ACB – Strong credit growth, asset quality shows improvement - Earnings Flash
  • 2024-07-23T00:00:00
  • Company Research

ACB released its H1 2024 results with TOI of VND16.8tn (USD673mn; 5.5% YoY) and PBT of VND10.5tn (USD420mn; +5.0% YoY), both achieving 46% of our full-year forecasts. On a QoQ basis, the Q2 2024 TOI and PBT increased by 6% and 14%, respectively. We attribute the 5% YoY increase in H1 2024 PBT to (1) an 11% YoY increase in NII, (2) a 13.4% YoY increase in pure NFI that was partly offset by (3) weak recovery in income from written-off bad debts, and (4) low gains from investment activities. We do not foresee material changes to our earnings forecasts for ACB, pending a fuller review. 

  • 6M 2024 credit growth was 12.8% (vs our full-year forecast of ~16%) and higher than the system-wide credit growth of 6%. The bank balanced its credit growth between retail lending (~ 12% YTD) and business lending (~12% YTD) in H1 2024. We attribute strong credit growth to (1) ACB’s advantage in low funding costs that can offer low lending rates to customers, and (2) the bank successfully establishing several cooperative relationships with industry-leading enterprises. 

  • 6M 2024 deposit growth was 6.0% - higher than the system-wide level of around 2%ACB’s controlled deposit growth is to be lower than credit growth to optimize its fund and support the NIM. This resulted in an increase in regulated LDR to 82.2% in Q2 2024 vs 78.1% in Q4 2023. Additionally, ACB’s Q2 2024 CASA ratio was 21.6% (+0.7 ppts YoY & -1.4 ppts QoQ).  

  • 6M 2024 NIM was 3.80%, decreasing 33 bps YoY vs our full-year forecast of 3.96%. We attribute this to (1) ACB reducing lending rates more than deposit rates to acquired new customers, and (2) a higher proportion of corporate and short-term loans. However, we believe strong credit growth in H1 2024 will positively contribute to ACB's NII in H2 2024, thereby improving its NIM 

  • 6M 2024 NOII was VND3.0tn (-14.2% YoY, completing 42% of our full-year forecast due to (1) the low one-off income from recovery of bad debts (-52.3% YoY), (2) low investment income (-53.3% YoY), and (3) low gains from FX trading activities (-13.8% YoY) that outweighed (4) a decent increase in pure NFI (+13.4% YoY). 

  • 6M 2024 OPEX was well-controlled with the CIR at 31.1% (flat YoY). This is better than our expectation, as our full-year forecast for CIR is 33.9%. 

  • ACB’s NPL ratio was relatively flat compared with the last quarter, at 1.50% in Q2 2024We observed improvements in the Group 2 loan ratio and accrued interest/IEAs in Q2 2024, which decreased by 25 bps QoQ and 7 bps QoQ, respectively. According to the bank, the NPL ratio in June 2024 was lower than that in May 2024, signaling a downtrend in ACB's NPL ratio. 

 

ACB’s consolidated H1 2024 results 

VND bn  

 H1 2023  

 H1 2024  

 YoY  

 Q2 2023  

 Q2 2024  

 YoY  

 NII  

12,461 

13,833 

11.0% 

6,246 

7,112 

13.9% 

 Non-interest income  

3,483 

2,987 

-14.2% 

1,778 

1,541 

-13.3% 

 OPEX  

(4,993) 

(5,230) 

4.7% 

(2,485) 

(2,466) 

-0.8% 

 PPOP   

10,951 

11,591 

5.8% 

5,538 

6,186 

11.7% 

 Provision expenses  

(962) 

(1,100) 

14.4% 

(706) 

(588) 

-16.7% 

 NPAT-MI   

8,001 

8,374 

4.7% 

3,866 

4,469 

15.6% 

  

 

 

  

 

 

 

 Loan growth**  

4.9% 

12.8% 

7.9 ppts 

5.5% 

8.7% 

3.2 ppts 

 Deposit growth**   

4.5% 

6.0% 

1.5 ppts 

2.3% 

3.8% 

1.5 ppts 

  

 

 

  

 

 

 

 NIM  

4.13% 

3.80% 

-33 bps 

4.13% 

3.88% 

-25 bps 

 Interest-earning asset yield  

8.89% 

6.72% 

-217 bps 

8.99% 

6.81% 

-218 bps 

 Cost of funds  

5.35% 

3.28% 

-207 bps 

5.48% 

3.29% 

-219 bps 

 CASA ratio*  

20.9% 

21.6% 

0.7 ppts 

20.9% 

21.6% 

0.7 ppts 

 CASA ratio plus term deposits in FX     

21.9% 

21.8% 

-7 bps 

21.9% 

21.8% 

-0.1 ppts 

 CIR  

31.3% 

31.1% 

-23 bps 

31.0% 

28.5% 

-2.5 ppts 

  

  

  

  

  

  

  

 NPLs / Gross loans    

1.06% 

1.50% 

44 bps 

1.06% 

1.50% 

44 bps 

 Group 2 loans / Gross loans   

0.87% 

0.54% 

-33 bps 

0.87% 

0.54% 

-33 bps 

 Accrued interest / IEAs   

0.70% 

0.52% 

-18 bps 

0.70% 

0.52% 

-18 bps 

 Source: ACB, Vietcap — *CASA volume included demand deposits and margin deposits; ** Q2 2023 and Q2 2024 loan and deposit growth is QoQ growth.

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