Good afternoon, and welcome to the Techcombank Fourth Quarter and Full Year 2024 Financial Results Presentation. As this event is being broadcast, we would like to remind those of you in the live audience to please put your mobile devices on silent. Today, Jens Lottner, CEO, will begin with opening remarks, and Alex Macaire, CFO, will share more details of the financial results and business updates, followed by a questions and answers session. Jens and Alex will present in English with live Vietnamese translation available via a separate link. As usual, there will be another call in Vietnamese tomorrow for retail investors. Today's presentation and Q&A will last around 90 minutes. With that, I'll turn it over to Jens to begin the presentation.
So, good afternoon, everyone, and thanks for joining, and wishing everyone still probably belated and happy New Year. Let me go and summarize probably the key performance of the bank in Quarter Four, but I think probably more holistically in 2024. So, 2024 was actually a pretty strong year for us. So, overall, we saw actually very good expansion on the credit book, but also on TOI, PBT, on all the operating metrics. There were a little bit kind of lower results coming in in Quarter Four because we took a big expense of VND 1.8 trillion, as announced, as part of the separation from Manulife. If we would actually have taken this out, TOI would have grown around 22% year on year. In terms of profit, we are at VND 27.5 trillion, which is above the guidance which we gave to the AGM.
And again, that still despite the fact that we actually have taken this one-off expense in full in the fourth quarter. Again, year on year, it's an increase of more than 20%. If we would not have taken that expense, the growth actually would have been around 28%. Return on assets, therefore, still stands pretty strong. In CASA, we have continued to improve our CASA position. Again, most of that is really thanks to the efforts we've done with some of the product innovation, especially the auto-earning product, which has seen tremendously good results in the fourth quarter. And again, we start bringing the numbers up and the CASA ratio, which actually helps us on the funding side and still maintaining the NIM. NPLs, I think people already have reported on it, and we see a further improvement on our credit book.
The overall number stands at 1.17, which is actually lower than what we had and even lower than when we were and where we were one year back, so the quality of the credit portfolio, despite this growth, actually has continued to strengthen, which was one of the key areas we were looking at, and then, at the same point in time, our Capital Adequacy Ratio still stands very strong, is one of the strongest in the industry, which is basically thanks to the way how we diversify our credit portfolio, but also basically based on the very strong earnings growth where the earnings actually retained and started to accumulate in the capital buffer, so from that perspective, as I said, it's a very strong quarter.
And again, there have been a lot of changes and a lot of headwinds in between in some parts, but overall, we are very satisfied with the performance in the last quarter, but overall in 2024. And again, Alex will now give you a little bit more details when it comes to the numbers. So, therefore, I hand it over to Alex.
Thank you, Jens, and good afternoon, everyone. So, we'll start, as usual, with a quick view of the macroeconomic environment. As you can see, most indicators show an improving trend. GDP growth continued to accelerate, reaching 7.6% in the fourth quarter and 7.1% for the full year. Vietnam is one of the most open economies in the world, as you know, and it continues to benefit from the very robust demand, particularly in the U.S., and also growth of exports and FDIs. So, domestic demand remained a bit subdued, and the 5.8% growth that you see here are actually 5.9% growth in the fourth quarter is largely still driven by the tourism sector. However, in 2025, we expect that domestic demand will rebound and will become a more sustainable driver of economic growth.
On the FX side, the election of Donald Trump, combined with strong employment reports in the UK, sent the DXY index up, and as a result of that, the Dong lost around 2% against the dollar in the quarter. For 2025, we expect a moderate depreciation for around 2%-5%, with a limited impact to interest rates because of the liquidity support to be provided by public investments. Looking now at the banking sector, we can see that credit growth accelerated quite a lot, reaching 15.1% for the full year, which is the highest level since 2017, and as economic agents invest more, then their available cash tends to decrease, which is the reason why you can see some downward pressure on the CASA ratio of most banks in the market, except, of course, Techcombank.
As a result, banks have had to raise more term deposits, resulting in more competition on term deposit rates, and you can see a continued upward trajectory for term deposit rates in the market. Interbank rates, on the other hand, have tended to stabilize in the 3% to 5% range, and we believe that the central bank will aim to maintain rates in this bracket, allowing for a relatively stable funding environment for banks in 2025. So, as a result, all in all, we expect that interest rates should have only a moderate increase in 2025, maybe 10 to 30 basis points. Let's look now at our financial highlights.
As Jens said, it's been a very strong year for Techcombank, and it's also been a solid quarter in the sense that the bank performed in line with our expectations and showed also improvement across a number of metrics, including CASA, including risk diversification, including risk metrics, and retail market share. NII growth slowed down a bit this quarter, driven by strong competition in the market and also by the continued impact of our flexible pricing policy. However, we still achieved an impressive 28.2% growth in our NII in the full year. NFI also faced some temporary headwinds in the fourth quarter. The key drivers were first the termination of our bancassurance distribution agreement with Manulife, and then the need also for the letter of credit market to adjust to some changes in the regulatory environment.
But then, as these issues are resolved, then we believe that this sets a strong foundation for our NFI to go back to double-digit growth from the first quarter of this year. Finally, our PBT this quarter, as Jens highlighted, also included the impact of the VND 1.8 trillion compensation paid to Manulife, as well as seasonal impact on costs, including for marketing, as we aimed to support the launch of our new auto-earning hero proposition. In spite of this, we finished the year with a PBT of VND 27.5 trillion, a PBT growth of 20%, a cost-income ratio of 32.7%, and an ROA of 2.4%. So, all this, I think, and particularly this combination of metrics is truly industry-leading. Our balance sheet remained as well among the strongest in the industry. We had improvement this quarter in our NPL, in our capital adequacy ratio, and in our CASA ratio.
All these position us well for the investments that we ambition to make in 2025 to affirm our leadership in AI, in sustainability, and in ecosystem plays, as we will see later. This is an overview of our P&L. As I already noted, the decreases in TOI and PBT this quarter were largely driven by the VND 1.8 trillion payment to Manulife, which was recorded in other income. If I exclude this one-off, then the TOI and PBT in Q4 were still up on the previous year by 3% and 13%, respectively. Also, worth noting is, I think, the very low level of credit risk provision this quarter, only VND 118 billion. We benefited from lower special mention loans, lower NPL, but also provision reversals for the debt collected in the quarter.
So, overall, and despite the one-off impact from the termination of our bancassurance partnership with Manulife, our total PBT reached VND 27.5 trillion, which is significantly above the VND 27.1 trillion target, which we communicated to the General Meeting of Shareholders. Let's look now at the asset yields and the developments on the asset and deposit side. So, at a consolidated level, we grew our interest-earning assets by 22%. Our customer funding grew even faster by 28% year on year. We reclaimed the number one position for NAPAS payments in the entire banking system in Vietnam, and we also benefited from the success of our new hero proposition, auto-earning 2.0. On rates, asset yields continued to decrease this quarter as a consequence of the diversification of our credit books and also the continued impact of our flexible pricing policy.
