressive, cannot be achieved, et cetera. And I think if you look into the macroeconomic figures, you would actually see that just if the government is actually spending the money and they have budgeted and which is available, and that an expansionary fiscal policy probably already would get us somewhere to the 10%. So I don't think that we would right now have a trade-off between a kind of 8%, 10% GDP growth and an economic stability. So stability, which, let's say, most of us would probably translate into stable inflation. So let's say, not going above the 4%, 4.5% guidance as well as foreign exchange stability. And I think right now, what we're seeing is that so far, the Central Bank has actually managed that pretty well. And yes, inflation is relatively higher than what we've seen beforehand. But I think that's kind of imported inflation mostly coming from the increased commodity prices as part of the crisis in the Middle East. I think the exchange rates have hold up -- have held up and quite well. So since the beginning of the year, we probably see the VND depreciating by 1.1%, 1.2% because there still actually is quite a positive interest rate differential between the Fed rate and the VND. So -- and also, I think compared to the Chinese yuan, I think we are all in relatively stable territory. Of course, there is the question, will the Fed increase the interest rate by 1 hike, 2 hikes. Again, probably that needs to be seen. And I think it will just increase by another 25 basis points if kind of inflationary tendencies in the U.S. would maintain. I think that would probably have not a big impact on the currency. I think, of course, there would be 2 or 3 rate hikes, and we are in different territory. But again, at this point in time, probably nobody is expecting it. We probably would rather see that if the Middle East situation kind of improves, that we would rather see a chance for quantitative easing and reduction of the interest rates in the U.S., which would mean that there's also more room for the SBV to reduce the interest rates. So at this point in time, I think in the current interest rate levels, we believe that it's relatively stable. So we might expect maybe interest rates go up in the Vietnamese market maybe by 20 basis points, 30 basis points. But all that should give us enough stability on the exchange rate. And therefore, also, I think on pricing, hopefully, the oil prices coming down. And again, we're seeing, of course, a flaring up. I think it will be -- it's in nobody's interest to really start and getting back to the situation we were, let's say, 2 months ago. And so hopefully, reason will prevail. If that should be the case, then again, I think pricing stability should also not be such a big issue. So we are looking forward over the next 12 to 18 months probably to a relatively from a pricing side, interest rates, foreign exchange rates, et cetera, probably at a rather stable environment and barring any unforeseen circumstances.

Thank you, Jens. Let me bring Tuan Anh in for a stock market liquidity question. How sustainable is Vietnam's current stock market liquidity given its heavy reliance on retail participation and persistent foreign net outflows year-to-date? And how should the company think about the liquidity outlook going forward?

Thank you for the question. So first, on the sustainability, Vietnam has moved through liquidity cycles before from thin liquidity to active markets, and this is no different for any other emerging or frontier market, and we expect that to continue. As the market becomes more mature and institutional participation rises, volumes should become steadier and less reliant on retail alone. Now on the second point, despite heavy foreign outflow, we think that the investment case for Vietnam remains very strong. GDP grew 8.2% in the first half and very progressive reforms are underway. We have non-prefunding, which is implemented already. Looking forward, we can look forward to the CCP being implemented in Q1 2027. So that should both improve liquidity significantly. And corporate earnings have been very robust. Listed company grew the first quarter profit around 38% year-on-year, with banking being a key driver. And after the recent correction, the valuations are back to very attractive levels. If you exclude all the Vingroup companies, the valuations are roughly below 15x earnings, and that drove much of the last year's rally. So we see this as a painful part of the cycle, but we expect Vietnam to pull through it. Now specifically about TCBS, as you know, our business model is fairly insulated from liquidity swings. We already offer 0 fee on stock. So we are -- our profit does not depend on trading volumes. And our margin lending business is still growing very strongly, as you can see with our record quarter. So even in a softer liquidity environment, our earnings should not get affected by market turnover.

Thanks Tuan Anh, Back to Techcombank, and this one is for Jens. What gives you confidence that Techcombank can meaningfully capture value from Vietnam's International Financial Center given that competition for these opportunities is likely to intensify as global and regional players enter the market?

