ACB announced H1 2022 results with TOI of VND13.8tn (USD599mn; +15.7% YoY) and bottom-line net profit of VND7.2tn (USD314mn; +42.6% YoY), achieving 49.0% and 50.1% of our FY2022 forecasts, respectively. The strong increase in H1 2022 NPAT was mainly due to (1) a 14.7% YoY increase in NII, (2) 14.6% YoY increase in pure NFI, (3) VND725bn gain from net other income compared to a low base of VND28bn in H1 2021, (4) VND33bn of income from equity investment vs VND7bn in H1 2021 and (5) VND526bn recovery from bad debts. These factors were partly offset by (1) a VND238bn loss from trading securities compared with a VND205bn gain in H1 2021, (2) 70.3% YoY decline in gains from investment securities and (3) 41.0% YoY increase in OPEX that resulted in a higher CIR. We currently do not foresee any material changes to our forecasts and/or target price for ACB, pending a fuller review.

ACB reported robust NII growth in H1 2022 despite NIM deteriorating on a YoY basis. ACB’s NII in H1 2022 was VND11tn (+14.7% YoY and +3.1% QoQ), achieving 49% of our full-year forecast. In H1 2022, ACB’s loan growth was 9.31% (-0.4 ppts YoY) — with much lower customer deposit growth of 2.16% (+0.7 ppts YoY) — resulting in a simple LDR of 84.5%. CASA increased 2.9 ppts YoY to 25.05% in 1H 2022. However, NIM decreased by 11 bps YoY in H1 2022 to 4.23%, which was due to a 58-bp YoY decrease in the IEA yield that outweighed a 45-bp YoY decrease in COF.

Trading securities experienced its largest loss since 2012. In H1 2022, ACB experienced a loss of VND238bn vs a positive gain of VND205bn in H1 2021 due to (1) VND136bn of provisioning for devaluation of trading securities and (2) a 47.3% YoY decrease in income from selling trading securities. When compared with parent financial statements, we see that the majority of the loss came from ACB Securities Company.

CIR increased by 6.5 ppts YoY due to OPEX rising