However, as you know, we manage our books and allocate our capital on the basis of the return on risk-weighted assets, and therefore, some degree of reduction in asset yields is acceptable if it is accompanied by a parallel reduction in risk-weighted assets, which was the case in Q4 as we allocated more and more of our capital toward the retail business. So, as a consequence of the pressure on asset yields, our NIM reduced a bit this quarter to 3.9%. However, if you look holistically through 2024, then it still stood at 4.2%, which is one of the highest levels in the market. Looking now at lending balances in more detail, like in the previous quarter, I'm quite pleased with the progress we have made on asset diversification and sector diversification. As you can see, we accelerated the expansion of our retail books with an impressive 8% quarter-on-quarter increase.
Meanwhile, corporate exposure remained broadly flat. Our corporate bond portfolio increased also, as you can see, from VND 33 trillion to VND 51 trillion, as we needed to replenish our stock of bonds to meet the needs of our customers in 2025. The chart also on the right-hand side shows that the proportion of medium-long-term assets in our credit books has reduced slightly in 2025, so confirming our present management of the funding position. This is another slide on credit exposure. The key takeaway, again, is, I think, the continued progress on diversification. The share of retail exposures in our credit books has reduced to 57% from 61% at the beginning of the year. Then this portfolio, the proportion of our total credit books, has gone down to now 33%, which compared to 37% one year ago.
So, it might look relatively small in absolute terms, but the reality is that to get to this level and quantum of reduction, you need to start growing other parts of your book very meaningfully. So, it's, I think, a very encouraging achievement. Within the retail book, the share of margin loans, home equity loans, and loans to micro-SME customers has increased very fast. That's another characteristic of our retail book growth this year. And this portfolio now represents around 16% of our total retail loans in Q4. Overall, I believe that these results show the strengths of Techcombank's retail franchise and also our determination to continue to pursue the diversification of our credit books. Looking now at the real estate value chain in more details, so mortgage disbursements in Q4 reached VND 35 trillion, which is the second highest quarter in three years.
It is therefore clear that the real estate market is on an improving trend, even though the recovery remains uneven. So, as we mentioned in the previous presentation, the North is performing very well and continues to drive the market, while the activity remains still a bit subdued in the South, at least for the higher-end landed properties, which is the segments on which we are maintaining our flexible pricing policy. But still, as a whole, we expect the real estate market to continue to expand in the coming years. You can see also the chart at the bottom left-hand side, which comes from our market analysis.
We estimate that the conditions now are very favorable to the real estate market, with a much more transparent legal framework and also a very low level of interest rates, which is broadly at the same level as in the boom years of 2015 to 2019, so with this improved environment and easier access to financing, we expect the cash flows of developers to improve, allowing them also to cope with some of the redemptions which are due to come in 2025. Now, a quick focus on deposits. Our Kassa balances grew by 27% in 2024, including a remarkable 15% increase in the fourth quarter of the year, and we will go back to the drivers behind this increase later.
We can see that the average Kassa per customer has also seen a very impressive increase by 35% during the year, reaching VND 28.5 million on average at the end of the fourth quarter. So, we expect this momentum to continue after the recent launch of auto-earning 2.0, which incorporates many compelling features, including no minimum or maximum balance constraint for customers, and also a unified account structure which allows customers to get interest rates of up to 3% on their side deposits. So, this is a truly groundbreaking product which we believe sets a new bar, a new benchmark in the banking sector in terms of performance and convenience for customers. So, it's one clearly of the key drivers behind the industry-leading Kassa ratio of 41% that Jens highlighted at the beginning of his presentation. Let's look now at our fee income.
Our total NFI grew 4.4% in 2024 to VND 10.6 trillion. It is a relatively modest level of growth for Techcombank, and we will look at the details now. Investment banking activities first posted a record growth of 88% year on year. Our securities subsidiary, TCBS, continued to gain market share, reaching 8% in the equity brokerage market in Q4 and 50% for all bonds originated in Vietnam in the corporate segment. On the other hand, we experienced temporary headwinds in a number of product lines. On bancassurance, as I mentioned, we had to adjust to the termination of our distribution agreement with Manulife, which means that for most of the fourth quarter, we were not able to record fees.
However, the profitability of the bancassurance business is now back to normal and has the potential to improve further in the future as we look for a new long-term strategic partner. On LST cash and settlement, the lower fee collection was mostly driven by what I mentioned earlier, which is a change in regulatory environment combined with relatively adverse interest rate conditions, which affected a very specific category of products, which are essentially credit-linked letters of credit called UPAS LC. So, we expect these headwinds to abate as the market adjusts to the new regulatory environment. However, it might take a few quarters, and during this period, we will see pressure on this part of our fee income. On cards, the decrease was mainly due to us adjusting the features of a number of our offerings to make them more competitive in the market.
So, this essentially reduced the profitability temporarily of our card business, but we believe that it will also set a foundation for this business to grow faster therefore in the future. Finally, FX activities were also a bit slow in 2024, including particularly in the first half of the year. However, you can see that the second half, and particularly the fourth quarter, showed already a much better momentum. So, we hope that this trend will reverse in 2025, and we hope that it will become a more meaningful driver of fee income in 2025. So, overall, I would say apart from the stellar performance of our investment banking activities, it was a bit of a consolidation year for Techcombank across a number of product lines. But we believe that we have set the foundation for a much more robust growth and a much brighter outlook in 2025.
Turning now to OpEx, so our operating expenses increased by 16% in 2024, driven by selective but resolute investment in our areas of strategic priority. As in the previous years, we saw a significant acceleration during the fourth quarter, driven by the usual seasonality, and I will probably give more details during the Q&A session, but also a step up in our marketing activities centered on the launch of our loyalty and Auto-earning proposition, and also the sponsorship of a number of highly successful events like the Anchai Concerts. During Q4, Techcombank reached for the first time the number one Brand Equity Index position in Vietnam, and so overcoming the biggest state-owned bank in Vietnam. We are also one of only two banks in Vietnam in the category of developed brands, as assessed by NielsenIQ.
Those are massive achievements, which essentially strengthen a lot at the top of the funnel, meaning that customers will be drawn to Techcombank a lot more in the future, and they are very important proof points for our strategy. As I mentioned in a previous call, you should therefore expect that we will not deviate from our strategy. We will continue to invest. Our cost will continue to increase, and we will continue to double down in the investments required to affirm our leadership in technology and in brand strength. Whilst doing this, we will ensure that our cost-income ratio remains in our target range of 30%-35%, which was exactly the case in 2024 because we achieved 32.7%. Let's look now at asset quality. As you can see, we started to see a much more significant improvement this quarter.