Thanks for the question. We had made a couple of comments recently from TCBS side and TCB on that matter. So let me probably repeat a little bit the way how we look at it. So I think it's actually good that global and regional banks participating in the VIFC. And I'm not quite sure if it is necessarily competition. Ultimately, we believe that in order to fund a 10% GDP growth trajectory, the capital formation, which is required for that, we need over the next 5 years, around $1.1 trillion in capital formation, of which we know under normal circumstances where $900 billion would be coming from, but $200 billion are kind of unexplained, meaning they need to come from overseas. So we need to mobilize overseas funding. And that, I think, needs actually probably 3 players. One, those who actually need the funds, which are the corporates. And secondly, those who are providing the funds, which are investors, banks, et cetera. And then third, intermediators. And I think there is still a very, very strong intermediation role to be done because we have not such a clear or informed investor base outside of Vietnam to completely understand all the opportunities within Vietnam, but also the risk and the specifics of the market. And I think a bank like ourselves is actually very good in bridging this information gap, meaning we understand our customers, we can describe the opportunities. We can take certain risk on our books. We can transform certain requirements in terms of risk profile. We can talk to international investors. We can give guarantees. So there's a lot of things we can do. And given the fact that we already have a lot of experience with project finance that a lot of the largest private companies who are involved in all these projects are already banking with us. And also that we actually have with TCBS, a company which knows how to distribute and package some of kind of off on-balance sheet exposures and put them into off-balance sheet, we are probably the best group positioned to talk to international investors and bridge that gap. So from our perspective, we need global investors. We need regional investors coming in, but they also need banks like ourselves to really make sure that they feel comfortable and that we can find the right solution, which really works on both sides for our domestic clients as well as for the international investors. So, therefore, I'm not quite sure that it is necessarily competition. I think there is a need to find and channel $200 billion of overseas money into investment opportunities in Vietnam. And we are playing a role, international banks, international investors, asset managers, they're all playing a role. So from that perspective, I think it's rather complementing than competing. And when it comes to domestic institutions, I think from the ecosystem which we have built, we feel that we're actually quite uniquely positioned to probably get our fair share of these opportunities.

Thanks for your insight, Jens. The next question is for Alex. What will be the key impact of Circular 25 on Techcombank? And how do you expect it to reshape competitive dynamics and risk profiles across the banking system?

Yes. Thank you for this opportunity to come back to a topic which has raised questions from various investors. So Circular 25 indeed relaxes some of the constraints which apply to banks when it comes to management of liquidity, particularly one indicator called MLT ratio, which measures the proportion of medium, long-term assets, which is funded by short-term deposits or short-term liquidity. So the fact that this indicator was relaxed for me largely reflects some awareness from the regulator that current the current norms are not fully reflective of the true liquidity and funding risk that the banks are exposed to. They are relatively rudimentary. And that's also the reason why the regulator has a longer-term plan to move to Basel III inspired metrics such as LCR or NSFR, which will provide a much more risk sensitive management of funding and liquidity. So the way, therefore, I'm interpreting it is that the regulator is aware that the current rules and regulations are not perfect. They don't want these rules to overly constrain the banking sector, particularly at a time where there is a need for deploying liquidity in the medium to long term in order to fund important national infrastructure projects. So for me, it's a rational and pragmatic decision, which doesn't increase the structural risks in the banking system as long as there is a disciplined path toward the adoption of more risk-sensitive framework derived from Basel III. And as far as Techcombank is concerned because that was also in your question, so it doesn't really change our own management of funding and liquidity because we apply our own internal framework in a way, which is directly aligned to Basel III and encompasses these 2 indicators of LCR and NSFR. Therefore, our liquidity management is already more stringent, more demanding in this respect than what the regulator prescribes.

Thank you, Alex. This next question is for Jens on AI adoption, and we covered it slightly during the presentation. But can management quantify where AI is expected to have the greatest impact on Techcombank's future earnings? And when should investors realistically expect these benefits become visible in the financials?