Our credit costs reduced to a very low level of VND 0.1 trillion, as I mentioned in Q4, which is 0.6% on net of recoveries on a last 12-month basis. Our special mention loans, our bucket two, decreased sharply by 14% quarter on quarter, and our non-performing loans ratio reduced to 1.17%. So, finally, and contrary to a number of banks in the system, our coverage ratio improved further and remained significantly above 100% to 114% precisely. So, this combination of improvements constitutes, I think, a very significant change compared to the previous quarter and suggests that we might be on an inflection point. So, I will make two comments on these slides, which provide more details on our credit risk provision. So, the first one relates to the chart on the bottom left-hand side.
It showed that the drop in credit costs in Q4 was not just driven by provision reversal, but also by a significant reduction in the trend for normal credit costs. Secondly, we can see from the charts on the right-hand side that it's not just the ratio of special mention loans and non-performing loans, which has reduced, but also the absolute amount of non-performing loans. This is, again, a significant and notable improvement compared to the previous quarters. This is another view on our asset health.
The key points to highlight are first the decrease in asset yields, the continued reduction in asset yields due to heightened competition in the market, as we mentioned earlier, as well as the impact of our credit diversification, but also the management of our interest receivables, which have gone down to 0.9% as a proportion of our interest earning assets through concerted actions with our customers to collect interests. Turning now to capital and liquidity. So, Jens mentioned it, despite the rapid growth of our credit books, we increased them again by 22% in 2024. Our capital adequacy ratio continued to improve and strengthen, reaching 15.3%. So, this shows the strong organic profit generation of Techcombank, but also the positive impact, as I mentioned, of the asset diversification.
On the one hand, it may have a negative influence on our net interest margin, but on the other hand, it also allows us to reduce our risk weights and therefore improve our capital adequacy ratio in anticipation of further value distribution or further investments. On liquidity, funding from customers further increased to 78% at the end of Q4. So, overall, I think it's fair to say that the bank is following a very strong trajectory across all risk metrics, whether it is diversification, delinquency, capital, or funding. Finally, a glimpse into our performance, how it compares versus peers. As you can see, we continue to outperform the market across all metrics. So, this is a new slide. Jens and I often get questions from investors about what are the drivers behind our industry-leading Kassa performance.
The short answer is that it requires a lot of efforts in many different areas. For a purely private bank like Techcombank competing with state-owned institutions, the bar is extremely high. The first thing we had to do is first to reclaim our number one position in NAPAS's transactions. To achieve this, we had to increase transaction volumes by 50% and transaction value by 20%. We had to reach a level of market share of around 15% across all transactions in Vietnam. For a bank of our size, which represents only 4%-5% of the overall market in terms of assets, I think it's a really, truly tremendous achievement. Secondly, we invested massively on improving our brand positioning, both top and bottom of the funnel.
We were therefore, as I mentioned, absolutely thrilled to claim for the first time the number one position in Vietnam in the banking market in terms of Brand Equity Index. This is a comprehensive index which includes factors like top-of-mind brand consideration and brand attributes. For a bank like us, which is only 31 years old, being number one in the Vietnam market is quite an achievement. Finally, we have been very methodical in driving engagement with our customers, and this is an effort which we have started even more increasing and accelerating in the fourth quarter of the year with the objective to drive CASA analysis.
That's a chart you can see at the top right-hand side of the slide shows a very strong correlation between CASA and number of transactions per customer, with a maximum CASA amount which is reached for around 100 transactions per customer per month. This is a threshold which we called and defined as main transaction bank status. From there, the objective is clear. We want to get more and more of our customers to reach this main transaction bank status. Thanks to our hyper-personalized strategy enabled by digital marketing and our Adobe platform, which is truly cutting edge, you can see that we have made tremendous progress in terms of increasing the engagement with our customers, particularly new-to-bank customers, and increasing the proportion of new-to-bank customers which have Techcombank as main transaction bank.
And you can see that over the span of two years, we've increased the proportion of customers who have reached MTB or main transaction bank status from 8% to 23% in our new-to-bank customers after just one month on board. This is a massive improvement, which I think validates the investments we've made in our payment platform, our MarTech platform, to drive engagement with customers and innovative propositions. We will turn now to the 2025 outlook. So, first, with the forward-looking guidance on GDP growth, as you can see, our forecast for 2025 is for GDP growth of around 7%, which is broadly the same level as in 2024. We believe that the Vietnam economy will continue to benefit from a number of factors: strong export activities driven by strong external demand, particularly from the U.S., strong and resilient FDI, thanks to extensive government support.
We've seen that recently in the areas of AI, semiconductors, and so on, improved infrastructure, a lot of investments in infrastructure, competitive energy and construction costs compared to other markets in the region, and finally, also significant progress on Corruption Perceptions Index, which now has Vietnam at the same level as China. Though we have made continued progress over the last few quarters, we have now gone past all other countries in the region and now at the same level as China, which is, I think, quite a significant achievement, and the other factors which hopefully will support growth in 2025 are the increase in public spending and also the recovery in the real estate market. So, with this, how will this translate into what you're interested in, which is probably the performance of the bank?
For credit growth, as always, we'll be in line with the credit quota we received in 2024. We received a quota of 20.8%. The quota in 2025 could be even higher as the government aims to accelerate the growth of the economy and will therefore probably allocate stronger, higher quotas to banks in 2025. Our cost of funds, we expect to remain relatively stable. The favorable impacts from our new Auto-earning proposition should offset the moderate TD rate increases, if any. Our Kassa ratio hopefully will continue to be able to drive it up thanks to the strategies we described earlier. NIM should, will be managed to remain in the same ballpark. Our main lever continues to be cost of funding. We cannot really control the pricing strategy of our competitors and therefore will focus on cost of funding. NII growth, we target more than 20%.
If we get more than 20% credit growth, this will require, as I said, action on cost of funding and NIM. For NFI, an area of relative disappointment in 2024 for temporary reasons, as I mentioned, we expect to go back to double-digit growth in 2025 through also ecosystem plays. Our cost income ratio, as I mentioned, will remain in the same ballpark, around 32%, 33%. Our NPL ratio should be also relatively stable compared to 2024. In any case, we will manage it below the 1.5% mark. And as for our credit costs, which has been relatively and remarkably stable at 0.8% before recovery in 2023 and 2024, we believe also that we can manage it below 1% in the base scenario.
In a nutshell, even though our bottom line this year and this quarter was a bit impacted by the payment made to Manulife for the termination of our distribution partnership, it was still a very important and a very meaningful quarter for Techcombank. We had a turning point in the dynamic of our cost of risk and impressive organic growth in our Kassa balances, particularly during the fourth quarter. We had the launch of a market-shaping new hero proposition with Auto-earning due to the deal, and we had a massive validation of our strategy with our access to the top position in the Vietnam banking sector in terms of Brand Equity Index. This is a lot. Once again, I would like to thank our staff, our stakeholders, our shareholders, and importantly, our customers for having helped us get to where we are today.
Before we bring this presentation to a close, I'd like also to show one last slide around some of our priorities for 2025. So, for 2025, we have already defined three areas of priorities, which we might expand also further as we work on our new five-year strategic plan. So, those are AI, ecosystem, and ESG. On AI, we ambition to be the first fully AI-powered bank in Vietnam. We already have a very strong foundation. We have an AI-ready data architecture, which is truly unique in the banking sector in Vietnam and also quite unique even in the region. We have some AI-powered processes already for lead generation, for also real-time monitoring of customer interactions. But going forward, we want to expand this even more to build truly unique customer value propositions, which could include, for example, 24/7 service availability, hyper-personalized services, shorter time to market.
We will also expand on a strategy of mass empowerment of Techcombank staff to reach exponential productivity gains with virtual sales assistants, IT code productivity, copilots, marketing content creation, and so on. AI is going to be a very important priority for us. The second one is ecosystem. We have built already a very compelling ecosystem, as you know, in areas like real estate, value chain, and wealth services with our subsidiary TCBS. Going forward, we want to push this strategy even more and build an integrated diverse group, which will provide a range of financial and non-financial products and services to customers by the bank, but also by the bank's selected partners in the ecosystems.
We have already defined four priorities in the short term, which are first real estate, no change here, FMCG, which includes banking to banking, business to business, and business to consumer retail, protection, including insurance and healthcare and automobility. So, this we believe has the potential to help us acquire a much broader range of customers and, more importantly, also generate more value with each of our customers. Finally, ESG, though another very important strategy for the bank in 2025. We are already fully ESG-enabled now, and we have put all the key capabilities in place already. We had some early wins in 2025 to establish leadership in the market. For example, we were the first private bank to issue a green bond framework complying with ICMA standards.
We were also the first private bank to issue green bonds and the first bank in Vietnam to introduce carbon tracking cards in partnership with Visa, so going forward, our approach and focus will be on continuing to affirm our ESG leadership through innovative solutions like the Eco Card I mentioned earlier. We will also actively engage with regulators to push the sustainability agenda, including helping Vietnam achieve its net zero commitment, and then we will aim to deliver on our $5 billion USD green credit aspiration, focusing on renewable energy, green agriculture, data centers, and green building. This is an exciting agenda, and I am personally confident in the strengths of our brand and the technological capabilities, and believe that with these assets, we will be able to create the required momentum to make this happen.
This brings our presentation to a close, and I will now hand it over to Minh Do for the Q&A session. Thank you. Thanks, Jens and Alex. Let's begin the Q&A session. The first question is for Jens. Could the bank share its view on the macroeconomic situation in 2025 regarding GDP growth, interest rates, and exchange rates? Relating to this question, what would be the key external factors that you will monitor in terms of Trump 2.0, Fed rate cuts, and outlook? So, thanks for the question. So, some of that Alex already had talked about. Overall, we expect the growth somewhere to be in the 7% range. I think the guidance which has been given by the government is somewhere between 7% to 8%.
We can easily get our head around an 8% scenario, but to be fair, there's also potentially downsides, which might make this a little bit more complicated. But if you think about the underlying elements, which would still look at kind of the key sectors, tourism and FDIs, manufacturing, which is also propelled by the China Plus One and strategies from a lot of overseas companies, I think there's enough room to believe that you can actually get to a 7%-8% GDP growth. And also with the recovery of the real estate sector, that would also be a very important contributor. And if the real estate sector is coming back, we've seen that in the past, there's an overall wealth effect where people feel just more comfortable, and that will then relate also to a broader uptick in domestic consumption.
I think overall, we believe there's a relatively strong case for growth in the country and driven really across all different areas of the GDP. Now, if that's happening, so what happens to some of the prices? I think, A, we will probably see that the interest rates might be still going up a little bit on the funding side. I think, and that comes probably a little bit to where we are on the Fed and in the U.S. If the U.S. is basically right now going on a relatively strong expansion and then inflation is relatively under control there, and even if it's a little bit of an uptick, but GDP growth is strong, then I think the Fed will probably not reduce the rates so much.
Already, people are expecting less of Fed rate cuts, which means that, as any other country in the world, Vietnam cannot diverge too much from relatively higher interest rates in the U.S. If we just think about it, and already at this point in time, and probably the 10-year government bond in the U.S. stands at around 4.8%, we are in Vietnam at 2.9%. That somehow will actually lead to depreciation of the currency. Money will be flowing into the U.S. We probably also believe that there's maybe between 3%-5% depreciation potentially in the Vietnamese dong versus the U.S. dollar. Again, that all assumes ultimately a relatively strong performance of the U.S. At the same point in time, the willingness to still actually support the domestic growth and not defend the exchange rate by all means.
We believe probably within reason that the corridor, the trading corridor will slip a little bit, so as I said, 3%-5%. But that should also then take out a little bit of pressure on the interest rates, the domestic interest rates, so that there might be a little bit of an increase, maybe on 20-30 basis points, but not so much. I think the central bank will try to balance these targets of exchange rate, inflation, and domestic growth, but again, I think the real target will be domestic growth. With that, again, I think 7%-8% and what can come in the way. I think the only thing what could really and massively can come in the way is if the U.S. would start singling out Vietnam as kind of one of the key targets because of the trade surplus.
In the first interaction or the first time, Trump 1.0, 2016, the trade surplus with the U.S. was $50 billion. We're now standing at roughly $120 billion. And so, behind Mexico and China, we are actually number three when it comes to trade surplus Vietnam with the U.S. So, right now, I think what we've seen and the comments made were very much around Canada, Mexico, and China. So, there was no further naming of anybody else, which would actually lead us to believe that if there will be tariffs, it will be across the world, which would still leave our relative competitive position intact. Again, if that would be different suddenly, which again, we don't expect, then that might put more pressure on exports. But again, even this year, we have not seen everything on the real estate side. We have not seen the tourism completely coming back.
We have not seen all the disbursement of public funds. So, again, even if that starts coming in, I think there are still some other arrows in the quiver which the government can actually take. So, again, I think 7% to 8% probably is a relatively okay scenario, and that's what is underlying all our assumptions.
Thanks, Jens. As a follow-up, the SBV set a high credit growth target for the whole system of 16% for 2025. Would Techcombank then expect to be granted a higher growth quota of at least 20% to 25%?
So, in the past, it actually always happened that way. We always got more quota than the average. So, if the average would be at 16%, we would probably expect to be higher. That's exactly what Alex has said.
There was an official letter written to all the banks where the State Bank were asking, "What kind of growth are you expecting and what can you handle?" So, we put back to the central bank that we could handle and easily deal with 25% credit growth. Now, if we will get 25% credit growth, it will depend. But overall, I think that, again, if we're getting to a 16% overall system growth and system quota, and already in the current environment, we were roughly at 21%, you would actually expect, again, that we will probably get closer than in the end of 2025 to maybe a 25% number than what we have seen this year, which was 21%.