Yes, AI is probably on everyone's mind. So let me basically describe a little bit how we think about it. So ultimately, the whole translation of AI needs to come through productivity improvements. And what I mean with productivity improvements is that probably more or people can do more and with less. And I think the key elements we're already seeing is as described already on the TCBS side, I think especially right now in software development. So we're seeing probably productivity improvements up to 50%. But we also see revenue improvements by increasing the productivity of our relationship managers who are able to have much more productive conversations. And there, we are probably seeing around 30% to 40% in the first use cases and where we deploy an AI tools in support of our staff. So I think ultimately, you will already start seeing some of that going through the books. If you recall the presentation we gave on overall 5-year strategy where we said we want to double the number of customers. We want to double our market share in terms of revenues, which should lead to 4x TOI. And that already has actually encompassed quite a couple of AI capabilities because a lot of this were done with the assumption that we can actually increase productivity quite tremendously. So the question is, will we be able to completely separate this out and saying this is coming through AI or this is coming through something else. I think that will be relatively tough because ultimately, what we are seeing is it's really the combination between a human being really knowledgeable about using these tools and the tools itself, which will ultimately get to these productivity increases. At the same point, we should also be clear that AI is not coming for free. And I believe that from a knowledge perspective and from an application perspective, we are probably quite advanced even by international standards, how we are applying AI. And what that means is we're also understanding the limitations of AI because all these investments which you're seeing right now in data centers, in all the developments of large language models, also, they have a price and the providers of these services are asking for a repayment of all the investment efforts. And if we compare that to still relatively moderate labor cost, we see that we could ultimately use that in order to replace labor or kind of at least increase the processes quite significantly, but it might not always make economic sense, not at this point in time, but maybe or potentially later if either labor cost is more expensive or alternatively, the cost of AI actually has come down, which is expected to be the case. So net-net, I think we're already seeing, as I said, 50% increase in productivity in certain parts like coding, data engineering, et cetera. You will see that in a constant kind of reduction of our cost-to-income ratio. as well as of our improvement of TOI per headcount, which already, I think this year has increased by 20%. So you will see more of that. And you will see more revenue enhancement per relationship manager. And you will see it in a lot of other areas. But again, it will be a little bit hard to discern exactly where is it coming from. But overall, you should assume that, as we said, the strategy which we proposed, which is double number of customers, double kind of the market share in terms of penetration and wallet share, which will lead to 4x TOI that this is all based on the assumption that we can fully and intelligently deploy AI tools. And as I said, we are actually on a pretty good trajectory. What you've seen in TCBS I think it's true for TC Life, TCGI as well as the overall bank. I think all of these use cases already start getting applied across TCB Group. And again, we will report on it because also from our perspective, we will manage these investments very, very carefully because a lot of banks right now, a lot of companies reporting that they don't see the benefits. I think we're seeing these benefits already very, very clearly. But again, I think you need to work very, very hard in order to make sure that they are really getting all the way down to the bottom line.

Thanks, Jens. Staying on AI, the question is for Tuan Anh. I know you -- maybe can you elaborate a bit on the presentations part on AI, but could you provide an update on TCBS's AI adoption and key applications and on how AI is impacting the company's business?