Next question is for Alex on the securities law. How does the revised securities law and draft amending decree 155 impact the bond business for TCBS?
Yeah, thank you for this question. So, broadly speaking, there are two ways of issuing bonds in Vietnam. The first one is to go through private placement. So, it's relatively simple, straightforward, and has many advantages. The only drawback is that it's reserved to professional investors. So, the new regulations have introduced some additional requirements on issuers, particularly obligation to have a credit rating, obligation to have collateral as well, or bank guarantee. So, therefore, it's good because it improves the transparency and the quality of the market, but also it potentially reduces the number of issuers. That's for the supply side. On the demand side, the new legislation also makes it a bit more straightforward for professional investors to prove their eligibility. However, the pool of the eligible investors still remained quite constrained.
For this reason, we do not expect that the bond market will suddenly expand at a massively different pace in 2025, and we would rather anticipate a 10% growth in the volume of issuances, at least for private placement. Now, the second modality is public offering. So, in theory, it has a lot of advantages because you would be able to approach a much wider range of investors. In practice, the requirements are quite stringent in terms, in particular, of debt-service ratio. And then, on top of that, obviously, the process for issuing is quite cumbersome and expensive, even though the new law on securities law aims at making the approval from SSC more straightforward. So, we believe that this compartment of the market, public offerings, will remain a little bit marginal, at least for TCBS.
So, overall, our forecast is for the new bond originations to grow double digit in 2025, but maybe low double digit rather than high double digit. Thanks. Next question is for Jens on real estate. Could you share your view on the recovery momentum of the real estate market specifically? Do you think that the recovery momentum that we saw in 2024 will continue to be maintained or even accelerate in 2025? What are the prospects of projects that Techcombank is financing, especially to the real estate developers in the South? So, again, I think we've seen that slide in the presentation, which Alex has given. So, it follows actually a relatively strict pattern, which is really that first comes a decline, then recovery, and then we're growing up again. I think what is still completely unbroken is the demand for housing.
We have an ever-increasing gap of demand and what is really supplied. Therefore, I believe that while we already saw a relatively strong recovery in the North, and I think that will actually continue, I also think that the South will actually be coming back. I think some of that is just due to the fact that this year or last year, last year, there were actually not a lot of approvals given because of maybe also some administrative backlog. I think given that there are certain changes right now, also in the leadership in the South, we really expect that some of these things will come back. We will see better approvals, small approvals, and more supply hitting the market, which will be absorbed.
What we've seen very clear, even at the high end, the moment you put something out in the market, the demand is overwhelming. Given the fact that the change in labor law is now coming through, we also see that new land will actually be much more expensive. That means all the projects which are still there, which are a little bit in the backlog, if they start getting executed on the land bank, which is already existing, we actually believe that there is a lot of momentum. Again, some of that will be depending on just what is the overall feeling, right? How do people perceive the economy? Are they feeling confident and all of this?
So, therefore, I think if we are in a rather 7%-8% GDP environment, and if the changes which are coming with the Trump 2.0 administration are not too disruptive, then again, I think people will feel rather confident, and then you will see that actually money is coming into the market. Again, probably we still have a problem at the lower end, so we will need to see how that lower end will actually also be supplied. But overall, I believe what we are seeing is there's a lot of companies who are making plans, who want to develop products, and we see customers who are really interested in buying and also investing in real estate, not just for living there, but also, again, coming back as an investment class.
From that perspective, we are actually relatively confident that we will see a continued recovery and that the asset class and the real estate market will actually be coming back.
Thanks. The next question is for Alex. Alex, in light of that, would you expect to revise up the real estate market outlook in 2025? Because also the government's GDP growth target is 7%-7.5%, and the SBV has a 16% credit growth. And then related to that, are you seeing less pressure on lending yields for both developers and homebuyer loans? And do you expect to see improvement in your mortgage book NPL in 2025?
Yeah, thank you. Very comprehensive question. To the first point around our assumptions for 2025, are they affected by the recent communications from the central bank and the government?
So, first, our plan was based on an assumption of GDP growth of 7%. So, from that point of view, we are not changing our assumptions or changing our projections at this stage. And as for the fact that the government is now targeting 16% credit growth, so, as Jens said, this is consistent with the GDP aspirations of the government. So, if they want to reach 8%, reach 10%, then obviously this will have to come with a higher amount of financing to the economy. And we believe that it's also a case for us to receive a higher credit quota in 2025. In 2024, we got 20.8%. In 2025, as Jens said, we will be ready to get up to 25%. So, at this stage, we are not changing our interest rate projections. It's more like in terms of how much credit quota we could get.
And usually, it doesn't impact too much revenue. It's more something which will have an impact on 2026 NII. To answer you the impact on mortgage rates, so the true and the sad reality is that it's a very competitive market. And a number of players, including state-run banks, are having very aggressive pricing policies. And the market has become even more competitive after September 23, when customers were allowed to freely move their mortgage from one bank to another. During the second half of the year, as you saw, we had very strong disbursements in the market. We had a strong rebound of the real estate market, particularly in the North, with transaction prices increasing 25%-30% year on year. And yet, mortgage rates have continued to decrease and are on a downward trend.
Therefore, I would not be too excessively optimistic about the possibility for mortgage rates to suddenly increase massively in the near future. Hopefully, at some point, that will go up. But before that, as our market analysis team expects, the main impact could be a further support and improvement in the demand for real estate investment. So, it will still benefit the bank, but not in the form of NIM, more in the form of our capacity to continue to build our retail franchise. In terms of NPL of mortgage books, so the reality is that most of our NPL for retail, most of our NPL for the bank is driven by primary mortgages and only a relatively limited number of primary mortgages and primary mortgage projects.
Situations are typically where we have a buyer, typically quite wealthy, buying to invest and investing in a number of properties, who is involved in contentious discussions with the developer because this investor is not happy with the market trend and the price appreciation in the development he or she has invested in. So, it's very specific, and we have made progress in resolving these situations. As you've seen, this is one of the drivers behind the improvement in our NPL for our mortgage book. It has gone down to 1.9% in Q4. And beyond that, we have also learned from this situation, and we have updated our underwriting policies.
Those are essentially the two reasons why we believe that the trend for NPL in our mortgage book going forward should be more positive or continue to be positive, driven by a better control, as I said, of the delinquency experience on primary mortgages. It's not directly linked to what is happening in the market or the rebound in the real estate market. It will be more linked to us resolving these very limited situations I mentioned earlier in primary developments and us also drawing the lessons of what we've been through to adjust our risk appetite and underwriting policies going forward. Thanks. Next question is also for Alex. Could you comment on the bond market performance in 2024 and the outlook for next year? Yeah, 2024 performance in the real estate, in the bond market, was quite impressive.
We had a 60% year-on-year increase in bond origination, and this was one of the main drivers behind our stellar performance on investment banking fees. For the record, we increased our banking fees by 88% year-on-year. A lot of the new issuances were from bank bonds, which increased 69% year-on-year, but we had also a very robust demand from corporate customers. On the back of this new framework for bond issuance, we create more transparency and therefore more confidence from investors. So, as I mentioned, for 2025, we believe that the environment will remain supportive. However, this catch-up effect of pent-up demand that we saw in 2024, we're not completely certain that it will happen again in 2025, which is why we're having a more, I would say, cautious forecast of a double-digit growth in bond origination and bond distribution this year in 2025.
We might be surprised on the upside, but let's be surprised on the upside rather than the downside. Next question is for Jens. We heard that Techcombank was the first joint-stock commercial bank to have issued a green bond in Vietnam. What was the size of the deal? Who were the targeted investors? And what do you see developing for this market in the next two years? Yes, indeed. We issued the first green bond as a joint-stock bank. The size was actually relatively small. It was around VND 450 billion for our normal sizes. That's relatively small. And it went to insurance companies who are actually very much interested in these kinds of instruments. And we would expect actually for the year the number to be much larger. And we plan to issue up to roughly VND 3 trillion. Again, I think the demand is there.
Sometimes it's really a question of when you start executing it because there's a lot more due diligence which needs to be done. That actually takes time. But I think the name is good. The framework and also the rating which we got as we started basically getting rated for these issuance by S&P also has given us actually a very good kind of standing. So, we expect actually that we can do these VND three trillion this year, and we believe there's enough demand. And again, we also believe that I think there's a need for these kinds of instruments. I think despite what we've seen in some other parts of the world where some banks and governments are retracting a little bit on their commitments, I think the Vietnamese government is very clear what they want to achieve.
And we also believe it's absolutely critical for really creating a sustainable economy and also for being one of the leading production hubs in the world. And I think there is a demand for very clear, sustainably produced products. So, from that perspective, I think nothing has changed. So, we will continue on that trajectory. And again, we believe the 3 trillion is probably only the beginning with the framework in place and the experience we have made.
Thanks. Next question is also for Jens. What are the bank's priorities and must-win battles in 2025? And when do you think that the bank can go back to the 4.5%-5% NIM to sustain that prior 1%-1.5% lead over your peers?
So, again, I think the priorities have not changed pretty much. We are still saying at the beginning, it starts with cheap funding.
Then, when you actually have the funding completely sourced, then that gives you the freedom to pick the right credit and sectors where you want to disburse the funds. And then, as you start going in there, I think it's still the ability to actually also do a fee-based business around wealth and all these other areas. So, I think nothing has changed there. On the funding side, again, I think it's very clear that is the area where most of the focus will be. You've seen some of the charts which Alex has showed where we're really saying it comes through the transactions, through all the investments we have made. We'll continue to harness these investments, and we'll continue to push even further because we've seen enough of the evidence to actually give us the confidence that we're just pursuing it.
We should actually be able to get to these outcomes. It might take a little bit longer, but again, I think it's very clear that the mechanics are working. So, that is a clear area, and we will continue like what we did in the past to really focus on that. So, at the same point in time, we are running a little bit against this rising tide because if, as I said, there's pressure on the overall interest rates because of the policy, which is set a little bit by the Fed, and we're a very open economy, then we need to see how far we can go with that, right? But I think over time, it will actually start enabling us, everything else being the same, to bring actually our cost of fund down. And as you've seen, the industry is probably at around 20%.
We are at around 40%. So, that will continue to give us an advantage. On the credit side, on the credit yields, I think that's a little bit the question of where's the overall economy heading and what exactly is the strategy which is driven by some of the large state-owned banks. And that is a little bit, frankly, out of our hand. What we will do is we will expand into some areas where we believe we have a better return on risk-weighted assets, which might be in the unsecured space, which might be on the retail credit side. And you've seen that this is what we're doing. So, we're bringing down the corporate book. We're bringing down some of the sectors like real estate, if it has a relatively high risk-weighted asset consumption.
And we will start driving the other ones up, but that will probably take a little bit of time. And again, some of the big parts of the book, like the mortgage, will be under constant pressure as people are basically trying to really find relatively safe assets. And again, if you are constrained in your risk management capabilities, the easiest is to just look at the areas which have proven by other banks to be relatively safe and then going after these customers and just basically saying, "I do the same for you, but I do it for 50 basis points less." So, as long as this dynamic is there, I think we're still dealing with that problem. But again, I think, as Alex has said, we believe that we can at least manage the NIM at this level.
And then, as over time, credit demand is really coming into action, then we actually should also see that the margins are opening up again. And then, last but not least, I think in the end, while NIM is important, I think it's also, for the overall return on assets, it's important actually to get fee income up. And that's where we said investment banking, we really believe that there's much, much more what we can do on the bancassurance side. And then some of the effects which we've seen are rather effects which we took this year, like the change in regulation that certain things which were booked in the past as fee income are now booked as interest income.
Some of the areas we were also seeing problems on the FX side because of the way how the trading corridors are set and how the central bank is actually defending the currency. So, a lot of these things are changing. And therefore, on the baseline, which probably was muted this year, we should be able to set up on top of it, which should give us actually better Return on Assets. So, again, nothing has changed. We just need to make sure that some of the things which are really under our control that we are executing against these flawlessly. And then, if there are some where market dynamics will make it a little bit harder, which we see mostly on the credit yield side, then I think we just need to basically make sure that we compensate with other measures. Thanks.
And related to that, how would you rate your portfolio diversification efforts? And do you see opportunity to drive lending fee income and cross-selling in the new segments of SME, household, and merchants? Plus, how do you plan to maintain the low NPL, high asset quality as you go into unsecured lending?
So, again, a lot of questions with different angles. So, let me try to go through it and find where I want. So, in terms of the overall diversification, as Alex has said, I think there is clear progress, right? And so, bringing the overall real estate exposure down, I think we see this in every single one of the components. And then we're also trying to actually see that we're shifting more into retail and also there into SME and households. So, we will continue to do that.
We still are at the overall corporate book is probably 60%. 40% is on the retail side. Again, we will try to get this to 55%-45%, and then 50%-50%. But again, ultimately, we believe the biggest growth is still on the retail side, and we will continue to invest in that. On the retail side, you're right in asking the question. We believe actually there's a lot more cross-selling we can do, especially on the SME and household side. I think we only started to get into that segment in all earnest, frankly, in 2024. And we made already quite some strides. So, we started, and I think our proposition were very much around payments, collections, and also Auto-earning. We now will start expanding that into credit. And so, we're seeing actually pretty good uptick.
And then we also know that the owners of these businesses, a lot of them are mass affluent customers, which are then also on the private side looking much more for wealth management solutions. So, there's a lot of cross-sell. And that's when Alex was showing the numbers of how quickly are we able to create somebody as MTB and create a main transaction bank relationship. That is actually one of the key ingredients. And as we start bringing product penetration up? And for a long period of time, because we were growing so fast, the product penetration or product per customer were actually not growing so much because we always got new customers in with exactly one product. But now, what we're able to manage, we actually manage both sides of the equation. We manage growth at the same point in time.