Thank you for the question. As Jens mentioned, AI is everywhere right now, and we can't stop talking about it. We are adopting it everywhere across TCBS, but I can group it into 3 core areas. One is, as Jens mentioned, higher productivity. Number two is the change in how we organize our teams because, as you know, every company is now trying to experiment with AI. And number three is in the number of new products and offerings that we can bring to our customers. So first, let's talk about the increase in productivity. Jens talked about higher TOI per headcount. We're seeing a lot faster product development from the engineering team. Since we've rolled out the AI coding assistant, every developer has used it daily, and the development TAM is down about 26% compared to last year. And the time it takes for an idea -- from ideation to release feature is down about 25% for TCBS. So a lot of the new tools and training platforms apart from features are reaching customers a lot faster. Now the second thing is about how we can do more with the same headcount. And it's about how we reorganize our teams. We used to run developers and quality engineers as separate roles in a large team. But now they've merged into one role as an engineer because the AI is handling a lot of the routine testing and implementation. And in practice, we have actually rolled out for many of our strong teams, a team of 10 is now split into 2 independent teams of 5. And that means that we can run more parallel work streams with the same headcount. And this lets us pursue more initiatives and respond faster to markets. And the third and the most important thing is for the customers. This AI has changed what we can offer to customers, not just how fast we offer it. We are using AI agents to support customers across different parts of their customer journey. We have a wealth adviser, a bond adviser, a stock adviser. And so we can cover a lot more clients and engage them more deeply without increasing our headcount. And of course, the next obvious step is to increase personalization, so the tailoring of investment experiences to the individual client on top of this AI foundation.

Thank you, Tuan Anh. The next question is for Jens. We have observed several recent changes in Techcombank's management team. How should investors interpret these changes in the context of your execution priorities for the next 5-year strategy?

Thank you for the question. So how should investors interpret it, I would say, positively. What I mean with that is I think the changes are very deliberate. As we started on our 5-year journey, we made the decision that we actually want to have a broader financial ecosystem. And with life insurance, with general insurance, we have and set up a company together with MobiFone and helping on running a new payment switch for the country in addition to NAPAS. So all of that requires dedicated leadership capabilities and capacity. And so we took a couple of our strongest kind of Board members and basically asked them to join these companies and take over these roles because we also wanted to make sure that they are very strongly connected to the culture and the DNA of Techcombank. And so that we started connecting and really working together as one big group. And as we put these people into the roles, we promoted people within the bank and to basically step up and take over other -- or step into these roles. And again, I think it just shows the depth and breadth of our talent base, and we said this for a long, long period of time that ultimately the 3 pillars, digital, data and talent, the most important one is actually talent. So we have a very broad talent base, and we trust that these people can actually execute. So we put them into these specific roles. And then in some areas, we also basically bring new people on to the team, just for example, for AI and other strategic priorities in order to make sure that we actually have the most and deepest expertise required in order to execute our strategy. So this is not kind of sometimes when there's such a change in the management team that it's kind of turmoil or people want to leave. And that is completely not the case here. It's very deliberate actions on putting people into different roles in order to make sure that we can execute our strategy as intended. And so from that perspective, you might actually even see most. But as I said, I think we should look at the overall talent as an extended ecosystem and which needs to work across. And again, I think there's still coordination with all of these entities, and they're still basically very part of the success story and the resilient business model we have talked about so much.

Thank you, Jens. This next one is for Alex. Could you please share recent trends in property prices for projects financed by Techcombank?

So let me come back again on the to the situation in the real estate market and focusing maybe a little bit more about Techcombank. So the first comment I would make is that the prices, as you can see in the market are actually continuing to hold up very well, increasing 12% quarter-on-quarter in Hanoi and 8% quarter-on-quarter in Ho Chi Minh for primary selling properties. So the overall environment is still showing strong underlying demand from homebuyers. And this also applies to the primary properties finance and projects financed by Techcombank, right? So there is no reduction in prices. There is clearly more careful consideration from homebuyers, as I mentioned before reaching a decision to buy. And therefore, we can see that a few developers are using incentives to convince the homebuyers to accelerate their purchase decisions. And this is, I would say, a logical business trade-off between like giving incentives in order to accelerate the sale or accepting the sale to take longer. So these incentives could be, for example, in the form of flexible payment plans or interest rate support or even like a voucher in order to get a discount if the homebuyer purchases another property from the same developer in the future. So those are the kind of things that we are seeing at the moment, but we are not seeing any significant or any price cut actually for primary properties. The reduction in disbursement that we observed in the second quarter, as I mentioned, is really linked primarily to the absence of blockbuster project coming to the market this quarter. And from next quarter, we already anticipate that the new disbursements could be back to a level which is closer to the VND 30 trillion mark that we observed in the last few quarters.