The number of products per customer is going up because we're actually using much more sophisticated onboarding journeys and by using technologies, data, and all of that. So, I think actually you will see that the profitability per customer will actually be going up. So, therefore, key part is, yes, we will shift into retail. On the retail side, we will have a higher product penetration. We will actually go on the credit side, but also on wealth management. What about NPLs? I think if you have seen the numbers, we still believe that on the overall book, the 1.17% is probably elevated. Still, we need to work through some of the portfolio. We still also have cross-defaults from CIC. So, these numbers should be going up, which would allow us to actually start expanding into other areas where we will see more NPLs.
The NPL per segment might actually be higher per product, might be higher. Overall, because the books are still relatively small, they might not be so high. Therefore, they might add a little bit, but not so much. They will actually add disproportionately on the NIM side because the return on risk-weighted assets and the margin we are making are much, much better. Again, I think from a diversification perspective, we're pretty much on track, bring down credit portfolio on the corporate side, increase on the retail side. The retail side will do the right mix of low-risk loans, which are more on the mortgage, but then adding in some unsecured pieces. Overall, the overall NPLs will still be okay, but NIM should actually improve in that context and should give us a broader set of opportunities for fee-based income. Thanks.
Next question is for Alex. NFI has shown a downward contribution recently. Is it reasonable to expect NFI growth back to 20% per annum in 2025 once some of the one-time items and reclassifications are behind us?
Yeah, a very legitimate question. I touched on it during my presentation. I think it's absolutely reasonable to expect that the growth in 2025 will be faster than in 2024. I mentioned double digit. I also said that it might be low double digit rather than a high double digit because we will continue to see some headwinds, particularly in LC cash and settlement, so if I take the sources of fees one by one, IB fees, I mentioned earlier, we had a very strong progression expansion in the bond business in 2024, plus 60% give or take, and in 2025, we expect these growths to slow down.
This will be relatively on the downside compared to 2024, but still obviously growing on bank card. That's where you will see probably the biggest rebound. If you look at our quarterly performance, essentially, we were not booking any fees for bank card during most of the fourth quarter of the year. This was a big impact on our NFI performance in 2024. And clearly, in 2025, we will not see that again. And on the positive side, we will also benefit from more income coming from our general insurance business after the setup of TCGI, a specialized subsidiary. On cards, I mentioned that 2024 was a year of overhaul for our card strategy. We increased product feature costs to make our offerings more competitive in the market.
That reduced our margins and explains why our fee income on cards was down despite a very significant progression in volumes. So, we set a new base in 2024. And from there, we expect to be able to grow much faster in 2025. But the market remains very competitive. It's a commodity product. So, we need to accept the fact that there will be continued pressure on margins in this market. LC cash and settlement, I touched about it. That's the area which led to the most significant headwind in 2024. And this will probably also stay there for another few quarters as we and other players in the market are working on new products which could potentially meet the needs of our customers and comply with the new legal framework for this credit-related letters of credit, which we call UPAS LC.
There is clearly hope, and there is also a potential for upside. At this stage, we're still assuming in the double digit NFI growth that I mentioned, we are still assuming that this compartment of our flow business will remain under pressure. FX sales has seen a lot more traction in Q3 and even more Q4, as you've seen. We therefore expect that this trend, hope that this trend will continue. It will depend a lot on the policy of the central bank and the dynamic of the FX rate. If the Dong trades too close to the SBV ceiling rate, then again, margins will be compressed. There are a number of factors we do not control, but we have, I would say, a clear objective to grow this line of business very meaningfully in 2025.
So, my overall, like, this analysis confirms what you said, right? That 2025, you can expect it to be better than 2024 in terms of year-on-year growth. However, because of this overhang on UPAS LC, we will not still probably, unless we are in a very favorable scenario, we will not be back to the 25% or 20-plus% growth that we thought in the past. Our assumption at this stage is more like in the 10%-20% range. Thanks, Alex. You touched on this in your last answer, but could you elaborate more on the bank's insurance strategy? Yeah, so basically, the bank insurance strategy remains one of the key pillars of our strategic plan. We believe that it's a need that needs to be met by our customers.
When you look at Vietnam compared to other markets in the region and then in the world, you see that the penetration of insurance products is quite low. You see that although the amount that people dedicate to insurance and protection compared to their income is also abnormally low, we believe that at some point a catch-up will happen. For this catch-up to happen, we will need, however, probably the regulatory framework to evolve, for example, in the form of more attractive tax breaks for people who buy life insurance policies in the form of more support for health protection or in the form of also incentives for corporates and organizations to put in place retirement plans, even though this is probably a bit farther away on the horizon. At this stage, we have mutually agreed with Manulife to terminate our bancassurance partnership.
We have new distribution arrangements in place with TCA and with AIA, which provide a very satisfactory level of profitability already. And as I mentioned, we are looking for a new long-term insurance partner, which will hopefully allow us to unlock the growth and get to a very significantly higher level of performance in the next few years. So, if I look back at the trajectory over the last three years in Vietnam, the bancassurance market has really clearly suffered from a crisis of confidence following the Vạn Thịnh Phát and Saigon Commercial Bank issue. We believe that the market is now ripe for a rebound, probably reached the bottom. And as far as we are concerned, we suffered comparatively less than other players, which shows in a way the quality of our sales processes, our customer-centric selling processes.
We will apply to this compartment of or to this line of business the same customer-centric and ecosystem approach that Jens touched on earlier. So, it's an integral part of our wealth offering. We are a leader in wealth. Therefore, we should be a leader in life insurance. And over the next couple of years, working with our future long-term strategic partner, we will aim to create the most compelling life insurance proposition in Vietnam, leveraging the technology platform that we have built, leveraging the insurance experience of our partner, and leveraging our technological capabilities.
Next question is for Jens. Regarding the strategy of expanding in the South, when do you think we will see a material contribution and/or concrete results in this policy?
So, to a certain extent, given the fact that 60% of our corporate book actually already sits in the South, and it's a bit hard to say when do we see a massive contribution, right? Because there is a massive contribution already. I think when we're saying is we want to go into the South, I think it's really more like that if you just compare market share, you compare top of mind, a lot of the measures which we are usually put forward, we're basically saying we are not as strong as we are in the North. So, therefore, again, I think just the normal performance and the way how we allocate, we will start allocating more marginal resources into the South, right? So, and again, I think we will continue to basically show the results like what we've seen in the past.
So, we're growing 20-25% on the credit side. So, you would expect actually that if that's the case, that probably 60% or maybe 70% actually starts growing into the South. So, we will continue to do that. But I think to a certain extent, we don't need to call this out particularly, right? If there is something to be called out, then I think it's rather that we're probably rather saying is while the focus always has been very much on Ho Chi Minh, Hanoi, Da Nang, Hai Phong, so the big cities, and especially the two centers, that we will actually start going into some of these provinces with very high GDP growth, which are also the center or FDIs where a lot of economic activity is actually happening, and that's where we will grow, right?
But again, I think it's not that suddenly there is that we're saying, okay, now we're basically growing 40% or 50% because ultimately, as long as you're still working in a credit quota environment, right? The quota is the quota. It's just a question of relative allocation. However, when it comes to fee-based products, when it comes actually to wealth, when it comes to mobilizing of funds and all of that, we would actually expect that the contributions from the South are stronger. And that's, again, I think if you see that when Alex was saying we expect 10%-20% growth in some of these areas, we would again expect an overproportional amount of that growth actually to come going forward from the South.
I think the other one or the other area where we'll see that is the success of the household and small SME strategy because, again, a lot of that activity sits more in the South, and then we will see how that actually is developing. Over the last year, we've probably grown around 800,000 to a million customers in that space. We actually want to add even another million plus this year, so, again, that will be all activities which will center a little bit more on the South. But again, it will not be probably as radical, and it will all be contributing to the overall performance of the bank more than anything else.
Thanks, Jens. You saw a double-digit increase quarter on quarter in FMCG retail logistics and utilities, and then also construction and materials saw a surge of mid-20% quarter on quarter.
Does this have any correlation with the public investment or FDI growth at the year-end?
Not so much. I think we always have been, how should I say, in coming back to a quota environment, right? We always have been a little bit kind of constrained where else we put our money in and where else we are lending. And I think these demands were always there. So, I think it's more like really allocating the money to these customers. Of course, by definition, if you're saying, okay, we're not going into the non-real estate sector, and real estate means really real estate developers. There is a lot of other kind of recom related activities, industrial parks, infrastructure projects, and all of that. When you look into that, right, one is clearly we are expanding our footprint in areas which are very strong or driven by domestic consumption.
So, that would be FMCG, that's retail, and that's even to a certain extent non-bank financial institutions because they are all benefiting from that. And I think that's just part of our normal strategy. Of course, FDIs, we have been probably more active than in the past in this sector. And that is probably more really owed to the fact that because of the FDI, but also especially China Plus One, you've seen much more coming up, much more demand coming up. And where right now we are also playing a more active role. But I think, again, this is more secular trends than anything owed to the fact that something happened, especially in quarter four. I think this is just part of the longer-term strategy.
Thanks, Jens. Next question is on dividends, everyone's favorite question.
Could you just expand on what the policy is for paying dividend this year, given that we didn't see a mention of it in the press release? Again, I think the policy this year is the same like the policy last year, where we basically said, okay, what's the policy? So, at the AGM, I think the board and the chairman basically made a comment that we had a policy for 10 years of not paying dividends, then we paid dividends in 2024. At this point in time, we already said that structurally we should be able to do that without jeopardizing our targets, which are, as we said, being at the level of 15% in CAR and still self-funding our growth of around 20% in credit growth. So, nothing has changed from that perspective.
So, again, the board will look into these parameters and will then take the decision on what to submit to the shareholder meeting, which will be due somewhere over the next couple of weeks. But again, this is just part of the normal deliberation, and this really is the prerogative of the board. As a management team, you can not do anything else but basically do the plans and provide the operational efficiency and capital efficiency if the board decides so to afford these dividend payments. But if the decision to take or to pay it is really with the board. And again, I think there's probably nothing more to add than what we said over the last couple of quarterly analyst meetings and in the last AGM already.
Thanks. And I think we have time for one more question, Alex.
This fourth quarter, OPEX was up sharply, whereas last year was flat quarter on quarter. Could you explain a little bit the reason for that?
Yeah, sure. So, roughly our cost this quarter in Q4 were around VND 4.5-VND 4.6 trillion. And the trend or the baseline for the previous quarter was around VND 3.5 trillion. So, let's say we have a VND 1 trillion increase to explain. So, the first comment I would make that it's not just that Q4 is high, it's also that the previous quarters were relatively low. We made it clear, I think, both Jens and myself, particularly when we reported a cost-income ratio of 27% in Q2, that it was not what we believed is the right level of investment and expenses for the bank. We made also it clear that we would continue to invest.
And as a result of that, the cost-income ratio would go back to the range of 30%-35%. So, we were always very clear on that. It's just that we do not decide of when the cost materializes or when is the right time to invest. Sometimes it's just also something that we have to live with. So, we have, again, VND 1 trillion increase to explain. I would say it's about evenly allocated between three main drivers. So, the first driver is staff costs and more particularly performance-linked bonuses, and more specifically in our investment banking activities and given the very strong performance that I highlighted before. So, we have to accrue based on certain rules, and it's not something that also is, as I said, set in our HR policies and in our agreements with the shareholder of TCBS as an example.
So, it's not something that we control, but we can always decide after the fact to potentially pay less. So, the accrual, one third of the increasing cost is linked to this performance-linked accruals and staff costs more generally. Second third is linked to marketing. So, I mentioned the much more intense effort on marketing in the fourth quarter of the year to harness our new propositions on loyalty in Auto-earning to offer also some new exclusive differentiated experiences to our top priority customers like the Anh Tai Concerts . So, this has a cost, but it also allowed us, as I explained, to drive CASA massively, a 15% quarter on quarter increase is, I think, quite a significant achievement. And it also allowed us to reach the number one position in the banking sector in terms of Brand Equity Index. So, I think it's money well spent.
And then the third bucket is more like other expenses with some elements of seasonality, but also some one-offs. I can give you two examples of one-off. One is a performance-linked or outcome-linked payment we had to make to one of our providers because they achieved their performance targets, and it's for around VND 100 billion. And we had another payment of the same magnitude that we made to support the government's relief programs for people affected by Typhoon Yagi. So, that's two items. And then on top of that, you have the usual year-end thank you parties, business meeting, or the activities that we organize for our staff and our partners, ecosystem partners at the end of the year, which also drive a seasonal increase in cost. So, I hope to have given you more insights into what drove the increase in cost in the last quarter of the year.
Obviously, last probably it was not in the question maybe because you are very polite, but should we expect the same growth in 2025 and will the first quarter be as high? The answer is no, right? So, clearly the first quarter of 25 will not be as high as Q4 because Q4 included the one-off elements I mentioned earlier. So, we grew our cost by 16% in 2024. We expect to grow our cost by the same quantum, maybe a bit less actually in 2025.
Thanks, Alex. This concludes the fourth quarter and full year 2024 financial results presentation. The presentation and replay link will be posted on the IR section of the website soon. Please contact the IR team for any additional questions. And we wish you not only health but wealth as we're a bank over Tet and the new year.
Look forward to speaking to you again in three months.
Thank you.